Lebanon and Saudi Arabia Investment Climate in Light of Current Conditions Saudi – Lebanese Forum March 1st and 2nd, 2012 Beirut, Lebanon Headlines 1. IMPACT OF ARAB SPRING ON LEBANON AND SAUDI ARABIA 2. SAUDI ARABIA: ONE OF THE MAJOR INVESTORS IN LEBANON 3. WHY IS LEBANON INTERESTING TO SAUDI ARABIA 4. ECONOMIC SECTORS OF INTEREST 5. ABOUT IDAL 6. CONTACT US Headlines 1. IMPACT OF ARAB SPRING ON LEBANON AND SAUDI ARABIA 2. SAUDI ARABIA: ONE OF THE MAJOR INVESTORS IN LEBANON 3. WHY IS LEBANON INTERESTING TO SAUDI ARABIA 4. ECONOMIC SECTORS OF INTEREST 5. ABOUT IDAL 6. CONTACT US Real GDP Growth decreased sharply for almost all MENA region countries. Saudi Arabia was one of the very few countries to escape that trend… Real GDP Growth Rates in Selected MENA Countries (2010-2011) Source: International Monetary Fund In relative terms, Lebanon and Saudi Arabia were however one of the less impacted countries by the turmoil… Turmoil Economic Impact Indices on Real Economy (by Country) Severe Impact Syria 5 Libya 5 Tunisia 4 Egypt 4 Iraq 3 Bahrain 3 Lebanon 2 Jordan 2 Qatar 0 KSA 0 UAE 0 No Impact Source: Bank Audi’s Group Research Department Headlines 1. IMPACT OF ARAB SPRING ON LEBANON AND SAUDI ARABIA 2. SAUDI ARABIA: ONE OF THE MAJOR INVESTORS IN LEBANON 3. WHY IS LEBANON INTERESTING TO SAUDI ARABIA 4. ECONOMIC SECTORS OF INTEREST 5. ABOUT IDAL 6. CONTACT US Significant trade activity between Lebanon and Saudi Arabia (cont’d) Top 3 Arab Countries of Exports From Lebanon Top 3 Arab Countries of Imports to Lebanon (2011) (2011) Total Exports to KSA US$ 307.9 million Source: Lebanese Customs Total Imports from KSA US$ 531.6 million Coupled with significant Investment activity between Lebanon and Saudi Arabia (cont’d) Major Investments from Saudi Arabia between 2004-2012 Company Name Industry/Sector Cheikh Saleh Kamel Trade/Investment Year of Establishement 2004 Nesco / Nesco Group for Hotel Investments Tourism 2004 Ste Méditerranéenne Des Grands Hôtels Tourism 2004 Zamil Industry/Sector 2004 Dallah al Baraka / Albaraka banking group Banking 2005 Gulf Finance Investment Company Tourism 2005 Al Tuwairqi Group Industry 2007 Saudi Cables for Marketing 2009 National Technology Group / DirectFN Industry Information Technology (IT) Services/Trade National Technology Group / DirectFN 2010 2010 Frinsinyeh Saudi Arabia Industry 2010 Saudi Globe Med for Medical Forms ICT 2011 Oger Liban SAL Construction - Saudi National Commercial Bank Banking - Movenpick Hotel Tourism - Summerland Kempinski Hotel Tourism - Rotana Media - Four Seasons Hotel Tourism - Source: Ministry of Economy and Trade Distribution of Saudi Projects in Lebanon by Sector (2004-2012) Saudi Arabia’s Investments in the region Sudan • KSA is looking into investing in Sudan's agriculture sector with large cereal crops to be exported back to the Kingdom. Turkey • KSA has been highly involved in the Turkish market with more than 170 Saudi companies currently operating in Turkey within the following sectors: textiles, food, banking trade, real estate, transportation and tourism. Egypt • KSA has built several strong ties with Egypt over the years. It is currently investing in their agricultural, industrial, IT, financial and touristic sectors. India • India is a new market that KSA has grown interest in. It has looked for business opportunities within the oil & gas, power, construction, fertilizers and tourism sectors. Jordan • KSA is conducting several projects within the petrochemical sector as well as the information technology sector. Lebanon • Tourism, Real Estate, Healthcare, IT, Banking. Headlines 1. IMPACT OF ARAB SPRING ON LEBANON AND SAUDI ARABIA 