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INVESTMENT CLIMATE AND REFORMS IN SYRIA SYRIAN GERMAN BUSINESS COUNCIL (SGBC) 1.

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Presentation on theme: "INVESTMENT CLIMATE AND REFORMS IN SYRIA SYRIAN GERMAN BUSINESS COUNCIL (SGBC) 1."— Presentation transcript:

1 INVESTMENT CLIMATE AND REFORMS IN SYRIA SYRIAN GERMAN BUSINESS COUNCIL (SGBC) 1

2 S Y R I A Population: 21 million Area: 185,180 km2 GDP: 46 billion US $ GDP Growth rate: 5,8% GDP per capita: 2190 $ Strategic location at the crossroads of Europe and the Middle East, between Turkey, Irak, Jordan and Saudi-Arabia Rich cultural heritage Religious diversity (Sunni Muslim 72%; Alawi Muslim 14%; Christian 12%; Shia Muslim and Druze minorities) SYRIAN GERMAN BUSINESS COUNCIL (SGBC) 2

3 Structure of Syrian GDP 3 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

4 DEVELOPMENT OF THE SYRIAN ECONOMY AND INVESTMENT CLIMATE 4 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

5 The gradual liberalisation of the centrally planned economy under deputy prime minister for economic affairs, Abdullah al- Dardari, has caused a boom of the private sector (in 2008, 65% of GDP generated by private companies) The10 th 5 year-plan for comprises important reforms for creating a social market economy which is explicitly oriented on the German concept of Soziale Marktwirtschaft already numerous positive results For the 11 th 5 year plan, the government plans to increase its spending to reach $50 billion in various areas related to developing the Syrian infrastructure, developing highways, seaports, dry ports, public services.... etc. 5 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

6 For the 11 th 5 year plan, the government plans to increase its spending to reach $50 billion in various areas related to developing the Syrian infrastructure, developing highways, seaports, dry ports, public services.... etc. 6

7 Most important results of the Syrian reform process: Fiscal reforms (competitive ratios, tax incentives( Standardization of exchange rates and pegging of the Syrian Pound to the Special Drawing Rights (SDR) of the IMF Reduction of custom duties (to levels required by the EU Association Agreement) Integration into GAFTA (Greater Arab Free Trade Area) Issuing of a Competition Law and Investement Laws Launching of the Damascene stock exchange in 03/ SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

8 8 Improvement of the logistics sector Involvement of private investors in the management of Syrias two main ports (ICTSI / Philippines in Tartous, CMA-CGM / France in Latakia). World Bank logistics ranking 2010(based on customs clearance; quality of infrastructure; ease of arranging international shipments; competence of officials; tracking and tracing and timeliness): Syria moved from position 80 (in 2007) to 55 (out of 155 countries) Starting 05/2010 weekly RO/PAX-connection Venezia -Tartous (SY) – Alexandria (EG) for goods and passengers by Venezia Logistics; Venezia – Tartous 68h

9 GDP Growth Rate 9 Average annual GPD growth of 5.2% between Estimated GDP growth of 5.8 % for SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

10 Inflation Inflation during the period was relatively high, but in 2008 it increased sharply due to domestic and global conditions (drought, increase in food & fuel prices). In 2009, figures show significant depreciation in inflation. 10 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

11 To meet the new requirements of an open market economy, and the need for competitive business environment at both micro & macro levels, the Syrian government adopted measures to improve the financial sector and to attract more inflows of FDI by: A.Licensing private banks (including Islamic banks), private insurance companies and financial services companies in 2000; since 2010, foreign operators can acquire up to 60% of Syrian banks (before 49%). B.Reviving the Monetary Council. C.Modernizing public banks to enable competition in the banking sector. D.Establishing and launching the Damascus stock exchange in March Banking sector 11 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

12 Energy consumption +8% / year due to ecomonic development and population growth Need for more power stations and alternative energy sources Opening up of the sector to foreign companies Two major new power projects: 450 mw extension to the Jandar power station (built by Mitsubishi Heavy Industries of Japan) in central Syria, bringing its total capacity to 1,150 mw; contract value around 280 million. 600 mw-extension to the Zara Power Plant near Homs for 400million. Wind farm project (BOO or BOT) near Palmyra with capacity of mw. Objective: to generate up to 2,500 mw of power from wind by Energy sector 12 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

