US companies will come to Kurdistan Region if reforms are made: business leader
“The reform effort that the government drives will help attract more US companies,” Vice President of Middle East Affairs at the US Chamber of Commerce Steve Lutes said in an interview on Rudaw’s Washington Perspective.
KRG’s reform agenda
The US Chamber of Commerce, which represents over three million companies, signed a number of memoranda of understanding with its counterpart in the Kurdistan Region in late June, hoping to expand investment and trade relations with Erbil.
In the interview, which aired on Friday, Lutes said the US Chamber of Commerce’s visit to the Kurdistan Region sought to “help understand what that reform agenda is” that the new Kurdistan Regional Government (KRG) is aiming to pass.
This agenda seeks to cut down on expenditures, transform public services and facilitate investment and business ventures for foreign companies by removing cumbersome bureaucracy.
Areas of interest
Lutes characterized the visit as a “fact-finding mission,” and said they met with Kurdistan Region leaders regarding their business focuses and priorities.
“The president [Nechirvan Barzani] spoke largely about what the direction is that he sees for the Kurdistan Region of Iraq in terms of the economic development in the areas that should be focused on,” said Lutes. “That included agriculture, industry, manufacturing and advanced manufacturing, and certainly tourism.”
The two parties signed memoranda of understanding in areas of agriculture, health, finance, banking, energy, logistics, telecommunications and other fields.
The Kurdistan Region is currently highly reliant on foreign food imports mainly from neighboring countries, partly due to its underdeveloped agricultural sector and lack of necessary and proper storage facilities. This sometimes compels farmers to lower prices so as to get rid of their products before they are rotten.
The KRG wants to reduce its dependency on foreign imports and develop its own industries, as well as benefit from a presence of US companies. Lutes said Kurdish leadership was welcoming of US companies embarking on business and investment ventures in Kurdistan.
Another area of interest for foreign companies to invest in is digitization. Lutes said “there was a lot of focus on digitization” in their meetings.
The electronic-governance system is the latest modernization effort the KRG has undertaken in the wake of the financial crunch that hit the Region hard in 2014 after Baghdad cut its share of the federal budget and the costly war with the Islamic State (ISIS).
The government introduced a biometric payroll system to reduce spending by weeding out ghost employees, referring to people on the payroll who do not actually show up for work. That system went live in October 2017.
Erbil desperately needs a “developed and modernized” banking system to attract more investors to the Region, because such a system “gives assurances for companies that they know that they are going to be able to take some of their profits out, that they know that people get paid,” according to Lutes.
A delegation from Citi Bank also accompanied the US Chamber of Commerce in their visit to to explore investment opportunities in the Region.
Branding
Kurdistan Region produces many things locally, namely steel and honey, but there is no internationally-known company exporting Kurdish honey to the global marketplace.
“Some of the best honey in the world is produced there in the Kurdistan Region of Iraq, but there is really not a brand. There is no unique understanding around the globe that some of the best honey is produced right there,” Lutes said, adding that US branding experts can help the Kurdistan Region develop its own brands in the future.
“We are interested in seeing companies make that long-term commitment and have that type of partnership that is going to lead to job creation, stability and growth in the Kurdistan Region of Iraq, as well as Iraq overall,” he said.
Investment regulations
Lutes said President Nechirvan Barzani, Prime Minister Masrour Barzani and the parliament were understanding of the kind of business and investment environment that attracts US companies, adding they recognized the importance of the “rule of law, transparency, even areas like intellectual property” to foreign investment in the Kurdistan Region.
“There is a real strong desire and interest to have US companies because I think we bring great value, we bring innovation. We don’t just come and sell something,” he said. “There is training, there is technology transfer.”