Thread: Archive News - Iraqi Dinar Think Tank - 08/09/09 - 09/01/10

Is Iraq ready for American investors?
It has big needs, business savvy, and plenty of opportunity, say optimists. But critics are wary

An Iraqi woman places a call to a broker on the other side of a glass screen at the Baghdad Stock Exchange on October 18, 2009. In the run-up to a major investment conference in Washington, traders at Iraq's stock exchange pitched their ideas for where foreigners should put their money for the best return — banks and hotels. But should American investors be heading for Iraq?

Washington
At the end of her speech to more than a thousand US and Iraqi businesspeople packed in a hotel ballroom, Secretary of State Hillary Rodham Clinton threw an American spin on an Arab proverb: “Dawn does not come twice to wake a man – or a woman.”
Her point? It’s time to invest in Iraq.

It sounds crazy. Though the violence has ebbed, terrorists still make their presence felt with deadly attacks. Challenges – from dividing oil revenues to the future of the northern city of Kirkuk – threaten to split the country. Even if Iraq hangs together, it faces a daunting to-do list of reforms before it becomes a place many foreign businesses would set foot in.

Yet, like Secretary Clinton, some consultants and more than a few US businesspeople are making the case for Iraq: This uncertain period is precisely when foreign companies can reap the biggest gains.

Bob Flavell had heard the same hype, but he wanted hard data about sales prospects for his company, Base 1 Welding Supply. When he asked an Iraqi trade official for it, Mr. Flavell was floored. “The numbers he was talking about, just for our product line, would exceed all of what California exported all of last year to Iraq,” Flavell says. “Those are big numbers.”

Iraq, to put it mildly, needs everything: more than 2 million housing units, half a million hospital beds, seemingly endless technology and know-how for an escalating oil and gas extraction industry, the rebuilding of the nation’s once-robust education system from top to bottom.
Iraq optimists cite four reasons why it’s a great time to invest:

1. A ground-floor opportunity

Coupled with a population that is both highly educated for the region and sitting atop the world’s third-largest reserve of oil, Iraq is “one of the last great ground-floor opportunities in the world,” says Paul Brinkley, an undersecretary of defense and the director of the Task Force for Business and Stability Operations in Iraq.

After years of economic stagnation brought on by international sanctions, Iraqi appetite for new consumer goods is boundless, says Khalil Urfali, an Iraqi-American whose Atlanta-based firm exports personal-hygiene products. “What they need, you cannot imagine.”

“I am going into a market where I already have 18 competitors. But the market is so huge and it’s seen absolutely nothing” due to sanctions, he says. “The issue is not if it’s going to sell,” just how long.

2. Improving business climate

When Hussein Qaragholi first traveled to Iraq in 2003 for the Abu Dhabi Islamic Bank, he put an Iraqi bank through a simple test. He asked a bank teller what she would do if someone wanted to deposit a large amount of cash. “Do you ask them where this money comes from?” Mr. Qaragholi asked. Her reply? “ ‘Sir, that would be very rude.’ ”

But recently, after he contacted a potential Iraqi banking partner, Qaragholi said it sent his bank a questionnaire about its anti-money-laundering practices.

Other developments are brewing. One is a “one stop shop,” promised by Iraq’s National Investment Congress. The shop will provide a single portal for businesses interested in opportunities in Iraq, explaining regulations and procedures for all sectors of the economy. Legislatively, a package of tax breaks, including the elimination of fees on imports for three years and an easing of restrictions on land ownership, are already in place.

As the legal infrastructure improves and the political situation remains largely stable, groups are more likely to offer political risk insurance. The lack of such insurance is a key barrier to investing in Iraq, said several US ****utives who gathered in Washington, D.C., in October to attend the US-Iraq Business Investment Conference, where Clinton spoke. The availability of political risk insurance could push American investors to take the plunge – even if they don’t eventually opt for that coverage.

“Insurance might get that investor or lender interested and on the plane … and then maybe they get into a project and there’s no need for OPIC,” says John Moran of the Overseas Private Investment Corp., an independent federal agency that offers the coverage.

