Palestinian Industry and Economic Growth Forum

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• Palestinian Industry and Economic Growth Forum
• Reviewing the current status of the industrial
  sector
• Presented by
• Muhammad Sharia
• May 4-5, 2009
• Jericho

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Objectives

• Evaluating the current status of industrial
  sector
• Assessing the obstacles and impediments
• Recommendations

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Approach

• Field visits to representatives of all industrial
  sectors
• Interviews with different players in the industry
• Questionnaire

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Limitations of the research

• Limited period of time
• Different classification of industry
• Discrepancies in figures and data

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(1)Industrial contribution to GDP
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(2)The economy GDP composition
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(2)The economy GDP composition
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(3)Sector employment
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Unemployment rates
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Key players

• Government ministries and institutions.
• Private sector organizations.
• Donor agencies and foreign aid.

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Investment climate

• Availability of laws of investment encouragement.
• Availability of enabling trade agreements.
• Availability of Skilled workforce.
• Lack of highly skilled managers.
• Lack of proper qualified industrial zones and
  parks.
• Lack of proper infrastructure utilities at
  competitive costs.
• Political instability.
• Movement limitations.

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Main Findings

• Production capacity has dropped down drastically,
  it varies around 45. And hence total sales.
• Employment in core industries has fallen down to
  around 50. In the industry it is 60.
• New investments in developing existing industries
  have been noticed. Not totally new investments.
• Increase in export share of industry.
• Increase in local market share of certain
  industries.
• Enthusiasm, dedication and determination of
  industrialists from all sectors

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Main Findings (contd)

• An absence of a national integrated comprehensive
  program for upgrading the Palestinian industries
  was noticed.
• Both public and private sector institutions have
  no clear vision or main targets of the industrial
  sector.
• Lack of coordination efforts is seen between
  different donor and international institutions.
• Getting accurate data and information about the
  statistics of industry is not easy.
• Lack of family business modern administrative
  tools and mechanisms to tackle family related
  problems.

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Main Findings (contd)

• Inter-industry relations and networking with
  academic institutions and other effective
  stakeholders are weak.
• Weak business cultures and leadership skills that
  are necessary for creating change.
• ICT diffusion is not widely spread in the
  industrial sector.
• Strategic partnerships and alliances through the
  sector will capitalize on joint resources and
  minimize costs.

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Obstacles and Impediments

• On the national level
• Poor market regulations
• High cost utility services
• Poor image of the industry
• No trade controls
• No effective quality and standards applications
• Movement limitations

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• Sectoral level
• Lack of cooperation
• Aggressive competitiveness
• Lack of sectoral support and value chain concepts
• Poor supply chain management
• High variation in companies performance
• Weak moderate strong sector representation
• Access to finance

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• Firm Level
• Production problems
• Quality problems
• Management and administrative problems
• Marketing problems
• MIS and CIT problems
• Financial problems

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Industrial Subsectors

• Leather and shoe industries
• Leather tanning, shoe and footwear making, bags,
  clothing and furniture.
• Chemical industries
• Paints and ink, detergents, cosmetics
• Pharmaceutical industries
• Generic medicines for human use
• Veterinary industries
• Generic products for animal and agricultural use

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• Food industries
• Frozen vegetables and fruits, oils and fats,
  meat, dairy, chocolates, confectionary and
  snacks, beverages and water, spaghetti, animal
  food, flour mills and others.
• Plastic industries
• Pipes, fittings, containers, packing and
  packaging, melamine and rubber, polystyrene and
  others.
• Handicrafts industries
• Olive wood, mother of pearl, ceramic, embroidery,
  and others
• Marble and stone industries
• External cladding products, internal cladding,
  decoration and others

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• Paper and printing industries
• Print houses, paper products, carton, other
  promotional materials
• Textile industries
• Textiles, clothing
• Construction industries
• Ready mix, flour and side walks tiles, precast,
  crushers
• Metal and engineering industries
• Metal doors, abrasives and welding material, wire
  and roll drawing, aluminum profiles, electric
  panels, kitchen wear, machinery and others

