syrian arab republic - world bank documents

Report No 1975a-SYR

Syrian Arab Republic FILE CclPYDevelopment Prospects and Policies:Report of a 1977 World Bank Mission(In Four Volumes)

Volume III: Background AnnexesFebruary 22, 1980

Countrb Programs Department IIEurope Mfiddle East ancd \orth \trica Re-ion

FOR OFFICIAL USE ONLY

Document of the World Bank

Thi', n o(umeni ha& a rel di t(IJ distrbution and may be usr d brron Ip1nt nto (}flt\ rn the ptnrflormi t eottherotit (}alc uti es fts ( ontentsmas not othe rs tsr' be di1oc olosr f(ithout \orld Bank authorization

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CURRENCY EQUIVALENTS(as of December 1979)

SDR 1.00 = Syrian Pounds (SL) 5.2035US$ 1.00 = Syrian Pounds (SL) 3.95SL 1.00 = US$ 0.2532

FISCAL YEAR

Until 1969: July 1 to June 30From 1970: January 1 to December 31

FOR OFFICIAL USE ONLY

SYRIAN ARAB REPUBLIC

DEVELOPMENT PROSPECTS AND POLICIES

Report of a Mission

Sent to the Syrian Arab Republic

by the World Bank

in 1977

VOLUME 1: PRIORITIES FOR POLICY ACTION

VOLUME 2: THE MAIN REPORT

VOLUME 3: BACKGROUND ANNEXES

VOLUME 4: STATISTICAL ANNEXES

This report was prepared by a Basic Economic Mission which visited Svria

during March 25 to April 19, 1977. The mission was composed of Messrs. Arshad

Zaman (mission chief), Basil Al-Bustany (general economist), Zmarak Shalizi

(general economist), Gabriel Sciolli (fiscal economist), Delano P. Villanueva

(econometrician, IMF), Keith Marsden (manpower and employment, ILO), RichardW. Gable (consultant on public administration), Ian Hume (income distribution

consultant), Harry Richardson (regional and urban economics consultant),Wolfgang Stolper (consultant on development planning), and Pan Yotop,oulos(consultant on agricultural economics). It also incorporates the wcrk of a

preparatory Special Economic Mission which visited Syria during October 31 to

November 24, 1976; and consisted of Messrs. Arshad Zaman (mission chief),

Basil Al-Bustany (general economist), Zmarak Shalizi (general economist),

Boris Blazic-Metzner (national accounts), Ms. Rosalinda Dacumos (macroeconomicprojections), William Grau (external debt), Javad Khalilzadeh-Shiraz.i (indus-

trial economist), Clifford Hardy (construction sector specialist), Bernard

Decaux (consultant on public enterprises), Jean David (consultant on textiles),

Clive Collins (agriculturist), and Norman Rask (consultant on agricultural

economics). The report also draws upon World Bank project appraisaL reports,

sector reports, and other internal documents.

This docunent has a restricted distribution and may be used by recipients only in the performance oftheir official duties. Its contenst may not otherwise be disclosed without World Bank authorization.

BASIC ECONOMIC REPORT

SYRIAN ARAB REPUBLICDEVELOPMENT PROSPECTS AND POLICIES

CONTENTS

VOL. 1: PRIORITIES FOR POLICY ACTION

ContentsMapCountry DataPreface

1. Introduction2. Economic Background3. Restoring Macroeconomic Equilibrium4. Developing a Strategy for the 1980s5. Strengthening Economic Management6. Conclusion

VOL. 2: THE MAIN REPORT

ContentsMapsCountry Data

1 Introduction2. Public Administration

Appendix A: The Public ServiceAppendix B: Local Administration

3. Development Planning and Performance4. Population, Employment and Incomes

Appendix A: Manpower TrainingAppendix B: Population and Labor Force Projections, 19,75-2000

5. Resource Allocation, Pricing and Income DistributionAppendix A: The Price and Subsidies System

6. Regional and Urban Development7. Agriculture and Agricultural Planning8. Strategies and Policies for Agricultural Development9. Industrial Organization and Performance10. Prospects, Issues, and Options in Industry11. Fiscal and Monetary Policies

Appendix A: Public Finances: Medium-Term Prospects (])etailedAssumptions)

Appendix B: The Relationship between Government Invesl:mentProgram and Inflation: A Macroeconometric Model

12. Foreign Trade and the Balance of Payments13. Towards a Development Strategy: Feasibility, Constraints, and

Policy Issues

Contents (Continued)

VOL. 3 BACKGROUND ANNEXES

1. International Trade and Finance2. Agriculture3. The Public Manufacturing Sector4. The Textile Industry5. Education6. Transportation7. Water Supply and Sewerage

VOL. 4 STATISTICAL ANNEX

.1. A Note on National Accounts Statistics2. Statistical Tables

BASIC ECONOMIC REPORT

SYRIAN ARAB REPUBLIC

DEVELOPMENT PROSPECTS AND POLICIES

VOLUME THREE

BACKGROUND ANNEXES

CONTENTS

Page No.

ANNEX 1: INTERNATIONAL TRADE AND FINANCE ............ .. 1..............

1. Institutional Context and Commercial Policy ............ 1

2. The System for Controlling the Level and Compositionof Trade. 3The general structure of import tariffs. 3The structure of tariffs on manufactured goods 4Recent adjustments to the structure of tariffs 9

Other import restrictions (quotas, prohibitions) 9Private imports against foreign exchange holdings

abroad .11The allocation of domestically available foreign

exchange through the State's foreign exchangebudget .14

The foreign trade plan .15Export promotion .16

CONTENTS (continued)

Page No.

3. Trade Agreements ..................................... 18Merchandise trade and payments agreements .... ...... 18Major recent trade agreements with Syria .... ....... 20The European community's accord with Syria ...... 20The Jordanian accord with Syria .... .............. 21

4. Direction of Trade ................................... 23

5. Capital Flows and External Public Borrowing .... ...... 26The foreign exchange budget ........................ 26External Public Debt ............................... 27External Debt by Agency and Sector .... ............. 28Exchange rate and reserves ......................... 29

6. Policies on Foreign Investment ....................... 30Free Trade Zones ................................... 30Joint ventures ..................................... 32

7. Foreign Trade and Balance of Payments Data Base ........ 33

ATTACHMENT 1-A: List of Public Organizations Engaged inExternal Trade ..................................... 35

A-1: General Organizations exclusively engaged in External TradeA-2: General Organizations engaged in External Trade in addition

to domestic manufacturing and/or Internal TradeA-3: Other Organizations directly involved in External TradeA-4: Public Sector Organizations not involved in External Trade

ATTACHMENT 1-B: List of Selected Goods Subject to Various Controls . 43

B-i: List of Goods whose importation into the Syrian Arab Republicis prohibited

B-2: List of Goods whose importation is confined to theEstablishments of the Public Sector

B-3: List of Imports covered by the Extraordinary Permits SystemB-4: List of Goods whose exportation from the Syrian Arab Republic

is prohibitedB-5: List of Goods whose exportation is confined or restricted to the

Establishments of the Public Sector

CONTENTS (continued)Page No.

ANNEX 2: AGRICULTURE ........ ................ ........................ 70

1. Introduction ...................... 70

2. Resources and Farming Systems ......................... 71Climate and Land Use .................... 71Water Resources ........ ............................. 72Soils .. 72Production Under Rainfed Conditions .... ............. 73Production Under Irrigation ..... . .................... 74Livestock Production ................................ 75Cropping Patterns and Cropping Intensity .... ........ 78Farm Production Units ............................... 78

3. Structural Changes in Agriculture ..................... 80Land and Agrarian Reform ............................ 80Modern Technology ................................... 81Manpower and Training ............................... 82

4. Agricultural Institutions ............................. 84Ministry of Agriculture and Agrarian Reform ......... 84The General Institute for Fodder .................... 85The General Institutes for Cattle and Poultry ....... 85The Cereals and Flour Mills Organization .... ........ 85Ministry of the Euphrates Dam ....................... 86Agricultural Cooperatives ..................... 86Agricultural Cooperative Bank ....................... 88

5. Agricultural Planning and Policies .................... . 91Policy Formulation and the Planning Process ......... 91The Organization of Agricultural Production in Law 14 91Third Five Year Plan Agricultural Targets andAchievements, 1971-75 .............I ................. 93

Fourth Five Year Plan Agricultural Objectives 1976-8C1 95On land utilization and integration on crop andanimal production ....... ........................ 95On husbandry ......................... 96On the Ministry of Agriculture and Agrarian Reform 97On Irrigation Development ....................... , 97

The Euphrates Valley New Irrigation Schemes .... ..... 97Rehabilitation of the existing Irrigation System in

the Euphrates Valley .................... 98Other Irrigation Developments ....................... 98Development Priorities in Irrigation ............... . 99

6. Special Topics ........................................ 101Demand Projections by Commodity Group .... ........... 101Economic Analysis of Sugarbeet Relative to Cotton andthe Prospects for the Respective Agroindustries ... 101

ATTACHMENT A: The Text of Law 14


Page No.

ANNEX 3: THE PUBLIC MANUFACTURING SECTOR ........... .. .............. 110

1. Historic Background .................................. 110

2. Organization of the Public Manufacturing Sector 111General Organizations .............................. 111Public Manufacturing Enterprises ................... 113

3. Performance of the General Organizations and PublicEnterprises ........................................ 115Production ......................................... 115Capacity Utilization ............................... 116Sales .............................................. 116Exports ............................................. 118Prices ............................................. 119Employment and Productivity ........................ 121Profitability ...................................... 123Investment ......................................... 125Regional Disribution ............................... 126

4. Financing the Public Manufacturing Sector .... ........ 128

5. Review of Individual General Organizations ........... 134General Organization for Food Industries .... ....... 134General Organization for Sugar ..................... 140General Organization for Textiles .... .............. 142General Organization for Chemical Industries .... ... 151General Organization for Cement Industry .... ....... 160General Organization for Engineering Industries .... 164

ANNEX 4: EDUCATION AND TRAINING: ISSUES AND PRIORITIES ............ 170

1. Summary and Conclusions .............................. 170

2. Socio-Economic Background ............................ 174

3. The Education and Training System .................... 177The Education Structure ........................... 177Administration and Planning ........................ 178Enrollment Distribution ........................... 178The University Problem ............................. 180Education Efficiency ............................... 181Curricula .......... ................................ 182Physical Facilities ................................ 183Teacher Education ................................... 184Non-Formal Education ............................... 185Education Finances ................................. 186Conclusions ........................................ 187


Page No.

4. Education Policies and Strategy ..... ................ 188Bases for Developing an Education DevelopmentStrategy ........................................ 188

Suggested Outline of an Education DevelopmentStrategy .......... .............................. 189

Analysis of Present and Projected Trends .... ...... 190Teacher Requirements.193TechrReureens .............................................19Analysis of Some National Proposals .... ........... 194Literacy Policy ....... .......................... 194Vocational and Technical Education .... .......... 194University Education ...... ...................... 195

A Note on the Euphrates Basis Development Project 196

ATTACHMENT A: Technical Background ................................ 199

1. Agricultural Education and Training ............ 199University Level ............. .. .............. 199Post-Secondary Level ........... .. ............ 202Upper-Secondary Level .......... .. ............ 203Non-Formal Training ............... 205

2. Vocational Training .............. .............. 207Introduction ......... ......................... 207Technical (Industrial Secondary Schools) 207Vocational Training Centers (Ministry of

Industries) ................ ................ 208Vocational Training Centers (Ministry ofPublic Works) .................. 210

Factory Schools (Ministry of Industries) ....... 211Craft Centers (Ministry of Social Affairs

and Labor) ................................. 211Institutes of Popular Culture (Ministry ofCulture and National Guidance) . .212

Conclusion . .213

3. Secondary School Technical Education .216Introduction .216Third Five-Year Plan (1971-75) .216Growth of Student Enrollments and Numbers ofTechnical Secondary Schools .216

Courses of Study and Curricula (IndustrialSecondary Schools) .217

Admissions .218Examinations .218Teaching Staff .220Textbooks .220Facilities .220Recurrent Expenditures .221Problems Facing Technical Secondary Schools 222Directorate of Technical Education .222Proposed Plan for Expansion of Technical

(Industrial) Secondary Education. 223


Page No.

4. Technician Education ............................ 226Introduction .................................. 226Industrial Training Institutes (Ministry ofEducation) .................................. 226

Intermediate (Engineering & Industrial)Institutes (Ministry of Higher Education) ... 231

Intermediate Institutes (Ministry ofIndustries) ................................. 232

Intermediate Institutes (Ministry ofPetroleum and Mineral Resources) .... ........ 234

Intermediate Institutes (Ministry of PublicWorks) ........ .............................. 235

Conclusion .................................... 236

5. University Level Education ...................... 238History ......... ................................ 238Administration of Universities .... .............. 239Decrees Influencing University Development ...... 240Admissions to the Universities .... .............. 240Enrollments and Pressure of Numbers for .Undergraduate Studies ......................... 241

Academic Year and System of Studies .... ......... 244Undergraduate Courses of Study and Examinations 245Teaching Staff, Staff-Student Ratios and TeacherTraining ...................................... 246

Post-Graduate Studies and Research .... .......... 248Plans for University Education Expansion .... ... 250

ANNEX 5: TRANSPORTATION ................................ 253

1. Introduction .......................................... 253

2. Structure of the Transport Sector .................... 254Roads .......... .................................... 255Railways ........................................... 263Ports .......... .................................... 267Civil Aviation ............. 269Oil Pipelines ...................................... 270

3. Transport Policy, Planning and Coordination .... ...... 272

4. Summary of Recommendations ........................... 274

CONTENTS (continued)Page No.

ANNEX 6: WATER SUPPLY AND SEWERAGE ........ ......................... 275

1. Summary and Recommendations ...... .................... 275Summary Recommendations ...... ...................... 276Projects Recommended for Study ..... ................ 278Project Preparation ........ ........................ 278Sewerage . .......................................... 279

2. Country and Sector Situation to Year 2000 .280

Geography and Climate .280Total Population .280Urban Population .281Present and Projected Service Levels for Water 282Supply Constraints and Increasing Costs of UrbanSupplies ...... 282

Consumption Projections to Year 2000 .283Improvements in Quality of Service .287Rural Water Supply and Projections .289Sewerage Service Levels and Projections .290

3. Present Sector Organization, Planning and Constraints 292Sector Organization .292Sector Goals and Planning .293Third Five-Year Plan (1971-75) .293Fourth Five-Year Plan (1976-80) .295

Constraints to Sector Development .297Political and Economic .297Manpower and Training .297

Project Preparation, Implementation and Operation 301Sector Finances .301Coordination .303

ATTACHMENTS:A-1 Water Resources .305

A-2 Figure 1: Organization Chart of the Ministry ofHousing and Utilities Water andSewerage Departments .308

Figure 2: E.P.E.F. Organization ................. 309Figure 3: Etablissement des Eaux d' Alep (EPEA)

Organization Chart ................... 310Figure 4: Organization Chart of the Homs Water

Authority ............................ 311

A-3 Outline of Legislation .......................... 312

A-4 Summary of Main Recommendations of Fifth AnnualConference of Syrian Public Water AuthorityDirectors .............. 318

A-5 List of Project Possibilities ............... 319

A-6 Design Criteria .................... 322

A-7 EPEF's 1976 Tariff Structure ..... ............... 324

COUNTRY DADA - SYT-AN ARAB REPUBLIC Page 1 of I mac

AREA POPULATION DENSITY (1977)185,179.7 sq. k-. 7.84 million (mid-1977) 12.33 2 qare 'm

Rloo of Growth: 3.37. (fron 1970 to 1977)

POPULATION TSDITRIBVlIGN (l9P) 11FALD (1976)Crode Birth Rate (per ,000) 47.78 Popclorion p-e physician (1976) 2690.00Crndo Death Rate (per 1,000) 15.40 Popalatiom pee hospital bhd (1976) 936.00

INCOME DISTRIBUTION (1978) DISTRIBUTION OF LAND DIDNERSHTP

of national income, highest qaintile . . . -soofd by top 10, of owrelowest qeintile . .. --ood by smallest 10D of owners . .,

ACCESS TO PIPED rlATER (1972) ACCDS 79 ELZCTRIEITY (1970)Occupied dwellings without piped water (N) 55.00 of populaaion- toal 41.7!

- moral 10.72'i

=NRI-TION (1971-73)Calorie intahk as t of raquiroments 104.00 DEDUIATION 1977)pee capite ptecin intaeh (Drams/day) 75.00 Adu.t lit-racy roa . 51.00

Peit-ary school emcollral 89.00

GDP PER CAPINA in o9d--: UTS 3930

a11S1 NATIONiGL PRODUCT (1976)

Growth halo US$ Fno _ 1966-1971 1971-1975

GNP at Placket Prices 6,254 100.0 6.5 6.2lens Damestic In-,estmeit 1,370 30.0 13.2 10.9Dross Rational Sawing -I 1,068 16.6 13.6 -14.0Cuenomt A-coumt Balance -772 -12.6Export of Goods, NFS 1,347 21.5 6.9 1.7Import of Goods, NFS 2,541 40.7 7.6 15.9

OUTPUT, EMPLOYN1E%T AtDPRODUCTIVT1Y IN 1976 c/

Valon Addod Lahba Forc V. A. Por horkorUS$ million I- ThonsEnds _- US. '

ADogriCmltbae 1200.3 19.8 579.0 31.7 2073.0 20.7I.nd-ustry 1275.8 21.1 306.0 16.7 4169.0 41.5Sevines 3576.1 59.1 943.0 51.6 3792.0 37.8

Total/Average 6052.2 100.0 1820.0 108.0 10031.0 100.0

GD0IEN(IENT P~INANCE Ecc ---aosort1975 1976 1977 1978 1979

Slillion Sl 7 of CDP ;illio- SL N of GDP illior SL 7 of GDP Milli6 SL T of GOP *'illion SL 'A of GDP

Crrent Rocoipts 5701 29.2 5821 24.9 6057 23.5 7311 23.8 9400 26.1

Cuorret Expenditnre 9663 h9.5 11258 46.1 12973 50.3 13346 43.5 18000 50.0

Current Deficit 3962 20.3 5437 23.2 6916 26.8 6035 19.7 8600 23.9

Capital xpendiauren 4502 23.0 5212 22.3 6339 24.6 6013 19.6 7000 19.4

a/ This data sheit hae bher prepared am the basin of the moot recent data availahle in Decmbeh 1979. Conseq-ntlv data foe 1976 (asd earlier)

presented in this data sheet may bh 0t variance with 1976 data preeno--d elsmnherc in this -epart.

b/ The pee capita GNP intimate in oalculated by ahe name co- -ersion techniq-e an aha World oalk Atlas, 1979. All athe- converion- to dollars

in thin table are at the averago exchange rota p-meviling during the p-riad corered.

cI At -n--mac ohrket pri-es.

COUNTRY DATA - SYRIAN ASAB REPUBL] C 2 f 2

IOEYl, CREDIT AND PRICES1972 1973 1974 1975 1L976 1977

17(MillionELor-st-andig end period) _ 7

Money Supply 3151 3797 5540 6958 8599 10893Bank CIdit to Publt S,ector 4006 3663 5515 6669 11271 8161BSok Credit to Peivate Sector 578 653 694 889 1249 1339

(Percentage or Index Nu ber-)

-oney Os U of GE1 35.0 39.1 39.4 35.8 34-9 41.9General Pr:ce Indox (1962 = 100) 129.0 171.0 195.0 209.0 23530 256.0

Annoal percentage changes in

Genreal Urine Inde- -5.4 32.6 14.0 7.2 12.4 .9Bank credit t0 Public Secrto

as 7= ef CDP 44.5 7.7 39.3 3413 457 31.3Eank crodit te Prieate Secter

as 7 ef GDP 6.4 6.7 4.9 4.4 5.1 5.1

B4LANC1 OF PAY'IM:;S MERCdAISE EPRTS (Avernee 1929-79:

1914 1975 1976 1972 1979 US u Millio

E.ports of leeds 723 943 1,065 1,077 1,068 Oil 044Icports of lends 1,122 ,561 3,27 2,625 2,415 Phosphate 16

Trade Gop (deficit = -) 1-33 -618 -1,205 -1,548 -1,317 Cotton 182

Seroioes (art) 65 -3 -21 137 -S Manofactared Deds 427le~t Teansf..o 169 713 454 Ž 0 _15 other netneed geice 131

Balaote on Curoert Attonot 460- 94 772 -167 8825 All

otal 1,062

-et ILT Bor-r-ingDisburseents 988 72 341 412 309A.-rtization 1C6 19C 143 183 179

-19 -28 199 229 b30 CS Millienpublic Debt, incleding guaranteed 1328N-n-gearanteed Private Debt --

Other Capital (net) 11 13 54 IC9 35 Total eutatandieg & Disbursad 1328

Intrease in Rceseves (+) 159 79 -520 171 -99"ET DEBT SERVICE RATIO fon 1977 5/

Gross Reseres (ed y ) 491 730 354 539 107 Public Debt incloding guaranteed 7.4

petroleun IV d7 109 194 145 321 Nen-g9aranteed Pri-ate Debt --Petreleun Exponts 432 691 660 617 646 Total outstanding & Disbersed 7.4

t U.4i vi 122n.I1,l ( ,,1.'I) IBRD/IDA LENDING, (D- , 1 977 MIlion 001

____________ CSRD ~~~~ ~~~~~~~~~~~~IDA TOTAL

.Irnoo Ivetogat oatsta-ding & Disbursed 72.3 30.0 191.3

ol74 1911 176 1177 1939 1979 ltdlnbeceed 246.8 18.2 265.0q5 .~5 Outstanding ianloding _

.SS 1.09 = 3.7713 T25 1.9,-A75 3 5 01 c0

3.95 undisbursed 319.1 58.2 307.3

SL 1.30 = 3.2986 0.273 9.2572 0.3 0.253 C.253

d/ Crude and detinatioen.c/ Dob See5jice net of interest canoed en foreign exchacge re-erves as a percentage of Experto of Good and Moe-Canter Services

- lot applitable

ANNEX 1

INTERNATIONAL TRADE AND FINANCE

CHAPTER 1

INSTITUTIONAL CONTEXT AND COMMERCIAL POLICY

1.01 Syria's institutional structure has undergone a number of changes inthe last two decades. Prior to 1958 the country's institutions were suitedprimarily for a laissez faire development strategy. This was interrupted inthe period 1958-61 following the Union with Egypt (UAR) and an initial. wave ofnationalizations. After separating from the UAR in 1961 there was an attemptto return to the earlier institutional structure., However, with the accessionto power of the Ba'athists in 1963 the dominant role of the state sect:or inthe economy was permanently established with a second wave of nationaLizations.It was during this period 1963-70 (primarily 1966-70) that foreign trade wasbrought under the guidance of the state as a state monopoly. Only after 1970was there an attempt to gradually liberalize development and trade strategy bygiving the private sector a significant complementary role to the state sectoraccompanied by new policies and legislation.

1.02 About 70 percent of total imports .(by volume) are monopolized by thepublic sector, primarily by the General Organizations for Foreign Trade. 1/The six most important ones, specializing along broad products lines, aresupervised by the Ministry of Economy and Foreign Trade. 2/ However, a numberof other public sector general organizations, not under the jurisdiction of theMinistry of Economy and Foreign Trade, which are engaged in domestic manufac-turing and/or internal trade are also authorized to import and/or exportabroad. 3/

1.03 Special order goods are generally imported directly by the users(essentially Government agencies and public entities). The trade companieseither import on their own account for retail distribution or as agents oncommission 4/ for the public or private sector. The proportion of imLports

1/ For each foreign trade general organization there is a counterpartinternal trade organization that distributes goods domestically andconsults with the Ministry of Supply to ensure that the needed supplyof goods is available.

2/ The six organizations are Aftometal, Aftomachine, Aftotex, Tafco, Pharmexand Gota.

3/ The list of all public sector organizations engaged in external trade andtheir jurisdictions is provided in Attachment A.

4/ These commission charges significantly increase the cost of imports,especially to the private sector which must pay a 10 percent charge, ascompared with 4 percent for public entities.

This Annex draws on the work of Mr. Zmarak Shalizi.

- 2 -

on behalf of public and private sectors varies by the organization in ques-tion. For example, Aftotex (the General Organization for Foreign TextileTrade), which was responsible for more than 75 percent of all textile importsin 1975, imported mainly on behalf of the private sector.

1.04 With the exception of the export of items such as petroleum andother mining resources, exports channelled through public sector trade organ-izations are often produced in the private sector. For example, cotton, whichis a significant public sector export item, is produced primarily in the pri-vate sector and purchased by the Government at prices below internationalprices (Volume 2, The Main Report, Chapter 8, Table 8.3 and Chapter 9, para9.84). The export and import of fruits, vegetables, and in some cases meat,are at present reserved for the private sector due to the high perishabilityof these goods and the consequences of shifting them to the more administra-tively organized state external trade organizations.

1.05 Throughout this period, despite substantial modifications in theinstitutional structure, the basic development strategy remained intact. Itsaim was to industrialize Syria as rapidly as possible by taking advantage ofthe relatively abundant physical resource base in agriculture and mining. Amajor objective of the Government's investment strategy during this period wasto reduce Syria's dependence on imports in phases (i.e. to pursue an import-substitution development strategy). 1/ Initially the imports of consumergoods were to be reduced followed by intermediate goods and finally capitalgoods to the extent feasible and possible given the structure of locallyavailable factors of production and resources. However, as in other coun-tries, this phased import-substitution strategy has not resulted in a reduc-tion of the overall import level as the ambitious investment programs neededfor this industrialization strategy to succeed have generated the need forhigher levels of imports of capital goods and intermediate goods.

1.06 A corollary objective of the investment strategy was to not onlysatisfy the domestic market in final consumer goods thereby reducing the needfor imports, but to also develop the capacity of the industries to a levelwhere economies of scale and the overall output levels would make possibleexpanded exports which would in turn allow Syria to gradually shift the com-position of her exports away from raw materials to semi-processed and finallyto processed goods (for both consumption and investment).

1/ The only modification in the strategy was in the period 1966 and 1970,when the Government made an attempt at autarchic development, despiteSyria's historical specialization in commercial activity. However,given the relatively small overall size of the economy and the ambitiousinvestment program set forth for the country, it was not possible toreduce Syria's dependence on external trade, particularly imports.

r

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CHAPTER 2

THE SYSTEM FOR CONTROLLING THE LEVEL AND COMPOSITION OF TRADE

2.01 To date Syria's system for controlling the trade deficit has beendirected at limiting the level and/or structuring the pattern of importsrather than promoting the level and/or diversification of exports. In addi-tion, the level and composition of imports were controlled more through directadministrative measures such as prohibitions and quotas than through indirecteconomic (price mechanism) measures such as tariffs and/or exchange rates.Despite these administrative measures there was a rapid and sustained growthof imports in Syria in the 60's and 70's linked strictly to the requirementsof national defense, cf investment, and of consumption necessary to maintaina relatively egalitarian income distribution policy.

THE GENERAL STRUCTURE OF IMPORT TARIFFS

2.02 Syria's protection policy over the last three decades has been shapedby its desire to promote domestic industrial development through minimi.zingimport competition. In principle, Syria's tariff structure is designed1 tosupplement its phased import substitution strategy by discouraging imports ofconsumer goods and encouraging investment (Table A1.2.1)

Table A1.2.1: SYRIAN TARIFF STRUCTURE

……------------------Percent-------------…-----Rate for other

Items Tariff Rate taxes combined Total

1. Raw materials 1.0 5.0 6.02. Semi-finished inter-

mediate goods

a. Competitive 20.0 - 35.0 12.8 - 15.9 32.8 - 50.9b. Non-competitive 10.0 - 17.0 10.7 - 16.1 20.7 - 33.1

3. Finished consumer goods

a. Competitive 50.0 -100.0 19.0 - 29.4 69.0 -129.4b. Non-competitive 35.0 - 50.0 15.9 - 19.0 50.0 - 69.0

4. Capital goods 1.0 5.0 6.0

Source: Research Department, General Directorate of Customs.

That the Syriarn structure of tariffs is designed to encourage investment, canbe appreciated from the fact that total customs duties on raw materiaLs andcapital goods are limited to only 6 percent, whereas for semi-finished inter-mediate products, they range from 21-51 percent and for finished consujmer

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products from 51-130 percent. This has been reflected in an increase in theshare of fixed assets imported from 22 to 29 percent between 1972 and 1975(Table SA 3D.5).1/

2.03 In spite of this favorable tariff structure, turnkey projects (inwhich complete factories are imported) are totally exempt from any duties, asare any imports by the universities (SL 500 million estimated for 1977), hos-pitals, military, and other special groups importing items deemed essentialfor either consumption or production (e.g., basic foodstuffs and fertilizers).As a result of these exemptions, it has been estimated by the Director ofResearch at the General Directorate of Customs, that two-thirds of potentialcustoms duties are not collected, which has contributed to the size of thebudgetary deficit.

2.04 A protection system designed to promote efficient industrial devel-opment must take special cognizance of the implications of low tariff levelson machinery and equipment. 2/ These low tariffs (and/or subsidies) over along period are likely to bias industrial development in the direction ofcapital intensive industries and relatively capital intensive technology.This distortion is already evident in the number of ongoing capital-intensiveturnkey-type projects without feasibility studies. Unbridled importedcapital-intensive industrialization would seem undesirable in light of theexisting problem of underemployment in many public plants (see Annex 3, thisVolume) and the possibility of discouraging local production of machineryand equipment suited to domestic resource availability.

The Structure of Tariffs on Manufactured Goods 3/

2.05 The basic customs duty, which consists of a number of surcharges,applies to all imports not exempt from custom duties (Table A1.2.2). Thebasic duty rates on finished manufactured goods vary widely, generally depend-ing on whether the item in question is considered a "necessity", or a "luxury",the range being between one percent to well over 100 percent (applicable toprivate passenger cars as shown in Table A2.2.3).

1/ Tables whose numbers start with SA, are to be found in Volume 4,Statistical Annex.

2/ Since domestic manufacturing activity is highly protected, the shadowforeign exchange rate may be higher than the official rate. Thus, lowimport duties are in effect a subsidy for importing capital equipment.

3/ This section covers essentially the same material as Volume 2, Chapter10, but is included here for the sake of completeness.

5-

Table A1.2.2: SURCHARGE ON IMPORTS

Surcharge Rate

1. Consumption Tax /a 1 percent or 4 percent of CIF value2. Statistical Tax lb 4 percent of CIF value3. Defense Tax /c 15 percent of the basic customs duty4. Education Tax /d 2 percent of the basic customs dut:y

plus 10 percent of consumption tax5. Ports Tax /e 3 percent of basic customs duty6. Sea Transport Tax /f 0.2 percent of CIF price

/a The rate is 1 percent if the imported good is exempt from thebasic duty or is subject to 1 percent basic duty. The proceedsare distributed among municipalities.

/b Applies to all imports except those under the Arab Common Marketagreements.

/c Applies to all imports subject to the basic duty.

/d Applies to all imports subject to the basic duty and the consump-tion tax.

/e Applies to goods entering the country via the Syrian ports.Transit goods exempted.

/f Applies to goods entering or leaving Syria by sea.

Source: The Customs Administration, Directorate of Studies.

2.06 It is apparent that the import surcharges substantially increase theactual nominal tariff rates on imports. After the addition of all the sur-charges, the nominal tariff rate on a good subject to the basic duty rate of Ipercent becomes 6.6 percent. Hence, except for imports exempt from the basicduty, the minimum nominal tariff rate is generally 6.5 percent of CIF value.

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Table A1.2.3: IMPORT TARIFF RATES ON SELECTED MANUFACTURES /a

Tariff RateTariff Heading Product (Percent of CIF Price unless Otherwise Noted)

15/7-C2 Olive oil SL 0.6/Kg subject to a minimum of 20 percentof CIF price

19/3 Macaroni 30 percent

22/3-a,b Beer SL 75-100/litre with a minimum of 50 percentof CIF price

24/2-C Cigarettes SL 1.24 and 2.1/Kg, depending on price

25/23 Cement 25 percent

34/1-a Soap 0.40/Kg subject to a minimum of 35 percent ofCIF price

53/6 Woollen yarn 20 percent with a minimum of SL 4.0/Kg for(not for yarn containing more than 20 percent (byretail sale) weight) man-made textile fibres; 1 percent

for others

55/5 Cotton yarn 1 percent-7 percent or SL 75-105/Kg, depend-- (not for ing on the stage of processing and the count

retail sale)

55/6-a,b Cotton yarn 20 percent with a minimum of SL 4.0/Kg for(for retail yarn containing more than 20 percent (bysale) weight) man-made textile fibres; 15 percent

for others

56/1-4 Man-made fibres 1 percent(not for retailsale)

56/5-a 1 Man-made 20 percent with a minimum of SL 4.0/Kgfibres, pure

55/9-a,b,c,d Cotton fabrics SL 1.55-6.55/sq. meter, escalated accordingto weight per meter and stage of processing

53/11-a Woollen fabrics 25 percent with a minimum of SL 3.0/Kg

/a Excluding various surcharges. See [para. 2.051 of the text.

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56/7-b 1,2 Synthetic SL 5.50-1.20/Kg, escalated according tofabrics weight per square meter and stage of pro-

cessing, with a minimum of 30-40 percent ofCIF price

61/1/2/3/4 Ready-made 50 percentgarments

15/23 Paints 25 percent

31/1-5 Fertilizers 1 percent

34/15-a Refrigerators 100 percent(for domesticuse)

84/15-b Refrigerators 1 percent(for industrialuse)

85/15-a 2 Television sets 50 percent

84/40-a 1 Washing ma- 75 percentchines (fordomestic use)

84/40-a 2 Washing ma-* 1 percentchines (forindustrialuse)

87/2-4 Private auto- If weight is under 1,000 Kg: SL 6.75 per Kgmobiles plus progressive duties based on CIF price

ranging from 45 percent on the first: SL 5,000to 225 percent on the value in excess of SL15,000; if weight is over 1,000 Kg: SL 9.0per Kg plus progressive duties based on CIFprice ranging from 60 percent on the SL 5,000to 300 percent on the value in excess of SL15,000

85/4 a Batteries 35 percent

84/22 and 23 Construction 1-6 percentmachinery

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Capital equip- 1 percent (generally)ment for indus-trial use

84/24 Agricultural 1 percentmachinery

Source: The Customs Administration and Table of Tariff for Customs Duties(Damascus, 1973).

2.07 No data is available on effective rates of protection for Syria'smanufactures. Inasmuch as quantitative controls (quotas and prohibitions) arethe primary instruments of protection, and domestically produced manufacturedgoods are subject to price control, nominal tariff rates provide little guid-ance concerning the probable pattern of effective protection. However, incertain instances (e.g. television sets and increasingly, cement), the nominaltariff rates in conjunction with CIF prices are used as benchmarks for fixingprices under a cost-plus formula (Volume 2, The Main Report, para 9.22). Thedomestic price in such cases is set so as to equal the tariff-inclusive priceof imports, although in reality very little or no imports may actually bepermitted. The application of this procedure could, in the cases of manufac-tured goods with low value added content, yield exceptionally high levels ofeffective protection. However, the resource-pull effect of such high protec-tion should not be exaggerated since investment decisions, at least in thepublic sector, are not usually influenced by profitability considerations.

2.08 With greater scope for private investment in industry (Volume 2, TheMain Report, para 9.27), the pattern of effective protection will have sig-nificant resource-pull impact in the future. To prevent misallocation ofresources, protection policy 1/ will need to be tailored so as to provideequal effective rates of protection for all lines of manufacturing (indeed,all economic activity), except for infant industries which may need addi-tional protection. In this context, a systematic evaluation of the pattern ofeffective protection and domestic resource cost of Syrian industry might bedesirable primarily as a guide for future public investment. In practice, theuse of tariffs (a form of selective indirect control) has played a minor rolein the protection system. Rather the tariff system has been used primarilyas a source of revenue generation, and even that function has not been fullyutilized.

1/ In addition, the protection system could be utilized to provide anappropriate balance between incentives for export and import competingindustries.

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Recent Adjustments to the Structure of Tariffs

2.09 The most recent adjustment to the structure of Syrian tariffs 1/ islikely to come about as a result of the proposed customs union with Jordan. 2/Mutual agreement has apparently been reached on all categories with the excep-tion of finished consumer goods where Syrian rates are consideraWly higherthan the Jordanian rates. It is likely that Syria will have to reduce! itstariffs on finished goods which might contribute to an increased import ofconsumer goods. Agreement is expected sometime in 1977.

2.10 In addition to unifying tariff rate schedules, the recently formedeconomic union with Jordan requires tariffs and import/export licenses fortransactions between the two countries to be abolished, provided that thegoods involved have at least 40 percent domestic value added. It is :in thiscontext that Syria's coordination of its tariff structure with that of Jordanon the imports of inputs for, and outputs of, manufacturing is important toprotect Syrian producers from facing a competitive disadvantage in their homemarket, and in Jordan, despite the limited trade between the two countries atpresent.

OTHER IMPORT RESTRICTIONS (QUOTAS, PROHIBITIONS)

2.11 After the nationalization of the foreign trade sector, giving theGovernment strict control over imports and exports, selective direct controls(prohibitions and quotas) over imports have been the primary instrument ofindustrial protection. Whatever potential the tariff structure may have hadas an instrument to guide imports, once foreign trade was made a monopoly ofthe state sector most imports were brought into the country under an import/export plan developed in the Ministry of Economy and Foreign Trade (para2.27). 3/

2.12 As a result, Syria follows a comprehensive system of import licens-ing, foreign exchange control and confinement of most foreign trade to publicagencies. There are essentially two types of import regulations for importscompeting with domestic industry--prohibitions and quotas. Imports cf alarge number of products are prohibited. The basic criterion for prchibited

1/ Syria is currently an observer in GATT. In the last decade its tariffstructure has been undergoing continuous modification. When the struc-ture has been stabilized, Syria plans to join GATT.

2/ Tariffs are revised by a tariff council which consists of the Ministerof Finance as President of the Council, the Minister of Economy andForeign Trade, the Minister of Industry, the Minister of Supply., and theDirector General of Customs, and the Secretary is the Director of Tariffsin the Directorate of Customs.

3/ In principle, the level of imports was constrained by the availableforeign exchange, hence, again in principle, the annual foreign tradeplan was linked to the annual foreign exchange budget with adjustmentsfor unforeseen circumstances. In practice, this link has not been imple-mented effectively.

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goods is the availability of adequate local supply. 1/ For example, importsof television sets and refrigerators for domestic use, both produced locallyin abundant quantities, are prohibited. The need to resort to quotas andprohibitions results from the authority's fear of dumping (rather than con-structive competition by foreign enterprises). Protection through prohibitionis at times independent of how "infant" the industry in question is. Forexample, imports of textile fabrics similar to those produced locally areprobihited, even though the textile industry in Syria has been in existencefor decades.

2.13 Imports under the quota system are allowed, subject to foreignexchange availability, for products whose domestic supply is inadequate formeeting the demand (e.g. cement). Generally, in cases of products with sub-stantial quality (including size) variation and for which the domestic supplyis inadequate to meet the demand, quotas are granted for the product rangewhich is of higher quality than that produced locally. The determination ofthe local supply adequacy and the type of imports allowed rests with theMinistries of Industry, Economy and Foreign Trade, and Supply and DomesticTrade.

2.14 In principle, to provide competition to domestic industry, even pro-hibited goods are allowed to be imported through the Damascus InternationalFair. 2/ In addition, exceptions are made to the prohibited list, for tourismprojects and government agencies, but not to public enterprises. As such, nogoods are totally prohibited.

2.15 The Ministry of Supply is also responsible for maintaining a bufferstock reserve system which helps modulate price movements and maintain theflow of commodities at a sustainable level, that is, it functions as a stab-ilizing device quantitatively (as a stabilization fund would function throughthe price mechanism). 3/ The level of reserves vary by commodity from one

1/ On the other hand, the export of goods are prohibited if domestic pro-duction is insufficient to meet domestic consumption needs. (A selectedlist of prohibited imports and exports is provided in Attachment B.)

2/ The import of prohibited goods is authorized in the Damascus Inter-national Fair through the use of a special formula based on the previousroles of various countries, and their pavilions, in Syrian trade. Thereis no limit, of course, on the import of non-prohibited goods to theFair. The minimum import is SL 50,000. However, the total volume ofimports through the fair is insignificant as a source of competition.

3/ The Ministry of Supply does not consider it to be socially desirable thatprices rise to close the supply-demand gap due to inadequate plannedimports resulting from actual domestic production shortfalls. Hence, itis considering the establishment of a stabilization fund to insulatedomestic prices from import prices, which are not currently reflected inofficial prices, once the subsidy system is phased out.

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tenth to two thirds annual domestic consumption. Occasionally, these reservesare drawn down instead of increasing imports immediately if there is a foreignexchange constraint. 1/

PRIVATE IMPORTS AGAINST FOREIGN EXCHANGE HOLDINGS ABROAD 2/

2.16 The State attempts to maintain a comprehensive control over foreigntrade through the Foreign Exchange budget to complement the selective controlexercised through prohibitions and quotas. The publicly-owned foreign tradecompanies receive an annual allocation within the framework of the Government'sannual foreign exchange budget 3/ and are authorized to issue their orn importlicenses. The foreign exchange budget includes a relatively small allocation,estimated at about 10 percent of the total in 1975, for imports needed by theprivate sector for production inputs and investment goods.

2.17 Ordinarily the private sector can import directly without goingthrough the General Organizations for Trade if the commodity is not legallyrestricted to the public sector. Other discretionary measures, however, suchas licensing, are used to control private sector imports, for commodities notlegally restricted to the public sector. 4/

I/ As mentioned earlier, exports are allowed as long as domestic supply issatisfied. However, in the case of a foreign exchange constraint it ispossible, in principle, for exports to be authorized without domesticsupply needs being met.

2/ For the determination of the Foreign Exchange Budget - see paras 2.19-2.26.

3/ Private exporters are required to turn over their foreign exchangereceipts to the Government since they cannot have their own foreignexchange accounts (for imports or any other purpose).

4/ The private importer is required to go to the Ministry of Economy toget a license and then to the Commercial Bank to give a notification ofimport draft, in return the Commercial Bank credits the importer'saccount with Syrian pounds equivalent to his foreign exchange require-ments. This is then reported to the Ministry of Economy and Central Bankfor authorization of foreign exchange for import purposes. Often advancedeposits on imports in Syrian pounds are required by the Commercial Bank.The import licenses are given by the Ministry of Economy to the Directorof Customs. The Directorate of Customs also records imports withoutimport licenses (for example from Jordan). It should be noted t:hat nolicense is required for the import of gold. No export licenses arerequired for most goods once the criteria of satisfying domestic supplyhas been met.

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2.18 With the liberalizations put into effect after 1970, 1/ the propor-tion of imports channelled through the private sector increased from approxi-mately 29 percent in 1971 to an estimated 40 percent in 1976 (Table A1.2.4).The liberalization consists of providing a number of outlets within the con-text of overall state control of foreign trade to the private sector. Theseinclude the system of extraordinary permit imports which allows the privatesector to import raw material, intermediate and capital goods and even someconsumer goods on the restricted list against their own foreign exchange hold-ings abroad, 2/ to complement the system of commissioned imports of itemsrestricted to public trading companies. As a result of the latter, theprivate sector dominates, in addition to the import and export of agriculturalproducts that are not on the list of vital commodities, the import and exportsof non-standard or sub-standard items in the industrial products field (i.e.some types of yarns, etc.). These imports, financed by Syrian-held balancesabroad and suppliers' credits of at least one year, are granted licensesfreely. The former is believed to have particularly augmented the privatesector's access to imports of raw materials, intermediate inputs, and capitalgoods. It has also enabled private entrepreneurs to avoid considerable admin-istrative difficulties and delays associated with obtaining foreign exchangequotas and import licenses.

1/ It is assumed that imports channelled through the private sector in theperiod 1966-70 did not exceed 25 percent of the total.

2/ Exporters are allowed to utilize foreign exchange holdings proven to havebeen deposited abroad prior to 1970 for imports and/or make arrangementswith Syrian migrant workers abroad who, as non-residents, are authorizedto open foreign exchange accounts in Syria and transfer funds withoutclearance from the exchange office.

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Table A1.2.4: PUBLIC AND PRIVATE SECTOR SHARESIN INTERNATIONAL TRADE (1971-76)

(millions of Syrian Pounds)

(Est.)/a l~~~b Ic /

1971- 1972 1973- 1974 1 ¶75- 1976-EXPORTS

Private 165.7 331.0 393.0 n.a. 351.4 540.9Public 623.3 810.0 948.0 n.a. 3,089.5 3,600.4

Total 789.0 1,141.0 1,341.0 2,914.0 3,440.9 4,141.3

I1SPORTSPrivate 494.0 n.a. 731.0 n.a. 1,662.6 3,640.1Public 1,209.5 n.a. 1,611.0 n.a. 4,509.1 5,571.2

Total 1,703.5 2,082.0 2,342.0 4,571.0 6,172.7 9,211.3

EXTRAORDINARY PERMITIMPORTS /e

Private 28.0 65.1 62.2 102.4 167.6 n.a.Public 10.3 16.3 15.3 2.2 32.9 n.a.

Total 38.3 81.4 77.5 104.6 200.5 n.a.

EXPORTSPrivate Sector Share 21.0% 29.0% 29.3% n.a.. 10.2%/:E 13.0%/f

IMPORTSPrivate Sector Share 29.0% n.a. 31.2% n.a. 26.9% 39.5%

EXTRAORDINARY PERMITIMPORTSPrivate Sector Share 73.1% 79.9% 80.2% 97.8% 83.5% n.a.Share of Private SectorExtraordinary PermitsImports in TotalPrivate Sector Imports 5.7% n.a. 8.5% n.a. 10.0% n.a.

Note: "n.a." represents "not available".

/a 1971 public/private shares of exports and imports are based on data inA Survey of the Commercial and Economic Relations of Syria with otherCountries, Syrian Documentation papers, Damascus, Oct. 1972.

/b Public/private shares of exports and imports are based on data in The NewSyria, Central Bureau of Statistics.

/c Public/private shares of exports and imports are based on data in ForeignTrade Statistics 1975, Central Bureau of Statistics.

/d Public/private shares of exports and imports are based on Central Bureauof Statistics estimates.

/e Chamber of Commerce, Damascus./f The declining share of the private sector in total commodity exports

reflects the sudden expansion in 1974 in the price and volume oif petroleumexports, a public sector monopoly.

Source: Central Bureau of Statistics and Chamber of Commerce, Damascus.

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THE ALLOCATION OF DOMESTICALLY AVAILABLE FOREIGN EXCHANGE THROUGH THE STATE'SFOREIGN EXCHANGE BUDGET

2.19 The ordinary and development budgets are determined by law and pre-pared by the Ministry of Finance in consultation with the State Planning Com-mission and other agencies including the Ministry of Foreign Trade and Economy.However, the foreign exchange budget is not determined by law but by an inter-ministerial committee. This budget is put together in the Ministry of Economyand Foreign Trade and when it is not operational ad hoc measures are adopted.

2.20 The foreign exchange budget is determined through a lengthy proce-dure as follows: a communique is sent from the Ministry of Economy andForeign Trade to all other Ministries to get their need for foreign exchange(both operating and development needs) within a month of the beginning of thenext fiscal year. A similar request for foreign exchange requirements in theprivate sector is made through the Chamber of Industry, Chamber of Agricultureand Chamber of Commerce, and for the public sector through the responsibleGeneral Organization.

2.21 The responses are then presented to the Director of the ForeignExchange Budget (a directorate in the Ministry of Foreign Trade and Economywhich is in charge of all money and credit affairs) who calls for a meetingof a standing committee of the Ministry of Foreign Trade, presided over bythe Minister or Deputy Minister of Foreign Trade, which reviews the collectedresults with the State Planning Commission, the Ministry of Finance, theCentral Bank and major client ministries such as the Ministry of Petroleum,Ministry of Supplies, Ministry of Defense, and five or six of the foreigntrade General Organizations. The foreign exchange allocations for the variousagencies are reached through a consensus as a result of bargaining over a onemonth period. Then the budget is analyzed and classified by:

(a) liquidity type, i.e. currency and clearing account,

(b) commodity type, i.e. in terms of consumer goods and inter-mediate goods, capital goods and services,

(c) geographic patterns.

After that the analytic report and foreign exchange budget 1/ are both for-warded to the economic committee.

2.22 The Economic Committee to whom the study is presented is headed bythe Minister of Economy and Foreign Trade, and consists of the Governor of theCentral Bank, the representative of the Commercial Bank, the General Directorof Customs and the Director of the Central Bureau of Statistics. The Committeestudies the report in light of priorities and available foreign exchange andthe requirement of the Five Year Plan. After their adjustments, particularly

1/ The foreign exchange budget includes military needs.

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in the allocation of imports between cash clearing and credit facilities, thereport is submitted to the Cabinet and the approval of the Prime Minisl:er, whois the Head of the State Planning Council and is responsible for the imaplemen-tation of the Five Year Plan.

2.23 In practice, despite the lengthy procedure, little pruning is doneat the lower levels, hence most such requests show overruns over allocationsand require special ministerial permission for supplementary foreign exchangefunds to be allocated, if available, either from Special Accounts or fromReserve Accounts.

2.24 Each agency, enterprise and ministry is allocated foreign exchangewithin a certain ceiling. Revisions above that ceiling have to be ratifiedby the Economic Committee. In principle no enterprise can accept a line ofcredit independently of the Ministry of Economy and Foreign Trade's apiproval.They in turn look at the enterprise's production needs and refusals of foreignexchange are extended even to enterprises with foreign financing (supplierscredit) if the foreign financing exceeds the allocated foreign exchangeceiling. The Committee for Reviewing Documentary Credits 1/ is chaired by theGovernor of the Central Bank and includes a representative of the Ministry ofEconomy and of the Commercial Bank only. The Central Bank is the executor ofthe Foreign Exchange Budget and the Director of Foreign Exchange in theCentral Bank makes a report on foreign exchange utilization quarterly. Thisis the principal means of monitoring the allocations provided through theForeign Exchange Budget. The Ministry of Economy and Foreign Trade also putsa ceiling on the foreign exchange available as loans from the Commercial Bankto the private sector.

2.25 The report on Foreign Exchange requirements that is submitted to theEconomic Committee includes an analysis of the structure of outstanding debtand the ability of the country to service the debt. Arab loans are used tofinance projects for which domestic, or other foreign resources, are notavailable.

2.26 The external debt division of the Central Bank provides guaranteeson loans to government ministries and pays the installments and drafts dueon the items guaranteed by the Central Bank. The Public Debt Fund of theMinis-ry of Finance on the other hand provides such guarantees to loans tothe public sector enterprises, and the Commercial Bank to the private sector.

THE FOREIGN TRADE PLAN

2.27 A foreign trade plan is also incorporated with the foreign exchangebudget. This foreign trade plan is prepared by the Ministry of Economy and

1/ The Ministry of Finance requires all firms and stores to provide end ofyear inventory status within fifteen days of the year-end for approxi-mately twenty six major items. As a result of the shortage of foreignexchange in early 1977, documentary credits are now granted only afteran analysis and scrutiny of the stocks available to public enterprises inorder to control overstocking.

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Foreign Trade with a representative of the State Planning Commission. Theplan is prepared on the basis of three different or alternative projections:

(i) based on historical series and average growth rates;

(ii) based on the direct correlation between the uses of thecommodities and their demands; and

(iii) based on a plan for exports and imports of commoditiesfor the last five years.

This plan is cleared by the Foreign Trade Committee within the State PlanningCouncil that looks at foreign trade requirements.

2.28 It should be apparent from a review of recent developments inSyria's trade that the above described formal structure has been inadequateto the task of preparing a meaningful foreign exchange budget and foreigntrade plan. Part of the problem results from the fact that the level ofanalysis, e.g. of the foreign trade plan is insufficiently disaggregatedfor the plan to be an effective guide for foreign trade.

EXPORT PROMOTION

2.29 Syria's export incentives system is limited to a subsidy on exportsof cotton yarn and fabrics. The subsidy ranges from 6 to 12 percent of sell-ing price depending on the degree of processing of products. The subsidy,provided by the Export Promotion Fund of the Ministry of Industry, is financedfrom the proceeds of a levy of SL 0.20/kg on yarn production. Both publicand private firms may avail themselves of the subsidy. In addition to theexplicit subsidy on textile exports, these exports are also implicitly sub-sidized, since the price paid for cotton to farmers is about half the worldprice. The need,for the textile exports subsidy should be reassessed.

2.30 The distribution of exports of manufactures between public and pri-vate enterprises which is available only for 1975, indicates that the privatesector accounted for 61 percent of Syria's manufactured exports. 1/ The Sugarand Cement General Organizations do not export any products. In the Chemicalsand Engineering subsectors, which are nominally oriented toward import sub-stitution, the export performance has also deteriorated, despite the evidenceof underutilized capacity and accumulation of inventories in some productlines. 2/ The persistent and often large shortfalls in achieving the exporttargets, despite the fact that often annual targets were revised downward inview of the previous year's performance, may also be attributable to the

1/ See Central Bureau of Statistics, Statistics of Foreign Trade of Syria,1975, Damascus, 1976, Table 17.

2/ A case in point is television sets whose production was about 39,000units in 1975 of which 29,000 units were sold locally and the balancewas accumulated in inventories.

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absence of an incentive system which would reward the General Organizationsfor attaining or exceeding their targets and would penalize them for short-falls. Therefore, a comprehensive export incentive system may be essentialfor stimulating exports, particularly by public manufacturing enterpriseswhose performance in this respect has not proved to be encouraging.

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CHAPTER 3

TRADE AGREEMENTS

3.01 Syria has a relatively large trading network. However, as a conse-quence of geographical proximity, combined with mature industrial structureand high consumption standards, Europe (including the enlarged European CommonMarket, Comecon 1/ and other European countries) dominates Syria's merchandisetrade, accounting for over 60 percent of Syria's exports and imports. Despitethe diversification in the commodity composition of Syria's trade and the in-creased number of trading partners since 1960, Europe's importance in SyrianTrade has not diminished. At a more disaggregated level, however, the patternof Syria's trade by major trading sub-groups has changed substantially since1970 as is evident in Tables SA 3D.14 and SA 3D.15.

MERCHANDISE TRADE AND PAYMENTS AGREEMENTS 2/

3.02 The principal trade and payments agreements affecting Syria'sexternal trade are bilateral. The majority are normal medium to long-termagreements of intent. No commodity composition of trade is specified andtransactions are in convertible currency at prevailing international pricesand free market exchange rates. The Syrians choose their best offer in importand export bids irrespective of agreements, since bids are open to all coun-tries whether or not Syria has a trade or payments agreement with them.Any modifications in agreed prices, dates of delivery and/or specifications(quality) result in Syria's reassessment of its trade pattern, as the tradeagreements do not have any binding obligations. 3/

3.03 No financial facilities are provided for trade. All such facilitiesare available only for projects. However, to increase the liquidity of theGovernment temporarily, payments agreements with swing limits (Table A1.3.1)were entered into in the 1960's. Deficits above the swing limit are settledin a designated convertible currency, or any other convertible currencymutually agreed upon by the respective central banks. Clearing is arrangedat the end of the year or in the following agreement. These agreements areautomatically renewed annually if neither party requests cancellation. Inthe absence of a payments protocol, payments are made directly.

l/ Is the East European counterpart of the European Common Market andincludes the Soviet Union as a member.

2/ Based on the Directorate of Customs' data. Information on the directionof services trade was not available from the regular official statisticalpublications. Hence, the balance on trade of goods and services bytrading blocs and/or countries cannot be analyzed for trends.

3/ Even though, in theory a trade and/or payments agreement should be inbalance, in actuality it seldom is, primarily due to price fluctuations,but also due to the fact that Syria's trade with certain countries isuni-directional (e.g. the import of tea from Sri Lanka).

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Table A1.3.1: OUTSTANDING PAYMENT AGREEMENTS AS OF DECEMBER 31, 1976

Ceiling on Imbalance Period in which excessesin account at any are to be settled in

Country Date Signed point in time goods or currency

Sri Lanka Oct. 9, 1966 LStg 450,000 excess within 45 daysof claim in convertiblecurrencies; balance endof agreement year

People's Republic Feb. 21, 1963 LStg 750,000 excess within one monthof China of claim; balance within

three months oi- eachagreement year in goodsor currency

People's Republic Nov. 12, 1969 LStg 200,000 within three months inof Korea kind, beyond that in

convertible currencywithin 15 days

USSR Nov. 4, 1965 LStg 500,000 Same as aboveoriginally, LStg585,335 currentlyafter the devaluationof the pound sterlingin 1967

People's Republic Dec. 31, 1969 SwF 500,000 excess within one monthof Vietnam of claim; balance end

of every calendlar year.

Source: Central Bank of Syria.

3.04 In 1971 trade with bilateral payments agreement countries accountedfor 33.4 percent of Syria's total exports and 23.4 percent of Syria's totalimports. As Syria's economy and financial situation improved in the early70's most of these payments agreements were cancelled, so that by 1975 onlyfive bilateral payments agreements remained 1/ with the People's Republic

1/ Up to 197:1 Syria had bilateral payments agreements with over a dozencountries: Bulgaria, the People's Republic of China, Ceylon, Cuba,Czechoslovakia, the Democratic Republic of Germany, Hungary, thePeople's Republic of Korea, Poland, Romania, Spain, the United ArabRepublic, the USSR and the People's Republic of Vietnam. The bilateralpayments agreement with Cuba was terminated on January 6, 1973; withSpain on April 9, 1973; with Hungary on January 1, 1974 by virtue ofan agreement signed on February 27, 1974; with Egypt on October 1, 1974;with Poland and Romania on December 31, 1974 and with Bulgaria and theGerman Democratic Republic on December 31, 1975.

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of China, Ceylon, the People's Republic of Korea, the USSR and the People'sRepublic of Vietnam. Together they accounted for only 9.5 percent of Syria'stotal exports and 6.0 percent of Syria's total imports 1/ in 1975. Allcapital account transactions with the bilateral payment agreement countriesare in principle in convertible currency. Only current account transactionsare settled through the provisions of the payments agreements. The paymentsagreements do not impose any obligations on either party to purchase a fixedquantity of goods from the other. However, a list of goods produced by eachsignatory and acceptable to the other as payment in lieu of currency isincorporated in the agreement. The goods are exchanged at prevailing inter-national prices. 2/

MAJOR RECENT TRADE AGREEMENTS WITH SYRIA

The European Community's accord with Syria 3/

3.05 On January 18, 1976 the European Community signed a major trade andcooperation treaty with Syria (as well as with Egypt and Jordan). The newtreaty is of unlimited duration to allow the steady, assured growth of devel-opment benefits. But, it does contain provisions for examination and updatingat fixed intervals starting in 1979.

3.06 Commercial Agreement. The treaty aims to liberalize trade in bothdirections. But due to EC's heavy trade surplus with Syria and Syria's imme-diate development needs, the emphasis is on easing the flow of exports fromSyria to Europe through tariff concessions. Syria's agricultural exports tothe Community are relatively unimportant, nonetheless, the Community will -grant tariff concessions ranging from 40 to 80 percent on a range of farmgoods exports. For industrial products and non-farm raw materials, the EC hasgranted an 80 percent tariff cut upon signing and a final 100 percent tariffcut as of July 1, 1977. The community will also abolish quantitative restric-tions on imports except for a few sensitive products where a tariff-rate/quotasystem will be applied until December 31, 1979 (at the latest). For theseproducts (refined petroleum products, phosphatic fertilizers, cotton yarn, andwoven cotton products), which are Syria's potential major export items, goodscan enter the EC duty free up to certain fixed levels. Above these ceilingsthe Community reserves the right to charge tariffs if necessary. It should benoted that the products involved are the chief focus for the future industrial-ization of the country since they involve finished manufacture of local rawmaterials. The EC expects that "The prospect of a free market in the EC forthese goods by 1980 should attract a stream of European investment into the

1/ Excluding military equipment imports.

2/ Provision is also made for the incorporation of a mutually agreed uponrevaluation or devaluation clause to secure the interests of the con-tracting parties.

3/ Sources: EC Background Note No. 46/1976 (Nov. 4) and No. 4/1976(January 26), and Middle East Monitor, Vol. VI, No. 19/1976 (December 15).

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locs1 irdustries". In return Syria has agreed to grant the community most-favored-nation treatment for its exports while reserving the right to usetariffs to protect its new domestic industries.

3.07 o^nancial and Technical Aid. Under the accord, the EC will grant,over a period extending to October 1981, UA 60 million 11 ($66.6 million) forloans through the European Investment Bank (EIB). Of this UA 34 million($37.7 million) will be in the form of normal loans, UA 7 million ($7.8 mil-lion) for loans on special terms, and UA 19 million ($21.1 million) in. theform of grants. "The aid system leaves open the possibility that othe!r funds,including those from the oil-rich Arab nations, can be brought in togetherwith the EC aid to enhance development projects". The technical cooperationterms of the accord aim at creating contact between firms in Europe anddevelpment groups in Syria and the region to facilitate patent exchange,marketing accords, and joint exploration and production ventures.

The Jordanian Accord with Syria 2/

3.08 On April 6, 1975 Jordan signed an Economic Cooperation Agreementwith Syria. This agreement represents a commitment to implement the Einalphase of the Agreement on Arab Economic Unity (Arab Common Market), wlhichrequires the unqualified removal of trade restrictions on the exchange ofcommodities produced by each, 3/ and stimulate other signatories to followsuit.

3.09 The principal provisions of the agreement include: the eliminationof customs and other dues and taxes, as well as import and export licenses,; 4/on the trade between the two countries of natural resources, agriculturaland livestock products 5/ and manufactured products; the imposition of equaldomestic dues and taxes on products of both countries; the non-subsidization

1/ One Unit of Account (UA) was equivalent to approximately $1.11 inJanuary 1977.

2/ Source: General Customs Administration of Syria, Economic Studies,Statistics and Auditing Dept., Study No. 17265/TQ/75.

3/ Domestic production is based on the Arab Common Market definitionof at least 40 percent domestic value added which will be recordedin the certificate of origin.

4/ A certificate of origin endorsed by a mutually agreed upon competentGovernment authority will be required for purely organizational andstatistical purposes.

5/ "The two parties shall have the right seasonally, in special casesor for stupply purposes, to restrict the export of any agricultural,livestock or supply products."

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of products exported to each other which compete with local production 1/; theestablishment of commercial centers by each party in the country of the otherparty to promote and facilitate trade between the two parties and to conductmarket research; the harmonization of trade classifications and regulations;the undertaking of joint ventures.

3.10 In the latter category are included among others the establishmentof a joint Free Trade Zone (FTZ) in Dar'a on the Jordanian/Syrian border, andthe establishment of a joint commercial and investment bank capitalized at$6.5 million to deal with jointly owned industries and commercial establish-ments, while also providing import credit facilities that are not availablefrom the State owned Commercial Bank of Syria. 2/

3.11 The Syrian Jordanian trade agreement is part of a much larger setof accords in various fields from education to defence aimed at standardizingthe laws and practices of the two countries with the eventual objective ofunification. In and of itself the trade agreement is not likely to be ofmajor significance 3/ as less than one percent of Syrian exports and importsof goods are transacted with Jordan (Table SA 3D.16).

1/ Re-export of any product by one party without written authorizationfrom a competent Government Authority of the other party is possibleonly if the product has been converted by additional processing torightfully invest it with the character of local production.

2/ Source: Mideast Markets, October 11, 1976, p. 9. The Commercial Bank ofSyria is the only commercial bank in the country.

3/ With the exception of its effect on the Syrian tariff structure (see para2.10).

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CHAPTER 4

DIRECTION OF TRADE

4.01 Syria is a member of the Arab Common Market 1/. This, however, hasnot had a major impact on its external trade. The share of Syrian trade withthe Arab Common Market (ACM) members has decreased steadily since 1960. Duringthe Third Five Year Plan period Syria exported only 6.5 percent of her totalmercnandise exports to ACM members, down from 12.7 percent during the SecondPlan period. This decline was partially a reflection of the increased impor-tance of the export of mining products (crude petroleum and phosphate rocks)in total Syrian Exports, items which are not exported to ACM member countries.However, the 19.6 percent per annum growth of nominal exports to ACM members,even though more rapid and steady than the (0.4) percent growth of exportsto non-ACM Arab countries (1970-1975), was still substantially less than thesteady 47.2 percent per annum growth of Syrian exports to the "Rest of theWorld" 2/ countries for which Mining product exports were also insignificant(Table SA 3D.ll).

4.02 The share of Syrian imports from the ACM countries also declinedfrom 9.2 percent in the second plan period to 6.5 percent in the third planperiod in contrast to the growth in the share of Syrian imports from "'OtherArab" countries and "Rest of the World" countries. This decline is, however,overstated as. it reflects the low price of Syrian crude oil imports from Iraq.This conclusion is reinforced as a consequence of the doubling in 1976 of

1/ The Arab Common Market (ACM) was established by the Arab Economic UnityAgreement of 1955. The Agreement was to be put- into effect in sixstages through the gradual elimination of tariffs and customs dues onthe trade of products produced by member countries. The stages wereto be implemented in the following order:

Stage Type of Product Tariff Reducltion

1 Ail Natural Resources 100%2 All Agricultural & livestock products 100%3 Some industrial products 100%4 Remaining industrial products 60%5 Remaining industrial products 80%6 Remaining industrial products 100%

Five of the six stages have been implemented by all members of the ACM.The sixth stage originally scheduled to be completed by 1972 has provedmost difficult to implement (see para 3.08). The share of Syrian tradewith the Arab Common Market (ACM) members has decreased steadily since1960, in spite of the Arab Economic Unity Agreement.

2/ The share of total merchandise exports for this group remained unchangedfor both the Second and Third plan periods.

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Syrian imports fron; "iOther Arab" countries, reflecting the import of Saudicrude oil at higher prices. Nonetheless, it can be asserted that Syria'smembership in the Arab Comnon Market has not contributed effectively toincreasing the share of its trade with member countries.

4.03 The primary trading groups for Syria continue to be the enlargedEuropean Common Market and the Socialist countries of Europe and Asia. TheSocialist bloc has accounted for a larger share of Syria's exports than ofher imports throughout the three plan periods, which may be accounted for bythe importance of bilateral payments agreements in Syrian trade 1/ and theutilization of commodity exports for settling payments imbalances. The shareof imports from the Socialist bloc and the European common market were almostequal during the second -plan period, representing a peak for the former anda trough for the latter. During the Third Plan period, however, the share ofimports from the two blocs returned approximately to their First Plan periodlevels with the Socialist bloc's share slightly higher and the EuropeanCommon Market's share slightly lower than during the First Plan period (eventhough the share of the latter was still twice that of the former) (Table SA3D.14).

4.04 The composition of Syrian imports from each group is substantiallydifferent, with capital goods imports forming a larger share of imports fromthe European Common Market than from the Socialist bloc 2/ (Table SA 3D.18).Similarly, the composition of Syrian exports to the two groups is very dif-ferent, with a larger share of Syrian raw cotton exports destined for theSocialist bloc (primarily USSR, PRC and Romania), while a larger share ofSyrian crude petroleum exports (70-80 percent) are destined for WesternEuropean markets (primarily Italy, FRG and France). The European CommonMarket has become Syria's primary export market (35 percent) during the ThirdPlan period as a result of the export of crude petroleum.

4.05 By contrast to the more developed nations of Europe, the share ofSyria's trade with her immediate neighbors has been declining steadily since1969, despite their proximity, (Table SA 3D.16),-with very dramatic drops inexports in 1971 and 1975, and of imports in 1975.

4.06 Syria has continuously had an overall merchandise trade deficitsince 1960. During the Third Plan period it had no merchandise trade surpluswith any of the major trading groups even though during the First Plan periodit had a merchandise trade surplus with both the Socialist bloc and the non-ACM Arab countries and during the Second Plan with only the non-ACM Arabcountries. The most significant deficit throughout the three Plan periodswas with the European Common Market, followed by the Socialist bloc in the

1/ It is assumed that some investment and military loans are paid throughthe earmarking of commodity exports even though in principle the capitalaccounts are to be cleared in convertible currencies only.

2/ Military equipment (not clearly recorded) has been imported primarilyfrom the Socialist bloc during the three plan periods.

25

Second Pl<an period, and North America and the "Rest of the World" in i-he ThirdPlan zexod (Table SA 3D.13). 1J The share of trade with North America waslarger itn the first Plani periodl than in the subsequent two 2/. However, ineach Pl.sn period North America was the smallest market for Syria- exports ofany of the Minjcr trading groups, while remaining a non-insignificant sourceof Syrian imports (primarily wheat and capital goods).

4.07 Syrian export markets are more concentrated than her import sourcesboth geographically (Table A1.4.1) and by commodity (as a result of petroleumexports (Table SA 3D.2). This can be observed from the tabulation of thedirection of trade by country rather than by trading groups. During the thirdPlan period a varying set of ten countries accounted for over 75 percent ofSyria's exports, the five principal destinations in order of significancebeing the USSR, Italy, Lebanon, the Federal Republic of Germany and thePeople's Republic of China. During the same period a varying set of tencountries accounted for over 59 percent of Syria's imports, the five principalsources in order of significance being Italy, the Federal Republic of Germany,Lebanon, France and the USSR. In 1975 the top three export markets accountedfor 39 percent of all Syrian merchandise exports, while the top three sourcesof imports accounted for 29 percent of all merchandise imports. 3/

Table A1.4.1: SIGNIFICANCE OF PRINCIPAL TRADING PARTNERS (1969--75)

Third Five Year Plan Period1969 1970 1971 1972 1973 1974 1975

Imports: Top teni 60.0 55.3 57.8 59.6 59.0 59.0 60.4Single largest 3/ 8.7 7.6 8.5 8.1 10.5 12.1 12.8

Exports: Top ten 71.5 77.0 74.9 74.3 69.4 80.8 73.2Single largest 3/ 17.2 21.5 18.1 20.2 15.3 17.5 18.1

Source: Central Bank Bulletin, 1975 No. III and IV, pp. 68-71.

1/ For end lperiod data see Table SA 3D.15.

2/ In 1970 Syria restricted imports from the U.S. to goods whose prices werelower and qualitv higher than goods from other countries. This restric-tion was repealed in 1977.

3/ Between 1973 and 1975 the Federal Republic of Germany, Italy, and Franceretained their respective individual positions as first, second, and thirdmajor source of imports, whereas their combined share increased. from 26percent to 29 percent of total Syrian imports.

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CHAPTER 5

CAPITAL FLOWS AND EXTERNAL PUBLIC BORROWING

5.01 As would be expected Syria's international political relations haveinfluenced the pattern and sources of her borrowing. During the late sixtiesSyria borrowed primarily from the Soviet bloc which was also the primarysource of much of her imports and destination of much of other exports. Duringthis period net public borrowing became positive as a consequence of an eight-fold increase in the level of gross disbursements which contributed to a con-tinuous increase in net reserves. Since 1970, and particularly since 1973, asa result of the liberalization of trade, particularly imports, Syria's tradeand external borrowing has been reoriented substantially towards Western Euro-pean and non-Socialist Arab countries.

5.02 Imports are normally financed from a number of sources:

(a) domestic export receipts,(b) foreign accounts abroad,(c) foreign loans and credits.

THE FOREIGN EXCHANGE BUDGET

5.03 The Foreign Exchange Budget is principally concerned with the firstof the three categories. The second category is limited to the private sectorand part of the third category is outside the jurisdiction of the committee toallocate. Most loans 1/ result from contractual commitments and are of twotypes. The first type is direct financing for a specific project, which isnot adjusted by the Committee on Foreign Exchange. The second type is a publicloan to the government to allocate as it sees fit. This is allocated propor-tionately between both the private and the public sectors, by the Director ofthe Foreign Exchange Budget in the Ministry of Economy and Foreign Trade. Theproportion varies, but is approximately 1 to 15. The priorities for allocat-ing foreign exchange to the public sectors are based on the following structureof priorities:

(1) projects already underway,(2) quick return projects, and(3) other projects.

As noted elsewhere, the actual obligations are determined in conjunctionwith the Director of the Annual Planning Department of the State PlanningCommission.

1/ Foreign loans to the public sector are guaranteed by the Public DebtFund of the Ministry of Finance or the Central Bank and to the privatesector by the State's Commercial Bank.

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EXTERNAL PUBLIC DEBT

5.04 With the availability of more recent and complete external debt datathe official balance of payments accounts have been revised by the World Bankfor the period '969 to 1976 (Table SA 3B.1). This adjustment has resulted ina large errors and omissions figure. However, since these figures are consis-tently negative, indicating unrecorded imports, the direction of the currentaccount balance (surplus or deficit) has not been altered despite changes inthe magnitude of the balance.

5.05 To facilitate the analysis, the information from the revised balanceof payments, for the period 1970 to 1976, has been recast in the form ofdemand for and sources of foreign exchange for the Syrian Arab Republic (TableSA 3C.1). It is apparent from this Table that the import of goods and non-factor services including the implicit imports recorded through errors andomissions account for approximately 92 percent of the foreign exchange require-ments of the economy. The remainder are the requirements for servicing exist-ing debt.

5.06 The structure of disbursements and commitments between the twoperiods (1969-72) and (1973-76) also changed dramatically with commitmentsfrom the Eastern bloc declining less rapidly than disbursements to half theformer period's levels and commitments from OPEC and OECD countries increasingmore rapidly than disbursements to over three times the former periocl's levelsin terms of shares of total commitments and disbursements. In absolutte termsthe increase was even more rapid (Table SA 4.4).

5.07 Commitments from private creditors, primarily financial institutionsand suppliers' credits, declined slightly in the 1973-76 period even thoughdisbursements more than doubled (in terms of shares of total disbursements).As was noted before (in Table SA 3C.1) suppliers' credit financed 1 percent oftotal foreign exchange requirements in 1970 and 1.2 percent in 1976 peaking at4.4 percent in 1974. They accounted for about 30 percent of disbursementsduring the 1971-75 plan period (Table SA 4.6), primarily from France (12.8percent), Federal Republic of Germany (5.2 percent), Italy (5 percent), Japan(1.7 percent) and Spain (2.9 percent). l/

5.08 The bulk of capital flows during the Plan period, however, that is2/3 (or 66 percent) were in the form of bilateral aid of which 23.8 percentwas from the Soviet Union, 13.6 percent from Saudi Arabia, 8.3 percent fromthe Democratic Republic of Germany, 6 percent from Romania and 2.8 percentfrom the United States primarily in the last two years (1975 and 1976).Bilateral aid also accounted for the largest share of total commitmentsduring the same period (Table SA 4.5), with Romania being the largest donor(19.5 percent) followed by Saudi Arabia (12.9 percent), the Soviet Union(8.1 percent) and Czechoslovakia and the Democratic Republic of Germany(7.1 percent each). Bilateral aid as a source of financing increased from

1/ For the tractor factory in Aleppo.

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10.3 percent in 1970 to 11.3 percent in 1976, dropping briefly to a low of8.6 percent in 1975. Multilateral aid which was insignificant prior to 1975was financing about 1.1 percent of total foreign exchange requirements in1976. Private bank credits accounted for only A percent and multilateralaid for less than 1-1/2 percent of total disbursements. Thus, during theThird Plan period the bulk of aid from Easterr bloc countries was in the formof bilateral aid and that from the OECD countries in the form of suppliers'credit. Only since 1975 has aid from OECD countries shifted from suppliers!credit to bilateral aid as a result of U.S. "Security Supporting Assistance."

5.09 The terms of this debt has been increasingly more stringent, withthe grant element 1/ (Table SA 4.3) declining from 83.6 percent in 1972 to13.2 percent in 1976 for multilateral aid, from 52 percent to 36 percentbetween 1971 and 1976 for Eastern bloc aid, from 47 percent to 34 percentthe same period for OPEC aid. The grant element only in the OECD aid hasincreased from 20 percent to 64 percent primarily as a consequence of theinclusion of USAID funds which are on very concessionary terms.

EXTERNAL DEBT BY AGENCY AND SECTOR

5.10 Tables SA 4.7 and SA 4.8 show the debt outstanding and the annualcommitments and disbursements since 1973, by agency and sector as of Decem-ber 31, 1976. The largest portion of the debt outstanding (31.2 percent) isheld directly by the Government of Syria, the remainder is distributed betweena number of ministries, public organizations engaged in trade, various prefec-tures and other public entities. The most significant in terms of borrowingin the last three years have been the Engineering and Chemical IndustrialUnit, the General Administration for the Execution of Industrial Projects, -the General Administration of Cement, the Euphrates Project Authority, theGeneral Establishment of Electricity, the General Organization for Sugar, theGeneral Establishment of Post and Telecommunication, the General PetroleumCompany, the Ministry of Agriculture, the Ministry of Euphrates, the Ministryof Petroleum and Electricity, the General Organization of Chemical Industriesand the Union of Textiles.

5.11 In terms of sectors, the manufacturing sector accounted for 37 per-cent; electricity, gas and water 22 percent; and community and social services18 percent, of total debt outstanding, disbursed and undisbursed, at the endof 1976 2/ (Table SA 4.8). Since suppliers' credits do not require guarantees,

1/ The grant element is a weighted average of the terms (interest, maturityand grace) of commitments. A low "grant element" suggests the terms ofa loan are "hard", whereas a high "grant element" suggests the terms of aloan are "soft", that is, more grant-like.

2/ A sizeable amount, approximately 8 percent of capital flows, has not beenclassified by sector as they have been contracted by the Government assignatory without indication of which industries they will be distributedto. In the case of public enterprise commitments, the Government doesact as the guarantor of the debts even though it does not sign the com-mitments.

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publtr. -nternrises made heavy use of suppliers' credits to finance investmentsin "he m.mnufacturing sector (most of which were turnkey-type projects withoutfees ihtiitY studies).

