Modernization provides more job opportunities, investments and competition
Egypt, Economics, 5/28/2002

Egypt's President Hosni Mubarak underlined the need for abiding by timetables for implementing industry modernization plan and exportation of products developed in the new urban communities.

The President said the private sector has developed many industries, adding that priority should be given to opening new exportation markets for these industries as they enjoy competitive capabilities such as weaving industries, food industries, leather, furniture and building materials.

This came at the ministerial meeting yesterday which was devoted to discussing development of the Egyptian industries.

Minister of Information Safwat AL Sherif said that in the light of discussions held, President Mubarak stressed that it was necessary to carry out an integrated policy for modernization which covers heavy, medium, light and small industries.

Efforts of the ministry of industry, military production and the Arab Organization for Industrialization (AOI) will be enlisted in this effort together with the private sector which represents the wide base of the development and for modernization process in the coming period.

This should proceed side by side with policies to open export markets and activate the domestic market in addition to the activation of agreements which serve trade and economic cooperation at the Arab, African and international levels.

President Mubarak asked Prime Minister Dr. Atef Ebeid to set up a coordination council to include all public and private industrial sectors.

The President stressed that the modernization program aims, in the first place, at setting up an industrial base relying on the efforts of the private business sector and small and complementary industries run by a wide base of small factories and the youth.

The modernization process should be carried out according to fixed timetables and the authorities to shoulder this responsibility should be defined.

The public should be made aware of the positive results of free trade agreements, European partnership agreements and trade agreements with Arab and European countries, the President said.

"We cannot stand still in a changing world in which countries compete," the president pointed out.

President Mubarak said future generations should assume responsibility and go forward, with studied steps, towards modernization.

Burdens

We should face the burdens of the first years in which there will be a drop in general resources as a result of the scaling down of customs and the execution of agreements with the Comesa member-states, European partnership or free zone agreements signed with Arab countries.

There will be gradual improvement after the first three or four years.

President Mubarak pointed out that the Egyptian private sector has set up new modern industries in a number of new cities and elsewhere.

"It is important to give priority to open markets for exports for modern competitive products in the fields of weaving, food industries, furniture and construction material in addition to industries in which Egypt enjoys a comparative distinction" the President said.

Partnership

President Mubarak underlined that the application of partnership and comesa agreements should be accompanied by financial policies designed to realize gradual balance in the first five years to provide gradual protection for Egyptian products in order to gain a competitive edge.

The President asked the cabinet to review, periodically, priorities, components and protects of the investment plan in the light of detailed feasibility studies and to benefit from the experience gained in previous projects and maximize the positive aspects.

The needs of foreign currency should be defined together with the volume of finance required from donor countries and funds in which Egypt has a share.

Studies

Feasibility studies should show the national economic return and the services to be provided to citizens in the fields of health and education, the pres dent pointed out.

while reviewing modernization policies, President Mubarak said that it was important to utilize the scientific and research facilities of Egyptian universities and scientific research centers and to give priority to the development of cotton weaving industries, using pure Egyptian or mixed cotton, in order to have a competitive edge in world markets in addition to meeting the needs of Egyptian consumers.

President Mubarak reviewed available funds to finance upgrading vocational training centers in all governorates.

President Mubarak showed interest in the marble industry and plans to realize a big stride in this industry and achieve advanced figures in the field of exports.

All facilities should be provided to develop existing markets, the president said.

The President asked that studies related to old weaving factories should be completed and also studies regarding the kima factory. The President stressed that this should not affect workers or their income.

Minister of Industry Dr. Ali Saidi, in a review he presented on the modernization of Egyptian industry, explained that Egyptian industry contributes about 20 per cent of the Gross Domestic Product (GDP).

There are about 2.5 million workers in the industrial field, representing 30 per cent of the labor force in the economic sectors. Industrial exports represent 52 per cent of total commodity exports.

The value of total industrial exports amounted to 6 billion pounds in fiscal year 2000/2001.

Total investments in industry amounted to 148 billion pounds in the past 20 years.

