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Tuesday, 16 October 2018

Egypt govt launches new strategy to boost local industry

Increasing locally manufactured inputs is the focus of the government’s newly launched development strategy

Safeya Mounir , Friday 12 Oct 2018
Industry
The Local Industry Development Strategy will focus on increasing domestic inputs (Photo: Reuters)
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The Ministry of Trade and Industry released its Local Industry Development Strategy (LIDS) earlier this month, a national programme for growth in line with its existing Sustainable Development Strategy, said Minister of Trade and Industry Amr Nassar.

The two strategies aim to raise industrial growth to 10 per cent annually by 2030 and to increase the local components used in production.

The LIDS will make available support for local industries to enable them to compete with foreign counterparts, the minister said at the launch of the strategy.

This is by no means the first attempt at developing local industries. “Previous plans included a programme to support mostly the suppliers of inputs to huge multinationals operating in Egypt,” said a source at the ministry.

“This time around the strategy is targeting all the different levels of the industries,” he added.

“During the first phase, the LIDS will focus on the engineering, chemicals and building materials industries, being three of the largest industrial sectors. The earlier programmes focused only on the sectors that exhibited potential for growth,” the source added.

At the launch of the LIDS, Hossam Farid, advisor to the minister of trade and industry on small, medium-sized and micro-enterprises (SMMEs), said the strategy depended on developing the chain of SMMEs suppliers, which represent the majority of the country’s industrial structure.

“We aim to develop these industries and to help them receive adequate funding and skilled labour and market access, in addition to advanced technologies to modernise their products,” he said.

A review of the structure of Egypt’s imports during the first half of this year had revealed that 55 per cent were in the engineering, chemicals and building materials sectors, he said, adding that it was possible to develop these sectors so that they could manufacture products that could compete with imported materials.

The minister of planning had earlier stated that the government was seeking to raise the rate of industrial growth to eight per cent during the current fiscal year and increase industrial inputs to 21 per cent of GDP by 2020, up from the current 15 per cent.

Developing the industrial sector should be based on increasing the production of intermediate goods and decreasing the imports of production inputs, said Ahmed Abdel-Hamid, head of the Chamber of Manufacturing Building Materials, pointing out that a number of industries already depended on locally made materials such as ceramics and marble.

Some industries required the local manufacturing of moulds to manufacture final products, Abdel-Hamid said. “Manufacturing these is more important than making production machines, which are imported only once,” he added.

“Approximately 25 to 30 per cent of building materials are locally produced. If this sector is developed, the figure will rise to 70 per cent within five years,” he stated.

The amount of local inputs used differs from one industry to the other, said Mohamed Al-Mohandess, chairman of the Engineering Industries Chamber.

“The LIDS should focus on manufacturing the components that we currently import. The strategy should also target each industrial sector individually to identify which components should be locally manufactured,” he said.

Al-Mohandess added that some engineering industries used 70 per cent local components. That figure could increase to 75 per cent by the end of the year, he said.

The degree of the use of local inputs differed among sectors, he said. “In household supplies manufacturing, which depends on crude aluminum, for example, the percentage of local components has reached 90 per cent. However, local components in household appliances are only 70 per cent,” he explained.

He said that surveys had been carried out in industrial areas such as 10 Ramadan City and 6 October city to find out what components industries needed, with factories connected to the local manufacturers of these.

Similar surveys would be carried out in Upper Egypt and other part of the country, he said.

“Sometimes a factory that produces components is next door to a facility relying on imports. They are unaware that they could work together because they don’t communicate enough,” Al-Mohandess added.

The Ministry of Trade and Industry should make land and real-estate tax exemptions available to manufacturers and should help them to navigate any obstacles on condition that they deliver the needed intermediate goods, he concluded.

* The writer is a freelance journalist.

* A version of this article appears in print in the 11 October, 2018 edition of Al-Ahram Weekly under the headline: Boosting industrial development

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