Source: American Contractor
URL: http://www.americancontractor.com/2011/10/another_cbi_interview_mudher.html

Second interview with the Central Bank of Iraq Advisor, Mudher Mohammed Saleh. It was an interview conducted by an al-Iraq TV producer in Arabic and translated to English. The topics are in regards to private banking and housing shortage projects. Housing is desperately needed in Iraq.

Audio Link Arabic Version file size (30 Megs)
http://www.yousendit.com/download/T2dlQ3QzTkF1Yk5sQXNUQw

Mudher:
it’s just raising up and growing larger because no one is covering the gap, it’s been said that in Iraq 25,000 housing units added annually, and this number makes us laugh, especially when Iraq has a three million housing units shortage, that he needs to cover, and there is no methods for solving this, Frankly the policy of housing is not so clear through the history the government was giving lands and loans to people from the supported real estate bank and that how the Iraqi cities and neighborhoods were built, today in every province there is a neighborhoods called Al Jumhorya, Al Mua’almen, Al Muadfeen, Al dubat, etc. where is it right now?, we established a residential complex we turned to the whole now, there is an gap in the budget, in my estimate there is two sides for the equation, the first is the internal financing and secondly an external side for external financing, there is an foreign contractor and a foreign financier, as the universal banks, but even those they loan with the universal conditions and there is cost for the loan, if the beneficial sustain the external loan that will be a disaster because of the high benefits, so the one who will pay the benefits is the government through the support of the general budget, the general budget have a social goals not only provisioning with food, because providing houses for the poor ranks in the nation is more important then the provisioning, it is a human right, so we need a push up in the budget and a push up also in the social of the general budget.

Start at 01:31
Producer of the show:
Ok Dr. this general budget, and after the assurance that you talked about and how there must be plans and big projects and a foreign lenders, does this affect the Iraqi market?

Start at 01:42
Female speaker:
Of course,
we have a problem in Iraq that considered as one of it kind in the Iraqi market, the real estate market; the prices are unimaginable, now if you take the average of the prices of the real estate you will find we are the most expensive between all of the neighboring countries, and the market has no other options, its comes with a limited offers and there is no options, once in your show before I said something, I said if we made a real production for the housing units, a real two projects with a real numbers, not the 25,000 facing the three millions housing units, the prices of the real estate will go down to half of what it is right now, is it believable that a house been built in the 1970 worth usd 300,000 this imaginary number and unbelievable and the question is why is this happening, because there is no other options; a high request for the housing.

Start at 02:50
Producer of the show:
Can you tell us about these other options?

Start at 02:52
Female speaker:
one of these options is the “Residential complex”.

Start at 02:54
Producer of the show:
You mean the one we saw the report about.

Start at 02:57
Female speaker:
that’s right; we hope that this Residential complex will be build; because this will firstly change the way of the thinking within the market;

Start at 03:08
Producer of the show:
The first 25% will be done in three years?

Start at 03:09
Female speaker:
yes three years, firstly it will give a glimpse of hope for the future, made a motive to invest in the real estate section and lowering the prices of the housing units, and all of these will move the request for the other sections that have a relation with the housing section and the most important ones is the construction, Iron, Steel, and even employment, in a previous show the constructing manager for Baghdad Shaker Al Zamili told us about an incident look like Basmaya Residential Complex, when the civil engineers start coming from the province to work in this project, so the need for the housing is very important because it has a connection with al the other sections and also for it direct affect the first is solve the housing crisis and also solve the unemployment crisis, because the housing section is like a sponge it can suck a lot of the unemployment from the society.

Start at 04:24
Producer of the show:
Dr. you talked about the Banks especially the foreign banks what kind of assurance that these banks need?

Start at 04:41
Mudher:
the foreign bank if they made their contracts with the government they will need sovereign assurance, the ministry of finance will give the assurance.

Start at 04:47
Producer of the show:
Only a sovereign assurance, not may be through a private contracts or a private companies?

Start at 04:50
Mudher:
No, I don’t think that there are huge companies that have a great assurance or a great finance to be able in assuring the foreign banks, because the highest capital is between the hands of the government only, the richest person in Iraq right now is the government, more than 80% of the country income belong to the government, and it is the biggest owner, so the government is the highest assurance, so the government only can support and assure such a projects.

