MADE BY LEBANON

Lebanon 2017 | CONSTRUCTION & REAL ESTATE | FOCUS: REBUILDING SYRIA

Though conflict continues, many Syrians are beginning to return home, and they may find Lebanese firms there helping to rebuild.

Syria's Civil War, at six years and counting, is the most salient, and maybe the most politicized, humanitarian crisis in recent memory. Yet, nearly half a million Syrian refugees and internally displaced persons returned to their homes in the first half of 2017, according to the UN. In most cases, they were going to check on their properties and family members, highlighting the less-talked-about issue of infrastructure collapse after several years of conflict, and igniting hope in Lebanon that lucrative contracts could help it boost its construction industry According to a report from the International Monetary Fund (IMF), the reconstruction of the country could take more than 20 years and cost between USD180 and 200 billion.

In accordance with this notable trend, the UN High Commissioner for Refugees (UNHCR) is increasing operational capacity within Syria, anticipating increasing returns of internally displaced persons and refugees. Lebanon too isanticipating an end to the conflict and positioning itself as the center for the reconstruction of Syria.

Several factors make Lebanon a compelling fit as the rebuilder of Syria, including geographic location, two free trade agreements, common language, and cultural and historical ties. Those factors are expected to provide a competitive advantage to Lebanon.

Lebanon's Prime Minister recently addressed the UN on the issue, saying that Lebanon, with 1.5 million Syrian refugees (25% of Lebanon's population) and 375km of shared border with Syria, should be the center from which to launch the rebuilding of Syria. It also calls for support to strengthen infrastructure and the education system, which has been damaged by the influx of refugees. The World Bank estimated EUR17.3 billion in losses suffered by the Lebanese economy due to the weight of the Syrian crisis. Despite the burden on certain sectors of Lebanon's economy, such as health and education, positive expectations for Syria's reconstruction provide many opportunities for the construction sector. Hariri alluded to history but reverses the roles, pointing out that, after all, it was the Syrians who rebuilt Lebanon after the Lebanese Civil War ended in 1990.

Lebanon's ability to take full advantage of Syria's possibilities depends on whether it can attract foreign companies to its coasts, despite its current non-competitive business environment. At present, Lebanon ranks 13th out of 15 Arab countries in the Global Competitiveness Index of the World Economic Forum. Across the country, the government, along with its international partners, including the World Bank, the Islamic Development Bank, and UN agencies, are evaluating a range of initiatives that could stimulate foreign investment as well as bilateral trade.

The Ministry of Industry and the UN Industrial Development Organization are managing the creation of three industrial zones. These industrial cities will be built in the Bekaa Valley and the Chouf region, where local construction manufacturers will be well located to serve the Damascus area.

The city that most will most benefit from the reconstruction of Syria will not be Beirut, but rather Tripoli. Tripoli is now poised to become the country's most important center for the business related to rebuilding Syria and a key supply route for the devastated Syrian province of Homs, bordering northern Lebanon. In addition to the new industrial cities, the expansion of Tripoli port is expected to bring potential and boost new projects. In 2012, Gulftainer won the bid for the construction and operation of a terminal in the port. More still, the most ambitious project in Tripoli will be the 30-km railway to the Syrian border that will transport construction materials and other goods for reconstruction.

Lebanon also needs improve its infrastructure, but many businesses are banking on an end to the Syrian conflict to further invest in both countries. Syria's instability has shaken investor confidence in Lebanon. Moving closer to peace could have contrasting positive ripple effects.