With its long-standing textile tradition and low labour cost, Syria has great potential as a fabric and garment exporter writes Jozef De Coster. However, further economic liberalisation is needed if the fabric and garment industry is to compete on the world stage.

Europe is lucky to have three important cotton growing countries amongst its east Mediterranean neighbours: Turkey, Syria and Egypt.

However, while Turkey has emerged as a heavyweight textile and clothing exporter, both Syria and Egypt still mainly function as suppliers of cotton fibre. Their international role as suppliers of textile and clothing products is very limited.

In Aleppo, the main centre of Syria's textile industry, business people are painfully aware of the enormous gap between Syria's potential in textiles and clothing and the country's modest achievements up to now.

Syria's exports of all textile products (including raw cotton) to the EU were worth just EUR250m in 2004. This was not even one-tenth of Tunisia's and Morocco's exports of textile products to the EU, at EUR2.84bn and EUR2.55bn respectively in 2004. And it was 47 times lower than Turkey's textile exports of EUR10.55bn to the EU.

Eng Ammar Said, executive director of the Aleppo Chamber of Industry, says: "I made a comparison between Syria and Turkey, starting from their respective cotton production figures.

"If Syria could perform as well as its northern neighbour, it could annually export worldwide US$8bn dollars of fibre, textile and clothing products."

Added value policy
At the end of the nineties, the Syrian government embarked on a policy of added value. This meant that instead of exporting most of its quality cotton in fibre form, Syria would try to export more cotton yarns, fabrics and finished products.

The state organisation GOTI (General Organisation for Textile Industry), started the construction of three new, ultra-modern spinning mills, not only to increase its yarn spinning capacity to close to 100,000 tons per year, but also to improve yarn quality.

And in 2004, Syria's largest cotton ginning plant, with an annual capacity of 200,000 tons, was launched.

All Syrian cotton is hand picked. Around half a million people from a population of nearly 19 million harvest an average of more than 800,000 tons of cotton per year (an estimated 900,000 tons in 2005).

The Syrian government subsidises the cotton farmers, most of them small land owners, by fixing a purchase price well above world prices. This results in high domestic yarn and fabric prices - but badly affects the competitiveness of weavers and clothing manufacturers. Not surprisingly, many leading textile and clothing manufacturers have switched to synthetics.

Market liberalisation
Since 1990, Syria has taken several steps towards market liberalisation. The private sector has gradually been authorised to enter a growing number of textile activities. Recent Free Trade agreements signed with Turkey and a number of Arab countries, and the (pending) Association agreement with the EU are testimony of Syria's opening up to the world.

On 20 October 2005 the country announced it would allow imports of garments and shoes from all over the world, though with a tariff barrier of 47.5%.

Syria, with its long-standing textile tradition and low labour cost, undoubtedly has a great potential as a fabric and garment exporter.

However, further liberalisation of the economy (especially the cotton growing and spinning segment) is needed if the private fabric and garment industry is to get a fair chance to grow and compete.

By Jozef De Coster.