UNIDO Integrated Support Programme
to the Palestinian Industry 1999-2001
AGREEMENT FOR IMPLEMENTATION

II. Priority for the immplementation of the Integred Programme

1. An Integrated Support Programme to the Palestinian Industry was elaborated in 1999 by UNIDO together with the Ministry of Industry . The objective of the IP was to promote sustainable industrial Development in Palestine. The Programme, with an estimated budget of around US$ 6.3 million and a duration of 3 years, comprised two major components: (a) Building capacity of the Ministry of Industry; and (b) of the Private Sector with 5 sub-components respectively.

2. To support the initial preparatory phase, an allocation of $60,000 was made from the UNIDO Regular budget in October 1999.

3. During the first mission of the UNIDO Team Leader of the IP (17 - 21 October 1999) it emerged the importance of the expected contribution of the UNIDO Programme to promote sustainable industrial development in Palestine. Specifically, emphasis was placed by Palestinian authorities and the private sector on the need to focus the implementation of the IP around the concept of Industrial Upgrading (Mise a Niveau) successfully implemented in other countries (i.e. Tunisia, Morocco, Egypt, etc.). This approach was determined by a recent exposure of Palestinian representatives to the Tunisian experience and on the UNIDO recognized and successful experience in designing and implementing Upgrading Programmes as well as in related quality and business performance improvement programmes.

4. The Industrial Upgrading Program (IND-UP), as foreseen by the Palestinian authorities, shall support the manufacturing sector to enhance its competitiveness and increase its exporting capabilities, to become ultimately a significant contributor to the GDP and a major permanent creator of employment opportunities in the Palestinian economy. It shall aim at upgrading the environment, including the supporting enterprises, as well as the manufacturing business enterprises and establishments. It is meant to be a permanent program to assist the manufacturing sector to continuously enhance its competitiveness and adapt to the changing conditions of the market. The IND-UP Program can be considered as one of the strategic means for the implementation of the Palestinian long term economic strategy, as outlined in the 1999-2003 national plan.

5. In view of the above, and based on an initial agreement on the priorities for the IP by UNIDO and the Palestinian Authorities the preparatory phase was used to design a specific Industrial Upgrading Programme within the IP. In particular, two activities were carried out:

a)Study Tour of five Palestinian representatives of the Ministry of Industry and of the Private sector to Tunisia to learn about the methodologies for the design and implementation of the Industrial Upgrading Progra.

b ) Recruitment of a natioal experts (Financial Analyst) and fielding of two high-level experts (Institutional Framework   for Industrial Upgrading, and a Financial Analyst).

6. At the UNIDO General Conference held in November 1999, the Government of Italy approved the financing of $ 1 million to the UNIDO Industrial Development Fund for the implementation of the IP based on the priorities agreed with the Palestinian National Authority, i.e. with focus on Industrial Upgrading and the following sub-components: Establishment of Industrial Investment Promotion Unit including the Delegate programme to the UNIDO Investment and Technology Promotion Office in Italy already financed and agreed); Industrial Export Capacity. Building; Capacity building for Industrial Policy formulation, monitoring and updating; Assistance to the Establishment of a National Palestinian Industries Union (Ongoing); Support to the Palestinian Standards Institute; and Total Quality and business Improvement for selected Industrial Enterprises.

6. During the second mission of the IP Team Leader (11-16 February 2000), taking into account: .

• The need to optimally utilize the available funds and the expectations on additional funds;
• Reports of the two high level international experts;
• New technical assistance projects being approved in the same field;
• New requests by Palestinian Authorities in the field of investment promotion; .
• Opportunities and timing for tapping other financial resources;
• The need to achieve concrete and quantifiable short/medium-term results;

the implementation of the UNIDO Integrated Support Programme to the Palestinian Industry 1999-2001 would focus on setting up of an Industrial Upgrading Programme on a pilot basis including also the integration of other components foreseen in the Integrated Programme, as follows:

7. Sub-components (1) and (2) would aim at building up human and institutional capacity for implementing a fully-fledged National Industrial Upgrading Programme through a demonstration phase with a group of pilot enterprises. Special emphasis will be placed in on-the-job training through shop-floor interventions and addressing among other costs of non-quality . In this context assistance will be provide to assess and upgrade the capabilities, processes and procedures of the Ministry of Industry, to establish financing mechanisms for the IND-UP and to assess the feasibility to set up a National Cleaner Production Centre.

. 8. Sub-component (3) would aim at strengthening the capabilities of the Ministry of Industry and other public/private institutions in feasibility studies, upgrading the competitiveness of the SME enterprises through the promotion of international partnerships in the form of joint ventures or other forms of strategic alliances and match-making activities. Such capacity building will be geared to the establishment, eventually, of an Investment Promotion Unit. It will also include assistance in the preparation of an Investment Promotion Plan, in the preparation of an investment forum addressing the Palestinian Diaspora and a delegate programme.

