|Against a backdrop of difficult political and economic transitions, Iraq is once again opening its doors to foreign business. Decades of war, sanctions and hardship have left the country with a devastated infrastructure, and the government is looking to foreign investment and expertise in its bid to rebuild and expand.
One legacy of the long years of Iraq’s isolation is that information, beyond news journalism, is sparse. Companies wishing to consider investment in Iraq often do not have sufficient information required to make informed decisions. This white paper goes some way towards filling that gap by highlighting the current experiences, hopes and concerns that companies have regarding the business environment in Iraq. It is based on a programme of desk research, a survey of 367 senior executives, and 13 in-depth interviews with business executives, diplomats and investment experts. This research focuses on companies’ perception of doing business in Iraq, and includes the views of companies currently operating in the country, those that plan to invest and those not considering entry into the Iraqi market.
The main findings of the research are highlighted below.
- Investor opinion about Iraq is divided…: Although 49% of respondents judge tha“the ongoing violence means doing business in Iraq will remain too risky for some time”, one-third see Iraq as “a country with significant opportunities for those who are willing to accept risks in the short term” and 28% as “a fledgling democracy with a long-term political and economic future.”
- …but improving: Just over half – 51% – said their perceptions of Iraq as a place to do business had improved in the past two years, compared with 12% who said it had got worse.
- Construction is seen as the most promising sector after oil and gas: 46% of investors see construction and real estate as the country’s single most promising non-hydrocarbons sector, followed by chemicals (25%). Consumer goods tie with healthcare and pharmaceuticals for third place (both 22%), followed by agriculture and agribusiness (20%).
- The largely untapped consumer market is seen as a significant attraction. Unsurprisingly, the most attractive aspect of Iraq, as perceived by these executives, is the country’s oil and gas resources, which are cited by 58% as one of the top three attractions (17% cite other natural resources such as phosphates). However, Iraq’s untapped consumer market is almost as big a draw, selected by 49% of those surveyed, with the chance of achieving first-mover advantage being the third most popular choice.
- Violence, corruption and poor infrastructure are the main business risks: The top three risks are violence, (69%), corruption (45%) and shortages of infrastructure (38%). The next three are credit risk, bureaucracy, and a lack of contract protection.
- Investors on the ground expect security to improve: Almost 70% of existing investors expect the security situation to improve over the next two years, while only 5% think it will get worse. However, 61% of those not currently considering investment expect the situation to stay the same or get worse.
The research also yielded advice for businesses looking to enter the Iraqi market. Please click here for the full report, including survey findings, economic forecast and advice for investors.