Business Opportunities in Iraq
by Allison Thompson, Freelance Writer for the Western Pennsylvania International Business Newsletter
According to the U.S. government, agriculture, petroleum, and the rebuilding of the infrastructure are the prime sectors that should provide a firm foundation for trade and investment in Iraq. Saddam Hussein’s defiance of the international community over the past decade largely isolated Iraq’s economy from the international marketplace, with deleterious consequences to all sectors of the economy.
Agriculture is a mainstay of Iraq’s non-oil economy, with the main crops being wheat, barley, rice, and dates. Private investment has been virtually nonexistent in this sector for the past decade. Consistent provision of inputs such as fertilizer, seed, and pesticides are necessary for agricultural production to recover and increase. After many years of neglect, the extensive irrigation infrastructure is in great need of repair. Other immediate needs in this sector are the reestablishment of services and managerial capabilities, and the development of an efficient distribution network.
The oil sector dominates Iraq’s economy, with oil exports historically accounting for about three-quarters of gross domestic product, and the development of Iraq’s vast oil reserves will spur the country’s economic recovery and future growth. Iraq’s upstream and downstream oil and gas infrastructure is outdated and requires a sizable investment in repair, rehabilitation, and upgrading. Iraq’s oil export pipeline systems and terminals also are in need of rehabilitation and modernization. Moreover, continuing sabotage and terrorist attacks on the country’s oil infrastructure, particularly on vital domestic and export pipelines, have hindered efforts to sustain oil production and export levels.
Iraq has approximately 108 airports and airfields through out the country, with international airports in Baghdad and Basra and major domestic airports in Mosul, Kirkuk, and Irbil. All airports in Iraq are severely outdated. Systems have gone without maintenance for years and suffer from a lack of spare parts. International commercial airlines have not operated in Iraq for thirteen years. Airports need to be upgraded with power, water, sewage, and telecommunications equipment.
Opportunities also exist in the rebuilding and modernization of the country’s seaports, railways, roads, and bridges. Decades of fuel shortages and lack of regular maintenance have severely curtailed dependable electrical supply, and it is expected that companies may have numerous and wide-ranging opportunities in the power sector. While it is thought that over 90 percent of the urban population now has access to water, quantities per capita are still insufficient. Water treatment and distribution systems, as well as sewage systems, are outdated, damaged, or insufficient.
In May 2003, the UN Security Council and the United States lifted most economic sanctions against Iraq, permitting non-sensitive U.S. exports to Iraq. Some U.S. exports or re-exports of goods or technology are subject to a license requirement under the U.S. Department of Commerce’s Export Administration Regulations (EAR), or will require specific authorization from the U.S. Treasury Department's Office of Foreign Assets Control (OFAC). To determine if goods or technology are subject to a license requirement under the EAR, contact the Commerce Department's Bureau of Industry and Security (BIS), Exporter Counseling Division: (202) 482-4811.
The business opportunities that exist in Iraq at this time fall into four general categories: (1) U.S. government reconstruction contracts; (2) CPA and Iraqi Ministry solicitations; (3) working directly with Iraqi state-owned enterprises; and (4) private enterprise. In 2003, U.S. government reconstruction contracts were issued primarily by the U.S. Agency for International Development (USAID) and the U.S. Department of Defense Army Corps of Engineers. All Requests for Proposals (RFPs), amendments and award announcements are located at http://www.fedbizopps.gov. USAID provides additional information from its website at http://www.usaid.gov/iraq. The Coalition Provisional Authority’s “Program Management Office” (PMO) is responsible for all procurement funded by the fiscal year 2004 U.S. government appropriation of over $18.6 billion for Iraq reconstruction. All contracting activities are reported on the PMO’s new website (http://www.rebuilding-iraq.net ).
Iraq reconstruction prime contractors are responsible for choosing their own subcontractors. Companies are encouraged to access the contractors’ websites for information on needs and bid requirements. USAID’s largest Iraq reconstruction contractor, Bechtel, which won a second construction contract on January 6, 2004 valued at $1.8 billion, maintains a website on its activities at http://www.bechtel.com/iraq.htm. A complete listing of U.S. government contracts, including contact information of the prime contractors and known subcontractors, is available from the U.S. Department of Commerce Iraq Investment and Reconstruction Task Force website at http://www.export.gov/iraq. The Iraqi Business Center website at http://www.iraqibusinesscenter.org provides a database of Iraqi companies seeking subcontracts and international partners for work in Iraq.
While travel in Iraq is now possible, the security situation for U.S. citizens is serious. The State Department provides up-to-date travel warnings for Iraq, and U.S. businesspeople are advised to carefully assess the security situation before traveling to Iraq. Theft and violent crime are common in Iraq and the possibility of attacks against U.S. citizens and facilities remains high. Law enforcement by Coalition forces and local police is limited.
Key Contacts for Doing Business in Iraq
Start your research on doing business in Iraq at the U.S. Department of Commerce, Iraq Reconstruction Task Force Business outreach web site and hotline http://www.export.gov/iraq.
For the latest news on reconstruction, visit the Coalition Provision Authority website: http://www.cpa-iraq.org/
For information on the $18.6 billion in contracts to be awarded in the sectors of waste water/potable water, oil, electricity, security and justice, transportation and communications, and health facilities and public schools, visit: http://www.rebuilding-iraq.net/ and http://www.fedbizopps.gov.
For information on the tendering process for government contracts, visit: http://www.arnet.gov/far/loadmainre.html. Register online at http://www.ccr.gov.
For information on security and travel, visit: http://www.travel.state.gov/, http://www.centcom.mil, and http://www.hiciraq.org.
To find an Iraqi partner or distributor, to network, or to find information on new regulations and business opportunities, visit: http://www.iraqibusinesscenter.org and http://www.kirkuk-business-center.org.
For information on sources of financing (such as the working capital guarantee program, letters of credit, or third country suppliers) visit the Ex-Im Bank of the United States at http://www.exim.gov or the Overseas Private Investment Corporation’s Risk Insurance Program at http://www.opic.gov.
You can also start the pursuit of Iraqi business right in your backyard with the U.S. Commercial Service Office in Pittsburgh. Call: (412) 644-2800.