Legal Briefing- September 2019

Finance

  • Governor Hazem Qarfoul of the Central Bank agreed with his Iranian counterpart to set up a joint Syrian-Iranian banking committee in anticipation of incorporating a joint bank between the two countries.
  • The Damascus Centre for Research and Studies published a report outlining potential fiscal reforms for the post-war era including the establishment of a so-called “Development Bank” that would work alongside the Central Bank to channel funds for the reconstruction process. The report also envisages raising customs duties on luxury goods and services as well as imported materials that can be produced locally in order to promote domestic production.
  • The Civil Enforcement Department in Lattakia announced that a public auction was to be conducted in accordance with Law 19/2014 to sell off the La Liche Hotel in Lattakia after its owners failed to repay a loan granted to them by the state-owned Real Estate Bank.
  • The People’s Assembly questioned Minister of Communications and Technology Eyad Al-Khatib on corruption rumors surrounding the two telecommunications giants in the country Syriatel and MTN Syria though not much information was forthcoming on the subject. On September 23rd, the state-owned Real Estate Bank issued a circular to all its branches in Syria to cease processing financial transactions and providing financial services to Syriatel or any of its branches with the exception of facilitating salary payments to its employees.

Monetary Policy

  • The unofficial value of the Syrian Pound, or Lira as it is known locally, appreciated against the US Dollar stabilizing to an extent at SYP 600 to the US Dollar after it almost reached SYP 700 to the US Dollar only days earlier. The situation forced traders to pause sales while repricing their goods.
  • The Damascus Chamber of Commerce started work on establishing an intervention fund that would be used to support the value of the Syrian Pound and resist its depreciation against the US Dollar. The Lira Intervention Fund as it has come to be known is now being implemented by the Federation of Syrian Chambers of Commerce and the Federation of Syrian Chambers of Industry under the supervision of the Central Bank. Merchants and industrialists in Syria have begun depositing some of their US Dollars in the Lira Intervention Fund at a new exchange rate set between the official Central Bank rate and the unofficial rate. Contributors will be paid in Syrian Pounds at a later date. Though depositors are not expected to benefit financially from the Lira Intervention Fund due to the exchange rate mechanism, the initiative aims to stabilize the Syrian Pound and support its appreciation against the US Dollar before contributors are able to collect their funds. Millions of US Dollars have already been deposited in the Lira Intervention Fund as business personalities met the Governor of the Central Bank to pledge more funds to support the value of the Syrian Pound. The launch of the Lira Intervention Fund coincided with news that the Lebanese Pound’s peg to the US Dollar could no longer be fully maintained. It may indicate that Syrian businessmen are repatriating their US Dollars from Lebanese banks back to Syria.
  • Prime Minister Imad Khamis approved a proposal by the Economic Committee linked to the government to cut by half the number of strategic goods whose importation can be financed by banks at the Central Bank’s official rate, which is much more attractive than the unofficial rate.
  • The People’s Assembly held deliberations to discuss the depreciation in the value of the Syrian Pound at about the same time as the Lira Intervention Fund was established.
  • According to an expert, a 2013 bill regulating the Syrian Pound should be revived and amended with the aim of reasserting exclusive state control over foreign exchange transactions just like in the 1980s in order to mitigate the effects of speculation and currency depreciation. Under this scenario, private foreign exchange businesses would no longer be allowed to operate and the state-owned Commercial Bank of Syria would be the only authorized entity to process transactions. Moreover, harsh penalties would be imposed for black market dealings.

Corporate

  • Syrian companies had until the end of September to reconcile their Articles of Association with the Companies Law provided for in Legislative Decree 29/2011. Failure to comply meant that they ran the risk of liquidation. There will be no further extensions of the deadline.
  • Nine Syrian businessmen and one Lebanese counterpart incorporated a company to export fruits and vegetables.
  • Two leading businessmen incorporated a company to manage malls and commercial centers.
  • The top foreign investor in Syria Stroytransgaz, a leading Russian corporation involved in a variety of sectors from phosphate to fertilizer plants to port operations, has set up a branch office in Damascus.
  • Syriatel’s share price on the Damascus Securities Exchange dropped by SYP 2,000 from SYP 8,000 when it first listed at the beginning of the year to SYP 6,000. Regulations mandate that the share price must be adjusted depending on stock activity.
  • The Syrian Commission on Financial Markets and Securities penalized three financial brokerage firms and three brokers for failing to comply with legal requirements when they executed trades on the shares of Syria Gulf Bank.
  • Al-Badia Cement Co. received final approval from the Damascus Securities Exchange to list on the stock market. Share trading will commence on October 15th at an initial price of SYP 100 per share.

