While Kish might be overshadowed by its more prosperous Gulf neighbors, the tiny island will not remain insignificant to regional businessmen for long. Just off the south coast of Iran in the Persian Gulf is a free trade zone which is hosting joint business ventures intended to put Kish on par with the likes of Dubai, Bahrain and Kuwait. The challenges of governing the area pose the biggest threat to the zone’s future growth and development, but officials are troubleshooting to not miss the opportunity to attract some of the region’s riches.
With a purportedly more liberal social climate, the Kish Free Trade Zone Promotion Center (KFTZP) aims to mould Kish into a world-class destination for travelers and businessmen alike. The KFTZP’s two-pronged economic attack, tourism and business, will depend on the island’s ability to draw wealth from overseas, a hard task to accomplish given the island’s position across the Gulf from other major regional players. Nevertheless, with the help of the Iranian government, interested investors, and oil, Kish could turn into the next Dubai.
Part of the free trade zone’s master plan involves the creation of technology parks where various industries, from electronics to textiles, chemical products, food units and even automobile production take place. Tehran is currently taking an active role in seeing that these technology parks come to fruition with oversight from veteran technology park administrators. In March 2008, Mahmoud Salahi, the presidential advisor in charge of free trade toured the 270 hectare Pardisan Technology Park, located in northwestern Tehran. During his time there, he met with the president of Pardisan and emphasized the need to streamline the export process by better utilizing the free trade zones
Signs of confidence
While Iran is investing in its future through developing Kish’s technology and tourist infrastructure, other countries are eyeing Kish as a potential big player on the financial scene. The managing director of the Kish Free Trade Zone, Majid Shayesteh, announced recently that the Iranian-Bahraini joint banking venture, known as Futures Bank will open for business on Kish. This alliance, which came as a result of the merging of the Iranian banks Saderat and Melli and the Bahraini Ahli United Bank points to confidence on the part of Iranian and foreign companies in the future success of Kish.
Underscoring this confidence is the presence of Iran-Europe and Standard Charter Banks, already active on the island. With a growing financial presence, Kish might be able to attract the economic muscle needed to support large-scale projects in the coming years.
Selling finance
While technology parks and investment are undoubtedly important aspects of Kish’s development plan, oil must be the number priority given Iran’s preponderance of black gold and the strategic shipping lane within which Kish lies. In 2005, then Managing Director of the Kish Free Trade Zone Organization (KFTZO), Hossein Qassemi, announced the proposal for an oil bourse in Kish. Mohammad Javad Assemipour, the official in charge of the project added that the petroleum exchange could help create further transparency in the Oil Ministry’s performance and help attract more foreign investments in national energy industries
In 2008, the bourse became fully operation. In February 2008, the bourse traded 100 tons of polyethylene consignment. Although the exchange trades in Iranian Rials amongst other currencies, Iranian officials hope to establish another exchange in which euros will be the primary currency traded. The reason for this would be two-fold: by using euros, Iran can effectively price commodities traded in a stronger currency than the US dollar, as the greenback is continuing its downward slide on international markets and shows no sign of abating. In addition to price goods in stronger currencies, Iran can be one of the first to move forward with a new OPEC standard in valuing petroleum, a move which other OPEC members have been considering for the past few years.
As the fourth largest oil producer in the world and a powerful member of OPEC, the presence of an oil bourse on Kish could do much to attract capital to the mainland Iran’s inflation-stricken economy.
In the meantime, the 20-odd brokers at the Iranian bourse at the time of its opening lend credence to the idea that Kish is a hotspot for future Middle East and global investment. The Iranian government’s moves to establish Kish and other free trade zones may signal an end to state-run business and a glasnost of liberal economic policy, spearheaded by Iranian free trade zones such as Kish. The island free zone is not with out its obstacles, however.
How to say ‘parsimony’ in Persian?
Beyond carving out a reputation for itself based on finance, oil and tourism, features already found in throughout the region, Kish will have to decide whether it is strictly in line with Islamic law, or headed toward a more liberal social and political policy. With a moratorium on Israeli goods and alcohol along with other laws imposed by the Islamic government, we have yet to see how Kish and an Islamic Iran will handle an influx of foreigners beyond the familiar regional Muslim investors from Saudi Arabia, the United Arab Emirates, Kuwait and the like.
Nevertheless, with European and Middle Eastern travelers and businessmen turning their heads toward Kish, the island might prove to be the next boomtown for technological infrastructure, banking, and oil investment.
