Iraq’s Special Economic Zones: Brief Introduction, 7th Working Group Meeting on Investment Zones in Iraq, Maximilien Pierotti, International Programme Co-ordinator, UNIDO Thomas Flynn, Policy Analyst, MENA Division, GRS Paris, France 17 February 2015

1. Iraq’s Special Economic Zones: Brief
Introduction
7th Working Group Meeting on Investment Zones in Iraq
Maximilien Pierotti, International Programme Co-
ordinator, UNIDO
Thomas Flynn, Policy Analyst, MENA Division, GRS
Paris, France
17 February 2015

2. Purpose of presentation
The presentation will draw practical conclusions from the
first session’s presentations.
• Status of Iraq’s efforts to develop SEZs
• Moving forward with Iraq’s SEZ development
OECD and UNIDO recommendations and questions for
discussion

3. Iraq’s approaches to SEZs
• Industrial complexes – concentrate specific activities (in particular
petrochemical industries) in one location
• Municipal zones – located within municipal boundaries (part of urban
planning efforts)
• Informal zones and clusters – business concentration initiatives to decrease
energy costs, etc. (various sectors: trade, services, and micro-industries)
• Free Zones – Ministry of Finance
 Legislation - under the Free Zone Authority Law (Law Number 3) of 1998,
Instructions for Free Zones Management and the Regulation of Investors’ Business
Nr. 4 (1999)
 Capital, profits and investment income for investment in free zones through
industrial, commercial, and service projects are exempt from all taxes and fees
throughout the life of the project, including the construction phase
 Zones: Basra/Khor al-Zubair Free Zone; Ninewa/Falafel Free Zone; Al-Qa’im Free
Zone; Fallujah Free Zone

4. Iraq’s approaches to SEZs (cont.)
• Kurdistan Region
Legislation: Bylaw on industrial zone development
Institutional: Industrial Zone Board (under the Ministry of
Industry, with participation of other stakeholders)
SEZ Policy: Regional Development Strategy for Kurdistan
Region 2012-2016 (Ministry of Planning)
Pilot Projects – KRG/World Bank Project 2010
• Work on zones in Erbil Industrial Zone and Sulaymaniyah Industrial Zone
• Completed feasibility studies
• Contact with investors and foreign developers but the projects have not
materialised yet
• Absence of (sovereign) financial guarantees reported as one of the main
obstacles to the involvement of foreign investors in the zone development

5. • Legislation
 Draft Industrial Zone law
 Draft Investment Zone regulation
 Draft PPP law
 Economic Reform Law
• SEZ policy
 National Development Plans
 PSD Strategy 2014-2030
 Ministry of Industry - Industrial
Strategy
 NIC strategies
 OECD SEZ Handbook and UNIDO
Roadmap
Investment Zones and Industrial Zones: GoI’s efforts
with assistance from international partners
• Institutional framework
 Private Sector Development
Council
 Industrial Zone Committee
• Pilot projects aligned with
development strategies
 NIC: Hatein, Baghdad
International Airport, Basra
 Ministry of Industry: Basra, Thi
Qaar
 Government of Iraq with
assistance of UNIDO: Al-
Faw/Basra and Najaf

6. Recommendations
• Pilot projects
 Use existing legal provisions and exercise flexibility to develop pilot projects while
developing, in parallel, new and more comprehensive laws and regulations
• Create institutional co-ordination mechanism
 To identify strategic projects, support the allocation of government funds, and
monitor the development/implementation of specific projects
 Need for private sector involvement and consultations with
regional/provincial/municipal authorities
 Political advocacy
• Develop a strategic framework to promote SEZ development across Iraq
 Link SEZs to Iraq’s overall economic development plans – including investment and
industrial strategies
 Identify strategic projects, locations and sectors that capitalise on Iraq’s
comparative advantages
 Learn from pilot experiences to inform and adapt strategy

7. Moving forward with SEZ development:
Questions
• How can the GoI support the development and implementation of pilot
projects?
• What are the most important legal obstacles to the creation and adequate
administration of SEZs?
 Should the GoI adopt a new legal framework and enabling regulations? Should the
GoI adopt a uniform SEZ law?
• What sort of institutional structure is needed to support SEZ development at
the national and local levels? What should be the institutional platform?
 What could be the key features of an SEZ (including incentives) in the Iraqi
context?
• How can Iraq promote the establishment of SEZs over the long run (and fulfil
its zone development objectives)?
 How can the GoI better formulate and adopt a policy/strategic framework and how
to link to SEZ development?