""JABAN INTERNATIONAL COOPBRATION AGENCY GICA) i BNE S ok Hpusn i ORG. NIZATION FOR CEMENT DING MATERIALS (GOC) Me SYRIAN ‘ARAB REPUBLIC THE FEASIBILITY STUDY ed ON THE CEMENT PLANT DEVELOPMENT IN THE SYRIAN ARAB REPUBLIC FINAL REPORT JIN rat FINAIML AAT J115277017) #PREFACE In response to @ request from the Government of the Syrian Arab Republic, the Government of Japan decided to conduct the Feasibility study on the cement plant development in the Syrian Arab Republic and the study was implemented by the Japan International Cooperation Agency (JICA). JICA sent a study team, led by Mr. Hiroshi Takakusaki of Nihon Cement Co., Ltd, and organized by Nihon Cement Co., Ltd. and Industrial Services International to the Syrian Arab Republic 3 times from November 1995 to October 1996, ‘The teain held discussion with the officials concerned of the Government of Syria, and conducted related field surveys. After returning to Japan, the team conduicted further studies and compiled the final results in this report. T hope this report will contribute to the promotion of the plan and to the enhancement of friendly retations between our two countries. I wish to express my sincere appreciation to the officials concerned of the Governnient of Syria for their close cooperation throughout the study. November 1996 Kimio Fujita President Japan Intemational Cooperation AgencyAAimTyasian 193277017) 9Mr, Kimio Pujita November, 1996 President Japan International Cooperation Agenoy Tokyo, Japan Dear Mr. Fujita Letter of Transmittal We are pleased to submit to you the feasibility report for the cement plant development in the Syrian Arab Republic (Syria). The report contains the advise and suggestions of the anthorities concerned of the Government of Japan and your Agency. Also included are comments made by the Ministries of the Syriew Government during technicat discussions on the draft final report which were held in Damascus. Based on the domestic cement supply shortages forecasted to continue up to 2010, the study team proposed to set up a 3-million-ton per year new cement plant at Abu Al Shamat located at 70 kin eastem north from Damascus. This report presents the conceptual design of the new plant and the management method of the new company. ‘The study team confirms that this Project is technically surely possible and shows vety high profitability basing on the new investment of 360 million USD. In view of recent active industrialization in Syria, the improvement of the cement supply to the all Syrian provinces is very urgent. We recommend that the Syrian Government implements this project as a top priority. We wish to take this opportunity to express our sincere gratitude to your Ageney and Ministry of Foreign Affairs. We atso express our deep gratitude to State Planning Commission, Ministry of Industry, Ministry of Invigation, General Organization for Cement and Building Materials and the other authorities concemed of the Government of Syria for the close cooperation and assistance extended to us during our investigation and study. Very truly yours, a4 S Hiroshi Sy ‘Team Leader ‘The Feasibility study ‘on The cement plant Development in The Syrian Arab RepublicBBREVIATIONS The Syrian Arab Republic Feasibility Study STUDY ... .. The Feasibility Study of New Cement Plant Development at Abn Al Shamat JICA Japan International Cooperation Agency Ist JICA Feasibility Study Team NEW PLAN1 ‘New Cement Plant to be constructed at Abu Al Shamat THE PROJECT ... Project for the New Plant GOC ........ . General Organization for Cement and Building Materials MAADAN .. . General Organization of Mineral and Building Materials OMRAN .. . General Organization for Intemal Trades of Mineral and Building Materials Ministry of Industry Ministry of Economy and External Trading ._ State Planning Commission Syrian Petroleum Company Organization for Road Company . Syrian Telecommunication Establishment PEDEEE . Public Establishment for Distribution and Exploitation ‘of Electrical Energy PEEGTI Public Establishment of Btectric Generation and Transmission GEGMR .. General Establishment of Geology and Mineral Resources REM. Railway Foundation, Ministry of Transportation WBMI Water Basins, Ministry of Irrigation MSEA .. Ministry of State for the Environmental Affairs DRUM .. Directorate of Barada and Alwaj Basin, Ministry of Irrigation OBG .. Oxford Business Guide, 1995-6 OP... . Ordinary Portland Cement SR PPO .. NSP .. sp ‘TPC .. PR .... Sulphate Resistant Portland Cement Pozzolanic Portland Cement . New Suspension Preheater Syrian Pound Tartous Port Company Final Repost‘TABLE OF CONTENTS Page 1. PURPOSE OF THE STUDY 1.1 INTRODUCTION 1.2 PURPOSE OF THE STUDY... 2. BACKGROUND OF THE STUDY AND ITS PROGRESS 2.1 BACKGROUND . 2.2. NATIONAL ECONOMIC DEVELOPMENT POLICY FN SYRIA 2.2.1 The First to Sixth Five-Year Development Plans .. 2.2.2. The Seventh Five-Year Development Plan . 2.3. PROGRESS OF THE STUDY .. 3, OUTLOOK ON SYRIA 3.1 SYRIA IN INTERNATIONAL SOCIETY ...... 3.2 GENBRAL FEATURES IN SYRIA. 3.2.1 Geographic Features .. 3.2.2 Administrative Divisions 3.23. Poptilation .. 3.24 Labour Force 3.25 Education 3.3. FEATURES OF ECONOMY 3.3.1 General Situation ... 3.3.2 Estimated xpenditus i inthe 1995 Budget mated Revenues in the 1995 Budget Gross Domestic Product Growth Inflation Trade Balance 3-13 Debt... Currency ... 3.4 PRIVATIZATION POLICY, 3.4.1 Outlook .... 3.4.2 Investment Law 10 3.4.3 Private Cement Plant Investment Plan . 3.5 POLICY OF CEMENT INDUSTRY 3.5.1 Outlook ... 3.5.2 Major Govemment Policy .. 3.6 LAWS AND REGULATIONS FOR POLLUTION 3.7 OTHER REFERENCE DATA 4, CEMENT MARKET IN SYRIAAl 42 43 44 4s OUTLOOK OF THE SYRIAN CEMENT COMPANY A. Organization of GOC 4.1.2 Manpower of the Cement Company .. CURRENT SITUATION 4.2.1 The Public Sector 4.2.2 The Private Sector ...... 4.23 Cement Distribution Terminals 4.24 Standards for Cenient Quality 425 Official Cement Price ... 4.2.6 Price of Imported Cement 4.2.7 Cement Transport and its Cost ‘TREND OF CEMENT SUPPLY ..... FORECAST ON DEMAND UP TO 2010 44.1 Onilook .. 4.42 Demand Forecast .. 4.43. Verification of Demand Forecast CEMENT IMPORT AND EXPORT IN NI 4.5.1 Outlook . 4.5.2 Cemeitt Export and Import Countries .. CEMENT MARKET OF THE NEW PLANT 4.6.1 Regionat Demands in 2010 lene 4.6.2 Market of the New Plant .....o.ssneresree 24d oe - 4-6 - 4-6 coe 410 . 4-10 4 . 412 4-12 . 418 SHBOURING COUNTRH . 419 . 419 sovee 4-22 . 4.22 INFRASTRUCTURE 5] 5.2 53 54 GENERAL INFORMATION AND DATA ON THE SITE CONDITIONS. SAA Plant Site Location . 5-1 5.1.2 Geological Condition: 5 5.13 Meteorological Condi . 5-2 PORT 3.2.1 Outlook ..... 5.2.2 Tattous Port 5.2.3. Transportation Route to the New Plant .. ROAD 5.3.1 Outlook .. 5.3.2 Transport Route to the New Plant 5.3.3 Transport Facilities and Fees .. 5.3.4 New Road Construction for the New Plant RAILWAY 5.4.1 Outlook .. 5.4.2 Transport Route to the New Plant .. 18, 18 €5.5 5.6 5.7 5.8 5.9 5.10 5.4.3 Transportation Facilities and Fee .. 1 S19 5.4.4 New Railway Construction for the New Plant... 519 ELECTRIC POWER SUPPLY 5.5.1 Outlook .. 5-25 5.5.2 Power Supply to the New Plant 5-26 OIL SUPPLY 5.6.1 Outlook an $28 5.6.2 Oil Supply to the New Plant . $229 NATURAL GAS SUPPLY 5.1.1 Outlook .. 