Sunday 22 April 2018

Iraq to keep on pursuing economic reforms

Baghdad, April 26, 2010

Iraq's foreign investment body believes that no matter who ends up leading the next government after an inconclusive election, economic reforms to create a diversified free-market economy will not be abandoned, said its chief.

"All of the political parties want to develop this country and create a multi-faceted economy," Sami Al Araji, chairman of Iraq's National Investment Commission, told Reuters at his office in Baghdad.

The war-damaged country has entered a period of political uncertainty following a March 7 election that produced no outright winner. Protracted talks on forming a government after the last national election in December 2005 helped set the stage for a bloody sectarian conflict.

"Everyone wants to use our oil to create a diversified economy," Al Araji added, "not just a one-way ticket economy."

Iraq has the world's third-largest oil reserves, and with a raft of recent deals Baghdad struck with global oil companies it hopes to quadruple its crude output capacity to Saudi levels of around 12 million barrels per day.

The deals would generate the cash Iraq needs to rebuild after years of war, sanctions and under-investment. But the country also needs to diversify its economy and create jobs.

Araji said a key to attracting investment was the creation of a "one-stop shop" where investors could cut through the reams of red tape needed to do business in Iraq.

Araji said the government wants a system where investors can go to one office "sit and read a newspaper for a while" and receive their paperwork promptly.

The problem is while the government is united on the need to facilitate foreign investment, some ministries have their own rules and guidelines. This relic of decades of a centrally planned economy has proven difficult to overhaul, Araji said.

"It is not easy to penetrate that centrally guided way of thinking," he said. "Some bureaucrats live in their own world and don't want to give up their power."

Iraq came in at No 153 out of 183 countries in the World Bank's "Doing Business 2010" report, which measures business regulations and their enforcement worldwide. When it came to starting a business, Iraq was in 175th place.

Araji said the commission has identified 750 infrastructure projects for Iraq worth $600 billion -- most but not all are included in a five-year economic plan approved by the government -- but he acknowledged not all of them would necessarily happen.

"How many projects we have will depend on how clever and how open we are," he said.

That wish list of projects ranges from power generation to roads, bridges, hospitals, water treatment and housing.

Centrally guided mindset

Foreign investors have complained Iraq's bureaucracy is opaque and difficult to navigate. This does not help a country in desperate need of massive infrastructure investments after the US-led invasion to oust Saddam Hussein in 2003 and the wholesale sectarian slaughter that followed.

Araji said the "one-stop shop" plan was moving slower than he wanted, but the government needs the bureaucrats on its side.

"This process will take more than this year to complete," he said. "But in 2010 we'll see our performance improve greatly."

The investment commission's head said the government aims to focus on "production sharing" for Iraq's some 200 state-owned enterprises -- many of which are decrepit after nearly 20 years of sanctions and strife, and employ too many people.

Under this model, these companies will not be sold but foreign investors will be asked to come in and restructure and operate them, then share the profits with the government.

The ministry of industry and minerals plans to sign such an deal with French cement firm Lafarge SA to refurbish and run a cement plant in the southern province of Kerbala.

"I think the majority of our state-owned enterprises can be salvaged in this way," Araji said. – Reuters

Tags: World Bank | investment | Iraq | Baghdad | economic reforms |

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