Egypt has the potential to reposition its textiles industry in a new global environment, though a series of challenges is still to be overcome. Mona El-Fiqi reports In recent years, the Egyptian textiles industry, especially in the private sector, underwent a period of continuous improvement. Yet, economic experts remain displeased. They claim that unless the industry gains a toehold in the competitive international textiles market, the situation could be dire. Last week a seminar was held with the grand title, "Towards a Comprehensive Strategy for the Textile Sector in Egypt". The one-day event, organised by the Delegation of the European Commission in Egypt, was attended by a great number of textiles experts and private sector businessmen. During the seminar, it was truistically asserted that Egypt had the potential to be a major player in the global textiles market due to its superior cotton quality and geographical location. Furthermore, it has a long history and culture in textiles and all the essential infrastructure is already in place. Much is still to be done, " I am afraid we will lose all these privileges if we do not move fast," said Mohamed Qassem, chairman of the Spinning and Weaving Chamber at the Federation of Egyptian Industries. According to Qassem, the main objective of textiles manufacturers is to reposition Egypt as a major supplier for raw materials and finished goods in the international market. "This aim is not far distant, as the Egyptian textiles industry already has potential," Qassem added. The Egyptian textiles industry is extremely healthy, with more than 1,500 manufacturers employing 50,000 workers. The production output is $3.2 billion annually, representing 3.5 per cent of Egypt's total Gross Domestic Product (GDP). Moreover, Egypt enjoys customs privileges with respect to EU countries, the USA and some Arab states. In addition, Egypt's benchmark costs in labour, manufacturing, water, energy and gas remain much lower than other countries. That said, a long list of challenges are facing the textiles industry. Namely, quality issues, a penury of designers and designs centres, together with a poor record in upstream development and logistics. "We lack skills, [and] the education system does not [have the] profile to fit the market needs," bemoaned Qassem. A study conducted by the German Technical Cooperation (GTZ) reported that the newly graduated textile engineers from Egyptian colleges lack knowledge of modern manufacturing methods. "Textile engineering colleges in Egypt are teaching methods that were created in the 1940s and are mostly obsolete today. The curriculum needs to be revised and modernised in order to supply industry with its needs," the study stated. In stark contrast to the public sector textiles companies which are in a state of slow decline, the private sector has worked hard to develop its factories and raise their export volume. With regard to ready made garments, Magdi Tolba, chairman of the Ready Made Garments Export Council said, "Ready made garment exports in 2005 increased and represented 10.5 per cent of Egypt's total exports excluding oil exports." According to Tolba, a 20 per cent growth rate is expected every year, peaking at $3 billion in 2010. Such favourable growth will also see 70 more export companies take the field. In addition, labour levels in this sector are expected to increase to around 700,000 workers, in both direct and indirect labour. To boost Egyptian textiles exports, the Ministry of Trade and Industry concocted an export development strategy which is being applied from 2005-2007. The strategy targeted particular markets for textiles exports, namely the USA, COMESA, the EU and Arab countries. The strategy also called for bilateral agreements with Arab and regional partners. Over the last two years a number of agreements were concluded by the government, with the textile sector starting to benefit from these. Examples are the Egypt-EU Partnership Agreement and the Qualified Industrial Zones (QIZ) concord with the USA which were signed in 2004. The introduction of the QIZ with the USA in 2004 has had a positive impact on the Egyptian textiles industry. The total number of export companies increased from 54 in 2005 to 166 companies in 2006. Egyptian exports to the USA rose from $564 million in 2004 to $614 million in 2005. The increase represents nine per cent and it is expected to rise yet further to 20 per cent. While this modest increase seems more than merely acceptable, when compared to increases in Chinese exports to the USA, it is clear that there is much more to be done. When Egyptian textile exports to the USA, due to the QIZ, increased by nine per cent from December 2004 to December 2005, Chinese exports to the USA rocketed up by 180 per cent during the same period. In addition, Egyptian exports of certain categories of textiles, which comprise almost 74.5 per cent of the total exported to the EU, have decreased marginally, while Chinese exports in the same categories have increased by around 156 per cent. This clearly shows the cut-throat competition that exists in the global textile market, and shows the necessity of development in the Egyptian textiles industry. As for the future, according to Qassem, by 2010, the number of countries exporting textiles will be reduced from 60 in 2004 to 20 countries in 2010. India and China will lead this pack of survivors in 2010. While China leads in mass production segment, India scores in the value-added segment given its superior design and process capabilities, added Qassem.