2. SAUDI ARABIA: ONE OF THE MAJOR INVESTORS IN LEBANON 3. WHY IS LEBANON INTERESTING TO SAUDI ARABIA 4. ECONOMIC SECTORS OF INTEREST 5. ABOUT IDAL 6. CONTACT US The Lebanese economy encompasses key business drivers of FDI… Favorable Investment Environment: Resilient Banking Sector: Corporate Tax Rate (%) (2009) Soundness of Banks Rankings (2010) Source: Countries website Source: World Competitiveness Report And a highly diversified Economy… GDP Diversification of Selected Countries Least Diversified - AD Most Diversified + KSA Singapore lebanon Ireland Taiwan Norway Canada Mining & Quarrying Manufacturing Government services Construction Trade, Restaurants, Hotels Real Estate Banking & Insurance Transport & Communication Agriculture Electricity, Gas & Water Other Tax Distributive Sectors Commodity Sectors Sources: Source: Saudi Arabia Central Department of Statistics; Statistics Singapore; Ireland CSO; Statistics Norway; Statistics Canada; Taiwan DGBAS; Abu Dhabi Statistical Yearbook; IMF World Economic Outlook 2006; Booz Allen Analysis Headlines 1. IMPACT OF ARAB SPRING ON LEBANON AND SAUDI ARABIA 2. SAUDI ARABIA: ONE OF THE MAJOR INVESTORS IN LEBANON 3. WHY IS LEBANON INTERESTING TO SAUDI ARABIA 4. ECONOMIC SECTORS OF INTEREST 5. ABOUT IDAL 6. CONTACT US Economic Sectors with Growth Potential INDUSTRY AGRO INDUSTRY TOURISM AGRICULTURE IT TECHNOLOGY TELECOM MEDIA Sectors included in Investment Law No.360 (*) (*) Sectors selected for their growth potential and their readiness for development Agriculture: Important Export Potential The country is endowed with the highest proportion of agricultural land in the Middle East. Abundant water resources allow for intense agricultural activity Agricultural areas cover around 26% of the Lebanese territory (nearly equivalent to 2770 km2) Agricultural production contributes to around 4.8 % of GDP It employs roughly 10% of the Lebanese labor force, and is the fourth largest employer in the country Key Agricultural products include: Fruits mainly citrus, apples, bananas and grapes, but also significantly olives Sources: Syndicate of Agro Food Sector // Central Administration of Statistics POTENTIAL INVESTMENTS IN: Farms: Fisheries &Animal Packaging & Storage Centers Agro Industry: Important Export Potential A major contributor to the Lebanese economy Generated around 32.5% of the industrial sector output in 2009 Has significant employment potential with 23.3% of the industrial sector workforce (30,760 workers) Accounts for 20% of industrial establishments in Lebanon POTENTIAL INVESTMENTS IN: Exports of agro-food products equal to 10.9% of total industrial exports Exports growth at 13% annually since 2001 (despite decline in industrial sector exports) Sources: Syndicate of Agro Food Sector // Central Administration of Statistics Manufacturing plants Bottling facilities Tourism: Highest Generator of Revenues Directly accounts for 8% of Lebanese GDP but indirectly to around 34% of the national GDP (because of the indirect effect on the economy) Capital investments in this sector have amounted to 1.2 billion USD in 2010 (10.2% of total investments) and are expected to rise by 6.2% per annum according to the WTTC (*) 7 billion USD of revenues generated by tourism (20% of country’s GDP) 40% growth in tourists arrival (*) WTTC: World Travel & Tourism Council POTENTIAL INVESTMENTS IN: Hotels and Leisure Facilities Healthcare Tourism Cultural and Religious Tourism Business Conferences ICT: Sizeable Potential In Business Applications Estimated size: 287 million USD (2010) Forecasted to grow by around 11.8% (based on estimates) Employs around 7,000 people Over 20% of Lebanese