An eye on alluring leaders, emerging sectors, leading companies and rising trends shaping the future of the Region of .

2014/2 THE REVIEW Issue 6 KURDISTAN REGION OF IRAQ Open for Business

Agriculture & WATER Planting the Seeds

Mario Al-Jebouri— Chairman, IKG Property Dean Michael — Chairman & CEO, Atconz Group HUMAN CAPITAL Untapped Resource Making the Most of Kurdistan

Dr. Ramazan Goran Retail Giant KRG Representative in Austria ICT Stepping Forward

REAL ESTATE & Azmar Air CONSTRUCTION Jean Marie Boixel — Shifting Dynamics Country Manager—Iraq, SI Retail Game Changer

INVEST IN GROUP AN EYE ON THE EMERGING WORLD

Australia — Austria — European Union — France — Germany — Iran — Italy Poland — Russia — Spain — Sweden — Switzerland — United Kingdom — United States

KRG Worldwide The KRG has representative Department of Foreign Relations Kurdistan Regional Government offices in 14 countries. www.dfr.krg.org www.krg.org CONTENTS 2014/2 Briefing 35 UNTAPPED RESOURCE 17-19 Making the most of Kurdistan

Kurdistan Oil & Gas Job Market Survey 40

FOCUS: KURDISTAN ECOCEM POWER Finding Synergy in PLANTS Unlikely Places IN REVIEW 28 56

Diplomacy & Politics 21 Economy 24 Kurdistan in Austria Ambitious Target of Growth Dr. Mustafa Ramazan Goran Raad Zahid Kurdistan in France Building on Industrial Capacity Khaman Zirar Asaad Dilshad Shakir Notes from Westminster Driving Growth Gary Kent Fuad Anaswah Human Capital New Concept in 35 John Downe Educational Edge Robert Richie Game Changer Baker Saeed Taufiq Harnessing Kurdistan’s Human Potential WE THINK OF INNOVATIVE SOLUTIONS AND TECHNOLOGIES. Ian McIntosh Energy 52 WE CREATE BETTER WAYS TO SERVE ENERGY NEEDS. Sustaining Growth in Kurdistan: Changing Dynamics WE MOVE FORWARD TO CREATE VALUE FOR GENERATIONS TO COME. Creating the Skilled Workforce Bilal Wahab Chris Parker DK>'ƌŽƵƉŝƐĂůĞĂĚŝŶŐŝŶƚĞƌŶĂƟŽŶĂůŽŝůĂŶĚŐĂƐĐŽŵƉĂŶLJĨƌŽŵƚŚĞŚĞĂƌƚŽĨƵƌŽƉĞǁŝƚŚƉƌĞƐĞŶĐĞŝŶŵŽƌĞ Confidence Remains High ƚŚĂŶϰϬĐŽƵŶƚƌŝĞƐ͘tĞŚĂǀĞŽǀĞƌϳϱLJĞĂƌƐ͛ĞdžƉĞƌŝĞŶĐĞ͕Ϯϵ͕ϬϬϬĞŵƉůŽLJĞĞƐŽŶϯĐŽŶƟŶĞŶƚƐ͕ĞdžƉůŽƌĂƟŽŶĂƐƐĞƚƐ Kurdistan Careers: Shwan Zulal ŝŶϭϯĐŽƵŶƚƌŝĞƐĂŶĚϭ͕ϳϬϬƐĞƌǀŝĐĞƐƚĂƟŽŶƐŝŶƵƌŽƉĞ͘ Connecting Jobseekers with Employers Nawzad Kamaran THINK. CREATE. MOVE. Kurdistan Region of Iraq — 7

UpstreamDesert_200x270_Vredgrey2.indd 1 3/24/14 12:59 PM Construction Qaiwan Towers 4DLZDQ 7RZHUV· LFRQLF WZLQ WRZHU GHVLJQHG LV D EUHDWKWDNLQJ DGGLWLRQ WR Energy WKH 6XODLPDQ\DK VN\OLQH BAZIAN OIL REFINERY 7KH VWRUH\ EXLOGLQJ LV 5HÀQHG3HWUROHXPRI,QWHUQDWLRQDO4XDOLW\ VSUHDG DFURVV  7KH UHÀQHU\ LV FXUUHQWO\ RQH RI WZR UHÀQHULHV LQ WKH .XUGLVK 640 DQG FRPSULVHV DQ UHJLRQFRQVLVWHQWO\SURGXFLQJUHÀQHGSHWUROHXPSURGXFWVRI RIÀFH WRZHU D ÀYH VWDU WKH KLJKHVW RUGHU 7KLV UHPDUNDEOH JURZWK DQG SURGXFWLYLW\ KRWHO DQG D SUHPLXP KDV HQDEOHG 4DLZDQ *URXS WR H[SDQG WKH UHÀQHU\ DQG VKRSSLQJPDOO$QLPSRU LQFUHDVH LWV RXWSXW WR  EDUUHOV D GD\ /RFDWHG  NP WDQW EXVLQHVV DQG FRP IURP6XOD\PDQL\DKWKHUHÀQHU\LVFXUUHQWO\RQHRIRQO\WZR PHUFLDO KXE WKH FDSLWDO UHÀQHULHVLQWKH.XUGLVWDQUHJLRQDQGSURGXFHVEDUUHOV H[SHQGLWXUH RQ 4DLZDQ DGD\%D]LDQ2LO5HÀQHU\LVFXUUHQWO\XQGHUJRLQJDQH[SDQ 7RZHUV LV LQ H[FHVV RI 86 VLRQ SURJUDPPH WR LQFUHDVH LWV FDSDFLW\ WR RYHU  PLOOLRQ EDUUHOVDGD\E\  Real Estate Contact Details Sulaimanyah Heights +HDGRIÀFH6XODLPDQL0DOOEXLOGLQJ,UDT 7 6XOH\PDQLH+HLJKWVLV4DLZDQ*URXS·VQHZHVWDQGWKHPRVWDPELWLRXVSURMHFWVWLOOGDWH:LWK &RQWDFW#TDLZDQJURXSFRP RXWVWDQGLQJ SURMHFWV XQGHU WKH EHOW OLNH 4DLZDQ &LW\ 6XOH\PDQLH 0DOO DQG XSFRPLQJ 'XEDL -%&-/7'XEDL32%R[8$( SURMHFWVVXFKDV4DLZDQ7RZHUVLWRQO\PDNHVVHQVHWKHQH[WVWHSLVDSURMHFWRIWKLVVWDWXUH 7 &RQWDFW#TDLZDQJURXSFRP 6XOH\PDQLH+HLJKWVZLOOEHVSUDZOHGDFURVVDSDUWPHQWXQLWVDQGYLOODVRIYDULRXV 'XEDL$/2ZDLV7RZHU'XEDL32%R[8$( VL]HV WKDW DUH DOO VSUHDG DFURVV D MDZGURSSLQJ  VTXDUH PHWHUV ,W LV GHVWLQHG WR 7 EHFRPHWKHFLW\·VPRVWSUHVWLJLRXVDQGGHVLUDEOHFRPPHUFLDODQGUHVLGHQWLDOGHYHORSPHQW 7KHFDSLWDOH[SHQGLWXUHRQWKHSURMHFWLVRYHU86PLOOLRQ

Real Estate Qaiwan City 4DLZDQ &LW\ LV D G\QDPLF WKULYLQJ FRPPXQLW\LQ6XODLPDQ\DK'HVLJQHG WR DSSHDO WR ERWK KRPH EX\HUV DQG SURSHUW\LQYHVWRUVWKHGHYHORSPHQWLV D FLW\ ZLWKLQ D FLW\ RIIHULQJ UHVLGHQWV HYHU\WKLQJWKH\QHHGIRUDIXOÀOOLQJOLIH 7KHFLW\FRQWDLQYLOODVDQGDSDUW PHQWV WKH 4DLZDQ &LW\ FRYHULQJ DQ DUHDRI640ZLWKWKHFDSLWDO H[SHQGLWXUHRQWKHSURMHFWLVRYHU86 PLOOLRQ CONTENTS 2014/2

“The real estate and Real Estate & Construction construction is one 59 of the most quickly Addressing New Developments Dean Michael changing sectors Quality - A Rising Trend in Kurdistan, with Mario Al-Jebouri shifting dynamics Global Design in the quantity Yassin Younis and quality of construction.”

REAL ESTATE & CONSTRUCTION REVIEW 59

Amal Ouarid, Senior Customer SSH Design 68 Service Rep. Leading company in architectural design. Excellence in Aircraft Handling 87 Macair Flight Support sets the standard in superior customer service and specialized aviation services AGRICULTURE handling as the first fixed based operation (FBO) in & WATER REVIEW Erbil, Kurdistan Region, Iraq. Planting the Seeds

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10 — The Review 2014 / 2 [email protected] | www.macairinc.com Mobile +964 750.330.2777 | Office +964.750.386.2363 Just about as high as you can get. CONTENTS 2014/2 When it comes to setting the standard in private jet charters, no one surpasses Komar Aviation Group. For the 8th consecutive year we’ve been awarded the ARGUS Platinum Rating — the highest level of safety ratings for equipment and crew experience. So take to the skies with a majestic fleet of aircraft, magnificent 24-hour concierge service, and maximum peace of mind. We’ll Retail take you higher than ever before. Welcome aboard. 70 The Big Box Comes to Kurdistan Jean Marie Boixel SI Retail’s Expansion in Kurdistan Christophe Durand Retail Giant Bhupesh Malhotra

Life 94 ICT 77 Divan Erbil: A Home for Connecting the Region the Business Traveler Rebaz Kawa Martin Kolb Local Knowledge, Local Applications Godar Ibrahim

77 ICT REVIEW Stepping Forward

Worldwide aircraft charters, sales, Affiliate Office management and acquisitions. Macair Flight Support “While challenges +1.949.250.1359 +964.750.386.2363 persist in Kurdistan’s KomarAviation.com MacAirInc.com Orange County | Van Nuys | Long Beach | Carlsbad Erbil, Iraq ICT sector, momentum FOCUS: in the sector’s LEVELINI Interior Design maturity and Redefined in development has Kurdistan shown no signs of 96 slowing in 2014.”

A MACAIR, Inc. company Kurdistan Region of Iraq — 13 The Review Kurdistan Region of Iraq An update on alluring leaders, emerging sectors, leading companies and rising trends shaping the future of the Kurdistan Region of Iraq.

Co-Publisher nvest in Group (IIG) is pleased to announce the release of the sixth issue of “The Review: Kurdistan,” which provides fresh business perspectives and features the dynamic leaders, Iinnovative companies, and tremendous opportunities now emerging in the Kurdistan Region. This issue provides key updates relating to recent developments in a variety of sectors, including Diplomacy, Energy, Economy, Real Estate & Construction, Human Capital, Department of Foreign Retail, ICT, and Agriculture & Water. Notably, “The Review: Relations (DFR) Kurdistan” also includes IIG’s exclusive interview and analysis Kurdistan Regional pieces with leading players from various sectors, who discuss the business environment in Kurdistan, their success stories, and Government (KRG) key projects that are helping to promote further growth in the Kurdistan Region. Kurdistan, as a rising frontier market, has remained safe, stable, and open for business in spite of the recent political turmoil in Iraq. The outstanding support of the international community for Kurdistan in its fight against terrorism reflects an investment in the future of Kurdistan and the Kurdish people. We truly believe the Kurdistan Region can serve as a beacon of Published in September 2014 economic and social progress. Copyright © Invest in Group 2014 The KRG is committed to creating the best possible business environment for foreign companies operating in Kurdistan. Our Goldcrest Executive, Cluster C, special issue for 2014 will highlight the KRG’s business-friendly JLT, Dubai, UAE policies, Kurdistan's rising business opportunities, and the overall [email protected] investment climate within the Region. www.investingroup.org We would like to express our gratitude to Minister Falah Mustafa Bakir and the DFR team for their support of our project Printed by in the Kurdistan Region of Iraq. Express Basımevi Deposite İş Merkezi, A6 Blok, K: 3 no: 309, İkitelli OSB, We hope you enjoy the issue. Başakşehir İstanbul, Turkey Invest in Group No part of this publication may be reproduced, or transmitted in any form or by any means, electronic or mechanical, including photocopy, recording, or any information storage and Managing Director: Can Yirik | Production Director: Daphne Rosenstein retrieval system, without prior written permission Marketing Director: Rachael Walsh | Creative Director: Mustafa Gülsün of Invest in Group. Whilst every effort has been Contributors: Chris Parker, Gary Kent, Shwan Zulal made to ensure the accuracy of the information Editors: Brady Jewett, Gabriel Mitchell, Robert Sotolar, Taylor Rockwell contained in this publication, the authors and publisher accept no responsibility for any errors it Public Relations Alexandra Meier | Design: Catherine Bergman may contain, for any loss, financial or otherwise, Researcher: Sabine Ofer | Sub-Editor: Matthew Thomson sustained by any person using this publication. Photo Editor: Esra Köse

Kurdistan Region of Iraq — 15 BRIEFING BRIEFING

Higher Education Quality Assurance Plan

According Kurdish Ministry of Higher Education statistics, 4,351 Kurdish uni- versity students are now participating in the region’s $86 million Human Capacity Development program that sends stu- dents abroad to complete their higher education and gain professional skills before returning to lead development efforts in Kurdistan. The Plan also involves skill building The Eighth Cabinet of the Kurdistan Regional Government programs for graduates and educators, as well as a push to open new colleges and departments. Kurdistan’s 13 public “The main goals of the 8th cabinet are diversifying universities admitted 36,214 students this Kurdistan’s economy to avoid an overreliance on natural year, 4,000 more than the year before, while the region’s 11 private universities resource exports, tackling corruption, investing in improved admitted 12,000 students, 5,000 more infrastructure in areas of transport, health, and education, than last year. ensuring equal opportunity for all citizens of Kurdistan, and ENERGY Field Development Plan for advancing women’s rights.” Akri-Bijeel Nechirvan Barzani, Prime Minister of the KRG ENERGY ENERGY MOL Group announced that it had Record Production Output to Increase agreed upon a development plan for its operations at the Akri-Bijeel field north of DNO has announced record produc- Genel Energy, Anglo-Turkish oil and gas Erbil with the KRG’s MNR. MOL’s oper- tion levels of around 139,000 bpd at its exploration and production company, has ations at the Bijell and Bakrman areas of Kurdistan operations in the second quar- confirmed that oil production at its Taq the Akri-Bijeel field already have a pro- ter. This represents a 76% increase in pro- Taq operations will increase to a record duction capacity of 10 mboepd, but the duction levels over the first quarter of the 140,000 bpd in September. In addition company plans to utilize temporary facil- year, and the firm has made clear its inten- to the Taq Taq, the firm operates fields ities to boost production to 35 mboepd tion to further increase oil production in at Tawke. Genel Energy has been main- by the end of the year. the Kurdistan Region. The company has taining production at these two fields, Under the two-phase development set a production target of 200,000 bpd for and combined oil production levels are plan just agreed with the KRG, MOL its Tawke operations. averaging around 230,000 bpd. will first determine the number of wells needed to develop its holdings at Akri- “We’ve had feet on the ground in Kurdistan for 10 years, Bijeel and help install a new export pipe- including during the recent crisis as well as in past ones, and line and an advanced Central Production Facility. By 2017-18, the company expects remain fully and firmly committed to our operations.” to increase production to at least 50 Bijan Mossavar-Rahmani, DNO’s Executive Chairman mboepd at the site.

Did you know The Economist’s Intelligence Unit ranked the Kurdistan Region 55th in the world on its “quality of life” index, while Iraq was placed 134th out of 159 countries for which data was available on that measure.

Kurdistan Region of Iraq — 17 BRIEFING Tourism Did you know Erbil Citadel The capacity of the Kurdistan Region's oil pipeline to Turkey will reach 220,000 barrels per day at the end of September. UNESCO’s World Heritage Committee has named the Erbil Citadel to its list of World Heritage Sites after 18 of the Q&A Committee’s 21 members voted to Energy The MNR sought to reassure workers Aimen Dean —­ approve its application. The Citadel is Kurdistan’s Oil Industry in the energy sector and stressed that Managing Director, Five Dimensions one of the oldest inhabited cities in the Forges Ahead its oil production plans would continue Consultants world, with a history that stretches 7000 as originally envisioned. The Ministry IIG: Can you tell us a bit about years into the past. Political upheaval has rocked Iraq and struck a confident tone in a statement, Five Dimensions? touched Kurdistan in recent months, yet saying: “The enemy has not been able AD: We are a market intelligence Transport real estate oil production levels in Kurdistan appear to target oil operations in the Region, company specialized on the Middle Haji Omaran Project Erbil Arjaan stable and there are signs that the KRG but as a precautionary measure some of East. We provide forecasts on risks may be finding more buyers for its oil the exploration activities in areas abut- and opportunities in the region. We Kurdistan’s Ministry of Housing and Erbil Arjaan by Rotana will offer 20 sto- exports. ting potential combat zones have been also conduct detailed due diligence Reconstruction reports that the first stages ries of first-class mixed-use service com- While an early August offensive by temporarily halted and staff relocated. investigations, feasibility report and of a road project designed to cut travels plex project providing serviced offices ISIS prompted American intervention However, oil production in the Region forecasts based on qualitative data. times between Erbil and Haji Omaran on and hotel apartments. The total invest- and the bombing of terrorist groups in remains unaffected, and is being delivered the Iranian border in half are nearing com- ment of the project is $52 million with the vicinity of Erbil, as well as the evacu- to both the domestic and export mar- IIG: In which areas do you expect to see the greatest demand? pletion and expected to open by mid 2015. ownership divided as follows: Malia ation of most foreign staff in Kurdistan’s kets. Indeed, the KRG is expecting that AD: We expect growth in two lines of Through the construction of dual carriage- Invest Holding %60, SS Roza Offshore oil industry, preliminary figures show the producing companies will ramp up services: first on geopolitical analysis way and multiple tunnels, the project seeks 30 %, and DIVA Srl 10%. that overall oil production levels have production in the coming weeks as ongo- and second for due diligence inves- to facilitate regional trade and transit. remained largely unaffected. Total oil ing export infrastructure improvements tigations. In both cases, it is all about Real Estate The second and final section of the production in the Region, which aver- come online as planned.” briefing our clients and prospects Kurd Towers project will connect the area of Choman aged about 360,000 bpd through June, Perhaps the most important element of about Kurdistan. By providing sound to Haji Omaran with the construction of appeared to be down just 5,000 bpd in that export infrastructure is the Kurdistan’s data and relevant contacts, we want The Kurd Towers is a deluxe commercial around 17 km of dual carriageway. The the wake of the disruptions caused by newly operational oil export pipeline to to add value both to Kurdistan and and residential development by Faruk government predicts that this section of ISIS attacks nearby. Though firms such Fishkhabour, which was also seeming- to our clients by enabling them to Real Estate. The towers will comprise of the project will be completed sometime as Genel Energy, Chevron, Exxon, and ly unaffected by the disorder of the past identify clear pathways for successful 265 residential units and 160 offices. The in 2017. Hess have evacuated employees from weeks and has been pumping a normal ventures in a market with rarely seen massive potential. Kurd Towers will rise 175 meters, mak- the Region, production operations seem level of 120,000 bpd of oil to the Turkish ing it the tallest towers in the Kurdistan trade to have remained largely undisturbed. border. In the meantime, work has begun Dubai-Kurdistan IIG: What are your medium term Region and Iraq. Drilling and exploration activities, how- on upgrades to the pipeline to nearly dou- plans? ever, have been curtailed. TAQA and ble its capacity to around 220,000 bpd by AD: We have ambitious plans The UAE has pledged some $7 billion Hess have both ceased exploration in the the end of the month. Nearly 8 million because we believe in the potential for investment in the infrastructure of Region for the time being, but TAQA has barrels of oil exported through the pipe- of Kurdistan. We have been visiting Kurdistan, while nearly 118 companies reiterated that the current shutdown will line, filling 11 tankers, have already been Kurdistan for over two years now from the UAE currently have operations in not affect its plans to begin oil production shipped to potential customers via facili- and even starting working for some the Region. Total trade between the UAE in Kurdistan at the beginning of 2015. ties at the Turkish port of Ceyhan. prestigious MNCs. At this stage, now, and Kurdistan amounts to over $8 billion. we will expand our network of local associates. In the medium term, we “The UAE is committed to want to be able to quality all opportu- “As Malia Group, our roadmap nities coming up for clients and help contribute to the economic them with local support to operate in the coming years is one them in a profitable manner. growth of Kurdistan, where we Hospıtalıty have been among the pioneers.” of strategic growth and Erbil Rotana welcomes its new GM IIG: How do you foresee the market Rotana has announced the appointment of Ghassan Dalal as developing over the medium term? Abdullah Saleh, diversification where GM of Erbil Rotana. A Lebanese veteran with over 20 years of AD: We believe that Kurdistan is per- Deputy Minister of Economy and Trade investment in Kurdistan and experience in the international hotel industry including Canada, fectly able to manage the currently Egypt, Lebanon, Nigeria and Sudan, Ghassan will bring a unique highly-troubled regional environment other countries in the region depth of experience to his new position. Commenting on his at its most and we don’t believe that will feature prominently.” new appointment, Ghassan Dalal said: “I am truly excited to this will affect the general positive trend for Kurdistan. If the Dubai mod- work with and build a solid team of local talents that will have el is followed, the growth potential is Jacques Jean Sarraf, long-term success; a practice that has been key in the overall extremely high. Chairman & CEO, Malia Group success of Erbil Rotana and will maintain loyalty.”

18 — The Review 2014 / 2 Kurdistan Region of Iraq — 19 DIPLOMACY & POLITICS

KURDISTAN BOARD of INVESTMENT Kurdistan in Austria IIG: How would you assess the relations IIG: How would you characterize the The Kurdistan Region of Iraq is a booming market that offers promising investment between Austria and the KRG? commercial ties between the both sides? opportunities especially in the agriculture, industry, and tourism sectors. MRG: We are fortunate to be working MRG: A number of Austrian compa- closely with a foreign government whose nies are already making use of the vast ties with the Kurdistan Region date back commercial opportunities the Kurdistan to the 1970s, when Austria was one of the Region has to offer. Austrian Airlines was first countries to grant asylum to refugees the first international carrier to offer from the Kurdistan Region. During these direct flights to Erbil in 2006, contribut- difficult times throughout the 1980s, the ing immensely in connecting Kurdistan Austrian government never wavered with the rest of the world. Other prom- in their support. Today we are solidify- inent examples of Austrian commercial ing these historic ties by encouraging activity are the energy company OMV, and facilitating the active engagement and Doppelmayr, who built cable cars Dr. Mustafa Ramazan Goran ­— of Austrian companies in the Region. on Korek Mountain and in Slemani, and KRG Representative in Austria The many official meetings of President is currently working on another project Barzani with Austrian President Fischer, in . Aside from these projects, our Dr. Mustafa Ramazan Goran speaks as well as the visits of Minister Falah office meets daily with smaller Austrian to IIG regarding the ties that the Mustafa and other high-ranking officials companies who are showing an increas- KRG Representation in Austria is with the Austrian chancellery, foreign and ing interest in the Kurdistan Region’s fostering between Austrian and other ministries and institutions, includ- business opportunities. Although at the Kurdish business and society. ing the Austrian Economic Chamber are beginning there was naturally a bit of indicative of our strong friendly relations. reluctance due to the unstable securi- ty situation in some parts of Iraq, these IIG: The Austrian government opened reservations have largely been overcome a Schengen Visa processing center in thanks to information exchange and first- Erbil. In what ways do you think that it hand visits to the Kurdistan Region. Our will improve ties between the Kurdistan goal now is to promote B2B opportuni- Region and Austria? ties between Austria and the Kurdistan MRG: One cannot stress the importance Region. of this Visa application center enough. Prior to the establishment of the applica- IIG: Do you work with the Austrian The BOI is providing professional one-stop-shop services to tion center in January of this year, indi- commercial office in Erbil or other busi- viduals were required to personally travel ness groups with interest in Kurdistan? investors and is responsible for granting public benefits to eligible to the Austrian embassies in Amman or MRG: The existence of an Austrian com- Ankara, a lengthy process that was also mercial office in Erbil as well as the active private investment projects based on the investment law of 2006. very costly. Many Kurds and Iraqis would participation of Austrian companies in make frequent visits to Austria as tourists, the numerous trade fairs, too, underline students, and patients, and we wanted the great interest Austrian companies are to help ease the application process for showing in the Kurdistan Region. We About these individuals. We voiced our concerns plan to organize sector-focused events in Dr. Mustafa Ramazan Goran holds a and urged for a better application process the coming months as we firmly believe medical degree from the University for everyone. Even during a visit to Erbil that the Kurdistan Region’s agriculture of Vienna and has been working as a general practitioner in Vienna for in November 2011, the Austrian Vice and tourism sector, which are defined www.kurdistaninvestment.org 25 years. Dr. Ramazan previously Chancellor and former Foreign Minister as priority sectors by our government, represented the KDP in Austria and Michael Spindelegger agreed and empha- could benefit greatly from the extensive was officially appointed the KRG sized how essential it was to open such an Austrian expertise and experiences in General Directorate of Investment Erbil General Directorate of Investment Slemani General Directorate of Investment Duhok Representative to Austria by the 6th office. Today, all Iraqi citizens can directly these fields. (Branch office) (Branch office) (Branch office) Cabinet in November 2010. A Emergency Hospital Street, Bakhtiary, Erbil Sarchnar, next to Mashxalan Masjid, Slemani 1st Shubat Street, Duhok apply in Erbil for a visa. +964 66 / 264 21 18 +964 53 / 318 17 23 , or - 318 17 24 +964 62 / 762 71 75, or - 762 70 13 [email protected] [email protected] [email protected] Kurdistan Region of Iraq — 21 D & P DIPLOMACY & POLITICS

