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مؤسسة فريدريش ناومان .. من أجل الحرية

Handicraft Sector

Palestine

December 2013

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Palestinian Handicrafts ....................................................................................................................................... 3

Introduction ............................................................................................................................................................ 3

Handicraft Sector in Palestine: ........................................................................................................................ 5

Types of handicrafts: ....................................................................................................................................... 6

Current and potential markets for Handicrafts:................................................................................... 9

Legal Framework: Government Strategy and Planning ...................................................................... 11

Ministry of National Economy (MoNE): ............................................................................................... 11

Ministry Of Culture Strategic Plan .......................................................................................................... 11

Ministry of Tourism ...................................................................................................................................... 13

Legal framework ............................................................................................................................................ 14

Challenges: ............................................................................................................................................................ 17

Lengthy Procedures for exporting .......................................................................................................... 17

Lack of supporting Policy by the Government ................................................................................... 18

Difficulty in Accessing additional Financial Resources .................................................................. 18

Ineffective Donors Project ......................................................................................................................... 19

Lack of Marketing Awareness .................................................................................................................. 19

Lack of Powerful and effective Private sector representation .................................................... 20

Lack of Credible Data about the Sector ................................................................................................. 20

Impediments by Israeli occupation............................................................................................................. 22

Limiting the access of tourists to the local shops ............................................................................. 22

Difficulties in importing the needed machineries and raw materials ...................................... 22

Difficulties in movement and access ...................................................................................................... 22

Conclusion............................................................................................................................................................. 23

Recommendations ............................................................................................................................................. 25

Bibliography ......................................................................................................................................................... 28

Types of Handicraft in Palestine .................................................................................................................. 30

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Palestinian Handicrafts

Introduction For the past 5,000 years, production of Palestinian Handicrafts have reflected the unique

connection between people, the environment and land. The methods used to produce

handicrafts is an integral expression of the Palestinian cultural heritage and identity and a

main pillar of the Palestinian tourism industry Palestinians accumulated the skills of

handicraft-making and developed them through different generations, making the

contemporary economy of many Palestinian cities, including Nablus, Bethlehem and

Hebron, dependent mostly on the handicrafts industry. It is an inimitable practice with an

important economic impact on the development of the Palestinian economy. For centuries,

the Palestinian handicrafts industry has been a significant contributor to the Palestinian

national economy and a contributing source to the Palestinian GDP. Moreover, due to labor

intensive characteristic of the industry, the Handicraft Sector is considered one of the most

important and needed sectors in generating jobs.

Currently the handicraft sector faces several obstacles and challenges hindering its

development and expansion but also threatening the operation of existing businesses . The

challenges are a result of imposed limitations by the occupation, but are also magnified and

amplified by other factors including the inefficient planning by the responsible authorities;

lack of cooperation and coordination between the private and public sector, the oblivion of

the importance of improvement and renovation of industry's production.

Regardless of the obstacles faced by the sector, there is no doubt that the industry has

untapped potentials for further support of the growth and development of the Palestinian

economy, while preserving the Palestinian cultural heritage and identity.

This study is intended to highlight the current practices of the Palestinian handicrafts; view

the governmental efforts and plans to develop the sector; explore the challenges and

weaknesses; explain how the Israeli occupation impediments hinder the growth of the

sector and based on the latter, provide recommendations for the viable development and

improvement of the handicrafts industry.

The first section of the study intends to provide the reader with an overall overview of the

handicraft sector in Palestine and to describe the different characteristics and practices of

each handicraft sub-sector, moreover, the section highlights the current export capacities

and briefly addresses the potentials that can be utilized by developing the sector.

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The following sections “Government Strategy and Planning” underlines the plans set by the

government for the period between 2011- 2013, with highlighting the major shortcomings

from the Palestinian private sector perspective.

The following two sections “challenges and Israeli impediments” provide the obstacles and

challenges posed by internal policies, inefficient business practices and Israeli policies.

Finally, the study concludes and provides recommendations extracted through the revision

of all documents available related to handicraft sector, interviews with key players in the

sector and working group meetings with the Palestinian private sector. It is worth

mentioning, that for the sake of this study and the different figures available (discussed

later in the study), the numbers and figures used result from workshops questionnaires

and interviews with key players in the sector including business owners, private sector

institutions and government officials.

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Handicraft Sector in Palestine: Originally, handicrafts products used to be sold locally to tourists and pilgrims who visit

Palestine during religious Holidays such as Christmas. Currently, it has expanded to reach

few foreign markets through informal and formal businesses that export the handicrafts

products to other countries. However, this might seem as a progress in trade but it has

posed many challenges to the legal and viable development of the handicrafts industry for

many reasons, as defined in this study. Thus, it is important to define the strategies, of

exports and marketing that the businesses adopt, to evaluate the performance of the

industry and recommend feasible ways to improve it.

The Handicraft Sector in Palestine is mainly concentrated in Bethlehem and Hebron

compared with other cities' contribution to the sector. The sector’s major companies and

an average of 80% of production units are located in Bethlehem and Hebron; with the

majority of the businesses being family owned businesses.

The success of the handicraft sector products is derived from its attachment with the Holy

Land which gives it a comparative and competitive advantage. The latter, provides a

justification for the high price of the Palestinian handicrafts products' compared to similar

products produced in other countries. In addition, all products are handmade, by skilled

labor, who inherited the know-how technique from previous generations adding the

historical advantage, which usually translates to additional business returns, but has been

diminishing in recent years due to three main factors:

• The increase in the foreign low cost and replica products entering the Palestinian

markets and being sold to incoming tourism as souvenirs from the holy land.

• Lack of labeling of the Palestinian products.

• A large margin of the products price is added by the souvenir shops, and could reach up

to 10 times of the price sold by the workshops and factories.