"of the 25,200 private industrial establishments, 20.830 were registered in the past 20 years, "the Minister said.

The Minister of Information said that the industrial modernization program covered cooperation programs with the European Union.

The agreement initialed with the European Union includes a program to develop the private sector which was funded with 40 million Euros during the period 1993-2001.

Second: the Egyptian -European program to modernize industry, under the agreement signed in 1998, for 54 months ends in December 2003.

The industry modernization council was set up in February 2001 and the consultative council, which oversees the modernization program, was set up in April 2001.

The Minister of Industry said that the modernization program will be financed by the European side within the limits of 250 million Euros.

The Egyptian Government will contribute 103 million euro, in cash or in kind, and the Egyptian private sector will contribute 73 million Euro in return for participating in providing the service.

The Minister of Industry outlined the goals of modernization as follows:

First: To increase the contribution of the industry sector to the Gross Domestic Product (GDP) in order to increase the ability of Egyptian economy gradually in the short, medium and long term.

Second: To raise competitive ability of the private industrial sector with focus on medium and small industries.

Third: To create job opportunities and attract investments within the framework of economic liberalization and opening out into the world.

The Minister of Information outlined the expected results of the modernization program as follows:

First: To improve the competitive ability of about 5,000 industrial projects through technical assistance.

Second: To improve the ability of business centers to represent their members and serve their interests by setting up 20 business centers to present technical assistance.

Third: To raise the efficiency of about 300 Egyptian consultant bureaus to modernize medium and small industrial projects.

Fourth: To improve the legislative and administrative climate by introducing legislative and organizational legislation to influence the climate of business in the industrial field.

The components of the modernization program, as presented by the minister of industry, are as follows:

First: To modernize industries in which Egypt has a comparative privilege, namely weaving, food, leather, furniture, construction and chemical materials, medicine, equipment components, vehicles, engineering goods.

Second: The modernization program classifies on the basis of the actual condition of Egyptian industry as follows:

a) Old factories which cannot be modernized.

b) Factories which can be modernized in a short period at a reasonable cost.

c) Factories which can be modernized in a longer period at a higher cost.

Third. To provide an encouraging industrial environment by tariff problems, removing obstacles in the way of facilitating procedures.

Fourth: To provide funding to carry out the modernization program under easy funding conditions.

The Minister of Industry presented:

1. The executive plan which included completing the organizational and administrative structure of the center to modernize industry which represents the basic nucleus of modernization operations.

2. To complete the equipment of a permanent headquarters of the industry modernization center at the headquarters of the industries union.

It will be operated in June 1, 2002.

3. To begin a program to train workers at some private sector factories.

4. To complete studies to develop the program of private sector.

The Minister of Industry said that 30 million Euros have been received from the European side to equip the center to modernize industry in addition to 45 million Euros to carry out the first stage of the modernization program.

A total of 132 companies have asked to benefit from the modernization program. Contracts are being signed to secure international and local experience to serve the modernization programs of these companies.

A total of 200 industrial companies have asked to take part in six programs to develop exports. The number is expected to rise up to 300 companies.

Among technological centers set up is a center for the technology of marble and granite. There are 250 factories, with exports valued at about 200 million dollars.

President Mubarak has promised to visit the Qatamia area where these factories are situated.

The meeting was attended by Premier Dr. Atef Ebeid, Deputy Premier and Minister of Agriculture and Land Reclamation Dr. Youssef Wali, Defense and Military Production Minister Field Marshal Hussein Tantawi, Information Minister Safwat EL Sherif, Foreign Trade Minister Dr. Youssef Boutros Ghali and Minister of Industry and Technological development Dr. Ali El sa'adi.

Minister of State from Military Production Dr. Sayed Mashaall, Minister of Public Enterprises Dr. Mukhtar khattab, Finance Minister Dr. Medhat Hassanein, State Minister for Foreign Affairs Dr. Fayza Abul Naga, Chief of Presidential Cabinet Dr. Zakariya Azmi and Chairman of the Arab Organization for Industrialization Magdi Hatata, were also present.

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