INSIGHT Notes from Westminster

Kurdistan in France Rahman, the KRG's High Representative and one MP has even backed a Kurdish to the UK, was blunt in her assessment of air force. Parliamentarians also recognise IIG: Can you tell us a bit about your acquiring their know-how and expertise, the new Iraqi realities and the possibilities the need to supply medicines and greater office and what it can offer the French which are crucial in this phase of our eco- for federalism 2.0: "Post-, Iraq has a assistance with the humanitarian prob- business community? nomic development. For example, an different geographic landscape, a different lems flowing from the massive influx of KZA: We have engaged in numerous agreement was signed to this effect with security landscape and that has brought up to a million people - about 20% of the initiatives and activities in an effort to the French Region of Dordogne. We are the political crisis to the forefront. The Kurdish population. meet the expectations of private and also in contact with the Brittany region. Government in are dysfunction- A major parliamentary debate on the institutional stakeholders, while living al. The Iraqi army is in disarray, so the wider issue of the Middle East and North up to the image of Kurdistan’s renewal as IIG: What direction do you believe question is, what Iraq are we part of ? " Africa was also secured by Alistair Burt, a dynamic, safe region firmly focused on the trend of French investment in the The former Iraqi Minister, Dr. Ali the former British Minister for the Middle the future. We approached French busi- Region is heading? Allawi made the case for confederation East. The focus was on the Gaza crisis ness leaders and established contact with KZA: We believe that France – a pioneer- Gary Kent — but in a hesitant manner because he con- but Kurdistan was a significant part of their most representative institutions, ing and highly dynamic country in the Director, All Party Parliamentary Group ceded that the status quo would probably the debate. including the MEDEF, an organization food industry – should invest more in on the Kurdistan Region of Iraq (APPG) persist: Iraq divided into three effectively Burt cautiously argued that Britain Khaman Zirar Asaad —­ representing the largest French com- this sector. The same is true of tourism. sovereign states. "should look hard at what support it can KRG Representative in France panies, and UbiFrance, encompassing Kurdistan, which has enormous potential The Committee was electrified by give to the Kurdish region" specifically other mid-sized companies, along with in this sector, should take France as an the evidence from the respected former by acknowledging the need to sell oil to Khaman Zirar Asaad provides IIG follow-up and regular contact with the example in this area also, by showcasing American diplomat, Peter Galbraith, who survive, having been starved of funds by exclusive insight into the ways in French Ministry of Economy, Finance its rich past, straddling three major civ- rounded on the traditional diplomatic the Maliki Administration, support on which the KRG Representation in and Industry. ilizations, and its historical heritage, as a mantra of maintaining current borders at defence and intelligence, and "counselling France is bringing French business means of projecting itself into the future all costs. He said that the West's mistake in and discussion about further steps towards to the Kurdistan Region. IIG: French firms are among the most and the modern world. Yugoslavia was preserving territorial integ- autonomy or independence" because active foreign actors in the Kurdistan rity rather than avoiding war, and failing to "independence for the Kurdish region is Region. How has your office helped to IIG: How do you foresee relations understand that many simply didn't want a big step that would have serious rami- facilitate this investment? between France and the KRG develop- parliamentary search engine to stay in Yugoslavia. He reminded us that fications, but it is no longer off the cards." KZA: French companies are currently ing over the medium term? records about 400 references to America originally sought to keep the Another Conservative MP, Robert well represented in Kurdistan, but a sub- KZA: Relations between France and the Kurdistan in the past 75 years but USSR intact but that didn't fly which was Halfon, who has visited Kurdistan five stantial margin for expansion remains. Kurdistan Region predate the beginning A14% of these are in the last 18 months. for the better for the imprisoned nations times, outlined "a few home truths" - real- Numerous other profitable investments of the economic boom that our country This is thanks to rapid changes in Iraq, a of the old Soviet Union. He contrasted politik has often trumped human values, are available to our French partners. The has experienced in recent years. France now very topical inquiry by the power- British acceptance of the right of Scotland fuelled appeasement and denied the right flagship firms of French industry are cur- was at our side during the dark years – the ful Foreign Affairs Select Committee and to secede with its apparent refusal to allow to self-determination. He was crystal rently highly visible in the economic land- years of dictatorship and genocide. We because Kurdistan has won many more the Kurds to do the same. clear about Kurdistan: "Instead of trying scape of Kurdistan: Lafarge in the cement shall always be grateful to this country parliamentary friends. It's impossible to predict what the to keep together an artificial and bro- works sector, Total in energy, Orange in and its people who came to our aid in the The Select Committee inquiry looked Committee will conclude maybe in the ken Iraq, the UK, the United States and telecom, Carrefour & Auchan in mass- past, when we were in distress. France is set to concentrate on the mechanics of Autumn. It is possible, if improbable, that their allies should be doing everything scale food retailing, and so on, but we the world’s fifth largest economic power building a more concerted commercial the political context will have changed possible to help the Kurdistan region to hope to see small and medium-sized and its companies rank among the world’s and cultural relationship with Kurdistan by then. As things stand, however, the become independent, and to ensure that About French enterprises invest more heavily leading enterprises. Our relations are des- and how federalism should be imple- de facto division of Iraq is making new [it] remains free and democratic." Khaman Zirar Asaad has been the KRG’s in Kurdistan. Kurdistan was at one point tined to strengthen and develop, given our mented. But it is now tackling how to thinking essential. The future of Kurdistan will be deter- Representative to France since her appointment in 2010. She previously the fruit basket and granary of the entire position in the new emerging Middle East, reconfigure federalism or whether con- Some MPs, many of whom have seen mined by its people and the realities on served as a member of the Kurdistan region; it must become so once again. Our and given the history of France with this federation or independence are likely, Kurdistan for themselves on our delega- the ground but British and other parlia- Parliament from 2005-2009. She holds citizens should not settle for being con- region and its role as a permanent member inevitable or desirable. tions, sympathise with and see Kurdish mentarians will play a vital role in gal- law degrees from the Erbil Technical sumers, but must also become produc- of the UN Security Council. We have an Arguments about all these were made independence as a vital bulwark against vanising moral and practical support. Institute, Salahaddin University, and the ers. This is possible through partnerships economic and political partnership, which in an intellectually forthright manner in an extremism. There is an openness about Expect to see many more hits on the University of Paris. with French companies with the goal of we must further build upon together. A evidence session in July. Bayan Sami Abdul supplying military goods to Kurdistan parliamentary data base. A 22 — The Review 2014 / 2 Kurdistan Region of Iraq — 23 E ECONOMY

Ambitious Target of Growth We are targeting an IIG: Can you provide us with some spe- “ cifics on the ESX? opening for the ESX RZ: The ESX got a license from the Iraq in the fourth quarter Securities Commission. We are working “When the market gains under the mandate of the Iraq Securities momentum and starts of this year. We are Commission, which has the same listing expecting an initial procedures as the Iraq Stock Exchange. to work in the medium We are targeting an opening for the ESX term, we are targeting capitalization of in the fourth quarter of this year. We are $300-400 million. expecting an initial capitalization of $300- almost 40 qualified 400 million. We have a consultant con- companies from the tract with the Louis Berger Group. As a consultant, they are doing work in terms Kurdistan Region to of listing, infrastructure, procedures, and be listed on the stock ” Raad Zahid ­— training brokerage firms here on how to IIG: What level of interest in Kurdistan IIG: Do you look primarily for foreign exchange. Then they will come one by CEO, Erbil Stock Exchange (ESX) be licensed. We expect to take public four exchange. have you found with foreign investors? institutions to underwrite IPOs? Have one. With four companies in the first six companies in the insurance and construc- RZ: If you look at the Kurdistan Board of you found that any local banks are inter- months, I expect that we might double Raad Zahid provides IIG with some tion sectors on the ESX when it opens. We Investment statistics from 2006 until the ested in facilitating IPOs? that by one year of business. specifics on the ESX’s opening, have licensed two brokers. One broker first quarter of 2014, they will show that RZ: The first stage of an IPO is difficult initial market capitalization, and got the approval from the Iraq Securities ” almost $38 billion in funds entered the for foreign investors because they have IIG: Turkish, Lebanese, and Emirati plans to attract foreign investors. Commission and the second one is in the market in Kurdistan. They were distrib- to comply with Iraqi law and the Iraq companies have strong economic ties process of doing so. There are another two uted between the oil and gas sector, con- Securities Commission’s procedures. But with the Kurdistan Region. Do you that are fulfilling the requirements for for foreign investors, that they can enter struction, trade, agriculture, and banking. all locally incorporated companies, even expect their involvement? ESX to trade as a licensed broker. this market easily, and that security here Rather than going to banks and the finan- private limited liability companies, can RZ: We have many Turkish and Lebanese is much better than in Baghdad. These are cial sector, most companies can fulfill convert to a public joint stock and then banks that are licensed and working IIG: What issues are you addressing for all factors that will add to liquidity once their needs for financing and growth in do their listing on the stock exchange. We here in Kurdistan now. There are a lot investors that the Iraq Stock Exchange the market opens. the future through the ESX. are negotiating two settlements with them of foreign companies from Lebanon, (ISX) is incapable of addressing? How on the types of trade that will take place the UAE, and Turkey in joint ventures confident are you that the ESX will IIG: How can the ESX ensure proper IIG: Could the ESX’s small size be a on the exchange. There are other banks with locally incorporated companies. have enough liquidity to be attractive and accurate disclosure to investors of challenge in terms of attracting those that would like to list their shares on the Actually, if you look at companies that to investors? quarterly financial statements and other types of investors? stock exchange in the future. are now listed on other stock exchanges, RZ: The ISX is dominated by banks. There important data? RZ: Yes, but the prospects for growth and like Dana Gas, Abu Dhabi Islamic Bank, About is also Asiacell, which constitutes almost RZ: Apart from the Iraqi standard of pro- capitalization in the Kurdistan Region are IIG: What is your medium term target? and TAQA, they might do a dual listing Raad Zahid holds a B.A. in Economics 40% of the market capitalization there. ducing balance sheets and evaluations for better than in the rest of Iraq. Security- RZ: When the market gains momentum of up to 20-30% of the stocks they listed from University and M.A. in First of all, there is no dual listing between the companies, we are trying to impose wise, communication and transporta- and starts to work in the medium term, in their original market according to the Econometrics from Essex University, and the ISX and the ESX. We are trying to the international accounting standard tion are easy here. These are all factors we are targeting almost 40 qualified com- rules and regulations there. In the future, in finance from Strathclyde University bring more transparency with the com- for that reporting so that all the materi- that will entice foreign investors to come panies from the Kurdistan Region to be it depends on their needs and how they in Scotland. Prior his current post, he worked for over 30 years with the Abu panies that will be listed here, especially al things, like balance sheets, cash flow, and invest in Kurdistan. They will have a listed on the stock exchange. Some of look at Kurdistan’s market. If they do a Dhabi Investment Authority (ADIA) for foreign investors that play a big role in profits, and losses, will be transparent to window to look at this through the ESX. them are doing evaluation, and we are dual listing after the first year, that will where he led several strategic initiatives the economy of Kurdistan. investors. On a quarterly basis, we are Currently, we have two funds- one from helping them by looking at a financial be a positive sign for us. for projects, treasury and alternative Liquidity will come with the market. trying to let companies disclose all the Sweden and one from England- that are advisor to evaluate their balance sheet A investments for the world’s largest Once the market opens, a lot of busi- information related to the stocks they are interested to see what companies will be and assets until they comply with all the sovereign wealth fund. nesses will see that there are openings listing in the market. listed so that they can have access. procedures that we require as a stock

24 — The Review 2014 / 2 Kurdistan Region of Iraq — 25 E ECONOMY Building on Industrial Capacity

Dilshad Shakir ­— CEO, Azady Industries

Dilshad Shakir speaks to IIG about the role that Azady Industries is playing in the development of Sulaimani a center for heavy indus- try in Iraq and the broader region, Already, as it relates to Azady Industries, IIG: Which sectors provide your larg- Azady Industries and well as the major potential for we can see synergies coming together est clients? Where do you see further Azady Industries, a Sulaimani-based, further growth in the sector. in here to allow for this growth. As we growth? Faruk Holding Company, is a regional create galvanized steel for construction, DS: As I mentioned, the KRG’s Ministry leader in steel structure manufacture. The company specializes in transmission transmission towers, and communica- of Electricity is a major client. They have and communication towers for power tions towers, we rely on steel, but also plans to expand transmission lines to utilities and telecom companies, as well cement, as a complementary good for sufficiently cover all of Kurdistan—all of as steel structure for construction. the structures we build. We already which requires a huge number of tow- have these inputs. As I said earlier, once ers. While they have, in the past, used IIG: Sulaimani has become a major local steel production massively. Azady Sulaimani’s steel factories can use raw foreign companies to supply these, we center within the Kurdistan Region Industries would benefit from such iron rather than recycled scrap, this will are now stepping into that role. We are IIG: What improvements or expansions for heavy industry—the province pro- expansion, as steel would be easier and only improve the efficiency and capaci- also supplying towers for similar expan- has Azady Industries been working to duces an enormous amount of cement cheaper to source. Currently, when local ty of Sulaimani’s heavy industry sector. sions of transmission lines throughout the complete in 2014? and steel each year. To what degree does producers cannot meet our needs, we Further, we as a company have already rest of Iraq. In the telecom sector, Azady DS: One of the major areas that we have Azady Industries benefit from local must import steel from Turkey, which is taken steps in centering industry in Industries has already established itself been investing in recently has been our strength in industry? costly. The challenge to developing these Sulaimani. Azady Industries already throughout the country as a partner of quality control laboratory. We were the DS: The industrial strength of Sulaimani iron ore mines, currently, is regulatory. has the largest galvanization pool in the choice for the three major mobile opera- first company to have ISO quality cer- is very important for us. Most impor- We are awaiting the development of a country. This allows us to make power tors, Asiacell, Korek, and Zain, and supply tification for both quality management tantly, factories in Sulaimani produce the legal framework that will allow us to take transmission towers for both federal Iraqi their cell towers. We provide high-qual- and oil and gas areas, and we are current- raw materials that we use, namely steel. advantage of these local resources and utilities, as well as the KRG Ministry of ity solutions for setting up GSM towers ly working on getting ISO certified for Currently the steel plants in Sulaimani begin mining. Electricity. Previous to this, these trans- in areas with challenging geography and our testing laboratory. We already have About use scrap to create their products. While mission towers had to be imported, typi- weather, cost effectively. In construction, the equipment to assess the strength and Dilshad Shakir has served as CEO of Azady Industries for the past two this works on a small scale, most major IIG: How do you view the evolution cally from Turkey or Iran, but sometimes we have had a few clients, notably in con- integrity of all of our products in a num- years. Previous to his tenure at Azady steel producers use mined iron ore to of heavy industry in Sulaimani and as far away as China. Making structures struction of the Grand Millennium Hotel. ber of ways. The certification processes, Industries, he served for 31 years at the make steel. Faruk Holding is working Kurdistan over the coming 5-10 years? such as these in Kurdistan only makes However, construction in Kurdistan is and more importantly the lab and qual- KRG Ministry of Electricity. He holds a to establish such a system, and to begin DS: The foundation is already built for sense, and with growth in industri- still dominated by cement for structure, ity control processes themselves, truly degree in electrical engineering from mining iron ore outside of Sulaimani, Sulaimani to become a major industrial al capacity in Sulaimani, this is now so we still view this as a market for future demonstrate our international standards the University of Sulaimani. which would increase the volume of center for Iraq and the broader region. happening. growth rather than a current focus. of quality to our clients. A 26 — The Review 2014 / 2 Kurdistan Region of Iraq — 27 E ECONOMY

FOCUS: ECOCEM Finding Synergy in Unlikely Places

Faruk Holding, in partnership with Already well known for solving problems will be trucked to the cement plants. All Lafarge, have found an innovative and filling gaps through innovative and in all, only 12-20% of the original trash method of using Sulaimani’s high-quality private sector investment, delivered to Ecocem will be returned to a Game Changer waste to partially fuel the city’s Faruk Holding is pushing the boundaries landfill. The rest will go on to productive major cement plants—reducing once again. Sulaimani Governorate pro- uses; even the moisture removed will be IIG: Could you brief our readers about industrial CO2 emissions, lowering duces hundreds of tons of garbage daily, purified for reuse. Azmar Air and its key projects? operational expenses, cleaning as Sulaimani grows, it begins to create Faruk Holding and Lafarge hope BST: Azmar Air was established in The new airport“ in up the city’s water and soil, environmental strain on the city. Landfills, to have the whole operation running 2005. We are the fifteenth company in Slemani will be the and improving urban safety in scattered around the outskirts of the city, smoothly by the end of 2015, and have the Middle East to have the International the process. As part of Lafarge require massive areas—and in some cas- aspirations to eventually run their plants Air Transport Association’s Safety Audit biggest one in Iraq. It and Faruk Holding’s interest in es, such as in Tanjaro in the city’s south, primarily on RDF. As Sulaimani grows, for Ground Operations certificate. We will be built at the same improving Sulaimani and assisting urban expansion is nearing the dump- economically and industrially, as well as manage ground handling, cargo, fuel, the Regional Government, the sites. They release gases, which pollute demographically, its production of waste and catering services at airport, with the same two parties are jointly initiating a the city’s air; they pose major fire hazards; is predicted to grow in kind. A parallel International Airport (SIA). Azmar Air runway and taxiway. comprehensive service to sort the and, even as the city is dependent on its expansion of RDF use is built into the has been growing 20% each year. We have municipal solid waste to produce aquifers for fresh water, pollute the city’s Ecocem contract. Ecocem holds a 20-year about 600 staff now. We will be closing refuse-derived fuel (RDF), and groundwater. Surprising then, that in this renewable contract with the Slemani We are also the first company in Iraq the old terminal and minimize landfill waste to less refuse, Lafarge and FH find opportunity. municipality to consume 1,000 tons of to have a private airport, and we are than 20% of its original volume. Lafarge and Faruk Holding’s major garbage per day, with 3% annual increas- Baker Saeed Taufiq ­— now building Iraq’s first specialized car- building a new one cement plants in Sulaimani —Bazian, es. This represents over 40% of Sulaimani’s General Manager, Azmar Air go airport in Sulaymaniyah, which we with a hotel. Tasluja, and Gasin Cement Company— total current waste production, and there will own completely. The new airport in require tons of fuel for clinker produc- is ample room for expansion. In the first Baker Saeed Taufiq discusses Sulaymaniyah will be the biggest one in tion. The precalciner and the Kiln are year, Ecocem plans to produce, from its Azmar Air’s expanding ground Iraq. It will be built at the same airport, operated at around 1,400 degrees Celsius. total waste, 130,000 tons of RDF, which handling operations in Kurdistan with the same runway and taxiway. We At this temperature, refuse-derived fuel covers roughly 25% of Lafarge/Faruk and the company’s ambitious will be closing the old terminal and build- in Baghdad. No airline can fly ”to the (RDF)—dried, shredded garbage, essen- Holding’s cement plants’ fuel needs. As plans to turn its Slemani base ing a new one with a hotel. It will take a Kurdistan Region without the approval of tially—can be used efficiently to fuel the Faruk Holding and Lafarge push towards into a nexus for international minimum of four years to finish. We are the ICAA. It affects us negatively. Airlines chambers, and is burned so hot that car- their goal to power their plants entirely cargo flights. also building the Sulaymaniyah Cargo know that we have to get that approval bon emissions are diminished. The pro- from RDF, much more RDF will be pro- Village, which will be finished in August. from the ICAA, and then they come to us. cess produces less smoke and pollution duced, and much more waste recycled. On the other hand, we have been talking than typical burning of trash, and less The project benefits everyone IIG: Do you believe that Sulaymaniyah with Baghdad about taking on ground CO2 than the heavy oil that currently involved. By producing their own fuel can be a cargo hub? handling operations at the airports in fuels the cement plants. rather than depending on oil suppliers, BST: Iraqi airspace is a corridor for all Basra and Baghdad for a year now. We The RDF plant, operated by Ecocem/ Faruk Holding and Lafarge not only the flights between the West and the won a tender over seven international Environmental Solution Limited, a improve the predictability and indepen- East. Everyday there are around 300 competitors. Until now, our case has been company established by Faruk Holding dence of their cement plants, but they flights over Iraq. So, Sulaymaniyah is in stuck in the Ministry of Transportation and Lafarge Industrial Ecology, will be will also lower operational costs through a good position to be a point of connec- in Baghdad because of political problems. based in Tanjaro, just south of Sulaimani. cheaper fuel supply. Much more impor- tion between the West and East. Through We are waiting for the situation to change. Municipal solid waste trucks will drop tantly, however, is the impact the project our cargo company, we can provide the off roughly one thousand tons of waste will have on Sulaimani’s environment and facilities needed for a hub that can distrib- IIG: What do you see in the future of the per day to the plant. The waste is then society. Groundwater will be cleaner, soil ute cargo from Sulaymaniyah to the East. aviation industry in Kurdistan? sorted, and 3-5% of the waste, primarily will be more productive for agricultural The new airport will play a crucial role BST: The airline business is directly con- scrap metal and plastic, is removed to be purposes, the air will be fresher, and the in positioning Sulaymaniyah as a cargo nected with people’s economic situation, recycled. Water comprises roughly half city will be more secure as landfill fires hub for the region. This is our main plan. and the economic potential and growth of the waste. To dry the waste sufficient- diminish. While heavy industry and envi- of Kurdistan. We believe that the aviation ly to be used in the precalciner, Ecocem ronmental improvement often seem at IIG: How does the current political sit- industry will improve in the Kurdistan will employ bacteria in a process of bio odds with one another, Ecocem demon- uation affect the growth of the aviation Region if the economic situation con- drying, which will heat and dry the trash. strates that synergies between the two can industry in Kurdistan? tinues to improve here. As I mentioned, Unusable trash will be separated and sent be found—to the benefit of communities BST: As you know, all permission comes we would like to see Kurdistan become a to a landfill, and the dried, shredded RDF as well as balance sheets. A from the Iraq Civil Aviation Authority cargo hub for the region in the future. A 28 — The Review 2014 / 2 Kurdistan Region of Iraq — 29 E ECONOMY

Driving Growth

IIG: Niva has grown at upwards of strategy is to open most of our show- to our local showrooms. Because of reg- Ford dealers are very important in pro- Niva Car Trading 250% per year in recent years. What has rooms, supply hubs, and service facili- ulatory differences between the KRG and moting the brand. Niva Car Trading is the exclusive allowed you to reach these numbers? ties ourselves, to remain fully integrated. Baghdad, these cars can only be sold in dealer of Ford and Lincoln FA: Niva has been fortunate to witness In Baghdad, Basra, Sulaimani and Erbil, the Kurdistan Region. Safety and quali- IIG: Financing presents challenges to automobiles in Iraq. A Faruk Holding company based in Sulaimani, Niva such growth between 2011 and now. The we have already done this, and we will ty standards in the KRG are very strict. many firms in the Kurdistan Region. To maintains a broad presence across growth has been due to a number of rea- do the same in Duhok soon. In smaller While our cars all meet these standards, what extent does access to finance limit Iraq and the Kurdistan Region. sons. One of the central factors has been markets, we will work with sub-dealers. the compliance procedure is expensive people’s ability to buy cars in Kurdistan? our marketing strategy. We have imple- We can supply the cars and parts and sup- and time consuming. When importing Is this changing? mented and adopted an aggressive, and port their services, while fostering local cars into the country this procedure is FA: Access to finance is one of our major thus far, successful, campaign to make business in smaller towns. not yet implemented. However, once it challenges, both as a company and as retail ourselves broadly known by customers in is, Ford cars comply with internation- finance for our customers. Retail financ- the country. Moreover, we have improved IIG: Which demographics and seg- al standards, regardless of regulation or ing is somewhat unique to car sales. Some our after-sales services, such as service, ments of the market do you find most local policy. This becomes problematic local banks do offer retail financing for car maintenance, and parts. We have also promising for the growth of car owner- if demand shifts between the regions, loans. These are at high rates, and short Moh’d Fuad Anaswah ­— increased and improved our sales team ship in the Kurdistan Region? because we cannot move vehicles between repayment periods. However, it is incon- CEO, Niva Car Trading by hiring more and more sales profession- FA: The country in the past few years has the Kurdistan Region and federal Iraq. I sistent at this stage. Some loans are easy als and retraining those that we have at displayed very fast growth; it has been the hope that eventually there will be some to acquire, some very difficult. Financing Fuad Anaswah provides IIG insight global standards. We opened a call center fastest growing country in the region. As sort of a free zone between the two or through banks still is somewhat below into the opportunities, as well as the last year that allows us to call each and GDP per capita increases to approximate- between neighboring countries, so that our expectations and ambitions, because challenges, in maintaining the sky- every client that comes to buy a car, and ly $5,000 per year, we will begin to see we can import the vehicles directly into retail financing is crucial to car sales, we rocketing growth of the Kurdistan most of those who service their vehicles more and more families and individuals the free zone, and then we can move cars believe that as financing improves, our Region’s retail and fleet automobile with Niva. Feedback from our call center buying cars with better quality—more to Kurdistan or federal Iraq as per actual sales numbers will also grow. sector, and how Niva has become a is reviewed each month, and we use the than just a means of transportation. demand. This would make our operations central player in the market. information to improve our sales and ser- People begin to look at cars as a means of much more efficient, to the ultimate ben- IIG: Car insurance is only recently vices. Regarding the sustainability of our entertainment, and seek smart, green, and efit of our end customer. becoming available, and is still not growth trajectory, we will keep growing luxurious automobiles. We broadly cover widely used in the Kurdistan Region. quickly. Perhaps not at 250% per year, but the market from the lower end up to the IIG: In what ways do you collaborate What is your take on the future of the we expect three-digit growth to continue higher end. Ford suits this strategy very with Ford to realize your mutual goals? auto insurance sector? Financing through for the coming years. well. It is not cheap, but it is not expensive, FA: There is a lot of collaboration between FA: When our customers purchase cars, “ and it offers very high value for the mon- Ford, Niva and other Middle East Ford we heavily encourage them to buy car banks still is IIG: Can you tell us about your expan- ey. We start with small, entry-level cars dealerships. Ford has a Middle East office insurance. The sector itself is growing, somewhat below our sion strategy within the country? and move up to higher-end luxury cars based in Dubai that coordinates all of the with Asia Insurance serving much of the FA: We are currently expanding into and trucks. In coming years, we expect regional distributors. They send repre- market. However, the culture of using expectations and new markets in federal Iraq, including for overall increases demand for luxury, sentatives here each month to help in insurance has not yet been integrated in ambitions, because About Baghdad and Basra, where we believe safety, intelligence and comfort, and we training our sales team and ensure con- society, for social reasons or simple lack Fuad Anaswah has been the CEO of there is still a lot of potential for new are well positioned to provide that. tinuity and consistency between different of understanding. Of course, shifting risk retail financing is Niva Car Trading since 2011. Previously, growth. In Baghdad, we have registered dealers. Additionally, we have quarterly to insurance companies is preferable to crucial to car sales, he was the founder and CEO of KADDB with Gamco, which is the federal agency IIG: Importing thousands of cars into meetings with all of the Ford dealers in carrying it yourself, but at this point it is Investment Group, and Managing in charge of purchasing vehicles for fed- Kurdistan and Iraq must present logis- the region, to share insights and collab- still relatively rare. There is a potential, we believe that as Director of Jordan Light Vehicle eral entities. We hope to serve many of tical challenges. In what ways have you orate on seasonal marketing campaigns. I believe, for significant growth in this Manufacturing, KADDB's Jordanian financing improves, British joint venture company. He the federal Iraqi public sector entities in streamlined the process of getting cars For example, we roll out a Ramadan cam- sector. Asia Insurance is the biggest and holds a Masters degree in Industrial coming years. Our Basra branch opened into the country? paign in July, in collaboration with other most professional insurance company in our sales numbers will Engineering Management from Jordan in early June, which has cemented our FA: Logistics does present major chal- Middle East Ford dealers. Of course, we the country. The company is only three also grow. University, and a Bachelors degree in presence in the southern Iraqi market. lenges. For our cars coming to the do our own unique campaigns as well— years old- insurance is still a very young Mechanical Engineering from Sheffield Between all of our regional branches, we Kurdistan Region, we import cars our Newroz campaign in Kurdistan, for industry here. University. will serve the entire Iraqi market. Our through Turkish ports and truck them example—but our synergies with other A

30 — The Review 2014 / 2 ” Kurdistan Region of Iraq — 31 E ECONOMY

About John is an entrepreneurial business and finance professional with an international track record in corporate finance, private equity, new venture development and turnarounds. Prior to Azure Serviced Offices, John was a director at Ernst & Young Corporate Finance in Bahrain and then co-founded Asil Strategic Partners, a transaction advisory boutique. Before coming to the Middle East, John’s career focused on Debt Capital Markets in London with a range of international banks. John holds a BA in Arabic from SOAS and an MBA from London Business School. He also qualified as an Associate of the New Concept in Erbil Chartered Institute of Bankers.

