Syria will have to begin liberalizing its state-owned banks without delay if it wants to attracts the billions of dollars it needs for its development, say experts meeting in an investment conference in Damascus.
"At present there is no long-term funding for the Syrian private sector," stressed an official of the International Finance Company (IFC), an arm of the World Bank.
"The banking sector is inefficient," added Sami Haddad, IFC director for the Middle East and North Africa, during the two-day conference that ended Friday.
Nationalized in 1963 after the ruling Baath party seized power, the banking sector consists of the Commercial Bank of Syria and five other banks, concentrating on industry, agriculture, housing, general business and savings.
Their poor service and heavily bureaucratic slowness sends customers en masse into neighboring Lebanon, whose banks can be found just an hour's drive from Damascus.
A Lebanese banker who preferred to remain anonymous estimated that more than 10 percent of deposits in some Lebanese banks belong to Syrians.
"We give them credit cards, we support the commercial dealings of reputable customers and we guarantee them banking secrecy," he said.
The total of Syrian banks' assets, apart from the central bank, is estimated at less than 580 billion pounds (12 billion dollars) for a population of 17.5 million, while in Lebanon they are around 44 billion dollars for some four million people.
Farid Roufayel, head of the Lebanese banking association, said Syria needed to channel public savings into it economy instead of allowing capital flight to Lebanon.
Syria, under a new government and a new president, took some timid steps this year, authorizing foreign banks to set up in free trade zones to finance companies established there.
Four Lebanese banks have taken advantage of the facility, in the hope of seeing the market open up further.
The Syrian authorities also announced that they would create banks open to private capital, as well as a special bank aimed at meeting the needs of investors.
However several speakers at the Damascus conference voiced skepticism.
"Half-measures are not a solution," Roufayel said.
"The liberalization must be direct and clear, backed up by coherent legislation," he said, adding that from experience banks with mixed public and private investment did not work.
The vice president of the Association of Arab Banks, Joseph Torbey, for his part stressed Syrian tardiness in adopting reforms.
The size of the investments Syria needs to meet the requirements of a swelling population -- it must create at least 200,000 jobs a year -- makes speed essential.
The country's ageing industries and infrastructures, including power, water supplies, transport systems and irrigation, need urgent modernization.
According to the electricity ministry, the demand for electric power is predicted to grow from 22 billion kilowatt hours last year to 73 billion in 2020, requiring investments in new generating plants totaling 1.5 billion dollars a year over 20 years -- DAMASCUS (AFP)
© 2000 Al Bawaba (www.albawaba.com)
