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- MONDAY, 04-29-2024, PM 4:05
- KARAR AL-ASADI
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Importing products and goods contributed to the exit of more than 70 billion dollars from Iraq in one year, despite the campaigns and initiatives launched by officials in the country to support the local product. Economic experts put a number of factors and reasons for the decline in Iraqi products and the invasion of markets by imported goods, including the lack of raw materials and the absence of support. government, lack of protection for industrial investors, and lack of border control.
Economic affairs researcher Mustafa Hantoush says, “The process of supporting the national product is something that requires real action and not just slogans. The Iraqi product has disappeared since the nineties due to international isolation as a result of the blockade, the interruption of raw materials, and the absence of spare parts, as the Iraqi industrial system collapsed until 2003.”
Hantoush adds: “After 2003, the process of moving towards importing began with an increase in money and the entry of the dollar, as there was no real plan to create a product, build the Iraqi industry, and activate factories to pump products equal to the imported ones in quality.”
According to the researcher, “Iraq needs a set of clear steps to activate the industrial sector, including turning to the industrial cities model, and providing facilities to the industrial investor who is still painstakingly obtaining investment licenses.”
Hantoush stresses the need to “activate industrial loans. Unfortunately, previous initiatives did not succeed due to the lack of factories, and although there is a slight trend towards them, the Central Bank stopped all loans and initiatives due to the lack of a real reading of the market and its needs by the bank governor. What is the reason for stopping the wheel of development and industry in Iraq".
The researcher also talks about “the necessity of controlling the borders from the Kurdistan side. The western and central borders are controlled by 70 percent and more, but the northern border still represents a major problem for the entry of smuggled goods.”
A local economic institution confirmed that the official customs authorities’ data for the most important countries exporting various goods to Iraq (11 countries) showed that Iraq’s total official imports from these countries alone in 2023 amounted to 67.25 billion US dollars, an increase of 6 percent compared to 2022.
The Future Foundation, which specializes in statistics, reported that the exports of countries to Iraq, excluding Iran, amounted to a value of 58 billion US dollars, expecting that the exports of other countries not mentioned in the data of customs authorities would amount to a value of 3-5 billion US dollars, thus bringing the total exports of countries to Iraq last year. Its value is 71 billion US dollars.
Since 2003, Iraq has often topped the lists of importers of various industrial and agricultural goods, whether from Turkey or Iran, in addition to occupying advanced ranks as an importer from Jordan and the Gulf states, while the volume of its imports from China reached about 50 billion dollars.
It is noteworthy that the companies of the Ministry of Industry and Minerals used to supply the market with what it needed before 2003, but now they have declined for several reasons, most notably the opening of import doors and the lack of regulatory restrictions, and the creation of many competitors for the local product, despite the latter’s quality and subject to quality control.
For his part, economic expert Hammam Al-Shamaa points out that “supporting the local product is very important, but the steps taken by the government are insufficient. The situation of the industrial sector is deteriorating and has not witnessed any revival for several decades, due to political conditions, chaos, and the prevalence of cases of extortion and royalties, which led to a delay in sector and make it non-competitive with any product imported from neighboring countries.”
Al-Shamaa adds, “The industrial sector cannot rise unless the situation in Iraq stabilizes for a long period and there is complete protection and industrial investors feel safe and reassured that there is no blackmail or threat. Then the sector can develop and everything else remains just talk.”
The industrial sector in Iraq is suffering from a continuous decline due to the failed policies and procedures followed, which weakened the development of the industrial sector in its various branches, as well as the flooding of the Iraqi market with various goods imported from abroad that have better competitive advantages than local goods, which led to the marginalization and disruption of many local industries, including It includes medium and small.
Al-Shamaa points out that “agricultural production also suffers from problems, such as the lack of regular and subsidized availability of water, electricity, and fertilizers. The farmer is also concerned about water resources as he is unable to increase yields, and all of these factors do not encourage agricultural production.”
He explains the reasons for the high prices of local agricultural products by saying that “the farmer cannot produce at low costs because the electricity that operates the water pumps is not available, and there is no support in terms of providing irrigation mechanisms such as sprinklers, drip, etc., and fertilizers are also not supported by prices, so how can agricultural products with high quality be provided?” Subsidized prices?
Agriculture, in turn, suffers from a bitter reality, due to the severe water shortage that the country has been witnessing for years and the lack of government support. The Ministry of Agriculture sometimes resorts to supporting local agricultural products by closing the import of certain products, but high prices force it to reopen the borders again.
In addition, economic expert Manar Al-Obaidi puts forward a group of factors for the decline of the local product, such as “Iraq’s loss of strategic extractive projects. Any local product needs raw materials that are extracted from the ground or transformed and reproduced, such as iron and aluminum materials, and others, and Iraq lacks extractive projects as a result.” Weak government and private sector investment in such vital projects.”
Al-Obaidi also talks about “the weakness of decisions to support the local product, such as control over customs tariffs and weak control over border ports, which is a basic point for many problems in Iraq. Even with legislation to protect the national product, weak control over the ports allows the leakage of imported goods.”
Regarding the costs of local production, he believes that “at the forefront of these costs is energy and labor, and both matters are considered high compared to neighboring countries, and thus the local product loses the element of competition due to its high costs, in addition to the rise in fees, taxes, and wages on Iraqi factories, despite the fact that the Industrial Investment Law granted a lot There are exemptions for industrial project owners, but the large number of regulatory bodies increases the official and unofficial fee bills.”
Al-Obaidi adds, “Iraq also lacks the culture of the local product. Many Iraqi manufacturers believe that the industry ends with the end of final production, but modern industry puts only 30% on the product and 70% on the supply, marketing and distribution chains, which is what the local product lacks while the imported product focuses on On these aspects, Iraq also lacks weak commercial financing and government support, as countries go through a certain stage in order to revitalize the industry by providing financial packages to laboratories and factories that contribute to reducing operational costs, and the absence of this support was another reason for the loss of competitiveness.
He concludes: “All of these factors may be major reasons for the inability of the local product to seize control of the Iraqi market, and they need a clear strategy and not just slogans about the necessity of working to encourage the local product, but rather a policy that sets the determinants and capabilities, analyzes the data to the smallest details, and provides clear solutions to ensure support for the product.” the local".
Last year, the Ministry of Industry and Minerals revealed statistics on the number of factories in Iraq, both operating and unemployed, as the total number of factories affiliated with public sector companies in Iraq is about 227, while the number of them operating is only 144.
According to these data, about 18,167 industrial projects have stopped working for various reasons.
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