|Corm advocates remodeling of Lebanese economy to 'do miracles like other countries'
|Lebanon cannot overcome the negative impact of the world financial crisis if it does not reform its economic model to become more productive, former Finance Minister Georges Corm said Wednesday.
"Lebanon has to shift from an economy dependant on the flows and remittances coming from outside to an economy that would exploit all of its comparative advantages. If we keep our brain-drain here and we activate the sectors of the economy that are based on what we call the knowledge economy, we can do miracles like other countries have been doing," Corm told The Daily Star.
The remarks came during a conference - organized by Data and Investment Consult-Lebanon at the Crowne Plaza Hotel in Beirut - aimed at discussing the challenges that Lebanon is facing in the midst of the global financial crisis.
The World Bank estimated remittance inflows to Lebanon at $6 billion in 2008, constituting an increase of 4 percent from $5.77 billion in 2007, according to a report published recently by the Byblos Bank Group. The report added that remittances stood at $5.2 billion in 2006 and $4.9 billion in 2005.
According to the same report, the World Bank stated that remittances from the Gulf Cooperation Council (GCC) countries (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) account for 26 percent, or $9 billion, of flows to countries in the Middle East and North Africa region in 2008. It also estimated that, if the crisis persists, remittance flows from the GCC countries would fall by 9 percent in 2009 compared to a rise of 38 percent in 2008.
Indeed, Corm said that the most dangerous impact the global financial turmoil could have on Lebanon would come from the crisis in the Gulf, where a huge number of Lebanese expatriates live. Many are expected to return to Lebanon if the crisis continues, he noted.
"Let us hope that the crisis in the Gulf does not become deeper because of other links between this region and Lebanon also reflected in our economy's reliance on real estate investment by the Gulf people in addition to our reliance on the foreign assistance which might be less available today than it used to be," he added.
Corm argued that Lebanon should reduce its dependence on the real estate, tourism and financial sectors and be able to compete in other sectors like agriculture and manufacturing, which would provide added value to the economy.
Also speaking at the conference, economist Salim Hamadeh said that in the past, the manufacturing industry constituted 13 percent of the Lebanese economy. Today the figure rests at 6.5 percent.
According to a report published by Audi Bank, Lebanese manufactured goods are facing high barriers of entry in foreign markets. As a result, the report added, the government should set policies aimed at raising awareness in the private sector and training industrialists to produce goods with high quality standards.
Hamadeh also stressed the importance of government intervention in helping to attenuate the problems faced by the agricultural sector.
Agricultural development, he said, has the capacity to improve the living conditions of rural citizens and alleviate a major socioeconomic problem, namely rural migration to urban areas, which is unsustainable.
"[The] government's support should include the introduction of advanced agricultural techniques for the purpose of increasing incomes of farmers," added Hamadeh.
The Daily Star