Investment

  • Chinese businesses are reportedly interested in learning and becoming acquainted with the provisions of Syria’s new Investment Bill in anticipation of it becoming law as they explore lucrative sectors of the Syrian economy for potential investments.
  • In order to facilitate activities under the Investment Law, Prime Minister Imad Khamis issued a circular calling for closer cooperation between public bodies and the Syrian Investment Authority so that investors can benefit from speedy and transparent licensing procedures.

International Trade

  • A Syrian-Omani business forum was held in Syria on the sidelines of the Damascus International Fair with the participation of 50 Omani businesspersons representing their respective chambers of commerce and industry.
  • Emirati business personalities attending the Damascus International Fair and representing a 40-member delegation expressed their desire to push forward Syrian-UAE economic relations while developing the legal infrastructure to facilitate trade ties and access to both markets.
  • The Fujairah Chamber of Commerce unveiled an idea to organize a joint Syrian-UAE exhibition following the visit of the delegation of Emirati businesspersons to the Damascus International Fair.
  • Syria’s Exports Promotion Agency agreed to cover the shipping costs of exports that were the subject of contracts signed at the Damascus International Fair.
  • According to the General Establishment for International Exhibitions and Fairs, the number of visitors to the 61st edition of the Damascus International Fair amounted to 1,462,000 visitors.
  • Approximately 390 companies from 31 countries participated in the fifth edition of the Re-Build Syria Exhibition.
  • Iraqi Prime Minister Adel Abdul Mahdi approved the reopening of Iraq’s border with Syria known as the Abou Kamal-Qaim land crossing. The crossing formally reopened on September 30th for persons and goods. Iraq is considered Syria’s largest export market. Trade has hitherto been conducted via Jordan. It follows the reopening of the Nassib crossing on the Syrian-Jordanian border almost one year ago.
  • Jordan reciprocated an earlier measure by Syria and raised transit fees on Syrian trucks entering Jordan.
  • The Amman Chamber of Commerce has requested the mediation of the Damascus Chamber of Commerce in lobbying the Syrian authorities to remove trade barriers between the two countries in order to facilitate the importation of Jordanian goods into Syria.
  • South Africa is considering importing several materials from Syria including olive oil, citrus products and phosphate.
  • Syrian exports to Abkhazia will benefit from customs duty exemptions for up to five years.

Commerce

  • The Constitutional and Legislative Affairs Committee in the People’s Assembly deliberated on new draft legislation concerning the organization and structures of the Federation of Syrian Chambers of Commerce and the Joint Chambers of Commerce and Industry throughout the provinces.

Industry

  • An agreement has been signed between a local investor and a foreign party to establish a project in Rural Damascus to grow mushrooms in Syria worth nearly SYP 2 billion. Production is projected to cover the country’s requirements for mushrooms and thus, dispense with the need for imports.

Agriculture

  • A €13 million wheat milling project is being piloted by an Iranian company in Syria with 3,000 tons of wheat sent to the company for milling within a period of 10 days.

Construction

  • Minister of Public Works and Housing Souheil Abdel-Latif discussed with the relevant legislative committee in his Ministry potential amendments to the Contractors Syndicate Law 9/2014 to adapt it to the requirements of the reconstruction phase.
  • In the presence of the Chinese Ambassador to Syria and the Chairman of the Syrian-Chinese Business Council, a memorandum of understanding was signed between two engineering and construction firms from Syria and China to consider building residential suburbs and undertaking major projects.