5.12 All of the outstanding debt is repayable in convertible foreigncurrencies (with the exception of $88 million equivalent debt incurred inrubles), two-thirds of it in US dollars, the remainder in pounds sterling,Saudi riyals, 'French francs, KuW4ait dinars, United Arab emirate dinars in thatorder 'Table SA 4.9).

EXKTIA2.GE RAMTE AkND RESERVES

5.13 Durilag the Bretton Woods period, Syria adhered to a strictly main-tained official foreign exchange rate of 3.82 Syrian pounds to the dollar.During this period a parallel free market rate was allowed to operate' inSyria. This rate differed from the official rate by small amounts (TableSA 3E.2), which increased gradually during the nationalization period. in thesixties and peaked in 1970 at 13 percent above the official rate. Thereafterit gradually dropped until, in 1973 when the two rates were unified, thedifference between them was marginal. Since 1973 as a conisequence of thechanged exchange rate structure internationally the Syrian pound has alsofluctuated. It was briefly revalued upwards following the devaluation of theU.S. dollar. Subsequently, the Syrian pound was pegged to the dollar withall other cross rates being determined by the dollar to Syrian pound exchangerate. The Syrian pound was devalued to 3.90 to the dollar in 1976.

5.14 It has been the policy of the monetary authorities to intervene inthe market to support the exchange rate. For brief periods in the past thenet liquidity position of the Government has been negative as a consequenceof its attempt to support the exchange rate. Between 1968 and 1971, theperiods in which the current account balance was negative, reserves were drawndown continuously to finance the deficit as capital inflows were insufficient.From 1971 onwards, however, during the period of current account surpluses,substantial borrowing, gross and net, occurred resulting in a very rapidbuildup of reserves. It must be noted again, that this positive state ofaffairs was less the consequence of the strength of the Syrian economny andmore the consequence of an increase in the volume of unrequited transfers.

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CHAPTER 6

POLICIES ON FOREIGN INVESTMENT I/

6.01 In 1971, Syria ratified the convention of the Arab InvestmentGuarantee Institution 2/. The institution, established in Kuwait under theauspices of the Arab Economic Union, assures Arab investors of adequate com-pensation against non-commercial risks, such as expropriation, restrictionson transfer of capital or earnings, exchange rate penalties on capitaltransfer, or military destruction of assets.

6.02 Legislative Decree 348 of 1969 authorized joint ventures betweenArab investors and Syrian state enterprises and delineated the specificconditions under which the safeguards would be granted to the capital, ofSyrian immigrants of other Arab nationals, which is invested in developmentprojects or deposited in Syrian Banks for three months or more. Among theseconditions are:

(a) Syrian labor should represent at least 75 percent of thetotal work force in the investment project;

(b) transfer of project property is not permitted until afterthe first five years of operation;

(c) up to half the profits from the investment may be transferredabroad each year; and

(d) the cost of the project may be transferred after five yearsof operation, by transfers of 25 percent yearly.

Additional privileges may be authorized by the Government on a case by casebasis.

FREE TRADE ZONES

6.03 In 1971, Free Trade Zones were established by Decree No. 18 with theintention of attracting foreign private capital that would hesitate to investdirectly in Syria with its socialist regulations and state guidance of invest-ment. The Free Trade Zones were intended to attract investments that would:

1/ Despite exchange restrictions during the nationalization period in thesixties it is assumed that a large amount of Syrian capital fled toLebanon illegally.

2/ Other countries that ratified the convention include Egypt, Jordan, Iraq,Kuwait, Bahrain, the United Arab Emirates, Algeria, Tunisia, the Sudan,Morocco, Mauritania and Lebanon.

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(a) generate employment

(b) be a source of foreign exchange through employee wages

(c) intrc'uce new technology

(d) be a source of competition to domestic industry therebyenhancing the quality of the latter's output.

6.04 With this in mind, over the past five years a total of ten mnillionsquare meters (one thousand hectares) has been set aside at ports, bordercrossings and market centers in six Free Trade Zones areas 1/. A hundredpercent of the Free Trade Zones output can be marketed within Syria if itcomplies with foreign trade and customs regulations, and only 20 percentif the output is on the prohibited list, i.e., is competitive with domnestLicproduction 2/.

6.05 The development of the Free Trade Zones is expected to be gradualeven though there have been no studies to determine the period over whichthe initial costs are to be amortized and the means whereby operating costswill be covered. To date the influence of the Free Trade Zones has beeninsignificant despite the relatively rapid initial increase in gross revenuesfrom 0.1 million Syrian pounds in 1972 to 3 million Syrian pounds in 1975 andan estimated 5 million Syrian pounds in 1976.

1/ One Free Trade Zone has been established at each of the sea ports ofLattakia and Tartous, one at the International Airport of Damascus,one in each of the major commercial centers of Damascus and Aleppo,one as a joint venture with Jordan at the Syrian-Jordanian bordercrossing of Dar'a. It is expected that, in addition to the industrialsector, investments will be attracted to the commercial and financialsectors, that is warehousing and banking (the latter is exclusivelyrestricted to the public domain outside the Free Trade Zone in Syria.The advantages to foreign investors (both Arab and non-Arab) ininvesting in a Free Trade Zone in Syria would be:

(a) Syria's strategic location vis-a-vis Middle Eastern markets(thereby saving on transportation costs)

(b) the relatively abundant and relatively cheap labor available

(c) the availability of many raw materials

(d) the availability of state provided infrastructure (roads, water,electricity, even housing for the workers)

(e) exemptions from customs duty licenses and other regulations.

2/ No minimum value added content is required to be Syrian in origiLn,however, 75 percent of the employees are required to be of Syrianorigin.

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6.06 Non-Arab foreign investment in Syria, except in the Free TradeZones, must still be negotiated on a bilateral, case by case basis, andmust be individually approved by the legislature.

JOINT VENTURES

6.07 The Syrian Government has to date entered into a few bilateralmanufacturing investment agreements 1/ each specifying different conditions(and concessions) for the investors. In general, these agreements providefor joint stock companies, combining capital of foreign (public and private)investors and the Syrian Government, with control held by a Syrian stateenterprise. The agreements provide protection (i.e. compensation) againstnationalization, permit repatriation of earnings and capital, authorizeexemption from financial and municipal taxes, customs duties and similarlevies, and from regulations pertaining to the General Organizations andother state companies, as well as exemption from all taxes and dues for theincome and property of expatriate employees. In addition, the agreementsprovide for a Government commitment to purchase the investment if substan-tial losses are incurred through war and/or a "political decision by theSyrian Government", and to guarantee specified rates of return to the privateinvestor.

6.08 In February 1974, private sector interests were also permitted tosign loan agreements with foreign investors for private development projects(Decree No. 76). Interest and amortization on such loans could be freelytransferred abroad in convertible currencies. At the same time, Arabnationals resident in the Syrian Arab Republic were permitted to freelyacquire real estate in the country (Decree No. 38). Locked assets originat-ing from previous sales of such real estate by Arab nationals were alsoreleased.

6.09 The evolution of this liberalization policy however has not beencontinuous and seldom have previous laws and codes been explicitly eliminatedor overridden by new ones. As a result, direct foreign investment plays avery minor role in Syria's economic development or in her balance of paymentsposition.

1/ Among the presently existing agreements is one with a Spanish company,which has resulted in the formation of the Euphrates Company forManufacture of Tractors (and various agricultural implements). Thisagreement is the only one as yet to be formally ratified by thelegislature and operational. Another agreement concluded is witha French firm to establish a company to produce telephone exchanges.

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CHAPTER 7

FOREIGN TRADE AND BALANCE OF PAYMENTS DATA BASE

7.01 Syrian Foreign trade data suffers from a number of deficieacies.The principal one is the use of inappropriate values based on the Directorateof Customs' dollar to Syrian pound exchange rate rather than the CentralBank's exchange rate. This results in inappropriate price indices (in someinstances e.g. both the price and quantity index for an S.I.T.C. categorydecline while the nominal value figures increase) (Tables SA 3D.3, SA 3D.4, SA3D.7 and SA 3D.8).

7.02 Similarly, the' balance of payments data suffer from the non-recordingor inappropriate estimation of components figures. For example, between 1974and 1976, the average level of total remittances from Syrian workers abroadwas estimated by IBRD, in conjunction with the Central Bank of Syria 1/, to beapproximately SL 200 million per year. In the same period, it was estimatedthat the number of Syrian workers abroad were anywhere between 200 to 400thousand (200 to 300 thousand in Lebanon prior to the Civil War and 100 to200 thousand in the Gulf area and the Arab Peninsula). These two estimateswould result in an implicit per worker remittance of between SL 500 to 1,000or 130 to 250 dollars per worker per annum. This figure is 7 to 14 percentof the annual per worker remittance of Turkish workers in Western Europe($18,000 - $19,000 per annum). As such it is a very low figure despite theshortcomings of such a comparison. Even if all private transfers and "other"service payments receipts were treated as remittances the figures would stillindicate very low estimates.

7.03 The assumption that the level of remittances are under-recorded isstrengthened by the fact that in 1975 and 1976 private imports were estimatedat SL 1.7 billion and SL 3.6 billion respectively (Table Al.2.4). On theother hand, earnings from private exports during those two years were only SL0.4 and SL 0.5 billion with remittances, transfers 2/ and private capitalinflows providing an additional SL 0.3 and SL 0.5 billion. As a result, SL1.0 billion and SL 2.6 billion of private imports were implicitly paid for byforeign exchange receipts from outside the private sector. This is unlikelyespecially given the estimate by the Director of the Foreign Exchange Budgetthat only one fifteenth to one tenth of the foreign exchange resources avail-able to the Director of the Foreign Exchange Budget for discretionary alloca-tion is allocated to the private sector for imports and the Funds available tothe Director of the Foreign Exchange Budget should include foreign exchangereceipts from the private sectors.

1/ The Central Bank does not estimate factor income transactions separatelyfrom non-factor service transactions.

2/ Transfers and private capital inflows should also account for the financ-ing of imports by the private sector against foreign exchange holdingsabroad.

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7.04 Another shortcoming of the accounts results from the fact that aportion of Syria's foreign debt (primarily to the Eastern bloc) is paid inthe form of commodities (despite the requirement in principle that capitalflows be transacted in convertible currencies). These exported commoditiesare recorded correctly in quantitative terms, however, the receipts do notshow up as foreign exchange earnings but rather as drawdowns of Central Bankliabilities. Off-setting the under-recording of the above transactions thereis an under-recording of disbursements in the capital accounts in the officialbalance of payments data which when adjusted (as in Table SA 3B.1) indicate alarge error and omissions figure which is consistently negative, indicatinglarge unrecorded imports.

7.05 More coordination is required between the data providing agencies,for example the Central Bank does not estimate Net Factor Income in the bal-ance of payment estimates as interest payments on external public borrowingare not separated from amortization payments in the data supplied by theMinistry of Finance's Public Debt Fund and workers' remittances are notseparated from transfers in the data supplied by the Commercial Bank of Syria.Similarly, the import figures provided by the General Directorate of Customsand used in the national accounts are not adjusted to correspond to theofficial foreign exchange rate, which is used in the balance of paymentsestimate of the Central Bank 1/. The arbitrary estimation of all thesefigures every year can only lead to information with limited utility foranalytic purposes.

1/ The difference in import magnitudes is explained by the use of differentForeign Exchange rates cited by the Central Bank and the Directorateof Customs. The Custom's figure is based on the exchange rate of$1 = SL 4.05 that was adopted in 1974 as an average exchange rate tooffset the sudden impact of devaluation on Customs revenue. It has beenused throughout the period since then. The Central Bank's figure isbased on the prevailing unified official market exchange rate. Hence thecustoms data is inappropriate for analyzing the current price magnitudeof import figures even though shares and nominal growth rates (except in1974) remain unaffected. The adjustment factor to be applied to customsdata on imports of goods only is (3.70/4.05) for 1975 and (3.90/4.05) for1976.

- 35 -ANNEX IAttachment 1-APage 1

ATTACHMENT 1-A

LIST OF PUBLIC ORGANIZATIONS ENGAGED IN EXTERNAL TRADE 1/

A-1: General Organizations Exclusively Engaged in External Trade:

1. "AFTOMACHINE" Foreign Trade Organization for Machinery and Equipiments

IMPORTS: All kinds of machines, vehicles, tires, spare parts.

2. "AFTOMETAL" Foreign Trade Organization for Metals and Building Materials

IMPORTS: Metal products, reinforced round bars, steel pipes and tubes,pipe fittings, steel sheets and plates, tin plates, merchantbars, special section steel, billets for rerolling of rein-forced round bars, shafting round steel bars, curtain rails,beam rails for glass sliding doors, curtain rails (U) beams,timber products, other metals and timber products as may berequired.

3. "GOTA" General Organization for Trade and Distribution

IMPORTS: Alcoholic drinks, cosmetics, perfumes, general merchandise,watches, typewriters, calculating machines, photographic andX-ray films, textiles, agricultural products, etc.

EXPORTS: Crude oils, brocades and artisan products, TV sets, drybatteries.

4. "PHARMEX" General Organization for the Trade of Pharmaceutical Products

IMPORTS: All pharmaceutical products, chemical products for laboratoryuses, baby food, medicated milk and different items.

5. "TAFCO" Foreign Trade Organization for Chemicals and Foodstuffs

IMPORTS: Fertilizers, tea, rice, sugar and raw sugar, salt, calned meatand fish, coffee, copra and coconut oil, potatoes and potatoesseeds, powder milk, paper and cardboard, calcium carbide,sodium perborate, earthenware, insecticides.

6. "AFTOTEX" Foreign Trade Organization for Textiles

IMPORTS: All kinds of yarns and textiles.

1/ Source: Damascus Chamber of Commerce Publication: "List of PublicSector Organizations" June, 1975.

- 36 - ANNEX 1

Attachment 1-APage 2

A-2: General Organizations Engaged in External Trade in Addition toto Domestic Manufacturing and/or Internal Trade:

1. "THAMECO" The Arab Medical Company

IMPORTS: Raw Materials, packaging materials.

EXPORTS: Pharmaceutical products.

(Produces: Pharmaceutical products (medicines) capsules-tablets,suppositories - ampoules, syrups, drops.)

2. Organisme General pour la Commercialisation et l'Industrialisationdes Cereales

IMPORTS: Wheat, barley.

EXPORTS: Wheat, barley and lentils.

(Produces: Flour)

3. General Organization of Chemical Industries

IMPORTS: Raw materials, machines and spare parts.

(Produces: Cement, detergents, soaps, nitrogen, fertilizers)

4. General Organization for Textile industries (UNITEXTIL)

IMPORTS: Polyester, acrylic, rayon staple, etc., textile chemicals andauxiliary materials, wool staples, various machinery for textileplants.

EXPORTS: Cotton yarn, fabrics, etc., hosiery, underwear, rayon blendedfabrics, brocades, etc.

(Produces: Cotton yarn, cotton fabric, grey and printed hosiery,underwear (men, ladies and children) rayon blended fabrics,woollen blended fabrics, machine made carpets, furnishingfabrics various textile articles.)

5. General Consumption Institution

IMPORTS: directly from abroad to meet consumption needs.

(Produces: Ready-made garments. Also, in charge of meat trade for theCity of Damascus.)

- 37 -

ANNEX 1Attachment I-APage 3

6. National Film Organization

IMPORTS: Feature films, unexposed films, cinema equipment, film industryaccessories.

(Produces: Feature films, documentary films, technical services incinematic fields.)

7, Organisation General des Industries Alimentaires

IMPORTS: Necessary raw materials for food industry such as: Causgticsoda, milk powder, soap stock, activated carbon, raw sugar,plants, machinery and accessories thereof.

EXPORTS: Dehydrated onion, ground nuts, linters, biscuits andchocolates, beverages, conserves, molasses and alcohol.

(Produces: Foodstuffs, such as: cotton seed oil, chocolates, conserves,biscuits, dehydrated onion, soap, ground nuts, beverages,sugar.)

8. General Organization of Tobacco

IMPORTS: Virginian and burley tobacco leaf, basic products in thecigarette manufacture (filters, aluminum foils, cellophane,aquafuge, craft paper, casing products, etc.)

EXPORTS: Tobacco leaf, oriental, semi-oriental and burley tobacco,cigarettes of different blends.

(Produces: Tobacco leaf, oriental, semi-oriental and burley tobaccoand cigarettes of different blends.)

9. The Organization for the Defence Factories

IWPORTS: Detergents chemical products, industrial machinery, rawmaterials.

EXPORTS: Water and electrical metres and gauges, transformers, drybatteries, gas cylinders.

(Produces: Water and electrical metres and gauges, transformers, drybatteries, gas cylinders.)

10. 41 Ahlia Company for Rubber Products

IMPORTS: Natural rubber, synthetic rubber, plastic granules (P.R.C.)latex, accelerator, chemicals, charge chemicals.

(Produces: Rubber shoes, plastic shoes, boots, slippers, heels andsoles, ordinary bicycle tires, sponge mattresses, neoliteplates).

- 38 -

ANNEX 1Attachment 1-APage 4

11. Arabian Company for the Manufacture of Soap and Detergent

IMPORTS: Raw materials necessary for its processing activities.

EXPORTS: Detergent powders (SAR), cleaning powder (SAF) and bleachingpowders (SULTAN).

(Produces: Detergent powders (SAR), cleaning powder (SAF) and bleachingpowders (SULTAN))

12. Arab Oil and Soap Industry Company

IMPORTS: Oil for soap, palm, copra and coconut oil, together with otherchemicals and raw materials necessary for the soap and vetetableoil production.

EXPORTS: Cotton cake, cotton linter and variety of soaps.

(Produces: Cotton seed oil, cotton cake, cotton linter, toilet soaps andwashing powder soap for washing, soap powder and ghee.)

13. Converting Industries Corporation

IMPORTS: Hardrolls, wood pulp, chemicals and other raw and semi-finishedmaterials for use in its manufacturing operations.

EXPORTS: (HITEX) facial tissues, (DANEX) feminine sanitary napkins, and(TWENTY) nice toilet tissues.

(Produces: (HITEX) facial tissues, (DAMEX) feminine sanitary napkins, and(TWENTY) nice toilet tissues.)

14. General Company for Phosphate and Minerals

IMPORTS: Machinery and equipment laminated bags and other packagingmaterial s.

EXPORTS: Mineral phosphates and salts (table and industrial).

(Produces: Mineral phosphates and salts (table and industrial).)

15. The Company for Metal Structures and Mechanical Industries

IMPORTS: Equipment and machinery necessary for its op.erations.

(Produces: Tanks, trailers, boilers, hangars and all metal structures.)

16. Paints and Chemical Industries

IMPORTS: All necessary materials for paint production.

(Produces: All kinds of paints.)

- 39 -


17. Societe Nationale pour la Fabrication du Ciment et des Materiaux deConstructiot.

IMPORTS: The necessary equipments for its cement factories, also rawmaterials, asbestos fibers for processing.

EXPORTS: Asbestos cement sheets.

(Produces: Cement, building materials asbestos, sheets and pipes.)

18. The Industrial Company for the Manufacture of Crimping and Stockings

EXPORTS: All kinds of men's and children's socks and women's stockings.

(Produces: Texturized filament, nylon fibers, polyester yarns, men's, andchildren's socks and women's stockings)

19. Syrian Arab Company for Dairy Products

IMPORTS: Butter oil, milk powder, sterilized milk bottles, machinery.

(Produces: Sterilized milk, ghees, butter, cream, condensed yogurt,pasteurized milk.)

20. Syrian Glass and Porcelain Industries Corporation

EXPORTS: Window glass, glass figurines, bottles of all shapes anddimensions and thickness including candy jars, containers,milk bottles, etc., tumblers, dishes, bowls, drinkingcontainers, porcelain dinnerware.

(Produces: Window glass, glass figurines, bottles of all shapes anddimensions and thickness including candy jars, containers,milk bottles, etc., tumblers, dishes, bowls, drinkingcontainers, porcelain dinnerware.)

21. "KHOMASSIEH" United Commercial Industrial General Corporation

IMPORTS: Rayon, tops, dyes, chemicals and auxiliary products.

EXPORTS: Cotton wool and synthetic yarns, cotton goods, bleached anddyed woollen carpets, medical bandages and sterilized cotton.

(Produces: Cotton wool and synthetic yarns, cotton goods, bleached anddyed woollen carpets, medical bandages and.sterilized cotton.)

- 40 -


22. "AL DEBS" United Arab Industrial Corporation

IMPORTS: Grey clothing material, dyestuffs, chemicals, auxiliaryproducts, textile machinery, spare parts and accessories.

EXPORTS: Printed goods (cotton and mixtures with polyester), yarns.

(Produces: Textile goods (spinning, weaving and dyeing).)

23. BARADA Company for Industrial Minerals

IMPORTS: Raw materials.

(Produces: Household items, stoves, refrigerators.)

24. The United Arab Match and Shipboard Company

(Produces: All kinds of matches and wood products, marketing isdelegated to the Consumer Cooperative and Intrometal.)

25. General Company for Building

IMPORTS: Lubricants, aviation gasoline and aviation kerosene.

(Produces: Petroleum products, lubricants, aviation gasoline andaviation kerosene.)

26. Syrian Petroleum Company

EXPORTS: Sulphur coke and crude oil.

(Operates: Oil fields for the Homs Refinery.)

27. Union of Engineering Industries

IMPORTS: Raw materials entering in the production of most of the itemsmentioned below.

EXPORTS: Walnut, trunks, paints, glass, pickled skins, refrigerators,pressure cookers, chipboard and gas stoves.)

(Produces: Paints, glass, porcelain, plastic articles, rubber andplastic shoes, asbestos, cement, detergents, refrigerators,cables, cutteries, gas stoves, plywood, medicines, tannedleather, TV sets, telephones, batteries, matches, chipboards,gas stoves.)

-41- ANNEX 1Attachment 1-APage 7

A-3: Other Organizations Directly Involved in External Trade:

1. Damascus International Fair

Organizes the annual fair in Damascus and is responsible for partici-

pating in foreign fairs and exhibitions.

2. Organisation General des Zones Franches

Responsible for all the free trade zone areas in the country.

3. Central Bank of Syria

4. Commercial Bank of Syria

General banking operations and foreign currency exchange.

5. Syrian Insurance Company

Activity: Insurance and reinsurance commercial and otherwise.

A-4: Public Sector Organizations Indirectly Involved in External Trade:

1. General Organization for Cement

Supervises and runs all cement factories in the country.

2. General Organization for Fodder

Responsible for the production, procurement and distribution of animalfodder in the private, public and cooperative sectors.

3. Syrian General Authority for Maritime Transport

The authority concerns itself with maritime transportation on behalfof the various ministries and departments of the public sector, and offersits services to private companies and individuals as well.

4. Administration General du Chemin de fer du Hedjaz

The Administration is responsible for running the Syrian railway system.It is also in charge of the railways investment program.

5. General Organization for Poultry

Under establishment: Poultry projects already under way.

- 42 -

ANNEX IAttachment 1-APage 8

6. Arab Advertising Organization

Undertakes mass media advertising, press, television, cinemas, outdoor,etc.

7. General Institute for Engineering and Designs

8. General Authority for Post

9. Karnak Tourism and Transport Company, S.A.R.

Tourism and intercity passenger transportation.

10. The Company for Preserved Food and Modern Agricultural Industries

Processes preserved fruit and vegetables.

11. Adra Sugar Company

Sugar processing and refining.

12. Arab Tanning Corporation

Skin tanning and leather distribution.

13. General Shoes Company

Marketing shoes.

14. General Company for Building

Contractors specializing in prefabricated houses and buildings.

ANNEX I- 43 - Attachment 1-B

Page 1

ATTACHMENT 1-B

LIST OF SELECTED GOODS SUBJECT TO VARIOUS CONTROLS

List of Goods whose Importation into Syrian Arab Republic is Prohibited: 1/

Tariff Item No. Kinds of Goods

1/2 & 3 Bovine live animals (from Jordan only).

1/4 Goats except live male foreign goats.

1/5 Poultry, except live chicks not more than one week old withthe approval of the Ministry of Agriculture and AgriculturalReform or its departments.

1/6 Camels, except from Turkey, and live pigeons and animalsexcept for parrots.

2/1 Meat, fresh, chilled, or frozen, except for fresh nmeatimported from Turkey.

2/2 Slaughtered poultry, and its edible offals, except liver,and limbs whether fresh, chilled or frozen.

2/3 Poultry liver whether fresh, chilled, frozen or kept insalted water.

2/4 Slaughtered hunt.

4/1 Fresh dairy and cream not concentrated nor sweetenesd.

4/2 Powdered milk.

4/3 Butter and Ghee (Samne).

4/6 Natural honey.

5/10 Ivory, raw or simply prepared (not cut in special shapes)also its pieces, powder, and remnants.

5/11 Tortoise tail, raw or simply prepared (not cut in specialshapes), its nails, tails, and nail remnants.

5/12 Coral, and its similarity except sea shells, raw cr simplyprepared but not completely done, other kinds of shells,raw or simply prepared, not cut in special shapes, itspowder and remnants.

1/ Damascus Chamber of Commerce, Research Dept., August 1975.

- 44 -

ANNEX 1Attachment l-BPage 2


5/13 Natural sponge.

5/15 Products of animal origin, and non edible dead chase.

6/3 Cut flowers and flower buds for decoration, whether dried,whitened, dyed, watered or processed in another way exceptfor those imported from the Arab Economic Community.

6/4 Leaved branches, leaves, branches and other parts of plants,green moss and herbs for decoration, whether wetted, dried,whitened, dyed, watered or processed in another way, exceptfor those imported from the Arab Economic Community.

7/1 Onion and onion transplant.

7/4 Edible vegetables and plants, dried or dewatered, whetherin one piece, cut, sliced, crushed or powdered and notprocessed in another way.

7/5 Dried shelled legumes, whole seeds, peeled, broken, split,or crushed except for: 1 - Seeds prepared for sowing.

2 - Bean seeds.

8/2 Fresh or dried citrus fruit except:

1 - Quantities imported from Lebanon or Egypt.2 - Oranges imported from Turkey.3 - Oranges of Jordanian origin provided accompanied with

a certificate of origin issued by the competentJordanian authorities assuring Jordanian origin.

8/4 Fresh or dried grapes.

8/5 Peeled fruits, dried or fresh, with or without peel.

9/9 Seeds of aniseed, fennel, coriander, cumin, prickly cedar,saffron, condiment and other spices except those financedby Syrian immigrants.

10/1 Wheat and mixed wheat, except for wheat prepared for sowingprovided the approval of the Ministry of Agriculture andagricultural reform is obtained and quantities specifiedby the ministry.

10/2 Rye (Jaodar).

10/3 Barley except when financed by Syrian immigrants.

-45- ANNEX IAttachment 1-BPage 3


10/4 Oats.

10/5 Maize except quantities which are prepared for sowing asestimated by Ministry of Agriculture and agriculturalreform.

10/7 Black wheat, millet and other cereals.

U/ia Wheat flour,

11/2 Semolina, white flour, shelled cereals except for rice.

11/8 Cereals and roots starch (Eniolin) except that processedfor industry and maize starch.

12/1 Peanut, cotton seed except for seeds processed for theimprovement of production.

12/4 Sugarbeet.

12/7 Liquorice root.

12/8 Lowest beans (Carob) fresh or dehydrated, whole, broken orground, and kernels of fruits and plants originally used ashuman food, except those processed for sowing.

12j9 Cereal straw and husks, raw or chapped.

12/10 Beet, turnip, roots, grass, and other plants used as fodder.

13/3 Opium and hashish.

15/2 Animal fats and ghees of various kinds except those importedby owners of non food stuff factories.

15/7 Cotton seed oil, sesame oil, pistachio oil, linseed oil,copra oil, palm oil, maize oil, castor oil, turnip oil andturpentine oil.

15/13 Margarine, imitation lard and other types of edib:Le processedfats.

15/17 Remnants of fatty materials or of natural or animal wax.

16/1 Large and fine sausages and substitutes of meat or offalsand limbs or blood except for those imported from othercountries beside Lebanon, Iraq,' Egypt, Jordan, Saudi Arabia,Kuwait and Sudan.

- 46 - ANNEX 1

Attachment 1-BPage 4


17/3 Molasses even though decolored.

17/4 Sugar products with no cocoa.

18/1 Cocoa shells and pieces even though roasted, except thoseimported by proprietors of factories, whether public orprivate sector, within their needs according to the esti-mates of the Ministry of Industry and its authorizeddepartments.

18/6 Chocolate and other food preparations containing cocoa.

19/3 Edible pastes (macaroni and noodles).

19/5 Products obtained by the swelling or roasting of cereals.

19/7 Bakery products e.g. bread etc., with no additions ofsugar, natural honey, eggs, fats, cheese or fruits.

19/8 Luxury bakery products, e.g. biscuits, cakes, even thoughcontaining cocoa.

21/2 Essences of tea, coffee or mate, and products originatedfor same, except for essences of coffee financed andimported by Syrian immigrants.

22/2 Lemonades, flavored water and other non alcoholic drinksexcept fruit or vegetable juice.

22/3 Beer.

22/9 Alcoholic drinks whose rate of alcohol is less than 80percent flavored and perfumed, except imports of whiskyby GOTA.

22/10 Vinegar and its substitute.

23/2 Barley and other remnants of milling or shifting of cerealsor vetches.

23/3 Beet pulp, bagasse and other wastes of the sugar, beer,distilling, starch and similar industries except thoseimported from:

1 - Arab Economic Community.2 - Turkey after approval of The Ministry of Agriculture.3 - Financed by Syrian immigrants.

23/5 Wine lees and argol.

- 47 - ANNEX 1Attachment 1-BPage 5


23/6 Forage except for cotton seed husk.

25/10 Natural calcium phosphate, natural gypsum aluminum phosphates,and phosphatic chalk.

25/20 Medical gypsum.

25/22 Gypsum excluding calcium oxide and hydroxide, except forimports financed by Syrian immigrants.

27/15 Natural asphalt and bitumen etc.

27/16 Bituminous mixtures for roads.

28/4 Liquid or compressed oxygen.

30/3 Medicaments with pirasine as an active element in pills.Medicaments with bismot soxinate in suppositories.

32/9 Varnishes, paints and colors except for leather and moldsvarnishes, insulating varnishes, water pigments etc.

34/1 Soap, toilet soap except shaving soap, soft soap, groundsoap or non perfumed liquid soap.

34/6 Wax candles and similar products.

36/6 Matches.

38/18 Liquidizers and dryers.

41/2 Processed leather except the needs of the Organization ofDefense factories.

42/1 Saddles and equipment for animals of all kinds.

42/4 Goods of natural or imitated leather for art uses exceptwhen financed by Syrian immigrants.

42/5 Leather straps and strops.

43/1 Skins undressed.

43/2 Processed or tanned furs skins.

43/3 Manufactured fur skins.

43/4 Imitation fur skins and their products.

44/2 Charcoal.

- 48 - ANNEX 1Attachment 1-BPage 6


44/11 Wooden sticks, wood prepared for matches, wooden nailsfor shoes.

44/12 Hay or wooden wool and saw dust.

44/16 Wooden framed plates.

44/21 Boxes, chests and wooden cylinders.

44/23 Wooden products for construction including floor tiles.

47/2 Paper and cardboard waste, including newspapers andperiodicals waste except for unprinted wastes.

48/16 Boxes, sacks, and other paper or card board containers.

48/18 Registers, exercise books, note books, diaries, agendas,files, book covers, stationary, albums, except for largefiles, files of hard cover.

49/5 Maps similar to those produced by the department ofMilitary Land Survey.

50/2 Pure silk, not manufactured.

50/3 Silk waste, spun and waste, spun and remnants of thosewastes.

50/1-50/6 Silk cocoons and natural silk yarn except for spun yarnfrom silk.

52/2 Fabrics of metal yarn and fabrics of metalised yarn as initem 52/1 used for making clothes, or for upholstery orsimilar uses except for:

1 - Fabrics made for neck ties.2 - Fabrics made for umbrellas.

55/1 Raw cotton not combed nor carded.

55/2 Cotton seed lint.

55/3 Cotton waste not combed nor carded.

55/4 Cotton combed or carded.

-49 - ANNEX 1IAttachment 1-BPage 7


56/7 Woven fabrics of man made fibres except:

1 - Imports of UNITEX or any authorized company affiliatedto it,

2 - Requirements of neckties and umbrella factories.3 - Wooven fabrics of two or more stratas of rubber prepared

to be used in the shoe industry.

57/i Raw hemp, macerated, spun, combed or treated in any othermethod-

58/1 Carpets with knotted or rolled surface.

58/3 Hand made tapestries i.e. Flanders, Aubusson, etc. anddecorated knitted tapestries except for those embroideredat sides with cotton threads provided the rate of embroideryis equal and less than 20% of the total public weight.

58/5 Ribbons, and ribbons with no woof, made of thread orparallel fibres, with a width of 25 cm. and more.

59/4 Cordage and ropes and wrapping threads, braided or nonbraided, except for:

1 - Jute thread.2 - Cords of thin threads prepared for use in olive oil

industry.3 - Linen threads prepared for use in the nets of jacquard

machinery.4 - Linen threads twisted, polished and dyed.5 - Sizal threads.

64/1 Shoes and similar products and parts thereof, except for:

1 - Rubber laces, prepared for slippers.

2 - Plastic shoe imported by UNICHEM, or any authorizedcompany affiliated to it.

68/1 Paving and flag stones of natural stone except for slatestone.

68/4 Grinding stones except for those used in grinding olivesand made of natural stone.

69/4 Building bricks including paving blocks and similar kinds.

69/5 Roofing tiles, decorative tiles and other ceramic con-structional ware.

- 50 -ANNEX 1Attachment l-BPage 8


69/13 Statues, decorative materials for personal use except forporcelain electrical lamps.

70/4 Unworked glass prepared for industrial constructions whethercasted, plated or sheeted except for colored and wiredglass.

70/5 Unworked glass whether rolled or blown.

70/6 Cast, rolled, sheeted or blown glass except for coloredand polished glass sheets.

70/7 Cast, rolled, sheeted or blown glass (including wiredand flashed) even though its surface is polished or groundand cut in non square or rectangular shapes or lented orfurther worked, and vacuum glass of several stratas andcollected glass.

70/10 Glass bottles and glass tableware.

70/14 Glass complete lusters glass globes worked and preparedfor the lusters industry even though not completed, andunworked glass globes, lamps glass except for kerosenelamp glass.

70/16 Round or square transparent glass for paving except hollowtransparent glass, tiles, and glass sheets and squaresprepared for covering walls.

73/21 Iron structures for window frames, shutters, doors, bars,fences and similar products for use in houses and gardensand steel hared angles.

73/29 Chains and parts thereof, of iron or steel prepared forcranes of the following sizes:

a - Chains width of 3-12 mm.b - Chains width of 0.25-2.5 mm.c - Steel chains with rings of 2-5 mms.d - Chains with rings of 3-15 mms, except for all ring

types of chains used for agricultural or industrialmachinery or vehicles.

73/36 Domestic stoves, cookers, ovens, (including those usedfor central heating), electric heaters, and its parts andaccessories, made of cast iron or iron or steel, exceptfor:

1 - Separate parts of stoves, and cookers.

- 51 -

ANNEX 1Attachment 1-BPage 9


2 - Parts of ovens operating by gas, used in bakeriesand grills.

3 - Separate parts for stoves not made of iron sheets.4 - Iron cast heads of gas stoves.

73/38 Pressure cookers made of stainless steel or enameled.

74110 Cables of copper even though braided, except for thoseinsulated to be used for electrical purposes (to bemaaufactured locally).

74/18 Brass household utensils, kitchen ware, sanitary ware andparts except:

1 - Brass showers bowls.2 - Brass drinking bowls, scent bottles, and kohl bottles.3 - Those imported in compliance with the exceptional

imports rules.

85/4 Electric accumulator cases.

85/15 Wireless receivers of very high frequency.

85/19 Electrical plugs unequipped with special holes for con-nection with ground cables and normal ballast equipmentexcept for those operating on tension of 110 or 220 voltsequipped with a condenser.

90/26 Hydraulic and volume water meters of 1/2 inch and electricmonophase meters.

94/1 Chairs and couches, even though transferable into beds, andparts there of, except for wooden chairs prepared for manu-facturing straight, moving and archy chairs.

94/4 Mattress supports and, parts of beds containing springs orstuffed to be used as mattresses, bed covers, pillows etc.including those manufactured of sponge or foam or any othersimilar material, whether covered or not.

96/1 Brooms of sticks gathered even with a stick handle.

96/6 Hand sieves and hand riddles.

Of VariousTariff Items New and used military clothes.

- 52 -

ANNEX 1Attachment I-BPage 10


Of Various Plastic products manufactured locally according to the

Tariff Items instructions of the industrial departments except forbrushes of sorters, plastic tractors, laundry baskets,

porters of detergents discs, and equipment prepared for

threading needles.

- 53 - ANNEX 1Attachment 1-B-2Page 11

ATTACHMENT 1-B-2

LIST OF GOODS WHOSE IMRORTATION IS CONFINED ORRESTRICTED TO THE ESTABLISHMENTS OF THE PUBLIC SECTOR 1/

Tariff ItemNo. Kinds of Goods Status Name of Establishment

4/2 Dried powdered milk of Confined to 2/ Nationalized Pasteurizedcomplete fat, not pre- Dairy Products Co.

pared as infant food

4/2 Milk as infant food Pharmex

4/3 Butter " Union of Food Industries

5/15 Silkworm seeds Restricted 3/ Ministry of Agricultureand Agricultural Reform

7/1 Potatoes Confined to Tafco

9/1 Coffee Restricted to Tafco

9/2 Tea Tafco

10/6 Rice Tafco

10/7 Millet (dariseed) Confined to Organisme General desCereales et des Mino-teries

12/1 Sunflower seedsSyrian Industrial Vege-table Oils Co.

12/1 Copra Restricted to Tafco

12/1 Cotton seeds if Co-operation Agricul-tural Bank

15/2 Animal and vegetable Confined to The General Institutionfats and oils hydro- for Consumption

genated partly orcompletely

1/ Damascus Chamber of Commerce, Research Dept., July 1975.

2/ Status by a ministerial decision.

3/ Status by a Law.

-54 - ANNEX IAttachment 1-B-2Page 12


15/13 Margarine Confined to The General Institutionfor Consumption

16/1 Thick or thin sausages " Tafco

16/2 Canned preparations and Restricted to Tafcoother commodities ofmeat

16/3 Meat and juices extracts Confined to Tafco

16/4 Canned prepared and Restricted Tafcoother commodities offish

16/5 Canned preparations of/ Confined to Tafcoand crustaceans andmolluces

17/1 Brown sugar Restricted to Tafco

17/1 Refined sugar and Ministry of Financesugar-candies

17/2/A Glucose Confined to Tafco

17/4 Chewing gum Union of Food Industries

19/2/B Preparations of infant Restricted to Pharmexfood, of diet food whichis based on flour orstarch

20/1 Pickled edible vege- Confined to Pharmextables and plants

20/2 Non pickled edible vege- " Pharmextables and plants

20/5 Jams, marmalades etc, " Pharmexwith or without sugar

20/6 Fruits preserved in other Pharmexmethods including thosesugared and alcoholed

20/7 Fruits and vegetables non Pharmexfermented without addingalcohol, including those

sugared.

-55- ANNEXIAttachment 1-B-2Page 13


21/6 Natural and non natural Confined to Union of Food Industriesyeast

21/7 Sacharin " Pharmex

22/5 Arak and Wine " Gota

22/9 Whisky " Gota

24/1 Raw or unmanufactured Restricted to Tafcotobacco and tobaccorefuse

24/2 Manufactured tobacco, Tafcotobacco essence andextracts

25/1 Table salt Tafco

25/23 Portland cement Tafco

25/23 White cement Confined to Aftometal

27/9 Crude Oil General Petroleum Co.

27/10 Non-crude oil General Petroleum Co.

28/38 Pyro-sulphate Tafco

28/42 Pyro-carbonate " Tafco

28/46 Barate " Tafco

28/56 Calcium carbide " Tafco

30/1 Glands and other organs Restricted to Pharmex

30/2 Immunized blood vac- " Pharmexcines, microbe vaccines,etc., and similarproducts

30/3 Human and veterinary Pharmexmedicines

30/4 Wadding gauze, bandages, " Pharmexand similar articles,prepared for retail

- 56 - ANNEX 1.

Attachment 1-B-2Page 14


31/2 Mineral or Chemical Restricted to Tafcoazotic fertilizers

31/3 Mineral or chemical Tafcophosphates

31/4 Mineral or chemical Tafcopotassic fertilizers

31/5 Other fertilizers Tafcoprepared as pills ordiscs or in similarshapes and packed innot less than 10 kgsa package

33/2 Ghee essence Confined to Union of FloodIndustries

34/1 Soap and organic Union of Engineeringdetergents of Iraqi Chemical Industriesorigin

34/2 Chemical detergents Tafco (Except for theand scouring powder imports of factories)

34/3 Lubricating preparations General Petroleum Co.

34/5 Scouring pastes and Tafco (Except for thepowders imports of factories)

Chapter 36 Fireworks and explosives Gota Organization

37/7 Movie films Restricted to National Film Organiza-tion

40/11 Rubber tubes and flapsetc. Aftomachine

41/1 Raw hides and skins Tafco

44/3 Wood " Aftometal

44/4 Squared wood "

44/5 Sawn wood it

44/15 Plated wood "

-57 - ANNEX IAttachment 1-B-2Page 15


44/18 Artificial or recon- Restricted to Aftometalditioned wood

48/1 Manufactured cardboard Tafco

48/5 Paper Confined to

48/6 Paper and cardboardruled or lined

4819 Mazonite "t

48/13 Duplicating paper Restricted to

48/15 Cut paper and cardboard " "

51/1 Synthetic yarns not for Aftotexretail

51/4 Textiles of synthetic Confined to Union of Textileyarn Industries

53/3 Waste wool Confined to Aftotex

53/5 Carded or combed soft Restricted towool

53/6 Carded woollen yarns

53/7 Combed woollen yarns

53/8-A Nap combed yarns Confined to

53/9-A/I Nap coarse yarns if

53/9-B/I Hair yarns i t

55/5/G Cotton yarns

55/7 Knitting cotton textile Union of TextileIndustries

55/8 Cotton terry towelling "ttextile

56/1 Short synthetic fibers Restricted to Aftotexuncarded and uncombed

- 58 -

ANNEX 1Attachment 1-B-2Page 16


56/5 Yarns of short fibers Restricted to Aftometal

57/10 Woven fabrics of jute " "

58/2 Carpets except for rugs Confined to Automatic CarpetCorporation

58/4 Velvet and pile fabrics Union of TextileIndustries

62/2 Bed and table covers " from Arab Republic of Egypt

62/3 Jute bags Organisme Generaldes Cereales et desMinoteries

63/2 Rags and remmants of Aftotexropes and similar products

64/1 Plastic shoes Union of Engineeringand Chemical Industries

68/12 Asbestos water pipes of Aftometal50 mm diameter

68/12 Asbestos, sheets, elbows Societe National pour lawaterpipes of diameter Fabrication des Cimentother than 50 mm et des Materiaux de Con-

struction

69/11 Chinawares Tafco

69/12 Other porcelain wares

73/9 Iron and steel broad Restricted to Aftometalsheets

73/10 Iron and steelbars " "

73/11 Iron and steel anglesof special forms

73/13 Iron and steel sheets

73/17 Iron pipes or tubes ofcast iron

- 59 -

ANNEX IAttachment 1-B-2Page 17


73/18 Iron or steel tubes and Restricted to Aftometalpipes

73/20 Iron and steel tube andpipe fittings

74/3 Copper bars, rods,angles, and wires

84/25 Harvesters and threshingmachines

85/1,15, Television sets and parts Syrian Arab Electronics21 Corporation

85/4 Batteries Confined to Syrian BatteriesCorporation in Aleppo

87/1 Tractors Restriced to Aftomachine

87/2 Motor cars

87/4 Cars and tractorschassis

87/9 Motor cycles Confined to

Chapter 93 Arms and ammunition Gota

- 60 - ANNEX 1Attachment 1-B-3Page 18

ATTACHMENT 1-B-3

LIST OF IMPORTS COVERED BYTHE EXTRAORDINARY PERMITS SYSTEM 1/, 2/, 3/

1 - All firms and individuals whether traders i.e. retailers and/or whole-salers, or manufacturers and/or processers are allowed to import up toSL 24,000 annually for the specific use of their respective trades andbusinesses, the under listed items, according to the Extraordinary ImportPermits regulations, exempting them from the pre-import Licence System.

2 - Unlike goods included in the Foreign Trade and Exchange Plan, all pay-ments for goods admitted under the Extraordinary Import Permits arrange-ments should be made in free exchange/currency, and may not use anycredit facilities.

Tariff No. Item

6/33 Cosmetics i.e. creams, liquids and perfumes etc. includinggoods itemized under tariff No. 33/6/S originating and importedfrom Lebanon, provided they are duly checked and verified bythe Syrian customs.

34/5/A Shoe polishes.

34/6 Candles and the like.

39/7/H Plastic granules.

42/2 Travelling gear-wallets.Suitcases of all kinds etc.

42/3 Ready-made clothes together with leather and imitation leatheraccessories etc.

42/5 Other products of leather, reconditioned leather and imitationleather.

43/1 to 43/4 Natural furs, imitation furs and products thereof.

44/21 Chests, cages, wooden barrels etc.

44/24/B Wooden household utensils etc.

44/25 Tools, tool handles and boxes, brooms shoelasts.

1/ Damascus Chamber of Commerce, Research Dept., Jan. 1977.

2/ Foreign Trade Rules and Regulations Digest 1972, Table No. 4, PP. 237-247.

3/ Decree No. 267, 5/7/71.

-61- ANNEX IAttachment l-B-3Page 19

Tariff No. Item

44/28 Other wooden products.

50/9-50/10 All silk fabrics-excluding upholstering fabrics (valued at noless than S.P. 5 per Sq. m. Cif) are exempted from all importsregulations and need not have import permits by the TextileIndustries Union as per article 51/4.

NOTICE: THE FOLLOWING ITEMS HAVE BEEN ADDED BY MINISTERIAL DIRECTIVENO: 9/4/7665 DATED ON 1/7/1973; VIZ. 53/1l/All, 53/11/G/l,53/12/A, 53/i3/A, 55/7/A, 55/9/Z.

53/11 Woollen and angora clothes are exempted from all import restric-tions and need not have their import permits, referred to theTextile Industries Union, with the proviso that woollen clothesfor use in menswear are 140 cm, or more in width or value atno less than SL 18 per metre or its equivalent in foreigncurrency.

53/11/A/I "Prato" fabrics containing synthetic materials or othermixtures exceeding 20% of its weight.

53/11/G/l All kinds of cloth: remnants not exceeding one metre in lengthand containing synthetic materials and mixtures in excess of20% of its weight.

53/12,53/13 All silk, cotton, wool, linen etc. fabrics and embroideries58/3, 58/10 of 25 cm in width or more.

53/12/A Coarse wool "Tella" materials.

53/13/A Hair "Tella" materials.

55/7/1 All cotton textiles (No. 40) exempted from all import regulationsand need not have import permits by the Textile Industries Unionas per article 51/4.

55/7/A All cotton textiles containing synthetic fibres or mixtures inexcess of 21% of its weight.

55/8,55/9 All cotton textiles (No. 40) or more including fine cottontextiles are exempted from any import restrictions and neednot have import permits by the Textile Industries Union as perarticle 51/4.

55/91Z All textiles containing synthetic fibres or mixtures in excessof 20% of their weight.

- 62 - ANNEX 1

Attachment 1-B-3Page 20

Tariff No. Item

56/7 All silk fabrics (mixtures of silk, polyester and linen) not lessthan SL 13 per metre or its equivalent in foreign currency Cifand of any width are exempted from all import regulations andneed not have import permits by the Textile Industries Union asper article 51/4.

58/4/A, Velvet materials made of cotton, silk or any other kind of58/4/B yarns are exempted from all import regulations and need not have58/4/C, import permits by the Textile Industries Union as per article58/4/H 51/4.

58/5 Ribbons, etc. made of yarns or fibres.

58/7 Yarns used in velvet braids, etc.

58/8 Tulle (Filet), etc.

58/9 Fashion Tulle (Filet), etc.

59/1 Wadding substitutes, down of cotton textile origin.

59/5/B Nets made of the materials mentioned in No. 59/4 even thoughin finished state.

60/1-60/5 Crochet or needle products made of natural silk cotton, wooletc. excluding all kinds of stockings as per tariff No.60/4/b.

61/1-61/461/8-61/10- Human hair apparel, etc.

11

61/5 Handkerchiefs.

61/6 Scarfs, veils, head and neck covers, etc.

61/7 Neckties.

61/9 Brassieres, corsets.

62/1-62/2 Bed covers, blankets, bed sheets, etc.

63/1 Woollen second-hand garments.

65/1-65/2 Hats, etc.

66/1 Umbrellas of all kinds.

66/2 Walking-sticks and the like..

-63-- ANNEX 1Attachment 1-B-3Page 21

Tariff No. Item

67/1 Poultry skins, and poultry parts.

67/2 Artificial flowers, leaves, fruits and parts thereof.

67/3 Human-hair.

67/4 Artificial hair.

68/2/B/I Statues and other objects for interior decoration or68/10/A personal use.

68/7/B Stones and other metal products.68/16

69/13 China products as apparel accessory.

69/14/B Other china products.

70/9 Mirrors framed or otherwise.

70/13 Heatresisting and unbreakable glass products for kitchen use.

70/19 Pearls and precious stones etc.

71/13 Jewelry diamonds and parts thereof.

71/13-71/14 Goldsmitheries.

71/16 Pins and drawing paper.

73/34 Hair pins.

73/39 Steel wool for scrubbing and cleaning.

73/40 Other iron products.

74/16 Copper taps.

74/18 Copper tools.

74/19/A Copper boxes for personal use.

75/6/B Nickel boxes for personal use.

76/15 Aluminum tools.

764/169 Copper and aluminium wire for chandeliers assembling.

- 64 - ANNEX IAttachment 1-B-3Page 22

Tariff No. Item

82/9/A Ivory and mother of pearl decorated knives.

82/14/A Ivory and mother of pearl decorated cutlery.

83/6 Statues and other objects of ordinary metals for interiordecoration,

83/7 Lighting gadgets (metal).

83/9 Clips, etc.,

83/13 Bottle stoppers (metal)

85/10 Portable lamps, etc.

87/10 Bicycles.

90/1 Optical lenses.

90/3 Spectacle frames.

90/4 Sun glasses.

90/13 Magnifying glasses.

90/14/B Compasses.

90/23 Barometers, etc.

91/4 Alarm clocks, watches, etc.

92/ll Tape recorders and the like.

96/5 Cosmetics pastes creams powders, etc.

97 Toys and games.

98/1 Buttons excluding army buttons.

98/3 Pens and pen holders, etc.

98/5 Pencils, etc.

98/12/A Combs, etc.

98/25/B Heat insulating equipment (of leather) and parts thereof.

-65 - ANNEX IAttachment l-B-4Page 23

ATTACHMENT 1-B-4

LIST OF GOODS WHOSE EXPORTATION FROMTHE SYRIAN ARAB REPUBLIC IS PROHIBITED 1/


1/1 Thoroughbred horses whose age is more than four years andmares of whatever age.

1/2 Bovine cattle (including Buffaloes).

1/4 Lamb, ewes, rams of present season, rams "Doughli" whichdid not pay the enumeration tax and she-goat of both races,"Mir'ez & Damascene".

1/5 All kinds of pigeons except for the blue ones.

1/6 She-camels and live chase.

2/1 Any quantity of meat, guts and limbs of horses, bovine,buffaloes,sheep and goats whether fresh, chilled or frozen,even though accompanied with passengers.

2/2 Slaughtered poultry and its edible offals and limbs whetherfresh, chilled or frozen.

2/3 Poultry liver whether fresh, chilled, frozen or kept insalted water.

2/4 Edible non-live chase.

2/5 Poultry non squeezed nor diluted fats whether fresh, chilled,frozen, salted, kept in salted water, dried or smoked.

2/6 Edible guts and limbs of all kinds, salted, kept in saltedwater, dried or smoked.

4/1 Fresh dairy and cream not concentrated nor sweetened.

4/2 Any quantity of dairy and cream, whether conserved, con-centrated, dried, or sweetened, even though accompanied withpassengers.

4/3 Any quantity of butter, ghee (samne), even though accom-panied with passengers.

4/4 Any quantity of all kinds of cheese, no matter what named,even though accompanied with passengers.

j v 0 Uf1eLce, Re-seLch Dept., July 1975.

-66 - ANNEX IAttachment l-B-4Page 24


5/15 Non-edible dead chase.

6/2 Unploughed olive roots, wild or spherical.

7/1 Truffle, white onion, white onion transplant and artichoke.

10/1 Wheat.

10/3 Barley.

10/6 Any quantity of rice, even though accompanied with passengers.

11/1 Ground barley.

12/1 Any quantity of sesame, even though acocmpanied withpassengers.

All kinds of fodder of different customs items.

15/7/A Any quantity of cotton seed oil, even though accompaniedwith passengers.

15/7/C Any quantity of olive oil, even though accompanied withpassengers.

15/12/A Any quantity of hydrogenated cotton seed oil, even thoughaccompanied with passengers.

17/1 Any quantity of sugar, even though accompanied withpassengers.

17/2 Any quantity of other kinds of sugar, concentrated sweetliquids, honey substitutes, those mixed with natural honeyand burned sugar and molasses (Caramels), even thoughaccompanied with passengers.

19/3 Macaroni, even though accompanied with passengers.

19/5 Any quantity of crushed wheat (Bourghol), even though accom-panied with passengers.

19/7 Bread of Syrian origin.

23/3 Beet pulp.

34/1 Any quantity of soap, including medical soap, even thoughaccompanied with passengers.

34/2 Any quantity of organic detergents or processed.

- 67 -

ANNEX 1Attachment l-B-4Page 25


36/6 Any quantity of matches, even though accompanied withpassengers.

41/1 Raw hides except for the hides of chased animals, pigs, dogs,and raw salted and acidulated hide of sheep, lambs and goats,named (Pickless).

44/3 Walnuts wood.

47/2 Paper and card board remnants and old products of paper cardboard, suitable for manufacturing paper.

51/1 Any quantity of synthetic uncut yarn not prepared for retail,even though accompanied with passengers.

53/7 Any quantity of wool yarn not prepared for retail, eventhough accompanied with passengers.

55/1 Any quantity of raw cotton, even though accompanied withpassengers.

62/3/A Jute bags except for those used for packing exported goods.

73/23 New and/or used empty barrels.

73/24 Any quantity of gas containers (Bottles), even though accomrpanied with passengers.

74/1 Brass remnants and scrap.

- 68 -ANNEX 1Attachment 1-B-5Page 26

ATTACHMENT 1-B-5

LIST OF GOODS VZHOSE EXPORTATION IS CONFINED ORRESTRICTED TO THE ESTABLISHMENTS OF THE PUBLIC SECTOR 1/

Tariff Item No. Kinds of Goods Status Name of Establishment

7/4/B/2 Dried Onions Confined to 2/ Tafco

7/5/A/2 Dried Beans " Union of Central Agri-cultural Cooperative

7/5/D/2 Lentils Organisme General desCereales & des Minote-ries

8/4/A Grapes Union of Central Agri-cultural Cooperative

10/1 Wheat Restricted to 3/ Organisme General desCereales & des Minote-ries

10/3 Barley "

10/7 Millet (Dariseed) Confined to

11/1 Flour Restricted to

11/2 Ground Barley if

11/7 Malt "

12/1 Peanut Confined to Tafco

12/l/K/2 Sunflower Seeds Syrian Industrial Vege-table Oil Corp in Aleppo

15/7/A Cotton Seed Oil Tafco

Chapter 16 Conserved (Meat & " Fish)

1/ Damascus Chamber of Commerce, Research Dept., July 1975.

2/ By Ministerial Decision.

3/ By Law.

69- ANNEX I

Attachnment l-B-5Page 27

Tariff Item No. Kinds of Goods Status Name of Establishment

17/3 Molasses Confined to Tafco

18/6 Chocolates to

19/8 Biscuits

Chapter 20 Conserved (Vegetables& Fruits)

22/a89 Alcohol, t ..

23/2 Bran Organisme General desCereales & des Minote-ries

23/4 Oilcakes Tafco

31/l,2,3,4,5 Fertilizers t

Chapter 36 Fireworks & GotaExplosives

51/4 Exporting Silk Union of TextileFabrics to Arab IndustriesRepublic of Egypt

55/1 Raw cotton not Restricted to General Organization ofcarded or combed Ginning & Marketing

Cotton

55/2 Cotton Linter Confined to Tafco

55/5,6 Cotton Yarns " Union of TextilesIndustries

55/9 Exporting CottonFabrics to ArabRepublic of Egypt

56/7 Exporting MixedFabrics to ArabRepublic of Egypt

62/3 Jute Bags Orgenisme General desCereales & des Minote-ries

Chapter 93 Arms and Ammunition Gotaand parts thereof

- 70 -

ANNEX 2

AGRICULTURE

CHAPTER 1

INTRODUCTION

1.01 Syrian agriculture has a long history. It is the ancient birthplaceof cereal cultivation; it has seen the development of irrigation techniquescopied in many other parts of the world and has long established tradition inboth animal and crop agriculture. Many of the problems facing Syrian agri-culture are as old as the history of sedentary agriculture - dependence onuncertain rainfall, population and livestock pressure on natural resourcesand problems of plant and animal disease. These worldwide problems are onlynow beginning to feel the impact of modern research and optimism is high thatsolutions will be found to many of them.

1.02 After the upheavals of the 1960's there is a noticeable confidenceand optimism in the agricultural sector. The most recent consecutive goodcrop years (1972 and especially 1974 to 1976) have greatly contributed toagricultural income and have formed expectations about the future. In factthe development performance of the Syrian economy in the future will to agreat extent depend on the record of Syria's agriculture.

This Annex draws upon the work of Mr. Pan A. Yotopoulos (Consultant). Itupdates earlier work done by Messrs. John C. Collins and Norman Rask (Con-sultant) on the basis of their visit to Syria in November 1976, and byMr. Malcolm Purvis (Consultant) on the basis of his visit to Syria inMarch/April 1974.

- 71 -

CHAPTER 2

RESOURCES AND FARMING SYSTEMS

CLIMATE AND LAkD USE

2.01 Agricultural production activities are dominated by climate and

rainfall. The climate is Mediterranean, with hot dry summers and cool rainywinters. Rainfall distribution is very uneven, ranging from 500-800 mm per

year in the western coastal regions and in the north to under 250 mm in thearid southern and eastern parts of the country. In portions of the westerncoastal mountain range, annual rainfall may average as high as 1000-1500 mm.The annual, seasonal and regional distribution of rainfall varies greatly(see Table SA7.1). 1/ The distribution of annual rainfall is unusuallyconcentrated in the December-April period. The result is that in all cul-tivated areas, except the more humid parts with above 55 mm of precipitation,plant maturation is often inhibited by an exhaustion of soil moisture in earlysummer. The moisture content of the soil reaches its peak in early Februaryafter the substantial rains that ordin4rily occur in the months of Decemberand January. The accumulated moisture is then dissipated rapidly and byearly April, the normal flowering period for wheat, available soil moistureis approaching zero. Maturation of the plant takes place during May and earlyJune with very little moisture present.

2.02 Most of the agricultural production takes place in a band of rela-tively high rainfall areas along Syria's western and northern borders (seemaps in Volume 2). The interior of the country is semi-arid or arid steppe.This latter region is generally not suited for cropping and at best can beused for extensive livestock grazing during and immediately following thewinter rainy season. The principal crops associated with each of the mainrainfall areas are as follows (see also discussion in Volume 2, The MainReport, Chapter 8).

Humid Area (above 800 mm)

2.03 This is the major productive area of Syrian agriculture. Drylandcotton, wheat, millet and sugarbeet, irrigated crops and vegetables, potatoes,citrus and apples are among the more important crops. This is also the majorolive, grape, pistachio and fig producing area.

Semi-Arid (350-500 mm)

2.04 Principal crops are wheat and barley and, where irrigation ispossible, cotton. Much of this area is subject to winter frosts which limitsthe plantation of tree crops. Apricots and other tree crops are grown insheltered areas.


Semi-Arid (250-350 nmm)

2.05 The major crop is barley and this crop is only successful whenrainfall is good and well distributed, Much of the year to year fluctuationin cereals production depends on the success of the crop in this area.

Arid Area

2.06 This is mainly steppe, spring pasture land and desert. If irrigationis possible wheat, cotton, sugarbeet and other crops can be grown. Drylandfarming is very risky and of low productivity. Practically all the rainfallis received from October to May and most of it during the period Novemberthrough April.

2.07 Of the total land area of 18,518,000 hectares, about 30 percent iscultivated or capable of cultivation and about 50 percent comprises forest,pasture and arid steppe lands used for seasonal grazing. The remainder isunproductive mountain and desert (see Table SA7.2). Irrigated agricultureoccupies 540,000 hectares, which is about 3 percent of the total land area,9 percent of the total cultivable land, and 14 percent of the cropped area.

WATER RESOURCES

2.08 Syria has substantial water resources for irrigation. Currently,about 540,000 hectares are irrigated. Completion of the Assad Reservoir onthe Euphrates River (1973) increases the irrigation potential to over 1,000,000hectares. Irrigation projects are now being planned and implemented to usethis water resource. They will not be fully completed, however, for many -years. Salinity problems on existing irrigated land reduce productivity andresults in some land retirement from irrigation each year. This further slowsthe growth in total irrigated acreage. Reclamation expenses also draw re-sources away from new project activities.

2.09 The major water resource of Syria is the Euphrates River with anannual average flow of 26 billion M3 and live storage capacity in Lake Assad of11.9 billion M3. Other major rivers are the Orontes (1.5 billion M3) and theKhabur (1.5 billion M3), a tributary of the Lower Euphrates. The Yarmouk(400 Mm3), Barada (300 Mm3), Afrin (250 Mm3), and Nahr Kabir (250 Mm3) are alsosignificant. Detailed studies of the seven main hydrological basins have notbeen completed and the overall groundwater situation is uncertain. However,indications are that surface and underground water resources are abundant.Development has until now concentrated on supplies from rivers and springs andthis pattern is likely to continue, However, irrigation from shallow wellsis increasing in the Aleppo Plain area and on the coast while provision oftubewells for livestock watering in the Steppe Basin is also contemplated.

SOILS

2.10 In the western and northern areas where average annual rainfall isin excess of 300 mm, the cultivable soils are predominantly grumusols and redand brown Mediterranean soils. Every patch of cultivable soil is cropped.

7 73

Destoning and terracing are practiced in the mountainous areas to permittitilization of otherwise marginal land. Under low rainfall conditions, tradi-tional cultivation has provided for frequent periods of fallow. Soils aresown to rainfcŽd barley where averEge rainfall is below about 300 mm and areusually poorly structured, highly calcareous montmoriilcnitic brown loams.

2.11 A narrow band of alluvial soils with textures ranging from clay tosandy loam occurs alorng the Euphrates River and its tributaries where theyhave been traditionally used for irrigated crop production. Locally, accu-mulatigps of salt have resulted in low yields and some lands have been aban-doned. The higher lands bordering the Euphrates Valley downstream of LakeAssad comprise generally mediuui to fine textured soils frequently with moderateto high gypsum content and in places overlying gypsum rock. Internal drain-age ranges from good to locally poor. Irrigation projects on these soils willbe developed to utilize the water made available by construction of the TabqaDam. The arid steppe lands are principally calcareous loams. Low rainfalllimits their use to extensive grazing.

PRODUCTION UNDER RAINFED CONDITIONS

2.12 Production is limited to one crop per year, grown either during thewinter rains or on residual soil moisture on the following summer months.Wheat is by far the most important rainfed crop occupying about 45 percent ofthe total area planted to rainfed crops, while a further 30 percent is devotedto barley and 10 percent to fruit trees. Only about 6 percent of the rainfedcropped area is planted to summer crops.

2.13 Fallow is a common practice, especially in the lower rainfall areas.It is not clear to what extent this practice is dictated by the need to con-serve moisture, restore fertility, provide seasonal grazing or to control weeds.The normal weed fallow would provide little or no benefit for moisture conser-vation, nor would it contribute significantly to the soil nutrient reserves.The grazing provided by such a weed fallow would not appear greatly superiorto the feed resource provided by wheat and barley stubbles and residues, whilethe control of weeds in general seems of little concern to the average farmer.Plans to intensify rainfed agriculture would drastically reduce the extent offallow and if successfully implemented would lead to a significant increase inthe area of rainfed crops grown.

2.14 Yields, particularly in the more drought prone areas, fluctuatewildly from year to year. Average rainfed barley yields in particular havevzried betwen 0.1 and 1.2 tons per hectare during the past decade (seeTable SA7.6). The lower figure no doubt represents a zero yield over much ofthe sown area, the crop being so poor that the farmers use it for grazingratner than trying to harvest the grain. During a drought year such grazingwould hbve an appreciable value. Wheat grown under somewhat higher rainfallhaE yielded more consistently though the range is still between 0.3 and 1.2tons per hectare (see Table SA7.5). Lentils and chickpeas are grown almostexclusively under rainfed conditions and comprise the bulk of dry legumes (seeTable 5A7.8).

- 74 -

2.15 Olives are the major rainfed tree crop occupying some 180,000 hec-tares though the density of many old plantings is low. Yields average justunder 1 ton per hectare. Other important tree crops include apricots (11,000hectares), figs (20,000 hectares) and pistachio (9,000 hectares). About80,000 hectares of grape vines are cultivated (see Table SA7.9). In the early1960's, cotton was an important rainfed cash crop, planted on 60-70,000hectares. However, it is now grown almost entirely under irrigation.

PRODUCTION UNDER IRRIGATION

2.16 Irrigated agriculture presently occupies about 540,000 hectares or14 percent of the land under crops in Syria (see Table SA7.3). The importanceof irrigated crops in total crop production is greater due to the higherintensity of use of irrigated lands.

2.17 The Euphrates River provides irrigation water for roughly one-thirdof the presently irrigated areas. These estimates appear in Table SA7.36.

2.18 Irrigated production doubled from 1.4 million to 2.9 million tons,the increase being due both to increase in area of winter crops and to improvedyields of summer crops and tree fruits. As a result, irrigated agriculturegenerated about 45 percent of the total tonnage of crops produced in 1975(see Table SA7.11). Crop yields are in general still not particularly highhowever and further significant improvements may be expected. Though cottonwas little grown prior to 1945, it rapidly became and continues to be the mostimportant summer cash crop under irrigation. It is grown extensively in boththe Euphrates Basin and the Orontes Valley as well as in those areas ofthe Aleppo plain where groundwater is available for irrigation. The totalarea cultivated to cotton has declined from an average 280,000 hectares inthe early 1960's to just over 200,000 hectares at present as rainfed cottonhas been phased out (see Table SA7.7). Overall, yields have almost doubledduring the past two decades largely as a result of the increasing proportionof irrigated cotton. However, during the period there has been little improve-ment in irrigated cotton yields in spite of a steady increase in the use offertilizers and other inputs.

2.19 Sugarbeet production has slowly increased in the Orontes Valley toserve existing factories at Jisr-al-Shugur in the Ghab (2,000 tons/day).Yields, however, seldom average over 25 tons/hectare, disappointingly lowwhen compared to the 50-60 ton yields obtained under essentially similar con-ditions in the Lebanese Bekaa Valley. Tobacco and oilseeds (groundnuts andsunflower) are other industrial crops grown under irrigation.

2.20 About 90 percent of the irrigated area planted to winter crops ispresently used for wheat production. This is an increase from about 70 per-cent in the late 1960's. Yields have increased during the same period fromabout 1.2 to 2.2 tons/hectare largely as a result of introducing HYV Maxipakwheat (see Table SA7.5). Other cereals include maize, sorghum and rice grownin the summer (see Table SA7.4).

- 75 -

2.21 Irrigated vegetable and fruit production is also important. Pota-toes, tomatoes and onions are the most commonly grown vegetables with a sig-nificant part of the tomato production used for processing (Table SA7.8).Apples, pears and citrus (mainly oranges) are the most important irrigatedfruit crops (see Table SA7.9).

2.22 In the Euphrates Valley, the major investments in irrigation infra-structure made in the last decade have not yet led to a large increase in thepublic irrigation perimeters. Construction has proceeded more slowly thanplanned due in large part to the serious technical problems encountered inconstructing lined canals in the gypsiferous soils of the Euphrates Basin.Major sections of concrete canal lining collapsed when minor seepage resultedin progressive solution of gypsum in the underlying soil and extensive sub-sidence. Measures to combat the problem have been instituted including:

(a) avoidance of high gypsum soils in designing canal alignments;

(b) use of waterproof plastic material in conjunction with con-crete lining;

(c) use of better sealant for joints in concrete canal linings;

(d) excavation of high gypsum soils along canal alignments, re-placing it with compacted low gypsum fill before reexcavatingthe canal sections.

2.23 The area of private irrigation pumped from the Euphrates River in-creased rapidly during the 1950s but since then has remained constant at about150,000 ha, although several thousand hectares have been abandoned due tosalinity, and replaced by bringing new land under command. This situationcannot continue since all new land within economic distance and elevation ofthe river (for private investors) has been brought into production. Moreover,it is estimated by the consultants now working in the Lower Euphrates Valleythat there is currently a reduction of maybe 3,000 ha annually in the net areaof private irrigation in the valley due to salinity. Yields may be lower overa larger area affected by salinity.

2.24 Outside the Euphrates Valley the most extensive public sector irriga-tion schemes (90,000) are located in the Orontes River. The remaining irri-gated area in ';yria is comprised mainly of private schemes, mostly pumping fromwells, and totals some 200,000 ha, or nearly 40 percent of the total irrigatedarea in Syria.

LIVESTOCK PRODUCTION

2.25 Livestock represents one of Syrian agriculture's largest capitalassets and accounts for about 20-40 percent of agricultural production, depend-ing on climatic conditions. Nearly half of the total land area is suitableonly for livestock production, and there is a long established integration oflivestock raising with dryland crop production through the migration of sheeponto crop residues.

76 -

2.26 With the exceptiorn of draught animals and camels, most livestocknumbers have steadily increased since 1960. Sheep are the principal live-stock in rainfed areas (see Table SA7.17). Since 1957, sheep numbers havefluctuated between 3 and 6 mr 1 on (see Table SA7.18). Under-reporting oflivestock numbers however makes it likely that actual numbers are some 15percent higher than the published statistics. Furthermore, the reportednumbers do not include animals under one year old. Since, on average, about60 percent of the total feed intake of sheep comes from natural grazing areas,they are subject to large inter-annual nutritional fluctuations due to rain-fall variability. The sharp d ecline in numbers during and following a droughtresults from increased offtake to reduce the feed requirements of the flocks,higher mortality (about 20 percent compared with about 5 percent normally) anda lower lambing rate (about 40 percent compared with a normal of about 90 per-cent). Conversely, during years of good rainfall offtake rates are reducedin order to rebuild the flocks,

2.27 About 60 percent of the sheep flocks are tended by Bedouins. Theygraze the steppe lands during winter and spring. In summer and autumn theyare led to the higher rainfall areas to graze crop residues. Some of thefarm-based flocks from the fringe of the steppe also graze on the steppeduring winter and grazing in the western mountains is utilized during theearly summer by flocks from adjacent farmlands.

2.28 Goats number about 0.5 million of which about 90 percent are small,low-yielding local breeds found in the higher rainfall areas of the west andnorth as well as an integrated areas and in the Euphrates Valley.

2.29 The quality of the Syrian rangelands has been steadily deterioratingin recent years. Continued encroachment into the lower rainfall areas forbarley cultivation destroys the more desirable natural plant associationswhich regenerate only slowly. Meanwhile the lands are exposed to erosion.The erosion problem has been further exacerbated by cutting of shrubs forfirewood. This reduction of the available range results in greater grazingpressure during years of poor rainfall Twhich in turn hastens the decline ofthe remaining range since the more palatable herbage species are replaced bycoarser ones of low forage value. Until recently the encroachment of croppinginto the grazing lands had not been accompanied by any effort to provide sub-stitute sources of forage by increased production in the higher rainfall areas.Meanwhile, legislation to enforce movement of flocks out of the cultivatedlands during the winter cropping season and the abrogation of traditionaluse rights in the steppe with its transition to state ownership furtherexacerbated the overgrazing problem.

2.30 While most sheep are used for domestic consumption, Syria has bene-fitted from a substantial but fluctuating import and export trade in meat andlive animals. Typically, sheep are imported from Turkey and Iraq for fatten-ing; and exports, both of meat and live animals, are directed towards Jordanand Lebanon. Occasionally imports are interrupted by Turkey and Iraq onanimal health grounds, and. more frequently, in years of poor rainfall, exportsare restricted or banned by the Syrian Government in order to keep domestic

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Me,~t down. Syria is a net importer of fresh and frozen meat, milk anddairy products, and eggs, and these imports have given considerable impetusto s ing production from the livestock sector.

2.31 Expansion of intea-sive ii-vastcck production :is oc-_rring in three

sreas, poultry, dairy cattle and sheep fattening. Significant production in-creaseo however, have been largely limited to poultry (see Table SA7.17).implementation of a program for construction of large public sector egg andbroiler production units is in progress and has already resulted in doublingof egg production between 1970 and 1975 (see Table SA7.19). Though intensivedairy prodution is also being developed, mainly through large public sectordairy uni$p, no significant incregse in production of milk and milk products

has been observed. Special sheep fattening cooperatives have been initiatedto upgrade and stabilize meat supplies and provide an outlet for sheep formerlyfattened on the range.

2.32 The main constraints to livestock development and animal productivityare:

(a) limited feed availability, particularly for sheep during winterand early spring;

(b) the lack, or inadequate application, of disease control measuresover a large segment of the animal production;

(c) inadequate long-range planning on the part of Government; and

(d) traditional practices of livestock producers (e.g., in the caseof Bedouin flockowners, sheep themselves are often considered asa source of wealth and are sold only when the family requiresready cash or food).

2.33 Recognition of these problems has led the government to undertakea series of measures to alleviate and remedy the shortage of feed under aNational Program for Sheep and Range Development. These include:

(a) establishment of sheep and range cooperatives in the steppe lands,enabling the Bedouin grazers to have access to input supplies,credit and organized marketing in the same way as agricultureproducers in more favorable environments;

(b) encouragement of sheep fattening cooperatives to increase theoff-take of excess animals from the rangelands flocks;

(cs legislation prohibiting the ploughing of low rainfall areas withappropriate penalties for noncompliance;

(d) increasing production of fodder in higner rainfafl areas throughcultivation of fodder crops as part of an agricultural intensifi-cation program, compulsory in areas having over 350 mm of rain-fall;

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(e) establishment of a National Feed Revolving Fund to facilitateprovision of adequate feed supplies and the establishment of anemergency feed reserve to combat the effects of drought.

CROPPING PATTERNS AND CROPPING INTENSITY

2.34 The distribution of rainfall limits production under rainfed condi-tions to one crop per year even in favorable years. In the past, the exten-sive sheep production system also required a supply of low cost grazing tosupplement that available in winter in the steppe. This was probably onereason for the extensive use of weed fallow in the rainfed areas, coupledwith the small soil fertility benefits derived from less frequent cultivationof high nutrient demanding cereals. Certainly, however, improved levels ofproduction and higher profitability are possible by growing pulses and legu-minous forages, instead of the fallow period in the rotation, and by judicioususe of fertilizers, to increase soil nutrients. Nevertheless, the unreliablepattern of rainfall over much of the area limits both the extent to which useof inputs can be justified, and when rains are late, appreciably delays theperiod available for timely sowing of crops.. As a result the soil fertilitycannot be raised to a level which would give the full potential yield of thecrops grown. In some years yields will be severely depressed due to shortageof moisture and in some years it will not be possible to plant the whole cul-tivated area due to lack of time. A 100 percent average cropping intensity isthus unlikely to be attained for a number of years.

2.35 Under irrigation the most important annual crops are wheat andcotton to which sugarbeet will be added in the future. During winter, wheatand over-wintering sugarbeet will occupy land, from September/November untilJune/July of the following year. During summer, spring-planted cotton andsugarbeet will be grown, occupying land until October in the case of sugar-beet and November for cotton. Taking account of these overlapping seasons,the need to provide adequate time to complete land preparation for followingcrops and the fact that significant areas of perennial crops (fruit trees,alfalfa) are also likely to be grown under irrigation, a cropping intensity ofabout 130-135 percent is probably the maximum which can be attained even allow-ing for the shorter season vegetable and fodder crops which can be grown on amore limited scale.

FARM PRODUCTION UNITS

2.36 Agricultural production units are organized under one of threegeneral forms, private farms, cooperative farms or state farms. The privatesector is the most important and is composed of many small and medium-sizefarms producing a wide variety of products. While the private sector is re-presented in all areas and types of production, it is most common in the rain-fed crop regions. Over 80 percent of the cultivated area is included in thissector.

2.37 Cooperative farms make up the second most important production sec-tor and are organized principally to provide marketing, credit, and technicalassistance to members. About 16 percent of the cultivated area is farmed

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cooperatively. However, they are found on about one-half of the irrigatedland partly as a result of land redistribution carried out under the agrarianreform law. There are also a number of specialty cooperatives created forspecific purposes. Cooperatives are viewed favorably by the government sincethey provide an -ffective mechanism to channel services and to direct agricul-tural activities to meet production goals. The number of cooperatives hasbeen increasing in recent years.

2.38 The state farm sector is very small, occupying less than 2 percentof the cultivated land. In recent years several large dairy and poultry pro-duction units have been established as state farms. Management efficiencyand related operational problems, however, will probably restrict furtherincreases in direct state organization of agricultural production units.

