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This publication is available at https://www.gov.uk/government/publications/exporting-to-iraq/doing-business-in-iraq-including-the-iraqi-kurdistan-region-iraq-trade-and-export-guide
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 Department for International Trade (DIT) 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. The International 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:
- fifth largest economy in the Middle East and 47th largest in the world
- 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
Read the Overseas Business Risk report for Iraq.
You should ensure you take the necessary steps to comply with the requirements of the UK Bribery Act.
3. Growth potential
3.1 Economic growth
Iraq’s economic growth forecast has been revised down, following the security and political crisis from June 2014. The International Monetary Fund (IMF) forecasts Iraq’s Gross Domestic Product (GDP) growth at 1.3% for 2015.
Huge hydrocarbon wealth is fuelling economic development across a range of sectors including:
- oil and gas
- financial and professional services
Iraq’s economy is dominated by the public sector, which is over resourced and inefficient.
An IMF Standby Agreement (SBA) has been signed to detail further economic reform, including legislation to update the country’s hydrocarbons legal framework.
3.2 Gulf 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.
3.3 Free 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
Department for International Trade (DIT) provides free international export sales leads from its worldwide network. Search for export opportunities.
5.1 Oil 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 Ali.Aziz@fco.gov.uk for more information on oil and gas opportunities.
Iraq is in the process of rebuilding and upgrading its infrastructure.
Design and construction opportunities include:
- rapid build low cost housing
- 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 Adviser Dhuha.Jabbar@fco.gov.uk for more information on infrastructure opportunities.
5.3 Defence 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.
Department for International Trade (DIT) 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 Nour.Al-Rashied@fco.gov.uk for more information on defence and security opportunities.
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)
Contact Trade and Investment Adviser Ali.Aziz@fco.gov.uk for more information on healthcare opportunities.
5.5 Financial and professional services
Iraq’s financial and professional services sector is in urgent need of reform. The commitment to move away from state owned industry and create a private sector necessitates the need for more diverse and better financial and professional services.
Creative finance and professional solutions to increase liquidity in the market to fund projects is a priority for the Federal Government of Iraq.
Opportunities for UK business include:
- investment banking to meet the needs of global clients operating in Iraq across various industry sectors, as well as local financing demands
- the rapidly growing insurance sector with a total aggregate gross written premium for private insurance companies worth USD 70 to 80 million (though the size of market cannot be accurately assessed due to lack of reliable data)
- budgeting reform and capacity building which will impact gold reserves and currency exchange
Contact Trade and Investment Adviser Sara.Serwar@fco.gov.uk for more information on financial and professional services 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 Department for International Trade (DIT) Team in Iraq for help in setting up a branch office.
6.1 Investment agencies
The Iraqi National Investment Commission (NIC) facilitates foreign investment and is an important partner for the Department for International Trade (DIT) 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 Department for International Trade (DIT) Team in Iraq to help find tax and legal advisers before entering into agreements.
7.1 Standards 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.
7.2 Intellectual 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.
8.1 Sales tax
A flat sales tax of 10% is applied to 5 star hotels and restaurant accommodations.
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.
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 the Department for International Trade (DIT) Baghdad might be able to facilitate a one off business visit visa valid for one month, issued by the Iraqi National Investment Commission (NIC).
10.1 Travel Advice
If you’re travelling to Iraq for business, check the Foreign and Commonwealth Office (FCO) travel advice beforehand.
Contact the Department for International Trade (DIT) Team in Iraq for more information and advice on doing business in Iraq, including the Iraqi Kurdistan Region.