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Industries of special care

• Construction industries
• The anticipated new cities and housing boroughs
• The rehabilitation and reconstruction processes
  of Gaza
• Infrastructures current and future needs
• Highly inter-related industry, service and trade
  linkages
• Higher labor absorption sector
• Good geographic distribution of the sector
• Shelter is the base of human needs

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• II. Metal and engineering industries
• III. Chemical industries
• Both industries
• Very much related to construction process
• Have good potential for job creation
• Have export potential
• Have direct effect on the human health and safety
• Have a good potential for research and
  development
• Very much related to other industries
• Can easily benefit from academic linkages

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• IV. Leather and show making industries
• Can show a good example of value chain concept
• High reserve of competencies
• High rate of job creation
• Easy resume of export markets
• Highly adaptive to distinctive skills
• A very wide manufacturing base
• Potentiality of stronger cooperation within the
  sector and its concentration in one geographic
  location
• Reasonable availability of raw material

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• V. Food industries
• The direct effect on human health and safety
• A corner stone of food security program
• Highly inter-related with other industrial
  sectors
• The integration with the agricultural sector
• High generation of jobs
• The potential availability of product development
  and research
• The potential readiness for export markets
• It is the base-line of the pyramid

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• VI. Veterinary industries
• Neglected sector over the past period
• High potential for export
• The importance of the sector for agriculture and
  livestock
• The inherited experience in the sector

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• Attractiveness of those specific sectors
• A wide base of producers
• High potential for new investments
• High job creation
• Export potential rates
• Inter-related industrial linkages
• Not been heavily approached or benefited from
  previous assistance programs

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What should we do?

• A National Integrated and Comprehensive Program

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A national integrated program for industrial
development should be focused on

• It should be derived from the mature and deep
  understanding of the beneficiaries actual needs.
• All stakeholders should be heavily involved in
  the designing, implementing and evaluating the
  program.
• The program should be based on three major
  integrated pillars the national pillar, the
  sector level pillar and the firm level pillar.

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Recommendations

• National Level

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National Level Recommendations

• National Promotional Campaign (Watani)
• Requirements and obligations of the Palestinian
  National Authority
• Organizing the local market
• Procurement
• Infrastructure reliability and utility tariffs
• Industrial Zones and Parks

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• Tax Refunds
• PSI Development
• Pressuring Israel markets of Gaza and Jerusalem,
  free movement of goods and people.

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Recommendations

• Industrial Sectoral Level

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Sector Level Recommendations

• Publicprivate partnership follow up mechanisms
  (market regulation, procurement, tanning park and
  machinery)
• Documenting sectors success stories
• Quality, standards and certification (training,
  awareness, laboratories, certification,
  inspections)
• Management and business culture (training,
  systems, communication, strategic planning,
  leadership skills, family business administration)

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• Business essentials (production, standard
  procedures maintenance, costing and pricing,
  procurement, financing)
• Technical development (upgrading machinery,
  preventive maintenance, CB enhancements, product
  development)
• Modeling and designing (shoes, cloths, printing)
• Promotion and packaging (websites, brochures,
  image, export targets)
• Collective procurement (handicrafts, chemicals)

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• Power and environment
• ICT diffusion into sectors
• Strategic alliances (B2B, merging, partnerships)
• Networking and academic linkages
• Capacity building for sector representatives

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Recommendations

• Firm Institutional Levels

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Recommendations at the firm level

• Work and motion study
• Layout efficiency
• Process and capacity design
• Inventory management
• Waste reduction management
• Energy consumption
• Work schedules
• Maintenance management

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Recommendations at the institutional level

• Empowering and strengthening the PFI and sectoral
  industrial federations
• Running programs related to industrial
  development in cooperation with industrial
  representative institutions (PFI and specialized
  federations)
• Strengthening inter-relation ties and cooperation
  between different industrial federations
• Funding and establishing a comprehensive
  industrial database.

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Thank you