Cablegate: Lebanese Discuss Entrepreneurship at Ambassador's

VZCZCXRO7623
RR RUEHBC RUEHDH RUEHKUK RUEHROV
DE RUEHLB #0075/01 0260443
ZNR UUUUU ZZH
R 260443Z JAN 10
FM AMEMBASSY BEIRUT
TO RUEHC/SECSTATE WASHDC 6408
INFO RUEHEE/ARAB LEAGUE COLLECTIVE
RHEHAAA/NSC WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/USDOC WASHDC

UNCLAS SECTION 01 OF 02 BEIRUT 000075

SIPDIS

SENSITIVE

E.O. 12958: N/A
TAGS: ECON ECIN EFIN PGOV LE
SUBJECT: LEBANESE DISCUSS ENTREPRENEURSHIP AT AMBASSADOR'S
ROUNDTABLE (ECONOMIC WEEK IN REVIEW, DECEMBER 28 2009 - JANUARY 24,
2010)

CONTENTS
--------

-- LEBANESE DISCUSS ENTREPRENEURSHIP AT AMBASSADOR'S ROUNDTABLE
-- TRIPOLI BUSINESS INCUBATOR EXPANDING ACTIVITY
-- HARIRI SIGNS TOURISM, ECONOMIC AGREEMENTS WITH TURKEY
-- PM'S ECONOMIC ADVISOR UPBEAT ABOUT 2010 PROSPECTS
-- LEBANON IMPROVES IN 2010 ECONOMIC FREEDOM INDEX
-- LEBANON AND CHINA SIGN GRANT AGREEMENTS WORTH $6.6 MILLION
-- IT SECTOR EXPECTED TO REACH OVER $270 MILLION IN 2010
-- TELECOMS MINISTRY TRANSFERS OVER ONE BILLION DOLLARS TO TREASURY

LEBANESE DISCUSS ENTREPRENEURSHIP
AT AMBASSADOR'S ROUNDTABLE
---------------------------------

1. (SBU) Ambassador Sison held a roundtable discussion January 14 on
ways to encourage the culture of entrepreneurship in Lebanon with 19
leaders from the private sector and civil society. In a lively
discussion, participants noted the need for political and security
stability; greater publicity for successful Lebanese entrepreneurs;
instilling entrepreneurial values via the educational system; and
encouraging accountability, transparency, and tax incentives for
start-ups. Out of the 19 participants, seven will participate in
the Presidential Entrepreneurship Summit hosted by President Obama
in Washington, DC, in April 2010.

TRIPOLI BUSINESS INCUBATOR
EXPANDING ACTIVITY WITH EU GRANTS
---------------------------------

2. (SBU) The director of the Business Incubator at Tripoli (BIAT),
Fawaz Hamidi, told us he is expecting a grant of about 800,000 euros
from the EU to support BIAT's projects to support entrepreneurship.
With these funds, he hopes to open an industrial space and an
innovation center at the Tripoli Chamber of Commerce, Industry and
Agriculture. BIAT also wants to provide space for small
manufacturing facilities in the food and pharmaceutical cosmetics
sectors. BIAT has already used a 700,000-euro EU grant to encourage
start-ups.

3. (SBU) Hamidi also said the president of the union of three
municipalities in northern Lebanon (Tripoli, Mina, and Baddawi) and
the Mayor of Tripoli are working with the World Bank on a city
development strategy (CDS), which he expected would be completed
within five months. Hamidi, who is the economic expert on this
project, told us the Tripoli Special Economic Zone (a project for
which USAID is funding a feasibility study) could be one strategic
project under the CDS.

HARIRI SIGNS TOURISM, ECONOMIC
AGREEMENTS WITH TURKEY
------------------------------

4. (SBU) During PM Hariri's three-day visit to Turkey from January
10-12, Hariri discussed the possibility of Turkey supplying excess
electricity to Lebanon through an agreement with Syria, Hariri
economic advisor Hazar Caracalla told us. The Turkish side promised
to study the matter, she added.

