Frem: Industrialists on verge of ‘scream of death’ September 22, 2011 02:07 AM The Daily Star
BEIRUT: Industrialists in Lebanon are about to let out “the scream of death” to protest against difficult conditions that poor national infrastructure has imposed on them, Association of Lebanese Industrialist chief Nemat Frem told Al-Markaziah News Agency Wednesday.

“It’s no longer acceptable to let the industrialist remain the victim of worry and punishment anywhere he moves,” said Frem.

“If electricity production is barely able to provide for households, then what should we say about factories? This reality forces us to compensate for shortages by covering exorbitant costs and bearing very high technical burdens,” he added.

A $1.2 billion draft electricity law has been up for discussion in government. The law is expected to significantly reduce energy shortages.

Lebanon’s inflation gains momentum September 22, 2011 02:07 AM By Peter T. Daou The Daily Star




BEIRUT: Lebanon’s Consumer Price Index grew at an annualized 2.77 percent in August to reach 116.2 points, regaining momentum after timid growth in July. Although the index inched up only a meager 0.52 percent compared to July, the rise remains significant given the sources of inflation were the key food and transportation sectors.

The main driver for the resurgence of inflation was the index’s main component, food and nonalcoholic beverages, which represents nearly 20 percent of spending by the average household.

The component’s index jumped to 128.1 points during the month, a 1.5 percent increase over July and the fastest growth rate since April of this year according to the Central Administration of Statistics.

Transportation costs, the CPI’s third-largest component, grew 1.12 percent in August over the previous month.

Compared to August 2010, transportation services were 7.5 percent higher, reflecting the global and domestic increase in gasoline prices.

According to the report, no sector registered a decline in prices although most were either stable or slightly ahead of July.

The index is expected to reach 121 points by December 2011 based on a 6 percent inflation forecast by the Central Bank governor and Standard Chartered.

In particular, the index for education, which represents 7.7 percent of consumer spending, may be one source of inflation in the remaining months of the year, as it is usually adjusted once a year in October, and in 2010 advanced by 6.6 percent.

On the other hand, the rise in prices of water, electricity, gas and other fuels appears to have slowed down since June, reflecting mainly the decline in international fuel prices.

With economic growth forecasts revised downwards to a five-year low of 1.3 percent by a recent Economist Intelligence Unit report, inflation may in fact surprise analysts by heading towards a weaker showing than the 2010 rate of 4.6 percent, assuming no sudden increases in international fuel prices.

But the statistics submitted by the CPI, which is under the jurisdiction of the Prime Minister’s office, is seriously being challenged by NGOs and independent consumer advocates who argue that inflation in Lebanon is far above the 6 percent ceiling.

Consumer Lebanon, which is expected to release a new survey on the cost of living soon, said prices of basic commodities in the first three months of this year surged by more than 18 percent.

“The government only uses specific items in its basket. This basket includes basic food items but they [government] do not mention other important items such as transportation cost, rents of apartments and school tuitions. If we add all these items then the price index will be much higher,” Zuhair Berro, the head of Consumer Lebanon, told The Daily Star.

Berro stressed that inflation is way above 6 percent.

“All basic commodities have surged to alarming levels this year due to several factors. How can the government say that inflation is only 6 percent? No one believes this figures,” Berro said.

He added that the even the World Bank does not officially acknowledge the inflation figures of the government and the Central Bank.

“The World Bank considers inflation and cost of living figures in Lebanon as nothing more than an opinion and not actual scientific facts,” Berro said.

Hajj Hasan calls to bolster agricultural trade September 22, 2011 02:07 AM The Daily Star
BEIRUT: Agriculture Minister Hussein Hajj Hasan called on Arab states to bolster regional coordination of agricultural trade during a meeting with a Jordanian delegate Wednesday.

Hajj Hasan said relations with Jordan were improving, especially in agriculture. He also said that domestic agriculture had made “great advancements” in the past two years. Hajj Hasan has served as agriculture minister for nearly two-and-a-half years.

“Lebanon has no shame in announcing obstacles it faces and to report international agencies specialized in dealing with any disease that appears,” he said.

Farming, one of the most neglected sectors in Lebanon, receives less than 1 percent of government spending.

Lebanese Parliament passes electricity bill September 22, 2011 11:44 AM (Last updated: September 22, 2011 02:14 PM) By Wassim Mroueh The Daily Star

The Lebanese Parliament. Archive photo


BEIRUT: Lebanon's Parliament approved the electricity bill at a legislative session Thursday following the consensus reached between rival politicians over the draft law a day earlier.

Free Patriotic Movement leader Michel Aoun, who had originally proposed the draft law, met with Berri prior to the session. This was the first legislative session Aoun has attended this year.

Marada Movement leader Sleiman Franjieh, Aoun, Progressive Socialist Party leader Walid Jumblatt and MP Talal Arslan left the session after voting for the bill.

Around 60 MPs at Wednesday’s parliamentary joint committees, chaired by Berri and attended by Prime Minister Najib Mikati, agreed on two amendments to the Cabinet’s energy proposal, obliging Energy Minister Jibran Bassil to form a regulatory board and appoint a new board of directors for Electricite du Liban as soon as Parliament endorses the bill.

The government’s proposal initially stated that Bassil should form the regulatory board, known as the Electricity Regulatory Authority within three months and appoint EDL’s board of directors within two months.

Bassil and Aoun’s Change and Reform bloc MPs were not informed prior to the decision endorsed by Berri, Prime Minister Najib Mikati, and other parliamentary allies to approve amendments, which were also supported by MPs from Walid Jumblatt’s National Struggle Front bloc.

Wednesday’s session saw more than two hours of calm discussions, in contrast to the heated debates of earlier meetings.

Opposition lawmakers had been demanding the introduction of amendments which they argued would ensure transparency and proper spending for the project, which is meant to boost Lebanon’s power supply by 700 MW.

Majority politicians have accused March 14 MPs of purposely obstructing the work of the committee.

Finance Ministry to audit all state accounts since 1993 September 22, 2011 02:07 AM The Daily Star


BEIRUT: The Finance Ministry confirmed Wednesday that it will carefully examine and audit all the state’s budgets from 1993 to date to ensure that they have been completed according to proper rules and regulations.

“We will complete the 2012 draft budget in accordance with laws and regulations and we will also audit all the state’s accounts since 1993,” Youssif al-Zain, speaking on behalf of Finance Minister Mohammad Safadi, told participants in a the 4th meeting for senior budget officials in the MENA region organized by the OECD.

Zain, an advisor to Safadi, added that the Finance Ministry was preparing the new budget and aimed to apply transparency.

Some March 8 political figures have been pressing the government of Prime Minister Najib Mikati to audit all the accounts of the Finance Ministry since 1993.

The Free Patriotic Movement headed by MP Michel Aoun claims that the previous governments are involved in misappropriation of public funds.

It also alleges that the former finance ministers have spent $11 billion above the official budget since 2005.

But former Finance Minister Raya Hasan has vehemently denied these accusations and described them as a political campaign to discredit March 14 and Future movement in particular.

Zain said that the World Bank has been instrumental in the formation of the debt management at the Finance Ministry. He added that the Finance Ministry will endeavor to reduce the public debt burden on the national economy.

Economists differ over 2012 ‘reform’ budget September 23, 2011 01:38 AM (Last updated: September 23, 2011 02:33 PM) By Peter T. Daou The Daily Star




BEIRUT: As the country holds its breath for the 2012 budget, economists have already raised the stakes by putting forward divergent opinions over what constitutes a “reform” budget. The few hints of the content of the forthcoming budget include a 15 percent increase in spending financed by higher taxes, most likely through a higher tax on interest, the capital gains tax, a possible tax on real estate gains, and a rumored increase in Value Added Tax to 12 percent.

“A 15 percent increase in expenditure is not acceptable. I also do not agree with the concept of increasing spending by increasing taxes. The basic component of a reform budget is to reduce expenditures so the problem is on the spending side not the revenues side,” Nassib Ghobril, chief economist at Byblos Bank told The Daily Star in an interview.

In addition to his distrust of large government, Ghobril expressed deep concern for the health of Lebanon’s economy at a time when the country is navigating its worst economy in five years. “It is simply not the right time to raise taxes. You wouldn’t raise taxes after the 2006 July war and you wouldn’t raise taxes after the assassination of Prime Minister Hariri in 2004, so why should you raise them now?”

But Prime Minister Mikati’s government, which came to power with a populist message, had promised in its ministerial statement to adopt more social-oriented reforms, long sidelined by previous Cabinets, covering the electricity and health care sectors, retirement benefits, and others.

To Dr. Georges Nehme, economist and director of the faculty of business administration at Antonine University, budgetary reforms are embodied in the spirit of the ministerial statement which calls for a fair redistribution of wealth.

In an interview with The Daily Star, Nehme said the Lebanese government needs to increase revenues in order to be able to meet the social demands of its people. He said that “European governments have achieved high levels of revenues, and are currently asked to cut spending, but Lebanon needs to increase revenues to where they should be in order to expand social and investment spending.”

He said a reform budget would include a strong push toward improving tax collections in order to combat tax evasion, also a main ingredient of Ghobril’s recipe for reform. Both describe any increase in the VAT as economically harmful with Nehme proposing increased taxation of top corporate and individual earners instead.

“The VAT is a fixed tax that affects all consumers equally so increasing it would be disastrous for the middle and lower classes. On the other hand, capital gains taxes and income taxes are progressive so they in fact reduce the gaps between the social classes while generating revenues,” said Nehme.

VAT and customs taxes brought in nearly $4 billion in revenue for the government in 2010. According to Nehme, “nearly 70 percent of taxes in Lebanon are fixed and the rest are progressive, so any reforms would need to shift that balance in favor of progressive taxes.”

As a result, Nehme advocates the introduction of a progressive tax on interest on large deposits, reaching 15 percent, and on gains from real estate transactions. He estimates every 1 percent increase in the interest tax generates $100 million in government revenues, providing ample room to reduce or remove the gasoline tax.

However, the tax faces stiff opposition from bankers and economists, including Ghobril, who warn of a flight of deposits from the country if the tax is introduced.

Similarly, while recognizing the government’s right to tax profitable transactions in the real estate sector, Ghobril is critical of the timing.

“In principle, if you make profits on a transaction you should pay a tax, but the real estate sector is already in a slowdown phase and the tax would not help restore growth,” he said.

Ghobril goes even further than rejecting the timing of additional taxation to advocating lower taxes, citing what he views as a “bloated” public sector in Lebanon. He argued that “tax revenues were 18.4 percent of GDP in 2010, one of the highest rates in the Arab world, so the last thing the economy and consumers need is to add a tax burden.”

On the hand, Nehme believes the government can actually stimulate economic growth by increasing spending. He referred to the LL8.9 trillion ($5.9 billion) 2011 spending bill awaiting the approval of Parliament’s general assembly as a key potential driver of economic growth during the final 3-4 months of this year.

“The 8,900 trillion to be spent by the government before the end of the year may push up real GDP growth in 2011 above 2.5 percent,” predicted Nehme. If approved, the bill would legalize spending by the current government above 2005 levels, the last year the budget was approved by Parliament.

According to Economena Analytics calculations, the additional mandate would bring the total spending ceiling to LL20.603 trillion ($13.7 billion) in 2011, a 21 percent increase over 2010.

For economists who believe the government can play a direct role in promoting growth, the leakage is also inside the government, not only outside. “A reform budget would see economic and productive ministries such as the ministries of agriculture, industry, and economy receiving more funding to bring them closer to service ministries,” advised Nehme.

Ministries are currently divided into what has come to be known as “four-digit, three-digit, and two-digit ministries” based on the amount of funding they receive. Ministries with budgets exceeding LL1 trillion ($663.3 million), the four-digits, include the ministries of Education, Defense, and the presidency of the council of ministers, while the productive ministries sit at the bottom with less than LBP 100 billion ($66.3 million).

The Agriculture Ministry has already been able to double its budget to LL80 billion in the 2012 budget proposal, a strong positive sign according to Nehme.

At the heart of the raging debate over the government’s role in the economy lies a deep fault line that spreads from telecoms all the way to electricity. To Ghobril and other economists wary of government intervention, the answer to the Mikati government’s social promises is in the privatization of state assets and the support of the private sector.

“Social benefits come from reducing the bloated public sector and privatizing state-owned assets,” the economist said.

Nehme acknowledges that government resources are scarce and will most likely hinder the ability of the current Cabinet to meet its long list of promises in the ministerial statement, as with previous Cabinets, so he suggests that the government focuses its resources on one issue to ensure that at least some success can be achieved.

“I recommend that the government select one sector and focus all its funds and efforts on developing it. Since electricity reforms are being financed from outside the budget, the government can choose another one,” suggested Nehme.

Lebanon’s gas fields, a gift or curse? September 23, 2011 01:36 AM (Last updated: September 23, 2011 02:24 PM) By Sami Atallah The Daily Star


The prospect that Lebanon may one day exploit gas reserves off its coast has triggered high hopes for the country’s economic outlook. Some analysts have predicted that gas will reduce the country’s energy bill, pay off the public debt, and will precipitate regional development. But in reality, gas is not a means to any of these ends. On the contrary, it has the potential to greatly undermine Lebanon’s economic and political system should gas revenues be mismanaged.

Beyond addressing maritime disputes with Israel, Lebanon’s primary challenge will be to translate gas revenues into self-sustaining growth, accompanied by improvements in socio-economic welfare. Many countries endowed with oil and gas have failed to do just that. For every Norway that has doubled its per-capita Gross Domestic Product between 1980 and 2008, there is a Nigeria, whose citizens have witnessed no change in their living standards; or a Saudi Arabia, whose per-capita GDP was halved over the same period. The road to effective management is mired with difficulties that could easily overwhelm the Lebanese government.

Five challenges stand in the way. The first is the ability of the government to bargain for a good deal with multinational companies. A majority of profits must be ensured for the state, as must an agreement on future prices, to reap higher returns when prices go up.

This is a daunting task for most governments, as many oil companies have greater resources and expertise in estimating the value of the gas to be extracted, and hence are in favorable bargaining positions. One way to rectify this imbalance is to create a bidding process that increases competition between firms. The stronger the competition, the more the revenue that will be reaped by the state. However, Lebanon’s record of holding a competitive process when it comes to contracting is dismal, with many of the state contracts granted to the private sector marred by cronyism and corruption.

The second challenge is how to manage the boom-bust cycle. A common problem facing gas exporting countries is the volatility in price. Over the last 18 months, natural gas prices have dropped by half. The variation in the revenues earned, not only makes planning more difficult, it also leads to volatility in spending. This provokes boom-bust cycles, where spending is high in good years followed by deep cuts in bad years.

The problem is exacerbated when governments borrow from abroad against the high price of gas, only to face major problems when prices drop and lenders have to be repaid. So instead of reducing its public debt, which is already high, Lebanon could see itself becoming more dependent on loans as a result of mismanagement.

One common way to resolve this issue is to create stabilization funds, which ensure steadier patterns of spending against gas price fluctuation. These must be enshrined with the right incentives for politicians not to abuse them.

The third challenge is managing revenues. A major misconception about gas revenues is that they are regarded as a source of income. In reality, they are not. As a non-renewable asset, the consumption of the gas revenue should be seen as consumption of capital rather than a consumption of income. Hence, the government’s optimal strategy is to invest the gas revenue into financial assets and treat the interest earned as income. This can be done by implementing a national wealth fund where gas revenues are invested globally in stocks, bonds and property.

The fourth challenge is how to manage spending. The gas receipt will tempt politicians to spend more. Those whose tenure in office is uncertain will be tempted to spend the money sooner rather than later, in order to get re-elected or out of self-interest. The population will also be expecting an increase in their own welfare with the new revenues. The nature of Lebanon’s political system makes irresponsible management of resources harder to contain. There is a need to develop binding rules dictating what is spent where.

The fifth challenge is how to deal with the implications of gas revenues on other sectors. Gas revenues will generate higher demand for non-tradable goods and services, such as consumer services and housing, among others. Such services can only be supplied by shifting local resources and factors of production away from the agriculture and manufacturing sectors, rendering those sectors uncompetitive. Since these sectors’ contributions to the economy have dwindled since the end of the civil war, gas will only exacerbate this downward trend. One way to deal with this is to develop a plan that compensates these sectors by improving infrastructure and other types of productivity enhancing investments.

The ability of countries with gas reserves to achieve self-sustained growth remains the exception rather than the rule. A major factor that determines the ability of a government to manage its oil or gas reserves effectively is the political institutions entrusted to ensure transparency and accountability that were in place before the discovery of these reserves. If so, Lebanon’s hopes of transforming itself as a result of its offshore gas will remain illusory.

Lebanon’s taxi drivers win Parliament approval on subsidy September 23, 2011 01:38 AM (Last updated: September 23, 2011 03:30 PM) By Dana Khraiche The Daily Star


BEIRUT: Transport worker unions hailed Parliament’s decision to deliver a drivers’ subsidy, promised in May. The plan will see taxi and truck drivers given a monthly subsidy of LL470,000 and LL350,000 respectively for three months.

It’s a price that some labor union leaders and analysts say is too great for Lebanon’s struggling economy to bear.

Between 37,000 and 40,000 taxi cabs are expected to claim dues. The number of claimants swells when unlicensed taxi cabs, difficult to identify due to rampant counterfeit, are taken into account.

The plan was approved by former Finance Minister Raya al-Hasan earlier this year as gasoline prices rose, but was never set into motion by Prime Minister Najib Mikati’s Cabinet, prompting threats of strike action from public transport drivers.

One planned strike was called off last week after overnight talks with Mikati led to the plan being put on Parliament’s agenda for a vote.

“This is a positive development … and we want to thank the speaker of the Parliament and the prime minister and the MPs for giving taxi drivers their rights,” Bassam Tleis, the head of the confederation of public drivers and transport unions, told The Daily Star following the vote.

He also urged lawmakers to speed up the process of finalizing payment for drivers who had already submitted their paperwork to receive the subsidy to the Finance Ministry.

The unions’ demands also include better organization of the public transport sector and action to crackdown on unlicensed taxis and foreigners working in the sector.

The Ministry of Public Works and Transport has put forward a plan to improve the performance of the sector and organize regulation and licensing.

But labor leaders like General Labor Confederation Union chief, Maroun Khawli, believe those plans are unlikely to materialize.

Widening deficits, expected to be seriously exacerbated by the subsidy, won’t accommodate the 2004 Public Transport plan, touted by Ministers, he said. The plan, which adds 250 buses to the existing, nearly defunct transport system, is estimated to be four times cheaper than the subsidy. “It’s a scandal,” said Khawli of the agreement.

The plan, said Khawli, was carelessly handled, with taxi license owners expected to benefit from the subsidies, while drivers continue to be weighed down by heavy fuel cost burdens.

He described Transport Minister Ghazi Aridi’s dubbing of the deal as a plan “that helps the poor who transport the poor” as a fallacy, and has vowed to take action to end it.

Ghassan Ghosn, chief of the General Labor Confederation, however, said “it’s a first step in helping the general public deal with fuel burdens.”

4,000 lucky Lebanese test-drive faster 3G Internet technology September 24, 2011 02:03 AM By Tamara Qiblawi The Daily Star




BEIRUT: A lucky 4,000 Lebanese smart-phone users are getting busy exploring the benefits of 3G four days into its long-awaited pilot launch.

“I’ve made more than 7 [Voice-over IP] calls that were international since I got 3G. The connection was excellent,” said Abir Ghattas, one of the founders of youth-powered movement for faster and cheaper Internet, Ontornet.

Ghattas was one of two Ontornet members to be handpicked by GSM-providers MTC touch and Alfa for 3G’s pilot study. She’s sampling the bolstered speeds this month for free.

Telecoms Minister Nicholas Sehnaoui marked Lebanon’s 3G debut this Tuesday at USJ, where the names of some 50 university students who would be part of the pilot project were picked out of a glass box. A select few business-people and civil society members are also enjoying 3G this month.

Officials say they will make the service available to the general public at an unspecified date in October.

“3G saves a lot of money on calls and SMS. We are just using [Web] Messenger and Skype all the time,” said another Ontornet founder, Mireille Raad.

She has been traveling around the country testing 3G speeds. Connections wane as users venture away from the capital, where the technology’s infrastructure is concentrated, she reports.

Beirut speeds go up to 2 mbps. In her native Batroun, they are closer to 60 kbps.

In the Beirut outskirt of Zalka speeds average around 128 kbps.

It’s still a far cry away from existing 2G connections, also known as WAP. They run at around 26 kbps.

“We’re helping people configure their devices and we’re moving around the country to see how different people will experience it,” said Raad. “I have a friend who tried to talk to MTC three times to get some help but failed to get a response … we’re trying to get the community to give us feedback.”

3G users are dropping their DSL powered computers for the much faster connection, Raad and Ghattas said.

Current DSL connections, considered to be some of the slowest in the world, are expected to make a seismic shift Oct. 1, when land-line provider Ogero releases new Internet packages, said to be up to eight-fold faster and 80 percent cheaper than currently existing connections.

Put together, it looks as though Lebanon has inched ever closer to an Information Technology environment that agrees with global standards.

It’s the kind of stuff that makes for major changes in a notoriously sluggish economic landscape. During 3G’s launching ceremony, Sehnaoui recalled a U.S. statistic that projects a 1 percent increase in economic growth for every 10 percent increase in broadband penetration.

During an exclusive interview with The Daily Star in June, MTC touch CEO Claude Bassil said he expected 3G to unleash large opportunities in web application development, adding a crucial layer to Lebanon’s still nascent IT sector.

“If 3G can boost Internet penetration in Lebanon by 30 percent, then we will catch up with maturing countries in four years,” he said.

It’s also being seen as a chance to replenish entrepreneurial spirit in a country once considered a regional commercial hub, allowing for more exposure to innovative business practices and helping to break down many infrastructural barriers.

Lebanon experiences between three and six hours of power outages on a daily basis. It’s a major source of investor non-confidence.

And its citizens, especially the young, are itching for a way out of these crippling realities via faster and cheaper Internet.

“People are pushing the limits all the time. They’re wanting to do much more than they are able to do,” said David Munir Nabti, founder of social media advocacy group AltCity.

Beirut stocks at 2-year low as tumble continues September 26, 2011 01:30 AM By Peter T. Daou The Daily Star




BEIRUT: In a week when regional and global equities were butchered by capitulating investors, a drop in the BLOM Stock Index by 0.3 percent to 1,240.69 points is ironically as good at is gets. Fears of a Greek default and a U.S. recession are driving investors away from equities, and holders of Beirut-listed stocks are just as wary.

The Beirut Stock Exchange’s market capitalization, which dipped below the $11 billion mark during the first week of September, resumed its journey south and closed the week ending Sept. 23 at a two-year low of $10.71 billion.

“Lebanon is not an island. The entire investor community is nervous when it comes to volatility in international markets and that impacts domestic investors who also own shares in global markets,” said Georges Homsi, head of private banking at Credit Libanais in an interview with The Daily Star.

But the selling rush in foreign markets is contrasted by a ghost town Beirut Stock Exchange. The volume of traded shares on the BSE was down 44 percent during the week, as attention shifted to global developments.

Only 75,000 shares of Solidere, the exchange’s most traded stock, changed hands during the week, still enough to eat away 1 percent and 1.6 percent of the A and B tranches respectively, closing at $15.29 and $15.16.

Solidere’s shares have shed nearly 20 percent of their value since the start of the year, but Homsi doesn’t see any momentum to recent declines given individual investors are more likely driving the market for now.

“Solidere has been under pressure in terms of pricing but not in terms of volumes. In times of crises, 150,000-200,000 shares are typically traded daily, but today we only see small volumes,” said Homsi.

In the same token, no shares of BLOM Bank, Lebanon’s second largest by assets, were traded during the week, although trading in the bank’s GDRs reached $50,000 and pulled down the stock price by 1.7 percent.

And the downward trend doesn’t appear to be nearing an end anytime soon with Homsi suggesting further declines are due given the lack of interest from Arab investors in BSE stocks under the new government.

“Solidere’s investors are mostly from the Gulf region, including Saudi Arabia and Kuwait. During the previous political structure, regional investors were interested in buying real estate and real estate shares on the BSE, but today with the changes that have happened, I am not sure the appetite is still there,” said Homsi.

In addition to the domestic political changes of the past nine months, Lebanon has been faced with a difficult economic environment emanating in part from deteriorating security in neighboring Syria and from weak investor confidence.

Recently published data showed the central bank’s coincidence indicator, widely seen as a measure of economic activity in the country, fell 1.8 percent to 257.1 points in July, its lowest level in four months.

Although cement deliveries inched up 0.34 percent in July to 586,997 tons, construction permits, a proxy for future construction activity, plummeted by a third in July to 1.19 million sqm compared 1.78 million sqm in June and 1.73 million sqm in July 2010.

Still, analysts maintain that BSE and economic factors are driven directly by domestic and regional political developments, both of which appear to have at least marginally improved over the past several weeks. Most recently, the government’s contentious electricity plan garnered widespread support in parliament, putting an end to months of heated political debate, but apparently falling short of jump-starting interest in Beirut stocks.

According to Homsi, “investors are by nature risk-averse, so until the situation totally stabilizes, I think the wait-and-see mode will continue.” He said that for stock prices to rise again, “we would need to see stability in international markets, regional political stability, and a clear view on the outcome of the political change in Lebanon.”

Trade groups oppose rise in minimum wage September 26, 2011 01:30 AM The Daily Star
BEIRUT: Two major merchant groups have come out against labor union demands to more than double the minimum wage in statements released by the groups Sunday.

The Trade Association of Hamra and the Trade Association of Burj Hammoud dubbed demands to increase the minimum wage from LL500,000 to LL1,250,000 “too difficult” given the current economic slowdown.

The General Labor Confederation, Lebanon’s largest coalition of labor unions, has spearheaded plans to stage nation-wide strikes and demonstrations on Oct. 12 demanding the minimum wage boost as well as improvements to employment benefits.

Several labor unions have voiced support for the protest, lending credence to the GLC’s charge that cost of living increases, buttressed by rises in global food prices and notorious bureaucratic mismanagement, are becoming too difficult to bear.

But traders have come out strongly against the bid, which sources say is being seriously considered by Prime Minister Najib Mikati’s Cabinet.

“We consider [wage rate rises] to be the right of the wage earner. But in [those] conditions that are different from economic conditions that Lebanon is currently under [which] have halted production operations, we see that there is difficulty in achieving the raises that are called for,” said a statement from the Trade Association of Burj Hammoud.

They also called on labor unions to work toward “a middle-ground” with traders to avoid the Oct. 12 strike.

The Trade Association of Hamra, a historic economic district in Beirut, echoed those statements.

It also denounced a draft law to raise Value Added Tax from 10 percent to 12 percent, urging the government to seek other avenues to tighten budget deficits.

Air transport employees back labor unions strike September 27, 2011 02:26 AM The Daily Star
BEIRUT: The Union of Air Transport Employees announced Monday, its commitment to the labor union’s decision to observe a strike all over the Lebanese territories until their demands are met.

“The most important demand filed by the Union of Air Transport Employees is the increase in the minimum wage to LL1,250,000,” it said.

The union of air transport employees has also supported the labor union’s refusal to increase any indirect taxes and mainly the VAT in addition to demanding the placement of price ceilings of LL 25,000 and LL20,000 on gasoline and diesel prices respectively.

It also supported the labor union’s call for an increase in educational allowances to LL1,000,000 for every student in addition to an increase in transport allowance to LL16,000

Total Lebanese cover premiums spike 17 percent September 27, 2011 02:26 AM The Daily Star
BEIRUT: Insurance premiums increased by 17 percent in the first six months of 2011 compared to the same period in 2010, according to a report issued by the Association of Insurance Companies.

The report said that the amount of premiums in the first and second quarters of 2011 reached $3.623 billion.

The increase in premiums was mainly witnessed in the departments of life insurance and medical insurance which rose 24 percent and 29 percent this year respectively.

The non-life insurance contributed to 5.33 percent of the total premiums with raises of 7.25 percent and 23.1 percent for car and life premiums respectively.

It also added that the total volume of money paid on accidents until June 30, 2011, increased by 10 percent compared to the first six months of 2010.

3G still on track despite Shura Council ruling September 27, 2011 02:26 AM (Last updated: September 27, 2011 01:25 PM) The Daily Star
BEIRUT: As some 4,000 Lebanese take 3G for a test-drive this month, battles continue to rage between the Telecommunications Ministry and Cedarcom, an Internet Service Provider petitioning for the technology’s suspension.

Cedarcom has taken legal action against the ministry, alleging that the government had not taken the proper legal routes to release the new service.

This week, the Shura Council ruled in Cedarcom’s favor, ordering the ministry to suspend 3G for a month pending further deliberations, the daily, Al-Akhbar reported Monday.

However, that ruling was deemed to be non-binding, according to a source at the ministry.

The council had taken up a similar lawsuit filed last month by Global Com, an ISP owned by Cedarcom CEO Imad Tarabay, and ruled against it, effectively annulling later decisions on the issue, the source said.

The two companies commissioned to provide 3G, Alfa-owned MIC1 and MTC-owned MIC2, have not received required licensing, Cedarcom said.

But analysts and media groups have said that there are ulterior motives for Cedarcom’s actions. The group is the largest provider of mobile broadband, a technology that’s expected to receive a heavy blow from faster and cheaper mobile Internet service, 3G.

Tarabay declined to comment on the proceedings when he was contacted by The Daily Star.

The 3G service, touted by officials as a “revolution” for the Lebanese economy, is now in its pilot stage, with 4,000 Lebanese currently sampling it before its official release next month.

The exact date of the release, however, has not yet been satisfied.

Testers are said to be enjoying speeds of up to 7 MB per second, a far cry from the existing WAP mobile connection which runs at roughly 25 KB per second.

That connection wavers as users venture away from Beirut, however, since most of the service’s infrastructure converges on the capital.

Tarabay has on various occasions voiced some strongly worded complaints against the Telecommunications Ministry, which he said has greatly sidelined the private sector.

Taxes levied on private telecommunications companies are among the highest in the world, a condition that some technology analysts say has led the sector to dire straits. Lebanese Internet is considered to be one of the slowest in the world.

High government control prompted officials to try to liberalize the sector. Those efforts culminate in Law 431, issued in 2002 and enforced in 2007, which created a government entity, named the Telecommunications Regulatory Authority.

It was tasked with liberalizing the sector, privatizing some major government entities, including 3G providers MIC1 and MIC2.

Many say, however, that those efforts have come to nil.

Lebanese shoppers log on to e-commerce September 28, 2011 01:57 AM (Last updated: September 28, 2011 02:32 PM) By Brooke Anderson The Daily Star

BEIRUT: Despite the country’s notoriously slow and insecure Internet, businesses in Lebanon have begun to tap into a demand for online shopping, fueled by social media networking and a newfound consumer confidence in the safety of credit card purchasing.

“We saw the wave, and we decided to ride it at the right moment,” says Haytham El-Khoja, the co-founder of Mizalla, a Lebanese website set up two months ago that advertises itself as the region’s first online mall.

While well-established international companies have been available in the country for some time, local businesses have remained wary of branching into the market, perhaps put off by consumers’ mistrust of online credit card security, the country’s poor Internet and its lackadaisical approach to formal addresses.

This has begun to change in the past couple of years with some Lebanese companies, including florist Exotica and sweet shop Hallab, establishing websites alongside their physical stores. Companies have adapted to the local market, with many that deliver in Lebanon, including Mizalla, offering payment on delivery, removing people’s key fear of online purchasing.

Nonetheless, Khoja reckons that the MENA region is still playing catching up on the e-commerce front, lagging about five years behind the U.S.

He believes that the rise in the popularity of social media, propelled by the social uprisings across the region, has helped shift attention online.

“What helped us was that at the beginning of the Arab Spring everyone was on Twitter and Facebook. Before, people would always say that online was the future. But then we realized it was now,” he says.

“There is definitely a lot of potential for e-commerce in our region, coupled with the symbiosis that social media and online marketing can bring to the table,” says Darine Sabbagh, marketing manager at software developer Integrated Digital Systems in Beirut.

She believes e-commerce has a lot more potential in the country. “Beyond the possibility for retailers who sell physical goods to go online and open online outlets, these is a huge need for service retailers online,” she says, “from delivery services to shopping services, beauty services, online consultancy, video-on-demand and many, many others.”

For Mizalla, an online “shopping mall” which sells products from local stores, e-commerce is likely to grow as the buzz around it increases.

Khoja says that prior to their company’s launching two months ago, while a computer programmer in Saudi Arabia, he went online to promote his and other similar businesses through blogs with the idea that this would create discussions about the market.

“I always liked websites that build a community around them,” he says at his small office in the residential neighborhood of Mar Elias, where he and his colleagues now promote and sell 60 different brands from 20 stores through the Mizalla.com website, currently focusing on electrical goods, but with plans to branch out into fashion and beauty. “I created a community and I listened to their needs. I also blogged about our competitors. I said: you can also buy from these websites. I knew that being alone and jealous would harm us.”

So far, the strategy has worked. As an increasing number of consumers became confident about their online security, the more they are getting into the habit of buying online on a regular basis.

According to a recent survey by group-buying website GoNabit, consumers are becoming increasingly comfortable with making online purchases in the Middle East.

Ninety-three percent of respondents said they had a positive view of e-commerce, despite known and perceived security problems and two-thirds said that if it is cheaper to buy online they would do so more often.

FACT BOX
Largest Markets:


1.The UK has the largest e-commerce market in the world, per capita
2.China has the biggest e-commerce market among emerging markets, with over $36 billion in sales in 2009
Some pure-click companies founded in the Middle East:


1.GoNabit.com
2.Mizalla.com
3.Marka VIP.com
4.Dia-boutique.com
Some brick-and-click companies in Lebanon:


1.Exotica (flowers)
2.M2 (Multimedia Megastore)
3.Hallab (sweets)
Source: The Daily Star and Wikipedia

Indeed this is evidenced in the growing popularity of GoNabit and other group-buying websites, via which consumers can get substantial discounts on products provided by local businesses on deals that last around 48 hours. Lebanon now has several of these websites, including Groupon, Cobone and GoNabit, operating in the country.

An increasing level of trust and convenience are the two main factors that are bringing about more business. The new sites are doing the work of the businesses and the consumers: promoting products, making deliveries and transactions without requiring their customers’ full credit card information.

“The online word of mouth fuels local services and people are less worried about using their credit cards to make online purchases,” says Ayman Itani, a Beirut-based social media consultant who has helped several local online businesses launch their services.

“Banks in Lebanon have played an important role in helping with the security of online purchases,” he adds, “and they are playing a bigger role in raising awareness of online purchasing when people open their accounts.”

And once people get into the habit of online purchasing, they often find better deals than they would at physical stores.

Some economists have suggested that e-commerce could help curb inflation, with intense price competition and with the ability of customers to have at-hand information on various deals online, the most popular example being eBay, the consumer-to-consumer auction website, established in 1995.

Today, many online retail start-ups are following a similar model – giving consumers the power to buy at lowest bargains based on the availability of the products.

MarkaVIP.com is one example of a local company that has done this. An exclusive online shopping club, it runs “flash sales,” working on the forces of time and product urgency and scarcity, selling excess inventory of high-end brands at much lower prices than would normally be available. The pure click company was founded in Jordan by former eBay employee Ahmed Alkhatib, and has since expanded offices into the GCC and, in January 2011, Lebanon.

As the largest and fastest-growing online shopping company in the region, Alkhatib says they have “just scratched the surface.” Although he didn’t expect the growth to be so fast, he predicts that by 2015, MarkaVIP “will easily become a $500 million business.”

E-commerce, although nascent in the Middle East, is proving to be a cost-effective and viable business, starting as a niche market two years ago to become an increasingly normal way of doing business.

“On the technology end we are seeing increased demand from customers for developing e-commerce websites in Lebanon,” says Sabbagh, the IDS marketing manager. Still, she warns that “before venturing into that world, businesses should understand that their online outlets need as much consideration and research in design and development as their physical outlets as consumers have high expectations when comparing them to their international and multinational counterparts.”

Businessmen call for pension fund program September 28, 2011 01:57 AM The Daily Star
BEIRUT: The Lebanese Businessmen Gathering disclosed Tuesday its own version of the pension fund which remained in the Cabinet and Parliament’s drawers since 2008. The gathering underlined the importance of separating between the pension fund and the medical coverage for retired persons.

“There should be complete separation of the old pension fund and the proposed medical coverage for retired persons. It is not fair for those who retire at the age of 64 not to benefit from the medical coverage after their retirement and this would be a social sin if we did not allow these retired people to benefit from these services,” the gathering said.

It reminded that the current medical benefits to citizens covered by the National Social Security Fund do not meet the real needs of the society.

The gathering prefers to see the minimum retirement salary be linked to the minimum salary.

The successive governments since 2000 have made extensive studies on pension funds and have submitted several proposals but none of them ever materialized, according to experts who noted that this issue is only used by politicians to gain public support before the parliamentary elections.

All political parties support the idea of efficient pension funds for the elderly but they differed on the means to finance this huge project.

The gathering favors the retired person to collect a monthly retirement salary which is equivalent to 40 percent of his last salary when he was working.

But that gathering will take into consideration the ability of the private sector to keep financing such a scheme in the future.

The plan calls on the private sector, employees and the state to finance this ambitious plan.

The government of Prime Minister Najib Mikati has pledged to improve the social and medical benefits for all citizens and Labor Minister Charbel Nahhas said that one of his top priorities is to implement the long awaited pension fund for elderly citizens.

The gathering touched on the issue of increasing the minimum wage: “Our goals are to improve the level of livelihood, improve the purchasing power and improve the social and public services such as education, transportation and medical care.”

Fast Internet on track despite delay fears September 29, 2011 01:35 AM By Tamara Qiblawi The Daily Star
BEIRUT: Lebanese Internet will press ahead with plans to release a game-changer Internet package in early October, despite widespread speculation that land-line provider Ogero will hold off on the release of needed bandwidth.

The Daily Star has learned that at least two major private Internet service providers will implement an Internet decree passed last month, which reduces end-user DSL prices by 80 percent and raises speeds up to eight times.

The release of the package has been scheduled for Oct. 1.

Some of the ISPs that have not given assurances of implementing the package have said they are waiting on Ogero, which controls around 80 percent of Lebanon’s Internet cables, to release international capacity, said Firas Abi Nassif, a consultant at the Telecommunications Ministry.

Ogero’s refusal to release international bandwidth, shuttled through a transcontinental cable known as IMEWE, creates major bottlenecks in the sector.

However Abi Nassif said he expects any delay in Ogero’s compliance with the law to last “only a few days.”

Ogero, long considered the wild card of the telecommunications sector, has been embroiled in heated battles with the Telecommunications Ministry over at least three different ministry tenures.

Deadlocks between the two bodies are viewed by most commentators to be politically motivated, with each controlled by opposing sides of Lebanon’s deep political divide, subsequently putting major roadblocks in plans for change in that notoriously ailing sector.

Lebanese Internet is considered one of the slowest and most expensive in the world. It’s a situation that Internet users are hoping will change drastically next month with the DSL package and the official release of the 3G service, already in its pilot stage.

Virtual ISP is a medium-sized provider that upgraded its Internet services in compliance with the decree almost immediately after the Cabinet announced its passing. It was a move, said technical manager Denys Fredoryshchenko, that was meant to push others to do the same.

But now they wait eagerly for signs of life from Ogero.

“It is not proper solution, what we are doing now, it is higher speed, but it is unstable and has high latency,” said Fredoryshchenko. “With more bandwidth our customers can have completely new experience and much better service.”

Another private ISP, Terranet, has been taking a similar route, pumping up bandwidth from its own cables networks in order to transfer the new package to consumers.

Terranet is one of two major ISPs whose compliance with the Internet decree The Daily Star can confirm. IDM is the other.

Still Terranet depends on Ogero cables for its pipe links to the network, which must be tapped into in case the network gets exhausted by heightened Internet traffic.

It will also be reaching out to only part of its customer base. Some customers – less than half – subscribe to Terranet through Ogero’s network; these will not benefit from the package.

But Terranet is optimistic that Ogero will follow through with the package. The group’s general manager Khaldoun Farhat estimates a more than 50 percent chance of Ogero’s compliance.

There are two reasons that could explain Ogero’s behavior. The first has to do with technical problems that Ogero might be experiencing. The second is political; tech community members are speculating that Ogero has just been looking for a way to sabotage success achieved by the ministry.

Abi Nassif said he suspects technical problems were unlikely, given Ogero’s large workforce. He also ruled out suspicions that Ogero lacked the infrastructure to supply the new bandwidth.

He also downplayed political misbehavior, saying he was confident Ogero would not resort to violating the law.

The Daily Star could not be reach Ogero for comment.

Telecommunications Minister Nicolas Sehnaoui has hailed the new Internet package as a major leap forward for Lebanon.

Banking sector sees 5 percent asset growth September 29, 2011 01:35 AM The Daily Star
BEIRUT: Fransabank chairman Adnan Kassar said Wednesday that the Lebanese banking sector has witnessed an increase of 5 percent in its assets during the first half of 2011 compared to 5.6 percent for the first half of 2010.

“Assets reached $135.4 billion in the first half of 2011 which reflects the banking sector’s resilience to the political challenges facing Lebanon and the region,” he said.

Kassar assured that the banking sector intends to continue to provide support to the public sector.

“But our utmost priority is to remove economic obstacles including the public debt, financial deficit and the poor infrastructure mainly in the electricity sector,” he said.

He also emphasized the need to issue new decrees for the private sector aimed at regulating financial markets and organizing the partnership between the public and private sectors.

“This will increase the flow of investments to Lebanon which would contribute to increasing the growth rate and creating more job opportunities in addition to increasing the purchasing power of citizens,” he said.

New offers unveiled for BlackBerry, Internet users September 30, 2011 02:17 AM The Daily Star




BEIRUT: Land-line provider Ogero will wire 1 Mbps connection speeds to Internet users in the vast majority of the country Oct. 1, marking the start of the implementation of a widely anticipated Internet package, Telecommunications Minister Nicolas Sehnaoui said during a broadcast of LBC’s Kalam en-Nass. The announcement follows widespread speculation that Ogero, which controls roughly 80 percent of Lebanon’s cable network, would not follow through with the plan.

The new Internet package, signed into law last month, is set to reduce bandwidth prices by 80 percent and increase speeds by up to 8 times.

Some Private Internet service providers have reportedly refrained from releasing the package, waiting for assurances from Ogero.

Full implementation of the package depends on the government laying out more optic fibreinfrastructure to accommodate Internet users in remote parts of the country. The minister said this would happen by the end of 2012.

BlackBerry Instant Messaging in Lebanon would see a drop in prices by 33 percent from $40 to $27, and bandwidth caps would increase from 100Mb to 200Mb, Sehnaoui announced as part of a series of “surprises” he promised to revealed prior to the show.

Sehnaoui also announced that Kalam cards, or prepaid cards for public telephones, were going to make a comeback Oct. 10.

Another development Oct. 10 deals with modems that have been in short supply for several months now, due to Ogero’s taking them off the market: the Telecommunications Ministry would now be filling in for the shortage by supplying modems through Libanpost.

Ogero says the lack of modems is due to a lack of capacity on their part, a claim that the Telecommunications Ministry denies.

Ogero, long considered the wild card of the telecommunications sector, has been embroiled in heated battles with the Telecommunications Ministry over at least three different ministry tenures.

Deadlocks between the two bodies are viewed by most commentators to be politically motivated, with each controlled by opposing sides of Lebanon’s deep political divide, subsequently putting major roadblocks in plans for change in that notoriously ailing sector.

However some ISPs managed to sidestep the political quibbling, pulling “technical tricks” to win customers over with upgraded speeds and prices. The Daily Star can confirm the compliance of Terranet, IDM, and Virtual-ISP.

Seventy five percent of people in Lebanon will be able to enjoy the new Internet package next month, the minister said.

The minister also brushed off speculation that new mobile Internet service 3G, currently in its pilot stage, would face suspension.

Some Lebanese daily newspapers reported this week that the Shura Council had voted in favor of mobile Internet provider, Cedarcom, which is seeking to suspend 3G’s launch.

Cedarcom has filed a law suit against the ministry, alleging it had not taken the proper legal routes to release the service.

But commentators say there are ulterior motives at play. The group is the largest provider of mobile broadband, a technology that’s expected to receive a heavy blow from faster and cheaper mobile Internet service, 3G.

The service is set to be released at an unspecified date in October.

At Kalam en-Nas Thursday, Sehnaoui said official prices for this service would be released Oct. 20.

Ninety-two percent of poll-takers on Kalam en-Nass’ website said they believed Sehnaoui would push the telecommunications sector forward.

Lebanese Internet is considered to be the slowest in the world, something that is expected to drastically change with the new Internet package.

It was a transcontinental cable (IMEWE), that set off the sector’s refurbishing. Lebanon’s IMEWE can provide the country with nearly 330 GB in bandwidth. Lebanon’s local sector only provided around 2 GB.

Price index committee to assess validity of minimum wage raise September 30, 2011 02:17 AM The Daily Star
BEIRUT: The price index committee will hold a crucial meeting Friday to review all the cost of living data submitted by the General Labor Confederation and the private sector to determine whether the demand for higher minimum wage is valid. The meeting will be headed by Labor Minister Charbel Nahhas who will try to narrow differences between the GLC, which is demanding a LL1.2 million minimum wage, and the private sector, which completely rejects this request on the grounds that it would hurt the economy, force companies to lay off workers and cause inflation to soar.

Sources did not expect any important decision to come out of this meeting because each side will not budge from its position.

But these sources stressed that Prime Minister Najib Mikati will eventually invite the labor unions and representatives of the private sector for a general meeting at the Grand Serail to find an exit on this issue.

The GLC and other unions are planning a nationwide strike and demonstrations for Oct. 12 to protest the cost of living and to call for raising the minimum wage to LL1.2 million a month.

All sides admit that the high cost of living and deteriorating economic conditions have dealt a blow to poor and middle class families in Lebanon.

The Central Bank projects inflation at 6 percent but some NGOs and economists believe that inflation is far higher than the official estimates.

Hamdi Saqr, one of the labor union leaders, hopes that officials and the private sector will find a positive solution to the high cost of living before the general strike on Oct. 12.

Al-Markazia news agency quoted some experts as saying that both the GLC and the private sector will agree on raising the minimum salary from LL500,000 to only LL750,000 .

Finance Minister Mohammad Safadi said he sympathized with the demand of the labor unions but feared that raising the minimum salary to LL1.2 million would cause the budget deficit to rise to alarming levels.

But the minister said that the government will make new acceptable proposals on the minimum wage and promised to allocate more funds for social and medical benefits.

Employers and unions narrow divide October 01, 2011 02:13 AM The Daily Star




BEIRUT: Labor Ministry officials and business community leaders vowed to help boost the minimum wage during a price index committee meeting Friday, labor union chief Ghassan Ghosn said during a press conference held by committee members.

The meeting comes as labor unions gear up for a nation-wide labor strike, scheduled for Oct. 12 and spear-headed by Ghosn’s General Labor Confederation, Lebanon’s largest labor coalition.

Several employee unions, from the banking sector, teacher unions and airline employee unions, have come out in favor of the strike, which lists a more than doubling of the minimum wage as its chief demand.

The GLC is calling on government to increase the minimum wage from LL500,000 to LL1,200,000

Labor Minister Charbel Nahhas has been scrambling to find a middle-ground between union demands and those of the business community, who have brushed off the proposed wage increase as “arbitrary … expected to exact a large toll, especially during a time of economic slowdown.”

“The session was very fruitful because representatives of employers and wage-earners have been dealing with the issue not in a combative way, but [as] mediators [who] come and try to find a middle ground,” said Nahhas at the conference held after the two hour meeting.

The participants had agreed to revise the minimum wage, said Nahhas. They included Ghosn, Nahhas, Audit Council chief Ali Fayyad, Central Administration for Statistics President Maral Tutelian, Trade Association head Nicholas Chammas, and Industrialists Association chief Walid Saf.

Three committees had been formed to deal with the issue: one to update national consumer price indices, another to revise national policies that affect labor and wages, and a third to look into national policies that deal with business competitiveness and national economic production.

Nahhas noted that the committee had convened days before the government discusses the 2012 draft budget. He said that all efforts would come to naught unless the committee’s plans are included in the budget.

Lebanon has been without an official national budget since 2004, a year before former Prime Minister Rafik Hariri’s assassination plunged the country into a series of political crises.

“The [labor] issue relates to a [feeling] of malaise that the economy suffers from, and it’s become clear to everyone, and the symptoms of this failure have also become clear: ongoing emigration and regression of competitive advantage, and the concentration of labor in migrant workers, and a level economic activity that does not meet the needs of the Lebanese,” said Nahhas.

The committee is set to meet again next Monday. Nahhas expects the committee to submit a recommendation by next weekend.

Living costs are estimated to have swelled greatly over the last few years, primarily due to spiraling global food and energy prices.

The GLC estimates living costs to have increased by a whopping 120 percent since 1996.

“All Lebanese know how their wages have been eaten into, and all Lebanese suffer from the difficult living situation. The tight economic situation has had Lebanese reeling under this recession,” said Ghosn.

Traders Association chief Nicholas Chammas who had previously cautioned against the proposed wage increase, said he was prepared to support “a limited increase to the minimum wage.”

Budget deficit falls to 12.35 pct of spending October 01, 2011 02:13 AM The Daily Star
BEIRUT: Lebanon’s budget deficit in the first seven months of this year has fallen by LL586 billion ($390.9 million) to reach 12.35 percent of spending compared to the same period of last year, the Finance Ministry said Friday.

The ministry attributed this significant fall in the deficit to the high revenues of the telecoms sector although these funds are still kept in the coffers of the Central Bank.

Since Finance Minister Mohammad Safadi assumed his position, the Finance Ministry started adding the revenues collected from the telecoms sector to the overall income.

But Former Finance Minister Raya Hasan has repeatedly criticized the new method of calculations by Safadi and his team, arguing that the ministry cannot add the telecoms revenues if it does not physically collect the money from the Telecoms Ministry.

Telecoms Minister Nicolas Sehnaoui, following the footsteps of his ally and predecessor Charbel Nahhas, insisted that the Finance Ministry’s share of the telecoms revenues can only be collected at the end of each year.

According to the statement, the budget deficit up to July 2011 reached LL1.203 trillion (or 12.35 percent) compared to a deficit of LL1.789 trillion (or 18.76 percent) in the same period of 2010, a drop of LL586 billion.

If these calculations are taken for granted, the primary surplus (excluding the cost of debt servicing) has risen to LL2.155 up to July 2011 compared to the same period of last year, registering an increase of LL362 billion.

This represents 18.8 percent of total government revenues.

Total government revenues up to July stood at LL8.536 trillion, an increase of LL788 billion compared to the same period last year.

“It is worth mentioning that the 2011 figures represent the estimates of the Telecoms Ministry although the actual revenues of this ministry are still with the Central Bank,” the statement added.

The Finance Ministry’s share from the telecoms rose by 278.59 percent in the first seven months of this year to reach LL1.253 trillion compared to only LL331.050 billion in the same period of last year.

Tax revenues fell by 2.53 percent to reach LL6.169 trillion while other various taxes jumped by 8.23 percent to reach LL2.932 trillion.

Proceeds from tariffs up to July of this year fell by 23.26 percent to reach LL1.257 trillion while revenues from VAT dropped by 0.1 percent to reach LL1.978 trillion.

Total government spending up to July reached LL9.740 trillion compared to LL9.538 trillion in the same period of last year, an increase of 2.12 percent.

The ministry attributed the surge in spending to the high monetary allocations to the electricity sector which rose by LL64 billion.

Total money spent on the troubled electricity sector up to July stood at Ll1.144 trillion.

Safadi projected the electricity deficit to rise to $2.1 billion at the end of 2011.

The minister is expected to hand over the 2012 draft budget to the ministers in the coming two weeks for discussion and approval.

All indications point out that the Finance Ministry is proposing to raise some taxes such as the VAT and taxes on capital gain to bankroll crucial social and medical benefits.

There is also a strong possibility to increase taxes on interest rates on deposits from 5 percent to 7 percent.

Higher taxes on seafront properties and real estate transactions are also being mulled by the Finance Ministry.

There is also a strong possibility that Mikati may consider increasing the minimum wage to LL750,000.

But the General Labor Confederation is threatening strikes across the country if the government refuses to increase the minimum salary to LL1.2 million.

Safadi promises to look into old Finance Ministry accounts October 01, 2011 02:13 AM The Daily Star
BEIRUT: Finance Minister Mohammad Safadi rejected the existing “looting and fraud impression” tied to the name of the Finance Ministry. Safadi made these remarks during his meeting with a delegation of the Food and Agriculture Organization that focused on the agricultural and nutritional situation in Lebanon.

Safadi also said Friday that not only the Finance Ministry but also the country’s administrative institutions were undoubtedly plagued with such fraudulent acts, noting that violators should be held accountable without the need to accuse the entire institution with fraud and embezzlement.

“All public finance administrations, mechanisms, laws and regulations are subjected to revision and reconsideration in a bid to reach the highest levels of transparency and accountability,” the minister added.

Safadi underscored the importance of investigating the fate of the $11 billion and all the accounts that were made at the Finance Ministry over the past 11 years

“We are studying all of these issues based on rules and regulations while taking into consideration all past circumstances,” he noted, stressing that this should be done in a very objective manner and avoid politicization of all these issues.

As for investigating the Higher Relief Commission’s work, Safadi said: “This commission played major roles at more than one stage, and any violation in this regard will be handled by the most appropriate means.”

Regarding the construction of dams, Safadi said this project was very essential in Lebanon as it allowed the country to benefit to the maximum from its water wealth.

“We are fully aware of the importance of such a project and we are studying the best way of implementing it by taking into account the financial capacity of the treasury,” he said.

Safadi added that the private sector could play a great role in this regard.

Global investment banks recommend Lebanese Eurobonds October 03, 2011 02:20 AM The Daily Star
BEIRUT: Merrill Lynch upgraded its recommendation on Lebanon’s external debt to ‘Over Weight’ from ‘Market Weight’ in its model portfolio of emerging markets debt and raised Lebanon’s allocation to 3.9 percent from 3.5 percent in the portfolio.

Lebanon’s external debt rating of ‘Over Weight’ placed it in the same category as Abu Dhabi, Jordan, Qatar, South Africa, the Philippines, and Uruguay, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group. Lebanon’s allocation is the second highest after the Philippines among countries with an ‘Over Weight’ recommendation. Lebanon accounted for 9.3 percent of the allocations in the Emerging Europe, the Middle East & Africa region, and constituted the third highest allocation in the EEMEA region. Also, Lebanon had the same allocation as Columbia and was the 8th highest in the universe of 42 emerging economies in the portfolio.

Merrill Lynch attributed its recommendation on Lebanese Eurobonds to their low beta correlation with international markets, given increased global risk aversion. It added that it changed Lebanon’s debt to ‘Over Weight’ despite concerns about domestic politics and the risk of further deterioration in the fiscal outlook.

It noted that Lebanese Eurobonds have outperformed Merrill Lynch’s Sovereign Plus Debt Index since the emerging markets sell-off in August, while the high interest rate differential, or carry, has helped. It said Lebanon’s external debt posted returns of 0.2 percent in September compared to -4.6 percent for the EEMEA region and -3.6 percent for emerging markets. It added that Lebanon’s returns in September constituted the only positive performance among 42 emerging economies in the portfolio. It considered that the main risk for Lebanon remains contagion spillovers from the unrest in Syria.

In parallel, Barclays Capital maintained its recommendation on Lebanese Eurobonds at ‘Market Weight’ in its emerging markets credit portfolio and raised Lebanon’s allocation to 2.8 percent from 2.4 percent. Lebanon’s external debt rating of ‘Market Weight’ placed it in the same category as Poland, Ukraine, Bulgaria, Croatia, Venezuela, Argentina, Panama, the Dominican Republic, and Pakistan. Lebanon’s allocation is the second highest after Argentina among countries with a ‘Market Weight’ recommendation.

Lebanon accounted for 7 percent of the allocations in the EEMEA region, and constituted the fourth highest allocation in the region. Also, Lebanon’s allocation was the 12th highest in the universe of 30 emerging economies in the portfolio.

Barclays Capital said the recent global market turmoil has had little effect on Lebanese credit spreads, in line with Lebanon’s historically low correlation to global market drivers, and despite the domestic political uncertainties. It considered that this trend will not change, given the high level of local liquidity and the support for the Eurobonds.

It noted that Lebanon’s external debt may be an attractive asset class to temporarily increase allocations in an environment of global market uncertainties. However, it cautioned that political risks in the country remain elevated.

Beirut stocks pin hopes on autumn rebound October 03, 2011 02:20 AM By Peter T. Daou The Daily Star


BEIRUT: Everybody and their brother has taken a shot at Beirut stocks in 2011. After the collapse of the national unity government in January, Arab uprisings, the row over the Special Tribunal for Lebanon, European debt concerns, and most recently U.S. recession fears, all of which have taken a punch at local stocks, the Beirut Stock Exchange is pinning its hopes on a strong comeback in the last quarter of 2011.

“I would expect stocks to continue their down trend in coming weeks, [but they] may rise again at the end of the year if companies report strong earnings results,” said Carole Sassine, chief broker at Credit Commercial et Foncier in an interview with The Daily Star.

Stocks typically lose momentum during the summer months, but with the start of the fall season, investors return to market and drive up volumes. Although the number of traded shares grew by half to 932,267 during the last week of September, “both volumes and prices were still lower than usual,” according to Sassine.

