EXECUTIVE SUMMARY
EXECUTIVE SUMMARY
FEASIBILITY STUDY OF BUSINESS DEVELOPMENT ZONES IN IRAQ
ZONES IN IRAQ NOVEMBER 2009
NOVEMBER 2009
Business Development Zones in Iraq
Executive Summary Presentation: A comprehensive and multi‐part Feasibility Study concerning Business Development Zones in Iraq has been completed. The Study addresses four major areas and this slide presentation is an executive Study addresses four major areas and this slide presentation is an executive
summary for readers of the Study.
The Feasibility Study covers Four Parts:
1 Background Description
1.
Background Description
2. Overview of National Zone Programs and Selected Zones
3. Legal, Regulatory and Tax Review
4. Business Development Zones for Post‐Conflict Economic Development in Iraq
in Iraq This executive summary is not meant as a substitute for reading the Study in its entirety; it provides an introduction and guide for interested readers, a quick reference and discussion aid to the complete Study Part Four of the Feasibility
reference, and discussion aid to the complete Study. Part Four of the Feasibility Study, which is the focus of this executive summary covers seven sections regarding Business Development Zones (BDZs): Introduction, Role of BDZs, Iraqi Economic Sectors, Potential Types of BDZs, Profiles of Business Models, Competitiveness, and Location Specific BDZs.
Please refer to the final slide for details on the contracting party for the Feasibility Study.
2
Key Themes of Report (1)
• The conventional concept of Business Development Zones (BDZs):
1.
Small
2.
Geographically defined
3.
Export Processing Zones
4.
Tax and Duty Free Zones
5.
Utilizing cheap labor 6.
Offering preferential trade status
7.
Benefiting from trade preferences
• Thousands of BDZs in over 100 countries cover a broad range of innovative new BDZ concepts
3
Key Themes of Report (2)
• New concepts of BDZ emphasize:
1.
1
Combination of investment incentives
C bi ti
fi
t
ti
ti
2.
Physical infrastructure
3
3.
Policy reforms
Policy reforms
4.
Hassle‐free administration
5.
Effective regulation
Effective regulation
6.
Range of sizes to fit policy objectives
• BDZs are pragmatic policy instruments:
1.
To implement economic, social and infrastructure development
2.
To overcome particular constraints
4
Contemporary Concepts of BDZs (1)
• Conventional concept of BDZs now obsolete:
1.
1 The “conventional concept” is an Export Processing Zone (EPZ) ‐
Th “
ti
l
t” i
E
tP
i Z
(EPZ) “a well‐
“
ll
defined geographical area, enjoying customs privileges and other incentives, in which the primary activity is processing of goods for export” (UNCTAD)
2. Second best solution compared to reform of whole country’s economy
3. Evolved from practical necessity rather than economic policy
• Contemporary BDZs:
1. are pragmatic and flexible policy instruments
2. promote private sector investment, generate employment, overcome constraints
3. introduce essential policy reforms
4. are tools for development initiatives
5
Contemporary Concepts of BDZs (2)
• GDP growth rates up to 10% (China Wide Area Zones) to 28% (Sri Lanka and Malaysia Small Area Zones)
L k
d M l i S ll A
Z
)
• Change can be implemented through BDZs when political realities constrain reforms throughout the whole country
g
y
6
Types of BDZ
• BDZs vary enormously:
1.
Conventional Export Processing Zone (EPZ) (e.g., Colon Free Zone in Panama)
2
2.
Single vault (Antwerp Diamond Zone)
Single vault (Antwerp Diamond Zone)
3.
Single regulation (New York Insurance Zone)
4
4.
Large industrial cities (e g Jubail in Saudi Arabia)
Large industrial cities (e.g., Jubail in Saudi Arabia)
5.
Whole regions with millions of people (e.g., Shenzen and Hainan in China)
7
Five Basic Types of BDZ
• Five basic types of BDZs:
1.
Conventional Small Area Zone (Turkish coastal zones, Jebel Ali)
2.
Wide Area Zone (Chinese special economic zones, Aqaba, Saudi New Economic Cities)
New Economic Cities)
3.
