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LEB_8953_BMW_X5_X6_Executive_20x28cm_ENG.indd 1 12/23/2015 10:40 AM JANUARY 2016 Editorial RESOLUTIONS FOR 2016

he magazine proposes a few resolutions for 2016. And we’re starting the year by practicing them. First, we call on the best and brightest Lebanese minds to seize the potentially lucrative opportunities that the Paris Agreement on climate change will afford. This is why we’ve put climate change on our cover. Our second, and most important, resolution is that 2016 will be our year of business ethics. There’s no better place to Tstart than with the worst disaster this country has seen in recent memory: the (mis)handling of waste management. We take an in-depth look at a local company given far more opportunity than international best practice suggests it should have had. We’re setting the stage for a year in which we will take a very hard look at business ethics in this law-ignoring country. Milton Friedman wrote that a company’s top brass — be they a board of directors or a small number of executives — has only one objective: make more profit year-on-year for the benefit of the company’s most important stakeholder, its shareholders. Of course, the company must obey the law, conduct business in a responsible manner and treat its employees respectfully and well. As we publish our months-long investigation into Averda, parent company of waste managers Sukleen and Sukomi, what we’ve found is plenty of government malpractice. Yet for every rumor we chased, we could not substantiate illegal behavior on the company’s part. Even the notion that the company only received contracts because of its founder’s religion or alleged ties to the late Rafik Hariri is undermined by the fact that each time Sukleen or Sukomi were given a no-bid contract, the entire cabinet approved. The conspiracy to divide the pie is one all of our politicians are in on. Our system is so broken and the laws and regulations we have on the books are so poorly enforced that it looks perfectly legal for a company to be given not only a monopoly on waste management, but years and years of taxpayer-financed work without having bid on a contract in more than 20 years. In fact, the Shura Council in 2001 gave Averda’s contracting in Lebanon a legal seal of approval. It’s bewildering. No-bid contracts might be legal in Lebanon, but they are neither reflective of international best practice nor of the Lebanon we want to see. The summer of 2015 saw protests we hoped would achieve more. We published a manifesto to help inform this country’s citizens because we’ve spent nearly 20 years pointing out what’s wrong in Lebanon and what needs to be done to right it. In 2016, you can expect us to name and shame both corporates and government officials. And we won’t be using Lebanese standards. Like the manifesto, our coverage this year is meant to help activists and pressure groups know who is doing wrong and how and what can be done better. We want an inclusive economic system, and the most effective way to get there is by promoting best in class corporate behavior. We’re on a mission, so keep reading.

Yasser Akkaoui Editor-in-chief

www.executive-magazine.com | JANUARY 2016 1 Contents JANUARY 2016

#198 On the cover 14

Last Month 6 Entrepreneurship 40

6 December’s essential 40 Smart Money Talks headlines 42 Bireme Ad (ventures)

Leaders 10 Retail 44

10 Climate change: A 44 Q&A: Tae Hun Ryu, Climate change talks in Paris have broken new 5,000-year opportunity LG Levant general ground and nations are now taking on responsibility 11 Waste management: manager at the local level. Opportunites in Lebanon look Recycling history promising, but they require political will. LIFE 48 Cover Story: 14 Climate change 48 Beirut Chants 50 UBay: Zen indeed 14 A chance for Lebanon 52 The craftsmanship 18 L’accord de Paris of Rolex 20 Comment: One drop 54 Silver screen’s at a time golden age

Economics & Policy 22 Business Essentials 56 22 Dissecting a waste ECONOMICS & POLICY 22 empire 56 Company bulletin Government oversight played a large role in Averda’s waste monopoly 26 Globalization of 60 Conferences & resettlement exhibitions 30 Comment: Renewed dynamism Last Word 64

Companies 64 A problem of & Strategies 32 domestication

32 Spinning content from every virtual angle 36 Q&A: Patrick RETAIL 44 Alexandre, Air France LG Electronics is refining their target market in the Levant

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Editor-at-large Thomas Schellen Real estate & industry editor Matt Nash Hospitality & tourism editor Nabila Rahhal Economics & policy editor Jeremy Arbid Deputy editor Livia Bergmeijer Executive Life editor Olga Habre Photojournalist Greg Demarque (Additional photos from AFP, Getty, Maryam Amstrad and Reuters) Art direction Tanya Salem of Smart Box sarl Illustrations Joseph Kaï Contributors Riad al Khouri, Mona Sukkarieh, Jessica Saade

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> A new study Circular 331 in 2013. The to invest in repairing matter. Hezbollah fired four released by the World Bank event highlighted the key basic services and retaliatory rockets from and Lebanon’s Central steps Lebanon needs to take stimulate employment southern Lebanon into Administration of Statistics in order to maintain strong in Lebanon’s poorest Israel. shows that one in four foundations for a sustainable areas, thus aiding both Lebanese live in poverty, ecosystem. refugees and local residents, > On December 21, despite the country being who have themselves new rounds of cross- classified as an “upper > Lebanese Prime suffered from the refugee party talks began in middle income” economy. Minister Tammam Salam, crisis, and encouraging Lebanon to discuss With a population of around the United Nations Special cohesion between the two the implementation of 4 million, this means that 1 Coordinator for Lebanon populations. The plan will government functions, as million Lebanese are living Sigrid Kaag and Deputy provide funding assistance well as the establishment on insufficient income to UN Special Coordinator to 300,000 of Lebanon’s of a new electoral law. The cover the basic costs of Philippe Lazzarini launched most vulnerable citizens. meeting, initiated by former rent, food and health care. a plan at the Grand Serail Prime Minister Saad Hariri, According to the study, to ask the international > On December 20 took place at Speaker Nabih the threshold determining community for $2.1 an Israeli aerial strike Berri’s residence in Ayn Al poverty is an income of $266 billion to help finance killed Hezbollah leader Tineh and included heads per month. Theresults of Lebanon’s Crisis Samir Kuntar in a of major parliamentary the study do not include Response Plan (LCRP) Damascus suburb from blocs who set out to find a the vast majority of where he was allegedly solution to the country’s Syrian and Palestinian involved in planning 19-month presidential refugees living in Lebanon, strikes against the occupied impasse. The need to fill since the data was collected Golan Heights. Kuntar the presidency is becoming between 2011 and 2012 was the longest serving all the more important since when only 100,000 Syrian Lebanese prisoner in Israeli the vacuum has largely refugees were registered jails. He was released in prevented Parliament in Lebanon, and no data a negotiated prisoner and the government was collected from the swap with Hezbollah in from continuing work as UNRWA-administered 2008 alongside four other usual. Hariri’s initiative Palestinian refugee camps. Lebanese prisoners. Kuntar to nominate Marada Lebanese Prime Minister The study found that 36 Tammam Salam spent 29 years imprisoned Movement leader Suleiman to 38 percent of residents in Israel after being Frangieh has not been in North Lebanon and the for 2016. The plan has accused of involvement in affected by these fresh Bekaa Valley live in poverty, been put forward to help attacks on Israel in 1979. talks, with the Maronite more than double the assist the 1.5 million Syrian Hezbollah’s official media leader officially announcing figure for Beirut residents, refugees living in Lebanon. branch announced that his candidacy during which stands at 16 percent. According to Salam, Kuntar would be buried a television interview Overall, 27 percent of the funding provided to in a Shiite cemetery in in mid-December, Lebanese live below the Lebanon has fallen short Beirut’s southern suburbs. despite opposition to his poverty line. of that provided to Turkey Syrian Information Minister nomination from other and Jordan, the two other Omran al Zoubi confirmed political leaders. > On December 10 and largest host nations in the Syrian authorities 11, Banque Du Liban region for Syrian refugees. were investigating > Military Prosecutor (BDL), Lebanon’s central Funding is key if Lebanon the attack and accused Judge Saqr Saqr on bank, organized an is to provide refugees Israel of gaining from December 21 charged international startup with basic services such Kuntar’s assassination, Bilal Baqqar with conference which attracted as housing, education falling short of outright belonging to ISIS and speakers and attendees and health care, since the blaming it. Official Syrian engaging in terrorist from all over the world. country’s own resources are media, on the other hand, activity. Baqqar is the main Regional and global interest already strained. As with claimed the aerial strike suspect in the November in Lebanon’s entrepreneurial the LCRP’s 2015 mission, was carried out by Israel, 12 twin bombing that ecosystem has been growing the government’s 2016 plan while Israeli ministers killed more than 40 since the launch of BDL’s intends to use the funding refused to comment on the people in Beirut’s Bourj Al

