Healthcare in Kurdistan, actual situation and future opportunities

General information about Kurdistan region in Iraq

After the US invasion of Iraq in 2003, a new Constitution of Iraq was established in 2005. This Constitution defines Iraq as a federal state recognizing the autonomous region of Kurdistan. 

The Kurdistan region in Iraq has 4 governorates: Erbil, Sulaimaniyah, Duhok and Halabja. 

The total surface of the region is 40.643 km². The population is 5,123 million (2014). 

The capital is the Erbil city. 

The region is limited by Turkey form the north, Iran from the east and Syria from West. 

Erbil, Capital of Kurdistan region in Iraq

Investment ground in Kurdistan

Iraq provides exemption from all taxes for 10 years for investors, including company tax and fees. This period can be extended to another 15 years if the project is shared with a majority of Iraqi shareholders. There are more incentives that include the right to reattract investment and profits resulting from investment, the right to employ foreign workers when needed and three years exemption from import duties of equipment required and the Iraqi government to ensure the nationalization or confiscation of investments. Investors benefit from the low tax rate on companies in Iraq even after the end of the period of tax havens, where the ratio is only 15%, which is one of the most competitive rates in the region and the world. Both the tax-free period and the low rate thereafter will help the investor to make a quick profit and encourage reinvestment. (1) 

Kurdistan region as part of the federal of Iraq has the same fiscal legislation. 

Facilitation has been given also to establishing and registering new companies in Kurdistan that can be 100% owned by foreign citizen or entities. 

For example, to register a Limited Liability Company (LLC) at the local Chamber of Commerce, incorporation time is fixed to be 15 to 20 business days. (2) 

Healthcare sector in Kurdistan

Between 2013 and 2020, the Ministry of Planning in the regional government intends to invest 2.1 billion dollars for the health sector, with the aim of increasing hospital reception by 42%. (2) 

According to a study done by RAND corporation in 2014, and assuming moderate population growth, the Kurdistan region should increase the number of hospital beds by 2574 beds by 2020. (3) 

The construction of 165 new primary health care facilities is planned, through public tenders that can offer equal opportunities to the local private sector and foreign investors. (2) 

At the moment there are 99 hospitals in service from which 40% are private. (2) 

Kurdistan’s current health care financing system is primarily a public budget system. All Iraqis are covered under the system, and a wide range of primary, hospital, and other medical care is offered in the public facilities, where most health care is provided. Some services are provided by private hospitals and physicians in private practice. (4) 

Opportunities in the Healthcare sector

As we saw before, the regional government intends to develop more the healthcare system and, at the same time, it encourages the private foreign investments. According to this there will be new hospital projects in Kurdistan region. There will be also good opportunities for foreign investors. 

Ways of financing and type of contracts

EPC contracts with the public financing

This is the traditional form of contracting and the most used actually for new health projects in the region. The procedure normally passes through public tenders open for local and/or international contractors. The financing is completely public and relies mainly on oil revenues. Considering the oil price decline in 2014 and the further sharp drop in 2020, it is clear that the public resources are not sufficient any more to support the development plan. 

Public Private Partnership

PPPs projects are technically feasible in Iraq even though there is not a specific clear legislation and procedure. The PPP is not widely used in Iraq. There are few projects mainly in Electricity and telecommunication, however there is a good concentration in Kurdistan region. 

Public Private Partnership could be advised to compensate the resources shortness caused by the drop of oil prices. There are a lot of examples in the world about successful PPP projects in healthcare. Please check the article about IALCH in South Africa. PPP can be used also on a wider range to reconstruct the national healthcare system in a country after war. Please check the article about the reconstruction of the healthcare sector in Syria after the war. 

Therefore there is need to create specific PPP regulation and clear procedure to manage projects implementation. Due to the actual economical situation there is an urgent need to conclude and issue the new PPP law that is still under discussion and evaluation by the federal government in Baghdad (5).

Private Facilities

The general grounds encourages private investments and this could be extended to the health sector. 

Even though 40% of the hospitals in Kurdistan are private they have very limited capacity. The regional government could encourage establishing new private facilities. They can increase the capacity in terms of number of beds and support the public system. They cannot, however, substitute the regional public health system. 

At the moment, there isn’t a specific fiscal regime for private health, it falls under the general tax legislation. In case the regional government should consider the private support, tax incentives, special tax depreciation treatment etc should be considered. 

Conclusion

The population in Kurdistan region in Iraq has generally good access to health facilities. Nevertheless, the quality and capacity of services should be increased and adapted according to the actual population and future growth. The regional government intends to develop the healthcare sector and encourages the foreign and private investments. Iraq has good investment legislation and Kurdistan, as part of Iraqi federalism is getting advantages from it. There are good opportunities in healthcare sector in Kurdistan region. 

Bibliography

1. The Economic Crisis in Kurdistan Region and its Impact on Foreign Investment. Al-Mihya, Sabah Noori Abbas. 5, s.l. : Int J Econ Manag Sci, 2017, Vol. 6. Sci 6: 453. doi: 10.4172/21626359.1000453. 

2. Invest in Group. Doing Business in Kurdistan Region How to Start-up, Prepared by Deloitte . Invest in Group. [Online] [Cited: May 18, 2020.] https://investingroup.org/publications/kurdistan/how-to-start-up/. 

3. Pisani, Alessio Ponz de Leon. Kurdistan iracheno : una Regione di opportunita' per les aziende venete. Treviso : Italian Trade Agency, 2014. 

4. Moore, Melinda, C. Ross Anthony, Yee-Wei Lim, Spencer S. Jones, Adrian Overton, and Joanne K. Yoong. The Future of Health Care in the Kurdistan Region — Iraq: Toward an Effective, High-Quality System with an Emphasis on Primary Care. RAND Corporation. [Online] 214. [Cited: May 17, 2020.] https://www.rand.org/pubs/monographs/MG1148-1.html. MG-1148-1-KRG. 5. World Bank Group. Procuring Infrastructure Public-Private Partnerships. Worl Bank. [Online] World Bank Group. [Cited: May 18, 2020.] https://bpp.worldbank.org/en/data/exploreeconomies/iraq/2018#1

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