Industry‐Specific Zone (e.g., garments, oil refining, electronics, medical)
4.
Performance–Specific Zone (e.g., export, value‐chain, policy reform, business incubators)
5
5.
Hybrid Zones (e.g., electronics & jewelry, transport & Hybrid
Zones (e g electronics & jewelry transport &
manufacturing)
8
Integrate BDZ Policies with Development Strategy for Iraq (1)
p
gy
q( )
• Iraq should develop BDZ policies that complement the National Development Strategy (NDS)
• BDZ policies should include sector strategies that:
1.
2
2.
Assess strengths, weaknesses and opportunities of Iraq’s economy
Support national development objectives as defined in the NDS and Support national development objectives as defined in the NDS
and
the International Compact with Iraq
• Major sectors for BDZs in Iraq include:
1.
1
2.
3.
4.
5.
6.
7.
General Manufacturing, Transport and Logistics
General
Man fa t rin Transport and Lo isti s
Oil Refining, Petrochemical and Heavy Industry
Financial Services / Central Business District
Information, Science and Technology
Wide Area Special Agricultural Economic Zone
Multi‐Modal Sea Transport Hub BDZ at Al Faw
Multi‐Modal Air Transport Hub BDZ at BIAP
9
Integrate BDZ Policies with
Development Strategy for Iraq (2)
p
gy
q( )
• Current BDZs in Iraq:
1.
Export Processing Zones (EPZs) (e.g. Al Qaim, Khor Al Zubair) supervised by General Commission for Free Zones in Ministry of Finance
2.
Industrial Parks supervised by the Ministry of Industry and Minerals
• Current BDZs are:
1.
Closer to conventional models of EPZs and municipal industrial zones than to contemporary concepts of BDZs
2.
Infrastructure facilities and duty‐free enclaves rather than development policy instruments
10
Integrate BDZ Policies with Development Strategy for Iraq (3)
p
gy
q( )
• BDZs are effective because they:
1.
Enable special initiatives to target particular problems
2.
Provide solutions on a manageable scale according to local conditions and capacities rather than attempting large scale solutions
3.
Provide enclaves of excellence or security in otherwise disruptive environments
4
4.
Identify brand and promote special initiatives
Identify, brand, and promote special initiatives
• However, these strengths of BDZs reflect their fundamental risks:
1
1.
BDZs can be used as surrogate development plans to avoid BDZs
can be used as surrogate development plans to avoid
comprehensive and thorough policy frameworks which may be politically challenging
2.
BDZ projects can develop into a plethora of uncoordinated BDZ
projects can develop into a plethora of uncoordinated
individual development initiatives
11
Typical Incentives and Facilities Package for BDZs in Iraq (1)
g
q( )
•
Independent BDZ Authority as regulator and municipal / local authority
•
BDZ Operator as efficient project developer and BDZ manager •
Reliable, high‐quality physical infrastructure
•
Independent judicial system and dispute resolution procedures
Independent judicial system and dispute resolution procedures
•
Efficient registration of legal entities
•
Low or no customs duties
•
Efficient customs procedures
•
Tax incentives
•
Relaxed labor rules
•
No restrictions on repatriating currency, profits, or capital
•
Guarantee against seizure of assets
•
Efficient trademark registration
12
Typical Incentives and Facilities Package for BDZs in Iraq (2)
•
•
Searchable business and intellectual property registries Ability to use international accounting standards and issue financial reports Ability to use international accounting standards and issue financial reports
in foreign currency
•
State‐of‐the‐art information technology and telecommunications
•
Vocational training institute, with human resource recruitment system (shelter plan)
•
Institutional architecture – range of professional institutions and business associations
•
Cluster of technical and support services (e.g. quality and productivity center, business incubator, technical extension services, specialized companies for quality standards and testing, R&D center focused on i f
lit t d d
d t ti R&D
t f
d
particular industry of the BDZ)
•
Positive policy environment, with parallel policies integrated with sectoral action plans for growth
action plans for growth
•
Purchase or grant of freehold land in BDZ (for major investors)
13
Priority Types of BDZs for
Consideration in Iraq (1)
• Recommended types of BDZ are:
1.
