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Lebanon to slap taxes on imported goods.

Summary: Industry Minister Hussein Hajj Hasan said Thursday he was planning to gradually impose Customs duties on certain imported commodities in order to protect the Lebanese industrial sector.

BEIRUT: Industry Minister Hussein Hajj Hasan said Thursday he was planning to gradually impose Customs duties on certain imported commodities in order to protect the Lebanese industrial sector. "From now on, I will pursue a policy that relies mostly on imposing Customs duties on imported products and mainly goods that are subsidized by their countries of origin and which pose great competition to Lebanese industries," he told a meeting held with the Lebanese-Chinese businessmen association.

Hajj Hasan argued that the government's role was to facilitate the export of Lebanese products and not to remove obstacles facing foreign imports. "One of the main measures that should be taken in this respect is to impose Customs on imports to boost the consumption of Lebanese products in our market," he said.

"This will also limit our trade deficit, which reached $16.7 billion last year and which constitutes a third of our GDP," he added.

Hajj Hasan warned of the negative impact of the deterioration in some economic indicators -- including the increase of the public debt to $60 billion and the decline in industrial exports -- on Lebanon's economy.

Lebanese industrial exports plunged by some 9.2 percent in the first eight months of 2014 compared to the same period in 2013, despite the government's ongoing efforts to open up new markets for local industries, according to statistics issued by the Industry Ministry in December of 2014.

Sources from the Industry Ministry told The Daily Star that two weeks ago the Cabinet renewed its decision to impose Customs duties on imported aluminum to support the local production of this commodity.

The source said that the minister had already announced his plan to impose duties on leather, iron, plastic, paper and food products.

"These measures will be taken gradually," the source added.

The new planned measure was met positively by some industrialists interviewed by The Daily Star.

"I pay tribute to his excellency the industry minister, who is supporting the industrial cause," said Fadi Gemayel, president of the Association of Lebanese Industrialists.

Gemayel argued that industrialists could be supported either by compensating them for the excessive cost of energy they are incurring in their operations or through the imposition of duties on imported goods that are already being manufactured in Lebanon.

Gemayel gave the example of glass bottles and jars that are used in agro food industries.

"The energy cost of glass bottles and jars is very high, for instance," Gemayel said.

He also questioned how Lebanon could have a prosperous agro food industry if it had to import empty jars and bottles from abroad.

He said the cost of energy for energy-intensive industries constitutes around 35 percent of the sales price. "The cost of energy that we pay is much higher than what [other] industrialists pay in the region," he added.

Gemayel argued that the cost of resolving the issue of intensive energy industries was in the range of $30 million to $40 million a year, a relatively small amount when compared to the deficit of Electricite du Liban, which costs the state around $2 billion a year.

"It is worth paying such an amount because energy-intensive industries provide around 7,000 jobs," he said.

"At the end of the day, Customs duties on some commodities can also be used to finance this excessive energy cost," he added.

Gemayel stressed that many countries levy very high Customs duties and many have even increased tariffs before joining the WTO, while Lebanon continues to impose very low Customs duties.

Jacques Sarraf, an industrialist and former ALI president, described the step as positive. "Minister Hajj Hassan is very organized and works according to laws and we do need such courageous decisions," he said.

"Commodities that are being smuggled into Lebanon and that are affecting Lebanese industries must be subject to Customs," he added.

Gemayel said that the industrial sector had been suffering from a lack of proper economic and industrial policies. "We only have support from [the Central Bank] with [its] subsidized loans that have proven effective in fostering exports, in addition to support from the ministry," he added.

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Publication:The Daily Star (Beirut, Lebanon)
Geographic Code:7LEBA
Date:Jan 9, 2015
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