final version summary of studya.ppt - oecd.org · feasibility study of business development ......

EXECUTIVE SUMMARYEXECUTIVE SUMMARY

FEASIBILITY STUDY OF BUSINESS DEVELOPMENT ZONES IN IRAQZONES IN IRAQ

NOVEMBER 2009NOVEMBER 2009

Business Development Zones in Iraq

Executive Summary Presentation: A comprehensive and multi‐part Feasibility Study concerning Business Development Zones in Iraq has been completed. The Study addresses four major areas and this slide presentation is an executiveStudy addresses four major areas and this slide presentation is an executive summary for readers of the Study.

The Feasibility Study covers Four Parts:1 Background Description1. Background Description2. Overview of National Zone Programs and Selected Zones3. Legal, Regulatory and Tax Review4. Business Development Zones for Post‐Conflict Economic Development in Iraqin Iraq

This executive summary is not meant as a substitute for reading the Study in its entirety; it provides an introduction and guide for interested readers, a quick reference and discussion aid to the complete Study Part Four of the Feasibilityreference, and discussion aid to the complete Study. Part Four of the Feasibility Study, which is the focus of this executive summary covers seven sections regarding Business Development Zones (BDZs): Introduction, Role of BDZs, Iraqi Economic Sectors, Potential Types of BDZs, Profiles of Business Models, Competitiveness, and Location Specific BDZs.

Please refer to the final slide for details on the contracting party for the Feasibility Study. 2

Key Themes of Report (1)

• The conventional concept of Business Development Zones (BDZs):

1. Small

2. Geographically defined

3. Export Processing Zones

4. Tax and Duty Free Zones

5. Utilizing cheap labor

6. Offering preferential trade status

7. Benefiting from trade preferences

• Thousands of BDZs in over 100 countries cover a broad range of

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innovative new BDZ concepts

Key Themes of Report (2)

• New concepts of BDZ emphasize:

1 C bi ti f i t t i ti1. Combination of investment incentives

2. Physical infrastructure

3 Policy reforms3. Policy reforms

4. Hassle‐free administration

5. Effective regulation5. Effective regulation

6. Range of sizes to fit policy objectives

• BDZs are pragmatic policy instruments:

1. To implement economic, social and infrastructure development

2. To overcome particular constraints

4

Contemporary Concepts of BDZs (1)

• Conventional concept of BDZs now obsolete:

1 Th “ ti l t” i E t P i Z (EPZ) “ ll1. The “conventional concept” is an Export Processing Zone (EPZ) ‐ “a well‐defined geographical area, enjoying customs privileges and other incentives, in which the primary activity is processing of goods for export” (UNCTAD)

2. Second best solution compared to reform of whole country’s economy

3. Evolved from practical necessity rather than economic policy

• Contemporary BDZs:

1. are pragmatic and flexible policy instruments

2. promote private sector investment, generate employment, overcome constraints

3. introduce essential policy reforms

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4. are tools for development initiatives

Contemporary Concepts of BDZs (2)

• GDP growth rates up to 10% (China Wide Area Zones) to 28% (Sri L k d M l i S ll A Z )Lanka and Malaysia Small Area Zones)

• Change can be implemented through BDZs when political realities constrain reforms throughout the whole countryg y

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Types of BDZ

• BDZs vary enormously:

1. Conventional Export Processing Zone (EPZ) (e.g., Colon Free Zone in Panama)

2 Single vault (Antwerp Diamond Zone)2. Single vault (Antwerp Diamond Zone)

3. Single regulation (New York Insurance Zone)

4 Large industrial cities (e g Jubail in Saudi Arabia)4. Large industrial cities (e.g., Jubail in Saudi Arabia)

5. Whole regions with millions of people (e.g., Shenzen and Hainan in China)

7

Five Basic Types of BDZ

• Five basic types of BDZs:

1. Conventional Small Area Zone (Turkish coastal zones, Jebel Ali)

2. Wide Area Zone (Chinese special economic zones, Aqaba, Saudi New Economic Cities)New Economic Cities)

3. Industry‐Specific Zone (e.g., garments, oil refining, electronics, medical)

4. Performance–Specific Zone (e.g., export, value‐chain, policy reform, business incubators)

5 Hybrid Zones (e g electronics & jewelry transport &5. Hybrid Zones (e.g., electronics & jewelry, transport & manufacturing)

