People's Assembly discuss industrial and government modernization
Egypt, Politics, 5/17/2002

Since 1991 Egypt has consistently pursued the transition from a state-controlled economy to free market principles, and achieved financial stability and a high GDP growth.

Accordingly, Egyptian enterprise has become increasingly aware of the need to achieve international standards of competitiveness.

It was essential for private enterprises to increase their productivity, adapt to market liberalization and lower tariff protections.

However, the business skills needed and support services required are often lacking, particularly in the small and medium-sized enterprises (SME) sector, while many policy constraints remain.

Recently, the People's Assembly called for a strategy to link the Industrial Modernization Program (IMP) and the program to modernize the state.

IMP was originated in 1997 and developed by an ad hoc task force representing the private enterprise sector, various ministries, and academic economists.

The program is the first phase of the government's long-term industrial development strategy.

The program's overall objective is to promote GDP growth and the competitiveness of the private enterprise sector, with special emphasis on SMEs in the context of economic liberalization and internationalization.

It will also foster employment and entrepreneurship.

IMP aims to improve the competitiveness of 5,000 enterprises; by providing technical assistance, improving the ability of business associations to represent and serve their members' interests, increasing the effectiveness of 300 Egyptian business consultants and trainers, and improving the business environment. It will also develop the Ministry of Industry and its support institutions to improve the legislative, regulatory, and administrative environments by means of draft texts, and timetables to facilitate access to capital for private enterprises.

In its discussions, the People's Assembly (PA) has warned of the necessity to formulate legislation to ensure competition, prevent monopolies and protect local production from the fierce attacks of imports.

Head of the Industrial Committee at the PA Amin Mubarak has called for rationalizing the tariffs on Egyptian products and their imported components.

He suggested putting estimative prices on imported commodities to prevent smuggling and corruption in customs.

He also warned of importing goods of a lower quality than those produced here.

Mubarak said that tax and customs legislation should be amended and interest on industrial loans cut, while a new exchange mechanism regarding the American dollar and the Egyptian pound should be devised.

He advocated expanding incentives and tax exemptions for high-tech industries; exempting tools, equipment and spare parts and revising the prices of services for factories, such as energy and water.

He also suggested establishing a unified Egyptian trade mark.

The committee's report recommended tightening control on airports, harbors and borders to combat smuggling and committing all shops in Egypt to declare the origin of foreign goods for sale in Egypt.

It said severe financial fines and penalties for smugglers and commercial fraudsters should be applied in a law combined with tackling the sale of goods from unknown origins.

El-Wafd Party MP Mahmoud el-Shazli warned of the possible collapse of national industry after the application of the GATT Agreement.

He called for the acceleration of IMP to face the fierce competition of international markets.

He questioned how the Minister of Industry could realistically achieve his promise of modernising industry and developing 5,000 factories in only four years.

El-Shazli said that he thought it would take at least 10 years and called for a mechanism to develop industry and support the private sector.

The Wafd MP called for making use of Italy's experience in small-scale industries and the necessity of specialising production

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