Indeed, the week brought little change for investors on the verge of despair from the seemingly endless road downhill. The Beirut Stock Index closed the week down 0.57 percent to 1,233.57 points on Sept. 30, slashing the exchange’s market capitalization by 0.6 percent to $10.65 billion.

Bank Audi’s listed and GDR shares led the fall with drops of 1.8 percent and 1.89 percent respectively as the distress in Syrian banking sector operations continued to irk investors. On the other hand, Solidere, the real estate developer of downtown Beirut, fell only 0.7 percent during the week as its class A and B shares closed the day Friday up over 1 percent to $15.18 and $15.06 respectively.

Sassine attributed recent weakness in Solidere and several bank shares to international and regional events, partly caused by regional investors holding back. “The decline in the past few weeks was largely in relation to international markets, not due to domestic events. Several of the BSE companies are listed on foreign markets and were affected by the slowdown in investor activity. We also have not seen much interest from foreign investors who are probably more concerned with problems at home,” explained Sassine.

However, Sassine still sees the domestic political framework as the structural reason for the nine months of decline. “Domestic investors are also not encouraged because they still have the same perception of political instability in Lebanon. Not all Lebanese are quite relaxed about the new government and the other party has in the past shown more confidence in financial markets,” said Sassine.

BSE stocks have withheld one of the region’s and world’s most nerve-wrecking nine months and emerged with a respectable 15 percent decline year-to-date. Even the United Arab Emirates, the region’s self-proclaimed safe haven in 2011, found its investors reeling as the Dubai Financial Markets Index dropped 12.2 percent during the same period.

But investors are not too distinct in their wait for higher prices, the industry’s most primitive sign of a rebound, before they make a move. “Clients typically buy share when they see prices rising,” said Sassine.

Government mulls increasing minimum salary to LL750,000: report October 04, 2011 01:43 AM The Daily Star


BEIRUT: A committee tasked with proposing a new minimum wage to the government will likely decide on LL750,000, a source told the Al-Markazia News Agency Monday.

The General Labor Confederation, Lebanon’s largest coalition of labor unions, has been calling for more than doubling the minimum wage, from LL500,000 to LL1,250,000. It has been gearing up for a nationwide strike on Oct. 12, to rally support for the demand.

However, the Price Index Committee, which met for the first time to discuss the issue Friday, appears to be leaning toward a middle-ground, as business leaders come out against the GLC’s demand, calling it “arbitrary, unscientific … expected to exact a large toll on the economy during its economic slowdown.”

The Committee is headed by Labor Minister Charbel Nahhas and comprises leaders of the business community, as well labor unions heads and government statisticians.

During a committee meeting Monday, Nahhas reportedly enlisted the services of the Central Administration of Statistics to produce a list of consumer price changes since 1999.

The study is meant to provide an accurate depiction of what wages should look like in order for workers to make ends meet.

In addition to the minimum wage increase, the GLC’s Ghassan Ghosn is also demanding that gas prices be capped, and transport and education allowances be increased.

At a news conference Monday, Ghosn vowed to press ahead with plans to strike on Oct. 12, in spite of ongoing negotiations at the Price Index Committee.

The committee is expected to release a decision by the end of the week.

The government is also expected to include an item in the 2012 draft budget calling for a modest salary increase.

But Finance Minister Mohammad Safadi has made it clear that the government might be compelled to increase taxes such as the Value-Added Tax and taxes on capital gains to finance the increase in salaries and improved social and medical benefits.

Economists cast doubt on Beirut government’s inflation estimates October 04, 2011 01:43 AM By Mohamad El Amin The Daily Star
BEIRUT: Economists have cast doubt on the validity of the August price index recently issued by the government-run Central Administration of Statistics.

CAS issued a report last week putting the August price increase at just 0.5 percent from the month before. The figure stands in contrast to widespread complaints of price hikes during the month of Ramadan which spanned all of August.

The Daily Star interviewed three experts to get their opinion on the issue.

Zuhair Berro, president of Consumers Lebanon, told the Daily Star that the 0.5 percent CAS figure is “rather deceiving.”

Berro suggested that the price index basket used by the CAS was too broad, adding unnecessary goods and services to the basket, diluting price increases of essential goods.

Consumer Lebanon puts the actual figure at 2.2 percent.

The 2.2 percent figure reflects in contrast a basket of “daily and semi-daily use” consumer goods and services Berro said.

Berro said he hoped the government will intervene against monopolies to prevent further price increases:

“More than 80 percent of products in the Lebanese market are marketed by monopolies. A competition law and abolishment of exclusive dealerships are needed steps,” he added.

Furthermore, Berro complained about the “politicization of CAS statistics,” or the tampering with economic numbers in order to fulfill political ambitions.

Economic data in Lebanon is hard to come by, with the last census having taken place in 1932. Analysts say that the lack of figures is due to an age-old bias that any data may fuel sectarian strife.

Elie Yashouie, an Economist at Notre Dame University, also said CAS figures were doubtful and politicized.

“In Lebanon the reliability of any public sector statistic is doubtful. Numbers are also political,” he said.

Yashouie explained the 0.5 percent figure would put the yearly inflation rate at around 6 percent, undervaluing Lebanon’s usual inflation rate by about 3 points.

When asked about the reasons behind continuous price increases, he stressed that a big part of the price increase is imported:

“We are an import-oriented economy with a trade deficit of almost $8 billion. This means we also indirectly import external inflation. Additionally, local monopolies control the local market causing further price hikes.”

He also said that the Lebanese government’s continued policies of high interest rates and fixed exchange rates contribute to the price increases.

Ghassan Diba, Professor of Finance at the Lebanese American University, on the other hand, considered the indicator as decent, ruling out the possibility of any tampering with figures.

But he also said that the index could not properly reflect fluctuations in price that affect consumers.

“There is a difference between citizens’ sense of prices and the price index,” he explained.

“People generally make judgment based on the prices of few commodities that usually have fluctuating prices. The price index does not move in the same price changing pace of these commodities.”

Commenting on the proposed minimum wage increase, Diba argued that it would not affect prices significantly, contrary to claims by business community leaders.

“Three previous wage increases back in 1993 and 1994 as well as in 2008 have not pushed inflation significantly,” he explained.

Diba agreed that inflation in Lebanon is imported but believes the Lebanese government has neither the will nor the capacity to regulate prices in a free economy.

Berro, on the other hand, suggested that minimum wage increases be studied carefully.

Those price increases will eat up most of the wage increase, he argued.

Referring to recent the public taxi subsidies recently passed into law Berro said:

“We want to see social protection and sound policies not subsidies that only benefit certain individuals and contribute to price increases.”

Draft budget proposes VAT hike October 05, 2011 03:00 AM By Dana Halawi The Daily Star


BEIRUT: Finance Minister Mohammad Safadi unveiled Tuesday details of the 2012 draft budget which called for a series of taxes, such as increasing the value added tax from 10 to 12 percent – a proposal that was widely rejected by a number of politicians and economists.

The ambitious draft budget, which is yet to be approved by the Cabinet and parliament, envisages a rise in government revenues to a GDP ratio from 3.21 to 7.22 percent under the pretext of financing better social and medical benefits for the Lebanese people.

Head of the Free Patriotic Movement MP Michel Aoun explicitly rejected any attempt to increase the VAT which indicates that this draft budget will face stiff resistance from many ministers in the Cabinet.

Other economists also voiced reservation on raising the VAT ceiling.

“I am against the increase [of VAT],” said economist Louis Hobeika, adding that the best solution for the time being is the minimization of unnecessary expenditures.

Hobeika does not have confidence in the possibility of implementing the 2012 draft budget reforms due to prevailing political disputes in the country.

“How can Lebanon implement all these reforms with the prevalence of all this political fighting?” he asked.

Hobeika said that a 10 percent VAT is enough for the time being, expressing his disapproval at adopting any solution that would exert more pressure on Lebanese consumers.

“It’s better to minimize our expenses for the time being and to better collect our revenues rather than increasing VAT,” hinting at the poor collection of electricity revenues in some areas in Lebanon.

Hobeika’s disapproval was echoed by economist Ghazi Wazneh. “The increase in VAT in parallel with an increase in the minimum wage would contribute to a surge in inflation rate which in turn would have a negative impact on growth rate,” he said. “Moreover, the increase in wages would then lose its value.”

Wazneh prefers to impose taxes on real estate investment which would generate LL400 billion in addition to imposing taxes on other items rather than increasing VAT. “I’d also prefer to collect a 0.5 percent tax from commercial banks on T-bills transactions which would generate around $150 million,” he added.

Wazneh has also suggested imposing taxes on seafront properties in addition to dividing the funds allocated for infrastructure improvement over several years in order to ease the burden.

The 2012 draft budget announced by Safadi during a press conference included a 3 percent tax on real estate transactions and an increase in VAT from 10 to 12 percent in addition to increasing the tax on deposit interest rates from 5 to 8 percent – the latter would surely irk bankers, experts say.

Lebanon has been without a budget for the past five years. The 2010 budget was not passed by parliament while the 2011 budget was not even discussed by the Cabinet.

However, Safadi announced that he has referred the 2012 draft budget to the Cabinet and parliament for it to be discussed and approved.

“We have also started working on reviewing the past accounts of the state in addition to controlling our expenditures according to proper money management principles in order to guarantee investors and donor countries’ confidence,” he added.

Safadi tried to allay concerns over tax increase by assuring that the finance ministry will reduce certain taxes such as the taxes on profits from the re-assessment of companies that want to turn to holding firms.

Other measures include reducing the fines on those who defaulted from paying their subscriptions to the National Social Security Fund for the year 2010 by 90 percent.

“Reducing from fines on traffic fees for the year 2009 and before by 70 percent was also included in the 2010 draft budget,” he said.

Safadi cited other exemptions and cuts in fines and fees while highlighting the draft budget’s focus on the increase in investment expenditures for the improvement of infrastructure and services which would save citizens many bills.

“Investment expenditures reached LL3.079 trillion (around $2 billion) in the 2012 draft budget, which is equivalent to 14.62 percent of total expenditures and 4.5 percent of GDP,” he said.

The minister added that investment expenditures would amount to 5.32 percent of GDP if the LL563 billion budget of the Telecommunications Ministry are to be added to the overall expenditures.

However, Safadi admitted that the amount of money needed for the improvement of infrastructure including telecommunications, electricity, water and transportation projects is way above what has been allocated in the 2012 draft budget.

“This is why the government is working on securing additional funding from donor countries in addition to boosting partnership with the private sector in order to finance these projects,” he added.

Among the measures adopted in the new draft budget is the ministry’s insistence on strengthening the social safety nets aimed at protecting citizens by allocating LL300 billion as a first step to pave the way for a complete health coverage for all Lebanese.

“We have tried, in the new draft budget, to create a balance between the taxes imposed and the additional social security benefits offered to citizens,” he said.

Safadi said that the draft budget takes into account the government’s dues for the NSSF and hospitals.

Productive sectors have also had their share in the 2012 draft budget: LL156 billion has been allocated to support the agriculture sector; LL46 billion is aimed at boosting the tobacco farming and an additional LL125 billion has been allocated for subsidizing agriculture investment loans.

As for the tourism sector, the 2012 draft budget allocated LL18.5 billion which will include the construction of a tourist port in Jounieh costing LL60 billion to be paid over three years.

According to the summary of the 2012 draft budget provided by the Finance Ministry, the overall budget deficit in 2012 is expected to reach LL6.247 trillion compared to LL5.466 trillion in 2011, equivalent to an increase of LL781 billion or 14.3 percent.

Safadi said in his speech that the 2012 draft budget secures control over spending when compared to the 2011 draft budget.

“It also records a drop in the deficit to GDP ratio from 9.4 to 8.1 percent in addition to recording a regression in the debt-to-GDP ratio from 135 to 132 percent,” he added.

The minister added that the cost of debt servicing is expected to reach LL5.812 trillion in the 2012 draft budget compared to LL5.776 trillion in the 2011 draft budget – an increase of LL36 billion, reflecting the increase in the public debt.

Answering questions by journalists about the 2012 draft budget’s commitment to covering the expenses of the Special Tribunal for Lebanon, Safadi assured that the Lebanese government pledges to fulfill all of its local and international duties.

Asked about a possible objection of a specific political party against covering STL’s expenses, Safadi said that the interests of Lebanon are a priority and expressed his confidence that all political parties would unanimously agree that Lebanon’s top interest is to fulfill its international obligations.

Can Safadi budget withstand scrutiny? October 05, 2011 02:59 AM By Osama Habib The Daily Star


BEIRUT: The 2012 draft budget will surely receive mixed reactions from politicians, economists and labor union leaders in the coming few days.

It is very likely that one of the items in the draft budget which calls for increasing the value added tax from 10 to 12 percent will come under fierce criticism from labor unions and consumer protection groups who will definitely claim that any VAT increase will lead to higher inflation and a staggering rise in basic consumer prices.

Bankers will also join the campaign against the draft budget because it also calls for increasing taxes on interest rates on customer deposits from 5 percent to 8 percent.

These bankers will argue that this tax will scare away investors and depositors and this will eventually lead to capital flight from Lebanon.

Finance Minister Mohammad Safadi has carefully weighed his options before embarking on this draft budget.

Safadi realizes that the government can’t meet his promises to raise the minimum wage, allocate more money to build power plants and infrastructure and bolster the social and medical benefits for citizens if additional funds are not made available.

To meet these needs, Safadi and his team were forced to propose a series of taxes that would not have a major impact on inflation.

The allocations for the 2012 draft budget total LL21.063 trillion ($14 billion) compared to LL19.826 trillion in the 2011 draft budget, an increase of LL1.237 trillion or 6.24 percent.

Current expenditures stood at LL12.172 trillion in 2012 draft budget compared to LL10.783 trillion in 2011, an increase of 12.88 percent.

Allocations for investments in 2012 stood at LL3.078 trillion compared to LL3.267 trillion in the 2011 edition, a drop of 5.77 percent.

Total projected revenues in the 2012 draft budget are LL14.816 trillion compared to LL14.361 trillion for the 2011 draft budget, an increase of LL455 billion, or 3.17 percent.

As a result, the projected budget deficit at the end of 2012 will stand at LL6.247 trillion compared to LL5.466 trillion in 2011, an increase of LL781 billion or 14.3 percent.

This means that the total budget deficit will close at 29.66 percent compared to 27.57 percent in 2011.

According to the new figures in the 2012 draft budget, the Finance Ministry will allocate LL6.294 trillion to cover the salaries and end-of-service benefits for government employees

The ministry explained that it has increased allocation for compensation and end-of-service benefits for retired employees by LL230 billion.

The draft budget has also allocated funds to appoint the vacant posts in some ministries.

Investment projects in the new draft budget stood at LL3.079 trillion which represent 14.62 percent of total government expenditures and 4.50 percent of GDP.

The draft budget has allocated more funds for land appropriations. These lands are bought by the government to either build roads or highways or build power plants and water refineries.

The ministry has also added LL563 billion to telecoms and this brings the total money allocated to investment projects to LL3.642 trillion, or 5.32 percent of Lebanon’s GDP.

The projected cost of debt servicing in the 2012 draft budget is LL5.812 trillion compared to LL5.776 trillion in the 2011 draft budget, an increase of LL36 billion.

The Finance Ministry hopes to generate LL15.544 trillion in 2012 and projected a real GDP growth of 4 percent next year.

Inflation is projected at 5 percent.

The ministry argued that it based these projections on the revenues it collected in the first six months of this year, which stood at LL7.186 trillion.

It believed that the ministry can see revenues rise by 3 percent in 2012 if everything goes according to plan.

The ministry wants to slap a 3 percent tax on revenues generated from the sales of properties.

It is also considering a settlement for the buildings that were illegally built on properties since 1994.

The ministry emphasized that it has offered incentives to many tax payers and has even abolished other taxes that have no added value.

Copies of the draft budget were sent to all the ministers so that they can study it carefully before discussing the draft during a Cabinet session.

This budget will surely be the subject of sharp debate between the supporters of Prime Minister Najib Mikati who strongly supports it and Aoun’s ministers who will not hesitate to pelt the tax proposals with sharp criticism.

Observers will ask, will Mikati be able to sell the budget to the divided ministers before taking it to the parliament for final approval?

If the support isn’t found, the question is will Lebanon remain without an official budget for another year?

Gasoline prices see biggest drop this year October 06, 2011 12:49 AM The Daily Star
BEIRUT: Gasoline prices saw a sharp LL1,000 drop Wednesday, the biggest fall in 2011.

The price of the 98-octane rated fuel is now LL34,600, while the 95-octane rated fuel is priced at LL33,900, as per the updated price scheduled signed by Energy Minister Jibran Bassil. Kerosene gas also dropped by LL400 and is now sold at LL28,600.

Diesel oil is now sold at LL29,600 and fuel oil at LL29,100. All prices are based on 20 liters.

Wednesday’s drastic decline is the first in 2011 and comes weeks after Parliament approved a subsidy plan for drivers aimed at helping public transportation drivers meet rising gasoline prices.

Lebanon’s industrial exports jump 3 percent October 07, 2011 12:50 AM The Daily Star
BEIRUT: Industrial exports in the first half of 2011 reached $1.709 billion, compared to $1.659 billion during the same period in 2010, recording an increase of 3 percent, the Industry Ministry said in a report Thursday.

“Exports of pearls and precious stones [excluding gold] ranked first in the list of Lebanese industrial exports, amounting to $377.6 million in the first half of 2011, with South Africa being the top importer of these products,” said the report.

Exports of pearls were followed by the exports of regular metals at $308.7 million, electrical equipment at $273.4 million, food products at $181.5 million and chemical products at $173.9 million.

“The exports of the products previously mentioned totaled $1.315.1 billion in the first half of 2011, equivalent to 76.9 percent of total exports, compared to $1.267 billion in the first half of 2010 which is equivalent to 76.4 percent of total exports,” added the report.

The report also gave a detailed overview about the exports that have increased in volume and those that have recorded a drop in the year 2011.

It said that the exports of regular metals increased from $239 million in the first half of 2010 to $308.7 million in the first half of 2011 with Turkey, Japan, China and Holland being the main importers of these products.

Moreover, chemical products exports increased from $143 million in the first half of 2010 to $173.9 million in the first half of 2011.

“The export of these products to Iran and Syrian dropped while they have increased to Bangladesh, Spain, Iraq, the UAE, Jordan, Turkey and Saudi Arabia,” it said.

It said that the export of food products went up from $160 million in the first half of 2010 to $181.5 million in the first half of 2011 with Saudi Arabia, Syria, Jordan, U.S., Angola and Kuwait being the main importers.

“The export of food products to UAE went down,” it added.

Meanwhile, the export of textiles went up from $50 million in the first half of 2010 to $68.8 million in the first half of 2011.

On the other hand, the total volume of industrial imports reached $123.1 million in the first half of 2011 compared to $113.1 million in the same period of 2010, which is equivalent to an increase of 8.8 percent according to the industry ministry’s report.

HSBC forecasts 2011 GDP growth at 1.7 percent October 07, 2011 12:50 AM The Daily Star
BEIRUT: Investment Bank HSBC revised Lebanon’s GDP growth to 1.7 percent in 2011. In its weekly economic publication, the “Lebanon Weekly Monitor,” Bank Audi indicated that HSBC released its Macro MENA Economics quarterly issue termed “Unfinished Business” in which it analyzed Lebanon’s economic situation.

HSBC indicated that despite ongoing policy stasis and deepening unrest in neighboring Syria, Lebanon remains a safe haven.

Lebanese local currency and dollar bonds have outperformed their peers, and banks have seen a surge in non-resident deposits.

Central Bank reserves including gold have also hit a new all-time high and at $44 billion equate to over 100 percent of GDP, or 28 months of import cover.

Yet the report mentioned that risks remain pronounced. Exports have slowed down relative to last year, increasing by just 0.2 percent year-on-year in the first half of 2011. Weak indicators, including the coincident indicator, arrivals at Beirut International Airport and construction permits, also prove a cyclical downturn in domestic activity that had already started, even before the regional turmoil of the first quarter, as per HSBC.

Campaign mounts on proposed new taxes October 07, 2011 12:50 AM By Osama Habib The Daily Star

BEIRUT: Finance Minister Mohammad Safadi will face his first real test when he discusses the 2012 draft budget in the Cabinet amid signs that most ministers will kill the bill even before it is passed to the Parliament.

Safadi, who vowed to address the needs of Lebanese who are reeling under an economic slowdown, is aware that his proposed taxes will not gain favor among politicians and labor unions.

But the minister will probably argue that the government cannot allocate more money to improve social and medical benefits as well as build electricity and water facilities if revenues remain the same.

Safadi said earlier that he is willing to listen to the remarks of his colleagues in the Cabinet and will be open to any suggestion to raise the government’s revenues without increasing the VAT.

However, Safadi will likely ask the ministers who vehemently oppose some of the proposed taxes to suggest other types of taxes.

He will probably tell some of his critics: “If you want me to spend more money on infrastructure and improve the social and medical benefits for all the Lebanese then please help me find more funds.”

The proposed VAT tax hike has already come under sharp attack from most economists, labor unions and even some ministers.

Labor Minister Charbel Nahhas, who was credited with making major amendments to former Minister Raya al-Hasan’s 2010 draft budget, will most likely argue against raising the VAT from 10 percent to 12 percent on the grounds that it would hit the poor, raise inflation and cause prices of basic commodities to jump to alarming levels.

Some economists recommend avoiding any tax that would negatively affect the low and middle classes, especially during such a time of economic hardship in the country.

These economists have pointed out that any new tax that is levied while GDP growth is at rock bottom would exacerbate the situation and induce consumers to spend less.

Along with the General Labor Confederation and other labor unions, merchants and traders have also cautioned that a higher VAT would leave the economy in shambles and could cause a huge drop in consumption.

The taxes could also cause imports to decline as consumers start shying away from buying luxury goods such as cars, electronics and furniture.

Against this backdrop, Safadi may be compelled to go back to the drawing board and make major modification to his original 2012 draft budget.

Al-Akhbar newspaper, which is very close to the March 8 Forces in general and Hezbollah in particular, has blasted Safadi’s proposed taxes, claiming that the measures proposed by the minister will surely make more Lebanese join the poorer classes.

Hezbollah, which is considered a strong supporter of MP Michel Aoun, who totally rejects any VAT increase, will be in an awkward position since it will be compelled to take sides in this open debate over the draft budget.

Any attempt to undermine the work of Safadi will almost certainly anger Prime Minister Najib Mikati, who personally insisted on naming his long-time ally as the finance minister.

Observers believe that Hezbollah will be careful in its assessment of the draft budget in order not to antagonize its ally Aoun and at the same time not to widen the gap with Mikati and Safadi.

Safadi will also attempt to sell the idea of increasing taxes on interest rates on customer deposits to the commercial bankers, who are the biggest holders of the government’s treasury bills and Eurobonds.

Bankers have warned on many occasions that more taxes on interest rates on deposits would scare away investors and even prompt some major depositors to take their business somewhere else.

The allocations for the 2012 draft budget total LL21.063 trillion ($14 billion) compared to LL19.826 trillion in the 2011 draft budget, an increase of LL1.237 trillion or 6.24 percent.

Current expenditures stood at LL12.172 trillion in the 2012 draft budget, compared to LL10.783 trillion in 2011, an increase of 12.88 percent.

Allocations for investments in 2012 stood at LL3.078 trillion, compared to LL3.267 trillion in the 2011 edition, a drop of 5.77 percent.

Total projected revenues in the 2012 draft budget are LL14.816 trillion, compared to LL14.361 trillion for the 2011 draft budget, an increase of LL455 billion, or 3.17 percent.

As a result, the projected budget deficit at the end of 2012 will stand at LL6.247 trillion, compared to LL5.466 trillion in 2011, an increase of LL781 billion or 14.3 percent.

This means that the total budget deficit will close at 29.66 percent, compared to 27.57 percent in 2011.

According to the new figures in the 2012 draft budget, the Finance Ministry will allocate LL6.294 trillion to cover the salaries and end-of-service benefits for government employees

The ministry explained that it has increased allocation for compensation and end-of-service benefits for retired employees by LL230 billion.

The draft budget has also allocated funds to appoint the vacant posts in some ministries.

Investment projects in the new draft budget stood at LL3.079 trillion, which represents 14.62 percent of total government expenditures and 4.50 percent of GDP.

GLC boycotts meetings on price index October 07, 2011 12:50 AM The Daily Star
BEIRUT: Minimum wage increase negotiations are in jeopardy as the General Labor Confederation decided to boycott Price Index Committee meetings from Thursday.

Ghassan Ghosn, head of GLC, told New TV the step aims to press the Cabinet to reject the VAT hike included in its 2012 draft budget.

Ghosn said there was no reason to attend the committee’s meetings in view of the proposed new tax increases, which would also include an additional LL2,000 tax on gasoline.

“The GLC intends to suspend membership in the committee until Finance Minister Mohammad Safadi withdraws the VAT increase item from the draft budget,” said Ghosn.

GLC union chief Maroun al-Khawly also slammed what he called “slow and provocative” minimum wage increase negotiations with the Cabinet.

Khawly said the Cabinet had been trying consistently to water down the labor demands by disrupting the work of the Price Index Committee and proposing new taxes in the budget draft.

“The budget draft’s aim is to tell workers that any demands achieved will immediately be faced with corresponding increases in taxes and fees,” he said.

He stressed that the upcoming Oct. 12 strike would be a major step toward what he described as “toppling the arrogant behavior of the ‘businessmen’s Cabinet.”

He announced that a labor demonstration in Tripoli, on the day of the general strike will head to Prime Minister Najib Mikati’s house in the city.

The GLC gained new support Thursday with the Gathering of Agricultural Associations announcing that it would take part in the strike.

In a statement after its meeting later on Thursday, the GLC also slammed “the absence of direct taxes on profit and real estate sales that are the basis of a tax system that provides social justice,” calling on the Cabinet to reject the budget draft.

As the GLC continues its preparations for a nationwide strike and demonstrations on Oct. 12, it is simultaneously in negotiations with the government on how to implement their demands.

Until a few days ago, all sides were hopeful a settlement would be reached before of the planned general strike on Oct. 12.

The Price Index Committee had been in charge of assessing the economic validity of the GLC’s demands to more than double the minimum wage and hike social and transportation allowances.

Observers say that the Oct. 12 planned strike may gain lot of sympathy and support, even from labor unions that oppose the policies of the GLC.

Ghosn reiterated that the unions will not back down from their demand to raise the minimum wage to LL1.2 million, although the chances of it being met are dim.

Ogero gets equipment that helps boost Internet speeds October 07, 2011 11:02 AM The Daily Star
BEIRUT: Lebanon’s telephone land-line provider Ogero says it has finally received equipment it needs to help boost Internet speeds.

In a statement late Thursday, Ogero said it received Wednesday the technical equipment on loan from Data Consult Company.

Ogero said it had requested the apparatus more than a year ago but that it could not obtain it due to lack of funding, which prompted Ogero to stop selling fast Internet services in July 2010.

Ogero said that following “extensive day and night efforts” to install the device, some Beirut neighborhoods such as Ras Beirut, Mazraa, Shiah, Ashrafieh and Badaro, would start receiving fast internet service as of 10:00 a.m. local time Friday.

It said other areas across Lebanon would gradually receive fast broadband services.

Internet in Lebanon is considered to be one of the slowest and most expensive in the world. The country’s telecoms minister has announced an upgrade in speeds throughout the country, with a minimum of 1 mb download speeds for subscribers. Lebanese will for the first time have access to mobile 3G technology.

Panel pitches 20 percent wage hike October 08, 2011 12:49 AM By Mohamad El Amin The Daily Star


BEIRUT: A Labor Ministry-led committee tasked with proposing a new minimum wage has recommended a 20 percent across-the-board wage hike after deliberations Friday.

Labor Minister Nicolas Nahhas, who made the announcement, said the hike would be accompanied by a publicly funded universal health care plan covering all Lebanese citizens, and a further 9-10 percent provided through phasing out fees for the National Social Security Fund.

The meeting was boycotted by the General Labor Confederation to protest a proposal by the Finance Ministry to raise the Value Added Tax from 10 to 12 percent. But representatives of the private sector attended the meeting.

The recommendations will be passed on to the Cabinet for approval.

Ghassan Ghosn head of GLC, Lebanon’s largest labor union coalition, declined to comment when contacted by The Daily Star, saying only that dialogue with the government as well a nationwide strike scheduled for Oct. 12 would go on.

The wage hike recommendation come as a breakthrough after a private sector representatives and labor union heads had been locked in a stalemate earlier Friday.

Private sector heads came out in strong opposition to any general wage increase, suggesting only that the minimum wage rise by 15.7 percent, a figure they said reflected increases in living costs since 2008.

The GLC has demanded that the minimum wage be more than doubled, increasing from its current level of LL500,000 to LL1,250,000.

“Even an increase of the minimum wage to LL750,000 would mean mass unemployment and businesses going bankrupt,” Mohammad Choucair, head of the Beirut Chamber of Commerce, told The Daily Star Friday.

LL750,000 has been proposed as “a middle-ground solution” to the stalemate, according to sources in the Price Index Committee, or the group charged with coming up with a new minimum wage level to avert the Oct. 12 strike.

Choucair “utterly rejected” any increase to wages, claiming that it would lead to the bankruptcy of both the public and private sectors.

While admitting an increase in living expenses could be observed, he claimed the General Labor Confederation has not relied on economic indicators in putting out their minimum wage demands.

Choucair said the wage hike would result, according to a Chamber of Commerce study, in “devastating effects, particularly for the industrial sector.”

A whopping 104 factories would shut their doors, Choucair’s study said.

Representatives of the private sector cited the current economic downturn caused by regional and local political instabilities as major reasons to reject the minimum wage increase. “The GLC’s rigid position and its withdrawal from the Price Index Committee, ignoring economic figures, is unrealistic,” they said in a statement.

The associations also slammed the Finance Ministry budget draft, which proposes a 2 percent increase in Value Added Tax.

The tax, they said, would exact a huge toll on the sluggish economy.

Similar views had been expressed by Nicolas Chammas, head of Beirut Merchants Association, who said: “The private sector is only ready to adjust the minimum wage by the percentage of inflation between 2008 and 2011,

But economist Ghazi Wazni told The Daily Star in an interview that wage increases would not necessarily harm the private sector.

Putting the needed wage hike at LL250,000, he said such an increase would be beneficial to the Lebanese economy and to businesses.

He said the government should be looking at greater purchasing power afforded by the hike as strengthening actions.

Wazni said a LL250,000 increase would put the budget deficit at 9.7 percent, few decimal points higher than current deficit.

The GLC’s Oct.12 general strike gained additional endorsements and promises of participation Friday from employee unions from across various sectors.

The Association of Bank employees announced Friday that they would be participating in the GLC-led strike.

The association insisted in a statement that the wage increases should vary with salary levels, rejecting a lump-sum increase.

Lagging Lebanese economy still beats peers October 08, 2011 12:47 AM By Peter T. Daou The Daily Star

BEIRUT: Month after month, Lebanon’s 2011 economic growth forecasts were revised downward, most recently landing in the upper range of 1-2 percent. Despite the obvious melancholy, the country’s slower pace of growth is more inevitable than self-inflicted, and in a sign of the times, is ahead of many of the country’s traditional peers.

Although the Lebanese economy was hit by the collapse of the national unity government in January, an uncommon consensus among economists attributes weak growth rates to regional turmoil, especially in Syria, placing little blame on domestic political disputes.

“Internal politics have always been there, so I am not sure they affected us this time, but the situation in neighboring countries negatively affected tourism and reduced investor appetite,” said Dr. Salim Chahine, professor of finance at the American University of Beirut told The Daily Star in an interview.

Simon Neaime, chair of the economics department at AUB also pointed to the impact on tourism from regional unrest. He said that “Ramadan was in the middle of the summer this year so the country lost some tourism, which contributed to lower growth rates,” ruling out an effect from European debt concerns “because not many entities in Lebanon have ties to Europe.”

“Domestic politics and regional events both played a role in lower economic growth in Lebanon, but by the beginning of the summer tourist season, the government was formed and the country had a successful season,” said Dr. Georges Nehme, economist and Antonine University professor who believes the negative impact of politics on the economy in 2011 is exaggerated.

Indeed, downgrades continued to hit Lebanon even after relative political stability returned with the formation of the new government, pointing fingers to Syrian unrest. Earlier in October, HSBC revised the country’s economic growth rate down to a meager 1.7 percent, but said the country remains a safe haven for the region, shortly after Standard Chartered said the Lebanese economy is expected to grow at 1.5 percent.

But even low single digit growth rates place the country in the ballpark, and often ahead, of many Middle East economies as well as the European Union and the United States. According to BofA Merrill Lynch, a U.S.-based investment bank, real GDP growth in the U.S. and EU will slow down to 1.6 percent and 0.8 percent respectively in 2011 while Bahrain’s economy will shrink by 2.2 percent, all lagging behind Lebanon.

Even the United Arab Emirates, which escaped the political domino of Arab uprisings, is seen growing by 2.8 percent, only a click ahead of Lebanon’s growth despite increased revenues from higher oil prices. Growth in Switzerland of the east is also not too far from that at Switzerland of the west, projected at 1.9 percent in 2011.

Other key indicators also corroborate Lebanon’s resiliencein the face of stormy regional and international weather. Private sector deposits, although weaker than previous years, maintained a steady increase in 2011, rising 5.4 percent by the end of July compared to UAE’s 6.7 percent in the first six months and the gap has been steadily narrowing.

Lebanon’s credit fundamentals have also remained exceptionally strong amid a wave of credit downgrades in the region. The country, along with Saudi Arabia and Qatar, are the only economies in the Middle East with stable sovereign and corporate debt outlooks from Standard & Poor’s, a global credit rating agency.

According to Nehme, “the central bank’s policies have protected Lebanon from excessive risk-taking. Also, given that public lending is around 50 percent of total bank lending, banks had no incentive to increase risk-taking which is usually a negative but now a positive factor.”

And to European countries forced to cut social spending and trim wages and the public workforce, Lebanon is arguably in an enviable position. Debt levels have remained stable, rising 0.4 percent by the end of July compared to soaring public debt in the eurozone. The government is even planning to raise the minimum wage, expand the public workforce, and make cash payments aimed at alleviating poverty.

Although Neaime sees ulterior motives to the sudden focus on social spending, he still sees them as a belated positive. He said that “politicians are trying to prevent social unrest similar to neighboring countries by increasing social spending which has been low in Lebanon, so we can afford to pay.”

Chahine struck a similarly cautious note explaining that “Lebanon is really far below what’s given in developed countries, so what the government is offering to give is very little in comparison and is in fact a preparation for high taxation,” in reference to the draft 2012 budget which proposes an increase in the Value Added Tax to 12 percent.

Based on regional events, 2012 is not expected to bring news to the Lebanese economy as the growth ball is almost fully outside Lebanon’s court and mostly in its backyard. “We can’t paint a rosy outlook for 2012 because we have to see how things unfold in Syria and other Arab countries and what happens with oil prices because they affect remittances from the Gulf region,” said Neaime.

Similarly, Nehme warned that an import ban by Syria would take a heavy toll on Lebanon’s industrial sector and consequently economic growth. In a desperate move to protect its dwindling foreign exchange, Syria had banned imports in late September but reversed the decision two weeks later.

“In my view, this would have an extremely dangerous and much bigger impact on the economy than the blockage of transit because a lot of Lebanon’s industrial goods are sold in Syria,” said Nehme. At the same time, he expressed confidence in stronger economic growth in 2012 based on increased government spending and given the country is entering a new elections cycle.

Lebanon’s handful of cautious stability appears to have staved off the contagious economic downturns floating around and deliver enough growth for the country to limp into 2012 with some rays of hope for a rebound.

Lebanon among lowest MENA tax bases October 08, 2011 12:47 AM The Daily Star
BEIRUT: JP Morgan indicated that Lebanon has one of the lowest tax bases across MENA oil importers and the planned VAT rise in the 2012 budget could help reduce this gap.

According to its weekly publication “Lebanon Weekly Monitor,” Bank Audi said that JP Morgan mentioned that the primary balance which posted a surplus over the previous decade has significantly deteriorated despite the recent on-off $700 million transfer from the Telecommunications Ministry.

The government projects to reduce the fiscal deficit by 1.3 percent-pts to 8.1 percent of GDP next year including a VAT hike to 12 percent from 10 percent and higher taxes on interest rate deposits to 8 percent from 5 percent previously.

Government revenues would also be boosted by a 3 percent capital gains tax on real estate sales.

According to JP Morgan, these new measures would affect domestic demand at a time when the economy slowed sharply to about 1.5 percent in the first half of 2011.

Real GDP growth could therefore be lower than government’s projections of 4 percent in 2012. Lebanon posted a strong economic performance in 2009-10 boosted by confidence, deposit inflows and political stability.

However, most of these factors have already reversed their trend making the implementation of necessary reforms increasingly challenging, JP Morgan said.

Announcing AFIRC 2011 - The First Conference of Its Kind in the Arab World
Bringing Together Regulators and Insurers

Beirut 6 October 2011: The Lebanese Ministry of Economy & Trade hosted a press conference in its offices in Beirut's Central District, to announce the First Arab Forum of Insurance Regulatory Commissions Conference - AFIRC 2011, organized by the Arab Forum of Insurance Regulatory Commissions (AFIRC), in collaboration with International Fairs and Promotions (IFP) on 17-18 October at the Phoenicia Intercontinental hotel - Beirut. The conference will bring together regional and international leaders in the insurance sector for two days to discuss ways to improve the insurance sector in the Middle East and North Africa, as well as Arab insurance markets' potential for growth.

Present at the press conference were HE Mr. Nicolas Nahhas, Lebanese Minister of Economy & Trade; Mr. Walid Genadry, Chairman of the Arab Forum of Insurance Regulatory Commissions (AFIRC) and Member of the Executive Committee of the International Association of Insurance Supervisors (IAIS); and Mr. Albert Aoun, Chairman and General Manager of International Fairs and Promotions (IFP). Media representatives and reporters were also present at the press conference to cover the announcement.

HE Mr. Nahhas started by presenting the Ministry's plans to develop the Lebanese insurance sector. Following this, Mr. Walid Genadry gave a speech in which he explained the vision of AFIRC: "One of the main objectives of this conference is to set up a dialogue and understanding between insurers and the various regulatory entities beyond the traditional relationship of insurer and regulator so that regulatory entities may contribute to increasing competitiveness among companies and sharing best business practices within a transparent environment adopting advanced international standards that have proven to be vital to business growth worldwide, both qualitatively and quantitatively, thus empowering the sector across the region to take advantage of numerous market opportunities that remain unexploited".

Mr. Albert Aoun then declared how proud IFP was to be collaborating with AFIRC in organizing this event, the first of its kind in the region, and citing the huge positive response by major companies in the Arab world invited to participate, pointing out the large number of general managers and decision-makers representing them. In closing, he expressed his hope that the conference would serve as the best platform from which to initiate a permanent dialogue between all the different parties involved in the Arab insurance market to improve and develop the sector.

As the AFIRC 2011 Conference is being organized, studies indicate that the insurance sector in the Middle East and North Africa region is still in its early growth stages, whereby insurance and reinsurance companies have only recently begun witnessing some growth in terms of business and expansion, despite the sector's long history in the region. While the global insurance market has been through a slight recession in the past two years, the region has seen significant growth, especially in Gulf Cooperation Council (GCC) countries. This growth combined with the current state of markets in the region permits positive predictions for the sector in the near future.

Within the AFIRC 2011 Conference, a selection of speakers and experts from around the world will gather at a summit to discuss urgent and vital issues and topics in today's markets such as strengthening the companies' competitiveness, solvency, actuarial concepts, etc. Over the two days of the conference, key figures from insurance companies and groups from the region and the world will also hold sessions on different other topics.

In light of the depth, diversity and importance of this event, as well as it is expected impact on the insurance sector in the Arab world, the AFIRC 2011 Conference benefits from the support of major names in the sector, such as the Association of Insurance Companies in Lebanon (ACAL), MedGulf, and Arabia Insurance Company sal, which are co-sponsoring the conference.

It is worth mentioning that the insurance sector in the region has never before witnessed any similar event of this magnitude; this will be unique opportunity for market players to discover this summit and benefit from the conclusions and recommendations that result from it, as well as from its potential and business prospects. The Arab Forum of Insurance Regulatory Commissions hopes to make the conference an annual event on its agenda and the agenda of insurance companies to keep the dialogue open between insurers and regulators constantly open and lead to a new integrated concept of the relationship between them for the benefit of the markets in the future.

-Ends-

© Press Release 2011

Lebanon merchants voice objections to proposed draft budget October 09, 2011 03:53 PM The Daily Star

BEIRUT: Merchants in Bourj Hammoud and Hamra voiced objections Sunday to the proposed draft budget of Finance Minister Mohammad Safadi, citing the poor economic climate and financial strains.

Zuheir Itani, head of the Merchants' Association for Hamra Street, took aim at the draft budget’s call for an increase in the value added tax (VAT).

“The association absolutely rejects any increase in taxes whatever these might be. The merchants cannot manage with any further burdens, particularly given that they are meeting their obligations to the Lebanese state,” Itani said, according to a statement.

Safadi unveiled Tuesday details of the 2012 draft budget which called for a series of taxes, such as increasing VAT from 10 to 12 percent – a proposal that was widely rejected by a number of politicians and economists.

Itani said there was still stagnation in the sector and said this was down to the decreased liquidity of consumers.

“The work of merchants is highly correlated with the income of citizens and liquidity,” Itani said.

“The harsh conditions require a speedy solution. The government has finished with the issue of electricity but now it needs to address other issues that concern the sector and citizens ... because the merchants at the end of the day are citizens trying to make a living. They cannot bear any new burdens, rather the state should provide opportunities that secure work and continuous activity.”

Voicing Itani’s concerns, Paul Ayanian, head of the Association of Bourj Hammoud Merchants warned against an increase in the VAT and said he objected to Safadi’s suggestion that a tax be imposed on interest made on savings.

“The trade sector can no longer take any more burdens or new taxes given the poor economic situation and in light of the lack of production and a stagnation in sales activity and poor exports,” Ayanian said.

Referring to recent statistics, Ayanian said out of 106,000 merchants, manufacturers and farmers, “66,000 have taken out loans from the banks and 18,000 are on the verge of bankruptcy, and 6,600 institutions have announced bankruptcy.”

Ayanian said further tax increases would lead to unemployment and more cases of bankruptcy.

He also argued now was not the time to raise salaries, arguing that this would push inflation up.

“An increase in salaries will increase inflation and fuel the wave of price rises that the citizens cannot bear anymore and will lead to a social revolution.”

Addressing those calling for an increase in salaries, Ayanian said: “With all due respect to the rights of workers and employees, but before we go for increasing salaries we need to address the causes behind the price increase, boost monitoring, create incentives to help the productive sectors -- and an increase in taxes will lead to a stunting of exports to Europe and Arab countries and Africa.

“This will negatively impact on the situation in the country, and there are many Lebanese manufacturers that will relocate to surrounding countries so that they can produce and export as a result of the cheap labor in these countries and the absence of VAT, taking into consideration that Lebanon has become one of the most expensive Arab countries.”

The Genereal Labor Confederation has vowed to carry on with a strike on Oct. 12 until the government addressess the demands of workers, namely an increase in wages.

Investors dump Beirut stocks October 10, 2011 01:38 AM By Peter T. Daou The Daily Star




BEIRUT: Beirut Stock Exchange investors betting on the return of liquidity in October got more than they bargained for. Total traded shares rose 22.5 percent to 1.14 million during the first week of the month, but the BLOM Stock Index fell 1.9 percent as returning investors appeared more risk-averse than their predecessors.

“I would not want to belong to a market where property prices have been rising for the past four or five years and the government is near the top of the list in debt levels,” said Akram Annous, MENA strategist at Dubai-based Al Mal Capital in an interview with The Daily Star.

Banking stocks tailed the market with heavy losses as Lebanon’s two largest banks, BLOM Bank and Bank Audi, plummeted 4.76 percent and 3.83 percent respectively during the week to close at $7.8 and $5.77.

The ailing also continued for Solidere, the exchange’s heavyweight stock and developer of the prestigious Downtown Beirut area with class A shares falling 2.57 percent to $14.79 and class B shares closing the week down 2 percent to $14.76.

Stocks began their drop earlier in the year as a result of internal political disputes, but after several months of decline, it became clear that regional turmoil, mainly in Syria, had taken the wheel. Both BLOM and Audi have significant operations in Syria and Egypt, the impact of which remains veiled in secrecy.

“Prices of Solidere are not improving because of regional events. Even the banking industry is not comfortable despite having significant liquidity,” Salim Chahine, finance professor at the American University of Beirut, told The Daily Star in an interview.

Still, the constancy of the 9-month drop in share prices without one noteworthy rebound reflects a deeper and more fundamental worry among investors. Property prices, a key pillar of growth in previous years, have taken a turn for the worse signaling gloomy days ahead for both Solidere and the banks that thrive on lending.

“The property cycle is running out of steam and that is bad for everybody. When property prices rise two or three times, there is always a shakedown,” argued Annous. And banks, which reported strong first-half results, are not immune from risk-averse investors.

“Investors do not look at current profits, but at asset quality down the road and the ability to generate a sustained level of profits in the future. Lebanese banks may have a lot of cash, but when upside potential is limited that has an impact on the stock price,” said Annous.

The banking sector globally has suffered the most during the previous months as result of rising credit fears, but Lebanese banks have successfully averted the crisis mainly due to the central bank’s conservative lending policies. However, according to Annous, “Lebanese banks are tied to a highly leveraged government, which is a source of worry for investors hearing about European debt concerns every day.”

Unlike European banks, Lebanese banks are flush with cash as they boast one of the world’s lowest loans-to-deposits ratios. Asked if banks should use some of the cash to buy back shares to prop up prices, Annous rejected any such move as counterproductive. “If buying back shares is the best an emerging-markets bank can do, then I think that is a bad sign. The bank should either increase lending or hold the cash because lower valuations could be a sign that things may get tougher.”

Beirut stocks are therefore alone in their quest for growth, so far a failed one which cost the market $234 million in eroded market capitalization during the week, and doesn’t seem to hold much promise for the future. According to Annous, “although stocks will rebound, as they always do after a protracted decline, contracting valuations are part of the new cycle where multiples for equities will be lower.” Chahine painted a similarly gloomy picture, saying “with risk-aversion, low prices cannot be but justified.”

Lebanese consumers upbeat about economy’s prospects, survey reveals October 10, 2011 01:38 AM The Daily Star
BEIRUT: Residents in Lebanon have a positive outlook on the country’s economy as well as their financial future with the consumer confidence index moving up 11.4 points compared to last quarter, according to the latest results from the recent Consumer Confidence Index study carried out by Bayt.com, one of the Middle East’s most popular job sites, and research and consulting organization, YouGov.

However, the survey revealed that 73 percent feel that their current salary is not in line with the cost of living, with 41 percent stating buying consumer durables is not practical in the present situation.

The study shows that prospects for the future appear quite positive for Lebanon survey takers, with 46 percent believing that their financial position will improve in a year’s time, while a good 19 percent claim it will stay the same and only 10 percent believe it will get worse.

In parallel, 24 percent of respondents expect that the economy will get better within the same time frame.

However, this claim won’t essentially mean an increase in the number of jobs. While 69 percent feel there will be either no change or fewer jobs in a year’s time, only 16 percent of think there will be more jobs available.

Similarly, 29 percent seem pessimistic about the possibility of increase in their organization’s employee count in the coming quarter, while only 15 percent feel the opposite and believe that there will be positive growth, and 36 percent share a neutral outlook on the same.

Asked about companies addressing staffing requirements in the coming three months, 39 percent of Lebanon survey-takers are neutral, with 14 percent seeming optimistic and 27 percent appearing quite pessimistic.

“While a certain number of countries witnessed a drop in their Consumer Confidence Index since last quarter, the region’s overall sentiment toward the future remains positive. It will be interesting to see if the region can slowly, but surely, reach a long-term period of true stability in the near future,” explained Amer Zureikat, vice president of sales at Bayt.com.

With regard to the respondents’ present financial situation in Lebanon, 35 percent have experienced no change, but the situation is worse for 31 percent of survey takers, while 26 percent have had an improved financial position in comparison to the previous year.

The survey’s respondents also remain unsure on the prudence of purchasing consumer durable goods, with 41 percent of Lebanon respondents saying “now is a bad time to buy.” Only 12 percent believe that this is a good time to buy, while 40 percent stay neutral.

Additionally, with 62 percent of Lebanon residents opting to shy away from investments in property and 59 percent from purchasing a car in the next 12 months, only 18 percent will look into investing in properties and 22 percent in a car.

Among those who are willing to make such investments in a year’s time, 57 percent said they will be buying a “new” property and 56 percent a new car, while 36 percent said they will opt for a used one.

“We conduct our quarterly Middle East Consumer Confidence Index Survey in order to chart how consumer confidence levels are changing as the region goes through different economic cycles, and faces the challenges and pressures wrought by economic trends and events across the globe,” said Zureikat. “This seeks to provide all stakeholders, from regional businesses to local organizations and HR professionals with up-to-date information that is both relevant and reliable as a snapshot of current market trends.”

When it comes to employment, only 14 percent of Lebanon respondents appear to be highly satisfied with their career prospects, while 35 percent have neutral sentiments, and 42 percent are displeased. Correspondingly, only 22 percent appear to be highly satisfied with their career growth in their current organization, while 42 percent seem unhappy and 31 percent are neutral.

“Gauging consumer opinion is a powerful tool for revealing the current attitudes and sentiments about the business and economic conditions in a specific country, and to see how these change overtime,” said Sundip Chahal, Chief Operating Officer of YouGov.

Data from the Consumer Confidence Index survey shows that feelings on the level of job security in Lebanon are relatively balanced, with 30 percent saying they are highly satisfied, while 36 percent have neutral feelings toward their job security. Twenty-seven percent are unsatisfied.

Data for the quarterly Bayt.com Consumer Confidence Index survey was collected online from Aug. 24 to Sept. 20, with 7,864 respondents from the UAE, Saudi Arabia, Qatar, Oman, Kuwait, Bahrain, Syria, Jordan, Lebanon, Egypt, Morocco, Tunisia, Algeria and Pakistan.

Cost of wiring remittances to Lebanon rises in Q3 2011 October 10, 2011 01:38 AM The Daily Star
BEIRUT: Figures issued by the World Bank show that the cost of sending remittances from the United States to Lebanon reached 14 percent in the third quarter of 2011 for a $200 transfer, constituting an increase from 12.6 percent in the first quarter of 2011 and from 13.1 percent in the third quarter of 2010, according to Byblos Bank’s Lebanon This Week.

The report stated that the cost of sending $500 from the U.S. to Lebanon reached 6.51 percent in the third quarter of 2011, up from 5.53 percent in the first quarter of 2011 and from 5.7 percent in the third quarter of 2010. It said that the cost includes the transaction fee and exchange rate margin, and represents the average cost of transferring money through commercial banks and money transfer operators.

In nominal terms, the cost of sending $200 and $500 from the U.S. to Lebanon is $28 and $32.5 respectively, up from $26.2 and $28.5 respectively in the third quarter of 2010.

Moreover, the cost of sending remittances from Germany to Lebanon reached 14.8 percent in the third quarter of 2011 for a transfer of 140 euro or about $200, constituting a decrease from 13.5 percent in the first quarter of the year and from 15.66 percent in the third quarter of 2010, added the report. It also said that the cost of sending 345 euro, or about $500 from Germany to Lebanon reached 8.1 percent in the third quarter of the year, up from 6.9 percent in the first quarter of the year and from 7.7 percent in the third quarter of 2010. In nominal terms, the cost of sending 140 euro and 345 euro from Germany to Lebanon costs 20.7 euro and 27.8 euro, respectively.

In parallel, Lebanon ranked as the most expensive destination for sending of $200 from the U.S. among 27 countries with available data. It was the fourth most expensive for sending $500. The data covered 12 countries in Latin and Central America, seven countries in East and Southeast Asia, three countries in the Caribbean, and four countries in Africa, in addition to Lebanon in the Middle East. The U.S. is the sixth largest source of inward electronic cash transfers to Lebanon.

The World Bank indicated that the average cost to send remittances through commercial banks to Lebanon was 17.9 percent and the average cost through MTOs was 7.2 percent in the third quarter of 2011. In comparison, the average cost to send remittances through commercial banks to Lebanon was 17.1 percent and the average cost through MTOs was 6.2 percent in the first quarter of the year; while the average cost to send remittances through banks and MTOs was 19.2 percent and 5.8 percent, respectively, in the third quarter of 2010. MTOs accounted for 70 percent of cash transactions to Lebanon, followed by money dealers with 22.4 percent and commercial banks with 7.5 percent.

Lebanese cement exports hit by Syria unrest October 11, 2011 01:40 AM By Brooke Anderson The Daily Star


BEIRUT: Lebanese cement exports to Syria and Iraq have fallen drastically as companies find it increasingly difficult to ship their products overland through Syria, which is facing security disturbances.

“The situation is now critical because the sales are decreasing radically to Egypt and Syria,” Pierre Doumet, general manager of Cimenterie Nationale told The Daily Star.

The company used to export 97 percent of its cement to Syria, Egypt and Iraq. In 2007, it invested $100 million in a production facility in Chekka in anticipation of increased regional demand.

“Now, we’ll have to export much further away. Cement travels with difficulty. It’s not a value-added product. We have to travel further and sell it cheaper. We’re now exporting more to Cyprus and we’re looking at the markets in Spain and Italy – which are all under severe recession.”

Today, as Lebanon’s neighbors continue to experience turmoil, producers of cement, one of Lebanon’s largest export items, are now looking at ways to make up for lost business. And as exports through Syria dwindle, they see that regional competitors, such as Jordan and Turkey, are gaining ground as they are able to offer lower prices because of their geographic proximity and cheaper gas prices.

Lebanon produces 6.5 million tons of cement per year, with an average price of $92 per ton and with an annual domestic demand of 5 million tons, meaning 1.5 million tons need to be exported, no easy feat as regional unrest shows no signs of abating.

But cement delivery in Lebanon mainly depends on the real estate boom in the country, which sometimes grinds to a halt in the event of security incidents.

“Unrest in Egypt and Syria both started around the same time. Syria was not only an export market but also a transport route to Iraq. Now it’s more complicated, especially with Syria’s export ban,” said Doumet, noting that even though his company continues to ship cement through Syria (while construction demand has almost completely stopped), higher risk has meant higher insurance and transport costs.

Compounding the problem of sharply declining exports is a stagnant and uncertain domestic market that doesn’t have the capacity to absorb all of the output. As Lebanon’s construction slows down, cement producers worry about what will come next.

“We need to look at the outlook and the indicators: Stagnation of construction activity, uncertainties, and a lack of government spending on infrastructure. These factors might lead to a decrease in domestic consumption,” said Jamil Bou Haroun, business development manager at Holcim, Lebanon’s largest cement producer. He said that although the domestic market is currently stagnant, he’s reluctant to increase exports due to regional unrest.

Sibline, which produces almost completely for the domestic market, has not seen a drop in demand, but the company’s CEO, Talaat Lahham, said that if regional unrest continues, increased competition domestically could affect his business.

“The cement industry is getting a double-whammy,” said Assem Seifeddine, associate dean of the business school at the American University of Beirut. “The biggest real estate projects are in a freezing phase, and the liquidity in real estate has dried up significantly, and the prices of real estate have gone down. This gives less incentive for big projects to be done. We don’t have the euphoria of the real estate market like we did two years ago … The real estate market will probably take another two to three years to pick up again.”

He noted that until now, Lebanon’s cement industry has been able to turn to exports when domestic demand was low. But the regional turmoil is making this a less viable option.

“Unfortunately, I don’t think things will improve in Syria anytime soon. If anything, things will probably get worse there.”

Lebanon’s cement industry is no stranger to adversity.

The 15-year Civil War that ended in 1990 hurt the country’s three cement firms – Cimenterie Nationale, Holcim and Sibline. Holcim was particularly affected given that it has historically relied on the domestic market. Then, in the mid-1990s, cement sales spiked with the country’s post-war reconstruction and subsequent construction boom.

The industry saw a period of relative stagnation until around 2005, when Iraq’s post-war reconstruction gave Lebanese cement exporters a lucrative new export market.

This lasted through 2010, when Indian and Pakistani cement companies began squeezing out their Lebanese competitors in Iraq, specifically CN, which exports the vast majority of its products and had until that point relied on Iraq as a reliable market.

Around the same time, some of Lebanon’s biggest export markets began experiencing instability with anti-government demonstrations, first in Egypt, then in Syria, which have continued until now and has dealt a severe blow to all exports these countries.

“Maybe Libya will surprise everyone and will pick up sooner than we think,” said Seifeddine.

Government salaries rise by LL199 billion October 11, 2011 01:40 AM The Daily Star
BEIRUT: Lebanon’s Finance Ministry said Monday payments of government salaries in January-June 2011 reached LL1.828 trillion, a rise of LL199 billion compared to January-June 2010.

A LL151 billion rise in basic salaries from LL1,229 billion in January-June 2010 to LL1,380 billion in January-June 2011 was mainly driven by higher payments to the military and security forces (+LL115 billion) and education personnel (+LL44 billion), and slightly offset by a drop in payments to civilian personnel (-LL8 billion).

The increase in basic salaries paid to the military personnel was mainly due to the fourth payment of the 1996-98 retroactive increase to military and security personnel which is to be paid in six disbursements over the 2009-11 period1 and the one-off payment of field service indemnities accrued between June 2008 and February 2011.

The increase in basic salaries paid to the education personnel was due to an estimated LL14 billion increase in payments to primary and intermediate education, LL16 billion in secondary education and LL9 billion for payment to teachers hired on a contractual basis.

