Oxford Business Group 2007 Liban post and government officials signed an agreement at the end of September that is expected simplify the business registration process in Lebanon.  The International Finance Corporation (IFC) , a member of the World Bank Group, worked with the government to design the new process. The initiative was the result of one of eight advisory programmes undertaken by the IFC in an effort to restart the economy following the summer war of 2006.

The new business registration process, aimed at making the set up of a business simpler, cheaper and faster, is anticipated to be launched by the end of this month. Currently, registering a business involves numerous trips to government offices, various fees and a large amount of paperwork.  The initiative is being touted by the government as likely to reduce the overall time, cost and complexity of the process by almost half and to cut the number of steps and trips to government offices from the current 12 to 17 down to a maximum of six.

"The reform sends a very positive message to the private sector and entire investment community," said Thomas Mouillier, IFC regional program manager for business regulatory reforms. Efforts were made to standardise the process by making it possible to register a new business with a single form that can be submitted to any branch of Libanpost, Lebanon’s official mail service network, along with the necessary fees.

Within an average timeframe of a week, Libanpost will deliver a certificate of registration approved and stamped by the commercial registry, the tax identification number issued by the ministry of finance and all other relevant documentation to the business owner. The IFC has worked with Libanpost to ensure that documents will be circulated between the various government agencies in a timely manner.

The announcement comes as Lebanon was placed 85th in Doing Business 2008, an annual survey by the IFC that ranks 178 economies on the ease of conducting business in the respective countries. The survey is based on the appraisal of 10 indicators of business regulation that track the time and cost to meet government requirements in business start-up, operation, trade, taxation and closure.

In a year-on-year comparison with the previous report’s results, although Lebanon moved up one place overall, it lost ground in seven of the categories, with its largest fall taking place in the starting a business category where it dropped 10 places. The survey reports it currently takes an average of 46 days to open a business in Lebanon, compared to the regional average of 38.5. The average cost to open a business in Lebanon is 94% of gross national income (GNI) per capita, compared to the regionall average of 66%.

The Lebanese government has often stated its aim to reduce the bureaucracy businesses have to endure in a bid to entice more investment. In the last decade, serious efforts were made to modernise the regulatory framework to facilitate foreign and local investment in the country. These have included a 2001 change in the law that simplifies foreigners’ access to acquiring property and the investment development law of 2001, which offered investment incentives to businesses.

However, in the year surveyed by the IFC‘s report, Lebanon failed to undertake any reforms related to the ease of doing business, while other countries in the region were highlighted for their progress. Egypt scooped the position of top reformer in the world, while Saudi Arabia was placed as the seventh-fastest reformer globally and was credited for undertaking one of the boldest reforms by eliminating layers of bureaucracy previously associated with setting up a business. The survey focuses on reform as it views it as a catalyst for investment, citing the fact that equity returns are highest in countries that are reforming the most. "Investors are looking for upside potential, and they find it in economies that are reforming-regardless of their starting point," said Michael Klein, World Bank/IFC vice president for financial and private sector development.

The initiative has yet to be tested but officials hope it is the beginning of a new phase. "This agreement is a successful and concrete step toward creating a friendlier environment for investors in Lebanon," said Sami Haddad, minister of economy and trade. "It sets the stage for other reforms that are needed to attract more investment into the country."

© Oxford Business Group 2007