Republic of Iraq - Cabinetcabinet.iq/uploads/pdf/2015-3/2.pdfRepublic of Iraq Council of Ministers...

Republic of IraqCouncil of MinistersPrime Minister’s Advisory Commission

Private Sector Development Strategy 2014 - 2030

April 2014

Vision Statement

“Developing a viable and thriving national private sector, that is regionally competitive and globally integrated, led by the business community, which contributes to economic diversification, sustainable development and job creation.”

PRIVATE SECTOR DEVELOPMENT STRATEGY 2014 - 2030

TABLE OF CONTENTS

FOREWORD .................................................................................................... 1

EXECUTIVE SUMMARY .............................................................................. 3 - 6

CHAPTER 1: FUNDAMENTALS OF THE PSDS ................................... 7 - 10

1.1 Origins of the PSDS in Iraq’s Constitution

1.2 BasicDefinitionofthePrivateSector

1.3 Rationale: Why a PSDS?

1.4 Background and Constraints

1.5 DevelopmentObjectivesofPSDS

1.6 TimeframeandTargets

CHAPTER 2: OVERALL APPROACH .................................................... 11 - 13

2.1 Key Orientations

2.2 The PSDS

2.3 The PSDS Four Pillars:

2.4 BroadObjectivesofthePillars

2.5 RoleoftheGovernmentinthePSDS

2.6 RoleofthePrivateSectorinthePSDS

2.7 RolesandResponsibilitiesduringtheTransition

CHAPTER 3: TARGET SECTORS AND THEMATIC AREAS ............ 14 - 15

3.1 FindingsfromStudiesConductedduring2010-2012

3.2 Criteria for Priority Sectors

CHAPTER 4: ACTION FRAMEWORK .................................................. 16 - 18

4.1 PILLARI–UnderstandingthePrivateSector

4.1.1. ObjectivesofPillarI

4.1.2. ActivitiesunderPillarI

4.2. PILLARII–ImprovingtheBusinessEnvironment

4.2.1. ObjectivesofPillarII

4.2.2. ActivitiesofPillarII


4.3 PILLARIII–TheSMEDevelopmentProgramme

4.3.1. ObjectivesofPillarIII

4.3.2. ActivitiesofPillarIII

CHAPTER 5: THE IMPLEMENTATION of PSDS .................................. 19 - 23

5.1 PILLARIV–TheImplementationPillar

5.2 TheObjectiveofPillarIV

5.3 TheActivitiesofPillarIV

5.4 GuidingPrinciples

5.5 TheImplementationStructure

5.6 ThePrivateSectorDevelopmentCouncil

5.7 ThePlanning,ResearchandImplementationUnit

5.8 MonitoringandEvaluation

5.9 PublicAwarenessandCommunications

5.10 TransitionalManagement

TABLES

Table-1.SuccessIndicators,PhaseOne(2014-2017)...............................................24 - 27

Table-2.ActionPlanandIndicativeBudget,Phase1(2014-2017)..........................28 - 30

Table-3.SMEOpportunitiesbySub-Sector................................................................31 - 32

Table-4.InterimActionPlanfortheTransitionalManagementPeriod......................33

ANNEXES

Annex-1.OverviewofthePrivateSector...................................................................39 - 47

Annex-2.SummaryofPrivateSectorDevelopment-RelatedProgrammes..............51 - 56

Annex-3.ActivityProfilesofthePillars(PhaseOne)................................................ 59 - 98

Annex-4.PriorityLegislations....................................................................................101 - 104


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FOREWORD

TheGovernmentpresentsthePrivateSectorDevelopmentStrategyofIraq(PSDS),theproductofanextendedperiodofinternalconsultationswithintheGovernment,andbetweenrepresentativesfromtheprivatesectorandinternationaldevelopmentpartners.

ThefirstdraftdocumentofthePSDSwasinitiallycirculatedinJanuary2013,astheoutputofapart-nershipbetweenthePrimeMinister’sAdvisoryCommissionandparticipatingmembersfromtheUNCountryTeam,specificallytheUnitedNationsDevelopmentProgramme,theInternationalLabourOrganization, theUnitedNationsIndustrialDevelopmentOrganization, theFoodandAgricultureOrganization,UNHabitat,UNIFEMandtheUnitedNationsOfficeforProjectServices.

Funded throughagrant from theUnitedNationsDevelopmentGroup’sMulti-DonorTrustFund,theUNCTagenciesestablishedthePrivateSectorDevelopmentProgrammeforIraq.ThePSDP-IengagedwiththeGovernment,theprivatesectorandinternationaldevelopmentactors,preparingthegroundfortheelaborationofthePSDS,presentedhereasaroadmapfortheGovernmentandprivatesector,soastostimulate,diversifyandmakefundamentalchangestothenationaleconomythatwillimprovethebusinessenvironmentunderwhichtheprivatesectorworks.

TheTheoryofChange,presentedwithinthePSDS,iscomprisedofseveralelements:thegatheringofupdatedinformationontheprivatesector,thecreationofaninformationsystemcontainingthedata,surveyfindings,andbusinessregistrationrecordscollectedontheprivatesector,plusinitiativesaimedatreformingthenationallegalandregulatoryframeworkgoverningtheprivatesector,estab-lishingmechanismsforimprovingaccesstofinanceforbusinesses,theprovisionoffinancialstimu-lantsandincentives,programmestointegratethePrivateSector,includingSMEs,intoSOEandlargecompanyrestructuring,andtheestablishmentofaplatformofdialogueandinteractionbetweentheGovernmentandtheprivatesector.Allactionsareaimedatstrengtheningtheprivatesector,enablingittobecomemoreproductive,morecompetitive,andtoexpanditsroleasanincreasinglylargercon-tributortotheGDPandemployerofthenationalworkforce.

ThePSDP-IreviewedtheongoingstudiesandeffortsbytheWorldBank,theUSAID,andotherin-ternationalactorsworkinginthefieldofprivatesectordevelopment.TheresultingPSDSowesmuchtotheseorganizationsforthenumerousperspectivesgainedfromtheirexperienceontheground.


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EXECUTIVE SUMMARY

I. Thelegacyofdecadesofdirectstatecontroloveralmostallaspectsofthenationaleconomyhaslefttheprivatesectorseverelyweakened;manybusinesseshaveclosedandtherearepresentlytoofewjobopportunitiesremainingintheprivatesector;

II. WhilefortunatetohaveoilrevenuesthatfinancetheFederalbudget,continuedrelianceonoilproductiontokeeptheeconomyrunningisneitherdesirablenorsustainableoverthelongterm;thisdependencyhascontributedtoanover-relianceonimportedgoodsandequipment,oftenattheexpenseoflocalproducersandserviceproviders,manywhoareunabletocompetesuccess-fullyinthecurrentbusinessenvironmentandregulatoryframework;

III. Economicdiversificationiscruciallyneeded,drivenforwardbyarevitalizednationalprivatesector; however, in spiteof themanyopportunities for expansion, current laws and regula-tionsgoverningtheprivatesectoroftenactasanimpedimenttoprivatesectordevelopment.Innumerousinstances,theyareconstrainingtherevitalizationoftheprivatesectoraswellaspreventingthecreationofnewjobs;

IV. Reformofthepolicyandregulatoryframeworksisneeded,initiatedunderaGovernmentpro-grammethat is responsive to thepriorityneedsof theprivatesectorasarticulated inanewdialoguebetweentheGovernmentandtheprivatesector;

V. TheGovernmentwillconsultprivatebusinessesregularlyandsystematicallybeforenewandbetterlawsaredraftedthatimpactthebusinessenvironment.Theestablishmentofapermanentplatformforgovernment-privatedialogueisessentialforcorrectiveactionstobesuccessfulthatallowbusinessestooperatemoreefficiently;

VI. Thecurrentlimitedaccesstofinancemakesitanarduoustaskforbusinessestomodernizeorexpand.Newavenuestoobtainfinancing,accessibletomorebusinesses,especiallySMEs,areneeded;

VII. State-ownedenterprisesarewidelyviewedasinefficient,andburdenedwithlowproductivity.TheiroperationsarecostlytosustainandaredrainingtheFederalbudget.Additionally,mostSOEsareisolatedfromregionalandglobalmarkets1;

VIII.BetterintegrationofSOEswiththeprivatesectorwouldallowthemtobecomemoreproduc-tive,morecompetitiveandwouldprovidenewbusinessopportunitiesarisingfromstrongertieswithregionalandglobalmarkets;additionally,SOErestructuringandcorporatizationwouldopenlargeopportunitiesfortheprivatesector;

IX. Inthepastdecade,severalprogrammaticeffortswerelaunchedtosupportIraq’sprivatesector.Todate,theseeffortsremainfragmentedanddonotfitintoacohesivestrategyoraplanofsuc-cessiveactionsthatcanbeusedbytheGovernmenttoaddresstheissuescurrentlyhinderingtheemergenceofavibrantprivatesector;

X. The PSDSpresentsaroadmaptoconsolidatetheGovernment’sprivatesectordevelopmentef-fortsfortheperiodof2014-2030;duringthePSDSimplementationitisenvisagedthatIraqwillscorehigheroninternationalindicesthatmeasurethecountry’sbusinessenvironmentandthattheprivatesectorwillbecomemoreproductive,competitive,andsociallyandenvironmentallyresponsible,andbetterabletoprovideanincreasinglylargernumberofnewjobs;

1 The Government initiated the SOE restructuring process in 2010.


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XI. ImplementationofthePSDSwillallowtheGovernmenttofindsolutionsthataddresstheprior-ityneedsofthebusinesscommunity.Whilemovingaheadwitheconomicreforms,theGovern-mentwillcreateabusiness-friendlyenvironment,andmakeavailablefinancialresourcesfor:(1)enhancingSMEcompetitivenessand(2)partneringtheprivatesector,includingSMEs,withSOEs;

XII. Initially,theGovernmentwilltaketheleadrolewithimplementingthePSDS.Overaperiodofyears,theleadrolewillbetransferredtotheprivatesector,andwheneverpossible,decentral-izedapproacheswillbeappliedtothePSDSimplementation;

XIII. TheGovernmentwillachievetheobjectivesofthePSDSusingathree-prongedapproach:theThreeDevelopmentPillars:

a. PillarI: UnderstandingthePrivateSector

b. PillarII: ImprovingtheBusinessEnvironment

c. PillarIII TheSMEDevelopmentProgramme

XIV. UnderPillarIV,TheImplementationPillar,allworkforthethreedevelopmentpillarswillbeinitiated;

XV. APrivateSectorDevelopmentCouncil(PSDC)willbeestablished,madeupofgovernmentandprivatesectorrepresentatives,toserveasamanagementoversightbodyandaplatformfordialogueandcoordinationoftheactivitiessetforthinthePSDS;

XVI.Under thePSDC;aPlanning,Researchand ImplementationUnit (PRIU)willbecreated toimplementtheactivitiesandputinplacetherequirementsofallfourPillars;

XVII.PillarI‘sobjectiveistomakeavailabletotheGovernmentandprivatesector,accurateinfor-mationontheformalandinformalprivatesector,forstrategicplanninganddecisionmakingpurposes;

XVIII.PillarIwillachieveitsobjectivethroughthefollowingactivities:

a. Conductsurveysoftheformalandinformalprivatesector;

b. DevelopmoderninformationsystemsfortheGovernmentandprivatesectorstakehold-ers;

c. Developanetworkoflocalbusinessregistrationcentersandvalidatedata;

d. BuildcapacityintheGovernmentandtheprivatesectoronthebestuseofinformationwhenplanning,executing,trackingandreportingonprogress.

XIX.PillarII’sobjectivesare:

a. Tohaveinplacestreamlinedpolicies,laws,regulationsandproceduresthatfosterprivatesectordevelopment;

b. Tohaveimprovedaccesstofinanceforprivatebusinesses;

c. Tohaveincentivesinplaceforincreasingproductionandinnovation,theregistrationofbusinesses,privateinvestmentandemployment;

d. Toimprovethequalityofservicesprovidedbyprivatesectorinstitutionandassociationstobusinesses;


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e. Tostrengthenqualitycontrol,qualityassurance,certificationandlicensingsystems.

XX.PillarIIwillachieveitsobjectivesthroughthefollowingactivities:

a. Initiateapublic-privatesectordialogue,wherebybusinessesareconsultedbytheGov-ernmentbeforenewpoliciesandlawsaredrafted;

b. Revise,simplifyandissuenewlawsintheregulatoryframeworkgoverningtheprivatesector,withaviewtoreducingredtape;

c. Reviserulesandproceduresforimprovingaccesstofinancefortheprivatesector;

d. Developandproposenewpoliciesandstrategicplanstargetingtheprioritysectorsthatsupportprivatebusinessengagement;

e. Introduceincentivesfornewinvestmentsandinnovationaswellasforincreasingtheregistrationofbusinesses;

f. Strengthen quality control management, quality assurance, certification and licensingsystems;

g. Fortifytheprivatesectorinstitutionsandassociationsandthecoverageofservicestotheirmembership.

XXI.PillarIII’sobjectivesare:

a. ToimproveSMEproductivityandcompetitiveness;

b. Toinvolvetheprivatesector,includingSMEsandlargercompanies,inSOErestructuringandcorporatization.

XXII.PillarIIIwillachieveitsobjectthroughthefollowingactivities:

a. Provide advisory, counseling, business planning, training and networking services toSMEs;

b. EstablishaFundtoprovideseedcapital,softfinancingandloanguaranteesfortheprivatesectortoexpandtheirbusinesses,toestablishnewenterprises,toincreasecompetitive-nessandtopromoteentrepreneurshipandinnovation;

c. Establishaspecialprogrammetocreatebusinessopportunitiesfortheprivatesector,in-cludingforSMEs,withSOEs;

d. Developindustrialzones,businessincubators,businessdevelopmentcentersandsimilarinitiatives;

e. Establishaspecialunittotoincreasejobopportunitiesforwomenandtoenhanceaware-nessintheprivatesectoroftheimportanceofgenderequalityandinclusiveness.and;

f. Launchapublicawarenesscampaign.

XXIII.PillarIV’sobjectiveis:

ToensuretheefficientandtimelyimplementationofthePSDS.


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XXIV.PillarIVwillachieveitsobjectivethroughthefollowingactivities:

a. Establishanoversight,managementandcontrolsystem,i.e.thePrivateSectorDevelop-mentCouncil(PSDC);

b. EstablishaPlanning,Research&ImplementationUnit(PRIU)underthePSDC,toex-ecutetheactivitiesofthethreedevelopmentPillars;

c. EstablishaNationalSMEAgency;

d. Establishamonitoringandevaluation(M&E)unitunderthePSDC.

XXV. ThePSDSwillbeimplementedinthreephases

a. PhaseOne-2014-2017-Government-led;

b. PhaseTwo-2018-2022-Government-led;

c. PhaseThree-2023-2030-Privatesector-led.

XXVI.SuccessIndicatorsexpectedforthePSDSPhaseOneTimeframe(2014-2017):

a. TheGovernmentunderstandsitsroleasafacilitatorandenablerforprivatesector,andviewstheprivatesectorasapartnerandassociate;

b. Theprivatesectorunderstandsitsroleandresponsibilityasasocio-economicactorandisworkingcollectivelytocontributetonationaleconomicgrowthanddevelopment;

c. ThePSDCisestablishedandfunctioning;

d. TheSMEAgencyisestablishedandmanaginganSMEFund;

e. Theprivatesectorexperiencesmodestgrowthcontributingby2017about35%ofGDPandemploying30%oftheworkforce,

f. Reducingunemployment from the2011 rateof11% to the6% target setby theNDP2013-2017thusimpactingsignificantlywomenandyouth.

XXVII.SuccessIndicatorsexpectedforthePSDSPhaseTwoTimeframe(2018-2022):

a. Increasedprivatesectorinvestmentsinkeyeconomicanddevelopmentsectors;

b. Privatesectorcontributionincreasedmoderatelytoprovideupto45%ofGDPby2022;

c. TherankingofIraqintheWorldBank’sDoingBusinessReporthasimprovedmarkedly;

d. Unemploymentreducedtolessthan6%.

XXVIII.SuccessIndicatorsexpectedforthePSDSPhaseThreeTimeframe(2023-2030):

a. Fulltimeemploymentintheprivatesectorincreasesto50%ormoreoftotalemployment;

b. Privatesectorcontributionincreasedtoprovide60%ofGDPby2030;

c. Fixedcapitalformationbytheprivatesectoramountsto50%ofthenationaltotal;

d. AllviableStateOwnedEnterprisesrestructured,corporatizedandintegratedintoaprivatesec-tor-ledmarketeconomy;

e.Unemploymentisreducednationwideto4%orless.


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CHAPTER 1: FUNDAMENTALS OF THE PSDS

1.1 Origins of the PSDS in the Constitution

Article25ofIraq’sConstitutionstipulatesthat“theStateshallguaranteethereformoftheIraqiecon-omyinaccordancewithmoderneconomicprinciplestoensurethefullinvestmentofitsresources,diversificationofitssources,andtheencouragementanddevelopmentoftheprivatesector”.

1.2 Basic Definition of the Private Sector

Article8oftheLawofCompaniesNo21(1997)states:“Aprivatesectorcompanyisestablishedonagreementbetweentwoormorepersonsoutsidethestatesector,usingprivatecapital.”Article8alsohasaprovisionthatincludesprivate-jointstockorlimitedliabilitycompanieswheneverthestateholdsashareoflessthan25%ofthecapital.

Internationally,itiswidelyacceptedthattheprivatesectoristhepartofthenationaleconomythatisnotunderdirectstatecontrolandthatisrunforprofit.

1.3 Rationale: Why a PSDS?

Greatpromiseresidesinthenation’snationalassets,i.e.itshumancapital,naturalresources,fertileland,greatwealthofhistoricalsitesandreligiouspilgrimagedestinations,andvastmarketoppor-tunities,given thehugedemand forproductsandservicesandplentifulfinancial revenues.Takentogether,anationalendowmentexistswithanimmensepotentialfornewventuresinallsectorsoftheeconomy,ledbyaresurgentprivatesectorthatdriveseconomicgrowthanddiversification.

Intherecentpast,Iraqhasstruggledtoovercomethelegacyofdecadesofstatecontrolovermostaspectsofthenationaleconomy.Moreover,Iraqhasbecomeincreasinglydependentonoilrevenuestodrivetheeconomyandtoprovidetheprincipalsourceoffundstofinancethestatebudget.

Withtheprivatesectorinitspresentdiminishedstate,themenandwomenwhomakeupthenationalworkforcehavefewalternativesbuttoseekemploymentingovernmentstructuresorSOEsthatareoversized,underproductiveandoftenconstituteanetdrainonthenationaleconomy.

Today, there is increasingawarenessof theneedtomakesweepingimprovements to thebusinessenvironment.Changesareneededifprivateenterprisesaretoremaincompetitiveandvibrantenoughtoofferlongtermemploymentopportunitiestothenationalworkforce.

Since2003,Iraqreceivedseveralinternationalprogrammesintendedtoimprovethenationalbusinessenvironment.Whileachievementsweremade,effortsremainfragmentedandneedalignmentunderanationalmasterplanthatpresentsaroadmapforprivatesectordevelopment.

InaccordancewiththeGovernment’scommitmenttoreformthenationaleconomy,theelaborationofthePSDSwascommissionedbythePMAC,toallowforanationally-owned,nationally-implementedstrategicplan,tocontinuallyimprovetheenvironmentfordoingbusinessinIraqandtoattractmoredomesticandforeigninvestorstohelpensuresustainableeconomicgrowth.

1.4 Background and Constraints2

Beginningin2003,agreatdealofworkinprivatesectordevelopmentwasundertakenthrougheco-nomicrecoveryanddiversificationprogrammes,withtheassistanceofnationalandinternationalor-ganizations,resultinginanumberofanalyticalstudiesproduced,draftlawsandregulationsproposedandpilotinitiativesmaterializingontheground.

2 See Annex - 1.


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Overthelastfiveyears,theGovernmenthastakenadditionalstepstoimprovethebusinessenviron-mentandtorestorethecompetitivenessofIraqibusinesses.Inparticular,theGovernment,throughthePMAC,withsupportfromitsUNandinternationalpartners,launchedin2009thePSDP-IthatcombinedinputsfrommembersoftheUNCountryTeam3intheircorrespondingareasofexpertiseandmandate.

Theseeffortswerecomplementedbytheworkofotherpartners,notablytheWorldBankandUS-AID,whoprovidedpolicylevelsupport,initiatedstudiesandoffereddirectfinancialandtechnicalassistancetoanumberofenterprises4.TheworkproducedbythePSDP-Iandinternationalpartnersstimulated a reform process introducing new approacheswith additional information gained thathighlightedthenumerousconstraintsaffectingtheprivatesector.Identifiedduringthisprocesswasthewidely-heldconclusionthatIraq’sprivatesectorfacesnumerousimpedimentshinderingitsde-velopment,including:

1. Lackofeffectivepoliciesandstrategiesforsupportingtheprivatesector;

2. Outdatedandoverly-complexlegalandregulatoryframeworkdesignedforacentrally-plannedeconomy;

3. Irregularenforcementofexistingpoliciesandlaws;

4. Inadequateaccesstofinance;

5. Damagedphysicalinfrastructureandaninsufficientenergysupply;

6. Shortageofqualifiedhumanresources,especiallyskilledlabor;

7. Suboptimaltransparencyinthepublicprocurementsystem;

8. Complicatedprocessesfortheregistrationandclosureofbusinesses;

9. Unfaircompetitionfromthepublicsector;

10. AbsenceofapermanentdialoguebetweentheGovernmentandprivatesector;

11. Insufficientknowledgeonglobalandregionalmarketdynamics.

Theabovefactorshavecontributed to the increasedclosureofprivatebusinesses.Therefore, it isevidentthattheprivatesectorinIraqismakinganinadequatecontributiontotheGDPandcurrentlylacksthecapabilitytocontributesufficientlytoeconomicdiversificationorjobcreation.

