development_zone – Syria Report

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.

On September 11, the Higher Investment Council decided to create the first development zone in Syria within Al-Layramoun (also known as Balleramoun) Industrial Zone in the northern part of Aleppo city. However, until the executive instructions for the decision are issued, there is still some ambiguity over how officials will implement the zone, including if the zone will be only aimed at the reconstruction and rehabilitation of public facilities or if it will also target private properties that have been damaged in the war.

Al-Layramoun Industrial Zone

Al-Layramoun Industrial Zone was established in the 1980s on land expropriated from a village of the same name. The zone was subject to the provisions of Prime Ministerial Decree No. 1858 of 1986, and the area was later annexed to Aleppo city under Decree No. 495 of 2007, which amended the city’s administrative boundary lines.

Between 2005 and 2012, a number of craft plots were added to the industrial zone, allocated for woodworking, sewing, knitting, embroidery, and for metal furniture making. Then, in 2018, the area was placed under the provisions of Prime Ministerial Decree No. 66 of that year, which relates to implementing and investing in industrial and craft zones.

Under Decree No. 1858 of 1986 and its amendments, an industrial zone is any publicly owned land that is allocated for founding industrial and artisanal businesses in accordance with a general zoning plan that meets the needs of the concerned parties.

According to the decree, here are three categories of plots that can be in an industrial zone: the first is for industrial, craft, and professional work; the second is for small- and medium-size industrial facilities; and the third is for medium and large non-pollutant industries. The second and third categories include public utilities and facilities that remain under state ownership, while plots in the first category may be allocated and sold to private industrialists and craftspeople, including those whose facilities were previously expropriated by the state. In all cases, however, the land and public facilities in the industrial zones belong to the state. According to Decree No. 66, these consist of state lands or land expropriated by the state. The state has not relinquished its ownership even in cases of allocating or selling certain plots

How has the war damaged this area?

When opposition forces seized the northern rural part of Aleppo in late 2012, Al-Layramoun became a frontline zone between the rebels and the regime. It suffered heavy airstrikes, artillery fire, and clashes on the ground. In 2017, the vice president of Aleppo’s Chamber of Industry told the Swissinfo news agency that 85 percent of facilities in Al-Layramoun were completely destroyed in the fighting. The news agency described the area as a “graveyard of factories, with silence and destruction looming over it.”

Around 1,800 small- and medium-sized enterprises were active in Al-Layramoun before 2011, while today there are only 160, the Chamber of Industry vice president told local state-run newspaper Al-Jamahir last week.

After regime forces regained control of the area in late 2016, the Ministry of Local Administration’s reconstruction committee allocated SYP 200 million to remove rubble, clear the roads, and equip infrastructure in the zone. In late 2018, SYP 100 million was also allocated to rehabilitate the damaged telephone network. No other financial obligations were made to reconstruct or rehabilitate the industrial zone.

In June 2022, the Aleppo governor formed a committee to rehabilitate infrastructure in Al-Layramoun and remove any obstacles and challenges to the area’s reconstruction. The goal of the committee was to restore all public services, including electricity, water, phone networks, telecoms, sewage, roads, and lighting. However, the committee has yet to announce the status of such work.

The development zone

During its meeting chaired by the Prime Minister on September 11, Syria’s Higher Investment Council authorised the creation of a development zone in the Al-Layramoun Industrial Zone area. The council tasked the relevant authorities with implementing the project.

A development zone is one of several types of special economic zones in Syria. Under Investment Law No. 18 of 2021, such zones are fully open for investment from the private sector and for partnership with the public sector. Development zones fall under the category of administrative development zones, and can exist either be invested in for general development or real estate development purposes, or for reconstruction purposes if the area has been damaged in the war.

According to Law No. 18 of 2021, a development zone may be established by decree from the Higher Investment Council, which defines the zone’s administrative borders, the zone’s activities, and when the zone must be completed. A ten-member committee, which is chaired by the Minister of Local Administration and includes a committee director, supervises a development zone. This committee prepares a general zoning plan that determines any financial and time commitments of implementation. Committee members also study requests to allocate real estate plots to investors inside state-owned land and to assign individuals the task of detailing and outlining the zone’s organizational scheme.

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