Iraq completes 250 factories and optimism has a broad role for the private sector
Bureaucratic factory owners suffer in importing raw materials, which makes the exemption laws lacking in content
Muayyad Al-Terfi is an Iraqi reporter Monday, April 11, 2022 23:48
Observers called for government support in terms of soft loans to modernize factories in Iraq (AFP)
The Iraqi government is trying to liberate the local economy from the constraints of the public sector and make the private sector gradually expand to take a broader role than government industrial sectors, which are no longer able to compete and convince the Iraqi consumer, in addition to the great losses it has incurred during the past years.
Within this direction, the Iraqi Ministry of Industry announced the completion of 250 factories of different sizes within one year, as well as steps to encourage the private sector and businessmen to establish and construct industrial projects in various fields through a series of incentives.
The Director General of Industrial Development, Aziz Nazim, told the Iraqi News Agency that "Law No. 20 of 1998 stipulated customs facilities and exemptions for a period of ten years for machines, equipment and raw materials according to production," noting that
"the exemptions will help to complete projects with strength and solidity in order to achieve production stability.
He explained that "industrial projects, whether medium or large, when they are exempt from customs and tax duties, will achieve several advantages, including direct employment and reducing unemployment, in addition to achieving a production tax and income tax, and thus a resource for the state will be achieved on the one hand, and the employment of workers on the other."
Aziz Nazim added, "Exemptions are made according to the nature of the industrial project and its production materials.
Raw materials that enter the food or construction industry are included in the exemptions," noting that
"the change in the exchange rate has become the trend towards food industries and the opening of several factories in this regard."
He stressed that "during the past year, it was decided to establish 1853 factories, of which 253 were completed, with a production development rate of about 25 percent." And he continued,
"Several decisions were issued in light of the increase in prices in global markets, including Resolution 65 that organized the process of delivering raw materials to factories, which led to their not being diverted and sold in the market, as well as Resolution 73, which explained the exemptions for construction and basic materials, the last of which was the complete exemption of materials.".
Iraq is seeking to restore life to the manufacturing sector, which was badly damaged during the period of economic sanctions in the nineties of the last century and after 2003, after the rest of them stopped as a result of the comprehensive openness policy that caused them great losses that forced them to lay off their workers and leave the economic scene due to their inability to compete.
It seems that the high rate of consumption witnessed by the Iraqi society and its increasing need for transformative food industries sufficient to meet its needs and in large quantities, may cause its inability to fully meet the import, which motivated the Iraqi Ministry of Agriculture and investors to enter strongly to activate this sector again.
The Iraqi endeavors focused on supporting food industries that depend on the surplus of Iraqi crops, especially vegetables, according to a plan that relies on distributing them to governorates and agricultural cities far from the capital and from the centers of the most prominent Iraqi cities, to revive economic activity in these areas that suffer from high rates of unemployment and poverty.
The former head of the Iraqi Federation of Industries, Ali al-Saadi, said that "the most important suffering experienced by Iraqi factories is the bureaucracy in customs, especially in the issue of importing duty-free raw materials," while noting that
"the contribution of the private sector is estimated at only two percent of GDP."
Extension of exemptions
Al-Saadi said that "the owners of factories in Iraq suffer from bureaucracy in importing raw materials, which made the exemptions laws lacking content, and therefore we need follow-up in customs,"
calling for the need to extend the exemptions to more than ten years, since many factories, the duration of their establishment is more From this date," he added,
"it is necessary to monitor the borders of imported materials that have a counterpart in Iraq," noting that
"the establishment of 253 factories last year is a good number."
57 thousand industrial projects
Al-Saadi confirmed that there are more than 57,000 industrial projects in the country, but only 10 to 15 percent of them are currently working, because those who set up the factory collide with the deadly bureaucracy and the failure to grant factory owners loan facilities.
He pointed out that "there are decisions that have not been implemented despite its legislation years ago, such as the law of land ownership that was established ten years ago, it has not been implemented, and those who were owned are only a few factories," noting that
"the contribution of the private sector to the domestic product before 2003 was 14 percent and today it contributes two percent."
Al-Saadi added that "all these obstacles did not prevent the existence of good industries such as the construction industries and the foodstuff industry, such as the dairy industry," pointing to
"the possibility of achieving self-sufficiency in these products if these industries were taken care of."
In turn, economic researcher Basem Jamil Antoine considered that "the completion of a quarter of these factories is a good achievement and will employ a lot of manpower," stressing "the support of factories by 20%."
Antoine said that "the completion of the construction of 253 factories is a very good number in light of the current circumstances and the Iraqi environment that is not attractive to industry," noting that
"if this number is completed a quarter of it, it is a great gain, because many workers will be employed, meet the market need and limit import.".
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The economic researcher called for the establishment of integrated industrial cities according to a study by the Ministry of Industry of the obstacles faced by factory owners, stressing the need to divide the industrial areas as polluted and non-polluted industrial cities.
food and construction
Regarding the factories that investors accept, Antoine said, "Food factories are the masters of projects, as well as construction industries such as the cement industry, which we have achieved self-sufficiency in, especially in light of construction and reconstruction in the country that is progressing in full swing."
Until 2015, Iraq imported about 12 million tons of cement annually, according to the statistics of the Iraqi Ministry of Industry and the Iraqi State Cement Company, before its import was prevented and large difficult sums were provided.".
Through these steps during 2018, Iraq was able to achieve self-sufficiency in cement production for the first time since 2003, with a production of more than 18 million tons from government and private factories, which represents an important prelude to raising production to record levels that the country has not witnessed since the establishment of this industry in the country in the forties. the last century.
Antoine pointed out that "the Iraqi industry was previously competing with the importer, but the dumping of foreign goods and the development of global factories led to the decline of the local industry,"
calling for "the creation of government support in terms of soft loans to modernize factories."
The same speaker pointed out that there are laws that need to be activated, including the customs tariff law that encourages the protection of national production and the anti-dumping law, stressing that
"neighboring countries support their industry by up to 20% and it is not possible to compete with that industry without government support."