The creation of private banks and of a stock exchange in Syria will lift massive obstacles to investment in the country, but the traditionally interventionist economy still needs vast structural reforms, commentators said Sunday, December 3.
The green light given by the ruling Baath party on Saturday to the unrestricted establishment of private banks, after being put off several times, is a "good sign and the end of a taboo", a Damascus-based diplomat said.
Deputy Riad Seif welcomed this reform of the banking sector, which was fully nationalized in 1963, telling parliament Sunday the decision is "correct and audacious, and a huge step in favor of investments".
However, Riad Seif, who represents the business world, asked the government to "set up the necessary mechanisms to control the activities of the new banks in conformity with international standards and the national interest".
On Saturday, the party leadership gave instructions for the creation of private banks "in the form of private or mixed shareholding companies".
It also told the country's banks to "look into the issue of foreign currencies being traded at their real values", and said it supported the creation of a stock exchange and the promulgation of laws on banking secrecy.
So far, Syria has tightly controlled exchange rates and the flow of currencies abroad, thus leading many Syrian economic players to operate through banks in Lebanon, Jordan or Cyprus.
Syrian rates vary from 11 to 46 Syrian pounds to a dollar, depending on the nature of the transaction. The effective street rate of the dollar is around 50 pounds.
A Syrian businessman called these decisions "very positive", adding however that he hoped they would materialize. "The Syrian Central Bank is not yet sufficiently equipped to run the control mechanism", he added.
"Problems remain, because there is a need to establish proper regulatory bodies", an economist told AFP.
"It's a huge undertaking", he said, "because before you create a stock exchange, you need to take care of fund transfers, exchange rates and reform the tax system".
"It requires a faster rehabilitation of state banks, changes in their administration in order to have trained and competent executives and a preparation of the technical equipment to control currencies", the official daily ath-Thawra agreed.
The banking sector in Syria consists of the Commercial Bank of Syria and five other banks, concentrating on industry, agriculture, housing, general business and savings.
Syria, under a new government and a new president, had taken the first timid steps in August, authorizing four Lebanese banks to operate in free trade zones to finance companies established there.
"These measures are not surprising for those who know how determined President Bashar al-Assad is to implement reforms and modernize the country at all levels", the official party newspaper al-Baath said.
"It cannot be denied that there is an urgent need for reform and development in all sectors", the newspaper added.
Al-Baath also mentioned the need to modernize some laws, some of which are almost 40 years old, especially those on tax, rents and the press.
Assad has also begun a slow process of political reform, amnestying political prisoners and allowing other political parties to publish their own newspapers.— (AFP)
© Agence France Presse 2000
© 2000 Mena Report (www.menareport.com)