Clothes see biggest decline
Industrial exports fell by 11 percent in 2012, according to a report issued by the Ministry of Industry (MoI). The total value of industrial exports reached $2.9 billion. Khaled Farshoukh, Head of the Council for Industrial Exports’ Development, said the decline in industrial exports continued through the current year: “During January and February industrial exports dropped by five percent each month compared to the same periods in 2012.”
Exports fell due to the local unstable situation and the international economic slowdown, according to Farshoukh: “The deflation in the global economy led European companies to reduce their imports. Moreover, global firms are hesitant to deal with local manufacturers as they are afraid they would not be able to fulfill their commitments, because of the local political turmoil.” He said the clothes sector witnessed the biggest drop in the quantity of exports because of ongoing competition from other countries like Turkey and the Far East. The decline was not linked to the current circumstances.
Electrical and mechanical appliances represented the largest amount of industrial exports. Ghassan Bolbol, Head of the Syndicate of Electrical Equipments Manufacturers, said: “Exports of electric cables maintained the same levels, but a drop was reported in electric switchboards, power generators, and lighting equipment.” Electrical goods are mainly exported to Arab countries, Africa, Europe, and some Far Eastern markets. Bolbol said: “We did not benefit much from the free trade agreement with Turkey, as industries in Turkey manufacture the same electrical goods at lower costs.”
Chemical industries and food industries were the second and third largest categories of industrial exports. George Nasraoui, Head of the Syndicate of Foodstuff Industries (SLFI), said: “Food industry exports remained stable, but the problem is in the increasing production costs which were higher than in our competitor countries.” According to Nasraoui, energy costs in the local market are around $1,000 for each ton, while this figure does not exceed $200 in Gulf countries. The local minimum wage is around $700 per employee, while the cost of foreign laborers in the Gulf does not exceed $200 per employee, excluding fees of residential permits. “Global firms prefer importing from Turkey and Gulf countries because of the higher costs of local goods,” said Nasraoui.
Food industry products are exported to Arab countries, as well as some markets in Europe and America. “Saudi Arabia is our best export market, although the food industry sector there is efficient,” said Nasraoui.
“Overland transport of exports went down by around 50 percent last year, which led industrialists to resort to costlier maritime transport,” said Farshoukh. Industrial products are exported in big amounts to the Gulf countries, mainly the United Arab Emirates, Saudi Arabia, and Iraq.
Imports of industrial machinery, an indicator of future industrial activity, fell by around ten percent to $288 million. “The increase in production costs, including the increase in wages and high energy costs, have also pushed industrialists to reduce their production,” said Farshoukh.
Date Posted: Mar 19, 2013