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Here Comes Erbil

Adam Balchin discusses the benefits and challenges of working in Erbil

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Adam Balchin, Al Tamimi.
Adam Balchin, Al Tamimi.

Adam Balchin, head of the Construction and Engineering practice at law firm Al Tamimi, discusses the benefits and challenges of working in Erbil

Arguably, the primary reason for Erbil’s success is the KRG’s 2006 Investment Law. This law provides for: equal treatment of foreign and local investors, the ability for investors to own all the capital of their projects and to repatriate profits in full. Furthermore, projects that meet certain criteria will receive the benefit of free or cheap land.

The most enticing stipulations are likely those that give investors a 10-year tax break and the freedom for foreign companies to not have to partner with local firms or have local shareholders operating in the region. This is complemented by a 2009 Iraqi law, which allows foreigners to own land in Iraq. The rebuilding and creation of key infrastructure has warranted the presence of a number of foreign investors from various sectors at the Erbil International Fair and has engendered construction opportunities.

In 2009, the annual Construction Fair showcasing building equipment and electrical appliances amassed 300 companies from 23 countries. With its large, proven oil reserves (estimated at 45 billion barrels), Kurdistan has also garnered attention from East Asia. South Korea has had a consulate in Erbil since 2008 to promote its country’s trade interests in Iraq, and to also enable scholarship and vocation opportunities for regional inhabitants. China also has plans on opening an office in the near future.

One of the biggest issues that companies face when establishing business in Erbil is ironically being affected by the same problems they are trying to fix. Services like water and electricity, although better than they used to be, are lacking. The Erbil municipality is only able to provide around 17 hours of electricity per day, while country-dwelling residents in Kurdistan may not have access to power at all. This will pose added costs and delays to any attempts at improving infrastructure.

The Kurdish language, culture, and history aside, the most crucial and current difference between Kurdistan and the rest of Iraq is its relative safety. Retired Army colonel Harry Schute believes that Kurdistan is safer than New Jersey. But Iraq has gained a reputation for violence and minimal security, a scare for tourists, investors and workers. In May 2007, two car bombs killed a total of 45 people and wounded 150.

A company has to be certain that its employees are going to have physical security and peace of mind. In spite of the bombings, Lufthansa and Austrian Airlines conduct four flights a week to Erbil, and certain countries, such as the UK, have specifically mentioned that traveling to Kurdistan does not pose the same risks as traveling to the rest of Iraq.

As Erbil seeks to reinvent itself, companies across the globe are keen to reap the benefits from this unique process. Although there will be a significant number of difficulties for current and future investors, Erbil’s economy is advancing at a lightning-fast pace because of its construction and development initiatives across all sectors.
As business grows, so will the need for legal assistance in a variety of areas for domestic and international clients alike. Al Tamimi is ready to assist clients embrace the exciting new challenges and opportunities in Erbil.

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