Manufacturing

1. Executive Summary

Iraq has a real, not hypothetical, industrial base, but it remains shallow and unbalanced. The official annual report on large industrial establishments for 2024, covering Iraq except the Kurdistan Region and defining a large establishment as one employing 30 or more people, recorded 916 large establishments and 129,177 workers, with production valued at IQD 17.232 trillion, production inputs at IQD 8.804 trillion and value added at IQD 8.428 trillion. Sales were valued at IQD 15.469 trillion. These figures represent tangible industrial activity, but do not in themselves establish a deep or internationally competitive manufacturing base. ¹

The composition of activity reveals the more important problem: a clear concentration in food industries, building materials and refined petroleum products, alongside less depth in equipment, machinery, components and advanced chemical chains. In the large private-sector establishments surveyed in 2024, food industries accounted for 69.5% of private-sector production value, followed by non-metallic mineral products at approximately 12.4% and non-alcoholic beverages at approximately 10.2%. This structure reflects advantages in the domestic market and construction and food demand, but also means that the task for 2045 is not simply to ‘add factories’; it is to move gradually into more complex links within those same chains. ²

Data on medium-sized establishments for 2024 show a similar picture: 248 establishments and 3,379 workers; 42.3% of establishments were in non-metallic mineral products, 33.5% in food products and 9.7% in beverages. Their production totalled IQD 230.8 billion and their value added IQD 100.9 billion. Industrial policy should therefore not be designed around large companies alone. The middle tier of establishments is one bridge to specialisation, supplier development and growth, but it needs measurement, finance, quality and market linkages, not exemptions alone. ³

The cumulative report on large establishments for 2025 provides an important directional update, but is not a direct substitute for the 2024 annual report. It recorded 965 operating establishments, production of IQD 14.652 trillion, inputs of IQD 9.388 trillion and value added of IQD 5.264 trillion. It also identified 892 private, 67 public and 6 mixed establishments, with the private sector accounting for 52.1% of production value within this cumulative framework. The difference between ‘annual’ and ‘cumulative’ methodologies means that these figures cannot be combined into a single series without reconciling their definitions. ⁴

The chapter's argument is that industrial deepening proceeds through five interconnected layers: selecting a limited number of chains with scope for learning and expansion; shared infrastructure that actually works, not industrial land alone; quality, accreditation and laboratories that make products marketable; local suppliers entering real contracts; and trade, finance and public procurement instruments that do not become permanent privileges. Any programme that reduces industrialisation to ‘factory + exemption’ will create nominal capacity, not industrial capability.

The chapter therefore treats the five sectors specified in the contents as different models of industrialisation, not a ranking. Petrochemicals require integrated feedstock, energy, water and logistics and major investment; food requires links to agriculture, refrigeration, quality and packaging; pharmaceuticals require oversight, quality, technology transfer and a regulated market; building materials require energy efficiency, standards and a balance between capacity and demand; and energy-related industries require a transition from services, maintenance and assembly towards components, testing and gradual localisation of engineering.

The chapter does not propose an artificial figure for industry's share of output by 2045. The National Development Plan itself sets a near-term target to increase manufacturing's contribution from its plan baseline of 1.8% to 2.2% by 2028; after that, accounts must be updated and definitions reconciled before establishing a 2035–2045 trajectory. ⁵ Long-term success is measured by the depth of domestic inputs, productivity, quality, exports and the stability of operations and resources, not output share alone.

2. Definitions and methodological boundaries

2.1. Boundaries with subsequent chapters

3. Iraq's industrial baseline

3.1. The 2024 annual baseline: industry exists, but is concentrated

Source/note: Statistics and Geographic Information Systems Authority, Annual Survey of Large Industrial Establishments 2024. ⁶

3.2. Composition of the large private sector

Source/note: source: 2024 annual report; shares and values concern the private sector within the large establishments covered by the report. ⁷

3.3. Medium-sized establishments: the link that must not be neglected

The Statistics Authority defines a medium-sized establishment as one employing 10–29 people, and the 2024 survey covers the private sector outside the Kurdistan Region. There were 105 establishments in non-metallic mineral products, 83 in food products and 24 in beverages, with 36 spread across other activities. This tier matters because establishments can become specialist suppliers or grow into larger companies, but its data also reveal concentration in industries of low or medium complexity. ⁸

3.4. The 2025 cumulative update: higher numbers and value do not equal industrial deepening

Source/note: Statistics Authority, Cumulative Survey of Large Industrial Establishments 2025, published in 2026. ⁹

4. From a single factory to a value chain

A single factory can increase production or even replace some imports, but does not necessarily create an industrial system. Industry deepens when an increasing share of product value is spent again within the economy through competitive domestic materials, engineering and maintenance, laboratories, transport and storage, software, design and packaging, and financial services, and then when some suppliers become exporters or providers to other sectors.

