Syrian demand for Lebanese goods  has substantially increased recently, driving up exports by 6 percent in the first half of the year and industrial goods by 13 percent up to April. But the real figures could be much higher, experts argue, due to a thriving smuggling trade  in all kinds of goods – especially pharmaceutical products.
Syria topped the list of export destinations in the first half of the year, with a total bill of $391 million, accounting for around 17 percent of Lebanon’s total exports.
“Lebanese industrialists continue to provide alternative goods to Syrian products after many industries were brought to a halt or cut back production as a result of the turmoil,” Industry Minister Vreij Sabounjian told The Daily Star.
“There is definitely an upward trend and we expect to continue seeing increases in industrial exports,” he said.
Jacque Sarraf, CEO of Malia Group  – a major industrial and commercial group which had investments in Syria – echoed Sabounjian and highlighted that Syrian demand was concentrated on fast-moving products.
“Consumer goods  ranging from foodstuff to tissue paper are in huge demand in Syria,” Sarraf added.
He also said demand for pharmaceutical products was soaring in the war-torn country, particularly since key industrial cities in Aleppo have been damaged or looted by combatants.
Earlier this month, The Daily Star reported that at least 25 Syrian pharmaceutical plants had been completely destroyed or taken over by militias, and most of the others have been forced to suspend production over the past two years.
Overall pharmaceutical production  in Syria dropped 75 percent since 2010, according to the most recent Syria Humanitarian Assistance Response Plan, released by the United Nations in June.
Yet despite the growing demand, many pharmaceutical products are entering Syria through unofficial channels because most Lebanese factories have not registered their medicine and equipment with the Syrian Health Ministry as required by law.
The Lebanese Industry  and Health ministries should liaise with the Syrian side to acquire the proper licensing, experts said, adding that this would both result in higher customs revenues and improve the accuracy of export figures.
Moussa Moussa, plant director at Benta SAL, told The Daily Star that his company had been seeing significant Syrian demand for its medical equipment, particularly items related to surgical operations.
But he said the fact that the company produced high-end products made it less lucrative to Syrian importers, noting that demand was arbitrary and rapidly fell or increased depending on the situation.
“But for sure there is a sizable Syrian demand for Lebanese pharmaceutical products ... if you look at the market as a whole,” he said.
Moussa told The Daily Star that owners of the biggest pharmaceutical industries in Aleppo had mulled opening factories in Lebanon but were deterred by high land prices and other unfavorable factors.
As a result, none of the plans had yet materialized, he said.
Lebanese industrialists are also tapping other markets as local demand declines on economic stagnation.
“We are entering new markets in Africa and elsewhere where there is a strong Lebanese expat presence. The GCC [Gulf Cooperation Council] states are still very promising markets for Lebanese producers” Sarraf said.
Sabounjian highlighted the importance of new markets in the Caucasus, including Armenia and Georgia.
“We are organizing a business delegation including industrialists and franchisers to discover opportunities and market Lebanese successes and products in these countries,” he said.
Sabounjian said his ministry was working toward passing a key law that would slash taxes on industrial exports.
Industrial exports, excluding re-exports, were up 13 percent to more than $1.2 billion in first four months of 2013, the ministry said last week.
Industrial machinery imports were up 22.1 percent from $89.4 million in the same period of 2012, an indicator of a future increase in industrial output.
Lebanon’s exports increased $142 million to $2.31 billion as imports  declined $86 million to around $10.80 billion, compared to last year.
As a result, Lebanon’s trade deficit declined $230 million to $8.48 billion in the first half of the year, according to the Higher Customs Council.