Iraq investors told to stick to banks and hotels

Iraq Investments

Since the fall of Sadam Hussein, war-torn Iraq has been desperate to stimulate economic growth as it struggles towards a stable and self-sufficient future. One of the best ways for it to do this is to attract foreign investment, but a lack of security in the country, especially around the northern Kurdish territory of Kirkuk, has meant much needed cash from overseas has been hard to come by.

However, in the lead-up to a major investment conference in Washington this week, Iraqi traders have pitched their ideas as to where foreign investors can put their money to get the best returns - banks and hotels.

"I would recommend the tourism and banking sectors (for foreign investors)," said Ali Jamal, a senior broker for Al-Jawhara, an investment firm.

"Especially tourism because new hotels are being built and existing ones are being refurbished - the door is being opened for investment in tourism," he added.

In an encouraging sign for Iraq, this sentiment seems to shared between both brokers and clients. "Hotels and banks will do well - once the security situation gets better, their value will rise at an extraordinary rate," predicted Salman Hassan Salman al-Khafaji, who said he had made a profit of 50 million Iraqi dinars (43,000 dollars) on the markets so far this year.

"Foreigners should invest in tourism - it will definitely get better here," he added.

Iraqi Prime Minister Nuri al-Maliki will lead the delegation in Washington, presenting around 750 projects to potential investors, although no deals are actually expected to be signed at the conference itself. According to National Investment Commission chief Sami al-Araji, the conference is to be attended by over 200 companies, and while the focus will be on basic infrastructure, investment in industries such as housing and construction, agriculture, health and transport will also be targeted.

Foreign investment is mainly focused on diversifying Iraq's chaotic economy, which is heavily reliant on oil. It is estimated it will take around US$400 billion to rebuild the country and its out-dated and decrepit infrastructure.

So far, foreign investment has started trickling into Iraq, and most of it has been targeting the tourist industry. According to Abdul Jabbar al-Rubaie, the Managing Director of the Al-Mansour Melia hotel on the Tigris river in central Baghdad's Salhiyeh neighbourhood, the hotel is close to securing investment for a new development. He said he expects a Kuwaiti group to agree to a 300-million-dollar injection in around four to six months to start construction for a new hotel on a plot of land adjacent to the Al-Mansour.

Hotels and banks are attracting most of the investments because their share prices represent good value. But without security on the ground, foreign investment can never reach the levels needed for a full and speedy recovery.

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