Syria’s manufacturing industry faces uphill battle
Thirteen years of war have decimated the sector. Only with sustained government support can the industry get back on its feet and contribute to the country's economic recovery.
Eduardo Ramon
Syria’s manufacturing industry faces uphill battle
The private manufacturing sector—one of the most severely affected by Syria’s war—is far from returning to the production levels enjoyed before the outbreak of large-scale demonstrations in 2011. Instead, the economic policies of the country’s new leaders have worsened the sector’s predicament and heightened its challenges.
Earlier this month, the government raised electricity prices significantly, raising the cost of living, which was already very high, while wages and salaries remain generally low. For the manufacturing sector, it was a further blow, raising production costs and burdening industrialists with additional operating expenses.
Muhammad Ayman Al-Mawlawi, head of the Damascus and Rural Damascus Chamber of Industry, said companies were not consulted over the decision to raise the price from SYP1,500 to SYP1,700 ($0.15) per kilowatt-hour. This is significantly higher than what Syria’s neighbours pay. For comparison, the price per kilowatt-hour ranges from $0.025 to $0.05 in Egypt and $0.09 to $0.10 in Türkiye. In Iraq, it is $0.04, and in Jordan, it is $0.095.
The chamber is to object formally, in a bid to have the decision reversed. However, for Mahmoud al-Mufti, vice president of the chamber’s chemical sector, the lack of participatory decision-making is discouraging.
Frustration with the government’s decision and disregard for the protection of the manufacturing industry has intensified over the past few months. On 30 September, a group of Syrian industrialists organised a sit-in in front of the headquarters of the Federation of Syrian Chambers of Industry in Damascus, calling for measures to support and protect national manufacturing and to impose closer control over imports. The protesters also penned a letter to Interim President Ahmed al-Sharaa, highlighting the ways Arab and foreign governments support their domestic industries and requesting the implementation of similar measures.
A government decision to liberalise trade earlier this year has worsened the country's trade deficit, with imports exceeding exports up to tenfold
Nine days earlier, half of the board members of the Aleppo Chamber of Industry had announced their resignation over claims of marginalisation and the Ministry of Economy and Industry's "failure to respond to their demands." The Minister of Economy and Industry, Mohammad Nidal al-Shaar, however, refused their resignation and called for discussions. A few days later, on 27 September, al-Sharaa visited Aleppo and met with manufacturing industrialists to discuss the challenges they face and possible solutions.
This followed months of frustration and criticism by manufacturers in Aleppo regarding their ability to compete with the rising volume of imported goods, low national purchasing power, rising energy prices, the country's volatile power supply, new customs tariffs, low liquidity in the market due to banking restrictions, and the insufficient supply of skilled workers.
In mid-November, the Ministry of Energy slightly reduced the prices of oil derivatives to help alleviate the high cost of living and boost industrial productivity. However, by fixing prices in US dollars, any changes in the value of the Syrian pound and the exchange rate will affect the market, including higher prices for goods and transportation.
A Syrian worker in a carpentry workshop in the Douma area, on 19 December 2016.
Little assistance and unfair competition
The vast majority of Syria's manufacturing sector comprises micro, small, and medium-sized enterprises (MSMEs) and has limited capacity to compete with foreign products. After more than 13 years of war, the sector needs a complete overhaul to become profitable again. The sector receives little financial assistance from the state, institutions, or banks, which, alongside other structural problems and challenges in the sector, gives Syrian manufacturers who moved abroad little incentive to bring their businesses back home.
Meanwhile, a government decision to liberalise trade earlier this year has worsened the country's trade deficit, with imports exceeding exports up to tenfold. The biggest jump in imports has come from Türkiye, following Damascus's reduction of customs duties on over 260 Turkish products in January. Turkish exports to Syria raked in $1.2bn in the first seven months of the year, representing a growth of over 49.3% compared with the same period in 2024, according to Jalal Kadooglu, head of the Syria Committee within the Turkish Exporters Assembly.
Syrian and Turkish officials have also agreed to resume negotiations on the 2005 Türkiye-Syria Free Trade Agreement (FTA), suspended since 2011, and to pursue a broader economic partnership. However, this will endanger Syrian national production, particularly in manufacturing and agriculture, which may struggle to compete with Turkish imports. The original 2005 FTA had a detrimental impact on local industries, leading to the closure of many manufacturing plants, especially in the suburbs of major cities, such as Aleppo and Damascus.
Sluggish pace
Since then, out of the 3,888 registered industrial companies in Damascus, only 1,112 have restarted operations, with the rest either closed, out of service or under renovation. In the Adra Industrial City alone, where 3,757 industrial licenses are registered, only about 1,068 companies are active. During the first nine months of the year, 562 new industrial and craft establishments began production with a capital of approximately SYP 13bn ($1.2mn), creating about 2,776 jobs—a drop in the sand compared to the employment needs of the country.
Two workers at a steel factory in the Qamishli area, on 22 February 2024.
Similarly, in Aleppo, around 20,000 industrial and craft establishments are registered in the governorate, with more than 1,900 factories in Sheikh Najjar Industrial City, although many are not operating at full capacity. Since the fall of the Assad regime, around 500 new factories and craft establishments have been created in Sheikh Najjar, providing over 5,800 jobs and more than 1,000 jobs at the Aleppo governorate level.
Nationally, the number of Syrian industrial establishments has fallen from around 130,000 before the war to an estimated 80,000. The Directorate of Industrial and Craft Investment at the Ministry of Economy and Industry reported that 2,225 industrial projects were licensed between January and September 2025. Out of this total, 218 became operational. However, no information is available regarding capital or work opportunities involved in these projects, which would provide a better understanding of the nature and scope of investments in the sector.
Grievances against government measures
In mid-June, the government announced a new investment system for industrial cities, aimed at enhancing Syria's attractiveness and encouraging national and foreign investment. Similarly, a draft income tax law—due to take effect in 2026—imposes a relatively low corporate tax rate of 10% and provides tax exemptions on capital. There are also plans to allocate one quarter of total sales tax revenues to a special fund designed to support the country's industrial and export sectors, in coordination with the Ministry of Economy and Industry and other public entities.
These measures, however, do not tackle the structural challenges facing the industrial manufacturing sector, particularly MSMEs. They ignore the demands and fears expressed by industrialists, demonstrating a lack of inclusion and participation in decision-making at the top echelons of the state. Moreover, they reflect the political and economic orientation of the authorities, which favour a commercial economic model characterised by investment in short-term profit at the expense of the productive sectors of the economy.
A Syrian worker at a bakery in Damascus, on 19 June 2016.
The focus is on attracting foreign investment in sectors such as tourism, real estate, and financial services, usually with short-term profit return. There have been barely any announcements regarding investment in the manufacturing sector, with the only exception being the Al-Muhaidib Group's decision to invest $200mn in "the field of heavy industries", but even that is yet to materialise.
Contrary to economists who argue against subsidies and ignore the fact that even advanced economies tend to support national production, the new government should promote policies that protect and empower MSMEs. That means subsidies on electricity and oil derivatives, promoting solar energy and other environmentally friendly alternatives, facilitating financial services to address limited access to finance, providing trade opportunities to address restricted market access, and enabling the import of certain raw materials to reduce production costs.
The manufacturing sector could be a key stabiliser of Syria's economy, alongside agriculture. Their growth could drive production in other sectors, spur job creation (both skilled and unskilled), and boost investment and innovation.
