After months of debate, a new draft law on public private partnerships (PPPs) seems set to reassure investors that Syria is an attractive place for their capital. It is thought that the law will not only set out how PPPs can be brokered in Syria, but also encourage investors, banks and contractors to work and invest in Syria by making the legal contracts that create PPPs clear and enforceable. That enforceability is essential and has been a stumbling block for successful foreign direct investment in many countries in the past.

It is hoped that PPPs will accelerate economic growth and provide employment.

Structural changes in the move to a market-based economy have been implemented. An over-reliance on petroleum has been replaced by a more balanced dependence on agriculture, industry, trade, services and investment. A willingness to bring in reforms, liberalise markets and encourage the private sector to take on a larger role have contributed to a growth rate that averages 6%.

However, while progress has been made, in the recent Doing Business report, an annual survey on the “ease of doing business” across the world produced by the World Bank and the International Finance Corporation (IFC), Syria’s ranking of 144th did not change from last year.

In order to remain competitive, Syria needs to attract investment, particularly from abroad, across the range of sectors and develop reliable infrastructure. This is where the notion of PPPs comes in. Government spending on infrastructure is limited by fiscal constraints so private companies can contribute to bridging the gap.

According to the IFC, a PPP is defined as a partnership between the public and private sector to deliver a project or service traditionally provided by the public sector. Its aim is to provide a more efficient, reliable service that is cheaper for the end-user.

The main reason for a government seeking private capital is to lighten the burden on the public purse. Governments can leverage the human capital, or expertise, of the private sector while companies benefit through the opportunity to invest in projects that are normally closed to them.

Streamlining the process through the establishment of the Central PPP Unit, under the direction of Abdullah Dardari, deputy prime minister for economic affairs, has helped. But despite much talk on the benefits of PPPs, only two large projects have been approved until now.

One of the first contracts signed under the PPP policy was a concession to manage and enhance the container terminal at the main Latakia port on the Mediterranean, which was given to a consortium that includes Souria Holding and French shipper CMA CGM. The other sizeable project is the private management of the port of Tartous.

Smaller projects in fields like wastewater management to build treatment plants on Build-Operate-Transfer systems have been implemented. The first of these was a joint project between the Ministry of Housing and Construction and Syrian-Qatari Holding Company to build plants to serve Jaramana and Suwayda.

Renewable energy is another sector where PPPs can play a useful role. In May this year Cham Holding, an umbrella group that brings together 73 Syrian investors, signed a strategic partnership with Danish firm Vestas for the development of the first Syrian wind energy project in Al Sukhna and Al Hijana.

On schedule, the company has experienced no hindrances except the delay in announcing qualified bidders for the project. The firm understands that the delay was due to the time taken to recruit a transaction advisor for the project.

“The potential for PPP projects in the renewable energy in Syria is big. Syria has around 5000MW of wind energy potential and much more when we talk about solar energy.

“As for the oil and gas sector, PPP has been a remarkable success in Syria over three decades, starting with Al-Furat Co. and Shell, headquartered in the Netherlands,” said Mahmoud A. Al Khoshman, CEO of Kharafi Cham for Utilities Development Company (MARAFEQ) and Sana Investment Company.

There is a concern that foreign companies and large local firms will monopolize the market for PPPs since they have experience and expertise in the field. Is this necessarily a bad thing?

“PPP projects are usually large business undertakings and they require large international and local companies with substantial technical, financial and people capabilities to handle and manage projects through a hectic, time-lengthy and costly process,” he continued.

Khoshman says that his company will offer around half of the PPP projects they win to national institutions and interested individuals.

“PPP projects are attractive investments for pension funds and endowments. Finally, we have a simple solution to such a worry… Law number seven of 2008 on competition and antitrust shall ensure fair play in the PPP court,” he said

• Sam Dalla: Was the Chinese model that good?
• Assad appoints a 29-member Constitutional Committee, for a new constitution by next February

• Assad appoints a 29-member Constitutional Committee, for a new constitution by next February
• Sam Dalla: Was the Chinese model that good?

• Assad appoints a 29-member Constitutional Committee, for a new constitution by next February
• Sam Dalla: Was the Chinese model that good?

• Assad appoints a 29-member Constitutional Committee, for a new constitution by next February
• Sam Dalla: Was the Chinese model that good?