KUALA LUMPUR: Malaysia External Trade Development Corp (Matrade) sees the value of total bilateral trade between Malaysia and Iraq growing about 20% this year from the US$211.04mil chalked up in 2008 as the war-torn country stabilises.

The bilateral trade value between the two countries for the first two months this year was US$47.33mil, compared with US$13.5mil in the same period last year, according to Matrade.

"The demand will be in products like furniture, medical items, food products, machinery, automobile parts, electrical items and household appliances," said Dzulkifli Mahmud, trade promotion section director at Matrade's West Asia/Africa division.

"Our major export items to Iraq are palm oil, processed food, electrical and electronics products, and chemicals and chemical products," he added.

Dzulkifli called on Malaysian companies to invest in Iraq as the situation in the country has stabilised and that countries like China and India have started to promote their products there.

He was speaking at a roundtable discussion between Iraq's Al-Muthanna Investment Commission and Iraqi and Malaysian companies here on Tuesday.

The discussion, organised by Matrade, is aimed at creating business opportunities between Malaysia and Iraq, particularly in the southern Iraqi state of Al-Muthanna.

Commission chairman Adil Dakhil Mohamed said the Iraqi government had been supportive and aggressive in attracting foreign investments by providing incentives, guidance and legal support.

"Tax exemption will be given for companies in building factories or plants in the country and 10 years' tax holiday will be provided once the factory starts production," he said.

He also urged Malaysian companies to be involved in the infrastructure, housing and construction sectors in Al-Muthanna as the state needed 30,000 houses in the next five years.