Why do you think the industrial sector in the Kurdistan Region has taken so long to develop?
In the 1960s and 1970s, there were about ten big industries in Erbil. The products produced here were exported outside Iraq to Gulf nations, Eastern Europe, and other countries. However, the beginning of the Iraq-Iran War, which lasted from 1980 to 1988, was the beginning of the destruction of the industrial infrastructure of the country.
That’s why the priority of the Kurdistan Regional Government [KRG] has been to give significant attention to this sector. Now, the Ministry of Trade and Industry [MTI] is about to establish four industrial zones in Kurdistan: one each in Erbil, Slemani, Duhok, and Garmian. We received authorization for this project and the Council of Ministries allocated a large budget for it. This budget will be for the infrastructure of these projects: the irrigation, electricity, water, etc. When the infrastructure for this project is prepared, we will invite foreign and local companies to participate. They will receive land free of charge, along with other facilitating considerations.
In what other ways has the KRG prioritized further development of the industrial sector?
In cooperation with the Ministry of Finance, the MTI now will provide loans to those companies that want to set up factories. These loans range from 500 million Iraqi Dinar [IQD] to 2 billion IQD. They are small budget loans, but they will help people start small-sized factories or businesses. In addition, our office is constantly meeting to draw up new regulations, amend old ones, and issue new laws for our sector.
Our strategic plan prioritizes new strategic projects that will help to establish food security. These projects mainly relate to the construction of new wheat and barley silos. Until this point, we have had a storage capacity for wheat and barley of about 280,000 tons. The strategic plan calls for one million tons in reserve within the next 3 years. At the moment, we have four new projects to make this plan a reality. This number will increase over the next 7 months. These are 100% government projects, not private investment projects.
What role are foreign companies playing in these types of projects?
We depend quite a bit on foreign experience. Iraq in general and Kurdistan in particular were under years of embargoes, sanctions, and wars. As a result, many experts immigrated outside the country. So, the policy now is to draw the attention of these experts, both Kurdish and foreign, and encourage them to come to Kurdistan and facilitate the rehabilitation and reconstruction of every sector of the economy.
When do you hope to have the infrastructure of the industrial zones established?
We are now in the documentation stage. These are huge projects in terms of the land required. Each one consists of more than one million donum; one donum is equivalent to 2,500 square meters. Within 3 months, we will finish and we will begin the tendering process.
Regarding the industrial zones, it is also worth mentioning that we have been preparing “Bilateral Free-Trade Zones” between Kurdistan Region and Turkey that will be located in the border zone in Zakho. It will be a very strategic project between the two sides and has been accepted by the both governments. Now only the Central Government in Baghdad needs to approve the plan. I believe if Baghdad continues to delay giving approval, we should start this project because it is mentioned in the Constitution that the KRG can enter into deals and establish projects for the sake of all Iraq. Since this project will benefit not only the Kurdistan Region but also other regions as well, it is in line with the Constitutional law.
In terms of industry, what would you say are the priority import items?
Construction materials. Both the public and private construction sector in the Kurdistan Region is massive. As a result, there is daily demand for increased construction materials. We have sufficient local production of cement, but we need more steel, aluminum, and bricks. So there is very promising market for construction companies and for construction materials. Generally speaking, the majority of the companies that have registered their branch or to set up new companies have been construction companies.
We have been preparing ‘Bilateral Free-Trade Zones’ between Kurdistan Region and Turkey that will be located in the border zone of Zakho. It will be a very strategic project between the two sides.
In the past two years, however, we have noticed that the number of the industrial companies is increasing. There are many new businesses here that are engaged in setting up new factories. For example, we have received requests to establish small recycling factories and automotive spare parts production facilities.
What types of projects is the MTI trying to facilitate to rehabilitate the sector?
If any company is producing products in an area in which we have achieved self-sufficiency, then they will obviously want to begin exporting. We provide the permission and license to export to markets in Turkey, Syria, Iran, or Gulf Countries. For example, two years ago, we began exporting certain food items from Kurdistan to Dubai: honey, grapes, green apples, and red apples. We provided all the facilitations and made all the arrangements for this process to occur. The Dubai market was very difficult to compete in, but we succeeded because of the quality of our products. We provided the facilitation and it ended up being successful.
In what types of training courses have the staff at MTI participated?
We have a general plan for the training courses organized by the Ministry of Planning. At the same time, we have our own. For example, in April a big delegation came back from the UAE where it participated in conferences and professional training courses relating to arbitration. Monthly and weekly we send our staff abroad to get new experience in different areas: in information technology, in trade, in administration, in learning new languages. So, it takes some time to collect all this experience and to move forward confidently.
What are the obstacles that have limited the expansion of trade between the Kurdistan Region and any other country?
The main problems that have happened are in the border zones relate to the quality of the products imported. Recently, the KRG made an agreement with SGS, the Swiss company, to open a branch in the border zones to check the incoming products. If the product meets the established standards, it will be allowed to enter without any problems. With the increasing GDP per capita, now people only want good quality products. So, the number of low-quality products now on the market will probably continue to reduce.