Frem: Reducing the Shadow Economy in Favor of the Formal Economy Is Lebanon’s Core Battle, While End-of-Service Benefits Are as Important as Bank Deposits

In his speech in Parliament during discussions on the general budget law, MP Neemat Frem said: “In my intervention today, I want to focus on the half-full side of the glass. Four years ago, our budget stood at one billion dollars. Today, it has reached six billion. This means we are halfway there economically, which is significant and encouraging.”

He continued: “Lebanon’s main economic battle should be shrinking the shadow economy and expanding the formal, tax-paying economy. We are already seeing tighter controls on smuggling at border crossings, the airport, and land borders, in addition to a deficit-free budget – which is positive. There should also be a law requiring budgets to remain balanced.”

Frem noted that he had heard “many colleagues complaining that the current budget lacks investments. I am thankful it does, because the Lebanese state is the worst entity to carry out investments. Rather, we need to move toward BOTs [Build-Operate-Transfer] and PPPs [Public-Private Partnerships] to attract private capital to public infrastructure. This is how we will build the new Lebanon. The Lebanese state has been the worst employer in the country and is responsible for the financial collapses in the energy, telecommunications, and other sectors.”

He added: “Investments should serve as an indicator of global confidence in Lebanon. Capital is cautious and will not come unless it trusts the country. Therefore, serious and large-scale efforts are required to restore investor confidence.”

Frem also referred to a previous draft law he submitted to establish a state assets investment authority aimed at attracting capital into dormant sectors in Lebanon, to manage, develop, and invest these assets responsibly over a set number of years, after which they would return to the state. “I hope this law will be approved,” he said.

Regarding the “half-empty side of the glass,” he recalled that the issue of end-of-service benefits in the private sector had been removed from the previous budget. “Today, we look toward end-of-service benefits in both the private and public sectors, including the military and retired teachers. This issue will not resolve itself if this Parliament continues to bury its head in the sand. It is unacceptable for public employees to retire with salaries of only $300-400 per month.”

He continued: “We talk a lot about bank deposits, but end-of-service benefits are equally important, as they reflect years of work and savings to ensure a dignified retirement. I urge that this issue be given top priority in both the public and private sectors.”

Frem stressed: “In the private sector, nearly $12 billion in compensation funds have been lost. Forty years of work evaporated, and today Lebanese workers are exposed. Employers attempt to provide compensation, but unfortunately, 90% fail to fully compensate their employees. The situation is tragic: after 40 years of work, workers are left without a decent retirement. Laws exist on this matter, and they must be enacted as quickly as possible – the people are a trust placed in our hands.”

He explained: “In the private sector, companies that legally declare their profits and fully compensate their employees are threatened with bankruptcy if they attempt to allocate provisions to cover these losses.”

On another note, Frem highlighted that the process of restoring confidence in Lebanon is already noticeable. “We thank the government for its clear stance before the international community regarding weapons and reforms,” he said. “Progress is being made, albeit slowly – we see three steps forward and two steps back. The important thing is that the equation does not reverse and that we continue moving forward.”

Frem also addressed the parliamentary elections, saying that “the issue is not only whether elections are held, but how they are managed, as this will reflect the performance of both this government and Parliament. If we decide to hold elections tomorrow, the current law cannot be implemented without executive decrees and would require reopening voter registration for expatriates, while the law I proposed, as well as the government amendment allowing expatriates to vote from abroad, is still not in force.”

“We are thus facing a law that is in force but not enforceable, and a law that is enforceable but not yet in force,” he underscored. “In both cases, implementing either option will require a technical postponement to allow expatriates to register. If we do not reach an agreement soon, we must consider a third option – a new law – which would extend the timeline to reach the best possible legislation. This would amount to a non-technical extension for an extended period.”

He concluded: “It is time for genuine reform, beginning with an effective Parliament and Senate. By the way, this Parliament functions more as a Senate than as a House of Representatives. In this regard, I have submitted a bill to elect both a Senate and a House of Representatives simultaneously, the first on a sectarian basis and the second on a non-sectarian basis.”