Hamburg Business Day Syria

  • July 6, 2010
  • 09:00 to 17:00
  • Hamburg Chamber of Commerce & Industry

Opportunities of Investment and Trade in an Opening Market

July 6th, 2010

09.00 a.m. – 5.00 p.m.

Hamburg Chamber of Commerce & Industry

 

The „Hamburg Business Day Syria“ presented perspectives on the development of the Syrian economy and information on possibilities for trade and investment in the country. The conference offered participants the opportunity to exchange views and to get into contact with business leaders, decision-makers and academic experts for economics, politics and law. The event was organized by EMA in cooperation with the Chamber of Commerce Hamburg and the Honorary Consulate of the Syrian Arab Republic in Northern Germany.

09.00 a.m.  Reception

09.30 a.m.  Opening

  • Stefan W. Dircks, Chairman of the Study Group Asia in the Hamburg Chamber of Commerce
  • Hani Nasri, Honorary Consul of the Syrian Arab Republic – Member of the EMA Advisory Board
  • Martin Köppen, Director of the Board for International Affairs, Energy and Economic Aid in the Department for Labor and Economy Hamburg
  • Saeb Nahas, Honorary Member of EMA e.V.

 

10.00 a.m. – 11.00 a.m.  Panel I: General Information on the Economic Conditions in Syria

Moderator: Taoufik Ben Amara, UNO-Ambassador (ret.). – Member of the EMA Advisory Board

  • Syria – An Opening Market; Secretary of State Hussam Al Din Al Hakim, Ministry of Local Administration
  • General Information on the Economic Conditions in Syria; Christian Glosauer, Correspondent for Germany Trade & Invest
  • Syrian Projects on Funding, Aid and Investments; Prof. Dr. Matanios Habib, Minister for Petroleum and Mineral Ressources (ret.), Damascus University
  • The Development of German-Syrian Economic Relations; Dr. Alexander Tettenborn, Director for North Africa, Near- and Middle East, Federal Ministry for Economy and Technology

Discussion

11:00 a.m.  Break

 

11:30 a.m. – 12.30 p.m. Panel 2: Legal Framework Requirements and Opportunities for Investment in Syria

Moderator: Dr. Abdallah Nassour, Rostock University

  • Current Economic Reforms in Syria and Opportunities for German Investment; Dr. Magdy El Menshawy, Regional Director Syria and Lebanon – GTZ Syrien
  • Legal Framework Requirements, Guaranties for Investment, and the Establishment of Branch Offices and Joint Ventures for German Businesses; Dr. Stephan Jäger, Amereller Rechtsanwälte
  • Establishing Private Enterprises in Syria – Funding Opportunities and Services of DEG, Wilhelm Icke, Vice-President Europe / Middle East/ Central Asia, DEG

Discussion

12:30 p.m.  Lunch

 

1:30 p.m. – 3:00 p.m.  Panel 3: Infrastructure, Environment and Energy / Special Economic Areas and Aid for Private Interest in Syria

Moderator: Heinz W. Dickmann, Chamber of Commerce Hamburg

  • Investment in Infrastructural Projects; Saeb Nahas, Chairman of the Board and Secretary General of Nahas Enterprises Group
  • Supporting German Business – Hermes Bonds; Volker Knauth, Head of Unit Middle East / Turkey, Euler Hermes
  • The Environmental and Energy business in Syria, Dr. Abdallah Nassour, Rostock University
  • Presentation of the “Industrial Cities” in Syria; Akram Hassan, Director of Industrial Cities

Discussion

3.00 p.m.  Break

 

3.30 p.m. Panel 4: Light Industry and the Transportation Sector

Moderator: Heinz W. Dickmann Chamber of Commerce Hamburg

  • The Export Potential of the Syrian Manufacturing Industry – Examples from the Textile ~, Clothing ~, and Olive Oil Production; Dr. Salam Said, Bremen University
  • Views and Practical Details on the Syrian Light Industry; RA / Mohami Oussama Al-Agi, Kanzlei Al-Agi, Syrian German Business Center
  • Experience of a German Business: Transports between Germany and Syria; Florian Jäckel, Deputy Director Export Section, Distribution Area: East Med, Greece-Turkey, Black Sea, West Med, Baltic, Mediterranean Shipping Company Germany

Concluding Debate

The Syrian economy has traditionally been heavily dependent on oil exports. However, the share of raw materials in the export volume dropped from 80% to 40% from 2000 to 2008, and the sector’s contribution to the national budget is steadily declining. In view of this, the government is seeking to tap new sources of income by promoting the private sector and reforming the tax and financial systems, and under President Dr. Bashar Al-Assad is pursuing a liberalization-oriented reform course.