1 General Manufacturing, Transport and Logistics BDZs
G
lM
f t i T
t d L i ti BDZ
2. Oil Refining, Petrochemicals and Heavy Industry BDZs
3. Financial Services / Central Business District
4. Information, Science and Technology BDZs
5. Wide Area Special Agricultural Economic Zone
6. Multi‐Modal Sea Transport Hub
7. Multi‐Modal Air Transport Hub
• Of
Of the recommended BDZs, the Wide Area Special Agricultural the recommended BDZs, the Wide Area Special Agricultural
Economic Zone showed the most significant improvement to competitiveness
– Based
Based on Competitiveness Index derived from Heritage Economic Freedom, on Competitiveness Index derived from Heritage Economic Freedom
World Bank Doing Business, World Economic Forum Competitiveness, and Transparency International Indexes
14
Priority Types of BDZs for
Consideration in Iraq (2)
q( )
• Study methodology incorporated: 1.
Structure (potential to accelerate growth of strategic sectors)
2.
Function (contributing to solution of cross‐cutting issues) 3.
Policy priority (according to NDS, Investment Law, and ICI) 4.
Regional survey of conditions, resource availability and markets 5.
Professional assessment of emerging opportunities for Iraq
6.
Location criteria
• Should be updated as NDS and Sector Action Plans are completed
15
General Manufacturing, Transport, and Logistics BDZ Business Model (1)
g
( )
• To include standard BDZ incentives and facilities, with following add t o s to t e p ys ca
additions to the physical infrastructure:
ast uctu e
1. Multi‐modal “dryport” including
a. truck container terminus, truck parks, and maintenance
b. cold stores, reefer ports, warehouses
c. entrepôt free zone area, with bonded warehouses for re‐export
d fast
d.
fast freight cranes and transfer between ships, barges, aircraft, trucks, freight cranes and transfer between ships barges aircraft trucks
rail as appropriate for the particular BDZ
2. Secure and bonded corridors to nearest airports, seaport, rail station
3. Industrial park for general/light manufacturing, engineering, maintenance
4. Hostels for drivers, family housing for migrant workers in isolated border BDZs
16
General Manufacturing, Transport, and Logistics BDZ Business Model (2)
g
( )
• To include standard BDZ incentives and facilities, with following additions to institutional infrastructure:
1.
Training and R&D centers to specialize in logistics, supply‐chain management
2.
On‐site international transit and customs offices
3.
Local branches of manufacturers, transport, logistics trade associations
4.
Professional institutes of engineers, transport, logistics, export management
17
General Manufacturing, Transport,
and Logistics BDZ Business Model (3)
g
( )
• Parallel Policies to include: 1.
Transport Sector Master Plan
2.
Trade policy reforms based on cost of protection analysis
• Business model customized to particular conditions of individual sites according to Transport Sector Master Plan
18
General Manufacturing, Transport, and Logistics BDZ Business Model (4)
g
( )
• Locations for Manufacturing, Transport and Logistics BDZs:
1.
Strategically situated on junction of transport corridors for transit trade
2
2.
IIn well populated area with numerous towns and villages for ll
l t d
ith
t
d ill
f
distribution trade
3.
Land available for development
4.
Near border crossing for international trade
5.
