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PP RUEHWEB

DE RUEHDM #0051/01 0141400
ZNR UUUUU ZZH
P 141400Z JAN 10
FM AMEMBASSY DAMASCUS
TO RUEHC/SECSTATE WASHDC PRIORITY 7241
INFO RUCPDOC/DEPT OF COMMERCE WASHINGTON DC PRIORITY
RUEATRS/DEPT OF TREASURY WASHINGTON DC PRIORITY
RUCPDOC/USDOC WASHDC PRIORITY 0189

UNCLAS DAMASCUS 000051 
 
 
FOR CIMS NTDB WASHDC PRIORITY 
 
SIPDIS 
 
DEPT FOR EB/IFD/OIA; DEPT FOR USTR 
 
E.O. 12958: N/A 
TAGS: ECON EFIN ETRD ELAB KTDB PGOV USTR OPIC SY
SUBJECT: 2010 INVESTMENT CLIMATE STATEMENT FOR SYRIA 
 
REF: 09 STATE 00124006 
 
The 2010 Investment Climate Statement for Syria follows: 
 
 
Chapter 6: Investment Climate 
 
-Openness to Foreign Investment 
-Conversion and Transfer Policies 
-Expropriation and Compensation 
-Dispute Settlement 
-Performance Requirements and Incentives 
-Right to Private Ownership and Establishment 
-Protection of Property Rights 
-Transparency of Regulatory System 
-Efficient Capital Markets and Portfolio Investment 
-Competition from State Owned Enterprises 
-Corporate Social Responsibility 
-Political Violence 
-Corruption 
-Bilateral Investment Agreements 
-OPIC and Other Investment Insurance Programs 
-Labor 
-Foreign-Trade Zones/Free Ports 
-Foreign Direct Investment Statistics 
-Web Resources 
 
 
Openness to Foreign Investment 
 
Designated by the U.S. government as a state sponsor of 
terrorism, Syria has been subject to the U.S. Department of 
CommerceQs Export Administration Regulations (EAR) for over 
thirty years. All dual-use goods and advanced technology 
items have been controlled and/or restricted from the 
Syrian market since 1979. These restrictions were enhanced 
through the implementation of economic sanctions under the 
Syria Accountability Act (SAA) of May 11, 2004. As 
currently implemented, the SAA does not ban U.S. 
investments. However, the current ban on the export of 
almost all products of the United States has made 
investments by U.S. businesses more difficult to carry out, 
and the President has the authority to extend 
implementation of the SAA to ban all U.S. business and 
investment activity in Syria at any time. 
 
SAA sanctions are in addition to restrictions under the 
Grassley Amendment that prevents U.S. corporations from 
taking advantage of foreign tax credits for taxes paid in 
Syria. Furthermore, the President has designated more 
sanctions under the International Emergency Economic Powers 
Act (IEEPA) and Section 311 of the USAPATRIOT Act regarding 
financial transactions with the Commercial Bank of Syria. 
As a result, the transfer of U.S. dollars to and from Syria 
has become difficult, making investments that much more 
challenging to execute. Therefore, since the end of 2006, a 
number of U.S. corporations, notably in the oil and gas 
sector, made the decision to divest and cease their 
activities in Syria. 
 
Syrian officials and ministers routinely stress publicly 
the need for economic reform in order to attract foreign 
direct investment and thus stimulate economic growth and 
increase employment. Announced liberalizations are often 
rescinded or contradicted by other government officials, 
however, sometimes at the expense of private companies that 
have made business decisions based on government 
commitments subsequently annulled. Although a bloated 
bureaucracy, rampant corruption, and the lack of an 
independent judiciary are still significant impediments to 
business, in 2009 the Syrian Arab Republic Government 
(SARG) did issue new laws in the fields of investment, 
tourism, shipping, arbitration, intellectual property 
rights (IPR), banking and finance, real estate, and trade 
that continue its slow and halting effort to reform the 
countryQs economy. Continued political instability in 
Syria's neighboring countries, however, as well as the 
international financial crisis, discouraged significant 
foreign investment. 
 
