Investment Climate Statements for 2016 - Lebanon

Executive Summary

Lebanon is open to foreign direct investment. Its many advantages include a free-market economy, the absence of controls on the movement of capital and foreign exchange, a well-developed banking system with strong financial soundness indicators, a highly-educated labor force, good quality of life, and limited restrictions on investors. However, issues that continue to cause frustration among local and foreign businesses include corruption, political risk, red tape, arbitrary licensing, outdated legislation, an ineffectual judicial system, high taxes and fees, lack of transparency, and weak enforcement of intellectual property rights.

Lebanon has not had a president since May 2014 and political deadlock has led to a stalemate in electing a successor. The ongoing vacancy and broader political paralysis have debilitated an already divided cabinet and parliament and stalled progress on major decisions that require political consensus. This has contributed to a perception of domestic political risk that encourages emigration and discourages economic activity. However, Central Bank stimulus packages since January 2013, totaling USD 4.8 billion, have partially compensated for these negative impacts on the economy. These stimulus packages and an increase in domestic consumption of goods and services (in part from the presence of an estimated 1.5 million Syrians in Lebanon) helped Lebanon achieve GDP growth of one percent in 2015 (IMF).

In 2016, external political risk perceptions also remain high, given the negative impact of the continuing turmoil in Syria and the region on the Lebanese economy. The vacant presidency, a tense security environment, and the travel warnings/bans on Lebanon imposed by some Gulf countries exacerbate these already significant challenges. As a result, many investors have maintained a wait-and-see approach.

Declining oil prices and sluggish GCC country economies led to a decline in remittances. Overseas remittances to Lebanon decreased from USD 7.40 billion in 2014 to USD 7.16 billion in 2015, according to the World Bank. Although the public deficit, which reached 6.4 percent of GDP in 2015, remains an issue of concern for investors, the Government of Lebanon (GoL) should not face difficulties in financing its deficit and rolling over sovereign maturities coming due in 2016. The domestic banking sector remains strong and the continued growth in deposits in private banks is sufficient to finance the borrowing needs of the economy. The Central Bank continues to publicly assert that it will maintain monetary and financial stability – reassuring investors that there will be no debt defaults or currency depreciation.

The business climate remains sensitive to domestic and regional political and security developments. Spillover from the Syrian crisis will continue to impact growth, which is expected to remain below potential until the crisis abates. In addition to political divisions, political paralysis and vested interests have blocked structural reforms and legislation to stimulate growth, encourage private sector development, and create jobs.

Lebanon welcomes U.S. investment. Significant potential opportunities for U.S. companies exist in the energy sector, particularly for oil and gas exploration and power production. However, political paralysis in Lebanon has delayed the first bid round for offshore oil and gas exploration and authorities have not yet set a new date. Other investment opportunities include the fields of information and communication technology, healthcare, safety and security, environment and franchising.

Table 1

Measure	Year	Index or Rank	Website Address
TI Corruption Perceptions index	2015	123 of 168	transparency.org/cpi2015/results
World Bank’s Doing Business Report “Ease of Doing Business”	2015	123 of 189	doingbusiness.org/rankings
Global Innovation Index	2015	74 of 141	globalinnovationindex.org/content/page/data-analysis
U.S. FDI in partner country ($M USD, stock positions)	2014	USD 17.38	www.bdl.gov.lb
World Bank GNI per capita	2014	USD 10,030	data.worldbank.org/indicator/NY.GNP.PCAP.CD

1. Openness To, and Restrictions Upon, Foreign Investment

Attitude toward Foreign Direct Investment

Traditionally, Lebanon has remained open to foreign direct investment (FDI). The Investment Development Authority of Lebanon (IDAL) is the national entity responsible for promoting investment in Lebanon and possesses the authority to award licenses and permits for new investment in specific sectors. IDAL also has the authority to grant special incentives, exemptions, and facilities to large and SME projects regardless of whether implemented by local or foreign investors (Investment Law No. 360). IDAL also facilitates strategic international and local partnerships through joint ventures, equity participation, acquisition, and other mechanisms. It provides legal and administrative advice as well as sectorial studies to support potential investors. Updated information on IDAL and its incentives can be found on its website: http://www.investinlebanon.gov.lb.

The government is committed to improving the business environment and encouraging domestic and foreign investment and public-private partnerships (PPP). Nevertheless legislative efforts have stalled. For example, a draft PPP law and the Ministry of Economy and Trade’s (MoET) amendments to the Lebanese Commercial Code, which would streamline business and intellectual property legislation, await consensus and are still pending in parliament.

Other Investment Policy Reviews

Lebanon is not a member of either the Organization for Economic Co-operation and Development (OECD) or the World Trade Organization (WTO). The United Nations Conference on Trade and Development (UNCTAD) last performed an investment policy review in 2003. IDAL publishes reports on key sectors, which are available online at http://investinlebanon.gov.lb/en/sectors_in_focus

Laws/Regulations on Foreign Direct Investment

A foreigner may establish a business under the same conditions as a Lebanese national, provided that the business is registered in the Commercial Registry. Foreign investors who do not manage their business from Lebanon do not need to apply for a work permit. However, foreign investors who own and manage their business within Lebanon must apply for an employer work permit and a residency permit. Employer work permits stipulate that a foreign investor's capital contribution cannot be less than USD 67,000 and that the investor must also hire three Lebanese and register them at the National Social Security Fund (NSSF) within the first six months of employment.

Companies established in Lebanon must abide by the Lebanese Commercial Code and are required to retain the services of a lawyer to serve as a corporate agent. Local courts are responsible for enforcing contracts. There are no sector-specific laws on acquisitions, mergers, or takeovers, with exception of bank mergers.

Lebanese law does not differentiate between local and foreign investors, except in land acquisition (see “Real Property” section). Foreign investors can generally establish a Lebanese company, participate in a joint venture, or establish a local branch or subsidiary of their company without difficulty. Specific requirements apply for holding and offshore companies, real estate, insurance, media (television and newspapers), and banking.

Under Lebanese law, the establishment of joint-stock corporations, limited liability, and offshore and holding companies are allowed. However, offshore and holding companies must be joint-stock corporations (Société Anonyme Libanaise - SAL). These are governed in separate chapters under the Lebanese Commercial Code.

As a one-stop-shop for investors, IDAL has a website (http://investinlebanon.gov.lb/) that provides updated information on investment legislation, regulations and starting a business. IDAL’s proposed changes to laws and regulations on foreign direct investment, including amending requirements for IT companies to benefit from IDAL incentives, are still pending government approval.

Business Registration

The Ministry of Justice publishes all required procedures, documents and payments needed to conclude the registration of any Lebanese company on its website at http://www.justice.gov.lb/CP/viewpage.aspx?id=589&language=2. According to the Ministry of Economy and Trade (MoET), the registration process takes approximately one day and a notary public is required. There is no other way to register businesses. Foreign companies are required to register electronically – a list of documents and procedures are published on the Ministry of Economy and Trade’s website http://portal.economy.gov.lb/. IDAL also provides a user-friendly portal for doing businesses in Lebanon and outlines all necessary requirements at http://investinlebanon.gov.lb/en/doing_business.

