The Armenian government said on Thursday that it plans to launch a “free economic zone” near Armenia’s border with Iran before the end of this year.

Hovannes Azizian, a deputy minister for economic development and investments, said the tax-free zone will be set up in Agarak, a small town in the southeastern Syunik province located several kilometers from the Iranian border.

“This is an important opportunity to foster tourism and encourage people to buy goods there without any customs duties,” Azizian told reporters. “We also expect that the Iranian side will show an interest in manufacturing in that free economic zone goods for other markets: the Eurasian Economic Union and Europe.”

“We are convinced that this will be a profitable enterprise for the organizer and a development opportunity for the beneficiaries [of the zone],” he said.

The plans for the tax haven were first revealed by Yerevan in late August. Then Prime Minister Hovik Abrahamian said Iranian entrepreneurs will be able to open manufacturing firms there and engage in duty-free exports of their products to Russia and other EEU member states.

Azizian confirmed that Iranian firms setting up shop in the zone will have tariff-free access to the EEU markets. Some of them have already expressed a “preliminary interest” in doing that, he said.

He said he also hopes that the project will help to boost Armenia’s trade with Iran, which stood at a modest $220 million in January-November 2016.

Despite upbeat statements made by officials from the two neighboring states, the lifting of international sanctions against Iran in 2015 has yet to have a positive impact on the volume of bilateral commerce. According to Azizian, one of the main reasons for that is lingering restrictions on banking operations between Armenia and Iran.

“If two companies cannot transfer money between them, it’s hard for them to do business. We hope that this problem will also be solved,” the official said, adding that Armenian exports to Iran could quickly rise by 30 percent. He also expressed hope that the Iranian government will lower import duties for Armenian goods.

Armenia mainly exports electricity as well as meat, soft drinks and confectionery to the Islamic Republic at present.

Iranian President Hassan Rouhani said his country would like to deepen economic ties with Armenia when he visited Yerevan late last month. “We must do everything to utilize the full potential of Armenian-Iranian relations in the coming months and years,” Rouhani said after talks with President Serzh Sarkisian.