Firms call for long-term investments in Iraq

Their main grievance is alleged lack of international commitment that has led to a number of companies attending the expo seeing little in serious investment and not enough firms are interested in conducting business.

"Iraq is in need of trillions of dollars to pursue the rebuilding and development of infrastructure," an Iraqi official told the GDN.

"Americans have committed $50 million a year to pursue the rebuilding of our infrastructure and so far this year they have spent $30m to $40m on setting up roads, residential blocks and power stations in Iraq."

"Iraq is in need of more than 3m residential homes and approximately 6,000mw of power.

"The event here today has a number of big companies but the problem that we have witnessed is the fact that decision-makers from the Iraqi ministries have not shown up, meaning that all the large projects are not available to be propagated."

A representative from the Iraq-based infrastructure firm Al Qasswara Group said that the exhibition has amounted to very little in terms of actual deals. So far the only deal his company has negotiated has been the purchase of diggers from the Omani Chamber of Commerce.

"We have seen a number of our counterparts from Iraq but there hasn't been anyone that is interested in investing in long-term business," Al Qasswara Group chief executive Luqman Al Janaby said.

Merjal is another Iraq-based company that deals with contracting and infrastructure. They recently installed a 350mw gas power station in Kurkuk as well as a 500mw gas turbine power station in Arbil. The company is currently installing a 150 tonne per hour boiler in Baghdad.

"The expo has been good for networking with other companies but from a business point of view has not been very fruitful," Merjal Oil and Industry consultant adviser Kahtan H J Al Anbaki said.

"The fact that no decision-makers from Iraq have attended is an issue, but another problem is that the expo has been held over a weekend which has led to less local businessmen attending.

"The ideal set-up for this expo would have been a concise programme of tenders in Iraq resumed by direct dialogue to establish acquisitions between companies."

Al Bilal Group, another Iraqi-based infrastructure firm, has said the event has seen low interest and that companies that want to stabilise in Iraq now need to seek partnerships soon.

"The Iraqi government and the American investors are working in Iraq," Al Bilal Group vice-president Majid Ahmed said.

"The entire infrastructure needs to be renewed with a new system and design and there are a limitless number of opportunities for firms interested in investing in Iraq.

"Some people say that in the next two years these problems will begin to be addressed but realistically there is at least another five to six years work in Iraq until a global standard of infrastructure is even beginning to take shape."

(Source)AlSabah

Purchasing two aircrafts and reopening airline between Baghdad and London

Al-Waeli added, "the wages of procurement contracts were concluded with the consent of the Cabinet, because they exceed the powers of the ministry, and a committee was formed at the level of ministers, attorneys, general directors and experts to examine the aircrafts."

The acting Minister of Transport said that "the first aircraft will arrive at the end of October 14th, while the second one will arrive at the end of next January."

Also, Al-Waeli said that his ministry has entered into another agreement with a French company for the purchase of modern aircrafts type (Turbo Probe) to be used for local flights.

He explained that the ministry had an agreement with the British Airways to reopen the air line between Baghdad and London for the conduct of flights between the two countries in the coming days, adding that "the ministry is working to increase the number of the weekly foreign flights on the lines of Istanbul- Beirut, as well as developing Iraqi airports, including Baghdad Airport." (Source)AlSabah

International expectations of economic growth in Iraq

This came during a media symposium held in London recently on the sidelines of his official visit to Britain. Dr. Barham Salih, Head of the economic file said that the Iraqi government decided to allocate about two and a half billion, for the development of provinces distributed among regions according to population. He added that development in the performance of administrative departments made the government raise the budget allocated to provinces to the double. Dr. Salih admitted that the political reality of Iraq is unstable and there are many problems that prevent agreement to resolve crucial issues, and added that the oil law was suspended because of the political debate which happened about its paragraphs.

(Source)AlSabah

Raising the value of the Iraqi dinar achieved more than what was expected

Akbar explained that the "procedures and treatments approved by the Central Bank Governor and the members of the Governing Council, were aiming at stabilizing the exchange rate of the Iraqi dinar against the American dollar at (1,250), but the precise procedures of the monetary policy of the Bank to restore confidence in its independence, gave results of bringing the value of the dinar exchange rate to about (1,234) versus the American dollar, which places the Iraqi dinar in a good market state, due to the optimism created by monetary policy on Iraqi future economy. "

He continued that "according to the monetary policy adopted by the Central Bank, it was decided to raise the price of the Bank (Policy rate) from 16 to 20% annually, in addition to raising the interest rates of credit: the primary credit would be for 22% annually and the secondary credit 23% annually." Pointing out that it was decided to raise the interest rate of the Last Resort Loan to 5,23% annually, as well as raising rates on banks' deposits in the Iraqi Central Bank to be 18% annually for the night investment, and 19% annually for the investment for 14 days, while the interest of investment for 30 days became 20% annually.

