The economic activity in the Sulaymaniyah is considered good and features a relatively high participation rate of women compared to other provinces of the Region. The Sulaymaniyah is also characterized by high proportion of workers in the private sector, mainly concentrated in the services and industrial sectors, compared to other provinces of the Region, The Sulaymaniyah is the largest industrial city in Iraq, representing 30% of the total Iraqi industries. A number of unique factories and plants, in terms of production and size at the country level, such as cement, iron, steel, and cans manufacturing factories and plants, have been established in the Sulaymaniyah through investors, Since 2004, the Sulaymaniyah International Fair has been annually held with the participation of more than 160 local and foreign companies. This event has a direct impact on the economic growth in the Province making it a commercial hub in the region due to security and proximity to the Islamic Republic of Iran, as well as the facilities provided by the Provincial Government to investors.
Strategic Location and Topography:
The geographical location of the Sulaymaniyah Province is strategic in terms of the possibility of trade between the Province and the rest of Iraq’s provinces on the one hand, and between the Region and the Islamic Republic of Iran on the other hand. The estimated amount of trade exchange with Iran through the border crossings in the Sulaymaniyah is USD 4 billion a year.
Unemployment and Workforce
The participation of the Sulaymaniyah in the proportion of the workforce in the Region is the highest for both sexes, where it amounted in 2012 to 41.9%, of which 16.1% are females, while it was 36.7% in Erbil, of which 11.2% are females and 34.2% in Dohuk, of which 12.3% are females.
During 2013, the proportion of the economically active (15 years and above) in the Sulaymaniyah rose to reach (47.6%), as the year the unemployment rate dropped for both sexes (15 years and above) from 8.6% in 2012 to 6.6% in 2013.
Presentation by the Governor of Sulaymaniyah, Dr. Aso Fereydoon, in the Iraqi provincial meeting on 6/9/2015
Plan Steering Committee in coordination with technical directorates
Socio- Economic Indicators in KRG – Socio-Economic Monitoring System, Ministry of Planning.
Kurdistan Regional Statistics Office, Kurdistan Region, Iraq, Dec 2012
Sulaymaniyah Province - Statistical Indicators for 2013, Sulaymaniyah Statistical Office
Tourism is one of the most important economic tributaries in the Sulaymaniyah. There is an international airport and a number of foreign and Arab investments in the Sulaymaniyah, which include a number of foreign workers and management personnel residing in the Province. The Province is also characterized by its civil and cultural openness, making it a popular destination for internal tourism, specifically from the Iraqi provinces outside the Region.
In 2013, the number of flight trips arriving to the Sulaymaniyah International Airport amounted to 3.214 flights, in addition to 188.864 arrivals and 18.448 departures.
The Sulaymaniyah International Airport directly connects the Kurdistan Region to 12 international destinations, as well as Baghdad, Najaf and Basra. In average, it records 445flights a week and the number of passengers has increased by 18% per year between (2006-2012).
As for land border crossings, there are five border crossings with neighboring countries in the Region; namely, Haj Omran border crossing between Erbil and Iran, Bashmakh border crossing between Sulaymaniyah and Iran, Parwezkhan border crossing between Garmian Administration and Iran, Ibrahim Khalil border crossing between Dohuk and Turkey, and Fishkhabour border crossing between Dohuk and Syria. Moreover, in addition to the Derbandikhan lake, the Sulaymaniyah hosts the largest artificial lake in the Region, Dokan Lake, which was formed as a result of building the Dokan dam. The mountains and lakes, notably Dokan Lake, form tourist attractions with large development and tourism investment potentials in the future. However, the concentration of large numbers of displaced persons around Dokan Lake in the Sulaymaniyah constitutes a major threat that may lead the Region to lose the tourist investment potential of the Lake in the future, unless immediate action is taken to address this issue.
As for tourist facilities and installations, there are 236 hotels in the Sulaymaniyah, based on 2013 figures. However, the facilities and installations suffer from clear gaps and differences in terms of service quality and qualified workers. In addition, the private sector, including tourism, suffers from complex procedures targeting foreigners’ recruitment and expensive cost of living, particularly in relation to land and building rents and purchase prices.
As in the Kurdistan Region, a number of tourist facilities in the Sulaymaniyah follow the world classification “star certification” of the facility”, while many other facilities adopt a local classification that is not supported globally. This requires more supervision and unification of classification methodology.
