Thread: Archive Latest News - Think Tank - 15/04/08 - 26/08/08

Continued........

One-of-a-kind Opportunities

The feedback from the conference was that the opportunities being offered in Iraq are certainly on a scale and with an upside that is probably unique in the world. The main challenges for the new investors in Iraq will be the ability to connect these former state institutions to a new market structure or supply chain that as yet doesn’t exist in Iraq. Other issues of over-staffing, reliance on old technology, the slow process of government procedures, and the existing limitations (and small scale) of the current Iraqi private sector will also have to be dealt with.

Hosted in formal partnership with the US Department of Defence Task Force for Business Stability & Operations and the American Chamber of Commerce-Iraq, and managed by Iraq Development Program, the Summit was held on the instruction of Iraqi Minister of Industry & Minerals HE Fawzi Hariri.

Minister Hariri was joined by director generals from Iraq’s leading and most lucrative state-owned enterprises, which include the state companies for construction, cement, glass & ceramics, iron & steel, mechanical industries, automotive industries, engineering, heavy engineering, information systems and electrical industries. Altogether a delegation of 85 Iraqi ministers and managers were present at the Shangri-La Hotel in Dubai for the Summit.

Dr Hamoudi Abbas Hameed, Director General for Food & Pharmaceutical Industries, said that Iraq is a major food consuming nation in the Middle East, but local production does not meet 20% of the current demand, despite the former good reputation and good standing of Iraqi brands.

Discussing the leading Iraqi pharma companies Sammara and Nainava, and other companies under his management such as State Company for Sugar Industry, State Company for Vegetable Oil & Detergent Industries or the State Company for Dairy Products, Hameed said that the output of vegetable oils and detergents covers only 20% of requirements specified by the Ministry of Trade. Some 300,000 tonnes of vegetable oils were imported into Iraq last year, as well as 140,000 tonnes of detergent and 70,000 tonnes of soap.

Explaining the current market position, he said that with raw milk available locally and cheap labour there is a good opportunity for dairy plants like the Abu Ghreab factory, the baby milk plant, the Mousel or Al Qadisia plants to return to full production.

“We have a new plant for producing milk with capacity of 10 tonnes per day,” he explained. “Projects like this will be very important in the future. We need ten times this quantity to meet the demand.”

Another company in the sights of the early entrants to the Iraqi manufacturing sector is the State Company for Tobacco & Cigarettes Industry, which is currently producing 0.5 million cartons of cigarettes per year, at a time when the demand is for 3.5 million cartons. “There is room for expansion in this plant,” said Hameed.

Regarding the State Company for Sugar Industry, he said this is a company producing white sugar from sugar cane, beet and raw sugar as well as added value products such as medical alcohol, molasse, bagasse and fresh yeast. “The expansion of these plants will be a good opportunity for investors,” said Hameed. “There is a possible 15% increase within the existing capability of the plants, but by giving licences for new products, the multinationals will be able to add more than that figure.”

Business Intelligence Middle East - bi-me.com - Report from the Iraq Commercial Investment Summit - News, analysis, reports

Continued........

Not all a Rosy Picture

Ali Saleem Omar, Director General for Construction Industries, said that his sector – which is producing cement, bricks, plastic pipes, glass, ceramics and refractory materials like tiles, aluminium parts and insulating materials – is vital to the future of Iraq.

“The current assessment is that these plants are running at under their design capacity, they are suffering cumulative bottlenecks, and they are not making use of new technologies,” Omar said. “They have suffered three decades of continued instability, but now there are opportunities to use new techniques.

He said that the current vision of the Iraqi government is governed by circumstances, taking all elements into account, and with this in mind there is a period of 10 or 15 years to allow for rehabilitation of the existing plants. The cement production target is set at 30 million tonnes per year, and that for bricks is set at 540 million he said. Currently a large quantity of bricks are being imported.

