Thursday 16 June 2022

Investment project evaluation | Exploring Research information


Investment project evaluation

Investment project evaluation "The decision-making mechanism of investment projects and enhancing the scientific nature of investment project evaluation are of great significance for making full use of limited."

Investment projects refer to an expanded reproduction economic behavior that achieves expected benefits within a predetermined time and space range by increasing the input of human, material, financial and scientific and technological resources, improving production conditions, increasing production means, and improving comprehensive production capacity. 

Investment project evaluation refers to the use of system principles, economies of scale theory, investment optimization principles, risk uncertainty principles, etc. to comprehensively evaluate investment projects, so that capital input produces maximum output. From a micro point of view, the evaluation of investment projects plays a key role in the success or failure of the project, affecting the rational allocation of economic resources by economic entities. 

From a macro perspective, the evaluation of investment projects affects the allocation of resources in the whole society, and ultimately affects the speed and quality of a country's economic growth. Under the conditions of market economy, the evaluation of investment projects is of great significance.

First, the background of the Syrian state

On April 1946, 4, after Syria gained independence from French colonialism, it chose a national socialist model that was different from the Western economic model in developing its national economic model. After the revolution of March 17, 1963, Syria embarked on the path of Arab national socialist development, nationalized all industrial and mining enterprises, confiscated private property, and turned it into state-owned property, resulting in a shrinking scale of national industry and an outflow of private capital and talent. 

By 3, the Syrian economy was on the brink, the government called on citizens and diasporas to invest in the economy, but it did not have the desired effect, private capital continued to flow out, and productivity continued to decline. 

In November 8, in order to overcome the negative and unbalanced phenomena of the national economy and embark on the path of diversified economic development, Syria launched a reform campaign to save the country and revitalize the economy, and adopted an economic recovery strategy led by state-owned enterprises to develop collective, joint venture and private enterprises.

 In 1968, the Constitution abolished the nationalized economic system, developed and protected the private economy, and smoothly transitioned to a diversified economic system. Therefore, after the promulgation of the Constitution, the outflow of private capital and national capital began to return, and the two economic models of public and private in economic life began to coexist.

Since the 20s of the twentieth century, Syria has been exploring a diversified economic development model suited to the characteristics of its society. In this process, Syria has continuously learned from the successful experience of economic development in developed and developing countries, gradually improved economic laws and regulations, and implemented diversified economic policies in line with national conditions, thereby promoting the sustainable development of the national economy, and developed at a rate of more than 70% in the 20s of the 90th century, becoming a rare country with rapid economic development in the Middle East. In 5, the pace of economic development in Syria increased, with the Syrian government still estimated that GDP growth was still around 2007 per cent.

From the promulgation of the Law on Encouraging Foreign Investment No. 1991 of 10 to the end of 2002, 431 industrial projects were planned to be built, of which 55 were implemented, with investment increasing from 35.22 billion Syrian pounds (about 0 million US dollars) to 77.61 billion Syrian pounds (about 87 million US dollars), 1 registered industries and 35,694 enterprises, of which engineering projects accounted for 86281%; followed by the chemical industry, accounting for 61.14%; again textile industry, accounting for 5.13%; Then the food sector, which accounts for 2 per cent, is geographically unevenly distributed, with Damascus, Rural Damascus and Aleppo accounting for 11 per cent.

Second, the status of investment project evaluation in Syria

The evaluation of investment projects in Syria begins with construction projects aided by international organizations. According to the United Nations, construction projects must follow the specific evaluation criteria and procedures of international organizations, so it is not part of Syria's own investment project evaluation. But it provides the basis for the initial construction of the evaluation of investment projects in Syria. 

During the Second Five-Year Plan period, Syria began a cost-effectiveness analysis of a large number of industrial projects. The State Planning Commission was established on July 1968, 7. At the end of the 2s of the 20th century, Western feasibility study methods were introduced in Syria. In 70, the State Development Planning Commission issued the Joint Guidelines for the Evaluation of Syrian-Jordanian Investment Projects. 

Looking at the development of the current investment project evaluation in Syria, which can be described, it has the following characteristics: late start; absolute control by the government; There is no independent evaluation system, and the evaluation system for investment projects is not perfect.

Third, on the problems existing in the evaluation of investment projects in Syria

(1) Technical issues in the evaluation of investment projects

1. In the evaluation of investment projects, there is a lack of assessment of the quality of operators. For a technology project, the key to its success or failure lies in the operator of the project. The low quality of the operator will make the project ultimately fail. At present, Syrian evaluations of projects often focus only on the expected economic benefits of the project itself. The expected benefits of a project only mean that the project is feasible, while its investment is not necessarily feasible. Because the investment always ends up going to a certain industry in a certain region. When the quality of the invested enterprise is low and it does not have enough ability to achieve its expected economic benefits, the economic benefit standard will lose the premise and foundation for its existence.

2. The lack of investment environment assessment for the introduced projects leads local governments, driven by "performance awareness", to lack of evaluation of the investment environment of the projects, and blindly introduce them, resulting in projects "only blossoming but not bearing fruit". The investment environment restricts investors' investment activities. The superior investment environment is the guarantee for the smooth progress and development of investment, which is conducive to the realization of the economic benefits of the project; The poor investment environment will hinder the smooth progress of investment activities and affect the economic efficiency of the project. The investment environment includes both hard and soft environments, where the deterioration of the soft environment has a greater impact on the success or failure of the project.

3. Lack of professional investment appraisal institutions and intermediary organizations. Although Syria currently has more than a dozen appraisal institutions, most of them are affiliated with government departments or accounting firms, etc., lack industry vision and professional experience, coupled with single valuation methods and backward appraisal methods, which makes the value estimation of investment projects or enterprises too erroneous, and the credibility of the assessment results is poor.

(2) Issues in the decision-making system of investment projects

In the decision-making of investment projects, Syria adopts a centralized and unified decision-making system, which presents the following two contradictions:

1. The contradiction between the economic requirements of decision-making and the non-economic considerations of decision-making. 

The non-economic considerations of decision-makers are mainly reflected in two aspects: First, the central decision-making is often constrained by political factors and mutual constraints between government departments. 

The second is the pursuit of performance in local government decision-making. 

Local governments should meet or exceed the targets for economic aggregates and development rates assigned to local governments in order to obtain opportunities for promotion; In the face of the local economy, it is necessary to solve pressures such as employment pressures and people's living standards and pressure to increase fiscal revenues. These goals and tasks of local governments are related to the scale of the economy and are not closely related to economic efficiency, resulting in non-economic considerations in local decision-making.

2. The contradiction between decision-making authority and decision-making risk asymmetry. 

Due to the disunity between the decision-making body and the investment entity, the investment decision-making authority is divided between the Supreme Council of Investment, the enterprise executive and the enterprise. The risk constraint system for investment decisions is seriously lacking. In Syria, the Supreme Council for Investment is the main decision-maker of investment projects, and the risks of investment projects are generally not borne by them. Therefore, in investment evaluation, the Supreme Council of Investment is more arbitrary, and sometimes even does not follow the rules.


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