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Al-Ahram Weekly 13 - 19 January 2000 Issue No. 464 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 13 - 19 January 2000 Issue No. 464
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Heritage Special Books Profile Travel Sports People Time Out Chronicles Cartoons Letters Way off the mark
By Mona El-FiqiThe fulfilment of the government's plan to raise the value of Egyptian exports to $10 billion by the end of 2000 seems far from attainable. The Central Agency for Public Mobilisation and Statistics (CAPMAS) put export volume in the first half of 1999 at only LE4.7 billion, or less than $2 billion. Thus, in order to reach the government's target, export volume needs to be more than quadrupled.
Government policy over the last few years has been geared to efforts to attain the national export target. Specialised councils and committees of experts were established and decrees were issued to ease the financial burdens of exporters.
However, looking at the growth rate of Egyptian exports during this period, it is clear that the $10 billion target cannot be achieved. "It would be impossible to reach this target even by 2005," said Helal Shetta, deputy chairman of the exporters division of the Federation of Chambers of Commerce.
Shetta believes that businessmen should produce with the aim of exporting, rather than merely exporting what exceeds local market needs. He said that population increase absorbs production unless producers set an export strategy for themselves and decide to supply the export market rather than the domestic one.
According to CAPMAS figures, Egypt's export volume fell from LE13 billion in 1997 to LE10.7 billion in 1998. During the same period, imports rose from LE44.9 billion to LE56 billion and the trade deficit grew from LE31.5 billion to LE45.1 billion.
Since the Egyptian economy has to be integrated with the international market, the inadequate performance of Egyptian exports will lead to a trade deficit increase. Moreover, it will negatively affect foreign currency reserves, the value of the local currency and Egypt's foreign debts.
In a study conducted by the Egyptian Businessmen's Association (EBA), the 16 per cent increase in export volume from 1980 to 1996 -- which ranks Egypt 76 in the world -- is considered very meagre.
Compared to the exports of other Arab countries, Egyptian exports are indeed low. Iraq, for instance, in spite of the international economic blockade against it, has, through the 'oil for food agreement', achieved an export volume double that of Egypt.
The volume of Egyptian non-oil exports is particularly weak. In 1998, 34 per cent of exports were accounted for by oil. A high percentage of oil exports inevitably leads to the occasional slump in total export revenue due to drops in international oil prices -- as happened in 1998.
There is a lot of scepticism related to the government's decrees to encourage export activities. Shetta said that the government had on many occasions announced new measures providing exporters with more incentives, but that nothing had been done. "Each time, officials told us that they had not received any instructions to apply the announced decree and that it was just press talk." By way of example, Shetta points to the as yet not implemented decree issued in October 1999, before the cabinet reshuffle, to lift the taxes levied on exports.
Among the problems facing exporters is the tax rebate fund which was devised to facilitate repayment of customs duties to the private sector. An exporter who preferred not to mention his name said that the system, though commendable in theory, is often hampered by practical inefficiencies making its implementation difficult. The source added that exporters should be granted lower interest rates on their loans to encourage them to invest in export-oriented projects.
In a recent study, the EBA defined the role of the government, the private sector and business organisations in reactivating export performance. According to the study, the government should encourage projects which are mainly involved in export by granting incentives for their expansion, abolishing sales taxes on imports of capital goods and spare parts used in manufacturing exports and providing exporters with tax breaks as well as more financing facilities from the Export Development Bank.
According to the study, the private sector should be responsible for improving product quality to meet international standards, reducing cost price, improving marketing and establishing joint ventures with international companies in order to compete with foreign products.
As for business organisations, the study says they should provide exporters with recent studies of foreign markets and financing organisations and data about exportable products.
