BABIL: HILLAH MARKETS ABOUND WITH AFFORDABLE IMPORTS

UNCLAS HILLAH 000153

SIPDIS

SIPDIS

E.O. 12958: N/A
TAGS: ECON ETRD IZ IR
SUBJECT: BABIL: HILLAH MARKETS ABOUND WITH AFFORDABLE IMPORTS


1. This is a PRT Babil Cable.


2. Summary. Hillah markets and shops abound in imported
consumer goods, most of which are affordable to average
citizens. Open air produce markets typically stock an abundance
of mainly Syrian and Iranian fruits and vegetables. Consumers
face no shortage of appliances. Retailers report a brisk trade
in cheap imported clothing. Noticeably absent from stalls are
Iraqi products, which shopkeepers cite as too expensive and
uncompetitive. Although hard to gauge precisely, supply and
demand in consumer goods appear to be in balance in Hillah. End
Summary.


3. Hillah, the capital and largest city in Babil province, is
home to some 500,000 people. Open-air markets and shops abound
in imported consumer goods. Observation and anecdotal evidence
indicate no shortage of long-lasting consumer products,
including air conditioners, air coolers, refrigerators, TVs,
satellite dishes, stoves, heaters, and household generators. A
common theme among residents is that most households were able
to satisfy their pent up demand for such goods in 2003-04 and
sales now have slowed to meet demand for replacements and new
household formation. Consumers reportedly can purchase these
higher priced products on "store credit" similar to rent-to-own
schemes in the U.S., with implicit interest rates frequently
over 40 percent.


4. A PRT trip to a large Wal-Mart type store suggests that many
manufactured goods, such as personal products and apparel,
originate in China and elsewhere. Shop owners expressed
satisfaction with the quality and price of these goods at
wholesale and retail outlets. They said customers seemed
satisfied with quality.


5. Despite being a largely agricultural province, Babil's
markets appear to stock many imported foodstuffs. Visits by
officers to local produce markets in August and September
revealed a variety of imported fruits and vegetables, primarily
from Iran and Syria, and even bananas sporting Del Monte labels.
Locally engaged staff (LES) at the Regional Embassy Office
stated that Iraqi domestic agricultural products were also
uncommon, with wholesalers importing most foodstuffs.


6. When asked why they prefer imports, some retailers responded
unhesitatingly, "Because they're cheaper than domestic
products." For instance, Fadhil Al-Kulaby, the proprietor of a
large Wal-Mart-like store in Hillah, stated that he would not
carry products from the Najaf ready-to-wear factory or the
Hillah textiles factory because higher quality and much lower
priced goods are available from China and other high volume, low
cost producing countries. Several other business contacts also
reported to the PRT and LES staff that Chinese producers, in
particular, were facilitating Iraqis traveling to China
specifically to arrange wholesale purchases directly from the
manufacturer.


7. Supply and demand of consumer goods and foodstuffs appear
balanced with prices being fairly stable over the last several
months. At the same time, the PRT has observed short term price
spikes in most tracked foodstuffs based on seasonality and Iraqi
holidays. However, these spikes generally even out over longer
periods. For instance, the price of beef fell from
approximately USD 5.90 per kilo to USD 5.20 per kilo after
Ramadan, while the same occurred with oranges hitting USD 1.15
per kilo and subsequently dropping to just over USD 1.

WITT