Printer-friendly VersionBy Aiyob Mawloodi
The Kurdish Globe
The KRG "has to set a limit for the imports of foreign products into the market" and "support local producers."
During the last year, a considerable number of manufacturing companies and factories in the Kurdistan Region have stopped manufacturing and closed down. The major reason behind that, according to the manufacturers and experts, is a rise in the raw material costs, all or most of which is being imported from neighboring countries and some foreign countries.
According to the figures available at the Directorate General of Planning and Follow-Up in the Kurdistan Region's (KRG) Ministry of Trade, only during the past year, due to rising production costs and failure in competing with their foreign competitors, some 170 local factories and manufacturers were forced to stop production and close their businesses throughout the Region.
This number, according to the Directorate of Planning and Follow-Up, constitutes 10% of the total manufacturing companies working throughout Kurdistan.
Economist Hussein Mohammed Pishdari thinks that such a move will hurt the region's economy and the producers are vulnerable to the foreign competition and cannot survive alone.
"The KRG has to support the domestic producers and boost their production capacity according to a scientific plan," said Pishdari. "In addition, the government has to set a limit for the imports of foreign products into the market."
Pishdari warns that if the level of imports from neighboring countries remains the same and the borders remain open toward imports from Iran and Turkey, in the future, "We witness tens of other manufacturers closing their business, since in every country, if no limit is set for foreign products in the domestic markets, local fabrics collapse. This in turn not only will lead to weakening domestic production, but it will also increase the unemployment rate and thousands of laborers working in these factories will lose their jobs.
A low rate of domestic production and high rate of unemployment are two of the major factors of collapse of an economy.
Ministry of Trade statistics suggests that there are roughly 1,863 various manufacturers registered and working in all the three provinces of the Kurdistan Region. Those manufacturers cover 21 different sectors, most of which are located within the borders of the Erbil Province.
The majority of the factories work in the industrial sector, and a total of more than 13,000 employees work in these factories.
Despite the severe environment Kurdistan is for manufacturers, an aluminum manufacturing factory has recently been established in Duhok Province by the Kuashi industrial area in Duhok City on an area of 23,000 square meters. The production capacity of the factory is 7 tons per day, i.e., 200 tons per month.
Ma'rouf Ramadhan, the owner of the factory, said in an interview with a local Kurdish news website that the initial investment of establishing the factory is US$ 4 million.
The factory needs 100 workers to run and reach its full capacity.
At the early stages, Ramadhan says, the factory will depend on foreign imported raw material.
However, they will be trying to depend on domestic raw material as well as to boost their production up to 700 tons per month to be able to supply part of central and southern Iraq in addition to Kurdistan Region.
Currently, Kurdistan Region and Iraq as a whole depend mainly on oil revenues for their budgets, and the private sector mainly depends on trade and services due to the weakness of the domestic production and its inability to satisfy the local market, something which leaves the economy dependent on the outside and vulnerable toward foreign influence.
Kurdistan is rich in raw materials and natural resources, which can be a strong pillar for the economic infrastructure and development of the region's economy if utilized wisely by the private sector under the supervision and support of the public sector.