Presented at the 5th Meeting of the Working Group on Investment Zones in Iraq, MENA-OECD Investment Programme. 28 April 2013, Cairo, Egypt

1. Private Sector Development Center
‫مركز تنمية القطاع الخاص‬
Khalid Mahdi

2. Iraq’s Private Sector’s Perspective
about
Prospective Investment Zones in Iraq

3. Agenda
What is the PDSC?
Snapshot from the ICA Report 2012
Lessons Learned from Post Conflict Countries
Examples on Obstacles faced by an IZ
Private and Public Sector Zones
Examples of PPP

4. What is the PSDC?
™
™
The Center is a joint private sector body in Iraq
focused on economic reform. Its mission is to
contribute to:
– Business Development
– Investment
– Economic Growth
– Entrepreneurship
The Center will achieve the above by:
– Identifying barriers to reform
– Working with the Government to implement
tangible solutions

5. PSDC structure
er
Steer
Ste g
ing
in
Com
Come
t
mitte
mit
e
e
The Secretariat
provides support to
the steering
committee and the
working groups.
The Center is led by the
Steering Committee.
Secretaria
Secretaria
t
t
Regular discussions on
reform issues will take
place through
Working Groups.
Working Groups
Working Groups

9. Labour Productivity & Unit Labour Cost by Firm
Size

10. Annual Subsidies for SOEs

11. Innovation Indicators by Firm Size

14. Definition of SEZ
A ‘Special Economic Zone’ is
defined as geographically delimited
areas administered by a single body,
offering certain incentives.

15. Lessons learned from Croatia
and Mozambique
1. There is no need to wait until the conflict is resolved to
start preparing an FDI-friendly environment
2. Anchor the country’s FDI-related laws to international
standard
3. GFDI attraction efforts should primarily focus on source
countries with an advantage in understanding local host
country conditions
4. Generous, targeted incentives may be necessary to
secure and extract additional benefits from FDI projectsn
Source: UN Conference on Trade and

16. Lessons learned from Croatia
and Mozambique
5. Special economic zones are simple ways of creating ideal
regulatory environments for FDI in the presence of weak
overall business climates.
6. Privatization can benefit public finances and attract FDI
early on
7. The employment impact of FDI differs by sector and
mode of entry. It may be desirable to offer incentives to
encourage investment in labour-intensive sectors, or to limit
privatizations and sales of domestic firms to foreign
investors, especially in the immediate post-conflict period.
However, long-run considerations of efficient labour
allocation should not be ignored
Source: UN Conference on Trade and

17. Lessons learned from Croatia
and Mozambique
8. FDI cannot be expected to alleviate regional inequalities,
but it still has a role play in improving conditions in
disadvantaged regions
9. Backbone infrastructure may not benefit from substantial
FDI for several years after the conflict is resolved. During
these years, ODA is a more important external source of
funding for these projects. Over time, FDA can come to play
a more direct role
10. FDI can be successful in raising and diversifying exports

18. Lessons learned from Croatia
and Mozambique
11. Weak business climates for local firms may hinder their
ability to spontaneously link with FDI and create valuable
spillover effects. This necessitates either strong reform
efforts at the local level or government action to improve
the capacity of SMEs to coordinate with FDI
12. FDI helps improve tax revenues in absolute terms…

19. Obstacles Faced by the Dakar
EPZ
™
™
™
™
™
™
Excessive bureaucracy involving different institutions in the
country, especially customs;
Unnecessarily long delays in obtaining necessary permits (often
more than one year);
Unrealistic goals imposed on potential investors, both with regard
to jobs to be created and initial investment;
Poor reputation of the local workforce, which was labeled
unproductive and overly expensive;
Elevated cost of other factors of production (energy, water,
communications);
Rigid and constraining labor regulations; employment contracts
were permanent and employers did not have complete freedom
to recruit the people they wanted.
Source: Cling and letilly, 2001

20. Private & Public Sector Zones in Developing &
Transition Economies
Sources: BearingPoint; Il database; WEPZa (2007); FIAS research.
Region
Americas
Asia and the
Pacific
Africa (subsahara)
MENA
Central & Eastern
Europe and
Central Asia
Public
146
435
Private
394
556
Total
540
991
49
65
114
173
69
40
374
213
443

21. Examples of PPP in Zone
Development
Country/Zone
Role of Public Sector
Role of Private
Sector
Gaza Indust. Est.
West Bank &
Gaza
Financing all external
infrastructure as well as
factory shells, provision of
land on long-term lease
Financing internal
infrastructure and
management of
zones
Aqaba Ind. Est.
Jordan
Financing all external
infrastructure, provision of
land on long-term lease
Financing internal
infrastructure and
management of
zones
Subic Indust. Est. Financing all external
Philippines
infrastructure as well as
factory shells, equity stake
in industrial estate
Financing internal
infrastructure and
management of
zones
Tan Thuan EPZ
Vietnam
Financing of all
internal and external
infrastructure and
management of
Provision of land on longterm basis, right of way
development rights on
access roads

22. Questions
1.
3.
4.
Do we need (now) to be sector specific?
How can investment zones help to develop Iraq's
private sector?
What does the Iraqi private sector need from the
government to effectively engage with foreign
companies working in investment zones?

23. Thank you...
info@psdc-Iraq.org