13 Business Environment - Laws & Legislations Issued Laws: 1.Anti dumping law. 2.Domestic production protection law. 3.Intellectual property law. 4.Investment decree no 8. 5.Investment Agency establishing decree no 9. 6.Islamic banks decree. 7.Insurance and reinsurance companies decree. 8.Money laundering law. 9.Stock exchange board creation decree. 10.Trade law. 11.Free zones and industrial cities decrees. 12.Provisions of the confidentiality banking profession decree. 13.Decree of exemption certificates of origin belonging to the national origin of goods imported from the Greater Arab Free Trade Area of consulate ratification. 14.Establishing Exports Development and Promotion Agency law. 15.Digital Signature law, law on Electronic Communications. 16.Competition and Anti-Monopoly law. 17.Companies law. 18.Food law. 19.Registration for the branches and agents of foreign companies law. 20.Real estate development law. 13 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

14 Business Environment - Laws & Legislations Laws and legislations to be issued in the near future: 1.Patent law. 2.Electronic trade law. 3.Establishing fund for merchants retirement. 4.Improvement of Export / Import Procedures. 5.Facilitating SMEs licensing law. 6.Enforcement of Contracts and Property Rights. 7.Training of Commercial Lawyers and Establishment of Commercial Courts. 8.Reform of commercial Courts. 9.Anti fraud law. 10.Labor law. 11.Public private partnership law. 14 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

15 Holdings Establishing a number of Holdings in Syria: Cham Holding Souria Holding Syrian-Qatari Holding Company Construction Products Holding Company (CPC) Bahraini-Syrian Holding Company (unnamed until now) Kuwaiti United Company for Investment Kuwaiti Syrian Holding Company Castle Invest Holding Al-Mashrek-Fund 15

16 Arab World Bilateral Free Trade Agreements Bilateral Free Trade Agreements and other Trade Protocols Iran Turkey EU Malaysia Russia Eastern EU 16 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

17 Foreign Trade (Billion USD) 2000 – 2009 Overall Syrian exports grew by nearly three times (3.2 times). Overall Syrian imports grew by more than four times (4.7 times). 17 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

18 Syrian Exports 2008 (mainly agricultural / food products and textiles) Others 12% Arab Countries (especially Iraq) 40% America 3% 18

19 Syrian Exports 2008 (in million USD) 19 Material Growth rate fuel ,2% Animals & vegetables % Manufactured goods ,1% Manufactured materials ,2% Non- manufact. goods ,6% Chemical materials ,6% Machines % Raw non edible materials ,6% Drinks and tobacco ,3% Total Exports ,8% SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

20 Syrian Imports 2008 Eastern EU 17% EU Countries 25% Arab Countries 20% America 5% Asia18% Other Countries 16% 20 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

21 Syrian Imports 2008 (in million USD) 21 Material Growth rate Fuel % Animals & vegetables % Manufactured goods % Manufactured materials % Non- manufactured goods % Chemical materials % Machines ,1% Raw non edible materials ,3% Drinks and tobacco ,6% Total Imports ,6% SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

22 SYRIAN-GERMAN BILATERAL ECONOMIC RELATIONS 22

23 SYRIAN-GERMAN TRADE 23 SYRIAN GERMAN BUSINESS COUNCIL (SGBC) German exports to and imports from Syria in Mrd.

24 SYRIAN GERMAN TRADE 24 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

25 FOREIGN INVESTMENT IN SYRIA 25 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

26 Foreign Direct Investment FDI into Syria has significantly increased during the period SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

27 Foreign Direct Investment 50% of total FDI inflow to Syria has been attracted to tourism, 17% to oil exploration/production, and 13% to banking Investors mainly from Gulf countries and Turkey (industrial projects in and around Aleppo) German investors: Henkel, Knauf 27 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

28 Decrees No. 8 & 9 relative to investment have created an investment-friendly legislative and administrative framework, by way of the following reforms : 1.Allowing foreign investors to transfer their profits abroad. 2.Giving foreign investors the right to own the land and means of production as needed during the entire period of operation. 3.Tax exemptions for project requirements including non-tourism and public transport projects. 4.Shifting all tax concessions to decree no 51 (dynamic tax system). Investment promotion 28 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

29 Tax and fiscal reforms Tax and fiscal reforms spurred growth of the private sector investments (34 new laws and decrees since 2003). Decree No 51 of 2006 supported the business sector in general: maximum income tax was reduced from about 90% to 63% and then from 35% to reach 28%: o Competitive and low tax ratios 0 – 28% (individuals and companies) o Tax incentives o Dynamic tax deduction Investment promotion 29 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

30 Legislative Decree No. 9 for the Year 2000 delineated the role and tasks of the Syrian Investment Agency and its independence, and introduced the One-Stop- Shop at the Investment Promotion Commission. Launch of an investment map on 20/12/2008. Investment promotion 30 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

