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Appetite for investment remains despite slump
BankMed's Executive General Manager, Mohamed Ali Beyhum and Chairman of the Beirut Traders Association Nicholas Chammas attend a press conference in Beirut, Thursday, Dec. 19, 2013. (The Daily Star/Mohammad Azakir)
BankMed's Executive General Manager, Mohamed Ali Beyhum and Chairman of the Beirut Traders Association Nicholas Chammas attend a press conference in Beirut, Thursday, Dec. 19, 2013. (The Daily Star/Mohammad Azakir)
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BEIRUT: Despite an ailing economy, multiple security incidents and the negative impact the presence of Syrian refugees has had on business, Lebanon’s commercial sector continues to show an appetite for investment, according to a study launched Thursday.

The investment index for retail and wholesale businesses in Lebanon, put together by the Beirut Traders Association and BankMed, indicates that Lebanese merchants intend to maintain their investments in imported goods despite the negative indicators witnessed during the third quarter of 2013.

“The Lebanese commercial sector witnessed a bad performance in the third quarter of 2013 but merchants still have an appetite for investment in the fourth quarter of the year,” BTA President Nicolas Chammas said.

“This has always been the spirit of Lebanon,” Chammas said during a news conference with BankMed to launch the study, noting that merchants had never lost hope despite the challenges prevailing in the country.

The results for the third quarter of 2013 reflected a continued willingness to increase investment in the upcoming period, as measured by the “Intention to Invest” component of the index.

“There is a slight appetite of 5.4 percent to invest by merchants,” the BTA president said.

The study reflects the investment climate in the country, giving an overview of the present commercial activity and overall economic situation.

BankMed Chief Economist Mazen Soueid explained the study in detail.

“The computed figure for the ‘Intention to Invest Component’ in the third quarter of 2013 reached 0.1642 on a scale of -3 to +3, which was adopted to express the level of intentions to invest or disinvest,” he said. “This figure was normalized into the range (0-100), where it amounts to 52.7.”

Sectors that showed positive intentions to invest included household electrical appliances as well as products such as eggs, oils and fats, which saw growth of 9.55 percent and 12.24 percent respectively during the third quarter of this year.

On the other hand, the computer parts sector demonstrated a willingness to invest despite a 5.46 percent slowdown in activity during the previous quarter.

Meanwhile, the study indicated that the plumbing and construction materials sector showed no willingness to either increase or decrease investments, despite a rise in sales by 20 percent.

This disinterest in investment also applied to perfumes and cosmetics, books, magazines, newspapers and stationary, although sales in these sectors saw a decline.

As for sectors that cut investments considerably, these included clothing, shoes and leather items that registered a 22 percent drop in sales in the second quarter of 2013.

The study showed the turnover component, which assesses the total amount of sales, declined by 5.7 percent.

The impact of the massive influx of Syrian refuges has also been significant.

Lebanese industrialists have complained that Syrians are opening unlicensed workshops in different areas and are offering their services for far lower rates than local manufactures. The industrialists warn that this phenomenon is causing heavy financial losses to legitimate industrial businesses.

Chammas said that what concerns merchants even more was the fact that unlicensed Syrian businesses were opening and competing with Lebanese institutions illegally. “This is affecting the productivity of the different Lebanese sectors,” he warned.

He said the best way to revive the commercial sector was by cooperating with banks to provide loans to merchants who suffer from cash flow problems. “Today, most of the merchants are suffering from cash flow problems and the support of banks is highly needed in such situations,” he said.

Meanwhile, Mohamed Ali Beyhum, BankMed’s executive general manager, highlighted the important role of banks in supporting merchants while drawing the audience’s attention to the continuous support provided by banks for this sector. “Banks are giving loans to merchants in need and indicators reflect very well what I am saying,” he said.

Beyhum added that the Central Bank had urged commercial banks to reconsider the situation of financially troubled businesses and to support them with available means.

The presence of such a large number of Syrian refugees in Lebanon has also pushed up demand for basic food products this year and caused prices to soar, Chammas said Thursday. “The great demand on food products is causing a hike in prices,” he noted.

The United Nations and the World Bank estimate the number of Syrian refugees in Lebanon at 1.3 million and the figure is expected to rise if the conflict in the neighboring country persists.

Chammas also noted that the presence of such a large number of Syrian refugees in Lebanon has had a negative on the Lebanese employment scene.

“Lebanese workers are being replaced by Syrians in supermarkets, fuel stations and other places as well,” he explained, adding that this was leading to an increase in unemployment among Lebanese.

A version of this article appeared in the print edition of The Daily Star on December 20, 2013, on page 5.
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