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Al-Ahram Weekly 22 - 28 June 2000 Issue No. 487 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 22 - 28 June 2000 Issue No. 487
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Economy Focus Opinion Culture Features Travel Living Sports Profile People Time Out Chronicles Cartoons Letters Trade Buzz
When delegates from the Group of 15 convened in Cairo this week, trade was on their minds. As many G-15 countries recover from the reverberations of the Asian economic crisis, focus now turns to boosting trade among G-15 countries and with the industrially-advanced countries of the North.Strong trade relations are vital to economic growth and development. In 1999, the combined exports of the G-15 countries stood at $361.4 billion, with imports a comparable $357.2 billion; but intra-G-15 trade accounts for only 11 per cent of the group's international trade. Recognising the need to promote intra-group trade, the G-15 Federation of Chambers of Commerce, Industry and Services (FCCIS) was founded during the eighth G-15 summit, also held in Cairo in 1998.
FCISS has been quick to champion small- and medium-sized enterprises (SME). "SMEs constitute the backbone of any economy. They support the industrial base and open up employment opportunities," Indonesian economist Haryono Eddyarto told Al-Ahram Weekly. Calling SMEs "the most urgent social issue governments need to address," Eddyarto stressed the need for countries to cooperate and learn from each other's experiences, drawing on the example of India and the work of Egypt's Social Fund for Development.
But it takes more than discussions to achieve progress. "A specific agenda for cooperation in the development of SMEs is required," said Khaled Abu Ismail, head of the Federation of the Egyptian Chambers of Commerce. Abu Ismail admonished FCCIS members for not even paying their dues to the federation. "The treasury of the general secretariat of the FCCIS is penniless," he told the Weekly. In fact, all meetings of the FCCIS so far have been financed by Egyptian businessman Mohammed Farid Khamis, who was recently elected the G-15 FCCIS head.
Mohamed Shawashira, head of the Business and Investment Forum (BIF) -- another organisation aimed at fostering business opportunities between G-15 states -- agreed that future economic growth relies heavily on the success of SMEs.
"Both organisations act as facilitators to open new horizons to businessmen. Therefore, we should work together to eliminate the elements of duplicity," said Shawashira, who suggested establishing a "pool of resources" from which SMEs could be financed.
Shawashira argued that the G-15 could be a very influential group if it made full use of its potential. "The G-15 countries play a very significant role in the world economy," Shawashira noted. The population of the G-15 countries is 1.8 billion, almost 30 per cent of the world population, and G-15 countries produce roughly 8 per cent of the global gross domestic product. And yet, foreign trade of the member countries amounts to a mere $718.6 billion against total world trade -- a staggering $10.4 trillion.
Although trade among G-15 countries has been growing steadily -- it increased from $21.7 billion in 1989 to $71.8 billion in 1997 -- intra-G-15 trade declined rapidly in the past two years, in large part due to the Asian economic crisis. "As a result, the cost of trade has become very expensive for importers and exporters in these crisis-hit countries," explained Emmanuel Canivel, a senior banker from Indonesia.
Indonesia was among the worst hit countries by the crash. According to Canivel, virtually all banks in Indonesia were affected and letters of credit issued by Indonesian banks were not accepted outside the country. Trade with the country essentially stopped. The government was forced to step in and provide banks with guarantees.
Indonesia has advocated establishing a G-15 bank that would be owned and represented by the member governments and would offer preferential trade facilities. Canivel explained that many banks would be willing to provide larger trade limits if there was a G-15 guarantee. "Smaller countries would be able to enjoy larger limits, since they would be working under the G-15 umbrella," he said.
Meanwhile, in an age where economic growth is essentially spurred on by high-tech, knowledge-based industries, the Internet is a vast frontier of trade possibilities. Sibexlink.com, a site set up as a centre for gathering and disseminating information on developing countries, is an open door for emerging markets in developing countries. Currently, some 30,000 companies are registered with the portal, but Khairul Ismail, general manager at Sibexlink.com, says that the figure falls far short of expectations.
Sibexlink is a good start toward enabling businessmen to learn more about each other and foreign businesses, a necessary prerequisite for greater commercial exchange and investments, the delegates concurred. But some summit participants expressed disappointment with the slow adoption of the group's initiatives. Subodh Bhargava, former president of the Confederation of Indian Industry and head of the Indian business delegation to the G-15 summit, lamented the fact that member countries have not been able to effectively achieve an economic focus.
"What is missing is better understanding and knowledge of each other. There is a huge information and communication gap," Bhargava said, adding that G-15 countries lack in-depth knowledge and assesment of each other's trade.
In the absence of preferential treatment for G-15 businessmen, knowledge is power. Bhargava suggested more frequent meetings between businessmen, indicating that heads of states harbour most of the attention at annual meetings, often at the expense of business forums.
Abdel-Moneim Seoudi, chairman of the Federation of Egyptian Industries, the organisers of the forum, said that there is a lack of information on each G-15 country's degree of industrialisation and what it can provide. According to Seoudi, this information will enable countries to complement each other industrially, and commercially.
But trade talk wasn't confined to trading shots on lack of information and coordination. In a bid to promote trade relations among the G-15 countries, the General Authority for Fairs and International Markets organised a trade exhibition from 13 to 20 June in which all G-15 countries scrambled to enticingly display the products they have to offer. The exhibition organisers provided 40 metres free space for each country's pavilion, but the Egyptian government had the lion's share of display room. Each ministry and governmental organisation had a pavillion to display its products and publicise its services and activities.
Sadly, it appears that the economic fruits of the summit might not be as bountiful as the political ones. Mohamed Radi, export manager at Universal, one of the companies participating at the exhibition, told the Weekly that although his company exports to many countrie,s it does not export to any of the G-15 countries. The high costs of transportation, he said, makes Egyptian products more expensive and less competitive in the G-15 markets.
Nevine Wahish, Sherine Nasr and Mona El-Fiki
