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Al-Ahram Weekly 4 - 10 May 2000 Issue No. 480 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 4 - 10 May 2000 Issue No. 480
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Opinion Culture Special Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Export recipes
By Mona El-Fiqi
Foremost among the declared aims of economic reform in Egypt has been the creation of an appropriate climate for export-led growth. The government, while admitting that export-performance has actually been deteriorating, continues to insist that an export-oriented economy is the only way forward
At a seminar held by the Al-Ahram Centre for Political and Strategic Studies this week, Minister of Economy and External Trade Youssef Boutros Ghali urged that "an export development policy" needs to be put in place.
According to Ghali, an important part of such a policy is the establishment of a federation for exporters to deal with their problems and help them to increase their exports.
The formation of a body for the legal protection for Egyptian trade is also very important. According to seminar participants, representatives of this body should be posted in foreign markets with the aim of protecting Egyptian exports, for instance to defend Egyptian products against accusations of dumping.
The poor performance of Egypt's exports is highlighted when measured against that of another emerging economy such as Turkey. In 1982, Turkish exports stood at $9.2 billion, in comparison with Egyptian exports at $8.6 billion -- a difference of less than $1 billion. However, in 1999, Turkish exports reached $52 billion while Egypt's increased to only $14 billion.
Within the global framework Egypt ranks 174th among 186 exporting economies, according to Gamal Bayyoumi, assistant to the foreign minister for European Union Partnership affairs.
Exporters and officials gathering at the seminar identified the problems obstructing Egyptian exports as factors related to the general condition of the economy as a whole. One of these is the high production costs which they attributed mainly to insufficient tax incentives. Such high costs make the prices of Egyptian exports uncompetitive in the global market. Poor marketing, inadequate research and development and competition with products dumped in foreign markets are other debilitating factors.
Even textiles, which are considered by experts to be the Egyptian product with highest export potential, are facing problems. Textiles currently make up 25 per cent of the total value of Egypt's exports in manufactured goods. Although Egypt produces 45 per cent of the world's long staple cotton, its price is high compared to that produced in the United States and the quality of cotton textiles produced in Egypt is poor.
Mohamed Farid Khamis, chairman of the Shura Council's Industry and Energy Committee complained that the lack of transparency characterising the government's privatisation of textile companies has made the sector's labour force insecure which has had a negative impact on its productivity. Khamis suggested that for Egyptian products to be priced competitively, the government should ease the heavy tax burden on exporters.
Naela Alouba, member of the exports committee of the Egyptian Businessmen's Association, blamed the government for not providing direct financial support to exporters "as other governments do, such as that in Turkey," she said, citing policies which facilitate the repayment of loans by businesses.
Former Minister of Industry Mohamed Abdel-Wahab said that the cost of establishing industrial projects in Egypt is 25 per cent higher than in any other country -- a cost that impacts negatively on the prices of products. In response, government officials said that exporters should be assisted through tax breaks and terms of payment on loans, even if indirectly.
Regional trade arrangements such as the Arab Free Trade Area and the European Partnership were cited by seminar participants as means by which Egyptian products might gain access to international markets. Bayyoumi said that Egypt's dealings with the EU have already helped increase Egyptian exports to Europe from 10 to 45 per cent of total Egyptian exports and this is expected to increase once the partnership agreement is signed.
Even though the partnership agreement has not yet been signed, the EU has given Egypt $1 billion over the past three years for technical assistance. Another $1 billion grant is scheduled to be given over the next three years.
"What is killing exports is not globalisation or even opening up the local market to imports as some exporters believe. It is bureaucracy," Bayyoumi said.
Egypt is committed to opening its market to Arab imports in 2007 and to EU imports in 2019.
