Role of productive sectors in enhancing economic growth discussed

PNN/ Ramallah/

The Palestine Economic Policy Research Institute (MAS) concluded its series of technical symposia in preparation for the planned MAS Economic Conference to be held later in the summer of 2016 with a fourth and final session focusing on “The Role of Productive Sectors in Enhancing Economic Growth“. The Economic Conference is destined to be a milestone economic gathering intent on providing a homegrown economic vision for the revitalization of the Palestinian economy amidst the lingering political stalemate.

This Fourth Symposium was chaired by Dr. Mohammad Shtayyeh, Director of the Palestinian Economic Council for Development and Reconstruction (PECDAR). Dr. Samir Abdullah, Senior Researcher at MAS, presented the discussion paper, with contributions from: HE Ms. Abeer Odeh, Minister of National Economy, HE Dr. Sufian Sultan, Minister of Agriculture, HE Ms. Rula Maayah, Minister of Tourism, and Mr. Mohammad Nafez Hirbawi, Chairman of the Palestinian Businessmen Forum. More than 40 economic, academic, and civic society leaders participated in the symposium discussions.

In his presentation, Dr. Samir Abdullah analysed the state of economic stagnation plaguing the Palestinian economy, especially in the productive and services sectors. The paper attributed reasons for this stagnation to several factors, especially the repercussions of continued control by the Israeli occupation authorities of access and movement of people and goods and services as well as of key natural resources needed for an effective productive cycle in Palestine. This is coupled with what he termed as a marked loss of interest by the international community in the Palestinian question and the resulting decline in donor and development assistance to Palestine. As a way out of this state of stagnation, the paper suggested the introduction of a package of incentive policies and remedial investments and interventions to offset the attrition of internal productive capacities. Such policy interventions could generate additional employment, increase the market share of local producers, while enhancing competitiveness and access to potential exports markets. All of this should reduce Israeli economic hegemony and allow for organic growth.

Dr. Nabeel Kassis, Director General of MAS, emphasized that the continuing regression in Palestinian economic indicators as a result of exogenous factors primarily resulting from the Israeli occupation called for serious collaborative work between various actors in the Palestinian economy. This call to action can and should put a limit to economic decline, offering policies and alternatives that are applicable on the ground to resuscitate the Palestinian economy, sustaining it against these continued challenges.

In his opening remarks, Dr. Mohammad Shtayyeh stressed the importance of this symposium because it focused on the pivotal role played by the productive sectors in the economic cycle.

Minister Abeer Odeh stressed the importance that the government assigns to an active partnership between private and public sectors, citing examples such as the joint implementation of the National Export Strategy designed to enhance industrial exports by 13% annually. Another example was the Industrial Upgrading programs being implemented via 5 industrial clusters with 50 startup industrial companies in leather, shoes, garment, furniture, stone & marble, palm trees, and traditional handicrafts.  This strategy does not ignore the importance of supporting capabilities of SME companies via facilitation of registration and inter government requirements for this sector, concluded Minister Odeh.

Minister Sufian Sultan indicated that the agriculture sector in Palestine has declined due to several adverse factors, first of which is the control of land and water by the occupation authorities, in addition to shrinking availability of agricultural land, low investment and weak marketing infrastructure for agro products,. Minister Sultan called for proper attention to this sector as a fundamental contributor to economic development.

Minister Maayah indicated that despite the challenge of developing an independent viable tourism sector under occupation, there are some bright spots and indicators which testify to Palestinian achievements. The number of hotel rooms have increased from 5,000 to 10,000, occupancy rates in local hotels have increased, in addition to the increased share of Palestinian travel agents in managing inbound tourism, reaching as much as 45% of all incoming tourists, as a result of close cooperation with the private sector to increase inbound tourism to Palestine and creating more tourism activities.

Mr. Mohammad Nafez Hirbawi re-articulated the need for the government to adopt a clear development and investment plan premised on a genuine public private partnership. He stressed the continued impact of some internal impediments to growth, such as the need for reform of the Investment Promotion Law, procedural issues with law enforcement and the judicial system, high production costs, where for instance electricity costs for industrial production are some 30% higher than in Israel, as well as the lingering bureaucracy in some government agencies.

Other recommendations and needs aired by the participants included: support for a fair market share for local products, increased efforts to spur export activities, increased local consumer confidence in local products, and building confidence between the three sectors involved in the economic cycle: government, private sector and civic society. Greater focus was called for in the SME sector, which continues to constitute a dominant 98% of economic establishments, as compared to only catering to the needs of the larger corporate entities, which only constitute 2% of the economy. Insurance for agriculture activities, activating special agricultural councils under the patronage of the minister of agriculture, plus special regulations to address high energy and water costs, as well as the need to reduce bureaucracy in some public entities were some of the recommendations raised during the discussion.

MAS has now concluded its organization of a series of four such meetings on economic challenges and pertinent national revitalization efforts as part of the preparatory work for the MAS Economic Conference slated for late summer 2016. The exact conference date shall be announced once consultation with all stakeholders are concluded to ensure optimal results in confronting pressing socio-economic challenges.

The first symposium discussed challenges facing the Palestinian economy and the existing economic policy vision. The second symposium dealt with social-economic remedies in the fight against poverty and socio economic gaps, while the third focused on the enabling environment and structural reforms needed to improve the business environment including trade with regional and global markets.