American Contractor

Iraq's former trade minister wanted on a corruption charge was detained Saturday at the Baghdad airport after attempting to leave the country, a senior lawmaker said.

The plane carrying Abdul-Falah al-Sudani was ordered back to Baghdad during its flight to Dubai so that an arrest warrant charging him with corruption could be served, said Sabah al-Saedi, the chairman of the parliamentary integrity committee.

The arrest comes in the midst of a government crackdown on corruption. So far hundreds of arrest warrants have been issued since the beginning of the year against officials — including 51 in high-level positions.

Al-Sudani is charged with of mismanaging the ministry by importing expired foods, engaging in illegal contracts and employing relatives, said Judge Rahim al-Ogaili, the head of the Commission on Public Integrity.

Al-Sudani, a member of Prime Minister Nouri al-Maliki's Dawa party, resigned shortly after appearing before parliament earlier this month to answer allegations of corruption.

The minister's brothers are accused of having skimmed millions of dollars in kickbacks on food imports. One of them is in custody after attempting to flee the country while the other is still at large.

The case became a national spectacle after a video surfaced on YouTube purportedly showing al-Sudani's two brothers drinking and partying with scantily clad women.

The news of the arrest also comes after al-Maliki said earlier this week that he would not defend any official in his party accused of corruption.

Read article here.

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Important Iraq Dates

July 25, 2009 – KRG Parliament Elections
July 31, 2009 – Iraq Referendum Vote (SOFA Security Agreement)
January 16, 2010 - National Parliamentary Elections
August 21st to September 19th 2009 - Ramadan

Just this week the Iraq Council of Representatives (CoR) held a meeting on the issue of lifting the immunity of some deputies that have outstanding warrants for there arrest. They have decided to organize a 14 member committee consisting of the individual blocs that make up the CoR to study the issue.

Things are continuing with the signed petitions as just recently the Sadrist Bloc has submitted a request and signed by 25 Parliament members to summon the Labor and Social Affairs Ministry to be asked questions by the Parliament on how he is doing with the affairs of the Ministry. I have not heard anything else on this ministry just that the CoR would like to get more information on how the Ministry of Labor and Social Affairs has been doing all this time.

OIL

There is still no date when the Ministry of Oil Hussein al-Shahristani, will be reporting front and center at the Iraqi Council of Representatives. I am sure he is getting his notes together from his support staff and others that are in support of the Oil Ministry.

At the same time the CoR is getting there questions in order to ask the al-Shahristani when they get the chance. Such as the corruption files linked to the Oil Ministry that the CoR Oil and Gas committee have in there possession. The Oil and Gas committee want to ask al-Shahristani, about the lack of maintenance of the Iraqi Oil pipelines, which they say could cause the explosion of the pipelines at any moment.

Another issue is on why al-Shahristani, has failed to bring a single oil refinery to Iraq to reduce the shortage of oil derivatives. And the CoR wants to know why al-Shahristani, did not do anything when the Persians (Iranians) started to take over oil wells in the border areas. There are other questions that will be asked just have not been published as of yet.

Let's hope they get to the 70 of the most important oil wells in Iraq that have been depleted due to bad extraction methods. I could make a list of how bad the Oil wells are but some other time. I will say the reports are that if nothing is done to get the production levels up very soon than the production level will start to drop from the current levels.

KRG Pumping Oil Sunday 31 May.
After getting the blessing from the Iraq Central government due to the 2009 budget deficit they really had no choice. This is just a trial run to see what is the capabilities of the KRG to pump oil from the Al-Turiq and Taqtaq oil wells. The KRG estimates they can get about 10,000 barrels a day and later get it up to 50,000 bbd. Let's hope there is no holes in the pipelines and no terror attacks to make them look bad.

IRAQ CHAPTER SEVEN
The new expiration date is 31 December 2009 however the Iraqi government has been negotiating with the UN representatives who just recently visited Baghdad. There is another meeting next month June. There are legitimate obstacles of preventing Iraq from getting out under the Chapter seven. The debt that is owed to other countries such as Kuwait, Saudi Arabia who are owed 30 bn usd each and Egypt 800 million dollars and other countries that want there money. I don't believe the meeting next month you will see the Chapter seven lifted or you may but I think the next 30 days is not enough time to solve each countries issues of the money owed. Kuwait wants there property back that was taken in the Gulf war and or compensation. I don't believe you can solve this in 30 days especially when Iraq doesn't have any money to pay it's debts. Remember they went to the London Conference to acquire investments which are badly needed just don't think they are able to come to an agreement with Kuwait anytime soon. Kuwait is the country that wants Iraq to remain under Chapter Seven. We will have to watch this and see how this develops.

