Q: The chairman of the Chamber for Textile Industries said 900 factories are at risk of closing down. How do you see the situation?
Tolba: I disagree with such statements. Despite the revolution and the numerous demonstrations and sit-ins witnessed in 2011, little has changed from the year before.

The issues have been there for a long time. The situation didn’t worsen much with the revolution. However, the risk is yet to come: The unstable political situation is very likely to scare foreign investors. I succeeded in mediating between one of the companies and its foreign partners who were thinking of pulling out of the market — with the ongoing instability, many investors are having the same thoughts.

Q: What is the role of the Spinning and Textile Export Council?
Tolba: Due to many internal struggles in the Chamber, former Minister of Trade and Industry Rachid Mohamed Rachid had established the export councils to speak for exporters. I was the first head of the Spinning and Textile Export Council from 2005 to 2008, a time when Egyptian ready-made garment exports grew at an annual rate of 30%. I believe the export councils play an important role in boosting exports and protecting the interests of exporters.

Q: What struggles are you referring to?
Tolba: The Chamber has been dominated for so long by people mainly from the business sector, and they do not quite represent the industry. They are too politicized and capable of generating propaganda and that’s why they win in the ballot boxes while their industries represent only 15% of the industry’s supply chain and 10% of the labor.

The sector is state owned and limited to specific industries. Those who represent it do not have a vision for the overall industry. It’s called the spinning, weaving, dyeing, finishing, ready-made garments and textiles industry. Not only did they marginalize the rest of the supply chain, but they launched a “war” against exporters and ready-made garment producers.

Q: What about export indicators?
Tolba: In 2010, total textile exports reached $2.4 billion, and 2011 figures will be pretty much the same, which is poor compared to other countries. In Bangladesh, for instance, textile exports reached $18 billion in 2010, and the government is targeting $25 billion in 2018. Vietnam, which wasn’t an important producer until recently, reached $10 billion in textile exports.

Q: What do you think of the package of decrees issued by Minister of Trade and Industry Mahmoud Eissa at the end of November?
Tolba: I think the minister’s decisions are a very positive step; he is trying to draw a road map for those who follow him. However, I don’t fully agree with the decrees because imposing restrictions on the import of ready-made garments of world-famous brands could waste investments worth millions of dollars that companies sunk into shopping malls. There would be no point in doing so since our local products do not compete with such brands in the first place.

Moreover, the spinning and weaving industries flourished in Egypt before 1952 because the market was open, but they collapsed after that because of the protective measures. Due to this collapse, we now have a gap in the supply chain. We don’t depend at all on local yarn and import two thirds of our needs from abroad, so it would be unfair to try to improve the financial conditions of a few collapsed companies at the expense of the entire market.

Q: What measures do you suggest?
Tolba: I communicated to the minister further reservations on other decrees that are yet to be issued and will include imposing restrictions on the temporary permit system [exemption from custom duties for imported raw materials] and the free zones, claiming these are doors for smuggling.

It’s true we saw smuggling activity in the past, but now with the lower custom duties there is no smuggling activity via the temporary permit procedure or free zones. Instead, there are merchants who smuggle ready-made garments. This requires different measures like better monitoring of imported goods, for instance.

Q: Can you elaborate further about the gap in the supply chain?
Tolba: Splitting the ownership of land after 1952 damaged our cotton production since small-scale owners couldn’t afford the expenses of growing it. This reduced the areas cultivated with cotton over the years.
Twenty years ago, the area was estimated at 1 million feddans. This has declined to 320,000 feddans today.

Moreover, the nature of Egypt’s soil can only produce fine, long-staple cotton, which feeds only 2–3% of the industry worldwide. What should have been done at the time was encourage world-famous ready-made garment producers to invest in Egypt and make use of our fine cotton or work on agricultural research to produce short-staple cotton that is more suitable for our industry.

Unfortunately, the subsequent governments did not resort to either solution and started instead to export raw long-staple cotton (the local ginning and spinning industries cannot produce high-quality yarn) and import short-staple cotton and yarn to be used by local spinning and textile producers.

Q: Do you see a way out of this crisis?
Tolba: There is no remedy for the industry other than privatization. I know this might not appeal to many people, but it could work perfectly for the industry if applied correctly.

Privatization previously meant selling anything to anyone at any price, but what I mean here is privatizing the management; we should make use of the expertise of the top international producers like India and China and employ the help of specialized companies to revive our old industry. Bt