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May_ 2010


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									                                  Embassy of India


Economy & Finance :

Syria, Iran to Set up Preferential Trade Agreement : During the 12th Syrian-Iranian
Higher Commission meeting presided over by Syrian Prime Minister, Naji Al-Otri and
Iranian Vice-President Mohammad Rida Rahimi which was held in Damascus on
April, 29-30, a Preferential Trade Agreement was signed and will come into effect
on June 1, 2010. Various other agreements and memoranda of understanding
were also signed.

Competitiveness Report Outlines Syria‟s Comparative Weakness : The 2010 edition
of a report by the National Competitiveness Observatory (NCO) held in Damascus on
May, 19 outlines the following key findings which highlight the weaknesses of the
Syrian Economy:

   -      The cost of doing business in Syria are the highest in the Middle East
   -      The high level of the bureaucracy is encouraging corruption and
          fraudulent practices.
   -      The level of R&D and, in general, communication technology is poor and
          inadequate to meet business needs.
   -      Intellectual property is not protected and not oriented towards business
   -      The Syrian education system is not preparing young professionals to
          serve the economy.
   -      The management of talent is poor including poor incentives and low
   -      The access to finance is difficult and financial markets are immature.

However, Syria‟s Vice Prime Minister Abdallah Dardari, in charge of Economic
Affairs stated that Syria‟s economy has problems but is not in crisis.

Syria‟s GDP to Cross USD 60 billion Mark in 2010 : According to projections for
economies of the Middle East Region by IMF, Syria‟s nominal gross domestic
product should exceed USD 60 billion mark this year as the economy continues to
grow and inflation remains subdued. The rates for GDP growth, inflation and
current account balance are in line with the data published in the April edition of the
World Economic Outlook also by the IMF.

Key Economic Indicators :

                                                 2010            2011
GDP (USD, billion)                               60.0           66.2
Real GDP Growth (%)                                5.0            5.5
Government deficit(% of GDP)                      -4.5           -3.4
CPI (%)                                            5.0            5.0
Export (USD billion)                             18.7           20.4
Imports (USD billion)                            21.4           23.1
Current Account balance (% of GDP)                -4.0           -3.5
Government debt (% of GDP)                       28.6           26.0
Gross Official Reserves (USD billion)            16.9           16.4
Gross External debt (% of GDP)                     9.0            8.1
Source : IMF, Regional Economic Outlook, Middle East and Central Asia

Agriculture & Water :

Water Shortages, High Input Prices, Limit Cotton Crop Level : One fifth of Syria‟s
population is estimated to be working in the cotton & textile sectors that is still
considered a “strategic crop” by the Syrian Government. Production of cotton crop
that regularly used to cross the one million ton mark till a few years ago is
estimated to be only 6,60,000 metric tons of raw(seed) cotton grown on 1,65,000
hectares during the year 2009-2010 due to reduced water availability, increased
input prices particularly on diesel and fertilizer, low international prices which in
turn reduce the procurement prices paid by the Government to farmers. Ginning in
Syria is the monopoly of the Cotton Marketing Organization (CMO). This is a state
owned institution which also has the monopoly over cotton seed procurement.

Syria‟s 2009-2010 Cotton Crop

Area planted (hectares)                 1,65,000
Production of seed cotton               6,60,000
Production of lint (ginned) cotton      2,20,000
Lint cotton consumed by locals          1,80,000
spinning facilities(Tonnes)
Lint cotton exported (Tonnes)             40,000
Procurement prices for seed                42.00
cotton (SYP/kg.)

Syria Gains WTO Observer Status :
The World Trade Organization has granted Syria the status of observer paving the
way for its full membership some nine years after it formally applied to the Geneva-
based body. The decision is an important success for Syria and was made possible
following the decision by the US Government to lift its opposition to Syria‟s
application. A consensus among all WTO member countries is required for the
accession process to begin. In a press release on its website, the WTO said that
“the General Council on 4th May, 2010 agreed to establish a working party to
examine the request of the Syrian Arab Republic for WTO membership. In that
same release an official Syrian statement read that “when the terms of our
negotiations are completed and agreed, they would contribute to improving market
access, strengthening the rules-based multilateral trading system and contributing
both to global welfare and the welfare of the people of Syria. Syria had applied for
membership in October, 2001 and has since then largely liberalized its economy
and signed trade agreements with both Arab countries and Turkey. Syria has also
concluded negotiations with the European Union on an association agreement that
will see a free trade area established between them within a period of 12 years
after the deal is formally signed.

US Extends Sanctions for One More Year :

The American Administration has announced on 3rd May that the sanctions imposed
on Syria in May, 2004 have been extended for another year stating that “While the
Syrian government has made some progress in suppressing networks of foreign
fighters bound for Iraq, its actions and policies, including continuing support for
terrorist organizations and pursuit of weapons of mass destruction and missile
programme, continue to pose an unusual and extraordinary threat to the national
security, foreign policy and economy of the United States”.