“This is explained by the recruitment and appointment of 2,835 primary teachers and 755 secondary teachers for 2010 and 2011. It is also the result of the reclassification in the 2011 National Budget Proposal of payments made to contracted primary teachers from transfers (Article 14) to salaries and wages (Article 13),” the ministry said.

World Bank revises downward 2011 real GDP growth to 4 pct October 11, 2011 01:40 AM The Daily Star


BEIRUT: The World Bank projected economic growth in Lebanon at 4 percent in 2011, down from a January forecast of 7 percent and compared to growth of 4.1 percent in the Middle East & North Africa, 2.5 percent for the region’s oil importers and 3.5 percent for oil importers with links to the GCC.

Lebanon’s projected growth rate in 2011 would make it the seventh fastest growing economy in the MENA region for the year, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group.

It also projected real GDP growth in Lebanon at 5 percent in 2012 compared to 3.8 percent for the MENA region, 3.9 percent for oil importers and 4.5 percent for oil importers with links to the GCC.

Lebanon’s projected growth rate for 2012 would make it the fourth fastest growing economy in the MENA region behind Iraq with growth of 12.6 percent, Qatar with 7.1 percent and Djibouti with 5.1 percent.

Also, the World Bank forecast Lebanon’s fiscal balance to post a deficit of 5.5 percent of GDP this year, relative to a surplus of 1.4 percent of GDP for the MENA region, a deficit of 7.5 percent of GDP for oil importers and a deficit of 5.5 percent for oil importers with GCC links in 2011.

Lebanon’s projected fiscal deficit would be, along with Morocco, the sixth highest in the region in 2011, behind Egypt with a deficit of 9.5 percent of GDP, Iraq with a deficit of 8.4 percent of GDP, Syria with a deficit of 7.1 percent of GDP, and Yemen with a deficit of 5.9 percent of GDP.

Furthermore, it projected Lebanon’s current account deficit at 22.4 percent of GDP in 2011 and 21.3 percent of GDP in 2012, compared to a surplus of 8 percent of GDP for the region in 2011, a deficit of 5.4 percent of GDP for oil importers and a deficit of 17.2 percent of GDP for oil importers with GCC links.

In parallel, the World Bank revised downward Lebanon’s economic growth to 7 percent in 2010 from a January estimate of 8 percent, compared to growth of 4.3 percent in the MENA region, 4.7 percent for oil importing economies, and 5.3 percent for oil importers with GCC links. Lebanon was the third fastest growing MENA economies in 2010 among Arab countries behind Qatar at 16.3 percent and Yemen at 7.8 percent.

It also estimated Lebanon’s current account deficit at 24.1 percent of GDP last year compared to a surplus of 6 percent of GDP for the region, a deficit of 5.1 percent of GDP for oil importers and a deficit of 16.3 percent for oil importers with GCC links.

Lebanese banks maintain growth despite political, regional tensions October 12, 2011 03:12 AM The Daily Star

BEIRUT: The Lebanese banking sector continued to achieve relatively good growth in assets and customer deposits in the first eight months of this year despite the political standoff and regional turmoil. Domestic banking activity grew by 7.1 percent since the beginning of the year to reach $138.1 billion at end-August 2011, a report said.

The report was published by Bank Audi Lebanon Weekly Monitor. It said banking activity in Lebanon continued to be driven by customer deposits.

The latter, accounting for over 80 percent of total banks’ balance sheets, reported a satisfactory 5.4 percent growth in the December 2010 to August 2011 period.

Yet, the $5.7 billion rise in the deposit base so far this year remains lower than the $6.9 billion increase recorded over the corresponding period of last year.

The rise in the customer deposit base of banks operating in Lebanon over the first eight months of this year has been mostly accounted for by resident deposits. The latter contributed to 65 percent of the total deposit base growth, posting a $3.7 billion increase over the period of 2011.

Non-resident deposits also grew since the beginning of the year by $2 billion, bringing their contribution to the deposit base increase to 35 percent, compared to a lower contribution of 104 percent registered in the corresponding period of 2010.

From a currency angle, this year’s rise in bank deposits was driven by foreign currency deposits.

Within the context of non-negligible conversions to the benefit of foreign currencies this year (especially during the month of January), deposits in local currencies retreated by 4.2 percent in the December 2010 to August 2011 period, while those in foreign currencies rose by 10.9 percent over the same period.

Accordingly, the deposit dollarization ratio resumed an upward trend, moving from 63.2 percent at end-December 2010 to 66.6 percent at end-August 2011.

The satisfactory increase in banks’ funding base and additional liquidity at hand allowed banks to extend new waves of loans.

Banks’ lending activity grew by 11.4 percent over the first eight months of this year to reach $38.9 billion at end-August 201 1.

The $4 billion of new loans extended by the sector actually turned 18 percent lower than the corresponding volume of 2010’s first eight months, yet remain noticeable within the context of a domestic political stalemate that lasted throughout most of the first half of this year.

Lending activity growth was mostly accounted for by the resident sector, with a 75 percent contribution to new loans extended by Lebanese banks. Loans to non-residents registered a positive variation by $1 billion over the first eight months of this year.

Foreign currency loans continued to drive lending activity this year (a 71 percent share in lending growth), but Lebanese pound loan growth, supported by BDL’s reserve exemption measures, maintained a contribution to total lending activity growth at about 29 percent of the total, a high compared to the years 2006-2008 (during which that share averaged 10 percent).

Ogero to increase Internet speed by 1mbps October 12, 2011 03:12 AM The Daily Star
BEIRUT: Ogero media office issued a statement Tuesday saying that it will increase the speed of DSL Internet connections starting Wednesday by 1mbps in some areas of the north and south regions. The step came after Ogero launched a new modem it had received last Saturday.

“Ogero has started working day and night on putting this modem to work the minute it received it,” said the statement. It added that the speed will go up in other areas as soon as Ogero receives other necessary equipment. “The Telecommunications Ministry is working on securing liquidity to buy the necessary equipments because Ogero does not have the means to purchase them,” added the statement. – The Daily Star

Improved Internet not felt by Lebanese October 12, 2011 03:12 AM The Daily Star
BEIRUT: A majority of Internet users have seen no change to their connection speed since a scheduled increase was due to come in to effect, according to poll conducted by The Daily Star this week.

The vast majority, 68 percent, of the poll’s more than 550 respondents said that their Internet connection was “slow and nothing had changed” since the beginning of October, the month the government said Internet Service Providers would receive faster speeds to pass on to users.

The next largest group, 15.6 percent of respondents in the weeklong poll conducted on The Daily Star’s website, said they had noticed “a marginal increase.” Only 9.4 percent said their connection was as fast as the authorities said it would be.

The results may come as no surprise to Lebanon’s 1 million Internet users, who have waited years for an increase to speeds which have been rated the worst in the world by online speed-testing group, Speednet.com.

Critics cite key issues, including a national Internet backbone that is obsolete and needs upgrading, distribution delays, archaic legislation, and the sector’s lack of transparency.

Some activists contend that the infrastructure necessary for a fast connection is ready, but that political bickering is preventing it from being “switched on.”

This appeared to be resolved over the summer, with the activation of a submarine fiber optic cable, and the release of a new schedule of prices.

However, it is unclear if the promised high speeds have come into effect, with many Lebanese Internet users continuing to complain about the same high prices and slow connections.

Ruba Mourad, a member of the Internet activist group Flip the Switch, wrote on the group’s Facebook wall Tuesday, “Hey guys! Does anyone know what’s going on in Hamra? Has the upgrade been implemented? We feel no difference at all. Any suggestions?”

She added, “on our web account IDM states that we have been upgraded to 1Mb download, but in reality that is not the case. We barely get 0.16 MB. Please let me know if anyone has felt any improvement.”

Meanwhile, another Internet activist group, Ontornet, urged people to be patient, noting that the government had promised faster connection in the beginning of October, and that the month is not yet at the halfway point.

Some of the ISP providers told The Daily Star that they are confident that the Internet will become much faster before the end of October.

They added that Ogero and the Ministry of Telecom have promised to release more bandwidth in the coming few days.

But some of the ISPs have complained about the lack of coordination between Ogero and Telecom Minister Nicolas Sehnaoui.

“The problem is that Sehnaoui says something while Ogero says something else. It seems that there is a tug of war between the two sides. We want both sides to bury the hatchet and put their differences aside for the sake of the Lebanese,” a manager of one of the ISPs told the paper.

Gasoline prices continue to drop October 12, 2011 10:27 AM (Last updated: October 12, 2011 01:17 PM) The Daily Star


BEIRUT: Gasoline prices continued their decline Wednesday, with petrol falling by LL800.

Diesel and fuel oil also fell by LL500.

The price of 98-octane rated fuel is now LL33,800 and 95-octane rated fuel is LL33,100.

Kerosene gas is priced at LL28,200 and fuel oil at LL28,600. Diesel oil is now sold at LL29,100, according to the weekly price schedule released by Energy Minister Jibran Bassil.

Last week prices declined by LL1,000, the first sharp decline this year.

Greater Beirut has fast speed Internet: Sehanoui October 12, 2011 03:36 PM The Daily Star


BEIRUT: Telecoms Minister Nicolas Sehnaoui said Wednesday that certain towns north and south of Beirut will today have fast speed Internet, and told users that Greater Beirut has already received upgrades.

“Greater Beirut has been covered. Today, the north, Sidon and Tyre will have fast speed Internet,” Sehnaoui told reporters Wednesday morning.

Sehanoui added that the ministry is working on providing the rest of the areas with the necessary equipment to receive faster Internet.

Lebanese Internet users expected to receive cheaper, faster services early this month, after the Telecoms Ministry announced that it would be releasing faster services at cheaper prices at the beginning of October.

A poll conducted by The Daily Star over a one-week period showed that 68 percent of those surveyed did not experience any difference in their Internet speeds. Around 16 percent said they had witnessed a marginal increase.

Lebanon’s has some of the slowest and most expensive Internet speeds in the world.

Late-night deal averts strike October 12, 2011 03:13 AM By Hassan Lakkis The Daily Star

BEIRUT: An eleventh-hour deal that saw the Lebanese government raise wages and increase benefits averted what had promised to be the largest general strike in the country’s history but drew an angry response from the private sector.

The General Labor Confederation (GLC) suspended Wednesday’s planned strike after the Cabinet agreed late Tuesday night to increase the minimum wage to LL700,000 ($466) from the current LL500,000. The government also agreed to increase by LL200,000 the wages of those earning less than LL1 million, and by LL300,000 those who earn between LL1 million and LL1.8 million. The agreement also included raising the daily transportation allowance to LL10,000 from LL8,000 while the education allowance for children jumped to a maximum of LL1.5 million.

Representatives of the private sector voiced outrage over the deal and vowed to adopt a tough response following a meeting scheduled on Wednesday.

There is deep concern that some companies could lay off their workers and even shut down their businesses if the government tries to enforce a salary increase, which is beyond the means of many firms.

The private sector favored raising the minimum wage to LL700,000 but insisted on offering a wage increase of only LL150,000 for people earning less than LL1.5 million. They also rejected the new ceiling for transportation and education allowances.

The deal, which was passed despite opposition from some ministers, was brokered by Health Minister Ali Hassan Khalil, who was empowered by Parliament Speaker Nabih Berri to negotiate with both the GLC and the private sector. The agreement averted a general strike that could have crippled the entire country and widened the gap between the two parties.

Bank employees, school teachers and MEA and TMA staff had announced their intention to join the strike on Wednesday.

Prime Minister Najib Mikati admitted that both the GLC and the private sector had some reservations about the deal.

“We had to take into consideration the capabilities of the state and the private sector, as well as the impact on inflation. This may not be the best solution but under the circumstances this the best we can offer,” Mikati told reporters.

GLC head Ghassan Ghosn announced that the union had suspended the strike temporarily for the sake of civil peace but would reserve the right to stage protests at a later date if warranted.

“We have some reservations to the deal reached by the government, and we intend to hold a broad meeting on Thursday to discuss this issue and take appropriate measures,” Ghosn said.

He added that the deal had not met the aspirations of laborers, noting that many employees would not be entitled to any raise under the new government plan.

The Change and Reform ministers withdrew from the Cabinet deliberations to express their deep reservations about the deal.

The ministers were furious because Mikati and his allies had not even discussed a proposal made by Labor Minister Charbel Nahhas to raise wages by 30 percent across the board.

Energy Minister Jibran Bassil described the measures agreed by the government as “nothing more than tranquilizers.” He claimed that Mikati had made the last-minute compromise only to avoid the strike.

Earlier in the day, Berri held talks with GLC leaders and some representatives of the private sector in an effort to narrow differences between the two sides and avoid the general strike.

The GLC had originally demanded that the minimum wage be increased to LL1.2 million ($800) from the current LL500,000.

Economists and businessmen have warned that any salary increase that was not carefully calculated could drive up the prices of commodities.

But Mikati said he has instructed the economy minister to monitor prices of commodities to ensure that the new measures do not stoke inflation.

The Cabinet also agreed to issue bonds in foreign currencies to finance several projects and approved two agreements between Lebanon and the World Bank.

Mikati indicated that he may drop the idea of raising the VAT to 12 percent, as most parties and unions have voiced strong opposition to this proposal.


A version of this article appeared in the print edition of The Daily Star on October 12, 2011, on page 1.


This article was amended on Wednesday, October 12 2011
This article was amended on Oct. 12. Due to an editing error, a 0 was missed off some of the figures. The original article wrongly stated that the government would increase the minimum wage to LL700,00 and other wages by LL200,00 and LL300,00. These figures should have been LL700,000, LL200,000 and LL300,000 respectively.

Citizens urge lower prices instead of wage hike October 13, 2011 01:24 AM By Wassim Mroueh The Daily Star


BEIRUT: Merchants and employees expressed displeasure Wednesday with the Cabinet’s decision to raise salaries, arguing that authorities should have instead addressed soaring prices in the country.

Many who were interviewed by The Daily Star complained that shops, companies and schools have already increased the prices of their services and commodities in anticipation of the raise, making the move useless.

A clerk who works in a clothing shop in the Mar Elias neighborhood of Beirut argued that while some employees will receive an increase of LL200,000 in their salaries, they will end up paying much more, given the continuous increases in prices.

“All this is empty talk, they should first reduce the prices of commodities,” he told The Daily Star Wednesday. “This will make life easier for employees as well as shop owners.”

The same view was echoed by Ghassan Haboubaty, who advised that the government curb soaring prices and offer soft credit facilities for young people to buy homes.

“An additional LL200,000 will not make it easier for me to marry and buy a house,” explained Haboubaty.

Following marathon discussions between representatives of the private sector, the General Labor Confederation and government officials, the Cabinet agreed to increase the minimum wage to LL700,000 ($466) from the current LL500,000. The government also agreed to increase by LL200,000 the wages of those earning less than LL1 million, and by LL300,000 those who earn between LL1 million and LL1.8 million. The agreement also included raising the daily transportation allowance to LL10,000 from LL8,000, while the education allowance for children jumped to a maximum of LL1.5 million.

The deal averted a general strike which was originally planned by the GLC for Wednesday.

For a woman who works in a perfume shop at Hamra Street, the salary raise was “unfair.”

“Why did we get a lower raise than those whose salaries range between LL1 million and LL1.8 million?” the perfume shop worker asked.

“At the same time, we will not benefit from it [the raise] because the prices of commodities will go up,” she added.

The woman, who requested to remain anonymous, explained that the strike should not have been called off. “They should have carried out the strike and demanded lower prices.”

“Introducing the raise was a mistake. The government should cut the price of gasoline and work on boosting power supply in the country,” said Ibrahim Simmo, who works in a boutique shop. “Everything will become cheaper when the price of gasoline goes down.”

“After the raise was introduced, the product whose price was LL6,000 will now cost LL9,000 or LL 10,000 … merchants are waiting for such an opportunity,” he added.

Mahmoud Fakih, an employee, said workers would be happy to have the same salaries but see a drop in prices.

“A LL200,000 or a LL300,000 raise does not compensate for the increase in the prices of food, medical services and tuition fees.”

Discontent was also voiced by merchants, who wondered how they could pay their employees a salary raise amid slowing business.

Sana Abu Karroum, who manages a jewelry shop, said it was difficult for the store’s owner adapt to the wage hike because the shop is already experiencing a low turnover.

“The employer cannot afford to raise salaries, but the employee will never understand this,” she said, expecting that some shops will close down as a result of this policy.

“If I have three employees, I will lay off one, following this raise,” said the owner of a clothing shop. “How can I afford paying a raise?”

Wage increase to impact treasury October 13, 2011 01:24 AM By Mohamad El Amin The Daily Star
BEIRUT: Economists warned Wednesday that the new salary package offered by the government Tuesday could cost the Lebanese treasury up to LL1 trillion ($666 million) annually but differed on whether the measures would negatively impact the economy.

Former Finance Minister Jihad Azour told The Daily Star that the public sector would have to allocate around LL1 trillion for the new wage increases in order to pay the salaries of government employees.

“These estimations are based on the 2008 wage increase which was approved by the government at that time,” Azour said.

The government of former Prime Minister Fouad Siniora raised the minimum wage to LL500,000 from LL300,000 a month. Unions considered the raise insufficient and demanded better wages and improved social and medical benefits for all citizens.

Azour added that the salary increase is a hefty price to pay, advising the government to boost productivity, improve efficiency and carry out structural reforms in order to meet the new obligations for the treasury.

He argued that the government can improve the social safety net, upgrade the current labor law and implement the pension law which has been sitting in the drawers for a long time.

Azour’s view was not shared by economists Ghazi Wazni and Louis Hobeika, who both estimated that the raise would cost the treasury LL0.5 trillion ($331 million) annually.

The total cost of government salaries and end of service benefits is little more than $4 billion a year, or 35 percent of total government revenues.

Wazni believes that the government should cut spending and apply wide austerity measures to keep the budget deficit from rising.

When asked about the impact on inflation, Azour said the risk would be high if wage increases were not matched with increased economic productivity to offset inflationary pressure on goods and services.

However, Wazni thought the wage increases might have already fostered a significant increase in prices.

“The prices have risen already by approximately 10 to15 percent under impact of the wage increase talks over the past weeks,” he said, arguing that the salary increase is reasonable and, in theory, should not cause prices of commodities to surge dramatically.

Wazni feared that some merchants and traders would seize this opportunity to manipulate prices, calling on the government to increase price control.

For his part, Hobeika, thought wage increases would have minimal effect on prices: “It will not have a substantial effect on inflation rates. The raise is insignificant to cause inflation or prices to rise very high.”

Economists’ assessment of the impact of the wage increase on private the sector also differed.

Azour thought the impact on the private sector was hard to measure now before knowing how business would react to the decision. However, he thought certain businesses would pay a higher bill.

“The construction industry, industrial institutions, and other labor-intensive sectors would be most affected by these [wage] increases … These sectors might be pushed toward hiring more foreign workers,” Azour warned.

Hobeika, however, thought the wage increase would mainly harm weaker businesses outside Beirut: “These increases will punish weaker companies outside the capital.”

But Hobeika stressed that the affluent banking sector, for instance, would not be drastically affected by the wage hike.

Wazni thought the wage increase amounts were not counterproductive to the private sector but would rather help in energizing the economy.

The settlement on wage increases, Azour said, yielded more “political gains” to the Cabinet, rather than sustainable social and economic gains.

Real estate booms in Hazmieh as property sales fall in capital October 14, 2011 12:46 AM By Brooke Anderson The Daily Star

HAZMIEH, Lebanon: With sales of flats across the capital slowing down, one area that is bucking the trend is the northeastern Beirut suburb of Hazmieh and its surrounding towns, where people are attracted to the relatively low prices and calm and clean environment.

“People like it because it’s clean and still affordable,” says Salim Khalil, the general manager at the real estate development company iGroup, whose apartments start at $250,000, less than half the price of a similar luxury apartment in central Beirut. “You can still see trees and rivers in Hazmieh.”

Here, on the hills overlooking Beirut, shiny new apartment complexes stand alongside freshly dug-up empty lots emblazoned with the names of development companies, while above them cranes dot the skyline.

Land in Mar Takla, at the center of Hazmieh goes for $3,000 per square meter, while land in the nearby neighborhood New Mar Takla sells for slightly less, compared to $7,000 to $18,000 in Beirut.

“If you’d come a week ago, you would have seen rows of trees in front of you, hundreds of years old,” says Elias Saade, looking out the window of his villa in Hazmieh, which is soon to be demolished to make way for Hazmieh Village, a development project of luxury apartments on a mountain overlooking the Metn hills and the Mediterranean Sea, in partnership with Mahmoud Joueideh, the director of the Beirut International Exhibition & Leisure Center. “The developers are required to plant new trees. But of course it won’t be the same.”

Saade, a former head of the municipality of the nearby town of Wadi Shahrur and lifelong resident of the Hazmieh area, seems to have mixed feelings about the rapid new development of the place from which he hails.

“Hazmieh has changed 100 percent from what it was five years ago,” he says. “Some of the older residents don’t like this, because it was quiet and now there’s traffic. But they need to keep up with the times.”

Once a quiet and woody suburb of Beirut, only accessible by small windy roads, Hazmieh has become one of the largest construction sites in Lebanon. Residents and developers alike say the Hazmieh of today bears no resemblance to that of just a few years ago.

The town has seen the construction of 90 new buildings over the past two years, along with a complete upgrade to its infrastructure. A month ago the municipality began the renovation of Damascus Road (the main route linking Beirut and eastern Lebanon), the rebuilding of the main roundabout and the construction of a new bridge, as well as new roads linking Hazmieh to Beirut and the rest of Metn.

Developers credit the municipality with a lack of bureaucracy and support for ongoing projects.

“The municipality is encouraging investment by offering good infrastructure,” says Khalil from iGroup.

Its location, as the closest suburb to Beirut and with direct road access to Downtown, the airport, the north and the east, makes it attractive for residents and developers.

Considered a middle- to upper-middle-class town, developers tout Hazmieh as a mixed-sect area, free from political affiliations that are prevalent throughout much of Lebanon, located near the Defense Ministry and protected by the Lebanese Army. It is also close to the prestigious grade school, Collège Notre Dame de Jamhour, the Bellevue Hospital and other landmark institutions.

Scheduled to open in a year is the Beirut City Center, which on completion will be the largest shopping mall in Lebanon.

The seven-story mall, across 164,000 square meters, will include four basement levels of parking, retail shops, restaurants, a Carrefour supermarket and a movie theater.

The developers are working to build the mall according to LEED environmental certification, the international standard for green friendly construction. Its environmental credentials might be called into question, however, given the amount of traffic the shopping center will produce, and the absence of reliable public transportation reaching the area.

The rapid construction of the area appears to be a mixed blessing, with some people saying that Hazmieh is finally getting the recognition it deserves after years of being in the shadows while at the same time voicing concerns that the new development could cause a spike in prices.

“The demand is at a peak now,” says Elie Hakme, business development manager at Hakme Group. “There’s not going to be more construction, and now owners are asking for higher prices. Now, the prices are about 15 percent higher than they were two years ago.” He adds that the area has so far been undervalued because of lack of infrastructure and ongoing construction.

However, as it develops the area may become ever more similar to its metropolitan neighbor.

Ministry figures contradict rising prices of goods October 14, 2011 12:46 AM By Mohamad El Amin The Daily Star
BEIRUT: Consumers Lebanon says wage increases might have already caused hike in prices of basic commodities between 8 to 30 percent, despite a weekly Economy Ministry price-index reporting a drop in most foodstuff prices this past week.

These remarks followed reports of significant price increases, with many citizens claiming prices had already been driven up by talks over wage increases over the past weeks.

Prices of tobacco and chocolate bars have, for instance, jumped by LL250.

Some consumers noticed that even prices of eggs in some groceries rose by nearly 25 percent in the past few days.

But an Economy Ministry report issued Thursday claimed most foodstuff prices dropped over last week.

The report said vegetable prices were down by 1.5 percent, fruit prices dropped by 2.2 percent, meat items prices dropped by 2.7 percent, while only egg and dairy products prices increased by 2.2 percent.

In an interview with The Daily Star, Consumers Lebanon head Zouhair Berro challenged the Economy Ministry figures, saying prices of 12 basic items had seen a marked rise since August, driven by talks of wage hikes.

“A study we conducted Friday, in response to wide complaints about price hikes, showed that 12 basic commodities’ prices were up between 8 to 30 percent compared to prices last August.”

Berro added that Consumers Lebanon has been warning the government against an arbitrary wage increase that could drive huge price hikes. Berro, however, was convinced there was no valid economic reason behind this surge in prices.

“The monopolies controlling the market are the main cause for price increases. The talk about price monitoring in Lebanon is empty. The government does not have the capacity to monitor prices. With the absence of a legal framework and political will, it is very hard to control prices.”

When asked about the disparity of the statistics between Consumers Lebanon and the Economy Ministry, Berro said the basket used by the ministry was too broad. The weekly increase or decrease percentages also hide the real percentages of price hikes.

Following discussions between representatives of the private sector, the General Labor Confederation and government officials, Cabinet agreed to raise the minimum wage to LL700,000 ($466) from the current LL500,000. The government also agreed to increase by LL200,000 the wages of those earning less than LL1 million, and by LL300,000 those who earn between LL1 million and LL1.8 million. The deal had averted a general strike which was originally planned by the GLC for Wednesday.

Economists have varied opinions on how wage increases would affect the economy with some warning it might drive significantly higher inflation if not coupled with increased productivity and others disregarding it as too low to have a significant impact.


The Economy Ministry said it will vigorously monitor the prices of all basic commodities in the market and will not hesitate to fine traders who hike prices beyond reason.

Division widens between private sector, labor unions over wages October 15, 2011 01:57 AM The Daily Star
BEIRUT: Leading businessmen and labor unions Friday maintained their fierce attack on the government’s controversial salary package amid concern that this issue could affect the credibility of Prime Minister Najib Mikati.

The Lebanese Industrialist Association, which held a meeting to take a tough stand against the government’s decision to raise the minimum wages, advised the Cabinet to pursue a comprehensive social policy to improve the living conditions of the Lebanese instead of raising the salaries beyond the means of most companies and businesses in the country.

The association stressed that it is not giving the full rights of labors in Lebanon but these demands should be reasonable: “The Lebanese public should be aware of the situation of the national economy, which is bleeding amid a steep international economic crisis and regional turmoil that have left their traces on our country.”

The association reminded the Lebanese workers that Greece was compelled to cut the salaries of Greek employees in order to reduce the mounting deficit. It added that if the government tried to enforce the salary increase. Most companies and factories would be forced to either shut down their businesses or lay off more than 30 percent of the workforce.

The Association of Insurance Companies in Lebanon also supported the call to refrain from paying the salary increase to the staff as this would further harm the already fragile economy.

The private sector said they would challenge the government’s decision to raise the salaries and increase education and transportation allowance.

The Economic Committees, which held talks with Mikati earlier, insist on raising the minimum wage based on the statistics of the Central Spastics which estimated that the cost of living since 2008 rose by less than 17 percent, a figure widely refuted by all labor unions and independent consumer groups.

The sharp debate over the salary package has even spilled over to the divided Cabinet with some ministers openly criticizing Mikati for handling the whole matter.

Labor Minister Charbel Nahhas favored giving all the Lebanese 20 percent salary increase, and the exemption of the private sector from paying the sickness and maternity benefit fees for the employees. Nahhas sought to encourage companies to offer higher salary for their staff.

The minister wants the government to provide the sickness and maternity fees which is currently paid by the private sector.

Nahhas advised the government to finance the sickness and maternity benefits for employees through taxes on real estate profits and capital gains.

But this proposal was quickly dismissed by Mikati and his allies as unrealistic, arguing that this step would cause a huge financial burden on the treasury.

Some news media in Lebanon say that the government’s salary package may hit a wall if the private sector refused to comply with this decision.

They added failure to comply with this decision could be used by Mikati’s opponents to as an excuse to question his ability to run the government.

Maroun Khawli, the president of General Confederation of Lebanese Workers, blasted the private sector for refusing to comply with the government’s decision to raise the salaries.

“The Economic Committees, which earlier took part in the price index committee meeting headed by Nahhas, agreed to raise the salaries by 20 percent. But now these committees are backing down from their original demands,” Khawli said.

He warned that Lebanese workers will not hesitate to stage sit-ins near the houses of leading businessmen to pressure them to accept the new salary packages.

Hajj Hasan: Main beneficiaries of rising food prices are merchants October 15, 2011 01:57 AM The Daily Star


BEIRUT: The Food and Agriculture Organization recognized Friday as world food day in the presence of Agriculture Minister Hussein Hajj Hasan, who focused his comments on the reasons behind the worldwide hike in food prices.

“One of the reasons behind the rise in food prices is the growth in population and the change in consumption patterns,” he said.

However, Hajj Hasan added that this is not the main reason behind the increase in food prices because production has also jumped simultaneously with the growth in population. “But prices remained high,” he said.

He added that merchants tend to damage the produce if they were not able to sell it, in order for them to keep prices high.

“If we are to look at the difference between the profit generated by farmers and the amount of money paid by consumers, we realize that the main beneficiaries are merchants,” he added.

Moreover, Hajj Hasan said that greenhouse gas emissions by the super powers have had a negative impact on climate change which in turn has negatively affected natural resources.

For his part, Elie Bsaibes, president of the Engineers Syndicate, emphasized the need to adopt development strategies for all sectors and mainly the agriculture sector in addition to preserving agricultural areas.

He called on the industrialized nations to spare no efforts in supporting poor nations. “Around $83 billion is needed for investment in the agricultural sector and agriculture development which is much better than using this money in wars,” he added.

Meanwhile, Ali Momen, FAO representative in Lebanon, spoke about the impact of the increase in prices on poor nations. Momen emphasized the importance of investing in the agriculture of under developed countries where 98 percent of hungry people live and where production must be remarkably increased to feed poor nations’ populations.

Lebanese economy rebounds in August, indicators show October 15, 2011 01:57 AM The Daily Star


BEIRUT: Economic indicators released Friday showed the Lebanese economy is strongly rebounding from its downturn in the early months of the year.

Arrivals at Beirut International Airport rose 1.33 percent year-on-year to 1.87 million in the first eight months of 2011, including a massive 23 percent rise in August arrivals, an increase of 261,866 arrivals, signalling a turnaround following seven months of slow airport activity. Similarly, the coincident indicator, a measure of economic activity in the country, rose 3.68 percent year-on-year to 236.7 points in August, although still 8 percent lower compared to July. However, the indicator is historically lower during the summer months.

Economic activity also appears to have picked up well before August. According to the second quarter business survey, more managers from virtually all sectors of the economy reported an improvement in activity compared to the first quarter of the year, although business remained sluggish when compared to the same period in 2010.

In particular, the difference between those managers estimating that there has been an improvement in sales volumes, and those reporting a decline shrunk to -4 percent in the second quarter, up from an all-time low of -27 percent in the first three months.

Trade activity proved resilient to regional events as Lebanese exports spiked 20 percent year-over-year to $372.9 million in August, following a 38 percent leap in July exports. In total, exports rose 6.6 percent in the first eight months of the year, slightly outpacing the 6.3 percent growth in imports, and leading to an expansion of 6.2 percent in the country’s trade deficit to $9.72 billion by the end of August.

Customs receipts, a significant revenue source for the government, fell only 7.2 percent year-on-year to $117 million in August, compared to average drops of 22 percent in the previous seven months.

Although retail, trade, and tourism appeared to weather the impact of the Arab uprisings and domestic political turbulence, data showed the construction sector is struggling.

Construction permits, an indicator of future construction activity in the country, were 29 percent lower in August 2011, at 1.14 million, in comparison with August 2010.

In the first eight months, permits fell 7.3 percent year-on-year, highlighting the severity of the real estate market downturn in Lebanon, but boding well for future prices as developers cut back new supply.

Pay increase will lead to hike in tuition fees: private schools October 15, 2011 01:57 AM The Daily Star
BEIRUT: The Association of Private Educational Institutions in Lebanon Friday rejected a newly approved pay raise, saying the new measure could lead to a rise in tuition fees.

The association said in a statement that it “categorically rejects the salary increases at the beginning of the academic year 2011/12 which will inevitably lead to an increase in tuition fees … and threaten the closure of schools and displacement of teachers.”

However, the association, which covers around 1,500 private schools across the country, condemned a call by the Teachers’ Union to hold a general strike Wednesday, saying this measure would “target parents and institutions alike.”

Meanwhile, the Lebanese Industrialists Association issued a statement voicing reservations over the pay raise given the ongoing global financial crisis and the unrest in the Arab world.

Most of the labor unions and associations have voiced anger at the deal struck between the General Labor Confederation and the government late Tuesday night, arguing that many Lebanese will not truly benefit from the salary increase.

The Cabinet Wednesday endorsed the controversial salary hike, in which the minimum wage will be raised from LL500,000 to LL700,00.

It also agreed to raise by LL200,000 the wages of those earning less than LL1 million and by LL300,000 those who earn between LL1 million and LL1.8 million.

“The Lebanese people should be aware of the reality of the national economy which is bleeding in light of the ongoing global economic crisis and the unrest in the Middle East,” the association said in a statement following an extraordinary meeting of its board of directors Friday.

It said Lebanon’s markets had experienced the negative repercussions of these events and had seen a hike in prices, high-priced production and a decline in export.

The association also said the export market is likely to see record low levels of growth for this year and warned of severe complications at various other levels.

The industrialists challenged Cabinet’s decision, and said they would not abide by the pay increases.

“The solution lies in the adoption of a comprehensive social policy in which the text is drafted together by the state, and employers and workers together,” the statement said.

It also agreed to raise by LL200,000 the wages of those earning less than LL1 million and by LL300,000 those who earn between LL1 million and LL1.8 million.

those who earn less money get small raises, and those who earn more money get bigger raises ?? is that even sane?

Lebanese banks offer good value: EFG Hermes October 17, 2011 12:40 AM By Peter T. Daou The Daily Star


BEIRUT: Lebanese banks may have successfully weathered the Arab uprising storm and overcome weaknesses in the domestic market, but their success has not attracted more investors.

“To me, Lebanese banks offer very good value, but liquidity on the Beirut Stock Exchange is low, and investors don’t like that in case they want to get out quickly,” said Elena Sanchez-Cabezudo, CFA, MENA banks analyst at EFG Hermes, in an interview with The Daily Star.

Indeed, recent trading activity on the Lebanese exchange has been dismal even by downturn standards after investors slashed their trading by over two-thirds to 326,779 shares during the week ending Oct. 14.

Despite weak trading, Beirut stocks mounted their biggest comeback in three months with the Beirut Stock Index advancing 0.88 percent during the week and closing at 1,220.54 points Friday to bring the market capitalization slightly up to $10.52 billion.

The rebound marked the latest attempt by stocks to regain some of the lost grounds during their worst year-to-date performance in a decade.

Solidere, Beirut Stock Exchange’s heavyweight stock, saw its class A and B shares inch up 1.08 percent and 0.95 percent respectively, but it was Bank Audi, the country’s top lender by assets, which led the market with a 3.64 percent gain to close at $5.98, while BLOM and Byblos held their grounds at $7.8 and $1.63 respectively.

Lebanese bank networks in crisis-stricken countries like Egypt and Syria had sparked investor fears of rising provisions over the past nine months.

However, Sanchez-Cabezudo said Lebanese banking operations in Egypt have been resilient to the uprising, attributing the decline in stock prices to heightened MENA risk-aversion.

“In Egypt, operational performance of Lebanese banks during the first half was resilient despite higher provisions, so, overall, they have been very resilient to the Arab Spring environment and to weak growth in the domestic market. I think risk aversion for the MENA region as whole is behind the decline in equity prices,” said the EFG Hermes equity analyst.

Although Lebanon’s banks were not exposed to the credit crises faced by their UAE peers, their shares have suffered more, creating an attractive entry point for value investors.

“Current market prices of banks do not reflect fundamentals. They were already undervalued even before the recent crisis,” said Sanchez-Cabezudo who has “BUY” ratings on Bank Audi and BLOM Bank with price targets of $8.61 and $10.7 respectively.

Still, the pillars of the Lebanese economy were not fully immune to the domestic political turbulence. Private sector deposits at the country’s commercial banks rose only 9.96 percent year-over-year to $113 billion in August, their slowest pace since November 2007, and inched up 5.4 percent in the first eight months compared to a 7.3 percent rise during the same period in 2010.

On the bright side and in the absence of stock price gratification, investors can still bet on the generosity of Lebanese banks in distributing dividends, but should expect little sympathy in return for falling prices.

Sanchez-Cabezudo recommended “banks preserve capital to take advantage of a potential improvement in growth when it comes.”

Safadi: Wage increase to cost treasury $700 mln October 17, 2011 12:40 AM The Daily Star

BEIRUT: Finance Minister Mohammad Safadi said over the weekend that the recent wage increase endorsed by the Cabinet will cost the Lebanese treasury $700 million annually.

Safadi, who was speaking to Sawt al-Mada radio, also defended his proposal to increase the Value Added Tax from 10 percent to 12 percent, stressing that the extra revenue from this tax would entirely return to the Lebanese people and the not the pockets of the treasury.

He also warned that the government has LL24 trillion in outstanding dues in 2012, LL18 trillion of which is in Lebanese pound-denominated currency and the remaining LL6 trillion in foreign currency.

“The increase in the VAT has a social objective because all the proceeds from this increase [2 percent] will return to the people,” Safadi explained.

The minister argued that that if the citizens are against raising the VAT ceiling, then extra social and medical benefits cannot be made available.

“Health spending originally stood at LL440 billion and according to the 2012 draft budget the allocation for this item will rise by LL300 billion to allow more people benefit from this service,” Safadi said.

He added that an additional LL250 billion would be allocated to the social safety network.

Safadi stressed that he is not against the principle of slapping a tax on real estate profits so long as this tax does not exceed 15 percent.

Safadi revealed that the Cabinet sought to avert the planned strike by the General Labor Confederation last week based on information that a “fifth column” was bent on starting riots.

Safadi also urged the private sector to abide by the government’s decision to boost workers’ wages.

“The government received information that a fifth column would take advantage of the strike [and spur] riots,” Safadi said, adding that concern for national security “at this sensitive period Lebanon and the region is undergoing” had driven the Cabinet to exert all efforts to prevent this from happening.

The government managed to avert strike action by the GLC Tuesday after hours of negotiations with labor unions to increase the minimum wage.

The Cabinet agreed to increase the minimum wage to LL700,000 from the current LL500,000 and raise by LL200,000 the wages of those earning less than LL1 million and by LL300,000 those who earn between LL1 million and LL1.8 million.

The move by the government was met with fierce criticism by representatives from the private sector, who openly challenged Prime Minister Najib Mikati Wednesday by urging firms not to abide by the decision.

Even the GLC, which had endorsed the new wage hikes and called off the strike action, tried to push for more amendments to the original proposals.

After meeting Mikati Thursday, Ghassan Ghosn, the head of the GLC, said he had voiced strong criticism of the ceiling placed on those that could benefit from the wage increases, set at LL1.8 million by the government, and said he asked Mikati to offer LL300,000 to all categories.

In his interview Saturday, Safadi admitted that the compromise agreed late Tuesday was lacking.

“Neither we, the labor unions nor the [private sector representatives] are satisfied [with the decision] but I think it is the beginning to the solution and not the end,” Safadi said.

The private sector argues that raising salaries will lead to a rise in inflation and has urged the government to seek alternative ways to help employees.

Safadi said additional steps are needed to prevent the agreed salary increases from being offset by rising inflation.

“If we don’t take additional steps then [the increase] will only be temporary and will be eaten away by inflation,” Safadi said, adding that “raising salaries without taking all the other measures will render the increase useless.”

those who earn less money get small raises, and those who earn more money get bigger raises ?? is that even sane?

No, it's not even , I think the raises should take into account the profession too, btw is it true that they've raised prices of commodities a loooot before even raising salaries ???

Cabinet set to approve wage increase: Nahhas October 18, 2011 01:00 AM The Daily Star

BEIRUT: Labor Minister Charbel Nahhas said Monday that the Cabinet will issue a decree in the coming days to increase the salaries for public and private sectors’ employees, despite the strong opposition from the Economic Committees and most labor unions.

Nahhas, who held separate talks with the General Labor Confederation and representatives of the private sector, told reporters he will advise the Cabinet to review the previous decision and make the necessary adjustments in an attempt to win the approval of all sides.

But the minister suggested that the chances of amendments to this decree are very small.

Head of GLC, Ghassan Ghosn, told The Daily Star that the private sector has no choice but to adhere to the decree to raise wages.

“The private sector will give us the wage increase whether they like it or not. They have no other choice,” Ghosn insisted.

The Economic Committees, which group all the main companies and banks in the country, have explicitly stated that they will not comply with the government’s decision.

A broad meeting is scheduled Thursday in order to create a private sector lobby opposed to the wage increase.

Various labor unions have also criticized the government decree for excluding salaries above LL1.8 million from the wage increase.

Ghosn emphasized that the GLC approves the settlement over wage increases but, at the same time, is working hard so that the upcoming wage increase decree would also benefit the 15 percent of the workforce excluded from the raise.

Those earning above LL1.8 million would not be entitled for any wage increase. While the minimum wage would be raised to LL700,000 from LL500,000, salaries under LL1 million would be raised by LL200,000 and those between LL1 million and LL1.8 million by LL300,000.

Commenting on the legality of the decree, Ghosn said it would follow legal mechanisms already put into practice in the 1996 wage increase.

However, Ghosn hinted that the LL1.8 million ceiling might weaken the legality of the upcoming decree.

“The remaining problem is that of 15 percent [of the workforce] who were excluded from the wage increase. Those [that] are employed by profitable, productive companies that could easily afford the increase,” Ghosn announced after meeting Nahhas.

Ghosn complained that those excluded from the wage increase would be affected by an imminent increase on old rent contracts.

When asked about a possible solution to the ceiling problem, Ghosn said the GLC is tackling the issue from a legal perspective.

“We have a legal position linked to wage parity and organizational ranks. An assistant manager, for instance, should not earn more than the manager [as a result of the wage increase ceiling],” adding “we asked [Minister Nahhas] that the decree be law-abiding and any legal gaps be avoided. This is our prime demand now.”

The private sector stressed that it will contest the government’s decision to the Shura Council, claiming that this decree is totally against the Labor Law.

But other legal experts told The Daily Star earlier that the government has the right to enforce any decision regardless of whether the Shura Council supports the argument of the private sector.

Finance Minister Mohammed Safadi said earlier that the new decision to raise salaries for public employees will cost the treasury between $600 to $700 million annually.

He added that this will have some impact on the budget deficit but did not rule out the possibility of new taxes.

The government salary package has infuriated most labor unions and teachers associations who feel that the GLC betrayed them when they made major concessions to the government and private sector.

The teachers associations have called for a general strike Wednesday to demand higher pay for all teachers in the country.

Chaos reigns in Lebanese insurance sector October 18, 2011 01:00 AM By Dana Halawi The Daily Star

BEIRUT: Unfair and unregulated competition is hurting the Lebanese insurance sector’s growth prospects, representatives of local insurers told The Daily Star Monday.

“The presence of a big number of insurance companies in an unregulated business environment is hurting growth in the insurance sector,” Nabih Baaklini, chief operations officer at Arabia Insurance Company said on the sidelines of the opening of The Arab Forum Insurance Regulatory Commissions conference 2011.

Baaklini called on the government to draft a law for the regulation of the insurance sector and send it to the Parliament for ratification.

“This law would call for the merger of some of the small insurance companies operating in Lebanon,” he said. “Our market can only take 20 to 30 insurance companies but not more.”

There are over 50 small, medium and large insurance firms in Lebanon and many experts say that this number is too big for the country.

Only 10 of these firms control nearly 80 percent of the market share and the rest hardly make ends meet.

AFIRC was attended by a large number of CEOs, general managers, decision-makers and key figures of the insurance sector in the Arab world, as well as several representatives of European insurance companies, to discuss the future of the insurance sector.

Baaklini believes that insurance companies must not even wait for the government to formulate the necessary regulations.

“They should rather start with the implementation of international corporate governance standards which will assist them in properly specifying the role of the management and that of the board of directors,” he said.

Moreover, Baaklini complained that some insurance companies are unable to pay for the claims made by their clients due to their low liquidity as a result of cutting their prices to compete with each other.

Baaklini’s complaints were echoed by Walid Mamlouk, a Sales Executive at Medgulf, who said that the attempt of some insurance companies to cut their prices in order to attract more clients is weighing negatively on the sector.

“When companies cut their prices, their liquidity reserves drop which prevents them from paying the full claims of their clients and this is affecting the overall reputation of the sector,” he said.

Mamlouk added that insurance companies must focus on improving their sales departments for them to be better able to present their products to clients.

For his part, George Hanna, manager of the syndicates department at Medgulf, said that another factor that is taking a toll on the sector is the instability across the region, which he said is preventing investors from initiating huge projects.

“The insurance sector grew by 12 percent in 2010 and we are expecting the growth to reach 15 percent this year,” he said. “However, this is considered to be low compared to the growth registered in the region.”

Economy and Trade Minister Nicolas Nahhas noted the swift development of the region’s insurance sector during his speech: “During the past 10 years, the insurance sector in the Middle East premiums jumped by four fold, increasing from $5 billion to $20 billion.”

However, Nahhas added that this growth constitutes only 0.5 percent of the international insurance market which is estimated at $4.3 trillion.

Nahhas said that the growth in the insurance sector depends heavily on the initiatives and support of the private sector while its regulation is a shared responsibility between the government and the private sector.

Speaking on behalf of Prime Minister Najib Mikati, Nahhas said that insurance companies must improve their performance by providing their staff with training courses for them to be able to deliver packages that better meet their clients’ demands.

He also called upon insurance companies to work on increasing awareness about the importance of insurance.

Nahhas asked the government to support the creation of a regulatory body to supervise the sector. He also emphasized the importance of introducing obligatory insurance packages with social benefits.

“This should go in parallel with a regulatory authority that ensures its implementation,” he said.

The government has also been asked to adopt economic policies that facilitate the development of the sector, Nahhas added.

PM sees big Lebanese role in Mideast growth October 19, 2011 01:10 AM The Daily Star


BEIRUT: Lebanon is highly capable of contributing to the prosperity of the region due to the successful performance of its banking and finance, tourism, health and education sectors, said Prime Minister Najib Mikati Tuesday.“

Lebanon has a competitive advantage in the Middle East region and we, as a government, are willing to take all the necessary measures to ensure our country’s sustainable position as the main center for regional and international organizations,” he said during the launching of the Businessmen Union of the Middle East conference.

Mikati said the conference would allow Arab countries to cooperate while opening Arab markets and preparing for regional integration on the economic, security and social levels.

“We hope this conference gives Lebanon a chance to enter new markets that would provide our youths with new job opportunities while strengthening Lebanon’s competitive capability on all levels,” he said.

Mikati was praised by conferees for his will to improve the economy and for his support for every project that brings prosperity to Lebanon.

Mikati agreed one week ago to increase the minimum wage to LL700,000 from the current LL500,000 and raise by LL200,000 the wages of those earning less than LL1million and by LL300,000 those who earn between LL1 million and LL1.8 million.

The decision, which came after some seven hours of negotiations, averted a general strike called by the GLC for Oct. 12, but was met with strong opposition from the private sector.

Mohammad Choucair, president of the Chamber of Commerce, Industry and Agriculture, who also took part in the conference, renewed his refusal of the wage increase settlement by calling upon the prime minister to review his decision, saying that it had been adopted without referring to proper scientific studies.

“This increase in wages might hurt our national economy,” he said.

Choucair called upon Mikati to tackle the problem at it roots.

He said the only way to improve the livelihoods of laborers is through supporting the private sector and contributing to increasing investment and production in addition to creating more job opportunities.

The solution that has been adopted by the government will only exacerbate the problem, he added.

“The government is asked to improve the livelihood of citizens by securing the necessary services and not by adopting a temporary solution to the prevailing issue,” he commented.

Choucair added that all countries in the world resort to solving their financial problems by giving incentives to the private sector and attracting investments which would create additional job opportunities.

Labor unions also renewed Tuesday their refusal of the wage increase settlement, condemning the General Labor Confederation’s leniency in advancing workers’ demands.

“The wage increase, approved in the Cabinet, violates law number 35/46 which specifically outlines the appropriate legal mechanisms to increase the minimum wage as well as the methods to estimate cost of living,” National Union of Workers’ and Employees’ Associations, an alliance of various labor associations, said in a post-meeting statement Tuesday.

The statement had slammed the GLC leadership on labor demands saying the confederation “had lost a historic opportunity to unite labor under its leadership to advance workers demands.”

It had also expressed support for teachers’ associations’ sit-in at the Grand Serail calling for wide participation in the teachers strike that is scheduled Wednesday.

Teachers’ unions, of both private and public schools, have been readying for the strike aimed at protesting the government’s handling of the wage increase issue.

The workers association of Beirut Public Water Company also announced Tuesday its rejection of the wage increase settlement, denouncing the GLC for accepting the deal.

This view was echoed by Association of Printing and Media Workers who also thought the GLC had submitted to a political settlement that did not meet demands of workers.

Meanwhile, Saida Traders Association announced in a statement that “it was illogical to increase burdens on businesses at a time of economic downturn affecting particularly the commerce sector.”

“This will surely cause bankruptcies in the sector,” they warned.

A meeting gathering Beirut trade associations Tuesday had also announced a similar position, issuing the warning that the wage increase would cause price hikes eliminating any improvement in social conditions brought about by the deal.

“The Cabinet decision was not based on scientific criteria and disregarded Central Administration of Statistics inflation numbers. It also violates labor law and international accords signed by Lebanon,” head of the Food Industries Association George Nasrawi said in the meeting.

Hamra Traders Association also warned businesses were unable, because of hard economic conditions, to implement the wage increase and called on the government to reconsider its decision.

Additionally, the Private Hospitals Association announced they were incapable of implementing the raise:

“Despite our support to wage correction … we are unable to bear any additional costs whether on wages or any other items,” they warned.

“If hospitals are pushed to bankruptcy, they will surely have to take precautionary actions including limiting health-care services offered to the public …,” they added.

Their statement called on health-care workers to understand the difficulties facing the sector and its inability to adhere to the wage increase decision.

Going back to the conference Choucair said that the economic associations’ capacity to improve growth and contribute to improving the economic activity and creating job opportunities is the only way to provide Arab populations with a decent life.

“This is the biggest challenge we are facing today,” he commented.

Choucair emphasized the importance of opening up the Arab markets in order to strengthen the production capacity of Arab countries and increase their exports.

“The logic of closed and protected markets has gone,” he said. “Arab countries are capable of reaching better growth if they cooperate together.”

He also praised Lebanon for its capability of providing the rest of the region with the expertise of its citizens in various sectors and especially following its resilience during international and regional crises.

“In this context, we call upon official authorities to take all the necessary legislative and executive measures that would facilitate our responsibilities and goal in opening our markets and removing all obstacles facing trade exchange in the region,” Choucair added.

For his part, Wajih al-Bizri, president of Lebanese World Chamber of Commerce, said that the launching of the conference in Lebanon reflects a great trust in the country’s economy.

“We believe that this conference will give us a chance to enter new markets which will encourage us to improve and increase our production,” he said.

Gasoline prices see minimal change October 19, 2011 12:00 PM The Daily Star
BEIRUT: Fuel prices saw minimal change Wednesday with the price of the 98-octane rated fuel increasing by LL100 while the price of fuel oil dropped by LL200.

According to the weekly price schedule released by Energy Minister Jibran Bassil, the 98-octane rated fuel now costs LL33,700 while the price of the 95-octane rated fuel remained at LL33,100.

The price of Kerosene gas is now LL28,100, dropping by LL100. Fuel oil is now sold at LL38,400 and diesel remained at LL29,100.

All prices are priced per 20 liters.

Lebanon to increase prices of tobacco to help farmers October 20, 2011 01:47 AM The Daily Star
BEIRUT: The Finance Ministry and tobacco farmers announced plans Wednesday to raise the prices of tobacco in an attempt to alleviate the economic burdens on the growers.

The announcement came after a meeting between Finance Minister Mohamed Safadi and a delegation of tobacco farmers.

“Minister Safadi showed his readiness to improve the tobacco industry in addition to supporting farmers following the damage inflicted during the 2006 Israeli war on Lebanon,” said Hassan Fakih, head of the tobacco farmers syndicate in the south.

Abdel Hamid Sakr, head of the tobacco farmers association in the North, gave an overview of the new prices. He said that the price of 1 kilogram of good quality of tobacco was set at LL17,700 instead of LL15,950, while the medium quality tobacco will be sold at LL12,600 instead of LL11,550 and the low quality tobacco will be priced at LL4,850 instead of LL4,500.

“We wanted to increase our prices further but Safadi said the ministry cannot afford more increases,” Sakr added.

Separately, Safadi met with a delegation from the World Bank who discussed social development programs and the second phase of the national program for targeting poverty.

MENA countries improving business climate October 20, 2011 01:47 AM The Daily Star
WASHINGTON: The private arm of the World Bank said Wednesday that 11 out of 18 economies in the Middle East and North Africa had improved business regulations for entrepreneurs in the past year, despite political and economic uncertainty in the region.

The International Finance Corporation’s report, “Doing Business 2012: Doing Business in a More Transparent World” assesses regulations affecting domestic firms in 183 economies.

The report ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and enforcing contracts. The study’s methodology expanded this year to include indicators on getting electricity connections. Morocco improved its business regulation the most compared to other global economies, climbing 21 places to 94, by simplifying the construction permitting process, easing the administrative burden of tax compliance, and providing greater protections to minority shareholders. Since 2005, Morocco has implemented 15 business regulatory reforms.

The report said that six of the region’s 18 business regulatory reforms measured made it easier to start a business. For example, Jordan reduced the minimum capital required to start a company, and Oman’s new one-stop shop for entrepreneurs cut business registration time from seven days to three.

Saudi Arabia remained the regional leader with a global ease of doing business ranking of 12. Qatar implemented its first reforms since 2005 and climbed to 36 on the global scorecard by improving its credit information system. The United Arab Emirates further streamlined the requirements for business start-up, and improved its ranking to 33.

New data show that the region can improve access to information on business regulations.

“The region’s entrepreneurs can be empowered by stronger institutions and better access to information,” said Neil Gregory, senior manager of Global Indicators and Analysis, World Bank Group.

“In more than half of the region’s economies, an entrepreneur must meet with an official to get fee schedules or documentation requirements for many business procedures. E-government initiatives, the global trend, can help relieve bureaucratic burdens on entrepreneurs by offering transparent and sustainable solutions,” he said.

Over the past six years 17 economies in the Middle East and North Africa have made their regulatory environment more business-friendly.

“Making business regulations more efficient and accessible increases opportunities for economic growth,” said Augusto Lopez-Claros, director of Global Indicators and Analysis, World Bank Group.

MENA countries improving business climate October 20, 2011 01:47 AM The Daily Star
WASHINGTON: The private arm of the World Bank said Wednesday that 11 out of 18 economies in the Middle East and North Africa had improved business regulations for entrepreneurs in the past year, despite political and economic uncertainty in the region.

The International Finance Corporation’s report, “Doing Business 2012: Doing Business in a More Transparent World” assesses regulations affecting domestic firms in 183 economies.

The report ranks the economies in 10 areas of business regulation, such as starting a business, resolving insolvency and enforcing contracts. The study’s methodology expanded this year to include indicators on getting electricity connections. Morocco improved its business regulation the most compared to other global economies, climbing 21 places to 94, by simplifying the construction permitting process, easing the administrative burden of tax compliance, and providing greater protections to minority shareholders. Since 2005, Morocco has implemented 15 business regulatory reforms.

The report said that six of the region’s 18 business regulatory reforms measured made it easier to start a business. For example, Jordan reduced the minimum capital required to start a company, and Oman’s new one-stop shop for entrepreneurs cut business registration time from seven days to three.

Saudi Arabia remained the regional leader with a global ease of doing business ranking of 12. Qatar implemented its first reforms since 2005 and climbed to 36 on the global scorecard by improving its credit information system. The United Arab Emirates further streamlined the requirements for business start-up, and improved its ranking to 33.

New data show that the region can improve access to information on business regulations.

“The region’s entrepreneurs can be empowered by stronger institutions and better access to information,” said Neil Gregory, senior manager of Global Indicators and Analysis, World Bank Group.

“In more than half of the region’s economies, an entrepreneur must meet with an official to get fee schedules or documentation requirements for many business procedures. E-government initiatives, the global trend, can help relieve bureaucratic burdens on entrepreneurs by offering transparent and sustainable solutions,” he said.

Over the past six years 17 economies in the Middle East and North Africa have made their regulatory environment more business-friendly.

“Making business regulations more efficient and accessible increases opportunities for economic growth,” said Augusto Lopez-Claros, director of Global Indicators and Analysis, World Bank Group.

Telecoms minister launches long-awaited 3G October 20, 2011 02:55 PM The Daily Star


BEIRUT: It’s official: 3G is coming to Lebanon, and it will be at reasonable prices. Customers will now pay $19 per month for 500 megabytes for the basic starting package, Telecoms Minister Nicolas Sehnaoui announced Thursday.

Sehnaoui’s announcement was met with applause by dignitaries, students and journalists at the American University of Science and Technology (AUST), which hosted the launching event for the mobile phone technology.

The country’s two operators, Alfa and MTC, will offer 3G subscriptions and will announce the rates for other packages starting in early November, the telecoms minister said.

The announcement comes amid longtime efforts to speed up Lebanon’s Internet, which has been ranked as the world’s slowest by SpeedTest.net.

