NNA - Prime Minister Saad Hariri said that "this is the best time to invest in Lebanon because, thanks to this political stability and security in our country, we have been able to establish that the country is capable of confronting crises in a wise manner."
He added out that our goal is to ensure that the fiscal deficit will not increase from the year 2017 until 2018, and that we will be able to meet all financial challenges next year.
Hariri's remarks came during a discussion this afternoon with the participants in the Global Business Summit, organized by Endeavor Lebanon and LIFE at the Four Seasons Hotel.
Question: To what extent do you confirm that the situation in Lebanon is stable? What guarantees can you give investors?
Hariri: For the past year, we called our government the restoring confidence government. We were working to show the world what the consensus could achieve. Over the course of this year, we achieved many things. People did not believe at first and thought that this consensus could explode at any time. Butit enabled us to overcome a very difficult situation in a wise way.
Question: Lebanon has been suffering from slow growth over the past years due to a number of problems, and we believe that the reason for this is that the country is moving on one engine, which is the monetary. In doing so, your government should stimulate economic activity, growth and job creation. What have you achieved at this level and what are your plans to encourage investment and growth in the country?
Hariri: I think that approving the budget is one of the most important achievements of this government. The country was on the 2005 budget, and for 12 years, we were working on unreal grounds. Today we have a budget for 2017 that includes a number of reforms and some taxes. I think the way to drive growth is to invest in the investment program that we have been working on over the past eight months. This program covers all the infrastructure in the country.
Question: When will the investment spending program start?
Hariri: We are preparing for a conference that starts next March. Until then, we have about $ 3 billion in projects as part of this program, but it has been approved by the government and the Parliament. We still need some funding to cover the acquisitions. When we get $ 750 million, we will start with the conference.
Question: So you are waiting for the contribution of the private sector with approximately $ 4 billion.?
Hariri: Even more. I think we are talking about eight years of investment, 2000 MW of electricity, roads from Khaldeh to Nahr Ibrahim, with an estimated cost of $ 1.5 billion. We hope to see the private sector implement these projects. We also believe that the expansion of the airport is worth about $ 1 billion. There are many other projects we intend to launch in mid-February, which are Elissar and Linor. These are real estate projects like Solidere which witnessed many political problems in the past. Today here is a consensus on them.
Question: To what extent do you think the investment environment is available in Lebanon?
Hariri: There are many laws that we have prepared and which are very important to encourage work. We worked on them in cooperation with several ministries and advisory bodies. They will be completed in Cabinet and then referred to Parliament, which will not delay them. With these laws, business will be much easier. There are a number of other laws that we will work on and a number of legal offices will help us in this matter in order to speed up their adoption.
Question: What about infrastructure, transparency and the overall economic situation?
Hariri: If we talk about transparency, look at the oil and gas sector. We signed the EITI agreement, which is done with transparency and international monitoring in the best way. Usually people sign it when this whole process starts. We signed it even before to make sure that the transparency of this sector is done from day zero. So the process we passed through in the oil and gas is extremely important. Also, on the CIP, we are going to follow the highest standard with the World Bank. We asked the World Bank and the IMF to give us all the standards that they need and I want it to be a condition for these projects to make sure there is full transparency.
Question: There is a lot of concern amongst the audience here about what happened over the past month in the government. Lebanon relied a lot on support from the Gulf countries, from both the public as well as the private sector. Will that support continue,on the financial level? What will your government might be doing to avoid an impasse?
Hariri: I think the Gulf has a problem with one political party and not with the whole of Lebanon. The Gulf is not going to take steps against all of Lebanon. I assure you that we have the best relationship with Saudi Arabia and very good relationship with the UAE and most of the Gulf. We will make sure that our disassociation policy will satisfy everyone and not only Lebanon. Some people would like to explain the challenges of the last month for their own political purposes in Lebanon, and unfortunately this is happening, but I can assure you that you will see many steps taken from the Gulf towards Lebanon and vice versa. Rest assured this is not going to be an issue at all.
Question: We would like to see clearer and well defined policies from the government to increase the industrial output of the country including the software sector.