IIG: How did you decide to bring this IIG: What is your customer service concept to the Kurdistan Region? philosophy? JD: It is an industry that I have been JD: The whole point of what we do is that following quite closely for eight years. I clients can come here, sign an agreement, have been looking for the perfect oppor- and start work immediately. They move tunity. In the UAE, there are over twenty straight in and stay for as long (or as serviced office centers. In Qatar, Kuwait, short) as they like. Everything is included Saudi Arabia, Bahrain, and Oman the and we take away the headache of having serviced office concept is very common, to manage a property. The logic is that I but there is nothing here. Erbil is a safe, want to win clients and I want to keep stable, oil-rich capital city with no ser- them. I do not want to upset them, and IIG: Why should people rent your offic- that is owned by individuals here, it can Arabs and Yazedis. Thank goodness too, viced offices, and foreign companies wish I want them to be so comfortable here es when they can rent a flat or a villa? take just three weeks. What takes time is that we have the Peshmerga to protect us to expand their presence in the emerging that they never want to leave. That is why, JD: We are here, we are up and running, setting up a subsidiary or a branch of a and now the USA and UK are stepping marketplace of the Kurdistan Region. I every morning, we have fresh croissants and you can move in today. When you foreign company. If you are setting up a in to help. John Downe —­ saw this gap in the market and decided delivered from the best bakery in town, rent a villa or a flat, you have to add into branch of an British company, you have The threat to Erbil is, at worst, medium. Managing Partner, Azure Serviced to set up the first and only serviced office a bowl of red apples, Italian coffee, and that all the utilities, Wi-Fi, maintenance, to get all your company papers stamped But the perception of an event can cause Offices center in Kurdistan. English breakfast tea- everything just to the up-front capital expenditure of fixing by the Foreign & Commonwealth Office chaos and that in itself brings some dan- make people feel comfortable. All these the AC, remodeling, repainting, buying and notarized back in London, brought gers such as lack of imports. Asymmetric John Downe discusses the IIG: What were the key challenges in small things people really value. furniture, and the time cost of that. Plus out here, and stamped again by the KRG. threats persist. Logistics is a concern and opportunities and challenges bringing this concept to Kurdistan? you will not have a receptionist, security, Those papers will then be used to help flights have been reduced. The US air- Azure sees as it introduces the JD: The fit-out was the biggest challenge, IIG: What makes Azure serviced offices or a steward. If you include all of that, we establish your subsidiary or your branch strikes have improved morale and people serviced office concept to the because skilled craftsmen were simply unique in terms of services? are between 30-50% cheaper. Plus, we are here. It can be as little as three weeks or as are much calmer. I had one new client due Kurdistan Region. not available. We took this floor when JD: The key area of our strategy is pricing flexible. You can leave after three months, long as three months. The fact is, though, to fly in and sign up, they postponed their it was a concrete shell. Skilled builders, and services. What we do is take a bun- or, if you just need a space for a special in most sectors you can have 100% own- trip but are still going ahead with opening carpenters, interior finishers, and proj- dled approach. We include everything- project for six months, you can take an ership as a foreigner, which, again, sets an office here at Azure. ect planning are areas where huge strides not only their office, but also free use of office for six months just for one project. Kurdistan apart from most Middle East Overall, I expect projects may be could be taken going forward. boardrooms and meeting rooms, Wi-Fi, Nobody else can offer you that. So, life is countries including the UAE. delayed by a couple of months but busi- The other challenge was explaining to and all the utilities. The backup generator a lot easier here. nesses cannot afford to ignore the possi- people what we do. You have to remem- is included. We have a steward and tea, IIG: How have events of the last few bilities that are here. ber that most of our clients are foreigners coffee, and beverages. We have a recep- IIG: You are also the head of the weeks affected business? or foreign companies, so they have prob- tion. We include a phone on your desk, Kurdish-British Business Council. How JD: The last week has been tragic for all IIG: Can the companies that rent offic- ably seen it in Europe or America. But for so you have your own phone number, would you define doing business in this those affected and my sincere sympa- es come here and work whenever they those who have not, I always say, “I can and, if people phone that number, it is market? thies go out to families that have been want? explain it to you, but just come around answered in your company’s name on our JD: Doing business and setting up a com- decimated by these terrible events. I am JD: Yes- 24/7. We have our staff on the and have a look.” Once they come around, reception and put through to you. All of pany in Kurdistan is reasonably straight- so impressed by the hospitality of the premises from 9am to 5pm. If people they understand. that is included. forward. If you are setting up a company Kurdish people towards the Christians, want to come in at 2am, that is fine. A 32 — The Review 2014 / 2 Kurdistan Region of Iraq — 33 HUMAN CAPITAL Professional Development Institute THE REVIEW — The American University of Iraq, Sulaimani HUMAN CAPITAL The Professional Development Institute promotes human capacity development, by providing individuals with the skills, knowledge and experience to facilitate organizational development and promote societal transformation. Untapped Resource Making the Most of Kurdistan • Masters in Business Administration Perhaps more than any other sec- shift to the private sector for both (UKH); MSelect, a recruitment agency, tor or resource, Kurdistan’s quickly reasons of efficiency and demogra- has a training and development cen- • Project Management, Leadership & Finance Certification expanding workforce contains argu- phy: The median age of the Kurdistan ter, as do specific sector oriented com- ably the most potential to reshape the Region is only 20-21 years, meaning panies, such as Stirling Group’s Health, • Professional Education and Training Kurdistan Region’s business, econom- that the working age population is Safety, Security & Environment ic, and social landscape for the better, set to expand massively in the com- (HSSE) training programs. Companies • Language Instruction over the long term. This untapped ing decade, which the already bloated use each of these operations, depend- potential is a result of several factors public sector certainly cannot absorb. ing on their specific needs, to invest in • Management Consultant Services coming together, including latency KRG initiatives are pushing employ- their employees’ skills, professional in the professional capacities of the ment increasingly into the private development, and expertise—from Region’s workforce, a major demo- sector, as well as training employees English (or Kurdish, or Arabic) lan- graphic skew towards younger gen- in methods that improve skills and guage, to computer programming, to erations, and the influx of investment efficiency in the public sector. The firefighting. that has swept into the Region over KRG’s Human Capacity Development Perhaps the most promising the past decade. The current situation, Program (HCDP) sends recent grad- training and development programs, then, is one in which the workforce is uates to international universities for however, are the products of pub- large, young, and yearning for profes- post-graduate studies, many agencies lic-private cooperation. The Ministry sional development—and the private train their own employees (or those of Natural Resources (MNR) con- sector has the incentive and capital of other agencies), and the Prime ducts the largest of these programs. to provide it. Minister’s office unveiled in 2013 International oil companies (IOCs), The vast majority of Region’s a website to pair job-seekers with as part of their Production Sharing workforce is employed in the public employers in the private sector. Contracts (PSCs) with the MNR to sector—a legacy of both decades of However, some of the biggest explore and produce oil, must con- sanctions, which stunted private sec- momentum for capacity develop- tribute a certain percentage of their tor development and employment, ment and training, and private sector income towards the MNR’s capac- and a broader Iraqi history of cen- employment, comes directly from the ity development programs. Some tralization of the economy beginning private sector. Training takes the form IOCs take this even further—Gulf in the mid-20th century. Indeed, as of in-house operations at major com- Keystone, for example, has improved of 2012, only 20% of all wage-paying panies; training centers at universities, morale, staff retention, and overall jobs in the Kurdistan Region were in such as the Professional Development productivity through the creation of the private sector. This statistic, how- Institute (PDI) at the American a comprehensive capacity develop- ever, is untenable—something which University of Iraq, Sulaimani (AUIS), ment program for their employees in the KRG’s leadership understands— and the English Language Center at Kurdistan. and is changing. Employment must the University of Kurdistan, Hewler

Kurdistan Region of Iraq — 35 www.auis.edu.iq - E. [email protected] - T. 00964 771 014 0882 H C HUMAN CAPITAL

Private Sector Training However, to prepare the workforce to work closely with companies and for the rigor of private sector employ- clients to tailor courses directly to ment, in some cases additional skills what is demanded. “It is essential to 850K-1.1 million and development training is nec- understand the needs of each cli- The Kurdistan Region will add essary. This is particularly true for ent so as to customize trainings and employment in foreign companies courses relevant to their needs,” notes between 850,000 and 1.1 million operating in Kurdistan. For exam- Robert Ritchie, director of AUIS’s new employees to its workforce ple, written and spoken English Professional Development Institute. proficiency often presents challeng- “Iraq has seen years of conflict, which in the coming 20 years es; professionalism in writing and has adversely affected the opportu- communication is sometimes found nity for its people to gain knowledge lacking; and basic to intermediate and skills. Now, especially in the computer skills can need touching up. Kurdistan Region, the favorable secu- These skills can be developed at many rity situation means that the Region different professional development has an opportunity to invest in its Public to Private: and training centers and institutes. workforce. There is a great need for The Great Migration Perhaps less often considered is training in Kurdistan and we receive cultural awareness in the workplace, many requests for all kinds of train- Creating increased employment entrepreneurialism, increased foreign many sectors, the KRG offers regular for both expat workers and local staff. ings, ranging from language courses 64% opportunities in the private sector is direct investment, or privatization of tenders and contracts for outsourc- According to Allegra Klein, director of to field specific courses.” among the most important factors in some government functions. The KRG ing projects, and even works in joint MSelect’s Training and Development Companies themselves also insuring social and economic health in has been actively working towards ventures to bring the private sector Center, “On job sites…people work in provide extensive training to their the Region. Given the Region’s afore- the initial two options, most obvi- into public projects. Even within the isolated, close quarters for weeks at a employees. From retail, where mentioned young demographic make- ously through its 2006 Investment training and development sector, the time. This creates potential for clashes Landmark Group brings in foreign 64+36+M up, it is estimated that the Region will Law, which has had great success in KRG contracts with private universi- from religious or cultural misunder- experts to train local employees and IOCs’ net employment in add between 850,000 and 1.1 million both bringing foreign investors to ties and training institutes to improve standings. Companies are therefore management, to ICT, where com- Kurdistan is currently 4,137, new employees to its workforce in the the Region, but also in spurring local the skills of local public workers. making cultural awareness much panies such as CIS and others send coming 20 years—equivalent to over investment and entrepreneurialism. While the migration into private more of a priority.” their employees to get international and is 63% local. 20% of the Region’s entire current Since the law’s inception in 2006, the sector employment is a must in com- MSelect is also now working certificate for new technologies and population, and 100% growth on cur- Region has seen 693 new licensed ing years, the transition will take time, in recent collaboration with the equipment. Bigger companies, such rent employment figures. projects, totaling over $39 billion of and will take further decisive action by World Bank’s International Finance as Faruk Group Holding have large The KRG’s public sector already foreign and domestic investment, and both the public and private sectors. Corporation (IFC), which is opening staff training divisions to bring staff employs a far outsized percentage of countless new private sector jobs. One 2014 report commissioned by up its ‘Business Edge’ initiative in the into line with the companies’ quality its population in its bureaucracy and Regarding the third option, out- the KRG notes that, in addition to Region. The program is active in 30 standards. direct government employment, state sourcing public sector functions to poor English language and comput- developing countries, in 10 languag- Even in healthcare, companies owned enterprises, and public-private the private sector, there has been er skills, preference for public sector es, covering 59 individual topics, tai- are bringing professional expertise initiatives. Further net expansion of movement as well. Public-private employment still hinders the private loring its programming to the needs of to the field after graduates have left the public sector’s size, particularly in partnership arrangements are devel- sector labor market, as many com- local workers, and seeking broadly to university. Nordic Medical Services, 90% relation to the Region’s population, oping increasing momentum in the petitive employees seek stable jobs improve the professional competen- part of RMSI International, trains local would broadly be understood as an KRG. Particularly where industry in the public sector. Overcoming this cies of employees. MSelect has been healthcare professionals from many inefficient use of public resources—let specific expertise can be helpful, the challenge will require private compa- selected by the IFC to lead Business of Erbil’s hospitals in Pre-Hospital alone a doubling in size, as the work- KRG is eager to work with private, nies to compete more strongly with Edge courses in Kurdistan and Iraq in Trauma Life Support. Faruk Medical The90 MNR has set a target+10M force is estimated to do over the com- often foreign, companies. In ICT, for the public sector in the labor mar- English, Arabic and Kurdish. City partners with local medical ing 20 years. This leaves the private example, the KRG’s Department of ket, but will also require a broader As many companies and organiza- schools to bring recent graduates of reaching 90% local sector to pick up the slack in the com- IT (DIT) coordinates several private understanding among the Kurdish tions find wide and disparate needs in into the hospital in residency schemes, employment in the energy ing workforce expansion. companies to achieve the KRG’s workforce of the benefits of private terms of human capital, universities bringing them to speed with interna- This will require increased local IT-related goals and benchmarks. In sector employment. and training centers find it important tional norms in healthcare provision. sector by 2016.

36 — The Review 2014 / 2 Kurdistan Region of Iraq — 37 H C HUMAN CAPITAL

“The MNR estimates that IOCs’ production workforce will increase by 200% for each 100,000 barrels per day produced. Current production of 165,000-200,000 is expected to reach 1 million bpd by the end of 2015. This expansion will also represent in unskilled and semi-skilled labor, Such production represents the addition of 1,600 growing opportunity for training cen- where locals represent 88% and "A doubling of ters in HSSE. Stirling Group, an HSSE 95% of the workforce, respectively. company, is preempting this work- Moving locals into more executive, Kurdistan’s workforce new production workers in just 1.5 years.” force growth by expanding and broad- senior, and managerial positions is a ening its training capacities, including long-term goal of the MNR, but one presents much the development of a full-scale oilrig in which will take time, as education and a training center just outside of Erbil. experience accrue among the local more opportunity The company already brings in HSSE IOC workforce. training experts from around the Ian McIntosh, an advisor to the than liability—the world to bring global expertise to the MNR focusing on workforce capacity local energy sector. development, is promoting initiatives addition of 1 million Moreover, the MNR has set a tar- whereby the energy sector reaches Energy Sector get of reaching 90% local employ- out and collaborates more closely bright, capable Paves the Way ment in the energy sector by 2016. with local universities and local grad- The 63% of current local employment uates, and uses apprenticeships to entrants to the The energy sector, still the largest driv- future energy sector employees. The enhancement. Benefits of the program by the IOCs in Kurdistan is large- build expertise and high-level skills er of Kurdistan’s economy has, in col- training program is comprehensive, to the company include improved safe- ly concentrated in the lower rungs among young, local professionals in workforce carries laboration with the Ministry of Natural comprised of both formal training and ty and efficiency for the company, and of the employment ladder—largely the sector. Resources (MNR), played a leading role an internship component with an IOC. a happier workforce with more defined with it unrivaled in expanding the skills of Kurdistan’s However, many oil companies find career paths, more professionalism workforce. Early in the sector’s devel- that the incentive of creating and and competency, and increased pride Public Sector Initiatives taking root. Hiwa Afandi, director of untapped potential opment in Kurdistan, when the MNR retaining skilled, professional workers in their work. the Department of IT, is leading an began offering Production Sharing is enough to invest in capacity building Initiatives such as these, already Prime Minister Nechirvan Barzani has initiative to have internationally cer- for the Region’s Contracts (PSCs) to international oil programs independently. Many IOCs some of the largest in the Region, are addressed the need for growth in pri- tified training centers, to ensure that companies (IOCs) for exploration and actively hire local recent graduates for set to expand hugely as IOCs move vate sector employment at length in computer and IT skills can improve economy and business production, the MNR recognized the professional positions; MOL Group from exploration to production. recent years, and has made private processes and maximize efficiency importance of local capacity develop- and Marathon Oil have scholarship IOCs’ net employment in Kurdistan sector development and public sector across the KRG. environment." ment that IOCs could offer the Region. programs in place to send recent local is currently 4,137, and is 64% local. reform central priorities of the KRG’s While daunting at first glance, The MNR thus made compulsory a graduates to study petroleum engi- The MNR estimates that IOCs’ pro- recently formed Eighth Cabinet. the major shifts taking place in ‘capacity building bonus’ to be paid by neering at top international universi- duction workforce will increase by This follows a 2013 initiative by the Kurdistan, both into the private IOCs towards local capacity and infra- ties, and Genel Energy and ShaMaran 200% for each 100,000 barrels per Prime Minister to establish ‘Kurdistan sector and up the skills ladder, are structure initiatives in Kurdistan. The Petroleum have donated generously day produced. Current production of Works’, a website devoted to connect- being taken seriously by both pub- bonus is first paid upon signing the to AUIS. Moreover, some companies 165,000-200,000 is expected to reach ing job-seekers to employers in the lic and private sector stakeholders. PSCs, and then, as profit oil is pro- are finding that investing heavily into 400,000 by the end of this year, and private sector, as well as services to Upon closer inspection, a doubling of duced, paid as a percentage—between the careers of their own local staff pays up to 1 million bpd by the end of 2015. educate workers about work in the Kurdistan’s workforce presents much 2.4%-4.8%—of net profits. hefty returns in staff retention, morale, Such production represents the addi- private sector, and help them to cre- more opportunity than liability—the The MNR this year is using some and productivity. Chris Parker, a con- tion of 1,600 new production workers ate resumes and CVs to apply for such addition of 1 million bright, capable of this funding for a major capaci- sultant to the Region’s energy sector, in just 1.5 years. Beyond production, positions. entrants to the workforce carries with ty development project targeting characterized one of such programs the MNR projects that a 5x increase Within the KRG’s bureaucracy, it unrivaled untapped potential for thousands of people, including the carried out by Gulf Keystone, as a in production increases overall energy and in addition to the MNR, training the Region’s economy and business Ministry’s employees, as well as young small investment for a large workforce sector employment by 3x. and development initiatives are also environment.A 38 — The Review 2014 / 2 Kurdistan Region of Iraq — 39 H C HUMAN CAPITAL

MSELECT Employee Survey

MSELECT is pleased to announce the information in light of the fast-paced over 1,000 respondents, MSELECT was launch of our 2014 Kurdistan Oil & Gas economic development of Kurdistan, able to form a general idea of the profes- Job Market Overview and Salary Survey, in comparison to the surveyed compa- sional disciplines available in the market, the first such comprehensive survey nies’ hiring trends and what they offer in their pay structure and benefits received, ‘from the ground’ in Kurdistan. By devel- terms of compensation, benefits packages as well as expectations from current and Seeking a new job role? Actively or Passively seeking? Reasons for looking for a new job oping two different surveys, the goal was and career development opportunities. future employers. This is likely to have a 15% Higher Salary to approach both employees working Company information was supplied by direct influence on companies that are 15% throughout Kurdistan and major Oil and most of the major international Oil & Gas looking to increase their current work- 13% 17% New Challenges 14% Gas ‘Exploration & Production’ companies operators in Kurdistan. force in the short- or mid-term by adjust- Career Development 8% operating in the same region. The ques- The employees’ survey was conducted ing their hiring strategies to effectively Better work/life balance 7% tionnaires were carefully designed to over a four-month period and covered all attract talented candidates. Better training 9% 6% obtain the participating employees’ career types of expertise within Kurdistan. With 87% 83% Better location 5% Travelling 4% 5% More responsibility 5% Better bonus How did you find 5% Whom do you work for? Number of years in current role Improved benefits your current role? package Yes Actively 4% 4% No Passively 19% 4% 22% 13+87F17+83F Most important corporate benefits for employees Overall how satisfied are you with your 14% 31% 9% 17% position at the current employer? 62% 38% Training 16% 21% Annual Bonus Satisfied and willing to develop 4% 13% 31% Health Insurance my career path with the company 16% 10% Car Allowance 7% 37% 16% Overtime Happy with my job, don't mind 7% 41% Travel Allowance moving to another job opportunity 7% An International Company < 1 Year Company website Housing Allowance A locally Established Company 1-3 Years Word of mouth Not satisfied, currently looking 38+62F 19 3-6 Years +94+37+31F 22 Recruitment agency +2016144F 28% 6-10 Years Internal move for a better job opportunity > 10 Years Other Newspaper Head Hunted Jobs Board How motivated are you to see Did you receive Have you had any training your company succeed? a pay raise last year? in the last 12 months?

8%

59% 32% 56% 44% 63% 37%

Highly motivated Yes Yes 8 Neutral +3260F 44 No +5637 No +F+63F Not Motivated

40 — The Review 2014 / 2 Kurdistan Region of Iraq — 41 H C HUMAN CAPITAL

Educational IIG: How does PDI collaborate with focusing on the clients and their needs in the private sector (or public sector) to whatever field or area of training they may Edge ensure you are satisfying the demands of require. There is great demand for quality your clients, in terms of skills covered? education and trainings in Kurdistan and The MBA program strives for the high- RR: PDI began operations three years we strive to meet the demands of our cli- est standards, comparable to other MBA ago, and in this short period of time we ents and the market. programs offered internationally. This have had the pleasure of working with means that students need not go abroad to some of Kurdistan and Iraq’s largest pri- IIG: How have you found that receive a first-rate educational experience. vate sector companies, and have devel- Kurdistan’s human capital is evolving? The exposure to a new way of learning oped courses and provided trainings Is the skills gap closing with increasing that is fresh and engaging will equip stu- for government and non-governmental education? dents with the knowledge and skills nec- entities. The variety of courses that PDI RR: The Kurdistan Region has seen essary to further succeed in their careers. offers and the range of clients that we have explosive growth in industry, commerce places us in a good position to understand and trade over the past decade. With this IIG: The MBA program offers night the market needs and trends. Being in the growth comes the need for an educated classes for established professionals, but professional education field means that and skilled workforce. The trend over the is also taking steps to recruit students PDI deals with different types of clients past few years has seen many of the inter- straight out of AUIS’s undergraduate Robert Ritchie —­ from individuals who seek to improve national companies relying on foreign program. Who would you say is the IIG: How does PDI’s association with PDI Director, Professional Development their English language skills, to businesses workers for labor. However, there is an target demographic for the program? AUIS affect or benefit PDI’s operations? The Professional Development Institute (PDI), American University of seeking consultation services or train- increasing realization that organizations RR: The enrollment process encourages RR: As a department of AUIS, PDI has Institute at AUIS supports individuals, Iraq, Sulaimani (AUIS) ings, to professionals who look for career in the Region need to invest in the local applications from a diverse background the support of the university and draws organizations, and professional groups with courses and programs covering a advancement by obtaining an MBA or workforce, not only to maximize effi- of students, which complements the pro- on its physical and human resources to wide range of subjects, including English Robert Ritchie speaks to IIG knowledge/skill in a specific area. It is ciency, but also to help the Region build gram by bringing together a broad range produce quality education and training language studies and management about the growing demand for essential to understand the needs of each human capacity. Education and training of experience to discuss and analyze busi- for its clients. While AUIS educational and business training. PDI offers Iraq’s professional development training client so as to customize trainings and naturally play a great role in the devel- ness topics and issues. This mix in turn offerings are based on a liberal arts sys- premier MBA program, English language and education in the Kurdistan courses relevant to their needs. Therefore opment of the workforce, and it is evi- encourages debate and exchanges of ideas tem, PDI has a mandate to provide train- courses, IT courses, and professional Region, and how PDI’s MBA we apply a client-centered approach to dent that the Region needs to continue whereby students find innovative solu- ings and other educational offerings that certificates in Leadership, Finance, program remains the touchstone everything that we do. to commit to Human Capacity building. tions and discover new ways of approach- may differ from the conventional liberal and Project Management—including of business education in Kurdistan The skills gap is closing but at a very slow ing work related matters. The target is arts model. This gives PDI the flexibili- preparatory work for CAPM and PMP and Iraq. IIG: What forms of training do you find rate, more needs to be done to tap into both experienced business professionals ty to adhere to the liberal arts principles project management certification. the most demand for, and where do you the human labor potential that Kurdistan and motivated young graduates. We aim when needed and to divert where neces- find PDI to be particularly strong with- has to offer. Moreover, what is required to achieve maximum synergy. sary. We believe, and this is supported by in the human capacity development sec- in Kurdistan is to promote a culture of our experience, that PDI’s training and tor in Kurdistan? lifelong learning so that human resourc- IIG: Have you received feedback regard- skills development focus compliments RR: As we all know, Iraq has seen years es of the Region can keep up with the ing the value-add the AUIS MBA pro- and adds value to the academic liberal of conflict, which has adversely affect- ever-changing needs of business, whether vides professionals from the local arts curriculum of AUIS. ed the opportunity for its people to gain technical or non-technical. business community? Does the curric- knowledge and skills. Now, especially ulum of the program reflect any unique IIG: Does your location in Slemani play “The MBA program has in the Kurdistan Region, the favorable IIG: How has PDI been so successful elements of the business environment a limiting factor in attracting business witnessed growth every About security situation means that the Region in attracting high caliber students to in the Region? for professional training, or candidates Robert Ritchie is the Director of PDI at has an opportunity to invest in its work- the MBA program, despite competition RR: The feedback received from individu- for your MBA program? year since its inception AUIS. In this role, Ritchie overseas all force. There is a great need for training in from other Iraqi universities and, in the als that have participated in the program, RR: Although the AUIS is based in activities related to the creation and Kurdistan and we receive many requests case of some top students, major foreign organizations and the community in gen- Slemani, the university, including PDI, in 2007. The curriculum provision of educational programs for all kinds of trainings, ranging from universities? eral has been very positive. The MBA pro- receives many applications from all over of the program is com- fostering professional growth language courses to field specific courses. RR: The MBA at PDI is a student cen- gram has witnessed growth every year Iraq and in some cases from abroad. The and development, and directs the Our MBA program and English language tered, dynamic and interactive program since its inception in 2007. The curric- geographic location of the AUIS campus parable to other MBA University’s MBA program. He has courses have proven to be very popular that focuses on the main aspects of busi- ulum of the program is comparable to has not been a limiting factor because programs international- over 15 years of international business and attract a diverse student body due to ness and the working environment. The other MBA programs internationally and PDI is able to provide its offerings in development and university teaching ly and at the same time experience, including 12 years in the the fact that these programs were part of program is consistently updated and at the same time designed to be relevant locations of the client’s choosing. In fact, MENA region. Ritchie holds an MBA the department’s initial offering. As PDI touches on current business trends and to meet local needs. We have also rede- PDI has offered a number of trainings in designed to be relevant from Boston University’s School of expands its portfolio, we are witnessing a issues, analyzing real-life case studies. We signed our thesis requirement to focus Erbil, the Garmian region and across the Management, a JD from the Temple rise in demand for courses such as Project have recently introduced three special- on real industry problems, resulting in Slemani governorate. PDI recognizes the to meet local needs. University School of Law, and a BA from Management, IT, Finance and general izations to our MBA program: Project tangible benefit both to the student and opportunity to explore expansion outside Arcadia University. consulting work. PDI’s strengths lie in Management, Leadership and Finance. their respective companies. of Slemani. A 42 — The Review 2014 / 2 ” Kurdistan Region of Iraq — 43 H C HUMAN CAPITAL