Syrian-Saudi Venture to Raise Capital to USD 200 million: Syria and Saudi Arabia
have decided to increase from USD 50 million to USD 200 million, the capital of
Syria-Saudi Company for Industrial and Agricultural Investment which was
established in 1977 and has investment in a number of business sectors including
dairy products, furniture and textile. The decision was taken during a meetings
between the Syrian Minister of Finance and Saudi Deputy Minister of Finance.

Oil & Gas :

Syria‟s Crude Oil Production Stabilizes at above 3,80,000 bpd : According to the
Ministry of Petroleum, Syria‟s average production of crude oil reached 3,82,269

barrels per day in the first quarter of 2010 indicating an increase of 1.03 percent as
compared to the same period of 2009 when production stood at 3,78,376 bpd and
an increase of 1.4 percent compared to the whole of 2009 when production
averaged 3,76,920 bpd. Light crude oil formed 40.2 percent of the production or
1,53,638 bpd and heavy crude formed 59.8 percent or 2,28,630 bpd.                Syria
exported 31,857 bpd of light crude oil at an average price of USD 74 per barrel and
1,15,720 bpd of heavy crude oil at an average price of USD 70 per barrel. The
country‟s average production of natural gas stood at 25.43 million cubic meters a
day in the first quarter of this year representing an increase of 17.73 percent as
compared to the same period of 2009.

Petro-Canada to Drill Well in Block 2 : Petro-Canada Palmyra will drill next month a
new well Manda-1 in Block II which spreads over a total area of 6,800 square
kilometers around the city of Hassakeh. The well is the third to be drilled by Petro-
Canada, a fully owned subsidiary of Suncor Energy, in the Block. Petro-Canada has a
100 percent working interest in the Block and had signed a production sharing
agreement with the Syrian Petroleum Company in February, 2004 for that purpose.
In February, 2008 the deal was extended for 30 months. According to a study by
GPC, 22 exploration wells will be drilled by eight operating companies throughout
Syria during the period 2011-2015. A total of USD 68 million needs to be invested
in both drilling and seismic surveys.

CNPC Raises Stake in AFPC : China National Petroleum Corporation (CNPC) has
acquired a 35 percent stake in Syria Shell Petroleum Development (SSPD). The
agreement strengthens the partnership between Shell and CNPC and both parties
will look to continue growing and investing in attractive opportunities in Syria‟s
upstream industry. Recently. Shell has announced signing of a 30 year contract
with Petro-China, the listed arm of CNPC and Qatar Petroleum to explore natural
gas in Qatar. SSPD has interests in three production licenses which cover some 40
oil fields in Deir-ez-Zor, Fourth Annex and Ash Sham areas all of which are operated
by Al Furat Petroleum Company (AFPC), a joint venture between SSPD (31.25%),
Himalaya Energy Syria BV (18.75%) and the General Petroleum Corporation (50%).
Himalaya Energy Syria is a joint venture by CNPC and ONGC.

Power :

Marafeq and Vestas to Develop Wind Farm : Marafeq, a joint-venture between
Syria‟s second largest holding company „Cham Holding‟ and Kuwait‟s Kharafi group,
has signed an agreement with Danish engineering firm Vestas, the world leader in
wind technology, to develop jointly a wind farm with a generation capacity of up to

100 MW. Marafeq will develop the project, Vestas will provide it with necessary
technology and Kharafi will be responsible for the engineering, procurement and
construction work. The wind farm will either be located in Al Sukhna or in Al-Hijana,
two sites south of Damascus.

Decree Formalizes Loan Agreement for Power Plant : A Presidential Decree passed
on April, 21 has approved the loan agreement signed earlier this year with the
Saudi Fund for Development(SFD) to part finance the extension of the Nasseriyah
Power Plant, a project that has yet to be opened for bidding by PEEGT. The total
project cost is estimated at around USD 369 million.

Tourism :

New Hospitality Projects Across Syria: The Tourism Investment Forum (TIF) held in
Damascus between April 27 and 29 offered 91 hospitality projects across Syria to
potential investors. The TIF is organized every year since 2005 by the Ministry of
Tourism and serves as a market where all types of potential tourist projects put
forward by the Ministry of Tourism but also by other Ministries and local
administrations are outlined and offered for investment on a Build-Operate-Transfer
(BOT) basis.

Health :

SQH Announces Shareholder Deal to Develop Syrian American Health Centre : The
Syrian-Qatari Holding (SQH), Syria‟s largest holding company has announced the
signing of a definitive shareholder agreement with the Syrian American Medical
Center for the co-development of a medical centre in Damascus that will be located
in the West Mezzeh Area. The SQH will develop and manage the project through its
fully owned subsidiary, Syrian-Qatari Healthcare. The cost to build the centre is
estimated at around USD 112 million and its development will require 3.5 years to

                                                                    (Sushil K. Saraf)

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