6 JANUARY 2016 | www.executive-magazine.com

LAST MONTH

QUOTE OF THE MONTH and advanced preparing to negotiate manufacturing, among accession to the World other areas. The fund is Trade Organization WE HAVE OVERCOME A HUGE equally funded by both (WTO). The country is the “BURDEN THAT WAS PRESSURING countries and will be largest economy outside LEBANON AND THE LEBANESE. managed by Abu Dhabi’s the organization. Following ” Mubadala Development the success of nuclear TAMMAM SALAM, Lebanese prime minister, on the Co., China Development talks, Tehran is ready decision to export Lebanon’s trash Bank Capital and China’s to restore international State Administration economic links after years of Foreign Exchange, of sanctions by major according to the UAE’s world powers. In a meeting Barajneh neighborhood. The Independent state-run WAM news in Nairobi held every He was arrested earlier Municipal Fund will cover agency. two years, Nematzadeh in December by Internal the $200 million needed addressed the 162 members Security Forces before to provide the export > As the price of oil of the WTO, telling being referred immediately costs, Agriculture Minister ended the second week of them that after “years of to a military investigative Akram Chehayeb said after December at a seven-year intensive negotiations judge. The suspect faces the meeting. low, GCC stocks retreated have finally cleared all the the death penalty if found to 12-month lows. Qatar’s misunderstandings about guilty. > The United Arab QE Index dropped by 3.7 Iran’s nuclear activities, we Emirates joined forces percent on December 13 are taking the next step > Following months with China to create a $10 and closed below 10,000 toward integrating more of stalled talks, Lebanese billion co-investment for the first time since deeply into the global ministers on December fund in efforts to pursue November 2013; Saudi economy.” 21 came to an official stronger ties with one of Arabia’s Tadawul All Share solution to the waste the world’s largest players Index sank its lowest since > As part of management crisis in international trading 2012. The ADX General preparations for a Syrian that has been engulfing and its second-biggest Index in Abu Dhabi fell by peace negotation scheduled the country’s capital and trade partner after India. 2.1 percent. Whereas GCC for January in Vienna, surrounding areas since The UAE-China Joint indices recovered some transfers of wounded July 17, 2015. The six- Investment Cooperation ground in the second half fighters and civilians hour cabinet meeting, the Fund, agreed upon and of the month, oil prices from two flashpoint regions first in three months to signed during a visit stayed subdued and were in Syria were carried out discuss the crisis, ended to China by the crown close to 11-year lows on with support by Lebanon, with the approval of a prince of Abu Dhabi, December 30. Turkey and Iran on decree to export most Sheikh Mohammad bin December 28. A convoy of of Beirut and Mount Zayed al-Nahyan, will > Iranian Industry more than 120 combatants Lebanon’s waste over seek investments in Minister Mohammad and civilians passed from the next 18 months. The energy, infrastructure, Reza Nematzadeh said on Zabadani into Lebanon via next step will be for the technology December 17 that Iran is the Masnaa border crossing Council for Development and were later transferred and Reconstruction to by air to Turkey and from draw up contracts with there to opposition-held British and Dutch firms areas in Syria. In parallel, which will be charged with 335 people were evacuated handling export operations. from villages in northern However, it will take weeks Syria and taken through for the contracts and Turkey and Lebanon to treaties to be drawn up in government-controlled line with international law, areas in Syria. The since waste exports are humanitarian action Sheikh Mohammed bin Zayed al-Nahyan (L), crown prince of controlled by the United Abu Dhabi, meets Chinese President Xi Jinping during a signing was brokered by the Nations Basel Convention. ceremony in Beijing on December 14, 2015. United Nations.

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Executive W20XH27 familly.indd 1 5/24/11 4:00:33 PM LEADERS

> Climate change A 5,000-year opportunity Paris Agreement signals great chances for Lebanon

“This Agreement... aims to strengthen the global response to the threat of climate change, in the context of sustainable development and efforts to eradicate poverty, including by: (a) Holding the increase in the global average temperature to well below 2 °C above pre-industrial levels and to pursue efforts to limit the temperature increase to 1.5 °C above pre-industrial levels, recog- nizing that this would significantly reduce the risks and impacts of climate change; (b) Increasing the ability to adapt to the adverse impacts of climate change and foster climate resilience and low greenhouse gas emissions development, in a manner that does not threaten food production; (c) Making finance flows consistent with a pathway towards low greenhouse gas emissions and cli- mate-resilient development. This Agreement will be implemented to reflect equity and the principle of common but differentiated responsibilities and respective capabilities, in the light of different national circumstances.” Article 2, Paris Agreement

hen it comes to managing our planet, the human of Nations and the United Nations. The closest examples for race has finally succeeded in learning a few things. similar formulations of a shared global will are probably the W One lesson is that climate is something that we do UN’s Millennium Development Goals of 2000 and their suc- influence but cannot control.Au contraire, the climate con- cessor targets, the Sustainable Development Goals. trols us in spite of all our technology. A second lesson is that For implementing the Paris Agreement, national de- we have to adapt in order to survive in the third millennium terminations are key. The agreement establishes a positive just as Paleolithic humans needed to adapt as groups to sur- framework for national contributions. However, realizing vive environmental changes during the Pleistocene era. For and expanding these contributions will be a task for the sov- modern man, this adaptation is, however, a collective chal- ereign institutions of the 195 states that have committed to lenge to achieve culture change on a planetary level. the Paris Agreement and are expected to ratify it. The process The third insight to ponder is that it is much better to will be complex and arduous but it comes with hope that pas- affirm a chance than to obsess on downside risks. Dealing sions and energies which were in the past wasted on debates wisely with what we cannot control but are able to influence over the reality of human climate impacts will now be invest- positively as very large collectives — i.e. humanity, the com- ed into agreeable and achievable measures. munity of nations, single nations and business enterpris- Bringing the climate chance [intended] process down to es — represents a humongous opportunity with millennial national levels, every country is asked to fulfill its responsi- consequences. Not trying to capitalize on the chance to curb bility. For countries in the Middle East, climate change-relat- climate change would mean to simultaneously fall into an in- ed responsibilities include not only implementation of emis- tellectual ice age and invoke a slow meltdown of the global sion goals but also needed measures for managing scarce and economic core. vital natural resources, water being at the top of the list (see The trigger event for this historic chance is the global comment on page 20). agreement on reduction of global warming reached at the For Lebanon, the call for action entails two main aspects: United Nations Climate Change Conference in December private and public. The country will need to continue incen- 2015, the so-called COP21 Paris event. In the best case it will tive programs — primarily financed through central bank be a tipping point in dealing with the human impacts on our stimulus — to implement emission reduction measures. To climate, including a very achievable Lebanese contribution maximize the impact of those measures, Lebanon will need to reducing our carbon emissions (see explainer on page 18). to tap into external financing from donors and international From a species perspective, the breakthrough of Paris lies institutions. This is doable (see cover story on page 14) but in the declaration of a humanity-wide shared goal and collec- requires fiscal diligence and something totally new: political tive affirmation to pursue this goal. One will be hard pressed self-denial. This means that the next Lebanese government to find any precedent for such in-principle consensus at his- — yes, Executive still insists that we need a full government toric events of the 20th century — from peace conferences asap — will have to pass a number of laws, achieve real co- to the founding assemblies of organizations like the League operation between ministries instead of allowing fragment-

