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Tue 24 Nov 2009 07:47 AM

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Abu Dhabi firm in talks to build Iraqi homes mega project

Bloom Properties in the running to build a huge property development in Karbala.

Abu Dhabi firm in talks to build Iraqi homes mega project
IRAQ SHRINE: A view of the Imam Hussein shrine in Karbala. (Getty Images)

Abu Dhabi-based developer Bloom Properties is reportedly in talks with the Iraqi government to build a huge property development in Karbala.

According to a report in the National, the development has been valued at $18bn – making it the one of the largest property building projects ever announced in Iraq.

“The UAE is leading the pack so far,” Kyle Stelma, managing director of emerging markets at Dunia, told the paper.

Bloom officials declined to comment.

If the Bloom bid is successful it would become the latest in a series of major developments in Iraq by UAE firms, including Damac Properties, Al Maabar and Bonyan International Investment Group, in recent years.

According to a report by Dunia, Emirati firms have invested $37.7bn (AED138.47bn) in Iraq so far this year, which accounts for almost a quarter of all investments.

Karbala, with Imam Hussein and Hadrat Abbas shrines, is one of the holiest cities for Shiite Muslims.

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Ahmed Mousa Jiyad 10 years ago

Available information and data from credible and reliable sources does not support such reported level of FDI claimed by Dunia Frontier Consultants-DFC. My constant follow-up on this issue would let me to suggest that the adopted figure is nothing but an aggregate of “adding-up” reported news related to this and that offer, project, intention, agreement, etc., without proper verification and cross-checking, in addition to possible misunderstanding of what FDI really means. The last issue of UNCTAD’s World Investment Report 2009 provides the latest available data on the subject (2008), defines the concept, identifies its components and makes an estimate of FDI’s Inflows, Outflows, Stock and its significance with regards to gross fixed capital formation-GFCF and gross domestic product-GDP. For the years 2006, 2007 and 2008 FDI Inflows to Iraq were (in $million) 383, 485 and 488 respectively, and Outflows were 305, 149 and 181 for the same period. This gives a net inflow of 78, 236 and 307 respectively. FDI stock was estimated at only $2.1 billions in 2008 and was estimated to register negative values for previous years, according to WIR. Obviously, UNCTAD data does not support at all what Dunia Frontier Consultants claim of billions surge in FDI inflow to Iraq. Furthermore, and according to the Ministry of Planning under the National Development Strategy (NDS), during the period of 2006-2009, the amount proposed under development strategies for the same period was around IQD 190068.5 ($153 billion). This compared with the statement which says, “foreign direct investment in Iraq has reached more than $156bn, a 241 percent increase on 2008” would only indicates to the inaccuracy and clear fallacy of the estimation made by Dunia Frontier Consultants and its baseless claims. As we all know oil sector (especially the upstream sub-sector) is the magnet for FDI, as witnessed by the current “rush for Iraqi oil”. But except for AlAhdab oilfield contract, which was signed with CNPC and began implementation, only the Rumaila oilfield (with BP/CNPC) contract was “signed” lately but the work has not started yet and thus no FDI has actually took place. The 19 November 2009 CCA/UNDAF agreement with Iraq asserts that “a massive inflow of capital for oil field development is uncertain in the absence of articulated interventions to reform the management of oil resources.” Obviously, Dunia statement saying “the oil and gas sector has soared to the top of the latest list, as energy investments rose from $18bn to $73bn”, is incorrect since it confuses bids with contracts. Most likely Dunia had added the investment potential for Rumaila ($15-$20 billion ) to West Qurna1, not yet signed with ExxonMobil/Shell, ($50 billion divided equally between capex and opex) Finally, Dunia states “real estate was the main focus of foreign investment in Iraq”, was again mixing up intentions with reality. Information from National Investment Commission does not support such assertion. Furthermore, this cannot be the case since the Iraqi Parliament has approved in this month of November amendment to Investment Law number 13 of 2006 allowing foreign ownership of land in Iraq. Conclusion: Information, data and analysis do not support the figures and assertions made by Dunia Frontier Consultants regarding FDI in Iraq. It is regrettable that a consulting firm advocated such unsubstantiated information. Ahmed Mousa Jiyad, Norway. 28th Nov 2009 mou-jiya@online.no