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The Warsaw Voice » National Voice » September 2, 2011
Special National Section: Iraq in Poland
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Why Invest In Iraq
September 2, 2011   
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By Saad J. Kindeel, Iraq’s ambassador to Poland

As the Arab Spring sweeps through many of the countries neighboring Iraq, demanding democracy and freedom, Iraq is ahead of the game—it went through such an experience eight years ago.

Those Arab countries that have seen their regime change are seeking Iraq’s experience—Iraq has a new constitution accepted through a national referendum and has held three parliamentary elections and two municipal elections.

Life in Iraq is returning to normal with millions of Iraqis seeking a new quality of life, the freedom to trade, to work and to travel. Iraq’s booming economic potential, when combined with the substantial improvement in the security situation, creates huge opportunities for trade and investment on an unprecedented scale. Investors like builders, suppliers, transporters, developers, producers, service providers, manufacturers and financiers will all find unique opportunities to advance their business in a reviving economy with unprecedented returns.

Iraq’s economy is poised for a dramatic change. Rapid economic development in Iraq is emerging. With inflation under control at 5%, Iraq is quickly establishing a strong foundation for a major economic revival. The country is heading for a surge of reconstruction and investment efforts that will produce a business boom lasting many decades. The entire Iraqi economy is being rebuilt. All sectors are booming, from power, transport, and communication, to water utilities, health, education and residential housing, to oil and gas infrastructure, agriculture and tourism.

The IMF forecasts that GDP will grow a staggering 11.5 percent in 2011, which is among the highest figures in the world. The current GDP of $82 billion is poised to grow fourfold in the next decade to $300 billion. Government spending on infrastructure is expected to amount to about $200 billion in the next five years. Experts estimate the volume of Iraq’s economy will be between $500 billion and $1 trillion in 10 to 15 years. Private investment, currently in its infancy, is expected to exceed government spending in the next 10 years. The focus is on the construction sector, which has a target of building 2 million housing units in the next five years.

Iraq’s business boom derives its power from six resources: oil, people, history, strategic location, agriculture and religious tourism. Each one of these resources, on its own, is enough to turn Iraq into a wealthy nation. Oil, which accounts for 80 percent of GDP, is the only utilized resource. The potential of agriculture, with Iraq’s fertile lands between the Tigris and Euphrates rivers, can provide the nation with income comparable to that from oil. The potential of religious tourism exceeds that of oil. The holy cities of Najaf and Karbala currently receive one million foreign visitors, while they lack hotels and modern residential facilities.

Five million people a year from Muslim countries want to visit these holy places, more than double the number of visitors Mecca receives annually.

Iraq’s location at the head of the Gulf provides the country with strategic economic power to re-establish an ancient trade link between East and West. A modern rail system linking the Gulf to Europe via Turkey will provide a faster, safer and cheaper alternative to the Suez Canal.

Turkey and Iran are taking advantage of their geographic proximity, boosting their trade balance with Iraq to $12 billion and $15 billion a year respectively. The United States and the United Kingdom, which have a military presence in Iraq, are maintaining a trade balance of $7 billion and $5 billion respectively. France is vigorously active in boosting business with Iraq to $5 billion. China, Japan and South Korea have established a strong foothold in Iraq with long-term concessionary contracts for five years. Other European countries are also moving in.

The recommended entry strategy for smaller investors to compete with the giants is through a local partner who can help navigate the legal and regulatory system in Iraq. Local partners can also provide access to vital market knowledge, provide labor at competitive rates, utilize pre-established sales networks, maintain business relationships critical for business success as well as provide easy solutions to any security risks through their knowledge of the area and the locals.
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