March 29, 2009 / 12:28 PM / 10 years ago

Iraq investors bemoan red tape and lack of credit

BAGHDAD (Reuters) - Red tape, inconsistent laws, delays in land leases and a dearth of finance are the main impediments to investment in Iraq, business leaders say, not bombs or gunmen.

Speaking on the sidelines of an investment conference in Baghdad late on Saturday, Iraqi businessmen complained they wait too long for permits to be granted, have trouble applying to lease or rent land and are rarely able to borrow to invest.

“The government needs to revolutionize these procedures or just throw them in the bin,” Mohammad Hassoun Taha, who invests in industrial and tourism projects, told Reuters.

“The ground is not ripe for investment in Iraq. The laws and procedures I think belong to First World War times.”

Iraq has been hoping for a tide of investment since the U.S.-led invasion in 2003 ended Saddam Hussein’s isolated regime, but the insurgency and sectarian conflict unleashed by it scared many investors off and hindered local businesses.

With violence down to the lowest levels since the 2003 U.S. invasion, the country is desperate to attract investment to rebuild roads, sewage and electricity systems.

A collapse in oil prices has weakened its budget. Oil exports account for more than 95 percent of Iraqi government revenue.

Taha said he had a religious tourism investment project worth up to $300 million in the pipeline, but it had taken five months of going from official to official in various ministries just to get his license to operate.

Religious tourism is massive in Iraq, with thousands of Shi’ite pilgrims from Iran, Bahrain and elsewhere coming every month to visit the holy shrines and mosques of Najaf, Kerbala and Samarra.

Sami al-Araji, head of the government’s investment committee, told reporters officials were mulling amendments to pre-2003 regulations that conflict with a 2006 investment law, which has badly hindered allocation of land for investment.

“Land allocation can take a long time,” said Ferhad Alaadin, a Kurdish businessman who specializes in housing.

“I have a project to build 1,200 villas and have waited three months to get land allocated, but nothing so far. We can’t waste our time waiting.”

He added that each ministry was failing to follow the new investment law because it conflicts with their own regulations.

Hameed al-Iqabi, who invests in a range of projects from construction to paint manufacturing, said there was virtually no finance from banks available to fund small businesses like his, hampering his ability to expand at a crucial time.

Writing by Tim Cocks; editing by Andrew Roche

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