Syria Market Entry

Syria Market Entry

Subchapters:

  • Market entry
  • Forms and conditions of operation on the market
  • Marketing and Communications
  • Issues of intellectual property protection
  • Public procurement market
  • Payment terms, payment ethics and resolution of commercial disputes
  • Visas, fees, specific conditions of travel to the territory
  • Employment of citizens from the Czech Republic
  • Fairs and events

Market entry

In the case of the intention to operate stably on the domestic market, or when deploying more complex and demanding technology, or if it is a cooperation aimed at production cooperation, we recommend the involvement and use of the services of a local registered representative. Syrian legislation, unlike some other Arab countries, generally does not require foreign firms to use exclusively the services of local agents to sell their goods. However, from 2 January 2002, the provisions of Act 15/2001 came into force, according to which all companies supplying the state sector must have a local representative if they do not have a branch registered in the country. Exceptions are supplies to the military and security forces, barter trades, contracts requiring purchases directly from the manufacturer and contracts not exceeding a value of SYP 5 million (approx. USD 100,000). Act No. 34 of 2008, which only came into effect in March 2009, defines the basic conditions that must be met when registering local representatives. This law is then followed by a regulation of the Ministry of Industry and Trade, which effectively covers the activities of local representatives in the form of registration, and which states the following: The Ministry of Economy and Trade defines the conditions for the registration of agents of foreign companies in Syria. In principle, it can be a general registration for all activities of a foreign company or a registration for, for example, only one tender. The foreign company must also be represented by only one agent. Check smber for agriculture and fishing facts of Syria.

The document issued by the Ministry of Economy and Trade defines the requisites of a contract and representation concluded between an agent and a foreign company in order for the representation to be registered. These are the following items: ·

Name of the represented company and registered office. · Nationality, if applicable. place of residence. · Address (headquarters) of the parent company and details of branches, if relevant. · Type of authorization and method of mediation (meaning whether the agent is paid a commission or a fixed fee). · Amount of percentage reward or salary and terms of payments. · Subject for which the power of attorney is issued, event. list of items (goods, services, etc.). · Time limitation of power of attorney. · Agent’s name, address and contact details (phone, fax, e-mail). · Establishing that the business relationship between principal and agent is direct and that the foreign entity does not have another agent in Syria. When registering a representative, the following documents must be submitted: · Valid registration of the agent for the performance of the relevant business activities, supplemented by a copy of the document confirming the identity and the tax identification number. · Certified copy of extract from the commercial register. · The agency agreement between the foreign company and the agent translated into Arabic and verified at the embassy of Syria operating in the country where the foreign entity is located and at the Ministry of Foreign Affairs in Syria.

When choosing an agent, we recommend: 1. request the business registration of the agent/distributor, 2. request a portfolio of companies that the agent/distributor represents (from a competitive point of view), 3. request a list of products that the agent/distributor sells (from a competitive point of view, complementarities), 4. request references to companies that the distributor/agent already represents (verify their satisfaction), 5. in the case of an agent, agree on a commission for the goods sold and not on a flat rate for representation.