2.39 With the exception of the land owned by state farms and productioncooperatives, agricultural land in Syria is owned by individuals whose mainoccupation is agriculture. Such privately owned land amounts for 92.6 percentof total area under holdings. The distribution of land holdings, as derivedfrom the Agricultural Census of 1970-71 is shown in Table 4.9 (Volume 2,Chapter 4). The relatively small holdings of less than two hectares are ofmajor importance: they constitute 26.7 percent of the total number of holdingsand amount for 2.3 percent of the total areas in holdings. In the more fertileareas with the highest rainfall and levels of irrigation, the average size ofholdings is even lower. In Tartous, for example, 12 percent of the holdingshad less than half a hectare and 60 percent had less than two hectares.At the other extreme, the 2.9 percent of the total number of holdings with50 hectares or more amounted for 32.2 percent of the area in holdings.These holdings are preponderant in the semi-arid and arid areas.

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CHAPTER 3

STRUCTURAL CHANGES IN AGRICULTURE

3.01 In an agriculture dominated by natural conditions of variable rain-fall structural changes can be a more reliable indicator of productive poten-tial than the actual short-term growth in production. In this sense thechanges in the structure and organization of productions in the use of inputs,in agricultural institutions, in policies and in strategy of development, be-come an integral part of the study of Syrian agricultural potential.

LAND AND AGRARIAN REFORM.

3.02 As it appears from Table SA 7.2 both total cultivated area and irri-gated area present a significant variance from year to year, with the trendfor the former being downward and for the latter upward. The reason for thisobservation is that the area under cultivation is itself a function of rain-fall and its annual fluctuations are positively correlated with precipitation.Furthermore, a series of drought years can produce more lasting effects onland productivity and areas under cultivation. Cropping of permanent pasturein good years and overgrazing of reduced forage in bad years leads to theexpansion of desert conditions, increased erosion and destruction of thenatural resource of agriculture. The increase in saline soils and the con-flict with Israel have further contributed to a reduction in land available toagriculture. Irrigated area is also linked to rainfall, since rivers providewater for about two-thirds of the irrigated area. The poor rainfall years ofthe late 1960's also account for the decline in this part of irrigated area.On the other hand there has been an increase in area under controlled (public)irrigation schemes which enable much better control over water supplies anddistribution. The completion of the Euphrates dam in 1973 brings nearer thepossibility of doubling existing irrigated area over the next 20-30 years.

3.03 During the union with Egypt the government initiated (in 1958) aprogram of agrarian reform aimed at breaking up the large estates and redis-tributing land to share croppers and farm laborers. Ceilings on land owner-ship were set between 15 and 55 hectares of irrigated land and between 80 and300 hectares on rainfed land depending on average annual rainfall. The excesswas to be redistributed to tenants and landless farmers in plots up to amaximum size of 8 hectares of irrigated land or 30-40 hectares of rainfed landper family. Actual allotments have been much lower than those specifiedlimits. The average allotment (including both irrigated and non-irrigatedland) is about 8 hectares per farmer. With the established limits on pre-reform land holders and a significantly smaller average size of redistributedproperties, there has been a marked move towards equality in the size of dis-tribution of rural properties (see Volume 2, Chapter 7, Table 7.1).

3.04 An area of 1.4 million hectares was expropriated between 1958 and1968. However, little redistribution took place until 1968. Most of theexpropriated land was distributed in 1969. Of the original 1.4 million hec-tares, 466,000 hectares have been distributed to the private sector, with an

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additional 254,000 hectares distributed to cooperatives or used to createstate farms. In 1976, 351,000 hectares remained undistributed. They are inthe rainfed areas of Northeast Syria. This land is presently being rented to

farmers with priority going to landless farm workers. There iL no decisionon how this last segment of expropriated land will be redistributed. Thereare no plans for further expropriation of land. The government feels that

the present land holding distribution is adequate for equity considerationsand that general efforts to increase productivity in agriculture will diffuse

themselves sufficiently throughout this structure to provide equitable rates

of growth for all farmers (see Table SA7.22).

MODERN TECHNOLOGY

3.05 In the established cultivated areas the Syrian farmers appear indus-trious and receptive to new innovations providing these are proven to give a

better financial return. They are, however, acutely aware of the risks in-herent in rainfed agriculture and are naturally unwilling to commit scarce fi-

nancial resources to modern inputs unless higher productivity is reasonablyassured and the expected financial return is commensurate with the risk theytake.

3.06 The most important annual inputs to agriculture are fertilizer andmachinery. Both have shown steady growth in use, especially in the last year(see Tables SA7.26 and SA7.24). The bulk of fertilizer is applied to irrigated

cotton and to a lesser extent to irrigated wheat and horticultural crops.Nitrogen and phosphate are the major fertilizers used, with nitrogen accountingfor 65-70 percent of total usage.

3.07 Machinery use has increased steadily in recent years, with a sub-stantial acquisition of major items including tractors and combines in 1975(see Table SA7.24). A shift in the scale of power equipment is also evident.For example, while total tractors in use increased by 60 percent between1970 and 1975, tractors of over 50 H.P. capacity more than tripled during thisperiod. The number under 50 H.P. remained fairly stable (see Table SA7.25).

3.08 It is estimated that 95 percent of the acreage in barley and wheatis now mechanized. Production of lentils, sugarbeet, cotton and soybeansare programmed for increased mechanization, though it is recognized thatadditional machine specialization will be required. It is interesting tocontrast the decided movement toward mechanization, and especially largescale power units, with the distribution of land holdings which shows veryfew individual properties in excess of 25 hectares. The planners recognizethis contrast but feel no acreage-size limitations are needed since farmerswho own tractors can rent their services to other farmers. Several factors*-pport this decision. In the case of cooperatively owned tractors, suffi-cient scale of operation is clearly available to make efficient use of the

larger sized equipment. Also, while properties are relatively small, thereare few permanent structural barriers between properties to hinder the move-ment of large scale equipment. Finally, little is known about the degree ofscale in operational units; i.e., the degree to which owners of equipment are

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renting additional land to provide an economic base for operating the equip-ment. If operational units are much larger than ownership units, then largescale equipment can be more easily accommodated.

3.09 Major items such as tractors and combines are imported either incomplete units or in the form of major components. A tractor assembly plantwith a capacity of 3000-4000 tractors annually, operates in Aleppo. A newassembly line will double this capacity by next year. In this case, the engineand some major parts are imported from Spain while the remaining componentsare manufactured locally.

3.10 Maintenance and repair of major equipment items has depended largelyon local private garages. The Peasants Union maintains one large repair shopin each Mohafaza and a few additional smaller shops in some local districts.Spare parts are available from the distributing company in Aleppo and in someinstances are imported directly by the private sector. Training centers foroperators and maintenance personnel are now being operated by some state farms.Several additional centers will be opened in the near future.

3.11 The quality of inputs is also undergoing change. Mexican wheatvarieties, which are more fertilizer responsive if sufficient water is avail-able, have increased in use in recent years. In 1975 they accounted for aboutone-third of the wheat planned, and they account for almost all of the irri-gated wheat. Animal quality is being improved through imports of qualitybreeding and production stock and through programs for artificial breeding.Feed inputs are being made available for emergency situations through the feedstorage programs to tide livestock holders over periods of short forage supplycaused by drought. This will help stabilize annual fluctuations in productioncaused by drought conditions and improve the general quality of animals goingto market.

3.12 Government policies restricting availability of credit to thosefarmers who conform to accepted cropping patterns and cultivation practiceshave no doubt been a factor in encouraging adoption of better methods on somefarms. However, the standardization of recommended practices and input usagewill tend in the long term to bring production on the majority of farms to aplateau above which the better farmer will be unable to advance unless he isgiven much greater freedom to decide on the best practices under the conditionsspecific to his own farm. This plateau production level is likely to be appre-ciably below the optimum for a large proportion of farms.

MANPOWER AND TRAINING

3.13 Intensification of agriculture and the use of modern technologicalinputs create additional demands for trained manpower in agriculture to beused as administrators, research and extension agents, and also for farmertraining.

3.14 In 1975, the MAAR staff of 9,046 included 37 with a Ph.D. degree,33 with an MA degree and 1,073 with a university level education. Effortsare currently underway to substantially increase the pool of trained personnel

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available in the agricultural sector. Responsibility for agriculture educa-tion is jointly shared between the MAAR and the Ministry of Higher Education-- university level training being the responsibility of the latter.

3.15 Three faculties of agriculture exist in Syria -- in Damascus, Aleppoand Lattakia. The faculty of Lattakia is the most recent. There has been adramatic increase in enrollment in recent years. For example, total enroll-ment in 1970 was 910 and is now 5,610. Only 70 students graduated in agricul-ture in 1970. This had increased to 489 by 1975 and will be more than 1,000in 1977. This is equal to the total number of agricultural graduate staff atthe "ingenieur agricole" level in the MAAR.

3.16 The curricula at the three universities are essentially similar. Thefour year program is expected to be modified in the near future to allow somespecialization in the final year and there will be a corresponding divisionof labor between the three campuses. Aleppo and Damascus are also startinga one year post graduate diploma course with the expectation that as resourcespermit (particularly faculty growth) this will expand to a two year Master'sprogram. The current student-faculty ratios are high, between 60-80:1. Eightysenior faculty all hold Ph.D.'s from foreign universities, including UK, USSR,USA, Eygpt and France.

3.17 There are currently 13 vocational high schools run by the MAAR. Inaddition there are two specialized high schools for agricultural machinery andfor veterinary services. The curriculum in all 13 general schools is the same.The Ministry will be opening a new training center for short courses on fruittree production for members of its staff who have graduated from the University.

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CHAPTER 4

AGRICULTURAL INSTITUTIONS

MINISTRY OF AGRICULTURE AND AGRARIAN REFORM

4.01 The Ministry of Agriculture and Agrarian Reform (MAAR) consists of7 Technical Directorates each responsible for a particular agriculturaldiscipline; the Technical Directorates comprise:

(a) Agriculture (with subdivisions responsible for Field Crops,Horticulture, Plant Protection and Agricultural Extension);

(b) Forestry;

(c) Veterinary Services;

(d) Animal Husbandry;

(e) Soils;

(f) Engineering and Construction;

(g) Statistics and Economics.

Three Directorates of a more general nature are responsible for:

(a) Administration;

(b) Research;

(c) Training and Education.

4.02 The Ministry is represented in each Province (Mohafazat) by a Provin-cial Director and a staff comprising, where relevant, representatives of eachof the Headquarters Directorates. The Provincial Office in turn supervisessuboffices in each district or large village unit in the province. FieldExtension Agents are provided on the basis of one agent for between 1,000 and4,000 hectares irrigated or between 4,000 and 6,000 hectares rainfed crops inthe private sector. The Agricultural Cooperative Union provides its ownmanagement staff for each cooperative but the MAAR provides technical supportwhen required. Veterinary and Animal Husbandry services are staffed separatelyfrom the Agricultural Extension Service but the services are coordinated atthe Provincial level.

4.03 Agricultural research in Syria is conducted by the central researchstation and at substations located in most provinces. The network of researchstations is adequate and there seem to be satisfactory links with the Interna-tional Research Centers and other research agencies. The output of the

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research organization, however, is modest and development of specializedadapted technology to suit local conditions has been limited to the effortsof a few dedicated staff. This is due to past lack of funds and equipment,shortage of well trained and experienced research personnel anc absence ofwell established research priorities and objectives. The livestock subsectorin particular seems to have been neglected until recently when the potentialfor increased production through better range management and fodder productionhas been conclusively demonstrated.

4.04 A number of new institutes serving agriculture have been created inrecent years. This in part represents an attempt to stabilize and upgradelivestock production through an integrated crop-livestock program. It alsorepresents the additional control and direction that is being applied toagriculture by the government. Four of the more recent organizations whichhave been created within the MAAR are the General Institutes for Fodder,Cattle, Poultry and Fishery. A primary mission of these new Institutes is toincrease and diversify protein production to help meet the goal of doublingprotein consumption by 1980.

THE GENERAL INSTITUTE FOR FODDER

4.05 This Institute was the first of the four to be established (1974).It is concerned with the supervision of feed processing and the establishmentof feedmills and warehouses. It also supervises both domestic and foreignfeed marketing. This includes feed import and export operations and domesticdistribution and purchase from producers through advance contracts. Thus, GIFhas the potential role of planning the feed needs of the livestock sector atndof allocating the feed resources. To the extent that this organization pro-vides similar services to those of the Cereals and Flour Mills Organization,some duplication of facilities and services may occur (e.g. purchase ofbarley, which is a principal feed concentrate).

THE GENERAL INSTITUTES FOR CATTLE AND POULTRY

4.06 These institutes have focused early attention on the establishmentof large scale poultry and dairy stations. Much of the technology, financeand foundation stock for these stations is being imported. They are beingoperated largely within the public sector. Plans now call for a broader dis-persion of the quality stock and technology throughout the cooperative andprivate sectors. Special subsidy and finance incentives are being provided tofacilitate a more rapid acceptance. Artificial insemination stations will beused to upgrade the quality of local animals.

THE CE-kEALS AND FLOUR MILLS ORGANIZATION

4.07 This is the public sector agency in charge of procurement and mar-keting of wheat, barley, and lentils, and is responsible for wheat flourmills. It reports to the Ministry of Supply, Cereals Office rather than MAAR.The cereals organization has 25 permanent buying points throughout the countryas well as a number of seasonal buying points operated during and immediately

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following harvest. Purchase and selling prices are fixed at the policy levelby the Council of Ministers for Economic Affairs. The price of wheat flour isheavily subsidized (see Volume 2, The Main Report, Chapter 6).

MINISTRY OF THE EUPHRATES DAM

4.08 The Ministry, which is in overall charge of all development in theEuphrates Valley, is a nearly self-contained organization responsible fordevelopment of the Euphrates Dam. It is divided into two major entities:The Government Organization for the Development of the Euphrates Dam (GOED),and the General Administration for the Development of the Euphrates Basin(GADEB). The former has responsibility for the construction of the EuphratesDam and to act as a competing contractor for other major works. The latter isassigned all other aspects of the development of the Euphrates Basin in Syria.GADEB is the most important organization in implementing future development.Up to the present time GADEB has been largely involved in the establishmentof the 20,000 ha pilot irrigation area, the planning and supervision of con-struction of irrigation areas in the Balikh Basin and Meskene plain, andthe planning and supervision of studies in the remainder of the area.

4.09 GADEB has separate offices for Planning and Statistics, Land Acqui-sition, Public Relations, and Procurement, and its technical functions aredivided among four sectors: Irrigation, Agriculture, Social Affairs, andFinance and Administration. The Office of Planning and Statistics is con-cerned with overall, intersectoral planning and logistics; that of LandAcquisition with the purchase of land for right-of-way and Government farms;and the Office of Procurement is responsible for final approval and awardingof civil works contracts and purchase of materials, machinery and equipment.Each of the four sectors is headed by a Deputy Director General.

4.10 GADEB faces several serious problems which may restrict future prog-ress. It is becoming increasingly difficult to locate finance for the remain-ing irrigation projects and maintain the scheduled rate of development. Inaddition, there is not sufficient well-trained staff to organize, administerand operate the ambitious development program. Planning agriculturaloperations is uncertain since there has not been a decision taken on the typeof organization for the new settlement, or where the farmers or workers willcome from. Other problems related to the organization of the new settlements,such as the supply of credit, are expected to ensue.

AGRICULTURAL COOPERATIVES

4.11 There are several types of agricultural cooperatives. The vastmajority (over 90 percent) are multi-purpose. They are basically servicecooperatives that act as intermediaries between farmers and the credit-inputand output institutions. At the end of 1976, 3,158 out of a total of 3,433cooperatives were of this multi-purpose type (see Table SA7.23).

4.12 Property ownership in most cases rests with the individual farmer.In about 15 percent of the cooperatives, the land is owned by the cooperative.

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In these cases,, the jointly owned land was distributed in this cooperativefrom under the agrarian reform act. Cooperatives are frequently formed whenirrigation projects are initiated, hence about one half of the irrigated landis operated under cooperatives. By contrast only 12 percent of the rainfedagricultural land is farmed by cooperatives. Tractors are often the propertyof the cooperatives; however, they may also be owned individually. Combinesare owned by the cooperatives and in some instances by the parent PeasantsUnion.

4.13 Cooperatives receive preferential treatment from the AgriculturalCooperative Bank in the form of a 1 to 1.5 percent interest discount oncredit. The individual members, however, pay the same interest rate as theprivate sector and the I to 1.5 percent difference accrues to the cooperativeand is used to help finance services to the members. A 0.5 to 1 percentcharge for value of produce sold is also used to defray operating expenses ofthe cooperative.

4.14 The ruling committee of each cooperative is responsible for carryingout the target production levels determined for its membership under eachannual agricultural plan. However, each individual member must be responsiblefor his credit obligations. Finally, the Peasant Union maintains some agri-cultural specialists and accountants to assist the individual cooperativesbut is short of sufficient personnel to adequately staff these functions.

4.15 There are a total of 232,000 members in all agricultural cooperativesin Syria. This is an average of about 70 members per cooperative, thoughactual membership will range from a low of 30 to a high of several hundred.The larger cooperatives are located in areas of irrigated agriculture.

4.16 The remaining 275 cooperatives are principally specialized in live-stock operations. Sheep and range cooperatives (174) in the Steppe Region andsheep fattening cooperatives (55) located near major cities comprise the bulkof this group. Dairy (22) and poultry (14) cooperatives are also important.The primary long run objectives with respect to cooperatives are:

(1) to reactivate the 10 percent of existing cooperatives thathave become inactive;

(2) to establish cooperatives on all land distributed underthe Agrarian Reform Law;

(3) to expand the number of cooperatives so that they existin all private villages.

4.17 By 1980 it is estimated that the number of cooperatives will haveincreased to 3,800. Membership in cooperatives is open to farmers who own andlive on their land, who have no conflicting interest in outside activities thatwould adversely affect their participation, and who are not criminals. Eachmember pays shares on the basis of quantity and quality of land, and may enteror leave the cooperative providing all outstanding obligations are met.

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AGRICULTURAL COOPERATIVE BANK

4.18 Agricultural credit and agricultural credit institutions are assuminga greater role in the direction, control and stimulation of agricultural pro-duction. In 1966 the Agricultural Cooperative Bank (ACB) was designated asthe institutional source of agricultural production credit. For severalyears thereafter the ACB experienced steady growth in lending volume (seeTable SA7.27). During the period 1970-74, lending volume was fairly stable.'However in 1975, the volume increased by about 50 percent and is expected toincrease further in the future as modernization of agriculture will requiremuch greater use of production inputs, such as fertilizer, which are suppliedthrough and financed by the ACB.

4.19 The bulk of agricultural credit has been for short term productioncredit (one crop year), often reaching over 90 percent of total credit provided.However, in 1974 and especially 1975, substantially greater quantities ofmedium-term credit (up to five years) have been provided. This credit has beenused primarily for the purchase of tractors and machinery and is a majorcomponent of the substantial credit increase noted in 1975. Long-term credit(over five years) continues at an insignificant amount.

4.20 Within major commodities, cotton production received almost three-fourths of all production credit given by the ACB in 1975 (see Table SA7.29).Finally, sizeable amounts of credit are given in kind--principally fertilizer,pesticides and seeds. The percentage of in-kind credit has increased fromabout 30 percent in the late 1960's to over 50 percent in recent years. Planscall for a further increase to 75 percent by 1980. This is consistent withthe government's plans to increasingly control the manner and form of agricul-tural output. This also means that ACB will become increasingly involved intransportation, storage and distributional problems associated with supplyingthese inputs, functions not normally associated with purely financial institu-tions.

4.21 The ACB has a good repayment record. It generally requires onlysignature for short-term credit, however under Law 14 a significant number ofborrowers will have to receive prior licensing before being eligible for ACBcredit and the associated agricultural inputs. On medium and long-term creditsome collateral is required, typically real estate or the purchased item (e.g.tractor) for which credit is utilized. Short term loans can be extended tothe next cropping season if unfavorable conditions limit repayment capacityfrom current production.

4.22 The ACB maintains that they are able to meet all credit demands.However, the preponderance of credit to the cotton crop raises some doubtsthat all agricultural enterprises are equally well served.

4.23 For major commodities covered by price controls and state tradingorganizations, repayment to the ACB is made by payment to the farmer or co-operative of receipts net of outstanding loans--the balance is drawn in favorof the ACB.

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4.24 Tne ACB charges uniform prices for all inputs supplied and uniforminterest rates (5.5 percent) throughout Syria. However, the cooperatives andpublic sectors benefit from a 1.0 to 1.5 percent discount. In the case ofcooperatives, the individual members still pay private sector rates and thedifference is used to help finance the cooperative's activities- The sameinterest rate is charged on long and short-term loans with no monetary cor-rection used to offset real value loss due to inflation. In 1975, 66 percentof the ACB credit went to the private sector and 31 percent to the coopera-.tives (see Table SA7.28).

4.25 The ACB, in addition to supplying annual credit and inputs is ineffect playing a major role in the implementation of agricultural productionpolicy. Since it has a virtual monopoly of fertilizer and other key input dis-tribution and since credit (and the above inputs) are allocated in accordancewith production plans established by the Ministry of Agriculture, the Bankplays a central facilitating role in shaping annual agricultural production tomeet targeted agricultural output needs.

4.26 The reorganization of the ACB and the amendment of its charter isone of the priority objectives of the Syrian Government. The topic receivedspecial attention at the Syrian Agricultural Seminar in Damascus (February 19to March 1, 1977). Specifically, part of the capital contribution that wasprovided for in the 1968 reorganization of the ACB (Decree 141) never materi-alized and the Bank is unable to discharge effectively its functions due toits limited financial resources.

4.27 The following steps were discussed in connection with the reorganiza-tion of the Bank:

(i) It was recommended that the amendment to the charter raisethe Bank capital from SL 150 million to SL 300 million.

(ii) It was recommended that the annual contribution that theGovernment pays to the Bank be raised from SL 2 to 4 mil-lion. It must be noted that the Government's annual contri-bution has not been paid since 1968.

(iii) It was recommended that the Bank be allowed to borrowdirectly from Arab and other international agencies (suchas the Arab Development Fund or the World Bank).

(iv) It was recommended that the Bank make a special effortto encourage agricultural savings and for this purposeit offers interest rates higher than other banks andinterest on savings is tax free.

(v) The development of alternative sources of productioncredit would ease the burden on the ACB and couldincrease the effectiveness of the operations. Asan example, the original Agrarian Reform Law that

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distributed land to peasants and established cooperatives providedthat individuals benefitting from land distribution would haveto pay 25 percent of the land value over a 20-year period.This money would go into the cooperatives' treasuries for futureself-financing of development projects and for long-term invest-ment. However this law was never enforced and a political decisionto enforce it now would be difficult and could not be takenwithout reorganizing simultaneously the cooperative movement.

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CHAPTER 5

AGRICULTURAL PLANNING AND POLICIES

POLICY FORMULATION AND THE PLANNING PROCESS

5.01 Syrian agricultural policy has evolved through five-year investmentand production plans of which the most recent, the Fourth Five Year Plan,began in 1976. Annual plans incorporate specific incremental goals necessaryto meet the objectives of the five year plan. There is substantial continuity

from one plan to another in terms of general direction for agricultural devel-opment. It is principally the form and degree of change that characterizeseach new plan. However, exogenous events such as the recent situation withIsrael, the influx of refugees and large influxes of foreign capital, dochange substantially the annual plans, budgets and performance levels. Theplanning process, even for annual plans, tends to overstate the potential forachievement, especially in the investment area. For example, in recent yearsactual expenditures have been about 50 percent of investment goals whileproduction performance (given reasonable rainfall) has been close to targetsunder annual plans.

5.02 Several factors point toward the possibility of narrowing the gapbetween plans and achievements in the future. The first is experience. Stepsto reach many ambitious goals have been initiated and thus the ability of thesector to respond has been tested. This experience may contribute in settingmore realistic targets for future plans. Second, Law 14 1/, to the extentthat it provides instruments for the implementation of the Plan (such ascropping patterns and input availability) should be reflected in the outcomeof the planning process. However, there are some dangers in this approach aswell, since general (regional) management of farm production is being substi-tuted for individual initiative. In many instances, this means farmers willbe persuaded to use inputs and technologies and to plant crops which are notnormally a part of their farming operation. This may increase agriculturalproduction on some farms (for example, where fertilizer is introduced) butwill also reduce the operating efficiency in most farms that would not beallowed to adjust optimally to their particular resource situation.

THE ORGANIZATION OF AGRICULTURAL PRODUCTION IN LAW 14

5.03 Law 14 was enacted on November 9, 1975, to enable the Governmentto direct the agricultural sector toward the annual production targets setaccording to practices consistent with the best land use patterns. TheLaw is applied by linking the availability of inputs in compliance with speci-fied cropping rotations and practices for each region. The Law calls for thepreparation of an annual agricultural plan which: (i) determines the composi-tion of agricultural production necessary to achieve increased quantity andquality of production, (2) stipulates the obligation of farmers to comply withthis plan, and (3) determines the obligation of the government and its institu-tions relative to securing production inputs and the purchase and marketing

I/ See Attachment A to this Annex for the Text of Law 14.

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of agricultural products, including prior determination of prices. Morespecifically, the law requires the setting of production targets and cor-responding areas for all agricultural products on a national and local level,including a pre-planting determination of product prices; the adoption of anagricultural credit policy to support the production plan; a determination ofkinds and quantities of production inputs needed to reach the production tar-gets, including prices; and a marketing policy to accommodate the agriculturaloutputs.

5.04 The Law also stipulates penalties for non-compliance with the pre-scribed production plans. They include possible jail sentences and fines,loss of crops produced in violation of the plan and confiscation of the landfor an unspecified time, during which the government would operate it and keepthe generated revenues. Implementation of Law 14 in 1977 will be limitedto specific crops in irrigated areas and lands in Stability Zone I (i.e., whereannual precipitation averages 350 mm or above). Other areas will be includedin subsequent years.

5.05 Institutions serving agriculture have assumed various responsibili-ties under this new law. The Ministry of Agriculture, for example, mustprescribe standard production practices, rotations, cropping intensity, andset prices for inputs and production. Individual farmers and cooperatives areobliged to follow these standardized procedures for their respective region.Additional leverage in applying Law 14 is gained through the AgriculturalCooperative Bank, as a greater proportion of credit than previously will beextended in the form of the physical inputs under fixed proportions and forspecified cropping patterns. The Ministry of Agriculture and its specializedagencies must also certify or license each farmer's production plans beforecredit and inputs are supplied, and it must also assure that producers adhereto prescribed production plans. Farmer cooperatives also serve a very usefulfunction in enforcing the new law as each cooperative must formulate anaggregate plan and receive corresponding amounts of credit and inputs.

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THIRD FIVE YEAR PLAN AGRICULTURAL TARGETS AND ACHIEVEMENTS, 1971-75

5.06 The implementation of the Third Development Plan, 1971-1975, wasseverely affected by the drought during the 1972-73 winter and by the war in1973. However, development rallied in 1974 from the previous years' setbacksand crop production levels in 1975 compared favorably with the targets ori-ginally set for the plan (see Volume 2, The Main Report, Chapter 7, Table 7.2and Table SA7.33). With the good 1974/75 rainfall, wheat production was wellabove target but barley production was disappointing and did not appear tohave increased significantly during the decade 1966-1975. As both of thesecrops are to a large extent grown under rainfed conditions, their yieldsfluctuate widely depending on the amount and distribution of rainfall. Underthese conditions, farmers cannot be expected to increase the use of cashinputs where there is a high risk of partial or commplete crop failures. Therainfed wheat yield data (see Table SA7.5), when adjusted for annual rainfalland smoothed using 3-year moving averages, indicate a modest upward trend,probably the result of the introduction of better varieties and improvedproduction methods in the less drough-prone areas. On the other hand rainfedbarley yields similarly calculated exhibit no upward trend, the crop beinggrown largely in more drought-prone areas where the risk is too high tojustify the adoption of more costly production techniques (Figures A2.5.1 andA2.5.2).

5.07 Cotton production remained stable throughout the third plan periodand sugarbeet production declined although the plan anticipated modest in-creases in both. Vegetable crops and fruits, however, achieved or exceededplan production targets.

5.08 Planned increases in livestock production in the 1971-1975 periodwere not achieved except for poultry production (see Table SA7.17). Thesevere drought of 1973 was a principal reason for this disappointing result.

5.09 Production achievements during the plan period have also beenhampered by poor utilization of investment funds made available through MAARbudget allocations during the plan period (see Table SA7.32). Failure toutilize the funds provided is due both to over-ambitious planning targetsbased on political expediency rather than technical feasibility, and bureau-cratic delays in initiation of investment works. Delay in passage of thebudget precludes activity for up to 3 months at the beginning of the year andthe subsequent gradual increase in momentum ends with a burst of activityduring the last 3 months of the year when up to 70 percent of total expendi-tures is often incurred. The pattern was continued in 1976 when final invest-ment expenditures were expected to be about LS 200 million out of a budgetallocation of LS 442 million.

5.10 Expansion of irrigation proceeded more slowly than had been expectedduring the plan period, due in large part to the serious technical problemswhich were encountered during construction of lined canals in the gypsiferoussoils of the Euphrates Basin. The increase of about 20 percent in area ofirrigated crops grown during the plan period was due mainly to an increase inthe area of winter crops. Irrigated production doubled from 1.4 million to2.9 million tons, the increase being due both to increase in area of winter

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FIGURE A2.5.1: Syria Basic Economic MissionRainfed Wheat Yields in Relation to Rainfall and Yield Trend, 1966-1976

1.5 ~~~~~~~~~~~~~~~~1.5

3 year moving average of'61 1.0 _ H s 1.0 -yield adjusted for rainfall

0~~~~~~~~~~~~~~~~~~~~

>0oc *5 ><05 _

I I ~~~ ~~~~~~01 I I I I I I I I I I0 200 400 600 66 67 68 69 70 71 72 73 74 75 76

Rainfall (mm) Year of Harvest

World Bank - 18818

FIGURE A2.5.2: Syria Basic Economic MissionRainfed Barley Yields in Relation to Rainfall and Yield Trend 1966-1976

'1.0 p 1.0 c.X. 0 * 3 year moving average of e

)- 0.5 ~~~~~~~~~~~~~>' 0.5

a 0 g r 0 T

0 200 400 600 66 67 68 69 70 71 72 73 74 75 76

Rainfall (mm) Year of Harvest

World Bank - 18819

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crops and to improved yields of summer crops and tree fruits. Crop yieldsare in general still not particularly good, however, and further significantimprovements may be expected.

FOURTH FIVE YEA2 PLAN AGRICULTURAL OBJECTIVES, 1976-1980

5.11 The tentative nature of the Fourth Five Year Plan has been repeatedlydiscussed in The Main Report (Volume 2). The Plan has been adopted on aninterim basis and mainly for the continuation of on-going projects. Itsagricultural component has not been fully integrated with the other sectors,nor has it been cleared through the political authority. Following thediscussion of agriculture within the planning framework, of the Fourth FiveYear Plan presented in Chapter 9, this section deals with the agriculturalobjectives of the current plan, as inferred from the existing Annual Agricul-tural Production Plan, from advance drafts of planning documents and fromdiscussions with responsible officials.

On land utilization and integration of crop and animal production

5.12 The Plan aims at adjusting crop and animal production to long-runclimatic capabilities by the following measures:

(a) In the Steppe Region (18 million hectares)

(i) Stabilize sheep numbers at six million head. Numbershave previously ranged higher following a successionof favorable rainfall years.

(ii) Organize sheep production in cooperatives on designatedland tracts. This would partially substitute for thetraditional migratory Bedouin practices.

(iii) Provide for emergency storage capabilities for droughtyears.

(iv) Eliminate cultivation of Steppe land. Together withthe emergency storage target above this would help haltthe deterioration of land productive potential that isnow occurring through unwarranted cultivation and earlyovergrazing of the limited vegetation.

(v) Supply wells on each of the cooperative land tracts.

(b) In the Low Rainfall Area (rainfall of 250-350 mm)

(i) Eliminate wheat production except in the most favorableareas.

(ii) Increase production of barley and grazing forages.

(iii) Increase production intensity through less use offallow, replacing it with a cereal-fodder crop rota-tion where possible.

(c) In Areas of Adequaxte R-a infani (in excess of 350 mm)

(i) Increase production intensity to 1.0 by eliminatingthe practice of fallow completely.

(d) In Irrigated Areas

(i) Increase intensity of production to 1.6 through awinter-summer crop rotation system involving sugar-beet, wheat, cotton and corn.

(e) In General

(i) Set production targets and practices for each rainfallregion and incorporate these as part of each annualplan with compliance secured through incentives, per-suasion, and sanctions provided for in the Law 14.

(ii) Increase the number of cooperatives to 3,800 by 1980.

On Husbandry

5.13 In order to increase per capita annual protein intake from 10.5 gns(1972) to 24.0 grams per day in 1980, the plan provided for the following:

(a) Increase Dairy Production. 20 percent

(i) Importing 51,000 quality dairy animals, i.e., 30,000to private farmers and cooperative and 21,000 to 36state farms of about 600 cows each.

(ii) Upgrade local dairy breeds through artificial insemination.

- one center now in Damascus - a second to be establishedin Aleppo in 1978.

- fixed and mobile breeding stations throughout the country.

- special inseminator training schools.

(b) Double Meat Production (mainly sheep)

(i) Less cultivation in Steppe Region, therefore moregrazing capacity.

(ii) Establishment of additional sheep and range, andsheep fattening cooperatives and provision ofcredit to purchase feed.

(iii) Emergency feed reserves to prevent decimation ofsheep flock during droug^ht years.

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(c) Incease Poultry Production

(i) Fourfold increase in poultry meat production.

(ii) Two-and-one-half to three-fold increase in egg production.

5.14 The specific production targets to be achieved by 1980 are shownin Volume 2, The Main Report, Chapter 7, Table 7.3. Table SA7.35 showsbase-year and targeted for 1980 land utilization (of irrigated areas and

Stability Zone I) for the major crops.

On the Ministry of Agriculture and Agrarian Reform

5.15 The MAAR has a number of ongoing projects which will be completedunder the Fourth Five Year Plan. These have all been included in the MAAR1977 Budget (see Tables SA7.32 and SA7.31). Out of a total investment budget

for 1977 of LS 417 million, nearly a quarter is for poultry development and40 percent is for establishment of intensive dairy units. It is unlikely thatfurther major public sector projects will be undertaken in these fields duringthe Fourth Five Year Plan as a result of the Government emphasis on privatesector participation both in poultry and in dairy production through provisionof imported cattle at subsidized prices.

On Irrigation Development

5.16 Over the Fourth Five Year Plan period the total irrigated area andthe relative balance between the Euphrates and the rest of the country willnot change substantially in spite of the major ongoing investment program andthe completion of the Tabqa dam on the Euphrates River, which provides anadditional 11,900 Mm3 storage, and irrigation for a planned 550,000-600,000ha. A rough estimate of the planned area of irrigation by 1980 is shown inTable SA7.36, and is broken dow.i by agency in Tables SA7.38, SA7.39 and SA7.40.Although the total area would ony increase by 8 percent, a start would be madeto the rehabilitation of some 30 percent of the existing irrigated area. Someof the decisions that will determine the medium-term expansion have alreadybeen made, but others still remain to be finalized. It is therefore useful topresent below a comprehensive picture of the irrigation situation in Syria(see maps in Volume 2).

THE EUPHRATES VALLEY NEW IRRIGATION SCHEMES

5.17 The irrigation development projects in the Euphrates Basin are shownin Table SA7.38. Section 1 of the Balikh Basin Project will account for some21,000 ha at an estimated cost of US$11,000/ha. Additional investments willbe required for farm machinery and buildings. Currently the area is sparselysettled abid it is anticipated that few people will have the resources or expe-rience to start irrigation farming in the area on their own account in theshbort-term, Moreover labor is, and is likely to remain, scarce and full farm

mechanization will probably be required. Skilled tractor drivers and mechanicswill therefore be needed. The Government's proposal to go ahead with StateFarms is therefore sound but the organizational, operational and management

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training should be initiated now to allow sufficient time to build up a cadreof trained managers and skilled labor with practical experience to operate thefarms.

5.18 Preliminary feasibility studies have been completed on the remainderof the Balikh area but financing of the works remains a serious problem espe-cially as some OPEC donors are reluctant to be involved in a project withriparian issues. A 4,000 ha farm in the West Meskene area is nearly completedand the installation of a major pump station for the remainder of the area iswell underway. A contract has been let for the development of 14,000 ha inEast Meskene. The Resafe Plain is under study but the Mayadin Plain holdslittle promise for irrigation development.

REHABILITATION OF THE EXISTING IRRIGATION SYSTEM IN THE EUPHRATES VALLEY

5.19 Soil problems cause loss of irrigation in substantial areas in Syriaeach year. Rehabilitation of the existing irrigation system and control ofwater logging and salinity are therefore of utmost priority.

5.20 A Romanian contractor has started work on the rehabilitation of9,000 ha on the left bank of the Middle Euphrates area (Section 7 of Balikh),18,000 ha on the right bank have been studied.

5.21 The on-going consultant studies have indicated the feasibilityof controlling water logging and salinity in the Lower Euphrates Valleythrough tubewell drainage. A first project to provide control of the highwater table affecting some 35,000 ha out of 60,000 ha on the right bank isunder preparation with construction scheduled to commence in 1979, and afollow-up project to drain a similar proportion of the 60,000 ha on the leftbank is planned for 1981. A phased investment is being considered:

- provision of a sufficient number of tubewells to providecontrol of the water table under the present agriculturalsystem, at a rough estimated cost of about US$500/ha, oralternatively,

- installation of a greater density of tubewells to controlthe water table allowing for leaching, at a rough esti-mated cost of US$1,00/ha,

- followed by full agricultural development after includinga new irrigation system as well as tubewells for ground-water control at a cost of up to US$8,000/ha.

The consultants' final report should provide the information necessary todecide on the priority of the different phases.

OTHER IRRIGATION DEVELOPMENTS

5.22 The two entities with authority for irrigation outside the EuphratesValley, the Major Projects Administration and the Ministry of Public Works,

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both have development plans which are summarized respectively in Tables SA7.39and SA7.40. Consultants are now working on the feasibility study for therehabilitation of 60,000 ha in the Ghab Region on the Orontes River, for theMajor Projects Administration. The Major Projects Administration also hasplans for about 20,000 ha of new irrigation in the Fourth Plan period.

5.23 Plans to expand pumped irrigation, mainly from wells, have yet tobe formalized. A mission of the FAO/IBRD Cooperative Programme has recentlyvisited the Hasakeh area where a first stage project is being prepared toprovide supplementary irrigation for 20,000 to 30,000 ha from groundwater.Costs are not yet available. But since supplementary rather than full irri-gation is anticipated and a sizeable shallow fresh-water aquifer is apparentlyavailable, it is expected that satisfactory returns can be obtained for lesscost than for other forms of irrigation development.

5.24 After 1980 it is planned to start construction on a further 260,000ha in the Euphrates Valley, of which 60,000 ha would be rehabilitation. Else-where in Syria 300,000 ha are planned of which 40,000 ha would be rehabilita-tion of existing areas. Although it is unlikely that these goals can beachieved rapidly, there is a long-term potential to increase the irrigatedarea from its present 550,000 ha to a future one million hectares, and it willbe important to continue with the necessary feasibility studies during theFourth Five Year Plan period so that longer-term priorities may be establishedand a broader basis provided for preparation of the Fifth and subsequentPlans.

DEVELOPMENT PRIORITIES IN IRRIGATION

5.25 On economic grounds, high priority should be assigned to rehabilita-tion of those existing irrigation areas where salinity, waterlogging, floodingand poor on-farm distribution systems are at present seriously limiting pro-duction. On these areas investment costs per hectare will be generally lowerthan equivalent cost of equipping new irrigated areas in Syria, since some ofthe investment required already exists and may be considered as a sunk cost.In these areas there is considerable scope for improving yields and produc-tion, and the fact that experienced farmers are already farming these lands,and that an institutional framework (cooperatives, agricultural bank etc.)already exists, indicates that production can increase quite rapidly on com-pletion of the remedial physical works. Projected economic rates of returnshould therefore be satisfactory. Several areas suitable for this type ofdevelopment include the Middle and Lower Euphrates, the Ghab and the DamascusPlain.

5.26 Exploitation of fresh groundwater for supplementary irrigation inthe north and northeast of Syria should also give a good return on investment,and the feasibility study for the Hasakeh Project should give an indication ofthe priority for this type of investment.

5.27 Prospects for large new irrigation projects are not encouraging dueto high investment costs (Balikh US$11,000/ha for Section 1, and an estimatedUS$7,500/ha at 1974 prices for Sections 4, 5 and 6) and low rates of return,

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(Sections land 2 of 3 percent to 4 percent). The USAID has apparentlydecided against financing part of the Balikh project because of high costs andlow anticipated returns. Moreover there is not at present great populationpressure for new land settlement. Nevertheless, Syria as a semi-arid countrywill have to develop fully its water resources over the longer-term althoughshortage of investment funds may limit the pace at which this can be done.

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CHAPTER 6

SPECIAL TOPICS

DEMAND PROJECTIONS BY COMMODITY GROUP

6.01 Serious underinvestment in data for Syrian agriculture does notallow to carry out specific demand projections nor to place much trust in thecommodity balance sheets that one could compile (see Chapter 7).

6.02 In Table SA 7.43 we present the 1972-74 average levels of productionfor major commodity groups, as derived from FAO's ICS (Interlinked ComputerStorage and Processing System) files. We also present the FAO projections fortotal and per capita demand for food for each of the commodity groups, for theyears 1975, 1980 and 1985, and the corresponding levels of per capita calorieand protein intakes.

6.03 A cautionary note must be emphasized, lest one reads levels close toself-sufficiency into the comparison of the production and projected demandlevels. The latter refer to direct consumption demand and exclude quantitiesused for feed, seed, or manufacturing, or wasted. The gap between productionand demand would have been greater had these uses been also considered.

6.04 The FAO data in general must be treated cautiously, since the onlysolid base that exists for projections in Syria is the 1963 Commodity BalanceSheet, which was based on a household survey, and which is by now obsolete.As an example, the projections of total and per capita demand for cereals andsugar seem unrealistic (see the discussion in Volume 2, Chapter 8 for theformer and the discussion begining in para 6.06 for the latter).

6.05 Table SA 7.44 presents estimates of income elasticities of demand bycommodity group, based on the same FAO data.

ECONOMIC ANALYSIS OF SUGARBEET RELATIVE TO COTTON AND THE PROSPECTS FOR THERESPECTIVE AGROINDUSTRIES

6.06 Since sugarbeet and cotton production compete in the most directsense, the evaluation of the plans for either agroindustry must involveproduction analysis for the two crops. Para 8.70 in Volume 2 (The Main Report,Chapter 8) presents estimates of the private profitability of cotton andsugarbeet.

6.07 In the calculations of the above mentioned paragraph the costs ofrroc-uction per hectare are the "hypothetical average costs of production" forthe 197'6-1977 season, estimated by the Ministry of Agriculture and AgrarianReform. They include material inputs (fertilizer, chemicals, water), laborcOsts, operating costs (transportation, repairs, miscellaneous expenses), rentof land and interest on capital--but no profit. The producers' prices (perkg) are officially fixed and range for cotton between SL 1.70 for first gradeto a low of SL 1.45 and for sugarbeet from SL 0.145 for the summer crop(harvested in August-September) to 0.13 for the winter crop (harvested inJune-July).

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6.08 The Table reveals that the private rates of return for both cropsare very close, slightly favoring sugarbeet at the lower price ranges whilefavoring cotton at the higher ranges. The rate of return of sugarbeet, how-ever, is most likely overestimated. Sugarbeet must be processed soon afterharvest, otherwise its sugar content decreases radically. In countries withcooler climate and refrigerator facilities, processing can be postponed for aslong as 30 days after harvest, while in Syria this time is reduced to threedays. It is planned that the farmers adhere to a rigid schedule. They willbe provided with coupons that entitle them to bring to the mill each day duringthe season a specified quantity of beets for processing. If they do not keepup with the schedule they will bear the cost of the reduction in sugar content--a provision that the General Union of Peasants has vigorously protested.Be this as it may, the rigid schedule to which the farmer is subjected and thecost in case he is unable to adhere to it (whether for his fault, transporta-tion bottlenecks or factory down-time) have as effect the decrease in theprivate rate of return to sugarbeet compared to cotton.

6.09 The conclusion of the comparison of the private profitabilities ofthe two crops is that, at first sight, current costs and returns are roughlyconsistent with the Plan's aim of increasing sugarbeet production relative tocotton. Further examination, however, reveals that the significant indirectcosts of producing sugarbeet, such as adhering to a rigid schedule of produc-tion and delivery, mean that the farmers will consider seriously before theyexpand their acreage. Under the circumstances it appears very doubtful thatthe level of incentives provided will be adequate for reaching the targets ofthe Fourth Five Year Plan.

6.10 Aside from calculations of the respective private profitabilities,the social profitability of the two crops must also be considered. Sugar iscurrently an import commodity. Cotton is the main Syrian export commodity,which, moreover, seems to be facing an elastic demand at the internationalmarket, while domestic demand is also increasing. This is evidenced by thefact that no cotton stocks have been accumulated in recent years. Socialprofitability calculations, therefore, should also include import and exportconsiderations. The relative calculations appear in Table 8.6 (Volume 2, TheMain Report, Chapter 8).

6.11 Three alternatives are compared in the table. The two refer tosugar output of 160,000 mt that adequately covers the current levels of sugarconsumption. Moreover, if the ration-priced sugar at 0.85 SP/kg (as comparedto the free market price of 3.00 SP/kg) becomes selectively available in thefuture only to the low-income families, total consumption levels will probablydecrease below 160,000 mt. The third alternative refers to the Plan's sugarproduction of 250,000 mt by 1980. Therefore, it assumes that the threeexisting and the four planned sugar factories will be in operation. Incomparison Alternative I is based on the existing capacity and imports of rawsugar and alternative II is a combination of I and III in relying on existingcapacity, two new mills and imports of raw sugar.

6.12 The direct costs of meeting the target sugar productions are esti-mated on the basis of two import prices of raw sugar: The current cif price

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of $0.33 kg and the historically high price of the 1975 Syrian imports of$0.74 kg. Alternative II leaves a residual of at least 70,000 mt of sugar forexport. Given t:he current world demand and supply situation it is questionablewhether Syria will be able to actually export that quantity. For the purposesof the calculation, however, we have optimistically assumed thiat exports willbe feasible at the current world price of $0.25 kg.

6.13 The indirect costs of sugar production are the export proceeds ofcotton. They have been estimated by using the current world price of $0.70 kgand the alternative low price of $0.20 kg that appears highly unlikely for theSyrian quality of cotton.

6.14 These alternatives are summarized at the botton of the table. At cur-rent prices, the utilization of existing capacity with imports of raw sugar isclearly the dominant strategy. On the extreme assumption of most unfavorableprices for Syria, both for raw sugar imports and cotton exports, and theoptimistic assumption of Syrian exports of sugar (at current world prices)Alternative III becomes slightly better than Alternative II.

6.15 There is certainly merit in buying self-sufficiency to a certainextent and insulating the country from the vagaries of wild fluctuations inworld market prices for some vital commodities. Under these considerationsAlternative II with only two new sugar mills in operation is probably theoptimum combination of foregoing relatively small current revenues (loss of$14,000,000 compared to Alternative I) in order to buy substantial insuranceagainst adverse price changes in the future (again of $70,000,000 compared toAlternative I). Alternative III should be discarded since it can only buyadditional insurance against adverse price moves at exorbitant cost comparedto the other alternatives.

6.16 Some additional qualitative considerations that have not been in-cluded in our estimates further strengthen the choice of Alternative II: (i)The capital cost of the new factories has not been considered. Alternative IIsaves $100 million in foreign exchange or, in case the purchase of the two newfactories cannot be cancelled, it saves the portion of that amount which canbe recouped by reselling the factories or even scrapping them. It also savesthe installation and operating costs of the two factories in local currency.(ii) Alternative III would result in complete idleness of all seven factoriesover nine months of the year. This underutilization represents wasteful useof scarce capital. Alternative I, and to a certain extent also AlternativeII, would stretch the utilization of capital over the year by processingimported raw sugar. An additional benefit of these alternatives is thatsevere cyclical unemployment of labor is avoided. (iii) The direct comparisonof the cost oE production of sugarbeet and cotton has not accounted for thefact that the former has higher water requirements than the latter. Waterbeing the especially scarce resource in Syria, the alternative that favorscotton production should be preferred. (iv) The exact timing that productionand processing of sugarbeet requires would place further demands on theSyrian transportation network and would necessitate further additions toexpensive capital in terms of trucks, and eventually refrigerator facilities.

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ANNEX 2Attachment A

ATTACHMENT A

THE TEXT OF LAW 14

Law No. 14

The President of the Republic

By virtue of the provisions of the Constitution,

And the decision of the People's (National) Assembly at its meetingheld on 11.9.1975,

Hereby promulgates the following:

Article 1 In this law the following words shall have the meanings indicatedagainst each:

Minister: The Minister of Agriculture and Agrarian Reform

Ministry: The Ministry of Agriculture and Agrarian Reform

Investor: Any person who shall invest in agriculture by management of aproductive Project, a landlord, tenant or share-cropper.

Plan: The Annual Agricultural Production Plan.

Article 2 Agricultural plant-life and live-stock production shall beregulated in the Syrian Arab Region (Republic) according to an annual Planto be approved by the Supreme Council for Agriculture, and which shall, inparticular:

a. Regulate, increase the returns from, and improve the quality of,agricultural production.

b. Determine investors' obligations assumed in carrying out the Plan.

c. Determine obligations of the state and its agencies, particularlyinsofar as concerns purchase and marketing of agricultural products, settingprices a priori and securing production inputs.

Article 3 a. The Supreme Council for Agriculture shall be constitutedas folows:

Prime Minister ChairmanChairman of the Economic Committee Vice-Chairman

- i05 - ANNEX 2Attachment A

Head of the Regional Farmers' Bureau )Minister of Agriculture and Agrarian Reform )Minister of State for Planning )Minister of Economy and Foreign Trade ) MembersMinister of Industry )Minister of Supplies and Internal Trade )President of the General Farmers' Federation )

b. The Council shall deal with matters relating to the Plan inthe light of State general policy, and, in particular:

1. Decision-making

- Determining surface areas and production figures forthe different varieties of agricultural production at State level.

- Determining pre-fixed sales prices for specific agri-cultural products under the Plan, in the light of general policy.

2. Approve financing policies for agriculture.

3. Determine inputs and approve the sales price thereof.

4. Approve marketing policies for agricultural products.

5. Determine the part to be played by all concerned incarrying out the plan.

6. Determine general principles and develop agriculturalfarming cooperatives and agricultural public establishments.

7. Follow implementation of the Plan and take adequate deci-sions thereon.

Article 4 The Ministry shall annually determine agricultural productionfigures agreed upon by the Supreme Council for agriculture within the contextof an annual agricultural plan, comprising:

- Area to be set aside for agriculture in each Governorate.

- Varieties, returns and production rates of varieties to beproduced.

- Approved cropping patterns.

Obligations assumed by investors for production, increased returns,improved quality, protection and pest and disease control.

- 106 - ANNEX 2

Attachment A

Article 5 A follow-up Committee shall be established as follows:

Minister of Agriculture and Agrarian Reform ) ChairmanDeputies to the Minister of Agriculture and )Agrarian Reform )

President, General Farmers' Federation )Secretary of the National Farmers' Bureau ) MembersThree Directors to be nominated by the Minister of )Agriculture and Agrarian Reform from his Ministry )

Director of Agriculture and Irrigation Planning in )the State Planning Authority )

(The Functions of the Committee shall be):

- Constant follow-up of the Plan

- To propose various amendments to the Plan

- To propose increasing declared prices of agricultural production,or reducing actual prices of production inputs or protection control fees.

- The Comrmittee shall have the right to invite State Senior CivilServants as members when considering matters within their respective com-petences.

Article 6 a. An Agricultural Council shall be established in each of theGovernorates as follows:

- Governor Chairman- Head of the Farmers' Sub-Bureau )- Director of Agriculture and Agrarian Reform )- Manager of the Agricultural Cooperatives Bank )- Two representatives of Bank branches in the )

Governorates ) Members- Member of the Agricultural Affairs Executive )

Bureau )- Chairman of the Farmers' Federation in the )

Governorate.

b. Functions:

Handle all matters relating to the Plan in the Governorate, andin particular:

- Propose figures in the plan relating to the Governorate.

- Divide production duties in the light of the figures of the Plan,and the cropping patterns in the Governorate, between the various sectors,regions, districts, villages and production units which information shallbe published in the form of an annual detailed agricultural plan for theGovernorate and issued, with the approval of the Governor.

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ANNEX 2Attachment A

- Take steps to carry out the Plan and organize the various steps

involved in agricultural operations.

- Prepare regular reports on the Plan for submission to the Follow

Up Committee.

Article 7 a. an Agricultural Committee shall be set up in each adminis-

trative region to be constituted as follows:

- Regional Administrator Chairman

- Head of the Agriculture and Agrarian Reform )Department )

- A Party Representative )- Chairman of the Farmers Union ) Members

- District Officer )- Branch Manager of the Agricultural )

Cooperatives Bank )

b. Functions:

Handling all matters relating to the Plan at regional level

and in particular:

- Follow up implementation of the plan in the region, and report

regularly to the Agricultural Council.

- Take adequate steps to invest in lands which are being cultivated

in violation of the details of the Plan.

Article 8 Agricultural Committees shall set up sub-committees by resolutions

they shall adopt, to be constituted of:

- A representative of the Administrative Authority.

- A representative of the Ministry of Agriculture and Agrarian

Reform.

- A representative of the Farmers' Federation.

The functions of the sub-committees shall be to check on imple-

mentation of the Plan in the locations determined. The sub-committees shall

be entrusted with the task of taking proces verbales of all violations or

contraventions in implementing the plan. These committees shall be invested

with the powers of legal arrest in application of the provisions of this law.

Article 9 aL. A Fund to be named the "Agricultural Production Plan Fund"

shall be established with a capital of ten million Syrian Pounds to finance

the costs of implementing the Plan.

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ANNEX 2Attachment A

b. The rules relating to incentives and compensation for out-standing investors who have met all their obligations under the Plan, andsupervisors of the implementation of the Plan shall be determined by resolutionof the Supreme Council for Agriculture.

c. Resources of the Fund shall be:

- The proceeds from fines arising out of violations to the Plan,subject of Article 10(a) of this Law.

- Revenues acc-ruing from land in which the State has assumed invest-ments in accordance with Article 10(c) of this Law.

Article 10 Any investor who shall not meet the obligations assumed byvirtue of the Plan, particularly insofar as concerns areas to be cultivated,varieties of crops cultivated, timing and protection, as well as any otherobligations assumed relating to live-stock production, shall be liable tothe following penalties: -

a. A term in prison of from 15 days to three months, and a finefrom SL 500 to SL 5000.

b. Condemnation of plant-life cultivated in violation ofobligations.

c. State investment in the land subject of the violation forthe season in which the violation occurred, production being confiscated asrevenue for the Agricultural Production Plan Fund.

d. Any person whose land has been utilized in accordance withthe provisions of paragraph (c) of this Article, or paragraph (b) of Article7, shall not be entitled to claim any right, alternative or compensation inthis regard.

Article 11 In the event that an investor shall commit violations exceeding50% of the obligations assumed, the Courts shall not have the right to reducethe penalties stipulated in Article 10(a) below the minima set forth in thisLaw.

Article 12 The penalties provided for in Article 10(a) of this Law shallbe applied to all permanent workers in agricultural, public and joint sectorswhen they fail to meet the obligations assumed under the plan.

T 09

ANNEX 2Attachment A

Article 13 All directives necessary in application of this Law shall be

issued ay decree of the Minister of Agriculture and Agrarian Reform.

Article 14 This Law shall be published in the Official Gazette.

Damascus 11.10.1395 A.H. and 11.13.1975

President of the RepublicHafedh Al Assad

Chef de CabinetCouncil of Ministers' AffairsSigned and sealed

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ANNEX 3

THE PUBLIC MANUFACTURING SECTOR

CHAPTER 1

HISTORIC BACKGROUND

1.01 The Syrian public industrial sector includes all establishmentswhich were nationalized in 1964 and 1965. The first nationalization decreeswere promulgated in April 1964 and the Government took over eight industrialcompanies. Other decrees in May 1964 gave the Government a 25 percent parti-cipation in 15 other companies. At the beginning of 1965, new decrees totallynationalized 22 companies including the fifteen companies in which the Statehad taken a 25 percent participation in 1964. In addition, the State na-tionalized 30 companies in which it took a 90 percent participation and 63companies in which it took a 75 percent participation. Later on severalcompanies were denationalized with the result that the number of nationalizedcompanies was brought to 108.

1.02 Until July 1965, provisional control over nationalized industrieswas exerted by the Syrian Economic Institution. This control was then trans-ferred to the General Organization of the Public Industrial Sector and fromMarch 1968 nationalized companies were administered by three individual"Unions" established by Legislative Decree No. 21 of March 1967. In order tobetter control and increase the efficiency of the enterprises some of the 108nationalized companies were merged and the total number reduced to 47 (tex-tiles: 13 instead of 46; food processing: 11 instead of 20; and chemicalsand engineering: 23 instead of 42). The Unions were subdivided into six"General Organizations" in 1975, covering the following subsectors: foodprocessing, sugar, textiles, chemicals, cement, and engineering. The GeneralOrganizations have their legal basis in the Legislative Decree No. 18 of1974.

1.03 Today 52 manufacturing units operate within the public industrialsector under the control of the six General Organizations. Petroleum andphosphate companies remain under the supervision of the Ministry of Petro-leum and Mineral Resources. The Euphrates Company for the Manufacture ofTractors, established in 1969 by a special Legislative Decree as a jointventure with a Spanish company, is an independent public sector enterprise,under the supervision of the Minister of Industry. The tobacco, cotton ginn-ing and flour milling industries are also administered separately.

This Annex draws upon the work of Messrs. Bernard Decaux and Jean David (con-sultants).

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CHAPTER 2

ORGANIZATION OF THE PUBLIC MANUFACTURING SECTOR

2.01 In general, the public manufacturing sector consists of three or-ganizational segments (i) the units of the General Organizations which accountfor the major part of the sector (ii) the units administered by the Authorityfor Cereals and Flour Mills, Cotton Ginning and Marketing and the TobaccoMonopoly and (iii) the Euphrates Company for the manufacture of tractors whichis an independent public sector enterprise administratively attached to theMinistry of Industry. This chapter analyzes the General Organization system.

GENERAL ORGANIZATIONS

2.02 The Sector Organizations now operating are the six General Organiza-tions for Food, Sugar, Textiles, Chemicals, Cement and Engineering Indus-tries.l/ The Board of each General Organization comprises a Chairman, who isthe General Manager (the Minister of Industry is Chairman of the Board for im-portant budget and project discussions) 2/, up to five directors 31 who workin the Organization and one representative of the workers. The Board ofDirectors sets policies and objectives of production, export, marketing, em-ployment and prices. It prepares detailed plans to ensure the development ofproduction and enforces strict control upon resources available to the Organ-ization.4/ It approves the annual plan of each producing unit (investment,production, marketing, labor, costs and royalties, estimated budget). Itsets norms and performance standards for the General Organization and theunits. It reviews progress reports of the companies 5/ and takes necessaryaction. The Board coordinates the companies and resolves any disputes aris-ing between them.

2.03 The General Manager "enjoys the widest powers in directing theaffairs of the General Organization, and shall be responsible to the Minister

1/ Chapter 5 details the individual units of each individual Organization.

2/ Article 11 of Law 18 of 1974 provides that the Board, meeting underthe Chairmanship of the Minister, approves the overall annual plan ofthe Organization, approves annual budgets of units and of the Organiza-tion, proposes changes in the capital structure of units and the Organ-ization to the Supreme Planning Council and sets up, merges or abolishesproducing units.

3/ These directors are usually in charge of technical problems, finance,planning, marketing, production, etc.

4/ Article 12 of Law 18 of 1974.

5/ The producing units are sometimes called "public companies" and some-times enterprises.

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(of Industry) for the good performance of work".l/ He carries out thedirectives of the Board and has a wide ranging authority for all operationalmatters, including supervision of public companies and labor problems.

2.04 The fact that the Minister of Industry is Chairman of the Boardfor important matters enables the Organizations to speed decisions withoutgoing through the Ministry of Industry administrative machinery. This in-dependence from the Ministry is emphasized and enjoyed by the Organizations.At the same time, they find themselves acting as small ministries controll-ing a number of manufacturing enterprises. However, this autonomy raisesthe question of public accountability of the General Organizations and alsoof the effectiveness and desirability of their control over the enterprises.

2.05 The Organizations have a limited staff. Only a few directors andsometimes their assistants seem fully qualified to carry out the difficulttasks of identifying, preparing and executing projects. As a result, mostdecisions fall on overburdened General Managers. The current Five Year Plan(1976-1980) is extremely ambitious and its careful execution seems entirelyout of proportion with the administrative and managerial capabilities of theGeneral Organizations. Projects were analyzed in a hurry and negotiationsconducted hastily with foreign suppliers. In order to meet deadlines, moreattention is paid to as rapid as possible execution of a project than to asound and continuous decision making process which includes economic justi-fication and financial profitability. Since priority has to be given to theimplementation of new projects, only insufficient attention can be paid toexisting conditions in manufacturing units (in particular the smaller ones).Again, lack of expertise and time within the Organizations may explain whycurrent problems of the units remain pending and why plant supervision re-mains insufficient.

2.06 Programming and planning also seem to be weak elements in severalOrganizations. Too many small units in several subsectors require detailedknowledge and attention which is simply not available.2/ The Textile Organi-zation, which is specialized and deals strictly with textiles, appears toobtain more positive results in programming and planning its subsector.

2.07 General Organizations are more concerned with building plantsthan with analyzing real market needs. A typical case is the nitrogen fer-tilizer project which was reportedly "suggested" to the competent GeneralOrganization after much public relations efforts and a skeleton feasibilitystudy which carefully avoided the problems of foreseeable export surplus.It is only now, when construction work on the project is well in hand, thatquestions are starting to be raised on the export problem.

1/ Article 14.

2/ The Mission heard complaints from one vegetable oil mill manager thatthe staff of the General Organization for Food Industries was only com-petent with regard to sugar, although sugar had now been put under aseparate Organization.

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PUBLIC MANUFACTURING ENTERPRISES

2.08 The public enterprises (or establishments or companies) are managedby the General Manager and an Administrative Committee.l/ The General Manageris the Committee Chairman and up to four functional directors and two repre-sentatives of the workers also serve on the committee. The Committee setsperformance standards to be realized, proposes annual plans and sets upprograms to carry out policies and plans fixed by the General Organization.It is also in charge of productivity, labor and financial problems. In thelatter respect, the Committee must see that industrial cost accounting iseffectively applied.

2.09 The General Manager's first duty is to "execute the decisions ofthe Board of Directors of the General Organization and of the AdministrativeCommittee."2/ He enjoys the widest powers in managing the company's affairsbut will also be "responsible to the General Manager of the General Organiza-tions for the good performance of the work."

2.10 The management of many enterprises has demonstrated an eagernessto overcome technical difficulties in order to increase production, to achievebetter capacity utilization, to increase sales and to modernize or balanceexisting installations. Performance of individual units is reviewed in detailin Chapters 3 and 5. However, several weaknesses may already be distinguished:

Accounting Records

2.11 Such records do not reveal the real assets of the enterprises andby the same token do not show their real earnings .3/ No proper cost account-ing exists in plants, although it is made an obligation by Article 22 of Law18 of 1974. To achieve management control by the managers of enterprises(recommended below) and to give more emphasis to the public accountabilityof the enterprises by way of full disclosure of performance, an integratedmanagement control system incorporating corporate and financial planningshould be introduced in all units.

1/ Article 19 of Law 18 of 1974.

2/ Article 24.

3/ The most obvious flaw is lack of revaluation of fixed assets (and depre-ciation allowance) to take inflation into account. This procedure tendsto overstate earnings and understate the total investment, hence over-stating the return on the investment. No attempt has apparently beenmade to calculate, even approximately, the extent of this overstatement.On the other hand, there is also a reverse problem of overstatement ofthe true value of assets. This arises where plants have been built usingar. uneconomic scale of output (particularly applicable to the ammoniumnitrate plant). Where poor earnings have resulted, they have often (andmisleadingly) been blamed on price control.

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Control by General Organizations

2.12 Under the present system, unit managers must refer any decision ofsignificance to the Organization's General Manager for approval. These sub-missions cover such operating aspects as financing, production, planning,procurement, investment and personnel. This tight control gives rise to twoareas of concern, namely the accountability of units for their performanceand the limited autonomy given to the unit managers. The hierarchical struc-ture of the General Organizations prevents rapid communication and the pre-sentation of all major decisions to the Organization's management delaysday-to-day operations. Additionally, the control of the Organizations overthe planning of unit operations creates situations where delays in projectapprovals 1/ restricts units from maximizing output or achieving optimumproduct mixes.

2.13 Managers of companies do not question the planning and coordinationrole of the General Organizations, but are critical of day-to-day interfer-ences in the problems of producin~g units, and they frequently have to requestauthorizations for very small matters. Paradoxically, negative answers are infact rarely given to enterprises since General Organizations are often unableto make proper technical decisions due to lack of competent staff and evenless to provide technical assistance.

Lack of adequate staff motivation and incentives

2.14 This is frequently mentioned as the root cause of low efficiencyin public enterprises. The major handicaps are lower pay than in the privatesector and even than in the Administration and long delays before major deci-sions can be reached. In addition, the top executive may have to defend hisdecisions and his strategy in endless discussions with the General Organiza-tion management and directors who often have little understanding of theparticular industry in which the firm is operating. Such conditions are amajor cause of turnover in top and middle management leaving for neighboringcountries or for positions in the private sector. Workers in the industrialpublic sector work continuously for 8 hours a day, to which must be added anaverage of two hours transportation time. This is a heavier work schedulethan in ministries. For instance, chemists working in the Administration work6-1/2 hours a day and are paid higher salaries. Also, paid vacations amountto 14 days per annum in General Organization enterprises whereas civil servantsare given 30 days. Finally, technical training is limited and many people areonly trained on the job.

1/ One plastic company wished to acquire an injection molding machine ofslightly more than SE 0.5 million which is above the free limit of SE 0.5million under which the unit manager is free to decide to purchase ornot. Such machine was considered essential to diversify productionand thus meet keen competition from private sector producers. Not onlywas the proposal rejected by the General Organization, but no explana-tion was ever offered.

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CHAPTER 3

PERFORMANCE OF THE GENERAL ORGANIZATIONS AND PUBLIC ENTERPRISES

3.01 The General Organizations have inherited a number of small andmedium sized plants which were privately managed until the mid sixties. Lossof engineers and technicians and lack of proper accounting data have hamperedthe development of these public sector companies. However, the managementof many operating units has demonstrated an eagerness to overcome technicaldifficulties, to increase production, to achieve better capacity utilization,to increase sales and to modernize or balance the plants. Nevertheless,there are still areas where improvement is necessary. In the textile andchemical sectors there is the need to rationalize production and to modernizeand balance facilities; in the food processing sector low levels of capacityutilization will require that a solution be found to the long unsolved prob-lems of the supply of raw materials; and in the engineering and fertilizersectors there is the need to review the operations of some units in terms oftheir economic efficiency.

3.02 Within each sector there are marked variations of performance andcompanies recording good or poor performance can be found in each GeneralOrganization. Detailed assessments of the performance of the General Organ-izations are noted Chapter 5.

PRODUCTION

3.03 There is no general production index for the General Organizations.However, physical production has increased by about 3 percent annually overthe period 1965-1975 for items representing almost half of the total Organiza-tion's sales in 1975.1/ The growth in total volume of Food Industries saleshas been hampered by a fall in vegetable oil and cake production. Sugarproduction has risen by 5 percent per annum for 1965 to 1975. Cotton fabricsgrew by 2.2 percent, whilst cement output rose by 4 percent over the period.Only two new important products have emerged in recent years - nitrogenousfertilizer and steel bars - but their output is limited. The general produc-tion picture is thus one of slow growth for significant traditional items,with the exception of vegetable oil and cake whose output actually fell during1965-1975.2/ However, some products have also increased rapidly - plasticfootwear (20 percent p.a.), cleaning papers (49 percent p.a.), refrigerators

1/ See Table SA 8B.3. (Tables whose numbers start with SA, are to be foundin Volume 4, Statistical Annex.)

2/ Rubber footwear and pickled sheepskin production also fell during1965-1975.

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(27 percent p.a.), television sets (44 percent p.a.), asbestos pipes (34percent p.a.) and wall tiles (32 percent p.a.). On the average, productionmay have risen by 6 to 7 percent per annum during 1965-1975.1/

CAPACITY UTILIZATION

3.04 As will be seen in detail in Chapter 5, low capacity utilizationrates are a problem for a number of industries. Power cuts are definitelya factor. However, a lack of qualified manpower may be an even more impor-tant reason as it results in the inability to run existing facilities at fullcapacity. Foremen and technicians are in insufficient number. Some skilledpersonnel are attracted by the private sector or by other Arab countries wheresalaries are higher.

3.05 One other reason for low capacity utilization lies in irregularand insufficient supplies, particularly for spares and components. Delaysin ordering and receiving such items are linked to the fact that many itemsare imported. Delays occur because of difficulty in clearing equipmentthrough Customs and unloading at ports. Because orders are often placedfor small quantities, foreign suppliers are sometimes not eager to sendlimited shipments. One example has been the lack of imported logs for amill at Lattakia which has resulted in the almost total closing of the plantfor several weeks.

3.06 Finally, and perhaps inevitably, seasonal industries can work onlya few months a year because of the short duration of the crops. However, itis known that agricultural raw materials (sugar beet, tomatoes, grapes, otherfruits and vegetables for canning, milk, etc.) for one reason or another haveo-tten been in too short supply, even in season. This has resulted in con-tinuous financial losses for some companies.

SALES

3.07 The variation in General Organization's sales, valued at currentprices, is shown in (see Table SA 8B.4). Since 1965, annual sales at currentprices have increased from SL 477 million to SL 1,280 million in 1975, anoverall increase of 168 percent. The engineering sector shows the greatestrelative increase followed by the chemical and cement sectors. However, tex-tiles remain the most import sector with 35 percent of the General Organiza-tion's total sales. The lowest increase in sales value was recorded by FoodIndustries.

1/ Items representing 45 percent of Organization sales grew on an average by3 percent p.a., those representing 12 percent of sales grew by about 12percent and those representing 9 percent grew by 35 percent. Other itemsrepresent a large number of minor products which have increased by be-tween 5 and 10 percent p.a. These results have been obtained by takinggrowth in the physical volume of sales for individual manufacturing itemsfor the period 1965-1975.

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3.08 Total sales increased by 15 percent in 1974 and 16 percent in 1975.The breakdown for each General Organization is as follows (percent annual

increase in current prices):

General Organization 1974 1975

Food 1.5 25.0

Sugar 4.3 (11.6)

Textiles 26.8 5.2

Chemicals 35.6 27,4

Cement /a 32.6 22.7

Engineering 62.1 37.8

TOTAL 25.4 15.6

/a Includes cement, asbestos and wall tiles.

3.09 More than half the increase in the sales of food products in 1975was due to higher oil cake production and rising production by two new foodand beverage processing plants. Sugar sales decreased in 1975 as a resultQf lower output. Textile sales slowed down in 1975 mainly as a result ofprice stabilization, particularly of cotton yarn, after the extremely fastrise in prices in 1974.1/ Sales of the chemical industries companies of theGeneral Organization rose both because of production increases in 1974/75(In particular for glass, paints, leather footwear, plastics and soap) andsignificant price increases. In 1975 chemical sales rose by only 9.6 percent,when excluding fertilizer sales which almost doubled in 1975. This reflectsthe qlwdown and even, in several instances, the decline in the price of anumber of commodities in 1975. Cement sales also rose as a result of priceincreases (about 10 percent in 1974 and 20 percent in 1975) and output (13percent growth in 1974 and 1 percent in 1976). Asbestos and wall tiles salesalso increased. Finally, a similar situation also prevailed for engineeringas important price increases took place in 1974 and in some cases in 1975.More than half of the growth in the Organization sales in 1975 was due to aninCreased ouitput of steel bars. This sector also witnessed high growth rates

1! the wholesale price of yarn (N 1/12) in Damascus rose from 447 SyrianPiasters/kg in 1973 to 600 in 1974 but declined to 590 in 1975. Cotton

yarn (N 1/20) rose from 484 piasters/kg in 1973 to 669 in 1974 and 675in 1975.

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in the sale of a number of items such as refrigerators, electric cables, tele-vision sets, plywood, etc. Rapid output growth and price increases combinedto give the Engineering Organization the highest sales growth rate in 1974and in 1975.

EXPORTS

3.10 The public sector units are mainly concerned with manufacturing tomeet local demands and only surpluses of production are exported.l/ Since1970 the public sector exports have only increased from SL 62.8 million toSL 76.5 million in 1975. Since such export values are expressed at currentprices., this most likely represents a fall in real terms. Of these amounts,58 percent consisted of textiles, 13 percent of cotton seed processing by-products (oil cake and cotton linters), 8 percent of prepared groundnutsand 7 percent of dehydrated onions. The balance, i.e. 14 percent, consists ofother processed food beverages, pickled sheepskins (4 percent), tanned sheep-skins, paints, glass products and refrigerators. The cotton textile exportsubsidy scheme seems to be the only export incentive in the Syrian system.2/

3.11 The share of exports in total General Organization sales hasdecreased since 1973 and went down from 12 percent in that year to 6 percentin 1975.3/ Most of the decrease has been in textile and food products (vege-table oil cake).

Value of Exports(SL million)

1970 1971 1972 1973 1974 1975

Food products 33.6 33.0 41.1 36.6 24.8 24.7

Textiles 24.0 34.4 45.0 65.0 45.0 45.6

Chemicals 3.4 3.5 6.0 5.2 3.1 6.0

Engineering 1.8 1.5 1.6 1.9 0.6 0.2

TOTAL 62.8 72.4 72.4 108.7 73.5 76.5

1/ One exception is pickled sheep skins which are produced entirely forexport.

2/ Besides a straight export subsidy, cotton textiles exports benefit froma price of ginned cotton below the world market price.

3/ See Table SA 8B.5.

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3.12 Manufactured exports should rise in the future with anticipated sur-pluses in textile output (particularly cotton yarn). Fertilizers and cementare also likely to show exportable surpluses when ongoing projects have beencompleted. It is unfortunate that little attention has been given so far tothe need to investigate potential export markets. It does take time to findexport outlets and General Organizations should undertake to find customersas early as possible.

3.13 As regards other existing industries, additional efforts should bemade to provide food processing plants with needed raw material inputs as someof these plants have been exporting and could export more canned fruits andvegetables and other prepared products. Leather exports could also beincreased with a better supply of leather skins. Finally, higher priority toexport given by General Organization enterprises could lead to increasedcapacity utilization and thus lower production costs in a number of plants.To encourage such exports, possible export incentives might, after carefulstudy, prove to be necessary.

PRICES

3.14 On an aggregate basis, the Wholesale Price Index indicates thatprices of manufactured products (including building materials and fuels)increased by about 109 percent between 1970 and 1975. The price increaseswere particularly sharp in 1973 and 1974 (22 and 42 percent respectively).In 1975, the rate of increase slowed down to 12 percent. It is not possibleto gauge the inflation rate for domestically-manufactured goods from theW4holesale Price Index both because of its limited coverage and the inclusionof imported goods. However, information available on ex factory prices inpublic sector enterprises tells an interesting story:

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Ex Factory Price Index for Selected Manufactured Products(1970 = 100)

1971 1972 1973 1974 1975

Paint 112 152 138 243 naSoap 100 102 100 148 naBicycle Tires 95 74 88 256 228Pickled leather 149 313 490 364 395Glass containers 98 89 89 122 125Cardboard boxes 73 77 80 149 143Cement 97 97 135 154 185Matches 100 100 100 155 naPlywood 100 106 114 200 216Refrigerators /a 100 100 100 113 126Gas stoves 82 82 100 116 225Liquid batteries 91 134 109 104 112Television sets 100 104 100 100 109Paper handkerchieves 106 101 100 130 135

/a 8 cubic feet.

Source: General Organizations

3.15 The above data clearly indicate a steep rise in ex factory prices in1974 but not in 1973. Price increases also slowed down in 1975. About onethird of the above products rose by more than 100 percent from 1970-75 andanother third by about 50 percent. Only television sets, liquid batteries andglass containers showed small price increases.

3.16 As regards textiles, although substantial price increases were exper-ienced in the period 1970-75, except for synthetic yarn and cloth (which relyheavily on imported inputs), the increases were less than the rise in theWholesale Price Index for Manufactured Products.

Ex Factory Price Index for Selected Textile Products, 1975(1970 = 100)

1975

Woolen yarn 130Special Cotton cloth - 145Cotton yarn 157Synthetic cloth 212Synthetic yarn 257Woolen cloth 284

Source: General Organization for Textile Industries.

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EMPLOYMENT AND PRODUCTIVITY

3.17 During the five years after nationalization, i.e. from 1965 to 1970,the labor force of the General Organizations grew at an annual average rate of5.4 percent. From 1970 to 1975 this rate rose somewhat to 6.z percent. Bythe end of 1975, the total workforce of the General Organization was about41,000 as against 23,500 at the time of nationalization in 1965, an overallincrease of 76 percent (see Table SA 8B.6) or 5.8 percent per annum.

