Innholdsfortegnelse for January 1, 2016 i Lebanon Opportunities

CENTRAL BANK LIMITS INCUBATORS’ SHARES IN STARTUPS Incubators and accelerators are allowed to invest only up to five percent in the capital of each startup company that benefits from their support, according to a circular by the Central Bank (BDL) issued recently. “BDL is keen to determine the goal of each investor in startups,” said Marwan Mikhael, Head of Research at Blominvest Bank. “Instead of having high shares in a target company and provide it with a priority, BDL considers that incubators and accelerators should be neutral and serve many companies in the market,” he said. Managers of incubators and accelerators are also not allowed to have direct or indirect shares or investments on their own behalf in these startups, the circular said. The circular said that profits and amounts…

There were one million poor people in the 2011-2012 period, or 27 percent of the population, according to a recent poverty study published by the local Central Administration for Statistics (CAS) and the World Bank. This percentage is slightly less than what was stated in the latest statistical report of 2004. The authors warned, however, that comparison is not really accurate as the methodology has changed. The findings are based on a Household Budget Survey (HBS), by the sampling method. The Poverty Line was set at $8.63 per person, per day. This is the minimum required to fulfill basic needs. The ‘Food poverty line’ is set at $2.7 per person, per day. Below this level, feeding needs will not be satisfied, as per 2400 calories per day. There was no…

Demand food industrial products is thriving. Food industrial companies will be more able to penetrate markets demanding high quality standards. “Food industrialists have massive capabilities, and still have much to give,” said Fadi Gemayel, Chairman of the Association of Industrialists. He said that this sector can achieve more growth. The market is expected to receive more investments in this sub-sector to meet the international needs. Georges Nasraoui, former chairman of the Syndicate of Lebanese Food Industries, said that the food safety law enacted by Parliament will push manufacturers to enhance their performance and abide more by the standards. Lebanese cuisine is gaining more recognition in new markets. “There are large opportunities in exporting our food products to the promising Chinese market,” Nasraoui said. He said that exports to Russia increased…

“The health sector will be performing very well this year,” said Amir Abdelnour, Consultant General Surgeon at Saint George Hospital. New medical technologies and high-tech equipment will enter hospitals. Physicians holding new specializations will mushroom. Abdelnour said that the health sector will witness new investments in hospital premises, new medical equipment, as well as new physicians. “The high quality medical services and five-star facilities will attract the whole region,” said Abdelnour. New laboratories and scanning centers will see the light this year. Establishing long term hospitals, rehabilitation centers, and palliative care centers is becoming a trend. “Awareness towards servicing the elderly is growing, for this reason the need for establishing these hospitals will grow,” he said. According to the Ministry of Public Health (MoPH), total health expenditure reached $3 billion…

MUNICIPALITIES TO GET $800 MILLION FROM MOBILE REVENUES The Council of Ministers has issued three decrees approving the distribution of LL1,200 billion ($800 million) to municipalities. The sum represents arrears of their shares from tax proceeds on mobile phone revenue from the beginning of 2010 to the end of May 2014. Nearly LL667 billion ($445 million) of the total amount is allocated to municipalities and federations of municipalities, LL527 billion ($351 million) are due to the Independent Municipal Fund, while LL6 billion ($4 million) are to be paid to villages that do not have municipalities. L0116-21 WORKS ON TRIPOLI’S EASTERN RING ROAD BEGIN Expropriation of property for Tripoli’s Eastern Ring Road has begun. The $100 million project is partly funded by the Islamic Development Bank (IDB). The 8.5 kilometers road…

International economic institutions, among which the Institute of International Finance (IIF), the International Monetary Fund (IMF), and the World Bank, kept on updating their forecasts regarding economic growth. However, there are discrepancies among the outcomes of the different forecasters. One of the major factors is the weighing scheme adopted by international entities when trying to ponder the main drivers of economic growth. In addition, political and security developments are also barometers of economic forecasts. All reports linked clearly between the political stability on the one hand and the improved performance of the economy on the other. Alia Abbass, Director General of the Ministry of Economy and Trade (MoET), said: “Instability has made growth limited to two percent in 2015, which is not what we aspired to, but the capital is…

The real estate market will continue the correction process. Activity is expected to remain on the lower side. “This year is going to be similar to the one before, if the overall political and security situation persists,” said Samer Bissat, Vice President of the Real Estate Developers Association in Lebanon (REDAL). Many large scale developments will hand over part of their projects, such as Waterfront City in Dbayeh. The total built-up area of all residential projects that will be delivered this year in Beirut, Baabda, Metn, Kesrouan, and Aley is stable compared to last year. It will reach an estimated total of 2.5 million square meters. Demand will continue to flourish in affordable housing. “People are getting used to small apartment sizes,” said Massaad Fares, Chairman of the Real Estate…

“I am optimistic that this year will be different,” said Abdel Hafiz Kaissi, Director General of the Ministry of Public Works and Transport. Several projects are almost complete. Tendering and commencement is expected this year. Parliament has ratified several loans and grants. These will kick start vital projects such as Bisri Dam, the restoration of Zouk and Jiyeh power plants, and the development of wastewater networks in several regions. A $65 million public transport project for the Greater Beirut Area is awaiting funds, either by the Treasury or World Bank. “The tendering file is ready and there is a possibility that it will be launched if funds are secured,” he said. The project includes 20 traffic lanes for buses, 911 bus stops, and buses equipped with GPS. If completed, this…

