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Economic Sector Information
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The oil sector dominates Iraq's economy, with oil exports historically accounting for up to three-quarters of gross domestic product (GDP) and more than 90 percent of foreign exchange earnings. Iraq's estimated proven oil reserves stand at 115 billion barrels -the second largest in the world. The immediate term i.e. 2007, production target is 3.5m bpd, with the medium to long term target at 6m bpd.
Iraq also has 110 trillion cubic feet of world-class natural gas reserves that are both associated with oil fields and held in separate accumulations. The upstream and downstream oil and gas infrastructure requires substantial investment in rehabilitation and upgrading. Iraq's many identified oilfields also require large-scale investment to develop and foreign investment is to play an important part in that effort. In addition significant investment is needed in the production of kerosene, gasoline, LPG, and diesel fuel.
Promotion of strategic partnerships between Iraqi and foreign oil & gas companies is considered critical for the development and expansion of the industry. Restructuring of the industry is currently underway with the national oil companies being merged into a single entity, and the creation of a strong legal and regulatory framework.
As of 2005 some 30 companies have signed MOUs with the Iraqi government to carry out capacity building, consulting and reservoir studies.
Some recent success stories include:
- In January 2005, a consortium of Shell, BHP, Billiton and Tigris Petroleum signed a deal to increase production from the 4.5b barrel Halfaya field in southern Iraq.
- In December 2004, the Turkish company AVRS ASYA, was awarded a 4 b$ contract to develop the Khurmala Dome.
- The oil field of Majnoon is slated for development at a cost of 4b$, and estimated to carry up to 30 billion barrels of oil.
For more details please visit the Ministry of Oil at:
Based on a large and expanding local market, a tradition of industrial activity, a well trained work force and rich hydrocarbon resources, Iraq seeks a rapid private sector led and export oriented industrial development. In order to achieve its goals, some of the steps taken are as follows:
- Introduction of investor friendly commercial laws & regulations
- Proactive promotion of foreign investment across a spectrum of sectors
- Establishment & development of Economic Enterprise Zones and Complexes
- Restructuring of financial markets for efficient access to private capital
- Development of the Small and Medium Enterprise (SME) sector
- Resuscitation of local industry through the injection of foreign capital and expertise
- Strengthening of Standardization and Quality Assurance Services through membership of the International Standards Organization (ISO)
- Restructuring and privatization of State Owned Enterprises (SOEs)
- Expansion of exploration and geological surveys for non-oil minerals products
- Establishment of technical resource networks for women entrepreneurs
The non-oil industrial sector includes petrochemicals, phosphate, sulfur, fertilizers, minerals, cement, paper, consumer goods, light manufacturing, electronics, machinery & transport equipment, textiles, leather goods, and food processing & packaging. Industrial activity in the above mentioned areas is found in both the large scale as well as the SME sectors, with the former mainly state owned and marked for privatization, and the latter privately owned.
For details on investment and sectors in Iraq please visit the Iraq Investment Promotion Agency (IIPA) at:
Or Visit the Ministry of Industries and Minerals:
Or the US Department of Commerce site on Iraq:
According to the Ministry of Planning there are some 70,000 companies in a variety of sectors that are part of the SME sector. In the light of the importance of SME in both job creation as well national growth, the International Finance Corporation (IFC), the private sector arm of the World Bank, has approved plans to establish an Iraq Small Business Finance Facility of up to $170 m, in order to help Iraqi banks finance small business.
(For more information please visit ).
There are several international organizations like the USAID, ACDI/VOCA () and CHF () which also actively provide micro-credit throughout Iraq.
Iraq's major achievement regarding the modernization of its financial sector is the formation of an independent Central Bank of Iraq (CBI). Under the new banking and securities legislation i.e. , envisaged to create a modern, vibrant and competitive financial sector, foreign banks can open branches and establish joint ventures with private sector Iraqi banks. A license is required however there is no legal limit on the number of licenses granted to foreign banks. Interest rates are completely liberalized and all private banks are authorized to process international payments, remittances and foreign currency letters of credit. They are also authorized to participate in the USD and NID currency auctions conducted by the Central Bank of Iraq.
Among the immediate and medium-term steps envisaged to further develop the financial sector are the restructuring of state owned banks and insurance companies; and the creation of an effective operating structure for the CBI to provide services and supervision for the banking system. Modernization of the country's non-cash payments system and the establishment of modern electronic settlement facilities at the CBI are also underway.
