Lebanon: Investing

FDI in Figures

Paradoxically, Lebanon has benefited from the global economic crisis of 2008-2009 and saw the country's foreign direct investment soar. The relatively healthy Lebanese banks avoided the crisis and benefited from an increase in their deposits. Hardly exposed to toxic assets, they acted as a refuge. Other investment concern primarily the telecommunications sector, building infrastructures (mostly through public/private partnerships), tourism and construction. The instability of Syria and the economic crisis in Europe are however both factors which might negatively influence the influx of FDI in 2012.

Foreign Direct Investment	2008	2009	2010
FDI Inward Flow (million USD)	4,333	4,804	4,955
FDI Stock (million USD)	27,282	32,085	37,040
Performance Index*, Ranking on 141 Economies	10	6	-
Potential Index**, Ranking on 141 Economies	91	-	-
Number of Greenfield Investments***	9	26	-
FDI Inwards (in % of GFCF****)	71.3	4.8	-
FDI Stock (in % of GDP)	95.7	98.8	-

Source: UNCTAD - Last Available Data.

Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.

FDI Inflows By Countries and Industry

Main Investing Countries	2009, in %
Countries of the Gulf (Kuweit, Saudi Arabia, Qatar, United Arab Emirates)	90.0
Non-Arab countries	2.5
Rest of the world	7.5

Main Invested Sectors	2009, in %
Real estate	44.4
Banking	26.3
Tourism	22.2
Trade	2.2
Finance	1.5

Source: Investment Development Authority, Annual Report 2010 - Last Available Data.

Form of Company Preferred By Foreign Investors: Limited Company
Form of Establishment Preferred By Foreign Investors: Subsidiary
Main Foreign Companies: In 2004 the UNCTAD registered 64 foreign companies in Lebanon (meaning companies of which 10% equity is owned by a foreign entity).

Why You Should Choose to Invest in Lebanon

Strong Points: Lebanon has many advantages. Firstly, it is very open to trade and foreign investment. Its economy really is a free market economy. In addition, the non-control of foreign companies' capital and trade movement is also an undeniable advantage. Finally, it should be emphasized that there is a very educated and qualified workforce in the country, a very good standard of living and limited investment restrictions. Today there are considerable investment opportunities in the field of reconstruction of basic and productive infrastructures, in construction and in supermarkets.
Weak Points: Foreign business people who have settled in the country are exasperated by corruption problems, the relative nature of arbitration in the issuing of licenses, customs procedures that are too complicated and the partiality of justice.
Government Measures to Motivate or Restrict FDI: Lebanese common law, characterized by the freedom to do business, is in principle very open to all traditional forms of investment. In addition, in order to facilitate all the investor business establishment administrative formalities, the law n°360 of 16 August 2001 on investment promotion formed a government agency IDAL (Investment Development Authority of Lebanon). This agency, which is under the direct authority of the Prime Minister, grants numerous tax exemptions, or offers exceptional regimes, as long as the investment is in defined sectors of activity, in zones designated by name, and starting from a certain invested amount. Likewise, this agency has the power to issue the necessary licenses and permits. The IDAL has also launched an "investors matching service" program to facilitate the creation of partnerships between local and foreign firms, in the form of joint ventures, capital holdings, acquisitions or other. In 2006, the government signed a plan with the IMF to facilitate registration procedures for companies. In 2007, the law to facilitate investment made it possible to reduce by half the time, cost and number of procedures for forming a company. Lastly, the country has launched an ambitious privatization plan, which has led namely to the privatization of the telecommunications and electricity sectors. The country has two operational free zones, one in the port of Beirut and one in the port of Tripoli. The Lebanese government has just launched a plan to attract foreign investors. It provides the creation of special economic zones, tax-free and specialized in high potential sectors like medical tourism, media, high-tech and food processing. Each of these areas should receive special infrastructure and customs facilities. The plan also provides for the improvement of the country's image amongst foreign investors by developing the Lebanese Agency for the Promotion of Investment website.

Protection of Foreign Investment

Bilateral Investment Conventions Signed By Lebanon: Lebanon signed bilateral agreements with about fifty countries. On the Mediterranean Basin Lebanon signed bilateral agreements with Cyprus, Egypt, Spain, France, Italy, Morocco, Tunisia and Turkey. 46 agreements can be downloaded on the UNCTAD website.
International Controversies Registered By UNCTAD: Several conflicts with chinese and french companies.
For more information, consult the Department of Americain state.
Organizations Offering Their Assistance in Case of Disagreement: UNCTAD
Member of the Multilateral Investment Guarantee Agency: Yes

Country Comparison For the Protection of Investors

	Lebanon	Middle East & North Africa	الولايات المتحدة	Germany
Index of Transaction Transparency*	9.0	6.3	7.0	5.0
Index of Manager’s Responsibility**	1.0	4.6	9.0	5.0
Index of Shareholders’ Power***	5.0	3.4	9.0	5.0
Index of Investor Protection****	5.0	4.8	8.3	5.0

Source: Doing Business - Last Available Data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.

