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The Second Meeting of the Project Working Group
Improving the business and investment climate in Iraq
16 February 2015 Château Room D, OECD Headquarters 2 rue André Pascal, Paris
Conclusions
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THE SECOND MEETING OF THE PROJECT WORKING GROUP
I. BACKGROUND – CURRENT STATUS OF THE OECD’S IRAQ PROJECT
In 2007 the GoI requested the OECD’s support to develop its private sector. In response, the MENA-OECD Investment Programme launched the Iraq Project. The Project combines capacity building and policy dialogue activities to improve the business and investment climate in Iraq. The current phase of the Iraq Project – financed by the Swedish International Development Co-operation Agency (Sida) until mid-2016 – includes:
The Programme seeks to help the GoI develop a more attractive investment policy
framework. It will assess Iraq’s legal, regulatory, and institutional investment framework. Based on
the assessment the Programme will then train Iraqi policymakers on ways to improve the
investment regime.
The Programme seeks to increase the capacity of the National and Provincial Investment
Commissions (the NIC and the PICs) to better attract and retain investment, particularly in
sectors strategic to Iraq’s long-term economic development. The Programme is conducting an
investment promotion diagnostic. Based on the findings, the Programme will develop capacity-
building activities that include training sessions and a roadshow to align the NIC, the PICs, and the
KRG’s Board of Investment with best practice investment promotion techniques.
The Programme seeks to support the GoI’s efforts to establish a clear framework for SEZs,
which the GoI can use to promote investment into strategic sectors. In addition, the Programme
intends to advise the GoI on its efforts to conduct a feasibility study for a pilot SEZ.
Ensuring GoI representatives, Iraqi NGOs, and business associations participate in the
Programme’s MENA-region activities, including the working groups on Investment and on SME
Policy and Entrepreneurship, the OECD-MENA Women’s Business Forum, and training activities
at the IMF Training Centre in Kuwait. The GoI is also co-chair of the Investment Security in the
Mediterranean (ISMED) Working Group.
From 2007 to 2014, the US Department of State funded the Project, which also included activities on infrastructure finance, public procurement, and business integrity.
II. THE PROJECT WORKING GROUP
The Project Working Group (PWG) helps align Project activities with Iraq’s national and regional development priorities, secure support and buy-in among Project stakeholders, and ensure efficient Project follow-up. At the first meeting of the PWG in May 2014 in Baghdad, the Programme presented the goals and the work plan, which PWG members approved. In the second PWG meeting, the Programme, GoI officials, and international and OECD experts discussed:
Ways in which Iraq can design an investment strategy taking into account its political and security situation;
Ways in which Iraq can reform State-Owned Enterprises (SOEs) to create new investment opportunities;
Present and future priorities and activities for the Iraq Project.
A full list of participating organisations in the Project Working Group is included in section V.
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III. SECOND MEETING OF THE PWG In the second PWG meeting, held 16 February 2015, PWG members acknowledged:
While the transition to market-based economy has been difficult, the GoI should continue to develop and implement private sector development policies to reduce conflict and realise other development goals.
The GoI needs continued international support on economic policy reform to realise the economic development goals articulated in the governmental strategies, in particular the “General Framework of the Government Programme 2014-2018”, the “Industrial Strategy”, the “Integrated National Energy Strategy (2013 – 2030)”, and the “Private Sector Development Strategy (2014 – 2030)”.
The GoI should adopt an investment strategy, which fully acknowledges the current political, economic, and security challenges that the country faces.
To ensure that economic reforms are fully inclusive, the GoI should strengthen the relationship between the provincial governments and the central government and to better integrate the Iraqi private sector in formulating economic policies.
The GoI should work towards strengthening its investment policy framework (including legal and regulatory measures) and employ investment promotion efforts to attract private investment needed to develop Iraq’s private sector.
Iraq’s State-Owned Enterprises (SOEs) can be suitable vehicles for investment, provided they are corporatised and held to commercial standards similar to some other MENA countries’ SOEs. The GoI can develop an investment portfolio to present investment opportunities in SOEs.
Special Economic Zones (SEZs) provide a means to attract private investment; their policy objectives should be narrow and aligned with Iraq’s economic development priorities. The GoI should continue to develop pilot SEZs, while improving the policy framework to develop SEZs.