MoET established a small and medium-sized (SMEs) enterprise unit in 2005 to provide services to SMEs located and operating in Lebanon. The unit focuses on policy and governance, improving Lebanon’s business environment, offering linkages within the business community, and advice on financing. MoET defines enterprises with less than 10 employees as micro-enterprises, those with less than 50 employees as small enterprises, and those with less than 100 employees as medium enterprises. In 2014, the unit launched Lebanon’s SME Strategy: A Roadmap to 2020, but the Ministry has yet to implement its proposals.

Industrial Promotion

IDAL currently focuses on promoting investments in the following sectors: agriculture, agro-industry, industry, information technology, media, technology, telecommunications, and tourism. Information on sectors and incentives provided are available on IDAL’s website and through conferences and meetings with stakeholders, including an annual meeting with the Association of Industrialists.

Limits on Foreign Control and Right to Private Ownership and Establishment

Foreign private entities may establish, acquire, and dispose of interests in business enterprises, and may engage in all kinds of remunerative activities.

Limitations related to foreign participation include a general limitation on management participation (Article 144 stipulates that the majority of the board of directors should be Lebanese); indirect limitation with regard to acquisition of capital shares (Article 147); limitation on capital shares with regard to public utilities (Article 78); and limitation on capital shares and management with regard to exclusive commercial representation (Legislative Decree No. 34/67, dated August 5, 1967). In the financial sector, most establishments, including those in banking and insurance, must take the form of a joint-stock company.

A limited liability company (Société à Responsabilité Limitée - SARL) is governed by Legislative Decree No. 35, dated August 5, 1967. It may be 100 percent owned and managed by a non-Lebanese.

Holding and offshore companies follow the legal form of a joint-stock corporation and are governed by Legislative Decree No. 45 (on holdings) and Legislative Decree No. 46 (on offshore companies), both dated June 24, 1983, and amended by Law No. 19, dated September 5, 2008. A foreign non-resident chairman/general manager of a holding or an offshore company is exempt from the obligation of holding work and residency permits. Law No. 772, dated November 2006, exempts holding companies from the obligation of having two Lebanese persons or legal entities on their board of directors. All offshore companies must register with the Beirut Commercial Registry. Offshore banking, trust, and insurance companies are not permitted in Lebanon.

Law No. 296, dated April 3, 2001, amended the 1969 Law No. 11614 and governs foreign acquisition of property. The 2001 law eased legal limits on foreign ownership of property to encourage investment in Lebanon, especially in industry and tourism, abolished discrimination for property ownership between Arab and non-Arab nationals, and lowered real estate registration fees from six percent for Lebanese and 16 percent for foreigners to five percent for both Lebanese and foreign investors. The law permits foreigners to acquire up to 3,000 square meters (around 32,000 square feet) of real estate without a permit but requires cabinet approval for acquisitions exceeding this threshold. Cumulative real estate acquisition by foreigners may not exceed three percent of total land in each district. Cumulative real estate acquisition by foreigners in the Beirut region may not exceed ten percent of the total land area. The law prohibits individuals not holding an internationally recognized nationality from acquiring property. This restriction is widely believed to be primarily aimed at preventing Palestinian refugees residing in Lebanon from permanently settling in the country.

Privatization Program

Lebanon’s laws for the privatization of the telecommunications sector (Law 431) and the power industry (Law 462) were drafted in 2002. However, political dysfunction stalled their implementation.

Parliament passed a two-year law authorizing the cabinet to issue Independent Power Producers (IPP) licenses to investors in April 2014. It later amended the law to extend its application through April 2018. Little has been done to date, but the Ministry of Energy and Water, the Ministry of Finance, and the Higher Council for Privatization (HCP) are collaborating with the IFC and the World Bank to explore next steps.

According to the HCP, there is currently considerable support by the political, business, banking and academic communities for the passage of Public-Private Partnership (PPP) legislation. The Sub-Committee of the Budget and Finance Parliamentary Committee has resumed discussions of a revised PPP Law. In anticipation of the passage of the PPP bill, the HCP issued and published guidelines for PPP in February 2014 on its website: http://www.hcp.gov.lb. Ratification of PPP legislation would open new opportunities for local and international private sector investment in Lebanon.

The Capital Markets Law calls for the corporatization and subsequent privatization of the Beirut Stock Exchange (BSE) within a two-year period from the date that the Capital Markets Authority (CMA) is appointed. The cabinet appointed the CMA in June 2012 but has yet to undertake serious action to corporatize the BSE.

Screening of FDI

There are no mechanisms in place to screen FDI in Lebanon.

Competition Law

Lebanon has not enacted a law that governs competition. Local courts review transactions for competition-related claims.

2. Conversion and Transfer Policies

Foreign Exchange

There are no restrictions on the movement of capital, capital gains, remittances, dividends, or the inflow and outflow of funds. The conversion of foreign currencies or precious metals is unfettered. Foreign currencies are widely available and can be purchased from commercial banks or money dealers at market rates. Lebanon’s Central Bank, the Banque du Liban (BdL), posts a daily local currency-exchange rate on its website: http://www.bdl.gov.lb/. On average, the local currency (the Lebanese Lira, or Pound, LBP) has been pegged to the USD at LBP 1,507.5 per USD 1 since 1988. However, the dollar continues to trade on the local economy at LBP 1,500. BdL is committed to maintaining a stable currency. Lebanon has one of the most heavily dollarized economies in the world and businesses commonly accept payment (and return change) in a combination of LBP and USD.

Remittance Policies

There are no delays in remitting investment returns except for the normal time required by the banks to carry out transactions. There are no surrender requirements for profits earned overseas.

Lebanon is a founding member of the Middle East and North Africa Financial Action Task Force (MENAFATF). Its most recent mutual evaluation can be found at: http://www.menafatf.org/MER/MutualEvaluationReportoftheLebaneseRepublic-English.pdf/. Parliament endorsed four new laws to comply with international Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) standards in 2015: Law No. 44 amending the Law on Fighting Money Laundering and the Financing of Terrorism, Law No. 42 Declaring the Cross-Border Transportation of Money, Law No. 43 on the Exchange of Tax Information, and Law No. 53 authorizing the Lebanese Government to accede to the International Convention for the Suppression of the Financing of Terrorism. As a result, Lebanon was placed on “regular follow-up” review status during the MENA FATF 23^rd Plenary in Doha on April 23-25, 2016.

In February 2016, the Financial Action Task Force (FATF) concluded that Lebanon has a sound framework to criminalize terrorist financing, and that the terrorist financing offence criminalizes all of the activities specified in UNSCR 2178. It also noted that Lebanon has a comprehensive legal framework and mechanism to implement targeted financial sanctions pursuant to UNSCRs 1267/1989 and 1988, and UNSCR 1373.

3. Expropriation and Compensation

Land expropriation in Lebanon is relatively rare. The Law on Expropriation (Law No. 58, dated May 29, 1991, Article One), as well as Article 15 of the Constitution, specifies that expropriation must be for public utility and calls for fair and adequate compensation. Compensation is paid at the time of expropriation, but is often perceived as below fair market value. The government does not discriminate against foreign investors, companies, or their representatives when dealing with expropriations.

