What are the potential risks of investing in Iran?

Now that the deal in Iran is a reality, foreign investors begin to look for opportunities to further develop in the Middle Eastern countries and surrounding markets. This said, in many countries like Iraq the risks for global entrepreneurs can be considerable. This article explores the three main risks when investing in Iraq.

Corruption

Iraq is a corrupt country, as many other developing nations are these days. In accordance to Transparency International’s Corruption Perception Index 2015, Iraq is the fifth most corrupt place in the World, with weak court protection, embezzlement of public funds and little to no anti-corruption efforts, deterring investment efforts;

No financial reforms in banking sector

The current banking sector cannot support increased investment amounts and while the country boasts 51 banks, there is little to no competition from the private sector. Transparency is low and the banks’ fiscal activities may be considered “shady” when looked at from the perspective of a foreign investor.

Security

Last, but not least, security is probably the biggest concern when investing in Iraq. Sporadic improvements have taken place over the past five years, but regular attacks, orchestrated by al Qaeda and Sunni groups continue to be part of the daily news. The federal Government cannot secure peace and can provide only weak, limited protection services to foreigners.

Business setup benefits in Iraq?

The Iraqi Government, have imposed only minimal setup requirements over the past five years in an effort to attract FDI (Foreign direct investments). As a company setup expert advisor, Healy Consultants confirms the attractiveness of these registration advantages in Iraq, namely:

• The Iraq LLC requires very low setup requirements;
• New LLCs require only one shareholder of any nationality;
• Only One director or corporate shareholder is required from any nationality;
• Minimum start-up capital requirements are low at US$850 and
• New businesses receive full tax-exemption for a period of ten years.

Conclusion

The World is focused on the Middle East and will continue to monitor the situation there in terms of direct or indirect investments. In time, the risks of expansion and doing business in Iraq will hopefully diminish as the government and people in these regions write a new success story, similar to Dubai.

Best regards,

Mr. Petar Chakarov

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Client Relationship Manager
Healy Consultants
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