The New Iraq 2012 Discovering Business in association with C o n t e n t s Introduction 5 Map - cities, oilfields, international airports & borders 7 Messages Dr. Sami Al-Araji, Chairman of the National Investment Commission 8 HMA Michael Aron - the British Ambassor to Iraq 10 Baroness Nicholson of Winterbourne - Executive Chairman of IBBC 12 Business Matters Private sector role - PricewaterhouseCoopers (PwC) 15 Establishing a presence - Mena Associates Iraq - Amereller Legal Consultants 21 Finance The changing investment landscape in Iraq - MerchantBridge 26 Iraqi banking sector - HSBC 32 Financing the private sector - IMMDF 36 Iraq FDI Competitiveness Report 2011 - Investment Consulting Associates (ICA) 38 The Iraqi insurance market - AAIB Insurance Brokers 43 Facilitating/Trading Organisations Exporting for growth - UK Trade & Investment 47 Iraqi Group offers route to projects market - Al Burhan Group 50 Perspectives on the Iraqi Market - the Middle East Association (MEA) 54 Exploring limitless possibilities - Eastern Holding/Iraq Business Council 57 Risk Management Operating in Partnership - Control Risks 62 Oil & Gas Fast track strategy 66 Tapping the energy potential of Iraq - Mott MacDonald 72 Infrastructure Core infrastructure needs to be in place - Sarah Hildersley 77 Utilities Water - nothing functions without it 82 Power - electricity sector steps up power surge 84 Creating lasting partnerships - Parsons Brinckerhoff 88 3 CONTENTS Construction & Civil Engineering A construction boom that will last decades 91 Lasting foundations in Iraq - Harlow International 96 Manufacturing Industry is revitalised 100 Agriculture Essential part of Iraq’s economy 104 Mining Offers hidden opportunities 106 Transport Welcome to Erbil International Airport - (EIA) 109 Jordanian aviation is vital for business - Royal Jordanian 112 Strategy geared for the 21st century 114 British automotive icon continues to grow - Sardar Group 118 Healthcare & Education Social investment vital for economic growth 121 Telecoms Dramatic expansion continues 125 Tourism Destination Iraq - Dunira Strategy 129 Featured Contacts 133 © Published by Allurentis Limited (www.allurentis.com) All rights reserved. All information accurate at the time of printing, November 2011. Acknowledgement: Allurentis would like to thank all our supporting organisations for their kind contributions. For further information or to participate in the 2012/2013 edition please contact: [email protected] Photos courtesy: www.istockphoto.com in association with NIC: www.investpromo.gov.iq UKTI: www.ukti.gov.uk 4 Introduction Iraq was known as Mesopotamia (from the Greek between the Principal cities (by population/estimates) rivers) until the end of the First World War. The region is thought to Baghdad - capital (5.8 million) contain the legendary Garden of Eden and is where Ur, Babylon and Mosul (1.5 million) | Basrah (923,000) other historic and religious sites are located. Erbil (1 million) | Sulaymaniyah (836,000) Following the end of the First World War and the end of Turkish Kirkuk (600,000) | Ramadi (700,000) Ottoman rule, Iraq was placed under British administration in 1920 Fallujah (850,000) | Karbala (800,000) by a League of Nations mandate. In 1932, the area achieved i n d e p e n d e n ce as a kingdom with Britain retaining military Najaf (800,000) | Dahuk (600,000) bases and rights of transit for its forces until the overthrow of Zubayr (600,000) | Al Hillah (510,000) the monarchy. Amarah (450,000) | Kut (450,000) A Republic was declared in 1958 after a military coup. Saddam Tal Afar (450,000) | Baquba (410,000) Hussein took control in 1979. After his demise, the country became a parliamentary democracy following ratification of the country’s The 2005 constitution guarantees Iraqis basic rights with an constitution on 15 October 2005. independent judiciary. The President protects the constitution and unity of the state, while the Prime Minister is the direct executive Iraq has a land area of 432,162 square kilometres and borders authority and Commander-in-Chief; he is nominated by the Council Jordan to the west, Syria to the northwest, Turkey to the north, of Representatives. Kuwait and Saudi Arabia to the south and Iran to the east. The Head of State is President Jalal Talabani since 6 April 2005. The Iraq is composed of 18 governorates or provinces. These are Anbar, Head of Government is Prime Minister Nouri Al-Maliki since 20 May Babil, Baghdad, Basrah, Dahuk, Diyala, Erbil, Karbala, Kirkuk, 2006. A new government was announced in December 2010 Missan, Muthanna, Najaf, Nineveh, Qadissiya, Salah Al-Din, following elections held on 7 March the same year. The elections Sulaymaniyah, Thi Qar and Wassit. were based on an open list system that elected the members of the Iraq’s population is estimated at 30.4 million with an average age of Council of Representatives, who