Iraq Business Overview

Business and Economic Overview

The Iraqi economy has taken a double shock since mid-2014 in the form of the Daesh insurgency and the fall in oil prices: the oil sector provides more than 90% of government revenue and 80% of foreign exchange earnings. Aside from security concerns and corruption, bureaucratic bottlenecks, poor infrastructure, shortages of skilled labour, regulations and long payment delays on government contracts are common complaints from firms operating in Iraq. Indeed, Iraq ranks 154 of 190 in the World Bank’s Starting a Business Index and 168 of 190 in their Ease of Doing Business rankings.

There are a number of legal requirements for starting a business in Iraq, totalling at least nine individual procedures including naming, company registration and employee registration. Many of the procedures are time consuming and include costs, creating opportunities for corruption.

Nevertheless, Iraq has significant long-term investment potential. Iraq will require considerable investment in reconstruction and infrastructure once the security situation has stabilised. Opportunities to invest exist in the environment, security, construction, healthcare, tourism, agriculture, infrastructure and particularly the energy sectors.

Iraq also imports large quantities of agricultural commodities, machinery and ‘defence articles’. A number of markets are also uncrowded which will benefit early entrants.

Iraq’s hydrocarbon resources are the least explored of any major producer; the International Energy Agency estimates that Iraq will produce 46% of the growth in global oil production by 2035, totalling US$5 trillion, which creates huge opportunity in energy security, extraction and infrastructure, although government regulation and involvement in the energy sector is considerably greater than other industries.

Nevertheless, the Government of Iraq seems to have the political will to strengthen the economy and to further open the country to foreign investment.