JEANS IN EGYPT

Egypt is country of around 82 million people. Per capita income is around 3000 USD. Historically Egypt has been an important textile hub due to its cotton production. Recent political and social upraisings made production and foreign investments to slow down but once the country is fully stabilized, the country must be a key player again in the textile industry.

 Egypt is the largest producer in Africa and worldwide of long (LS) and extra long staple (ELS) cotton, accounting for 50 percent of world production in 2008, it has built a brand reputation for its quality of cotton. Furthermore, Egypt has a vertically integrated textile and apparel industry, 90% of spinning and weaving companies are publicly owned. Over the last ten years, there were a growing number of efficient private companies. However, the private sector dominates downstream industry with over 70 percent of garment production.

The Egyptian government is targeting the encouragement of private investments in the up-stream industry, as well as, the down-stream industries. Jeans production in Egypt is mainly located in three areas: Cairo, Port Said and Ismalia. The country has been producing jeans for export markets such as USA and EU countries.

Its geographical proximity to Europe and Middle makes it a country of strategic importance. Egypt has access through Meditarrean sea by Alexandria port and to Asia through the Suez Channel.Companies such CRS, Maytex Nile Clothing, Lotus, Taha Group, etc are examples of companies producing jeans in the country. Textile and Apparel is an important sector in Egypt.

The objective of the 2020 sector strategy is to sustain export growth at 15% (CAGR) to increase from the current level 2.6 billion USD to 10 billion USD in 2020. IDA's vision for the attraction of new investment to the sector focuses on the following objectives: Strengthen the up-stream supply chain Increase focus on the fast delivery of apparel to the EU, enabling entry to a higher value market segment Focus upon the following diversified sub-sectors: Denim mills Denim laundries Intimate apparels Premium Knitters Premium fabric, cotton producers Spinning and weaving producers Unified Vision of Stakeholders VISION 2020 is a policy to grow exports to USD 10 billion, and create over 5 million jobs. In addition to:- Establishing a Higher Council for Textile and Apparel Industry Developing specialist industrial zones for specific sub-sectors. Investment fund to develop or support the infrastructure for specialist industrial zones Upgrading existing factories and improving quality standards Development of the domestic supply chain.

 The global financial crisis impact on the textile sector Global fabric producers are shifting productions towards regional markets Egypt is attracting spinning, weaving, dyeing, and printing companies that need shorter delivery times to their key markets, both garment producers in Egypt and the region; especially the countries of Agadir, Jordan, Morocco, and Tunisia Specialized textile industrial zones with cost share infrastructure.

 Vertical integration across the industry Textile Sectors Value Proposition Value of exports is increasing on a year-to-year basis.  Investment is increasing drastically Labor costs relative to productivity remain competitive compared to regional countries of North Africa & Central and Eastern Europe Specialized industrial zones Market proximity Preferential market access Attractive export support & training grants Textile and Apparel is an important sector in Egypt.

 The objective of the 2020 sector strategy is to sustain export growth at 15% (CAGR) to increase from the current level 2.6 billion USD to 10 billion USD in 2020. IDA's vision for the attraction of new investment to the sector focuses on the following objectives: - Strengthen the up-stream supply chain - Increase focus on the fast delivery of apparel to the EU, enabling entry to a higher value market segment - Focus upon the following diversified sub-sectors: o Denim mills o Denim laundries o Intimate apparels o Premium Knitters o Premium fabric, cotton producers o Spinning and weaving producers Over the past years, the US and Europe have been Egypt's textile and clothing exports' primary markets with a market share of 35% and 46%, respectively.

The Egyptian textile industry is enhancing its competitive position by new investments adopting the latest technology in all phases of the production process. Egypt Competitive Strengths and Capabilities High Quality Raw Materials. Egypt’s cotton is internationally prized and valued for its quality. Contracts of the Egyptian exports of cotton to world markets have increased during the cotton exporting season (2009-2010) reaching 1,245,690 kantars of the high quality varieties, to meet the needs of 23 countries - the expected value of these contracts is estimated at USD140.882 million. In FY 2007/08, Egypt exported USD 82.9 million of raw cotton, versus USD 101.9 million of cotton yarn in 2008/09, according to the Egyptian central bank statistics.

                                   

 Competitively Priced Skilled Labor. The textile industry is labor-intensive, and human resource costs can be a heavy burden on a large company. Wages in Egypt are among the most competitive and stable in the region - growing at 5% per year. Additionally, training programs and government initiatives continuously upgrade the skills of Egyptian laborers, improving their usefulness to textile manufacturers.

 Strategic Location. The country’s geographic location facilitates export to Asia, Africa and Europe; Egypt is also closer to the US than its competitors such as India and Indonesia. Egypt has 15 commercial ports to facilitate exports. Free Trade Agreements. In addition to FTAs with the European Union, COMESA and the Arab World, Egypt’s QIZ agreement with Israel and the United States gives local manufacturers both tariff and quotafree access to the US market on the condition that 35% of the commodity is manufactured in a qualifying zone, and a minimum of 10.5% of the product is from Israeli inputs.