3.18 The Engineering Organization showed the greatest relative increase(14 percent per annum) in its labor force 1/ as shown below:

Annual Growth Rates in Labor Force

General Organization 1965-70 1970-75 1965-75

Food 9.9 7.1 8.5

Sugar 8.5 - 4.2

Textiles 3.8 5.5 4.6

Chemicals 6.8 9.0 7.9

Cement 4.8 2.0 3.4

Engineering 13.5 14.5 14.0

TOTAL 5.4 6.2 5.8

3.19 About one-third of the increase in the labor force has resulted fromnew plants opened after 1965 2/ (5 food and beverage processing units, 1 sugarmill, I spinning and weaving plant, the fertilizer plant, the steel bar plantand the television set assembly factory). Such new projects now provide 5,700jobs. They contributed about 25 percent to the total sales increase of theOrganizations during 1965-75.3/

3.20 Excluding these projects, it seems that employment annual growthmay not have been more than 5 percent in existing plants. This compares with

1/ This is due to the opening of a new television assembly plant. 40 per-cent of the Organizations' labor force increase has been due to the 1,000jobs filled in 1975 by the new plant (1,400 in 1976).

2/ In 1975 labor employed was food processing 1,387 employees, sugar 600,fertilizer plant 889, textile plant 1,084 and television assembly plantabout 1,000.

3/ The television assembly plant and food processing units are labor inten-sive. However, since for some food processing plants, capacity utiliza-tion rate is low, there may be some over-employment. Also the fertil-izers and steel bar plant are capital intensive.

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an estimated output growth of about 5 percent 1/ (excluding output realized bynew projects). It would thus appear that employment has on average not in-creased faster than production over the period considered. This is, forexample, the case for cement where employment grew by 2.7 percent annually,whereas output grew by 3 percent per annum.

3.21 However, it is important to note that for a number of years and pre-sumably already in 1965, the Organizations' units have been overmanned andcould benefit from some labor shedding. One example is the textile sectorwhich employs close to 60 percent of all manpower in General Organizations.It is estimated that the labor force may be 2 to 3 times what would benormally required in direct production processes (spinning and weaving). 2/Textile labor productivity is low. Also, there seems to be overmanning infood processing industries. Low capacity utilization of many industriesaggravates the problem. Another example of low or stagnant productivity maybe found in the cement industry where the annual tonnage of cement producedby worker was practically the same in 1975 and 1965 (i.e. 350 Kg/worker).

3.22 In the absence of a reliable constant price value added series forthe public manufacturing sector, it is not possible to assess the trend in

1/ See paragraph 3.03 above. Estimated total growth is 6 to 7 percent butsubtracting 25 percent of output growth due to new projects, output inolder companies may have increased by 4.5 to 5.3 percent.

2/ Production per spindle-hour is approximately 21 grams of yarn, whileaverage production per man-hour is about 3.5 kilograms. It takes 28man-hours to produce 100 kilograms of yarn (average metric count 28.62).These are comparable to yields in other developing countries but low bystandards in industrialized countries. In addition, the manpower directlyinvolved in production is too great at 4,700 workers. Also, many of thework stations are superfluous. Normally, a worker should work eight hoursper day, 300 days per year, i.e., 2,400 hours per year. Under these con-ditions, the 1975 output of 34,000 tons could have been achieved with1,420 workers, assuming that it takes 10 man-hours to produce 100 kg ofyarn. Thus, the production staff is substantially larger than it shouldbe to produce 34,000 tons, even if allowance is made for the condition ofequipment. Similarly, average output per loom per hour is 720 grams offabric, as against the European average of 1 kilogram. Average workingtime (operating time) is 6,400 hours per loom per year, while manpowerworking time is 2,200 hours annually per worker. Therefore, the hourlyproduction per loom is 28 percent lower than normal, using modern equip-ment, and the average operating time per loom is 11 percent lower thanthat for three shifts working eight hours a day for 300 days (7,200 hoursper year). The number of man-hours per worker annually is also 8 percentlower than the norm of 2,400 hours. However, the direct labor force inweaving in the public sector numbered 6,656 in 1975, which is excessive.Assuming, conservatively, that four looms were operated by one worker,for 2,200 hours per year, only 1,875 workers would be needed to produce16,400 tons annually with 2,500 modern looms.

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real value added per worker in public manufacturing in recent years. However,a crude indication of labor productivity trend in public sector manufacturingcan be provided by comparing employment growth with the growth in real out-put. On the assumption that the growth of real output of the public sectorwas about 6 tc 7 percent between 1971 and 1975, it can be concluded that there

was little, if any, gain in real output per worker since employment (measuredby the number of workers) in public sector manufacturing industry increasedby about 7 percent per year during the same time interval.

3.23 The labor regulations have made it difficult for the companies toreduce their work forces. Workers receive a lifetime employment contract withthe enterprise upon completion of one provisional year. Dismissal is gen-erally prohibited. Indeed, because of social and political pressures theGeneral Organizations' workforce takes two forms - one is the continued opera-tion of units which are technically obsolete and uneconomic (e.g. Rubber, Plas-tic and Leather Go. and the Aleppo Vegetable Oil Co.l/, whilst the second isthe lack of positive action to reduce the workforce even when it is recog-nized that the level of manning is grossly excessive.

PROFITABILITY

3.24 The discussions of financial profitability throughout this Annex aresubject to the caveats noted in para. 2.11 above. The financial profitability(relative to sales) of the General Organization's companies has remainedalmost constant since the mid-sixties. However, a number of companies havebeen making losses either because costs have been higher than authorized sell-ing prices (sugar, fertilizers, Rubber and Plastic Co.) or because of lack ofraw materials, other supplies or management problems (several food processingplants, the Wood Products Co. in Lattakia). Textile companies' profitabilityhas remained consistently low over the years, one reason being the low profitmargin allowed on many textiles for social reasons. Out of 52 companiesbelonging to the six General Organizations, 11 have made losses in 1975. Thelargest losses came from the Sugar Organization since sugar prices are keptartificially low - this is the only General Organization reporting operatinglosses. Profits were made by the fertilizer plant in 1975 but losses occurredin 1976 for similar low pricing policy. In 1975 the sectors' total profits,after tax, were SL 79.4 million 2/ compared with SL 41.5 million in 1971.3/

1/ Although this company is being modernized, the over-employment problemmay not be solved in the near future.

2/ Excluding the General Organization for Sugar. Due to the size of itslosses, the result would be a net loss for Organizations as a whole.

3/ See Table SA 8B.7 Net profits include reserves (general reserves tostrengthen the financial position of an establishment, legal reservesin accordance with the provisions of Article 246 of the Commercial lawand which are built up by shareholder companies, voluntary reservesbuilt up by shareholder in application of the provision of Article 248of the Commercial Law). Besides reserves, net profits include amountswhich are transferred (in principle) by establishments to the GeneralOrganizations and to the Public Debt Fund.

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However, the 1975 figure includes SL 28.4 millon profit made by one singleunit, the Arab Company for Electronic Industries, belonging to the EngineeringOrganizations, which enjoys a privileged full tax exemption status and makesconsiderable profits through heavy import duty protection and high sellingprices of television sets, considered luxury goods. Eliminating exceptionalprofits made by this company, profits were SL 51 million in 1975 as against SL53.9 million in 1971. Profitability has thus not increased significantly overthe years. In 1976 profits may have declined taking into account a SL 10million loss by the General Fertilizer Company.

3.25 An analysis of return on sales 1/ provides another indicator ofthe level and trend of profitability. These results are shown below:

Profitability of General Organizations(net profits as % of sales)

1971 1972 1973 1974 1975

Food 6.1 7.3 5.5 5.8 5.3

Textiles 3.5 3.6 4.5 4.4 2.5

Chemicals 6.8 8.5 (loss) /a 9.0 9.4

Cement 11.8 9.1 14.3 16.5 9.3

Engineering /b 14.5 12.1 11.3 7.7 6.6

TOTAL A /b 6.1 8.6 3.4 6.8 5.2TOTAL B _c 7.4 8.6 4.8 9.1 7.7

/a Fall in profitability due to exceptional loss byFertilizer Co. in 1973.

/b Excluding the Arab Company for Electronic Industries(see para. 3.24).

/c Including the Arab Company for Electronic Industries.

Return on sales have not shown any increasing trend in recent years. TheGeneral Organization for Textiles particularly shows poor performance.

3.26 An assessment of profitability trends in relation to fixed assets isdifficult due to lack of satisfactory data. Available data on gross fixedassets (at cost) for the various General Organizations, are shown in TableSA 8B.8. Excluding the General Organization for Sugar from the data, netprofits as percentage of gross fixed assets increased from 6.6 percent in 1971to 9.5 in 1974.2/ However, without the inclusion of the exceptional profits


2/ 1975 asset data are not available for all the General Organizations.

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earned by the company assembling television sets, the corresponding ratioswere 5.3 percent and 6.8 percent, indicating a modest increase in the returnon fixed assets between 1971 and 1974. Again, the performance of the GeneralOrganization for Textiles appears poor (see Table SA 8B.8).

3.27 The more fundamental issue relating to the profitability of mostOrganizations is how can this level be improved in order to increase theability of the Organizations to generate sufficient savings to finance alarger part of their own investment programs. Pricing policies and thebasis of computation are a major aspect of this problem. The current basisfor computing prices 1/ is to allow for the recovery of operating costs plusa profit margin (effectively a nominal rate of return). However, the depre-ciation element of the costs relates to the historic book value of the units'assets and not to the present replacement cost. The present pricing policiesshould be amended to allow the units to cost depreciation of assets at re-placement values rather than original cost.2/

INVESTMENT

3.28 In 1971, General Organization companies invested SL 34 million. 3/In 1975 they invested SL 201 million. Such investment corresponds to expendi-tures for modernization and balancing as well as expansion of existing com-panies. It does not include investment for entirely new projects such as theFertilizer Company and the Steel Bar plant.4/ Investment in existing com-panies can be compared with total fixed investment by the General Organiza-tions.

Fixed Investment by General Organizations

(SL million)

1971 1972 1973 1974 1975

Existing companies 33.6 49.4 55.7 92.3 201.3

Total 58.0 65.0 106.0 277.0 1452.0

1/ Except for socially sensitive items such as sugar and low grade tex-tiles, etc.

2/ Another aspect is the practically unchanged value of share capital ofthe companies since nationalization. Increasing share capital shouldgive companies more financial means and autonomy in managing their in-vestment program.

3/ See Table SA 8B.9. Investment is defined as the increase in gross fixedassets in one given year.

4/ Most of the expenditure on these two projects took place in the latesixties and in 1970 since they came into production in 1971/72.

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3.29 The increase in total investment programs in 1973-75 can be seenfrom the above data. Few new projects were undertaken in 1971-72 and invest-ment by existing companies represented the bulk of total investments. How-ever, with greater financial resources and priority given to industrializa-tion, a number of new projects were subsequently undertaken in chemicals,cement, engineering and textiles. As a result, increased fixed investmentin existing companies has represented a declining share of total investment.This increase in total investment has been financed mainly from Public DebtFund allocations, from external borrowings and, to a minimal extent, frominternally generated funds. In this regard (i.e. self financing from in-ternal funds) the performance of the Organizations has been poor. In 1976the total budget allocation amounted to SL 2,320 million. 1/ To this amount,General Organizations anticipated contributing SL 136 million 2/ or 5.9 per-cent, with the balance being financed by the Public Debt Fund or by foreigncredits. The Organizations have not, therefore, been able to achieve theirobjective of providing a substantial part of the public industrial sector in-vestment requirements. Reasons for this include not only a relatively poorprofit record by the Organizations, but also the Government decision to embarkon an ambitious industrial investment program, the cost of which is in anycase well beyond the financial means of the General Organizations.

REGIONAL DISTRIBUTION

3.30 One of the objectives of the Government's industrial policy is thedecentralization of industry. With regard to sectoral distribution, GeneralOrganizations are responsible for 52 companies (some multiplants) in the manu-facturing sector - 15 in food processing, 3 in sugar, 13 in textiles, 9 inchemicals, 3 in cement and 9 in engineering. 3/ The regional distribution ofproducing units is as follows for 1975:


2/ Actual payments by General Organizations have been lower. In particular,budgeted self financing by the Engineering Organization was SL 60 millionbut effective expenditure was only SL 27 million. This was due to lowerthan expected profits by the Television Co. (television sets salesdeclined in 1975) and by the Metalco Co. which had problems in marketingits now locally assembled buses. Also losses were made by the LattakiaWood Products Co. instead of anticipated profits. Finally, total Organ-ization profits in 1975 were about SL 35 million but SL 28 million pro-fits were made by the Television Co. alone. The latter company has aprivileged status which gives it the right to keep profits for its ownuse as it finds appropriate. It would seem that such profits were usedto finance inventories of imported TV components rather than spent onfixed asset investments.

3/ Also including other subsectors such as wood, matches and paper products.

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Food Sugar Textiles Chemicals Cement Engineering Total

Damascus 5 1 5 6 1 5 23

Aleppo 2 - 2 2 1 1 8

Homs 2 1 4 1 - 1 /c 9

Hama 1 - 2 - 1 1 5

Lattakia 3/a - - - - 2 5

Tartous 1/a - - - - - 1

Salamieh 1 - - - - - 1

Sweida 1 - - - - - 1

Al-Ghab - 1 lb

16 3 13 9 3 10 54 /d

/a The Groundnut Co. has two plants (one in Lattakia and one in Tartous).

/b Al-Ghab Sugar Mill between Lattakia and Aleppo.

/c The Metal Construction Company operates two bus assembly units - one atHoms and the other at Damascus.

/d Total greater than 52 companies because of multiplant activities in twodifferent locations for two companies.

3.31 More than 80 percent of producing units are located in the four maincenters of Damascus, Aleppo, Homs and Hama. However, in the last few yearsseveral new plants have been installed in other towns - Lattakia Canning Co.,Lattakia and Tartous groundnut processing mills, the dehydrated onion process-ing plant at Salamieh, the Arak and Wine Company at Sweida. It should be notedthat decentralization has taken place strictly for food processing plants.This is logical given the proximity of raw materials to food processing units.As regards other industries, it seems normal that engineering, chemicals andcement plants be located near major industrial and consuming centers and theissue of decentralization of industry does not seem at present to be a majorone. However, the Syrian authorities' intention is to start industrializingthe Euphrates Valley area and important projects are or will be completedthere particularly at Deir-Ez-Zor. (sugar, pulp & paper).

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CHAPTER 4

FINANCING THE PUBLIC MANUFACTURING SECTOR

4.01 From 1969 to 1975 total investment in the existing units of theGeneral Organization has been SL 484 million. Because of the paucity ofinternally generated funds, investment in new projects has been financed bythe General Organizations themselves, but only to a limited extent, the bulkof financing being provided by the Government either from its own funds orthrough foreign grants and Credit. A very limited amount of financing hascome from the Industrial Bank, estimated at only 4 percent of the totalinvestment outlays in manufacturing industry in 1971-75. In the past, how-ever, companies were able to generate funds to meet replacement needs andachieve some expansion. But in many cases such self-financing was not largeenough to undertake necessary modernization and balancing programs. Sincegovernment funds were most mobilized to pay for new projects and self financ-ing was insufficient, modernization of the public sector units has thus beenunduly neglected with negative results in capacity utilization and produc-tivity.

4.02 Overall net profits (after taxes 1/) of the Organizations' companiesfor 1969-1975 were SL 299 million and investments SL 484 million. However,excluding 1975, net profits were SL 248 million and investments SL 298 million.Depreciation funds and some borrowings have filled the gap.

Net Profits and Investments (1969-1975)(SL million)

1969 1970 1971 1972 1973 1974 1975

Net Profits/a 27.3 28.9 33.0 53.9 45.4/b 59.6 51.0

Investment 35.0 31.6 33.6 49.4 55.7 92.3 186.3/c

/a Excluding losses by sugar mills and profits by the Arab Company forElectronic Industries Co. (See Table SA 8B.7).

/b Excluding SL 21.7 million exceptional losses made by the Fertilizer Co.

/c Excluding expansion by the Arab Company for Electronic Industries.

4.03 The large deficit for 1975 stems not only from the fact that severalcompanies made losses in 1975, but mainly from the expansion programs (for exist-ing companies) included in the Development Plan 1971-1975 and carried out in1974-75. This is particularly the case for textile companies which increased

1/ All net profit figures in this Annex are after taxes, unless otherwisestated (see para 9.92 of Volume 2, The Main Report).

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fixed investment by SL 68 million in 1975. Such investment was not financedin significant amounts by General Organizations and financing had to beprovided by the Government.

4.04 Net profits made by companies include reserves and surpluses.Reserves represent about 35 percent of net profits and surpluses 65 percent.l/Reserves include the legal reserve (10 percent of net profits), reserve forinvestment financing 2/ (also 10 percent) and a general reserve to coverunforeseen losses (15 percent). Keeping reserves is a legal obligationresulting from the Commercial Code regulations but without any substantialmeaning, since such reserves have to be transferred 3/ by public sectorcompanies to the relevant General Organization. Not only are surpluses andreserves transferable, but also depreciation funds.

4.05 It appears, however, that in practice a number of companies keepreserves and surpluses (and depreciation funds). They prefer to keep theirown resources, often for working capital purposes and equipment replacement,rather than to have to rely entirely on General Organizations and on thePublic Debt Fund. Companies are allowed to spend freely on investments upto SL 0.5 million but must obtain the General Organizations' approval forexpenditures between SL 0.5 and 1 million. Above that amount, Planning andFinance Ministries have to give their approval. It should be pointed out,however, that some companies do transfer profits to Organizations. For in-stance, the Damascus Cement Company transfers net profits and depreciationto the General Organization which in turn provides investment funds as re-quested in the Budget.

4.06 The General Organizations' management seems rather lenient regardingsome companies' reluctance to release profits to them. In fact, the Organiza-tions themselves are reluctant to transfer surpluses to the Finance Ministry,although in theory they should do so 4/ and in turn receive funds necessaryfor investment purposes. It may also happen sometimes that one GeneralOrganization anticipates that a company will make losses in the near futureand then does not request this company to transfer surpluses to it. Thisseems to have been the case for the Fertilizer Co. which realized profits in1975 that were not transferred to the General Organization for Chemical

1/ See Chapter 5 on individual Organizations.

2/ The so called "Reserve for Industrial Development."

3/ Until 1970, reserves were kept as provisions for working capital pur-poses by the companies, whilst surpluses were divided between companyemployees (25 percent) and General Organizations. Since 1970, all fundshave to be given to the Organizations.

4/ In accordance with Law 18 of 1974. Transfers must include not onlyprofits but also depreciation and reserve funds. These so called"liquidity balances" are to be made available to the Debt Fund as tem-porary ncn interest bearing loans.

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Industries since losses were anticipated and actually occurred in 1976 as aresult of price fixing policies of the Government which lowered prices in1976. In other cases, the General Organization specifically asks one companyto transfer funds to finance a particular project in the same subsector. Forinstance, the General Organization for Food Industries (previously UNIFOOD)requested the Al Shark (Beer) Co. to release funds to enable UNIFOOD tofinance the expansion of the Dairy Products Co. at Homs. This is equivalentto pooling arrangements within one General Organization.

4.07 Article 16 of the Legislative Decree No. 18 of 1974 specificallystates that the resources of General Organizations consist inter alia of netprofits, reserves and depreciation funds of companies attached to it.l/ Asa result, a General Organization is allowed to arrange for funds to be trans-ferred from profitable units to unprofitable units. This penalizes profitablecompanies which have to finance the unprofitable ones, or finance projectsunrelated to their own activities, while at the same time they have to seekand justify requests for funds to the Public Debt Fund.

4.08 Although the Government would like the General Organizations tofinance a large part of their annual development programs from non budgetarysources,2/ the Government's pricing policies create difficulties for thecompanies to achieve a sufficient level of internal fund generation to makeany real contribution to the financing program, and the Organizations areincreasingly required to obtain resources from the Public Debt Fund. In1976, 94 percent of investment allocations in the Budget was financed by thePublic Debt Fund and foreign credits. The first priority of the Governmentin respect of the Organizations appears to be acceptable domestic prices,whilst financial profitability comes second. As prices are set to equal"historic" capital and operating costs, depreciation allowances and net earn-ings are insufficient to replace fixed asset investment and inventories. Ifa larger self generation of funds by the Organizations is expected, and thisis essential for implementation of their heavy investment plans, considera-tion must be given to the effect of the Government's pricing policies upontheir operations.3/ The application of stringent price controls or priceceilings, which can be revised only after much discussion with the management

1/ In return, Article 17 provides that the General Organization will utilizeits resources for financing planned expenditures (and transfer surplusesto the Public Debt Fund).

2/ At least for normal expansion programs, i.e. excluding large new projectswhich cannot be realistically financed from the retained earnings of theOrganizations.

3/ An example can be found in the cement industry for which until 1973/74total depreciation, reserves and distributed profits were insufficientto cover replacement cost of investment. However, the decision in re-cent years to substantially increase selling prices now make it possibleto cover such cost, but this does not seem to be the case for many es-tablishments in other subsectors.

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of General Organizations and lengthy time lags, seriously restricts theprofitability of units, particularly those in the food processing (includingsugar), chemical and fertilizer sectors. This in turn limits new investmentand the replacement of existing assets.

4.09 In recent years, government financing of the Organizations' invest-ment by way of the Budget has shown rapid growth, while the share of selffinancing by Organizations has remained very small:

Budget Allocations in the Public Manufacturing Sector /a(SL million)

1975 1976 1977 lb

Food 52.1 75.0 120.0Sugar 67.6 269.6 336.0Textiles 311.0 400.0 450.0Chemicals 708.0 718.0 1654.0Cement 236.3 581.0 279.0Engineering 269.0 277.0 244.0

TOTAL 1644.0 2320.6 3063.0

/a See Table SA 8B.10 for a comparison of budget allocations and actualexpenditures.

/b Proposed by General Organizations.

4.10 Self financing amounted to SL 136 million in the 1976 budget, brokendown as follows - food SL 20 million, textiles SL 10 million, chemicals SL 21million, cement SL 25 million and engineering SL 60 million.l/ Not only isbudgeted self financing of limited amount, but if funds are not forthcoming,2/the deficit is to be financed from additional government allocations.

4.11 Public Debt Fund investment allocations of domestic resources toGeneral Organizations have, since 1973, been considered as loans bearing 9percent interest with repayments beginning after the projects are in fulloperation, the duration of the loans not being specified. In fact, thesefunds are not repaid, nor is interest collected. The purpose of providing 9percent interest loans is to bring public sector industries to adopt a morecost conscious and profit oriented behavior. Interest on loans is thus in-cluded as financial expense in companies' accounts. The desired effect of

1/ In the latter case actual expenditure was SL 27 million only as explainedabove. This compares with SL 20 million self financing in 1975 and bud-geted self financing of SL 40 million for 1977.

2/ Budgeted self financing is based on forecasts made by individual com-panies and consolidated by the General Organizations.

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the 9 percent interest rate is thus to subject new investments to a test offinancial viability. However, since General Organizations mobilize allavailable surpluses from operating companies to finance their own investmentprogram, the latter do not have sufficient resources to repay the Public DebtFund.l/

4.12 The Public Debt Fund is required to meet the annual financialrequirements of all projects which have been included in the Five Year Planeven if, following approval of the Plan, project implementation producessubstantial increases in costs above originally authorized estimates. ThePublic Debt Fund administration performs no evaluation of proposed investmentprojects; it is assumed that these responsibilities are exercised by the StatePlanning Commission when selecting projects for the Development Plan on thebasis of proposals made by the General Organization.

4.13 However, the Ministry of Finance exercises control on the accountsand budgets of the General Organizations. Each Organization is required tosend the Finance Ministry its budget for approval. As a rule, the Ministryonly evaluates the overall budget request from each Organization but may alsoinvestigate the financial position of individual operations units for clari-fication and analysis. Recommendations are made by the Ministry to the Min-istries of Industry, Supply and Planning, as well as to Organizations in orderto solve problems encountered by companies in financial difficulties. Suchrecommendations are made sometimes after visits in the field and detailedanalyses of reasons for shortcomings and losses.2/ They range from sugges-tions to increase prices to proposals for reorganizing the company accountsor improving stocks management. The Ministry claims to have, in several in-stances, rejected the budgets of individual companies unless measures aretaken to improve the unit's performance.

4.14 The Ministry of Finance has recently succeeded in having the Gen-eral Organizations agree to follow common accounting principles. There hadbeen insufficient harmonization in the preparation of accounts, particularlyfor depreciation, reserves and other provisions. Prior to nationalization,accounting in private firms was extremely weak. Progress has been made inrecent years in preparing financial accounts (balance sheets, profit and lossstatements, etc.). It is hoped that further progress will be made in thenext two years, so that by the end of 1978 fully comparable and consistentaccounts will be submitted by the General Organizations' companies.3/ How-ever, the problem of cost accounting has not been solved and lack of appro-priate data hampers normal management decisions based on exact knowledge of

1/ Since 1975, formal loan agreements are signed between the Public DebtFund and the General Organization (not the individual company).

2/ This happened, for example, in the case of textile and wood productscompanies.

3/ A special committee has been set up within the Ministry of Finance tosee that public sector enterprises effectively apply rules laid downby the new accounting code.

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the financial profitability of individual items. This is particularly impor-tant for the several multiplant industries producing a variety of items.At present textile companies are completely unable to determine for instance,whether they lose or make a profit on individual textile produ_.s. This is animportant issue in many firms and technical assistance to the Ministry ofFinance, the Organizations and producing units is urgently needed in thisrespect.

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CHAPTER 5

REVIEW OF INDIVIDUAL GENERAL ORGANIZATIONS

5.01 Selected data for 1975 (or 1976, where available) for the GeneralOrganizations is presented in Table A3.5.1.

Table A3.5.1: GENERAL ORGANIZATIONS: SELECTED DATA, 1975

General Employment Assets ŽSalesi Exports/ (% (% menP iOrganization ('000) (SLm) (SLm) (SLm) Sales) Assets) SLm)F

Food 5.6 107 254 35 5.3 9.4 14Sugar 1.8 83 135 - /c /c 3Textiles 23.5 611 456 38 2.5 1.9 130Chemicals 4.2 1511d 154 7 9.4 n.a. 6Cement 2.7 138 168 - 9.3 7.6 15Engineering 3.5 72 453 5 23.6 7.7 33

Total 41.3 967/d 1,620 85 7.7/c n.a. 201

/a Gross fixed assets at cost.lb 1976./c General Organization for Sugar recorded a loss; total ratio of profits

to sales excludes sugar./d 1974.

Source: Volume 4, Statistical Annex, Tables SA 8B.5, SA 8B.6, SA 8B.7,SA 8B.8, SA 8B.9.

GENERAL ORGANIZATION FOR FOOD INDUSTRIES

Facilities and Products

5.02 Prior to nationalization in 1964/65, all of the food processing unitsin Syria were privately owned. With nationalization and expansion, the 15 com-panies which now comprise the General Organization for Food Industries (GOFI)control the major part of the food products industrial sector. The only itemwhich is still mainly produced in the private sector is chocolate (1,168 tonsproduced by the private sector in 1975 versus only 93 tons by the public sectorin 1975).1/ There are seven main lines of production: vegetable oil and by-products (oil cake, cotton linters, soap), dairy products, beverages (beer,

1/ The private sector also produced 6.3 percent of fruit and vegetablecanned products, 27.3 percent of margarine, 16.3 percent of biscuits,13.3 percent of beer and 0.3 percent of vegetable oil.

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wine and arak), vegetable and fruit canning, biscuits,l/ dehydrated onionsand groundnuts. Vegetable oil is by far the most important activity in thissector, totalling 60 percent of sales in 1975 (see Table SA 8B.ll).

Capacity utilization and production

5.03 Capacity utilization is high for vegetable oil plants which aresupplied with sufficient cotton seed.2/ Tomato paste plants are not workingat full capacity partly due to technical problems and lack of qualified staff,but the situation has been improving particularly at the Damascus canning fac-tory. However, low capacity utilization rates have been recorded for cannedbeans (Lattakia), milk, wine, biscuits and chocolate. In the case of beans,milk and wine, the problem is shortage of regular supplies. For chocolate,competition from the private sector may be one reason for underutilizationof capacity, as public sector plants may find it more difficult to respondto changing market conditions.

5.04 Production has not been increasing rapidly for a number of importantitems:3/ vegetable oil and oil cake output has stagnated since 1965; the sameoccurred for groundnuts whose producton (for export) started in 1967 and waslower in 1975 than in the initial production year. Chocolate, butter andbutter oil output has also stagnated or declined. However, production of beerhas risen at a fast rate growing from 2 billion liters in 1965 to 6 billion in1975 (see Table SA 8B.12). Biscuit output has also been growing in recentyears as well as apricot jam and processed milk. However, on the whole, GOFIcompanies have not shown very fast production rates in past years. Only threesmall new plants (1 canning plant and 2 arak and wine factories) have been setup since 1970.

Sales

5.05 Sales of GOFI companies have risen from SL 114.5 million in 1971to about SL 150 million in 1973 and 1974. Most of this increase was linkedto higher production of cotton lint, increased Damascus oil output, and thedevelopment of beer, wine and arak sales. However, sales rose sharply to SL190 million in 1975, although half of the increase was only due to much highersales of oil cake by the Aleppo Vegetable Company.4/ This company alone con-tributes 48 percent of total GOFI sales. Vegetable oil and by-products, bev-erages and canning represented 82 percent of total sales in 1975. The two new

1/ To which imust be added sweets and chocolate.



4/ Sales of oil cake went from 81,673 tons in 1973 to 46,682 tons in 1974(abnormally low year) and 84,891 tons in 1975. Also despite stagnantoil and oil cake production, increased oil cake prices have pushed thevalue of sales upwards.

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plants (the Lattakia Canning Co. and the Homs Arak and Wine Co.) which cameinto production in 1974 added only about 10 percent to GOFI's sales increasein 1974/75.

Exports

5.06 GOFI companies export mostly vegetable oil cake, groundnuts, bis-cuits, dehydrated onions and fruit and vegetable canned products. In 1970-1973 exports averaged SL 35 million 1/ but fell to SL 25 million in 1974-75.As a result the share of exports in total GOFI's sales declined from 32 per-cent in 1972 to 13 percent in 1975. A major cause of the decline was the fallin vegetable oil cake exports. Whilst total production of oil cake stagnated,domestic sales went up as a result of an increased demand for cattle feeding.The average local selling price rose from 30 piasters/kg in 1973 to 37 in 1974and 39 in 1975 whereas export prices remained constant at 47 piasters, thusreducing the price differential favoring exports. Groundnut exports have alsofallen, and the volume of exported nuts was only 2,632 tons in 1975 as against5,689 tons in 1973.2/ This fall may be linked to a decline in total outputfrom 8,260 tons in T973 to 4,641 in 1975. Also export prices grew from SL1,685/ton in 1973 to SL 2,388/ton in 1975, i.e. by 42 percent which may haveslowed down export demand. The production of dehydrated onions is entirelyexported to the USSR and the EEC. Volume of exports has stagnated but salesvalue substantially increased as the unit price has more than doubled since1973.3/ For the first time, the exporting company made a profit in 1975.

5.07 There is a potential for cotton linter exports. Linters are a by-product of vegetable oil output 4/ and are exported profitably to the U.S.,Japan and Europe. Production cost (for lower grade) is 26 piasters/kg and -theaverage export price was 54 piasters in 1974 and 98 piasters in 1975. Exportshave stagnated over the years because cotton linter production is limited bylack of growth in capacity of the vegetable oil plants.

5.08 One disturbing factor has been the disappearance of tomato paste,apricot jam and canned beans exports and the stagnation in other vegetablecanned products exports. Lack of adequate supplies for the plants is a prob-lem, but there would seem to be an export market for canned fruits and vege-tables which would be worth while to explore.

1/ See Table SA 8B.15

2/ Exports are made to Switzerland, the USSR and Hungary mainly.

3/ Exports amounted to 121 tons in 1971, 221 tons in 1972, 1,220 tons in1973, 1,168 tons in 1974 and 960 tons in 1975. Export values are shownin Table SA 8B.15.

4/ Linters are used to produce cellulosic acetate, viscose, dynamite. Itis not feasible to process them in Syria as the minimum economic sizefor an acetate plant is 20,000 tons/year, and there is not enough linteravailable locally.

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Profitability

5.09 The net rate of return on gross fixed assets fell slightly from anaverage of 11.2 percent in 1971-73 to 9.7 percent in 1974-75.1j Four com-panies which reported losses for both 1974 and 1975 (The Syrian Biscuits Co.,the two wine and arak companies, and the Lattakia Canning Co.2/) also had lowlevels of capacity utilization. The situation is aggravated in the case of'wine companies by the fact that they have to purchase grapes at high pricesand also have to compete with small private factories which use alcohol frommolasses to supplement grapes for arak production.

5.10 In fact the only GOFI companies which showed reasonable profitsover the years have been the vegetable oil companies,3/ the beer factory andthe groundnuts company. This is confirmed by an analysis of net profits onsales which averaged in total around 5 percent in 1975, while these companiesshowed an average profitability of 7 percent in that year. All other com-panies' profits only averaged 2.5 percent on sales in 1975.

Investment

5.11 Investment totalled SL 55.9 million (at current prices) from 1965to 1975.4/ To this total must be added the cost of five plants set up in1965-74 with a total value of SL 12.6 million only. In addition, about SL 21million were needed for projects under construction in 1975. Until 1975 in-vestments were financed entirely from retained earnings and bank borrowings.In fact, profits and depreciation have been higher than investment in pastyears (in million of SL):


2/ The Damascus Canning Co. also showed low profitability.

3/ Vegetable oil companies have a reasonably good profitability because al-though vegetable oil selling prices are kept at a low level (SL 150/tonin 1975 against production cost of SL 140/ton) and 20 percent of salesonly are allowed at the free market price of SL 300/ton, other products(hydrogenated oil, oil cake and cotton linters) are sold at a goodprofit.


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Table A3.5.2: SUMMARY OF SOURCES AND USES OF FUNDS

Average Average1967-1970 1971-1974 1975 TOTAL

Net profits 18.4 26.2 10.1 54.7Depreciation 17.0 16.3 4.9 38.2

Sub-total 35.4 42.5 15.0 92.9

Investments (replacement,expansion) 16.8 7.2 13.7 37.7

New projects 4.8 7.8 21.3 33.9

Sub-total 21.6 15.0 35.0 71.6

Surplus (deficit) 13.8 27.5 (20.0) 21.3

5.12 Companies have thus been able until 1975 to finance investmentswithout requesting direct Government funds. In general profits are kept bythe companies and not transferred to GOFI unless asked. In one instance GOFIasked Al Shark Company to transfer funds to the Dairy Homs Company (which hadbeen unprofitable in past years) in order to enable it to finance an expansionprogram. In any case the level of investment has been modest in the past tenyears.

5.13 In 1975 the level of expenditures rose substantially: replacementinvestment and small expansion doubled from SL 6.3 million in 1974 to SL 13.7million in 1975. Total capital expenditures amounted to SL 35 million, signi-ficantly less than anticipated in a SL 52 million budget for GOFI. Thisbudget included SL 19 million in self-financing by GOFI and the balance fromthe Public Debt Fund. Delays have been incurred because of time needed forfeasibility and engineering studies, and in some cases civil work has beenretarded.

Employment

5.14 From 1965 to 1975, the workforce of the companies increased fromabout 2,500 to 5,659,1/ about half being seasonal workers. One third of thelabor force is in vegetable oil companies and about half in fruits and vege-table processing plants (two canning factories, dehydrated onion plant andgroundnut factory). About 70 percent of the increase in the workforce from1965 to 1975 is explained by employment opportunities offered by six newplants, but it should be noted that five of them have been running at aloss. The low rates of return and low levels of capacity utilization inthis sector raises the question of whether unprofitable units should be


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closed and production rationalized or whether the units should continue tooperate because they provide employment, albeit uneconomically.

5.15 Exc?ssive work force results sometimes from outdated productionmeans. This is the case for instance in vegetable oil milling where facili-ties are often very old and the processes used are inefficient but require alot of labor. Many workers are old and sick. In one vegetable oil refineryunit there were 250 workers, while a similar modern plant would have use foronly 15.

Prospects

5.16 Notwithstanding the low rate of return on fixed asset investment andsales (see paras. 5.08 and 5.09), GOFI development programs since 1971 haveincreased fixed asset investment (gross) from SL 67 million to SL 107 millionin 1975. This has been achieved through retained earnings although substan-tial new projects in 1975 had to be funded by Government budgetary resources.Such a situation has continued to prevail in 1976 and will most likely con-tinue in 1977 and future years due to the size of the 1976-1980 Plan for foodindustries.

5.17 GOFI's proposed 1976-80 Plan calls for investment outlays of SL160.1 million in 1976-80.1/ Most of the planned projects are carried overfrom the previous Plan period (1971-1975). Reserve projects totalling SL 135million are unlikely to be completed before 1980.2/ One-third of the amountfor transferred and new projects relates to replacement and normal expansionof existing plants, 28 percent for canning plants (including tin cans), 16percent for a milk factory, 12 percent for beer expansion, and 8 percent forvegetable oil expansion (solvent extraction plant).

5.18 This represents a very moderate investment program although severalprojects are unlikely to be completed, in particular the milk processingfactory, which has been affected by lack of milk supplies. The solvent ex-traction unit which would significantly increase vegetable oil yields maynot be approved due to lack of budgetary funds.3/ As a result the size ofproposed expenditures may be reduced from SL 160.1 million to SL 111.2 million.Already in 1976, out of SL 75 million budgeted 4/ only SL 50 million wereactually disbursed due to implementation delays. Expenditures were mostly


2/ Although SL 13 million have been requested in the 1977 Budget for build-ing a 15 imillion liter beer factory at Lattakia.

3/ The Company does not have the resources to finance the project itself asthe price of vegetable oil is kept artificially low for social reasons.

4/ Of which SL 20 million from net GOFI resources and SL 50 million fromthe Public Debt Fund for new plants and major expansion.

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for the beer factory expansion, the vegetable oil mill in Aleppo (full moder-nization program), the dehydrated onion plant, and the new macaroni projectat Dar'a. SL 15 million were also spent (out of SL 50 million) on replacementand minor expansion of existing mills.

5.19 The General Organization for Food Industries was created recently,and succeeds the Union for Food Industries which was dissolved in 1975 afterthe Sugar Organization was set up. The main food processing activity under,GOFI is vegetable oil. One may wonder whether a reorganization of the variousvegetable oil companies under a common management may not be desirable, sinceapparently GOFI competence and contribution in that field is limited. In gen-eral GOFI's role is not questioned regarding planning and planning control;however the normal decision-making process may be left to company managerssince apparently GOFI's intervention in detailed operational matters isusually followed by approval in the absence of qualified experts within GOFI.The latter's role should thus be seen more as one of a planning unit whichprepares projects, in cooperation with production units, for approval byplanning and financial Government authorities.

GENERAL ORGANIZATION FOR SUGAR


5.20 This Organization operates three sugar mills: one at Homs built in1948, a second at Damascus built in 1957 and a third at Al Ghab near Lattakiabuilt in 1967. Refined sugar is produced from local sugarbeet and importedraw sugar. The General Organization for Sugar was set up in 1975 at Homs afterseparating from the Union of Food Industries (UNIFOOD). The main purpose ofsetting up a separate Organization for Sugar was to make it responsible forthe construction of four new sugar mills with a total capacity of 240,000 tonsof refined sugar.

Production and capacity utilization

5.21 In 1975 sugarbeet production was 187,000 tons which, assuming anaverage 12.5 percent sugar yield, gave 20,125 tons of refined sugar. Sincetotal refined sugar output was 117,000 tons in 1975, it can be seen that mostsugar is refined from imported raw sugar.l/ In addition molasses and beetpulp used for cattle feeding are produced as by-products.

5.22 Refined sugar production 2/ has not increased significantly sincethe opening of a new sugar mill at Al Ghab.3/ Total production averaged

1/ Refined sugar imports amounted to 16,000 tons in 1975.


3/ For instance, production at the largest mill (at Homs) was 50,243 tonsin 1969 and 53,436 tons in 1975.

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130,000 tons over the period 1969-1975. Domestic sugarbeet output has notincreased either over the years and has even declined since 1973. Sugarbeetproducer price has been kept low and was lower in 1975 than in 1973,1/ thusdiscouraging increased output; sugar plants have therefore been running at

about 50 percent of capacity. Imported raw sugar imports have accordinglyremained at. a substantial level over the years. Only about 20 percent ofrefined sugar is produced from sugarbeet.

Sales and profitability

5.23 The estimated value of sales has averaged around SL 110 million over

the last few years. Sugar mills have incurred losses for a number of yearssince the price of refined sugar is not allowed to reflect increases in im-ported raw sugar which may cost two to three times more than refined sugar.2/In 1974 the price of impbrted raw sugar was SL 1,494/ton and in 1975 SL 2,897ton, compared with a selling price (ex-factory) of refinrJ sugar of SL 792.5ton in 1974 and SL 844.5/ton in 1975.

5.24 There are two prices for sugar: a rationed price of 80 piasters/kgand a market price of SL 3/kg. However, rationed sugar is made available atthe annual rate of 18 kg per capita, which is considered generous, and a sub-stantial amount of this sugar is sold on the black market at about SL 2/kg.As a result quantities purchased at the SL 3/kg market price are very limited.This severely reduces the impact of the fixed market price mechanism which wasestablished to cover the high cost of imported sugar and to reduce heavy sub-sidies necessary to cover the difference between production cost and rationedprice. In 1974 production cost of refined sugar was SL 1,612/ton at the Homssugar mill whereas the selling price was SL 792.5/ton.

5.25 Losses by the General Organization for Sugar Industry increased fromSL 28.3 million in 1970 to SL 66.9 million in 1973 and an estimated SL 200

million in 1975. Losses have increased mainly as the result of higher rawsugar prices which represent about 90 percent of total production cost. Salesof molasses and beet pulp represent only about SL 2 million and profit on suchsales is about SL 0.3 million.

Prospects

5.26 Investment in existing sugar mills has been small and covers replace-ment needs and purchase of new machinery. In 1976 these mills received SL 7million from the Public Debt Fund in addition to SL 5 million generated throughnormal depreciation. Sugar mills are managed largely independently from theGeneral Organization; the latter's role being mainly to plan and execute newsugar refining plants.3/

1/ Sugarbeet price went up from SL 50/ton in 1970 to 97 in 1973 and 107 in1974 but declined to 95 in 1975.

2/ The lower price of sugarbeet cannot compensate for the high price ofsugar as beet is available only in limited supply.

3/ Total staff of the Organization numbers 42, most of whom are in the

Technical and Finance departments.

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5.27 The General Organization's proposed 1976-80 Plan envisages expendi-tures of SL 693 million for four sugar mills of 60,000 tons refining capacityeach. The total cost of such mills is SL 740 million.l/ A total of SL 222million was spent in 1976, of which SL 42 million went to local constructioncosts and the balance for payment of machinery to foreign suppliers. Anamount of SL 336 million has been requested in the 1977 budget. Should sucha request be approved, and funds be effectively spent, 80 percent of the pro-posed investment allocation would be used in the first two years of the FourthPlan period. This might prove too ambitious since work on two mills (SouthGhab and Deir-Ez-Zor) is not scheduled to be completed before 1978/79. Inaddition, due to expected low availability of sugarbeet,2/ full productionis not anticipated to be reached until at least four years following comple-tion of each mill. In fact, sugarbeet production has declined from 248,000tons in 1972 to 187,000 tons in 1975 and there is great uncertainty as towhether enough sugarbeet will be available even after four years followingcompletion of each mill. Consequently, adding a 240,000 ton capacity forrefined sugar (produced from sugarbeet) to the existing 120,000 ton capa-city is likely to prove uneconomic. Capacity may be too large in view ofprojected domestic demand for sugar and production costs too high because ofa shortage of sugarbeet; new mills may have to use imported raw sugar andproduce sugar at a cost higher than imported refined sugar.

GENERAL ORGANIZATION OF TEXTILE INDUSTRIES

5.28 The textile companies belonging to the public sector (spinning mills,weaving, finishing, carpets, underwear and such) are under the authority ofthe General Organization for Textile Industries, which is itself attached tothe Ministry of Industry.

5.29 The Organization is responsible for distributing orders over thevarious mills within the framework of approved production programs; followingup their execution, specifically assuring the supplies required for manufac-ture; computing the operating results at the end of the fiscal period anddrawing conclusions for the management of the enterprises; and carrying outthe labor policy best suited to the requirements of the enterprises (workload,wage scale, training) within the framework of the legislation in force.

5.30 The Organization is further responsible for ensuring that orders forboth the domestic market and for export are filled out properly, such trans-actions being negotiated by the relevant state commercial agencies. To thisend, it must:

(a) supply the domestic market with items of ordinary, everydayquality at the lowest possible prices for sale in specializedpopular stores;

1/ See Table SA 8A.9.

2/ Linked to problems in developing irrigation in sugarbeet growing areas.

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(b) supply yarns to enterprises in the private sector (weaving,hosiery);

(c) supply fabric to wholesalers and retailers; and

(d) supply the industries with the textile items they require (bagsfor sugar refineries, the chemical industry, or flour mills,for example).

5.31 The Ministry of Domestic Trade and Supplies and the Ministry ofIndustry set the selling prices or profit margins, and frequently, for socialreasons or because of delays in obtaining authorization to pass on costincreases, the compulsory ceiling selling prices are lower than costs. Theconsequences of this include discontinuation of manufacture of items sold ata loss, which vanish from the market, and a lowering of quality by eliminatingcertain features of an article to reduce costs. At the same time, the Govern-ment ginning plants sell the cotton fibers to the spinning mills at a pricethat is approximately half the world price for cotton of comparable quality.

5.32 Four factors can be identified as having a distorting effect onoperational results of public sector textile enterprises:

(a) raw cotton is purchased at a preferential, arbitrary price;

(b) the labor supply is far too abundant and often insufficientlyskilled to operate modern equipment;

(c) there is a low workload, inflexibly assigned whatever theproductivity potential of the equipment involved may be; and

(d) there are compulsory selling prices, sometimes lower than thecost.

Furthermore, management is not in a position to generate the surplusesnecessary to cover investment in replacements and expansion.

Profitability and Investment

5.33 Data available on the companies attached to the General Organiza-tion for Textile Industries show a rather low profitability over the last fewyears. 1/ Profits were especially low in 1975 and some companies will alsoshow a loss for 1976, having only balanced their operations in 1975; othersachieve somewhat irregular results from one year to the next.

5.34 The increase in production costs (notably in payroll costs) is onecause of this; apparently price adjustments have been partial and allowedonly after a lengthy waiting period. As mentioned, another reason for low


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profits is the policy to sell some t xtiles at a low price for social reasons.Net profits on sales and on gross fiaed assets (at cost) have therefore evolvedas follows: 1/

1-71 1972 1973 1974 1975

Net Profits as % of sales 3 5 3.6 4.5 4.4 2.5

Net Profits as % of grossfixed assets 2 9 3.0 3.7 4.0 1.9

5.35 In theory, all the net pro-its of the enterprises are transferredto the General Organization, which, in turn, transfers them to the Ministryof Finance. In return, the Ministry of Finance provides financing for invest-ments. Actually, however, the General Organization transfers nothing to theMinistry of Finance, but retains the funds to cope with its own needs, suchas covering maintenance expenses and replacing certain items of equipment thatare in poor condition. In any case, the resources that become available to itare relatively small, mainly because of the restrictions on selling prices,but also because of low productivity in the mills. This makes it impossibleto implement a substantial expansion and/or a constrained modernization program.

5.36 Data on investments by the General Organization for Textiles are notavailable prior to 1969. During 1969-75, the bulk of investments in existingcompanies of the various General Organizations has been in textiles: SL 332million out of total investments of SL 499 million, or 66.5 percent. Yet netprofits in textiles were very substantially below investment levels, suggest-ing that the bulk of this investment was financed from sources other thaninternal cash generation.

Prospects

5.37 The Organization's proposed Plan for 1976-80, the implementation ofwhich is already partially under way, involves three major objectives:

(a) replacing textile imports by national production;(b) promoting exports; and(c) providing employment for new workers.

In line with these goals, the Plan, along with developing spinning and weaving,will aim at regenerating the carpet-making industry, a national resource whichwas tending to die out, as well as developing the men's and women's clothingindustry. The amount of investment proposed for the principal categories isas follows: 2/

1/ See Tables SA 8B.38 and SA 8B.39.


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Amount(Millions of SL) %

1. Replacing and updating of equipment 165 13.62. Cotton spinning 70C 57.93. Wool industry (washing, spinning, weaving,

carpet-making) 172 14.24. Men's and women's clothing 98 8.15. Spinning of cotton waste 15 1.26. Miscellaneous (testing center, spare parts

manufacturing plants, etc.) 60 5.0

Total /a 1,210 100.0

(or in millions of US$): 306

/a Including transferred projects from previous Plan, and new projects, but notthe so-called "reserve" projects see Table SA 8B.41.

5.38 The cotton industry accounts for over 70 percent of planned textileinvestments. As can be seen in Table SA 8B.41, the investment effort will beconcentrated in 1977 and 1978, having already reached quite a substantial levelin 1976. The startup of new mills should be staggered over 1977 and 1978 ifthe completions are met and if clients are released on time. It appears thatthe proposed Textile Plan for 1976-1980 will enjoy priority in both the finan-cing and supplying of building materials.

5.39 In 1975 the number of people on company payrolls totalled 23,506 andby 1980 existing companies are expected to reach a total of 28,317, i.e., a 20percent increase (see Table SA 8B.42). In addition, the new mills anticipatedby the Plan would provide employment for another 15,203 individuals. Thus,by 1980 the total number of persons employed by the General Organization forTextile Industries would be 43,520. 1/ This substantial increase implies thatno effort will be made to reduce redundant labor in textile mills.

Spinning

5.40 The production of yarns (cotton, pure wool, blended wool, chemicalfibers) should increase from the 1975 figure of 34,000 tons (including 30,000tons of cotton) to 114,000 tons by 1980 2/ (including 106,000 tons of cottonyarn). Approximately 52,000 tons are earmarked for the domestic market (ofwhich 21,400 tons will be processed for production of fabrics in the publicsector and 18,600 tons in the private sector) and 62,000 tons are for export(see Table A3.5.3 below).



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5.41 The amount of raw cotton required by the textile industry in 1980will be 116,000 tons, as against 33,000 tons in 1975, or an increase of86,000 tons. This amount is available in Syria but it will come as a deduc-tion from exports, which in 1975 amounted to 102,000 tons. In 1980, if thegoals of the 1976-80 Plan are achieved, yarn exports will total 57,300 tons.

5.42 In 1980, yarn production is planned to be used as follows:

Table A3.5.3: DISTRIBUTION OF YARN SUPPLIES 1975-1980(in tons)

Public Sector Private SectorExports Domestic Total Exports Domestic Total

Year market market TOTAL

1975 4,800/a15,200 20,000 7,600 15,400 23,000 42,800/b

1980 62,200/a 21,400 83,600 12,000 18,600 30,600 114,000

/a Including 108 tons woolen and synthetic fabrics in 1975 and 917 tons in1980.

/b Data for 1975 include 33,900 tons domestic output of yarn and 8,900 tonsof imported yarn.

Source: General Organization for Textiles.

5.43 The total amount of investments planned in the spinning industryis SL 700 million 1/ to cover installation of 449,000 new spindles, to whichmust be added funds for modernization and replacement of old spindles. Itmay be possible to achieve some savings through modernizing existing mills,in lieu of some of the planned expansion.

Weaving

5.44 Public Sector. Under the provisions of the 1976-80 Plan, fabricproduction is slated to increase from the 1975 budget of 16,400 tons to 26,300tons by 1980, 2/ and to achieve, this target, no new weaving plant is to beinstalled during the Plan period. 3/ Consequently, part of the SL 165 millionallocated for replacement and updating of equipment will be utilized to

1/ Excluding SL 35 million for a plant to produce 3,000 tons of yarn fromcotton waste. This project is a "reserve" project and thus may be con-sidered as unlikely to be implemented during the Plan period.


3/ One small weaving plant in Lattakia and one wool plant are envisaged asreserve projects and will not be implemented before 1981.

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modernize existing looms and purchase new ones. However, such an amount seemsinadequate, taking into account the need to modernize the weaving sector in anintegrated fashion and install new looms to increase cloth output by about10,000 tons by 1980.

5.45 Private Sector. Taking into consideration the production and exportof yarn as well as the production of fabrics by the public sector anticipatedfor 1980, the private sector is expected to be using about 30,600 tons of yarnin 1980 as against 23,000 tons of yarn in 1975, i.e., 7,600 tons more, or anincrease of one-third. There are no reliable data on the amount of equipmentin the private sector as regards either the number of units involved or theirfeatures, or on the manpower used. However, to produce 30,600 tons, assumingthat every loom is operated each year for 5,520 hours 1/ (2.3 shifts x 8 hoursx 300 days = 5,520 hours) and that hourly output is around 1.3 kilograms offabric, it would theoretically be necessary to have about 4,250 looms. How-ever, if we take into consideration the large amount of reinforced fabricsmanufactured (jacquard-style, damask), such as bedspreads and drapery fabrics,as well as the interruptions caused by shortages of yarn and by power fail-ures, it would be more realistic to reckon with 5,000 looms. Since it isestimated that there are presently 10,000 looms distributed among 2,500establishments, it would thus seem that the private sector could increase itsoutput of fabrics by raising its productivity through use of better equipmentand with an improved supply of raw materials (yarn and such) rather than byadding new capacity.

Finishing of Fabrics

5.46 No growth program for finishing, which includes the dyeing, bleach-ing and printing of fabrics, is included in the 1976-80 Plan because existingequipment is now used to only 50 to 70 percent of its capacity. Most bleach-ing facilities and particularly the printing facilities are completely modern,so that only the most antiquated equipment remaining, most of which is dyeingequipment, is expected to be replaced. Such replacements would require gen-erally small investments that could be financed by the companies themselves.

Evaluation

5.47 Production. The Plan provides for the production of 114,000 tonsof yarn in 1980, but there may be certain justifiable reservations as to thepossibility of achieving this goal within this planned time period. Idlebis scheduled to receive 15,000 open-end turbines (the equivalent of 45,000standard spindles) capable of an annual production of 10,000 tons. However,in view of possible problems in startup and operaticn of this equipment, itwould seem prudent to reduce the expected output - at least for 1980 - from10,000 tons to 5,000 tons. Also, there is no assurance that work in threeshifts, i.e, 7,200 hours a year, will be feasible in 1980, and consideration

I/ Based on plant visits.

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must be given to the power failures, which are a constant hindrance to produc-tion in the existing spinning mills. It would therefore seem reasonable toestimate newly-installed spinning mills output for 1980 as follows: 25 gramsper hour x 404,200 1/ spindles x 6,000 hours 2/ = 60,600 tons per year. 3/Total spinning mill production for 1980 would thus be:

- Open-end spinning: 5,000 tons- Other new mills (400,000 spindles): 60,600 "- Existing plants (285,000 spindles): 34,000

Total 99,600 "

(rounded out to: 100,000 " )

as against the planned 114,000 tons.

5.48 These 100,000 tons would be divided between a domestic marketdemand estimated at 40,000 tons and a foreign market demand of 60,000 tons.The export value of textiles would be distributed as follows (in US$ mil-lions, 1975 prices):

- Yarn exports (43,000 tons /a) 81- Fabric exports 11- Miscellaneous woolen and synthetic

items (carpets, etc.) 10

Total 102

/a This figure compares with a Plan export targetof 57,342 tons for yarn. See Table SA 8B.44.

5.49 Domestic Market. For the domestic market, sale of yarn and fabricsby the public sector is estimated at about 52,400 tons, compared with 30,600in 1975. 4/ Since the population is expected to increase at the rate of

1/ Total Plan target of 449,000 spindles, from which have been sub-tracted 45,000 spindles, equivalent to 15,000 open-end turbines.

2/ As against a 5,700 hours per day average in 1975.


4/ See Table SA 8B.40. Plan figures for 1980 indicate cotton yarn availablefor local sale at 26,889 tons; woolen, synthetic and chemical yarn at3,690 tons; and fabrics at 21,812 tons. This gives a total of 52,391tons, which may be considered as rather optimistic.

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3 percent annually and should reach 8.6 million in 1980 (as against 7.4 mil-lion in 1975), and purchasing power could go up by an almost equal percent-age, an increase in domestic demand from about 31,000 tons in 1975 to 40,000tons in 1980, corresponding to a growth rate of 5.5 percent per annum, seemsmore reasonable.

Exports l/

5.50 Yarn Exports. On the basis of the 1976-1980 Plan, the average sell-ing price (presumably at constant 1975 prices) for all counts and categoriesof yarn combined will be as follows:

- For export (F.O.B.): SL 7.52 per kilogram;- For the domestic market: SL 6.48 per kilogram.

If we set the production cost at a level corresponding to the normal pricefor raw cotton, the price of yarn moves up from SL 5.70 to SL 10.50 per kilo-gram, (or US$2.70 per kilogram). The selling price to foreign markets, onthe basis of one 30-count cone, is approximately US$2.70 to US$2.90 per kilo-gram (F.O.B.), so it remains competitive, even based on raw cotton prices atthe world market level. The question thus is whether the existing reportsubsidy system is really necessary.

5.51 Exporting yarn is relatively simple. Since the quality and pricesof the yarns, as well as their presentation, please the customer, it suffices(and this is the requisite and sufficient condition) to have a representativewith good connections and an excellent business reputation in order to besuccessful. Exports of the quantity anticipated (43,000 tons) would go:

(a) to the known markets, including neighboring Arab countries,which are developing their own textile industry, notably inknitwear and hosiery;

(b) to the Eastern European countries with which Syria enjoysclearing agreements or bilateral agreements; and

(c) to the Common Market countries, to which Syria has preferentialaccess (no quotas). It should be noted that yarn imports havebeeni liberalized in the EEC countries - this market imported300,000 tons of yarn in 1976 against 200,000 tons in 1975.

5.52 Exports of piece goods and other items made of woolen and syntheticfabrics. For 1980, exports of-piece goods and other woolen and syntheticitems are expected to be valued at approximately US$11 million for fabricsand approximately US$10 million for the other items, making a total of US$21million. In 1975, such export amounted to US$14.5 million. The US$11 million


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figure corresponds to the expectations of the Plan, both for the public sector(4,900 tons) and for the private sector (12,000 tons), and it seems reasonable.

5.53 Exports of fabrics and knitwear have so far had two main destina-tions: Eastern European countries and neighboring Arab States. Items goingto Eastern Europe include heavy fabrics, notably heavy bedspreads exported tothe USSR, while Arab countries have tastes and requirements similar to thosein Syria. It should be borne in mind that Syria belongs to the Arab CommonMarket whose goal is to do away with customs barriers. In fact, substantialreductions in customs duty have already been granted. Syria also forms asingle customs area with Jordan.

5.54 Another potential market is in Western European countries, and anagreement has been signed with the EEC aimed at facilitating the entry ofSyrian textile products. As a result, a gradual decrease in customs duties ispossible, together with the liberalization of imports of a number of productssuch as cotton cloth. 1/ Also, import quotas could be set up for so-called"sensitive" products.

5.55 It is quite clear that, although penetration of a foreign marketis relatively easy for cotton yarn, the situation is different when it comesto selling piece goods, which must meet certain requirements. Fabrics haveto comply with preferences in such things as width, weight, strength and tex-ture, and items must suit the local clientele, especially printed fabrics fordresses or household fabrics. This market assumes the creation of collectionsof articles, of a network of representatives, and competitive prices, requir-ing considerable commercial flexibility and wide possibilities for adaptation.

5.56 In order to foster exports, the public sector might first deal ingreycloth as fabric for printing, the clientele for which is relativelyrestricted (fabric printers, manufacturers, transformers) but who purchasefairly large amounts and often on a continuous basis. Second, the privatesector might export finished fabrics although they are subject to modifica-tions according to changes of season and fashion. Customers such as garmentworkers, wholesalers, retailers, and interior decorators are far more numerousbut they purchase restricted quantities and require financial deliveries andproduct quality, both of which are essential for success in this market.

1/ Cotton yarn is already without quota limitations into the EEC.

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GENERAL ORGANIZATION FOR CHEMICAL INDUSTRIES


5.57 The General Organization for Chemical Industries controls and man-ages 9 units producing a variety of products such as paints, glass, leatherand rubber products, plastic footwear, bicycle tires, soap,l/ medical drugs,fertilizers, etc. Only one unit is fairly recent, the General FertilizerCompany which started producing ammonium nitrate in 1972.

Production and Capacity Utilization

5.58 Production has increased slowly for a number of items in the lastten years 2/ (flat glass, glass containers, fertilizers) and even declined forrubber footwear, pickled leather skins and vegetal tanned leather. Reasonsinclude lack of raw materials (hides and skins), technical problems (fertil-izer plant), old inefficient facilities (rubber footwear)3/ and lack of demand(some plastic products). However, output has been growing for other productssuch as paints, soap and leather soles.

5.59 Only one production unit (opaque glass) has achieved full capacityutilization. For more than half of the main products, capacity utilization isless than 50 percent.4/ The pickled leather skins and the vegetal tannedskins production lines have been affected by the low level of the supply ofskins. The plastic shoe industry cannot work at full capacity as it is unableto meet competition from the private sector which sets prices freely whilsta cost plus 10 percent profit pricing system is enforced for public sectorunits.5/ The fertilizer plant operates at only 64 percent of the ratedcapacity due to persistent technical problems in one ammonia unit with no hopeof any immediate improvement. In general, frequent power cuts also reducecapacity utilization. Such cuts have for a long time stopped production 40

l/ Soap is also produced by the four vegetable oil companies. In 1975,they produced 5,415 tons versus 5,178 tons produced by the Soap Company.


3/ The age of machinery producing rubber footwear is 25 to 28 years old.


4/ This raises the problem as to whether the public sector production costis higher. However, the public sector company argues that private in-dustrialists manipulate prices, sometimes selling below cost to under-cut public sector sales and afterwards increasing prices considerablywhen the public sector plant has discontinued production of a particularitem. The public sector company claims that it does not have the sameflexibility in adjusting prices because of controlled price regulationsin the public sector.

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hours/month in one plastic plant. They also severely affect the ammoniumnitrate fertilizer factory. Finally, there is a lack of spare parts due tounloading problems at ports compounded by the wide diversity of origins ofmachinery.

Sales

5.60 With numerous production problems and competition from the privatesector (for paints, rubber footwear, plastic footwear), the sales of thissector have remained about constant since 1971. Sales at current prices wentup from SL 48.5 million in 1971 to SL 102.9 million in 1975.1/ Prices ofchemical and other products have risen by about 80 percent from 1971 to1975 2/ on the average with much higher increases for bicycle tires, pickledleather and tanned leather. Also in some cases prices have decreased in 1975(rubber shoes, tires, tanned sheepskins, cardboard boxes) which means that theaverage price increases were perhaps close to 100 percent from 1971 to 1974with price acceleration particularly noticeable in 1974. It is interesting tonote that sales value rose particularly in 1974 but much less in 1975, thusreflecting a general slowdown in price increases and even a decrease in theprices of several items.

5.61 Apart from the Fertilizer Company, the largest sales tur.nover hasbeen registered by the Syrian Glass Company in 1975 (25 percent of total salesexcluding fertilizers). Other companies have sales averaging SL 10 millionyearly, the smallest one being the Arab Medical Company producing ampoules andcapsules.

Exports

5.62 The sector units export mostly paint, pickled sheepskins and wool,flat and opaque glass, glass containers and cardboard boxes. The largestsingle exported item is pickled sheepskins which amounted to SL 3.1 millionin 1975, i.e. 52 percent of total export sales valued at SL 6 million.

1/ Excluding the fertilizer plant whose production started in 1972. Fer-tilizer sales amounted to SL 43 million in 1975.


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Volume of Exports

1965 1970 1971 1972 1973 1974 1975

Paint(gallons) - 21,440 25,350 88,145 19,639 - -

Flat glass(tons) 1,520 2,062 1,689 1,751 1,046 571 268

opaque glass(tons) 85 493 380 662 274 99 85

Glass containers(tons) 330 505 644 590 457 479 485

Pickled skins(ten pieces) 1,012 9,885 11,343 13,516 9,717 8,618 17,363

Tanned sheepskins(pieces) 74,266 89,304 184,165 161,189 70,413 41,101 29,293

Cardboard boxes(tons) 102 25 38 69 104 22 13

5.63 The above data show that only exports of pickled sheepskins haveincreased since 1970. Total export sales by the General Organization for -Chemical Industries companies represented 5.9 percent of total sales in 1975and 4.2 percent only when including fertilizer sales. This ratio was lowerin the early seventies when it reached 7.5 percent in 1970 and 9.5 percent in1972. This decline reflects the disappearance of paints and most glass pro-ducts as export items, in the latter case due to high domestic demand (plantcapacity is fully utilized). However, the main problem remains the lack ofgood quality and availability in sufficient volume of leather skins, whichhampers export sales.

Profitability

5.64 The rate of return on assets has remained around 8 percent over theperiod 1965-1974.1/ Few units have been reporting persistent losses, the onlyexceptions being the Fertilizer Comany in 1973, the Syrian Glass Company in1974 and the Arab Tanning Company in 1970 and earlier years, and the Plastic,Rubber and Leather Company in 1975.2/


2/ This company was unable to sell its output in 1975 due to competitionfrom private plastic footwear producers.

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5.65 Net profits on sales 1/ show the same trend, averaging around 7percent over the years. Average profitability of the General Organizationcompanies has been enhanced in 1974 and 1975 after including profits by theFertilizer Company which amounted to 23 percent in 1974 and 17 percent in1975. However, such profits are somewhat distorted as they reflect artifi-cially low priced naphtha purchases which largely compensate for somewhat lowselling prices for ammonium nitrate.

5.66 The relatively satisfactory profit record of the sector's companiesdoes not entirely reflect the true situation of these units. Physical produc-tion has not increased substantially in several cases and a number of plantsare outdated and should be altogether closed or completely rehabilitated.Some companies are also not able to successfully fight private sector competi-tion and have accumulated stocks. However, the General Organization does notseem to have been able to remedy all these defects, probably as it is fullyoccupied with planning and executing a number of new large scale projects.At any rate, the fact that plants are fully depreciated and that prices arefixed on a cost plus basis where depreciation cost is kept at a minimum, mayresult in profit ratios which ard only apparently good. The picture wouldprobably look somewhat different if all companies were allowed to 1) takeinto account real replacement value to calculate depreciation and, 2) adjustprices to meet real costs.

Investment

5.67 Few substantial investments have taken place since 1965 in thesector units and the value of gross fixed assets rose only by SL 28.6 millionbetween 1965 and 1974, (Table SA 8B.22).2/ Net profits (and depreciation)have been sufficient to finance increases in fixed assets. Until recentlyinvestments were mostly for replacement and minor expansion with, however, thelarge exception of the Homs Fertilizer Plant which was financed with govern-ment funds. However, in 1975 the situation was considerably modified and newinvestment in large scale projects has become substantial. It amounted toSL 650 million. Only SL 10 million was spent on replacement and expansionin existing plants, whereas SL 640 million was devoted to new projects. Thebudget allocation had, however, been SL 698 million for new projects, butdifficulties in implementing projects did not allow full utilization ofbudgeted funds.

Employment

5.68 Employment totalled 4,166 in 1975 including 889 for the fertilizerplant.3/ Excluding this plant, employment has grown from 2709 in 1970 to


2/ Excluding the Fertilizer Company with fixed assets of SL 94 million atthe end of 1974.


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3277 in 1975. The small growth in employment reflects sluggish growth fora number of items (see para. 5.28). The General Organization's proposed1976-80 Plan anticipates for 1980 an increase in existing companies' staffto about 6,002, half of this increase resulting from a 40,000 ton expansionof the Damascus glass plant in 1979/80 and possibly from the productionof 11,500 tons of various plastic products by 1980 by the Plastic ProductsCompany. However, since this is only a "reserve" project, it is not certainthat the anticipated increase in employment would be reached by 1980.

Prospects

5.69 The General Organization's proposed 1976-1980 Plan anticipates atotal expenditure of SL 2,888 million for projects transferred from the pre-vious Plan period, SL 558 million for new projects and tentatively SL 554.5million for "reserve" projects.l/ The breakdown of transferred projects bysub sector is as follows:

Fertilizers 1479.1 51.2

Tires (bicycle and car) 379.7 13.1

Pulp and paper 239.1 11.7

Glass 172.4 6.0

Leather tanning 118.4 4.2

Others 399.5 13.8

TOTAL 2,888.2 100.0

It thus appears that almost two thirds of investment has been allocated to thefertilizer and tire manufacturing sub sectors.

5.70 Budgeted and actual investment funds for 1976 were as follows (inSL million):

Budget Actual expenditures /a % spent

Completion and start of new projects 705 557 79.0Replacement and renewal 13 13 100.0

718 /b 570 79.3

/a Estimated.

/b Including SL 21 million self financing and SL 297 million budgetaryfunds.

1/ S-e Table SA 8B.23.

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5.71 In the first 10 months of 1976, actual investment was only SL 393million for new projects and SL 7 million for replacement. Large amountswere due for payment in the last two months of 1976, mostly for paymentsabroad to foreign machinery suppliers and contractors of projects under exe-cution. Actual expenditures thus seem to reflect more financial paymentsthan money spent according the progress of work on individual projects. Themain reason for the shortfall in 1976 is the delay in implementing a secondtri-superphosphate plant in Deir-Ez-Zor for which negotiations are stillunderway. l/

5.72 Funds requested under the 1977 budget amount to SL 1654 millionincluding SL 1636 million for new projects 2/ and SL 18 million only forreplacement. Most budgeted funds will thus be utilized for the completionof projects now under construction. Such funds amount to SL 1365 million(including replacement) and represent 47 percent of the total Plan allocationfor on-going projects. Taking into account the SL 570 million already spentin 1976, it appears that 67 percent of the planned investment would be com-pleted over the first two years of the Plan. This is not entirely unrealis-tic since a number of projects were already contracted for in 1974/75 andwork began in 1975/76. However, given the magnitude of the sums involvedand of the work to be implemented, it is likely that as in 1976 delays willagain occur in 1977. But there is still ample time for the projects to beready by 1979/80.

5.73 The following comments can be made regarding the main proposedprojects.

5.74 Phosphatic fertilizers. Substantial phosphatic fertilizer produc-tion is expected during the Plan period. The Romanians are currently involvedin the construction of a phosphatic complex at Homs, which consists of unitsto produce 60,000 tons/year of P205 phosphatic acid, 195,000 tons/year of

1/ An agreement has been signed with Romania for implementing this projectsubject to financing of the largest part of the project by Iran. Sincesuch financing has not been confirmed, no progress could be made on thisproject. Negotiations with Iran are reportedly underway.

2/ Including SL 1347 million for ongoing projects and SL 102 million for newprojects (TSP plant in Deir-Ez-Zor, a new tannery in Damascus and a beltfactory in Aleppo). In addition, SL 110 million have been requested toincrease the share capital of existing companies and thus help solve someof their financial resource problems. Finally, an amount of SL 77 mil-lion has been requested to start work on a major expansion of the PlasticCompany in Aleppo.

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sulphuric acid and 208,000 tons/year of P20 tri-superphosphate (TSP). 1/Civil work started in June 1975, erection o? the plant was initiated in March1976 and the TSP plant is due to come on stream by the end of 1978.

5.75 The estimated cost of this project is SL 800 millic;.. Cost ofmachinery and equipment is SL 660 million 2/ whilst SL 140 million will bespent on land, roads and infrastructure. The project is being implemented on

a turnkey basis under a contract signed with Industrial Export of Romania inJune 1975, under the supervision of the existing General Company of Fertil-izers. 3/ An amount of SL 741.7 million has been allocated for the projectfor the Plan period 1976-1980, the balance representing expenditure incurredin 1975. In this total, foreign credit facilities have been obtained fromRomania for an amount of SL 315 million equivalent. Expenditure has been SL100 million in 1976 and SL 400 million has been requested for 1977. Plannedexpenditure is SL 241 million for 1978, the last year of project implementa-tion.

5.76 Production is expected to be as follows:

1979 1980 1981 1982

TSP (000 tons) 270 315 315 450Value (SL million) 243 /a 282 282 400

/a This corresponds to a price of SL 900 per ton,i.e. US$225. In addition, sales of sulphuricacid would amount to SL 168 million, surplusphosphoric acid SL 16 million and AIF to SL 2million.

5.77 The production of TSP is thus planned to reach full capacity util-ization with 450,000 tons in 1982 or slightly more than 200,000 tons P 0But demand is not anticipated to reach more than 40,000 tons P 20 in l182against 15,000 tons in 1975. This projection assumes a reasonab e demand ininfrastructural requirements (to transport and store fertilizers) at the rate

1/ In addition, about 2,000 tons/year of AIF 3(aluminum fluorine) is expectedto be produced. An amount of 208,000 tons P 205is equivalent to 450,000triple super phosphate (TSP).

2/ Divided between SL 469 million in foreign currency and SL 191 million forlabor cost and other expenses for Romanians in charge of building theplant.

3/ This company has been operating a small ammonium nitrate plant at Homssince 1972.

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of about 15 percent per annum. 1/ This means Syria would have to export 80percent of its production in the early eighties. This will be a major problemin view of the heavy competition that is expected in the export market in thisgeographic area at that time. Although Syrian authorities believe that TSPwill be exported to Arab countries, 2/ no negotiations on possible export con-tracts have been envisaged so far.

5.78 The problem of disposable surpluses of TSP will be aggravated shoulda second TSP project be undertaken in Deir-Ez-Zor. Such a project would produce250,000 tons of TSP, the equivalent of about 115,000 tons of P205. Sincethere may already be a surplus of 160,000 tons of P205 in 1982 because of the

new plant at Homs, total surplus would thus be 275,000 tons and evidently thiswould create difficult marketing problems.

5.79 Nitrogenous fertilizers. The largest Plan project in this sector isan ammonium/urea plant. Capacity is 1,000 tons/day for ammonium (of which 600tons is to be used by the urea plant and 400 tons to be sold) and 1,050 tons/day for urea (at 46.3 percent N). At full capacity, the plant would thusbe able to sell 132,000 tons of ammonium (99 percent N) and 346,000 tons ofurea. 3/ This is equivalent to 290,000 tons of nitrogen.

5.80 Civil works started in September 1976 and plant erection work shouldbe initiated in January 1977 with completion in November 1979. It is plannedto produce 189,000 tons of urea and 54,000 tons of ammonium in 1980, the firstyear of operation.

5.81 The total cost of this project is estimated at SL I billion, ofwhich SL 759 million is financed by Saudi Arabia and the balance by the PublicDebt Fund. An amount of SL 737.5 million is envisaged in the proposed Plan tocomplete the project. SL 158 million has been disbursed in 1976 and SL 225million has been requested for 1977. Planned expenditures are SL 200 millionin 1978 and SL 154 million in 1979. A contract has been signed with a Frenchfirm on a turnkey basis.

5.82 Nitrogenous fertilizer production amounted to 85,000 tons of ammoniumnitrate in 1975 and may have reached 96,000 tons in 1976. The Homs fertilizerplant has run into a number of production problems since it started productionin 1972. Power cuts have prevented the 150,000 ton rated capacity from being

1/ Official planning assumes 278,000 tons of TSP consumed locally in 1980,i.e. 125,000 tons P 0

2 5

2/ But such belief does not seem to be based on any serious analysis ofsupply/demand long run prospects for TSP in Arab countries.

3/ Assuming 330 days per year. Equipment suppliers have anticipated 180days in the first year, 300 days the second year and 330 days the thirdyear.

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reached. Another problem has been a reforming unit in the ammonium plant whichhas never worked properly. This unit can work at full capacity for only twomonths and then has to be stopped for two weeks for cleaning and repairing. 1!The General Tartilizer Company was able to generate profit in 1974 and 1975 asselling prices were kept above production costs. 2/ However, production costhas risen from SL 421 in 1975 to SL 450 per ton in 1976 whilst the sellingprice to the Agricultural Bank (a major customer which finances fertilizersales to farmers) was only SL 348 per ton. Company losses in 1976 amounted toabout SL 10 million. In fact, production costs would have been much higherhad the main raw material, naphtha, been sold at a CIF price of US$120, i.e.SL 480, per ton. The company purchasing price is only SL 53 per ton, as aresult of a government decision to keep fertilizer prices low by cutting notonly the consumer price but also the prices of raw materials supplied to theplant.

5.83 Consumption of nitrogenous fertilizers was about 100,000 tons N in1975. 3/ It is not anticipated that it will reach more than 265,000 tons Nin 1982, assuming a reasonable demand growth of 15 percent per annum and theprovision of adequate infrastructural facilities (transport and fertilizerstorage). Total capacity of the new ammonia/urea plant alone is about 300,000tons N 4/ and the ammonium nitrate production may be 50,000 tons N. As aresult the exportable surplus of N would be 85,000 tons in 1982.

5.84 There should be therefore a major incentive for Syria to increaseits own fertilizer demand but, although fertilizer should be readily avail-able, it is highly unlikely that the infrastructure to transport and storefertilizer and also to promote its use will be available.

5.85 Tire plant. The purpose of this project, to be located in Hama, isto produce car and bicycle tires. At full capacity, the plant could produce460,000 car tires and 220,000 bicycle tires. A turnkey contract was signed inJuly 1975 with Techno Export of Czechoslovakia. Total cost of the project is

1/ The reforming unit was built by a British firm, whereas the ammonia plantis Italian, the nitric acid plant Russian and the ammonium nitrate plantCzech. The company has not been able to obtain proper technical assist-ance to solve all its problems and the General Organization neither con-tributed, helped nor controlled.

2/ In 1975, production cost was SL 421 per ton whilst average selling pricewas SL 506 per ton. Profits amounted to SL 7.2 million which were nottransferred to the General Organization but kept as a reserve for eventuallosses (which in fact occurred in 1976).

3/ Imports of nitrogenous fertilizers have been 113,000 tons in 1975 anddomestic production 85,000 tons, i.e. 198,000 tons. This may be equiv-alent to about 100,000 tons of N.