I predict that they will extend this all the way up too 31 Dec 2009 and if no agreement has been made then you will see another extension date into 2010.

The Iraqi National Elections was scheduled for 31 January 2010 and now the date has been changed to 16 January 2010. The date was conflicting with the date of a religious holiday.

The Belgians have just written off 80% of the debt owed by Iraq and probably will see a Belgian Embassy opening in Iraq soon.

The Oil and Gas Committee Recorder Jabir Khalififah Jabir, recently said that if the Oil Minister Hussein al-Shahristani submits his resignation just like the Trade Minister did last week it will not protect him from legal prosecution. Jabir says he has several items evidence of corruption in the Ministry of Oil.

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The Iraq Ministry of Trade resignation saga continues...

Things are getting interesting in regards to the resignation of Abd-al-Falah al-Sudani, the former Iraq Trade Minister. The Iraqi Council of Representatives have decided to go ahead and conduct a vote of 'No Confidence' even after PM Maliki had accepted the Trade Minister resignation on May 14.

The Iraqi Premier is the temporary Trade Ministry for now. Also the Council of Representatives would like the PM Malki to rescind the resignation of the Trade Ministry.

The no confidence vote was scheduled for Wednesday 27th May and it was delayed until Thursday 28th May. Why it was postponed is still a mystery. Maybe PM Maliki is having second thoughts about accepting the resignation of the Trade Ministry before the Iraqi Council of Representatives had there no confidence vote, I am not sure. Well, anyway the reason for the no confidence vote by the Iraqi Council of Representatives, this week so that the former Ministry of Trade al-Sudani can not run in any future elections or seek any position in the Iraqi government. Plus there is speculation that maybe al-Sudani will be investigated and maybe have criminal charges against him in the future. Which would send a signal to all the allegedly corrupt officials wherever they find them in the Iraqi government that any corruption and you will be prosecuted.

PM Maliki is looking at the corruption inside the government and is going to launch a nationwide campaign to get a grip on the corruption that is plaguing the Iraqi government.

American Contractor has been receiving emails mentioning that the U.S. Dollar will no longer be available in Iraq after June 1st. As I've have said in a previous newsletter dated 05232009 and if by chance you did not receive it let me know. I've said in the previous newsletter “The notion of the US Dollar no longer available inside Iraq is just plain false.”
Where do people come up with these ideas? Don't tell me I already know.

At the height of the Iraq war there were at one time 165,000 U.S. Troops not counting the various coalition forces and the contractors working in Iraq and all spending US Dollars and collecting those US Dollars over the past six years. Plus you had the US government sending over US dollars to help with the building of an Iraqi government and Iraqi banks to include the Central Bank of Iraq all in US Dollars. A large amount of those dollars are still in Iraq either in a Iraqi bank or buried under their mattress. Just recently now you have the US Army finance sending out a flyer stating in part “ Effective June 1, 2009 the finance office on Tallil will no longer disburse U.S. Dollars.” In the same flyer from the US Army Finance the flyer says “U.S. Currency will be reduced to an operational minimum at all finance offices.” Where do you get the U.S. Dollar will no longer be available in Iraq?

So you see that the US Army will still be using the US Dollar just not as they have been doing the last six years. They are trying to force a reliance on the local Iraqi banks after six years which is a good thing. Maybe they should have thought of this a long time ago then this late in the game, I guess better late than never.

There was another posting from the US Army Finance in regards to corporate checks and if you want these type of checks cashed for US Dollars you have to justify it. Rarely do any contractors use the Army Finance to cash a corporate check they just go to a regular Iraqi bank or a western bank and conduct the transaction.

The Post Exchange/PX will always use US Dollars and not ever will they use Iraqi Dinar because it is against the Army Regulations to use any other currency but US Dollar in all there transactions.

In the last six years there has been billions and billions of US Dollars transferred to Iraq. The US Dollars don't just disappear a large majority of it is still inside Iraq. So the US Dollar will still be used just maybe not so much by the US Army. What about the oil sales that have been sold in US Dollars since 2004? The Iraqi government conducts all there contracts in US Dollars to pay contractors because there suppliers want to be paid in US Dollars. So again the US Dollar is not going any where in Iraq.

