Working hard to boost exports
Egypt, Economics, 12/25/2001

Described by President Hosni Mubarak on several occasions as a life-or-death issue, the promotion of exports has topped the government's agenda for several years now.

According to Akher Saa weekly magazine, the annual volume of Egyptian exports usually range between $4.4 billion and $ 6.4 billion. However, even when the volume hit a record $ 6.4 billion, this did not really mean an increase in exports, but an increase in international oil prices.

Oil, cotton, textiles and certain agricultural crops, including oranges, onions and potatoes, are the main Egyptian exports.

In the fiscal year 2000-2001, exports reached an all-time record of $7 billion and, with a noticeable decrease in imports, the Egyptian trade deficit has declined to 9.3 billion.

However, experts warn that the trade deficit remains too high for a developing country like Egypt. The promotion of exports, they argue should be matched with strict programmes to limit imports.

Youssef Boutros Ghali, the Former Minister of Economy and Foreign Trade who was given the new foreign trade portfolio in a recent minor Cabinet reshuffle, vowed in statements to the magazine that his ministry would do its best to give a real boost to exports.

Boutros Ghali, who provoked outcry among the public and the media last year when he was quoted as telling a People's Assembly Committee to "forget about exports," said the Ministry of Foreign Trade would give priority to removing obstacles hindering exports.

"The ministry aims to increase goods and services, reduce imports and establish ways of acquiring more hard currency," Boutros Ghali told Akher Saa.

Unlike in his previous controversial statements, Boutros Ghali said that Egypt, with its manpower and resources, is able to double or even triple the current volume of exports.

"However, this cannot be achieved without continuous and integrated policies. Our strategy is to work out some of these policies," he stressed.

Boutros Ghali's Advisor, Rushdi Abdel Qader, said that Egyptian trade representation offices abroad would play a key role in the next phase.

"Activating Egyptian exports demands continual monitoring of the performance of trade offices abroad, especially regarding the implementation of export accords and searching for new openings," he said.

He added that more attention would be given to organizing Egyptian trade fairs abroad and encouraging Egyptian exporters to take part in thematic fairs worldwide.

The ministry, Abdel Qader stressed, would also work to increase the number of trade fairs held in Egypt. But economists still call for more concerted action to boost exports.

Moustafa El-Said, a former minister of economy, said structural problems impeding exports go back decades.

"Export promotion demands restructuring production sectors, mainly industry and agriculture, as well as promoting an 'export culture' among businessmen," Said said, calling on the government to remove export obstacles and solve exporters' tax and customs problems.

He added that Egypt should also make use of the numerous trade accords it has signed with Arab, African and European countries.

"More effort and planning should be made to benefit from the economic association accord signed with the European Union as well as COMESA (the Common Market for Eastern and Southern Africa)," Said explained to the magazine. He added that he is pinning his hopes on an industrial modernization programme Egypt is to start under its accord with the EU. "This programme should improve Egyptian industry, making it more internationally competitive," he said.

Ahmed Galal, Director of the Egyptian Centre for Economic Studies, blamed the export problems on a lack of incentives. "Instead of achieving higher revenues from exports, Egyptian producers have discovered they can achieve bigger ant easier profits from selling their goods in the local market," he said.

"Protection granted to local producers through customs duties on imports are much higher than the compensation exporters get through several other systems, including the draw-back system," he went on.

Samiha el-Qalioubi, professor of commercial law at Cairo University, stressed the importance of modernizing export-assisting activities.

"In addition to adopting export-promotion policies, the government should give attention to indispensable activities like transportation, finance and marketing. "Countries with similar economic conditions to Egypt, like Malaysia, Singapore and Korea, have achieved real export breakthroughs," she said.

Some experts argue that the adoption of modern technology in production and marketing is the first step towards achieving an export breakthrough similar to that in Southeast Asia.

"Universities and research institutions, which are financed by taxpayers' money, should contribute more to the modernization of production sectors to enhance exports," Sami Hatem, head of Technological Development Studies Centre said.

He added that solving the chronic trade deficit hinges in the first place on curbing imports. However, Hatem warned against an all-out campaign against imports.

"Studies conducted by the centre showed that 80 % of imports consist of raw materials, capital goods or machinery indispensable for Egyptian industry," he said.

Yet, Hatem stressed, a large portion of these imports could be reduced if Egyptian producers opt for the equivalent, locally produced goods.

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