3. Native entrepreneurial spirit

American businesses may find glimmers of hope by looking at the entrepreneurial behavior of Iraqis themselves, says Allen Collinsworth, general manager of Fara Resources, a construction company based in Istanbul, Turkey, that has worked on several projects in Iraq.

“What we have to look for are those nascent signals of democracy and grass- roots private sector development,” he says. “The guy who goes out there and starts a fish farm off the Euphrates – I’ve seen it. The farmers who get together and say: ‘Let’s get our fields together and achieve some economy of scale’ – that’s going on. The women who are entering into the workforce. These are the kinds of trends that are too often understated.”

Iraq doesn’t have to be perfect to attract foreign investment. “I don’t think we’re trying for a democratic example of an ‘A-plus’; a ‘C-minus’ or a ‘D-plus’ would be fantastic,” says Mr. Collinsworth. “We need something where everyone sort of goes and says, ‘Well, it’s not as good as we hoped it would be, but we can live with this.’”

4. Foreign rivals

While Iraq may be a great ground-floor opportunity today, a flock of foreign companies are looking at the same numbers that US firms are.

During a visit to Iraq in 2008, Skip Schaum, CEO of Newport Global Technologies, was dining at Baghdad’s Palestine Hotel near a table of seven Chinese businessmen. “All were under 40; all spoke perfect Arabic, English, and Mandarin,” he says. China’s American competition “does not sound like that.”

Beyond cultural skill, many foreign companies have longstanding connections with Iraq, making them more attuned than Americans to the nation’s business rhythms.

“There are lots of people in the surrounding countries and in Europe who understand the requirements of that country and who have worked there or have at least more of a realistic view into the country’s requirements than American companies do,” Mr. Urfali says.

The critics’ rejoinder

But timing is key, Iraq skeptics point out. It’s no use getting in on the ground floor if the superstructure is going to crumble. The immediate danger: an Afghanistan-style debacle during the national elections tentatively scheduled for January. While violence has ebbed to levels unseen since 2003, a conflagration surrounding the elections or the election law would shatter investors’ confidence.

In the longer term, the passage of a law governing how Iraq will distribute its energy wealth and political compromises regarding questions of Kurdish autonomy for Kurds and the future of the city of Kirkuk are all pressing concerns.

Then there are business reforms. Transparency International ranked Iraq 176 in its annual Corruption Perceptions Index, on par with Sudan. Only Burma (Myanmar), Afghanistan, and Somalia placed lower. While Iraq has begun the long road to joining the World Trade Organization, the current legal and regulatory frameworks in place “too often remain restrictive, non-transparent, and out of line with international best practices and the principles of the rule of law,” according to the US Agency for International Development’s 2009 economic progress report on Iraq.

A Brookings Institution report was even more pointed: “Iraqi reformers, for all their heroic efforts, have been unable to send credible signals that Iraq’s investment climate is being improved,” wrote nonresident senior fellow Raji Desai.

Until government ministries stop treating private corporations as subservient to the bureaucracy, streamline investment laws, and strengthen unemployment protection, the country will remain more problematic than it’s worth for investors, Mr. Desai argues. “Without a functioning system of unemployment insurance, allowing foreign investors to buy companies and fire workers would be political suicide for any Iraqi government,” he writes.

Companies, especially large ones, also worry about Iraq’s labyrinthine and inexperienced judicial system.

These problems don’t deter the optimists. After six years of Iraqi and US sacrifice to stabilize the nation, the prospect that non-US nations might take the best advantage of Iraq’s potential is wounding to Americans and Iraqis alike.

“After the United States came to liberate Iraq and after Iraqis have given the ultimate price to get rid of the dictatorship, it’s just fair that we build the relationship economically,” says Namir Jumaili, marketing director of Al Juthoor, a construction firm in Anbar Province that has worked with the US military. “We had the military bang. We had the security bang. Now we need the economic bang.”

