Iraqi Kurdistan: Construction Over Energy
BMI View: The Iraqi semi-autonomous Kurdistan region will outshine the rest of the country in terms of investment potential over the next few years. The construction sector will outperform the energy industry, as the ongoing dispute over oil revenues with Baghdad increases risks for oil companies.
The Iraqi semi-autonomous Kurdistan region will continue to attract significant investment over the coming years, outperforming the rest of the country. There are currently approximately USD46bn worth of projects planned or under way, particularly in the energy, construction, tourism and infrastructure sectors, making the region one of the most dynamic projects markets in the Middle east and North Africa.
A host of factors make Iraqi Kurdistan attractive to investment. For one, the legal framework is friendlier to foreign companies compared to the rest of Iraq. Under the Kurdistan Regional Government's (KRG) 2006 investment law, foreigners are allowed to own land for the purpose of housing projects, which is not permitted in the area administered by the federal government. Legislation also ensures equal treatment of foreign and local investors, and no restrictions on capital movement. Finally, the KRG guarantees a 10-year tax break for new investors. Although we expect Baghdad to attempt to improve the business environment in areas it directly administers over the next few years, bureaucratic bottlenecks and the slow political process will in our view impede a catch up with the KRG.
|Outperforming The Rest|
|Iraq - Governorates, Iraqi Kurdistan in Darker Shade|