Replanting Beirut’s not-so-green spaces 10 JANUARY 2016 | www.executive-magazine.com ed fiefdoms, and demonstrate to international funders that tions have been innovated by Lebanese companies. With their money is well and efficiently invested, with the maxi- certainty, these can be developed further and put to eco- mum outcome in emissions reductions, when provided to logically responsible profit generation in the growing and Lebanon. decentralizing markets of emerging and frontier economies On the private sector, our call to action is to be smart, in decades to come. The shift out of fossil fuels and into -al decisive and proactive. Known for their adaptability and ternative energies is a chance for Lebanese entrepreneurs quickness in engineering practical solutions, various Leba- to do good, work economically, create jobs, and reduce our nese entrepreneurs have demonstrated in recent years that output gap. Unmissable. they can devise alternative energy answers to problems in Returning to the global perspective, the climate change markets that face inherent restraints (such as, ahem, fre- chance is a once-for-a-species opportunity that, if missed, quent interruptions of governmental power supply). As may not recur in the next 5,000 years. This quantification is observed and documented by Executive, solar, creative of course totally over the top and completely arbitrary but energy storage, and very feasible power management solu- there is truth in it — and doesn’t it sound impressive?

> Waste management rotting trash on the streets will be back in fashion for sum- mer 2017. Recycling history It’s important to remember that the great “trash crisis” Lebanon set to repeat past mistakes of 2015 actually started with a government decision in early 2014 to close the nation’s largest sanitary landfill. While there was nothing wrong with the decision to shutter the landfill, e are being governed incompetently. 2015 proved the blunders soon began piling up like so many uncollected that. Not only did the government’s handling of bags of garbage. First and foremost, a ministerial commit- W waste management allow one of the country’s tee tasked in early 2014 with finding a replacement for the worst environmental disasters to unfold, but it Naameh landfill failed spectacularly. The plan this commit- is replicating bad decisions it made nearly 20 years ago. In tee eventually settled on consisted of dividing the country 1997, the cabinet gave one local company a monopoly on into six service zones and tendering waste management in most of the nation’s waste without a competitive tender. As those zones to private companies. Bidding did not open un- 2015 came to a close, the cabinet was set to simply split that til late in the first quarter of 2015, meaning that even if the monopoly between two international firms, again without a tenders were successful, winning companies could not have competitive tender. But for double the price. Worse, the al- had replacements for Naameh constructed before the landfill leged will to let municipalities handle their own garbage an- closed. Further, the plan once again would have given one nounced in September 2015 has yet to translate into action, contractor (admittedly a consortia of local and international meaning that if this temporary solution is truly temporary, companies) in each zone full control of waste management, which is not standard international practice and arguably the main grievance against Averda, parent company of waste managers Sukleen and Sukomi. On top of that, the tender conditions were outrageous. The contracts were slated to last seven years, yet winners were expected to: 1) secure land on which to build waste management facilities; 2) build and operate those facilities; and 3) decrease landfilling from around 80 percent of the to- tal waste stream to 40 percent in the first three years and to 25 percent thereafter. Land in Lebanon is expensive. Capital expenditure on technologies needed to decrease landfilling can cost millions, and resident opposition to waste manage- ment facilities “in my backyard” is high. Every private sec- tor player Executive spoke to about the tenders — includ- ing those who ultimately submitted offers — said the tenders seemed designed to fail. Executive has not been able to dis- cern exactly how the tender conditions were formulated, but Parliament should do its job and question all involved in an open, televised session. The legislature has this authority, as

www.executive-magazine.com | JANUARY 2016 11 LEADERS

evidenced by an October committee hearing the press was Averda these past two decades. asked to leave when MPs nearly came to blows. Executive believes in private enterprise and responsi- When the tender winners were finally announced in Au- bly earned profit, so we’ve been paying special attention to gust — over one month after Naameh closed and trash piles the so-called “waste file” and have dug deep into allegations and open burning were common — the contracts were im- of corruption levied against the private company that has mediately cancelled because of supposedly high costs. As Ex- been cleaning up after most of us since 1994. We were able to ecutive noted at the time, proper waste management is not completely debunk some of the accusations against Averda cheap, and several local politicians are well aware of that. The (namely that politicians hold shares in the company and that fall-back plan, formulated in a matter of days and approved its prices are extravagant). We could not disprove some of by the cabinet in September, had two components: sanitary the other allegations against the company (namely that Aver- landfilling for 18 months and devolution of waste manage- da paid bribes to get work, shared profits with the political ment responsibilities to the municipalities. The second part elite and/or earned profit margins in excess of 30 percent). was the more important, as it was envisioned to be long-term What is absolutely clear, however, is that Averda’s workload, and sustainable. Flawed as the reasoning may have been, the and thus its revenues, expanded repeatedly without competi- idea called for cities and villages to work together, establish- tive bidding. The tendering process, however, is the govern- ing their own service zones and choosing local sites for waste ment’s responsibility, not the contractor’s. treatment and disposal. While the public generally seems to In dealing with Averda, successive governments seem to have no problem littering or despoiling this nation’s natural have viewed it as the path of least resistance. For example, beauty with festering open trash heaps, the Lebanese have in 1997 when the government faced a self-imposed deadline traditionally opposed modern waste management facilities to close the open dump in Bourj Hammoud, the cabinet ap- being built anywhere near their homes. proved an ambitious emergency plan The government was supposed to create that envisioned the construction of a committee to build capacities among THE STATE SIMPLY waste sorting and composting facilities municipal leaders, getting them ready GAVE THE WORK TO as well as a sanitary landfill in around to handle their own trash — with or AVERDA INSTEAD OF 18 months. The state simply gave the without private sector participation. By work to Averda instead of going to ten- March 2017, the entirety of Lebanon GOING TO TENDER. der. This is a bad pattern. We should be should have had plans approved, con- THIS IS A BAD ashamed of it, not repeating it. tracts signed and all needed waste man- PATTERN. And, while it is uncommon for one agement facilities built and ready for company to be offering the full spread operation to accommodate the full de- of waste management services, what the volution of responsibility for this most basic service. While state pays Averda is not higher than in other countries with the temporary landfilling component of the plan hit the ex- Lebanon’s income level for the same range of services. Dou- pected brick wall of public opposition, authorities have done bling that cost with no guaranteed long-term benefit, how- absolutely nothing to prepare for full municipal takeover of ever, is ludicrous and proof our leaders are happy to make waste management. If even one minister who approved the incompetent decisions. Everyone loves to hate Averda, but plan took it seriously, he or she should have loudly and fre- the company did not create the situation in which it works. quently called for action on the long-term component. In- It should not be demonized for doing its job. That said, more stead, time has been much better spent bickering over tem- transparency in waste management — as well as all state fi- porary sanitary landfill sites. nanced contracts — is long overdue. The most confusing part of this saga, however, is the Parliament needs to assert itself. If the government seemingly final chapter. At time of writing, the government awards no-bid contracts, lawmakers should demand an- says it wants to export the nation’s waste for 18 months at a swers. In public. The legislature is supposedly the cabinet’s cost of $212 per ton. Given an average waste generation rate watchdog, and the “waste file” demands immediate action of 3,000 tons per day in the areas that incumbents Sukleen for the greater public good. and Sukomi have been servicing, the total bill will be nearly And years of accusations against Averda should teach $350 million — more than double the estimated $165 mil- us a few things. Parliament should also develop listing re- lion for 18 months of waste management services the gov- quirements for any company that wins state work of a sig- ernment would have paid Averda, Sukleen and Sukomi’s par- nificant value or duration. The exact requirements are open ent company. And awarding these new contracts without to debate, but the bottom line is that when public money gets public discussion or competitive bidding is simply a repeat spent, those ultimately footing the bill have the right to a ba- of the worst sin the government committed in dealing with sic level of knowledge and access to information.

