ERBIL, Kurdistan Region – The number of foreign businesses registering in Erbil for 2019 has already surpassed the number that registered all of last year as the economic, political and security situation improves in the Kurdistan Region.
Better security following the Islamic State's defeat and less regulation caused the increase, according to one Kurdistan Regional Government (KRG) official.
"Improvement of security and economic conditions in the Kurdistan Region, its stability and the reduction of bureaucratic measures in registering companies were the reasons why foreign companies turned to the Kurdistan Region again," KRG Department for Company Registration head Pishtiwan Warti told Rudaw this week.
Some 28 foreign companies registered in 2018 to conduct business in Erbil. In the first six months of 2019, 33 companies have already registered, Warti revealed.
This brings the total of foreign companies registered in the entire Kurdistan Region 3,252, according to Department for Company Registration figures. A majority 2,371 of these companies are in the Kurdistan Region capital of Erbil.
The Kurdistan Region is making a push to improve business ties with the outside world.
On June 30, Turkish business delegates arrived in Erbil for a summit aimed at attracting new investors. Some business people in Kurdistan are optimistic that Turkish companies, which have long exported goods to Kurdistan, will instead consider opening factories in the Region.
"We will be encouraging traders who have been exporting their goods to Kurdistan to bring their factories to Kurdistan and invest from here," the president of the Kurdistan Association of Importation and Exportation, Gailan Haji Sahid, told Rudaw at the summit.
In April, Iranian, Saudi, Turkish and other companies came to Erbil for a KRG-sponsored oil and natural gas fair.
The largest number of companies hails from Turkey, which has 1,421 companies in the Kurdistan Region. Iran followed with 362. The rest of the companies come from Middle Eastern and Western countries with 181 from the United Arab Emirates, 178 from Lebanon, 156 from the UK, 141 from the US, 109 from Jordan, 87 from Germany, 63 from Italy and 42 from Romania.
The Kurdistan Region faced a financial crisis that dragged on for years starting in 2014 amid a budget dispute with Baghdad and subsequent cuts, falling oil prices, and the war with the Islamic State (ISIS) and the influx of 1.8 million displaced Iraqis and Syrian refugees.
More than 60 percent of investment projects in education, health, roads and public services have resumed since stopping amid the crisis, however, according to the Kurdistan Investors' Union.
The Kurdistan Regional Government (KRG) is seeking better business ties abroad due to the improved security situation post the Islamic State (ISIS)'s defeat in Iraq and better relations with Baghdad.
In late 2017, the federal government imposed an air and diplomatic embargo on the Kurdistan Region due to the Kurdistan independence referendum. Federal forces also retook the disputed territories from the Peshmerga at this time.
Relations have improved under Iraqi Prime Minister Adil Abdul-Mahdi, however, who took office last year. In January, the Iraqi parliament passed budget measures to pay public sector employees in the Kurdistan Region.
US business delegates believe now is an opportune time for American companies to invest in the Kurdistan Region and Iraq, even as the US maintains a security warning for its citizens looking to travel to Iraq amid tensions between with Iran.
"We think it is an opportune time for American companies to be looking to come in to invest and do business," VP of Middle East Affairs at the US Chamber of Commerce Steve Lutes told Rudaw in an interview this week.
Both Kurdish and foreign officials say there is room for improvement in the business sector in the Kurdistan Region and Iraq, however. Lutes expressed the banking sector needs to be updated.
"Modernizing the banking system in Iraq is one of the most important things that we as the business community, as a business advocacy organization, should be focusing on," he said.
Aras Sheikh Raouf, from the KRG Ministry of Trade and Industry, also said the country needs a better banking system to attract investment across multiple sectors.
"In order to draw the attention of foreign companies to invest more in tourism, industrial and agricultural sectors, we should give privileges to them and have an active banking system," he told Rudaw this week.
Translation by Salim Ibrahim