Forms and conditions of operation on the market

The fundamental norm that defines the forms of operation of foreign companies, institutions and agencies operating in the Syrian Arab Republic is Law No. 34 adopted in 2008, which regulates the operation of state or non-profit entities in Syria in addition to foreign business companies. The regulations of the Ministry of Industry and Trade then define the conditions for the representation of foreign companies at the level of sales representatives. Law No. 34 defines four basic forms of representation of foreign entities in Syria. These are the following: Branch, performing the main activities on the territory of Syria to carry out any business activities. Those foreign entities should establish a branch in Syria, which, for example, hire local labor or the scope of their activities represents an activity lasting more than 6 months, or send their experts to Syria for a period of more than 6 months, or seek, for example, to buy real estate. A temporary office designed to fulfill a contract with a time limit for a maximum of one year with the possibility of an extension for another year. A temporary office can represent a private or state entity with the right, for example, to rent real estate necessary for the performance of its activities. The representative office is limited by the ban on commercial activity. Its purpose is primarily to promote the foreign entity, contact with the public, communication with Syrian entities. The content of this form of representation can also be the collection of information necessary for the activities of the parent company without the generation of profit. In particular, they are regulated by Act No. 34, but also by other legal regulations, conditions for registration of a representative office for foreign banking institutions. A local, regional office, whose activities are again limited by the ban on conducting commercial activities with the main content of communication with Syrian subjects. In essence, it provides a postal address for communication with local institutions, including the delivery of court decisions, judgments, etc. To register a foreign representative office with the Ministry of Economy and Trade, it is necessary to submit: · Name and seat of the company · Nationality and place of incorporation · Legal form of the company · Legal status and local jurisdiction of the commercial court of registration · Type of registration · Reason for operating in Syria · Basic assets (except for state institutions and non-profit organizations) · Office address · If there are branches, their headquarters · Name of the managing person,

Marketing and communication

Considering the existence of several national TV channels and radio stations, there are good possibilities of using mass media for promotion in Syria. Daily, periodical and professional press regularly publish advertisements promoting various products, the names of their manufacturers or importers and distributors. The most frequently used way is to use a local representative or distributor. Nevertheless, the main form of sales support is fairs and exhibitions. Supervision of advertising prices and its content in the mass media is carried out by the state-owned Arab Advertising Organization (AAO), Muntanabi Str., POBox 2842, Damascus, fax: 00963-11-22220754. This organization mediates advertising on television, newspapers and controls advertising on public billboards. The price of advertising depends on whether the goods are locally produced, manufactured under license or imported. Advertising prices tend to be quite high for foreigners. Information about exhibition events is currently published on the websites of the main domestic organizers. The ongoing armed conflict combined with the COVID-19 pandemic has meant that only a few trade fairs and exhibitions are held across the country and the remaining ones were canceled in 2020, with plans to resume in 2021. The most important trade fair event in Syria (Damascus International Fair) is organized by the state company Public Establishment for International Fairs and Exhibitions (http://peife.gov.sy/en/). A private Syrian entity that organizes several other exhibitions and fairs is the Syrian International Marketing Association (SIMA) – http://www.simafairs.com/ . The most important trade fair center is the capital Damascus.

Issues of intellectual property protection

The issue of intellectual property protection (IPR) should not be underestimated in relation to the Syrian business environment. Although manufacturers and distributors of pirated products (mainly computer software) are raided by state authorities from time to time, the production and distribution of these goods continues indefinitely. The most widespread infringement of copyright is in the field of music, image carriers and textiles (imitation of textile brands is also widespread, however local manufacturers with an official license – Addidas, Nike, Puma, United Colors of Benneton, etc.). A similar situation exists with computer software, where the US ban on the export of software programs using protective encryption technologies to Syria has forced the domestic market to 100% pirated copies. However, even in other areas of computer software, approx. 60% of all used products are pirated. In the retail network, everyone can buy the latest versions of computer operating systems and user programs for a tiny fraction of the usual world price. As for books and their copyrights, most of the books available in the local market are in Arabic and by Arabic authors. However, there have also been cases of translations of English books without first obtaining the relevant copyright. The new law No. 12/2001 on the protection of copyrights, which applies not only to writers but also to computer software, helped to improve the situation to some extent. However, the protection of the law applies mainly to Syrian authors, for foreign authors, the implementation of the law is limited only to Syria’s international obligations in this area. Syria is a signatory to the Paris Convention for the Protection of Intellectual Property and the Madrid Convention on the Declaration of Origin.