High-speed broadband internet, which has been activated in Beirut and some northern suburbs, should be available in the rest of the country in the coming two weeks, as the ministry works out technical issues in order to make the new service available to all users.

The long-awaited event drew a large crowd, and for those who were unable to enter the conference room, the event was broadcast live in two different rooms at AUST.

Lebanese exports up in first 8 months of 2011 October 20, 2011 01:13 PM The Daily Star


BEIRUT: The total number of Lebanese exports rose by 7.4 percent in the first eight months of 2011 to reach $2.35 billion compared to the same period last year, according to a report released Thursday by the Industry Ministry.

The report also said that Lebanese exports witnessed an increase of 39.1 percent compared to the same period in 2009.

The total number of imports from Lebanon registered an increase of 0.2 percent to reach $159 million compared to the same period last year and 14.3 percent compared to 2009.

The country’s top exports were precious metal, stones and pearls in August and constituted $99.3 million worth of total exports. South Africa came in as the top importing country of these goods.

Chemical industrial products were ranked as the second most common exported items, worth some $45.6 million of the total number of exports, with Bangladesh, India, being the main recipient.

Iraq was the largest importer of electronics and machinery, which ranked as the third most common items to be exported in 2011. However, the report said the export of these items had declined from $61 million in 2010 to $39.1 in 2011 as a result of a drop in imports from the U.A.E and Egypt.

As for ordinary metals, exports declined from $37 million in 2010 to $32.9 million in 2011 due to a decline in exports to Turkey. But exports to China and Spain have risen, the report added.

The study also said Arab countries were the top recipients of Lebanese industrial exports in August. These countries have imported $101.8 million, i.e., 32.7 percent of the total number of exports.

“Non-Arab African countries came in second; it imported 27.3 percent and then came European countries which imported 16.9 percent.”

Electronic equipment and machinery were the most exported products to Arab countries, worth some $17 million of total exports.

South Africa ranked first as the top importing country for industrial products, with $53 million of the total exports. Turkey came in second followed by the U.A.E.

Safadi sees debt at $60 billion by end-2012 October 21, 2011 01:40 AM By Mohamad El Amin The Daily Star
BEIRUT: Finance Minister Mohammad Safadi projected Wednesday that public debt would grow to $60 billion by end of 2012 but said it was still crucial to make further investments in vital infrastructure projects.

Safadi’s remarks came during a Beirut Chamber of Commerce seminar to discuss the 2012 budget draft, currently being studied by the Cabinet.

Safadi insisted the economy is “healthy,” when compared to economies of many European countries that have been battered by the current economic crisis.

Lebanon had been largely safe from the crisis and its shockwaves but should remain alert, the minister said.

“Lebanon has a good reputation in financial markets. Apart from a sound administration, the country has never defaulted on a debt payment,” he said, adding that “the [2012] budget would be largely acceptable by international standards, given the deteriorating financial situation globally.”

The minister stressed it was important to keep the budget deficit at bay by balancing new expenses with revenues.

“I don’t mind taking out new taxes or annulling tax hikes but this should be coupled with reducing equivalent expenditures. I would not agree to a significant increase in the budget deficit,” he said.

The minister was alluding to his proposal to raise the Value Added Tax from 10 to 12 percent and increasing the tax on interest rates on customer deposits from 5 percent to 8 percent.

These tax proposals came under sharp criticism, not only from economists and labor unions but also from many ministers in the Cabinet.

Safadi said proposals to place the budget deficit at acceptable levels are quite crucial amid difficult international market conditions.

He added that monetary policies, adopted since the early 1990s, had provided needed financial stability, although at a hefty price, including $4 billion of yearly debt service.

The effects of such policy, particularly high interest rates, had turned the Lebanese economy into a rentier economy rather than a productive one, he said.

“Why would a businessman invest in a productive project when he can earn 7 percent doing nothing,” he said, calling for a gradual decrease of interest rates to foster economic growth.

Safadi was keen to emphasize the importance of public investment in infrastructure projects, saying Lebanon could not afford to shy away from investing significant amounts in both the electricity and water sectors.

“We have allocated around $2 billion for investment expenditures in the 2012 budget … we are now faced by a ‘necessary investment pressure.’”

The electricity sector, Safadi explained, could not be developed aptly without investments in improved access to natural gas, including liquefied natural gas facilities.

Access to pipeline-transported natural gas had been hindered by Egypt demanding higher prices and the uprising in Syria obstructing potential pipeline gas supplies from Turkey, the minister explained.

Safadi focused in his discussion on various social issues, arguing poverty in Lebanon had reached a very high level.

“The Lebanese Civil War had destroyed the middle class, vital for economic and social stability. We have to support regenerating this key component of society,” he said.

The minister stressed the need to build a social safety net, including a universal health care plan for all citizens, promising the Cabinet would work toward realizing it.

Safadi warned, however, that the recent wage increase would not improve social conditions, as most of it might be negated by inflation.

“If not accompanied with appropriate legislation and policies including a completion law and effective price monitoring … this might actually be a step backward,” he said.

The minister restated his earlier estimate that the wage increase decision made by the Cabinet would put a LL850 billion ($564 million) burden on the state budget.

The Cabinet had decided, two weeks ago, to raise the minimum wage and salaries under LL1 million by LL200,000. Salaries between LL1 million and LL1.8 million by LL300,000.

Businesses lash out at decision to raise salaries October 21, 2011 01:40 AM By Dana Halawi The Daily Star

BEIRUT: Hundreds of businessmen, industrialists and merchants gathered Thursday at BIEL’s Pavillon Royal to voice their total opposition to any attempt to raise the salaries beyond the means of the struggling private sector.

Speaker after speaker lashed out at a government decision to increase the wages of private and public sector employees, drawing loud applause from the audience.

Speakers described the recent government decision as illegal, haphazard, unrealistic, unjust and not based on any scientific findings.

“We cannot remain silent over an illogic decision that does not take into consideration the interests of laborers, business owners and the treasury as well,” said Mohammad Choucair, president of the Chamber of Commerce, Industry and Agriculture.

The Cabinet agreed 10 days ago to increase the minimum wage to LL700,000 from the current LL500,000 and raise by LL200,000 the wages of those earning less than LL1 million and by LL300,000 those who earn between LL1 million and LL1.8 million.

The decision, which came after some seven hours of negotiations, averted a general strike called by the GLC for Oct. 12, but was met with strong opposition from the private sector.

BIEL’s business leaders renewed their rejection of the wage increase, calling upon the government to back down from their decision.

“We call upon all business institutions to refrain from implementing this decision,” they said when announcing their recommendations.

They have also threatened to resort to the Shura Council if the government does not cancel its decision.

“We are open to negotiations with all parties and particularly the labor unions in order to reach a decision that is satisfactory to all,” they added, while warning against the negative impact of the approved wage increase.

Choucair said that the government’s decision does not address the root causes of the problem but rather exposes the country to economic, social and security problems. “Some are worried about the threats of strikes by labor unions, but we would like to tell them the strikes that might be waged by unemployed people will be much worse and a threat to national security if this decision was adopted,” he said.

He added that the private sector aims to improve the livelihood of workers by increasing their productivity and their exports of Lebanese products.

Choucair’s views were echoed by Nemat Ifram, president of the industrialists’ association, who said that the industrial sector was able to register a remarkable yearly growth ranging between 15 and 20 percent in the years 2005 until 2010 despite the successive governments’ neglect of the sector.

“The growth that was witnessed in those years prompted us to increase the wages of our employees automatically without waiting for any decisions by the government,” he said.

Ifram warned of the risk of bankruptcy and high unemployment if the government does not back down.

“We are not ready to accept to finance a government system which is decayed and plagued with corruption and inaction,” he said, prompting loud applause from the audience.

Joseph Torbey, president of the Association of Lebanese banks, said that the association is totally supportive of the economic associations’ demand that the government’s wage increase decision be canceled.

“We usually provide our employees with good packages and we don’t need a decision by the government to do so,” he said.

He added that the decision has already affected prices of commodities.

“Prices have already increased and we will soon witness some institutions’ inability to cover their expenses and to settle their dues to banks,” he said.

For his part, Adnan Kassar, chairman of General Union of Chambers of Commerce Industry & Agriculture for Arab Countries, called upon the government to formulate a long-term economic policy that would revive the economy and put an end to inflation and the increase in unemployment.

Kassar has also asked labor unions to resort to dialogue to solve this problem, saying that such a huge social problem cannot be solved on a temporary basis but its root caused need to be solved.

“Did the previous wage increases give laborers their rights?” he asked, adding that the government must assume its responsibilities before putting additional burdens on the private sector which is considered to be the main pillar of the economy.

EDL to strike as Cabinet puts off wage increase October 22, 2011 12:56 AM The Daily Star
BEIRUT: The board of the Electricite Du Liban held an urgent meeting Friday criticizing the government’s refusal to approve the decree for limiting working hours and raising wages.

“We are surprised that the government has returned the draft of the decree to the Finance Ministry for further study,” said the statement issued by EDL.

It added that EDL was expecting the decree to be approved, especially as it was studied for over two months by the current government, and most of the ministers promised to agree on its implementation.

EDL said it has decided to go on strike on Oct. 25. EDL earlier suspended a strike planned for Aug. 10.

EuroMena II invests $13.5 mln in Khoury Home October 22, 2011 12:56 AM The Daily Star


BEIRUT: EuroMena II, the Beirut-based private equity fund and member of Capital Trust Group, announced Friday its investment of $13.5 million in Khoury Home, the leading Lebanese home appliances retailer.

This investment is in line with Khoury Home’s expansion in Lebanon and the MENA region, it said. A joint statement Friday quoted managing director of EuroMena II Romen Mathieu as saying: “The main objective of this deal is to increase the capital of this ambitious group, to further fuel the expansion of its operations in Lebanon and across the Arab world.

” Khoury Home chairman Georges El Khoury stressed that, following the acquisition of the assets of its main competitor – Hokayem SAL – earlier this year, the group intends to “expand on the local market and open new branches in several areas, particularly in Tripoli, Zahle and the south.

Our long-term strategy, with the assistance of EuroMena II, is to become the leading regional player in the household retail sector.”

Union head: Wage rise should be implemented October 22, 2011 12:56 AM The Daily Star
BEIRUT: Maroun al-Khawli, head of the General Federation of Labor Unions, criticized Friday the meeting that was held Thursday by private sector leaders to renew their rejection of the wage increase.

Business leaders “have the right to contest the decision but they should implement it because if they don’t then this would be against the law,” he said, adding that labor unions are ready to seriously negotiate the issue in order to reach a solution that is satisfactory to all and in the national economy’s interest.

Also Friday, the president of the union of banks employees called upon the government to issue a decree for a wage increase that would cover all employees, regardless of their salaries.

He added that the union will take some measures if the banking sector does not increase the wages of its employees. Meanwhile, the farmers’ syndicate complained in a statement about the government’s unfair economic policies which it said impact heavily on the purchasing power of citizens.

CAS price index under fire by consumer groups October 22, 2011 12:56 AM The Daily Star
BEIRUT: The Central Administration of Statistics said in a report on the cost of living that inflation for August and September of this year rose only by 0.1 percent, a figure which was dismissed by Consumer Lebanon as “ridiculous and totally inaccurate.”

The CAS, which is under the jurisdiction of the Prime Minister’s office, claimed that prices of basic commodities did not rise too much in the past two to three months.

The CAS added that the cost of living index from October 2007 to September 2011 rose by 16.3 percent.

According to CAS tables for August-September, the price of food and non-alcoholic beverages rose by 0.6 percent, alcoholic beverages and tobacco jumped by 0.1 percent and clothing and footwear by 0.3 percent.

But CAS said other commodities such as health and water, electricity, gas and other fuels fell.

The president of Consumers Lebanon Zuhair Berro said the government’s figures are completely inaccurate and does not reflect reality.

“Where did they come up with these statistics? Let these people who conducted the survey ask any consumer about the prices of basic items,” Berro told The Daily Star.

Berro said Consumers Lebanon is preparing another survey of prices in the coming days. “Our statistics for September and early October show prices of basic commodities rose between 8 percent to 50 percent,” he said.

He added that statistics in Lebanon have become a matter of opinion.

Berro said the World Bank and other international agencies believe CAS figures lack accuracy and credibility.

NGOs and consumer groups argue that CAS does not include all items.

CAS insists that it includes most consumer items in the survey.

The conflicting surveys have been used by both the private sector and labor unions to show conflicting estimates of the cost of living in Lebanon.

The private sector, which strongly opposed the government’s decision to raise salaries, insists that the minimum wage should not exceed 16 percent based on the survey provided by CAS.

However, the General Labor Confederation and other unions estimate that the cost of living have risen by 30 to 40 percent since 2008 when the government agreed to raise the minimum wage to LL500,000 a month.

The rise in prices of commodities in Lebanon are mainly attributed to external factors such as the appreciation of the euro currency, noting that Europe is the biggest trading partner for the country.

But Berro and other consumer activists have a different opinion for the surge of consumer prices.

Berro says one way to free the prices is to liberalize the economy and allow merchants to import any product even if dealers have exclusive representation for the product.

Lebanon 11th in Arab world on doing business October 22, 2011 12:56 AM The Daily Star
BEIRUT: The World Bank/International Finance Corporation Doing Business 2012 report ranked Lebanon in 104th place among 183 countries worldwide and 11th among 19 Arab countries in terms of ease of doing business.

Lebanon came in 103rd place globally and in 10th place regionally in 2011 in the rankings, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group. Lebanon also ranked in 32nd place among 44 Upper-Middle Income Countries in the 2012 survey.

A firm in Lebanon requires 37 procedures and 721 days to enforce commercial contracts, compared to an average of 44.7 procedures and 659.1 days in the Arab region and to 31.4 procedures and 518 days in OECD countries.

Further, enforcing a contract in Lebanon costs 30.8 percent of the claim compared to 23.8 percent in the region and 19.7 percent in OECD markets.

The index is a composite of 10 sub-indices of business regulation that track the time and cost to meet government requirements in business start-up, expansion, operations and insolvency. Also, data are presented for regulations on employing workers.

Globally, Lebanon came ahead of Pakistan, Marshall Islands and Nepal and ranked behind Seychelles, Paraguay and Papua New Guinea, while it ranked ahead of Dominican Republic and Argentina and behind Seychelles and Saint Kitts & Nevis among UMICs.

Regionally, Lebanon came ahead of Qatar and Sudan and behind Jordan and Morocco.

Beirut stocks trade at levels last seen during 2006 war October 24, 2011 01:06 AM By Peter T. Daou The Daily Star

BEIRUT: Gone are the days when hundreds of thousands of shares would change hands daily on the Beirut Stock Exchange, and the new volume lows continue to send shockwaves across the trading community, warning of a massive sell-off in the works.

“There has been no volume and no interest in the market for a while now. Some trades come in from time to time, but they are nothing noteworthy,” said Yves Rahme, head of equities unit at Byblos Bank in an interview with The Daily Star.

The number of traded shares fell 16 percent to 274,559 during the week ending Oct. 21, the slowest trading week yet in 2011, bringing back memories of the post-July 2006 war trading days.

The BLOM Stock Index also closed the week down 0.49 percent to 1,214.51 points, less than 2 percent away from the bottom of the July 2006 war period, as the market capitalization slid half a percent to $10.46 billion.

Asked why pessimistic investors are not rushing to liquidate their holdings, Rahme said that “investors are not selling because prices are depressed and the spreads are too big.”

He cited BLOM Bank’s bid and ask prices which were quoted at $7.39 and $8.09 respectively Friday, a 9.5 percent spread which itself results from the missing liquidity.

Spearheading the journey into the past is Solidere, which despite showing some resilience in recent trading, remains at levels widely considered to be unjustified. “For several weeks now, Solidere has been trading at the levels of the 2006 war period.

If the stock picks up to $16-17, you will see more sellers,” predicted Rahme who believes investors still refuse to book their losses, choosing instead to wait for a local rebound before dumping their shares.

Solidere’s A and B classes gave in to declines of 0.4 percent and 1.34 percent respectively and are trading in the upper levels of $14 a piece.

Unsurprisingly, a proposed 3-percent tax on real-estate sales transactions did not appear to impact the developer of Downtown Beirut and neither did the decision to raise interest income taxes to 8 percent from 5 percent affect banking stocks.

According to Rahme, “political events used to move the market, but that is not the case anymore. The increased tax on interest income also had no impact on stock prices because they do not trade on fundamentals but on liquidity needs of investors.”

Indeed, third-quarter earnings at Bank Audi barely instigated any trading after the bank reported its worst quarterly growth in net profits in years. Profits at the bank grew only 0.15 percent to $92.1 million during the three summer months as provisions nearly doubled year-on-year to $15 million.

The bank’s balance sheet also shrunk for the first time since early 2007 on flat growth in loans and advances, while deposits fell 1.55 percent year-over-year to $24.9 billion at the end of the quarter.

Despite low volumes, Bank Audi GDR was the worst performer during the week, down 3.07 percent, followed by BLOM Bank which dropped 1.92 percent.

With more bank earnings expected to be uninspiring, a rebound may be further away than some sellers wish.

Landlords reject extension of current rent law October 25, 2011 02:06 AM The Daily Star
BEIRUT: The landlords of “old rent” buildings rejected in a statement released Monday the extension of the current rent law.

The group called on Parliament to speed up discussions of the new law, demanding that tenants’ compensation be canceled.

In the current rent law, the tenant is entitled to significant financial compensation if asked to move out by the landlord.

Different associations of landlord had repeatedly urged the government to liberalize the old rent law, saying many of the tenants living in old buildings are paying extremely low rents compared to the current rents.

But the tenants argue that they cannot afford to move to more expensive apartments, adding that the compensation offered by landlords is very low.

Lebanon risks fallout if budget row persists October 25, 2011 02:06 AM By Osama Habib The Daily Star

BEIRUT: The Finance Ministry seems to be running out of options as opposition to its 2012 draft budget hardens, with most economists warning that Lebanon’s credibility in financial markets will be greatly damaged if no substantivereforms are carried out.

Lebanon has been without an official budget since 2005, when former Prime Minister Rafik Hariri was assassinated.

Failure to obtain a Cabinet and Parliament endorsement for the draft budget would further erode the remaining confidence in the government of Prime Minister Najib Mikati, who is already struggling to avoid the wrath of the United Nations over the funding the highly controversial Special Tribunal for Lebanon.

There is deep concern among financial circles that rating agencies may downgrade Lebanon in the near future if the Cabinet’s efforts to pass the budget bill hit an impasse.

Finance Minister Mohammed Safadi, who is aware that this initial draft is unlikely to receive support without some compromises, has made clear that he is willing to drop his proposal to raise the Value Added Tax from 10 percent to 12 percent, but only on the condition that the Finance Ministry does not allocate additional funds for social and medical benefits.

“I don’t mind taking out new taxes or annulling tax hikes [of the VAT], but this should be coupled with reducing equivalent expenditures,” the minister said earlier.

The minister said he feared that the public debt could rise to $60 billion at the end of 2012 if measures were not adopted soon to cut spending and increase revenues.

Economist Eli Yashoui told The Daily Star that any failure to adopt a budget this year would send a signal that Lebanon is a failed state.

“This is the sixth year in a row we are running the country without an official budget,” Yashoui said.

In his opinion, raising the VAT ceiling would make matters worse for both the economy and state budget.

“If it was up to me, I would set the VAT at 5 percent instead of the current 10 percent. Why can’t we raise taxes on real estate sales and capital gains just like other countries in the world?” Yashoui asked.

Yashoui believes that the best solution for the mounting budget deficit would include an agreement between the private sector and the government.

“I don’t support the privatization program but I do back a partnership between the public and private sectors. Let the private sector bankroll vital infrastructure projects in return for a cut in profits for the companies and banks [in order to] finance these projects,” he said.

Economist Ghazi Wazneh was also critical of the taxes in the 2012 draft budget but stressed that despite these drawbacks, the bill focused considerably on ensuring full health coverage for all Lebanese citizens.

“Among the positive points in the bill was a clause to boost electricity production to 700 MW and expand the natural gas network,” Wazneh said.

He also noted that Safadi has allocated more money for projects aimed at the agriculture sector, which was neglected by previous governments.

Bur Wazneh disputed Safadi’s economic projection for 2012.

“A GDP growth of 4 percent in 2012 is considered too optimistic given the fact that the region is passing through a delicate state and we should remember our economy is not doing very well either,” he said.

He cautioned that raising the VAT to 12 percent could increase revenues by LL396 billion, but at the same time this tax would increase poverty from 28 percent to 31 percent.

The economist was also concerned that raising the tax on interest rates on bank deposits from 5 percent to 7 percent would affect the capital inflow to the country, although this step could generate additional state revenue of LL422 billion.

Wazneh repeated his call to impose an average tax of 0.5 percent on treasury bills that are carried by Lebanese commercial banks.

“This tax alone could generate revenue of $150 million a year. The banks recorded a net profit of $1.6 billion in 2010,” he said.

Wazneh also advocates a tax on real estate profits at a rate of 15 percent, as well as levying fines against illegally built properties on the coast.

“The government could collect a revenue of LL600 billion over the next three years if it reached a settlement with the owners of the seafront properties. Most of these properties were built on land which belongs to the government,” he said.

But all these proposals, according to experts, are unlikely to be implemented so long as politicians pursue different priorities in budget negotiations.

IMF lowers Lebanon growth forecast to 1.5% October 26, 2011 05:30 PM

DUBAI: The International Monetary Fund said Wednesday it has revised down its forecast for economic growth in Lebanon to 1.5 percent in 2011 after many years of robust expansion, due to political uncertainty and unrest in neighbouring Syria.

The drop revealed in the IMF's Regional Economic Outlook, released in Dubai, is the second this year after the fund lowered its expected growth to 2.5 percent in the spring.

"That is our best estimate," the IMF's director for the Middle East and Central Asia, Masood Ahmed, told AFP.

A five-month delay in the formation of a government until June and unrest in Syria have "led to a slowdown in economic activity quite significantly in Lebanon resulting in the revision of our estimates," he said.

He said the two factors have had "consequences on confidence" in the economy which grew at no less than 7.5 percent between 2007 and 2010, according to IMF figures.

Ahmed said that the slowdown is noticed in the property sector, which grew rapidly over the past couple of years, but also in the whole economy.

"It is a more generalised slowdown that we have seen," he said, noting that "the fiscal position has deteriorated a bit, in part because of the slowdown in the economy and also because fuel tax excises have been halved."

Lebanon's fiscal deficit will rise to 7.8 percent of GDP in 2011, compared to 7.3 percent in 2010, the IMF report said.

The fund is more optimistic on the prospects for next year, expecting the economy to pick up pace and expand by 3.5 percent.

"In the second half of the year, there has been a government in place. There is a bit more certainty coming from that," Ahmed said, adding that the "assumption is that during the course of next year, things in the region will continue to stabilise."

Earlier this month, the World Bank revised downward its forecast for Lebanon's economic growth from seven percent expected in January to four percent, forecasting a fiscal deficit of 5.5 percent of GDP.

Lebanon staggers under a public debt of more than 53 billion dollars (38 billion euros), equivalent to around 135 percent of the country's GDP.

Tourism witnessed a 15.5 percent drop in the number of arrivals for the first quarter of 2011 compared to the same period in 2010.

Property transactions also fell 21 percent quarter on quarter while customs revenues dropped some 20 percent compared to the same period last year.

The decline was was widely attributed to the uprisings gripping the region coupled with domestic troubles that left Beirut without a government for five months.

Lebanese bank Blom's profit holds steady October 26, 2011 04:00 PM


BEIRUT: Lebanese lender Blom Bank on Wednesday said net profit held steady in the first nine months of the year, despite political turmoil that is weighing on economic growth.

Net profit inched up 0.2 percent to $236.3 million, the bank said. Assets rose by $1.3 billion to $23.4 billion and deposits rose by $1.1 billion to $20.3 billion.

"These results commend the bank's performance amid operating conditions characterized by political tensions in Lebanon and upheavals in the region, and by debt crises and economic slowdown at the global level," the bank said.

Lebanon's economic growth is expected to slow to 2 to 3 percent this year after several years around 8 percent, largely due to political tension which engulfed the country in the first half of 2011.

That tension brought down the government of Prime Minister Saad al-Hariri in January and after months of political bickering Lebanese officials agreed on the formation of the government of Prime Minister Najib Mikati.

Blom has a presence in 12 countries including Syria where President Bashar al-Assad has been facing a revolt against his 11-year rule for the past seven months.

It also operates in Egypt, where a popular uprising toppled President Hosni Mubarak in February.

Salameh: Capital market to create jobs October 26, 2011 01:02 AM The Daily Star


BEIRUT: Central Bank Governor Riad Salameh Tuesday said that the capital market law which was approved by the Cabinet and Parliament will allow for the creation of one or more private bourses in Lebanon. “The capital market will kick off once the Lebanese Cabinet names three people in the committee.

We can have one or more private bourses in the country. We have lot of players and they are all skilled,” Salameh told participants in a luncheon held in his honor by the Financial Market Association at the Phoenicia hotel.

Lebanon’s Parliament approved in August the long-awaited capital market and insider trading laws that are seen as crucial to revitalizing the financial market. “This is an import step we took today.”

“At last Lebanon will have a vibrant capital market that will be supervised by an independent watchdog that will be headed by Central Bank governor Riad Salameh,” MP Yassin Jaber told The Daily Star earlier.

The draft law has been sitting on Parliament’s shelves for the past five years but has been amended many times in accordance with the latest developments around the world.

Lebanese companies and investors have been pressing successive governments to pass the capital market law, arguing that many countries in the region have surpassed Lebanon in capital market laws and regulations.

Experts stress that an independent capital market will draw funds from both Lebanese and foreigners.

The watchdog will consist of seven members – five of them from the private sector.

“I can’t really tell when this capital market [law will] kick off, but we hope that it will happen at the end of this year. We need to appoint the five independent members as well as find a location for the regulatory body,” Jaber said.

According to the Central Bank, the draft law passed by Parliament aimed at setting up an independent body to regulate and supervise capital markets

Salameh stressed that the commercial banks will not be listed on the new capital markets in Lebanon.

“We are trying to separate between commercial banks and investment banks to reduce risks and for this reason we have created the capital markets to allow investment banks to trade in these bourses,” the governor said.

Salameh also revealed that the Central Bank will propose to the government exempting international companies and funds that want to be listed in the new capital markets from taxes.

“To guarantee the reputation of Lebanon, the committee appointed by the government will directly supervise the capital markets,” the governor said.

He hoped that the new capital market will increase job opportunities and bring investments to the country.

So far, Lebanon has the Beirut Stock Exchange which is under the jurisdiction of the Finance Ministry.

Only 12 banks and companies are listed on the BSE.

The governor also commented on the serious economic crisis plaguing Europe and the efforts by the European Union to bail Greece out of its current debt problem.

“We were not affected by the global crisis thanks to the banking policy in Lebanon. Interest rates remained low and liquidity increased despite the crisis in Europe,” the governor said.

He added that banks have managed to achieve a growth of more than 7 percent while lending to the private sector jumped by 15 percent.

Cabinet considers leasing electricity-generating ships October 27, 2011 01:19 AM The Daily Star

BEIRUT: Energy and Water Minister Gibran Bassil disclosed Wednesday that the Cabinet is studying a proposal to lease powerful electricity generation ships to compensate for the electricity shortage in the country.

Bassil, who was speaking at a news conference after touring Bsalim power plant, warned that any delay in approving the leasing of ships would make matters worse for the Lebanese especially in the summer seasons.

“We have a lot of offers. One of these offers is that a leased ship will eventually belong to the government in seven years.

“We need to form a committee to negotiate with companies that offers the lowest prices,” the energy and water minister told reporters.

The government approved Bassil’s plan to allocate $1.2 billion for the construction of 700 MW plants after making some amendments to the original proposal.

March 14 MPs have criticized Bassi’s first plan and insisted that the entire Cabinet be directly involved in the negotiation to build power plants.

The critics also demanded that Bassil seek soft loans from Arab funds at lower interest rates.

Lebanon currently produces less than 1,600 MW but the actual need is over 2,300 MW.

“Leasing ships to generate power is very important because we can’t repair Zouk and Jiyeh plants if alternatives for these stations are not found. The two plants will be out of service when maintenance work start,” Bassil explained.

The minister admitted that receiving electricity from Turkey and Iran is a bit complicated now because the quantity may not be enough for Lebanon and for this reason it is advisable to lease ships.

Most of Lebanon’s power plants are very old and need massive repairs, according to energy experts.

The Council for Reconstruction and Development is currently studying new tenders to carry out maintenance work on the Zouk and Jiyeh plants.

Bassil defended again the installation of high voltage power lines in the Mansourieh area, arguing that the World Health Organization and most medical experts assured that high voltage power lines do not pose any threat to the health of citizens.

Nahhas sets official terms for farmers’ subsidies October 27, 2011 01:19 AM The Daily Star
BEIRUT: Economy Minister Nicolas Nahhas issued a memorandum Wednesday setting conditions required for farmers to benefit from government wheat subsidies.

The conditions include filling an application accompanied by personal documents, and a land ownership certificate or a land rental contract certified by local authorities.

The farmers are also expected to provide documents and maps showing the exact location and size of the land they intend on cultivating.

Salameh warns any salary hike will cause inflation to rise October 29, 2011 12:56 AM The Daily Star


BEIRUT: Central Bank Governor Riad Salameh said Friday that Lebanon’s inflation rate would climb with any wage hike, adding that a recently abandoned proposal for increasing salaries would have drive inflation up to 10 percent from the current 6 percent, in remarks cited by his office in Beirut.

Speaking at a conference in Paris to mark Lebanese Banking Day, the governor stressed that plans to increase wages should be coupled with reforms to boost the economy.

However, the governor warned that reforms would not materialize if political detente was absent between the various Lebanese groups.

The government of Prime Minister Najib Mikati has been forced to reconsider a salary package it offered to both private and public sector employees after the State Shura Council rejected the plan, saying it runs contrary to Lebanese Labor Law.

Among the main duties of the Central Bank is to keep inflation at acceptable levels.

But many economists doubt the Central Bank’s inflation estimates, claiming that inflation is far higher than 6 percent based on the soaring prices of consumer goods over the past three years.

Salameh also commented on the performance of Lebanese banks and the capital market law which was approved by both the Cabinet and Parliament.

“The Lebanese Cabinet has recently approved a new law to organize the financial markets. The Central Bank will chair the board of directors of the financial markets to ensure that the commercial banks will not take part in these markets. Only investment banks, financial houses and financial brokers will be allowed to deal in these markets,” Salameh said.

But he cautioned that financial instruments have caused huge loans to the banks and for this reason the Central Bank insists on policies that prevent any bank from going bankrupt.

He added that the capital adequacy ratio among Lebanese banks has reached 7 percent and this is the ceiling required by the international standards.

“But as a precaution, we will discuss this ratio with the banks to raise it to 12 percent. The problem which was facing the banks is due to the real estate sector and stock exchange in general. The Lebanese banks can focus on these two sectors provided real estate companies and bourses secure 40 percent of the funding as well as 50 percent of any capital,” the governor explained.

He praised Lebanese banks for adopting wise measures concerning allowances and distribution of dividends because this will allow for bigger private equity and higher capital adequacy ratio.

“Increasing the capital adequacy ratio from 7 to 12 percent will induce us to exercise bigger control. Lebanese banks are deeply committed to the implementation of the international criteria,” Salameh added.

He also reiterated Lebanon’s commitment to combating money laundering and terrorist financing.

“Lebanon was subjected to some rumors which were exploited by some for reasons which have nothing to do with banking and finance. We assure you that the Lebanese banking sector is sound and there is not any imminent danger,” Salameh stressed.

The governor also touched on the revolutions and uprisings in a number of Arab states.

“The events in the Arab states and the European financial crisis have not affected Lebanon because our economy is already dollarized,” Salameh said.

Nahhas: Cabinet to ink wage deal within 10 days October 29, 2011 12:56 AM The Daily Star


BEIRUT: Lebanon’s Labor Minister Charbel Nahhas said Friday that the Cabinet would adopt within 10 days a new proposal for salary increases after the Shura Council rejected an earlier proposal for wage hikes.

“The Cabinet will take a decision on salary increases in five to 10 days,” Nahhas said. Nahhas added that it was important for the Cabinet to heed the opinion of the state Shura Council. “The decision of the council was based on studies of a number of basic issues. All decisions to raise the minimum wage should be in accordance with the rise of consumer prices,” the minister said. Nahhas stressed that negotiations should be conducted through the Price Index Committee, which he heads.

He added that any attempt to find a solution without the consent of the Price Index Committee would be an attack on the prerogatives of the minister.

“The judicial opinion has put things in perspective and has justified the state as a sponsor for social relations in the country,” he said.

Nahhas explained that the Cabinet will base its new decision to increase salaries on the average cost of living which is issued by the Price Index Committee, adding that the increase should be a lump sum and this will be applied to all salaries.

The minister also rejected what he called an unjustified rise in prices every time there is a salary adjustment.

Meanwhile, labor unions issued a statement Friday reiterating their demands that the government to apply the wage increase to all salaries in addition to improving social benefits.

“We call upon Minister Nahhas to open a dialogue through the Price Index Committee in order to discuss the reluctance of business owners in defending laborers’ rights,” it said.

The statement also called upon Nahhas to include all the unions that opposed the government’s decision in the Price Index Committee meetings while reopening negotiations in order to solve the issue within 10 days.

The union has invited all other labor groups to a consultative meeting on Tuesday afternoon to agree on a set of measures to be taken.

The General Labor Commission will meet Monday to discuss the issue.

Bank of Beirut records $76.1 million profit in first 9 months October 29, 2011 12:56 AM The Daily Star


BEIRUT: Bank of Beirut managed to maintain a flat profit in the first nine months of 2011 despite difficult economic conditions in the country, a senior official of the bank said Friday.

“We have recorded a net profit of $76.1 million in the first nine months of this year. The profits went up by only 0.2 percent compared to same period last year but nevertheless our assets and deposits went up significantly,” Roger Dagher, the Chief Financial Officer of Bank of Beirut told The Daily Star.

He added that the profits in the third quarter were almost identical to the 3rd quarter of last year.

“There is a pressure on profitability due to the margins. But if we look at other indicators of Bank of Beirut such as deposits and assets they all went up considerably,” he said.

In February, Bank of Beirut acquired 85 percent of the Australian Laiki Bank as part of its expansion.

The acquisition is worth more than $420 million, including plans to invest in the acquired bank in Australia.

“This is one of the most important acquisitions in Lebanon in many years. This shows Lebanese banks are still eyeing other markets outside Lebanon to expand their business,” the source said.


In a joint statement from Marfin Popular Bank, the Cypriot parent company of Laiki Bank, and Bank of Beirut, the two institutions confirmed the agreement for the acquisition of 85 percent of the shares of Laiki Bank (Australia) Ltd. by Bank of Beirut.

As a result of this acquisition, Bank of Beirut’s assets grew considerably.

Total assets of Bank in the first nine months of this year stood at LL9.507 trillion compared to LL7.123 in the same period of last year.

Dagher stressed that Bank of Beirut expanded its operations in countries that do not have high political risks.

“That’s why we expanded to Australia, Cyprus and UAE where the risks are minimal,” Dagher said.

He projected the profits of the bank at the end of this year to be around $102 million.

BEMO bank also disclosed its results Friday.

The net profits of the bank in the first nine months of this year stood at LL10.530 billion compared to LL10.338 billion in the same period of last year.

Total assets of BEMO rose to LL2.142 trillion in the first nine months of this year from LL1.823 trillion in the same period last year.

So far only four listed Lebanese banks have disclosed the results before the end of October.

Most of the leading Lebanese banks did not report a significant rise in profits this year and most of them attributed the reason to the political stalemate in Lebanon and regional tension.

Lebanon seeks more exports to European markets October 29, 2011 12:56 AM The Daily Star
BEIRUT: Mohammad Choucair, head of the Chamber of Commerce, Industry and Agriculture, emphasized Friday the importance of Lebanon’s openness to European markets following a drop in exports to the Middle East region.

Choucair’s remarks came during the opening of the “Lebanon’s week in France” exhibition organized by the chamber in cooperation with its French counterpart, the Lebanese Central Bank, Solidere, BankMed and MEA in addition to the Tourism and Industry Ministries. Lebanon’s exports fell by 68 percent to Egypt, 12 percent to the UAE and 10 percent to Iraq. Held at Palais des Congres, the exhibition witnessed the participation of over 85 companies belonging to the tourism, banking and real estate sectors.

“This exhibition is considered to be a great accomplishment and we are very proud of this step, since France is considered to be the third-largest importer of Lebanese goods at around $400 million,” said Choucair.

Choucair said that the exhibition promotes Lebanon’s industrial reputation and gives Lebanese products a great chance to be successfully marketed in France.

“We hope that this experience gets repeated very soon in other countries,” he said, adding that Lebanese products are renowned to be of high quality, enabling them to easily enter any foreign market.

For his part, Pierre Gabier, president of the French Chamber of Commerce, Industry and Agriculture, said that more than 240 meetings will be held between Lebanese and French traders following the exhibition. He added that the conferees agreed to organize such exhibitions every 18 months.

Meanwhile, Finance Minister Mohammad Safadi met on the exhibition’s sidelines with his French counterpart, Francois Baroin. Talks between them focused on the economic crisis in the eurozone.

Compromising on salary adjustments October 29, 2011 12:56 AM By Louis Hobeika The Daily Star
Social demands are surfacing again in Lebanon due to the growing mismatch between average income and average consumption for the regular family. It is not sufficient to raise salaries, and it is equally important over time to provide affordable and quality medical care and social benefits for all citizens. It will take a long time for those benefits to be provided at a satisfactory level.

Moreover, the financing may not be available now. Therefore a quick salary adjustment is necessary to cover parts of the loss in purchasing power and to preserve social stability and avoid a general strike. The government should not impose a solution on the eve of the strike as it did with the drivers, as such solutions are bound to be discriminatory and badly designed.

If salaries should be adjusted, what are then the acceptable rates of increase favorable to both parties currently negotiating under the auspices of the Labor Ministry? Obviously, the public expects the government to be an efficient and honest mediator, inspiring confidence in both parties and the public at large. I propose the following scheme by tranches where the first LL500,000 is subjected to a 50 percent increase, the second LL500,000 to a 40 percent, the third to 30 percent, the fourth at 20 percent and the remaining at 10 percent on condition that the monthly raise does not surpass LL1 million. For example, a salary of LL2 million today will become LL2.7 million. Government employees may have to wait for the new budget to come out in the next few weeks before a decision can be taken. The private sector can apply it immediately.

I am fully aware that this proposal does not fulfill the full aspirations of the labor movement but falls within the means of the business sector. It’s a compromise which may not completely satisfy both parties, but it’s a right response to a justified request for a salary adjustment.

The increase should be applied as of Oct. 1, 2011, as full retroactivity in this type of calculation is not recommended and could jeopardize the health of many small firms in rural areas. The main question that could be addressed is the impact on the economy and especially on inflation. Economic studies show that when an economy is operating at full employment, an increase in salary leads to an increase in the costs of production and therefore to an increase in prices. On the other hand, empirical studies show that when an economy is operating below full employment which is the case of Lebanon, there is no indication whatsoever of a relationship between salary increases and prices. The studies show that under the latter, a salary increase pushes businesses to organize themselves better, that is, to increase their productivity. Therefore a moderate salary increase under conditions of underemployment will improve the social climate and help businesses adjust their administrative and technical operations to the benefit of the economy and its growth.

What should be done to avoid a similar clash in the future? Salaries should be adjusted annually at a rate equivalent to half the overall inflation index as measured by the official Directorate for Statistics. Businesses can easily absorb annual increases but hate to have to do large adjustment in so many years. Moreover, the labor policy of the government should go beyond salary adjustments to worry about improving the productivity of labor and firms negatively affected by events in Lebanon and the region. This productivity can be helped by properly investing in education, training and development for management and workers.

Louis Hobeika is a professor of economics and finance at Notre Dame University.

Beirut stocks sink as investors preoccupied elsewhere October 31, 2011 12:49 AM By Peter T. Daou The Daily Star


BEIRUT: Ignorance was hardly bliss for Beirut stock investors in the final week of October. As the world debates Europe’s rescue plan and with the Middle East’s attention diverted to Syrian-Qatari developments, Saudi Arabia’s new political hierarchy and Tunisia’s election results, the Beirut Stock Exchange sank further into oblivion.

Even third quarter earnings reports by Lebanon’s biggest banks drew little interest from investors who reportedly saw the slowdown in profits coming, in light of Syrian and Egyptian events.

“Investors were not surprised by the earnings results, and are away from the market because of the turmoil in the region. Political events in Syria affected banking sector growth but that was already priced in the market, so price movements did not show any momentum and volumes were rather passive,” said Nancy Elias, senior financial consultant at FFA Private Bank in an interview with The Daily Star.

Yet with only 382,849 shares changing hands during the last week in October, the BLOM Stock Index still managed to fall 1.18 percent to 1,200.15 points, although market capitalization rose slightly to $10.48 billion.

BLOM Bank, the country’s second largest bank by assets, announced a year-on-year drop of 8.4 percent in third quarter net profit, pushing the stock down 3 percent during the week to $7.42. Similarly, Bank of Beirut said its profits fell 1.17 percent during the quarter, but its shares did not budge.

The only bank to report third quarter profit growth is Banque Bemo which said its net income rose 6.9 percent year-on-year to $2.1 million, an exception limited by the lack of trading in the bank’s shares. On the other hand, Solidere, which is yet to report summer earnings, saw its Class A and B shares slide 2.15 percent and 0.48 percent respectively with tight trading.

Good or bad, earnings results typically generate some trading, but with Lebanese stocks at two-year lows, investors are refusing to liquidate. “Bank profits were not really expected to be a catalyst, rather a better macro environment. As soon as regional turmoil calms, liquidity will be injected back,” said Elias.

Asked about a possible role for the central bank or government in rescuing a fading stock market, Elias said that “liquidity comes from confidence and the current sources of uncertainty are external, namely Syria, but not related to fundamentals, and those cannot be manipulated by the central bank.”

Instead, she pointed to a long-term solution involving financial reforms through privatization which would lead to the entry of new entities into the stock exchange. “We already have conservative financial policies and a disciplined banking sector, but we need better trading conditions,” said Elias.

Trading conditions in Lebanon’s Eurobonds seemed more appealing to investors with Elias describing activity in the over-the-counter market as more active given demand from depositors. Similarly, bonds traded on the BSE fared better than equities during the week albeit on even smaller volumes as the BLOM Bond Index rose 0.1 percent to 111.1 points, down only 0.8 percent for the year.

After futile earnings reports and in the absence of interest in the
BSE from investors, politicians and financial authorities, all of whom are focused on deciphering the Syrian and Special Tribunal for Lebanon variables, Lebanese stocks keep sliding into the abyss without serious buying activity in sight. “We were betting on a return of liquidity, but that has not happened yet,” said Elias.

Syria revolt strains Lebanon’s struggling economy October 31, 2011 12:49 AM By Natacha Yazbeck


BEIRUT: Lebanon’s economy is feeling the strain of a seven-month uprising against Syria’s Bashar Assad, as the increasingly violent revolt takes its toll on tourism, trade and capital inflows.

“The Arab Spring has not been remotely beneficial to the Lebanese economy. It’s deprived us of two crucial markets – Syria and Egypt – at a time when all our drivers of growth over the past five years are on the decline,” said Beirut-based economist Sami Nader.

After years of overall economic expansion and record prosperity in the vital tourism sector, the International Monetary Fund recently revised downward its forecast for growth in Lebanon to 1.5 percent in 2011 from 7.5 percent between 2007 and 2010, citing political uncertainty and the unrest in neighboring Syria.

The Economist Intelligence Unit meanwhile reported indicators for banking, construction, and tourism – which accounts for 25 percent of employment in Lebanon and 20 percent of the country’s annual income – weakened significantly in the first half of 2011.

The histories – and economies – of Lebanon and Syria for decades have been intertwined, with Damascus taking advantage of Beirut’s modern banking system and the latter capitalizing on its neighbour’s cheap labor.

But today, ongoing unrest in Syria has raised the risk of capital flight from Lebanon, as expatriates and potential investors play it safe fearing the violence threatening the regime in Damascus could spill over to Beirut.

“Inflow will begin to suffer soon if Lebanon does not take measures to protect the economy, including stimulating growth and exports,” said Nader.

“In light of what is going on in the region, the government must have a cohesive and clear vision on how to boost the economy and counter the lack of growth.”

While Lebanon’s foreign reserves stand at $31 billion (21.8 billion euros), the country staggers under a public debt of more than $53 billion, equivalent to around 135 percent of GDP – among the highest debt-to-GDP ratios globally.

Inflation in 2011 is also forecast to rise to some 5.2 percent as international commodity prices increase sharply, particularly for oil and food.

And as trade with Damascus declines, the economic future looks far from rosy in Lebanon, which depends on Syria as a destination or transit route for a large portion of its trade.

“Our clients in Syria are not buying because they just can’t afford to lose liquidity,” said one Lebanese trader of fast moving consumer goods who depends on customers in Damascus for at least half of his sales.

“Even after Syria lifted its ban on foreign goods, clients have frozen their business with us as they’re not sure what’s going to happen,” said a businessman who did not want to be named.

Months after it was hit by sanctions by the European Union and United States, Syria in September announced the temporary suspension on imports of products subject to tariffs of more than 5 percent, excluding only basic supplies that are not manufactured locally. The ban was later revoked.

Exports from Lebanon topped $2 billion in the first two quarters of 2011, according to the Economist Intelligence Unit’s Lebanon country report. Syria is still listed as one of Lebanon’s top markets abroad.

But with the revolt against Assad showing no signs of subsiding, the business community is on edge fearing the loss of a once-lucrative market which has long favored processed foods and luxury items imported from Lebanon.

“Freight coming to Beirut is by and large resold to other destinations, and Syria was a top customer,” said Marwan Chebli, general manager of Antarsped, a shipping company with branches in Lebanon and Syria.

Chebli said business in Syria has dropped by nearly half since the start of the year, while air, land and sea shipping from Lebanon has declined 13 percent since August.

“Even banking is affected,” he told AFP. “We are unable to even transfer money to our office in Damascus.”

Lebanon has the potential to boost competitiveness in region October 31, 2011 12:49 AM The Daily Star
BEIRUT: Lebanon’s economy has the potential to become more competitive and reap the benefits in terms of higher growth if key challenges are addressed, said a report from the Organization for Economic Cooperation and Development and the World Economic Forum.

The OECD and WEF’s Arab World Competitiveness Report said Lebanon has one of the better educational systems in the region, with both the quality of education and enrollment rates ranked as “good.”

The WEF’s Global Competitiveness Index ranks Lebanon in 12th place globally on the overall quality of its educational system and in sixth place worldwide in terms of its math and science.

The two organizations also highlighted the high quality of management schools in the country, as reflected by its ranking in 18th place worldwide in this category.

The report added, however, that educational outcomes could be improved further if Lebanese businesses provide more opportunities for on-the-job training.

The OECD and WEF report noted the presence of intense domestic competition in local markets as another key advantage, adding that intense competition supports high efficiency in the domestic market.

According to the Global Competitiveness Index, Lebanon has the 28th most competitive market worldwide and the 35th most efficient market.

The report also noted the low number of administrative barriers to entering the market, with Lebanon’s ranking 23rd in the number of procedures to start a business.

It also cited as a competitive advantage the country’s taxation system, which limits distortions (21st place), as another factor contributing to a healthy, competitive environment.

The report encouraged the streamlining of customs procedures in order to facilitate the flow of goods over the border and, eventually, to support efforts to attract FDI to Lebanon.

In parallel, the OECD and WEF said that the key challenges for Lebanon remain its weak institutional set-up, under-developed infrastructure, and difficult macroeconomic environment.

The report noted that institutions suffer from corruption as reflected by the country’s 132nd position among 142 countries worldwide, inefficient government agencies (117th place), as well as a judiciary that does not meet the needs of businesses (105th place) and that is subject to external influence (127th place).

The two organizations also listed the security situation in the country as a weakness that imposes significant costs on the business community, with Lebanon ranking in 105th place in this category, “mainly due to the prevalenceof terrorism.”

The OECD and WEF added that upgrading the country’s infrastructure will require stabilizing electricity supply (141st), as well as investing in roads (115th) and railroads (122nd).

Such investments will require the participation of the private sector because of the need for fiscal consolidation due to repeatedly high deficits and an unsustainable level of government debt, the report said.

The report concluded that Lebanon’s competitive advantages provide a strong base if these challenges are addressed.

Lebanon's Byblos Bank profit growth falters
October 31, 2011 03:11 PM


BEIRUT: Lender Byblos Bank on Monday reported reduced profit growth in the face of a slowdown in Lebanon's economy and upheaval in the Middle East.

It said profit in the first nine months of 2011 grew 6.2 percent to $128.1 million, compared with a 16.2 percent rise in first-half profit against the same period a year earlier and a 22 percent rise in 2010 full-year profit compared with 2009.

Byblos was the third of Lebanon's three main banks to report its nine-month results. Blom Bank last week said profit was steady at $236.3 million while Bank Audi posted a 7.1 percent rise to $271 million.

Results for all three showed a decline in profit growth.

Byblos said assets rose 9 percent to $16.7 billion and customer deposits increased 7 percent to $12.7 billion.

Its shares fell 1.2 percent to $1.60 after the results.

Byblos said its cost to income ratio fell to 47.4 percent in the first nine months of 2011, compared with 48.9 percent in the same period last year.

GLC urges speedy salary package rethink November 01, 2011 12:43 AM By Mohamad El Amin The Daily Star

BEIRUT: The General Labor Confederation warned the Cabinet Monday against any procrastination on salary increases, as ministers prepared to discuss Tuesday the Shura Council decision which rejected the government’s previous wage package.

“We call on Cabinet to accelerate deliberations aiming to correct the wage increase decree through [converting it to] percentages on salary ranks. In addition to [upholding] the raise on social benefits, transportation and education allowances,” the GLC executive committee said in a statement after its meeting Monday.

But GLC head Ghassan Ghosn hinted in an interview with The Daily Star that union leaders have not yet made up their minds over wage increase percentages that they seek to demand at deliberations with the Cabinet.

“The draft decree has significant legal errors. Let the government fix the wage increase decree first and then we can discuss the percentages with the government. We are scheduled to meet the Cabinet in few days,” he said, refusing to give any definite percentages.

The GLC statement also called on Labor Minister Charbel Nahhas to correct the legal errors made in the decree draft. Additionally, the statement reiterated labor union’s call on Cabinet to revive already existing price-monitoring mechanisms.

“We call on [Nahhas] to abide by the Cabinet decision, now supported by the Shura Council’s decision, to hold Price Index Committee meetings on a regular basis. This is particularly relevant given the price increases that have been already driven by the wage increase decision.”

The GLC statement also praised the Shura Council’s rejection of the wage increase proposal:

“[The Shura Council’s decision] is in line with our previously declared reservations on the Cabinet decision to exclude a segment of the workforce whose salaries are above LL1.8 million from the raise,” it said.

The GLC also commended Prime Minister Najib Mikati’s position on the issue, saying it showed he understands the importance of the changes requested by the Shura Council, a stance they considered central to bringing a “more just wage” increase into realization.

“The formation of a committee, headed by Prime Minister Mikati, to study the Shura Council’s recommendations … will settle the debate [over the wage increase]. It also closes the door on business associations’ demand to restrict the increase to minimum wage,” the statement added.

Over the past weeks, business associations had lashed out against the wage increase taken by Cabinet in mid-October. They repeatedly stated they would only concede to a 16.7 percent increase on minimum wage, an official statistic they said reflected accumulated inflation since 2008.

But with the Shura Council’s final verdict made, as Nahhas had affirmed previously to The Daily Star, the private sector would have lost a chance to appeal against the decree at the council.

The business associations’ argument that the government does not legally have the right to adjust wages beyond the minimum wage had been presumably refuted by the council’s verdict affirming the government’s authority to carry out yearly wage adjustments.

The Shura Council had rejected last Thursday the government’s bid to raise the minimum wage and salaries under LL1 million by LL200,000, and salaries between LL1 million and LL1.8 million by LL300,000.

The Cabinet decision had averted what would have arguably been Lebanon’s biggest ever labor strike scheduled for Oct. 12.

In a statement rejecting the wage increase decree draft, the council had cited violations to article 6 of the labor law, adding that any increase should not be a static lump-sum amount.

Article 6 of the labor law, it said, stipulates that government must review the minimum wage yearly to coincide with cost of living increases and inflation rates.

Despite the non-obligatory status of the Shura Council verdicts, the Cabinet has affirmed its intention to follow its recommendations, possibly bringing the debate over wage increase back to square one.

Further deliberations are scheduled over the upcoming few weeks, in an effort to reshape the decree into compliance with the council’s recommendations made last Thursday.

EDL employees urge govt to approve raise in wages November 01, 2011 12:43 AM The Daily Star
BEIRUT: The Union of Electricite du Liban employees Monday urged the government to approve a raise in wages for part-timers willing to work full time, warning that the failure of the Cabinet to meet their demands would result in an open-ended strike.

Last week, EDL workers announced the suspension of an open-ended strike that was scheduled to begin Tuesday.

“After receiving several promises, the union expressed willingness to cooperate particularly during a meeting with Prime Minister Najib Mikati on Oct. 24, 2010 and postponed the open-ended strike that was set to begin on Oct. 25 to make room for the government to pass a decree,” a statement by EDL employees said.

“We hope that we will not be forced to take negative steps,” it warned.

Budget deficit falls by $572 million in first 10 months November 03, 2011 01:13 AM The Daily Star


BEIRUT: Lebanon’s budget deficit in the first 10 months of 2011 fell by LL858 billion ($572 million) compared to the same period of last year to reach LL1.471 trillion or 21.42 percent of total spending, the Finance Ministry said Wednesday.

The primary surplus, excluding the cost of debt servicing, up to October of this year rose by LL580 billion to reach LL2.269 billion, or 20.83 percent of government revenues. The primary surplus in the same period of last year stood at LL1.689 trillion, or 15.52 percent of spending.

The ministry said that the total budget deficit in the first 10 months of this year stood at LL1.471 trillion (less than $1 billion), representing 13.5 percent of total spending achieved over this period. The budget deficit in the first 10 months of last year stood at LL2.330 trillion.

Total government revenues up to October of this year reached LL9.422 trillion, an increase of LL873 billion or 10.21 percent compared to the same period of last year.

The ministry stressed that it calculated the new revenues this year based on the estimated income generated by the Telecoms Ministry although the cash is still deposited in the Central Bank.

However, former Finance Minister Raya al-Hasan, a March 14 member, argues that Finance Minister Mohammad Safadi has no right to include the revenues of the telecoms sector as long as the proceeds from this sector remain in the Central Bank.

Telecoms Minister Nicolas Sehnaoui, following in the footsteps of his predecessor Charbel Nahhas, refuses to channel the telecoms revenues to the treasury under the pretext that law stipulates that the revenues should be sent at the end of the year.

Furthermore, Sehnaoui insists that a large chunk of the revenues should be allocated to the municipalities.

According to the ministry, revenues from direct and indirect taxes reached LL6.758 trillion in the first 10 months compared to LL7.013 trillion in the same period of last year, falling by 3.64 percent.

But the ministry attributed the main reason behind the rise of government revenues in general to the proceeds from the Telecoms Ministry which stand at LL1.449 trillion.

On the expenditure side, the government spent LL10.893 trillion in the first 10 months of this year compared to LL10.879 trillion in the same period of last year, slightly increasing by 0.13 percent.

The ministry said allocations for the electricity sector rose by LL216 billion. Safadi earlier predicted that the deficit of Electricite du Liban would reach $2 billion at year-end.

Lebanese industry thriving despite difficulties November 03, 2011 01:13 AM The Daily Star



BEIRUT: Lebanon’s industrial sector is seeing increased employment despite challenges, Industry Minister Vreij Sabounjian said Wednesday, after the ministry released positive figures on acquired industrial licenses for the first half of 2011. The food industry topped the list in issued licenses with 22.3 percent, followed by furniture and wood industries, the ministry reported, putting Mount Lebanon as the top host location with 51.5 percent, followed by North Lebanon and Beirut with respectively 16.5 and 3.4 percents.

Sabounjian urged investors to establish new industries in northern and southern Lebanon, as well as the Bekaa region, where he said the cost of land and labor is much lower.

“This way, businessmen can contribute along with the state in promoting balanced development,” he said.

The number of issued industrial licenses for the first half of 2011 reached 206 with an absolute maximum of 51 licenses recorded in March and a minimum of 21 in June.

Sabounjian had announced Tuesday that his ministry was pushing for a number of measures to encourage investments in the industrial sector.

Sabounjian said discussions were taking place with the Finance and Economy Ministries to reduce the income tax on industrial exports after the Industry Ministry submitted a draft proposal to the government.

Sabounjian added that his ministry was also in the process of drafting a law proposal providing incentives for the establishment of private export companies to create an opportunity for small industries to market their products abroad.

In parallel, the Foreign Ministry was required to promote Lebanese products abroad through its commercial foreign attaches and diplomatic missions.

Lebanon’s exports fell by 68 percent to Egypt, 12 percent to the United Arab Emirates and 10 percent to Iraq.

MTC launches 3G service 1 week after rival provider Alfa November 03, 2011 01:13 AM By Elias Sakr The Daily Star


BEIRUT: Lebanese customers on the Mtc touch network are now able to access long-awaited 3G services, the telecom operator announced Wednesday, one week after rival company Alfa launched the service.