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Integrate BDZ Policies with Development Strategy for Iraq (1)p gy q ( )

• Iraq should develop BDZ policies that complement the National Development Strategy (NDS)

• BDZ policies should include sector strategies that:1. Assess strengths, weaknesses and opportunities of Iraq’s economy

2 Support national development objectives as defined in the NDS and2. Support national development objectives as defined in the NDS and the International Compact with Iraq

• Major sectors for BDZs in Iraq include:1 General Man fa t rin Transport and Lo isti s1. General Manufacturing, Transport and Logistics

2. Oil Refining, Petrochemical and Heavy Industry

3. Financial Services / Central Business District

4. Information, Science and Technology

5. Wide Area Special Agricultural Economic Zone

6. Multi‐Modal Sea Transport Hub BDZ at Al Faw

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7. Multi‐Modal Air Transport Hub BDZ at BIAP

Integrate BDZ Policies withDevelopment Strategy for Iraq (2)

• Current BDZs in Iraq:

p gy q ( )

1. Export Processing Zones (EPZs) (e.g. Al Qaim, Khor Al Zubair) supervised by General Commission for Free Zones in Ministry of Finance

2. Industrial Parks supervised by the Ministry of Industry and Minerals

• Current BDZs are:

1. Closer to conventional models of EPZs and municipal industrial zones than to contemporary concepts of BDZs

2. Infrastructure facilities and duty‐free enclaves rather than development policy instruments

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Integrate BDZ Policies with Development Strategy for Iraq (3)

• BDZs are effective because they:1. Enable special initiatives to target particular problems

p gy q ( )

2. Provide solutions on a manageable scale according to local conditions and capacities rather than attempting large scale solutions

3. Provide enclaves of excellence or security in otherwise disruptive environments

4 Identify brand and promote special initiatives4. Identify, brand, and promote special initiatives

• However, these strengths of BDZs reflect their fundamental risks:

1 BDZs can be used as surrogate development plans to avoid1. BDZs can be used as surrogate development plans to avoid comprehensive and thorough policy frameworks which may be politically challenging

2. BDZ projects can develop into a plethora of uncoordinated

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2. BDZ projects can develop into a plethora of uncoordinated individual development initiatives

Typical Incentives and Facilities Package for BDZs in Iraq (1)g q ( )

• Independent BDZ Authority as regulator and municipal / local authority

• BDZ Operator as efficient project developer and BDZ manager

• Reliable, high‐quality physical infrastructure

• Independent judicial system and dispute resolution proceduresIndependent judicial system and dispute resolution procedures

• Efficient registration of legal entities

• Low or no customs duties

• Efficient customs procedures

• Tax incentives

• Relaxed labor rules

• No restrictions on repatriating currency, profits, or capital

• Guarantee against seizure of assets

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• Efficient trademark registration

Typical Incentives and Facilities Package for BDZs in Iraq (2)

• Searchable business and intellectual property registries • Ability to use international accounting standards and issue financial reports• Ability to use international accounting standards and issue financial reports

in foreign currency

• State‐of‐the‐art information technology and telecommunications

• Vocational training institute, with human resource recruitment system (shelter plan)

• Institutional architecture – range of professional institutions and business associations

• Cluster of technical and support services (e.g. quality and productivity center, business incubator, technical extension services, specialized

i f lit t d d d t ti R&D t f dcompanies for quality standards and testing, R&D center focused on particular industry of the BDZ)

• Positive policy environment, with parallel policies integrated with sectoral action plans for growth

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action plans for growth

• Purchase or grant of freehold land in BDZ (for major investors)

Priority Types of BDZs forConsideration in Iraq (1)

• Recommended types of BDZ are:

1 G l M f t i T t d L i ti BDZ1. General Manufacturing, Transport and Logistics BDZs

2. Oil Refining, Petrochemicals and Heavy Industry BDZs

3. Financial Services / Central Business District

4. Information, Science and Technology BDZs

5. Wide Area Special Agricultural Economic Zone

6. Multi‐Modal Sea Transport Hub

7. Multi‐Modal Air Transport Hub

• Of the recommended BDZs, the Wide Area Special AgriculturalOf the recommended BDZs, the Wide Area Special Agricultural Economic Zone showed the most significant improvement to competitiveness

– Based on Competitiveness Index derived from Heritage Economic Freedom

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– Based on Competitiveness Index derived from Heritage Economic Freedom, World Bank Doing Business, World Economic Forum Competitiveness, and Transparency International Indexes