Public procurement market

In the vast majority of cases, state contracts are awarded through public tenders. The exception is small contracts, mostly for the supply of spare parts (usually up to USD 20,000), which are awarded directly based on the decision of the purchasing committee of the relevant state organization. The law does not apply to purchases of weapons and military equipment, which take place through direct demand management. Tenders are published in the press (mainly the Arabic daily Tishrin or the paid web portal Syria Report). The time from the official announcement to the deadline varies, usually around two months. However, some organizations give a deadline of only 4 weeks. For large orders, pre-qualification is carried out. The price of the tender documentation is also different and varies according to the relevant state organization (free or up to 1,000 USD).

Legislation

The basis of the legislation is the General Delivery Conditions prescribed by Act. No. 228/1969, 195/1974 and 349/1980 (oil sector). The conditions are one-sided and against the supplier. Individual tenders prescribe, depending on the nature of the individual project, other legal, financial or technical conditions resulting from the regulations of individual departments.

Preparation of offer

Great attention must be paid to the formal preparation of the offer and strict adherence to the tender specifications. It often happens that a company is excluded even for an insignificant formal error. Prices must be quoted both CFR(C&F) and FOB, usually in USD. The offer must contain 3 envelopes: 1) bid bond, required documents and statements, 2) technical offer, 3) price and financial offer. If it is required to send samples, it is necessary to expect about 10-14 days for their customs clearance. If the offeror is not a manufacturer, he must submit a statement from him that he cannot or is not interested in exporting the goods directly and that the offer or is his exclusive seller of the relevant goods into the territory. The validity of the offer is usually prescribed for 90 days (sometimes 120 or 180 days), if the winner is not announced during this period, it is automatically extended by the same period, if the tenderer does not announce his intention not to continue with the tender within 7 days before the end of its validity. Bidders must include the name and address of their representative in Syria in the bid. If the representative does not have one, in some cases only his data is sufficient, and during the evaluation procedure, the representative agreement and all other documents necessary for the relevant registration of the representative office will be prepared. This is done in the interim, or only at the moment when the bidder is approached as the winner and invited to sign the contract. However, the risk of the latter is the possibility that the representative will not be registered in time (30 days by law) or that his registration will not be approved.

Bid bond

Each bid must be covered by a bid bond. Bid bonds (2-5% of the estimated bid value) must be issued through the Commercial Bank of Syria and in the text prescribed by that bank. Between this bank and the bank of the Czech exporter, there is also a correspondent bank, as Czech banks do not have appropriate guarantee lines with CBS. The foreign correspondent bank’s order to issue a bid bond must be sent 7-10 days before the tender deadline. If the respective bid bond cannot be issued by the deadline, a copy of the issuance order dated before the tender deadline can be placed in the bid envelope. In this case, the bid bond must be issued in the next 1-2 days, but no later than the closing date. The text of the bid bond gives the possibility of limiting its validity to a fixed date, which, in connection with the new internal regulation of this bank, improved the position of bidders. Currently, the bank no longer asks the beneficiaries of the guarantee for an opinion on its extension or return, as it was before (in the past, the bid bond was often extended unnecessarily, as this procedure was very lengthy) and considers guarantees for which it does not receive the relevant instruction during their validity to be extended, as invalid after the expiration of their period. It is therefore up to the tenderer who does not intend to extend his offer to notify the tenderer of his intention in time and ask him for a refund, or non-extension of bid bond validity. The winner of the tender can ask for the return of the bid bond only after signing the contract and opening the appropriate guarantee for the good performance of the work (performance bond).

The role of the local representative in the selection process

According to Law 15/2001, a Syrian state-owned enterprise can enter into a contract with a foreign firm only if it has an officially registered representative or a registered branch in the country. Formalities for registration with the Ministry of Economy and Foreign Trade are governed by Act 151/1952 (for details, see chapter 8.1). The local representative should also be able to ensure the technical specification of the tender for the bidder before the official announcement, so that there is enough time to prepare the bid. Tenders are deliberately announced with a short deadline until the deadline, so that only “some” companies can prepare a serious offer. Furthermore, even if the tenderer fulfills all the formal requirements of the selection procedure, has an acceptable technical solution and his offer is the lowest in price, he may not succeed if his agent does not “lobby” for him during the evaluation process.