III. OUTCOMES AND NEXT STEPS
Component 1: Strengthening the Iraqi investment policy framework
The Programme intends to help the GoI align its legal framework for investment policy with international best practice, while accounting for Iraq’s existing policy and legal framework, political and security situation, and institutional capacity.
The Programme is ready to support the GoI’s efforts to develop and adopt a second amendment to the 2006 Investment Law.
The Programme will work with the GoI, and other relevant stakeholders to assess Iraq’s legal framework for investment.
Concurrently, the Programme intends to provide workshops for GoI officials based on the assessment and the needs of the NIC; and in addition the Programme will use the workshops to inform and strengthen the assessment.
The assessment of the legal framework for investment and the workshops will indicate the training needs of Iraq’s investment promotion agencies. They will also help the Programme design activities for Component 2.
Component 2: Investment promotion diagnostic and development
The Programme intends to work with the NIC, PICs, and the KRG Board of Investment to improve their capacity to promote Iraq as an investment destination.
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The Programme has tailored the component activities based on an assessment (a Diagnostic Report) of the capacity of Iraq’s investment promotion agencies to promote Iraq as an investment destination.
The Programme will train GoI investment promotion agencies on customer relationship management (CRM), investor enquiry handling systems, investment marketing, and investor outreach.
Based on the trainings, the Programme will work with the GoI and other Project stakeholders to develop an investment strategy, which will include sector analyses and a sector targeting strategy. The capacity building activities, done in parallel with the investment strategy, will help the GoI formulate and implement the investment strategy.
All of these outputs will contribute to the planning and conducting of an investor outreach event, where the results of the capacity building activities will be applied.
Component 3: The Working Group on Investment Zones
The Project intends to help the GoI develop a policy framework for Special Economic Zones, and specifically to support the NIC’s efforts to develop investment zones, in particular the Hatein Zone.
The Programme intends to hold the 8th Meeting of the Working Group on Investment Zones in Iraq in Autumn 2015 in conjunction with the next meeting of the PWG.
For further information about this component, please see the “Final Declaration” from the 7th
Working Group on Investment Zones (February 2015, Paris).
Component 4: Integration into regional workings groups and activities
Upon the Programme’s request, PWG members agreed to nominate appropriate participants to attend the Programme’s MENA region working groups and training sessions, as detailed in the Iraq Project Calendar. Further, the Programme will nominate Project stakeholders to participate in other organisations’ activities when appropriate.
IV. TENTATIVE CALENDAR OF UPCOMING ACTIVITIES
Date/Location Activity
End of March 2015, Amman
Iraq Project Training on CRM and Investor Enquiry Handling System (Component 2)
Mid-April 2015, Amman Iraq Project Workshop on the legal framework for investment of Iraq (Component 1)
Spring 2015, Kuwait OECD-IMF Training on Building Capacity and Frameworks to Ensure Value for Money from PPPs (Component 4)
18-21 May, Kuwait OECD-IMF Training on Improving Competitiveness in the MENA (Component 4)
June 2015, Amman Iraq Project Workshop on the Investment Policy Framework in the Iraqi context (Component 1)
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Date/Location Activity
June 2015, Dubai Working Group on SME Policy and Entrepreneurship (Component 4)
September 2015, Amman Iraq Project Workshop on Negotiating BITs (Component 1)
September 2015, Amman Iraq Project Training on Investment Marketing (Component 2)
Autumn 2015 MENA-OECD Working Group on Investment (Component 4)
Autumn 2015 Women Business Forum (Component 4)
October/November 2015 3
rd meeting of the Project Working Group and 8
th meeting of the
Working Group on Investment Zones in Iraq (Component 3)
November 2015 ISMED Working Group: Meeting on Islamic Finance (Component 4)
23-26 Nov 2015 OECD-IMF Training on “Strengthening Private Sector Integrity” (Component 4)
Late November 2015 Iraq Project Workshop on Dispute Settlement (Component 1)
December 2015 ISMED Working Group: meeting on Arbitration (Component 4)
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V. MEMBERS OF THE PROJECT WORKING GROUP
National Investment Commission
Council of Representatives
General Secretariat for the Council of Ministers
Prime Minister’s Advisory Commission
Office of Deputy Prime Minister for Economic Affairs
Ministry of Finance
Ministry of Industry and Minerals
Ministry of Higher Education
Ministry of Planning
Provincial Investment Commissions
Kurdistan Regional Government – Board of Investment
Kurdistan Regional Government – Ministry of Trade and Industry
Iraqi Businessmen Union
Iraqi Council for Business Women
Iraq Federation of Industries
Iraqi Institute for Economic Reform
Iraqi National Business Council
Private Sector Development Centre
Swedish International Development Co-operation Agency
United Nations Industrial Development Organisation
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Second Meeting of the Project Working Group
Seventh Meeting of the Working Group on Investment Zones
Improving the business and investment climate in Iraq
16 February 2015, Château Room D 17 February 2015, Room CC2 OECD Headquarters 2 rue André Pascal, Paris
AGENDA
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THE SECOND MEETING OF THE PROJECT WORKING GROUP
I. BACKGROUND – CURRENT STATUS OF THE OECD’S IRAQ PROJECT
Hydrocarbons have driven Iraq’s recent economic growth; however, they create few jobs for Iraqis. To reduce its reliance on hydrocarbons and promote sustainable economic development, the Government of Iraq (GoI) has sought to create private sector jobs.
