examines how the crisis will take its toll on Egyptian exports
To the rescue
In reaction to the global slowdown, the government provides more support to the industry
The government is currently considering a package of measures that may help ease the negative impact of the financial crisis on the local industrial sector in general and on exporters in particular. Last week Minister of Trade and Industry Rachid Mohamed Rachid announced the government's decision to fix the price of energy provided to industrial factories during the coming period in an attempt to help them reduce their costs.
A few months ago, the ministry had decided to gradually raise, over a three-year period, prices of electricity and natural gas provided to heavy energy consumption factories such as cement and fertiliser producers. The first phase of the plan, which aimed at cancelling subsidies and selling energy at international prices, was applied in July 2008. However, in response to the global slowdown, Rachid announced the application of the second phase will be put on hold for some time.
Moreover, the additional export fees imposed on cement exports and steel products were also cancelled last week. Rachid announced the decision was taken in response to a study conducted by the ministry's external trade department, which asserted the financial crisis would lead to a slowdown in all economic sectors including exports. The study added this exceptional measure will help maintain local production and exports at their current level. Rachid explained the ministry will follow up the situation, and should there be any disturbance to the local markets, export fees will be imposed once more to stabilise the market.
Meanwhile, the government is considering a comprehensive programme to support the industrial sector. This includes providing more facilities to investors to encourage them to establish new industrial projects, additional tax exemptions and a discount on sales tax. Rachid added that a reduction in shipping costs, an exemption on some port service fees related, and additional exports insurance support are among the measures currently being considered by the government.
The Federation of Egyptian Industries, the Egyptian Federation of Chambers of Commerce and the Exports Councils have all been invited to present their views and suggestions relating to the government's plans to overcome the negative impact of the crisis.
According to official figures, the global slowdown expected during the coming year will lead to a reduction in the state's total revenues by $4 billion and a decrease of the growth rate from seven per cent to less than six per cent. To contribute to alleviating the situation, the government will continue to take actions to ease the impact on the economy.
Minister of Economic Development Osman Mohamed Osman announced that an additional LE5 billion will be allocated to raise investments directed at infrastructure projects to LE42 billion, contrasting with the LE37 billion previously allocated in the government's plan. On the technical and technological levels, the Industrial Modernisation Centre (IMC) announced that it too will focus its future programmes on raising the productive capacity of factories and upgrading technology. The IMC will help attract foreign experts to work in Egyptian factories to raise their competitiveness.
In a meeting held this week to discuss how the industrial sector can surpass the crisis, IMC Executive Director Adham El-Nadeem said the IMC will provide more support to factories to help open up new markets for Egyptian exports. He added the IMC will soon announce additional privileges to be provided to industrial companies to support and upgrade their performance.