Agriculture

The agriculture sector has been greatly hampered by decades of conflict, destructive national government policies, international sanctions, the Public Distribution System (PDS), and a 20+-year period of isolation. Currently over 80% of the region's basic products are imported, and an open border has resulted in the region becoming a market for often substandard or contaminated goods.. Certain agricultural industries such as poultry, some grains, some fruits and vegetables, and livestock may offer the opportunity for the region to escape from this dependence. Biotechnology could also be an important key in the region’s agricultural future.

The following areas in agriculture require further development:

1. Poultry, while most frequently utilizing an outdated operating model, has potential.

2. A study of soybean production and processing should be undertaken.

3. Fruit, nuts, and vegetables offer opportunities, but the lack of modern agro-processing and cold chain technology inhibits this potential.

4. Organic production provides a significant opportunity for agriculture in the Kurdistan Region and it should be exploited. Organic certification should be sought.

5. Biotechnology is a strategic key to the region’s agricultural future.

6. Dehydration and the processing of certain vegetables (e.g., tomatoes) into powder should be a matter for a serious near-term development.

Construction

The KRI construction industry has been a leader in job creation and economic development. However, there are constraints that should be addressed to improve the competitive advantages of the region's construction sector. To overcome these constraints, the KRG should implement a variety of improvements, such as establishing a "one-stop shop" permitting and utility connection facility, establishing a Project Development Facility (PDF), and establishing a construction Public Private Partnership Center (PPPC).

Few sectors that fall into this industry:

- Cement

- Steel

- Bricks

- Materials Testing

- Sanitary Utilities (Water, Wastewater, and Solid Waste)

- Water and Wastewater

- Solid Waste

Natural Resources  

Natural Resources and the petroleum sector, are seen by many as the engine that will drive commercial growth in the Kurdistan Region. The natural resources and geology of Kurdistan Region  are being explored, but initial exploration results indicate the Region has significant oil and gas reserves. Because of this potential,  international oil and gas companies have signed Production Sharing Contracts with the KRG. In the next 10  years, the Kurdistan Region is expected to be an important oil and gas producer. In addition, oilfield service companies have opened offices with local partners. Estimates by PSC company managers and geologists indicate that oil range from 10 billion to possibly as high as 45 billion bbls of crude oil reserve.

Mining

Mining Act is being drafted by KRG’s Ministry of Natural Resources. The act is intended to generate increased interest in mining development in the KR and includes some of the same features as the Oil and Gas Law. Private sector companies should develop the mining sub-sector because several types of mineral deposits exist in the KR, including decorative stones, and metallic and non-metallic minerals including copper, gold, and barite.

Information and Communications Technology

The communications infrastructure in KRI has been neglected for years because of sanctions and internal conflicts. To catch up, the KRG must create a suitable regulatory environment; act to create international connectivity with neighbouring states and Baghdad, KRG needs to ensure that the education sector is working toward developing ICT skills.

Tourism

Cultural tourism based on the Kurdistan Region’s many historical sites offers great potential for not only generating income but also introducing the region to potential investors. The KRI, however, must establish a tourism destination identity in order to compete for visitor's dollars. In the development of KRI’s tourism sector, Erbil’s Citadel cultural heritage site should be the cornerstone of KRI’s tourism development strategy, given the Citadel’s history, the “Kurdistan – the other Iraq” promotional campaign and UNESCO’s proposed master plan for the Citadel. The capability and effectiveness of the Ministry of Tourism could be also enhanced by accelerating private sector tourism development. Private sector tour operators have begun to bring tourists mainly from the rest of Iraq to the Kurdistan Region.

The following tourism sectors have potential expansion in the Kurdistan Region:

A. Adventure Tourism

B. Sports Tourism

C. Conference Tourism

D. Cultural Heritage/ Archaeological Tourism

E. Interregional Tourism

F. Recreational Tourism

G. Religious Tourism

H. Shopping Tourism

I. Treatment Tourism

Trade Sector

The Kurdistan Region has enjoyed a long history of both external and internal trade. The region can capitalize on its strategic geographic location by establishing policies that can attract investment and generate economic growth. Caravan trade routes between the Far East and Europe have run through the Region for 6,000 years. The trade sector in the Kurdistan Region currently constitutes the principal sector of the region’s economy. Although trade does not generate significant revenue for the region’s public sector, it is a large source of revenue for the private sector, especially for small and medium-sized businesses.

Trade and Industry reform has the potential to have a broad positive impact on the KR’s economy. The import side of trade is booming. The KRG’s new agenda are to expand consumer protection laws to provide greater accountability for those who import tainted or unsafe products. Improve Export trade, the largest potential component of which will be agricultural products, that is underdeveloped and suffers from years of neglect. The KRG continues to expand its export and foreign direct investment (FDI) promotion campaigns. The ministry of trade and industry and the board of investment of the Kurdistan Region are promoting local and foreign investment in Large-scale manufacturing in order to shift its revenues towards an Oil and Gas independent. The KRG is also paying attention to the lack of industrial parks were transportation, electric power, personnel, and training facilities are accessible.

Manufacturing Sector

Industrial production in the region is characterized by small-scale family businesses serving, almost exclusively, the Kurdistan Region’s economy. The region suffers from a lack of infrastructure, especially the lack of reliable electricity and clean water that deters many would-be manufacturers; the industrial sector has become uncompetitive in the face of international competition. This industrial sector can and will develop if it is allowed to follow a natural course of economic development. The trade sector can pull the industrial sector forward. Nevertheless, there is no absence of opportunity. Because of the growing national and world demand for agricultural products, agro-processing offers the Kurdistan Region a near-term prospect for industrial development and trade. To capitalize on these opportunities, the KRG must support investment in integrated technology to improve productivity.

Typically, an industrial/manufacturing sector in a country is driven by supply value-chain economics. In the Kurdistan Region, weakness in the supply chain has created large gaps in the industrial sector, resulting in products of unreliable quality that do not meet international standards. Numerous reasons can be given for the underdeveloped industrial sector in Kurdistan Region, but the most significant is the former Ba’athist regime’s policy of restricting the development of state-owned enterprises in the Region. There were only four state-owned enterprises of significant size when the regime fell in 2003. The sector has become uncompetitive in the face of international competition. This industrial sector can and will develop if it is allowed to follow a natural course of economic development. The trade sector can pull the industrial sector forward. Industrial production in the Kurdistan Region for manufactured goods includes metal pipes, furniture, construction materials, detergent, agro-industrial production, and simple clothing items. Industrial production in the Region is characterized by small-scale family businesses serving, almost exclusively, the Kurdistan Region’s economy. The Region suffers from a lack of infrastructure that deters many would-be manufacturers, especially the lack of reliable electricity and clean water; technology transfer from foreign companies; and a skilled workforce.

Banking

The banking sector in the KRi has a limited role in business transactions, consequently, in economic development. This heavy reliance on cash limits opportunities for economic expansion. An efficient banking system needs interbank and government securities markets to provide liquid instruments for short-term investment. A lack of confidence in the banking sector is related to a loss of deposits under the former regime. While there is no short-term solution to reestablishing trust in the banking system, steps can be made to increase public confidence in the banking sector. All banking sector reform efforts should make the establishment of confidence a priority. Clear separation of the roles of the CBI and the Ministry of Finance is essential. Well defined roles will ensure better regional economic policy. The Ministry of Finance should be responsible for fiscal policy, while CBI should be responsible for monetary policy. There is a potential conflict of policy objectives if both fiscal and monetary policies are placed under the aegis of the MOF. Independence of the central banking function should be assured by law.

Article is using information from a publication of the US Agency for international development (USAID)