Beirut - Arabstoday
Lebanon’s economy needs to grow by 4-5 percent in 2012 to avoid falling into a vicious cycle of mass layoffs and stagnation, the head of the Beirut Chamber of Commerce told The Daily Star in an interview Thursday.
“Our major aim now is to preserve existing jobs [rather than] the economy’s ability to create new jobs,” Mohammad Choukeir said, arguing that this has become increasingly difficult because of a recent wage increase, as well as the soaring cost of fuel.
He said the private sector conceded to the recent wage increase to preserve social stability, as instability remained a great threat to the region’s economies.
But Choukeir, who co-led the private sector in lengthy negotiations over a wage increase in late 2011, said the “skirmish” had left wounds on many businesses.
“It might not be a big issue for the top 10 percent of companies who are doing well, but we have been getting endless complaints from businesses who struggle to afford the raise,” he said.
He said the soaring price of fuel has also contributed in increasing operating costs for businesses, which he said have not been able to meet new costs or increase their profits.
Last year economic conditions began to deteriorate, and more trouble lies ahead if no action is taken to stimulate growth, he said.
“The reason behind the deteriorating economic situation is by far political. The tense political situation is taking its toll more than ever on the confidence of local and foreign investors,” Choukeir said from his office in Beirut’s Sanayeh quarter.
Choukeir cited some examples of the weak economic indicators in 2011 and 2012, noting that the rate of bouncing checks reached alarming levels.
“Bouncing checks soared 30 percent in January 2012 compared to the same month in 2010, and then soared again by 14.5 percent in February,” he said, stressing the negative outlook the figures portray.
“But while such statistics would have been met with great urgency in any other country, Lebanese politicians turned a deaf ear,” he added.
Whereas Lebanon used to see $4-5 billion of foreign direct investments annually, the county has not been able to attract any significant investments in 2011 and the beginning of 2012, Choukeir added.
Despite agreeing that regional instability contributed significantly to the sluggish economic performance last year, he argued that 2011 had also been a year of lost economic opportunities.
“I do not like to say that we should benefit from the anguish of our neighbors, but realistically Lebanon could have gained significantly from the crises as it has managed to avoid falling into chaos seen in other economies.”
“But politicians insist on bringing regional instability to the country,” he said, condemning officials’ failure to oversee the economy.
Choukeir said Lebanese investments in Syria and Egypt are of far greater concern than issues typically stressed, including Lebanon’s trade with the two countries.
He said $3-4 billion of investments in Egypt and hundreds of millions of dollars in Syria are at great risk if the turmoil in these countries persists.
“Our exports and investments by Lebanese banks in the two countries are minor compared to the investments many businessmen have in the two big regional economies,” he added.
When asked about the steps needed to boost the economy, Choukeir said the only way forward was to involve the private sector more in upgrading the country’s outmoded infrastructure.
“Lebanon has so far no law legalizing partnerships between the private and public sectors. The government should involve investors in telecommunications and electricity as well as other vital fields,” he said.
Such partnerships, Choukeir added, do not necessary require privatization of publically owned enterprises, a subject which remains an issue of controversy in Lebanon.