1.5 Development Objective of PSDS

Theover-archingdevelopmentobjectiveofthePSDSistostrengthentheprivatesectorandtodiver-sifyandrevitalizethenationalnon-oileconomy,byprovidingtheGovernmentwitharoadmaptoleadaprivatesectordevelopmentchangeprocessthat,from2014-2030,willmakeasignificantcontribu-tiontoeconomicgrowthandimprovetheenvironmentfordoingbusinessinIraq.ProgresswillbemadeonrealizingtheaspirationssummarizedintheVisionStatementandonadvancingthespecificobjectives,describedlaterinChapterOne.

ActivitiestobeundertakenduringimplementationwilltargetpriorityneedsthatareagreeduponbyaconsensusreachedbetweentheGovernmentandrepresentativesfromtheprivatesector.

3 UNDP, ILO, UNOPS, UNIDO, FAO, UN-HABITAT and UNIFEM.4 See Annex - 2.


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Apermanent forumwillbeestablished forpublic-private sectordialogue, tocontribute ideasandinformationvaluabletothefine-tuningoftheGovernment’sprivatesectordevelopmentpoliciesandprogrammes,keeping themoncourse toachievemuch-neededeconomicgrowthaswellas to in-creasesignificantlythenumberofavailableemploymentopportunitiesfor thenationalworkforce.ThePSDPwillservetheadditionalpurposesof:

a. RepositioningIraqamongtheleadingregionaleconomies;

b. Bringing about better integration of the national economywith regional and globaleconomies;

c. ContributingtoimprovedmarketratingsofIraqasacountryprovidingafavorableenvi-ronmentinwhichtodobusiness;

d. Providingnationalandinternationalorganizationswithaconciseandcompellingframe-workforcoordinatingtheiragendasoneconomicandsocialdevelopment.

1.6 Timeframe and Targets

Over the timeframeof2014-2030, thePSDS is envisaged tobe implemented in three successivephases:

A. Phase One: 2014 - 2017

TheGovernmentwilltaketheleadroleduringtheimplementationoftheactivitiesofPhaseOne,infullpartnershipwith theprivatesector, localgovernmentsandotherstakeholders.PhaseOnewillconcentrateonpriorityactivitiestoachieve‘quickwins’inprivatesectordevelopment,particularlytheestablishmentandoperationalizationofthePSDC,directsupportactivitiestotheprivatesector,establishingaNationalSMEAgency,industrialzones,businessdevelopmentcenters,businessincu-bators,enactingkeylegislationandrevampingexistingregulations,withpublicawarenesscampaignsinformingtheNationofpositivechangestothebusinessenvironment5.

InPhaseOne,theprivatesectorisexpectedtoachievemodestgrowth,contributingby2017about35%oftheGDPcomparedto30.5%in2012andprovidingfull-timeemploymentforabout30%oftheworkforcecomparedto25%in2008.Therateofunemploymentisexpectedtobereducedfrom11%in2011to6%by2017,astargetedbytheNDP2013-2017,especiallyamongyouthandwomen.

ThePSDSestablishesanInterimActionPlanforPhaseOnethatcomprises31activitiesdistributedoverthe4pillars.Table-1providesacondensedsummaryoftheseactivities,oversight,coordinating,implementingpartiesandsuccessindicators.Table-2indicatesthetimeframeandestimatedcostsoftheseactivities.Annex-3providesmoredetailedActivityProfileforeachoftheproposedactivities.

ThetotalestimatedcostofPhaseOneactivitiesisID447billion,67%(aboutID300billion)ofwhichwillbeutilizedtoprovidegrants,softloans,guaranteeschemesandvariousincentivestotheprivatesector.

5 See Table 1 and Table 2.


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B. Phase Two: 2018 - 2022

PhaseTwowillbuildontheprogressofPhaseOne,oncealldirectsupportactivitiesareimplementedandoperational.Thiswillleadtoanexpandingprivatesector,bothinsizeandactivity,providingupto45%oftheGDPandupto35%offulltimejobswiththerateofunemploymentreducedtolessthan6%.Furthermore, therewillbesubstantial improvements in thebusinessenvironment, investmentclimateandIraq’srakingintheWorldBank’sDoingBusinessannualreports.

By2022,allSOE’swillberestructuredorcorporatizedandintegratedwithSMEsinvaluechainsandsupplyclusters.

C. Phase Three: 2023 - 2030

During PhaseThree, theGovernmentwill gradually transfer the leadership of implementing thePSDStotheprivatesector.Therewillberapidgrowthoftheprivatesector,achievingatleast60%shareoftheGDP,contributingatleast50%offixedcapitalformation,withtherateofunemploymentreducedto4%orless.

Bytheendof2030,thevisionofthePSDSwillbeachieved.Iraqwillhaveaviable,economically,sociallyandenvironmentallyresponsibleprivatesector,operatinginanefficientbusinessenviron-mentthatisinternationallycompetitiveandintegratedintoregionalandglobalmarkets.


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CHAPTER 2: OVERALL APPROACH

2.1 Key Orientations

a. Tosupporttheprivatesector,theGovernmentwillfindsolutionsthataddressimmediateandlongtermpriorityneedsofthebusinesscommunity.

b. Whilemovingaheadwithreforms,theGovernmentwillestablishaFund,therebymakingavailablefinancialresourcesfor1)enhancingSMEcompetitiveness;and2)tofacilitateSMEpartneringwithStateOwnedEnterprises.

c. Initially,theGovernmentwillmanagetheimplementationofthePSDS,graduallytrans-ferringthemanagementroletotheprivatesector.

d. TheobjectivesofthePSDSwillbebroughtaboutusingathree-prongedapproach:theThreeDevelopmentPillarsofthePSDS.

e. Afourthpillar,theImplementationPillar,willcarryouttheworkneededtoadvanceprog-ressonthethreedevelopmentpillars.

2.2 The PSDS

a. Isaflexibleinstrumentandshouldbeviewedasbeingreadytoaddressanevolvingeco-nomiccontext,subjecttoperiodicreviewsandfinetuningsoastorespondaccordinglytonewpriorityneeds,freshopportunitiesandchangingcircumstances.

b. Builds on existing institutional arrangements, recent structural reform achievements,sharedconcernsofstakeholders,policyorientations,ongoingeffortsbyalleconomicde-velopmentactors,aswellasonexistingopportunities.Assuch,itwillcontinuetoexpandtheprocessofreforminitiatedduringrecentyearsthatshouldbefurtherconsolidatedandacceleratedwithasharedcommitmentfromallinvolvedparties.

c. IsalignedwiththeNationalDevelopmentPlan2013-2017,whichconstitutesthedefini-tivepolicyinstrumentaddressingtheentireeconomicandsocialdevelopmentcontextofIraq.

d. IsalignedwithothernationalstrategypolicypapersinparticulartheINESandtheSOERestructuringRoadmap.

2.3 The PSDP Four Pillars

♦ PillarI UnderstandingthePrivateSector

♦ PillarII ImprovingtheBusinessEnvironment

♦ PillarIII TheSMEDevelopmentProgramme

♦ PillarIV TheImplementationPillar

2.4 Broad Objectives of the Pillars6

Pillar I: Understanding the Private Sector

• ToprovideGovernmentandprivatesectorstakeholderswithaccurateinformationontheformalandinformalprivatesector,forplanninganddecisionmakingpurposes.

6 See Table 1.


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Pillar II: Improving the Business Environment

•Tohavestreamlinedpolicies,laws,regulationsandproceduresinplacetofostertheprivatesec-tor;

•Tohaveaccesstofinancingavailablefornationalbusinesses;

•Tocreateincentivesforincreasedproductionandinnovationandfortheregistration,investmentandemploymentintheprivatesector;

•ToimprovethequalityofservicesprovidedtoSMEsbytheprivatesectorinstitutionsandas-sociations.

•Tostrengthenqualitycontrol,qualityassurance,certificationandlicensingsystems.

Pillar III: The SME Development Programme

• ToimproveSMEproductivityandcompetitiveness;

• To involve theprivatesector, includingSMEsand largecompanies, inSOErestructuringandcorporatization.

Pillar IV: The Implementation Pillar

• ToensureefficientandtimelyimplementationofthePSDS7.

2.5 Role of the Government in the PSDS

InitiallytheGovernmentwilltaketheleadontheimplementationofPSDS;graduallyshiftingfromits current roles of:

a. Principalowner

b. Planner

c. Organizer

d. Investor

e. Producer

Toitsnewrolesinprivatesectordevelopmentas:

a. Promoter

b. Facilitator

c. Protector

2.6 Role of the Private Sector in the PSDS

ThePrivateSectorwillgraduallyassumetheGovernment’scurrentrolesandeventuallyleadontheimplementationofthePSDSinPhaseThree.

7 Refer to Annex - 3 for detailed Activity Profiles under each Pillar.


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2.7 Roles and Responsibilities during the Transition

Duringthistransition,theGovernmentwillbeworkingat:

1. EnsuringthatstabilityandsecurityimprovesinIraqtopermitbusinessestoinvest,de-velopandbecomemorecompetitive;

2. Applyingaparticipatoryandinclusiveapproachwiththeprivatesector;

3. Establishingapermanentdialogueandconsultationforwiththeprivatesectorbasedonmutualrespect,aimedatbuildingcooperationandtrust;

4. Implementinglegislative,regulatory,institutionalandpolicyreforms;

5. DevelopingthefinancialsupportsystemandinstrumentsforthePrivateSectortoemergeandgrow;

6. Promotingabusinessenvironmentthatattractsinvestments;

7. Coordinatingbetweenstakeholderministriesandinstitutions;

8. Advocatinggender empowerment andgender equity, and fosteringa stronger role forwomenintheIraqiworkforce;

9. MonitoringandevaluatingprogressinimplementingthePSDS;

10. Improvingnationalenergysuppliesandeconomicinfrastructure;

11. Ensuringqualitystandardsofdomesticandimportedproducts;

12. Applyingthebestenvironmentalpractices;

13. Protectingintellectualpropertyrights.

Inparallel,theprivatesectorwilltaketheinitiativetomobilizeitselftoassumeapro-activerolein:

1. Strengthening private sector institutions and associations, improving their sustainabil-ityandcoordinationwhileensuringahigherrepresentationofprivatebusinesseswithinthem;

2. ContributingtotheGovernment’sefforttoestablishapermanentplatformfordialoguebetweentheGovernmentandtheprivatesector;

3. Participatingintheformulationofsectorpoliciesandplansthatwillbecomecomponentsofthenationaldevelopmentplans;

4. AssistingtheGovernmentintheimplementationofthecomponentsofthenationaldevel-opmentplans;

5. Creatingactiveandcompetentprofessionalandtechnicalorganizationstopromotethehigheststandardofservicesineachprofessionortrade;

6. Promotingtheuseofgoods,materialsandservicesoflocalcontentassubstitutestore-placeimportedgoods,materials,andservices.


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CHAPTER 3 – TARGET SECTORS AND THEMATIC AREAS

3.1 Findings from Studies Conducted during 2010-20128

a. TheNationachievedrapideconomicgrowthaveragingslightlylessthan10%p.a.overtheperiod2010-2012;however,therateofgrowthisexpectedtoslowto3.7%and6.3%in2013and2014respectively9.Growthwasdriveninrecentyearsbytheoilsector,how-ever,inthecomingyears,non-oilsectorgrowthisexpectedtoreach14%perannumandemergeasanimportantcontributortofutureeconomicexpansion;

b. Foreigninvestmentisstillconfinedtothefollowingfivesectors:(i)oilandgas,(ii)manu-facturingandindustry,(iii)housingandconstruction,(iv)telecommunications,and(v)electricitygenerationanddistribution.Thesefivesectorsattracted90%offoreigncom-mercialactivityin2010.TheyaredominatedbySOEs,andarealsothemainrecipientsofpublicinvestmentandsubsidies;

c. However,other industriesoffer investmentopportunities inIraq(e.g.chemical,metal-lurgical,pharmaceutical,tourismandrecreation,ICT,andHi-techindustries);

d. Additionalinvestmentopportunitiesarepresentintheoilandgasserviceareasanddown-streamindustries(e.g.refining,petrochemicals,oilproductsdistribution);

e. Increasedpublicexpenditure,foreigninvestmentanddevelopmentarecausingaboominthedemandforconstructionmaterials. InmanypartsoftheNation,therearelargereservesoftherawmaterialsthatareusedtoproducethesematerials,whichshouldbebetterutilized;

f. Abundantnativesulfurandphosphaterockreserves,togetherwithplentifulnaturalgasshouldallowIraqtoattractsizabledomesticandforeigninvestmentinthefertilizerindus-try;

g. Giventhenationalagriculturalpotentialandgrowingdemandforlocallyproducedfoodproducts,therearegoodprospectsfortheexpansionofthelivestock,poultry,fruitanddateproduction,fisheries,aswellasdairyandfoodprocessingindustries.

Anassessmentofthecompetitivenessofselectedsectorsoftheeconomyandtheinvestmentoppor-tunitiesinherentwasconductedwithinthePSDP-I10,andappearsinTable-3.Also,Table-3showsthatnearlyallsectors(exceptfortextile)offerinvestmentopportunities.

Since2003,thenon-oileconomyhasbeendominatedbytradeandservicesectorswhilemanufactur-ingandotherproductionsectorsfellintodecline.Thisisaconsequenceofseveralfactors,includinganopenimportpolicy,adoptedbythepreviousregimein1998,whichisstillinplace,thatfacilitatedtheentryofcheaperimporteditemstonationalmarketplaces,makingitdifficultforlocalproductswithhigherproductioncoststocompete.

Withnon-oiltradeconstitutingthelargesteconomicsectorintermsofnumberofjobsprovided,thereispressingneedtoadoptandenforceanappropriatelegalandregulatoryframework(addressedunderPillarII)toimprovecontrolsoncheaperimports,particularlywithcustomclearance,qualitycontrolinspectionandcertificationprocedures.

8 Refer to Annex - 1 and Annex - 29 Source: Ministry of Planning, Department of Economic and Financial Policies, January 2014. See also Annex - 1.10 Source: UNIDO, PSDP-I, 2012


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Inparallel,anewtraderegimeshouldaimatcontributingtoincreasingthelocalcontentofimporteditemsasakeyelementinthePSDStosupportnationalemploymentandgrowth11.Forthispurpose,thePSDSwillinterveneinthemanufacturingsector(underPillarIII)toimprovethequalityofgoodsmanufacturedlocallywhiledecreasingtheirproductioncosts.

3.2 Criteria for Priority Sectors

Whileinprinciple,allsectorsoftheeconomyshouldbeconsideredinaprivatesectordevelopmentstrategy,thePSDSconcentratesonSMEdevelopment,giventheshortageoffinalizednationalmac-roeconomicandsectorstrategies12.Accordingly,thisPSDSwillfocusonsectorsthat:

1. OfferanopportunitytoutilizetheNation’sabundantnaturalresources,particularlyitsoilandmineralresources;

2. Offerimmediateopportunitiesforpublic-privatepartnerships;

3. Arelaborintensiveandcangenerategenderinclusiveemploymentopportunities;

4. Where sector strategies and feasibility studies have beenfinalized or are in advancedstagesofpreparation;

5. Plan the introductionofnew technologies, alternativeor renewable energy sourcesornewproductionmethodsthatareenvironmentallyfriendly.

According to the analyses conducted to date13bynationaland internationalorganizations,allkeydrivingeconomicsectorshave,fromtheseperspectives,tremendousmarketdevelopmentandem-ploymentgenerationpotentialsasshowninTable-3.Amongthese,therevitalizationoftheindustrialsectorrepresentsatoppriorityforfosteringeconomicgrowththroughprivatesectordevelopment,especially,ifSMEsengagemorerobustlywithSOErestructuring.

Althoughtheprivatesector’sshareofGDPincreasedfrom25%in2002to28%in2008,itsshareinfixedcapitalformationdecreasedsubstantiallyfrom18%to2.60%duringthesameperiod.Theshareoftheindustrialsector,bothpublicandprivate,droppedfrom4.18-4.46%intheperiod2000-2002to2.14%in2012withamaximumpeakof2.84%in2009(Annex-1).ThePSDSrolloutwillprovidetechnicalandfinancialsupporttotheindustrialandmanufacturingsectorsoftheeconomythatcanestablishandsustainsupplyandvaluechainswithinthekeystrategicnon-oilsectors.

11 For example, there is sufficient cement production in Iraq to meet present and future demand in the housing and infrastructure sectors; nevertheless, about 50% of all cement used today is being imported.

12 Notable exceptions are the Industry and Energy sectors. See Table 3.13 Sector profiles are provided in Annex 4; main sources: Industrial Strategy (draft), INES/World Bank, Investment

Climate Assistance/World Bank, UNIDO Investment Map and SOEs reviews, Tijara market studies.


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CHAPTER 4: ACTION FRAMEWORK

4.1 PILLAR I – UNDERSTANDING the PRIVATE SECTOR

ThisPillaraddressestheimmediateneedforgainingabetterunderstandingoftheIraq’sprivatesec-torthroughtheregistrationofbusinesses,datagatheringsurveys,mappinganddataanalysisofIraq’sbusinessesaswellasthemarketdynamicsaffectingtheirviability.

Havingmorecompletedataandinformationonwhatconstitutestoday’sprivatesectorandthespecif-iccontextswhichbusinessesfaceisessentialformakinginformeddecisionsandjustifyingproposedreformsandtargetedactionsaimedatimprovingthebusinessenvironment.

Forwardplanningandtheweighingofseparateopportunitycostsforinvestmentbystateandprivateorganizationswillbefacilitatedthroughtheestablishmentandoperationofawell-designedandread-ilyaccessibledataandinformationplatform. Byplatform,itismeantasystemofdatabases,ITtoolsandproceduresaccessibletogovernmentandprivatesectorstakeholders,containingthetype,numberanddistributionofformalandinformalbusi-nesses,whichtrackstrends,evolvingcircumstancesandothermarketsfactors, toprovideupdatedanalysesforusersofcurrentconstraintsandnewopportunities.

4.1.1. Objectives of Pillar I

PillarIobjectivesare:

1. AugmentingandcomplementingthestatisticspreparedbytheCentralStatisticalOrgani-zation;

2. Providinggovernmentalinstitutionswiththedataneededforbudgetingstateresources,specificallythoseaimedatsupportingtheprivatesectorandtheeconomicgrowthofthecountry;

3. Providingtheprivatesectorwithdataneededforstrategicinvestmentplanning;

4. Increasingsignificantlytheregistrationofbusinesses;

5. Contributinginformationfortheenhancementofthepublic-privatesectordialogue.

4.1.2. Activities under Pillar I14

Morespecifically,forachievingtheaboveobjectives,fourtypesofactivitiesandactionsareenvis-aged:

a. Surveyingtheformalandinformalprivatesectorinthegovernorates;

b. Developingmoderninformationsystemsfor theGovernmentandprivatesectorstake-holdersandvalidatingalldatafromsurveysandothersources;

c. DevelopingthecapacityoftheGovernmentandprivatesectorstakeholdersforutilizinginformation,planning,trackingprogressandreporting;

d. Developinganetworkoflocalbusinessregistrationcenters.

14 See Annex - 3.


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4.2 PILLAR II – Improving the Business Environment

PillarIIaddressesthepriorityneedfortheprivatesectortooperateinasupportive,predictableandcoherentenvironmentwithinanewlegalandregulatoryframework,andwithmoresupportivepoli-cies.

4.2.1. Objectives of Pillar II

PillarIIobjectivesare:

1. Tohaveinplacestreamlinedpolicies,laws,regulationsandproceduresthatfosterprivatesectordevelopment;

2. Tohaveimprovedaccesstofinanceforprivatebusinesses;

3. Tohaveincentivesinplaceforincreasingproductionandinnovation,theregistrationofbusinesses,privateinvestmentandincreasedemployment;

4. Toimprovethequalityofservicesprovidedbyprivatesectorinstitutionsandassociationstobusinesses;

5. Tostrengthenqualitycontrol,qualityassurance,certificationandlicensingsystems..

4.2.2. Activities of Pillar II15

a. Initiateapublic-privatesectordialogue,wherebybusinessesareconsultedbytheGov-ernmentbeforenewpoliciesandlawsaredrafted;

b. Revise,simplifyandissuenewlawsintheregulatoryframeworkgoverningtheprivatesector,withaviewtoreducingredtape;

c. Reviseproceduresandrulesforimprovedaccesstofinancefortheprivatesector;

d. Developandproposenewpoliciesandstrategicplanstargetingtheprioritysectorsthatsupportprivatebusinessengagement;

e. Introduceincentivesfornewinvestments,innovationandincreasingtheregistrationofbusinesses;

f. Fortifytheprivatesectorinstitutionsandassociationsandthecoverageofservicestotheirmembership.

g. Strengthenqualitycontrol,qualityassurance,licensingandcertificationsystems;

4.3. PILLAR III – The SME Development Programme

Pillar IIIcontains theactualactivities,projectsand interventions thatwillbe implementedby thestructuresofPillarIV,tothedirectbenefitoftheprivatesectoringeneral,andtoSMEs,inparticular.PillarIIIwillenhancethecompetitivenessofboth(i)SMEsand(ii)SOEs,establishinganimproved,mutuallysupportiveandbetterintegratedpublic-privateenvironmentforcollaborationandpartner-ship;PillarIIIwillensureaneffectiveuseofstateresourcesthroughwell-conceivedstrategicplans,streamlinedrulesandtransparenteligibilitycriteriaforSOEsandSMEsworkingtoachieveincreasedintegrationandcompetitiveness.

