Front Page	E-mail PagePrint Version

California companies urged to ''look beyond what they see on television or what they read in the newspapers''

BEVERLY HILLS - 04/07/05 - According to expatriate businessman Raad Ommar, the reconstruction of war-ravaged Iraq is much more than rebuilding a war-shattered infrastructure.

It is, he told the CalTrade Report, "an investment in the future of a country that is painfully recovering from decades of misrule." 

Ommar, who serves as chief executive officer of the Iraqi-American Chamber of Commerce and Industry (IACCI), made his comments during a recent networking seminar in Beverly Hills that provided a 43-member Iraqi trade delegation with the opportunity to meet with Southern California-based companies interested in forming joint ventures and other business partnerships.

Particular areas of interest included such critical infrastructural sectors as water treatment, power generation, education, highway and bridge construction, telecommunications, medical technology, food processing, manufacturing, safety and security systems, prefabricated housing, facility maintenance, heavy construction, and agricultural machinery.

"Iraq has tremendous potential in manpower and natural resources as well as the means and the geographical position to be on a par with the world's most developed nations," said Ommar.

"Many challenges exist, but we are very eager to create the kinds of relationships from which everyone can benefit."

The networking seminar - attended by more than 150 people - was co-sponsored by  the Beverly Hills Chamber of Commerce, and the US Commercial Service of the US Department of Commerce, and organized by the IACCI, which was founded by Ommar two years ago after the fall of Saddam Hussein.

The organization - www.i-acci.org  - has 5,700 members on its rolls, including more than 300 in the US and maintains offices in Baghdad and Arbil, Iraq and Amman, Jordan. Its US headquarters in located in Glendale, near Los Angeles.

The delegation was the largest of its kind ever organized and was the first visit by Iraqi business executives to the US since the country's January 30 election.

"We decided to participate in this mission simply because this is the place where the technology and expertise is," said Mufid Abdulmajid, managing director of Al-Fayid General Contracting Co. Ltd., a Baghdad-based construction firm specializing in building water treatment facilities and networks. 

"We see the US business 'personality' as being very close to that of the average Iraqi businessman compared to that of the Europeans we're used to partnering with," he said, noting that, in the past, Iraqi companies would "as a matter of course" partner with a European company's agent based in Jordan, Turkey or Lebanon.

"All that's changed," said Adbulmajid. "We would much rather work directly with US companies in forming joint ventures," he said, adding the company has already partnered with multinational Fluor on several projects throughout the country.

In an effort to get US-based companies to look at Iraq as a viable market for both goods and services the US Export-Import Bank (EXIM) has been extending credit for investment in Iraq, while the government-chartered Overseas Private Investment Corp. (OPIC) has said it will guarantee up to 90% of a private loan.

Last month, President Bush vested $1.7 billion of Iraqi regime assets that had been frozen in the US over a decade ago and placed them in a special account to be used to support reconstruction.

So far, sources have said, nearly half of these assets have been delivered to Iraq to finance reconstruction projects in several critical sectors including water and sewage treatment, both of which have been tagged as two of the most critical areas for redevelopment, according to several international organizations including the World Bank.

Since mid-2004, five water treatment plants have been built, while construction has begun on 23 more, according to the Washington, DC-based Iraq Construction Management Office (ICMO), the independent US government agency helping coordinate reconstruction efforts in the country.

But much more remains to be done, said Abdulmajid.

"At this point, only about 30 percent of the country is served by sewage networks and more than 70 water and sewage treatment plants throughout Iraq need to be rebuilt," he said. "Along with the facilities themselves, it's absolutely critical to staff the facilities with trained people who can manage and maintain their operations.

According to recent Iraqi press reports, the Municipal Water Department in Mosul, the capital of the northern province of Nineveh, implemented 31 projects last year alone.

Old and war-damaged pipes were replaced in several towns, several new water projects executed, and numerous office and maintenance buildings were built "ensuring an uninterrupted flow of water supplies" to the province's nearly 3 million people.