In 2007 the GoI requested the OECD’s support to develop its private sector. In response, the MENA-OECD Investment Programme launched the Iraq Project. The Project combines capacity building and policy dialogue activities to improve the business and investment climate in Iraq. The current phase of the Iraq Project – financed by the Swedish International Development Co-operation Agency (Sida) until mid-2016 – includes:
The Programme seeks to help the GoI develop a more attractive investment policy
framework. It will assess Iraq’s legal, regulatory, and institutional investment framework. Based on
the assessment the Programme will then train Iraqi policymakers on ways to improve the
investment regime.
The Programme seeks to increase the capacity of the National and Provincial Investment
Commissions (the NIC and the PICs) to better attract and retain investment, particularly in
sectors strategic to Iraq’s long-term economic development. The Programme is conducting an
investment promotion diagnostic. Based on the findings, the Programme will develop capacity-
building activities that include training sessions and a roadshow to align the NIC, the PICs, and the
KRG’s Board of Investment with best practice investment promotion techniques.
The Programme seeks to support the GoI’s efforts to establish a clear framework for SEZs,
which the GoI can use to promote investment into strategic sectors. In addition, the Programme
intends to advise the GoI on its efforts to conduct a feasibility study for a pilot SEZ.
Ensuring GoI representatives, Iraqi NGOs, and business associations participate in the
Programme’s MENA-region activities, including the working groups on Investment and on SME
Policy and Entrepreneurship, the OECD-MENA Women’s Business Forum, and training activities
at the IMF Training Centre in Kuwait. The GoI is also co-chair of the Investment Security in the
Mediterranean (ISMED) Working Group.
From 2007 to 2014, the US Department of State funded the Project, which also included activities on infrastructure finance, public procurement, and business integrity.
II. THE PROJECT WORKING GROUP
The Project Working Group (PWG) helps align Project activities with Iraq’s national and regional development priorities, secure support and buy-in among Project stakeholders, and ensure efficient Project follow-up. At the first meeting of the PWG in May 2014 in Baghdad, the Programme presented the goals and the work plan, which PWG members approved. In the second PWG meeting, the Programme, GoI officials, and international and OECD experts will discuss:
Ways in which Iraq can design an investment strategy taking into account its political and security situation;
Ways in which Iraq can reform State-Owned Enterprises (SOEs) to create new investment opportunities;
Present and future priorities and activities for the Iraq Project.
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February 16 – Château Room D – The Second Meeting of the Project Working Group
9:30-10:00 Registration of participants
10:00-10:30 Welcoming Remarks
William DANVERS, Deputy Secretary-General, OECD
Sami AL-ARAJI, Chairman, National Investment Commission
Eidi GENFORS, Counsellor, Development Co-operation, Swedish International
Development Co-operation Agency (Sida)
10:30-11:00 Iraq Project Overview
The Programme will update PWG members about the Project’s progress and detail planned activities for 2015.
Speaker:
Klaus HACHMEIER, Iraq Project Co-ordinator, Global Relations Secretariat, OECD
11:00-11:30 Coffee break
11:30-12:30 Contribution of the Project to Iraq’s New Economic Policy
GoI officials will describe new developments in Iraq’s economic policy, as contained in the new Government Strategy issued in September 2014. PWG members will then share their views on Iraq’s national economic strategies and the Project’s objectives to ensure alignment with the needs of the Iraqi economy.
