TBY talks to HE Michel Sleiman, President of the Republic of Lebanon, on the country’s role in the region, its ability to attract FDI, and cooperation between the public and private sectors.
TBY How would you describe Lebanon’s economic and financial role in the region?
MICHEL SLEIMAN Lebanon plays a prominent role in the Middle East and Arab world, given its geographical position as a crossroads between East and West and at a strategic location on the eastern shore of the Mediterranean Sea. Furthermore, Lebanon’s free economic policy in addition to the various features of its banking sector have all contributed to granting Lebanon a leading role at the economic and financial levels in the region, particularly during the pre-war period. Nowadays, and after the reconstruction process and achieving stability and security, Lebanon has regained its regionally distinct role, which has had a positive impact on its economic growth, scoring thus between 8% and 9% over the past four years, in spite of persistent Israeli threats and the war of July 2006. In this context, I would like to underscore the role of Lebanese citizens in reinforcing Lebanon’s position in the region, for the Lebanese are distinguished by their culture while remaining up-to-date with the latest technologies.
In what key sectors would you like to see Lebanon place more emphasis on to develop the economy and provide jobs?
Lebanon has always been a leading name in the world of trade and services in addition to its high standards in the fields of tourism, education, and health care. That is why we are always keen to develop these areas to maintain Lebanon’s status. Moreover, other sectors such as industry and agriculture generate income for many citizens and provide numerous job opportunities for the Lebanese youth. We must not forget the importance of the Lebanese banking sector, which proved to be vital for the Lebanese economy after it demonstrated its capacity to withstand and overcome crises thanks to the financial and banking policies adopted by successive Lebanese governments and the Banque du Liban. Lebanon’s banking resilience asserted itself during the recent global financial crisis when Lebanese financial and banking policy was considered a policy to be emulated by other countries. In fact, despite the political problems Lebanon faced, its economic sectors, especially the banking sector, maintained steady growth over the past years. Our primary concern has been to reduce the interdependence between the economic and the political sector for the Lebanese economy to gain more stability and develop its potential.
How does Lebanon maintain its ability to attract foreign direct investment?
During the past years, Lebanon constituted a safe haven for foreign investments. Investments in Lebanon posted an annual growth of 14% to 15% between 2003 and 2009; indeed, the value of investments neared $4.8 billion in 2010, particularly thanks to the economic and financial policies adopted in addition to the facilities granted to investors aimed at encouraging the latter to invest in Lebanon. Beyond a shadow of doubt, maintaining security and stability in Lebanon will strengthen its ability to attract foreign investment, especially given the recent political and security developments in many countries of the region.
How does Lebanon’s substantial diaspora contribute to the development of the Lebanese economy?
The Lebanese diaspora has played a crucial role in Lebanon’s economic development; it has been a fundamental pillar during all the periods the country has gone through because of the money transfers and their persistence in investing in Lebanon. As a matter of fact, money transfers issued by Lebanese expatriates exceeded $7 billion in 2009. This is a clear indicator of the Lebanese people’s attachment to their motherland and their complete confidence in its future. Moreover, among the Lebanese diaspora are investors with an entrepreneurial spirit that constitute a continuous springboard effect for sustainable economic growth from a capital- and knowledge-transfer perspective. Therefore, it is a must that strong bonds are maintained and consolidated with the Lebanese diaspora. Hence my keenness to meet with members of the Lebanese diaspora, discuss with them their problems and recommendations, and put their suggestions at the service of the nation.
What steps are being taken to reduce the country’s public debt?
Lebanon’s public debt, which nowadays exceeds $50 billion, is not a recent problem; it is a result of the events the country has gone through, after which a huge reconstruction process was necessary to rebuild what was destroyed. We have taken several steps to try to contain the aggravated public debt by replacing these debts with less expensive ones through the Paris I, Paris II, and Paris III Conferences, rationalizing spending, and seeking incomes to cover the cost of servicing the public debt, a cost that constitutes the bulk of the public budget each year.
What coordination would you like to see between the public and private sector in economic development?
The private sector has demonstrated its competence in project management and its resourceful ability to generate funds. Therefore, it is pertinent to take advantage of the capabilities and expertise of the private sector by establishing a partnership between the private and public sectors. This partnership proved its usefulness in many areas, particularly in the field of telecommunications. In addition, there are many areas the private sector could greatly contribute to, namely those of electricity, transportation, petroleum, and infrastructure. However, we need to draft in parallel laws and devise systems for this partnership to be beneficial to all parties and prevent monopolies, and that is what we are working on at this stage.
What efforts are being made to attract investment to regions outside of the greater Beirut area?
The system is weighed down by administrative centralization and unbalanced development. That is why most administrations and investments are concentrated in Beirut, while there are many Lebanese regions suffering from poverty and deprivation due to the accumulations of the past years. We are striving to solve this problem by developing a strategy for balanced development across the different regions of Lebanon. Moreover, efforts are being deployed to draft a decentralization law.
What is your outlook for the Lebanese economy in the medium term?
Lebanon possesses an array of capabilities and competences that must be seized on to develop its economy. Furthermore, Lebanon has relatively abundant natural resources that can be utilized, like water, for example. Furthermore, studies underline the presence of oil and gas in Lebanon, and a law was passed regulating the exploration and investment in this richness. Lebanon’s economic future is promising and we have many opportunities we can capitalize on, yet the most vital prerequisite remains maintaining security and stability in the country. Consequently, we have always sought to bring the opinions of various parties closer and uphold constructive dialogue among them, for that would serve our beloved country.
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