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Northern region looks to entice investors away from
bureaucratic Baghdad.
Differences between the way Iraqi Kurdistan and the
rest of Iraq promotes investment is prompting
businesses to snub Baghdad and turn to the northern
region of the country.
In a sign of the apparent preference for the north,
the Iraqi-American Chamber of Commerce and Industry
is holding a conference in October in Iraqi
Kurdistan for 240 firms interested in investing
there.
Analysts say that there are a number of reasons why
firms are presently turning their backs on the Iraqi
capital.
The Sulaimaniyah administration of Iraqi Kurdistan
has an Investment Promotion Board that guides and
facilitates projects for investors. But in Baghdad,
there is no central agency to which investors can
turn.
Furthermore, Iraqi Kurdistan's investment law was
drawn up following an examination of similar laws in
23 Arab and foreign countries, said Shilan Khanaqa,
media director of the Investment Promotion Board.
The law, implemented in March 2004, exempts
companies and contractors from paying customs for
five years and also provides free land for business
projects.
In Baghdad, the government still relies on laws
established by the Coalition Provisional Authority,
CPA. The Iraqi investment rules allow for discounts
on customs taxes for five years but the amount
depends on the size and timeframe of each investment
project.
Foreign investors also can't own property, permitted
only long-term leases of up to 40 years, according
to one of the orders issued by the CPA.
"Nobody abides by the investment law, including
Iraqi ministers, because it was established by the
CPA," said Raad Ommar, director of the
Iraqi-American Chamber of Commerce and Industry.
"The most important point is there is no agency
dedicated to welcoming and guiding companies.
"There needs to be radical changes in the Iraqi
investment law so that it supports investors."
The relative stability of Iraqi Kurdistan also plays
a role in making the region attractive to investors,
but company executives say the way they are treated
is a very significant factor when they make
investment decisions.
Nassir al-Azzawi, CEO of the Ard al-Afrah tourist
and investment company, said the Iraqi Kurdistan
investment law is more attractive than the Iraqi law
because it guarantees maximum rights for investors.
In Iraqi Kurdistan, he was able to get a
100,000-square-metre plot of land for a tourism
project within three days of applying.
In Baghdad, it seems that bureaucracy works against
investors, al-Azzawi said. For more than a year, he
has been waiting for a court to decide on his
request to evacuate squatters from his land in
Falluja so he can develop a tourist project there.
"So far, I didn't get anything despite the fact that
I spent one billion Iraqi dinars on this project
during the rule of the former regime," he said.
In Iraqi Kurdistan, there is a standard procedure
for all business projects, which is entirely handled
by the Investment Promotion Board, said Abbas Noori,
director of economic and technical evaluation for
the board. First a decree is issued for a company in
relation to its project, then an investment license
is issued. A plot of land is subsequently provided
and, finally, an investment contract is signed.
But in Baghdad, the procedures depend on the terms
worked out between the investor and the government
ministry with which the deal was made, said Lamiya
Sa'ad Abdullah, a lawyer for a Baghdad real estate
and contracting company.
"Iraq is in need of investment experience, not
investment funding," Abdullah said.
Not all foreign companies are even registered with
the trade ministry, partly for fear of having
information revealed to insurgents and also to avoid
paying taxes. As a result, there are no statistics
available to calculate total foreign investment in
the rest of Iraq, Baghdad Chamber of Commerce member
Tariq Shakir Ahmed said.
In Iraqi Kurdistan, the government has signed 70
contracts with foreign companies and is currently
working on implementing 25 projects worth 75 million
dollars. And many of the companies due to attend the
investment conference in Iraqi Kurdistan later this
year have indicated that they would prefer to invest
there than other parts of Iraq because of the
bureaucracy.
And while Iraqi Kurdistan is open to foreign
investors, the rest of Iraq is still cautious and
even suspicious of it. Whenever Baghdad government
officials talk about being open to foreign
investment, some Iraqis respond by accusing them of
selling the country out.
Nameer Hussein al-Rubaie is an IWPR trainee in
Sulaimaniyah.
www.iwpr.net
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