Lebanese businesswoman Maryam Saab, who owns a cleaning materials factory in the Saadiyat area (south of Beirut), has raised her prices by 40% after "the rise in fuel and raw material prices left me with no other options to maintain my small factory." Maryam tells Asharq Al-Awsat that, despite the relatively high price increase, she had to reduce her profit margins for fear of losing customers on one hand, and to protect her workers' livelihoods on the other.
She adds, "When we opened the factory in 2018, our goal was to expand gradually, but the series of crises and the significant rise in fuel prices, which affects manufacturing and delivery costs, along with power outages and the increase in raw material prices, compelled us to make do with what we have, as we now fear taking risks in a country overwhelmed by problems and difficulties from every direction."
Lebanese industrialists look with apprehension at the developments of the Ukrainian-Russian war, especially since this sector has faced consecutive blows over the past four years, the latest being the repercussions of the Russian-Ukrainian conflict, which caused oil prices to rise and created a global raw material supply crisis, further exacerbating the situation in economically drained Lebanon amidst soaring raw material prices.
Ziad Bekdash, Vice President of the Industrialists Association in Lebanon, explains in a conversation with Asharq Al-Awsat that "the rise in oil prices is a significant problem for industry in Lebanon, but the bigger issue lies in the increase in prices of most raw materials from the source by percentages ranging from 20% to 200%, primarily due to increased shipping costs." He emphasizes that "most manufactured goods, both food and non-food, will see price increases," asserting that "2022 will be harder than 2021 for industrialists and for all Lebanese."
He states, "We are in an economic war that affects the whole world, but Lebanon's problem is much greater because it is experiencing an exceptional situation; the economy is in shambles while government decisions are contradictory among the factions, not to mention the electricity crisis and its impact on all sectors. We are already drowning in our problems, exacerbated by the high cost of imported and globally manufactured raw materials."
He points out that "soon we will witness an additional rise in prices, especially since traders and manufacturers who still have some raw materials hurried to raise prices to preserve their replacement value." He gives the example of paper, stating, "Whereas the cost of a ton last year (2021) was equivalent to $700, the price today has risen to $1500 if available."
Bekdash rules out the closure of factories but warns that continuing in the current situation will inevitably lead factories to reduce employment. He notes that "this reality has already begun, particularly after Lebanon lost its exports to the Arab market and seeing a decline in purchasing power in the local market."
He adds, "Factory sales have declined, except for food products that have replaced imports, by 50%, in addition to a 50% loss in exports to Saudi Arabia, Bahrain, and Kuwait."
The food industry in Lebanon has borne the brunt of the repercussions from the Russian-Ukrainian crisis, especially following the decision by Lebanese Industry Minister Georges Bouchikian and the Lebanese government to ban the export of a long list of processed food goods, as part of the authorities' efforts to contain the military operations’ impacts on the food security of the Lebanese in their most dire living conditions.
Bekdash clarifies that "the Minister of Industry's decision and the government's endorsement was somewhat hasty, as evidenced by the minister easing the restrictions on the next day regarding the items banned from export," confirming that "the minister is cooperating with industrialists and does not stop any export request that reaches him."
He explains that "the materials that will have export controls are those that have flour, oil, and sugar in their production," noting that "the problem of oil and flour is the largest, while the sugar crisis has reportedly been resolved, as we recently heard from relevant officials, with a ship carrying 14 tons of sugar arriving in Lebanon soon, followed by another ship carrying 40 tons of sugar."
He asserts that "the fundamental problem lies in the rising prices of raw materials, thus, the prices of all manufactured and commercial items will rise, as they have become expensive from their sources," indicating that "the ton of sugar, which was $500, is now $1200, having nearly doubled and a half."