Start at 05:20
Producer of the show:
So according to this sovereign assuring, and as you said, so why there is no foreign banks in Iraq right now?

Start at 05:30
Mudher:
look, this is just another story; the entering of foreign banks to Iraq had been set by the law number 94 in the 2004 y the law of banks in Iraq, and for the first time this law allows the foreign banks to enter Iraq, so what enter Iraq was two things, the first is branches of foreign banks and secondly a big share between Iraqi banks and foreign banks, but If you look to their shares they are just a very law numbers till now, these banks would like to work with the Iraqi market, but their wish is postponed, if he just put his leg in Iraq and accept that the name of the bank will be Iraqi for example (X bank) it name is Iraqi but the internal is foreign, so they request their shares to be under Iraqi names, so this shows you that these guys want to put their legs and when the right chance come to them they will show there real identity, so in my opinion the part of foreign banks is a postponed part, their projects are limited and their share are limited also, but they have a hope in the Iraqi market so we as a Central Bank we made all the facilities so they can benefits from all the functions of the CBI like selling or buying, and there is regulations for these things. And also let me tell you another thing, these banks are fit with the law and they are not a law breaker, they are the most people who like to work with laws, but their part is still postponed and that’s what I guess, they just know that there is bright and a great future for the Iraqi market but they are waiting for the right chance to expand right away.

Start at 07:53
Producer of the show:
So Dr. as an economical expert does you thinks that the one million housing units annually is an agreeable number?

Start at 07:56
Female speaker:
I don’t really know, and as an Iraqi person I lost the hope in such projects, let us first see the first people take their housing units and after that we may be have the hope again, till now I can not say that they are a real projects.

Start at 08:18
Producer of the show:
And what a bout you Dr. what you think as an Iraqi person?

Start at 08:20
Mudher:
As an Iraqi person I said let us first begin with neighbor and Residential Complex, as an example I saw a new neighbor in Babil province and it was very beautiful, I was to see such a thing and I said that is the right way to start, but the preparation for building one million housing units I think its far beyond believing.

Start at 08:38
Producer of the show:
But didn’t they start with 700,000 housing units and they say it will be done with the financing? Especially within these years,

Start at 08:45
Mudher:
Frankly the building of it not that impossible, but preparing the recourses is the hard part.

Start at 08:52
Producer of the show:
Ok, you mentioned before the Iraqi companies, a lot of people taking about these companies and how they have the abilities to do big contracts, especially in such projects of housing?

Start at 09:08
Mudher:
let me tell you something, about the assurance the Iraqi companies will accept their assurance the foreign banks, but even though the banks will treat them like foreigners, and some times it’s an foreign companies with appearance of an Iraqi owned company these companies want to guarantee his lenders from a wide known foreign banks and at the same time these banks wants an assurance from the Iraqi government only and not from any one else because as we talked before its the biggest owner and that how it goes, because the lending is a huge and comes in one term,

Start at 10:25
Producer of the show:
A lot of American Banks showed there acceptance to lend and support such projects, don’t you think that’s a positive thing?

Start at 10:27
Mudher:
I consider it a positive step, and that show you that Iraq is a rich country and he can makes a lot, but it waits, We called this the bridge loan, let say that you have old car and you want to sell it and buy a new one, so you will take a loan and buy the new one and after that you sell the old one and give back the money, Iraq goes in this way. Iraq funding abilities is very high and a rich country, I don’t want to be so Optimistic, Iraq don’t have a problem with funding, but it’s a funding management issues. This is and facility problem and if we need to solve it the facility should work right and the employees should also work right and it’s just a matter of time and it is the stock of the past time.

Start at 11:28
Producer of the show:
Dr. Do you have such a optimistic in this also?