5-30 5.7.2 Gas Supply to the New Plant 5-30 COMMUNICATIONS 3.8.1 Oullook .. 5:32 58.2 Communications forthe New Plat . 532 LABOUR FORCE 5.9.1 Outlook ... 5-33 5.9.2 Manpowver for the New Plant. 5-33 WATER RESOURCES 5.10.1 Overview on Geoeleetrical Prospecting ... 5.10.2 Existing Wells in Abu Al Shamat 5.10.3. Major Wells in Neighboring Region 5.10.4 VES in Abu Al Shamat.. 5.10.5 Purpose of the Pumping Test 5.10.6 Test Methods 5.10.7 Test Results .. 5.10.8 Conclusions and Recommendations. WATER PUMPING TEST REPORTS SUBMI COUNTERPART S-W-15 6. RAW MATERIALS 6.2 Gl AL 6.1.1 Remarks on Topography and Suatigeaphy of Abu Al Shamat Region ..... a 6.12 Online of Geotogical Investigation on the Limestone and Basalt Quarries 6.1.3 Other Materials .. LIMESTONE 6.2.1 _Lithofacies of the Limestone Deposit .. 6.2.2. Limestone Quany .. 6.23 Quality ...63 64 QUARRY EXPLOIT) a 72 13 1A ‘75 16 17 78 19 BASALT 63.1 Lithofacies of the Basalt Deposit ... 6.3.2 Basalt Quany .. 63.3 Quality. CORRECTIVE MATERIALS 641 lica Sand ..... . 6-6 64.2 Clay 67 6.4.3 Ferro Clay fiom Rajo occ : ; 68 6.44 Gypsum 6-8 64.5 Pozzolan 6.4.6 Summary of Reference Data .. REEERENCE DATA Chart. X-Ray Diffraction Test on Raw Materials Photographs: Thin Section of Raw Materials ... Chemical Analysis Data... rtON BASIC CONCEPT OF QUARRY OPERATION LOCATION OF PROPOSED QUARRIES AND RESER’ 721 Limestone .. 7.22 Basalt MINING METIIOD. 73.1 Mining Face .... CRUSHING AND TRANSPORTATION M PRODUCTION PROCESS ORGANIZATION OF MINING DEPART! TIMATION OF REQUIRED NUMBERS OF HEAVY EQUIPMENT 7.7.1 Limestone Quany 1.12 Basalt QUAM ose 7.73 Other Heavy Vehicles . 7.74 Selection of Heavy Equipment BLASTING 78.1 Concept of Blasting . 78.2 — Calculation of Charge (Method used in Japan 7.8.3 Drilling Pattern and Charge of Explosives 784 — Current Regulations .. INFORMATION ON THE CURRENT SYRIAN QUARRY OPERATION 7.9.1 The Case of Tartous Centent Co. 1 TAL 7.9.2 Anatogy of Adra Cement Co... Ta 7.9.3 Analogy of Arabian Cement Co. 7-20 6-9 . 6-10 »6-R-1 6-R-39 . G-R-65, iv8, CONCEPTUAL DESIGN OF THE NEW PLANT 8.1 DESIGN CONCEPT AND BASIC PROCESS ENGINEERING 8.1.1 Raw Material Characteristics 8.1.2 Raw Mix Proportion 8.13 Availability of Water a 8.1.4 Raw Matetials Grinding System £ 8.15 Clinker Burning System 8.16 Kiln Exhaust Gas By-Pass System 8.1.7 ‘Preheater Exhaust Gas Water Spray System 8.18 Cement Grinding System .. 8.1.9 Capacity of Major Equipment and Storage 8.2 DESIGN BASE 8.21 Plant Capacity none 8.2.2 Quality of Product .. 82.3 Shipment of Product 8.2.4 Raw Materials Fuels . Water Compressed Air . Heat Medien . Electric Power .. 8-57 8-57 8-57 8-57 8-61 .- 8-62 .. 8-63 8-63 8-63 Plant Site Conditions 864 Pollution Control 3-68 Standards 8-68 Unit... 8-69 8-69 Language 8.3 PLANT DESCRIPTION, LAYOUT AND FLOW SHEET 83.1 General Description of the Plant ..... woe 8-70 83.2 Description of Production Line . 87h Blectrical and Instrumentation... 8-84 . 8-89 Dwg, No. L-001 Plot Plan .... Dwg. No, 1-002 General Layout 8-91 Dwg. No. F-001 Flow Sheet : 8-93 Dwg. No. E-001 Single Line Diagram for Main Power Distibution 8-95 Dwg. No. E-002 Control System Configuration .. 8.97 9. ENVIRONMENTAL IMPACT ASSESSMENT 9.1 OUTLOOK .. . Ot9.2 POLLUTION CONTROL 921 Air Pollution .. a 9.2.2 Noise and Vibration 9.3 NATURAL AFFAIRS 93.1 Influence on Animals 9.3.2 Effect on Natural View 9.4 SOCIAL AFFAIRS 9AN Effect on Historical and Cultural Properties .. 9.4.2 — Effect on Traflic 9.4.3 Interference with Military Activities 9.5 OTHERS . Ot - 9-5 - 9-6 9.5.1 Nuisance during Construction 9-6 9.5.2 Monitoring System ..... 9-7 9.5.3 CO; Emission ... 9-7 9.5.4 Influence on Underground Water Resources 9-7 9.5.5 Surface Water Contamination ........ 9-8 1 NEW COMPANY 10.1 OUTLOOK ON CURRENT SYRIAN COMPANY . 10-1 10.2 ORGANIZATION OF THE NEW COMPANY 10.2.1 Generat Director's Office ... 10.2.2 Technical Assistance Team Office = . 10-2 10.2.3 Administrative and Technical Deputy General Director’s Offices. 10.2.4 Administration and Labour Department 10.2.5 Financial Department .. 10.2.6 Commerciat Department .. 10.2.7 Statisties Department 10.2.8 Mining Department .. 10.2.9 Production Department 10.2.10 Engineering Department 11 Quality Control Department 10.2.12 Store House Department .. 10.3. MANNING PLAN 10.3.1 Outlook 10.3.2 Manning Plan .. 10.33 Manpower Reeru 10.4. TRAINING PROGRAM 10.4.1 On-the-Job Training in Syrian Cement Plants (key staff, Ist stage) ment Plan .. .. 10-10 vi10.4.2 On-the-Job Training in Syrian Cement Plants (400 persons, Ist stage) .. 10-11 1043 On-the Job Training in Foreign Cement Plants (2nd stage) .. 10-11 10.44 Technical Assistance (3rd stage) 10-11 10.5. QUALITY CONTROL MANAGEMENT 10.5.1 Organization ..... 10-12 10.5.2. Plant Design Concept . 10-12 10.5.3 Raw Material Quality Comttol os. 10-12 10.6. POLLUTION CONTROL MANAGEMENT 10.6.1 Organization . . 10-13 10.6.2 Design Concept 10-13 10.7 RAW MATERIALS AND CEMENT TRANSPORT 10.7.1 Railway and Road ‘Transport . 10-14 10.8 CEMENT SALES PLAN .... leat 10-14 11. CEMENT DIRECT PRODUCTION COSTS UL UTILITIES 411.1 Unit Consumption of Ut i wees ed 11.2 ORDINARY PORTLAND CEMENT (OP) PRODUCTION COSTS 11.2.1 Variable Costs (OP) . a WS 11.2.2 Fixed Costs (OP) . are 11.3 SULPHATE RESISTANT CEMENT (SR) PRODUCTION COSTS 11.3.1 Raw Material Unit Costs (SR) L116 113.2 SR Production Costs . 16 11.4 POZZOLANIC PORTLAND CEMENT (PPO) PRODUCTION COSTS 114.1 Raw Material Unit Costs (PPO) . UT 11.4.2 PPO Production Costs . WT HS 11-9 11.6 CEMENT TRANSPORT AND SALES COSTS 11.6.1 OMRAN Cost and Sales Price .... . WHT 11.7 RAW MATERIAL TRANSPORT PEE 11.7.1 Road Truck Transport Fee .. 1 11.7.2. Railway Transport Fee Hell 12, IMPLEMENTATION PLAN FOR THE CONSTRUCTION OF THE NEW PLANT 12.1 IMPLEMENTATION PLAN FOR THE CONSTRUCTION WORKS ... 12-1 12.2, PROJECT FORMATION 12.2.1 Project Organization 12.2.2 Project Management and Control 12.3. TIME SCHEDULE... . 12-3 12.3 . 12-513. PROJECT BUDGET 13.1. TIME SCHEDU 13.2. SCOPE OF INVESTMENT 13.2.1 Investment by the Syrian Counterparts .. 133 PRE-OPERATIVE EXPENSES BY THE NEW COMPANY 13.3.1 Foreign Currency (USD) Portion 13.3.2 Local Currency (SP) Portion .. 13.4 TECHNICAL ASSISTANCE FEE . 13.5. BUDGET FOR CONSTRUCTION 13.5.1 Plant Faci 8 13.5.2. Erection Works Cost .. 13.5.3 Civil and Building Works and Office Equipment .. 13.5.4 Transportation Cost 13.5.5 Enginceting Fee .. 13.5.6 Other Fees ... 13.5.7 Contingency . 14. FINANCIAL AND ECONOMIC ANALYSIS. 14.1 BASIS ON THE ANALYSIS ...... 14.2. TOTAL CAPITAL REQUIREMENT 14.2.1 Fixed Capital Requirement 14.2.2 Working Capital. 14.2.3 Financing Plan 143 FINANCIAL ANALYSIS. 143.1 Premise of Financial Analysis 14.3.2 Price Basis ..... 14.3.3 Fund . 14.3.4 Tax : 14.3.5. Depreciation and Amortization 14.3.6 Disbursement Schedule of Total Capital Re 14.3.7. Sales Plan... 14.3.8 Production Plan 14.3.9 Sales Votume and Unit Price 143.10 Production Cost ... 14.3.1 Financial Analysis Method 14.312 Results of Financial Analysis 143.13 Sensitivity Analys 143.14 Conclusion .. 14.4 ECONOMIC ANALYSIS 14.4.1 Economic Benefit and Cost .. 14-1 viii14.4.2 nomic Benefit .. 14.4.3 Economic Cost 14.4.4 Economic Internal Rate of Return 14.4.5 Conclusion ...... 