Over 10,000 subscribers were already connected to high speed Internet as of Tuesday, including 8,000 subscribers who migrated from 2G to 3G+ and an additional 2,500 new users who subscribed within one day of its activation, Mtc touch chief commercial officer Nadim Khater said.

Mtc Touch’s geographic coverage will be confined during the first few months to Greater Beirut and the coastal line stretching north and south of the capital, Khater said in a news conference at the Phoenicia hotel in Beirut.

Within two to three months, the coverage is to be extended to cover most Lebanese territories, he added, explaining that the coverage of less populated areas would take place faster than the first phase.

Customers will have access to a series of packages that they can subscribe to, with options including a $10 offer for a 100 MB cap, $19 for a 500 MB cap, $32 for a 1GB cap, $79 for a 3GB cap and $99 for a 5GB cap. Additional MBs will cost $0.1, $0.08, $0.07, $0.07 and $0.06 for each respective package.

Mtc Touch prepaid customers will also have the option of using the 3G network without a subscription at a cost of $0.5 per MB download through a pay-as-you-go scheme.

3G, the third generation of mobile phone technology, allows users with 3G-enabled devices like smartphones access to a network to download information from the Internet at high speeds, opening myriad services previously unavailable to consumers.

One widely sought after service, video calls, will be available for a charge of $0.4 per minute. But a service trial conducted by Mtc Touch earlier this month showed that 92 percent of those who participated in the poll didn’t use video calls.

However, Khater attributed the lack of use of video calls among trial participants to the fact that of the 2,000 who took part, very few actually knew each other and were therefore unlikely to call each other.

Though the Lebanese welcomed the launch of the 3G+ service, many have complained about the high pricing of plans relative to the data cap provided.

However, Telecommunications Minister Nicholas Sehnaoui, who sponsored the launching, told reporters that the price packages shouldn’t be compared to current prices in the region where the service has been available for a while.

“The prices should rather be compared to prices that have been offered in the region when those countries launched the service,” Sehnaoui said.

He added that another reason behind the relatively high cost was the size of the Lebanese market which is small when compared to other countries.

The telecoms minister said prices should decrease gradually, adding that the Telecommunications Regulatory Authority was due to announce Friday a study conducted to explain the rates.

State project aims to improve aid to poor
November 03, 2011 01:13 AM
By Olivia Alabaster
The Daily Star


BEIRUT: A national project aimed at reaching extremely impoverished Lebanese will improve the way assistance is distributed to households, the initiative’s director told The Daily Star.

Implemented by the Social Affairs Ministry, the government last month officially launched the National Poverty Targeting Program. The project aims to reach at least the 8 percent of the population living in extreme poverty: those individuals surviving on less than $2.4 per day; around 300,000 people who are unable to meet their basic food and non-food needs. A further 28.5 percent of people in Lebanon live in poverty.

The NPTP program is being funded by the World Bank and by the Italian, Canadian and Lebanese governments.

A major component of the NPTP is the creation of a first-of-its-kind poverty database for the entire country, a pilot scheme of which was conducted in three areas of Beirut, in Ain al-Rummaneh, Shiyah and Tariq al-Jadideh, in 2009.

The nationwide campaign is urging families to register at their local Social Development Centers, where they are assigned to a social worker – nearly 400 of which have been specially trained for this project – who will then visit the family at home.

“Previous studies in Lebanon have looked at mapping poverties in terms of regions, but we haven’t had studies which have looked at who the poor actually are,” said Ramzi Naaman, the director of NPTP.

While similar projects around the world often take a household’s earnings as an indicator of poverty levels, this measure was impossible in Lebanon, Naaman explained.

“A lot of people do not report their true income and a large percentage of people work within the informal sector,” he said.

The NPTP therefore uses a proxy-means testing methodology, whereby the social worker examines the composition of the family by age, health problems, educational levels, and the household assets, including the home and property.

Each of these factors is assigned a mathematical weight and each family then a numerical score, Naaman explained. As the database becomes more complete, a national poverty line will be drawn, and families will be ranked on this chart.

A family’s place on the national scale will thus qualify the household for different subsidies. Many previous World Bank schemes have assigned cash or conditional cash-assistance, but this is not feasible in Lebanon, Naaman said.

“Here, cash is a bit problematic … there is the fear that cash might fall into a process of political, regional influence,” he said. “So we have moved in the direction of turning that basket of subsidies, available for those neediest families, toward service provision.”

The $28 million “basket” will primarily offer help in terms of health and education, providing the final 15 percent of health care fees after the Health Ministry pays the initial 85 percent, and providing tuition fees and the cost of school books to children. It will also offer help with paying electricity subsidies to those households which qualify.

Health and education are key, Naaman said, to creating a social safety net: “They are very important at building up the human capital and trying to stop this inter-generational transfer of poverty.”

While he admits that many might at first be skeptical about the ability of the government to implement such social assistance, Naaman believes that people will soon change their minds.

“We’ve become accustomed to starting a process and never finishing it. But if a family registers with the NPTP, and then gets tangible benefits… this will give us credibility and it will encourage others to come forward and register,” he said.

The first round of results and simultaneous implementation of social assistance is expected in May or June 2012, and will at first affect around 150,000 individuals. However, there are obstacles that the project will have to deal with, Naaman admits.

“When you start something new at this level, you are shifting the status quo,” he said. “Some people have really built their power on helping these families … Now you are coming out with a system, which is the state,” which is providing that assistance.

Ultimately though, Naaman believes the project will help not only Lebanon’s poorest families, but the country as a whole.

“When you have state services you are allowed some kind of freedom of thought … you have your own identity,” he said.

“If, with this project, we are able to … restore the image of the government, that the government is in charge of every single citizen, I think this would help us start looking at the new Lebanon,” Naaman said.

Lebanese banks see a drop in profits this year November 04, 2011 01:36 AM By Osama Habib The Daily Star


BEIRUT: Lebanese banks have started to feel the impact of the economic crisis in Lebanon and the turmoil in neighboring Syria as profits fell by 12 percent in the first nine months of this year.

According to the last consolidated balance sheet of all commercial banks in Lebanon, the profits of these banks up to October of this year reached $965 million compared to $1.095 billion in the same period last year, registering a drop of $132 million.

This is probably the first time in years the Lebanese commercial banks see a drop in profits, although most bankers remain upbeat about the prospects of growth in the future.

Bank assets and customer deposits saw growth in 2011 but still remained a bit lower than the 2010 performance.

Most of the listed banks on the Beirut Stock Exchange reported a slight rise in profits in the first nine months of this year.

But a close look at the balance sheets of some banks shows clearly that profits actually fell in the third quarter compared to the third quarter of last year.

“These results are due to the overall performance of the Lebanese economy. When we have an economic slowdown, banks usually take higher provisions and this impacts profits,” Joe Sarrouh, the adviser to the chairman of Fransabank, told The Daily Star.

The other factor which dragged down profits this year was the political unrest in both Egypt and Syria, countries with strong presence of leading Lebanese banks.

None of the Lebanese banks operating in Syria, for example, explicitly say that the political turmoil in the country has affected the operation of these banks.

There was also no information about any withdrawal of deposits from the Lebanese banks in Syria.

However, Lebanese banks are not willing to turn their back on countries which opened their doors for them, arguing that whoever rules Arab countries, banks will always find a window of opportunity in these states.

Sarrouh even saw an opportunity to expand in some of the countries that were the scene of bloody wars.

“Lebanese banks did not have any presence in Libya but with the regime change we see an opportunity to expand to this country in the future,” Sarrouh said confidently.

The Central Bank said that customer deposits in the first nine months of this year reached $112.9 billion, recording an increase of $5.7 billion compared to the same period last year.

But these results remained lower than the first nine months of 2010 when total deposits jumped by $6.9 billion.

Sarrouh said that total remittances from Lebanese expatriates in the Gulf region have also shrunk, leading to a fall in the growth of deposits this year.

Economists say that the delicate economic conditions in some of the Gulf states have directly affected Lebanese expatriates, and this was clearly evident by the drop in money they send to their relatives and families back in Lebanon.

But ironically, bank loans to the private sector have seen a growth of 1.51 percent in the month of October and 17.10 percent in the first nine months of this year.

Banks, and especially the leading banks, are currently very careful in lending amid a severe economic crisis and an uncertain political future.

To weather any unforeseen problems in the future, banks make provisions that are equal to the loans they give to their clients.

But despite the gloomy economic picture and never-ending political bickering in Lebanon, Central Bank governor Riad Salameh remained upbeat about the future of the commercial banks, predicting a growth of 7 to 8 percent at the end of this year.

The governor obviously is counting on the highly regulated banking sector and the strict measures enforced by the Central Bank to ensure that deposits are safeguarded all the time.

BLOM also assessed positively the performance of the three leading Lebanese banks in the first nine months of this year despite major difficulties.

“Despite political tensions and disturbances in Lebanon and the region and the ensuing economic slowdown, the three largest Lebanese banks (BLOM, Audi and Byblos) maintained their profitability and orderly growth.

“What reinforces this performance is that these three banks are banks with the widest regional expansion among Lebanese banks, especially in countries currently undergoing major political change. This indicates the three banks’ successful operational management and control over risk under difficult conditions characterized by higher risk and uncertainty,” BLOM said in the report.

Monthly transfers to EDL reach LL1,234 bln November 04, 2011 01:36 AM The Daily Star

Treasury transfers to Electricite Du Liban reached LL1,342 billion in 2011 distributed as follows: Reimbursement of KPC and Sonatrach at LL1,212.2 billion; Payments to EGAS at LL54.9 billion; Debt service at LL74.5 billionTransfers in January-August 2011 registered an amount of LL216 billion higher than that of 2010, which stood at LL1,126 billion.

This is primarily due to a LL151 billion increase in gas oil and fuel oil payments and a LL55 billion payment for natural gas provided by EGAS.

Businessmen urge government to rethink economic policy November 04, 2011 01:36 AM The Daily Star


BEIRUT: The Lebanese Businessmen Association urged the government Thursday to adopt a comprehensive strategy to overhaul Lebanon’s economy rather than increasing wages, a move which they contend could backfire on the livelihoods of the Lebanese.

“There is no disagreement that the major problem rests in the weak purchasing power of the majority of Lebanese, which affects their living standards. This weakness stems from inflation in the regional and world economy,” head of the association Fouad Zmokhol said.

However, Zmokhol added that an increase in wages in the private sector would have negative repercussions on Lebanon’s economy and labor force, causing inflation to soar by 2 to 3 percent while unemployment would jump by 5 to 6 percent, reaching 20 percent.

Other negative repercussions would include the migration of the qualified and young skilled labor force, a reduction in domestic and foreign investment, a drop in GDP growth by 2 to 3 percent and finally the closure of many small businesses, Zmokhol said.

High production costs and low profits amid the global financial crisis and the unrest sweeping the Arab world are, according to Zmokhol, among the major reasons behind fall in the volume of business activity in Lebanon.

Zmokhol made his remarks during a meeting with the head of the Shura Council, Judge Shukri Sader.

The Shura Council turned down a Cabinet decision last week to increase wages after a deal was struck between the Cabinet and labor unions.

The Cabinet had agreed to raise the minimum wage by LL200,000 for salaries under LL1 million and LL300,000 for salaries between LL1 million and LL1.8 million.

The Shura Council argued that the Cabinet has no right to set a specific ceiling for the wage increase and added that raising salaries by LL200,000 and LL300,000 runs contrary to the nature of percentage increases.

Sader said the government decision was in violation of Lebanese laws based on a free market economy, which leaves employers and employees of the private sector responsible for negotiating a solution.

Sader added that article 44 and 45 of labor law 36/67 stipulated that the government was only entitled to set the minimum wage in line with the rate of inflation.

The Shura Council had also denied the government the right to change the education and transportation allowances that figured in its plan, adding that such a decision should only be negotiated between the employers and employees.

Among the solutions to the social woes of the Lebanese, Zmokhol suggested a revision of guaranteeing social benefits for elderly citizens, streamlining the public education sector, enhancing public transport and increasing health coverage by revitalizing the National Social Security Fund.

Also among the major reforms discussed were Zmokhol’s suggestions on proposed job creation aimed at bridging the gap between 19,000 yearly job applications and the 3,500 job offers.

SC, Deutsche, Fransa to sell Lebanon’s bonds November 04, 2011 01:36 AM
BEIRUT: Lebanon hired Standard Chartered Plc, Deutsche Bank AG and Fransa Invest Bank SAL to manage the refinancing of about $2 billion in Eurobonds maturing next year, Minister of Finance Mohammad Safadi said.

“I am optimistic about the appetite in the market,” Safadi said by phone today, adding that Lebanon is pursuing the refinancing early to take advantage of a fall in borrowing costs. The agreement will be announced tomorrow, he said.

The Arab country has about $3.79 billion of Eurobonds due next year, including interest payments. The next Eurobond of $600 million matures in March, followed by maturities in April, July and September, according to Finance Ministry data.

Moody’s Investors Service rates Lebanon’s domestic and foreign-currency bonds at B1, four levels below grade. Standard & Poor’s gives them a B rating, five steps below investment grade.

In July, Lebanon refinanced about $950 million in Eurobonds and interest payments maturing in August by issuing a $1.2 billion dual-tranche Eurobond.

TRA: New ADSL rates below Arab average November 05, 2011 02:07 AM By Mohamad El Amin The Daily Star

BEIRUT: A Telecommunications Regulatory Authority study showed Friday that ADSL and international bandwidth prices in Lebanon are lower than Arab countries’ average. But it admitted that 3G prices in the country exceed average Arab prices. The study, presented by TRA board member Patrick Eid, stipulated that 3G mobile broadband services would develop through all three internationally recognized stages of gradual service expansion.

The first stage, which Lebanon is currently at, carries the heftiest price-tag and the lowest number of subscribers, Eid explained. He added that operators aim at this stage to increase the knowledge-base and study usage patterns in addition to improving service coverage and eliminating technical problems.

In the latter two stages, Eid said, the service operators aim to increase market penetration as the pool of users grows larger with an increase in the number of smartphone users, leading to significant price decreases.

3G mobile broadband service was launched last week by both of the country’s mobile network operators, Alfa and MTC.

The price of 3G services, Eid explained, is currently between 23 and 25 percent higher than the average price in the Arab countries “which leaves a comfortable margin to decrease prices as the service progresses to the 2nd and 3rd stages,” Eid added.

But he revealed that ADSL pricing in Lebanon was lower than many Arab countries. The new low-usage (2GB) ADSL prices put Lebanon below Arab countries average price by 23 percent. Meanwhile the high-usage (6GB) ADSL price positions Lebanon level with Arab countries’ average of $28.

“Only Lebanon, Morocco and Oman offer ADSL Services starting at capacities higher than 256kbps and 512Kbps,” Eid said.

But significant differences are shown in prices of corporate fixed broadband, said Eid. When compared to average Arab prices, low-usage (2GB) and high-usage (6GB) in Lebanon are 75 percent and 59 percent lower respectively.

Newly reduced international bandwidth and international leased-circuit prices, Eid added, became also significantly lower than the Arab average and similar to prices in Morocco and Jordan.

TRA acting chairman Imad Hoballah opened the press conference with a presentation of the authority’s main duties, outlining its vision for developing the sector. Hoballah also described the mechanisms of cooperation between the TRA and the Telecommunications Ministry, especially issues relating to price and infrastructure of telecommunications services.

Head of TRA’s Information and Consumer Affairs Unit Mahassen Ajam shed light on the authority’s efforts to reduce the prices of telecommunications services, building its pricing studies on scientific analysis and comparisons with neighboring and developed countries.

Ajam explained that recent draft regulations issued by TRA are centered on protecting consumer rights, while at the same time ensuring increased access to a wide choice of advanced services.

Olive yield down but farmers look to next year’s harvest November 05, 2011 02:08 AM By Antoine Amrieh The Daily Star


KOURA, Lebanon: It was hit-or-miss for this autumn’s olive harvest, but most farmers, many of whom are struggling with rising costs and stagnant profits, have their sights set on next year. Toni Sarkis, a farmer in Zghorta in the north, said that this year’s olive season was delayed for over two weeks and his fields yielded less than 50 percent of the average quantity of a bearing season.

Many olive trees alternate one year of bearing with one of production, especially those that aren’t irrigated. As such, it’s uncommon for trees to have two good harvests in a row and last year was a bearing season for many groves.

According to Sarkis, the method used to harvest olives also affects the quality of the crop and thus the quality of the oil produced, as well as the tree’s health and future crops.

“We started gathering ripe olives that have fallen to the ground and shaking the boughs of some of the mature olive trees,” Sarkis said. “Some olive grove owners have started harvesting their crop by hitting the trees with a wooden stick, but this technique damages the olives and the trees’ boughs and branches, and it negatively affects future crops.”

The olive tree is one of the oldest fruit trees in Lebanon and is grown in most all the country’s regions, especially in the north and south. It is cultivated from sea level up to an altitude of around 800 meters.

Samer Khatib, who owns an olive grove in the village of Qwayta in Koura, said that the olive yield this year was around 30 percent of a normal bearing season.

He blamed the poor harvest on high temperatures, noting that the rain that fell was of no use to the crop.

“Last year God gave us a good season and we hope that the harvest will be large in the coming season,” Khatib said.

In the past every village in Koura had an olive press but most of them have closed down to make way for residences and stores, he added.

There are no accurate statistics for olive presses in the country as more than half of them are not registered with the Industry Ministry. In north Lebanon, where there are over 200 olive presses in use, only 85 of those have received license from the ministry.

Before 2007, 13 million olive trees covered 57,500 hectares of the country, but urban and road expansion has reduced the number of trees by 15 percent. Forty percent of the country’s olive groves are in north Lebanon where 20 percent of the harvest is consumed and 80 percent is made into oil.

In central Koura, a member of the Matar family, said that this year’s season was as good as last year’s and the crop yielded over 80 percent of the average yield of a bearing year.

“The area’s residents have already started to harvest their olives that are saturated with oil due to the rains that fell over the region,” he said.

According to Matar, hand-picking olives is the best harvesting method as it is safe for the trees and promotes a good crop.

“Mattresses are laid under the trees and workers pick the olives one at a time,” he said, adding that the most popular technique is striking the tree with a wooden stick.

“Although this method is easy and quick, it severely damages trees and the crop which often spoils,” Matar said.

The mayor of the Koura village of Bkeftin, George Shubah, said olives are grown over 500 acres of land in the village but most of the trees are affected by disease.

“Lack of awareness and the owners’ neglect of their lands negatively affects their olive trees and those on neighboring land,” Shubah said. But according to him, this year’s season was good and the village’s olive presses are being put to use.

As for Malek Ayoubi, a municipal council member in the Koura village of Al-Nakhla, he relies on the help of family members during the harvest season due to high costs.

“The high costs of proper pruning, fertilizing, and using pesticides to combat diseases bring additional costs,” Ayoubi said, adding that the cost of producing 20 liters of olive oil is around $100 but can only be sold for around $100.

“This has caused owners to neglect the trees that their families toiled so hard to plant, and to sell their lands, especially since real estate prices have skyrocketed,” Ayoubi said.

I am wondering, why Lebanon isn't still a member of WTO? Government isn't interested in it??

Beirut stocks on slippery slope November 08, 2011 12:36 PM By Peter T. Daou The Daily Star


BEIRUT: Despite earnings results, Beirut stocks remained both an unpopular trading choice for investors and a drag on portfolios during the first week of November. The BLOM Stock Index (BSI) added one more week to its nine-month legacy of decline in 2011, shedding 1.05 percent to 1,187.46 points during the five trading days ahead of Eid El Adha.


The break below the 1,200-points level effectively erases all the market’s gains following the June 2009 parliamentary elections and opens the door to further declines.


Volumes picked up slightly by 4.5 percent to 400,244 shares during the week, but instead of breathing life into the Beirut Stock Exchange (BSE), the marginal activity erased $100 million in market capitalization to close Friday at $10.38 billion.




Stocks held large volumes of sell orders relative to buy orders


Trailing the market was the exchange’s heavyweight stock Solidere A that tumbled 2.52 percent to $14.3 followed by Byblos Bank at 2.47 percent. At the start of the week, the latter reported an 8.6 percent year-over-year drop in net profit to $44 million in the third quarter of 2011, but said its nine-month performance remained 6.2 percent ahead of 2010.


Byblos Banks’ earnings, although not surprising given the slowdown in the domestic market and the turmoil in neighboring Syria where the bank maintains major operations, still disappointed some investors and by close of business Friday there were 2.6 times more sellers than buyers of Byblos Bank shares.


In fact, the majority of stocks held large volumes of sell orders relative to buy orders including Banque BEMO Bank which had 10,000 shares in line for a sale at 2 percent below the market price with no buy orders. On the other hand, bid-ask volumes of Solidere shares were balanced on the buy and sell side while investors were lined up to purchase Bank Audi and Ciment Blancs shares albeit at a discount to last prices.


On the other hand, bonds maintained their outperformance over local equities with the BLOM Bond Index rising 0.1 percent to close the week at 111.1 points. Similarly, Lebanese Eurobonds were up 1.2 percent in October with BofA Merrill Lynch returning to an Overweight view on the securities which comprise 3.6 percent of its model portfolio, the third largest holding after Russia and Turkey among 22 countries under coverage in the Eastern Europe, Middle East, and Africa region.

Analysts see continued downward trend for Beirut stocks November 09, 2011 01:07 AM By Peter T. Daou The Daily Star

BEIRUT: Regional uprisings and lackluster economic growth in Lebanon are likely to continue weighing heavily on Lebanese stocks this week, after the bourse performed dismally last week, analysts told The Daily Star.“The decline in the stock market is a normal reflection of the weakness in the Lebanese economy where real GDP growth projections have been revised downward several times this year. There is also a role for risk aversion related to political instability and the regional turmoil,” said Salim Chahine, associate professor of finance at the American University of Beirut in an interview with The Daily Star.

Despite earnings results, Beirut stocks remained both an unpopular trading choice for investors and a drag on portfolios during the first week of November. The BLOM Stock Index added one more week to its nine month legacy of decline in 2011, shedding 1.05 percent to 1,187.46 points during the five trading days ahead of Eid al-Adha. The break below the 1,200 points level effectively erases all the market’s gains following the June 2009 parliamentary elections and opens the door to further declines. Volumes picked up slightly by 4.5 percent to 400,244 shares during the week, but instead of breathing life into the Beirut Stock Exchange, the still marginal activity erased $100 million in market capitalization to close on Friday at $10.38 billion.

“As long as the regional turmoil and the impact on the Lebanese economy persist, the stock market will likely continue to decline,” said Chahine. In particular, Syrian unrest has led to declines in Lebanon’s tourist numbers arriving by car from the GCC, and exports have declined sharply, prompting many to directly link Lebanon’s economic growth and stock market performance in coming months to developments in Syria. Joe Sarrouh, adviser to the chairman of Fransabank, agreed that both political tension and an economic slowdown were dragging the Beirut Stock Exchange downward, but added these were not the only factors behind the fall of the bourse.

“The Beirut Stock Exchange lacks depth and wits,” he said, adding that as long as there is insufficient liquidity in the market, the bourse will continue to perform poorly.

“Trading in Beirut stocks traditionallyonly has one trend at a time: either sell or buy,” he said, adding that the current trend was to offload stocks. Trailing the market last week was the exchange’s heavyweight stock Solidere A which tumbled 2.52 percent to $14.3 followed by Bank Byblos at 2.47 percent. At the start of the week, the latter reported an 8.6 percent year-over-year drop in net profit to $44 million in the third quarter of 2011, but said its nine month performance remained 6.2 percent ahead of 2010.

Byblos’s earnings, although not surprising given the slowdown in the domestic market and the turmoil in neighboring Syria where the bank maintains major operations, still disappointed some investors and by close of business on Friday, there were 2.6 times more sellers than buyers of Byblos shares.

“Since the events started in Egypt, we were all expecting bank profits to be adversely affected, and that’s why you see a continuous decline in stock prices and not a sharp drop,” said Chahine.

In fact, the majority of stocks held large volumes of sell orders relative to buy orders as of market close Friday, including Banque BEMO with 10,000 shares in line for a sale at 2 percent below the market price with no buy orders. On the other hand, bid-ask volumes of Solidere shares were balanced on the buy and sell side while investors were lined up to purchase Bank Audi and Ciment Blancs shares albeit at discounts to last prices.

Asked about a possible role for the central bank in supporting a market down 20 percent in 2011 to date, Chahine said that “declining interest rates, already extremely low relative to where they should be, would normally provide excellent support to the stock exchange. The fundamentals of the banks are very strong, so I don’t see what the central bank can do.”

Instead, both Chahine and Sarrouh advocated long-term measures aimed at promoting liquidity on the Beirut Stock Exchange.

Merchants in Lebanon warn against any bid to raise VAT November 09, 2011 01:07 AM The Daily Star
BEIRUT: More merchants and traders in Lebanon voiced their strong objection to any attempt to raise the Value Added Tax under the current economic conditions.

The merchant associations in Hamra and Burj Hammoud warned Tuesday that raising the VAT from 10 to 12 percent would have catastrophic results on businesses.

Finance Minister Mohammad Safadi presented his 2012 draft budget to the Cabinet two weeks ago which is yet to be discussed and approved by the ministers. One of the items in the draft budget which triggered wide condemnation from most ministers, economists, labor unions and merchants was a series of taxes that hit the consumers as well as businesses.

Merchants fear that any VAT increase would lead to an increase in the prices of commodities, which would also prompt a sharp drop in retail and wholesale sales.

They also say a consumer tax will cause inflation to jump to 8 percent.

Safadi reiterated on many occasions that he is willing to drop the idea of raising the VAT on condition that those who strongly oppose it come up with a logical proposal to increase government revenues in order to finance ambitious infrastructure projects.

Merchants called on the government to reject calls for higher taxes, reminding officials that the growth is projected to be less than 3 percent at the end of the year.

Most consumers complain that prices of many basic items already jumped by more than 20 percent four weeks ago after Safadi first revealed his 2012 draft budget.

Businesses in Lebanon were also determined to confront attempts by the government to raise the salaries beyond the financial means of most companies and firms in the country.

The state Shura Council has rejected a Cabinet decision to raise the minimum wage from LL500,000 to LL700,000 and to offer an additional LL300,000 for those earning between LL1 million to LL1.8 million.

Fadi Gemayel, an industrialist, said that he is willing to accept a revision of salaries if this step was coupled by a series of measures to stimulate the economy and lure bigger investment in infrastructure projects in the country.

U.S. to question Lebanon over deposits November 10, 2011 01:06 AM The Daily Star

BEIRUT: Alleged reports of capital and deposits fleeing from Syria to Lebanon will be the key issue raised by a senior U.S. official during his talks with Lebanese officials Thursday.

The U.S. Assistant Secretary for Terrorist Financing Daniel Glase, who is scheduled to meet with Central Bank governor Riad Salameh and Finance Minister Mohammad Safadi, will convey Washington’s deep concern about reports that Syrian officials who are on the U.S. blacklist are trying to transfer their money to Lebanese banks and financial institutions.

Salameh told the Association of Banks in Lebanon that Glase’s visit had been scheduled previously.

The visit comes on the heels of news that Washington is determined to apply pressure on any country that facilitates the transfer of Syrian funds, especially if they belong to Syrian officials who may have played a role in the crackdown on Syrian protesters.

But Salameh and bankers insist that Lebanese banks have not received substantial deposits from Syria since the crisis broke out eight months ago.

Bankers argue that the deposit growth this year has dropped compared to last year, proving that no Syrian cash has entered Lebanon.

A leading banker told The Daily Star that it is nearly impossible for any cash to enter the banking and financial system in a haphazard manner.

“Any penny that enters our financial system in Lebanon will appear in the balance sheets of commercial banks. There is no way billons of U.S. dollars [are] entering the Lebanese financial market without raising the alert of the Central Bank,” the banker stressed.

He added that banks have clear instructions to ask any person who deposits more than $10,000 where he got the money from.

But the banker suggested that money could be carried through the border illegally by smugglers, but they surely won’t dare to deposit them in the banks since they realize that this cash will be frozen by monetary authorities.

Salameh made similar these remarks in an interview with a Russian TV station, saying that the growth in Lebanon’s deposits dropped this year when compared to 2010.

The latest data supports his claim. Deposits grew 5.4 percent in the first eight months of 2011, compared to growth of 7.3 percent in the first eight months of 2010, according to numbers by data provider, Economena Analytics.

Salameh confirmed that no Syrian accounts have been frozen in Lebanon, saying that such a procedure is the prerogative of the Special Investigation Commission, a body affiliated with the Central Bank.

“The Commission has not taken any action against Syrian depositors,” he said, adding, “generally, this requires a decision by the [U.N.] Security Council.”

But a statement issued earlier by the U.S. Treasury Department said Glaser was expected to “highlight the need for authorities to remain vigilant against attempts by the Syrian regime to evade U.S. and EU sanctions through the Lebanese financial sector,” the U.S. Treasury Department said.

The United States had informally inquired about Syrian deposits in Lebanese banks last September as part of Washington’s efforts to tighten economic and financial sanctions on Damascus, media reports said.

Bankers confidentially say that Syrian deposits in Lebanese banks do not exceed $3 billion and that most of this money belongs to prominent Syrian businessmen and traders who have held deposits in Lebanon previously.

These bankers also claim that they will abide by any Security Council resolution in the future which may prohibit any banking and financial transactions between Lebanon and Syria.

“So far, the Security Council did not pass any resolution on this matter and for this reason Lebanon is officially not obliged to heed the pressure from any country,” a banker told The Daily Star.

Salameh and President of the Association of Banks in Lebanon Joseph Torbey have aggressively campaigned in Washington and other European capitals to dispel all rumors that Lebanese banks are a haven for illegal activities.

Torbey made it abundantly clear that Lebanese banks are well regulated and always abide by all Security Council resolutions.

Exchange dealers in Lebanon also denied some media allegations that they are receiving large sums of cash from Syria, adding that they are also under the strict supervision of the Central Bank.

Salameh: Turmoil has hit Lebanese economy November 10, 2011 01:06 AM The Daily Star

BEIRUT: Political upheavals gripping many Arab countries had dire effects on the overall performance of most Middle East economies, including Lebanon, Central Bank Governor Riad Salameh said Wednesday.

Salameh, who was interviewed by Russia Today TV, admitted that the flows of investment and stock exchanges of Arab countries have been affected by current developments.

“Since Lebanon’s economy is so closely intertwined with that of neighboring Syria, the unrest across the border has taken a huge toll on the Lebanese economy,” he added.

Lebanon’s GDP grew 7.5 percent annually between 2007 and 2010. However, the latest growth forecast for the country has shrunk from a high of 7 percent to a low of 1.1 percent.

Salameh acknowledged that Lebanese banks with operations in Damascus have been impacted by the events in Syria.

This has resulted in a decline in banking activity and a drop in the total amount of financial transactions.

Economic experts agree with Salameh saying that the transition from autocracy to democracy in the Middle East is likely to be bumpy and unstable, at best.

“Political change and turmoil affect the performance of the Lebanese banking sector that have expanded regionally,” Salim Chahine, associate professor of finance at AUB told The Daily Star.

“Lebanon is directly exposed to these crises through its trading activity with neighboring countries and disruption to the flow investment into the country,” Chahine added.

But Salameh tried to play down the impact, saying that Lebanon was able to manage the repercussions through financial maneuvering and that the country has yet to experience decelerated growth.

“The negative impact has not reached a crisis stage as Lebanon is expected to record a growth of 2 percent in 2011,” he explained.

The governor also denied reports of illegal Syrian capital flow into Lebanon, adding that the Lebanon’s growth in deposits dropped this year when compared to 2010.

The latest data supports his claim. Deposits grew 5.4 percent in the first eight months of 2011, compared to growth of 7.3 percent in the first eight months of 2010, according to numbers by data provider, Economena Analytics.

Industrialists Association issues 7th edition of guide November 10, 2011 01:06 AM The Daily Star
BEIRUT: The Association of Lebanese Industrialists issued the seventh edition of the directory of Lebanese exports and industrial firms Wednesday, in cooperation with local and international stakeholders.

The guide includes full addresses of industrial institutions in Lebanon, in addition to classifying their products in accordance with the international commodity classification system dubbed Harmonized System Codes (HS Code).

This aims to allow local and international businesses to identify tariff rates for any Lebanese-produced commodity as well as those produced by 130 other countries.

The directory can be read online at http://www.lebanon-industry.com.

Nahhas meets importers to control foodstuff prices November 10, 2011 01:06 AM The Daily Star
BEIRUT: Economy Minister Charbel Nahhas prepared for a visit next to Moscow week, discussed bilateral relations with the Cypriot ambassador, and headed a meeting to monitor foodstuff prices Wednesday.

Nahhas had agreed with importers of basic food items to provide the ministry with weekly wholesale prices, allowing the ministry to draw comparisons between wholesale and retail prices in an effort to curb arbitrary price hikes.

Gasoline prices up by LL100 November 10, 2011 12:16 PM The Daily Star
BEIRUT: Gasoline prices rose by LL100 Thursday, while the price of kerosene gas and diesel increased by LL500.

The 98-octane graded fuel now costs LL34,100 while the price of 95-octane graded fuel is now LL33,400, based on the weekly updated price list issued by the Energy and Water Ministry.

The price of kerosene gas is now LL29,200, Diesel costs LL29,600 while diesel oil for electronic vehicles costs LL29,400.

Lebanon, Egypt to cooperate on ordnance, electric equipment manufacture November 10, 2011 01:22 PM The Daily Star
BEIRUT: Lebanon and Egypt are working on establishing a joint company manufacturing electric equipment and ordnance, Egypt State Information Service reported.

Egypt’s Ministry of Electricity Hassan Youniss said the company would open new opportunities for cooperation in the field of electricity and investment for the two countries.

"The two sides will cooperate on the manufacture of electric equipment and ordnance, exchange of expertise and information and establishment of new industrial bases in the two countries," Younis was quoted as saying in a statement by the agency.

The minister added that the company aims at enhancing Egyptian-Lebanese cooperation.

Blackout hits 90 pct of Lebanon Internet users November 11, 2011 01:16 AM The Daily Star
BEIRUT: The majority of Lebanon’s Internet users experienced Thursday a blackout, as the country lost the connection to its primary underwater cable. The blackout reportedly affected 90 percent of the country’s Internet users.

A brief statement issued Thursday night by Telecoms Minister Nicolas Sehnaoui’s press office said the ministry contacted the concerned provider in Marseille to fix the problem, which was ameliorated by 8:30 p.m.

Last Monday, Internet users in Lebanon experienced a major slowdown as the country lost the connection to its primary underwater India-Middle East-Western Europe cable.

Lebanon’s Telecoms Ministry had promised that the country’s Internet speed would greatly increase in early October. Over the past couple of weeks, some users reported faster speed. However, others have reported recent slowdowns.

Lebanon’s 1 million Internet users have waited years for an increase to speeds which have been rated the worst in the world by online speed-testing group, Speednet.com.

Critics cite key issues, including a national Internet backbone that is obsolete and needs upgrading, distribution delays, archaic legislation, and the sector’s lack of transparency.

Some activists contend that the infrastructure necessary for a fast connection is ready, but that political bickering is preventing it from being “switched on.”

This appeared to be resolved over the summer, with the activation of the IMEWE, an international fiber optic submarine cable, and the release by the government of the new schedule of prices .

Cabinet to exempt VAT on loans, donations November 11, 2011 01:16 AM The Daily Star
BEIRUT: The government intends to issue decrees to exempt Value Added Tax on international loans and donations to public institutions, municipalities and municipality unions.

A statement issued Thursday by Prime Minister Najib Mikati said the law already excludes these bodies from paying the tax in both article 19 of law 379, organizing VAT, issued 2001 and article 5 of law 7284 issued 2002.

It added that decrees enforcing both articles will be suggested by the Finance Ministry and approved by the Cabinet accordingly.

The statement highlighted, however, that local sources of funding, whether public or private, would remain subject to a 10 percent VAT.

Byblos maintains profits despite Q3 provisions November 11, 2011 01:16 AM The Daily Star


BEIRUT: The high provisions Byblos Bank took this year have slightly affected the profit growth in the third quarter, but the net income of the bank since the beginning of 2011 was more than satisfactory, Alain Wanna, the Chief Financial officer of the bank, said. “Given the events taking place in Lebanon and the countries where the bank has a presence, I think the performance of the bank was more than satisfactory in terms of profits and assets growth,” Wanna told The Daily Star.

Byblos Bank, one the three largest banks in Lebanon, ended September 2011 with a net profit of $128.1 million, an increase of 6.2 percent compared to the September of last year.

But the profits of the bank in the third quarter slightly fell by 8.57 percent to $44.3 million due to the high provisions the bank took this year.

Most Lebanese banks have seen their profits slide this year due to the political unrest in Syria.

“Personally I don’t look only at the bottom line. I look at the quality of the profits. The most important thing is also to look at the provisions the bank is taking,” Wanna said.

He stressed that Byblos is paying much attention to the quality of assets, capital adequacy ratio and beefing up the private capital of the bank.

“The capital adequacy ratio of Byblos is 14 percent and this more than meets the conditions of Basel II recommendations. The bank also increased the private equity by $250 million when the International Financial Corporation (the private arm of the World Bank) joined in raising the stake,” Wanna explained.

He believes that Byblos is the least leveraged among the three top banks in the country. This means that the bank has a strong capital base.

Wanna noted that Byblos Bank has issued $300 million in euro bonds with a 10-year maturity, and this was the first such transaction by a Lebanese bank.

He remained confident that Byblos will maintain the same high profit as last year with special emphasis on liquidity and a strong capital base.

Wanna added that the unrest in Syria had only had a minimal effect on the bank’s operations.

“We have assets close to $1 billion only in Syria while the actual size of our balance sheet is more than $15 billion and this means that the impact of Syria on our operation was not that significant,” he said.

He added that the core business of Byblos is still in Lebanon, despite the bank’s expansion in many countries such as Iraq and Sudan.

“We are not witnessing any growth in assets and deposits in Syria due to the current circumstances, but the impact on our overall operations is still not too big,” the banker said.

Wanna was upbeat about the future of Byblos Bank.

The bank already has a presence in Iraq with more branches set to open in the next few years.

Wanna argued that Iraq is a promising and huge market, especially with its huge oil wealth.

He also disclosed new plans to diversify the bank’s revenues.

“The interest rates on government securities, whether in Lebanese pounds or foreign currencies, are failing, while the interest rates on customer deposits are not dropping at the same pace.”

Wanna said that Byblos intend to pay more attention to private banking to manage wealth and this step would be an attempt to diversify income.– O.H.

Public debt reaches $53.4 billion up to October November 12, 2011 01:27 AM The Daily Star
BEIRUT: Lebanon’s public debt up to October of 2011 reached LL80.505 trillion ($53.4 billion) compared to LL79.298 trillion in the same period of last year, the Association of Banks in Lebanon announced Friday.

ABL added that the public debt from August to October rose by close to $600 million.

Finance Minister Mohammad Safadi has predicted that the public debt would surge to $60 billion at the end of 2012.

Successive governments have been struggling to reduce the public debt which at one point reached 185 percent of GDP before falling to 135 percent of GDP last year.

Economists agree that the public debt pose a major problem for Lebanon as all efforts to implement radical reforms and privatize some state-owned companies failed miserably as a result of the sharp political split in the country.

Safadi has presented the 2012 draft budget to the Cabinet two months ago but this bill was met with stiff resistance because it called for a series of taxes that will hit low income families.

The minister warned that failure to boost revenues through taxes would hamper all efforts to keep the budget deficit low.

The budget deficit in the first 10 months of 2011 fell by LL858 billion compared to the same period of last year to reach LL1.471 trillion or 21.42 percent of total spending, the Finance Ministry said Wednesday.

The primary surplus, excluding the cost of debt servicing, up to October of this year rose by LL580 billion to reach LL2.269 billion, or 20.83 percent of government revenues. The primary surplus in the same period of last year stood at LL1.689 trillion, or 15.52 percent of spending.

The ministry said that the total budget deficit in the first 10 months of this year stood at LL1.471 trillion, representing 13.5 percent of total spending achieved over this period. The budget deficit in the first 10 months of last year stood at LL2.330 trillion.

Total government revenues up to October of this year reached LL9.422 trillion, an increase of LL873 billion or 10.21 percent compared to the same period of last year.

The ministry stressed that it calculated the new revenues this year based on the estimated income generated by the Telecoms Ministry.

Economy Ministry to monitor foodstuff prices November 12, 2011 01:27 AM The Daily Star
BEIRUT: Economy Minister Nicolas Nahhas said the ministry will start enforcing foodstuff price monitoring efforts Thursday.

After meeting with various representatives of foodstuff importers and producers, Nahhas said an urgently formed foodstuff price monitoring committee would soon be legalized and regulated by a decree issued by the Economy Ministry.

Nahhas said the committee would meet Monday to determine the mechanisms it will adopt for price monitoring, adding that the committee would include two representatives from each foodstuff traders’ association.

The representatives welcomed the formation of the committee.

EDL part-timers hold sit-in, demand full-time positions November 12, 2011 01:27 AM The Daily Star
BEIRUT: Electricite Du Liban part-time workers in Mount Lebanon held a sit-in Friday demanding that the government hire them on a full-time basis in the company.

EDL part-timers from different Mount Lebanon districts participated in the sit-in held at Bhamdoun’s EDL branch.

The workers demanded that the government allow them to benefit from the National Security Fund even if they are part-time employees.

They called on the General Labor Confederation to endorse their demands, saying their open strike would go on until all their demands are met.

EDL part-time workers have been long demanding their appointment by the government.

They have repeatedly said their work leaves them exposed to significant risks, and that they are being denied any social or health coverage.

Power ships to provide shortage stopgap November 12, 2011 01:27 AM By Mohamad El Amin The Daily Star


BEIRUT: The Cabinet decided in its session Thursday to go ahead with plans to lease electricity-generating ships and has empowered a ministerial committee to study international bids for the project.

But some ministers have already warned that this modest step is insufficient to solve the chronic energy shortage in Lebanon.

Energy and Water Minister Gibran Bassil and Economy Minister Nicholas Nahhas said Friday that the leased ships will be a temporary measure until the Zouk and Jiyye thermal power plants are rehabilitated.

Both plants will be shut down during the rehabilitation.

The Zouk thermal power plant, the country’s largest power station, has a 607 MW capacity while the Jiyye plant has 346 MW capacity.

Most of Lebanon’s power plants are obsolete and have more than served their life span.

The governments of late former Prime Minister Rafik Hariri invested $1.4 billion in the construction of two gas-run stations and rehabilitated the remaining plants.

But since then, successive governments have failed to make any substantial investments in the energy sector because of deep political rifts between ministers and lack of funds.

Lebanon currently produces less than 1,600 MW of electricity but the actual need of the country far exceeds 2,300 MW.

This acute shortage has prompted Electricite Du Liban, the public electricity provider, to ration electricity by six to 12 hours in almost every region.

The summer season sees heightened pressure on the grid as consumption rises due to tourism and extensive use of air conditioning across the country.

Nahhas expects leasing contracts for the power-ships to be signed in two to three months, just before the power-greedy summer season.

But it is still unclear how much the electricity-generating ships will be able to add to the country’s electricity supply, with media reports putting the range of their output between 140 and 260 MW per vessel.

Sources close to Bassil refused to disclose to The Daily Star further details about the leasing of the ships.

They added that the government will award the contracts to the firms that present the best offers in terms of prices and quality.

The value of the contracts has also not been decided.

But the sources stressed that the cost of these ships would be less than the cost of running the existing power plants, a view stated earlier by Bassil.

“The actual cost of the leased power-ships would be lower than most of Lebanon’s diesel oil-powered plants,” Bassil said.

“However, it is all important to transfer [the power plants] from diesel oil to natural gas to significantly increase the electricity supply [and reach a comprehensive solution to the electricity problems] according to the $1.2 billion electricity plan,” he added.

The minister said that the decision was an initial step that should be followed by an international tender that has been already confined by the ministry to companies having “suitable technical capabilities.”

“This is not a comprehensive solution to the country’s electricity problem … But we cannot at all increase power cuts [to allow for maintenance works in Jiyye and Zouk power plants] and worsen an already catastrophic situation. This is a temporary solution necessary to stabilize the situation …”

The government had approved last September Bassil’s plan to allocate $1.2 billion for the construction of 700 MW plants after making some amendments to the minister’s original proposal.

As of 2011, Lebanon spends a massive $5.5 million a day on its national electricity provider Electricite Du Liban. This works out to around $2 billion a year, significantly impairing the government’s finances.

Economists have also warned repeatedly about the significant effects of power shortages on the economy.

According to a 2010 paper by the International Monetary Fund, electricity shortages are the major obstacle to economic growth identified by businesses in Lebanon.

The study also indicated real gross domestic product would rise by an additional 1.9 percent yearly if electricity shortages were eliminated.

Households and businesses, in various Lebanese regions, also pay up to $100 per 5 amperes (1100 watts) a month to benefit from private generators providing electricity during power cut times.

^^ weren't they same people who opposed this move during Hariri's government.

Booklet highlights entrepreneurship reform ideas November 14, 2011 01:37 AM The Daily Star
BEIRUT: The Youth Economic Forum launched a booklet of 33 policy ideas to modernize Lebanon’s young entrepreneur program. The booklet written by 63 young authors (individuals and NGOs), is the product of the Reformists Platform project which lasted two years, providing a space for students, activists and young researchers from different backgrounds and regions in Lebanon to think, research, develop and advocate public interest related policies.

293 people participated in the workshops, out of which 108 participants joined the follow-up panels to develop their own policies. 32 University campuses, 110 NGOs, and 62 Municipalities were invited to the workshops.

Engineer Yahya Mawloud, president of the Youth Economic Forum, inaugurated the launching ceremony emphasizing the role of youth who “should be involved in this hard, yet challenging, work, especially when facing a political class that disregards innovative ideas.”

Dr. Karim al-Mufti, vice president of YEF, explained the idea and process of the Reformists Platform along with the content of the booklet that covers 11 sectors from Public Transport to Education, Environment, Industry and Public Finance, noting that this booklet “renders another image of Lebanese youth, at a time where current students’ elections still produce sterile political competition, whereas the country is in need of innovative policy initiatives from young citizens.”

Price monitoring committee to gather data weekly November 15, 2011 01:15 AM The Daily Star
BEIRUT: A newly formed Economy Ministry committee for “urgent price monitoring and regulation” held its first meeting Monday. The committee, tasked primarily with foodstuff prices, discussed mechanisms to be adopted in its weekly price monitoring activities.

A post-meeting statement announced prices will be examined through data gathered from different point of sales. The data will be collected weekly by Economy Ministry offices in various Lebanese regions.

Members in the committee, representing various foodstuff traders and importers, reiterated in the meeting their commitment to provide the Economy Ministry weekly with basic foodstuffs’ wholesale prices.

This will allow the ministry to effectively detect arbitrary increases in retail prices.

IDAL suspends subsidies on egg exports November 15, 2011 01:15 AM The Daily Star


BEIRUT: Investment Development Authority of Lebanon suspended subsidies on egg exports Monday. Head of the authority Nabil Itani announced, in a statement, that the step aims to keep a balance between export and local markets.

It added that recent sharp increases in egg prices were behind the decision. The suspension of subsidies was a temporary decision until prices in local markets return to normal, it explained.

The suspension is a part of a new strategy involving adjustable subsidies on all exports that IDAL supports.

“This is also in line of a previously announced new agricultural export development program dubbed ‘Agri Plus’ that will be launched early 2012,” the statement added.

Beirut Port Authority discusses upgrade plans November 15, 2011 01:15 AM The Daily Star
BEIRUT: Beirut Port Authority discussed expansion and computerization plans for Beirut port Monday.

A post-meeting statement called for implementing a series of measures to increase the port’s capacity including separating customs and seaport operations and lessening bureaucratic procedures causing delays in the port’s work.

The statement said a few months delay in works to expand the port’s container storage area will not have a serious effect on the port’s work, given there has been around 10 percent decrease in local consumption this year.

Food prices up 80 percent since 2002 November 16, 2011 01:32 AM By Mohamad El Amin The Daily Star


BEIRUT: A senior FAO official said Tuesday that food prices in the MENA region have risen by up to 80 percent since 2002. “Despite prices of food declining a bit from their highest point during the peak of global food price crisis in mid 2008, recent price increases pushed food prices 80 percent above their 2002 levels.” Saad al-Otaibi, assistant director-general of FAO said at the opening of the Regional Agro-Industries Forum held at Le Royal Hotel Beirut.

Otaibi explained that some of the region’s countries were unable to cope with the increasing food needs stemming from fast-growing populations. “This is particularly relevant to poor countries which have high population growth rates, given continuous pressure international food prices put on economies,” he said.

Agriculture Minister Hussein Hajj Hasan, who also spoke at the opening of the forum, emphasized that Lebanon was facing similar problems.

He said the country was subject to fluctuations in international food prices, a result of importing 80 to 85 percent of the food it needs, he said.

Hajj Hasan argued that this phenomenon was a result of economic policies had been promoting services and real estate sectors and marginalizing productive sectors.

“Our food in Lebanon is tied to any political or economic crisis abroad … We do support free trade but ‘not a free trade’ that eliminates national production and agriculture. Free trade should be also about exporting goods and fostering food security.”

Hajj Hasan called for bolstering trade among the region’s countries saying Lebanon’s trade agreements with developed countries were biased against the agro-industrial sector.

Regional representative of UNIDO, Khaled al-Mekwad, emphasized the role of agro-industries in economic development in the MENA region.

He said it contributed in fighting poverty, lessening emigration and fostering rural development.

The global food and financial crises of 2007 and 2008 have pushed an additional 115 million people into hunger, FAO reports projected. It expects persisting international economic crises are likely to further aggravate food security through affecting employment and incomes internationally.

The three-day event, organized by FAO (U.N. Food and Agriculture Organization) and UNIDO (U.N. Industrial Development Organization), is being attended by government officials, non-governmental organizations, private sector agro-industry enterprises and researchers from across the 20 countries of the region.

Participants will discuss the effects of the 2006-08 world food crisis on food security in the region.

At the end of the forum, they will suggest concrete policy recommendations that organizers say could help promote the region’s agro-industrial sector.

A sector which they have stressed was crucially in need of investment as well as support from the public sector.

Such investments would in turn boost job creation and sustainable economic growth in the region.

The forum had urged, in its opening session, the region’s governments to strengthen bilateral and regional cooperation in the field, harmonize policies and increase food production to foster regional food security.

The World Food Summit of 1996 defined food security as existing “when all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life.”

But experts said food security in the region is severely undermined by the region’s constantly growing import of the majority of the food it consumes. All the panelists speaking at the opening session warned against this trend.

Hajj Hasan blasts merchants exporting spoiled potatoes November 16, 2011 01:32 AM The Daily Star

BEIRUT: Agriculture Minister Hussein Hajj Hasan accused some merchants of exporting spoiled potatoes, warning he would not hesitate to reveal the names behind the shipment of such agricultural produce if they continue they behavioral pattern.

Waving photos of rotten potatoes, the minister said he has concrete and undisputed evidence that some wholesalers and merchants have been regularly shipping decayed potatoes to some Arab states.

Saudi Arabia recently stopped importing Lebanese potatoes to the kingdom because most of these potatoes and fit for human consumption.

The Saudi ambassador to Lebanon raised this issue with the minister who promised to investigate the complaints.

Saudi Arabia is one of the main importers of Lebanese potatoes and this moratorium will deal a blow to the local farming sector.

“The ministry did not take any arbitrary measures against exporters and farmers but we are determined to ensure that all exported potatoes meet international standards and are fit for consumption,” the minister said.

He added that two trucks were loaded with potatoes that headed to Saudi Arabia and Jordan were rejected entry to these countries because these potatoes were decayed.

The association of the Bekaa farmers threatened to observe a strike if the minister insisted on examining the potatoes before their shipment to other countries.

But Hajj Hasan threatened to reveal the names of the traders and exporters who refuse to examine the potatoes before shipment.

“It’s time for those who manipulate the prices of agricultural products to leave and they have no right to speak in the name of farmers,” said the minister.

The minister stressed that from now on any potatoes or agricultural produce that fail to pass inspection will be quarantined and will not be allowed to leave the country.

Hajj Hasan thanked Saudi Arabia for re-opening its market to Lebanese goods after it received assurances that all products would be thoroughly examined by the Lebanese authorities.

“We assured all countries we visited that our agricultural produce is of top quality but some merchants tried to export bad potatoes and kept the good ones at home,” he said.

Beirut port figures show improved performance November 16, 2011 01:32 AM The Daily Star
BEIRUT: The International Chamber of Navigation of Beirut said recently issued port figures suggested an improvement in overall performance.

A statement, issued by the chamber Wednesday, said the port’s October figures reflected the economy’s ability “to adapt to local and regional instabilities.”

The statement noted that shipped goods rose by 4 percent last October to around 600,000 tons with the total number of containers growing by 17 percent to 91,184 compared to last year.

The number of containers intended for local markets also rose by 8 percent, reaching 24,080 containers. While transshipment saw a very large 46 percent increase with the number of containers rising to 41,996, also compared to October last year.

The number of cars shipped, however, fell by 44 percent to just 4,608 cars.

Head of the chamber, Elie Zakhour, expected the port’s business to stay steady ahead of the holiday season, when the country more than doubles its imports. Zakhour expected that by the end of 2011, Beirut port will enter the list of the top 100 international ports.

Anti-corruption revolutions part of developments: PM November 16, 2011 01:32 AM The Daily Star


BEIRUT: Prime Minister Najib Mikati said Tuesday the revolutions against corruption were part of the recent political and security developments in some of the Arab states.

“The revolutions against corruption should induce us to reassess the administrative and financial systems in government agencies.

This task necessitates a continuous follow-up from the monitoring and controlling bodies to keep the work in its proper legal framework,” Mikati told participants at the 46th meeting of Arab agencies that focuses on better control of financial spending in government departments which was held at the Grand Serail.

The session was attended by ministers, MPs and Arab ambassadors in Beirut. Mikati stressed that this meeting comes amid a wide increase in spending in Arab public departments to finance broad developments in these states.

He added that this spending should be coupled with broader financial supervision both on the local and regional levels.

Mikati called for greater cooperation among various anti-corruption agencies and bodies in the Arab world to ensure rational use of financial resources of the state.

Alpha group banks’ growth driven by customer deposits November 16, 2011 01:32 AM The Daily Star
BEIRUT: In the first nine months of 2011, consolidated assets of the Alpha group, the top 12 Lebanese banks with deposits exceeding $2 billion, as compiled by Bankdata Financial Services, registered a single digit growth rate of 6.4 percent, driven by a 5.2 percent growth in customers’ deposits.

Both of these levels are below those achieved in the corresponding period of last year, reflecting the less favorable economic environment in the domestic market and the deteriorating economic conditions in several countries where Alpha banks are operating. “Notwithstanding, loans to customers registered a 12.7 percent growth year-to-date, driven principally by a sustained lending activity in Lebanon,” Bankdata said.

It added that the downward activity trend was translated by a 2.9 percent growth in net profits of the Alpha group in the first nine months of 2011 relative to the corresponding period of 2010.

“Nonetheless, the Alpha group’s average does not reflect individual performances, as the most profitable bank reported a growth in net earnings of 61.6 percent while the least profitable one registered [an] earnings contraction of 20.2 percent,” the report said.

It added that this relatively limited earnings growth reflects a year-on-year increase in operating income of 5.3 percent, within the context of an increase in general operating expenses by 7.6 percent and in loan loss provision charges of 13.2 percent, the latter highlighting additional specific and collective provisions taken in order to sustain asset quality in the face of adverse developments.

The increase in operating income, limited to 5.3 percent, is the result of a contraction in the spread by 8 basis points, principally in Lebanon, following a larger decrease in the yield on assets than in the cost of funds, driven by the renewal of maturing Lebanese T-bills at lower yields.

“At the level of overall efficiency, the cost to income ratio of the Alpha group reported a slight deterioration from 47.02 percent in the first nine months of 2010 to 48.07 percent in the first nine months of 2011, without however impacting the profitability ratios, which sustained similar levels over the same periods,” the report said.

Lebanese consumer confidence levels at lowest since 2007 November 17, 2011 01:10 AM By Mohammad el-Amin The Daily Star


BEIRUT: The Byblos Bank-OSB Consumer Confidence Index showed Lebanese consumers’ confidence levels at their lowest during the first nine months of 2011, owing chiefly to political divisions over the Special Tribunal for Lebanon and the ongoing political crisis in neighboring Syria. The index, a joint project between Byblos Bank and Olayan School of Business at the American University of Beirut, was launched Thursday at the bank’s headquarters in Beirut.

The study, covering the period between 2007 and 2011, said consumer confidence levels have been extremely sensitive to political and security developments in the country.

The Lebanese economy has long been subject to the influence of politics and security, but the study is the first-of-its-kind to methodically correlate an economic indicator to the country’s turbulent political landscape.

“The results of our Index show that consumer confidence in Lebanon is significantly affected by political events, whether they are negative or positive,” Nassib Ghobril, chief economist at Byblos Bank, said at the project’s launching event.

Consumer Confidence Index is an economic indicator measuring consumer views of the current economic situation and their expectations for the future. Customers with high confidence are more likely to spend more, fostering economic activity.

The study showed that 2009 saw the highest yearly average of consumer confidence at 96.7 points propelled by the formation of the long-awaited Cabinet of former Prime Minister Saad Hariri, which at the time brought an end to a months-long political crisis.

The year 2009 saw relative stability bolstering consumers’ confidence said panelists at the launching event.

The index reached its peak in May 2008 at around 133.6 points after rival Lebanese political parties ratified the Doha Accord that ended bloody clashes between pro-government and opposition gunmen after the Cabinet decided to dismantle Hezbollah’s telecommunication network.