Priority Types of BDZs forConsideration in Iraq (2)

• Study methodology incorporated:

q ( )

1. Structure (potential to accelerate growth of strategic sectors)

2. Function (contributing to solution of cross‐cutting issues)

3. Policy priority (according to NDS, Investment Law, and ICI)

4. Regional survey of conditions, resource availability and markets

5. Professional assessment of emerging opportunities for Iraq

6. Location criteria

• Should be updated as NDS and Sector Action Plans are completed

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General Manufacturing, Transport, and Logistics BDZ Business Model (1)g ( )

• To include standard BDZ incentives and facilities, with following additions to the physical infrastructure:add t o s to t e p ys ca ast uctu e

1. Multi‐modal “dryport” including

a. truck container terminus, truck parks, and maintenance

b. cold stores, reefer ports, warehouses

c. entrepôt free zone area, with bonded warehouses for re‐export

d fast freight cranes and transfer between ships barges aircraft trucksd. fast freight cranes and transfer between ships, barges, aircraft, trucks, rail as appropriate for the particular BDZ

2. Secure and bonded corridors to nearest airports, seaport, rail stationstation

3. Industrial park for general/light manufacturing, engineering, maintenance

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4. Hostels for drivers, family housing for migrant workers in isolated border BDZs

General Manufacturing, Transport, and Logistics BDZ Business Model (2)

• To include standard BDZ incentives and facilities, with following additions to institutional infrastructure:

g ( )

1. Training and R&D centers to specialize in logistics, supply‐chain management

2. On‐site international transit and customs offices

3. Local branches of manufacturers, transport, logistics trade associationsassociations

4. Professional institutes of engineers, transport, logistics, export management

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General Manufacturing, Transport,and Logistics BDZ Business Model (3)

• Parallel Policies to include:

g ( )

1. Transport Sector Master Plan

2. Trade policy reforms based on cost of protection analysis

• Business model customized to particular conditions of individual sites according to Transport Sector Master Plan

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• Locations for Manufacturing, Transport and Logistics BDZs:

g ( )

1. Strategically situated on junction of transport corridors for transit trade

2 I ll l t d ith t d ill f2. In well populated area with numerous towns and villages for distribution trade

3. Land available for development

4. Near border crossing for international trade

5. Secure area, bordering secure area of another country, forming an lenclave

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General Manufacturing, Transport,and Logistics BDZ Business Model (5)

• Sequence of development of BDZs according to policy priorities d ili diti

g ( )

and prevailing conditions

• Phased development of the two transport hubs at Al Faw and BIAP with national network of Manufacturing, Transport and Logistics g, p gBDZs

• Pending Transport Sector Master Plan, business model is hub‐and‐k tspoke system

• Based on multi‐modal hubs at Al Faw and BIAP as gateways to Iraq and whole West Central Asia Regionand whole West Central Asia Region

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• Hubs at Al Faw and BIAP connected to network of spoke Manufacturing, T d L i i BDZ di ib i i

g ( )

Transport and Logistics BDZs as distribution centers on main transport corridors spanning Iraq and import‐export links to neighboring countries

• Could be funded and managed as Public Private Partnerships (like Saudi Economic Cities)

• Even if all potential sites are not developed, Manufacturing, Transport and Logistics BDZs should be based on Transport Sector Master Plan

• Scale of each Manufacturing, Transport and Logistics BDZ depends on long term comparative advantage of location as transport and logistics hub or as distribution spokep

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Oil Refining, Petrochemical, and Heavy Industry BDZ Business Model (1)y y ( )

• To include standard BDZ incentives and facilities, with following additions to physical infrastructure:

• Sufficient highway capacity and numerous access points, together with sufficient internal road network for largest 18‐wheel, 44‐ton trucks

• Access to railroad, with modern fast freight handling equipmentAccess to railroad, with modern fast freight handling equipment

• Heavy industry electricity supplies at internationally attractive rates (US$ 0.06 per KWH). Own generating capacity or connected to grid at 100 MW level

• Oil and gas pipelines for industrial energy, refining, petrochemical raw materials, and alternative to electricity for heating and industrial ovens

• Desalinated water

• Sanitary and industrial waste treatment

• Social services

• Family residential

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y

• Recreational facilities

Oil Refining, Petrochemical ,and Heavy Industry BDZ Business Model (2)

