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Director of Industrial City in Aleppo Calls on Syrian Investors to Return

The Industrial Zone in Sheikh Najjar in Aleppo.
The Industrial Zone in Sheikh Najjar in Aleppo.
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Director of Industrial City in Aleppo Calls on Syrian Investors to Return

The Industrial Zone in Sheikh Najjar in Aleppo.
The Industrial Zone in Sheikh Najjar in Aleppo.

Hazem Ajjan, director of the industrial city in Sheikh Najjar in northern Syria, called Saturday on Syrian expatriates to invest in the industrial city in Aleppo.

He stressed that all the encouraging factors for production have improved, especially the availability of a 24-hour electricity supply.

Speaking at the Expatriates Forum held in Khan al-Harir market in the old city of Aleppo, Ajjan said 810 establishments have already started operation. Half of the firms are funded by expatriates.

In a statement to the official Tishreen newspaper, Ajjan noted that the administration of the industrial city in Sheikh Najjar, in cooperation with the concerned authorities, is working seriously and vigorously for the return of industrialists who were forced during the war to move their factories and work to other countries.

Fares al-Shihabi, the head of the Aleppo Chamber of Industry, called on Syrian industrialists abroad to return to Syria, where they could restore and rehabilitate their factories. He stressed basic elements, such as energy, electricity and water, are available to run the facilities.

Al-Shihabi then confirmed that the industrial sector is gradually improving.

The electricity supply in Aleppo improved remarkably after President Bashar Assad made this month his first visit to the northern city since his forces recaptured it in 2016.

He reopened a thermal power plant that is expected to generate 200 megawatts of electricity.

However, with power returning to Aleppo, owners of generators have expanded towards other provinces, such as Latakia, Hama, Homs and Damascus, where they are now allowed to invest after previously being barred.

Sources said this is a sign that the electricity crisis in Syria is nowhere close to being resolved.

A solution was only found in Aleppo, which will rely on thermal power from Iran that had preempted Assad’s visit by repairing the plant, giving the impression that it controls the electrical sector and not the regime.

Indeed, the Iranian Cultural Chancellery in Damascus said in a statement that an Iranian company had repaired the station.

Responding to calls for investors to return to Aleppo, sources said electricity is one of a number of complex problems hindering investment, among them is loss of trust in the regime and its officials that have destroyed the industrial and agriculture sectors.

Moreover, the security and military forces have imposed their authority over industrialists and merchants, set up checkpoints across cities and forced them to may tariffs.

They also cited the unjust tax policies and the tight measures imposed on the movement of funds, the banning of the use of foreign currency, in addition to the high cost of transporting and shipping goods due to the fuel crisis.

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Turkish Firms Face Wave of Closures Amid Economic Reckoning 

Leftover textile materials are seen outside a shut-down textile factory at the organized industrial zone in Corum, Türkiye, August 23, 2024. (Reuters)
Leftover textile materials are seen outside a shut-down textile factory at the organized industrial zone in Corum, Türkiye, August 23, 2024. (Reuters)
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Turkish Firms Face Wave of Closures Amid Economic Reckoning 

Leftover textile materials are seen outside a shut-down textile factory at the organized industrial zone in Corum, Türkiye, August 23, 2024. (Reuters)
Leftover textile materials are seen outside a shut-down textile factory at the organized industrial zone in Corum, Türkiye, August 23, 2024. (Reuters)

It is hard for Dogan Duman to see how he can keep his garment factory in central Türkiye running much longer, even after firing a third of his staff to cut costs that have soared for companies nationwide, generating a wave of bankruptcies and closures.

Idle sewing machines are pushed to the side of his factory floor in Corum, where outside "For Sale" signs and padlocked gates dot the small city's once-buzzing industrial zone.

Such sober scenes are spreading across Türkiye as part of the fallout from a more than year-long policy-tightening effort, including a 50% benchmark interest rate, to rein in years of soaring inflation and overheated demand.

