BAGHDAD (Reuters) - Investment in Iraq remains hindered by conflicting regulations and a labyrinthine bureaucracy, officials said on Sunday, as the country awaits a wave of foreign cash needed to help it rebuild.
“Frankly speaking, the value of the investment in Iraq is not that big,” Thamir Ghadhban, head of Iraq’s national investment committee, told Reuters.
“Some provinces have managed to award investment licenses worth billions of dollars ... But what is important here is not only granting licenses, but for investors to actually start executing projects,” he said at an investment conference in Baghdad.
Ghadan said officials were mulling amendments to pre-2003 regulations that conflict with a 2006 investment law, which has hindered allocation of land for investment. They are also seeking to improve cooperation between local and federal powers.
Such steps are part of Iraq’s efforts to ensure infusions of investor cash, needed to rebuild bombed-out buildings, overhaul decaying infrastructure and create jobs, actually materialize.
Major investors are lining up to take part in the oil sector — Iraq has the world’s third-largest oil reserves — and officials are expected to clinch a spate of massive oil and contracts in 2009. But outside oil, investment is coming slowly.
Aqeel al-Khazali, governor of southern Kerbala province, said there was more than $1 billion in stalled investment in his region. “We get these investment projects going, but then they get lost in the bureaucratic labyrinth,” he said.
Investors who seek to break ground in Iraq must get the sign-off from various ministries whose regulations are often not harmonized, there is often confusion about proper procedures and approval of the right paperwork can occur at a glacial pace.
Khazali urged the federal government to give provincial authorities greater autonomy to close investment deals.
Iraq has been hoping for a tide of investment since the U.S.-led invasion in 2003 ended Saddam Hussein’s isolated regime, but it needs foreign cash more than ever after a collapse in oil prices weakened its own spending ability.
Oil exports account for more than 95 percent of Iraqi revenue and officials are revising spending plans after oil plunged to less than $100 a barrel from last summer’s record highs.
“The government cannot be responsible for all investment in Iraq,” Deputy Prime Minister Rafie al-Esawi said.
The government of Prime Minister Nuri al-Maliki is hoping improving security will turn years of talk about major foreign investment into reality.
The security situation is seen as far better than in the peak of sectarian violence in 2006-07, but violence continues especially in restive areas such as northern Nineveh province, and the threat of resurgent violence looms.
That makes investors anxious when it when it comes to hunkering down billions of dollars for long-term deals.
Writing by Missy Ryan; Editing by David Holmes