Legal Briefing- July 2019

Real Estate

  • Construction works began on Delta Tower, the first real estate development project in Marota City to receive a building permit.
  • The Governorate of Damascus is planning to streamline its licensing procedures with respect to construction projects in Marota City, which are currently deemed too slow. Since the launch of Marota City in 2017, only one project has obtained a building permit so far.
  • According to the Director of Technical Studies in the Governorate of Damascus, it will cost approximately SYP 280 billion to build alternative housing projects in Marota City for its former settlers, who will in turn pay for them in instalments. Construction works are yet to begin. A lot of former inhabitants lived in informal settlements without title deeds in the Al-Razi area which became Marota City. The authorities provided them with financial facilities to live in rented accommodation while alternative housing was built. Once the alternative housing projects are built, their value will have increased substantially with the new developments in Marota City. The residents will then have the option to purchase these new homes but since their cost will be high, they will be able to pay in instalments.
  • The former Damascus industrial district of Qaboun is headed for an urban renewal in line with Law 10/2018, similar to Marota City. Land valuation will be undertaken before the issuance of shares to pre-existing owners who can redeem them in plots with other land shareholders.
  • For the first time under the Real Estate Development Law dating back to 2010 and for the first time in Marota City, a public auction for the sale of a residential plot is taking place as a result of disputes between its owners concerning an application for a building permit. According to the Law, more than 50% of the owners of a plot can apply for a building permit but if there are dissenting owners, a public auction takes place where it is presumed that the majority owners or others with similar interests will attempt to bid for the balance.
  • Pursuant to the Real Estate Investment Law 15/2008, the Council of Ministers has approved the establishment of a real estate development zone in the Rural Damascus suburb of Qatana, which will be implemented by a private company at a cost of SYP 74 billion.
  • The Homs Dream project that was launched before the war and envisaged the construction of towers has not been cancelled according to the Governorate of Homs but rather is being amended to fit the current circumstances and potentially include areas damaged during the conflict.

Commerce

  • The Board of Directors of the Federation of Syrian Chambers of Commerce agreed to establish the Central Exports Committee to replace the recently dissolved Syrian Exporters Federation. The new body will have branches linked to the chambers of commerce throughout the provinces.
  • As part of plans to expand the importation of necessary goods by the public sector, Prime Minister Imad Khamis agreed to extend a loan of SYP 50 billion to the state-owned General Foreign Trade Organisation (GFTO). The GFTO was also tasked with increasing exports of Syrian goods.
  • The Minister of Internal Trade and Consumer Protection issued a resolution requiring private sector importers who resort to bank financing to fund their purchases to sell 15% of their imported goods at cost to the competent public sector agencies that also sell similar products.
  • The government’s recent decision to increase the price of industrial gas used by manufacturers is expected to have inflationary effects on the sale of consumer goods in general.
  • 40 to 45 trucks containing fruits and vegetables cross the Syrian-Jordanian border at Nassib every day for exportation to Iraq. Before the war, the trucks used to number 130 to 150.
  • Representatives of European, Chinese and Japanese companies have been participating in exhibitions taking place in Syria.
  • Since the war, Syria’s economy has endured situations where some traders use a high US Dollar exchange rate to unjustifiably hike up prices and where smuggling as a result of import controls has curbed competition in the markets while tax evasion has created unfair imbalances.
  • Businesses in Damascus are having to deal with less cash liquidity in the markets today ironically as a result of the departure of rebels from the Ghouta region last year. Foreign sponsors of the rebels back then pumped so much cash into them that made its way into the mainstream economy.
  • Lebanese farmers protested against smuggled Syrian produce, which is reportedly depressing markets in Lebanon as a result of unauthorized Syrian competition. Earlier this year, Syrian Prime Minister Imad Khamis agreed to lower tariffs on Lebanese imports but the new rates are yet to be announced.

