Association agreement with EU would help modernize industry

A paper on the priorities of modernizing the Egyptian economy has stated that there are various aspects to achieve it topped with human resources development, developing small business and making full use of the free trade zones signed with some Arab and foreign countries.

The paper, prepared by professor Heba Handousa, executive director of the Economic Research Forum for the Arab Countries, Iran and Turkey, attributed the weak status of human resources development in Egypt to the low school enrollments in the basic education stages noting that Egypt was placed on late position in the human resources development report issued by the UN recently.

As for the association agreement Egypt has recently signed with the EU, Handousa said that such an agreement should have its advantages and disadvantages.

She added that since the end of the negotiations concerns had been raised on the expected negative aspects of the agreement although it would be for the best interests of Egypt if it would be utilized in the best way possible.

She said that the agreement would contribute much to the efforts of promoting the Egyptian exports as it will lead to the abolition of all the administrative and other obstacles impeding the flow of Egyptian exports to the European markets.

It will also contribute much to efforts aiming at modernizing the Egyptian industry through the industry modernisation programme, half of its financing would be provided by the EU within the framework of the association agreement.

Moreover, it will help enhance the flow of foreign investments into the country.

"However, there are negative side of the agreement, such as the expected reduction of the customs revenues which could reach 3.4 per cent annually.

But this could be made up for through designing a less complicated taxation system," the report said.

"We have to consider the fact that the association agreement will leave such a negative impact on small industries in Egypt which are not strong enough to stand the competition neither at home nor abroad," Handousa who is a member in the board of the Central Bank of Egypt said.

Referring to the foreign investments in Egypt, the paper said that they were' necessary for creating new job opportunities and introducing advanced technology to Egypt.

The point that has to be considered here is how to use these investments in the best way so as they eventually serve national economy.

This relies mainly on developing the taxation and customs systems so as to reduce and facilitate measures, it said.

On national savings, the paper said that they were inadequate to fulfill the needs of investments, as there was a gap of about 8% between them.