Construction was a booming industry before the financial crisis hit the Kurdistan Region.
ERBIL, Kurdistan Region — The total amount of investments in the Kurdistan Region is around $46 billion, the bulk of which was made prior to the 2014 financial crash, including $6 billion direct foreign investments, according to the Kurdistan Region Investment Board.
“The economic crisis has not fully ended, but we have passed through the most difficult parts,” said Nouri Osman, acting head of the board.
“There are some activities, but very modest. For the moment we try to reorganise and go forward,” Osman said as the country continues with its economic and austerity plans started last year.
The Kurdistan Region’s annual incomes shrank by around 50 percent after the Iraqi government withheld the region’s share of national budget estimated at $12 billion in 2013.
Relying on it own mainly oil-dependent revenues, nearly $5 billion in 2016, the region has almost entirely cancelled large national projects as part of its punitive austerity measures.
Osman said most investors are now interested in tourism, agriculture and manufacturing industries, since the government has prioritised these three sectors over the past year.
The once lucrative housing business which attracted large numbers of investors in late 2000, has now slowed down with thousands of empty residential apartments in the markets and no buyers, Osman said.
“We have around 75,000 residential units and no one buys them, so we decided to halt investments in this sector,” Osman said.
Osman also said no changes will be made to the the 10-year tax-free period which was imposed in mid-2000 to attract larger foreign investors.
“It will remain not just for economic reasons, which obviously will encourage foreign investments, but also to secure political support for the region on an international level,” Osman added.
New business creation in the Kurdistan Region is at a 10-year low, experiencing severe decline in 2016 compared to the boom year of 2013, official data shows.
The KRG is currently paying back several billion-dollar loans to Kurdish private banks, which the government had borrowed to pay salaries to state employees over the past three years, according to the minister.