The Kurdistan Region has emerged as a promising investment hub in recent years thanks to its relatively stable political climate, strategic location, abundant natural resources, and growing economy. The region has succeeded to a great extent in diversifying its economy, developing infrastructure, and creating a business-friendly environment that offers meaningful incentives to investors. 

According to the Kurdistan Board of Investment, the region has licensed a total of 45 foreign projects with a total capital of $10.58 billion and 29 joint venture projects with $1.68 billion, and the trend is only growing. The region's GDP per capita for 2022 was $7,038, and the Kurdistan Regional Government (KRG) has set an ambitious target of achieving 10% annual GDP growth over the next few years.

More than just energy

One of the main reasons for the region's attractiveness to investors is its abundant natural resources. The region is home to significant oil and gas reserves, with estimates putting the total at over 45 billion barrels of oil and three trillion cubic feet of gas, and boasts significant reserves of minerals, including iron and copper. 

Kurdistan’s agricultural sector is also rapidly growing and presents the region’s biggest potential, as the availability of fertile lands and a favorable climate make it an ideal location for cultivating a diverse range of crops and fruits. According to the KRG, the sector has grown steadily in recent years and is projected to continue to expand, with the aim of transforming the region into a crucial food source for Iraq and neighboring countries. 

In fact, last year Kurdistan notched its largest non-oil export, sending 2,000 tons of domestic pomegranates that were produced, packaged, and transported through a special initiative led by the Office of Prime Minister Masrour Barzani. The pomegranates were sold in the largest markets across Europe and the Gulf, and the Kurdistan Region announced soon thereafter that it planned to export other agricultural products including apples, grapes, and honey.

At the 2022 Global Energy Forum organized by the Atlantic Council, the prime minister stressed his plan for economic diversification, with the focus being on agriculture, manufacturing, and services, all with the aim of creating new revenue sources “in addition to the energy sector – not [as] an alternative.”

 Attracting tourists and investors

In addition to natural resources and agriculture, the Kurdistan Region is also gaining popularity as a tourist destination, making it a key sector for the regional government's plans to diversify the economy. In 2022, the region attracted over 6 million tourists, and there are plans to invest in touristic infrastructure and promote the region as a travel destination. 

To further attract foreign investors, the KRG recently launched the Invest Kurdistan platform to showcase the KRG's long-term vision and how it offers a variety of incentives for foreign investors, such as tax exemptions, simplified business registration procedures, and a favorable regulatory environment that supports investment and safeguards the interests of foreign investors. Through Invest Kurdistan, the KRG has devised a comprehensive two-year plan to transform its Board of Investment into an investment promotion agency.

Invest Kurdistan is run by a group of young professionals who meticulously evaluate investment opportunities, establish clear short-term and long-term objectives, identify potential foreign investors, and extend invitations to them to enter the market. As confirmed by Dr. Muhammed Shukri, Chairperson of KRG's Board of Investment, approximately 100 companies in the Gulf States have already been approached to participate in the first stage of this initiative.

Investment opportunities

During an exclusive interview with Kurdistan Chronicle, Dr. Shukri explained that Invest Kurdistan seeks to present a comprehensive overview of investment opportunities for potential foreign investors. This includes providing essential statistical information, highlighting applicable laws and regulations, and outlining available incentives. 

He further emphasized that foreign investors stand to benefit from a range of advantages, such as a 10-year tax exemption, a five-year waiver on customs fees, complete ownership rights, the legal ability to transfer their capital and/or interests, and the potential for extension of all incentives. 

When asked about investment opportunities in the energy sector, the Kurdish official disclosed that the focus has shifted towards investing in the petrochemical and industrial sectors as well as infrastructure rather than expanding oil-export volumes. 

“We have reached out to numerous companies, particularly those in the Gulf, to encourage investment in the petrochemical sector for the purpose of utilizing the byproducts of oil,” Dr. Shukri said, pointing out that the region is prioritizing investments in road construction, railways, water management, dams, environmentally friendly technologies for electricity production, industrial clusters, agricultural projects, and educational and tourism infrastructure projects. 

Foreign investments and joint ventures

In 2022, the KRG's Board of Investment licensed a total of 93 projects, and it is actively working to increase this number. Since 2006, the KRG has licensed a total of 1,111 projects with a total capital of $66.5 billion, out of which 44 were foreign investments. Additionally, many foreign businesses have partnered with local investors to form joint venture projects in the Kurdistan Region. 

“With every foreign investor who chooses to invest in Kurdistan, we see it as an opportunity to create and present another success story by assisting them to succeed. This, in turn, can help to further establish Kurdistan as a highly desirable investment hub in the region,” Dr. Shukri concluded.

The young and educated workforce is seen as one of the region’s main assets and yet another draw for investors. According to official statistics, the median age in Kurdistan is just 23 years old. More than 30 universities train thousands of highly skilled graduates each year and, ultimately, prepare a highly skilled workforce with great ambitions for the market, including international companies, organizations, and investors. 

Marewan Hawramy is one of the publishers of the Kurdistan Chronicle. He is a writer and an expert in protocol and diplomacy.