The banking sector is expected to have an increase in profits as it will not be negatively affected by the rise in the U.S. interest rates. Fadi Assali, Chairman of Cedrus Bank, said that the consolidated net profit of local banks is likely to increase by eight to ten percent this year. Marwan Barakat, Head of Research at Bank Audi, said that the net interest income would improve a little thanks to the rise in U.S. interest rates, which would increase the Libor benchmark rate to 1.4 percent, at the end of 2016, from half a percent at the end of 2015. Joe Sarrouh, Executive Advisor to the Chairman at Fransabank, said that banks may benefit from greater yields on their short term placements deposited in international money markets. But…

The Ministry of Education and Higher Education (MoEHE) will be stricter in offering licenses for establishing universities and faculties. “The ministry’s strategy for this year is quality guarantee for education,” said Ahmad Jammal, Director General of Higher Education. He said that the ministry will start this year implementing the education law enacted in 2014. This law imposed difficult conditions for offering university licenses, such as conducting feasibility studies and having the financial ability to operate a university for several years, without depending on tuition fees. Jammal said that the available universities are required to comply with the international standards and be subject to internal and external assessment for their programs and professors’ development. “Competition in education is growing regionally and the country should maintain the distinguished position it has earned,”…

RÉGIE TO DOUBLE PRODUCTION CAPACITY Régie, the State-owned tobacco monopoly, will expand its factory’s production capacity in Hadath, in 2016. George Hobeika, Secretary General of Régie, said: “Demand for the new types of local cigarettes ‘Cedars Silver’ and ‘Cedars Plus’ is increasing, so we will install new production lines to double production.” Production will reach 290,000 boxes (500 packs per box) and will be entirely dedicated for the local market. Hobeika said that international companies have shown interest in manufacturing their cigarettes in Régie’s factory. Investment in the new production line is estimated at $7 million. Régie financed around $25 million this year to rehabilitate the old Hadath factory and to install new equipment. The total built-up area of the facility is 12,000 square meters. Revenues from Régie to the…

INDUSTRIAL PERMITS RISE SHARPLY Industrial permits issued by the Ministry of Industry (MoI) reached 357 in the first half of 2015, increasing by 38 percent from the same period last year. Establishment licenses, i.e. to start a factory, represented the highest percentage (38 percent). Investment licenses, related exploitation of the facility, represented around 22 percent. Most licenses were issued to industries from the third category (45 percent) or semi-light industries, such as food industry factories, then for industries from the fourth light category (35 percent), such as textile factories. “There is a large potential in the food industrial sector and it is achieving continuous growth,” said Fadi Gemayel, Chairman of the Association of Industrialists. He said that there is still a shortage in the amount of food produced and this…

Links: Click this article’s entry in ‘Table of Contents’ on our website Health spending per capita rose from $361 in 1995 to $621 in 2011, which is higher than the MENA average of $220. As a share of the Gross Domestic Product (GDP), the country’s health expenditures remained quite high, despite falling from 10.7 percent in 1995 to 6.6 percent in 2011. According to the Ministry of Public Health (MoPH), the health bill is $3 billion per year and the ministry’s contribution is around $300 million. In 2011, public spending on health represented around six percent of Government spending. MoPH allocations from the Government’s budget (excluding debt) dropped by 41 percent from 5.9 percent of total Government expenditures in 2005 to 3.4 percent in 2012. In 2011, private spending represented…

Several manufacturers have allocated budgets to expand their facilities, or establish new ones this year. Around $200 million in investments are expected to be spent on sorting and composting facilities. Industrialists will be investing to increase production and meet the growing demand for local products. “Lebanon has always been the country of capabilities,” said Fadi Gemayel, Chairman of the Association of Industrialists (ALI). He said that the industrial sector has always witnessed good performance compared to other economic sectors and this is due to the industrialists’ personal efforts. Electing a president would enhance the political situation and will create a positive shock for the market and boost investments, according to Gemayel. “Industrialists believe in the country and will continue investing in it,” he said. Industrialists in 2016 will focus on…

A look at the expected run of events in 2016, such as new facilities opening and business expansion, shows that this year is not expected to differ from its precedents, with regard to keeping the ongoing move, no matter how unpromising the situation looked. A remarkable number of restaurants, hotels, resorts, touristic villages, food courts and nightlife complexes are going to be opened, renovated or expanded. Nada Sardouk, Director General of Ministry of Tourism, said: “The guarantee of 2016 improvement is the political stability starting with the election of a president.” Pierre Achkar, President of the Tourism Syndicates’ Union, is also “waiting for the political and security developments of 2016 to build on, because 2015 revenues were bad.” Hopes are pinned on the strength of the sector, the quality of…

The Internet is expected to improve. Akamai Technologies, a global provider of content delivery network (CDN) services, plans to install its ‘Cache’ storage service on the Beirut Internet Exchange Point (IXP) in 2016, according to Gabriel Deek, vice-president of the local chapter of the Internet Society. With this new tool, data related to Lebanon will be accessed directly, without going through global networks. This will save cost and time to local users. The shift to Internet Protocol (IP) version 6 (IPv6) from the saturated IPv4 could begin next year. “This project should be embraced by the State, banks, universities, and other organizations,” Deek said. “We are also working to bring part of cloud computing to Lebanon,” within the Beirut Internet Exchange initiative. The use of servers is declining worldwide as…

The stock market that was resilient in 2015 could perform even better in 2016. It is expected to improve because there are some positive indicators regarding the political situation in the country, said Marwan Mikhael, Head of the Research Department at Blominvest Bank. The fact that the banks are achieving good profits and distributing dividends regularly will also help the overall market enhance its performance. Most of the shares on the Beirut Stock Exchange (BSE), especially those of banks, are undervalued, their price to book ratio is less than one. Nadim Kabbara, Head of Research at FFA Private Bank said three factors work together as catalysts to bring back these undervalued shares to their intrinsic values. The first factor pertains to the fundamentals of listed shares such as profitability. The…