Investment Law No. 10 (1991) and its amending Decree No. 7 
(2000) were the SARG's initial attempts to stimulate 
foreign direct investment in Syria; unfortunately, the 
Higher Council for Investment's (HCI) lack of definitive 
criteria for adjudicating foreign applications left the 
process open to political pressures, lobbying and 
corruption. This first attempt at reform brought long 
delays and was seriously lacking in many areas. 
Consequently, due to poor implementation, Investment Law 
No. 10 fell short of its goal of making Syria a more 
attractive investment venue. 
 
To address the shortcomings of Investment Law No. 10 and 
its amending Decree No. 7, the SARG announced Decrees Nos. 
8 and 9 in January 2007, which resulted in a dramatic 
year-on-year increase in the number of HCI-approved 
projects. Decree 8 allows preexisting investment licenses 
(under Law 10 and Decree 7) to continue unchanged. 
 
Decree No. 8 is designed to enable investors, whether 
Syrians, Arabs, or foreigners, to own or lease the land 
required for their projects, and provides for free 
repatriation of profits, dividends and invested capital on 
condition that all tax liabilities have been met. If a 
foreign investor encounters obstacles in setting up a 
project, and decides to withdraw within six months of 
receiving a license, all capital invested up to that point 
may be freely repatriated. Foreign staff will be entitled 
to repatriate up to 50 percent of their net income and 100 
percent of any end-of-service benefits. Additionally, 
Decree 8 exempts investors from paying customs duties on 
equipment imported to set up their projects, but they are 
liable to standard corporation taxes which fall under the 
jurisdiction of the 2006 Tax Law. However, investors are 
eligible for tax deductions if they choose to establish 
their projects in one of SyriaQs industrial zones. Decree 
No. 8 offers additional tax deductions for projects that 
create a high number of new jobs, as well as projects with 
many shareholders. 
 
To encourage investments in the underdeveloped eastern 
region of the country, namely in al-Hasakeh, Dayr al-Zur 
and al-Raqqa, the SARG passed a law in September 2009 
exempting investment projects located in those regions from 
taxes and fees for a period of ten years, provided the 
projects were licensed before December 31, 2012. Projects 
licensed after this date would not benefit from the tax 
exemption. 
 
Most sectors are open for private investment under 
Investment Law 10, Decree 7, and Decree 8 except for cotton 
ginning, water bottling, and cigarette production. All 
investment laws and decrees cover projects in the fields of 
manufacturing, transport, agriculture, electricity, health 
and services.  Tourism and real estate investments are 
covered by separate legal and tax frameworks and governed 
by the Ministry of Tourism. Oil and gas projects and salt 
mining must be coordinated directly through the Ministry of 
Petroleum. The Ministry of Finance governs the 
establishment of private banks and insurance companies and 
the Ministries of Education and Higher Education govern the 
establishment of private schools and universities. 
 
As a corollary to Decree 8, the SARG also passed Decree 9 
of 2007 stipulating the formation of the Damascus-based 
Syrian Investment Agency (SIA). The Higher Council for 
Investment (HCI) meets only twice per year to review 
general investment policies, but has delegated operational 
decision-making to the SIA. The SIA, under the auspices of 
the Prime Minister's office, has the overall responsibility 
for supervising national investment policies, developing 
and enhancing the investment environment in Syria, 
providing data and statistics to investors, approving 
projects and annulling licenses for those projects not 
implemented within the required timeframe. To facilitate 
investment and overcome bureaucracy, SIA opened branches in 
several major Syrian cities and plans to open additional 
branches to cover the whole country by the end of 2010. 
 
Decree 9 also charged SIA with providing one-stop-shopping 
service to potential investors in order to speed the 
processing of investment applications and help reduce 
bureaucratic hurdles. SIA officially inaugurated its 
One-Stop-Shop in early December 2008. As part of its menu 
of services, the One-Stop-Shop offers an "Investment Map" 
of Syria that was produced with the assistance of the 
United Nations Development Program (UNDP). The map 
reportedly provides detailed information pertaining to laws 
and regulations governing investment in Syria, as well as a 
list of established investment projects and continuing 
investment opportunities. The map was launched online and 
is available in English, French and German. SIA plans to 
translate the investment map into 12 other foreign 
languages during the coming year to better promote 
investment. Furthermore, SIA representatives have been 
appointed in every Syrian embassy abroad to showcase Syria 
to potential investors. 
 
