The construction sector of Iraq is trying to carry on and mange with the economic and political challenges which are generally happens with a post-war country. Repairing its war-torn infrastructure and managing its business environment to face all the economy and political challenges, it has gain a huge pipeline of project line. A huge number of projects are under maintenance and in the project pipeline including infrastructure of US $35 billion helping to gain high growth rate in the Iran’s construction sector. The Iran Government has announced again and again its aim to give priority on infrastructure business. Mostly to focus on housing and electricity investments for that it has lost many contracts.
According to the 2012 budget, a five years investment planning for 2013 to 2017 of US$250bn-US $275bn are to be maintained for the growth in Iraq's construction sector. It has been expected that average growth rate of 7.7% will be achieved per year between 2012 and 2016. In order to successfully achieve these plans their forecast is to see the improvement in the institutional capacity, political relations, and budget execution rates. The US$100bn budget is 21% higher than the previous year budget. And this involves $32bn in the projects of investment. This amount of increment has been achieved by 31% increment in electricity investment and 10% increment in housing investment. Infrastructure assignments are anticipated to carry on to stronger to get their goal. They are refraining from announcement into their forecast by giving limited information on projects.
Some construction sectors are getting construction contacts, some are beginning, some are facing risks in progress, and other are seeing no progress at all.
The key factors that are affecting the sector are:
Political risk: The political condition in Iran is deteriorating day-by-day. The instances of violence are increasing. The lack of security is a prohibitive factor for investors. Though, over the recent year some improvements in security were made in Iraq.
Oil industry disputes: total income of stale-mate over oil is shared between KRG and Iraq. And the lack of power to supply pleasing contracts to IOCs is affecting the country’s ability to use advantages on oil reserves. The oil industry disputes are affecting the infrastructure sector, as investing is almost completely dependent upon public revenue spending. Moreover oil revenues are not achieving expectations ability for investing in projects could be impeded.
Lack regulatory environment: Thee poor regulatory environment is badly affecting on the investments.
Lack of institutions: Iraq’s institutions are lacking of the strength and organization for obtaining the projects. In 2011 the electricity ministry of Iraq has been through several ministers and its inability produced a huge lose of contracts of billion dollar for power plants. The ability for refining institutions is not present.