One of the major deficiencies of the sector is the businesses' lack of the marketing and

promotional skills. Other than that, the expansion of sales beyond the tourists coming to

the holy land is limited and hence the sector became seasonal dependent, resulting in

liquidity problems in off-season periods of the year. According to several investors and

shop owners, the sales only peek around the holiday periods, but in other periods of the

year, the sales drop to barely cover the operational cost.

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Types of Handicrafts: • The types of handicrafts in Palestine are unique in terms of material used and patterns.

Annex 1 of the study illustrates the types and provides sufficient information on each. It

is important to note that each type is associated with a Palestinian city, village. The types

include:

• Embroidery

• Tatreez Fallah (Cross – Stitch

Embroidery)

• Tahriri (Couching - stitch

Embroidery)

• Tashreem (Patchwork)

• Majdalawi Weaving

Bedouin Weaving

• Olive wood Carving.

• Olive Oil Soap.

• Ceramics.

• Basketry.

• Glass and Pottery

• Mother of Pearl.

Based on market analysis study1, there are four main handicrafts products that directly

contribute to the handicrafts sector. The four types are Embroidery, Olive Wood Carving,

Glass and Pottery and Mother of Pearl. The market analysis was based on sector-selection

criteria, which was conducted to determine the sub-sectors with the highest potential

levels in employment, growth and impact on the economy. In addition, the sectors chosen

below have the most potential to realize and utilize major opportunities for development.

The analysis below is based on the market analysis and assessment made by CHI

international in 2010. With reference to Table A sector-selection matrix, in the appendix,

the following sectors are analyzed.

The most important type is embroidery. It is considered the main and most famous

handicraft product related to Palestine both locally and internationally with high sales in

the local market, and it is characterized with high growth potential that could reach

thousands of women working in handicrafts production, through formalizing the

handicrafts sector. Regardless of the latter, the embroidery products are not competitive

exports because of many factors including the high cost of production, low capacity to

address products demand and lack of abroad market access. Addressing the

aforementioned issues, the potential of the embroidery will be utilized to make it a

competitive export.

1 CHF international 2010.

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There are many embroidery designs representing different Palestinian areas,as each

Palestinian city or village is known for its own famous texture. Considering the working

force, the majority of labor consists of household women seeking to improve income.

The embroidery sub-sector has the largest number of informal businesses compared to all

other sub sectors with the estimated ratio of 1 to 10. The number difference between the

formal and informal segments in the embroidery sector is a result of the cultural norms

that is shared among certain Palestinian villages and areas. due to the conservative nature

shared among these communities, it is not preferable for women to seek work, and so it

was substituted by such work which can be completed at home. Nevertheless, in northern

parts of Palestine, in cities including Jenin, Tulkarem and Qalqelya, the number of women

working in embroidery decreases as most women are more involved in agricultural

activities. There were attempts by the chamber of commerce and several women

organizations to regulate the sector through charging a small registration fees of (100 NIS)

but it never succeeded.

The embroidery produced by women is either sold through NGO institutions such as YMCA

and Red Crescent or directly to the shops. The price is estimated either according to the

number of Yarn balls used or a lump sum based on the days needed to be completed. The

twine ball is sold for 6 NIS and in some villages the cost can reach 3 nis. Moreover, the

quality of dresses or clothes is decided based on the type of needlework and Twine used.

In Gaza, the registered number of embroidery workshops does not exceed 50 while the

informal workshops, or women working in this sub-sector is estimated to exceed 2000

women. In Hebron, an estimated number of 3000 women work to produce embroidery.

While in Nablus, Ramallah, Jericho and Jerusalem, the number of women producing

embroidery is estimated to be 1000 women in total.

Since the academic institutions, teaching production skills, are limited in number, most

women learn embroidery from older generation in their families. However, the

introduction of new designs is inadequate, and there is a lack of professional promotional

activities that target international markets, and so the exports in this sub-sector are very

limited, unable to compete globally. However, through some special requests, there have

been several diversifications in recent years, including scarfs, bags and mobile cases.

Unfortunately, due to the high cost, integration in the textile sector was infeasible.

Other important type of handicrafts include olive wood craving as it is only found in three

main cities of Bethlehem (Bethlehem, Beit Jala and Beit Sahour) with each city specialized

in certain designs. Most of the labor force working in this field are men with the direct

labor force estimated to reach 600 and 400 as indirect labor. The row materials, which

mainly consist of olive wood, used to be imported from Gaza but after the closures imposed

by the Israeli governments during the second Palestinian intifada, wood has been imported

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from northern parts of Palestine. The cost of wood depends on its quality as it can cost up

to 1600 NIS per ton. According to recent estimates, this sub-sector consumes between

3000 and 4000 tones of olive wood annually. In recent years, US and European countries

started to request that wood must be treated from rots and insects, unfortunately increase

the cost of production.

Olive woodcarving is considered sub-sector with the largest profit margin among all

other handicraft sub-sectors. For instance, the production cost of a 15 cm nativity set is

4$ while it is sold for 15$. On the other hand a 1 m nativity set which need 5 working

days by one labor cost 5000$ and is sold for $10,000 by the souvenir shops.

There are 95 registered wood carving workshops while the unregistered workshops are

estimated to be 120 to 130 workshops. The cost of establishing a workshop can vary

between $6,000 for small workshops to $50,000 for workshops with high production

capacity. Beside the cost of Wood, the main production cost remains the Labor cost which

can reach 200 nis for certain skilled labors who are considered scarce in resent days.

In addition to embroidery and Olive wood carving, Glass and pottery are mainly known as

the Khalili Glass (Hebron Glass) which first appeared during the Roman rule of Palestine.

