Syrian daily: the failure of private banks experience in free zones

The Syrian Arabic local daily Tishreen issued on Tuesday said that the private banks, just one year after its establishment, did not succeed in performing its due role, as they are besieged by administrative restrictions.

The paper quoted the chairman of the Syrian commercial bank Mahmoud Mithqal as saying that the private banks in the free zone " are just a means of contact between the accreditor and the central bank" for these banks which are located in Lebanon.

These private banks were permitted to deal freely with the clients ( traders, industrialists and transport companies) working in the five free trade areas in Damascus, Adra ( a town in the outskirts of Damascus countryside), Aleppo and the two ports of Lattakia and Tartous.

The aim behind establishing these private banks was to ensure the freedom of transfer for sums of accreditors and to carry out transfer operations to foreign sides, not to pass through the Syrian banks which are owned by the government and are under complicated rules towards monetary transfer and exchange processes.

However the activities of banks in the free zones were obstructed by the limited number of clients ( 300 clients according to the paper) and the administrative restrictions on credits and debts.

In June 2000, six Lebanese banks started working in the free zones, making use of the first step of openness in Syria in the banking sector since its nationalization in 1963.

This very step was followed in April by the release of rules on banking secrecy and permitting private banks to work in Syria with the aim to encourage investments in order to get Syria out of the economic recession.