Iraq's parliament passed an investment law on Monday that would allow foreigners to own land for housing projects, and is designed to streamline regulations and applications for foreign investment, lawmakers said.

Iraq hoped for a tide of foreign investment as the sectarian bloodshed triggered by the 2003 US invasion subsided in the last two years, but bureaucracy, red tape and outdated land ownership laws have deterred businessmen.

'This is a huge achievement for everybody, the parliament, the cabinet and the Iraqi people. This will remove many obstacles blocking the investment process in Iraq,' National Investment Commission chairman Sami al-Araji told Reuters.

The investment law does not cover the oil sector, nor hotel construction, but housing is a potentially huge growth industry.

Iraq hopes to build millions of new housing units. The old real estate laws only allowed the lease of land to foreign investors for a limited time.

The new law aims to speed up the process of applying for investment licences and to clarify federal and provincial powers when dealing with investors. It must now be approved by Iraq's presidential council.-Reuters