“Iraq will soon become one of the biggest markets in the region for infrastructure goods, and especially in the construction materials I mentioned,” he said. He added that all the elements were in place for Iraq’s rebuilding efforts to go even higher than they are now. These include demand for housing due to the natural population increase, the replacement and upgrading of existing residential and commercial buildings, and the resolution of the current housing crisis.

Omar said that with current capacity from his three main plants at 6.4 million tonnes, with the possibility of a full electricity supply, the new investors should be able to increase output with a minimum of maintenance. “Given the previous published statistics, there should be no obstacle to raising the production quantities,” he said. According to Iraqi Customs figures, the country is currently importing 5 million tonnes of cement per year.

“The government has ambitious plans, but also we do not want to give a rosy picture about Iraq,” said Omar. “The way ahead is not paved well, so the investment is not free from risks or challenges.” He referred to another recent Iraq investment conference in Kuwait, where the market reaction was quite cautious.

Abdulghani Fakri Al-Jafer, Director General for Textiles Industries, gave a presentation on a sector that is very important for the issue of Iraqi unemployment. His talk also gave rise to a discussion and about awareness of quality control, given that a large part of the production is currently being dumped on the local Iraqi market.

Al-Jafer said that the eight companies in his jurisdiction, including six for textiles, one for leathergoods and one for furniture, interact closely with the private sector that includes 300-plus factories in Baghdad and other governates. They rely strongly on supplies of local Iraqi wool, which is suitable for carpet and blanket production. Cotton is grown in the middle and North of Iraq.

The production in the textiles sector is sufficient to meet only 10% to 20% of the local demand, he said. Al-Jafer said several factors affect the quantity and quality of the available materials, which are going not just into clothing, but into tents, carpets, shoes, bags, furniture and other products.

“The local markets are not being considered as the main source for marketing, since some products are being dumped in the local market,” said Al-Jafer. He said these product lines are increasingly focusing on quality, in areas such as mechanized or hand-made carpets, as well as special products like medical wool, so as to meet the requirements of international markets.

The government recently allocated US$22 million for the rehabilitation of production lines for cotton recently, including one in Kirkuk.

“The sector wants to support also the private industries, with the availability of raw materials such as yarn,” said Al-Jafer. “The sector depends mainly on protection and regulation of the local production, which at the moment cannot compete with similar products, for example from China.”

“We are happy to support conferences such as this one,” said Al-Jafer, “which are being held for the purpose of encouraging investment in many factories. In other aspects they also raise awareness of the training needs, and they give a livelihood to our very able workforce.”

Sufyan Sulaiman Sedeeq, Acting Director General for Industrial Services, presented a profile of the industrial services and project management sector in Iraq. He said this group of state companies are very active, both as advisory companies and companies which implement turnkey projects in the areas of IT control and engineering.

He said that there is a considerable skills base in Iraq, for design and turnkey project management in several engineering sectors (civil, mechanical, electrical and control systems). The state-owned industrial services sector in Iraq includes six companies and some jewels in the crown of the old regime, such as the General Systems Co (GSC), State Company for Design & Consultation (SIDCCO), State Company for Industrial Design & Construction (SEDAC) and State Company for Information Services (ISC).

ISC is a company specialized in programming, which has 120 customers in Iraq. GSC is the only company in Iraq specialized in control systems in electrical power and in oil & gas, and one of Iraq’s national companies with huge capabilities.

Sedeeq pointed out that the companies under his control also have expertise in solar power projects and public lighting installations. These include Al Ezz State Company and Al Hather State Company, a firm which used to produce chemical materials and which now produces materials required for the work on Iraq’s power stations and oil refineries.

“The vision is simply huge,” said Sedeeq. “We are looking for international companies to support us with new techniques. We are participating with these companies and they can take a role in the management.”

The Summit revealed that the Iraqi government’s investment budget has risen to US$15 billion for 2008, divided amongst the different state industries, For example, the industrial services sector, with its heavy emphasis on research & development, has a 15% share of this fund, which is being used to prime the interest from the international specialist companies and local contractors who make up Iraq’s industrial competitors as well as customers.