The government, with the agreement of the parliament, established three real estate companies in the mid-1990s to encourage reconstruction and development in Greater Beirut: private corporation Solidere, for Beirut’s downtown commercial center; private corporation Linord, for northern Beirut; and public institution Elyssar, for the southwest suburbs of Beirut. However, Linord has been dormant for years and Elyssar’s projects have stalled since 2007. The government granted these three companies the authority to expropriate certain lands for development as per the Law on Expropriation. They have, however, faced serious legal challenges from landowners and squatters. Several court cases are still pending against Solidere after 20 years of litigation.

4. Dispute Settlement

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

Lebanon has a civil (Roman and Codified Law) legal system inspired from the French civil procedure code (three degrees of jurisdictions). Ownership of property is enforced by registering the deed in the property registry. Lebanon has a written commercial law and contractual law. Lebanon has commercial, civil and penal courts, but no specialized courts to hear intellectual property (IP) claims. Civil and/or penal courts adjudicate IP claims. Lebanon has an administrative court, the State Council, which handles all kinds of disputes involving the state.

Lebanon has a labor court in each of the eight governorates to hear claims of unfair labor practices. The current judicial process is generally competent and reliable on a procedural basis. However, compensation sometimes is perceived not to be fair.

Bankruptcy

The Commercial Code (Book No. 5, Articles 459-668) and the Penal Code govern insolvency and bankruptcy. By law, a secured creditor has the right to a share of the assets of a bankrupt party. Verdicts involving monetary values in contract cases are made according to the currency of the contract or its equivalent in Lebanese Pounds at the official conversion rate on the day of the payment. Workers can resort to the Labor Court and the National Social Security Fund to recover pay and benefits from local and foreign firms in bankruptcy.

Investment Disputes

In the past, the government has faced challenges related to previously awarded contracts and resorted to international arbitration for resolution. To post's knowledge, there are no known new cases. In 2010, the government settled a dispute with a Chinese contracting company working to expand the northern port of Tripoli.

International Arbitration

International arbitration is accepted as a means to settle investment disputes between private parties. The Lebanese Centre for Arbitration was created in 1995 by local economic organizations, including the Lebanese chambers of commerce, industry, and agriculture. The Centre resolves domestic and international conflicts related to trade and investment. Its statutes are similar to those of the International Chamber of Commerce (ICC) in Paris, and its conciliation and arbitration rules are modeled on those of the Paris ICC.

The government accepts international arbitration related to investment disputes. In cases involving concessions or State projects, the government does not accept binding international arbitration unless the contract includes an arbitration clause that was obtained through prior approval by cabinet decree. However, there is an exception for investors from countries that have a signed and ratified an investment protection agreement with Lebanon that stipulates international arbitration in case of dispute.

ICSID Convention and New York Convention

Lebanon is a member of the International Center for the Settlement of Investment Disputes (ICSID Convention). Lebanon ratified the 1958 Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) in 2007. Lebanese law conforms to both conventions.

Duration of Dispute Resolution – Local Courts

Cases in Lebanese courts are not resolved quickly due to shortage of judges, inadequate administrative staff and technology, and poor case management. Resolution of commercial litigation in Lebanese courts takes on average five or six years. Enforcement of a court decision on average takes between six months and two years. Politicians and powerful lobby groups sometimes interfere in the court system. Local courts accept investment agreements drafted subject to foreign jurisdiction, provided that they do not contradict Lebanese law. Judgments of foreign courts are enforced subject to the “exequatur” obtained.

5. Performance Requirements and Investment Incentives

WTO/TRIMS

Lebanon is not a member of the WTO, but has held observer status since 1999.

Investment Incentives

Lebanese legislation does not impose performance requirements on investments. There are no requirements on foreign investors regarding geographic location, amount of local content, import substitution, export expansion, technology transfer, offset requirements, or source of financing. Investors are not required to disclose proprietary information as part of the regulatory approval process, except in the case of banks, which must obtain Central Bank approval for transfer of ownership of shares in most cases (BdL circulars are posted on http://www.bdl.gov.lb).

Lebanon’s Investment Law encourages investments in the fields of technology, information, telecommunications and media, tourism, industry, and agriculture and agro-industry. The law divides the country into three investment zones, with different incentives provided in each zone. Incentives include facilitating issuance of permits for foreign labor, tax incentives that range from a 50 percent tax reduction for five years on income tax and tax on the distribution of dividends to a total exemption from these taxes for 10 years starting from the date of operation (tied to the issuance of the first invoice). Companies that list 40 percent of their shares on the Beirut Stock Exchange are exempt from income tax for two years. The Investment Law also allows for the introduction of tailor-made incentives through package deals for large investment projects, regardless of the project’s location. These may include tax exemptions for up to 10 years, reductions on construction and work permit fees, and a total exemption on land registration fees. IDAL may exempt joint-stock companies that benefit from package deal incentives from the obligation to have a majority of a board of directors be Lebanese (Law No. 771, dated November 2006). Investors who seek to benefit from work permit incentives under “package deals” must hire two Lebanese for every foreigner and register them with the NSSF. Several amendments to the Investment Law are currently awaiting parliamentary approval and would expand incentives provided to companies and increase the pool of start-ups operating in the ICT sector.

Other laws and legislative decrees provide tax incentives and exemptions depending on the type of investment and its geographical location. Industrial investments in rural areas benefit from tax exemptions of six or 10 years, depending on specific criteria (Law No. 27, dated July 19, 1980, Law No. 282, dated December 30, 1993, and Decree No. 127, dated September 16, 1983). Exemptions are also available for investments in south Lebanon, Nabatiyeh, and the Bekaa Valley (Decree No. 3361, dated July, 2, 2000). For example, new industrial establishments manufacturing new products will benefit from a 10-year income tax exemption. Factories currently based on the coast that relocate to rural areas or areas in south Lebanon, Nabatiyeh, and the Bekaa Valley benefit from a six-year income tax exemption. In April 2014, parliament enacted a law to reduce income tax on industrial exports by 50 percent.

More information can be found on IDAL’s website:

http://investinlebanon.gov.lb/en/doing_business/investment_incentives

The government reduces the dividend tax from ten to five percent for companies listed on the BSE. It also reduces the dividend tax to five percent for companies that open up 20 percent of their capital to Arab companies listed on their country’s stock exchange or for foreign companies listed on the stock exchange of OECD countries, and for companies that issue Global Depository Receipts (GDRs) amounting to a minimum value of 20 percent of their shares listed on the BSE.

Domestic and foreign investors may benefit from a 4.5 percent subsidy on interest for new loans granted after 1/1/2012, for amounts up to USD 10 million per project (with a ceiling of USD 40 million) provided by banks, financial institutions, and leasing companies to industrial, agricultural, tourism, and information technology establishments. The subsidy extends for a maximum of seven years, with a grace period of two years. This program has been extended until the end of 2016. Investors can also benefit from loan guarantees from Kafalat, a semi-private financial institution that helps SMEs to access subsidized commercial bank loans, with a grace period of two years for projects in Lebanon.

Domestic and foreign investors may also benefit from regulations that the Central Bank implements to stimulate economic activity. Since January 2013, the BdL launched a total of approximately USD five billion in several stimulus packages available to commercial banks to increase lending to the private sector at a reduced cost for housing loans, investment in productive sectors, energy-saving and renewable energy projects, and to finance new projects or develop existing ones. Moreover, in August 2013, the BdL issued circular No. 331 authorizing banks to directly invest in technology start-ups up to three percent of equity by providing banks, with interest-free facilities over a maximum period of seven years. The Central Bank also issued a circular indicating that, in cooperation with the EU, it will continue to subsidize loans of USD five million or less that are extended to finance environmentally-friendly energy projects.