4/ Assuming 330 working days/year.

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SL 450 million, of which SL 380 million is foreign exchange cost and SL 70million local cost. The contract signed with Techno Export is for SL 393million, of which SL 380 million is foreign exchange cost and SL 13 millionlocal cost. 11 SL 100 million has already been disbursed as advance paymentsand the balance will be paid by 1979. Production is scheduled to start in1980. Bicydle tires are however already locally produced, and the existingplant capacity utilization rate is low. 2/ Despite this, no exports by thenew plant are envisaged for the future and the justification for increasingbicycle tires production capacity with a new plant is difficult to understand.

5.86 Pulp and paper plant. This project is to produce 60,000 tons ofwriting, printing and wrapping paper and 30,000 tons of pulp. A turnkeycontract has been signed in April 1975 with an Austrian firm. In the firststage pulp will be imported from Austria, but later on it will be producedfrom local wheat straw. Implementation of the project has been delayed bytechnical problems over the selection of a site area near Deir-Ez-Zor. Partof the machinery has arrived and erection work is to start early in 1977.

5.87 Total cost of the project is SL 475 million, of which SL 381 millionis foreign exchange cost (to be financed by Abu Dhabi) and SL 94 million localcost (to be financed by the Public Debt Fund).

GENERAL ORGANIZATION FOR CEMENT INDUSTRY

Facilities and products

5.88 The Organization for Cement was established in 1975 separately fromthe Union for Chemical and Engineering Industries. The Organization operatesand controls one plant each in Damascus, Aleppo and Hama, respectively, oneasbestos tube and sheet plant in Damascus, and one wall tile factory in Hama.

Production and capacity utilization

5.89 At end 1976 the cement plants were old and outdated (the most recentwas 17 years old). Capacity is fully utilized. Production has stagnatedaround 0.90 to 0.95 million tons yearly, 3/ and there is a cement deficit.The latter was 855,000 tons in 1975 according to trade data, and despite newcapacity under construction the deficit should remain until 1980.

1/ Salaries and local expenses of Czech personnel.

2/ Tire production declined from 634,000 in 1971 to 482,000 in 1972, 274,000in 1973, 254,000 in 1974 and 136,000 in 1975.


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5.90 The asbestos plant which is managed by the Damascus Cement Companystarted production in 1967 and reached 7,069 tons in 1973. 1/ A plant expan-sion brought the level of output to 17,930 tons in 1975 and capacity utiliza-tion was 83 percent. The "porcelain" plant has a regular production since1965 and produced 11 million wall tiles in 1975, capacity being fully utilized.

Sales

5.91 Over the period 1965-1975, all the plants recorded increased sales,with total sales rising from SL 33.4 million in 1965 to SL 100.2 million in1975 for cement and from SL 0.1 million in 1965 to SL 16.9 million in 1975 forasbestos and tiles. 2/ The most significant period of sales value increase was1973-1976 when sales increased substantially, mainly as a result of sellingprice increases as capacity utilization had remained consistently high andcement was in short supply. Asbestos sales also almost trebled from 1973 to1975 as a result of increased available capacity.

5.92 Within the subsector, the Aleppo Company is the largest cement pro-ducer and contributed in 1975 40 percent of the General Organization totalsales. The Damascus Cement Company, which also produces asbestos, contributed38 percent, while the remaining 20 percent came from the small Hama CementCompany.

Profitability and investment

5.93 The profitability of the General Organization's companies increasedsharply in 1973 and 1974, and then declined in 1975. Net profits as percentof sales rose from 9.1 in 1972 to 16.5 in 1974. 3/ The ratio declined to 9.3in 1975, apparently due to increased import duties and taxation. Net profitsas percent of gross fixed assets also rose from 5.0 in 1972 to 12.8 in 1974,then falling to 7.7 in 1975. The increases reflect higher selling priceswhich have risen from SL 54.50 per ton in 1972 to SL 104 per ton in 1975. 4/The price increases were intended not only to compensate for increased operat-ing costs but also to build retained earnings to finance at least part ofthree new cement plants which commenced building in 1972/73 at Aleppo,Damascus and Hama.

5.94 Investment depreciation and net profits have evolved as follows (inmillions of SL):


2/ Tables SA 8B.24 and SA 8B.25.


4/ Damscus cement ex-factory prices. Prices were further increased to SL138 per ton in 1976 (see Table SA 8B.27).

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Table A3.5.4: SUMMARY OF SOURCES AND USES OF FUNDS

1966-69 1970-72 1973-75 1975

Investment 14.9 6.2 23.7 14.6ResourcesDepreciation 28.2 17.3 13.4 4.2Net profits 15.9 20.3 36.8 10.6

Total 44.1 37.6 50.2 14.8

Surplus 29.2 31.4 26.5 0.2

5.95 The increase in investment in 1973-75 represents only part of thepicture since it does not include expenditures on the three new plants men-tioned above totalling 1.3 million tons/year capacity, the cost of which isat least SL 495 million. 1/ Actual expenditure by the General Organizationfor Cement in 1975 alone was SL 183 million which is 12 times the resourcesgenerated by the cement companies in that year. As will be shown below,self-financing by the General Organization amounted to SL 25 million in 1976,as compared with Public Debt Fund advances of SL 556 million.

5.96 The valuation of assets within the cement sector is an issue whenrelated to the companies' ability to fund their own investment programs.Before 1973, cement selling prices which are fixed by the Government werecomputed on the basis of cost recovery plus a nominal rate of return. How-ever, the computation took no account of the factor that, in this sector,most of the assets are fully depreciated. 2/ Thus the selling prices havebeen increased to generate additional funds and increased gross profits havebeen high enough to cover replacement and modernization costs. Given thecurrent cost of asset replacement, the sector's selling prices should bedetermined on a "replacement value accounting" basis and not on the presenthistoric basis. This would normally enable the General Organization forCement to increase the portion of self-financing.

Employment

5.97 The total workforce of the sector was 2,718 in 1975, as comparedto the 1965 level of 1,955 and the 1970 level of 2,465. 3/ The increaserelates to higher production volume, but the yearly tonnage of cement pro-duced per worker was practically the same in 1965 as in 1975. 4/


2/ Existing plants are very old and outdated; for instance, the Damascuscement plant was built in 1930.



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Prospects

5.98 From 1970 to 1975 gross fixed investment increased from SL 109 mil-lion to SL 138 million. The General Organization's proposed 1976-80 Plananticipates ir,,estment outlays of some SL 2,570 million (excluding reserveprojects). Expenditure is estimated at SL 420 million 1/ in 1976 and the1977 budget request totals SL 279 million. 2/ Thus during the first 2 yearsof the Plan SL 699 million would be spent, i.e. 25 percent of the Plan invest-ment, but 38 percent when excluding three projects for which contracts havenot been signed and which may not be needed in the medium term. The invest-ment rate followed until present thus seems in line with total planned allo-cation for the five year period 1976-1980 (again excluding the non-contractedprojects).

5.99 The Government estimates that the domestic consumption of cementwill increase from 2.2 million tons in 1975 to 3.95 million tons in 1980. 3/To meet this increase, the General Organization for Cement has launched anumber of new cement projects 4/ which, if completed in time, would increasedomestic production from 0.95 million tons in 1975 to 7.90 million tons in1982. However, contracts for building three plants (Rastan, Adra and AleppoNo. 3) with a total annual capacity of about 2.2 million tons 5/ have not yetbeen signed. Assuming that none of these three plants would be in productionby 1982, cement output is expected to reach 5.70 million tons in that year(Table SA 8B.29).

5.100 The construction of the above-mentioned three plants bring cementoutput to 7.90 million tons in 1982 6/ when domestic demand would be around4.80 million tons. The substantial capital investment in these three addi-tional cement plants SL 950 million, according to 1975 estimates, would thusnot appear to be justified unless there is an assured export market for some3.0 million tons in 1982 at economic prices. 7/ The size of cement plants now

1/ The budget allocation for 1976 was SL 581 million, representing SL 200million from foreign credit facilities, SL 356 million from the PublicDebt Fund and SL 25 million from retained earnings of the General Organ-ization.


3/ See Table SA 8A.1l.


5/ 6,700 tons/day. See Table SA 8B.29.

6/ Assuming 0.95 million tons production from the old plants.

7/ There would already be a 0.9 million ton exportable surplus in 1982 evenin the absence of any of the three plants not yet contracted for.

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being built in Syria (3,200 tons/daily capacity) is economic and given Syria'sproximity to such markets as Saudi Arabia or the Gulf States, cement exportsare likely to be competitive with other suppliers such as Pakistan, Korea andPoland. However, this needs to be studied as well as the overall cementcapacity being built or contemiplated in Arab countries and the magnitude ofthe cement deficit in this area in the years to come.

Substitute Building Materials

5.101 Gypsum. Large deposits of gypsum occur in three main areas extend-ing towards the Iraqi border. The principal use for gypsum at present is inthe cement industry, which consumes about 35,000 tons per annum. A detailedgeological survey of the country was to be completed in the spring of 1977 andwas expected to locate more exploitable deposits of gypsum. The cost of pro-duction is relatively low - a plant to produce 50,000 - 70,000 tons of gypsumannually would cost in the order of SL 25 million. UNIDO has been requestedto supply an expert to study the technology of producing plaster, prefabri-cated blocks, wall panels and plaster board; France and Hungary have expressedan interest in financing production. Substantial benefits would accrue to thebuilding industry with the introduction of gypsum based products, which areonly about one-third the weight of equivalent cement based products; cementconsumption would be correspondingly less.

5.102 Sand Lime Bricks. The "General Organization for Chemical Industries"has made trial tests of sand lime bricks in various colors, with positiveresults. Suitable materials (90 percent silica sand and 10 percent quicklime) can be found without difficulty. Consideration should seriously be -given to further study and construction of a pilot project for sand limebricks. Capital investment would be relatively small - a plant to produce20 million bricks annually would cost around SL 25 million.

5.103 Red Bricks. Difficulties have been experienced in finding suitableloamy clays, but promising deposits have been found recently about 40 km fromDamascus. Tests are currently being made on experimental production processesin Austria and Romania; the former process appears suitable with certainadditives to the clay. The production of perforated bricks and roof tileswould serve to replace cement blocks and present roofing materials. Again,capital investment would be relatively small - a plant to produce 20 millionbricks annually would cost around SL 30 million.

GENERAL ORGANIZATION FOR ENGINEERING INDUSTRIES

Facility and Products

5.104 This Organization operates and controls 9 companies producing avariety of equipment such as refrigerators, gas stoves, television sets,electric cables, boilers, electric motors, steel bars, bus assembly. More-over a number of non-engineering products are manufactured and includematches, veneer, chipboard, paper products, liquid batteries and oxygen gas.Many of the operating companies have mixed product ranges. The ElectricMotor Company previously attached to the independent Tractor Company was

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put under the supervision of the Organization in 1975. However, the GeneralOrganization does not administer several engineering items produced by otherindustries such as the Defence Works (metal furniture, water and electricmeters, dry batteries, etc.).

Production and Capacity Utilization

5.105 The production performance of the Organization's units is noted inTable SA 8B.30. In general capacity utilization has been about one third totwo thirds. 1/ Plant producing items such as refrigerators (8 cubic feet)and television sets have recorded among the lowest rates of utilization (38.7percent and 29.8 percent respectively). Taking the units' other products,only the small electric cable plant, oxygen gas and paper handkerchiefs haveshown a full capacity utilization rate (Table SA 8B.31). Reasons for such alevel of idle capacity include frequent power cuts, 2/ lack of spare parts,lack of proper maintenance facilities within the plants and difficulties inavailability of raw materials. 3/ However, the major reasons seem to be inthe low market demand 4/ in relation to capacity and a shortage of qualifiedmanpower. The latter problem is aggravated by the rapid rate of expansion andnew projects in recent years. Potential domestic demand for television setsand refrigerators seems to have been overestimated in planning productioncapacity.

5.106 Despite these drawbacks, one must note that production has increasedsignificantly from 1965 to 1975 (Table SA 8B.30). The fastest growth rateshave been recorded for pressure cookers, refrigerators and television sets.The new steel bar plant has increased production by 42 percent from 1972 to1975.

Sales

5.107 Sales of the Organization have shown an average annual growth rateof 30 percent (increasing from SL 19 million in 1965 to SL 266 million in 1975)and 45 percent from 1970-1975. 5/ The SL 266 million figure includes salesby the Steel Products Company 6/ which started production in 1972, the Metallic


2*/ One company reported cuts in Damascus of 10 to 60 minutes every other day.

3/ The Lattakia wood products plant was idle in November 1976 due to lackof imported timber (no regular supply contract and congestions atLattakia port).

4/ The prob]Lem is sometimes aggravated by smuggling (e.g. television sets).


6/ SL 102.3 million in 1975.

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Construction Industries which started in 1971 1/ and the Electric Motors Com-pany which was attached to the Organization only in 1975. Three companies(Steel Products Co., Barada Co. and Arab Syrian Co. for Electronic Industry)contributed almost 80 percent of the Organization's total sales. The salesvalue improvement in 1974 and 1975 reflected not only average unit price in-creases (47 percent for refrigerators, for example, from 1974 to 1975) butalso physical sales increase (e.g. 35 percent for refrigerators).

Exports

5.108 Exports have been low, totalling less than 2 percent of annual totalsales in recent years (Tables SA 8B.5 and SA 8B.32)). In 1974 and 1975 exportshave declined mainly due to the disappearance of refrigerator exports. Tele-vision sets and wood products exports have also ceased. Refrigerators andtelevision sets have a high import content and value added is small, so thereis little flexibility for adjusting export prices. 2/ As similar items areassembled in neighboring countries, there seems little hope to develop exportsin the future. Moreover, management of the companies is now fully occupiedwith expansion plans and places little stress on exports. It is howeverpossible that with the completion of the new modern refrigerator plant withcapacity of 200,000 units in Damascus, exports may be resumed to Arab coun-tries. 3/

Profitability and Investment

5.109 Total net profits of the Organization have increased from SL 1.7million in 1965 to SL 35.6 million in 1975, and gross fixed assets - on ahistoric cost basis - has increased from SL 18.4 million to SL 7.0 millionduring the same period. 4/ This would give an increase in the current rateof return on gross fixed assets from 9.2 percent in 1965 to 146.5 percent in1975. Such a result is meaningless, since it incorporates exceptionally highprofits made by the Arab Syrian Company for Electronic Industry which sellstelevision sets at high prices (on government orders as television sets areconsidered a luxury item) and way above production costs. Moreover, this

1/ This Company produces oxygen bottles, steel containers and small boilers.Since 1975 it started assembling small buses in two plants (3 buses canbe assembled in each plant daily).

2/ Television sets had to be exported at SL 500 in 1974 as against localselling price of SL 1,201. However production cost (i.e. excludingimport taxes) is only SL 600.

31 The existing refrigerator plant with a yearly capacity of 105,000 unitswill close down in 1977 and a new plant with a capacity of 200,000refrigerators will start operating. Net additional capacity will thus be95,000 units, and part of the output may be exported again. In 1975-76the Company was fully busy with building the new factory.

4/ See Tables SA 8B.7 and SA 8B.8.

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company enjoys complete income tax exemption. Excluding it from the calcula-tion, the rate of return rose from 9.2 percent in 1965 1/ to 13.9 percent in1975.

5.110 The average rate of return conceals marked variations of performanceby individual units. For example, negative rates of return have been shownby the United Arab Co. for matches and by the Lattakia Wood Company (in thelatter case since 1972). 2/

5.111 Profitability as percent of sales (excluding the Arab Syrian Co. forElectronic Industry) averaged 10.7 percent in 1965-1969 as compared with 10.9percent in 1970-1975. However, profits have declined in 1974-75, to an aver-age of.7.2 percent as against 12.6 percent during 1971-73. Such a fall hasbeen registered for all companies of the General Organization.

5.112 The companies grouped under the General Organization for EngineeringIndustries are subject to government price control. Steel electrical wires,stationery supplies and compressed oxygen are considered "essential" items,batteries are an "ordinary" item,, whilst television sets, gas ranges and steamcookers are classified as "luxury" items under government price regulations.In most cases, selling prices 3/ remained very stable until 1972-73, whichreflected the government's desire to slow inflationary tendencies by notallowing widespread price increases by public manufacturing enterprises. 41However, the price level set was sufficient to enable most companies to enjoysatisfactory and in some cases high levels of profitability. 5/ In 1974 and1975 prices had to be increased to reflect higher raw material and labor costsbut the rise was not sufficient to compensate for the entire cost increasewhich resulted in a lower profitability, and even some losses.

5.113 Until 1975, profits generated by the companies 6/ in this generalorganization were sufficient to enable them to finance replacement and expan-sion plans. However, investments by existing companies do not include new

1/ The Arab Syrian Co. for Electronic Industry started production in 1969.

2/ Losses have been due to excessive and unskilled manpower; increasingcost of imported timber delivered at a high price and in small volume;and low selling prices.


4/ One exception has been television prices which have been raised by ahigher margin than warranted by increased input costs in order to gen-erate additional revenue.

5/ In addition, imports are fully banned, which gives full protection tosuch items as refrigerators, cables, stoves, gas ranges, steam cookers,etc.

6/ Excluding the Arab Syrian Co. for Electronic Industry.

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projects such as the steel bars plant in Hama, electric motors, aluminumshapes, etc. This explains why the General Organization for EngineeringIndustries has been able to finance only a small part of total investmentexpenditures. In 1975, SL 236 million were invested, of which only SL 20 mil-lion came from the General Organization itself 1/ and/or from the companies.In 1976, self financing was about SL 27 million out of total investmentexpenditure of SL 231 million, i.e. 11.7 percent only. In 1977, self financ-ing may reach SL 40 million compared to a total capital expenditure budget ofSL 224 million, i.e. 17.8 percent. The small size of units administered bythe General Organization makes it obviously impossible for them to participatesubstantially in the financing of the projects now underway. It is thus quiteevident that the Government itself had to find resources (including foreigncredits) necessary to finance new and much larger projects than the GeneralOrganization had been used to managing hitherto or was able to finance.

Employment

5.114 Total employment by the General Organization for Engineering Indus-tries rose from 939 in 1965 to 1,769 in 1970 and over 3,500 in 1975. 2/ Mostof the recent increase in personnel came from expansions at Barada (refri-gerators, household appliances) and the Arab Syrian Co. for Electronic Indus-try (television sets, telephone apparatus, switchgear). These industries arelabor intensive and their development corresponds to the Organization's statedgoal to maximize employment.

Prospects

5.115 The General Organization's proposed investment of SL 678 million-forprojects transferred from the previous Plan is well underway. 3/ Some of theprojects were started in 1974 and most of them in 1975. A new bus assemblyline was completed in 1975. Four projects were finalized in 1976 - an aluminumshape plant in Lattakia, a paper conversion plant expansion in Damascus, apencil factory and a new electric cable plant also in Damascus. The develop-ment of a new refrigerator plant and the expansion of the gas stove unit aswell as the new assembly line for television sets (including color TV) will be

1/ Self financing of SL 20 million is higher than SL 7.3 million reportednet profits in 1975. One must add, however, depreciation and reserveskept by the companies. Depreciation has averaged annually less thanSL 1.5 million since 1965.

2/ See Table SA 8B.6. Data do not include the Steel Products Co. in Hama,the Metalco Co. and the Electric Motor Co.


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completed in 1977. 1/ Two important projects - a plant to produce 120,000 tonsof billets from scrap metal and a metal pipe factory in Hama are being built ata cost of SL 273 million 2/ with the financial assistance of Saudi Arabia.Finally, the new Aleppo cable factory is under construction with financialassistance from Hungary. All this means that practically all pLojects shouldbe producing before 1980 with, however, the major exception of the so-called"Reserve" projects with a cost totalling SL 642 million. The latter list ofprojects includes a hot and cold rolling mill as well as two aluminum plants.It is unlikely, for overall budgetary reasons, that these reserve projectswill be started within a short period of time. Prefeasibility studies arereportedly being prepared for these various projects. Although it is the wishof the General Organization management to develop an integrated basic steelindustry 3/ in Syria, it is recognized that the small size of the market, theinvestment cost and the very critical lack of qualified personnel makes itdifficult to envisage the development of hot and cold rolling mill facilitiesbefore a number of years.

5.116 The General Organization for Engineering has two stated objectives,first to increase production integration and, secondly, to foster employment.The first objective could be achieved, for instance, through the productionof small compressors in the Electric Motors Co. to be supplied to the Baradarefrigerator plant. Another example is the production of wooden televisionboxes which contributed (modestly) to the increase in the value of sets pro-duced locally.

5.117 The objective to favor labor intensive projects is being pursuedthrough the expansion of the electronic industry (television assembly, switch-gears, telephones). Total employment creation by the new projects will amountto about 3,000 jobs, but the general trend is definitely towards capitalintensive projects. The General Organization for Engineering should certainlypay more attention to management and modernization problems. Another priorityin future years will be, as mentioned in the previous paragraph, to integrateproduction further. Engineering units are few and isolated. Production ofcomponents and spares through sub-contracting in particular with the privatesector may reduce industries' dependence on extremely varied and sometimesunreliable sources of import.

I/ The new refrigerator plant will replace an old one which is being closeddown. Similarly for televisions, the new plant will progressively re-place the existing crowded and inefficient production unit,

2/ In fact, cost overrun problems were encountered which made it necessaryto request additional budgetary funds from the Ministry of Finance.West German firms have been awarded a contract of $50 million for the120,000 ton steel plant near Hama.

31 Using direct imported ore reduction and continuous casting.

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ANNEX 4

EDUCATION AND TRAINING: ISSUES AND PRIORITIES

CHAPTER 1

SUMMARY AND CONCLUSIONS

1.01 The main thrust of educational development in Syria over the lastfew years has been on quantitative expansion at all levels--basically, inresponse to demographic factors and the pressure of social demand. As aresult of this expansion, gross enrollment ratios in Syria (89 percent inprimary education, 55 percent in preparatory, 32 percent in secondary, and12 percent in higher education) now compare very favorably with most of theother countries at a similar stage of development. Also, compared withthese results, the cost of education does not appear excessive: in 1974,recurrent expenditures on education represented a fairly modest 12.8 percentof the total recurrent budget and total public expenditures on educationabsorbed a reasonable 3.7 percent of GDP. These figures, however, concealserious imbalances and deficiencies.

1.02 The pressure for expansion coupled with the lack of adequate finan-cial resources has often resulted in deterioration of the learning/teachingenvironment--at present, the majority of school buildings are not functionallysuitable for education puposes; about one-third are rented houses; labora-tories, workshops, libraries, equipment and materials are almost non-existent.This makes it impossible to apply curricula in their entirety, stifles theefforts of teachers to introduce more flexible and modern teaching technolo-gies, and hinders the modernization of curricula and their re-orientationtoward practical subjects. A sub-sector in which the trade-off between qualityand quantity has proved to be particularly serious is university education;here, the dramatic increase of undergraduate enrollment since 1971, dispro-portionate with the present and expected demand for professional manpower inthe country and not supported by adequate provisions of physical facilitiesand teaching staff has already created and, unless corrected, is bound toaggravate further the conditions for a serious educational crisis.

This Annex draws upon the findings and recommendations of a World Bankreconnaissance-in-depth mission, which visited Syria between October 29 andNovember 20, 1975. The mission comprised Messrs. A. de Capitani (economist;mission leader), V. G. DeSa (technical education specialist), R. Savas(agricultural education specialist) and C. L. Germanacos (education planner,consultant). In view of the wealth of descriptive and analytical detailcontained in two recent UNESCO studies of the Syrian education and trainingsystem, this Annex provides only a minimum of descriptive materials, andfocuses instead on evaluation of issues and identification of needs andpossible solutions. The UNESCO studies are: Population Dynamics andEducation Development in Syria -- Analysis and Perspectives (4 volumes),UNESCO Regional Office for Education in the Arab States, Beirut, 1974;and Education in Syria, Paris, 1972.

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1.03 Despite the quantitative expansion, there are still significant

disparities in the distribution of educational opportunities by regions andby sex. The most obvious imbalances are between urban and rural areas, but

the problem is also serious in the poorest areas of the major cities, where

the government efforts to provide social infrastructures can hardly catch up

with the pressures of demographic growth and the rapid urbanization process.

In addition, the persistence of cultural and sociological, obstacles to the

generalization of basic education among the urban and rural poor (particu-

larly, but not exclusively, in the case of girls) underscores the need for

new education approaches--with much heavier reliance than in the past on

non-formal and adult education. In this respect, literacy courses combined

with skill training and community development programs seem to have high

developmental priority.

1.04 As in many other countries, vocational education--which is more

expensive and is still considered less prestigious than traditional academic

education--has been relatively neglected and represents only some 15 percent

of secondary enrollment. On the other hand, post-secondary technician edu-

cation (Intermediate Institutes) has received a great deal of attention in

recent years--but in many cases, the hasty establishment of new intermediate

institutes has been simply a means of diverting some of the baccalaureates

away from already saturated universities, and has not been supported by the

provision of either adequate facilities or suitable qualified staff. To the

extent that available manpower projections can be relied upon, both vocational

and post-secondary technician education seem to need further development. But

they also need a better coordination of efforts among the various ministries

and agencies (about 10) involved, to avoid duplication and wastage of human

and financial resources which have plagued these forms of education in the

past. The proposed establishment of a National Council for Vocational Training

and Technical Education would be a first important step in the right direction.

1.05 - It appears that the government's strategy over the Fourth Plan (1976-

80) period is likely to represent a continuation of the main policy thrusts of

the previous Plan with emphasis on: (a) generalization of compulsory education

and gradual merger of primary and preparatory education (which should become

eventually one common cycle of nine years of "basic" education for everybody);

(b) rapid expansion of vocational and technical education; (c) reform of

primary teacher training and creation of 14,000 new places; (d) accelerated

program of school building construction to phase out, as soon as resources

permit, rented facilities and eliminate double shift; and (e) construction

of a new University at Lattakia and various important improvements and/or

extensions to the other existing universities.

1.06 In these circumstances, it is suggested that education and manpower

development in Syria should be designed to: (a) improve the quality and dis-

tribution of basic education, and meet priority manpower needs; and (b) maxi-

mize the reform impact of a relatively limited transfer of resources. Con-

sistent with this strategy, public investment should focus on three main

objectives: (a) developing and improving the quality of elementary, prepara-

tory and non-formal adult education in disadvantaged regions (both rural andurban); and (b) improving the country's capacity to train effectively and

appropriately semi-skilled and skilled workers and technicians.

-172 Anx 4

FIGURE A4.1.1: STRUCTURE OF THE EDUCATION SYSTEM, 1975-76

PRIMARY SECOND LEVEL HIGHER EDUCATION

PRIMARY TEACHER TRAINING

HIGHER INSTITUTE OFTECHNOLOGY 14 Y-,rt

Eng neerin R Cen

Etccoroseot~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ Commetrn cIe, Ecnoic I{ot cnmcEaccalacrear (goalityrrq for higher ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ ~ NIERITES(46 ,,,,

excecrinoal~~~~ommrc _cEginerig

AGE I I I -...I II

Nt e gher ed atiRos eRyEPARATOR GEmERA

,91 Salaurrat moveormally throuhghtIrer tyrteeroTE NIASE N RA G E~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

s 7 8 9 Ig 11 12 13 14 15 It 17 18~~~~~~~~~~~~~~~~~~~~~g,-1-

Note The AGE-GRADE relavionsh p app ies if students enter school at the regular admission age (6i~~~~F,,~Itand move normally through the system World 8ank-154ti2~~~~~~-h~,T,aiimg

- 173 -Annex 4

FIGURE A4.1.2: ORGANIZATION OF THE MINISTRY OF EDUCATION

r MINISTER |

_- ED CATOA ADlSM OFFICE OF THE MINISTER DEPUTY MINISTER DEPUTY MINISTER DEPUTY fMINISTER

1 Dtrectorate of 1 Directorate of General . 1. Directorate of- Secretary Planning, Foliow-up Education Physical Education

EDUCATION PLAN- - Archives & Statistics 2. Directorate ofNING COMMITTEE Organization 2. Directorate of - Section of Primary Youth

of meetings Curricuia & Books - Section of Intermediate 3. Directorate of- Information 3. Directorate of & Secondary School Health

TRAINING Office Research - Section of Private 4. Directorate ofCOMMITTEE - Technical 4. Directorateof Education Administrative

Of f Ice Training - Section of Teacher Affairs5. Directorate of Training 5. Directorate of

| IN0S'TI'TUUTE FOR Cultural Relations - Section of Loans Legal AffairsSCHOOL BUILDINGS 6. Office of Equivalen- 6. Directorate of

cies 2. Directorate of Technical Accounts7, Office of Documen- Education 7. Directorate of

tation Personnel

8. Office of Foreign - Agricultural Section 8. Directorate ofAid - Industrial Section School Books

- Commercial Section Pubiscations

3. Directorate ofExaminations

4. Directorate ofEducational Technology

5. Directorate ofDelegates

Source: MOE, April 1976. Vorld Bank 15475

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CHAPTER 2

SOCIO-ECONOMIC BACKGROUND

2.01 Syria's population (7.7 million in 1976, and growing at the highrate of 3.3 percent per year) is concentrated mainly along the coast and inthe strip east of Lebanon, following the pattern of rainfall and the avail-ability of cultivable land. Among the main demographic features affectingeconomic development are:

(i) very high birth and fertility rates (50 per thousandcorresponding to about 8 children per fertile woman);

(ii) an increasing proportion of children aged 14 yearsand less in the total population (46.2 percent in 1960;49.3 percent in 1974), with consequent increase in thealready high dependency ratio;

(iii) strong migratory flows of young adults from rural toovercrowded urban areas (Damascus, Aleppo, Lattakia),with corresponding increases in the percentage ofdependents in rural areas and in the number of poor inurban areas; and

(iv) very high rates of net emigration abroad (about 300,000Syrians settled in Lebanon during 1963-1972).

2.02 These demographic factors are reflected in the structure and dynamicsof the Syrian labor force (1.7 million in 1974), which is characterized by:(a) high growth rates (2.0-2.5 percent per year in recent years) despite the"cushion effect" of high emigration and increasing enrollment ratios; and(b) increasing youthfulness (55 percent of the labor force is under 35 yearsof age). Other important features of the labor force are: (a) low overallactivity rate (about 39 percent, mainly due to the persistently low partici-pation rate of women in the labor market; (b) slowly improving, but stillmodest educational profile (about half of the labor force is illerate;illiteracy ratios are as high as 65 percent for agricultural workers, 43 per-cent for service workers and 39 percent for industrial workers; (c) con-centration of open unemployment in urban areas, among the young and theunskilled; and (d) persistent "brain drain" (recent statistics have not beenpublished, but it is known that during 1956-1969, 65 percent of newly gradu-ated physicians, 61 percent of engineers, 44 percent of science specialistsand 39 percent of economists migrated abroad).

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Table A4.2.1: STUDENT POPULATION PROJECTIONS BY AGE GROUPS, 1970-1990(in Thousands)

Age-Group 1970 1973 1975 1980 1985 1990

6 196 220 239 302 371 40512 154 174 187 227 286 36015 138 154 165 200 248 31518 123 138 148 178 216 272

6 through I1 1,062 1,200 1,290 1,614 2,010 2,30912 through 14 445 500 538 653 819 1,03715 through 17 399 445 476 573 710 90018 through 22 520 600 656 804 980 1,200

6 through 14 1,507 1,70 1,829 2,267 2,829 3,3466 through 17 1,906 2,145 2,305 2,845 3,539 4,2466 through 22 2,426 2,745 2,961 3,649 4,509 5,44612 through 17 844 945 1,041 1,230 1,529 1,937

Population 6,305 6,950 7,283 8,908 10,711 12,825All Ages

Source: Median Variant of Population Dynamics and Education Development inSyria - Analysis and Perspectives, Beirut, 1974: Regional Officefor Education in the Arab States (except for 1973 projection whichis a World Bank estimate).

Note: The "total population" projections used in this table for 1980, 1985and 1990 are 4.4 percent, 6.3 percent and 8.5 percent higher respec-tively, than the UN medium variant projections for 1980, 1985 and1990 (see Table SA 1B.1).1/ The higher projections were used to deter-mine an outer range on the rate of growth of the school age population.

2.03 Although events overtook the projections of the Third Plan, and thePlan itself underwent substantial changes as old projects were deleted and newones added, its overall strategy has not been changed and is expected to formthe basis of the Fourth Plan, 1976-1980. The new Plan, however, is stillbeing discussed by the government and details of the proposed investment pro-gram were not made available to the mission.

2.04 In the absence of specific information on macro-economic: targetsof growth and the sectoral distribution of planned investments, detailed


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forecasts of manpower needs are impossible--the only alternative being toattempt a broad evaluation of trends with a view of reaching qualitative con-clusions about areas of possible shortages and priority needs. Preliminaryprojections for the period 1974-1985 suggest that the average annual trainingneeds at the beginning of the 1980's could be in the order of some 20,000skilled workers (with secondary general or vocational education), some 7,000technicians (including 4,500 primary teachers and vocational instructors)and about 6,000 university graduates from all specializations.

2.05 Given the very uncertain nature of the data and hypotheses used inthis exercise, no firm conclusions can be drawn. The exercise, however,seems to confirm the feeling, shared by many Syrian educators and planners,that while there may be sufficient economic justification for expansion ofcertain sub-sectors of the education system (in particular, vocational edu-cation and higher technician training where increasing shortages are pro-jected), the present trends of indiscriminate rapid growth at all levels (and,in particular, at the secondary general and university level) can only beexplained in terms of social demand for education. Given the gaps betweenprojected manpower demand and supply, alternative assumptions about growthrates and investment patterns are unlikely to alter the above "qualitative"conclusions about manpower disequilibrium. While a detailed analysis ofspecific skills requirements is not available yet, it appears that vocationaland technician training for the manufacturing and construction sectors aswell as for land reclamation, irrigation and farm machinery have the highestpriority.

2.06 It should be emphasized that the above projections do not coverthe needs for on-the-job training or for refresher or upgrading training forthe workers already employed. In view of the low educational profile of theSyrian labor force, the growing technological sophistication of the Syrianindustry, and the mobility of labor, it seems that accelerated adult vocationaltraining (particularly for the manufacturing and construction sectors) shouldbe given high priority.

2.07 The same considerations seem to apply to the agricultural laborforce, inasmuch as the government strategy for expansion and moder'nization ofthe sector will require the use of better production technologies and moreefficient management of the farms, particularly in the newly developed areasof the Euphrates Basin. It is doubtful that these results could be achievedwithout substantial upgrading of the very modest level of educational attain-ment of the rural populations concerned. In this respect, functional literacy,rural skills, health and nutrition, and community development are probablypriority educational needs.

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CHAPTER 3

THE EDUCATION AND TRAINING SYSTEM

3.01 Since the beginning of the 1960s, there has been an unprecedentedexpansion of the education and training system in Syria. During 1963/64 to1973/74, total enrollments have grown at about 7.5 percent per year, from814,000 to 1,662,000. Today, one out of every four persons in Syria is astudent. Despite the Syrian government's efforts and intentions to attunethe education system to overall development policies and regulate its growthin accordance with rigorous planning, education growth has responded prin-cipally to the pressure of social demand. As a result, enrollment expansionhas often outpaced action to achieve relevance and impr-'! education qualityand efficiency.. The issues thus raised and the imbalances created or accen-tuated have a pervasive influence on Syria's educational structures and pro-cesses.

THE EDUCATION STRUCTURE

3.02 The structure of the Syrian formal education system basicallyfollows the four-tiered pattern usual in Arab countries:

(i) 6 years of primary education (grades 1-6; normal age group:6 through 11);

(ii) 3 years of preparatory education (grades 7-9; normal agegroup: 12 through 14);

(iii) 3 years of secondary education (grades 10-12; normal agegroup: 15 through 17); and

(iv) higher education, comprising technician courses of 2-yearduration in "intermediate institutes" and university coursesof 4-6 years.

3.03 Education in public schools is free at all levels. Transition with-in this structure was regulated at the completion of each of the above cycles.However, as Syria is moving toward a 9-year course of basic education, thecompetitive examination for progression from primary to preparatory has beeneliminated. A mildly selective examination controls entry from preparatoryinto secondary education, which is divided into general secondary (furthersubdivided after a common first year into a humanities branch and a sciencebranch, both leading to the baccalaureate) and technical secondary (withspecializations in industrial, commercial, home economics or agriculturalstudies). No entrance examination is administered for admission into univer-sity--in principle, entry is open to all baccalaureate holders.

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ADMINISTRATION AND PLANNING

3.04 The Ministries of Education (MOE) and of Higher Education (MOHE) areprimarily responsible for education in Syria. UNWRA and the private sectorplay a limited role, while a number of other ministries (in particular Agri-culture, Culture, Health, Industry, Labor, Petroleum, Public Works, SocialAffairs and Tourism) are active in training related to their special technicalfields.

3.05 There is a considerable degree of administrative decentralization.In the case of the MOE, policy guidelines and major programs are defined bythe central authorities and resources allocated to each of the regions; theregional authorities decide on the details of the program within the region,assign teachers, and distribute teaching aids and materials as required.Implementation of the school building program is the responsibility of theInstitute of School Buildings, a para-government agency with an autonomousbudget. As for the MOHE, the Minister presides over the Council of HigherEducation which includes the rectors of the universities and is responsiblefor establishing general policy guidelines, ensuring coordination among thethree universities and the higher institute and determining each year thenumber of students to be admitted to the different faculties at each univer-sity.

ENROLLMENT DISTRIBUTION

3.06 The education system in Syria is broad-based and comparativelywell-developed in terms of quantity. The following table shows the growthof enrollments by levels of education in the period 1963/64 to 1973/74:

Table A4.3.1: GROWTH OF ENROLLMENT, 1963/64 to 1973/74

1963-64 Enrollments 1973-74 EnrollmentsTotal % % Graduates Total % % Graduates

Level OOOs Female Private OOOs OOOs Female Private OOOs

Primary 628 30% 8% 22 1,160 39% 3% 112Pre-paratory 105 23% 38% 16 308 30% 4% 56Secondary(alltypes) 50 20% 35% 13 134 28% 10% 32

Higher(inSyria) 31 15% 0% .. 60 20% 0% 7

Source: Ministry of Higher Education.

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3.07 The table shows three main trends:

(i) a rapid expansion of all levels of education (enrollments havedoubled in primary and higher education, and trebled in prepara-tory and secondary);

(ii) slow progress of girls' education (notwithstanding some improve-ment in the participation rates of girls, the proportion remainslow; it may be another decade or more before sociological con-ditions will have led to any substantial improvement at thepost-primary level); and

(iii) decline of the private sector 1/ (where enrollments have beenreduced from 38 percent to 4 percent in preparatory and from 35percent to 10 percent in secondary education).

3.08 As a result of the expansion, the school participation rates inSyria compare very favorably with those of other countries at a similar stageof development,

/aTable A4.3.2: ENROLLMENTS- AS PERCENTAGE OF RELEVANT AGE GROUP

GNP PerCapita LiteracyUS$ Primary Middle Secondary Higher Rate

Syria (1974) 560 89% 55% 32% 12% 40%Arab Republicof Egypt (1973) 240 /b 74% 46% 31% 10% 35-40%Saudi Arabia (1973) 1,300 lb 54% 25% 10% 2% 20-30%Iran (1973) 723 77% 38% 24% 3% 50% /aAlgeria (1973) 320 /c 67% 21% 8% 3% 25%Morocco (1974) 290 54% 17% 8% 2% 26% /eLebanon (1972) 754 130% 62% 37% 11% Id 68%Jordan (1972) 270 104% 63% 31% 27% If 59%

/a Including over-aged students./b GDP./c 1972 figure./d Lebanese students only; 23%, if foreign students are included./e Over 10 years of age./f 1974 figures include students abroad; only 5% in Jordan.

Source: Ministry of Education. Central Statistics Offices.

1/ For purposes of this report, the comparatively small enrollments in UNRWAprimary and intermediate schools (none in secondary) are included inpublic education.

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3.09 The above overall data, however, conceal significant disparities inthe distribution of educational opportunities by regions and by sex. As shownin Table SA 10.1, the regions of Al-Hasakeh, AIl-Raqqa, Deir-Ez-Zor, Aleppo andDamascus hinterland are seriously disadvantaged in terms of educational oppor-tunities at primary and preparatory levels. In general, there are seriousimblances between urban and rtral areas, with net participation rates in pri-mary education averaging 98 percent in the former and less than 67 percent inthe latter. Similar imbalances seem to affect the poorest areas in the majorcities, although precise statistical information is unfortunately not avail-able. It should be noted that the imbalances in participation by sex (para.3.07) seem to be more pronounced in the poorest areas, where the sociologicaldeterrents are stronger (in rural areas, female participation rates in primaryeducation drop to less than 50 percent.

3.10 Imbalances are also present in the distribution of enrollments be-tween general and technical studies. In 1973/74, over 80 percent of secondaryenrollments were in general secondary schools, but only 8 percent in indus-trial schools, 2 percent in agricultural, 3 percent in commercial and 4 percentin primary teacher training. In higher education, only 10 percent of totalenrollments in Syria are in non-university technician courses; of the universitystudents, the proportion in the humanities (33 percent) is high compared withmedical sciences (10 percent), engineering (15 percent), agriculture (11 per-cent), and sciences (12 percent).

THE UNIVERSITY PROBLEM

3.11 The question of distribution by specialization at university level,however, is less dramatic than the overall size and growth of undergraduate-enrollment. The opening of the universities, in 1971, to all baccalaureatesof general secondary schools has placed an increasing burden upon the univer-sities, as the number of baccalaureates has been rising continually as aresult of the earlier great expansion of primary and secondary school systems.Because of demographic factors and the expected continuous growth of secondaryeducation, this pressure--which already bears no relationship to the demandfor professional manpower in the country--is expected to continue in themedium term. As a result, higher education enrollments, which were 47,000 in1971/72 and 62,000 in 1974/75, are expected to reach 100,000 to 110,000 by1980.

3.12 The increasing shortage of suitable teaching facilities, instruc-tional equipment and teachers 1/ has forced the authorities to take certainrestrictive measures:

1/ At present, Damascus faculty of science has a student/full-time equiva-lent teaching staff ratio of 58:1, while one faculty of engineering hasa ratio of 36:1 and another faculty of engineering has a ratio of 90:1.These ratios would hardly be considered acceptable in a secondary school.

18t1 -

(i) only secondary schoo'l graduates of the previous academic yearare eligible for admission, and applicants aze sorted out accord-ing to their grades within given capacity limits established foreach specialization by the Council of Higher Educatiun; and.

(ii) only in secondary cases will graduates of the technical secondaryschools be allowed to apply for admission into the universities.At the same time, universities are encouraged to establish inter-mediate institutes to draw off some of the baccalaureates.

3.13 On the whole, th;se measures have proven to be inadequate. Entryrestrictions seem to have worked mainly against the poorer students who cannotafford taking the baccalaureate exam several times to obtain higher scores(which often requires heavy expenses for private tutoring). On the otherhand, the hasty establishment of new intermediate institutes has often beenbased on inadequate planning which has resulted in a lack of adequate facil-ities and suitably qualified staff--to the detriment of quality education.

3.14 In these conditions, the commendable efforts of the government toimprove teacher supply, introduce post-graduate courses and improve the -

quality and distribution of physical facilities risk being stifLed by theexplosive growth of undergraduate enrollment. It seems, therefore, imperativethat a system of "rationing" better linked to manpower needs of the economybe applied graduially but vigorously; at the same time, the present proceduresfor admitting applicants into the various faculties need to be scrutinized,and services provided for counselling and testing for aptitude and commitment.(Under the present system, the student will register in the first facultywhich accepts him.)

EDUCATION EFFICIENCY

3.15 Education efficiency ratios in Syria compare fairly well with thoseof most other developing countries but still show room for further improvement.In primary education, repetition averages about 10 percent per annum while thedrop-out rate is about 5 percent per annum (about 2 percent in grade 1, reach-ing 11 percent in grade 6). In preparatory education, repetition rates arehigh, reaching 45 percent in final class (grade 9). Drop-out, however, isless than 9 percent. In secondary education, repetition is abnormally high inthe final grade--43 percent. Here, too, is evidence that students not gainingentry to third level education do not drop out but continue to repeat untilthey have obtained the final certificates. (The drop-out rate is less than

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5 percent.) As for higher education, the evidence available suggests that themajor problem is repetition, not drop-out. 1/

CURRICULA

3.16 On the whole, curricula for both primary and general secondary edu-cation are well balanced in terms of their objectives. Practical activitiesare included in both primary and preparatory education though there could besome additional time allocated to this area in the preparatory schools. How-ever, the content of a number of syllabi needs to be modernized. A review ofthe curricula of the secondary (industrial) technical schools underscoressome of these general assessments. The specializations offered (woodcraftsand carpentry, machinery, welding and smithery, foundry and casting, auto-mechanics and diesel mechanics, electricity, telecommunications and elec-tronics, and textiles) are generally relevant in terms of manpower needs.The curriculum of each course of study is well balanced between workshopand theoretical studies and most of the programs are well designed, though amodernization of contents is called for in some cases. The textbooks used(some 90 titles) are well prepared and the final examination gives seriousprominence to the practical subjects.

3.17 The agricultural technical secondary schools, on the other hand,are of comparatively lower standard. The intake is not of high quality. Thecurriculum is fragmented in a wide spread of subjects. Although adequatetime is allocated for field, workshop and laboratory work, most of the in-struction is theoretical because the practical facilities, equipment andmaterials are lacking. Furthermore, the schools do not have adequate numbersof full-time and/or trained teachers. At present, there is no institution inSyria training teachers of agriculture; it is essential that the agriculturalintermediate institutes and the university faculties of agriculture organizein-service and pre-service teacher training programs in conjunction with theuniversity schools of education.

1/ In some of the university faculties, the passing rates are usually lowin the first year of studies, largely as a result of the universities'open-door policy; as the drop-out rate is low, the repeater rate ishigh in these schools; the passing rates improve in the higher years asshown in the Table below:

Year i to OtherYear 2 Years

Faculty of Science, University Damascus 60-70% 80-95%Faculty of Science, University Lattakia 50-707% 80%Faculty of Engineering, University Damascus 40-50% 80%Faculty of Engineering, University Aleppo 60% 90-93%

Compare, however, the Damascus University Agricultural Faculty which hada 40 percent drop-out in 1974-75 of its intake; it is not known, however,what proportion of this loss transferred to other faculties.

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3.18 The -intermediate institutes affiliated to the universities presentanother kind of problem. They have no purpose-built facilities of their own,and the teachers are the university teachers; the responsible umiversityadministrations cannot give to these technician institutes the same attentionas is given to the professional faculties, with the result that the programsare of lower quality and tend to take a theoretical direction. The six inter-mediate institutes of the Ministry of Industry are also handicapped by thelack of their own practical facilities, teaching equipment and full-timeteaching staff. The teaching program, however, uses some factory facilitiesand the course includes periods of on-the-job training.

3.19 Of different calibre are the three intermediate institutes of theMinistry of Education; these have acceptable curricula, satisfactory student:teacher ratios, and for the most part, well-equipped workshops (by the FederalRepublic of Germany). Most teachers are well-motivated, employed on a full-time basis and have received advanced training abroad (mainly in Germany). Inthese circumstances, it is possible to apply a program of practical trainingto the point where the students in the last (second) year of training under-take production assignments with simulation of real manufacturing situations.

PHYSICAL FACILITIES

3.20 The assessment given above points up the deficiencies in the qualityof education at all levels resulting from inadequacies of learning-teachingresources. Management and operational skills have not fully coped with therate and areas of expansion and curricula have not been entirely satisfactoryand syllabi up-to-date. Another serious obstacle to better quality educationin Syria is the physical element. The vast majority of school buildings arenot functionally suitable for modern educational purposes; about one-third arerented houses; laboratories, workshops, libraries, equipment and materials arealmost nonexistent. Even in recent constructions, the practical spaces arelimited or hardly suitable for modern teaching purposes. There is an urgentneed for establishing adequate norms and standards both for teaching spacesand for the equipment required for various programs of study. Although 94percent of permanent teachers in primary schools and 77 percent in secondaryschools are qualified, the majority is forced to resort to passive teachingmethods in the overcrowded, non-purpose-built and unequipped spaces used asschool buildings. Moreover, the shortage of buildings makes it necessary touse most of the buildings on a double-shift basis. This means that the weeklywork load has to be curtailed to allow for the two shifts to begin and coQ-plete their daily studies at school within reasonable hours. In these cir-cumstances, the feasibility of lengthening the school year to make up for theshorter working day needs to be urgently considered. In the longer runsprogressive replacement of unsuitable facilities at both primary and secondarylevels is of top priority to improve the quality of education. This programneeds to be supported by a comprehensive inventory of school buildings andother education facilities.

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TEACHER EDUCATION

3.21 Higher quality teacher education is essential in this type of sit-uation. The primary teacher training curriculum has served well, but nowneeds some revision to enable teachers to become more self-reliant and moreversatile. In the better tfaining colleges, makeshift workshops and craftrooms have been established where trainees are doing fine work in preparationfor the time when they will have to depend primarily on available textbooks,their own resourcefulness and the goodwill of interested parents. However,most primary teacher institutions are in borrowed premises, usually parts ofother non-purpose-built educational institutions (Table SA 10.9), and they aretoo small to justify the appointment of a sufficiently broad range of quali-fied teacher trainers.

3.22 In primary teacher training, the "pedagogical" content of coursescan be increased without handicapping the "academic" element of the curriculum.The four-year course (grades 10-13) following graduation from preparatoryeducation is long enough to allow teacher trainers to design a well-balancedand integrated curriculum assuring a sound academic base, cultural and socialgrowth, up-to-date pedagogical skills including workshop and agriculturalskills, and relevant field training. This course is particularly suitablefor able applicants from the rural areas who would otherwise have had littlelikelihood of continuing their studies in the upper level of secondary schools.In the second type of course--a one-year course (grade 13) after baccalaureate--the trainees already have an adequate academic level so that the greaterpart of the course should be devoted to the pedagogical skills including work-shop and field training aspects.

3.23 Until the current school year, primary teacher training was of oneyear duration post-primary (58 percent of trainees in 1975/76) and four year'spost-preparatory. The one year course has been extended to two years from thepresent year, and the numbers in the four-year course are being progressivelyreduced.

3.24 In public preparatory and secondary schools, the teaching force islargely composed of university graduates (77 percent), but only 17 percent ofthe total force has had pedagogical training. I/ The annual output of 500university graduates in the University of Damascus School of Education's one-year diploma course could correct this problem in time, but applications fromscience and math graduates are very limited. Plans are now being prepared forconsiderable expansion of the School of Education and for a more systematicapproach to in-service teacher training courses.

3.25 The universities are producing adequate numbers of subject graduatesto meet the preparatory and secondary schools' demand for teachers, provided

1/ It is not possible to provide precise estimations of teacher:studentratios since there is inadequate evidence to permit a close approxima-tion of full-time teacher equivalency. In schools visited, the ratiowas of the order of 1:20.

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the graduates in the sciences and math can find the teaching profession suffi-ciently attractive. At present, there are shortages in these areas, partic-ularly in preparatory schools outside the main cities. 1/ This means that thesmaller preparatory schools are less well staffed with university graduatesand have to contend with the problem of transitory teachers. Teachers for thepreparatory schools for music, art, and physical education are trained in twoIntermediate Teacher Training Institutes in a two-year post-baccalaureatecourse in adequate numbers.

3.26 At the universities, the shortage of teachers is extremely critical,leading to teachers carrying such heavy teaching loads that their efficiencyis likely to be affected, as is their availability to carry out any signif-icant reseach activity. Teacher student ratios are probably higher than 1:40in most university schools. (It is difficult to make any accurate overalljudgment because of the insufficiency of evidence on full-t4ime equivalency.)A very recent decree aims at greater efficiency in teaching and encouragementof research by requiring university staff to be placed on a full-time basis;in return, teachers will receive an additional allowance of 200 percent oftheir salary. This timely measure may also attract more qualified personnelto university teaching, and the universities may give greater attention toresearch studies related to Syrian developmental purposes. At present, onlythe medical and dentistry schools in the science-based faculties offer graduatecourses, despite the high quality of the university teaching staff.

NON-FORMAL EDUCATION

3.27 Activities in the field of non-formal education are varied andbecoming increasingly widespread with the increased efforts of a number oforganizations to supplement action by the government. The total effort,however, is still relatively limited. A substantial expansion of ongoingprograms to eradicate illiteracy would be of direct benefit to the ruralpopulation and the urban poor. Despite the creation in 1972 of a specialcommittee of the Higher Council to coordinate the literacy activities of allagencies involved in this work, the attendance at the literacy classes ofthe main agency--the Ministry of Culture and National Guidance--was just over6,000 in 1970 and has increased to only 12,000 in 1974. Among possibilitiesof expanding these literacy activities two available sources could be quicklyand cheaply mobilized to participate effectively in a literacy program providedthere was determined official commitment. Firstly, the widely dispersedprimary school network and the growing preparatory school network could offerliteracy programs throughout the nation after teachers had been given a shortintensive course in the required techniques. If these schools were providedwith some practical facilities, as suggested later, literacy programs could begiven a ftuctional aspect and correlated with adult education and communitydevelopment programs in general. Secondly, functional literacy classes could

1/ Paradoxically, Syria is a net exporter of qualified preparatory andsecondary school teachers (particularly, but not exclusively, to theGulf States).

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be promoted on a larger scale in the activities of the cultural centers of theMinistry of Culture. These centers are presently doing important educationalwork with adolescents and adults in the arts, music, languagues, literature,sewing, knitting, home-management, etc.

3.28 Mention should be made of the functional literacy classes organizedby the General Union of Syrian Arab Women in which literacy has been combinedwith skill activities which can provide gainful occupation. It is to be hopedthat the literacy activities of this organization, as also of the GeneralFederation of Syrian Trade Unions, will be nurtured to assume larger propor-tions. Reference must be made also to the UNESCO functional literacy trainingwithin the project for the development of the Ghab area.

3.29 In the field of industrial training of semi-skilled and skilledworkers, the Ministries of Industry and Public Works have their own trainingprograms. The Ministry of Industry centers at Damascus and Aleppo had atotal enrollment in 1975 of 858 in the accelerated training programs (6-9months' duration) and 282 in the two-year programs. The latter courseincludes one year in the factories. The trades offered are electricity,metal, carpentry, plumbing, automative, textiles and drafting. All success-ful trainees find employment in state enterprises.

3.30 The Ministry of Public Works' centers, with enrollments of about3,000, offer programs of the intensive type (3-8 months' duration depending onthe trade) in electrical wiring, sanitation, ironmongery, woodwork, plasteringand painting, tile work, concrete, steel reinforcement, masonry, stone andbrick work. Depending on the trade, admission is open to those who can readand write or to preparatory school graduates. Trainees receive stipends.The Ministry uses rented facilities or borrows MOE technical school premises.

3.31 The Ministry of Labor organizes a few training programs, partic-ularly for trade union leaders and for the handicapped, and operates somehandicraft and carpet-making centers. Under the Ministry of Agriculture andAgrarian Reform, which has also training programs for its own staff, theGeneral Union of Peasants is responsible for training staff for the coopera-tives (managers and bookkeepers), and also carries out short courses forfarmers and for farmers' children, in coordination with the well-organizedagricultural extension services.

EDUCATION FINANCES

3.32 Despite the rapid enrollment growth, public education expendituresin Syria have tended to decline relative to total public expenditures andGDP (Table SA 10.10). In 1974, public recurrent expenditures on educationrepresented a fairly modest 12.8 percent of total public expenditures, capitalexpenditures on education absorbed about 3.5 percent of total capital budgetand total public expenditures on education were only 3.7 percent of GDP.

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3.33 Although these percentages may be slightly misleading in interna-tional comparisons due to the inflated size of the Syrian public budget(because of military expenditures), they underscore two important featuresof the country's education finances: (a) relatively low unit recurrentcosts (Table SA 10.13), associated with relatively high rates of educationalefficiency (para. 3.15), low teachers salaries 1/ and low expenditures onteaching/learning aids; and (b) heavy reliance on rented rather than purpose-built facilities to cater for a substantial proportion of new enrollments.

3.34 These features have made it possible to face the pressure of socialdemand for education without undue pressures on the public budget. Theprice has been, in the opinion of many Syrian educators, a relaxation ofeducation standards and a decline in quality.

3.35 It appears, however, that new trends are emerging. Firstly, schoolbuilding construction is being increased very rapidly; the total amountinvested was about SL 22 million in 1970 and is now about SL 290 million(Table SA 10.10). Secondly, in an effort to attract and retain betterqualified staff in the teaching prrofession, teachers' salaries have beenalmost doubled between 1974 and 1975 for primary and secondary educationand trebled for university education. Both trends are positive inasmuchas they show increasing government preoccupation with education quality.However, they seem hardly reconcilable with the continuation of the 1960spolicies of "linear expansion" of the education system.

CONCLUSIONS

3.36 Four principal conclusions may be drawn from the foregoing assess-ment of the education and training system:

(i) the formal system is sufficiently well-developed quantitativelyat all levels; if it is to become a responsive tool of socialand economic development policies, the major effort in thenext few years should be on improving the quality, relevanceand distribution of education;

(ii) non-formal education programs are limited in extent as well asdistribution, and the activities of each ministry or agencyare insufficiently coordinated with the efforts and resourcesof other ministries or agencies;

(iii) the vocational and technical training area urgently needsdevelopment, but it needs also integrated and comprehensiveplanning; and

(iv) development of post-secondary education urgently needs to bere-oriented and restrained where necessary.

1/ This refers to basic salaries; actual salaries are, in fact, substantiallyhigher for most teachers due to overtime payments (see Table SA 10.11).

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CHAPTER 4

EDUCATION POLICIES AND STRATEGY

BASES FOR DEVELOPING AN EDUCATION DEVELOPMENT STRATEGY

4.01 Analysis of recent developments in the education sector suggeststhat education policy seems to be the prisoner of two objectives and twodevelopment patterns which have not been fully reconciled. On one side,economic policies and aspirations require that the education and trainingprovisions be more closely related to anticipated economic needs; thisrequirement has both a qualitative dimension, in terms of relevance oftraining and the development of desirable work attitudes, and a quantita-tive aspect insofar as the numbers of graduates from certain trainingsources are critical to development.

4.02 The Third Development Plan, 1971-75 attempted to strike a balancebetween the opposing goals of training to meet strict manpower needs forSyria's economic growth and education for broad social purposes by emphasizingthe following policy objectives:

(i) to begin the merger of primary and preparatory education;

(ii) to enforce compulsory education gradually, beginning withthe six to eight years' age group to reach a participationrate of 80 percent in primary schools by 1975;

(iii) to diversify secondary education by reinforcing technicaleducation and introducing new specializations;

(iv) to channel 20 percent of the graduates of preparatory educa-tion into secondary technical education;

(v) to build a sufficient number of schools so that class sizesmay be reduced to a maximum of 40 in primary, 45 in prepa-ratory and secondary, and 40 in technical education, whilecontinuing to work schools on a double shift basis wherepossible but eliminating three-shift work;

(vi) to improve school health services; and

(vii) increase the supply of free books, subsidized books and otherteaching-learning aids in the schools.

4.03 Some of these objectives and targets have not been achieved prin-cipally because of the dislocation of Plan execution by the 1973 War andits aftermath. Apart from the construction program, the objectives cannotbe called ambitious, and it is expected that they will be carried over andform the basis of the new Education Plan, 1976-80.

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4.04 A number of additional proposals for education reform have recentlybeen developed by the 1974 Conference on the Development of the Pre-UniversityEducation. It is expected that these proposals will also be reflected inthe new Plan 1976-80, as they are already strongly influencing the thinkingand work of the MtOE Directorates of Curriculum and Textbooks, EducationalResearch and Educational Technology. Among the new recommendations, thefollowing are the most significant:

(t) primary school curricula should be better related to thechildren's socio-cultural environment, which impliesdiversification of curricula and a stronger agr'culturalorientation in rural areas;

(ii) additional time should be allocated to pre-vocational andorientation courses in the preparatory schools _ identifythe interests and aptitudes of students and ensure moreeffective career guidance;

(iii) efficiency in the schools could be improved by upgradingstudent services and introducing more modern and appro-priate testing and promotion systems; (to this admittedlypartial measure, it is recommended, should be added theinitiation of remedial and counselling services);

(iv) teacher training should be improved; more women teachertrainees should be attracted (in order to convince parentsto leave girls in schools); better incentives should beprovided to attract and hold qualified teachers inteaching; and

(v) special training courses should be conducted for schoolprincipals and education administrators.

SUGGESTED OUTLINE OF AN EDUCATION DEVELOPMENT STRATEGY

4.05 A viable education/development strategy for the medium term canbe suggested in the framework of the foregoing analysis of the economy devel-opment policies, the objectives set out in the education sector of the ThirdDevelopment Plan, 1971-75, the trends and directions of actions and measuresinitiated in the period, the recommendations made at the Conference on theDevelopment of Pre-University Education, and of the assessment of the presenteducation system and its potential. The strategy thrust would be to reinforceand expedite actions designed to improve quality and relevance of educationas well as the distribution of education opportunities. No case is made forpurely quantitative expansion, except in those geographical or skill areaswhere there are manifest deficiencies of educational opportunities and appro-priate training provisions. This approach would be spearheaded by (a) cur-ricula reforms; (b) improved teacher education; (c) improved learning-teaching school environment where the relevant curricula can be effectivelyapplied by betiter trained teachers capable of employing modern active teachingmethods; (d) organizational and administrative measures appropriate to modern

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educational practices and the Syrian realities; (e) improved management andplanning capabilities at all levels of the system; and (f) provision ofappropriate education/training resources in new regions to be developed.

4.06 In order to make resources available for such improvements andfor growth in response to the social equity and economic developmentimperatives, the strategy would restrain, expansion in certain subsectorsof the education system while promoting relatively faster growth of othersubsectors. In particular, the objective of assuring good quality basiceducation and functional adult education in the rural areas (as well asin the poorest urban areas) should be given priority over increased enroll-ments in the universities; similarly, vocational education and techniciantraining should have priority over general secondary education.

4.07 A second aspect of the recommended strategy aims at improving thecost-effectiveness of the education/training system not only through thereforms and improvements indicated above, but also by carrying out studiesto ensure optimal localization of education/training resources. Thus, the"carte scolaire" survey and the study of norms and standards (para. 3.20)need to be carried out at the earliest opportunity.

4.08 It should be recognized, however, that it may be unrealistic toexpect early decisions on some of the more sensitive issues. No governmentcan ignore the political realities of social demand, though it may temperthe pressures. Moreover, ongoing actions or programs cannot be rapidly slowed;university enrollments will grow in the next three or four years because theintakes of this and of the last year are already in the system and cannot beejected, nor can the new intake in the next few years be put at a much lowerpoint than the number allowed in 1975. Again, the rate of growth of voca-tional and technician training, for example, will be governed in the imme-diate period by the need and time required to train teachers, developcurricula, and build and equip the institutes.

ANALYSIS OF PRESENT AND PROJECTED TRENDS

4.09 In this context and given these premises, a preliminary fore-casting exercise was based on the government's enrollment projects and themission's evaluation of present and projected trends. The purpose is simplyto illustrate certain medium term implications of present policies--not todetermine optimal targets.

4.10 The preliminary objectives of the ministries are summarized below(see Table SA 10.14 for details), together with an extrapolation to 1984/85 1/.,

1/ To a considerable extent, enrollments in 1984/85 will be predeterminedby the level of intake in 1979/80.

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Public and Private Enrollments in 000s

/a /Level 1973-74 1979-80- 1984-85`/

No. _ No. % No. %

Primary 1,160 89 1,310 104 2,010 100Preparatory 308 55 448 69 665 80Secondary /c 134 32 204 35 240 34Higher /c 60 12 110 14 130 13

( ) = gross participation rate, with overage children included.

/a Government projections.lb World Bank projections./c All types; all ministries with formal programs.

Source: Ministry of Education and IBRD mission projections.

4.11 These targets must be seen in terms of the implications on resources.Tables SA 10.15 and 10.16 show the following average annual resource require-ments over the period 1974-1984 if the growth pattern suggested by the abovetable is to be realized and the quality factors fully recognized:

PROJECTED AVERAGE ANNUAL RESOURCE REQUIREMENTIN THE PERIOD 1974 TO 1984

Required AnnualQualified Teachers Purpose-built Investments

(Public and Places (Public US$ million /aPrivate Education) Education only) (1974 prices)

Value Percentage

Primary 4,000 120,000 48 36.1

Preparatory 2,300 20,000 16 12.1Secondary General 10,000 12 9.1

Secondary Technical /b 500 10,000 13 9.8

Primary Teacher ) 800 2 1.5Training ) 600-1,000

Higher ) 7,500 41 31.1

164,800 132

/a Excluding land costs./b All types; all ministries with formal programs.

Source: Ministry of Education and IBRD mission projections.

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4.12 Several observations need to be made. Firstly, government invest-ments in primary education could be lower if more local communities wereencouraged to undertake construction of primary schools. In such cases,technical assistance to be provided by the Institute of School Buildingswould be essential to ensure that the buildings, simple as they might be,could serve the purpose adequately.

4.13 Secondly, the large portion of the investment attributed to HigherEducation (over 31 percent) could be somewhat reduced if it were possible torestrain university enrollments in the 1976-1980 period. Conversely,enrollments in technician level education could be more rapidly expanded.

4.14 Thirdly, the financial implications of the projected rapid growthin technical education and vocational training programs seems to have beenunder-estimated by the government. The MOE proposal for investment in thissub-sector for 1976-80 of US$21 million 1/ is well below the projectedrequirement of about US$80 million, though part of this would be invest-ments by ministries other than the MOE. It would seem that a thorough re-assessment of this problem is needed.

4.15 Fourthly, with the government's decision in the future to incorpo-rate technical education programs into a multi-purpose or comprehensive typeof secondary school, the overall investments on secondary education would needto be re-apportioned to meet the additional costs incurred in converting ormoving from the general secondary school to the comprehensive type whileformal technical secondary school requirements would be reduced.

4.16 The stated policy of the MOE, which aims at elimination of doubleshift by 1980, needs to be reconsidered because it will take more time thanexpected to be implemented and it implies that priority in construction wouldbe given to elimination of double-shift; this in turn would mean less atten-tion to replacement of obsolete or non-functional rented buildings and lesscare to provide place for new enrollments. Furthermore, such a priorityfavors the children in the cities and larger towns where double-shift schoolspresently operate; children in the smaller village schools would continue toattend school in totally unsuitable buildings. The following order of priori-ties is recommended: (a) places for new intakes into the system; (b) placesfor replacement of non-functional and/or rented buildings; (c) places forreducing overcrowding; and, lastly (d) places for elimination of the double-shift.

1/ The MOE proposed investment program does not include equipment costswhich could take the program to about US$30-35 million.

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TEACHER REQUIREMENTS

4.17 The question of how to achieve and maintain the availability ofqualified teachers apace with enrollments in growth requires careful study.In primary schools, the annual need could be of the order of sco,e 4,000qualified teachers (Table SA 10.16). The primary teacher training is now atwo-year post-baccalaureate course so that 8,500 to 9,000 places in purpose-built training colleges should be adequate in the medium and longer-term. TheMOE plan, therefore, to construct 14,000 places during the period 1976-80 canbe reduced; this should be done in such a way as to have at least one (mixed)or two (male and female separately) training institutions of viable size ineach region; priority should be given to those regions which are presentlydisadvantaged in this respect.

4.18 The question of teachers for the academic subjects of the preparatoryand secondary schools of all types has been treated earlier (paras. 3.24 and3.25). There need be no problem. The Intermediate Teacher Training Insti-tutes can provide the teachers for physical education, art and music in ade-quate numbers. However, the requirement of 300-350 1/ additional teachers oftechnical subjects and of workshop instructors annually will be met throughthe present training provisions made under the First Bank Education Project.There will be a need to attract appropriately qualified university degreeholders and graduates of the engineering and agricultural intermediate insti-tutes into teaching, preferably after they have obtained some industrialexperience and undergone a pedagogical training course. In addition, theproposed introduction of new practical subjects--basic industrial arts orhandicrafts, agriculture and home-ecnomics--into the preparatory school cur-riculum will call for appropriately trained teachers of practical subjects--some 200 annually for this level.

4.19 In summary, the teacher supply can match the demand in pre-universityeducation to achieve the required targets with the set-up of additional pro-grams for practical subject teachers are instituted. Given the present basefor teacher preparation, the demand will not be so great as to raise seriousproblems. Both the government's and the mission's projections assume teacher:student ratios more or less similar to those obtained in 1974, which areconsidered acceptable--1.38 in primary, 1:30 in preparatory, 1:20 in generalsecondary/comprehensive and 1:15 in technical/vocational. Of these, theprimary education figure may have to be improved to allow for more extensivemultiple-grade teaching in smaller schools in the rural areas. An additional600 new qualified teachers a year in the primary system could reduce thestudent:teacher ratio to around the 1:35 mark. The additional recurrent costimplications of this improvement should be considered before further planning.Such an improvement should not be made at the expense of other quality improve-ments (services, teaching/learning aids, management, etc.) required in primaryeducation.

1/ The annual requirement for technical education is about 600 additionalteachers; it is assumed that about 35-40 percent of these would beteachers of academic, cultural and commercial subjects.

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ANALYSIS OF SOME NATIONAL PROPOSALS

Literacy Policy

4.20 It is useful to consider in some greater detail some specificprograms or policies proposed by various national agencies for inclusion inthe Fourth Plan 1976-80. The national policy on literacy is to eliminateilliteracy over an unspecified period of time, principally by ensuring theparticipation of children in primary schooling in the first place. Theachievement of universal primary education with all primary school age childrenremaining in school until they have attained at least an adequate literacy andnumeracy level assumes greater urgency. In the period 1975-1985, however,there is little chance that this will be achieved. Apart from the thousands(particularly children from the poorer urban and rural areas) who may notenter school at all each year in the earlier part of this period, the retentionrate is not likely to improve to the extent of eliminating dropouts fromprimary education. Because of the special effort made to eliminate illiteracyat primary level, the literacy training for adults has received too littleattention so far.

Vocational and Technical Education

4.21 Analysis of the preliminary proposals for expansion of intermediateinstitutes and of vocational training centers over the next Plan period con-firms the urgency of establishing a National Council for Vocational Trainingand Technical Education. Six ministries and agencies are involved at theintermediate institute or technician level:

(i) The Ministry of Education is considering construction andequipping of:

- three new intermediate institutes at Deir-Ez-Zor, Homsand Lattakia;

- additional facilities for the three existing institutes.

(ii) The Ministry of Petroleum and Mineral Resources proposes:

- construction of new facilities for its institute at Homs.

(iii) The Ministry of Public Works plans to provide facilities for:.

- the present institutes at Damascus and Aleppo which useborrowed premises of other training agencies;

- one new institute at Deir-Ez-Zor.

(iv) The Ministry of Higher Education has plans for the constructionof new buildings for the existing institutes affiliated to theuniversities of Damascus and Aleppo; five new institutes wouldalso be created at Lattakia University (agriculture, engineer-ing, teacher training, minerals and petroleum, and para-medical).

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(v) The Ministry of Industry plans to construct:

- two new institutes at Damascus and Aleppo for trainingchemical laboratory technicians;

- new purpose-built facilities for its five existing insti-tutes at Damascus, Homs and Aleppo.

(vi) The Ministry of the Euphrates Dam plans to expand and equip arecently established Institute for Land Reclamation at Al-Raqqaand a training center for extension staff also at Al-Raqqa.

4.22 The following ministries are involved at the skilled and semi-skilledworker level:

(i) The Ministry of Industry proposes to expand its vocationaltraining centers at Damascus and Aleppo and establish twonew centers at Deir-Ez-Zor and Homs to be financed underthe First Bank Education Project.

(ii) The Ministry of Public' Works proposes to construct its owncenter at Damascus and Aleppo and also at Hama, Lattakia,Homs, Deir-Ez-Zor, Dar'a, Al-Sweida and Al-Hasakeh in thatorder.

(iii) The Ministry of Social Affairs and Labor plans to add 55 carpetweaving centers and two rug weaving centers in the rural areasand poorer slum areas of large cities to reinforce its present20 centers. (Each center admits 20 trainees for five-monthcourses.)

(iv) The Ministry of Education is proposing the construction andequipping of eight new industrial secondary schools at Damascus(2), Homs, Aleppo, Tabqa, Lattakia (2), and Tartous.

(v) The Ministry of Agriculture and Agrarian Reform plans torationalize the system of agricultural secondary schools byreducing the number of schools and improving and expandingthose which will be retained (it is expected that some 50percent of the graduates would be admitted to intermediateagricultural institutes).

4.23 These various ministries' plans may, in fact, be modest when eachis taken separately, but the query raised is whether in their totality theyform a rational integrated program in which questions of locations, capacities,overall enrollments by institution and by specialization have been consideredin terms of overall demand, regional requirements and the need to ensureoptimal utilization of resources.

University Education

4.24 During the next Plan period, the most important project of theMinistry of Higher Education probably will be the construction of the new

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October University at Lattakia. Other sizeable programs are being considered,such as the introduction of new engineering specializations at Aleppo Univer-sity, the creation of graduate courses at both Damascus and Aleppo or theconstruction of new advanced laboratories at the faculty of electrical andmechanical engineering at Damascus. Other projects are still being discussedsuch as the establishment of a new technological university at Homs.

4.25 The University of Lattakia is planned to be constructed in four -

phases, the first of which will comprise the faculties of medicine (1,500students), natural sciences (3,000 students plus 2,000 students from otherfaculties) agriculture (3,000 students), and engineering (2,000 studentsdistributed among civil, electronic, mechanical, urban and municipal engi-neering) as well as residential accommodations and general services. Thesecond phase will comprise the university hospital, a faculty of letters(4,000 students) and additional boarding facilities. The third and fourthphases will include construction of five intermediate institutes (para. 4.21(iv)) and facilities for cultural and social activities.

4.26 The government emphasizes that the new university would (i) providea more balanced geographical distribution of university education facilities,thus avoiding polarization at the two existing centers; (ii) provide highlyskilled manpower for both Syria and the Arab world at large and a sourceof technological knowledge for the economic development of the coastalregion; and (iii) be a model university with adequate research facilitiesand specializations not found in other universities. A weakness in theplanning of university education has been an over-concern with undergraduateeducation. Moreover, why the October University should serve as a modeluniversity is not clear, nor are the relationships between curricula andphysical facilities, staff development plans and detailed estimation ofcosts.

4.27 As may be concluded from the overall manpower situation as describedin paras. 2.04-2.05, caution in expansion of university education is needed.Consideration should be given in this respect to the likely limitations ofprofessional manpower demand in the country and the likelihood that in the1980s the demand by other Arab countries for expatriate professional labormay decrease as these countries develop their national supply sources. Al-though the employment of university graduates was not a pressing problemin 1970-1975, except for the oversupply of humanities and social studiesgraduates, the problem may become serious in the next few years.

A NOTE ON THE EUPHRATES BASIN DEVELOPMENT PROJECT (EBDP)

4.28 This project is likel-y to remain the largest component of theSyrian development program for at least the next fifteen years. Its ultimateobjective is to transform Northeast Syria into a highly productive agricul-tural area and provide an improved standard of living for its present inhabi-tants and the families who are expected to settle here. Its area includesthe administrative regions of Deir-Ez-Zor, Al-Raqqa and the larger portionof Aleppo.

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4.29 Thus far, the project has largely focused on the physical infra-structure, but increasingly, attention is being directed to the questionof human resource development. The ultimate success of the program willdepend on the motivation, skill and energy of the population of the area.

4.30 The objectives of the project reflect the government agriculturaldevelopment strategy which aims at increasing and stabilizing agriculturalproduction by expanding the area under irrigation and intensifying productionof these lands to reduce the uncertainties associated with a dependenceon rainfall. Most of the water resources outside the Euphrates River Basinare already utilized for agriculture, hence, development of the waters ofthe Euphrates Basin, representing almost 90 percent of the water resources ofthe country, has assumed overriding significance. Ultimately, the EuphratesBasin hydropower and irrigation project will 4rrigate 640,000 hectares ofland, more than doubling the area presently under irrigation in Syria, andquadrupling the country's presently installed power capacity. The full costof development over 40-50 years is presently estimated at US$2 billion; 25percent of public investments in the 1971-75 Plan were allocated to the proj-ect. The Balikh Basin around Al-Raqqa is the first area under development.Bank/IDA assistance is financing one of the irrigation schemes (41,000 ha) andothers may be considered in later projects.

4.31 Administration of the EBDP is the responsibility of the Ministryof the Euphrates Dam, within which the General Organization for the EuphratesDam (GOED) is responsible for the construction of the dam and power stationand the General Authority for the Development of the Euphrates Basin (GADEB)is responsible for the development of the Basin. The construction of thedam was started in 1963.

4.32 The total population of the Euphrates area is estimated at about500,000; over 90 percent of the families are engaged in farming as owners,tenants or agricultural laborers. Almost all of the females and almost 70percent of the males are illiterate. Trachoma and tuberculosis are widespread.Some 10,000 families or 57,000 individuals (59 villages) will need to beresettled as a result of the first inundation. Fifteen new villages have beenconstructed to take in the population of the reservoir villages. About 60branch villages and 15 central villages will be constructed in the Fourth Planperiod at Meskeneh Balikh, the mid-Euphrates and lower Euphrates zones where114,000 ha are to be reclaimed.

4.33 The new villages have a population ranging from 330 to 768 families,but the majority are in the 330-500 range. They are big enough, that is,to justify a six-classroom primary school. ITI each group of villages, onevillage is designated as a "development center" in which the district adminis-tration will be located. If these are suitably located, they would form thenatural location for a preparatory school to serve the satellite villages.Each village will have a school, a youth club, a health center, a social unit(to include adult education and literacy services), a market, a mosque, and acooperative center. The villages designated as development centers will alsohave farmer training facilities. GADEB will assign to each village a socialworker, an agricultural cooperative technician, a storekeeper and an accountant.

