Syria’s export development policy failed, local market pays the price: Expert
Enab Baladi – Jana al-Issa
Supporting and stimulating exports in return for reducing the import bill is a policy the Syrian regime’s government followed for years, and it was enhanced with decisions that are in the interest of this policy in the first place, according to its statements.
The criticisms of merchants and industrialists have not ended in the context of their demands to facilitate the export process more and to give them more incentives to do so for years, while the impact of this policy was evident in the local market on the prices of many products that were exported in quantities that do not take into account the size of the internal demand for them.
In light of the high deficit figures recorded in the Syrian trade balance, the government’s insistence on this policy raises questions about its feasibility and impact on the local market.
Decisions fail to serve reality
The government of the regime has taken many decisions with the aim of “supporting and developing exports” over the past years, the latest of which was a promise related to starting work to support obtaining international quality certificates for export and securing storage and refrigeration units for all products intended for export, by granting the necessary facilities for investment in this field.
The government also directed the laboratories to expedite the issuance of the results of the analysis of samples sent to them of goods intended for export, especially agricultural and food, in addition to granting soft loans to sorting and packaging centers and setting up an appropriate mechanism for inspecting goods so that they do not lead to spoilage.
While these and other decisions do not seem to contribute to supporting exports, which is evident through the repeated criticisms by industrialists and traders.
The latest of which is the statement of the head of the Damascus Chamber of Commerce, Abu al-Huda al-Lahham, that the Syrian product “which many praises” is incapable, in its current state, of competing globally.
Al-Lahham told the local “Global” website on 11 December that the reasons for this are due to the low income of citizens and the low wages of workers, who are now working with low wages and salaries that are not commensurate with the work they do.
According to al-Lahham, exports from Syria are currently limited to foodstuffs and canned goods only, without any factories succeeding in exporting their products, except for companies that have established factories in neighboring countries such as Jordan and Egypt, which mainly export from those countries.
The quality of the product alone is not enough, al-Lahham asserts, adding that what the Syrian product needs to be exported is the quality of sales, the quality of delivery, the quality of transportation, and its expenses, in order for it to be able to compete with other countries, which mainly beat it in terms of quality.
“Didn’t work” in Syria
The government’s policy of “increasing exports” is in order to secure foreign exchange for the import of many basic materials and commodities necessary for the continuation and operation of production facilities with acceptable production capacities, according to a previous announcement by the Minister of Economy, Mohammad Samer al-Khalil, in early December.
Dr. Yahya al-Sayyed Omar, a researcher in political economy, told Enab Baladi that one of the axioms of improving macroeconomic indicators is working to increase the quantity and value of exports and reduce the quantity and value of imports, pointing out that all governments seek to enhance their exports and reduce their imports.
If this is done successfully, it could reflect positively on a wide range of economic indicators, such as the trade balance, the balance of payments, the gross domestic product, the value of the national currency, the unemployment rate, and other indicators, al-Sayyed Omar added.
Regarding the reality in Syria, the economist explained that the government of the regime is also seeking to increase its exports and reduce its imports. But it did not succeed in this, as the matter did not go beyond the limits of decisions, and it did not have an actual application on the ground.
The government has been relatively successful in reducing imports through periodic bulletins specifying the prohibited materials to be imported, and even in this, it did not fully succeed, as many of the prohibited materials entered the country through smuggling, says al-Sayyed Omar.
Last June, the Economy Minister, Mohammad Samer al-Khalil, stated that the ministry was able, through the policy of “rationalization of imports,” to reduce the import bill from 2011 to 2021 by 77%.
The value of the bill decreased from the beginning of this year until the end of last May by 14% compared to the same period last year, he added.
The decrease in the value of the import bill has negatively affected merchants, who are now openly bringing in their products and raw materials through “smuggling,” demanding solutions to that.
Also, it has reflected on the citizens amid the high prices of most basic consumer items as a result of the lack of supply and high demand for them.
No “subsidy” for the producer
According to Dr. al-Sayyid Omar, the government of the regime was unable to subsidize its exports except within unnoticed minimum limits, although it is almost entirely responsible for this failure.
“Supporting exports requires the support of industrial and agricultural producers, but on the contrary, they are always pressured,” says the economist.
In the industrial sector, the government of the regime was unable to provide the necessary fuel or electricity for production, in addition to the “warlords” exerting pressure on the industrialists, al-Sayyed Omar said.
In the agricultural sector, farmers were not supported as required amid many difficulties affecting the volume of their production, such as the continuous increase in agricultural costs.
The most recent was the increase in fertilizer prices by 50%, in addition to the stagnation of some surplus products and the failure to export them, such as apples, for example, whose farmers were forced to sell them below the cost price, which caused them great losses.
No matter the need
The government’s tendency to increase exports negatively affected the citizens, as the lack of availability of the material prompted an increase in its prices, as happened recently with olive oil on 11 October, when the regime’s government issued a decision allowing the export of a maximum of 45,000 tons of olive oil.
The Minister of Agriculture, Mohammad Hassan Qatna, justified the decision at the time by saying that Syria’s expected production for this year is approximately 125 thousand tons, indicating that the quantities approved for export are “surplus production.”
However, the decision contributed to raising the prices of olive oil, despite government talk about the existence of abundant quantities of it, as its price reached 275,000 SYP for a 16-liter tin (package) after its price did not exceed 225,000 SYP last year.
By adopting this policy, the government seeks to “repair the severe shortage in the value of exports,” so it resorts to exporting some products, especially agricultural ones, regardless of the market’s saturation with these products, according to al-Sayyed Omar.
At the beginning of 2022, Rania Ahmed, Assistant Minister of Economy for Economic Development and International Relations, said that the ministry’s policy focuses on rationalizing imports, focusing on priorities, and developing exports, adding that at the end of 2021, the value of Syrian exports amounted to 664 million euros.
While the value of the trade balance deficit in 2021 amounted to about 3.33 billion euros.
The ongoing deficit in the trade balance leaves clear effects on the value of the Syrian pound and the standard of living on the one hand and on the government’s ability to carry out its duties towards individuals, on the other hand, al-Sayyed Omar concluded.
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