NEWS

British companies urged to act now on Iraq

British companies need to move fast if they are to gain a foothold in Iraq and avoid losing out to their competitors. 

This was the message at the Middle East Association’s Iraq: Untapped Opportunities conference at the Dorchester Hotel in London. 

Supported by the National Investment Commission of Iraq, UK Trade & Investment and Allurentis, the event was attended by over 230 business and government representatives. 

A strong Iraqi delegation attended, led by Dr Hussein al-Shahristani, Iraqi Deputy Prime Minister for Energy and including Dr Khairallah Hassan Babiker, Minister of Trade; Herish Muharam, Chairman of the Kurdistan Regional Board of Investment; and Dr Abbas Al Sa’adi, Advisor and General Director of Legal Directorate of the General Secretary of the Council of Ministers.

Opening the 22 November conference - sponsored by Shell, Parsons Brinckerhoff, Petrofac and Mott MacDonald - Middle East Association Director General Charles Hollis commented that Iraq is now entering a more stable phase, and opportunities for business are growing.

“We need to replicate the UK success in the Kurdistan region throughout the whole of the country,” he said, adding that the Association is looking to organise a trade mission to Baghdad and Basra within the next 12 months.

In a keynote speech, Dr al-Shahristani urged British companies to participate in Iraq’s unprecedented reconstruction and development programme “for the benefit of all parties.”

He underlined the Iraqi government’s commitment to creating a conducive environment for foreign investors through the generous benefits and incentives offered by Iraq’s investment law. 

Highlighting Iraq’s huge economic potential, he noted that Iraq’s real growth rate has been more than 7% per annum over the last four years, and is expected to grow even faster over the next decade, with GNP in 2010 standing at $150bn.

Iraq is looking to invest $200bn over the next six years in the oil and gas sector alone, with a need for new technology and modern management skills. Iraq’s goals “cannot be achieved without international companies” he said. He stressed that the opportunities are not limited to the energy sector, highlighting telecommunications, transport, housing, financial services and tourism as areas offering opportunities.

Lord Howell of Guildford, Minister of State at the Foreign & Commonwealth Office, stressed the importance attached by the UK government to developing its relationship with Iraq.

“Fundamental to this relationship is building on our trade links,” he said. He noted that Iraq has “huge economic potential” with its history of innovation, the fourth largest hydrocarbons reserves in the world, a population of 30 million and largely untapped mineral resources, noting that it attracted $42bn of foreign investment in 2010. With its GDP outpacing that of China, Iraq is “poised to take off” as it seeks to overcome decades of conflict and underinvestment, he said.

“The combination of rebuilding and modernising infrastructure; developing the provision of public services; guaranteeing better security and training the population in the range of skills needed in a modern economy will offer excellent opportunities for British companies prepared to enter the Iraqi market,” he added, noting the contribution of British companies such as Shell, BP, Foster Wheeler and Petrofac. 

“There is opportunity for British businesses to do more.” The UK will continue to offer support to put Iraq back at the centre of the global economy, he concluded.

Herish Muharam, chairman, Kurdistan Board of Investment, acknowledged the role of the Middle East Association in championing trade with the Kurdistan Region and the rest of Iraq since 2006. Despite a slow start, British companies have been catching up in the past year, he said. The UK has the third highest number of firms registered with the KRG Ministry of Trade and Industry, and had one of the largest pavilions at the Erbil International Trade Fair.

British expertise is sought in areas including electricity, water, road transport, health, education, banking and finance and engineering.

“Where British firms may not be able to compete on price, you can provide consulting, project management and project finance services, and partner with local contractors,” he said, stressing the Kurdistan Region’s affinity with the UK.

The Kurdistan Region will continue to boom over the next two to three years, he said, noting the success in attracting foreign investment and adding that the Kurdistan Investment Law is one of the most investor-friendly in the Middle East.

Robin Ord-Smith, director UKTI Iraq, noted the “huge, huge opportunities” for international companies in all sectors including healthcare, education and training, power, water, transport and housing. He acknowledged the leading role played by British companies in sectors such as oil and gas, with BP contributing $12bn in the last 12 months to Iraq’s exchequer, and noted the “genuine affection and respect” for British companies. However he suggested that the “window is closing” and British companies are in danger of being left behind. Iraq is “one of the great opportunities of the next couple of decades. If you don’t act soon, your international competitors will have stolen a march on you”. 

These comments were echoed by others including William Wakeham, CEO, AAIB Insurance Brokers, who called for more British companies to have a presence on the ground.

The obstacles in doing business with the market were not glossed over, however, and the practicalities of doing business were also addressed.

While improvements in the security situation were acknowledged, there were calls for increased transparency, the speeding up of the decision making process, a more open financial sector, further private sector activity, enhanced export credit facilities, and improvements in the visa regime for business visitors in both directions.

As Gordon Turley, Mott MacDonald, remarked: “There will be challenges, but everything is doable.”