Local FMCG (fast moving consumer goods) distributors are angling for a major role to play in post-war Iraq as the market there limps back to normalcy.
Some of these companies along with their principals are studying the various possibilities to tap the Iraqi market.
One option would be for the principal to expand the distributor's area of coverage by adding on Iraq, or even create special purpose companies together to enter it.
It is still early days yet as the regulatory framework which will govern commercial activities in the post-Saddam era has yet to be set up.
"The way we see it is that the principals themselves might not be willing to go into a market as volatile as Iraq is right now at this stage," said a senior manager with one of the biggest distribution chains in the UAE.
"In such a situation, UAE companies will be in a better position to get in on their behalf."
During the UN Oil for Food programme of the last decade, may local firms had built up extensive contacts within Iraq.
Local markets had been among the biggest suppliers of essential items, both through official and unofficial channels. Also, during the war, humanitarian supplies were sourced and routed through Dubai.
It may be a good time to reactivate these, suggest sources. But there will be competition from Kuwaiti and Saudi firms, who have the added benefit of sharing extensive borders with Iraq.
According to sources here, leading Kuwaiti firms have already started work on firming up alliances with prospective Iraqi partners to get a toehold in that market.
A clearer picture of the potential, and the pitfalls, of doing business in Iraq will become more apparent between now and the next four months or so.
The biggest concern still is how the laws will shape up. In the absence of any clear cut regulations covering commercial transactions, overseas companies and banks will be viewing prospects there bleakly.
Opening letters of credit can then prove a very cumbersome process, especially so as the Iraqi dinar looks to be a spent force and the country does not have a semblance of a financial system in place.
And given the state of the market and its currency, it is a moot point whether Iraqi consumers can afford the products, apart from the bare necessities, that will flow in. In such a scenario, a 'wait and watch' policy might be a good strategy for local firms to adopt.
According to S. Chandrasekhar, general manager for consumer operations at Spinneys Dubai llc: "As a marketplace, Iraq seems to be at least 20 years behind compared with the mature retail sectors in Dubai and some of the other Gulf markets.
"It will take time for a distribution network to be put in place, and what the role of overseas/regional firms will be. Also, the interim authorities have to determine whether Iraqi companies can contribute.
Gulf News
