SEZ in Tripoli undermines labour rights and plunders government revenues

On Labor Day, former Minister Charbel Nahas published an article in Al Akhbar newspaper featuring the so-called Special Economic Zone (SEZ) in Tripoli, North Lebanon, under the title ‘The economic zone a present on May Day’. Nahas critically reviewed the SEZ regulations while describing how it violates the rights of workers and was in full breach of the State’s interests. The following is a summary of key points in the article:

SEZ General Management Committee

• The committee which will manage the zone is totally independent from the supervision of public institutions.
• The said committee, according to Article 8 of its bylaws, is in charge of setting licensing provisos for investment projects, and at the same time, is responsible for granting approvals for these projects. It is responsible for receiving applications and the issuing work permits for foreigners under a special system for the zone and then will transfer these to the Labor Ministry.
• The said committee exclusively exercises the power given to public institutions, state departments and municipalities with regard to granting administrative licenses and construction permits.

The SEZ Operator

• Aside from the previously mentioned body, the SEZ law has authorized the establishment of a new structure called the “Operator”, which by virtue of Article 1, is responsible for operating and developing the zone, partly or completely, in line with the set terms. Moreover and according to the law, the Operator may also carry out development and rehabilitation work in the zone.
• Article 12 of the SEZ law granted the Operator the opportunity of providing certain services in the zone, including the possibility of setting up some infrastructural ventures, like electricity, communications, water and other facilities, and operating them autonomously in the zone at competitive prices, according to agreed terms, a clause of the law which is in clear breach of the exclusivity of the public institutions to provide these services.

Activities and Services

• Article 17 states that investment enterprises in the zone may be active in the fields of trade, industry, services and storage, but not in tourism.
• Investors are exempted from taxes or fees, including customs tariffs, consumption fees inside the zone, export and import duties for vehicles, apparatus, equipment, materials, goods, income tax on profits, license fees, and many other fiscal advantages.
• Exemption from income tax on profits can be provided on two conditions: first, the total value of fixed assets in the institution or in its capital should not be less than the equivalent in national currency of three hundred thousand US dollar, and secondly, that the ratio of Lebanese workforce should not fall under 50% of total labor force of the company.

Workers Rights

• Work relations between wage earners and companies operating in the zone relating to wages and termination of contracts should observe the stipulations of contractual agreements between the two parties involved. And thus, they do not fall under those of the Lebanese Labor Law.
• Furthermore, Article 31 states that employers and wage earners are exempt from the provisions of the National Social Security Fund and that employers who recruit those workers in the zone are exempted from the obligations of declaration, registration and payment of their entitlements to the NSSF.
• According to Article 29, work permits or renewal applications by employers or workers who entered Lebanon for the purpose of working in the zone, will be submitted to the committee itself and not to the Labor Ministry, and therefore, it becomes hard to verify the proviso stipulating the recruitment of 50% of Lebanese workforce in return for exemption from profit taxes.
• Finally, Article 34 states that salaries of workers and wage earners of companies operating in the zone will also be exempted from income tax.

For the full article, press the below link:
http://www.al-akhbar.com/node/231932

(Al Akhbar, 1 May 2015)