Improving the business and investment climate in Iraq, Klaus Hachmeier, OECD, Project Working Group Introduction. 16 February 2015, Paris, France

1. Improving the business and investment climate in Iraq
Klaus Hachmeier
Project Working Group
Introduction
Date:16 February 2015, 10:30h
Venue: OECD, Paris

2. 1. Overview of the OECD:
activities in the MENA region and in Iraq

3. The OECD - Fast facts
• The OECD provides a forum in which governments can work
together to share experiences and seek solutions to common
problems.
• It works with governments to understand what drives economic,
social and environmental change.
• The OECD set international standards on a wide range of things,
from agriculture and tax to the safety of chemicals.
• In the area of investment, these include: the Policy Framework
for Investment (PFI), the Declaration and Decisions on
International Investment and Multinational Enterprises,
the Principles of Corporate Governance …
• Nearly 300 expert committees and working groups with
participation of +100 countries
Public Affairs and Communications Directorate

4. The MENA-OECD Investment Programme: A
forum for policy dialogue and policy reform
Leveraging the OECD model of policy dialogue and peer
learning:
 Regional dialogue on investment, SMEs, women
entrepreneurs, business integrity
 Leveraging OECD standards and tools
Country projects adapted to specific needs:
 Supporting investment reforms in Arab transition countries
through the Deauville Partnership
 Business Climate Reviews in selected countries
 Work in conflict-afflicted areas: Iraq, Libya, Yemen
A regional approach, supplemented by country-
specific engagement to promote successful policies
and good practices in MENA

5. 2. The Iraq Project:
Background

6. The OECD has worked with Iraq since 2007
A series of meetings and workshops on the legal and institutional
investment framework, infrastructure finance, Investment Zones and
integrity in public procurement in Iraq between 2007 and 2013.
A series of policy insights and recommendations was presented to GoI
on 2-3 February 2014 in Baghdad on the following topics:
 Catalysing investment into Iraq;
 Public-private partnerships (PPP) and Iraq’s infrastructure development;
 Improving public procurement to expedite development;
 Reforming policy to meet the growing demand for housing.
Resulted in

7. MENA-OECD Iraq Project 2013-2016
• Objective: Improve the business and investment climate through policy
dialogue and capacity building for key actors.
• Project Period: December 2013 – June 2016
• Key beneficiaries: National Investment Commission (NIC); KRG Board of
Investment (BoI); Provincial Investment Commissions (PIC); the Iraqi
private sector; Iraqi governorates
Donor: Beneficiary: Implementer:

8. Iraq Project: Improving the business and investment
climate
The Project has four components:
OECD Business Climate and Investment Support
Policy Dialogue
C4: Integration into
regional working
groups and activities
C3: Working Group on
Investment Zones
Capacity Building
C1: Strengthening the
Iraqi investment
policy framework
C2: Investment
promotion diagnostic
and development

9. 3. The Iraq Project:
Why focus on investment?

10. 10
Growth:
 Creating economic value-added in non-hydrocarbon sectors, economic
diversification.
 Stronger integration into global value chains.
Employment and jobs:
 The oil sector provides for 70% of GDP and 95% of state revenue, but
only 1% of employment. Employment needs to be created outside the
oil sector.
Innovation and technology:
 Knowledge, skill, technology transfer through FDI.
 Higher productivity and competitiveness.
Long-term effects:
 Poverty alleviation
 Conflict resolution
Why Iraq needs investment (1/2)

11. 11
Investment needs to rebuild Iraq according to the
National Development Plan 2013-2017:
• Public investment: ID 329 trillion (EUR 242,5 bln.)
• Private investment: ID 88 trillion (EUR 64,0 bln.)
Why Iraq needs investment (2/2)

12. National and Provincial Investment Commissions play a
central role in attracting and retaining investments
12
• Marketing Iraq as investment location
• Developing and promoting strategic sectors and projects
• Identifying and contacting “good” investorsInvestment
Promotion
•Facilitation for investors, e.g. licenses, taxation, visa/work permit, land
allocation. Identify obstacles to investment and inv. policy; maintin sound,
predictable, transparent, non-discriminatory legal framework.Investment
Facilitation
Policy
Advocacy
• How is the “investment agenda” reflected in the government’s strategies
and policies?
Goal: An “Investment Strategy” that defines and promotes
strategic sectors, projects, and identifies suitable investors
Goal: Efficient facilitation process, incl. evaluation and review of
investment facilitation process
Goal: Ensure that good investment standards and regulations are
integrated in Iraqi economic policy, regulation and laws
Elements of the investment process:

