Will ‘Free Financial Center’ Lure Foreign Banks to Iran?

By Alireza Ramezani, for Al-Monitor. Any opinions expressed are those of the author, and do not necessarily reflect the views of Iran Business News.

Iranian authorities are weighing whether to launch a free financial center, most probably in one of the country’s free trade zones, to encourage capital inflow into the economy.

“Planning is underway to turn free trade zones into foreign investment hubs through the opening of branch offices for Tehran’s equity and bond markets, setting up offshore banks and establishing a free financial center,” said Akbar Torkan, secretary of the Supreme Council of Iran’s Free Trade, Industrial and Special Economic Zones, in March at a meeting with Expediency Council leader Ali Akbar Hashemi Rafsanjani on the Persian Gulf island of Kish.

Torkan’s comments came days after he reached an agreement with the Securities and Exchange Organization, Iran’s capital market regulator, to launch the financial center. Of note, he had said in November that the Kish free trade zone would be a suitable place to set up such a center.

Torkan, who is also an adviser to President Hassan Rouhani, argues that multinational banks would face lower risk if they operated on the island, noting that they would have time to assess the situation before making a final decision about investing in the mainland. Many senior Iranian economic officials appear to be in agreement with his thinking.

Central Bank Governor Valiollah Seif (pictured), whose support is key to the project’s success, appears to back the initiative, despite disagreements with Torkan over the launch of offshore banks in free trade zones, the news website Tabnak reported April 4. While there has been no direct word from Seif, in August the Iranian Free Trade and Special Economic Zones News Agency (Freena) had quoted Ali Asghar Mounesan, CEO of the Kish Free Zone Organization, as saying that Seif had agreed with the establishment of the financial center on Kish.

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