The deal will help unlock investment from within the war-torn country, Iran’s Minister of Industries, Mining and Trade Mohammad Reza Nematzadeh said during a visit to Baghdad on February 14, Fars News Agency reported.
The minister said Iran would begin with several pilot projects, for which it would also supply industrial equipment and investment.
Welcoming the news, his Iraqi counterpart, Mohammad Shiya al-Sudani, said the construction of industrial townships was among the country’s priorities, Financial Tribune reported.
“Given Iran’s experiences in the construction of such townships, Iraq is willing to cooperate with Iran in this field,” he said.
Building industrial townships to attract investment in manufacturing is a popular strategy pursued by many developing countries.
Iran has already built 750 such townships and estimates that they host 40,000 factories and plants, according to Global Construction Review.
India is also relying on such projects to industrialize while avoiding problems with setting up factories in urban centers. Industrial townships also help attract foreign investment. At the end of 2015, Japan announced plans to double its investment in India by setting up 11 industrial townships, each with around 30 Japanese factories, all of which are eligible for special tax incentives.