Potential investors should prepare to face significant costs to ensure security, cumbersome and confusing procedures, and long payment delays on some GOI contracts.Difficulties with corruption, customs regulations, cumbersome visa procedures, unreliable dispute resolution mechanisms, electricity shortages, and lack of access to financing are also common complaints from companies.Budget transfers have resumed, albeit on a lower basis. S.-Iraq Strategic Framework Agreement and the Trade and Investment Framework Agreement.
But Investment Commissions still generally lack the authority to intercede when investors encounter bureaucratic obstacles with other Iraqi ministries. Under the Iraqi Constitution, some competencies relevant to the overall investment climate are either shared by the federal government and the regions or are devolved entirely to the regions.
Currently, the IKR, comprising three northern provinces, is the only area of Iraq with a designation as a region.
However, the security situation varies throughout the country and is generally more stable in Iraq’s southern provinces and the Iraqi Kurdistan Region (IKR). Iraq has the fifth largest proven oil reserves in the world and needs tremendous reconstruction and infrastructure development. Iraq imports large volumes of agricultural commodities, machinery, and consumer goods.
Despite the current security and fiscal challenges, Iraq has long term potential for U. Iraq’s fiscal position is forcing the GOI to balance competing budget priorities.
Shifting and unevenly enforced regulations create additional burdens for investors.
The GOI currently operates over 192 SOEs, a legacy from decades of statist economic policy.A 2009 amendment to the NIL, followed by 2010 implementing regulations, allows limited foreign ownership of land solely for the purpose of developing residential real estate projects.Although the NIL was meant to clarify and codify investment regulations, the lack of clear and definitive implementing mechanisms creates confusion and delays in the approval of investment projects.The fall of oil prices drastically reduced Iraq’s revenues from oil exports, which account for more than 90 percent of Iraq’s budget.Despite these challenges, the GOI has publically characterized the country’s current fiscal position as an opportunity to hasten public and private sector reforms as the country seeks to attract foreign investment and diversify its oil-based economy.The GOI is facing a projected USD 20 billion deficit in 2015.