| COUNTRY PERSPECTIVES
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PALESTINIAN AUTHORITY |
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Business opportunities and territorial marketing |
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Introduction |
In the current context of social, economic and political difficulties, major investment will be needed to continue the rehabilitation initiatives launched ten years ago and to develop modernisation of the country’s infrastructure and rebuilding. Effective infrastructure will provide a sustainable economic development, a fundamental cornerstone in the establishment of a viable Palestinian State in the near future.
According to the World Bank, investment needs are evaluated between US$ 500 and US$ 900 million for the short-term (2005-2008), depending on how the political situation evolves.
The withdrawal of Israel from the Gaza Strip in 2005 offers many opportunities for the development and rebuilding of Gaza. The EU decided at the end of 2005 to release EUR 60 million to finance the setting up of political institutions and the construction of strategic infrastructure henceforth controlled by the Palestinian Authority. |
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Energy |
Palestine’s energy sector started developing under the Palestinian Energy Authority (PEA) in 1995, later becoming the Palestinian Energy and Natural Resources Authority (Penra). In the field of energy generation, more than 30 percent of electricity consumption is now produced in the Palestinian Territories, compared to only 3 percent prior to 1995. Despite this progress, the situation remains difficult: electricity consumption (2 to 2.5 million MWH) is still largely dependent on Israeli sources and levels (about 70 percent).
Approximately 13 percent of the population is not connected to the network, particularly in rural communities (where 4.5 percent are without electricity and 8.5 percent are supplied by small power generating units). The Ministry of Energy and Natural Resources expects that the demand for electricity in the West Bank and the Gaza Strip will increase fourfold in the next 15 years. In order to increase domestic output and to reduce dependency on Israel, Penra is encouraging the private sector to invest in the construction of new power stations, e.g. the 140 MW Gaza combined cycle power plant, carried out under a BOO arrangement for total investment of US$ 150 million and managed by the ''Palestine Electricity Company'' (PEC) consortium. |
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Water |
A strategic field for the Palestinian Territories, controlled mainly by Israel, the water sector has vital political, economic and social implications, both locally and at the regional level. Thanks to mobilisation of the international community, infrastructure for distribution, purification and treatment is improving, but needs remain considerable. From 1995 to 2006, international investment in the sector reached US$ 620 million, according to the PAMS database (Palestine Assistance Monitoring System) on aid coordination managed by the Ministry of Planning. Palestinians want an autonomous distribution network, with a view to avoiding Israeli restrictions and constraints. They need to increase the quantity of water for consumption by reducing losses in the network and investing in purification and water treatment in order to preserve groundwater quality. |
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Information technologies |
Information technology is the fastest growing sector in the Palestinian economy. A large pool of well-educated work force and Palestine's geographic proximity to advanced technology centres in Israel are two factors that have greatly contributed to the sector's expansion.
Palestinian universities are capitalising on the worldwide shortage of IT specialists by putting strong emphasis on IT training in their curricula. Sun Microsystems, for example, has donated laboratories to three Palestinian universities in order to train IT students and a number of universities in Palestine have established Information Technology Units. It is expected that this specialised curriculum will be of critical importance to the emerging Palestinian state, providing graduates well versed to meet the special needs of ministries, municipalities, telecommunications companies, as well as banking and financial structures.
A commitment to international quality standards (such as CMM and ISO) and supportive international trade agreements are key reasons why leading names such as IDS, Oracle, 3Com and Timex have chosen to establish offices, R&D operations or links in Palestine. |
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Construction and public works |
Development of the construction sector is a priority for the Palestinian Authority to meet the needs of a population growing at a rate of 3.3 percent. Housing construction is developing very quickly thanks to the return of investors from the Palestinian Diaspora. The PA is also offering public land to the population, in a move to encourage construction. The Palestinian Territories count 3.7 million inhabitants and the population is largely urban. Population density is one of the highest in the world, particularly in Gaza (3800 inhabitants/km²), where housing needs are the most critical. Most of the population lives in refugee camps, where the majority of buildings remain unfinished. Current forecasts show that some 200,000 new homes will need to be built by 2010, with the Ministry of Housing evaluating needs at 40,000 units in the Gaza Strip. |
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Health and pharmaceutical products |
Four entities are present on the health market: the public services of the Palestinian Authority managed by the Ministry of Health (MOH), the United Nations Relief and Works Agency for Palestine (UNRWA), Palestinian or foreign non-governmental organisations (NGOs), and the Palestinian private sector.