Hariri: I am all for giving certain industries a lot of incentives. We should focus on the technological industries but the problem is that most of the subsidies go to certain groups on things that do not benefit the country. The job of the Economic and Social Council is to choose sectors that deserve incentives. I think we should be the hub for all medical treatment or hospitalization in the Middle East because we have the best doctors and hospitals. People in the Middle East travel to Europe to get medical treatment, whereas we should give a lot of incentives for health care in Lebanon and the same applies to technology because the Lebanese entrepreneurship is very advanced. We need to focus on that and give incentives to these industries.
Question: Experts in oil and gas sector sounded the alarm saying that there are major problems in the four laws attempted to be passed by Parliament. There are serious gaps in them in their current format and there is no rush to pass them right now.
Hariri: Absolutely. I totally agree with you and we took a position on this issue where we want the government to study the laws because there are real problems in these laws, and we will make sure that these gaps are not there anymore.
Question: I know your office is working on different initiatives supporting SMEs. Can you tell us more about it and the timeline to implement them?
Hariri: Regarding SMEs we tookmany initiatives and we saw that there is a lot of lack in coding, so last summer we did a three-month program to teach the youth coding. At the end of this program we took a decision to make the center of the program in the Grand Serail in order for the people who have initiatives to come to the Serail. My team has been working a lot to be more proactive.
Question: What is the economic vision of the government?
Hariri: The challenges that we have in this country are tremendous. When I came last year, we did not have many issues, like the state budget, the electoral law, the oil and gas and all the things that stabilize the country. Definitely we still lack a lot of vision to achieve progress in the country. But we took a decision in the government where we brought McKinsey to put up this vision to take the country where we want it and to help us in implementing the vision we want. In the next coming months we will finalize with McKinsey this vision.
Question: The law 64 has increased taxes to finance the increase in salaries of the public servants. There is the 2018 budget that is coming up. Are there new taxes foreseen and how do you manage between the pressure to reduce the public deficit and do projects to increase the growth of the country and try to help the economy to stay afloat until your vision is set?
Hariri: We have a deficit problem today, how do you fix this especially that we have a subsidy of 2 billion, 2,5 billion dollars in electricity, plus you have the CIP that we need to generate growth in the country in order to develop this economy. In addition, we have reforms.
I am against increasing any tax, we should stop some taxes and focus on 2 or 3 taxes like VAT, decrease the income tax all the way to 10% or less and this allows Lebanon to be a haven for low taxes and that way you bring more people to Lebanon.
In the budget we are preparing for 2018 there all a lot of unjustified benefits. The salaries scale cost us a lot, we cannot continue to borrow money to spend on useless things, we need to spend on investment, infrastructure, on things that make a difference and change people's life.
Question: To follow up on the topic of taxes, I want to tackle the real estate sector that contributes immensely in the GDP of the country. The taxes are increasing.
Hariri:This is something we are working on because you are right. The taxes on real estate are huge and this affects development. We believe that we should bring it down and allow the real estate to have incentives to decrease taxes.
Question: Investors care about political stability and security. But what is the stance of the government when the minister of justice presses charges against a journalist like Marcel Ghanem?
Hariri:Concerning freedoms, I do not accept that anyonemess with them. In Marcel's case, overstressing this case is a big mistake.
I filed complaints against some journalists who were crossing lines. Procedures follow their course.
This must be solved and Marcel as a journalist must take his right. I am with Marcel in this matter.
Unfortunately, everything in this country is politicized and the experience has shown that the only way to move forward is by dialogue.
Question: Last year, you promised that the internet will be fixed in Lebanon within 6 months.
Hariri: We took steps and moved from 4g to LTE in Lebanon, there is much more to be done, I think in February we will sign the biggest contract, which allows to have fiber optic everywhere in Lebanon.
Question: There are concerns about the situation in the region and its repercussion on Lebanon.
Hariri: I can assure you that we are safe. The reason I decided to have all these conferences is not only to take steps internally to build a safety net around us to ensure that the regional problems do not affect Lebanon. ISG was clear. The safety of Lebanon comes first. The dissociation policy must respected. Rome 2 is to confirm the commitment of Lebanon to implement resolution 1701. The Paris conference is to assure the stability of our economy.
It is wrong to think that we are not stable, the international community stands with Lebanon, KSA wants the stability of Lebanon, we must follow up with the disassociation policy.
The country is stable, my focus is on economy and reforms. Everybody is willing to cooperate to reach the safety zone.