The SIA is supposed to meet at least bi-weekly to reduce 
the review process time to two weeks from application to 
decision. The SIA board members are appointed by the Prime 
Minister and include a Chairman, Director General, Deputy 
Director General, Deputy Ministers of Finance, Local 
Administration and Environment, Economy and Trade, 
Agriculture, Transport, Industry, Tourism, Social Affairs 
and Labor, Housing and Construction, and the State Planning 
Commission as well as a representative from each of the 
Federation of the Syrian Chambers of Industry, the 
Federation of the Syrian Chambers of Commerce, the 
Federation of the Syrian Chambers of Agriculture, and the 
Federation of the Syrian Chamber of Shipping, the Director 
of Legal Affairs at SIA, the Director of the One-Stop-Shop, 
and SIA's Director of Marketing. 
 
According to Decree 9, HCI members include the Prime 
Minister, Deputy Prime Minister for Economic Affairs, 
Ministers of Finance, Local Administration and Environment, 
Tourism, Agriculture, Social Affairs and Labor, Economy and 
Trade, Housing and Construction, Transport, and Industry, 
the Head of the State Planning Commission, as well as the 
Chairman of the SIA and its Director General. 
 
Despite the government's recognition of the need to change 
Syria's investment climate, both foreign and local business 
leaders continue to cite three main obstacles to growth in 
investment. First, the banking sector remains inadequate to 
meet the financing needs of not only multinational 
corporations, but also local enterprises. Second, the lack 
of rule of law makes contractual obligations inherently 
uncertain and potentially impossible to enforce. Finally, 
the lack of regulatory transparency and specificity, 
particularly when dealing with government-affiliated 
entities, leads to a climate of bureaucracy, confusion, 
intimidation, and corruption. 
 
Foreign investors are often hampered by a lack of awareness 
throughout the tendering process and complain that winning 
bids are often based more on contacts and relationships 
than the actual merits of a proposal. Certain ministers in 
the government have acknowledged this problem within the 
last few years and have tried unsuccessfully to address it. 
Similarly, in the judicial system, judgments are subject to 
external pressures that make it difficult for businesses to 
ensure that contracts are binding. 
 
Although government officials had previously stated that no 
privatization of state enterprises will take place during 
the current Five-Year Plan, which runs through 2010, in 
2007 the SARG awarded a contract to a Philippines-based 
company to develop and run the small container terminal in 
the Port of Tartous. Similarly, in 2008, the SARG awarded a 
contract to a French-Syrian consortium to operate the 
container terminal at the Port of Latakia.  The tendering 
process was typically opaque and the winning French company 
may have benefited from having an influential Syrian 
partner and an improving political relationship between 
Syria and France. 
 
Despite recent legislative attempts at reform, the economy 
remains centrally planned, and uncompetitive public-sector 
companies continue to drain government finances. While 
government officials publicly reject the notion of 
privatizing state enterprises on ideological grounds, such 
positions likely reflect their unstated pragmatic fears of 
a dramatic increase in unemployment. 
 
However, realizing the need for foreign investment in large 
infrastructure projects, the Deputy Prime Minister for 
Economic Affairs, Abdullah al-Dardari, in cooperation with 
The British Syrian Society, organized a two-day conference 
in late 2009 to promote Public-Private Partnership (PPP). 
The concerned authorities are currently preparing a draft 
law to pave the way for such projects, especially in the 
electricity, transport and petroleum and gas sectors. 
 
