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 Iraqi Kurdistan's investment sector is a mess, it does not benefit the public: Investors Union Spokesman

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Iraqi Kurdistan's investment sector is a mess, it does not benefit the public: Investors Union Spokesman  1.7.2012  

CEO of Barez Company and spokesperson for the Investors Union, Yaseen Mahmood Rasheed. Photo: Rudaw

July 1, 2012

SULAIMANIYAH, Kurdistan region 'Iraq', — A report from the Financial Auditing Committee has led to debate over investment projects in Sulaimaniyah and some dark aspects of contracts the report has brought to light. Yaseen Mahmood Rasheed -- known as Mala Yaseen – is the CEO of Barez, one of the companies involved in the investment projects reviewed. He is also the spokesman for the Investors Union. Mala Yaseen discussed the Financial Auditing Committee’s report with and said that, although it mentioned his company, these reports greatly serve investment projects.

Q: A despised term in Kurdistan is “investor,” and “investment.” What to do you make of this?

Mala Yaseen: Investment is a new field in Kurdistan that only started after 2006. In some countries, investment has brought calamities. In Egypt a few years ago, news of fake companies and investors broke out and was followed by the destruction of buildings. We have to prevent such disasters from occurring here in Kurdistan. After Feb. 17, 2011 [demonstrations], investment projects have met with questions and doubts.

Q: Why?

Mala Yaseen: Investments go through a number of stages. From 2006 to 2011, the people of Kurdistan were waiting to see what investment was, what it could do and what it has done. In 2011, opposition parties took advantage of this new area and used investment to criticize the government. The reforms of the Kurdistan president were a response to the opposition’s critiques.

The reforms started by targeting investment projects. In the early stages, many investment projects were halted. The reform committee even halted some projects that had been allowed by the government.

People realized that investment projects were not benefiting the public much. Investors were targeting housing markets. All they wanted was fast money-generating projects. Some investors declined all projects except housing ones. Barez was one of them. I was one of those investors, too. I have to be honest.

Investment projects must benefit people. They should not only serve a few people, like myself, so that all of a sudden a few people get rich.

Q: And some of those fast money-generating projects are useless.

Mala Yaseen: Yes. There are housing projects in Sulaimaniyah that were built in 2006 and now need renovation. The problem is investment law. Investment law, too, has to be renovated. Look, the Ministry of Agriculture has been around for 22 years. The Financial Auditing Committee has a number of reports about handling the finances in this ministry, which is normal. But the Board of Investment has been around only for six years, and the Financial Auditing Committee has 40 to 50 reports on this board. This is not normal.

Q: The Sulaimaniyah Board of Investment claims that the Kurdistan Presidential Reform Committee did not find anything against the board, yet you say Financial Auditing Committee has all these reports on the board. How is this so?

Mala Yaseen: I do not know why the Reform Committee did not find anything against the board. The Reform Committee did a lot of great things. Before the committee, agricultural lands were given to investment projects, but the committee stopped that. Now only non-cultivable lands are given to investment projects. This is the greatest thing the committee changed. The committee also changed the way licenses are issued to investment projects, and annulled many contracts. We visited Kurdistan’s prime minister and asked him to form a permanent committee to continuously monitor investment projects.

Q: Foreign investment companies, compared to local ones, are not blamed for problems. How have they been able to win the trust of people?

Mala Yaseen: Well, there have been some fake foreign companies too. But the real ones have good technological abilities, capable staff and have presented good projects in Kurdistan -- for example, the pharmaceutical and cement factories in Sulaimaniyah. Moreover, there are a number of five-star and super nice hotels in Sulaimaniyah and Erbil built by foreign companies, as compared to a country like Afghanistan which does not have even one five-star hotel.

Q: Does the Investors Union have information on the number of projects run by foreign companies?

Mala Yaseen: A large number of companies have asked for licenses. However, the Council of Investment, which is chaired by Nechirvan Barzani [prime minister] has halted a number of projects. Now no permissions are issued, in order to carry out reform, particularly for housing projects. But in the past, 500 investors were given permission to start projects. Just today, permission was issued to the Asia Insurance Company. However, another 500 investors are awaiting permission to start projects.

Q: Investment has now become child’s play. Everyone asks for a license to invest. Isn’t that true?

Mala Yaseen: Unfortunately, the investment law says investment projects are to be assessed, but it does not say investors too must be assessed.

You know, you see a guy who is a policeman, and one day he quits his job and submits a proposal for an investment project. Then he is permitted to carry out the project and builds 1,000 housing units. I mean there have been certain “investors” that not only were not investors and did not have the money to carry out any projects, but did not even have money to pay for a taxi.