Moderator:
Marie-Estelle REY, Senior Advisor, Global Relations Secretariat, OECD
Speakers:
Thamir GHADHBAN, Head, Prime Minister’s Advisory Commission
Nura Salim Muhammad AL-BAJARI, Member, Council of Representatives of Iraq,
Economic and Investment Committee
Michael KOPLOVSKY, Deputy Chief of Mission, US Embassy in Baghdad
Discussion
12:30-13:30 Lunch Break: Château’s Roger Ockrent Room
13:30-15:00 Thematic session I: Promoting Investment in Iraq: Lessons from other fragile and conflict-affected situations (FCS)
How can Iraq attract more domestic and foreign investment? Research has shown that fragile and conflict-affected situations (FCS) can attract significant flows of foreign direct investment (FDI).
This session will discuss tactics that Iraq can use to attract FDI in the short-term to rebuild and recover economically, exploring, inter alia, what types of companies work in FCS and what criteria they consider when making investment decisions.
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PWG members will be invited to discuss existing and potential initiatives and tactics for promoting investment in Iraq.
Moderator:
Klaus HACHMEIER, Iraq Project Co-ordinator, Global Relations Secretariat, OECD
Speakers:
Peter DAVIS, Private Sector Development Expert, Visiting Research Fellow, Birkbeck
College, University of London
Gassia ASSADOURIAN, Policy Analyst, Global Relations Secretariat, OECD
Sami AL-ARAJI, Chairman, National Investment Commission
Ribwar Khalil HIDAYAT, Minister, KRG Board of Investment
Discussion
15:00-15:30 Coffee break
15:30-17:00 Thematic session II: State-Owned Enterprises (SOEs) and Investment
How can SOEs support private sector development, and how can Iraq attract investments in its SOEs?
The restructuring of Iraqi SOEs features prominently in Iraq’s new Government Strategy issued in September 2014. The Prime Minister’s Advisory Commission (PMAC) is now preparing a comprehensive study on SOE rehabilitation and eventual privatisation.
The session will discuss ways to apply the OECD’s recommendations for SOE restructuring and privatisation to Iraq, while discussing the lessons of general SOE restructuring in MENA and the options for Iraq. The session will explore ways in which the GoI can encourage its SOEs to become more competitive, while mitigating negative social consequences.
Moderator:
Munqith AL-BAKER, Former Advisor to the Minister, Ministry of Industry and Minerals
Speakers:
Alissa AMICO, Manager, Middle East and North Africa, Corporate Affairs Division,
Directorate for Financial and Enterprise Affairs, OECD
Marc TEJTEL, Deputy Chief Counsel, Commercial Law Development Programme
(CLDP), US Department of Commerce
Abdulhussein AL-ANBAKI, Economic Advisor, Prime Minister’s Advisory Commission
Discussants:
Abd al-Salam AL-MALIKI, Member, Council of Representatives of Iraq, Economic and
Investment Committee
17:00-17:30 Conclusion: Future Activities of the OECD Iraq Project
This session will summarise the findings of the previous sessions and discuss the future activities of the Project, in line with outputs and in response to the GoI’s initiatives and needs.
Component 1: Marie-Estelle REY, Senior Advisor, Global Relations Secretariat,
OECD and Anna JOUBIN-BRET, International Investment Lawyer
Component 2: Klaus HACHMEIER, Iraq Project Co-ordinator, Global Relations
Secretariat, OECD
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Component 3: Thomas FLYNN, Policy Analyst, Global Relations Secretariat, OECD
Component 4: Gassia ASSADOURIAN, Policy Analyst, Global Relations Secretariat,
OECD
Page 13 of 13
The Iraq Project: “Improving the business and investment climate in Iraq”
Hydrocarbons have driven Iraq’s recent economic growth; however, they create few jobs for Iraqis. To reduce its reliance on hydrocarbons and promote sustainable economic development, the Government of Iraq (GoI) has sought to create private sector jobs.
In 2007 the GoI requested the OECD’s support to develop its private sector. In response, the MENA-OECD Investment Programme (the Programme) launched the Iraq Project. The Project combines capacity building and policy dialogue activities to improve the GoI’s policies and institutions concerned with private investment and governance affecting the business environment.
