Syrian people are to be allowed to hold unlimited foreign currency following a decree issued Tuesday by President Hafez al-Assad as part of the government's efforts to revitalize the economy.
Until now, possession has been punishable by prison terms of between three and ten years.
"The possession of foreign currency, payment orders in foreign currency and precious metals is no longer punishable by law, whatever the value involved," said the decree, carried in the official media.
Nevertheless, possession of foreign currency will still be checked at borders. Anyone found violating the law could face a prison term of between one and five years although this is considerably less than the 15 to 25 year sentence they risked before.
Syrian citizens have been allowed to open foreign currency bank accounts since 1996, but investors hung back as long as the law banning possession of foreign currency remained on the statute books.
However, a Damascus businessman who asked not to be named, said the real obstacle to investment remained exchange control.
"Everyone had dollars, it was an open secret, and it was tolerated," he said, describing the impact of the new decree as largely psychological.
The decree is part of Syria's efforts to woo investors as the new government appointed six weeks ago embarks on its key task of revitalizing the economy.
The presidential decree was followed by a government announcement that it wants to encourage private investment in Syria by amending a 1991 law which has failed in its aim of attracting foreign or expatriate Syrian capital.
Under the draft amendment approved by the cabinet Tuesday, "Arab and foreign investors will be permitted to purchase or rent the property they need for investment projects, including tourism projects."
It also contains plans to extend the grace period during which new private investment projects are exempted from tax, in particular those in the remote northern districts of Hassaka, Deir ez-Zor and Raqqa.
It will also become easier to move around the foreign currency needed to purchase equipment and for the construction of new enterprises.
Foreign shareholders will be allowed to repatriate their capital and profits five years after the enterprise they have invested in comes into operation.
The measures were the first to be announced since the formation of the new government of Prime Minister Mohammed Mustafa Miro on March 13.
"The aim of these measures is to make Syria an important and profitable magnet for investments by nationals -- resident and expatriate -- by other Arabs and foreigners," Miro told the official SANA news agency.
The amount of Syrian capital currently outside the country is estimated at some 20 billion dollars.
Only just over one billion dollars of foreign capital was invested in Syria between 1992 and 1999, while the country's GDP has grown by between 15 and 16 billion dollars over the last three years.
Syria's balance of payments strayed into the black in 1998, with a surplus of 12 million dollars, but fell back into the red last year, with a deficit of 300 million.
Economists blame the stagnation on the inflexibility of the centralized administration, which Miro has undertaken to remedy -- DAMASCUS (AFP).
© 2000 Al Bawaba (www.albawaba.com )