Industrial Bank slashes rate by half

 

By Salem Takleef

 

Azzaman, September 5, 2005

 

The state-owned Industrial Bank has cut the interest on loans it extends to Iraqi entrepreneurs by more than half.

 

The bank’s director, Abdulwahab Habib, said the rate has been reduced to 9% from 20.

 

The move, he said, was part of government incentives to encourage domestic industry and lure Iraqi entrepreneurs to start up new businesses.

 

“We want to regain pubic confidence in this sector (the bank) and we promise our clients that further interest rate cuts on our loans are possible,” Habib said in an interview.

 

Iraqi entrepreneurs are reported to be interested in setting up new businesses or refurbishing the existing ones despite mounting violence and security.

 

Iraqi banks, both state-owned and private, are striving to modernize their financial services and some have introduced fully computerized systems.

 

But the financial sector is still struggling and has not yet integrated into broader Middle East or international banking systems.

 

Habib said investment, both by local and foreign entrepreneurs, was essential for the country’s post-war reconstruction.

 

He said the country cannot solely rely on its oil wealth, and he cited the United Arab Emirates, which despite its massive oil wealth, still relies on foreign investment to develop its economy.

 

Habib said the government should turn its attention to the domestic industry and start issuing regulations to protect local products.

 

Regulations that protected local industrial goods were scrapped shortly after the 2003 U.S. invasion and local entrepreneurs and industrialists complain of the influx of cheap goods into the country.

 

“We have to seriously consider protecting national products by imposing at least 100% tax on imports. We cannot leave the door wide open for imported goods as it is the case now,” he said.