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By David Morgan: English.GlobalArabNetwork.com: Tunisia: Industrial strategy sets objectives to be achieved by 2016
Submitted on Mar 29, 2010.
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Visit: http://www.unpan.org/Newsevents/tabid/864/mctl/ArticleView/ModuleId/2247/articleId/21455/Default.aspx
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Tunisia has adopted a new industrial strategy which sets medium-term objectives to be achieved by 2016. The main aim is to differentiate the “Tunisian brand” from its competitors principally by adding hubs and innovation features to its positioning as a location for “back office” and “industrial nearshore” activities for its mainly European Union partners.
Additionally, the Tunisian location is being integrated in a regional and global value chain by making improvements in logistics efficiency. Meanwhile, the promotion of better education and training aims to help increase value-added production.
These current initiatives are a continuation of the export-oriented economic model that Tunisia has adopted since the 1970s, but it was in 1995 that the country launched its national upgrading programme in order to increase the competitiveness of its enterprises and shape them up for competing in international markets. By 2008 over 4,000 companies had participated in the upgrading programme and by 2011 the figure should have reached 4,800.
Projected funded in this way have helped increase the share of fully exporting industrial companies up to 45% in 2007. A special scheme of tax-free profits is available for companies producing at least 85% of their products for export. Industrial exports, excluding food, reported a fourfold increase on 1996, reaching €7 billion in revenue.
Seeking to take advantage of its geographical proximity and cultural legacy, Tunisia has progressively strengthened relations with the member states of the EU, which as a whole has today become its main industrial partner and customer, accounting for 80% of industrial exports. Since 1996 exports to EU member states have grown by an average of 10% per year.
This record of success has been achieved thanks to the country’s substantial efforts to upgrade and enhance its education and vocational training, transport and logistics infrastructure, along with the creation of production platforms that meet international standards and the facilitation of trade.
Tunisia’s entry into a free trade area with the EU in 2008 opened up new opportunities but also posed new challenges. Heavily relying on exports and foreign direct investment, the Tunisian economy has become more dependent on global developments. Faced with the emergence of countries offering lower production costs, a shift of gear proved essential.
A main goal is to see the value of exports reach $17.5bn by 2016 and in order to achieve this, three key areas of economic development have been identified:
- Upgrading traditional industrial sectors such as textiles, clothing, leather and footwear, agri-food, phosphates and building materials;
-Diversifying industry and promoting the emergence of new sectors, such as electronics, automobile and aeronautics (MEI), engineering plastics, pharmaceuticals and biotechnology, ICT, service centres and other industry related services;
-Preparing the ground for the next wave of industries that will regenerate the economic fabric of the country by promoting the development of niche markets at the crossroads of several industrial sectors such as mechatronics.
The success of the strategy requires the implantation of large companies to lead the way and to attract them to Tunisia competitiveness poles are being created in four key sectors: textiles and clothing; MEI, agric-foods and ICT. By 2016 these sectors should comprise 1,000 companies and generate 40,000 jobs in Tunisia. One recent example of a successful venture in this regard has been the creation of activity in the aeronautical sector involving a group of sub-contractors and partners of the Airbus programme.
As well as these service related industries, Tunisia is interested in developing trade, leisure and tourism and by diversifying its economy the country expects to reduce its exposure to the vagaries of the global markets.
Mechanical and Electrical Industries
With their strong potential for increasing exports, Mechanical and Electrical Industries (MEI) have doubled their production since 2003 to reach over €4.6bn in 2008, 54% of which was the electrical industry. During the period 2003-2008, the sector benefited from an average increase in investments of 15% per year, rising to 31% for the electrical and electronic industries.
Exports more than doubled to reach €3.5bn in 2008 with European customers remaining the principle market for Tunisia. The sector of aeronautical and automotive components grew dramatically over the last ten years with exports increasing fivefold to reach €1bn in 2008. By 2016, MEI is expected to account for 46% of the country’s exports, against 25% in 2006.
To achieve its ambitious targets, Tunisia is focusing on innovation, synergies through adopting a cross-sector approach and an 11.3% targeted annual rise in investment over the period 2006 and 2016.
