* $7 bln of private investment expected in 2012
* Up from $3 bln in 2011
* Plans gradual privatisation of all govt factories
By Aseel Kami
BAGHDAD, Nov 19 Iraqi industry is beginning to
shake off the legacy of years of violence and economic decline,
with private investment in the sector expected to reach as much
as $7 billion this year, up from $3 billion in 2011.
Though political instability and security issues remain,
Adel Karim, the deputy industry minister, said that the country
is reaping the rewards of opening up its financial and
industrial sectors and luring foreign investment and expertise
to revive its dilapidated factories.
"Iraq is still attracting foreign investment despite
political problems and terrorist attacks," Karim told Reuters on
"If things continue as they are now, it is possible to
exceed $7 billion in 2013. And if the political crisis eases,
there will be a jump in investment."
Since the last U.S. troops left in December 2011, Prime
Minister Nuri al-Maliki's Shi'ite-led government has been
politically deadlocked and insurgents have continued to carry
Many of Iraq's 260 factories were either looted in the
aftermath of the U.S. invasion in 2003 or are outdated or
located in restive areas.
Iraq needs investment in every sector, Karim said, and has
an ample enough budget to enable it to rebuild. Were it not for
the unstable political and security climate, investment in
industry might have been double the $7 billion figure.
The country's industrial sector currently contributes a mere
2 percent to the country's gross domestic product (GDP),
according to central bank data. That figure could and should be
higher, Karim said.
"Our contribution (to GDP) should be no less than 20 to 25
percent. I believe, if the political and the security situation
calmed down, it would be possible to reach that figure in three
or four years easily."
Karim said the ultimate goal was the gradual privatisation
of all 260 government factories, which are run by more than 70
state-owned companies. For now, however, the ministry plans to
continue to grant production-sharing agreements to protect
"Our main goal is to hand over our companies to the private
sector, because the private sector is more active ... but our
first step is production-sharing deals," Karim said
The ministry has signed between 40 and 50 production-sharing
contracts with local and foreign companies over the past two
years, the deputy minister said. These have included German,
French and Turkish companies.
It recently signed a $1 billion contract with Turkey's UB
Holding to restore an iron and steel factory that was looted
during the 2003 invasion in the southern province of Basra.
Karim also said the ministry is close to signing contracts
worth a combined $1 billion with three Turkish companies to
restore three cement factories in northern and southern Iraq.
(Editing by David Goodman)