This article covers the best practices and needs for reform in entrepreneurship policies in Syria.
Startup, ease of entry
For-profit companies
Syria has had several business start-up reforms over the past decade, and still ranked relatively low in the 2010 Doing Business report, moving down from 133rd to 134th in the ease of starting a business. Business start-up required 7 procedures, took 17 days, and cost nearly 28% of GNI per capita to start a business in 2009, and had the highest minimum paid-in capital in the world at 1,013% of income per capita. This was nine times the regional average. Syria further reduced the capital requirement to 355.1% of income per capita in 2010.
Best practices
In 2006, Syria reduced its registration tax (stamp duty) from 1.5% to 0.5% of capital. In 2007 it enforced publication of the memorandum of association in the official gazette for new companies, making registration more expensive, but this was abolished in 2008, when the new company was instead required to publish a copy of registration certificate. Syria introduced a new commercial code in 2007 that simplified business start-up and made registration administrative rather than judicial by abolishing the court and lawyers’ participation in the registration process, introduced statutory limits and simplified tax registrations for new business. In 2009, it put registration forms online, however it doubled the cost of registration due to higher publication and incorporation fees from 18.2% to 27.80% GNI per capita. Furthermore, in 2010 it decentralized approval of the company memorandum, reducing four days to register, but increasing the cost to 38.1%(GNI income per capita). In 2008, Syria had an increase of 33% in its minimum paid-in capital requirement, equivalent to 4,354% of income per capita, making it more difficult for entrepreneurs. This was reversed in 2009 to about 10 times the average income per capita—still the highest paid-in minimum capital requirement in the world ($70,660). Syria continued to improve, in 2010, it eased business start-up by reducing the minimum capital requirement for limited liability companies by two-thirds. The entry of private banks into the Syrian market sped up the issuing of Letters of Credit reducing two days in time for both exports and imports. Reforms in customs started in 2005 with the intention of implementing electronic data interchange system, to simplify procedures, increase transparency and improve the productivity. By 2006, new IT equipment and software were set up in four locations allowing traders to submit declarations online.
Needed reforms
Syria does not have a fully fledged enterprise policy framework and lacks clarity in institutional implementation.
Finances
Access to finance remains one of the key problems for enterprises operating in Syria particularly for small and medium enterprises (SME's). In spite of the reforms initiated by the government and the Central Bank of Syria, the legal and regulatory environment remained relatively underdeveloped and the ranges of banking and financial services for the enterprise sector were limited. Syria ranked 181st out of 183 economies worldwide in the ease of getting credit, putting the country in the bottom three. As of 2009, credit information services and credit guarantee schemes or credit bureau registry that could supported access to credit by reducing collateral requirements were not available in Syria. Few microfinance facilities exist and most of these operate as pilot projects. Although the Commercial Bank of Syria (its largest state-owned bank) was officially charged in February 2009 with increasing loans for small business startups, a climate of corruption may deter many would-be entrepreneurs. Syria enhanced access to credit by eliminating the minimum threshold for loans included in the database, which expanded the coverage of individuals and firms to 2.8% of the adult population.
Private equity
Syria has no legislation related to investment funds. There are no equity funds operating in the country as of 2009. The government has recently licensed a number of holding companies, in order to mobilize equity funds from private entrepreneurs.