Main opportunities in this sector include electrical, electronic, automotive and aeronautical components; mechatronics; metal construction and foundry.
Textiles, Leather, Clothing and Footwear
As the country’s first industrial employer, this traditional economic sector developed through outsourcing for European companies. Thanks to its adaptability to change, Tunisia has become the fifth largest supplier to the European markets.
Between 2002 and 2007, textiles and clothing exports grew by 4% per year on average while exports of leather and shoes rose by 8%. Nearly 96% of exports are destined for the European markets.
Attracting over one fifth of total FDI, textiles and clothing have benefited from an average 27% annual increase in investment during the period 2005-2008. In the face of increased competition from Asia, Tunisia undertook a qualitative upgrading of its production shifting towards designer wear, finishing and co-production. The aim is to increase exports by 5.1% per year by 2016. Business opportunities exist in the areas of spinning, weaving and finishing; creation and design; the manufacture of small and medium series; technical textiles; leather and leather goods; and logistics.
Agriculture and Agri-business
Agriculture remains the main activity in several of Tunisia’s regions and contributes substantially to overall production (some 12% of GDP), jobs and balance of payments. Olive oil is a notable product and Tunisia is the second largest exporter in the world.
By 2016, the country aims to increase its food produce exports by a rate of at least 9% through the promotion of value-added production and by upgrading its distribution channels.
Opportunities in this sector range from conditioning of oils; fruit, vegetables and seafood; fish and shellfish farming; production of meals and frozen, biological and health products.
Business Process Outsourcing and ICT
This sector is seen as the spearhead of the country’s economy and has strong development potential in local and global markets. In 2008, its contribution to GDP stood at around 8% and is expected to reach 13% by 2011 and 20% by 2016.
Exports in this sector are expected to increase from €31mn in 2007 to €500mn in 2016.
Tunisia is devoting public investment to improve and develop the sector which is an important factor making for its expansion. In addition, the liberalisation of the telecommunications services has facilitated the entry of new players and has acted as a spur to the development of the sector.
To accelerate the spread of the digital economy, Tunisia has initially focused on the local market but relies on the expertise of international operators.
The growth of business process outsourcing (BPO) services parallels the development of ICT services. Opportunities for investors exist in the areas of networks of landline and mobile phones; related services; BPO; and nearshoring activities.
Chemical and Plastics Industry
This until recently undeveloped sector has been attracting the attention of public and private sector investors. Over the period 2003-2007, the sector received substantial and increasing investment which has enabled the emergence and establishment of the industry. By 2008 the sector included 241 firms with 10 or more employees, of which 39 were fully export oriented and 156 companies with foreign partners.
Meanwhile, the plastics industry had 250 firms with 10 or more people, including 62 fully export oriented and 81 with foreign participation.
Given the sector’s export potential and close linkages with other strategic sectors, it is anticipated that the chemicals and plastics sectors could become engines of growth in the Tunisian economy over the next decade.
Opportunities in the sector exist in the areas of engineering plastics such as luxury packaging, construction, agriculture; plates and tubes; medicines such as generics and vaccines; soaps and cleaning products.
Tourism Sector
Tourism is the main source of foreign exchange for Tunisia, generating 6.5% of GDP and employing 12% of the workforce. In 2008, some seven million foreign tourists visited the country, representing a rise of 5% on the previous year. In recent years the country has been trying to restructure the sector by rebalancing coastal and inland tourism through encouraging investment in priority areas. Opportunities for investors exist in a number of areas such as planning and development of resorts, “green tourism”, seawater therapy and medical tourism.
The data for this report is obtained from the Mediterranean Investment Map produced by the European Union agency, the ANIMA Investment Network.
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Categories: Local Content, Digital Divide, Poverty eradication, Governance, Knowledge Sharing
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Country: Tunisia
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Tunisia: Industrial strategy sets objectives to be achieved by 2016 Tunisia has adopted a new industrial strategy which sets medium-term objectives to be achieved by 2016
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