44.5 CALCULATION 15. CONCLUSION AND Ri 14-21 14-22 14-23 14-23 14-24 15-1 ECOMMENDATION: APPENDIX MEMBER LIST FOR SITE INVESTIGATIONLt PURPOSE OF THE STUDY INTRODUCTION ‘This report has been prepared by the JICA Study Team (JST) based on “The scope of work for the feasibility study for cement plant development in the Syrian Arab Republic agreed upon between the Ministry of Industry (MO!) / General Organization for Cement and Building Materials of the Government of Syria (GOC), and Japan Intemational Cooperation Agency (JICA)” dated June Ist, 1995. Currently the Syrian coment industry is facing serions shortages it cement supply due to the policy of industrialization actively promoted by the government. The government therefore started importing cement from Jordan and Turkey in 1994. Duc to this situation, Syria plans to increase cement production capacity from the current 5.339 million tons to 18.5 million tons in 2010; however, the financial arrangements for their expansion have not been ensured yet IST proposes urgent installation of a new cement plant of three million tons (1.5 million tons X2 lines) capacity at Abu Al Shamat, which is located appropriately on fair teams for infrastructunes and cement deliveries. In regard to the cement demand forecast of 11.5 million tons in 2010, JST considers the estimate to be rather conservative taking into consideration the recent economic growth and the comparison with per capita consumption in neighbouring countries caused by large population and the high population growth rate in Sytia IST proposes up-to-date process and equipment in the conceptual design utilizing an automatic control system both for plant process and cement quality control equipment, and energy and industrial water saving systems. ‘The Syrian counterpaits canied out exploration for water resources in the new plant site using Vertical Electric Sounding (VES) and, based on the results, it was found that water aquifers exist in the plant Boring and water pumping tests were carried out on five test wells by the Syrian counterparts. ‘fhe test results submitted by the Syrian counterparts show a high possibility of catching vequired water (130 Uh) continuously in the region if the number of water wells is increased at the project implementation stage. JST has proposed that current pumping tests shall be continued, while observing for interference with the other wells. ‘Training of engineers and operators for the new company is an important task in the new project. Since the new company will have to recruit 96% of employees among new graduates and other industiies, JST proposes the training program in Chapter 10. ‘This report was provided based on the final discussions and clarification carried ‘out with the Syrian counter-parts from October 6 to October 13 1996 in Damascus.1.2 PURPOSE OF THE STUDY ‘The purpose of this study is to prepate a feasibility study for the construction of a new cement plant in the Syrian Arab Republic (Syria), by verifying feasibility of the technical, economic, financial and environmental aspects including transfer of technologies to the Syrian counterpart regarding methods for preparing an outline for cement plant consteuction, feasibility study and plant management through the & carrying out of this study. Japan International Cooperation Agency (JICA) Feasibility Study Team (JST) intcodneed the basic principles for this Feasibility Study (F/S) as described below 1) Decide the most suitable plant capacity technically and economically. 2) Select a plant location which will not adversely affect future agricultural and industrialization plans in adjoining areas. 3) Apply EU regulations for environmental protection standards. 4) Secure raw materials and utility supplies on a long term basis. 5) Base the market for cement on domestic supply in principle, allowing for ‘exports in future. 6) Propose a construction budget with priority on employment of local labor and procurement of materials in Syria. 7) Propose a company management and personnel plan in consideration of the Syrian Government Policy, economy and efficiency. 8) Propose a training program for Syrian employees for the management of the new plant, 9) Devise a development plan which recognizes that Syria is a county with numerous historical sites. 10) Through the above, make a plan to set up a cement plant that will become a model plant in Syria 1224 BACKGROUND OF THE STUDY AND ITS PROGRESS BACKGROUND In 1991, Syria started partial economic liberalization called the New Investment Law (Lav 10) to promote forcign investment in the private sector in the developing industeialization of agriculture and manufacturing in Syrian private and public sectors. Due to the progress of industrialization, demand for cement, which is an indispensable material in the construction sector, is forecasted to increase sharply. Ceinent supply per year in Syria in 1995 was 4.8 million tons from domestic plants, despite the 5.4 tniltion ton production capacity. This operating ratio of 89% is due to old and deteriorated machinery and equipment in the current plants Domestic demand in Syria in 1995 was over six million tons. In this situation, JICA, opon the request of the Syrian goverment, sent a Mining & Industrial Development Study Team mission to Syria in January 1994 to affirm the facts of the Syrian cement industry. Based on discussions between JICA and the Syrian Government, it was agreed on June Ist 1995 that JICA would canry out a feasibility study on the construction of a new cement plant in Abu Al Shamat in Syria, Since the Syrian side wants to install a plant with a capacity of three million tons per annum, the SICA Study Team (JST) need to verify the propriety of the capacity in terms of demand, method of cement transportation and infrastructure.2.2. NATIONAL ECONOMIC DEVELOPMENT POLICY IN SYRIA. The national economic development policy in Syria can be studied from the transition of the Five-Year Plans. 2.2.1. ‘The First to Sixth Five-Year Development Plans. Under the First Five-Year Development Plan, started in 1960 under integration with Fgypt, agrarian reform was primarily carried out and large scale land development and irrigation were the main activities; with respect to industrialization, the formation of organization and system were the main works. In this stage, the framework of the national economic structure such as public corporations and state enterprises were established. ‘The Second Five-Year Development Plan from 1966 was carried out under the supervision of the former East Germany, permeated by a strong coloring of socialism. Under the plan, huge investment was made in infrastaucture stich as railways, oil pipe fines, and the Euphrates Dam, but before these investments could produce their products, the plan run ouit of funds; therefore, both the investment rate and economic growth fell far short of their target values. The Third Five-Year Development Plan cartied out by the Assad Government produced construction and consumption booms different from the original plan, due to external factors such as the Fourth Middle East War, the oil price hike, ete. and as a result, the economy in Syria was highly service-oriented. Facing a domestic financial deficit and international payment deficit caused by the