Hariri plans to privatize economy and link with EU

Published November 13th, 2000 - 02:00 GMT

Lebanese Prime Minister Rafiq Hariri plans to privatize the electricity industry and fixed line telephone connections from 2001, and to strike an association agreement with the European Union, he told AFP


"I hope that the privatization of the telecommunications sector will take place as soon as possible, during the year 2001," Hariri told an AFP delegation headed by company chairman and managing director Bertrand Eveno. 


As for the privatization of the OGERO public phone company, Hariri will look for a "strategic partner who will hold between 20 and 25 percent, with the rest going to the open market." Such a partner will be "the foreign company making the best offer," he said. Two private companies, Libancell and Cellis, already share the mobile phone market. 


Hariri said that he also wants to "privatize as soon as possible" Lebanon's electricity company (EDL). "As soon as the preparations are made, we will privatize it," he said, without specifying how he planned to proceed. As for new projects on production and distribution of electricity, he said he wanted to conclude BOT (Build, Operate and Transfer) deals. 


Hariri also wants to make inroads with the Europeans. "I want to sign an association deal with the European Union in 2001 ... we are in a hurry and I think that the European Union is too," he said. Lebanon does half its trade with the EU. 


Negotiations have dragged on through five years because of a row over the level of customs duties, which are the main source of revenue for the Lebanese state. Hariri confirmed his intention over the coming weeks to sharply reduce excise duties and to simplify customs control.  


He said he will let raw materials come through with zero tax, while maintaining customs levies on cars, cement, hydrocarbons, tobacco and furniture. Half the revenue to the Lebanese state comes from excise tolls and "Lebanon wants the EU to compensate it for at least 500 million euros ($425 million) for its drop in receipts," a European diplomat close to the talks told AFP


To cut public debt which has reached more than $22 billion, the prime minister said he was in favor of radical policies to hike receipts, as it is hard to cut spending when half goes on servicing debt.  


He noted that the first step taken by his government Wednesday was to declare an open skies policy over Lebanon. “We will take others on board," he said, announcing a freeing up of the basic law allowing for the purchase of land by foreign investors. 


In terms of fiscality, Hariri said he favors a no-tax regime for income below $8,000 per year, and a very low fixed rate just above that income level. Corporation tax will "be held at 15 percent," he said, "although the tax on specific transactions will be reviewed." As for sales tax (VAT) — "that may take a while." 


"Lebanon is the oasis of the Middle East, as it boasts freedom and culture. I want to make of it a trade and re-export center, with an airport which can become the 'hub' of the region, as well as a telecommunications and information technology center," he said. 


"We are going to encourage companies, particularly Europeans, to use Lebanon as an industrial base, with a work force as well trained as, but less expensive than Europe," said Hariri. — (AFP, Beirut) 


by Pascal Mallet 


© Agence France Presse 2000

© 2000 Mena Report (www.menareport.com)

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