Construction and Investment in Iraq

There have been some positive developments last week in the political stalemate in Iraq. A breakthrough in the negotiations between some of the factions allied to Mr. Nouri Al-Maliki, have brought the formation of the government slightly closer to realization (relatively speaking). All now depends on the negations with the other major players, namely the Kurdish coalition, and the Iraqiyah party headed by the previous Prime minster, Mr. Iyad Allawi. The best outcome for Iraq would be a government of national unity where all three major blocks participate. This hopefully would bring stability and prosperity to Iraq, and the whole region, in turn, not to forget the rest of the world. But we may still have to wait for weeks, or probably months before the government is formed.

But unfortunately, the stalemate in the formation of the government and the relative lack of security has diminished the successes achieved by Iraq, in improving the investment climate. Iraq made some significant changes to investment regulations to encourage direct foreign investment, but has not yet reaped the fruits of these changes. If a national unity government is formed, hopefully security should improve, and the investment climate would be ripe for foreign companies to do business in Iraq.

However, and in spite of this, there are many foreign companies that have already set up shop in Iraq, and are actively involved in the country. The majority of these companies are Turkish, UAE, and of course the oil majors and oil service providers. The presence of these companies has given rise to a modest spur of activity in the construction industry. This activity started in the Kurdistan region initially in the north of the country, but is now being seen in the southern provinces, in particular in the holy cities of Karbala and Najaf, and not to forget the oil rich port city of Basra.

UAE property developers/investors have been active in the south where mixed use developments in Karbala are springing up to meet the demand for housing and hotel/serviced apartment accommodation in a city where the annual number of visitors during the holy season of Ashoura reached 18 million recently.

All this has been made possible because of the positive amendments to the investment regulations, and the many advantages to foreign investors as a result. It applies to almost all types of investments. But as far as the construction industry is concerned, it applies to property development, and the manufacture of construction materials. Some of the main benefits for foreign investors include zero corporate tax for a period of ten years, and the freedom to repatriate capital and profits at any time. There are many other important benefits and advantages, and developers and investors who are serious about doing business in Iraq will find these investment regulations to be extremely advantageous.

I mentioned earlier in this blog that Turkish companies are heavily involved in construction in Iraq, and this is particularly true in Kurdistan, where the Turkish construction and infra-structure companies are not only well experienced, but they are also very well placed to provide heavy competition to western contractors. They will also have had the added benefit of having entered the market way before their western counterparts, and thus would have established themselves in the country. On the flip side, the fact that the country's infra-structure requires complete revamping, in a nation of 28 million people, the demand for experienced companies will probably remain high.

Blair Anderson Ltd can be contacted on the following email:

2 Responses to Construction and Investment in Iraq

  1. [...] Read more on Kurdistan investment in Stewart Blair’s blog: Construction and Investment in Iraq. [...]

  2. Micro cap stock picks 2nd November 2010 at 01:13 #

    Was looking for some investment help and came across your blog. Great post!


  1. Kurdistan Development to Continue Unabated | Iraq Business News - 11th October 2010

    [...] Read more on Kurdistan investment in Stewart Blair’s blog: Construction and Investment in Iraq. [...]