\'Alarming\' drop in Egyptian exports
The chairman of the Federation of the Egyptian Chambers of Commerce says the poor performance of the country's exports is alarming and is one of the factors aggravating the economic recession. Khaled Abu Isamil expressed his concern at Ministry of Economy statistics showing exports had dropped from EP16 billion in the mid-eighties—to EP12 billion in 1998—to EP10 billion last year.
The challenges of finding markets for exports aside, exporters with access to European and Asian markets found the past year extremely difficult. Since the Egyptian pound is pegged to the U.S. dollar, the decrease in the value of European and Asian currencies against the dollar, ranging from five to more than 30 percent, struck hard at the earnings of exporters.
Abu Ismail told Al Ahram Weekly that "exporters trading with these European and Asian¨ countries suffered losses of approximately 33 percent, simply because they are bound by earlier agreements to carry through their deals."
Some producers see devaluation of the Egyptian pound as the solution to the problem—something Prime Minister Atef Ebeid has said the government has no intention of doing.
Abdu Badawi, an Egyptian exporter, is quoted by Al Ahram Weekly as saying that the "only solution is to let market forces determine the real exchange rate of the Egyptian pound." Devaluing the pound, he adds, will make Egyptian exports cheaper and more competitive in foreign markets. This measure will also boost the performance of Egyptian products against those coming from Asia.
But the weakness of Asian and European currencies is only one of the more recent problems faced by exporters. Egyptian exporters are burdened with procedures and costs that they view as inconsistent with the government's stated goal of increasing exports.
Mustafa Zaki, another exporter, cited high electricity rates, taxes and import duties on machinery used in production as some of the costs the government could reduce. As a result, Egyptian products are more expensive than foreign products. For example, a ton of imported sunflower seed costs EP700 ($160) while the same quantity of locally grown seed sells for EP1,000 ($3,700). Studies conducted by the Ministry of Economy have recommend that only 25 percent of the labor force in Egypt should work to meet local demand for products, while the remaining portion should be employed in export activities.
Exacerbating the situation is the fact that machinery used by local industry comprises 70 percent of Egyptian imports. Given these challenges, support from the government needs to be more forthcoming, exporters said. Some expressed concern about the impact of GATT, saying Egyptian negotiators should have sought more protections for their country's products. Exporters also called for the establishment of a
fund for the ongoing promotion of Egyptian exports. Such a fund, according to Helal Shata, Deputy of the Exporters Division of the Egyptian Chambers of Commerce, is something exporters have requested numerous times in the past 20 years.
The exporters also stressed that Egyptian production should target specific niches following thorough studies of foreign markets. —(Albawaba-MEBG)
© 2000 Mena Report (www.menareport.com)