In addition to the challenges mentioned above, business 
contacts highlighted the following specific difficulties of 
doing business in Syria: 
 
- The SARG requires import licenses for every item 
imported, except for raw materials and items imported from 
Turkey and the GAFTA (Greater Arab Free Trade Agreement) 
countries. Likewise, foreign companies must acquire permits 
for each item of equipment intended for temporary use and 
subsequent re-export (i.e. drilling rigs) to avoid paying 
import duties. The validity of these permits can be 
difficult to extend if the companyQs service contract 
expires and the company wishes to keep the equipment in the 
country for stand-by usage. Delays in the re-export of 
equipment after a temporary permit expires have resulted in 
heavy fines. 
 
- Syrian corporate, income, and wage tax liabilities for 
foreign contractors have been unclear for quite some time, 
and they continue to complicate the operations of many 
companies. 
 
- The awarding of contracts is often delayed by the 
lobbying efforts of influential local business interests 
and groups. Even in cases devoid of external influence, 
bureaucrats fear accusations of corruption and abuse, and 
therefore often require additional reviews of investment 
proposals that are not mandated by law and that 
inordinately delay projects. The SARG has reiterated its 
commitment to increasing the degree of transparency in the 
process, but foreign and Syrian firms continue to cite 
problems. 
 
- Public-sector employees may demand bribes for required 
routine services. The average public-sector employee earns 
wages estimated at USD 215 per month. Public-sector wages 
have not kept up with rising inflation so many public 
employees have turned to petty corruption to make ends 
meet. In addition, labor laws are complex and significantly 
limit an employer's flexibility to hire and fire employees. 
 
- Syrian property law - at least since the BaQathists took 
power in the early 1960s - has been tenant-friendly, which 
made it difficult for landlords to lease residential 
properties, negotiate rent rates and evict problem tenants. 
In addition, at the end of 2004, the government implemented 
an 18 percent tax on any real estate leased for use by 
foreign persons or entities. In 2005, however, the SARG 
began implementing a residential rent law passed in 2000 
that affords landlords greater rights and protections. 
 
In 2006, the SARG issued a law permitting commercial real 
estate owners to lease their properties according to 
contract terms. The law allows the real estate owners to 
reclaim their properties after the contractQs term of 
validity has expired. In addition, foreign investors in 
real estate and the tourism sector have been able to take 
advantage of decisions of the Higher Council of Tourism 
that provide foreign landlords with exemptions from labor 
and tenant laws. 
 
In June 2008, the SARG issued Law 11 regulating property 
ownership by non-Syrians. The law's objective is to 
facilitate foreign ownership of residential property as a 
means of stimulating greater overall foreign investment. 
Law 11 was followed quickly by Law 15 in July 2008, which 
established a Real Estate Development and Investment 
Authority specifically empowered to encourage investment in 
the real estate sector. Despite these steps, foreign 
individuals and companies are allowed to rent offices and 
residences for a maximum period of 15 years, which is not 
renewable. 
 
In September 2008, the SARG passed Decree 9 in an attempt 
to curb illegal housing. The Decree applied to any new 
construction of illegal housing (but not existing housing) 
and listed a set of penalties that included prison terms 
from three months to ten years as well as fines of USD 
4,000 to USD 87,000. 
 
In December 2008, the SARG passed Law No. 33 authorizing 
the granting of title/deeds to owners of existing illegal 
housing units. The registration process took place at 
special councils established by the law that were entrusted 
with the task of confirming the property deeds. 
Beneficiaries had to pay 10 percent of the unitQs estimated 
value to the Treasury as property tax. 
 
To better regulate the real estate sector, the SARG passed 
Law No. 39 in late December 2009 establishing a Mortgage 
Finance Supervisory Authority (MFSA). Starting in 2010, the 
MFSA will be responsible for issuing all mortgage finance 
related legislations and regulations including standard 
contracts, licensing instructions to mortgage companies and 
funds, as well as the set-up of a national mortgage entity. 
Law 39 imposes penalties on mortgage firms that violate the 
existing regulations. 
 
