30 August - 5 September 2001
Issue No.549
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Al-Ahram Weekly Online 30 August - 5 September 2001 Issue No.549 |
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A vision of sorts
At a time when export promotion is again being underlined as a key plank in the government's economic policy, local industry is facing increasing competition from hitherto unanticipated quarters. Turkey, for one, is making inroads in the domestic steel, glass, plastic, textile and detergent markets, areas in which Egypt for long held a comparative advantage. China, too, has seen a remarkable increase in its exports to Egypt, to the extent that the trade balance between the two countries has widened to $700 million, in China's favour.
Egyptian exports accounted for no more than $6billion in the period 1999-2000 while imports reached $ 17.8 billion. As if these figures were not sufficiently worrying, Egyptian industry's share of its local market is being steadily eroded, hardly an ideal foundation from which to launch an export drive.
The Ministry of Economy and External Trade was perfectly clear, when it made public its export strategies at the beginning of this year, identifying those areas in which export promotion would reap the most dividends. A plan, then, appears to be in place, the result of a vision of sorts. What is needed now is its implementation.
For this to succeed, though, export promotion can no longer remain hostage to the bureaucratic mentality that dogs so much of the nation's economic life. Legislative changes remain necessary to provide long- promised reductions in customs and taxation on production inputs. Current restrictions on credit extension must be ended, and the principle that all exporters, in dealing with the customs department, be treated on equitable footing rather than those lucky enough to be placed on government "white lists" receiving preferential treatment, must be enshrined in law.
The banking sector needs to adopt a policy in which, rather than extending loans to individual businessmen it adopts a strategic view across whole sectors and arranges its credit provisions accordingly. One very urgent need is to pay far more attention to small and medium enterprises which are currently almost entirely dependent on the Social Fund for Development in financing any moves into foreign markets.
Decision-makers, too, need a far more comprehensive data base on which to build policy, even on the basic level of identifying those areas in which Egyptian products enjoy a competitive edge.
Timetabling, too, needs an injection of realism, of practicality over optimism. Projections must be less ambitious so as not to become self-defeating. A marketing drive, broader and more ingenious than the current government engineered one, must be formulated, taking into account the possibilities that exist across all global markets.
Tackling the obsolete methods of production that have contributed to the collapse of many Egyptian industries must also be prioritised, which means bringing to an end damaging squabbles such as the ongoing dispute between the Ministry of Industry and the EU's industry modernisation programme. Urgent matters of national priority cannot be reduced to the petty, internecine backbiting that takes place within individual ministries.
As the government holds meetings this week with bankers and exporters to examine ways of increasing receipts of hard currency we can only hope that sufficient attention will be paid to implementing a coherent exchange rate policy, one capable of securing a stable exchange mechanism. The exchange rate, unfortunately, is but one of the multitude of problems that must be addressed, and successfully so, if the government's export promotion drive is not to remain an optimistic blueprint, but be turned into feasible economic policy.
Sadly, all too often the many bureaucratic arms of the government appear to pull in diametrically opposed directions, rendering the best- laid plans of cabinet members no more than pies in the sky. "Export promotion", whether of commodities or of services, will not take off until the determining administrative, monetary and fiscal regimes which so far have failed to give them the needed direction, are themselves reformed.
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