Corporate

  • 24 companies were incorporated in Syria in June, some of which were established by Arab and foreign shareholders.
  • During the first six months of 2019, 246 companies were licensed in Syria in a variety of sectors.
  • Dutch and Lebanese investors incorporated a company in Damascus with a share capital of SYP 40 million to undertake infrastructure works and contracting services.
  • A Syrian-Russian company was incorporated in Rural Damascus and it will specialize in contracting services and the provision of construction materials.
  • Syrian and Iraqi shareholders incorporated a company in Syria to provide oil services.
  • A new business personality has incorporated two companies in Syria to trade in cellular and electronic devices and construction materials respectively.
  • Work is ongoing on a bill that would encourage family businesses to convert their status to joint stock companies and potentially list on the Damascus Securities Exchange, which would in turn foster greater transparency and tax compliance. A similar law was passed in 2007 in anticipation of the launch of the stock market in 2009 but it expired in 2011. Family businesses compromise 80% of all companies operating in Syria and are considered the backbone of the economy.
  • The Damascus Securities Exchange has amended its stock market index to include Banque Bemo Saudi Fransi in its sample of stocks after it met the relevant criteria while removing both Cham Bank and Al-Aqeelah Takaful Insurance Company.
  • During share sales on the Damascus Securities Exchange on July 17th, 25% of the ownership of Syria Gulf Bank exchanged hands in less than a minute through 10 major deals.
  • The Board of Directors of the Syrian Commission on Financial Markets and Securities approved the decision of Banque Bemo Saudi Fransi to increase its share capital by issuing 15 million shares worth SYP 1.5 billion.
  • The Board of Directors of the Syrian Commission on Financial Markets and Securities approved the share capital increase of Cham Bank by SYP 750 million.

Finance

  • The state-owned Real Estate Bank in cooperation with the Central Bank initially planned to raise mortgage offers from SYP 5 million to SYP 25 million for customers seeking loans to purchase homes though this figure may instead be SYP 15 million.
  • The Commercial Bank of Syria raised the maximum level for personal loans to SYP 15 million.
  • A new bill is being prepared to amend Law 26/2015, which deals with the rescheduling of loan payments by borrowers to the state-owned banks.
  • The Chartered Accountants Association revealed that it received several applications from foreign companies to set up in Syria. According to the Accounting and Auditing Professions Law, foreign companies can only own 49% of local accounting firms. Deloitte and Ernst and Young are already active in the local market.

Taxation

  • According to the Directorate of Finance in Damascus, tax collection has improved by 50% so far this year.

Insurance

  • The Director of the Insurance Supervisory Commission confirmed that agreements will be signed next month with Russian and Iranian companies to provide reinsurance services to Syrian insurance companies.

Industry

  • 340 projects were established in Aleppo along with the return to operation of 20,000 industrial facilities since government control was restored in December 2016.

Energy

  • Iraq is planning to export oil to both Syria and Jordan as part of plans to diversify its customer base and supply routes, especially if there is increased tension affecting the Strait of Hormuz. Iraq is also seeking to increase its production and sales capacities.
  • The Council of Ministers approved a plan to supply petrol stations, which were set up in 2015, with fuel products after provisions were suspended due to licensing defects.
  • Prime Minister Imad Khamis approved the importation of 100,000 tons of fertilizers.
  • The government is planning a review of legislation regulating renewable energy. Meanwhile, the Council of Ministers approved amendments to a resolution involving the purchase of renewable energy by the state from the private sector while acknowledging that new legislation was required to encourage foreign investors from friendly countries to enter this sector in Syria.
  • Syria’s first ever privately-owned photovoltaic solar power plant has commenced operations in the Hassia Industrial Park. According to a governmental source, it has been connected to the country’s electricity grid.