The government grants customs exemptions to industrial warehouses for export purposes. Companies located in the Beirut Port or the Tripoli Port Free Zone benefit from customs exemptions and are exempt from the value-added tax (VAT) for export purposes. They are also not required to register their employees with the NSSF if they provide equal or better benefits.

Research and Development

U.S. and other foreign firms may participate in government authority-financed and/or subsidized research and development programs.

Performance Requirements

The government mandates local employment and the Ministry of Labor issues an annual list of jobs restricted to Lebanese. Foreign and local participation in the board of directors is specified in the status of the companies, according to Lebanese commercial law. Foreign investors enjoy the same incentives as local investors.

Foreigners doing business in Lebanon through a company, factory, or office must hold work and residency permits. There are no discriminatory or excessively onerous visas, residence, or works permit requirements. Registration with a chamber of commerce is required to import and handle a limited number of products that are subject to control requirements for safety reasons, but products with special import requirements constitute less than one percent of total tradable goods. Registration with a chamber of commerce is required to ensure that established facilities meet safety, handling, and storage requirements.

Foreign investors who do not manage their business from Lebanon do not need to apply for a work permit. However, foreign investors who own and manage their business from Lebanon must apply for an employer work permit and a residency permit. The employer work permit stipulates that the investor’s share in the capital be not less than USD 67,000, and that the investor pledges to hire three Lebanese and register them at the National Social Security Fund (NSSF) within six months.

Data Storage

Lebanon does not follow any “forced localization” policy, nor require foreign IT providers to turn over source code or provide access to surveillance. Lebanon’s Central Bank requires all banks to keep data backups in Lebanon, while service providers are required to do the same.

6. Protection of Property Rights

Real Property

The right to private ownership is respected in Lebanon. The concept of a mortgage exists and secured interests in property, both movable and real, are recognized and enforced. Such security interests must be recorded in the Commercial Registry and the Real Estate Registry. The Real Estate Law governs acquisition and disposition of all property rights by Lebanese nationals, while Law No. 296, dated April 3, 2001, governs real estate acquisition by non-Lebanese.

Intellectual Property Rights

Although Lebanon is still not a member of the WTO, Lebanon’s intellectual property rights (IPR) legislation is generally compliant with Trade-Related Intellectual Property Rights (TRIPS). However, IPR enforcement is weak. The MoET's Intellectual Property Protection Office (IPPO) has spearheaded efforts to improve the IPR regime but suffers from limited financial and human resources, and insufficient political will within the GoL. Lebanon’s Internal Security Forces (ISF) and Customs also play a role in enforcement. The understanding of IPR within the Lebanese judiciary has improved somewhat in recent years but gaps remain in awareness of the economic repercussions of IPR violations, judicial prosecution of IPR cases, and strong court decisions with punishments prohibitive enough to prevent other infringements. The MoET’s new draft laws and amendments to existing laws to improve the IPR environment are pending parliamentary approval.

Existing IPR laws cover copyright, patent, trademarks, and geographical elements. Lebanon's 1999 Copyright Law largely complies with WTO regulations and needs only minor amendments to become fully compatible. However, amendments to the current law have been stalled in parliament since 2007. Registration of copyrights in Lebanon is not mandatory, and copyright protection is granted without the need for any registration. Lebanon's parliament ratified the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty (WPPT) in February 2010. Ratification documents have not yet been deposited with WIPO, however, since this would also require amendments to the copyright law.

Drafts of new industrial design, trademark, and geographical indications laws have also been pending in parliament since 2007. The MoET is willing to push for all pending legislation to pass in parliament. The MoET launched an online registration service in January 2013 for copyrights and trademarks on https://portal.economy.gov.lb/. This service simplified the registration process and over 80% of registrations of trademarks and copyrights now take place online. Due to the complexity of copyrights and patents, registration is still accepted in person at the Ministry. The switch from a deposit system to an objection system for trademarks also remains stalled due to the need for parliamentary approval. However, the MoET noted that it implements the objection system in practice.

A modern TRIPS-compatible Patent Law, approved in 2000, provides general protection for semiconductor chip layout designs and plant varieties. Data protection and undisclosed information fall under Article 47 of the Patent Law, but current provisions for pharmaceutical registration are subject to interpretation. Generic manufacturers in Lebanon are not prohibited from using original data (e.g., data published on the U.S. Food and Drug Administration website) to register competing products that are identical to original products. Decree No. 571 on the conditions of registering, importing, marketing, and classifying pharmaceuticals, which should have improved the process of drug registration and reduced the number of copycat drugs being registered, still leaves some room for interpretation. There are no current plans to amend the Patent Law to reduce counterfeit drugs found in the market. The Lebanese legal regime does not require examination, prior to registration, of patents for novelty, utility, and innovation. Simple patent deposit is required at the MoET, where the application is examined only for conformity with general laws and ethics.

The ISF’s Cybercrime and IP Unit tracks seizures of counterfeit goods but does not make this information publically available. Lebanese Customs also plays a direct role in IPR enforcement by seizing counterfeits and an indirect role as part of its efforts to combat smuggling. The U.S. Trade Representative’s Special 301 annual review of intellectual property protection worldwide has kept Lebanon on its watch list since 2008. Given insecurity, political instability, and spillover from the Syrian crisis in 2015, the GoL underscored the significant difficulty that it faced in enforcing IPR.

The IPPO acts upon the requests of rights holders or in an ex officio capacity. The ISF cannot act in an ex officio capacity and still requires a criminal complaint to be filed with the prosecutor’s office in order for it to take action. The sale and distribution of pirated, counterfeit, and copycat products continues across Lebanon, in commercial establishments and through street vendors. This included leather goods, apparel and luxury items, fast-moving consumer goods (FMCGs), software, optical media, and pharmaceuticals.

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.

Resources for Rights Holders

Mr. Robert Palmer
Economic Officer
+961-4-542600/543600
Beirutembassyinvestment@state.gov

The embassy’s list of lawyers can be found at http://lebanon.usembassy.gov/attorneys.html.

7. Transparency of the Regulatory System

Local and foreign private sector companies should be wary when bidding for public projects, given lack of transparency, clear regulations, and fair consideration of bids. Lebanon has a Procurement Law that regulates public procurement. However, public institutions have separate procurement regulations under the guidelines of the Procurement Law. Government administrations often award contracts by mutual agreement, without calling for a tender, and the government does not always establish clear procedures for the process.

The procedures necessary for business entry, operation, and exit are not streamlined and excessive regulation plagues bureaucratic procedures. However, the process does not discriminate against foreign investors. International companies face an unpredictable and opaque operating environment and often encounter unanticipated obstacles or costs late in the process. Even so, according to the World Bank’s 2016 Doing Business report, it takes entrepreneurs 15 days to start a business in Lebanon, compared to the average of 19 days in the MENA region. The report may be accessed at http://www.doingbusiness.org.

Currently, IPR trademark registration, economic and trade indicators, and market surveillance reports, are available online at: http://www.economy.gov.lb.