• Sites may vary in size to reflect target investors:

1 V l i d t i l it (t i ll 10 000 t it ) f

y y ( )

1. Very large industrial sites (typically 10,000 square meter units) for investors to design and build factories and connect to general utilities

2. Medium manufacturing sites (typically 5–10,000 square meter units) for component and support industriesfor component and support industries

3. Transport and logistics areas, requiring large land areas, warehouses and containers storage

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Oil Refining, Petrochemical, and Heavy Industry BDZ Business Model (3)

• Institutional Architecture to include local branches of Oil, Ch i l E i i I d t i T d A i ti f i l

y y ( )

Chemicals, Engineering Industries Trade Associations, professional Institutes of Engineers

• Policy framework for oil refining, heavy industry and y g, y ypetrochemicals under Hydrocarbon Law:

1. Sets out how government and private sector contribute to national downstream and energy intensive developmentdownstream and energy‐intensive development

2. Assists BDZ Operators in attracting investors in their sectors

• Parallel policies:• Parallel policies:

1. Remove restrictions in national and international trade

2 D l l li i2. Develop clear transport policies

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Financial Services/Central BusinessDistrict Business Model (1)( )

• To include standard BDZ incentives and facilities, with following dditi t th h i l i f t tadditions to the physical infrastructure

1. High quality urban infrastructure provided by municipality (e.g. streets) or BDZ Operator (e.g. up‐market office space, hotels, convention center)

2. Efficient logistics including access to mass transit systems, rail, highway, airport and limited warehouse facilities g y, p

3. Congenial social environment for workers and residents, including for families of national and international executives

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Financial Services/Central BusinessDistrict Business Model (2)

• To include standard BDZ incentives and facilities, with following additions to the institutional infrastructure:

( )

1. Offices of pillars of financial services sector (e.g. Central Bank, Stock Exchange, other key exchanges (oil and gas), and large corporations)

2. Trade Associations and Professional Institutes (Institute of Accountants, Bar Association, Bankers Association, Business Roundtable, Chamber of Commerce)

3. Business and Financial Service Regulators (Central Bank, Securities Commission, Financial Services Authority, Financial Ombudsman)

4 Financial and business research centers and consulting organizations4. Financial and business research centers and consulting organizations

5. Training institutes (business school, finance, banking, accounting, insurance, marketing, advertising)

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Information, Science, and Technology BDZ Business Model (1)gy ( )

• To include standard BDZ incentives and facilities, with following additions to the physical Infrastructure:

1. Fully serviced high technology factory sites

2. Pre‐built shell factories for manufacturing, research or maintenance operations

3. Clean areas distant from smoke, dust, vibration3. Clean areas distant from smoke, dust, vibration

4. Purpose‐built science conference center

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Information, Science, and Technology BDZ Business Model (2)

• To include standard BDZ incentives and facilities, with following

gy ( )

additions to the institutional infrastructure:

1. Science, Technology and Knowledge Industries Trade Associations, and Professional Institutes of Engineers, Scientists, Computerand Professional Institutes of Engineers, Scientists, Computer Sciences

2. Financial services cluster (for venture capital funds and other specialists)specialists)

3. Business incubator with advisory services for financing, marketing, and company administration and roster of independent directors

4. Multi‐disciplinary applied research institute (part of university or smaller think tank)

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Information, Science, and Technology BDZ Business Model (3)

• Special incentives for high technology industries:

gy ( )

1. Tax provisions to extend years to carry forward losses and transfer losses to other projects in Iraq

2. No tax on reinvested profits for at least 10 years

3. Zero tax on Iraqi and worldwide income derived from patents, royalties, other forms intellectual property for both national and foreign companiesg p

4. Personal income tax exemptions for both foreign and Iraqi science and technology personnel

5. Trademark registration and intellectual property protection with BDZ‐dedicated office

6. Registration of Scientific NGOs at BDZ‐dedicated NGO Office and

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6. eg st at o o Sc e t c GOs at ded cated GO O ce a dregistration procedure

Wide Area Special Agricultural Economic Zone Business Model (1)( )

• To include standard BDZ incentives and facilities, with the f ll i ti l dditi t th h i l i f t tfollowing particular additions to the physical infrastructure:

1. Small Area Zone within the Wide Area Special Agricultural Economic Zone with fully serviced industrial/commercial sites open to all types of agro‐processing, packaging, chemicals, additives/ingredients, agro‐engineering and technical services companies

