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Syria mulls allowing majority foreign ownership in firms

  Syria is considering permitting foreign investors to hold majority stakes in local companies, including banks, its central bank governor said on Wednesday.

Gulf Arab investors, including banks and telecoms firms, have sought to expand into Syria over the past two years but are only allowed to own a stake of up to 49%. “There is a plan,” central bank chief Adeeb Mayaleh said when asked if Syria would allow foreign investors to take majority stakes. He did not give a time frame. “We haven’t reached that stage yet,” Mayaleh told reporters on the sidelines of an Arab economic summit in Kuwait City.

Private banks were only allowed to set up in Syria five years ago and regulations curb lending and a range of banking activities found in neighboring countries. Syria’s nine private banks have mainly Syrian, Jordanian, Lebanese and Gulf shareholders.

Western investors have stayed away from the sector, partly due to US sanctions imposed on the Damascus government in 2004 for its support of anti-American groups in the Middle East. Commercial Bank of Kuwait offered last summer to boost its stake in Syria’s Cham Bank, while Qatar National Bank said in 2007 it had agreed with partners to set up a bank in Syria.

The state has taken limited steps in the last few years to reform its finances and lift restrictions on capital movement and foreign currency transfer. Asked about the affect of the global financial crisis on Syria’s banking sector, Mayaleh said: “Right now there is no impact on the Syrian banking sector due to the policy of the Syrian central bank. But of course, the Syrian real economy is not isolated from the global crisis.” (Reuters)