Introduction:
The role of small and medium-sized enterprises (SMEs) in the global economy has grown in recent years, representing approximately 80–90% of all operating establishments in most countries. The potential contributions of this sector to both the economic and social levels have become clear.
In Syria, SMEs constitute the backbone of the industrial sector and are an important tool for economic and social development. This is primarily due to their representation of traditional economic activity, in addition to their positive impact on the national economy, in terms of their pioneering role in providing new job opportunities and their ability to link economic activities, all with modest requirements compared to other types of development projects.
First, the legislative and regulatory framework for SMEs in Syria:
- The establishment of SMEs in Syria is governed by the provisions of Law No. 21 of 1958 and Law No. 47 of 1954.
- These enterprises are subject to regulatory matters under the Commercial and Companies Laws, placing them within the general legal framework for private economic activities.
Second, the reality of small and medium-sized industries in Syria:
Given the Ministry of Economy and Industry’s oversight of the small and medium-sized industries sector, we review the reality of these industries in Syria below. We use this term to distinguish it from the more general term “small and medium-sized enterprises” for statistical and analytical purposes within some parts of this paper.
- These industries operate within the basic industrial sectors: food, textiles, chemicals, and engineering.
- Small and medium-sized industries constitute 82% of the total number of private industrial establishments.
- The capital of these industries constitutes 83% of the total capital invested in the private industrial sector.
- The employment employed by this sector is estimated at 94% of the total employment in the private industrial sector.
- Small and medium-sized industries contribute approximately 7% of the gross domestic product.
Third, an analysis of the reality of small and medium-sized industries:
- Small and medium-sized industrial enterprises constitute a fundamental component of the national economic sectors in Syria.
- These enterprises contribute to the employment of a significant proportion of the workforce in the national economy.
- Most of these establishments operate according to traditional, well-known business practices and find it difficult to develop their work methods in line with the requirements of integration into the global economy.
- The products of this sector face fierce competition from lower-quality, cheaper imported products, given the weak enabling environment for this sector.
- These establishments lack an environment that provides the basic requirements for their economic performance, such as training and vocational qualification.
- They suffer from a weak infrastructure necessary to support and develop these establishments, especially in the areas of production and marketing.
Fourth: The potential for developing this sector:
- Creating job opportunities with less capital.
- Reinvesting savings in productive sectors rather than directing them toward consumption.
- Investing locally available raw materials.
- The role of small and medium-sized enterprises (SMEs) as feedstock for other industries, expanding the local production base.
- Reduced need for high levels of training.
- Providing a significant portion of the local market’s needs, reducing imports.
- The ability to quickly adapt to market changes.
- The potential for relying on digitalization for internal and external marketing.
- Relying on the assembly economy to reduce production costs.
Fifth, government policies to develop small and medium-sized industries:
The current phase requires that government policies, within the development plan, develop a supportive and integrated business environment for this sector, considering that supporting it is not an option but a strategic necessity for revitalizing the Syrian economy. This requires genuine political and social will to adopt this approach, given its impact on reducing unemployment, increasing GDP, and achieving social stability.
1.Developing the legislative and regulatory environment
- Issuing a law specific to small and medium-sized industries that regulates registration, licensing, and granting records.
- Establishing an industrial modernization center to provide the necessary technical support.
- Simplifying procedures and granting additional benefits such as customs exemptions and tax reductions.
- Developing the banking sector
- Establishing a national fund to finance small and medium-sized enterprises with government and international capital.
- Granting banks benefits to encourage them to allocate a portion of their credit portfolio to this sector.
- Developing the education and training sector
- Establishing specialized technical support centers.
- Developing a sustainable plan to develop professional skills and focus on new professions.
- Providing grants for the adoption of energy-saving technologies.
- Establishing technology incubators for emerging industries.
- Developing marketing mechanisms.
- Establishing a national electronic platform to showcase products domestically and internationally.
- Adopting the commercial attaché at embassies as a market data provider and linking them to policymakers.
- Establishing small industrial complexes equipped with infrastructure to reduce production costs.
Conclusion:
Small and medium-sized industries in Syria are a fundamental pillar of the national economy, given their role in employment, production, and industrial integration. Despite the challenges they face, their potential is significant and can be leveraged through comprehensive government policies focused on legislation, financing, training, and marketing. Adopting these policies would achieve a qualitative shift in the performance of this sector and enhance its contribution to economic and social development.
In this context, the Syrian Future Movement published a previous study entitled “Small Projects: An Abandoned Need” (May 15, 2024). Based on the above, the Syrian Future Movement recommends several measures that complement those contained in this paper, most notably:
- Directing zakat and almsgiving to support small and medium-sized enterprises (SMEs) rather than limiting them to consumer aid, as this has a sustainable impact in stimulating the economy.
- Establishing a national economic fund under the supervision of a community committee in cooperation with Syrian businessmen, with the aim of financing SMEs within a transparent and oversight framework.
- Redirecting international support towards promoting a culture of small and medium-sized industrial enterprises (SMEs), as an effective tool for combating unemployment and achieving social stability.
Integrating these recommendations into proposed development policies enhances the sector’s chances of success and transforms SMEs from an economic marginality into a strategic focus in rebuilding the Syrian economy, especially considering that the investment cost of a job opportunity in Syria in SMEs can reach $100,000.
Member of the Economic Bureau
Reem Halali
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