Secure area, bordering secure area of another country, forming an enclave
l
19
General Manufacturing, Transport,
and Logistics BDZ Business Model (5)
g
( )
• Sequence of development of BDZs according to policy priorities and prevailing conditions
d
ili
diti
• Phased development of the two transport hubs at Al Faw and BIAP g,
p
g
with national network of Manufacturing, Transport and Logistics BDZs • Pending Transport Sector Master Plan, business model is hub‐and‐
spoke system k
t
• Based on multi‐modal hubs at Al Faw and BIAP as gateways to Iraq and whole West Central Asia Region
and whole West Central Asia Region
20
General Manufacturing, Transport, and Logistics BDZ Business Model (6)
g
( )
•
Hubs at Al Faw and BIAP connected to network of spoke Manufacturing, Transport and Logistics BDZs as distribution centers on main transport T
d L i i BDZ
di ib i
i
corridors spanning Iraq and import‐export links to neighboring countries
•
Could be funded and managed as Public Private Partnerships (like Saudi Economic Cities)
•
Even if all potential sites are not developed, Manufacturing, Transport and Logistics BDZs should be based on Transport Sector Master Plan
•
Scale of each Manufacturing, Transport and Logistics BDZ depends on long term comparative advantage of location as transport and logistics hub or as p
distribution spoke
21
Oil Refining, Petrochemical, and Heavy Industry BDZ Business Model (1)
y
y
( )
•
To include standard BDZ incentives and facilities, with following additions to physical infrastructure:
•
Sufficient highway capacity and numerous access points, together with sufficient internal road network for largest 18‐wheel, 44‐ton trucks
•
Access to railroad, with modern fast freight handling equipment
Access to railroad, with modern fast freight handling equipment
•
Heavy industry electricity supplies at internationally attractive rates (US$ 0.06 per KWH). Own generating capacity or connected to grid at 100 MW level
•
Oil and gas pipelines for industrial energy, refining, petrochemical raw materials, and alternative to electricity for heating and industrial ovens
•
Desalinated water
•
Sanitary and industrial waste treatment
•
Social services
•
y
Family residential
•
Recreational facilities
22
Oil Refining, Petrochemical ,and Heavy Industry BDZ Business Model (2)
y
y
( )
• Sites may vary in size to reflect target investors:
1.
1
Very large industrial sites (typically 10,000 square meter units) for V l
i d t i l it (t i ll 10 000
t
it ) f
investors to design and build factories and connect to general utilities
2.
Medium manufacturing sites (typically 5–10,000 square meter units) for component and support industries
for component and support industries
3.
Transport and logistics areas, requiring large land areas, warehouses and containers storage
23
Oil Refining, Petrochemical, and Heavy Industry BDZ Business Model (3)
y
y
( )
• Institutional Architecture to include local branches of Oil, Chemicals, Engineering Industries Trade Associations, professional Ch i l E i
i I d ti T d A
i ti
f i
l
Institutes of Engineers
y
g,
y
y
• Policy framework for oil refining, heavy industry and petrochemicals under Hydrocarbon Law:
1. Sets out how government and private sector contribute to national downstream and energy intensive development
downstream and energy‐intensive development
2.
Assists BDZ Operators in attracting investors in their sectors
• Parallel policies:
Parallel policies:
1. Remove restrictions in national and international trade
2
2.
D l
Develop clear transport policies
l
li i
24
Financial Services/Central Business
District Business Model (1)
( )
• To include standard BDZ incentives and facilities, with following additions to the physical infrastructure
dditi
t th h i l i f t t
1.
High quality urban infrastructure provided by municipality (e.g. streets) or BDZ Operator (e.g. up‐market office space, hotels, convention center)
2.
Efficient logistics including access to mass transit systems, rail, highway, airport and limited warehouse facilities g
y, p
3.
Congenial social environment for workers and residents, including for families of national and international executives
25
Financial Services/Central Business
District Business Model (2)
( )
• To include standard BDZ incentives and facilities, with following additions to the institutional infrastructure:
1.
Offices of pillars of financial services sector (e.g. Central Bank, Stock Exchange, other key exchanges (oil and gas), and large corporations)
2.
Trade Associations and Professional Institutes (Institute of Accountants, Bar Association, Bankers Association, Business Roundtable, Chamber of Commerce)
3.
Business and Financial Service Regulators (Central Bank, Securities Commission, Financial Services Authority, Financial Ombudsman)
4
4.
Financial and business research centers and consulting organizations
Financial and business research centers and consulting organizations
5.
