A Complete Plan to Reactivate he Productive Sectors in Lebanon
In light of ongoing discussions and comments over the deteriorating political, financial and economic situations in Lebanon since 17/10/2019, the reactivation of the productive sectors leads the public claims after having witnessed the severe negative impact of the ongoing wrong economic policies since 1992.
The deep negative outcome is instilled in the exodus of the professionals and university graduates, who represent the backbone of the future of Lebanon, and the huge increase of unemployment touching the 50% mark.
The above outcome is a result of a cunning policy, carefully drafted and imposed by the western countries, in order for Lebanon to remain economically colonized. The negative outcome is also a result of the ignorance of the successive governments and parliaments since 1992.
Therefore, this paper sheds light on the following subjects:
- The reason for the downfall.
- The practical solutions.
- The effect of the proposed policies on the exports.
- The sources of financing the productive sectors.
I. The cunning measures are:
1.Drafting the two laws “The National Production Protection Law” and “The Consumer Protection Law, in a way that prevented the protection on the one hand, and despairs the local production on the other. (I have a detailed study on both laws).
2.Signing free trade agreements (FTA) as GAFTA, Euro med, and EUFTA.
3.Negotiating Lebanon’s partnership in the WTO for years that ended in keeping Lebanon as an observing member in spite of its succumbing to reduce the average import duties to below 5%.
4.Affirming the above mentioned free trade agreements (FTA) via bylaws passed by the parliament.
5.Signing ofFTAs with several individual countries such as Saudi Arabia, Syria, Egypt and several others with a clear advantage to such countries.
The outcome of all such agreements and laws, and due to the severe competition from the imported products, many industries have closed down such as clothing, shoe making, most medicinal, and furniture.Also agricultural production came to near complete halt especially the production of lentils, chick peas, wheat, barley, corn, sugar cane, beans, milk, honey, calf fattening and many others.
The reason for the harsh competition from the imported goods, especially the agricultural and food, is the direct subsidy on the production and the export of similar products by the exporting countries. This practice results in a landed price lower than its original cost in the exporting countries, especially USA, EU, China, Turkey and many others.
II.What is the solution?
The solution lies in the following procedures:
1.Modify the two laws “the Consumer Protection law” and “the National Production Protection law” in a way that allows both laws to entice local production on account of imports.
2.Freeze the execution of all free bilateral trade agreements for a period not less than 15 years on the grounds that Lebanon is passing through a very tough economic crisis.
3.Impose import tariffs on all products produced or can be produced in Lebanon exceeding 50% and may reach 100% on luxury items and expensive passenger cars.
4.Increase the minimum wage to 1.5 million Lebanese Pounds and increase all other wages in the same proportion tapped at ten million Lebanese Pounds.
5.Finance the increase in wages of the public sector from the proceeds of the import duties until the local ventures take over via taxes and duties.
III.Effect of such a Policy on Export
Exporters may oppose the protectionist measures on the grounds that their exports may be diminished.
The answers to this allegation are:
1.The percentage of the exports versus the imports during the past 20 years ranged between 10% and 12%. It dropped to 12% during the past three years.
2.Lebanese exporters faced serious obstacles from importing countries including the countries that signed the FTAs.
3.It is undoable that Lebanon sacrifices its intention to become productive just to please exporters at a cost of 600,000 US Dollars in export subsidies.
IV.Sources of Financing the Productive Sectors
It is probable that banks, under the present financial collapse, will not be able to finance new productive sector projects.
The major encouraging factor in delving into investments is the expected profitability. Once insured of the effective import duty protection, we will witness the well-known Lebanese adventures finding the necessary financing from his own savings, or from emigrant relatives, or from engaging import traders in their ventures who used five billion USD in such imports even during the severe economic collapse.
Over and above, certain commercial banks will soon recapitalize themselves and refinance productive projects amongst other projects, especially in light of restricted imports.
V.Conclusion
Saving Lebanon’s economy rests in activating the productive sectors which represent the major employer of the university graduates and of the unemployed. They will raise the economy to respectable levels; will crack on innovation and excellence; will participate in food security; will strive to improve quality and reduce costs in order to resume exports.