The Ministry of Health is responsible for the supervision, regulation and licensing of all Palestinian medical services. In spite of considerable international assistance, health needs remain considerable. In a study undertaken by the PCBS and published in its 2004 Annual Report, total health expenditure in the Palestinian Territories amounted to US$ 503 million in 2003. |
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Textile and clothing industries |
The textile and clothing industry is the second largest industrial employer in Palestine. The industry is made up of hundreds of small enterprises working out of private homes. Seventy percent of registered companies are considered individual proprietorships, the remaining 30 percent partnerships. The highest concentration of garment and textile factories in the West Bank is in Nablus, where there are 362 factories. Gaza is home to 760 factories and the remaining 578 are distributed throughout West Bank towns and cities. The industry is made up predominately of micro-establishments with between one and four employees. Only 1 percent of companies in the sector employs over 50 workers. The remaining 49 percent of garment and textile factories in the West Bank and Gaza employ between 5 and 49 employees. An increasing number of Palestinian companies export directly to the US, Europe and Arab countries, while a significant 80 percent of production goes to Israel, to be exported to international markets under Israeli brand names. |
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Stone and marble |
The stone and marble sector contributes 4 percent to Palestine’s GNP and 5 percent to its GDP. Average annual sales per employee come to approximately US$ 40,000, fivefold average productivity per employee for overall industrial activity in Palestine.
Sales grew significantly in 2005, reaching US$ 270 million in 2005 vs. US$ 220 million in 2004. In 2005, 32 percent went to the domestic market, 55 percent was exported to Israel, and 13 percent was shipped throughout the Middle East region, a promising market with a fast growing potential (10 percent in 2004). |
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Tourism |
Palestine provides the tourist not only with an opportunity to discover its many religious and historical monuments, but also its unique geography and short moderate winters in which to enjoy their holidays. Palestine also has coastal areas and scenic mountainous landscapes, in addition to the historic city of Jericho and the Dead Sea. There are several health resorts and recreational facilities in the Jericho/Dead Sea area. A state-of-the-art casino was opened in late 1998 on the outskirts of Jericho and shortly thereafter, a five-star international hotel was built as an extension to the Oasis Casino project. Major Palestinian investors are poised to launch a world-class theme park when political stability returns. Cultural heritage, entertainment and recreational opportunities, and conference facilities are all available in Palestine for local, regional, and international tourists and businesspersons. It is estimated that nearly one million tourists visited Palestine in 2000, generating approximately US$ 450 million in revenue. Tourism’s contribution to Palestine’s national economy is greater than that of industry or agriculture. |
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Agriculture and agrifood |
Palestine has traditionally enjoyed a strong reputation for trade in agriculture, which plays a major role in food security and jobs. It is also the basis for activities in agrofood, production of fodder, soaps, furniture, cosmetics, leather goods…
Agriculture employs 16 percent of the Palestinian labour force and provides activity for more than 39 percent of the informal sector. Moreover, more than 17 percent of Palestinian families practice subsistence farming and livestock activities. The agricultural sector generates 25 percent of Palestinian exports, mainly fruits (72 percent of cultivated land), olives and olive oil, strawberries, vegetables and (more recently) cut flowers. |
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Reconstruction opportunities in the Gaza Strip |
The Israeli withdrawal from Gaza in 2005 has created new development prospects in the area outlined by the “Gaza Strip Economic Development Strategy” covering the 2005-2015 period.
The Plan gives special attention to the areas evacuated starting on 15 August 2005, which represent approximately 16.5 percent of the total surface of the Gaza Strip. 97 percent of the land occupied by these settlements is public land with major but fragile ground water reserves that urgently require measures for their protection and safeguarding and a rational basis for resource allocation
The Plan outlines general directives for the rehabilitation of these areas in the context of Palestine’s overall urban fabric and defines options for future use in line with medium and long-term needs and priorities for the development of Palestine and optimal use of existing equipment and infrastructure. |
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