Hebron's Old City has a quarter named the "Glassblower Quarter" and Hebron glass

continues to serve as a tourist attraction for the city, as Glass is mainly made in Hebron

with small number of workshops located in Jericho, Nablus and Ramallah. The cost of raw

materials is very low since it uses recycled glasses and clay. The labor force working in

this sector is approximated to be 750 person mostly men, the number is expected to

increase dramatically to reach 4000 labor since it is labor intensive and is hand made.

Most of the current consumption is limited to decoration purposes even though there is

potential to be introduced as house tools such as cups and dishes. Since the main

consumer targets tourist groups, the products are mostly located in the tourism areas.

One of the most drawbacks of this sub-sector is their negative effect on environment that

result from the used ovens which consumes used car oils and gas. Overall, due to the raw

materials used, the products are limited to certain colors (mainly blue) with few numbers

of design and poor packaging qualities.

Mother of Pearl: mainly located in Beit Sahour and it is dependent on the imported shells,

which used to come from Australia and recently from New Zealand and India. The cost of

the imported shells has increased from 1500 NIS per ton to reach now between 4000 and

7000 NIS based on its quality and purity. There are 150 workshops with the main

investment is the skilled labor which has accumulated experience through the years. The

main exporting countries are Islamic countries since European countries have banned its

importation due to environmental reasons. Like most of the handicraft sub-sectors, the

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mother of pearl businesses lack the proper packaging in addition to the introduction of new

designs which can open new markets.

Overall success of the aforementioned types and also adding ceramics sector, reflects the foreign and local market demands for the handicrafts products, as consumers prefer products with special and unique characteristics. according to the market assessment made by CHF INTERNATIONAL, "On average, olivewood and ceramics businesses are able to achieve revenue of $300,000 - $500,000". It is important to note that despite the constraints, the olivewood exports sales is approximately 2-4$ million dollars per year.2

Current and potential markets for Handicrafts: Regardless of which handicraft sub sector is being described, it is worth mentioning the

level of representation by the private sector institutions is underestimated and as a result

several governmental policies have been imposed without the prior knowledge of the

businesses of the policies implemented. Moreover, the lack of follow up by the private

sector institutions of the implementation of projects related to improving handicrafts

production, has proven that companies may accumulate theoretical knowledge in the field

of marketing and designing handicrafts, but not applying that knowledge to their practice.

The latter, has limited the potential of efficiently exporting products to foreign countries

under a governing law that ensures the application of legal procedures through proper

administration of a governmental entity, responsible for the monitoring and administration

of export/import procedures.

Even with the dependence of the sector on tourists, the export activities form part of the

sector's sales., According to PALTRADE the exports of the handicrafts may vary. According

to official numbers, the export consists of ($1 million) from the total sales ($6 million).3 On

the other hand, the number provided by the businesses estimates the exports value to be

between 50% and 70% of a $60 million total sales. In both cases, the largest percentage of

the exports from the handicraft products are exported to the Israeli market, either as a final

distinction or for re-exporting to other markets. Moreover, and regardless of the exports

value, the sector was able to enter several regional and international markets. Below is a

table of handicraft products and market destinations:

2 Ibid

3 Sector Needs Assessment – PALTRADE. P.19

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Table 1: Current Handicraft Markets 4

Sold to Local Market Sold to Israeli Market Sold to international Markets

Handicraft Products Ceramics, Olive Wood Products. Embroidery

Ceramics Products, Glass Sets. Wood and embroidery

Ceramics Products, Glass Sets. Wood and embroidery

Moreover, Following is the Existing and Potential Markets according to PALTRADE Need

assessment Survey:

Table 2: Potential Markets for Handicraft Sector

Existing Markets Potential Markets

Handicraft Products UAE, Israel, Jordan, USA and Europe

Arab Countries, Israel, EU markets

As it is clear, some of the markets importing Palestinian handicraft products are also future

potential markets, since they are not fully exposed to the Palestinian businesses, and there

is a possibility for further expansion either in-relation-to the kind of products exported or

quantity exported. Furthermore, the businesses currently working in the handicraft sectors

are considered uninformed of the potential to export their products to foreign markets. ,

Compared to other sectors in Palestine.

Table 3: level of demand on market information - by market and sector

4 Paltrade Sector Diagnostic Study, 2013

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Taking the above table as a reference, the sample of handicraft companies indicates that

most market information demanded are on the Israeli market, Europe and USA as they

contain the highest profit margins and can be accessed either directly or through an Israeli

intermediary. The information requested about the USA and European markets are focused

on rules and regulations to enter the markets, cost to enter the market and business

contacts. While the information about the Israeli market is more focused on the customer

needs, such as designs and prices. The businesses' interest to acquire information about

Arab market such as Jordan and UAE is limited, since the businesses can obtain the

information without the need for external support while other Arab countries are difficult

to access and hence there is no interest in collecting information about them.

Companies in the handicrafts sector are always faced by a high cost in return to explore

new markets. As a result, hindering their export activities and expansion to new markets.

Moreover, in addition to the difficulties in accessing the Israeli market, the handicraft

sector also face high difficulties in entering the Arab markets where it is expected to

flourish due to the Arab emotional relation towards Palestine.

Legal Framework: Government Strategy and Planning Ministry of National Economy (MoNE): Considering the legal framework that is currently applied and implemented in Palestine, the Industrial law No.10 for the year 2011, authorizes the ministry of national economy as the main public institution responsible for the planning and the development of industrial sector including the Handicraft industry. Moreover, the Ministry is responsible for the support and promotion of the industrial sector. Bearing in mind the Ministry of National Economy Strategic Plan, the handicraft is not considered a priority sector and is considered in the plan as part of the development process of the tourism sector. The low priority of the sector was also reflected in the national development plan since the handicraft sector planned activities was included under Tourism and Antique.

