The Independent On Sunday
BEIRUT: Billions of pounds of foreign investment is flooding into Syria, even though the Middle East country remains under American sanctions and faces growing international pressure to co-operate over Iraq and Lebanon.
Following the death of former president Hafez al-Assad in 2000, Syria started an economic reform drive and moved away from socialism towards a market economy under Assad's son, President Bashar al-Assad. Foreign investment was allowed for the first time in 2003, and it has caused the face of Damascus to change radically. Benetton and other well-known foreign clothing outlets are now seen throughout the capital, while billboards line the streets touting wares that would have been unknown under Hafez al-Assad.
Indeed, over the past five years advertising has surged 50 per cent as branding becomes as much a part of Syrians' everyday lives as any- where else on the planet. Satellite television, estimated to beam into 85 per cent of Syrian homes, despite being officially banned, is also playing its part.
"For years it was a closed system, and now Syrians are motivated to buy Western brands," said Karim Saidah, general manager of France's Bel Groupe, owner of The Laughing Cow cheese brand in Syria.
The car market, meanwhile, has surged by a staggering 60 per cent since vehicle taxes were slashed in 2005.
The Joud Company, a local conglomerate, has collared 50 per cent of the £51m soft drinks market after striking a deal with Pepsi when the US giant was taken off a Syrian blacklist. And Bel Groupe's share of the processed cheese market rocketed from 5 per cent to 65 per cent in the 18 months since opening a £8.7m factory.
One of the most attractive sectors for investors, however, is retail and tourism. One project is a £256m joint venture between Dubai's Emaar Properties, IGO, an offshore investment, and a development company called the Eighth Gate. Located just outside Damascus's city centre, the project is expected to be the largest mall in the Levant.
Although economic reforms and investment are being officially encouraged, decades of bureaucratic inertia, cronyism and political ideology are hindering retail developments.
"Such projects are all plans on paper... they may be viable within 10 years," said Dr Nabil Sukkar, managing director of the Syrian Consulting Bureau for Development and Investment.
"What takes six months in Qatar takes six years in Syria. There are a lot of hurdles for permits," he added.
Nor are Western companies immune to the risks. Many, for example, may be attracted by Syria's 18 million potential consumers, but not all are comfortable pouring money into a region that remains unstable. Nor do they want to risk the wrath of the US over economic sanctions. It means the biggest players tend to be Lebanese and Gulf investors, who are flush with cash from the recent spike in oil prices and remain nervous, post 9/11, of investing in the West.
Yet the reforms continue. Earlier this month, the government pushed through a law allowing the export of profits. Officials hope it will help attract some £19bn, which will be needed in the coming five years to achieve a target growth rate of 7 per cent, to diversify the economy away from dwindling oil revenues, and to reduce unemployment.
The launch of a security exchange commission later this year may also give Syria's reforms a boost. "The stock exchange will inspire holding companies and corporations, as well as improving money transactions in the market," said Laila al-Samman, general manager at the Bank of Syria and Overseas. "There is a big chance to make money as Syria is a new market."