The investment drain is just as dangerous as the brain drain

Khaled Abu Shakra – Nidaa Al-Watan

With the difficulty of opening the doors of logical solutions to the Lebanese economic, financial and monetary crisis, the doors of immigration have been opened wide. A phenomenon, although not new to Lebanon, but it is radically different from the contemporary migrations that followed the events of 1860, the famine of 1914 and the war of 1975. This time it was not limited to the migration of white, blue and pink not. white-collar workers, but rather to the migration of investments.

Although there are many types of migration of individuals and families, there is no clear definition of “investment migration”. The search always leads to “the flight of capital”. However, in the current Lebanese situation, the last description appears to be inaccurate, or at least carries a lot of bias against investors, especially the Lebanese. While the flight of capital is linked to a voluntary act and the “cowardly” nature of capital, investment migration appears to be a forced, not optional, solution to preserve what remains of the business, once the system has all the elements of resilience hit hard . It actually did not leave much hope for businessmen, neither in politics, nor in financial, monetary, security, economic and social policy.

Usually one of the following reasons is sufficient for capital to “escape” the country: an increase in taxes, a state government’s failure to pay its debts, a loss of confidence in the state’s economic strength, political instability and increased security events, or currency collapse and a decrease in power Purchases for citizens, or the lack of services such as water, electricity, communication and infrastructure, or the closing of the door to exports… everything happened within two years and until the extreme happening in Lebanon. And “with this we remained committed to our country, and tried to hold out until our last breath,” says George Nasraoui, vice president of the Association of Lebanese Industrialists. Today, however, we are witnessing a new phase of declines, mainly due to rising energy costs, and the lack of affordability. As the industrialist is forced to secure electricity for his plant by means of special generators that consume large quantities of diesel, and require maintenance on a permanent basis.” To make matters worse, a barrel of diesel has crossed the $260 threshold due to the rise in global fuel prices, and the almost total absence of state electricity.

This basic and fundamental obstacle represented in the ability to secure energy for industry does not exist in the destinations where industrialists are looking for an investment space to establish a new supporting industrial line. Electricity is guaranteed 24/24 by the state at reasonable and fair prices, without affecting the rest of the customs facilities, and the availability of excellent infrastructure in the industrial cities. “About a month ago, we went to the Sultanate of Oman with about 25 industrialists to explore investment opportunities,” continues Nasraoui, and “we were attracted to the facilities provided to us in terms of well-equipped industrial cities, and its low cost. compared to Lebanon. Which encouraged some to stay and work there. Of course, this does not mean the closure of investment in Lebanon, but the expansion externally and not internally, especially since the presence in the Sultanate provides easy access to the market of the Kingdom of Saudi Arabia, which is of great importance for exports of industrial products, after it was closed from Lebanon (due to the lack of required controls drug smuggling in some shipments).

At the beginning of the crisis, great reliance was placed on increasing industrial exports and improving their competitiveness in the local and international markets. The decrease in the exchange rate of the national currency against the dollar would have made the prices of Lebanese goods lower than their competitors in the market, and would have increased the demand for them. However, this did not happen due to the inability of producers to increase investments internally and establish new lines for the following reasons:

– The lack of political stability and the closure of many Arab Gulf markets to Lebanese goods.

– Slouching infrastructure.

Considerably high cost.

The explosion of the port of Beirut and damage to half of the capital.

Public sector strike and disruption of the clearance of imported raw materials and export operations.

The collapse of the banking sector.

Inability to dispose of deposits.

Don’t risk any “lire”.

As a result, the producers chose not to risk pumping any additional “lire” into this dangerous and unsafe environment, and to invest abroad. The economy has therefore lost a serious opportunity to achieve growth and create new jobs on the one hand, and to reduce the deficit in the balance of trade and payments on the other. And “this is the responsibility of the state, which so far has no executive plan to get out of the crisis, or even a development program to preserve the industry,” according to Nasraoui n. “The ministries disagree with each other about the laws. Let’s take the example of the Ministry of Economy and the fatal subsidy error it committed, and the chaos that reigns today in the matter of wheat.” Nasrway, who emphasizes the interest of the Ministry of Industry, says that the work of one ministry is not enough if there is no ministerial and government solidarity and a clear vision for the future.

The establishment and development of business in any of the countries is directly related to the existence of a strong and competent banking sector. Without reliable banks capable of attracting deposits and loans to investors, hope becomes tenuous, if not impossible, to increase investment and achieve growth. With the collapse of the banking sector in Lebanon, steadfastness has become an act of resistance for industrialists,” according to Nasraoui, “because they have to ensure continuity with individual initiatives.” In his opinion, “If there was a coherent banking sector, we would saw greater growth in the industrial sector, even if there were political and economic crises.”

“The search for investment opportunities abroad was not limited to the productive sectors, but also to services and trade. And if things stay as they are today, we will all be abroad,” says the head of the used car showrooms Syndicate, Elie Azzi. “Although most of the government’s income is secured by the private sector, obstacles are placed in our face daily by the government and the public sector. On the one hand, no state is able to take decisions, protect them and implement them. On the other hand, the strike of employees, the blocking of public administrations and the inability to remove goods from the port hamper our ability to move. . Regarding our sector in particular, i.e. the second-hand car sales sector, we were satisfied with “their” withholding of our money and the decrease in the percentage of sales, but the “concern” of the state did not satisfy us. Where we can’t register the cars that sell, causing us to lose customers and threaten to close the rest of the showrooms. Especially since our institutions are located in cities and on main public roads, and the cost of investing in them is very high.” All these things prompted Azzi to expand in the Sultanate of Oman, and prompted other merchants to transfer their investments to the Sultanate as well, to escape this bitter reality. Working abroad does not preserve and develop investments, but rather preserves the investor’s peace of mind and health, from which he pays daily for what he earned on the land.

The actual volume of foreign investment has not yet been accurately estimated, although all data indicate that it is very large when compared to the years before the crisis. The likely reason is that the majority of investors are still surveying, investigating opportunities and initially feeling the pulse. However, this process will not soon expand vertically, in the event that the executive plan does not see the light of day to get out of the crisis, and the state does not take the initiative to restructure and clean up the banking sector, while the good and was able to work, and did not intend to unify the exchange rate and end the platform hoaxes. The judiciary did not strengthen and strengthen its independence, and did not ensure energy in a sustainable manner, in that time on investments in Lebanon for peace.

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