The government does not publish proposed draft laws and regulations for public comment but usually forms a drafting committee composed of both public and private sector stakeholders. However, Telecom Law No. 431 requires the Telecommunication Regulatory Authority (TRA) to issue regulations in draft for public consultation to promote transparency and enable the general public to shape future regulations. There have been no new regulations since the TRA board expired in February 2012. In general, legal, regulatory, and accounting systems are consistent with international norms. Publicly listed companies adhere to international accounting standards.

Lebanon still lacks an access to information law to promote transparency in the private and public sectors. According to Transparency International’s Lebanon chapter, the Lebanese Transparency Association (LTA), several ministries undertook transparency initiatives in 2015. The Lebanese Parliament, however, has failed to enact new transparency-related legislation to date. As part of the National Network for Access to Information, the LTA, Ministry of Finance (MoF), and other stakeholders helped draft laws on access to information and whistleblower protection, both which have awaited parliamentary ratification since 2009 and 2010, respectively. In the meantime, the MoF continued to organize workshops, raise awareness, and build capacity of civil servants on access to information and whistleblower protection.

8. Efficient Capital Markets and Portfolio Investment

There are no restrictions on portfolio investment, and foreign investors can invest in Lebanese equities and fixed income paper. Lebanon places no restrictions on the movement of capital into or out of the country for investment or other purposes. The government permits the free exchange of currencies, precious metals, and monetary instruments, both domestically and internationally. There are no restrictions on payments and transfers for current international transactions.

Credit is allocated on market terms, and foreign investors can obtain credit facilities on the local market. The private sector has access to overdrafts and discounted treasury bills in addition to a variety of credit instruments, such as housing, consumer, or personal loans, as well as corporate loans and loans to SMEs.

Lebanon’s banking regulatory system is transparent and consistent with international norms. Banks conform to Bank for International Settlement (BIS) standards and International Accounting Standards (IAS). Legislation exists that regulates the issuance and trading of bank equities. Law No. 308 on unification of bank shares allows banks to increase their capitalization and shareholder base, as well as to optimize trading of bank shares on the BSE.

Government legislation allows the listing of tradable stocks or papers on the Beirut Stock Exchange (BSE). Currently, the BSE lists six commercial banks, 21 sovereign Eurobond issues (19 in U.S. dollars, one in euros, and one in Lebanese Pounds), and four companies, including Solidere, one of the largest publicly held companies in the region. Trading is more active in listed banks’ instruments and occurs in a combination of auction and continuous trading, with e-trading authorized in 2008. In 2011, Parliament endorsed both the Insider Trading Law and the Capital Markets Law to regulate and supervise capital market activity. However, the BSE suffers from a lack of liquidity and low trading volumes in the absence of significant institutional and foreign investors, and had an annual trading volume of only 5 percent of market capitalization in 2015. Weak market turnover discourages investors from committing funds to the market and discourages issuers from seeking listings on the BSE. Traditional businesses held by commercially powerful families dominate most sectors. The government is trying to improve the transparency of such firms to help solidify an emerging capital market for company shares.

To stimulate market activity, the Capital Markets Authority (CMA) in Lebanon, analogous to the U.S. Securities and Exchange Commission, issued several regulations to regulate disclosure policy of joint stocks and mutual funds as well as to encourage investment in start-up companies. In 2014, the CMA started receiving technical assistance from the World Bank to prepare regulations for the development of capital markets. More information can be found on: www.cma.gov.lb/. Lebanon hosts the headquarters of the Arab Stock Exchange Union.

Money and Banking System, Hostile Takeovers

The banking system enjoys high financial standing and boasts a capital adequacy ratio of 14.4 percent as of June 2015 (higher than Basel III requirements), sound liquidity, and a foreign currency prime liquidity ratio exceeding 47 percent of foreign currency deposits. The total domestic assets of Lebanon’s five largest commercial banks reached approximately USD 101 billion as of the end of 2015 (or about 51.5 percent of total banking assets), according to BdL data. About 3.6 percent of total loans were estimated as non-performing by end-February 2016. Banks maintained approximately 68.5 percent of provisions against non-performing loans as of February 2016. The remaining 31.5 percent were covered by adequate collateral.

Lebanon’s Central Bank imposes strict compliance with regulations on banks and financial institutions. There are no restrictions in Lebanon on a foreigner or non-resident’s ability to open a bank account in local currency or foreign currencies. However, banks have stringent inquiry mechanisms to ensure compliance with international and domestic regulations. They implement Lebanon’s anti-money laundering and combating terrorism financing laws. Banks also uphold Know-Your–Customer requirements and other regulations to combat tax evasion, inquire about the purpose of opening a new account, about the source of funds to be placed into an account, and to discover other relevant information. Lebanese banks are compliant with the Foreign Account Tax Compliance Act (FATCA).

There are no specific rules on hostile takeovers but no hostile takeovers have ever occurred on either the Beirut Stock Exchange or in the banking sector. By regulation, any investor should inform the BSE when her/his portfolio of shares in any of the listed companies reaches ten percent. Moreover, any shareholder with more than five percent of a bank’s share capital must obtain prior approval from the Central Bank to acquire additional shares in that bank, and must inform the Central Bank when selling shares.

9. Competition from State-Owned Enterprises

The GoL maintains monopolies in the utility sector (Ogero for telecom landlines and two mobile companies, Electricité du Liban (EdL) for electricity production and transmission, and four water authorities), a casino (Casino du Liban, a mixed public-private enterprise), tobacco procurement, manufacturing, and sales (La Régie des Tabacs et Tombacs), as well as the national airline (Middle East Airlines), whose monopoly is scheduled to end in 2024. Other major state-owned enterprises or public institutions include the Beirut, Tripoli, Sidon, and Tyre ports, the Rashid Karami International Fair (in northern Lebanon), the Sport City Center, and real estate development institution Elyssar. The GoL also owns shares in Intra Investment Co., a mixed public-private investment company, which owns 96.62 percent of Finance Bank – a Lebanese commercial bank.

There is no uniform definition of State-Owned Enterprises (SOEs) and each has separate internal by-laws. Decree 4517 (dated 1972) establishes two types of public institutions, one administrative category that involves public enterprises like the Lebanese University, and a second that holds commercial aspects like EdL and La Régie. The Ministry of Finance maintains an unpublished list of SOEs and public institutions. SOEs and public institutions may purchase or supply goods or services from the private sector or foreign firms. Procurement is governed by separate regulations but under the same terms and conditions as public procurement. SOEs and public institutions benefit from certain tax exemptions.

Although law restricts electricity production to EdL, numerous private investors operate unregulated generators across the country and sell electricity to citizens at significantly higher rates during the country’s frequent power cuts. EdL awarded several concessions to privately-owned companies for power distribution in specific regions, and these companies are interested in producing electricity to meet customer demand. In April 2014, parliament granted the cabinet the authority through 2018 to license private companies to generate electricity. Since 2012, EDL contracted three private companies to manage bill collection, maintenance, and power distribution. Two private operators also hold contracts from the government to manage the country’s two cellular companies to two private operators.

Lebanon’s SOEs report to shareholders whereas public institutions are subject to oversight by the concerned ministries as well as by the Ministry of Finance. Public institutions require the approval of concerned ministries for major business decisions. SOEs may independently prepare their budgets, which must be approved only by their board of directors. The SOEs and public institutions are required by law to publish an annual report, and to submit their books for independent audits as well as to send their books to the Court of Audit.

