Can Egypt's non-oil exports be doubled during the coming four years? This is what the government and private sector are aiming for, reports Mona El-Fiqi In an attempt to boost non-oil exports, the government in cooperation with export councils announced a new strategy that aims at raising exports from LE92 billion in 2009 to LE200 billion in 2013. Last week, Prime Minister Ahmed Nazif met with chairmen of export councils in different sectors to discuss the details of a national plan to boost exports. During the meeting, Nazif approved the strategy and asserted that the government would continue supporting the competitiveness of Egyptian exports by passing appropriate legislation and providing incentives to investors. Nazif added that the government would go on improving infrastructure, providing land, and offering well-trained labour to help exporters reach their goals. Rachid Mohamed Rachid, minister of trade and industry, further announced that the strategy has defined objectives such as attracting LE70 billion in new industrial investment, training 600,000 workers, and providing 400,000 job opportunities in the industrial sector. The number of exporting companies is expected to increase from 1,800 to 2,800, each exporting products valued at $1 million. According to Rachid, the success of this strategy depends on improving the competitiveness of Egyptian products. "Empowering national industry, improving product quality and decreasing the profit margin are necessary for the plan to succeed," Rachid said. Rachid asserted that reducing imports of raw materials that can be locally produced becomes necessary now to improve national industry. Taking the first step to empower national industry, on 16 February, the Ministry of Trade and Industry decided to provide a package of incentives to 90 industrial sectors. The incentives are being given according to the value added of each sector in order to encourage them to expand using locally manufactured components. Rachid announced that the financial assistance provided to exports through the Export Development Fund would be determined according to the value added of these products starting in July of fiscal year 2010-2011. Rachid asserted that the government would continue backing different productive sectors to lighten the negative impact of the global financial crisis. Adham Nadim, executive manager of the Industrial Modernisation Centre (IMC), told Al-Ahram Weekly that following the international financial crisis, the government started to direct more investment to infrastructure projects to help revive the economy and provide job opportunities. However, the result, after one or two years, was not as the government hoped. "These projects could not provide sustainable job opportunities as factories do. So the government has decided to redirect investments towards boosting exports, a guaranteed solution to the growing unemployment problem," Nadim explained Nadim said raising exports to LE200 billion in four years is a realistic target. Owing to the large size of international markets, exports can be doubled, while growth of sales in local markets is limited. During the past few weeks, various export councils in different sectors held meetings to discuss a plan for each sector and to decide on their needs in order to double exports. Export councils agreed that they need more financing facilities, infrastructure, well- trained workers, marketing missions, new legislation, and trade agreements. Nadim said that exporters have identified that preferential trade agreements signed with some countries have helped to boost exports. They have requested that the government secure new trade agreements with countries such as Russia, India and South Africa, and in Latin America, to open these markets to Egyptian exports. Exporters have also requested that the government provide long-term loans for the industrial sector. "In Egypt the loans provided are short-term, for two or three years, but in other countries the industrial sector enjoys long-term loans that may reach 15 years. A long-term loan gives factory owners a chance to work and repay their debts to the banks," Nadim added. Exporters are optimistic that Egyptian non-oil exports can be doubled. Non-oil exports were doubled before from LE46 billion in 2004 to LE95 billion in 2008. Behind this success, according to Hani Berzi, chairman of the Food Export Council, was a comprehensive strategy of the Ministry of Trade and Industry. Berzi said the Food Export Council is committed to apply a plan to raise current exports of food products from LE10.8 billion in 2009 to LE22 billion in 2013. According to Berzi, food exporters will succeed in achieving this figure with the assistance of the government's support programme. Berzi further explained that the council's plan includes LE15 billion in new investments, providing 18,000 new job opportunities and the addition of 180 exporters to reach 280 members of the Food Export Council. However, Berzi said there are obstacles that hinder boosting food exports, such as the lack of a general authority for food safety and an active role for the current safety food law. Unifying laws, developing current legislation, applying strict control, and enforcing severe penalties against violators are a must to enhance exports, according to Berzi. "For example, under the current system, a factory owner who works without a licence pays LE100 as a fine, which is nothing," says Berzi. Meanwhile, exporters are complaining that the technical education sector does not graduate well- trained workers. "Although there is an unemployment problem in Egypt, businessmen do not find good workers to employ," Berzi said. One other important obstacle mentioned by Berzi is the lack of good roads linking Egypt with its neighbours, raising transportation costs and rendering Egyptian exports uncompetitive. In response, Rachid announced this week that Minister of Transportation Alaa Fahmi agreed to form a new working team to cooperate with the Ministry of Trade and Industry to facilitate renovating the transportation network. Berzi also added that the government should provide land with utilities for industrial projects, as well as agricultural lands, which are decreasing and causing a reduction in food exports. In a meeting last Sunday, Ahmed Fekri Abdel-Wahab, chairman of the Engineering Goods Exports Council, said that the engineering sector has a plan to raise exports from LE10.6 billion in 2009 to LE37.6 billion in 2013. To achieve this plan, according to Abdel-Wahab, the sector needs to pump in new investments estimated at LE6.5 billion and to add 116 new exporters and provide 25,000 job opportunities.
