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Determined To Grow

The Kurdistan Region of Iraq is experiencing an unprecedented period of development.  With a 12% and 8% growth rate in 2012 and 2013 respectively, giant investment projects, and sound economic policies, the wind is blowing on the side of the Kurdistan Region.

The Kurdistan Region's economy is dominated by the oil industry, agriculture and tourism.  Due to relative security and peace in the region and more economically liberal and market-oriented policies, it has a more developed economy in comparison to the rest of Iraq. Its economy has the characteristics of a macro-stable, liberal, newly industrialized country similar to that of neighbouring Turkey, Azerbaijan, Armenia and Georgia.

As a result of a favourable investment law, a burgeoning private sector, a forward thinking government, and a strong security environment, the Kurdistan Region continues to register impressive economic growth and now seeks to assert itself as a new investment hub in the Middle East. Indeed, the past decade has seen this once deprived and isolated area open itself to the world at an amazing pace. A variety of significant developments have facilitated this successful growth pattern.


Emphasizing Institutions

For a number of years following the Kurdish liberation in 1991, there were two separate governments in the Region; one based in Erbil and headed by the Kurdistan Democratic Party (KDP), and one based in Sulaymaniyah and headed by the Patriotic Union of Kurdistan (PUK). However, in early 2006, the two governments were unified, and the modern Kurdistan Regional Government (KRG) was formed. One of the priorities for that government was to create a legal foundation that could attract investment. A task force was implemented to identify the shortages or vulnerabilities in the investment climate (excluding the oil and gas sector), as well as the steps that could be taken to rectify those deficiencies. It was determined that a new law was needed to encourage more private sector participation and that a new physical institution was needed to oversee this development. As a result, the Kurdistan Board of Investment (BOI) was established in 2006. The mission statement of the new organization was simple: create new opportunities, provide professional services to investors, and work to rebuild all of Iraq through the Kurdistan Region. To accomplish these objectives, new legislative structures were also required.

Developing the Framework

The 2006 Investment Law, which was passed by the Kurdistan National Assembly and was ratified by President Masoud Barzani, remains one of the most important factors in the rapid economic growth that has been achieved over the last decade. The Law stipulates that foreign investors can repatriate their profits in full, are equally treated under the Law, are entitled to all the capital of any project, and enjoy the same rights as local investors to purchase and own land. In addition to these protections for foreign investors, the Law establishes additional tax incentives and benefits to encourage foreign investment. Perhaps most notably, as a result of the Investment Law, the BOI was able to establish a streamlined licensing process that expedited the infrastructural development that was so necessary in the Region. The BOI awarded its first investment license in November 2006; up to 2013, it has issued a total of 594 licenses with a total investment capital of $30.5 billion. Of those licenses, 526 were granted to local companies, 43 to foreign companies, and 25 to joint venture partnerships. Both the 2006 Investment Law and the institutional oversight provided by the BOI have been integral in promoting the growth of the Region’s private sector, the cooperation of local firms with international companies, and the attention of foreign operators.

KRG Investment Law, Article 5: A Project shall be exempt from all non-custom taxes and duties for 10 years starting from the date of providing services by the Project, or the date of actual production.

Infrastructure Improvement

36% of all projects licensed by the BOI were authorized in the last two years alone, indicating that the infrastructure and economy of the Region continue to expand considerably. In an effort to promote further development, the BOI made the decision to decentralize, giving its branch offices in the three governorates of the Region increased licensing authority; a greater number of projects have been implemented as a result.

In terms of the economic areas impacted by this investment, of the 594 total projects authorized as at the end of 2013, housing remains the largest sector with 166 total projects (27.9% of all investment). However, as a result of the large number of housing developments under construction, the BOI made the decision to suspend housing licensing in order to focus on more critical areas, such as agriculture, tourism, and industry. Consequently, industry (136 projects constituting 22.9% of all investment), tourism (101 projects constituting 17.0% of all investment), and trading (87 projects constituting 14.6% of all investment) have come to the forefront. Despite being identified as a key area for expansion, the agriculture sector remains limited in its development, with 23 projects forming just 3.9% of all investment (sixth on the list behind the health sector).

Nevertheless, the $30 billion that has already been invested has gone a long way towards correcting many of the issues that plagued the Region prior to the creation of the Investment Law; no area serves as a better example of this fact than the electricity sector. In 2006, the Kurdistan Region was forced to import all of its electricity. Today, the abundant gas resources of the Region provide a maximum of 2,800 megawatts (MW) of power, with plans to expand to 4,000 MW by 2014 and 6,000 MW shortly thereafter. Despite an increase in total consumers from 705,000 in 2009 to 1.1 million in 2013, Kurdistan now enjoys approximately 18 hours of power per day, in comparison to the rest of Iraq, which averages just 4 hours.

