Importance of the private sector and the challenges and policies

January 6th, 2016

Dr.. Haider Hussain Al Tohme *

Led the continued decline in global oil prices to slip the Iraqi economy into a deep recession and indigestion financial dangerous, it coincided with the double challenge facing the Iraqi government represented in fighting organization Daash terror on the one hand and political and economic reform and the fight against financial and administrative corruption on the other.
And restores drop in oil prices shed light on the key economic issues such as the restructuring of the national economies and the search for a variety of revenue to the public treasury and work to diversify the economic base and stimulate the private sector. Dependence on oil revenues in previous years, the size of the role of the private sector and led to a decline in activity in non-oil sectors.
Attention has turned toward the private sector and its role in the existing economic system has changed since 2003 to be the locomotive of economic growth and stability in the country instead of chronic addiction to oil supplier. In this context, it created a lot of institutions have taken a number of actions and programs to boot a smooth transition to the private sector and the gradual liquidation of the enterprises of the public sector workforce without hurting the cross thrown in medium and small businesses received government support for. But most of these programs have remained a dead letter because of the lack of realism because she had prescriptions for a shift towards the private sector is far from economic reality in Iraq and its requirements.

The first axis: Sector
Your role is hoped
To strengthen the role of the private sector and encourage them to take a leadership role can contribute to the revitalization of the national economy and dismantling the financial suffocation suffered by the country, through the following:
1 - absorb a large number of manpower and various ages and skills due to the availability of a variety of job opportunities in various economic sectors commensurate with most of the available skills, thereby raising the private sector shoulders the responsibility of the government to provide jobs for all the researchers reported.
2 - linked to the previous point, the absorption of unemployment leads through employment opportunities offered by the private sector to achieve the entry of workers that turn into effective demand is able to stimulate economic activity, rather than the last link government spending and mainly associated with oil price fluctuations.
3 - sale of companies and enterprises the government is capable of production, or follow the participatory approach with the private sector, will provide the government a good financial resources due to stop the annual support provided to these companies for the exercise of its business on the one hand, and access to large sums of money in exchange for the sale of these companies on the other.
4 - the rise of the private sector and carrying out the task of providing goods and services in the country, with tariff protection by the government, will provide a broad front of domestic goods limit the bleeding of foreign currency because of the import of stunning hand and check the food security of a country on the other.
5 - the acquisition of the private sector a greater part of the production process in the country at the expense of reducing the role of the state will increase the efficiency of the use of economic resources.
6 - by sectoral entanglements, the revival of the private sector (industry specific) in turn will stimulate both the agricultural, commercial and service and other sectors of the economy sector.

The second axis: the challenges
Starting private sector
The private sector in Iraq suffers from a range of problems and obstacles to development, including, for example, but not limited to:
1 - the deterioration of the security situation and political instability in the country.
2 - lack of policies and strategies to support and obsolescence and complexity of the legal and regulatory frameworks, which were designed for a centrally planned economy the private sector.
3 - Inadequate funding sources available and the length of time needed to obtain investment loans.
4 - the collapse of the physical infrastructure in the country and inadequate power and water supplies.
5 - the scarcity of qualified human resources, especially skilled labor.
6 - poor economic management View from the presence of decision makers.
7 - uncontrolled import and not domestic product competitive.
8 - the bureaucratic complexity of the rings and the spread of the phenomenon of financial and administrative corruption that haunt investment bodies.

The third axis: the private sector and stimulus policies needed
In late August the Iraqi government set up a crisis cell to follow the economic and financial situation and fee policies to adapt to the continuous fall in oil prices, with the launch of a new initiative for the development of the private sector in the context of the government's economic reform curriculum. However, it referred to the failure of a large number of government programs that have been implemented over the past decade to support the private sector in Iraq and to overcome obstacles launch, because it was fragmented and do not fall within a coherent strategy or plan that includes consecutive procedures may be used by the government to address the problems that hinder the emergence of private sector subject.
The development of the status and performance of the private sector is a fundamental issue must underpin economic policies by adopting the optimal strategy for the development of the private sector reflects a correct understanding and a clear vision of the mechanisms and ways of activating its role in economic activity, so the government should launch a package of policies and procedures appropriate to stimulate and strengthen this sector At the current stage, most notably:
1. to start a dialogue between the government and the private sector, where the government consult (the Council of Ministers and the House of Representatives) with the private sector when developing policies or laws, regulations or instructions concerning the latter through meetings and seminars jointly to review and simplify the legal and regulatory on active private sector framework overcoming obstacles start.
2 - provide adequate funding for the private sector through the issuance of new laws and the removal of red tape and improve the chances of this sector in obtaining adequate funding commensurate with the investment opportunities in the country, and work on the development of new financing mechanisms are available for most private companies and institutions, especially small and medium enterprises.
3 - the need to provide an adequate and stimulating environment helps to stimulate the private sector by providing the required infrastructure protection and security for projects and institutions operating in the country.
4 - adoption of advanced training programs and rehabilitation contribute to the empowerment of the Iraqi work force and raise the level of skill so that these programs be homogeneous and harmonious with the Iraqi labor market requirements, in order to supplement the hands of the private sector workforce and a variety of skills fit the needs of the market.
5 - Work to facilitate the granting of investment licenses and the allocation of land for investment projects required procedures and granting tax breaks and customs protection of similar goods in order to enable the private sector to have access to domestic and foreign competition product and the acquisition of local markets markets.
6 - Creation of a partnership between the public and private sectors to achieve integration in economic activity and in order to serve both sectors, and establishes for the growth of a dynamic private sector can get better to expand his opportunities and thereby enhance its position and performance for the benefit of economic activity as a whole.
7 - find a social and competitive market is far from a monopoly, through the enactment of laws framed the work of local markets and increase efficiency in the allocation of resources.

* Researcher at the center of the Euphrates Development and Strategic Studies