It may be coming. Newport Global got a contract in July to build a sports complex in Basra. “We’re already talking about other sports facilities and the fact that we’re there gives us a leg up,” Mr. Schaum says. “This isn’t the last stadium that will ever be built in Iraq, that’s for sure.”

http://www.csmonitor.com/Money/2009/...ican-investors

Dated December 16th - probably written a few weeks ago.

Finance Committee: vote on the 2010 budget next week

Announced the Finance Committee in the House of Representatives next week will vote on the 2010 budget, after making several amendments to the bill. Alaa revealed Chairperson of the Committee on Saadoun discuss a number of proposals for the amendment of the ration card system

Coverage to low-income and exclusive transfer of the differences in the amounts allocated to improve the living standards for this category.

Saadoun said in a statement to the "morning": that the Committee discussed with the Finance Minister Baqir Jabr Al-Zubaidi recent amendments to the budget as approved in the parliament and examine a number of proposals in this regard. And confirmed the intention of parliament to vote on the state budget for the year 2010 at a meeting on Saturday, 26 this month, the presence of the Minister of Finance and officials in the ministry, after the completion of amendments relating to side service and seek to transfer the investment budget to the provincial councils, which include the implementation of several projects in the areas of education and health , housing, employment and social affairs, indicating that this measure will encourage the governorates to move the economy and provide jobs for the unemployed and the establishment of provincial oversight functions and accountability.

Referred to the House of Representatives recently completed, read the draft general budget for the year 2010 amounting to more than 83 trillion dinars, of which 23 trillion dinars allocated for the expenses of the investment projects, and 60 trillion dinars for operating expenses, by a financial deficit of more than 21 trillion dinars. According Chairperson, Finance Committee representative "that received assurances from the Minister of Finance requiring the Bank of Iraq to provide the salaries of employees public sector companies without any delay guaranteed by the Ministry in accordance with the paragraphs of the budget, which indicates that public sector companies borrow from banks to pay salaries.

She said the allocations of ministries and the security services in the next year budget amounted to 13 trillion dinars, of which more than six trillion to the Ministry of Interior and five trillion to the Ministry of Defense and about two trillion to the National Security Council and the General Intelligence trillion, up from last year.

As a member of the Finance Committee called on the House of Representatives Atrushi Sami parliament to speed up processing, the controversial paragraphs in the law of 2010 budget and approved by the end of the month to serve public interests, called on the bloc the United Iraqi Alliance Sheikh Humaid Molh support development projects within budget next year.

http://translate.googleusercontent.c...m5iXQ9MX_EbJEw

CBI dollar sales down by 13% this week

The Central Bank of Iraq (CBI) dollar sales this week went down by 13% to reach $751.218 million, compared to $814.517 million last week.

“The demand hit $51.760 million in cash this week compared to last week’s $90.800 million, covered at exchange rate of 1,183 Iraqi dinars per dollar, and $699.458 million in foreign transfers outside the country compared to $723.717 million, covered at an exchange rate of 1,173 Iraqi dinars per dollar,” according to a CBI news bulletin received by Aswat al-Iraq news agency.

None of the banks that participated in this week’s session offered to sell dollars.

http://en.aswataliraq.info/?p=123714

PM calls for partnership between public, private economic sectors

Iraqi Prime Minister Nouri al-Maliki said on Saturday that cooperation and partnership between the public and private sectors are an important step to improve Iraq’s economy, warning that polarizing the two sectors will get the country back to “zero point.”

“The public sector will not develop without cooperation and partnership with the private sector,” al-Maliki said in a speech at the 1st constituent conference of the Iraqi National Business Council.

He said that the state should work on achieving this coordination between the two sectors.

“The conference is an announcement to start this partnership on the way to changing the country’s economic policy,” al-Maliki said.
He said that the Iraqi National Business Council is a big step on the right direction.

http://en.aswataliraq.info/?p=123754

Oil denies knowledge of any talks between the local government in Basra and foreign oil companies

Oil Ministry denied knowledge of any talks between the local government in the province of Basra and foreign oil companies.