13. 4. The Iraq Project:
Components, past and future Activities

14. Components
I. Strengthening the Iraqi investment policy
framework
II. Investment promotion diagnostic and
development
III. Working Group on Investment Zones
IV. Integration into the MENA-OECD Investment
Programme regional working groups and other
activities
14

15. 15
Component 1: Activities 2015-16
1. Analysis of the legal investment framework, incl. planned
amendment to the Investment Law 13/2006 and related
(commercial et al.) jurisdiction, support process for
parliamentary adoption.
2. Workshops/ trainings on
a. Investment policy in the Iraqi context – examining the role of the
legal investment framework as part of a comprehensive investment
strategy; and
b. selected topics of investment policy (e.g. Bilateral Investment
Treaties, Dispute Settlement).
Goal: (a) support the development of a sound legal investment
regime (to improve predictability for investors), and (b) building
an investment strategy to support investment promotion efforts

16. Agenda
I. Strengthening the Iraqi investment policy
framework
II. Investment promotion diagnostic and
development
III. Working Group on Investment Zones
IV. Integration into the MENA-OECD Investment
Programme regional working groups and other
activities
16

17. 17
Diagnostic Report of Iraq’s Investment Promotion
Agencies (February 2015) with following
recommendations:
 Focus on investment marketing and facilitation
practices.
 “Investment Strategy” should focus on (a) marketing
selected, “strategic” sectors and projects, and on (b)
actively targeting suitable investors.
 Stronger policy advocacy in line with investors’
demands and needs.
Investment Diagnosis: Towards an
“Investment Strategy”

18. Component 2: Activities 2015-2016
1. Establishing operational investor database and investor
enquiry and handling system (early 2015)
2. Workshops/ trainings on investment marketing and
investor outreach (mid-2015).
3. Developing materials for investor outreach campaign
and study visit (“roadshow”) to take place in early
2016.
 Goal: NIC/PICs market strategic investment projects/
sectors to selected investors, addressing investors’ needs
and demands.
18

19. Agenda
I. Strengthening the Iraqi investment policy
framework
II. Investment promotion diagnostic and
development
III. Working Group on Investment Zones
IV. Integration into the MENA-OECD Investment
Programme regional working groups and other
activities
19

20. Supporting the development of investment zones since 2010
• The Working Group on Investment Zones in Iraq helps the Iraqi
government to develop investment zones to:
 mitigate risks for investors through a conducive business, legal, and
regulatory framework;
 attract more foreign investment and develop high-growth industries;
 diversify the economy
20
• Previous activities include:
 Six Working Group meetings were held to discuss
policies, tools and good practices to develop
investment zones
 Trainings and workshops were held on e.g.
feasibility studies and the Iraqi international
investment framework
Meeting of the Working Group on
Investment Zones in Iraq

21. Component 3: Activities 2015-2016
• Two annual meetings :
Participants: Representatives from GoI, the international
and Iraqi private sector, NGOs, regional and international
experts, and civil society organisations
Example topics: legal and regulatory framework for
economic zones; zone administration; zone financing; land
allocation; encouraging women to participate in
investment zones; access to infrastructure; cooperation
with Iraqi businesses.
Goal: (a) Support a co-ordinated investment zone approach, (b)
support a feasibility study for a pilot investment zone.
21

22. Agenda
I. Strengthening the Iraqi investment policy
framework
II. Investment promotion diagnostic and
development
III. Working Group on Investment Zones
IV. Integration into the MENA-OECD Investment
Programme regional working groups and other
activities
22

23. Past Activities (2014)
The Iraq Project organised participation of Iraqi officials in
various regional activities and trainings of the MENA-OECD
Programme:
• May 2014 (Cairo): Working Group on Competitiveness
• June 2014 (Paris): OECD-MENA Women’s Business Forum
• June 2014 (Kuwait): Training on Improving Competitiveness at
IMF-Middle East Center for Economics and Finance (CEF)
• September 2014 (Paris): Working Group on SMEs and
Entrepreneurship
• December 2014 (Cairo): OECD-League of Arab States
Conference on Fostering Regional Integration on Investment/
Working Group on Investment Policies and Promotion
23

24. Component 4: Activities 2015-16
Planned activities 2015-16 (preliminary):
• March 2015 (Kuwait): IMF-CEF Training on PPPs
• May 2015 (Kuwait): IMF-CEF Training on Competitiveness
• June 2015 (Dubai): Working Group on SME Policy and
Entrepreneurship
• October 2015 (Kuwait): IMF-CEF Training on SME Finance
• End 2015: OECD-MENA Women’s Business Forum,
Working Group on Investment
Goal: Stronger integration of Iraqi stakeholders in regional
policy dialogue.
24

