Syria aims to attract as much as $55 billion in foreign direct investment over the next five years, Deputy Prime Minister for Economic Affairs Abdallah Dardari said.
About $25 billion of the investment will go into infrastructure projects, Dardari told reporters today in Paris. Investment in Syria this year will reach $2.5 billion, he said.
The country’s economy will grow at about 5.8 percent this year and an average of 5.5 percent to 6 percent over the next five years, he said. “We know we need a big leap forward to attract this investment,” Dardari said. “We know that there are many things we have to do in terms of financial markets and protectionism.”
Legislation will be introduced or amended on public procurement, non-government electricity generation, investment banking, leasing, mortgage financing, central bank independence and local credit guarantees, Dardari said. Syria is also considering starting an export guarantee program.
Syria plans to build 5,000 megawatts of power generation capacity over the next five years and French companies would account for 1000 megawatts of the projects, Dardari said. About 100 megawatts will be from solar energy and 200 megawatts from wind-generation, he said.
Syria wants French companies to bid for the contract to build a new terminal at Damascus airport, Dardari said, noting that private companies can now operate regional airports and that Syrian skies are now open to private airlines. The Arab country is seeking to improve its infrastructure as it vies to attract more tourists. About 6.5 million tourists visit Syria a year and the government wants to increase the number of visitors to 14 million by 2015, Dardari said.
“Even with all these changes, we have a long way to go,” Dardari said. “A competitive economy is a mindset, a new way of seeing things. This is the real challenge. But the political determination is unquestionable. There is no going back.”
Syria’s long-term foreign-currency debt was given a rating of BB- this month, three levels below investment grade, by Cyprus-based Capital Intelligence, which was rating the country for the first time. Short-term bonds in foreign currencies were rated B, one level below investment grade.
While Syria has “comparatively strong solvency and liquidity indicators and a demonstrable commitment to gradual economic reform,” the rating company said, the country’s “economic structure and institutional frameworks are relatively weak, and the financial system underdeveloped.”
Syria’s government is exposed to “potentially significant contingent liabilities because of the dominant role of the state in the economy,” Capital Intelligence said. It described the investment climate as “poor, marred by high levels of state ownership and protection, bureaucracy and corruption, deficient legal and regulatory regimes, inadequate physical and technological infrastructure, and low levels of education and training.”
The government should focus on implementing changes that would quicken its transition to a market-based economy, the company said.
“The Capital Intelligence rating went better than expected, given that they never asked us for our input,” Dardari said. “There are many things that we have done already that were not captured in that report. But we know that there are many things we have to do in terms of financial markets and protectionism.”
The Arab country’s central bank said last year that it would allow foreigners to own as much as 60 percent of the country’s banks, up from 49 percent. As part of encouraging the development of private industry in its state-dominated economy, Syria opened its first stock exchange in March of last year.
Syria is negotiating a free-trade agreement with the Mercosur trade bloc, which includes Argentina, Paraguay, Uruguay and Brazil, Dardari said. The country has a free-trade agreement with Turkey and an interim agreement with Iran.
Capital Intelligence and the International Monetary Fund have said the government should focus on implementing changes that would quicken its transition to a market-based economy. The IMF forecasts that Syria’s economic growth will accelerate to 5 percent in 2010 from 4 percent last year.
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