Lebanon's industrial sector is rapidly increasing trade links abroad and continues to benefit from subsidies from the central bank.

Lebanon has historically, been capable of manufacturing excellence in a variety of sectors from the paper industry, chemicals, and silverware, to medical supplies, and agro-industry products; the list is long and impressive. Many industrial family holding groups are present not only all over the Middle East, but are active all over Africa, often running power stations. Groups such as SACCAL and Sakr manufacture and assemble electrical generators and electrical distribution systems and supply transformers that are set up as far away as Disneyland Paris.

Industrialists have fared surprisingly well in Lebanon over the last few years, considering the increasing squeeze on operational costs. This negative impact of the Syria crisis was partly offset by Lebanese industrialists seeking to fill gaps in the Syrian market. In 2013, exports through Syria as a percentage of GDP declined YoY from 2012 by 1.8% to 1.3%. Yet, imports of industrial equipment increased to $300.4 million in 2013, a rise of 4.3% YoY on 2012. Industrial exports on the other hand increased 4.2% from $2.95 billion to $3.08 billion over the same period. Lebanon's industrial net exports are representative of the country's industrial innovation and adaptability, which has only increased during times of hardship, including over the last three years.

According to statistics reported by the Association of Lebanese Industrialists (ALI), Lebanon's most exported items were $527 million of base metals (17.14%), $508 million machinery and mechanical appliances (16.51%), $425.8 million foodstuffs (13.84%), $355.9 mineral products (11.57%), $329 million of chemical products (10.7%), $175.2 million of paper and cardboard (5.7%), 155.8 million pearls and precious stones (5.1%), and $144.2 million plastic products (4.6%).

Given Lebanon's strategic proximity to Europe, Asia, and Africa, the footprint of Lebanon's industrial exports is gradually expanding. Lebanon's top five main export destinations for industrial products during 2013 were Syria with $482.7 million (15.6%), followed by Saudi Arabia at $331.4 million (10%), the UAE at $270 million (8.8%), Iraq at $254 million (8.3%), and Turkey accounting for $175.3 million (5.7%).

Lebanon's central bank, the Banque du Liban (BDL), regularly tries to gauge opinion in the industry, and evaluate public opinion in terms of activity of the industry. Although at the time of printing no data from BDL's business survey from 2014 was available, it is apparent from looking at 4Q2013 statistics that there was a deterioration in relative terms, with a balance of confidence standing at -4 compared with a +5 in the preceding quarter, but that had slightly improved from -8 during the same quarter of 2012. The balance of opinions was the lowest in the north, Beirut, and Mount Lebanon at -13 each.


ALI has been lobbying tirelessly and smartly in Lebanon to defend the interests of its members and the income they generate domestically and internationally. The competitiveness of Lebanese industry in local and global terms has been put to the test over the last couple of years with the establishment of different geographical zones, and syndicates, by the industrial sector. “We have subgroups, one for geographic and one for sectorial activity…this was [due to] a long-lasting demand from various sectors," explained the newly elected President of ALI, Fadi Gemayel. Lebanon's industrial sector is one of the sectors that has been the most affected by the deadlock of the political system. “We have had strong support from the ministers, all of them, but nevertheless, there is no clear industrial policy. We are interacting concerning various issues; for example, the government has given soft loans to industry," Gemayel opined. ALI has recently been embroiled in a debate regarding what its members consider to be the state's excessive duties on imports and exports. After years of deliberation, the group successfully lobbied for a 50% discount on taxes related to exports; these, in addition to the BDL's 5% subsidies for any industrial investment, are some of the tenets of support that are enabling Lebanese industrialists to open up new markets.

The industrial sector in Lebanon was actually one of the first to start vocally asking for assistance from BDL, and has benefited a great deal from the central bank's stimulus packages, which started in the paper sector three years ago.

Regardless of the lack of an updated regulatory framework and the low level of governmental support, investment in Lebanese industry has steadily increased, “the previous authorities had a program of soft loans to industry since maybe 10 years ago. This has played a very important role because if you look at the growth of our exports since 2005, they have more than doubled. This has been very productive in consolidating the industrial base and increasing exports and local output," Gemayel commented.

Lebanon's industrial sector shows high investment potential, and it would be significantly higher if it weren't for sky-high operating costs for energy-intensive industries. Indeed, competing with regional powerhouses Egypt and Turkey is even more challenging as both these countries have subsidized fuel and electricity for industrial purposes. Lebanon still faces a major shortfall in terms of electricity generating capacity, with scheduled blackouts still affecting the country at large, meaning that energy-intensive industries need to establish their own generators. However, should the natural gas deposits found off the coast of Lebanon be successfully brought into its energy matrix, this situation may turn around in favor of not just industrialists, but the country at large.

Yet, the current strength of Lebanon's economy as a whole, particularly the assets held in the banking sector and GDP per head standing at $10,000, compounded by the assistance provided by the BDL, have played a fundamental role in allowing Lebanon's industrial sector to maintain a cautious growth path. ALI, through its newly elected board in May 2014, seems to be heading a general call for public policy change that encourages investment in more productive areas of industry. A key way that ALI intends to do this and simultaneously enhance the competitiveness of Lebanese industry is to utilize the full breadth of the country's trade links, human capital, innovation, and determination to boost growth. “The economy depends on the private sector and we want to put in motion the synergies between success stories of the Lebanese, like in design and fashion and software," stated Gemayel. “I am sure that the Lebanese industrialists are solid partners and Lebanon can be a hub for production of value-added products."

Time will tell how successful ALI's strategy of introducing more modern industrial products and promoting synergies between Lebanon's different industries can be.