Azizi argued in an April interview with Tejarat-e Farda that due to Iranian financial regulations’ noncompliance with international and professional standards, the establishment of a free financial zone would have no justification whatsoever. Rather, Azizi argued, such a center might impose extra costs on the national economy at a sensitive time, with the Joint Comprehensive Plan of Action having recently been implemented.
In other remarks, Azizi additionally questioned the call for establishing a free financial center on Kish Island, claiming that it would be hard for officials to have access to professional human resources and entities. He also criticized those authorities comparing the DIFC with a similar center in Iran, noting that regulations in Dubai are much less strict. He wondered whether stringent laws in Iran would allow changes in regulations to make them compatible with international rules. Furthermore, he outright warned that if policy instruments are not used properly in any free financial center, the whole system would collapse in the medium term, making markets extremely unstable.
This warning shows that the launching of a free financial center needs robust, research-oriented planning, foreign consultation, new legislation and supervisory enactment of new rules and procedures. The latter is of great significance, since money laundering and other illegal financial dealings could cost the economy billions of dollars in the absence of well-developed regulations.
Regardless of how the Iranian government prepares to face the challenges of launching a free financial center, efforts to promote the growth of the financial services industry would appear to be essential given the less-than-stellar banking situation in the country. Iran expects aggressive investment, as much as $50 billion per annum, for the next decade. Some experts believe the best way to diversify sources of financing is first to call on Iranian expatriates to move their capital from neighboring markets, namely Dubai and Turkey, to their homeland.
Before any decision is made in this regard, however, the Iranian government must assure potential investors that risks arising from activities in a free financial center will be properly managed.