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RV UPDATE:

As of 27 May 2009 there is no evidence of a pending RV. The Iraq government budget 2009 has a 20 Billion deficit and to overcome all of this the government is taking a loan from the IMF 7 billion and also allowing the KRG government to export oil to Turkey.

The Iraqi government ministry officials are still attempting to get the following items passed in the Iraq parliament; Political Reform Document, National Reconciliation, the future of Iraq, General Amnesty Law, Implementation of Laws, and amendment to the Iraq Constitution. The government is always trying to solve the issues of the Oil and Gas law and hopefully by the end of the year or early next will we see this issue resolved however I would'nt count on it. The next round of tenders for the Iraq oil fields is next month in June.

IRAQ GOVERNMENT
There are some parliament members that have been accused of criminal acts however, cannot be brought to justice because they have immunity. 70 Parliament members have filed a request to have the immunity removed from several parliament members. The Dawa Party is demanding the removal of immunity from several members of the Accord Front. These members have arrest warrants that have not been served due to the immunity law.
Just recently PM Maliki has banned all alcohol in restaurants and hotels and owners of such establishments must sign document that the owner is fully responsible and if caught the hotel or Restaurant will be closed.

Several liquor stores have opened up in the area since the security has improved. This reminds me of the strict laws of Saudi Arabia and maybe Iraq is heading in that direction. We will have to wait and see.

The cabinet reshuffle will include more than seven sovereign and service ministries, such as the Oil, Finance, Trade, transportation, and Higher education ministries.

The Agriculture ministry has already resigned also in the cross hairs for reshuffle is the Woman’s ministry as she has resigned earlier, then she later changed her mind and Maliki refused to accept her back into the Cabinet. She not allowed to attend any meetings with the Council of Ministry’s.

Today in Baghdad there was a mini meeting with Iraq government officials to discuss Iraq’s relations with other neighboring countries, national reconciliation, and the U.N. role. Also remember I’ve mentioned that there will be a major meeting in Baghdad in October with the International Compact. The meeting in October will discuss of getting Iraq from Chapter Seven and PM Maliki wants to know why do some countries want to keep Iraq in Chapter Seven.
When PM Maliki was at the Iraq Investment Conference in London one of the issues that was brought up about Foreign Investment in Iraq was not able to own land inside Iraq. You can own the building but not the parcel of land that the building sits on. PM Maliki has stated that he will work on amending the Iraq Investment law to read that Foreigners are allowed to own land in Iraq. When, your guess is good as mine. This is one of the main obstacles for foreign investments in Iraq.

Council of Representatives Oil and Gas Committee recorder, Jabir Khalifah Jabir, has been pressuring the Iraq Parliament Speaker to set a date for the questioning of the Oil Minister Husayn al-Shahristani. The committee had presented an official request to the Parliament Speakership after collecting the signatures required to set this in motion.

We will just have to see what happens next as I do believe the Oil Minister will either resign beforehand or actually go through with the questioning in front of the Iraqi Parliament. We will know something within the next week before PM Maliki goes to Washington D.C..

The Interior Ministry appears to be putting pressure on the Ministry of Oil operations as they just reported a fake company operating in Basrah by four members of a company called Badr al-Janub and have been accused allegedly smuggling oil worth 4 billion dollars. The fake company had signed oil contracts with the Oil Ministry to smuggle 92 oil tanks. With this in the news and the Parliament wanting to question the Oil Ministry does not look good. We will have to see what other news comes out regarding all the ministries as I am sure everyone is posturing and getting ready for the inevitable ax that PM Maliki said he would do concerning the reshuffle of the cabinet.

Speaking of Ministries and how they operate which is poorly let me give you what one Parliament member says about the Iraqi government.

“I agree with you, because there is a flaw. There is a flaw in the administrative system of the Iraqi state. When will it develop? It has been rife with bureaucracy and routine for the past 30 years. I agree with you because it is an undeniable fact. I cannot deny that our ministries are still using carbon copy. You still need 100 signatures on government documents. A person has to go to 10 government departments collecting signatures before he gets an approval. What for, you do not know. Why is this the situation?” – Al-Dabbagh Parliament member, Iraq Council of Representatives.

Now after reading this statement from Al-Dabbagh, now you have an idea why everything in Iraq government takes so long to get accomplished.