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Wide Area Special Agricultural Economic Zone Business Model (2)( )

• To include standard BDZ incentives and facilities, with the following particular additions to the institutional infrastructure:

1. Agricultural Industry Associations, covering farmers, manufacturers, and tradersand traders

2. Professional associations for agricultural and environmental scientists and technologists

3. Environmental and water regulatory agencies with controls over rate of use

4 Special financial services unit in Small Area Zone for commercial4. Special financial services unit in Small Area Zone for commercial banks and Agricultural Cooperative Bank

5. Agricultural applied research and development center

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Wide Area Special AgriculturalEconomic Zone Business Model (3)

• Special Incentives

( )

1. Free Zone status for agricultural production companies located outside Small Area BDZ

P li E i t• Policy Environment

1. Introduction of legal reforms in Wide Area Special Agricultural Economic Zone including freehold land ownership rights and rights to purchase State land so farmers can use land as collateral for loans

2. Strategic plan for development of agricultural sector (production g p p g (pand agribusiness)

3. Reform of agricultural trade policy to eliminate trade restrictions

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Wide Area Special Agricultural Economic Zone Business Model (4)

• Parallel Policies

( )

1. Reform banking sector to encourage competition in banking and agricultural finance

2 C t t l f t t2. Create master plan for water management

3. Invest in agricultural infrastructure, especially for irrigation, drainage systems, and rural roads

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Multi‐modal Sea Transport Hub Business Model (1)

• Strategic purposes:

1. To provide deep water super‐port for Ultra‐large Container Ships (ULCSs) as gateway for West‐Central Asia

2 T d i ti t it2. To expand existing port capacity:

a. Um Qasr port has only 13 meter draft and could not handle new ULCSs

3. To reduce import costs:

a. UNDP estimates Iraq saves USD 500 for each Twenty‐foot i l U i ( U) i d h h I i h hEquivalent Unit (TEU) imported through Iraqi port rather than

overland

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• Strategic purposes (cont.):

1. To promote super‐port as hub for transport and logistics network

a. Iraq currently imports 7 TEUs per 1,000 population

b K i i 92 TEU 1 000b. Kuwait imports 92 TEUs per 1,000

c. Jordan imports 25 TEUs per 1,000

d If I i t d 25 TEU 1 000 (th J d ) it ldd. If Iraq imported 25 TEUs per 1,000 (the same as Jordan), it would import more than 800,000 TEUs per year

e. At that level, Iraq could save USD 200 million per year by importing through its own port instead of overlandthrough its own port instead of overland

f. Iraq should plan for 5 million TEUs per year, growing to a sub‐continental entrepôt handling 25 million TEUs per year

g. Compare Dubai which handles 8 million TEUs per year and plans for 55 million TEUs per year by 2030 35


• To include standard BDZ incentives and facilities, with the f ll i ti l dditi f i ti d f ilitifollowing particular additions of incentives and facilities packages:

Physical infrastructure Physical Infrastructure (cont)• Deep‐water port – minimum 17 meters, better 19 meters, best 21 meters

• Large‐scale container sea

• Land links: rail to Basrah, road to trunk highways, bonded road/rail link to Basrah airport

• “Satellite” dryport and Free Z t B h i t• Large scale container sea

terminal, minimum 20 berths• Landside post‐Panamax gantry cranes for sea port and rail head

Zone at Basrah airport• Logistics and transport park

with Free Zone status• Industrial Park with Free Zone

t t f lhead• Large‐scale container “dryport” to integrate sea, road, rail, and air transit movements

status for general manufacturing, engineering, light assembly

• Expansion of Al Faw town as new city

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movements new city


• To include standard BDZ incentives and facilities, with the following particular additions of incentives and facilitiesfollowing particular additions of incentives and facilities packages:

Legal/tax incentives Institutional infrastructure g• BDZ Authority as Municipality and Wide Area Zone Administrator

• Independent judicial system/

f/Policy environment

• Parallel policies of national transport Master Plan, trade policies BDZ strategy• Independent judicial system/

dispute resolution for maritime and transport law

policies, BDZ strategy• Venture capital funds and banks specializing in shipping, transport and logistics companiescompanies

•Marine Trade Associations and Professional Institutes

37


• Two potential locations:

p ( )

1. Al Faw

2. Deep water platform extension to Al Faw

• Three phase development:

