Investment a "success story" in Iraqi Kurdistan

While most Iraqis struggle under the detritus of a seven-year war, the people of Arbil in Iraqi Kurdistan can frolic in a public pool, ride an elevated cable car over freshly planted parkland or escape stifling heat in a new ice skating hall.

The new luxuries of Iraq's northern Kurdish region seem a world apart from the dust and grit of Baghdad, where suicide bombers are an everyday fear, dirt-gray blast walls dominate a war-weary cityscape, hotels are shuttered, leisure confined to home and the city's own telepherique lies in ruin.

The relative security of semi-autonomous Kurdistan, largely unaffected by war, has made it a safe haven in an oil-abundant country that presents an enticing but uncertain profile to a business looking to invest.

"The telepherique idea I brought from China. It cost me $2.5 million (£1.58 million) to build and it was constructed by a Chinese company," said Mamdouh Mahmoud, the businessman behind the cable car and skating rink in central Arbil.

"I'm paying $2,500 per year as rental fees for the land I leased from the government to build the skating hall and telepherique station, so who could resist the temptation to invest here?" he said.

TOO DANGEROUS?

Stunted by a generation of war, sanctions and neglect, Iraq is one of the world's most compelling emerging markets.

It sits atop proven oil reserves of 115 billion barrels, the world's third largest, and its estimated 30 million people are starving for housing, electricity and consumer goods.

But the war that started with a U.S. invasion to oust Saddam Hussein is not over, and Iraq remains a place entered at risk.

Islamist militants are still active. Bombings and other attacks kill hundreds each month.

A new survey of business executives by the Economist Intelligence Unit found 64 percent believe it is still too dangerous to do business in Iraq, even though more than half said their view had become more positive in the last two years.

Kurdistan won the highest marks within Iraq -- 46 percent had highly or somewhat favourable views of the region with only 20 percent unfavourable.

In Arbil, the only blast walls in evidence are the brightly painted ones surrounding the parliament. The capital of Iraqi Kurdistan has clubs, restaurants and a feeling of safety that allows residents to stay out after dark.

Investors are eying the region as an end in itself or an entry point for the rest of Iraq, when the rest of Iraq is safe.

The sounds of construction are everywhere in Arbil as new houses and apartment blocks sprout. Investors have committed $14 billion since mid-2006, according to government officials.

"This has been a major success story for Kurdistan. We're proud of that," Prime Minister Barham Salih told Reuters in an interview in July.

Business leaders point to a key 2006 investment law that helped transform Kurdistan from a centrally planned economy under Saddam to a more trade-oriented, investor-friendly region.

It offers a 10-year tax exemption and free land to business owners, with the right to transfer profits outside the region.

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