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November 12, 2008
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“Why Should Investors Invest in Kurdistan?”
Kurdishaspect.com - By Ahmed S. Wali **
I. Background
Kurdistan is one country that is abundant with natural resources. It has a great climate that goes with its fertile soil and highly productive land. It has beautiful terrain and no doubt many admire its full potential as ideal country for investment.
For background, Kurdistan has 80,000 sq. km. Its capital city is Erbil, which is considered as the “oldest continuously inhabited city in the world, and is the fastest growing and fourth largest city in Iraq (Overview: Iraqi Kurdistan, 2007). One of its sources of revenue is its oil reserves, which produce 45 billion barrels of oil reserves and is the 6th largest sources in the world (Overview: Iraqi Kurdistan, 2007). Its population is ethnically diverse and is highly educated. It is even proud about its very low crime rate with “a prison population of under 1,000 in a region with a population of 5 million (Overview: Iraqi Kurdistan, 2007).
II. Kurdistan
While Kurdistan has all the qualities of a wise choice for investment, one cannot stop thinking about certain reservations of some people about the viability of pursuing businesses in this part of the world, and whether or not Kurdistan Iraq has indeed a lot to offer as a business partner in the international business community considering that it has had many economic disturbances brought about by the recent war. Besides it, Kurdistan Iraq is so much politicized that it is prone to political instability that definitely impairs its economy.
Come to think of it, Kurdistan Iraq has strengths to offer that probably assures prospective business partners to invest in this country. Kurdistan Iraq is inherently offering persistent and effective military security that protects the country from any threats to Iraq’s domain. Its citizens, called the Kurds, are traditionally organized on a tribal basis and each tribal unit is trained to protect its own territory, thus enables it to preserve its patriotic union for that matter.
Another feature that truly binds the Kurds in Iraq so closely together is their language (Kurdistan Iraq, 2007). Although the Kurds have several Kurdish dialects, all are so much influential in bringing people closer and protective of each other no matter what dialect Kurds tend to patronize. The language is not taken as a mere dialect; it is taken as a significant indication of the Kurds’ patronage to their beloved nation that moves as one.
Looking back at history, Iraq became independent in 1932 as its people then demanded for a self-rule Kurdish nation. Clashes between the army and the anti-government guerillas were not prevented throughout most part of the 1960s. When Ba'ath Party came to power in July 1968, it created further resistance that consequently led to a major revolution in 1970. In March 1970, the government and the Kurds reached an agreement, to be implemented within four years, for the creation of an Autonomous Region consisting of the three Kurdish governorates and other adjacent districts that have been determined by census to have a Kurdish majority, but this idea did not last long as the agreement was opposed heavily by all Kurdish leaders, hence, a major war was ensued (Kurdistan Iraq, 2007). The Kurds were crushed yet guerilla activities continue to exist in various parts of Kurdistan.
III. Kurdistan: Its Business Potentials for Investors
Other countries in the world are looking at Kurdistan Iraq as a business destination. Despite its concern on its peace and order situation, the presence of the U. S. signals a bright future ahead in terms of economic development. There are some positive indications that prove such signals to be heading their way to economic development, such as the boost in the construction industry. American products are sold in the Kurdistan markets. The oil refinery and power generation are not problems in this region; petroleum reserves are abounding that is why it has become the main attraction for business partners to invest in the country.
a.Strengths
Strengths Kurdistan has a great source of oil reserves. Studies show that only 10 per cent or so has been explored. This means that there are more oil bearing formations deep down the earth that is waiting to be tapped and explored. Additionally, while in Kurdistan has rich source of oil, production costs are one among the lowest in the world, thus making it a haven for oil investing companies in the world.
Kurdistan is also abundant in agricultural products that are free of chemicals. It raises cattle, sheep; produces cereals, fruits, vegetables of high quality and grade; provides transportation, refrigeration and packaging facilities to maintain, if not, sustain the increasing demands for agricultural products of Kurdistan. Irrigation projects are introduced to sustain agricultural system; deep wells are built to economize water usage.
b.Weaknesses.