The reform steps since 2002 include opening the banking, insurance, cement and electricity sectors to private initiative, liberalizing the import regime with sometimes drastic tariff reductions and introducing a harmonized customs system (NHS), lowering corporate income tax, unifying exchange rates, facilitating foreign investment, reforming corporate, investment, real estate and trademark law, enacting a competition law and establishing an investment authority. The new laws facilitate, among other things, the establishment of companies, the acquisition of land for foreigners for investment purposes and the repatriation of profits.

In addition, seven free trade zones (including Damascus, Damascus International Airport, Aleppo and the ports of Latakia and Tartous) have been established, which are intended to attract export-oriented investors in particular with special conditions. Foreign direct investment rose from US$600 million in 2006 to US$885 million in 2007. In addition to the reform of the financial sector, a dispute settlement center for economic issues, which was opened in Damascus in January 2010, should further increase Syria’s attractiveness for foreign investment.

Since 2005 Syria has been a member of the Greater Arab Free Trade Association (GAFTA), which grants duty-free access to 14 other Arab countries for products manufactured in Syria. A free trade agreement with Turkey has been in force since January 2007. In addition, Syria participates in programs within the framework of the European Neighborhood Policy and in the Barcelona Process of the European Union and the Union for the Mediterranean, and is striving to join the World Trade Organization (WTO). An association agreement with the European Union has already been initialled several times, but still needs to be signed.

Due to its low level of integration with the international financial markets, the international financial crisis has hardly affected Syria, but the country has not been spared the effects on the real economy. The real growth rate decreased from 6.3% in 2007 to 5.1% in 2008 and 2.2% in 2009. The fact that despite the decline in oil production and export revenues, a positive

The increase in the number of new jobs is due to the ongoing expansion of the private sector. A slight recovery is expected in 2010 with an estimated 3.7% growth. At the same time, the opening of the Damascus Securites Exchange (DSE) in March 2009 amid the global financial and economic crisis represents another visible step in the transformation process.

Syria’s main export goods are oil, which is currently being produced at a rate of around 350,000 barrels/day, as well as food, textiles and clothing. The main import goods are machinery and transport equipment, metals and metal products, motor vehicles, food and chemical products. In 2008, Germany exported goods worth 688 million euros to Syria and imported goods from Syria for more than 1239 million euros, with oil being the main import. Germany is Syria’s largest customer in the mineral oil sector, Syria is the seventh largest oil supplier for Germany. At the same time, Germany is one of the most important supplier countries for Syria for electrical engineering products, machinery, chemical products and motor vehicles.

Syrian-German relations are traditionally close and friendly. Germany enjoys a very good reputation and is a sought-after partner politically and economically. Following a debt rescheduling agreement in 2002, Syria is once again a partner country in German development cooperation, which focuses on the water sector. Germany is also active in the areas of economic reform, higher education, urban development and renewable energies. In February 2010, the Syrian Deputy Prime Minister and the State Secretary in the Federal Ministry of Economics and Technology opened the Syrian-German Economic Council, whose aim is to strengthen contacts between German and Syrian companies and to deepen economic relations between the two countries. This is supported by a double taxation agreement, which was also signed in February 2010.

In concrete terms, German companies have good investment opportunities in the following areas:

Following the opening of the financial sector, seven non-governmental banks have already established themselves, as well as the country’s first microcredit institution, which was founded with the participation of the Kreditanstalt für Wiederaufbau. Liberalization has led to competition among banks and the introduction of new services. A new law now authorizes private shares of up to 60 % (previously 49 %). The development of the banking sector has already exceeded expectations in the first two years and seems promising for the coming years as well. With only about 3,000 insured private households, the country is also an almost untapped market for the insurance industry. Since the sector was opened up in 2005, nine private insurance companies have been active.

