The overall business environment in an economy depends on many factors, ranging from market size, macroeconomic conditions, and business regulations. A number of international benchmarks and surveys identify key constraints to a country’s competitiveness and private sector development. While such benchmarks only give an indication of the overall enabling environment for firms, they can help identify specific areas of business regulation in need for reform to create a more business-friendly environment for firms supporting private sector productivity and growth. Governments can play a key role by creating a regulatory environment with rules that establish and clarify property rights, minimize the cost of resolving disputes, increase the predictability of economic interactions and provide contractual partners with core protections against abuse. Simple and inexpensive business registration processes, for instance, can facilitate formal entrepreneurship, enhance job creation and economic growth,1 and lower levels of corruption and informality.2
Private sector development is required to catalyze renewed opportunities for enterprising Iraqis.
Private sector transformation includes changing the mindset from a public driven economic model fueled by oil industry to an entrepreneurial one. High informality of the private sector and weak access to markets prevent the development of the private sector. Business opportunities to serve a 40 million consumer market is one of Iraq’s biggest assets. However, changing the mindset of Iraqi’s tomorrow requires building public-private sector trust today which has worsened due to widespread protests demanding transparency and accountability to political leaders. The fragile, conflict-affected, and low capacity situation in Iraq, as well as volatile social environment requires high levels of adaptability and flexibility. Iraq’s economic condition was gradually improving following the deep economic strains of the last three years. However, the current unrest highlights the continued fragility of the country context and the high priority of improving economic opportunities, particularly for youth.
This Report offers a Reform Memorandum and Reform Action Plan for Iraq which focuses on improving the regulatory environment for firms, leveraging the World Bank Doing Business3 framework while also embedding a broader focus on areas were Iraqi small and growing businesses are most likely to face uncertainty, complexity, and obstruction. The Reform Action Plan is a roadmap for reform in each reform priority area and includes the activities, steps, timing, responsibilities and the resource needs for implementation of each reform. Selected areas for additional technical assistance from the World Bank team are identified accordingly. The Reform Action Plan is based on the Reform Memorandum on Business Environment Reform also included in this Report. The Reform Memorandum covers areas under the scope of the Doing Business indicators, i.e. Starting a Business, Dealing with Construction Permits, Getting Electricity, Registering Property, Getting Credit, Protecting Minority Investors, Paying Taxes, Trading Across Borders, Enforcing Contracts, and Resolving Insolvency; and other priorities areas in the Iraqi context, i.e. Women in Business, and Regulatory Governance. The last section of this report offers the Government of Iraq guidelines on institutional coordination for reforms.
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