1

BeirutApril 21, 2023

Economic Performance & Investment Environment in

Lebanon

2

Outline

Lebanon: The Gateway to the Middle East

A Stellar Economic Performance

Strong Economic and Legal Fundamentals

Investment Opportunities

3

LEBANON: THE GATEWAY TO THE MIDDLE EAST

4

LEBANON – CROSS ROAD TO EUROPE, ASIA, AFRICA AND THE MIDDLE EAST…

Direct Air Services to African Sub-continent home to

Direct Access to all European Markets

GCC access

…. Facilitated by very liberal trade policies

5

LEBANON IN FIGURES

Overall Country Characteristics

Capital Beirut

Form of Government Parliament Democracy

Official Language Arabic – French

Population 4,224,000

Literacy Rate 90%

Lebanon Main Economic Indicators 2009

GDP at current prices (USD billion) 34.5

Real GDP growth (%) 8%

GDP/Capita ( Current USD) 8,175

Average Inflation Rate (%) 1.20%

Exchange rate (LL per USD ) 1507.5

Bank Assets to GDP (% of GDP) 334.1%

6

SOLID REASONS TO INVEST IN LEBANON:

A STELLAR ECONOMIC PERFORMANCE

7

The Lebanese economy has registered a stellar performance over the last few years…

0.60%

7.50%

8.20%8.70%

6.50%

2.50%

5.80% 6%

5%

3%2.70%

0.20%

3.00%

7.50%

8.5%9.30%

7.30%

2%

3.80%

-3%

-1%

1%

3%

5%

7%

9%

11%

2006 2007 2008 2009 2010

0.60%

7.50%

8.20%8.70%

6.50%

2.50%

5.80% 6%

5%

3%2.70%

0.20%

3.00%

7.50%

8.5%9.30%

7.30%

2%

3.80%

-3%

-1%

1%

3%

5%

7%

9%

11%

2006 2007 2008 2009 2010

REAL GDP GROWTH RATES(2006-2010)

Source: International Monetary Fund, World Economic Outlook Database, April 2010

Lebanon

Emerging Economies

Advanced Economies

MENA Countries

Worldwide financial crisis

8

… and was one of the best performers regionally and internationally despite the global slowdown

ANNUAL GROWTH RATES (2009-2010)

Source: International Monetary Fund, World Economic Outlook Database, April 2010

9.03%

8.00%

5.20%

4.67%

4.52%

3.99%

3.35%

2.95%

2.89%

2.75%

2.03%

0.14%

-0.67%

-2.66%

-6.29%

-7.58%

-10% -5% 0% 5% 10%

Qatar

Lebanon

Morocco

Egypt

Sudan

Syria

Oman

Tunisia

Bahrain

Jordan

Algeria

KSA

UAE

Kuwait

Japan

Ireland

9

Confidence in the Lebanese economy has sustained with FDI inflows growing at a steady rate of 15%

Source: UNCTAD: IDAL Estimates and Calculations

15% CAG

R

2.68

3.38

4.33

4.844.65

2006 2007 2008 2009 2010

FDI INFLOWS TO LEBANON (2006-2010)

10

Enabled mainly by strong interests from foreign investors and Arab expatriates particularly in the Lebanese real estate and residential sectors

Financial 1.5%

Residential 26.3%

Tourism 22.2% Real Estate

44.4%

Education 1.3%

Trade2.3%

Agriculture1.8%

FDI DISTRIBUTION BY SECTOR (2009)

11

Lebanon is actually one of the largest recipient of FDI in the region, If we exclude oil rich economies

FDI INFLOWS TO MENA COUNTRIES(in 2009)

(Bn $)

Source: UNCTAD/World Investment Report (WIR)2010

0.2

1.5

2.3

2.3

2.5

4.8

6.8

8.5

8.7

35.0

Kuwait

Syria

Algeria

Jordan

Morocco

Lebanon

Egypt

UAE

Qatar

KSA

Oil Rich Economies

12

Actually Lebanon has the highest degree of internalization with FDI stock as large as the economy

430

230

200

175

90

85

80

60

100

40

30

40

35

0 100 200 300 400 500

Hong Kong

Luxembourg

Singapore

Belgium

Switzerland

Ireland

Sweden

UK

Lebanon

Saudi Arabia

UAE

France

Canada

FDI STOCK % GDP (2009)

Source: UNCTAD STAT

13

SOLID REASONS TO INVEST IN LEBANON:

STRONG FUNDAMENTALS

14

Lebanon is one of the freest economy regionally and internationally due to the lack of restrictions on capital flows

6.5

6.1

5.9

5.9

5.7

5.5

5.3

5.1

5.1

5.0

4.3

4.1

4.1

Hong Kong

Finland

Lebanon

Singapore

Qatar

UAE

Saudi Arabia

Australia

Jordan

Turkey

Kuwait

Egypt

Tunisia

Source: World Competitiveness Report

RESTRICTIONS ON CAPITAL FLOW (2010)