The Iraq Finance Ministry has announced that he would like to withdraw 5 billion usd from the Central Bank of Iraq to cover the shortfall in the Iraq 2009 budget. Now you have the Iraq Parliament wants to meet with both Finance Minister Bayan Jabr and the Central Bank Director Dr. Sinan al-Shebebi. The Parliament would like to know the reasons behind this from Finance Minister and CBI. If the CBI does give the funds to the MoF this would be dangerous to the Iraqi Dinar currency and effect it's currency value. I think this will happen because where else is Iraq going to get the funds to cover the budget shortfall.

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Iraqi Prime Minister Nuri al-Maliki has accepted the resignation of his trade minister over allegations of corruption relating to the country's massive food import program, his office said.

Trade Minister Abd al-Falah al-Sudani submitted his resignation on May 14, the office said in a statement, before being grilled by parliament over a scandal that has led to the arrest of one of his brothers and the flight of another.

Read Article here

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A brief summary of events that are occurring in Iraq for the week. This is a limited view of all things happening in Iraq. There is a lot more to write about then what I have written in this .pdf

The Iraqi Trade Minister has been accused of corruption by the Iraqi Parliament members which held a no confidence vote while in session. The Minister, Abd al-Falah al-Sudani denies the allegation which have been made by political opponents and or disgruntle employees. The Trade Minister brother has been arrested in connection with the corruption scandal.

The Seven Way committee from the Iraqi Council of Representatives operating in Kirkuk and have not reached an agreement on the issue of Power Sharing. Expect more delays on other Iraqi legislation.

The Interior Ministry Official says 219 ministry employees face corruption charges. Major General Abd-al-Karim Khalaf, Director of the National Command Centre at the Interior Ministry, has referred 219 officers and members of the ministry to the Iraqi courts on financial corruption charges.

There is a brave Parliament member that has called for Oil Minister Hussein al-Shahristani's, resignation. Parliament member Jabr Khalifia Al Jabr, whom is the Oil and Gas committee Recorder has called for the Oil Minister resignation before he is questioned by the Iraqi Parliament within one week. The Parliament member has proof of the corruption and will be presented upon al-Shahristani's questioning in front of Parliament. At the moment the Iraqi Parliament has called for his questioning in front of Iraqi Parliament which 140 members have already signed a petition for the Oil Ministry al-Shahristan questioning.

In the months to come your going to see a lot of the Iraqi Parliament exert there legislative authority to hold people who have been placed in office held accountable as you are already seeing this with the Ministries of Trade, Oil, Electricity. The other Ministry that the Iraqi Parliament will be questioning is the Electricity Ministry, as to why Iraq does not have more electricity then it does.

This all coincide with the PM Maliki calling for a yet another Cabinet shuffle and I do believe this will happen as PM Maliki will make changes to fix the ongoing problems with his cabinet who are inept and lacking in skills to lead Iraq. And also the National Elections on January 30, 2010. In regards to the cabinet shuffle the Deputy Prime Minister Barham Salih will post his resignation.

PM Maliki will be heading to the United States to meet with obama in mid June. I am sure the shuffle of the cabinet will happen before he meets obama.

All this with the No confidence vote is nothing new and the Iraqi Parliament wanted this to happen for over a year. The Iraqi Parliament didn't have the political will and or backing due to not having a strong Parliament Speaker to get things done.

One more note in reference for to removing a Ministry from office this can only occur with absolute majority. My source says the Iraqi Parliament members who did not sign the No Confidence vote Petition will most likely vote no on the removal of the Minister. It will remain to be seen next week if the Oil Minister al-Shahristani will show up and be questioned by the Iraqi Parliament members or resign before him coming to the Iraqi Parliament.

The Status of Forces Agreement (SOFA) was passed by Parliament last December 2008 and in the agreement and this was the main reason it was passed by the Iraqi Parliament is that there would be a vote by the Iraqi people on the security agreement between the United States and the Iraqi government and the vote would be held before July 31, 2009.

As the July date is getting close you will see shortly the Iraq Election Commission issue a call for a law for the Referendum to take place as agreed in July. In order to have this vote your going to need funding and organization to get this done.

U.S. Dollar no more in Iraq?

There are some people out there that think that the US Dollar is no longer going to be in Iraq because of a letter from the U.S. Military Finance advising all it troops that U.S. Dollar will be no longer available. Well, maybe for the US Military however, all other contractors and other Iraqi businessmen will still be using the U.S. Dollar. You have to keep in mind the Iraq Dinar is not a regionally accepted currency for business transactions. The Iraq Dinar is still a fully convertible currency in all the major currencies inside Iraq for all debts public and private. So the notion of the US Dollar is no longer available inside Iraq is just plain false.
An attempt will be made to publish this newsletter on a weekly basis and also as time goes on to publish more content as time permits.