Evaluation procedure

Although the law prescribes that the evaluation of the tender be public, i.e. with the participation of the bidders, the opposite is usually the case. It can take place in one day or, on the contrary, take several months (mostly 6-8 months including approval by a superior authority). First, the envelope is opened with the bid bond and other formal requirements (declaration of boycott of Israel, confirmation of membership in the Chamber of Commerce, etc.), then the envelope with the technical solution is opened, which, in case of more complex offers, is assessed and evaluated by the technical committee, which takes several weeks. Finally, the price part of the offer is opened. It happens that the second or third bidder who succeeds in the first two criteria is often asked to reduce his price by at least 10%. The originally lowest bidder must respond to this reduction if it wants to win the contract.

Payment terms, payment ethics and resolution of commercial disputes

In general, legal disputes in the business area between private entities are resolved according to the Commercial Code number 33/2007 and the Civil Code from 1949. For the procedural side, the law number 4/2008 regulating the methods of conducting disputes in the field of civil and commercial law is essential. Disputes in which a state entity is one of the participants can be conducted before a civil court as well as an administrative court. The subject of legal disputes may also be the subject defined in the provisions of Act No. 2/2008 aimed at protecting customers from false advertising, banning the production and sale of imitations of foreign brands and narcotic substances. In general, a foreign entity formally has the same rights in litigation as any other local entity.

  • Concluded insurance transferring the enforceability of the claim to the insurance company.
  • The text of the contract, which in the event of a commercial dispute refers to the legislation of the company’s origin, i.e. the Czech Republic (of course, a problem may arise with the enforceability of the law).
  • A solution in the form of deposits, which may be secondarily disadvantageous due to a change in the exchange rate

If a foreign company is facing litigation or is determined to initiate litigation, it must contact local legal counsel. He is further granted a power of attorney. A power of attorney can be granted at the Representative Office of the Syrian Arab Republic in Prague on a general document for the granting of power of attorney.

Visas, fees, specific conditions for traveling to the territory

The Ministry of Foreign Affairs of the Czech Republic does not recommend citizens of the Czech Republic to travel to Syria due to the ongoing armed conflict in the country and the related overall destabilization of the security situation. Following the spread of the COVID-19 epidemic, the Syrian government has implemented border sanitation measures since the end of February 2020. In March, the land borders to Jordan and Lebanon (with exceptions) were closed, as well as the Damascus airport and sea border crossings. Upon entering Syria, all travelers must undergo a 14-day quarantine in designated facilities.

Visa

  • A mutual visa obligation applies between the Czech Republic and the Syrian Arab Republic for citizens of both states. Citizens of the Czech Republic have the option of obtaining a visa to the country at the embassy of the Syrian Arab Republic in Prague at the address Českomalinská 20/7, 160 00 Prague 6 (web address https://www.syrianembassy.cz/). The consular department of the embassy issues entry visas according to the following rules: Acceptance of applications: daily from 9:00 a.m. to 12:00 p.m. /on working days/ Issue of granted visas: Monday – Thursday: 1:00 p.m. – 2:00 p.m., Friday: 12:00 p.m. – 1:00 p.m. The applicant must submit the following requirements: passport valid min. 6 months, 2x application form – can be downloaded via the website of the embassy, ​​2x photos, confirmation of employment or study Visa can be requested with the following validity: one-time visa for 2 months: 60, – Euro or multiple-entry visa valid for 2 months, or more: 100,- Euro. The applicant is obliged to pay the fee to the account at ČSOB: No. 263701095/0300. For up-to-date information, always contact the mentioned embassy.