Transport

  • Emaar Motors, a company incorporated in 2017, has officially become the exclusive agent for the Chinese automobile manufacturers Chery and Faw in Syria after its agency agreements with both companies were successfully registered with the Ministry of Economy and Foreign Trade.
  • Sea Motors, an affiliate of Emaar Motors and the exclusive agent for the Chinese automobile manufacturer Chery in Syria, has launched the Arrizo 6 model at the Dama Rose Hotel in Damascus in the presence of the Chinese Ambassador and the company’s Middle East regional manager. Syria was the Chinese company’s first overseas market. Between 2001 and 2011 before the automobile import ban, 17,000 cars were exported to Syria. Founded in 2017 in the Hassia Industrial Park in Homs, Sea Motors is the largest assembly plant in Syria and third in the Middle East.
  • Local Syrian automobile manufacturer SIAMCO plans to launch the latest model of its Cham car series this year. SIAMCO is a Syrian-Iranian joint venture based in the Adra Industrial Park that is meeting demand needs at a time when car imports have been halted since 2011.
  • Prime Minister Imad Khamis agreed to approve Uber-style regulations whereby owners of private vehicles, not public vehicles such as taxis and buses for public transport, could start transporting passengers using GPS tracking once they fulfil the necessary licensing requirements. Up until now, privately-owned vehicles were not allowed to be utilized for the purposes of transporting passengers. Taxis and buses that provide public transport are only allowed to do so since they are registered as public vehicles. The new regulations aim to bridge this gap. The new measures are welcome given that car imports have been restricted since 2011 and fuel prices have surged recently due to shortages.
  • The Egyptian version of Uber and Careem called “Move It” has started applying for a license from both the Ministry of Communications and Technology and the Ministry of Transport to begin operations in Syria. Given the recent increase in fuel prices brought about by shortages in recent months, the Uber-style application is expected to meet the needs of the Syrian market as more and more people prefer to leave their cars at home.
  • Land transport services between Damascus and Cairo have resumed.
  • Jordan prepared for a visit by the Syrian Minister of Transport Ali Hammoud to discuss transport and trade issues, particularly high transit fees imposed by Syria on neighboring countries and reciprocal import controls applied by both countries on each other.
  • According to the Governor of Aleppo, Aleppo International Airport is ready to resume operations and will do so once security conditions have been met.
  • Private air carrier Damascene Airlines, which was incorporated in 2010, has filed for liquidation with the Ministry of Internal Trade and Consumer Protection following a decision to this effect by its general assembly.
  • The Ministry of Transport and the Syrian Investment Authority have agreed to grant investors in the transport sector an additional year to complete their projects, which have been delayed due to the current economic circumstances.

Tourism

  • Construction works on the five-star Yasmin Rotana Hotel in the Damascus district of Mezzeh, which is owned by a subsidiary of Cham Holding and will consist of 338 rooms, are expected to resume soon after being halted for years due to the conflict.
  • The Syrian Arab Company for Tourism Establishments, which was incorporated in 1977, is expected to list on the Damascus Securities Exchange later this year.
  • Work is underway on two tourism projects being carried out by Russian investors in the coastal region.
  • A number of Syrians in the UAE postponed their travel plans to Damascus this summer because of the high cost of airline tickets. Due to the small number of flights operating between the UAE and Syria, limited supply and increasing demand during the summer season raised air fares.

Telecommunications

  • The National Network Services Authority announced that up until the end of 2018, 55 public sector entities have joined the secure government IT network, and seven government transactions can now be concluded by the use of digital signatures.
  • Syrians are diversifying their range of instant chat applications on their smart phones as the quality of WhatsApp has been deteriorating recently. Various reasons have been given, including too much pressure on networks and the possible consequences of US sanctions. It is worth noting that WhatsApp in Syria began experiencing problems immediately after the US sanctioned Huawei, the Chinese telecommunications and mobile phones giant which had undertaken the task of upgrading Syria’s telecommunications network.

Health

  • The government is working on a strategy to encourage the production of local pharmaceutical items to avoid the need for imports, which put pressure on foreign exchange supplies and hence the value of the Syrian Pound.

