Habtoor warns politicians to stop bickering and start governingUAE tycoon says investors will only tolerate so much


message Tuesday to Lebanese politicians: "Put your differences aside and fix the problems plaguing the country because the loss of Lebanon cannot be compensated." Speaking at the Middle East Airlines lounge of Beirut's Rafik Hariri International Airport, Khalaf Habtoor, who has more than $400 million invested in Lebanon, said his group was forced to lay off hundreds of staff due to last summer's war with Israel, the ensuing political crisis and bureaucratic procedures. The group said 800 of its 1,100 employees had lost their jobs since July of 2006.

"I hate to see Lebanese employees out of work. They have families to feed. But the situation is too overwhelming," Habtoor told reporters.

Many five-star and four-star hotels laid off most of their staff after the war as occupancy reached perilously low levels.

"I put my faith in Lebanon when I started investing here in 1992 immediately after the end of the [Civil] War. I did not expect to make a quick profit. But as the country jumped from one crisis to another, my group lost lot of money," Habtoor said.

Among the assets of Habtoor Group in Lebanon are the Metropolitan Hotel, the Habtoor Grand Hotel, the Habtoorland theme park, plots of land and residential buildings.

He emphasized, however, that the group is not going to abandon its assets in Lebanon despite the bleak outlook.

"Can we take the hotels and theme park with us? [Would] any sane [person] buy our properties at this moment?"

Lebanon relies heavily on foreign direct investment (FDI) and tourism to create growth and jobs. But since the assassination of former Prime Minister Rafik Hariri in February 2005 and the ensuing political and security incidents, FDI has plunged and the war ruined the 2006 tourist season.

Despite attempts by the Tourism Ministry and the Investment Development Authority of Lebanon (IDAL) to boost the confidence of investors, the t climate is still far from attractive.

Habtoor warned that many Lebanese and Arab investors are considering legal action against the state for failing to protect investments and establish law and order in the country.
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"Due to the continuing unfriendly investment climate, a number of Arab and Lebanese investors have approached us to join them in suing the state of Lebanon before the UN Commission on International Trade Law and International Center for Settlement of Investment Disputes. I have used my personal leverage to persuade them to hold back, believing that the prevailing state of affairs would change," Habtoor said.

A group of hotel owners and businesses in Downtown Beirut told Premier Fouad Siniora Monday they would take legal action against the government if they were not compensated as a result of the three-month sit-in.

But the investor expressed doubt that the attitude of the government will change.

"But in all honesty, how long can I continue to do this? Are things really going to improve to a satisfactory level in the near future?" asked Habtoor.

"I have some remarks about the tax system in Lebanon. I was told I would get tax exemptions when I built my hotels and theme park. But unfortunately I was hit by taxes."

Citing an example, Habtoor said that the Finance Ministry and municipalities charged heavy fees on stamps.

He also complained about unethical judges who passed unfair verdicts against his group.

But the head of IDAL clarified some of the misunderstandings.

"We should be clear about one thing. IDAL has a wide range of tax exemptions for all investors who finance projects that create jobs. Among these incentives are tax exemptions of profits and real-estate projects. However, the agency has no say in the stamp fees because this is the responsibility of the Finance Ministry," Itani explained.

He added that IDAL saved Habtoor millions of dollars as a result of the exemptions.

Itani said Habtoor is one of the key investors in Lebanon and that neither the government nor IDAL wants him to drop his investments.

Habtoor was also critical of divisions in power, saying: "This country has many heads. What is needed is one captain to steer the ship."

Daily Star

So does this mean Al Habtoor closed down/will be closing down his hotels in Beirut?

Azour hastens to reassure Habtoor on efforts to keep investors happy


By Osama Habib
Daily Star staff

Friday, March 23, 2007


BEIRUT: Khalaf Habtoor's sharp criticism of Lebanon's bureaucracy, corruption and outdated investment laws drew quick promises of improvement from officials this week. Finance Minister Jihad Azour was one of the officials who rushed to appease the UAE tycoon by assuring him that the government was determined to cut through red tape, modernize financial and tax laws and simplify procedures.

"We don't want investors to haul their investments and take them somewhere else. We want them stay put and stimulate the economy," Azour said in a statement on Thursday. The minister admitted that there are "loopholes and complications in administrative procedures."

Infuriated by political and bureaucratic problems in Lebanon, Habtoor warned the government in a press conference in Beirut on Tuesday that Arab investors are willing to take their investments out of the country if the state fails to act.

"I put my faith in Lebanon when I started investing here in 1992 immediately after the end of the [Civil] War. I did not expect to make a quick profit. But as the country jumped from one crisis to another, my group lost a lot of money," Habtoor said. "How long can I continue to do this? Are things really going to improve to a satisfactory level in the near future?"|

The Gulf businessman has investments valued at more than $400 million in Lebanon, including the Metropolitan Hotel. But the Habtoor Group recently dismissed 800 of its 1,200 employees in Lebanon.

Azour said that the government has made a series of proposals to make the life of investors easier.

"The government has included a set of proposals during Paris III donor conference to improve the investment climate in Lebanon," he said.

Azour also blamed the political deadlock for the negative mood in the country. "We have constantly warned that the sharp political differences and constant escalation will scare away investors and induce them to take their businesses to other countries," he said.

He added that Lebanon is regrettably wasting another opportunity at economic growth.

"We are going to lose all that we have built if the situation remains the same," he said.

But Azour justified some of the taxes that Habtoor complained about in his press conference. "The Habtoor Group is benefiting from a wide range of tax incentives, which were promised by the Lebanese government. Among these incentives are complete exemptions from tax on income and capital dividends and reductions in labor and construction fees," Azour said.

"We urge the UAE investor to stay steadfast and have more faith in Lebanon."

But Habtoor's statement did get some positive responses from some investors and chairmen of companies.

"Habtoor hit all the right buttons. This man should head the Investment Development Authority of Lebanon with absolute powers," Jean Riachi, the chairman of Financial Funds Advisors, told The Daily Star.

He wondered why Lebanon should be different from other countries: "If a bomb explodes in London, life will continue as if nothing happened. But any incident in Lebanon will put the country on the edge of a brink."

Riachi also seconded Habtoor's criticism of Lebanese taxes. "Each public bureau wants to apply laws by the book and there is no leniency in the system," he said, adding that part of the problem was that each department is affiliated politically to a certain leader or faction.



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