Enab Baladi – Jana al-Issa

Recent political changes in Syria open the door wide for economic transformations imposed by the current phase in the context of the country’s reconstruction.

One of the most notable changes is the reliance on investment, particularly foreign investment, as one of the most effective drivers of the economy to accelerate economic activity and fill the state treasury.

In the Syrian environment, there are hundreds of investment opportunities that can attract capital; however, the high desire of investors to start their projects in Syria may collide with several obstacles due to the absence of a secure investment environment.

An entry point for state development

Foreign investors should study and determine the extent of the risk of the investment climate in a given country before deciding to invest there, as explained in a report published by the financial and investment website “Investopedia.”

The investment climate encompasses the economic, financial, social, and political conditions in a country that affect the willingness of individuals, banks, and institutions to lend to the private companies operating there.

According to the report, the investment climate is influenced by several indirect factors, most of which exist in Syria. These include the level of poverty, crime rates, infrastructure, labor force participation, national security considerations, political stability, taxation, liquidity, stability of financial markets, the rule of law, property rights, regulatory environment, government transparency, and government accountability.

Foreign investment is a key entry point for developing the state, particularly in the Syrian context, as explained by political economy researcher Yahya al-Sayed Omar. He noted that the cost of reconstruction is high, and therefore it is necessary to work on developing indicators for foreign investment in the country.

Al-Sayed Omar added, in a post on his personal Facebook page, that investment requires several prerequisites, and in general, to attract investors, it is essential to understand the challenges they may face and work to confront them.

Security as a priority

Challenges to foreign investment primarily revolve around security and various indicators of political and social stability, as well as the existence of a supportive legal and legislative environment and the provision of extensive facilities and benefits, as confirmed by researcher Yahya al-Sayed Omar.

Moreover, developing infrastructure (facilities, networks, airports, resources, and energy) is a critical factor, along with the stability of the entire region, which is what is termed geopolitical stability. Regional stability indirectly reflects on investment in the country, according to the researcher, which could attract and encourage foreign investments in Syria.

Economic analyst George Khouzam pointed out that capital owners can choose to settle or invest in any safe place in the world, and none of them would consider investing in a location that poses any personal threat or threatens their funds or could lead to a decline in commercial activity in the future.

Khouzam added in a post on his official Facebook page that the stability of security and civil peace without the possibility of future conflicts is the most important condition before undertaking any economic reforms, especially since there are foreign and Arab countries that evaluate the degree of security and civil peace to facilitate the return of their trade and diplomatic relations with Syria.

For the sixth consecutive year, Syria maintained its position at the bottom of the Global Peace Index, according to the 2024 report by the Global Institute for Economics and Peace, one of the main indicators relied upon by investors to assess the investment environment in the country.

According to the index, Syria ranked 161 out of 163, just one position ahead of Yemen, which ranked 162, while Afghanistan ranked last.

Iceland topped the index and is in first place, which is why it attracts investments annually worth hundreds of millions of dollars.

The Global Peace Index measures the state of peace in three areas: the level of security and community safety, the extent of ongoing local and international conflict, and the degree of militarization.

Two facets of capital

Academic and economic researcher Sinan Hatahet stated in an interview with Enab Baladi that foreign investment in Syria has two facets: the first is the money located abroad but owned by Syrians, including dual nationals or expatriates, and the second is international foreign companies looking to invest.

The first facet is crucial because the economic situation in the country requires the concerted efforts of all to rejuvenate the economic process. It plays a role in stimulating the private sector, which should be the primary employer in Syria, as has been historically, where, in the worst case, the ratio of private sector employees reached 75%, while state employees constituted only 25%.

Hatahet believes that Syrian capital should be prioritized to maintain national decision-making, while foreign capital is important, provided there are legislative and legal safeguards to protect the country’s rights, without allowing exploitation of local consumers.

In both facets, the investment process requires several indicators, the first of which is legislation to protect against theft and unfair competition and to safeguard the economy from potential monopolization by the investor.

The process also requires security, insurance companies, guaranteed energy, and a workforce that is trained to high levels of expertise to enable operations to commence, along with the existence of a financial environment for funding, such as banks.

Without these indispensable indicators, there will not be significant foreign investment in Syria, according to Hatahet’s expectations, who added that fully lifting sanctions on Syria and removing the designation of Hayat Tahrir al-Sham (HTS) from terrorism lists is also an important factor in this context and can double investments in the country.

At the bottom of productivity and top of corruption

In terms of labor, Syria ranked 18th out of 117 countries in the worker poverty rate index, according to the International Labour Organization‘s 2022 classification. Productivity in Syria was ranked 149th out of 185 countries, indicating weak productivity.

Regarding the ratio of employment to the population, Syria came in 166th out of 190 countries with a rate of 39.2%, according to updates from the International Labour Organization, signaling labor migration.

For consecutive years, Syria has maintained its position near the bottom in the annual report on the Corruption Perceptions Index published by Transparency International, which assesses the levels of transparency and corruption in 180 countries worldwide.

In its latest report, the organization ranked Syria 177th out of 180 countries, with a score of 13 out of 100 points. Thus, Syria has dropped from 144th place with a score of 26 points according to the classification published in 2012, reaching its current position after a decline of 13 points.

The state’s score on the Global Corruption Perception Index reflects the perceived level of public sector corruption on a scale from zero to 100, where a score of zero indicates high corruption and a score of 100 indicates high integrity.