yota691 Posted February 4, 2015 Report Share Posted February 4, 2015 UK Trade& Investment Guidance Doing business in Iraq (including the Iraqi Kurdistan region): Iraq trade and export guide Updated 3 February 2015 Contents Iraq export overview Challenges doing business in Iraq Growth potential UK and Iraq trade Opportunities for UK businesses in Iraq Start-up considerations Legal considerations Tax and customs declarations Business behaviour Entry requirements Contacts 1.Iraq export overview Iraq, including the Iraq Kurdistan Region, is open for business. However, this is a challenging, high risk, but potentially high return market in which to do business. Contact a UKTI Iraq export adviser for a free consultation if you are interested in exporting to Iraq. The political and security situation remains fragile in Iraq. Despite this, commercial opportunities are huge as the country rebuilds its infrastructure and main institutions. Sizeable contracts have been and continue to be signed with UK businesses robust enough and strategically placed to do business in Iraq. Iraq’s hydrocarbon resources are the least explored of any of the major producers. TheInternational Energy Agency (IEA) estimates that 46% of global oil production could come from Iraq by 2035. There are over 200 British companies operating in Iraq, including BP, Shell, Standard Chartered, PricewaterhouseCoopers, Weir Group, Petrofac, AMEC Foster Wheeler, Pell Frischmann, Astra Zenica, Landrover Jaguar and JCB. Benefits for UK businesses exporting to Iraq include long and established trade links between the UK and Iraq growing economy middle income country British goods and services are considered as iconic by the Iraqis immense scale of opportunities uncrowded market in many sectors so good scope for early entrants Strengths of the Iraqi market: high sovereign wealth created by increasing oil revenues, with potential to fund a USD 360 billion investment programme low inflation new government’s political will to strengthen the economy as part of the stabilisation effort 2.Challenges doing business in Iraq Iraq is a challenging market. It’s ranked poorly in the World Bank’s ‘Ease of Doing Business’ listing. The main issues are: security concerns lack of transparency stifling bureaucracy ranks very low in Transparency International’s Corruption Perceptions Index difficult entry requirements poor infrastructure weak banking sector difficulties in obtaining letters of credit and payment guarantees and delays in payments arbitration can take months, if not years You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act. 3.Growth potential 3.1Economic growth Iraq’s economic growth forecast has been revised down, following the security and political crisis from June 2014. However, the Iraqi economy is still growing rapidly and over 5% growth is expected in 2015. Huge hydrocarbon wealth is fuelling economic development across a range of sectors including: oil and gas infrastructure defence and security healthcare education Iraq’s economy is dominated by the public sector, which is over resourced and inefficient. An International Monetary Fund (IMF) Standby Agreement (SBA) has been signed to detail further economic reform, including legislation to update the country’s Hydrocarbons Legal framework. 3.2Gulf region The Gulf region is a gateway to Iraq as most of the larger companies have their bases in the Gulf region. It can be an ideal location to conduct business for UK companies unable to travel to Iraq. However, Iraqis emphasize the importance of being present in Iraq to do business. 3.3Free Trade Agreements (FTA) Iraq has FTAs in place: EU-Iraq Partnership and Cooperation Agreement United States-Iraq Trade and Investment Framework Agreement(TIFA): The Greater Arab Free Trade Area (GAFTA) 4.UK and Iraq trade UK exports of goods and services to Iraq were £811 million in 2013. Total exports of UK goods to Iraq in 2014 were £339 million. Top UK goods exports are: industrial machinery and equipment electrical machinery and appliances professional, scientific and controlling instruments road vehicles medicinal and pharmaceutical products 5.Opportunities for UK businesses in Iraq UK Trade and Investment (UKTI) publish over 1,000 business opportunities per month across all sectors and over 100 markets. Sign up to receive regularbusiness opportunities alerts. 5.1Oil and gas Leading UK companies, such as BP and Shell have energy partnerships with Iraq extending over 20 years and beyond. The values of contracts are worth billions of dollars, and the scale of the supply chain sector is immense. Iraq possesses the world’s tenth largest proven gas reserves. Shell, in a joint venture with Mitsubishi, was also awarded a contract to develop the Iraq South Gas Project. Approval of a hydrocarbon law is essential to further unlocking more commercial opportunities in the energy sector. Contact Trade and Investment Adviser Mustafa.Alazawi@fco.gov.uk for more information on oil and gas opportunities. 5.2Infrastructure Iraq is in the process of rebuilding and upgrading its infrastructure. Design and construction opportunities include: Basra City Master Plan project in southern Iraq rapid build low cost housing schools hospitals sports stadiums shopping malls leisure industry resorts The government of Iraq has begun large-scale plans to upgrade its water and sanitation infrastructure. There has been strong UK engagement with the Ministry of Municipalities and Public works across the country. Major UK companies are in the running for huge contracts worth billions of dollars in the Iraqi Kurdistan region. Iraq is in the process of upgrading and building new power stations under the Ministry of Electricity’s 2010 to 2030 development plans. About USD 93 billion has been allocated to fund new ground power generation installations. Contact Trade and Investment Advisers Ali.Aziz@fco.gov.uk andDhuha.Jabbar@fco.gov.uk for more information on infrastructure opportunities. 