“Our goal is getting more Kurds employed in meaningful roles in the oil and gas industry in order for them to develop technical skills and for Kurdistan to develop a workforce with the technical capability to manage the industry. Harnessing Kurdistan’s Human Potential ” IIG: Could you brief our readers about IIG: How would you define the key Oil and gas is a global industry. Skilled IM: The MNR does not need to be inter- the MNR’s workforce capability devel- phases of the workforce capability personnel are readily available in this vening in this manner. A recent survey About opment program? development program? international market. If you set up a com- we commissioned shows that the num- Ian studied civil and mining engineering IM: Our goal is getting more Kurds IM: I believe we need to first address get- pany tomorrow and you need to run a ber of graduates from natural resources then trained as a Petroleum Engineer employed in meaningful roles in the oil ting people into the industry in entry-level seismic program, you can go hire a seis- programs is already forecast to increase with Shell. He has lived and worked in the UK, Canada and North Africa and gas industry in order for them to positions. This is not so straightforward mic expert by the end of next week. So oil four fold in the next four years. The con- before Kurdistan. Ian has been working develop technical skills and for Kurdistan since the industry finds that school leav- companies can easily get personnel, but at cern now is the quality of these programs. in Kurdistan since January 2010, and to develop a workforce with the techni- ers and graduates are not well prepared to a high price. So the lack of local person- Through the university liaison I men- was Vice President at WesternZagros cal capability to manage the industry. meet the demands of this industry. We are nel does not actually impede companies tioned before we are trying to encour- Resources until 2013. Ian is currently Workforce development is a key com- developing foundation training to pro- doing their work, and moreover, this high age improvement in university program assisting the Minister of Natural ponent of regional development: the vide a better supply of employment-ready cost may not ultimately be a concern to design, content and delivery. Resources and the Kurdistan oil & gas oil and gas sector is poised to generate young people. Once employed, recruits them. Kurdistan uses “cost recoverable” industry to design and implement plans significant value, and we want to retain have to be trained and developed. I call contracts, so while all the costs are at the IIG: So what is the status of the project? to increase the number of skilled Kurds the maximum share of that value that we that the apprenticeship phase. This is a company’s risk until it makes a discovery, IM: We started designing a number of working in the oil & gas Industry. Ian McIntosh —­ can within the region. So this project is structured training and development once a discovery is put into production, programs. Unfortunately, most pro- Consultant at the Ministry of Natural not just about getting more Kurds into period that takes maybe five years to get the company is allowed to recover what grams are not yet launched due to a lack Resources (MNR) the industry. It is vital that we develop a someone from novice through to being it has spent from the revenue generat- of resources and funds. For instance, skilled competent workforce. somewhat skilled with meaningful qual- ed, before its profit oil is allocated. That we designed the Foundation Training Ian McIntosh talks to IIG about the ifications. The third phase, competency does not create a great incentive for the Program to take unemployed graduates MNR’s plans to develop technical IIG: We heard that 63% of the development, is then mastering that job oil companies to reduce costs, which I and put them through a pre-employment and vocational skills that will allow Kurdistan-based workforce for oil and skillset, where you become truly compe- believe translates into lower incentive to program that helps them understand how the Kurdish workforce to take gas companies is made up of locals. tent in your field. That is one perspective develop lower cost local staff. the industry functions, what a business on a bigger role at all levels of IM: True, and this data does not include of the overall project. is, what expectations are on them as an Kurdistan’s booming oil and gas service companies. From a survey we The other involves breaking the project IIG: You also focus on working with employee, how to work together with industry. did a couple of years ago, we know that into job families. Production Operations universities. What sort of cooperation people (cooperating as opposed to com- the percentage of local staff in the ser- is one job family, for example. Drilling is will there be in this field? peting), etc., but this is currently suspend- vice companies is higher than in the oil another. I started establishing training IM: I am talking to the universities, but a ed, albeit temporarily. Other programs and gas companies. So the real answer is boards made up of industry represen- representative of the oil and gas industry, are taking time to reach a consensus higher than 63% - more than two-thirds of tatives to address the specific problems to discuss how universities can better pre- within the industry as to what should those directly employed by the oil and gas of recruiting, training, and competence pare students for our industry. I typically be done. Oil companies have general- industry right now are local staff. But to development in each job family. This bring about six oil and service companies ly proven to be hesitant in really getting understand the challenge better, you need approach is intended to break workforce to the table to discuss what the industry behind the project; certainly none are go to the last MNR monthly report where development down into more bite-sized wants from the universities, and vice-ver- willing to demonstrate unilateral tangi- you will see a chart that breaks down the pieces, so you have people of the same job sa. We have now established a number of ble commitment. IOC workforce by seniority from execu- family focusing on what they can do to get Liaison and Advisory Boards to formalize tive down to unskilled. This shows a high more Kurds developed in that discipline. this dialogue. At this stage it is mainly IIG: So is the main challenge funding? percentage of expats at the senior and about understanding what the industry’s IM: Yes, my initial estimate is that we high-skilled end diminishing in expats IIG: How does the lack of this skilled requirements are. need to be spending about $20 million down to the unskilled level, where you workforce affect the industry? per year on a significant capability devel- see the inverse. So this single percentage IM: The immediate impact is cost. It is an IIG: Does the MNR support the univer- opment program. A minor part of that is measure hides the real challenge. impact on the industry, but ultimately, it is sities here to open departments dealing in management, resources and adminis- an impact on the Kurdistan government. with natural resources? tration, and obviously, a bigger part of it

44 — The Review 2014 / 2 Kurdistan Region of Iraq — 45 H C

is in training delivery. However, half this the jobs involved in operating the facili- can in fact be advantageous to hire qual- funding is needed to establish a training ties that produce, process, and transport ified welders from say Sri Lanka than it academy– initially something as simple as oil, gas, (and especially dealing with sour is to hire local welders. Part of the reason a facility with classrooms so we can actu- gas). These are critical tasks, and nobody is wage expectation, part is output, and ally run these training programs. Then wants another fatality, fire, explosion, or part is quality. However we can readily we can get into some of the vocational oil spill. What we are trying to do here is copy a welding program because there training facilities like welding workshops to also protect the people of Kurdistan are models in other countries, but it needs and electrical labs. and Kurdish assets. The best way that funding. I am sure that If we set up a I am not saying the government needs you can ensure that there will not be an welding school, companies will hire the to fund the project. A lot of the train- incident is by having competent people students coming out of it. We also believe ing is for people who are already work- running those facilities. that there is a commercial opportunity ing at the industry, and companies will Drilling operations are a also a highly to provide such a training facility; the pay for that training themselves. A sig- dangerous part of the business, so this job government does not have to fund the nificant amount, however, is for taking family is also a high priority. The health, establishment of that school. school-leavers and graduates straight safety, and environment (HSE) profes- from university and putting them in foun- sionals are an essential part of maintain- IIG: Do you see a trend in that direction dation and apprenticeship programs to ing the integrity of all oilfield activities so in Kurdistan? build the talent pool in Kurdistan ahead that discipline is a focus area also. The IM: I do see a desire by some private of the industry. This is where government other priority job family is graduate engi- companies to build training infrastruc- support may be needed. neers and geologists who fill high skilled ture. They are certainly looking for an I believe the industry should be more roles but also because they are the manag- incentive. To have private companies willing to pay for the project, because ers of tomorrow. In the oil and gas indus- fund the whole workforce project would this workforce is being developed for try, most managers are either engineers be ideal but I also understand that it may the industry and will be replacing more or geologists. Training tomorrow’s leaders be a bridge too far. Something that has expensive expats. I also expect the oil and is vital. evolved since I started this is that I have gas companies to be more ready to work come to put a lot more focus on develop- together to invest in building that future IIG: Does the lack of vocational training ing occupational standards. I now think talent pool. schools pose a challenge for workforce that is the means by which we are going capacity development? to bring about faster and better capability IIG: How do you structure the priorities IM: In terms of workforce numbers development. Technical and vocation- of the program? and overall economic impact, vocation- al standards need to be collaboration IM: Foundation Training as mentioned al trades– welding, electrical, etc.– are between industry and government, but before is a priority. Within the job fami- very important. And there is a dearth of once agreed they become the industry’s lies I have focussed on competency devel- training infrastructure in the Region. For yardstick. By defining what the accept- opment in certain key functions. The example there is only one small Kurdish able standard is for working as a welder production operations training board is welding school. Historically most weld- on an oil and gas pipeline in Kurdistan, the most vital to me. Some 4,000 posi- ers came from Mosul or the south. To for example, we drive the employers to tions will be created in production oper- benefit fully from industrial growth in have workers who meet those standards. ations in the next five years. That is a lot Kurdistan requires that we develop a If you also have a school that is develop- of skilled jobs to be created. That, in itself, regional capability for these basic trades. ing students to this standard, then that makes it worthy of attention. The other Service companies employ the welders human resource supply chain starts to thing is that those jobs are quite critical so this requires a different collaboration. function better. in terms of operational risk. These are One of the challenges they face is that it A

46 — The Review 2014 / 2 H C HUMAN CAPITAL

“I believe that Kurdistan has a decision to make-and-soon-on a national strategic plan for its workforce and how to then deliver that operation- ally. Our own experience tells us that it can be done rapidly and that the Kurdistan Workforce not only thirsts for professional Competency Development but also enjoys hard work.

ANALYSIS Sustaining Growth in Kurdistan: ” Creating the Skilled Workforce

espite all the current turbu- Regulatory reform will be the catalyst economic good. A system used suc- competency development has had to About lence and upheaval in Iraq, the for physical action, and the KRG should cessfully in other countries is one almost start afresh in a short timeframe. Chris Parker MBE was a former COO Kurdistan Region continues on a now address three key areas of regulatory of repayment of training costs if an As a practitioner and observer in much of of the primary oil exploration company Dpath to prosperity and increasing auton- enforcement: employee leaves a post before a cer- Kurdistan’s tremendous success to date, I in Kurdistan, GM of oilfield engineering plc and a regular speaker at Kurdistan omy. However, several long-term con- tain time bar date. Another is to license think that the use of external best practice Industry events. He is founder and straints remain as obstacles to long term 1. National standards (provisional or all employees and thus movement is and expertise in the Ministries to quick- Managing Director of Charmogen Ltd, a Kurdish progress. Primarily, Kurdistan will long-term) must be swiftly identified controlled and an employer who ly bring about such regulatory change UK consultancy that provides strategic need to ensure economic sustainability, and stated by the relevant Ministries. wishes to protest against ‘staff poach- will then enshrine workforce develop- and operational solutions to the oil and especially by gaining guaranteed revenue As importantly, these standards must ing’ can do so with national support. ment as a major factor in the security gas industry and is the lead provider of flow from her new oil production. Allied to also be enforced and audited to ensure of Kurdistan’s economic progress and workforce Competency Management this important political issue is the provi- compliance in both the private and 3. Workforce development schemes such growth. Without it, the future looks less Systems in Kurdistan. sion of what I call ‘Capital-I Infrastructure’: public sectors. Alignment in part or as Competency Management Systems secure. Short-term gains will be made but the vital national foundations required for whole with accepted international stan- should be required of all medium and the unease amongst unemployed young Chris Parker —­ significant economic growth. dards will aid collective ‘buy in’ and major scale organizations in both Kurds, as well as the lack of wealth dis- MBE, Managing Director of Charmogen One of the main requirements of any save valuable time. An example would public and private sector. Without tribution through career jobs, will bring growing, new economy is the development be the use of NEBOSH in HSE as the such a requirement, staff develop- a whole new set of distractions for an of a skilled workforce. This is no small national standard, even if it is termed as ment is currently seen by some as a already busy KRG. challenge and one that other regional oil a Kurdish system aligned to NEBOSH. lower priority than short-term profit In summary, I believe that Kurdistan boomers have solved by imported labor. A key driver is the need for common- margins. There is best practice avail- has a decision to make–and soon–on a The model used to date in many GCC ality in areas such as competency and able today from Kurdistan compa- national strategic plan for its workforce countries has seen cheap skilled labor skills lest multiple terms and taxonomy nies such as Gulf Keystone, whose and how to then deliver that operational- imported as a workforce with expat con- emerge for the same skill. This is like- industry leading Competency Based ly. Our own experience tells us that it can sultants providing technical and executive ly to add to the confusion and ineffi- Framework is already repaying the be done rapidly and that the Kurdistan management. This has proved a short-term ciency later on if not addressed now. investment with increased staff pro- Workforce not only thirsts for profes- success but one that has implications for ductivity, loyalty and contentment. sional Competency Development but local employment and long-term sustain- 2. The workforce need to be encour- also enjoys hard work. Those two aspects ability. These two issues are ones that the aged to remain in organizations that So how would such enforcement work normally guarantee a major foundation Kurdistan Regional Government (KRG) invest in them and not to depart with without too much red tape and legal for economic growth, especially with such seems keen to address, not least as its newly won qualifications to the high- concerns? I expect that a national com- abundance in extractive resources. These ambitious young populous need employ- est bidder. This practice discourages munication campaign would help to measures will only need a small amount ment and not in the already over-burdened investment in development as it is encourage all to support the economy of resources to set in motion, but the public sector. However, the only way this seen as a risk. Again, regulatory best by playing his or her part responsibly in return on that visionary investment will will happen is for a systematic campaign practice exists in many Gulf coun- the emerging future prosperity. We are all see swift rewards and increased economic of both regulatory and physical action to tries to constrain employees once an aware of how far Kurdistan has come in a sustainability and political security in the ensure enduring workforce development employment is secured in order to pro- decade but we must also remain mindful decades ahead. by all parties involved. tect both employers and the national of how the culture of employment and A

48 — The Review 2014 / 2 Kurdistan Region of Iraq — 49 H C HUMAN CAPITAL

1 Prime Minister Nechirvan Barzani and Deputy Prime Minister Qubad Talabani visiting the Jobs Baazar of Kurdistan Careers 2013 2 Deputy Prime Minister Qubad Talabani chairs a panel in Kurdistan Careers 2013 3 Jobs Baazar Kurdistan Careers Connecting Jobseekers with Employers 1

IIG: What inspired the creation of the IIG: What is the main benefit for job- Kurdistan Careers event? seekers and companies that participate NK: We thought Kurdistan was missing in the Kurdistan Careers event? a place where all of the employment mar- NK: We have realized that networking ket could come together. Events similar is not as strong here as we might have to this already exist at universities, but thought. For example, we had our first those are only focused on students. We event in Erbil at a government IT training are focusing on the whole Kurdistan academy with Microsoft-certified cours- Region. Kurdistan is a growing market, es. Companies did not even know this but it is hard to know where to start for training academy existed. We asked com- new graduates. We thought that, in a two- panies what the main reason they exhib- day event, we could bring together what ited was in our 2013 feedback survey, and would take six months of searching to do. 30% said networking. The main benefit Besides that, we knew that an initiative was that companies realized they were not 2 3 Dr. Nawzad Kameran —­ for private sector training was missing alone facing issues finding good labor. For Partner, Kurdistan Careers here in Kurdistan. Thus, we wanted to jobseekers, we provide the largest venue Lecturer, Department of Computer raise awareness through annual events for finding employment opportunities, IIG: What are your future plans for NK: It is true that most of the sponsors are Science and Engineering, University of and smaller events connected to them, language and soft skills training, place- Kurdistan Careers? big companies in the energy and ICT sec- Kurdistan-Hewler as well as through the media. ments, and international internships. NK: As the economy grows, you need tors. The majority of exhibitors are SMEs, The KRG policymakers also benefit from this type of event and other industry though. The SMEs do not realize what Nawzad Kameran explains how IIG: How many people attended last the perspectives of both exhibitors and focused events to act as a barometer for they are missing out on or the quality of “As the economy grows, Kurdistan Careers connects year’s event, what was on the agenda? jobseekers. where the economy is going. We want the people they can get. They invest more you need this type Kurdistan’s workforce with the NK: Over two days, we had around 2,000 to be the place that brings together all in family contacts. Participating in some- region’s growing economy through people and 48 organizations covering the IIG: What is your target for the upcom- the companies, expats, and new grad- thing like the Kurdistan Careers event or of event and other networking and capacity building. energy, finance, ICT, higher education, and ing event? uates that want to work in Kurdistan. reaching out to universities to see what industry focused events logistics sectors. We put a lot of focus on NK: When companies come here, they We want to be that go-to place once a qualified people they can get gives more capacity building. As I mentioned, training hear we have a big labor market. It is true year where you find your job, and we variety to jobseekers and the employment to act as a barometer is a big issue right now. We do not have that there is a lot of available labor, but also want to expand into large-scale market. for where the economy enough skilled people that are ready to the market is under-skilled. At most uni- workshops focusing on professional go out into the market. I can say confi- versities everything is theoretical. Mostly development. In our upcoming event, IIG: Are you planning to provide is going. We want dently that we have played a role in raising the private universities and University of we will have an awards ceremony– the recruitment services? to be the place that the importance of training and develop- Kurdistan-Hewler have been responding Kurdistan Careers Key Awards. It sets a NK: We stay away from the recruitment ment. We had some roundtables focusing by putting in work placements, career standard within the employment market, process itself, but we give companies a brings together all the mostly on the energy sector after the event. planning, and outreach to companies to celebrates achievement in the local mar- whole list of contacts. Basically, we help companies, expats, We specifically had one section at the job establish a bridge with students. We are ket, and is something to which people on the transparency side of things, so fair last year called the “internship zone,” trying to change the culture so students can aspire. people know which resources are avail- and new graduates where we handed out leaflets on what see the reality of things in the field. In our able. Last year, we helped the KRG as that want to work in internships are and why they are import- upcoming event we will hold three indus- IIG: We know that most of your spon- they launched their job listing website, ant. We wrote down a list of all the compa- try panels to bring those worlds together sors are giant energy and ICT com- Kurdistan Works, at Kurdistan Careers. Kurdistan. nies that wanted to receive interns and all and point to common ground. panies. Do you also target small and We helped them connect with all of the the people that wanted to do internships. medium-sized enterprises (SMEs)? recruitment market. A 50 — The Review 2014 / 2 ” Kurdistan Region of Iraq — 51 E ENERGY Changing Dynamics

IIG: It is safe to say that many of the highest standards of transparency in its dynamics between Erbil and Baghdad independent oil sales since the viability related to KRG oil exports and revenue and reputation of its industry depends sharing will have shifted considerably in on it. The fate of revenue sharing depends coming months. How do you believe the on the ongoing political reshuffling that entry of ISIS to central Iraq will affect is taking place as we speak. ANALYSIS these issues? Kurdistan facing tough times BW: ISIS’s incursion and control of IIG: On the same topic, do you see the swaths of Iraqi territory was indeed a instability in federal Iraq opening a but confidence remains high game changer in Iraqi politics, especially door for increased US engagement or the relation between the federal govern- explicit support of the KRG? he Kurdistan Region has been resources from the Kurdistan Regional ment and the KRG. ISIS separates the BW: Iraq has been effectively divided. It known as the gateway to the rest Government since January 2014 has had KRG from the rest of Iraq with a border is a matter of U.S. policy whether to opt of Iraq because it has been the a negative impact on the financial situa- that stretches for about 1000 kilometers— for gluing it back together or to oversee Tmost secure area in the country and has tion in the region. Despite all the nega- Bilal Wahab —­ and the KRG is not keen to help Iraq’s an amicable partition. The Kurds have an open door policy for investment. Even tive headlines and ISIS advances, many Assistant Professor, American University defeated army fight ISIS. However, the been committed to federalism, and the before ISIS (The Islamic State of Iraq and investors– especially the oil companies– of Iraq, Sulaimani (AUIS) entry of ISIS will not change immediate- Sunnis are increasingly warming up to the Levant) came on the scene, the rest are bullish about the future of the region, ly the commercial and legal constraints it. Provincial authorities are primed for of Iraq had been difficult to do business and the level of confidence remains high. Bilal Wahab provides IIG exclusive on Kurdish oil sales. It does change the power devolution and decentralization. with, while Kurdistan remained open ISIS overwhelmed Kurdish forces in analysis into the changing dynamics balance of power between the KRG and Unfortunately, the federal government for business. In July this year, however, July, but Peshmerga troops appear to have in Kurdistan’s energy sector and Baghdad, though. After the surprising was moving in the opposition direc- that image of security and stability was regained the initiative and have made regional geopolitics, and argues meltdown of the Iraqi military in the face tion, trying to centralize more power shattered in the wake of ISIS attacks close various advances after US airstrikes. The for further progress in responsible of ISIS, Baghdad’s principal leverage over in Baghdad. A clash between these two to the region’s capital Erbil that over- international community has made var- management of the KRG’s energy the KRG remains solely economic in the tendencies was inevitable. For example, Shwan Zulal —­ whelmed Peshmerga forces. ious pledges to help arm Kurdish forces. sector and hydrocarbon revenues. form of the much-needed KRG share of central management of the economy has Director, Carduchi Consulting The natural reaction for businesses Some of these have been met, while others the national budget. The Kurds had their glaringly failed—The government has was to take precautions, but the impact are still forthcoming. Furthermore, the share of land grab as well, controlling spent $600 billion since 2004 with very on the oil industry has been surprisingly US, Britain, and France have expressed and many of its oilfields. Adding little to show for, except for the devel- minimal, as most producing fields are out support for Iraqi Kurdistan and made oil from Kirkuk to Kurdish oil flow could opment in the KRG. Indeed, the Iraqi of ISIS reach and continue to produce and pledges to protect the Kurdistan Region help the KRG mitigate Baghdad-imposed military could not protect Mosul and export. The oil industry has taken mea- and their interests in it. risks and achieve an unprecedented level from ISIS, but residents of these sures to protect its staff that include pull- The current crises have dented con- of economic independence by year end. provinces have not revolted against their ing out non-essential workers, and, for a fidence in the stability of the Kurdistan new rulers either. few oil companies, halting operations in Region in the short term, and it will take IIG: How might these developments As for Washington, it has been look- certain areas. The industry as a whole, some time to bring back confidence for affect Kurdish aspirations for political ing at Iraq through the rear view mir- however, is still committed to Kurdistan. mainstream investors. Intrepid investors, independence? ror since 2011. The ISIS invasion was an Pulling out staff has affected some however, are more bullish than before BW: We need to wait and see whether the unwelcome surprise and caused much exploration and development activities, given the fact that, when the threat of ISIS new balance of power would encourage commentary and debate in the U.S. media especially close to ISIS-controlled areas. attacking and advancing close to the Kurds to move toward political inde- and policy circles. It was also a setback This has, in turn, affected the service Erbil came, the international community pendence, or leverage it against Baghdad and reality check for the Washington’s industry, which is largely run by indig- and the US in particular stepped up and About to gain more concessions. Such a trajec- ‘One Iraq’ policy. Moreover, Kurdistan’s About enous business. ISIS now controls near- vowed to protect the region. American Bilal Wahab got his bachelor’s tory would depend greatly on region- strong rhetoric about independence after Shwan Zulal is a business consultant ly one-third of Iraq, and trade routes intervention has boosted investor con- degree in the English Language from al and international politics, especially the ISIS incursion was received with res- and political analyst, covering a broad between the rest of the country and fidence by signaling the interest of the Salahaddin University. He received his Turkey’s position, whose commitment to ervations in Washington, and seen as a spectrum of political and governmental Kurdistan have either been cut off or are United States and its allies in the security M.A. in International Affairs from the the KRG is crucial to the Kurdish energy distraction from the immediate threat risk management in the Kurdistan not safe, negatively affecting the many of the Kurdistan Region, which is shared American University in Washington industry’s functioning and survival. Thus posed by ISIS. The KRG, on the other Region and Iraq. Zulal is Head of D.C. as a Fulbright Fellow. Wahab Consulting and Business Development businesses operating in Kurdistan that by those who have invested billions of dol- is currently a PhD candidate in far, the ISIS incursion has buttressed the hand, wants the international community at Carduchi Consulting in London, also cater to the rest of Iraq. lars in the oil sector and other industries Public Policy at the George Mason Turkish commitment to the KRG energy to realize that Baghdad is holding back as well as a Research Associate at While Kurdistan has been seen as the there. Moreover, the international com- University in Arlington. He has written industry, and international buyers inter- Kurdistan’s potential for prosperity and the European Centre for Energy and place to set up shop in order to service munity’s rush to arm Kurdish Peshmerga most widely on energy policy, good ested in Kurdish oil heed less Baghdad’s for supplying energy markets with much Resource Security (EUCERS), Kings the rest of Iraq, the Iraqi federal govern- forces is another vote of confidence in the governance, transition to democracy, threats. I should say, moreover, that it is needed crude. The KRG seems to be lob- College London. ment’s decision to withhold budgetary Kurdistan Region. A transnational crime, and illicit trade. very important for KRG to uphold the bying Washington through delegations, 52 — The Review 2014 / 2 Kurdistan Region of Iraq — 53 E ENERGY

