Baghdad, October 19: In the run-up to a major investment conference in Washington, traders at Iraq’s stock exchange pitched their ideas for where foreigners should put their money for the best return — 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.
On the other side of the glass screen that separates brokers from their clients, the consensus appears to be the same.
“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.”
Their optimism regarding Iraq’s economic development comes as a delegation led by Prime Minister Nuri al-Maliki visits Washington to court foreign investment from major companies on Tuesday and Wednesday.
While National Investment Commission chief Sami al-Araji has conceded he does not expect deals to be inked at the conference, some 750 projects will be presented to potential investors, and presentations will be made, encouraging investment in Iraq.
The conference will be attended by more than 200 companies, Araji told reporters earlier this month, 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.
Dude to US-backed UN sanctions against Iraq and six years of US-led occupation, Iraq’s economy is in shambles.
Government revenues are almost entirely dependent on oil, and infrastructure remains dated and, in many cases, decrepit.
Finance Minister Baqer Jabr Solagh estimated in November that Iraq needed 400 billion dollars to rebuild the country, a figure the government is unlikely to be able to afford.
The cabinet approved a 67-billion-dollar annual budget, the vast majority of which is earmarked for government salaries, in 2010, leaving little left over for other projects.
Foreign investment, however, has been trickling in — 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.
“As security has gotten better, our operation has increased,” he said, noting his hotel had seen a 20-percent increase in customers in the previous four months.
“That increase is not just true for this hotel, it’s also true of other hotels.”
Security has improved in Baghdad and throughout Iraq but remains high by international standards and recent major attacks have served notice that insurgent groups remain capable.
One foreign diplomat, speaking on condition of anonymity, acknowledged said that companies based in his country that were considering investing in Iraq had been deterred in particular by bombings at the foreign and finance ministries on August 19.
At the stock exchange, however, there is a belief that security will continue to improve, and that will only make their investments more attractive.
“I’m mostly investing in hotels, because their share prices are good value, and banks are also cheap,” Khafaji said, adding he expected to build on his profits towards the end of the year.
“As security improves, more money will come.”
—Agencies