“PRODUCTIVE INVESTMENTS THROUGH TRANSNATIONAL PARTNERSHIPS AND JOINT VENTURES” OCTOBER 2, 2014 ROME

WWW.INVESTINLEBANON.GOV.LB

Snapshot on Transnational Partnerships

Some diaspora groups have been heavily involved in investing in their home countries.

TRANSNATIONAL PARTNERSHIPS

IDAL | 2014

Development Effort of the Diaspora

• One of the most prominent examples is the overseas Chinese, who accounted for 70 per cent of China’s foreign direct investment between 1985 and 2000, helping to fuel the country’s rapid economic growth over this period.

• Similarly, members of the Indian diaspora were key to the growth of the country’s information technology (IT) sector in the 1990s, as members of the Indian diaspora who held senior positions in US companies were instrumental in lobbying for the outsourcing of IT contracts to India.

Source: Development Research Centre on Migration, Globalisation & Poverty

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The economic mobility of the diaspora is dependent on its diversity and therefore itscontributions are various

TRANSNATIONAL PARTNERSHIPS

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Forms of Transnational Partnerships

• Diaspora Direct Investments (DDI)

• Trade

• Outsourcing

• Start-up or business investments

• Remittances

• Savings

• Purchase of real estate

• Humanitarian support

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IDAL | 2014

The Case of Lebanon

Brazil: 7,000,000 Argentina: 1,200,000

Venezuela, Colombia& Ecuador: 600,000

Mexico: 400,000

USA: 3,300,000

Canada: 270,000

Africa: 90,000

Europe: 250,000

The Gulf: 250,000

Australia: 450,000

Mapping of Lebanese Diaspora Around the World

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CASE OF LEBANON

Lebanon has a huge diaspora of 14 million people spread around the world

Total Lebanese Immigrants: 14,000,000

Source: Maronite Foundation

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While in the early years of migration migrants were mostly involvedin craftsmanship and low skilled labor, expatriates have slowly movedto high value added jobs

Sector of Economic Involvement of the Diaspora

ICT Sector Tech Banking and Finance

EngineersBusinessmen Medical SpecialistsBankers Quali�ed Manpower

Technicians TeachersCraftsmen Building Contractors

Habib Haddad

Elie Khoury

Tony Fadel

Carlos Slim

Alberto Dahik

Carlos Ghosn

John Zoghbi

Magid Abraham

Ray Irani

1800-1900:Early waves of Immigration

Mid 90’s:Second waveof immigration

Early 2000:New Wave of Immigrantsin the Tech sector

Source: Professor Guita Hourani from the Lebanese Research Center at NDU

CASE OF LEBANON

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Lebanon is the 18th largest recipient of remittances globally and the 12th largest recipient among developing economies in 2013

4.7

5.6 4.9 5.2

5.8

7.27.6

8.27.6 7.6

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

7.6

2013

Inward Remittance Flows into Lebanon(2003-2013)

Lebanon: Remittances Inflows by Region of Origin

(2013)

Source: World Bank Source: Central Bank, data shared during MTM i-Map mission to Lebanon (2013)

Northen america

Australia

Africa

EU

GCC Countries

CASE OF LEBANON

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Lebanon is actually the country with one of the highest ratio ofremittances to GDP in the world and the highest in the region

CASE OF LEBANON

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Our banks hold deposits amounting to 167 Billion USD, which is 4x our GDP. Most of the deposits are

from the diaspora.

HOW CAN THESE BE CHANNELED INTO DDI?