15 See Annex 3


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4.3.1. Objectives of Pillar III

PillarIIIobjectivesare:

1. ToimproveSMEproductivityandcompetitiveness;

2. Toinvolvetheprivatesector,includingSMEs,inSOEandlargecompanyrestructuringandcorporatization.

4.3.2. Activities of Pillar III16

Toachievetheaboveobjectives,fourgroupsofactivities(actions)areenvisaged,describedindetailinAnnexI(SEEPhaseOneActivityProfiles)inadditiontotheactivities(actions)describedinPillar I and Pillar II:

a. Provide advisory, counseling, business planning, training and networking services toSMEs;

b. EstablishaFundtoprovideseedcapital,softfinancingandloanguaranteesforbusinessestoestablishnewenterprises,increasecompetitiveness;andtopromoteentrepreneurshipandinnovation;

c. Establish a specialprogramme tocreatebusinessopportunities for the private sector,includingSMEs,withSOEs;

d. Developmentofindustrialzones,businessincubators,businessdevelopmentservicesandsimilarinitiatives;

e. Establishadedicatedunittofostergenderawarenessandgenderinclusioninprivatebusi-nesses,toincreasejobopportunitiesforwomenintheprivatesector;

f. LaunchofaPublicAwarenessCampaign.

16 See Annex 3


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CHAPTER 5: The Implementation of the PSDS

5.1 PILLAR IV – The Implementation Pillar

PillarIVcontainstheoverallPSDSManagementstructure,thediversecomponentsofwhichwillbeestablishedtoensuretheefficient,effectiveandwell-sequencedimplementationofallactivitiesandactionsinPillarsI,IIandIII,fortherolloutofthePSDS.ItisenvisagedaPSDCwillbeestablishedundertheCouncilofMinisters.ThePSDCwillbecomethegoverningbodyforthePSDSrolloutthatismanagedunderPillarIV.

PillarIV,willalsocontainanindependentMonitoring&EvaluationunittoreviewprogressduringtherolloutofthePSDS.TheM&Eunitwillnoteprogress,constraintsandsignificantissuesthatneedaddressingandoffertimelyrecommendationsforremedialmeasuresandcoursecorrectionsduringtheimplementationoftheactivitiesandactionsofthePSDSbytheGovernment,bytheprivatesectorstakeholders,bytheSMEAgencyandbyanyotherparticipatingentities,withaviewtoachievingthegoalsoftheVisionby2030.

5.2 The Objective of Pillar IV

ToensuretheefficientandtimelyimplementationofthePSDS.

5.3 Activities of Pillar IV17

FourmainactivitieswillbedevelopedunderPillarIV:

a. EstablishmentofanoverallmanagementandcontrolsystemforthePSDS;

b. EstablishmentofaPRIUtoorganizeandsupervisetheactionsinallPillars;

c. EstablishmentofanationalSMEAgency;

d. EstablishmentofanindependentM&Esystem.

Efficient,effectiveandtimelyimplementationofthePSDSrequiresamanagementstructureforim-plementationthatguidestheprocessofsustainableprivatesectordevelopment;definestherolesoftheGovernmentandprivatesectorinmanagingthisprocess,strikingabalanceindecision-making.

5.4 Guiding Principles

Themanagementstructureisbasedonthefollowingfundamentalprinciples:

A. ProactiveandbalancedrolefortheGovernmentwhichentailsstrategicallyguidingpri-vate sectordevelopmentwhile achievinga favorablebalancebetweencentralizedanddecentralizedapproaches.

B. Activeparticipationofallstakeholdersfrom the onset,tofacilitatethephasingoutandhandingoveroftheGovernment’sleadingroleofthePSDSrollouttotheprivatesector.Assuch,allpartiesinvolvedinfosteringprivatesectordevelopmentmustbeeffectivelyinvolvedinimplementationoftherolloutfromtheonset.

C. Competentanddedicatedprogrammeimplementationstructure that undertakes the ex-ecutionofnation-wideandcrosscutting interventionsand thatprovides technicalandmanagementsupport.

17 See Annex 3


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D. Monitoringandevaluationarrangementsthatassessprogressinimplementation,evaluateperformance,draw lessons learned, suggestamendmentsand identifynewlyemergingchallenges.

E. Capacitybuildingthatincludestraining,technicalsupportandadvicetotheGovernmentandprivatesectorstakeholders.

F. Gender equity thatdemonstratestothegeneralpublicthattheinclusionofwomeninanempoweredroleintheprivatesectorisbothi)anintegralpartoftheprogressandex-pectedresultsenvisagedinthePSDSrolloutandii)anationalpriority.

5.5 The Implementation Structure

TheimplementationstructureofthePSDSisenvisagedtohave(i)streamlinedandeffectivedecisionmakingandconsultativemechanisms,allowingpromptresponsesandcorrectiveactionstobetakenbydecisionmakers;and(ii)toensureavoiceindecision-makingbyrelevantstakeholdersfromtheGovernment,theprivatesectorandthegeneralpublic.Forthispurpose,thePSDSenvisagesthees-tablishmentthePSDCundertheCoM.

ThePlanning,ResearchandImplementationUnit(PRIU)willmanagenation-widethecrosscuttingactivitiesunderthePSDS.Furthermore,shouldthedraftFederalLawofEconomicReformbeen-actedandtheFederalEconomicReformCouncilbeestablished,theFERCwillundertakethedutiesandresponsibilitiesofthePSDC.Inthisinstance,thePRIUwillbecomeanintegralcomponentoftheFERC,undertakingthesamefunctionsasenvisagedherein.

5.6 The Private Sector Development Council (PSDC)

ThePSDCconstitutesthehighestlevelinstitutiontooverseethemanagementandimplementationofthePSDS.ThePSDCshallbeaplatformfordialogue,engagement,interactionandcoordinationbetweentheGovernmentandtheprivatesectorandmakedecisionsandissuerecommendationsontheactivitiesunderthePSDS.DecisionsofthePSDCwillbesubmittedtotheCoMforapprovalorendorsement,whenrequiredbyitsby-laws.ThePSDCwillhavebranchesorrepresentationofficesinthegovernoratestocoordinatetheimplementationofthePSDSamonglocalstakeholders(localgovernments,branchesofcentralinstitutions,localprivatesectorinstitutionsandassociations,civilsocietyorganizations,localmedia)andwiththePSDC,PRIUandM&EUnit.

ThechairmanshipofthePSDCshallbedeterminedatalaterdate.Allkeystakeholderswillberepre-sentedinthePSDCincludingrepresentativesof:

1. CentralMinistries and otherGovernment entities (MoF,MoP,MoIM,MoT,MoLSA,PMAC,CentralBankofIraq);

2. KurdistanRegionalGovernment;

3. Privatesectorinstitutionsandassociations;

4. Financial institutions, includingIraqiPrivateBanksLeagueandsmallandmediumfi-nancinginstitutions;

5. TradeUnions;

6. NationalSMEAgency,SOERestructuringUnit;

7. LocalGovernments(threeonrotationalbasis).

8. Independentexperts(nationalandinternational);


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AtleastonethirdofPSDCmembershipwillbeallocatedtoprivatesectorrepresentatives.

TheresponsibilitiesofthePSDCwillbe:

1. Toreviewanddecideonprivatesectorrelatedpolicies,strategies,programmes,activitiesandprocesses,afterwhichthemobilizationofrelevantGovernmentinstitutionsfortheimplementationphaseswillfollowbyCoMdirective;

2. Toensuresimplificationofexistinglawsandregulationsgoverningtheprivatesector,andproposingamendmentstothecurrentortheadoptionofnewones;

3. ThecoordinationofallPSDeffortswithcentralministries,KRG,non–ministerialenti-tiesandlocalgovernment;

4. ThecoordinationoftheofrestructuringofSOEs,withtheparticipationoftheprivatesec-torwhileensuringthesocialmitigationmeasureareinplace;

5. Thepreparationofnationalandgovernorate-levelstrategiesinlinewiththePSDS;

6. ThemonitoringandevaluatingoftheimplementationofpoliciesandprogrammesforPSDS,realigningthePSDStotakeadvantageoflessonslearned,changingcircumstancesandnewlyemergingopportunities;

7. ThepreparationofperiodicprogressreportsontheimplementationofthePSDSforsub-missiontotheCoMandprivatesectorstakeholders.

ThePSDCwillconsideropeningofficesat thegovernorate level tocoordinatewithlocalgovern-mentsandlocalprivatesectorinstitutionsandassociations.

5.7 The Planning, Research and Implementation Unit (PRIU)

WorkingdirectlyunderandaccountabletothePSDC,thekeytoasuccessfulrolloutofthePSDS,willbetheestablishmentofaPRIUthatwillberesponsibleforplanning,researching,organizing,managingandimplementingallactivitiesofthePSDS,including:

1. Planning,researching,designing,managingandimplementingtheactivitiesunderPil-larsI,II,IIIandIV;

2. PreparationofannualworkplanstobeapprovedbyPSDCasendorsedbytheCoM;

3. RegularconsultationandclosecoordinationbetweentheGovernment,theprivatesectorandcontractedentities;

4. FacilitatingregularconsultationandclosecoordinationbetweenthePSDCandtheKRGandwithlocalgovernmentintheimplementationofthePSDS,especiallythroughPSDSbranchesorrepresentationoffices.

5. DraftingofnewpoliciesandlegislationasrequiredforadoptionbyGovernment;

6. Designinganddraftingtechnicalspecificationsandtermsofreferenceforallactivitiestobeoutsourced;

7. Preparationofallmanuals,standardsoperatingproceduresandguidelinesforthegover-nanceandcontrolofPSDSimplementation;

8. Procurementof external technical assistance, training services, equipment andall re-quiredinputsforthefourPillars;


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9. IssuanceofInvitationstoBid,contractsandpurchaseorders;

10. Managingtheselectionofcontractedentities,consultingfirmsandexperts;

11. TheinitialmanagementoftheSeedCapitalFundunderPillarIIIpendingtheestablish-mentofanSMEAgencytowhichtheFundwillbetransferred;

12. Managementofpublicawarenessefforts,communicationsandexternalrelations;

13. SupportthePSDCtoestablishanindependentM&EunitforassessingtherolloutofthePSDS;

14. OrganizationandpreparationofagendasandminutesofmeetingofthePSDCouncil;

15. SubmissionofregularprogressreportstothePSDCwithrecommendationsonpriorityactionsorpoliciesneededforadoptionbyconcernedinstitutionsandorganizations.

Ingeneral,thePRIUwillundertakeoverallcoordinationamongcentralministries,sectors,commis-sions,localgovernmentsandprivatesectorinstitutionsandassociationsinadditiontoimplementingactivitiesrelatedtonationalorcross-sectoralpoliciesandstrategies.Otheractivitieswillbeimple-mentedbycentralministriesandcommissionsandlocalgovernmentsaccordingtotheircompeten-ciestoensurethattherewillbenooverlaporconflictinimplementation.

5.8. Monitoring and Evaluation

Theestablishmentofaneffectivemonitoringandevaluationsystemisessential formanaging thePSDSrollout,identifyingbottleneckstoprogressandrecommendingcorrectiveactions.ThePSDCwillberesponsibleforestablishinganindependentmonitoringandevaluationunitthatfollowstheprogressofPSDSimplementationandthatreportsfindingstothePSDCfortheCoMtotakeallnec-essaryactionstokeeptherolloutontrack.TheManagementStructurecontainsathree-levelM&EsystemforthePSDSrollout,undertakenbyadedicatedM&EunittobeestablishedunderthePSDC.TheM&EUnitwillsubmitregularM&EreportsoneachontheM&ElevelstothePSDC.TheM&EUnitwillperformthefollowingreviews:

Level 1: Efficiency in the Implementation of the PSDS

ThisM&Elevelassesseswhetherthespecificprogrammes,projectsandinitiativesofthePSDShavebeenproperlyimplemented,andwhetherthatimplementationwascost-effective.

Level 2: Effectiveness of the Proposed Policies and Support Programmes

ThisM&ElevellooksatwhetherthepoliciesandprogrammesareadequatelysuitedtoimplementingthevisionandobjectivesofthePSDS.Forthispurpose,theM&EUnitwillmeasureperformanceofthePSDSImplementationbythevariousentities,againstestablishedbenchmarksandsuccessindica-tors.

Level 3: Continued Relevance of the PSDS Vision and Objectives

ThisM&Elevelexploreswhetherthevision,theobjectivesandtheproposedactivitiesbythePSDSremainrelevantoverthepassageoftime,inviewofchangingcircumstancesinthenationalcontext,orwhetherthePSDSneedstoberealignedaccordingly.


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5.9 Public Awareness and Communication

ThePSDCwillensurethewidestdisseminationofinformationandcommunicationoftheelementsandprogressofPSDSamongtheGovernmentinstitutions,regionalandlocalgovernments,privatesectorinstitutions,theIraqiDiaspora,academicandresearchinstitutionsandtothegeneralpublicusingavailablemediachannelsandpreparingpublicawarenessmaterials.Inparticular,progresswiththePSDSrolloutwillbecommunicatedtomembersoftheCouncilofRepresentatives,KurdistanRegionalParliamentandGovernorateCouncilstoensureawarenessandallowtheserepresentativebodiestofacilitatetheimplementationofthePSDSfortheirconstituencies.

ThePSDCwillprepare informationdissemination, communicationandpublicoutreach strategiesdesignedtobuildgeneralenthusiasmandsupportforthePSDSchangeprocess.

5.10. Transitional Management

UntilthePSDCcanbeestablished,PMACwillundertakethetransitionalmanagementofthePSDS.This shall include:

a. GainingtheendorsementofthePSDSbytheCoM;

b. PreparationofproposalsforCoMapproval,onthemandate,structure,jobdescriptions,dutiesandresponsibilities,by-lawsaswellasamanualofstandardoperatingproceduresforthePSDC;

c. Preparationofproposals,forCoMapproval,onthemandate,structure,jobdescriptions,dutiesandresponsibilities,workproceduresandoperationalbudgetforthePRIU.

d. DraftingaCoMresolution/DiwaniorderforestablishingthePRIUandpresentingittoCoMSec;

e. OrganizinginternationaltechnicalassistancetoPMACasrequired;

f. PrepareanInterimActionPlanandensurethatbudgetaryallocationsareinplacetorollouttheimplementationofthePSDSpromptly,inordertomaintainthemomentumcre-atedbythePSDP-IandtheconsultativeprocessesthatpreparedthePSDS.TheinterimactionplanshallincludetheactivitiesindicatedinTable-4(thedetailsoftheseactivities,timeframeandrequiredbudgetaryallocationshavebeenexplainedinTable-1,Table-2andAnnex-3).ThestartingpointfortheInterimActionPlanwillbetheCoM’sendorse-mentofthePSDS.

g. AssigninganExecutiveManager,underPMAC,toundertakethedailycoordinationandfollow-upofthePSDSactivitiesduringthetransitionalperiod.


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Annex - 1Overview of the Private Sector


Table of Contents

1. Background2. Main Features of the Private Sector in Iraq2. 1. Private Sector Dynamics2. 2. Private Sector Contribution to GDP and Employment3. Private Sector Development in National Development Plans4. Business Environment in Iraq5. Opportunities for Private Sector Development6. Private Sector Institutions and Associations7. The Local Network of the United National Global Compact in Iraq 8. The Private Sector Development Center

Tables

Table - 1 Public and Private Sector Shares in Generation of GDP, Fixed Capital Formation and Rate of Employment, 1974 – 2012

Table - 2 Ranking of Iraq on the World Bank›s «Doing Business Report» 2007 - 2014Table - 3 Breakdown the Parameters Used in Doing Business Report 2014 and Iraq›s Rankings


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1. Background

Until1950s,theprivatesectorhadaprivilegedpositionamongthenationalprioritiesandbenefitedfrom thestate’sextensivesupportandfinancialaid.However,with increasingoil revenues in theearly1950s,thestatusofprivatesectorstartedtodecline.Theroleoftheprivatesectordeclinedfur-therin1964withthesetbackofnationalizationofmostprivatebusinesses18 andtheadoptionofcen-trally-planned,“socialist”modelofeconomy,wherethepublic(socialist)sectordominatedalmostalleconomicactivitiesexceptagriculture,retailtrade,ownershipofdwellingsandsocialandpersonalservices.Consequently,businesspersonsshiftedintolow-risk,shortcycle,continuousdemandactivi-ties,particularlyintradeandrealestate.

Thisdominationofthepublicsectoroneconomicactivitiescontinueduntil1987whentheeconomicdifficulties forced theGoI then to adopt an “open door policy as regards the private sector” andceaseddirectinterventioninagricultureaspartoftheeconomicliberalizationandprivatizationpro-gramme,theso-called“AdministrativeandEconomicRevolution”.Theperiod1987-1990witnessedtheprivatizationofstate-ownedfarmsandpublicsectorfactories,liberalizingthelabormarket,es-tablishingastockmarket;allowingprivatecommercialbanks,encouragingArabinvestment,provid-ingincentivestoprivatesectorinstitutionsandenactmentoflawsandregulationsthatsupportedanexpandedroleoftheprivatesectorinthenationaleconomy.Thesemeasuresenhancedtheprivatesector’sstatusandexpandeditsroleineconomicactivities,particularlyinindustryandagricultureasreflectedinitsshareofGDPgeneration(Table-1).WiththeimpositionofinternationalsanctionsonIraqin1991,theroleofthepublicsectorretreatedandtheprivatesectordominatetheeconomicactivitiesuntil1999whentheGoIdecidedtoopenthemarketforcheap,subsidizedimports,whichdumpedthedomesticmarket.Thisresultedintheclosureofover33,000MSMEsandover100,000workerslosttheirjobs.

Theplightoftheprivatesectorculminateafter2003withinsecurity,politicalinstability,openim-portpolicy,inappropriateinvestmentclimate,lackofcompetentfinancialinstruments,deterioratedinfrastructureandcapitalflight.These,associatedwithescalatingoilrevenues,reducedtheprivatesector’sshareinthenationaleconomyandinGDPgeneration.

Inshort,theperiodsincethe1950switnessedshiftingrolesbetweenthepublicandprivatesectors.Yet,theseshiftingroleshavebeenarbitraryratherthanplanned,responsiveandmitigativetoseverepoliticalandsocioeconomiccircumstancesrather thantheconsequenceofsoundeconomicpolicyandweren’tassociatewithin-depthchangeinthevision,mind-setandpolicyoftheGoItowardstheprivatesector.

2. Main Features of Iraq’s Private Sector

2. 1. Private Sector Dynamics

TheprivatesectorinIraqhasbeen,andstill,dominatedbyindividual,micro-andsmallbusinesses,mainlyoperatinginretailandtrade,constructionandtransportationservicesaswellasinlightin-dustry.Themajorityofbusinessesareownedbysoleproprietors,withmostoftheremainderbeingfamilypartnerships19.Iraqpossessesfewlarge,typicallyfamily-ownedandrunmulti-industrycon-glomerates,activeinretail,domestictradeandconstruction.However,largeprivatebusinessesareemerginginIraqinICT,particularlymobilecommunications,intechnicalservicesforoilandgas

18 In July 1964, the GoI issued the Law of Nationalization of Some Companies and Facilities No. 99 (1964) and the Law of Nationalization of Commercial Banks No. 100 (1964) that nationalized all commercial banks, insurance companies and the 27 largest private industrial firms having capital of ID 70,000 (then about US$ 250,000) and above. The GoI issued also Law Regulating the Statuses of Some Companies and Corporations No. 103 (1964) requir-ing profit sharing with workers, and participation of workers in management.

19 ILO Survey of Firms.


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industryandinmanufacturingindustry.AccordingtotheNDP2013-2017,thenumberofprivatein-dustrialSMEsincreasedfrom10,339to11,181whilethenumberoflargeenterprisesincreasedfrom412to420intheperiod2009-2010.

A2012surveyof950MSMEsconductedbyILO20 in three Qadas21providedsomeusefulinformationonthestructureanddistributionofMSMEs:agriculture(5.6%),manufacturing(8.6%),construction(19.2%),tradeandretail(54.6%),otherservices(12%).TotheopinionofthesurveyedMSMEs,ac-cesstofinance,infrastructureandavailabilityofskilledlaborconstitutethemainsuccessfactorsforbusinessdevelopmentand/orexpansion.

Activity-wise,theprivatesectordominatesinagriculture,wholesaleandretailtrade,hotelsandtour-ism,ownershipofdwellingsandpersonalandsocialserviceswhilecontributedonly27.9-39.7%tomanufacturingindustryin2009-2010,whereTherelativesignificanceofprivatesectorcontributionstotheGDPatcurrentpricesdifferedbyeconomicsector.Inagriculture,ownershipofdwellings,andpersonalservices,theprivatesectorprovidedupto100%,whileinmanufacturingindustries,thepri-vatesectorprovided27.9%and39.7%in2009and2010respectively.Thislatterincreaserelatestotheincreasingnumberofprivatesectorindustrialenterprises,bothlargeandSMEs.