Travel to Damascus and Syria

  • Taking into account the fact that the international airport in Damascus operates only in very limited traffic and there is no direct connection from Prague, the easiest way to travel is through the airport in Beirut (Lebanon). To cross the Lebanese-Syrian border, the traveler must be equipped with a valid COVID 19 test not older than 96 hours. Mass transport between Beirut and Damascus is very unreliable, so it is necessary for travelers to be picked up at the border (preferably directly at Beirut airport) by someone from the Syrian side. Traveling through Syria is strongly not recommended (if necessary, it is possible to consult the current situation with the staff of the Czech Embassy in Damascus).

Accommodation capacity

Hotels

  • Sheraton Damascus Hotel – standard room (single USD 300/double USD 325) – club room /lounge access/(single USD 350/double USD 375) – club suite/lounge access/(single USD 675/double USD 700) – terrace club suite /lounge access/(single $700/double $725) – presidential suite ($2750)
  • Hotel Dama Rose Damascus – standard room (single USD 115 + 13.5% tax) with breakfast – standard room (single USD 130 + 13.5% tax) with breakfast

Drinking water

  • It is not recommended to use water directly from the tap, it is recommended to use bottled water.

Crime and asymmetric threats

  • As Syria has been in a decade of civil war, travel in the territory, with the exception of some areas, is highly risky. The conflict is ongoing, especially in the northern, northeastern and northwestern parts of the country.

Asymmetric threats

  • With regard to the occurrence and frequent activities of terrorist cells of the so-called Islamic State, traveling especially in the desert areas east of Damascus and along the border with Iraq is highly risky.

Criminality

  • With regard to the critical economic situation in the country, the high level of poverty and the lack of resources for the livelihood of the population, there is a high latency in the country, mainly property crime (theft, kidnapping, ransom, etc.). Therefore, movement, especially outside the very center of Damascus and without a trusted person familiar with local conditions, is considered highly risky.

Employment of citizens from the Czech Republic

The issue of employment of non-resident citizens is basically determined by the following institutions:

  • The Ministry of Labor and Social Affairs in the field of defining the rules of employment of foreigners in Syria in the spirit of the establishment of Law 91/1959, Ministry Decrees No. 2040/2005 and 15293/2006;
  • Directorate General of Passport and Immigration Agenda on the issue of rules for granting residence permits; · Ministry of Finance in the area of ​​the income tax agenda according to the provisions of Act No. 24/2003.

Depending on specific cases, other entities may also enter into the entire process, such as individual line ministries, the executive of industrial zones, etc. In general, this is a very complicated process, the successful management of which can take a very long time. In principle, if the applicant seeks a job as an employee, he must, among other things, submit a document to the Ministry of Labor and Social Affairs that there is no other resident applicant for the defined position, or that the applicant has resided in Syria for more than 10 years. In the case of employment in the private sector, in addition to the presentation of documents on professional competence, a statement is required that during the work at the given workplace, a local employee will be trained within the framework of the defined program, who will gradually replace the non-resident worker. In the case of an application for a work permit as an employer, it is necessary at the General Directorate of the Passport and Immigration Agency to start the procedures for processing the application for a residence permit in accordance with the currently valid procedures by proving professional competence, submitting a document on the rental of production facilities, or office space event. proof of residence on the territory of the state for more than 10 years, if available. At a certain stage of the bureaucratic process, which is changing, all requests are then forwarded to the Ministry of Labor and Social Affairs, which, after going through its own procedural rules, again forwards the whole matter to the Directorate General of Passport and Immigration Agenda for further processing.

Fairs and events

For 2020, all events (primarily international trade fairs – Damascus International Fair, Re-Build Syria 2020 Exhibition, etc.) have been canceled as part of the government’s preventive measures against the spread of COVID-19. This year, the mentioned fairs should already be held, but the international participation will probably be very low. The Damascus International Fair should take place on August 25. – 3.9. 2021 ( http://peife.gov.sy/en/ ) and Re-Build Syria 2021 Exhibition on 29.9. – 3.10. 2021 ( http://www.re-buildsyria.com/ ).

Syria Market Entry