Lebanon's liberal investment policies are designed to attract foreign direct investment to foster economic recovery and rebuild its war damaged infrastructure. Some analysts estimated that the rebuilding costs would exceed $18 billion with construction accounting for a large part of foreign investment. As of 2002, French, Italian, German, British, Korean, and Finnish companies were the predominant investors in Lebanon. Their presence is most strongly felt in the fields of electricity, water, and telecommunications. US-based investment was only $7 million in 1996, though this had climbed to $65 million by 1999. In addition to limiting the maximum income tax rate to 10% for foreign investors, the movement of funds in and out of Lebanon is free from taxes, fees, or restrictions. Lebanon also has bilateral trade investment agreements with China and a number of European, East European, and Arab countries.
To conserve cash, the government uses "build, operate, transfer" (BOT) agreements to finance major projects. In 1997 total foreign direct investment (FDI) totaled $150 million. By 2000 this had nearly doubled to $297.8 million. In 2001, the annul FDI inflow fell to $249.3 million. Other forms of capital inflow—remittances, repatriated capital and placements in treasury bills—far outweigh inward FDI.