Legal Briefing – January 2019

International Trade

• A delegation of Syrian businesspersons visited the United Arab Emirates as part of efforts to further develop UAE-Syrian economic relations. They set off on a tour of sites in Abu Dhabi and held meetings to discuss potential UAE investments in various sectors of the Syrian economy. The meetings were held at the levels of the chambers of commerce and industry of both countries. Following the visit of the Syrian delegation, efforts were underway to promote the UAE as an export destination for Syrian goods as well as Syria as a recipient of more goods from the UAE. Marota City, the new real estate development in Damascus, is also envisioned as a potential target for UAE investment.
• DP World established a 2,500 kilometer transport corridor stretching from Jebel Ali Port in Dubai all the way to the Nassib crossing on the Syrian-Jordanian border following the reopening of the latter in October 2018. As such, cooperation will be strengthened between customs authorities and logistics providers in the UAE, Saudi Arabia, Jordan, Syria and Lebanon in order to facilitate the flow of goods to Syria.
• Syria, Iraq and Iran are in talks to further integrate economic and energy links between the three countries across their land borders. To this effect, there are plans to establish a joint company between the three countries to facilitate the exportation of Iranian goods to Syria via Iraq. Doing so would mitigate the repercussions of situations such as the gas shortage crisis in Syria where US secondary sanctions on Iran are hindering supplies to Syria.
• The Ministry of Economy and Foreign Trade issued a negative list containing 16 foodstuff items that are banned from being exported outside Syria.

Reconstruction

• Syrian Prime Minister Imad Khamis and Iranian Vice-President Eshaq Jahangiri signed significant agreements that will facilitate Iranian public and private investments in the reconstruction process in Syria including in the energy, housing and transport sectors.
• At an event hosted by Lebanese international engineering firm Khatib and Alami in Dubai, Syria was back on the agenda of potential opportunities as reconstruction in the country gets underway.
• Jordanian contractors discussed the means by which they could contribute to the reconstruction process in Syria during a syndicate meeting.
• Recent studies suggest that the Syrian economy on its own without external financing can generate up to 40% of the revenue needed to fund the country’s reconstruction estimated at $200 billion (US). However, these assessments are interpreted as taking an optimistic perspective.
• Economists are predicting that Syria may have the highest economic growth rate in 2019 as reconstruction gets underway.

Commerce

• The chambers of commerce in Syria are now requiring businesses that want to renew their memberships to employ at least one employee and register them with the General Establishment for Social Security. Doing so is a prerequisite for renewing memberships even if a business does not usually employ personnel.

Industry

• Aleppo topped all other Syrian provinces with respect to industrial establishments returning to work.
• A rising businessman from Aleppo has contributed to the incorporation of a steel company in his home province.
• According to the Syrian Investment Authority, an automobile plant and assembly line will be set up by a local car manufacturer in the Adra Industrial Park outside Damascus.

Finance

• The Central Bank of Syria is studying mechanisms to encourage Syrians to transfer their funds to Syrian banks from overseas, particularly from Lebanon, by permitting them to open foreign currency accounts on more preferential and beneficial terms along with better deposit rates.
• Local corporation Aman Holding raised its shareholding in the Syria International Islamic Bank, one of the leading financial institutions in the country, to 7.6%.
• The Council of Ministers discussed a bill that would increase the minimum capital requirements of domestic money transfer companies, excluding those that engage in foreign exchange and foreign money transfers.
• The Ministry of Finance imposed an attachment order against the assets of family members behind the Katakit Company, a local Syrian producer of confectionery sweets.

Taxation

• The General Commission for Taxes and Fees raised the tax imposed on automobiles operating on diesel fuel to boost revenues for the Public Treasury.

Capital Markets

• Syriatel, the top mobile network operator in the country, led stock market transactions on the Damascus Securities Exchange following its recent listing.
• Al-Aqeelah Takaful Insurance, a local company listed on the Damascus Securities Exchange, started distributing earnings to its shareholders following a share capital increase sanctioned by its shareholders.

