Foreign Direct Investment in Syria: Report

DAMASCUS, (ST) – The Syrian Investment Commission (SIC) recently launched the first report of foreign direct investment in Syria (FDI) under the slogan “the prospects of attracted investment to resources to the investment searching for efficiency” in cooperation with government ministries and agencies, the Central Bureau of Statistics, the UN Development Program and the Syrian Consulting Bureau for Development and Investment.

The report included indicators, framework of foreign investment policy and its flows in Syria, including its origin, quality and sector distribution for the year 2010, depending on a field survey in cooperation between the Investment Commission, the Project of Improving Investment environment and the Central Bureau of Statistics. The survey covered 241 companies including direct foreign investment, including 54 companies located in industrial cities and free zones.

“The total flow of foreign direct investment in Syria in 2010 amounted to 76.971 billion Syrian Pounds, or about (1539) million dollars and the largest share of its flows, estimated at 48, 5 billion Syrian Pounds at a rate of 63%, went to the oil and gas sector. The financial sector received about 8 billion Syrian Pounds 48.5 billion pounds and received financial sector about eight billion pounds at a rate of 11%, While the manufacturing sector received 17.3 billion pounds at a rate of 23%,” the report pointed out.

The report showed according to the geographical distribution of sources of the accumulated foreign direct investment until the end of 2010, that the European Union is the main source of foreign direct investment in the Syrian market by 73%. The investment is provided mainly by the Netherlands 62%, France 8%, and if we exclude the oil and gas sector, the Arab countries become the most important source of FDI with a share of 61% of the total balance of investment. Most of these investments turned towards manufacturing, real estate and money.

 Most investors from the Gulf region, Lebanon and Jordan formed the largest share outside the oil and gas sectors, and most of the foreign direct investment at the end of 2010 took the form of the new investment of about 99.7 %, while 0.3% of it took the form of mergers and acquisitions through a bargain that was conducted between Sodic Company for Investment and Development and Palmyra Company for Real Estate Development.

According to the proposals to develop and activate the role of foreign direct investment in the national economy, the report summed up a number of points to remove and address the institutional and material obstacles that hinder any foreign investment, regardless of its source or relation to any sector of the economy, the adoption of the philosophy of smart intervention to encourage foreign investment in the sectors and priority activities and the rationalization of the based catalytic system towards the unification of the laws and regulations of investments and putting them under one umbrella to expand the functions and powers of the Syrian Investment Commission and linking incentives to priorities of  investment and rationalizing the use of tax incentives and putting it within a variable a framework and the adoption of the principle of the use of certain ratios of local inputs to encourage domestic product in the case of available adequate efficiency or the application of appropriate thresholds for export and linked to incentives and to be flexible and variable incentives whenever stages differ and priorities change. ‏

The report finds that the efforts of the Investment Commission in the promotion of foreign direct investment is to set up a national observatory for foreign direct investment based in the headquarters of the Syrian Investment Commission using all those related to this area in terms of experience, application, or data collection or how to conduct surveys.

As well as the formation of a committee headed by the Syrian Investment Commission and represented by concerned bodies such as the Ministry of Local Administration and the Planning and International Cooperation Authority and the Regional Planning Commission. The task is to study the governorates and Syrian areas in terms of all indicators and comparative advantages, and the absolute and existing projects in order to contribute to guiding the appropriate investment, including foreign direct investment.

The report emphasized the importance of establishing a network of information about alternative foreign markets to traditional markets, setting up special investment data bank including information about all of the costs of the means of production, publishing of available investment opportunities and ensuring all their own specifications to be ready to be invested directly.

The report also pointed out to the importance of cooperation with the government to identify sectors of priority that can achieve the growth conditions, productive and technological promotion and invite investors to participate in these sectors.

 The report concludes to emphasize the economic importance of foreign direct investment in Syria since it is contributing to the improvement of the national economy and raise the percentage of GDP.  The flow of foreign direct investment in Syria is considered a reasonable indication compared to the economies of countries in the Middle East and North Africa and other countries.

Sharif el -Khatib