Francisco A. Laguna & Wojciech Kornacki
Iraqi Kurdistan offers the security and numerous investment opportunities that are currently hard to find in other parts of Iraq or Central Asia. Since the fall of Saddam Hussein in 2003, the region has experienced dramatic economic growth and political stability that continue today, despite the violence in other parts of Iraq. Iraqi Kurdistan has become a magnet for foreign investors and foreign direct investment.
Background on Iraqi Kurdistan
Currently, Iraq is a federated state, and Iraqi Kurdistan is one of the federally recognized regions of Iraq. Iraqi Kurdistan is located in a strategic location between Turkey, Iran and Syria. It has enjoyed local autonomy for the last 45 years. Since the fall of Saddam Hussein, it has had a democratically elected Parliament and vibrant government institutions which are openly pro-Western. The population of Iraqi Kurdistan exceeds 5.2 million and estimated GDP per capita was ~ US$ 4,500 as of 2011.
In the last several years, Iraqi Kurdistan has been undergoing rapid development. The region has experienced an estimated 12 percent growth, one of the highest in the world. Major trade partners for Iraqi Kurdistan are Turkey, the United Arab Emirates, the United States, and the European Union.
The capital of the Kurdistan Regional Government is Erbil – perhaps one of the oldest cities in the world. According to the Kurdistan Regional Government’s official website, the Kurdistan Parliament has passed progressive investment and oil and gas laws which have contributed to economic growth and stability. The region has 2 international airports and approximately 12 major international airlines offer direct flights there.
Iraqi Kurdistan appears to be one of the best places to invest in the region because of its current need for foreign direct investment, security and flexible and transparent investment laws. The Kurdish Regional Government allows for full repatriation of profits, investment with or without local partners, a 10-year exemption from corporate taxes, and a 5-year exemption from customs duties. Needless to say, this makes Iraqi Kurdistan much more investment-friendly than the rest of Iraq or the region.
The Kurdistan Board of Investment makes it easy to identify foreign direct investment opportunities in the Kurdistan region. It lists numerous business opportunities in the areas of real estate, communication, transport, agriculture, education, banking and many others.
Current investment priorities are agriculture, tourism, and various industries that have been largely underdeveloped over the last several decades. In addition, with oil reserves estimated at 45 billion barrels, many international companies have been already heavily investing in the oil and gas industry.
The turning point for Iraqi Kurdistan came when Exxon became interested in its natural resources. Several years ago, Exxon, the largest international oil company, signed major exploration contracts with the Kurdish Regional Government, and many other international companies followed in recent years, including Total, Gazprom and Chevron.
Currently, the Kurdish Regional Government continues to export oil to markets around the world, including the United States. Despite igniting a legal battle with the Iraqi Government, the highly profitable exports have not stopped.
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