5. (SBU) The PM's visit to Turkey led to the signing of a tourism
and economic agreement, abolishing the need for visas between both
countries. This will benefit the Lebanese, as press reports
estimate that about 600,000 Lebanese travel to Turkey annually.
Lebanon and Turkey also signed agreements in the fields of security
and health and ratified three MOUs on maritime rights, agriculture,
and forest protection. Caracalla noted she expected a new round of
negotiations for an FTA with Turkey to take place in March 2010.

PM'S ECONOMIC ADVISOR UPBEAT
ABOUT 2010 PROSPECTS
----------------------------

6. (SBU) Caracalla was upbeat about the Lebanese economy and said
2010 appeared promising at all levels. She attributed her optimism
to the current political and security stability, as well as positive
macroeconomic indicators in 2009. She stressed the PM was committed
to implementing the ministerial statement by placing the
environment, energy efficiency, and technology development high on
his agenda. Hariri was keen to raise these priorities in all his
visits abroad, she said. Caracalla added the GOL needed to increase
capital spending on infrastructure to sustain growth, and noted that
the finance minister would resort to additional revenue measures
and/or approach donor countries in order to maintain fiscal
stability. Caracalla said the PM was keen to act quickly on his

BEIRUT 00000075 002 OF 002

economic priorities because, based on previous experience, harmony
in the cabinet did not usually last long.

LEBANON IMPROVES IN 2010
ECONOMIC FREEDOM INDEX
------------------------

7. (U) Lebanon ranked 89 out of 179 countries worldwide and 9 out of
17 MENA countries in the 2010 Heritage Foundation Index of Economic
Freedom. This constituted an improvement of 6 places worldwide,
while it remained unchanged in the region compared to 2009. Lebanon
was considered 59.5% free, compared to 58.1% last year. Lebanon's
ranking was attributed to improvements in investment freedom,
financial freedom, and trade freedom, while its noted strengths
remained in the trade (with a low-weighted average tariff rate),
fiscal (with a low overall tax burden), monetary and financial
freedom categories. The index evaluates ten broad factors of
economic freedom: business, trade, fiscal, monetary, investment,
financial, labor, as well as government size, property rights and
freedom from corruption.

LEBANON AND CHINA SIGN GRANT
AGREEMENTS WORTH $6.6 MILLION
-----------------------------

8. (SBU) President of the Council for Development and Reconstruction
(CDR), Nabil Jisr, and the Chinese ambassador to Lebanon signed two
grant agreements for economic and technical assistance of totaling
approximately $6.6 million on January 14. CDR Director of Funding
Dr. Wafa Charafeddine told us the use of the grants would be
determined later. She believed the grants would be used to supply
Chinese-made equipment to public entities, similar to previous
grants. Last year, China donated solar heaters to residences
damaged in south Lebanon, while in 2008 it provided equipment to
Ogero, the publicly owned telephone company, she said.

IT SECTOR EXPECTED TO
EXCEED $270 MILLION IN 2010
---------------------------

9. (U) The information technology (IT) sector in Lebanon is expected
to reach $276 million in 2010, up 5.7% from 2009, according to
Business Monitor International (BMI). The report noted a number of
developments in the sector in 2009, including GOL plans for partial
privatization in the sector and the computerization of the public
healthcare system. However, the country failed to reach its true
potential in the sector because of important challenges that
remained, such as political, economic, and security stability, in
addition to proper infrastructure. BMI noted that SMEs, which
account for most of the 700,000 businesses in Lebanon, could play an
important role in the sector, although it singled out lack of access
to finance as a major barrier for business. In its ministerial
statement, the GOL committed to developing the IT sector and
providing broadband services for the entire country.

TELECOMS MINISTRY TRANSFERS
OVER ONE BILLION DOLLARS TO TREASURY
------------------------------------

10. (U) The Ministry of Post and Telecommunications (MPT) announced
the transfer of over $1.2 billion to the state treasury for 2009,
$23 million more than in 2008. Transfers from the telecom sector
are among the largest sources of revenue to the treasury, along with
revenues from value-added tax (VAT), income tax and excise tax.

SISON

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