Shafaq News- Baghdad
Iraq’s efforts to revive its industrial sector willdetermine whether the country can reduce its dependence on oil revenues andbuild a more productive economy, industry officials and economic analystsinterviewed by Shafaq News suggested, calling for greater focus on restartingfactories, supporting local production and attracting investment.
Despite its large natural resource base, consumer marketand strategic location linking the Gulf with Turkiye and Europe, Iraq’sindustrial sector remains limited after decades of conflict, sanctions, weakinvestment and inconsistent policies. Thousands of factories have stoppedoperating, while manufacturing continues to account for only a small share ofan economy dominated by oil.
With crude revenues accounting for nearly 90% of governmentincome, rebuilding industry has become a major challenge for Iraq as it seeksto create jobs, reduce imports and strengthen economic stability.
Aqeel al-Sayegh, deputy head of the Iraqi IndustrialistsUnion, noted that some factories have begun returning to production, while newfacilities have also started operations in recent years.
Al-Sayegh pointed to measures aimed at protecting localmanufacturers, including customs restrictions on imported goods that competewith Iraqi products.
"We introduced protection measures for Iraqi productsthat have imported alternatives and imposed tariffs of 100% on cardboard, 65%on carpets, as well as measures covering juices, cakes, dairy products,disposable goods, PVC (rigid plastic used in pipes and windows), iron and otherproducts," he explained.
He added that Iraq’s industrial exports now includeconstruction materials, iron products and metal containers used in food andbeverage industries, but maintained that more support is needed to help localproducers compete.
"We have brought thousands of factories back intooperation. The number of operating factories has reached around 37,000, whilenearly 35,000 factories remain inactive," al-Sayegh remarked.
Many of those inactive facilities could return toproduction if they receive stronger government backing, he added, criticizingthe ‘’gap between official commitments and actual implementation.’’
Beyond efforts to reopen factories, Iraq’s industrial recoverydepends on addressing deeper structural challenges, including the shortage oflocally available raw materials and limited industrial supply chains.
Al-Sayegh identified petrochemicals as one of the sectorswith the greatest potential, arguing that Iraq’s continued burning ofassociated gas represents a missed opportunity to develop industries based onlocally available resources.
"The gas that is being burned today could produce realwealth through petrochemicals and plastic pellets, while oil can also be usedto produce materials that enter industries such as detergents andcosmetics," he stated.
Nawar al-Saadi, a professor of international economics,noted that Iraq needs to rethink the role of imports rather than simply attemptto reduce them.
Al-Saadi maintained that imports should support domesticproduction by providing machinery, technology and industrial materials insteadof replacing locally made products.
"Imports should focus on providing raw materials,technology and equipment needed by Iraqi industries rather than floodingmarkets with products that can be manufactured locally," he explained.
Advocating for a national industrial strategy focused onsectors where Iraq has potential advantages, including food production,pharmaceuticals, petrochemicals and construction materials, he stressed thatimproving electricity supplies, simplifying administrative procedures,strengthening banking services and linking vocational training with industrialneeds would also be necessary to create a more competitive businessenvironment.
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While industrial policy remains a central concern, otheranalysts believe the management of existing industrial assets will also play akey role in Iraq’s recovery.
Economic analyst Ahmed Adnan argued that restructuringinactive state-owned factories should be among Iraq’s priorities, with greaterprivate-sector involvement helping transform those facilities into productiveinvestments.
Calling for specialized industrial zones equipped withinfrastructure and reliable energy supplies, he cited Iraq’s dependence onimports, which cover around 80% of domestic needs, as an opportunity for localmanufacturers to expand production.
"If Iraq can produce these needs domestically, it willnot only reduce imports but could also become an exporter to neighboringcountries," he stated, referring to the importance of energy sectorreform, agricultural development and stronger protections for investors asconditions needed to attract more domestic and foreign capital.
Beyond infrastructure and investment, some analysts believethat Iraq’s resource base itself offers untapped opportunities for industrialgrowth.
Mustafa al-Faraj, an economic analyst, viewed Iraq’snatural resources as a potential foundation for industrial expansion if theyare transformed into finished products rather than remaining limited toextraction.
Al-Faraj cited resources such as silica sand, which couldsupport several manufacturing sectors, calling for measures includingincentives for factories, easier access to financing, specialized industrialzones and improved transport networks to lower production costs and strengthenexports.
"Natural resources should not remain limited toextraction," al-Faraj stated. "They should be transformed intoindustries that create jobs, generate exports and add greater value to theeconomy."
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