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4.34 Exploitation of the potential for cultivation of valuable industrialand food crops will be the responsibility of resettled illiterate and basicallyunskilled families and of new settlers whose ability to respond to the newenvironment and opportunities may be limited in the first place. To build up apositive response will be the major thrust of a human resource developmentprogram; it will entail the provision of literacy, farmer training and formaleducation services. In particular, the rate of introduction of new agricul-tural techniques will be conditioned by the farmers' ability to assimilate, theability of the instructors, and the availability of other teaching/learningresources.

4.35 A corps of trained extension workers familiar with the sociologicalproblems as well as with the ecology and agricultural potential of the regionwill be required. Technical support for the cooperatives will be neededfor some time also. To this end the Ministry of the Euphrates Dam plansto strengthen the Land Reclamation Institute and estalbish an ExtensionServices In-Service and Pre-Service Training Center at Al-Raqqa. Shortintensive training of "master" farmers should also be organized. In addition,the Rural Skills Training Center, also at Al-Raqqa, will offer opportunitiesfor teaching farming skills, farmh machinery skills, and building constructionskills to farmers' children, and be available for additional farmer trainingcourses. These services will complement the non-formal adult trainingcourses to be provided by primary and preparatory schools.

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ANNEX 4

ATTACHMENT A

TECHNICAL BACKGROUND

CHAPTER 1

AGRICULTURAL EDUCATION AND TRAINING

1.01 Agricultural education in Syria is provided at the (i) university,(ii) post-secondary, and (iii) upper secondary levels.

UNIVERSITY LEVEL

1.02 The existing three agricultural and one veterinary faculties wereestablished during the last 15 years to meet the urgent manpower needs ofthe agricultural sector at the professional level. The Faculties of Agri-culture at the Universities of Damascus and Aleppo were established in 1960.The Faculty of Veterinary Sciences, University of Aleppo, and the Facultyof Agriculture at the October University (Lattakia) were opened in 1969 and1971, respectively.

1.03 The duration of the agricultural course is four years, at the endof which students are granted a general B.Sc. degree in agricultural sciences.The Faculty of Veterinary Sciences offers a five-year course leading to anM.B. degree in veterinary sciences. Students holding a science baccalaureatecertificate are accepted in these faculties. In general, applicants give lowpriority to agriculture due to limited job opportunities and low salary scalesin the public sector where the majority of agricultural graduates seek employ-ment. Therefore, applicants tend to be students with rather low grades, notaccepted in other faculties and not interested at all in agriculture. As aresult of this, drop-out rates (especially in the first year) and repeaterrates are high. In 1974-75, about 40 percent of the first year studentsdropped out at the Faculty of Agriculture, Damascus (Table SA 10.8). Drop-outrates decrease significantly after the second year. Repeater rates average15-20 percent.

1.04 The Faculties at Damascus and Aleppo are housed in good facilitieswhich can accommodate about 1,000 and 900 students, respectively. Classroomsand laboratories are well equipped. The Faculty in Aleppo has a modern farmof about 100 ha located 17 km from the university campus. The Faculty plansto establish a 1,000 ha farm in cooperation with the Ministry of Euphrates Damin Meskene Basin, near the Euphrates Dam Reservoir, during the Fourth PlanPeriod. The main objective of the farm would be to carry out research forthe development of the region and to provide practical training for thefaculty students on modern mechanized farming techniques. The Faculty ofAgriculture, Damascus, started as a High Agricultural Institute in thefacilities of a secondary agricultural school (about 500 students capacity)at Kharabo (Ghota), 18 km from Damascus. The school farm has 84 ha of irrig-ated land of excellent quality with rather poor farm buildings. In 1963, theInstitute was transferred to the University of Damascus to become a faculty

ANNEX 4-200 - Attachment A

of Agriculture. After completion of the construction of the new facilities,the Faculty moved to the new campus near Barzeh, on the outskirts of Damascus,in 1972. As the present 22 ha of land does not allow adequate field practiceand large-scale research activities, the old campus at Kharabo has been keptas a field station primarily for practical work with horticulture and animalhusbandry. The existing building on the old campus is occupied by the Inter-mediate Agricultural Institute.

1.05 The Faculty of Agriculture at the October University has beenaccommodated temporarily at a secondary school building in Lattakia. Con-struction of the Faculty of Agriculture has been planned to take place inthe second phase which is expected to start about in 1978 and completedin three years. Some land will be provided on the new university campus(100 ha of land have already been purchased on the outskirts of Lattakia)for experimental studies. The Ministry of Agriculture agreed to provide40 ha of land to the Faculty from the farm of the Secondary Agricultureschool at Buka, 2 km from Lattakia. The Faculty is looking for otherland to establish a farm, especially for animal production.

1.06 The Faculty of Veterinary Sciences of the University of Aleppowas established in Hama, about 180 km from Aleppo, as part of the plan todecentralize university education. Hama was chosen as a site because theland, a nucleus of buildings and a large amount of funds, were contributedby the local community. On the other hand, Hama is very suitable for agri-culture, especially for animal production, and there are several animalhusbandry centers in the area. The Faculty started in the academic year1969-70 at Aleppo, and in 1971-72 moved to its new buildings in Hama. AUNDP/FAO project has provided experts and equipment for the Faculty. Afield station (on 100 ha of land, 10 km from the campus) for student prac-tice and an Animal Health and Production Research Center on dairy cattle,sheep, goats and poultry are planned to be established. A project has beensubmitted to the UNDP for the provision of assistance for the researchcenter. The Faculty will start offering a post-graduate course (diploma)on laboratory diagnosis in 1976. Teaching staff of the Faculty consistsof one dean, 11 expatriate professors from Egypt on contract basis, fiveprofessors from Aleppo and Lattakia Universities and six demonstrators.There are 30 fellowship holders studying abroad for their Ph.D. degrees.About half of them will return before the end of 1976.

1.07 Enrollments in the faculties of agriculture have increased veryrapidly as shown in the following table:

Enrollments in the Faculties of Agriculture (1970-75)1969/70 1970/71 1971/72 1972/73 1973/74 1974/75

Damascus 492 732 1,699 1,575 1,999 2,473Aleppo 391 1,006 1,582 1,476 1,742 2,340October - - 400 557 721 952

Total 883 1,738 3,629 3,608 4,462 5,765


- 201 -ANNEX 4Attachment A

1.08 The quality of education has considerably suffered due to this in-crease. Two faculties, Aleppo and Damascus, had to train about 4,800 studentsin 1974/75, while they have only 1,800 places. Due to heavy load on the teach-ing staff, the faculties could not fulfill their responsibilities properly inagricultural research; neither were they able to initiate graddate studies.Although the quality of the teaching staff is good, the number of teachersis clearly insufficient:

No. of Teaching Staff and Student/Teacher Ratiosin the Faculties of Agriculture (1974/75)

Staff Members Student/TeacherFaculty Ph.D. B.Sc. Total Enrollments Ratio

Damascus 42 10 52 2,473 48:1Aleppo 40 8 48 2,340 49:1October 12 3 15 952 64:1

Source: IBRD mission estimates.

1.09 It is very likely that an unemployment problem of the agriculturalgraduates will be faced in the near future if present intake is maintained.According to the government's estimates, the need for agricultural graduateswould be 3,461 by 1980 and 5,814 by 1985. If it is assumed that 1974/75 in-take of about 2,400 is reduced to about 2,000 and maintained at that level,the three faculties, with about 25 percent wastage rate, would be producingabout 1,500 agricultural graduates per year. As a result, agriculturalgraduates would exceed the government targets by about 3,000 in 1980 and5,000 in 1985 as shown below:


Comparison of Required Stocks and Estimated Outputs of AgriculturalGraduates by 1980 and 1985

Existing stock as of 1-1-1975 930Output during 1975-78 (75 percent of present enrollments) 4,300Output during 1979-80 3,000

Total graduates by 1980 8,2305 percent attrition per annum -1,780

Total stock by 1980 6,450Requirement by 1980 3,460

Surplus by 1980 2,990

Existing stock by 1980Output during 1981-85

Total graduates by 1985 13,9505 percent attrition per annum -3,010

Total stock by 1985 10,940Requirement by 1985 5,800

Surplus by 1985 5,140

Source: World Bank mission estimates.

1.10 As for the Faculty of Veterinary Sciences, enrollments increased from103 in 1971/72 to 579 in 1974/75. The Faculty is planning to develop itsfacilities so as to graduate 50 students each year. This would be sufficientto reach the government target of 630 veterinarians by 1985, but would beexcessive on the basis of norms adopted by the Second International Con-ference on Veterinary Education, Copenhagen, 1965. On the basis of thesenorms, even assuming that Syria's needs are calculated by reference to thenorm for developed countries of one veterinarian per 5,000 units (comparedto 1:30,000 for developing countries), there would be a need for only 387veterinarians. An output of 30 would be sufficient to attain this level.If the present intake of about 200 is not reduced, the government's 1985target of 630 veterinarians would be substantially exceeded by 1985.

POST-SECONDARY LEVEL

1.11 Three Intermediate Agricultural Institutes, under the Ministry ofHigher Education, offer two-year post-secondary courses. The I-nstituteswere established during the last five years to train middle level agricul-turists to be employed primarily in the extension services. They would beprovided with broader based training and more specialized knowledge thanagricultural secondary school graduates, yet less theoretical and morepractical than university graduates. Only baccalaureate holders (science)

- 203 - ANNEX 4Attachment A

from general secondary schools used to be accepted by the Agricultural In-stitutes. Since 1975, a new policy has been introduced, whereby up to 50percent of the agricultural school graduates will be eligible for admissionto the agricultural institutes. Students from general schools who cannotenter the universities due to low average marks also enroll in the Insti-tutes. Enio±lments in the Agricultural Institutes increased from 288 in1972/73 to 447 in 1974/75 (Table SA10.8). Drop-out rates are very high--between 30 and 50 percent of the first year students drop out; many to sit forthe baccalaureate examination a second time in an attempt to obtain highergrades which would permit them to enter the university.

1.12 The Agricultural Institutes have been established in the existingFaculties of Agriculture in order to share temporarily the present facilitiesand teaching staff. The Institute at Damascus, established in 1970, operatesin the old campus of the Faculty of Agriculture at Kharabo (para. 1.03). TheAleppo Institute was opened in 1971 and is still operating in the facilitiesof the Faculty of Agriculture under a separate administration. The LattakiaInstitute, established in 1974, will move soon to its new facilities near theTobacco Research Center in the outskirts of the city.

1.13 The curriculum of the institutes provides for one year of trainingin general agriculture and another year of specialized training. The optionsfor specialization at the Damascus Institute are animal production, fieldcrops, pest control, and horticulture; at Aleppo, animal production and plantproduction and protection; at Lattakia, tobacco production and horticulture.

1.14 The government has decided to establish an Intermediate VeterinaryInstitute, but the location of the Institute has not yet been decided.

1.15 The GADEB (General Authority for the Development of the EuphratesBasin) established an Intermediate Institute for Land Reclamation at Raqqain 1975 to train assistant civil engineers and assistant agricultural en-gineers. Duration of the course is two years; students specialize in civilengineering and agricultural engineering in the second year. Enrollmentwas 80 in 1975. The Institute is housed in the facilities formerly belong-ing to an Agricultural Secondary School. Buildings are adequate but equip-ment is not sufficient. Instruction is provided by the technical staff ofGADEB.

1.16 The Intermediate Forestry Institute, an international institutionsponsored by the Arab League, offers a two-year post-baccalaureate course totrain forestry technicians.

UPPER SECONDARY LEVEL

1.17 Agricultural secondary schools, which operate under the supervi-sion of the Ministry of Agriculture and Agrarian Reform, have a long history.The first agricultural school (Salamieh/Hama) was established in 1910, but


only after Syria became independent in 1945 did the number of schools in-crease considerably and reached 15 in 1972. Two of the agricultural schoolswere established to offer specialized courses; the Veterinary School atDamascus (opened in 1951) and Farm Machinery School at Qamishli/Al-Hasakeh(opened in 1972). Agricultural schools went through various stages of up-grading and restructuring which led to their present organization as Agricul-tural Secondary Schools. The duration of the course is three years afternine years of general education. At the end of the course, the studentsare awarded a baccalaureate certificate in agriculture.

1.18 During the decade of the 1960's, a total of 1,328 techniciansgraduated from the agricultural schools and 244 from the veterinary schools.Since 1970, the number of graduates has been 3,007 and 200, respectively.The majority of the agricultural school graduates work in the public sector,primarily in the various departments of the Ministry of Agriculture andAgrarian Reform, General Union of Peasants, the Ministry of Euphrates Dam,General Directorate of Tobacco and Cotton, Agricultural Bank, Central Bureau,and various processing companies of agricultural commodities. The qualityof education in the agricultural schools is low, partly due to inadequatefacilities (laboratory, workshop and farm), equipment, materials and teachers.Many schools lack essential units, e.g. animal husbandry, poultry, dairy, foodprocessing and farm machinery. Therefore, in spite of the adequate proportionof practical periods provided in the program of instruction, many subjects aretaught theoretically in the classrooms. There were only 64 full-time teachersin 1974/75 and many subjects were taught by 190 part-time teachers who didnot have any pedagogical training. There is no institution for agriculturalteacher training in the country; agricultural graduates are employed asinstructors. The Ministry of Agriculture and Agrarian Reforms organizes shortin-service training programs for them on an ad-hoc basis. The curriculum wasrevised some years ago, but still needs to be improved. Subjects are frag-mented (17-19 subjects are taught in each grade) and the time devoted to somesubjects is inadequate, e.g., only one period of agricultural extension isgiven in three years. Repeater rates are quite low--in 1974/75 about 14, 4and 3 percent of the students repeated in the grades 1, 2 and 3 respectively.

1.19 The Ministry of Agriculture and Agrarian Reform is aware of theproblems faced by the secondary agricultural schools and has decided to tacklethem by:

(i) providing better facilities for practical training(laboratories, workshops, production units in the schoolfarm), equipment and materials;

(ii) improving curricula--a committee is already working oncurricula with a view to transform all agriculturalschools into specialized schools (para. 1.18).


(iii) up-grading teachers; and

(iv) providing boarding facilities for all students.

1.20 The government's policy has been to establish Intermediate Agricul-tural Institutes and reduce gradually the number of agricultural secondaryreduced to the following seven:

Agricultural Secondary School - Salamieh, HamaAgricultural Secondary School - Idleb, HarimAgricultural Secondary School - Deir-Ez-ZorAgricultural Secondary School - LattakiaAgricultural Secondary School - Dar'aFarm Machinery Secondary School - Qamishli, Al-HasakehVeterinary Secondary School - Damascus

The total enrollment in these schools will be about 1,400-1,600 to produceabout 400-500 lower intermediate level technicians per year. Due to an in-creasing need for this level personnel in veterinary services, the presentcapacity (260) of the Veterinary School will be doubled when the constructionfor expansion is completed. Similarly, enrollments at the Farm MachinerySchool will be increased in order to train more farm machinery techniciansneeded for mechanized agriculture.

1.21 The government's policy for training middle-level agricultural tech-nicians seems consistent with the realities of the country, the absorptivecapacity of the agricultural sector, and the financial capacity of the minis-tries. However, there is a disproportion with respect to the projected numberof university graduates (para. 1.07).

NON-FORMAL TRAINING

1.22 In 1975, the Ministry of Agriculture and Agrarian Reform transferredfarmer training programs to the General Union of Peasants (GUP) which wasestablished in 1974. There are 52 Regional Unions under the GUP with a totalof about 6,000 cooperatives. GUP has 13 District Training Centers--one ineach mohafazat, and one Central Training Center in Damascus. Each Districtcenter offers six courses per year on cooperative management for about 200trainees. The duration of the course is 45 days. The most successful traineesfrom these courses follow a six-month course for cooperative leaders in theCentral Training Center. Two groups (60 each) are trained per year. GUP isplanning to offer 90-day evening courses for farmers' children to train cooper-ative accountants. GUP also provides short courses for farmers on farmingtechniques of various crops (six days) and on administrative matters (11 days).These courses are held in the local Cooperative Union meeting rooms. Theextension service of the Ministry of agriculture and Agrarian Reform is co-ordinating its activities with the GUP for the training of farmers.


1.23 Extension Service in Syria is well organized, at the mohafazat,mantika (district) and nahiye (sub-district) levels (but see para. 4.35). Butthere are shortages in budget, transportation and staff in certain areas. TheMinistry of Agriculture and Agrarian Reform operates two in-service trainingcenters to train its personnel--one on horticulture, one animal husbandry.

1.24 The Ministry of Euphrates Dam, in cooperation with the Universityof Aleppo, will establish a farmer training center in the university farm tobe established at Meskene Basin (para. 1.03). GADEB will also establish aTraining Center to provide two-month pre-service and two-week in-servicetraining for its staff which are about 2,000 at present.

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ANNEX 4Attachment A

CHAPTER 2

VOCATIONAL TRAINING

INTRODUCTION

2.01 The institutional training of skilled and semi-skilled industrialworkers in the Syrian Arab Republic is carried out under a number of min-istries. These include:

(i) technical secondary schools under the Ministry of Education;(ii) vocational training centers under the Ministry of Industries;(iii) vocational training centers under the Ministry of Public Works;(iv) factory schools;(v) craft centers under the Ministry of Labor, and(vi) institutes of popular culture under the Ministry of Culture.

The technical secondary schools admit youths from preparatory schools, whilethe other centers admit both youths and adults to their training courses.

2.02 Table SA10.6 gives the locations of the different trainingcenters and the relevant data for comparison. In the subsequent paragraphs,there is a description of these centers which serves to illustrate the needto coordinate the diverse training programs into a more consistent and inte-grated system.

TECHNICAL (INDUSTRIAL SECONDARY SCHOOLS)

2.03 A fuller description of the technical (industrial) secondaryschools under the Ministry of Education is given in a separate section.

2.04 There are presently 14 technical (industrial) secondary schoolsand three industrial traiiing institutes having industrial secondary schoolsections. At the beginni-ng of the 1975/76 academi- session, the totalstudent enrollment was 15,566 of which 7,070 students were in grade 10.

2.05 The schools offer a 3-year course of study (grades 10, 11 and 12)in many trade specializations, with admissions to students who have obtainedsatisfactory marks at the preparatory school examination. The course ofstudy leads to the baccalaureate of the technical secondary school.

2.06 The curriculum for each course of study is laid down by the Min-istry of Education and comprises usually 19 hours per week of theoreticalsubjects and 20 hours of practicals. The trade specializations includewoodwork and carpentry, machining, welding and smithy, foundry and casting,automechanics and diesel mechanics, electricity, telecommunications andelectronics, and textiles.

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ANNEX 4Attachment A

2.07 The baccalaureate examination lays much stress on practical exam-inations, for which the passing marks' percentage is 60 percent and failurein which means repetition of the whole examination.

2.08 The facilities in the technical secondary schools vary from fair-to good and, in general, the maintenance of equipment is satisfactory.

2.09 The staff/student ratios are good. This is because of timelyanticipatory steps taken by the Directorate of Technical Education inincreasing the enrollments in the post-secondary industrial training in-stitutes, where potential shop instructors are trained.

2.10 The proposed plans (Fourth Plan) are to increase student admissionsto the technical (industrial) secondary schools from nearly 7,000 to 12,000by 1980. To accommodate these enrollments, two secondary schools under con-struction in the Third Plan will be completed and construction of eight othersstarted during the Fourth Plan. The achievement of this plan of expandingtechnical secondary schooling will largely depend on the availability ofqualified teachers, and especially, shop instructors.

2.11 Successful training programs in these secondary schools can result--firstly by increasing contacts between schools authorities and employersto lead to a better knowledge of job opportunities and job requirements and,where necessary, reserving jobs in industrial state enterprises for bacca-laureate holders; and secondly, by encouraging better qualified preparatoryschool students to enter the technical secondary school system by allowingthe baccalaureates opportunities for admission to post-secondary institutionsthat train technicians. Presently, many of these institutions admit onlybaccalaureates from general (science) secondary schools.

VOCATIONAL TRAINING CENTERS (MINISTRY OF INDUSTRIES)

2.12 The centers which are administered by the Ministry of Industriesoffer (a) accelerated training of six to nine months' duration, and (b) two-year training. Some 72 percent of the enrollments is from the factories ofstate enterprises to meet their requirements.

2.13 The six to nine months' duration program is intended to trainsemi-skilled workers. Admission is open to employees of the state enter-prises having an ability to read and write. The curriculum includes 12hours of theory and 24 hours practical.

2.14 The two-year program comprises one year at the Center and oneyear in the factories, and is directed towards training skilled workers.Admissions are mainly from employees who have a preparatory school (Grade 9)certificate.

2.15 Presently, there are two Vocational Training Centers--one atDamascus and the other at Aleppo. The centers operate two daily shifts,six days a week.

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ANNEX 4Attachment A

2.16 The trades include electricity, metal trades, carpentry, plumbing,car machinery, textiles, and technical drawing/drafting. In 1975/76, thenumber of enrollments at Damascus was 388 in the six-month course and 245in the two-year training program, while at Aleppo, 458 trainees were inthe six-month program and 37 in the two-year. The enrollments in the dif-ferent trades were:

Elec- Metal Plumb- Car- Technical Car Spinningtricity Trades ing pentry Drafting Machinery & Weaving TOTAL

Damascus:6 mo. course 89 174 46 39 40 - - 3882 yr. course 60 185 - - - - - 245

Aleppo:6 mo. course 48 204 - - 24 85 97 4582 yr. course - - - - - - 37 37


2.17 The vocational centers receive each year nearly 4,000 applicationsfor the 1,000 admission capacity. Admission tests are conducted simultaneouslyat the two centers, which consist of a written test in mathematics and dicta-tion, and also an oral interview.

2.18 The examinations are held by each center. The failure rate is only10 percent. All successful trainees find employment in state enterprises.

2.19 The teaching staff at the two centers consist of full-time instruc-tors and engineer-teachers:

Damascus AleppoInstructors Teachers Instructors Teachers

Electrical 8 1 2 1Metals 12 1 12 -Plumbing 2 - - -

Carpentry 2 - - -

Technical Drafting -2 2Car Machinery 6 -Textile 5 1

TOTAL 26 2 27


The staff/trainee ratio is not wholly satisfactory.

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ANNEX 4Attachment A

2.20 Instructors are sometimes recruited from those completing the _training and having completed one year of apprenticeship. Some are selectedfor training abroad.

2.21 The facilities at the Vocational Training Center at Damascus aresatisfactory. This Center received technical assistance from ILO for itsestablishment.

2.22 Each Center has a Director who is responsible to a Deputy Ministerin the Ministry of Industries. The Ministry has a small planning unit withthree-engineers. The Ministry has also an Advisory Commission, and therewas actual consideration being given to setting up an office of theDirectorate-General of Vocational Training Centers and Intermediate Insti-tutes under the Ministry.

2.23 The proposed plans (Fourth Plan) include the expansion of theexisting centers and the establishment of two new centers at Homs/Hama (metaltrades, textiles, and car machinery) and at Deir-Ez-Zor (metal trades textilesand car machinery). At Damascus, the new specializations and expansion wouldinclude textiles, heat treatment, and car machinery, while at Aleppo, thesewill include electrical, heat treatment and die and tool making. Otherspecializations being considered are refrigeration, agricultural machinery(manufacture), and food technology.

2.24 The budget allocation proposed in the Fourth Plan is:

(i) Development of existing Centers 7.0 million Syrian Pounds

(ii) Establishment of Centers at Homs andDeir-Ez-Zor and intermediate institutes 60.0 million Syrian Pounds

2.25 The cost of training at the Vocational Centers has been assessed bythe Ministry of Industries to be 800 Syrian pounds per trainee for 6 months'training. This cost includes the salary of the teacher and the cost of rawmaterials. Each trainee receives a stipend and, at completion of the trainingprogram, has to work in state enterprises for a stipulated minimum period oftime.

2.26 The problem of obtaining instructors for the vocational trainingcenter remains. The requirements forecast for the Fourth Plan area: 14 engi-neers; 121 intermediate institute graduates; and 82 technical secondary schoolbaccalaureate or equivalent with industrial training.

VOCATIONAL TRAINING CENTERS (MINISTRY OF PUBLIC WORKS)

2.27 The Centers under the Ministry of Public Works offer acceleratedtraining from three months' to eight months' duration depending on the trade.The trades include electrical wiring, sanitation, ironmongery, woodwork,plastering and painting, tile work, concrete, steel reinforcement, masonry,stone and brick work.

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ANNEX 4Attachment A

2.28 Admissions are open to those who have a knowledge of reading andwriting and to preparatory school graduates, and trainees receive stipendsof 100 Syrian pounds/month and 150 SL/month respectively. On completion oftheir traintiig, the trainees are employed in public works projects.

2.29 Training is conducted either in rented premises or existing tech-nical secondary schools at Damascus, Aleppo, Hama, Homs, Lattakia and Deir-Ez-Zor. A total of 3,000 are receiving training this year.

2.30 In the Fourth Plan period, the Ministry has plans to construct itsown training centers, first at Damascus and Aleppo, then at Hama and Lattakia,next at Homs and Deir-Ez-Zor and lastly at Dar'a, Al-Sweida and Al-Hasakeh.It has been estimated that each center would cost 1.5 million Syrian pounds.

2.31 There is no defined curriculum, and studies for introducing modularconcept are needed. Moreover, the training program can become more effectiveonly with the availability of trained instructors. At the present, all in-structors are part time, either from the technical secondary school or fromthe Ministry of Public Works.

2.32 The situation in public works construction is presently such thatthe number of skilled workers is not equal to the demand in the constructionsector. It is worsened by the emigration of skilled workers to neighboringcountries such as Saudi Arabia. There is urgency to establish and man thevocational training centers for the construction trades.

FACTORY SCHOOLS (MINISTRY OF INDUSTRIES)

2.33 There are five such schools either within an industrial complex orwithin the factory itself and financed by the factories themselves. Theseschools offer training in specialized areas associated with production offertilizers, glass and ceramics.

2.34 The courses are of two to three years' duration and the admissionrequirements are that the trainees are employees of the factories and havepreparatory school grade certificates.

CRAFT CENTERS (MINISTRIES OF SOCIAL AFFAIRS AND LABOR)

2.35 Under the Directorate of Countryside Relief, in the Ministry ofSocial Affairs and Labor, there were, in 1975, 19 carpet weaving centersand one rug making center. Their objectives are the training in rural in-dustries and the creation of labor opportunities. The centers act both astraining centers as well as production centers; in the latter function, thecenter provides all the equipment and the materials required for the manu-facture of carpets and rugs. The designs are provided by the design sectionat the Ministry, and marketing is done through the directorates in themohafazats.

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ANNEX 4Attachment A

2.36 At each center, two courses are conducted annually, each of fivemonths' duration to which 20 trainees are admitted. Only women are admittedto the Carpet Weaving Centers and men to the Rug Weaving Center. Foradmission, the trainees must have a knowledge of reading and writing andsome mathematics.

2.37 It is expected that by the end of 1976, some 45 centers will havebeen built and in operation. The program in the Fourth Plan, (1976-80), is toconstruct 55 carpet weaving centers and two rug weaving centers in both ruralareas and poorer slum of large cities.

Needlework and embroidery centers are run by the General Union ofWomen.

INSTITUTES OF POPULAR CULTURE (MINISTRY OF CULTURE AND NATIONAL GUIDANCE)

2.38 The Ministry of Culture and National Guidance administers sevenfine arts centers, one applied arts center, two colleges of music and 27institutes of popular culture.

2.39 The institutes of popular culture have been established in townsto train those who are not in schools, are older in age, or are in occupa-tions of particular advantage to the town. The institues are co-educational.In 1974, the enrollment in 26 institutes was 4,814 and there has been a dra-matic increase in enrollments. At Damascus in 1970, the session enrollmentwas 1,117 students; in 1975 it stood at 2,257.

2.40 There are two sessions in a year--each session lasting five months.Students register for each session. Classes are held both in the afternoonand at night, six days in a week. Each class has 30-35 students. There maybe as many as 500 students in a group registered for a course of study. Eachgroup attends the institute two days in a week.

2.41 Admission to the institutes is open to those who have completedprimary schooling and are between the ages of 15 and 40 years (there is norestriction to the maximum age).

2.42 The courses of study are many. Some of these are specialized tothe region; for example, net making at Lattakia, salesmanship at Homs, andbookbinding at Hama. At Damascus, the courses of study and enrollmentswere:

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ANNEX 4Attachment A

1975 Session--Enrollments--Females Males

1. Languages:English 330 160

French 81 65

2. Secretarial 112 243

3. Sewing 769 -4. Embroidery 35 -

5. Interior Decoration 65 -6. Music 30 84

7. First Aid 26 318. Electricity - 355

9. Commercial Accounting/Bookkeeping 38 83

10. Arabic script writing 73 15

2.43 Examinations are held at the end of each session. Books are supplied

to the students at a subsidized rate.

2.44 Teachers are part-time teaching staff and are drawn principally from

the universities and secondary schools. The average teaching load is four

hours in a week.

2.45 The institutes are housed in rented premises. The facilities range

from fair to unsatisfactory (for example, electrical laboratories).

2.46 At Damascus, the expenditure on salaries in 1975 was 25,000 Syrian

pounds. Total expenditure varies from 6 SL/hour to 10 SL/hour of class.

2.47 The plans are to increase the number of institutes of popular

culture to 54 by 1976, and to augment the courses of study--especially those

related to scientific training. The development expenditures proposed for the

Fourth Plan period are:

(i) Establishing a common center at Damascus 8.0 million SL

(ii) Buildings/rent/equipment 200.0 million SL

CONCLUSION

2.48 There is no doubt about the need for the training of skilled workers

and technicians in adequate numbers in specializations required for the

economic development of Syria. The educational and technical ministries have

certainly spearheaded a desirable trend. However, some institutions have

been set up on an ad-hoc basis without adequate preparation of curricula,availability of physical facilities, and trained full-time teaching staff.

In many recent proposals, one finds either duplication of efforts or that no

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ANNEX 4Attachment A

consideration has been given to combining such institutes located in one city.Largely, this situation has arisen because of the absence presently of anadequate national coordination mechanism bringing together education andemployed to formulate training programs.

2.49 The following three groups of activities, which are being admin-istered separately, need to be recognized as interlocking ones and theircoordination arranged for in advance. These groups of activities are:

(i) compilation of national classification of occupations/trades,manpower surveys, estimating skill and manpower requirementsin context with national development programs;

(ii) preparing vocational training and technical education plans tomeet training needs, translating these into projects, arrangingfor their supervision and administration; and

(iii) establishing national technical education and vocationaltraining standards, trade testing and certification, andcoordinating all technician and skill training programs.

2.50 It is understood that the Government of Syria is giving activeconsideration to the establishment of a National Council for VocationalTraining and Technical Education. Technical assistance for the establish-ment of this National Council is a component of the First Education Projectfinanced by the Bank.

2.51 The Ministry of Education's technical secondary schools directtheir energies to education and training of preparatory school graduatesas skilled workers through a three-year course of studies in mechanicaland electrical trades. The schooling program is fairly well organized andadministered and there are plans to enlarge this program.

2.52 For an increasingly large number of youths who do not completetheir preparatory schooling (about 44 percent of students in Grade 6 donot pass the preparatory school certificate examination) the only trainingopportunities to become skilled workmen are available in the vocationaltraining centers of some technical ministries; but present numbers ofadmission places are comparatively fewer than those available in technicalsecondary schools. The training opportunities for these youths need to beenlarged.

2.53 The Ministry of Public Work's vocational centers concentrate onthe building trades, but their program is handicapped as they use rented pre-mises or existing technical secondary schools or vocational centers of theMinistry of Industries. All their instructors are part-time. Moreover,there is no central planning unit, as in the Ministry of Industries, thatis responsible for the vocational training program and planning.

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ANNEX 4Attachment A

2.54 The Ministry of Industries has a planning unit for vocational train-ing, which is staffed with qualified personnel. The Ministry of Industries,further, has an advisory Commission and there was actual consideration beinggiven to setting up an office of Directorate General of Vocational TrainingCenters. The existing centers are reasonably well staffed and equipped.

2.55 The Vocational Training Centers of the Ministry of Industries havebeen identified for the initial selective Bank assistance to improve the out-put of skilled and semi-skilled workers through accelerated short-term coursesand two-year training courses. The project component would include theenlargement in enrollments of the existing two centers at Damascus and Aleppoand the establishment of two further centers at Deir-Ez-Zor and Homs/Hama.The trades to be included will not only be the mechanical, electrical/electronic and automotive and agricultural machinery trades, but also textileand building trades, the latter being partly conducted in the premises ofVTC's of the Ministry of Industry for the Ministry of Public Works.

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ANNEX 4Attachment A

CHAPTER 3

SECONDARY SCHOOL TECHNICAL EDUCATION

INTRODUCTION

3.01 In Syria, the secondary school system comprises the general sec-ondary schools with their two streams, literary and science, and the tech-nical secondary schools with industrial, agricultural and commercial streams.The aim of secondary schooling is to prepare the student for higher studiesor in a specialization for employment.

3.02 The secondary school system is administered by the Ministry ofEducation; the secondary technical education is supervised by the Directorateof Technical Education within the Ministry.

THIRD FIVE-YEAR PLAN (1971-75)

3.03 One of the objectives of the Third Five-Year Plan was to realizethe following ratios for those who complete preparatory schooling and continuetheir education in the technical secondary schools:

Percentage admissionin technical schools

1970-71 131971-72 131972-73 151973-74 201974-75 25

The plan also called for the completion of the industrial schools at Damascusand Deir-Ez-Zor, and the construction of 12 new ones.

GROWTH OF STUDENT ENROLLMENTS AND NUMBERS OF TECHNICAL SECONDARY SCHOOLS

3.04 The growth in enrollment of students in the industrial, agriculturaland veterinary, and commercial seocndary schools is shown in Table SA 10.7.The average rate of annual growth during the period 1970-73 was about 7percent for industrial schools, 11 percent for agricultural schools and 17percent for commercial schools. During 1973-75, this average rate of annualgrowth was significantly higher, 22 percent for enrollments in industrialschools.

3.05 The distribution of the technical secondary schools (industrial andagricultural) in the different mohafazats is indicated in Table A4A.3.1.


Table A4A.3.1: DISTRIBUTION OF TECHNICAL SECONDARYEDUCATION BY MOHAFAZATS, 1974

MORAFAZAT INDUSTRIAL AGRICULTURAL COMMERCIAL& VETERINARY

No. of Student No. of Student No. of StudentSchools Enrollment Schools Enrollment Schools Enrollment

Damascus 2/a- 1,519 2 423 2 1,062Aleppo 3/a 1,900 1 327 2 1,145Homs 1 1,359 1 208 1 497Hama 2/a 949 2 392 1 299Lattakia 1 871 1 198 2 552Deir-Ez-Zor 1 740 1 222 1 74Idleb 1 785 1 177 1 42Al-Hasakeh 1 518 2 134Al-Raqqa 1 297 1 87Al-Sweida 1 312 1 332 2 148Dar'a 1 372 1 211 2 79Tartous 1 635 1 230 2 220

Grand Total 16 10,257 15 2,941 16 4,118

/a Includes Industrial Training Institutes that have technical secondaryschools sections.

Sg-rce: Ministry of Education.

3.06 There are at present 14 technical (industrial) secondary schoolsand three industrial training institutes that have technical (industrial)secondary school sections. The enrollments in the three grades of theseschools for the sessions 1974/75 and 1975/76 were:

Grades10 11 12 TOTAL

1974/75 5,087 3,408 3,792 12,2881975/76 7,070 5,087 3,409 15,566

COURSES OF STUDY AND CURRICULA (INDUSTRIAL SECONDARY SCHOOLS)

3.07 The courses of study last three years leading to the baccalaureateof technical (industrial) secondary schools. The curriculum for each courseof study is laid down by the Ministry of Education. The curriculum contentcomprises broadly 19 hours per week of theoretical subjects and 20 hoursper week of practicals, including shopwork. The theoretical subjects are

-218 - ANNEX 4Attachment A

divided into five hours/week for Arabic and social studies, six hours/weekfor physics, chemistry and mathematics, and eight hours/week for technologyand drafting.

3.08 There is a common group of technical specializations offered ineach technical secondary school and additional specializations depending ontheir need in the region of mohafazat. The common group usually consists ofwoodwork and carpentry, machinist, welding and forging, foundry and casting,auto-mechanics and electricity. Additional specializations are, for example,textiles and electronics at Damascus, and telecommunications at Lattakia.

3.09 The school working hours are from 7:30 am to 5:00 pm (nine hours)for six days in the week. All theory classes are usually held in the morning.For shopwork practicals, the sections are so arranged that some work is donein the morning and the others in the afternoon, improving the utilization ofshop equipment. In some schools, there is a further shift from 6:00 p.m. to10:00 p.m. to train skilled workers under the vocational training scheme.

3.10 The school is administered by the director, assisted by two assis-tant directors--one for each shift.

ADMISSIONS

3.11 The minimum qualifications for admission to the technical (indus-trial) secondary school is a successful passing of the preparatory schoolexamination (Grade 9). The selection is on the basis of grades obtainedat the preparatory examination. The Ministry of education lays down eachyear the number of admissions to each of the specializations and the minimumacceptable grades obtained at the preparatory examination.

EXAMINATIONS

3.12 The examinations for the 10th, 11th and 12th grades are annualand are held in July. The examinations for the 10th and 11th grades areadministered and supervised by each school.

3.13 The 12th grade annual examination is common to all the technicalsecondary schools, and is administered through the Directorate of TechnicalEducation of the Ministry of Education. This examination is held simul-taneously for all the schools and lasts nearly 10 days.

3.14 The subjects for the 12th grade examination comprise both theo-retical and practical and are indicated in Table A4A.3.2, which also showsthe duration of each subject examination, and the total and passing marks.

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ANNEX 4Attachment A

Table A4A.3.2: EXAMINATIONS OF SECONDARY EDUCATION

Durationof Total Passing

Subject Examination Marks Marks(hrs)

1. Arabic 1 20 82. Social Sciences: History & Geography 1 20 83. Labor Laws 1 20 84. Language English/French 1 20 85. Science (Physics & Chemistry) 2 40 166. Technical Mathematics & Mechanics 2 40 167. Technical Drawing 4 60 308. Technology (special to the selection) 4 60 309. Practicals 4 60 36

Source: Ministry of Education.

3.15 Whereas the percentage mark for passing the general subjects is 40percent, that for the technical subjects is 50 percent, and for the practicals60 percent. At the practical examination, there is an oral interview at whichthe student explains the work and jobs completed in the year and also apractical/demonstration task.

3.16 It is most encouraging to observe the importance given to the prac-tical examinations, for at this examination, there are three examiners--onlyone of which is from the secondary school concerned. Moreover, failure inthe practical examination means a failure in the whole examination, and thestudent has to repeat the grade class.

3.17 For the preparation of the questions for the theoretical subjectpapers, the Ministry invites two to four teachers to prepare the questionpaper. The answer scripts are collected from all the technical secondaryschools and are corrected at one center. After the first group of correc-tions, comparison of marks is made to maintain a uniform standard of gradingthe answer scripts.

3.18 Sample passing rates at the industrial secondary schools visitedwere:

Grades10-11 11-12 Baccalaureate Exam

Ale!ppo 86% 90% 90%Lattakia 87% 97% 80%Damascus 95% 95% 60 - 70%


At Lattakia, the drop-out rate in Grade 10 was about 6 percent. After Grade10, there were virtually no drop-outs, as students, on failing, usuallytransfer to another secondary school.

TEACHING STAFF

3.19 The teaching staff is divided into two categories:

(i) teachers of theory subjects, whose qualifications are adegree from a university, and

(ii) shop instructors, who have to possess a diploma from post-secondary intermediate institutes or industrial trainingcenters.

3.20 The ratios of students to teaching staff in the industrial secondaryschools are satisfactory despite the frequent rapid increases in the numberof admissions. The situation reflects well on the preparedness of theDirectorate of Technical Education to anticipate these trends and meet them bytimely increases in the enrollments in the post-secondary industrial traininginstitutes where potential shop instructors are trained.

3.21 The training program for instructors includes 55 scholarships in theyear 1975 for advanced training and studies abroad.

TEXTBOOKS

3.22 As many as 90 titles of textbooks have been published in Arabic bythe Directorate of Technical Education. There is a special Book PrintingCenter under the Ministry of Education. Teachers get remuneration for writingtextbooks.

3.23 All titles of textbooks for Grade 10 were published in 1968; forGrade 11 in 1969; and for Grade 12 in 1970. Revisions are printed from timeto time.

FACILITIES

3.24 The shop facilities in the schools visited vary from fair to good.The maintenance of equipment is largely satisfactory. Purchase of equipmentis done centrally, and the specifications and quality of purchased equipmentreflect the competence available in the different specializations at theDirectorate of Technical Education.

3.25 The machine shops were adequately equipped, although many of themachine tools were of larger capacity than usually required for instructionalpurposes. The electrical shops were provided with the necessary equipment,but the electronics shops were deficient in teaching aids and kit boards.


The woodworking shops had all the standard machine tools and used these inthe production program of furniture and other wooden accessories requried byschools.

3.26 The auto-mechanics shops were handicapped in that outmoded modelsof engines and chassis were not replaced, although the instructional capabil-ities were high. A real life situation, in using the testing and repairfacilities for taking on outside jobs, would improve the quality of training.Expensive cylinder head surface grinders, cylinder honing equipment, andcrankshaft grinders are used solely for demonstration.

3.27 Many of the secondary schools have foundry and casting shops, al-though few students register for these specializations. The textile weavingsection in one school has limited instructional equipment consisting ofhand-operated looms and little mechanical weaving equipment.

3.28 Most induptrial secondary schools visited had adequate floor spacefor shops and classrooms for the present enrollments. Shop layouts werestandardized. In ofie secondary school, the land area was 30,000-40,000 m2.The workshop floor area amounted to 6,000 m2, and the remaining built-upconstruction area was approximately 4,000 m2.

3.29 What will be needed in the Directorate of Technical Education arestrong teams for planning and preparing equipment specifications in keepingwith the curricula. The present staff could benefit from visits in traininginstitutions abroad to collect information and an awareness of trainingtrends. At present, there is a restriction in that a staff member can goabroad only once every two years.

RECURRENT EXPENDITURES

3.30 Some idea of the annual recurrent expenditures of a technical sec-ondary school can be formed from the data collection from the Aleppo Technical(Industrial) Secondary School with a 1974/75 enrollment of 1,234 students,500 annual admissions, 106 teaching staff, of which 64 were shop instructors,and an output of 382 baccalaureates in 1975:

Salaries - staff per month 60,000 Syrian poundsStipends - students per month 60,000 Syrian poundsRaw materials, electricity,)water, repairs ) per year 180,000-210,000 Syrian pounds

3.31 The expenditures in Syrian pounds on Technical Secondary Schoolsunder the Ministry of Education were:

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ANNEX 4Attachment A

1973/74 1974/75

Salaries 6,348,000 8,400,000Materials 1,350,000 1,350,000Equipment 4,740,000 6,740,000Others 820,000 740,000

13,258,000 17,230,000

PROBLEMS FACING TECHNICAL SECONDARY SCHOOLS

3.32 The present character of this education which tends to be terminalhas an adverse effect on the quality of preparatory school graduates who enterthe technical secondary schools.

3.33 Previously as many as 50 percent of the technical secondary schoolbaccalaureates entered into the university. Recently, with a new decree,only the first student in his branch can enter into the university. Moreover,the post-secondary technical institutes under the Ministry of Higher Educationand technical ministries give preference to general (science) secondary schoolbaccalaureates, and admit only a few meritorious technical secondary schoolbaccalaureates. The result is that students who have poor grades at the prep-aratory school, or those who have failed to improve their grades despite re-peated attempts for admission to the general secondary school, enter intothe technical secondary schools.

3.34 The baccalaureates from the technical schools, moreover, are ab-sorbed into industry with difficulty, despite the decree that requires industryto absorb them as workers. A proportion of the students, therefore, entermilitary service.

3.35 To encourage students to enter the technical (industrial) schools,the government offers each student an inducement of a stipend of 50 Syrianpounds per month during his studies.

3.36 There are a number of possible steps to improve the situation. In-creasing contacts between school authorities and industry could lead to abetter knowledge of job opportunities. State enterprises could provide re-servation of jobs as skilled workers for those completing their studies.Moreover, the present policy of closing opportunities for technical schoolbaccalaureates from proceeding to training institutions for technicians,such as intermediate institutes, needs to be revised.

DIRECTORATE OF TECHNICAL EDUCATION

3.37 The Directorate is headed by the Director who has a staff compris-ing five inspectors of industrial schools, and one inspector of commercialschools. The staff responsibilities are distributed in areas of teacherappointments, curriculum development, student affairs, planning buildings,and equipment and materials procurement.

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ANNEX 4Attachment A

3.38 For annual needs, the Director requests the schools to send intheir requirements through the Regional Directorate, following consultationsover which budget provisions are made. The Director reports monthly to theDeputy Minister of Education. There is also a common annual report.

PROPOSED PLAN FOR EXPANSION OF TECHNICAL (INDUSTRIAL) SECONDARY EDUCATION

3.39 The proposed plan is supply-oriented rather than demand-oriented.It envisages that the present percentage of all successful students frompreparatory schools, who enter general secondary schools, will be reducedfrom 70 percent to 50 percent by 1980 and that the percentage of thoseentering technical secondary schools (commercial, industrial and agricultural)will rise from 20 percent to 25 percent in the same period. It is expectedthat the remainder of students from the preparatory schools will find entryeither into vocational training centers administered by the different tech-nical ministries or into the labor force.

3.40 On the above basis, and on the assumption that of those enteringtechnical secondary schools, some 25-30 percent will go to commercial sections,another 10 percent into agricultural sections and the remainder to industrialsections, an indication of the future increases in enrollments for whichadequate teaching physical facilities and teaching staff must be planned isshown in Table A4A.3.3.

Table A4A.3.3: PROJECTED EXPANSION OF INDUSTRIAL SECONDARY EDUCATION,1973-74 - 1980-81

Plan Postulated Dir. Tech. Educ.Enrollment x %Grade 9 No. of Enter Nos. of Enter Nos. ofPrep. % Prep. School Indus.Sec. Annual Ad- Indus.Sec. Annual Ad-

Year School Pass Grads. Schools missions Schools missions

1973-74 101,259 56 56,3001974-75 103,000 57,680 5,000 5,0001975-76 110,t)00 61,600 11.4 7,000 11.4 7,0001976-77 120,000 67,200 12 8,060 11.9 8,0001977-78 130,0)00 72,800 12.6 9,200 12.6 9,2001978-79 160,000 89,600 13.0 11,640 12.1 10.8001979-80 190,000 106,400 13.5 14,360 11.3 12,2001980-81 220,000 123,200 14.0 17,248 11 13,400


3.41 The Directorate of Technical Education has however assumed a constant12 percent of preparatory school graduates as entering industrial secondaryschools (given in the last column of Table A4A.3.3). This appears to be a morerealistic appraisal of the expansion capabilities.

3.42 As rmentioned earlier, there are 14 technical (industrial) secondaryschools and three institutes that have industrial secondary school sections.

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ANNEX 4Attachment A

Moreover, it is expected that two schools for which construction was startedin the Third Plan will have been completed in the next two years. TheDirectorate's proposals for the Fourth Plan include the construction of eightnew industrial secondary schools. Their provisional locations are: Damascus(2), Homs (1), Aleppo (1), Euphrates (1), Lattakia (2), and Tartous (1). Oneof these schools will be for girls only in the specialities of electrical andelectronic trades.

3.43 The cost estimates in millions of Syrian pounds, prepared by theDirectorate, are:

1975/76 1976/77 1977/78 1978/79 1979/80 TOTAL

A. Increase in RecurringExpenditures for in- 3.44 4.30 4.72 5.0 5.438 22.90dustrial secondaryschools and institu-tutes

B. Development Budget

(i) Equipment for newand expansion ofindustrial second- 10.00 11.0 7.0 7.0 5.0 40.00ary schools andinstitutes

(ii) Building Construc-tion of new schools 75.00and institutes

3.44 Building costs average 6-10 million Syrian pounds for an industrialsecondary school with enrollments of 600-1,000 students. Some 50 millionSyrian pounds are allocated for the construction of the eight new industrialschools. The cost of construction of buildings alone is 600 SL/m2; sitedevelopment 40-60 percent of the cost of building. Cost of land is roughlyequivalent to the cost of the construction; around 30,000 square meters ofland is required for a technical secondary school.

3.45 The requirements of teaching staff have also been estimated by theDirectorate on the basis of the following teaching loads: technical teachers8-10 hours/week, mathematics teachers 12-13 hours/week; chemistry/physicsteachers two hours/week lectures and 10 hours/week laboratory; shop instruc-tors 20 hours/week.

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ANNEX 4Attachment A

Estimates of Teaching Staff Requirements

Technical Mathem. Physics/Chem.Instructors Teachers Teachers Teachers

1976/77 216 26 9 71977/78 117 14 5 41978/79 166 20 7 51979/80 187 22 8 6

Source: Ministry of Education and IBRD mission estimates.

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ANNEX 4Attachment A

CHAPTER 4

TECHNICIAN EDUCATION

INTRODUCTION

4.01 The institutional training of technicians in Syria is carried outunder many Ministries without any apparent coherent planning or coordination.The institutions include:

(i) industrial training institutes under the Ministry of Educa-tion;

(ii) intermediate institutes under the Ministry of Higher Edu-cation;

(iii) intermediate institutes under the Ministry of Industries;

(iv) intermediate institutes under the Ministry of Petroleum; and

(v) intermediate institutes under the Ministry of Public Works.

4.02 Table SA10.5 lists the different institutes together with educationaldata on their enrollments, admissions and specializations.

INDUSTRIAL TRAINING INSTITUTES (MINISTRY OF EDUCATION)

4.03 The industrial training institutes offer 2-year post baccalaureate(Grade 12) courses of study for training technicians and technical instruc-tors, with admissions to students who have obtained satisfactory marks atthe baccalaureate examination of the technical secondary schools. The courseslead to a diploma certificate.

4.04 There are presently three industrial training institutes at Damascus,Aleppo and Hama with a total enrollment of about 1,700 students and admissionsin 1975 totalled nearly 900. The technology specializations are distributedamong the three institutes: production (manufacturing) technology at Aleppo;electronics and electrical technology at Damascus; and auto-mechanics at Hama.

1974/75 1975/76I Yr II Yr Total I Yr II Yr Total

Damascus 198 164 362 273 220 493Aleppo 350 410 760Hama 150 220

700 700


4.05 The curriculum is organized by each institute and requires theapproval of the Ministry of Education. Broadly, the curriculum consists of:general subjects, six hours/week; science subjects, eight hours/week; tech-nology subjects 13 hours/week; and practicals some 12 hours/week. For thosebeing trained as technical instructors, an additional five hour/week aredevoted to pedagogical subjects.

Hours/ Duration of Marks/Week Examination Passing Grade

General Subjects

Social Studies 1 1 100/40Language English/French 2 2 100/40Industrial Safety 1 1 100/40Industrial Planning & Economy 2 2 100/40

Science Subjects

Applied Mathematics 4 3 100/40Applied Mechanics 2 2 100/40Physics 2 2 100/40

Technology Subjects

4.06 In the second year of studies, the students are allowed options indifferent specializations. In electrical technology, the specializations arein (i) generation, transmission and distribution; (ii) electrical machinery,and (iii) electrical applicances. In electronics technology, the specializa-tions are (i) telecommunications; (ii) instrumentation; and (iii) industrialelectronics. In mechanized technology, specializations available are in theareas of (i) machine tools; (ii) welding and metals; (iii) foundry and casting;and (iv) woodwork.

4.07 The institutes run daily two shifts. Most of the theoretical classesare held in the morning, while practicals are conducted during both the morn-ing and afternoon shifts.

4.08 Examinations are held annually and are conducted by each institute.The Ministry of Education invites each institute to submit the names of teach-ers, from which list it selects the examiners. The Ministry also scrutinizesthe questions before these are printed. The passing rate is 75 percent whiledrop-out is 2 percent at the most.

4.09 The staff-student ratios in the institutes are satisfactory. AtDamascus, with a student enrollment of nearly 500, there were 41 full-timeteaching staff, of whom 13 were technical teachers and 28 were instructors.At Aleppo, where the student enrollment is 760, there were 58 full-time teach-ing staff, of whom 12 were technical teachers and 46 were instructors; the


part-time staff numbered 40 of whom 16 were technical teachers and 24 wereinstructors. It must be added that some of the teaching staff were also asso-ciated with teaching in the industrial secondary school sections of the insti-tutes. Many of the teachers and instructors have received advanced train-ing abroad, especially under the West German Government's Technical AssistanceProgram. There is no doubt that, among the many intermediate technical insti-tutes in Syria, those under the Ministry of Education are better staffed withfull-time instructors and teachers who are highly motivated.

4.10 The work load of the technical teachers is 16 hours per week, whilstthat of the instructors is 24 hours per week. Teachers with engineering de-grees receive a basic salary plus a 150 percent special allowance (totalling1600-1200 SL/month), whereas instructors with an institute's diploma get abasic salary together with a 25 percent special allowance (totalling 400-800SL/month). Overtime is granted at the rate of 7 SL per hour. The wages inindustry are about double that in the teaching institutes.

4.11 Textbooks are available for the students in most subjects of study.In the absence of textbooks, cyclostyled notes are distributed. Many of theteachers and instructors participate in the program of writing textbooks andshop manuals, as the Ministry of Education grants them monetary rewards.

4.12 The shops at the Damascus and Aleppo institutes are well equippedfor the present enrollments and courses of study. Under the West German as-sistance program, the Aleppo institute received nearly SL 10 million worthof equipment. At Damascus, the electrical shops have also received equip-ment from West Germany, and the assistance is ongoing with the electronicsdepartment. The space of the shops is presently adequate, and the roomutilization was satisfactory.

4.13 The students in the second year of training undertake productionassignments which have the advantage that real manufacturing situations aresimulated and the products (that include transformers, small motors, controlcircuits, distribution panels, lathes and other teaching aids) find use inthe institutes and technical secondary schools.

4.14 Students who are trained as future instructors for the technicalsecondary schools receive a stipend of 100 SL per month. At Aleppo in 1974,some 20 were selected for training as instructors, and in 1975 a further 60.In all the three institutes, 276 trainees were receiving training as poten-tial shop instructors.

4.15 For the training of the teaching staff for the institutes them-selves, a training program has been prepared under which some 55 instructorswill be sent abroad for training in auto-mechanics, electrical technology,foundry, weaving, electronics, fuels and furniture. Furthermore, 7 techni-cal teachers are scheduled for training abroad in automotive technology,electrical and electronic technologies, mechanical technology, foundry andtextiles.


4.16 The recurring expenditures in Syrian pounds on the three inter-mediate institutes under the Ministry of Education for the periods 1973/74and 1974/75 were:

1973/74 1974/75

Salaries 1,174,000 1,846,000Materials 175,000 158,000Equipment (machine parts) 75,000 71,000Lab. & shop furniture 42,600 43,000Repairs 20,000 20,000Others including over-time,

stipends, travel, maintenance 368,400 725,000

1,855,000 2,863,000

On the average, the re'curring expenditure on each institute is one millionSyrian pounds.

4.17 The basis of planning for the expansion of the industrial traininginstitutes is to accommodate between 30-40 percent of the baccalaureates formechanical (industrial) secondary schools for further training as technicians,and also, to provide instructors for the expanded program of technical second-ary schooling.

4.18 In the Fourth Plan, student admissions to the technical (industrial)secondary schools are to be increased from 7,000 to 12,000 by 1980. In 1975,there were 3,400 students in Grade 12 of these secondary schools, and in 1980this number will be 8,700, 75 percent of whom are expected to graduate. If30-40 percent of these baccalaureates are to be admitted to the industrialtraining institutes, the latters' admission capacity will have to be raisedfrom the present 1,000 to nearly 2,000-2,500 by 1980.

4.19 It has been estimated by the Directorate of Technical Educationthat between 1967-1980, nearly 700 additional technical instructors, with aminimum qualification of a diploma from the industrial training institutes,will be required for the expanded program of the technical (industrial)secondary schools. In 1974/75 the teaching staff in the technical secondaryschools and institutes under the Directorate of Technical Education were:

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ANNEX 4Attachment A

Technical TechnicalTeachers Teachers

Automotive mechanics 18 201General mechanics 56 308Welding 2 109Foundry 1 24Carpentry 6 104Technical drawing - 3Electronics 16 84Electrical 36 213Weaving 4 17Air conditioning 3 -Chemical engineering 3 -

TOTAL 145 1,063

Additional 180

4.20 The industrial training institutes are the only source of trainedtechnical instructors for the technical secondary schools and even for thevocational centers as well as, in some instances, for the intermediate in-stitutes in the country.

4.21 The proposed plans of the Directorate of Technical Education areto expand enrollments at the three existing industrial training institutes,with additional courses in precision mechanics, central heating and airconditioning, and agricultural machinery. The plans include the establish-ment of new institutes at Deir-Ez-Zor, Homs and Lattakia in order to dispersesuch training opportunities in all regions, particularly as no hotel accom-modation is available to students of the present institutes.

4.22 At Damascus Industrial Training Institute, the equipment availableis satisfactory for an enrollment of 500 students, and the space availableis adequate for 720 students. The additional equipment needed for an enroll-ment of 720 students is 3.0 million Syrian pounds. At Aleppo, for its pres-ent enrollment of nearly 800 students, and additional 2.0 million Syrianpounds worth of equipment is required for the metallurgical and metrologylaboratories and jigs, tools and die shop.

4.23 The estimates of expenditure prepared by the Directorate of Tech-nical Education for expanding enrollments at the three existing institutes,introducing additional new courses, and establishing three new institutesare: buildings construction, 18 million Syrian pounds; equipment for expan-sion and new institutes, 15 million Syrian pounds.

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Attachment A

INTERMEDIATE (ENGINEERING & INDUSTRIAL) INSTITUTES(MINISTRY OF HIGHER EDUCATION)

4.24 One gets the overall impression that the establishment of these in-termediate institutes by the Ministry of Higher Education was motivated prin-cipally by the need to relieve the pressure upon the universities arising outof the Government decree of open policy of higher education to baccalaureatesfrom general secondary schools.

4.25 The intermediate (engineering and industrial) institutes offer 2-year post baccalaureate (Grade 12) course of study for training purportedlytechnicians, with admissions open to baccalaureates from general (science)secondary schools and to a few meritorious baccalaureates of technical second-ary schools. The courses lead to a diploma certificate.

4.26 There are presently three intermediate (engineering and industrial)institutes. The total enrollments at the three intermediate institutes atDamascus and Aleppo in 1974/75 were 1,304, with nearly 700 admissions. Thetechnology specializations presently offered are civil technology, mechanical,electrical and electronic technologies.

1973/74 Enrollments 1974/75 EnrollmentsI Yr II Yr Total Graduates I Yr II Yr Total

Aleppo 307 131 438 114 269 221 390Damascus (Engineering) 454 175 629 149 340 267 607Damascus (Industrial) 254 116 370 195 204 202 406

4.27 The curriculum was designed to consist of 40 percent theoreticalsubjects and 60 percent practical subjects. In actual practice, because ofthe lack of shop facilities and full-time instructors, the situation in someof the institutes is such that 75 percent of the time is devoted to theoreticalsubjects.

4.28 Even though some of the institutes were established some five yearsago, these institutes do not yet have their own buildings and shops. The in-stitutes use the physical facilities of the engineering departments of theuniversities within whose campuses the institutes are located. These physi-cal facilities are primarily designed for training engineers and not techni-cians.

4.29 Examinations are held annually. The low failure rate of less than10 percent is not the consequence of the abilities of the students, but aresult of the fact that large numbers of repeating students would impose astrain upon the limited available physical facilities.

4.30 The institutes have very few full-time staff, other than the Direc-tor, and rely on part-time teachers from the universities. Although theseinstitutes are administered by the Ministry of Higher Education through theDirectors, the de facto control rests with the universities.

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ANNEX 4Attachment A

4.31 The Ministry of Higher Education has plans to construct buildingsfor these intermediate (engineering and industrial) institutes and also toestablish a new institute at Lattakia. A building construction program isunderway at Aleppo. New courses in chemical and textile technology are alsobeing planned for introduction. The development budget for all types ofintermediate institutes was four million Syrian pounds in 1975 and projectedas 12 million Syrian pounds in 1976.

4.32 At present, there is no problem of unemployment of the graduatesof the intermediate institutes, as in accordance with a government decree,all graduates are to be absorbed into industry and construction in the publicsectors. The private sector employs the graduates in building construction.

4.33 There is a preference of secondary school students to enter theuniversity rather than the intermediate institutes for the customary reasonsof social and monetary benefits. The institutes' students often view theinstitutes as an interim stage for entry to the universities, especially asadmission to the institutes is on the arbitrary basis of grades obtained atthe baccalaureate examination of the general (science) secondary schools.There is no test administered to determine the aptitude of students for tech-nician training.

INTERMEDIATE INSTITUTES (MINISTRY OF INDUSTRIES)

4.34 The intermediate institutes under the Ministry of Industries offer2-year post baccalaureate (Grade 12) courses of study for training technicians.Admissions are open to those, preferably employees, who are baccalaureatesfrom general (science) secondary schools. Only in the textile technologyinstitute are admissions also extended to a few baccalaureates of technicalsecondary schools.

4.35 There are six intermediate institutes in Damascus, Homs and Aleppoadmitting a total of 700 trainees to the following technolgoy specialization:chemical (silicate) technology, chemical (fertilizer) technology, electricaland electronic technologies, food technology, and textile (spinning, weavingand dyeing) technology. These intitutes are of comparatively recent origin.The enrollments in some of these institutes in 1975 were:

I Yr II Yr

Damascus (chemicals - silicate) 62 100Homs (chemicals - fertilizer) 99 99Damascus (electrical) 85Damascus (electronics) 100

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ANNEX 4Attachment A

4.36 The curriculum is organized by each institute and requires the ap-proval of the Ministry of Industries. Broadly, the curriculum of the firstyear consists of 28 hours/week of theory subjects and 10-12 hours of practi-cals, and in the second year, there are 20 hours/week of theory subjects and16 hours of practicals. In textile technology, however, of the 40 hours ofclass, 10 hours/week in the first year are devoted to theoretical subjects and15 hours/week in the second year.

Hours/Week(I Year)

General Subjects

Social Studies 2Language English/French 3Industrial Safety 1

Science Subjects

Chemistry 2Physics 2Mathematics 4

Technical Drawing 2

Technology & Applied Sciences 14

Practical Training FLabs - 5 10~Factories - 5

4.37 Although the year is devided into semesters, examinations are heldannually. In textile technology, the passing rate is between 77-85 percentand those who fail can repeat the course; drop-out is only 7 percent. Alltrainees receive a stipend of 120-150 Syrian pounds per month, are regarded asemployees of the state unions of industries, and have the undertaking to servea minimum of five years on graduation at a wage of 400-500 Syrian pounds permonth. During the summer recess, the trainees work in the factories.

4.38 There were no full-time teachers at the intermediate institutesother than at the Textile Institute which had seven full-time teaching staff.Technical teachers (with engineering degrees) and technical instructors (alsocalled assistants) are drawn part-time from industry or the vocational train-ing centers under the Ministry of Industries. For example, at the Damascusengineering (electrical and electronics) institute, there were 14 part-timeteachers and at the Damascus (chemical technology) institute there were only10 part-time teachers. There is presently no training program for teachingstaff of the institute.


4 39 The textile institute at Damascus has its own buildings and itstextile spinning, weaving and dyeing shops are reasonably equipped, exceptthat the testing rooms need to have temperature and humidity controls. Mostof the other institutes use either rented premises or the premises of thevocational training centers; as such they do not have all the necessary lab-oratories or shops for training and have to rely on the available facilitiesin the neighboring factories for the conduct of practical work of the trainees.

4.40 Each institute has a full-time Director assisted by Assistant Direc-tors. For coordinating the programs of the institute under the Ministry ofIndustries, there is a standing commission comprising six members, with theDeputy Minister as its chairman. The members represent the intermediate in-stitutes, the planning bureau of the Ministry and the unions of industries.

4.41 The proposals for the Fourth Plan include constructiot of buildingsfor five institutes, equipping each for an enrollment of 300 trainees, andalso the establishment of two additional institutes at Damascus and Aleppo fortraining chemical laboratory technicians.

4.42 The institutes have problems arising out of the absence of a coreof full-time teaching staff to give continuity to the teaching programs.These problems are expected to continue until such time as trained teachersand instructors are recruited on a full-time basis.

INTERMEDIATE INSTITUTES (MINISTRY OF PETROLEUM AND MINERAL RESOURCES)

4.43 These institutes offer 2-year post baccalaureate (Grade 12) coursesfor training technicians, for meeting the requirements of the petroleum organ-izations under the Ministry of Petroleum and Mineral Resources. The admissionsare open only to baccalaureates of general (science) secondary schools withgood grades in physics and mathematics.

4.44 The Ministry had earlier training institues at Damascus, Homs, Aleppoand Al-Raqqa; since then these have been concentrated at only two locations--the main training institute at Homs within the Petroleum Refinery Complex, andan auxiliary institute in the petroleum fields at Ras Al-'Ain. The traineeenrollment was nearly 500 this year with admissions numbering 300. The tech-nology specializations are: (i) petrochemical technology; (ii) petroleumtransportation and storage; (iii) petroleum production/refining; (iv) petroleumwell drilling; (v) electrical technology; and (vi) electronic technology.

4.45 The institute at Homs runs daily two shifts and has physical facil-ities only for lecture- classes. All practical work is conducted in the lab-oratories of the refinery. For demonstration exercises, trainees are takeneither to the refinery departments or to actual drill rig sites. Furthermore,the trainees spend three months in the year in the refinery, chemical plants,distribution and storage sites, shop and oil fields--depending on theirspecialization. For technical drawing instruction, the trainees go to thelocal technical secondary school.


4.46 The trainees receive a monthly stipend of 150 Syrian pounds permonth. On completion of the course they are absorbed by the petroleum in-dustry to whom they are bonded to serve a minimum period of six years. About60 percent of the trainees at the Institute come from Homs.

4.47 At present there are only two full-time teachers; the rest of theteaching staff are part-time personnel drawn from the staff of the refineryat Homs, the petroleum industry and the oil fields. There is serious needto recruit more full-time staff.

4.48 Plans have been prepared for the construction of buildings for theInstitute at Homs, but its location is not yet decided. Although there is aHigher Institute for Petroleum and Chemical Engineering at Homs under theMinistry of Higher Education, there apparently is no formal collaborationbetween the two ministries in the planning of training of technologists andtechnicians in the common fields of specialization.

INTERMEDIATE INSTITUTES (MINISTRY OF PUBLIC WORKS)

4.50 The institutes conduct a 2-year post baccalaureate course of studyfor training supervisors and engineering assistants for highway constructionand other public works. The admission is open to baccalaureates of technicalsecondary schools.

4.51 The two larger intermediate institutes are at Damascus and Aleppoand the smaller ones at Homs, Hama, Lattakia and Al-Hasakeh. This year, some500 trainees were admitted.

4.52 The subjects of study include specializations relating to construc-tion, topography, surveying, water supply, irrigation and soils. Lectures aredelivered in the institutes' premises, while all practicals are conductedin the field.

4.53 The trainees receive stipends of 150 Syrian pounds per month duringtraining, and on their successful completion of the course, are absorbed bythe public works organization at salaries ranging from 400 to 450 Syrianpounds per month.

4.54 Most of the teaching staff are part-time, and the institutes facethe problem of recruiting full-time staff. For each of the major institutes,the requirements are 48 teachers because of the large number of specializa-tions.

4.55 The institutes are usually housed in either rented premises or thepremises of the vocational training centers. These have no laboratories anda major task iis one of equipping the laboratories after the institutes havetheir own premises.

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ANNEX 4Attachment A

4.56 These intermediate institutes, as so many other such institutesunder the technical ministries, suffer from the lack of adequate numbers offull-time teaching staff, teaching laboratories and teaching aids, and aprogram for the advanced training of its teaching staff.

4.57 The proposals in the Fourth Plan are to construct buildings forthese institutes within the complexes of the planned vocational trainingcenters. A new institute is also planned for establishment at Deir-Ez-Zor.The Ministry of Public Works estimates the cost of construction of eachinstitute to be 1.00 million Syrian pounds, and the cost of equipping it as0.5 million Syrian pounds.

CONCLUSIONS

4.58 The efforts for the training of technicians in Syria are spreadamong many ministries, but not all these efforts have the same potentialityfor success. The intermediate institutes, under the Ministry of Higher Edu-cation, were created to relieve the pressure on the universities from gen-eral (science) secondary school baccalaureates seeking admission to insti-tutions of higher education. These intermediate institutes, which often donot have their own premises, use physical facilities designed for the educa-tion of engineers rather than of technicians, and offer a curriculum thattends to emphasize theoretical instruction over practical work, since part-time teachers are recruited from university faculties. Moreover, the studentsof the institutes continually seek for their transfer to university faculties.

4.59 The intermediate institutes under the technical ministries, whichare of recent origin, were set up for training in certain specializations,admitting the employees of state enterprises who had completed their secondaryschooling. These institutes too do not have adequate and appropriate instruc-tional laboratory facilities and training aids and rely extensively for thestudents to conduct their practical work in factories and/or on site. Theteaching staff is mostly part-time and is not trained specifically for theirjobs as instructors.

4.60 The intermediate institutes (industrial training institutes) underthe Ministry of Education have been identified as the most favorable insti-tutes for initial Bank assistance in the training of technicians as well as ofinstructors for vocational training centers and technical secondary schools.These institutes offer systematically prepared courses of studies, thatinclude pedagogical subjects for instructor trainnees. Moreover, the insti-tutes have on their staff adequate numbers of full-time teachers and in-structors who have received advanced training abroad. The institutes,furthermore, possess suitable physical facilities including shop, laboratoryand instructional equipment. The development program of the Ministry ofEducation includes: (i) expansion in enrollments at the existing institutesat Damascus, Aleppo and Hama to include new technologies; and (ii) the estab-lishment of two new institutes at Deir-Ez-Zor and Homs to disperse training

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ANNEX 4Attachment A

opportunities in all regions. Through cooperation with the technicalministries, technologies relating to building, land reclamation, chemicalsand food could be included in the new development program. In this way thelikely duplication of efforts of different agencies to establish additionalinstitutes for training technicians in a given city can be avoided, leadingto economies of scale and a fuller use of scarce, trained full-time teachersand instructors.


CHAPTER 5

UNIVERSITY LEVEL EDUCATION

HISTORY

5.01 The first Syrian attempts to establish higher education began inthe twenties of this century when the schools of medicine and of law atDamascus were combined to form the Syrian University. The advance of highereducation remained slow under the French mandate. After independence, facul-ties of arts and sciences were added in 1946 to the university and a HigherInstitute of Teachers (Pedagogy) set up. In 1958, the name of the universitywas changed to the University of Damascus. By 1966, the Damascus Universityhad ten faculties in all the important academic disciplines.

5.02 A second state university was created in 1960 at Aleppo with anucleus of a faculty of engineering, and in the following year faculties ofagriculture and law were adjoined.

5.03 In 1966, a special Ministry of Higher Education was created. Atthis time, there were, in addition to the two state universities, three higherinstitutions namely, that of Commerce at Aleppo, of Agriculture and of FineArts at Damascus, all of which were later to become faculties of the respec-tive universities.

5.04 The consecutive national Five Year Plans (1965-70, 1970-750) paidconsiderable attention to the development of universities, enlarging andpromoting scientific and applied studies and training the teaching staffrequired for the national development of universities. This was as a resultof the growing realization of the role which universities can play in develop-ment plans.

5.05 A Faculty of Veterinary Sciences was established at Hama in 1967,and attached to the University of Aleppo in an effort to provide universityeducation in smaller towns and in rural neighborhoods.

5.06 In 1971, a third state university was set up at Lattakia, a coastaltown, which was subsequently renamed the October University.

5.07 In 1973, a Higher Institute of Petroleum and Chemical Engineeringcommenced functioning at Homs, burgeoning industrial city.

5.08 The various faculties at the three state universities and theHigher Institute as they exist today are listed in Table SA10.4.


ADMINISTRATION OF UNIVERSITIES

5.09 All the state universitites are governed by laws equivalent tocharters granted to universities in the United States. The laws lay downthe general principles of university education, their finances and theirrecognition as corporate bodies with autonomous status. They provide forthe administrative framework of the universities, their councils and theirprincipal administrative officers. Measures known as decrees or regulationssupplement these laws to meet evolving administrative, academic and financialrequirements.

5.10 The state universities are under the jurisdiction of the Ministerof Higher Education, who presides over the Higher Council of Higher Educationwhich includes the Rectors of the Universities. This Council draws up thegeneral policies of higher education in the universities, carries out thecoordination between the universities, approves proposals for the appointmentof professors, and decides each year the number of students to be admittedto the different faculties. In the Higher Council, priority is given to theneeds of the economic and social development of the country, including theneed to admit more students.

5.11 Planning the development of universities is a responsibility sharedby the Minsitry of Higher Education and the Higher Council of Higher Educa-tion. Universities are considered as part of the machinery of state for sup-plying the necessary cadres in fields of consequence to natural and economicdevelopment, and the planning of the universities is viewed as in harmonywith secondary education planning. The budget of each university is approvedby the Council of Ministers.

5.12 The university authorities are allowed considerable freedom inadministration, but ultimate control is reserved for the state through ap-proval of the budget and various legal provisions, including the appointmentof university rector and senior university personnel and the requirements thatthe Ministry of Higher Education and/or the Higher Council of Higher Educationapproves some of the decisions of the university authorities.

5.13 The administration of the university is carried out by the Rectoror President of the University, the University Council and other Councils.The Rector/President is appointed by a Council of Ministers' decree and hasthe authority of a minister. The University Council, which is presided overby the Rector. has authority over budget allocations, approval of curricula,coordination among the faculties, and approval of teaching staff nominations.Senior appointments are also made by the University Council, but in most casesthese require the confirmation of the Ministry of Higher Education.

5.14 Each Faculty has a Dean, who is appointed by the Minister of Educa-tion from names proposed by the Rector/President. The various facultiesenjoy a considerable measure of autonomy in the administration of their own

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ANNEX 4Attachment A

affairs, through the Faculty Council. Each faculty is divided into sections,each with its head selected from amongst the professors. Section Councilsform the first level of councils in the university system.

DECREES INFLUENCING UNIVERSITY DEVELOPMENT

5.15 A presidential decree issued in 1971 calls on the universities toadmit all students who passed the examinations of the secondary school certi-ficate unaided and who wish to proceed for higher education.

5.16 A decree of the Higher Council of Higher Education calls for morestudents to be mainly directed to the science faculties.

5.17 A law organizing institutions of higher training was passed in 1975,and includes the expansion of intermediate institutes under the differentministries so as to enlarge opportunities for secondary school graduates tohigher education, other than university education.

5.18 A recent government decree of September 1975 aims at greater effi-ciency of teaching and the encouragement of research by requiring full-timeattendace of university staff and an incentive for this is an allowance of200 percent of the salaries to teachers of the universities. Under thisdecree, the university teacher will have to put in 39 hours of work per weekat the university with a minimum of 8-10 hours of teaching.

ADMISSIONS TO THE UNIVERSITIES

5.19 The minimum requirement for admission to the state university orhigher institute is the secondary school certificate or its equivalent. Noentrance or any other examinations are administered. While the baccalaureatein general science is accepted for admission to all faculties, the bacca-laureate in literary section is accepted only for admission to the facultiesof letters, arts, law, commerce, fine arts and jurisprudence. In certainengineering faculties, a few of the best students with a baccalaureate fromtechnical secondary schools are also admitted.

5.20 In principle, as we have seen earlier, all baccalaureates of second-ary schools who have the qualifications may have entry into the universities.The lack of sufficient capacity to handle such numbers of admissions has madeits necessary to bring some restriction. At the end of each academic year,the Higher Council of Higher Education, on the recommendations of the respectiveUniversity Councils, decides on the total number of students to be admitted inthe following academic session to the different faculties and the distributionbetween the faculties. Furthermore, on the basis of statistical studies ofexamination results, the Higher Council also announces the minimum gradesobtained at the baccalaureate examination that are acceptable for admissionto a given faculty. Students apply for admissions only after the announcementof the Council's resolutions.


5.21 Applicants for admission are sorted out according to their grades.Those with the highest grades are given first priority. When the facultyquota is filled, those with lower grades are allowed to enroll in anotherfaculty, whose quota has not been filled, provided the student meets itsminimum requirements.

5.22 Other measures have also been adopted to restrict admissions by:

(i) making admissions open only to the baccalaureates ofgeneral schools (science and literary sections)graduating in that year only; and

(ii) not allowing graduates from intermediate institutes toenter the university, except for a few, and directingthe remainder into industry or other sectors.

5.23 To widen the catchment area of students admitted to the universities,the following steps have been taken:

(i) grades for admission of students from rural areas arekept lower for certain faculties;

(ii) special grants are awarded for each mohafazat;

(iii) preference is given to admitted rural students in theallocation of places in residential hostels; and

(iv) universities are authorized, through a special decree,to open new branches in rural areas and faculties forrural development.

5.24 This year some 27,000 students graduated from the general secondaryschools; of these 25,000 applied for university admission.

5.25 The areas of preference for study at the university are medicine,pharmacy, engineering and sciences in that order. Female students preferstudying at universities/higher institutes in their town of residence. Ina specific instance at Homs, where the only higher education institution isthe Higher Institute for Petroleum and Chemical Engineering, there were 60female students in the Institute's enrollment of 260.

