Iraq Business: Where there is a problem, or a lack, there is a business. It is this principal that makes Iraq the most strategic land of business opportunity presently in the Middle East.
Since 2003, Iraq has experienced a dramatic change from a centralized economy to a market economy. This introduction of comopetition, equal opportunity, and the development of the private sector has allowed Iraq’s businesses to flourish and grow, registering double digit GDP growth. The rise in oil prices, and Iraq’s rising oil exportation and production of hydrocarbons give the country an edge in the global economy. Iraq has the world’s 5th largest oil reserves, and is set to increase oil production 400% by 2017.(Dallas Business Journal). With each passing year, the country and its people are prospering, and the Iraqi consumer base is growing. The United States labeled Iraq as the 58th largest export market in 2011.
Its transition from a central planned economy to a market economy has invited the both domestic and foreign investment. Since the mid 2000s, Iraq has put in place an increasingly attractive legal framework that provides greater protection and incentives for new investors. As it moves towards the privatization of state owned enterprises and expands its financial and technological capacities, further business opportunities will open up and create an ever more attractive business environment for companies. Read More…
Oil, natural gas, phosphates, sulfur.
Exports (2009 est.)–$39.3 billion; export commodities–crude oil, crude materials excluding fuels, food and live animals. Export partners (2009)–U.S. 27.6%, India 14.5%, Italy 10.1%, South Korea 8.6%, Taiwan 5.6%, China 4.2%, Netherlands 4.1%, and Japan 4.0%.
Types–petroleum, chemicals, textiles, construction materials, food processing, fertilizer, metal fabrication/processing.
Imports (2009 est.)–$41.3 billion; import commodities–food, medicine, manufactured goods. Import partners (2009): Turkey 25.0%, Syria 17.4%, U.S. 8.7%, China 6.8%, Jordan 4.2%, Italy 4.0%, and Germany 4.0%.
The Iraqi government owns and controls Iraq’s oil supply, which creates the most revenue for the country, and is therefore its most valuable resource. The Iraqi government’s ownership and control over its oil allows its control over the economy as well, impacting the success and failure of local and private business.
Because of Iraq’s historic trade routes and landmarks, opportunities for builders, transporters, producers, suppliers, transporters, manufactures and financiers increase. The Government of Iraq has incorporated practices which give businesses and investors tools take advantage of the best opportunities in the country. Read more here.
The National and Provincial Investment Commissions gives investment licenses applications, issues licenses, allocates land, secures tax exemptions and facilitates the entry and exit of investors and their employees. With the US Government, Iraq is focusing on creating a business-friendly and investor-friendly environment. For example, it created the Iraqi Solutions for Administrative and Regulatory Reform (ISRAR) which has reduced the time needed to register a business from 74 days to 4 days. After over 30 years of oppression and civil instability, Iraq is ready to increase economic opportunity and prosperity throughout the country, with the help of international partners and investors. Read more about the steps investors should take to invest in Iraq.
Today, Iraq’s labor force is considerably larger than it was even a decade ago as a result of steady population growth and an increasingly dominant youth demographic. In 2012, the total labor force in Iraq was 8.2 million people, which was nearly a 2 million increase from 2004, and almost double the size it was in 1994. 42 percent of the Iraqi population participates in the labor force, which is defined as persons 15 years of age and older working or looking for work. Labor participation varies across the country, with data from 2011 showing Anbar, Najaf, and Wassit governorates as having the highest labor force participation (between 47 to 48 percent), and Dahuk, Thi-Qar, and Muthanna the lowest rates (between 37 to 40 percent). Click here to read more about Iraq’s Labor Force.
The first Iraq bank was established in 1941, called the Rafidain Bank. This was a state-owned bank and completely controlled by the Iraqi federal government. For over fifty years, Iraqi people did not bank with anything else – there were no private or foreign financial institutions allowed within the Iraqi state.
Rafidain Bank presently has numerous branches over Iraq, extending to countries such as Egypt, UAE, Yemen, Jordan and the UK.
In 1988, certain Rafidain Bank branches were re-branded, re-named and madeover by the federal government. This new brand of banks was called Rasheed. The same federal laws applied for both banks.
Click here to learn more about the history and function of Iraq banking.
The currency in Iraq is the Iraqi Dinar (IQD). As of February 9th, 2014, the conversion rate is: 1 USD = 1160.6708 IQD.
The Iraqi Dinar has had a tumultuous history due to the tyranny and inflation under Saddam Hussein’s infamous regime. The use of the Iraqi Dinar began in 1931, before the Independence of the Iraqi state from the British Empire. The exchange rate began at 1 IQD = $4.86 US. It remained well established until the war with Iran in the 1980s, when it was registered at a similar rate, but equated to only half its actual value, due to fluctuating cost of living. During the Gulf War, the Dinar reached epic lows. In 1995 the dinar inflated to a conversation rate of 3000 IQD to 1 USD. It has now leveled to an average 1160 IQD to 1 USD, with an expected rise of value in the coming years with increased economic growth. Read more about Iraq currency.
Despite of the fluctuating security situation in Iraq, the needs of citizens stay the same: Food, clothes, electronics, and more products are bought by the population on a daily basis. IRFAD has paid special close attention to the rise of FMCG in Iraq in the past 5 years. Here is a general breakdown of various products and their success in Iraq. (Coming Soon)
- Food: Iraqi-s spend most of their money on food. Depending on a fame’s size, often 50-80% of a family’s income goes towards buying food.
- Technology: Iraqi-s spend disposable income on mobiles, especially the youth. They change mobile brands often – iPhone, Samsung. Mobile Telecommunications is a huge business in Iraq. There are very few young people who do not have a smart phone.
- Clothing: Clothes are important to Iraqi-s as well. Every three or four months, there is usually a wardrobe change. Elegant clothes are valued by women in Iraq, especially. Clothes are mainly imported from Turkey and China.
Foreign investment is expected to grow within Iraq in both the dominate oil field, as well as the non-oil sector of the economy, such as forestry, mining, energy, and agriculture. As foreign investment increases, the demand for reliable business travel information increases as well. Read more to help navigate your business trip to Iraq.