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Al-Ahram Weekly 6 - 12 April 2000 Issue No. 476 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 6 - 12 April 2000 Issue No. 476
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Summit Features Focus Travel Living Sports Profile People Time Out Chronicles Cartoons Letters An ailing giant
By Mona El-FiqiEgypt's textile industry provides employment for almost one third of the industrial labour force, and accounts for 22 per cent of total industrial (non-oil) export proceeds according to the Central Agency for Public Mobilisation and Statistics. Egypt accounts for more than 50 per cent of the world's production of long staple cotton. Yet the industry is struggling to survive, Mona El-Fiqi reports.
Awakening a Sleeping Giant -- a two-day conference on the Egyptian textile industry organised by the Centre for Economic and Financial Research and Studies (CEFRS), revealed the problems facing the industry.
In 1998 Egypt exported just LE9 billion worth of textiles, a reflection, say experts, of the chronic problems afflicting an industry dominated by mammoth public enterprises, unable to adjust their production and marketing so as to compete more effectively in international markets.
"Low productivity, out-dated technology, poor management and marketing, unsuitable products, inadequate insurance, dumping, excess labour and high prices are all to blame," says Heba Nassar, head of the CEFRS.
Since 1994, the revenues of the 31 public textiles companies have plummeted. The situation has not been helped by the fact that, since 1994, the government's policy of fixing the price of domestically produced raw cotton has resulted in higher prices than on the international market.
But the problem does not stop with government pricing policies. There are, admits the minister of public enterprises, probably 35,000 excess workers in public textiles companies.
Such over-manning has led to labour costs being considerably higher than in India, Indonesia and Turkey. Labour accounts for 15 per cent of total manufacturing costs.
Factories use outdated machinery which can process only limited varieties of cotton, leading to the use of expensive long staple cotton when short staple cotton would be more appropriate.
The minister, though, claims that the government has begun upgrading factories with a view to eventual privatisation. Production is being downsized, he said, to a level commensurate with the factories' technical capabilities and actual labour force.
Dumping has hit the local industry particularly hard. The ministry of the interior assesses that some LE8 billion worth of textiles and garments -- 80 per cent of the domestic market -- has been dumped.
And although the nascent private sector is more promising when it comes to productivity and marketing it is, as yet, too small to have any real impact on the overall output and export performance of the textile industry.
Globalisation and liberalisation have also compounded the Egyptian textile sector's problems, with the General Agreement for Tariff and Trade (GATT) requiring the complete lifting of trade barriers on textiles. The ready-made garment, in turn, will be completely liberalised by 2005.
"Recent innovations in the industry have altered its traditional supply system. Together with the massive restructuring required by the privatisation programme, this poses both problems and potential opportunities," says Loubna Abdel-Latif, a professor of economics at Cairo University .
Although the Egyptian textile industry enjoys comparative advantages -- high-quality local raw cotton and low labour wages -- these have yet to be converted into a competitive edge, while countries that are not traditional textile exporters, such as Turkey and Tunisia, are now major competitors in the global market.
