Iraq is struggling to rebuild after years of economic sanctions and conflict. But the lack of security in much of the country has scared away potential investors and slowed reconstruction. But in the relatively quiet Kurdish area of northern Iraq, stability is paving the way for prosperity as the region works to attract foreign investment.
Security fears in central and southern Iraq have made it impossible for many foreign companies to do business in those areas. But with the ability to offer security in the north, the Kurdish government has declared itself open for business.
Many foreign companies have already started coming to the Kurdish region.
Hersh al-Tayyar, the chairman of the Iraqi Businessmen's Union based in the northern city of Irbil, says recently Lebanese companies have been exploring the area's potential, but the bulk of the foreign businesses now in northern Iraq are from Turkey. One such company is the Turkish firm 77, which has invested a lot of money in cement batching plants.
Many of the companies here right now are seeking projects funded by the Kurdish regional government, rather than putting up the capital. But others, such as the Lebanese Bank Audi, have entered northern Iraq with an eye to the long-term, and are investing money and hiring and training local employees.
"It is a bet coming here to Kurdistan," said Charbel Moubarak, Bank Audi's regional manager. "We believe that this is the departure point, because our main target is Baghdad. While the security is prevailing here in Kurdistan, we can stay here, we can start from here and then move to other parts of Kurdistan, waiting for other cities, whenever the security prevails we will go there."
Tayyar of the Businessmen's Union says this is what many companies are doing. He says Kurdistan is uniquely positioned to be a gateway to the rest of Iraq.
The Kurdish regional government also shares this view, and has been working to revise its foreign investment law to attract international investors to the north.
Douglas Layton, the director of the Kurdistan Development Corporation, a joint public-private company, says the new investment law will have many incentives for foreigners.
"For example, foreigners will be able to own 100 percent of a local company, whereas in the past it was 49 percent, and it had to be majority controlled by Iraqis," he said.
Foreign investors will also be able to own property; they will receive an automatic five-year tax holiday that can be extended to 10 years, and they will be exempt during that time from import duties, income taxes and taxes on repatriated profits.
But the money is not rolling in just yet, as some issues remain to be addressed. For example, the bureaucracy is cumbersome and moves slowly. The Kurdish parliament was expected to pass the foreign investment law last week, but legislators abandoned their task when the assembly's airconditioning broke down on a typically hot day.
The education system has also decayed during years of sanctions and neglect, and university students are graduating unprepared to enter the business world.
Northern Iraq also lacks a proper infrastructure to support large-scale foreign investment. Douglas Layton, however, sees that not as an obstacle to investment, but as an opportunity.
"From an investment point of view, this is a tremendous opportunity," he said. "We are going to have to build everything from A to Z. So whatever sector a company is involved in, there is opportunity here in Kurdistan to see a significant return on investments that they make."
Layton says smart investors realize that now is the time to be entering northern Iraq as the region is beginning to take off.