Inversió estrangera directa (IED) a Síria

FDI in Figures

Before entering a political crisis in 2011, Syria was determined to gradually open its economy, moving from a closed and centralized economy 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 has greatly encouraged foreign investment, with measures such as the legalization of full business ownership, the importation of machinery, 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) are tangible results of the modernization of the country's legislative and fiscal framework. Syria has also created a number of industrial zones providing a favorable 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 caused investment to fall. The country is subject to sanctions from the United States and the EU, which limits trade and investment. The Caesar Syria Civilian Protection Act that came into force in June 2020 dissuades any investor from participating into Syria’s reconstruction.

No reliable international data has been published on FDI inflows into Syria since 2012. According to the UNCTAD World Investment Report 2021, the stock of FDI in Syria amounted to USD 10.7 billion in 2020. According to data collected by the Syrian Investment Agency on the stock of FDI between 2008 and 2014, 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 17 billion SYP (33 million USD) (Syrian Investment Agency).

In its Doing Business 2020 report, the World Bank ranked Syria 176th out of 190 economies, gaining three places compared to previous year's report. Progress has been made in terms of insolvency settlement.

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.

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.