Inside view on Iraq logistics
The fictional character Sinbad the Sailor is well-known around the world. Supposedly hailing from the Iraqi city of Basra, the explorer travelled the seas east of Africa and south of Asia recounting tales of magical adventures that are still thrilling adults and children today.
However, for the global business powerhouses, the magical possibilities inside Sinbad’s hometown remain a thrill. Particularly since Iraq has the world’s fourth largest oil reserves – mostly situated in Basra - eighty per cent of which remain unexplored.
Following the most recent war, Iraq is on the mend and commodities are needed. Earlier this year the country’s deputy central bank governor, Mudher Kasim, announced that in the next four years he expected Iraq’s GDP to jump to $360 billion from its current $170 billion – maintaining its average 9.4 per cent yearly growth.
Iraqi companies now have a clear vision for the future, according to Sarmad Al-Khudairi, CEO of Al-Fayha Group. And he would know; the Iraqi firm, which provides logistics services through subsidiary Fayha Group Logistics, has been in operation since 1920.
“The 2003 war generated positive growth in many businesses, and caused a recession in many businesses - but one thing I can say is that from 2003 to 2008, Iraq was looking to settle old conflicts, deal with restrictions and very old local regulations. But now, and since 2008, Iraq is trying to implement the international standards of business: to be an open market, and a free market, to be competitive and to gauge services which are not based solely on relationships,” says Al-Khudairi.
“So it has been a change for Iraq to be like any other free or international country. All these experiences went into rethinking the rules and regulations, and making a new start. Since 2011 and 2012 there has been far greater clarity as to where Iraq is going.”
“We are now moving towards a free market, more competition and giving a better service; no more monopolies. The people who can’t give better service and good rates don’t take the business any more.”
But what about the facilities available for companies in Iraq? And how do they compare with the rest of the Middle East? Well, according to Al-Khudairi, whose firm owns seven warehousing and logistics facilities in Basra, there is not much difference between Iraqi facilities and the ones in Dubai.
“It’s identical to Dubai,” he says. “And to make sure we meet the standards, all the key managers in our company have worked either in a Western country or in GCC, especially in Dubai. They still have Dubai visas and they still come here for training and coordination.
“So this is how we differentiate. When the client comes, he finds it very easy to deal with our managers, because they know the standards, they know the language, they know the communication. There may be a cost for us but it’s worthwhile. This is how we serve them.
“For companies wanting to use our facilities, we can offer security, twenty-four hours electricity and fast internet connection.
“Our focus now, is to emulate the warehouses which can be seen here in Jebel Ali. They will be fully built, well-equipped and well-finished. Clients will be able to move in immediately and to use them as offices or workshops or whatever. Already we have many leading western companies with us as our tenants.
“The other thing that our company can offer, uniquely, is this: Al-Fayha owns the only private port in Iraq. It is called the UR dry dock. So, as in 2003 when there were problems with the government ports, we supported Iraq by having our own port.”
However, Al-Khudairi believes that although the private sector in Iraq can accommodate the influx of foreign companies, the country’s infrastructure still has some way to go to catch up.
“Companies who are supervised by the Iraqi government have started to export oil now. And so there is a greater demand for logistics, traders and warehouses.
“But, I think the biggest challenge for our government is to cope with the demand and to provide an infrastructure to allow for this boom. The private sector, like us, has the funding and the land, and can build warehouses. We can bring trucks from any country in the world, but how about the roads? How about the ports capacity? How about the water and the power needed for all this?
I think the government knows the challenge and I think they’re working faster in making bigger roads, more electricity etc. That’s really the challenge for the government, but they know about it.”