Real Estate

  • More than 700 objections have been raised against the new zoning regulations for the Damascus district of Qaboun proposed by the Governorate of Damascus.
  • A source in the Governorate of Damascus announced that residents of certain districts of the capital that were affected by the conflict could return to their properties on the condition they present proof of ownership.
  • Aleppo City Council authorized infrastructure works to commence on the second real estate development zone located in the southern neighborhood of Tel Al-Zarazir in accordance with the Real Estate Investment Law after initial works had begun on the Al-Haidariyeh area. Aleppo City Council owns 63% of the area where the real estate development zone in Tel Al-Zarazir is located.
  • A delegation comprising Chinese government-owned companies operating in the construction, banking and energy sectors has confirmed its interest in investing in five real estate development zones in Syria while on a visit to the country.
  • The General Corporation for Engineering Studies and Technical Consultations completed the first and second phases of the zoning scheme for the city of Deir Ez-Zor.

Tourism

  • A French hotel operator is planning to open two hotels in Damascus, one of which will be classified as five stars and the other as four stars. Construction and renovation works on two buildings that will house the hotels have been ongoing for a few years. However, according to Minister of Tourism Mohammed Rami Martini, no French company or hotel operator has to date applied or requested approval to establish or operate hotels in Syria. Despite this statement, it did not in fact mean that the two hotels in question were not intended to be managed by the French operator.
  • The Czech website Novinke confirmed that the coastal city of Lattakia has resumed touristic activities as it is witnessing a notable recovery evidenced by a significant boost in the number of tourists.
  • Since the start of 2019, the historical castle Krak des Chevaliers has been undergoing extensive renovation and restoration work carried out by a Syrian-Hungarian joint mission.

Transport

  • The Ministry of Transport revealed that Turkish companies have been requesting transit rights to cross Syrian territory on route to their destinations though responses have not been forthcoming from the Syrian side.
  • Syria’s Civil Aviation Authority launched plans to establish two new airports. During the Damascus International Fair, the Director General announced intentions to convert the military airport in Palmyra to civilian use and to build a new airport in Aleppo in the ICARDA region.
  • Zeina Trading Company, the exclusive agent for Hyundai Motors in Syria, showcased its first batch of locally assembled cars at the Damascus International Fair which comprise the Elantra model with a price tag of SYP 17 million per automobile.

Energy

  • The Ministry of Petroleum and Mineral Resources announced that a gas well which ceased activity in 2011 is now back in service.
  • The Ministry of Petroleum and Mineral Resources announced that the Deir Attiyeh 2 gas well located north of Damascus will be put back into service with an expected production capacity of up to 600,000 cubic meters per day extracted from a depth of 3,620 meters.
  • Syria’s state-owned General Petroleum Corporation has signed three long-term oil exploration and production contracts with Russian counterparts, which will require ratification from the People’s Assembly.
  • Syrian-Iranian cooperation is moving forward in the field of generating electricity via renewable energy.

Education

  • The local American school in Damascus also known as Damascus Community School has been permanently closed by the US State Department as of August 31st. The school’s operations were temporarily halted since 2012 but now the latest move means the school will be shut for good.

Health

  • The Syrian Investment Authority licensed a project pertaining to the establishment of a factory in Lattakia that will produce medical supplies and pharmaceutical products. The investors will therefore benefit from financial incentives provided for in the Investment Law.
  • British pharmaceutical giant GlaxoSmithKline has reportedly not renewed its license contract with a local Syrian drug manufacturer to produce the branded antibiotic Augmentin for compliance purposes. The Syrian company will now produce an alternative version under its own brand.

Technology

  • Through a Syrian-Russian joint venture, software has been developed to facilitate a digital signature system in Syria under the authority of the newly established Electronic Certification Center, which falls under the umbrella of the National Network Services Agency.

Constitution

  • UN Secretary-General Antonio Guterres announced the formation of the long-awaited UN-sponsored Constitutional Committee for Syria, which should convene in the coming weeks. Syria’s conditions for the Constitutional Committee are that it must be exclusively a Syrian-owned process, free of any sort of foreign interference, not accountable to any externally-imposed timetable and that the UN’s role is simply to facilitate the deliberations. The Constitutional Committee comprises 150 members, 50 of which were nominated by the Syrian government, 50 were named by opposition groups and the remaining 50 represent civil society activists. There will also be a steering committee drawn from 45 of the 150 members. The Constitutional Committee will adopt its own rules of procedure regulating discussions and agreeing each article of a proposed constitutional provision by a vote. The first meeting will convene in Geneva on October 30th. The Constitutional Committee will have to decide whether to use the current Constitution of 2012 as a basic starting point to follow through with amendments or whether to draft a new constitution from scratch.