The securities market is being strengthened through the development of a regulatory framework and the introduction of a state-of-the-art electronic trading system. Furthermore, a major development in the financial sector is the establishment of the Trade Bank of Iraq with an authorized capital of $100m. Please see given below the foreign banks licensed by the CBI with a presence in Iraq:
- The National Bank of Kuwait (NBK): 75% interest in the Credit Bank of Iraq (IFC: 10% interest)
- HSBC Group: 70% interest in the Dar Es Salaam Investment Bank
- Export & Finance Bank of Jordan: 49% interest in the National Bank of Iraq
- Iraq Holding Company (Kuwait): 51% interest in the Gulf Commercial Bank
- Ali Bank ( Bahrain): 49% interest in the Commercial Bank
- United Bank of Bahrain : 49% shareholding in the Bank of Baghdad
- Standard Chartered Bank: Received approval
- Arab Banking Corporation (Bahrain): Branch opened in the Credit Bank of Iraq
- A'ayan Company (Kuwait): 49% interest in Economic Bank for Investment
- National Bank of Qatar: 60% interest in Mansour Bank
- Bank Melli (Iran)
- The Agriculture Bank of Iran
- The Agriculture Bank of Turkey
- The Housing Bank for Trade & Finance (Jordan): Representative office opened
- The Jordan National Bank: Representative office opened
- Bank of Beirut: Awaiting license approval
- Al-Mashreq Investment Bank (Lebanon)
For details on the Banking Sector, list of private banks and their points of contact please see the Central bank of Iraq at: .
The Trade Bank of Iraq (TBI) is a state Export Credit Agency established to facilitate trade. The TBI provides expertise, a point of contact for international firms and trade finance services. It works with Iraqi commercial banks and an operating consortium comprised of a group of international banks led by J.P. Morgan Chase.
On October 5, 2004, the Export-Import Bank of the United States (Ex-Im Bank), the Iraqi Ministry of Finance and the Trade Bank of Iraq (TBI) signed a framework agreement that enables the Ex-Im Bank to support U.S. exports for Iraqi reconstruction.
Renewal of this agreement allows the TBI to continue to access Ex-Im Bank's $500 million facility. Under this facility, Ex-Im Bank insures short-term letters of credit issued by, or on behalf of TBI in respect of purchases of U.S. goods and services.
In December 2003, 15 other countries joined Ex-Im Bank in entering into framework agreements with TBI. Ex-Im Bank is presently working with other countries to help develop similar agreements. For further details please see and .
Iraqi companies may raise funds through the domestic securities market i.e. The Iraqi Stock Exchange (ISX), which is an independent organization. It is authorized by law under the (also see Section 28 for amendments to CPA Order 74) and started operations in June, 2004. The Securities and Exchange Commission and the Depository Operations Center have also been established, in order to bring the securities market up to international standards. Foreign investment in the ISX in not permitted at present; however this option may be available in the future. For more details please visit the Iraqi Stock Exchange at:
Part of the ancient Fertile Crescent, Iraq has a long history of agricultural activity. Known as the bread basket of the Middle East, its land and water resources are amongst the most plentiful in the region. One fourth of the land area is cultivable, with half of it fed by rain water and the other half by a highly developed and complex system of irrigation, covering an area of 3.5 million hectares. Most of the irrigation water flows from the Tigris and Euphrates rivers producing up to 77 billion cubic meters.
With three distinct climatic zones, Iraq's agricultural production is amongst the most diverse in the region. Rain fed agricultural activity is mainly found in the north of the country; where the main crops are wheat and barley. Irrigation is largely located in the Tigris-Euphrates plains in the south and central region, and comprises of approximately 70% of agricultural production.
Livestock and dairy are important parts of the agro-economy. Iraq's sheep are in high demand in the Middle East for its high quality meat. In addition there is a thriving poultry and dairy industry with both cow and buffalo milk being produced.
Iraq's agricultural exports are diverse consisting of dairy, fruits, vegetables, meat and grain; and the potential for growth is immense. Iraq has long been the largest producer of dates in the world and many of Iraq's immediate neighbors import a number of Iraqi products.
With investment in inputs, modern technology and infrastructure there is great potential for growth in the sector. Some of the areas of potential investment are seeds and seed production, dairy production, dates, sheep, fisheries and horticulture.
Wheat and barley are the most common winter crops, with dates, alfalfa, citrus, stone fruits and nuts also planted. Summer crops include maize, rice, vegetables, melons, cotton and sunflowers.
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