Philippe Zgheib, assistant professor at AUB, said “the Doha Accord had the biggest positive impact on [consumer]confidence between July 2007 and September 2011.

“Other political events that affected confidence materially include the parliamentary elections of 2009, the formation of the [former PM Fouad] Siniora and Hariri Cabinets in 2008 and 2009 respectively, the designation of Mr. Najib Mikati as Prime Minister in January 2011, and the formation of the Mikati Cabinet in June 2011.”

The index reached its lowest average value throughout the first nine months of 2011 when it hit an average of 55.3 points. It had reached its lowest point in August at just 46.4 points after the STL issued four arrest warrants and Syria’s political crisis escalated, the study showed.

The index also slid significantly in July and August 2010 under the influence of border clashes between the Lebanese Army and Israeli soldiers in Adaisseh and internal armed clashes in Burj Abi Haidar.

The study was based on 1,200 face-to-face interviews conducted across different Lebanese regions, a statement released by Byblos Bank said. The index is to be issued on a monthly basis. The field surveys are carried out by Statistics Lebanon, a polling firm hired to draw a random sample and conduct the interviews during the last 10 days of every month.

The index’s values are composed of adding-up two sub-indices, a Present Situation Index and an Expectations Index. The first covers the current economic and financial conditions of consumers, and the second addresses their expectations for the upcoming six-month period at the time of the survey.

Additionally, the index classifies consumer confidence data based on region, age, religious affiliation, gender, income and profession.

The average between 2007 and 2011 showed no disparity between consumer confidence across administrative districts (mohafaza); with the exception of the Bekaa, where consumer confidence was significantly lower scoring an overall average of just 56.1, significantly below the national average.

The study also showed Christian and Sunni consumers with identical levels of consumer confidence at around 80 points, while Druze consumers showed lower confidence at 76.3 points. Shiite consumers, however, displayed significant variance scoring a lower confidence level at 67.3.

Arab banks to pursue emergency economic plan November 17, 2011 01:10 AM By Elias Sakr The Daily Star

BEIRUT: The Arab world is in need of an emergency plan to boost inter-Arab banking and economic cooperation in a bid to diminish the impact of political crises sweeping the Middle East, Lebanese and Arab banking officials said Wednesday. “The Union of Arab Banks ... is in the process of putting in place an emergency Arab economic plan,” Union of Arab Banks Secretary-General Wissam Fattouh said in a news conference at the Phoenicia hotel in Beirut.

The emergency plan will see discussions on the “future of the Arab world in light of recent transitions” during a two-day forum starting Nov. 24 in cooperation with global and Arab institutions including the Arab League, the World Bank and tens of other economic institutions.

The popular uprisings and political crises that hit several Arab countries will see a decrease in Arab GDP growth from 4.84 percent in 2010 to 3.76 percent in 2011, head of the Lebanese Banking Association Joseph Torbey said.

However, Torbey added that the gloomy picture won’t last long before it is reversed in 2012 with an Arab GDP growth rate expected at 3.84 percent.

While Egypt’s GDP is forecasted to drop from 5.15 percent in 2010 to 1.22 in 2011, it is expected to rise back to 1.75 percent in 2012, Torbey said.

Similarly in Tunisia, the GDP growth rate will drop from 3.05 in 2010 to 0.01 in 2011 to jump back to 3.93 percent in 2012 while Syria is forecasted to see a downward trend with its GDP growth rate decreasing from 3.23 percent in 2010 to 2.02 in 2011 and 1.55 in 2012.

The Arab banking sector, which counts nearly 430 institutions that manage around $2.5 trillion in assets and more than $1.3 trillion in deposits with a capital base of $270 billion, will witness disparity in performance between oil producing countries and the rest of the Arab world.

While the banking sector in Gulf countries is expected to grow as oil-producing states benefit from a rise in prices due to political and economic uncertainty, most countries in turmoil will end 2011 on a negative note.

Torbey said UAE and Saudi banks recorded respectively a 4.14 and 6.54 percent increase in bank assets in the first nine months of 2011 compared to 5.78 and 3.28 in the entirety of 2010.

Qatari bank assets grew 22.94 percents in the first nine months of 2011 compared to 11.12 percent in the entirety of 2010 while Kuwaiti banks recorded a 6.03 percent in the first six months of 2011 compared to 1.84 percent in 2010.

In countries witnessing political turmoil, negative growth rates were recorded in Bahraini banks where asset growth rates of -10.84 percent were recorded in the first eight months of 2011 compared to 0.18 percent in entirety of 2010.

Egyptian banks also recorded a negative growth rate of -2.52 percent for the first eight months of 2011 compared to 16.19 percent in the entirety of 2010 while Syrian banks recorded a rate of 0.23 percent for the first four months of 2011 compared to 6.22 percent the entirety of 2010.

The recent development in Egypt, Libya, Yemen, Tunisia and Syria indirectly influenced non oil-producing Arab states like Lebanon, Jordan, Oman and Palestine.

In Lebanon, bank assets grew 7.08 percent for the first eight months of 2011 compared to 11.87 in the entirety of 2010 while Jordanian bank assets recorded a 6.19 percent growth in the first nine months compared to 10.85 in the entirety of 2010.

The slow growth caused by regional instability amid a global financial crisis requires Arab banks to kick off investment programs in cooperation with central banks and Arab governments, Torbey said, elaborating on a series of measures that need to be adopted.

Among those measures is the need to create Arab banking conglomerates and cooperation frameworks to confront any future crises, according to Torbey, who urged for further collaboration with legal organizations and international institutions to set international banking regulations.

Torbey added that efforts to encourage global investments in the Arab world and increased cooperation with the global and regional financial markets should feature on the agenda of Arab banks.

GLC rejects Nahhas wage increase package November 18, 2011 02:06 AM (Last updated: November 18, 2011 02:49 PM) By Mohamad El Amin The Daily Star

Beirut: The General Labor Confederation rejected Thursday a wage increase package proposed by Labor Minister Charbel Nahhas, insisting the Cabinet should revise its October decision to increase wages in compliance with the Shura Council’s verdict.

Nahhas suggested, at last Friday’s price-index committee meeting, a 16.4 percent wage hike in line with accumulated inflation numbers by the state-run Central Administration of Statistics.

Nahhas’ package also included transportation allowance to basic salaries and enacting universal health coverage for all Lebanese residents funded through taxation on real estate transactions.

Head of the GLC Ghassan Ghosn told The Daily Star that the GLC was unwilling to accept Nahhas’ proposal. He added that the plan would be hard to implement if not “misleading” to labor demands.

Representatives of the GLC, the private sector and high school teachers submitted Friday their comments on Nahhas’ plan.

“The government should respect its own decisions and the agreement made with the GLC. We also have to respect the promises we made to workers. We do not approve Nahhas’ proposals,” Ghosn said.

“We cannot approve phasing-out the National Social Security Fund which was a result of years of labor struggle. If the minister wants to provide health coverage for all Lebanese, let him do it through the ... NSSF,” he added.

“If the government turns away from [last October’s] wages increase decision, we will return to initiate a general strike,” he warned.

Nahhas had argued that universal health coverage funded through taxation on real estate transactions would phase-out NSSF fees which would spare employees and employers from paying 9 to 10 percent of salaries.

Unlike the GLC, the private sector expressed flexibility toward Nahhas’ bid. Private sector representatives said Thursday they approved in principle the 16.7 percent increase suggested by the minister but had strong reservations over other details of the bid.

Head of Beirut Traders Association Nicolas Chammas told The Daily Star that the private sector welcomed the minister’s bid, saying it had taken into account economic and financial consequences of the wage increase.

But Chammas added that the private sector tied its acceptance of the wage increase to the exclusion of salaries above a certain ceiling from the hike.

“We accept the 16.4 percent increase for ‘lower’ wage brackets” he said refusing to specify the exact ceiling the private sector was requesting.

Last month, the Shura Council rejected a Cabinet decision to increase wages in the private and public sectors, a move that brought negotiations between the government, the General Labor Confederation and the private sector back to square one.

The Cabinet had agreed to raise the minimum wage by LL200,000 for salaries under LL1 million and by LL300,000 for salaries between LL1 million and LL1.8 million.

The Shura Council said the exemption of salary hikes for wages above LL1.8 million was a violation of the law.

“The wage increase is not only about alleviating social conditions but should also take into consideration the situation of businesses and public treasury. We felt that Minister Nahhas has now recognized the deep economic difficulties faced by businesses,” Chammas added.

Chammas said the private sector had recognized, during deliberations with Nahhas, the authority of the Central Administration of Statistics in determining the level of the wage increase in line with its inflation statistics.

Chammas added that the private sector rejected the addition of transportation allowance to basic salaries:

“We do not approve adding the transportation allowance to the salary base because that will mean additional taxation and increasing NSSF fees. This adds a burden on the private sector and will reflect badly on the economy. An inflated minimum wage would frighten investors. It is a bad economic indicator,” he explained.

Full health coverage, Chammas thought, was “nearly impossible” to achieve as the government had failed before in implementing similar projects.

“The government failed at projects like the optional NSSF coverage. The government also has more than LL800 billion worth of NSSF arrears. Applying universal health coverage would require a total reform of the NSSF,” he said.

Sabounjian hails ISO 26000 implementation November 18, 2011 02:06 AM The Daily Star


BEIRUT: Industry Minister Vrej Sabounjian hailed Thursday the implementation of the International Standard for guidelines on social responsibility “ISO 26000” at a number of Lebanese institutions.

Sabounjian described the implementation of the ISO 26000 as a very important step in the promotion of sustainable development.

Two ISO 26000 certificates were awarded at the event to Unipak, a packaging manufacturer, and Al-Kawthar high school.

Lebanon, Italy to promote scientific cooperation November 18, 2011 02:06 AM The Daily Star


BEIRUT: Lebanon and Italy signed Thursday a memorandum of understanding to promote bilateral scientific cooperation. The Lebanese Agriculture Ministry and the National Scientific Research Center signed an MOU with the Italian league for fisherman (Lega Pesca) as part of the Qana Scientific Boat Project.

“This Memorandum is an important step toward sustainable development, resource management and scientific cooperation between Lebanon and Italy,” Italian Ambassador to Lebanon Giuseppe Morabito said.

Morabito added that cooperation in research and technology would help improve the wealth and quality of life for both the Italian and Lebanese people.

“Italy merged its efforts with Lebanon into the CANA research vessel allowing the Lebanese National Scientific Research Center to perform important marine studies and ensuring Lebanese policymakers and administrators with tools to protect and manage their share of the Mediterranean and of its resources,” he said.

Lebanon ranks 8th regionally in terms of ease of paying taxes November 19, 2011 01:39 AM The Daily Star


BEIRUT: The World Bank’s private sector arm, the International Finance Corporation, in conjunction with PricewaterHouseCoopers issued a report termed “Paying Taxes 2012: The Global Picture” in which it ranked Lebanon 41st out of 183 countries and eighth out of 16 Middle East and North African countries in terms of ease of paying taxes.

In order to rank countries based on the aforementioned criterion, the study involves recording the taxes and mandatory contributions that a medium-size company must pay in a given year, as well as measuring the administrative burden of paying taxes and other contributions.

A result overview shows Lebanon’s global ranking regressed from the 36th spot, while it retained its regional position from the previous survey.

This is in line with the performance of several regional jurisdictions which have fallen in this year’s report. According to the survey, in several locations, levied taxes are limited to social security contributions on national employees. That said, many of the jurisdictions in the MENA region are increasingly adopting other revenue raising measures to meet budgetary needs, thus impacting the cost of compliance of many businesses. These measures include increased fees and levies paid for licenses, permits and other government approvals necessary to operate a business. In addition to rising tariff rates, many businesses also need to employ an increasing numbers of back office staff to comply with these changes, which is resulting in higher overhead costs at a time when many businesses are struggling to survive.

The ease-of-paying-taxes rankings are compiled through three sub-indicators: the number of tax payments, the time afforded for compliance and the total tax rate. When it comes to tax payments, the study indicates that the standard case study in Lebanon paid a total of 19 taxes, 12 of which are labor tax payments, six are other miscellaneous tax payments and one is a corporate income tax payment. This compares to a regional average of 20 tax-related transactions, 12 of which are labor tax payments, seven are miscellaneous tax payments and one is a corporate income tax payment. Globally, Lebanon ranked 68th out of 183 countries in this indicator, while in the MENA region Lebanon came in ninth out of 16 countries.

The indicator for the time to comply assesses the number of hours per year the case study spends dealing with taxes. In Lebanon, the sample case study spends 100 hours dealing with labor taxes, 40 hours handling corporate income taxes and 40 hours dealing with consumption taxes. Therefore, it dedicates 180 hours each year to deal with taxes. It is worth noting that for this indicator, the longer time dedicated to handling taxes, the lower the rank. This compares to a regional average of 186 hours a year to deal with taxes, distributed into 76 hours to deal with labor taxes, 61 hours to deal with corporate income taxes and 49 hours to deal with consumption taxes. Lebanon ranked 62nd globally, and ninth regionally in this category.

Finally, when examining the indicator for tax rate, the case study in Lebanon appears to have a total tax rate of 30.2 percent of commercial profits, against a regional average of 32 percent. The labor tax rate was found to be at 24.1 percent of commercial profits, compared to a 17 percent average in the MENA region. The corporate tax rate was at 6.1 percent of total commercial profits compared to a regional average of 10 percent. Lastly, when it comes to miscellaneous tax rates as a percentage of commercial profits, the regional average was 4 percent, compared to 0 percent in Lebanon. For this indicator, the lower the rate is, the higher the ranking. Lebanon ranked 44nd globally and ninth regionally in this category.

Consumer prices rising but at rate below NGOs’ estimates: CAS November 22, 2011 01:33 AM The Daily Star
BEIRUT: The Central Administration of Statistics reported Monday that the price index continued to rise on a monthly basis although this surge remained well below the estimates of consumer groups and NGOs.

According to CAS, which is under the jurisdiction of the prime minister’s office, the consumer price index between October and September 2011 went up by 0.7 percent.

However, CAS noted that the accumulated increase in the prices of consumer products from December 2007 to October 2011 reached 17 percent.

It added that prices of commodities rose by 3.5 percent in less than a year.

CAS said that the prices of food stuffs and nonalcoholic beverages have jumped by 29.4 percent since the beginning of 2008.

Alcohol and tobacco rose by 9.3 percent in the same reporting period.

However, independent consumer groups and NGOs contradict these figures and claim that CAS is deliberately giving lower inflation figures to discourage labor unions and political parties from demanding higher wages that could be beyond the means of the government and private sector.

CAS insists that their calculations are scientific and transparent, adding that they constantly survey and assess the prices of the main items.

CAS includes prices of food, beverages, clothes, residential rents, water, electricity and gasoline in their price basket. It also adds the cost of health, transportation, telecommunication, leisure and education.

Consumer Lebanon for example said that prices of basic commodities have risen by more than 18 percent in the first seven months of this year.

The group, which issues its price index on a regular basis, earlier said that inflation is well above the 6 percent ceiling which was set by the Central Bank this year.

The prices of commodities have risen significantly in the past four months as news emerged that the Finance Ministry intends to increase the value added tax from 10 to 12 percent.

Consumer groups also believe that the Economy Ministry is not clamping down on merchants and traders who manipulate prices.

The surge in prices of basic commodities have induced the General Labor Confederation and other labor unions to demand raising the minimum wage from LL500,000 to LL950,000 per month.

The Labor Ministry is currently negotiating with both the GLC and the private sector to reach another agreement on the minimum wage.

The private sector insists that any wage increase should be based on the studies of CAS and not any other independent body while the GLC wants the government to include the studies by Consumer Lebanon and other NGOs.

IMF, GLC discuss economy as wage increase looms November 22, 2011 01:36 AM The Daily Star


BEIRUT: An International Monetary Fund delegation discussed the current economic situation with the General Labor Confederation, amid imminent wage increases.

A post-meeting statement, issued by the GLC, said the talks focused on the impact of the wage increase on the economic cycle.

It added that the GLC had criticized the taxation system, which they said was based on indirect taxes that prevent “any redistribution of wealth and achieving tax justice.”

The IMF delegation said the GLC’s observations would be taken into consideration when drafting the upcoming IMF report on Lebanon.

Gasoline prices down by LL400 November 23, 2011 10:48 AM The Daily Star
BEIRUT: Gasoline prices fell by LL400 Wednesday while the price of kerosene gas and fuel oil both rose by LL300, according to the weekly fuel price update by the Energy and Water Resources Ministry.

The 98-octane graded fuel is now priced at LL33,500 while the price of 95-octane graded fuel now stands at LL32,800. It now costs LL29,900 for kerosene gas, LL30,400 for fuel oil and LL31,000 for diesel oil.

All prices are per 20 liters.

Hajj-Hasan to regulate potato exports, quality November 22, 2011 01:36 AM The Daily Star

BEIRUT: Agricultural Minister Hussein Hajj-Hasan said Monday the ministry was taking steps to tighten measures on potato imports as well as assuring the quality of exports.

The minister said after meeting potato producers and exporters in Bekaa, that arrangements had been made to allow exporting a part of the potato produce to Syria.

Hajj-Hasan said the ministry is currently enforcing standards toward assuring that the potato produce is clear from bacteria and viruses.

Separately, Hajj-Hasan announced the ministry would soon initiate a project aiming to afforest 2,000 acres across Lebanon.

Lebanon’s bank deposit growth outpaces UAE November 23, 2011 01:25 PM By Peter T. Daou The Daily Star


BEIRUT: The Lebanese may be known for wasting golden opportunities but they are just as famous for their astonishing comebacks. After slipping in January, Lebanese commercial bank deposits regained momentum and rose 4.4 percent to $113.4 billion in the first nine months of 2011, according to data provider Economena Analytics.

The surprising ability of Lebanon’s banks to attract deposits despite internal political instability and regional turmoil stands in stark contrast to the dismal growth witnessed at banks in the United Arab Emirates, where deposit growth slowed considerably in recent months to finish the first nine months up only 1.7 percent to $290.6 billion.

The UAE has promoted itself as a regional hub for the financial sector and as a safe haven for investors and banks.

“What is happening in Syria is certainly playing a role but Egyptian and Libyan events, in addition to Europe’s crisis, are also contributing to deposit growth in Lebanon," said Simon Neaime, chair of the economics department at the American University of Beirut (AUB), in an interview with The Daily Star Tuesday.

Some argue that the consistent increase in deposits, which brought $6.2 billion in fresh private funds into the banking sector by September, is tainted by inflows from key Syrian figures escaping a worldwide asset freezes.

However, Lebanon’s Central Bank, along with a streak of industry pundits, have denied the claim and pointed to the sector’s strict fund deposit protocols and to the implementation of any U.N. decisions. The small size of the country’s non-resident deposits and the meager increase of less than $2 billion through September provide little support to the critics’ claims, although some doubts remain.



Loans are not being channeled into the real economy to stimulate economic growth


“It is true that many Syrians hold dual citizenships and it is possible that their money appears as resident deposits but I also think Beirut is becoming the financial sector hub for the region. When it started happening in 2008, I thought it was because of the financial crisis, but now it is clear that the trend is sustainable,” said Neaime.

In addition to its current stability relative to other Levant countries, Lebanon is benefiting from Europe’s vicious debt crisis and the world’s low interest rates. Lebanon’s overnight interbank rates are almost 10 times their UAE equivalents as the Central Bank relies on high interest rates to defend the dollar peg.

Interest from Europe cannot be underestimated. While Arab tourist numbers fell 39 percent in the first nine of 2011, tourists from European countries were down only 10 percent: a sign of confidence in the tiny Mediterranean country.

Nevertheless, in an interview with The Daily Star, Georges Nehme, chair of the business administration department at Antonine University, attributed the mismatch in deposit growth rates to UAE-related events.

“I think this is due to UAE factors because we haven’t seen in Lebanon any major change at the monetary policy level to attract additional deposits,” said Nehme.

Bankers in the Gulf country attribute the reversal in deposits to the deceleration of foreign fund inflows as a result of the “Arab Spring” and to less attractive interest rates while government officials claim the funds are being redirected to investment instruments with higher returns.

Yet deposits are just as good as their economic impact and in this regard Lebanon seems to be back to the old habit of wasting opportunities.

Deposit growth, albeit slower than in previous years, continues to exceed the increase in lending, starving the economy of needed funding for growth. Lebanese commercial bank claims rose by $1.3 billion in the first nine months of 2011, with only $800 million going to the private sector, while UAE’s banks gave out nearly $12 billion in loans.

“We have had this issue for a while now. Loans are not being channeled into the real economy to stimulate economic growth, but hopefully with more liquidity, things may improve,” said Neaime.

GLC and private sector fail to reach deal on salary packages November 26, 2011 01:47 AM By Mohammad el-Amin The Daily Star


BEIRUT: The General Labor Federation and the private sector failed again Friday to reach a common understanding on the ceilings of higher wages, prompting Labor Minister Charbel Nahhas to take his proposals to the Cabinet.

At the conclusion of the Price Index Committee meeting, Nahhas said deliberations at the committee failed to reach an agreement.

Citing an example of the deep differences between the two sides, Nahhas said that the private sector is not willing to increase the education and transportation allowances to the new salary package for employees.

Nahhas supported the position of the private sector concerning higher allowances, adding that the law apparently prohibits additional allowances.

The minister proposed instead to add these allowances to the basic salaries. Disagreements over how to implement Nahhas’ suggestion to enact a state-funded universal health-care coverage had also contributed to the committee’s inability to reach a compromise.

Nahhas had suggested, at a Price Index Committee meeting early November, a 16.4 percent wage hike, adding transportation and education allowances to basic salaries, and enacting a publically funded universal health care coverage for all Lebanese residents.

He said the plan would be funded through taxing real estate transaction profits and other similar taxes.

Despite the failure of the Price Index Committee deliberations, Nahhas said he would forward the committee’s comments to the Cabinet session.

He said he hoped the Cabinet would still adopt a comprehensive wage increase including the controversial universal health-care plan. Nahhas emphasized the issue would be a crucial subject at the Cabinet meeting.

“The economic and social destiny of four million citizens is more important than any other issue, including funding the Special Tribunal for Lebanon,” he said.

Nahhas made a point to slam the participants’ inability to endorse steps toward “building a welfare state.”

He stressed their refusal of the universal health care plan was rather aberrant and had exposed a deep lack in confidence in the ability of the Lebanese state to regenerate: “This is the first time in history employers as well as workers reject a publically funded health care coverage.

“Let us be clear that these deliberations exposed that all sides doubt the very ability of the state to revive. Different sides are only concerned about preserving their own benefits,” he added.

Lack of trust in the government was precisely cited by head of General Labor Confederation Ghassan Ghosn as the reason behind rejecting Nahhas’ health care bid: “We cannot become dependent on an untrustworthy government and a political system that does not take into account social conditions.”

Ghosn reiterated the union’s insistence on realizing the wage increase through redrafting the Cabinet’s last October decree to make it compliant with the Shura Council’s ruling.

Nicolas Chamas, head of Beirut Chamber of Commerce, said the private sector had been flexible, conceding to the 16.7 percent increase suggested by Nahhas.

He reiterated the percentage a fair wage increase that reflects accumulated inflation since 2008.

But Chamas said that alleviating social conditions and providing health care were the government’s responsibility and should not be linked to the wage increase issue.

Chamas called on Nahhas to take economic hardships facing the private sector into consideration when forwarding the committee’s recommendations to the Cabinet meeting.

Hanna Gharib, head of the Secondary Teachers Association, warned that the wage increase should not be lower than what had been purposed by the government earlier.

“We have initiated strikes and sit-ins to go forward not backward,” he said.

Gharib criticized the government’s taxation system which he said was biased against the lower-income sections of society.

A mid-October wage increase decree had averted the country’s arguably biggest labor strike. It increased by LL200,000 for salaries under LL1 million and by LL300,000 for salaries between LL1 million and LL1.8 million.

The decree was then rejected by the Shura Council over the illegality of the ceiling excluding those who earn above LL1.8 million from the raise.

This prompted additional deliberations within the framework of the Price Index Committee in the hope of reaching a settlement.

Safadi: Transitions need financial aid November 26, 2011 12:52 AM By Elias Sakr The Daily Star

BEIRUT: Arab countries that experienced drastic political changes need economic and financial support to weather the transition period to democracy, Economy Minister Mohammad Safadi said Friday at the 5th Annual Arab Banking conference in Beirut.

“Countries in turmoil need a full-blown financial and economic support on their way to growth and during the transition period to preserve stability and avoid falling prey to chaos,” Safadi told participants at the forum on its second and final day.

Safadi said Arab states suffered weakness in the productive sector, which slows growth and increases unemployment rates.

A solution to such crises requires large investments in the productive sector, according to Safadi.

“This requires a skilled and experienced labor force despite the fact that the educational systems in the Arab world have failed to graduate a qualified labor force,” Safadi added.

If oil revenues are excluded, Safadi said, the size of the economy of Arab states combined wouldn’t equal the economy of one European-Mediterranean state.

“To illustrate this fact, statistics say that unemployment rates in Arab countries exceeded 16 percent according to the Arab Labor Organization,” Safadi said.

Other speakers saw an opportunity to enlarge the size of the Arab economies in the aftermath of the Arab revolutions.

“Despite the current gloomy economic situation, the Arab world could benefit from change toward democracy to ameliorate free market systems,” secretary-general of the Union of Arab Banks Imad Amin Shehab said during one of the forum’s sessions on the economic future of the Arab world.

Speaking at an afternoon session on Mechanism and Opportunities for the Return of Arab and Foreign Investments to the Region, Shehab said the Arab world should capitalize on the spread of democracy to boost its productive and investment sectors.

The recent popular uprisings and political crises that swept the region triggered a drop in Arab GDP growth from 4.84 percent in 2010 to 3.76 percent in 2011.

“Although it is too early to predict the time needed for states that witnessed revolutions to restore stability, the developments will unveil many investment opportunities, particularly if attempts to limit corruption and financial squandering succeed,” Shehab said.

While Gulf countries are expected to grow as oil-producing states benefit from a rise in prices due to political and economic uncertainty, most countries in turmoil will see a decrease in investments by the private sector.

Egypt lost private investments worth $16 billion in early 2011, the Institute of International Finance said last June.

The IIF said foreigners withdrew around $16 billion in private capital from Egypt this year in the wake of the political turmoil that ended with the ouster of ex-President Hosni Mubarak.

Shehab said Arab banking sources estimated lost investment opportunities in four Arab countries comprising Egypt, Syria, Tunisia and Jordan to a total of $43 billion.

The estimated loss of $43 billion is divided between $9 billion in lost banking deposits, $17 billion in lost tourism revenues and $11 billion lost in foreign direct investments, according to Shehab.

Head of the Association of Lebanese Banks Joseph Torbey said Thursday foreign investments inflow to the region for 2011 decreased by about 83 percent from more than $20 billion to about $4.8 billion.

“The role of Arab Banks in Accommodating the Change” was the subject of discussions at an earlier session in the day.

BLOM Chairman Saad Azhari said Arab banks would cope with change in the Arab world by adopting certain procedures that would safeguard its assets and its mounting financial and developmental impact on the economy.

Azhari said the Arab banking sector, which comprises 430 institutions manages around $2.5 trillion in assets and more than $1.3 trillion in deposits with a capital base of $270 billion.

In Lebanon, the size of Lebanon’s banking sector amounts to triple that of the Lebanese economy with a growth rate of 7 percent in 2011, Prime Minister Najib Mikati said Thursday.

Azhari added that banks could play an important role in the financing of small to medium enterprises while seeking to reform laws regulating their work.

“Banks could play a role to develop reform programs by making the private sector the main driving engine of Arab economies with what it entails in the separation between politics and the economy as much as possible.”

Lebanon sees 14.5 percent drop in real-estate transactions November 28, 2011 01:41 AM The Daily Star


BEIRUT: Lebanon’s real-estate sector took a hit in 2011 as the number of real estate transactions tumbled by 14.5 percent year-on-year as of the end of October 2011 influenced by domestic political bickering and regional unrest, reported Credit Libanais Bank in its latest weekly market report.

The report said the real-estate sector demonstrated sluggish activity when compared to the same period last year with the number of real estate transactions dropping year-on-year to 66,143 from 77,360, Credit Libanais Economy Research Unit said.

The value of real estate transactions was no exception, shedding $830 million on a 12-month basis to $6.84 billion as of October 2011.

The share of sales to foreigners represented a shy 2.02 percent of total sales transactions during the first 10 months of 2011, down from 2.04 percent in 2010 and 2.53 percent in 2009. Average value per real-estate sales transaction, however, notched up by 4.35 percent on an annual basis to $103,460 up from $99,147 in the same period last year.

The average value per sales transaction in Beirut continued to decline owing to a shift in buyers’ appetite from the capital to the more affordable areas of Metn and Kesrouan, according to report.

Lebanon’s registered construction permits, which reflect the level of future supply in the real estate sector, fell to 1,012,777 square meters during October 2011, from 1,173,893 in October 2010, according to statistics released by Lebanon’s Order of Engineers.

On a cumulative basis, Lebanon’s construction permits eased by 7.63 percent on an annual basis to 11,526,242 square meters as of the end of October 2011 in comparison with 12,478,913 as of October 2010.

As for the geographical distribution of construction permits, Mount Lebanon topped the list with a total of 6,949,219 square meters (60.29 percent) as of October 2011, followed by South Lebanon with 1,346,875 (11.69 percent), Beirut with 1,105,327 (9.59 percent) and the Bekaa region with 1,070,845 square meters.

The report said the findings indicated a shift in developers’ appetite toward more affordable residential end-users.

Solidere shares could fall if Cabinet collapses: economists November 28, 2011 01:41 AM By Peter T. Daou The Daily Star


BEIRUT: Beirut stocks brace helplessly for the impact of a potential Cabinet collapse amid intensifying political tensions. Economists and traders say Solidere’s shares, already down 27 percent in 2011 through Nov. 25, stand to lose in the week following a possible resignation by Prime Minister Mikati during Wednesday’s Cabinet session.

“Of course if the government falls we will see a sell-off and since Thursday, investors have been worried,” said Carole Sassine, chief dealer at Credit Commercial et Foncier in an interview with The Daily Star.

Average daily traded shares already more than doubled to 164,431 during the week ending Nov. 25 compared to the previous two weeks. The BLOM Stock Index retreated 0.66 percent to 1,167.01 points during the four trading days, sinking the index further to a 21 percent loss year-to-date.

Banks were little affected by developing political crises at the ministerial and Syrian levels, while Solidere, the real estate developer of Downtown Beirut, was in focus as rising volumes drove the stock down 1.7 percent to $13.41 during the week and the market capitalization down to $10.22 billion.

“I am more hopeful for Solidere than for the banks. Solidere is a piece of Beirut bound to go up – when, I don’t know,” said Louis Hobeika, professor of economics at Notre Dame University in an interview with The Daily Star.

The steady decline across the majority of securities on the Beirut Stock Exchange since the collapse of the national unity government is not expected to spare stocks the bitter taste of the looming crisis, and the focus is on the more liquid and politically sensitive Solidere shares.

The stock shed 11.7 percent in the aftermath of former Prime Minister Saad Hariri’s Cabinet resignation, painting a bleak outlook for Solidere in coming weeks.

But Sassine said the scenario may be different this time around, depending on the identity of the next government. “Markets act differently every time, depending on uncertainty and on who may come to power next,” he added.

In fact, Mikati’s term has so far seen Solidere’s A shares drop 27 percent since he formed his Cabinet on June 13, compared to the BSI’s 14.5 percent consistent decline.

The only positive note since then has been the appointment of Salameh for a fourth term as governor of the Central Bank, buoying Solidere and the BSI temporarily up 9.8 percent and 2.5 percent respectively.

To Hobeika, the possible sell-off would have no impact on national wealth because of the size of the stock exchange, but would make the shares of the BSE’s real estate developer even more attractive for long-term investors. “I advise investors to be patient and consider long-term returns unless they have urgent liquidity needs. When stocks fall, I would buy Solidere shares.”

Economy likely first victim if Cabinet collapses November 29, 2011 02:01 AM By Osama Habib The Daily Star



BEIRUT: Lebanon’s economy is expected to shrink dramatically if the government of Prime Minister Najib Mikati resigned in the coming days or weeks due to deep differences over the international tribunal funding, economists and bankers warned Monday.

“The economy will certainly suffer a big blow if the government resigns. We need to have a government even if this Cabinet had certain weaknesses,” economist Ghazi Wazneh told The Daily Star.

Mikati has threatened to resign as premier if the ministers refuse his request to pay Lebanon’s share in the tribunal, warning that the country would be subjected to crippling economic sanctions if Beirut fails to meet its international obligations.

The prospects of resignation has caused deep alarm among economists, bankers, businessmen and traders who already complain of weak economic indicators this year as a result of the deteriorating security and political conditions in neighboring Syria and the government’s inability to address crucial social and livelihood issues.

Some economists did not even rule out that the country’s GDP growth may fall to zero in 2012 from 2-3 percent this year if the government turned into a caretaker Cabinet.

Merchants and traders may see the volume of business fall drastically as consumers will become more reluctant to spend any money on luxury items, especially during this Christmas season.

If this happens, then imports from Beirut port and other key outlets will see a decline in volume and value and this will translate into an acute decrease in government revenues.

“All government investment projects will be put on hold until further notice if the government collapses. All the allocations for electricity, water and dam projects will be scrapped because a caretaker Cabinet has no authority to execute these projects,” Wazneh said.

The government has failed to approve the 2012 draft budget due to strong objections from many ministers over the planned new taxes.

Finance Minister Mohammad Safadi called for raising the value added tax from 10 to 12 percent and proposed increasing taxes on interest rates on customer deposits from 5 to 8 percent.

However, these taxes sparked outrage among labor unions and merchants alike, warning that such taxes would trigger a spiraling inflation and above all deal a blow to consumer confidence.

Wazneh said a collapse of the government would also mean that Lebanon would remain without an official budget for the sixth year running.

“Labor unions and employees who were pinning hope that Labor Minister Charbel Nahhas will submit a proposal to raise wages by 17 percent may soon realize that their dream for better living conditions will go down the drain if the Cabinet resigns in the coming few days,” another economist said.

There is a general consensus among many financial experts and economists that domestic problems are far more catastrophic on the economy than the impact of the Syrian situation on Lebanon.

Observers caution that potential investors will surely scrap all plans to make any investments in Lebanon.

“A caretaker government cannot issue any decree or license for investors to start projects in Lebanon. This will definitely shrink foreign direct investment,” Wazneh explained.

But some bankers seemed confident that even in the likelihood of a government collapse, the banking sector will not be affected.

“I don’t think the government will fall soon but nevertheless even if this happens our banks will not be affected because this sector is highly regulated and closely monitored by the Central Bank,” said Joe Sarrouh, the adviser to the chairman of Fransabank.

But he acknowledged that the possible fall of the government may bring some uncertainty to the market that also might trigger slower economic growth.

“Who has an interest under these adverse economic conditions to be responsible for the collapse of the government?” Sarrouh asked.

He stressed that there would not be any problems for Lebanon in financing the public debt next year even if the government were to resign.

He noted that the Lebanese government had successfully rolled over outstanding Eurobonds and treasury bills without any problem.

Sarrouh also expressed confidence on the strength of the Lebanese pound, noting that the Central Bank was sitting on more than $33 billion in foreign currency reserves.

“Lebanon has enough muscle to weather any unforeseen crisis thanks to these reserves,” the banker said.

But apart from the upbeat outlook of the monetary situation, most other economic indicators, according to economists, will surely suffer as a direct result of a possible collapse in Mikati’s government .

Public sector wages reach LL2.155 tln November 30, 2011 01:45 AM The Daily Star

BEIRUT: The Finance Ministry said Tuesday that salaries of civil service employees and army and security forces personnel in January-July 2011 reached LL2.155 trillion, an increase of LL221 billion compared to January-July 2010 due to the increase in basic salaries.

“A LL166 billion increase in basic salaries from LL1.429 trillion in January-July 2010 to LL1.595 trillion in January-July 2011 mainly driven by higher payments to the military and security forces (+LL118 billion) and the education personnel (+LL68 billion)” were the cause of the increase, the ministry said in a statement.

“This was slightly offset by a decrease in payments to civilian personnel (-LL20 billion).”

It added that the increase in basic salaries paid to the military personnel stemmed primarily from the following factors: “The fourth payment of the 1996-98 retroactive [wages] to military and security personnel which is divided into six disbursements over the 2009-11 period and the one-off payment of field service indemnities that accrued between July 2008 and February 2011.”

“It is worth mentioning that field service indemnities are additional benefits to which military personnel in service are exclusively entitled in the public sector,” the ministry said.

The statement added: “It is worth noting that the conversion of the ‘ISF mujannadine’ to permanent members led to an increase in payments of ‘housing allowance,’ which is a benefit to which only permanent members are entitled.”

“This also led to the payment of one additional salary in February 2011, which is the date of conversion, since contractual members cash out their remuneration at the end of the month contrary to permanent employees who cash out their pay one month in advance.”

Salaries to the public sector represent about 35 percent of the total government spending each year. It is estimated 200,000 civil servants, soldiers and security forces personnel are on the state’s payroll.

Lebanon external debt records 7th highest returns in EMEA markets December 02, 2011 02:39 AM The Daily Star

BEIRUT: Figures issued by Merrill Lynch indicate that Lebanon’s external debt posted returns of 6.03 percent in the first 10 months of 2011, constituting the seventh highest return among 28 markets in the Eastern Europe, the Middle East & Africa (EMEA) region. Lebanon also ranked the 19th best return among the 51 emerging markets included in Merrill Lynch’s Sovereign Plus Debt Index.

Lebanon outperformed the EMEA region’s returns of 4.04 percent, but underperformed the overall emerging market returns of 6.53 percent year-to-October, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group. Also, Lebanon’s external debt outperformed the 4.76 percent returns posted by similarly-rated sovereigns.

Further, Lebanon’s external debt posted the fourth highest returns among 12 countries in the Middle East & Africa region in the first 10 months of 2011, ahead of Bahrain (4.23 percent), Gabon (4.13 percent), Jordan (3.82 percent), Senegal (1.68 percent), Tunisia (1.3 percent), Egypt (-0.57 percent), Morocco (-0.78 percent) and Iraq (-1.72 percent).

But it was outperformed by Nigeria with 13.3 percent, South Africa with 6.83 percent and Ghana with 6.12 percent. In U.S. dollar terms, Lebanon’s external debt posted returns of 6 percent in the first 10 months of 2011, coming in eighth place in the EMEA region and in 20th place among emerging markets.

In parallel, Lebanon’s external debt posted returns of 0.85 percent in October, constituting the 23rd highest return in the EMEA region and the 42nd highest return in emerging markets during the covered month.

It underperformed the EMEA returns of 3.22 percent and the emerging markets returns of 3.9 percent, as well as the 4.94 percent returns of similarly-rated sovereigns for the same month.

World Bank, FAO: poverty rising over global price spike December 03, 2011 02:08 AM The Daily Star


BEIRUT: Lebanon’s heavy dependence on imported food combined with massive hikes in global food prices between 2007 and 2008 have sparked increases in poverty, said a consultant to the World Bank and FAO at a lecture held Wednesday.

Jane Harrigan said the average Lebanese household spends a large 20 to 30 percent of take-home income on food. Harrigan’s presentation entitled, “The Economics of Food Security in Lebanon” was coordinated by the Faculty of Agricultural and Food Sciences at American University of Beirut.

“Yes, domestic wheat production has increased significantly over the last 15 years but so has domestic demand due to population growth, income growth, and changing consumption patterns,” warned Harrigan.

In 2009, the World Bank rated Lebanon as vulnerable in food security, he added. The global rise in food prices and the fact that Lebanon is heavily dependent on import had some serious macro-economic effects: it led to inflation, a rising agricultural trade deficit, and a major negative social effect.

Between 2007 and 2008, the agriculture trade deficit as well as the cost of imported food increased 50 percent. Trade data suggests that Lebanon has a very strong revealed comparative advantage in the export of fruit and vegetables as well as wine and tobacco, added Harrigan.

From a purely economic perspective, if Lebanon wants to achieve food security by specializing in those areas where it has an international comparative advantage it should be focusing on exporting fruits vegetables and importing cereals that it doesn’t have a comparative advantage in.

Lebanon receives $50 million fund to boost SMEs December 03, 2011 02:07 AM The Daily Star

BEIRUT: Abraaj Capital, European Investment Bank and Cisco announced jointly Friday a $50 million “Lebanon Growth Capital Fund,” venturing into the country’s small- and medium-sized enterprises.

The project is a part of Abraaj Capital’s $500 million MENA-based small- and medium-sized investment platform dubbed Riyada Enterprise Development. The fund will initially target investments toward 13 to 15 leading Lebanese SMEs with potential to achieve rapid growth and potential to expand internationally.

The stakeholders said the fund’s capital infusion aims to help these businesses grow into leaders in their markets; a step they said would help foster “substantial job creation, innovation and long-term economic development in Lebanon.”

Cisco, a global IT corporation, committed $7 million to the fund as a part of its “Partnership for Lebanon” imitative, which the company says is committed to help advance ICT infrastructure and create opportunities for small and medium businesses. An initial $6.75 million had been provided by the European Investment Bank.

The rest of the capital was provided by Abraaj putting investments at a first close of $30 million.

But the fund is expected to grow into its $50 million goal by 2012.

Investments made by the fund will be handled by RED’s investment team in Beirut and will be supported by the broader platform, present in eight other MENA countries.

Speaking at the launching event held in Beirut Friday, Economy and Trade Minister Nicolas Nahhas said: “The Economy and Trade Ministry considers SMEs to be a crucial part of the economy and a vital catalyst to growth and development ... By developing a structured approach to support SMEs through multiple initiatives, the Lebanese government is also playing an important role in the growth and development of SMEs.”

Nahhas said the fund demonstrates the commitment from the private sector to foster innovation and long-term economic development in the country.

This view is shared by Fadi Moubarak, general manager of Cisco Levant, who said “Cisco’s investment in the Lebanon Growth Capital Fund demonstrates tangible support of the SMEs sector and contribution to help create sustainable economic development by stimulating innovation and job creation in Lebanon.”

EIB vice president Philippe de Fontaine Vive said the bank would continue to be an active supporter of small and medium businesses in Lebanon.

Tom Speechley, a senior partner at Abraaj Capital, expressed confidence in the Lebanese SME sector’s ability to prosper.

Solidere shares rebound after STL funding December 05, 2011 01:19 AM By Peter T. Daou The Daily Star


BEIRUT: Shares of Solidere rebounded nearly 10 percent in a week which saw the long-time Special Tribunal for Lebanon funding dispute resolved with the transfer of funds by Prime Minister Najib Mikati’s office.

Mikati had warned that a refusal by the Cabinet to fund the tribunal before a December deadline would prompt him to submit his resignation in what he described as a final-ditch effort to stave off likely international economic sanctions.

“After the funding of the tribunal, some people came to [the] market to buy, but there were few sellers, so prices were pushed up,” said Yves Rahme, head of equities unit at Byblos Bank in an interview with The Daily Star.

Solidere’s class A and B shares, which closed at $14.71 and $14.74 respectively Friday, had suffered from rising domestic and regional political instability in 2011 in addition to a deteriorating real estate market in Lebanon.

But Solidere’s rally did not come as a surprise to Nancy Elias, senior financial consultant at FFA Private Bank, who told The Daily Star that “Solidere’s share prices in the $13 range were a big surprise because we expected them to stagnate around $14, so this was [an] ... expected market correction.”

Solidere’s rally pulled the BLOM Stock Index up 2.5 percent during the week to 1,195.92 points, its highest level in a month. The Beirut Stock Exchange’s market capitalization also bounced back 2.18 percent to $10.44 billion by the close of trading Friday while volumes remained subdued at 73,155 average daily traded shares.

Banking stocks were mixed with Bank Byblos and Bank Audi adding 1.25 percent and 1.2 percent to $1.62 and $5.88 respectively, while BLOM Bank and Bank of Beirut fell 0.13 percent and 1 percent to $7.42 and $19.2 respectively. Audi’s Global Depository Receipt also rose 0.8 percent to $6.35 as BLOM’s GDR was unmoved during the week at $7.9.

Investors typically turn to banking stocks after Solidere’s shares cease to offer an attractive buying opportunity, but according to Rahme, “the capital invested this time is not too big and thus there is no buying rush to drive banking stocks.”

The surge in Solidere’s shares comes after months of continuous declines interrupted only by the positive response to the renewal of the central bank’s Governor Riad Salameh in July, and may in fact be as short-lived as its predecessor.

“For now investors still view the stock as an opportunity to buy at depressed prices, but above $15, maybe that view will change,” said Rahme who doesn’t believe this is the beginning of a turnaround in the market because “even after the funding of the STL, the domestic and regional problems are still there.”

Elias said volumes may remain low as “investors are already invested in banks and real estate.No one has enough liquidity to average down their cost.”

Prices of gasoline decline December 07, 2011 10:40 AM The Daily Star
BEIRUT: Fuel prices fell Wednesday by up to LL300, according to the weekly price update by the Energy and Water Resources Ministry.

The price of 98-octane rated fuel is now priced at LL32,600, dropping by LL300, while the price of the 95-octane rated fuel declined by LL200 and is now sold at LL32,000.

Kerosene gas now costs L29,600, decreasing by LL200 and the price of Diesel oil is now LL30,600.

All prices are per 20 liters.

Government revenues rise by 10.2 percent December 06, 2011 01:50 AM The Daily Star


BEIRUT: Lebanon’s budget deficit has been gradually falling over the past few months of this year thanks to the revenues of the telecoms sector which have been added to the gross income of the government for the first time in two years.

In a statement to the press, the Finance Ministry said that the total fiscal balance registered a deficit of LL1.471 trillion in January-August 2011 compared to a deficit of LL2.330 trillion in the same period in 2010.

As for the primary balance, it recorded a surplus of LL2.269 trillion in the first eight months of 2011 compared to a surplus of LL1.689 trillion in the corresponding period of 2010.

These figures are the result of a 10.2 percent increase in revenues (generated by the inclusion of the expected revenues from the Ministry of Telecommunications) and an almost stable level of expenditures.

When expected telecommunications’ revenues (LL1.449 trillion) are excluded, the fiscal deficit widens to LL2.921 trillion in January-August 2011, while the primary surplus drops to LL820 billion, due to a 6.7 percent drop in total receipts coupled with an almost stable level of expenditures.

Total revenues for the eight-month period ended Aug. 31, 2011 amounted to LL9.422 trillion, as compared to LL8.549 trillion for the corresponding period in 2010. Although tax revenues fell by 3.6 percent, total revenues over the period increased by 10.2 percent due to the inclusion of the expected revenues from the Telecommunications Ministry accrued for the period.

“If these revenues are excluded, total revenues would decrease by 6.7 percent, as compared to the same period of the previous year, due to declines in both tax and non-tax revenues of 3.6 percent and 30.5 percent respectively,” the ministry explained.

Tax revenues dropped to LL6.758 trillion in the first eight months of 2011 compared to LL7.014 trillion in 2010. All tax components under “tax revenues” registered decreases except for taxes on income, profits and capital gains which rose by LL279 billion (or 17 percent), resulting mainly from a LL191 billion increase in income tax on profits, owing to higher profits realized in 2010.

Total government expenditures in January-August 2011 remained almost stable – LL10.893 trillion in 2011 compared to LL10.879 trillion in 2010.

Current primary expenditures increased by LL487 billion as a result of LL175 billion rise in salaries, wages, and related items, and a LL85 billion rise in retirement and end-of-service compensations.

The ministry noticed a LL216 billion increase in transfers to EDL due to higher international oil prices and LL20 billion increase in transfers to the National Social Security Fund as part of the annual government contribution to the maternity and sickness fund from the 2010 budget proposal.

In addition, the Finance Ministry made a LL58 billion payment for the wheat subsidy.

Gross public debt increased by LL1.198 billion from the end-December 2010 level to LL80.496 trillion in August 2011.

Barclays sees Lebanon’s GDP growth at 3.6 pct in 2012 December 13, 2011 01:26 AM The Daily Star


BEIRUT: Barclays Capital projected real GDP growth in Lebanon at 3.6 percent in 2012 relative to a forecast of 1.8 percent for 2011.

It said that several indicators reflect subdued economic activity this year, adding that the escalation of sanctions against Syria could intensify downside risks to growth prospects and seriously affect the Lebanese economy, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group.

It noted that formal and informal trade and investment linkages between the two countries have deepened significantly in recent decades, while Lebanese investments across various sectors in Syria are significant and have been an important source of income earned.

It added that Lebanon has to deal with increased scrutiny of its trade and financial systems to ensure compliance with international and regional sanctions on Syria.

It expected capital flows to remain subdued and to possibly come under pressure due to concerns about the recent sanctions.

In parallel, Barclays indicated that the government’s recent spending decisions resulted in an ad-hoc approach to public expenditures, which is likely to undermine fiscal discipline given the ongoing contraction in tax revenues.

It added that the 2012 draft budget, as presented, could reverse past gains and exacerbate sovereign risk.

It said most of the increase in government spending came from non-interest current expenditures, which rose by more than 9 percent year-on-year and are likely to increase even further given the planned wage increases.

It added that the government’s approval of $1.2 billion to finance investment in the electricity sector is not anchored within a medium-term expenditure framework and is not formally linked to obligations of completing cost recovery-related reforms.

Moreover, the Cabinet recently approved several special Treasury draws that were drafted by line ministries. In addition, the suggested 9.5 percent increase in spending in the 2012 draft budget may not be commensurate with line ministries’ absorptive capacities, which could potentially result in inefficient and wasteful spending, it said.

Further, the government’s ability to contain the cost of debt may become more constrained from increasing political risks that could spill over onto banks’ balance sheets and lead to further fiscal slippages in 2012.

As a result, it urged the Lebanese government to support an orderly budgetary process, something that has been lacking for the past six years.

It said this is necessary to allow for a transparent and coherent fiscal policy. It expected the 2012 draft budget to be revised in light of recent political developments and increasing downside risks to growth, and expressed skepticism about the likelihood of an agreement on the proposed tax measures.

Syria crisis to drive up prices of Turkish imports December 14, 2011 01:23 AM By Elias Sakr The Daily Star


BEIRUT: Lebanon will see an increase in retail prices of Turkish-made garments as of next month if instability in Syria persists, Lebanese merchants who import goods from Turkey via Syria told The Daily Tuesday.

The transportation cost of Turkish goods to Lebanon has nearly doubled as the security situation in Syria continued to deteriorate since the popular uprising broke out nine months ago against the Syrian regime.

The tense security conditions in Syria have discouraged Turkey from allowing its trucks that are bound to Lebanon from using Syrian territories as a transit point and ultimately forced Lebanese merchants to ship Turkish goods via air rather than land transport, doubling the transportation cost from nearly $3.5 to $7.5 per kg.

While retail prices remain unchanged so far, Nicolas Khoury, a wholesale trader, told The Daily Star that stores will be compelled to hike prices as soon as they receive new goods at a higher cost.

“We have been informing our clients that we will deliver goods at a higher cost to cover for the increased transportation cost of new shipments. For example, the transportation cost of a double sized blanket, which weighs on average 4 kilos has almost doubled from $15 to $28,” Khoury said.

The higher transportation cost incurred by wholesalers would raise retail prices by an even higher percentage, since retailers sell their products at 1.6 to 2.5 times the cost of goods, Khoury said.

Mazen Abdallah, the owner of several retail stores that import garments directly from Turkey, said the cost of land transportation had been as low as $2.25 per kg before the crisis in Syria began to unfold.

“It went up to $5 per kg nearly six months ago after turmoil hit Syria,” Abdallah added.

Not only has the cost of land transportation doubled, but also the delivery time, Abdallah said.

Though transit through Syria remains open despite Damascus’ recent suspension of a 2004 free trade agreement with Turkey in retaliation for economic sanctions imposed by Ankara, tensions between the two countries have hampered Turkey’s trade with the Middle East.

Land transport across the Syrian-Turkish border has been delayed over the past week, with hundreds of trucks stranded on the border.

While land transportation used to take between three to four days, today the delivery of goods could take up to a week to 10 days, Abdallah said.

Adding to the woes of Lebanese importers, Turkish cargo agencies have recently informed Lebanese importers that “shipments will take place at your own responsibility.”

Abdallah said two Lebanese importers have recently incurred losses of up to $15,000 in missing shipments transported through Syria.

The shift to air freight has raised transportation prices per kg of goods up to $9, Abdallah said.

But the cost of land transportation is expected to drop if the security situation in Syria sees improvement.

Another Lebanese merchant said he ordered a shipment using land transport this week at $5.25 per kg and expects the goods to be delivered within 10 days.

While maritime shipping seems like a reasonable third option, its inconvenience leaves Lebanese merchants doomed to choose between risking to lose their shipments in transit through Syria or paying nearly double for air freight.

Both Khoury and Abdallah said maritime shipping was inconvenient because of long delivery times caused by the near-absence of direct shipping to Lebanon. “It takes between 15 to 20 days for the shipment to arrive to Beirut port and another week for cargo clearance at the port. Thus, the delivery of an order takes between three and four weeks and the merchant can miss the holiday season, for example,” Khoury said.

While direct maritime shipping to Beirut exists, a merchant would have to order an entire container of goods for such a service, leaving him with excess merchandise that he is incapable of selling.

Abdallah also said the increased cost of goods coupled with operational expenses would eventually lead to higher prices.

“We cannot sustain this pace for more than one month,” Abdallah said.

Lebanese-Turkish bilateral trade volume reached $750 million as of the end October 2011, a 23 percent increase compared to last year. Turkey ranks eighth in Lebanon’s imports with a volume of around $550 million and fifth in exports with a volume of $200 million.

So far, the effect of turmoil in Syria on Lebanese exports to Turkey remains unclear.

Volume of Lebanese exports increases 6.5 pct December 15, 2011 01:28 AM The Daily Star
BEIRUT: The volume of Lebanese industrial exports rose by 6.5 percent in the first 10 months of 2011 to reach $2.929 billion, up by $179 million, 6.5 percent, above last year’s $2.750 billion, according to a report released by Industry Ministry.

But the report said that exports in October 2011 totaled $305.8 million, falling slightly from October 2010 level of $312 million.

The country’s top exports were precious metals, stones and pearls contributing $89.9 million. South African countries came first importing 48.9 percent of these goods.

Electrical equipment and appliances were ranked second in industrial exports, worth some $44 million.

Gasoline prices fall LL300 for second week in a row December 15, 2011 01:26 AM The Daily Star
BEIRUT: Fuel prices fell for a second week in a row by LL300, according to the weekly price update by the Energy and Water Ministry.

The price of 98-octane rated gasoline is now priced at LL32,300, dropping by LL300, while the price of the 95-octane rated gasoline declined by LL300 and is now sold at LL31,700.

The price of kerosene gas remains unchanged at LL29,600, while diesel oil fell by LL300 and now costs LL30,300. The price of diesel is priced at LL30,100. All prices are per 20 liters.

Lebanon cellular networks to get $110-mln upgrade December 16, 2011 02:06 AM The Daily Star

BEIRUT: Telecoms Minister Nicolas Sehnaoui Thursday unveiled a $110 million plan to upgrade and modernize the cellular network to put an end to sub-standard mobile service.

The minister, who was speaking at ESA’s Higher Business Studies, said the National Quality of Services will take the telecoms sector into a new era.

“I am happy to announce to the Lebanese that the National Quality of Services for the cellular networks will put an end to the poor mobile services. This plan will take eight months to be completed. But the Lebanese will feel the positive results in two to three months. Today I have signed the appropriate investment decision which will allow the two cellular companies, Mtc Touch and Alfa, to start work on this big project,” the minister said.

The first phase of the plan, according to Sehnaoui, was based on a technical and geographic survey to determine the points of weaknesses in the cellular networks, which were identified in both densely populated areas and remote areas where the reception is weak or even negligible.

“In light of the survey, the ministry will buy 400 E1200 antenna stations that will be located in areas where the services are weak. The ministry will also buy 20 mobile stations that will provide a backup support and especially in the densely populated areas such as center of the capital, for example,” he explained.

The ministry also has plans to buy 120 repeaters that would handle the problems of illegal equipment which some subscribers use to strengthen reception from their residence.

“The required investments to maintain and develop the cellular networks are $110 million and this figure is close to the international standards but still this amount is not sufficient due to the shortage of investments over the past few years.

Both the general managers of Mtc Touch and Alfa reiterated the importance of this plan.

Christmas shopping volume sinks this season December 16, 2011 02:03 AM By Mohamad El Amin The Daily Star


BEIRUT: The first weeks of the holiday season have been deemed slow by merchants across the capital as Christmas shoppers hunted for bargains and relatively cheaper gifts, complaining that soaring foodstuff prices have eroded their ability to buy expensive presents and luxury items.

The Daily Star spoke Thursday to a number of shoppers and merchants in three major commercial districts of Beirut: Hamra, Burj Hammoud and at ABC in Sassine.

One easily made observation as one walks through these markets is that a majority of shop browsers walk empty-handed with some looking at the window displays while others check out the prices without buying anything.

All except one of the shopkeepers interviewed said they were facing a slow holiday season with sales, significantly below what they expected for the busiest time of the year.

Mahmoud Ballout, the owner of a clothing shop, complained along with three other shopkeepers in Hamra Street that his business was not doing well this year.

“The year has been really bad for our business. We are slashing our prices to lure more customers but still we were not able to sell enough. Usually we start giving discounts during February, but this year they have already started. Tourists are also almost completely absent from the street,” he said.

