The financial losses being made by Iraq’s state owned enterprises are “not acceptable” and the Government is pushing through new legislation to prioritise the growth of the private sector, the Prime Minister’s Chief of Staff told a high-level business conference in Baghdad last week.
Speaking at the Iraq Britain Business Council (IBBC) event in the Iraqi Capital, Dr Mehdi Al Alak said the move was vital for the country.
“We are trying to move away from theories and bring a more practical approach to encourage and grow the private sector. This needs some legislation to be abolished and new laws to be created, but it is now a priority for my government and it cannot be delayed,” explained Mr Alak.
The man charged by the government with helping push through the reforms, Dr Hussein Anbaki, said they were now examining 176 state owned enterprises to see how they could be transferred from state control to private enterprise.
Dr Anbaki, the Chairman of the Prime Minister’s Advisory Committee, told the audience of senior Iraqi and UK business leaders that the government would no longer allow public enterprises to continue to operate if they are losing money.
“As well as making a profit, they must create jobs. To do this there will be certain challenges, for example the lack and regularity of power supply, infrastructure, and bureaucracy. The boards of these organisations should be in charge, but unfortunately we see the ministries in control which makes the whole thing more bureaucratic,” explained Dr Anbaki.
Bishr Baker, the managing partner for E&Y in Jordan and Iraq, said since 2003 publicly-owned companies in Iraq had taken $11 billion of government money but had made no profit.
“Over-employment in these companies ranges from 30% to 50% so you can imagine that when they come to be transferred into private ownership this will cause social issues with unemployment. They will need state benefits and training to find new jobs. It will be very difficult but the government must provide an essential safety net,” added Mr Baker.
Standard Chartered’s acting CEO in Iraq, Mohammed Al Delaimy, explained to the conference the steps needed to change a state-driven economy to the private sector. It was imperative to have the proper legislation in place for both the government and the private institutions – this was to protect the local product and also consumer rights.
Mr Delaimy said a full review of business practices was also necessary. “We need to ask ourselves if we have the right infrastructure. Do we have an adequate pool for skills and talented people? This is helpful for deciding why and when the next industry is privatised. We can also find out what kind of human resources are needed,” he explained.
Later in the day, the former Iraqi Deputy Prime Minister, now Minister for Higher Education, Dr Hussain Al Shahristani, called for British Universities and other international educational institutions to open branches in Iraq.
“We have 651,000 students currently studying for degrees, 42% of which are women. We have 40,000 instructors and teachers. 17.3% of students are aged between 18 and 23 and we’d like to increase this to 25% but unfortunately the lack of capacity of our universities hinders this position,” Dr Shahristani pointed out.
“We have the funds – around $3000 for each student – which can’t compare to Europe or the States but I believe are amongst the highest in the Middle East. We want more connection between universities in the UK and abroad and perhaps they would take into consideration opening branches here in Iraq? Under the former regime this was not possible, but we have now sent a draft law to Parliament to enable this to happen,” he added.
The European Union’s Ambassador to Iraq, Jana Hybaskova, said they had decided to invest in Iraq, not because it was rich in oil and gas, but rich in its people and its population.
Ms Hybaskova said the EU was spending six million Euros to help provide technical support for Iraqi educational establishments. Through UNESCO they were also investing a further 12 million Euros in reforming vocational training. “We want to enhance the skills of the Iraqi people, not only to combat terrorism, but to use computers, mobile phones, to learn about modern technology based on the needs of the private sector.”
The IBBC Executive Chairman, Baroness Nicholson, reaffirmed the organisation’s strong support for developing the educational sector in Iraq. She suggested IBBC member companies could play a big role in developing the country’s educational requirements.
“Iraq needs to expand its colleges and universities and to develop apprenticeship schemes. Maybe that would be the way IBBC companies could help the most? All run training schemes of their own and I believe there is a huge amount they could and would do.”
The Baroness thanked the Iraqi Federation of Chambers of Commerce and the National Investment Commission (NIC) for co-hosting the event. She particularly praised the Baghdad Chamber for their invaluable support. She said the organisation had done “an incredible” job to bring the cream of Iraqi and UK business together with leading politicians for the conference.
A spokesman for the Baghdad Chamber of Commerce said today: “We were determined to make this event very special and we are proud to say that it was. We had two days of incredible constructive debate which will benefit not only Iraqi and international business but the Iraqi people as well.”