The Kurdish Globe | By Salih Waladbagi | Erbil
The number of foreign companies, working in different specialties, has dramatically decreased in the second largest Kurdish city of Sulaimaniya, according to officials.
Soran Ahmed, Sulaimaniya's head of the Directorate of Statistics, recently stated that only 46 foreign companies had been registered in the city in 2011. He further revealed that this number fell to 33 foreign companies in 2012.
Ahmed added that the directorate has been trying hard to identify the reasons for the decrease.
'Number of foreign companies'
Around 3,700 domestic companies were registered up to now in the province of Sulaimaniya, according to the directorate.
"Some 551 foreign companies have been thus far registered. Some 300 Iraqi companies have also established their branches in the city," Ahmed told Kurdish media agencies.
The specialty of the vast majority of domestic companies has focused on general trading and in construction contracting.
However, in the past few years, domestic companies have also been operating in the fields of tourism, medical supplies, aviation services, cleaning as well as media services and advertisement.
He additionally noted that no company has been listed in the field of sports services.
Ahmed added that the role of domestic companies operating in the field of tourism has been appraised as very "ineffective". He described such kind of companies as "unable to make illustrious changes."
'Decreasing number of Iranian companies'
The number of Iranian companies, in the city of Sulaimaniya, is estimated at around 150, according to the directorate.
Out of this, around 35 companies are currently operating actively, and the rest are bankrupted.
"Around 200 Turkish companies have been only registered in the city, by the directorate," Ahmed said.
He stated that one of the key factors behind the decreasing number of foreign companies in the city is due to the fact that most of the leading and substantial business projects are taking place in the Kurdish capital city of Erbil.
A few months ago, the city of Sulaimaniya was recognized as "Kurdistan's capital of culture". In response to a question about whether the number of art companies has risen following the recognition, he affirmed that the number has thus far remained static.
'Lack of joint ventures (JV)'
Ahmed also warned on the lack of Joint Ventures (JV) in the Region in general and the city in particular.
"Absent of joint venture companies leads to the possibility of a fragile economy, and vice versa." He further added that the number of the JVs is not more than the number of "fingers on a hand".
One of the most significant implications of the existence of JVs is a strategic alliance between two or more individuals or entities. Improving the concept of bringing JVs into the Region will lead to an active stock market exchange. According to the Iraqi laws, only JVs can enter the stock exchange.
According to Ahmed, there is no stock exchange in the major provinces of the autonomous Kurdistan Region.
In the past, several JVs from the Iraqi capital of Baghdad endeavored to build a stock exchange in the Region.
The efforts, he said, were turned down by the Region's Council of Ministers and the Ministry of Trade.
He belived that the decision to turn down the efforts was an advantageous step at the time as the stock exchange should be a public institution not a private one.
"I do believe that a competent and proper stock exchange is necessary for the Region because the number of the JVs may increase in the future."
'Lack of relevant legislation'
There are several mixed companies (an alliance between the government and a private company) working in Baghdad.
Economic experts say that Kurdistan is need of such kind of mixed companies. However, the KRG does not even try to draft legislation to encourage such companies.
Ahmed noted that the existence of mixed companies is a vital issue, especially if the government plays the role of an observer as opposed to a partner.
A lack of insurance companies continuous to cause serious damages to the economy and hinders development. According to the director it is hardly a trouble-free task to establish an insurance company in Kurdistan.
"According to Iraqi laws, if any private company wants to establish an insurance corporation, it should start with a capital of 1 billion IQD. But according to the KRG Ministry of Finance's regulations, insurance corporations should have a capital equal to 25 billion IQD to start the business."
With the pulling out of the Iraqi forces from the Kurdistan Region and the establishment of the de facto autonomy in the early 1990s that was later followed by the Second Gulf War, the insurance sector, which was controlled by a state-owned insurance company, and all insurance activities in the region were effectively paralyzed.
Understanding and recognizing the implication of insurance services and the threats that its absence creates to the economy, the Kurdistan Regional Government (KRG), in cooperation with the private sector, is working to reactivate and revitalize the insurance sector.
Ahmed warned the KRG that the ministry's regulations hinder economic progression. He urged the KRG to amend the insurance law based on new international developments and in a way to adapt it to the on-ground-realities in Kurdistan.