ENROLLMENTS AND PRESSURE OF NUMBERS FOR UNDERGRADUATE STUDIES

5.26 The opening of the universities, in principle, to all baccalaureatesof general secondary schools has placed an increasing burden upon the univer-sities, as the number of baccalaureates has been rising continually as aresult of the earlier great expansion of primary and secondary school system.Whereas in recent years there was a known urgent need to meet the requiremerts

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ANNEX 4Attachment A

of teachers for the expanding secondary school system, the present day num-bers of university admissions bear no particular relationship to the demandfor professional and specialist manpower in the country.

5.27 On the credit side, it must be admitted that the proportion of num-bers of secondary school students graduating in the sciences was only one-thirdof those in the literary studies before 1972; in 1975 this proportion was two-thirds. The period 1972-75 has witnessed an increase of 25 percent in theenrollments in the sciences.

5.28 Nevertheless, the increasing pressure of numbers of those claimingadmission to the universities raises a number of questions. Is there provi-sion of alternative institutions of higher education? What effacts will suchlarge numbers, especially of the greater numbers of students of pootc- quality,have on tne standards of teaching? Is the university's function solely thatof providing undergraduate teaching?

5.29 At present, one-third of the secondary school baccalaureates areadmitted to the university, another third is siphoned into intermediate insti-tutes (2-year post baccalaureate institutions) and the remainder enter thelabor market. The intermediate institutes provide the alternative route tohigher education. These institutes are under the management of a number ofministries, including the Ministry of Higher Education, and are described ingreater detail in Chapter 3 on technical education.

5.30 Table A4A.5.1 illustrates the rate of expansion of universityeducation in Syria. Between 1970-75, the total student enrollments increasedby 57 percent, and in the same period enrollments in the science orientedfaculties nearly doubled - a major achievement in altering the proportion ofstudents studying in the humanities. The proportion of the total studentsstudying in the science oriented faculties has progressively increased from28 percent in 1969 to 38 percent in 1970 to 45 percent in 1975.

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ANNEX 4Attachment A

Table A4A.5.1: UNIVERSITY & HIGHER INSTITUTES ENROLLMENTS1968-1975

1968/ 1969/ 1970/ 1971/ 1972/ 1973/ 1974/ Projected1969 1970 1971 1972 1973 1974 1975 1980

TOTAL 33,597 36,763 39,533 47,100 49,255 53,473 62,156 100,000-110,000

Annual GrowthRates 1.09 1.08 1.19 1.05 1.09 1.16

Science,Engineering,Medicine,Dentistry, 9,293 12,006 14,912 18,665 21,303 24,963 30,129Pharmacy,Agriculture,Veterinary

Annual GrowthRate 1.29 1.24 1.25 1.14 1.13 1.25

Letters,Economics,Commerce, Law, 24,304 24,757 24,621 28,435 27,952 29,410 32,027Fine Arts

Annual GrowthRate 1.02 -ve 1.15 -ve 1.05 1.09

Source: Ministry of Higher Education. Central Statistics Office.

5.31 The average annual increase in student enrollments in 1970-75 hasbeen of the order of 12 percent, and in science oriented faculties the annualincrease was 19 percent. While budgetary provisions have increased somewhat,the expansion in student enrollment has not been matched with proportionateexpansion of teaching staff, facilities and equipment. A university systemwhich expands beyond the limits of its capacity promotes lowering of academicstandards and considerable harm is done to the country by graduates who areintellectually and professionally poorly trained to assume positions ofresponsibility. We shall return to the subject of staff-student ratios inpara. 5.56. The current university statistics are given in Table SA10.4.

5.32 The pressure on the university system would not have been sobad had there been guidance of students according to their abilities, and tothe existing and future needs and opportunities for professional work. Thestudent, due to the system of grades for admission to the different faculties,

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ANNEX 4Attachment A

will register in the first faculty which accepts him. The student will nothave been oriented to the subject because of his interest and abilities, norbecause manpower distribution made that kind of study necessary.

5.33 Documentary information on the demands for manpower in the dif-ferent disciplines is presently sketchy at the best. Meanwhile, the Ministryof Higher Education plans admissions on the basis of this information, of theuniversities' teaching facilities which cannot be developed quickly, and ofthe growing number of students seeking places. Whereas in 1970-75, theproblem of employment of graduates was not a pressing one, this is unlikelyto remain so in the latter years of the next Five Year Plan (1975-80).

5.34 The open-door policy has resulted in greater demand for universityeducation in the absence of a system of student guidance in secondary schoolsto see which professions and levels are best for them. Planning access to theuniversities has to be linked with the employment of graduates, which in turnrequired a solid basis of adequate knowledge of manpower distribution andfuture needs. In turn, this planning must be made part of a comprehensiveeducational and training system. It is not possible to draw up a long termplan of students' access to the university if it is not coupled with a longterm plan of developing teaching facilities, teachers' availability, adminis-trative efficiency and financial resources.

5.36 The university's authorities, the ministries of higher education,education and planning, are aware of these problems and the need for theirresolution. It is this intervening period, while the problems are beinglooked at squarely for their rational resolution, that there are seriouspossibilities that ad-hoc measures taken may prove to be difficult to rescindlater on.

ACADEMIC YEAR AND SYSTEM OF STUDIES

5.37 The academic year extends from October to June and comprises twoterms with an interval of a 2-week period as mid-year vacations. The studentsmust register for the entire year.

5.38 Both the annual system of studies and the semester system are prac-ticed in the universities. In the annual system, adopted by many facultiesincluding those of science and engineering, students take examinations in twosittings at the end of the academic year, in July or in September. Studentsare obliged to be examined in all the required subjects; those who fail areallowed to sit for the second examination in September. In the semester sys-tem, adopted by the faculty of medicine at Damascus and the faculties of agri-culture and economic at Aleppo, the students take examinations at the end ofeach semester; those who fail can repeat the examinations at a special sessionheld in the summer.

5.39 Many faculties have plans to change over to the semester system asthe annual examinations dominate much of the academic program and the time ofthe faculty staff; moreover, there is a long preparatory period before the


end of the academic year and preceding the annual examinations during whichno theory classes are held.

5.40 The method of instruction in the form of lectures to large bodiesof students, without adequate supporting tutorials, leaves much to be desired.

5.41 Teaching is six days in the week, with student class periods from30 hours per week in the science faculties to 35 hours per week in the engi-neering faculties (of which some 20 hours are theory periods).

UNDERGRADUATE COURSES OF STUDY AND EXAMINATIONS

5.42 The emphasis in the curriculum of the faculties is on specializa-tion. Arabic is the medium of instruction, unless exemptions are made by theUniversity Council.

5.43 The courses of study in the faculties of letters, commerce, economics,agriculture and sc'iences last for four years; while in the faculties ofengineering, dentistry, pharmacy and medicine the duration is five years.

5.44 In engineering, the course of the preparatory year is common to allthe departments. This course is designed to strengthen the students in thephysical sciences and foreign language, and acquaint them with engineeringterminology. In the fourth or final year, each student elects one of themany specializations offered by the department. A final year B.Sc. projectis also included in the curriculum. In some departments, the second term ofthe final year is devoted to project work which may be conducted in the uni-versity or outside.

5.45 In the sciences, there are two sets of courses--a general one thatis aimed at providing science teachers for secondary schools, and the otherfor applied work (for example, applied chemistry, applied geology). The cur-riculum follows what is called the "certificate" system. A certificateusually consists of a group of related courses in a field of specialization.The student must successfully pass the specialized preparatory year for pro-motion. In order to graduate with a bachelor degree, he must complete anumber of certificates (a minimum of eleven at Aleppo). The certificaterequirements are such that when the student completes all the years of study,he usually has the equivalent of a major and a minor. For those who take thegeneral degree, some amount of pedagogy subjects are included; whilst those whowork towards the applied science degree have to undergo practical trainingduring the summer.

5.46 In the faculty of medicine, the period of study includes a premedicalyear and the final year is allotted to internship.

5.47 Courses common to more than one faculty are taught in single classesby the same teacher, and the student is allowed to register, in some cases,in two faculties, which gives the student some freedom in the selection ofcourses.


5.48 Examinations are under the control of the Dean of each faculty whosupervises the subject examination committees and the general supervision com-mittee. The examination committee for each subject consists of one or moreexaminers appointed by the Faculty Council from among the teaching staff ofthe faculty. The examinations are essentially internal except for projectwork where external examiners may be involved.

5.49 The written examination is usually of three hours' duration. Thegrades for each subject range between zero and 100; in order to pass, thestudent must receive a minimum of 50 in each subject of the curriculum.

5.50 The student cannot be promoted from one year to the next higherunless he has successfully completed and passed all the courses prescribedfor that year. Usually, if he fails in no more than two subjects, he isprovisionally promoted to the next higher class. However, in a faculty witha preparatory year, a student cannot be promoted to the next yccr unless hepasses all his subjects. A student is not permitted to repeat any excmina-tion more than twice, or to repeat a class for more than two years.

5.51 The passing rates are usually low in the first year of studies andthis is largely as a result of the universities' open-door policy to holdersof general school baccalaureates. The passing rates improve in the higheryears as shown in Table A4A.5.2.

Table A4A.5.2: UNIVERSITY PASSING RATES

I Yr. to II Yr. Other Years

Faculty of Science, Univ. Damascus 0-70% 80-95%Faculty of Science, Univ. Lattakia 0-70% 80%Faculty of Engineering, Univ. Damascus 0-50% 80%Faculty of Engineering, Univ. Aleppo 60% 90-93%

Source: Ministry of Higher Education and the Universities.

5.52 Drop out rates are usually low and occur mostly in the first yearof studies; the drop out rate in the faculty of engineering is nearly 1percent. Voluntary drop out is negligible. Most of those who cannot makethe grade in the faculties of engineering and medicine register in other lessdemanding faculties or in intermediate institutes.

TEACHING STAFF, STAFF-STUDENT RATIOS AND TEACHER TRAINING

5.53 The university ranks of teaching staff include professor, associateprofessor, lecturer and instructor, with the minimum academic qualificationsfor each rank being a doctorate degree or equivalent. Demonstrators andteaching assistants, whose qualifications are a first degree, are not regardedas regular members of the faculty although they are listed as such.

5.54 Prior to the passing of a recent decree, the teaching load wasbetween 10-12 hours per week. There was, in consequence, much opportunity

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ANNEX 4Attachment A

for teachers to take on outside employment to supplement university incomeor to take on paid overtime teaching as lecturers at the university itself.Some teachers thus had teaching loads of as many as 38 hours per week. Muchof this increase of teaching loads was a result of the rapid universitystudent enrollment that was often unanticipated and inadequately planned for.

5.55 According to the new decree, a university teacher has to put in 39hours of work per week at the university comprising: (i) 8-10 hours ofteaching (8 hours for professor, 9 hours for asst. professor, 10 hours forlecturer); (ii) choice of (a) further teaching (b) writing textbooks andnotes or (c) research; (iii) administrative work, including attendance atcommittees; and (iv) scientific services to the country. This decree, whichaims at greater efficiency of teaching, grants to university teachers anextra allowance amounting to 200 percent of their salary. This measure istimely, as a dangerously high percentage of teaching staff in the variousfaculties is employed on a part-time basis. Whether it will help reduce thehigh student-staff ratios by attracting qualified personnel to the teachingstaff remains to be seen.

5.56 Some idea of the high prevailing student-staff ratios will begathered from a study of Table A4A.5.3.

Table A4A.5.3: STUDENT-STAFF RATIOS

Staff RatioEquiv. of Student:

Full- Part- overtime Full-Student time time teaching time

Institution Enrollment staff staff hours staff

1. Damascus (1973-74)Fac. Science 4,556 82 29 56:1Fac. Engineering 2,137 48 27 45:1Fac. Elec. & Mech. 1,268 58 34 22:1Fac. Pharmacy 876 30 2 29:1

2. Damascus (1975)Fac. Science 5,120 (5,600) /a 88 n.a. 58:1Fac. Engineering 5,020 (4,200) Ia 43 /b 40 90:1Fac. Elec. & Mech. 1,446 (1,422) /a 40 /b n.a. 36:1

3. Aleppo (1975) 5,020 (5,500) /a 64 n.a. 78:1

4. Lattakia (1975)Fac. Science 591 8 5 74:1Fac. Engineering 356 8 n.a. 44:1

5. Homs (1975) 221 (260 /a 6 15 37:1

/a Beginning of session 1975-76./b Includes assistants.

Source; Ministry of Higher Education.

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ANNEX 4Attachment A

5.57 The Ministry of Higher Education has an elaborate training program.The Supreme Council for training, with members from the Ministries of HigherEducation, Education and Planning oversee this training. All trainingrequires the approval of the Directorate of Planning of the Ministry. Duringthe Third Plan, some 300 university teachers were sent abroad or were chosenfrom abroad for advanced training or post-graduate studies. For the FourthPlan, it is estimated that the training program will be of like magnitude.

5.58 At Aleppo, the teachers abroad on training are 16 in sciences, 13in agriculture, 20 in engineering, 15 in medicine and 9 in veterinary sciences.At Damascus' Faculty of Mechanical Engineering, no teachers were sent abroadin the past two years; this year five-six teachers have been nominated andthere is a proposal to send 20 teachers abroad in the next three years. AtHoms, some 20 staff are abroad on training, of which three are expected toreturn next year and five in the following years; plans are to send a further15 for post-graduate studies selecting from graduates who are already abroad.Each department of the faculty of sciences, Damascus, has about five teachersabroad on higher training; plans are to send two teachers each year.

5.59 Students of the university and high specialization holding govern-ment scholarships abroad at the end of 1974 were: 469 in engineering, 157 insciences, and 89 in industrial sciences. Students studying abroad under thesupervision of the Ministry of Higher Education, on their own expense, at theend of 1974 were: 6,431 in engineering (3,584 in western countries) and 2,010in sciences (783 in western countries).

POST-GRADUATE STUDIES AND RESEARCH

5.60 In the majority of the faculties of the universities, most of thetime of the teachers is spent on training an ever increasing body of under-graduate students. The only science-oriented faculties that offer post-graduate courses are those of medicine and dentistry which conduct coursesleading to a higher diploma in these specializations.

5.61 The faculty of engineering at Damascus had initiated post-graduatestudies in structural engineering in collaboration with the American Univer-sity at Beirut, with alternating periods of six months; this program hassince been discontinued.

5.62 The universities are engrossed inordinately with increasing under-graduate enrollments. Although the faculties recognize the need for com-mencing post-graduate studies, for which many of them have drawn up plans,their introduction cannot be effected without reducing the present under-graduate teaching loads. A weakness in the planning of university educationhas been a lack of attention to the potential benefits of post-graduatestudies in specializations of economic benefit to the country. To takea specific example, recently the admissions of students to a department ofgeology were increased to 300, despite the distinct possibility that therewill be an over-production of geologists for whom the scope of employment

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ANNEX 4Attachment A

is less than 50 geologists every year. Rather, there is an identified needto upgrade existing geologists in mapping, exploration of economic mineralsand geophysical and geochemical exploration. In this instance, happily,because of the collaboration between the Directorate of Geological Survey andMinerals- nd the University of Damascus, advanced training in mapping is tobe given next year to some 10 geology graduates.

5.63 The area of utilization of the human resources at the universitiesfor overall economic development, needs to be given serious attention. Thefaculty of science at Damascus, with its staff that includes over 80 doc-torates, and the faculties of engineering at Damascus and Aleppo, with asimilar number of Ph.D.'s, have no post-graduate programs so far. The qualityof teaching staff at the universities is excellent and ripe for introducingpost-graduate studies and undertaking research work. The advantages would beto initiate the training of junior university teaching staff within thecountry, and to maintain the vitality of university teaching and of curriculathat are responsible to developments, both within the country and outside.

5.64 It is understood that the Supreme Council of Sciences has prepareda plan to establish post-graduate facilities. Grants are also being madeavailable by the Supreme Council for research projects that have demonstrableeconomic development possibilities. There are research centers under theMinistries of Industry, Agriculture and Defense, but little research has sofar beentdndertaken at the universities.

5.65 Some of the areas in which post-graduate/higher course would benefiteconomic development are:

industrial chemistry - beneficiation and upgradingphosphate rockexport of phosphorustextile chemistry

zoology - fisheriesplant diseases

industrial microbiology - preservation of fruitdairy products; fish catch

silicate technologypetrochemicalsgeochemistry and geochemical explorationgeophysics-petroleum prospectingmineralogytextile physicssoil mechanicsecology of forests and pasture regionsland reclamationirrigation engineeringreinforced concrete structurespublic healthtown and regional planning


electric power distribution - network studieswind and solar energyautomatic control engineeringproduction technology and industrial engineeringindustrial management, including project management

5.66 The commencement of a program of post-graduate studies/highertraining within the country will necessarily have to be phased to meet thepriorities of the national development plan. There would be an expecteddelay, in some instances as long as three years, to allow for:

(i) stabilization, if not reduction, in undergraduateteaching loads; and

(ii) construction of laboratories and equipping these foradvanced studies and research.

A commitment to post-graduate studies and research in the universities in theforthcoming development plan will only be realizable if the open-door policyof university admissions to secondary school baccalaureates is modified torealistic goals of demands for such qualified manpower in the national economyplans.

PLANS FOR UNIVERSITY EDUCATION EXPANSION

5.67 While the Ministry has not formulated in detail the Fourth Plan proj-ects, the objectives of university educational expansion are:

(i) to develop the October University at Lattakia as a modeluniversity;

(ii) to reach steady state university enrollment by increasingintakes to intermediate institutes;

(iii) to disperse higher education facilities over the country,especially the intermediate institutes, by establishing theLand Reclamation Institure at Raqqa, and the Telecommunica-tions Institute and Veterinary Institute at Hama;

(iv) to increase specializations in undergraduate course ofstudy in the sciences, by having a common 2-year programand further two years of specializations in conformitywith the country's development program;

(v) to increase opportunities for offering post-graduate coursesin the different faculties of the universities;

(vi) to incorporate research and training in the universities; and

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ANNEX 4Attachment A

(vii) to enlarge the project of translating scientific textbooksand large publications to spur the process of Arabizing thescience language.

5.68 At Damascus University, the faculty of science has plans to intro-duce post-graduate diploma and master degree courses of studies in all thesix departments, including organic chemistry and applied geology. The facultyof engineering is also considering introduction of town and urban planning.

5.69 The faculty of electrical and mechanical engineering at Damascus hasan ongoing project costing 87 million Syrian pounds, of which some 32 millionis available from the President's Fund. The project comprises the equippingand construction of buildings of advanced labotatories for final year andpost-graduate students. The laboratories include a high voltage laboratorydesigned with the cooperation of the State electricity Board and metallurgicallaboratories proposed by the State Union of Industries.

5.70 A computer center for all the faculties at the University of Damascusis being proposed for completion in the Fourth Plan.

5.71 At Aleppo University, plans are to offer post-graduate courses inveterinary medicine, medicine and dentistry, agriculture, science, economics,engineering and management. New departments of mining and metallurgy, chemicalengineering and agricultural machinery are to be opened. Also the Departmentof Chemistry will organize special courses oriented to the needs of industry,including pharmacology, pharmaceutical and organic chemistry.

5.72 The idea of setting up technological universities at Aleppo (with theexisting faculty of engineering as nucleus) and at Homs (with the Higher Insti-tute for Petroleum and Chemical Engineering as nucleus) has been mooted. Inparticular, the Higher Institute at Homs has acquired a 360,000 square metersite in the event that this institute becomes a technological university withan enrollment of 2,000-3,000 students in engineering and the related scientificdisciplines.

5.73 The Ministry of Higher Education attaches the highest priority tothe development of the October University at Lattakia as (a) it is a younguniversity with much room for planning as a model university, (b) it couldbe a research center for new studies relating to maritime/marine transport,fishery and biology, and environment pollution.

5.74 A Master Plan of the October University has been prepared, in-cluding project documents for the first of the four phases. In the firstphase the construction items relate to:

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ANNEX 4Attachment A

(i) faculty of medicine (1,500 students);

(ii) faculty of science (3,000 students + 2,000(physics, chemistry, students from otherbiology, geology) faculties);

(iii) faculty of engineering (2,000 students)(civil, electronic,mechanical, urban andmunicipal engineering)

(iv) residential accommodation of university faculty and students; and

(v) general services.

5.75 The second phase of the October University is to consist of theconstruction of (a) hospital, (b) faculty of agriculture (3,000 students),(c) faculty of letters (4,000 students), and (d) residential accommodation.

The development budget allocated for Higher Education in the years 1975 and1976 is:

(Million Syrian Pounds)1975 1976

A. Universities

1. Damascus 30.8 111.22. Aleppo 10.2 47.23. October (Lattakia) 33.0 200.0

B. Higher Institute of Petroleum& Chemical Engineering, Homs 2.3 7.0

C. Intermediate institutes 4.0 12.0

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ANNEX 5

TRANSPORTATION

CHAPTER 1

INTRODUCTION

1.01 The basic layout of the Syrian transport system has been determinedby the physical setting of the country and the partition of the region afterWorld War I. The coastal plain to the west, the narrow fertile plain in thecenter, the Euphrates basin in the northeast, and the desert to the east,have determined the location of Syria's urban centers and its most importanttransport axes. The only natural corridors are the coastal and central plainsfor north-south movements, and the Euphrates River and the gap in the mountainsbetween Homs and Tartous for east-west movements. Other important transportcorridors have to cross mountains (Damascus-Beirut and Aleppo-Lattakia) or thedesert (Damascus-Baghdad). The rapid economic growth since the beginning ofthe 1970's, stimulated by the discovery and exploitation of phosphates in thecentral region and oil in the northeastern region and by agricultural develop-ment north of the Euphrates, has led Syria to initiate a major reorganizationof its transport system and to undertake large-scale construction projects inports, railways and roads to restructure its network and meet the new demandsplaced on it. This annex will endeavor to trace the main lines of thisexpansion and restructuring program and to discuss some of the difficultiesit has encountered.

This annex draws upon the work of Mr Graham Smith.

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CHAPTER 2

STRUCTURE OF THE TRANSPORT SECTOR

2.01 Inland transportation is dominated by road, for both passengers andfreight, and although the role of the railways, at present very small, isexpected to expand appreciably in the next five years, road transport willremain dominant. Of an estimated 8 billion intercity passenger-km in 1976,roads carried over 98 percent, railways 2 percent and air a fraction of 1percent. As for freight, of an estimated 8 billion intercity ton-km (exc-lusive of crude oil), roads carried 96 percent and rail 4 percent (see TableA5.2.1). Domestic air freight was negligible. International transit trafficof freight has grown rapidly in recent years, to 3 million tons in 1975, ofwhich over 80 percent moved by road. The railways have been hampered fromplaying a greater role by the inconvenient layout of the networ'rk nd itsdivision into two systems with different gauges, though this should i~;provewith the opening of new lines in the early 1980's. Syria has two generalcargo ports on its Mediterranean coast handling 4.7 mn tons of non-oil trafficas of 1976, an increase of more than 50 percent on two years earlier. Themost rapid growth has been experienced at Tartous, a new port developed onlysince the late 1960's to relieve Lattakia, the traditional port of Syria.There is no significant inland waterways transportation, as the only largeinland waterway, the Euphrates River, is far from the main population centers.Development of domestic civil aviation has been discouraged by the relativelyshort distances between the main population centers. Two crude oil pipelinesystems cross Syria from east to west, one for carrying oil from Syria's ownfields in the extreme northeast to the port of Tartous, the other for handlingoil in transit from Iraq to the Mediterranean oil ports at Banias (Syria) andTripoli (Lebanon) (see maps in Volume 2). Until 1976 part of the Iraqi crudewas used to supply the refinery at Homs. A second international transit line,the TAP line from Saudi Arabia, crosses the southwestern corner of Syria onits way to Saida in Lebanon.

Table A5.2.1: INLAND TRANSPORTATION VOLUMES, 1973-1976

Passengers Freight1973 1976 1973 1976

Pass./Km % of Pass./Km % of Ton/Km % of Ton/Km % of(billion) Total (billion) Total (billion) Total (billion) Total

Road* 4.10 98 7.70 98 4.40 97 7.90 96Rail 0.07 2 0.17 2 0.12 3 0.30 4Air - 0.02 1 - 1 - -

* Excluding urban.

Sources: Central Bureau of Statistics, "Statistical Abstract" for rail andair, and mission estimates for roads.

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2.02 Four ministries are responsible for administration of the trans-port sector: the Ministry of Transportation (MoT) for road transport servicesand both the infrastructure and services of rail, ports and civil aviation;the Ministry of Communications (MoC) for road infrastructure; the Ministry ofPetroleum for pipelines; and the State Planning Commission, through its trans-portation department, for reviewing the implementing ministries' investmentprograms and integrating them into the national economic planning mechanism.The MoT was established only in 1974 with a nucleus of staff formerly with theMoC, to bring all the modes of transport (except pipelines) under a singleauthority. It is still in the process of building up its capabilities.

ROADS

2.03 The existing classified road network (excluding city streets) hada total length of about 15,700 km as of 1976, of which 11,700 km, or 75 per-cent was asphalted (see Table SA 9.1).1/ The average density is 80 km perthousand sq km, similar to that of Turkey and Jordan; this average, however,conceals a marked difference between the relatively lush and densely popu-lated areas along the Mediterranean coast (over 800 km per thousand sq kmaround Tartous) and the almost empty central and eastern desert areas (30km per thousand sq km in the Deir-Ez-Zor Governorate) (see Table A5.2.2).The road network has been growing at about 5 percent per year over the pastdecade. In 1975 and 1976 the rate of construction of paved roads averaged570 km per year, less than sufficient to keep pace with the sudden increasein transport demand, which since 1974 has been growing at 10-15 percent peryear.

2.04 Traffic is particularly heavy on the main corridors, namely thenorth-south axis connecting Damascus with Aleppo and the major cities in theinterior plain, the Lattakia-Tartous coastal road, and the three transversehighways: Lebanese border via Damascus to the Iraqi border; Homs-Tartous; andLattakia-Aleppo-Deir-Ez-Zor. The average volume of traffic on the Damascus-Aleppo highway is 6,000-9,000 vehicles per day, and on other inter-city mainroads 1,500-3,000. Truck traffic is very heavy on most main roads, in therange of 35-50 percent of total traffic; the most common types of truck arelarge two-axle models with a capacity of 10 tons, and multiple-axle semi-trailer and trucktrailer combinations of European manufacture. The combinedimpact of rapid growth in traffic generally and heavy trucks in particularhas severely strained the network, on top of which widespread overloadinghas accelerated deterioration of road surfaces. The issue of overloading isdiscussed below (para. 2.17).


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Table A5.2.2: REGIONAL DISTRIBUTION AND DENSITY OF ROAD NETWORK(1976)

Length of Roads (Km) Density (All Roads) /aPaved Per Area Per Inhabitants-as % (Km/'000 (Km/'OOO

Governorate Paved Total of Total Sq Km) Persons

Damascus 1,644 1,939 85 110 1.1Homs /b 1,206 1,345 90 30 2.0Hama 1,410 1,589 89 180 2.5Tartous 1,267 1,574 80 830 4.3Lattakia /b 1,000 1,397 72 610 2.9Idleb 984 1,331 74 220 2.9Aleppo 1,131 1,787 63 100 1.1Raqqa 407 787 52 40 2.7Deir-Ez-Zor /b 440 1,130 39 30 3.2Hassakeh 580 824 70 40 1.4Suweida 789 884 89 160 5.2Deraa /b 699 916 76 250 3.2Quneitra 158 164 96 90 8.4

Total/ 11,715 15,676 75 80 2.0Average

/a Assuming 3.3 percent annual population growth since last census in 1970.lb Provisional data.

Source: Ministry of Communications.

2.05 The immediate cause of the rapid increase in traffic has been thenew policy on vehicle imports in effect since 1974. Over the ten years up to1974, a shortage of foreign exchange coupled with a transport policy emphasizingrailway development had led the Government to hold down growth of the vehiclefleet to an average annual rate of less than 5 percent, compared to the 8-9percent rate that real GDP growth might have led one to expect on the basis ofinternational comparisons. Strict quotas were placed on vehicle imports, andthere was no significant domestic manufacture or assembly of road vehicles.In consequence, more than half of all vehicles were over ten years old, andownership stood at 5.5 cars per thousand persons or 9 vehicles of all types,less than half the international average for countries with similar per capitaincome. In the new climate prevailing after the 1973 war and the 1974 oilprice increases, a major policy change was made regarding expansion of thevehicle fleet: the import quota system was dropped and procedures wereliberalized. The response was very strong: from a level of 3,000 vehiclesin 1974, imports rose in 1975 to nearly 26,000 and in 1976 to nearly 36,000.In the two years from 1974 to 1976 the registered vehicle fleet doubled, from64,000 vehicles to 126,000. The number of cars increased 69 percent, from39,400 to 66,500; buses exactly doubled, from 2,800 to 5,600; the number of

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pickups rose nearly 5 times, from 5,800 to 27,200; and the truck fleet wentup 63 percent, from 16,100 to 26,200 (see Table SA 9.2). The cost in foreignexchange was great, about $320 million, and in 1977 import restrictions onvehicles were reintroduced to limit foreign exchange outflow.

2.06 The import mechanism now in operation gives expression to marketforces while allowing the Government to keep control of the expenditure offoreign exchange on vehicles. Most purchases are made through the statecompany, Aftomachine. Aftomachine makes block orders of certain standardmodels in response to market demand and sells them to the public for localcurrency, the principal constraints being high customs duties of 100-250percent on cars depending on size, and a certain limitation in model choice.Truck purchases similarly are channeled through Aftomachine with customsduties averaging 30 percent. The manufacturers selling the block imports arerequired by the Government to set up service centers and spare parts suppliesin the main cities. Alternatively, individuals may import directly any modelthey choose if they can pay in foreign currency. Spare parts seem to be easilyavailable.

2.07 The regional distribution of the fleet is very unequal: vehicleownership per thousand persons in Damascus, where half the total fleet isregistered, is more than double the national average, whilst in the easternand southern provinces it is less than a quarter of the average (see TableA5.2.3). The regional imbalance has worsened somewhat since 1974. There hasalso been a shift in the composition toward private ownership, which nowaccounts for 70 percent of cars. The large number of pick-ups imported in1976 made possible a significant shift among small-scale businesses and farmsaway from use of animal-drawn vehicles for distribution. Despite the suddenjump in the number of vehicles since 1974, ownership levels are still low byinternational standards, and demand can be expected to remain strong for someyears. Balance of payments constraints rule out the continued importation ofnew vehicles in 1977-78 at the rates of 1975-76 and indicate that a returnto something closer to the pre-boom level will be necessary at least for afew years. Further expansion of the vehicle fleet by about 30 percent by1980 would be consistent with both balance of payment prospects and thelikely growth of transport demand, at a cost in foreign exchange of $60-70million per year. By the year 2000 the fleet could number 750,000, including450,000 cars, implying nearly 50 vehicles per thousand persons or three timesthe ownership level in 1976.

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Table A5.2.3: REGIONAL DISTRIBUTION OF VEHICLE FLEETAND OWNERSHIP LEVELS (1976)

Ownership Pea'000 Persons7

All AllGovernorate Cars Vehicles Cars Vehicles

Damascus 39,7666 63,998 22 36Homs 5,237 11,295 8 17Hama 1,847 6,676 3 11Tartous 1,638 3,003 4 8Lattakia 3,113 6,004 6 13Idleb 436 1,917 1 4Aleppo 12,196 22,825 8 14Raqqa 601 2,190 2 7Deir-Ez-Zor 620 2,511 2 7Hasakeh 947 4,201 2 7Sweida 79 478 0.5 3Dara'a 65 474 0.2 2

Total 66,545 125,572 9 16

/a Assuming 3.3 percent annual population growth since last census in 1970.

Source: Ministry of Communications.

2.08 The general principle underlying bus and truck operations is privateownership of vehicles and government regulation of rates and fares. Structu-rally the system appears to have sufficient flexibility to enable it to adaptto the rapid expansion currently being experienced by the highway sector.

2.09 Bus operations fall into two categories: urban and intercity. Eachof the governorate capitals has an urban bus system belonging to the municipal-ity, which is responsible for setting fares. Intercity buses are privatelyowned except for the luxury services operated by the partly government-ownedKarnak company. Operators of the privately-owned buses are only allowed toserve routes for which they have obtained permits from the municipalitiesaffected, and according to agreed upon service frequencies and fares. Restric-tions on owning more than one bus account for the fact that most private busservices are one-man owner-driver operations. In most towns they operate outof communal terminals owned by the municipality. A typical fare is SL 5.25for the 350 km from Damascus to Aleppo, or 1.5 piastres (0.38 USJ) perpassenger-km, which is low by international standards. Fares on the Karnakbuses are approximately double those charged by ordinary buses.

2.10 Taxis are an important complement to the bus services and are sub-ject to similar regulations regarding ownership and fares. Communal taxisseating five or six passengers operate between cities on fixed routes like

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buses, at fares that are on average two to three times those of the ordinarybuses; e.g., SL 75 per taxi for Damascus-Aleppo, or, for a full passengerload, 4.4 piastres (1.1 US&) per passenger-km. Revisions to bus and taxifares are worked out periodically through negotiation between the operatorsand the municipalities.

2.11 The commercial vehicle fleet is divided into three categories:(a) private: own-account vehicles of privately-ownred firms and institutions;(b) public: cormon-carrier vehicles owned by private individuals and subjectto government regulation regarding operating licenses and rates; and (c) gov-ernment: own-account vehicles of government organizations and public-sectorcompanies. In 1977 there were approximately equal numbers of trucks andpick-ups; of the trucks, common-carrier vehicles are the largest category,making up half the total; government-owned trucks account for 30 percentand private own-account trucks the remaining 20 percent. Pick-ups are moreor less evenly divided between private and for-hire use. Government trucksinclude the own-account fleets of such enterprises as the phosphate company,the cotton authority and the wheat authority. Other government institutionswho wish to transport goods and who do not have their own vehicles, use thecommon carriers at preferential rates compared to private-sector consigners.

2.12 The tariff governing shipments for government customers is set bythe Ministry of Supply in consultation with truckers' representatives and theMinistry of Transportation, which is responsible for licensing motor vehicles.Last revised in 1974, the tariff provides rates per ton-km that decline withdistance from 11.0 piastres (2.8 USi) per ton-km over 100 km (e.g., Damascus-Deraa) to 5.5 piastres (1.4 US¢) per ton-km over 700 km (e.g. Damascus-Deir-Ez-Zor). These are also low by international standards. A supplement of 20percent is allowed for trips over unpaved roads, less than the likely extraoperating cost incurred and a supplement of 35 percent is allowed for tripsrequiring an empty outward journey or backhaul. The same common carriers,when handling shipments for private customers, may charge approximately 30percent more than the government-customer rates.

2.13 Due to the clear disincentive this differential represents, theGovernment sometimes has difficulty in finding sufficient trucks to move itsshipments, particularly of imports waiting to be cleared from the ports, whichhas been a cause for concern. Despite the large number of trucks importedin 1975 and 1976, the supply apparently still did not expand fast enough tokeep pace with demand, constrained perhaps by the restrictive ownershipregulation that no one may own, completely or partly, more than one publicvehicle. Financing for the purchase of trucks is obtainable from commercialbanks on reasonable terms. The Government is responding to the problem throughtwo channels: the loading turn system and revision of the tariff.

2.14 The loading turn system is operated by the freight bureaux, ofwhich there is one in each major town. Privately owned but operating underMoT supervision, the bureaux or agencies operate depots to which incomingtrucks report, and assign to the truckers as they arrive sequential numberscorresponding to the shipments waiting to be picked up. A trucker who isassigned a government shipment is obliged to accept it, and may be rewardedindirectly by being allowed, after handling three government shipments, to

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make one international haul, at rates agreed between the consignor and thetrucker. The bureau covers its expenses by a fee of SL 5-8 levied on eachconsignment picked up, independent of the invoice amount. Payment for theshipment is made directly from the consignor to the trucker. To relieve theneed for compulsory assignment of government shipments, the Ministry of Supplyhas prepared a revised tariff that approximates present private rates (i.e.,30 percent above the existing government tariff), that in mid-1977 was await-ing final government approval.

2.15 International truck transit traffic is substantial on the mainroads from the ports of Lattakia and Tartous to Damascus and from Beirut toDamascus and thence on the Damascus-Amman and Damascus-Baghdad highways. Froma level of 1.4 million tons in 1973, the total traffic volume by road reached2.8 million tons in 1975, as the economies of Saudi Arabia and the Gulf statesboomed. Provisional figures for 1976, however, show a drop off to 1.8 milliontons, due primarily to a reduction in traffic to and from Lebanon to less thana third of its 1975 volume. The total volume of road transit traffic in 1976average 250 loaded trips per day with an average load per truck of 19 tons.Syrian vehicles accounted for about a quarter of these trips, in competitionwith truckers from Lebanon, Jordan, Iraq, Kuwait and Saudi Arabia. A numberof bilateral agreements between Syria and its neighbors determine the routesby which transit traffic may cross Syrian territory.

2.16 Three kinds of user charges are levied on transit traffic: a so-called "tax for services rendered" based on the value of cargo in transit;a transit fee per vehicle regardless of cargo value or weight (introduced inApril 1976); and tolls on the Damascus-Baghdad road. Total revenues fromthese three sources amounted to an estimated SL 27 million in 1976, whichmore than adequately covered the share of the highway budget attributableto transit traffic, estimated at approximately SL 10 million.

2.17 Road pavement design is based on a maximum single axle load of 13tons. However, a survey carried out by the Ministry of Communications on theDamascus-Homs highway in late 1976 showed that some 25 percent of all truckshad axle loads in excess of 13 tons, with some in excess of 20 tons. Thedamaging effect was the equivalent of an average axle load close to 15 tons.The incentive to overload has come from the'rapid growth in freight transportdemand since 1974, which has outstripped the ability of the truck fleet togrow commensurately. The heavily laden traffic, particularly in the south-and east-bound direction has aggravated pavement deterioration on the mainarterial roads, requiring more frequent overlays than the pavements weredesigned for.

2.18 The Government is keenly aware of the situation, and is seeking asolution through various avenues. These include:

(a) deliberations of a joint commission with Jordan and Iraq, bothof which are faced with the same problem of overloading toharmonize highway design standards and vehicle size and loadingregulations;

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(b) analysis of the number of additional vehicles needed to meet

the demand without resort to overloading; and

(c) a proposed revision of truck freight rates to reflect current

operating costs and to encourage more rapid expansion of the

truck fleet.

In August 1977 Syria, Iraq and Jordan agreed to recommend that the Arab

League adopt an international legal limit of 12 tons per single axle and18 tons per tandem axle, that the limit should be strictly enforced at the

point of origin of each shipment, where policing would be less disruptive

and more efficient than on the highway, that adequate enforcement on the high-way should be provided, and that no truck should be allowed to cross an inter-

national border if the axle load exceeds the legal limit of the country it

wishes to enter. In its lending to Syria for highways, the Bank has stressed

the importance of the organizational steps the Government must take to make

the enforcement sy,stem effective. The other aspects of the problem are to be

examined by the consultants carrying out the national transport study due tostart in 1978 under the Ministry of Transporation.

2.19 The central component of Syria's policy regarding the future ofthe road network is the construction of a four-lane divided highway system

consisting of a central north-south axis, linking the principal cities.,i.e., Aleppo, Homs, and Damascus, and extending on southwards to the Jordanianborder near Dar'a; two east-west highways, one from Aleppo to the port of

Lattakia and the other from Homs to the port of Tartous; and a highway along

the coast linking Lattakia to Tartous to complete the "box". Finally, therewould be four-lane connectors to Turkey northwards from Lattakia and to

Lebanon westwards from Damascus. The total length would be 800 km. This

system appears justified in view of the large traffic volumes carried, withthe possible exception of the Turkish link. Of the system, three sections of

the Damascus-Aleppo highway have been completed to four lanes, totalling 137

km, and on the remainder, one carriageway is open as a first stage. Construc-

tion is underway on the Damascus-Lebanese border link, the Homs-Tartous link,

and the rest of the second carriageway between Damascus and Homs. On the

Damascus-Jordan highway construction is due to start in 1978. Provision ismade in the Fourth Five-Year Plan for feasibility studies and at least partial

construction of all the other links. In total, the Plan provides for con-struction of 439 km of four-lane divided highways.

2.20 The Fourth Plan also provides for construction or improvement of628 km of two-lane primary roads, mostly sections in the central and easternregions needed to complete links connecting Damascus with Deir-Ez-Zor and

hence Iraq via Abu Kamal, and Homs (and therefore Tartous) with Iraq via Tanf.Finally, the Plan includes provision for paving approximately 3,400 km ofsecondary and feeder roads.

2.21 The total effect of this program would be to increase the paved net-work by about 35 percent between 1976 and 1980, at a cost of SL 1,207 million

(US$309 million). The Fourth Plan highway program amounts to a doubling in

real terms over the Third Plan's highway allocation which was SL 296 million

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(US$76 million). As in other sectors, the Plan stresses the priority attachedto completing projects already started and maintaining the existing infrastruc-ture rather than launching into new projects.

2.22 International financing has been obtained from several differentsources to assist in the primary road construction program. The IDA is pro-viding US$10 million under its Second Highway Project towards the constructioncost for parts of the Damascus-Lebanese border and Homs-Tartous four-lanehighways, and the IBRD is lending $58 million under the Third Highway Projectfor a bypass around Homs, a section of the new road from Aleppo to Tall-Kojakin the extreme North-East, and strengthening of the pavement on parts of theDamascus-Aleppo highway. The Saudi Fund is lending 40 million rials (US$11.3million) towards the Damascus-Lebanese border highway, USAID US$45.9 millionfor the Damascus-Dar'a four-lane highway and the Kuwait Fund 14 million Dinars(US$52 million) for the Palmyra-Deir-Ez-Zor two-lane highway and parts of theHoms-Tartous highway. USAID is financing, under a grant, feasibility studiesfor the Tartous-Lattakia, Lattakia-Arriha (Aleppo) and Lattakia-Turkisi. borderlinks.

2.23 The subsector is organized appropriately to carry out this programwhile maintaining the existing highways. Construction and maintenance ofprimary roads, which make up about 40 percent of the total paved network, arethe responsibility of the Department of Highways and Bridges (DHB) of theMinistry of Communications (MoC). Secondary and feeder roads are built andmaintained by the provincial authorities with funds provided through theMinistry of Local Administration. A system of maintenance centers for primaryroads has recently been established in the provinces, modeled on a pilotcenter set up outside Damascus with World Bank and ILO assistance. Suchregional centers are now in operation in 6 of the 13 governorates and haveled to a significant improvement in maintenance performance. In the othergovernorates the local authorities carry out maintenance of primary roads withfunds supplied by the MoC. Some secondary roads have been built by the semi-autonomous government agencies responsible for major irrigation and powerprojects and then transferred to the DHB for maintenance, but this practiceis likely to be curtailed in the future in favor of full MoC responsibilitythroughout. The density and quality of the secondary network, as well asthe balance of allocations between secondary and primary roads, appearsappropriate to the existing demand.

2.24 Revenues from road users come from import duties on vehicles andspare parts, taxes on fuel, and vehicle registration fees; they are not ear-marked for highway purposes, but are added to general government revenues.It is estimated that revenues from road users more than cover actual expendi-tures on administration, maintenance, improvement and construction of highways.

2.25 Finally, with regard to personnel, the capacity of the highway sub-sector to meet the demands likely to be placed on it during the next decadeis uncertain. While the potential supply of civil engineers graduating fromSyrian universities appears adequate, there is a serious lack of transporteconomists, planners or traffic specialists. Furthermore, the actual supplyof engineers has been far less than the potential, in view of the large numbers

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who have emigrated, principally to the neighboring countries and the Gulf states,and the difficulties inherent in attracting engineers into government service,and retaining them, within the constraints of the civil service salary struc-ture. In response, the Government now requires all university graduates toenter government service for a number of years following graduation and as ageneral rule is not permitting engineers in the regular civil service toleave the public sector.

Recommendations

2.26 In examining the under supply of common carrier trucks, the Govern-ment should pay particular attention to the tariff structure, the licensingfees and ownership regulations, to assess the extent to which they may beacting as a brake to the needed expansion of the fleet.

2.27 Urgent steps are needed to enforce the existing axle-load regula-tion either by the use of weigh stations on the open road or preferably atthe freight depots where many vehicles are loaded, and where checks on thefreight manifest and the trucks' permitted loading are both practicable andnon-disruptive. International experience suggests little justification forraising the 13-ton limit.

2.28 Motor vehicle taxation should be restructured to make heavy vehiclespay their full share of highway construction and maintenance costs, and toencourage a shift from two-axle trucks to multiple-axle trucks.

2.29 Continued subsidizing of diesel fuel is likely to aggravate thedistortion in the distribution of traffic between road and rail (paras. 2.35and 2.36). While we recognize that social policies may justify subsidizing ofdiesel fuel or kerosene for such uses as agricultural machinery or domesticheating, it is recommended that the Government examine the merits and prac-tical possibilities of pricing diesel fuel for road vehicle use at its fulleconomic cost.

RAILWAYS

2.30 The Syrian railway system as of 1976 accounted for no more thanabout 3 percent of total inland transportation. By the early 1980's, on theother hand, it should have the potential to carry as much as 25 percent offreight ton-km, thanks to a large-scale railway construction and modernizationplan now under way. It remains to be seen, however, how much of this potentialwill be realized. In view of the steady decline in the market share of railwaysthroughout the world in recent decades, any major scheme to reverse this trendneeds to reckon with an uphill struggle. The strengths and weaknesses of therailway in the transport market need to be studied with particular care.

2.31 The Syrian railways start with the serious disadvantage of beingdivided into two systems of different gauges, one serving the capital andthe southern half of the country, the other the second largest city and thenorthern half of the country; there is no practical possibility of throughshipments between the two systems. The narrow gauge (1.05 m) Hedjaz Railway

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system of 341 km connects Damascus with Jordan to the south and Lebanon to thewest; it was built in the 19th century under the Ottoman Empire. The standardgauge (1.435 m) Northern Railways system extends over 1,331 km radiating fromAleppo to the Turkish border to the north, Qamishli and the Iraqi border tothe east, Homs and thence Tartous to the south and Lattakia to the west. Thissystem combines lines built in the 19th century (the connections to Turkey andto Homs and Akkari) and lines constructed in the past decade (Akkari-Tartousopened in 1968 and Lattakia-Qamishli in 1976). Both systems are entirelysingle track. The Hedjaz and the Northern Railways systems are managed byseparate administrations, both of which are controlled by the Ministry ofTransport (see Table SA 9.3).

2.32 As of 1974 operating conditions on both the systems were very poorand the disconnected route sections, the different gauges, low traffic volumesand decreasing operating efficiency had all led to operating deficits on bothsystems. Traffic amounted to only 3,400 passengers per day travelling anaverage of 82 kms, and 2,900 tons per day travelling an average of 145 km,far too short for economic operations (See Table SA 9.4). Many of the loco-motives and much of the rolling stock were inoperative. The Hedjaz systemrelied largely on steam locomotives, some of which date from the turn of thecentury. Many parts of the existing signalling apparatus were installed over40 years ago and most of the station buildings and yards date from the sameperiod. The system was incapable of competing effectively with road transport.

2.33 1976 saw the opening of the 741-km Lattakia-Qamishli line, thefirst major stretch of new line in the large-scale modernization and expansionplan that has been under preparation since the 1960's, with technical andfinancial assistance from the Soviet Union. The intention of the plan is toprovide the country with a unified national standard-gauge railway networkconnecting the seaports with the main centers of production and consumption inSyria, Iraq, Jordan and Turkey. As initially conceived, the network wouldamount to about 2,500 km of which about 1,900 km would be new lines, and wouldconsist of three main routes: the first connecting the port of Lattakia withAleppo, Deir-Ez-Zor, Qamishli and northern Iraq; the second main line wouldconnect the port of Tartous with Homs, the phosphate mines south of Palmyra,Deir-Ez-Zor and central Iraq; and the third line would connect Aleppo, Homsand Damascus with Turkey in the north and Jordan in the south. The designstandards provide for average train speeds of 100 km/h for freight trains and140 km/h for passenger trains, which are high for such a railway system. Alltraction equipment is to be diesel powered. Local construction materialplants have been set up to supply the railway construction program, includingprecast concrete cross-ties, pylons and ballast. Major purchases of new loco-motives and rolling stock have also been made, including 30 diesel locomotivesand nearly 880 freight cars of various types, and more are planned.

2.34 The last section of the Lattakia-Aleppo-Qamishli line, the diffi-cult and costly crossing of the coastal mountain range between Lattakia andAleppo, was completed in early 1976, allowing the line to be opened through-out to partial operation. The main commodities to be transported on it arewheat, barley and cotton, all of which are major crops grown in northern Syria.

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Aleppo is a major center for textile manufacturi-ng and food processing, andexports of cotton, Syria's primary export coimmodity before the discovery ofoil, are shipped out from Lattakia. Processing and marketing of the agricul-tural staples (cereals, sugar and cotton) are in the hands of government-ownedcompanies who are being called on by the Government to use the new railway.The response during the first year of operation, while doubling the total offreight ton-km for the system as a whole, has been disappointing. Althoughthe capacity of the line is 3 milion tons annually, actual traffic reachedonly 1 million tons. Part of the short-fall was strictly technical: thetelecommunications system is not yet operating, forcing trains to operateat low speeds and frequencies. But resistance has also been met from poten-tial users, particularly those who already have their o vn truck fleets (e.g.,most of the government-owned companies).

2.35 It is understandable that even those without their own road vehiclesshould continue to prefer road. Railway freight rates and passenger fares arebarely competitive with road transport (See paras. 2.09 and 2.12). Allrailway carload freight traffic is subject to a uniform national classifica-tion; the rates differ according to the type of commodity and line, in therange 5.5 to 7.5 Syrian piastres (1.4 to 1.9 USi) per ton-km (on the northern,standard-gauge system). Truck rates fall in much the same range for distancesgreater than 250 km. Contrary to the normal pattern of economic costs, thismakes truck cheaper on long hauls and railway cheaper on short hauls. Onshort hauls, however, truck has an appreciable advantage in convenience andtime that discourages use of the railway. Passenger fares, at 3.6 to 5.0piastres per km for fast trains and 2.0 to 3.2 for slow trains, are on average40 percent higher than the competing bus services, while the services are lessfrequent. Clearly a review of road and rail tariffs in relation to therespective costs of transport is called for.

2.36 With regard to quality of service by rail, a lot also remains to bedone, particularly with respect to door-to-door delivery times and reliability.The Government has made a significant step in setting up grain silos at themain railheads: Aleppo, Raqqa, Hasakeh, Qamishli and elsewhere. However,as long as all shipments from the Jezireh area to Damascus or other destina-tions south of Homs have to finish their trip by road, few such shipments arelikely to use the railway for any part of the distance. For instance, aconsignment from Hasakeh to Damascus, a distance of 870 km, could be trans-shipped from rail to road at Aleppo (510 km) or Homs (704 km), both distancesover which train should have a lower economic cost for carload bulk commodi-ties than truck, but the delays and inconvenience of transshipment constitutea severe deterrent. The railway administration is giving considerationto organizing truck feeder services to storage points and stations; it isstrongly encouraged to pursue this possibility, and also the promotion ofprivate sidings.

2.37 The next stage of expansion of the network will substantially cutdown the need for transshipments, as well as improve the overall level ofservice of the system. The investment program for 1976 to 1980, set atSL 1,045 million ($270 million), calls for progressive dieselization and anincrease in the total rolling stock to match the expected increase of demandin the extended network. The line to connect Homs to Damascus, already under

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construction, is tentatively scheduled to open in 1981. The Aleppo-Homs andHoms-Akkari sections are to be reconstructed and modernized. New stationsand signalling systems will be installed on the lines being constructed andmodernized, and a major new railway workshop and marshalling yard at Jibrin,near Aleppo, that are to be put into operation during 1977, are expected tosubstantially improve the efficiency of freight transport. Together, thesenew and reconstructed lines will serve the important purpose of relieving theDamascus-Aleppo and Homs-Tartous highways of some of the excessively heavytruck traffic they are carrying at present (para. 2.04).

2.38 Another line now under construction will also help relieve the Homs-Tartous highway of burdensome heavy traffic: the link to the phosphate minesat Mahin, near Palmyra. Due to open in 1980, this line, which branches offfrom the Damascus link south of Homs, will carry phosphate to Tartous forexport that is now moving by road at a rate of 320,000 tons per year. theequivalent of 50 twenty-ton trucks each way each weekday.

2.39 Implementation of other proposed new links in the railway plan isless certain. A feasibility study was carried out in 1976 for the Palmyra-Deir-Ez-Zor link, but no provision has been made in the Fourth Five-Year Planfor construction, to avoid duplication with the two-lane highway being builton the same route during the Plan period. For the proposed new standard-gaugelink from Damascus to the Jordanian border, no feasibility study has so farbeen carried out and no funds for construction have been assigned in the FourthPlan; this line, however, is being held as a reserve project, costed at SL 200million. Since a four-lane highway is about to be built in the same corridorat a cost of SL 359 million (US$92 million), such a railway project wouldrequire very thorough study as to its economic justification, as well ascareful coordination with the Jordanian Government. The Jordanian Governmenthas recently received a study by Sofrerail of future development of the linefrom the Syrian border to Amman which at present carries negligible traffic.Construction of the proposed line from Deir-Ez-Zor to the Iraqi border at AbuKamal, the route to Baghdad, is pending agreement with Iraq on coordinationof construction programs on either side of the border. This link wouldgive Syria a central position for transit traffic between the Mediterraneanand the Gulf. Overland transit traffic is declining, however, as the portcapacity shortages in the region are eased. A feasibility study is also beingcarried out for a link between the ports of Lattakia and Tartous, but noconstruction is foreseen under the Fourth Plan.

2.40 The Government lays considerable stress in its development policiesand planning on the important role the railway is to play in the future. Thispriority is reflected in the fact that the railway system is to receive 28percent of the Fourth Plan transport sector investment budget, despite thefact that it presently performs only about 3 percent of total inland transport.By 1982, when it is hoped that the construction phase now in progress willhave been completed, it should be potentially capable of carrying 25 percentof total inland freight (by ton-km). However, this would imply a 16-foldincrease in traffic in the six years from 1976. A more manageable rate ofincrease, to half the potential capacity, implying a 12 to 15 percent share ofthe market, would still pose serious problems of marketing on the demand side

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and administration and operations on the supply side. A first step in thisreorientation process was the splitting of the northern military organizationin September 1977 into two units, one for operations and the other for con-struction, under a common supervisory board.

Recommendation

2.41 It is strongly recommended that the implications of this structuralshift in the transport sector be studied in depth at the earliest opportunity(a) to analyze the transport market in terms of each main commodity categoryand haul distance, (b) to study the costs of competing road and rail services,(c) to shape the respective tariffs, such as to ensure an efficient and eco-nomic distribution of traffic and avoid wasteful duplication of investment,and (d) to prepare the railway organization for the administrative demandslikely to be placed on it.

PORTS

2.42 The principal ports of Syria are Lattakia and Tartous for generalcargo and the export of Syrian crude oil and Banias for the export of crudeoil in tr~ansit from Iraq. The port of Tartous is relatively new, havingbeen opened in 1965; it surpassed Lattakia in general cargo volume for thefirst time in 1975 (see Table SA 9.5). Lattakia is the only port used by asignificant number of passengers. Both Lattakia and Tartous have experienceda rapid increase in traffic since 1973, both in Syria's own internationaltrade and in transit traffic to the OPEC countries of Syria's hinterland whoseGulf ports have been acutely overloaded. The total volume of seaborne tradein 1976, excluding Iraqi crude oil, was 14.0 million tons, 50 percent up ontwo years earlier. The volume of non-oil trade, that is, excluding Syrianoil, was 4.7 million tons, likewise up more than 50 percent on 1974. Thevolume passing through Lattakia went up one fourth in the two years to 2.2million, while Tartous doubled its non-oil throughput to 2.5 million, andincreased its crude oil exports by a half to 9.3 million tons. The volume ofIraqi crude oil exported from Banias in 1975 had been 27 million tons, a levelwhich had been maintained more or less steadily since the late 1950's. In1976, however, Iraq decided to reroute its crude oil exports via the Gulf andTurkey and ceased using the trans-Syria pipeline.

2.43 As in previous years, the volume of imports exceeded that of non-oil exports by more than 4:1. Imports covered a wide variety of commodities:manufactured goods, foodstuffs, metals and cement. The primary export com-modity at Lattakia was cotton, produced mostly in the Jezireh region, and atTartous, phosphate mined near Palmyra; 320,000 tons were loaded in 1976. Bothports rely entirely on cranes for loading and off-loading and were workingwell above their rated capacity, with waiting times for incoming ships some-times running into months. By end-1977, however, waiting times at both portswere reduced to less than 10 days.

2.44 Works to enlarge the port at Lattakia are in progress or in finaldesign, including lengthening of the 710 m breakwater, construction of 2,000 m

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of new quays in addition to the existing 1,950 m, to a depth of 10 to 13.5 m,87 hectares of new back-up area on reclaimed land, and 38,000 m2 for ware-housing and ancillary services, and installation of 28 new cranes and relatedequipment. This expansion program, assisted by the Soviet Union, will raisethe port's capacity from 1.6 million tons annually to 3.0 million tons by1980, with a long-range target of 7 million tons by the year 2000. The totalestimated cost of civil works is SL 250 million (US$64 million). As notedabove (para. 2.34), some inertia has been experienced in arranging for con-signees transporting goods from the port to switch from trucks to the newlyavailable rail service which began operations in March 1976.

2.45 Tartous similarly is undergoing a major expansion program designedto raise its capacity to 2.5 million tons annually by 1978. The current boom-ing traffic all but reached that target in 1976. On completion the port willhave, in addition to the phosphate handling pier, 3 general cargo piers witha total length of 4,300 m and a depth along quays varying from 3 m to 14 m.A dry dock and repair yards are also planned that in 1976 were at the designstage. Longer range plans for expansion to around 5 million tons are beingdeveloped. Growing use is being made of the container terminal at Tartousfor truck transit to other countries of the Middle East. Roll-on roll-offservices from Greece were introduced in mid-1977.

2.46 The port expansion program is being financed partly by loans fromthe Saudi Fund for Development, amounting to SL 90 million (US$22.5m) forTartous and SL 85 million (US$21.3 million) for Lattakia. The total amountallocated to the port sector in the Fourth Plan is SL 886 million (US$227million), 24 percent of the transport sector total.

Recommendation

2.47 In planning the long-run expansion of Syria's ports and the con-struction of new railway lines and highways to serve them, careful considera-tion should be given to the causes of the recent congestion and the likelihoodof a recurrence. On the one hand it is to be hoped that peace in Lebanon willsoon make possible the restoration of the port of Beirut to something like itsformer scale of operations, and on the other the transit traffic to the Gulfis unlikely to maintain the growth rate recorded between 1973 and 1975; thedecline observed in 1976 makes forecasting particularly uncertain. Apart fromthe war in Lebanon and political tensions between Syria and Iraq, the crashprograms to expand the ports of the Gulf are bringing substantial new capacityinto operation, and the construction booms in many Gulf nations are beginningto level off. By mid-1977 most Gulf ports had brought waiting times downto a matter of days, even as traffic resumed through the Suez Canal. It isrecommended that the national transport study under preparation by the SyrianGovernment give particular attention to the longer run projections of transittraffic and the appropriateness of alternative solutions to capacity bottle-necks that may be short-lived.

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CIVIL AVIATION

2.48 WThile the role of civil aviation in internal transportation is smalland likely to remain modest, the national airline is rapidly expanding itsservices internationally. At present, the country has two international air-ports, at Damascus and Aleppo. Domestic services are operated between Damascusand Aleppo, Lattakia, Qamishliye and Deir-Ez-Zor. In addition to these air-ports there are landing facilities at Al Thawra (near the Euphrates dam) andPalmyra. The Directorate General of Civil Aviation under the Ministry ofTransport is responsible for the administration of all civil airports inSyria.

2.49 Air transport operations in Syria are centered on Damascus. Thepresent airport, completed in 1969, can accommodate the largest aircraft inservice. Traffic there in 1976 reached 1,077,000 passengers, nearly doublethat of two years earlier, and 6,700 tons of air freight, more than 50 percentup on 1974. Much of this growth came from the use of larger planes, as thenumber of flights in the same two years rose about 40 percent. Traffic atother domestic airports has fluctuated in recent years, and declined sub-stantially from 1975 to 1976 (from 55,000 passengers to 29,000), reflectingincreased competition from highway transport. Domestic air freight is negli-gible. In 1975 the Directorate General of Civil Aviation forecast traffic atDamascus airport in 1980 at about 1.4 million passengers and 10,000 tons offreight, which would mean annual growth rates from 1975 to 1980 of about 13percent for both passengers and freight. The rapid growth in 1975 and 1976suggests that this forecast may well be on the low side.

2.50 The Five-Year Plan for 1976-80 includes the completion of a newpassenger terminal and lighting at Damascus airport, the second stage of theconstruction of an international airport at Lattakia, expansion and improve-ment of Aleppo airport, and the development for tourist purposes of Palmyraairport. The total allocation to aviation is SL 264 million (US$68 million),7 percent,of the transport sector total.

2.51 The national airline, Syrian Arab Airlines, is owned by the Govern-ment, and operated as an autonomous commercial enterprise under the controlof the Ministry of Transport. The airline provides international servicesto most capital cities of the Middle East and North Africa, and to selectedcities of Western and Eastern Europe and of the Indian subcontinent. It usesthree Boeing 727's and two 747 SF's for its international services, and fourSuper Caravelles for the domestic services.

2.52 The acquisition of the five Boeings, purchased through a loan fromthe United Arab Emirates and delivered in 1976, enabled Syrian Arab Airlinesto achieve a greater increase in transportation performed from 1975 to 1976than almost any other IATA airline; the total available ton-km more thandoubled. This jump in supply appears to have outpaced demand, however;passenger-km flown went up by "only" 46 percent, causing the average pass-enger load factor to drop from 67 percent, comfortably above the IATA worldaverage of 58 percent, to 51 percent, well below it (see Table SA 9.6).Although no data are available on the airline's financial performance,international comparisons suggest that an operating loss could normally be

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65 percent from 1975, for a total of 1.04 million passenger-km (averagejourney 2,200 km). On domestic flights, on the other hand, passengerscarried were down 45 percent on 1975, to 29,000, for a total of 12,000passenger-km (average journey 430 km), while the number of seat-km availablewas not reduced. As mentioned above, the drop in domestic air travel reflectsthe rapid expansion of the road vehicle fleet in the same period. Air freighton international services was 18 percent up on 1975, at 3,400 tons (7.6 mil-lion ton-km) and on domestic services remained static at 85 tons (58,000ton-km).

OIL PIPELINES

2.53 Two major international crude oil pipelines run through Syria. Thepipeline system from the Kirkuk fields in Iraq via Homs to the terminals atTripoli in Lebanon and at Banias in Syria consists of three separate pipelineswith a total annual capacity of about 55 million tons. Thrcugit in 1975,the last full year of operation, amounted to 48.4 million tons to Homb andfrom there 27.0 m million tons to Banias and 19.0 million tons to Tripoli,with the remaining 2.4 million tons being refined at Homs for domestic con-sumption (see Table SA 9.8).

2.54 The Trans Arabian Pipeline Company (TAPLINE) pipeline from the AbuHadriya fields in Saudi Arabia to the terminal at Saida in Lebanon consistsof one pipeline with an annual capacity of about 25 million tons; throughputin 1974, the last full year of operation before the civil war in Lebanon,amounted to 11.0 million tons.

2.55 In addition to the international crude oil pipelines, Syria's GeneralPetroleum Company has two domestic pipeline systems. One system consists ofone crude oil pipeline from the Karachok fields in north-east Syria via Homsto the terminal at Tartous, through which 9.3 million tons of crude were ex-ported in 1976. Over SL 300 million were spent during the Third Five YearPlan on raising the pumping capacity of this line. The other system consistsof three oil product pipelines connecting the refinery at Homs with Aleppo,Lattakia and Damascus, each with an annual capacity of 500,000-600,000 tons.

2.56 Both international transit lines were inoperative during much of1976. Operation of the Tapline was discontinued in April 1975 due initiallyto a dispute over prices and freight rates and subsequently to the fightingin Lebanon; pumping was resumed in December 1976. Iraq broke off use of itstrans-Syrian pipeline a year later, in April 1976, also because of a disputeover transit dues; the Kirkuk crude was exported instead through Iraq's ownGulf ports and later through Turkey also. The latter deprived Syria not onlyof transit dues estimated for 1975 at US$122 million 1/ (US$0.41 per barrelgoing to Banias and US$0.30 to Tripoli), but also of crude oil at concessionaryprices to supply the Homs refinery. Since the sulphur content of Syrian crudeis too high for the Homs refinery, 1.8 million tons had to be imported throughBanias in 1976, mostly from Saudi Arabia.

1/ US$135 million including Oil Royalties according to the Balance ofPayments estimates (Table SA 3A.1).

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2.57 Although Syria's crude oil export facilities and its refinery atHoms were damaged during the 1973 war, they were repaired within a year.Output from the refinery in 1976 was about 4.2 million tons of oil products.An ongoing refinery expansion program, with Romanian technical and financialassistance, is expected to increase annual capacity to 5.2 million tons by1978. A second refinery is now under construction at Banias, due to open in1978 with a capacity of 6 million tons.

2.58 The Fourth Plan earmarks SL 296 million (US$76 million), 9 percentof the transport allocation, for pipelines, broken down into SL 130 millionfor improvements to the Karachok-Tartous crude oil line and related facilities,SL 42 million for a new product pipeline from Homs to Adra, outside Damascus,SL 40 million for storage facilities, and SL 64 million for upgrading theIraqi transit line. It seems doubtful that the latter item will be utilized.

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CHAPTER 3

TRANSPORT POLICY, PLANNING AND COORDINATION

3.01 The Five Year Plan is the basic instrument embodying the Govern-ment's development policies and strategies. While there is no transportpolicy document as such, several recent statements by Government leadershave emphasized the importance attached to modernizing and expanding thetransport system in response to the burgeoning demand of recent years, withparticular stress on the enlarged role the railway is to play. Coordinationwith Jordan in transport planning and regulation is also frequently mentioned.Attitudes to the role of the private versus the public sector are pragmatic;both have important roles to play at present and are expected to continueto do so in the future.

3.02 The allocation to the transport sector in the Fourth Plan is SL 3.7billion, or 8 percent of the total. This is 2.4 times the sector allocationunder the Third Plan as implemented, where transport accounted for 9.5 percentof the total. The share of the transport sector in total investment is stillsomewhat low by international standards. The distribution by mode (see TableA5.3.1) shows several shifts from the Third to the Fourth Plan: pipelines'share shows a marked drop to 8 percent, balanced by substantial increases inthe share of ports to 24 percent and that of roads to 33 percent. Railways'share drops slightly while aviation's share remains constant at 7 percent.The roads' allocation of SL 1.2 billion refers only to infrastructure, inaddition to which the purchase of road vehicles could account for an addi-tional SL 1.8 billion. The railways' allocation of SL 1.0 billion, on theother hand, includes vehicles. Thus the distribution of total investmentbetween roads and railways will, to a certain degree, reflect their intendedfuture shares of the inland transport market and the considerable catch-upeffort required of the railway.

Table A5.3.1: THIRD AND FOURTH PLAN ALLOCATIONS FOR TRANSPORTATION(SL million)

Third Plan (1971-75) Fourth Plan (1976-80)Planned (%) Implemented (%/0 Planned (%)

Road 424 22 296 19 1,205 33Rail 642 33 520 34 1,045 28Ports 124 6 85 6 886 24Air 212 11 106 7 264 7Pipeline 563 29 533 35 296 8

Total 1,965 100 1,540 100 3,696 100

Source: State Planning Commission.

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3.03 As regards competition between modes, users are free to select themode that best suits their requirements, and there is no systematic allocationbetween modes. At times, however, the Government intervenes in response tospecific problems with means determined on an ad hoc basis. To cite twoexamples, the Government was able to give direct instructions to government-owned companies to use the Lattakia-Qamishli railway instead of trucks wherepracticable; whilst the Government's response to the shortage of common-carriertrucks to clear government imports from the ports (bearing in mind that therates for government loads are appreciably lower than for private loads),was to have the police enforce the "luck-of-the-draw" turn system at freightbureaux, and at the same time to offer an inducement in the form of the rightto take, after delivering three internal government consignments, one inter-national assignment (with the opportunity for higher profits and foreigncurrency earnings in the OPEC hinterland countries).

3.04 Intermodal coordination issues are also handled on an ad hoc basis.An issue of particular concern at present is that of truck axle load regula-tions and their enforcement, where a dialogue is in progress between the MoTand the MoC with the Prime Minister acting as arbiter, the MoT representingthe interests of truckers and the MoC being responsible for maintaining theroads. The effectiveness of this ad hoc negotiation to achieve a timelysolution acceptable to both sides is questionable, yet the issue undoubtedlyrequires prompt action to ensure immediate and full enforcement of the exist-ing regulation while solutions to the truck capacity shortage are worked out.

3.05 The Government is currently contemplating undertaking an overallnational transport study to strengthen its planning for the sector. Thestudy, to be funded by USAID, is to make a comprehensive inventory of theexisting transport system, review the appropriateness of current regulations,forecast demands for new infrastructure and identify routes and servicesneeding priority attention, with regard to both efficiency within each modeand coordination between modes. The study will also propose an outlineinvestment plan for the next five to ten years.

Recommendation

3.06 It is recommended that the proposed national transport study giveparticular attention to the current and future conditions of road/rail com-petition in terms discussed in para. 2.41, to ensure an economically sounddivision of the transport market and to avoid wasteful duplication of invest-ment.

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CHAPTER 4

SUMMARY OF RECOIMENDATIONS

4.01 Truck tariff structure, licensing fees and ownership regulationsshould be reviewed to assess the extent to which they may be impeding neededexpansion of the fleet (para. 2.26).

4.02 Urgent steps are needed to enforce the existing axle load regula-tions (para. 2.27).

4.03 Motor vehicle taxes should be restructured to make heavy vehiclespay their full share of highway construction and maintenance costs, and toencourage a shift from two-axle to multiple-axle trucks (para. 2.28).

4.04 Consideration should be given to pricing diesel fuel for roadvehicle use at its full economic cost (para. 2.29).

4.05 Railway rates and fares need to be revised and the quality of ser-vice improved if the railway is to realize its potential when the expandednetwork is completed (para. 2.41).

4.06 Future trends in transit traffic should be studied carefully beforefurther major investments are made in port expansion (para. 2.47).

4.07 Planning of new railway lines and new highways serving the samecorridor should be carefully coordinated to avoid wasteful duplication ofinvestment (para. 3.06).

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ANNEX 6

WATER SUPPLY AND SEWERAGE

CHAPTER 1

SUMMARY AND RECOMMENDATIONS

1.01 This Annex focuses on the prospects for the water and seweragesector in Syria to the year 2000. The country's population is projected todouble nearly every twenty years reaching 16.8 million in 2000 1/ compared to4.6 million and 6.3 million for the census years of 1960 and 1970 respectively.About 65 percent of the total population by the year 2000 is expected to livein urban areas compared to 37 percent in 1960 and 43 percent in 1970.

1.02 Past levels of access to potable water supply in Syria have beenabove average for the Middle East. However, as a result of rural-urban mi-gration and reduced investments in supply works during the past six years,available volumes are no longer adequate to meet the population served andlarge investments in urban water supplies are required in order to ensure ade-quate access in the future. Demand in major cities is projected to outstripsupply by mid-1980, and projects are underway to expand supply. However,existing supply systems are so constrained that further expansion is oftenpossible only at higher costs. Pollution of traditional sources from urbansewage aggravates the supply situation. Consumption for urban areas is pro-jected to grow from an estimated 106 million m3 in 1970 to 788.4 million m3in year 2000 assuming a growth in urban per capita consumption from 107 lcd 2/in 1970 to 200 lcd in 2000. Consumption per capita in the rural areas isprojected to rise from 55 lcd in 1970 to 100 lcd in 2000. Urban populationserved by house-connections is projected to rise from about 70 percent in1975 to 95 percent by year 2000 while rural population with reasonable accessto supplies is expected to rise from 50 percent in 1970 to 90 percent in 2000.Finally, the urban population connected to municipal sewerage systems is pro-jected to rise from 60 percent of total urban population to 90 percent in 2000.

1/ Projections which are stated in this and the following chapters are basedon the sector mission's estimates and unless otherwise stated, do not rep-resent either World Bank projections or official government projectionsor targets.

2/ lcd = liters per capita per day. (I lcd = 0.26 US gallons per capitaper day.)

This Annex is based on an unpublished World Bank sector report. The reportwas prepared by Messrs. V. Nwaneri (Economist) and S. Serdahely (SanitaryEngineer), based on their mission to Syria from November 11, 1976 to December13, 1976. Messrs. W. Keilani and W.-Cosgrove participated part-time on themission.

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1.03 With regard to the existing sector situation, present service levelsthroughout Syria (in terms of house-connections and public taps for water andhouse-connections for sewerage) are relatively high except for residents out-side the planning limits of major cities. However in most cities, existingwater distribution and sewage collection systems are old and need to bereplaced. As a result water losses in distribution systems are high. Insome cities supplies are intermittent. Most water meters are broken andneed to be repaired or replaced. The Government's objectives had emphasizedhouse-connections in both urban and rural areas except in those villageswhich do not have their own municipal authorities. In the past, urban watersupply had rightly been given highest priority and this accounts for the pre-sent relatively high service levels in major cities. Although the Fourth Plan(1976-80) has been published, its targets were scaled down because of economicand financial constraints. It had originally proposed expansion of villagewater supply systems and provision of sewage treatment for the major cities ofDamascus, Homs, Hama, Aleppo and Lattakia. This strategy reflected the factthat at present there is no municipal sewage treatment facility in Syria.Furthermore, in certain areas along the Quwaik river and particularly aroundAleppo, the use of stream flow (which is polluted with untreated sewage) forcontact irrigation by farmers located downstream from sewage outfalls contri-butes to a high incidence of waterborne diseases. The incidence reachesepidemic proportions and is causing considerable financial losses in cropsdestroyed during epidemics.

SUMMARY RECOMMENDATIONS

1.04 Priority should be given to extending services to areas outsideexisting city limits since a number of urban poor live outside these limits.The Government should consider such a measure in conjunction with overallurban population control and town planning policies. The emphasis of expand-ing urban house-connections within the existing city limits should, for theperiod up to 1980, be shifted to improving quality of services - replacing oldwater distribution and sewage collection systems, reducing water losses in thesystem, providing better quality of water for longer periods and repairingand replacing meters. Pollution of water sources from urban sewage shouldbe studied and projects to control such pollution especially in the cities ofDamascus, Aleppo, Homs, Hama and Lattakia have high priority. Furthermore thegovernment should consider as urgent a pollution control legislation for thewhole country to ensure protection of existing sources of supply.

1.05 The Fourth Five-Year Plan (1976-80) originally proposed to spend anestimated total of SL 2.6 billion (US$670 million). 1/ The principal factorslikely to constrain the Government's original sector proposals for the FourthPlan and limit the achievement of the mission's projected service levelsinclude the following:

(a) limited budgetary funds due to Syria's recentpolitical and economic developments;

1/ In 1975 prices, for Water Supply and Sewerage only (Chapter 3, TableA6.3.3).

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(b) shortage of qualified staff;

(c) inadequate tariff structure and poor financialmanagement by the authorities in the sector;

(d) inadequate coordination at both ministerial and operationallevels;

(e) increasing costs of construction and materials; and

(f) insufficient project preparation capability.

Because of limited funds and increasing costs, only about 60 to 80 percent ofthe government's original sector targets based on 1975 prices are now likelyto be achieved. The Government is now considering substantially reducing itsFourth Plan targets.

Recommendation:

A progressive tariff structure for water (and eventually for sewer-age) designed ,to cover operating and maintenance costs of service with somecontribution to system development is strongly recommended to ease pres-sure on Government budgetary resources. A legislation permitting increasedaverage tariff structure has been passed recently but the proposed tariffincreases for domestic consumers have not yet been effective. Thus theCentral Government is modifying its policy of being the principal source offunds for sector development and encouraging greater generation of fundswithin the sector. The recommended progressive tariffs should also ensurethat the poor are provided access to service. The recommended improvementin metering, billing and collections should also help alleviate presentfinancial problems faced by water authorities.

1.06 The shortage of skilled staff throughout the sector will impose themost severe constraint to achieving service level improvements. The principalcauses of the shortage include the absence of any formal training program inthe sector and poor salary and wages structure for staff in public service.This report includes an assessment of present staff shortages in the sectorand gaps to be filled before 1980.

Recommendation:

A training program designed to meet existing and projected manpowerneeds in the sector is recommended and should be given highest priority.Finance for such a national training program is already provided from an ArabFund Loan to the Damascus Water Authority. The Government should thereforeengage a consultant to assist local officials to start implementing thenational training program as soon as possible. However, improving workingconditions including the low salary structure is fundamental to the long-termsolution of the skilled manpower shortage.

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1.07 Several Government ministries are involved in the sector. Howeverthe most active is the Ministry of Housing and Utilities (MHU) which super-vises all eight public water authorities in Syria and is directly responsiblefor rural water supplies. It also prepares the design and supervises theconstruction of all projects in this sector except in Damascus and Aleppocities.

Recommendation:

Government's policy of establishing public water authorities in allthe thirteen provincial capital cities of Syria is likely to lead to moreefficient development of the sector. The sewerage subsector is, however,weakly organised at present within the local municipal authorities. A nucleusof staff at MHU in Damascus, prepares designs for projects but its staff istoo small to make any effective impact. Improved organization fur sewerage istherefore recommended. Alternative organizational arrangements to be exploredshould include establishing an autonomous national sewerage authority to beresponsible for sewerage in all urban areas. At present, the staff shortageand absence of treatment facilities preclude setting up one sewerage authorityfor each provincial city as is the case for water.

