New Iraqi Investment Laws Off To Shaky Start, Reports Warn

by Lorys Charalambous, for LawAndTax-News.com, Cyprus

08 October 2003

Reports in the regional media have expressed doubts as to whether the investment law reforms recently enacted by the Coalition Provisional Authority (CPA) in Iraq will serve their purpose and attract increased foreign direct investment (FDI) to the war-torn country.

Under the terms of the economic plan put forward by the Coalition-appointed authorities, foreign investors will be permitted to own 100% of enterprises in all areas except real estate, oil, and natural resources. New banking laws will allow foreign banks to locate in the country, and over the next five years, up to six foreign institutions will be permitted to purchase 100% stakes in local banks, with restrictions lifted after that point.

However, speaking to the Gulf States Newsletter service recently, Governor of Basra and member of the Iraqi Governing Council (IGC), Wael Abdul Latif suggested that the investment law reforms outlined in Dubai last month by Finance Minister Kamel al Gailani would likely be amended by a sovereign Iraqi government.

This possibility is certain to alarm potential investors, and may persuade them to wait for the enactment of a constitution, and the election of a permanent government.

Regular opinion polls conducted by the media are also thought to pose a potential problem for the new investment regime, as the CPA must listen to public opinion, and it is not certain how ordinary Iraqis will react to a sudden influx of FDI.

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