Doing Business in Lebanon

Transcription

1 Doing Business in Lebanon Country Facts Capital Beirut Area km2 Population 4,4 million Language Arabic (official), French, English. Currency Lebanese Pound LP GDP per capita USD 10,707 GDP Growth 1.5 %

2 Since its independence in 1943, the Lebanese Republic has been categorized as a free democratic country amongst few other countries in the Middle East. Moreover, Lebanon consists of 17 acknowledged religious faiths, which has marked Lebanon as the most religiously diversified country in the area. Economically speaking, Lebanon is a service-oriented economy. Main growth sector are banking and tourism. The civil war seriously damaged Lebanon's economic infrastructure, cut national output by half, and derailed Lebanon's position as a Middle Eastern entrepot and banking hub. Following the civil war, Lebanon rebuilt much of its war-torn physical and financial infrastructure and has recently experienced growth rates at nearly 10 percent.

3 The Lebanese Economy An Outlook of the Economy Lebanon's economy is characterized by a high level of imports and by significant trade deficits. The deficits derive largely from foreign income earnings, including capital inflows, remittances from the Lebanese diaspora as well as the tourism, banking and insurance sectors. The country is known for a strong economic persistence. Prior to the Syrian conflict, Lebanon proved a remarkable growth achievement of an average annual GDP growth of 7.1 % from 2007 to During that period, the world economy witnessed a grave economic interruption. Experts forecasted the Lebanese economy to grow 4-5 % from 2012 to 2014 but with the outbreak of the Syrian crisis, this has decreased to annually 1.5 %. Despite economic turbulence, the banking sector has shown robustness and a recent report stated that it continues to be well placed to face unforeseen contingencies (Bank Audi, Lebanon Banking Sector Report, September 2014). 3

4 The Business Environment Business Outlook Lebanon s economy is constituted by a private sector that accounts for 75 % of aggregate demand and a large banking sector that supports this demand. It is primarily based on the service sector (mainly tourist, financial and banking activities), which contribute with 75 % of the country's GDP. The share of the industrial sector (banking, tourism, food processing, wine, jewellery, cement, textiles, mineral and chemical products, wood and furniture products, oil refining, metal fabricating), which is almost entirely owned by the private sector, is 20 % and agriculture contributes with 4.6 % (2013). Lebanon is keen to increase exports, and has organizations at home and abroad to encourage this. In recent years, international buyers have returned to purchase products and establish permanent lines of supply. Governmental Situation The Lebanese government remains open to foreign direct investments and offers a series of incentives to national and foreign investors alike, as part of its strategy to attract investments to growth promising sectors. Various ministries and government agencies offer series of exemptions and tax breaks to support companies in their set-up and operation phases. The Investment Development Authority of Lebanon (IDAL) holds the authority to award licenses and permits for new investments in specific sectors. IDAL also has the authority to grant special incentives, exemptions, and facilities to large projects, whether implemented by local or foreign investors 4

5 Sectors of Interest Banking Sector The Lebanese banking sector s relatively high level of success in recent years has garnered international attention. International business media outlets have praised Lebanon for being one of very few countries continuing to report growth since the financial crash of Lebanon goes therefore also under the term Switzerland of the Middle East. Its global attention lies also in its active cooperation with international institutions and in the implementation of anti-money laundering measures. The country s banks have been steadily growing and increasingly looking to other markets to expand. Investment Opportunities in Energy Recently discovered deposits of natural gas in the Eastern Mediterranean s Levant Basin have arrived at a time when global demand for natural gas and related products is projected to increase at an annual rate of 1.6 percent, on its way to overtaking coal as the second most important fuel source in the world behind crude oil. This is good news for Lebanon and investors, as the small but resilient nation claims a significant portion of the Levant Basin s resources as part of its Exclusive Economic Zone. Threedimensional seismic studies conducted thus far over the Exclusive Economic Zone show promising. Promising Food Market Demand for basic needs, such as food and drink, has presently increased considerably. This has to do directly with the vast population increase in Lebanon, coming from the Syrian refugee inflow. The crisis has triggered a boom in food prices, which are expected to worsen in 2014 due to a severe drought. Lebanon relies therefore more than ever on external food supply, and this provides the Danish food and agriculture businesses with excellent market opportunities. New Water Adventures As water shortage in Lebanon is exploding due to drastic population growth, an urgent need for smart clean water solutions has become ever more relevant. In September 2014, the World Bank approved the Water Supply Augmentation Project worth USD 474 mil. intended to deliver clean and safe water to citizens in Greater Beirut and Mount Lebanon areas. Technically the project will expand existing dams and create a hydraulic infrastructure. Compared with other countries in the MENA region, there is high abundance of water in Lebanon, but only 6 % is stored, which explains the bad water provision. The World Bank project could be of interest to Danish clean water firms. Fashion Still in the Spotlight Despite the present economic obstacles, one industry continues to progress in Lebanon, namely the fashion industry. According to a study by BankMed the fashion industry increased by an average annual growth rate of 3.9 % reaching USD 606 mil. (In terms of spending) in The demand for fashion in Lebanon mainly leverages to imports from Europe in particular, as the local production capacity does not meet the local demand. Danish brands such as Vero Moda, Jack & Jones, Malene Birger are examples of Danish success stories in the Lebanese fashion industry. The Lebanese preference for Danish designer brands over many others provides room for a potential unique market that should be explored further by Danish companies. 5

6 The Trade Council at the Danish Embassy in Beirut Through experience, a solid network with public and private sector and dedication, the Trade Council will provide services that will make market exploration and penetration easier and smoother. The Trade Council s services are also available for already established Danish businesses in Lebanon. Market research, partner search and match, general consultancy and setting up meetings with public and private figures are among the services provided by the Trade Council. The Trade Council also helps in hosting events for product and brand launch or any other related events. Danish Lebanese Business Association (DLBA) DLBA was created to establish, sustain and develop contacts between Danish and Lebanese companies, which have a shared interest in improving their commercial activities in Denmark and Lebanon. The Trade Council and the Embassy assist DLBA members in raising issues and concerns to various Ministries and EU representatives concerning trade barriers. The Trade Council has also assisted in connecting DLBA with various Danish producers and suppliers since DLBA members are directly connected and referred once a relevant opportunity is available. When it comes to governmental projects the Trade Council has the knowledge and know-how in dealing with governmental institutions. Through its public diplomacy, the Trade Council has access to diverse and high level public figures. Big and small Danish businesses have benefited from our services. The success stories are not few, the feedback is always positive and satisfaction levels remain high. So when Danish businesses are considering and exploring Lebanon as a potential market, they must have only one task in the to-do list; contact the Trade Council at the Danish Embassy in Beirut

7 Embassy of Denmark, Serail Hill- Down Town Beirut Lebanon Tel (1) /2 Fax +961 (1) Ahmad El Loubani Head of Commercial Section Tel +961 (1) Mobile