pressure of military expenditure, it became impossible to finance demand in all industries using national funds only; therefore, private capital was introduced ‘The Fowth Five-Year Development Plan followed along the same fine as the ‘Third Five-Year Development Plan, with the government directly investing in large scale projects and leaving small and middle scale projects to the private sector, For large scale projects, however, assistance by the Arab oil-producing countries was not enough and private capital was not sufficiently channeled into domestic industries due to strict currency restrictions, ‘Thus, the economy in the country faced a sluggish period; the commencement of oil production was the only bright factor. Considering the situation, the target growth rate was set up conservatively in the Fifth Five-Year Development Plan, but the shortage of funds became serious (since most financial aid was used for military expenditure), which resulted in tightening ‘of control including import restrictions and creation of an underground economy, Actual growth rate during the period was 2.2% against the 7.7% target; agriculture, mining and manufacturing industries recorded minus growth. 2-2 ©2.2.2 The Seventh ‘The Sixth Five-Year Development Plan, which should have statted in 1986, failed to obtain the approval of parliament, the reason being that there was no hope of raising funds. ‘The plan was only reflected in the budget of cach year as a guideline of the government, ‘The main projects in the plan were limited to continuing items from the previous plan and productivity improvement projects for existing industries. Priority was given to investment in agriculture, oil and power; investment for industrization was decreased, The Sixth Five-Year Development Plan shows an indication of the present liberalization of the economy; the role of the public sector is limited (0 projects for improvenient of infrastructure and social capital reserves, although restriction of funds under the plan was the main reason for this. In this period, various problems became urgent; under the state-controlled economy which was based on supply and demand for goods, the plantied economic growth was not achieved, the imbalance of national economy and international payments escalated, and inflow of capital and technology were impeded due to economic isolation from Europe, the USA, and other capitalist countries. ive-Year Development Plan ‘The Seventh Five-Year Development Plan (1991-1995 ended its term without its details being disclosed. Reportedty, under this plan, the amount of investment is 200.9 billion SP for the public sector and 141.8 billion SP for the private sector, totaling 342.7 billion SP. Investment for the public sector doubled from that of the previous plan, while that for private sector increased about seven-fold from 20.0 billion SP; increased weight for the private sector is characteristic of this plan. h the public sector, investment in new projects is limited to 37.0 billion SP, while 163.9 billion SP is allotted to renovation projects and projects in progress, ‘The policy of the government to introduce a market economy can be read in the allocation of investment in which, although key industties such as oil, gas and power are monopolized by the government, other industries are open to the private sector and the fields in which private sector and public sector compete, are positioned as “Mixed Fields” in which ° both public and private sectors cooperate. Rationalization of the public sector was a political problem and President Assad issued the “Rationalization Act” to guarantee independence of public enterprises and make their self-management possible. ‘The Economic Minister promised business circles unification of exchange routes and liberalization of exchange, repeal of export duty, establishment of a joint-stock company act, liberalization of foreign trade and if, in addition to the above, pending projects such as establishment of a stock exchange system and approvals of private companies are realized, further activation of the economy in this country is expected. 2-32.3. PROGRESS OF THE STUDY ‘The JICA Study Teani (JST) started this Feasibility Study on October 9th 1998. Site surveys were carried out twice, The first survey was from November 11th to 30th 1995 and the second survey was from February 18th to March 27th 1996. Confirmation of the Draft Final Report with the Syrian counter-patts wag conducted from October 6th to 13th 1996 in Damascus. Reports were submitted to JICA and GOC as mentioned below: 1. Inception Report October 9th 1995 2. Progress Report (I) November 29h 1995 3. Interim Report February mth 1996 4. Progress Report (II) March = 25th (1996 5. Draft Final Report September 10th 1996 24hivaagttonn z yf REPUBLIC OF vom zee Luar: YP PS FRAO SYHIAN'ARAB REPUBLIC tes oi a) A ngebe. "80. 190 150.200 ‘Map. JORDAN, SYRIA, LEBANON AWSY LUP LINDY _JORDAN : SYRIA: LEBANON _Rivas) Ree 7 REPUBLIC OF ea a Bane e ae ieee f PIF: PU-- AM: Vee nae phi Fen Lake al-Assad DUP + PS THB] SYRIAN ARAB REPUBLIC Sat “ : 333 : TNE ate * by tam ood pourem i IC Seay T Pitan0N OF SAUDI ARABIA hah 7 Gif of faaba \ 0 50 100 150 200 h CN ee ’ 2 i Map. 1 Toran. syn Enanon Way . yy P . LiNy ¥’Lt peoy 2p uoisiaig eauensiumupy Z ‘dey6% dey pos ¢ de—_—_—_———— 7 \ — TANG] wOOg em Ansapuy sed pte 20 nerds ayy - MamnINQ p dey SK \ areas amatg very curaig som, myemeig ing Rag UE GNSOST®MALICE Nvanvit| (eouON TERE TOUATNE) wA O92 ferD jo uomED07st-z TSTAION OF MEN DUCT HOH MOHOAQ 7 “100d Fe Kamen Assent ese Aaron ese93. OUTLOOK ON SYRIA 3.1 SYRIA IN INTERNATIONAL SOCIETY Before 1990, Syria had a close relationship with the Union of Soviet Socialist Republics (USSR) as one of the Arabic hard-liners against the USA on the terms of Palestinian issue. After 1990, Syria improved its relationship with the USA through Syria's cooperation with the United Nations in the Gulf War in 1991. In October 1991, Syria joined the Middle East Peace Talks held in Madrid, Since then, negotiation for the way to a comprehensive peace process between Arabic countries including Syria and Israel under the catalytic coorditiation of the USA has been commenced. There is no doubt that the vesult of the negotiations will affect the future economy of Syria as well as its neighbouring countries. 