Sports

  • A number of businessmen are getting involved in football sponsorship deals in Syria and the transfer of players from one club to another, thereby raising the value and prestige of numerous local players.

Lawyers

  • There is controversy within the Damascus Bar Association whereby some lawyers charge their clients exorbitant fees that can reach SYP 10 million without giving their case due attention. Clients are being advised to file a complaint with the Bar Association to claim for a refund. There are reportedly more than 8,000 lawyers in Damascus still on the Roll of Attorneys, down from more than 10,000. 2,000 lawyers had their names struck off due to not settling their Bar Association fees and prolonged absences whereby they did not practice the profession.

Judiciary

  • There are reportedly only 31 judges adjudicating real estate disputes in Syria at the present time.
  • According to Minister of Justice Hisham Al-Shaar, the courts will attempt to resolve the matter of the 23,000 non-performing loan cases before them.
  • The Personal Status Courts are hearing numerous lawsuits involving disputes over alimony and guardianship, in the latter case by widowed mothers against their fathers-in-law, arguing that the latter are not acting in the best interests of their grandchildren as their guardians.

Administrative Reform

  • The Ministry of Administrative Development is working on a piece of legislation that can be described as the Freedom of Information Bill. It aims to increase transparency between the government and citizens as part of the National Administrative Reform Program (NARP).
  • An official in the Ministry of Administrative Development stated that the bill requiring candidates for public sector employment to disclose their financial status and details beforehand to ensure that they do not unjustly enrich themselves while in office should be issued in 2019.
  • The smart card system in Syria used for purchasing subsidized fuel products will be rebranded as a public services card to permit other public sector establishments to provide services to citizens through the use of the same card as opposed to the issuance of multiple cards.

Civil Status

  • Legislative Decree 11/2019 exempts Syrian citizens who delayed in registering their civil status or who failed to obtain official documents and cards on time from fees and fines if their delay is due to their presence in a conflict zone or because they had to flee.

Military Affairs

  • Legislative Decree 9/2019 provides exemptions from building permit fees for the families of martyrs and wounded personnel from the Syrian Arab Army and the Internal Security Forces once they apply to build, repair or renovate their homes.
  • Legislative Decree 12/2019 amends Articles 10, 95 and 113 of the Military Service Law provided for in Legislative Decree 30/2007 and further regulates the circumstances for the postponement of compulsory military service obligations.
  • Legislative Decree 13/2019 grants an honor card to injured Army and security personnel to be used to benefit from medical, educational and financial services.
  • Legislative Decree 15/2019 adds two articles to the Military Service Law, whose provisions shall also apply to personnel in the Internal Security Forces, which provide a comprehensive definition of soldiers and officers who are missing in action or were martyred during the war.

Crime

  • According to a local newspaper, 15 suspects on average are tried every day in Damascus before the Economic Criminal Court where they face allegations brought against them pursuant to the Economic Criminal Code provided for in Law 3/2013.

International

  • In the space of less than one week, President Bashar Al-Assad welcomed to Damascus the Omani Foreign Minister and the Special Envoy to Russian President Vladimir Putin while a reshuffle of top security officials reportedly took place.
  • President Bashar Al-Assad met with envoys of Pope Francis in Damascus carrying a message from the Vatican.
  • Then-British Foreign Secretary Jeremy Hunt said he had told his Iranian counterpart that Britain would facilitate the release of the detained Grace 1 oil tanker if Iran provided guarantees that it would not sail to Syria. Although Jeremy Hunt had been adopting hawkish foreign policy stances in a bid to beef up his leadership credentials ahead of the Conservative Party leadership race, the seizure of the oil tanker appeared aimed more at compliance with US secondary sanctions against Syria’s oil sector than with EU sanctions.
  • There is speculation that a bill recently approved by the Egyptian Parliament that would grant citizenship to foreign investors in Egypt could possibly benefit numerous Syrian businessmen in the country. A number of them moved to Egypt during the war and set up massive factories.