Capstone Meeting presentations from February 2014, Baghdad, Iraq

1. Maximilien Pierotti, UNIDO
Thomas Flynn, MENA-OECD Investment Programme
2 February 2014, Baghdad, Iraq
The role of economic zones as business and investment catalysts in Iraq
United Nations Industrial
Development Organization
UNIDO Iraq Programme Office

2. UNIDO Iraq Programme
What is the purpose of this presentation?
Define how Iraq can benefit from economic zones
Analyse the usefulness of economic zones as a policy instrument in Iraq
Propose concrete next steps
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3. UNIDO Iraq Programme
What are economic zones? What do they offer?
Overall definition
•One among various economic policy instruments to support private sector development and stimulate investment
•“Environments where it is easier and cheaper for the private sector to engage in economic processes” (Claude Baissac)
•Can serve multiple policy objectives
Similar goal: A secure, conducive environment for enterprises
•Developed and managed land, subdivided into plots
•Adequate on- and off-site infrastructure and access to utilities
•Support services for existing or new businesses (e.g. business licencing, training, incubation)
•Perhaps offer fiscal or commercial incentives, access to finance
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4. UNIDO Iraq Programme
Rationale for economic zones
•Create an alternative business environment: Investment support measures that resolve barriers to investment and economic activities and facilitate firm entry
•Provide needed inputs to encourage private sector development
A tool for Governments to address economic challenges
•Catalyse economic activity in specific locations: improve municipal zoning, urban planning, and/or environmental impact management
•Encourage a production-based economy: strengthen local industrial bases and promote local economic development
•Develop competitive firms, regions, and country: enterprise development and investment attraction
•Encourage economic diversification
How can zones help attain policy objectives?
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5. UNIDO Iraq Programme
Consistency with Iraq’s development goals
A non-exhaustive list
•Encourage private sector development and investment, in particular through infrastructure and services development
•Support industrial revitalisation and the emergence of a manufacturing-oriented economy, especially through technology transfer
•Increase “competency and competitiveness” to increase production
•Support economic diversification
•Stimulate export capacities
•Generate new jobs/businesses
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6. UNIDO Iraq Programme
Portfolio of economic zones
Why different economic zones? Depends on policy objectives
•Industrial Zones: both domestic and foreign investors, especially in manufacturing and support services
•Export Processing and Free Zones work under specific customs regimes to facilitate regional/international trade and support export-oriented manufacturing
•Special Economic Zones (Investment Zones) offer streamlined regulations and licencing and incentives to attract foreign investors and develop new industries
•In other countries, technology parks and business incubators offer high-level support services, designed to facilitate economic diversification
One country can have different zones according to policy objectives

7. UNIDO Iraq Programme
Various types of economic zones
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Extent of support services and incentives provided
Level of technology and foreign capital
Industrial Zones
Technoparks and Incubators
Independent Enterprises or Clusters
Investment Zones

8. UNIDO Iraq Programme
Lessons learnt
Legislation
•A specific legal regime
•And/or a streamlined regulatory framework pertaining to zone development/ management
Institutional framework
•Stakeholders must co-ordinate
•Parastatal body (by law)
•Or an advisory entity co- ordinating stakeholders efforts
Management structure
•Central Government: Legal/regulatory framework, land allocation, incentives, investment promotion, financing, sovereign investment guarantees
•Local governments: Zone management, licencing, infrastructure and security provision, services, land, holding municipal authority
•Private sector: involved in the design and management of zones (Management contracts and possibly zone development and financing through PPP)
Policies
•Unified economic zone strategy, connected with an overall economic development plan
•Various types of zones can successfully co-exist as long as they support specific policy objectives
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9. UNIDO Iraq Programme
Moving forward with economic zone development
Adopt a new legal framework and enabling regulations
•On-going initiatives (draft industrial zone law, draft investment zone regulation)
•Draft PPP law
Create an institutional support structure
•Draft industrial zone law advocates for the creation of an independent institution
•Private Sector Development Council, Industrial Zone Committee
Formulate and adopt a policy/strategic framework
Support the development and implementation of pilot projects
•Several on-going initiatives across Iraq by Ministry of Industry and Minerals, Free Zone Commission, and Iraqi National Investment Commission, supported by the international assistance community (UNIDO, OECD)
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