Beside the MoNE Plan, there are two main strategies directly related to Handicraft industry

in Palestine, administered and decided by the Ministry of Tourism and Antiques and the

Ministry of Culture Strategies. Regardless of the ministries different approach to the

handicrafts sector, the cultural identity and heritage are made a priority over the

business interest of the sector.

Ministry Of Culture Strategic Plan The Ministry of Culture considers the handicrafts as the historical identity of Palestine as it

views the sector as a promotional tool to preserve Palestinian heritage and the Palestinian

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historical identity. Through the revision of the Plan, Handicraft sector was addressed

specifically in the third strategic objective which states Protected, safeguard and

renovated cultural heritage of the Palestinian people, it is clear that the strategy of the

ministry considers the Handicraft industry as a mean to preserve the Palestinian heritage

and culture and a tool to transfer it abroad but with little interest in improving the business

aspects of the industry.

As a result of concentrating on the cultural aspects of the sector, all proposed programs

addressing the sector are mainly general promotion of the product and increase awareness

about its importance from a cultural point of view as shown below in the table.

Policy Intervention

1) Encourage and support traditional industries and handicrafts

1. Conduct a comprehensive survey on traditional industries and handicrafts.

2. Enforce laws on the support and promotion of traditional industries.

3. Enhance quality production of traditional industries and handicrafts.

4. Promote traditional industries and handicrafts abroad.

5. Launch a sensitization campaign throughout schools and universities and in the media about the significant support of traditional industries and handicrafts, thereby support heritage, conserving the environment and developing national economy.

6. Encourage and organize local and external exhibitions for traditional industries and handicrafts.

7. Rejuvenate the Traditional Industries Development Centre in Al ‘Eizariya area, which was approved by the late President Arafat.

As it is shown in the interventions set by the ministry concerning the Handicraft industries,

the sector is a promotional tool to the Palestinian heritage and identity both on the local

and international levels, even point three which target the quality of the handicraft

products is not clear through the strategy literature if it is for improving the sales or any

other purposes. Moreover, the budget dedicated to the industry which consist of

approximately $5 million distributed on three years is not sufficient to address the needs

and the requirements of the sector to improve and expand both locally and internationally.

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Unfortunately even though the Palestinian national development plan of 2011-2013 clearly

states:

" Development Approach:

The Ministry of Planning and Administrative Development

(MoPAD) sponsored the Culture Sector Strategy in cooperation

and coordination with respective bodies. In partnership with

experts selected by the National Team, MoC established a

specialized technical team of the Ministry’s staff. Over 17- 27

January 2010, the technical team developed working papers,

which included a presentation of the culture sector situation,

diagnosis of problems and relevant causes, and identification of

strengths and weaknesses. These working papers were presented

through 14 meetings, attending by workers and entities

interested in the culture sphere, for discussion, observation,

comment, and proposals in order to develop each field of culture.

Working papers addressed the following themes: publication and

printing books; traditional handicrafts and industries etcc" 5

The feedback from the various government officials and private sector businesses in

addition to the revision of the plans set by the related ministries (MoNE, MoC and MoT)

show lack of coordination between the three bodies and a very week participation of each

ministry in the plans of the other two ministries. With the only connection between the

ministries exist through the accumulation of the Ministry of Planning (MoPAD) to all plans

to form one general plan. Moreover, the financial difficulties that the Palestinian

government went through in the previous years have prevented the ministries from

implementing the majority of the projects related to the Handicraft sector.

Ministry of Tourism

The Tourism Ministry considers the handicraft sector an integral part of tourism and a

continuing source of funding for the tourism sector in Palestine, as mostly dependent on

tourists consumers.

5 Strategy of Ministry of Planning

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Legal framework: The current Palestinian law needs the necessary amendments to regulate the handicraft

sector through the development and improvement of a package of laws that empower and

stimulate cultural and intellectual creativity (Law on the Protection of Cultural Heritage,

Law on Intellectual Property Rights). Enacting a law with provisions that regulate the work

of heritage industries with a focus on handicrafts, will provide a legal framework in which

enterprises can easily operate. The law should include a definition, classification, defined

IP registration process, regulatory framework, specifications and standards for the

handicrafts as heritage products so as to ensure high quality traditional products and their

IP rights .

The Palestinian law must ensure that the handicrafts industry, ways of production and

designs, are protected as Palestinian heritage and identity, locally and internationally.

Thus, it should be based on the international standards and definition of cultural heritage,

as intangible culture products type. Also, not only protecting handicrafts products, as

folklore, artistic expressions and cultural heritage currently but also preserving the

Cultural heritage as it is unique and irreplaceable, which places the responsibility of

preservation of the knowledge and techniques of how to produce handicrafts products,

folklore and traditional art, all maintained and preserved for the benefit of the future

generations. The latter can be achieved through ratification of international conventions

including The Convention for the Safeguarding of the Intangible Cultural Heritage is a

UNESCO treaty adopted by the UNESCO General Conference on 17 October 20036; the

purpose of the convention is to safeguard the intangible cultural heritage; to raise

awareness at the local, national and international levels of the importance of the intangible

cultural heritage, and of ensuring mutual appreciation thereof; and to provide for

international cooperation and assistance. Moreover, Convention on the Protection and

Promotion of the Diversity of Cultural Expressions adopted by the UNESCO General

Conference on 20 October 2005 is of great importance and relevance to the protection of

Palestinian handicrafts products7.

The agreement is binding on all state members and made to ensure that states have the

responsibility for the protection and promotion for the "diversity of cultural expressions

and ensuring the free flow of ideas and works". The latter must be achieved through the

ending of occupation and the Israeli impediments that greatly hinders the free movement

of handicrafts products as cultural products. The convention also sets objectives that

6 Intangible cultural heritage refers to "traditions or living expressions inherited from our ancestors and passed on to our descendants, such as oral traditions, performing arts, social practices, rituals, festive events, knowledge and practices concerning nature and the universe or the knowledge and skills to produce traditional crafts" 7 "The Convention recognises the rights of Parties to take measures to protect and promote the diversity of cultural expressions, and impose obligations at both domestic and international levels on Parties.