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Information about investing in Iraq and what are the requirements to do so. The information was published by the Iraq Investment Commission.

Investors Guide to Iraq

Purpose of Investors Guide

The purpose of this guide is to describe the investment opportunities in today's Iraq and the investment environment potential investors will encounter when making business investments

Benefits of Investing in Iraq

To attract foreign Investments into Iraq, generous benefits, guarantees and exemptions have been set out in Iraqi investment law, including:

- 10 years of tax exemption
- Ability to repatriate investment and profits from investments
- Ability to bring non-Iraqis into country to work on investment projects
- Guarantee to not nationalize or confiscate investment

Key Geographic and Demographic Information

- The Republic of Iraq is located in South West Asia, Turkey surrounds it from the North; Iran from the East; Syria and Jordan from the West; and the Arab Gulf; Saudi Arabia and Kuwait from the South and Southwest

- Capital: Baghdad

- Four Major Cities: Baghdad, Mosul, Basrah, Erbil

- Population: 30 Million (2008 Est.)

- Population Growth: 3% Annually (2008 Est.)

Important Economic Data

The Iraqi economy depends primarily on the oil sector which provides approximately 67% of its total domestic product and has a number of other sectors that make up the remaining 33%

2008 Estimates:

- GDP: 131 Billion
- Per Capita: Income: $4,360.00
- Workforce: 7.74 million
- Unemployment: 15%
- Consumer Price Inflation: 6.8%
- Key Agricultural Products: Wheat, Barley, Rice, Vegetables, Dates, Cotton
- Key Industries: Oil and Gas, Petrochemicals, Textiles, Leather Goods, Construction Materials, Food Processing, Fertilizers, Metal Fabrication
- Average Daily Oil Production: 2.42 Million Barrels
- Average Daily Oil Exports: 1.83 Million Barrels
- Proven Oil Reserves: 115 Billion Barrels
- Proven Natural Gas Reserves: 3.17 Trillion Cubic Meters

The Investment Environment

- The Iraqi economy is undergoing a rapid transformation from a centrally based economy to a free market economy in which the private sector has a leading role in the economic development of the country

- After 2003, Iraq took important steps towards enhancing the private sector through several legislature reforms which are described in the following presentation

Investment Law No.13 was ratified by Parliament in October 2006 with the effective date of January 17, 2007

- Established the national Investment Commission and Investment Commissions in each of the Provinces

- Covers investment projects in the private and mixed sector

- Does not cover Oil and Gas exploration and production and investment in the banking and insurance industries

- Specifies $250,000 USD as the minimum level of capital investment according to investment regulations No. 2/2009

- Regulates domestic and foreign investment through several mechanism as follows

A. The National Investment Commission (NIC) leads the effort to attract and regulate investment

The NIC is comprised of the following:

- Legal and Administrative Department
- Economic Department
- Promotion and Information Department
- The "One Stop Shop" Department to expedite investment licenses

- Formulates national investment strategies and policies governing investment projects

- Lays out plans, regulations and guidelines and regulations

- Monitors the application of the guidelines and regulations

- Oversees Federal strategic investment projects

B. Strategic Projects

- Investment Regulation No. 2 for the year 2009 specified the strategic projects which the NIC is required to oversee; twelve categories of projects are detailed in this regulation which are listed in Appendix II

C. Establishment the Investment Commissions in the Regions and Provinces which have the Authority to grant investment licenses, promote investment, open local branches in their area and formulate local investment plans in consultation with the National Commission to ensure that the local plans do not conflict with the Federal Investment Plan

D. Specified Benefits and Guarantees for Investors

1. Ability to invest capital brought into Iraq with related earnings in an exchanged currency after settling all obligations and debts to the Iraqi Government and all other parties

2. Permission to trade stocks and bonds listed on the Iraqi Stock Exchange (ISX)

3. Ability to lease land for the life of the investment project or for a term no longer than 50 years. Extensions can be requested and obtained from the NIC for additional years based on need and economic considerations

