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Inversió estrangera directa (IED) al Líban

FDI in Figures

Lebanon has traditionally been open to foreign direct investment, although recent political instability, macroeconomic imbalances and a foreign currency crisis have dampened the country's attractiveness. According to the 2021 World Investment Report published by the UNCTAD, FDI inflows were estimated at USD 3 billion in 2020. The stock of FDI reached only USD 18 billion in 2020.The stock of FDI reached only USD 18 billion in 2020. In the past, FDI has fuelled job creation and boosted the information, technology and industrial sectors, but regulatory and institutional bottlenecks affected the prospects for FDI diversification. In the last two years Lebanon has been hit by a series of shocks: an economic and financial crisis, followed by the COVID-19 pandemic, a political crisis and finally, the explosion at the port of Beirut on 4 August 2020. The unprecedented economic crisis has had large and persistent negative impacts that continued affecting the country in 2021 and deterred FDI. The main investors are France, the United Arab Emirates, the United States, Germany, the United Kingdom, the Netherlands, Jordan and Egypt. FDI are mainly oriented towards trade, real estate, services, tourism and agriculture.
The serious economic and political crisis that Lebanon is going through, the sovereign default and the effects of the Syrian crisis will continue affecting investor confidence. Other factors already impeded FDI including high unemployment, brain drain, energy supply shortages and regulatory obstacles (UNCTAD Investment Policy Review, 2018). The country is ranked 143rd out of 190 economies by the World Bank in its Doing Business 2020 report (down 1 position compared to the previous report, in which Lebanon had already lost 9), one of the lowest rankings in the Middle East. Since October 2019, the Lebanese financial sector has imposed ad hoc capital controls, preventing most Lebanese from transferring money abroad, despite the fact that 75% of accounts in Lebanese banks are denominated in dollars. On 7 March 2020, Lebanon announced its intention to default and restructure its nearly $31 billion of dollar-denominated debt.  Despite the economic plan implemented by the government to restructure its financial sector, Lebanon has signed an official request for IMF assistance.  Most analysts see Lebanon's short to medium-term economic future as bleak, with probable fiscal austerity, persistent capital controls, further devaluation, and potential impairment applied to wealthy depositors to recapitalise the banking sector. These developments will affect Lebanon's potential as a destination for foreign investment, degrading its position in the years to come.

 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) 2,6582,0553,067
FDI Stock (million USD) 65,96568,02017,752
Number of Greenfield Investments* 6124
Value of Greenfield Investments (million USD) 14929096

Source: UNCTAD, Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 
Country Comparison For the Protection of Investors Lebanon Middle East & North Africa United States Germany
Index of Transaction Transparency* 9.0 6.4 7.0 5.0
Index of Manager’s Responsibility** 1.0 4.8 9.0 5.0
Index of Shareholders’ Power*** 5.0 4.7 9.0 5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in Lebanon

Strong Points

With its liberal economy, Lebanon has attracted foreign investors for many years. Advantages for FDI in Lebanon include:

  • The country can represent a gateway to other countries in the Middle East and to many emerging economies thanks to its geographical location
  • The relatively westernised workforce is highly skilled
  • Few restrictions exist for investment and there are still important investment opportunities in the fields of reconstruction of basic and productive infrastructure, construction and supermarkets
  • The large diaspora (there are more Lebanese outside the country than inside) guarantees recurrent financial flows to the country, thereby injecting liquidity into the national economy
  • The discovery of offshore natural gas deposits should enable the country to reduce its energy dependence and offer numerous opportunities for related sectors.
Weak Points

Disadvantages for FDI in Lebanon:

  • Exposure to geopolitical tensions in the region
  • Political instability: the political landscape is divided according to religious, political and cultural criteria
  • Social unrest driven by a decline in public services and growing food insecurity
  • A lack of transparency in the licensing system
  • Complicated customs procedures, high taxes and fees
  • Since October 2019, Lebanon’s financial sector has imposed ad hoc capital controls
  • In 2020, the local currency lost more than 60% of its value on secondary exchange markets
  • Economically, the country's very high public debt remains one of the main obstacles to FDI (in March 2020, the government announced it would default on and restructure its nearly USD 31 billion in dollar-denominated debt).
Government Measures to Motivate or Restrict FDI
Lebanese business law, which is very liberal in terms of business freedom, is in principle very open to all traditional forms of investment. In addition, in order to facilitate all investor business establishment administrative formalities, law n°360 of 16 August 2001 on investment promotion formed a government agency IDAL (Investment Development Authority of Lebanon). This agency, which is under the direct authority of the Prime Minister, grants numerous tax exemptions, or offers exceptional regimes, as long as the investment is in defined sectors of activity, in named zones and start from a set investment amount. Likewise, the agency has the power to issue the necessary licenses and permits. Furthermore, IDAL established the Business Support Unit (BSU), which provides free legal, accounting, and financial advice to startups across sectors.
Lebanon’s Investment Law No. 360 introduces tailored incentives through package deals for large investment projects, including tax exemptions for up to 10 years, reductions on construction and work permit fees, and a total exemption on land registration fees.
Bilateral investment conventions signed by Lebanon
To see the list of investment treaties signed by Lebanon, consult UNCTAD's International Investment Agreements Navigator.

Find out more about Investment Service Providers in Lebanon on GlobalTrade.net, the Directory for International Trade Service Providers.

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Actualitzacions: May 2022

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