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Executive W20XH27 piano.indd 1 1/31/11 2:51:22 PM COVER STORY Climate change

A chance for Lebanon Implementing the Paris Agreement will require political will By Jeremy Arbid

ast month Lebanon, along- side 194 other countries, was L represented in Paris for what was expected to be another confer- ence promising to mitigate pollution but delivering little in way of curb- ing the pace of climate change. After high profile conferences in Kyoto in 1997 and Copenhagen in 2009 failed to obligate countries to reduce pol- lution, the mood leading up to the Paris conference was for more good intentions and empty promises. Yet, surprisingly, after two weeks of talks the 195 countries agreed to reduce carbon emissions — it’s being dubbed the beginning of the end for the fossil fuel era — a move that could alter the economic landscape for fuel import- ing countries, like Lebanon. But to reach the goals of the Paris massive investment in renewable accord, officially referred to as the WEALTHY ECONOMIES energy and energy efficiency projects Paris Agreement, and limit a rise in HAVE PLEDGED TO that, simultaneously, would phase global temperature levels, political will CHANNEL AT LEAST $100 out fossil fuel use and reduce carbon is required. France’s foreign minister BILLION ANNUALLY emission. Wealthy economies, like the and chair of the Paris conference, TO FINANCE GREEN United States and European Union, Laurent Fabius, called the agreement a PROJECTS have pledged to channel at least $100 “historical turning point”. Other global billion annually to help poorer econo- leaders — United Nations officials and mies finance green projects. heads of state, even the Pope — have is an agreement to avert catastrophic Lebanon has already benefited echoed this sentiment. The highest climate change by limiting a rise in from international financing and more levels of international politics might, global temperature levels to no more help is expected as the likely momen- hopefully, drive momentum down- than 2 degrees Celsius (with wording tum established with the Paris accord ward to the domestic level. Lebanon in the agreement urging the tempera- snowballs moving forward. The is already working to reduce its ture increase to be limited to 1.5 de- European Union granted 11.9 million emissions largely through renewable grees Celsius if possible) by the end of euros ($13 million) to subsidize inter- energy projects, but the country will the century. To do so, countries agreed est rates and increase payment periods need various measures of legislation to to transparent reporting of their emis- for projects that fall under Lebanon’s continue forward. Can political will at sion reductions, to meet every five National Energy Efficiency and the international level trickle down to years to assess and modify their pledg- Renewable Energy Action (NEEREA) Lebanon, or will the status quo of local es so that the 2 degree (or 1.5 degree) plan — a financing mechanism for policy making remain? goal stays within reach, and put forth green energy projects initiated by the a notion of collective responsibility central bank. The World Bank chan- INTERNATIONAL FINANCING — no more is there a stark distinction neled a $15 million loan through the Where the Kyoto and Copenhagen between rich and poorer nations (see International Bank for Reconstruction conferences failed, Paris succeeded. Paris accord explainer page 18). and Development to help manufactur- The overarching result of the accord For the most part, this will require ers reduce emissions. Parliament met

14 JANUARY 2016 | www.executive-magazine.com for a rare meeting in November 2015 theory, a $1 billion credit line annu- electric vehicles was worth $600 bil- to approve two loans that were set ally to be invested in green projects lion last year. to expire — one from the European through near interest‑free loans. There are both structural and leg- Investment Bank and the other from Since 2011, Khoury says, direct islative challenges that Lebanon must the French Development Agency. The investment in renewables, energy ef- address to develop renewables and loans account for some $40 million ficiency and green buildings stood at energy efficiency as a market segment. that will be invested in renewable and $450 million. In early December 2015 As part of the goal to reduce emissions energy efficiency projects in 2016. BDL Governor Riad Salameh told a by installing renewables and limiting Vahakn Kabakian, climate change conference audience that the bank’s dependency on imported fossil fuel, project manager at the Ministry of initiative had created 10,000 jobs and Lebanon will need to restructure its Environment and part of Lebanon’s 270 companies, with the credit line electricity sector. Redirecting the $2 delegation to the Paris conference, and financing some 325 projects. While billion that Electricite du Liban (EDL) Pierre el Khoury, director of the Leba- the available credit has not been fully receives annually to help cover the nese Center for Energy Conservation utilized, it is expected in 2016 that cost of generation — it pays only $25 at the Ministry of Energy and Water, another $300–400 million will be per barrel with the treasury cover- both agree that international financing injected, says Khoury. ing the difference — is a measure will be very important for Lebanon to BDL has, essentially, created a that director general of the Ministry reach its emission reduction contribu- niche sustainable energy market. of Finance, Alain Bifani, calls for. In tion. They say that the availability of Businesses and factories, for example, a December interview with Execu- international financing will increase, have taken advantage of the financing tive, he said the subsidy needs to end not immediately but moving toward mechanism to install rooftop photo- because Lebanon can no longer afford 2020 as momentum picks up. Nam- voltaic systems. Some of Lebanon’s it, even with the breathing room that ing a few donors as examples Khoury biggest banks are already involved in current low oil prices provide. says, “We will be moving towards financing sustainable energy projects, The view from the Ministry of real money — Abu Dhabi Fund for Khoury says, and the hope is that Environment’s Kabakian differs — Development, the European Invest- more will join. “We still have [several] removing EDL’s subsidy will make ment Bank, the Asian Development banks that are not involved yet but renewables much more cost effec- Bank, the Sustainable Energy for All they will be in the near future. The tive if not cheaper. “We can make initiatives of the United Nations — will culture is there,” he says, adding that [renewables] cheaper and that’s what all have money to support and give “without the Paris accord it would most developed countries do. If you loans. So, starting from the Paris ac- have been tougher [but] now it will really want to expand it, you need to cord and onward there will be money be easier for private investors to work make sure that it’s going to cost less.” to be invested.” with Lebanese banks – whenever they The goal is to satisfy 12 percent of the need money to invest in a renewable country’s electricity needs by 2020 and STIMULUS MONEY energy project they will have [more] 15 percent by 2030 through renewable The bottom-up approach agreed choices, banks and financial institu- sources — percentages based on Leba- upon in Paris to mitigate climate tions will have the money.” non’s current 2,500 megawatts of EDL change places countries in the driver’s production plus private generator seat to implement renewable and MARKET SEGMENT production. Khoury says that, so far, energy efficiency projects. Kabakian The Paris accord piqued the inter- Lebanon has installed 21 megawatts of points out that international money est of many an investor at top banks solar energy and expects another 50 will help Lebanon move faster toward and funds in the world’s financial megawatts to be installed in 2016. A installing renewables and energy ef- capitals. The presence of top execu- large measure of Lebanon’s reduc- ficiency projects, but the primary chunk tives from financial institutions at tion in emissions will come not only of financing is coming domestically. the climate conference did not go from installing the type of megawatts Available financing via Banque du Liban unnoticed and the early indication Khoury mentions but also from de- (BDL), Lebanon’s central bank, both is investment portfolios will shift centralizing renewable energy produc- Kabakian and Khoury agree, has made toward the growing renewable energy tion, and installing energy efficiency Lebanon a role model in the Middle industry. Goldman Sachs, an Ameri- solutions, at offices and homes. For East. Through several circulars dating can multinational investment banking this, business engagement is key. back to 2010 and its subsequent stimu- firm, recently said the global market Developing a robust market seg- lus plans the central bank provides, in size for renewables plus hybrid and ment will help Lebanon hold up its

