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Skip Navigation LinksHome :: Back Issues :: Syria’s first steps towards free markets

July 2001

Syria’s first steps towards free markets


Euromoney asked Wafic Rida Said, businessman and chairman of the First Saudi Investment Corporation, to offer some thoughts on the opening up of Syria.




       
Wafic Rida
Said
The question that everyone will want to ask about Syria is this: do recent economic reforms amount to a new dawn? I, for one, think that they do. This last year has seen a very important change of mood and direction with the arrival on the scene of the new young president, Dr Bashar Al-Assad. While there may be some in Syria for whom change is unwelcome and to be resisted, there can be no doubt of the president's commitment to modernize and reform every aspect of his country or of his eagerness to attract foreign investment and technological know-how.
Syria is in an exciting period of transition - from one generation to another, from one economic model to another, from a closed system to an open one. The Association Agreement, which Syria is negotiating with the European Union, aims at a free trade area by the end of the decade. This could transform the Syrian economy.
The authorities now recognise that the private sector, for so long the poor relation of the economy, should be encouraged to grow and to prosper without undue state control or intervention, the government's role being to provide a business-friendly legal, fiscal, financial and infrastructural environment. This is a big programme.
It will take some time to complete, but the president is hard at work on it. The signs of the sea-change are already there, the most recent example being a reform of Syria's financial services sector, as well as legislation to allow foreign private banks to operate throughout the country.
This is a promising start. But the private sector remains hesitant and further action is needed - and indeed is being planned. I see three major priorities: first, the need to liberalize further dealings in foreign exchange, as well as greater transparency in all financial business and investment dealings. Second, I believe that the government should, to the greatest possible extent, remove restrictions on imports of goods and services, opening up the home market to healthy competition. Third, it is essential that the legal system should be and be seen to be totally independent, impartial and above reproach. These are prerequisites if investors, both Arab and western, are to be encouraged to enter the Syrian market in a meaningful way. The overall aim must be to transform the economy, still largely state-controlled, into a lively market-oriented one.
The prospects for those investing now are good. Taxes are low - in many cases the government is offering a seven-year tax holiday.
Manpower is cheap. Improvements to the road, rail and telecommunications infrastructure are being realized and there is a commitment to modernise Syria's industrial base. The opportunities are there and the economic potential enormous. Syria's position at the heart of the Arab world is unique. It is the natural bridge between the Gulf and the Mediterranean and the perfect point of entry to the region. Its close ties, enhanced by free trade zones, with neighbours such as Lebanon, Iraq, Egypt and Saudi Arabia, make it a prime location for export-oriented industries.
One of the most important sectors, in my opinion, will be tourism. Tourism is at present largely undeveloped. So far, most tourists are from Arab countries, but last year about 150,000 French people visited Syria, 115,000 Germans, 100,000 Russians and so forth.
These are still small numbers, but the government is targeting an expansion in the annual numbers visiting Syria to reach over seven million in the next decade. These are ambitious plans and rightly so.
Syria is blessed with a stunningly beautiful Mediterranean coastline, with beaches that it would be difficult to match anywhere in the world. It has dramatic mountain landscapes and lovely varied countryside which ranges from lush orchards to boundless plains to deep desert. The climate is excellent, the cuisine delicious and the people welcoming and hospitable. Above all, Syria offers the discerning traveller its unrivalled cultural heritage. As the birthplace of civilization, Syria has unique architectural and art treasures spanning six thousand years and there are over 30,000 archaeological sites to visit. Of course, tapping this potentially lucrative economic resource demands investment in transport and communication networks, high quality construction projects and training people in new skills.
There are, of course, many other promising sectors for would-be investors. I would list banking and financial services, agro-business and animal husbandry, water management, phosphates and fertilisers, textiles - where Syria has always been strong - oil and gas, telecommunication, education and information technology in which the president has a particularly strong personal interest.
The Syrian government's reform programme reflects the serious commitment of its president, Dr Bashar Al-Assad, to modernise the country, to open it up to free trade and cross-border capital flows. It must and will be implemented and extended. For in so doing, the government will make possible the world-wide partnerships and alliances which will be crucial in allowing Syria to fulfil its potential and to play a key part in the global society of the 21st century.
Syria's key indicators
  1992 1993 1994 1995 1996 1997 1998 1999 2000 2001* 2002*
Population (mn) 12.96 13.39 13.84 14.15 14.62 15.10 15.60 16.11 16.64 17.19 17.76
Population (% change pa) 3.43 3.32 3.36 2.24 3.32 3.28 3.31 3.27 3.30 3.30 3.30
Labour force 3.59 3.70 3.81 3.92 4.04 4.16 4.29 4.41 4.55 4.68 4.82
GDP per head 682.70 735.70 870.70 949.40 1,101.50 1,109.60 1,101.70 1,020.00 1,010.00 1,000.00 998.00
GDP per head ($ at PPP) 2,672.10 2,785.50 2,961.60 3,130.10 3,314.90 3,353.40 3,543.10 3,430.00 3,420.00 3,470.00 3,520.00
Real GDP growth per head (% pa) 9.71 1.80 4.15 3.43 3.89 -0.77 4.35 -4.60 -1.80 -0.80 -0.70
Private consumption per head ($) 503.70 540.50 600.20 628.80 780.80 767.00 756.20 715.00 724.00 739.00 751.00
 
* Figures for 2001 and 2002 are projections
Source: Economist Intelligence Unit






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