A police mechanism to recover exporters money


Two proposals are circulating among the industrialists, originating from the Ministry of Industry, under the title “Recovering Export Funds in Foreign Currency”. The two proposals aim to impose restrictions on the output of commercial operations abroad, that is, to require exporters to return dollars to local banks. In practice, this proposal comes as a punishment for the exporter, which is completely opposite to economic logic in light of the ongoing crisis. In order to motivate exporters to return their money to Lebanon, they could be granted tax exemptions, or a new banking unit could be created that would operate according to new rules that they could trust instead of appointing police to monitor them. This is something that the economy as a whole needs, not just the exporters. The two proposals, in their current form, may push exporters to search for bypass mechanisms to evade this matter. For example, they can set up units abroad that buy goods from them cheaply, and then sell them to their actual final destination. The first proposal – imposing the transfer of the value of export bills to Lebanese banks, while giving exporters certain benefits to ensure the continuation of their work according to the following mechanism:
1- Determining an estimated rate of profits for each of the export sectors, after meetings with the concerned parties in each sector. Determining this rate does not bind the institutions and companies of this sector. Rather, it is determined for purposes that are limited to the mechanism (especially the sixth point of it) that we propose, with the aim of unifying standards among its beneficiaries.
2 – Imposing the transfer of the value of export invoices to Lebanese banks within a maximum period of 45 days from the date of export, which is the logical time limit for payment, with the exception of companies that show contracts or correspondence between them and the external customer stipulating different deadlines.
3 – The exporter must sign an undertaking to implement the second point above, provided that this undertaking is presented when submitting each export statement to the companies specifying the time limit during which the company undertakes to transfer the export value to Lebanon. In the event that the time limit exceeds the 45 days, the company must attach to the undertaking, contracts or correspondence confirming this.
4 – A hard copy of this undertaking is kept in the customs export declaration, and its scanning is imposed on the Najm customs information system, and the originals are collected and sent to the Banque du Liban, which monitors its implementation.
* Note: Details related to the statement (its number, date, value of the invoice …) are mentioned in the undertaking and approved by the customs inspector (acceptance monitor or scout according to the path the statement took), in order to enable the Central Bank to follow up on the validity of its implementation.
5 – In the event that the exporter breaches the undertaking, the Central Bank notifies the customs of the matter, so that his tax number will be collected temporarily, and he is prevented from recording any import or export statement, before completing his commitment to transfer the required amount to Lebanon or to enter an equivalent amount of Fresh money into Lebanese banks. Other penalties may also be imposed (fines, deprivation of subsidies on the import of raw materials …).
6- With regard to export sums transferred to Lebanese banks and the exporter’s freedom to dispose of them, it is appropriate to reconcile between preserving a somewhat free economy on the one hand, and achieving the financial and monetary goal of this mechanism on the other hand. Therefore, we suggest the following:
– Based on the principle of the investor’s right to freely dispose of his profits, giving the exporter the right to withdraw fresh dollars from the transferred amounts in a percentage equivalent to the percentage of profits determined according to the first point in this mechanism, to spend them as he pleases, or to open an appropriation for the purchase of raw materials from abroad.
With regard to the remaining amounts of these transfers, the exporter has the right to open credits to buy raw materials while giving him the ability to withdraw a certain percentage of them in Lebanese pounds according to an exchange rate that exceeds the price specified in banks (i.e. 4000 pounds / dollar). These withdrawals will allow exporters to pay some of their local expenses (salaries, operating expenses …). Thus reducing the cost of the produced commodity and increasing its competitiveness.
* Note: These transfers reduce the need to open subsidized funds, as direct credits are opened from foreign currencies transferred from abroad, which reduces the burden on the Central Bank and reduces the demand for foreign currencies in the internal market. Supported credits or imports mean the conversion of sums from the Lebanese pound into a foreign currency according to a supported exchange rate, that is, a rate lower than the free market exchange rate for making purchases from abroad. In this context, and since the main goal of import subsidies is to preserve the purchasing power of the Lebanese consumer, it is worth stopping the opening of subsidized credits for the industrialists who depend only on the exporter and do not make any local sales, as they buy their raw materials and sell the commodities produced in foreign currency. They are not really affected by a change in the exchange rate of the Lebanese pound.
In the event that the company or establishment declares a halt to the export and import of the subsidized raw materials, then it has the right to withdraw all these amounts in cash in foreign currency. In the event of resuming its operations, the company or institution must re-enter these funds in foreign currency into Lebanese banks, where they are disposed of by returning to the previous assets mentioned above.
The second proposal – incentivizing the exporter to transfer the export sums to Lebanon
With the aim of preserving the free economy, as a first and experimental stage, exporters can be incentivized to transfer their revenues to Lebanese banks through specific offers, instead of restricting their freedom and imposing measures on them. We mention from these submissions:
Facilitating their granting of credits to purchase subsidized raw materials and increasing the ceiling of these credits.
– Giving them the ability to withdraw the company’s funds backed in foreign currency in Lebanese banks in Lebanese currency at an exchange rate that exceeds the rate specified in banks (i.e. 4000 Lebanese pounds / dollars), including the sums they receive from their clients in Lebanon on the basis of checks in foreign currency.
He granted them certain tax exemptions.

Notes on the first proposal
A- It should be noted that the exporter may tamper with the declared value of export by reducing it, in order to reduce the value of the sums to be transferred to Lebanon. To prevent this, one of two measures may be imposed:
Customs may require the presentation of a copy of the import declarations registered abroad within a period of two months. In the event of any discrepancies, customs must suppress the violation of false connotations of value in accordance with the principles and inform the Central Bank of the true values ​​to take action in relation to it.
– The central bank can impose on the exporter to make these transfers to his account in Lebanon directly from the customer’s account abroad and not through an account of interest to the exporter abroad.
B – The biggest problem lies in the loss of confidence in the banking sector by exporters who fear that it and their money will be controlled after the sums are transferred to Lebanon. Therefore, the Banque du Liban should be their guarantee by establishing a unit for this purpose whose mission is to receive and process the reviews of these exporters and follow up on the implementation of all points of this mechanism by Lebanese banks without any delay.
A – Given the large number of details that must be paid attention to when implementing this mechanism to prevent any manipulation or fraud, it can, as a first stage, be restricted to a number of companies according to certain criteria, for example: companies whose exports constitute 60% or 70% of the total exports of Lebanon and companies that It benefits from high sums to import subsidized raw materials.
* These notes are as mentioned in the paper distributed to industrialists and are not prepared by “Al-Akhbar”. Subscribe to «News» on YouTube Here

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