Gregory D Thome  05/14/2009 01:46:10 PM  From  DB/Inbox:  Gregory D Thome

Cable 
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UNCLAS    SIPDIS     BAGHDAD 01237
CXBAG:
    ACTION: ECON
    INFO:   DCM POL EXEC

DISSEMINATION: ECON
CHARGE: PROG

APPROVED: PRT:BLYNCH
DRAFTED: PRT:KJOHNSON
CLEARED: OPA:DNOBLES; ECON:GTHOME

VZCZCBGI1462
RR RUEHC RUCNRAQ
DE RUEHGB #1237/01 1321147
ZNR UUUUU ZZH
R 121147Z MAY 09
FM AMEMBASSY BAGHDAD
TO RUEHC/SECSTATE WASHDC 3013
INFO RUCNRAQ/IRAQ COLLECTIVE

UNCLAS SECTION 01 OF 02 BAGHDAD 001237 
 
SIPDIS 
SENSITIVE 
 
E.O. 12958: N/A 
TAGS: EINV ETRD PGOV ECON IZ
SUBJECT: Muthanna's Provincial Investment Commission: Successes and 
Challenges 
 
REF: (A) 08 Baghdad 3682 
 
¶1. (U) This is a PRT Muthanna Reporting Cable. 
 
¶2. (SBU) SUMMARY:  Muthanna's Provincial Investment Commission (PIC) 
is one of the most active in Iraq, with 17 projects licensed to date 
and four of those are in various stages of completion.  Challenges 
remain, however, especially in acquiring rights to land from the 
Ministries of Finance and Municipalities/Public Works for these 
projects.  Both PIC board members and businessmen alike believe that 
land is the number one impediment hindering many of these 
investments.  END SUMMARY. 
 
MUTHANNA'S PIC: A MODEL FOR IRAQ 
-------------------------------- 
 
¶3. (U) Muthanna's Provincial Investment Commission (PIC) is one of 
the most active in Iraq.  As of early May, the PIC had issued 17 
licenses for projects across a variety of industries, including 
tourism, entertainment, agriculture, retail trade, housing, and 
heavy industry.  In total, these investments could bring in some 360 
million dollars to Muthanna.  In addition, the PIC is evaluating 
another 25 proposals valued at approximately two billion dollars. 
Companies from Turkey, China, Germany, Australia, Kuwait, and 
elsewhere are currently proposing investments in Muthanna.  In 
addition, some local Iraqis have returned home from living abroad to 
start businesses in Muthanna. 
 
STATOIL AND CHUCK-E-CHEESE IN MUTHANNA? 
--------------------------------------- 
 
¶4. (U) While licensing is a necessary step in the investment 
process, construction starts are an even more important step.  To 
that end, on May 7, the PRT conducted a site visit to a new auto 
care center outside Samawah.  The owner/manager envisions a 
substantial project, to include a petrol filling station (already 
completed), an auto service station, a car dealership, and a family 
restaurant.  The owner's inspiration came from the many STATOIL 
stations he saw when he lived in Sweden for some 15 years.  The fuel 
station phase of the project was fully operational when the PRT 
visited, and the installed pumps were imported from Sweden. 
 
¶5. (U) The PRT also visited the site of a future children's 
entertainment center in central Samawah.  The project will be under 
construction for the next year, but the foundation had already been 
laid at the time of the PRT's visit.  The investor, a local 
businessman, was interested in this project after seeing a similar 
facility in the UAE and a "Chuck-E-Cheese" restaurant in Michigan. 
 
¶6. (SBU) Finally, the PRT visited the Samawah offices of the Sawa 
Beach Company.  The company is negotiating joint ventures to 
renovate and operate two cement plants, one in Muthanna and the 
other in Najaf.  The Muthanna project would rehabilitate the newer 
of the two cement plants in the province so that it can once again 
produce to its design capacity.  This would allow more of southern 
Iraq's cement needs to be produced in Iraq; currently, only 
one-tenth of Iraq's cement needs are produced within its borders. 
 
LAND TITLES AS THE MAIN ROADBLOCK 
--------------------------------- 
 
¶7. (SBU) Uniformly, the businessmen and PIC representatives viewed 
land issues as being the major roadblock preventing licensed 
projects from getting started.  The projects already underway have 
been successful only because the businessmen have owned the land 
themselves.  In particular, the PIC board members complain that the 
Ministry of Finance and the Ministry of Municipalities and Public 
Works own most of the land that could be used for investment. 
Although these local officials continue to work with interlocutors 
in Baghdad for a solution, they are not sanguine about a solution 
anytime soon. 
 
 
¶8. (SBU) Privately, PIC representatives lament that investment is a 
new concept in Iraq and many of the ministerial representatives in 
Baghdad are not accustomed to organizations outside of government 
investing in large scale programs.  Under the previous regime, 
Iraq's economy was heavily centralized with nearly 200 state owned 
enterprises.  Therefore, Baghdad controlled nearly all economic 
activity, with the exception of small scale production.  Ministers 
and other government officials may be working with that mind set. 
In addition, there may be obstacles of graft and official corruption 
impeding progress on these land issues. 
 
¶9. (SBU) COMMENT:  Muthanna's PIC continues to be ahead of many of 
its provincial peers in terms of attracting investment interest and 
issuing licenses for projects.  With the exception of a few projects 
where the investor personally owns the land, most of these will 
require a land lease or purchase before any further progress can 
take place (reftel).  Only pressure from multiple stakeholders -- 
provincial, business (both national and international), and 
diplomatic at the national level -- can break this logjam.  END 
COMMENT. 
 
BUTENIS