Far-reaching measures are planned in transportation and logistics, including the modernization and expansion of airports, investments in the infrastructure of the regions in the east and the addition of express lines to the rail network. In addition, the commercial ports in Latakia and Tartous are to be modernized, with partial private concessions being awarded for the management of the terminals in the form of BOT (Build-Operate-Transfer) contracts. In order to benefit from its geographical location, Syria intends to double its freeway network to 2300 km and thus become a transit country between the Mediterranean and Iraq, between Turkey and the Gulf States. Here too, BOT contracts should attract private investors. In addition, other major projects are planned, such as the Hegschas Railway between Damascus and Jeddah and the Damascus Metro.

Since the first opening of the telecommunications industry in 1991, the state-owned monopoly company Syrian Telecommunications Establishment has gradually been allowing foreign investment in the fixed-line network sector. The telephone and Internet infrastructure is being overhauled; Siemens is already active here. The mobile phone sector is expanding rapidly and a third license is soon to be awarded to a private provider. The government supports the private purchase of computers with special credit programs and wants to increase the number of Internet users. New providers are to expand the range of services; in this context, the Internet certainly offers growth potential.

Due to demographic and economic developments, the demand for energy is increasing by 10 % annually. Planned initiatives in the energy sector include the modernization and new construction of oil refineries, the expansion of the oil and gas pipeline network and the construction of a power plant. Here, the necessary adaptation of the distribution network offers German companies commercial opportunities. In the wind and solar energy sector, natural conditions are good to very good. Although interest in renewable energies is only slowly beginning to emerge, legislative initiatives and support measures are being planned. In the medium to long term, interesting business perspectives for German companies could therefore arise.

As far as light industry is concerned, the gradual opening of the previously shielded markets in a number of areas makes it necessary to modernize production facilities. Provided that prices are competitive, German companies can benefit from the excellent reputation of the “Made in Germany” seal of quality, especially in the machine sector.

The tourism industry, which the government wants to develop into one of the most important oil-independent economic pillars, is one of the most dynamic economic sectors in Syria with double-digit growth rates. In the course of the first Tourism Investment Market Forum in 2005, for example, contracts were concluded for 13 of 33 projects tendered by the Ministry of Tourism and hotel management companies such as Intercontinental and Holiday Inn were admitted for the first time. Except for the luxury hotels, however, hotels have hardly any leisure facilities so far. The hotel infrastructure in the middle class is inadequate and definitely needs modernization to meet the demands of upscale and cultural tourism.

Further investment opportunities exist in the education and health sectors, in the textile industry and in the pharmaceutical sector.

Syria’s transformation process as an opportunity for German companies

The Syrian Business Day took place on July 6th in the plenary hall of the Hamburg Chamber of Commerce with lively participation of Syrian and German participants. In cooperation with the Honorary Consulate Syria, mutual business opportunities were discussed and important social contacts were made under the motto “Investment and trade opportunities in an opening market”.

Stefan W. Dircks, chairman of the working group Asia of the Chamber of Commerce Hamburg, welcomed the guests with reference to the increased interest in Syria, which can be observed on the basis the increased delegation journeys for example under the patronage of Guido Westerwelle there descriptive. Above all the change from a planned to a social market economy paves the way to an attractive investment country, said Dircks.

Afterwards, Hani Nasri, Honorary Consul of the Syrian Arab Republic in Hamburg, welcomed the participants and speakers. He praised both Syria as a country steeped in history and a meeting place for different cultures, and the beauty of the city of Hamburg and its status as a gateway to the world. He thanked the Chamber of Commerce and the Syrian participants with the call to spread the experiences gained on this day and to promote cooperation.

Martin Köppen, Head of International Affairs, Energy and Economic Development, Hamburg Ministry of Economic and Labour Affairs, emphasised that there is a great deal of interest on the part of entrepreneurs in Hamburg in developing economic relations with Syria. He sees great opportunities for cooperation, especially in the renewable energy sector. The Syrian Business Day is intended to help more Syrians and Syrian companies gain a foothold in Hamburg.

Saeb Nahas, Managing Director of Nahas Enterprises Group, honorary member of EMA and exclusive sponsor of the event, emphasized the long-standing German-Syrian friendship and expressed his hope for further successful cooperation between these two partners, especially with regard to the expansion of infrastructure in Syria.

After these unanimous, promising greetings, the first block was opened with the lecture of Mr. Christian Glosauer under the moderation of the former UN coordinator Taoufik Ben Amara.

