Investment Opportunities in Iraq? For several decades Iraq had an economic framework based mainly on oil production and export. During the last few years, there has been an increase in the oil price of production and export followed by an increase in the GDP of the State. Iraq is recognizing the need for broader economic development to ease the State’s economic dependence on oil production.
Iraq is a strategically located nation with an educated and enterprising population and vast natural wealth. Iraq aims to boost the country’s economic performance through enhancing political stability and security, building and improving infrastructure, promoting investment in non-oil sectors, and supporting the development of the financial sectors.
The Iraqi government has undertaken steps to develop greater investments in the public and private sectors, thus contributing to the economic development that has characterized Iraq in recent years. This promises to further increase thanks to the incentives and strengthening projects planned for all the less developed sectors.
Foreign Direct Investment and Investment Opportunities in Iraq
In the global economy, foreign direct investment (FDI) is a key component in national strategies to achieve sustainable economic and social development. This has long been recognized by OECD countries, which are both the largest providers and largest beneficiaries of FDI worldwide. The experience of OECD countries suggests that there are, broadly speaking, two requirements for attracting high levels of FDI:
- Building a stable environment conducive to business and investment through progressive macro-economic and structural policies, and legal frameworks; and
- having the capacity to compete effectively on world markets for mobile FDI
After decades of war, sanctions, and destruction, Iraq needs significant investment inflows to rebuild its infrastructure, create employment, foster growth, and – in the case of FDI – transfer modern technology and know-how.
With improvements in Iraq’s security and economic stability, the Iraqi government now is to attract and build technical and scientific expertise, develop human resources, create job opportunities, and remove red tape.
Foreign investment is surging. Strategic and financial investors from around the world are seeking ways to invest in Iraq with reliable, experienced, well-connected partners. The Iraq reconstruction opportunity is singular in scale and scope. Iraq possesses what could prove to be the largest oil reserves in the world and it is the only important oil and gas producer in the world. Iraq has the potential and the intention to increase production by a factor of four or more times over the coming decade.
Business Establishment in Iraq
The steps to establish a company in Iraq do not last more than 30 days. First of all, the investor must choose a valid business name to be reserved later at the Baghdad Chamber of Commerce.
The company name must also be reserved for the Federation of Chambers of Commerce. In order to establish business in Iraq it is necessary to obtain, through a specific application, the certificate showing the regular registration of the company at the Companies Registry. For the eventual issuance of the certificate 15 days are required and counted from the day of taking charge of the request.
The investor will then have to create a seal that will be used to certify and protect the company’s most sensitive documents, guaranteeing their inviolability. This is a delicate phase that is completed in 48 hours.The establishment of a company process ends with the regular registration of all employees to the social security systems.
Possible Business Entities to Establish in Iraq
Limited Liability Company is the most common and widespread business entity in Iraq. LLC must be composed of at least two members, a shareholder and a director. At least 51% of the ownership of the company LLC must be Iraqi (the percentage value may vary in relation to the type of sector in which the company intends to operate)
A foreign investor can establish a Joint Stock Company in Iraq with at least four other members and five directors.
In Iraq it is possible to establish Branch Offices of Foreign Corporations in cases where these are necessary to support certain government functions or if they intervene to collaborate with companies that support government functions. A foreign investor who decides to establish a branch office in Iraq has the possibility to own it 100%.
One or more foreign companies may decide to join for a limited period in order to carry out a common project, thus establishing a Joint Venture (JV).In Iraq it is possible to establish a Joint Venture (JV) only if it is composed of at least an LLC or a JSC.
Sectors with Investment Opportunities in Iraq
- Oil and gas sector
- Infrastructure and construction sector
- Healthcare
- Agricultural sector
- The sector of alternative and renewable energies
Oil and Gas
With the cost of oil and gas production in Iraq being among the lowest in the world, and having one of the largest oil reserves in the world, the opportunity in this sector is huge.
Infrastructure and Construction
There are plenty of investment opportunities in Iraq for those looking to invest in construction and infrastructure. The construction and engineering sectors are key to the reconstruction of houses, facilities, and infrastructure in Iraq. Iraq’s National Investment commission is also heavily seeking private investments in various infrastructure and housing projects, creating many opportunities for foreign investment.
Much of Iraq’s transportation infrastructure, constructed during the 1970s and 1980s, is now in dire need of substantial rehabilitation and replacement. Enhancing this infrastructure is crucial for integrating Iraq with other markets across the Middle East and Europe.
The Iraqi Government has initiated plans to develop new railway systems and port facilities, as well as to upgrade existing roads and aviation infrastructure. These initiatives have resulted in increased investment opportunities, facilitating the transfer of knowledge and expertise in areas such as technical infrastructure, operations and management, security, and concessions for various modes of air, land, and sea transportation.
Healthcare
Despite great measure to improve a health sector that provides universal free care, it has yet to recover from decades of conflict and neglect. To improve this situation the country needs tens of thousands of new doctors and more than 100,000 new hospital beds. A number of new contracts have been signed recently with international companies.
Agriculture
The agricultural sector is one of the main economic activities that contribute to a country’s national economy. However, this sector’s growth in Iraq is facing difficulties considering the decline of agricultural capital stock and its reliance on government investment, which is insufficient. Therefore, the government is actively looking for foreign direct investment in the agricultural sector.
Investing in this sector and implementing policies and programs to foster its growth and development would help fight the poverty in rural areas which is 30% twice of that in urban areas, it would also increase food security, meet domestic needs, and contribute to the exports.
Recently the agricultural sector in Iraq has been receiving growing attention led to initiate few projects for the cultivation of cereal crops, fruits, vegetables, and dates.in addition to raising livestock.
Alternative and Renewable Energies
It is not surprise to see investment opportunities in Iraq for the energy sector. Iraq, which has a population of 43 million, is sitting on 17 percent of the Middle East’s proven oil reserves and generates 80 percent of its power using fossil fuels.
At 1.43, the power score of Iraq is lower than the regional average of 1.74 in the Middle East region. Investment in clean energy in Iraq was around $1.8 million in 2022, a decrease of 10% from 2020 ($2 million). Between 2019 and 2022, the highest investment in clean energy was in 2019 at $184 million, while the lowest was in 2022 with $1.8 million.
Now, Iraq is planning to build solar plants and its first green hydrogen project as part of a strategy to tackle power shortages and reduce its carbon footprint. The country’s cabinet has approved a proposal to install 12 gigawatts (GW) of solar power by 2030.
How are we helping?
At Injaz Company we are supporting businesses to invest in Iraq, aligning with the interest from both the private and governmental sectors in Iraq.
