Syrian Arab Republic

GDP (US$ Billion)

60.04 (2010)

World Ranking 68/191

GDP Per Capita (US$)

2,807 (2010)

World Ranking 130/191

Economic Structure

(in terms of GDP composition, 2017)

Services
(60.40%)
Industry
(19.60%)
Agriculture
(20.00%)

External Trade (% of GDP)

76.5 (2007)

Currency (Period Average)

Syrian Pound

11.23 per US$ (2016)

Political System

Unitary multiparty republic

Overview

The conflict in Syria continues to take a heavy toll on the economy and growth has slumped to levels last seen in the early 1990s, pushing millions of people into unemployment and poverty.  In addition, a severe decline in oil receipts and disruptions of trade has placed even more pressure on Syria's external balances, resulting in the rapid depletion of its international reserves. In July 2017, the World Bank produced a report on the economic impact of the conflict in Syria. The cumulative GDP loss from 2011 to 2016 was estimated at USD226 billion, with the war having disrupted economic activity by damaging industrial and agricultural production, reducing capital and disconnecting networks and supply chains. The longer the conflict lasts, the more difficult recovery will be because the effects of economic deterioration become more persistent over time.

Sources: UNHCR, World Bank, Fitch Solutions

 

Major Economic/Political Events and Upcoming Elections

July 2017

Hezbollah and the Syrian army launched a military operation to dislodge jihadist groups from the Arsal area, near the Lebanese-Syrian border.

 

October 2017

The Islamic State (IS) group was driven out from Raqqa.

 

November 2017

The Syrian army took full control of Deir al-Zour from IS. Syrian and Iraqi forces put IS under pressure in the dwindling areas still under its control.

 

December 2017

Russian President Putin visited and declared the mission accomplished for his forces in the battle against IS.

 

January 2018

Turkey launched an assault on northern Syria to oust Kurdish rebels controlling the area around Afrin. It seized the town in March.

 

February 2018

The Syrian government launched attacks on Eastern Ghouta, the final rebel-held enclave near Damascus.

 

October 2018

Jordan reopened the Naseeb-Jaber border crossing with Syria, which had previously served as an important commercial link for businesses involved in regional trade. Jordan had shut it down after it was seized by Syrian rebels in 2015, causing commercial activity to plummet in the adjoining free trade zone.

 

November 2018

The Syrian Arab News Agency (SANA) claimed that the General Establishment for Free Zones had achieved revenue of SYP3.3 billion for the year ending October 2018.

 

November 2018

Syrian government claimed of a suspected gas attack in Aleppo were followed by warplanes attacking rebel-held areas of the north for the first time since the creation of a buffer zone by Russia and Turkey in Idlib Province.

 

December 2018 - January 2019

United States President, Donald Trump announced plans to withdraw United States troops from Syria.

 

February 2019

The Syrian Arab News Agency reported that exports through the Naseeb-Jaber border crossing reached more than SYP13 billion from mid-October 2018 to mid-January 2019.

 

February 2019

The caliphate in Syria nears its end in the only remaining live front in the war as Baghouz, near the Iraq border, was besieged. Idlib would be the last pocket of Syria held by Islamists.

 

March 2019

The Syrian Arab News Agency reported a rise in the number of registered workers, possibly heralding a recovery in the labour market. 

 

August 2019

A conditional ceasefire was put in place in the north-west region of Syria, which included the rebel-held Idlib province.

 

August 2019

A United States delegation arrived in Turkey to set up a joint operations centre that would oversee the establishment of a safe zone in Syria. The move followed a recent agreement between United States and Turkish officials to address security concerns along Turkey's southern border.

 

October 2019

Iran-based MAPNA Group started construction of a 540MW combined-cycle power plant at Latakia in Syria. The project was jointly funded by the governments of Syria and Iran. The phase one of the project, which includesd a gas-fired unit, was expected to become operational in 18 months. The facility's other gas unit and a steam unit were scheduled to be completed in 24 and 34 months, respectively.

 

February 2020

The Syrian Ministry of Electricity Transmission Establishment had opened tenders for two solar photovoltaic projects in the country. The country was seeking developers for the construction of a 40MW solar facility at the Jandar combined cycle power plant in Homs Governorate, and a 23MW plant near Damascus. Bids for both the projects were by April 20, 2020.

 

Sources: BBC Country profile – Timeline, Middle East Institute, SANA, BBC, The Syrian Observer, Fitch Solutions

Major Economic Indicators
External Trade

Merchandise Trade

 

Trade in Services

Trade Policies
  • The Syrian Arab Republic's Working Party for World Trade Organization (WTO) accession was established in May 2010. The Working Party has not yet met. Syria was open to international trade before the civil war began in 2011, and the government is still aiming to harmonise its import tariffs and custom duties to adapt them to WTO standards.

