Fast Market Research recommends "Iraq Infrastructure Report Q1 2014" from Business Monitor International, now available

Boston, MA -- (SBWire) -- 12/06/2013 --The reconstruction of Iraq's infrastructure continues and the construction industry will benefit from a sizeable investment plan and an inflated budget. However, the country's poor business environment will prevent the sector's promise from being fully realised. Low project completion rates are a result of government agencies' lack of accountability and technical capacity, as well as frequent delays in the approval of projects and the transfer of funds by the central government. We accordingly forecast sector growth to be at 8.1% year-on-year (y-o-y) in real terms between 2013 and 2017 - far from the impressive 24% y-o-y growth witnessed between 2008 and 2012.

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Although much-delayed, the Iraqi parliament approved in a budget for 2013 back in March. The budget had large sums earmarked for investment into the power, housing and transport sectors. However, Iraq's poor business environment results in the large sums of money being promised rarely being fully utilised. Although the poor security situation in Iraq continues to deter foreign involvement in the market, more endemic problems such as corruption, a lack of institutional capacity and poor technical ability severely dent growth. To address these endemic problems the Ministry of Finance and the Ministry of Planning are looking to tackle the issue of low execution rates by making those with a rate of less than 25.0% liable for questioning by the parliament and the council of ministries. While such moves are encouraging for the construction sector, we believe the government's lack of control over local agencies and bureaucratic bottlenecks will impede the progress of development projects during the forecast period.

Developments which are underpinning our outlook for this quarter include:

- The development of the Grad Fao port near Basra will significantly boost construction in the region and has the potential to lead to Iraq becoming a major freight destination as companies may wish to transport goods overland instead of undergoing the long voyage to Suez.
- Air and sea ports continue to garner investment. Japan has offered loans of about JPY120bn (US$1.24bn) to Iraq to build a new refinery and rebuild the port of Khor Al-Zubair. Both loans will have a term of 40 years and JGC Corp. and Chiyoda Corp. are expected to bid for the Rumaila refinery project, while Toyota Tsusho, Toyo Construction and Toa Corp are expected to bid for the Khor Al-Zubair rebuilding project.

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