Monday, October 01, 2012

Buy Lebanese, please

Commentary - Executive magazine

A new campaign was launched in September by the Ministry of Industry and the Association of Lebanese Industrialists (ALI) with the slogan “Your industry your identity: Buy Lebanese.” It is aimed at giving the sector a boost in the current economic downturn, given that some 60 percent of industry’s sales are local.

It is a good move, but the sector could have done with greater recognition from the government of its contribution to gross domestic product (GDP), which has gone from 9 percent in 2009 to an estimated 19 percent today. Such a move could have included giving the ministry governing the sector a decent budget and pushing state agencies to actually buy Lebanese products.

The Ministry of Industry’s current budget is a measly $5.14 million, which is barely enough to pay for salaries yet alone have a decent marketing budget to promote Lebanese industry around the world. Indeed, ministerial employees have said that if they want to attend exhibitions abroad, they have to pay for flights out of their own pockets and then hope they get reimbursed.

Other countries have industry budgets in the billions of dollars, and set aside sizable allowances for trade fairs and expos, with dedicated stands to tout the nation’s wares. For instance Jordan’s Ministry of Industry and Trade had a budget of $8.8 billion in 2011, and the United Arab Emirate’s Ministry of Commerce and Industry some $11.2 billion. The small island of Singapore, less than a 10th the size of Lebanon but with a similar population size, has a budget of $3.3 billion for the Ministry of Trade and Industry.
While these countries include commerce or trade in addition to industry, even if you combine the Lebanese Ministry of Economy and Trade’s $21 million budget with that of the Industry Ministry’s, it is still shockingly underfunded.

As an overall percentage of the $14.71 billion budget, the Ministry of Industry’s cut accounts for just 0.035 percent. The sector’s GDP contribution generates significant revenues for the government as well as being a major employer, accounting for an estimated 26 percent of the total 1.48 million Lebanese workforce, according to website Economy Watch. That works out to 370,250 jobs, meaning the ministry’s budget allocates just $13.5 per employee in the sector.

The Ministry of Agriculture has a budget of $59.3 million, while representing a quarter of the GDP contribution of industry, and the Ministry of Youth and Sports — that well known contributor to economic growth and prosperity — has a budget almost double that of industry, at $9.7 million. Tourism, an important economic sector, still contributes a third less to GDP than industry, but has treble the budget, at $14.6 million.

While there is the counter argument that some countries earmark billions for industry and are still not competitive, and others are competitive without much state assistance, it cannot be ignored that Lebanese industry is currently facing a lot of challenges. A higher budget for the Industry Ministry would no doubt help, but so would addressing other stumbling blocks, notably the endemic shortfalls in energy and infrastructure.
Where the government could show true support is by buying Lebanese. But according to industrialists, the government more often than not shuns Lebanese products for foreign brands, believing them better.

This has led to bizarre situations where the government has ordered products from France yet the good is actually made in Lebanon; the winner in this scenario is the middle man and the loser the Lebanese tax payer. One industrialist told how at a recent expo in Beirut, European companies placed orders for specialized products while the Lebanese government queried that same local company’s experience in the order application process — the deal later fell through.

Among the public there is also a certain snobbishness towards Lebanese products. “We export to 30 countries and the image of Lebanese industry is higher elsewhere than here,” said an industrialist. “A Lebanese would buy a Turkish-made product over a Lebanese one, I don’t understand it.”

Whether the new “buy Lebanese” scheme will work remains to be seen, but its effectiveness would certainly be bolstered if there was a bigger ministry budget for marketing, and the government itself began practicing what it preaches. 

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