the business community, and Turkey Kurdish energy industry are in place: to shift Washington’s policy in its favor. increasing production, oil-thirsty mar- “how much” is “how stable” oil exports energy cooperation is a classic example of And we are sensing a shift in U.S. policy kets, a cooperative transit state (Turkey), are. In other words, for the KRG, ensur- a win-win situation that has helped both toward independent Kurdish oil sales— and investment in export infrastructure. ing and controlling a predictable flow of sides put many of their historical disputes from opposition to neutrality. Challenges I mentioned earlier—main- oil and revenue independently would be behind them, and look forward. It is also ly legal and political—still exist, but are more preferable to unpredictable revenues an example of economic and commer- IIG: There seems to be some degree of waning in the face of the rising oppor- controlled by Baghdad. cial cooperation easing political tensions. opacity regarding recent and future oil tunities. The development of the KRG’s Furthermore, there are logistical chal- The relations have so far have been resil- sales from Ceyhan. Has the KRG got- energy industry has gone through phases. lenges that could slow down the flow of ient, weathering developments in Syria, ten past the initial stumbles of finding Counting on a strategy of establishing Kurdish crude. Export infrastructure, Turkey, and Iraq. It has both short- and buyers? Can KRG oil marketers sell oil facts on the ground, the KRG start- including pipelines and storage capaci- long-term implications for both sides’ at market rates? ed small with the so-called wildcatters. ty, fall behind production capacity. More economic and political trajectory. BW: Not yet. But the KRG is heading in The gains were solidified with the KRG importantly, the KRG has not yet put in The KRG should know, however, that the direction of independent, stable oil legal framework for exploiting the nat- place institutions capable of responsibly Turkey, a NATO power, has a much larger “The KRG has been sales at prices close to the market. There ural resources, including the adoption dealing with the windfall from oil sales. economy and could absorb Kurdistan. is no shortage of oil buyers in the market, of industry-favorite production sharing The KRG should have learned a major In other words, independence from abler in translating but buyers were discouraged by politi- contracts (PSCs). In turn, better-estab- lesson from the suffering it incurred by Baghdad should not translate to full oil wealth into cal warnings from Washington and legal lished companies have been attracted to Baghdad’s budget cuts. The KRG needs dependence on Ankara. KRG’s lever- threats from Baghdad. That could change Kurdistan’s energy sector. Following the to build a diversified economy founded age on Ankara is much smaller than its development, a due to the easing of U.S. stance after ISIS mass of companies and blocks they are on a strong legal and institutional founda- leverage on Baghdad. This is yet anoth- case in point that incursion and the formation of the new awarded, the KRG is eying the last and tion. Up to now, the KRG’s economy can er reason that necessitates that the KRG Iraqi government. most important phase: consolidation of be characterized as merely a distribution invest in creating a robust local economy, the management of The KRG has opted for opacity with the industry through mergers and acqui- system—channeling oil revenues that it interdependent with its neighbor. wealth is more crucial regards to monetizing its crude in fear of sitions by larger oil firms. Monetization did not fully control on an uncontrolla- retribution from Baghdad. This, howev- of oil is crucial for the success of this last bly enlarging public sector. For example, IIG: You note in your recent report than its size. er, should not continue. Unfortunately, phase, since, according to the terms of the it is economically wasteful and unsus- that further promoting and developing history of petrostates indicates that the PSC, oil firms are paid a percentage of the tainable to spend up to 70% of oil rev- Kurdistan’s gas resources could broadly energy industry is guilty unless proven oil revenues as cost recovery and prof- enues on a bloated bureaucracy whose benefit its economy. Can you tell us just innocent through transparency and over- it. Becoming a predictable and reliable contribution to the economy is about 2%! how and why this is the case? ” sight. Given the few actors involved in oil exporter is within sight for the KRG, The Kurdistan natural resources law has BW: Indeed, gas can be instrumental to exchanging substantial amounts of cash, granted it remains successful in investing important clauses for wealth management, the economic diversification I advocated there are ample opportunities for cor- in infrastructure and puts in place neces- such as a sovereign wealth fund, that need for earlier. The KRG has an estimated 165 ruption across the oil value chain. KRG sary governance mechanisms. to be implemented. Despite these short- trillion cubic feet of natural gas, most of oil sales are gaining momentum, and comings, the KRG has been abler in trans- which is associated with oil. Gas can be infrastructure investment is underway IIG: The KRG estimates that once pro- lating oil wealth into development, a case the feedstock for many local industries, to boost export capacity. These logistical duction hits 400,000 bpd, oil revenues in point that the management of wealth is including power generation and petro- foundations must be matched with insti- will reach the level at which they would more crucial than its size. chemicals. Once developed, the KRG can tutional checks and balances that guaran- no longer depend on federal budget- Natural gas can have export gas, especially to Turkey, which tee good governance of the Kurdish oil ary allocations. What are the biggest “ IIG: The role of Turkey has been cen- sees gas as the real prize for its coopera- sector. Dr. Ashti Hawrami’s recent com- challenges to reaching these produc- stronger ripple effects tral to the KRG’s ability to export oil tion with the KRG. Less like oil, natural mitment to the Kurdistan parliament for tion levels? in the economy, by and, as of recently, home to the KRG’s gas can have stronger ripple effects in full disclosure and transparency is a step BW: There are several considerations deposit account for oil revenues the economy, by offering local industry in the right direction. and moving parts when trying to come offering local industry accrued through sales from Ceyhan. a comparative advantage for lower cost up with a break-even point for the KRG. a comparative Can we expect this degree of cooper- manufacturing and agriculture. If exploit- IIG: Perhaps more importantly, has the Variables include new explorations, pro- ation to lead to increased commercial ed well, the KRG could also export elec- precedent been firmly set that the KRG duction figures and costs, and internation- advantage for lower ties between the two in broader ways? tricity. In terms of the environment, gas has a predictable export route through al oil prices. For example, as the Kurdish cost manufacturing BW: Yes. KRG needs Turkey’s political is cleaner. However, unlike oil, gas has the KRG pipeline, and a predictable way oilfields boost production, do the giant support and technical expertise. Turkey, not received due attention. Iraq currently to monetize the oil exported? Or, can fields in the South boost production to the and agriculture. in turn, needs to diversify its energy flares about half of gas production due to we expect to see ongoing challenges? degree of compensating for the loss from sources and find markets for its indus- lack of capturing technology—an obvious BW: The building blocks for a robust the North? However, more important that tries. The KRG-Turkey commercial and opportunity loss. A 54 — The Review 2014 / 2 ” Kurdistan Region of Iraq — 55 E ENERGY Power Plants in Review Annual Growth in Max. Demand 2004 - 2014

The Kurdistan Region will have 8000MW DEMAND (Installed Capacity) in 2016. 2000

1726 3886 MW Erbil Power Plants - Total Installed Capacity (in operation) 3000MW 3500MW 1440 Slemani Capacity in Summer (est.) Capacity in Winter (est.) 1350 6400MW 1441 Dohuk Average produced power (2016) 1076 1000 1096 918 1000 Existing Power Plants 793 694 858 613 698 546 610 559 Hydropower Stations Diesel Power Stations 410 538 362 Dokan Power Station ınstalled capacıty 421 455 Designed Capacity: 400MW 353 Average Production: 150MW erbıl 29MW 231 2014 Total: 4230 duhok 29MW 0 Derbendikhan slemanı 29MW YEAR 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Designed Capacity: 249MW (saqaR) Average Production: 100MW erbil 10MW akra-duhok (saqaR) 10MW -slemani (saqaR) 10MW Ongoing Power Plant Projects Gas Power Plants (saqaR) Chwarta-Slemani 10MW Power Plant Used FUEL Status Erbil 1500MW and Slemani 1000MW Gas Power Stations slemanı (saqaR) 15MW Erbil KAR GROUP supplied by Natural Gas through pipelines from Kormor (saqaR) Dual Fuel Gas Fields (170Km Pipeline to Erbil Power Station and koya-slemanı 17.2MW Khurmala 1000MW Combined 4 Units Simple Cycle will be operated in September 2014 (saqaR) (Diesel Oil & Natural Gas) 60Km to Slemani Power Station). Chwarqurna-slemanı 20MW Cycle Power Station 2 Units Combined Cycle will be operated in 2016 8 units in Erbil and in Slemani in operation. -slemanı (saqaR) 24MW

SLEMANI Heavy Fuel Oil Power Plant IMPLEMENTED BY Used FUEL Status Tasluja 51MW Number of the units: 30 x 1.7MW PIRDAWD - Erbil Mass Holding Company Completion Date: September 2014 Erbil 1500MW Dual Fuel The Power Station consists of 8 units Simple Sycle (GE (Diesel Oil & Natural Gas) Frame9) and 2 units Combined Cycle. 8 units of Simple Cycle (8 X 125MW) in operation. 2 units Combined Cycle (2X250MW) Combined Cycle Erbil / KHABAT Power Station under construction. The first unit of combined cycle (250MW) Thermal POSCO ENC will be operated in September 2014. Erbil 300MW Number of the units: 2 x 150MW Completion Date: 2016

Chamchamal-SLEMANI Mass Global Company Dual Fuel Slemani 1500MW 8 Units (GE Frame9) in operation. SLEMANI QAIWAN GROUP (Diesel Oil & Natural Gas) 2 Units (Combined Cycle) under construction. Combined Cycle combined Cycle 750MW Bazyan The contract has been signed between Ministry of Electricity and Power Station Qaiwan Group. The project will be commenced in 2014.

Sumel – DOHUK Mass Holding Company Dual Fuel Duhok 1500MW The Power Station consists of 8 Units Simple Cycle (G.E. Erbil Heavy Fuel Oil KAR GROUP Combine Cycle (Diesel Oil & Natural Gas) Frame 9- 125MW). All units (Simple Cycle) in operation. Harir 200MW The contract has been signed between Ministry of Electricity and KAR Power Station 2 units Combined Cycle under construction Group. The project will be commenced in 2014.

Baadra - Dohuk 13 X 13.6MW Implemented Heavy Fuel Oil DOHUK Baadra 150MW by Poltex All Units in operation since September 2011. Natural Gas POLTEX 800MW The contract have been signed between Ministry of Electricity and Internal (Back up Diesel fuel) combustion Engine Poltex. The project will be commenced in 2014.

56 — The Review 2014 / 2 Kurdistan Region of Iraq — 57 REAL ESTATE & CONSTRUCTION

THE REVIEW — REAL ESTATE & CONSTRUCTION Shifting Dynamics

s a central driver of Kurdistan’s begin exploration for hydrocarbons, The sector is still met by many chal- growth in foreign and domestic are moving into production phases. lenges. Financing and insurance Ainvestment, construction and Such a shift means that they will be in markets are immature in the Region, real estate draws a huge amount of Kurdistan more permanently, and will leading to perverse and inefficient investment—$13.7 billion in Board require larger staffs. This translates, outcomes. Consumers tend to buy of Investment-licensed housing proj- in the real estate sector, to higher houses and apartments in cash, ects alone since 2006, which does demand for graded office space and as there is no mortgage market. not include commercial or industri- high quality housing (and perhaps less Developers are limited in terms of al space. It is also, however, one of demand for long-term hotel stays and risk and leverage, as they also cannot the most quickly changing sectors in smaller, cheaper forms of housing and finance major development projects, Kurdistan, with shifting dynamics in office space). Other sectors moving stunting the level of quality and quan- the quantity and quality of construc- tity of real estate built in Kurdistan. tion, as well as the quality of residen- Lack of insurance means that home- tial and commercial space demanded The real estate and owners cannot secure or leverage by the foreign companies entering their properties. Kurdistan. In many respects, 2014 has construction is one of the While building standards exist, seen initial rumblings of many shifts most quickly changing enforcement for such standards large- in the sector. ly does not, which ultimately leads Trends that have gained steam this sectors in Kurdistan, with some developers to build cheap, shod- year, and will persist in coming years, dy projects, sometimes even leading include a move towards increasingly shifting dynamics in the to safety concerns. High demand and high quality builds, standardization the nascent nature of the market have With uninterrupted presence in the Middle East for over 87 years, Deloitte, the largest professional services rm in the world, and enforcement of construction and quantity and quality of created a degree of short-termism provides you with audit, tax, consulting, and nancial advisory services through 26 oces in 15 countries in the region. development standards, and in the construction. among some developers, as cheap, Our 'As One Borderless, Boundless' approach means we also collaborate closely with our globally connected longer term, a stronger and more liq- quickly built projects are expected to network of member rms, represented by 200,000 professionals in more than 150 countries. uid market with the increased use of be quickly profitable. And, with the To open the door to a world of professional services, visit us at www.deloitte.com/middleeast financing and insurance in the sector. into the Kurdistan Region, as well as Kurdistan’s high rents, such devel- Changing demands, following shifts small and medium-sized enterprises opments often are. However, this in the larger economy, drive each of (SMEs) will likely take their place in dynamic is quickly changing as the these trends. International oil compa- temporary or more affordable spac- real estate market, and the Region’s nies (IOCs), for example, which have es, demonstrating increased segmen- economy and business environment flocked to Kurdistan in recent years to tation of the market. overall, are maturing.

Kurdistan Region of Iraq — 59 R & C REAL ESTATE & CONSTRUCTION

Space for Industry Beyond Erbil As quantity meets demand, however, and global companies set up shop in In addition to these eye-catching While Erbil has largely paved the way “High-profile commercial Erbil, quality is now securely in the spotlight. In many respects, 2014 has developments, investment in industrial in the real estate and construction seen initial rumblings of many shifts in the sector. space is also gaining steam. In addition sector, drawing more international and residential projects to Erbil’s four current industrial zones, investment in the sector than else- are going up quickly. New four new zones are slated to open, where, Slemani is seeing major prop- including a Heavy Industrial Zone, erty development as well. Qaiwan hotels are scheduled to open Establishing and Agro-Industrial Zone, a Petrochemical Group is investing hugely into real their doors on and around Enforcing Standards Zone, and the Hawler Industrial City. estate, opening Qaiwan Towers, a pre- Much new industrial space is occu- mier commercial space this year—one Gulan Street in 2015, big While market demand is pushing qual- pied by the oil and gas industry, with of which will, in 2015, house Slemani’s residential developments ity higher, this shift to quality is still a 270,000 square meter of industrial Rotana Hotel. Qaiwan is also invest- 13.7 billion on the outskirts of Erbil are Board of Investment-licensed work in progress. Low quality building space explicitly allocated to the sector. ing into residential real estate, with still persists, as unified building stan- The primary challenge faced by Sulaymaniyah Heights, a premier lux- in progress, set to expand housing projects alone since 2006, dards are still not broadly enforced industrial real estate relates to the ury development housing 2,200 units, which does not include commercial 58,690 by the KRG. The sector is unable and way that land is zoned in Kurdistan. office and retail space. Qaiwan Group residential real estate sup- or industrial space. Annual Housing Demand unwilling to police itself, and market Much industry is developed on land is also developing multiple projects for ply hugely in 2-3 years, and demand can only do so much to moti- zoned for agriculture. While this has high and mid-level housing, including vate developers to conform to inter- yet to present serious challenges to the Qaiwan City and Qaiwan Heights much-needed office space is national building standards. industrial companies operating on this projects. In total, Qaiwan Group has increasingly coming online." The leading international firms improperly zoned land, it does create over 9,000 new housing units slated Shift in Focus: operating in Kurdistan would like to concern for companies planning to to come online in Slemani soon, with Quantity to Quality see a more robust regulatory and legal invest over the long-term. Farmland several hundred already completed environment: planning, building reg- remains at risk of being compulso- and occupied. Additionally, interna- It is logical that, starting with very lit- IKG Property early in the develop- ulations, and building control need to rily taken back by the government, tional malls, long present in the Erbil tle development at all just a decade ment process to ensure that its floor be rigidly enforced in particular with according to IKG. International ten- market, are now opening in Slemani, ago, the construction sector’s focus plans, designs, and safety standards regard to structural integrity and ants are starting to vigorously assess with a Majidi Mall and Family Mall has been to build—as much and as were up to the expectations of global safety. They see the establishment of land title and implications on long under construction, as well as City quickly as possible. As quantity meets companies. universally enforced standards as nec- term tenure. Public-private coopera- Center Mall, which recently opened demand, however, and global com- According to the experts, some of essary to the progress of the sector. tion to re-zone and redefine land for its doors in the city. panies set up shop in Erbil, quality is the office space which is imminent- industrial use could ameliorate this now securely in the spotlight. Major ly due to go on stream still does not Breaking New Ground challenge and clarify the issue. international companies, beginning adhere to international standards for to establish themselves permanently global organizations. However, quali- Amid these changes, new ground Finance and Insurance in Kurdistan, demand graded office ty quickly improving in the Kurdistan continues to quickly be broken in the space. TAQA, the national ener- Region’s real estate supply. The prima- sector. IKG Property project a 700% Perhaps the most significant limit- Weak insurance markets com- mortgage market creates conditions gy company of Abu Dhabi, is only ry motivator for the change in quality increase in supply across all subsec- ing factor in the sector is Kurdistan’s pound each of these challenges. where a real estate bubble would be the most recent IOC to move from is demand for quality in the market. tors by 2017. High-profile commercial weak and nascent finance and insur- Homeowners are at risk of losing a impossible to create—a serious con- its previous villa in Italian City to a Factors seen as essential for interna- and residential projects are going up ance markets. Alternatively, buyers significant portion of their assets, and cern in such a hot and dynamic mar- more dedicated, permanent office in tional businesses are still only sporad- quickly. New hotels are scheduled to can pay in installments for housing, are unable to leverage their properties ket. Of course, this positive aspect Empire World; others, including Gulf ically applied. open their doors on and around Gulan but previous to receiving the house. for further investment. “Once assets does not outweigh the negative. In Keystone and Standard Chartered, Many private sector changes could Street in 2015, big residential develop- Effectively, there is no mortgage mar- are insured,” notes IKG Property the longer term, development of the have moved into office space in UB move the construction sector in the ments on the outskirts of Erbil are in ket. Ultimately this leads to suppressed Chairman Mario Al-Jebouri, “inves- financial and insurance markets will Plaza, established by UB Holding. right direction. Increased use of con- progress, set to expand residential real demand for housing and real estate. tors can then look towards monetiz- be key to unlocking additional growth As more companies make similar struction supervision to ensure that estate supply hugely in 2-3 years, and For developers, the lack of financial ing the assets and releasing cash to and value in real estate. While these transitions, either initially into the design and engineering plans are much-needed office space is increas- markets also means suppressed sup- reinvest in other projects or sectors.” markets are deepening, thanks to the Kurdistan Region, or into high qual- carried out, true to form and quali- ingly coming online. Empire World, ply of real estate. Developers in the However common in more developed efforts of capable and ambitious local ity permanent space, more develop- ty, by construction and development the highest-profile mixed-use devel- Kurdistan Region must self-finance markets, this is not easily possible yet and foreign banks and insurers, this will ers are pursuing quality in their new firms could improve quality. This opment in Erbil, is incrementally roll- most of what they build, translating to in Kurdistan. likely present challenges to the broad- developments. The Erbil Business & would hold builders accountable to ing out new space, with international much less risk-taking on their part— There is reason for optimism, how- er economy over the medium to long Trade Tower, a new space slated to designers, as well as the owners of oil companies quickly relocating to the and therefore fewer major, ambitious ever. The lack of a financial sector has term. open its doors soon, consulted with the projects. premier office and residential spaces. projects. not been solely negative. The lack of a A

60 — The Review 2014 / 2 Kurdistan Region of Iraq — 61 R & C REAL ESTATE & CONSTRUCTION

Addressing New Developments

IIG: Considering Atconz Group’s role in However, the market is not ready for it, Kurdistan’s real estate sector, where it is so we are fine-tuning it and hopefully we a pretty well known name, how would will come up with a press release when you define the company’s goals? the country is ready—hopefully as soon DM: We have learned a lot from the as possible. market about how to design a business that works for Kurdistan—what are the IIG: How are some of the key projects market needs in terms of individuals at Atconz Group like New Azadi, Piroz, and companies, what is available in the and Dragon Mall developing right now? market to achieve certain qualities, and DM: With New Azadi, we have handed what is available in terms of raw materi- over phase two and there is one phase als and marketing tools. We try to mold to go. We delivered almost 600 units these together into one model that works. of housing. The New Azadi project is a Our ultimate goal is to develop a pro- dynamic process. When we started four Dean Michael —­ gram for housing in order to participate years ago, it was a $100 million project. Chairman & CEO, Atconz Group in resolving the issue of mass housing It has since expanded, largely because of for the needy. the dynamic change in the market. This Dean Michael speaks to IIG has altered the phases, and the project is regarding Atconz’s massive IIG: Can you tell us more about this ini- now more than double. ambitions and developments in tiative, and how Atconz is going about On Piroz, we signed an agreement the Kurdistan Region, as well as executing it? with Starwood International for a four the challenges and opportunities DM: Iraq needs around three million star chain to be built in a location we have present in Kurdistan’s current housing units today, and we would like to near the airport. It represents an invest- business and regulatory be central to meeting that need, because ment of roughly $100 million, including IIG: What would you say are the key one of the burdens that we would hope feasibility or financing processes, and the environment. we understand our locality better than the facilities. We anticipate that both the challenges in the market and how are the new government in Baghdad would results are stunted in terms of quality. most. Ultimately, this issue requires effort New Azadi project and Piroz will be fin- you addressing them? pay attention to when it stabilizes, because There is a fertile market for higher qual- between the private and public sector; ished by the end of 2017. DM: First of all, the dynamic here is very this is the only way to attract investments ity development once we have the mort- the two must develop, in a joint effort, For the Dragon Mall, we have held active, and challenges are related to the into the country to help fixing our devel- gaging and banking involved, we hope. a model to resolve this issue together. back on it for reasons of trade and com- geopolitical environment. Second is that opment problems. Because Kurdistan is about 20% of the merce. We are still doing the feasibility. Kurdistan is still a cash economy. It is IIG: What is your key piece of advice entire Iraqi market, we are looking at the We do not have a site or airport specified not like a standard economy linked to IIG: How does the lack of a mortgage as a businessman to foreign companies needs of something like half a million for the free trade zone, so the market is the stability of the international bank- system affect your business? minimizing risk while doing business units here in Kurdistan. And, when we not ready for such operations yet; we are ing system. Therefore, the risk is higher DM: This is a major problem. Imagine in Kurdistan? speak of affordable housing, we mean waiting for these issues to stabilize. than other places, but the reward is also that a project sells units at $800,000 DM: Most of the foreign companies “On Piroz, we signed decent quality units, not cheap quality. higher. Investors with the best chances of apiece. People bring $800,000 in cash did probing before they started to get IIG: What green initiatives are you success here have better knowledge of this in a sack, pay it, and get a house. This involved. The best way to probe is to find an agreement with IIG: Tell us more about the product working on in Atconz’s projects? dynamic environment and anticipate and is unheard of in any international oper- a local partner. Most of the joint venture Starwood International itself—what will the housing develop- DM: As a matter of fact, we can announce prepare for changes. The Central Bank ating system. Even $100,000-$200,000 projects are more successful than foreign ments look like? to the IIG for the first time that we have of Iraq governs the banking system in must be financed in cash. Alternatively, projects. This is because: we are talking for a four star chain to DM: “Affordable decent” means meeting recently begun a project of recycling sew- the Kurdistan Region, with private banks people pre-purchase new homes, where investment, not contracts. With a joint be built in a location the minimum requirements of interna- age water for irrigation in Kurdistan. We and insurance connected to it. Baghdad, the developer takes a deposit of 20%, venture, you will have the local knowl- tional standards in terms of sanitation, have a system of wastewater treatment however, does not support private banks then 10% every six months and so on, edge, local networks, and local capabil- we have near the air quality, insulation, and thermal qual- contained within it the project, and we to attract more investment, and they are and delivers the house after 4-5 years. As ities that will support your cause. This airport. It represents an ity—this is what we would like to achieve. are self-sustaining. Also, we are think- not very good at attracting the insurance a result of this, we have so far seen build- saves you possibly two years of getting This is our ultimate goal. We hope that ing of doing more green initiatives with companies that allow the banking sys- ing but we have not seen development. along, because the local partner is con- investment of roughly we will announce a few programs when our Piroz Hotel project. We will probably tem to get involved in business. Today Because of scarcity and the cash econ- nected and established. This saves you $100 million, including the country is ready for it. The study has aim to have the first LEED (Leadership in we have a retail banking system and a omy, there is no freedom to put quality a lot of money. So joint ventures are a been done; we have been working on it Energy & Environmental Design) project money transaction system, but little into buildings. People accept low quality, very good idea when you do it with a the facilities. for the last three years. We even addressed in Iraq—which will be a major milestone else because of regulatory burden from because they cannot finance higher qual- well-established company within the issues of green buildings and sustainabili- in the country’s history. Baghdad (effectively not allowing the ity. Investors and contactors cut corners same field. ty within the program to minimize costs. existence of mortgage banking). That is for the lowest cost. There are no proper A ”62 — The Review 2014 / 2 Kurdistan Region of Iraq — 63 R & C REAL ESTATE & CONSTRUCTION

