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US is welcome - Syria encourages foreign investments

Global Arab Network - - George Haddad

Sunday, 20 September 2009 20:27

damascus_stock_exchange_syria_investment

Syria expects to attract $30 billion of foreign private investment in the next five years, as it encourages Islamic banking development and opens up its economy, according to the Syrian finance ministry.

Syria, which has been under U.S. sanctions since 2004, has embarked on limited reforms to counter the damage from sanctions and spur economic growth after decades of stagnation and government reliance on oil revenue. In May, the US prolonged the sanctions for another year.

The Syrian government’s encouragement of foreign investments and a rapprochement between Damascus and Washington may have borne new fruit.

A United States company, International Investment Group, announced in August plans for a series of industrial projects worth about 35 million US dollars in the eastern Syrian area of Deir Ezzor.

Abdulaziz al-Muslet, the regional representative of the International Investment Group, told IWPR that there was no ban on US-registered companies working in Syria.

Muslet said his company was registered in America with regional offices in Dubai, Qatar and North Africa. It was questioned by US officials about its plans to work in Syria but Muslet said that all obstacles on the American side had been cleared up.

In announcing details of the project, Muslet told reporters that his group was interested in Syria as a “geostrategic incubator” for regional investments.

He said that Syria presented a safe and solid location for investments, according to the state-run news agency, SANA.

The company will be setting up factories for the production of beverages, make-up, beauty products, industrial oils and other products. The group also announced earlier in 2008 the establishment of a fodder factory in the area of Hassakeh in eastern Syria.

Experts believe that such deals offer benefits to both sides.

“The Syrian side would benefit from the US technology and the Americans could be able to benefit from selling equipment to Syria,” said Ibrahim Hamoud, professor of economics at the public Tishreen University in Lattakia.

The export of US-manufactured goods to Syria is banned except for food and medicine under sanctions imposed against Damascus.

Punitive measures also include a ban on contracting business with the Commercial Bank of Syria and denying certain Syrian citizens and entities access to the US financial system, according to the website of the US embassy in Damascus.

But in recent months, as a result of an improvement of relations between the two nations, Washington said that it would seek sanction waivers to allow the export of certain goods, including aircraft parts and other technology-related products.

Some Syrian analysts say the Syrian economy has not been affected much by the US sanctions.

“The US sanctions did not affect Syria a lot because the amount of economic trade between the two countries has, anyway, not been considerable,” said Ibrahim al-Haji, a Syrian economist based in France.

He added that Syria did not receive any aid from Washington and was not bound to the US by any economic agreements.

But local analysts say that civil aviation and energy production were affected by the sanctions.

Also, a report on Syria issued this month by the Oxford Business Group said that US sanctions had served to restrict the flow of foreign direct investment into the country, in particular into the oil industry.

Although foreign investment rose to around 2.1 billion dollars in 2008, up from 400 million dollars in 2004 based on the figures of the International Monetary Fund, it could have been much higher, the report said.

Most of the foreign investments come from oil-rich Gulf countries like Saudi Arabia, the United Arab Emirates and Kuwait.

Despite the international financial crisis, the Syrian minister of economy, Abdullah al-Dardari, estimated at a conference in August investments in the country would be 132 billion dollars by 2015, including 55 billion dollars to be spent on infrastructure.

Syrian officials and analysts say that the state has taken many measures to attract foreign and local investors.

On September 10, a presidential decree exempted projects established in the eastern Syrian cities of Deir Ezzor, Hassakeh and Raqqa from income tax for ten years, according to SANA.

Ahmad Abdulaziz, the director of the public investment council, said that Syrian authorities had reduced the amount of bureaucracy for investors starting projects in Syria.

He said that the country is adopting the “one-stop shop” principle so that investors can complete all the procedures needed to launch a project at one office instead of having to get documents signed at different ministries and administrative bureaus.

In a recent study on the ease of conducting business in Syria, the World Bank indicated a solid improvement in the regulatory environment in the country.

According to the report, Syria has cut the number of official procedures needed to open a new business by one third, while slashing the time taken to complete these steps from more than six weeks to just 17 days.

But, Muslet, the regional representative of the International Investment Group, said that his group’s success in Syria was still dependent too much on the willingness of the Syrian authorities to facilitate the implementation of his projects.

He said that he hoped there would not be any bureaucratic obstacles impeding the realisation of the project and he did express some worries about the ongoing procedures involved in doing business in Syria.

Officials say the new policies of opening the national economy have helped achieved an average of around six percent growth in the last several years.

In March the finance minister, Mohammad Al-Hussein, opened the Damascus Securities Exchange, a new bourse he hopes to change the culture of Syria's family owned businesses and encourage higher standards of accounting and management.

The stock exchange only hosts 10 companies. The minister said more listings were in the works and the government would consider foreign companies once the domestic component was strengthened.

"The financial sector in Syria has not reached the level achieved in other countries," Mohammad Al-Hussein told Reuters. "We are interested to learn from other systems in the world."

(IWPR, Reuters, World Bank)

Global Arab Network

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