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| Iraq attracts serious investment commitments |
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Posted on 3 Feb 2010 |
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With Iraq gradually opening its doors to international investors, Trade Bank of Iraq, one of the leading state-owned banks, is in the process of setting up an investment fund to attract investors for facilitating project finance.
Trade Bank of Iraq (TBI) is setting up a US$250 million investment fund this month to attract foreign investment in project finance, according to Hussein Al Uzri, president and chairman of TBI. The bank is currently finalizing the investment fund’s details.
Al Uzri was in Dubai last November to sign an agreement with Thomson Reuters to use its dealing trading services. As a result, TBI became the first bank in Iraq to connect to the international foreign exchange and money market community.
TBI, a state-owned bank operating mainly in trade finance, investment banking and project finance, was established in July 2003 to facilitate Iraq’s international trade and the reconstruction of the country after the expiration of the UN Oil for Food program. TBI has since built a relationship with a network of 120 banks covering 63 cities in 39 countries and was one of the first Iraqi banks to receive a line of credit from major international financial institutions.
TBI is one of the 40 banks present in Iraq. Out of these 40 banks, 11 are either 100 per cent owned or partially owned by international banks. Six are state-owned banks and the rest are private banks.
Al Uzri said: “We are seeing a revival of interest from the international investment community with the security situation improving.”
Iraq is now writing new laws for the financial sector related to banking, investment and stock exchanges.
“The National Investment Commission, which was established in 2008, has started working this year and trying their best to attract investors from across the globe,” said Al Uzri.
To encourage investment in the country, the government in Baghdad is offering companies tax-free status for 10 years, along with a promise not to nationalize them.
Iraq’s parliament also passed an investment law on November 23, 2009 that allows foreigners to own land for housing projects and is designed to streamline regulations and applications for foreign investment, Reuters reported. Iraq’s old real estate laws only allowed the lease of land to foreign investors for a limited time. The new law is now awaiting approval from Iraq’s presidential council.
Iraq needs 2.5 million housing units to cater to its growing population. In fact, foreign direct investment soared in Iraq in 2009, rising 241 per cent compared to 2008 with some US$156.7 billion of capital commitment, including multibillion-dollar real estate and mixed investment deals.
Year-on-year foreign investment into Iraq was US$47.6 billion in 2008, up from a meager US$3 billion the previous year, according to reports by US-based Dunia Frontier Consultants.
The UAE was one of the top investors in Iraq in 2009. It announced investments totaling US$37.7 billion for the first nine months of 2009, mainly in the oil, gas and real estate sectors, thus accounting for 24 per cent of all investments in Iraq.
Abu-Dhabi-based developer Bloom Properties was in talks with the Iraqi government to build a large property development in Karbala valued at US$18 billion, making it one of the largest property projects ever announced in Iraq.
According to the Wall Street Journal, investments by UAE companies in Iraq in 2009 included the US$20 billion Rasheed real estate development in Baghdad by Millennium Solutions and Bonyan International Investment Group and a US$8 billion energy deal by Dana Gas and Crescent Petroleum that will eventually aim to supply gas to Europe through a giant pipeline starting in Central Asia. Damac Properties and Al Maabar are among other UAE companies that have plans to launch real estate projects in Iraq.
“We had almost no investment for the past 25 years. The UAE is among the first countries in this region to invest in Iraq and now the rest of the Gulf states are showing interest,” said Al Uzri.
Apart from the UAE, Kuwait is the only other Gulf country that has made significant investments in Iraq. The country’s investments total US$6.8 billion.
Other countries eyeing major opportunities in the country include South Korea (US$24.7 billion), the US (US$22 billion), the UK (US$10.5 billion) and Lebanon (US$10.1 billion), according to a published report.
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