Syria has settled the debate over the identity of its new financial and investment system, adopting a model of “strategic partnership” between the public and private sectors as a fundamental alternative to outright privatization. The shift officially elevates the private sector from a marginal supporting role to the “engine of economic development” and the principal partner in leading the recovery and reconstruction phase. The strategic approach, crowned by the launch of a broad national dialogue in 2026, aims not only to attract domestic and expatriate capital and reconnect local value chains, but also to redefine the state’s role as a regulator and guarantor of a free market. Supported by an international vision focused on sustainability and an unprecedented package of legislative incentives, the strategy seeks to bridge a trust deficit that has persisted for years and build an open social market economy that balances freedom of individual initiative with broader developmental responsibility. First dialogue after the political transition Damascus recently concluded the First National Conference for Private Sector Dialogue in Syria 2026, held over three days at the Conference Palace. The event was the first of its kind in the country since the beginning of the political and economic transition following the fall of the former regime at the end of 2024. Organized by the Ministry of Economy and Industry in cooperation with the United Nations Development Programme (UNDP), with funding and support from the Japanese government, the conference drew nearly 500 economic figures, including ministers, representatives of public institutions, chambers of commerce, industry and agriculture, business councils, experts and businesspeople from inside and outside Syria, as well as international organizations. According to official Ministry of Economy and Industry materials, the conference aimed to formulate practical visions and recommendations to support the path toward recovery and comprehensive development. Syria’s new economic vision aligns with UNDP principles that view “economic diversification as a strategic asset.” Under this framework, the Syrian private sector is not regarded as a monolithic bloc but rather as a diverse and resilient ecosystem. Its structure spans several levels, most notably micro, small and medium-sized enterprises, which account for more than 90 percent of Syria’s business landscape and represent the country’s primary reservoir for absorbing the national workforce. It also includes family businesses and craft workshops that preserved productive skills locally throughout years of crisis under severe pressure, as well as agricultural producers and local manufacturers who ensured the continued minimum flow of goods into domestic markets. Syrian workers load sacks of freekeh, a roasted green wheat grain widely used in Levantine cuisine, after burning and roasting immature wheat over open flames to separate and preserve the grains, on the outskirts of Taftanaz, northwestern Syria, Sunday, May 24, 2026. (AP Photo/Ghaith Alsayed) Identity of the new economy In comments to Asharq Al-Awsat, Osama Kadi, an economic expert and senior adviser for local economic policy affairs at Syria’s Ministry of Economy and Industry, said the conference had “removed ambiguity” regarding the identity of the Syrian economy in the coming phase. He explained that the country’s economic direction is closest to a guided market economy, or social market economy, similar to those found in Germany, much of Europe and Canada. The private sector, he said, is viewed as the driver of economic development, while the public sector is not destined for privatization, with the government instead pursuing a partnership model with private enterprise. Kadi added that the economic identity of the new Syria is based on free supply-and-demand mechanisms without monopolistic practices, while emphasizing good governance and the state’s role in monitoring the implementation of laws, ensuring their flexibility and fostering an attractive investment environment through tax rates designed to encourage economic activity. Investment Law No. 114 Under Investment Law No. 114 of 2025, the Syrian government exempted all agricultural and educational activities from taxation and introduced incentives for industrial production. Any investment company that exports more than 50 percent of its production receives an 80 percent tax exemption, while the general tax rate does not exceed 15 percent. Production lines and machinery used in manufacturing operations are also exempt from taxes. Kadi noted that the law’s executive regulations support micro, small and medium-sized enterprises, which make up more than 90 percent of Syria’s businesses, through credit lines, concessional loans, business incubators and accelerators. The regulations also encourage such enterprises to participate in local and international exhibitions through business councils announced during the conference in more than 17 countries. Mohammad Nidal al-Shaar speaks during the opening of the First National Conference for Private Sector Dialogue in Syria (X). Balancing private initiative and the role of the state Speaking at the conference’s opening session, Minister of Economy and Industry Mohammed Nidal al-Shaar said Syria is moving toward building a new economic model that combines realism, ambition and openness. He said the country is closely examining states that have achieved successful models and rapid development over relatively short periods in order to learn from and adapt those experiences while building its own model based on its capabilities, strategic location and the expertise of Syrians at home and abroad. Al-Shaar said that “adopting a free-market approach does not mean the absence of the state or the abandonment of market controls. Successful experiences have proven to be based on a balanced model between freedom of initiative and the strategic role of the state.” He added that “modern economic revival is not built on slogans, but on efficiency, discipline, stability and genuine partnerships, as well as an economy that provides opportunities for initiative, creativity and production within a clear national vision.” He stressed that the state’s economic role