Thriving on shelves, struggling across borders

Source: Nidaa al Watan

The local industrial market is seeing improvement, but the sector still faces major challenges on the export front, where ambitions collide with an unstable regional environment and complex economic conditions. And while the domestic situation is described as “relatively comfortable,” foreign markets, especially those in the Gulf, remain far from fully open to Lebanese products, limiting manufacturers’ ability to regain their usual momentum. Caught between optimism for better economic ties and the persistence of logistical and political obstacles, the industrial sector stands before a real test to maintain its presence in foreign markets.

“The industrial landscape in Lebanon can today be considered relatively good in terms of the local market. Lebanese industry now accounts for about 65% of products displayed on store and supermarket shelves, whereas before the 2019 economic crisis it did not exceed 30 to 35%,” says Ziad Bekdache, Vice President of the Association of Lebanese Industrialists.

Decline in imports

Bekdache explains that “this shift is mainly due to a decline in imports triggered by the financial crisis and the COVID-19 pandemic, which pushed Lebanese consumers, who traditionally preferred foreign goods, to turn toward local products. Lebanese goods also had the advantage of being relatively cheaper, by 25 to 40% depending on the item, while offering comparable quality.”

With the crisis easing and duties and taxes now calculated in dollars, Bekdache notes that “import costs have increased, while local industries have maintained relatively stable prices. This encouraged many consumers to support domestic production, driven by growing awareness of the importance of strengthening Lebanese industry for several key reasons:

1. Lebanese industry provides jobs for about 250,000 Lebanese workers, in addition to a large number of seasonal workers, especially students who work in the summer to cover tuition costs.
2. Buying Lebanese products keeps 60–95% of the sale value inside Lebanon, whereas purchasing imported goods results in about 70% of the value flowing abroad.
3. It stimulates the economic cycle by injecting new money into the local market through exports, which have increased in recent years.
4. It enhances the competitiveness of Lebanese products, which have often become cheaper than imported goods.”

Emergence of new industries

Bekdache adds that “during the crisis, Lebanon witnessed the emergence of new industries that did not previously exist, such as the production of face masks, ventilators, and various additional medical and food products. Many factories also expanded production lines and added new types of goods, which strengthened internal competition and broadened consumer options.”

As for the challenges facing Lebanese industry, he explains that “the sector is clearly suffering from the expanding phenomenon of the informal economy.”

He says: “While the number of registered legal factories in Lebanon is estimated at around 4,000, it is believed that another 2,000 to 3,000 illegal factories operate outside legal and tax frameworks, creating a significant imbalance in fair competition within the local market.”

He adds: “When we talk about the informal economy, we are referring to tax and customs evasion. Although most illegal crossings have been closed, smuggling continues through the airport or official ports.”

He gives an example: “Some parties import goods in small quantities without paying full customs duties or declare invoices at half their actual value, resulting in roughly 50% tax evasion. Other methods include importing containers with mixed goods, half of which are recorded under low-tariff codes (5%) instead of higher ones (20–25%), causing direct harm to national industry.”

The biggest challenge

Bekdache notes that “there have been repeated proposals to install advanced scanners at ports and border crossings to improve container inspection, but implementation remains slow. The biggest challenge, however, is undervalued invoices, for which no effective oversight mechanism or practical solution has yet been introduced.”

He stresses that “this situation weakens the competitiveness of legal factories, since they pay taxes and duties while informal competitors operate outside the tax system. At the same time, taxes on legal factories have increased compared to 2019 and 2020, making it harder for Lebanese goods to compete abroad.”

A fair economic environment

Bekdache points out that “although the industrial sector is not demanding direct state support amid the current financial crisis, it needs a fair economic environment that allows it to operate under equal conditions. Supporting industrial production ultimately increases exports and raises state revenues from taxes and duties, a mutually beneficial outcome.” He adds that “most long-term industrial projects are stalled or operating at limited capacity due to instability and a lack of incentive policies.”

The Gulf market dilemma

Bekdache highlights a key issue: “the Gulf market dilemma.” He notes that “Gulf markets, especially Saudi Arabia and Bahrain, have remained closed to Lebanese exports since 2019, while manufacturers face difficulties obtaining entry visas to the UAE and Kuwait. This means an almost complete absence from Gulf markets, which were historically among the most important export destinations.”

He explains that “these developments pose an existential threat to Lebanese industry, because factories that do not operate at least 16 hours a day cannot cover their operating costs, putting many at risk of closure or bankruptcy.”

European markets

Regarding European markets, Bekdache states that “Europe’s economic downturn has also reduced Lebanon’s export volume. Lebanese exports reached around $4.5 billion in 2024 but fell to about $2.5 billion in 2025 due to trade barriers, weaker competitiveness, and the decline of regional and global markets.”

Thus, “the local market today is relatively comfortable, but the export situation is completely different. Conditions remain difficult and unstable, despite our constant optimism that economic relations with Gulf markets may improve,” Bekdache says.

However, he cautions: “We must be realistic. A market lost for five or six years is very hard to regain quickly.”

For example, “in 2018 Lebanese exports to Saudi Arabia amounted to around $250 million, and the sector’s goal back then was to double that figure thanks to low production costs and a fixed exchange rate of 1,500 LBP.”

He continues: “With Saudi, Bahraini, and other Arab markets closed, export capacity dropped significantly. And even if these markets reopen today, it will not be easy to regain previous numbers, because competitors have already filled the gap we left.”

Bekdache also highlights the “trust factor,” noting that “many foreign clients prefer to deal with countries that are politically and security-wise stable. They fear disruptions or port closures that might delay deliveries in Lebanon. Their logic is simple: ‘Why work with a country whose exports might stop overnight when I can choose a stable market?’”

Ensuring security and political stability

In short, he stresses that

The Lebanese economy, whether tourism, trade, or industry, cannot recover unless we establish political and security stability and end internal disputes. Without fully implementing Resolution 1701 and ensuring a safe, stable environment, restoring Arab and international trust in Lebanon’s economy will be extremely difficult.

Finally, he notes the Saudi position reported by Reuters, quoting a senior Saudi official who said that “Saudi Arabia is planning soon to strengthen its trade relations with Lebanon, and that a Saudi delegation will visit Lebanon shortly to discuss removing obstacles that hinder Lebanese exports to the Kingdom.” This development opens a door of hope for an industrial recovery if Saudi markets reopen to Lebanese products.