Training institutes (business school, finance, banking, accounting, insurance, marketing, advertising)
26
Information, Science, and Technology BDZ Business Model (1)
gy
( )
•
To include standard BDZ incentives and facilities, with following additions to the physical Infrastructure:
1. Fully serviced high technology factory sites
2. Pre‐built shell factories for manufacturing, research or maintenance operations
3. Clean areas distant from smoke, dust, vibration
Clean areas distant from smoke, dust, vibration
4. Purpose‐built science conference center
27
Information, Science, and Technology BDZ Business Model (2)
gy
( )
• To include standard BDZ incentives and facilities, with following additions to the institutional infrastructure:
1. Science, Technology and Knowledge Industries Trade Associations, and Professional Institutes of Engineers, Scientists, Computer
and Professional Institutes of Engineers, Scientists, Computer Sciences
2. Financial services cluster (for venture capital funds and other specialists)
3. Business incubator with advisory services for financing, marketing, and company administration and roster of independent directors
4. Multi‐disciplinary applied research institute (part of university or smaller think tank)
28
Information, Science, and Technology BDZ Business Model (3)
gy
( )
• Special incentives for high technology industries:
1. Tax provisions to extend years to carry forward losses and transfer losses to other projects in Iraq
2.
No tax on reinvested profits for at least 10 years
3.
Zero tax on Iraqi and worldwide income derived from patents, royalties, other forms intellectual property for both national and g
p
foreign companies
4.
Personal income tax exemptions for both foreign and Iraqi science and technology personnel
5.
Trademark registration and intellectual property protection with BDZ‐
dedicated office
6.
Registration of Scientific NGOs at BDZ‐dedicated NGO Office and eg st at o o Sc e t c GOs at
ded cated GO O ce a d
registration procedure
29
Wide Area Special Agricultural Economic Zone Business Model (1)
( )
• To include standard BDZ incentives and facilities, with the following particular additions to the physical infrastructure:
f ll i
ti l
dditi
t th h i l i f t t
1.
Small Area Zone within the Wide Area Special Agricultural Economic Zone with fully serviced industrial/commercial sites open to all types of agro‐processing, packaging, chemicals, additives/ingredients, agro‐engineering and technical services companies
30
Wide Area Special Agricultural Economic Zone Business Model (2)
( )
• To include standard BDZ incentives and facilities, with the following particular additions to the institutional infrastructure:
1.
Agricultural Industry Associations, covering farmers, manufacturers, and traders
and traders
2.
Professional associations for agricultural and environmental scientists and technologists
3.
Environmental and water regulatory agencies with controls over rate of use
4
4.
Special financial services unit in Small Area Zone for commercial Special
financial services unit in Small Area Zone for commercial
banks and Agricultural Cooperative Bank
5.
Agricultural applied research and development center
31
Wide Area Special Agricultural
Economic Zone Business Model (3)
( )
• Special Incentives
1.
Free Zone status for agricultural production companies located outside Small Area BDZ
• Policy Environment
P li E i
t
1.
Introduction of legal reforms in Wide Area Special Agricultural Economic Zone including freehold land ownership rights and rights to purchase State land so farmers can use land as collateral for loans
2.
Strategic plan for development of agricultural sector (production g p
p
g
(p
and agribusiness)
3.
Reform of agricultural trade policy to eliminate trade restrictions
32
Wide Area Special Agricultural Economic Zone Business Model (4)
( )
• Parallel Policies
1.
Reform banking sector to encourage competition in banking and agricultural finance
2
2.
C t
Create master plan for water management
t
l f
t
t
3.
Invest in agricultural infrastructure, especially for irrigation, drainage systems, and rural roads
33
Multi‐modal Sea Transport Hub Business Model (1)
• Strategic purposes:
1.
To provide deep water super‐port for Ultra‐large Container Ships (ULCSs) as gateway for West‐Central Asia
2
2.
T
To expand existing port capacity:
d i ti
t
it
a. Um Qasr port has only 13 meter draft and could not handle new ULCSs
3.
To reduce import costs:
a. UNDP estimates Iraq saves USD 500 for each Twenty‐foot Equivalent Unit (TEU) imported through Iraqi port rather than i l
U i ( U) i
d h
hI i
h h
overland
34
Multi‐modal Sea Transport Hub Business Model (2)
• Strategic purposes (cont.):
1. To promote super‐port as hub for transport and logistics network
a. Iraq currently imports 7 TEUs per 1,000 population
b Kuwait imports 92 TEUs per 1,000
b.