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strengthen the economic value of intangible heritage, and so including the handicrafts

industry. The conventions include the objective of support co-operation for sustainable

development and poverty reduction, via assistance from the International Fund for Cultural

Diversity

Furthermore, the protection of handicrafts products as cultural products can be achieved

through the ratification of the mentioned conventions. However, it is also vital to protect

the products as economic goods, as the handicrafts sector is an industrial sector, it is of

high significance to solve the issues related to the economic value of the products and the

issues that the private sector faces due to weak legislation and regulatory framework .

Sustainable development can be achieved through regulating the handicrafts industry and

registering the products as industrial design with intellectual property rights. 8 Under The

Hague Agreement Concerning the International Deposit of Industrial Designs, a WIPO-

administered treaty, a procedure for an international registration exists. An applicant can

file for a single international deposit with WIPO or with the national office in a country

party to the treaty. The handicrafts products design will then be protected in as many

member countries of the treaty as desired. The latter can be achieved through creating a

Palestinian law with sui generis intellectual property rights listing the handicrafts products

as a protected industrial design. Based on the latter, the TRIPS agreement can be applied, if

Palestine becomes member to the WTO and so the handicrafts products will be protected

further by the WTO rules, and any violation of the industrial design right by a member

state, through illegally and illicit copying or manufacturing of the handicrafts products

design, can then be challenged at the WTO dispute settlement body.

The handicrafts can also be protected with the Geographical Indication primary IP rights

(GI), since different regions in Palestine produce handicrafts design each with its own

colors and patterns, and so the product is associated and defined with a specific

Palestinian city or village, based on its specific qualities and traditional designs. The

maintenance of the latter and the specific qualities of the products can be protected and

maintained through labeling the products with " holy land products, or Palestinian

traditional products", expressing the Palestinian identity through exports. 9

Accordingly, it is highly recommended to create the necessary laws and regulations to

ensure that the Palestinian identity and cultural heritage is protected as a cultural and

8 An industrial design right is an intellectual property right that protects the visual design of objects, it consist of the creation of a shape, configuration or composition of pattern or color, or combination of pattern and color in three dimensional form containing aesthetic value. An industrial design can be a two- or three-dimensional pattern used to produce a product, industrial commodity or handicraft. 9 A geographical indication (GI) is a name or sign used on certain products which corresponds to a specific geographical location or origin (e.g. a

town, region, or country). The use of a GI may act as a certification that the product possesses certain qualities, is made according to traditional methods, or enjoys a certain reputation, due to its geographical origin.

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economic value through a series of regulations governing and monitoring the products

locally and internationally.

Negative consequences of the weak regulatory framework

related to handicrafts sector:

1) Non-cooperation between authoritative ministries and bodies: the regulations and

law related to handicrafts do not provide clear identification of how cooperation

between the responsible bodies should occur and what steps must be made to

implement the strategic plans. The lack of cooperation and mutual vision of the

economic development of the sector, hinders any sustainable development of the

handicrafts sector and undermine its importance to the economy, tourism and

finally the private sector.

2) Absence of responsible financial institutions; in the laws and regulations there are

no defined financial institution or body that is dedicated for the financial support of

the sector and to ensure the financing of the strategic plans.

3) Weak legislation and vague provisions on the development of the industrial sector:

there is no regulation that clearly defines the development goals nor the mechanism

on how they will be achieved as the focus is based on tourism, the economic

development is not made a priority,

4) Lack of defined quality standards: there is no clear identification or definition of

handicrafts products and the facilities in which they are produced.

5) IP rights protection: finally and most importantly, the Palestinian law lacks any

international standards for the protection of the handicrafts products in local and

foreign markets, as the laws lack Intellectual property right that protects the

cultural identity and heritage expressed through the handicrafts products, and thus

risking the Palestinian products in foreign markets, through unfair competition and

lost identity, making unoriginal copies of the Palestinian handicrafts a cheaper and

more desirable products to consumers, inducing costs on local businesses. Thus a

law that focus on the handicrafts sector as an industrial sector with IP protection

will yield substantial profits to businesses, positively reflecting in return on tourism

and culture.

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Challenges: Lengthy Procedures for exporting: For monitoring purposes, The “Makasa” VAT documents have to be submitted by the

Palestinian businesses prior the export process with only limited number of shipments

included in the same documents.

Adding the difficulties faced due to the Israeli restrictions, the Palestinian businesses are

discouraged to export their products to foreign markets, as the costs associated with the

procedures are high.

Controlling the Market According to the assessment done and the feedback received from the businesses working

in the sector, the current Palestinian legal framework does not the sector.. The current laws

and regulations do not impose the required level of market control that will allow fair

competition and protecting the local products from the invasion of the foreign products

that are cheap replicas and labeled as “holy Land” products. Additionally, the Fair

competition in the market has been effected by the existence of informal businesses that

perform the production process through households work, and have no taxes or labor

commitment and accordingly acquired competition over prices.

Moreover, the lack of market control has given the businesses, such as the tour guides, tour

buses companies and souvenir shops, a powerful bargaining position over the workshops

and has contributed to a dramatic increase in the local product price without any effect on

the profit margin of the workshops.

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Lack of Quality Standards

Since the Handicraft sector has always been related to culture and heritage, it was never

fully approached by the Palestinian government as an economic sector and as a result the

quality standards set by the specialized authority is limited. It is worth mentioning that the

Palestinian Standards Institutions, the agency responsible for setting the standards in

Palestine, only have limited quality standards concerning the safety of the products while

the quality standards are absent.

