The industrial sector’s contribution to GDP is expected to increase in the short to medium terms as the Lebanese Government recognizes the importance of supporting the sector to achieve an inclusive and sustainable economic growth.
KEY FACTS AND FIGURES:
The sector accounted for around 14% of GDP in 2018 and employs around 21% of the local labor force (based on 2009 national estimates).
There are over 6,400 industrial firms in Lebanon, with more than 22% in the Agrofood sub-sector.
The Agri-food sector is the highest contributor to the Industrial sector’s Gross Value-Added accounting for a 34% share of total.
The value added of the manufacturing sector per capita has more than doubled between 1990 and 2015 moving from USD 268 to USD 703 (in constant US dollars per capita). By this, Lebanon surpassed comparator countries such as Jordan and Georgia.
Industrial exports stood at USD 2.7 billion in 2018, accounting for 93% of total Lebanese exports.
Top five Lebanese industrial exports arePearls and Precious Stones (24%), Agrofood products (16%), Base Metals (14%), Chemicals (13%), and Machinery and Electrical Appliances (12%).
Key export destinations include: United Arab Emirates (16%), Saudi Arabia (7%), Syria (7%), South Africa (6%) and Iraq (5%).
The share of sophisticated manufactured products using medium and medium-high technology in total manufactured exports reached 38% in 2015 (World Bank) - indicating promising technological capabilities in the sector.
Industrial permits have increased at a CAGR of 16% from 375 in 2011 to 1,086 in 2018.
Highly-Skilled Workforce with Competitive Wages: Lebanon ranks 19th worldwide for the Quality of its Educational System and it occupies the 6th place for the Quality of its Math and Science Education. Moreover, competitive wages for high-quality human capital supports the development of innovative and high-value industries.
Governmental Support: The Government offers many tax advantages for manufacturing companies as well as fiscal exemptions granted through IDAL.
Access to Competitive Financing: The Central Bank of Lebanon offers subsidized loans for the industrial sector to support the development and expansion of productive industries.
International Treaties and Agreements: Lebanon’s exports benefit from favorable export terms and access to external markets thanks to a number of bilateral and multilateral agreements most notably EU- Lebanon Association Agreement, EFTA, GAFTA, GSP…
Development of Industrial zones: The Ministry of Industry developed a strategic plan (2025) for the sector to increase productivity and industrial exports. The strategy includes also the development of a number of industrial zones around the country (Baalbek, Tourbul-Qosaya, Deir el Moukhaless-Jleiliyeh, Mtein-High Metn, Zrarieh- South, Qaa- Baalbeck, Bsarma- Koura) that will be equipped with state-of-the-art infrastructure. These zones are featured in the government’s Capital Investment Plan and are expected to create approximately 31,000 jobs once completed.
Tripoli Special Economic Zone (TSEZ): The 560,000sqm economic zone is expected to become a major driver for the development of high added-value industries in the North of Lebanon. The zone which is strategically located only 30 km from the Syrian borders will be equipped with advanced infrastructure and tenants will benefit from competitive leasing rates. The zone is expected to play a major role in the reconstruction of Syria.
Development of Industrial Clusters: IDAL has formulated a strategy to encourage and support the establishment of clusters in the regions of Lebanon to produce one or several products based on the comparative advantages of the regions. This strategy is expected to drive investment into the regions, support entrepreneurship, increase the competitiveness of industrial products and help them access foreign markets.
Oil and Gas Sector: Lebanon signed its first offshore oil and gas exploration and production agreement in 2018 with drilling expected to start in 2019. This will create new opportunities for the development of relevant downstream industries including petrochemicals, fertilizers and plastics.
Reconstruction of Syria: The reconstruction of Syria is expected to act as an important driver for the development of the manufacturing sector in Lebanon including construction material and prefabricated housing industries in order to serve the Syrian market.
Sources: Ministry of Industry, Lebanese Customs, Executive Magazine, Brite by Blombank