Lebanon has a population of 4.55 million as of 2015, according to the International Monetary Fund (IMF). It was the 74th largest market for U.S. exports in 2014, according to U.S. Department of Commerce statistics. The Lebanese Customs Authority reported that Lebanon’s total imports in 2014 reached USD 20.494 billion, of which USD 1.227 billion came from the United States.
In 2014, the United States ranked as Lebanon’s fifth largest trading partner behind China, Italy, France, and Germany. According to Lebanese Customs statistics, major U.S. exports to Lebanon were mineral fuel and oil (USD 306 million), vehicles (USD 227 million), machinery and electrical instruments (USD 187 million), products of chemical industries (USD 171 million), prepared foodstuffs, beverages and tobacco (USD 72 million), and vegetable products (USD 56 million).
Real Gross Domestic Product (GDP) growth is estimated to have slowed from eight percent in 2010 to two percent in 2014, according to the IMF’s April 2015 World Economic Outlook, with nominal GDP estimated at USD 49.9 billion in 2014. The IMF Article IV Consultations in May 2015 lowered growth forecast for 2015 from 2.5 percent to two percent, with the average inflation rate at 1.1 percent compared to 1.9 percent in 2014.
Lebanon’s economy follows a laissez-faire model. The economy is highly dollarized and the average exchange rate is stable at Lebanese Lira (LL) 1507.5 to the dollar. The country has few restrictions on the movement of capital across its borders. The Lebanese government’s intervention in foreign trade is minimal.
Lebanon faces major financial challenges, notably a very high level of public debt and large external financing needs. The business climate will remain sensitive to domestic and regional political and security developments. Spillover from the Syrian crisis will continue to impact growth, which is expected to remain below potential in the near term.
The U.S. Government has neither a bilateral investment treaty (BIT) with Lebanon nor an agreement on the avoidance of double taxation. The U.S. Government signed a Trade and Investment Framework Agreement (TIFA) with Lebanon in 2006. Since 1999, Lebanon has had observer status at the World Trade Organization (WTO), but has not acceded to the organization. In 2006, Lebanon signed an association agreement with the European Union.
There are many good reasons for U.S. companies to export to Lebanon. Lebanese consumers are fond of U.S. products, given their high quality and competitive price. English is widely spoken in the business community. Payments for business transactions are often made in U.S. dollars, and major Lebanese banks have American correspondent banking relationships that facilitate financial transactions between U.S. exporters and Lebanese importers.
Starting a new business in Lebanon is relatively simple and open. According to the World Bank's Doing Business 2015 report, it takes entrepreneurs only nine days to start a business in Lebanon, compared to the average of 19 days in the MENA region.
According to Transparency International's (TI) 2015 Corruption Perception Index (CPI), Lebanon ranked 104 out of 189 countries worldwide and 14 out of 19 MENA countries. Foreign and local companies have complained about impediments such as arbitrary licensing decisions, complex customs procedures, archaic legislation, an ineffectual judicial system, high taxes and fees, high telecommunication charges and slow Internet speeds, poor power provision, , uneven interpretation of laws, and a lack of adequate protection of intellectual property.
Lebanon adheres to the Arab League boycott of Israel. Enforcement is selective, as many goods on the boycott list are available in the Lebanese market. The Arab League’s Central Boycott Office maintains a blacklist of U.S. firms that are believed to contribute to Israel’s military or economic development. As per U.S anti-boycott regulations, U.S. companies must refrain from certifying that their products do not come from Israel. If there appears to be any request that might be in support of boycotts, companies should contact the Bureau of Industrial Security (BIS) in the U.S. Department of Commerce (http://www.bis.doc.gov).
The Council for Development and Reconstruction (CDR) is the Lebanese government’s executive body responsible for tendering major projects, procuring financing for these projects, and supervising their execution. Major projects exist in transportation, electricity, telecommunications, education, solid and water waste. These projects are listed at http://www.cdr.gov.lb/eng/home.asp.
Significant investment opportunities for international companies exist in the electricity, water and wastewater and oil and gas sectors, safety and security, and healthcare. More information about electricity and water projects can be found at http://www.energyandwater.gov.lb. More information about Lebanon’s oil and gas opportunities can be found at http://www.lpa.gov.lb.
U.S. companies interested in doing business in Lebanon are advised to hire a Lebanese agent or distributor. Although working through an agent is a very common practice in Lebanon, networking and lengthy investigation are key to finding an appropriate one.
U.S. companies do not need to visit Lebanon to find an agent. The U.S. Commercial Service can help U.S. companies find the right partner through the International Partner Search (IPS) service. Information is available at http://export.gov/lebanon/eg_lb_035712.asp.
The Investment Development Authority of Lebanon (IDAL), a public agency responsible for promoting investments in Lebanon, has a “One-Stop Shop” service to issue permits and licenses for investors. More information is available at http://investinlebanon.gov.lb.