Doing Business in Lebanon
Lebanon: Invest In The Future
At the heart of the Middle East and the crossroads of three continents, Lebanon is where the East meets the West.
A convergence point of trade routes for thousands of years and a unique cultural and religious melting pot, The Land of the Alphabet is rising again as a regional and international hub for trade, finance, services, culture, and tourism.
With a stable political system based on a parliamentary democracy, and unique characteristics that are inherent to the Lebanese system, Lebanon offers an ideal business environment for discerning investors.
In addition to a free-market economy based on a long tradition of government-supported liberalism, a sophisticated banking system, a developed legal framework, a superbly skilled workforce, and an exceptional lifestyle, Lebanon offers a large number of investment opportunities in all sectors of the Lebanese national economy.
IDAL, the Investment Development Authority of Lebanon, is the sole public agency responsible for promoting investments in Lebanon, identifying and marketing opportunities, guiding international companies to establish prime business positions, and assisting investors in accessing a wealth of untapped economic potential. When investing in Lebanon, let IDAL pave your way.
Why Lebanon ?
- Strategic Geographical Location: At the Center of the Eastern Mediterranean, Lebanon is uniquely positioned at the crossroads of Africa, Asia, and Europe.
- Free Market Economy: Based on a long tradition of liberal investment policies, free enterprise and private initiative are the drivers of the Lebanese economy.
- Liberal Financial Environment: With a free foreign exchange market, full currency convertibility policies, no restrictions on the inward or outward movement of capital, and banking secrecy, Lebanon is truly ideal for conducting business.
- Developed and Non-Discriminatory Legal Framework: Lebanon offers a well-developed legal framework that protects private property and grants Lebanese and Non-Lebanese equal rights.
- Untapped Investment Opportunities: Lebanon offers investors a wide array of investment opportunities in all sectors of the economy. Furthermore, Lebanon represents a point of entry to a large regional market.
- Moderate Tax Rates: With maximum tax rates of 15% for companies and 20% for individuals, Lebanon’s fiscal charges are among the most moderate worldwide.
- Qualified and Competitive Workforce: Lebanon’s workforce is well educated and multi-talented. Skilled labor is widely available, yet at moderate fees.
- New and Expanding Infrastructure: With state-of-the-art telecommunications, a modern electricity network, a new airport, expanding port facilities, and an ambitious road rehabilitation program, Lebanon’s infrastructure is quickly becoming one of the best in the region.
- Unique Living Environment: Thousands of years of history, optimal climatic conditions, a very rich culture, and a vibrant nightlife justify Lebanon’s “Pearl of the East” surname.
- Facilities and services for Investors: IDAL’s “One-Stop-Shop” Service offers investors a fast and seamless way to obtain the official permits and licenses needed to implement their projects.
Basic Facts and Figures
Political System: Parliamentary Democracy
Total Area: 10,452 km2
Languages: Arabic, English, French
Religions: Islam, Christianity
Population: 4.6 Million
Urban Population: 86.6 %
Population Growth: 1.7 %
Workforce: 1.2 Million
Literacy Rate: 88.4 %
Currency: Lebanese Pound (LBP)
GDP: $ 16.4 Billion
Imports/Exports: $ 6.5 Billion/$711 Million
Industries: Food processing, jewelry, cement, textiles, mineral and chemical products, wood and furniture products, oil refining, metal fabricating and others.
Main Trading Partners 2006 | ||||||
Imports Thousand$ | Share | Exports Thousand$ | Share | |||
Belgium | 153,568 | 2% | Bahrain | 20,069 | 1% | |
Brazil | 227,050 | 2% | Belgium | 46,778 | 2% | |
China | 751,598 | 8% | China | 45,589 | 2% | |
Egypt | 379,134 | 4% | Egypt | 47,894 | 2% | |
France | 761,130 | 8% | France | 39,125 | 2% | |
Germany | 659,875 | 7% | Germany | 22,237 | 1% | |
India | 117,831 | 1% | India | 11,967 | 1% | |
Italy | 709,957 | 8% | Iran, Islamic republic of | 36,087 | 2% | |
Japan | 285,022 | 3% | Iraq | 136,259 | 6% | |
Netherlands | 150,034 | 2% | Jordan | 84,231 | 4% | |
Romania | 160,900 | 2% | Kuwait | 82,463 | 4% | |
Russian Federation | 260,655 | 3% | Nigeria | 33,832 | 1% | |
Saudi Arabia | 296,382 | 3% | Qatar | 63,766 | 3% | |
Spain | 148,875 | 2% | Saudi Arabia | 146,205 | 6% | |
Switzerland | 211,980 | 2% | Switzerland | 450,988 | 20% | |
Syria | 177,953 | 2% | Syria | 175,737 | 8% | |
Turkey | 257,826 | 3% | Turkey | 102,345 | 4% | |
UAE | 132,080 | 1% | UAE | 176,223 | 8% | |
UK | 406,654 | 4% | UK | 31,547 | 1% | |
USA | 1,016,013 | 11% | USA | 52,636 | 2% | |
Other countries | 2,133,069 | 0 | Other countries | 50,040 | 20% | |
TOTAL | 9,397,586 | 100% | TOTAL | 1,856,018 | 100% | |
General Exports to the U.S. ( Value in USD)
2005 | 2006 | 2007 | 2008 | 2009 | Total | Yearly Average |
63,841 | 55,536 | 70,980 | 50,785 | 24,712 | 265,855 | 53,171 |
General Imports from the U.S. (Value in USD)
2005 | 2006 | 2007 | 2008 | 2009 | Total | Yearly Average |
560,566 | 1,033,429 | 1,161,222 | 1,930,332 | 744,778 | 5,430,327 | 1,086,065 |
Source: http://www.customs.gov.lb/customs/trade_statistics/5year/search.asp
New Legislative Reforms
The Lebanese Government has embarked on a major reformative action plan to modernize the regulatory framework and provide a suitable climate for investment in an efficient legislative environment. New policies have been adopted, and modern laws have been promulgated such as:
- Foreign Acquisition of Property law that facilitates and streamlines the acquisition of real estate by foreigners.
