Factory output in the Kurdistan Region is booming thanks to the removal of customs duties and checkpoints between Iraq and the Region.
“Due to the removal of customs checkpoints between Baghdad and the Region and the unification of customs duties, the export of our factories’ products to the Iraqi cities has increased by 20 percent,” Mustafa Zubair, who oversees factory affairs for the Kurdistan Regional Government (KRG) Ministry of Trade and Industry, told Rudaw, without specifying a time period.
“High quality and cheap prices” have contributed to increased demand on Kurdish-made goods and services, according to Zubair. Some 70 percent of products produced by factories in the Kurdistan Region are sold elsewhere in Iraq.
They include hygiene products, plastics, and food items.
The KRG Ministry of Trade and Industry has licensed 5,400 large, medium, and small factories to operate. Of this number, almost 3,000 were established.
“Of the 3,000 factories, 600 are very active, selling 70 to 80 percent of their outputs outside the Kurdistan Region,” Zubair said.
Following the takeover of Kirkuk by Iraqi forces supported by Iran-backed Shiite Hashd al-Shaabi paramilitias, the Iraqi government decreed to deal with Kurdish-made products as foreign exports.
High customs fees were levied on the pretext that the KRG does not abide by Iraq’s Law No. 25, 1991 for Industrial Development concerning the licensing of factories.
This move forced the plants in the Kurdistan Region to revoke their license with the KRG and apply for a new one from Baghdad to escape high tariffs.
“This problem has now been resolved,” Zubair claimed. Permits are now being issued according to Iraq’s Law No. 20, 1998.
“Any factory licensed based on that law will be exempted from any taxes and customs fees for 10 years allowing them to import raw material to their factories from any border-crossings of Iraq,” he explained.
The majority of the Region’s factories are located in Erbil − around 1,200.
“The removal of customs points between the Iraqi cities and the Kurdistan Region has led to an increase in demand on Kurdish factory outputs from the Iraqi cities and a boost for businesses. Therefore a number of factories that had been shut down in the past have once again resumed their operations,” said Taeb Kazho, head of Erbil’s industrial development.
“Only in last month, 15 factories checked with us applying for permits to export raw material for their factories,” Kazho said.
Of Erbil’s 1,200 factories, 600 are exporting both to Iraq and abroad.
“Currently, factories [in Erbil] export vehicle oil, plastic chairs and tables, tahini, and other products to Syria, Turkey, Lebanon, Egypt, and Sudan.”
Products in the greatest demand among Iraqi importers are “ice cream, mushrooms, natural water, soft drinks, household equipment, tissues, plastic, chemical fertilizers, cement, steel, and many others.”
After hygiene, the second most desired products exported from the Region to Iraq and other countries is plastic materials.
According to the industrial ministry, there are 561 firms producing plastic products in Kurdistan.
Plastic products include chairs, tables, bins, household appliances, synthetic tablecloths, and nylons.
Daim Plastic is one of the largest factories in Erbil. Its output amounts to 500 tons every month, consisting of 100 different commodities.
The firm’s owner agrees the normalization of Erbil-Baghdad relations has contributed to the business boom.
“The removal of the customs duties led to a boost to our market because the $1,200 they were charging us for customs fees is no longer the case,” said Nahro Abdulrahman, owner of Daim Plastic. Now they can “compete with Iranian products.”
Abdulrahman said they rely heavily on other Iraqi provinces for the sale of their equipment. Some 60 percent of their products are sold in Iraqi provinces, 20 percent abroad, and 20 percent in the Kurdistan Region.
“Compared to the past our sales have increased by 20 percent and we expect it will increase by the end of this month as it is the season for the use of plastic materials.”