The goal of the group is to provide a forum for professionals to network, explore business opportunities, pass along regional job oppor Kyle, as an expert in "frontier market" investment, how would you describe the strengths and weaknesses of the Kurdistan region in attracting investors? I think the strength of the KRG region is threefold: first is obviously the fact that this region reduced secur
ity issues greater and faster than the rest of Iraq, which was a big factor in much of the initial investment going into the region. Secondly, the region moved quickly to woo foreign investors, with a very proactive investment commission, a new international airport, successful energy and other infrastructure tenders. Finally, they proactively reached out to the large pool of potential investors in Turkey, and have done very well building that financial bridge. I think the largest weakness of the region is simply its size—whereas in the beginning some firms would only be willing to do business in KRG because of the security situation, with the solidification of the government, successful oil and gas rounds, and lowered security incidents to the south, a number of them are eyeing the 25 million plus potential consumers to the south.
2. What is Consultants and what role are you playing in Iraq? Consultants is an emerging markets consulting firm that helps investors on companies operate in new markets—we focus on providing due diligence, market entry studies, valuation, and business development support work for companies and funds that are looking to enter into Iraq; and have been assisting firms throughout Iraq for three and a half years now.
3. What do you see as the greatest improvements in the Kurdistan region over the past few years? For most new investors entering KRG for the first time, the most obvious ones are sometimes the most important—with the new airport, a number of new hotels, and a proliferation of restaurants and entertainment venues; these all mark concrete improvements that investors can see and track as they travel multiple times. I think the sheer volume of foreigners doing business in this particular market has increased significantly as of the past 6-9 months in particular.
4. Are you seeing a movement of international investors towards Iraq? What areas other than housing and oil are of interest to investors outside of Iraq? We just released a yearly report looking at investment and commercial activity in Iraq during 2010, in comparison to the last number of years, and found roughly a 50% increase in investment and commercial activity in 2010 versus the year before. This steady and increasing amount of investment exists—and we think will continue—because of three main things. The first and most important is the declining security threat throughout the rest of Iraq. The second was the successful oil and gas bid rounds, coupled with the steady progress most of the IOC’s are making down in/around Basra. Finally, we think the formation of the new government in Baghdad this past December eliminated or lowered the last remaining cause for uncertainty through the country. Our report showed that outside of O&G and real estate, infrastructure, transportation, electricity, and heavy industry were the leaders for outside investors.
5. What do you envision for the region in the next 1-3 years? I think if the oil production continues to increase and if the government can be seen to fairly and equitably utilize the revenues from that production, Iraq could begin to reemerge as one of the central economies of the Middle East, and potentially play an increasing role as bridge between Europe and the Middle East for not only oil and gas; but trade, agriculture, etc. This is, however, will require a careful allocation of oil revenues for investments in infrastructure across the country, particularly in electricity and clean water, as well as lowering income disparities and stimulating job growth..
6. Is there anything else you would like to say? There has really been a watershed psychological moment in terms of regional and global investors operating in Iraq. My firm has seen a large increase in interest in Iraq by a large number of investors these past 6 months. Continued security improvements and the stability promised by the return of Prime Minister Maliki has convinced these investors that this is an environment where they can operate successfully. If the government can handle this latest round of regional instability fairly and equitably, we expect to see 2011 as the largest year for investment into Iraq yet.