The same view was echoed by Freddy, a merchant in Burj Hammoud, who said his jewelry shop had not yet seen the generous holiday customers that he is accustomed to welcoming at this time of the year.

Paul Abu Elias, who was shopping for Christmas on Arax, Burj Hammoud’s major commercial street, said people were nowadays generally reluctant to spend generously on nonessential items.

“Even those who are buying are limiting their purchases to necessary stuff,” he said, adding that people have become much more concerned about prices than anything else these days.

But the whole picture was not gloomy: A Burj Hammoud merchant who did not want to be named said lowering prices was the key to boosting his sales.

“Whoever has the cheaper product will sell,” he said, adding, “I saw a significant improvement this year after I lowered prices at the shop.”

He said the success of his business depends on locally manufactured clothing, which he thought significantly improved his situation in the market compared to merchants selling imported goods.

Employees at various low-end shops, which were particularly busy, would not talk to The Daily Star, citing management restrictions.

Georges Murad, shopping for Christmas in Burj Hammoud’s market, said most of his income went to providing bare necessities.

“No one monitors prices. Supermarkets are free to increase prices and no one is able to stop them,” he said. Murad’s comments were shared by various shoppers who said they barely make ends meet.

But Nadine, who was shopping for the holidays at ABC mall in Ashrafieh, thought there were a lot of bargains that customers could benefit from during the season.

“I have not noticed any increases in prices, at least on clothing and gift-items. In fact discounts have started somewhat earlier than usual this year,” she said.

Hanna, another shopper, said he was avoiding expensive shops and looking for more reasonably priced gift items. “I believe people have become more price aware overall,” he said, adding that Christmas was not about expensive gifts.

The head of Beirut Merchants Association Nicolas Chammas confirmed the reports of a slow season during an interview with The Daily Star Thursday, saying markets continue to recede under the pressure of regional and local unrest.

He said that 20-25 percent of total business volumes are generated each year by merchants during normal and quiet holiday seasons, but this year the picture was much gloomier.

“We had warned before that 2011 had been an already bad year for businesses and the continuing political wrangling continues to overshadow it,” he said.

“Also strikes and protests contributed to the worsening situation,” he added, referring to the demonstration staged by teachers Thursday.

Chammas reiterated that the tourism industry, imperative for energizing Lebanese markets, had suffered a blow because of the turmoil across neighboring Syria.

“Let us not forget that the Syrian situation had caused a drop in the number of tourists, especially those who come here for shopping often on a weekly basis. A lot of tourists who cross through Syria from Jordan and other countries are no longer able to cross over to Lebanon.”

Chief economist at Byblos Bank Nassib Ghobril also took a dim view of the situation, saying ongoing political divisions and the Syria crisis are putting a damper on already dwindling consumer confidence.

Ghobril, who is in charge of the OSB-Byblos Bank Consumer Confidence Index, did not expect that December consumer confidence statistics, available next January, would bring any improvement.

“Consumers still have deep uncertainties, chiefly due to the country’s continuing political crises. We will continue to see consumer confidence dwindling alongside political turmoil,” he said, adding, “Also let us keep in mind that growth this year will not exceed 2 percent.”

Last November the Byblos Bank-OSB Consumer Confidence Index had shown Lebanese consumers’ confidence levels at their lowest during the first nine months of 2011 since 2007.

But the root of the problem, Chammas thought, was that residents are subject to continuous increases in their education, health care, electricity and transportation bills, leaving “discretionary income at just 50 percent of the income of a Lebanese family.”

“The government should intervene to lessen these costs. That would be a more effective approach than wage increases,” he suggested.

Electricity woes costing Lebanon $6 bln a year December 17, 2011 02:34 AM The Daily Star

BEIRUT: Energy and Water Minister Gibran Bassil said Friday that Lebanon is incurring $6 billion in losses each year as a result of the problems plaguing the electricity sector.

Bassil, who was speaking in a conference on energy organized by the Issam Fares Center of Studies in Beirut, said this loss represents about 15 percent of the country’s GDP which now stands at $40 billion.

“Solving the electricity crisis is a central issue for Lebanon and any laxity in fixing this problem will have negative economic and social consequences,” the minister argued.

He added that $4 billion of the electricity losses covers the cost of fuel oil and gasoil which run the country’s aging power plants.

The electricity crisis is one of Lebanon’s worst nightmares as Electricite du Liban applies severe power rationing in most of the country.

EDL’s power plants generate 1,600 MW while the actual need is more than 2,300 MW.

Bassil submitted a plan to the government to build more gas-run power plants and import electricity from neighboring countries at a cost of $4.5 billion over the next five years. According to the plan, electricity production should in theory rise to 4,000 MW if everything goes according to plan.

But some critics and energy experts doubt that Bassil and the government will be able to implement the ambitious plan as a result of the deep differences between the ministers, turmoil in Syria and above all the deep shortage of funds in the state’s coffers.

Bassil said that Lebanese citizens spend $1.7 billion on private generators each year and this has surely dealt a blow to the treasury because EDL is losing essential revenues.

“In addition to the $1.7 billion, the direct losses from electricity malfunctioning are $1.5 billion,” Bassil said.

The minister also criticized the occasional riots staged by citizens in some areas protesting the power cuts.

He also said that in some areas EDL bill collectors are prohibited from collecting payments.

Telecoms revenues reduce budget deficit December 17, 2011 02:34 AM The Daily Star

BEIRUT: The telecoms sector proved to be a boon to the government as the revenues from this lucrative industry helped the Finance Ministry reduce the budget deficit in the first nine months of this year by close to LL1 trillion ($666 million), figures released by the Finance Ministry showed.

“These figures are the result of a 12 percent increase in revenues (generated by the inclusion of the expected revenues from the Telecommunications Ministry), and a 1.4 percent (LL173 billion) increase in expenditures,” the Finance Ministry said in a statement.

It added that the total fiscal balance registered a deficit of LL2.103 trillion in January-September 2011 compared to a deficit of LL3.088 trillion in the same period in 2010.

As for the primary balance, it recorded a surplus of LL2.336 trillion in the first nine months of 2011 compared to a surplus of LL1.623 trillion in the corresponding period of 2010.

“When expected telecommunications revenues (LL1.632 trillion) are excluded, the fiscal deficit widens to LL3.735 trillion in January-September 2011, while the primary surplus drops to LL704 billion, due to a 5.1 percent drop in total receipts, coupled with a 1.4 percent increase in total expenditures,” the ministry added.

But Telecoms Minister Nicolas Sehnaoui, following the footsteps of his predecessor Charbel Nahhas, refuses to transfer telecoms funds to the Finance Ministry until the end of the year, arguing that the law allows him to make this transfer at the end of each year.

Former Finance Minister Raya al-Hasan argues that Finance Minister Mohammad Safadi has no right to add the telecoms revenues to the general income of the state since the money is still sitting in the Central Bank.

Total revenues for the nine-month period ended Sept. 30, 2011, amounted to LL10.480 trillion, as compared to LL9.323 trillion for the corresponding period in 2010. Although tax revenues fell by 2 percent, total revenues over the period increased by 12 percent due to the inclusion of the expected revenues from the Telecommunications Ministry accrued for the period. If these revenues are excluded, total revenues would decrease by 5 percent, as compared to the same period of the previous year, due to declines in both tax and non-tax revenues of 2 percent and 29 percent respectively.

The ministry added that tax revenues dropped to LL7.487 trillion in the first nine months of 2011 compared to LL7.659 trillion in 2010.

“All tax components under tax revenues registered decreases except for domestic taxes on goods and services which were stable compared to the same period in 2010, and taxes on income, profits, and capital gains which rose by LL320 billion (or 19 percent), resulting mainly from a LL206 billion increase in income tax on profits, owing to higher profits realized in 2010. Apart from this, all other tax components had a weaker performance,” the statement added.

Total expenditures in January-September 2011 increased by around 1.4 percent from LL12.411 trillion in 2010 to LL12.584 trillion in 2011.

The ministry added that the current primary expenditures increased by LL717 billion as a result of a rise in salaries and increase in transfer to Electricite du Liban.

Interest payments fell by LL274 billion (6 percent) to LL4.191 trillion due to lower debt service payments mainly on domestic currency debt.

Gross public debt increased by LL2.658 trillion from the end-December 2010 level, to LL81.956 billion in September 2011.

The ministry added that the local currency debt increased by LL2.045 trillion to LL50.300 trillion.

By end-September 2011, commercial banks’ holdings of domestic currency debt were LL973 billion lower than end-2010, albeit a LL2.799 trillion increase during the course of September. The central bank’s holdings increased by LL 3.127 trillion by end-September compared to end-2010.

Red gasoil price decreases by LL2,900 December 20, 2011 02:12 AM The Daily Star

BEIRUT: Price of red gasoil decreased LL2,900 Monday after Cabinet removed VAT on red diesel oil last week.

Commenting on this step earlier this week, the president of the Oil Importing Companies Maroun Chammas told The Daily Star that the measure suggested by the Energy and Water Ministry would be beneficial but at the same time stressed that it would have been better to remove the consumer tax on both red and green gasoil.

There are worries that merchants will try to take advantage of the measure and hoard red gasoil, he added. Reports had also warned that consumers may not be able to differentiate between red gasoil and green gasoil, and may therefore be cheated.

Beirut Port sees phenomenal growth in 2011 December 20, 2011 02:00 AM By Mohamad El Amin The Daily Star

BEIRUT: Port of Beirut has performed much better than other economic sectors in the country as activity and transshipment reached all time high this year, the head of the port said Monday.

“It has been a very good year for the port’s operations. Hopefully, we will pass the 1 million container mark by the end of the year,” Hassan Kraytem, head of the Beirut Port Authority, told The Daily Star.

This upbeat assessment was also echoed by Elie Zakhour head of the Beirut International Chamber of Navigation, an official representative of 45 shipping agencies operating at the port.

“The port has already handled 945,000 containers, not to mention the 70,000 to 80,000 containers which are expected to be handled in December. We will easily pass the 1 million [containers] mark. This would put the Beirut Port along with the world’s biggest 100 international ports,” Zakhour told the paper.

Zakhour expressed high optimism about the growth prospects in the port’s operations saying that its business is being propelled by massive growth in transshipment that exceeded 27 percent in the first 10 months of 2011 alone, contributing some 405,000 containers.

Kraytem believes that the mounting prospects of the transshipment business were a result of a number of shipping companies moving their operations to Beirut, where operations have become safer and more profitable compared to other countries in a region wracked by political unrest.

Additionally, the port is offering a high-quality service to companies that are attracted by the port’s added value to their business and the lowered costs incurred on their businesses, both Zakhour and Kraytem confirmed.

The container pier number 16 with its 15.5-meter depth and 600-meter length has also contributed in strengthening the port’s position as a Mediterranean transshipment hub, said Zakhour.

The expansion works, which Zakhour said is vital for boosting the port’s growth, is expected to upgrade the container quay to a depth of 16.5 meters to handle 1,500,000 containers.

Asked about the destination countries for transshipment through the port, Zakhour said Syria, Cyprus, Turkey and countries across the Mediterranean were being served by the facility.

The turmoil in neighboring Syria would not negatively affect the port, he added, but in fact may well contribute to increasing its activities.

“The Syrian market does not show signs of a slowing demand but in fact quite the opposite. We see an increase in Syrian demand on goods transshipped through the port,” he said.

But Zakhour feared the port was reaching its full capacity, adding that the expansion plans concluding in 2013 should not be delayed if not possibly completed ahead of schedule.

Overcrowding had caused ships to wait as long as three days to process shipments at the seaport, a statement reported by the National News Agency said earlier Monday.

“There is barely any space available at the port, which already sees high volume of ships during the import hungry holiday season,” Zakhour said.

Kraytem said the upgrade would also directly contribute significantly to eliminating delays and pressure on staff and equipment caused by the increasing activity.

According to November figures ferried goods increased by 4 percent last October to around 600,000 tons with the total number of containers growing by 17 percent to 91,184 compared to last year.

The number of containers intended for local markets also rose by 8 percent, reaching 24,080. Meanwhile, transshipment saw a large 46 percent increase with the number of containers rising to 41,996, compared to October last year.

In the early 1990s, a phase of development and reconstruction took place at the Port of Beirut.

According to the Beirut Port Authority’s website, the port’s infrastructures includes four docks, two quays and new container terminal with 700,000 TEU (20-foot equivalent unit) of yearly capacity.

The container terminal became operational in February 2005. It is equipped with five ship-to-shore gantry cranes with an outreach of 60 meters.

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Gasoline prices down for third week in a row December 21, 2011 11:01 AM The Daily Star
BEIRUT: Gasoline prices fell for a third week in a row Wednesday, particularly diesel, which fell by LL600.

The price of 98-octane rated gasoline is now priced at LL32,200, dropping by LL100, while the price of the 95-octane rated gasoline declined by LL200 and is now sold at LL31,500.

The price of kerosene gas fell by LL1,000 and now costs LL28,600 and oil fuel now costs LL29,700.

All prices are per 20 liters.

Government to regulate generator operators December 21, 2011 02:47 AM The Daily Star


BEIRUT: Energy and Water Minister Gibran Bassil Tuesday stressed that owners of private generators should slash the subscription fees they collect from citizens after the government removed the value added tax from the red gas oil which runs these units.

Speaking at a press conference with Interior Minister Marwan Charbel and Economy and Trade Minister Nicolas Nahhas, Bassil said all concerned ministries would work around the clock to ensure that all owners of private generators fully comply with unified rates.

“The profits generated by owners of the private generators sometimes reach 30 percent,” the minister explained, adding that the current rates charged by these owners are unacceptable, reminding the operators that they are illegally connecting the cables on Electricite du Liban’s power lines.

Most Lebanese depend on private generators to make up for the severe electricity rationing applied by EDL, which ranges between eight to 12 hours a day and in the summer season it reaches 16 hours in some regions.

Bassil estimated that the private generators have become so lucrative to an extent that the income from this illegal business reached $1.7 billion in 2010.

“When the price of each 20 liters red gas and fuel oil was LL30,100, the price charged for each hour supplied to subscribers with 5 amperes was LL425. But today and with the drop in the prices of red gasoil to LL27,100, the price for each hour of supply provided by the private generator should not exceed LL390,” the minister said.

He added that Lebanese citizens pay each year $1.7 billion to private generator owners.

Some municipalities in Lebanon succeeded in setting a fixed price for the private generators and forced the owners of these units to abide by all the regulations set by the authorities.

However, most private generators’ owners have always set the prices they wanted without any intervention from the authorities.

The subscription for 5 amperes during severe electricity rationing sometimes exceed $80 per month and this, according to many citizens, are higher that the bills charged by EDL.

Citizens feel that the private generators owners have become a powerful empire that can challenge the authority but they admit at the same time that the failure of the successive governments to rehabilitate the power plants have encouraged the operators of these units to fix any price they want.

For his part, Charbel said he had instructed all municipalities to compel the owners of private generators to install meters on the generators.

“These generators will be sealed by the Economy Ministry which in turn will send monitors to ensure that the owners of these units are fully complying with the instructions of municipalities,” Charbel said.

The minister also plans to conduct a comprehensive survey to determine the number of all private generators that operate in Lebanon.

“Any private generator owner who refuses to comply with the government directives will receive a penalty,” Charbel stressed.

He added that if the offender repeats his violation the government will put him out of business.

There is no clear statistics on the exact number of private generators but observers say that the number is in the thousands.

Beirut ranks 170th worldwide in quality of living December 21, 2011 02:47 AM The Daily Star


BEIRUT: The annual survey on the quality of living in 221 cities around the world by global consultants Mercer Human Resource Consulting ranked Beirut as the 170th most desirable city for overall living standards and 16th among 25 cities surveyed in the Middle East and North Africa region in 2011, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group.

Beirut ranked in 172nd place worldwide and in 16th place in the region in the 2010 survey. Also Beirut ranked in 34th place among 42 Upper Middle Income Countries included in the 2011 survey while it ranked in 32nd place among UMICs included in the 2010 survey.

The study evaluated the cities on the basis of 39 key quality-of-living determinants grouped in 10 categories that include political, economic and sociocultural factors, in addition to health & sanitation, schools & education, public services & transportation, recreation, consumer goods, housing and natural environment. New York City served as the benchmark for other cities.

On a global basis, Beirut ranked ahead of Cotonou in Benin, Almaty in Kazakhstan and Yerevan; and came immediately behind Vientiane in Laos, San Salvador in El Salvador and Banjul in Gambia.

It also ranked ahead of Almaty in Kazakhstan, Tirana in Albania and Algiers in Algeria; and immediately behind Saint Petersburg in Russia, Caracas in Venezuela, and Moscow in Russia among UMICs. Regionally, Beirut ranked ahead of Djibouti, Algiers and Damascus and behind Jeddah, Riyadh and Cairo. Beirut’s rank improved by two spots, posting the fifth highest increase in the region’s rankings along with Kuwait City, Nouakchott.

The rankings of 10 cities improved, 12 declined and three stayed the same. Abu Dhabi’s rank improved by 5 spots constituting the highest improvement in the MENA region while Tripoli’s rank dropped by 35 spots representing the steepest decrease in the region.

Mercer indicated that the recent wave of violent protests across the MENA has temporarily lowered living standards in the region. Many countries such as Libya, Egypt, Tunisia and Yemen have seen their quality of living levels drop considerably.

Vienna had the highest overall quality of living in the world and Dubai remained the best city for overall quality of living in the region; while Baghdad is still considered to be the world’s least appealing city.

The survey is conducted annually to help multinational companies assess international hardship allowance for their expatriate workers.

The data for the survey was collected between September and November 2011 and has been regularly updated to take account of changing circumstances.

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Beirut Port breaks record despite turbulent year December 22, 2011 01:58 AM The Daily Star


BEIRUT: The number of containers handled by Port of Beirut surpassed the 1 million mark in 2011.

“Despite a hard economic year on both regional and international levels, we have broken the record and established once again its [important] regional role,” head of the port Hassan Kraytem said.

Kraytem said a decision to expand the port a few years ago came at the right time to meet its increasing activity and “will further strengthen the position of the port as a sea transport regional hub.”

The expansion works, due to be finalized in 2013, are vital for boosting the port’s growth, experts say.

The upgrade is expected to increase the depth of the container quay to 16.5 meters and increase the size of the container area to handle a total of 1,500,000 containers per year.

Earlier this week, The Daily Star reported that the port had performed much better than other economic sectors in the country as transshipment reached an all time high this year.

Government plans olive oil, sugar beet subsidies December 22, 2011 01:58 AM The Daily Star

BEIRUT: The government intends to launch olive oil and sugar beet subsidies, said Agriculture Minister Hussein Hajj Hasan.

Hajj Hasan said his ministry had prepared the sugar beet subsidies draft decree and intended to pass it on to Prime Minister Najib Mikati and other concerned ministers for further examining.

Olive farmers rejected Monday a Cabinet decision last week to buy 50,000 20-liter canisters of olive oil.

The quantity, designated for Lebanese Army consumption, is intended to support farmers who have been saying they are unable to market more than 200,000 canisters of 2011 produced olive oil.

Power crisis threatens Lebanese economy December 22, 2011 01:58 AM The Daily Star

BEIRUT: Energy experts warned Wednesday that the mounting losses of the electricity sector would wreak havoc on the Lebanese economy if not addressed in the near term. The experts were speaking during a three-day seminar organized by Issam Fares Center for Lebanese Affairs on sustainable energy in Lebanon.

Ibrahim Shahrour, the director of planning and programing at the Council for Development and Reconstruction, said successive energy ministers had made very little progress toward solving the major problems in the electricity sector since 2002.

Shahrour added that the Lebanese economy would suffer miserably if the the electricity sector maintained its losses indefinitely.

He noted that no governments to date had kept promises to privatize the state-run Electricite du Liban (EDL) or find a private-sector partner that could ease the burden on the state.

The annual losses of the electricity sector are expected to exceed $2 billion by the end of 2011.

EDL has long been a drain on the Lebanese state’s coffers, and experts complain that the state-run firm is plagued by poor management, unqualified and unmotivated staff and rampant corruption.

Many agree that the best solution for the ailing electricity sector would be privatization, or a private-public partnership in which a private firm would jointly run EDL with the state. But some critics have voiced fears that the sale of state assets to private companies could increase unemployment.

“It seems that they [authorities] have bypassed demands for privatization and private-public partnership by focusing on a plan that integrates public investments with private investments,” Shahrour said.

He added that EDL could apply modern technologies in administering electricity production.

“There are programs and software that will enable EDL to conduct studies on the movement of energy on the power grid to ease the technical losses and also to study malfunctioning and their impact on safety of facilities,” the expert said.

Shahrour underscored the importance of completing the installation of the high voltage cables in the Mansourieh area, the scene of protests by residents who fear that the cables could be harmful to their health.

Engineer Zakaria Ramal noted that most of the major transformers were old and obsolete and needed to be replaced, citing the example of the transformer in the southern suburbs.

He also complained that the electricity network suffers from high levels of technical losses, or power lost through the ageing grid, as well as non-technical losses, or power lost through electricity theft.

Ramal said EDL sold a kilowatt hour to private electricity companies between LL50 to LL75 while EDL’s subscribers pay LL125, meaning that private concession companies make a profit of up to LL75 for every kilowatt they sell to their customers.

Ramal warned that the Energy Ministry might be forced to increase electricity rationing if the energy plan was not implemented soon.

Another speaker said the financial bleeding of the electricity sector represented 35 percent of Lebanon’s total public debt.

“Bill collection losses each year are over $350 million not to mention technical and non-technical losses,” one of the speakers said.

Energy and Water Minister Gibran Bassil has submitted a plan to build new power plants and rehabilitate the existing ones over the next five years at a cost of $4.5 billion.

Lebanon growth hinges on regional developments December 23, 2011 02:16 AM The Daily Star


BEIRUT: The Economist Intelligence Unit projected economic growth in Lebanon at 3.4 percent in 2012, higher than the estimated growth rate of 1.5 percent in 2011, but still below the average growth rate of 8.1 percent recorded between 2007 and 2010.

It said that Lebanon’s growth prospects in the coming year would depend on regional developments, as Lebanon’s service-oriented economy relies on demand from Arab countries, mainly from the economies of the Gulf Cooperation Council.

According to the EIU the unrest that engulfed the region this year, along with domestic political instability in the first half of 2011, had a sharp impact on economic activity throughout the year. It expected any economic recovery in 2012 to be limited by the serious downside risks from the continued unrest in Syria, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group.

The EIU said the weak performance of the tourism, banking and construction sectors throughout 2011 demonstrated how sensitive Lebanon’s economy is to political uncertainty.

It considered that the long-stalled economic reforms could proceed at a slow pace, given the current, more politically homogenous government. It noted that the factions within the Cabinet will only be able to reach consensus on some relatively neutral political and economic topics such as energy sector reform.

However it said structural changes, such as fiscal reforms, will face resistance, as corruption and patronage permeate the political system and many politicians have their own interests in maintaining a bloated public sector.

In parallel, the EIU anticipated the fiscal deficit to remain large at 7.7 percent of GDP in 2012 but to contract from 8.7 percent of GDP in 2011.

It pointed out that Lebanon has struggled to pass budgets in the past five years due to political disputes and external conflicts. It added that the 2012 budget proposal includes controversial tax rises that may prevent it from being ratified. It noted that spending on reforming Lebanon’s electricity sector will constitute a major component of capital spending next year.

It noted that the Finance Ministry is now including revenues from the Telecommunications Ministry, which normally provides a large portion of non-tax revenues to the government, in its official accounts.

But it is unclear whether the funds are actually being transferred, it added. The EIU expected the deficit to begin to narrow gradually in case of higher growth rates and if a more coherent government policy allows for better expenditure management.

Also, the EIU indicated that Lebanon is unlikely to face contagion from debt crises in the eurozone and elsewhere, despite having a large structural deficit and one of the world’s highest debt-to-GDP ratios, because local banks hold most of the government’s foreign debt.

It also projected Lebanon’s current account deficit to average 21 percent of GDP in 2012-13, and said that the deficit will fall after reaching an estimated nearly 31 percent of GDP in 2011, when high prices for oil will have driven up import costs.

It added that the ongoing unrest in Arab countries means that Lebanese exporters are struggling to get products to markets and demand in these economies has slowed down, which is worsening Lebanon’s trade deficit. It said the drop-off in demand in Syria, as the unrest weakens the economy, will affect Lebanon’s services account as it serves as an overland transit route for many goods shipped to Syria and other Arab markets.

The EIU added that tourism receipts, mainly coming from Lebanese expatriates who visit the country regardless of political instability, and remittances will help to moderate the widening current account deficit, although remittances may decline this year.

It indicated that Lebanon’s current account imbalance is normally covered by capital inflows, but noted the Central Bank of Lebanon has reported deficits on the capital account for 2011. It added that this may not account for unreported transfers of funds from Lebanese residents abroad or some Syrian movement of money into Lebanon.

Beirut stocks: No hope for year-end comeback December 24, 2011 02:02 AM By Peter T. Daou The Daily Star

BEIRUT: Despite hopes for regained market momentum before the end of the year, Beirut Stock Exchange activity proved once again that the rule of financial law is not stronger than the politics ruling Lebanon’s market.

Volumes slowed almost 90 percent to 153,381 shares during the week ending Dec. 23, and the BLOM Stock Index fell 0.2 percent to 1,187.42 points with little hope for a comeback in the final days of a long year. “I think the market will be very slow and trading light next week because investors are busy with the holidays and stock dividends, namely those of Solidere, have already been cashed,” said Tarek Bassil, equities trader at Byblos Bank in an interview with The Daily Star.

Over half a million shares of Byblos were traded during the week in what appeared to be a continuation of the previous week’s multimillion share trading in the bank, and trading may resume in the coming week with 42,625 open buy orders and 58,128 sell orders. Bassil, however, said the heavy trading is not a reflection on the bank’s fundamentals given the minimal price fluctuation. “Those are typical results from the transfer of ownership, and the same recently happened with Bank Audi,” said Bassil.

Rumors about a U.S. lawsuit against three Lebanese banks for involvement in money laundering activities related to Hezbollah did not seem to gain much traction or generate higher trading volumes although banking stocks were the biggest losers of the week. Bank Audi GDR saw its shares fall 4.61 percent to $6, followed by Byblos, down 3.03 percent and back to its recent stable level of $1.6. BLOM Bank’s GDR fell 0.91 percent to $7.63, while Bank Audi’s listed shares dropped 0.85 percent to close the week at $5.8.

Low trading levels indicate that private investors took an early holiday this year and the typical portfolio rebalancing at funds and other institutional investors may likely have been put on hold in order to buy time through the holidays.

“The rebalancing will be offset by the uncertain political situation this year,” said Bassil.

Syria’s agreement to an Arab observer mission did little to assuage investor fears as the crisis in Syria continues to pose a drag on foreign investment sentiment in Lebanon.

“The market should follow the trend of regional and international markets which are rebounding lately, but Syria is somehow scaring foreign investors who do not see the limited economic impact on Lebanon or who typically view the region as one entity,” explained Bassil.

And the weakness in stock prices just before year-end was exacerbated by the acceleration in consumer price index figures released by the Central Administration of Statistics. The CPI rose 0.46 percent month-over-month in November to 117.6 points, up 3.04 percent in the first 11 months, with the fastest increase in prices reported in the food and nonalcoholic beverages category which rose 1.18 percent month-over-month, an annualized increase of 5.12 percent.

November also saw clothing and footwear prices inch up 0.8 percent and water, electricity, gas and other fuels rise 0.81 percent. On the other hand, both education and transportation were virtually flat for the month.

With Lebanese investors taking a beating from stock price performance and from accelerating inflation in 2011, the focus has shifted to the all-too-familiar, politically sensitive post-holiday rebound. “There is definitely an opportunity for a rebound in 2012 given low prices, but only if political situations in Lebanon and the region ease,” said Bassil.

Beirut ranks 170th worldwide in quality of living December 21, 2011 02:47 AM The Daily Star


BEIRUT: The annual survey on the quality of living in 221 cities around the world by global consultants Mercer Human Resource Consulting ranked Beirut as the 170th most desirable city for overall living standards and 16th among 25 cities surveyed in the Middle East and North Africa region in 2011, as reported by Lebanon This Week, the economic publication of the Byblos Bank Group.

Beirut ranked in 172nd place worldwide and in 16th place in the region in the 2010 survey. Also Beirut ranked in 34th place among 42 Upper Middle Income Countries included in the 2011 survey while it ranked in 32nd place among UMICs included in the 2010 survey.

The study evaluated the cities on the basis of 39 key quality-of-living determinants grouped in 10 categories that include political, economic and sociocultural factors, in addition to health & sanitation, schools & education, public services & transportation, recreation, consumer goods, housing and natural environment. New York City served as the benchmark for other cities.

On a global basis, Beirut ranked ahead of Cotonou in Benin, Almaty in Kazakhstan and Yerevan; and came immediately behind Vientiane in Laos, San Salvador in El Salvador and Banjul in Gambia.

It also ranked ahead of Almaty in Kazakhstan, Tirana in Albania and Algiers in Algeria; and immediately behind Saint Petersburg in Russia, Caracas in Venezuela, and Moscow in Russia among UMICs. Regionally, Beirut ranked ahead of Djibouti, Algiers and Damascus and behind Jeddah, Riyadh and Cairo. Beirut’s rank improved by two spots, posting the fifth highest increase in the region’s rankings along with Kuwait City, Nouakchott.

The rankings of 10 cities improved, 12 declined and three stayed the same. Abu Dhabi’s rank improved by 5 spots constituting the highest improvement in the MENA region while Tripoli’s rank dropped by 35 spots representing the steepest decrease in the region.

Mercer indicated that the recent wave of violent protests across the MENA has temporarily lowered living standards in the region. Many countries such as Libya, Egypt, Tunisia and Yemen have seen their quality of living levels drop considerably.

Vienna had the highest overall quality of living in the world and Dubai remained the best city for overall quality of living in the region; while Baghdad is still considered to be the world’s least appealing city.

The survey is conducted annually to help multinational companies assess international hardship allowance for their expatriate workers.

The data for the survey was collected between September and November 2011 and has been regularly updated to take account of changing circumstances.

This ranking does not make much sense to me. I understand that Beirut has some very serious problems and does not deserve a high ranking amongst world cities like New York, London, etc, however I don't believe Beirut is as bad as this ranking might suggest.

I will use Cairo and Riyadh as examples, only because they are mentioned in the article as ranking higher than Beirut, it is not my intention to bag out these cities.

First of all ranking cities from best to worse is a very subjective exercise. For example, for a very devout and conservative Muslim, Riyadh would be a far more superior city than Beirut. For a person who loves history and wants to experience traditional Arab culture, Cairo would be a better choice over Beirut. For a young Western university student wanting to spend a year studying in the Middle East whilst still maintaining his liberal lifestyle, Beirut would be the better city.

With the Mercer ranking, it's purpose it to rank cities based on hardships that western executives could expect to face living and working in these cities. It's supposed to be used to assist in making business decisions and as a way to fairly compensate employees for the hardships they may face in being posted in foreign cities.

Now Beirut has some serious issues concerning pollution, noise, traffic, lack of public transport, overcrowding, lack of green spaces and poverty which I'm sure were big factors in it's low ranking. However from what I know about Cairo these same issues are even a lot more serious. Also apart from these issues I can think of many more reasons why Beirut would be a more comfortable city for a western executive. So Cairo ranking ahead of Beirut does not make sense to me.

Now in regards to Riyadh, I am sure it is a far more developed city than Beirut. I bet they have 24 hr electricity, good public transport, better Internet speeds, cleaner water, less poverty, etc. However no matter how developed it is, it's ultra-conservative Muslim society with it's many restrictions on personal freedoms that would be taken for granted in the West, would not make it an attractive city for a Western executive to live. I think most Westerners would prefer to live in Beirut despite it's crummy public infrastructure.

Overall Beirut is far from being a perfect city, however it is not that bad. Despite it's problems, the city has it's own unique charm, good weather, views of the sea and mountains, diverse cultures, personal freedoms and laid back life style. If you have enough money (like a Western executive would) you can live a very good and enjoyable life in Beirut, maybe even more so than your home city. It's definitely not a place where a Westerner would have to fear or dread having to live.

^^ Welcome to the forum and thank you for your perspective. I tend to agree with you that these types of rankings are seriously flawed, however, sanitation, public services & transport/infrastructure are what really hurt our score. Also the "school & eduction" data included public instituitions.

New rules threaten 250 Lebanese money changers December 31, 2011 12:46 AM By Mohamad El Amin The Daily Star


BEIRUT: More than 250 money changers across the country are likely to be stripped of licenses and forced into Lebanon’s underground economy, the head of the Lebanese Money Changers Association told The Daily Star, following a Central Bank decision last month to double compulsory minimum capital in an attempt to clamp down on money laundering.

“Out of 400 [licensed] money changers, we have between 250 and 300 who are not capable of affording the hike ... What is the advantage of forcing the money changers into the black market?” said Mahmoud Halawi, the head of Lebanese Money Changers Association.

Halawi insisted that the step would induce more chaos in the sector, already swarming with what he described as “protected” unlicensed businesses.

The measure would not aid in efforts aiming to combat money laundering if the business, according to Halawi, “had nothing to do at all with money laundering activities that go through completely different channels.”

“We are always accused of money laundering because of the nature of our business involving cash transactions. But how can our businesses, most of whom operate at under $30,000 of daily trading, be involved in any significant money laundering?” he argued.

The Central Bank has been increasingly clamping down on alleged illegal activities by some money changers. A report by The Financial Times claimed last November that Syrian nationals were using the relaxed nature of the business for what it described as an intensifying capital flight caused by the escalating crisis across Syria.

But more significantly, a Manhattan-based U.S. federal court sought on Dec. 15 a massive $480 million in damages against two Beirut money changing businesses, the now sold out Lebanese Canadian Bank, and a number of U.S.-based car export firms.

A report by The New York Times said the court highlighted that these entities had been involved in drug money laundering through Lebanon. The court argued huge amounts of cash had been flown to the country and deposited initially into foreign currency exchange businesses then channeled through to the Lebanese Canadian Bank. Hezbollah was accused by the court of taking a portion of the profits.

Halawi denied any relation of money changers to money-laundering activities, saying not one single case in a Lebanese court had ever named a money changer in such activities.

“There are two [currency exchange] companies reportedly mentioned in a U.S. lawsuit for money laundering but that is an isolated case not [yet] recognized by Lebanese law,” he said.

The Central Bank issued last November a circular that ordered money changers to “know the client,” forcing them to investigate more into the backgrounds of highly cashed-up clients. The circular held money changers, commercial banks and clients responsible for declaring the source of funds from money-changing operations.

Lebanese money changers, Halawi confirmed, were consecutively subject to increasing restrictions placed on them by the banking sector.

“Banks have recently closed the bank accounts of almost all money changers,” Halawi complained, saying that the Association of Lebanese Banks had been firm in discontinuing all dealings with the sector.

When asked about the reasons behind the hike in the compulsory minimum capital, Halawi said his association had not received a clear answer from the Central Bank yet.

Among the reasons, he said was restricting the business to commercial banks and bigger exchange businesses.

“They [Central Bank] might be also aiming at decreasing the number of money changers, thinking this would facilitate the regulation of the sector,” Halawi said.

Halawi made a point to stress that 2,000 families were threatened by the decision urging the Central Bank to consider the devastating social impacts of their decision.

“We are no longer capable of bearing arbitrary decisions taken without planning especially in a toughening financial crisis,” Halawi said in a news conference held earlier Friday.

The Association of Lebanese Money Changers came out strongly against a decision by the Central Bank that more than doubled requisite capital needed for licensing currency exchange businesses.

The Central Bank had decided to hike minimum capital required for category A money changers to LL750 million, up by some LL250 million from their previous levels. The capital of category B money changers was hiked to LL500 million, up by some LL400 million.

The bank’s decision gave a one-year grace period for implementing the measure. A new currency exchange business would have to implement the hikes immediately.

Finance Ministry building in dark ages January 17, 2012 02:27 AM By Mohamad El Amin The Daily Star

BEIRUT: It is hard to imagine how ordinary people cope with the relentless power cuts every day. But it is even harder to contemplate a vital government building experiencing three hours of electricity rationing. But such a situation is exactly what taxpayers, bearing invoices and documents, encounter when they flock to the Finance Ministry’s revenue department on Beshara Khoury street only to find out that there is no electricity in the building.

But unlike other governmental premises, this building has no back-up electricity and no private generator; meaning work is brought almost entirely to a halt during the daily power outages.

The building houses offices for key Finance Ministry departments, including both income and real estate taxes.

“Tell the officials we need generators; the power cuts are forcing the ministry to shut down completely,” said a frustrated ministry employee.

After The Daily Star made inquiries with senior Finance Ministry officials, a source close to Minister Mohammad Safadi contacted the newspaper to say that acquiring a generator would be a top priority in the coming few days. “The landlord will not let us install a generator inside the building. We may consider putting the generator in a location close to the building,” the source said.

Another source said the ministry had made arrangement with Electricité du Liban to restrict cuts after working hours but for some reason EDL was unable to abide by the agreement.

He said there was no need for the taxpayers to go personally to the revenues building to pay their dues.

“They [taxpayers] can settle their taxes and dues either through the banks or the offices of LibanPost across the country,” the source said.

A taxpayer, who also did not wish to be identified, said he had recently been asked to wait for two hours when he happened to be at the building to settle an inheritance tax during an outage.

“When the cuts are scheduled from 9-12, or 12-3 it is very problematic. [During the cuts] we have to stop working because most of the transactions are computerized,” another employee explained, when asked about the electricity cuts schedule.

“This usually occurs twice or three times a week,” the employee added.

According to the Energy Ministry, the government allocates close to $2 billion to cover EDL’s deficit each year.

Ironically, the Finance Ministry is responsible for channeling the sums to the loss-making state-owned electricity provider. The Finance Ministry also allocates funds, in the annual public budget, for generators run by most ministries and public administrations,

Businesses and households across Lebanon are forced to subscribe to private generators providers to make up for the severe electricity cuts.

Apart from Beirut, which enjoys 21 hours of electricity each day, the remaining regions endure harsh power cuts that range between 12 and 16 hours each day, depending on the condition of the power plants and the weather.

Energy and Water Minister Gibran Bassil estimated that the private generator providers in Lebanon deprive the treasury of more than $1 billion in revenues each year.

The World Bank said the economy could grow by an additional 1 or 2 percent if the government managed to supply 24 hours of electricity every day.

Chammas calls for lifting of VAT on fuel oil, says gas prices to rise January 21, 2012 01:26 PM The Daily Star

BEIRUT: Head of the Association of Petroleum Importing Companies Maroun Chammas called for the removal of the Value Added Tax (VAT) on fuel oil and while predicting the price of gasoline would continue to climb.

“We urge that the government lift VAT on fuel oil so that [some] will not take advantage and so that citizens have the option to select what goods they want,” Chammas told LBC television station Saturday.

“As a group of oil-exporting companies we have warned that subsidizing fuel oil is not the right way to help citizens that have a need for it. The problem is that the will is not present and past experience has shown that some traders who want to sell their goods will take advantage,” he said.

On the price of gasoline, the association head said the price of petrol would increase once more next week by LL400. He said the rise was due to the increase in global fuel prices.

Fuel prices rose sharply for a second week in a row Wednesday, with diesel up by LL500 and gasoline up by at least LL400.

The price of 98-octane graded gasoline is now LL33,300 while the price of 95-octane graded gasoline is now LL32,700, according to the Energy and Water Ministry’s latest price list update.

At present the price of diesel is LL26,300, up LL500 from last week. Prices of kerosene and oil fuel are now LL28,400 and LL29,500, respectively.

Gasoil, diesel prices to drop once Parliament approves VAT cut January 25, 2012 02:26 AM By Mohamad El Amin The Daily Star


BEIRUT: The prices of gasoil and diesel are expected to fall as much as 10 percent once the Parliament convenes and approves a recommendation by the parliamentary Budget and Finance Committee to remove the VAT from this commodity.

“The measure will help alleviate social conditions and lessen the energy bill on households. It should also contribute to lowering production costs on agricultural products and bread,” Maroun Chammas head of the Association of Oil Importers said.

The parliamentary Finance and Budget Committee endorsed Tuesday a draft law to permanently eliminate VAT on the two vital commodities.

Sources told The Daily Star that parliamentarians will pass the draft law once Speaker Nabih Berri calls for a session. According to media reports, the committee combined suggestions made by MP Neamatallah Abi Nasr and the Cabinet.

Abi Nasr, who submitted the proposal, said the step would alleviate negative consequences of international price hikes of petroleum on vital economic sectors.

He stressed the step would significantly lower production costs for the industrial and agricultural sectors.

However, leading industrialist Jacques Sarraf says consumers rather than companies would benefit the most from the measure. “Industrial institutions are already refunded the [VAT] paid to the treasury. It is the consumer who ends up paying the VAT and not us. But this measure will spare the companies and industrialists from filling forms to refund the VAT.”

Gradual hikes on the price of the commodity, usually attributed to increasing prices of petroleum internationally, pushed the current price of gasoil to around LL29,300 per 20 liters as per last week’s prices issued by the Energy Ministry.

Citizens across the country’s coldest areas complained gasoil had become so expensive that most families cannot afford using it for heating. They said the recent decision by the government to temporarily slash VAT on red gasoil had failed to resolve the issue. Many merchants, according to media reports, have hoarded the red diesel after the government slashed the price in order to sell them with a big profit.

Chammas said some distributers sold subsidized red gasoil claiming it was the cleaner non-subsidized green diesel.

Travelport Establishes Regional Levant Hub in Beirut
Jan 26 2012 -

Beirut, Lebanon: 26 January, 2012: Global travel services provider Travelport has announced the activation of a regional Levant hub in Beirut that will oversee its growing Galileo and Worldspan travel agency network in Lebanon, Turkey, Jordan, Iraq and Syria.

The new office in the heart of downtown Beirut will serve as the travel conglomerate’s Levant headquarters, supporting the group’s travel agency customers, airline suppliers and distribution partners across the region. Executives from the company were on hand this week to mark the official opening, along with prominent members of the Levant travel industry including senior representatives from Middle East Airlines (MEA).

Although its travel technology has been available in the Levant for nearly two decades through 3rd party distributors, the new Levant hub office will mark the first time that Travelport has had a direct presence in the region. According to president and managing director for the Middle East and Africa Rabih Saab, Travelport’s heightened involvement demonstrates its enhanced commitment to the Levant region and the growth potential it sees for its travel industry in the immediate and long-term future.

“This is a strategic investment that will allow us to capitalise on the continued growth we foresee in the region, whilst enabling travel suppliers from across the value chain to benefit from our extensive global reach and travel technology expertise,” explained Saab. “We are now uniquely positioned to seize new growth opportunities and offer the travel trade community unrivalled service and support,” he added.

To support its strategy, Travelport has put in place a Beirut-based team that includes Senior Airline Business Development Manager Mouna Moussi, Business Development Manager Loretta Bouchedid and Market Support Manager Hanane Sawaya, all seasoned professionals with extensive travel and airline industry experience.

Travelport operates both the Galileo and Worldspan reservation platforms and is the leading global distribution system (GDS) provider in Lebanon, Syria and Jordan, where the platform is managed by national carrier Royal Jordanian. In Turkey, Galileo was recently voted ‘Best GDS’ by members of the prestigious SKALITE travel industry association.

Travelport currently operates in Lebanon through its local Galileo and Worldspan distribution partners Travelport-Lebanon and Gate 7, and has had a long and successful relationship with Middle East Airlines (MEA), boasting a full content agreement that makes MEA flights and fares accessible to all Travelport GDS users worldwide.
Jan 26 2012.Press Release

Citi: Lebanon’s economy could suffer if Syria situation worsens January 28, 2012 01:28 AM The Daily Star

BEIRUT: Citi warned that the unfolding developments in Syria may affect Lebanon’s economy and political future if the situation grows out of control.

“Ongoing unrest in neighboring countries may impact domestic stability, particularly if the situation descends further into sectarian armed conflict, with a potential spill-over of sectarian friction into Lebanon,” Citi said in its report on Lebanon.

The report still perceived substantial risks to the outlook emanating from regional geopolitical which have the potential of disturbing local stability.

However, the report, which was published by Bank Audi’s Lebanon Weekly Monitor, noted that economic indicators revealed a slight turnaround in the local economic situation.

The report noted that there had been significant positive progress in Lebanon’s bid to begin exploiting its potentially extensive offshore hydrocarbon resources.

“Following the passage of a law establishing the legal basis for exploitation of the country’s reserves, the Cabinet approved a number of decrees in early January, including the set up of a hydrocarbons regulatory authority,” Citi said.

According to Citi, progress in developing Lebanon’s hydrocarbon reserves has significant economic implications.

“Oil and gas imports account for around 25 percent of total imports, representing 7 percent of GDP. Moreover, the fiscal burden of the external oil dependence is significant. The transfer made from the budget to EDL accounts for some 5 percent of GDP, on average. A local source of gas is likely to be cheaper and ease the burden on the country’s external balances, providing much-needed support to the economy,” the report explained.

Citi’s report added that confidence in the banking system remained solid.

Dollarization, a possible indicator of eroding confidence in the Lebanese pound, has remained broadly flat in recent months.

“Moreover, deposit growth and, in particular, non-resident deposit growth, remain strong, at a yearly rate of 7 percent and 17 percent respectively in November 2011,” the report said.

“The premium charged on Lebanese pound deposits over USD deposits, a common measure of the country risk premium, has remained at all-time lows and stable (under 3 percent),” it added.

The Citi report said that these indicators were particularly important given the role the Lebanese banking sector plays in propping up government finances through its purchase of government debt.

On the real economy front, indicators suggest a modest turnaround. Tourism appears to have suffered as a result of regional and domestic political uncertainty, but is recovering.

Hotel occupancy rates are down for the year to November compared with the same period in 2010, but average occupancy in the three months to November was 72 percent, compared with 66 percent the year before.

“This suggests a modest recovery in recent months. Imports measured by incoming freight volumes, which have been falling over recent months, started to grow again in September, rising 5.7 percent that month,” according to the Citi report.

Central Bank Governor Riad Salameh told Bloomberg News Thursday that Lebanon’s economy could grow more than 4 percent this year if the country remained politically stable and unrest subsides in the Middle East.

“We can get over that if we have the proper conditions, political stability and less tension in the region,” Salameh said.

Other investment banks and international agencies believe that Lebanon may even maintain a relatively high growth in 2012 if the situation in Syria becomes more stable in the future.

Accounts court: 60 firms hoarded red gasoil January 28, 2012 01:37 AM The Daily Star


BEIRUT: Head of the Court of Accounts Aouni Ramadan said 60 oil distribution firms may be involved in the red gasoil scandal, promising to pursue this case till the end.

Ramadan sent two auditors to the Deir Ammar and Zahrani refineries to examine the ledgers and receipts which show that they actually received and distributed the red gasoil one day before the end of the deadline to reinstate the VAT on this commodity.

He said 8 million liters of red gasoline had been hoarded in the market one day before the expiry of the deadline.

“All indications show that 60 companies are involved in this scandal. These firms reaped profits when the they sold the red gasoil at the previous price,” Ramadan explained.

Energy and Water Minister Gibran Bassil also vowed to pursue the case to the end, saying there would not be any political cover for any firm or individual involved in this scandal.

But the minster stressed that the companies which distributed the commodity according to the rates set by the Energy Ministry should receive commendations from the authorities.

“Any senior or junior government employee involved in this case should be held accountable,” Bassil added.

He said the Lebanese authorities and the entire media was on full alert because they want to know who hoarded the red gasoil and then sold it at higher rates when the VAT was reinstated.

Last month, the Cabinet approved a $15 million program which phased out the value added tax worth 9 percent of the final price of red gasoil. The price of red gasoil used for heating homes, electricity generation and running motor vehicles had been steadily increasing and currently stands at LL29,700 per 20 liters.

Lebanese economy may grow at more than 4 percent this year January 27, 2012 01:53 AM By Massoud A. Derhally


Lebanon’s economy could grow more than 4 percent this year if the country is politically stable and unrest subsides in the Middle East, central bank Governor Riad Salameh said. “We can get over that if we have the proper conditions, political stability and less tension in the region,” Salameh said in an interview at his office in Beirut late Wednesday.

Domestic political uncertainty in Lebanon last year, amid popular uprisings and unrest in Syria, Bahrain, Yemen, Tunisia, Egypt and Libya, curbed Lebanese economic growth last year to the slowest pace since 2006. The economy grew about 2 percent in 2011 after growing 7.5 percent in 2010, Salameh said. The International Monetary Fund had forecast growth of between 1 and 2 percent for last year.

“Political shocks and instability in the first half of 2011 led to a significant drop in consumer confidence in Lebanon in the first nine months of last year,” said Nassib Ghobril, chief economist at Beirut-based Byblos Bank SAL. “Political stability would help improve consumer sentiment and, therefore, support economic growth.”

Still, total deposits at all Lebanese banks increased 7 percent last year to $120 billion, in addition to deposits at Lebanese banks operating outside the country that amount to $30 billion, Salameh said.

The stability of Lebanon’s pound, pegged at about 1,500 to the dollar since 1993, and an interest rate on Lebanese pound deposits that reached as high as 8 percent in 2008, have attracted foreign inflows from the country’s expatriate community, averaging more than $1 billion a month.

“Overall the activity of last year was satisfactory given a difficult situation in the region and special events in Lebanon also,” Salameh said.

“The potential for growth is here because the liquidity is available,” he said, adding that infrastructure projects and the exploration of gas and oil “can spur confidence in the economy.”

Lending in Lebanon increased 14 percent last year with $40 billion loaned to the private sector, Salameh said. The central bank has $32 billion in foreign currency reserves in addition to gold valued at about $15 billion, he said.

Inflation last year reached 4 percent and is forecast to about 6 percent in 2012, if commodity and oil prices don’t increase further this year, Salameh said.

Lebanese banks have limited exposure to the political turmoil in Syria, Salameh said.

“The stability of the banking sector is not at stake. Lebanon has gone through various difficult times,” he said. The central bank has “taken all the necessary measures, and is doing the necessary stress tests,” Salameh said. “Even if there are no losses, general provisions are being constituted in the balance sheets of these banks. We are well prepared if the crisis continues.”

PTTEP sets sights on fuel in Lebanon

The Nation February 1, 2012 1:00 am

PTT Exploration and Production yesterday confirmed reports that it plans to explore for energy resources in Lebanon.

PTTEP president and chief executive officer Anon Sirisaengtaksin said countries on the Mediterranean constituted one of the firm's strategic locations for pursuing exploration and production (E&P) business.

The company is conducting a geological study of Lebanon's resources, Anon said. It might ask the Lebanese government for permission to send a team to explore the country after the study is complete.

Anon's comments follow recent remarks by fugitive former prime minister Thaksin Shinawatra that he had spoken with Lebanese officials to pave the way for PTT to conduct exploration in that country and cooperate with the government there to promote growth in the energy sector.

Anon said the company had conducted studies aimed at promoting E&P businesses in many countries deemed to have high energy potential, including Lebanon and other countries in the eastern Mediterranean, as well as in East Africa.

He said it was normal for the Thai government to support the company's exploration efforts and offshore business activities. PTTEP is willing to cooperate with the government - or any person involved with the government - who helps the company in order to promote Thailand's energy industry, the CEO said.

Meanwhile PTTEP, in cooperation with the Meechai Virivaidya Foundation and Business for Rural Education and Development (BREAD), yesterday introduced a new brand of packaged rice, School Rice, designed to promote farmers' incomes and benefit society.

Anon said the School Rice brand was part of PTTEP's corporate social responsibility activities to benefit rural people. The company has provided Bt16 million to fund research on the development of environmentally friendly rice-planting methods.

Meechai, a founder of BREAD, said that by purchasing this rice, consumers could help society, as the company will donate profits to schools and rural people.

School Rice will be sold at 102 branches of Tops Supermarket, or consumers can directly order at www.bread.co.th.

PTTEP's sales revenue grew 25 per cent in 2011 thanks to a higher petroleum price and increased sales volume.

An independent study by IHS CERA showed that the average price of benchmark Brent crude was US$111 for the year, well above the previous high of $97 in 2008. This is the highest average annual oil price since 1860.

As revenue rose from $4.5 billion in 2010 to $5.69 billion, its net profit rose from $1.38 billion to $1.47 billion. In baht terms, net profit hit Bt44.7 billion, up from Bt43.77 billion a year earlier.

The company has proposed a dividend payment of Bt2.79 for the second-half performance, on top of the Bt2.61 interim dividend paid earlier.

During 2011, PTTEP booked losses from fires at its Montara site in the Timor Sea off Western Australia. Its foreign-exchange loss was down for the year.

http://www.nationmultimedia.com/business/PTTEP-sets-sights-on-fuel-in-Lebanon-30174883.html

Lebanon needs a public debt strategy February 01, 2012 02:51 AM (Last updated: February 01, 2012 02:54 PM) By Ibrahim Saif The Daily Star

The Lebanese government has a problem of enormous public debt and, unfortunately, no clear plan for getting out of its current economic situation. But time is of the essence as uncertainty widens on the Syrian front and other regional developments threaten to negatively affect the Lebanese economy and its sovereign debt rating.

In an attempt to avoid complications that might arise from these situations, the government announced that its annual swapping and rescheduling of debts would take place at the end of November, earlier this year than usual. The announcement was accompanied by the issuance of a new batch of eurobonds to secure the liquidity the government needs to conduct its business. This is a familiar process that is repeated each year at different times in an attempt to adjust the large public debt.

The debt swap and the issuance of eurobonds were considered successes, especially given the current circumstances. Bankers could not hide their surprise at the demand and the interest rates offered, considering regional and international markets are experiencing a downgrade in the credit ranking of many governments, thereby raising interest rates on sovereign debt.

A number of facts about the Lebanese economy will have repercussions for a range of sectors. First of all, growth this year is expected to rise just 1.5 percent, a rate well below that of the past two years. The rosiest possible scenario would be a growth rate of no more than 2.5 percent in 2012, but no one wants to count on this number in light of the numerous local and regional changes that could deflate expectations.

Second, it is obvious that the Syrian political crisis profoundly influences commercial relations between the two countries. Most of Lebanon’s land trade passes through Syria, and Lebanese banks, which do a lot of business in Syria, have seen their fortunes decline, despite the likelihood of achieving modest profits as a result of their operations in 2011. It should be noted, however, that Lebanese banks operating in Syria secure private capital for their foreign branches, and so are not expected to reflect negatively on or damage trust in other Lebanese banks. What’s more, the challenges created by the sanctions imposed on Syria have been circumvented due to the responsible reaction of the Lebanese Central Bank in addition to the private banking sector. Riad Salameh, governor of the BDL, Lebanon’s central bank, has made it clear that the Lebanese banking system is clean of any Syrian public funds and thus is not endangered by any restrictions imposed on them.

Third, the Lebanese Canadian Bank crisis and the consequences that resulted from it have undoubtedly made Lebanese banks more stringent in terms of credit facilities. Earlier this year, the Treasury Department sanctioned the bank for laundering money for Hezbollah. And according to a senior banker in Lebanon, Lebanese banks have exaggerated their reactions to this turn of events. They have become “unnecessarily” strict when it comes to granting of such facilities, especially to individuals.

All of this shows that despite the many sticks thrown in the wheel of the Lebanese economy, the outcome has been generally better than expected. The early debt-swap deal at favorable rates, the limited effect of the sanctions on Lebanese banks, and the adamant cooperation of Lebanese authorities in the Lebanese-Canadian Bank crisis are all signs that the system is surviving. However, in addition to the many economic problems in the country, the limited growth prospects this year clearly indicate that something needs to be done.

According to data from the Ministry of Finance, the value of Lebanon’s public debt rose to about LL80.496 trillion ($53.7 billion) by the end of August, an increase of LL1.198 trillion from what it was during the same period last year. It should also be noted that the decline in domestic debt in the portfolio of commercial banks has coincided with a rise in domestic debt in local currency in the Central Bank’s portfolio. The Ministry of Finance issued $1.2 billion in eurobonds on Aug. 2 in the two groups: the first $500 million due in November 2016 at an interest rate of 4.75 percent, the lowest interest rate achieved by Lebanon on the issuance of foreign currency since 1994; and the second, $700 million with an interest rate of 6.2 percent, through the reopening of a eurobond due in October 2022 at an interest rate of 6.1 percent. Demand for bonds was four times the value of bonds on offer, with foreign investors obtaining 21 percent of all bonds issued.

Lebanon’s debt will remain high by all standards, but the problem is not related to interest rates currently paid on bonds and loans; rather, it has to do with the enormity of the steadily growing public debt and the lack of a clear strategy to deal with it. Current expenses such as public wages and social security, which make up the largest portion of overall spending, are left unchanged. Even taking into consideration predictions of moderate growth either this year or next, domestic revenue is not expected to grow enough to lead to a surplus in the budget that might be put toward reducing the ratio of debt to gross domestic product, or at least stop the debt from creeping any higher.

This reality indicates that the indebtedness of Lebanon will remain a thorny issue that will result in future challenges for the country. If the regional situation was to worsen and the margin of risk widen, Lebanon would have to consider alternatives to ensure the availability of liquidity and monetary stability as it suffers from the expected rise in interest rates.

These changes and facts indicate that now is best time for Lebanon to address its public debt and renegotiate some loans while thinking about new methods it can use to raise funds to restructure its debt. Due to the ambiguity of this period, it is considered more favorable to act now. The near future will be fraught with many dangers, while the debt, consuming so much foreign currency revenue, continues to drag down the economy.

Ibrahim Saif is a senior associate at the Carnegie Middle East Center in Beirut.