K
i i
92 TEU
1 000
c. Jordan imports 25 TEUs per 1,000
d If
d.
If Iraq imported 25 TEUs per 1,000 (the same as Jordan), it would I
i
t d 25 TEU
1 000 (th
J d ) it
ld
import more than 800,000 TEUs per year
e. At that level, Iraq could save USD 200 million per year by importing through its own port instead of overland
through its own port instead of overland
f. Iraq should plan for 5 million TEUs per year, growing to a sub‐
continental entrepôt handling 25 million TEUs per year
g. Compare Dubai which handles 8 million TEUs per year and plans for 55 million TEUs per year by 2030
35
Multi‐modal Sea Transport Hub Business Model (3)
• To include standard BDZ incentives and facilities, with the following particular additions of incentives and facilities f ll i
ti l
dditi
fi
ti
d f iliti
packages:
Physical infrastructure
• Deep‐water port – minimum 17 meters, better 19 meters, best 21 meters
• Large
Large‐scale
scale container sea container sea
terminal, minimum 20 berths
• Landside post‐Panamax gantry cranes for sea port and rail head
• Large‐scale container “dryport” to integrate sea, road, rail, and air transit movements
Physical Infrastructure (cont)
• Land links: rail to Basrah, road
to trunk highways, bonded
road/rail link to Basrah airport
• “Satellite” dryport and Free
Z
Zone
att Basrah
B
h airport
i
t
• Logistics and transport park
with Free Zone status
• Industrial Park with Free Zone
status
t t for
f generall
manufacturing, engineering,
light assembly
• Expansion of Al Faw town as
new city
36
Multi‐modal Sea Transport Hub Business Model (4)
• To include standard BDZ incentives and facilities, with the following particular additions of incentives and facilities following particular additions of incentives and facilities
packages:
Legal/tax incentives
g
• BDZ Authority as Municipality and Wide Area Zone Administrator
• Independent judicial system/ Independent judicial system/
dispute resolution for maritime and transport law
Institutional infrastructure f
/Policy environment
• Parallel policies of national transport Master Plan, trade policies BDZ strategy
policies, BDZ strategy
• Venture capital funds and banks specializing in shipping, transport and logistics companies
• Marine Trade Associations and Professional Institutes
37
Multi‐modal Sea Transport Hub Business Model (5)
p
( )
• Two potential locations: 1.
Al Faw
2.
Deep water platform extension to Al Faw
• Three phase development:
1.
Short term goal to build port facilities to supplement Um Qasr port
2.
Create hub port as key link in strategic national/regional transport and logistics network
3.
Upgrade super
Upgrade
super‐port
port for new generation ULCSs to service whole for new generation ULCSs to service whole
West‐Central Asia region
• Consider Neutral Zone status to serve whole region:
1.
Compare to existing oil Neutral Zones in Gulf Region
38
Multi‐modal Air Transport Hub Business Model (1)
• Strategic Purposes:
1.
1
Gateway for external air transport links Gateway for external air transport links
2.
Combines air, road, rail, telecommunications 3.
p
pp
(
Full transport support services (cold stores, maintenance engineering, dispatch yards) to act as hub for Iraq transport and logistics network
Istanbul and to
Europe
Malatya
Kars
Baku and
to
China
Eskenderan
Latakiya
Beirut
Khoramshar
Abadan
Al Faw
Kuwait
39
Multi‐modal Air Transport Hub Business Model (2)
• Located at Baghdad International Airport:
1.
Direct access to highway system 2.
Extensive underused land
3.
Scope to return to full international operations when normal security conditions prevail 4.
Baghdad is “world‐scale city”, main financial and business center of g
y,
Iraq with agriculture, industry, retail, construction, capital city and conurbation of 7 million people
5.
Baghdad is already a national and international rail hub, Baghdad
is already a national and international rail hub,
connecting a north‐south rail corridor with two east‐west corridors, and national and international highway hub
6
6.
