BARCELONA, Spain - The Kurdistan Region offers companies based in the United Arab Emirates (UAE) a gateway to business opportunities in the energy, construction, real estate and tourism sectors in the larger Iraqi market, according to an authoritative study published Monday.
“For UAE businesses, the Kurdistan Region of Iraq offers a more stable base and gateway to the rest of the country,” said the report, which was commissioned by the Dubai Chamber of Commerce and Industry (DCCI) and compiled by the authoritative Economist Intelligence Unit (EIU).
The findings were released as a delegation of high-profile UAE business leaders depart for Kurdistan on a trade mission organized by the DCCI.
According to the report, Kurdistan is more open than elsewhere in Iraq and the regional government is actively promoting foreign interests. “The region’s economic growth is robust and led by public sector expenditure and investment in oil and gas,” it noted.
The UAE’s involvement in the Kurdistan Region has grown in recent years, led by construction and logistics. The province of Erbil is particularly strong in real estate and has witnessed rapid growth and a real estate boom, earning it the title, “Dubai of Iraq.” It is hoped that Erbil will become a regional hub, with growth being driven by its airport, which opened in 2010, according to the report.
Figures quoted by the EIU state that imports account for 85 percent of the Kurdistan Region’s total trade: With a booming construction market and rising disposable incomes, demand for basic materials and consumer goods is rising rapidly.
The report added that Kurdistan’s strengths include stability, improving infrastructure and logistics, a positive attitude to foreign direct investment and strong trade links with Turkey. It noted that, in the non-oil sector, Erbil is focusing on developing free trade zones, tourism, light industry and agriculture.
Sizeable investments also are going into housing and rebuilding dilapidated infrastructure. A housing boom has been led by Turkey and Lebanon, however the UAE company Trojan Construction is currently engaged in a three-year construction project.
Last October, Dubai’s Emaar Properties kicked off the nearly $3 billion “Downtown Erbil” project, which is estimated to create 35,000 jobs and transform the face of the Kurdish capital when it is completed in about five years.
Other UAE companies active across a number of different sectors in Kurdistan include Dana Gas, Rotana, Majid Al Futtaim, and Abu Dhabi National Energy Company (TAQA), the report noted.
It said that the banking sector is also developing, with foreign banks, primarily from Turkey and Lebanon, starting to move into the market. HSBC and Standard Chartered have also invested.
Industry accounts for 22 percent of the region’s gross domestic product (GDP) and is led by the oil-and-gas sector. However, low-end manufacturing, such as bottling plants and construction materials, has attracted investors such as soft drinks giant, PepsiCo.
Meanwhile, tourism and travel account for 19 percent of GDP. In 2010, 1.3 million people visited the region, 20,000 of them from outside Iraq. Western visitors come primarily for business, but Kurdistan’s picturesque mountains attract tourists from Iran and Turkey, the report added.
In relation to Iraq as a whole, the report noted that the country has become one of the UAE’s key trade partners and is the second-largest market for re-exports. UAE statistics estimate total trade with Iraq for 2012 to have reached over US$8 billion.
Bilateral trade has been boosted by the launch of Emirates Sky Cargo’s freight flights from Dubai to Basra, which supply equipment for oil companies and key foodstuffs, the report said.
“Iraq will be one of the world’s fastest-growing economies over the next five years, but like many frontier markets there are challenges to this sustainability,” the report cautioned.