4.1. Why is domestic value more important than the ‘substitution rate’?

A product may carry the label ‘Made in Iraq’ while most of its components, packaging, technology and services are imported; this may be a reasonable stage early in the learning process. The problem begins when assembly becomes a permanent protected condition. The industrial compact must therefore track four separate layers: domestic value added, competitive domestic inputs, domestic skills/engineering, and a market independent of protection. Not every industry should be expected to reach the same ratio: pharmaceuticals, petrochemicals and equipment differ fundamentally.

4.2. A chain cannot be built by one ministry

5. The industrial portfolio: how the state can choose without picking political winners

The state cannot support every industry to the same depth, but selecting sectors by name alone opens the door to influence and waste. This chapter therefore takes up the ‘chain gateway’ from C02: every chain undergoes a published test before receiving infrastructure, protection, guarantees or preferential procurement. The gateway does not determine who owns the company; it asks whether a measurable national economic case exists.

6. Transforming raw materials into products: from volume to value

Iraq possesses hydrocarbon, mineral, agricultural and construction materials, but transforming a raw material into a product is not automatically beneficial. Some processes are intensive in energy, water and capital and may create limited domestic value if all technology, components and services are imported. Asking ‘Is the material available?’ is therefore insufficient. Further questions are needed: what is the final product, who will buy it, what is the full processing cost, what are the environmental risks, and which subsequent link can be localised?

In this sense, real ‘industrialisation’ is a cumulative process. Iraq can begin with packaging, assembly or basic processing where this provides an entry into learning, but the support compact must specify the next link to be deepened, when it will be reviewed and what happens if it is not achieved. A project is not penalised if economic feasibility justifies remaining at a particular link, but it is not treated as deep localisation if it does not advance.

7. Petrochemicals and chemical industries

Petrochemicals are the clearest test of Iraq's ability to turn oil and gas from a source of rent into an industrial input. In recent years, the Ministry of Oil itself has embraced integrated projects combining field development, gas utilisation, power generation, refining, petrochemicals and fertilisers. The integrated Nasiriyah project is an official example of this approach: field development, a refinery, a petrochemical plant and a power station within one project. ¹⁰ This establishes an institutional direction towards integration, but does not establish that every integrated project is feasible, financed or implemented; each requires an independent study.

7.1. The right design: a cluster, not a plant

Saudi Arabia's Jubail experience illustrates the mechanism, not a model to copy: a location close to energy, raw materials and sea lanes, unified industrial infrastructure, ports, railways, pipelines, shared services and long-term management. ¹¹ The lesson for Iraq is that a petrochemical project succeeds not merely because it is close to oil, but when logistics, utilities, the environment, the market and downstream industries are part of its initial design.

7.2. The petrochemical decision gateway

8. Food industries

Food industries are the most visible large private-sector base in the 2024 annual data: approximately IQD 5.023 trillion in large private-sector production in the annual report, or 69.5% of its total. ¹² Among medium-sized establishments, food products accounted for 83 of 248 establishments. ¹³ This strength does not mean every food chain is competitive, but it makes food a natural platform for deepening value through loss reduction, sorting and grading, refrigeration, packaging, laboratories, branding and supplier contracts.

8.1. Boundaries of the relationship with agriculture

Crop, water, irrigation and agricultural productivity decisions remain for the next chapter. Here the focus is the ‘factory gate’: does the factory obtain raw material of a known specification, quantity and timing? Is there a cold chain? Can it measure traceability and safety? Can industrial demand itself organise agricultural production through fair contracts rather than seasonal speculation?

‘Food security’ should not justify protecting every food factory. Importing certain materials or components may be more efficient. The aim is to build resilient, competitive chains while diversifying sources of critical inputs, not to close the economy.