25. The OECD Iraq Project: working in all areas
of investment process
•Investment promotion diagnosis and development
•Trainings in investment facilitation (investor enquiry and handling)
•Investor outreach training and campaign/ study tour
•Adapting investment strategy to conflict-afflicted situation of Iraq
Investment
Promotion/
Facilitation
•Analysis of legal framework for investment, support to Amendment to Iraqi
Investment Law 13/2006
•Workshops on investment issues (BIT, dispute settlement …)
•Working Group on Investment Zones
Investment
Facilitation
•Project Working Group – discussing economic policy relevant to investment in a
wider circle
•Integration of stakeholders in MENA-OECD Regional Working Groups on SME,
Women, Investment
Policy
Advocacy
25
(Selected) activities of the OECD Iraq Project:
C1
C2
C3
C4

26. Agenda and expected outcomes – Day 1
Contribution of the Project to Iraq’s Economic Policy:
 What are the priorities of Iraqi economic policy, and how does
this reflect on the Project?
Session I: Promoting Investment in Iraq:
 Recommendations for a stronger investment strategy
 How strengthen the legal investment framework?
 Possible contribution of OECD?
Session II: State-Owned Enterprises and Investment
 Status of SoE reform in Iraq.
 How can SoEs be a vehicle for investment?
Conclusion
 Determining future activities of the OECD Iraq Project
26

27. Agenda and expected outcomes – Day 2
Session 1: Rationales for Special Economic Zones (SEZ)
 What types of SEZ exist and their role in economic development?
What experience have countries made?
Session 2: SEZs in Iraq
 Plans for SEZs in Iraq. How can OECD assist to set up a pilot
investment zone?
Session 3: Effective and transparent land allocation
 Land-related issues are the reason for delayed investment projects in
over 60% of all cases. What are possible reform steps?
Session 4: Outlook for Global Value Chains in Iraq
 Can and should Iraq integrate into global production processes?
Closing and Final Declaration
27
Working Group on Investment Zones in Iraq

28. … Questions …?
28

29. Backup Slides
29

30. The MENA-OECD Programme: Investment Pillar
30
Inclusive
Growth &
Job Creation
B. Promoting entrepreneurship
& SME developmentA. Stimulating investment
D. Fostering Women’s Economic
Empowerment
C. Enhancing business integrity
and corporate governance
Key challenge: FDI to the MENA
region decreased by more than
50% between 2008 and 2013.
Despite recovery signs, investment
flows are insufficient to respond to
the urgent need of growth and job
creation.
Key challenge: Despite progress in
education, women’s labour force
participation remains the world’s
lowest (24%) and women’s
unemployment is the highest (18%)
– in particular among young
women.
Key challenge: Enterprise creation
rates in MENA are low and private
enterprises offer insufficient job
opportunities.
Key challenge: corporate
governance and integrity are solid
fundamentals for economic
development, social cohension and
stability.

31. Openness
Transparency
Participation
Trust
B. Efficient Machinery of
GovernmentA. Open/Clean Governments
E. Territorial DevelopmentC. Gender Equality
D. Rule of Law
The MENA-OECD Programme: Governance Pillar

32. OECD-MENA Women’s Business Forum
• Network of more than 500 women and men from business, government
and civil society
• Connects women entrepreneurs, provides role models and improves
access to information
• Two on-going projects:
32
Increasing women entrepreneurs’
access to business development
services
Improving women
entrepreneurs’ access to bank
and non-bank financing
Lists women’s business support services
across the MENA region
Outputs:
Last meeting: 6
June 2014 in Paris
OECD-MENA Women’s Business Forum,
annual meeting in Rabat in December 2013

33. OECD-IMF Trainings in Kuwait
33
Course Date
Improving Competitiveness in the MENA region 1-4 June
2014
Improving Policies and Access to Finance for
Small and Medium-sized Enterprises
24-27
November
2014
“Building Capacity and Frameworks to ensure
Value for Money from PPPs”
09-12
March
2015
• We conduct annual courses at the IMF-Middle East Center for Economics and
Finance in Kuwait on:
 Policies and access to finance for SMEs
 Competitiveness policies
 Business integrity
• Courses are designed for mid to senior-level public officials from the whole
MENA region (languages: Arabic and English)
• The workshops provoke lively exchanges between experts and participants and
motivate participants to share best practices and network
Past and Upcoming courses
Course on Improving Competitiveness in
MENA