Syria’s freeze on luxury items, car imports sends prices soaring
The sudden suspension of imports of cars and luxury goods to save foreign exchange has sent prices soaring in Syria, which is already under tough sanctions for its bloody crackdown on dissent.
“Prices of cars have increased. A Kia Rio cost 725,000 Syrian pounds ($14,500) last week. Now it is sold for 900,000 pounds,” a car dealer in Damascus told AFP. “The customers are paying the price,” he said.
According to him, however, there is enough stock to cover demand for vehicles in Syria for another three years. In May, car imports dropped to 2,000 compared to 20,000 in March, when an uprising against President Bashar Assad’s government was launched.
The government last Thursday took the surprise move of announcing the temporary suspension of imported goods which are subject to duties higher than five percent. The suspension did not include items not manufactured locally.
The Syrian government Monday adopted a $26.5 billion budget for 2012, 58 percent higher than last year, the state-run SANA news agency reported. It gave few details and no indication of expected budget deficit.
The United States and European Union have imposed sanctions against Assad’s government over its deadly crackdown on anti-government protests, which has killed more than 2,700 people since March, according to the United Nations.
The protests have dramatically slowed economic activity, with analysts predicting negative economic growth in 2011 as a result of a decline in tourism and investment. In the Sabaa Bahrat neighborhood in the heart of Damascus, car dealer Adnan Halabi expects that vehicle prices will increase by between 100,000 and 200,000 pounds. “I still have not raised the prices, but all my competitors have taken this step,” he told AFP.
For Economy and Trade Minister Mohammad Nidal al-Shaar, the suspension of imports “seeks to maintain our foreign reserves.” “It is a preventive temporary measure which will help enhance productivity and give a chance to local factories to produce more and create jobs,” he said. “The decision will not affect imports of raw materials, food items and basic commodities.”
Syria has 11 tariff schedule rates ranging from 1 percent to 60 percent, and the new freeze affects about a quarter of the 10,000 products that are imported, including cars, furniture, clothes, household appliances and certain foodstuffs. As a result, the prices of sunglasses have doubled and those of televisions have increased by between 2,000 and 5,000 pounds.
“We are back to the 1980s, when everything was expensive and there were few products available,” a customer said. After taking power in 2000, Assad launched a program of economic liberalization that allowed an influx of imported goods into the country. Before that, smuggling was the only way to get these goods. “Syrian merchants cannot afford to lose money,” said a trader in ornamental lamps in the Azbakeya area in the capital.
“I sell Italian, German and Chinese lights. The prices will jump and I cannot replace my current products. So when I have sold out, I will have to start dealing in Syrian lamps,” he said. According to 2009 figures, imports amounted to $14.7 billion, while exports were $9.7 billion.
Economists say that foreign reserves can cover 16 months of imports. “The decision is inappropriate. The suspension will affect … importers as well as employees. Many shops will close down because they will lose customers,” a Western diplomat said.
“The only beneficiaries will be smugglers, whom the regime says are connected to gangs” behind the revolt.
- Why India is likely to re-emerge as the UAE's top trade partner
- What's really attracting high net worth individuals to living in the UAE?
- Forbes Middle East reveals names region's 200 most powerful women
- Presidential vacuum, Syrian crisis leaves Lebanon's business leaders more than worried
- Oil wells, taxes, and scare tactics: how the IS has been making money all this time