  • Syria experienced a few years of positive trade development, after which trading came to a standstill due to the start of the civil war and the consequent economic sanctions imposed by the country's trade partners.

  • Syria's average tariff rate is 14.2%, the second highest in the Middle East and North African region (out of 18 countries). Syria imposes a progressive tax rates system for partners that it does not have a trade agreement with. Customs duties range between 1% and 200%, where raw materials are taxed at 5-10%, equipment for industry 10-20%, foodstuffs 1-15%, and machines 30-60%. A surtax of between 6% and 35% is levied on products meant to be sold to military barracks, schools and local councils. Tourism vehicles weighing under one ton are taxed 150%.

  • In May 2009, Syria banned all imports of 'any meat or products or materials containing derivatives of pigs'. Furthermore, travellers flying to Syria are banned from bringing in pets (unless accompanied with health certificates), animal products or prepared foodstuffs that contain animal products regardless of their origin. The measures apply to all of Syria's trading partners. Although this measure is likely to have been taken on the grounds of protecting the citizenry's health, it still discriminates against foreign producers of the affected products.

  • Customs duties are currently being lowered and reviewed in the context of an agreement of association between Syria and the EU and Syria's eventual membership to the WTO. Customs formalities have therefore been simplified and the list of prohibited imports has been lowered.

  • Syria has 34 signed bilateral investment treaties that are in force and six more signed but not yet in force.

Sources: WTO – Trade Policy Review, Fitch Solutions, UNCTAD

Trade Agreement

Multinational Trade Agreements

Active

  • Syria is a member of the Pan-Arab Free Trade Area (PAFTA): PAFTA's signatories consist of Bahrain, Egypt, Iraq, Jordan, Kuwait, Lebanon, Libya, Morocco, Oman, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, the United Arab Emirates and Yemen. PAFTA was established in order to create an Arab economic bloc that could effectively compete with other countries while ensuring that each country increased trade with one another. PAFTA entered into force on January 1, 1998. The most important aspect of the agreement was that over the next 10 years (to 2008), each member country would seek to reduce customs fees by 10% per annum as well as gradually eliminate trade barriers. In March 2001, the member countries decided to reduce the period over which the reductions in tariffs could be made so as to speed up the process, and in January 2005 the elimination of most tariffs among the PAFTA members was enforced. The agreement covers trade in goods.

  • Syria-EU Co-operation Agreement: This bilateral agreement between the EU and Syria entered into force on July 1, 1977, and it covers trade in goods. However, because it dealt with trade in crude oil and petroleum products, gold, precious metals and diamonds the agreement is suspended. An association agreement between Syria and the EU has been negotiated, but put on hold because of the internal situation in Syria, where internal repression has led to restrictive measures by the EU that have had a significant impact on bilateral trade. Compared to 2011, imports from Syria have dropped by 97% and exports by 85%, and where once they consisted of fuel and mining products they now consist mainly of agricultural products.

  • Turkey-Syria Free Trade Agreement (FTA): This bilateral FTA between Turkey and Syria entered into force on January 1, 2007, and it covers trade in goods.

Sources: WTO Regional Trade Agreements database, European Commission, Fitch Solutions

Investment Policy

Foreign Direct Investment

 

Foreign Direct Investment Policy

  1. Before the start of the conflict in 2011, Syria was gradually opening up its economy and moving towards a free market system.

  2. Before the start of the conflict, Syria introduced structural reforms, which included the renovation of the Commercial Code (2007), the Maritime Code (2008), the Finance Act (2004) and the Banking Act of 2004, which would allow the country to be able to move toward a free market economy. Furthermore, the Investment Law also gave incentives to foreign investors, including ownership of companies, import of machinery, transport and raw material free from customs duties.

  3. No reliable international data has been published regarding foreign investment in Syria since 2012, largely due to the country's ongoing conflict. This makes it difficult for investors to gauge the opportunities that might be present in the market.

Sources: WTO – Trade Policy Review, Investment Policy Hub, Syrian Investment Agency, Fitch Solutions

 

Free Trade Zones and Investment Incentives

Free Trade Zone/Incentive Programme

Main Incentives Available

Syria has eight free zones (Adraa, Airport, Aleppo, Damascus, Hasyaa, Lattakia Port, Tartous and Yaarobya), which allow for different production activities and services.

The government is also advocating policies for the development of industrial cities.

