Investment dilemma: Can Lebanon reverse the declining trend?

In Lebanon, new investment opportunities seem endless, ranging from clean and renewable energy generation to shared transportation projects, telecommunications development, tourism, commerce, agriculture, and industry.

Lebanon stands out with its relatively lower labor costs compared to neighboring countries, coupled with its location, diverse nature, and free economy. However, a fundamental issue is hindering progress.

The minimum requirement for prospective investors is a "nurturing environment" that protects their investments. This is missing in light of the absence of law enforcement, a dysfunctional or politicized judiciary, and almost paralyzed official departments.

A prominent example is the UAE-based Al Habtoor Group, one of the few entities with investments in Lebanon, threatening to withdraw its investments unless the government takes measures to protect them. 

The Group sent a message to the Lebanese government, highlighting the country's deteriorating security and economic conditions. 

It demanded compensation for losses incurred due to its funds being trapped in Lebanese banks or would resort to legal and political measures.

In terms of figures, since 2011 and following the Syrian crisis, Foreign Direct Investment in Lebanon has declined from around 5 billion dollars in 2010 to less than half a billion in 2022, according to World Bank figures.

What is required to reverse this?

Currently, neighboring countries have surplus funds and are looking for ways to invest their money.

Gulf funds, for example, manage investments at home and abroad worth $4 trillion. Will Lebanon benefit from this opportunity?