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First-ever IT stats show growing market - Sector's success is 3 to 4 times global average (Daily Star)

New light was shed on Lebanon's fast-growing hi-tech industry on Wednesday with the long-awaited release of vital sector statistics, published for the first time through a modestly funded project by the United States government.

After years of guesswork and vague estimations, there is now a quasi-official set of market data to gauge the performance of local software and related industries, which are growing by 12.5 percent, or three to four times the global average.

At a cost of less than $25,000, "The Information and Communications Technology Industry in Lebanon," is a survey of 146 firms conducted over March and April. "This is the most comprehensive survey of its kind in recent years," said United States Agency for International Development (USAID) country director Raouf Youssef.

Speaking to industry professionals gathered at a packed conference hall in the Radisson Hotel, he mused: "Collectively you represent what is widely recognized as Lebanon's comparative advantage in the world of business and commerce."

"The Lebanese IT industry is robust - showing resilience even in the face of a global slowdown," said Sushanta Mohapatra, an economist with American consulting firm SRI International, which executed the survey with USAID grants. "Lebanon is uniquely positioned because of its talent. Most Lebanese programmers are trilingual ... a unique advantage that most countries do not have," he added.

Free to the public, the 27-page document projects industry size in the range of $400 million, employment at up to 6,750 persons and growth ranging from 22.9 percent for software companies and 7.7 percent for hardware firms.

Clearly an export focused sector, over half of respondents reported at least 10 percent of sales outside Lebanon, with almost a quarter of software firms gaining 75 percent of their revenue from doing business abroad. Exports were primarily directed to the Gulf, followed by other Arab states, Europe, the Americas and Asia."One of the prime complaints people make about Lebanon is that information about anything is very difficult to get," Youssef added.

But out of 600 companies solicited, only 147 replied, "a very commendable response rate," according to Mohapatra who also listed some industry challenges, such as a lack of international certification, high dependence on private capital - reaching some 60 percent - and lack of information on export opportunities.

Although Lebanese companies prioritized high quality products and after sales services, they scored slightly lower in terms of prices.

For example, high operating and relatively high labor costs prevent Lebanon from competing with India, Mohapatra explained. But UN socio-economic indicators show stagnation in Lebanese salaries, while the price of government utilities, especially internet connectivity, continues to climb, ranking among the world's highest rates.

Also not mentioned in the survey is the curious lack of high-speed broadband connections in Lebanon - attributed by some observers as partly due to an economic tug-of-war between the country's top leaders and by others as stemming from government's strong dependence on telecommunications revenues.

Providing sluggish and outdated services for high connection fees has discouraged some leading IT companies, such as Nintendo affiliated Digipen, from investing heavily in web-based support centers."It's a serious handicap," said Jalal Fawaz, head of the Beirut-based Professional Computer Association, which also sponsored the survey. "The high cost of connections is especially prohibitive for smaller companies," he explained, still optimistic that the study brought the industry "a sense of community."

Beirut 21-06-2004
Habib Battah
The Daily Star



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