How to make big money in Iraq

This month's Australian Business Group in the Gulf luncheon meeting was enlivened by a presentation on opportunities in Iraq from Peter Linford, the Consul General for Dubai and Trade Commissioner for the region. His message was essentially that Baghdad is not a safe place and that firms should wait until the situation improves.

The two Iraqi gentlemen sitting opposite me looked bemused, having just spent some time explaining the 35% plus profit margins they were presently making exporting satellite TV equipment from Jordan to Iraq. Their computer distribution company based in Jebel Ali, Orient Technology (orientd@emirates.net.ae), is already doing great business with Iraq, and they have also taken on a Samsung IT distributorship.

Perhaps this company will be one of those to share in the estimated one million PCs needed in Iraq over the next 12 months. Of course, it is not easy. Their convoy from Jordan has to be protected by armed guards. But interestingly there is no problem with money in Baghdad. It seems that, after years of UN sanctions, everyone has a few US dollars stuffer under the mattress and is desperate to watch satellite TV.

Peter Linford pointed out that aircraft flying into Baghdad International Airport are still being shot at by snipers and that moving around the city is very slow, even for international agencies, because of the security situation. He was perhaps justifiably dismissive of boasts by British Airways and others that they expected to open services to Baghdad very soon.

'We presently have reports of looters and muggers in military uniforms. It is not safe. Violent deaths rose by 60% last week. Temperatures are over 50 degrees and air-conditioning is very limited with power at less that 60% of pre-war levels.

'Bechtel received more than 10,000 enquiries from companies wanting to pursue subcontracts on its $680 million reconstruction contract,' he added. 'Their message now is to diminish expectations. The first priority has to be the restoration of law and order'.

But, as my convivial Iraqi lunch companions noted, high profits do not come without high risks, and margins will fall as security returns. Indeed, entrepreneurs who expect to get rich by listening to advice from government officials are probably not going to get very rich, and now is a time when big money is to be made in Iraq.

Those speculators who were ridiculed for buying Iraqi dinars during the war have tripled their money in two months. Those who have bought up Baghdad property and shares will doubtless fare equally well. For the big money is made by the brave and market savvy, not by those who have to wait for the air-conditioning to work.

However, Austrade has registered 1,500 firms on its website that have declared an interest in working in Iraq, although this did include a couple of bricklayers among its number. And Peter Linford makes a valid comment in suggesting that these companies can now be directed towards wider opportunities in the region such as oil and gas projects in Abu Dhabi and general infrastructure in Qatar, for which the respective budgets before 2006 are $10 billion and $6 billion respectively. Both countries have excellent air-conditioning and offer complete security.

But those companies that really want to hit the big time will pursue opportunities in Iraq. It might take time, but rebuilding a rich country of 25 million plus people is a once in a lifetime opportunity, and there is not a business in Dubai without an Iraq strategy right now.