Deprived of strong economic development under the former regime, the virtually autonomous region is now leaving no stone unturned to woo investors, including in the sensitive oil sector, especially given its geographical proximity to Turkey, Iran and Syria.

"We want to make Kurdistan the commercial door of Iraq," said regional Prime Minister Nishirvan Barzani, adding that a bill promoting foreign investment will be put forward in Kurdistan's parliament.

"The text, which will be adopted next week by the parliament, will open the doors to foreign investment. Kurdistan is the best place in Iraq because it enjoys safety and stability," Barzani told AFP.

The prime minister said the new law would guarantee the rights of investors and that it opens all sectors to investment.

The three Kurdish provinces of Arbil, Dohuk and Sulaimaniyah, which cover more than 3,800 square kilometers (1,467 square miles), were largely deprived of any steady economic development during the regime of Saddam Hussein.

In 1991, the region became virtually autonomous after Saddam was defeated in the Gulf War and the victorious US-led allies made the area a no-go zone for the Iraqi dictator's forces. Since then, it has seen progress on the economic front.

And as the rest of Iraq has had to battle a raging insurgency and sectarian violence since the US-led invasion of 2003, Kurdistan has remained a peaceful region.

"There are currently 3,800 Iraqi and foreign companies, including 500 Turkish ones, operating in Kurdistan and I think that after the adoption of the new law, their number will double because many foreign companies have assured us that they are waiting for this law," said Aziz Ibrahim, commercial director general at the Kurdish ministry of finance.

Commerce Minister Mohammed Rauf said exact statistics on investment were not available because of "the existence of two ministries -- one in Arbil and the other in Sulaimaniyah."

From 1991, the Kurdish Democractic Party of Massud Barzani ruled Arbil and Dohuk, while rival Iraqi President Jalal Talabani's Patriotic Union of Kurdistan ruled in Sulaimaniyah.

But in May the two administrations decided to unify to form a single Kurdistan region after 15 years of separate rules.

The new investment-friendly law, consisting of 26 articles, is said to be liberal enough to lure foreign money into the region.

It will allow foreigners to repatriate their profits and also enjoy a 10-year tax holiday.

The companies will also be able to import raw materials without paying customs duties.

The bill also aims to liberalise all the industrial sectors for foreign investment, including the vital oil industry, while oil remains state controlled in the rest of the country.

"This law will contribute to the prosperity of Kurdistan," Kurdish contractor Badram Sadik said. "Until now we functioned on the basis of old law which was very restrictive."

The present law, based on a socialist model, favours state-owned enterprises rather than promoting private and foreign sector participation.

Kurdistan is currently witnessing a boom in the construction sector, with new projects such as shopping centres and tourist hotels involving an amount of 300 million to 500 million dollars.

"Until now the investments are concentrated especially in construction and infrastructure, but we want to give priority to industry," stressed Rauf.