January 2000

Lebanon Update Memo

The following report outlines new developments in the past three months and the state of on-going developments.

As noted in our Master Report and July – October Update Memo, the Lebanese government that took office in December 98 has embarked on the route of privatizing a number of state owned assets. It has also consistently claimed that the participation of the private sector in infrastructure was necessary. The following on-going developments can be stated:

1. On-going changes in the institutional structures.

A proposition was put forward by the Council of Ministers concerning the creation of a High Privatization Council HPC. The Council, once formed, will include the Prime minister and the ministers of finance, economy, labor and justice. It will be assisted by a panel of experts and will present its decisions to the government for final approval. The role of the HPC is meant to continue after privatization as it will have to monitor compliance and overlook foreign participation. It will also set up one or more regulatory authority to protect and safeguard competition. This competitive system is meant to encourage a wider range of international investors to participate and bring in expertise, capital and leading-edge technology.

2. On-going changes in the regulatory framework.

The draft form of the law on privatization as proposed by the Council of Ministers has been sent to parliament for approval in may 99. Due to unfavorable security conditions prevailing during the summer (Israeli raids on road and power infrastructures) and to parliament recess, the law was not brought to discussion in specialized commissions until october. At present, according to Mr Chaker ABOU SLEIMAN, member of parliament and head of the Commission of Administration and Justice, the law has been scrutinized and some amendments introduced. It is expected that the law be submitted to vote in parliament under short notice and published in the Official Gazette. It will then constitute the framework within which the privatization process could begin.

Concerning the privatization in the telecommunications sector specifically, a previous declaration of the Minister Issam NAAMAN indicates that some action could be announced before the end of december 1999. Nothing seems to be expected in 1999, according to Dr Kamal SHEHADI, consultant on privatization matters to the minister. However, Dr SHEHADI stressed the point that, since the declaration of the Minister (previous report), many meetings have been held with official delegations from the World Bank, the IMF and the IFC. The press has echoed declarations of many heads of such delegations stating that they are offering their services to the lebanese government in privatization matters.

Recent declarations by government officials, as reported by the press and the audiovisual media, put the figure resulting from the whole privatization package as planned by the government to 5 billion dollars approximately half of which pretaining the telecom sector.

3. On-going changes in IS policies.

According to OMSAR sources, the government has set up a strategic plan to guide its action in promoting the information technology and society. The key strategies of this plan consist of:

• Setting the framework. The objective is to get substantial benefits, both economic and social, through the effective use of information technology. The government is committed to provide leadership by putting structures and mechanism in place to facilitate accession to leading-edge technology through a national IT policy.
  
• Rehabilitating and reforming government services. The objective of the government is to introduce IT to transform the delivery of its services to citizens and to provide world class services that compare favorably with the best available in the competitive private sector.
  
• Modernizing government administration. The long civil strife in Lebanon left the country with no "legacy environment" as to the technology installed. This is making it easier to operate a modernization using a policy of "buy not build" or "buy and adapt" wherever feasible.
  
• Building a national information highway. The information highway is a vision of a seamless high capacity network that is capable of carrying voice data text and image traffic to all those connected. To this end a Wide Area Network project is already underway in OMSAR in its first stage. A number of network initiatives have been proposed in some other departments (ministry of finance, Central bank).
  
• 5. Developing the IT industry in Lebanon. It is certainly a main catalyst for restructuring business and government systems. The government is taking the opportunity to encourage the development of the IT industry by making greater use of the local industry in its application of the IT and in establishing a business friendly climate that enables the local industry to develop.
  
• Education and learning. This action is meant to ensure that Lebanese citizens are not disadvantaged in the information age and that they have the necessary skills to participate in the work force. This action implies an overall strategy for education and the implementation of a national IT education system in partnership with the IT and services industry.
  
• Information services. These services will be developed for economic and social sectors and will aim to build on the communications infrastructure to make available services to the community.