9. Pharmaceutical industries

Pharmaceuticals differ from other industries because quality and regulation are part of the product itself. The Ministry of Health reports clear expansion in localisation since 2023–2024, including an intravenous solutions line opened in 2024 with nominal capacity of 90 million units annually, alongside the manufacture of other dosage forms. ¹⁴ In February 2026, a government adviser stated that Iraq had 34 pharmaceutical factories and that domestic production covered approximately 40% of domestic requirements, alongside agreements to transfer drug-manufacturing technology. ¹⁵ These recent official/government figures must be treated as operational claims requiring a statistical series and a consistent measurement method before becoming an independent baseline for the Vision.

International trade data, meanwhile, show that Iraq remains a large market for imported medicines. In 2024, Jordanian pharmaceutical exports to Iraq totalled approximately USD 174.8 million, while Jordan exported approximately USD 896.8 million in pharmaceutical products worldwide. ¹⁶ The comparative lesson is not that Iraq should imitate Jordan, but that an export-capable regional pharmaceutical industry rests on quality, regulation, reputation, accreditation and supply chains, not the domestic market alone.

9.1. The pharmaceutical deepening ladder

9.2. Health procurement as a learning instrument, not a profit guarantee

Public procurement can give a factory predictable demand, but becomes a burden if it guarantees a market without competition in quality, cost and delivery. The proposed design within the Vision's approach uses multi-year contracts only for products requiring investment stability, with quality conditions, deadlines, reference pricing and periodic review, and gradual opening to competition. Success is measured not by the ‘local’ share alone, but by fewer shortages, higher quality and deeper technical capability.

10. Building materials

Statistics show that building materials are not a marginal sector. In the 2024 annual report, non-metallic mineral products, particularly bricks, accounted for a large proportion of establishments and employment. In the 2025 cumulative report, they represented 488 of 965 establishments, or 50.6% of large establishments, and 26.1% of employment according to the report. ¹⁷¹⁸ This reflects substantial reconstruction demand, but raises three questions: is capacity growing faster than demand, how much fuel and water does it consume, and is the product compliant and competitive in cost and quality?

10.1. From ‘more materials’ to ‘better materials’

The Central Organization for Standardization and Quality Control conducts updates, testing and quality-mark monitoring, including a cement plant follow-up in 2026 to verify continuing conformity. ¹⁹ The lesson is that protection of domestic products, when used, must protect a capability that can improve, not an indefinitely non-compliant or high-cost product.

11. Energy-related industries

By energy-related industries, this chapter means the industrial products and services needed to produce, transmit, distribute and use energy: cables, conductors, transformer parts, panels and equipment, pumps and valves, structures and tanks, spare parts, measurement and control equipment, and certain renewable-energy components where an economic case exists. Iraq already has partial capabilities. Ur State Company, for example, offers cables, wires and aluminium sections produced to Iraqi and international standards, while Ministry of Industry companies have transformer testing, rehabilitation and assembly capabilities. ²⁰ This is a foundation for learning, not evidence of a complete chain.

11.1. The component localisation ladder

The most serious mistake is to require a high nominal local-content share before suppliers and testing exist, producing a supplier in name only or higher costs without learning. The alternative is capability schedules: major procurement begins by breaking the product into packages that can actually be localised, followed by supplier qualification contracts, with content requirements increasing as success is achieved. The same percentage is not imposed on every product, and local labour alone does not count as deep industrial content.

12. Local suppliers and quality infrastructure

The preceding chapter handed the supplier and quality-infrastructure programme to this chapter because these are the links that turn a large anchor company into a wider industrial economy. Quality infrastructure includes standards, metrology, laboratories, accreditation, conformity assessment, quality marks and traceability. In 2026, the Central Organization for Standardization and Quality Control continued updating Iraqi standards for food, chemicals, engineering, construction and occupational safety, and provides digital services for the quality mark, product requirements and factory specifications. ²¹

12.1. The supplier programme: from general training to an actual contract

Under this design, the number of training courses is an activity indicator, not a measure of success. Success is a supplier that passed a test, won a contract and then retained it or expanded to another buyer. The state does not fund training indefinitely where no market or technical potential exists.