31 Decree No. 57 of 2004 concerning the establishment of industrial cities Consist of industrial and residential zones and offer all professional, educational, cultural and social infrastructures / services o Damascus / Adra o Aleppo o Homs o Deir Zzour Offer several incentives such as reduced charges for electricity One-stop-shop on-site where the investor can execute all administrative procedures Establishment of Free Zones (see Investment promotion 31 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

32 Renewable Energies and Electricity in Syria 32

33 Renewable Energies and Electricity in Syria Syria has a considerable potential for the use of renewable energies, specially in solar and wind energy. In 2003 the government created the National Energy Research Center (NERC) to support research in the field of energy and to assist the government propose renewable energy projects. The center has been conducting researches and propsing mid-sized projects to the government in coordination with UNDP, GTZ, JIACA and other active international bodies. The state policy opened up to a gradual involvement of private investors in the energy sector. There are several power houses in construction by foreign consortiums, which will also run them 33

34 Renewable Energies and Electricity in Syria Syria has an electricity agreement with Jordan, Libanon and Irak. A connection between Syria and Turkey to complete the supply is in planning stage. In the long run Syria will play an important role also in supplying the region with electricity 34

35 INVESTMENT OPPORTUNITIES IN SYRIA 35 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

36 Investment Opportunities Agriculture Tourism Technology & Communication Education Health Oil & Minerals Transportation Finance & Banking Industry Target Sectors Power Generation 36 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

37 Planned Investments The Syrian Governments long term strategic goals for the period are: GDP growth rate 9 % in average. Unemployment rate 7 % in average (4 % in 2015 ). Inflation rate less than 5 %. Gradual reform of the economic sectors (increase the share of the manufacturing industry). Continue sustainable economic growth and social equity (Distribution equity, living standard, health, education, science research). 37 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

38 Projected Investments SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

39 Distribution of private investments Mining Manufacturing Construction Electricity Agriculture Insurance & Finance Transportation Trade &Tourism (according to economic sectors) 39 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

40 SYRIAN GERMAN BUSINESS COUNCIL (SGBC) 40 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

41 The Syrian German Business Council is a non-profit organization; was created in December 2009 on the basis of decree no. 3023, issued by the Syrian Minister of Economy and Trade; was launched in Damascus on the 23 rd of February 2010 in the presence of Dr. Bernd Pfaffenbach, State Secretary at the German Federal Ministry of Economics &Technology, Dr. Abdullah Al-Dardari, Syrian Deputy Prime Minister for Economic Affairs, as well as prominent Syrian and German Businessmen and high-ranking officials; strives to promote the economic relations between the two countries; offers exclusive services to its members. 41 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

42 SGBC services 1. Business development services Customized identification of suppliers and potential customers Information research in order to evaluate your products or services' potential in the Syrian or German market and to familiarize with the markets business practices Support in creating target-specific marketing material Assistance in preparing your participation in international trade fairs Support in finding financial resources and joint venture partners for investment projects Establishing contacts with Chambers of Commerce, Business Associations and Professional Organizations in Germany and Syria 42 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

43 SGBC services 2. Networking services You have innovative products or services with good market potential, but that need the backing of government bodies and/or a change in legislation, mentality, habits? We will get you in touch with the right persons to talk to! You are planning to attend an exhibition in or to do a business trip to Germany or Syria? We will contact potential business partners and organize meetings with them! You are looking for the right partner to realize a project or do business with? As SGBC member, the high-level business delegations, meetings and seminars we host will give you plenty of opportunity for efficient and effective networking! 43 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

44 SGBC services 3. Activities and events For its members, the SGBC organizes at least two business delegations per year to Germany. For every German business delegation to Syria, the SGBC organizes b2b meetings and an official reception and/or dinner. With the aim of fostering economic cooperation between Germany and Syria, the SGBC organizes in cooperation with German organizations (GTZ, KfW, German Ministry of Economy, Ghorfa, Numov, DIHK, BDI etc.) conferences and seminars. 44 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

45 Our services – exclusive for SGBC members The SGBC is your privileged partner for developing business in Germany and Syria. As SGBC member, you are entitled to a panoply of specialized services tailored to meet your individual needs. Are you interested? Then get in touch with us – we would be glad to discuss with you in which way we can support you! 45 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)

46 THANK YOU FOR YOUR ATTENTION 46 SYRIAN GERMAN BUSINESS COUNCIL (SGBC)


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