That Egypt is under-performing in export markets is a well known fact. How might it improve? Sherine Nasr listened to the experts Export promotion ideas are en vogue these days. A few weeks ago, the People's Assembly passed an export promotion bill designed to boost Egyptian exports, despite objections on the part of many exporters. Although business associations tirelessly discuss the barriers to greater exports, suggesting possible solutions and incentives, efforts in this direction have thus far been unsuccessful. Egyptian exports haven't increased and the government doesn't seem to have a coherent vision or plan despite the fact that the obstacles preventing increased exports were accurately defined long ago. Last week, the Centre for Political and Strategic Studies hosted a large number of industrial, agricultural and tourism experts to give their opinion on "increasing the competitiveness of the national product". "To be competitive, you have to be one of the best, not necessarily the best," said Ahmed Arafa, an industrialist turned exporter. "One way of doing this is to increase the added value of your product. For example, instead of exporting cotton, it would be more profitable to sell a ready-made cotton T-shirt," said Arafa. He added that a factory successfully managing a variety of manufacturing processes is likely to be more competitive. But, with the exception of a few very large factories, this will be difficult to achieve. "How is one to become competitive when materials, know-how and technology are all imported?" inquired Mohamed Farid Khamis, one of Egypt's leading industrialists. Khamis went on to specify the three main reasons he believes Egyptian products are not competitive. Firstly, most Egyptian industries have not reached an "ideal production output". Khamis explained that an automobile factory that produces less than 200,000 cars a year cannot withstand competition from mass producers like Korea and China. Secondly, innovation and originality are both severely lacking in Egyptian products, according to Khamis. "In the 1980s, the creative component of a spinning machine accounted for 50 per cent of its total value. Today it is estimated at 87 per cent. This gives us an insight into the importance of innovation and creativity in the designing of any machine," said Khamis. To this day there has not been a specific budget to encourage scientific research and develop new technologies. "Industrialists and scientific researchers have somehow failed to create mutual synergy with the result that Egypt's contribution to global technology and innovation is virtually nil," he said. Third, excessive taxes and customs duties have led to comparatively high production costs. Khamis indicated that the production cost of one square metre of carpet produced in Egypt is 17 per cent higher than the same carpet produced in the United States, even though American workers earn ten times more than their Egyptian counterparts. "This is due to the endless number of fees and duties that producers have to pay. For example, the levying of sales taxes on production equipment is an Egyptian phenomenon which I believe has no equivalent anywhere else in the world," he said. According to a World Trade Organisation (WTO) report, Egypt was absent from a list of the world's top 50 exporting countries while it ranked 47th on a similar list of importers. "This is an alarming situation. But more worrying is the fact that we are not doing anything serious about it," said Mohamed Mokhtar Sultan, head of the Egyptian- Japanese Steel Company. He added that, when addressing these problems, the government has had a tendency to hold discussions only with major businessmen. Small and medium-sized entrepreneurs, who represent 98 per cent of the industrial community in Egypt, are largely ignored. "Moreover, the trade and industry chambers have tended to solve the problems of their members on an individual basis while failing to address industrial problems nationally," he said. Many experts believe it would be more realistic to initiate reform in areas where Egypt already has a comparative advantage. Thus, Egypt's spinning and weaving industry has been targeted. "It is worth noting that Egypt produces 50 per cent of the world's highest quality long stable cotton," said Adel Abdel-Halim, an expert in the field. As one of Egypt's oldest industries, textiles represent 25 per cent of Egypt's exports, employing more than one million workers, that is, 30 per cent of Egypt's industrial workforce. "Highly qualified Egyptians in this field have also helped found this industry in a number of Arab countries such as Iraq, Algeria and Sudan," he added. However, the textiles industry is facing many challenges. According to Abdel- Halim, very little has been done since the 1980s to upgrade or modernise existing production lines in Egypt's 5000 factories. The absence of ancillary or feeder industries have also lowered the quality of the final product. Additionally, excessive taxes, estimated to be as high as 40 per cent, is one of the biggest burdens. These factors have had a negative impact on Egypt's textile exports, which were estimated at $2 billion in 2001. Meanwhile, Turkey, Morocco and Tunisia have all been increasing their market share.