PROJECTS RECOMMENDED FOR STUDY

1.08 High priority should be given to water projects that relieve demandpressure in urban areas and sewerage projects that reduce pollution of existingsources. A number of projects currently being studied or considered for studyinclude: the Aleppo sewage treatment and collection, Palmyra multipurposewater supply from the Euphrates river, village water supply in the Kalamonregion (for a group of 25 villages between Homs and Damascus), Lattakia sewer-age (second phase), pollution control of Orontes and Barada rivers (includingsewage treatment plants for Damascus, Homs and Hama), Tartous water transmis-sion line, Deir-Ez-Zor sewerage and treatment plant and village water supply.Technical assistance is needed in the following areas; manpower training,groundwater exploration (especially in Palmyra), leak detection program, waterdistribution, sewage collection system analyses, billing and cost accountingmanagement. Because of the manpower constraints discussed in Chapter 3,expatriate assistance will be needed to prepare these projects.

PROJECT PREPARATION

1.09 Part of the constraint imposed on sector development by the in-adequate project preparation capability in Syria stems from the shortage ofskilled manpower. With regard to project construction, authorities in thesector are pressing the Government to give special consideration to encourag-ing industries that produce construction materials (cements, plastic pipes,etc.). The Bank's recent project for Aleppo includes provision for technicalassistance for the construction industry in Syria.

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Recommendation:

Long-term and lasting solutions to the project preparation problemcannot be achieved unless the Government pursues a viable salary and wagespolicy as well as implementing the recommended national training program.Other measures include standardization and publication by MHU of designcriteria now being used in the sector. With regard to the problem of lowsalaries in the public sector, the Government may consider a short-termmeasure of making exceptions for project related skills to facilitate imple-mentation of major projects.

SEWERAGE

1.10 The current program to construct sewerage facilities in major Syriancities will be seriously constrained by the present inadequate organizationof this subsector and the extreme manpower shortage within the sewerage divi-sion of MHU. There is an urgent need to strengthen the capability of thisdivision to enable it to undertake its project preparation and supervisionresponsibilities throughout Syria. A panel of professional engineers couldbe established to review and advise the sewerage division on the preparationof its projects. This could be an alternative but temporary solution tothe severe shortage of technical staff within the division. The scope fortechnical assistance to establish such a panel while the training of permanentstaff is undertaken should be explored.

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CHAPTER 2

COUNTRY AND SECTOR SITUATION TO YEAR 2000

GEOGRAPHY AND CLIMATE

2.01 Syria has a total area of 190,000 square kilometers, about one thirdthe size of France. Its topography is generally mountainous in the westerncoastal area becoming semi-arid or desert in the remainder of the country. Ingeneral terms, half of the country is arid, a quarter semi-arid and a quarterhumid.

2.02 The climate is typically Mediterranean with moderate rainy wintersand hot, dry summers. The coastal mountains form a barrier against the wetwesterly winds, and rainfall west of the mountains diminishes as a consequence.Annual rainfall varies between 500 and 1,000 mm per year in the coastal andmountain areas. In the distant eastern and southeastern areas the variationis from 500 mm per year down to 50 mm per year.

TOTAL POPULATION

2.03 Syria's total population (Table A6.2.1) grew from 3.5 million in1950 to 4.6 million and 6.3 million respectively for the census years of 1960and 1970. During the two decades the average growth rate had gone up from 2.7percent for the first decade to 3.3 percent for the second. The Government'sCentral Bureau of Statistics estimates that Syria's total population in 1975was 7.4 million and likely to rise to 8.6 million in 1980, thus implying aslightly lower rate of growth than in 1960-1970. According to the UnitedNations projections 1/ Syria's total population would be roughly doubled everytwenty years up to the year 2000 with the average annual growth rate at firstrising to 3.5 percent for the decade 1980-1990 and then falling to 3.1 percentby the year 2000. In that year Syria's total population could reach 16.8million on present trends.

1/ Projections used in this chapter are based on the high variant of theU.N. World Population Projections to Year 2000 (ESA/P/WP. 53, 10 March1975). The total population projected for 1985 in this variant is thesame as in the UN median variant projections (See Table SA 1B.1). How-ever, the total population projected for the Year 2000 is 4.8 percenthigher than the 15.824 million of the UN median variant projection, andthe urban populations projected for 1985 and 2000 are 1.9 and 12.5 per-cent higher respectively than the 4.114 and 9.574 million projected inthe UN median variant projections. These projections provide an outerlimit on "population growth" induced demands on the water supply servicesin urban areas.

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Table A6.2.1: POPULATION OF THE PROVINCES, 1960-1980(thousands of people)

/a lb /a lb lbTotal/ Total - Total- Total- Total/

Province (Mohafazat) 1960 1965 1970 1975 1980

Damascus City 530 641 837 1,042 1,292Damascus 473 455 621 732 871Aleppo 957 1,128 1,317 1,523 1,775Homs 401 460 546 629 730Hama 325 378 55 601 707Lattakia 527 623 390 444 511Deir-Ez-Zor 221 260 293 332 379Idlib 333 374 384 429 479Al-Hasakeh 353 374 469 532 608Al-Raqqa 178 167 244 281 325Al-Sweida 100 111 140 162 192Dar'a 168 158 233 282 348Tartous - - 302 348 403Quneltra - 136 17 19 22

Total 4,565 5,262 6,305 7,355 8,642

/a Population census results for September./b Mid-year estimates.

Source: Statistical abstract of SAR (1976) - all figures are rounded tonearest thousand.

URBAN POPULATION 1/

2.04 The proportion of Syria's total population living in the urbanareas in 1975 was estimated to have increased to 46 percent, from 35 percentin 1950. According to U.N.'s projections, Syria's urban population would riseto 65 percent of total population in 2000, implying an average annual growthrate of nearly 6 percent, which is double the annual growth rate of totalpopulation by year 2000. The high rate of growth in the past reflects, inaddition to natural increase, rapidly increasing rural emigration to thecities and influx of refugees during the 1967/1973 conflict and the morerece h Lebanese crisis.

1/ Refers to population of all settlements 10,000 and over.

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PRESENT AND PROJECTED SERVICE LEVELS FOR WATER

2.05 The rapidly increasing urban population in Syria has put pressureon existing water and sewerage facilities. In the capital city, Damascus,demand has already exceeded supply, a situation which the second Bank watersupply project is expected to resolve. In Aleppo demand is projected tooutstrip supply by 1981. In these and other major cities (Homs, Hama,Lattakia) authorities are preparing projects to expand existing sources ofsupplies. Several factors contribute to the imbalance between supply anddemand, the first is the constraint on supply.

SUPPLY CONSTRAINTS AND INCREASING COSTS OF URBAN SUPPLIES

2.06 As discussed in Attachment A-1 there are seven hydrological basinsin Syria (see Map at the front of Volume 2, The Main Report'r a-ia these show awide variation in annual rainfall and groundwater balance. As a result, someareas, for example along the Euphrates, have abundant water supply while otherareas, for example the desert basin around Palmyra, suffer from chronic short-ages. In addition to the uneven distribution of water resources, there is agrowing problem of pollution of traditional sources such as the Orontes andBarada Rivers from domestic and industrial sewage. This has aggravated thesupply situation in the regions of Damascus, Homs, Hama and Aleppo which havehigh concentration of population. In these areas existing sources are beingseverely strained; pumpage of water in excess of safe yield has resulted indamage to springs and increased pumping costs. The increasing cost of supplyis evident in Homs and Hama where, because of the pollution of the OrontesRiver, new sources of supply are located 32 km and 90 km, respectively, fromthe centre of these cities. Aleppo relies on Lake Assad located 82 km distanton the Euphrates River rather than the Quwaik River nearby whose flow isinsufficient to meet the city's needs. Its cost of supply is expected toincrease as a result of a project to increase its supply from Lake Assad. Theproject is estimated to cost about SL 461.4 million (US$116.8 million) andwill meet Aleppo's demand to 1991. 1/ Damascus traditionally had low cost ofsupply because the city is served from a spring (Ain Figeh) whose water flowsby gravity 15 km to the city. Because of good raw water quality of the Figehspring, no treatment is required. However, the cost of supplying Damascus isalso likely to rise because of the high cost of a new project which will aug-ment the city's supply to the year 1987. The project is estimated to costapproximately SL 1,027 million (IJS$260 million). The city is located on theBarada River but the river is polluted by domestic and industrial sewage.Cleaning up the river would add to the cost of the city's supply if its wateris to be used for drinking. Similarly, the cost of supplying Homs and Hamais expected to rise, reflecting new projects required to expand supply fromupstream of the Orontes River. It can be concluded therefore, that forSyria's major cities, the existing supply is so constrained that additionalsupplies will be forthcoming only at higher costs. This situation is rein-forced by the rapidly increasing cost of supply materials, equipment andforeign consultant services (see para 3.11).

1/ After some minor investments are made in 1986.

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CONSUMPTION PROJECTIONS TO YEAR 2000

2.07 Table A6.2.2 and Figure A6.1 show the consumption projections forall the urban and rural areas of Syria to the year 2000 as estimated by thesector mission. Table A6.2.3 gives a summary of published production andconsumption data for 1971-74 for Syria's nine major cities served by publicwater authorities (para 3.04). The population of these nine cities in 1975accounted for about 90 percent of Syria's total estimated urban population of3.4 million. Because these cities are located in nine of Syria's waterresource basins (Attachment 1), it is therefore fair to assume that the waterconsumption and production situation in these cities can be considered repre-sentative of the situation in all urban areas in Syria. These data weretherefore used as a basis for projecting production and consumption levels forSyria to the year 2000. Additional information used in the projection wasobtained from reports covering recent World Bank projects in Damascus andAleppo, the two largest cities in Syria (accounting for 63 percent of total1975 urban population). These were reinforced by data from current governmentprojects in other main cities such as Homs, Hama and Lattakia as obtainedduring the sector mission.

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Table A6.2.2: WATER AND SEWERAGE SERVICE LEVEL PROJECTIONSFOR URBAN AND RURAL AREAS

Year 1970 1975 1980 1985 1990 1995 2000

(1) Total population 6.3 7.4 8.6 10.1 12.1 14.2 16.6

URBAN(2) Population. 2.7 3.4 4.2 5.3 6.8 8.6 10.8(3) (2) as % of (1) 43 46 49 53 57 61 65

Water(4) Population with house-

conn. as % of (2) 68 70 73 80 85 90 95(5) Pop. with public stand-

posts as % of (2) 15 20 17 13 10 7 3(6) Other sources as % of (2) 15 13 10 7 5 3 2(7) Per capita consump.

(l.p.d.) 107 123 139 155 170 183 200(8) Total consumption

(million/m3) 106 153 213 310 447 596 788Sewerage

(9) Sewerage % served 60 65 68 75 80 85 90

RURAL WATER(10) Total rural population

(millions) 3.6 4.0 4.4 4.8 5.3 5.6 5.8(11) Rural per capita

consump. (l.p.d.) 55 60 70 80 90 95 100(12) % rural pop. with

access to safe water 50 55 60 70 80 85 90

Source: Sector Mission estimates based on statistical abstract of SAR (1976)and U.N. World Population Projections to 2000 (ESA/P/WP53, March 10,1975).

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Table A6.2.3; PRODUCTION AND CONSUMPTION OF DRINKING WATER (MILL M3) AND NUMBER OF SUBSCRIBERS ('000)

IN PUBLIC WATER AUTHORITIES 1971-1974

Classification 1974 1973 1972 1971 Classification 1974 1973 1972 1971

Damascus Water Authority Ragga Water Authority

Accrual production 92.6 87.5 84.0 73.0 Actual production 4.3 2.9 2.9 2.1Priced consumption 44.5 41.1 37.0 33.1 Priced consumption 2.1 1.1 1.1 1.1Free consumption 21.9 20.3 18.1 16.3 Free consumption 1.6 1.6 1.6 0.8Unaccounted for water 26.2 26.1 28.5 23.6 Unaccounted for water 0.3 0.3 0.3 0.2Number of subscribers 146.5 142.6 136.0 133.4 Number of subscribers 5.8 5.2 5.2 5.0Number of utilizers 820.2 798.7 761.7 686.8 Number of utilizers 28.9 23.0 23.0 24.0

Aleppo Water Authority Sweida Water Authority

Actual production 37.3 38.0 33.2 31.2 Actual production 0.4 0.7 0.6 0.9Priced consumption 23.3 23.7 20.3 20.3 Priced consumption 0.2 0.5 0.4 0.6Free consumption 3.0 3.0 4.0 5.2 Free consumption 0.04 0.2 0.1 0.1Unaccounted for water 11.0 11.2 8.9 5.7 Unaccounted for water 0.1 0.1 0.1 0.2Number of subscribers 104.5 100.3 96.2 92.1 Number of subscribers 3.6 3.5 3.3 3.1Number of utilizers 521.8 501.5 668.9 460.3 Number of utilizers 28.0 24.0 20.0 18.7

Homs Water Authority Hasakeh Water Admins.

Actual production 17v0 16.6 11.2 12.6 Actual production 2.3 1.9 1.9 2.5Priced consumption 10.0 7.4 6.3 6.0 Priced consumption 1.1 0.8 0.9 1.0Free consumption 1.4 3.1 0.4 0.2 Free consumption 0.7 0.7 0.8 1.3Unaccounted for water 5.6 6.1 4.5 5.3 Unnaccounted for water 0.5 0.4 0.1 0.2Number of subscribers 28.6 27.1 24.5 23.9 Number of subscribers 4.0 3.7 1.3 1.3Number of utilizers 200.2 189.7 149.6 145.9 Number of utilizers 39.2 36.8 30.5 30.5

Hama Water Authority Kamishli Water Admins.

Actual production 9.7 8.3 3.0 7.5 Actual production 2.0 1.3 0.8 1.3Priced consumption 5.5 4.7 1.7 4.5 Priced consumption 1.4 0.7 0.6 1.1Free consumption 0.4 0.3 0.1 0.3 Free consumption 0.5 0.4 0.1 0.1Unaccounted for water 3.8 3.3 1.2 2.7 Unaccounted for water 0.06 0.1 0.03 0.04Number of subscribers 18.5 17.8 17.0 16.3 Number of subscribers 3.9 3.7 3.7 3.3Number of utilizers 145.0 142.0 136.0 130.4 Number of utilizers 39.5 36.2 36.2 36.2

Lattakia Water Authority Total of 9 Cities 1971 1974 1976L/ 1980c/

Actual production 11.0 11.0 11.0 6.6 Actual production (m.m3 ) 137.8 176.6 202.6 254.8Priced consumption 5.1 5.0 5.0 4.7 Priced conaumption (" ) 72.4 94.3 108.9 138.1Free consumption 2.8 2.2 1.1 0.7 Free consumption (" ) 23.9 32.4 38.0 49.1Unaccounted for water 3.1 3.8 4.9 1.1 Unaccounted for water(") 39.6 50.7 58.1 72.9Number of subscribers 17.9 16.2 14.9 13.0 Metered conn. (000) a/ 291.3 333.2 361.2 417.3Number of utilizers 90.0 80.0 75.0 65.3 Pop. house-conn.(mil) b/ 1.6 1.9 2.1 2.6

Free cons. as 1% prod. 17.3 18.3 18.7 19.3Unaccounted for water 28.7 28.7 28.7 28.6

as 7 of prod.Per capita cons. (l/c/d) 110 120 126 139

a/ Described as No. of subscribers in the Statistical Abstract.

b/ Described as No. of utilizers in the St*tiatticl Abstract.

c/ Mission's estimates based on annual average increase over 1971-1974

Source: Statistical Abstract of SAR (1976)

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2.08 On the basis of all these sources of information, it was estimatedthat about 95 percent of Syria's urban population of nearly 11 million couldbe served by house-connections by the year 2000 compared to about 71 percentin 1976. The growth to the 95 percent level is expected to occur mainly after1980. This reflects the pipeline of projects to be completed in the majorcities such as Damascus, Aleppo, Hama, and Lattakia. A per capita consumptionof 200 lcd is assumed to be reached (as an average for all the urban areas inSyria) by the year 2005, even though this would be exceeded in Damascus andAleppo by 2000. Urban population served through public taps is expected tocontinue to decline from an estimated 20 percent in 1975 to 3 percent by year2000. This reflects the current policy of phasing out public taps in theurban areas of Syria, a policy which has so far been successful. Existingpublic taps are found largely in mosques and other public places.

2.09 Urban population using other sources of supply (-,lr'9ater vendors,public water tankers, etc.) are not expected to be completely served srompublic supplies until the year 2000. This reflects the fact that at present asignificant proportion of urban residents live outside the city planning limitsand are excluded from the existing facilities of public water authorities onthe grounds that these residents are either illegal squatters on public land orthat sources of supply are not adequate to cover them. Furthermore, authori-ties prefer to replace their existing problem ridden distribution networks,most of which are too old and contribute to high system losses rather thanextend these network to areas outside the city planning limits. Residentsin these areas rely for water supply mostly on private wells, few public tapsand expensive water vendors who charge often as much as SL 10.0/m3 comparedto the original charge of SL 0.40/m3 (US$0.40/1000 gals) which has just beenincreased. Service levels for the urban poor residing within the city limitsare generally satisfactory but those outside these limits lack adequate ser-vice. However where extension of services outside city limits seriously con-flict with government's urban population control and city planning policies,provision of rural facilities becomes important to stem the drift to the city.This measure is most important in those cities where the capacity of existingproduction and distribution facilities are limited. In some cities such asDamascus, most of these outside-city-limit residents have income below thecity's average. The Aleppo Conference 1/ (Attachment A-4) strongly recommendedthat measures be taken to extend services to areas outside the existing citylimits. This recommendation is supported in this report and the Governmentneeds to consider urgently removing legal obstacles to achieving this objec-tive.

2.10 The above consumption projections reflect primarily domestic waterconsumption rather than industrial water demand. Industrial users are servedby the public authorities in most of the larger cities but their consumptionis very low compared to domestic demand. In other areas most industries havetheir own private wells. However, in some of the smaller cities, with limited

1/ This was the fifth Conference of the Public Water Authority Directors inSyria which was held in Aleppo November 6 and 8, 1976. Its recommenda-tions are summarized in Attachment A-4.

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resources, large unplanned industrial and military demands could impose severestrains on resources. In Sweida for example, the combined monthly militaryand industrial demand is equivalent to more than 9 days production. Similarly,the expansion of the oil refinery in Banias (located between Lattakia andTartous) will add about 1 m3/sec. demand to an already over extended publicwater supply system. It is evident therefore that industrial location in thefuture should take into account water availability in the area.

IMPROVEMENTS IN QUALITY OF SERVICE

2.11 It is suggested that a major objective for the period before 1980should be the improvement in the quality of service provided in the urbanareas. Though the number of house-connections in Syria is above the averagecompared to other countries in the Middle East and North Africa Region 1/,the quality of service provided in the urban areas leaves much room for im-provement. In the areas within the city planning limits, continuous serviceis provided in most cities. The rehabilitation of the existing distributionsystem is one of the main objectives proposed for the Fourth Five-Year Plan(1976-80) (see Chapter 3, para 3.07 and Table A6.3.3). Connections in mosturban areas are said to be almost 100 percent metered. However, in almostall the cities, a significant percentage of the meters are either broken ormalfunctioning; some authorities are no longer certain of the accuracy ofconsumption data. The need for a meter repair, maintenance and replacementprogram is urgent.

2.12 A comparison of the levels of water quality in the major Syriancities is provided in Table A6.2.4. Disinfection by chlorination is mostcommon, with gas chlorination utilized by the larger water authorities andhigh test hypochlorite applied by the smaller ones. MHU's standards fordrinking water quality are the same as those of the WHO 2/. Sampling andanalysis by operators vary considerably, from once per day to none at all.Laboratory facilities are provided by MHU and only the largest water authori-ties have adequately equipped laboratories of their own. Private laboratoriesare used for chemical analysis. Except in Damascus and Homs 3/, treatment isprovided in the larger water authorities. There are water treatment plantsin the following cities: Aleppo, Lattakia, Hama, Raqqa, Idlib and Deir-Ez-Zor. Generally, treatment consists of sedimentation, flocculation, filtrationand chlorination. In some cases, as in the new Hama installation, the levelof treatment provided may be higher than actually required because of the goodquality of the raw water. For their filtration media, most plants utilizesand which is available in abundance in the vicinity of Tartous. Chlorine andaluminium sulfate are imported but lime is produced in Syria.

1/ This is confirmed by WHO - Surveys of Water Supply and Sewerage Servicesfor 1970 and 1975.

2/ International standards for drinking water (Geneva 1971).

3/ Damascus source from Figeh spring and Homs from El-Tanor are of such ahigh quaLity that treatment is not required.

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Table A6.2.4: WATER SERVICE LEVELS AND QUALITY (1976)

Population Hours of % UnaccountedId lb

Source Served/ Service for Water Chlorinatiorr

Urban AreaAleppo Euphrates

River 1,027,000 24 /a 29 YesSweida Dam and

Spring 40,000 20 30 YesHoms Spring 120,000 24 50 YesHama Orontes

River - 24 33 Yes

Palmyra Wells 30,000 22 33 NoLattakia Spring 250,000 24 48 YesTartous Wells 45,000 24 Not determined NoBanias Spring 30,000 24 Not determined YesRaqqa Euphrates

River - 24 25 Yes

Deir-Ez-Zor EuphratesRiver 100,000 12 Not known

Rural Areas _cHomsMohafazatvillages Wells 300,000 70%-8hrs-

30%.-16hrs 30 NoMusharfiy Dug Wells 6,000 8 Not known NoFurlus Wells 2,200 8 Not known NoSayed Wells 1,800 8 Not known NoTiyzin(4 villages) Wells 2,000 16 Not known No

/a This applies to only 75 percent of the service area which is suppliedunder pressure. The rest are on a rotational basis depending upon peakload requirements.

lb B = Chemical and bacteriological analyses are undertaken regularly inmajor cities (Damascus, Aleppo, Lattakia) but not as regularly for othersmaller cities.

/c Refers to the villages visited by sector mission.

/d Includes both house-connections and public taps.

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2.13 Present water sampling and bacteriological quality control are

inadequate outside the areas served by the largest water authorities such asEPEF and EPEA. Also, as indicated in Table A6.2.4 disinfection could be morewidely practiced than at present. To meet the WHO quality standards, MHUneeds to make regular sampling of sources in various provinces. Reports ofhigh bacteriological contents in the sources are received regularly from MHUfield officers. However the MHU is severely constrained to undertake appro-priate splutions because of the following factors. First, there is an inade-quate supply of both gas chlorine and hyperchloride from imports. Secondly,because of a shortage of trained laboratory and other technicians testing andanalysis of sources are very irregular. Thirdly, there are inadequate labo-ratory facilities for such testing and analysis. To solve these problems thefollowing measures need to be considered: (a) to establish a local factory toproduce gas chlorine since the country has adequate raw materials and powerfor such production, (b) training of laboratory technicians and chemists forwater analysis should be given priority, (c) extension of laboratory facili-ties to the province where appropriate.

RURAL WATER SUPPLY AND PROJECTIONS

2.14 According to the 1970 census results, the rural population of Syriawas 3.6 million, accounting for 57 percent of total population of 6.3 million.By the year 2000, the rural population is projected to rise to 5.8 million(Table A6.2.2) accounting for only 35 percent of the total population. TheMHU estimated that in 1970, 1.75 million (50 percent) of the rural populationhad reasonable access to safe water. By 1975, the proportion was estimatedto have gone up to 55 percent and is projected to reach 90 percent by 2000(Table A6.2.2). These projections reflect present Government policy toinstall rural facilities for villages with population above 200 (see para3.07). These projections should be interpreted cautiously for various reasons.It is difficult to obtain reliable estimates of rural service levels for waterbecause of the unclear definition of rural areas and inadequate data on ruralpopulation. This is further complicated by the existence of large numbers ofnomads (Bedouins) in some areas. Inadequate data on water resource availabil-ity, quantity and quality in most rural areas is a further complication.Despite these difficulties, rural service levels in Syria are clearly abovethe average compared to other countries in the Middle East Region. Thisis due in part to the ambitious program of the Third Five-Year Plan (1971-75)(see para 3.06). During that Plan period projects were implemented in mostof the villages. Those with existing municipal authorities pursued a policyof limiting or phasing out public taps and expanding house-connections. Inthe smaller villages with scattered or Bedouin population, public taps wereinstalled within easy reach of the average villager 1/. In general, servicelevels are higher in the larger size villages than in the smaller ones. Theimbalance will not be redressed until more of the smaller villages improvetheir water service level situation by establishing their own municipalitiesto operate and maintain the rural facilities.

1/ In the villages visited by the sector mission, the public taps are onaverage 200 m to 300 m apart and the most distant user in the villagelocated approximately 500 m to 600 m from the public tap.

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2.15 In those villages that have not benefited from rural water projects,quality of services vary widely, ranging from good in the villages with goodquality springs nearby to very bad in those relying on highly polluted riversor wells. In those villages using highly polluted stream flows for contactirrigation (for example, in the Hama, Aleppo and Deir-Ez-Zor areas), water-borne diseases tend to reach epidemic proportions, (see Attachment 1 on publichealth).

SEWERAGE SERVICE LEVELS AND PROJECTIONS

2.16 Service levels for sewerage are in general more difficult to assessin Syria than for water because the latter is managed by semi-autonomousauthorities in major cities and by the MHU local officials for the ruralareas. Sewerage on the other hand is almost entirely managed by municipalauthorities who do not separate their operational responsibilit!4es for allservices, including sewerage. Although there are at present no sewagc treat-ment plants in Syria, every large Syrian city has a sewage collection systemwhich discharges into the nearest river, valley, sea or irrigation fields (seeTable A6.2.5). All existing facilities are combined sewerage systems. Fairlycomprehensive sewage collection networks exist in the major cities of Damascus,Aleppo, Homs, Hama and Lattakia. Parts of these collection systems in thesecities are very old - the Damascus system is several centuries old while theAleppo system dates back 50 to 60 years. Others are of more recent origin.

Table A6.2.5: SEWERAGE SERVICE LEVELS IN 1976

Estimated % of City % of City % servedPopulation population population with

in 1973 served with served with Latrines/c /a /b

City (000)- piped sewerage- Cesspools/ or nothing

Damascus 1,257 70 30Aleppo 871 80 10 10Hama 218 60 40Homs 312 95 5Lattakia 185 85 15Al-Sweida 47 50 30 20Palmyra 20 95 5Deir-Ez-Zor 110 80 10 10Raqqa 71 50 25 25

/a Estimated as percent of population within city planning limits./b Includes residents outside the city planning limits./c Statistical Abstract of SAR, 1976.

Source: Municipal officials' estimates supplied to sector mission but figuresshould be interpreted with caution.

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2.17 The mission estimates that in 1970 about 60 percent of Syria's urbanpopulation had house-connections to the municipal sewage collection systemsand that by 1975 this percentage had risen to 65 percent. As with water, theprincipal objective before 1980 would be to improve the quality of existingcollection systems. After that year, the percentage of urban buildings con-nected is expected to rise gradually to 90 percent by the year 2000. Theprojections are slightly less optimistic than expected by municipal officialswho according to Figure A6.1 claim to have already connected over 80 percentof the urban population. Some of their data, however, refer only to popula-tion within existing city planning limits. The rest of the urban buildingsnot connected to municipal systems rely on cesspools or other means (see TableA6.2.6).

Table A6.2.6: SOLID WASTE DISPOSAL IN SEVERAL CITIES (1976 /a

No. of No. of Disposal RevenueCity Trucks Employees Method Generated

Damascus 60 2,000 Open Dump LS. 0.50/ton of CompostAleppo 7 1,300 Landfill and LS. 20/ton of Compost

Compost PlantAl-Sweida 1 25 Open Burning NoneHoms 20 /a Open Burning NoneHama 12 /a Open Dump NonePalmyra 1 10 Open Dump NoneLattakia 10 /a Incineration None, but new Compost

Plant contractedRaqqa 2 /a Open Dump NoneDeir-Ez-Zor 4 /a Open Burning None

/a Included as part of overall municipal labor force.

Source: Data supplied by Municipal Authorities.

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CHAPTER 3

PRESENT SECTOR ORGANISATION, PLANNING AND CONSTRAINTS

3.01 For administrative purposes, Syria is divided into thirteen provinces(called Mohafazat) and each province is subdivided into districts and sub-districts 1/. The municipalities are the administrative authorities for thecities, towns and villages (called Baladiya).

SECTOR ORGANIZATION

3.02 Until 1971 the Ministry of Municipalities and Rural Affairs wasresponsible for water supply and sewerage in both urban and rural areas.Since the dissolution of this Ministry, this function is now shared betweenthe Ministry of Housing and Utilities (MHU) and that of local government(MLG). Regarding water supply and sewerage, the MHU is responsible forgeneral guidance and assistance (to municipalities and other agencies inthe sector) on technical problems and project designs while MLG has overallfinancial responsibility for the services provided by these municipalities(including water and sewerage). The Ministry of Public Works and HydraulicResources (MPW) has general responsibility for water resource managementthroughout Syria except that the Ministry of the Euphrates manages the largeTabqa hydroelectric dam and its associated irrigation schemes.

3.03 The MHU has two divisions at its headquarters in Damascus, one ofwhich is responsible for potable water supply and the other for sewerage (SeeAttachment A-2, Figure 1 for the Organization Chart of this Department). TheWater Supply Division has staff in the local MHU office located in each of the14 provincial capitals in Syria. Through these provincial offices, MHU dis-charges its technical advisory responsibilities to the municipalities or thepublic water authorities (para 3.04). For the larger villages, the MHU designsthe facilities including the source supply, treatment plant, the main distri-bution lines and reservoirs. If a village exceeds 1,000 people, it may estab-lish a municipal administration which assumes responsibility for servicesincluding water and sewerage. In large municipalities, MHU's responsibilityis principally advisory but in smaller ones or villages without establishedmunicipal administration, MHU is largely responsible for construction, opera-tion and maintenance. As there are at present no sewage treatment facilitiesin Syria, the MHU provincial staff is almost exclusively devoted to water

1/ Each administrative division (province, district or subdistrict) isnamed after its capital city or town. The term "urban population" inSyria often refers to the populations of these provincial and districtcapital cities as well as to all settlements of size 10,000 and over.However, the term is often used by the officials (especially in watersector) to refer to the population of the provincial capital citiesonly, while the rest of the country is the rural or village population.

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supply problems. The responsibility for sewerage throughout Syria at presentis vested in a small unit within MHU which gives occasional assistance tomunicipalities on sewage collection problems. The unit's main task is thedesigning of new sewage treatment facilities but at present it has littleresources to effectively discharge its responsibility. The government shouldeventually reorganize sewerage, under an independent national authority. Inthe meantime the sewerage division needs to be expanded.

3.04 Eight major cities - Damascus, Homs, Hama, Aleppo, Lattakia, Sweida,Raqqa and Idlib - have semi-autonomous water authorities which are responsiblefor all aspects of water supply in their respective cities. Elsewhere, allbut the smallest urban centers may be considered to have some form of watersupply distribution systems which are managed by units within the local admin-istrative structure. The eight water authorities are subject to the technicalsupervision and guidance of the MHU covering such matters as project prepara-tion, design, construction operation and major contracts. Only Damascus andAleppo have water authorities sufficiently large to be independent of theMHU's technical supervision and guidance.

3.05 In February 1974, the Government issued Decree No. 18 (see Attach-ment A-3) which now governs all public authorities, corporations and estab-lishments in Syria. It formalizes previously existing customs and procedures,laying down general rules regarding location, lending and borrowing require-ments, management by the General Director and a Board of Directors, financialand accounting requirements, ministerial responsibility, and the powers of theGeneral Director, his Board of Directors and the responsible Minister. DecreeNo. 18 also specifies that each authority should have a separate Decree thatcontains the detailed regulations pertaining to that authority 1/. The eightwater authorities have similar organisation structures. The recent AleppoConference calls for standardizing the organization structures of all theseauthorities (Attachment A-2, Figures 2, 3 and 4 give the organization chartsof Damascps, Aleppo and Homs water authorities). A study to determine theoptimal organizational structure for public water authorities is now inprogress. It is expected to propose ways of standardizing the organizationalstructure of these public authorities.

SECTOR GOALS AND PLANNING

Third Five-Year Plan (1971-75)

3.06 The Third Plan proposed total expenditure for projects in the watersupply sector was estimated in 1971 prices at SL 212 million (US$54 million).This included SL 101 million by public water autorities (see Table A6.3.1)and SL 111 million for the rural areas (see Table A6.3.2). The Governmentbelieves that over 75 percent of its goals for the Third Plan were achieved

1/ For example, Decree No. 252 was issued on May 14, 1975, specifically forthe Damascus Water Authority (EPEF). It defines the functions of EPEF,its capital, sources of funds and staff regulations (Attachment A-3).

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in terms of amounts spent. The principal sector goals set for water supplyin the Government's Third Plan (1971-75) included the following targets: 1/

(a) In the urban areas, to increase the percentage of users(those with house-connections) from 58 percent to 68percent.

Table A6.3.1: SOURCES AND AMOUNTS OF PUBLIC WATER AUTHORITY PROJECTSFOR THIRD PLAN (1971-1975)

(Millions)

Total Funds StateWater Authority Required Development Internal Otherby Province for Plan Budget Funds Loans Sources

Damascus Water Authority 43.0 7.5 1.3 10.2 24.0Homs Water Authority 14.5 2.6 1.7 10.1 -Hama Water Authority 1.8 - 0.8 1.0 0.1Lattakia Water Authority 5.5 - 2.1 0.4 3.0Aleppo Water Authority 36.2 9.0 7.5 19.7 -

Total 101.0 19.1 13.4 41.4 27.1

Source: Third Five Year Plan 1971-1975. Page 33. (Figures are rounded) - in1971 prices.

(b) In the rural areas, to raise population served by publicsupplies from an estimated 45 percent in 1971 to 65 percentin 1975 by providing water to villages with population over400 provided that the per capita cost does not exceed SL 60(US$15.20).

1/ These are official targets as distinct from the sector mission's projec-tions (see footnote 1, paragraph 1.01).

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Table A6.3.2: SUMMARY OF THE PROPOSED SECTOR INVESTMENTSIN THE FOURTH FIVE-YEAR PLAN 1976-1980

Municipalities

Province P.W.A._ M.H.U _.e Water Sewerage Total

Damascus 1,023.5 105.7 - 60.0 1,189.2Dar'a - 32.4 - - 32.4Sweida 16.0 36.1 - 3.2 55.3Homs 7.5 /a 55.1 3.3 6.5 72.4Hama 9.0 lb 49.3 1.6 7.5 67.4Aleppo 438.6 178.1 - 2.4 619.1Idlib - 72.0 - - 72.0Lattakia 56.3 95.8 - 30.0 182.1Tartous - 89.0 - 25.0 89.0Raqqa 1.2 /c 23.0 - 4.2 49.2Deir-Ez-Zor - 60.6 3.2 - 68.0Al Hasakeh - 65.0 - - 65.0Quneitra - 2.8 - - 2.8Water Supply Directorate - 11.7 - - 11.7MechanicalDirectorate - 22.9 - - 22.9Water Department - 10.0 - - 10.0Palmyra City - - 6.0 2.0 8.0

Total 1,552.1 909.5 14.1 140.8 2,616.5

/a Original amount requested SL 12,000,000 also total of new projects is7,750,000 + 550 thousand transferred projects.

/b Original amount requested SL 15,000,000./c Has been increased to SL 25,000,000.Id Refers to only 7 authorities established before 1976./e Mainly for rural areas.

Fourth Five-Year Plan (1976-80)

3.07 The Government's original proposals for the Fourth Plan (1976-1980)aim at further decentralization of responsibility for urban water supply byestablishing more public water authorities to serve all the provincial capitalcities. In the rural areas, the original goals of the Fourth Plan includedthe provision of public water facilities to all villages with a population ofno less than 150 each in the northeastern provinces of Raqqa, Deir-Ez-Zor andHasakka and no less than 200 in all other provinces, ultimately serving 2,400villages (population of 1 million) by the end of the Plan period. However asalready indicated (para. 1.03) the Plan has been revised to scale down itstargets.

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3.08 Although the Fourth Plan has been revised, it should be noted thatthe sector mission estimated that both the urban and rural water projectsoriginally proposed in it could cost about LS 2,616 million (US$662 million)at 1975 prices (Table A6.3.3). This amount comprises (a) SL 1,552 million(US$393 million) for the eight public water authorities, (b) SL 910 million(US$230 million) for the MHU and its rural areas and (c) municipal projects ofSL 155 million (US$40 million) of which SL 14 million was for water and SL 141million for sewerage. These proposed investments include ongoing projectscarried over from the previous Plan as well as new projects. The bulk of thesector program (58 percent) includes the Damascus water supply project beingpartly financed by the Bank, the Aleppo water supply project also beingappraised by the Bank and the Lattakia Water Authority project. AttachmentA-5 lists other potential projects identified during the sector mission. Ofthese projects priority should be given to those which relieve demand pressurein urban areas and pollution of existing sources in both rural and urbanareas.

Table A6.3.3: SECTOR INVESTMENTS IN RURAL AREASIN THE THIRD FIVE-YEAR PLAN (1971-1975) /a

Totals for the Five YearsProvince Local Currency Foreign Currency Total

Damascus 5.4 1.3 6.7Dar'a 1.0 1.1 2.1Sweida 4.8 8.8 13.6Quneitra - - -Hooms 5.3 1.7 7.0Hama 5.8 3.3 9.1Lattakia 4.3 11.8 16.1Tartous 4.8 2.3 7.1Idleb 5.5 4.4 9.9Aleppo 9.0 2.2 11.2Raqqa 7.2 2.1 9.3Deir-Ez-Zor 8.9 1.9 10.8Al-Hasakeh 4.8 3.0 7.8

Total 66.8 43.9 110.7

/a Excludes investments by public water authorities.

Source: Third Five-Year Plan (1971-1975), Page 81.

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3.09 The Government has in the past given higher priority to developingwater supply in both urban and rural areas than sewerage facilities. However,current Government goals for sewerage have received high priority in responseto increasing pollution of major water sources by sewage discharges, and theconsequent hazards to public health. As a result, studies are currently beingundertaken by consulting engineers for the pollution control of the Baradaand Orontes rivers and sewage treatment for Damascus, Homs and Hama. Similarstudies are being planned for Aleppo and Lattakia. The findings of the sectormission support the high priority being given to sewerage and pollution controlprojects.

CONSTRAINTS TO SECTOR DEVELOPMENT

Political and Economic

3.10 Among some of the political developments likely to affect sectordevelopment are the 1967 and 1973 conflicts and the Lebanese crisis. Both ofthese developments had put pressure on Government budgetary expenditures.They had also led to increased urban population due to migration of refugeesto Syrian towns. In early 1976, Iraq decided to suspend its crude oil ship-ments through Syrian territory thus reducing Government revenue from transitfees. In addition to these political developments, there were domestic eco-nomic factors such as the reduction in crude oil export receipts, decliningtax revenue, expanding current and investment expenditure requests, etc., allof which have contributed to the increasingly severe budgetary and balance ofpayments pressures. As a result of these the Government had to scale downits ambitious Fourth Plan investment program, which reflected the optimism in1974-75 regarding the availability of financial resources. The final programwhich emerged from the revision of the Fourth Plan emphasized the completionof ongoing projects. In the water supply and sewerage sector, the revision islikely to affect the rural water supply program more than urban water projectsbecause major urban projects have already started.

3.11 Inflation is also imposing a serious constraint on current sectordevelopment effort in Syria. Although the wholesale price index which reflectsextensive price controls, rose by only 7 percent in 1975, it is thought thatactual inflation may have been closer to 20 percent. Though this might havedeclined to 15 percent in 1976, officials believe that construction andmaterials' costs in the sector are showing little sign of declining from the1975 high level. Few if any of these officials now expect to finance alltheir proposed projects or achieve even 80 percent of their original targetsin the Fourth Plan even if the amounts they originally requested were granted.

Manpower and Training

3.12 In addition to the economic problems another factor constrainingdevelopment is the shortage of skilled manpower in the sector. Table A6.3.4presents estimates of existing manpower shortages by professional categories.This problem is common in all sectors and in most developing countries. InSyria, it can be attributed to the following causes:

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(i) The low salary and wage structure for the public sector asa whole compared to better salary levels and working condi-tions for skilled people in the private sector and in otherArab countries.

(ii) The absence of any formal training program in Syria designedexclusively for the water supply and sewerage sector.

Table A6.3.4: MANPOWER SHORTAGES IN 1975 AND PROJECTEDREQUIREMENTS 1976-1980 FOR PUBLIC WATER AUTHORITIES

Public Water Al- AlAuthority Damascus Sweida Homs Hama Aleppo Idlib Lattakia Ragqa Total

Civil/SanitaryEngineers 18 3 4 4 4 5 9 5 52

Engineers /a 5 7 2 1 8 - - 4 27Accountants /b 12 2 9 5 4 19 7 1 59TechnicalAssistants /c 32 28 10 10 55 - 15 11 161High School /d 12 34 - 6 27 62 4 2 147HS Adminis-trative Clerk 2 13 8 4 20 34 5 1 87

Junior High /e 4 114 13 45 43 76 135 - 430Supervisors 72 - - - 6 - 5 12 95Laborers/Drivers 74 - - - 13 6 - 33 126Lawyers 4 1 2 - 4 - - 1 12

Total 235 202 48 75 184 202 180 70 1,196

/a Includes: Mechanical, electricial, geologists, topographers.lb Includes: Statisticians, administrative./c Includes: Mechanical, electrical, civil./d Includes: Industrial, technicians, laboratory technicians, draftsmen./e Includes: Clerks, technicians, guards.

Source: Fourth National Five Year Plan (1976-1980). Draft Proposal Suppliedto the Sector Mission by MHU and mission estimates.

3.13 These two problems are interrelated and measures to remedy them needto be adopted quickly by the Government to ensure successful sector develop-ment. Any proposals regarding training are likely to be weakened if the lowsalary structures in the public sector are not improved. For example, thesewerage division of MHU cannot retain its skilled staff because of its poorsalary and conditions of service (see 3.16). In the long run, the low salaryproblem will have to be resolved for the whole public sector but in the short-term, the Government may take separate measures allowing water authorities to

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grant attractive salaries and other improved conditions of service to highlyskilled staff needed to prepare and operate projects. If the water authori-ties were allowed to be autonomous in the sense of charging economic rates forservices as well as being free to pay competitive salaries, they could generatefunds internally to meet any increases in salaries and wages.

3.14 The present manpower situation throughout the sector can be illus-trated from the experience in the Damascus Water Authority (EPEF). UntilOctober 1974, EPEF was required to obtain authorization from the Governmentbefore it could increase its higher level skilled staff and even then hadto comply with Government's rigid low salary policy. As a result of thesestringent requirements, EPEF's authorized staff did not increase proportion-ally with its tasks. Most of EPEF employees relied on overtime payments orearnings from second jobs to supplement their salaries. EPEF also reliedheavily on consultants for its technical work. After October 1974, a staffingdecree was issued authorizing EPEF to negotiate slightly improved conditionsof employment for staff to be employed in its new project unit created toexecute the authority's projects. Even this has not enabled EPEF to attractthe required skills and it is recommended that the decree be extended.

3.15 To help resolve EPEF's staff problems, the Arab Fund for Social andEconomic Development included KD 0.4 million (US$1.4 million) for nationaltraining in the second Damascus water supply project jointly financed withthe Bank. The Arab Fund training assistance includes in addition to theassistance for EPEF an amount to finance part of a national training programfor water and sewerage. The assessment of the manpower requirements for thesector being provided in this annex (Table A6.3.5) could provide the basisfor the proposed program. Furthermore, the program should include:

(a) The establishment and maintenance of a training center. Inorder to benefit from existing facilities, for example labora-tories and treatment plants, the center should be adjacent toone of the existing eight public water authorities. The centershould be a semi-autonomous statutory entity like the publicwater authorities with MHU having supervisory responsibility.This will enable the center to pursue a flexible policy regard-ing the design of courses and recruitment of staff.

(b) Preparation of a program of study appropriate to meetingthe technical needs of the water authorities and otheragencies in the sector. Assistance from experienced con-sultants (to be financed from the Arab Fund Loan) willbe required in planning the training programs and relatedactivities in the fields of design, operation, maintenance,management, accounting and administration of water andsewerage systems.

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Table A6.3.5: MANPOWER REQUIREMENTS FOR THE FOURTH PLAN 1976-80M.H.U. HEADQUARTERS AND PROVISIONAL OFFICES

Tech- Chemists Tech- Networknical and nical Super-Assis- Assis- Drafts- Super- Me- inten-

Province Engineers - tants/ tants men visors chanics dents Drivers Total

Damascus 20 22 2 7 20 40 25 20 155Aleppo 21 38 2 7 15 102 19 25 229Homs 20 19 2 2 39 61 54 8 205Hama 17 23 2 2 8 50 8 10 122

15 20 2 4 21 63 10 12 147Tartous 17 24 2 5 20 68 68 8 212Idlib 29 43 2 4 8 100 38 14 238Deir-Ez-Zor 23 74 9 7 97 28 51 30 319Raqqa 11 24 2 7 12 24 12 31 123Hasekah 10 6 2 4 16 23 17 34 112Dar'a 8 22 2 5 10 56 22 22 147Suwayda 21 64 2 4 13 46 38 14 202Qunaytira 8 27 2 3 10 30 10 10 100Water

SupplyDirec-torate 48 17 6 9 2 - - - 82

MechanicalDirec-torate 15 9 - 2 _ - _ - 25

Total 283 432 39 72 291 691 372 283 2,418

/a Includes: Geologists, Mechanical Engineers, Civil Engineers.

/b Includes: Machinists, Topography Specialists, Electricians, AssistantEngineers.

Source: Fourth National Five Year Plan (1976-80).

3.16 There is an urgent need to strengthen MHU's professional staff parti-cularly the sewerage division whose professional staff have recently declinedfrom eight Syrian engineers and four expatriates to just three Syrians and oneexpatriate. Continued dependence on expatriates in MHU's line positions doesnot develop the required national talent. Reallocation of staff and greatercommunication between headquarters and local MHU, municipal and water authoritystaff should be explored but above all, training of staff and improvement ofconditions (including salaries) holds the best hope for solving MHU's staffproblems (See paras 1.09 and 3.13).

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PROJECT PREPARATION, IMPLEMENTATION AND OPERATION

3.17 Part of the constraint imposed by the inadequate project preparationcapability in Syria stems from the manpower shortage discussed above. Therecent Aleppo Conference discussed the effects of the shortage of qualifiedtechnical staff on project preparation and implementation and recommended thatthe Government give water authorities priority when allocating technicians(including those completing their military service) to the ministries anddependent agencies. The Conference also recommended the establishment orexpansion of locally based manufacturing industries (cement, plastic pipes,chlorine, etc.) to produce materials needed for water projects. This is oneof the major sector objectives of the Fourth Plan (1976-80).

3.18 The MHU is responsible for project preparation for both water andsewerage throughout Syria except for the largest public water authorities.Although MHU has some of the required design capability, the country wouldcontinue to depend heavily on the foreign consulting firms for preparation oflarge water and sewerage projects for some time partly because of the manpowerproblems discussed above. The country should start a program of ultimatelyeliminating its dependence on foreign consultants. Such dependence oftenleads to diversity in project designs when the country needs standardization.There is also a tendency to prefer more sophistication to simple designs.Design standards are communicated verbally during project preparation.Standardization and publication of design criteria are recommended.

3.19 Another serious constraint to sector development is the inadequateoperation and maintenance capability throughout the sector. Organized leakdetection and repair programs are nonexistent in most authorities. There arealso inadequate meter repair and maintenance programs, resulting in largenumbers of unmetered water services in most urban water facilities in Syria.Therefore, training in leak detection and repair techniques is necessaryfor most urban authorities. Staff from these authorities should also beencouraged to train or rotate from one urban facility to another to broadentheir experience as part of the development of the national training program.The shortage of operators in training is critical in most authorities. Aunique case is the new Hama water treatment plant which had no operators beingtrained to take up operation and maintenance of the facility when it is com-pleted.

SECTOR FINANCES

3.20 The Central Government is the principal source of funds for develop-ment projects. For example, Table A6.3.1 shows that in the Third Five-YearPlan (1971-75) the principal sources of public water authority funds wouldbe the following Central Government sources - the state development budgets,loans from the public debt fund and other Central Government sources. Alto-gether these sources provided 78 percent of the estimated total of SL 112.64million (US$28.52 million) to be invested by the water authorities of Damascus,Homs, Hama, Aleppo and Lattakia. The remainder would come from the budgets ofthese authorities themselves and even these budgets are subsidized by theCentral Government, through the municipality budgets, state loans and direct

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subsidies. These were supplemented by revenue from sale of water rights andcharges for connections and water supplies. In the original Fourth Plan,Central Government was expected to continue providing the bulk of the fundsfor investment. As an example, for the two major water projects for Damascusand Aleppo, the Central Government and its guaranteed foreign loans wouldprovide 88 percent and 78 percent respectively of the required investment.

3.21 Due to the pressure on the Central Government budgets and the cer-tainty of reducing the sector Fourth Plan investment program, serious con-sideration is being given to generating more funds from the sector activitiesthrough an improved tariff structure (see paras 1.05 and 3.24). The magnitudeof the investment program is probably a reflection of the fact that inadequatetariffs in the past have not generated the surpluses required to financerehabilitation and renewal of the existing systems or to provide the expan-sions required for the increasing urban population. As a resu;L sIf inadequatetariff structure whose maximum was, until recently, legally fixed throughoutSyria at SL 0.40/m3 (US$0.40/1000 gals), the water authorities and municipali-ties are dependent on Government funds for nearly all capital works. Waterand sewerage are regarded by the Syrian people as an important social servicewhich must be provided at low prices. At present there are no sewer chargesin Syria. In most parts of the country, water tariffs have not changed forseveral years. Until the Government changes this policy and implementstariffs approaching the incremental costs of water, the pricing system willnot indicate the true cost of water and the sector will be incapable ofgenerating the finances necessary for new investment. On May 1, 1977 alegislation to increase tariffs was passed but the increase is not effectiveyet for domestic consumers.

3.22 The tariff system in Syria before the new legislation (para 3.24)is illustrated with the Damascus (EPEF) tariff structures in Attachment A-7.Within the legal limits of SL 0.40/m3 for water and SL 0.60/m2 of buildingspace for sewerage connection charges, there was wide variation in the averagetariffs for most urban areas. Damascus and Aleppo were among those with thelowest average tariffs. The Damascus Water Authority (EPEF) had an averagetariff of SL 0.20/m3 (US$0.05/m3) in 1976. Though it has low operation costs(since it has no pumping and treatment costs), nevertheless the EPEF's tariffstructure was completely inadequate to generate the revenues necessary tocarry on its operations and finance the needed program of works. Aleppo'saverage tariff was SL 0.30/m3. The Homs Water Authority charged SL 0.25/m3while its cost was SL 0.36/m3 in 1975. The tariff increase proposed on May 1,1977 would, if implemented, provide acceptable financing for at least twoyears.

3.23 A low tariff structure poses more serious problems in the smallercities whose resources are highly limited. The situation was critical for thenewly established water authorities such as Sweida, Idlib and Raqqa. Aboveall, there is serious inequity in the sense that some of the urban residentsliving outside the city limits are paying as much as SL 10.0/m3 (US$2.53/m3)for water from vendors. Some of these are amongst the urban poor, especiallyin large cities like Damascus and Aleppo. A progressive tariff structure

- 303 -

(para 1.05) is therefore highly desirable and consideration should be givento implementing such a tariff as soon as possible.

3.24 The Government's recent legislation permitting water and seweragecharges that reflect costs of providing these services is necessary in orderto achieve projected service levels (Table A6.2.2). Now that the Government'spolicy on tariff has been reviewed, the public water authorities themselvescan improve their financial situation by reducing unaccounted-for water,undertaking extensive meter repair and replacement programs, improving levelof billing and collections, and undertaking consumer education on water con-servation.

3.25 The quality of financial management throughout the sector needs to beimproved. This problem stems partly from the dependence of operating agencieson Central Government funds. As a result, the system of accounting throughoutthe sector is designed to meet Government requirements. Operators prepareonly annual budgets in a form suitable for requesting further Central Govern-ment's funds. Budgeting and accounting in general are not aimed at generatingdata for improved management decision-making. The extent of this problemvaries from one authority to another. EPEA in Aleppo has the best record inthe sector. Billing and collections are poorly undertaken in most authorities,thus contributing further to their poor financial performance. 1/

COORDINATION

3.26 At present, the sector responsibilities are divided between fourministries, eight independent water authorities and numerous municipalities.There is a need for coordination at both levels of ministerial responsibili-ties as well as the operational level. At the ministerial level, strongcoordination is vital for multipurpose projects involving use and re-use ofwater resource. For example, the proposed project to bring water to Palmyrafrom the Euphrates River would involve a number of Ministries (MHU, Tourism,Planning, Agriculture, Euphrates, MPW and Industry). The highest degree ofcoordination amongst these ministries will be required for effective planningof such projects.

1/ In Lattakia, for example, the Harbor Authority which is a large con-sumer, is given flat rate monthly bills that are known to representgrossly less than the actual consumption. For some unexplained reason,the Harbor Authority's meters seem to break down as soon as they areinstalled, and the Water Authority is incapable of persuading the HarborAuthority to accept higher bills. Both Authorities believe that sincethey obtain their funds from the same Central Government, the problemis purely one of transfer of funds; and there is no need to cover theeconomic cost of supplying water. In fact the foreign shipping companiesthat use most of the water in the port are indirectly being subsidised bythe Water Authority.

- 304 -

3.27 At the operational level, existing public water authorities couldcoordinate their operational and planning activities to ensure efficient useof their resources. As an example, prospects for joint regional water supplyor pollution control projects should be explored by public authorities (suchas Homs and Hama) which are located in the same source. Although the Directorsof all public authorities in Syria have regular conferences (such as the recentAleppo Conference) to exchange views on problems of the sector, there is stillmuch room for improving effective coordination in matters of management andplanning. The MHU should be strengthened to enable it achieve a more effectivecoordination between all public water authorities in addition to assisting themunicipalities. Strong coordination from MHU should however not jeopardize theindependence of these authorities.

- 305 - ANNEX 6Attachment A-1

WATER RESOURCES

Quantity and Quality of Water and Public Health

Water Resource Basins

1. Syria has seven distinct hydrological basins which are shown onthe Map in the front of Volume 2, The Main Report. These are the Damascusbasin, Upper Jordan basin in the southwest, Orontes basin, Coastal basin,Aleppo basin, Middle Euphrates basin and the Steppe or Desert basin aroundPalmyra. These basins have differing characteristics including varyingrainfall, groundwater balances and arable land areas.

Surface Water and Quality

2. The principal rivers in Syria which are utilized for public watersupplies are (i) the Euphrates River which serves Aleppo, Raqqa, Deir-Ez-Zorand numerous villages; and (ii) the Orontes (or Assi) River, which providesfor the needs of Hama, and several small villages. Although the Barada Riverflows through Damascus, its polluted condition from urban sewage limits itsuse to irrigation, and it is not depended upon as a source for organizedpublic water supplies. The Quwaik River is not utilized for the Aleppo WaterSupply because of insufficient quantity. The Khabour River, tributary to theEuphrates, provides water for the city of Hassaka and several villages as well.Following construction of the Euphrates Dam and the formation of Lake Assad,seasonal variations in the river flow have been relatively equalized, withno problems associated with the quantity of water available for public watersupplies. High turbidity creates occasional treatment problems.

3. The Orontes River, with an average flow of 12 m3/s at the borderbetween Syria and Lebanon provides a satisfactory raw water source for Hama.However, progressive pollution downstream due to discharge of urban sewagein the water course in Syria has reached the level where the Orontes River isno longer exploited for public water supplies in the large communities. LakeKhatina, with a total area of approximately 40 km2 is the impoundment createdby damming the Orontes River south of Homs. Although this lake serves theneeds of several large industrial installations, pollution problems precludeits use as a source for public water supplies.

Groundwater Quantity and Quality

4. While several of the geological formations of Syria are imperviousand water-bearing, and the most important unconfined or semi-confined aquifersare in gravels, conglomerates or sandstones, the most important confinedaquifers are the karstic limestones, dolomites and also the chalky limestones

- 306 -ANNEX 6Attachment A-1

which produce the more significant springs. Several springs (called "ain"in Arabic) serve as major sources. One of these, Ain Figeh, provides for theDamascus metropolitan demand (approximately 3 m3/s) by gravity flow over adistance of 15 km. The Homs Water Authority now depends upon Ain Tanour(2 m3/sec discharge) to meet its needs and those of several adjacent villages.In order to meet the 6000 m3/day demand in the Sweida Water Authority and inseveral "off taking" villages, both Ain Mezrib and the impoundment of RomanDam are utilized, each accounting for approximately half of the Authority'sdemand. Ain El Sinn, whose discharge averages 6 m3/s is utilized for irriga-tion in addition to being the source for the Lattakia water supply.

5. Generally, the quality of groundwater is satisfactory, requiringlittle treatment. However, there are a few exceptions. In the village ofBanias (population 30,000), which has a spring source within th'e built-uparea, the spring is not protected, and domestic sewage pollution has createdsevere contamination problems.

Public Health

6. General mortality in the country, as measured by the crude deathrate was approximately 15 per 1,000 population in 1975. Of the seven prin-cipal infectious diseases reported by kind during 1966-75, typhoid fever,dysentery and scabies ranked among the most prevalent in the country.Although the health statistical documentation in the Ministry of Health (MH)is well organized, Government facilities are not utilized for treatment of allcases. As a result, during major outbreaks, many cases are not reported.From 1970 to 1976 at least four outbreaks of cholera took place in Aleppo inareas where sewage is utilized for contact irrigation. According to theMinistry of Health's local office in Aleppo, the cost of medical treatmenttogether with that of lost man-days of production and the cost of crops des-troyed in order to check infection was estimated at more than SL 90 millionfor one year. Schistosomiasis foci are present in Hamman Turkman on theBelikh River near Raqqa and in the north on the Euphrates River and in somevillages on the Khabur River. In early December 1976, an outbreak of typhoidfever occurred in Banias (population 30,000) in which an estimated 2,000persons were affected. In Hama province, it is estimated that, among thevillages depending upon rivers for water supplies, 90 percent of the diseasescontracted by villagers are waterborne in origin. For this reason, theDirector of the Office of International Health in the Ministry of Healthdefines the need for safe water supplies and adequate waste disposal as mostimportant for the health of the people.

7. A Conference of Syrian Water Authority Directorates made strongrecommendations to "control water pollution particularly at source" and forcontinued studies of pollution problems and their effects on public health inSyria.

8. There is at present no sewage treatment in any of the Syrian cities.All the sewerage systems in Syria are combined systems, and designed prin-cipally as storm-water collectors. Disposal is directly into rivers and water

- 307 -

ANNEX 6Attachment A-1

courses, without even primary treatment. Widespread use of the stream flowfor irrigation of small agricultural plots is common. Thus, during the dryseason periods when there is little or no flow in the water courses, theundiluted raw sewage is used for irrigation, creating serious health problems.However, the demand for irrigation water is great. In Palmyra, for example,the Municipality receives SL 1,500 (US$380) annually from a "wholesaler" whoresells the water to farmers.

- 308 - Annex 6Attachment A-2

FIGURE 1:ORGANISATION CHART OF THE MINISTRY OF HOUSING AND UTILITIES

WATER & SEWERAGE DEPTS.

MINISTRY OFHOUSINGAND UTILITIES

WATER SUPPLY SEWERAGEDEPARTMENT DEPARTMENT

VWATER RESOURCES DIVISION FORAND DESIGN OFLABORATORY SEWER SYSTEM

DESIGNING OF DIVISION FORWATER PROJECTS ~~~~~~~~~~~~~~~~DESIGN OF SEWAGE

i WATER PROJECTS | TREATMENT PLANT

SUPERVISION AND DIVISION FORCONTROL OF SUPERVISION OFEXECUTION PROJECT EXECUTION

WATER TREATMENTPLANT

WATERNETWORKS

ADMINISTRATION

________________ I______ World Bank-17216

- 309 - Annex 6Attachment A-2

FIGURE 2: E.P.E.F. -ORGANIZATION 1975

LEE]~~~~~~~~~~~~~

[ Atsistant Ge 3ra1 Manaoar | |CAntracts General aae|

jW-rd S-1-1 39(R)

Annex 6Attachment A-2

- 310 -

FIGURE 3:ETABLISSEMENT PUBLIC DES EAUX D'ALEP (EPEA)

ORGANIZATION CHART

Board of

Directors

President

and Director General

Consumer TechnIcal FinancialAdministra-Planning a 'Affairsue | Manager | Manager t dinisra & Statistics

Connections & | Construction I |Internal Audit | Legal Statistics

'|Meter Reading Control

Billn and ^ -Operation & Payments Administration Planning

Coletin Mains exensiron Accounts Personnel i

L Stores

VVorld Bank-17010

- 311 - Annex 6AttachmEeSt A-2

FIGURE 4:

ORGANISATION CHART OF THE HOMS WATER AUTHORITY

BOARDOF DIRECTORS

ANDDIRECTOR GENERAL

DIRECTOR _ STUDIES_ AND CORRESFONDENCECONNECTIONS | EXPE~~~~~~NDITURE

SRIBETIEN SUPERVISIONAND MAINTENANCE AND CONTRACT PERSONNELOF CONNECTIONS MAINTENANCE

_ ACCOUNTING SECTION

|W-od Ba-k-17217

August 1977

- 312 -


OUTLINE OF LEGISLATION

Decree No. 18 passed in 1974 determines general activities of the WaterAuthorities in Syria. The following is an outline of the principal elements ofthis decree.

A. Decree No. 18, February 15, 1974

Law Governing Establishments, Public Societies and Companies

1. The following articles of the decree affect establishments which areconsidered to be an "Etablissement Public", (e.g. the 8 semi-autonomous waterauthorities).

2. In order to achieve its objectives, it shall apply the various appro-priate methods while acting within the limits of the laws and regulations cur-rently in effect. It may:

(i) execute the conditions of the decree which created the estab-lishment;

(ii) create, join, divide or eliminate economic units;

(iii) create branches or interior centers or eliminate same;

(iv) grant loans to public societies or enterprises governedby this decree and guarantee loans which are granted tothem;

(v) enter into loan agreements with the State or financial andbanking establishments, local or foreign, without prejudiceto the rights of the State planning authority in virtue ofthe regulations presently in force.

3. It is administered by a director general (named by a decree whichestablishes his salary and indemnities) and an administrative council whosemembers, chosen in accordance with the laws and regulations in force, shallinclude:

(i) the director general (as president);

(ii) five directors from within the establishment;

(iii) a workers representative who is an executive member of thetrade union concerned and who shall be designated by theexecutive of the General Federation.

- 313 -


The president and directors shall be confirmed in their positions by minis-terial order.

4. By-laws related to the following matters shall be promulgated bydecree: finances, accounting, procurement, financial incentives, and onfundamental principles to be followed in arbitration and transaction.

5. Following matters shall be established by ministerial order:

(i) the administrative organization and responsibilities;

(ii) regulations related to supplies, distribution, storage andpublic relations;

(iii) transfer of personnel between establishments under the author-ity of the same ministry and entering into contracts withexperts and technicians;

(iv) nomination of one of the directors as deputy director general.

6. The administrative council is the authority responsible for the adop-tion of the policy to be followed by the establishment in order to achieve theobjectives for which it was created. It shall:

(i) establish a draft of the essential principles and by-laws to bepromulgated by the appropriate authority (paras 5 and 6);

(ii) establish standards;

(iii) decide policies and production, export, sales, operations, com-missions and income objectives in order to meet the goals decidedby the State;

(iv) establish detailed plans and work programs to guarantee produc-tion, ensure quality control and the economic use of resourcesand to ensure increased productivity in order to meet the needsof the establishment;

(v) establish the annual plan for the establishment for which it isresponsible, including:

(a) operations(b) production(c) sales(d) labor(e) costs and revenues(f) budget estimates


(vi) assure coordination between the public societies and theestablishment for which it is responsible and act in amanner to reduce differences between them;

(vii) study the regular reports presented to it on the operationsof the establishment and its financial situation and takeany appropriate measures;

(viii) study all matters which the minister or director generaldecides useful to submit for its consideration which isrelevant to the operations of the authority.

7. The administrative council presided by the minister shall:

(i) approve the annual plan of the establishment within theframework of the five-year plan and without prejudice tothe powers of the Ministry of Plan;

(ii) approve the annual financial reports;

(iii) propose an increase or decrease of the authorized capital ofthe establishment. A final decision on this shall be takenby the superior planning council;

(iv) create, join, divide or suppress economic units.

8. The administrative council may constitute its members into one ormore commissions to which it may provisionally delegate its powers; it mayretain the services of such experts as it may deem necessary.

9. The director general has the following functions:

(i) to execute the decisions of the administrative council;

(ii) to manage the "etablissement public", evolve work methods, toreinforce management and to delegate, name, advance or transferstaff in accordance with the approved annual plan for labor andconsidering the available credits in the budget;

(iii) supervise the works of the establishment;

(iv) award bonuses within the limits of the approved budget and imposefines on the personnel;

(v) delegate certain of his functions to the directors.

10. Its capital shall be composed of:

(i) shares owned by the State;

(ii) State equity investments;


(iii) fixed assets;

(iv) other sources fixed by the establishing decree.

11. Revenues shall be composed of:

(i) its net profits;

(ii) reserve funds and depreciation;

(iii) borrowings and credit facilities;

(iv) State credits;

(v) special revenues from its activities or service provided tothird parties.

12. It shall invest its financial resources in:

(i), financing of its plans and covering its expenses and paymentsrequired by the nature of the tasks assigned to it;

(ii) deposit of the excess of its revenues to the treasury of thePublic Debt.

13. (a) The accounting system shall conform to the principles ofcommercial and industrial accounting and its budget shallbe established on the same principles.

(b) The assets shall be considered as the property of the statewith the exception of assets which are designated by law tothe public use.

(c) It shall have the right of expropriation to house its employeesand economic units in conformity with the law governing expro-priation.

B. Decree No. 252, May 14, 1975

Applying Decree No. 18 of 1974 to "Etablissement Public desEaux de Figeh" (EPEF)

1. The dispositions of Decree No. 18 apply to EPEF which shall beattached to the Ministry of Housing and Utilities.

2. EPEF is charged with the supply and distribution of the waters fromthe Figeh source or any other to which it may obtain the right. It shallassure the distribution of water within the administrative limits of the cityof Damascus and the villages of the Barada River (El Figeh, Ain el Khadra,Bassine, El Achrafie, El Jedaide, El Hame, Jamraya) as well as the Yarmoukrefugee camp.


3. Its capital is fixed at LS 85 million covered by:

(i) funds contributed by the State and;

(ii) its fixed and moveable assets.

C. Decree No. 265 of October 29, 1974

EPEF's Organization

1. A temporary unit for major projects is established for EPEF. Thisoffice consists of the following posts (86 posts named, from engineers to door-man).

2. These positions may be filled by nomination, from the Government pay-roll or by secondment of civil servants or public sector employees. Engineershired from outside the public sector will be retained in accordance with DecreeNo. 60 of 1961. For all other positions wages and salaries will be determinedaccording to the year of graduation with an incremental step for each year ofexperience.

3. The work of this office shall terminate on completion of construc-tion of the works financed by the World Bank.

D. Decree No. 6, January 30, 1975

Establishing a Special Commission for EPEF's Projects

1. The Commission shall be composed of Messrs.:

- The Minister of Housing and Public Utilities - President

- The Director of EPEF - Vice President

- The Deputy Minister of Housing and Public Utilities respon-sible for Technical Affairs - Member

- The Director of Technical Affairs of the Municipality ofDamascus - Member

- The Engineer Nibras Mouayad, Chief of the Projects Officeof EPEF - Member

This Commission shall be responsible for following the implementation of thenew projects of EPEF.

2. The Commission is considered responsible for undertaking the neces-sary studies and for following the implementation of these projects until theyare ready for operation and this during a fixed delay of three years followingthe date of this Decision. The Commission has the right to use the services ofArab and foreign technicians and to take the necessary measures to resolve the

- 317 -


difficulties they may encounter. It is however authorized to have recourseof the offices of the Civil Service and to take its employees by detachmentor by assigning them to carry out works through overtime.

3. The Commission is authorized to award incentive bonuses and over-time pay to civil servants and salaried employees working on the above-mentioned projects and this by its own decision.

4. The Commission has the full powers needed to carry out its assign-ment; its decision and its activities shall be exempt from all laws andregulations in force in Syria, except as they concern the issuing of per-sonnel appointments in any form.

- 318 -


Summary of the Main Recommendations of the Fifth AnnualConference of Syrian Public Water Authority Directors Held in Aleppo

November 6-8, 1976

1. Supplies to Areas Outside City Limits. Urgent attention should begiven to the problems of water supplies to residents outside existing cityplanning limits. At present, supplies to these areas are hampered by legalrestrictions, and inadequate housing, streets and drainage.

2. System Leakages and Malfunctioning Meters. Each authority shouldestablish a leak detection unit and supply it with equipment to maintainregular checks in the distribution network. Damascus and Aleppo Water Author-ities would assist in training staff and securing equipment for other authori-ties in this effort. A meter repair program should also be started and blue-prints for water networks (mains, connections, etc.) made by all authorities.

3. Public Taps and Other Public Supplies. Wastage of water at placesof worship (e.g. mosques) with public taps should be controlled, their con-sumption limited and payments made for supplies.

4. Water Quality. Aleppo Water Authority is to import chlorine andensure its quality for all other authorities. Control of source pollutionshould be accorded high priority.

5. Training and Manpower. A National Training Center should be estab-lished and EPEF is empowered to implement this proposal. Government is urgedto seek solution to existing shortage of technical personnel.

6. Project Construction and Implementation. Shortage of funds, skilledstaff and construction materials were said to be major constraints and Govern-ment is urged to seek solution to these, e.g. expeditious transfer of funds,expanding local production of materials, etc.

7. Organization. Standardization of organization structures of allthe authorities was recommended.

- 319 -


LIST OF PROJECT POSSIBILITIES

1. (a) Aleppo Water Supply: This project has been appraised by theWorld Bank (see Chapter 1, para. 1.09).

(b) Aleppo Sewerage Treatment Plant: This is currently being con-sidered for study as part of the Aleppo water project 1(a).Authorities have sent out requests for proposals from con-sultants and received 90 answers which are now being short-listed.

2. Homs Water Transmission Line: This will be parallel to existingline and is necessary to meet needs of the city up to year 2000. Its presentstatus is not clear.

3. Palmyra and Neighboring Villages Water Supply. The Ministry ofTourism requested that the sector mission visit Palmyra and make specificreview and recommendations on the water supply situation of the area. Themission has reviewed the information and studies collected during its dis-cussions in Damascus, Homs and Palmyra itself. On the basis of these, itconcluded that the quantity and quality of groundwater (as revealed byseveral explorations undertaken in the area to date) are not adequate tomeet the needs. The only available groundwater from the "Amy" wells locatednorth of the town is of very bad quality. However, test drillings undertakenso far had not exceeded 150 m depth. The following alternatives for supply-ing the area could be studied in greater detail. At present there is aninter-ministerial committee coordinated by the Ministry of Planning to makerecommendation on a Palmyra project.

(i) Groundwater Source. This requires further hydrogeologicalstudy to obtain more conclusive data on the present ground-water situation.

(ii) Euphrates Source. Government and local officials showedkeen interest in the possibility of bringing water to thearea from the Euphrates river. This was explored exten-sively during the sector mission's discussions. Such ascheme may involve one of the following projects:

(a) The use of existing oil pipelines (formerly usedfor oil shipment from Iraq) with connections tothe source at Euphrates River and to the usersin the Palmyra area.

- 320 -


(b) The construction of a transmission line differentfrom (a) from the Euphrates for community watersupply (including tourism) and possible combina-tions of irrigation, agriculture and industry.

(c) The construction of a transmission line by anexisting phosphate company primarily to serveits own needs but with Palmyra as a possibleoff-taker.

(iii) Improvement of the existing production and distributionsystem in Palmyra City with consideration of alternativemethods of treatment.

4. Hama Sewage Collection System. This will replace the existing oldsystem which has deteriorated considerably. This project is already in progressand the main sewer network is completed.

5. Water Supply for Villages in the Kalamon Region. This is a rural(regional) water supply scheme to serve about 25 villages located between Homsand Damascus. This is a new project that deserves urgent consideration.

6. Pollution Control of Orontes and Barada. This project is currentlybeing studied by consulting engineers - (see chapter 1, para. 1.08).

7. Tartous Transmission. Water supply to the city of Tartous fromexisting treatment plant which is located on the Sinn River 45 km fromLattakia. This project is being considered as follow-up to 8(a) below.

8. (a) Lattakia Water Transmission Line. This project is already underconstruction but is being held up by the Lebanese problem anddisputes with Cecka Construction Company which is in charge ofthe project.

(b) Lattakia Sewerage. This project is in two stages. The firststage is relocation of the present sewage outfalls to avoidport expansion and an extension to serve the tourist area and anew development area. Preparation for this stage is expectedto start shortly. The second stage will include a treatmentplant. Proposals are being sent out to prospective consultants.

9. Deir-Ez-Zor - Sewerage and Treatment Plant. To serve:

(i) The existing parts of the old city that are already connectedto the existing collectior system.

(ii) New development on the North side of Euphrates River.

(iii) Neighboring Villages: It will make possible cleanerwater supply for downstream villages.

- 321 -


The project is not yet initiated. Similar projects could be explored forSalamiah, D'ara and Raqqa.

10. Rural Water Supply for Villages Above and Below the Euphrates River.The UNICEF expressed interest in rural water schemes for this region.

11. Baliak River Project. This river is infested with snails which arecausing schistosomiasis in villages which also use its bad quality water fordrinking.

12. Scope for Technical Assistance Exists in the Following Areas:

(a) Groundwater exploration - especially in the Palmyra area.

(b) Leak detection program - development and execution.

(c) Distribution and collection system analysis.

(d) Maintenance and operation program for both water andsewerage.

(e) Project design especially for small treatment plants.

(f) Use of local materials instead of imported materials.

(g) Manpower development and training.

- 322 -


DESIGN CRITERIA*

Water Supply

General Urban Rural

Design Period - Gravity Systems 25 years 30 years- Pump Systems 10 years 15 years

Assumed Average Daily Demand 200-300 lcd 100-125 lcd

Maximum Day Demand 1.35 x Average 1.35 x Average

Maximum Hourly Demand 2.0 x Average 2.4 x Average

Storage - Total 20% x Average 50% x Average- Elevated 5-10% x Average 25-30% x Average

System Design Pressure 3-6 atmospheres 2-3 atmospheres

Transmission and Distribution

Friction Coefficient (based on Colebrook Formula at 120C)

K = 0.025 for Asbestos Cement Pipe

K = 0.05 for Ductile Iron, Cement lined

K = 0.1 for Reinforced Concrete

Velocity: 0.4 to 1.2 m/sec.

House-connections: 1/2 in.

Meters: Universally specified for each connection

These are unpublished criteria obtained in discussions with officials inthe Ministry of Housing and Utilities.

- 323 -


Treatment

Rapid sand filtration rate (max.): 5-6m3/m2/hr).

Sedimentation retention time (min.): 4 hrs.

Flocculation time : 30 min.

Chemicals: Aluminium Sulfate and Lime

Sewerage

Collection System Diameters Sizes

Plain concrete pipe 20 cm - 60 cm

Reinforced concrete pipe over 600 cm

Reinforced cast in situ oval. section 60 cm x 1.0 m (vertical)

Reinforced concrete pipe w/cunette 1.0 m x 3 m (vertical)

House-connections 20 cm. min.

Collectors 25 cm. min.

Min. Velocity: 0.6 m/sec. (occasionally less)

Max. Velocity: 4.0 m/sec.

Design period: 40 years

Treatment

None as yet.

- 324 -


EPEF'S 1976 TARIFF STRUCTURE

Description Payable By Amount

Non-Recurring Charges

(i) Water Right Purchase Applicants 1/ with LS 2000 per m3/day 2/premises over 100 m2

(ii) Capital Contribution All applicants Minimum LS 75

(iii) Connection Fee - do - Cost plus 20%

(iv) Subscription Fee - do - LS 5

(v) Meter Installation Fee - do - LS 5

(vi) Deposit - do - Consumption depositplus value of meterdepending on size ofconnection and typeof consumption.

Recurring Charges

(i) Metered Supply Water right holder - LS 0.20/m3excessive

Others - All con-sumption 3/

(ii) Annual Fee Water right holders LS 14 per m3/day ofwater right

(iii) Meter Rent and Consumers who do not Varies (Basic = LS 9Maintenance own meters per year)

Meter Maintenance Only Consumers who own Varies (Basic = LS 4.8their meters per year)

(iv) Contribution to - do - LS 3.60 yearDistribution SystemMaintenance

(v) - do - As appropriate LS 50 year(Temporary Supplies)

- 325 -


Incidental Charges

(i) Transfer of Water Right All consumers LS 15

(ii) Name Correction - do - LS 5

(iii) Reconnection Charge - do - LS 3

(iv) Meter Testing - do - LS 5

(v) Meter Relocating - do - Not less than LS 15

(vi) Meter Destruction - do - Cost of repair orreplacement plus 20%.Minimum LS 15

(vii) Meter Reading Requestedby Consumer - do - LS 5

1/ Public, religious and certain other types of premises are exempt.

2/ The allowance which must be purchased depends on the size of the premises.

3/ Although EPEF may charge for public standpipes and religious buildingsthere has been no charge in the past.

syrian arab republic - world bank documents

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