Erbil, Kurdistan-Iraq ,-- Iraqi
Kurdistan’s parliament last week ratified the much-awaited
investment law- that will regulate business and trade activities in
the region- after a week-long intense debate.
The law gives the foreign investors the right to own property, take
the full profit of their projects outside Kurdistan, and own land.
It offers a ten-year tax holiday to the foreign companies and
exempts them from custom tariffs in a bid to further encourage
foreign investment in the region.
“This is a good law that creates a very advantageous situation for
foreign companies and their investment in Kurdistan,” said Douglas
Layton, the director of Kurdistan Development Corporation, a
government-linked organization with offices in London and Erbil that
“promotes investment in Kurdistan.”
His KDC is running public campaigns in the west for encouraging
investment in Kurdistan. These campaigns are well received and only
in the US, following one of the advertisement videos called “the
other Iraq”, the KDC’s website got three millions hits, explained
Layton.
According to the new law a supreme council for investment in
Kurdistan region will be formed headed by prime minister and several
relevant cabinet members. The body will supervise the giving of
contracts to foreign firms.
The law-makers hope the new law will help rebuilding the region that
has suffered decades of war and sanctions.
“A region with a stagnant economy like ours needs foreign help so
that we can rebuild the infrastructure of our country,” Dler Haqi
Shaways, the head of the economic committee of Kurdistan Parliament
told the Globe. “For that we need to offer certain incentives to
foreign companies to come here, and this is basically what this law
does.”
He believes that priority must go to the areas of industry,
agriculture, transportation and villages-reconstruction that have
been neglected in the past.
Since the 1991 popular Uprising of the region against the rule of
the former president Saddam Hussein, Kurdistan did not witness that
much booming until the overthrow of the regime by the US-led
coalition in 2003. Ever since, the region has introduced itself as
“the other Iraq” to the outside world, thanks to the relative
security and political stability of the region.
The law also allows the foreign companies to own 100 percent of the
stakes of their projects, while in the past they could only hold 49
percent of the shares and the remaining 51 percent would have gone
to a local Iraqi firm.
Over the past few years, mainly after the 2003 war of Iraq, the
hopes to attract foreign businessmen to Kurdistan relatively bore
fruits, but many investors especially Americans, were reluctant to
invest their capitals in Kurdistan due to uncertainties and
irregularities in its economic life. However, Layton argues that
with the privileges that the new law offers “it can have tangible
impact” in reversing the old situation.
“The new law clarifies it for foreign investors that what are their
rights and what advantages they will be given,” added Layton. This,
he believes, can be instrumental in encouraging foreign businesses
to work in Kurdistan.
Shaways added that “the law by itself is not enough and we need
other mechanisms and measures” to ensure its effective
implementation on the ground. “For example, we must eliminate the
beaurocratic procedures and routine in government institutions that
might discourage the foreign investors,” explained Shaways.
Many of the foreign companies currently working in Kurdistan employ
workers from outside the region, some of whom work at a lower price
than the local Kurds. This has caused some to worry that despite the
increasing number of projects in Kurdistan, many locals will remain
unemployed. Abdullah Ahmed, the deputy minister of trade in
Kurdistan government urged the foreign companies to employ the local
labor force that is cheaper than foreign workers, unless when
technical workers are needed for specialties that are not found in
Kurdistan.
He expressed his minsitry’s optimism that the law will lure
foreignors to the region.
“We are sure that people will welcome the law and it will increase
the number of foreign companies and investors in Kurdistan,,” added
Ahmed.
Despite the widespread reception of the law in business circles,
some economists speak of certain negative aspects in the law. They,
especially, point fingers to a provision in the law that allows
foreign companies to own land in the region.
“At present, foreign companies must not be given the right to own
land in Kurdistan, because it will be threatening to the national
security of Kurdistan in the long-run,” said Shamal Nouri, an
economist from Erbil.
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