should not be reduced to a debate between public ownership and privatization, nor should privatization be viewed as a stigma, a default option or an automatic solution to economic challenges. The real value of public assets, he said, lies not in their sale price but in their ability to generate sustainable added value for the national economy. Sectors for strategic partnership Speaking to Asharq Al-Awsat, Kadi identified agriculture, agro-industry, energy, transport, infrastructure and reconstruction as the key sectors expected to lead public-private cooperation. He said Syria remains an underdeveloped opportunity, with no more than 5 percent of its human potential, resources and underground wealth having been utilized. He also said Syria's geopolitical position had long been underutilized despite its potential and now contributes more than one-third of the state budget. As an example, he said that 11,800 aircraft crossed Syrian airspace in May alone, generating revenue for the public treasury. Kadi said the most important element in relations between the public and private sectors is the clarity of the partnership itself, particularly through transparency in contracts and the adoption of environmental, social and governance (ESG) standards. In this context, he said, the shift toward a green transition and the efficient use of resources should be viewed not as a luxury but as an economic necessity that can reduce long-term operating costs and prepare Syrian products for global markets. A boy carries balloons as shoppers stroll through the old market in Damascus ahead of the Eid al-Adha holiday on May 26, 2026. (Photo by LOUAI BESHARA / AFP) Institutionalizing partnership The convening of the private sector dialogue in Damascus for the first time since its launch in 2018 marked a milestone in institutionalizing and localizing the process. The question now, observers ask, is how far this shift can help bridge the “perception gap” and build mutual trust and accountability between traders and industrialists on one side and government institutions on the other. Syrian economist Ziad Arabsh said the move contributes to narrowing that gap by transferring discussions from exile to the domestic arena, where industrialists, traders and government officials confront the same challenges, including electricity, raw materials and procurement. He said trust is strengthened through direct dialogue without international intermediaries, while bringing all stakeholders together in one place creates social pressure to follow through on commitments. Arabsh added that institutionalization helps bridge perceptions by transforming dialogue from a temporary initiative into a permanent institutional mechanism linked to the Ministry of Economy and UNDP. The conference, he said, also turns discussion from a theoretical exercise into a practical decision-making process. Since the fall of the former regime, the Syrian government has been working to restore economic growth and attract domestic and foreign capital to participate in rebuilding the economy. The World Bank estimated in November 2025 that rebuilding Syria would cost about $216 billion, while direct physical damage to infrastructure and residential and non-residential buildings amounted to roughly $108 billion. Given the caution of foreign investors, experts broadly agree that expatriate Syrian capital and diaspora networks represent the most realistic and fastest source of financing in the near term. Arabsh said translating policy recommendations into implementation plans with binding timelines requires a clear institutional mechanism. This should include a joint executive committee tasked with converting recommendations into action plans and specific projects, establishing implementation schedules, linking plans to realistic budgets, creating monitoring and evaluation systems, and tying compliance to incentives and penalties. Without binding deadlines and public accountability, he said, recommendations risk remaining merely words on paper. Regarding legal guarantees and banking mechanisms designed to encourage expatriate capital to return, Arabsh pointed to the protections contained in Law No. 114, including safeguards for private and industrial property, regulations guaranteeing the transfer of profits in foreign currencies, easier financial transfers from abroad, concessional financing for joint ventures and the activation of leasing finance. He added that investment incentives include tax exemptions lasting between five and 10 years, industrial land at symbolic prices in industrial cities, and build-operate-transfer partnerships with the public sector that preserve state ownership while allowing efficient private-sector management. Arabsh also highlighted diaspora initiatives, including European Union and International Fund for Agricultural Development support for members of the Syrian diaspora to strengthen agricultural investment, as well as digital platforms such as “Bunyan Syria” that connect expatriates with reconstruction projects. “Expatriates need legal certainty, banking liquidity and tangible incentives, not just emotional appeals,” he said. An international co-financing platform In concluding remarks, Arabsh stressed the strategic importance of building strong ties with international financial institutions. He said the prominent involvement of UNDP and the Japanese government provides a trusted international guarantee that could encourage the World Bank, the International Monetary Fund and regional development banks to engage with Syria’s emerging economic landscape. Arabsh argued that UNDP’s strength lies in its ability to create structural integration on two fronts: a local track focused on supporting livelihoods and developing the micro, small and medium-sized enterprise sector, and a strategic track aimed at improving the national business environment. He concluded that the most urgent priority today is to transform the dialogue into a “co-financing platform” capable of bringing together public resources, donor funding and private capital within a single productive framework, ensuring that the diverse capacities of the private sector evolve from a tool of resilience and survival into a genuine driver of sustainable economic revival.