9. Sub-component (4) would aim at upgrading metrology, testing and calibration capabilities of the Palestinian Standards Institute in identified high-priority areas. Strong interaction will be pursued with other technical cooperation programmes (SIDA, MED/USAID).

10. Sub-component (5) would continue to strengthen the capabilities of the Palestinian Federation of Industries.

II. Programme Management Structure

11. In order to set up a fully-fledged Palestinian Industrial Upgrading Programme including institutional and financing mechanisms (as proposed by experts reports that adapted the Tunisian Model to the Palestinian reality), the UNIDO IP will implement, on a pilot-basis, an Industrial Upgrading Programme IND-UP. It will operate and be tested through assistance to a group of 10 to 20 pilot-enterprises based on the funds available and allowing the implementation of the other retained priority sub-components.

12. At the end of the pilot phase when the local capacity has been built, on the basis of the results achieved, the Palestinian Authorities shall be able to decide whether and how to set up a fully-fledged Palestinian Industrial Upgrading Programme including the provision of the required financial resources.

13. For the pilot phase the programme management structure will be as follows:

1. Steering Committee

Based on UNIDO experience in supporting Industrial Upgrading Programmes and on the institutional structure for industrial upgrading in Tunisia, the Industrial Upgrading Programme would require the establishment of a Steering Committee with the participation of concerned Ministries, the private and the financial sectors.

Chairmanship: Minister of Industry

Membership Relevant Ministries and representatives of the private sector and of the financial sector.

The Steering Committee will also co-ordinate and harmonize the implementation of other technical assistance programmes for Industrial Development.

The specific functions of the Steering committee will be defined in detail based on the reports of the experts fielded for the preparatory phase. Training and elaboration of processes, functions and procedures will be provided within the Programme.

2. Industrial Upgrading Bureau IUB (Ministry of Industry)

An Industrial Upgrading bureau will be set up within the Ministry of Industry , including the elaboration of procedures and training of staff. The Bureau will be managed by a Director nominated by the Minister and will be assisted by a highly qualified local expert financed by the UNIDO Programme. Other staff of the Ministry will be trained during the implementation of the programme.

The specific functions of the IUB will be defined in detail based on the reports of the experts fielded for the preparatory phase. Training and elaboration of processes, functions and procedures will be provided within the Programme.

3. UNIDO Technical Support Unit (PFI)

The National Technical Coordinator (recruited and financed by the UNIDO Programme) will act as UNIDO technical Coordinator in Palestine. He will report to UNIDO and liaise with the other programme management structure to ensure the technical delivery of the programme. Local experts and local consultancy companies will work together with international experts and the staff of the IUB for the Implementation of the programme at the selected pilot-enterprises.

The main function of the UTSU will be assistance to the Pilot enterprises in the strategic diagnostic, elaboration and implementation of the Upgrading Plans. Support for the elaboration of Investment plan will be provided within the Investment Promotion Sub-Component.

The specific functions of the UTSU will be defined in detail based on the reports of the experts fielded for the preparatory phase. Training and elaboration of processes, functions and procedures will be provided within the Programme.

4. Fund Management

For the establishment of a Industrial Upgrading Fund an international high-level expert would assist in assessing opportunities to access and tap planned and existing  credit facilities and in defining a procedures and mechanisms for such a fund as well as its possible institutional and legal set up.

5. Other functions

UNIDO has set up a Palestinian Team at its Headquarters. The Team Leader is responsible for the management of the whole IP while each member teanl will be managing specific sub-component or output.

The Focal Point nominated by the Minister of Industry will ensure the smooth, efficient and coherent implementation of all the components of the whole UNIDO Integrated Support Program to the Palestinian Industry 1999-2001.

The Palestinian Delegate to the UNIDO Investment and Technology Promotion Office in Italy would also facilitate the integration between the Investment Promotion and the Industrial Upgrading Components.

Sub-component coordinators will be nominated by the Minister for Investment Promotion and for the assistance to the PSI

III. Indicative allocation of available resources for the IP

UNIDO's contribution: $1,060,853 (including funds from other ongoing projects).

Contribution of the counterpart:

  In kind/ cost sharing for the organization of training activities.

Local experts for 6-9 work/months (TOCKTEN) will be made available for the upgrading of the Ministry of Industry.

Contribution from the pilot-enterprisesfor the pilot phase:

The amount would be determined at a later stage, however, it is expected to cover some 30% of the Assistance received (Strategic Diagnostic and elaboration and implementation of the Upgrading Plan).

Signed on the day of the 16 February 2000 in Ramallah.

Team Leader,UNIDO
GERARDOPATACCONI