www.executive-magazine.com | JANUARY 2016 15 COVER STORY Climate change

end of the climate change agreement, your net metering process but that’s builders to meet green standards in but the central bank initiatives are not also hindering us [from] getting to new construction projects. The small enough. “[The market] will definitely the 24 hours. This is part of derisking incremental legislative changes do not plateau if the system doesn’t change. practically,” Kabakian says. seem to be much of a hurdle moving It’s a market and you can only sell a For large-scale renewable energy forward. certain amount of [photovoltaic cells] projects — wind and solar farms, But structural changes will be. that only a certain [number] of people hydroelectric — investors will need Years of deferring waste management think is beneficial. Some will look at reassurance that EDL can uptake solutions came to a head in 2015 when a higher rate of return of income, for the produced electricity. So as long the government decided to close the example, or less payback period. If as there is no assurance, investors Naameh sanitary landfill with no al- you don’t provide that it won’t grow will calculate a level of risk pushing ternative in place — garbage has since anymore,” Kabakian says. The central up the cost for renewables in Leba- piled up on city streets with the only bank financing has incentivized the non. Lowering the cost of installa- options to toss it in open air dumps private sector with companies seeing tion and operation is key to attract- or burn it where it lay. Electricity pro- the dollar signs align in their favor ing financing from foreign inves- duction, too, is a decades old problem. when looking at potential returns on tors. It is even more important, says For years, electricity infrastructure investment over the long term. But Kabakian, for donors channeling and EDL have been allowed to decay renewable energy projects, from small money as per the Paris accord. As — the country does not generate to large, do have investment barriers Kabakian puts it, “[donors] want to enough electricity to satisfy demand that, even with subsidized loans, can get the most reduction per dollar carry an uncomfortable level of risk invested. Reducing a ton of CO2 that might stunt market growth if left is cheaper in China than it is in “[WHETHER] CARBON IS unchecked. Lebanon [so they will] go to China. REDUCED IN LEBANON “With [the measures] we have [Whether] carbon is reduced in OR IN CHINA, THE currently [the market] will grow a Lebanon or in China, the impact IMPACT WILL BE THE bit — my analysis will be that it will will be the same globally.” SAME GLOBALLY.” plateau in a couple of years and that On the side of energy efficiency, will be it. Either you need to have big reducing Lebanon’s carbon emissions investments taking place and then will be accomplished in the construc- so businesses and households must help the decentralized systems to grow tion sector by requiring geo-thermal turn to private generators that belch at the household level, or this is it,” thresholds for new buildings — toxic fumes into the air. Kabakian says. Installing solar panels encouraged by the central bank While these issues do not spell on rooftops of buildings is incentiv- initiative — but this necessitates doom for Lebanon’s plan to reduce its ized financially by the central bank legislation to force builders to meet emissions, they do demonstrate the but Lebanon needs to legislate a net standards. The environment ministry country’s leaders’ complete neglect metering scheme — a billing mecha- also has a plan to encourage, by fi- for the environment and disinterest in nism crediting renewable energy nancial incentive, individuals to swap ventures that do not line their pockets. providers for feeding electricity into their old gas guzzler for a new fuel ef- There is no political will to implement the public grid — to scale installation ficient vehicle. This too would require the structural changes needed for and decentralize small-scale renewa- legislation, both to regulate vehicle clean, sustainable solutions for waste ble electricity production. Passing net emissions and because the scheme management and electricity produc- metering legislation, Kabakian says, would alter sources of revenue to the tion because the financial motivations would exponentially increase the pace public coffer like Customs import and to do so do not currently align with the of decentralizing renewable energy. registration fees. interests of Lebanon’s political class. Derisking decentralization is also Lebanon has put the technical prep- an issue at the utility level because A SPOKE IN THE WHEEL arations to reduce emissions in place, EDL does not generate enough elec- Meeting Lebanon’s contribution Kabakian says, and when the political tricity to provide 24 hours to the pub- to emission reduction will require the will is there, the plan will be imple- lic grid. “Even if you have net meter- government to approve the technical mented. Hopefully the momentum built ing installed, you don’t have electricity roadmap that has been prepared and in Paris will work its way down to the on your grid [so] you won’t be able to agreed upon in Paris. Lebanon will local level, so that Lebanon’s politicians evacuate electricity to the grid. So not also need smaller legislative bills to prioritize the environment and ratify the having 24 hours [of supply] hinders regulate vehicle emissions and require climate change plan into law.

16 JANUARY 2016 | www.executive-magazine.com CO2 EMISSIONS * 2012 is the latest 20,371.97 available data 53,526,302.83

Mton CO2 equivalent

21,108 279 35,669,108 348.84 kton (Gg) CO2 per year kg CO2 per 1000 US dollar and per capita. 2014

4.25 4.936

ton (Mg) CO2 per capita and per year

CO2 EMISSIONS FROM FOSSIL FUEL USE AND CEMENT PRODUCTION PER 1000 DOLLAR GDP US dollar is adjusted to the Purchasing Power Parity of 2012.

GREENHOUSE GAS EMISSIONS (CO2, CH4, N2O, F-GASES)

CO2 EMISSION TOTALS OF FOSSIL FUEL USE AND INDUSTRIAL PROCESSES

PER CAPITA CO2 EMISSIONS FROM FOSSIL FUEL USE AND CEMENT PRODUCTION

LEBANON WORLD

Source Emission Database for Global Atmospheric Research

www.executive-magazine.com | JANUARY 2016 17 COVER STORY Climate change > Explainer

L’accord de Paris Executive explains the agreement to reduce global warming By Jeremy Arbid

he recent Paris Agreement is hagen there was limited transparency nario — with no measures taken to a departure in form and sub- on the issue of funding developing reduce greenhouse gases — Leba- T stance from previous climate countries; rich countries agreed to non’s emissions would rise to nearly change accords; it calls for a bottom- provide $100 billion annually starting 44,000 million tons CO2 equivalent up approach to limit greenhouse gas in 2020 to help poorer countries invest by 2030. Lebanon, as a low emitter emissions. Unlike the 1997 Kyoto in green technologies to reduce emis- of greenhouse gases, set an econo- Protocol — a bifurcated approach that sions. But in the years since Copenha- my-wide target because it does not legally bound developed countries to gen, developed countries have largely specify which sector of the economy reduce their emissions — the Paris ac- held true to their promise: in October emission reduction must come from, cord removes the distinction between 2015 the Organization for Economic thereby offering greater flexibility. developed and developing countries, Co-operation and Development is- The country will target a 15 percent allocating responsibility, for the most sued a report showing that close to reduction by 2030 — limiting a part, to the local level. two-thirds of the required financing rise in greenhouse gases to 37,400 At Kyoto developed countries was already being supplied. million tons CO2 equivalent — as were allotted a target to reduce their unconditional, meaning that emis- emissions, but developing countries TARGETS FOR LEBANON sions can be reduced in the economy like China or Mexico (Lebanon too) The Paris accord stepped away wherever it is easiest. Lebanon will were given no target and allowed to from requiring emission reduc- also produce 15 percent of its power let their emissions increase at will. tions to be legally binding, instead needs through renewables and will Developed countries with emission placing responsibility at the local aim for a 3 percent reduction in reduction targets were meant to ratify level for reducing emissions through power demand through energy ef- the Kyoto Protocol into law, but the discretionary contributions. This ef- ficiency measures. United States — then the world’s fectively means that countries, such Lebanon will set more aggres- largest emitter — declined to do so. sive targets if it receives financing For much of the 2000s, the agreement from the international community. was suspended and climate change LEBANON, AS A By 2030 the country will aim for a negotiations ground to a halt. LOW EMITTER OF 30 percent reduction in greenhouse Then came the 2009 Copenhagen GREENHOUSE GASES, gas emissions; renewables will also Accord that saw developed countries SET AN ECONOMY-WIDE produce 20 percent of total power and the largest developing countries TARGET [FOR 2030] demand, while energy efficiency agree to reduce emissions, but not in a measures will aim to cut power legally binding agreement. What had demand by 10 percent. Targeting carried over from Kyoto to Copenha- as Lebanon, will voluntarily phase a 30 percent reduction would see gen was a clean development mecha- out fossil fuel use. Lebanon limiting the rise of its nism for carbon trading. The carbon Lebanon’s contribution to the greenhouse gas emissions to just market aimed for cost effectiveness Paris accord is laid out in its Intended more than 30,800 million tons CO2 — a reduction of carbon emission Nationally Determined Contribution equivalent by 2030. per dollar invested. At Copenhagen (INDC). The INDC sets forth two In 2010, Lebanon’s greenhouse gas the failure to fully articulate a legally targets: an unconditional target that emissions totaled 19,139.27 million binding treaty pushed the price of car- Lebanon will contribute to reduce tons CO2 equivalent, 0.04 percent of bon into a global downspin, putting a emissions, and a conditional target if global emissions. By 2014, that propor- halt to carbon trading as a mechanism Lebanon were to receive international tion had risen to 0.07 percent of the to reduce emissions. support — mainly financing from global share. With countries voluntar- Not all was lost after Copenhagen. the $100 billion yearly fund, but also ily pledging to reduce the emissions Part of what was agreed upon at the technical knowhow and technology they produce, it is not yet clear how 2009 conference made its way into the transfer. Lebanon’s emissions might rank vis-a- Paris accord — financing. In Copen- Under a business-as-usual sce- vis other countries moving forward.

