Cheap imports leave Palestinian businesses struggling to stay above water

At a trade fair in the West Bank, BEN LYNFIELD finds that the economic crisis is pushing Palestinians to choose imports over locally made goods to make their savings go further.

One might expect a national industrial fair to include scores of elaborate exhibits, dazzling technological innovations and sharply dressed corporate executives conferring on the sidelines to strike lucrative deals.

But the Palestinian Federation of Industries fair that The Jewish Independent visited late last month in the occupied West Bank town of al-Bireh had none of these. In fact, there was no heavy industry there at all, only a dozen or so small companies: among them shoemakers from Hebron, a stone and marble supplier from Nablus and a Palestinian nutritional food producer from Shiyukh, near Hebron, looking to grow her family business.

“No way,” Muyaser Halayka, the owner and driving force of Al-Maysara for Nutrition Products reprimanded me when asked if she adds sugar to her best-selling product, grape syrup. “It’s all natural. I give from my heart and I view the customers as my children.

“It’s healthy and it’s our Palestinian heritage. It’s not Israeli,” she added.

Indeed, much of the rationale for holding the annual private sector fair is to encourage Palestinian consumers to be patriotic and buy local products rather than imports from Turkey and China that are cheaper and sometimes better quality.

But with the economy in deep crisis, that message is a hard sell. “Food insecurity is increasing,” explained Rabeh Morrar, director of research at the Ramallah-based MAS, the Palestine Economic Policy Research Institute. “You need to feed your kids so you look for a cheaper price, not patriotism.” Still, the minority who get high salaries are generally willing, he said, to pay more for a Palestinian product.

Two key factors contributing to the crisis, Palestinian economists say, are a deficit in the Palestinian Authority budget that translates into partial salary payments, and Israeli restrictions that among other things, limit growth and contribute to high import and export costs. Israel says the strictures are necessary for security reasons but the Palestinians dispute this.

Israeli and Palestinian analysts warn that high youth unemployment and mounting economic distress, along with the absence of a political horizon and the election of the most right-wing government in Israeli history, could lead to an explosion in the West Bank.

Concern about the new government was palpable at the fair. “We think the new government will want to prove itself on our account,” said Ahmed Ashab, who represents Hebron shoe companies.

Asked to elaborate, he responded: “At this time, it’s much better to keep silent.”

A representative of a stone-producing company, Abdul-Rahman Yamak, who lives in Beita, where settlers are trying to seize Palestinian territory, said he fears the new government will finalise what appears to be blatant land theft. “It’s not good, people are worried about their land,” he said.

Amid the economic crisis, demand is depressed. Few people came to the fair this year and more companies than last year decided they couldn’t afford the NIS5000 ($2160) fee to set up an exhibit. Participants have complained that the federation did a poor job publicising the event.

According to Rabeh Morrar, there are many reasons why the West Bank heartland of what is hoped to become a Palestinian state still lacks an industrial sector. The government has no money to incentivise launches by aspiring entrepreneurs, the environment for foreign investors is too risky, and the Israeli occupation impacts everything, including preventing Palestinians from exploiting the economic potential of Area C, the part of the West Bank under Israeli army rule which illegal Israeli settlers are trying to take over, often through violence that is seldom punished.

Still, those exhibiting at the fair were not giving up, making up for in heart what they lack in wealth. “God be praised, we’re succeeding,” said Halayka, the Palestinian matriarchal entrepreneur. Sales of the grape syrup, which she said helps cure coughing, blood ailments, stomach pain and liver problems, have increased from 100kg a year when she started in 2014, to 1000kg today.

Currently, Halayka sells via Facebook and her products are available at several food stores. But she is thinking big and wants to export to Palestinian communities all over the world.

Less upbeat are prospects for the Hebron shoe business. “Our biggest problem is Chinese and Turkish shoes,” Ashab said. He held up a brown shoe made in Hebron. “This one is natural leather and it sells for 200 shekels. A Chinese shoe with the same design sells for 80 shekels.

“The competition is putting owners in jeopardy and there is a lack of employees because most of those employees who can, go to work in Israel,” he added.

The biggest market for Hebron shoes is Israel, where companies ask the Palestinian shoemakers to put an Israeli label on the shoes, Ashab said. Most comply. But one Palestinian company, Rally, proudly refused to change the name of its shoes, he added.

The shoe companies are hoping to break into the Iraqi market as a lifeline. “In the Arab world they know Hebron shoes. We did a study in Iraq and were told by Iraqis that if there is not a big price difference, they would prefer Hebron shoes to Turkish or Syrian shoes.”

Yamak, the Beita resident and manager of Meral Stone and Marble company outside of Nablus, says his firm has also been suffering from foreign competition, in this case Turkish stone undercutting exports, and Egyptian stone drawing away local customers. “It’s very difficult because of all this competition. Palestinians must buy Palestinian products,” he said.

Photo: Palestinians walk next to school bags shop, in Rafah in the southern Gaza Strip (Abed Rahim Khatib/ Sipa USA).