Quality - A Rising Trend

IIG: Does IKG have plans to expand IIG: What will these changes mean for government when it comes to the con- mortgage market here means that a large IKG significantly into cities beyond Erbil? the gated communities that IOCs are struction sector. The government has, chunk of the population cannot afford IKG Property is a premier MA: IKG already covers the entire moving from? unfortunately, had higher priority things to take advantage of new units and independent real estate service and Kurdistan Region, as well as parts of MA: We will see a slight segmentation to worry about in recent months, but I new supply of real estate coming onto advisory firm based in Erbil. The southern Iraq, without a physical pres- of the market. When the large corpora- am certain that this will become a very the market. So, the lack of a mortgage company offers individuals, investors, businesses, and developers insight ence. Within the next 12 months, we tions, which can afford to pay larger sums vital part of the nation building exercise market and the lack of project finance and market intelligence to inform real intend to have people on the ground in for office space in the new builds, vacate that the KRG is doing, and will become to help investors and developers take estate decisions across Iraq and the both Slemani and Duhok, in addition their offices in English and Italian villag- a priority for the government in months on more risk has meant that the mar- Kurdistan Region. to Erbil. We are certainly also looking es, there will be a correction in the rents to come. At IKG we have submitted our ket has grown to invest in quick return at the situation in southern Iraq, but in these developments. We will then see views and made presentations to the gov- projects, rather than industrial develop- we do not believe that security and the a second wave of small to medium sized ernment. We are happy to participate ment and other longer-term ROI proj- development of the markets in Baghdad, enterprises come into those properties. at no cost to the government as consul- ects. Regarding insurance, most people Basra, and are at the level So, while there might be a slight cor- tants, helping to create these structures here do not know how insurance works, to which we can have a physical presence. rection, we do not see it having a severe and standards, bring in the groups like but this will change. Businesses want to Mario Al-Jebouri —­ Nevertheless, we cover these areas from impact on occupancy. Like in any other the Royal Institute of Surveyors from the know that their buildings are insured, Chairman, IKG Property Erbil with the intention to expand into market, then, we will see clear segmen- UK or elsewhere to create a real standard, even if they are coming in as tenants. southern Iraq when the situation permits. tation, where there is graded office space structure, process and procedure which Once assets are insured, investors can Mario Al-Jebouri speaks to IIG for the large corporations, and others will can be implemented quickly. This, for us, then look towards monetizing the assets about the quickly changing IIG: Many foreign firms in Kurdistan fill the void that they have left. is very important. and releasing cash to reinvest in oth- dynamics present in the Kurdistan seem to be attaining permanent office er projects or sectors. It is certainly an Region’s real estate sector, its and residential space. How will this IIG: What are the major challenges IIG: Is this something that can be over- aspect that has slowed growth, and it current challenges, and future affect Kurdistan’s commercial and res- related to creating stricter standards? come, through policy channels? is critical that it is implemented in the opportunities. idential real estate sector in coming MA: The challenge is to create a struc- MA: With the maturity of the market near future. years? ture within the bureaucratic institutions and increased competition, and even MA: This shift has already largely tak- to create the leverage, capability and man- the balance between supply and demand, IIG: How is the real estate market “With the maturity of the en place. The way this will change the date to insure the proper implementation short-termism quickly begins to weaken. changing as Kurdistan’s economy dynamics is such that the market even- of these standards across the board and People will become more long-term in matures? market and increased tually dictates to developers how and what without exception. There must be suffi- terms of their views and visions, and more MA: In terms of real estate, opportu- competition, and even they should be developing. Some of the cient teeth in the process, enabling them concerned about reputational risk, which nities exist across the board, but there office space which is imminently due to go to suspend construction or fine devel- is informed by the quality and credibil- has been a change in the game itself. No the balance between on stream still does not adhere to interna- opers that do not adhere to standards. ity they deliver. This is normal and has longer can you invest in real estate and supply and demand, tional standards for global organizations, They are building the reputation of the happened in several other countries. The guarantee major returns on investments. be it from security issues, efficiency, or the country and the sector. There must be a challenge is to find ways for the govern- You must now be much more cautious short-termism quickly quality of the build itself. The market is level playing field between all developers, ment to regulate the process so that it in the types of real estate you are invest- begins to weaken. currently indicating these issues to devel- so that no one feels that they are left out happens in a quick and structured way. ing in. You must formulate your invest- opers in Kurdistan, and we can already see or focused on negatively. This will bring ment strategy on sound feasibility studies, People will become quality shifting upwards. We advise many improved standards of living and better IIG: What effect has limited access to cash flow projections, and business plans. more long-term in About of the developers that are building new quality construction companies. If the finance and insurance had on the real Numbers, everywhere in the world, are Mario Al-Jebouri is chairman and office space regarding these issues, and basics are established, then there will be estate market? very important in this regard; they are terms of their views founding partner of IKG Property. many of the developers are now applying huge increases in quality in the sector. MA: This has a huge impact, both pos- transparent, and will lead investors to ask and visions, and more Before establishing IKG Group in 2011, the advice. One example of this is the Erbil itive and negative. The positive effect is the necessary questions before investing. Al-Jebouri ran a private equity fund Business & Trade Tower. The developer IIG: Have you seen any movement from that you cannot create a bubble, which This has not been the case in Kurdistan concerned about in London, after spending several came to us before construction started, the public or private sector to address would have happened had debt finance in the past; returns seemed almost guar- reputational risk, which years in the financial sector. Between and we went through a very rigorous these concerns? existed. But because everything is cash anteed. Now that there are far more play- 2002-2006, he served as an economic is informed by the advisor to the Bulgarian Prime process of advising them on what inter- MA: It is hard to believe that the pri- driven, development either gets delayed ers in the market, more competition and Minister, as head Bulgaria’s initiative national clients would expect from the vate sector will police itself properly to or stopped in the developer runs out of more saturation, this has changed. You quality and credibility to redevelop Iraq, and as head of building. This guarantees that elements of enforce such standards. The KRG must finance. The positive side, unfortunate- must look at what will satisfy demand Bulgaria’s Tourism Agency. He holds a the structure and design already address take a strong stand on this. At the end ly, does not outweigh the negative side. in both current and future demand; you they deliver. bachelors degree in civil engineering the concerns that clients demand. of last year, PM Nechirvan Barzani Negatively, growth is very limited. For must look at what clients want now as from the University of London. called on this to be a top priority of his example, the fact that there is no proper well as 20 years from now. A 64 — The Review 2014 / 2 ” Kurdistan Region of Iraq — 65 Niva Zarya Cement Established in 2007, NIVA is the exclusive dealer/ Zarya Construction Company is a full-service The Bazian Cement and Tasluja plants distributor for Ford and Lincoln vehicles in Iraq. general construction firm, and is one of the [approximately 30 kilometers apart] enable NIVA has currently three main distribution industry’s most reputable companies. It specializes the group to respond to the strong demand centers, which are located in Baghdad, Erbil, in construction, management, design, and for building materials in the Iraqi market, a and Slemani. All centers are fully equipped with building services, as well as transportation, general country undergoing massive reconstruction. state-of-the-art facilities providing maintenance trading (import and export), communication The demand for cement grows 15% per year. according to international standards. More infrastructure services, and project modification. FH seeks to provide for this increasing need by centers are planned to be opened in the short Zarya also provides all cement services such supplying quality materials for the construction and medium terms to cover further Iraqi as quarrying, blasting, engineering, solutions of housing and infrastructure. One out of every governorates. Vehicles sold by NIVA carry a (including design and instillation), re-factory four tons of cement in Iraq today comes from three- year or 60,000 km warranty and free maintenance services, and supply of all cement either Bazian or Tasluja plants. Faruk service with original spare parts, as applicable. materials and heavy equipment. Holding FH is comprised of 27 operating companies in 12 sectors: Telecom and IT, Cement Industry, Construction, Energy, Development, Medical Services, Hospitality, Real Estate, Management, Trade & Commercial, Agriculture. FH is incorporated as a holding company, with the controlling shares and branch companies owned by the Chairman of the Board, Mr. Faruk Mustafa Rasool. FH has always been at the forefront of Iraq’s development and has constantly aligned Rasan Pharmaceutical business opportunities with the objective of Rasan Pharmaceutical is the first company of its kind in Iraq. helping the companies of greater Iraq. This The manufacturing of IV solutions is critical to the well being approach remains engraved in the company’s of the Iraqi people. With that in mind, Rasan was designed culture to this day, and it is Iraq’s largest and to meet top-quality international standards, an approach most respected private company, employing over that is fundamental in guaranteeing the highest-quality 13,000 people. production, manufacturing, and technology. The primary product line of the plant is standard, large-volume IV solution, which contains purified water (to facilitate injections) and Faruk Medical City then concentrations of different solutions, including dextrose, Faruk Medical City is located in Slemani sodium chloride, ringer lactate, ringer solution, and sodium and provides a wide range of diagnostic chloride/dextrose. and therapeutic procedures ranging in size and complexity. Faruk Medical City (FMC) is committed to improving the healthcare options of the Kurdistan Region, and is outfitted with the latest technology. The facility is staffed by the highest caliber of experienced medical personnel. FMC has taken considerable steps to gain accreditation at both the national and international level, and aims to cover every possible need of the Iraqi community. Faruk Mustafa Rasool hopes that FMC will help end the need of the people of the Kurdistan Region to travel abroad for healthcare and basic procedures.

Asia Insurance Asiacell Goran Net Asia Insurance Company is the Insurance Arm of Asiacell is a leading provider of quality mobile Goran Net ISP Internet and Broadcast Services FH. Asia insurance Company is working to restore telecommunications services in Iraq, with over 10 was the first company to launch a DSL service and modernize the Iraqi Insurance market with million subscribers. Asiacell was the first mobile in the Slemani region, and is one of the major the hopes of it becoming one of the largest in telecommunications provider in Iraq to achieve Internet service providers. Since its inception Azady Industries Grand Millennium Sulaimani the region. As a market leader, Asia Insurance is nationwide coverage, offering its services in 2004, Goran Net has striven to be a leader in Azady Industries’ primary business areas are Galvanization Situated in the heart of Slemani, the Grand Millennium enjoys a breathtaking view of the committed to adding value to all of its clients’ across all of Iraq’s 18 governorates including the its field, which can be seen in the fact that the and Steel Structure. Azady is quality driven and client oriented city. The 32-story, five-star hotel consists of 253 guest rooms, 55 luxury suites, 7 executive activities. The company places particular emphasis national capital Baghdad and all other major company has the majority market share for fixed- company located in Slemani. The company is managed by suites, a presidential suite, and an executive lounge. Additionally, the hotel features three on building long term relationships with clients Iraqi cities. Asiacell’s network covers 97% of the line Internet users. Goran Net seeks to provide its highly experienced and dedicated professionals who are restaurants to accommodate all dining needs; Lebanese, an all-day international dining and associates based on exclusivity, mutual trust, Iraqi population, making the company’s national users with the highest Internet speed available fully committed to achieving ultimate customer satisfaction. lounge, and a luxurious revolving restaurant at the top of the tower. Located next to transparency, and quality of service. coverage the most extensive of any Iraqi mobile in the country, and the company believes in All of Azady’s plants are ISO 9001-2008 certified, and the tower is a 362-seat auditorium, a ballroom with seating for up to 800 people, eight telecommunications operator. utilizing and developing local staff and emphasize continual improvement. Azady possesses the additional meeting rooms of varied sizes, and a parking space for 400 hotel guests and Asiacell’s network is heralded knowledge in order to ensure that largest galvanization pool (13x1.5x2.5m) in the Region, with visitors. The Grand Millennium also includes a state-of- the-art health club, complete with as one of the most ground- the country has first-class individuals all necessary pre- and post- treating baths. A quality assurance on-hand personal trainers and luxury spa services. Recreation facilities include indoor and breaking accomplishments in capable of undertaking the most lab is also integrated into the same area. outdoor Olympic-sized swimming pool, tennis courts, squash courts, and jogging trails. the history of Iraq. complex of communication projects.

66 — The Review 2014 / 2 Kurdistan Region of Iraq — 67 R & C REAL ESTATE & CONSTRUCTION Global Design SSH SSH specializes in the IIG: How did SSH decide to enter the construction, one element that is miss- delivery of world-class Kurdistan Region? What is your overall ing is construction supervision. The con- construction projects in the strategy for 2014-2015? struction supervision team must ensure MENA region. It is rapidly YY: Kurdistan has a very bright future. that the contractor is building the project expanding multidisciplinary Perhaps two years ago a company such true to the original design, with the right firm with over 50 years' as SSH would have thought twice before dimensions as well as the right quality and expertise in architecture, entering a market like Iraq, but we believe safety standards. This is why, at SSH, we engineering, infrastructure that now is the moment; the time is right focus on four core components: master and construction supervision. SSH are respected project for a company like us to bring interna- planning, infrastructure, buildings, and leaders, trusted international tional standards of quality to this market. construction supervision. Construction partners and reputable Our strategy is to be a strategic partner supervision is particularly important to 2 employers. We aim to be the for architecture, energy and design ser- keep quality standards produced at pre- consultant, strategic partner vices, and an employer of choice where vious stages. and employer of choice Yassin Younis —­ ever we operate. We know that we have for the MENA region. Our GM-Kurdistan, SSH Design the vision, values and quality, and feel IIG: Where does SSH see Kurdistan in continued participation in the that the market is much in need of our its portfolio in the medium term? region's premier construction Yassin Younis provides exclusive services. As we only entered the market a YY: It was a milestone for us to open projects reflects our world- class expertise in specialist insight into SSH Design’s entrance few months ago, our market penetration this office in Erbil. SSH was established markets and our unrivalled into the Kurdistan Region, and is in the early stages. However, what is in Kuwait over 50 years ago and currently 1 local knowledge. discusses the challenges and unique for SSH, is that we work as sectors our business is expanding in Oman, UAE, opportunities present in Kurdistan’s spanning across territories. A project in Qatar, Bahrain, KSA and Kurdistan. Our design and development sectors. Erbil, for example, will include SSH's top focus has changed to become increasingly 3 designers from several different offices international. With Kurdistan in partic- and countries, including our Kurdistan ular, we are confident that we are here to office. We construct our teams based on stay; we feel that we are in the right place 1 KFH Residential Tower, Kuwait the skills of the designers and the needs at the right time. While what is happening 2 Royal Opera House, Oman of the project, which ensures top quality in much of Iraq right now is de-stabiliz- 4 3 Universal Printing Press, Kuwait on every project. ing, we know that the KRG has a steady 4 Gulf Bank, Algeria progress in developing the wealth of the IIG: How would you say that con- region, and has started exporting a signif- struction standards are improving in icant amount of oil, hopefully reaching 2 to find a strategic partner that shares our must invest in quality, because major Kurdistan? What is SSH bringing to the million bpd by 2019. There is democratic values and can work productively with us. infrastructure projects cannot easily be market in this regard? process and stability, and the need for Finally we entered into an MoU with an replaced every few years. YY: The market is not heavily regulated. increased quality infrastructure and con- investment firm. As we are new here, we We work closely with the public sector struction is broadly understood. All of the have yet to begin working on any projects, IIG: Do you feel that momentum from and big construction companies and we elements are in place, and we think that but we are hopeful that this will change local contractors is heading towards heavily stress the importance of playing Kurdistan's trajectory will grow quickly. very soon. improved quality, or are many still look- on a level playing field with other design- From Q4 of 2014 SSH we are hopefully of ing for quick returns at the expense of ers and contractors in terms of quality gaining real traction in Kurdistan with a IIG: Which area of SSH’s work do you quality? “The market is really and standards. Our quality is on par with number of project wins under our belts. see as being strategically most import- YY: The government sector has certain- top international designers, and we are ant in Kurdistan currently? ly shifted towards quality. The gener- shifting from a focus confident that we are bringing improved IIG: Did you break into this market on YY: We foresee many important areas al theme is that they want to invest in on quantity to a much quality and standards to Kurdistan. your own or with a local partner? for us focusing on building design and quality. When it comes to contractors, of However, we would also like to stress the YY: We have a strategic partner in infrastructure. Construction supervision, course the contractors are builders at the stronger focus on importance of having equally implement- Kurdistan. When we enter new markets, as I mentioned earlier, and master plan- end of the day and they build to what was About quality. This, confirmed ed and enforced standards and regula- we do so with local strategic partners— ning also has significant potential here. designed. It is the responsibility of the pri- Yassin Younis has over 17 years of by feasibility studies, experience in building industry; his tion. This improves the outcome for the clients or contractors or sometimes other In truth, however, the market is in need vate developers to emphasize quality by work portfolio extends from UK to the clients, the government, the contractors, companies. In Kurdistan, we are looking of everything. The built environment has choosing reputable designers. The private led us to enter the MENA region. Prior to joining SSH, and the end user as a whole. The quantity to work with construction and develop- a lot of scope for growth in Kurdistan, sector, in particular the local developers, market. Yassin worked for Atkins UK as design is now here; what Kurdistan needs now ment firms. There are many good devel- and quality is increasingly important. are moving gradually in this direction as manager and with WSP UK as Associate is to focus on maintaining high quality opers and we feel the market is in need With new water systems, for example, well as the market increasing demand Director. in its developments. When it comes to of companies like us. It was challenging you cannot look to the short term. You for quality. A 68 — The Review 2014 / 2 ” Kurdistan Region of Iraq — 69 R RETAIL

“Kurdistan is an emerging market and, in time, other brands will come. We are here. Carrefour is here. A lot of Turkish retailers are here and have aggressive expansion plans. We are positive on what we are doing with hypermarkets, and we believe that new brands will come in the future.

The Big Box Comes to Kurdistan ” IIG: How would you describe your job is to find a good mix for local peo- Turkish retailers are here and have aggres- JMB: Today, our hypermarkets are divid- About hypermarket concept in Kurdistan? ple between imported products and the sive expansion plans. We are positive on ed into 100 different product families. Jean Marie Boixel has over 25 years of JMB: Our job is to answer the needs of local products to which they are accus- what we are doing with hypermarkets, On average, we target 30,000 stock keep- experience in retail, including 20 years the people to bring them into our concept. tomed. Unfortunately, local production and we believe that new brands will come ing units in a hypermarket. Regarding with the Carrefour Group where he held We sell everything (75% food and 25% in Kurdistan is really limited. Our desire in the future. the number of customers, it is a little various positions, both operational and functional, including full responsibilities nonfood) under the same roof. Our first is to work with the maximum number of below the target we were expecting, but of Hypermarket Director. As Director store in Mega Mall is 5,500 square meters, local producers, because it is in our inter- IIG: How do you assess the transfor- we believe we have more people coming of the multi-format Managerial Training but we have not been able to replicate our est to reduce the logistics chain. mation of the market since you started than our competitors when they started Centre in Carrefour, Italy, Jean-Marie concept exactly with this size. Today, we your operations here? What were the operations. We knew that the beginning gained an extensive insight into are able to offer everything we want for IIG: How has the recent turmoil affect- initial challenges, and do you see that would be slow, especially with Mega Mall. team management. His expertise in the food business, but for the nonfood ed your logistics? those same challenges exist today? purchasing was obtained, in both business we do not offer what we expect JMB: For us it is clearly something we JMB: Today there are two main challeng- IIG: How do you address issues of hir- France and internationally, through his to offer because of the size. For example, need to manage day to day. It has really es. The first is that we are in a country ing local staff? positions as Purchasing Director and Jean Marie Boixel —­ we do not sell products like appliances strengthened links to Turkey. Today, we where 90% of what we sell is imported, JMB: Staffing is a real challenge for the Brand Distribution Director. Country Manager– Iraq, SI Retail in Mega Mall. We will open our second are naturally looking more and more to so you need to set up your operation with country. When we started operations, we hypermarket in Airport Mall. The size of Turkish products, even if that was the case distributors and there can be importa- had to bring talent from outside because Jean Marie Boixel predicts a the store in Airport Mall will be 10,000 before. If the rest of them are closed off, tion issues. The second is that this is a new there was very limited competition at the bright future for hypermarkets sqm. The number of units that we will we do not have many choices. market, so we need to drive people into time. We currently have a lot of local peo- like Auchan in Kurdistan. sell in Airport Mall will be double what our hypermarkets. We need to change ple working with us in the head office as we are currently offering at Mega Mall. IIG: Do you see room for other retail their mentality towards shopping, and, well as in the hypermarket. It is not easy giants in both the food and nonfood for that, we need to bring them the right and we do not say that we will recruit IIG: These hypermarkets are a new con- sectors here in Kurdistan? products at the right price. Other people 100% local people, but we have more and cept in Kurdistan. How does that affect JMB: For the food business, we believe in this business tend to sell some products more local people giving us résumés and your strategy? that the current players will be the players at a loss– with either no margin or a neg- our goal is really to bring up local people JMB: Opening in a new country is always in the future. A new entrant can come at ative margin– and compensate by selling as well. We aim to recruit a lot of people SI Retail a challenge. We challenge the habits of any time, but the market is not mature other products. We want to try to sell all and develop locally, because our business SI Retail has been established as a the consumers. In Kurdistan, the local for some types of brands. We are seeing the products in the store at a low price– is a real local business. We will have a platform to undertake retail operations people are used to traditional ways of more and more middle market brands. not just bakery items or special products. strong local presence by selling products in Iraq. The company owns the exclusive Auchan franchise in Kurdistan and shopping, so it is a new thing for them. Being here and having opened our first We prefer to have ten clients spending $10 to local people, recruiting local people, Iraq. SI Retail opened its first Auchan There is a cultural aspect– you do not hypermarket, with other hypermarkets each rather than one client spending $100. and creating jobs. We are trying to target hypermarket in June 2014 inside Mega work every country in the same way. If in the pipeline, we are gaining market mostly people that are freshly graduat- Mall in Erbil. The target is the opening of we offer only 100% French products, we share. Kurdistan is an emerging market IIG: How many items do you stock in ed for management and office positions. 10 hypermarkets in the next 5 years in know it will not work. Offering 100% and, in time, other brands will come. your hypermarkets? How many people They are eager to learn the business, and Kurdistan. local products is almost impossible. Our We are here. Carrefour is here. A lot of have been visiting your stores? we will teach them as we go. A 70 — The Review 2014 / 2 Kurdistan Region of Iraq — 71 R RETAIL

SI Retail’s Expansion in Kurdistan

IIG: How did SI Retail decide to start increasing purchasing power. It is a very IIG: What is your expansion strategy We want to have ample flat lands, the SI Retail operations in Kurdistan? positive environment for the retail busi- in Kurdistan? project will include big parking spaces SI Retail has been established as a CD: We started to monitor the mar- ness. Second, we have a growing popula- CD: Our target is to open ten hypermar- where we put an Auchan hypermar- platform to undertake retail operations ket in 2011. We looked at different tion, which is also a positive factor for the kets in the next five years. We are very ket as an anchor tenant, and we build a in Iraq. The company owns the exclusive Auchan franchise in Kurdistan and sectors, including the automotive and hypermarket business. At the same time, positive on this region and we have put small gallery around it with some shops. Iraq. SI Retail opened its first Auchan dairy industries, among others. Finally, it is a young population. Kurdish people a lot of effort into it. We have set up an We want to attract other retailers like hypermarket in June 2014 inside Mega we decided to go into retail. In 2012, know more and more about the devel- headquarter and a team of almost 50 peo- do-it-yourself, furniture, and clothing Mall in Erbil. The target is the opening of we signed a franchise agreement with opment of the hypermarket retail model ple to run this operation. Now we have retailers to create a new concept that 10 hypermarkets in the next 5 years in Auchan, which is the second largest and shopping concept. Lastly, the grow- 200 people working for us in Kurdistan. is easily accessible and where people Kurdistan. hypermarket chain in France and the ing expat population in the region is also Every time we open a hypermarket, we can shop in an easy space. We are not ninth largest in the world. We opened a positive factor for the development of will add 150-250 people. We do not know inventing anything– we are just replicat- our first hypermarket in June 2014, and the modern hypermarket concept. If you exactly what the speed of expansion will ing models that have been developed in we expect to open the next one in the look at the GCC, growth in hypermarket be, but we are planning to have five hyper- other emerging and developed markets. beginning of 2015 in Erbil as well. sales for the last five years has been 10% markets in Erbil, three is Slemani, and For the moment, this type of concept does Christophe Durand ­— on average, so we believe this is the type two in Duhok. not exist in Kurdistan. People have start- Expansion and Business Development, IIG: Why did you decide to go into of growth that we can expect for hyper- ed with big shopping malls, but we want SI Retail retail? markets in Kurdistan over the next five IIG: Are you planning to expand to oth- to go for a different and easier shopping CD: We saw the very important poten- years. It could be more, but if we have at er sectors? destination. Christophe Durand talks with tial for the retail industry in Kurdistan. least this rate we will be happy. CD: Real estate is linked to the develop- IIG about SI Retail’s expanding Carrefour had just opened when we start- ment of our retail operations, so we will IIG: How would you assess the invest- operations in Kurdistan and the ed the business. City Centre was here with IIG: Where would you place Kurdistan’s develop some real estate projects, which is ment environment in Kurdistan, and opportunities in the retail real one hypermarket and two small super- retail market in comparison to other the second branch of our business. Every how much investment are you antici- estate sector. markets. We saw potential in this mar- markets in the region? development that we will do in real estate pating for the retail park project? ket for what we would call a “modern CD: When we studied some of the char- will be to open an Auchan hypermarket. CD: This is a very interesting market in grocery concept” involving hypermarkets acteristics of the market in Kurdistan, we We are not interested in real estate that terms of investment. The investment laws and supermarkets. Thus, we decided to go saw that the penetration rate (the percent- is not linked to our retail operations. The and the environment are very encouraging “If you look at the GCC, for hypermarkets. age of sales of food and nonfood products main driver for us in real estate is to open in Kurdistan. Compared to other markets, growth in hypermar- made through the modern grocery for- hypermarkets. it is easier to set up and start a business IIG: How would you define your busi- mats) was below 5%. If you look at the in Kurdistan. It is also very important for ket sales for the last ness model here in Kurdistan? UAE, for example, 60% of total sales are IIG: Why did you decide to go for real us that we are able to own 100% of the five years has been CD: The typical size for a hypermarket is made through hypermarkets or super- estate? business. We also appreciate the support between 5,000 and 15,000 square meters. markets. In Saudi Arabia, it is 45%. In CD: The main reason is that we have been of Board of Investments to access lands. 10% on average, so we Our model is to be in a 10,000 sqm space Turkey, it is 20%. We believe that there working on expansion for almost two years We do not need a partner like in other believe this is the type plus 1500 parking spots where we offer is the potential for a massive increase in and it is very difficult to find a good loca- countries in the GCC. food and non-food products. This is the hypermarket and supermarket sales in tion that is suitable for what we want to do. Regarding the retail park investment, of growth that we can way that Auchan started its successful this country. Even though every coun- Existing locations are usually too small, do it really depends on the concept. It can expect for hypermar- business in Eastern Europe, especial- try is different, there is a trend towards not offer enough parking spaces, accessi- start at $20 million for the first phase of ly in Russia. We decided to duplicate the development of hypermarkets every- bility may also be an issue. As I mentioned the project and go up to more than $50 kets in Kurdistan over About the same business model starting with where in the world. We believe that what earlier, we need to go for at least 7,500- million if you go with a bigger project. the next five years. It Christophe Durand brings 12 years hypermarkets. has been seen in the Middle East in gen- 10,000 square meters for our hypermarket Initially, we will focus on smaller projects experience in investment. He joined could be more, but if SI Retail in 2013 after working 5 years eral in the last 10-15 years is very close to concept, we have to meet very strict criteria and expand it successful in order to intro- for a sovereign fund in Abu Dhabi IIG: How would you describe the retail what we see when we look at Kurdistan. before envisaging a new location. What we duce a new shopping concept for people in we have at least this covering MENA region. Now, he is business environment in Kurdistan? We believe that we have a very favorable want to develop on the real estate side is a Kurdistan. This type of project could also taking care of the expansion and CD: First, there is strong GDP growth, environment for hypermarkets. different concept than the shopping malls be a way of attracting capital to Kurdistan rate we will be happy. the real estate projects linked to the which has been 10% on average between that already exist in Erbil. We want to open from foreign investors from countries like development of SI Retail in Kurdistan. 2011 and 2014, which leads to an what we call a “retail park.” Turkey, Saudi Arabia, and the UAE. A 72 — The Review 2014 / 2 ” Kurdistan Region of Iraq — 73 R RETAIL