in turn elect the President and 20.9 years. The population is 97% Muslim. Main ethnic groups are approve the executive branch appointments. Arab and Kurd but Iraq also has distinctive Turcoman, Chaldean, Prime Minister, Nouri Al-Maliki’s State of Law coalition won 89 seats, Assyrian, Armenian, Bahai, Mandean and Yazidi communities. the Iraqi National Movement coalition led by former Prime Minister, Main religion: Islam (60-65% Shia and 32-37% Sunni). Ayad Allawi, won 91 seats. The Kurdish bloc, led by Kurdistan 5 IN T R O D U C T I O N D e m o c ratic Party President Masoud Barzani and Pat r i otic Union of Main ports: Ku rdistan, President Jalal Talabani, won 57 seat s. The Iraqi Nat i o n a l Umm Qasr, Basrah, Khor Al-Zubayr. A ll i a n ce led by Muqtada Al-Sadr have 70 seats and other parties Telecommunications: 18 seat s. International Dialling Code: 964. The main industry is the production of crude oil with an estimate d Cellular services based on three nationwide GSM networks – 2.7 million barrels per day (bpd) in 2011. Estimated oil re s e r ves are AsiaCell, Zain Iraq, Korek Telecom. A fourth operator is due to 143.10 billion barrels and estimated nat u ral gas re s e r ves are 3.17 be licenced. t r i llion cubic met re s. Other industries include production of chemica l s and fe r t i l i s e r s, text i l e s, construction mate r i a l s, pharmace u t i ca l s, Press: m etal pro d u c t s, pro cessed fo o d s, to b a cco and paper. Al-Sabah - state sponsored Al-Zaman - private London based daily, printed in Baghdad and Approximately 13% of Iraq is arable and some 35,000 square Basrah with English language pages kilometres is irrigated. The country cultivates wheat, barley, rice, Al-Mada - Baghdad private daily vegetables, dates, cotton, coffee and also farms sheep and poultry. Al-Mashriq - Baghdad private daily Iraq’s main export trading partners (2009) are the US (27.6%), India Al-Dustur - Baghdad private daily (14.5%), Italy (10%), South Korea (8.6%), Taiwan (5.6%), China Al-Manurah - Basrah private daily (4%), Netherlands (4.1%), Japan (4%). Television: Main import partners (2009) comprise Turkey (25%), Syria (17.3%), Al-Sumaria - a private satellite TV broadcaster US (8.7%), China (6.8%), Jordan (4.2%), Italy (4%) and Germany Al-Iraqiya - state sponsored (4%). Al-Sharqiya - Dubai based private satellite TV channel Kurdistan satellite channel - operated by Kurdistan Democratic Party Transport: Kurdsat - operated by Patriotic Union of Kurdistan There are 19 civilian airports of which six have international connections – Baghdad, Erbil, Sulay m a n i yah, Mosul, Basra h Internet news services: and Najaf. Scheduled services are operated to and from Baghdad Aswat Al Iraq International Airport by Austrian Airlines, Emirates, Etihad Airways, Al-Bawaba.com Eg y pt a i r, Gulf Air, Middle East Airlines, Royal Jordanian and Iraq-businessnews.com Turkish Airlines. Iraq.net Iraqdaily.com (part of WN network) A railroad network of 2,272 kilometres standard gauge track is on sustainableiraq.com course for rehabilitation and expansion. baghdadtonight.com 37,851 kilometres of paved roads in varying states of repair. Radio: Rivers and waterways of 5,279 kilometres including Euphrates Two public and three private stations (2,815 kilometres) and Tigris (1,899 kilometres). 58 kilometres of coastline located between Umm Qasr and Al-Faw. Source: CIA World Fact Book, BP Statistical Review of World Energy, IMF and the BBC 6 Map - cities, oilfields, international airports & borders 7 ME S S A G E S Message by Dr. Sami Al-Araji, Chairman of the National Investment Commission Dr. Sami Al-Araji Greetings and welcome to the third edition of The New Iraq – Other projects are also set to take off. These include the Grand Faw Discovering Business. Port, a metro project in Baghdad, a national housing programme to Iraq’s economy has lain dormant for decades. But the potential is build one million new housing units and agricultural development clear with a largely untapped market and rapidly increasing projects. Huge opportunities exist for water engineering companies population, predicted to reach 40 million in the next 15 years, to improve conservation and distribution of the country’s water recently restated high oil & gas reserves (among the highest in the resources. Education and healthcare are among our high priorities. world) and the co u n t r y’s strategic location. This fundamental Iraq needs to vastly increase its capacity to produce cement, steel strength is underpinned by steadily increasing oil production and and other inputs for the construction surge due to occur within the rising export revenues. next few years. Many more investment opportunities are opening up While the oil sector is a vital development sector, the investment in manufa c t u r i n g, financial service s, co n s u l t a n c y, training and map is far broader.