Iran and the Global Economy by Parvin Alizadeh Hassan Hakimian

Author:Parvin Alizadeh, Hassan Hakimian [Parvin Alizadeh, Hassan Hakimian]
Language: eng
Format: epub
ISBN: 9781317963004
Barnesnoble:
Publisher: Taylor & Francis
Published: 2013-12-17T00:00:00+00:00

Objectives and administrative set-up

As stated above, most free zones are set up with a set of explicit or stated objectives. The most common ones are: to attract FDI and to promote manufacturing exports, to create jobs, to upgrade domestic technological capability, managerial skills and know-how, and to regenerate deprived and stressed areas and regions. Many zones have implicit or unstated objectives, too. The two most common ones being: to reduce anti-export bias (while keeping the protective barriers elsewhere in the economy intact); and to act as experimental laboratories for trialling new policies (such as financial, legal and labour policies) before considering their application elsewhere in the economy (Akinci and Crittle, 2008: 12; Madani, 1999: 16–17).

In the case of Iran, too, free zones have had both a policy and infrastructure rationale combining most of the above goals and objectives. For the Free Trade-Industrial Zones, in particular, the principal stated objective was to help reduce Iran’s isolation from the international economy by promoting both domestic investment and FDI to boost manufacturing exports. As we have seen, this explains their location in areas with good, strategic links with major waterways and key regional markets. A further, albeit implicit, attraction of these entities in the Iranian context has been the promotion of non-oil exports and greater economic diversification in the absence of a more comprehensive, nationwide, but vexed, programme of economic liberalization.

The objectives of the SEZs are rather different. These zones are far more dispersed throughout the country and are expected to play a more active role in regional policy, for their potential role in revitalizing designated regions, as well as in improving the country’s distribution system and supply network. Given the physical size of Iran and its logistical problems with the supply and distribution of imported inputs and intermediate products, it is not surprising that the SEZs have the added attraction of facilitating imported goods in transit and improving the industrial inventory system, whilst simultaneously generating income and revenue for the SEZ authorities and creating local jobs.

FTZs and SEZs in Iran have markedly different governance structures. Governance matters pertaining to the Free Trade Zones are defined by ‘The Law on the Administration of Free Trade-Industrial Zones’, As mentioned above, this law was first passed in 1993 under the auspices of the First Five-Year Development Plan and was subsequently amended in 1999. It comprises 28 Articles and eight Notes, covering all aspects relating to operations, management and governance in the zones (Free Zones Regulations).

According to this law, all plans for the establishment of new zones and their boundaries are subject to proposal by the government and have to be ratified by the Islamic Consultative Assembly. Moreover, each zone is administered by an Authority organized as a company, with an autonomous legal status, whose capital shall belong to the government.5 Management is through a Board of Directors, which consists of three to five persons appointed by the Board of Ministers. The Managing Director, who is also ex officio chairman of the Board, is appointed by

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