For the first time in months, drinking water was available to the whole city and a large portion of villages in the province, while small-scale water purification projects have been completed in several areas both inside the city and in outlying districts, as well, the reports said.

In addition, more than 15,000 kilometers of pipes were extended in towns and villages in Nineveh province alone last year.

The Tigris River bisects the province and many villages and town too far away to get their water directly from the river have had wells and constructed small water projects.

But, according to even the best estimates, Iraq will have to spend $255 million every year to meet needs for drinking water with the country's current actual needs for drinking water topping out at a staggering 10 million liters a day at a time the country's water treatment projects currently produce only about 6.8 million liters.

Power outages, press accounts have said, are a "major problem" affecting the flow of water to towns not only in Nineveh province, but throughout the country as well as most of the water treatment plants and units did not have their own generators.

Last month, the World Bank agreed to give the Baghdad municipal government an additional $50 million to rebuild and upgrade a shattered water and power system that frequently leaves the capitol city's 5 million residents in the dark and without running water - often at the same time.

Power generation in other parts of the country is no better with outages sometimes lasting for as long as 20 hours at a stretch.

Since the beginning of the year, Iraq has signed agreements with Jordan, Turkey, and Egypt, and Iran to increase the volume of their electricity exports within the next several months, but, without adequate power lines and transmission plants to get the power where and when its needed, the situation won't improve, said Ommar of the IACCI.

"Without power, all the efforts to rebuild the country will come to nothing," he said. "It's absolutely vital that we create relationships with the right partners to get done what's needed as effectively as possible."

Another area that Ommar identified as "crucial" to Iraq's future development is telecommunications.

According to the US Agency for International Development (USAID), only about 4% of Iraq's population has access to any form of telecom service. 

Last year, the Coalition Provisional Authority (CPA) - which governed Iraq until the turnover of sovereignty to the country's newly elected government - getting a nationwide wireless service operational would be "quicker and more cost efficient" than revamping the heavily damaged and antiquated fixed land lines infrastructure across the country.

The World Bank estimates that through 2007, Iraq's telecommunications sector will need investments topping $2.3 billion. At the recent Madrid Donors' conference on Iraq reconstruction, a goal of increased "tele-density" to 10% was set for 2007.

"The opportunities here are limitless and the country is ripe for the latest technology," said Ommar. "California is seen as the global center for this kind of technology and the links need to be forged that will quickly establish a fully functioning telecommunications system available to as many consumers in Iraq as possible."

Iraq "offers lots of business opportunities and every day that things don't fall apart, things get better," said Dr. Fred Evans, dean of the College of Business and Economics at California State University-Northridge.

"The risks are great, but they are offset by the rewards," said Evans, who recently returned from an accreditation visit to the College of Business at Kuwait University in Safat, Kuwait.

"Beyond the facts and the statistics, the Iraqis are determined to succeed because, for the first time in a long while, they can genuinely say they have control of their own national prosperity. They want to succeed for more than just business reasons," he said.

Acknowledging the daunting security and logistical problems facing investors and businesses considering doing business in Iraq, Abdulmajid of Al-Fayid General Contracting told the CalTrade Report that its important for US businesses to "look beyond what they see on television or what they read in the newspapers."

There is a story that really isn't being told," he said, "The Iraq is so much more different in a positive way that the Iraq of even just a few years ago, and the Iraq of tomorrow will be much better still."

Iraq "owes its future to a United States that was willing to sacrifice much on its behalf," he said. "Our friendship has come at a very high cost and we want very much to do business with our friends."

Go back, or read the latest Front Page stories:

US Could Re-Impose Quotas on China Apparel, Textiles

04/04/05 – The decision to reexamine whether quotas should be re-imposed on Chinese textile and apparel exports to the US comes as the Commerce Department’s most recent figures show that shipments of knit shirts alone from China had increased by 1,258% in the first three months of this year, compared with last year, while shipments of cotton trousers were up by 1,521%; US retailers contend that reduced imports from China would be made up by more shipments from other countries and that no US jobs would be saved by re-imposing the quotas.