The optimum investment of natural resources is one of the tributaries of economic development, either directly through the investment of resources as production inputs or indirectly through the sustainable management of resources and to protect them from depletion. The Sulaymaniyah is characterized by the availability of water and fertile land, in addition to oil which is the primary resource for national income in the Kurdistan Region and Iraq. The striving to diversify economic resources based on the investment of potentials and resources available in the Province is the slogan of the next phase. With regard to other natural resources, there is currently no survey showing the quality and distribution of available amounts of natural resources in the Province, topsoil and subsoil alike, to be able to identify potential areas for investment.
Necessary Infrastructure for the Development of Economy and Attraction of Investment
Banking and financial services are among the most important requirements for investment and attraction of capital. Also, the provision of a number of investment projects with economic feasibility and development priority for the Province, as well as the availability of facilities and incentives for investors and capital, are key aspects of investment development and attraction of capital. At present, the banking and financial sector is very weak and lacks the diversity of services, particularly those required for trade and investment on the one hand. On the other hand, investors suffer from the lack of trust between citizens and banks, as the majority of clients prefer to collect their money in cash rather than by checks and bank bonds. Furthermore, the Sulaymaniyah in particular suffers from duplication in the case of the Central Bank, since there is a central bank in the Sulaymaniyah and another in Erbil, the Region’s Capital. Hence, this complicates matters further for both the trader and investor. Finally, the limited diversity and number of available private banks and electronic banking services in the Province constitutes an additional obstacle as well.
Political and Security Stability and Investor Confidence
During the last two years, the Province has experienced security and political turmoil, which negatively affected investment in the Region and reversed inflows outwards. Due to this situation, investments in all the provinces, including the Sulaymaniyah, were affected too. Furthermore, the absence of political consensus between the Region and Baghdad on the annual budget and in Baghdad itself on the annual budget 2014, which ended in rejecting the budget for all of Iraq, constituted an important factor in the economic deterioration of the Region. In addition, the consecutive differing views and divergence division of opinions between Baghdad and the Region about oil and the mechanism to deal with its revenues remains a major component of making the Region a rejecter environment for investment. Moreover, the year 2014 has witnessed a comprehensive security instability that affected the Region as a whole, and its provinces to varying degrees, as a result of the (ISIS) attacks in all of Iraq. Thus, all the conditions and factors mentioned above place a greater burden on the Regional and Provincial Governments to recover the investment movement and complete the economic growth path.
Durability of the Methodology of Dealing with Investors and Legal Procedures Required for Investment
During the previous phase, specifically from the 2007 to 2013, the Region and its provinces witnessed gradual increase in foreign investment movement as a result of the security stability and huge efforts to introduce the Region and attract investment to support growth and development, significantly in infrastructure. During the same period, the laws relevant to investment, especially foreign investment, witnessed a kind of change, followed by change in procedures also, in order to facilitate investment. The rapid change of the laws or procedures related to investors has led in most cases to a stage of confusion and disruption of trust between investors and the Government. Thus, more attention should be paid during the next phase to the volume and velocity of changes to be implemented in the field of investment and economic development, in addition to the involvement of investors and the private sector in the process of development and update of relevant laws or legislation and their associated procedures. Both investors and public sector employees describe the procedures associated with investment as too long, complex, and sometimes confusing. Accordingly, this aspect has to be paid more attention during the next phase.
Recruitment of Qualified Local Manpower in Foreign Investments
Local talents can be described currently as weak and unsuitable to the requirements of foreign investors. On the one hand, the language barrier is a fundamental obstacle facing the possibility of hiring local staff, as Kurdish and English are considered key languages, but most young people lack English or Arabic proficiency. On the other hand, there is apparent weakness in the required expertise and such weakness varies from one sector to another based on the requirements. Moreover, the culture of professionalism and productivity is also weak, mainly commitment to time and appointments.
No studies on the needs of economic sectors for competencies are available to guide the design and implementation of training courses for the local workforce. Neither there is a comprehensive study on the potential, aspirations, and outlook of the local workforce for careers and other various professions, in order to be the basis for determining the most important causes of the gap between the local workforce requirements and needs of the economy.
Workforce Preference of the Public Sector Over Private Sector
It is noted that the local workforce in the Province, as well as in the Region as a whole, prefer to work in government jobs, mainly due to job security and indirect privileges. It is also noted that there is a difference in monthly income between the public sector and private sector for the benefit of the latter, but that is not enough to reverse the trend from the public sector to the private sector for job seekers. At a time public sector institutions are experiencing overstaffing and variation in terms of numbers and competencies of staff, private sector institutions suffer from the high cost of its foreign employees. It is important to exert real and persistent efforts to make competent local cadres available for the private sector before heading later to legislative and legal amendments to raise job security in the private sector.
Optimal use of natural resources in accordance with high quality environmental standards to serve the economic sectors in the field of tourism, agriculture, industry and trade exchange, with the participation of the private sector.