Agricultureisdominated,ononeside,byprivatebusinessesmostlyownedbyindividualsand,fromtheotherside,byoverwhelmingroleoftheGovernmentinprovidingsoftloans,particularlythroughAgriculturalInitiativelaunchedin2009,andinofferingsubsidizedpricesofsomeproducts,espe-ciallycashcrops,aswellasitsdominanceovertheseedsandagriculturaltechnologymarketsthuspreventingtheprivatesectortodevelop.Also,theagriculturalsectorcurrentlylacksorganizedcoop-erativesorsimilarstructures.

Manufacturingindustryaccountsforabout17,500productionfacilities22formedbypubliccompanies(1.5%),mixedcompanies (0.2%)andprivatecompanies23 (98.3%),distributedamong the foodsector(2463),textiles(2919),chemicals(2251),constructionmaterials(6327)andmetalprocessing(3526).Intheperiod2008-2010,theMoIMlicensedabout1,400newindustrialprojects(withapeakof500reachedin2010).Actualperformanceisnotmonitoredorrecorded,butitisestimatedthatnotmorethan20-25%oftheprivatemanufacturingindustryfirmsstilloperatingorinbusiness.

Seventeenindustrialmixedsectorcompaniesareoperatingatthemomentwheretheprivateowner-shipshouldn’texceed75%ofthecapital,accordingtotheCompanyLawNo.21(1997).Thesepro-duceawiderangeofindustrialcommoditiesrangingfromaircoolers,airfilters,weldingrods,paintstoelectronicandelectricalequipmentandappliances.

Between40and50production-sharingcontractswithlocalandforeigncompanieshavebeensignedoversince2008,includingGerman,FrenchandTurkishcompanies(inthecement,fertilizers,auto-motive, agricultural equipment,mechanics,metallurgy, electrical and electronic industries).Morerecently,a$1billioncontractwassignedwithTurkey’sUBHoldingtorestorethelargeironandsteelfactorythatwaslootedduringthe2003invasioninthesouthernAlBasraGovernorate.

20 ILO, Micro, Small and Medium-sized Enterprises in Iraq; A Survey Analysis, 2012, http://www.psdc-iraq.org/sites/default/files/ILO%20Iraq%20MSME%20Analysis%20Final.pdf.

21 Sulaymaniya, the Marshlands, and Al Hillah.22 Directorate General of Industrial Development of the MoIM. In contrast, the Iraqi Federation of Industries accounts

for 44,518 members as “industrial projects” distributed among many more sub-sectors, including extraction, food, textile, chemicals, wood, paper, construction materials, basic metals, metals, manufacture, services etc.

23 Defined as “licensed industrial projects”.


41

According toWorld Bank Investment ClimateAssessment (ICA) report, despite numerous con-straints, productivity of firms in Iraq is nonetheless comparable to several other countries in theMiddleEastandNorthAfrica(MENA)region.Intheprivatesector,productivity24variesfromoneactivitytoanother.Inparticular,Iraqiprivatefirmshavebetterperformanceintheregionintextileandgarments,chemicals,pharmaceuticals,non-metalandequipmentsectors,whilethereisamplescopeforimprovedproductivityinfoodprocessingandelectronics25.Laborproductivity26presentsevenmoresignificantvariationsamongactivities.Inthechemicalandpharmaceuticalsindustry,laborproductivityistwotimeshigherthanintheelectronicssector.Also,higherproductivityisusuallyfoundinsmallsizefirms.

Withthedistributionofeconomicactivitiesbetweenthepublicandprivatesectorsremainedunstableandfluctuating,theprivatesectorcontributiontofixedcapitalformationshoweddecliningtrendsince2004,rangingbetween0.6and1.5%withanaverageof0.8%ofGDP27,anindicatorofdisablingenvironmentandadverseinvestmentclimatefortheprivatesector.

2. 2. Private Sector Contribution to GDP and Employment

PrivatesectorcontributiontoGDPgenerationremainedalmoststablesince2004,rangingbetween26.7and33.8%withanaverageofabout31%.Meanwhile,privatesectorcontributiontonon-oilGDPhadanoveralldecliningtrend,rangedbetween76.8and59.3%withanaverageof64.8%(Table-1).

Thereisnoaccurateandupdatedinformationondistributionoftheworkforcebetweenthepublicsectorandprivatesector.Intheperiod2004-2008,theprivatesectorprovided21.0-33.3(23.7%inaverage)offull-timejobsand14.0-34.6%(20.7%inaverage)ofpart-timejobs(Table-1).Inthesameperiod,thepublicsectorbecamethemajoremployer,providinganestimated3.4millionjobs(excludingKurdistanRegion).AccordingtotheNationalDevelopmentPlan2013-2017,thedistribu-tionofprivatesectoremployeesin2011variedbetween48.8%havingfull-timejobsand33.3%hav-ingpart-timejobs,withwomenconstitutingupto92.2%ofthosepart-timeemployees.

Agriculture used to be the largest employer in Iraq until few years ago.However, it’s providingnowonly20%ofjobs,almostallintheprivatesector.Moreover,andintheperiod2006-2010,thecontributionofagriculturetotheGDPrangedbetween4.4%and5.8%,butshowedaslighttrendofimprovementsince2009.

TheproblemofemploymentinIraqisbecominganationalpriorityissue,affectingtheentirecountry,especiallyfortheyoung,whosufferfromthehighestjoblessrate.AccordingtoBoozandCompany,around250,000peopleenteredthelabormarketperyearintheperiodof2007-2011,andthatisexpectedtoincreaseto290,000peryearfrom2012-2016.Thisisexacerbatedbythefactthat64%ofthepopulationisof24yearsorlessageandthattheagemedianisonly20years.Insuchcontext,thereisnoalternativeforIraqbuttorevitalizeanddeveloptheprivatesectortocopewiththeeverincreasingdemandonjobs. Thissituationisfurthercomplicatedbythemassiveout-migrationofprofessionalsandskilledlabor.

24 Total Factor Productivity, as defined in the ICA report of the World Bank25 The World Bank, Iraq: Investment Climate Assessment, 2012.26 According to the ILO, labor productivity is measured as gross domestic product (GDP), which represents the com-

pensation for input of services from capital (including depreciation) and labor directly engaged in the production.27 Data in Table - 1 have been provided by MoP and used to calculate the range and average. However, These differ

from the ones used in National Development Plan 2013-2017, at least for 2009 and 2010 (6.8% and 3.7% respec-tively).


42

Table - 1. Public and Private Sector Shares in Generation of GDP, Fixed CapitalFormation and Rate of Employment, 1974 – 201228

Year

Private Sector Share

(%) in GDP Generation

Private Sector

Fixed Capital Formation

(of GDP %)

Rate of Employment in the(%) Private Sector

Total GDP Non-Oil GDP Full Time Part Time

1974 31.9 74.8 2.5 ----------- -----------1980 19.2 48.4 4.7 ----------- -----------1990 22.0 59.7 5.0 ----------- -----------1995 34.6 92.6 0.4 ----------- -----------2002 25.0 83.9 1.2 ----------- -----------2003 25.3 79.3 ----------- 21.0 28.02004 30.9 72.9 1.0 24.0 34.62005 32.8 76.8 0.8 26.6 32.02006 29.7 66.1 1.1 33.4 16.02007 30.9 65.3 0.7 33.4 14,62008 26.7 60.5 0.6 25.0 22.02009 33.0 59.3 0.6 ----------- -----------2010 33.8 59.7 1.5 ----------- -----------2011 30.3 62.1 0.9 ----------- -----------2012 30.5 60.9 ----------- ----------- -----------

ThecontributionoftheconstructionandhousingsectortoGDPrangedbetween3.5%and5.0%intheperiod2006-2010withannualinvestmentrangingbetweenID1.6toID2.2trillion.Severalfactorscontributedtotherelativeimprovementinthissector,includingincreasingdomesticdemandandin-vestment(bothpublicandprivate),improvedincomeandthelaunchofseveralhousingloanschemes.

ThereisnoreliableinformationonthesizeandactivitiesoftheinformalsectorinIraq.However,thereisenoughevidencethatIraq’sinformaleconomyexpandedconsiderablysince2003.Thebig-gestincreaseshavebeenintheareasofsmall-scaleurbanserviceswithsmallerincreasesinagricul-tureandvarioussmallscaleindustries.Asafeestimateofthesizeoftheinformaleconomy(asof2006)isaround65percentofGDPcomparedto35%in2000althoughthismaybeabitconservative.Approximately68%ofthelaborforceisengagedininformalactivity,ontheassumptionthatmanyworkerslistedasunemployedusetheinformaleconomyasacopingstrategyuntilformalsectorjobsappear29.TheILO’sMSMEsurveyconductedin2012concludedthatmostmicroenterprisesoperateinformally.

3. Private Sector Development in National Development Plans

NationalDevelopmentStrategies2005-2007and2007-2010consideredtherevitalizationoftheprivatesectoroneofthefourmajorpillarsthatdominatethestrategicdirectionsinreconstructionanddevelopment,andthatcreatingafriendlyinvestmentclimatetodomesticandforeignbusinesses,smallandlargeandinagriculture,manufacturingandservicesisatoppriority.NationalDevelopmentStrategies2005-2007and2007-2010certainrequirementstoachievetheseobjectives,includingstreamliningandsimplifyingdoingbusinessprocedures, reforminglawsandregulations,corpora-tizationofstate-ownedenterprises,restructuringstate-ownedcommercialbanks,providingsoftfinancing,particularlymicrofinancingandSMEfinancingschemes,rehabilitatinginfrastructure,andintegratingdomesticmarketwithregionalandglobalmarkets.28 Source, Central Statistical Organization - Ministry of Planning and the National Development Plan 2010-2014. 29 Robert Looney, 2005, Iraq›s Shadow Economy. International Review of Economics and Business, Vol. LII, No. 4, De-

cember 2005, pp. 561-580 and Robert Looney, 2006, Economic Consequences of Conflict: The Rise of Iraq’s Informal Economy, Journal of Economic Issues, Vol. XL, No. 4, December 2006, 17 p.


43

Enhancingtheroleofthedomesticandforeignprivatesector,whetherinsizeofinvestmentorem-ployment opportunities,with the objective of financing development, has been one of themajorgeneralobjectivesoftheNationalDevelopmentPlan2010-2014,whichattemptedtoachievethisobjectivethrough:

♦ CreatingAninteractive,participatory,andcompetitiveprivatesectorthatsupportssus-tainablegrowth;

♦ Achievingpartnershipbetweentheprivateandpublicsectors

♦ Promotinganenvironmentthatencouragesinvestment

♦ Expandinganddiversifyingtheactivitiesthattheprivatesectorinvestsin.

TheNDP2010-2014estimatedthatprivate investmentwillconstitute46%of the totalexpectedinvestment(ID100trillionoutofID218trillion).

TheNDP2013-2017compriseddetailedanalysisofthestatusofprivatesectorandanevaluationofwhathavebeenachievedoftheobjectivesoftheNDP2010-2014.NDP2013-2017reckonedthat:

♦ Theroleoftheprivatesectorinoveralleconomicdevelopmentisstillmodestandnon-strategicasindicatedbythesubstantialdeviationinprivatesectorcontributiontofixedcapitalformationplannedtobeID24.8trillionin2011whiletheactualdidn’texceedID1.6trillion,a-92%deviation.

♦ Theprivatesectorinvestmentpolicycharacterizedbyinflexibility,lackeddiversificationandcontinuedtoadoptconventionalpatterns,particularlythelaborintensive/lowcapitalmodality.

♦ Theprivatesectorhadlimitedroleinemploymentduetotheunfavorablebusinessenvi-ronmentandlowpay.

♦ Refrainmentoftheprivatesectorfromparticipatinginenvironmentalactivitiesandfromcontributingtosustainabledevelopment.

TheNDP2013-2017setthenationalvisiontotheprivatesectoras“Anactive,competitiveandcom-petentpartner”andconfirmedtheendeavortoaccomplishthefollowingobjectives:

1. IncreasingtherateofprivatesectorcontributiontotheGDP;

2. Achievinganeffectiveandsustainablepartnershipbetweenthepublicsectorandthepri-vatesector;

3. Increasingjobcreationwiththeprivatesector.

TheNDP2013-2017hadamorerealisticestimationof21%toprivateinvestmentoutofthetotalexpectedinvestment(ID88trillionoutofatotalofID417trillion).

4. The Business Environment in Iraq

TheWorldBank’sDoingBusinessReportiselaboratedbytheWorldBankGroupeveryyearsince2004andaimsatmeasuringthecoststofirmsofbusinessregulationsin180-183countries.ThereportbecameoneoftheflagshipknowledgeproductsoftheWorldBankGroupinthefieldofprivatesector development,andisclaimedtohavemotivatedthedesignofseveralregulatoryreformsindevelopingcountries.Thereportpresentsadetailedanalysisofcosts,requirementsandproceduresaspecifictypeof privatefirmissubjectinallcountries,andthen,createsrankingsforeverycountry.


44

ListingofIraqonDoingBusinessReportstartedin2007.Sincethen,Iraqhasbeenrestingat thebottom(Table-2).The10parametersusedin“DoingBusiness2014Report”andIraqrankingsareindicatedinTable-3.

Inthe“DoingBusiness2014:UnderstandingRegulationsforSmallandMedium-SizeEnterprises”thatcameouton29October2013,Iraqranked151,anremarkableimprovement.Thisimprovementisduetotheshorteningofthetimeittooktocompletekeypracticesfromthepreviousyear.

♦ Iraqwentupfrom176to169instartingabusinessbecausetheproceduresrequiredtocompletethistaskhavebeensimplified,leadingtoadramaticdecreaseinthetimeneces-saryforregistrationfrom77daysin2012tojust29in2013.

♦ Thenumberofproceduresrequiredtoissueconstructionpermitsalsowentdownfrom13to10resultinginadropoftimenecessaryfordealingwithconstructionpermitsfrom187 to 139.

♦ Forothercategories,Iraq’srankingimprovedaswell.Gettingelectricityimprovedfrom46to39,buttheno.ofprocedures,5,andtime,47days,didnotchange.Inaddition,reg-isteringpropertycomprised5proceduresandconsumed51days.

♦ However,Iraq’srankingforcreditfacilitationslippedfrom174in2012to180,whilethatforthelegalrightsstayedat3outof10.ThisismainlybecauseIraq’sbanks,whetherstate-ownedandprivate,seldomprovideloans.

♦ Iraqscored theworst inprotecting investors, trade,enforcingcontracts, and resolvinginsolvency.DoingBusinessReport2014 indicates that theprocedure for importingorexportgoodstookover80days,enforcingacontracttook520daysandthatIraqhasnoproceduretodealwithbankruptbusinesses.

Table-2.RankingofIraqontheWorldBank’s“DoingBusinessReport”2007-2014.

ChangeRanking

)of 180-183 countries(Year

14020071412008146200915020101662011164201216520131512014


45

Tabl

e - 3

. Bre

akdo

wn

the

Para

met

ers U

sed

in D

oing

Bus

ines

s Rep

ort 2

014

and

Iraq

’s R

anki

ngs

Iraq

Mid

dle

East

and

Nor

th A

fric

a

Upp

er M

iddl

e In

com

e

GNI p

er C

apita

(US$

)5,

870

Ease

of D

oing

Bus

ines

s (ra

nk)

151

Popu

latio

n (m

illio

n)32

.6

Star

ting

a Bu

sines

s (ra

nk)

169

Regi

ster

ing

Prop

erty

(ran

k)10

8Tr

adin

g Ac

ross

Bor

ders

(ran

k)17

9

Proc

edur

es (n

umbe

r)10

Proc

edur

es (n

umbe

r)5

Docu

men

ts to

exp

ort (

num

ber)

10

Tim

e (d

ays)

29Ti

me

(day

s)51

Tim

e to

exp

ort (

days

)80

Cost

(% o

f inc

ome

per c

apita

)39

.3Co

st (%

of p

rope

rty

valu

e)8.

2Co

st to

exp

ort (

US$

per

con

tain

er)

3,55

0

Min

imum

cap

ital (

% o

f inc

ome

per c

apita

)13

.1Do

cum

ents

to im

port

(num

ber)

10

Getti

ng C

redi

t (ra

nk)

180

Tim

e to

impo

rt (d

ays)

82

Deal

ing

with

Con

stru

ction

pPe

rmits

(ran

k)20

Stre

ngth

of l

egal

righ

ts in

dex

(0–1

0)3

Cost

to im

port

(US$

per

con

tain

er)

3,65

0

Proc

edur

es (n

umbe

r)10

Dept

h of

cre

dit i

nfor

mati

on in

dex

(0–6

)0

Tim

e (d

ays)

139

Publ

ic re

gist

ry c

over

age

(% o

f adu

lts)

0.0

Enfo

rcin

g Co

ntra

cts (

rank

)14

2

Cost

(% o

f inc

ome

per c

apita

)17

.2Pr

ivat

e bu

reau

cov

erag

e (%

of a

dults

)0.

0Pr

oced

ures

(num

ber)

51

Tim

e (d

ays)

520

Getti

ng E

lect

ricity

(ran

k)39

Prot

ectin

g In

vest

ors (

rank

)12

8Co

st (%

of c

laim

)28

.1

Proc

edur

es (n

umbe

r)5

Exte

nt o

f disc

losu

re in

dex

(0–1

0)4

Tim

e (d

ays)

47Ex

tent

of d

irect

or li

abili

ty in

dex

(0–1

0)5

Reso

lvin

g In

solv

ency

(ran

k)18

9

Cost

(% o

f inc

ome

per c

apita

)23

8.1

Ease

of s

hare

hold

er su

its in

dex

(0–1

0)4

Tim

e (y

ears

)N

P

Stre

ngth

of i

nves

tor p

rote

ction

inde

x (0

–10)

4.3

Cost

(% o

f est

ate)

NP

Reco

very

rate

(cen

ts o

n th

e do

llar)

0.0

Payi

ng T

axes

(ran

k)63

Paym

ents

(num

ber p

er y

ear)

13

Tim

e (h

ours

per

yea

r)31

2

Tota

l tax

rate

(% o

f pro

fit)

27.8


46

5. Opportunities for Private Sector Development

Whiledifficult toquantify theactualdevelopmentpotentialof theprivatesector,varioussurveys,studiesandresearchessuggestthatconcreteopportunitiesexistfortheprivatesectortodevelop,con-tributetoeconomicgrowthandemployment.Theseopportunitiesinclude,inparticular:

♦ Substantiallyqualifiedandunderutilizedhumanandhugenaturalresources.

♦ Increasinglygrowingdemandofinternalmarketsforgoodsandservicesinseveral sectors.

♦ Anoilindustrythatconstitutesatremendousopportunityfortheprivatesectortoservebothontheupstreamanddownstreamproduction.

♦ Greatpotentialandneedforinnovationbyenhancingcompetitioninthedomesticmarketthroughqualitycertification,ICTuse,introductionmoderntechnologiesand,ingeneral,newandinclusivebusinessmodels.

♦ Apparenthighdynamism in thecreationofSMEssince2007,an indicatorofnascenteconomicrecovery.

♦ TheenormouspublicprocurementmadebytheGoIandthelargeFDIsandIOCs.

6. Private Sector Institutions and Associations

Iraq’sprivatesectorhas3institutionsestablishedbylaw:

1. FederationofIraqiChambersofCommerce,establishedbyLawNo.43(1989),havingbranchesinallgovernoratesandamembershipofoveronemillion.

2. IraqiFederationofIndustries,establishedbyLawNo.34(2002)andhave36,000mem-bers30.

3. IraqiContractorsUnion,establishedbyLawNo.59(1984)(Amended).

Nevertheless,severalprivatesectorassociationshavebeenestablishedafter2003onbasisofindi-vidualorgroupinitiatives,allhavingthestatusofcivilsocietyorganizations31.

AnevaluationofthemainprivatesectorinstitutionsandassociationsconductedbyUNIDOintheperiod2011-201232revealed:

♦ thelackofcommonlysharedstrategiesandweakinter-coordination;

♦ weakinternalgovernanceandfinancialstructure;

♦ focusonlyonadvocacyandweakservicedelivery;

♦ weakrepresentationofsomegrowingsectors(e.g.mining,chemicals,energy,environ-mentetc.);

30 This number appeared on the website of the Iraqi Federation of Industries. However, the internal records indicate that the actual membership is 44,518.

31 These include, but not limited to, Iraqi National Business Council, Iraqi Businessmen Association, Iraqi Private Banks League, Iraqi Industrial Gathering, International Businessmen Union, Businesswomen without Borders, Union of Iraqi Importers and Exporters, Iraqi Industrialists and Traders Union, etc. c.

32 UNIDO PSDPI Output Consolidation project, August 2012; surveyed associations: Iraqi Federation of Industries; Iraqi Businessmen Union; Federation of Iraqi Chambers of Commerce; Iraqi Institute of Economic Reform; Direc-torate Geberal of Industrial Development, MoIM; Iraqi Engineers Syndicate; Iraqi Private Banks League; Iraqi Con-tractors Union; Market Research and Consumer Protection Centre,Baghdad University; The Modern Agriculture Development Centre.