3.2 GENERAL FEATURES IN SYRIA 3.2.1 Geographic Features 1. Site & Extent ‘The Syrian Arab Republic lies on the eastem coast of the Mediterranean Sea, bounded by Turkey to the north, Iraq to the east, Palestine & Jordan to the south and by Lebanon & the Mediterranean Sea to the west. The total area of Syria is 185 thousand km?, of which 60 thousand km? are cultivated land; the yemainder is desert and rocky mountains. The Syrian deseit is suitable for growing grass and is used as pasture when there is sufficient sainfall. Geographically, Syria may be divided into 4 regions (refer to Fig 3-1), -s between the mountains & sea. (1) The coastal region: L (2) ‘The mountainous region: Runs from the north to the south of the country and includes all mountains and hills which are parallel to the Mediterranean Sea (3) ‘The interior plains region: Comprises the plains of Damascus, Homs, Hama, Aleppo, Hassakek and Dar‘a. It is situated to the east of the mountainous region. (4) ‘The desert region: Consists of the desert plains situated in the southeastern patt of the country near the Jordanian and Iraqi borders. ‘The Meditetranean coastline stretches for 193km. Lengths of the other borders 8 are those with Iraq (605km), Jordan (375k), Lebanon (375km) and Turkey (822km).COIS9} pf mapaeer oy HOT -¢8td2. Climate “The climate of the Mediterrancani Sea generally prevails in Syria, This climate is characterized by a rainy winter and a dry, hot summer. ‘The coastal region is characterized by heavy rainfall in winter and moderate temperatures with high relative humidity in summer. The interior is characterized by a rainy winter season and a hot dry scason ig summer, Table 3.1 Temperature (°C) in 1994 Station [Max Temp. [Min Temp. | [Damascus | 41.8 (15 days) -4.4 (12 days) Palmyra 42.4 (15 days) “2.2( Tdays) | 19.5 Lattakia | 38.5 (14days) | 3.2( 7days) | Ateppo 9 (15 days) ‘Tdays) —_| ‘AL-Kamishli_| 44.5 (15 days) .0( Gdays) | 19.6 "45.5 (5 days) | 4.5 ( 7 days) 20.8 "42.7 (15 days) | -3.4 (10 days) 18.6 (Source: Statistical Abstract 1995) 3. Precipitation During winter, snow falls over all regions with an altitude exceeding 1500m above sea level. Regions with an altitude of 800-1500m ate subject to both rain and snow. Other regions with lower altitude are subject to rain, and rarely to snow, except the desert regions where even sufficient rain seldom falls. ‘The country, from time to time, is subject to dry seasons, and the rain shortage leads to a great decrease in agricultural production, jon anid Weather Phenomena in 1994 7 i of days Precipitation fon) Sand [Thunder] Snow [| Rain | Max. in [ Max. in] Total ole 3.2 fEEeeeEe storms | storms’ |_month } day Damascus co {| a fo | 37 | 105.4 | Palmyra | 6 | 18 43.3 [ Lattakia o | 38 367.1 | Aleppo |__2 15 AL-Kamishli 3 |__6) [. [4072 [47.0 | statistical Abstract in 1995) 3.2.2 Administrative Divisions Syria is administeatively divided into 14 “Mohafaza” (Refer to Map 2). Each Mohiafaza is generally divided into “Manatik.” Each Manatik is finther divided into smaller administrative units called “Nawal Each Nahia covers a number of villages, and a village is the smallest administrative unit, 3-5A Moliafaza is headed by a Mohafez (Province governor), A Mantika is headed by Mudir cl-Mantika, A Nahia is headed by Mudir el-Nahia, and a village is represented by one or more Mokhtars (village headmen, who are responsibte for the village and the surrounding farms). Damascus city constitutes by itself'a separate Mohafaza, called the Governorate of Damascus. ‘Table 3.3__ Administrative Divisions in the Country at the End of 1994 No. of | No. of | No. of | No. of { No. of | No. of Citics_| Farms | Vitlages| Towns | Nahias |Mantikes [Damascus 7 area Damascus 29 27 9 Aleppo. | 32 | Hasakch____| | Al-Rakka ‘AlSweida_| [Dara 3.2.3. Population ‘The population in Syria in 1994 reached 13.8 million with an annual growth rate of 3.4%. It has one of fastest growing populations in the world. Today, around 60% of its population are under the age of twenty. In 1994, Damascus city had the highest density of 13,754 persons per km? following Latiakia with 324 per km? and artous with 368 per km2, Density in rutal areas of Damascus is 93 per km?, Authorities concemed forecast that population growth will deorease to near 3% per annum from 2,000, 3.2.4 Labour Force Around 28% of Syria's total population in 1991 were estimated to be economically active, creating a labour force of around 3.5 million, Unemployment in 1991 was around 6.8%, Widespread unemployment is a problem in all sectors of the economy. A large proportion of iurat employment is seasonal and unemployment tends to rise in the winter, 3-6Large wage difterenees between Syria and other Arab countries continue to cause the migration of the country’s most qualified personnel. The Gulf coun particular are a targe market for expattiate Syrian labour. ‘Table 3.4 Ratio of Population and Growth Rate % of Total population] Growth tale (%) _| 1994 T1981 1981-1994] 1970-1981 [Damascus _ 105 | 123 20.0 26.3 | [Rural areas of Damascus} 12.2 478 | 362 Aleppo 21 35,5 33.0 Ho a 8 311 37.2 Hama 79 311 |_ 33.2 Lattal = 34 225 | 32.7 Deir-cz-Zor |_ $l 42.9 34.6 idleb JAL-Rakka JAl-Sweida 42 03 00" Gouree: Statistical Abstract 1995) ‘Table 3.5 Labour Force in 1991 (housand) Total 2 (52.0%) 13,272 (51.6%) | 6,494 (51.8%) Female 3.971 (48.0%). [3,064 (48.4%) | 6.035 (48.2%) Total «(619346336 52,529 Labour Force 7 aa "Male 1307 (40,6%) [1,551 (47.4%) _ | 2,858 (44.0%) 392 (13.2%) | 236 (7.7%) 628 (10. 1,699 (27.4%) [1,787 (28.2%) 56 (4.3%) | 92(5.9%) | 148 (5.2%) | 38.(9.7%) | 50 (21.2%) 88 (14.0%) | = “94 (5.5%) | 142 (7.9%) | 236 (6.8%) ‘Unemployed(Damascus) 7 Ea oe ~ Male 8 8 26 6.9%) Female 8 18 26 26.8%) Tol ie 36 $2 (6.8%) | (Source: Statistical Abstract 1995) 37Construction 6% Social and Other 1% Services 29% Trade 7 12% @ Manufacturing 4% Agriculture 28% Fig 3.2 Distribution of Employment (Source: OBG) 3.2.5 Education Almost all children between five and 11 now receive full time primary education. Secondary education is provided through the country’s approximately 2,350 secondary and intermediate schools. Tescher-pupil ratios are relatively high, — @y averaging around one to twenty. A parallel rise in university enrollment was generated over the same period, and in 1994 over 130,000 students were studying at Syria's four universities and many technical colleges. Although a large number of students graduate with technical degrees, very few university courses offer vocational training and graduates usually require additional taining in their specialized field, Improvements in education have reduced the rate of illiteracy, which is estimated at 22.8% in urban and 39.4% in rural areas in 1991, 3,3 FEATURES OF ECONOMY 3.3.1 General Sitvation In general, the Syrian economy is being influenced by the following three major factor 1) Rainfall, especially in the agricultural sector 2) Oil, international prices in the mining sector 3) Financial backup from foreign countries for new project development Over the last six years, the economy has been in’ a process of gradual transformation from a planned state-oriented system to a maiket economy. This process is unlike that in Eastern Europe, and great efforts have been miade to avoid fundamental social & structural disruptions. As a result, the progress has been relatively slow. 3-8By the beginning of the 1990’s, the economy was on its way to recovery. Between 1988 and 1994, oil production doubled and more plentiful rains greatly benefited local farmers. In the public sector after 1991, the renewed influx of foreign aid allowed in a long-overduc replacement of capital, enabling the government to embark on a massive infrastructure development program, Electricity, telecommunications, water and sewage have been the focus of particular attention. ‘The introduction of banking reform and a stock exchange system have been debated in both the parliament and the local press. With gradual devaluation and abolition of some of many exchange rates, the government is preparing for the eventual unification of the Syrian Pound. 