Thousands of companies like Duman's - which makes coats and jackets for global fashion brand Zara - are squeezed by inflation that topped 75% earlier this year, an overvalued lira, hikes to electricity and gas prices and dwindling export orders.

"The orders are shrinking daily because we are losing our competitiveness... and I think they will shrink even more," he said of his 27-year-old company that is now down to 60% capacity and 210 employees.

Türkiye is one of the world's top five garment manufacturers and a critical source for Europe's top brands. But despite its advantage of proximity to Europe, its main trade partner, Duman says swelling energy, labor and FX costs have left him trailing rivals in Vietnam and Bangladesh.

"Considering the current lira exchange rate and the expected further rise to minimum wage next year, I think we won't be able to compete," he said. "We will be at a point of shutdown."

These days, Turkish households and business are facing the economic consequences of a cumulative 41.5 percentage points of rate hikes that began in June last year and are now finally beginning to cool inflation, which dipped to 52% last month.

Last year's dramatic policy U-turn, including fiscal steps, aims to leave behind years of soaring prices and currency crashes under President Recep Tayyip Erdogan's formerly unorthodox approach of monetary easing to stoke growth.

But with credit now out of reach for many, and lira depreciation badly lagging monthly price rises, companies, especially apparel and textile exporters, are in a crunch.

Almost 15,000 companies closed down in the first seven months of the year, up 28% from 2023, according to the Union of Chambers and Commodity Exchanges of Türkiye.

Other data suggest bankruptcy stress is brewing.

Monitoring outlet konkordatotakip.com says 982 companies were granted initial court protection from debt in the first eight months of the year, almost double last year's total.

Construction and textile firms have made the largest number of such applications to suspend debt payments to banks and suppliers to continue operations, and also for bankruptcy proceedings.

Such company strains have knock-on effects, slowing or halting payments across the economy and lifting joblessness.

There may be "heavy costs," said Erdal Bahcivan, chairman of Istanbul Chamber of Industry. "While trying to save a company, dozens of (creditor) firms may end up in dire straits."

Some economists say that given the aggressive tools used to slay inflation, rising unemployment and bankruptcies are all but certain.

"This is a serious dilemma for the government," said Seyfettin Gursel, director at Bahcesehir University Center for Economic and Social Research. "It is trying to put the monster it created back into its lair, but doesn't know how to do it".

STREWN GARMENTS

In Corum, 500 kilometers east of Istanbul, some factories have broken windows and one had dozens of colorful rain-drenched garments strewn across its grassy yard.

Bulent Demirci, co-owner of a yarn factory in the city with 50 workers, said he shut it down a couple of months ago due to an "unpredictable economic outlook".

"We had production cuts from time to time in the past. But this time it is all doom and gloom," he said.

Ankara's latest hike to the minimum wage was to 17,002 liras ($500) in January, which is up 100% from a year earlier and 500% from the end of 2021, when a historic lira crash rocked Türkiye.

Gas and electricity prices have risen about sevenfold and threefold respectively since 2021 for small to mid-scale manufacturers.

Türkiye’s overall production costs are now almost 40% higher than in competing Asian countries in dollar terms, according to interviews with exporters, who also blame barriers to financing and dwindling working capital.

Exporters have lobbied for more currency depreciation given that, year-to-date, inflation is 32% while the lira has fallen only 13% to the dollar. Authorities however have urged lira holdings, helped along by high deposit rates.

Istanbul-traded Mega Polietilen and garment manufacturer 3F Tekstil are among those that applied for court protection from debt payments.

An executive at 3F who requested anonymity said the move helped as it struggled to survive with a total 600 workers, and to continue supplying fashion brands such as Mango and H&M.

"But our suppliers and those who have receivables will suffer more in this process," amounting to roughly 10,000 workers at outsourced manufacturers across the country, the executive said.

"When interest rates reached 60-70% the companies could not bear it. They cannot manage their debt," he said. "Businesses have paid for high inflation in Türkiye."