12.2. A laboratory gap does not always require a new laboratory

Before purchasing new laboratory equipment, existing tests, accreditation, service time, unused capacity and opportunities for mutual recognition must be inventoried. The problem may be a missing standard, accreditation, maintenance or slow results, rather than a missing building. Investment follows a ‘testing-gap map’ for each chain.

13. Industrial cities and shared infrastructure

Iraq does not need to invent a new institutional framework for industrial cities. Industrial Cities Law No. 2 of 2019 established the Industrial Cities Authority under the Ministry of Industry and Minerals, aiming to organise activities in serviced locations and encourage domestic and foreign investment and partnerships. In July 2026, the Iraqi Gazette published Instructions No. 1 of 2026 on the conditions for granting licences to establish, develop or operate industrial cities. ²²²³ The Vision therefore prioritises using the existing framework and improving the project gateway, rather than adding a parallel authority.

13.1. An industrial city is not a land-allocation scheme

Türkiye's experience with organised industrial zones demonstrates the value of ready infrastructure—roads, water, gas, electricity, communications and waste treatment—and an administrative environment that reduces start-up costs. ²⁴ Transferring the idea to Iraq, however, does not mean copying Turkish exemptions or structures. The transferable principle is ‘serviced land + management + allocation rules + market linkage’.

14. Trade, protection, exemptions and procurement

A trade instrument can support industrial learning or conceal its absence. Iraq already applies exemptions and reduced duties to raw materials and production lines under existing legislation and decisions. In 2026, customs announced continued exemptions for raw materials and lines, with follow-up teams verifying that projects existed and exempted materials reached factories. ²⁵ ASYCUDA also continues to automate exemptions, advance declarations, manifests, exports and electronic payment. ²⁶ This infrastructure allows an exemption to move from an ‘administrative letter’ to a digitally auditable transaction.

14.1. The rule of alignment between protection and inputs

Protecting a final product makes no sense if tariffs or procedures make its raw material more costly than that of an imported competitor. The reverse also applies: exempting inputs while permanently protecting the product may create a rent margin. Instruments must therefore be reviewed as a package at chain level: input, final product, alternatives, market, competition and duration.

15. Productivity, energy, water and the environment

Any industrial expansion in Iraq takes place within real water, energy and environmental constraints. Production value alone is therefore an insufficient goal. Worker productivity, value added, energy continuity, water consumption, losses, waste and emissions must be included according to the industry. The official 2023 environmental survey of large and medium-sized industrial establishments covered 1,685 factories, of which 1,555 were operating or partially operating, and recorded 561.2 thousand tonnes of total solid waste annually. ²⁷ This alone makes waste management and material efficiency part of industrial policy, not an environmental addendum after investment.

15.1. ‘Value per resource’ indicators

No national numerical targets should be set for these indicators before sectoral baselines exist. A tonne of cement is not comparable with a package of medicine, nor a cubic metre of water in a food industry with an electrical component. The correct unit of comparison is within the chain over time; some indicators can then be aggregated at portfolio level.

16. Comparative lessons: mechanisms, not countries

In 2024, Jordan exported approximately USD 896.8 million in pharmaceutical products, including approximately USD 174.8 million to Iraq. ²⁸ This does not mean Iraq should target a similar figure. Rather, the Iraqi market itself tests regional manufacturers. For Iraqi factories to become regional suppliers, they must move beyond a guaranteed market towards accreditation, quality, delivery and overseas registration.

17. Iraqi industry in 2045 and the stages of transformation

The intended picture is not ‘an Iraq that manufactures everything’, but an economy with more industrial chains of rising domestic value; private companies able to expand and export; public institutions operating efficiently as regulators, purchasers and asset owners rather than permanent shelters for losses; industrial cities in actual use; and quality infrastructure that enables Iraqi products to win contracts because they conform, not because they are protected.

18. Indicator and target dashboard

The only numerical target reproduced here from a near-term official document is the 2028 development plan target for manufacturing's share. It is not extended to 2045 by linear interpolation. The remaining indicators require a baseline and stable definitions first, after which 4–5-year target cycles can be adopted.

19. Implementation programme package

P1 — Industry and value-chain accounts

Purpose: close the gap between factory figures and policy. The Statistics Authority and Ministry of Planning develop periodic accounts linking production, value added, domestic/imported inputs, trade, energy, water and employment across a limited number of chains. No new institution is established; existing statistical functions, national accounts and registers are used. The first output is a published methodology, a data dictionary and a register of discrepancies between annual and cumulative reports.