Lawyers of companies, or anyone, are given projects and once they receive the approval they sell the project for US$800,000 interest. Recently, I met someone at the Sulaimaniyah Directorate of Investment. The person was there to submit a proposal for an investment project. This same person came to me and asked for a $2,000 loan last year. He has not even been given the project, but has already sold half the project.

Q: Do you know how many projects are sold [to other contractors]?

Mala Yaseen: In Sulaimaniyah, it happens on a daily basis. But I would say it’s less than 100 projects. But due to this phenomenon, now we have fake investors. A number of people set up an office [claiming to be investors] and sell other people’s housing units. This is what investment has turned into.

Q: Why is the Investors Union silent in the face of this problem?

Mala Yaseen: We sent several letters to the prime minister of the sixth cabinet and informed him of the issue.

Q: Then what is the solution?

Mala Yaseen: The investment law has to be amended. A guy walks into the investment directorate, and comes out talking of millions of dollars. Serious reform is needed.

The Investors Union must hold an immediate convention and discuss the issue. The Investors Union, agriculture and industrial sectors have to be given attention. The government’s budget should not be spent via investment directorates. These budgets should not be allocated to housing projects; they should help people set up factories.

The previous cabinet made a big mistake when it delegated power to the general directorates. In the beginning, I thought investment permissions were to be given at the governor level, and therefore thought it was a good step. I did not know that was not the case, but instead Sulaimaniyah’s Directorate of Investment allows $300 million projects to go ahead.

Next year, the Financial Auditing Committee will find out what a mess this sector is, especially when they discover what projects are being permitted by the investment directorates at the provincial level.

The investment directorates are authorized to permit $50 billion projects. This is a disaster. In other countries, not even the assessment of the investor would be done in 10 days; here, the whole project is approved in days.

Investment permission must be authorized by the governors. A committee must be formed of five general directors. In Sulaimaniyah, there are some projects where the deadline has been extended from two years to five years. This is a mess. This is not in the interest of people.

Q: The free trade zone in Sulaimaniyah was a project approved eight years ago and US$950,000 was allocated to design its master plan. But the project was canceled. Was it not a good project?

Mala Yaseen: It’s good that it was canceled. We lost $950,000, but saved 5,000 acres of land. Otherwise, we would have lost the land too. I hope the land will not be given to other projects.

Q: Opposition parties in Sulaimaniyah now run some of the companies and private sector businesses. Do you think investment and the private sector are now involved in a political conflict between parties?

Mala Yaseen: Why should the opposition not have companies? They do have companies. As long as they are operating their companies legally, they should have companies.

However, in Sulaimaniyah there are a number of projects that are licensed but have not started; the lands are still open. There are some other projects that have issues. There are some other projects that have no issues, but the investor does not have the money to carry out the project, the investor is waiting for a time when he can get some money and start the project.

I will not provide information about these projects to the Board of Investment, but if Kurdistan’s prime minister asks me, I will give him all the information.

Q: There is talk of rapid money-generating projects. What is the volume of investment capital in Kurdistan?

Mala Yaseen: We do not have an active banking system, so it is not easy to accurately know the answer to that question. However, investment projects are not the only source of generating money. Now the tourism and agriculture sectors also license projects.

However, the term “millionaire” does not make much sense anymore. A million is nothing nowadays. Now the criterion for being rich is having no less than US$5 million. In Sulaimaniyah, 3,000 entrepreneurs have a fortune that exceeds $5 million. In Kurdistan, 10,000 individuals have US$5 million or more. Every year, a number of people join the wealthy class of $5 million.

In other countries, the government has investors pay a monthly salary to a number of the people with special needs; this is a form of taxation. But in Kurdistan, the government does not tax the rich. Some of them pay salaries to people with special needs voluntarily.

Q: Why does the report from the Auditing Committee target Sulaimaniyah?

Mala Yaseen: I do not know why this report was published now. This report was sent to the Council of Ministers six months ago, so why was it published now? The report includes studies of the companies Nalia, Qaywan and Barez. The report should have been published and responded to by the previous cabinet of the Kurdistan Regional Government.

However, the Auditing Committee has done a great job that serves investment. Their work is very detailed and they are aware of all the investment laws.

Q: Some Iranian citizens took $5 million from a number of businessmen in Sulaimaniyah. As the Investors Union, what have you done in that regard?

Mala Yaseen: Unfortunately, that money is gone. That incident dealt a blow to the Sulaimaniyah market. We lost a number of great businessmen.

By Nawzad Mahmoud - Rudaw

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