MARKET RESEARCH Manufacturing & Industrials

The manufacturing sector is still in need of development, limited by the lack of know-how and managerial as well as technical skills. However, with a gradual implementation of efficient and transparent trade laws and tariff rules, along with a relatively low cost of labor, Kurdistan wishes to promote itself as a Regional manufacturing hub. Ongoing infrastructural expansions in the Region, namely road construction and factory building, ensure that the demand for industrial products, mostly cement, steel and bricks, remains sturdy. For example, a USAID 2008 study puts annual cement consumption in Kurdistan at 2.5 to 4 million tons. The study claims that since 2000, the price of cement has increased from $25 per ton to up to $150. Similarly, rebar steel prices have risen from $200 per ton in 2000 to around $800.
 
The table below presents some recently established cement and steel factories.
  Plant Production Capacity
Cement Tasluja Cement Plant 2.3 million tons annually
Bazyan Cement Plant 2.5 million tons annually
Kirkuk Cement Plant 400,000 tons annually, being upgraded to produce 1 million tons
Sarchinar Cement Plant 250,000 tons annually
Steel Erbil Steel Company 240,000 tons annually
Chamchamal Steel Plant 1 million tons annually
GK Steel Plant 72,000 tons annually, being upgraded to 120,000 tons
Steel products are mainly being imported from other countries, namely Turkey, Ukraine, and China, to make up for the lack of ferric oxide in local iron ore. In order to get around this inconvenience, local steel factories such as Erbil Steel recycle scrap metal. Imported bricks and concrete blocks are also preferred to local products because of the lack of quality-control imposed on local products.
Investment incentives regarding the manufacturing sector are quite tempting. The land required for the establishment of a project is subject to total ownership, for local and foreign investors alike. More importantly, equipment and machinery can be imported duty-free for a period of two years as long as they are solely used for the particular project. Raw material necessary in the production process is also exempted from import duties for a period of five years. Similarly, spare parts and new equipment needed to expand or upgrade the project shall also be exempted from import duty, with prior approval from the Regional investment authority.Furthermore, the KRG promises “additional facilities and incentives” to projects established in underdeveloped areas and joint ventures involving both local and foreign investors.