Damascus – The economy of Syria improved with the opening process that began 10 years ago, but the country needs to advance more in areas like reduction of bureaucracy, infrastructure, public funding and training of labour. This is the opinion of heavyweight businessmen from Syria who operate in different sectors and diversified their business in recent years aided by the reforms.
"The country had a socialist system for over 40 years, and it cannot change everything from night to day," said to ANBA businessman Saeb Nahas, the owner of Nahas Enterprises Group, a conglomerate of 30 companies that operate in sectors that range from vehicle trade to the production of medication.
One of the main complaints of businessmen is the great participation of the state in the country’s economy, despite the opening to private exploration in recent years in sectors like infrastructure, tourism, agriculture, industry, banking and oil. "The economy here is between the regime of market and socialism," said Najib Assaf, the owner of companies in foreign trade, logistics, production of food, insurance and banking.
According to Assaf, the public sector still controls between 40% and 50% of the economy of Syria and many bureaucratic processes are imposed on the private initiative. "There is not 100% liberalisation," he said. "The president [Bashar Al Assad] wants to improve this scenery, but there is still resistance within the government to the market economy," he added.
The opening process is a pragmatic answer to the reality of the country, which needs to expand the offer of products and services in the domestic market, to obtain funds through exports, to attract foreign investment to make possible enterprises in essential areas, like generation of energy and transportation, as well as to create jobs for the growing population.
According to the deputy prime minister for economic affairs, Abdullah Dardari, who is responsible for the economic opening process, the number of inhabitants of Syria, currently at around 20 million, should double by 2030.
"There are challenges, it is not easy, but we are on the right route," said businessman Tarif Akhras, the owner of TAG group, which also operates in the most varied of sectors, from production of food to real-estate development. "We have one of the best investment legislations but bureaucracy is still great," he added.
Infrastructure
To reach its economic ambitions, the country needs to develop its infrastructure, to reform and also to build ports, airports, roads and highways. According to the Syrian prime minister, Mohammad Naji Otri, to attract private funds, new laws were approved and an organisation for promotion that operates like a "one-stop shop" for investors was established. "This is one of the reasons why we managed to maintain growth of 5.5% a year," said Otri.
According to Dardari, Syria needs to invest around US$ 50 billion in 10 years in the area of infrastructure and is expanding opportunities for private companies. In October, for example, there should be a conference on public-private partnerships (PPPs), a modality of contract that is not yet used in the country.
"IFC is helping develop a law on the matter," he said, referring to the International Finance Corporation, an institution connected to the World Bank that makes possible investment and provides consultancy to developing companies with regard to the strengthening of the private sector.
Modern infrastructure may guarantee to Syria a prominent position in regional logistics, through the import of products through its ports on the Mediterranean and later transportation by land to Lebanon, Jordan and Iraq. The same logic may be used for exports of goods from the country to the western markets, especially the flow of oil and gas through pipelines to the Mediterranean.
According to Saeb Nahas, transport of products from and to Iraq through Syria represents an economy of 12 days when compared to the route through the Mediterranean and Suez Canal, going around the Arabian Peninsula and arriving at the Iraqi coast on the Gulf. "The position of Syria, between Europe and Asia, is fundamental," added prime minster Otri, recalling the ancient Silk Route, which crossed the country.
In the oil area, according to the minister of Oil and Natural Resources of Syria, Sufian Al-Alao, the country needs oil and gas pipelines, as well as investment in exploration and production. According to him, Syria practices several modalities of contracts with private companies, which range from the mere providing of services to shared production and total concession. Alao declared that in the near future some 70 blocks should be tendered for land exploration. There are reserves of 2.5 billion barrels of oil that have not yet been explored.
"Syria needs many projects, be they in electricity, cement, steel, agricultural development, water supply, ports, airports, airlines, roads, the Damascus subway, Aleppo airport, etc. We need everything," summed up Najib Assaf. "This should take place some day, and the president [Assad] supports it," he said, adding, however, that there is still lack of government definition about how to face specific economic problems.
Social
A problem that may attract Syria is the reduction of money that expatriates send to their families. If the country has not been directly affected by the financial crisis, the jobs of Syrians working in Europe and in other regions were, says Saeb Nahas.
Dardari added that the process of reforms should enter a second phase starting in 2011, which includes taking to the social area the benefits reached in the economic area. The country has special interest in successful programs for reduction of poverty through income transfer, like the Brazilian Family Purse. "Syria needs this kind of project very much. We must be good in the economic and also social areas," he declared.
According to Nahas, Syria may guarantee a welfare state to up to 40 million people, double the population of before, but 50% of the public funds of the area are still turned to the area of defence. "The problems of the neighbouring countries also affect us, or else we could spend less on demesne," pointed out the businessman, referring to Iraq, Palestine and Israel.
He added that the country also needs much in programs for professional training to fight migration of people from the countryside to the city. "It is of national interest to maintain people in their homes, to fix them in their place. The country is being evacuated and cities have no condition of accommodating so many people," he said.
In his point of view, the populations of rural areas must be trained to strengthen agricultural production. "The field must produce, not just consume," he said. Agriculture was greatly affected by a strong drought two years ago and the migration of inhabitants to cities tends to affect the sector even further.
Agriculture
In this respect, the development of agriculture and of the food industry is among the priorities of the Syrian government. According to Dardari, if the population is going to double in little over two decades, the cultivated area should grow just 1.5% in the same period, which means that local agriculture needs great productive gains. "Greater productivity is the only way of feeding the country," said the deputy prime minister. "We need technology," he added.
Tarif Akhras is one of the businessmen who operate strongly in the sector. In November he should inaugurate a sugar refinery in Homs, as well as a farm for cattle raising and the installation of a beef slaughterhouse. "We are investing much in Syria and believe greatly that they will be very lucrative," he added.
In his evaluation, president Assad "has a clear view of the future of the country", which is living economic opening. "There is great potential for agricultural development here, as it is a great market," he finished off.
*Translated by Mark Ament