The GoL currently has no plans to privatize SOEs or public institutions. Middle East Airlines has postponed plans to list 25 percent of its shares on the BSE as a first step toward privatization. It is reportedly awaiting improvement in investor confidence to ensure that its shares will not be undervalued when traded on the BSE.

OECD Guidelines on Corporate Governance of SOEs

SOEs and public institutions have independent boards staffed primarily by politically-affiliated individuals, appointed by the cabinet for public institutions, and by shareholders for SOEs. The board of SOEs and public institutions always include a Government Commissioner appointed by the cabinet who reports to the concerned ministries. SOEs do not currently adhere to the Organization for Economic and Cooperative Development (OECD) Corporate Governance Guidelines.

Sovereign Wealth Funds

Lebanon does not have any sovereign wealth funds. Lebanon’s Hydrocarbon Law mentions that proceeds generated from oil and gas exploration would be deposited in a Sovereign Wealth Fund. Creating the fund requires a separate law, which the government has yet to draft. Lebanon currently receives no proceeds from natural resources that could flow into a sovereign wealth fund.

10. Responsible Business Conduct

Lebanese firms are increasingly aware of corporate social responsibility (CSR), including on environmental, social, and governance issues. This is true for the banking sector as well as companies in telecom, real estate, and industry, which are slowly creating sustainable supply chains or pursuing social initiatives to appeal to consumers. The government also encourages corporate engagement in solving national economic, social, and environmental problems. The Lebanese Standards Institution (LIBNOR), part of the Ministry of Industry, leads efforts to expand the use of the ISO 26000 standard on Social Responsibility (SR) in Lebanon, one of the eight pilot countries in the Middle East. The project is funded by the Swedish International Development Cooperation Agency (SIDA).

The Central Bank of Lebanon works closely with banks to direct their financial resources towards projects that improve society and the environment. This includes issuing circulars to create favorable environmental and educational loans, encourage entrepreneurship through private equity investments, and facilitating improved governance through customer protection. In 2015, the banking sector started to implement Central Bank Circular No. 134, requiring banks to apply measures to ensure transparent and fair dealings with their customers, a reflection of the CSR principles of corporate governance and consumer protection. It also established the Institute for Finance and Governance (IFG). The IFG cooperates with the Central Bank to organize conferences on topics such as good governance in the banking sector, economic and monetary policy, and banking regulations.

Several business ethics and corporate governance codes exist, including the business association ‘Rassemblement de Dirigeants et Chefs d’Entreprises Libanais’ (RDCL, or the Group of Lebanese Business Owners) “Code of Business Ethics,” and the Lebanese Code of Corporate Governance (CG), written under the auspices of the Lebanese Transparency Association (LTA). However, these codes are strictly voluntary and the government provides no incentives or enforcement for their adoption.

The Lebanese Transparency Association reports that more companies are approaching it for corporate governance assessments and its corporate governance guidelines and toolkits for family-owned enterprises and listed companies. CSR Lebanon, a Beirut-based company established in 2010, raises awareness and providing the necessary tools to promote CSR in Lebanon and the Middle East.

Lebanon seeks implementation of a number of international codes and standards to increase transparency and governance in government and the private sector. The Association of Banks in Lebanon adopted the Corporate Governance Guidelines for Banks Operating in Lebanon in January 2011. CSR Lebanon advocates for the principles of the United Nations Global Compact and was the first to introduce them to the private sector.

In 2013, Beirut-based business development advisory Capital Concept launched its Governance & Integrity Rating and becoming the first such firm recognized by Lebanon’s Central Bank to review and rate the banking sector in Lebanon and the MENA region. In 2015, it also launched Shareholder-Rights, a registered online platform and publication initiative to rate and review companies’ commitment to corporate governance and investor rights.

11. Political Violence

Political violence continued in 2015 due in part to spillover effects from the Syrian conflict. The situation remained somewhat stable with the implementation of the government’s security plan in 2014 in Tripoli and in villages in the Bekaa Valley along the Syrian border. In August 2014, clashes erupted in the northeastern town of Arsal between Lebanese Army (LAF) personnel and Islamic militants aligned with the Islamic State of Iraq and the Levant (ISIL) and al-Nusra Front. Nineteen LAF members and 40 to 45 Syrians and Lebanese citizens died and 90 to100 individuals were wounded. Islamic militants took 29 LAF and Internal Security Forces members hostage, executed four members, and released six members. On December 1, 2015, al Nusra Front released 16 others in a prisoner exchange with the LAF, although nine remain in ISIL captivity. On November 5, 2015, ISIL killed seven Sunni religious figures in Arsal reportedly due to their cooperation in prisoner hostage negotiations with the Lebanese government and al-Nusra. On November 12 2015, ISIL claimed responsibility for two suicide bombings in the Bourj al-Barajneh neighborhood (Dahiyeh surburbs) of Beirut that killed 43 and injured more than 200 people. ISIL claimed the attack specifically targeted “heretics” in a predominantly Shiite area and vowed to continue attacks. However, the various security forces responded to the attacks with alacrity and all those involved in the suicide bombing cell responsible for the Bourj al-Barajneh attacks were soon arrested or killed. On February 3, 2016, the LAF launched a major offensive in Arsal, killing six and capturing 27 ISIL militants, who they suspected of planning attacks against security forces along the north-eastern Lebanese border. As of the date of this report there have been no further large scale terror attacks on Lebanese territory.

Hizballah continued to accelerate its engagement in Syria fighting on behalf of the Syrian regime, while some Lebanese Sunni individuals and groups have supported the Syrian opposition. Hizballah and the Sunni-dominated Future Movement continued the “political dialogue” that they started in 2014 in an attempt to try to alleviate tensions between the Sunni and Shia communities. By end 2015, there were over 1.069 million registered Syrian refugees in Lebanon officially registered with the UN High Commissioner for Refugees. These refugees, and a large number of additional unregistered refugees, are severely straining local resources and services. Lebanon is believed to host more refugees per capita than any other country in the world.

The U.S. government considers the potential threat to American Embassy personnel assigned to Beirut sufficiently serious to require all Chief of Mission personnel to live and work under security restrictions. These limitations occasionally prevent the movement of American Embassy officials and the provision of consular services in certain areas of the country. U.S. citizen visitors are encouraged to contact the Embassy’s Consular Section for the most recent safety and security information concerning travel to Lebanon.

12. Corruption

Lebanon has laws and regulations to combat corruption such as the Illicit Wealth Law and the Penal Code, but does not enforce them effectively. The Illicit Wealth Law applies to all state employees, government and senior officials, and municipality members and extends to family members. However, it does not extend to political parties. There are several articles in the laws to counter conflict-of interest in awarding contracts and government procurement, but are not enforced. The government does not require or encourage private companies to establish internal codes of conduct that prohibit bribery of public officials.

In accordance with Lebanese law, it is considered a criminal act to give or accept a bribe. The penalty for accepting a bribe is imprisonment for up to three years, with hard labor in some cases, and a fine equal to at least three times the value of the bribe. Bribing a government official is also a criminal act. The Central Inspection Directorate is responsible for combating corruption in the public sector, while the public prosecutor is responsible for combating corruption in the private sector.