- Enforcement of the Arab League Boycott of Israel (dating 
from 1967) may lead to difficulties in the importation of 
needed products or in registering trademarks because the 
government requires additional paperwork certifying 
compliance with the boycott. U.S. law prohibits companies 
from providing this paperwork.  Anecdotal reports indicate 
the SARG has occasionally waived its requirement for 
boycott compliance certification in order to facilitate 
business with large U.S. companies.  As of September 2009, 
the Syrian Trademark Office is no longer asking foreign 
companies to fill out an application declaring their 
compliance with the Arab League Boycott of Israel. 
 
Index/Ranking 
2009 
Transparency International Corruption IndexQ126 
Heritage Economic Freedom IndexQQQ141 
World Bank Doing Business IndexQQQ138 
 
 
Conversion and Transfer Policies 
 
Under the guidelines of the USAPATRIOT Act, the President 
has designated the Commercial Bank of Syria (CBS) as an 
institution of primary money-laundering concern. 
Consequently, the Secretary of the Treasury issued a 
decision on March 9, 2006 banning correspondent relations 
between the Commercial Bank of Syria and U.S. financial 
institutions. Although the U.S. Treasury sanction only 
targets CBS, many U.S. and European banks subsequently cut 
off correspondent banking relationships with all 
Syria-based financial institutions. 
 
In March 2001, the SARG passed Law No. 28, which authorized 
the establishment of private and joint-venture banks. The 
law made general provisions for the operation of private 
banks and set a minimum Syrian ownership requirement of 51 
percent. At the same time, a banking secrecy law was also 
issued that authorizes numbered accounts and restricts 
asset seizures. To date, eleven private traditional banks 
are operating in the country and are generally able to 
carry out the same banking operations that are permissible 
to the Commercial Bank of Syria. In May 2005, a 
Presidential decree (Decree 35) allowed the establishment 
of Islamic banks in the country with a minimum of 51 
percent Syrian ownership. At present, two Islamic banks are 
operating in the country while the third, al-Baraka Islamic 
Bank, is scheduled to begin operations during the second 
quarter of 2010. 
 
In early January 2010, the SARG passed Law No. 3 amending 
some articles of Law No. 28 of 2001 and Decree 35 of 2005. 
Law 3 stipulates an increase in the capital of private 
banks from USD 60 million to USD 200 million and of Islamic 
banks from USD 100 million to USD 300 million. Law 3 also 
increased allowable foreign ownership of private banks from 
49 percent to 60 percent. Law 3 gives licensed banks 
operating in Syria a period of three years to increase 
their capital to the required minimum. 
 
Under current Syrian laws, investors are permitted to open 
foreign exchange accounts with CBS, the Real Estate Bank 
and the eleven existing private banks, and may retain 100 
percent of their export revenues. Decree 8 allows the 
repatriation only through Syrian banks of foreign currency 
profits generated from the import of capital into the 
country. 
 
Newly opened private banks can provide the same level of 
banking services as CBS and Real Estate Bank, including 
opening saving/checking accounts and issuing Letters of 
Credit (L/Cs), provided the money originates from outside 
the country. In some limited instances, private banks are 
allowed to issue U.S. dollar-denominated L/Cs backed by 
Syrian pounds. 
 
In 2006, the government allowed private investors to have 
access to foreign currency through CBS to finance the 
import of raw materials. In 2007, the SARG authorized 
foreign investors to receive loans and other credit 
instruments from foreign banks, and to repay them as well 
as any accrued interest from the proceeds of their projects 
using local banks. In February 2008, the SARG permitted 
investors to receive loans in foreign currencies from local 
private banks provided that the loans are used to finance 
capital investment, particularly the import of machinery 
and production equipment. Debtors are free to repay their 
loans from their foreign currency accounts in Syria or 
abroad or by purchasing foreign currency from the lending 
bank. 
 
To boost investment in the tourism sector, the SARG allowed 
local banks to provide financing to hospitality projects 
developed on the Build-Operate-Transfer (BOT) model. Local 
banks can now fund up to 50 percent of the cost of the 
project and repayment will begin after the project enters 
into operation. 
 