In his role as travel correspondent for German Trade and Investment, he reported on his experiences with the likeable country Syria and its well-educated population. Furthermore, the figures he presented showed the positive current account balance with Germany, with a general nominal increase in the relations between Syria and Germany.

Prof. Dr. Mtanios Habib, President of the EMA in Syria and former Minister for Petroleum and Mineral Resources and Professor at the University of Damascus, recognized that Syria with its enormous trade volume offers a broad and wide market, which thus encourages the European market to open itself to Syrian products. He further noted that Syria, due to its geographically advantageous location, should serve as a bridge of friendship, cooperation and common interests.

In addition, Dr. Alexander Tettenborn gave his interesting lecture on the topic of general framework conditions for Syria as a location with special emphasis on education. According to Tettenborn, 22% of all Syrian professors have a German degree, which shows the Syrian-German connection on the educational level. He also emphasized Syria’s good general conditions, which include investment protection and the double taxation agreement.

In the ensuing lively discussion, numerous questions from the participants were answered by the proven experts.

In the second block of topics, moderated by Dr. Abdallah Nassour from the University of Rostock, the speakers went into more detail about the legal and financial framework conditions. Dr. Magdy El Menshawy, Head of GTZ Syria, began by describing the increased relevance of the private sector and the associated expandable microfinance market. In addition, he described many projects that have been realized or are currently being developed thanks to German participation and funding, and that have been supported by GTZ itself, the DAAD or other institutions.

Wilhelm Icke from the German Investment and Development Corporation then reported specifically on the work and tasks of the company, which primarily provide long-term financing to support and promote Syrian companies. He also presented public-private partnership programs that provide for the training of personnel and management and whose costs are covered by the BMZ at 50%.

Finally, the legal framework was explained by Dr. Stephan Jäger (Amereller Rechtsanwälte) with regard to the historical background, in which he dealt in detail with distribution and investment law, but also highlighted problematic legal situations in dispute resolution.

Afterwards, the participants were able to take in the newly acquired information over lunch and also used the time between the lectures to establish business contacts and actively engage in German-Syrian exchange.

Freshly strengthened, the third block was then rung in, which was moderated by Heinz W. Dickmann from the Hamburg Chamber of Commerce and which was handed over to Saeb Nahas. Saeb Nahas presented numerous projects in Syria with European participation with regard to infrastructure, environment and energy. He discussed the relevant plans and projects in detail and emphasized that tenders will follow for further projects in the energy and wastewater sector.

Volker Knauth then introduced Euler-Hermes-Kreditversicherungs-AG and discussed among other things general conditions and risks. He pointed out that since 2009 there have been improved cover facilities to Syria, but that these are still comparatively small in number and can be expanded in Syria.

Dr. Abdallah Nassour from the University of Rostock also noted good framework conditions for environmental business in Syria, who identified clear opportunities for German business to enter the Syrian market, especially in the area of further qualification. Thus he showed on the basis concrete examples, how Syrian decision makers and high-level personnel are sent to Germany for specialized further training and act in such a way as active link between the two countries.

The fourth block was also moderated by Heinz W. Dickmann, who gave the floor to Dr. Salam Said from the University of Bremen. This focused on both sides of the textile and clothing and olive oil production: Both the comparative advantages of, for example, relatively favorable production conditions and the good geographical location, as well as barriers such as high customs duties and other levies, and the challenge of being confronted with small family businesses were expressed in her presentation.

Attorney Oussama Al Agi (Law Firm AL-AGI) and from the Syrian German Business Center, not only provided insights and practical advice on the Syrian light industry sector, but also called upon the attendees not to ignore the cultural peculiarities of the Orient, as this could occasionally lead to misunderstandings. He appealed to the audience to take advantage of the favorable time to invest in Syria, since the modernized economic legislation and the labor market there is attractive for German companies.

The successful and informative Syrian Business Day was concluded by Florian Jäckel from MSC, the second largest container shipping company in the world. Jäckel described the advantages of sea freight as the most cost-effective and safest means of transport and explained the concrete procedure and the MSC connections to Lattakia and Tartous, the most important ports in Syria in economic terms.

The event was concluded with the participants’ great hope for increased cooperation between German and Syrian companies, and afterwards the opportunity was taken to establish and exchange contacts. This can probably be seen as a clear sign of a successful day. The EMA was also very satisfied with the course of the Business Day and is looking forward to continue to mediate between the EMA countries.

From Vanessa Orlik

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