Iraq's National Investment Commission

NIC Investment Licenses

The investment licenses are granted not to the investors themselves, but to specific projects. Projects that receive an investment license enjoy a number of benefits under Iraq's tax and currency control laws. The projects are exempt from taxes and fees for a period of ten years (from the date of project start-up), increasing to fifteen years if the project is at least 50% owned by Iraqi investors. An investment license also exempts remittances related to the project from repatriation restrictions, allowing investors to repatriate capital and profits. It also allows non-Iraqi employees to repatriate their salaries overseas without restrictions (after they have paid local Iraqi taxes).

The NIC is open to applications for investment licenses from domestic and foreign investors, and has identified projects throughout Iraq in a number of sectors where it is seeking foreign investment. Investment licenses are available to be granted for projects in every sector, except oil and gas exploration and production, banking and insurance services.

The OSS serves as the single point of contact for NIC investment license applications. An investment license application must also include a feasibility study for the project that covers economic and technical aspects of the project, proof of financial support, and past performance of the project sponsors. There are no charges for the NIC application.

The NIC's broad mandate and latitude in negotiating and granting investment licenses presents a unique opportunity for investors who appreciate Iraq's potential as a major emerging market.

Developing Iraq's Investment Zones

Iraq is planning to establish "Investment Zones" to attract investors into specialized industry clusters. The provisions of the draft "Investment Zone Regulation" authorize the NIC to supervise the development of the Investment Zones, including the designation of their locations, supervising feasibility studies, licensing the developers, and monitoring the users.

Iraq already has a legal system that permits foreign investment in most sectors, and the investment license granted by the NIC provides material incentives and protections to investors. The primary purpose of the Investment Zones, therefore, is to provide coordinated administrative and logistical services and necessary infrastructure facilities in designated areas (and generate local employment opportunities).

The NIC is working with provincial investment commissions and preparing tenders for feasibility studies to develop the first 6 Investment Zones:

• an industrial zone in Babil Province

• a commercial and air cargo logistics zone in Baghdad Province

• a petrochemical and port cargo logistics zone in Basra Province

• a construction, glass and ceramics zone in Anbar Province

• a specialized mechanical industries zone in Nineveh Province

• a foodstuffs industries zone in Karbala and Najaf Provinces.

Iraq is now prioritizing its infrastructure redevelopment with an emphasis on direct foreign investment and technology transfer. Foreign investors will be interested in safeguards and guarantees that address perceived and actual risk. Iraqi law regarding foreign investment is arguably one of the most investor-friendly in the Middle East, and the NIC is a critical contributor to the success of any major project.

Mr. El-Erian is the founding partner with El-Erian Associates, LLC in Washington, DC. He is currently implementing technical assistance programs and developing infrastructure projects in the Middle East, particularly in Algeria, Egypt, Iraq and Libya. Since 2003, Mr. El-Erian has been involved in the U.S. and U.N. reconstruction efforts in Iraq as an advisor to senior Iraqi officials and parastatal entities, and to private sector investors. He previously worked in project finance with the World Bank and in private law practice in the United States.

Download: Iraq Perspectives Newsletter - May 2012