3.3.2 Estimated Expenditures in the 1995 Budget Estimated expenditures in the consolidated budget in 1995 were 162 billion SP (about 3.86 billion USD). Among the total expenditures, ordinary expenditures accounted for 54% and developmental expenditures for 46%. ‘The breakdown for expenditures in each sector is: -Comuninity, Social & Personnel Services including 24.7% for national secutity): 61.1% Electricity, Gas & Water: 11.0% -Agriculture, Forestry & Fishing 9.4% -Manufacturing: 6.1% -Transport, Communication & Storage: 4.6% -Mining & Quarrying: 3.1% -Building & Construction: 0.8% “Trade: 0.6% -Finance, Insurance & Real Estate: 0.4% Others: 2.3% (Source: Statistical Abstract 1995) 3-970 60 50 40 % x0 20 10 9 Li a 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 Years Fig3.3 Ratio of Expenditures for Ordinary & Development Purposes (Source: Statistical Abstract 1995) 3.3.3 Estimated Revenues in the 1995 Budget Estimated revenues in the consolidated budget for 1995 were 162 billion SP (about 3.86 billion USD). Among total revemtes, exceptional revenues stich as foreign loans & resources, local toans and other investment revenues accounted for 22.6%, Revenue from taxes and duties such as from direct taxes and duties, indirect taxes and duties accounted for 30.2%. Various revenues such as from petroteum pipeline transit duties, duties on crossing Damascus-Bagdad road and other revenues accounted for 28.5%. Supply surplus such as from budget surphus, and sectors from ageicultural, mining, transporYVcommunication/storage, money/insurance/road estate, and liquidity surplus accounted for 14.3%, (Source: Statistical Abstract 1995) 3.3.4 Gross Domestic Product Syria is classified as a medium-income developing country. ‘The country's per capita G.D.P. is comparable to that of neighbouring Jordan, and it is under constant pressure feom rapidly expanding poputation. Thie local economy relies heavily on seasonally fluctuating agricultural output which accounts for around 30% of G.D.P. Its industrial base is diversified and predominantly centered on the conversion of raw materials and light mamufactaring industry. ‘The oil sector accounts for $8.6% in total expoits of 3.5 billion USD in 1994 and it will continue to be the country's top foreign currency earner in frture. 3-10GDP per Capita (USD/capita) ___ Table 3.6 _ National Accoun unts (billion USD, 42SP/USD) _ 1994 1992 Gross Output, Producer's Price Intermediate Consumption Gross Domestic Product at Market Prices Consumption of Fixed Capital ‘Net Domestic Product at Market Price Indirect, Taxes less Subsidies GDP at Factor Cost Factor Cost er capita (USDicapita) i986 |_Iesr_| 14.99 8.04 | 6.96 6.14 11.82 9.85 8.85 0.40 0.34 031 11.42 9ST 8.54 0.97. | 0.70 8.88. 8.15 (663)__|.__ (625) 8.54 784 (638) | 0s) ‘Table 3.7 G.D_P. Breal ). (Source: Statistical Abstract 1995) down (Market Price %) BEE Sectors 1994 1993 _1992 ture 7 ing & Manufacturing 28 29 31 “1B 14 4 uilding & Constructi 4 4 nlesate & Retail trade 26 | 36 | ‘Transport & Communication 10 9 & Insurance 5. 4 Social & Personal Services 2 2 2 jovernment Services 10 “io | 0 ivate Non-profit Services 0 oo Total 100 100 100 USD billion (Source: Statistical Abstract 1995) ‘Turkey Egypt Syria Tunisia Jordan Lebanon Fig. 3.4, Comparative 3-1 G.D,P. in 1993 (billion USD) (Source: World Bank)3.3.5 Growth Growth levels on GDP at market price were highest in 1990 to 1992 averaging around 7.1%. Through 1995, GDP continued to grow at a slightly reduced rate; because factories established under Law 10 began production, and upgraded public sector plants came on stream, individual output will increase, Over all, Syrian manufacturing will benefit from the results of infrastructure improvements, particularly the more reliable electricity supply Based on Furopean econoniists, the forecast of real groivth for 1996 and thereafter will continue to be around 6% per annum (source: OBG). __Table3.8_ GPP at Market Pric is Growth (at constant price of 1985) 1994 | 1993 | 1992 [ 1991 | 1990 [ 1989 | 1988 | 13,844] 13.393] 12.958} 12,529] 12.116] 11.719) 11.398 |120.159]i13.103 /106.031| 95.883] 89.485] 83.133| 91.313 | price (billion SP) | __ zl o_o [GDP growth) | 62 | 67 | 106 | 71 | 76 | -98 | 132 ‘Gource: Statistical Abstract 1995) 3.3.6 Inflation Since the beginning of economic reform in 1994, inflationary pressures have generally been high. ‘They can be attributed to a gradual increase of demand for basic consumer goods, correspondent public sector wage rises, and exchange rate devaluation. Im the absence of an efficient banking system and instituionalized investment oppostunities, liquidity throughout the economy remains high, Based on the forecast reported by World Bank market line, unless plans for an adjustment of currently negative real interest rates and the introduction of a stock exchange are carried out, inflation at the current level estimated to be around 18%, will continue through 1996. Economists in the USA forecasted that inflation would rise to 20% in the period from 1996 to 2000. pee : 220-4 20 @ 8? ois ow I zg § 5 2 i ons +95 19 gt - 1991 1992 1993-1994 19951996 1997-2001 Fig 3.5 Inflation (Source: World Bank market line} 3-123.3.7 Trade Balance Since the end of the 1980's, Syrian foreign trade has expanded remarkably, showing fundamental changes in its composition and a reorientation towards new trading partners. Due to high oit exports, exports more than doubled between 1988 and 1991. In the 1990's the growth in imports accelerated due to investment Law 10, which encouraged the private sector to import machinery and equipment required for private investment projects. In 1990, for iustance, machinery, metal products and transport equipment alone accounted for over 45% of total imports. Other major imports include oil products, cars, certain fabrics and foodstuffs such as sugat. In regard to exports, since 1988 a more scrious deterioration of overall export levels has been prevented by the large rise in crude oil exports, which have increased nearly 3.5 times from USD 0.59 billion to USD 2.06 billion in 1994. ‘This oil accounted for around 58.6% of all Syrian sales abroad; however, due to increasing imports, the Syrian trade balance has shown a deficit since 1993, 4500, y 4000 i 3800 | 3000 | 2500 ferespons @ a | atewne g 1 [DBatance % 1000 | 500 ' ° : \ i sof Bll g | 1000 b. a 3 Fig 3.6 Syrian International Trade 1988-1994 (Source: OBG) _Table 3.9 _ Syrian ‘frade (iltion [Ttem | 1988. 