Aside from the loosening of controls under the previous 
Investment Law No. 10, Decree No. 7, and Decree 8, strict 
foreign exchange restrictions were enforced until mid-2003. 
Even though relatively recent legal changes permit the 
possession of foreign currency, overseas borrowing and the 
export of capital still require the approval of the Central 
Bank. These restrictions, however, are often disregarded. 
Foreign companies operating under the provisions of other 
laws may transfer capital inside Syria only in accordance 
with special agreements, usually in the form of a 
Presidential decree. The SARG passed Law 24 in April 2006 
which permits the operation of private money exchange 
companies, provided such operations are licensed. To date, 
there are ten currency exchange companies and 12 currency 
exchange offices operating in Syria, although many more 
continue to operate illegally on Syria's vast black market. 
 
Outward capital and profit transfers are permitted to 
companies licensed under Decree 8. Otherwise, they are 
prohibited unless approved by the Prime Minister or 
arranged separately, as in the case of production-sharing 
agreements with oil exploration companies. Decree 8 allows 
free repatriation of profits, dividends and invested 
capital, on condition that all tax liabilities have been 
met. In addition, if a foreign investor encounters 
obstacles in setting up a project, and decides to withdraw 
within six months of receiving a license, all capital 
invested up to that point can be freely repatriated. 
Foreign staff will be entitled to repatriate up to 50 
percent of their net salaries, and 100 percent of any 
end-of-service benefits. 
 
In a bid to liberalize the Syrian Pound and to loosen 
restrictions on hard currency outflows, in July 2009 the 
SARG permitted local banks to open accounts for clients to 
use for their international debit cards. These accounts may 
hold a maximum of USD 10,000 or its equivalent in Syrian 
Pounds or any other foreign currency. The holders of these 
accounts will be able to withdraw up to USD 10,000 per 
month while travelling abroad. 
 
In the case of foreign oil companies, "cost recovery" of 
exploration and development expenditure is governed by 
formulas specifically negotiated in the applicable 
production sharing agreement. Foreign oil partners in 
production-sharing joint ventures with the state oil 
company report delays in the recognition of "cost recovery" 
claims, although payments are eventually approved. 
 
In February 2007, the President issued Decree 15 permitting 
the establishment of financial, banking and social 
institutions that provide micro-financing and insurance to 
small investment projects. These institutions target 
clients in the suburbs and rural areas, and are expected to 
provide loans as small as $100. Anyone with the required 
minimum capital of $5 million may open such an institution, 
though foreigners must first obtain approval from the Prime 
Minister. The First Microfinance Bank (FMB), as the bank is 
named, started operations in November 2008. 
 
 
Expropriation and Compensation 
 
The main period of the expropriation of private property 
occurred from 1964 to 1966, after the BaQath Party seized 
power on March 8, 1963. During this period, as well as in 
the late 1950s after SyriaQs brief union with Egypt, the 
government nationalized many private farms and factories 
without paying any compensation. To the best of the EmbassyQ 
s knowledge, no one has been compensated for the material 
losses that occurred as a result of nationalization, 
although we have heard anecdotal accounts that there were 
some offers of derisory sums for compensation that 
landowners rejected out of hand. Between 1967 and 1986 
there were fewer cases of expropriation because the 
government had already seized the most valuable properties. 
The Embassy does not have any knowledge of private property 
nationalized after 1986. 
 
Investment laws enacted in 1985-86 for specific sectors, 
i.e. tourism and agriculture, included clauses that 
protected against expropriation and nationalization. Decree 
7 of 2000 explicitly stated that projects licensed under 
Investment Law No. 10 could not be nationalized or 
expropriated. Likewise, Decree 8 of 2007 explicitly states 
that projects could not be nationalized or expropriated. 
Decree 8 opened many sectors to private investment 
including petroleum refining, electricity generation, 
cement production, sugar refining, infrastructure, air 
transportation, environment, and services. Projects in the 
fields of oil and gas production, private schools and 
universities, banking and insurance, and tourism and real 
estate continue to be regulated under separate, specific 
laws. 
 
