Syria: Investing

FDI in Figures

Before entering a political crisis in 2011, Syria was determined to gradually open its economy, moving from a closed and centralized approach to a model close to the market economy. Indeed, between 2000 and 2010, the Syrian legal corpus underwent profound changes. Structural reforms, such as the renovation of the commercial code (2007), the code of the sea (2008), the finance law (2004) and the bank law of 2004, made it possible to phase out the model of the planned economy in effect for decades. The Investment Law greatly encouraged foreign investment, with measures such as the legalization of full business ownership, the importation of machinery, and exemption from customs duties on transport and raw materials. Private investors benefited from a five-year tax holiday (which has been extended to seven years in the case of a joint venture with 25% public sector participation). The establishment of a private banking system and private insurance companies (national or foreign), the opening of the local market with the liberalization of imports (gradual removal of tariff barriers to market access and reorganization of the customs administration with the help of the European Union) were tangible results of the modernization of the country's legislative and fiscal framework. Syria had also created a number of industrial zones providing a favourable framework for foreign companies wishing to set up in the country. However, the civil war which has torn the country apart since 2011 has caused a serious humanitarian and economic crisis that has triggered a fall in investment. The country is subject to sanctions from the United States and the EU, which limits its potential. The U.S. Caesar Syria Civilian Protection Act that came into force in June 2020 dissuades any investor from participating in Syria’s reconstruction. Furthermore, in early 2024, the U.S. House of Representatives approved the Assad Regime Anti-Normalization Act which further bolsters the sanctions outlined in the Caesar Act, set to expire in 2024, until 2032.

No reliable international data has been published on FDI inflows into Syria since 2012. According to UNCTAD's World Investment Report 2023, the stock of FDI in Syria amounted to USD 10.7 billion in 2022. Data collected by the Syrian Investment Agency on the stock of FDI between 2008 and 2014 shows that Russia was by far the largest investor in the country (75.8%), followed by Germany with 19.7%; whereas the majority of investments were directed towards the telecommunications, financial intermediation, and electricity sectors. Regarding FDI inflows into the country in the first half of 2016 (latest data available), the total amount was SYP 17 billion (around USD 33 million - Syrian Investment Agency).
The Minister of Economy claimed that the Syrian Investment Authority issued 32 investment licenses between the enactment of Investment Law No. 18 in May 2021 and June 2022. The assets of these investment projects totalled approximately SYP 1,357 billion.
Syria is not ranked on the 2023 Index of Economic Freedom.

Foreign Direct Investment	2020	2021	2022
FDI Stock (million USD)	10,743	10,743	10,743
Number of Greenfield Investments*	0	0	0
Value of Greenfield Investments (million USD)	0	0	0

Source: UNCTAD, Latest data available.

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

FDI INLOWS BY COUNTRY AND FDI STOCK BY INDUSTRY

Main Investing Countries	2014, in %
Russia	75.8
Germany	19.7
Palestine	1.2
Turkey	1.0

Main Invested Sectors	2014, in %
Telecommunications	26.0
Financial intermediation	17.3
Electricity supply	11.3
Oil and gas	7.0
Hotels and restaurants	5.9

Source: Syrian Investment Agency, Latest data available.

Form of Company Preferred By Foreign Investors: SNC (general partnership): Limited Partnership, Joint Venture.

What to consider if you invest in Syria

Strong Points: Syria's main strong points are:
- The highly skilled workforce in traditional industries such as textiles and clothing manufacture;
- The appreciation of new activities, mainly in training, counseling and knowledge transfer;
- Its engagement for the liberalization of its economy;
- A low level of debt:
- A tourism sector in full development;
- The establishment of a system more favorable to trade: removal of exclusive rights to import agents, reduction of customs duties on raw materials and the establishment of a harmonized system of nomenclature (HSN);
- The advancement in the banking sector, through the authorization of accounts in foreign currencies.
Weak Points: Syria's main weak points are:
- A strong demographic pressure (36% of the population under 15 years, 50% under 21 years and 250,000 new comers into the job market);
- A per capita income that progresses too slowly: 30% of the population still lives with less than USD 2 per day;
- The erosion of budgetary income and the degradation of the terms of the energy balance;
- A high rate of inflation, aggravated by a year of particularly severe drought;
- The absence of any refinancing instrument for Syrian banks and the explosion of credit in the private sector;
- The prices of real estate which have almost doubled in Damascus since 2006;
- A tax avoidance that is very difficult to repress and that undermines income and fiscal reforms;
- The lack of diversification in investments, especially targeting the real estate sector (high quality residences, hotel complexes or shopping centers).
Government Measures to Motivate or Restrict FDI: Syria has profoundly changed its legislative and legal base in order to attract foreign investment. The country has set up seven free zones which allow different production activities and services in the industrial zones. The government has also favored the development of industrial cities. It has created four new towns where an industrial complex is back to back with a residential area. These centers are intended to occupy the space between ancient and traditional urban areas. Syria has abandoned the first investment decree n°10 of the nineties to the benefit of decree n°8 which is much more favorable to FDI (land ownership, repatriation of profits...). This law has allowed the access of private investors into the industry sector.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Syria: Syria has signed many bilateral agreements with the United States, Germany, Pakistan, China, Indonesia, Russia, Belarus, Iran, Libya, Tunisia and Lebanon.
Member of the Multilateral Investment Guarantee Agency: Syria is a signatory of the MIGA convention.

Country Comparison For the Protection of Investors	Syria	Middle East & North Africa	United States	Germany
Index of Transaction Transparency*	7.0	6.4	7.0	5.0
Index of Manager’s Responsibility**	5.0	4.8	9.0	5.0
Index of Shareholders’ Power***	3.0	4.7	9.0	5.0

Source: The World Bank - Doing Business, Latest data available.

Procedures Relative to Foreign Investment

Obligation to Declare: The Syrian investment map provides information about the authorizations required to set up a business in the country.
Competent Organisation For the Declaration: Syrian Ministry of the Economy
Requests For Specific Authorisations: Air and rail transportation, landline telephones, oil refineries, mineral waters and cereal marketing are among the rare sectors which are still exclusively in the hands of the public sector.

Investment Aid

Forms of Aid: The European Union and Syria have started an agreement in 2004 under the aegis of the Euromed program. This agreement should create a free-trade zone for a period of 12 years between the European Union and Syria, and provide a legal frame for European aid intending to improve the political framework, as well as the economic and financial development of the country, especially in the following fields: science, technology, environmental protection, resources exploration, production and infrastructures.

Investment Opportunities

The Key Sectors of the National Economy: Oil, industry, banking and real estate.
High Potential Sectors: Syria remains very dependent of a small number of sectors: oil, agriculture and textile.
Privatization Programmes: The government is responsible for promoting foreign investments when it considers it necessary.
Tenders, Projects and Public Procurement: Tenders Info , Tenders in Syria Arab Republic
DgMarket , Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors: Government restrictions concerning foreign investment are weak and limited to sectors such as gas, oil, power generation and distribution, airline transportation, port operations, bottled waters and telephone services.

Finding Assistance For Further Information

Investment Aid Agency: Syrian Investment Agency
Other Useful Resources: Syrian Enterprise and Business Center
Doing Business Guides: Embargoes and sanctions on Syria for businesses in the UK
Embargoes and sanctions on Syria for businesses in the U.S.

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