How restrictive are regulations in your country related to international

capital flows. 2009-2010 weighted average

Score over 10

How restrictive are regulations in your country related to international

capital flows. 2009-2010 weighted average

Score over 10

Ranking

5

1

117

FREE MARKET ECONOMY

FREE MARKET ECONOMY

Lowest restrictions

15

Lebanon boast one of the soundest banking system in the world, ranking 4th only after some of the largest economies

SOUND BANKING SYSTEM

SOUND BANKING SYSTEM

Soundness of Banks* World Rank

9th

8th

7th

6th

5th

4th

3rd

2nd

1st

Canada NewZealand

Australia Lebanon Chile SouthAfrica

Panama Hong Kong Singapore

Ran

k

Source: Global Competitiveness Report, 2010-11

2010

SOUNDNESS OF BANKS (2010)

16

Lebanon has one of the most favorable taxation environment regionally and internationally

10%

13%

15%

15%

17%

20%

20%

24%

25%

30%

30%

33%

33%

40%

45%

Cyprus

Ireland

Lebanon

Jordan Low

Singapore

Egypt

Turkey

Greece

UK

Tunisia

Jordan Hig

Germany

France

Japan

Syria High

CORPORATE TAX RATE (%)(2009)

Source: Countries website

COMPETITIVE TAXATION

ENVIRONMENT

COMPETITIVE TAXATION

ENVIRONMENT

17

Lebanon has one of the best educated workforce that is endowed with a top-notch higher education system

80

57

57

55

52.6

41.3

40.4

39.8

35.2

32.7

20.6

Lebanon

Jordan

Tunisia

Qatar

Morocco

UAE

Kuwait

Egypt

Bahrain

Saudi Arabia

Algeria

Education Capability Index Selected Regional countries

(2010)

The Education Capability Index10 represents CEO satisfaction levels regarding the education system, based on current quality, the adequate skills acquired by students upon

graduating, and the ability of the education system to meet future market requirements.

The Education Capability Index10 represents CEO satisfaction levels regarding the education system, based on current quality, the adequate skills acquired by students upon

graduating, and the ability of the education system to meet future market requirements.

Source: www.pwc.com; ttp://www.educationdev.net

Number of Higher Education Students per 100,00 Inhabitants

(2010)

TOP NOTH HUMAN

CAPITAL

TOP NOTH HUMAN

CAPITAL

5339

4974

3117

2712

1960

1900

1559

1509

1380

1253

1236

801

USA

Korea

Argentina

Lebanon

Turkey

Egypt

Syria

Qatar

Saudi Arabia

Tunisia

Algeria

UAE

18

The healthcare system is amongst the best performer internationally as measured by the ratio of physicians to population and beds to population

Source: WHO Report 2010

64

37

33

31

30

27

26

24

15

16

5

Cuba

France

Lebanon

Ukraine

Bahrain

USA

Jordan

Egypt

UAE

Saudi Arabia

Syria

Physicians per 10,000 Population – Selected Regional and OECD countries

(2000-2009)

Beds per 10,000 Population – Selected Regional and OECD countries

(2000-2009)

87

72

60

34

31

20

22

21

19

18

15

139Japan

Ukraine

France

Cuba

Lebanon

USA

Bahrain

Saudi Arabia

Egypt*

UAE

Jordan

Syria

QUALITY HEALTH

CARE

QUALITY HEALTH

CARE

19

The Quality of Life has been an important factor in channeling investments to Lebanon

Quality of Life Indicators in MENA(Scale of 100)

(2010)

55.05

54.42

54.45

54.3

53.5

53.5

52.4

51.5

50.45

50

45

30 40 50 60

Jordan

Kuwait

Morocco

Lebanon

Bahrain

Syria

Qatar

Egypt

UAE

Algeria

Saudi Arabia

Source: International Living

The Quality of Life Index is based on variables relating to the

cost of living, environment, culture and leisure, political

freedom, health, infrastructure, safety & risk.

The Quality of Life Index is based on variables relating to the

cost of living, environment, culture and leisure, political

freedom, health, infrastructure, safety & risk.

++

LIFESTYLELIFESTYLE

20

SOLID REASONS TO INVEST IN LEBANON:

VAST INVESTMENT OPPORTUNITIES

21

Lebanon boast at least 9 sectors with growth potential and readiness for development

SECTORS WITH HIGH GROWTH POTENTIAL

INFORMATION TECHNOLOGYINFORMATION TECHNOLOGY

FOOD & BEVERAGEFOOD & BEVERAGE

TOURISM TOURISM

INDUSTRYINDUSTRY

MEDIA MEDIA AGRICULTUREAGRICULTURE TECHNOLOGYTECHNOLOGY

FINANCIAL SERVICESFINANCIAL SERVICES

EDUCATION EDUCATION

Source: UNDP Report 2003- Investor Perception Survey

22

SECTORS WITH PROMISING POTENTIAL – Overview

ICT: Great potential as Lebanon ranks 16th worldwide for the quality of its education and 7th for sciences. ERICSSON, US INTEL CAPITAL, NOKIA with operations in Lebanon

ICT: Great potential as Lebanon ranks 16th worldwide for the quality of its education and 7th for sciences. ERICSSON, US INTEL CAPITAL, NOKIA with operations in Lebanon

