Iraq investors should stick to banks and hotels, traders say

The cabinet approved a US$67 billion annual budget, the vast majority of which is earmarked for government salaries, in 2010, leaving little left over for other projects.

Foreign investment, however, has been trickling in — according to Abdul Jabbar al-Rubaie, the managing director of the Al-Mansour Melia hotel on the Tigris river in central Baghdad's Salhiyeh neighbourhood, the hotel is close to securing investment for a new development.

He told AFP he expects a Kuwaiti group to agree to a US$300 million injection in around four to six months to start construction for a new hotel on a plot of land adjacent to the Al-Mansour.

“As security has gotten better, our operation has increased,” he said, noting his hotel had seen a 20-percent increase in customers in the previous four months.

“That increase is not just true for this hotel, it's also true of other hotels.”

Security has improved in Baghdad and throughout Iraq — the death toll from violence in September was the lowest in five months, and less than half of the level a year ago — but remains high by international standards and recent major attacks have served notice that insurgent groups remain capable.

One foreign diplomat, speaking on condition of anonymity, acknowledged to AFP that companies based in his country that were considering investing in Iraq had been deterred in particular by bombings at the foreign and finance ministries on August 19.

The twin truck bombings had killed around 100 people and left several hundred wounded and made clear, the diplomat noted, that key ministries could be hit.

At the stock exchange, however, there is a belief that security will continue to improve, and that will only make their investments more attractive.

“I'm mostly investing in hotels, because their share prices are good value, and banks are also cheap,” Khafaji said, adding he expected to build on his profits towards the end of the year.

“As security improves, more money will come.”

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