47

♦ suboptimalinvolvementinnationaleconomicreformandprivatesectordevelopmentini-tiatives;

♦ absenceofkeyservices suchasbusiness incubatorsand technologyparks/centersandexport support facilities at local and national levels.Management training, feasibilitystudies,etc.areonlyofferedatnationallevelandwithlimitedscope;

♦ weakadaptationandutilizationofICTfacilities;and

♦ severesustainabilityproblemscausing resulting inseveral institutionscompetingwitheachothertosecuremembershipsandfinancing.

♦ thatmostoftheseinstitutionsandassociationsreceivedirectorindirectsupportfromtheGovernment,therebylosingcredibilityandindependence.

7. The UN Global Compact Local Network

UNDPIraqlaunchedthisinitiativeinOctober2011inpartnershipwiththeGoI(inparticularCoMSecandthenPMAC).TheUNGCLocalNetworkaimsatpromotingasociallyandenvironmentallyre-sponsibleprivatesector,inalignmentwithglobalstandardsofsustainableandinclusivebusinesses33.

WithaninitialsmallnumberofIraqicompanieswhojoinedtheUNGCbycommittingtointegrateintheirbusinessoperationsthe10principlesoftheUNGC.

Sinceitsestablishment,theUNGCLocalNetworkgrewinsizeandvisibilitytobecomeanincreas-inglyrecognizedplatformforIraqicompaniescommittedtoraisetheirstandardsandcontributetotheeconomic,socialandhumandevelopmentofthecountry,asapartneroftheGoI.TheUNGCLocalNetworkincludestodateabout90organizationsrepresentingprivatecompanies,businessassocia-tionsandNGOsfromdifferentpartsofIraqanddiversifiedintermsofsizeandsector.

8. The Private Sector Development Center

EstablishedasanNGOwiththesupportoftheWorldBankin2011,thePrivateSectorDevelopmentCenter(PSDC)isapartnershipbetweenprivatesectorrepresentativeorganizationsaimedatidentify-ingkeybarrierstodoingbusinessinIraqandworkingwiththeGovernmenttoresolvethesebarriers.

Asajointprivatesectorbodyfocusedonreform,itpromotesaninclusiveandcompetitiveIraqipri-vatesectorthroughtrustbuildingandpublic-privatedialogue,advocatingforeconomicreformandmarketorientedactivitiesandcontributingtobusinessdevelopment,investment,economicgrowthandentrepreneurship.

Besidesfollowingupmajorinternationalfundedprogrammesandparticipatingtomajorreformrelatedevents,thePrivateSectorDevelopmentCenter:

♦ Cooperates, in theareaofWomenEconomicEmpowerment,with theChamberTradeSweden in Iraq,UNWomenand is in theprocessof launchingadedicatedmagazine(Nina).

♦ EstablishedworkinggroupstoreviewthedraftLaborlawandSocialSecurityLaw

♦ CooperateswiththeMinistryofPlanningonthereviewoftheonContractorsClassifica-tion Criteria.

33 The UN Global Compact (UNGC), the largest global CSR initiative, was launched in 1999 by UN Secretary General as a strategic policy initiative for businesses that are committed to align their operations and strategies with 10 universally accepted principles in the areas of: a) human rights, b) labor, c) environment, and d) anti-corruption.

Annex - 2Main Private Sector Development Related

Programmes


51

1. UNCTThePrivateSectorDevelopmentProgrammeforIraq(PSDP-I),2009-2012

ThePSDP-IimplementedbyUNAgencies34 incooperationwiththeTaskForceofEconomicRe-formsintervenedatbothupstreamanddownstreamlevels;inparticularandamongother:

♦ Assessment,draftingandproposalsforrevisedlaws,regulationsandamendmentsofin12coreareas(basiclegalframework,commercialregime,investmentregime,publicpro-curement,economicreform,public-privatepartnership,arbitrationandreconciliation,la-borcode,agriculturalregime,landregime,taxationandcustoms,banking).

♦ RestructuringofStateOwnedEnterprises(SOEs):surveysandoverallassessments,pol-icywork,guidelinesforimplementationandinstitutionalsetupsandpilotinterventions

♦ Economicsectors’reviewandInvestmentmapping

♦ Industry:coaching&trainingsupporttotheformulationofIraq’sIndustrialStrategy

♦ SMEdevelopment:SMEsurveys(inthreeselectedgovernorates),preliminarypolicyandlegislativework

♦ Guidelines for a PSD Strategy

♦ Preliminarystrategiesforthenon-oilmineralandsolarenergysectors.

2. UNDP UnderthePSDP-I,UNDPconductedtheSocio-EconomicInfrastructureNeedsAssessmentforKurd-istanRegion(SEINA),co-financedbyKRG.SEINAcoveredallhardinfrastructure(electricity,watersanitationandenvironment,transport,agricultureandirrigation,industry,electricityandsocialhous-ing)andsomesoftinfrastructure(health,education,vocationalandtechnicaleducation,tourism,ur-banplanningandsocialhousing)componentsinKurdistanRegionandhadthefollowingobjectives:

♦ Executearapidandbroad-basedSocio-EconomicInfrastructureNeedsAssessment(SEI-NA)ofspecificsectors;

♦ Recommendthepriorityinvestmentsandpolicychangesthatareneededtoaddresspres-entgapsandconstraintsand tomeetfuturerequirements in linewith theKRGVision2020 to support economic expansion, social development, and sustainabledeliveryofservicesthatmeetthehighestqualitystandards;and

♦ Identifyopportunitiesforattractingprivate,foreign,anddomesticcapitaltotheleadingproductivesectorsofagriculture,industryandtourism.

Inalloftheseinfrastructuresectors,SEINAfocusedonprivatesectorsituation,developmentneedsandinvestmentopportunities.

34 UNDP, UNIDO, ILO, UNOPS, UNHABITAT, FAO, UNIFEM/UNWOMWEN.


52

3. UNIDOEnhancingInvestmentstoIraqthroughIndustrialZoneDevelopment

Keyactivities/achievementsinclude:

♦ Improvinginstitutional,policyandregulatoryenvironmentforindustrialzonedevelop-ment;

♦ EnhancingcapacitiesofIraqistakeholderstoplan,financeandmanageindustrialzones;

♦ Ensuringappropriatefinancingandmanagementarrangementsfortheimmediatedevel-opmentofindustrialzonesintwoselectedlocations;

♦ Conductingmappingandanalysisofexistingindustrialzonesinfourgovernorates,par-ticularlyintermsofregulatoryandmanagementarrangementsadoptedandservicespro-videdtohostedcompanies;

♦ AnalyzingthelegalandregulatoryregimeaffectingdifferentaspectsoftheestablishmentandmanagementofindustrialzonesandprovidingadvisoryservicestotheGoIforelabo-ratinganindustrialzone-specificregulatoryandinstitutionalframework;

♦ Supportingthecreationofaninter-ministerialIndustrialZoneCommitteetocoordinateeffortstowardsthedevelopmentandoperationofindustrialzones;

♦ Draftinga roadmap for thedevelopmentof industrial zones, encompassing legal andregulatoryaspectsandoutliningzonedevelopmentandmanagementoptionsinlinewithinternationalbestpractices;

♦ ConductingaSWOTanalysis,anindustrialsurveyandanassessmentoftheprivatesec-torneedsintwopreselectedgovernorates(AlBasraandAlNajaf);and

♦ Preparationofafeasibilitystudyfortheestablishmentofanindustrialzoneintwose-lectedlocationsinAlBasraandAlNajafGovernorates.

SME Development Programme - Establishing a Network of Enterprise Development Centers (EDCs)


♦ Establishing4EDCsinBaghdad,Erbil,DhiQarandAlBasraGovernorates,providingawiderangeofservices that includedbusinessmanagement training(eLearning),andcounselingtoentrepreneurs,preparationofbusinessplansandfeasibilitystudies(UNIDOCOMFARmodel),financialcounselingandinvestmentpromotionsupport,particularlySupplierPartnershipeXchange(SPX)andinternationalpartnershipsupport.TheseEDCsprovidedsupporttoaround600SMEprojects;

♦ Facilitating,since2010,morethan1000B2BinitiativesbetweenIraqiSMEsandforeignSMEs;

♦ Supportingatleast37documentedinternationalbusinesspartnershipand/orRFQforanestimatedvalueofoverUS$21million;and

♦ Data-basingandbusinessmatchmakingusingadvanceITsolutions(SPX-MIS)


53

Enhancement of Trade Capacities and Performance - Upgrade of the National Quality System (the Legal Framework and Infrastructure for Standards, Accreditation, Metrol-ogy, and Conformity Assessment)


♦ Draftingnationalqualitymanagementpolicyandstrategicactionplan;

♦ StrengtheningCentralOrganizationforStandardizationandQualityControl’scapacityintheimplementationofthenationalqualitysystem,includingtheprovisionofconformityassessmentservices(i.e.testing,certification,inspection);

♦ Establishinganindependent,internationallyrecognized,nationalaccreditationbody;

♦ Accreditingupto5testing/calibrationlaboratories,onecertificationbodyandonein-spectionbody(fromCOSQCwherepossible)aspilotprojectfortheNationalAccredita-tionBody;

♦ Drafting thenational tradepolicyframework to fosterprogress in theWTOaccessionprocess;and

♦ Developingcapacityoftheprivatesectortoidentifyandarticulateinterestsinrelationtotrade and WTO negotiations.

Support to the Iraqi Federation of Industries (under preparation)

TheobjectiveofthisassistancewillbetoimproveIFI’scapacitiestoprovideservicestotheIraqiprivatesector,throughinterventionsinfourmainareas:

♦ Strategyandgovernance;

♦ Databasedevelopmentandmanagement;

♦ Provisionofbusinesssupportservices;

♦ Partnershipandinvestmentpromotionservices).

4. The World Bank

Formulation of the Governance Action Plan of the GoI (in cooperation with UNDP)

TheGAPaimstocollateandconsolidategovernanceinterventionsacrosstheGoIwiththeultimatepurposeofcoordinating,tracking,performancemonitoringandevaluatingandprioritizingresources.TheGovernanceActionPlanisbasedon:

♦ Transparency,thatensuresavailabilityofinformationtothepublicandclarityofgovern-mentrules,regulations,anddecisions.Thisisthefoundationuponwhichbothaccount-abilityandparticipationarebuilt;

♦ Accountability,thatobligespower-holderstoaccountforortakeresponsibilityfortheiractions(includingfinancialmanagement);and

♦ Participation,wherecitizens(stakeholders)participateandinfluencedecisions,policies,budgetsandgovernmentactivitiesthataffectthem;mainfocusareasincludelegislationandregulationsfosteringprivatesectordevelopmentandSOEsreformandPPP.


54

The Private Sector Development Center35

Support to the establishment of the Private SectorDevelopmentCenter (PSDC) as a partnershipamongPrivateSectorrepresentativeorganizationsaimingat:

♦ identifyingkeybarrierstodoingbusinessinIraqandworkingwiththeGoItoresolvethesebarriers

♦ workingwiththeGoItoresolvethesebarriers

♦ contributing tobusinessdevelopment, investment,economicgrowthandentrepreneur-ship.

Business Planning and Public Private Partnerships


♦ Providingsupporttothree‘pilot’SOEs:theStateCompanyforDrugIndustries(SDI),theStateCompanyforMechanicalIndustries(SCMI)andAlMansourStateContractingCompany;

♦ Developingpracticalbusinessplans,focusingbusinessoperationsoncoreactivitiesandmarkets and structural reformswithin these SOEs, aiming also at attracting potentiallong-termjointventureswithsuccessfulprivatecompanies;

♦ Preparing“offtake”arrangementsforexcessemployees;

♦ SupportingtheestablishmentofjointventurebetweentheStateCompanyforDrugIn-dustriesandJordan’sMunirSukhtianPharmaceuticalGroup;and

♦ SettingnewbusinessmodelforAlMansourStateContractingCo. that focuseson theconstructionoflowincomeandaffordablehousingandbasedonaPPPjointventure.

Corporatization of SOEs and Asset Valuation

♦ Supporting,in2012,thecreationoftheAssetValuationUnitwithintheMinistryofFi-nanceascontributiontoSOEscorporatizationprocessestooverseeandcoordinatingSOEassetinventories,developinganddisseminatingstandardtemplatesandmanagingcentralrepositoryofassetdata.

Regulatory Reform

♦ EstablishinghighlevelRegulatoryReformUnits(RRUs)tosupportingtheCoMinas-sessingtheimpactsofproposedlegislations/regulations;and

♦ DevelopingcapacityandprovidingtechnicalassistancetoestablishedRRUsonRegula-toryImpactAnalysis(RIA),Cost-BenefitAnalysisandrelatedtoolstoensuretheeffec-tivenessofthesereviewsandreforms.

35 See also Annex 2.


55

5. International Finance Corporation (IFC) ♦ Support to theMinistryofElectricityfor improving internalgovernanceprocessesfor

managingandlaunchingIPP/PPPs.

♦ US$300milliontotalinvestments(2008-2013)supportingprivatesectorandleveragere-gionalinvestmentsinthecement(Lafarge),banking,telecommunication(Zain,US$155million),logisticsandwarehousing(Gulftainerco.,US$45million),hotelandfinancial(US$45million)sectors.

6. USAID

TijaraProvincialEconomicGrowthProgramme


♦ Microfinancing;

♦ SMElendingandguaranteeschemes;

♦ NetworkofBusinessdevelopmentservices;

♦ Businessenablingenvironmentandinvestmentpromotion;

♦ Youthentrepreneurship;and

♦ WTOaccessionassistanceandnormalizationofinternationaltrade.

TarabotProject

Keyactivities/achievementscovered3components:

♦ CivilServiceReform;

♦ NationalPolicyManagement;and

♦ AdministrativeDecentralization.

Tarabotaimedatreducingtheregulatoryburdenincoreeconomicareas,creatingaNationalHumanResourcesManagementInformationSystem,strengtheninggovernance,youthentrepreneurshipandsustainabilityaswellastheproposedNationalCenterofGovernmentExcellence.

7. Iraq Middle Market Development Foundation (IMMDF)IMMDFofferedmultipletypesoflendingproductstoIraqiprivateenterprises:

♦ MiddleMarketEnterprise(MME)Loan

♦ MMEloanproductrangesfromUS$500,000toUS$5,000,000.Theloanshavebeenusedfor the purchaseof equipment and/orworking capitalwith amaximummaturity of 5years.

♦ SmallandMediumEnterprise(SME)Loan

♦ SMEloanproductrangesfromUS$35,000toUS$500,000.Theloanproceedshavebeenusedtopurchaseequipmentand/orworkingcapitalwithamaximummaturityof5years.


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♦ AgribusinessLoan

♦ TheagribusinessloanproductrangesfromUS$35,000toUS$2,000,000.Theloanshavebeenexclusivelyusedtopurchaseequipmentand/orworkingcapitalspecificallyrelatedtoagriculturalproduction.

8. Japan International Cooperation Agency (JICA) JICAiscurrentlyprovidinginfrastructuredevelopmentloans(electricity,watersupply,transporta-tion,oilexportfacilitiesanddownstreamindustries,etc.)andtheassociatedcapacitydevelopmentand trainingassistance forproject cyclemanagement (planning,procurement, implementation,fi-nancialmanagementandmonitoringandevaluation),standardizationofGoI’slegalandregulatoryframeworksandmanagementpractices.TheultimatepurposeisenhancingforeigndirectinvestmentaswellasGoI’sFederalBudgetexecution.

9. UNHCR – UNHABITAT FacilitatingPrivateSectorInvestmentinDurableSolutionsinIraq

Thisnewjointprojectfocuseson

♦ Assessmentandcreationofopportunitiestoattractprivateinvestmentinthehousingsec-torinsuchawayastobenefitvulnerableIDPorreturneecommunities;and

♦ Achievementofdurablesolutionsusinghousingconstructionasacatalyst.

Annex - 3Activity Profiles


59

List of Activities

# Activity

Pillar I: Understanding the Private Sector

1. 1. Surveyingtheformalandinformalprivatesectorinthegovernorates

1. 2. DevelopingmoderninformationsystemsfortheGovernmentandprivatesectorstakeholders

1. 3. DevelopingcapacityintheGovernmentandtheprivatesectorstakeholdersforutilizinginforma-tion,planning,trackingprogressandreporting

1. 4. Developinganetworkofbusinessregistrationcentersandvalidatedata

Pillar II: Improving the Business Environment

2. 2. Revise,simplifyandissuenewlawsintheregulatoryframeworkgoverningtheprivatesector,withaviewtoreducingredtape

2. 3. Reviseproceduresandrulesforimprovedaccesstofinancefortheprivatesector

2. 4. Developandproposenewpoliciesandstrategicplans targeting thepriority sectors that supportprivatebusinessengagement

2. 5. Introduceincentivesfornewinvestments,innovationandincreasingtheregistrationofbusinesses

2. 6. Strengthenqualitycontrolmanagement,qualityassuranceandcertificationsystems

2. 7. Fortifytheprivatesectorinstitutionsandassociationsandthecoverageofservicestotheirmember-ship

Pillar III: The SME Programme

3. 1. Provisionofcounseling,advisory,businessplanning,trainingandnetworkingservicestoSMEs

3. 2. EstablishmentofaFundtoprovideseedcapitalsoftloansandloanguaranteesforbusinessestoes-tablishnewenterprises,increasecompetitiveness;andtopromoteentrepreneurshipandinnovation

3. 3. Establishmentofaspecialprogrammetocreatebusinessopportunitiesfortheprivatesector,includ-ingSMEs,withSOEsandlargecompanies

3. 4. DevelopmentofIndustrialZones,BusinessIncubators,BusinessDevelopmentCentersandsimilarinitiatives

3. 5. EstablishmentofadedicatedgenderunittofostergenderawarenessandgenderinclusioninPSDandincreasejobopportunitiesforwomenintheprivatesector

3. 6. LaunchofaPublicAwarenessCampaign

Pillar IV: The Implementation Pillar

4. 1. EstablishmentofanoverallmanagementandcontrolsystemforthePSDS

4. 2. EstablishmentofaPRIUtoorganizeandsupervisetheactionsinallPillars

4. 3. EstablishmentofanationalSMEAgency

4, 4. EstablishmentofanindependentM&Esystem


60

Introduction1.Annex-3comprises21ActivityProfilesthatconstitutethegeneraloutlineofthedetailedaction

plansofthePSDSinPhaseOne2014-2030.TheseActivityProfilersaredistributedasfollows:

♦ PillarI:4activities

♦ PillarII:7activities

♦ PillarIII:6activities

♦ PillarIV:4activities

2.TheseActivityProfileshavebeenpreparedaccordingtothelatestavailableinformationandes-timates.Consequently,detailedactionplanmightincluderevisionstothecomponentsandesti-matesaccordingtothelatestdevelopments.

3.ThePRIUandthecompetentministrieswillpreparethedetailedactionplansinaccordancewiththeActivityProfile.ThePSDC,whenestablished,willoverseethepreparationandintegrationofthesedetailedactionplans.

4.IntheTransitionalPeriod,anduntilthePSDCisestablished,theTFER,thePRIUandthecom-petentministrieswill prepare detailed action plan for the activities of theTransitional PeriodspecifiedinSection5.10.andTable-4inclosecoordinationwithprivatesectorinstitutionsandassociationsandwillensureCoMendorsementandtherequiredbudgetaryallocationsinthetime-framesetforeachoftheseactivitiesinTable-4.

5. ThestartlinefortheimplementationoftheactivitiesoftheTransitionalPeriodwillbethedateofCoMendorsementofthePSDS.OtheractivitieswillhavethestartlinesindicatedinTable-2.However,mostoftheseactivitiesareexpectedtocommenceinApril2014.


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Pillar I: UNDERSTANDING THE PRIVATE SECTOR

Activity Profiles Nos. I-1 and I-21. Activity Titles • Surveyingtheformalandinformalprivatesectorinthegovernorates

• DevelopingmoderninformationsystemsfortheGovernmentandpri-vatesectorstakeholdersandvalidatingalldatafromsurveysandothersources

2. Coordinating Entity PSDC / PRIU

3. Implementing Entity PRIUincollaborationwithMoP,MoIM,MoTlocalgovernmentsandprivatesectorinstitutionsandassociations

4. Oversight Entity PSDC5. Related Activities5. 1. COSSurveysandStatistics5. 2. ICA(WorldBank)5. 3. ILOSMEsSurvey5. 4. OutcomesofActivitiesII-1toII-55. 5. InformationandstatisticsavailablewithTFER,ministries,localgovernmentsandprivatesec-

tor institutions and associations6. Brief Description

6. 1. Objective TomakeavailabletotheGovernmentandprivatesector,accurateinfor-mationontheformalandinformalprivatesector,forstrategicplanninganddecisionmakingpurposes

6. 2. Beneficiaries Government,localgovernments,privatesectorstakeholdersandinves-tors

6. 3. Phase 1 Target Allgovernorates

6. 4. ScopeofWork6. 4. 1. Preparation

and Planning• Reviewofprevioussurveysandavailabledatabasesandstatistics;• Conductgapandneedsanalysisfordata,informationandITsystems;• Definethebusinesses’census,fieldsurveyandupdatingmethodolo-giesaswellastheoutreachplan(includingthepreparationoftailoredquestionnaires);

• Designtheinformationsystem(database);• Set-uptheimplementationarrangementsandplan.• Launchingafirstpublicawarenessandcommunicationcampaign

6. 4. 2. Implementa-tion

• Procurementofhardwareandsoftware• Launchofbusinesscensusandfieldsurveys• Datafiling,processinganduploadingintothedatabase• Dataanalysis,presentationandadministration

7. Expected Outputs Surveyscompletedanddatabasesestablishedinallgovernoratesforac-cesstotheGovernmentandprivatesectorstakeholders

8. Roles and Responsibilities

8. 1. CentralandLocalGovern-ments

•Managementarrangementsandcoordination;•Mobilizationofhumanandfinancialresources;• Visibilityandoutreachcampaign.


