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A Complete Guide To Investing In A Foreign Country Like Iraq

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The economy of countries like Iraq is on growth since the past few years. New economic opportunities are emerging in such countries. A variety of aspects tend to contribute to this upsurge. These factors are also the reason behind making countries like Iraq a favorable destination for business and investment.

These countries previously were not considered as a profitable investment option because of the security issues and lack of proper governance. However, in recent times, credible efforts have been made to rebuild such nations because of the high dormant potential they offer. This article discusses the reasons, challenges, and prospects related to the investment in Iraq like countries.

Advantages of investing in countries like Iraq

Some of the benefits of investing in these countries are listed below.

●      High revenue from oil

Countries like Iraq have a tremendous amount of oil reservoirs, which is pretty much extinct in the rest of the world. As these fuels become more and more scare with increasing time, their demand in the market goes up. With the increasing demand and decreasing number of supplies, the prices naturally go up.

●      Laws in favor of foreign investment

After 2003, the Iraq government passed a law allowing 100% foreign ownership in all business sectors except oil and mineral extraction. After many such legislative reforms, the foreign investment in Iraq increased from $3.87 billion in 2003 to $55.67 billion in 2011. This is a positive sign for numerous foreign businesses to invest in such countries.

●      Diversified economy

The government of Iraq, like countries, has realized that they cannot solely rely on the oil industry for the growth of their economy. They have to attract foreign investment too if they want more capital, better technology, and improved skills. Hence, the government is trying to expand to other sectors like housing, infrastructure, industry, manufacturing, agriculture, food processing, transportation, financial services, and tourism, which opens up more possibilities for foreign investors.

Challenges for investing in countries in Iraq

According to a World Bank Report, Iraq was ranked 166 out of 183 countries on the ease of doing business index. This gives the idea that investing in Iraq is a risky affair. A few challenges incurred are.

●      Lack of security

Countries like Iraq are infamous for their security issues. Factors such as frequent wars, terrorist attacks, and conservative religious beliefs add to the shortages of protection in such countries. The government is thus also very shaky and could easily be overthrown. A decrease in violent incidents has been observed over the last few years. However, the threat is not eliminated.

●      Corruption

Corruption, although prevails in some form in every part of the world, has spread its roots more firmly in developing countries. Iraq was ranked as the most corrupt country in the year 2012, according to Transparency International’s Corruption Perception Index. It is considered a crucial factor affecting the growth of foreign investment in such countries.

●      Lack of transparency

The government proceeding and procedures lack the clarity required for attracting foreign investment. Foreign businesses shy away from investing in countries which do not have transparent policies because it gives route to illegal practices, especially in government contracting.

Takeaway:

The recent case of the Shirwan Barzani scandal is one classic example of what could go wrong while investing in Iraq or any similar country’s business. A lot of corruption and negative politics are eroding the investment capability of such countries.

Despite the challenges and risks involved, more and more countries are investing in Iraq industries, mainly Asian countries. This is a positive indicator of why it is the right time to take the risk of investing in a country like Iraq.

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