However BIAP has no existing rail spur
However, BIAP has no existing rail spur
40
Multi‐modal Air Transport Hub Business Model (3)
• To include standard BDZ incentives and facilities, with the following particular additions of incentives and facilities following particular additions of incentives and facilities
packages:
Physical infrastructure
y
f
• Multi‐modal “dryport” with logistics/transport park, reefer ports, bonded warehouses and fast freight
warehouses, and fast freight transfer facilities
• Direct links to railroad and highway networks
Operational structures
p
• Link to “Transport and Logistics City” business park in Abu Ghraib Palace area
• Training and productivity Training and productivity
center for transport, logistics, and supply chain management
41
Multi‐modal Air Transport Hub Business Model (4)
• To include standard BDZ incentives and facilities, with the following particular additions of incentives and facilities following particular additions of incentives and facilities
packages:
Legal/tax incentives
• International transit and customs offices
• Efficient BDZ Authority and BDZ Operator
• Parallel policies of national transport Master Plan, trade policies, BDZ strategy
Institutional architecture/Policy environment
i
• Institutional architecture to include transport and logistics industries trade associations
• Professional transport institutes P f i
l
i i
and aviation associations
• Airport development through contracting or PPP models (under transport Sector Master Plan
transport Sector Master Plan
• “Open Skies” policy to encourage private or state‐owned airlines
42
Action Steps for Implementation of BDZs (1) • Adopt BDZ Policy as part of National Development Strategy to avoid uncoordinated individual development initiatives
id
di t d i di id l d l
t i iti ti
• BDZ Policy to implement the strategies in National Development Strategy and International Compact
Strategy and International Compact
• Pass Enabling Legislation in order to grant executive branch of g
government the authority to establish BDZs and determine their y
legal, regulatory, and tax framework with significant independence from central government
• Adopt sector master plans and pass relevant legislation (e.g. hydrocarbon law)
43
Action Steps for Implementation of BDZs (2) • Pass Enabling Directives for BDZs – in order to establish detailed provisions for regulation and operation of BDZs
• Promote BDZ development opportunities to encourage private sector investment in establishment of BDZs
IIraq has already lost 30 years and h
l d l 30
d
could be bypassed by new global p
development unless BDZs take advantage of restoration of security as this occurs
44
Action Steps for Implementation of BDZs (3) • Certain strategic decisions are required quickly in order to take advantage of major opportunities for Iraq. For example:
d t
f
j
t iti f I
F
l
1. Opening up of West‐Central Asia
2
2.
N E
New Eurasia land‐bridge transport routes
i l d b id t
t
t
3.
New transport technologies
4
4.
Economic growth in the Middle East
Economic growth in the Middle East
5.
BIAP’s status as hub airport
45
Criteria Used to Select Locations for BDZ Business Models (1) ( )
• Some BDZ locations pre‐determined by the project (Hub Sea Port at Al Faw, Hub Airport at BIAP)
Port at Al Faw Hub Airport at BIAP)
• Site selection is a complex process involving assessment of economic, financial, social, environmental, technological, and cultural factors • BDZs are public investment projects; therefore, need to assess criteria both to advance best interests of BDZ as a project and
criteria both to advance best interests of BDZ as a project and to maximize public benefits and minimize public costs
• Most criteria for selecting locations for BDZs are related to type of BDZ – clearly different factors for Pilgrimage BDZ and for Oil Refining BDZ
46
Criteria Used to Select Locations for BDZ Business Models (2) ( )
• However, basic essential common factors include:
1.
Availability of government freehold land
2.
Safety and sustainability of the land 3.
Availability of extensive water resources
4. Must already have or be close to supply of each essential utility (water, electricity, oil, gas, telecommunications connections)
5.
Dynamic, creative and ambitious local political leadership, or strong and dynamic local private sector leadership
6 Must be close to actual or potential transport links
6. Must be close to actual or potential transport links
47
Criteria Used to Select Locations for BDZ Business Models (3) ( )
• General Manufacturing, Transport, and Logistics BDZ:
1.
2.
3.
Junction or critical site of transport corridor
At least one major transport mode on location Close to large population
Close to large population 48
Criteria Used to Select Locations for BDZ Business Models (4) ( )
• Oil Refining, Petrochemicals, Heavy Industry BDZs:
1.