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Executive violon ad 20x27.indd 1 10/25/11 2:15 PM COVER STORY Climate change > Comment by Riad al Khouri

> Water and climate change subjecting vital negotiations on water issues to blanket blackouts for One drop at a time reasons of security is not a good idea. Jordan tackles growing water problems As an antidote to this state of affairs, the authors note that “ultimately, renewed political commitment to open institutional structures will be needed to mitigate these risks.” The key of course is openness: “We need to find ways to bring the fears, hopes and aspirations which basin actors may harbor about climate change into open discussion within joint institutions.” By doing so, these frameworks become more legitimate and resilient, making The shrinking of the Dead Sea has environmental and economic repercussions securitization less likely as they become better at dealing with changing conditions, including climate change, rowing populations, rising through an article entitled “Adaptation, and demands from various parties. demand on resources and Resistance, or Subversion: How Will Examples of this problem can be G mounting environmental Water Politics Be Affected by Climate seen in Jordan and its neighbors to pressures are putting an increasing global Change?” in the New Security Beat the west, who are together trying to strain on water resources. In the Middle blog of the respected Wilson Center’s implement elaborate water schemes East in particular, stressed river basins Environmental Change and Security in the Jordan Valley, also extending shared by countries are increasingly Program, three of the book’s co- through the Dead Sea basin to the Gulf experiencing problems, and global authors make the interesting point of Aqaba. It should be mentioned that climate change will only exacerbate this. that the hydraulic impacts of climatic water is very scarce in Jordan, where December’s landmark Paris changes are quite often deemed to be about 9 percent of the land is desert. Agreement on climate change was not of such a magnitude that responses are The kingdom, home to a growing local primarily about water-related issues, unreasonably crafted in the context population as well as a large influx of but a strong connection exists: climatic of national security. They call this refugees from Syria, is one of the most change continues to have an impact ‘securitization’, and in all of the cases water-stressed countries in the world. on many things, including water. Yet analyzed for “Transboundary Water how seriously are governments and Management and the Climate Change RED–DEAD SEA PROJECT institutions taking this imminent Debate”, there is evidence of responses Like other water-short countries in threat? Some answers have come in to climatic debates becoming subject the Middle East and elsewhere, Jordan a new book, “Transboundary Water to such a threat, whereby “impacts seeks to preserve domestic hydraulic Management and the Climate Change are deemed to be of such a magnitude resources through importing water Debate”, by a group of international that responses should be crafted in “virtually” through commodities with scholars covering global examples as the context of national security”, a relatively high volume of water used well as ones from the Middle East. The emphasizing that “this is important for production, such as agricultural book’s premise is that actors within because it creates an incentive to close products, while exporting those that transboundary water management off deliberation to outsiders and makes are less water-intensive. As such, institutions respond to the climate it less likely decisions will be made in Jordan imports about 7 billion cubic change debate in three ways: adapting an open, transparent way with multiple meters (m3) of virtual water annually to predicted impacts; resisting them stakeholders represented.” compared to 1 billion m3 withdrawn (by ignoring the issues); or subversion In the case of Jordan and much of from domestic water sources per year. (using the climate change debate to the region, problems of securitization However, such dependence of fulfill their own agendas). The authors are evident in water diplomacy. This Jordan and other water-scarce states then apply this framework to cases entwining of water and national on external supplies of water can be with global repercussions, such as the security requires confidentiality, which exploited politically. In that respect, Jordan River basin. is a common need in diplomatic amid regional disputes and diplomatic Further elaborating these themes or political discussions. However, tension that increasingly prevail in the

20 JANUARY 2016 | www.executive-magazine.com Middle East, the pursuit of solutions on the first phase of the project’s of which include water provisions to hydraulic problems within a classic implementation to build a pipeline and call for joint hydraulic projects. basin framework may offer the false linking the Red Sea to the Dead Sea. However, these ideas and plans should argument that neighbors sharing the In December, Jordan issued a call for contribute towards a just, lasting and same geo-hydraulics have an interest tenders for the project’s first construction comprehensive peace between Israel in cooperating while “setting politics phase. This first phase — at an estimated and the Arab countries, and not as a aside”. An example of this came in cost of up to $900 million — involves a substitute for it. Meanwhile, regional December 2013 when Israel, Jordan transfer of 300 million m3 of seawater and global hydraulics have changed and the Palestinian Authority signed each year from the Red Sea to the Dead dramatically over the past two decades, an agreement involving the Jordan Sea. In the following phases, the project partly due to climatic changes. In River–Wadi Araba area, aimed at entails transferring up to 2 billion m3 such a context, a narrow basin-based constructing in the south of Jordan annually. Jordan has invited private approach can, unwittingly or not, result a plant with a capacity of about 80 companies to submit prequalification in false solutions to water problems. million m3 per year to desalinate documents for the development and Unless drastic measures are taken, water from the Red Sea, 30 million m3 execution of the project’s first phase by climate change (and the whole issue of of which will be retained by Jordan. the end of March 2016. a two-degree celsius rise in temperature The facility will supply the southern However, one of the project’s as debated in Paris at the COP21 Israeli city of Eilat with 50 million m3 further shortcomings may be that conference) will continue to affect of desalinated water at cost value, and it does not sufficiently answer to — our region negatively, particularly Israel will deliver the same amount to possibly yet unknown — global climate when it comes to water scarcity and central Jordan for JOD 0.27 ($0.38) change factors. Such factors could desertification. Extreme versions of per m3, to be pumped from the Sea of upset project calculations through, for hot, dry summers with record high Galilee in northern Israel, from where example, much higher or lower rainfall temperatures in some parts of the Palestine will also receive 30 million in the Jordan Valley. region at two degrees celsius or more m3 of freshwater. In addition, a pipeline above previous maxima have become will dump brine from desalination into more prevalent in the Middle East. The the Dead Sea to mitigate its current JORDAN IMPORTS large temperature spikes that have been annual decline, estimated at one meter. ABOUT 7 BILLION seen in the past few decades in Jordan However, the deal is seen as CUBIC METERS OF and throughout the Middle East, continuing to ignore riparian rights VIRTUAL WATER combined with inadequate systems of of Palestinians, meaning their rights ANNUALLY land and hydraulic management, are to use water that flows through leading to a profound spread of deserts their territories, on the Dead Sea. and water shortages. Additionally, environmental groups THE POLITICS IN HYDRAULICS In this kind of situation, more have warned that the project could Both of these accords are a open debate and transparency are undermine the fragile ecosystem of continuation of Israel’s policy of needed, not less. Sadly, the political the Dead Sea, which they fear could be “economic peace” which simply means cultures of Jordan and Palestine contaminated by Red Sea brine. (The collaboration on various projects largely accept restrictions on public agreement was signed in Washington without restoring Palestinian and other discussion imposed by securitization DC and brokered by the United States Arab rights. These basin agreements — restrictions Israel and America under a shroud of secrecy in the name that the cash-strapped governments of largely frown upon at home, despite of securitization, a factor that is felt Jordan and Palestine might be pushed practicing them abroad. At the same to have contributed to the scheme’s to accept would end up undermining time, as hapless leaders and populaces weaknesses and reservations about it.) rights and, in the longer run, stunt from Ramallah to Amman look on, Similar issues have arisen in sustainable development. At the Israeli decision-makers can ignore connection with the Red Sea–Dead Sea same time, secrecy and the culture of water-related climatic issues to push Conveyance Project, another — albeit securitization in general help to ram through regional political agendas much larger — Israeli-Jordanian- such accords through, flouting public based on unsustainable and unjust Palestinian initiative in the same area and expert opinion. normalization of relations. seeking to meet increasing water needs Israeli governments have taken while stemming the shrinking of the this approach since the 1993 Israeli- RIAD AL KHOURI is Middle East Dead Sea. For that, Jordan signed an Palestinian Oslo agreement and the director of GeoEconomica GmbH agreement with Israel last February 1994 Israel-Jordan Peace Treaty, both

