IDAL – Investor Newsline – July 2013

Summer is upon us, and before most of you go on vacation and start planning for the last half of 2013, we wanted you to have a snapshot of the country’s investment activities and latest indicators of the first half of the year.

Two reports have come out from both the UNCTAD and AIEGC on FDI inflows to Lebanon in 2012 declaring the value to be close to 3.78 Billion USD; registering by that an 8.5% increase from 2011 levels, making Lebanon one of the largest recipients of FDI in the region in 2012.

Additionally, in the last two months, IDAL met with 8 investors with upcoming investment projects in the Industry, Agriculture sector, Agro Industry, Technology and Tourism sectors; 6 of which are eligible for IDAL’s incentives.

More information on these reports could be found in detail in this month’s newsletter.

I hope you will enjoy this issue, for any feedback please do not hesitate to contact us.

Best Wishes,

Nabil Itani

Chairman-General Manager

Despite the overall climate, the Investment Development Authority of Lebanon (IDAL) met with 8 investors with upcoming investment projects in the Industry, Agriculture sector, Agro Industry, Technology and Tourism sectors.

A more in depth analysis of the projects brought forward, show plans to develop a steel factory, a recycling plant, and a factory for prefabricated houses in the Industry sector.

The market for prefabricated houses in Lebanon is still under-supplied and could present tremendous opportunities for growth. Overall, the global housing industry is moving towards a ‘Green’ identity, with increasing use of prefabricated, eco-friendly and energy-efficient homes in modular designs.This could be a sector where Lebanon could innovate given the continuous demand for housing units. The recycling market is also underdeveloped with the local market currently dominated by few large players.

The projects in the Agriculture sector consists of one packing house and cold storage facility for high quality grapes and one farm to produce dairy products. Today, more than 8% of agro-food companies are involved in the production of milk and dairy product. A project to develop an olive oil and soap factory was brought forward in the Agro Industrial sector. Olive oil is amongst the most prominent Lebanese signature agro-industrial products supported by Lebanon’s diverse topography, fertile soil, micro-climates. In 2011 (latest census available), olive production was estimated at 90,307 tons, while olive oil production reached 11,300 tons, growing consistently by a CAGR of 6.5% since 2000. Around 30% of total production consists of extra virgin olive oil, the most refined type of olive oil, while the remaining serve as regular virgin olive oil. Exports of olive oil have been on an upward trend over the last four of years, growing at a CAGR of 14%, and reaching 4,162 tons in 2012, more than a third of domestic production. Lebanese olive oil exports are mainly destined to North America and the Gulf. Precisely, exports to the United States, the highest, reached 915 tons, or 22% of the total. It was closely followed by Saudi Arabia with 835 tons, or 20% of the total.

Regarding the other projects that were brought forward to IDAL, a 4 stars hotel is planned to be developed in North Lebanon, a region highly under-supplied with 4 and 5 stars hotels. In theTechnology sector, a 3-D printing project that uses green technology was brought forward.

Almost all investors are of Lebanese origin, with the exception of one company which is a joint venture of Lebanese and Kuwaiti investors. In terms of the type of projects, 7 of the projects are new or Greenfield and one consists of an expansion of an already established factory.

To conclude, from the 8 projects that were reviewed by IDAL, 6 are eligible for IDAL’s incentives while 2 do not meet the requirements set forth by Investment Law No.360 in terms of  investment size and number of jobs created.

The UNCTAD’s World’s Investment Report and theArab Investment and Export Guarantee Corporationrecently released FDI figures for 2012. Despite the current politico-security conditions, FDI inflows to Lebanon reached a value of 3.78 Billion USD, registering an 8.5% increase from 2011 levels, making Lebanon one of the largest recipients of FDI in the region, ranking 3rd  after the UAE and Saudi Arabia.

Lebanon’s positive growth was enhanced by foreign acquisitions in the insurance industry and in services related to real estate. New gas discoveries in Lebanese waters along the northern maritime boundary with Cyprus and Syria offer prospects for the country to attract FDI in oil exploration.

FDI INFLOWS TO LEBANON (BILLION USD | 2006 – 2012)

Source: UNCTAD

Lebanon managed to attract 7.8% of the total FDI inflows to the region in 2012, ranking 3rd in terms of the highest recipient of FDI flows in the MENA region, a share that is slightly lower than the 8.1% of 2011.

FDI INFLOWS TO THE MENA REGION (BILLION USD | 2012)

Lebanon also ranked first in the region in terms of FDI to GDP, with FDI inflows accounting for 8.9% of the country’s GDP in 2012.

FDI AS PERCENTAGE OF GDP (2012)

Source: Arab Investment & Export Credit Guarantee Corporation, IMF

The workshop brought together more than 25 players involved in e-commerce activities. The aim of the partnership is to highlight opportunities in the ICT sector and encourage investments in the sector.  E-commerce in Lebanon is presenting significant opportunities for regional businesses and investors as it remains an untapped market with currently around 10% of the Lebanese internet users only shopping online. In 2013, the online market in Lebanon is expected to witness significant growth with  the increasing consumers’ trust in online payment systems.   Various online payment gateways  and initiatives by the Lebanese banking sector such as PayPal and Emall by Bank Audi  are expected to boost online sales in the coming months and stimulate the e-commerce market in Lebanon.