P2 — Industrial chain-deepening compacts

This programme takes the value-chain compact concept from C02 and turns it into an industrial instrument. Each chain is selected through a published gateway, after which its compact identifies bottlenecks and their owners: supplier, laboratory, land, electricity, customs, training, finance. The compact is not a company subsidy; it is an outcome agreement between public and market actors to remove measurable barriers within a defined period, followed by a review deciding expansion or termination.

P3 — The qualified Iraqi supplier and quality infrastructure

A joint programme with anchor companies identifies components and services suitable for localisation, opens qualification calls, partly funds quality improvements where a potential contract exists, and links the Central Organization for Standardization, laboratories and accreditation to a map of actual gaps. A supplier counts as ‘successful’ only after meeting a standard, winning a contract and maintaining performance.

P4 — The industrial cities and clusters gateway

The Industrial Cities Authority applies the existing legal framework and 2026 instructions through a project gateway: demand, location, infrastructure, operator, water and environment, finance, utilisation indicator. Priority goes to completing cities or clusters with users and actual connectivity before creating new locations merely for geographical distribution. Actual occupancy, services, time and cost data are published.

P5 — Deepening the pharmaceutical industry

This connects the Ministry of Health, regulators, industry and factories through specific product pathways: quality, GMP, laboratories, technology transfer, equivalence/stability where needed, packaging, registration and then exports. Public procurement serves as a temporary demand anchor subject to quality, delivery, price and competition conditions. Domestic coverage alone is not treated as evidence of depth.

P6 — The petrochemical processing and energy compact

Each major project has a pre-investment gateway covering feedstock, water, energy, logistics, market, finance, safety and downstream products. The major project is connected to a supplier and downstream manufacturing pathway. A stand-alone intermediate-material plant cannot count as final success if subsequent value-chain links remain imported.

P7 — Resource efficiency and clean production

This begins with industries consuming the most energy, water and materials, establishes value/energy, value/water and loss/input baselines, and then develops efficiency, heat and water recovery, reuse and recycling projects where feasibility is demonstrated. Finance may come from the establishment, performance contracts or green finance where conditions allow; it is not assumed that the public budget funds every upgrade.

P8 — Industrial support instruments register and expiry review

A unified government register—not a new institution—is established, showing for each tariff, exemption, guarantee, land allocation or preferential price: legal basis, beneficiaries, estimated cost, indicator, review date and decision to continue/adjust/end. The aim is to make industrial policy auditable and prevent the accumulation of privileges whose costs nobody knows.

20. Implementation, cost and financing matrix

20.1. Cost methodology

The chapter sets no ‘total cost of industrialisation to 2045’, because such a figure would be artificial. Costs must be built project by project and gateway by gateway, showing the state's explicit and implicit commitment: land, infrastructure, exemptions, service prices, guarantees and public procurement. This allows support to be compared with actual value, jobs and learning.

20.2. Phased implementation matrix

21. Risks and safeguards

21.1. Rights safeguards and market competition

Industrial policy does not entitle the administration to seize control of the market or allocate resources without transparency. Licensing, protection, procurement and allocation decisions must remain open to grievance and review, criteria must be published as far as possible, and ‘product protection’ must not serve as a cover for excluding a compliant competitor or entrenching a monopoly. Environmental and safety requirements must also apply to public and private actors on the same principle.

22. Conclusion and the bridge to agriculture and food security

Manufacturing is where the productive-economy idea faces a material test: can Iraq take a material, component or knowledge and create higher value from it, with stable quality and defensible resource consumption, through companies that learn and enter supply chains? If so, resources become a foundation of strength. If support sustains a factory that neither learns nor competes, industrialisation itself becomes a new form of rent.

Industry therefore does not end at the factory. Food takes us directly back to land, water, crops and farmers; the ability to process food cannot compensate for low-productivity agriculture or water-wasting irrigation. The next chapter, V2-D04-C04 — Agriculture and Food Security — takes up the other end of the chain: how Iraq can produce agricultural raw materials more sustainably, productively and securely, and connect them to industry without depleting water, closing the market or turning food security into a slogan of absolute self-sufficiency.