Key concerns regarding the merits and fate of the Tripoli SEZ

Tue, 07/21/2015

With the launch of the Special Economic Zone in Tripoli, there has been much talk lately on the merits of this venture and its anticipated impact on the neglected and impoverished capital of North Lebanon. High expectations have attracted the attention of various politicians who started calling for the setting up of similar economic zones in other parts of the country. In view of the seriousness of the SEZ issue and its lasting repercussions, we are opting to shed some light on this largely unpublicized and major economic initiative.

By definition, the Special Economic Zone (SEZ) is a geographical area or just a legal status set up to attract mainly export-oriented private enterprises involved in production or services. The setting up of such special economic zones is generally associated with a range of generous tax exemptions and other forms of incentives and waivers from applying on-going laws related to investment and labor.

The setting up the Tripoli-SEZ was first brought up in Parliament in 2008 and formalized in a Cabinet decree in 2009. Many years later, in fact only a few months ago, the Council of Ministers finally agreed to appoint its board members, with former Minister Rayya Hassan as chairperson.

Since the present short article does not allow for a critical review of the background and regulations governing the Tripoli SEZ, we would like to refer readers to one incisive, and rather detailed critique of the venture which was presented by former Labor Minister Charbel Nahhas in an article published in al-Akhbar newspaper in commemoration of Labor Day and entitled ‘On the first of May, a gift of free economic zones’, Drawing from that article we would like to highlight Nahhas’s following conclusions:
- Similarly to SOLIDERE, the Tripoli SEZ is managed by a General Management Committee which is largely independent from the supervision of public institutions.
- The by-laws of the SEZ allow for the establishment of a new structure, to be called the “Operator”, and to be run by a private enterprise, which will be responsible for the full operation and development of the zone.
- Investors in the SEZ are expected to receive generous exemptions, waivers, etc, all at the expense of public revenues.
- Work relations between wage earners and companies operating in the zone will strictly observe the stipulations of contractual agreements between the two parties involved. And thus, they will not necessary fall under the legal provisions of the Lebanese Labor Law.
- Employees and wage earners will be excluded from the provisions of the National Social Security Fund; while at the same time SEZ governing authority can encourage the recruitment of foreign workers
In spite of these serious issues which were not adequately discussed within government or in the public sphere, work is underway to turn the project into reality. Praising the merits of the project, Rayya Hassan stressed that it will contribute to reviving economic life in the north of the country and is expected to create hundreds of jobs for the young generation. However, it is to be noted that Hassan did not put forward any strong and convincing evidence as to the chance of success of the project nor did she indicate the potential parties that may benefit from it. One argument highlighted repeatedly by SEZ advocates is its strategic location on an area of 55 000 square meters close to the port of Tripoli. The argument goes on to say that SEZ is bound to benefit from the major reconstruction momentum in Syria after the war.
Based on the previous arguments, officials in nearby Batroon have filed a similar demand for the setting up of a new special economic zone in their area. In a positive reply, the government agreed last April on a proposed law in that direction despite strong objections within the population of Batroon. It is also thought that similar demands are likely to emerge form other areas of Lebanon. However, it is worth noting the original idea was originally conceived in order to meet Tripoli’s own economic development needs.
Serious doubts still surround the fate of SEZ and uncertainty regarding the profile of its stakeholders. However one thing which is clear is that since its inception, the project slowly slipped into the confessional quagmire engulfing Lebanon. A case in point is the composition of its board which was decided purely along sectarian lines. One other major area of concern is the absence of a clear and comprehensive national vision concerning the fate of the country’s economy as well as towards localized development, coupled with the continued predomination of the SOLIDERE economic model, a model which has favored sectarian and regional cleavages within Lebanon.