On the other hand, the banking expert and general manager of the National Company for Financial Services, Abbas Khudayr Al-Kaabi, praised the monetary policy adopted by the Iraqi Central Bank to deal with inflation, and described it as deliberate and successful policy.

Al-Kaabi said, "however, raising the interest deposits at the Central Bank, to hit 20% annually, would certainly reduce the investment opportunities for Iraqi private and governmental banks; instead of moving towards investment, Iraqi banks will turn towards deposit in the Iraqi Central Bank of, because the interest mentioned earlier represents secure profitability, particularly since Iraqi banks are currently operating in circumstances do not allow them to deal with investment cover from outside the country, which adversely affect the ability of banks to continue their investment directions again. "

Hassan Ghalib Kubbah, Director of Basrah International Bank for Investment stressed the importance of improving the performance of the banking sector to conform to global standards of banking activity. He explained that "treating the imbalances is impossible, without passing through new funding sources which foreign investment is considered one of their direct channels." He pointed out that productive and service companies are currently operating with support from the Bank of Basrah, in the sectors of shipping, tourism, food production and packaging, and achieved good results despite the difficult circumstances.

Kubbah concluded that "the Iraqi banking sector can create the appropriate investment environment, which would activate the investment law, in collaboration with other sectors involved in the Iraqi arena." (Source)AlSabah

Greek companies announce their intention to invest in Kurdstan

During the meeting which was attended by Mr. Shireen Abdi, Head of the Legal Network for women, security and economic conditions in Kurdstan Region were discussed. Vice President of Kurdstan government invited Greek companies to exploit the investment law and the stable security conditions in the Region to invest their capital in Kurdstan and participate in reconstructing it.

On the other hand, the Greek delegation announced the opening of a commercial office of Greek companies in the Region soon to facilitate the work of those companies.(Source)AlSabah

100 billion iraqi dinar for waste treatment facilities in Baghdad

Mueen Al-Kadhimi, Council chairman, said in a press statement, "The Council allocated 100 billion dinars for the establishment of waste-sorting factories in Baghdad, the first project of its kind in the capital for chemical waste treatment. ... large quantities of wastes are collected daily from the areas and neighborhoods of Baghdad.

"The Council concluded the details of announcing the tender and arranging contracts, the equipping the factories with machinery specified for them to be imported during the coming months." He explained, "These large quantities of wastes need to be treated before disposal to protect the environment from pollution, the basic purpose of the factories." Al-Kadhimi continued, "Establishing such factories for the scientific treatment of the wastes collected daily will positively impact the health of citizens."(Source)AlSabah

Iraqi stocks gaining momentum

The Iraq Fund, Iraq's first hedge fund, began trading on August 2, the day on which foreign investors were allowed to start investing in the war-torn country. This follows the Iraqi government's enactment of the new foreign investment law last November, giving foreign investors flexibility to transfer capital into and out of Iraq. Foreign investors can form investment portfolios and can trade shares and bonds listed on the ISX. The Iraq Fund focuses primarily on state-owned enterprises (SOEs), which include steel plants, cement factories and glass works, and banking sector stocks listed on the exchange.

The fund has a $250,000 minimum investment requirement and charges 1.5 per cent for management and 15 per cent for performance, with a high-water market. After a one-year lock-up, investors can redeem quarterly. The Credit Bank of Iraq serves as its prime broker and the fund is domiciled in Delaware, the United States. Earlier, Holtz was reported as stating: "We target $100 million. There have been delays, but we'd like to do it within the next 12 to 18 months." So far the fund has attracted only private investors.

"The Iraq Fund provides investors (with an investment vehicle), who have expressed interest to make intelligent decisions," said Holtz, adding: "Iraq is a challenge because of conditions on the ground, but investors understand the risk." Given the physical conditions and the potential of SOEs "we feel we can turn a profit in three to five years," he said.

Asked about the high level of risk associated with an investment in Iraq, Holtz replied: "The difference between Iraq and US is that the US is a mature market. In Iraq there are boundless opportunities and potential but the risk factor is there." He added, however, that "safe is a relative word," citing the recent crisis in the US sub-prime credit market.

The ISX, established in 2004, has 33 companies trading out of 100 listed companies, said Holtz. And according to data for Thursday August 30 from the ISX web site, 29 companies were trading and 21 were off the trading floor following decisions at their annual general meetings to increase their capital. Of those companies traded, there were 12 banks, one investment company, three services companies, 12 industrial companies and one hotel company. Overall, six companies saw their shares rise, while 12 saw them fall. Another 11 stocks remained stable.

