Palestinian
Exporting Companies
Assessment
of Damages Incurred by the Palestinian Exporting Companies From September 2000-
September 2002
Executive
Summary
The
Palestine Trade Center (PALTRADE) conducted an assessment study to determine the
damages and losses incurred by Palestinian exporting companies since the
inception of the current Al – Aqsa Intifada. The main objective of this study
was to calculate the direct and indirect losses incurred by exporting companies
in different economic activities that fall within the mandate of PALTRADE.
Additionally, the study aimed to define the impacts of the recent Israeli
military re-occupation of Palestinian cities on the plans, visions, and
positions of these companies.
The
study involved field visits to Palestinian exporting companies in the West Bank
and Gaza Strip by PALTRADE work team. This study is part of PALTRADE’s effort
to assess the damages done to these companies in an attempt to develop relief
plans and programs to assist the companies to cope with and overcome the ongoing
crises.
Main Findings
The
preliminary findings of this study reveal that:
·
Approximately 230 companies are engaged in exporting activities in the
West Bank (80%) and Gaza Strip (20%);
·
The findings reveal that these companies are engaged in manufacturing
activities (79%), trade activities (9%), information technology (4%), services
activities (2%) and other economic activities including agriculture, tourism and
handicrafts (6%);
·
These companies export 8 – 12% of gross product whereas the remaining
percentage is distributed in the local and Israeli market;
·
Main export markets include Jordan, Gulf Countries, Western and Eastern
Europe, United States of America, Russia, Iraq, Morocco, and Turkey;
·
The survey indicated that the core-exported products involve stones and
marble, handicrafts, medicine, food products and confectionaries, flowers,
oranges and other agricultural products. The list extends to include computer
software packages, some electrical products and few industrial products.
·
Concentrated in Hebron, Nablus, Bethlehem, Ramallah, Jenin, Gaza, Rafah
and Khan Yunis;
these
companies employ around 9,000 employees, with an average of 38 employees per
firm.
·
The findings of this survey indicate that 65% of these companies were
established before the inception of the Palestinian National Authority in 1993;
·
As for the legal status of these companies, the findings indicate these
companies were registered in relevant ministries as private companies (64%),
sole proprietorship (14%), and public limited companies (12%). The remaining
companies were registered under other forms of legal status;
·
The Palestinian exporting companies are alike in terms of the
difficulties they have endured over the past two years. All interviewed
companies noted that they suffer from numerous impediments with strong
potentials to seriously impair their existence in the market, especially if the
Israeli re-occupation of the Palestinian cities does not come to an immediate
end. More than 30 exporting companies (including companies that had serious
potentials to become exporting) had been forced to stop or declare bankruptcy;
·
As for main obstacles, the findings of the survey indicate that 95% of
the companies view restrictions on movement among Palestinian Authority areas as
a core problem encountered by Palestinian private sector. Higher production and
distribution costs was cited as the second main problem (68%), followed by
difficulties in securing raw material needed for production. The fourth main
problem was lack of financial liquidity needed for covering essential expenses.
Other secondary obstacles include military curfews and checkpoints; lack of
debts and dues collections, and lack of VAT refunds from the Value Added Tax
(VAT) Department.
·
As for the Private sector’s total loss, which was the focus of this
study, the findings indicate that Palestinian exporting companies have incurred
damages in the amount of USD 41.7 million; equivalent to USD 146,000 per
Palestinian exporting company on average since the current intifadah broke out
in September of 2000.
Recommendations:
Based
on the findings of this study, we formulated the following recommendations with
the objective of enhancing the capacity of vulnerable companies to alleviate and
deal with the economic burdens resulting from the current crises.
These recommendations are summarized as follows:
1.
Provide
financial aids to companies, which could be attained either by soft long-term
loans or a special fund support to secure the funding essential for the
implementation of their production and export activities. Such loans or
contributions could be paid back following the collections of revenues from
financed activities;
2.
Assist
Palestinian exporting companies as well as companies that have exporting
potential to enter international and regional markets. This could be attained
through direct assistance to enter international markets, identification of
suitable strategic partners for Palestinian firms, or through the promotion of
local Palestinian products to both international and regional markets;
3.
Establish a
special representative body to address concerns of the Palestinian private
sector and the Palestinian exporting companies in particular. Such a body
shall assume coordination with the concerned authorities, in particular the
Ministry of Finance, on issues pertinent to VAT refunding. A similar body
could be established to influence and put pressure on the Israeli authorities
to release raw material and equipment held in Israeli seaports;
4.
Enhance the
role of the Palestinian economic institutions and unions in supporting the
private sector;
5.
Design special
programs to convince and attract qualified Palestinian professionals and
experts to seek employment in local Palestinian companies rather than with
foreign firms located abroad;
6.
Establish
free trade areas for Palestinian products in neighboring markets, such as the
Jordanian market;
7.
Design programs
capable of assisting skilled labor in the Palestinian exporting companies;
8.
Design training programs in different specialized fields. According to the
findings of the survey, training programs should address core issues such as
capacity building and international market penetration. Likewise, training
programs should concentrate on research covering international and regional
markets, the financing of resources, etc;
9.
Take into
consideration the recommendations of the Palestinian companies before
designing any relief programs. According to the majority of these companies,
many current relief programs do not pay attention to the priorities and
concerns of the companies and simply act in accordance with pre-designed
imposed agendas.
In
brief, the recommendations could be summarized in the following two points:
First:
Design special relief and Industry-rehabilitation programs and
Second:
Design and implement Export Readiness Programs
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