Volume 1 Cedric - revised luca Final - RUIG-GIAN

Special investment legislation and regulations cannot succeed in motivating thecreation and development of entrepreneurial if they impose overly burdensomeadministrative requirements on investments. Hence the need for enabling legislation toprovide enterprises with the flexibility they require, while safeguarding workers and thesociety from abuses.7.2. Harnessing opportunitiesThe new Iraqi social, political and economic context brings with it opportunities forentrepreneurship and enterprise development. This section highlights the mosteconomically dynamic segments of activity for Iraqi small enterprises today and in themedium term.The reconstruction sector attracts the largest bulk of the expenditures andinvestments in Iraq, and this will continue to be so over the medium term. According to theUN-World Bank joint assessment needs assembly which took place in October 2003,estimates of overall reconstruction needs over the period 2003 to 2007 will be in the orderof 36 billion US$. 89 However, reconstruction activity has so far concentrated on industriessuch as oil production and public utilities, thereby creating few jobs, and actualinvestments have not matched expectations to date. If Iraqi SMEs were more closelyinvolved in this process one could expect immediate success for SMEs, leading to privatesector prosperity, growth and, most importantly, the generation of hundreds of thousandsof jobs. Reconstruction programs can offer the economy the chance to regain its vitality.The oil sector is the main economic vein in Iraq. However, it has been isolated fromother sectors of the economy as pertaining exclusively to the State domain. Hence, theexpansion in oil sector’s upstream and downstream dealings with other segments of theeconomy, including SMEs, to provide inputs and services that are needed may represent arewarding, stable and profitable source of future development, investment and employmentopportunities to the private sector.Transport and distribution is another promising segment of future expansionprospects in Iraq. Neighbouring-country companies of this sort are currently relied upon tofill the supply deficiency in this sector. The transport sector was previously in the hands ofan SOE, and small companies were subcontracted. Following the war in Iraq many of thesecompanies liquidated their business. 90 The private transport sector remains a good businessopportunity to establish private companies for internal and external transport of cargo andpassengers, including taxi services.Another wide and attractive economic segment is commerce. Simplifying importprocedures and establishing quick profit opportunities are major driving forces behind theexpansion of this segment. Commercial businesses range from floor-shop vendors andwholesalers to relatively developed import/export companies. Therefore, one wouldimagine that there are commercial sections that may be overcrowded, such as sole trading,while other active traders can still secure semi-monopolistic positions in wholesale andimport trading. The depreciated Iraqi currency promotes exports. Also, the nullification ofprevious legislation that restricted exports presents new opportunities. Effective exportsupport must give a fair chance to Iraqi products. It is worth mentioning here thatentrepreneurs should be aware that the MoT has actively restructured the “Export supportfund” with the aim of offering support and loans to SMEs in this regard.89 The UN-World Bank "Joint needs assessment "(October 2003).90 Interview with Raad Al-Umari, transport expert, former DG of Transport Establishment.78