Lebanese middle class diminishing in size February 01, 2012 02:51 AM (Last updated: February 01, 2012 01:38 PM) By Paula Jahn The Daily Star

Leaving Lebanon: Many middle class families prefer to live abroad to maintain a good standard of living.


BEIRUT: Lebanon’s once-thriving middle class is now shrinking in number as high inflation, relatively low wages and a lack of major investments in productive sectors take their toll on the population.Lebanon’s recovery from its 1975-90 Civil War has been less than complete, leaving a democratic society with virtually no middle class – normally the group that democratic nations depend on to prosper.

That war “basically wiped out anything that’s called a middle class in favor of a small minority ... about 15 percent of the population, which became very rich,” says economist Simon Neaime.

Neaime, a professor of economics at the American University of Beirut, says that most of the educated class, which used to form the backbone of the Lebanese economy before the Civil War, was forced to seek better jobs abroad to maintain the lifestyle which they enjoyed prior to the conflict.

As of 2011, the World Bank classified the middle class in Lebanon as those people who earn between $15,000 and $27,000 annually.

But the World Bank statistics tell Lebanon’s actual story. Citing its (World Bank) numbers, Neaime estimates that only 5-10 percent fit this category. Seventy percent of the population generates an annual income of less than $10,000 annually while 15 percent live in abject poverty.

Before Lebanon’s Civil War, says Neaime, Lebanon’s middle class made up 50-60 percent of the population, “and then another 20 percent [were] on the two tails, a normal distribution.” That middle class was a vibrant mix of store-owners, small businessmen whose taxes were the backbone of a healthy economy.

Before the war, Beirut was proudly referred to as the Paris of the Middle East, while Lebanon was touted for its leaders as the regional model of tolerance and prosperity – attributes unthinkable without a functioning middle class.

But few things have been the same since the conflict. Western Europe’s middle class rose quickly from the rubble of World War II, helped by massive U.S. aid and support from local governments racing to re-establish healthy capitalism as a bulwark against the Soviet bloc.

Domestic economic rehabilitation programs, such as Solidere – the Lebanese economy reconstruction program – have undoubtedly made a difference in boosting Lebanon’s economy, but at the cost of forsaking the middle and lower class while pampering the upper classes.

Meanwhile, small wage increases imposed in Lebanon by the government as a means of silencing the threat of upcoming strikes are often offset by constantly increasing prices of commodities. “The increase [in wages] will [erode] before it gets in our hands due to rising prices across the board,” photographer Mahmoud al-Tawil recently told the web magazine Al-Shorfa.com, in comments reflecting widely held sentiments.

Alongside rising commodity prices, the would-be middle class is being squeezed by real estate prices that are at an all-time high. Ironically this trend has been fueled by Lebanese who have gone abroad for work due to the lack of good job prospects at home – most companies in Lebanon offer relatively low wages to engineers, architects, MBA graduates and lawyers.

A 2008 Center for Global Development study shows that on average, a Lebanese working abroad earns 31.6 percent more than he would at home. When he does return, he is relatively flush with cash – and his purchasing power on the real-estate market drives prices upward, pushing properties out of reach for those who stayed in Lebanon.

Traditionally, low interest rates expand the real-estate bubble, with investors rushing in and hoping to resell at a higher price within a few years. This speculative market also pushes up prices – a three-bedroom apartment in Beirut that cost $300,000 10 years ago now can fetch a price of more $700,000 or more, depending on the location and condition of the building.

Rents in the capital and the northern Metn have also skyrocketed, prompting newly married couples with university degrees to seek homes outside Beirut.

Inflation further compounds hardships, with an estimated annual inflation rate of 6 percent in 2011, though many economists maintain that the real figure is in fact far higher, due to rising prices across the board.

Neaime says that while the problem is global, “the increase in food prices, the increase in oil and gas prices ... is affecting goods and services locally.”

Lebanese expatriates, especially those who are based in the oil-rich Arab Gulf states, inject an average of $8 billion into Lebanon’s economy and this massive cash flow has helped the balance of payments.

As for restructuring the Lebanese economy, the process included a strong focus on the country’s banking and tourism sectors, a good short-run boost in the Lebanese economy.

As economist Markus Marktanner, previously a professor at AUB, notes, “these are not favorable industries to create a middle class. Both industries have very weak impacts on the labor market.” Tourism can be detrimental to a less than stable economy, Marktanner adds, as it “mostly demands seasonal and unskilled workers.”

“During the Civil War, Lebanon’s economic base as a safe haven eroded and the Gulf emerged as the new hot spot,” explains Marktanner. “The Gulf then also attracted many Lebanese and what could be a middle class in Lebanon became an expatriate middle class of Lebanese outside the country.”

As more and more Lebanese left the country in search of better opportunities, the local economy found less need to cater to the middle class.

Today, Marktanner says, Lebanon is left with no meaningful economic base, as it offers little stability. Those who have the chance to migrate are doing so, particularly college graduates, and perpetuating the cycle by draining the country of a future middle class.

Neaime sees some trend reversal, with salaries for professionals slowly creeping upward at a rate that beats inflation. But some of the revival might be temporary, with those choosing to stay often doing so because the global economic crisis has closed doors of opportunity that were open just a few years ago.

“It’s a combination of an exodus back to Lebanon accompanied by some improvement in the local salary scale,” he says.

Sari Hanafi, professor of sociology at AUB, speaks of a “migration culture” in Lebanon. Lebanese have more opportunity than their neighbors to attain a decent level of higher education, giving them greater mobility than their neighbors to go where the jobs are – including abroad. In Lebanon, Hanafi says, getting a good job is less a matter of skills or education and “more about the connections.”

The country’s open society also means that a young Lebanese college graduate’s goals are defined by Western-inspired consumerist goals unreachable at home.

Hanafi says that a Lebanese male of 25 considers owning a Mercedes and a nice apartment as minimum components of a nice life. Consequently, he will go abroad to support his definition of an “adequate” lifestyle.

In their own words, students at AUB echo Hanafi’s views, with economics student Afif al-Charif summing it up succinctly.

“Of course I plan on leaving Lebanon. Why would I stay?” he said. “Lebanon is not a stable country, everything seems unstable ... I could make three times more money if I worked abroad.”

Francois Bassil: Lebanon may suffer Greece’s fate February 03, 2012 02:11 AM By Osama Habib The Daily Star


BEIRUT: A leading Lebanese banker fears a Greek economic scenario in Lebanon this year if the government fails to take immediate action to reduce the budget deficit, cut waste and implement broad reforms.

“If the debt continues to rise in the same high tempo then I won’t be surprised if Lebanon experiences the same scenario in Greece, whose economy is in total shambles,” Francois Bassil, Chairman of Byblos Bank, one the three largest banks in the country, told The Daily Star in an exclusive interview Thursday.

Bassil reiterated that Lebanese banks are not willing to lend the government more money if Prime Minister Najib Mikati and his ministers fail to adopt crucial measures to cut the size of the public debt, which has reached alarming levels.

Lebanese banks have been financing most of the public debt since late former Prime Minister Rafik Hariri embarked on a bold drive to rebuild the country.

The Central Bank of Lebanon and local banks hold most of the debt, which is expected to reach $60 billion at the end of 2012 through subscriptions to treasury bills and sovereign eurobonds.

Bassil made it clear that Lebanese banks will roll over the outstanding debts each year, but have no intention or desire to increase their exposure to this debt.

Mikati has so far been unable to implement a number of the reforms that he promised because of sharp political divisions between ministers.

Finance Minister Mohammad Safadi presented the 2012 draft budget to the Cabinet for approval last month, but several ministers, mainly from the Change and Reform bloc, knocked the bill down the moment it became public.

Safadi had proposed raising the Value Added Tax to 12 percent from 10 percent, and raising the tax on interest rates on customer deposits to 7 percent from the current 5 percent.

The finance minister insists that a hike in taxes is unavoidable if the government wants to allocate greater funds for electricity, water and infrastructure projects.

According to data from the Finance Ministry, the value of Lebanon’s public debt rose to about LL80.496 trillion ($53.7 billion) by the end of August, an increase of LL1.198 trillion from what it was during the same period last year.

Meanwhile, as domestic debt has declined in the portfolio of commercial banks, the Central Bank has simultaneously assumed a greater share of sovereign bonds.

The Finance Ministry issued $1.2 billion in eurobonds on Aug. 2, 2011, to be released in two stages: the first $500 million in November 2016, at an interest rate of 4.75 percent, the lowest interest rate achieved by Lebanon on the issuance of foreign currency since 1994; and the second, $700 million in October 2022, at an interest rate of 6.2 percent.

“We will swap the outstanding bonds with other bonds at the current market rates. Interest rates are relatively low now, but they may rise again if no solution for the public debt is found,” Bassil said.

He emphasized that banks are ready to help the government if the latter showed willingness to reduce the size of the public debt, cut waste in all government departments and allow the private sector to take part in essential projects in the future.

“We had the Paris I, II and III donor conferences over the past years, but we have not seen any reform being implemented” the banker said.

Bassil questioned why the government does not seek the help of banks and the private sector to find a solution to the chronic electricity crisis.

“I don’t believe we will have proper electricity round the clock if the concerned ministers reject the assistance of the private sector,” he said.

Energy and Water Minister Gibran Bassil wants the government to secure $1.2 billion in loans to boost electricity supply by 700 megawatts.

But Mikati and Safadi seemed reluctant to proceed with Bassil’s plan because it entails borrowing more money from the market, a step that is certain to raise the budget deficit.

The energy minister rejected the recommendation of some ministers to seek loans from Arab funding bodies at very low interest rates with long maturity.

The Byblos chairman warned that Lebanon can’t afford to sleep on the electricity crisis for a long time as this would make conditions even worse.

He also stated that he strongly favors a partnership between the private sector and the government.

“The energy minister’s plan is perfect, but its execution is very dangerous because the government has to borrow more money and count more on service providers,” the banker explained.

He believes that the best choice for the government in respect to energy is to seek one of three options: private and public partnership, Build Operate and Transfer schemes, and concessions.

“The government must first complete all the administrative appointments and create an energy regulatory authority to ensure that all the projects implemented are done in a transparent manner,” the banker said.

He also expressed fear that tenders will be awarded to companies that are close to political parties in the country.

He said Safadi’s budget is close to LL21 trillion, meaning that the public debt will rise considerably.

Bassil also rejected raising taxes at this critical moment. “Taxes will scare away investors. The government should improve collection of taxes instead of contemplating higher ones,” he said.

Asked about the projected profits of Lebanese banks in 2012, the chairman said he expects net income this year to fall slightly compared to 2011 if the situation remains unchanged.

Business outlook uncertain in 2012 February 02, 2012 02:05 AM By Mohamad El Amin The Daily Star

BEIRUT: Wages will increase by an average of 6.5 percent across Lebanese industries throughout 2012 to be partially offset by a 5.8 rise in inflation, a study published Wednesday by Hay Group, an international human resources consultancy, forecast.However, the study, which analyzes data gathered from 13,000 employees across 100 Lebanese businesses, anticipates a long period of uncertainty as many businesses remain reluctant to implement a recent government decision to increase wages.

“Pay is an emotive topic in Lebanon following the changes put forward by the Cabinet. Organizations who took part in our study forecast a modest increase in overall compensations of 6.5 percent given that it will be months before any changes can be implemented within organizations,” Wendell D’Cunha, a manager at Hay Group said in a briefing in Beirut.

The Cabinet had decided in mid-January to increase salaries for private sector employees setting the minimum wage at LL675,000, up by some LL175,000. Other salaries would increase by a maximum of LL299,000.

The study reveals that wage increases in 2011 were reported by surveyed businesses at a solid 6.9 percent, only to be offset by a 5 percent rise in inflation.

“The increase in 2011 matched Hay Group’s forecast based on company data, levels of economic growth and inflation in Lebanon. Real salary growth was modest at 1.9 percent after accounting for inflation at 5 percent. This gives a more accurate reflection on employee’s true increase in purchasing power,” D’Cunha said.

The report expected that the overly inflated wages reported in 2009 could be seen again in late 2012 after the wage hikes are implemented.

“We will see significant rises in pay in the near to mid-term future. This will have a wider impact on the Lebanese economy, as was the case in 2009 when the last amendments to the labor law were passed,” D’Cunha added.

Lebanon’s unique human capital, the report argued, is both a challenge and an opportunity for employers as the job market remains influenced by other regional markets, where Lebanese are active participants.

“Lebanon has a highly educated and skilled workforce including a sizeable diaspora working in Gulf countries. When these global nomads return home, they have heightened expectations of employee packages. In tandem with this, Lebanon has a relatively high unemployment rate especially among the younger generation and this allows employers to have the pick of the talent,” said the report.

According to the report, the highest paying industry sectors in Lebanon are construction and construction material related industries. Employees in these sectors command a premium and are paid 6 percent above the general market. The consumer goods sector also pays 4 percent above the market average across other sectors.

The report suggests companies’ recruitment remains focused on hiring in the sales, marketing and administration job functions this year. Jobs in engineering, finance and accounting, as well as research and development, are also high in demand, according to the report.

Companies report 75 percent sales as the key job function they require for achieving growth, the report said.

However, not all companies are upbeat about hiring prospects, despite significant improvement recorded in comparison with past years.

The study said: “14 percent of businesses surveyed have expressed difficulty in retention of their staff compared to a higher 19 percent and 29 percent in 2009.”

The report said employee turnover ranged from 3 percent to 18 percent while the median is 8 percent. New joiners on the other hand ranged from 7 percent to 24 percent, while the median is 16 percent.

Employee turnover is a statistical figure showing how long employees tend to stay at a given workplace. The higher the rate the more likely employees are to change their jobs in any given year.

“Lebanon has a talented and internationally mobile workforce and employers will face challenges over the coming months in motivating and engaging these employees during a period of uncertainty,” the study concludes.

Accounts court to submit final report on gasoil scandal February 02, 2012 02:06 AM The Daily Star


BEIRUT: The Court of Accounts will submit its final report on “the red gasoil scandal” Tuesday as fuel prices continued to climb for the seventh week in a row.

“We are currently in the process of a final review of the report after a primary report was finalized earlier. Head of the court Aouni Ramadan informed Prime Minister Najib Mikati of the investigation’s updates and its primary results today [Wednesday],” the COA attorney general told the Central News Agency.

Sources close to the court had told The Daily Star earlier that 10 public employees were being named in the investigation. Bassam Wehbe told the CNA that the court’s investigation was focused on exposing the role of around 100 distribution companies who were involved in the hoarding of VAT-free gasoil.

Last week, the Court of Accounts launched an investigation into allegations that distribution companies had profited illegally by purchasing $80 million of red gasoil that had been exempt from value added tax but made the gasoil available to consumers only after the government resumed charging VAT.

Reports said distribution firms illegally reaped an estimated $800,000 in profits in 24 hours.

But oil sector experts suggest hoarding was taking place throughout the VAT-free period.

The prices of gasoil and diesel are expected to fall once Parliament convenes and approves a recommendation by the parliamentary Budget and Finance Committee to permanently exempt the commodity from VAT.

This measure would prevent distribution companies and gas station owners from profiteering from hoarding VAT-free gasoil. – The Daily Star

Plenty of solutions to electricity crisis, but no will February 04, 2012 01:52 AM By Osama Habib The Daily Star.

BEIRUT: Energy experts and officials are still at loggerheads over the best way to end the long-running electricity crisis with some favoring full or partial privatization of the sector while others insisting that the state can do the job.

This debate has jeopardized all attempts to tackle the electricity crisis as the current government failed again to allocate the necessary money to finance Energy Minister Gibran Bassil’s plan to boost production by 700 MW.

All sides agree that more investments are needed for the electricity sector.

They also agree that most of the existing power plants may stop functioning one day due to their old age and lack of maintenance.

But these discussions have proven futile while the state of the electricity sector has deteriorated further with power rationing reaching its highest levels since the end of the Civil War.

“It is the duty of the government to end the electricity crisis and to give affordable and efficient power around the clock,” Roudy Baroudi, a leading energy expert, told The Daily Star.

Baroudi argued that rehabilitating the electricity sector was not a big deal if true intentions were available.

“We are not reinventing the wheel. The most important thing is to have political consensus on whatever plan they have at their disposal,” he said,

Baroudi added that no major investment had been made in the sector since 1998.

“If Lebanon has between 4 and 5 percent growth in energy need then investment in this sector is badly needed. However, no such investment has taken place since 1998 and this has made the situation worse,” he said.

It has become common knowledge that the current electricity production which now stands at 1,500 MW is not sufficient to meet the growing demand for electricity.

To meet the current demand, energy experts say that production should rise to at least 2,400 MW, adding that even this goal may not be sufficient in the next four to five years due to population growth and the construction of more housing units, factories and malls across the country.

Bassil and his bloc accuse Prime Minister Najib Mikati of withholding funds from the Energy Ministry to implement the 700 MW plan.

They reiterate that Lebanon will lose $1.2 billion each year if electricity production is not boosted and new alternative energy secured.

Bassil refused to negotiate with the Arab funds for a soft loan, claiming that this process was too long and tedious.

But Mikati and Finance Minister Mohammad Safadi have said repeatedly that ending the electricity crisis is in the interests of all Lebanese, irrespective of their political affiliation.

However, Mikati and Safadi want all the contracts for the electricity plants to be handled by the regulatory authority for energy which has yet to be formed by the Cabinet.

Baroudi said it was in the interests of the government to appoint the regulatory authority to ensure all the transactions and contracts were awarded in a transparent manner.

“If a firm or a mall experience a power cut for an unknown reason they can complain to the regulatory authority to take the proper measures,” he said.

Baroudi supports the idea of standby electricity such as power barges and standby power plants that can be easily installed next to existing power stations.

“The government can rent these standby plants for two or three years until the construction of new stations in the country are completed,” he said.

But a former senior official, who spoke on condition of anonymity, told The Daily Star that the former government refused to endorse a plan submitted by the former energy minister to install standby power plants under different pretexts.

“It is not true that there is a liquidity crunch. If the government can issue $1 billion in Eurobonds to raise money this issue is usually oversubscribed. If they [government] can raise money through Eurobonds then why can’t they do the same for electricity,” he asked.

The former official said the state was already incurring $1.5 billion in losses due to the electricity crisis.

“If the former government had agreed to install the standby plants three years ago this would have given ample time to build more plants in the country to reduce the rationing,” he said.

Baroudi and the former official warn that the existing power plants may stop functioning without any prior warning.

“These plants are not designed to run forever. They will run out of steam if they are not upgraded immediately,” the former official warned.

Lebanese banks have offered the state a chance to take part in the rehabilitation of electricity either through a build, operate and transfer system or through a partnership with the state.

Bur to this date, the government and the Energy Ministry have not engaged in any serious talks with the commercial banks on the modernization of the electricity sector.

Mabroukkkk,we won't have any electricity one day

^^ YAAAAAAAAAY

:banana: :banana:

Dim and dimmer Shane Farrell, February 5, 2012

Over 20 years after the end of the civil war, Lebanon still can't solve its electricity problem, causing the nation anger over long shortages. (AFP photo)
Twenty-four hours of electricity a day, a privilege many in even less-developed countries than Lebanon take for granted, remains a pipedream here, at least for the short to medium term. Lebanon currently has available around 1,500 megawatts of power, with a demand of 3,000 megawatts during peak summer season. Meanwhile, power plants and electricity supply lines are old and in frequent need of repair or maintenance, which largely explains the sharp reduction of power experienced across Lebanon in the past month.

The situation is certainly not helped by political squabbling between rival parties, which delays decisions to improve the situation.

In the longer term, a $1.2 billion package was approved by the cabinet late last year for a project that will increase Lebanon’s energy output by 700 megawatts. According to Raymond Ghajar, the spokesperson for Energy Minister Gebran Bassil, the tender for this will be launched “within a month or so.”

However, 700 megawatts is still insufficient to meet demand at current levels, let alone in several years’ time when it is estimated to be implemented.

Following criticism of his performance by politicians and people protesting the increased electricity problems, especially in areas outside Beirut, Bassil has placed blame on his predecessors and rival politicians, whom he argues are obstructing his work.

Future MP Mohammad Qabbani, who heads the parliamentary committee on energy and is one of Bassil’s harshest critics, says that the solution to the problem is to privatize the sector, in accordance with Law 462, which was passed in 2002 but has not been implemented.

Qabbani told NOW Lebanon that “The minister does not want this to be done because he wants to run individually a sector that has billions of dollars in it. The only reason for that is corruption.”

Ghajar disputed the accusation that the ministry is blocking Law 462, saying that it has made its required amendments and submitted the draft to the cabinet. “This has to go back to parliament… We already did our work a month ago.”

Another element in the dispute is foreign assistance, both monetary and material. Bassil rejected Arab funding to finance the electricity plan because he said he had sent a set of conditions to the fund six months earlier, but had not received a response. Several Future bloc MPs claim that Bassil said there is no need for financial aid.

Recently, Iran offered to provide Lebanon with 500 megawatts in one year, bringing it up to 1,000 after a second year, through the construction of electricity stations as well as providing electricity via Syria, which would take six months. However, this has received criticism by Future bloc MP Assem Aaraji, who said that this would come at a “political cost.” Qabbani, on the other hand, told NOW Lebanon that he would be “ready to accept any support in the field of generating electricity, whatever the source is [so long as] it should be transparent and have good conditions for Lebanon.”

Meanwhile, Denmark has offered to construct windmills capable of generating 140 megawatts of electricity in the north of the country that would then be sold to the Lebanese state. If the project were agreed to, the windmills would be functioning in 13 months, according to Qabbani, who does not believe the offer will be accepted by the Energy Ministry.

But none of this improves the situation in the short-term. For that, Bassil is pushing for offshore boats with generators that would supply a yet-to-be-agreed-upon amount of electricity to the country during peak demand season, a similar situation to what occurred last summer. Ghajar told NOW Lebanon that the details of this would have to be discussed, although he hopes the project would be implemented before the summer.

Qabbani is critical of this move, however, saying that it is not an investment, but merely a stopgap solution.

In another development, discussions are ongoing about reducing the amount of electricity allotted to Beirut in order to resupply other areas of the country that experience up to 12 hours of blackouts per day. This is a move Bassil is pushing for, and which will need the cabinet’s approval, according to Ghajar, as the government previously decided to guarantee around 21 to 22 hours of electricity to the capital per day.

“We can’t do that unless the government revokes its previous decision [to offer Beirut 21 hours a day].”

^^ YAAAAAAAAAY

:banana: :banana:

Loool Hassoun :nuts: we're officially fucked up

Quarter of Lebanese firms will be hiring soon
February 13, 2012 02:14 AM

The Daily Star


BEIRUT: Around 24 percent of Lebanese firms will “definitely be hiring” in the next three months, according to a poll conducted by regional job search website Bayt.com and consulting firm YouGov.The percentage is forecasted to significantly increase to 68 percent within a year, the study showed.

But it added that hiring expectancy in the coming months would be slightly lower than it was in the fourth quarter of 2011.

Of the 54 percent of companies in Lebanon that are “definitely” or “probably” hiring throughout the next three months, the majority (42 percent) will be looking to hire less than five people, while 25 percent reported that they will look for 6 to 10 new employees.

Across the region, 31 percent of respondents prefer candidates with strong computer skills and prior experience in a managerial role.

In Lebanon, team management proved to be the most sought after experience to 36 percent of the corporate respondents, followed jointly by computer skills and sales and marketing experience, according to 25 percent of the respondents.

The survey highlighted the three most desirable skills for Lebanese employers as the ability to be a flexible team player (50 percent); good communication capabilities in English and Arabic (44 percent) and the ability to work under pressure (43 percent).

The top five academic qualifications most desired by local employers are business management (34 percent), computer science (24 percent), engineering (23 percent), administrative qualifications (22 percent) and information technology (20 percent).

“Employment trends are relatively similar across the region, with roughly a quarter of MENA companies considering hiring new staff in the coming months, and in a year’s time,” said Bayt.com vice president Suhail Masri.

The data for the survey was collected online from Jan. 2 to Jan. 24, 2012. Results were reported on a base of 9,238 respondents.

Countries that participated are the UAE, KSA, Kuwait, Oman, Qatar, Bahrain, Lebanon, Syria, Jordan, Egypt, Morocco, Algeria, Tunisia and Pakistan.

Real advertising expenditures in Lebanon slip 3.3 pct in 2011

February 13, 2012 02:14 AM

The Daily Star



BEIRUT: Real advertising expenditures in Lebanon slipped to $174 million in 2011, shedding 3.3 percent from $180 million in 2010, according to a forthcoming report in Arab Ad magazine. The advertising sector results were disappointing following a rapid growth of 15.4 percent in 2010 and 18.5 percent in 2009, according to Arab Ad, as reported by Byblos Bank’s weekly newsletter. The full report is due to be published in the February issue of Arab Ad.

Television attracted most of the expenditures reporting revenues of $65.5 mln (37.6 percent), followed by outdoor billboards at $45 mln (26 percent), newspapers with $32 mln (18.3 percent), magazines with $14.5 mln (8.3 percent), radio with $12 mln (7 percent), online with $3.5 mln (2 percent) and cinemas with $1.5 mln (1 percent).

The report said cinema advertising rose sharply in 2011 by some 25 percent. Online advertisements also registered a significant 6-percent growth followed by television advertising which continued to grow registering a decent 4-percent growth.

However, newspaper advertising dropped by 14 percent, followed by outdoor billboard ads, which declined by 6 percent. Radio advertising revenues also fell by 4 percent, followed by magazines, which registered a 3-percent decrease.

In terms of revenues, LBCI television station topped the list. An-Nahar came first among newspapers and Nadine was the top social weekly publication, the report added.

The report said Sawt al-Mada came first among non-music radio stations and Sawt al-Ghad ranked first among music radio stations.

The company Transmed was the biggest individual spender on advertising in Lebanon, followed by Khalil Fattal & Fils, L’Oreal Liban, Solvid, Amana Care, Nestle, Abi Ramia Brothers, Fransabank Group, BankMed and Obegi Consumer Products.

Further, Marinas Turbo was the top-advertised brand in all media, followed by XXL, Freeze, BankMed, Moukarzel, Fransabank, Bank Audi, Sedar, Buzz and BLOM Bank.

The report showed BBAC and Byblos Bank were the top two advertised brands in Lebanese cinemas, while BankMed was the most advertised in the press.

Marinas Turbo was the top advertised brand on television, Samsung was the most advertised on outdoor billboards, and BO18 Classic spent the most on radio promotions.

The report indicated that political news bulletins attracted 32 percent of total TV advertising, followed by comedy programs which attracted a 9-percent share.

Political subjects attracted 37 percent of print advertising, followed by social news with 16 percent.

It also added that the hygiene and beauty care sector was the top spender on advertising last year, while advertising by the automotive sector dropped sharply following cuts of 50 percent on budgets allocated for television campaigns.

According to IPSOS-STAT, monitored advertising expenditures in Lebanon reached $1.24 bln in 2011, almost unchanged from 2010. It said the discrepancy between monitored rates and the actual rates (which are not publicized) remains 7.1 larger than real advertising expenditures.

The trend is attributed to big discounts, inflated rate cards, big barter deals and a lack of transparency in the industry in reporting earnings.

Monitored spending on TV is up to 14.3 times larger than actual spending, followed by radio with a 4.1 ratio, magazines with a 3.9 ratio, outdoor billboards with a 3 ratio, newspapers with a ratio of 1.7, and cinema at a 1.6 ratio.

Minivans hike fares by LL500, citing gas prices, wage increase February 14, 2012 02:04 AM The Daily Star


BEIRUT: Beirut’s cheapest way of getting around became less of a bargain after minivan drivers across the capital hiked fares from LL1,000 to LL1,500 Monday, citing rising gasoline prices and a recent wage increase decision.

The head of Al-Walaa Transport Association Abdallah Hamadeh, which represents most minivan drivers, told The Daily Star the decision was taken independently by driver groups without consulting transportation unions.

Hamadeh said the unions were not involved directly in the decision, which remains unofficial but had already taken effect as of Monday.

But he added that the unions understood the reasons behind the step.

“The drivers are no longer capable of keeping the fares at a low level. At LL1,000, they can barely make ends meet,” he said. “They [drivers] do not benefit from the [recent] wage increase decision but will suffer from the consequences of the measure in terms of increases in prices and rent.”

In a statement issued Monday, Transport and Public Works Minister Ghazi Aridi said his ministry was the only authority in charge of reviewing fares for public transportation.

“I hope no side takes a wrong step,” he said, warning that his ministry would clamp down on arbitrary increases in fares. “The current fares are still valid and will stay unchanged until reviewed by the ministry [and] everyone should abide by it.”

According to Hamadeh, a lack of government regulation of the public transport sector is wreaking havoc on both the drivers and customers.

Popular minivan routes in Beirut include the No. 2 minivan from Hamra to Ashrafieh, the No. 5 from the airport to Dawra, and a No. 4 from Hamra to Hadath.

Abdallah Najdi, head of the Association of Public Transport Unions, said that the service taxi and regular bus fares remain unchanged at LL2,000 and LL1,000 respectively.

Gasoline up by LL500, diesel up by LL300
February 15, 2012 09:54 AM

The Daily Star



BEIRUT: Gasoline prices rose Wednesday by LL500 over last week for the 98-octane graded gasoline and LL400 over the same period for the 95-octane graded gasoline.

The price of 98-octane graded gasoline is now LL35,00, while the price of 95-octane graded gasoline is now LL34,300.

The price of diesel was up LL300 over last week and now costs LL30,100. The price of fuel oil, according to the latest fuel price update by the Energy and Water Ministry, is also LL30,100.

Diesel prices jumped late January after the lifting of an approximately month-long LL3,000 subsidy on the fuel.

Kerosene was up LL200 over last week and now costs LL29,200.

All prices are per 20 liters.

Fuel prices rise in line with global trends February 16, 2012 01:33 AM The Daily Star


BEIRUT: Gasoline and fuel prices continued to rise for the fifth week in a row. According to a statement by the Energy Ministry, the price of 98-octane graded gasoline price rose by LL500 to LL35,00, while 95-octane graded gasoline rose by LL400 to LL34,00.

The price of diesel is up LL300 and now costs LL30,100. The price of fuel oil is also LL30,100. Kerosene was up LL200 and now costs LL29,200. All prices are per 20 liters.

In an interview with The Daily Star, the head of the Oil Importers Association Maroun Chammas reiterated that the increase in fuel prices is a result of a hike in oil prices globally.

Government threatens to cancel permits of drivers hiking rates
February 18, 2012 02:06 AM

The Daily Star



BEIRUT: The government threatened Friday to cancel the license of any taxi or minibus driver who refuses to comply with official rates.

This move came following a meeting headed by Prime Minister Najib Mikati at the Grand Serail and attended by Interior Minister Marwan Charbel and Public Works and Transport Minister Ghazi Aridi along with representatives of the transportation and public buses unions.

The government took the decision after some minibus drivers shut the roads in the southern suburbs with burning tires and rocks to protest the attempts of Aridi to enforce the old fares on all the drivers.

Sources said that many minibus drivers called off their strike and removed all roadblocks after the government threatened to revoke the licenses of striking drivers.

Some of the minibus drivers had raised their fares from LL1,000 to LL1,500 per passenger under the pretext of high gasoline prices.

The Finance Ministry agreed three months ago to subsidize bus and taxi drivers in an attempt to alleviate the high cost of fuel for the drivers.

“One of the big bus transportation companies committed the grand sin when it unlawfully hiked the rates, although they realize the government had subsidized the cost of fuel three months ago,” Aridi told reporters at the Serail.

He added that the ministry is willing to discuss the grievances of all drivers in an open mind but it will not tolerate any person who acts on his own and without consulting the ministry.

“The drivers have the right to strike but they don’t have the right to close the roads and force the passengers out of the minibuses and taxis,” Aridi said.

He added that the behavior of some taxi and minibus drivers is appalling, noting that some passengers were assaulted just because they were riding other cabs and minibuses.

Aridi called for a meeting with the finance minister and drivers unions to discuss the surge of gasoline prices.

Trouble ahead as Parliament mulls rent law reform February 18, 2012 02:06 AM By Paula Jahn The Daily Star


BEIRUT: With some old apartments in prime Beirut locations being leased for as low as $120 a year, politicians and economists agree that the country’s outmoded rental system is due for a makeover.

But as Parliament debates proposed changes, experts warn of trouble ahead for landlords and tenants alike.For landlords, the problem is simple: Rents paid by the tenants according to the old law are far lower than the prevailing prices in the market, and what was good in 1992 no longer applies.

According to the vice president of the Committee for the Rights of Tenants Laws, the old law has allowed some 170,000 of the Lebanese capital’s 210,000 tenants to pay rent substantially below market value.

That value has increased immensely due to triple-digit inflation over the past two decades.

But with wages still lagging far behind rising prices, many Beirut residents could find themselves forced to move, not only from homes they have lived in for decades but also from a city that has suddenly become unaffordable.

And although apartments can be leased for prices set by the market, once Parliament scraps rent controls – probably in the next couple of years – landlords also have reason to worry.

Economist Ghazi Wazni forecasts a glut of rental property that few will be able to afford. “Supply will grow, and demand won’t compensate,” Wazni says. “We will see the Lebanese real-estate market in a quasi-freeze.”

Leases on apartments signed before 1992 are governed by a rental law drafted in 1975 that worked only as long as inflation was kept in check.

But by 1990 the Lebanese lira – worth nearly 50 cents in 1975 – was valued less than 0.05 cents. The Central Bank finally pegged the lira in 1995 to LL1,500 per dollar, where it remains today.

At the same time, driven by foreign investors, Lebanon’s real estate market boomed, with a two-bedroom flat in a desirable Beirut location now worth around a $700,000, up from around $300,000 few years ago.

But that bubble could be about to burst. And if it does, it will compound potential problems for owners already sitting on real estate they are unable to lease out because the end of rent controls have made their apartments unaffordable for the majority.

The real estate downturn that had already begun in 2010, parallel with external regional crises, shows no signs of recovery.

An IMF report earlier this month said “domestic demand is depressed, slowed down by falling investments.”

The IMF blamed “regional uncertainty,” and Wazni echoes those concerns, noting that Lebanon’s “economic situation is tied very much to the political situation.”

The volatile situation in neighboring Syria, which used to have a strong influence on the country, has also dealt another blow to the country’s real estate market with sales in 2011 falling by more than 18 percent.

With so many problems, economists say that the new real estate law will likely come with built-in cushions.

Details being weighed in Parliament include protecting tenants by requiring landlords to give them up to eight years notice. Landlords in turn would have the option of speeding up that process by buying out tenants, paying them up to 20 percent of the value of the apartment if they leave immediately. Also being contemplated are bank credit facilities allowing tenants to find alternate housing during the transition phase.

But the changes come with a price tag that will have to be picked up by the government, notes economist Ramzi Mabsout.

In other words the government may subsidize part of the interest rates on the loans the tenants will obtain from commercial banks to buy new apartments outside the capital.

This, according to Mabsout, will further strain the government’s budget.

And the new law could poke an even bigger hole in the shrinking real estate bubble, with an increase of rental space after old tenants leave – and few new tenants available to pay rents that now are higher than they had previously paid.

Wazni projects that once the law is put into place, “there will be no more interest from investors in the real estate market, neither domestically nor from abroad.”

Meanwhile, economist Simon Neaime says that “the expected excess supply will for sure lower the existing real estate prices, putting further downward pressure on a real estate market already affected by the regional geopolitical turmoil.”

However, not all real estate brokers and developers share this view.

The IMF report noted a shift in the market, saying that while “the boom was driven by the luxury apartment segments, demand has shifted to small apartments.” This is bad news for luxury real estate owners but could benefit landlords of more modest units, as former tenants move out from homes made unaffordable by the end of rent control and look for cheaper lodging.

Realtor Raja Makarem says the new law could encourage investors to “increase investments into buildings targeting low income families,” leading to a boom in pre-rental renovations.

He also expects many tenants to reach agreements with landlords on new leases that slowly adjust rents to the market instead of sudden jumps.

“An oversupply of apartments is out of the question,” he says.

Fellow realtor Tony Abou Rizk agrees, saying demand will continue to exceed supply in Beirut due to excessively high land prices that restrict new home construction.

“Even if the supply is increased, prices will be unlikely to drop,” he said.

Beirut apartments second most pricey in MENA
February 21, 2012 01:43 AM

The Daily Star


BEIRUT: Beirut apartments are still among the most expensive in the MENA region, and Lebanon’s real estate trend is unlikely to remain sustainable, said a recently issued report.

The report, dubbed “Global Property Guide,” ranked Beirut in 50th place in terms of the price of an average apartment.

Regionally, Beirut ranked second only behind Dubai, the Byblos Bank weekly newsletter said, quoting the same report.

The average price per one square meter in Beirut was put by the report at $3,223, higher for instance than in Saint Croix in the U.S. Virgin Islands, Manila and Buenos Aires, but lower than cities like Bangkok, Dubai and Riga.

Beirut was ranked in 35th place globally and first place in the region in terms of the price of an apartment relative to its rent, or the price-to-rent ratio. This ratio reflects the years of rent that are required to buy a property, and is typically used for measuring the undervaluation or overvaluation of real estate prices.

At 22, higher than the Arab average of 16, the figure indicates that it could take up to 22 years of rent to cover the purchase price of an average 150-square-meter apartment in Beirut.

But the report warned the trend of high prices coupled with low rent yields is unhealthy and is unlikely to be sustained over the long term.

Beirut ranked in 36th place among 82 markets globally and also in second place regionally in terms of average per month rent of a 150-square-meter apartment.

Beirut’s average rent was $1,872 for a 150-square-meter apartment, higher than the Arab average of $1,526 per month.

Oil sector to hold three-day strike March 26, 2012 04:52 PM The Daily Star


BEIRUT: Lebanon's oil sector plans to hold a three-day strike next week over demands that the government allow gas stations to increase the surcharge they impose on customers, President of the Association of Oil Importing Companies Maroun Chammas announced Monday.

Speaking at the association’s headquarters, Chammas said that the Cabinet’s decision to increase the minimum wage has become a burden on oil importing companies.

"There are rights that cannot be neglected and consequently we can't accord one sector preferential treatment over another, particularly since [we are forced] to pay the increase in wages by the Cabinet,” Chammas told reporters.

According to Chammas, the sector is demanding an increase of LL820 on the overall price of 20 liters of fuel to be distributed as follows: LL500 to be added to the surcharge accumulated by gas stations, LL120 for oil transporting tanks, and LL200 for oil companies.

The strike is scheduled to take place on March, 2, 3, and 4.

Chammas also left room for a solution to prevent the strike, which would cripple the country’s economy and possibly cause a fuel shortage.

“Our hands are extended to all those concerned in this matter, especially Energy and Water Minister Gebran Bassil and Economy Minister Nicolas Nahas and Prime Minister Najib Mikati,” he said.

Bassil has rejected the demands of the station owners, saying their actions resemble those of a mafia.

Many gas stations around the country complied last week with a strike called by the petroleum sector over the same demands.

Official statistics show consumer price index up by 3.4 percent April 12, 2012 01:45 AM The Daily Star


BEIRUT: The Consumer Price Index rose by 3.4 percent in February 2012 compared to the same period last year while inflation was up 0.8 percent since January 2012, according to figures released Wednesday by the Central Administration of Statistics.

Various consumer protection groups have long cast doubt on the veracity of the numbers issued by the Central Administration of Statistics.

According to Consumers Lebanon, prices have increased by more than 5 percent since deliberations over a wage increase started some months ago.

However, Economy Minister Nicolas Nahhas told The Daily Star Tuesday that so far no correlation has been spotted between the wage hike that took effect in February and the consumer price index.

Nahhas added that the impact of the wage hike has yet to materialize, saying that it is too early to judge its effect on the economy.

According to the Central Administration of Statistics, the price of food and nonalcoholic beverages rose by 0.6 percent year-over-year in February 2012, while the price of alcoholic beverages dropped 0.4 percent.

The cost of furniture and household equipment rose by 0.2 percent. The cost of health care increased by 0.7 percent.

The cost of leisure-related activities rose by 0.2 percent. Prices at restaurants and hotels went up by 1.3 percent.

The report also showed a rise of 3.2 percent in transportation costs.

Gasoline prices continue record climb, transport sector to strike April 11, 2012 09:17 AM By Dana Khraiche The Daily Star

BEIRUT: Gasoline prices reached a record high Wednesday for the second consecutive week, increasing by LL600 as the transportation sector prepares for its April 19 general strike.

According to the Energy Ministry's weekly price update, the price of 98-octane graded fuel is now LL39,700 while that of 95-octane graded fuel is LL39,000.

The cost of Kerosene gas increased by LL100 reaching LL31,300. The cost of diesel and fuel oil were not updated.

Last week, the price of diesel stood at LL29,200. All prices are per 20 liters of fuel.

The country's public transportation unions said last week they would strike on April 19 to urge the government to cap soaring fuel prices and increase the family compensation allowance.

Bassam Tleis, the head of the confederation of public drivers and transport unions, said the sector would proceed with the April 19 general strike unless demands to cap soaring gasoline prices are met.

“Our demands are for the government to fix the cost of gasoline and diesel oil, amend decrees governing the public transportation sector, increase the family compensation allowance and implement the public transportation plan,” Tleis told The Daily Star Wednesday.

He also warned that the nationwide general strike would be open-ended, but added that unions were open to negotiations.

The public transport unions met last week with both Prime Minister Najib Mikati and Public Works and Transportation Minister Ghazi Aridi to voice their demands and attempt to reach a resolution.

Tleis said that Mikati promised the unions to convene the ministerial committee, established in 2011 and tasked with coordinating with the public transport sector, in order to reach a settlement.

In May 2011, former Finance Minister Raya al-Hasan and Public Works and Transportation Minister Ghazi Aridi brokered a deal giving a monthly state subsidy of LL470,000 to taxi drivers and LL350,000 to truck drivers over a period of three months. The deal did away with a planned open-ended general strike that was expected to cripple the country.

Brent May crude fell 76 cents this week to settle at $122.67 a barrel, having dropped as low as $121.02 and tested below the 50-day moving average of $121.60. The decline in prices is attributed to revived talks between the West and Iran on its nuclear program.

If the talks fail, oil prices are expected to rise.

Public transport unions have also raised doubt about the Energy Minister’s weekly price update, saying that when the price of Crude oil in 2008 reached $149, local prices of gasoline hovered around LL27,000.

Real estate transactions decline in number but gain in value April 14, 2012 01:26 AM The Daily Star


BEIRUT: The number of real estate transactions in Lebanon slowed 4.29 percent in February from a month earlier, but gained in value, a report issued by Credit Libanais Bank showed.

The number of transactions fell to 5,156 in February from 5,387 in January while the value of transactions managed to climb 6.66 percent to $0.60 billion, the report said.

The average value per transaction increased from $104,342 to $116,279 in February.

In Beirut, the average value per transaction increased to $508,709 in the first two months of 2012, up from the 2011 average of $456,018.

The average value per transaction in the Metn and Kesrouan regions also rose respectively to $176,146 and $112,478 from the 2011 average of $171,784 and $97,487.

On a year-on-year basis, the number of transactions fell 0.82 percent in the first two months of 2012 in line with a decrease in the total value of transactions that shed $40 million in the same period, falling to $1.16 billion.

The average value per real estate transaction during the first two months of 2012 stood at $110,180, 2.17 lower compared to same period in 2011 when it averaged at $112,628.

The share of foreigners in real estate transactions increased slightly to 1.96 percent in the first two months of 2012 compared to 1.65 during the same period in 2011.

The number of real estate transactions fell by 12.02 percent during 2011 to reach 82,984, in comparison with 94,320 transactions registered in 2010.

The value of real estate transactions also fell to $8.84 billion, compared to $9.48 billion in 2010.

Lebanon vulnerable to food price shock April 25, 2012 01:49 AM The Daily Star



BEIRUT: Lebanon’s vulnerability to global food price shocks may compromise its ability to make progress across a number of Millennium Development Goals, the World Bank’s “Global Monitoring Report 2012” suggests.

The report, which was published last week, rates Lebanon among the most vulnerable countries in the world to global food price shocks.

As a net importer of cereal as a share of consumption, Lebanon is categorized as a country that faces “higher import bills, reduced fiscal space, and greater transmission of world prices to local prices for imported goods such as rice and wheat,” the report states.

Where countries rely on food imports, and particularly wheat, for at least 50 percent of domestic consumption, “higher international prices can put considerable pressure on government and household budgets,” it says.

Lebanon imports almost 80 percent of its annual wheat consumption, according to 2011 figures released by the U.S. Department of Agriculture.

The World Bank report also highlights that recent jumps in international food prices have halted the world’s progress across a number of the Millennium Development Goals.

“High and volatile food prices do not bode well for attainment of many MDGs, as they erode consumer purchasing power and prevent millions of people from escaping poverty and hunger, besides having long-term adverse impacts on health and education,” said Justin Yifu Lin, the World Bank’s chief economist and senior vice president for development economics.

“Dealing with food price volatility must be a high priority, especially as nutrition has been one of the forgotten MDGs,” he added.

Among Lebanon’s MDGs are the targets of reducing by half the proportion of people living on less than a dollar a day and lowering by 50 percent the percentage of people suffering from hunger in the country. In Lebanon, the population living under the poverty line reaches 28.6 percent, according to the United Nations Development Project.

The World Bank report, acknowledging the challenges governments face in responding to high food prices amid a global recession, recommends countries “deploy agricultural policies to encourage farmers to increase production.

Public Transportation Committee tours Beirut in public buses

The Public Works and Transportation Committee toured Beirut in public buses, on Wednesday. The committee was represented by its head MP Mohammad Qabbano, MPs member of the committee and Public Works and Transportation Minister Ghazi Aridi.

The bus took off from Nejmeh Square, where the parliament is located, passed through Manara, Raouche, Corniche el-Mazraa, en-Nahr and Mar Mikhael all the way back to the parliament. They toured in 47 different buses that will be working 4 stations. The buses are considered an addition to others that were rehabilitated until tenders are carried out to buy 250 public buses that match international standards and cater to the people with special needs.

Aridi said that these buses take into account Lebanon’s traffic as well as other urban characteristics. He added that bus stations are also included in the public transportation plan, adding that they are located at Beirut’s north and south entrances.

Qabbani, for his part, said that the committee attaches great importance to public transportation and the adoption of the plan, adding that the tour aims at encouraging citizens to use buses.

^^ Great Step , i wish we can get pics for the buses though.

Lebanon gasoline prices 13 highest in world: report May 21, 2012 01:41 PM The Daily Star


BEIRUT: The price of 20 liters of gasoline measured against daily income in Lebanon ranks 13th highest among 55 countries in the world and second highest in the Arab oil-producing countries, according to Byblos Bank.

The survey is based on the price of gasoline between April 2 when the price reached a record high, settling at LL39,100 for 98-octane gasoline and LL38,400 for 95-octane graded fuel, and April 11 when 98-octane graded fuel was sold at LL39,700 while that of 95-octane graded fuel was LL39,000.

According to the bank report, the price of a gallon of gasoline in Lebanon is equivalent to 95 percent of the country's per capita daily income, which is higher than that of the Seychelles at 94.2 percent, Brazil at 94.1 percent and Argentina at 92.7 percent and is lower than that of Lithuania, Hungary and Egypt, with the last standing at 107.2 percent.

“Lebanon also ranked in fifth place among 14 upper middle-income countries included in the survey, higher than the Seychelles, Brazil and Argentina,” it added.

The price of 20 liters of gasoline in Lebanon as a percentage also ranked second-highest among five Arab countries included in the survey. It is significantly higher than in oil producers such as Saudi Arabia but lower than in Egypt.

India is the most expensive country for gasoline based on per capita incomes as the price of 20 liters of gasoline is equivalent to 711.5% of the daily per capita income.

The report, issued by the Economic Research and Analysis division of Byblos Bank, also said that the price of 20 liters of gasoline in Lebanon is the 13th cheapest among 56 countries included in the survey.

The average price of a gallon of gasoline in Lebanon between April 2 and April 11 was $25.7, higher than prices in the U.S. ($22), Indonesia ($21.7) and Russia ($19.6), but lower than prices in Thailand ($26.2) China ($28.1) and Argentina ($28.7).

The price of a gallon of gasoline in Lebanon is lower than the 56-country average of $33.7 and the upper middle-income countries whose average stands at $25.9 but higher than the five Arab countries' average of $10.5.

The figures for Lebanon were calculated based on the International Monetary Fund's estimates of GDP per capita for 2011 while those of other countries were compiled by Bloomberg.

The price of gasoline has gradually declined since April 11 and last week stood at LL37,000 for the 98-octane graded fuel and LL36,300 for the 95-octane graded fuel.

In April, skyrocketing gasoline prices sent shockwaves across the country prompting a number of sit-ins and protests, particularly by the public transport union, asking the government to intervene.

LibanPack: Helping edible exports- interview May 22, 2012 01:55 AM (Last updated: May 22, 2012 03:39 PM) By Elias Sakr The Daily Star

BEIRUT: Nearly five years ago, 40 percent of barred Lebanese food and beverage exports were denied entry into North America, Europe and the Gulf region under the pretext of irregularities in packaging and labeling, according to a study by the Economy Ministry.

However, by 2012, this percentage has fallen considerably as many Lebanese producers have become more focused on the importance of packaging and labeling, which are seen as crucial requirements to enter markets abroad, Soha Atallah, director of LibanPack told The Daily Star.

The Lebanese Packaging Center, LibanPack is a nonprofit private-sector association founded in November 2007 with the support of United Nation Industrial Development Organization-Market Access and Compliance for Lebanese Export and funded by Switzerland.

Atallah said the major objective of LibanPack is to raise awareness among Lebanese industrialists on the importance of complying with international standards for packaging and labeling in a bid to increase the competitiveness of Lebanese products in export markets.

LibanPack services include integrated feasibility studies, technical assistance in packaging design, consultancy services to ensure compliance with international standards such as ISO 22000 and in-house training that covers manufacturing practices, Atllah said.

However, despite increased interest from Lebanese industrialists in packaging, Atallah said LibanPack still faces difficulties.

Among these difficulties is the reluctance of Lebanese industrialists to pay for consultancy services.

“Some Lebanese industrialists are still reluctant to pay for consultancy services. They would rather pay for tangible products,” she added.

However, LibanPack is drawing a growing number of customers from the Arab world such as Iraqi and Egyptian industrialists who have been cooperating with LibanPack.

The increased interest by Arab clients is helping LibanPack in its quest to accomplish self sustainability by guaranteeing the necessary funds for its operations, Atallah said.

Switzerland through its State Secretariat for Economic Affairs has committed $2.5 million to LibanPack since its kickoff for a five year period that ends in 2012, Atallah said.

“We thank Switzerland for its support that enabled us to offer free services when we started operating in 2007. Currently we are charging a symbolic fee for our services and our main revenue comes from sponsors,” she said.

Atallah added that the Lebanese Industrialists Association has also assisted LibanPack by hosting the association at its headquarters free of charge.

LibanPack offer its members three membership plans: a professional membership costing LL250,000 per year for Lebanese industries, companies and individuals; a student membership available at LL30,000 per year and an honorary membership starting at LL2,000,000 in annual fees.

Starting in 2013, LibanPack, faces the challenge of securing new funds to cover for the ending of the Swiss funding grant.

To compensate for the Swiss funding, the government should play a role in supporting LibanPack and by knock-on effect Lebanese industries, Atallah said.

With more than 60 members including industry professionals, companies, NGOs and student groups, LibanPack, a member of the World Package Organization, has extended its network by signing partnership agreements with the French and Tunisian packaging centers, she said.

Lebanon will host the 2013 board meeting of the World Packaging Organization, according to Atallah, who added that LibanPack was also organizing regional study tours for industries from Iraq and Sudan among other countries.

During the LibanPack-organized Lebanon Student Starpack 2012 award ceremony held in March, leading Lebanese industrialists said that superior packaging has boosted the competitiveness of Lebanese products and has contributed to the doubling of industrial exports over the last five years.

However, the industrialists have warned that the increasing energy costs involved in product packaging threaten the competitiveness of this new focus on image.

Gasoline prices down by LL1,000 May 23, 2012 08:33 AM The Daily Star

BEIRUT: The price of 20 liters of gasoline declined by LL1,000 and that of diesel by LL 500 from last week's price, according to the Energy and Water Ministry.

The price of 98-octane graded fuel now stands at LL36,000 while the price of 95-octane graded fuel is LL35,300, based on the weekly price update.

Kerosene gas is now sold at LL29,700, down by LL400, with fuel oil at LL27,500 and diesel at LL27,600.

The cost of gasoline reached a record high last month when the price of 98-octane graded fuel hit LL40,000. The increase sparked outrage among unions, which demanded the government place a price ceiling at LL25,000.

Government to raise VAT, interest tax May 25, 2012 01:22 AM By Mohamad El Amin The Daily Star


BEIRUT: A new 15-percent tax on profits made through real estate transactions and a 2-percent hike on both VAT and interest-revenue taxes are part of the revised 2012 budget draft announced by Finance Minister Mohammad Safadi Thursday.

According to Safadi, the planned real-estate tax would apply to sales of land and real estate purchased after 2009. Property bought before 2009 would be taxed 4 percent of the total sale amount, the minister added.

The new draft budget revised the value added tax from 10 to 12 percent.

“The hike on VAT would be equivalent to 1 percent of GDP, while the wage increases given last January constitute 2 percent,” Safadi said in defense of his proposal to raise the largely unpopular VAT tax.

The 5 percent tax on deposit interest revenues would be increased to 7 percent rather than the previously sought 8 percent, Safadi said, adding that the government reconsidered the hike “not to hurt those depending on interest income.”

Safadi, speaking at a news conference, said increases in taxes were necessary due to soaring public expenses.

A proposed retroactive wage increase for public sector employees since February, soaring payments to Electricité du Liban and adjustment in funds allocated to several ministries increased total expenditure from LL17.706 trillion ($11.7 billion) in 2011 to LL21.355 trillion in 2012.

The wage hike for public servants increased wages and salaries by 31 percent to a total of LL1.7 trillion, Safadi said.

He added that the actual figure would stand at LL2.2 trillion, if resulting increases, including hikes on hospitalization payments, were to be included.

Safadi also said transfers to electricity provider EDL jumped by LL500 billion to LL3.3 trillion.

The budget draft takes into consideration the impact of the economic slowdown internationally as well as the impact of local and regional political instability, Safadi argued.

He said the draft focused on sustaining a decline in debt-to-GDP ratio, a key economic indicator.

“The percentage will stand at 134.8 percent compared to 135.1 percent at the end of 2011,” Safadi said.

The GDP to debt ratios are calculated based on a 5.2 percent GDP growth in 2011 and a projected 3 percent for 2012, according to Safadi.

Economists have doubted the 2011 official growth figure, which significantly differs from figures released by the International Monetary Fund, World Bank and the Economist Intelligence Unit.

The three organizations have estimated Lebanon’s 2011 growth levels at around 1.5 percent.

Nassib Ghobril, chief economist at Byblos Bank, criticized the economic logic behind the tax hikes.

“This is a very bad idea, particularly in a time of economic downturn. Any increase in taxation would strangle economic activity,” Ghobril said.

Instead, he argued that the government should look into ways to improve tax collection and improve efficiency and accountability of public spending.

“Increasing taxes cannot be seen as a way to boost social justice. Realizing social justice starts by clamping down on tax evasion and trimming squandering of public finances,” he said.

While highlighting that the government had little choice but to increase taxes to meet its soaring expenses, economist Louis Hobeika echoed Ghobril, saying the government should have instead focused on reforming the largely inefficient public administration.

Hobeika said the increase on VAT would not translate into a significant increase in public revenues as he projected that consumption levels would fall on higher prices caused by tax hikes.

Safadi also said the ministry was discussing with banking sector representatives the possibility of raising taxes on bank profits from 15 percent to 20 percent in order to boost state revenues.

Investments in infrastructure constitute a large share of increases in state expenditures in the 2012 draft budget.

Safadi said a 65-percent increase in spending on infrastructure investments would include roads, electricity, gas pipelines and telecommunications.

Safadi said hotels outside Beirut would benefit from a proposed five-year tax exemption if the draft budget was approved.

Lebanese economic activity to remain slow in coming months
BEIRUT |
iloubnan.info, with agencies - April 22, 2012, 11h13 print this article
Photo: AFP The Lebanese economy continues to suffer from the impact of regional unrest as reflected by recently released indicators, Lebanon This Week stated, while quoting Business Monitor International.

The Lebanese Central Bank's monthly Coincident Indicator contracted by 1.8% year-onyear in January 2012, which pushed the three-month moving average to a nine-month low of -0.1%, According to the Business Monitor International.

The Coincident Indicator is a measure for the underlying health of the economy given the absence of timely official GDP data. According to BMI, the number of transactions in points-of-sale expanded by just 0.7% year-on-year in January 2012 relative to growth of 0.4% in December 2011, which reflects ongoing weakness in private consumption. It indicated that the growth in the three-month moving average of cement deliveries and construction permits reached a multi-year low of -11.1% and -7.7% year-on-year, respectively, in January.

BMI considered that the current economic slowdown is broad based, with consumption, trade and investment indicators all pointing to an economy fluctuating on the edge of recession. It said that Lebanon's economy has been affected by the ongoing crisis in Syria despite having avoided any incidence of large-scale public unrest associated with the Arab Spring.

It expected economic activity to remain depressed in the coming months given the low prospects for a lasting resolution to the Syrian conflict over the near term. However, it anticipated the ongoing rise in global oil prices to have a positive impact on the Lebanese economy through higher remittance inflows, an increase in bank deposits, and a rise in investments from Gulf countries.