The banking sector accounts for 71.5 per cent of the exchange's capital, which reached ID799.2 billion by April 2007. There are 18 listed banks having a combined capital of ID571.5. The pick up in the stock market is good news for its index had fallen significantly between January 2005 and March 2007, according to research on Iraq by the Kuwait-based Global Investment House. Over this period the general index performance lost more than 50 per cent of its value. The deteriorating security conditions resulted in the ISX index falling from its highest level of 72.6 points, in February 2005, to a low of 25.3 points in December 2006. Currently, the ISX index is trading between 40 and 42 points. The index stood at 40.82 points at the beginning of August and 41.90 points at the end.

The move from a manual trading floor to an electronic trading is expected to bring more liquidity to the market, especially as a greater number of foreign investors will be able to trade in Iraqi shares. This is expected to happen in October, according to a posting on the ISX Web site. Initially, however, only five of the listed companies will be traded electronically, and "we don't know how quickly it will take the other 95 companies to be listed", said Holtz.

The ISX currently trades on two days a week for two hours each day but once the exchange becomes automated trading days will increase to five days a week with two sessions per day.

Last week, the Iraqi Securities Body announced that it was regulating the broker market so that only approved brokerage companies could operate on the Iraqi security market. An approval date for the legislation was not specified, according to a posting on the Investor's Iraq forum web site.

It said that the chairman of the Securities Body, Abdul Razzak Al Saadi, had stated: "No new brokerage company would be admitted to the market with capital under one billion dinars, and no licensed banks' brokerage offices could be turned into limited (or contribution) companies without capital of minimum one billion dinars, majority owned by that bank."

He is also quoted as saying: "Current brokerage companies must ensure this year that each shareholder's stake is at least iraqi dinar 35 million and that they must build capital over the next five years to the minimum specified above."

Iraq inflation down to 17% in July

"Inflation is our overriding concern," he told Reuters in an interview on the sidelines of an annual central bankers retreat here in the Grand Teton mountains organized by the Federal Reserve Bank of Kansas City.

Bitter sectarian violence between majority Shi'ite and minority Sunni Arabs have driven the country to the brink of civil war. The violence has also greatly damaged economic activity by driving up prices and inflicting terrible hardship on the country's millions of poor and unemployed.

Shabibi has raised interest rates to 20% and lifted the value of the dinar against the dollar, reducing monthly inflation, excluding food and energy prices, to 17% in July from 35% in June.

"Our monetary policy is functioning well," he said, adding that future action "depends on developments in inflation, taking into account developments in the economy and investment."

The actions have also helped to reduce the usage of dollars in the Iraqi economy, which was dominant after the 2003 US-led invasion to topple Saddam Hussein.

The dominance of the dollar was a problem for the central bank, which cannot curb inflation with traditional tools to control the domestic money supply if most of the country's commerce is handled in dollars.

Shabibi said the dinar had taken back its rightful role as the currency of choice for Iraqis.

"There used to be more confidence in the dollar than the dinar but the contrary is now true because of the dollar's loss in value," he said.

The Iraq dinar has appreciated to around 1,240 against the dollar from as low as 2,200 in the aftermath of the war.

Business is booming in the semi-autonomous region of Kurdistan in northern Iraq, but is much more subdued in the rest of the country, which relies almost exclusively on oil revenues for the foreign currency it needs to pay for imports.

Shabibi conceded that the poor security conditions were a big constraint on business, but argued there was a great deal of activity quietly taking place that was hard to spot but remained a source of reassurance.

"You don't get big building projects or other very visible types of activity, but there is a lot of small-scale business taking place," he said. "I would not be here if I was not still optimistic." (Source)Arabian Business

Arab investor buys shares with $1.6 m in Iraq stock exchange

The largest number of traded shares and biggest trading was the Kurdistan Bank's shares as an Arab investor implemented a contract exceeded 900 million shares at cost of $2 billion iraqi dinar.

The number of traded shares increased in Iraq's Stock Exchange to reach 6.1 billions shares costing 6.3 billion iraqi dinars ($ 5 m) through implementing 312 contracts.

For today the numbers of traded shares were (1.659) b/shares and trading volume (3.675) b/ID, the price Index was about 40.775 point.

Index for Bank sector was (38.115), Index for Investment sector was (107.749), Index for Services Sector was (78.705), index for industrial sector was (11.891) index for hotels sector was (15.451).

The numbers of traded Companies were 29 and still 19 companies are off trading floor because of their General Assembly meeting which decided to increase their capital.(Source)Voice Of Iraq

Iraq stock exchange daily analysis for thursday session 16/8/2007

For Today the numbers of Traded Shares were (489) m / shares and Trading volume (918) m / ID, the price Index was about 41.829 point. Index for Bank sector was(38.568), Index for Insurance sector was(98.302), Index for Investment sector was (107.749),Index for Services Sector was(78.505), Index for Industrial Sector was(11.905) Index for Hotels sector was (15.759), Index for Agriculture sector was(85.840).(Source)ISX