Iraq's rule-sets need to be rationalized
Monday, November 23, 2009 at 11:32PM OP-ED: Liberate Iraq's Economy, By FRANK R. GUNTER, New York Times, November 15, 2009
What remains in Iraq is rule-set rationalization:
The chief problems in Iraq's commercial code are its incredible complexity, long delays in processing requests for licenses and high cost. For example, registering a new business in Iraq costs almost $2,800 compared to $139 in Delaware. (However, a group of Iraqi businessmen assured me that if $600 in cash was given to the right person, a license would be available immediately and no further fees would be required.)
The country could simply throw out its current commercial code and adopt a less restrictive, regionally acceptable one -- like Saudi Arabia's. Or, more realistically, it could make its code more user-friendly by, say, allowing business owners to work with one ministry -- as opposed to a dozen.
The government could take other steps, too. With the exception of tax collection and international trade regulations, responsibility for regulating private businesses could be taken from the Baghdad ministries and delegated to the country's 18 provinces. Encouraging the provinces to compete for private-sector jobs would lead to friendlier regulatory environments around the country -- just as it has in the United States.
But whatever is decided, the government of Iraq is running out of time.
Good piece.
Reader Comments (3)
Do you realize that in all of baghdad, there's only something like eight (legal) gas stations? For a city of millions. A huge mindset shift needs to come in the halls of power in order for this to get better. Decentralization, sensible regulation (rather than regulation based on graft), fighting nepotism - lots of culturally accepted (and expected) stuff that needs to change. That's going to be tough.
You don't build and stock a full size Wal Mart in Sadir City or Watts, because it can't be insured . . Stockholders would hang a CEO who would expose their investments to risk like that . . At least, Western Stockholders would . . They're spoiled, they always expect a return . .
“There is another path. The potential for private sector job growth in Iraq is great. The country is blessed with a strong entrepreneurial tradition, a relatively well-educated labor force and a natural resource more valued in the Middle East than oil: water. Only Iraq and Turkey have sufficient water for large-scale agribusiness, and Iraq is surrounded by wealthy countries that need to import food. But to exploit these advantages, Iraq needs to make important changes. And it should start by rationalizing its commercial code.”
Economically-realistic global rationalized commercial codes already exist. (The historically American (now global) model is one such code.) Do Iraqi businesses see and want the benefit? What is preventing outside business interests from connecting Iraqi businesses that see and seek this benefit into/with/within existing economically rational commercial codes? How can the preventing force, inertia, misinformation, ideology, fear, or whatever be overcome, bypassed, or removed? Politically complicated changes to government bureaucracy may or may not be as necessary as is being proposed in this article.