Business Intelligence Middle East - bi-me.com - Report from the Iraq Commercial Investment Summit - News, analysis, reports

Continued........

Energy Industry Services, key to Iraq’s Oil & Gas Bonanza

Taha Hussein Ali, Acting Director General for Engineering Services, said that there is high demand for all kinds of products in the non-ferrous engineering industry. For steel bars he said that the current demand is for 3 million tonnes per year, and Iraq has an added advantage with its large reserves of scrap steel, estimated at 15 million tonnes including aluminium and copper scrap.

“There are no other companies in Iraq that produce these items, other than companies in the public sector,” said Ali. “Government demand comes from the ministries of oil and electricity. We cannot meet all their requirements for these two sectors,” he said, adding that demand for spare parts and for some advanced technologies is also high.

The companies under this directorate include Al Sumood State Company for Vehicle Industries, a group that used to produce buses, trucks and agricultural equipment. Al Sumood has design capacity for 1,500 buses per year and 2,500 trucks, although its annual output has never reached these levels. Other plants are producing tippers and platforms for the agri-food sector as well as parts, and one diesel engine plant is currently lying idle.

Ur State Company for Engineering Industries is producing cables, metal foil, and it has a rolling mill, a foundry for enamel ware and anodizing plant. State Company for Heavy Engineering Equipment is dedicated to the oil sector with production capacity of 12,000 tonnes per year. State Company for Mechanical Industries is the only Iraqi company producing tractors and irrigation equipment such as pumps. Diala State Company for Electrical Industries produces power and distribution transformers to international specifications, as well as spark plugs and meters. It has divisions producing steam irons, ceiling fans as well as industrial equipment and materials like optical cable (being produced in a new factory) as well as argon gas and oxygen. Other companies within the engineering services sector are producing wire and cathodic copper from the treatment of brass scrap, sponge iron, spiral welded steel pipes and other steel fabrications used in refineries and Iraq’s construction industries.

At times the Iraq Commercial Investment Summit was presented as a wish list, with one industry after another presenting its investment requirements. We should not forget Iraq’s private sector, which holds many opportunities for partnering as well as full ownership, not only the public sector companies being discussed at the conference.

But considering the scramble for funds of similar privatisation movements in the former Soviet Union, Mexico or Eastern Europe, one can see a lot of wisdom in step-by-step approach of the Iraqi government, which bodes well also for its future partners.

For more information on specific companies or manufacturing plants and their production statistics log on to Government of Iraq - Ministry of Industry and Minerals - Home

The Ministry of Industry and Minerals has also published a guidebook ‘Investing in Iraq’s Industry: State Owned Enterprises’ which is also essential reading on this subject.

Business Intelligence Middle East - bi-me.com - Report from the Iraq Commercial Investment Summit - News, analysis, reports

Emerging Markets Expert Considers Private Equity Investments In Iraq

Iraq already boasts a hedge fund, and now a top emerging markets investor is casting an eye on its private equity potential.
Mark Mobius, who manages emerging markets funds at Templeton Asset Management, is in talks about making p.e. investments in the war-torn country.

“We are looking at private equity in Iraq and are meeting with representatives in Iraq,” he told Reuters. “There are smaller companies in manufacturing, the services and food industries that are keen for investment.”

Still, he warned the Iraqi Stock Exchange remains too illiquid for listed equity investments, which has not stopped Godvig Capital Management’s US$15 billion Babylon Fund. As might be expected, that hedge fund, which a year and a half ago, has been extremely volatile, posting double-digit returns last year and having a roller-coaster 2008.

