Business Friendly Laws Needed in Iraq

After seven years of war, Iraq's economy is essentially like a blank slate. Besides its oil trade, Iraq is in dire need of foreign investment to rebuild its infrastructure, including roads, commercial buildings, residential housing units and electric grid. Foreign investment has been flowing into Iraq as Iraq has auctioned off rights to drill their oil fields to foreign oil companies and investors are bidding on other energy related projects in the area. While safety and security is a concern in Iraq for investor, Iraq is further inhibiting itself by its own laws that make it difficult for foreign investors to contribute in rebuilding Iraq.

Stringent business regulations have hampered Iraq's potential for foreign investment. It takes way too long to register a company and it is very expensive, costing anywhere from $15,000 to $20,000. On average, it takes 77 days to form a business in Iraq, nearly four times the average time span of its neighboring countries. Compare this to only $300 to set up a company in the United Kingdom with a much faster processing time. Also, the Iraq's National Investments Law of 2006 bars foreigners from buying land, further preventing foreign investors from setting up shops, factories and warehouses.

The current political power vacuum is further preventing foreign investment. Iraq has realized this problem and the previous parliament had put together 72 draft laws to help promote and accelerate businesses in Iraq. However, no agreement was reached and the present lack of political unity further delays progress. The World Bank rated Iraq as the 153rd out of 183 ease-of-business scale. Furthermore, the UN reported that in 2009, Iraq had a total of $1.1 billion in foreign investments; however, Iran, with many more UN sanctions had more than three times as much foreign investment. Investors want to explore the Middle East, but Iraq is making it harder than it should be.

Iraq must resolve its political stalemate and focus on passing laws that promote incoming foreign money to rebuild Iraq. Iraq cannot restore its country on its own. Its shattered infrastructure does not help either. An influx of foreign investment to support Iraq from the ground up will accelerate Iraq's rise in becoming a major player in the global economy. Iraq has been living off of its profits from oil, but it must focus on promoting other industries to diversify its economy by establishing laws and regulations that are pro-business.

Dan Carlson is a dinar specialist at Dinar Profits, the most trusted source to buy and sell Iraqi dinar since 2004.