62

8. 2. PrivateSectorStakeholders • Identificationofleader/administrator;• Providing access to information, updates, circulation ofquestionnairesandresponses;

• Buildingawarenessofprivatebusinesses;•Mobilizationofinternalresourcesandstaff.

9. International Support Required

10. Time Frame

10. 1. Total duration 45months

10. 2. Overallplanningandpreparation months0-6

10. 3. Procurementofexternalservices months3-6

10. 4. Setting-uptheinstitutionalandcontractualar-rangements months3-6

10. 5. Conductingreviews,surveysanddatafiling months9-42

10. 6. Dataprocessing,analysis,presentationandad-ministration months24-45

10. 7. CompletionandplanforPhase2surveys months24-45

11. Indicative Budget

Item Cost (million ID)

11. 1. ProcurementEquipment 500

11. 2. ProcurementofTechnicalConsultingServices 2,000

11. 3. Operatingandmaintenancecosts 1,500

11. 4. Training,Conferences,Workshops,etc. 500

11. 5. Travel,Communication,Publications 500

Total 5,000


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Pillar I: UNDERSTANDING THE PRIVATE SECTORActivity Profile No. I-3

1.

Activity Title DevelopingthecapacityoftheGovernmentandprivatesectorstake-holdersforutilizinginformation,planning,trackingprogressandre-porting;

2. Coordinating Entity PRIU

3.

Implementing Entity PRIU,MoP,localGovernments,privatesectorinstitutionsandasso-ciationsandinternationaldevelopmentpartners

4. Oversight Entity PSDC

5. Related Activities

5. 1. UNIDOAssistancetoIraqiFederationofIndustries(underpreparation)

5. 2. ActivitiesII-3,II-6

6. Brief Description

6.1. Objective(specific) Toefficientlymanageand/orcontributetotheimplementationofthe

activitiesunderPillarIIandPillarIII

6.2. Beneficiaries Privatesectorinstitutionsandassociations,MoPandrelevantminis-

tries

6. 3. Phase 1 Target Privatesectorinstitutionsandassociations,MoPandrelevantminis-tries

6. 4. ScopeofWork

6. 4. 1. PreparationandPlanning

• Capacitydevelopment/trainingneedsassessment•Consultations• Designandorganizationofcapacitydevelopmentprogrammes• Selectionoftopicsandcasestudies• Organizationofcapacitydevelopmentgroups

6. 4. 2. Training • Formulationofstrategies,plansandreports• Technicalandeconomicfeasibilitystudies• Planningandbudgeting• Projectcyclemanagement• Utilizationandprocessingofdata• Financialanalysisandreporting•Workingwithindicators•Monitoringandevaluation•Case studies


64

7. Expected Outputs Plans,policies,strategies,reportsandfeasibilitystudiesunderPillarII and Pillar III


8. 1. Central and Local Governments

• ArrangementandcoordinationwithPRIUandprivatesectorinstitu-tions and associations

• Selection of trainer• Selection of trainees•Mobilizationfinancialresources• ProvisionoftrainingvenuesandITfacilities

8. 2. PrivateSectorStake-holders

• Identificationofleader/administrator;• Selection of trainees•Mobilizationofinternalresourcesandstaff.


10. Time Frame


10. 2. Preparationandorganization months0-6

10. 3. Training cycles months6-30

10. 4. Impactassessment month27-30


Item Cost (million ID)11. 1. Procurementofequipment 10011. 2. Procurementofexternalservices 60011. 3. Training, Conferences, Work-

shops,etc. 300

11. 4. Travel,Communications,Publi-cations 300

Total 1,300


65

Pillar I: UNDERSTANDING THE PRIVATE SECTORActivity Profile No. I-4

1. Activity Title Developinganetworkoflocalbusinessregistrationcenters.2. Coordinating Entity PSDS / PRIU3. Implementing Entity MoT /DepartmentofBusinessRegistration, localgovernments,

ChambersofCommerceandotherprivatesectorinstitutionsandassociations

4. Oversight Entity PSDC/PRIU,MoT,localgovernments


5. 1. PreviousworkinMoT(TijaraandUNDP)

5. 2. ActivitiesI-1,I-2,I-3,II,4


6. 1. Objectives ImprovingbusinessregistrationintheGovernorates

6. 2. Beneficiaries Formalandinformalprivatesector

6. 3. Phase 1 Target AllGovernorates.

6. 4. ScopeofWork6. 4. 1. PlanningandPrepa-

ration • Planning,designandprioritization• Allocationofhumanandfinancialresources• Issuingrelatedinstructionsandsettingworkprocedures• Capacitydevelopment• Publicawarenessandcommunication

6. 4. 2. Implementation • Openingandoperationalizationoflocalbusinessregistrationcenters

•Training•Monitoringandevaluation

7. Expected Outputs LocalBusinessRegistrationCentersestablished, interconnectedwithMoT›sDepartmentofBusinessRegistrationandstartingtooperateinall18governorates


8. 1. MoTandLocalGovern-ments

• ArrangementandcoordinationwiththePRIUandprivatesectorinstitutions and associations

•Mobilizationofhumanandfinancialresources• Provisionofmanagementandadministrativesupport• Provisionofcapacitydevelopmentservices• Provisionofpublicawarenessandcommunicationsupport

8. 2. PrivateSectorStakehold-ers

• Provisionofcounselingservicesandpublicawarenessandcom-municationsupport



66

10. Time Frame


10. 2. PlanningandPreparation months0-9

10. 3. Implementation(phased) months9-42

10. 4. Impactassessment months18-21

months39-4211. Indicative Budget


11. 1. ProcurementofEquipment,OfficeSpaceandOfficeFacilities 1,000

11. 2. Administration 1,000

11. 3. Training 100

11. 4. Operatingcosts 5,000

11. 5. Travel,Communication,Publication 100

Total 7,200


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Pillar II: IMPROVING THE BUSINESS ENVIRONMENT

Activity Profile No. II-11. Activity Title Revise,simplifyandissuenewlawsintheregulatoryframeworkgoverning

theprivatesector,withaviewtoreducingredtape.

2. Coordinating Entity PSDC3. Implementing Entity PRIUandTFER(adinterim)incooperationwithMoP,MoIM,MoT,MoA,

MoLSA,NationalInvestmentCommissionandprivatesectorinstitutionsand associations

4. Oversight Entity CoM

5. Related Activities1. AssessmentanddraftingworkcarriedoutunderthePSDP-IincooperationwiththeTFER›s

WorkingGrouponLegislationandbyothernationalandinternationalorganizations

5. 2. EstablishmentofRegulatoryReformUnits(RRUs)tosupporttheCoMinassessingtheimpactsofanyproposedlegislations/regulations(WorldBank)

5. 3. ActivitiesII-2,IV-2,IV-3

6. Brief Description6. 1. Objectives Tohaveinplacestreamlinedpolicies,laws,regulationsandproceduresthat

fosterprivatesectordevelopment

6. 2. Beneficiaries Allpublicandprivatesectorinstitutionsbycompetence

6. 3. Phase 1 Target LawsofFederalEconomicReform,Investment,PPP,Landregime,Pub-licProcurement,Banking,Custom,Labor,Companies,PublicCompanies,Competition,ConsumerProtection,Trade,Arbitration,TaxationandCus-toms.


and organi-zation

• EstablishmentofjointGovernment37-privatesectorworkinggroupunderthe PSDC

• Definitionofprioritiesandsettingtheagenda• Review,revisionandadoptionofimprovedlegislationsandregulations• Conductinginitialpublicawareness,outreachanddissemination

6. 4. 2. Implemen-tation

• Conductingconsultationsonspecificissuesandachieveconsensus• Reviewandintegrationofpendingdrafts• Preparationofnewdraftlawsand/oramendments• Harmonizationoflawsandregulations• SettingdeadlinesforsubmissiontotheCabinet• Follow-upontheprocessoflegislationandpromulgationwiththecom-petentauthoritiesoftheGovernment

• Continuingpublicawareness,outreachanddissemination

37 - Including also CoMSec, Local Governments, State Shura Council, banking sector.


68

7. Expected Outputs Prioritylawsandregulationsenactedandenforced

8. Roles and Responsibilities8. 1. Government • Ensurecloseconsultationandactiveparticipationoftheprivatesector

•Mobilizationofspecializedexpertise• Organizationofpublicawarenessanddisseminationevents• Streamliningandacceleratingthedrafting,review,adoptionandenforce-mentprocesses

8. 2. PrivateSectorStakeholders

• Provisionofcoordinatedopinions,recommendationsandinputs• Contribution to public awareness anddissemination campaigns amongprivatesectorbusinesses


10. Time Frame10. 1. Total duration 48months

10. 2. Establishmentofjointpublic-privateconsultationgroupandworkagendas

months4-9

10. 3. Recruitmentofnationalandinternationalexperts months4-910. 4. Review,integration,draftingoflawsandregula-

tionsmonths9-30

10. 5. Adoptionandenforcement months2-4811. Indicative Budget

Item Cost (million ID)11. 1. Procurementofequipment 5011. 2. Procurementofexternalexpertise 2,00011. 3. Consultations,Conferences,Workshops,etc. 50011. 4. Travel,Communication,Publications 500

Total 3,050


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Activity Profile No. II-2

1. Activity Title Reviseproceduresand rules for improvedaccess tofinance for theprivatesector

2. Coordinating Entity PSDC

3. Implementing Entity MoF, PRIU, National SMEAgency, private sector institutions andassociationsandinternationaldevelopmentactors(technicalsupportonly)



5. 1. FederalBudgetallocationsforSMEdevelopmentandtheprivatesectoringeneral5. 2. Existingfunds(theIndustrialBank,theAgriculturalBank,theHousingFund,KRGrevolving

fundforSMEdevelopment,IMMDF38 andmicrofinanceschemes)

5. 3. Previousandongoinginternationalfundedassistancetothebankingsector

5. 4. ActivitiesI-1,II-I,II-3,II-4,II-6,III-2,IV-2,IV-3

6. Brief Description6. 1. Objective Improvedaccesstofinancefortheprivatebusinessthroughtheestab-

lishmentofaseedcapitalandguaranteefund

6. 2. Beneficiaries Privatesectorbusinesses

6. 3. Phase 1 Target MoF, CBI, commercial banks (both state-owned and private), theSMEAgencyandlocalgovernments

6. 4. ScopeofWork6. 4. 1. Preparation of

the policy andregulatoryframe-works

• Consultationsfordefinitionofpriorityareasofintervention,instru-mentsandcriteria,includinglongertermmaturityterms,adequateinterestrateandguaranteesystem

• Design of a partially decentralized seed capital and guarantee fi-nancialschemetosupporttheprivatesectoratthecentralandlocallevels

• AppointmentofInterimFinancingSchemeManager39

• Preparation and adoption of needed legislative and regulatoryframeworksinconsistencywithActivitiesII-1andIII-2

6. 4. 2. Capacity Devel-opment

• TrainingofCentralandLocalGovernments,privatesectorinstitu-tionsandcommercialandsectoralbankson riskanalysis, invest-mentprojectfinancing,financialmanagement,monitoringandeval-uationandotherrelevantareas

7. Expected Outputs • Legalandregulatoryframeworkandmanagementplanforaseedandguaranteefundestablishedandadoptedforimplementationun-derActivityIII-2.

• Adoptedoverallpolicyonaccesstofinanceforprivatebusinesses,particularlySMEs.

38 -Iraqi Middle Market Development Foundation (CHF).39 - It is proposed that the PRIU, under the supervision of the PSDC, will initially manage the fund and transfer sub-

sequently this function to the SME Agency, once established.


70

8. Roles and Responsibilities8. 1. CentralandLocalGov-

ernments• Facilitationofconsultativeprocessesandachievementofconsensus• Arrangementswithprivatesectorinstitutionsandcommercialandsectoralbanks,bothstare-ownedandprivate

• Adoptionandenforcementofrelevantpolicylegislativeandregula-toryframeworks

• Statebudgetallocations,alsoforinterestsubsidies

8. 2. Private Sector Stake-holders

• Providecoordinatedopinionsandinputs• Contributetothedefinitionofrolesandcompetenciestobereflect-edintherelevantlegislativeandregulatoryframework


10. Time Frame

10. 1. Total duration 30months10. 2. JointGovernment-privatesector(incl.banks)consultations months0-610. 3. Recruitmentofnationalandinternationalexperts months3-610. 4. Policyformulationandadoption months6-910. 5. Review,integration,draftingadoptionandenforcementofleg-

islativeandregulatoryframework months9-30


Item Cost (million ID)11. 1. Procurementofexternalexpertservices 1,00011. 2. Conferences,Workshops,Consultations,Training,etc. 30011. 3. Travel,Communications,Publications 100

Total 1,400


71


Activity Profile No. II-31. Activity Title Developandproposenewpoliciesandstrategicplanstargetingthepri-

oritysectorsthatsupportprivatebusinessengagement.

2. Coordinating Entity PSDC3. Implementing Entity PRIUandprivatesector institutionsandassociations, incooperation

withrelevantministries,localgovernmentsandSMEAgency



5. 1. I-1,I-2,I-3,II-6,IV-3,IV-4

5. 2. INES,theIndustrialStrategy,otheravailablesectorpoliciesandstrategies

6. Brief Description6. 1. Objectives Tohavestreamlinedpolicies,strategiesinplacefosteringprivatesec-

tordevelopment6. 2. Beneficiaries Centralandlocalgovernmentsandallprivatesector

6. 3. Phase 1 Target CentralGovernment,localgovernmentsandallprivatesector

6. 4. ScopeofWork6. 4. 1. Preparationand

Planning• Organization,consultationsandmobilizationofstakeholders• Reviewandupdateofexistingrelevantpolicies,sectorstrategiesandframeworks

• ProcessingofsocialandeconomicdataassurveyedunderI-1• Harmonizationofcriteriaandstructuresofpoliciesandstrategies

6. 4. 2. Implementation • National, regional, local and international analyses; benchmarkinganalysis

• FormulationofnationalandlocalsocialmitigationplansforexcessSOEemployeesandcreationofnewjobs.

• Formulationofpoliciesandstrategiesinkeyeconomictargetsectors

6. 4. 3. Dissemination • Consultationsanddisseminationevents7. Expected Outputs Policiesandstrategiespreparedandadoptedinpriorityareasandsec-

tors(socialmitigationandPSDStargetedeconomicsectors)8. Roles and Responsibilities8. 1. Central and Local

Governments• Ensure coordination, consultations and active participation of rel-evantministriesandtheprivatesector

• Setarrangementswithprivatesectorinstitutionsandassociationsfortheirdirectcontribution

• Allocateresourcesfortherequirednationalandinternationalexper-tise

• Organizeawarenessdisseminationevents• Ensureadoptionofpoliciesandstrategicplans


72

8. 2. Private Sector Stake-holders

• Providecoordinatedopinions,recommendationsandinputs• Establishment of necessary central and provincial organizationalframeworkforactivityimplementationandfinalizationofarrange-mentswiththecentralandlocalgovernmentalstakeholders

9. International Sup-port Required

10. Time Frame

10. 1. Total duration 27months10. 2. Establishmentofjointpublic-privateconsultationgroups

bysector months0-3

10. 3. Recruitmentofnationalandinternationalexperts months0-610. 4. Collection,organizationandreviewofavailabledata,

statistics,reports,policiesandplans months3-9

10. 5. Implementation(formulations,reviews,adoption) months6-27



11. 1. Procurementofequipment 100

11. 2. Procurementofexternalservices 5,00011. 3. Training,Conferences,Workshops,etc. 50011. 4. Travel,Communications,Publications 500

Total 6,100


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Activity Profile No. II-41. Activity Title Introduceincentivesfornewinvestments,innovationandincreasing

theregistrationofbusinesses.

2. Coordinating Entity PSDC3. Implementing Entity PRIU,MoF,MoIM,MoT,localgovernments,NationalSMEAgency

andprivatesectorinstitutionsandassociations

4. Oversight Entity PSDCandlocalgovernments

5. Related Activities5. 1. ExistinginstrumentsundertheLawofInvestmentNo.13(2006),LawNo.2(2009)Amending

theLawofInvestmentNo.13(2006)andCoMRegulationNo.7(2010)

5. 2. ActivitiesI-1,I-4,II-I,II-3,II-6,III-2,III-3,III-65. 3. Recentandongoingworkontaxsystemreform(USAIDEconomicGovernanceIIProject)

6. Brief Description6. 1. Objectives Tohaveincentivesinplaceforincreasingproductionandinnovation,

the registrationofbusinesses,private investment and increasedem-ployment

6. 2. Beneficiaries Privatebusinesses,particularlySMEs

6. 3. Phase 1 Target MoF,MoT,MoIM,localgovernments

6. 4. ScopeofWork6. 4. 1. Policy and

Regulatory Framework

• Consultationsfordefinitionofapplicableincentives,priorityareas,instruments,procedures,andeligibilitycriteria(realsoIII-2)

• Formulation and adoption of specific policy framework, coveringalsoII-2

• Preparation and adoption of required legal and regulatory frame-workinconsistencywithlinkedactivities

6. 4. 2. Awareness,Dis-seminationandOutreach

• Organizationofdisseminationeventsinallgovernoratesincoopera-tionwithprivatesectorinstitutionsandassociationswiththesupportofthebusinessregistrationcenterstobeestablished

7. Expected Outputs • Regulatoryframeworkandproceduresestablishedandenforcedforfinancialandfiscalincentives

• Gradualincreaseininformalbusinessesregistration8. Roles and Responsibilities8. 1. Central and Local

Governments• Facilitationofconsultationprocessandachievementofconsensus• Arrangementswith private sector institutions and associations forjointdisseminationevents

• Adoptionandenforcementofrelevantpolicylegislativeandregula-toryframeworks


• Provisionofcoordinatedopinionsandinputs• Organizationofdisseminationeventsinthegovernorates


74


10. Time Frame

10. 1. Total duration 21months10. 2. JointGoI-privateconsultationsandreviews months0-310. 3. Recruitmentofnationalandinternationalexperts months0-610. 4. Policyformulationandadoption months6-1810. 5. Review,integration,drafting,adoptionandenforce-

mentofrelevantlaws,regulationsandmanuals months6-21

10. 6. Disseminationevents months6-21

11. Indicative Budget (ID)

Item Cost (million ID)11. 1. Procurementofexternalexpertise 30011. 2. Training,Conferences,Workshops,etc. 10011. 3. Communication,Consultation,Publication 100

Total 50040

40 - Complementary budget to that of activity II-2.


75


Activity Profile No. II-51. Activity Title Strengthenqualitycontrolmanagement,qualityassuranceand

certificationsystems

2. Coordinating Entity PSDC3. Implementing Entity MoP / Central Organization for Standardization and Quality

Control,MoT,MoIM,PRIU (technical advice), private sectorinstitutionsandassociationsandinternationaldevelopmentac-tors(technicalsupportonly)

4. Oversight Entity CoM, PSDC

5. Related Activities5. 1. UNIDO(SIDAfunded)regionalprogrammeonqualityinfrastructureupgrading(legalframe-

workandinfrastructures)

5. 2. ActivitiesII-1,II-6,III-1,III-2

6. Brief Description6. 1. Objectives • Improvingnationalqualitymanagementandcertificationsys-

tems.• ImprovementoftradecapacityandperformanceinIraq,fos-tering integration into the regional and multilateral tradingsystem

• Upgrading thenationalquality system (i.e. legal frameworkandinfrastructureforstandards,accreditation,metrology,andconformityassessment)

6. 2. Beneficiaries MoP(COSQC),MoT,MoIM,allprivatesector

6. 3. Phase 1 Target MoP(COSQC),MoT,MoIM,allprivatesector

6. 4. ScopeofWork6. 4. 1. Policy and Regulatory

Framework• Adoption of relevant national policy and legislation frame-work,inlinewiththenationalqualitymanagementgoals

• Ensuring consensus and commitment among all concernedstakeholders,includingministries,regulatoryauthorities,aca-demia, private sector institutions, standardization / accredi-tation bodies, governmental and private inspection bodies,certificationbodies,metrologyinstitutionsandconsumeras-sociations

6. 4. 2. Implementation41 • Supporting the private sector in certification processes andprocedures

• UpgradingthequalityinfrastructureoftheGoI

6. 4. 3. AwarenessDissemi-nation and Outreach

• Preparationofdisseminationandoutreachplan• Organizationofatleastoneeventineachgovernorate• Publicationofguidelinesandmanuals

41 - Training is already covered by UNIDO programme


76

7. Expected Outputs • Nationalqualitycontrolandqualityassurancepolicypreparedandenforced,qualitycontrol,qualityassuranceandcertifica-tionsystemestablished/upgraded

• EnhancednationaltradepolicyframeworkfosteringprogressintheWTOaccessionprocess

• Improvedimports’qualitycontrolandinspection


8. 1. CentralandLocalGovern-ments

• ImplementsupportmeasurestoenhancetheimpactofUNIDOproject and ensure future sustainabilityin terms of nationalqualitypolicy,relevantlegislationandapplicationofstandards

• Allocateresourcesfortherequiredsub-activities42

8. 2. PrivateSectorStakeholders • Disseminate and apply quality standards, norms and proce-dures,aswellascertification

• CooperatewithGovernmental stakeholders in the organiza-tionofevents


10. Time Frame

10. 1. Total duration 42months10. 2. Recruitmentofnationalandinternationalexperts months0-610. 3. Review,revision,adoptionandenforcementofrel-

evantnationalpolicyandlegislation months6-15

10. 4. Qualityinfrastructuresupgrading months12-42

10. 5. Supporttoqualitycertifications months12-4210. 6. Preparation of guidelines and manuals months 15 - 3610. 7. Awareness,disseminationandcommunication months12-4211. Indicative Budget (ID)


11. 1. ProcurementEquipment 10,000

11. 2. Procurementofexternalservices 5,00011. 3. Training,Conferences,Workshops,Publicationsetc. 1,500

Total 16,500

42 - Certifications for SMEs will be funded under Activity III-2 (seed capital fund).


