Explained: Law No. 2 of 2023, Amending the Investment Law

Two weeks ago the Syrian President issued Law No. 2 of 2023, which amended some parts of Investment Law No. 18 of 2021 and canceled Real Estate Development and Investment Law No. 15 of 2018 as well as its amendments. Essentially, Law No. 2 expands the scope of Law No. 18 to include real estate development and investment projects that had previously been regulated by Law No. 15 of 2008.

This new law was not part of the response to the February 6 earthquake, but rather had already been under discussion in the Parliament months earlier, as The Syria Report wrote previously. In theory, the law is meant to simplify investment procedures for real estate development, as well as stimulate investment via a handful of tax exemptions and administrative facilities. However, it does include a slew of issues that impact housing, land and property rights. 

Article 2 of Law No. 2 added “contribution to construction and urban development” to the goals of economic investment. Article 3 then clarified that the law’s provisions apply to a range of different projects including those for urban development and investment. 

Next, Article 4 confirms the Syrian Investment Agency (SIA), headquartered in Damascus, as the body overseeing investment in all sectors, including real estate. The SIA was established under Law No. 18 of 2021 and enjoys financial and administrative independence though it is affiliated with the Minister of Economy and Internal Trade. The SIA replaces the Real Estate Development and Investment Commission (REDIC), which was established by Law No. 15 of 2008. 

The duties of the now-defunct REDIC included regulating real estate development work; stimulating the private sector’s role and encouraging investment to participate in real estate development; help supply the housing and construction sector with land suitable for construction, as well as any necessary buildings, services and facilities; establish new residential suburbs and complexes; address informal settlements; and, finally, secure easily obtainable housing for low-income people.   

Law No. 2 also raised the number of SIA board members from 12 to 14, adding a representative from the Ministry of Public Works and Housing and a representative from the Regional Planning Commission. 

The new law entrusted the SIA board with the following additional duties: proposing certain state-owned properties to be used to establish real estate development and investment zones; proposing any advantages and easements for such projects; and granting development licenses to the real estate developers companies. 

Law No. 2 also replaced the term “real estate development zone” with the newer term “zone for real estate development and investment”. This was defined as any real estate or part of real estate covered by a decision to establish such a zone, whether it is currently built or unbuilt, and is subject to the provisions of Law No. 2. This is in contrast to Law No. 15 of 2008, which defined a real estate development zone as one that includes real estate both within and outside of zoned areas that can be secured from properties owned by the state, by local administrative units, by development companies or by private individuals. Under the executive instructions of Law No. 15, informal settlements could be addressed by establishing real estate development zones in their place, regardless of surface area. Law No.2 doesn’t mention informal settlements. 

Law No. 2 kept the SIA board’s power to propose establishing special economic zones, which it defined as any investment zones located within Syria’s customs zones — areas established with the goal of activating certain economic activities. These special economic zones were among the vague ideas included in the original Law No. 18 of 2021 and were divided into three types. Concerning housing, land and property rights is the so-called development zone, which is an administrative area considered to be an investment zone for development in order for reconstruction to take place in areas damaged by war. 

Law No. 2 increased the number of tax exemptions and customs incentives to include imported construction materials, equipment, machinery and other items needed to establish and equip tourism sites, hotels, accommodations, restaurants, entertainment facilities, and tourism services for investment projects. At the same time, however, Law No. 2 explicitly left out housing projects from the types of projects that would benefit from these exemptions and incentives. This is strange and not yet understood, as housing projects should receive priority in such exemptions, particularly after the February 6 earthquake and its disastrous impacts on buildings and housing, land and property rights.