Remittances as % GDP(2012)

16 %

10.80 %

7.30 % 6.80 %

5.00 %

Lebanon Jordan Egypt Morocco Tunisia

Source: World Bank,Migration and Remittances Factbook 2012

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CASE OF LEBANON

IDAL | 2014

Many initiatives have been undertaken by private and public entitiesto support expatriates in establishing transnational partnerships

Mapping of Entities Linking Expatriates to Lebanon

Associations Representing Expatriates * NON EXHAUSTIVE

Public / Semi-PublicOrganizations • General Directorate of Emigrants at the Ministry of Foreign Affairs • Investment Develop- ment Authority of Lebanon

• Lebanese Internation- al Business Council • Lebanese Immigrants Association

• Chamber of Com- merce

• World Lebanese Cultural Union

Initiatives & NGOs• LIFE - Lebanese Emigration Research Center (Private)

• Lebnet

• Joint Chambers

• Clubs

• Lebanese consulates

• The Lebanese Emi- gration Research Center

• Live Lebanon

• Tokten - UNDP

PoliticalFoundations • Hariri Foundation

• United Australian Lebanese Movement

Religious Foundations • Maronite Foundation

• Maronite League

Commercial Banks • Number of branches pertaining to subsidiar-ies and sister Lebanese banks abroad amounts to more than 200 units.

• Banque Libano Francaise launched a new program for Lebanese living abroad called the Expat Package from which they can bene�t from a special range of products and services to simplify their daily banking transactions

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CASE OF LEBANON

IDAL | 2014

The Lebanese government more specifically has been working activelyto support the Transnational Partnerships through various financial andtechnical schemes

Lebanese Government Support to Expatriates

1- Financial Support • IDAL through incentives • Central Bank through Circular 331• Ministry of Economy & Trade support for SMEs

2- Incubation Assistance • Incubator in each region

• Through Angel Investors from diaspora

• Through Venture Capitalists from diaspora

3- Information Provision • IDAL• Lebanon Connect• New website• Economic Diplomacy

4- Technical Assistance• Business matchmaking program of IDAL• Trade Missions• One-Stop-shop

by the Ministry of Foreign Affairs and Emigrants

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CASE OF LEBANON

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INVESTMENT PROMOTION

• Provide economic, commercial and legal information of relevance to investors

• Identifies business opportunities across various economic sectors

• Provide in depth analysis of sectors

• Grant fiscal exemptions and fees reduc- tion to investment projects

• Facilitate issuance of permits and licenses

• Provide on-going support for investment projects (after care service)

• Actively promotes Lebanon as key invest- ment destination

EXPORT PROMOTION

• Provide data on external markets

• Support companies in selected sectors in accessing external markets

• Provide promotional materials

• Subsidize participation in foreign fairs

• IDAL currently has in place 2 export promotion programs:

1 Agri Plus (2012): Which provides subsidies and support to exporters of agricultural products

2 AGRO MAP (2004): Which subsidizes the participation of agro food companies in foreign fairs licenses

IDAL’s mandates relevant to the diaspora9

Other financial support available to entrepreneurs and migrantsprovided by the government include the equity funds supportedby the Central Bank

Government Offerings

The Central Bank of Lebanon has guaranteed $400 million for Lebanese banks equity invest-ment in startups, incubators, accelerators and funds

All banks can bene�t from credits equivilant to 1.3 billion USD granted against the loans these banks grant on productive sectors pursuant to the following limits: 15% of the value of loans granted to productive sectors and 60% of the value of loans granted in Lebanese pound to productive sectors with a guarantee from Kaf-alat S.A.L. and bene�ting from an interest rate subsidy.

Kafalat targets SMEs and innovative start- ups that belong to one of the following productive economic sectors Industry, Agriculture, Tour-ism, Traditional Crafts, and High Technology. Loans guaranteed by Kafalat bene�t from inter-est rate subsidy. These subsidies were set up to mitigate the crowding out effect of the high interest rates in Lebanon induced by public sector borrowing. Interest rate subsidies are �nanced by the Lebanese treasury and admin-istered by the Central Bank of Lebanon.

CASE OF LEBANON

IDAL | 2014

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CASE OF LEBANON

IDAL | 2014

Other initiatives out there to support and encourage transnationalpartnerships

Incubators Supported by the Government

• Berytech has launched a new program aimed at incubating startups by Lebanese expatriates in their relocation to Lebanon.• €35,000 will be awarded as grant for each start-ups.

• Private initiative which however received government support under a decree signed by the Ministry of Telecommunication.

• Incubator at its embryonic stage funded by an EU grant.

• Initiative by the MoET and the EU since 2006. First innovation center of its kind in South Lebanon. It offers incubation and counseling services to manufacturing & service enterprises.

