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Lebanese industry: from productivity to prosperity

Encouraging more competitiveness in Lebanese industries

by Josiane Fahed-Sreih

The Industrial sector in Lebanon is a major contributor to the Lebanese economy by employing a large number of workers, and by being the largest source of hard currency to the country especially after the major economic collapse and the scarcity of the dollar that started in 2019. The Industrial sector in Lebanon is becoming more and more innovative and sophisticated just like its counterparts in innovative countries, and will become one of the major sectors that will witness increasing investments. With the development of oil and gas and the reconstruction of Beirut after the August 4, 2020 explosion, the industrial sector is set to become more competitive and serve the needs of the country.


In 2018, the sector accounted for around 8 percent of GDP ($4.2 billion) and employed 20 percent of the local labor force (around 318,000 employees). There are over 4,700 industrial firms in Lebanon the largest
portion of which is in agro-food production (26 percent or 1,245 firms), followed by construction materials (12 percent) and chemical products (8 percent). Industrial exports stood at $3.5 billion in 2019, accounting for 95 percent of total Lebanese exports. The top five Lebanese industrial exports in 2019 were pearls and precious stones (41 percent), mechanical machinery (6 percent), electrical machinery and equipment (5 percent), plastics (4 percent), and essential oils and cosmetics (4 percent). Key export destinations in 2019 included Switzerland (30 percent), the United Arab Emirates (12 percent), Saudi Arabia (6 percent), Syria (5 percent), and Iraq (4 percent). The share of medium and high-tech manufactured exports of total manufactured exports had reached 21 percent in 2017, indicating promising technological capabilities in the sector, knowing that industrial permits increased by 16 percent from 375 in 2011 to 1,086 in 2018.

Knowing that Lebanon is part of several multilateral agreements, most notably the EU-Lebanon Association Agreement, the Taysir agreement, The European Free Trade Association (EFTA), the Greater Arab Free Trade Area (GAFTA), the US-Generalized System of Preferences (GSP) and others, this by itself is a trigger for open market competitiveness and for the sales of the locally produced products. The industrial sector will become more competitive if some of these measures can be taken. Therefore, I recommend the following:
1- Encouraging private-public sectors partnerships.
2- Encouraging cooperation with academia by developing programs that can position Lebanon at the forefront of innovation, such as green industries
3- Encouraging and supporting SME creation that would create jobs and position Lebanon as a pioneer in enterprise creation knowing that Lebanon’s workforce is highly educated and savvy, compared to other Middle Eastern and gulf countries.
4- Offering technical support through the development of programs that encourage manufacturing.
5- Providing tax incentives to encourage people to invest in manufacturing.
6- Lowering the cost of manufacturing on all fronts from energy to land costs.
7- Creating industrial zones where the cost of land and other costs are low.
8- Advancing the transition towards a green economy while reducing the numerous environmental risks lying
ahead and accelerating the shift away from carbon-intensive industrial production to more sustainable models.
9- Offering incentives to move to a green economy as per European circular economy developmental goals.

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Josiane Fahed-Sreih

The director of the Institute of Family and Entrepreneurial Business at the Lebanese American University
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