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Country reports: Africa and the Middle East
units, independent from the management of each bank and excluded from all executive prerogatives; adopt an investment strategy taking into consideration all risks; and create an administrative unit with a mission consisting of auditing, evaluating and pursuing the compliance of the banks’ operations.2 ● A new draft of the competition law was adopted by the Council of Ministers in October 2007, and submitted to parliament on 24 November 2007.3 The draft law includes the creation of an independent national competition council with a specific mandate. ‘The Competition Council’s competences will apply to both private and public undertakings. Lebanon intends to develop a mechanism to exchange information on the total amount and distribution of state aid granted, so as to ensure transparency.’4 Since 1967 monopolies have been legal and, as such, competition in Lebanon has decreased.5 The Lebanese government’s Paris III reform programme has been intended to work towards ratifying a modern competition law and removing state protection including exclusive agency rights, which could reduce monopoly power and prices. This law is the realisation of this aim. ● In January 2006 the International Finance Corporation (IFC) signed an agreement with Lebanon’s Ministry of Economy and Trade (MoET) aiming to simplify business registration procedures by reducing the cost and time of business registration. In September 2007 an agreement between the MoET, the Ministry of Finance, the Ministry of Justice and LibanPost
was signed with the support of the IFC so as to facilitate business registration procedures. In this regard, a ‘Guide to Business Registration in Lebanon’ was developed, and LibanPost will serve as a one-stop shop for business registration in the country.6 ● The Lebanese Transparency Association has updated the 2001 draft law on access to information and is currently discussing with the legal committee in the Lebanese parliament the new updated draft law. ● As an initial step in improving public administration and reducing corruption risks, the Ministry of Finance signed a Memorandum of Understanding with the Lebanese Transparency Association (LTA) in October 2007.7 The project involves drafting a code of conduct and focuses on access to information.
Lebanon and the private sector The economic system in Lebanon has always been distinct from its neighbouring countries, as it enjoys an open and free economy that relies on services, mainly tourism and banking. In 2007 the share of the services sector totalled 75.9 per cent of GDP.8 Despite its size, however, the Lebanese economy is still dominated by small and medium enterprises (SMEs) and family-owned enterprises (FOEs). According to a survey on corporate governance in Lebanon, 95 per cent of the 298 companies surveyed in the Greater Beirut Area were SMEs, and 58 per cent were FOEs.9
2 Badri and Salim El Meouchi Law Firm, ‘Lebanon’, in Getting the Deal Through, Corporate Governance 2008 (London: Getting the Deal Through, Law Business Research Ltd, 2008). 3 International Conference for Support to Lebanon – Paris III, Fifth Progress Report, 31 March 2008. 4 See http://ec.europa.eu/world/enp/pdf/progress2008/sec08_397_en.pdf. 5 This is the result of Legislative Decree 34 on commercial representation introduced in 1967. 6 See www.economy.gov.lb/MOET/English/Navigation/News/BusinessRegistrationGuide.htm. 7 Commission Staff Working Document: Accompanying the Communication from the Commission to the Council and the European Parliament ‘Implementation of the European Neighbourhood Policy in 2007’ Progress Report Lebanon 2008. Partners in Transparency: Memorandum of Understanding between the Ministry of Finance and the Lebanese Transparency Association, signed 25 October 2007. 8 See www.cia.gov/library/publications/the-world-factbook/geos/le.html#Econ. 9 LTA, ‘Corporate Governance Survey 2004’ (Beirut: LTA, 2004); available at www.lcgtf.org.