As if the brain drain wasn't enough: energy costs could drive Lebanese businesses away
Dozens of Lebanese firms are moving their operations abroad, the head of the Beirut Chamber of Commerce told The Daily Star Wednesday, amid what he termed was an “unprecedented economic slowdown.” “A growing number of companies, including factories and commercial enterprises, are either trimming down their operations in Lebanon or moving offices and production lines entirely to other countries in the region,” Mohammad Choukeir said.
Choukeir declined to identify any such companies, although he noted that some were involved in tourism, industry and commerce.
Ziad Beckdache, vice president of the Lebanese Industrialists Association, said that while there was no massive exodus of Lebanese factories, energy-intensive businesses would soon be on the move if no government action was taken to cut fuel and electricity bills.
“What I can tell you is that if electricity and fuel are not subsidized for energy-intensive factories ... those who are able to will be moving to Egypt if the political and security situation in that country is okay,” he told The Daily Star.
Some of the biggest energy-intensive factories in Lebanon are involved in the production of tissue paper, cardboard, paper and plastic.
An industry source who declined to be identified told The Daily Star that one major producer of tissue paper recently relocated a production line to Egypt, in a move that reduced electricity costs by up to $500,000 a year.
Beckdache told The Daily Star that an Industry Ministry-led plan to cut costs for energy-intensive factories had been shelved by the government.
In late 2012 Industry Minister Vreij Sabounjian said Lebanon’s energy-intensive industries would benefit from a series of measures that could significantly cut their costs. But the proposal was never passed by the Cabinet, according to Beckdache.
“Officials here do not see that the losses they incur in taxes and job opportunities [when a factory moves operations] ... will exceed the subsidies they would need to provide for factories to stay,” he said.
Several Lebanese industrial firms have recently relocated.
After decades of manufacturing sweets in Lebanon, a Cadbury Adams factory in northern Beirut closed down in June, saying the local market would be supplied from a new facility Egypt.
Asked if the chamber was forecasting negative growth this year, Choukeir said: “Lebanon would be lucky to register a zero percent growth rate.”
“There are no more figures to discuss, all we have [are declining figures] across the board,” he said.
The group has threatened escalatory measures if a new Cabinet is not formed to deal with pressing concerns facing Lebanon, but has delayed any further moves until after a planned meeting next week with Parliament Speaker Nabih Berri and Prime Minister-designate Tammam Salam.