1. Short term goal to build port facilities to supplement Um Qasr port

2. Create hub port as key link in strategic national/regional transport and logistics network

3. Upgrade super‐port for new generation ULCSs to service whole3. Upgrade super port for new generation ULCSs to service whole West‐Central Asia region

• Consider Neutral Zone status to serve whole region:

1. Compare to existing oil Neutral Zones in Gulf Region

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Multi‐modal Air Transport Hub Business Model (1)

• Strategic Purposes:

1 Gateway for external air transport links1. Gateway for external air transport links

2. Combines air, road, rail, telecommunications

3. Full transport support services (cold stores, maintenance p pp (engineering, dispatch yards) to act as hub for Iraq transport and logistics network

Istanbul and to

EuropeMalatya Kars

Baku and toChina

Latakiya

Eskenderan

Malatya Kars

Beirut

Khoramshar

Abadan

39

Kuwait

Al Faw


• Located at Baghdad International Airport:

1. Direct access to highway system

2. Extensive underused land

3. Scope to return to full international operations when normal security conditions prevail

4. Baghdad is “world‐scale city”, main financial and business center of g y ,Iraq with agriculture, industry, retail, construction, capital city and conurbation of 7 million people

5. Baghdad is already a national and international rail hub,5. Baghdad is already a national and international rail hub, connecting a north‐south rail corridor with two east‐west corridors, and national and international highway hub

6 However BIAP has no existing rail spur6. However, BIAP has no existing rail spur

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Physical infrastructure Operational structuresy f•Multi‐modal “dryport” with logistics/transport park, reefer ports, bonded warehouses and fast freight

p• Link to “Transport and Logistics City” business park in Abu Ghraib Palace area

• Training and productivitywarehouses, and fast freight transfer facilities

• Direct links to railroad and highway networks

• Training and productivity center for transport, logistics, and supply chain management

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Legal/tax incentives Institutional architecture/Policy i• International transit and customs

offices• Efficient BDZ Authority and BDZ Operator

environment• Institutional architecture to include transport and logistics industries trade associationsP f i l i i• Parallel policies of national

transport Master Plan, trade policies, BDZ strategy

• Professional transport institutes and aviation associations

• Airport development through contracting or PPP models (under transport Sector Master Plantransport Sector Master Plan

• “Open Skies” policy to encourage private or state‐owned airlines

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Action Steps for Implementation of BDZs (1)

• Adopt BDZ Policy as part of National Development Strategy to id di t d i di id l d l t i iti tiavoid uncoordinated individual development initiatives

• BDZ Policy to implement the strategies in National Development Strategy and International CompactStrategy and International Compact

• Pass Enabling Legislation in order to grant executive branch of government the authority to establish BDZs and determine their g ylegal, regulatory, and tax framework with significant independence from central government

• Adopt sector master plans and pass relevant legislation (e.g. hydrocarbon law)

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• Pass Enabling Directives for BDZs – in order to establish detailed provisions for regulation and operation of BDZs

• Promote BDZ development opportunities to encourage private sector investment in establishment of BDZs

I h l d l 30 dIraq has already lost 30 years and could be bypassed by new global development unless BDZs take padvantage of restoration of security as this occurs

44


• Certain strategic decisions are required quickly in order to take d t f j t iti f I F ladvantage of major opportunities for Iraq. For example:

1. Opening up of West‐Central Asia

2 N E i l d b id t t t2. New Eurasia land‐bridge transport routes

3. New transport technologies

4 Economic growth in the Middle East4. Economic growth in the Middle East

5. BIAP’s status as hub airport

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Criteria Used to Select Locations for BDZ Business Models (1) ( )

• Some BDZ locations pre‐determined by the project (Hub Sea Port at Al Faw Hub Airport at BIAP)Port at Al Faw, Hub Airport at BIAP)

• Site selection is a complex process involving assessment of economic, financial, social, environmental, technological, and cultural factors

• BDZs are public investment projects; therefore, need to assess criteria both to advance best interests of BDZ as a project andcriteria both to advance best interests of BDZ as a project and to maximize public benefits and minimize public costs

• Most criteria for selecting locations for BDZs are related to type of BDZ – clearly different factors for Pilgrimage BDZ and for Oil Refining BDZ

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Criteria Used to Select Locations for BDZ Business Models (2)

• However, basic essential common factors include:

( )

