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Data Collection Survey on Business Environment in the Republic of Iraq Final Report

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Data Collection Survey on Business Environment in the Republic of Iraq Final Report Data Collection Survey on Business Environment in the Republic of Iraq Final Report July 2013 Japan International Cooperation Agency (JICA) UNICO International Corporation MEE Japan Economic Research Institute Inc. JR 13-021 Data Collection Survey on Business Environment in the Republic of Iraq Final Report July 2013 Japan International Cooperation Agency (JICA) UNICO International Corporation Japan Economic Research Institute Inc. Contents Page Chapter 1 Introduction 1.1 Framework of Survey........................................................................................................... 1-1 1.1.1 Background..................................................................................................................... 1-1 1.1.2 Objective and expected outcome .................................................................................... 1-2 1.1.3 Surveyed areas................................................................................................................ 1-3 1.1.4 Activities and schedule...................................................................................................1-4 1.1.5 Survey team .................................................................................................................... 1-6 1.2 Survey Methodology............................................................................................................ 1-6 1.2.1 PDCA ............................................................................................................................. 1-7 1.2.2 Field survey with multi-viewpoints................................................................................ 1-7 1.2.3 Approach to realities....................................................................................................... 1-8 1.3 Structure of Report............................................................................................................... 1-9 Chapter 2 Summary of Survey Results 2.1 Schedule and Process of Survey........................................................................................... 2-1 2.2 Results of Field Survey ........................................................................................................ 2-1 2.2.1 Survey in Iraq ................................................................................................................. 2-2 2.2.2 Survey in neighboring countries..................................................................................... 2-3 2.3 Workshops............................................................................................................................ 2-4 2.3.1 Interim Workshop in Istanbul ......................................................................................... 2-4 2.3.2 Interim Workshop in Tokyo ............................................................................................ 2-6 2.4 Identification of Key Issues.................................................................................................. 2-7 Chapter 3 Social and Economic Overview in Iraq 3.1 Social Environment.............................................................................................................. 3-1 3.1.1 Population....................................................................................................................... 3-1 3.1.2 Labor market and education ........................................................................................... 3-3 3.1.3 Daily life......................................................................................................................... 3-5 3.2 Economic Environment and Activity of Japanese Firms ..................................................... 3-8 3.2.1 Economic overview ........................................................................................................ 3-8 3.2.2 International trade........................................................................................................... 3-15 3.2.3 Investment ...................................................................................................................... 3-18 3.2.4 Overview of economy in Kurdistan Region ................................................................... 3-24 i 3.2.5 Business of Japanese companies with and in Iraq .......................................................... 3-26 3.3 Infrastructure........................................................................................................................ 3-29 3.3.1 Infrastructure in Iraq....................................................................................................... 3-29 3.3.2 Infrastructure in Kurdistan Region ................................................................................. 3-42 3.3.3 Issues in Infrastructure Development in Iraq.................................................................. 3-45 3.3.4 Free zones....................................................................................................................... 3-45 3.4 Donor Approaches to Improving the Iraqi Business Environment ...................................... 3-53 3.4.1 UN and World Bank initiative ........................................................................................ 3-53 3.4.2 World Bank group........................................................................................................... 3-55 3.4.3 IMF ................................................................................................................................. 3-56 Chapter 4 Current State and Issues of Business Environment 4.1 Laws and Regulations .......................................................................................................... 4-1 4.1.1 Overview of the legal framework in Iraq ....................................................................... 4-2 4.1.2 Basic laws in Iraq ........................................................................................................... 4-8 4.1.3 Laws and regulations related to doing business with and in Iraq ................................... 4-10 4.1.4 Investment law................................................................................................................ 4-23 4.1.5 Other laws and regulations ............................................................................................. 4-30 4.1.6 Laws and regulations in Kurdistan Region..................................................................... 4-36 4.1.7 Legal issues for doing business in Iraq........................................................................... 4-37 4.2 Labor and Human Resources ............................................................................................... 4-39 4.2.1 Labor............................................................................................................................... 4-39 4.2.2 Human resource development ........................................................................................ 4-52 4.3 Customs Clearance............................................................................................................... 4-60 4.3.1 Customs law and Customs tariffs ................................................................................... 4-60 4.3.2 Customs clearance procedures........................................................................................ 4-63 4.3.3 Customs clearance Issues ............................................................................................... 4-68 4.4 Financial System .................................................................................................................. 4-69 4.4.1 Banking system............................................................................................................... 4-69 4.4.2 Stock market ................................................................................................................... 4-98 4.5 Tax and Accounting ............................................................................................................. 4-100 4.5.1 Tax .................................................................................................................................. 4-101 4.5.2 Accounting...................................................................................................................... 4-103 Chapter 5 Issues in Doing Business with and in Iraq 5.1 Business environment and major issues............................................................................... 5-1 ii 5.1.1 Business environment comparative table ....................................................................... 5-2 5.1.2 Ease of doing business....................................................................................................5-2 5.2 Major issues identified during the Survey............................................................................ 5-3 5.2.1 Laws and regulations......................................................................................................5-3 5.2.2 Labor and human resources............................................................................................ 5-4 5.2.3 Financial System............................................................................................................. 5-5 5.2.4 Customs clearance .......................................................................................................... 5-5 5.2.5 Social and Economic Overview.....................................................................................
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