1991 ‘1993 |_1994 | Export 7 : Oil 1907 2059 | 407 Si t P1842 | ‘ S| 4156 | 3438 Oil 6S P92 Pon | 56] 1s | 153] 203 Public Sector} 1233 963 1061 1052 995 1189 1406, (exel.oil) ae ae oe Private Sector] 588 "| 766 |” 939 |" 1246 2134 “Total i986 |” 182i | “2062 | 2354 | | 3476 Balance -639_| 1192 [2094 | 1084 “323 (Sonree: OBG) 3413Table 3.10 _ Sector Share in Trade (%)_ | 1988 1989 | 1990 1991 1992 1993 [1994 Export a ; “Oil | 8 | 128 | 459 6 | 615s | 586 | Public Sector} 19.4 | 48.0 |” 98° |" 103°) 92 [713.5 J 14s __(exchoil) : : Private Sector] 36.7 | 39.2 | 44.3 | 363 | 212° |"25.0 | 269 e limport Oil a3 | sa] 3 | 2a] 39 48 Public Sector | 62.1 | 52.8 | 514 | 44.7 | 33.8 33.4 (exeloil) | + Private Sector] 29.6 | 42.1. [43.5 | 329 | 623 618 (Source: OBG) spots Fie inputs va Fastem Forme a in peck sts anim tn et 9 Arab Others, Countries 41% os ‘Milion BazrelsDay Peaeranraterrey Saudi tran Kuwait UAE Qatar Libya Syria Algeria Arabia Fig 3.8 Middle East Oil Production 1994 (Source: OPEC) 3-143.3.8 Debt Outstanding debts have bien a major source of tension between Syria and creditor countries for a number of years, ‘The debt in general has done litle to improve economiic relations with the outside world. Based on a report published by OBG, payments of interest and arrears to the world bank have been resumed. A setttement of the remaining EU debts was also reported to be possible shortly, as both sides appear to be interested in closer economic relations. U ).. GNP (USD, mil) tas % of GNP (%) | Debt Service (USD, mil). Export FOB (USD, mil.) ssee (Source: OBG) 3.3.9 Currency ‘The local currency is the Sysian Pound (SP). The SP has not been frecly convertible with other international currencies since the carly 1980's. The government has maintained a multiple fixed exchange rate system that pegs the SP to the USD. ‘The state-owned Commercial Bank of Sytia (CBS) has a monopoly on the conversion of foreign currency. ‘The official exchange sate system has four different rates currently in use. Major rates as of April 1996 are: 1) Official Rate (SP 11.2/USD) -Certain government transactions -Public sector exports of oil, oil products and certain agricultural goods -Government imports -Public sector invisible payments and capital transfers, etc. 2) Encouragement Rate (ENR) (SP 43/USD) -Public sector imports atid expoits -Domestic expenditure of non-oil foreign companies -External loans and credits in the governinent budget, ctc. 3) Promotion Rate (SP 22/USD) -Payment of allowances for studénts studying abroad 4) Neighbouring Rate (SP 51/USD) -In Beirut and Amman, banks will convert dollars at the higher offshore rate Note: ‘This study applied Encouragement Rate, which has been shown it recent daily newspapers in Syria. 3-15‘Table 3.12 _ Exchange Rate (SP pet USD) 4s of April 1995 ficial | ENR | Promotion [Neighbouring 2 46 | ‘Gource: OBG/nternational Monetary Fund) In general, foreign companies’ transactions with both the public and private sectors are conducted in hard currency or at the ENR. Foreign firms need to pay attention to the applicable rates when they convert hard currency to SP for the local portion before signing public sector contracts. 3.4 PRIVATIZATION POLICY 3.4.1 Outlook Syria, since it became independent in 1946, had built a strongly state controlled economic policy based on a socialist economic model. ‘Then a market economy mechanism was introduced gradually after the 1970's. 8 In the latter half of the 1980's, Syria started economic libetatization measures; however, it has taken on a strong state controlled system. For instance, basic industries such as mining, electticity and manvfacturing sectors were firmly supported by state capital and the government directly controlled the sharing of national resources. In 1991, the Syrian government passed an investment law inviting local, Syrian expatriate and foreign investors to become active throughout the economy. Projects under the law are enjoying a greater number of privileges than before, including relaxed import and foreign currency restrictions, extensive tax holidays and improved repattiation regulations for investment by non-Syrians, Syrian cconomic bodies can currently be classified into three sectors: Public, public/private mixed and private sectors. All sectors in certain industriat fields are to coexist through the competitive market theory. At this moment; government does not intend {o privatize existing public sectors to private sectors and altempts to & make competi between mixed sector and private sector. Principally, the government plans to be a self-sufficient structure by balancing agriculture and industry, but due to the shortages of capital funds and technologies, cooperation from abroad is indispensable. 3-163.4.2 Investment Law 10 1) Requirements Syrian residents including expatriates and foreigners are permitted (o invest under the provisions of the Inv. Each project application is considered on its own merits, but the investment must: -be in line with the aims of the state’s development plans; -utilize local resources; -contribute to economic growth, and create jobs; atitize modern machinery and advanced technology. 2) Imports Law 10 permits the import of all fixed and capital requirements for investment projects, subject to import restrictions such as on cars. Law 10 classifies three {ypes of imports: a) fixed capital, including machinery, equipment, means of transport needed to serve the project, and other materials including cement necessaty for establishing the project, b) cars and ¢) working capital. All imports in category a) are exempted from all taxes and stamp duties as well as custom duties. Imports in all three categories are restricted to use for purposes of the project and can not be sold in focal market. 3) Projects and Taxation All projects are granted a holiday from taxation on profits, dividends and real estate. The duration of the holiday depends both on the type of company’ and percentage of its production exported Private companies are granted a five-year holiday. Companies exporting more than 50% of their production are granted a seven-year holiday. 4) Repattiation Foreign nationals and Syrian expatriates are permitted to re-transfer capital committed to investment projects five years after their investment in the project. Funds re-transferred abroad in hard currency are not to exceed those brought into the country. Hard currency capital gains are therefore, technically impossible. Capital gains in local currency ate subject to taxation, Profits are allowed to be transferred abroad on an annual ba: By the beginning of 1995, a total of 1,200 projects had been approved under the Tay with a total capital of SP 216.5 billion (around USD 5.2 billion). Official implementation of figures for projects approved ate not available, but reportedly only 40% of projects approved have actually materialized sinice 1991 According to a local newspaper in England, around 76% of all funds come from outside of Syria. Arab investments include repatriation by Syrian residents abroad ‘or expatriate Syrians, Under the law, licenses are canceled if investors fait to initiate serious steps toward setting up a project within one year fiom obtaining approval. 3417Others 19% eat Packaging aind Pr Land “me ‘Transport and @ Car Rental Tevtiles . 