Reports of rampant corruption in Lebanon’s public sector are widespread. According to the 2015 Transparency International’s (TI) Corruption Perception Index (CPI), Lebanon ranked 123 out of 168 countries worldwide, and 12 out of 17 Middle East North Africa (MENA) countries, with a score of 28 out of 100 points (whereby zero is considered highly corrupt and 100 the most uncorrupt). Based on its currently ranking, Lebanon remained among the 50 most corrupt countries in the world. The index measures the perception of corruption by public officials and politicians and focuses on corruption in the public sector, defined as an abuse of official power for private interests.

Corruption is reportedly more pervasive in government contracts (primarily in procurement and public works), taxation, and real estate registration, than in private sector deals. The law provides criminal penalties for official corruption but is not implemented effectively. Government security officials, agencies, and police were subject to laws against corruption, bribery and extortion.

An unprecedented anti-corruption campaign by some government ministries, including the Ministries of Public Health (MoPH), Economy and Trade, and of Finance as well as Customs, which started in 2014 continued throughout 2015. Although generally satisfied, many people have adopted a wait-and-see attitude to see how far the campaign will go, including suspending operations and bringing those responsible to justice. The MoPH also released a mobile application and a hotline (1214) allowing citizens to report fraudulent actions to the ministry. The MoET launched the "Consumer Protection Lebanon” mobile application in 2014, adding to the already established consumer protection hotline (1739). The application enhances communication between the ministry and local consumers. It allows users to send and follow complaints and provide them with prompt notifications about ministry decisions and other MoET news. The MoF continued fighting corruption in the customs and real estate departments. It investigated several civil servants for illegal appropriation of public property and embezzlement in the real estate sector as well as intensified port and airport inspections. The ministry also launched a hotline for citizens’ complaints on misconduct by ministry employees.

The Lebanese Transparency Association (LTA) established the Lebanon Anti-Bribery Network (LABN) in 2008 in partnership with the Center for International Private Enterprise (CIPE). It re-launched LABN in 2013, for the specific purpose of combating bribery in the country. In 2014, LABN published two handbooks: “Access to Information: Benefit to the Private Sector,” and “Administrative Corruption in Lebanon,” to help identify obstacles and challenges related to greater transparency and corruption in public administration, respectively. Through LABN, the LTA also launched the Code of Ethics and Whistleblower Protection for Small and Medium Enterprises (SMEs), and provided a workshop for owners and directors of companies on the importance of ethics and on ways of applying the code. In 2015, LTA published two new handbooks on “Know Your Rights,” to empower Lebanese citizens with the necessary tools to fight bribery. The first handbook educates citizens on interacting with the State’s Council, while the second covers Lebanon's labor law with a focus on workers’ rights and benefits.

The LTA also established the Lebanese Advocacy and Legal Advice Center (LALAC) to inform citizens of their rights and to encourage victims and witnesses to take action against cases of corruption. LALAC operates a hotline for victims and witnesses to report cases of corruption and receive free legal advice and assistance with their case. The program is currently funded by the European Union, the Lebanese Renaissance Foundation, and the CIPE. In March 2013, LTA launched a one-year project entitled “Corruption Investigator,” funded by the United States Agency for International Development (USAID). The project facilitated citizens’ access to information throughout various media outlets to promote transparency and accountability and to advocate for a democratic community. In 2014, LTA launched two new branches of LALAC in the North and the Bekaa to facilitate citizen’s access to make complaints directly to an independent body.

The local NGO Sakker el Dekkene was established in 2013 to raise awareness against corruption though its innovative and interactive advertisement campaigns. It also encourages citizens to report and talk about their own experiences with corruption. For more information, please go to https://www.sakkera.com. In 2015 and 2016, the MoET signed a Memorandum of Understanding with Sakker el Dekene and LTA to promote transparency and reduce the impact of corruption when it occurs.

In 2015, new grassroots movements and campaigns were established to fight against corruption through collective actions in response to the trash crisis, with “You Stink” and “We Want Accountability” among the most prominent of them.

U.S. firms have identified corruption as an obstacle to FDI, including in government procurement, award of contracts, dispute settlement, customs and taxation.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Lebanon ratified the UN Anticorruption Convention in April 2009. Lebanon is not a signatory to the OECD Convention on Combatting Bribery of Foreign Public Officials in International Business Transactions.

Resources to Report Corruption

There is no government agency responsible for combating corruption. However, in 2015 and early 2016 the government made efforts to combat corruption across several ministries. The Lebanese Transparency Association monitors corruption.

Lebanese Transparency Association
Sami El Solh Avenue, Manhattan Bldg. 6th Floor
Badaro, Beirut
P.O. Box 50-552, Lebanon
Tel/Fax: +961-1-388113/4/5
Email: info@transparency-lebanon.org

13. Bilateral Investment Agreements

Bilateral Taxation Treaties

Lebanon does not have a bilateral investment treaty with the United States. However, the United States and the MoET signed a Trade and Investment Framework Agreement (TIFA) in 2006. Apart from pledging to foster an environment conducive to mutual trade and investment, the TIFA requires both parties to set up a United States-Lebanon Council on Trade and Investment that would meet twice a year or more to consult on trade and investment impediments and any other issues of concern. The council, which has not yet been set up, will seek and consider the views of private sector representatives in both countries. Under the TIFA, the United States and Lebanon agreed to a consultation mechanism that may be activated by either party within 60 days in the event of a dispute or other development affecting trade relations.

Lebanon signed the Euro-Mediterranean Partnership (ENP) agreement in 2002, and the interim agreement entered into force in March 2003. The final agreement came into force in April 2006 and the tariff reductions on imported products from the EU started in 2008. The EU and Lebanon launched a review of the ENP in 2014 and finalized it in November 2015. Lebanon signed the Convention on Pan-Euro-Mediterranean Preferential Rules of Origin in October 2014 although the document awaits ratification.

In 2004, Lebanon and the European Free Trade Association (EFTA) signed a Free Trade Agreement (FTA). In November 2010, Lebanon and Turkey signed an association agreement to establish a free trade area and reduce barriers to the free movement of goods, services, capital, and people between the two countries over the subsequent ten years. The agreement is not yet ratified. Lebanon also signed the Greater Arab Free Trade Agreement, which gradually replaced the bilateral FTAs signed with Arab countries including Tunisia, Morocco, Egypt, Iraq, Jordan, Syria, Sudan and the Gulf Cooperation Council states. A regional Economic and Trade Association Council between Lebanon, Syria, Jordan, and Turkey was announced in July 2010.

Lebanon has signed bilateral investment agreements with the following (in alphabetical order): Armenia, Austria, Azerbaijan, Bahrain, Belarus, Belgium/Luxemburg, Benin, Bulgaria, Canada, Chad, Chile, China, Cuba, Cyprus, Czech Republic, Egypt, Finland, France, Gabon, Germany, Greece, Guinea, Hungary, Iceland, Iran, Italy, Jordan, Korea (South), Kuwait, Malaysia, Mauritania, Morocco, Netherlands, OPEC Fund, Pakistan, Qatar, Romania, Russia, Slovak Republic, Spain, Sudan, Sultanate of Oman, Sweden, Switzerland, Syria, Tunisia, Turkey, United Arab Emirates, Ukraine, United Kingdom, and Yemen.

Lebanon does not have a bilateral taxation treaty with the United States.

