The Kurdistan Regional Government (KRG) is drafting a special economic zone (SEZ) programme to promote import substitution. Iraqi Kurdistan, an autonomous region in federal Iraq where Kurds represent the majority of the population, has pinned hopes on the development of its oil resources since former president Saddam Hussein’s 2006 execution paved the way for the rise of a local oil and gas industry, which he had strongly opposed.

While the oil industry in Iraqi Kurdistan has produced mixed success, the rest of the local economy fell behind, regularly forcing the KRG to rely on imports to meet domestic demand for goods and services. Muhammad Shukri, the head of the KRG board of investment and a member of the government cabinet, tells fDi Intelligence that a new strategy for the development of SEZs and industrial park will be ready by the end of the year to address the country’s dependence on imports. 

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Q: What is your vision for the development of an SEZ programme? 

A: We have high imports; most of the national budget goes towards importing food and other goods.

We want to have SEZs and industrial zones, especially in agribusiness and manufacturing, to address this and add value to our own raw materials and production inputs. We have already done this for steel by opening 20 steel mills in the past three years. 

Q: Why do you need SEZs for that? 

A: At the moment, investors often have land issues. The red tape for normal land allocation and licensing can take up to one year. Once we have SEZs in place, this will go down to 48 hours. Overall, we want to set up 16 SEZs and industrial zones, and we are eagerly looking for investors to develop them.

We guarantee equal treatment between foreign and local investors, plus incentives like a 10-year corporate tax exemption and a five-year exemption on customs duties. 

We guarantee equal treatment between foreign and local investors

Muhammad Shukri, chairman, KRG’s Board of Investment 

Q: What are the KRG Board of Investment’s other plans? 

A: Agriculture is another major priority of ours. The government’s ambition is to develop a KRG brand — particularly in fresh fruit. We have good water resources, but are planning to build 11 dams t further develop agriculture and attract investors.

Renewables is also another area of focus, as well as tourism, where we have beautiful sites and a diverse climate — there is a lot of potential in the sector. 

Q: How is the energy transition affecting your development strategy? 

A: With the advent of electric vehicles, the use of oil and gas for transportation will decrease. Therefore, we need to industrialise to exploit other use cases for our oil and gas production. In particular, we need to develop a petrochemical industry. Also, we want to use gas for electricity to power industrial projects and households. 

Q: Iraq has been a challenging place to do business for many years. Why is the KRG region [Iraqi Kurdistan?] any different? 

A: Although Iraqi Kurdistan has undergone tremendous development in the past years, it should have been better. However, we stand out in the region for political stability and security. Besides, the KRG provides a friendly religious environment; every religion can be practised freely and Pope Francis visited the capital, Erbil, in March 2021.