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Investment law in the balance of the economy
Economical 06/06/2024
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There is no doubt that investment is one of the most important factors that can contribute effectively to correcting the defect in the structure of the Iraqi economy, diversifying sources of income, and reducing dependence on oil. Reaching this goal is one of the most important strategic goals that contribute to Iraq’s stability and development and confronting the economic, political and social crises. Therefore, the law that is drawn up to attract investment must work to direct the financial surpluses of the Iraqi society and make them move in the direction that uses capital efficiently and achieves the maximum for Iraq.
Possible benefit.
Private sector investments, whether local or foreign, are among the most important factors that can be relied upon to solve the problems of the Iraqi economy. The private sector is the second wing of the economy, and reality and history have proven that its distance from the economic scene was one of the biggest historical mistakes in Iraq.
However, in a quick reading of the new investment law, we are disappointed according to our vision and economic ambitions, and fears have increased for the future of this country’s economy, and in this article we try to explain the reasons for this not optimistic vision.
According to our reading, the proposed investment law is nothing more than a law for investment in residential cities, which is not considered a channel for transferring the financial surpluses of Iraqi society into the hands of a small, non-productive group, some of whom are foreigners. The investor in building residential cities can import all the materials he needs for the project without any return to the state or the state treasury. He can grant the land for free, and we all know that the lands overlap and there is no difference between what is inside the basic design and outside it. Obtaining financial facilities and soft loans. After 25% of the project is completed, he has the right to withdraw the capital and profits in full. He has the right to employ foreigners, and of course these facilities will be used to import many times the materials and goods that the investor needs, which is the biggest source of increasing his profits and exporting foreign exchange many times the amount he obtained. Return as well as remittances of foreign workers.
As for what was mentioned in the privileges, he has the right to use what he increased from the land after the completion of the residential project without restricting or even specifying the land. This is a lot of talk. If we assume that he decided to build facilities that are not appropriate for the privacy of Iraqi society, or any of the investments that are not appropriate for them to be in residential areas. Does the law allow us to prevent it? The second question is: He has the right to invest the surplus, regardless of its size: five, ten, or even twenty dunams, and perhaps more!
All of this is for the sake of producing housing units that are so far beyond the capacity and capacity of the middle class and even those with above-average incomes, and so far we only see from it an increase in the well-being of the wealthy by isolating them and settling them in private cities and in return absorbing the community’s financial surpluses and exporting them abroad. Is this goal worth all these high economic costs?
Yes, it can stimulate the economy and increase growth if Iraq produces what the real estate sector needs, and therefore we say that it is an expansionary financial policy that aims to increase growth rates and income by increasing production rates and thus increasing employment and income rates in a way that contributes to solving the unemployment problem that haunts the political class and always threatens it. By failure.
If we give the land for free, with exemptions from taxes and fees, in addition to an interest-free loan to the investor, and we allow the employment of foreigners, and we allow the export of foreign exchange, which is the financial surpluses of citizens and the loans that came from the Central Bank and Iraqi banks, then all these sacrifices are for the sake of increasing the well-being of the well-off, nothing more and nothing less. There is a real solution to the problem of housing the poor and the middle class, and even if the needs of these segments are to be met, there are shorter and much less expensive ways, as the cost is great and very significant for the economic policy in general.
If we assume for the sake of argument that the visionary aims to increase the supply of housing units until it exceeds demand, then the gradual decline in prices will begin. I believe that with the presence of crazy financial surpluses, which include money laundering and the legalization of corruption funds, and some segments on which there are no restrictions, and they are many without detail, this is what I call the effect. The double negative of this money is that it deducts from public funds and exploits citizens. It works to increase prices in a way that cannot be kept up with in the real estate sector, and real estate in Baghdad and Basra are the best examples. Therefore, this goal is difficult to achieve and requires a long period of time or for these cities to reach remote areas. Too far.
We must be patient in approving this law, and we must push financial surpluses of all kinds in another, more efficient direction, as they are an important financial resource and the key to solving many of Iraq’s economic, political and social problems. We push them towards industry, especially with goods that meet the needs of the real estate sector and modern agriculture that meets the market’s need, and this is something that can be achieved. Easily with the very large profit opportunities from the very large movement of the real estate sector due to the support of the financial and monetary policies represented by the initiatives of the Central Bank, then it can be said that Iraq is pursuing a financial and monetary policy with clear features and results for the present and the future, and that these reasons for the investment law are somewhat logical.
Economic and academic expert
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