Lack of supporting Policy by the Government Due to the fact that the Handicraft sector in Palestine is not considered a priority sector

compared to Health, Education and Security, adding the constant inclusion of the sector as

part of the Tourism Sector, both the financial and policy support of the government do not

reach the needed supportive level. For instance, the Tourism Strategic Plan 2011 - 2013

do not include proposed program that target the sector while the Ministry of Culture

Strategic Plan dedicated only 7% 10of the proposed budget to the sector.

Moreover, the lack of supporting policies can be presented through the absence of special

pricing for the production inputs such as water and electricity, which decrease the cost and

hence encourage the workshops and firms to increase their production Outputs.

Difficulty in Accessing additional Financial Resources

A healthy credit environment can stimulate productivity improvement through technology

upgrades, quality standards through certifications, and market diversification through the

design and modification of products to meet new market requirements. Of particular

importance then, is the way in which access to finance facilitates industrial improvement

and growth

Unfortunately, the political situation in Palestine is rated as risky and unstable, as the main

public institutions and ministries never received the planned budget dedicated to the

development of handicrafts, the government plan was frozen and limited in terms of

implementation. Moreover, the banking sector in Palestine is following a cautious policy in

providing funds to the business sector in which a number of collaterals are needed to

obtain the required fund/ loan in addition to the filtration process which makes only a

10

Ministry of Culture Strategic Plan 2011-2013. P17

19

small percentage of businesses qualify to request the fund. As a result, the availability of

funds provided to the businesses, which can be used in the development and expansion of

the businesses, are limited.

Another shortcoming that is affecting the expansion of the handicraft firms in Palestine and

exposure of new international markets is the limited Banking services provided. Several

factories has turned down business opportunities with international firms due to the lack

of proper payment procedures such as (PayPal) 11which provide security for both parties.

Ineffective Donors Project

With the businesses in the sector suffer from low financial capacity due to the decline in the

sales and being limited to only holidays periods, which also effect the available liquidity. In

Addition to the high cost of production that is a result of the high cost of labor and

production inputs, the only outlet for businesses to build their capacity and expand is

through the available donor projects.

Unfortunately, the donor projects that were implemented in recent years have rarely

addressed the major issues that will significantly improve the sector performance. With the

exception of few projects such as the EU project which was implemented by PALTRADE,

which aimed to assess the current Palestinian handicraft products, and address issues,

which will lead to an increase in the Palestinian market share in the Israeli market.

the issue of movement and access is in need of external interference by the international

community Unfortunately, there was never a serious attempt through the donors projects

to address this issue.

Lack of Marketing Awareness

Through several assessments that was done to the Palestinian handicraft sector, the main

shortcoming of the products consist of the lack of constant updates in the designs and

products which match the needs and taste requested by the market. Moreover, the

Palestinian companies have little experience in the marketing strategies, which needs to be

followed in order to enter the international markets and/or gain more shares in it.

One of the clear examples about the limited capabilities of businesses in marketing is the

current packaging for the products. Currently the packaging used by companies lack

11

PayPal is a faster and safer way to send money, make an online payment, receive money or set up a merchant account

20

creativity required to attract the customers. Also, it is dependent mainly on the way the

souvenir workshops present the products.

Lack of Powerful and effective Private sector representation

The lack of representative body that properly represent the handicrafts sector and

translate its needs and requirements into a unified position lobbied and advocated with the

government to influence policies, rules and regulations. Moreover, a unified and joint

strategy between both the private and public sector will encourage the donor institutions

to dedicate funding to build the capacity of the sector. Most of the internal problems that

the handicraft sector is suffering from are due to three main issues:

• The development Handicraft sector is not considered a priority by the government

• The sector suffers from several policies and regulations imposed by the government that

affect the sector negatively and needs to be revised

• The needs and requirement of the sector is not being addressed neither by the

government nor by the donor’s projects

Lack of Credible Data about the Sector The data related to the Handicraft sector, is unfortunately very limited and is likely to give

a misleading representation of the sector's characteristics. Data covering information on

the large percentage of informal business and other organizations involved in the sector

including municipalities, churches and NGOs, significantly alter several analysis of the

sector performance. To illustrate the latter, there are two figures for the annual sales of the

handicraft sector in Palestine, the first figure source is governmental data, which states that

the sector is extremely underperformed, as the annual sales are roughly estimated at

around $6 million. The other figure, estimated by the companies and production facilities

working in the sector, is between fifty to sisxty millions.

21

The reason that triggers a difference between the two figures is based on several

indications:

• The Informal business in the handicraft sector in Palestine forms the majority of the

sector. The number of embroidery workshop registered in Palestine do not exceed 5

workshops, but the estimate number of facilities which produce embroidery can reach up

to 3000 facilities, taking in consideration NGOs and home based working women

• The inaccurate reporting of sales to the governmental agencies

• Several NGOs in Palestine and other entities including churches and municipalities buy

local products and export them to foreign countries. These sales are not registered as

exports.

• The current research companies in Palestine lack the advanced methods to collect and

analyze the data more accurately.

• For easier market access, the companies are exporting through intermediate Israeli

companies and hence its not recorded as Palestinian exports, especially that most of these

products are labeled as Israeli product or holy land which in both cases result in not

realizing Palestine as the country of production.

22

Impediments by Israeli occupation:

Limiting the access of tourists to the local shops Due to the Israeli control over the borders and the fact that most of the tourist groups come

through Israeli tourist agents or guides, the tourists movement in the Palestinian authority

cities such as Jerusalem, Bethlehem and Jericho is limited and hence the access to the

Palestinian souvenir shops is weak, and with considering the relation established between

the tourism agents and specific souvenir shops, the access of the Palestinian shops to the

Foreign visitors is minimal and as a result the sales are not reaching the expected level.

