Syria

SETTING UP A BUSINESS IN BODIES DEDICATED TO SUPPORT BUSINESS IMPLEMENTATION AND INVESTMENT ATTRACTION PICTURE OF SYRIAN ECONOMY THE TRANSPORTATION INFRASTRUCTURES THE FINANCIAL AND BANKING SECTOR, THE INSURANCE SECTOR Energy Sector – Oil and Gas, Electricity and Water Car industry Textiles Chemical Industry Agriculture CHAMBERS OF COMMERCE

Setting Up a Business in Syria

Encouraging investment has been a goal of the Syrian government since the early 1990s. This is because up until then, Syria was the recipient of general loans and grants for the purchase of Soviet weaponry and equipment from the former USSR. Furthermore, Syria also received free oil and very generous trade deals from Iran as a reward for severing economic and political ties with Iran's enemy . Upon the breakup of the USSR and the end of the Iraq v Iran war, Syria found itself looking for new sources of income. Therefore, in order to encourage investment from foreign countries, in 1991 the Syrian government passed Investment Law No. 10. This law offered investment incentives such as: tax breaks, customs duty concessions, increased freedom of capital movement and foreigners may own 100 % of a company and the land on which a business is located. Almost all sectors are open to foreign direct investment except for power generation and distribution, air transport, port operation, water bottling, telephony, and oil and gas production and refining. The investment law was initially quite successful in attracting investment into Syria as it opened up new parts of the economy and offered new incentives, which had not existed in Syria before. However, from the mid 1990s investments began to decrease owing to the unfavourable macroeconomic conditions in the country. Law N°10, at the time seen as revolutionary, is still providing attractive facilities. By way of example, this text sets no limit to foreign share holding, or to the nationalities of the members of the Board of Directors of companies. Among its most remarkable elements, this Law stipulates i) a five year tax exemption on business profit (which can be extended to seven years if more than half of business is to export); ii) the exemption of customs fees for all investment and transport goods, iii) the freedom to repatriate the capital and the profits. This law was significantly amended in 2000. By way of example, foreign investors now have the right to own the land on which their buildings are erected; this provision lead to the construction of a large number of new hotels owned by investors from the Gulf region, in and in the rest of the country. In order to benefit from the advantages of Law N°10, applicants simply have to put in a request with the Investment Bureau, which recently introduced a one-stop-shop system intended to facilitate the procedures. The only formal condition for the investments to be accepted is that the invested capital must be in excess of US$ 200,000. Almost all sectors are now open to private shareholding, after several decades of public monopoly that controlled whole blocks of the economy. All business statuses – from private limited companies to holdings – are authorized. Electrical power production and cement mills are among the sectors most recently made accessible to private investors. Air and rail transport, telephone systems, oil refineries, mineral water, the commercialisation of cereals are some of the few sectors still under public control. As to international trade, the Syrian authorities have also launched a gradual opening policy in the last few years. Some major free trade agreements have been signed with neighbouring countries. They provide real export opportunities at the regional level. The implementation of the Arab Free Trade Zone, scheduled for 2005, will enable Syria-based investors with free access – without tariffs or customs barriers – to m