BEIRUT: Lebanon should seek a new economic model and move away from fields like real estate and services to enter productive sectors, panelists at the Lebanon Economic Forum said Thursday.
Suggesting that structural reform is needed, Economy Minister Nicolas Nahas said a major challenge to development was the poor fit between education and the labor market.
“We often avoid talking about this, but our human resources do not fit our labor market,” Nahas said. “How would you employ an atom scientist in formulating polices to boost tourism,”
He said thousands of highly educated graduates have skills that do not match the needs of the Lebanese economy and are obliged to emigrate or face unemployment. Over 50,000 enter the Lebanese job market every year while the economy is only creating 20,000 to 25,000 job opportunities, according to a study by economist Kamal Hamdan.
Lebanon cannot remain dependent on the services sector, said Industry Minister Vreij Sabounjian, who spoke on the same panel.
“Countries that are dependent on services, including Greece and Ireland, were the first to fall in the current economic crisis while those with balanced economies have remained stable and less affected by the slowdown,” he said.
Lebanon has successfully moved away from from the post-Civil War period when industry played a marginal role, the minister added.
But he said much work was needed to develop the industrial sector, based on added-value products where it can compete, including agro-industries, wine, fashion and generators.
Sabounjian also called on industrialists to diversify from traditional markets in the Arab world, which he said had been affected heavily by a wave of uprisings. He said industrialists should tap markets in Central Asia and Africa.
Hamdan, who spoke on the same panel, said Lebanon’s economic model, based on investment in real estate, is failing.
“Over the past years 70 percent of investments have been made in the real estate sector. This does not contribute to job creation,” he said.
He said a recent survey commissioned by the International Labor Organization and the World Bank show Lebanon’s unemployment exceeds 11 percent. “Contrary to what we think, the quality of Lebanese human resources is mediocre and has fallen behind many Arab countries,” he added.
Another structural challenge to the Lebanese economy, Hamdan warned, is monopolies.
Lebanon’s taxation system, which depends on consumption taxes for 70 percent of revenues, is also a major flaw, Hamdan highlighted.
Other panels Thursday mulled ways to boost Lebanon’s small and medium enterprises, key to kickstart growth.
Director of the Banking Department at the Central Bank Najib Choukeir said a law allowing SMEs to use movable assets as collateral will be issued soon. He said this would allow more access to capital, particularly in rural areas where land assets are not yet officially registered.
Samer Karam, founder of Seequence, a startup accelerator, talked about eight new promising IT firms his company has helped to secure funding. He said many of the startups will start making money soon, only a few months following their selection.
“It all started from an idea. You need to create the opportunity and they will come,” he said confidently.