The press spokesman of the Ministry of Oil Assem Jihad, it was not aware of officials in the ministry of any discussions between the Company (Chevron) and those responsible for the investment in the province of Basra.

The Jihad that any negotiations or discussions or communications related to the oil sector should be through the ministry in particular, can not conclude agreements without the knowledge of the ministry.

He added that the oil companies who are looking for opportunities to invest in the Iraqi oil sector, by direct contact with the ministry and the status of negotiations with officials.

Meanwhile, the President of the Investment Authority in Basra Haider Fadhil from talks with the company (Chevron America) giant.

Fadel said that the negotiations were held with high-ranking delegation from the company addressed to the American oil investment opportunities in the oil field is located in the geographical boundaries of the city of Basra.

http://en.aswataliraq.info/?p=123774

Iraq earns $4.205bn in oil revenues in November 2009

Iraq’s revenues from oil exports during the past month have reached $4.205 billion U.S. dollars, a spokesperson for the Oil Ministry said on Saturday.

“In November 2009, Iraq exported 57 million barrels of crude oil at an average price of $73.77 U.S. dollars a barrel,” Aasem Jihad told Aswat al-Iraq news agency.

The purchasers included 29 companies from Asia, the United States and Europe.

“A total of 44.9 million barrels were exported through the southern ports, making $3.290 billion in proceeds for the South Oil Company.

The North Oil Company has earned $911 million by exporting 12.1 million barrels of oil,” Jihad added.

http://en.aswataliraq.info/?p=123772

Oil Ministry to initialize oil deals Tomorrow

Iraqi Oil Ministry will initialize service contracts with companies that won deals according to round - 2 of oil permissions.

“After the contracts are initialized, they will be sent to the Council of Ministers for final approval,” Assim Jihad, the Ministry’s spokesperson, told Aswat al-Iraq news agency on Saturday.

Iraq expects to increase its oil production to more than 12 million barrels per day (bpd) within six years.

http://en.aswataliraq.info/?p=123774

Al-Maliki: US withdrawal from Iraq to take place on time

Iraqi Prime Minister Nuri al-Maliki said in an interview published by an Egyptian newspaper Saturday that the United States would withdraw its troops from Iraq in 2011 as agreed.

Al-Maliki told al-Ahram daily that the recent serious of attacks, including one set of car bombs that killed over 130 people, were being e.xecuted by people who opposed the country's fledgling political process.

Al-Maliki said there was a move away from sectarianism and towards national politics. Iraq is set to hold elections in March.

He gave the interview ahead of a two-day visit to Cairo, set to begin Sunday, saying he wanted a 'new era of relations' with Egypt.

The two countries are to sign a serious of agreements, including in fields of economic cooperation. Al-Maliki said he was looking for more Egyptian private sector activity in Iraq, including direct investment.

It will be al-Maliki's second visit to the most populous Arab nation since he took office in 2006.

http://pukmedia.com/english/index.ph...15171&Itemid=1

Economic and social disparities between Iraq and the rest of the Gulf Cooperation Council

For as long as Iraq suffered a failure of the system's economic calendar is planned repair and modernization of institutions which have contributed to the absence of development thinking in most of the projects, despite the attempts of the variety of expert economists continued economic fundamentals are primitive in its economy, making it lags behind the world economy.

For as long as Iraq geographically classified as one of the Arab Gulf States, as a result of his leadership of the Arabian Gulf through the perpetrator of a single maritime "port of Faw," but all the economic criteria and economic-political behavior has experienced successive governments of Iraq shortly after independence from the British Mandate, and shows clearly the extent of economic and social disparities between Iraq and the rest of the Gulf Cooperation Council.

Iraq is the Arab country most distinguished in the Gulf region because of its potential economic nature, such as climate, agricultural land, mineral wealth in the world provides an important second largest reserves of crude oil in the world, and is ranked third in the production of sulfur, in addition to the wealth of phosphates and red mercury ...