Emerging Markets Expert Considers Private Equity Investments In Iraq | FINalternatives

Iraq to recover millions from Saddam lawyer's Swiss account

The Federal Supreme Court of Switzerland has ordered the freezing of 300 million dollars deposited in a Swiss bank account held by former Iraqi dictator Saddam Hussein's lawyer, Iraq's Ministry of Finance said Monday. "Iraq has won the ruling of the Federal Supreme Court and will recover over 300 million dollars deposited in the name of Khalaf al-Dlimi, Saddam's personal lawyer," a ministry statement said.

Switzerland will transfer the frozen money, which is legally the property of Iraq, to the Development Fund of Iraq by June 13, the ministry explained.

Dlimi has the right to file an objection to the court ruling with the sanctions commission of the UN Security Council.

The ministry pledged to pursue efforts to recover "stolen" Iraqi funds deposited abroad.

Iraq to recover millions from Saddam lawyer's Swiss account : Middle East World

PM, Emir of Kuwait discuss Iraq's Political Process

Iraqi Prime Minister Nouri al-Maliki met on Monday with Emir of Kuwait Sheikh Sabah al-Ahmad al-Jaber al-Sabah to discuss the political process in Iraq and issues of mutual concern and means to develop bilateral ties, according to an Iraqi cabinet statement.

"Maliki met during the first day of his visit to neighboring Kuwait with Emir Sheikh Sabah, Crown Prince Sheikh Nawaf Jaber al-Ahmad al-Sabah, Prime Minister Sheikh Muhammad Nasser al-Ahmad al-Sabah and tackled with them all issues of interest to both countries and ways to back Iraq's political process," read the statement received by Aswat al-Iraq – Voices of Iraq – (VOI).

Earlier on Monday an official Iraqi government spokesman said Maliki flew to Kuwait to attend the Iraq neighbors conference, which will start on Tuesday.

"Maliki will put forth Iraq's vision for relations it seeks with neighboring countries and practical steps for coexistence with the political situation in Iraq and diplomatic relations with Baghdad," Ali al-Dabbagh told VOI.

"The Iraqi premier is scheduled during his two-day visit to meet Emir of Kuwait Sheikh Sabah to discuss friendly ties to both countries' interests," he said.

Maliki's delegation comprises Foreign Minister Hoshyar Zibari, Minister of State for Security Affairs Shirwan al-Waeli, the prime minister's political and media advisors and correspondents of satellite TV stations.

Dabbagh pointed out that the even would be attended by member states in addition to Egypt, Gulf Cooperation Council (GCC) members, the G-8 countries, member states of the UN, the Arab League and the Organization of Islamic Conference (OIC).

The conference is the third. The first one was held in the Egyptian Red Sea city of Sharm el-Sheikh in May 2007.

The second meeting, convened in Istanbul, Turkey, in early November 2007, witnessed the participation of Iran, Syria, Saudi Arabia, Jordan, Kuwait, Egypt and Bahrain. The participants called for preventing the use of Iraq as a springboard "for terrorism against neighboring countries," expressing support for the Iraqi government's efforts in the fight against "terrorism."

Kuwait and Iraq announced in August 2004 the resumption of their full diplomatic relations, severed for 14 years since the Iraqi forces' invasion of Kuwait.

The United Nations imposed sanctions on Iraq immediately after its invasion of the oil-rich country. A U.S.-led alliance that included several Arab countries expelled Iraqi forces from Kuwait in the 1991 Gulf war.

Aswat Aliraq

Old Iraq Oil Deals "All Canceled," Ministry Spokesman Says

All of the oil deals signed by Saddam Hussein have been "canceled" and the companies must bid for the fields again, the Iraq Oil Ministry spokesman says.

This appears to be a change in policy, as the ministry had said that four deals still carried legal weight and, although they'd have to be brought in line with the new law, would still be honored.

"The old contracts that were signed during Saddam's era are all canceled," Assem Jihad told United Press International in a telephone interview. "If any of these contracts are to be renewed they would have to suit the new requirements of the new oil law that will be approved soon."