21% 10% Non-metallic Industey 23% Fig 3.9 Investments Approved Under Law 10 (Capital) As of January 1995 (Source: Investment Bureau) Table 3.13 Investments ntider Investment Law 10/1991 (End 1994) million’ SP_ Project Capital Investment Imported | Workers IEEE (Unit:_miftion) ___ Capital (0) “Type or Sector Nuniber}Totat | Totat [" Hard | Total | Number (SP): [{USD)| Currency Soe Q) @) | [Agricultural Sector 25 | 176166] 419.4] 110762 | 6 [Food Packaging and Processing 210 [9845] 16052.3 Textiles 7B 121339 iPaper, Printing and Publishing 15 2109.3 IClicnicals and Plastics 5327.4 [Non-metallic Products Raw Metals and Metalic Products 397623 8754.1 a 1693.9 110833.5 | 76016.1 19.9/~ 919 1589.7] 1386.0 ILand Transport and Car Rental 450535 9549.8 [347383 ISca Transport = 11768 164.2 |" 1092.0 [Grand Total —_ [101 [216537.9]5135.71 165080.4 | 123295.6 ‘Figures rounded —__(t) Capital and raw materials to be imported for investment projects (2) Catcutated at the “Neighbouring Countries” Rate” of SP42:USD {Q) Part of the investments paid up in hard curroney. Total industrial Seot [Tourist Services, etcctrcity (Source: OBG) eo 3.4.3 Private Cement Plant Investment Plan Under Law 10, ten cement plant projects have been approved since December 1994. According to the investment office under the Prime Minister’s Department in Syria, an outline of the private cement plant projects is as follows 1) The number of ficeases to be approved will be maximum ten plants, 2) Promoter must start practical action for licensed projects within one year from the approved date. 3.183) Four projects were approved in 1994 and six projects in 1995. Some of the projects have already been canceled. 4) Total production capacity approved by 1995 was 4.4 million tyear with ten ficenses amounting to around USD one billion; however, among the ten projects one promoter, namely Syrian Saudi Co., is trying to promote a new cement plant project at present as follows: -The project site wilt be in Hama Province with a capacity of ohe million Vy. ‘The license was approved in December, 1995. Reportedly total project cost is USD 200 million -Theit market will be 86% for export to countries such as Saudi Arabia and Lebanon, with 20% to the Syrian damestic market. -Equily capital will be 31% from promoters; the remaining 69%, which amounts to USD 97.7 million, is from public shares, including overseas from the Gulf countries. -The share subscription is floating on stock markets abroad as well as in Syria. 350 | >300 | >250 | >200 | <200 |Area in Hectares 269 2,473 1,306 1,823 | 10,218 lAs%of Total Arca] 146 | 134 | 7.1 98 | 551 (Source: Food and Agricultural Organization of thé United Nations (FAO) ‘fable 3.R.1S Cultivated /Inigated Area____(Iectares) ‘Year 1989 [| 1990 1993 1994} [Cultivated Area |” 5503 | 5626 $426 | $500 Irrigated Area 670 693 110 | 1181 otnigated | 122 | 123 | 163 | | 20s (Source: Food and Agricultural Organization of the United Nations (FAO) o ‘Table 3.R.16 Agricultural Output (Thousand Tons) Year 1990 [1991 | ‘1992 1993 | 1994* ley 846 917 1091 1553 nia Wheat 2070 2140 3046 3626 nla Cotton 441 $85 689 625 600 Lentils 110 50 75 98 nia Chickpeas 36 28 "4 56 nla Sugar Beet 422 653 1365 1210 1320 ‘Tobacco 1B 16 24 15 nla Potatoes 398 452 413 398 450 ‘Tomatoes 430 428 481 397 nla Citrus Fruit 363 451 319 455 415 Grapes 423 487 462 350 nla [sr 205 215 270 238 240 Olives 461 226 319 325 400 + (Source: Ministry of Agriculture) 3-26ble 3.R.17__Agricuttural Trade in 1993 (Thousand Tons) | 1045 * Potatoes D674 [romatoes. | 64.3 Cucumbers | 118 Exports {Other Vegetables 45.0 Pistachios ; 98 IStone Fru | 24.6 Spices | 186 i $2.5 Melons i 36.1 | 14.0 _ Raw Cotto | 1s89 | F2351* iCane Sugar P2710 i 99 iRice L138 L 5.4 Raw Sugar | 82.6 | 13.2 Milk Powder | 1.0 | 208 Maize Seed 347.6 L. O42 [Sesame Seed SB * Thousand Head (Source: Ministry of Agriculture) Table 3.8.18 _ Basic Data of Syrian Banks in 1993 _(SP Million) [Commercial Bank Loans 159063 __|._ Deposits 85057 Loans 3187 Deposits oe BT Agricultural Cooperative Bank Coans 13300 7 Deposits _ 4889 Popular Credit Bank Loans 8535 Deposits _ 15334. | Loans 11303 Hed posits 14345 Gouree: Central Bank) ganization for Insurance a 1991 T Cars 252.8 3214 Cargo 16.4 36.5 Pay Outs [Fire 72 $7 lothers* | M4 __10.8 Hrotal 290.5. 3743 | ICars 304.1 $44.0 ICargo 266.1 21.7 Premiums [Fire 158.2 187.6 lOthers* |. 86.0 96.0 [Total 814.4 1555.4 y, flight, life, ship and personal insurance (Source: Central Bank) ¥ including burglary, liab 3-274, CEMENT MARKET IN SYRIA 4.1 OUTLOOK OF THE SYRIAN CEM! 'f COMPANY 4.1.1 Organization of GOC GOC ander MOL conteols six cement companics. ‘The organization is shown in Fig 4.1. Each cement company produces cement and hands it over to OMRAN on ex-factory basis for their sales/transpoit/and delivery. The ex-feictory cement price is in principle, equivalent to direct production cost. GOC and typical organization of the Syrian cement company is shown in Fig. 4.1 and 4.2 4.1.2. Manpower of the Cement Company List of manpower and its present productivity is shown iu Table 4.1, Currently, the companies employ many workers, which results in very low productivity. ‘The reason is that due to the quickly growing population, the companies have to provide job opportunities for the state government, 4.2 CURRENT SITUATION 4.2.1 The Public Sector GOC under the Ministry of Industry is in charge of cement production. Under this organization, six companies owned by the state are operating cement plants independently. A total nominal capacity in Sysia is 5.399 million tons including 5 to 10 % blended pozzolan in cement. GOC group sold 4.46 million tons of cement in 1995, ‘The other group of cement supply is Military House owned by the military. | The nominal capacity is 0.3 miflion tons at present MAADEN under the Ministry of Economy and External Trading is in charge of coment impoxt and export. This organization has imported around one million tons of cement in tvo year, 1994 and 1995, from Jordan and Turkey. Target of import in 1996 is 06 to 1 million tons depending on hard currency allocation and arrangements for barter trading by the state government. Current market demand for cement import is estimated at two million fons per year. OMRAN under the Ministry of Supply and Juteral Trade is in charge of sales and transport/delivery in the domestic market. They manage sales of cement all over Syria as well as transport and delivery of bagged cement which is 90% of total cement delivery a present. ‘Transport and delivery of bulk cément is being managed by buyers such as government and private construction sectors for their ready mixed concrete production: 4-1@ @ e oF 90D Jo wonezmBiQ 1p Sig sxoseais sxoswaae sxosuaeé sxonezs ——ssoreue sxosa ez sxommss! —_soswas aurrad PSCRVENVIS, | Dx? | xparereoou | ALaaVS: Nowoncoud | TWINDAWOWANS t PVRISION sxmranount | saan axorenouant | ‘| SUNVIAASNOO | sans | souvourivad | oxoxoos~ ANEKLVae | ONINTVL| | sxouving noo E2009 | SALAD sans | ssouvant sassy | WSeEIN “TVOINHORL=) | ‘ONIKNV I ‘TWEENIO~ -ZALLVMISININGY— | “ | | soso | cexinaxco! | | saans | “ras | } souvingwe | soxannoo | WNW “IN sonata] son sosucnis-| scusIVIs) emma) suesWer SuVROUR MN SALVEISHONCY- H i | i BO | | | aaunome | | : HEH VNR) esncaus =a | TR - [Tw ER |) tomo | Lopoweas || vonuioa: sousoacous soworeyn || ancrasanay || tmawvas_||-rowmeos | woans | y | | j | i 1 REVERS] |Nouses: St eS ZONWNGLNIN aNmManda7GON4 op (corso Nar "eH 5 =m 355 AwOLYUORT | PesENIEVOTT ONDIOVEN, Aundwmog qusmey warm jo uonezTMeR Ty HT i “Pes ONENEID LAER +s MONTE IONS sesaowuers | | SoD I NOY i ‘yes ONTENTEO | “P28 SISATVNY 1800- | AWREELYA. | ‘wes ontxnoooy~! 39S TVNBLYK | AYER EES sisiovaners: wsivorh SsosnNvicwoav- | | sessseruznome, aroma | ! | seis xouzneoue~ srs t0uNoo | ses tmosvsts | | ‘owondows new vrmuiea, sever Prvensioa 1 | anew | ! | | emauomet i ; TERTNGISMON © wsxonvusnay| se souMasURO THORNE ses Non ee | | i | i TR MOE] EE Re Ce TTS. . I J =