Energy

• A gas shortage crisis continued in Syria as increased demand during the cold winter coupled with low supplies sent the parallel market price soaring. Syria does not produce enough gas to satisfy its population at the moment despite recent military victories to secure production sites. Imports from Iran are meant to fill in the gaps but US secondary sanctions on Iran are making logistics very difficult to transport gas to Syria.

Transport

• It was reported that civil aviation officials from the UAE began examining the facilities at Damascus International Airport to assess the capabilities for resuming direct flights to the Syrian capital.
• Jordan plans to resume commercial flights to Syria as a technical team from its civil aviation authority visited Damascus to discuss the matter.

Property

• The Ministry of Interior is no longer requiring security clearances to be obtained as a precondition for leases to be registered with municipalities.
• A new local businessman is believed to be behind the investment in the Yelbagha Complex in Damascus, a real estate development that commenced construction decades ago but ceased due to the presence of water resources underneath it and other reasons. The same businessman is responsible for investments in the retail and hospitality sectors such as the Qassioun Mall, the upscale Massa Plaza and the Al-Jalaa Hotel. The Yelbagha Complex is expected to host similar facilities. The investment agreement was signed with the Ministry of Religious Endowments, which is responsible for the site. The Ministry attempted to conclude similar agreements during the previous decade with companies from Saudi Arabia and the UAE but they were not implemented.
• A ceremony was hosted by the Syria Motherland Gathering to launch the Zeitoun City project near Palmyra in Homs province, which is anticipated to be comprised of 30,000 housing units and an area measuring 15,000 hectares in size. The development will also include hotels, malls, cultural centers, medical centers, a hospital, gardens and so forth.

Employment

• President Bashar Al-Assad issued Law 1/2019, which exempts employers registered with the General Establishment for Social Security from interest payments and fines for not settling their accounts within the prescribed time period.

National Administrative Reform Program (NARP)

• The Minister of Administrative Development announced the imminent issuance of the first working structural model in the history of the Syrian state for the benefit of the public sector. The first model will be implemented on the operations of the Ministry of Administrative Development and will serve as a pilot project to be executed by all public entities. A committee set up by Prime Minister Imad Khamis according to Resolution 15/59 is currently working to reorganize the structures of public sector entities in line with Law 28/2018.
• The Ministry of Justice formed a committee to review exemptions to legislative provisions granted by ministries. Prime Minister Imad Khamis recently announced that such exemptions would be stopped in pursuance of the National Administrative Reform Program, or NARP, which was launched by President Bashar Al-Assad in June 2017.

International Relations

• Following the reopening of the UAE embassy in Damascus, Bahrain is expected to make a similar move.
• The European Commission announced that Syrian authorities have suspended special visas for EU diplomats to visit Damascus. The measure may be linked to the fact that the Damascus government expects EU countries to reopen their embassies if they want access to Syria.
• A delegation of lawyers from the Syrian Bar Association paid a visit to Jordan to meet with their counterparts following a visit to Damascus by lawyers from the Jordanian Bar Association in October to coincide with the reopening of the Nassib crossing on the Syrian-Jordanian border.

International Sanctions

• The EU has imposed a round of sanctions against 11 new prominent business personalities and five recently incorporated Syrian companies, many of whom are involved one way or another in the Marota City real estate development project just outside of Damascus.
• Syrian businessman Samer Foz plans to fight the sanctions imposed on him by the EU in the European Court of Justice, citing the illegality and unfairness of the decisions as he seeks to participate in the reconstruction process underway in Syria through multiple investments.
• A businessman who was recently sanctioned by the EU and who is facing a lawsuit in Canada for allegedly violating the Canadian sanctions regime imposed on Syria has resigned from the Board of Directors of Byblos Bank in Syria.
• The House of Representatives and the Senate in the US Congress passed what is known as the Caesar Bill, which would have the effect of potentially imposing secondary sanctions on any person in the world who provides substantial services to any Syrian governmental entity. Specifically, the bill seeks to prevent dealings with the Syrian government in the petroleum, construction and aviation sectors as well as hinder financial dealings with the Central Bank of Syria. However, US President Donald Trump has not yet signed the bill into law.