www.executive-magazine.com | JANUARY 2016 21 ECONOMICS & POLICY > Averda

Dissecting a waste empire How Lebanese governments created a trash monopoly By Matt Nash adopted the name Averda and is best known in Lebanon under the brand names Sukleen and Sukomi. Sukkar Engineering later bid to rehabilitate an existing but damaged waste incinerator in the Beirut neigh- borhood of Karantina. The company lost that contract, but in 1993 won two separate public tenders to operate the Amrousiyeh and Karantina incinera- tors, contracts valued at $1.35 million and $1.3 million per year, respectively. Operation, however, was short-lived. Angry residents of Amrousiyeh who did not want an incinerator in their “backyard” burned the plant down in

THERE IS MORE GOVERNMENT Sukleen has been collecting waste in Lebanon since 1994 NEGLIGENCE THAN CORPORATE BRINGING IT BACK HOME WRONGDOING TO THE hile everyone in Leba- AVERDA STORY non — from taxi drivers Maysarah Sukkar moved his engi- W to elected officials — neering company, founded in 1968, to “knows” the country’s largest waste Saudi Arabia after the outbreak of civil 1996, and the Ministry of Environment manager is as dirty as the trash it war in Lebanon. The work Sukkar — under then–Minister Akram Che- collects, when pressed for proof, secured in the kingdom included the hayeb — banned waste incineration they have little to offer. Indeed, operation and maintenance of two in 1997. The end of incineration, how- even questioning the “fact” that slaughterhouse waste incinerators in ever, did not mean a halt to publicly Sukleen — and, by extension, parent Mecca. “We had a lot of expertise in financed work for Averda in Lebanon. company Averda — is corrupt will that specific technology of incinera- Sukleen had been collecting waste in likely get you dismissed as a know- tion,” Maysarah’s son Malek Sukkar the capital and its suburbs since 1994, nothing. Breaking the near absolute says, recalling the company’s entry and the closure of the incinerators silence the company has maintained into the Lebanese market. That experi- brought Averda more business. since it began operations in Lebanon ence led the company to bid for a in the early 1990s, Averda Chief Ex- contract in post-war Lebanon to finish INTERNATIONAL ecutive Officer Malek Sukkar opens building and test-operate a trash in- SUPERVISION up to Executive in a two-hour in- cinerator then-located in Amrousiyeh. Lebanon’s infrastructure in the terview after facilitating tours of the According to documentation provided 1990s was in shambles. In 1993, the company’s operations in Abu Dhabi by Averda, Sukkar Engineering beat World Bank loaned the country $175 and Lebanon. Questions about the France’s INOR (a company whose million for what was supposed to be private, family-founded company name has since changed to Inova) three years of “emergency reconstruc- remain — most notably concerning in a competitive bid to complete the tion and rehabilitation” work. One of their yearly profits — but months of project which INOR had taken on in the loan’s many targets was developing investigation suggest there is more the late 1980s. The contract’s value, waste management systems across the government negligence than corpo- Averda says, was $1.752 million. This country. The solid waste component rate wrongdoing to the Averda story. was the proverbial foot in the door for of the loan was later excised from the Sukkar Engineering, which by 1994 main project to become a project of

22 JANUARY 2016 | www.executive-magazine.com its own with a lifespan extended until 2003. However, one of the only suc- cesses of these loans came early on, in 1994, when Sukleen won an inter- national tender for waste collection in Beirut and its immediate suburbs, organized by the Council for Develop- ment and Reconstruction (CDR) and overseen by the World Bank. Accord- ing to company records Executive examined, Sukleen bid $14.99 per ton and was paid $3.6 million for collecting 240,000 tons of waste in the contract’s first year. Citing a report by the CDR — a government body that is part of the prime minister’s office and Averda’s contractual partner — Rei- noud Leenders quotes the same figure for Sukleen’s first year of operations in his book, “Spoils of Truce: Corruption A World Bank loan helped kick-start waste management after the civil war and State-Building in Postwar Leba- non.” An Amsterdam-based researcher the city and said they want to cancel Gazette” — Lebanon’s mostly non- who worked for the International Cri- your contract. They told us we need to digital legislative registry. However, sis Group while based in Beirut from clean the city […] So we said ‘okay’ when one of the most frequent critiques of 2002–2005, Leenders’ book touches they told us that they would augment Averda is that the company frequently only briefly on the waste management the contract to include street sweeping.” received new work without tender. sector. One detail he missed, however, Averda says that a government body with One example is the Sukleen service is that the World Bank — accord- a World Bank representative conducted a area. Originally, according to Averda, ing to project documents — paid the price study and determined that the price the service area was less than 100 collection bill the first two years, and offered by Sukleen was lower than what square kilometers. The company Sukleen’s contract stipulated that CDR the city had been previously paying and, writes, “At the request of the [since provide the company with all equip- ultimately, CDR awarded the company re-named] Ministry of Municipal ment needed to do the job. Equipment sweeping works without a formal bid and Rural Affairs, CDR expanded provision only became the company’s on February 20, 1995. The World Bank’s the waste collection operational area responsibility in 1996, according to project descriptions do not go into this from 100 [square kilometers] to 1,380 both Averda and the World Bank. level of detail, and Executive failed to [square kilometers].” A chart Averda reach the country director for Lebanon provided Executive with show- CONTRACT AUGMENTATION at that time. ing the increasing amounts of waste Sukleen’s original trash collection Awarding new work without a Sukleen was collecting suggests the contract did not include street sweep- competitive bid, however, became a expansion began in 1995, continued ing, according to Sukkar and Averda’s new modus operandi for the Leba- gradually until 1999 and, by 2014, documentation (Executive was nese government in handling waste included 266 municipalities generat- unable to independently verify this). management. Averda’s presentation ing slightly over 1.1 million tons of The city, Sukkar recalls, looked like a of its contract history in Lebanon trash per year. dump especially because the previ- includes specific dates and govern- ous trash collector in Beirut had been ment decisions for all the additional EMERGENCY PLAN doing street sweeping. “CDR called us work Sukleen and Sukomi were given. During the war years, preserv- and said the political apparatus is not Executive was unable to find these ing the environment was not part of happy with the level of cleanliness in decisions in old copies of the “Official the waste management strategy for