Weaknesses.Under the construction industry, Kurdistan is on its way to developing more infrastructures that are of significant contribution to the fast rising developments in rebuilding its economy. New roads and highways have been built, a number others are being repaired including bridges. While Kurdistan is rich in oil, it has insufficient supply of cement, gravel, bricks and steel girders that are supposed to go with the requirements for more construction projects to come. Kurdistan is finding its way to address these shortages so as to continuously provide work for its people and sustain the increasing demand for better infrastructure facilities that support incoming investments.
Kurdistan has to have a strong support system in line with its manufacturing industry. It is now currently restoring its manufacturing facilities by buying the needed machinery and installing the supporting technology to go with the increasing demand for such facilities. Equipment and raw materials are being made available especially for the textiles, cigarette and canning factories. One thing that is lacking is the participation of the private sector in support of the manufacturing industry. Local manufacturing sectors are also needed so as to strengthen the supporting manpower resources that go with the industry (Overview: Iraqi Kurdistan, 2007).
Other means of transportation such as airport facilities, upgraded airline facilities, such as Turkish airlines, Royal Jordanian and emirates, are encouraged to operate in Kurdistan to open its door to tourism. Hotel facilities need further ways and means to attract tourists and foreign investors to give it a try in investing in Kurdistan. Renovations, building of new structures are important to provide the supporting facilities that welcome more investors to invest in Kurdistan.
c. Opportunities.
For Kurdistan to carry on the challenges ahead, it has to be responsive to many areas where it requires its fast action. Its government must first of all be involved in the service, lead small enterprises to participate actively, and go for urban development programs. What further Kurdistan can do are the following: (1) Focus on reforms and not on the conflict that is influenced by the Saddam’s campaigns; (2) Focus on inviting investors for “housing, electricity, water and sanitation, community service” to facilities better support systems for the businesses of investors; (3) Engage in research and development activities in line with agriculture to discover and explore better ways of producing quality agricultural products and conduct better and safe agricultural practices and strategies for increased production; (4) Provide better employment opportunities by inviting investors who are in the business of canning, juice-making, and other processing plants in order to add to Kurdistan’s manufacturing and or agricultural industries.
c.Threats.
Threats. The lack of banking facilities discourages investors to invest in Kurdistan. To address this matter, the government must give more attention to sectors that need specific attention. The lack of banking facilities is said to be “the biggest impediment to the economic development” (Overview: Iraqi Kurdistan, 2007). Other concerns are electricity shortages, weak telephone communications, improved transportation links.
IV. Conclusion and Recommendation
This research is one good example that shows how a nation, like Kurdistan, is trying to rise up from its downfall and really tries to focus on areas where it could grow and potentially move on to progress. While its past wars and conflicts could be hurting, they should not hinder Kurdistan from facing the challenges of today and of the future. Learning from the past is important; learning to live for the present and the future is a continuing challenge that must be learned to live and get accustomed with.
Today, Kurdistan has gone a long way in its fight for change, for economic development, and for lasting peace. While it is still in the process of picking up the pieces of its past, it has become a robust nation that does not stop fighting for its sake amidst the many challenges of time.
**Ahmed S. Wali is a Doctoral Candidate in International Business
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V. References
Kurdistan Iraq. 2007. GlobalSecurity.org.
http://www.globalsecurity.org/military/world/war/kurdistan-iraq.htm
Rodgers, Bill. 2007. Iraq's Northern Kurdish Area Offers Business Opportunities.
Voice of America. 12 April 2007. http://www.voanews.com/english/archive/2007-04/2007-04-12-voa36.cfm?CFID=156269181&CFTOKEN=83078854..
Bowman, Michael. 2007. Iraqi Official Says US Both Source and Solution to Iraq's Woes. Voice of America. 9 April 2007.
http://www.voanews.com/english/archive/2007-04/2007-04-09-voa67.cfm?CFID=153202822&CFTOKEN=35457861.
Overview: Iraqi Kurdistan. 2004. Iraqi Kurdistan Business & Investment 2004. pp. 13-30
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