Oil and Gas Expansion

The abundant natural resources of Kurdistan remain at the heart of the Region’s burgeoning economy. In recent years, global energy leaders seem to have thrown their weight behind the Kurdistan Region. Indeed, major players like Chevron, ExxonMobil, Total, and Gazprom have expanded their operations in the Region, with ExxonMobil alone now having controlling interest in various exploration blocks. Lured by the estimated 45 billion barrels of oil, 100-200 trillion cubic feet of natural gas, and the favorable production sharing contracts offered by the Ministry of Natural Resources (MNR), around 40 companies are now involved in the oil and gas sector of Kurdistan.


Daily flow rates through the Kurdistan crude pipeline to Turkey have risen from 185,000 in August 2014 to nearly 300,000 in the first week of November, representing an increase of some 60% over the last four months.


By the end of this year, the KRG plans to increase exports to around 400,000 barrels per day (bpd) and to 500,000 bpd by the end of the first quarter of 2015. The KRG remains on track to meet its production target of 1 million barrels per day by end 2015/early 2016.


All proceeds from the sale of oil are treated as part of the KRG’s constitutional entitlement to 17% of Iraq’s revenues and to 17% of Iraq’s refining volumes for domestic consumption.

Trade Expansion

Approximately 55% of all investment in Iraq is taking place in the Kurdistan Region. During the first quarter of 2013, more projects were underway in Kurdistan than were completed in all of 2012. Since 2006, over $14 billion worth of foreign direct investment has flowed into the Kurdistan Region. In 2012 alone, foreign companies invested around $5 billion into the economy of Kurdistan. Additionally, official figures indicate that there are currently 15,000 local companies and 2,300 foreign companies from 78 countries registered in the Kurdistan Region.

The Ministry of Trade and Industry will soon establish four industrial zones in the Kurdistan Region; one each in the Erbil, Sulaymaniyah, Duhok, and Garmian areas.

In terms of trade and investment, Turkish companies are top of the list, accounting for over 65% of all foreign businesses operating in Kurdistan. Approximately 80 percent of all goods sold in the Kurdistan Region are made in Turkey. In the real estate sector alone, investment by Turkish companies reached $4.3 billion in 2012.

Iran also represents a critical trade partner for the Region, with the value of bilateral trade between the two sides estimated at $4 billion for the current year. The Parviz Khan border crossing (located in the western Iranian city of Qasr-e Shirin) attests to this growing relationship, as it was recently identified as the most active trade checkpoint of all the 86 crossings between Iran and Iraq. Iranian officials estimated that in the first four months of 2013, over 82,000 trucks crossed the Parviz Khan checkpoint from Iran into Kurdistan. In contrast, only approximately 250 trucks crossed from the Region into Iran. The majority of items imported from Iran are food products, furniture, and carpets.

Kurdistan’s other leading trade partners in the Middle East are Lebanon and Egypt. In Europe, Germany stands as the Region’s strongest trade partner, although the KRG has also signed trade agreements with Italy, Poland, and the Czech Republic.

Business Delegation to Erbil

The Kurdistan Region has a flourishing economy built upon progressive economic policies and growing government transparency. Investment opportunities span every sector, including oil and gas, electricity, agricultural and the service industries.  With an abundant amount of proven natural resources and a highly skilled labour force, the Kurdistan Region has the potential to become a regional economic powerhouse. 


The time to invest in the Kurdistan Region has never been more opportune.  It is on this premise that C. Savva & Associates, in cooperation with Mr. Nawzhin Hassan Hussein, are organising a comprehensive business delegation from Cyprus to Erbil, aimed for January 2015.


The delegation aims to assist Cypriot and foreign companies invest the Region by providing professional services, including unparalleled business matching opportunities.  We are looking to attract business leaders from the following sectors:


1.    Banking;

2.    Infrastructure development;

3.    Agriculture;

4.    Health;

5.    Education;

6.    Tourism;

7.    Oil and Gas;

8.    Renewable energy;

9.    Professional services.


In addition to the highly attractive tax incentives being offered by the Region, as briefly mentioned above, foreign investors enjoy the following additional benefits:

1.    Full repatriation of project investment and profit.

2.    Provision of ownership of project land to foreign investors.

3.    Sponsoring by the BOI for certain project services such as water, electricity, and sewage.

We are offering the opportunity for participation in the Business Delegation to Erbil in January 2015 to business leaders interested in exploring the endless investment opportunities that exist in Kurdistan.

For further details regarding the Delegation, contact Mr Charles Savva at +357 22 516 671 or a c.savva@savvacyprus.com