Although various incentives exist, such as lower customs duties and administration, as well as tax breaks, investors will face challenges arising from the conflict.

Sources: US Department of Commerce, Syrian Investment Agency, Fitch Solutions

Taxation – 2020
  • Consumption Tax: 1.5-40%
  • Corporate Income Tax: 10-28% (progressive)

Sources: World Bank, National Sources

 

Business Taxes

Type of Tax

Tax Rate and Base

Corporate Income Tax

- Specific rates: 22% on joint stock and limited liabilty companies; 14% for joint stock enterprises which issue more than 50% of their shares to the public; 15% for insurance companies which issue at least 51% of their shares to the public; 25% to banks and insurance companies

- Companies falling outside these categories are taxed at a progressive rate ranging between 10% and 28%

Dividends

- 7.5% on dividends issued by a non-resident entity

- Dividends issued by Syria-based entities are not taxed on distribution to another company

Capital Gains Tax

- Capital gains are treated as taxable income and taxed at the standard corporate tax rate

- Gains on real property are subject to a tax rate ranging from 15-30% of the property's registered value

Consumption Tax

- Syria has no value added tax, instead certain services and imported luxury goods attract a consumption tax, in a range of 1.5-40%

Surtax

- A local administration tax of 4-10%, depending on the region

- A temporary reconstruction fee of 5% is imposed on all direct and indirect taxes except payroll tax

Stamp Duty

- Ranges between 0.3% and 0.7%; imposed on transactions such as the formation of corporations and the execution of documents

Property Tax

- Ranges from 14% to 60%, depending on the type of property

Sources: World Bank, Fitch Solutions
Date last reviewed: March 14, 2020

Foreign Worker Requirements

Foreign Worker Permits

Anyone wanting to work in Syria needs to obtain permission from the Ministry of Social Affairs and Labor.

 

Localisation Requirements

The security situation means that employers will be obligated to pay exorbitant insurance premiums for foreign staff, and may also be required to offer substantial hardship and danger pay premiums.

 

Visa/Travel Restrictions

Citizens of all countries require a visa to travel to Syria. Before 2014, citizens of many Arab countries did not require a visa, and citizens of many former Soviet states were allowed to obtain visas on arrival.

There are two types of entry visas: a six-month visa valid for one trip or multiple trips, which can be awarded for one year; and a three-month visa valid for one time only.

Sources: Government websites, Syrian Ministry of Foreign Affairs, Fitch Solutions

Risks

Sovereign Credit Ratings


 

Rating (Outlook)

Rating Date

Moody's

N/A

N/A

Standard & Poor's

N/A

N/A

Fitch Ratings

N/A

N/A

Sources: Moody's, Standard & Poor's, Fitch Ratings

 

Competitiveness and Efficiency Indicators


 

World Ranking

2018

2019

2020

Ease of Doing Business Index

174/190

179/190

176/190

Ease of Paying Taxes Index

81/190

85/190

91/190

Logistics Performance Index

138/160

N/A

N/A

Corruption Perception Index

178/180

178/180

N/A

IMD World Competitiveness

N/A

N/A

N/A

Sources: World Bank, IMD, Transparency International

 

Fitch Solutions Risk Indices


 

World Ranking

2018

2019

2020

Economic Risk Index Rank

199/202

194/201

192/201

Short-Term Economic Risk Score

27.1

41.5

42.5

Long-Term Economic Risk Score

29.1

31.6

34.0

Political Risk Index Rank

198/202

197/201

197/201

Short-Term Political Risk Score

27.9

27.9

27.9

Long-Term Political Risk Score

21.7

24.2

24.2

Operational Risk Index Rank

187/201

184/201

187/201

Operational Risk Score

28.2

27.9

27.3

Source: Fitch Solutions
Date last reviewed: March 14, 2020

 

Fitch Solutions Risk Summary

ECONOMIC RISK

Given the prolonged period of unrest in Syria, along with the displacement of millions of Syrians, we expect continued economic decline over the coming quarters. The Syrian economy has contracted to the size it was in the early 1990s. While regions held by the regime of Syrian President Bashar al-Assad will remain better off than those not under government control, business activity and state investment will remain stagnant, and living standards will continue to decline as the Syrian currency loses value.

OPERATIONAL RISK

Damascus undertook some key reforms to improve the country's business environment before the beginning of the civil war, such as allowing greater private investment in specific sectors through public-private partnerships. However, as long as the civil war continues, foreign investment will remain virtually non-existent, with only a few Iranian and Russian companies investing in government-controlled territory. Russia's entry into the Syrian civil war in September 2015 has reshaped the conflict, allowing the Syrian regime of President Bashar al-Assad to make sweeping territorial gains and reduce the conflict zone to the largely rural province of Idlib in the northwest, adjoining Turkey.

