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Doing business in Iraq (including the Iraqi Kurdistan region): Iraq trade and export guide
Updated 3 February 2015
Contents
Iraq export overview
Challenges doing business in Iraq
Growth potential
UK and Iraq trade
Opportunities for UK businesses in Iraq
Start-up considerations
Legal considerations
Tax and customs declarations
Business behaviour
Entry requirements
Contacts
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 UKTI 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:
high sovereign wealth created by increasing oil revenues, with potential to fund a USD 360 billion investment programme
low inflation
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
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. However, the Iraqi economy is still growing rapidly and over 5% growth is expected in 2015.
Huge hydrocarbon wealth is fuelling economic development across a range of sectors including:
oil and gas
infrastructure
defence and security
healthcare
education
Iraq’s economy is dominated by the public sector, which is over resourced and inefficient.
An International Monetary Fund (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
UK Trade and Investment (UKTI) publish over 1,000 business opportunities per month across all sectors and over 100 markets. Sign up to receive regular business opportunities alerts.
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 [You must be registered and logged in to see this link.] for more information on oil and gas opportunities.
5.2 Infrastructure
Iraq is in the process of rebuilding and upgrading its infrastructure.
Design and construction opportunities include:
Basra City Master Plan project in southern Iraq
rapid build low cost housing
schools
hospitals
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 Advisers [You must be registered and logged in to see this link.] and [You must be registered and logged in to see this link.] 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.
UKTI 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 [You must be registered and logged in to see this link.] for more information on defence and security opportunities.
5.4 Healthcare
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)
hospital design and building programme (pending future budget approval)
Contact Trade and Investment Adviser [You must be registered and logged in to see this link.] for more information on healthcare opportunities.
5.5 Education
Education is a priority for investment in Iraq. There are multi-million dollar higher education projects in Iraq for which UK businesses can bid. 40% of the 35 million population are under the age of 15.
The UK is a natural partner of choice as higher education in Iraq is based on the British system. Iraq is looking to expand its twinning agreements between UK and Iraqi universities
Opportunities for UK businesses include:
accreditation
overseas scholarships
teacher training
English Language Training
education software
Contact Trade and Investment Adviser [You must be registered and logged in to see this link.] for more information on education 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 UKTI 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 UKTI 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 UKTI 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.
8.2 Customs
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.
8.3 Documentation
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 UKTI 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.
11. Contacts
Contact the UKTI Team in Iraq for more information and advice on doing business in Iraq, including the Iraqi Kurdistan Region.
[You must be registered and logged in to see this link.]
Updated 3 February 2015
Contents
Iraq export overview
Challenges doing business in Iraq
Growth potential
UK and Iraq trade
Opportunities for UK businesses in Iraq
Start-up considerations
Legal considerations
Tax and customs declarations
Business behaviour
Entry requirements
Contacts
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 UKTI 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:
high sovereign wealth created by increasing oil revenues, with potential to fund a USD 360 billion investment programme
low inflation
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
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. However, the Iraqi economy is still growing rapidly and over 5% growth is expected in 2015.
Huge hydrocarbon wealth is fuelling economic development across a range of sectors including:
oil and gas
infrastructure
defence and security
healthcare
education
Iraq’s economy is dominated by the public sector, which is over resourced and inefficient.
An International Monetary Fund (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
UK Trade and Investment (UKTI) publish over 1,000 business opportunities per month across all sectors and over 100 markets. Sign up to receive regular business opportunities alerts.
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 [You must be registered and logged in to see this link.] for more information on oil and gas opportunities.
5.2 Infrastructure
Iraq is in the process of rebuilding and upgrading its infrastructure.
Design and construction opportunities include:
Basra City Master Plan project in southern Iraq
rapid build low cost housing
schools
hospitals
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 Advisers [You must be registered and logged in to see this link.] and [You must be registered and logged in to see this link.] 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.
UKTI 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 [You must be registered and logged in to see this link.] for more information on defence and security opportunities.
5.4 Healthcare
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)
hospital design and building programme (pending future budget approval)
Contact Trade and Investment Adviser [You must be registered and logged in to see this link.] for more information on healthcare opportunities.
5.5 Education
Education is a priority for investment in Iraq. There are multi-million dollar higher education projects in Iraq for which UK businesses can bid. 40% of the 35 million population are under the age of 15.
The UK is a natural partner of choice as higher education in Iraq is based on the British system. Iraq is looking to expand its twinning agreements between UK and Iraqi universities
Opportunities for UK businesses include:
accreditation
overseas scholarships
teacher training
English Language Training
education software
Contact Trade and Investment Adviser [You must be registered and logged in to see this link.] for more information on education 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 UKTI 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 UKTI 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 UKTI 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.
8.2 Customs
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.
8.3 Documentation
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 UKTI 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.
11. Contacts
Contact the UKTI Team in Iraq for more information and advice on doing business in Iraq, including the Iraqi Kurdistan Region.
[You must be registered and logged in to see this link.]
