The Social Impact of Economic Reforms in Lebanon

1. The Social Impact of Economic Reforms in Lebanon The Parliamentary and The Civil Society Perspective National Workshop - National Assembly, Library Conference Room

2. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment Nicolas Nahas VPLebanese Industrialist Association National Workshop - National Assembly, Library Conference Room

3. Index How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment I. Main Challenges Hurting Competitiveness II. Constraints to Lebanese Firm III. 10 Constraint in Doing Business in Lebanon IV. Ease of Doing Business Rank V. Number of ranks lost or gained from previous year VI. Dealing with Construction Permits VII. Trading Across Borders in 2008/09 VIII. Enforcing a contract in Lebanon’s 1st instance court National Workshop - National Assembly, Library Conference Room

4. Index How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment IX. Closing a Business X. Outdated Legal Framework XI. Main Drivers for Competitiveness XII. Recommendations PMO&IFC Seminar on “Enhancing Business Environment” National Workshop - National Assembly, Library Conference Room

5. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment The absence of a coherent economical decision making process within the different government agencies The Absence of a reform ownership The lack of a clear vision on providing enablers to promote growth within the different regions of Lebanon Obsolete legal framework High Cost of Operation due to lack or inefficient infrastructure Low productivity and output of the human resources for inadequate education system and lack of professional training Difficult access to credit I. a. Main Challenges Hurting Competitiveness National Workshop - National Assembly, Library Conference Room

6. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment High cost of credit Lack of incentives for R&D Many of trade agreements have favored imports without providing room for enhancing exports capabilities. Informal competition. Inefficient bureaucracy Complicated and long procedures in company inception High Cost of land Absence of economical park I.b. Main Challenges Hurting Competitiveness National Workshop - National Assembly, Library Conference Room

7. Political Instability Electricity Corruption Tax Rates Cost of Financing HR Availability Illegal Competition Macro Uncertainty Tax administration Price of land II. Constraints to Lebanese Firm Ref: WB Simon Bell “Lebanon Reversing Declining Competitiveness?” National Workshop - National Assembly, Library Conference Room

8. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment III. 10 Constraint in Doing Business in Lebanon Ref: IFC Thomas Moullier Why Lebanon Scores Relatively Low? National Workshop - National Assembly, Library Conference Room

9. Saudi Arabia leads the way in the ease of doing business, followed by Bahrain. • Top 6 economies in Arab world from GCC • UAE and Egypt greatest jump in rankings this year, top global reformers – Egypt for 4th time IV. Ease of Doing Business Rank Ref: IFC Thomas Moullier Why Lebanon Scores Relatively Low? National Workshop - National Assembly, Library Conference Room

10. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment • 108 Starting a business • 125 Dealing with construction permits • 66 Employing workers • 111 Registering property • 87 Getting credit • 93 Protecting investors • 34 Paying taxes • 95 Trading across borders • 121Enforcing contracts • 124 Closing a business -9 -6 -6 -4 V. Number of ranks lost or gained from previous year -3 -5 +12 -8 Ref: IFC Thomas Moullier Why Lebanon Scores Relatively Low? -1 -1 National Workshop - National Assembly, Library Conference Room

11. 20 procedures, 211 days and high costs by international standards VI. Dealing with Construction Permits : Ref: IFC Thomas Moullier “Why Lebanon Scores Relatively Low?” National Workshop - National Assembly, Library Conference Room

12. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment VII. Trading Across Borders in 2008/09 Ref: IFC Thomas Moullier “Why Lebanon Scores Relatively Low?” National Workshop - National Assembly, Library Conference Room

13. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment 37 procedures 721 days average cost equal to 31% the value of the claim VIII. Enforcing a contract in Lebanon’s 1st instance court Ref: IFC Thomas Moullier “Why Lebanon Scores Relatively Low?” National Workshop - National Assembly, Library Conference Room

14. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment Takes 4 years. Only 19% of debts are recouped by creditors IX. Closing a Business Ref: IFC Thomas Moullier “Why Lebanon Scores Relatively Low?” National Workshop - National Assembly, Library Conference Room

15. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment • The Commercial Code was promulgated in Lebanon in 1942 and was amended several times until 1983 and it govern: • The Joint-Stock Company (or SAL). • The Limited Liability Company (or SARL) and more specifically by Decree-Law No 35 dated August 5, 1967. • The General Partnership Company (Société en Nom Collectif) • The silent Partnership (Société en Participation) • The Company Limited by shares (Société en Commandite par Actions) X.a. Outdated Legal Framework National Workshop - National Assembly, Library Conference Room

16. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment • The Limited Partnership (Société en Commandite Simple) • The Holding Company and more specifically by Decree-Law No. 45 dated June 24, 1983 which has been amended by Law No. 772 dated 16/11/2006. • The Offshore Company and more specifically by Decree-Law No. 46 dated June 24,1983 which has been recently amended by Law No. 19 dated 9/9/2008. • The collateral law is regulated by the Code of Obligations and Contracts dated 1932 and by the Law Decree No 46/L dated October 22, 1932 X.b. Outdated Legal Framework National Workshop - National Assembly, Library Conference Room

17. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment • The real estate securities are regulated by decision No. 3339 dated 12/11/1930. • Bankruptcy law is also part of the Code of Commerce of 1942 • Labor Law was promulgated in Lebanon in September 23, 1946 • The Beirut Stock Exchange is regulated by Decree-Law No.120 dated September 16, 1983 and by the Decree No.7667 dated December 16, 1995 X.c. Outdated Legal Framework National Workshop - National Assembly, Library Conference Room

18. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment Long Term Economical Policy enabling Sectorial Development Strong leadership Commitment for structural reform Modernize the legal framework to adapt to modern business environment attractive to FDI Efficient Infrastructure (Energy, Transport….etc) Competitive Cost of Operation Availability of Adequate Human Resources Availability of Professional Training Adaptation of the Education System to the Need of the Job Market Trade Agreement a Gateway to export XI.a. Main Enablers for Competitiveness National Workshop - National Assembly, Library Conference Room

19. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment Developing and Enhancing Norms and Quality Practices Access to finance to SME should be eased and through different channels (Banks, Capital markets, Credit house etc…) Streamline public administrative procedures (one stop shop, transparency, online process, time limit etc….) Upgrade the judiciary system performance to reinforce the confidence in the opportunity in doing business in Lebanon Develop economical zone capable of attracting FDI Build the structure to supply all needed data on the economy XI.b. Main Enablers for Competitiveness National Workshop - National Assembly, Library Conference Room

20. How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment • Improving the construction permit process • Increasing access to credit by modernizing secured lending framework • Improving trade across borders • Simplifying business registration • Improving the enforcement of contracts & alternative dispute resolution • Improving insolvency regime XII. Recommendations PMO&IFC Seminar on “Enhancing Business Environment” National Workshop - National Assembly, Library Conference Room

21. Going Forward How to Improve Competitiveness of Lebanon Economy andEnhance the Overall Business Environment The issue is not to determine what to do but when and through which mechanism the reform project should be managed The Lebanese should agree on an economical pact who will define the paradigm of the different choices available to restate the priorities and the way to go forward Thank you National Workshop - National Assembly, Library Conference Room