The News from Syria :


Q&A : Fouad Issa al-Jouni, Syrian Minister of Industry

By Dalia Haidar

In terms of exports, can you update our readers on the latest figures?

We have witnessed a rapid increase in industrial exports. In 2005 industrial exports were USD 1.8bn, in 2006 they were USD 4.7bn and in 2007 they were USD 6.5bn. Last year’s figures have not been released yet, but they were definitely more than what was achieved in 2007.

Where do Syrian products go?

Most of our exports go to Arab countries – 69 percent – while 29 percent go to Europe.

Syria has long been known for its textiles. What is the current health of the country’s textile industry?

The textile industry is one of Syria’s oldest. It has stood out throughout the ages and currently represents 33 percent of all Syrian industry. Both the public and private sectors are involved. A large number of private companies produce fabrics and clothes, but some produce cotton spun yarns. There are 27 public companies working in the textile industry; nine produce spun yarns that are 100 percent cotton. Their aggregate production amounts to 120 tonnes of different types of cotton spun yarns annually. This is twice Syria’s need for cotton spun yarns. Therefore, we are looking at export markets abroad. We are also trying to boost manufacturing to give our exports greater added value. Because of the textile industry’s long tradition in Syria I can assure you the industry is in good health.

How has the global financial crisis affected Syria’s textile industry?

The global financial crisis has led to a notable drop in exports, particularly for cotton spun yarns produced by the General Establishment for Textile Industries. Exports have dropped by an estimated 17 percent between October 2008 and March 2009. Internal sales have also dropped to 19 percent of their normal volume. Diminishing demand is the main reason behind the fall in exports. The textile sector has been the most noticeably and directly affected industry by the global financial crisis, particularly in the public sphere. But it needs to be pointed out that the press exaggerates the situation. There are some 131,000 industrial plants in the country, including small handicraft businesses. Undoubtedly, the global crisis has affected our industry, but it is not going to be disastrous and the Syrian industry can absorb it.

What challenges do Syrian manufacturers face?

There are many challenges. The entry of poor quality products with fake certificates of origin sold at artificial prices affects industry, so we have taken measures to control the problem. We also face problems marketing Syrian products. This needs to be actively addressed by the chambers of commerce and industry, as well as the ministries of industry and economy. Moreover, many companies still operate with an out-dated administrative mentality; this needs to be developed, we need more practical and modern administrative procedures. The private sector has started to handle these issues in a better way.

Syria is opening its economy. Can local firms withstand global competition?

Syria’s industrial sector faces severe competition; it was dealt a huge shock when the Arab Free Trade Agreement and the Free Trade Agreement with Turkey were implemented. At the same time, Syrian industry has grown and it is moving towards competitive production. So I don’t think we need to be too worried about Syrian industry, particularly with those sectors that provide high added value such as the food, textile and chemical industries. These industries are strong and capable of surviving and competing. The industries that do not provide added value and depend primarily on parts assembly have been, and will be, affected by global competition.

How is the government supporting Syrian industrialists?

The cabinet has taken many decisions which support industrialists. One of the main problems for industrialists in Syria is that many foreign products entering the country are subsidised in their home countries. As such, the government has set a minimum price for industrial products coming into the country. A minimum price limit has been set specifically for the entry of textile products into Syria from all over the world. This measure has been in place for more than two months and it will improve the situation and boost the sale of Syrian textile products. The same has been done for the food, chemical and engineering industries. A commission has been established at the Ministry of Economy which will develop and support industrial exports. However, industrialists are also being asked to play their role in modernising and restructuring their businesses, in addition to reducing production costs in ways that will help them to produce more competitive goods at higher standards.

What is the ministry doing to modernise Syrian industry?

We have launched a number of projects to help develop industry. These include the Industrial Modernization and Development Programme, the first phase of which was launched in 2007 with funding from the Italian government and the United Nations Industrial Development Organization. It involves the modernisation of 36 textile companies in the private sector and three from the public sector. The project has been very successful and we are preparing for the next phase which will be launched in 2010. We will also establish a centre for industrial development and modernisation. There is also a project by the European Union to strengthen quality management, capabilities and infrastructure in Syria. This will help Syrian industrialists meet European standards of quality.

What are your future plans for public factories in Syria?

There are eight organisations in the public industrial sector with 92 companies affiliated to them. We have put in place a strategy for every organisation specifying which industries should continue and which should come to an end. The companies which will stop operating will be used for other industrial investments if they are situated in an industrial region, or they will be switched to tourism or services sites. The focus will be on strategic sectors such as fertilizer, chemical, iron and cement industries. This is part of our current strategy.
We have also decided to stop producing ginned cotton and to focus on producing fabrics of good quality, using cotton yarns in order to maintain a higher added value. We will not privatise any public industry, but we are seeking investment from the private sector. At the same time, we will not launch any public sector industrial project that is not economically feasible.

How has the increase in diesel prices affected the industrial sector? Would you consider providing subsidised diesel to industrialists?

The increase in the price of diesel affected production costs, but the main impact was felt by those industrial institutions that operate on diesel. However, those who could switch to fuel oil did so and fuel oil is subsidised by the government. At the moment, there’s a suggestion to reduce the price of electricity for industrial operations, especially the small businesses.

source : Syria Today : August 2009