While much of Kurdistan still lags behind in terms of modern infrastructure, there are visible indications of rapid development in Arbil, the capital city. Foreign investors are slowly beginning to distinguish between Kurdistan and Iraq. Image Credit: Layelle Saad/Gulf News

While Iraqi Kurdistan is reaping the benefits of massive oil reserves, estimated at 45 billion barrels, there has been a strategic push from its leaders to develop other sectors of the territory — specifically tourism, investment and infrastructure projects. While much of the country still lags behind in terms of modern infrastructure, there are visible indications of rapid development.

In Arbil, the capital of Kurdistan, with a population of 2 million, housing developments are sprouting everywhere from undeveloped lands, paved roads are modern with traffic lights and police providing organisation, and five star hotels are emerging. As foreign investors are slowly beginning to distinguish between Kurdistan and Iraq, they become more comfortable and at ease to invest in Iraq’s northern and more secure territory. Proof of this is the growing number of international flights opening up, the most recent of which was Emirates Airlines — making it the third city after Baghdad and Basra.

Kurdistan’s progress has not been an overnight venture but, in fact, began in 2006 after a government initiative put in place a comphrensive development plan to see the region through the next few decades with the goal of opening up its tourism industry and to model Arbil as a regional hub for investment, entertainment and business.

Speaking to Gulf News, Andrew Jones, commercial development advisor for the Arbil International Airport, says he envisions the airport to be an international and regional hub, modelled much after Dubai’s airport. Surely, with its location between Europe and Asia and its close proximity to Turkey, Iran and Syria, the potential for revenue is enormous. However, the main obstacle the Kurdish government faces is to dispel the fear factor surrounding Iraq and promote itself as a modern and safe territory amidst a turbulent region.

To be certain, Kurdistan has first and foremost invested in security, with multiple checkpoints, searches and scans at the airport. Five star hotels also have checkpoints for luggage at the entrance. Also, it was clear that police were heavily deployed, both in uniform and plainclothed, in Arbil and near tourist areas in the countryside. While seemingly over-the-top, the level of security could comfort developers who wish to join the current wave of investment.

Impact of war on tourism

In fact, northern Iraq (now Kurdistan) was one of the prime tourist destinations in the region during the ’60s and ’70s, with many Gulf nationals visiting its scenic mountainside on vacation. With the Iraq-Iran war in the ’80s and the US invasion in 2003, Iraq lost billions in tourism revenue and investments.

Maulawy Jabar Wahab, the head of the Tourism Board, told Gulf News that slowly Kurdistan is attracting tourists again, mainly from its neighbours Iran, Turkey and Syria. Many Arab Iraqis also choose to vacation there — and view it as a safe haven. As more and more Gulf airlines are operating flights to Arbil, Kurdistan also hopes to gain back the interest of Gulf nationals. Surely, with popular destinations for Gulf nationals become increasingly unstable, such as Lebanon, Syria and Egypt, Kurdistan could become a popular alternative quickly.

During Eid holidays, Wahab says that 90 per cent of hotels in the city of Arbil were booked. He estimates $1 billion (Dh3.67 billion) in tourism revenue this year. “We are working hard to attract Gulf residents to Kurdistan by increasing the number of travel companies and advertisments in the Gulf,” he said. “Our marketing team has been studying the needs of different nationalities to attract them,” Wahab added.

However, because only two five star hotels are currently open in Arbil, prices are exorbitant, with a room starting at $450 at the Rotana. The other five star hotel is the Turkish-owned Divan hotel, where prices reach up to $10,000 a night for deluxe suites. However, prices could go down in the future as new five star hotels have been approved for construction, including the Kempinski, Hilton, Sheraton and Marriott. Currently, tourism revenue makes up for 6.7 per cent of Kurdistan’s GDP but the tourism board is working towards the goal of doubling this share.

Not only does Kurdistan hope to attract tourists through its luxury hotels but unlike other more modern cities, it offers the charm of remnants of ancient civilisations, such as the citadel which sits in the city centre and is the oldest continuously inhabited town in the world. Arbil has hosted many different civilisations dating back from the Ur III civilisation 6,000 years ago. It has also been ruled by Neo-Assyrians and Mongols. And during the Sassanian and Abbasid periods, it has been an important centre for Christianity.

Tourist appeal

An excavation in the Zagros mountains outside of Arbil in 1957 by a team from Colombia University found the first adult Neanderathal skeletons in Iraq dating back 80,000 years. This and other historical sites could peak the interest of archaeological tourists worldwide. But a lot of groundwork has to be done to attract these tourists.

To be sure, Arbil and the surrounding areas in the countryside have a long way to go in terms of tourist appeal. There is little nightlife in the city as most places close extremely early and the options are few. If marketed properly, Arbil could be an attractive destination for the party scene as it has very lax laws related to alcohol licensing. The most attractive shopping mall, called Family Mall, does little to entice foreign tourists — as it pales in comparison to malls in other surrounding countries such as Lebanon and Turkey. The lack of available outlets for tourists to shop and party could be a chief obstacle to its growth.

That is where the investment board comes in. While 80 per cent of investment in Kurdistan has been domestic, it is hoping to attract foreign investment too. Foreign investment in Kurdistan is still young and makes up only 14 per cent of the total investment in the region. Lebanese, Turkish, Egyptian and German companies are the biggest foreign investors, involved mostly in housing development projects.

Lebanon, meanwhile, has a unique edge in the banking sector. Currently, the Emirati Trojan Company is working on a housing development project and will be completed in three years. UAE-based Deyaar is also in discussions with the investment board in Arbil to develop a project to attract medical tourism. The prime focus of the investment board is to developing housing and infrastucture as a starting point to attract future investments.

Kurdistan has a long way to go but with a booming oil industry and a sharp marketing strategy, investors will surely see Kurdistan’s potential. Already many Kurdish citizens have lived in Western countries and have brought back a unique perspective on how the future of their country should look. Kurds have the added advantage of being culturally close with a broad range of nationalities such as Arabs, Turks, Iranians and Europeans. This could make for a more welcoming and tolerant environment to attract expatriates wanting to invest in its economy. The UAE model could work in Kurdistan but it must be followed through with smart leadership and proper management of its resources.