ERBIL, Kurdistan Region - Domestic goods in the Kurdistan Region lack investment and face increasing costs, factory owners and experts told Rudaw, urging for better protection for local industries. “While the Kurdistan Region has issued licenses for 4,679 factories, only around 1,000 are currently in operation,” Kovan Jalal, head of the industrial development directorate at the Region’s commerce ministry, told Rudaw’s Ranj Sangawi during an episode of Legel Ranj on Sunday. Jalal highlighted several locally productive industries, including cement, glass, blocks, paint, furniture, doors, windows, aluminum, and cleaning products, saying their products meet international standards. “The production of cement factories in Kurdistan is enough for the whole of Iraq. In addition, we have very good factories for glass, blocks, paint, furniture, doors, windows, and aluminum. Their products are up to international standards,” he said. "We have about 50 to 60 high-quality cleaning product factories whose products are far better than those produced abroad," he added. Jalal noted that there are 13 cement factories in the Kurdistan Region, adding that a ton of cement at the Tasluja cement factory in Sulaimani province costs about 45,000 dinars (around $34) due to “backing” from the Kurdistan Regional Government (KRG). He referred to another licensed factory currently producing smartphone connectivity devices as “a source of pride” for their directorate. In September, a smartphone assembly plant opened in Erbil that operates in collaboration with Infinix, a Chinese smartphone company, with a monthly production of around 30,000 phones. Other “successful” factories producing liquid bitumen, car oil, batteries, water pipes, and dairy products such as yogurt, cheese, and ice cream also exist in the Region, according to Jalal. But he acknowledged that there are barriers preventing local goods from reaching international markets. "There are challenges for domestic products to leave the country, particularly at the Ibrahim Khalil border crossing," he said. Located between Duhok’s Zakho and Turkey’s Sirnak, the Ibrahim Khalil border crossing is the most known of Kurdistan Region’s official land border gates with Turkey. The crossing is infamous for its hours-long queues. Jalal also pointed out that factory owners are not fully cooperating with domestic product protection laws. “We have very good cleaning product factories, but most do not complete the necessary paperwork to receive protection under the law, which would allow us to defend their market position.” Iraq imports food and various foreign goods worth $30 billion annually, according to Jalal. "Even 80 to 90 percent of the production of factories in the Kurdistan Region is going to Iraq," he said. To support local industries, he explained that two years ago, they requested for 75 percent of the government’s procurement to rely on local production. He claimed that domestic products are superior to imported ones because they undergo inspections by multiple agencies. "Our domestic products are hundreds of times better than imported products," he said. Aram Baban, a member of Sulaimani’s commerce chamber council, said that factory owners face significant challenges in the local economy, and the lack of local production is reducing the KRG’s income while increasing its expenditures. “There is no government in the world that can support all its people… out of five million people, around 1.2 million are public sector workers,” he said. According to a 2021 report by the Kurdistan Region Statistics Office (KRSO), 38.4 percent of the Kurdistan Region’s workforce is employed in the public sector. Baban said the presence of strong and productive factories is key to addressing the Kurdistan Regional Government’s financial crisis. "We educate young people, but they leave to serve other countries," he lamented. Every year, thousands of people from the Kurdistan Region seek to escape endless crises including lack of employment, political instability, and corruption by joining thousands of others from scores of countries taking perilous routes to Europe and abroad. He suggested that developers constructing housing units should also be required to build industrial facilities while criticizing the KRG for failing to prioritize local products in public tenders. “Our buildings should be constructed and renovated with bricks, cement, and glass from Sulaimani’s factories,” he said. Sardar Saeed, a representative of Faruk Group factories, criticized the lack of support for local industries, particularly from the public. "People's awareness of domestic production should be raised. People do not believe in and support domestic production as much as they should." Saeed claimed that his factory produces higher-quality goods at lower prices than foreign products, yet consumers prefer imports. He pointed to the rising costs of electricity and fuel, which were previously subsidized but are now being purchased at commercial rates. "The price of electricity has doubled, and land rent has increased from two million dinars to eight million dinars (around $1,500 to $6,000). We are under so much pressure. How can factory owners not leave the Kurdistan Region to set up factories elsewhere?" he asked. Economist and project management professor Khoshawi Khal added that high tariffs should be imposed on foreign goods to support domestic factories, making it possible for local products to compete. He expressed regret that after 2003, efforts were not made to attract Iraqi factory owners to the Kurdistan Region, saying “I wish we had done it in time.” He also criticized the KRG for not providing sufficient support to local industries. “If the Kurdistan Regional Government buys the products of our factories, it is certain they will not fail.” Khal pointed out that factories abroad benefit from bank support, unlike local businesses. "No one would want to go abroad and serve elsewhere unless they have lost trust in their home market," he stressed. Salar Omar, a factory owner in Erbil, claimed that he is aware of 200 to 300 factories in the city that have shut down due to financial struggles and a lack of support. "There is no bank to support factory owners in times of crisis. When we request loans, banks refuse, saying the land does not belong to you," he said, lamenting the lack of industrial representation for local businesses while saying that other countries support their industries to operate abroad. Shirin Yahya, a member of the Erbil Chamber of Commerce and Industry, stated that the chamber is working to address the concerns of factory owners by cooperating with the Iraqi industrialists union. "As the Chamber of Commerce, our role is to listen to factory owners’ concerns and work toward solutions. We have written to the Council of Ministers multiple times requesting electricity price reductions,” she said. Despite its vast oil and gas reserves, Iraq and the Kurdistan Region face chronic electricity shortages, especially during the summer when temperatures soar above 50 degrees Celsius.
