iraqi private sector's perspective on economic zone sectors
DESCRIPTION
Presented at the 5th Meeting of the Working Group on Investment Zones in Iraq, MENA-OECD Investment Programme. 28 April 2013, Cairo, EgyptTRANSCRIPT
Private Sector Development Centerمركز تنمية القطاع الخاص
Khalid Mahdi
Iraq’s Private Sector’s Perspective
about
Prospective Investment Zones in Iraq
Agenda
Lessons Learned from Post Conflict Countries
Snapshot from the ICA Report 2012
What is the PDSC?
Examples on Obstacles faced by an IZ
Private and Public Sector Zones
Examples of PPP
❝ The Center is a joint private sector body in Iraq focused on economic reform. Its mission is to contribute to:
– Business Development– Investment– Economic Growth– Entrepreneurship
❝ The Center will achieve the above by:– Identifying barriers to reform– Working with the Government to implement
tangible solutions
What is the PSDC?
Working GroupsWorking Groups
Secretariat
Secretariat
Steer
ing
Committe
e
Steer
ing
Committe
e
PSDC structure
The Center is led by the Steering Committee.
The Secretariat provides support to the steering committee and the working groups.
Regular discussions on reform issues will take place through Working Groups.
Labour Productivity & Unit Labour Cost by Firm Size
Annual Subsidies for SOEs
Innovation Indicators by Firm Size
Definition of SEZ
A ‘Special Economic Zone’ is defined as geographically delimited areas administered by a single body,
offering certain incentives.
1. There is no need to wait until the conflict is resolved to start preparing an FDI-friendly environment
2. Anchor the country’s FDI-related laws to international standard
Lessons learned from Croatia and Mozambique
4. Generous, targeted incentives may be necessary to secure and extract additional benefits from FDI projectsn
3. GFDI attraction efforts should primarily focus on source countries with an advantage in understanding local host country conditions
Source: UN Conference on Trade and Development
5. Special economic zones are simple ways of creating ideal regulatory environments for FDI in the presence of weak overall business climates.
6. Privatization can benefit public finances and attract FDI early on
7. The employment impact of FDI differs by sector and mode of entry. It may be desirable to offer incentives to encourage investment in labour-intensive sectors, or to limit privatizations and sales of domestic firms to foreign investors, especially in the immediate post-conflict period. However, long-run considerations of efficient labour allocation should not be ignored
Lessons learned from Croatia and Mozambique
Source: UN Conference on Trade and Development
8. FDI cannot be expected to alleviate regional inequalities, but it still has a role play in improving conditions in disadvantaged regions
9. Backbone infrastructure may not benefit from substantial FDI for several years after the conflict is resolved. During these years, ODA is a more important external source of funding for these projects. Over time, FDA can come to play a more direct role
Lessons learned from Croatia and Mozambique
10. FDI can be successful in raising and diversifying exports
11. Weak business climates for local firms may hinder their ability to spontaneously link with FDI and create valuable spillover effects. This necessitates either strong reform efforts at the local level or government action to improve the capacity of SMEs to coordinate with FDI
Lessons learned from Croatia and Mozambique
12. FDI helps improve tax revenues in absolute terms…
❝ Excessive bureaucracy involving different institutions in the country, especially customs;
❝ Unnecessarily long delays in obtaining necessary permits (often more than one year);
❝ Unrealistic goals imposed on potential investors, both with regard to jobs to be created and initial investment;
❝ Poor reputation of the local workforce, which was labeled unproductive and overly expensive;
❝ Elevated cost of other factors of production (energy, water, communications);
❝ Rigid and constraining labor regulations; employment contracts were permanent and employers did not have complete freedom to recruit the people they wanted.
Source: Cling and letilly, 2001
Obstacles Faced by the Dakar EPZ
Region Public Private Total
Americas 146 394 540
Asia and the Pacific
435 556 991
Africa (sub-sahara)
49 65 114
MENA 173 40 213
Central & Eastern Europe and Central Asia
69 374 443
Private & Public Sector Zones in Developing & Transition EconomiesSources: BearingPoint; Il database; WEPZa (2007); FIAS research.
Country/Zone Role of Public Sector Role of Private Sector
Gaza Indust. Est.West Bank & Gaza
Financing all external infrastructure as well as factory shells, provision of land on long-term lease
Financing internal infrastructure and management of zones
Aqaba Ind. Est.Jordan
Financing all external infrastructure, provision of land on long-term lease
Financing internal infrastructure and management of zones
Subic Indust. Est.Philippines
Financing all external infrastructure as well as factory shells, equity stake in industrial estate
Financing internal infrastructure and management of zones
Tan Thuan EPZVietnam
Provision of land on long-term basis, right of way development rights on access roads
Financing of all internal and external infrastructure and management of zones
Examples of PPP in Zone Development
1. Do we need (now) to be sector specific?3. How can investment zones help to develop Iraq's
private sector?
4. What does the Iraqi private sector need from the government to effectively engage with foreign companies working in investment zones?
Questions
