Ready-to-wear Export calls to support innovation to increase the competitiveness of Egyptian fashion

Adel Ghanem, Undersecretary of the Ready Made Garments Export Council, said that ready-made garments factories are among the fastest industries in establishing and training workers, the lowest in the cost of the opportunity to work, and the most employing of manpower, and most of them are women, and that exporting clothes to the global market despite its expansion is what enables us to achieve numbers Excellent in the field of export that the economy of our country and its people can benefit from.

“Ghanem” added that, looking at the numbers, Egyptian exports of ready-made clothes in 2019 amounted to (1.6) billion dollars, which is small compared to Vietnam (30.3), Turkey (17.7), China (151.58), and Bangladesh (33.63). The numbers are in billion dollars for the year. 2019, and that the noticeable big difference indicates that there is room for us to win a bigger share, and that there is something that we have been missing for many years and have not been able to achieve, which is that the state, with all its institutions and exporters, is on one front.

The council’s agent explained that currently the most that Egypt is trying to compete with in export – especially in the global ready-to-wear industry – is the element of “accurate operating cost”, which represents the first steps on the path to export growth at a fast and steady pace, followed by a higher level of performance to provide added value. This higher level is achieved by the integration of the participants in the value-added chain of the Egyptian clothing industry from the private and public sector, who have recently invested billions in ginns and weaving factories, calling for the need to prepare a supportive and stimulating legislative environment to play a stronger role in the fashion industry (innovation) and development Technology to maximize the global value of the term “Made in Egypt”.

Adel Ghanem stated that in recent years the role of the state has grown in the world so that it has become the most influential element in the export equation in many aspects of competitiveness, and this role has increased in light of the global economic conflicts and global crises, the latest of which is the Corona pandemic, he stressed that export The state is responsible for its institutions because the state is the one that sets its priorities, and if export is one of them, it is the one that enacts laws and legislations, imposes taxes, fees and burdens, as well as grants incentives and competitive advantages and concludes free trade agreements so as to ensure the supportive environment for exporters to launch and compete.

He pointed out that the state of the garment industry needs a review because the number of government agencies that affect the performance of manufacturers and exporters raises astonishment, as the exporter deals with the bodies of the ministries of industry, finance, local development, social solidarity, environment, interior, health, agriculture, housing, the central bank and others, and these ministries provide exemptions and incentives as much What it can afford, but at the same time imposes burdens and fees in favor of maximizing state revenues that exceed – what its incentives have provided to the source.

He added that these ministries, but also the bodies within the same ministry, work in isolated islands that do not feel what other procedures and fees impose that keep the exporter away from global competition, as well as many complex procedures and paper iterations that prolong the export process in a world where time has become so important for competition.

And the Undersecretary of the Export Council indicated that the Ministry of Finance provided export support with the right hand and with the left hand it imposed the real estate tax on factories and the symbiotic contribution, and added an information service fee on incoming shipments and many others, so the result of the equation was an increase in the cost of production, and he explained that the way of dealing with The Ministry of Finance is concerned with export subsidies. So, after issuing a law and implementing regulations to disburse subsidies, the exporter calculated it in its selling price, its financial flows and its budgets, and then was surprised by the delay in disbursing it for years, then it was disbursed at a 15% discount.

Ghanem criticized the Ministry of Finance’s early payment of the value-added tax by one month after it was paid every two months at the same time that international companies increased the payment period for Egyptian exporters, which affected companies ’liquidity and increased the cost of financing by imposing 1% of net wages. After taxes and insurances, anti-corona paid annually, in addition to imposing a takaful contribution of 0.25% of the company’s annual revenue.

He asked why the Ministry of Social Affairs had amended the Social Insurance Law, so it lowered the contribution rate, raised the minimum and maximum insurance limit, and added to it the incentives and additional previous settlement of their pension, which raised the cost of wages, and thus the total production cost, and even imposed a late payment fine of up to 21% annually compared to the Ministry of Finance when Paying export subsidies after a delay of three years, 15% was deducted from it, while the Investment Authority approved the one-stop-shop system to facilitate and expedite procedures, and with it the Authority’s intervention came in every small and large of the exporters ’companies, and with each procedure it imposed fees and caused a lost time that increases the cost of the product.

As for the Ministry of Industry represented by the Industrial Development Authority, it has made more attempts to dominate the companies and add procedural burdens with it, fees that increase the cost of production, including an annual license fee for the factory raw materials store, and the Ministry of Manpower imposes a monthly fee of 1% of the wages of all workers to the emergency aid fund and does not include in its objectives Making comparisons between the productivity level of workers in Egypt and other countries such as Bangladesh and Vietnam, and taking the reasons to reduce the difference so that the Egyptian exporter can compete in front of raising the income of workers .. Gas prices for factories were raised to the global price, and when the world price fell, they did not reduce it, so its current selling price is $ 4.5 per million BTU The world price is $ 2.65, and in Bangladesh it is $ 3.5.

And Adel Ghanem pointed out that the Central Bank and the practices of banks that reduce or cancel facilities contracted with a client from the industry at any moment and even change the interest rate agreed upon by surprise decisions, and it is known that reducing the currency rate is one of the most powerful ways that governments use to increase exports, such as Turkey. And in Bangladesh, while the price of the currency in Egypt rose, the price of the dollar in Turkey on January 1, 2017 was 3.53 pounds, and on January 1, 2021, it decreased to 7.42 pounds (a decrease of 52%). As for Egypt, the price of the dollar on January 1, 2017 was 18.11 pounds and on January 1. In 2021, it reached 15.73 pounds, an increase of 14%. Although we are proud of this achievement, we cannot deny its negative impact on exports, and the state must work to find other financial instruments to compensate it .. As for the Ministry of Supply represented by the Stamps and Weights Authority, it imposes annual fees on factory scales used in dealing with raw materials in the production stages.

In the end, Ghanem presented a solution that the export battle calls for us to be active and not reactive, and for the state and the exporters to be on one front, and this is what we see in the competing countries, where ambitious plans have been put in place to jump the rates of exporting clothes – despite their superiority – and despite facing the world. Due to the crisis caused by the Corona virus, we see Vietnam aims to reach its exports of ready-made clothes to $ 55 billion in 2025, while in Egypt we lack planning and teamwork, and all we have is legislation and reactive measures to improve conditions and others, which may be imposed by the same authorities, that destroy what the first targeted.

“Ghanem” emphasized that the current reality proved that the degree of complexity of matters and the great economic and social return that could be reached in the manufacture and export of ready-made clothes required the intervention of the President of the Republic as well as the intervention and achievement in sectors in which it was almost impossible to achieve any progress.

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