4. Permission to insure the investment project with any Iraqi or foreign company which is considered suitable

5. Ability to open accounts for the licensed project in Iraqi and or foreign currencies with Iraqi or foreign banks

6. Permission for foreign investors and non-Iraqi employees of investment projects the right to reside in Iraq and to have unimpeded freedom of entry and exit

7. Protection from confiscation or nationalization of any part of an investment project covered by the investment law excluding legally obtained judgments against the project

8. Provision for non-Iraqis working for the investment projects to transfer their salaries and other compensation outside Iraq in accordance with the law after paying their obligations and debts to the Iraqi Government and other parties

9. Any amendment to this law will not have any retroactive effect on the guarantees and exemptions and rights decided thereupon

E. Allowed Exemptions

1. A project which has obtained an investment license from the NIC will enjoy exemption from taxes and fees for the period of ten years as from the date of start up of commercial operation

2. The NIC is required to increase the number of years of exemption from taxes and fees in direct proportion to the percentage increase of Iraqi investor participation in the project. The increase in years of exemption may reach a maximum 15 years if Iraqi ownership exceeds 50%

3. Imported assets for an investment project are exempt from import fees provided that the assets shall have entered Iraq within three years of the date of the issuance of the license

4. Investment projects in hotels, tourist establishments, hospitals, health clinics, rehabilitation centers, educational and scientific organizations are granted additional exemptions from import fees of necessities required for modernization and renewal once every four years, provided that the necessities are used in the project within three years of the grant of the import license and that the items imported are not used for other than the intended purpose

F. Obligations of the Investor

- To inform the NIC of the start up date of the commercial operations of the investment project

- To maintain proper accounting records which will be audited by a licensed chartered accountant

- To submit the economic feasibility studies and all technical studies to include all related maps of the project

- To maintain special records for the imported materials

- To preserve the environment

- To adhere to Iraqi laws, proper quality control standards, and the submitted work schedules

G. Procedures to grant investment licenses and to establish projects

The "One Stop Shop" department in the NIC shall be responsible for the issuance of the investment license in accordance with the following steps required of the investor:

1. The investor submits a request to the NIC indicating a desire to invest and the area of intended investment

2. This request for a license shall be submitted on a standard form which can be obtained from the NIC directly or on their website

3. Submit a satisfactory credit recommendation from a certified bank

4. Provide the details of the investment project and its economic feasibility

5. Submit a timetable for executing the project

In return, the NIC shall execute the investment license in a period of time not exceeding 45 days from the date of submittal after obtaining the approval of those ministry sections that are required to reviews project submittals

H. Investment on the Iraq Stock Exchange (ISX)

The 2006 Law of the Investment No. 13 permits non-Iraqis to trade stocks and bonds listed on the ISX and to form investment funds to own stocks and bonds

- The ISX has begun electronic trading system to provide better transparency and rapid dissemination of information

- These upgrades are designed to encourage private investment and provide liquidity for those investments by listing their securities on the exchange

- In addition, a proposed law creating the law and regulation for a stock market commission has been drafted

Iraq's Bilateral and Multi-Party Agreements

A. Investment Guarantees and Protection Agreements

- Iraq has 9 multiparty agreements within the Arab League

- Iraq has 32 bilateral agreements worldwide

B. Iraq's Free Trade Agreement

- Iraq has free trade agreements with Algeria, Egypt, Jordan, Lebanon, Oman, Qatar, Syria, Sudan, Tunisia, UAE and Yemen

- Iraq signed a trade agreement with the United States on August 11, 2008 designed to improve trade and investment flows

- Iraq is a member of the Multi Investment Guarantee Agreement (MIGA)

- Iraq currently serves as an Observer in the World Trade Organization (WTO)

FREE ZONES IN IRAQ

The Free Zones (FZ) Law

- The FZ law No. 3 of 1998 allows industrial, commercial and service project invest in the FZ

- Goods imported and exported from FZ are exempt from all taxes and duties except when imported through customs

- All, capital, interest and income generated from project investments are exempt from taxes and duties throughout the projects timeline, including the construction and start up phases

- Application for FZ projects requires submitting a request and paying 100 USD fee to the Free Zones Board

Iraq has Four Free Zones

1. Basra / Khor Zubar

2. Ninevah / Flaifil

3. Al-Anbar / Al-Qaem

4. Sulamanyia / Northern Iraq

The Free Zone Law enables the following activities in the Free Zones

1. Industrial (Production and Sales) activities and assembling, manufacturing and repacking

2. Warehousing re-exporting and trading

3. Warehousing services and various types of transportation

4. Banking, insurance and re-insurance

5. Supporting complementary and professional activities and services

Iraq Banking System

The current banking system in Iraq consists of 43 banks in addition to the Central Bank of Iraq