- Customs Law that facilitates import and export procedures.
- Ambitious Privatization Programs in the vial sectors of the national economy such as Telecommunication, Water, Energy, and Transportation.
- Reduction of Customs Duties on almost all imports and especially raw material, equipment destined for industrial use, and IT-related products.
- Investment Promotion Law adopted by the Government and awaiting the Lebanese Parliament’s approval.
Other Reformative Measures Include:
- Increasing subsidies of interest rates on soft loans for vital sectors of the national economy (Tourism, Industry, Agriculture, and IT).
- Equalizing property registration fees for foreigners with Lebanese nationals and reducing them to 5 %.
- Reducing the Social Security Fund Contribution.
- Adopting an “Open Sky” policy.
Main Features of the Foreign Acquisition of Property Law
- Possibility of acquiring up to 3,000 m2 without prior approval.
- Possibility of acquiring more than 3,000 m2 (without a ceiling) by virtue of a prior approval.
- Increasing the total area that foreigners are allowed to acquire in the capital, Beirut, from 5 % to 10 % of the city’s total area.
Investment Opportunities
Due to forced interrupted growth in the past three decades, Lebanon offers a large number of untapped investment opportunities in all sectors, of the Lebanese economy and more specifically in the Tourism, Agro-food industries, Light & Medium industries, Agriculture, Health, Telecommunications, Energy, Environment, Transportation, and Information Technology sectors, Several indicators highlight the positive economic climate in Lebanon among which the Gross Domestic Product (GDP) that still marks continuous growth.
Lebanon offers investment opportunities in:
- The private sector in partnership with Lebanese entrepreneurs or without any Lebanese participation.
- The public sector through BOT (Build, Operate, Transfer), BOO (Bill, Operate, Own) or other similar public/private partnership schemes.
In addition, Lebanon represents a point of entry to a large regional market encompassing major Arab countries and reaching into Iran, Eastern Europe, part of North Africa, and the southwestern former Soviet Union republics. As such, its idiosyncratic characteristics render it ideal to serve as a regional hub and an ideal location for regional headquarters. In fact, Lebanon has recently signed a number of international agreements such as the Lebanese-Syrian Trade Agreement, the Arab Free Trade Zone Agreement, and is currently negotiating several others namely the Euro-Mediterranean Partnership, and the World Trade Organization (WTO). Such agreements will facilitate trade and investment between Lebanon and its regional partners.
Detailed lists of potential invest opportunities are available at IDAL. (www.idal.com.lb)
Frequently Asked Questions
· Do I need permission to invest in Lebanon?
No. There is no permission of any kind required for investing in Lebanon. Generally speaking, there are very few restrictions imposed on foreigners, and investors of all nationalities are free to undertake any project in compliance with existing regulations.
· Is it easy to establish a company?
Yes. With simple incorporation procedures, an absence of administrative constraints (except for banking, financial, and insurance firms), and seven types of companies to choose from, it is very easy to establish a company in Lebanon in less than a week.
· What is the tax rate?
The corporate tax rate depends on the type of company. It ranges from a flat rate of 1,000,000 LBP for offshore companies to a maximum of 15% of profits. Distribution of dividends is subject to a 10% tax rate. Salaries and wages of employees are progressively taxed from a minimum of 2% to a maximum of 20%.
· Is it difficult to obtain the required permits and licenses?
No. The “One-Stop-Shop” Service recently established in IDAL’s premises facilitates and streamlines the permitting and licensing process and allows investors to obtain the various permits and licenses they require with minimal time and effort.
· Are there any investment guarantees?
Yes. A number of national and international organizations including the National Investments Guarantee Corporation (NIGC), IAIGC (Arab Consortium), COFACE (France), HERMESM (Germany), ECGD (UK), OPIC, the Export Import Bank (US), MIGA and others ensure investments against non-commercial risks.
· Is there a mechanism for dispute settlement?
Yes. A Lebanese Arbitration Center has recently been established in close affiliation with the Chamber of Commerce and Industry and Agriculture of Beirut. Lebanon has also ratified the New York Convention of 1958 relating to international arbitration.
· Where can I find help and information on setting up a business in Lebanon?
Whether you are looking for general information about the investment climate and the investment opportunities in Lebanon or specific information about how to establish a company and obtain the required permits and licenses, your best reference is IDAL. Through its “Investors and Businessmen Information Center” and its newly established “One-Stop-Shop” Service for Permitting and Licensing. IDAL is most able to guide and help you.
sources: Lebanese embassy in Washington .USA