INVESTING IN KURDISTAN
The Kurdistan Region of Iraq has enjoyed unprecedented development since the removal of the previous regime in 2003.
The KRG has taken advantage of increased interaction with the international community to explore a wide range of economic activity, reserving a lynchpin role for foreign investors, multinational companies, and public private partnerships.
To facilitate such growth, the KRG passed a number of forward-looking pieces of legislation, including the Kurdistan Region Investment Law and the Kurdistan Region Oil & Gas Law, designed to ensure that the private sector is the engine of a free market economy.
The KRG’s Economic Development Strategy
The Kurdistan Region is blessed with natural resources, including fertile land, water, oil, gas and a host of other minerals. These natural resources were deliberately neglected by Iraqi central government regimes. Kurdistan’s human resources, such as management and technical skills, and its physical wealth, such as infrastructure and capital assets, were also under-developed for the same reasons.
As a result, know-how was not sufficiently developed and the people of Kurdistan were not able to innovate, adapt or improve existing technology. What returns were made from the Kurdistan Region’s natural resources were not invested in the people’s economic and social development.
The strategy: Nurture and sustain an innovative private sector
The aim of the KRG’s strategy is to develop Kurdistan’s physical, natural, and, above all, human resources, in order to develop the economy to the long-term benefit of the people.
The KRG’s approach is to be mainly a manager of the economy, by nurturing a new and more innovative private sector that will produce goods and services in competitive and sustainable sectors. Under the KRG’s strategy, the government is a partner of the private sector, but does not necessarily have a heavy or direct hand. To support a vibrant private sector, the Kurdistan National Assembly, the Region’s parliament, in 2006 passed an investment law (hyperlink) that is one of the most investor-friendly in the entire Middle East.
Part of the private sector will continue making profits in trade and other traditional activities. But a new and more innovative private sector will be developed, nurtured by policies that aim to produce highly skilled professional groups working in engineering and design consultancies, in science-based firms, and in research and development centres. The KRG will nurture these groups and encourage them to learn-by-doing and to learn by working side-by-side with foreign direct investors.
Implementing the strategy
Today the economic activities in the Kurdistan Region are the conventional income-generating sectors, such as trade, construction, some agriculture, basic manufacturing, real estate, small-scale investment projects and government services. These offer opportunities for human resource development and foreign direct investment which the KRG wishes to build on.
The second category of economic activity, which started recently, is large infrastructure projects including universities, roads, schools, shopping centres, hospitals and two international airports. These are mainly short to mid-term projects that provide work for some of the professional local workforce.
The KRG’s strategy will be applied to the following third category of economic activities, which can be grouped into eight clusters:
- Exploiting the large and fertile valleys of Kurdistan to develop agro-industries and dairies. The KRG will nurture factories, research institutes and technical colleges that support these activities. The per-capita consumption of these products is well below average, and the market in Iraq and the Kurdistan Region for these products is significant, and so should prove attractive for investment.
- Developing the network of activities needed to support agro-industries: railways, storage facilities, distribution centres, cooling, refrigerating, packing and trade facilities, and manufacturing systems.
- Upgrading the housing stock, school buildings and other social services buildings in the rural and urban centres. The manufacture of building materials using very advanced technology is also involved in this cluster.
- Reforming the education and health systems and applying English as the working language.
- Developing centres for engineering, design, contracting, business and entrepreneurship, standards and quality control, and research and development.
- Establishing banking, venture capital, micro-financing, insurance and capital markets.
- Developing the natural resources.
- Developing tourism.
The new role of the KRG
The KRG’s role is to:
- Manage the economy and create the right macro-economic conditions and business environment for the private sector.
- Build institutions to supervise planning and policy formulation.
- Work with stakeholders, including the federal government, the private sector, international donors and NGOs, to implement strategies for building the Kurdistan Region.
- Help the private sector to gain the right skills, technology and management so that it can play an effective and leading role in the development process.
- Manage the development of human resources, population policies and urban planning.
- Help to promote exports and related activities.
Why Invest in the Kurdistan Region?
The Kurdistan Region is an emerging market offering excellent opportunities
- With a young and increasingly prosperous population of nearly 4 million, the Kurdistan Region covers about 40,000 square kilometers , around the same size as the Netherlands or Switzerland.
- A stable security situation – not a single coalition soldier has lost their life nor a single foreigner been kidnapped in the area administered by the Kurdistan Regional Government.
- The Region has two new international airports in Erbil and Sulaymaniyah with over 80 direct flights per week from Vienna, Frankfurt, Stockholm, Amsterdam, Dubai, Amman, Istanbul…
- A liberal investment law, ratified in July 2006, offers foreign investors incentives including customs relief, tax holidays and the freedom to repatriate profits.
- A regulated banking & finance sector providing basic banking services.
- Seven universities, two of which teach exclusively in English, and a returning Diaspora provide a skilled workforce with English as a second language.
- Attractive investment opportunities in agriculture, banking, communication, construction, education & training, energy, healthcare, professional services, oil & gas and tourism…
More information can be found on the website of the Kurdistan Investment Board
Fact sheet: Doing business in the Kurdistan Region
An overview of direct investment, chambers of commerce, company registration, trade missions, visas, and trade shows.