5.3Defence and security Iraq plans to ramp up defence and security spending over the next decade with up to 25% of the national budget allocated to this sector. UKTI Iraq is supporting this sector through campaigns and events. Opportunities span the whole defence and security sector with the UK offer bound by export license requirements. A number of UK companies in the Personal Security Company (PSC) industry flourish in the Iraqi market. Contact Export Control Organisation (ECO) to check your goods you are meeting legal requirements for export. Contact Trade and Investment Adviser Mustafa.Alazawi@fco.gov.uk for more information on defence and security opportunities. 5.4Healthcare Iraq’s healthcare sector is valued at tens of billions of dollars. The government of Iraq considers their healthcare system to be modelled on that of the UK. It’s keen for the UK to help shape a healthcare blueprint. The UK is well placed to work with Iraq’s central government and local healthcare providers. Discussions between Healthcare UK and the Kurdistan Regional Government are underway. Specific areas of opportunity for UK businesses are: hospital refurbishment hospital management medical equipment and training pharmaceuticals (including generic brands) hospital design and building programme (pending future budget approval) Contact Trade and Investment Adviser Ali.Aziz@fco.gov.uk for more information on healthcare opportunities. 5.5Education Education is a priority for investment in Iraq. There are multi-million dollar higher education projects in Iraq for which UK businesses can bid. 40% of the 35 million population are under the age of 15. The UK is a natural partner of choice as higher education in Iraq is based on the British system. Iraq is looking to expand its twinning agreements between UK and Iraqi universities Opportunities for UK businesses include: accreditation overseas scholarships teacher training English Language Training education software Contact Trade and Investment Adviser Ali.Aziz@fco.gov.uk for more information on education opportunities. 6.Start-up considerations The Iraqi market is not for the fainthearted. It’s more suited to medium to large sized companies with the capability to succeed in a tough market. You must have a proven track record in the Middle East and north Africa region to be likely to succeed here. The principle options to establish a business in Iraq are to: participate in a local Iraqi company or entity (eg joint venture) establish a branch office appoint a trusted and well-connected commercial agent or distributor Contact the UKTI Team in Iraq for help in setting up a branch office. 6.1Investment agencies The Iraqi National Investment Commission (NIC) facilitates foreign investment and is an important partner for UKTI in Iraq. The Iraq Investment Law No.13 provides the foundation for foreign investment in Iraq. The Kurdistan Board of Investment regulates the Kurdistan Region. 7.Legal considerations You must comply with the Iraqi federal laws governing business activity. You should seek in-country legal counsel on the best approach to doing business in Iraq. Contact the UKTI Team in Iraq to help find tax and legal advisers before entering into agreements. 7.1Standards and technical regulations Iraq is a member of the International Organization for Standardization (ISO). The Central Organization of Standardization and Quality Control (COSQC) has responsibility for quality control and standardisation issues. 7.2Intellectual Property (IP) Iraq is a signatory to the: Paris Convention for the Protection of Industrial Property World Intellectual Property Organizations Convention Arab Agreement for the Protection of Copyrights Arab Intellectual Property Rights Treaty IP functions are spread across several ministries: Ministry of Planning has responsibility for patents and industrial design registry Ministry of Culture has responsibility for copyright Ministry of Industry and Minerals administers trademarks Enforcement of IP rights is challenging in Iraq. 8.Tax and customs declarations The Ministry of Finance has responsibility for the Iraqi tax system. 8.1Sales tax A flat sales tax of 10% is applied to 5 star hotels and restaurant accommodations. 8.2Customs A 5% reconstruction fee on the value of goods imported into Iraq has replaced the original Customs Law, No. 77 of 1955. Projects which have been granted an investment licence are exempt from this tariff for a period of time, as determined by import type. Several categories of goods are also exempt, including food products, medicines, clothes, books and transit goods. The Free Zones Law provides certain customs exemptions to projects established in one of the 4 free zones in Iraq. 8.3Documentation The documents needed for the import and export of goods to/from Iraq are: commercial invoice – initiated by supplier Certificate of Origin Bills of Landing / Airway Bill health and quality certificates (if applicable) 9.Business behaviour There are 2 official languages in Iraq: Arabic and Kurdish. The working week is Sunday to Thursday. The Islamic dress code is not compulsory, but it’s advisable for women to dress conservatively. 10.Entry requirements You must have a visa in advance of travelling to Iraq. If you are a business visitor, then UKTI Baghdad might be able to facilitate a one off business visit visa valid for one month, issued by the Iraqi National Investment Commission (NIC). 10.1Travel Advice If you’re travelling to Iraq for business, check the Foreign and Commonwealth Office (FCO) travel advice beforehand. 11.Contacts Contact the UKTI Team in Iraq for more information and advice on doing business in Iraq, including the Iraqi Kurdistan Region. 2 Link to comment Share on other sites More sharing options...
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