Num­ber of for­eign com­pa­nies de­clin­ing in Sulaimaniya

The role of some domestic com­pa­nies deemed “in­ef­fec­tive”.

The Kurdish Globe - - NATIONAL - By Salih Wal­ad­bagi

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. ‘In­surance com­pa­nies’ 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.

/ A view of a hous­ing project lo­cated on the cap­i­tal city of Er­bil, Iraqi Kur­dis­tan.

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