Difficulties in importing the needed machineries and raw materials

similar to other industrialsectors in Palestine, the Handicraft businesses in Palestine suffer

from the limitation and constraints of the Israeli military policies that hinder further

development and expansion . The main impediment is the inability of the businesses to

import the needed raw materials without passing through extensive security procedures

that consumes time and money. Moreover, the businesses are unable to import new

machines which will significantly contribute to the modernization of the industry (with

preserving the identity) in addition to increasing the capacity of production to cover high

demand due to the “dual used12” items list claimed by the Israeli military.

Difficulties in movement and access

The difficulties in movement and access suffered by the handicraft sector has increased the

cost of production significantly since it increases both the transaction cost of the raw

materials imported and the final product when exported. Also, the difficulties in movement

and access have affected the availability of the handicraft products in all Palestinian cities.

The difficulty in movement and access and the unpredictability in the time needed for

export has also discouraged the Palestinian companies to export. There are several

companies who recorded financial losses due to their inability to fulfill their contracts with

foreign companies within an agreed time table which resulted either in rejection of the

product or the activation of a penalty clause in the contract.

12

Items as identified to have military use in addition to its industrial use. It is banned to be imported by the Israeli Military under all circumstances across Israel's frontiers without specific permits

23

Conclusion The basic weakness of the Palestinian handicraft industry is that it is still primarily

oriented towards local sales to incoming tourists. A basic change of orientation is needed,

towards export markets, in order to create the drive for the needed fundamental changes in

the structure and other aspects of this industry.

The main internal weaknesses that need to be addressed in order to promote exports are

as follows.

Quality control:

• Though the present quality of products is high, the industry needs to learn and

apply upgraded quality control techniques and procedures. This is needed in

order to maintain the high product quality, while widening product lines to

include also non-traditional designs, and shifting to production of relatively

large quantities; and especially to meet the strict requirements of export

markets for consistency in all the specifications of the product, and in its quality.

• At a later stage many of the workshops would need financing facilities to

upgrade their equipment, in order to meet increased demand of foreign markets.

Designing-related weaknesses:

• Existing products lines are narrow, and designs do not match the tastes of the

export markets

• Lack in advanced design know-how and experience, and in acquaintance with

the latest trends in global giftware and home decoration markets.

Marketing-related weaknesses:

• Lack of information about International markets.

• Lack of know-how and experience in the development and application of

marketing strategy, distribution strategy, and other aspects of marketing and

sales on international level

External impediments

• Movement and access obstacles.

• Specific difficulties related to small-size shipments required in the handicraft

industry, which result in undue extra costs of transportation.

Legal and Policy Framework

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• Lack of laws and policies by the government to protect the local industry from

low cost duplicates imported from other countries

• Lack of financial support by the government in the off season periods

Lack of Financial Resources

• Difficulties in obtaining additional finances from banks due to unstable

situations

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Recommendations

In order to capitalize on its vast export opportunities, the Palestinian handicraft industry

has to transform, from an industry primarily oriented towards local sales to incoming

tourists, to an export-oriented industry. In doing so, it will build on the solid base of its

existing strengths, and preserve and develop its sales to the local market; while gradually

developing its export capabilities.

The following are the recommendations:

Marketing:

o Since the handicraft industry is characterized by many small manufacturing

units, its export effort must be joint or coordinated. Possible models for such a

joint/coordinated effort can be through (1) jointly owned export company; or

(2) coordinated marketing activity, whereas the marketing strategy and core

branding and positioning activities are done collectively, as well as certain costly

marketing activity (for example, exhibitions); while each company has its own

separate distribution network and sales operation.

Export

o In-depth market research led by the private sector with the support of the

Palestinian government which will map in details the marketing channels and

promotional support needed by Palestinian handicraft companies to penetrate

global markets and reach giftware markets

o Introduction of new products that will cover a larger and more segments and

increase the diversification of the sector.

o Use all available capacity building programs to obtain professional support in all

needed areas

o Construct a progressive matching plan to be implemented by the specialized

private sector institutions that will link the Palestinian producers with its

counterparts in international markets.

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Logistics:

o Establish a collection shipment center that can facilitate the transportation of

product to and through Israel and will lead to a decrease in the cost of

transportation.

Production and quality control

o With the support of the leading Professional workshops, private sector and

public sector institutions, identification and setting advanced quality control

procedures, as required by export markets.

o Through using external technical support, introduce new tools and production

technologies to be used in the handicraft industry, without affecting the

handmade characteristics of the product.

Design:

Introduce new designs based on market research and the ability to

implement on the short run and with minimum cost and without effecting

the characteristic of the Palestinian identity

Building on previous Capacity building programs and introduce new and

advanced professional courses and workshops and on the job training in

product design, trends evaluation, use of advanced 3d designing

programs, CNC lathing and turning, etc.

Consortium

Forming a consortium from a group of handicraft related businesses that

can implement a complete export strategy that includes quality control,

branding, packaging, promotion and shipping in addition to promotion

activities which can eliminate several obstacles that might be faced by

each company if it attempts to export independently

Administration:

Establishing a governmental organizational body with several supervised entities, to

regulate, administer and monitor the sector. For example, in collaboration with the

private sector, the organizational body can assist in providing the raw materials of good

quality to industries at a reasonable price. (MAS 2006)

Human Resources and financing:

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There are two major concerns in terms of financing. The first is that th sector lacks

specialized financial institutions. The second is that existing financial institutions set

complicated conditions for financing and require excessive collateral. This limits

handicraft producers’ ability to expand their operations or improve their performance.

Legal Framework:

Create a series of laws that are effectively and easily applied and implemented

Define handicrafts as industrial products and cultural products, and empower the

legal framework to efficiently protect cultural heritage rights and Intellectual property

rights.

Ratify relevant international conventions in Palestinian legal system to meet

international quality standards and open further exports opportunities.