77


Activity Profile No. II-61. Activity Title Fortifytheprivatesectorinstitutionsandassociationsandthecover-

ageofservicestotheirmembership2. Coordinating Entity PSDC3. Implementing Entity PRIUincollaborationwithprivatesectorinstitutionsandassociations4. Oversight Entity PSDC5. Related Activities5. 1. AllActivitiesofthePSDS5. 2. UNIDOsupporttotheIraqiFederationofIndustries(underpreparation)5. 3. UNIDOassessmentofprivatesectorinstitutionsandassociations(PSDP-I)5. 4. PrivateSectorDevelopmentCenter(supportedbytheWorldBank)5. 5. UNGlobalCompact(UNGC)LocalNetwork

6. Brief Description6. 1. Objectives Toimprovethequalityofservicesprovidedbyprivatesectorinstitu-

tionsandassociationstobusinesses6. 2. Beneficiaries Allkeyprivatesectorinstitutionsandassociations

6. 3. Phase 1 Target Allkeyprivatesectorinstitutionsandassociations

6. 4. ScopeofWork6. 4. 1. Overall Assess-

ment and Re-view

•Missionandservices• Representationandmembershipoutreach• Organizationandcompetencies• Legalandregulatoryframeworkandby-laws• Self-sustainability• Advocacyandcoordinationwithotherinstitutions

6. 4. 2. Review, Formu-lation, AdoptionandImplementa-tion of strategies andplans

• Reformulationofmissions,objectives,roles,internalorganization,by-lawsandensuringpoliticalindependence

• Harmonizationandintegrationoffunctionsandservicesamongpri-vatesectorinstitutionsandassociations

• AdvisoryservicestotheprivatebusinessestotheimplementationofthePSDSactivities

• Annualactionplansandbudgets• Humanresourcesmanagementandcapacitydevelopment• Information management (in coordination with activities I-2 andI-3)

• Sustainability,visibilityandcommunicationstrategiesandplans

6. 4. 3. Capacity Devel-opment

• Recruitmentandtrainingofspecializedstaff• Advisoryandcounselingtoprivatebusinessesintheframeworkof

the PSDS• Publicationanddisseminationofspecificguidelines• Advocacy• Studytoursandinternationalnetworking


78

7. Expected Outputs • Increasedmemberships,improvedandexpandedservicedeliverytobusinesses through implementing theactivitiesunder thePSDS-IandregularsuccessfulconsultationmeetingsheldwiththeGovern-mentinrelevantPSDStargetareasandactivities

• Adoptionandimplementationofjointlyagreedstrategiesandplans• EstablishmentofaPSInstitutionsLeagueasathemaincoordinationandvoicingforum

• Establishment and operation of PSDS public-private consultationgroups

• SuccessfulimplementationofPSDSactivities,asenvisaged• Gradualachievementofself-sustainability

8. Roles and Responsibilities8. 1. Central and Local

Governments• Support the jointactivitiesand regulatory revisionsof theprivate

sector institutions and associations• Supporttheformulationadimplementationofprivatesectorinstitu-tionsandassociationsstrategiesandplans

• Allocateresourcesforthesepurposes8. 2. PrivateSectorStake-

holders• EstablishdedicatedstructureforthisactivityandmobilizeinternalandexternalhumanresourcesforPSDSactivities’implementation

• Achieveconsensusinternallyandwithotherprivatesectorinstitu-tions and associations

• Adoptandimplementrevisedstrategiesandplans9. International Support Required

10. Time Frame

10. 1. Total duration 36months10. 2. Overallassessment,programmedesignandprepa-

ration months0-6

10. 3 Review,formulation,adoptionandimplementa-tionofstrategiesandplans months6-15

10. 4 CapacityDevelopment months6-36


Item Cost (million ID)11. 1. Procurementofequipment 500

11. 2. Procurementofexternalservices 1,00011. 3. Training,Conferences,Workshops,etc. 1,00011. 4. Travel,Communications,Publications 1,000

Total 3,500


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Pillar III: THE SME PROGRAMME

Activity Profile No. III-11. Activity Title Provideadvisory, counseling,businessplanning, trainingandnetworking

servicestoSMEs2. Coordinating Entities PRIU3. Implementing Entity PRIU,NationalSMEAgency,MoP,privatesectorinstitutionsandassocia-

tionsandinternationaldevelopmentactors(technicalsupportonlymostlyfortraining)

4. Oversight Entities PSDCandlocalgovernments


5. 1. ActivitiesI-1,I-2,I-4,II-1,II-2,II-5,III-2,III-3,III-4,IV-3

5. 2. Ongoingindustrialzonesdevelopmentprogramme

5. 3. CurrentFederalBudgetallocationsandsupporttoSMEs

5. 4. ExistingnetworkofBusinessDevelopmentCenters

6. Brief Description6. 1. Objectives ToimproveSMEproductivityandcompetitiveness.

ToimproveSMEsplanning,financingandimplementationofdevelopmentprogrammes.

6. 2. Beneficiaries SMEs6. 3. Phase 1 Target 20%ofregisteredbusinessesand20%ofsurveyedinformalbusinessesin

allgovernorates6. 4. ScopeofWork6. 4. 1. Preparation

and organi-zation

• Initialarrangementsforcoordinateddeliveryofservices• Establishmentofmixedexpertgroupsandguidelinesbyfocusareas,asembryonicSMEAgencysystem

• Definitionofmechanismsandproceduresforrequestofservicesandser-vicedelivery,includingalsoonlineandpossiblecost-sharingagreements

• Surveyreview(I-1)andconsultationswithprivatesectorinstitutionsandassociationsforfinaldefinitionofpriorityareas

6. 4. 2. CapacityDevelop-ment

•Training of Trainers • Trainingofcounselorsandadvisors(asfuturespecializedstaffofthena-tionalSMEAgency)

6. 4. 4. Implemen-tation

• ProvisionofcounselingandadvisoryservicesthroughthePRIUandtheprivatesectorinstitutionsandassociationsonfinancingapplication,plan-ningandotherdevelopmentpurposes

• AccreditationsystemimplementedforIraqiSMEdevelopmentcounsel-orsandadvisors

• Disseminationevents• GradualtransferofcompetenciestoSMEAgency

7. Expected Outputs • InitialexpertiseofSMEagency formedand theNationalSMEAgencyestablishmentprocessinitiated(reactivityIV-3)

• 2programmedisseminationeventsineachgovernorateconducted• 10%-20%ofregisteredbusinessesand10%-20%ofsurveyedinformalbusinessessuccessfullyassisted


80

8. Roles and Responsibilities8. 1. GoI and Local

Governments• Arrangementoverawareness,dissemination,outreachandvisibility• SupporttoaccreditationsystemforSMEcounselorsandadvisors• Allocationoffinancialresourcesforrecruitmentoftrainersandexperts


•Mobilizeresourcesandexpertisebysectors• CooperatewithGoIandGovernoratesoverawarenessdisseminationand

outreach• Organize,verifyandprocessapplications• ProvidebusinesscounselingandadvisoryassistancetoSMEs

9. International Support Required(trainingoftrainers)10. Time Frame10. 1. Total duration 48months10. 2. Preparationandorganization months0-1210. 3. Training months6-18

10. 4. Implementation(provisionofservices) months12-4811. Indicative Budget (ID)

Item Cost (million ID)11. 1. Procurementofequipment 50011. 2. Procurementoftrainingservices 1,50011. 3. Recruitmentofcounselorsandadvisors 50011. 4. Conferences,Workshops,etc. 30011. 4. Communication,Awareness,Publication,etc. 1,000

Total 3,800


81


Activity Profile No. III-21. Activity Title EstablishaFundtoprovideseedcapital,softfinancingandloanguar-

antees for businesses to establishnewenterprises, increase competi-tiveness;andtopromoteentrepreneurshipandinnovation

2. Coordinating Entities PSDC

3. Implementing Entity PRIU,nationalSMEAgency,commercialbanks(publicandprivate)

4. Oversight Entity CoM, MoF


5. 1. FederalBudgetallocationsforSMEs

5. 2. Existingfunds(MoIMSMEFund,KRGSMERevolvingFund,IMMDF)

5. 3. ActivitiesII-2,III-3,IV-2,IV-3

6. Brief Description6. 1. Objectives Enhancing the competitiveness of SMEs and at establishing an im-

proved,mutuallysupportiveandbetter-integratedpublic-privateenvi-ronmentforcollaborationandpartnership.

Ensuring an effective use of state resources throughwell-conceivedstrategicplans,streamlinedrulesandtransparenteligibilitycriteriaforSOEsandSMEsworkingtoachievethepreviousobjectiveA

Toleverageotherfinancialresources.

6. 2. Beneficiaries SMEs

6. 3. Phase 1 Target 10%-20%ofregisteredbusinessesinthegovernorates

6. 4. ScopeofWork6. 4. 1. General Criteria

(indicative)• Fundcomposition:30%grant,70%revolvingsoftloan(2yeargraceperiod,5-10yearsmaturity,2%to5%interestrate)

• Eligibleamounts:ID50-300million• Guarantee fund: initial startup amount, then self-financed from re-payments(1%-2%ofcapitalinstallments)

• Eligibilityrequirements:• Grantcomponent(indicatively):training,marketresearch,businessplanning,design,searchforpartnersandtechnologies,networkingetc

• Softloancomponent:investmentandotherimplementationactionsasplannedunderthegrantcomponent

6. 4. 2. PreparationandOrganization43

• Definitionofeligibleactions,eligibilitycriteriaandmanagementandreportingprocedures;designoftheFund(withbranchesinthegover-norates),preparationofmanualsofoperation

• Arrangementswithparticipatingbanksandprivatesectorinstitutionsand associations

• AppointmentandempowermentofInterimFundManager(underthePRIUuntiltheNationalSMEAgencyisestablished)

• Preparationofapplicationformsandselectioncriteria• Disseminationandvisibility

43 - According to legal and regulatory framework established under Pillar II.


82

6. 4. 3. Training • Trainingofpublic/privateinstitutionalandbankingstakeholders6. 4. 4. Implementation • Disbursement

• Verification•Monitoringandevaluation• Reporting

7. Expected Outputs • 10-20%oftheregisteredprivatebusinessesinthegovernoratessuc-cessfullyutilizingseedandguaranteefinancialschemesandNationalSMEAgencyservices


Governments• ArrangementswithMoP,MoF,banksandprivatesectorstakeholdersforyearlyFundallocationsandprocedures

• ArrangementswithLocalgovernments8. 2. Private Sector Stake-

holders• IncooperationwiththePRIU,ensureoutreach• ProvideadvisoryassistancetoSMEsforFundapplication• Collectionandpre-screeningofapplications.


10. Time Frame

10. 1. Total duration 36months10. 2. Preparationandorganization months0-1210. 3. Training months6-15

10. 4. Implementation months12-36


Item Cost (million ID)11. 1. Fund(includingguaranteefundandovera4-years

period)) 200,000

11. 2. Procurementofequipment 30011. 3. ProcurementofTechnicalConsultingServices 200011. 4. Training,Conferences,Workshops,etc. 50011. 5. Travel,Communications,Publications 500

Total 203,300


83


Activity Profile No. III-31. Activity Title Establishaspecialprogrammetocreatebusinessopportunitiesforthe

privatesector,includingSMEs,withSOEs.2. Coordinating Entities PRIU, National SMEAgency,MoIM,MoF,MoT,MoWR,MoCH,

MoO, MoA3. Implementing Entities Privatesectorinstitutionsandassociations,NationalSMEAgency

4. Oversight Entity PSDC


5. 1. SOEsrestructuringprogramme(SOERestructuringRoadmap)5. 2. PublicPrivatePartnershipandMoFAssetValuationUnitprogrammes(supportedbytheWorld

Bank)5. 3. ActivitiesI-1,II-2,I-3,II-1,II-2,II-3,III-1,III-2

5. 4. FederalBudgetallocationsforSOEs

6. Brief Description6. 1. Objectives Toinvolvetheprivatesector,includingSMEs,inSOEsrestructuring

andcorporatizationandinlarge(includingmixedcompanies)fores-tablishmentofvaluechainsandclusters

6. 2. Beneficiaries SMEsandSOEs

6. 3. Phase 1 Target PrioritySOEs(restructuring)

6. 4. ScopeofWork

6. 5. 2. PreparationandOrganization

• PreparationofframeworkcooperationagreementsbetweenprivatesectorinstitutionsandassociationsandrelevantministriesfosteringSMEparticipationinSOEsrestructuringandcorporatization

• Establishment of joint public-private working groups (by prioritySOEsectors)anddefinitionofcommonworkingagendasandoverallsocialandeconomicgoals

• Establishment of a special grant scheme forSMEs for supportingimplementationofeligibleactions44

• Preparation of eligibility criteria, procedures andmechanisms fortargetedtechnicalandfinancialsupporttoSMEs

• Preparationoffeasibilitystudiesandplans

6. 6. 4. Implementation • Negotiationswithrelevantministries/SOEs• Formulationandexecutionofspecificagreements• Fundingarrangements

7. Expected Outputs Atleast20successfulandsustainablevaluechainsand/orclustersestablishedbetweenSOEs,largecompaniesandSMEs

44 - The grant scheme will provide in general technical advisory assistance and financial support to PSIAs - for manage-ment, organization and coordination of the programme - and to groups of SMEs for implementing needed part-nership/clustering/value chain related measures (including establishment of new businesses, absorption of SOEs excess employees, legal advice and work, training etc) other than those under Activity II-2, aiming specifically at en-hancing SME competitiveness. The financial support to SMEs is estimated in average in about 100 million ID/SOE.


84

8. Roles and Responsibilities8. 1. Government • Supportandfacilitateprivatesectorinstitutionsandassociationsin

thepreparation,organizationandimplementationofactivities• Provisionofsoftloanfundingschemestoprivatesectorinstitutions

and associations 8. 2. PrivateSectorStake-

holders• SetupdedicatedworkinggroupsforSOEsrestructuringandappointmemberswithrelevantministries

• OrganizetargetedtrainingforSMEsinrelevantprogrammeareas• CoordinatetheparticipationandtheinputsofSMEs•ManagethegrantschemejointlywiththePRIU• SuperviseandmonitorthesupporttoSMEs• Ensureoutreachandvisibility

9. International Support Required(managementassistancetoprivatesectorinstitutionsandas-sociations)

10. Time Frame

10. 1. Total duration 39months10. 2. Preparationandorganization months0-1210. 3. Implementation months9-39


Item Cost (million ID)11. 1. Grantscheme 100,00011. 2. Procurementofexternalexpertise 40011. 3. Training,Conferences,Workshops,etc. 30011. 4. Communication,Awareness,Publication,etc. 300

Total 101,000


85


Activity Profile No. III-41. Activity Title Developmentofindustrialzones,businessIncubators,businessdevel-

opmentcentersandsimilarinitiatives

2. Coordinating Entities PSDC

3. Implementing Entity PRIU,MoIM,MoF/FreeZonesCommission,MoP,MoT,localgov-ernments,privatesectorinstitutionsandassociations,NationalInvest-mentCommission,GovernorateInvestmentCommissions

4. Oversight Entities PSDC


5. 1. MoIMindustrialzonedevelopmentprogrammesinAlBasra,ThiQarandAlAnbarGovernor-ates,FreeZoneCommission’sprogrammes

5. 2. Tijara (USAID), Existing network of Business Development and Support Service Centers,World-BankandOECDinitiativesoneconomiczonedevelopment

5. 3 UNIDOindustrialzonedevelopmentprogrammeinAlBasraandAlNajafGovernorates)

5. 4. UNIDOEnterpriseDevelopmentProgramme(enterprisedevelopmentcentersinErbil,Bagh-dad,ThiQarandAlBasra)

5. 5. ActivitiesI-1,I-2,I-4,II-3,II-4,II-5,III-1,III-2,III-4,IV-3


6. 1. Objectives • EnhancingSMEcompetitiveness,productivityandcompetitivenessand,eventually,bringaboutSMEdevelopment

• Jobcreationandincomegeneration• AbsorptionofSOEs’excessemployees• Improvementofbusinessenvironment/investmentclimate

6. 2. Beneficiaries SMEsclusters,entrepreneurs,privatesectororganizationsandimple-mentingGovernmentalentities

6. 3. Phase 1 Targets Entrepreneurs/self-employedpeopleSMEs,joblesspeople,SOEsex-cessemployees,youth


and organization

• SelectionofPhase1prioritygovernorates• Assessmentsofprivatesectorneedsintheselectedgovernorates• Consultation,preparationandcompletionofarrangementsbetweenGoI,governoratesandotherconcernedcentralandlocalstakehold-ers todefine the typeof support infrastructuresneededaswell astheirprospectivelocationandinstitutionalarrangements

• Preparation of national and / or governorate sustainable develop-mentplans

• Strengtheningexistinginfrastructuresandaddressingfinancialman-agementaspects


86

6. 4. 2. Training • Introductory training programmes (development planning, infra-structurefinancing,businesscounselling,clustersandvaluechains…)

6. 4. 3. Implementation • Targetedsurveysandgapanalysis• Identificationofoperators,definitionofemployment/staffingneedsandmodalities

• Identifypossiblevaluechains• Preparationoffeasibilitystudies,design,implementationandman-agementplansandmanualsofoperation

• Infrastructuredevelopmentforidentifiedindustrialzones• Realizationandstaffingofbusinesscentersandincubatorsandsup-porttostartups

7. Expected Outputs • Nationalandprovincialplansadoptedandimplementedin these-lectedgovernorates

• Infrastructuresbuiltforatleast3industrialzones• At least 3 new integratedBusinessCenters and Incubators estab-lishedandoperational.

• Creationofnewbusinessesandgrowthofexistingones• Generationofnewemployment.


