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Egypt exporters sound alarm over textile industry
Jean-Marc Mojon AFP November 30, 2006
CAIRO -- The Egyptian textile industry, one of the jewels of the country's economy, needs urgent reforms if it is to survive fierce global competition, exporters and officials said Wednesday.
"We don't have much time, our industry needs urgent decisions," Magdy Tolba, the head of Egypt's ready made garment export council, said at a Cairo conference on the future of the textile sector.
"If we don't seize this chance now and completely restructure the industry in a short timeframe - maybe three to five years - we may face dire consequences," he added.
As the number of textile-producing countries is fast being concentrated from around 60 a few years ago to a projected 10 to 15 by 2010, Egypt needs to secure its share of the $400-billion global industry.
"The industry is shifting fast and there will be a tiny group of survivors within a few years. It is vital for Egypt to make sure it is one of them," said Mohammed Kassem, chairman of the Egyptian Garment Exporters Association.
Egypt's textile industry, one of the oldest in the world, counts some 1,500 manufacturers, employs 500,000 people directly, and has an annual output estimated at $3.2 billion.
With readymade garment exports projected to top $1.3 billion in sales in 2006, a 30-percent increase compared to 2005, indicators are on the up for Egypt.
Some 60 percent of these exports are being absorbed by the US market on the back of the establishment in 2005 of the Qualified Industrial Zones, an agreement under which Egyptian goods containing at least 11.7 percent of Israeli components can enter the US market customs free.
"Europe is phasing out most of its textile industry and Egypt is in a better position than any other country to benefit from this," Kassem added.
The rising cost of labor is also forcing textile heavyweight Turkey to gradually migrate its industry to Egypt.
Egypt enjoys good trade ties with Western markets, a strategic geographical location and cheap labor. But the poor level of training and an obsolete upstream sector threaten the industry's long-term viability, experts said.
"The upstream sector, which is controlled by the public sector, is where the problems are and we need to import raw material to keep up with the growth in readymade garments," Helmy Abouleish, who heads the industrial modernization center at the ministry of trade, said.
Egypt is known worldwide for the superior quality of its cotton and accounts for 50 percent of up-market long staple cotton production globally.
But it has to import an estimated 90 percent of its total volume of yarns and fabrics to feed the manufacturing sector.
"We really need to work toward completing our supply chain ... We have a very short window to pull everything together, there is a real sense of urgency," said Kassem.
For decades, Egypt had protected its textile industry with tariffs and regulations and the phasing out of trade barriers has opened new opportunities but also exposed it to fierce foreign competition.
The skyrocketing growth of Asian giants China and India has left the Egyptian textile industry lagging behind and in need of a complete overhaul.
"For example, the advantage of proximity to our markets will mean nothing if we don't have a better frequency of boat shipments," said Kassem, pointing out that India was currently shipping goods to Western Europe faster than Egypt.
"The emphasis is no longer so much on countries but on the corporate world," he explained.
"In Asia and the Far East, they are creating monster corporations and there are more consolidations ... Egypt will have to modernize and follow suit if it wants to remain a player," Kassem added.
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