Syrian businesses left with unwanted goods as economy stalls

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Businesses in parts of Syria formerly held by the Assad regime are struggling to sell their wares as a deluge of cheap imports undercuts local producers, sparking widespread anger at the new government’s move to cut import tariffs.

Foreign goods, which had been restricted for years, were allowed into the country in January after rebels led by Islamist militant group Hayat Tahrir al-Sham ousted president Bashar al-Assad a month earlier.

Under Assad’s rule, most goods were produced domestically or smuggled in through a system of exorbitant taxes, duties and fines, steeply increasing costs. Electricity shortages also meant businesses had to pay extortionate amounts for power.

Some businesses are opting to shut shop temporarily rather than sell goods at enormous losses, underscoring the challenge faced by the new government in reviving the shattered economy and maintaining social stability.

One car dealer said that a car costing $10,000 in Beirut, for example, would have sold for $60,000 in Syria under Assad, but now the same vehicle would go for $11,500.

“Two months ago, all the products on the market were Syrian,” said a Damascus-based banker. “Nowadays, a ready-made product from Turkey is cheaper than the cost of imported fabric.”

A textile businessman in the capital said he expected consumers would eventually realise the imported products were lower quality, “but by then the market will have been disrupted, and a lot of factories that could not handle the loss of business will have closed”.

Since coming to power, the HTS-led government has sought to liberalise the shattered economy in order to drive economic growth and help rebuild a country torn apart by 13 years of civil war. While Assad’s ouster brought jubilation to many, it has also brought a new set of problems for businesses that survived the war and the parasitical regime.

The return of imports to formerly Assad-held areas was initially met with excitement as residents found themselves able to purchase items long missing from shops, such as Coca-Cola and French cheese.

But the fervour was shortlived, as a countrywide cash crunch and a slowdown in local business activity limited people’s purchasing power. 

HTS’s quick-fire loosening of import curbs has caused resentment in former regime-controlled areas, including the capital Damascus in the south.

“They’re doing all this to keep the north happy, while the south pays the price,” said one businessman from Damascus, who said he had shuttered his factories to wait out the period of economic uncertainty.

Wary of the new leaders from the previously rebel enclave of Idlib, a northwestern province, all the businessmen interviewed for this story asked to speak anonymously because of concerns about government reprisals.

Several people said they did not oppose tariffs being reduced but argued the cuts should have been slower and smaller to save businesses from huge losses. Given the cost of energy was high in Damascus, they said it would be hard to compete with Turkish businesses unless they had some tariff support.

“They’re selling items 60 to 70 per cent cheaper than my prices,” an alcohol manufacturer said. All his operations have been halted since December.

The resentment underscored the challenge the HTS-led government faces in broadening its rule from the small fiefdom of Idlib to the rest of the country.

While southern businesses have bemoaned the lower fees, the introduction of any tariffs at all has fomented anger in HTS’s northwestern heartland, where residents were long accustomed to the custom-free flow of cheap Turkish imports from across the border.

If new president Ahmed al-Sharaa fails on the economy “within a few months, there will be a very serious question mark about his capacity to manage the country”, said Jihad Yazigi, the editor of news outlet Syria Report.

“I think these changes going forward need to be thought through much more thoroughly, but at the moment the caretaker government doesn’t have the luxury to do that.”

The Damascus-based banker warned that industries that had previously been the backbone of the protectionist Syrian economy — such as pharmaceuticals — were now in danger. “If they open the road for pharmaceutical [imports], that sector would be eviscerated,” they said.