Yes master

I'm blogging in full this excellent article by Lysandra Ohrstrom from the Daily Star (one wonders why she is still there.) Lysandra (whom I do not know) often addresses issues of relevance to trade and small industries and has excellent insights. Read how the current government policies (and previous ones) reject the idea of any intervention in the sectors in order to favor import and trade. Read how their vision for Lebanon is one of services with no production. Read how they blame family agribusinesses rather than addressing (US and EU) market distorting subsidies. Read how the US, directly and through its subservient cronies has decided how the economy of Lebanon will be: services and laissez faire. Read how the capitalists and businessmen of Lebanon are begging the state for some intervention but how the state will not intervene because the US Department of Commerce thinks it should not. This government defers to the US in all matters: local politics, economy and timing of the toilet breaks. You should have heard US ambassador Feltman give the Lebanese people yesterday his views on the Lebanese constitution and on the timing of the presidential elections. One word can describe him: High Commissionner.

Global market changes face of Lebanese economyInvestors focus attention on value-added sectorBy Lysandra Ohrstrom Daily Star staffThursday, July 19, 2007

BEIRUT: As Lebanon's drive toward integration in the global market intensifies, foreign investors are shifting their attention to value-added sectors of the local economy, leaving industry and agriculture to struggle against high production costs and competitively priced imports. Pharmaceuticals, Internet communication technology (ICT), and insurance were identified as Lebanon's "best prospect sectors" in the 2007 annual Country Commercial Guide report released by the US Department of Commerce last week.

The vice president of the Lebanese American Chamber of Commerce, Arslan Sinno, said the World Trade Organization (WTO) accession process and multi-lateral free trade agreements with European and Arab countries have promoted the liberalization of the economy, forcing business leaders to take stock of promising sectors for development that may be able to compete at the global level.

"In view of the European neighborhood policy, the GAFTA (Greater Arab Free Trade Agreement), and TIFA (Trade and Investment Framework Agreement) with America, it will be more difficult for smaller businesses to compete with industrial giants in Western countries so they are focusing on value-added products that rely on human resources," Sinno told The Daily Star in a phone interview Wednesday.

Multinational corporations are increasingly subcontracting local software firms for their computer programming needs, he said, leading to some early "success stories" in the nascent ICT industry. Meanwhile, international film distributors are commissioning tri-lingual Lebanese for film translation and subtitles.

But other productive sectors have not fared as well in their effort to gain a larger share of Western markets. Agri-food exporters, for instance, have attempted to appeal to the growing appetite for ethnic and Mediterranean foods in Europe and America - which has expanded beyond the Middle Eastern diaspora - said Sinno, but the absence of legislation promoting mergers between family-owned SME's has discouraged the consolidation that is necessary to reduce prices in foreign markets.

"We can't have 12 separate canning companies competing for a share in the same market, they need to merge and find financing so they can rival products from other countries like Cyprus who produce the same goods," Sinno explained.

Though multi-national labels like Nestle have shown minor interest in acquiring local food manufacturing labels, very few energy-intensive industries have managed to attract foreign capital or retain qualified personnel - especially for specialized products.

Industrialists are not averse to the further opening of the Lebanese market to international products, insisted Wajih al-Bizri, the vice president of the Association of Lebanese Industrialists, but they need the government to mimic neighboring countries by creating industrial cities equipped with sewage systems, electricity and irrigation networks, and roads in less expensive, under-developed rural areas of the country.

"Lebanon never had any barriers to trade to begin with so industrialists are not afraid of [an open market]," he explained.

"What worries us is unfair competition from countries with low cost of energy.

"The [government] leased land to the private sector in Choueifat and Akkar and called them industrial zones, but they did not provide any infrastructure," Bizri said.I

ncreased openness has also contributed to the accelerating brain drain from Lebanon to Gulf countries, forcing industrialists to contend with an absence of qualified personnel with knowledge of international markets. Since the domestic market cannot meet the salary requirements commanded by middle and upper management in the Gulf, the quality of local products has suffered.

Though the Lebanese business community is calling for increased government intervention in the economy - however minor - the US Department of Commerce the views the state's laissez-faire investment policy as one of the country's biggest draws.

A multi-lingual workforce and media content providers in the country and the government's plans to upgrade the ICT infrastructure will offer significant opportunities to foreign investors, the department of commerce report said.

Meanwhile the pharmaceutical market generates $400 million a year in retail sales but products manufactured here account for less than five percent of total annual consumption, making Lebanon the biggest importer of prescription drugs in the Levant.

Insurance was also cited as an attractive sector for development since the demand for personal insurance policies and coverage for reconstruction work is projected to rise steadily.
The Lebanese service sector has shifted its gaze to global brands, with local branches of US franchises on the rise, despite declining purchasing power.

The report calls franchising "one of the fastest growing business sectors in Lebanon". Though domestic branches of global fast-food chains have proliferated most rapidly, the volume of clothing, retail, and car rental franchises has also risen, leading to the proposed creation of a union of Lebanese Franchisers this year.

Paul Ariss, head of the Restaurant, CafŽ, and Hotel Syndicate, expects the number of US food and restaurant franchises - there are currently at least a dozen different brands - to continue growing the future.

"Because the market is open, and people are aware of international brands there will always be a market for brands like Burger King, McDonald's, and KFC," he said.
"If they are still all doing well in Lebanon at a time like this other franchises will be encouraged to follow their example," Ariss said.