Presented 17 February 2015 - Paris, France The Seventh Meeting of the Working Group on Investment Zones in Iraq Session 3: Identifying policy barriers to effective and transparent land allocation for investment projects in Iraq, Klaus HACHMEIER, Iraq Project Co-ordinator, Global Relations Secretariat, OECD

1. Identifying policy barriers to effective and
transparent land allocation for investment
projects in Iraq
THE SEVENTH MEETING OF THE WORKING
GROUP ON INVESTMENT ZONES IN IRAQ
17 February 2015
Klaus Hachmeier
OECD, Iraq Project Coordinator

2. Session outline
I. Access to land as a key issue to attracting investment
II. International good practice
III. Land allocation and investment in Iraq
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3. ACCESS TO LAND AS A KEY ISSUE TO ATTRACTING
INVESTMENT
I. Why is it important?
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4. “There is a strong positive correlation between equity of land
ownership and subsequent national economic growth rates. Good
governance of land-based resources means positive outcomes of
land and related policy in terms of equity, efficiency and
environmental sustainability.”
Source: Zimmermann, W. (2011), Towards land Governance in the Middle East and North Africa Region, Land Tenure Journal 1/11.
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I. Why is it important? Access to land as a key
issue to attracting investment

5. I. Why is it important? Access to land as a key
issue to attracting investment
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More than half of the countries that
exist today have no functioning land-
administration system.
Around eighty countries in the world
do not have clearly defined national
borders.
Ninety percent of land rights in
Africa, and 60% globally are not
documented.
Investment climate surveys indicate
that land is one of the main
obstacles to conducting and
expanding business.
It takes at least 8 years, and often 11
or more, for a country to get from
discussing land policy to the point of
implementing it at scale (Deininger,
2005).
Land resources are used for a variety
of purposes that interact and
frequently compete with one
another.
Reform is often difficult as key
stakeholders often have vested
interest in keeping the status quo.
Factualneedforreformvs.…
…acomplexrealityontheground

6. In Iraq, land-related issues are the reason for delayed
investment projects in over 60% of all cases!
Reasons for non-implementation of investment projects in Iraq 2008-2013:
Source: Iraqi Ministry of Planning 6
Type of delay/hindrance Number of projects Percentage
1 Land-related issues. Contractual procedures, allocation, signing
of land lease, soil examination, violations of land (e.g.
unauthorized constructions)*
354 57.47%
2 Official procedures for signing the contract or determining rent* 91 14.77%
3 Modifications or approval of the plans or the feasibility studies or
building models
64 10.39%
4 Objections from official institutions concerning the location of
the project*
28 4.55%
5 Hindrances have been cleared or in the process of implementing
the project
26 4.22%
6 Legal issues with official institutions or internal discord in
invested company*
23 3.73%
7 Reluctance of investor to implement project 18 2.92%
8 License was recently awarded 6 0.97%
9 Other reasons 6 0.97%
616
Land-
related
issues!

7. In the MENA Region, institutions administering land rights - buying, selling,
inheriting or renting land – are often associated with high corruption.
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Source: Transparency
International Global
Corruption Barometer
Report 2009
I. Why is it important? Access to land as a key
issue to attracting investment

8. INTERNATIONAL GOOD PRACTICE
II. What works?
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9. II. International Good Practice
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Towards Effective and efficient institutional arrangements for land allocation:
There is no universal model, good land governance rather represents a state of active
institutional/organisational evolution
Centralised approach
e.g. specialised government agency for normative land and management tasks, central
level custodian model
Decentralised approach
e.g. municipality-based management model
“Mixed approach”
e.g. special purpose cooperation, contract-based trust management through a third
organisation (PPP), or shared responsibilities between central and provincial levels

10. 10
An accountable
and transparent
system for land
governance
1. Legal and
normative
framework
2. Modern
geodatic
reference
systems
3. Coherent
spatial data
infrastructure
4. Professional
educational
infrastructure
5. Professional
associations
and networks
Elements of a system for
land governance:
II. International Good Practice

11. II. International Good Practice – General
recommendations for Iraq
The way forward for promoting good land governance in Iraq:
• Partnering with regional bodies such as the League of Arab States, the Islamic
Development Bank and NGOs
• Developing strategic partnerships for
 building the normative and operational framework for land management
 creating an investment-conducive policy orientation
 accountability and transparency in the land sector
• Strengthening civil society engagement in land matters and involving all
stakeholders
• Integrating Iraq more into ongoing international initiatives and networks (e.g.
FAO, WB, UN HABITAT, EU, FIG, IFPRI and others)
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12. STATUS QUO AND WAY FORWARD
III. IRAQ – Land allocation and
investment
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13. III. Status quo and way forward
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The vision of the
Government of Iraq
includes developing a
policy to manage and
administer land in an
equitable, transparent,
efficient and sustainable
manner.
(Berlin Statement on Land
Policy in Iraq, 2011)
More than 80 percent
of all land is public
land, i.e. state-
controlled.
Public land
registration remains
incomplete and
overall weakly
managed.
Partial interest or
secondary land rights
are neither registered
nor robust, resulting
in large scale tenure
insecurity.
General situation: high
proportion of public lands,
but weak registration and
lacking ownership rights:

14. Investors’ Rights to land:
The Investment Law 13 (2006) establishes the right for foreign investors to rent
land for purposes of the enterprise, under a renewable 50-year lease (Article
11.3).
The amendment to the Investment Law (Law No. 2 of 2010) allows foreign
investors to acquire land, but only to build houses for Iraqi nationals.
Regulation No. 7 of 2010 grants land to investors, Iraqi or foreign, for free or
against a certain predetermined percentage of the income of the project in
different areas: housing and associated infrastructure (Articles 5 and 7). It
specifies rates for land lease for investment projects in: industry, agriculture,
services, entertainment, certain electricity and oil projects, and other investment
projects (Articles 8), and tourism and commercial projects (Article 9).
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III. IRAQ – Land allocation and investment

15. Regulation 7 (2010) obliges the Ministries of Finance and Municipalities & Public
Works, the Mayoralty of Baghdad, governorates and municipalities, authorities
and departments to
“… provide landed property and real estate suitable for the establishment of
investment projects and inform the NIC of their numbers, areas, ownership, types,
and usages.”
BUT
This has not always happened. NIC/ PICs have only limited options of lands. In the
current situation, an investor can have a proposal that is acceptable to NIC but
may not be able to access land for it.
(Positive Example: PIC Basra announces investment projects with land!)
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III. IRAQ – Land allocation and investment

16. III. IRAQ – Land allocation and investment
Industrial investors have additional concerns about land:
1. Accessible empirical data on availability, status and management of public land
 Investor wants to choose land, make business decision on planning studies (and
the value/ cost of land)
2. Unified, comprehensive and accurate rules governing land ownership and
classification
 Investor wants clear, secure land tenure (including rules on land transfer)
3. Clear institutional arrangements with only few agencies and institutions
involved in land management, (incl. social and environmental regulations)
 Investor wants allocation and licensing procedures to be efficient and
transparent, with transaction costs based on market values
4. No political interference, full transparency in management, allocation and
acquisition of public land
 Investor wants protection from arbitrary state intervention
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17. III. IRAQ – Land allocation and investment
1. Will the new 2014/15 Amendment to the
Investment Law change the situation?
2. Are Investment and Industrial Zones a
solution?
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