EU partnership agreement urges industrial modernization
Egypt, Economics, 7/18/2001

With the signing of the partnership agreement with the European Union (EU), the countdown for fierce competition between Egyptian industry and that of the EU member states (as well as other countries that have signed similar agreements with the EU) seems to have started.

Businessmen and economists say that the challenge is inevitable and a matter of life or death for national industry.

They are also afraid that Egypt will adopt the same negative attitude towards the challenges of the EU partnership as it did when the country adopted GATT, especially in relation to intellectual property rights.

Interviewed by a business daily, head of the People's Assembly Industry Committee, Mohammed Farid khamis, who had previously said that the modernization of Egyptian industry was the responsibility of the private sector, said the situation was dangerous.

"We have to realize the approaching danger so as to have a real sense of the necessity of modernizing national industry. The private sector has to share part of the financial responsibility for the modernization process," he argued, noting that it had to be a joint responsibility of both the government and the private sector.

In order to encourage the private sector to take part in the modernization process, the government could offer the private sector technical knowledge through its institutions or help it obtain the latest technology, he added.

Former Minister of Industry Fouad Abu Zahgla drew attention to an important aspect of the partnership with the EU, namely that the support for modernizing Egypt's industries will involve satisfying the urgent needs of the private sector and not the public sector, which also needs modernizing to meet the agreement.

He added that the general target of the industry-modernizing program would be confined to achieving more GDP growth and enhancing the competitiveness of the private sector, focusing on small and medium-sized industries.

In other words, big industries will not be expected to benefit greatly from this program.

Head of the investors Association in 10th of Ramadan industrial city, Mahmoud Soliman, stressed the urgent need of an industrial map for Egyptian industry.

"The structure of Egyptian industry must be reviewed so as to identify the industries requiring modernization for the good of the national economy," he said.

Industries needing to be developed, according to Soliman, are those using local raw materials like marble, cement, chemicals, building materials, iron and copper.

He also underlined the close link between the modernization of Egyptian industry and developing export-oriented small industries, noting that 70 per cent of Japan's exports, for example, rely mainly on small-scale industrial enterprises.

He also pointed to the necessity of encouraging scientific research linking it to the production process.

Part of the state budget could be allocated to this, along with a slice of the profits of each project.

"He urged making use of Tunisia's EU partnership experience. Tunisia has managed to modernize its industries and boost exports to the EU member countries," Soliman said.

We have to start immediately to identify a host of industrial sectors where we enjoy relative competitiveness and start launching rapid modernization programs," Former Minister of Industry Mohammed Abdel Wahab stressed.

He also underlined the importance of technological research saying that the government had to take the leading role in this.

"This is what happened in developing countries such as Malaysia and Singapore," he said.

"The challenge is coming either with the approaching application of the GATT agreements or with through the partnership with the EU," Head of the Leather Industry Chamber, Mamdouh Thabet Meki, argued.

These challenges demand the ability of the Egyptian industry to provide competitive products abroad and in the local market that will be one of the arenas for the struggle.

"But one has to bear in mind that the privileges Egyptian negotiators managed to obtain in the negotiations with the EU would get rid of the fears aroused by the partnership agreement," he said.

These privileges include the immediate application of some items once the agreement is approved giving the opportunity for the immediate modernization of certain industries in addition to lifting the customs duties and other restrictions on Egyptian exports to the EU markets.

As for the leather sector, Meki said that it would have a better chance than other sectors as it had been chosen as one of the first industries to undergo the modernization program.

In addition, once the agreement is put into effect, the Egyptian leather industry will have raw material from EU countries free of the previous customs restrictions.

Previous Stories:
  More foreign investments in oil, gas exploration   (7/17/2001)
  New infrastructure projects to put market in high gear   (7/17/2001)
  Privatization program progressing on schedule   (7/17/2001)

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