How global brands can get on the road to Babylon

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The World Bank’s latest “Doing Business 2020” ranks Iraq at 172^nd out of 190 countries, compared to the UAE at 16.

But investors should not be dissuaded as the country has vast untapped potential and is hungry for external investment. 

With the capital Baghdad the second largest city in the Arab world, Iraqi shoppers are eager to embrace global brands looking for new frontiers.

Below is a guide to entering this fast-growing market.

When most people think of Iraq they picture the Gulf War, what is the reality?

The war is over, but when people think of Iraq the first thing that comes into their head is the war images they saw on TV.

When I have taken clients and partners to Iraq they think they will see a lot of destruction, but they are surprised to see how vibrant and beautiful Baghdad is, and how welcoming and friendly the people are. Iraq is really trying to evolve and start a new chapter. 

Yes, you will see armed security but things have improved a lot in the last two years and 90 percent of the checkpoints have now gone.

Some areas, such as where the palaces and embassies are located, still have security, but Westerners and expats are generally very safe visiting Baghdad and Basra.  

• Oil sector revs up to exploit higher prices
• Political impasse overshadows oil bonanza
• Power sector continues to generate headaches
• Sweltering heatwave adds to power cuts misery

Is it easy to set up a branch or office in Iraq?

Yes, but you do need a local partner – similar to how Dubai was up until recently. You need a physical office in order to get a licence, but small offices are easily accessible to start with. 

Unlike Dubai, you only need one trading licence, there are no separate onshore or free zone rules. If you have all your documents it takes about a week to process, sometimes less.

Which sectors are the best and hardest to break into?

There are many opportunities for brands, particularly the big global brands in retail, especially in Baghdad which still does not have many of the popular names we are used to in Dubai.

Some global brands are emerging and residents eagerly embrace them. 

There are still a lot of opportunities for global brands especially in the beauty, restaurant and food sectors. People love to grocery shop so there is a lot of potential for more international food and beverage brands.

Would it be better to buy a stake in an existing Iraqi company?

If you can get a good deal in a good Iraqi company with a solid reputation then this is an option.

But Iraqi consumers are eager for something new, or brands that are not currently available.

If you can go it on your own then this is the best option and the government is making it easier all the time for people to enter the market from scratch. They are actively seeking out international brands to make their presence felt.

Are there any major restrictions or challenges?

One of the biggest gripes for new companies entering the Iraq market is that it is still very much a cash-first country.

It can be tricky when it comes to international transfers of money, as there are few big international banks. A lot of work is done by Western Union and money transfer as opposed to online transferring.

With restrictions on money laundering, you have to provide proof of funds. It can also be frustrating for big global companies used to seamless online transactions.

I am regularly seen running around Iraq with envelopes of cash to pay for rental and other bills – this is normal. Cash is still king, and cards are rarely used. 

Any other essential things to know about launching into the market?

Iraqis generally are very educated and are willing to learn and try new things. The main language is Arabic, but many can speak or understand English.

Assume most business communications will be done in Arabic, so you will need to make sure you have a translator with you when visiting.

What is the future like for Iraq?

Iraq is one of the biggest markets opening up in the region. I am genuinely so excited to see my country evolve and know it will develop quickly in the years ahead.

In three to four years’ time the opportunities will be gone. Many of the global brands are doing market studies and starting to make plans even if they aren’t speaking about it openly.

Some of the brands I am working with are huge on the international scale and it is an exciting time to be part of the changes. 

Dubai-based Rafat Shawe specialises in advising companies and brands looking to expand into Iraq