BAGHDAD (Reuters) - Iraq plans to spend around $680 million in 2011 to renovate its dilapidated factories and start new projects, a senior Industry and Minerals Ministry official said on Monday.
Haifa Hamid, head of the investment department in the ministry, said the economic reform plan was focused mainly on renovating existing factories or establishing new ones under a private-public partnership plan.
“From 2011, we have, altogether 800 billion Iraqi dinars ($684.2 million). Six hundred billion Iraqi dinars is for the rehabilitation. The remainder, about 200 billion Iraqi dinars, is for building new projects,” she told Reuters in an interview.
“We are thinking of cooperating with the private sector. The participation of the public sector should be limited. Later on, even that percentage of participation will be reduced gradually (and) it will be transferred to the private sector.”
Iraq is trying to shake off the legacy of years of violence, sanctions and economic decline by opening up its economy and luring foreign investment and expertise to help it rebuild.
Many of Iraq’s 240 factories were looted in the aftermath of the 2003 U.S. invasion. Some are outdated or located in areas still controlled by Islamist insurgents.
Sectors open for investment range from construction, engineering, petrochemicals and fertilisers to food, drugs and textiles.
Eight foreign firms, including French and Japanese companies, have so far invested in various sectors under Iraq’s Industry and Minerals Ministry, Hamid said.
Earlier this year, the ministry awarded a $200 million contract to France’s Lafarge SA LAFP.PA to rehabilitate Kerbala cement factory, while Japan’s Marubeni Corp (8002.T) and Kawasaki Heavy Industries Ltd (7012.T) won a contract in December 2009 for the Kubaisa cement factory in Anbar province.
“Iraq is a virgin country for investment. We have natural resources, in addition to oil,” Hamid said. “The one who wins is the one who will come now. The security, this is the main risk ... But it should get better.”
While violence in Iraq has dropped from the height of sectarian bloodshed in 2006-2007, foreign investors are wary and explosions and attacks happen daily.
Hamid said investors had also complained about some of the country’s regulation, particularly the investment law, which she said was under review.
“We have to make some amendments to some of the articles to improve the law so that there will be more encouragement to the investors to invest,” she said.
Hamid said the ministry had opted for gradual economic reform by choosing a slow move toward privatization in order to protect government employees from losing their jobs.
Iraq has half a million employees that are seen as a burden on the ministry’s shoulders as it cannot dismiss them because of the law and has to keep paying them salaries.
Hamid said the Finance Ministry had allocated 1.8 trillion Iraqi dinars to the ministry since 2006.
Writing by Aseel Kami; Editing by Alison Williams