8. 1. Central and

Local

Governments

• Selectingprioritygovernoratesandlocations• Conductingprivatesectorneedsassessment in theselectedgover-

norates• Allocating land and making available the required support infra-

structure• Preparingnational and / or localdevelopmentplans for industrial

zones• Addressingfinancingrequirementsofprivatebusinesses• Organizingtrainingprogrammes


• Participatingintheconsultationsforselectingprioritygovernoratesand locations

• Contributingtotheprivatesectorneedsassessment• Participatinginthepreparationofnationaland/orlocalplans• Establishingvaluechainsand/orclusters• Participatinginthetrainingprogrammes

9. International Support Required(managementassistancetoprivatesectorinstitutionsandas-sociations)

10. Time Frame



10. 3. Training months6-15



87


Item Cost (million ID)11 1. Procurementofequipment

15,000

11 2. Landandbuildings 30,000

11 3. Procurementoftrainingandspecializedservices1.500

11 4. Training,Conferences,Workshops,etc.1,000

11 5. Travel,Communications,Publications1,000

Total 48,500


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Activity Profile No. III-51. Activity Title Establish adedicatedunit to foster gender awareness andgender

inclusion in private businesses, to increase job opportunities forwomenintheprivatesector

2. Coordinating Entity StateMinistryforWomenAffairs

3. Implementing Entity PrivateSectorInstitutionsandAssociations

4. Oversight Entities PSDC / PRIU

5. Related Activities5. 1. UNDP›sWomenEconomicEmpowermentInitiative:IntegratingWomenintotheIraqiEcon-

omy5. 2. PSDCenter“Nina”magazineproject(WomenEconomicEmpowerment)

5. 3. I-1,I-3,II-1,II-2,II-3,II-4,II-6,III-1,III-2,III-4,IV-2,IV-3

6. Brief Description6. 1. Objectives To enhance gender equality and employment in the private sec-

torwithahigherparticipationofwomenintheimplementationofPSDSactivities

6. 2. Beneficiaries Economicallyactiveandbusinesswomen

6. 3. Phase 1 Target PSDSassistedbusinessesandinstitutions

6. 4. ScopeofWork6. 4. 1. Preparationandor-

ganization• Establishmentandoperationoftheunit• Preparationandadoptionofworkagendas,staffingandstrategicplan

• Establishment of a system of incentives for gender - balancedbusinesses

6. 4. 2. Training • Trainingoftrainers(forparticipationinPSDStargetactivities)6. 4. 3. Implementation • Establishmentandstaffingoftheunit

• Visibility,awareness,outreachanddissemination• Followupwithrelevantstakeholders• Advisoryandcounselingassistancefordirectenhancedparticipa-tion inPSDS targetactivitiesandgeneratedemployment inas-sistedbusinessesandinstitutions

7. Expected Outputs •Womenhaveupto25%ofjobsinformalprivatebusinesses•Womenreceiveupto25%ofthenumberofseedloansandguar-anteesprovidedbythePRIU/NationalSMEAgency

• ExecutiveBoardsofprivatesectorinstitutionshaveatleast15%womenmembers

8. Roles and Responsibilities8. 1. Central and Local Gov-

ernments• Support gender equality throughout the implementation of the

PSDS• Providefinancialsupportfortheestablishmentandinitialoperat-

ing costs of the unit• Settingupandestablishingcriteriaforan incentivessystemforgender-balancedbusinesses


89

8. 2. PrivateSector

Stakeholders

• Support and ensure increased participation and employment ofwomenthroughoutthePSDSand

• Provideguidance,advisoryandcounselingassistanceforapplica-tion

• OrganizedisseminationeventswithSMEs9. International Support Required (consultation, advice and training onwomen economic

empowerment)10. Time Frame

10. 1. Total duration 39months10. 2. Preparation,organizationandestablishmentoftheunit months0-1210. 3. Training months6-12




11. 1. Procurementofequipment 5011. 2. Procurementoftrainingandspecializedexpertise 15011. 3. Training,Conferences,Workshops,etc. 15011. 4. Travel,Communications,Publications 200

Total 550


90


Activity Profile No. III-6

1. Activity Title LaunchofaPublicAwarenessCampaign2. Coordinating Entity PSDC3. Implementing Entity PSDC/PRIU,IraqiMediaNetwork,privatemediaandprivatesectorinstitu-

tions and associations4. Oversight Entities CoMandLocalGovernments5. Related Activities5. 1. AllPSDSPillarIIIactivities6. Brief Description6. 1. Objectives Todisseminateawarenessonthedevelopmentandemploymentopportunities

offeredbythePSDS6. 2. Beneficiaries Allrelevantpublicandprivatestakeholders6. 3. Phase 1 Target Allrelevantpublicandprivatestakeholders6. 4. ScopeofWork6. 4. 1. Preparation

andorganization

• Design of the campaignwith the involvement of local governments andprivatesectorstakeholders

• Arrangewithandamongmedianetworksandreparationofcampaignad-vertisementplan

• Prepareandadoptfinalimplementationplan,withguidelines,presentations,tentativeeventagendasandworkingdocuments,synchronizedwithPSDSactivities

• Organizeworkshopswithdedicatedtrainingsessions


• Publicationsfordistributionattheevents• Rolloutofthecampaign• Impactevaluation

7. Expected Outputs • Atotalof30centraleventsandatleast6eventsheldineachgovernorate

8. Roles and Responsibilities8. 1. GoI and Local

Governments• Plan,organize, facilitate,coordinateandprovide therequiredfundingforthepublicawarenesscampaign

• Conductimpactassessment8. 2. PrivateSector

Stakeholders • Participateintheplanning,organization,facilitationandcoordinationofthepublicawarenesscampaign

9. International Support Required(consultationandtechnicalsupport)10. Time Frame10. 1. Total duration 48months10. 2. Preparation,planning months0-910. 3 Implementation months9-4811. Indicative Budget

Item Cost (million ID)11. 1. Procurementofequipment 5011. 2. Procurementofspecializedexpertise 60011. 3. Events,Conferences,MediaReports,etc. 45011. 4. CommunicationandPublication 300

Total 1,400


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Pillar IV: THE IMPLEMENTATION PILLAR

Activity Profile No. IV-11. Activity Title EstablishmentofanoverallmanagementandcontrolsystemforthePSDS.2. Coordinating Entity PMAC/TFER(facilitationandfollow-upwiththecompetentauthorities

oftheGoIandlocalgovernments3. Implementing Entity

4. Oversight Entities CoM


5. 1. AllPSDS-Iactivities

6. Brief Description6. 1. Objective ToensureefficientandtimelyimplementationofthePrivateSectorDe-

velopmentStrategy6. 2. Beneficiaries AllPSDS-IrelevantGoIandprivatesectorstakeholders(centralandlo-

cal)6. 3. Phase 1 Target EstablishmentandoperationalizationofthePSDC


and organi-zation

• Identification of participating Government and private sector institu-tionsandnominationofrepresentatives

• Preparing the essential documents for the PSDC (mandate, structure,positioning,modeofoperation,staffing,operationalbudget,etc.),draft-ing the CoM resolution / DiwanidecreeandsubmittingthepackagetoCoMSec

• EnsuringCoM/PMapprovalandpursuantmeasures• Preparingandadoptingtheby-lawsofthePSDC• PreparingPSDSstartupworkagendasaccording toagreedworkplananddefinedpriorities


• Assignmentoftechnicalandadministrationstaffandsettingupofficefacilities

• StartupofthePSDSimplementation

7. Expected Outputs • PSDC established and functionalwithin 12months since the date ofendorsementofthePSDSbytheGovernment

• PRIUandM&EUnitestablishedandoperationalwithin3monthssincetheestablishmentofthePSDC


Governments• Achievement of consensus among relevant central and local govern-mentalinstitutions

• Collectingandincorporatinginputsfromtheprivatesectorinstitutionsand associations

• EstablishinganInterimWorkingGroupwithprivatesectorrepresenta-tivestoimplementallinitialPreparationandorganizationalactivities

• Providingfinancialresourcesandfacilitiesfortheestablishmentandop-eration of the PSDC


92


• AppointingrepresentativesintheInterimWorkingGroup• ProvidinginputstotheGovernmentandlocalgovernmentsontheestab-lishmentandoperationofthePSDC

• NominatingprivatesectorrepresentativesinthePSDC(minimum1/3ofmembers)

• ContributeactivelytotheinitialrolloutofthePSDSasagreedwithintheInterimWorkingGroupand,later,thePSDC

9. International Support Required(oneadviser)

10. Time Frame



10. 3. Implementation(establishmentofthePSDC) months6-12

10 4. PSDSPhase1rollout) months12-42



11 1. Procurementofequipmentandsetupofpremises 600

11 2. Procurementofspecializedadvisoryservices 300

11 3. Staffingandoperationalexpenses(Phase1) 3,000

11 4. Conferences,Workshops,Publicationsetc.(Phase1) 500

11 5. Travel,Communications,PublicAwareness,etc.(Phase1) 1,000

Total 5,400


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Activity Profile No. IV - 21. Activity Title Establishment of a Planning, Research and Implementation Unit

(PRIU)toorganizeandsuperviseactionsinallPillars

2. Coordinating Entity PMAC/TFER,PSDC

3. Implementing Entity PSDC



5. 1. AllPSDSactivities

6. Brief Description6. 1. Objectives • ToensureefficientandtimelyimplementationofPSDS

•To ensure full coordination and consistency of the PSDC decisions withPSDSactivities

• Toprovide advice and recommendations to thePSDC for timeyactionsbythePSDCmembers

6. 2. Beneficiaries PSDCandallPSDSrelevantGovernmentandprivatesectorstake-holders(atcentralandgovernoratelevels)

6. 3. Phase 1 Target EstablishmentofthePRIU

6. 4. ScopeofWork6. 4. 1. Preparationand

organization• PreparationandadoptionofPRIUmandate,ToR,structure,modeofoperationandstaffingschedule

• LaunchofPRIUestablishmentprocedures

6. 4. 3. Implementation • AppointmentofthePRIUmanagement• SetupandstaffingthePRIU• Reviewandprioritizationofallworkplans• RolloutofPRIUactivities

7. Expected Outputs PRIU structure established and functionalwithin 3months of theendorsementofthePSDS

8. Roles and Responsibilities8. 1. Government • TimelyappointmentofthePRIUbythePSDC

• FacilitationofallnecessaryinstitutionalarrangementsforPSDSimplementation

• Allocationofstaff,facilitiesandfinancialresourcesforsustainingPhase1ofPRIUoperationsandactivities


• FinalizearrangementswiththePRIUforrolloutofactivitiesasplanned


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9. International Support Required(sameadviserforIV-1)

10. Time Frame



10. 3. Implementation(establishmentofthePRIU) months3-6

10 4. Implementation(PSDCrollout) months3-45



11. 1. ProcurementofEquipmentandSettingUpofPremises 1,000

11. 2. Staffing,AdministrativeandOperationalCost(Phase1) 10,000

11. 3. Conferences,Workshops,Publicationsetc.(Phase1) 1,000

11. 4. Travel,Communications,PublicAwareness,etc.(Phase1) 3,000

Total 15,000


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Activity Profile No. IV-3

1. Activity Title EstablishmentofanindependentM&ESystem

2. Coordinating Entity PMAC/TFERfacilitationandfollow-upadinterimwiththecom-petentauthoritiesoftheGoI

3. Implementing Entity IndependentunittobeestablishedunderthePSDC

4. Oversight Entities CoM,PSDCandlocalgovernments


5. 1. AllPSDS-Iactivities


6. 1. Objectives • ToensureefficientandtimelyimplementationofthePSDS• TocontributetotheenhancementofthePSDSimpactbyintroduc-ingtimelycorrectivemeasureswhenneeded

6. 2. Beneficiaries PSDCandallPSDSrelevantpublicandprivatesectorstakeholders(centralandgovernoratelevel)

6. 3. Phase 1 Target EstablishmentoftheM&EUnit

6. 4. ScopeofWork

6. 4. 1. Preparationandorganization

• EstablishmentofaGovernment-privatesectorworkinggroupformanagingPSDSM&EactivitiesuntilthePSDCanditsM&EUnitbecomeoperational

• Design of theM&E system (with linkages toActivity I-2) anddefinitionofspecificandmeasurableindicatorsforeachlevel

• PreparationofaM&Eplan,includingproceduresandschedulesforeachPSDSPillarandactivity(dataandinformationcollection,processing,transmission,evaluationandreporting)

• PreparationofM&Eguidelinesandmanuals• Identification and screening of possible independent organiza-tionstosupportM&Eactivities

• PreparationofToRfortheoverallM&Eunittobeestablished

6. 4. 2. Implementation • Launch of procedure for the selection and appointment of thePSDSM&EUnit

•M&E system establishment and operationalization throughoutIraq

• Start-upofM&EactivitiesasagreedwiththePSDCandthePRIU

6. 4. 2. Training • TrainingofM&EUnitstaff


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7. Expected Outputs • AnindependentM&EsystemforthePSDSinplaceandopera-tionalbyearly2015


8. 1. Central and Local Gov-ernments

• TimelyappointmentoftheM&EunitbythePSDC(includinglo-caloffices)

• Ensurecommitmentofcentralandlocalpublicsectorstakeholderstoprovidedata&informationasplanned

• FacilitationofallnecessaryinstitutionalarrangementsforM&Eactivities

• AllocationoffinancialresourcesforsustainingPhase1M&Eop-erationsandactivities


• Ensure commitment of private sector beneficiaries to providetimelydata&informationonPSDSactivityprogressandresults


10. Time Frame

10. 1. Total duration 39months10. 2. Preparationandorganization months0-310. 3. Implementation(establishmentoftheM&Eunit) months3-6

10 4. Implementation(M&Erollout) months6-39


Item Cost (million ID)11. 1. Procurementofequipmentandsetupofpremises 1,000

11. 2. Staffing,administrativeandoperationalexpenses(Phase1) 5,000

11. 3. ProcurementofspecializedexpertisefortrainingandTA 300

11. 3. Conferences,Workshops,Publicationsetc.(Phase1) 200

11. 4. Travel,Communications,Publications(Phase1) 2,000

Total 8,500


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Activity Profile No. IV-4

1. Activity Title EstablishmentofanationalSMEAgency

2. Coordinating Entity PSDC

3. Implementing Entity PRIU

4. Oversight Entities CoMandLocalgovernments


5. 1. I-1,I-2,II-1.II-2,II-3,II-4,II-5,II-6,III-1,III-2,III-3,III-4,III-5,III-6

5. 2. RelevantworkunderthePSDS

5. 3. AllotherSMEdevelopmentrelatedprogrammes(completedandongoing)

6. Brief Description6. 1. Objectives • ToensureefficientandtimelyimplementationofPillarIIandPil-

lar III of the PSDS• TohavefocalpointsforallneededsupporttoSMEs

6. 2. Beneficiaries AllSMEs6. 3. Phase 1 Target Selectedgovernorates(5-7forsubsequentconsolidationandfurther

expansioninPhases2and3ofthePSDS6. 4. ScopeofWork6. 4. 1. Preparationand

organization• Settingupframeworkagreementsandarrangementsbetweenrel-evantGoIandprivateinstitutions(includingthebankingsector)

• Definingthelegalstatus(underPillarII)anddesigningtheSMEAgency as an independentnetwork of central and governor-ate - level units45,inconsultationwithrelevantministries,privatesectorinstitutionsandassociations,commercialbanksandotherstakeholders

• Reviewingandstreamliningallpolicypapersprepared/draftedinthelastthreeyearsaswellasFederalBudgetallocationsforSMEs

• Definingprioritysupportareas,buildingonPRIUinitialworkun-derActivityIII-1

• PreparingafinalSMEAgencystrategyandaphasedimplementa-tion/developmentplan,coveringby-laws,facilities,management,manualofoperation,servicedelivery,humanresourcesmanage-mentandstaffing,financialsustainabilitystrategy

• Preparing, adopting and enforcing the relevant legislative andregulatoryframework(underPillarII).

6. 4. 2. Training • TrainingofGoIandprivatesectorinstitutions6. 4. 3. Implementation • Staffselectionandassignment

• Implementationoflogisticalarrangements• TrainingoftrainersforSMEAgencystaff• Seedandguaranteefundmanagement(withcommercialandsec-toralbanks)andprovisionofservicestoSMEs,graduallytrans-ferringcompetenciesfromthePRIUandthePSIAs(underactiv-ityIII-1)s

45 - Branches in the Governorates could be associated with the Business Development Centers (existing and to be cre-ated under activity III-4).


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7. Expected Outputs • EmbryonicnationalSMEAgencyestablishedin2015inBaghdadwithbranchesinselectedgovernorates

• 10-20%ofregisteredprivatebusinessessuccessfullyutilizingser-vices,seedfundingandguaranteeschemes

8. Roles and Responsibilities8. 1. Central and Local Gov-

ernments• Establishmentofadedicated jointGoI-privatesectorworkinggroup

• Approvalandenforcementoflawandregulations(underPillarII)• Appointment of hosting institutions/select appropriate SMEAgencylocationsinBaghdadandinthegovernorates

• Facilitation of arrangements among relevant and participatingGoIandprivateinstitutions

• AppointmentofaProjectManagementTeamandoffocalpointsinthegovernorates

• ProvidefinancialresourcesandfacilitiesfortheestablishmentoftheSMEembryonicSMEAgencyandforitsinitialoperations

8. 2. PrivateSectorStakehold-ers

• Nominatingrepresentativesofprivatesectorinstitutionsandas-sociationsintheGovernment-privatesectorworkinggroup

• Appointmentoftrainees• Preparationofstrategiesandplans(withspecializedsupport)• Consolidation of advisory and counseling activities under thePRIU (under III-1) and transfer of competencies to the SMEAgency

• Contributewithadditionalresources(assets,logistics,equipmentetc)asneededandagreed

9. International Support Required 10. Time Frame10. 1. Total duration 36months10. 2. Preparationandorganization months0-910. 3 Training months3-1210. 4 Implementation(establishmentoftheSMEAgencyand

itsbranches) months9-12

10. 5. Implementation(initialservicesrollout) months12-3611. Indicative Budget (ID)

Item Cost (million ID)11. 1. Procurementofequipmentandbuildingrefurbishments 5,00011. 2. Procurementofspecializedservicesandexpertise 2,00011. 3. Staff,managementandoperationalexpenses 9,00011. 4. Training,Workshops,Publicationsetc. 1,50011. 5. Travel,Communications,PublicAwareness,etc. 1,500

Total 19,000

Annex - 4Priority Legislations

Related to Private Sector Development that Need to be Urgently Addressed


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1. Law of Federal Economic Reform

•DraftendorsedbytheCoMandsenttoteCoRinAugust2013.

•CoRexaminedthedraftintheFirstReadinginNovember2013anddecidedtoreferbacktotheCoMtorevise.

•Status: Pending

2. Law of Public Private Partnership

•AdraftofaframeworkPPPlawwaspreparedin2012byUNIDOunderthePSDP-Iinconsulta-tionwiththeWorldBank

•ThedraftwassubsequentlyreviewedandrevisedbytheTFERWorkingGrouponLegislation.

•Status: Pending

•TheLaw,whenenacted,needstobecomplementedbyasetofregulationsand/orinstructionsdesigned for each sector.

3. Law of Public Procurement

•AnInter-MinisterialTaskForcedraftedaPublicProcurementLaw(PPL)in2007,supportedbythe World Bank

• In2011theStateShuraCouncilreviewedthedraftandreferredbacktotheCoM.

•Status: Pending

4. Law of Competition and Anti-Monopoly

•TheLawofCompetitionandAnti-MonopolyNo.14(2010)hasbeenenactedandpromulgatedon9March2010.

•TheLawaimsat ensuring freecompetitionandpreventingmarketmonopolyas incentives toreducecostandpricesandimprovingqualityofgoodsandservices.Thiswillultimatelypromotethedevelopmentoftheprivate,mixedandpublicsectorsandthesatisfactoryflowofgoodsandservicesinthemarket.

•Status:Ineffective;theCouncilofCompetitionandAnti-MonopolyAffairstobeestablishedinaccordancewiththisLawisnotestablishedyet.Also,theSupremeJudicialCouncildidn’tes-tablishyet,inaccordancewiththisLaw,thespecializedcourtthatshouldexaminethedisputesarisingfromtheenforcementofthisLaw.

5. Law of Companies No. 21 (1997)

•ThedraftAmendmenttotheLawofCompaniesNo.21(1997)asAmendedbyCPAOrderNo.64(2004)considersmergingwithittheLawofPublicCompaniesNo.22(1997).

•Status:ThedraftisstillpendingintheTFER.


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6. Law 22 on State Enterprises

•Needstobeamended(improveddefinitionofSOEs,separationbetweenownershipandmanage-ment,transparencyofdecisionmakingprocesses,eliminationoftheroleoftheDGasChairmanoftheBoard,corporatizationandprivatizationetc).

•Status:Pleasereferto(5)above.

7. Law of Labor

• ILOdraftedanewLaborCodein2009that,however,wasrejected.

•TheGoIpreparednewdraftthatincludesarticlesonsocialinsurance,excludestheworkersofthepublicsector,includingthoseemployedintheSOEsandobligesprivatecompaniestorecruittheiremployeesthroughtheMinistryofLaborandSocialAffairs.

•TheStateShuraCouncilreviewedthedraftandreferredbacktotheCoMin2011.

•The CoM referred the draft to the CoR.

•TheCoRcompletedtheFirstReadingandtheSecondReadingofthedraftin4February2012and7May2013.

•Status: Pending

• ILOandotherinternationalorganizationshavestronglyandrepeatedlyrecommendedexaminingandreaddressingvarioussignificantissuesrequiredforratificationofthe“ConventiononFree-domofAssociationandProtectionoftheRighttoOrganize”layingthebasisforsocialdialoguebetweenWorkersand theEmployers, rightsofworkersandemployees, roleand rightsof theprivatesector,discriminationandinclusiveness,etc..)

8. Law of Investment

•Needstobesubstantiallyrevised(unclearobjectives,nodistinctionbetweendomesticandforeigninvestments,thevaugedefinitionoftheroleoftheNationalInvestmentCommission,whichpres-entlyactsasimplementationbodyforthestate,managinglandandothertransactions,uncleartaxexemptions,uncleardisputeresolutionmechanism,etc.).

•LawNo.2(2009)AmendingtheLawofInvestmentNo.13(2006)guaranteestheownershipoflandbylocal,Arabandforeigninvestorsforhousingprojectsonly.

•RegulationsNo.7(2010issuedbytheCoMorganizedtheleaseratesforlandinvestedinthevari-ousfields..

•Status:Amendmentsproposedstillpending..

9. Law of Bankruptcy

•Despiterecommendationsforaseparatelawthatbettermeetinternationalbestpractices,theMin-istryofTradeincooperationwithTijaraLocalEconomicDevelopmentProgrammeofUSAID,prepareddraftLawAmendingtheLawofTradeNo.30(1984)thataddressesbankruptcy.

•ThedraftisunderreviewoftheStateShuraCouncil.

•Status: Pending


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10. Law of Consumer Protection

•TheConsumerProtectionLawNo.1(2010),thatisconsistentwithinternationalstandardsandbestpractices,hasbeenpassedandpromulgated.However, theLawneedstobeenforcedandpursuantimplementationinstructionsbeissuedbythecompetentauthorityoftheGoI.

•Status:Enforcementpending.

11. Law of Protecting Iraqi Products

•TheGoIenactedtheLawofProtectingIraqiProductsNo.11(2010)tocontributetothedevelop-mentofnationalindustrycapableofcompetingintheregionalandinternationalmarketsandtoprovideprotectiontoIraqiproductsagainstdumpingofdomesticmarketwithimported,subsi-dizedproducts.

•TheCoRpassedon11January2014LawofAmendmentNo.1totheLawofProtectingIraqiProductsNo.11(2010)thatextendstheprotectiontoagriculturalproducts.

•Status:LawofAmendmentNo.1totheLawofProtectingIraqiProductsNo.11(2010)ispend-ingonthepromulgationofthePresidencyoftheRepublic.

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