Posted by Ehsani on Thursday, September 22nd, 2011
In a rather dramatic step towards preserving the country’s foreign exchange reserves, Syria’s finance minister announced that new car imports into the country are suspended till further notice. All products that are subject to customs duties of 5 percent and over will be included in the suspension notice. Such products include luxuries including passenger cars. Mr. Al Chaar made the announcement to reporters following the weekly cabinet meeting. The decision was made to “conserve the country’s foreign reserves and to reallocate it to the lower income groups”. The decision was thought to be “preventive and temporary”. As imports of such products are halted, local producers are thought to pick up the slack by increasing domestic production and employment. Raw materials, food and other basic materials will be exempt from the ban. Products that are not locally produced will also be exempt.
For the record, Syria imports approximately 70,000 new cars a year. The country’s car industry is likely to see used car prices soar. This decision will force all new car dealers to close down till the ban is lifted. This is the most dramatic economic development to date since the Syrian events unfolded almost 7 months ago.
Syria’s local manufactures prospered for years under the old “himaye wataniye” paradigm. Imports were generally banned for those products that were produced locally. With no imports to compete with, local manufacturers produced inferior products at high prices that the consumer had no choice but to buy. The old days are back.
Syrian economic officials have long assured the country that the country’s foreign exchange reserves are sufficient. Figures around US$ 17-18 Billion have been cited. The above announcement either indicates that this number is not accurate or that the government has concluded to dramatically tighten its belts for what is likely to be a long ordeal. In order to preserve its foreign exchange reserves, the government had to make the choice of either cutting back on some of the key subsidies like energy or to resort to the above decision of halting car imports and other “luxuries”. The decision was easy to make. This is not the time to touch the subsidies as winter approaches. Industrialists have been warning the government of the impending rise in fuel prices used for production.
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