In late 2008, the SARG authorized the private sector to 
invest in salt extraction and mining projects subject to 
licensing by the Ministry of Petroleum and Mineral 
Resources. In late 2009, the SARG issued legislation 
governing the private extraction and investment of 
quarries. The law allows companies which obtain the 
required licenses to invest in a quarry for a period of 
three years, extendable.  The law also permits the 
formation of partnerships between the private and the 
public sectors to operate in areas that were previously 
restricted to the public sector. 
 
Despite these protections, the rule of law is weak in Syria 
and the SARG does occasionally seize the property and 
business interests of political opponents and officials who 
have fallen out of favor. In early 2006, alleging corrupt 
practices, the SARG confiscated all residential, commercial 
and business assets of former Vice President Abdul Halim 
Khaddam, his wife, and all other members of his family, 
including his children, their spouses and their children. 
In early 2008, the Ministry of Finance seized the assets of 
the board members of al-Nama' Company due to corruption and 
for providing misleading information. 
 
 
Dispute Settlement 
 
On June 8, 2005, Syria signed the Washington International 
Convention on Investment Dispute Settlement. In addition, 
as a party to the New York Convention on Arbitration, the 
SARG accepts binding international arbitration of disputes 
between foreign investors and the state in cases where the 
investment agreement or contract includes such a clause. 
Otherwise, local courts have jurisdiction.  Arbitration 
cases involving the public sector must be tried by the 
State Council, which attempts to ensure the integrity of 
the process; however, they have no authority to enforce 
their decisions. 
 
In March 2008, the SARG issued the countryQs first 
arbitration law. Law 4 authorized the establishment of an 
official arbitration center in Syria, which was registered 
with the Ministry of Justice and included a registry of 
accredited arbitrators. According to the law, public-sector 
entities were permitted to resolve disputes through 
arbitration. In December 2009, Syria launched its first 
economic arbitration center the "Hammurabi Arbitration and 
Reconciliation Center," for the protection of local, Arab 
and foreign investments in the country. According to the 
SIA, 11 new centers are expected to open shortly after 
applicants obtain the necessary licenses from the Ministry 
of Justice. 
 
A number of U.S. suppliers and companies have asserted 
claims against state enterprises for non-payment of goods 
and services delivered. The government has made an effort 
since 1996 to settle some of these cases on a case-by-case 
basis and one American supplier finally received payment in 
2002 for goods delivered in 1982. Long delays are common in 
settling disputes through negotiation and arbitration. In 
the past several years, fewer investment disputes have been 
filed or brought to the EmbassyQs attention as U.S. 
business activity in Syria has decreased steadily over that 
period. 
 
While property and contractual rights are protected on 
paper, the government regularly interferes in the judicial 
process. Judgments by foreign courts are generally accepted 
only if the verdict favors the Syrian government. Although 
an official bankruptcy law exists, it is not applied fairly 
because a creditor's ability to salvage any investment is 
contingent on the amount of influence he can exert and not 
on the letter of the law. Monetary judgments, if granted, 
are made in local currency and cannot be converted to hard 
currency. 
 
 
Performance Requirements and Incentives 
 
Investment Law No. 10 and its amendment, Decree No. 7, did 
not stipulate formal performance requirements as a 
condition for establishing, maintaining, or expanding an 
investment or for determining eligibility for tax and other 
incentives. Decree No. 8, however, raised the minimum 
investment capital from USD 200,000 to USD 1,000,000 if the 
investment projects are located in greater Damascus, 
Aleppo, Homs, Latakia, Tartus or Hama and to USD 600,000 if 
the projects are located in the rural areas of Dayr al-Zur, 
al-Hasakeh, al-Raqqa, Dar'a, Quneitra, Idleb, or Sweida. 
Furthermore, Decree 8 offered tax deductions if investors 
chose to locate their projects in one of SyriaQs industrial 
zones, for high job-creation projects, and for 
share-holding projects. 
 
To encourage investments in the least developed eastern 
region of the country, namely in al-Hasakeh, Dayr al-Zur, 
and al-Raqqa the SARG passed a law in September 2009 
exempting investment projects located in those regions from 
taxes and fees for a period of ten years, provided the 
projects were licensed before December 31, 2012. Projects 
licensed after this date would not benefit 
HUNTER