The US and the EU are the top contributors to Iraq's economy. However, private Investment is needed for a more stable economy, and here's why private investment is slow to develop.
Iraq is a good place to invest as it has the fourth biggest proven oil reserves on Earth, plus it needs major rebuilding efforts and infrastructure development. Per Iraqi law, foreign investors have access to a similar set of rights to locals, with no restriction on how much they can participate.
The Iraqi government dictates that, based on the National Investment Law, foreign ownership of natural resources such as extraction and processing is limited. This includes banking and insurance companies. Additionally, the authorities have the authority to screen Foreign Direct Investment under this law.
Iraq is having difficulty introducing laws and forming institutions that can help them effectively implement economic policies. Political reforms must be made in order to allay investors' worries about the unreliable business climate. While the government has the desire to bring in foreign Direct Investment, numerous challenges still exist; weak governance, security threats from militant groups, interrupted domestic and international trading routes and deteriorated economic infrastructure are some of those issues (US Department of State, 2023).
Attracting foreign direct investment is essential to rebuilding the country, given its dearth of local finance, but only those with a great risk appetite are likely to be enticed by the current investment climate. The issues are present, such as corruption, archaic infrastructure, a shortfall of experienced personnel, and outdated commercial regulations, still hinder investments and impede the growth of non-petroleum industries.
Resources:
Investing in Iraq
How to Invest in Iraq (irfad.org)
Foreign direct investment (FDI) in Iraq - Stanbic Bank TradeClub
Investing in Iraq: Prospects and Challenges | Middle East Institute (mei.edu)
Central Bank of Iraq | Home (cbi.iq)