14. OPIC and Other Investment Insurance Programs

In 1981, Lebanon and the United States signed an Overseas Private Investment Corporation (OPIC) agreement, which did not become operational until 1996. OPIC is currently engaged with Lebanon in three areas: insurance, financing, and investment. Since 2006, OPIC has worked with Citibank on a program that offers loans to the private sector (SMEs, retail, and housing) through selected Lebanese commercial banks. To date, OPIC has provided USD 300 million in credit line guarantees.

The Lebanese government’s National Investments Guarantee Corporation (NIGC) continues to insure new investments against political risks, riots, losses due to non-convertibility of currencies, and transfer of profits. Lebanon has been a member of the Multilateral Investment Guarantee Agency (MIGA), part of the World Bank, since 1994.

The Central Bank has pegged the average USD value of the local currency at Lebanese Pounds (LBP) 1,507.5 to the dollar since 1998. However, the dollar continues to trade in the business market at LBP 1,500. The BdL has repeatedly expressed its commitment to maintaining a stable currency. With record high foreign assets (excluding gold) of USD 37 billion as of end-March 2016, the BdL has the ability to maintain a stable USD/LBP rate for some time. Lebanon has one of most heavily dollarized economies in the world; as of end-February 2016, 64.7 percent of bank deposits were dollarized. Businesses commonly accept payment (and return change) in a combination of LBP and USD.

15. Labor

The 1946 Labor Law provides for written and oral contracts and specifies a maximum workweek of 48 hours (with several exceptions, notably agriculture corporations and domestic workers). The legal minimum wage was raised in 2012 to 675,000 Lebanese Liras ($450) per month. Lebanon is a member of the International Labor Organization (ILO) and signatory to all of its so-called fundamental conventions except on the Freedom of Association and Protection of the Right to Organize. The government mandates local employment, and the Ministry of Labor issues yearly a list of jobs restricted to Lebanese. In January 2015, the Ministry of Labor set the limit of foreigners that NGOs and International NGOs may employ at 10 percent of their total staff. Local unskilled labor is in short supply. Arab (mainly Syrians, Egyptians, and Palestinian), Asian, Indian, and African laborers are hired to work in construction, agriculture, industry, and households.

The law provides for the right of private sector workers to form and join trade unions, strike, and bargain collectively, although the law places a number of restrictions on these rights. Protection against anti-union discrimination is also provided, but enforcement is weak, and anecdotal evidence suggests anti-union discrimination was widespread. Lebanon has a General Labor Confederation (CGTL), recognized by the government, whose membership is limited exclusively to Lebanese workers. The CGTL’s activities are mainly limited to demanding cost-of-living increases and other social benefits for workers. The general labor-management relationship remains difficult and the Labor Law is not always properly enforced. Given its own strong political bias, the CGTL is sometimes accused of working for its own political interests and of ineffectiveness in fighting for workers’ rights. In recent years, other labor groupings, including the Union Coordination Committees, have overshadowed it. Strikes and demonstrations are not uncommon, and are usually aimed at pressuring the government for better employment conditions. However, this has never posed a major risk to investment. The law requires businesses to adhere to safety standards, but it is poorly enforced.

Lebanon’s working population (aged 15 and above) totals 1.2 million, including foreign residents but excluding the seasonal work force, according to CAS’s 2011 Labor Market in Lebanon report. The IMF estimated the population at 4.6 million in April, 2016. The World Bank estimates Lebanese unemployment will have doubled to 20 percent between 2012 and 2014, in large part due to the Syria crisis. The Ministry of Labor publicly noted that unemployment has reached 25%. As of end 2015, the official number of Syrian refuges in Lebanon, based on those registered with the UN High Commissioner for Refugees (UNHCR) reached 1.069 million. However, unofficial figures estimate the number of refugees to be much higher.

16. Foreign Trade Zones/Free Ports/Trade Facilitation

Foreign-owned firms have the same investment opportunities as Lebanese firms. Lebanon has two duty-free zones in operation, the Beirut Port and the Tripoli Port. The WTO-compatible Customs Law issued by Decree No. 4461 fosters the development of free zones. The GoL also passed Law No. 18, dated September 5, 2008, to set up a Special Economic Zone (SEZ) in Tripoli to attract investment in trade, industry, services, storage, and other services which granted investors tax exemptions and other privileges. USAID provided technical assistance to the GoL to prepare a feasibility study for Tripoli SEZ (TSEZ) in 2011. On April 9, 2015, the cabinet appointed the TSEZ Authority, and efforts are actively underway to build and develop the zone. The World Bank and IFC are updating the feasibility study as well as developing a financial model and licensing regime, and the Authority’s next step is to develop a business plan.

17. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

	Host Country Statistical source*		USG or international statistical source		USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Economic Data	Year	Amount	Year	Amount
Host Country Gross Domestic Product (GDP) (USD)	2013	$47.2 B	2015	$51.2 B	www.imf.org/external/pubs/ft/weo/2016/01/
Foreign Direct Investment	Host Country Statistical source*		USG or international statistical source		USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country (USD, stock positions)	2014	$17.38 M	2014	$227 M	BEA
Host country’s FDI in the United States (USD, stock positions)	N/A	N/A	N/A	N/A	N/A
Total inbound stock of FDI as % host GDP	2015	58.608 B 14.5%	2015	58.608 B 14.5%	UNCTAD

* The Central Administration of Statistics (CAS)
* The Banque du Liban (BdL) statistics on FDI cover banking and financial sector, insurance, and real estate investment; it doesn’t include investment in other sectors.

Table 3: Sources and Destination of FDI

The BdL doesn’t have statistics on global FDI with geographical breakdown; its statistics on FDI by country only cover banking and finance, insurance, and real estate investment.

Table 4: Sources of Portfolio Investment

Portfolio Investment Assets
Top Five Partners (Millions, US Dollars)
Total			Equity Securities			Total Debt Securities
All Countries	5,290	100%	All Countries	1997	100%	All Countries	3293	100%
United States	1,388	26.2%	United States	730	36.5%	United States	659	20%
United Kingdom	680	12.8%	Bahrain	271	13.5%	United Kingdom	584	17.7%
France	430	8.1%	Jordan	120	6%	France	322	9.7%
Bahrain	322	6%	Saudi Arabia	118	5.9%	United Arab Emirates	192	5.8%
United Arab Emirates	256	4.8%	Luxembourg	116	5.8%	Cayman Islands	171	5.1%

Source: IMF Coordinated Portfolio Investment Survey, June 2015.

18. Contact for More Information

Robert Palmer
U.S. Embassy in Lebanon
Economic Section
Aoukar, P.O. Box 70-840, Antelias, Lebanon

Tel: +961- 4-542600

Email: Beirutembassyinvestment@state.gov

ecoi.net-Beschreibung:: Jahresbericht zum Investitionsklima, inkl. Informationen zum Rechtssystem, zu politischer Gewalt, Korruption, Wirtschaftslage, etc. (Stand März 2016)

Land:: Libanon
Quelle:: USDOS – US Department of State (Autor)
Veröffentlicht:: 5. Juli 2016
Originallink:: http://www.state.gov/e/eb/rls/othr/ics/2016/nea/254451.htm
Dokumentart:: Periodischer Bericht
Sprache:: Englisch
Dokument-ID:: 1170369 (frühere ID 332520)