The Kurdistan Region has a burgeoning economy built upon progressive economic policies and growing government transparency. Investment opportunities span every sector, including oil and gas, electricity, energy, agricultural and the service industries.
Since the liberation of Iraq from the rule of Saddam Hussein, the Kurdistan Region has undergone great economic growth as international sanctions were lifted, including UN-imposed international sanctions on Iraq and Iraqi sanctions on the Kurdistan Region. With an abundant amount of proven natural resources and a tremendous labor force, the Kurdistan Region has the potential to become a regional economic powerhouse.
The Kurdistan Regional Government has been taking steps to facilitate opportunities, and has passed laws and regulations and promotes foreign venture by providing numerous incentives and legal guarantees to protect investment in the Kurdistan Region.
The data presented here deliberately draws primarily upon third-party sources, such as the IMF, UNDP, WFP, and WHO. A Kurdistan Statistical Authority has recently been created within the KRG’s Ministry of Planning to provide the public with credible and timely social and economic data. Its data will build on this foundation of research and statistics to more accurately analyze and track economics within the region.
■ GDP Per Capita: Nominal USD $2,200-$2,500 (2005 Est.); World Bank, 2006: 19. Because non-oil economic activity has been consistently stronger in the Kurdistan Region than in other Iraqi provinces, it is estimated that median income per capita in Kurdistan is 20-25 percent higher than the rest of Iraq (UNDP 2004; World Bank 2006).
■ In 2007, 36 percent of the Iraqi population rated their economic situation as “very good” or “quite good.” By comparison, 66 percent of the Kurdish population rated their economic condition as “very good” or “quite good” (ABC News 2007). The latter figure encompasses a sample that includes Kurds outside of the Kurdistan Region and therefore underestimates the higher subjective well-being of the Kurds of Kurdistan.
■ Exchange Rate: USD 1: 1,169 Iraqi Dinar. Since the end of 2003, the Iraqi Dinar has remained pegged to the US dollar. The Central Bank of Iraq (CBI) is committed to maintaining what has become a de facto peg to the dollar. The IMF reported in March 2007 that, “to contain inflation and counter dollarization, the CBI has tightened monetary policy and allowed the dinar to appreciate.” (IMF 2007).
■ Labor: Under the KRG’s 2006 Investment Law, there are no restrictions on the composition of labor or management. In 2007, 20 percent of the Iraqi population reported that jobs were available. By comparison, 57 percent of the Kurdish population reported that jobs were available (ABC News 2007). The latter figure encompasses a sample that includes Kurds outside of the Kurdistan Region and therefore underestimates the higher employment prospects of the Kurds of Kurdistan. In 2005, 94 percent of Kurdish firms expected employment to increase within six months. By comparison, only 38 percent of Iraqi firms expected employment to increase. (CIPE/Zogby International 2005).
The Kurdistan Regional Government continues to take steps to facilitate business opportunities and to ease the process by which organizations can be established, while simultaneously ensuring a level playing field and secure competitive environment.
Currently, it takes approximately 30 days to start a business in Kurdistan. By law, the Investment Board is required to process applications within 30 days of submission. Detailed, professional proposals have the potential to be processed more quickly, in approximately five to ten days.
- ■ Opinions of the Business Climate: Of Kurdish business leaders, 68 percent report that Iraqi commercial laws and regulations are easily available and understandable. By comparison, 39 percent of Iraqi business leaders are favorably inclined towards Iraqi commercial laws and regulations. (CIPE/Zogby International 2005); while 92 percent of Kurdish business owners and managers feel that it is possible for the business community to influence government policy. That compares to an Iraqi average of 62 percent.
Emerging and Diversifying
While oil and gas will no doubt make up the backbone of the Kurdistan Region’s economy, the KRG strongly believes in diversifying our economy. To ensure sustainable economic growth, the KRG’s 6thcabinet is focusing on agricultural development, rural village development and meeting the needs of our housing and construction markets.
To that end, the KRG is supporting projects aimed at building low-medium income housing, while strengthen the Regions industry base. Home to almost every raw material available, Iraqi Kurdistan boasts enormous industry potential, and our government plans on maximizing that potential.
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