Reconstruction of Syria – Forming of Joint-Ventures with Lebanese Construction Companies:
Entering Joint-Ventures with experienced Lebanese companies will provide European construction companies great advantages, such as access to local labour and engineers, local expertise, avoiding language barriers and security issues, and reducing costs.
The main issues of the wars in Syria are settled, the situation has been stabilised in most of the conflict areas.
In contrast to TV broadcasting etc., Syria does not consist only of war areas. Without neglecting or playing down the condemnable cruelty in Syria inflicted by all participants in violence, Syria partly continues normal life, although that does not mean that Syria is a safe country.
Of the around 17.000.000 population in 2014, around 10 to 11.000.000 people remain living in Syria. These people continue to live, many of them under difficult circumstances.
They continue to eat and to drink, and thus producers of food stuff continue to produce, as well as the packing industry, and many more. A number of industrial zones continue to operate, and most universities and schools continue their education as well.
It is expected that the reconstruction of Syria will begin towards the end of the year, at least in about 85% of the safe areas. Of course, this date is not a fixed date, and my the begin of reconstruction may be postponed.
In Turkey, near the Syrian border, the construction of two cement factories is continuing, each of them an investment of about 30 Mio USD.
Delegations of China and Russia are currently negotiating counter guarantees for the Syrian government, to be offered to foreign construction companies that intend to carry out construction projects in Syria. The current status of these negotiations is unknown.
Most of the reconstruction projects will be announced by the government. It is assumed that a part of them will be handled through tenders, and a part of them be fixed as direct deals.
Public projects will mainly consist of infrastructure and power projects (roads, railways, harbour facilities, airport facilities, public buildings, power plants). The total volume of most necessary reconstruction has been estimated as around 250 billion USD.
It seems as that Turkish construction companies will not be allowed to participate in Syrian tenders, due to the involvement of Turkey in war activities in North Syria.
Lebanon and the Advantage of Joint-Ventures
Syrian companies will only be able to deliver a very small part of the works needed. The Syrian Government will be open for foreign construction companies relating to the different types of projects. Tenders will be mainly international tenders.
However, it will not be easy for foreign companies to carry out construction works in Syria. The language barrier is only one issue. Foreign companies will have difficulties to send their employees to their sites in Syria, because of security concerns.
Foreign companies will also have difficulties to find sufficient local staff, from workers to foremen or engineers. On the other hand, it makes no sense to send foremen or engineers to the sites in Syria if they would be available locally or in surrounding countries.
Lebanon has a very well-developed construction industry, with all necessary type of well-trained staff and engineers available in the country. New buildings in Beirut and other locations are to the highest international standard.
The Lebanese Government is currently fostering the construction industry with a 6-billion-USDollars financing programme for housing.
The construction industry in Lebanon is currently undergoing a consolidation. The tendency is that a small number of the largest construction companies is rarely leaving projects for medium-size construction companies. On the medium term, medium companies will either be forced to close down, or to find other markets.
Syria has been Lebanon’s traditional main market for a wide range of Lebanese industries, including the construction industry. Historical ties (Lebanon has been within the area of Syrian kingdoms and influence until the Ottoman involvement), although not always without problems, are still today fostering business ties between both countries.
Lebanese business people and companies have developed a very unique resilience when it comes to operations under difficult circumstances. The history of Lebanon itself has always been marked by smaller and larger wars, unrests, conflicts and assassinations. The Lebanese construction sector masterfully managed to never collapse during all those years, a clear witness for the safety of investment and cooperation in and with Lebanon.
Lebanon is able to deliver (almost) all necessary construction materials and items, either produced in Lebanon or imported from Middle East countries as well as from Europe.
As far as the expected reconstruction of Syria is concerned, it will make sense to import construction materials for projects in Syria directly from Europe, either to Syria (once the ports are operating again) or through Lebanon.
The longest part of Lebanon’s borders are borders with Syria, providing quick access to Syria. Even when the Syrian ports are operative again it will be advantageous to import through Lebanon, for deliveries to sites in the Southern half of Syria, including Damascus and Homs:
Entering Joint-Ventures with experienced Lebanese companies will provide European construction companies great advantages, such as access to local labour and engineers, local expertise, avoiding language barriers and security issues, and reducing costs. With a Lebanese Joint-Venture partner, European firms would be able to host logistic operations of Syrian sites in Lebanon, or better handle logistic monetary transactions through Lebanese banks that do operate in Syria.
We strongly recommend beginning principle negotiations with Lebanese construction companies from now, being ready to enter the Syrian market when it opens, instead of beginning negotiations for the establishment of Joint-Ventures after the opening of the Syrian market.