Retail Giant IIG: Landmark has had trouble attain- a business with a long-term view. As this ing suitable real estate for malls and is a new market for us, we are working on shops in Kurdistan—a major concern building a reputation in Kurdistan. We for a retailer. What initial challenges are looking forward to better prospects did you face? by establishing ourselves as we have in BM: Finding suitable real estate has been other countries. a challenge, and as such our strategies have evolved with what works. When we IIG: You have, thus far, only opened first entered the market, we drove around four of 16 total planned locations in the city to scout out potential real estate Kurdistan. What is your timeline for options. As we started calling landlords, reaching full capacity in Kurdistan? we began to develop a broader network BM: The major factor with this setback of building owners and managers. Once was delays in the malls. Malls did not acti- we had a broad set of options, we studied vate on the schedule we had drawn out. Bhupesh Malhotra ­— traffic patterns to get an idea of demand Construction delays can range from six Country Manager, Landmark, Iraq for our businesses in each location. This months to 1.5 years or more.. The pri- was clearly a very challenging way of mary factor contributing to these delays Bhupesh Malhotra speaks to IIG going about selecting real estate, espe- is that owners use their own personal regarding the opportunities and cially with language barriers, no unified money to finance the malls' development, challenges of pioneering foreign building standards, and no access to so if they have personal liquidity prob- came with two value brands to test the wants to activate foreign investment and Landmark Group investment in the Kurdistan drawn up floor plans. Oftentimes there lems, the whole development comes to a market, and to broadly establish our pres- develop its own competent work force. Landmark is a major Dubai-based Region’s retail market. is no power or other utilities working standstill.. We believe formal financing is ence. This is still our main strategy. We Additionally, a free trade zone and open diversified retail group of firms, operating over 1,800 outlets in 20 in the buildings. Title deeds are another a challenge currently, and this causes sig- want to be in all of the key locations in the skies policy would be more than enough countries across the Middle East, challenge; it is unclear who actually owns nificant delays. Our perception is that this country where malls exist. In some cases to establish Kurdistan on the map. Africa, and Central Asia. much of available property. This initially scenario will improve, as several inter- we would prefer to open independent- However, this must all be done quickly. provided challenges for us. national banks have entered the market. ly on a stand-alone basis, but that pos- There is no time to wait and see what hap- es their own set of challenges. Another pens. The government must now react to IIG: How have you since been able to IIG: Internationally, which market seg- key to our operations is to employ local direct the market where the state wants it adjust your strategy to address these ments has Landmark has the most suc- staff whenever possible. This is really the to go.. The risks and concerns are based issues? cess in targeting? With this in mind, only way that our business can operate. A on what is happening around us; business BM: Our second strategy was to work how would you characterize the way final challenge for us is access to reliable is moving forward as planned. with the Region's malls. To do this, we that Kurdistan fits into Landmark’s data.. We are currently creating a data- looked into possible competitors, traffic portfolio? base, so that once we have a few years of IIG: How do you address the issue of volumes, and supermarket base. Much of BM: We are in the medium market seg- data behind us, we will have benchmarks human capital? this work had already been done, because ment—we cater to the masses. Our prices with which to base future targets. BM: Currently we use newspaper adver- Carrefour was already in Erbil. This gave are very competitive, and offer the best tisements, and local recruitment services. us more confidence and a larger appe- possible value with design in mind. . This IIG: How do you foresee the evolution However referrals form a major portion “In coming years, our tite for risk. Wee worked together with strategy is well suited for the Kurdish of the sector over the next 5-10 years? of our hiring strategy. The group has a growth target is to similar international retailers, where a market, because there seems to be a large BM: In the next 5-10 years, we will see very dedicated training program, this is joint strategy was developed for operating gap in those offerings. We have major major growth. It isn't just us; we have designed to develop the local workforce open and operate in all within this market. strength in our home offerings—carpets, already seen the entrance of Auchan, up to senior levels in the organization. of Kurdistan. We have decor, cutlery, etc.—which are not widely Carrefour, and many others. Many brands Our major challenge is to provide a long IIG: Rents have also increased in recent available here. Then, of course, our fash- are entering the market very quickly. I term career vision to our employees so entered the market with years. How does Landmark cope with ion lines cover the entire family, from don't think it will even take five years.. I that we become the preferred employer our core brands, with this higher overhead? babies and children to adults. The country has to keep up with the entry over all existing and future competitors. BM: Yes, rent expectations are incredibly of international business houses, partic- This is only possible by providing clear a plan to roll our entire About high. Landlords have a very short-term IIG: International retail is much new- ularly in regard to transportation, logis- growth path with training for higher portfolio, based on Bhupesh Malhotra has more than 20 view; developers want to see a return on er to the Kurdish market than to most tics, basic infrastructure, and improve roles, fair treatment, excellent incentive years of experience in diverse industries, their investments within three years.. We other markets you operate in. How does rules pertaining to visas & housing.. Visa programs and recognition. At this point, market response. and is currently based in Erbil heading have a long-term view, of at least 10-15 this affect your operation and strategy? processing is arguably the most import- our store staff is 85-90% local, while our the Landmark Group’s local presence. years, and this we are trying and to build BM: To establish ourselves initially, we ant element right now if the country higher-level managers are all expats. A 74 — The Review 2014 / 2 ” Kurdistan Region of Iraq — 75 ERBIL DERGIILAN 20X27.pdf 1 7/14/14 8:16 PM

ICT

THE REVIEW — ICT STEPPING FORWARD

Kurdistan’s ICT sector started from almost nothing in 2005, and has since become one of the Kurdistan Region’s most well developed and strategically important sectors. While challenges persist in Kurdistan’s ICT sector, momentum in the sector’s maturity 30% and development has shown no signs

C of slowing in 2014.

M

Y The Kurdistan Region’s ICT sector has had a good year in 2014—and given the sector’s strategic importance and CM Telecom sector growth relevance to the rest of the Region’s economy, security and 30+70M MY politics, it is important that the sector’s growth and devel- CY opment has been strong. Internet penetration rates have

CMY been climbing steeply with major growth in local inter- net services providers (ISPs), mobile penetration rates— K already relatively high at roughly 93% within the Kurdistan Region—are continuing to rise, and major ICT hardware manufacturers are working their ways into the market, often through local distributors and partners. 8% The public sector is quickly developing its own hard- ware to make the KRG work more effectively and efficient- ly. However, while there is much to be please about in the sector, there are still challenges: regulatory challenges are slowing the roll-out of 3G and 4G/LTE wireless technolo- gies at the level of major mobile operators, as well as local ISPs. Internet penetration, while growing quickly, is still 92Landline penetration rate +8M quite low by international and regional standards. Within the finance sector, banks and financial institutions are not sufficiently integrated technologically to provide interbank lending or ATM services—to the detriment of both banks and consumers. Finally, despite the efforts of very effective training centers, and heavy investment from both the pub- lic and private sector into the Kurdistan Region’s human 9% 50% capital, the level of technological literacy among much of 2014 2018 the Region’s workforce is still in development. While the many advances in the Region’s ICT sector are to be com- mended, there are still gaps in the market—and still much 9150+9+50M+M room for investment in the sector’s continued growth. Internet Penetration

Kurdistan Region of Iraq — 77 ICT ICT

data have greatly improved in recent “While service and pricing years “thus far, the market is not very competitive…fees are significantly for international data higher than in Europe or the US, which have much more developed and lib- have greatly improved in eral markets for these services. ” Deregulation in the international data recent years thus far, market may improve this situation. the market is not very Additionally, expansion of wire- less networks could allow for a much competitive… fees are faster expansion of Internet pene- tration, and much faster rates than significantly higher than development of hardwired infra- in Europe or the US, which structure. While the major mobile operators provide relatively slow have much more developed FastLink is GSM Internet to smartphone users, and liberal markets for Kurdistan’s the use of the latest technologies in leader in 4G/LTE wireless data transmission, 4G/LTE, these services.” technology. Internet provision is beginning to bring fast wireless Internet access to computer users with limited access to hardwired Wired or Wireless options. FastLink, a company that Hardware & uses small mobile devices to connect Infrastructure, Internet provision in Kurdistan start- Within Erbil and Duhok, Newroz company works with IQ Networks computers, smartphones, and tablets ed from a very low point—the first Telecom, exploiting their control of the and Al Sard, both of whom operate in Kurdistan to the Internet through Public & Private international cables to bring data Kurdistan’s only fiber optic cables into cables into Iran, as well as Newroz 4G/LTE networks, is the Region’s The Kurdistan Region’s ICT system a single, enormous datacenter based in and out of Kurdistan were estab- Turkey, is the central player in Internet Telecom, to distribute Internet band- leader in this technology. However, is, like all others, based fundamental- in the Kurdistan Region. According to lished in just 2007-2008 by Newroz provision. Not only has the company width in the governorate. By teaming as regulators in both the feder- ly on a foundation of hardware and Hiwa Afandi, director of the DIT, proj- Telecom. Since then, however, distri- run cables in and out of the country, with KurdTel, the operator of landlines al government’s Communications infrastructure. Companies, such as ect will bring major efficiency gains to bution and penetration have grown but it was also the first to bring fiber (which are currently primarily stan- and Media Commission (CMC) in Lebanese-based IT company CIS, as the Region’s public sector, by central- quickly. While there are still only to the curb (FTTC) technologies to dard copper cables) within Slemani, Baghdad, and the KRG’s Ministry of well as the aforementioned TarinNet, izing many of the processes and pro- three international fiber optic oper- businesses and residences within GoranNet is working to develop an Telecommunications (MOT) in Erbil are quickly importing cutting edge cedures that each agency currently ators carrying data into and out of Kurdistan. The company’s growth and extensive fiber optic cable network cut regulatory burden and issue network and computing equipment, must undertake independently. While Kurdistan (one through Turkey, two investment have brought Internet con- within Slemani, and hopes to make licenses for more ISPs to employ fast through partnerships with global budgetary constraints may delay the through Iran), investment in ICT nectivity to hundreds of thousands of fiber to the home (FTTH) and fiber to new wireless technologies, it is likely leaders in the sector, such as Cisco, project, its magnitude is regardless infrastructure within Kurdistan has homes and businesses since its estab- the business (FTTB) infrastructure that the Region’s major ISPs will be Microsoft, Alcatel-Lucent, and others. bound to make waves in the Region’s spread provision widely—and has lishment in 2005. More recently, the widespread within the city, drastical- quick to follow. Such hardware is used broadly across ICT sector, as well as the whole of jumped past the traditional stages company has begun aggressively pur- ly increasing Internet speeds. Some companies are already using all sectors in the Region’s economy, the KRG’s public sector as previously that many countries have followed. suing wireless technologies, particu- Despite the progress, there is wireless technologies in innovative from enabling inter-bank connectivity, cumbersome processes are stream- While landlines have stagnated in larly 4G/LTE provision, initially and significant opportunity for further ways. TarinNet, an ISP and ICT firm to developing private datacenters for lined. This will also create a significant Kurdistan for decades, leaving many perhaps most visibly through FastLink, investment in the Kurdistan’s Internet that provides the KRG with much of the Region’s largest companies. amount of work for the foreign and without traditional phone services, its sister company. Such technologies provision. First, despite the current- their Internet coverage, uses a point- The largest ICT projects of local private sector. While the DIT new companies are jumping ahead promise to bring high speed broad- ly low rate of Internet penetration, to-point network of towers to dis- 2014 have been carried out by the is developing sensitive and secure to develop fiber optic cable networks band both to more subscribers within Kurdistan’s international fiber con- tribute data around Kurdistan using public sector. The Department of IT infrastructure itself, much of the in their place. Fast data networks cities, but also to smaller villages pre- nections are becoming a bottleneck. WiMAX technologies. This allows high Information Technology (DIT) is Department’s work will rely heavily such as these not only provide fast viously unserved by ISPs. According to Aram Daro Noori, volumes of data to travel long distanc- overseeing the development of an on the private sector for consulting Internet, but VOIP phone and digital, Within Slemani, GoranNet, a Faruk General Director of GoranNet, while es without the expense or hassle of intranet, connecting all branches of and advisory, project outsourcing, and broadband TV as well. Group company, is the leading ISP. The service and pricing for international wired options or 4G/LTE technology. the KRG, with all KRG data stored on equipment.

78 — The Review 2014 / 2 Kurdistan Region of Iraq — 79 ICT Zain ICT Iraq, based in Baghdad but with operations in the Kurdistan Region, has even Enabling the End User more subscribers throughout While much of the Kurdistan Region’s society” to be of central concern to the country than Asiacell, workforce has a basic command of further growth in the sector, as well Mobile and is expected to list computer use, employers believe as the development of the broader on the Iraq Stock that there is still much to be desired economy and society. As an employ- Exchange soon. in terms of the Region’s computer er that heavily invests in the capacities Operators and technical literacy. This is, howev- of his local workforce, he is personally er, quickly changing with the entrance pushing society in this direction. He Korek of companies that invest heavily in believes that more can be done, how- 3 training their employees, public sector ever. “Developing technical capacity in Telecom, based Asiacell, a in Erbil, is smaller training initiatives, and independent schools will help to mature the mar- Slemani-based training centers teaching computer lit- ket in the long term, as young students than the other mobile operator (and eracy. MSelect, an HR and recruitment become increasingly acquainted with, two, but growing Faruk Holding company) firm, has recently opened a Training and interested in, technology and faster. is the largest publicly Center with branches throughout computing,” he told IIG. “A broad ICT traded Iraqi company, the Kurdistan Region. According to system cannot be successful without valued at roughly Allegra Klein, the Center’s director, educating students in IT, and this must “The KRG's DIT spent $5B. intermediate computing is one of the begin at a young age.” the initial part of 2014 most in-demand courses in MSelect’s While the private sector is quick- offering. There is reportedly still ly bringing cutting edge technologies conducting research on Mobile Operators much room for investment in the ICT and connectivity to the Region, and The Kurdistan Region’s mobile is likely to begin to level off in coming training sector, however. According conducting widespread employee what IT skills are most phone operators are, by far, the big- years. Current mobile phone pene- to Godar Ibrahim, CEO of Awrosoft, training, such broad and deep goals in need of attention and gest actors in the sector. Asiacell, tration in the Region is estimated to “for both government and the broad- of integrating IT literacy into society a Slemani-based mobile operator be 93%. However, the Region’s neigh- er population, there is a major gap in requires public sector support and training in the public sector, (and Faruk Holding company) is the bors in the Gulf have rates reaching basic skills, which presents opportu- coordination as well. Fortunately, and are in early stages largest publicly traded Iraqi compa- 120% or more, suggesting that there nities for companies willing to invest the KRG has made this a central ny, valued at roughly $5 billion. Zain is still ample room for net growth in training centers and ICT-focused focus. According to Hiwa Afandi, of rolling out training Iraq, based in Baghdad but with oper- in Kurdistan’s mobile penetration. education.” KRG Director of IT, his office is work- ations in the Region, has even more 93% However, much growth in the Region Some firms addressing the needs of ing aggressively to educate members programs. As part of this subscribers throughout the country will come not from penetration rates the Kurdish workforce through devel- of the KRG’s expansive public sector process, the department than Asiacell, and is expected to list on alone, but deepening of the mobile opment of custom software, tailored in ICT skills and processes. The DIT is also establishing an the Iraq Stock Exchange soon. Korek 7Mobile phone +93M sector through mobile data provi- to the needs of locals, with local IT spent the initial part of 2014 conduct- Telecom, based in Erbil, is smaller sion and smartphone use. Only small support on hand to assist in any chal- ing research on what IT skills are most internationally recognized than the other two, but growing penetration rate numbers of the Region’s population lenges end users are facing. Awrosoft, in need of attention and training in the faster. International telecommuni- is estimated to use smartphones with for example, a company that writes public sector, and are in early stages of certificate center to cations providers have taken notice data plans. However, movements in bespoke software, creates programs rolling out training programs. As part of the potential of these companies: the sector suggest that this is likely that use Kurdish language, with the of this process, the department is also increase the technological Ooredoo (formerly QTel), a Qatari to quickly grow. The Region’s mobile ability for local companies to custom- establishing an internationally recog- literacy of employees.” telecoms giant is a majority share- operators are currently restricted ize the software to suit their needs, nized certificate center to increase the holder in Asiacell; Orange (formerly to provision of slow GSM data pro- and with a local support team stand- technological literacy of employees. France Telecom) holds a 20% stake vision. However, the CMC plans to ing by in Erbil—benefits that massive, While much has been accom- in Korek; and Zain Iraq is part of Zain 2G auction licenses for 3G provision global software companies could nev- plished as far as enabling and educat- Group, the MENA-focused telecom to mobile operators soon, with 4G/ er provide in this market. ing Kurdish society to take advantage giant based in Kuwait. The CMC has Data Service LTE licenses hopefully in the pipe- However, ICT literacy is proba- of the innovation and potential that only auctioned licenses to these three (mobile operators) line. Access to these extremely fast bly most important for the future the Region’s ICT sector offers, full operators. While there has been talk wireless technologies are predicted growth of those in the ICT sector technological literacy will take time of issuance of a fourth mobile oper- to encourage more mobile phone itself. Antoine Kawkabani, CEO of to develop. According to Kawkabani, ator license by the CMC, in recent users to seek out smartphones and CIS-Iraq, a firm that imports, installs, “it takes an interested and engaged years little seems to have come of it. data plans—driving much of the sec- and maintains ICT equipment in the new generation before the market for Growth in the sector, which has tors future revenue growth. Kurdistan Region, considers the cre- ICT can truly mature.” seen breakneck speeds in past years, ation of Kurdistan as an “IT enabled A

80 — The Review 2014 / 2 Kurdistan Region of Iraq — 81 ICT ICT

“For foreign companies, there are very many government tenders for IT projects, as well as some tenders from major private sector companies. These provide plenty of opportunity for companies that have a permanent presence here. Connecting the Region

IIG: In what ways is TarinNet expand- or government branches or banks, web ”considerably. Second, we would like to capable of. It becomes challenging to find TarinNet ing Internet access in Kurdistan? hosting, server hosting, and others. open a new department specifically for out which companies really do come with Founded in 2005, TarinNet is one of RK: Our current target market is com- networking, covering both intranet and expertise and professionalism. To some the Kurdistan Region’s largest internet panies, hotels, houses, shopping malls, IIG: Are you planning on investing in Internet. Developing this department will degree, this is also related to the nascent service providers, as well as a central player in fiber optic and wireless and restaurants. We have a point-to-point 4G/LTE wireless technologies, like some take two years. There currently no com- nature of this market; lots of new compa- network development, hardware system. We put access points where pos- others seem to be doing? panies that focus exclusively on network- nies come here, and the poor ones have distribution, web design, web hosting, sible and where people concentrate. We RK: No, the investment required is more ing, which represents a major gap in this not yet left. and commercial IT support. A Ster have network covering Erbil, Slemani, than we can afford right now. Deploying market. Third, we would like to connect Group company, TarinNet covers all and Duhok. We do not place limits on 4G requires over $100 million to cover all all of TarinNet's towers with fiber optic. IIG: What advice would you give for- of Kurdistan. The company serves data use, and we are quite affordable. of Kurdistan. I have a license to provide Currently, they are connected through eign ICT companies considering enter- over 1,000 businesses customers, 4G, but use it for WiMAX instead. At this microwaves, but cable will speed up the ing the Kurdistan market? over 150,000 home users, and all IIG: Where do you see opportunities point, however, especially since Newroz connections, providing better service to RK: For foreign companies, there are government offices and employees in in the IT sector overall in Kurdistan? Telecom has already begun providing it, it our customers. This will help in renew- very many government tenders for IT Erbil, Duhok, and Kirkuk. RK: Kurdistan's IT market is new. We do is too late for us to want to invest enough ing all of my contracts with businesses projects, as well as some tenders from Rebaz Kawa —­ not have professional, integrated com- to compete with them. Instead, I would and the government. I would also like to major private sector companies. These CEO, TarinNet panies to provide all services within the like to improve my business through run fiber cables to all of the government provide plenty of opportunity for compa- sector. There is certainly space for these point-to-point connections to business- ministries. nies that have a permanent presence here. Rebaz Kawa speaks to IIG companies. However, until now, the com- es and homes. 4G is better for personal To invest, they must work with local com- regarding the trajectory of the panies that come here tend to do poor and home users, but less useful for busi- IIG: Regarding networking investment, panies to liaise with the ministries and Kurdistan Region’s ICT sector, the work and do not maintain a permanent ness users. If you are a big company, you are you looking to go into partnerships understand the market well. There are opportunities present, and the presence. Companies will come, invest a probably do not want to provide all of with foreign companies, or do you plan many local companies that are happy to steps that TarinNet and the KRG few million dollars, and leave. However, your employees with FastLink; it is much to work individually? partner with foreign companies for these are taking to realize the sector’s there is a lot of space and opportunity easier to buy a fast Internet connection RK: We currently have a partnership purposes. Many companies are doing this potential. here. In networking especially, there are which all of the employees can use. This with B2MB, which is an affiliate of Cisco. to connect the major gated communities very few companies in Kurdistan that is largely why TarinNet is so strong with However, the company I would like to with IPTV, VOIP, and other services. It can effectively develop fiber networks business and government clients. create would be much broader than what is much more challenging in older con- in new buildings. For Internet and ISPs, Cisco currently offers. Finding compe- struction, but in many of the new ones, the market is already fairly saturated. IIG: What are your targets and goals tent companies in this market is, unfor- it is easier. Bureaucratically is it easier as Between TarinNet, Newroz Telecom, for 2015? tunately, a challenge as well—you must well, because the compounds are owned GoranNet, and others, there is less space RK: This year we would like to really really be able to judge the competence by individuals and not under municipal within the market for Internet provision. develop our fiber optic networks for our of companies before you go into business regulation, so doing business with them However, we do need other services: major customers. We will bring fiber to with them. Not everyone wants to come is easier. As Kurdistan continues to devel- IPTV, VOIP, networking, intranet, data the building (FTTB) to more custom- here, and many that do will inflate their op, opportunities such as this will only sharing, file sharing between companies ers, which will speed up connections capabilities beyond what they are actually increase. A 82 — The Review 2014 / 2 Kurdistan Region of Iraq — 83 ICT ICT

Local Knowledge, Local Applications

IIG: As an independent software devel- familiarity, they must work with a local including Document Management GJI: We currently have a major project Awrosoft oper, how does Awrosoft position itself company. From the initial marketing System, Correspondence System, Archive with Newroz Telecom's ADSL system. Awrosoft was established in 2006. It is one of the first ICT companies in this market? and implementation to support for end System, HR, Payroll, Time & Attendance, Based on this, we are hoping to pro- to be established in the Kurdistan GJI: The reason that we decided to begin users, foreign companies require local Accounting and business processes. The vide more telecom solutions next year. Region. The company creates business developing software by ourselves is the knowledge that only local companies challenge that we have had with the Additionally, we are working in collabo- software solutions for medium & large customization costs. Secondly, the com- possess. Awrosoft works with many for- KRG in the past is largely that the ways ration with other companies to improve size enterprises across manufacturing, plexity of existing software for the end eign companies, and is in partnership in which they were working with private aspects of the Kurdistan's financial sector. service and commercial industries. users in Kurdistan creates challenges. For with Oracle, Microsoft, and Kaspersky companies was not made clear. This has We are currently working on developing Awrosoft provides ICT services for customization, especially because features for software. For hardware, we partner improved drastically under Hiwa Afandi, new e-payments solutions. Next year, we companies in the Kurdistan Region. Its are not in Kurdish, when companies want with HP, Dell and Cisco. However, while the current KRG Director of IT; he has hope to have a credit and e-payments sys- services cover custom-made IT solutions options that do not exist in, for example, we get some support from our foreign truly spearheaded joint ventures with tem up and running. We believe that this for the public sectors, advanced network engineering services and data Oracle's software, you cannot go to Oracle partners, we still develop all of our soft- local companies. Recent public-private is a prerequisite for electronic services in security, automation systems. to address this. For our software, however, ware in-house. IT projects that we have participated in Kurdistan much more broadly. As this is Godar J. Ibrahim —­ we can. This is very beneficial for compa- have been hugely successful, and power- a major project, we are working with a CEO, Awrosoft nies and for the KRG. Additionally, our IIG: Can you tell us about the training ful demonstrations of how the private and foreign company for additional support. support is in place, in Kurdistan. Finally, packages you carry out and which ICT public sectors can cooperate in a way that Security and stability are very important Godar J. Ibrahim speaks to IIG many people, including both the govern- skills you find are in most demand? creates very successful outcomes. in the financial sector’s ICT systems, and regarding the current opportunities ment and private sector, are very happy GJI: We decided to open our IT training the technology is complex. As such, there and challenges facing Kurdistan’s to see software in Kurdish language. It is center initially because awareness of the IIG: What are Awrosoft's key public sec- is a lot of space for foreign expertise to ICT sector, the huge potential in very new to many people, so the reaction importance of ICT literacy among the tor projects or initiatives for 2014-2015? develop banking ICT infrastructure in several ICT-related fields, and the is very positive. government and society is still relatively GJI: Currently, we are working on an IT Kurdistan. potentially revolutionary shifts that low. We began offering general training project with the KRG to create a KRG e-government and e-services could IIG: How do you see the growth of the courses early on, and we are now working Employees ID system. This will be a IIG: What major new steps could be make in Kurdistan’s government, ICT sector in Kurdistan? on setting up some events. We have two major milestone in the path to e-govern- taken to bring ICT in Kurdistan to the economy, and society. GJI: The penetration rates for mobile broad challenges. First, people tend not to ment. Based on this, major new services next level? phones in Kurdistan is quickly clos- be well educated in IT. People need basic will be developed in HR, eHealth, securi- GJI: A dream for me personally, and a ing in on 100%, and internet is around skills—how to use Windows, for example. ty, and others. So, many of our projects for vision for the company overall, is to estab- 10%, but it is growing very quickly—it For both government and the broader the coming year will be based on our ID lish a Science and Technology Park (STP) should reach 50% by end of 2015. We are population, there is a major gap in basic system. Secondly, we have implemented in Kurdistan. After looking at how ICT Recent public-private expecting that the market for software skills, which presents opportunities for a document management system, which systems in developed countries operate, “ and ICT in the future will be very high. companies willing to invest in training is very central to the automation of the it has become clear that developed coun- IT projects that we have Additionally, Kurdistan is a very young centers and ICT-focused education. KRG's internal processes. Once this is tries invest heavily in R&D. In Kurdistan, participated in have country; the median age is around 20. Second, we have established a training completed, the KRG will be able to pro- there are no active R&D centers, espe- We think that the next generation will center to teach clients how to use our own vide an increasing number of e-services cially in IT. We hope to establish an STP been hugely successful, About demand increased e-services and IT solu- software packages. While our software is to its citizens. Related to this, we have where several science and technology-in- and powerful Godar is the founder of Awrosoft tions much more than the previous gen- not very complicated, people still require two recent success stories in this regard, clined sectors and companies can work ICT solutions. He has over 10 years eration. We believe that e-services will be some training to use it well. the EIA and the Ministry of Planning, together to build and develop new ideas. demonstrations of of working experience in different a major source of growth. This is why we which will serve as a model for future I have already written a business plan to how the private and Telecom, IT and computing sectors. believe in Core Banking and e-Payment IIG: In what ways does Awrosoft work projects in other ministries. We provide start one, focusing first on the IT sector, Godar worked in Korek Telecom as solutions, and e-services in general. with the KRG to develop public sector these ministries fully integrated packages and applying the system to other scien- public sectors can Data Service Director and Technical projects? that streamline everything from HR to tific fields. This could be an opportuni- Board Member, and in 7Netlayers cooperate in a way that (Wego) as Technical Manager and IIG: What challenges do you see in the GJI: Our vision is to work on digitizing security. Within e-government, two new ty for foreign investors as well, to come General Manager. He is the designer IT sector for foreign companies? Kurdistan. Central to this is the develop- major initiatives that we are working on and invest in such a complex. While creates very successful and developer of first Trilingual GJI: The challenges here are largely relat- ment of smart cities and e-government. are e-health and e-education. it would be a long-term investment, it outcomes. (English-Kurdish-Arabic) Dictionary ed to bureaucracy. One of the main chal- We have prepared a technical team to could be very profitable over the long (AwroDic) in Kurdistan. He teaches at lenge that I find when foreign companies directly address e-government, and have IIG: What private sector initiatives to term, as R&D begins to churn out new the University of Salahaddin. come here is that because of not having developed some integrated solutions, you have in the pipeline? innovations. A 84 — The Review 2014 / 2 ” Kurdistan Region of Iraq — 85 AGRICULTURE & WATER

