Lebanese industrialists say they are strangled by war, costs, and declining Gulf exports

BEIRUT — The president of the Association of Lebanese Industrialists (ALI), Salim Zeenny, warned Tuesday of the triple pressure faced by the sector in the context of the regional war pitting Iran and the United States, along with their allies and proxies, notably Israel and Hezbollah.

Reporting losses "linked to the war waged by Israel, as well as the decline in local consumption and exports," the association says that industrialists "can no longer withstand additional burdens, in a context where the state increasingly resorts to imposing taxes to finance its spending."

According to the association, "the number of factories completely destroyed during the war remains limited, while most of the damage involves partial damage or forced closures." It adds that it remains "difficult to precisely assess the financial losses, which include rising energy costs, increased transport expenses and soaring prices of raw materials." The ALI also notes that industrial exports to Gulf countries, "Lebanon's main export market which traditionally offset the decline in domestic demand, are nearly at a standstill."

Take a look back

A second conflict in two years: How Lebanese companies are holding steady

The ALI is particularly contesting the retention of additional taxes put in place by the government last February to finance the raises granted to public employees. These measures include excise duties equivalent to $3.5 on fuels, a one-point increase in VAT — which must be voted on to take effect — and the addition of taxes on containers entering the port.

Last week, Finance Minister Yassin Jaber initially told the daily al-Akhbar that he was in favor of freezing this increase before tempering his remarks on Sunday, after unions protested. He stated that the state "has made a clear and responsible decision: to ensure the continuity of public services and essential infrastructure, while fully preserving the rights of public sector employees."

He also stated, according to comments reported by his press office, that "the Ministry of Finance is managing this difficult period with a state-driven logic concerned with good public financial management, and not out of emotional reactions," stressing that "true responsibility is not to make the easiest and least considered decision, but the one that ensures economic and social stability."

The ALI, for its part, has warned that "the industrial sector can no longer endure the accumulation of burdens in a context of repeated recourse to taxation to fund public spending," stressing that it provides jobs for some 250,000 families.