But at least the state investment between the countries of the Arabian Gulf, this is due to the way investment deal which I have acted their governments, culminated in the state treasury resources towards the development of infrastructure during the seventies, followed by a period of orientation towards military spending, which lasted until the end of the Kuwait war "Desert Storm" or the U.S. "the mother of all battles" Iraqis.

While characterized by the GCC countries to go all the free-market-based capitalist economy standards, which formed the spring board towards the growing investment structures of all global markets, despite the possibility of Iraq's economic and human than all the GCC countries individually, but the minimum investment, developmentally and less together for the rate of per capita income despite its dependence on Gulf standards socialist economy.

Iraq has passed a unique experience in the Middle East and preceded the Egyptian experience in the seventies of the twentieth century that the great similarities between the two is sure to be noted specialists in the field of economics that the similarity in the other direction we see that Iraq is a Gulf state is very different from its neighbors bays in the form and pattern of the economy, which is characterized by the numerous possibilities in Iraq without the other Arab states.

The main characteristic of the economy of Iraq before the occupation is a feature similar to a closed socialist economy in most sectors. And passed this period the first two phases of a clear second in the seventies and eighties in the explosive development and character as a result the high returns from high crude oil price the main supplier to Iraq, especially after the nationalization process in the early seventies, a pattern that is purely socialist.

The second stage is the stage of the end of Iran-Iraq war and the nineties until the fall of Baghdad and were characterized by the process of transition to capitalism and the establishment of the most important forms Baghdad market securities, which had a major role in the daring operation to shift in 1992 was initially modest and slow-moving and very cautious in legislation or applications as a result the economic siege and the ongoing U.S. war since 1991, after the events of Kuwait, but it was a good pace and on a sound basis in mostly compared with the circumstances that.

Financial markets are a tool of free economy Home for the purpose of establishing financial institutions for special projects of any economy needs whatever the level of economic phase that passes when the country, which translates to the establishment of private companies Oz contributor to the general people in society according to his freedom of movement of the individual property to capital in general.

In Iraq, a modest beginning in a limited number of companies in the promising market and has already been the establishment of several private banks (Bank of Baghdad, Iraqi Middle East Bank) and investment companies, finance and insurance, a main tributary to finance the economic development of capitalism and the subsequent stages of the market economy and the new global economy. etc. ..

Passed the Iraqi economy in a difficult and very sensitive as a result of occupation, which was characterized in the absence of legislation careless according to actual needs and possibilities of the Iraqi economy collapsed as a result of the long wars over the past two decades.

Suffered as the economic bloc, the Iraqi people from the absence of sound economic planning, Iraq after the occupation pursued free-market approach in full its aspects without the negative role of the state censor on the economy such as laws and systems of financial and regulatory proper purpose of protecting the investment risks that might face in investing, especially as the security situation deteriorating in the Iraq and the absence of horizon of stability pay a lot of capital and expertise to migration.

http://translate.googleusercontent.c...ZyCF2zksYpi9_Q

Maliki: The opportunity is favorable for the care of the private sector and Iraqi businessmen

Prime Minister Nuri al-Maliki "The opportunity is favorable for the care of the private sector and businessmen of Iraqis under economic openness and the existence of laws on the protection of capital and investors."

Maliki said in his speech during the founding conference for the Iraqi National Business Council that "the development of the economy and not the responsibility of the state alone but for the private sector played an important role in this framework and to get rid of the central iron in the performance of the economic process we seek to create opportunities for cooperation between the public and private sectors in various areas".

And said, "Our country has great wealth Ouija to invest in developing the economy and if capital concerns in the past, today has become a guarantee of job creation, adding that investors were buying on Iraq in light of security and stability has been achieved."

He said Maliki, "We have heard that the Iraqi businessmen were calling for its care and that the right and we must stabilize the situation with the security that we have it."

Asked participants to find out the real reasons that led to the migration of economic efficiencies and protect Almanantoj local and activating the principle of free economy and the development of effective standards for the quality control system.

http://translate.googleusercontent.c...LdiNRA1O4zPRUw