Lawyers

  • 30,000 lawyers took part in the Bar Association elections to choose their representatives in the provincial branches.

Judiciary

  • According to the Attorney General of Idlib, most of the court files belonging to the Khan Sheikhoun Court have been found after the town was brought back under government control.
  • The Council of State Administrative Court ordered a provisional attachment order against the movable and immovable assets of Pharoun Group equivalent to SYP 2.57 billion in favor of Adra Cement and Construction Materials Co. for the delayed execution of contractual works.
  • The People’s Assembly convened for its new legislative session and resumed voting on the articles in the new Council of State Administrative Court Bill, the judicial organ entrusted with hearing disputes involving public sector entities. The new Bill will replace the current Nasser-era Law dating back to 1959 and will formally separate the Council of State from the jurisdiction of the Council of Ministers thereby conferring judicial independence on the Administrative Court.

Financial Investigations

  • Speculation and confusion abounds in Damascus as the government’s anti-corruption drive appears on the surface to be in full swing. A number of officials have reportedly been slapped with an asset freeze order by the Ministry of Finance on suspicion of embezzlement.
  • Syrians inside and outside their country have been intrigued by reports that the Minister of Finance issued an order to freeze and confiscate the assets of 152 businessmen accused of corrupt activities. While some doubt their authenticity, others believe their accuracy. If the reports are indeed valid, the funds will help strengthen the state’s coffers at a time when there is not much appetite for local and foreign investment and the value of the Syrian Pound is under enhanced scrutiny especially given the launch of the Lira Intervention Fund.
  • There are reports that the Syrian authorities are pursuing a former Minister of Education on charges of embezzlement of public funds on a grand scale and that the Ministry of Finance has ordered a provisional attachment order on the movable and immovable assets of the former Minister.
  • The Ministry of Finance issued provisional attachment orders on the movable and immovable assets of Ebla International Artistic Production and Distribution Co. and its owner who recently produced a popular television series. He is accused of illegally distributing the series.
  • As part of its anti-corruption drive, the Ministry of Finance has apparently issued provisional attachment orders on the movable and immovable assets of 10,315 individuals since the beginning of this year through the issuance of 538 resolutions.
  • The Ministry of Finance lifted the provisional attachment order on the movable and immovable assets of the shareholders of Syria Steel Co. and the company itself, whose headquarters are located in Homs. The asset freeze was originally imposed in 2017.

Public Sector

  • New legislation is being considered in coordination with the Ministry of Administrative Development to reformulate the functions and objectives of the Ministry of Public Works and Housing.

Social Affairs

  • The Minister of Social Affairs and Labour revealed that for the first time a modern stand-alone law concerning the rights of children will be issued in line with Syria’s commitments as a signatory to the United Nations Convention on the Rights of the Child.

Military Affairs

  • President Bashar Al-Assad issued Legislative Decree 20/2019 granting an amnesty for certain crimes committed before September 14th and pardoning Army dodgers if they report for duty within three to six months. The amnesty does not cover conspiracies against the state, drugs and arms offences.
  • The Chairman of the National Security Committee in the People’s Assembly revealed that a proposal has been made to reduce the military service exemption fee for individuals living outside Syria. If the Committee approves the measure, it will face parliamentary deliberations. The military service exemption fee will not be applied to individuals living in Syria as the Committee believes that it would unfairly discriminate against families who cannot afford to pay the fee while only wealthy families would benefit.

International

  • Hungary is reportedly planning to break with the European consensus and upgrade diplomatic ties with Syria.
  • President Bashar Al-Assad received in Damascus a parliamentary delegation from Italy headed by Senator Paolo Romani.
  • Minister of Justice Hisham Al-Shaar met with Eva Felipe, the Ambassador of the Czech Republic to Syria, and discussed bilateral relations between the two countries along with joint cooperation in the legal and judicial fields.