1 Large area of available land
L
f
il bl l d
2. Distant from areas of dense population (due to pollution/ explosion risk)
3. Easy access to raw materials
4. Direct access to transport facilities
5 Access to large scale waste disposal facilities
5.
Access to large scale waste disposal facilities
6. Close to established engineering industry cluster with wide range of engineering industries and services to provide support
7. Close to skilled, technical and managerial labor resources at all levels
8. Proximity to established university with R&D facilities and specialization in science and petroleum engineering
9. Proximity to emergency services in case of accidents
49
Criteria Used to Select Locations for BDZ Business Models (5) ( )
• Financial Services BDZs/ Central Business District:
1.
1
Located in national or regional capital with established L t di
ti
l
i
l
it l ith t bli h d
commercial tradition 2.
Close to established cluster of business professionals (banks, lawyers, accountants, IT companies)
accountants, IT companies)
3.
Close to established university with graduate business school or advanced management school and research capacities
4
4.
EExtensive sources of high quality professional, sub‐professional and i
f hi h
li
f i
l b
f i
l d
clerical staff
5.
Easy links to international airport
6.
High quality social environment with good residential, cultural, recreation, restaurants and hotel facilities
7.
g
y
High standards of security
8.
Good community transport system to enable staff to commute to work reliably
50
Criteria Used to Select Locations for BDZ Business Models (6) ( )
• Information, Science and Technology BDZ (“Science Park”):
1.
Close to large science‐focused university
2.
Close to a cluster of research departments or head offices of high‐
technology companies and relevant government departments
technology companies and relevant government departments
3.
Close to sources of high quality professional, sub‐professional and clerical staff
4.
Easy links to international airport
5.
Clean environment, unaffected by pollution and vibration
6.
High standards of social environment with good family residential, cultural, recreation, restaurants, and hotel facilities
51
Criteria Used to Select Locations for BDZ Business Models (8) ( )
•
Wide Area Special Agricultural Economic Zone
1.
Good agricultural land
2.
Secure long term water supplies
3.
Farming population with strong agricultural culture
4.
Network of farming trade intermediaries and traders
5
5.
Established transport links (good highway or railway) to export produce
Established transport links (good highway or railway) to export produce
6.
Established network of rural roads
7..
Su c e cy o p ys ca
Sufficiency of physical infrastructure such that growth will not be ast uctu e suc t at g o t
ot be
constrained by infrastructure problems when reforms stimulate growth
8.
Committed and well informed political leadership
52
Appreciation For Their Contributions
We would like to acknowledge the following individuals for their valuable contributions to this summary document.
– Paul Savello, US Embassy, Iraq Transition Assistance Office, Ph.D., JD
Paul Savello, US Embassy, Iraq Transition Assistance Office, Ph.D., JD
– Alex Riemer, US Embassy, Office of Private Sector Development, Consultant
– Captain Siegfried T. Ramil, US Army Operations Officer
p
g
y p
55
Feasibility Study and Summary
TRC has completed comprehensive Feasibility Study called Business Development Zones in Iraq. The Study, along with the eight appendices, D l
Z
i I
Th S d l
ih h i h
di
was undertaken to provide those actively involved in economic development initiatives in Iraq with detailed information, analysis, and perspective in this area The material presented in the Study may
perspective in this area. The material presented in the Study may contribute to the basis of focused, effectively supported and coordinated development activities, and further policy initiatives for this important tool in building the Iraqi economy.
tool in building the Iraqi economy. TRC
Feasibility
F
ibilit St
Study
d and
dE
Executive
ti S
Summary P
Presentation
t ti
prepared by TRC Limited [email protected]
56
Further Information y
y
p
q
The Four Part Feasibility Study of Business Development Zones In Iraq was contracted through the Office of Private Sector Development, Strategic Investment, and Housing of the US Embassy; Baghdad, Iraq. Inquiries may be made to the following contact:
June Reed, Senior Advisor, US Embassy; Baghdad, Iraq
Office of Private Sector Development, Strategic Investment, and Housing
Office
of Private Sector Development Strategic Investment and Housing
[email protected]
0770.443.0240
57