In contrast to other parts of Iraq, the Kurdistan region has remained peaceful for the most part of the last decade, and as a result, there has been an upsurge in economic activity in the region, and the demand for all types of goods and services is on the rise.
The Kurdistan Region is a federated region in Northern Iraq consisting of three main governorates, Erbil, Sulaymaniyah, and Duhok.
The primary development focus is aimed at reconstruction as the government rebuilds essential infrastructure, from power and water utilities and transport infrastructure to residential housing.
Additionally, the government is investing into the economic infrastructure including oil fields and the mid- and down- stream pipeline, petrochemical, and fuel distribution sectors.
At present, more than 50 companies from 23 countries are investing over US$10 billion into the Kurdistan region in order to discover and extract valuable oil and gas reserves, which currently stand at 45 billion barrels, compared to no known reserves just six years ago. This places Kurdistan in the top ten largest oil reserves in the world.KEY ECONOMIC INDICATORS
GDP growth in Iraq has been strong over recent years and is projected to increase further over the foreseable future driven by reconstructive development and oil earnings through significant increases in oil production. These oil earnings are expected to continue to improve the current account balance for Iraq.INCENTIVISED INVESTORS
There have been notable improvements in the regulation of the business environment. The private sector is gaining
prominence and foreign capital is being invested into oil & gas, construction, hospitality, telecom and infrastructure projects.
As oil prices increase in the international market, it is expected that Iraq and Kurdistan will increase public spending into key infrastructure projects. In order to encourage foreign direct investmet, the following incentives have been introduced:
Source: Kurdistan Board of Investment
- Exemption from corporate taxes (10 years)
- Exemption from custom duties for:
o raw materials, equipment, machinery
o and spare parts etc. (5 years)
- Repatriate investment and profits from investments
- The right to employ foreign workers when needed
- Obtain three years exemption from import fees for required equipment
- Provision of land plots as subsidized lease
- Provision of public infrastructure to the project fence
- National and foreign investors are treated equally
- Agriculture, Industry and Tourism are primary sectors
- The guarantee that the government will not nationalise or confiscate investments
- These incentives apply to all sectors except oil and gas sectors
Since 2006, projects approved by the KRG throughout Kurdistan exceeded US$27 billion and as illustrated in the chart below this investment has primarily been targeted towards housing, industry, trade and tourism:
The Kurdistan Regional Government (KRG) has also recently approved the development of Dukan Tourist City located within the Sulaymaniyah governorate and being developed under a joint venture agreement between Emaar Properties and Kurdish Farouq Holding. The project is expected to be completed in five years at a cost of US$3bn and is considered to be one of the largest tourist projects (2,400,000 square meters) in the area.TRAVEL AND TOURISM TO KURDISTAN
The total contribution of Travel & Tourism to GDP in Iraq was IQD7,278.4bn (4.9% of GDP) in 2012, and is forecast to grow by 7.9% to IQD7,853.0bn (5.0% of GDP) in 2013, and to rise by 6.1% per annum to IQD14,246.6bn by 2023 (5.5% of GDP).
Our research reveals that approximately 2.2 million visitors travelled to Kurdistan in 2012 representing a 30.2% rise in visitation over 2011. Although there has been a large increase in airport passenger arrivals to the main airports in udistan,
visitation to Kurdistan is primarily generated by land travel.
Notably, there has been a major increase in international travel to the region in 2012 which has increased almost ten-fold betwen 2007 and 2012.
This is a clear reflection of the favourable foreign investment incentives being offered by the KRG, investor perceptions of a comparatively safe and stable business environment, and investor sentiment towards the economy as a whole. These increases in overseas visitation have also been aided by the increasing airlift to the region and the significant improvements in airport infrastructure.
Domestic visitation is divided between the Kurdistan area and the rest of Iraq. The most significant share of visitation to Kurdistan is from other cities within Iraq and in 2012, 66% of total visitation was generated from visitors within Iraq.
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