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While Western firms notch up high-profile deals in Iraq, smaller regional companies from Iran to Turkey are quietly building a broader Iraqi presence by pumping billions of dollars into housing and other projects.

Pledges by companies to invest in Iraq are suddenly taking off as violence falls sharply and the government seeks help to rebuild after years of war, sanctions and bloodshed.

Investors have announced $156.7 billion (Dh575.62bn) worth of projects in Iraq this year, not all of which are likely to bear fruit, Dunia Frontier Consultants said in a report. Much of the spotlight has fallen on mega-deals by Big Oil firms such as Exxon Mobil and BP for oilfields, but high security costs – 26 per cent of total costs according to one estimate – have deterred Westerners from other sectors.

Meanwhile, Iranian investors have been piling into the Shi'ite Muslim tourism business, Turkish companies have cornered the market in the Kurdish north and Gulf companies, some run by Iraqi expatriates, are nailing construction deals.

Middle East companies are perhaps more accustomed to operating in difficult environments, and have an easier time navigating Iraqi red tape and corruption, said analysts.

"It is easier for Gulf and regional companies to operate here because they know the mentality here," said Munther Al Fattal, Director of Investment Promotion at the US agency for international development's Tijara project.

"Security has greatly improved but there still are a lot of impediments such as bureaucracy and lack of transparency," he said.

While most investment projects announced in Iraq never seem to get off the ground, the growing business clout of regional firms is increasingly obvious.

Turkish firms have been investing in projects in the north and plan an $8bn mixed development project in the south, while Iranian firms have catered to tourism supporting Shi'ite pilgrimages to the holy cities of Najaf and Kerbala as well as industrial projects in Basra in the south, said Dunia.

Lebanese investors have opened up a bank and plan to set up a $500m residential city and dairy factory in Diwaniya, while investors from the UAE have been eyeing residential complexes and infrastructure projects.

The UAE has emerged as the top foreign investor in Iraq this year with pledges of $37.7bn, followed by South Korea and the United States, said Dunia.

But South Korea owes its number two spot almost entirely to a planned $20 billion investment in a new industrial city in Anbar province's untapped gas fields, which appears to be little more than a pipedream or at the very least, aspirational.

The US position in the rankings is almost entirely due to Exxon's $25bn contract for the West Qurna oilfield, which has yet to be ratified by the Iraqi cabinet. US investment into Iraq accounts for less than one per cent of the total if government contracts and oil are excluded.

A look at smaller deals offers a more revealing picture of the players with a wider presence in Iraq.

Lebanon tops the list of investment deals below $1bn, followed by South Korea, Iran, the UAE and Turkey, Dunia said.

Once again, South Korea's position in the list is misleading, exaggerated due to a single energy project. "Once the major energy deals are stripped away, it is largely regional players that dominate," said the Dunia report.

Some analysts say the dominance of Middle East players is likely to continue.

"Most of the investment will come from Gulf states and Jordan – with a significant contribution from Iran," said Gavin Jones of Upper Quartile, an Edinburgh-based research firm.

He said repatriation of wealth by Iraqis living in Jordan or the Gulf could account for a sizeable chunk.

Finance Minister Baqer al-Zubaidi reviewed with chairman of the parliament’s finance committee the 2010 general budget, according to a Ministry’s statement.

“The minister received on Monday (Dec. 14) Alaa al-Saadon and discussed with him the 2010 general budget and measures taken by the Ministry to answer the committee’s questions and inquiries,” said the statement received by Aswat al-Iraq news agency.

For her part, the lawmaker praised the Ministry’s cooperation with the committee.

Iraq’s 2010 federal budget reaches $73 billion.

Middle East investment Increasing in Iraq

(Iraq Directory)

While Western companies snapped up big huge energy deals in Iraq, smaller regional companies from Iran and Turkey are working quietly to build a wider existence there, by pumping billions of dollars in housing projects and other projects.

Increased commitments by companies to invest in Iraq suddenly after violence has sharply declined and the government requested to help rebuild after years of war, sanctions and violence.   Dunia Frontier Advisory in a report said, that investors have announced projects worth about 156.7 billion dollars in Iraq this, and is not likely to implement all of them.

The focus of most light on the large deals concluded by the major oil companies like Exxon Mobil Co. & B.B ,to develop oil fields, but high security cost, which can represents 26 % of the total cost, according to one estimate, deter investment in other sectors.

While there is increasing number of Iranian investors in the activity of religious tourism, and Turkish companies dominate the market in the north Kurdish, Gulf companies run by Iraqi expatriates, command some building deals.

Turkish companies invest projects in North and intend to establish a project to develop multi-activities in the south worth eight billion dollars, while Iranian companies dealing with tourism, in support of pilgrims to the holy cities of Najaf and Karbala, and some industrial projects in Basrah in the south.

Lebanese investors opened a bank, and intend to establish residential projects, and a project for dairy products in Diwaniya, worth up to $ 500 million, whiles the Emirati investors looking to establish residential and infrastructure projects.

Office of Dunia Consultative said that Emirates has emerged as the largest foreign investor in Iraq this year, with pledges amounting to $ 37.7 billion followed by South Korea and the United States.