1. Availability of government freehold land

2. Safety and sustainability of the land

3. Availability of extensive water resources

4. Must already have or be close to supply of each essential utility (water, electricity, oil, gas, telecommunications connections)

5. Dynamic, creative and ambitious local political leadership, or strong and dynamic local private sector leadership

6 Must be close to actual or potential transport links6. Must be close to actual or potential transport links

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• General Manufacturing, Transport, and Logistics BDZ:

( )

1. Junction or critical site of transport corridor

2. At least one major transport mode on location

3. Close to large population3. Close to large population

48


• Oil Refining, Petrochemicals, Heavy Industry BDZs:

1 L f il bl l d

( )

1. Large area of available land

2. Distant from areas of dense population (due to pollution/ explosion risk)

3. Easy access to raw materials

4. Direct access to transport facilities

5 Access to large scale waste disposal facilities5. Access to large scale waste disposal facilities

6. Close to established engineering industry cluster with wide range of engineering industries and services to provide support

7. Close to skilled, technical and managerial labor resources at all levels

8. Proximity to established university with R&D facilities and specialization in science and petroleum engineering

9. Proximity to emergency services in case of accidents49


• Financial Services BDZs/ Central Business District:

1 L t d i ti l i l it l ith t bli h d

( )

1. Located in national or regional capital with established commercial tradition

2. Close to established cluster of business professionals (banks, lawyers, accountants, IT companies)accountants, IT companies)

3. Close to established university with graduate business school or advanced management school and research capacities

4 E i f hi h li f i l b f i l d4. Extensive sources of high quality professional, sub‐professional and clerical staff

5. Easy links to international airport

6. High quality social environment with good residential, cultural, recreation, restaurants and hotel facilities

7. High standards of security

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g y

8. Good community transport system to enable staff to commute to work reliably


• Information, Science and Technology BDZ (“Science Park”):

( )

1. Close to large science‐focused university

2. Close to a cluster of research departments or head offices of high‐technology companies and relevant government departmentstechnology companies and relevant government departments

3. Close to sources of high quality professional, sub‐professional and clerical staff

4. Easy links to international airport

5. Clean environment, unaffected by pollution and vibration

6. High standards of social environment with good family residential, cultural, recreation, restaurants, and hotel facilities

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• Wide Area Special Agricultural Economic Zone

( )

1. Good agricultural land

2. Secure long term water supplies

3. Farming population with strong agricultural culture

4. Network of farming trade intermediaries and traders

5 Established transport links (good highway or railway) to export produce5. Established transport links (good highway or railway) to export produce

6. Established network of rural roads

7. Sufficiency of physical infrastructure such that growth will not be . Su c e cy o p ys ca ast uctu e suc t at g o t ot beconstrained by infrastructure problems when reforms stimulate growth

8. Committed and well informed political leadership

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Appreciation For Their Contributions

We would like to acknowledge the following individuals for their valuable contributions to this summary document.

– Paul Savello, US Embassy, Iraq Transition Assistance Office, Ph.D., JDPaul Savello, US Embassy, Iraq Transition Assistance Office, Ph.D., JD

– Alex Riemer, US Embassy, Office of Private Sector Development, Consultant

– Captain Siegfried T. Ramil, US Army Operations Officerp g y p

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Feasibility Study and Summary

TRC has completed comprehensive Feasibility Study called Business D l Z i I Th S d l i h h i h diDevelopment Zones in Iraq. The Study, along with the eight appendices, was undertaken to provide those actively involved in economic development initiatives in Iraq with detailed information, analysis, and perspective in this area The material presented in the Study mayperspective in this area. The material presented in the Study may contribute to the basis of focused, effectively supported and coordinated development activities, and further policy initiatives for this important tool in building the Iraqi economy.

F ibilit St d d E ti S P t tiTRC

tool in building the Iraqi economy.

Feasibility Study and Executive Summary Presentation prepared by TRC Limited [email protected]

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Further Information

The Four Part Feasibility Study of Business Development Zones In Iraq was y y p qcontracted through the Office of Private Sector Development, Strategic Investment, and Housing of the US Embassy; Baghdad, Iraq. Inquiries may be made to the following contact:

June Reed, Senior Advisor, US Embassy; Baghdad, Iraq

Office of Private Sector Development Strategic Investment and HousingOffice of Private Sector Development, Strategic Investment, and Housing

[email protected]

0770.443.0240

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