- The banks are distributed according to the ownership between seven governmental banks and 30 private banks including 7 Islamic banks and 6 licenses given to foreign banks

- Banking investments are governed by the law of the Central Bank of Iraq, No.56 of 2004 and the law of the banks, No. 94 of 2004

- The minimum capital requirements to establish a bank in Iraq is 100 Billion ID

Iraqi Banks with Foreign Shares

- Commercial Bank / 49% share by Al-Ahly Al-Muttahid Bank of Bahrain

- Baghdad Bank / 49% share by Al-Khaleej Al-Muttahid Bank of Bahrain

- Al-Ahly Bank of Iraq / 49% share by Export and Finance Bank of Jordan

- Adre Essalam Bank / 70% share by HSBC

- Al-Etiman Bank of Iraq / 75% share by National Bank of Kuwait / 10% share by International Funding Commission

- Al-Eqtisad Bank / 49% share by Al-Ayan Co. of Kuwait

- Al-Mansour Bank / 60% share by National Bank of Qatar

Trademark Protection

- Investors register trademarks with the Trade Marks Registrar, Ministry of Industry and Minerals

- The government protects some internationally recognized trademarks even if not registered in Iraq

- Investors may transfer ownership and grant a license for use of a registered trademark

- Iraqi laws protect registered trademarks for ten years, with the possibility to extend for ten additional years

- Trademark owners may apply for renewal during the final 6 months of the trademark validity

Patent Protection

Approvals on registering industrial designs and models are obtained for new or novel individual designs or models

An industrial design or sample is not considered novel in the following cases

1. If it was exhibited or described or its use was described to the public before submitting the application for registration for a patent in Iraq

2. If it was exhibited or described after applying for registration in a country dealing with Iraq on reciprocity basis

3. If it was exhibited in national or international fairs, or the industrial design or model was exhibited to the public in a scientific conference or journal during a period of not more than 6 months before the date of applying for registration in Iraq

4. If it includes non-elementary differences with respect to a previous industrial design or model or it was registered to a product of another type that is different from the one for which an industrial design or model was previously registered

Copyright Protection

- The Iraqi author rights laws attempt to meet the current international standards and WTO requirements

- The Intellectual Ownership Board of the Ministry of Culture oversees registering author rights

- Currently, this law applies to authors of novels and literature and of works of art and science

- If the book was a novel of another person's, then the authorship rights attribute to the author unless agreed otherwise

- Short stories or other literature, videos or scientific books may not be published in newspapers or fictions without permission of the author

- Financial rights guarantee the author lifelong protection and another 50 years past their death

- Newly created Iraq legal rights grant protection to artists of exclusive performances and rights in public broadcasting and novel forms of communication, according to international standards

Registering Companies in Iraq

The 1984 Law of Trade, No. 30 regulates all activities of private and public sectors for Iraqi investors

- Trade is defined as the business activities aiming at interest through a series of sectors to include import / export trade, manufacturing, logistics, construction, tourism, banking, insurance, purchase and sale of stocks and bonds, and contracting.

There are three steps to register a company:

1. Determine the Type of Company to Register

Companies according to the law of 1997 are divided into the following categories:

A. Stock Company Private and Mixed

- Stock companies may to be founded by no less than 5 individual or corporate entities and can sell shares for public subscription

- The shareholders responsibility for the company's liabilities is at the nominal value of the shares they own

- Iraqi law requires incorporating insurance, re-insurance and money investment companies in the form of stock companies

- Founding shareholders must deposit their shares of the company's capital into an authorized Iraqi bank

- Money investment companies can invest in financial securities in Iraq. They are subject to the provisions of the Companies Law as a stock company, but their transactions are monitored by the Central Bank of Iraq

B. Individualized Project

- An individualized company may be incorporated by a single person

- The individual owner undertakes unlimited personal responsibility for all the company's obligations

- The individualized company in Iraq is known as the "individualized Project"

C. Joint Company

- The single company is incorporated by 2 to 25 investors, either individuals or corporate entities

- The owners have shares in the company's capital

D. Simple Company

- The simple company is incorporated by 2 to 5 investors either individuals or corporate entities