• Initiative by the MoET and the EU.• Incubator aimed at assisting and promote growth potential sector in Tripoli, North Lebanon.

• To accelerate the development of the Lebanese IT start-up ecosystem through the active involvement of diaspora organizations.

DescriptionType

IncubatorBerytech

BeirutDigital

District

CFE

SOUTH BIC

BIAT

LEBANESE INTERNATIONAL FINANCE EXECUTIVES

Zone

Center

Incubator

Incubator

Association

• To encourage contrubition to homeland and host country.LEBANESE EMIGRATIONRESEARCH CENTER

Center

Entity

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Some Success Stories of TransnationalMigrants in Productive Sectors

IDAL has identified the following sectors for investment:

SUCCESS STORIES

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TECHNOLOGY

TELECOM

TOURISM

INFORMATIONTECHNOLOGY

FOOD ANDBEVERAGES

AGRICULTURE

INDUSTRY

MEDIA

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SUCCESS STORIES

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Lebanon has recently seen a surge of young entrepreneurs who havedecided to relocate to Lebanon

Case Study of Young Entrepreneurs - Fadi Daou : High Tech Sector

Company Overview Fadi Daou young entrepreneur, founded several companies in the US and decided to come back to Lebanon.

Multiilane develops technology and proucts for the optical communication market. It enables leading semiconductor companies to offer communication equipment for the next generation network. MultiLane’s cus-tomers include Cisco Systems, Broadcom, Intel Corporation, Gennum, Google, Teledyne Scienti�c, Cortina, Adtran, IPG Photonics, and TE connectivity.

The market for MultiLane’s product is global, with customers in the US, Europe, Taiwan, China, and Japan.

Government Offering Investment Development Authority of Leba-non provides through its incentive schemes, companies involved in the semi-conductor or manufacturing of ICT related equipment’s, with a set of �scal exemptions on pro�ts generated.

How did the government help?Support was provided to reduce customs procedures on tech products

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SUCCESS STORIES

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Another case is a touristic resort developed on the Lebanese coastand that was developed by a transnational migrant

Jiyeh Resort - Mohammad Saleh: Tourism Sector

Project Overview This resort, located in the coastal town of Jiyeh, 35km south of Beirut, will be built in two phases. The �rst phase will include the construction of 196 chalets and 92 cabins, 3 swimming pools, 2 restaurants and a 17,577m2 yacht berths. The second phase will see the rise of an eight-story hotel with 138 rooms and 10 suites, as well as a restaurant, terrace, ballroom and health club.

Mohammad Saleh a Lebanese expat has returned to Lebanon to give back to his country. His project will employ 210 people.

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SUCCESS STORIES

IDAL | 2014

Another case is that of a business hotel in the heart of Beirut developedby a transnational migrant

Le Gray Hotel - Sarkis Abshi: Tourism Sector / Other

Project Overview Ven-invest is an investment company specialized in ventures, acquisitions and real estate developments and investments in Lebanon. Founded and established by a group of Lebanese transnational migrants with a common heritage.

The company has established a lot of businesses in Lebanon, the most prominent being Le Gray Hotel in Beirut.

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The Way Forward

Going forward, we are working on promoting programs to expatriatesand increase linkages with the entrepreneurial ecosystems. A majormilestone has been the electoral law and the ability of expats to vote

Way Forward

Increase Government Support

• Increase networking and missions to countries with highest concentration of immigrants

• Increase campaigns and specially social media campaign targeting the expatriates

• Increase awareness on IDALs incentives

• Formulate a special incentives package for diaspora

• Support the Ministry of Foreign Affairs in its initiative pertaining to economic diplomacy

FosterLinkages with Private NGOs

• Establish linkages with universities and foster programs to increase involvement of expatriates in technical training

• Increase collaboration with UNDP programs on expatriates

• Collaborate with commercial banks to create special incentive packages for young entrepreneurs

• Increase collaboration with local incubators / accelerators who are providing links with the diaspora and provide them with �nancial incentives

• Increase collaboration with the private sector

THE WAY FORWARD

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