Emergence of Syria on the global scene

A decade after Syria decided to transform its closed command economy into free market economy, foreign banks have sprouted along the broad avenues of the capital, ATMs flank upmarket boutiques, and international hotel and fast food chains are settling in. Syria has joined the global economy and is open for business.

Abdullah Dardari, deputy prime minister for economic affairs and architect of the transformation, explained why Syria abruptly changed course, “Early in 2000 it became clear that the previous economic management system was no longer tenable. At that time 60 per cent of revenues came from oil exports”. “In a country with oil production decreasing from 6,00,000 barrels a day to 3,50,000 barrels a day, it was clear that changes had to be made.”

Syria inaugurated a ‘dramatic but gradual’ programme of comprehensive reforms of monetary and fiscal policy, taxation, finance and banking.  During the five year period between 2005-2010, Syria absorbed $25 billion in internal private and Arab investment and the government spent a comparable amount on infrastructure.

New industries

Dardari said today non-oil exports count for 70 per cent of revenues and are growing at 15 per cent a year. Six thousand new industries have been established and output is expanding by 15 per cent. Foreign investment grew from a low level of $160 million to $2.2 billion in 2009. The population is growing at 2.5 per cent per year and consumer spending and demand for homes, goods and services is rising. All these factors make Syria an attractive prospect for local, Arab and international investors, stated Dardari.

In the coming five-year plan the government intends to pour $45 billion into infrastructure, education, and health while $55 billion is expected to be invested by the private sector in housing, industries, and trade. The plan calls for the construction of 1,000 new communities with 8,80,000 apartments for middle class and lower income families, technology parks, and private universities.

While he said the public and private sectors are in ‘partnership’, businessmen need to pay taxes and customs duties on time while the government must remove red tape.
He calls the new management system, “the social market  economy,” and argued that it is balanced regionally and socially and ‘pro-poor’: designed to “make the poor richer so that they can consume the production of the rich.

“One of the most important targets of the reform programme is to create a new middle class. Although this is a long-term project, you can see signs of change. The middle class of the 1960s or 1970s was mainly civil servants. Today’s middle class is made up of small entrepreneurs, self-employed people and people who are taking advantage of the changes that are being planned.

“Of course, there are winners and losers in any reform programme. Our aim is to have an inclusive growth programme, which means that the percentage of the poor that benefits is higher than the percentage of the rich that benefits.”

Corruption

Rateb Shallah, head of the stock exchange, said two major problems are corruption and the reluctance of the traditional mercantile class — to which he belongs — to shift from real estate to productive investments. He argued that family firms must go public and list on the exchange, which has 16 trading firms and will have 20 by the end of 2010. “We have a new law calling for a certain percentage of stocks to be sold at $2-$20 so small investors can participate. They represent a huge source which has been idle.”

The 1950s practice of giving stocks as dowries to daughters is being revived, providing a nest-egg for women and children. He pointed out that although most exports continue to be in raw form, Syria is now exporting finished clothing and tinned fruits and vegetables.
The value of India’s trade with Syria currently stands at $530 million. Of this $360 million is in Indian exports to Syria and $170 million in Syrian exports to India. Although these figures are low, India is set to expand its participation in Syria’s social market economy.  New Delhi and Damascus are finalising a contract to build a new power plant. Once work begins the plant will be finished in 33 months. A Pune firm is setting up an IT centre which will give advanced training in software technology. India is seeking to exploit Syria’s vast supply of phosphates for use as fertiliser. India is involved in developing new oil fields and has tendered for wind farms to produce electricity.

A joint Indian-Syrian commission has been established to review ongoing projects. Indian firms are set to participate in the Damascus International Fair which takes place this month.