Written Report on SYRIA - Research Paper Example

?Written Report on SYRIA Introduction Syria which is officially known as the Syrian Arab Republic with Damascus as the capital and is situated in theWestern Asia with Lebanon, Iraq, Jordan, Turkey, Israel and the Mediterranean Sea on its borders. Arab Socialist Baath Party have been the party in rule in Syria starting from 1963 but the actual power is vested in the president who is supported by the military and a group of leading players of the political party. Bashar al- Assad is the president of Syria at present who has been enthroned after the death of his father Hafiz al- Assad. The Syrian Economy which is based mainly on the petroleum and agriculture sectors experienced a growth of 2.4% estimated in the year 2008 and these sectors together constitute one half of the Gross Domestic Product of the state. An increase in the production of the oil resulted from the shooting price of crude oil has contributed much to the foreign receipts of Syria (Central Intelligence Agency, p.657). Ease of doing business in Syria The governments of Syria were supporting the public sector for decades and the private sector too is given importance during the last few years as a result of the rethinking from the government side, realizing the necessity to boost private sector for the growth of the gross domestic product and to reduce the unemployment rate of the state. Syria was ranked at 143 in the ‘Ease of doing Business Report’ for the year 2010 by the World Bank which placed Syria behind all its neighboring countries. In dealing with construction permits and in starting a new business, the country was given 132nd and 133rd positions respectively. These figures indicate the difficulties faced by the private sector of Syria. The rising costs and the number of procedures involved in the process of issuing construction permits could be seen as the reasons behind this low ranking status. The report gives a clear cut idea regarding the tedious process of obtaining a construction permit which involves 26 procedures takes the duration of 128 days and requires spending 540.3 % of per capita income. However a down fall is observable in the case of the number of procedures and the required spending when compared with the statistics of 2006 whereas the cost required was 697% of the per capita income for the attainment of construction permits (Oxford Business Group, 2010, p.117). In the past few years Damascus, the capital has witnessed a number of economic reforms like opening private banks, reducing lending interest rates, raising prices of certain subsidized items and consolidating exchange rates (Central Intelligence Agency, 2009, p.657). Even though the government has acknowledged that it has carried out a number of reforms in the economy, sufficient legal regulations are expected by the investors in order to promote transparent and effective partnership from the government side and it is true that there is still scope for improvement (Oxford Business Group, 2010, p.117). Foreign business in Syria The trade liberalization and new exchange rate policies have contributed much to the entry of Syria in to the global market and at the same time the state is giving emphasis on the domestic economy in order to promote domestic investors. The number of foreign players entered in the liberalized banking sector appears to be an example of the foreign competition faced by the state. The Syrian economic reforms are carried out in such a way that they permit foreign participation along with providing necessary support and encouragements to the domestic firms focusing on the development of the economy of Syria. As a result of the corporate tax reformation of 2006 which reduced the tax rate from 65% to 28%, the corporate business sector experienced a remarkable change. A number of new business firms came in to operation and the government experienced an overall increase in the revenue. In 2008 another law was passed by Syria in order to support foreign investors. As per the law investors are allowed to rent or buy land in the state for their particular business purpose and to sell it back after paying tax and if the investors feel it is necessary and they were also allowed to withdraw their capital without any extra payments if it is done within six months from the beginning of the project. The customs duties levied on the goods imported for the foreign investment projects also were eliminated by new regulations. Industrial sector is the most attracted segment by the foreign investors and the major investment zones are located near three main cities; Damascus, Aleppo and Homs which were established to attract foreign investment and turned to be successful in achieving the goal. All these reforms have contributed immensely towards creating a comparatively fair situation for foreign investors in Syria at present (Oxford Business Group, 2007, p.34). Principal trading partners of Syria The main trading partners of Syria are the Arab nations, European Union, other European countries, China, Egypt, France India, Italy, Jordan, Russia, Saudi Arabia and Turkey according to the 2007 statistics (Oxford Business Group, 2009, p.40). Syria’s export items include oil as it is the main source of income for the country and other items like cotton, vegetables, fruits and textiles. Apart from the trading of raw materials Syrian exporters are concentrating on the export of finished food products and industrial goods. On the other hand Syria’s import items include transportation equipments, machinery, electrical generators, metal products, paper and chemicals and it is observable that the movement of imports is at a slow pace when compared with that of exports (South, C. & Jermyn, L., 2006, p.39). The entry of Syria in to the Greater Arab Free Trade Area in 