FOOD AND BEVERAGE: Great export potential for local industry mainly olive oil, wine and processed food– Made in Lebanon Products very successful internationally

FOOD AND BEVERAGE: Great export potential for local industry mainly olive oil, wine and processed food– Made in Lebanon Products very successful internationally

FASHION INDUSTRY: A booming sector with enormous potential: Designers such as Elie Saab, Rabih Keyrouz, already serving the international market

FASHION INDUSTRY: A booming sector with enormous potential: Designers such as Elie Saab, Rabih Keyrouz, already serving the international market

HEALTH CARE TOURISM: Lebanon already attracts health tourists from GCC countries and boasts one of the top notch medical centers in the world and highest ratio of physicians to population in the world

HEALTH CARE TOURISM: Lebanon already attracts health tourists from GCC countries and boasts one of the top notch medical centers in the world and highest ratio of physicians to population in the world

PROFESSIONAL SERVICES / CALL CENTERS: Lebanon offers a strategic location for serving the “Levant”/MENA markets, with an educated, multilingual and commercially minded workforce.

PROFESSIONAL SERVICES / CALL CENTERS: Lebanon offers a strategic location for serving the “Levant”/MENA markets, with an educated, multilingual and commercially minded workforce.

MEDIA: Significant Hub for the media and entertainment industry; Opportunities in High End Publishing, advertising, TV and audio Production; Promising market due to very young market

MEDIA: Significant Hub for the media and entertainment industry; Opportunities in High End Publishing, advertising, TV and audio Production; Promising market due to very young market

23

The Investment Development Authority of Lebanon (IDAL) has played an important role in attracting investments to growth promising sectors

Main Authority responsible for promoting Lebanon and attracting investments. Attached to the Presidency of the Council of Ministers

Created in 1994 and Investment Law 360 ratified in 2001

Provides a wide range of services: – Provide economic, financial and legal information important for investors

– Grants fiscal incentives and other types of fee reduction to investors

– Facilitates the issuance of permits and licenses

– Identifies investment opportunities across various sectors

– Provide Business Matchmaking Services to investors and entrepreneurs

Follow a sector oriented approach with specialists in growth promising sectors

24

INVESTMENT INCENTIVES IN LEBANON offered by INVESTMENT LAW 360

REGION AND SECTOR BASED INCENTIVE REGION AND SECTOR BASED INCENTIVE JOB CREATION BASED INCENITVE JOB CREATION BASED INCENITVE

• Also called Package Deal Contract • Provided to projects based on their

investment size and number of jobs created

• Incentives Provided: 100% exemption of Income Tax and

Taxes on Project Dividends for up to ten years

Up to a 50% reduction on Work and Residence Permit Fees

Up to a 50% reduction on Construction Permit Fees

Full exemption from Land Registration Fees

• Also called Package Deal Contract • Provided to projects based on their

investment size and number of jobs created

• Incentives Provided: 100% exemption of Income Tax and

Taxes on Project Dividends for up to ten years

Up to a 50% reduction on Work and Residence Permit Fees

Up to a 50% reduction on Construction Permit Fees

Full exemption from Land Registration Fees

• Also called Investment Projects incentives

• Provided to projects based on their geographical location across 3 Zone: A, B, C and investment size

• Incentives Provided: Up to 100% tax exemptions for 10

years for projects located in remote areas

Work Permits granted

• Also called Investment Projects incentives

• Provided to projects based on their geographical location across 3 Zone: A, B, C and investment size

• Incentives Provided: Up to 100% tax exemptions for 10

years for projects located in remote areas

Work Permits granted

TWO TYPES OF INCENTIVES SCHEMES

25

A

B

C

C

Sectors Minimum Inv. Size US$

Tourism 10,000,000

Industry 5,000,000

Agro-Industry 2,000,000

Agriculture 1,500,000

Technology, ICT & Media

200,000

Sectors Minimum Inv. Size US$

Tourism 4,000,000

Industry 3,000,000

Agro-Industry 1,500,000

Agriculture 1,000,000

Technology, ICT & Media

200,000

Sectors Minimum

Inv. Size US$

Tourism 1,000,000

Industry 1,000,000

Agro-Industry 1,000,000

Agriculture 500,000

Technology, ICT & Media

200,000

Regions with Socio Economic

Challenges

100% income tax exemption for 10

years

REGION AND SECTOR BASED INCENTIVE REGION AND SECTOR BASED INCENTIVE

C

50% income tax exemption for 5

years

Beirut

26

JOB CREATION BASED INCENTIVE JOB CREATION BASED INCENTIVE

Sector Minimum Inv. Size US$

Minimum Job Created

Tourism 15,000,000 200

Industry 10,000,000 100

Agro-Industry 3,000,000 60

Agriculture 2,000,000 50

Technology, ICT & Media

200,000 25Beirut

100% income tax exemption for up to 10 years

+100% exemption from taxes on project dividends for up

to 10 years

27

Today a multitude of Foreign Investors are operating in Lebanon

28

Thank You for your Attention

For queries and more information please contact IDAL at:

Info@idal.com.lb or 00961 1 9833 06

Or Visit our Website at www.idal.com