Lebanon

FDI in figures

Lebanon has paradoxically benefited from the global economic crisis and saw foreign direct investment in the country doubled in 2008. Lebanese banks, relatively healthy, have escaped the crisis and benefited from an increase in their deposits. Thanks to a little exposure to toxic assets, they have acted as a refuge. Thus, on 11 FDI projects in Lebanon in 2008, 5 were in the banking sector. Other investments relate primarily to the telecommunications sector, infrastructure development (in the form of public / private partnerships), tourism and construction. The return of political stability in the country and the economic reforms were warmly welcomed by foreign investors.

Why you should choose to invest in Lebanon

Strong points

Lebanon has many advantages. Firstly, it is very open to trade and foreign investment. Its economy really is a free market economy. In addition, the absence of controls over foreign companies' movements of capital and trade is also an undeniable advantage. Finally, we can stress the very educated and qualified workforce in the country, a good quality of life and limited restrictions for investment. Today there are considerable investment opportunities in the field of reconstruction of basic and productive infrastructures, construction and in supermarkets.

Weak points

Foreign businessmen settled in the country are exasperated by the problems of corruption, the relative nature of arbitration when licenses are granted, Customs procedures that are too complicated and the partiality of justice.

Government measures to motivate or restrict FDI

Lebanese common law, characterized by the freedom to do business, is on principle very open to all traditional forms of investment. Moreover, in order to facilitate for investors all the administrative formalities regarding setting up a business, Law n°360 of 16 August 2001 on the promotion of investment created a government agency IDAL (Investment Development Authority of Lebanon), under the direct authority of the Prime Minister, which grants numerous tax exemptions, or offers exceptional regimes, as long as the investment is in defined sectors of activity, in zones designated by name, and above a certain amount invested. In the same way, this agency has the power to issue the necessary licenses and permits. The IDAL has also launched a scheme, the "investors matching service" to facilitate the creation of local/foreign partnerships in the form of joint ventures, capital holdings, acquisitions or others. In 2006, the government signed a plan with the IMF to facilitate registration procedures for companies. In 2007, the law to facilitate investment made it possible to reduce by half the time, cost and number of procedures for forming a company. Finally, the country has launched an ambitious plan of privatizations which has led especially to the privatization of the telecommunications and electricity sectors in Lebanon. The country has two operational free zones, one in the port of Beirut and one in the port of Tripoli. The Lebanese government has launched a plan to attract foreign investors. It provides the creation of special economic zones, tax-free and specialized in high potential sectors like medical tourism, media, high-tech and food processing. Each of these areas should receive special infrastructure and customs facilities. The plan also includes to improve the country's image among foreign investors in developing the website of the Lebanese Agency for the Promotion of Investments.

Procedures relative to foreign investment

Freedom of establishment

A foreign investor can set up business in Lebanon in the same conditions as a Lebanese and must make sure he is on the Register of Commerce. Foreign investors must produce an employer's work permit and a residence permit. The employer's work permit specifies that foreign holdings in capital cannot be less than 67 000 USD, and that the employer has at least three Lebanese workers registered with the social security office. In addition, buying property is sometimes limited. In the same way, some investment projects are subject to conditions in some sectors or according to the origin of the investor.

Acquisition of holdings

A holding company may not hold directly more than 40% of the shares of two companies that are active in the same sector.

Obligation to declare

There is no obligation to declare. Lebanon assures and guarantees total freedom of local and foreign capital.

Competent organization for the declaration

Lebanese Stock Exchange website.

Requests for specific authorizations

These are the restrictions on foreign investment in Lebanon: - the media, inaccessible to foreign companies; - commercial representation: the capital of a joint stock company (SAL) must be made up of registered shares held predominantly by Lebanese, and 2/3 of the capital of a limited liability partnership company (SARL) must be held by Lebanese; - the exploitation of a public service. In the case of a joint stock company (SAL), a third of the capital must be held by Lebanese; - the real estate sector: a branch office cannot exercise in this sector (in the case of a subsidiary, the capital must predominantly be held by Lebanese and an authorization from the Cabinet is necessary); - banking and insurance sectors, those of capitalization, savings, capital investment, organized air transport: it is impossible to create a limited liability partnership company (SARL) in these sectors.

Finding assistance for further information

Investment aid agency

Investment Development Authority of Lebanon (IDAL)

Other useful resources

Central Bank of Lebanon.
Directory listing all the institutions likely to aid foreign investment.