Start at 11:32
Female speaker:
Yes, and why not, but this thing need a start point, if we just start from the right point we as I told you we need something to see in real, when we touch the real thing in our hands we will achieve the success but when you are going to reach the success its not known but the more important is to start, right now and as the Dr. said that we need a change in the facilities and that what is happening right now, if you change the central economic into market economic in this way the mechanism will change. Example before there was a fix exchange rate, now it becomes free, you have a free in exchanging and money transfer these matters wasn’t exist before, the doors open now for different companies foreign of Iraqi but the most important thing is the right accomplishment of the project,

Start at 13:23
Producer of the show:
Dr. Do the Iraqi banks have the ability to support one million housing units? Because one million housing unit is a huge number,

Start at 13:34
Mudher:
The problem with the Iraqi Privet Banks let us say, the Private banks is very protective with matter of lending, and we have a basis for the private banks that they can loan eight% of it capital and reserves, I did a recent check for the loan percentage and I found it about 1.5 % right now and its should be 8 times more than this number and that’s mean that these banks don’t give loans and there is a different reasons behind this like fearing of loss and dangers in this, I think there must be instead the syndicating loan and that means that all the banks will participate in one big housing loan from there stocks out side the country which its is about 60% while it should be 30% , for a one big shared benefit, and the government can also take apart in the benefits in this loan and that’s will encourage the private banks and its will be batter than spreading out there loans in the different sectors, I think that the government should make a statement for all the privet banks in Iraq to create such a loan together with the benefits that they agree on it later and the left benefits the government will pay it through the general budget and also the government will assure such a loan and this one will be very affective and will go in the right way.

Start at 15:05
Producer of the show:
Dr. the cheapest house right now that will be good to live it will cost 50,000 USD, will all the people will be able to afford this amount of money?

Start at 15:24
Female speaker:
it will be in a monthly payment method and even if the first payment will be a big amount of money we will consider this as improvement, and also the competition on the law cost housing units its something comes up with the companies, so the government need to take part in this by knowing the requirements of these housing units and the requirements of the people who will live in it, and also know the percentage of the medium class people that the government will serve in this project and also take a part in the payment also example that the person will have to pay 40,000 USD and the government will pay the 10,000 USD left, so that must be an easy thing by the government to do, because Iraq has a budget of 100 billion dollar and the people have the right to have a part in this number and also Iraq is flooding on the second largest amount of oil, the government it’s the main player in all of this and it can support the private banks by forcing the finance ministry and the C.B.I to help them and the people to accomplish such a project.

Start at 18:00
Producer of the show:
Ma’am you mentioned the banks, what you say about this Dr. whether it was Private or government Bank?

Start at 18:05
Mudher:
I agree with all of what the Dr. said, because the government is a sponsor government, it does, its ridicules to see some parts of Iraq and also people asking for the shares in the Oil while all of this must go in one way of housing, real estate, health, and education and these are the important to build the country and this is the right and justify distribution of the country wealth, the problem is that the government thought that the market will do it, and how is that should happen if the government is the most powerful supplier and held more than 80% of the Iraq wealth, the market can’t do nothing the market make his count on the government and it do the breastfeeding from the breast of the government, so only the partnership between the government and the market will create the perfect example for raise up of the country.

Start at 18:59
Producer of the show:
So after this part, do you Dr. agree with some other Economists who said that we have to build away from the cities? Like Basmaya project? And we saw through the report that it will have all kind of services like a good net of street roads and hospitals markets…Etc.

Start at 20:04
Female speaker:
the problem if you remember when the apartments in Al Saydya and Al Baya’a been built, at 1980 it was a strange thing at that time and right now its part from Baghdad and this is the way to build the big cities, the people do need importantly to be in the city the just need the well services from all it parts.

Start at 20:38
Producer of the show:
Ok dr. if you were inside the city it will take about an hour to reach your destination but if there were a highways connecting them it will take may be less than 10 minutes

Start at 20:55
Female speaker:
yes and that’s what they keep telling us and promise us with and we still dream about it, like the Sub-way Metro, and if this one will be built it will be a great shortcut like the two hours trip will be less than 15 minutes in the Metro, this is a very simple step but till now you can see people lives in tinplate houses or just a bricks and covered with a blanket and there is a family lives inside.

Start at 21:45
Producer of the show:
Ok lets go back to the Banks and loan of the invest I believe that there is a bases for the invest been set by the CBI, but what are these bases?

Start at 22:07
Mudher:
Frankly the Banks had two main functions it had the right to invest in 20% as maximum, and am telling you that these banks could be broken and fall in any second, so and as they have 60% reserves free to go out side they using it with the CBI because its some thing risk free