Iraq had contracts with ONGC of India, CNPC of China, Pertamina of Indonesia and PetroVietnam that were considered valid and were reportedly under negotiation.

Iraq is relying on Saddam-era oil regulations while the draft new oil law is under debate. The ministry short-listed 35 companies of 120 that applied for pre-qualification in an upcoming bidding round. Jihad would not say which oil and gas fields would be put to tender in the round, but the list is expected to be announced soon.

"All companies will have to internationally compete to offer better bids that would bring more interest to the Iraqi economy. All of these contracts from these companies will be reviewed by the Ministry of Oil," Jihad said. "We, at the Ministry of Oil, assure that no contract yet is signed with any company to invest or develop whatsoever."

Old Iraq oil deals 'canceled' - UPI.com

Update........

KRG PM: 'Progress' on Oil Law with Baghdad

Iraq's Kurdish region leader said talks in Baghdad on key controversial issues, including the oil law, showed "positive … cooperation and progress."

Nechirvan Barzani, prime minister of the Kurdistan Regional Government, said in a statement the central and regional governments met in Baghdad "to discuss the mechanism of relations between our two bodies as partners in the governance of Iraq, the advancement of our political process and other various issues regarding the future of Iraq."

His statement confirmed what United Press International reported first last week -- that the sides were nearing agreement on the draft oil law. It's been stuck as both sides disagree on how much control local governments should have in signing oil deals and to what extent foreign companies should be allowed to invest.

Barzani's statement said a February 2007 version of the law will be moved forward through the political process -- approved by the Council of Ministers and then Parliament -- and will lead to a settlement of key obstacles.

The February version was derailed in part by the Oil Ministry in Baghdad announcing four lists categorizing control over the discovered oil and gas fields and the exploration blocks, which the Kurds opposed.

Over the past year the KRG accelerated its own oil sector, passing a regional oil law and signing dozens of deals with foreign companies, which the Oil Ministry in Baghdad called illegal.

Now, according to Barzani and Iraqi government spokesman Ali al-Dabbagh, who UPI to spoke to last week, a federal oil and gas council will decide those and other matters.

Barzani said when the Council of Ministers OK's the oil law, three related laws -- revenue sharing, re-establishing the Iraqi National Oil Co. and restructuring the Oil Ministry -- would be bundled with it and sent to Parliament.

"Our meetings in Baghdad were marked by a positive feeling of cooperation and progress," he said.

Iraq's Oil Ministry still says the deals are not legitimate and there's no consensus on the oil law.

KRG PM: 'Progress' on oil law with Baghdad - UPI.com

Inaugurating International Bank of Kurdistan in Sulaimani

Othman, the KRG Deputy Minister of Financial Affairs inaugurated today the International Bank of Kurdistan in Sulaimani. The event was attended by a number of businessmen, investors and bankers.

Othman said in an exclusive statement to PUKmedia website that the forementioned bank is a sign to the progress economy in Kurdistan. This bank will have relations and dealings with other International Banks and also will encourage investors to invest in Kurdistan Region.

PUKmedia :: English - Home

Kurdistan and Britain to hold 2 Conferences on Banking

2 Conferences on banking are going to be held in Erbil and London in order to activate the role of the banks and insurance companies. Ways of developing the collaboration and joint plans between Kurdistan Region and Britain in the banking field will also be discussed in the Conferences. In the frame work of the forementioned issue, Mr. Othman Shwani, the KRG’s Minister of Planing received Mr. Hapter Bulter, the Representative of the Austrian Soshen Inface Company which is specialist in banking and insurance sector.

During the meeting they discussed the economic situation in Kurdistan Region and the investment laws issued by the KRG. They decided to hold 2 conferences on banking and insurance, the first one to be held on August in Erbil and the second on October in London. Minister Shwani requested via Mr. Butler the EU to support the KRG in the fields of Banking and insurance, He also called to link Kurdistan Region’s banks with those in Europe.

PUKmedia :: English - Home