Procedures Relative to Foreign Investment

Freedom of Establishment: A foreign investor can set up business in Lebanon in the same conditions as a Lebanese and must make sure he is on the Register of Commerce. Foreign investors must produce an employer's work permit and a residence permit. The employer's work permit specifies that foreign holdings in capital cannot be less than 67,000 USD, and that the employer has at least three Lebanese workers registered with the social security office. In addition, buying property is sometimes limited. In the same way, some investment projects are subject to conditions in some sectors or according to the origin of the investor.
Acquisition of Holdings: A holding company may not hold directly more than 40% of the shares of two companies that are active in the same sector.
Obligation to Declare: There is no obligation to declare. Lebanon assures and guarantees total freedom of local and foreign capital.
Competent Organization For the Declaration: Lebanese Stock Exchange website.
Requests For Specific Authorizations: These are the restrictions on foreign investment in Lebanon:
- the media, inaccessible to foreign companies;
- commercial representation: the capital of a joint stock company (SAL) must be made up of registered shares held predominantly by Lebanese, and 2/3 of the capital of a limited liability partnership company (SARL) must be held by Lebanese;
- the exploitation of a public service. In the case of a joint stock company (SAL), a third of the capital must be held by Lebanese;
- the real estate sector: a branch office cannot exercise in this sector (in the case of a subsidiary, the capital must predominantly be held by Lebanese and an authorization from the Cabinet is necessary);
- banking and insurance sectors, those of capitalization, savings, capital investment, organized air transport: it is impossible to create a limited liability partnership company (SARL) in these sectors.

Office Real Estate and Land Ownership

Possible Temporary Solutions: There are a few existing: The address of the company at the leader's private place of residence, the address in a business centre, accommodation in temporary workshops, the tree nurseries of companies and professional premises rentals.
The Possibility of Buying Land and Industrial and Commercial Buildings: For more information, visit the IDAL website (Investment Development Authority of Lebanon).
Risk of Expropriation: For more information, visit the IDAL website (Investment Development Authority of Lebanon).

Investment Aid

Forms of Aid: For more information, visit the IDAL website (Investment Development Authority of Lebanon).
Privileged Domains: For more information, visit the IDAL website (Investment Development Authority of Lebanon).
Privileged Geographical Zones: -The building industry;
- Telecommunications;
- Tourism.
Free Zones: For more information, visit the IDAL website (Investment Development Authority of Lebanon).
Organizations Which Finance: For more information, visit the IDAL website (Investment Development Authority of Lebanon).

Investment Opportunities

The Key Sectors of the National Economy: The Investment Development Authority of Lebanon (IDAL) website offers about fifty investment opportunities on line classified by sectors. Several property projects in the field of tourism are proposed as well as less conventional opportunities such as marine museum, preparation companies of different sectors (pharmacy, shoes, food processing industry ...), projects of raw material extraction (marble), the investment in new technologies, the construction of a hospital or services: air taxi, cleaning, car wash, etc.

Services
Lebanon offers numerous opportunities in qualified workforce activities (polyglot and trained workforce). Services proliferate in different sectors in Lebanon: insurance, advising, finance, education, tourism, etc. Lebanon knew how to take the bend of new technologies and offers activities linked to the development of Internet and communication networks. Service providing is also developing (car wash, remote monitoring and location of a vehicle, air taxi, etc.).

Industries
Several property projects are in progress such as hotel complexes, office buildings and apartments. Other projects are also in progress: shoe factories, office furniture, paper mills, pharmacy, marble extraction, etc. The food-processing industry counts several projects too: yogurt factories, mineral water production, lemon juice production, baby food manufacturing,etc.

Infrastructures
A project of building a wireless network is in progress in Lebanon.
High Potential Sectors: - The building industry;
- The telecommunications;
- Tourism.
Privatization Programs: The goverment plans to privatize banks.
Tenders, Projects and Public Procurement: Tenders Info, Tenders in Lebanon
DgMarket, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors: For more information, visit the IDAL website (Investment Development Authority of Lebanon).
Sectors in Decline: For more information, visit the IDAL website (Investment Development Authority of Lebanon).

Finding Assistance For Further Information

Investment Aid Agency: Investment Development Authority of Lebanon (IDAL)
Other Useful Resources: Central Bank of Lebanon.
Directory listing all the institutions likely to aid foreign investment.
Doing Business Guides: Lebanon Commercial Guide 2010 - Buy USA

Any Comments About This Content? Report It to Us.

Learn more about Investing in Lebanon on Globaltrade.net, the Directory for International Trade Service Providers.