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Security breaches weighing heavily on trade sector

Chairman of the Beirut Traders Association Nicholas Chammas attends a press conference in Beirut, Thursday, Dec. 19, 2013. (The Daily Star/Mohammad Azakir)

BEIRUT: The worsening political and security situation is costing the Lebanese trade sector millions of dollars every week, a prominent businessman said.

“The trade sector is incurring huge losses and if the situation continues this way, we expect a lot of entities to go out of business,” Nicolas Chammas, the president of Beirut Traders Association told The Daily Star.

Chammas said merchants had already been suffering from acute cash flow problems for the past couple of years, warning that the continuing deterioration would further exacerbate their misery by driving them to bankruptcy.

“Some merchants are resorting to selling pieces of real estate just to stay afloat,” he said. “This is ridiculous because the merchant should benefit from his business and not the other way around.”

The Lebanese trade sector has been suffering from huge losses since the beginning of the civil war in Syria. Lebanon has been rocked since last year by a series of bombings related to the ongoing conflict in the neighboring country, contributing to a deterioration of many sectors of the economy including trade.

Lebanese merchants have on numerous occasions complained about the steep decline in business.

Moreover, a warning issued by the U.S. Embassy in Lebanon last month calling on American citizens to avoid certain “Western-Style” establishments and malls caused a further damage to the sector.

“The retail index issued by BTA in coordination with Fransabank reported a huge drop of 15 percent in the commercial activity in 2013,” Chammas said.

Chammas added that the increasing frequency of security incidents has prompted the Lebanese to reduce excursions outside the home.

“This has caused a major drop in the business activity of clothing and jewelry shops as well as other outlets selling luxurious items,” he said, adding that citizens, in such risky circumstances, tend to only buy basic needs.

Chammas explained that restaurants could survive and maintain a fair profit by delivering to people in their houses. “But if we are talking about items such as cars or clothes, for instance, you don’t have a way to go to people if they do not come to you,” he said.

He cited security as the main requirement for the revival of the trade sector.

“The deteriorating security situation is preventing Arab tourists from visiting the country and this is a huge problem,” he said.

In May 2012, the United Arab Emirates, Qatar and Bahrain urged their citizens to avoid traveling to Lebanon, following the eruption of the Syrian civil war.

Moreover, in December 2013, Saudi Arabia and Kuwait have again advised their citizens against traveling to the country in the wake of the assassination that targeted former Finance Minister Mohammad Shatah.

“When tourists from these countries avoid visiting Lebanon, it is like you are cutting off [your own arm] because they have become an integral part of the domestic consumption,” he said.

Chammas added that just the Arab tourists coming from Saudi Arabia, Kuwait, the UAE, Qatar and Bahrain represented 45 percent of the duty free purchases in Lebanon. “We have suffered greatly in this sector because of this absence,” he said.

He added that merchants’ losses could not even be offset by the demand from Lebanese expatriates. “Expats have unfortunately chosen to go to other destinations with their families to avoid exposing themselves to dangerous situations,” he said.

Chammas added that the purchasing power of Lebanese had also dropped significantly.

“One important reason behind this is the substitution of Lebanese employees by Syrian workers who are invading almost every sector of the economy,” he said.

“Traditionally, Syrian laborers worked in the construction and agriculture sectors but nowadays they are present in manufacturing, transport, health education and trade,” he added.

“The mere presence of a huge human pool of both qualified and unqualified people ready to work exerts a downward pressure on wages in Lebanon.”

Chammas emphasized the need to form a government soon.

“The presence of a government helps in building confidence and turning the wheel of the economy because Cabinet, can for instance, adopt a new budget,” he said. “The budget is important for public investment and for injecting some money in the economy.”

Besides securing stability, Chammas called upon the government to be formed to respond to some of the merchants’ demands.

“One of our main demands is to provide subsidies on interest rates for loans given to merchants just like any other sector,” he said.

“Between 2009 and 2011 the trade sector has invested billions of dollars but interest rates on these loans were very high so we need to refinance this with lower interest rates in order to sustain and be able to service the debt,” he added.

 
A version of this article appeared in the print edition of The Daily Star on February 07, 2014, on page 5.

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Summary

The worsening political and security situation is costing the Lebanese trade sector millions of dollars every week, a prominent businessman said.

The Lebanese trade sector has been suffering from huge losses since the beginning of the civil war in Syria.

Lebanese merchants have on numerous occasions complained about the steep decline in business.

Chammas explained that restaurants could survive and maintain a fair profit by delivering to people in their houses.

Chammas added that the purchasing power of Lebanese had also dropped significantly.

Chammas emphasized the need to form a government soon.

Besides securing stability, Chammas called upon the government to be formed to respond to some of the merchants' demands.


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