companies are involved in the IT sector (either in hardware, software or as internet service providers) Mobile penetration rates are in fact among the highest in the region and have totaled 68% by end of 2010 Big potential in business-related applications and web development as well as software development Source: Business Monitor International POTENTIAL INVESTMENTS IN: Software Hardware Internet Software Providers Telecommunication Media: A New Growing Market Home to one of the most significant media industries in the Middle East Advertising expenditure is expected to record growth rates of 8.4% over the next 3 years Total advertising expenditure constitutes 2.8% of the national GDP New opportunities in digital media including: • • • • Online Advertising (e.g. Yahoo buying Maktoob) Online Gaming Online Advertising Specialized 3D Animation POTENTIAL INVESTMENTS IN: Advertising TV Production Digital Media Production Houses Healthcare Tourism: A Niche Market Skilled and specialized medical staff with 130 yrs of top quality medical experience Healthy climate with environmental diversity Sector size estimated by 1.2 billion USD with a 30% growth More than 15,000 doctors and 270 Hospitals New opportunities in healthcare tourism including: • Centers for Alternative Medicine • SPAs and Beauty Centres • Specialized physical rehabilitation centers • Specialized treatment centers POTENTIAL INVESTMENTS IN: Hotels, Furnished Apartments & Villas with medical services SPAs and Beauty Centers Gyms and Medical Sport Centers Nutrition Centers Health Care Tourism Park Headlines 1. IMPACT OF ARAB SPRING ON LEBANON AND SAUDI ARABIA 2. SAUDI ARABIA: ONE OF THE MAJOR INVESTORS IN LEBANON 3. WHY IS LEBANON INTERESTING TO SAUDI ARABIA 4. ECONOMICSECTORS OF INTEREST 5. ABOUT IDAL 6. CONTACT US About IDAL THE INVESTMENT DEVELOPMENT AUTHORITY OF LEBANON (IDAL) • The National Investment Promotion Agency of Lebanon • History – Established in 1994 with the aim of promoting Lebanon as a key investment destination and attracting, facilitating & retaining investments in the country • Governance – IDAL reports to the Presidency of the Council of Ministers (who exercises a tutorial authority over it) and has financial and administrative autonomy • Legislature – Investment Law No. 360 was enacted in 2001 to regulate investment activities in Lebanon IDAL has 3 tools to support investors Tools Available to IDAL Though Law No.360 MARKET INTELLIGENCE Market Intelligence: Information on investment opportunities across economic sectors Data on economic sectors with growth potential Data on investment climate Pre-Investment stage PACKAGE OF INCENTIVES ONE STOP SHOP Fiscal incentives: Exemptions from corporate income tax generated by the investment project IDAL as One Stop Shop for Investors Financial incentives: Fees Reductions on Operational cost: Non-Financial Incentives: Employees for the project are granted work permits with the support of IDAL Financing stage IDAL to supersede all public administrations, authorities and municipalities in issuing administrative permits and licenses except those granted by the Council of Ministers Licensing stage Headlines 1. IMPACT OF ARAB SPRING ON LEBANON AND SAUDI ARABIA 2. SAUDI ARABIA: ONE OF THE MAJOR INVESTORS IN LEBANON 3. WHY IS LEBANON INTERESTING TO SAUDI ARABIA 4. ECONOMIC SECTORS OF INTEREST 5. ABOUT IDAL 6. CONTACT US Contact Us THE INVESTMENT DEVELOPMENT AUTHORITY OF LEBANON (IDAL) Lazarieh Tower // 4th Floor // Emir Bechir Street Riad El Solh // P.O.Box 113-7251 Beirut // LEBANON T F E W + 961 (1) 983306/7/8 + 961 (1) 983302/3 invest@idal.com.lb http://www.idal.com.lb @Invest_Lebanon