- Each provides capital with either cash or in-kind contributions

- The Companies Law requires that incorporation certificates of the simple company must be registered with the Notary Public

- The owners of the simple company must deposit a copy of the incorporation instruments, to include names of shareholders and their numbers of shares, at the Iraqi Companies Registrar at the Ministry of Trade

E. Limited Company - Private or Mixed:

- The Companies Law states that the number of a limited company's founders is no less than 2 and no more than 25

- The founders can be individuals or corporate entities and are responsible for the company’s liabilities at the nominal value of the shares they own

- The majority of the companies registered in Iraq are limited companies

- It is permitted to incorporate a mixed company by the agreement between a single artificial person, or more, of the state sector and a single person, or more, of other sectors

- If the contribution of the State sector drops below 25%, it is then considered a private company

2. Meet Required Registration Procedures

A. Register a Trade name with the relevant trade chamber or union of trade chambers

B. Submit a signed contract by the founders, stating the name of the company, the activities and its capital

C. Deposit the capital of the company, in ID, at an Iraqi authorized bank and notify the companies registrar

D. Pay the required fees to the Companies Registrar

E. submit the subscription certificate, signed by the founders, and the company's feasibility studies

F. Define the commercial and technical activities of the incorporating company to be included in the contract for incorporation

G. Employ a legal advisor (attorney) for the company from the Bar Association in writing

H. Employ a chartered accountant from the Chartered Accountants and Auditors Association

I. Appoint a Executive Manager

J. Obtain approval of the Minister of Interior for all foreign shareholders

Only stock companies, mixed and private, may issue shares liable for public circulation. The founders of the mixed stock company must have more than 30% but less than 55% of the nominal capital. The other shares are to be floated to the public within 30 days as of the approval by the Companies Registrar. If the Companies Registrar finds that the registration papers mislead the investors, he then refers the matter to the Financial Securities Board

3. Receive Approval of Registration Request

- Two months for the stock company

- 20-25 days for all other types of companies

Worker's Retirement and Social Pension Organization

- All companies before commencement of their activities, must register with the Minister of Labor/Worker's Retirement (WR) and Social Pension Organization (SPO)

- They must deposit funds to pay the deductions for social security based on the number of employees and their estimated pay for three months

- The investor obtains a receipt voucher from the Ministry certifying the payment amount as well as the social security number issued to the company

- The primary step of registration with the Ministry of Labor and obtaining the receipt voucher requires at least a week and additional fees may be incurred during the process

- Social Security dues shall be paid on a quarterly basis

- Social Security payments equal 17% of an employee's ages
- Employers contribute 12%
- Employees contribute 5%
- Payments are made by the employers to the WR and SPO certified check

Customs Law

- The Customs Law, No. 77 of 1955 initiated the rate of customs tariff imposed on goods imported to Iraq

- This Law was suspended and replaced by the imposition of a 5% reconstruction fee on the value of goods imported to Iraq excluding: Food products, medicines, clothes, books and transit goods

- Iraq operates on a harmonized customs system

Quality Standards

- The Central Organization of Standardization and Quality Control is the sole body responsible for monitoring product standards in Iraq

- This organization inspects local goods according to health and safety parameters

- Iraq is also a member of the International Organization for Standardization which provides technical assistance with patents and intellectual ownership rights

Nutritional Health Requirements

- The Ministry of Agriculture inspects all agricultural products and livestock and issues health certificates for livestock

- The Ministry of health inspects and issues health certificates for manufactured food products

Posted by American Contractor at 8:27 AM | Permalink | TrackBacks (0)

As I’ve mentioned in early April on this blog that PM Maliki, will be heading to an Investment Conference in London after his meeting with the Russians. PM Maliki had 93 Iraqi officials in attendance and as I’ve said to others in private email communications this would be very important invitation only meeting for Iraq.

It is too early to tell if the meeting was successful for Iraq or not we just have to see what is reported and actions of the business world towards Iraq.

PM Maliki gave a speech on 30 April

The speech he gave announced some things new and other issues that is confronting Iraq at the moment and into the next several years.

I will say this after reading the full speech by PM Maliki after our translation department transcribed it, does give some details of where Iraq is headed or where PM Maliki would like to see Iraq.

I will seriously think about posting the full speech on this site. Just haven’t made a decision.

In October, there will be another serious conference and this time we don’t have to cross borders as it will be held in Baghdad.

Think International Compact.

Posted by American Contractor at 5:05 AM | Permalink | TrackBacks (0)