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Wed, Jun 06 2010 |
“Lebanon cannot afford not to reform. We, in the government, are fully aware of this fact and we are determined to tackle the long-standing challenges that have faced the Lebanese economy,” he said. “We realize that this cannot be done in one shot but rather in a step-by-step approach that is both pragmatic and realistic.”
Hariri promised to upgrade the necessary infrastructure such as electricity, roads, information and communication technology in order to sustain growth. “This effort will at all times focus on the goal of spreading growth opportunities to the entire region in order to elevate the quality of life of all Lebanese,” he said.
Hariri’s remarks came during the Lebanon Business Roundtable held at The Four Seasons Hotel in Beirut. The conference, which was organized by The Economist, is aimed at discussing the economic outlook of Lebanon in the coming few years and the challenges facing businesses in helping the country realize its potential.
In his speech, Hariri promised to implement growth enhancing measures to stimulate activity in most sectors of the economy. “We are embarking on a reform drive that addresses the existing gaps to provide a better platform for doing business. Moreover, we plan to include the private sector in the provision of public services through public-private partnership (PPP) and through privatization,” he said.
He added that the government increased its spending on the provisions of the social services in order to maintain the necessary safety net that guarantees social stability while addressing for the first time the environment as a public good, equally shared by all Lebanese.
Hariri said that all political parties participating in the government have previously agreed on the government statement which placed a great importance on the reform of the country’s vital sectors. “We have previously agreed to undertake major reforms in the environment, agriculture, telecommunication, infrastructure, schools and universities sectors,” he said.
He added that the approval on the budget may have been a bit late, but yesterday the government decided to invest in all of the sectors while discussing the 2010 draft budget. “We try to make sure that the priorities of people are set aside from politics, and I think we are getting there despite the fact that this took a lot of time,” he said.
Lebanon is expected this week to witness the birth of the 2010 budget after a long, and sometimes heated, debate on many of its articles.
During the conference, The Economist executive editor Daniel Franklin asked Hariri about his major red lines. “The main red lines for us in Lebanon are to make sure that freedom of speech is secured and to move ahead and take serious steps toward reforms in the economy,” he answered.
Hariri emphasized on the necessity of controlling the public debt. “My major red line is that we should not allow a further increase in our debt without knowing where we will get income from to sustain that debt,” he commented.
He also underlined the importance of protecting Lebanon from any harm that might occur.
Hariri placed a great importance on maintaining stability not only in Lebanon, but in the whole region. “Without peace and security, the whole region will pay the price. Today we have a Palestinian-Israeli problem that has been ongoing for the past 60 years and this is an issue that needs to be resolved once and for all,” he said.
For his part, The Economist Lebanon editor Justin Alexander gave an overview about Lebanon’s economic situation. He said the government has a real chance today to make progress on economic policy after long periods of stagnation because of the consensus prevailing between the different political parties.
“We cannot deny that deep divisions still remain within the Cabinet over political and economic issues. However, the polarization between blocks is not as great as it has been in recent years,” he said.
Alexander said that the Economist Intelligence Unit (EIU) is forecasting an average annual growth of 6 percent in 2011 in Lebanon, while growth might reach 8 percent this year. Moreover, he continued, the volume of merchandise passing through the port was over 1.5 million tons, which is 10 percent higher than the volume registered in the first quarter of 2009.
“As for deliveries of cement, they were up by 60 percent year on year and permits were issued for the construction of 3.8-million square meters of real estate which could be a good indicator for the sector this year,” he said.
On the other hand, he added, the World Traveling Tourism Council forecasted that Lebanon’s tourism sector would grow by 11 percent this year, which is the strongest in the world. “However it is unlikely this kind of growth will be maintained in the long term unless tourism activities were encouraged outside Beirut,” he said.
One of the problems facing the tourism sector, according to Alexander, is the lack of proper infrastructure. “The poor roads are an ongoing problem for tourism and commercial distribution and this restricts activities to the Beirut area and marginalizes the rest of the country,” he said. “Passenger growth increased by 25 percent last year to 5 million and if a similar growth takes place this year, it will be nearly the maximum capacity.”
Alexander said the World Bank ranked Lebanon this year at a disappointing 108 out of 183 countries and 12th in the region when it comes to favorable business environment. “This places Lebanon ahead of Morocco and Syria but behind Jordan, Egypt and even Yemen,” he said.
While Lebanon seems to be a pretty awful place to do business, he said, lots of investments keep on flowing to the country because there are good reasons to think of Lebanon as a special place. “Despite continuing dangers imposed by Israeli threats, people who know Lebanon will say that this is actually a period of unusual stability, and even when there is conflict, the economy is remarkably resilient,” he said. “Tourists returned within a few weeks of the July 2006 war and despite the fights of May 2008, tens of thousands of tourists stayed.”
Moreover, he added, Lebanon has a remarkably safe investment environment as long as one understands the system and the premises. “People who invest in Lebanon know the country well and these investors have stress tested repeatedly, and they don’t pull out on the first signs of troubles,” he said.
Meanwhile, EIU associate director Jane Kinninmont complained about the shortage in human capital in some of the countries of the Middle East and said that it was very difficult in the Gulf region, for example, to find and to maintain skilled staff. “On the contrary, Lebanon has a well educated and an entrepreneurial population which is an advantage that the country can capitalize on,” she said.
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