The Iraq Project benefits the National Investment Commission (NIC), the Provincial Investment Commissions (PICs), the Office of the Deputy Prime Minister for Economic Affairs, the Iraqi private sector and provinces, as well as Kurdistan Regional Government’s (KRG) Board of Investment. The Programme works in consultation with the United Nations, the World Bank, and the US Department of Commerce’s Commercial Law Development Programme (CLDP).
The Swedish Government will finance the Iraq Project until June 2016. The United States Government previously financed the Iraq Project.
Accomplishments and impact
The Programme has, with other international organisations and donor-funded projects, built GoI’s capacity to enter into investment-related agreements. Following several capacity-building activities, Iraq negotiated bilateral investment agreements with France, October 2010; Germany, December 2010; and Japan, June 2012. It also launched an agreement between the NIC and Egypt’s Ministry of Investment, during in an event with OECD participation on 3 May 2013. The Programme has also helped prepare Iraq, in co-operation with CLDP, to join the International Centre for Settlement of Investment Disputes (ICSID) Convention and reform its arbitration law. The Convention governs dispute resolutions for international investors through arbitration, and its member states are required to enforce awards. Iraq’s legislative bodies ratified the Convention, and now the instrument of ratification awaits the signature of Iraq’s Acting President.
The Programme has worked with the NIC to develop and implement policies on Special Economic Zones (SEZs). With Programme support, the NIC has:
Created a funded “Investment Zone” department;
Developed Iraq’s current Investment Zone regulation; and
Developed the pilot Hatein Investment Zone and began negotiations with a
potential investor.
Recently, the NIC has invited the Programme to analyse and comment on the draft Second Amendment to the 2006 Investment Law (to be discussed in Parliament) to ensure the amendment adequately addresses investor concerns.
Capacity-building activities
The Programme seeks to help the GoI develop a more attractive investment policy framework. It will assess Iraq’s legal, regulatory, and institutional investment framework. Based on the assessment the Programme will then train Iraqi policymakers on ways to improve the investment regime.
The Programme seeks to increase the capacity of the Iraq’s National and Provincial Investment Commissions (the NIC and the PICs) to better attract and retain investment, particularly in sectors strategic to Iraq’s long-term economic development. The Programme is conducting an investment promotion diagnostic. Based on the findings, the Programme will develop capacity-building activities that include training
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Capstone Meetings, Baghdad, February 2014: the Programme presented its policy recommendations, developed 2007-2013, to senior GoI officials.
1st Meeting of the Project Working Group, Baghdad, May 2014
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sessions and a roadshow to align the NIC, the PICs, and the KRG’s Board of Investment with best practice investment promotion techniques.
Policy dialogue activities
The Programme engages Iraqi policymakers in the regional dialogue on business climate related issues. Government representatives, Iraqi NGOs, and business associations participate in the Programme’s MENA-region activities, including the working groups on Investment and on SME Policy and Entrepreneurship, the OECD-MENA Women’s Business Forum, and training activities at the IMF Training Centre in Kuwait. The GoI is also co-chair of the Investment Security in the Mediterranean (ISMED) Working Group.
Through the Working Group on Investment Zones, the Programme seeks to support the GoI’s efforts to establish a clear framework for SEZs, which the Iraqi government can use to promote investment into strategic sectors. In addition,
the Programme intends to advise the GoI on its efforts to conduct a feasibility study for a pilot SEZ.
Contacts
Nicola Ehlermann-Cache Head of the MENA-OECD Investment Programme Global Relations Secretariat, OECD Tel.: +33 1 45 24 17 48 Email: [email protected]
Marie-Estelle Rey Senior Advisor, MENA Division Global Relations Secretariat, OECD Tel. : +33 1 45 24 81 46 Email : [email protected]
Klaus Hachmeier Iraq Project Co-ordinator, MENA Division Global Relations Secretariat, OECD Tel.: +33 1 45 24 76 51 Email: [email protected]
Thomas Flynn Policy Analyst, MENA Division Global Relations Secretariat, OECD Tel.: +33 1 45 24 96 71 Email: [email protected]
Gassia Assadourian Policy Analyst, MENA Division Global Relations Secretariat, OECD Tel: +33 1 45 24 83 87 Email: [email protected]
www.oecd.org/mena/investment
