Iraq needs up to $1 trillion (784 billion euros) over the next 10 years to rebuild its crumbling infrastructure and battered economy, its investment chief said in an interview on Thursday.
Sami al-Araji’s remarks come during the Baghdad International Fair, Iraq’s biggest trade showcase in more than 20 years, as the government looks to court foreign investment, diversify the country’s oil-dependent economy and reduce unemployment.
“We are talking about the reconstruction of Iraq, a minimum requirement of money … is about $600-700 billion dollars, and could go all the way to $1 trillion” in the years to 2022, said Araji, director of the National Investment Commission.
Araji said much of that money could come from Iraq’s rocketing exports of crude oil, which account for the lion’s share of government income, but “some will have to come from foreign and domestic direct investment.”
The figure is a marked increase from $186 billion targeted for 2010-2014 — $100 billion from oil sales and the balance from private investment. Araji said officials were looking to raise investment targets for the 2013-2017 period.
For now, however, investment levels remain sharply lower than those the investment commission chief predicts will be necessary.
According to Araji, Iraq had granted investment licences to both foreign and domestic investors in the past three years worth around $32 billion, most of which was from local sources.
“That’s what we’re banking on — both oil sales will go up, and hopefully the investment climate will improve a great deal (so) that it (investment) will be more,” he said
“Eventually, (foreign investment) will be much much higher, both as a value and as a percentage.”
Araji said that from 2013, Iraq would hold specialised trade fairs for key industries in which it is courting investment such as construction, transport and housing.
He is not the only one pointing to Iraq’s massive investment needs in the years ahead. The International Energy Agency said last month the country needed to direct $530 billion solely towards energy infrastructure in the next 23 years, peaking at an annual average of $25 billion this decade.
The 10-day Baghdad International Fair is featuring more than 1,500 companies from Iraq and 20 other countries.
Baghdad has looked to invite foreign companies to help rebuild critical infrastructure, which is crumbling as a result of decades of under investment, as well as to work in several key sectors such as transport, housing and agriculture.
Iraq’s state-dominated economy is heavily dependent on exports of crude oil, but while the energy sector accounts for around two-thirds of gross domestic product, it only accounts for one percent of employment.
As a result, joblessness is often cited as a complaint by Iraqis.
The country is also riven with corruption and grappling with byzantine legislation and regulation, all persistent complaints of investors, diplomats and analysts.