2005 seems to have immense importance in the foreign relationship of the state. The free trade agreement with Turkey in 2007 was another landmark in the history of Syria’s foreign Trade. In 2008 an association agreement was made between the EU and Syria which was a continuation of the agreement posed in 2004. These trade agreements helped Syria to accelerate the process of growth and to make better use of liberalization for diversifying and expanding its economy. Syria’s further integration is expected in to the global market as a result of the latest trade agreements with other nations, however non-tariff barriers exist in the state which raise the domestic price of imported goods and constitute a considerable degree of trade restrictiveness (Oxford Business Group, 2009, p. 40). Labor standards of Syria The labor force of Syria seems to be more skillful and educated among the labor forces of Arabian nations. Majority of the skilled labors are employed in the OPEC nations and half of the total population comes under the age group of fifteen and both these factors together constitute the comparatively smaller labor force of Syria. Statistics prove that 47 million people among the Syrian population were employed in the year 1998 and in the year 1996 the distribution of employment was 40%in agriculture sector, 40% in service sector and the remaining 20% in the industrial sector and there are seasonal unskilled workers in both the agriculture and industrial sectors. Unemployment rate is comparatively high in the state an in the year 2000 it was reported at 20%. The authority to enforce labor laws in Syria is with the Minister of labor and social affairs (Syria – Labor, 2011). There have been a number of efforts made in order to improve the standard of living of the working class of Syria. Steps were taken to encourage the contribution of female workers towards the development of the economy and the society and to ensure a social status equal to that of men regarding the rights and obligations as a citizen and to provide decent employments to the younger generation of the state. Syria had stepped towards the eradication of child labor form the state and regulated the minimum age for employment as sixteen years even though some exemptions are still possible (International Labor Office. League of Nations, 2007, p.26/38). The acceptation of two major international conventions by Syria ensures the protection of the rights of children (in 1993) and that of the foreign workers and their families (in 2005). These two conventions ensure the indiscrimination of foreign workers and the eradication of child labor (International Conventions, n. d). Conclusion It is obvious from the discussion above that Syria is a developing nation with comparatively better international relationships. There has been the introduction of new policies in order to attract investment in to its various segments. Even though it was a difficult task to start a business in Syria earlier, things have started changing now as a result of the latest business start up reforms carried out by the country. As we have discussed there were too many tedious procedure involved in the process of registration and these reforms made the initiation procedures much easier by the removing the role of layers and court in the process of the registration of a company. Another important issue was the time consuming procedure for the issue of the letter of credit for the exporters and importers of Syria. This was solved effectively after the entry of private banks. But yet another fact which has to be considered is that even after the implementation of all these reforms Syria is ranked at 137th position in the ease of doing business globally and the heavy increase in the paid up capital also makes the procedure of starting a new business a bit tougher. Therefore it could be concluded that the Syrian market offers a better atmosphere for the businessmen to invest when compared with the earlier governmental regulations and market situations of Syria. There exist a strained relationship between Syria and the US and the sanctions imposed by the US on Syria points out the nature of relationship between the two. Finished goods with more than 10% of US made components are not allowed to export to Syria and certain Syrian citizens are not permitted to access the US financial system due to their relationships with Al Qaeda and other terrorist organizations. The nature of relationship between two nations and the international policies could affect the business of individuals or firms between the two. The relationship between Syria and US is not a smooth one as we have discussed and as a result a US based business in Syria may be affected adversely (U.S. Trade and financial sanctions against Syria, 2011). References Central Intelligence Agency. (2009). The CIA World Factbook 2010, Book 2010. Edn. Illustrated. Skyhorse Publishing Inc. International Labour Office. League of Nations (2007). Record of proceedings. International Labour Organization. International Conventions. Arab Human Rights Index. Retrieved 8 March.2011 from http://www.arabhumanrights.org/en/countries/country.aspx?cid=19 Oxford Business Group. (2007). The Report: Emerging Syria 2008. Oxford Business Group. Oxford Business Group. (2009). The Report: Emerging Syria 2009. Oxford Business Group. Oxford Business Group. (2010). The Report: Syria 2010. Oxford Business Group. South, C. & Jermyn, L. (2006). Syria.Edn. 2, illustrated. Marshall Cavendish. Syria – Labor. (2011). Encyclopedia of the Nations. Advameg, Inc. Retrieved 8 March.2011 from http://www.nationsencyclopedia.com/Asia-and-Oceania/Syria-LABOR.html U.S. Trade and financial sanctions against Syria. (2011). Damascus-Syria. Retrieved 8 March.2011 from http://damascus.usembassy.gov/sanctions-syr.html Read More