Investments and promotion of Palestinian areas:

Establish an incentive system to encourage the private sector to invest in the culture

sphere.

Design a special programme to support the handicrafts sector in East Jerusalem,

thereby preserving the special status of the city in the composition of the Arab

Palestinian cultural identity and taking advantage of the high number of annual

tourists visits. ( MAS, 2006) )

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Bibliography

• Tech. Paltrade, Jan. 2008. Web. <www.paltrade.org/.../PalTrade-Needs-Assessment-Survey-2008-ENG.pdf>.

• "GLOBAL MARKET ASSESSMENT FOR HANDICRAFTS." Www.usaid.gov. USAID. 5 Sept. 2013 <http://pdf.usaid.gov/pdf_docs/PNADN210.pdf>

• Palestine National Development Plan 2011 – 2013

• Ministry of National Economy National Plan 2011 – 2013

• Ministry OF Culture National Plan 2011 – 2013

• Ministry of Tourism National Plan 2011 – 2013

• National Export Strategy

• Paris Protocol

• "HANDICRAFTS MARKET DEMAND ANALYSIS." Www.USAID.gov. 2009. USAID. 5 Sept. 2013 <pdf.usaid.gov/pdf_docs/PNADT033.pdf>.

• "INVESTMENT GUIDE TO PALESTINE." Palestine Investment and Promotion Agency. 2008. PIPA. 5 Sept. 2013 <www.pic-palestine.ps/userfiles/file/pdfs/invest_guide_e.pdf>.

• MAS 2006. "Informal Handicraft Industries in the Palestinian Territories: Current Status and Prospects" "Informal Handicraft Industries in the Palestinian Territories: Current Status and Prospects 2006 retrieved from: <http://www.ptfp.ps/userfiles/006%20handicrafts.pdf>.

29

• Al-Barghouti, Siham. "Palestinian Handicrafts." This Week In Palestine. 8 Jan. 2011. 18 Sept. 2013 <http://www.thisweekinpalestine.com/details.php?id=3302>.

• "Sunbula.org – Palestinian fair trade handicrafts - Craft Traditions of Palestine." Sunbula.org – Palestinian fair trade handicrafts - Craft Traditions of Palestine. 18 Sept. 2013 <http://www.sunbula.org/etemplate.php?id=18>.

• “Sector Needs Assessment”, Palestine Trade Center – PALTRADE. August 2012

• Hazboon, Sameer, Dr. "Handicraft Sector in Palestine." , Bethlehem Chamber of Commerce, Telephone interview. 25 Sept. 2013.

CHF International 2010. analysis of the handicrafts sector in Palestine, developed in

partnership with PalTrade, PFI and the Portland Trust.

Retrieved from:

http://www.idmc.ps/userfiles/file/stadies/Analysis%20of%20the%20Handicrafts%2

0Sector%20in%20Palestine%20summary.pdf

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Annex 1:

Types of Handicraft in Palestine

• Tatreez Fallah (Cross – Stitch Embroidery): an important symbol of Palestinian

Culture found in many family houses in Palestine and other neighboring countries

including Jordan, and reaching the Gulf countries and the United States.. Tatreez is a

common craft practiced by Palestinian women, especially in villages. The design

originates from the Canaanites era, approximately three thousands years ago. Tatreez

can take many shapes and designs. For instance, the traditional Palestinian dress named

"thob" is made of Tatreez, a long-sleeved robe-like dress worn by women in Palestine.

There are different designs for different Palestinian cities. The colors and patterns of

Thob dresses reflect the social status of women, marital and non-marital status. Also,

women usually choose their Thob according to the social events they are invited to.

Tahriri (Couching - stitch Embroidery): is specified for producing long traditional and

wedding clothes. Tahriri consist mainly of couching with silver, gold and silk cord. this

technique which is considered the main technique of Bethlehem embroidery was inspired

by ornate church ornaments, liturgical clothing or the braid and couching ornamentation

on the uniform of Ottoman and British officers. Tashreem (Patchwork): is a production

technique of the traditional Palestinian dresses that add luxurious designs. The patches

which consist of silk and Satin are sewn onto the chest panel, skirt fronts or sleeves.

• Majdalawi Weaving: related to Al-Majdal Village, is a technique that adds a black and

indigo cotton threads combined with silk thread in fuchsia and turquoise, a cloth woven

on a single treadle looms by a male weaver.

• Bedouin Weaving: it was traditionally done by the Bedouin women to create household

items suited for life in the desert. it is made of sheep wool spun into thread, colored with

natural dye and woven into a fabric using ground loom.

• Olive wood Carving: can be traced back to the 16th and 17th centuries, its made of olive wood materials that are found throughout Palestine. It takes 45 days to turn a piece of wood into a beautiful piece of art. Nowdays, Bethlehem is the city where most of the workshops are found.. Olive Oil Soap: another symbol of the Palestinian tradition and an extraction of the olive

31

oil industry. Produced most famously in Nablus, the olive oil soup was traditionally made by women using left over olive oil.

• Ceramics: favored by both locals and foreign tourists, Palestinian Ceramics which are influenced by the Armenian, Ottoman, Persian and Syrian arts, are known for their vivid colored and arabesque motifs. Today Hebron is known to be the leading city in Palestine in the ceramic industry.

Basketry: Palestinian women create various items to decorate their homes and outdoors by adding basketry to their surroundings. Depending on their creativity, women combine different materials with different colors for unique designs Table A. Sector Selection Matrix Selection Criteria:

Olivewood Embroidery Mother of Peal

Ceramics Pottery

Growth Potential Medium High (immediate); Medium (long-term)

Medium (immediate); Low (long-term)

Medium

Low (immediate); Medium (longterm)

Employment

High

High

low Low-medium

low

Impact High High Low Medium Low Youth High High Low High High Gender/Women Low High Low Medium Low