Source: Fitch Solutions
Date last reviewed: March 15, 2020

 

Fitch Solutions Political and Economic Risk Indices 

 

Fitch Solutions Operational Risk Index


 

Operational Risk

Labour Market Risk

Trade and Investment Risk

Logistics Risk

Crime and Security Risk

Syria Score

27.3

42.8

23.7

27.6

15.0

MENA Average

47.4

53.1

48.0

47.7

40.9

MENA Position (out of 18)

15

16

17

14

17

Global Average

49.7

50.2

49.8

49.3

49.2

Global Position (out of 201)

187

146

190

177

193

100 = Lowest risk, 0 = Highest risk
Source: Fitch Solutions Operational Risk Index

Country/Region

Operational Risk Index

Labour Market Risk Index

Trade and Investment Risk Index

Logistics Risk Index

Crime and Security Risk Index

UAE

72.0

71.2

79.1

68.7

70.5

Qatar

65.9

65.0

61.8

71.6

61.2

Bahrain

65.0

62.2

61.9

64.5

69.2

Oman

64.5

63.1

69.5

71.5

53.6

Saudi Arabia

62.6

67.2

62.1

62.7

57.7

Jordan

56.5

56.9

60.7

59.0

52.3

Kuwait

54.3

43.2

63.8

54.8

53.2

Morocco

54.2

54.2

51.2

52.5

56.2

Egypt

48.7

49.9

45.7

56.4

42.9

Tunisia

46.5

42.2

56.2

47.3

42.3

Lebanon

44.1

53.0

51.9

41.4

29.7

Iran

43.2

49.5

36.7

50.8

34.4

Algeria

39.2

46.1

31.1

42.9

36.2

West Bank and Gaza

32.5

48.8

37.4

32.0

17.0

Syria

27.3

47.2

22.1

29.3

17.1

Libya

27.3

45.5

23.7

27.0

15.0

Iraq

26.9

43.7

24.8

28.6

12.4

Yemen

23.2

32.7

24.9

15.8

16.1

Regional Averages

47.4

52.3

48.0

48.7

40.9

Emerging Markets Averages

46.2

48.2

46.5

45.0

44.9

Global Markets Averages

49.7

50.2

49.8

49.3

49.2

100 = Lowest risk, 0 = Highest risk
Source: Fitch Solutions Operational Risk Index
Date last reviewed: March 14, 2020

Hong Kong Connection

Hong Kong’s Trade with Syria

Export Commodity

Commodity Detail

Value (US$ thousand)

Commodity 1

 Electrical machinery, apparatus and appliances, and electrical parts thereof

595.4

Commodity 2

 Professional, scientific and controlling instruments and apparatus

138.5

Commodity 3

 Manufactures of metals

55.0

Commodity 4

 Office machines and automatic data processing machines

49.3

Commodity 5

 Machinery specialized for particular industries

22.5

Import Commodity

Commodity Detail

Value (US$ thousand)

Commodity 1

 Live animals other than animals of division 03

12.0

Commodity 2

 Telecommunications and sound recording and reproducing apparatus and equipment

4.2

Commodity 3

 Electrical machinery, apparatus and appliances, n.e.s., and electrical parts thereof

2.4

Commodity 4

 Special transactions and commodities not classified according to kind

2.3

Commodity 5

 Miscellaneous manufactured articles, n.e.s.

0.1

Exchange Rate HK$/US$, average
7.75 (2014)
7.75 (2015)
7.76 (2016)
7.79 (2017)
7.83 (2018)
7.77 (2019)


 

2019

Growth rate (%)

Number of Syrian residents visiting Hong Kong

237

-12.5

Number of Middle East residents visiting Hong Kong

113,849

-12.8

Source: Hong Kong Tourism Board
Date last reviewed: March 14, 2020

 

Commercial Presence in Hong Kong


 

2019

Growth rate (%)

Number of Syrian companies in Hong Kong

N/A

N/A

- Regional headquarters

- Regional offices

- Local offices

 

Treaties and Agreements between Hong Kong and Syria

Syria has a bilateral investment treaty with Mainland China that came into force on November 1, 2001.

Source: UNCTAD

 

Visa Requirements for Hong Kong Residents

A visa is required for HKSAR passport holders.

Note: Hong Kong's Outbound Travel Alert (OTA) system currently categorises Syria as black, indicating a severe threat and to avoid all travel.

Source: Hong Kong Immigration Department
Date last reviewed: March 14, 2020

Image name View