Ideal Setting for Farming The unique topography of the Kurdistan Region makes it ideally suit- ed to the development of a prominent agriculture industry. The gentle hills and rolling plains are ideally appro- priate for the cultivation of wheat and barley (the two primary grains con- THE REVIEW — AGRICULTURE & WATER cerned by the Region’s population). Abundant water sources have allowed for the growth of vegetable and fruit PLANTING THE SEEDS production, although not yet on a massive scale. Livestock farming rep- While there have been significant water resources dwindle. Despite resents yet another major opportunity developments in terms of the regu- these obstacles, local production of for the Region’s burgeoning agriculture lation and infrastructure relating to domestic agriculture products con- industry, as meat remains the most crit- the water resources of the Kurdistan tinues to increase, and new treatment ical element of any Kurdish menu. Region, the same can not fully be said and processing facilities will help to for the agriculture sector. Indeed, modernize the Region’s water sup- continued regional instability has neg- ply system. It is expected that these Infrastructure and atively impacted the agriculture indus- efforts will in turn go a long way Knowledge Lacking try of the Kurdistan Region. Conflicts towards reducing the wasteful usage in Syria and greater Iraq have limited practices that have existed for so long While the transportation infrastruc- export opportunities, thereby reduc- within Kurdistan. The political stale- ture of the Kurdistan Region has ing the appeal for new entrants into mate that took place over the first half developed by leaps and bounds, it this high-potential sector. These issues of 2014 compounded many of these is still ineffective in helping connect have also slowed the necessary pro- issues, as there was subsequently growers in remote rural areas with cess of diversifying source locations only limited ministerial oversight for the urban centers that require their for agricultural imports. Despite pos- these critical areas. However, a new produce. Local farmers complain that itive advances, the water resources Minister of Agriculture (who took shipping options are, at best, ineffec- of the Kurdistan Region still remain office in late June) and a re-dedica- tive and, at worst, non-existent. The in a precarious position. As the coun- tion to the twin policies of conserva- process of carrying products to mar- tries surrounding the Region look to tion and local production will no doubt ket can therefore be time consuming shore up their own domestic water help bring these vital industries back and deleterious to the quality and supplies, the Kurdistan Region could to a level commensurate with their condition of the items. Similarly, a potentially see its generally plentiful historical significance. lack of storage facilities (specifically

86 — The Review 2014 / 2 Kurdistan Region of Iraq — 87 A & W AGRICULTURE & WATER

According to the Board of Investment, a total of 25 agriculture Impact of Governmental Value of Meat Industry projects (3.61% of all projects) have now been licensed $704 Million Transition Continued debate over political pow- Although demand for red meat con- er and ministerial appointments last- tinues to increase, the available local Agriculture production ed until June, and allowed for only supply does not. As a result, the Illegal had increased in key Investment limited government involvement Transboundary Animal Trade (ITAT) areas, ranging from a in the promotion, regulation, and has flourished. Instability in surround- 33% improvement in facilitation of the agriculture indus- ing countries has allowed for an influx tomatoes (136,054 cold storage units) provides little try in 2014. The Islamic League of of animals from as far away as India tons) to a 454% increase incentive for farms in the Region to Kurdistan (Komal) gained six seats in and Pakistan; this reliance on cheap in okra (34,327 tons). expand their output capacities. With the Kurdistan Parliament in the 2013 and illegally imported livestock has a limited growing season and rapidly elections, and was also given control hindered efforts to increase local red changing weather patterns, farmers of the Ministry of Agriculture and meat production. In addition, with can ill-afford to miscalculate projected Water Resources (MOAWR). On June no way to inspect or regulate these yields. As a result, there is little to no 18th, the eighth cabinet of the KRG animals, there is also potential risk in impetus for local growers to expand was sworn into office, and Abdulstar terms of human health. Indeed, with their operations, let alone consider Investment and Majeed (the appointee from Komal) illegal markets still in operation and shifting to the factory-farm systems Employment was named Minister of Agriculture no centralized approach in place to that would better promote self-suffi- and Water Resources. Minister combat cheaply available imported ciency. Instead, Kurdish farmers tend A 2014 study conducted by Rand Majeed will be tasked with modern- meat, risks of disease or contami- to rely on historical practices and sit- Corporation found that agriculture izing the MOAWR, improving sector nation remain constant. Increased uation-specific knowledge rather continues to account for only a small $430.4 infrastructure (namely in regards government oversight is necessary than more modern techniques, and percentage (6.63%) of employment to factory farming), and developing to clamp down on this issue; in addi- are content to remain small-scale in throughout the Kurdistan Region; this new long-term plans to promote food tion, experts predict that increased terms of overall operations. represents a 0.5% decrease from the million security and overall self-sufficiency. government subsidies to those indi- previous year. Employment rates in viduals or groups targeting domestic the agriculture sector were higher in In terms of investment capital animal farming could help promote Cheap Imports Slemani (7.7%) than in Duhok (7.1%) by governorate, Duhok leads the growth of a critical local industry. or Erbil (4.9%). Despite being identi- the way, increasing its share to Markets in the major cities of the fied as a priority development area, $430.4 million (about 61.4% of all Kurdistan Region are packed with the agriculture sector in the Kurdistan agriculture investment) fresh produce, delivered daily to Region has seen limited investment Erbil ensure it is of top quality. The only in the past year. Board of Investment Opportunities and problem with this fact is that a sig- (BOI) statistics indicate that a total of $263.1 million Challenges nificant majority of these items are 25 agriculture projects (3.61% of all imported from Iran, Turkey, and oth- projects) have now been licensed for Slemani Wheat and barley remain the two production totals including 15,204 er countries in the surrounding region. a total of $704 million (1.79% of all biggest crops in the Kurdistan tons of eggplant, 12,626 tons of The KRG has made limited steps to investment). Both of these precent- $10.6 million Region, and combined constitute a onion, 88,063 tons of watermelons, implement a tariff system that would ages represent decreases from the significant percentage of all agricul- and 47,610 tons of cucumber. Meat favor local production, but the wide- corresponding figures IIG reported tural production. However, there production (specifically red meat) has spread availability of cheap, foreign in its 2013 report. Agriculture proj- have been dramatic improvements also witnessed growth, as local agri- foodstuffs further inhibits the devel- ects in the continue in other target areas. A study con- culture companies have begun pur- opment of the Kurdish agricultural to receive the largest amount of allo- ducted by the Kurdistan Region suing mother herd agreements with system. In addition, with the influx cated land (1,023 acres) compared to Agriculture continues to account Statistics Office (KRSO) for 2013 their European counterparts. Fruit of foreign products, dietary patterns Slemani (24.5 acres) and Duhok (217 for only a small percentage (6.63%) found that agriculture production production remains a primary area and culinary practices have changed acres). However, in terms of invest- of employment throughout the had increased in key areas, rang- of need, with statistics indicating that as items that were previously unavail- ment capital by governorate, Duhok Kurdistan Region. ing from a 33% improvement in the production and infrastructure Final production totals able have now become ubiquitous. leads the way, increasing its share tomatoes (136,054 tons) to a 454% costs associated with fruit cultivation including 15,204 tons of Kurdish farmers, who have a long, to $430.4 million (about 61.4% of all Employment rates in agriculture increase in okra (34,327 tons). Foods (specifically those that necessitate eggplant, 12,626 tons established history of growing select agriculture investment). Erbil ($263.1 Slemani (7.7%) that make up a significant portion of orchard development) serving as a of onion, 88,063 tons of crops, are not well-suited to cater to million) and Slemani ($10.6 million) Duhok (7.1%) diets of the people of the Kurdistan deterrent to small-scale local expan- watermelons, and 47,610 this rapidly evolving market. constituted smaller percentages. Erbil (4.9%) Region remained strong, with final sion into the sector. tons of cucumber.

88 — The Review 2014 / 2 Kurdistan Region of Iraq — 89 A & W AGRICULTURE & WATER Existing Water Resources Declining Availability water resources data The Kurdistan Region is home to plen- Changing environmental conditions region's needs exıstıng capacıty medıum term target (2020) tiful water resources, most notably its throughout the Middle East have had “The KRG Ministry of 3 2,256M M3 15,500M M3 numerous river systems. Originating an increasingly measurable impact on 10,000 MILLION M in southern Turkey, the the Kurdistan Region. Also, the lack of Planning estimates agriculture 22% 72% River serves as a major water source development of water resources has for the Erbil and Duhok Governorates, caused significant damage to the entire that individual while the similarly named Lesser Zab agricultural sector, especially during 78+22M 28+72M River originates within the Kurdistan dry periods. Recent reports which indi- water usage within 3 1000M M3 1300M M3 Region. The Sirwan and Alwan Rivers cated an expected increase in drought 1000 MILLION M (from surface & (for an pass through the autonomous region conditions over the next 30 years the Kurdistan Region underground estimated domestıc water supply 100% sources) 100% population of from their respective origin points in caused Iranian officials to begin mul- 6M inhabitants) Iran, while the River travers- tiple dam projects, with an eye towards is approximately es the Slemani Governorate, and redirecting bodies of water within the 100+M 100+M then runs along the southwestern country towards areas that are most in four times higher 3 200M M3 300M M3 border of the Erbil Governorate need of water resources. These proj- 200 MILLION M (from surface & (according for a significant distance. The KRG ects could potentially sever strategi- than the World underground to industrial Industrial Use 100% sources) 100% development also operates dams at the Region’s cally significant waterways that flow forecast) three major lakes: Mosul, Dukan, from Iran into Turkey. Although dam Bank standard.” and . In addition, KRG projects in southern Turkey have had 100+M 100+M sources note that Kurdistan is home less immediate impacts on Kurdish 3 20M M3 25M M3 to 5,174 natural springs (the majori- water resources, no formal terms 20 MILLION M ty of which are located in the Duhok have been agreed that would ensure livestock 100% 100% Governorate). As a result of these and that such bodies of water remain other factors, studies have indicated open and available. A United Nations 100+M 100+M that approximately 50% of the water Development Program (UNDP) study in the Kurdistan Region exists domes- noted that these factors have contrib- tically (in contrast to an estimated 8% uted to a 20% decrease in available Infrastructure Needed in the rest of Iraq). water per citizen. Erratic weather to Fully Address Water The Kurdistan Region at present is patterns have also forced citizens of dramatically underserved in terms of Overuse Fueling Kurdistan to become increasingly Concerns facilities for water processing, treat- Depletion reliant on the groundwater reservoirs To counteract certain issues relat- ment, and recycling. To address this for their water needs. The Ministry of ing to the excessive consumption dilemma, the KRG authorized the The sheer number of water wells cur- Agriculture and Water estimates that of water, the General Directorate construction of wastewater treatment rently in use (either for personal or there are approximately 20,000 autho- of Water and Sewerage (operating facilities in multiple locales through- commercial use) has helped provide a rized wells in use, though it is likely that under the umbrella of the Ministry of out the Region. Construction at the greater portion of the population with around 18,000 unauthorized or illegal Municipality and Tourism) instituted $113 million Goptapa Chamchamel readily available water. However, tax- wells operate on a regular basis. There a strategic plan relating to both the Water Project, located in the Slemani es on water are levied based on land are over 6,000 wells (legal and illegal) increase of available potable water governorate, is already underway, as is Studies have indicated size rather than on consumption. As a for agricultural purposes, and over 500 and the treatment of the Region’s work at the $96 million Amedy Water result, the KRG Ministry of Planning wells for industrial purposes. wastewater. The plan itself calls for Project (situated in the Duhok gover- that approximately estimates that individual water usage a multi-phase approach to address a norate). The primary aims of these within the Kurdistan Region is approx- wide variety of issues that are pres- facilities, which both have targeted 50% of the water in imately four times higher than the reservoır data 59% ently placing a strain on Kurdistan’ completion dates of 2015, will be to World Bank standard. To combat this limited resources. These solutions supply their surrounding environs the Kurdistan Region issue, the KRG has prioritized a rapid 10,000 MILLION M3 include the long-promoted installa- with potable water on a more mod- expansion of its number of dams. The tion of water meters to increase usage ern, consistent scale. Similar projects exists domestically construction of the three major dams (exıstıng capacıty) fees, the creation of new laws to pro- (including the $960 million Erbil Waste is expected to be completed by 2018. mote more binding regulations, estab- Water Treatment Plant and Network) (in contrast to an With an expanded dam network, the 16,963 MILLION M3 By 2020, capacity is planned lishing long-term water development are in various stages of planning and government could begin shifting con- 41+59M facilities, and (perhaps most notably) are expected help modernize, supply, estimated 8% in the sumption away from its dwindling (necessary capacıty) to reach 100% COVERAGE the creation of multiple water treat- and regulate the Region’s expanding groundwater resources. ment plants. urban population centers. rest of Iraq).

90 — The Review 2014 / 2 Kurdistan Region of Iraq — 91 A & W AGRICULTURE & WATER

Future water ProjectS current water ProjectS Project COST (ESTımated) Area & Capacity & Contract Type Construction Period Project COST / CONTRACTORs Area & Capacity & Contract Type Construction Period Ifraz 4 $600 million Water Treatment Plant 2 years Slemani $108 million Water treatment plant 2 years Capacity: 25,000 cubic meters per hour Goptapa - Capacity: 6,8000 cubic meters per hour Contract Type: Design, Build, Operate Nokan – Subor Contract Type: Design, Build, Operate Area: Northern & Eastern parts of Erbil Chamchamal Area: and 22 sub- districts Slemani cıty Three Waste Water Treatment Plants $276 million Capacity: 300,000 cubic meters per day 2-3 years Contract Type: Design, Build, Operate DUHOK $96 million Water Treatment Plant 2 YEARS Area: Slemani AmedY Capacity: 2,400 cubic meters per hour Steer Group- Contract Type: Design, Build, Operate Human-Arison Area: Amedy District, Deraluk Sub-district, Erbil City Four Waste Water Treatment Plants Sheladze Sub-district and 15 villages $960 million Capacity: 210,000 cubic metre per day 8-10 years Treatment Contract Type: Design, Build, Operate Plant & Area: Erbil DUHOK $75 million Water Treatment Plant 2 YEARS Network Capacity: 3,000 cubic meters per hour Omrab-Evyol- Contract Type: Design, Build, Operate Hardam Area: and 17 villages Dokan 3 $300 million Water Treatment Plant 2 years Capacity: 10,000 cubic meters per hour ERBIL $80 million Water Treatment Plant 2 YEARS Contract Type: Design, Build, Operate Barzan Capacity: 1,200 cubic meters per hour Area: Slemani ARGE Contract Type: Design, Build, Operate Construction Area: 51 villages in Barzan $195 million Water Treatment Plant 2 years Capacity: 6,000 cubic meters per hour SLEMANI $20 million Water treatment plant 1 YEAR Contract Type: Design, Build, Operate Area: Darbandi Khan Capacity: 1,200 cubic meters per hour Khanaqin City and 204 Villages OHITAN Company Contract Type: Plant, Design, Build Area: Harir Water Treatment Plant $110 million Capacity: 3,000 cubic meters per hour 2 years Contract Type: Design, Build, Operate Erbil & Duhok $135 million Expanding the capacity of IFRAZ-3 water 2 YEARS Area: Harir City and 95 villages Renovation treatment plant from 6000m3/hr to STFA-CALYON- 10,000m3/hr, and changing the old water FERNAS networks in many quarters in both Erbil Kushaf- Water Treatment Plant and Duhok. $170 million Capacity: 2,800 cubic meters per hour 2 years Makhmoor Contract Type: Build, Operate Project Area: Makhmoor District, Gewer Sub-district, Debaga Sub-district and 52 villages Slemani & $193 million Halabja Water Treatment Plant 2 YEARS Renovation Capacity: 50,000 cubic meters per day SSangYang Changing the old water networks in many Barda Rasha Water Treatment Plant quarters in Slemani. $80 million Capacity: 2,000 cubic meters per hour 2 years Contract Type: Design, Build, Operate Area: Barda Rash City and 100 villages

Khabat Project Water Treatment Plant $80 million Capacity: 3,000 cubic meters per hour 2 years Contract Type: Design, Build, Operate Area: Town of Khabat and surrrounding villages

92 — The Review 2014 / 2 Kurdistan Region of Iraq — 93 L Life

Divan Erbil: A Home for the Business Traveler

IIG: How would you define the concept I-phones. Our internet connection is very of Divan Erbil? strong. We have built a brand new build- MK: Divan is known in Turkey as a good ing next to the hotel that will be rented out hotel brand. We at Divan Erbil are striv- as offices for international companies on a ing to be a five-star international busi- long-term basis. Office space being con- 1 ness hotel. Business means catering to nected to the hotel has a lot of advantages. what the business traveler wants. We have Here, you can do lunch, have coffee, invite meeting rooms, 2 ballrooms, break-out guests, and even stay in the hotel. rooms, several bars, choices of restau- rants, fitness center, indoor pool and as IIG: What is your staffing policy? of next summer a large outdoor pool area MK: We tell people that this is a nice, and big guest rooms. We have an average safe place to work with more freedom of 40 square meters per room, and 30% of compared to other destinations that have 5 our rooms are suites, some have kitchens more restrictions. We are paying high- Martin Kolb —­ so they are like serviced apartments. I er salaries than in the Gulf to overcome General Manager, Divan Hotel Erbil define our hotel as very much dedicated the perceptions that come with being in and geared to the international business Iraq. I have been speaking to the Ministry Martin Kolb discusses a flurry of traveler, with a twist on Turkish hospi- of Education about introducing a hotel new projects at Divan Erbil. tality, Kurdish mentality, and European training program for local people. There 2 hotel management background. would be a one-year program and a two- year program. After training for one IIG: What projects do you have planned month in every department and get- in the short term? ting to understand the concept behind MK: We recently opened a new spa with the hotel in the one-year program, there a large fitness center, a Turkish bath, a would be a guaranteed job with us as a steam bath, a sauna, and a 20-meters long normal employee – a waiter, receptionist, indoor swimming pool. It is indeed very or a housekeeper. In the two-year pro- 6 luxurious. We have opened a ballroom for gram, they would be trained two or three 900 people and added four more meet- months in every department, in addi- ing rooms, for a total of twelve meeting tion to training in accounting and sales. rooms in brand new conditions. We also After the successful completion of those have a new steak house. We are going two years, we would guarantee them a to redo our 21st floor Asian restaurant supervisor job. 3 (sushi and noodles) with terraces over- looking the city. There will also be a bar IIG: What challenges do you see? with a huge terrace on one side of the MK: Now the challenge is definitely what 23rd floor, and we will have Erbil’s high- is happening in Iraq. We are running at est shisha lounge on the other side. It will around 50% occupancy during the week About be enclosed by glass in winter with heat- instead of 90%. The other challenge is Martin Kolb has over 20 years of ers. We will also be building an outdoor training staff. We have local staff applying, experience in international travel, swimming pool, which we are lacking at but they are not trained in the hotel busi- 7 tourism, and hospitality industry. Prior the moment. ness, so they apply to become a driver, a to joining Divan Erbil, Kolb held several bellboy, or to work in security. These are management positions in R Hotels, 1 Lobby Kempinski, Radisson, Golden Tulip, IIG: Are you planning to build a new all jobs where it is not necessary for you 2 Ballroom Holiday Inn, Sheraton, Wyndham, business center? to have hotel experience. Some applicants 3 Spa & Indoor Swimming Pool Coral Beach Resort, Kuoni, and MK: We have two business centers. Trends cannot speak English, which is a big issue. 4 Exterior United Airlines. He studied Business are moving away from business centers, All of these are minor issues compared 5 Q 21 Bar & Restaurant Administration, and speaks three though, because everyone has their to the challenges that the rest of Iraq is 4 6 Seasons Restaurant languages. own business center¬ in their laptops or now facing. A 7 Chopin Bar 94 — The Review 2014 / 2 Kurdistan Region of Iraq — 95 L Life

FOCUS: LEVELINI Interior Design Redefined in Kurdistan to change that,” says Al-Jebouri. Looking ince March 2013, Levelini has been Levelini’s clients benefit from a range of to move the Kurdish market away from working to redefine standards for tools the company offers to help them a singular focus on price, Al-Jebouri is interior design in the growing visualize interior spaces that meet their quick to point out that Levelini does not SKurdish market. Its Erbil furniture show- design goals, budget, and needs. These consider itself a luxury product or service. room, billed as the largest of its kind for include AutoCAD and 3D Max rendering, Rather, the company aims to cater to all Italian furniture in the Kurdistan Region, mood boards, and samples that are on segments of the market and to challenge offers local customers a taste of the com- hand in the Levelini showroom. Interior existing market participants on a value pany’s eclectic mix of styles sourced from designers trained in Europe assist this pro- basis. “We feel that Levelini is a trailblazer European manufacturers. With an eye cess. Besides its contract furnishing and in the fact that it is providing much higher to the opportunity provided by surg- in-store operations, Levelini also offers full quality furniture for similar prices to the ing office and residential development furnishing packages for two, three, and rest of the market.” For Levelini, quality is in Kurdistan, as well as a dearth of high four-bedroom apartments that start near expressed as much in the sophistication quality furniture in the local market, $14,000 for a two-bedroom apartment. of its staff as it is in the durability of the Levelini’s founder, Mario Al-Jebouri, Levelini’s business philosophy revolves furniture it markets. “We invest in our strives to differentiate the company from around a multi-faceted approach to qual- staff by sending them to Italy for training, emphasis on smooth logistics, maintain- to reach a larger audience of developers its competitors in the Kurdish market ity. Perhaps most importantly, the goods where they understand how the products ing a large inventory of furniture in its and consumers in Kurdistan, buoyed by with a commitment to service and qual- Levelini markets are meant to be durable they are selling are designed, the history Erbil showroom to ensure short waiting what he sees as favorable changes in con- ity. Its holistic approach to interior design and sophisticated in their design, whether of the products, the history of the compa- times for the fulfillment of orders and sumer preferences. “You are seeing more is meant to appeal to all price levels with they are modern or classic in style. For ny manufacturing the products, and the providing both transportation and on-site and more sophistication creeping into furniture for the home, office, leisure, and now, redefining customer expectations way that fashion trends are produced in assembly for customers. the market and people becoming more hospitality sectors. away from a strict focus on price and the industry on a global scale.” The com- Levelini’s plans do not stop with Erbil. aware of different styles and designs and The company’s operations comprise overcoming customers’ association of pany mixes local and international staff It already has a presence in the rest of the fact that they want quality.” As per- both retail and contract furnishing divi- Italian brand names with steep price tags in hopes of achieving a synergy between Kurdistan and in southern Iraq through sonal incomes grow with the expand- sions for individual or corporate clients. may be a challenge for Levelini. “I think local knowledge and foreign expertise, its individual and corporate contract fur- ing economy of the Kurdistan Region, Customers have included oil and gas com- in the beginning, like any emerging mar- while espousing a can-do customer ser- nishing business. The firm is on track to Levelini hopes to provide products that panies, hotels, restaurants, and a 700-unit ket, because of the lack of knowledge and vice attitude. “Whatever the client needs, build upon this footprint by opening a will appeal to customers with increasing residential development, and the firm understanding, people have been able to Where wants, or requires, we will always be able new showroom in Slemani in 2015 and means and changing tastes. is currently engaged in interior design opportunistically sell low quality products Gallery Mall, Gulan Street, Erbil, to satisfy those requirements and needs.” is weighing expansion to Duhok soon A work for a new shopping mall in Erbil. at high prices. We at Levelini have started Kurdistan, www.levelini.com To meet client needs, Levelini puts great thereafter. The company’s founder is eager

96 — The Review 2014 / 2 Kurdistan Region of Iraq — 97 Erbil Kurdistan review AD Aug 2013.pdf 1 12/10/2013 9:14:03 AM

Inspire your guests and meet at Erbil Rotana!

Conveniently located 10 minutes away from Erbil international Airport, the main international fairground and business center. The hotel is adjacent to the English and Italian villages and opposite of the beautiful park Sami Abd Al Rahman; one of the largest parks in Iraq.

Erbil Rotana is an ideal venue to serve your business needs, meetings and events. The hotel provides state-of-the-art conference and seminar requirements spread over 2 floors. The banquet area includes 7 fully equipped and flexible meeting rooms offering daylight with the latest audio-visual equipments addressing the needs of business conferences, meetings, wedding Iraq’s Leading Hotel parties or gala dinners. A professional catering & events Erbil Rotana was bestowed with the prestigious honour of being IraqÕs Leading Hotel team is available all the time to make your event a in 2011, 2012 & 2013, consecutively by the World Travel Awards. This five star hotel success. offers 201 well-appointed rooms and suites, 7 fully equipped meeting & events Business travelers can enjoy our wide variety of facilities venues, 5 restaurants that suit all tastes, a fitness club, spa and pool bar & terrace. ranging from 5 restaurants to our enchanting Zen the spa by Rotana or Bodylines Leisure & Fitness Club. To book your stay at the best available rates, visit rotana.com or To learn more about Erbil Rotana ongoing call us +964(0)662105555. promotions, please visit rotanatimes.com.

Gulan Street, Erbil, Kurdistan, Iraq. T: +964 (0)66 210 55 55, F: +964 (0)66 210 55 56, [email protected]