www.executive-magazine.com | JANUARY 2016 23 ECONOMICS & POLICY > Averda

Karantina plants — which includes composting done at the nearby Coral facility) into one contract, again with- out a competitive bid. This all means that by 1998, largely as a result of con- tracts awarded without competitive tender, Averda was collecting, treating and disposing of a significant portion of Lebanon’s waste. THE QUESTION OF PRICE Given that Averda handles the full waste cycle (from collection to disposal) for hundreds of municipali- ties in Lebanon, quoting one, per-ton price is arguably counterproductive. No amount of sweeping has cleaned up Averda’s reputation in Lebanon As Sukkar explains, “it is a matrix. There are tens of people involved in Beirut. The divided city had two open at the confused decision-making pro- calculating the costs.” He elaborates, dumps — the Normandy dump in the cess that led to the construction of the “the issue of pricing is not voodoo. It West and the Bourj Hammoud dump Naameh sanitary landfill. The report is very simple. Our profits are gener- in the East. By the time Sukleen began says, “CDR commissioned Sukomi to ally in line with industry averages.” waste collection in 1994, Sukkar says design, build and operate the Naameh That last statement, of course, is the the company was disposing of most landfill (January 1998),” but notes most disputed and one impossible to of the trash it picked up in the Bourj that operation of the facility began in verify as the company does not share Hammoud dump. The government re- August 1997. Averda says CDR re- its profits in Lebanon. peatedly promised to close the dump, quested Sukomi to begin construction That said, and contrary to Sukkar’s and in early 1997 finally approved an of Naameh in August 1997, with work in-person answer that prices cannot action plan. The plan included con- actually starting in October. Averda be divulged due to a non-disclosure struction of new composting facilities, adds that a contract for Naameh was agreement that is part of Averda’s construction of two sanitary landfills not signed with CDR until January contracts, the company did share its and expansion of incineration and prices with Executive. As noted ear- sorting capabilities at Amrousiyeh and lier, the initial collection bid Sukleen Karantina. Excluding the landfill con- “CDR COMISSIONED offered was $14.99 per ton. How- struction, Averda explains that in lieu SUKOMI TO DESIGN, ever, Averda notes that the price was of an international tender for work at BUILD AND OPERATE revised as per contractual agreement the sites Sukomi was already operating, THE NAAMEH LANDFILL in 1995, reaching $22.66. By 2010, “CDR proposed to the Council of Min- [IN JANUARY 1998]” Averda reports that collection prices isters to subcontract the works to the were $26.17 per ton in Beirut and its existing contractor, Sukomi.” Incinera- suburbs and $36.24 for further flung tion was later banned and the govern- areas in the service zone. These prices ment ultimately only provided land 19, 1998. Averda claims that, despite are below the range offered by the for one composting plant, but Sukomi the lack of a tender, “CDR reviewed World Bank in 2012 for average waste completed the works. Averda did not Sukomi’s technical and commercial collection costs in a country with disclose the value of the construction offer,” adding that an unnamed CDR Lebanon’s gross national income per contracts, nor did it disclose the value consultant “ensured that the prices are capita. The bank gives an estimated of the contract for building a sanitary very well competitive with interna- collection cost between $40 and $90. landfill in Naameh, work awarded tional norms.” According to an Averda spokes- to Sukomi by CDR in 1997, accord- Following the emergency plan, woman, Sukomi was charging between ing to Averda documents Executive according to Averda, the Council of $30 and $35 per ton to receive waste at reviewed. Ministers combined Sukomi’s two the Naameh landfill, within the $25 to A 2001 report on the state of the waste treatment contracts (covering $65 range the World Bank estimates as environment in Lebanon offers a hint works done at the Amrousiyeh and average for a middle-income country.

24 JANUARY 2016 | www.executive-magazine.com The World Bank did not provide an estimated cost for street sweeping. Averda says Sukleen is only being paid to sweep 1,375 kilometers per day at $21.125 per kilometer while it actually sweeps over 50 percent more, or 2,165 kilometers. Executive learned this after speaking with Sukkar, so was not able to ask why the company is not pushing to be paid in full. One can only assume the margins are loose enough to overlook the discrepancy. All told, Averda provided Execu- tive with collection, sweeping and disposal prices — excluding the treat- ment contracts covering Amrousiyeh and Karantina. Based on Executive’s Once the dust has settled, what will happen to Lebanon’s waste problem? calculations, these three components come with a yearly price tag of $59 Because we shouldn’t be developing mercial registry). The one question he million. The true bill Averda presents composting systems. We shouldn’t be dodged, however, is why the company CDR every year is, of course, higher developing sorting systems. […] He continued working in Lebanon despite because of the treatment contract, might well divest.” being at the whims of a fickle and which an official involved in imple- often unresponsive client. menting a new waste management END OF AN ERA? Sukkar also refused to provide plan for Sukleen’s service area says to- When CDR put out international the company’s financial statements, taled $50 million per year, bringing the tenders for new waste management making it impossible for Executive total to around $109 million. While contracts in early 2015, Averda did to verify his claim that Sukleen and the local press often cites a single fig- not bid. Sukkar says that was because Sukomi’s profit margins in Lebanon ure (i.e., $140 per ton, $160 per ton or the contracts required the winners to are in line with industry averages. $170 per ton) for what Sukleen “charg- find land for treatment facilities and Critics often claim that Averda’s Leba- es” the state, those figures appear to be sanitary landfills — long a problem non operations result in profit margins an attempt to lump all of Sukleen and in Lebanon as no one wants to live of 35 percent or more. Whether that’s Sukomi’s services together. The figure near a waste center. If and when a new true or not, the state is about to see its is “high” simply because it covers the plan is put into place, Sukleen and trash management bill significantly full waste lifecycle — collection, treat- Sukomi will leave Lebanon. The issue increase should a December 21 cabinet ment and disposal. of finding land, however, is integral to decision to export waste go into effect. While there are other waste Sukomi’s early history in this country. Agriculture Minister Akram Che- management companies around the The emergency plan from 1997 called hayeb told the press that exporting world that offer services covering the for more than what was ultimately the waste will come with a total price full waste lifecycle, it is more com- delivered as the state never provided tag of $212 per ton — well above the mon for a company to focus on one or land for facilities it said it wanted rumored lump sum rates Sukleen and two areas — i.e. collection and street built. Indeed, Sukkar and Averda’s Sukomi are paid. He also mysteriously sweeping or treatment. Sukkar himself documentation have no shortage of said that for 18 months of export, the believes the fully integrated approach complaints about the client — CDR total bill will come to $200 million. is not in Averda’s future as it looks to — either making promises it does not However, given that Sukleen’s service continue expansion beyond Lebanon. follow through on (such as provid- area generates an average of 3,000 He wants to take the company public ing land) or otherwise making life tons of garbage per day, at $212 per as soon as 2017, which would include difficult for Sukleen and Sukomi. He ton, the $200 million will be spent in bringing in what he calls a “profes- denies the company ever paid bribes around 10 and a half months. The full sional CEO.” Sukkar says, “When the in exchange for contracts and denies 18 months would cost nearly $350 mil- professional CEO comes in, he will that leading politicians are sharehold- lion. And, once again, the government look at [our treatment and disposal ers (a fact confirmed by documents will be awarding the trash contracts operations] and say, ‘This is not core.’ Executive obtained from the com- without competitive bidding.

www.executive-magazine.com | JANUARY 2016 25 ECONOMICS & POLICY > Refugees

Globalization of resettlement Syrian refugees in Lebanon are being relocated to third countries By Jeremy Arbid

ne might look at the change fied UNHCR that refugees having in number of registered A [2015] GOVERNMENT entered after January 5 and having O Syrian refugees in Lebanon POLICY TO DEREGISTER subsequently registered should be de- during 2015 and incorrectly assume REFUGEES HAS registered. UNHCR was duty bound Syria’s civil war is on the wane. Since LOWERED THE to comply and inactivated individuals the Office of the UN High Commis- NUMBER OF REFUGEES who had entered Lebanon after that sioner for Refugees (UNHCR) first be- SUPPORTED BY UNHCR date.” Based on data from UNHCR’s gan recognizing Syrian asylum seekers website, Executive calculates that at in Lebanon in 2012, their numbers least 37,304 Syrians lost their refugee have grown year-on-year until 2014. place in January 2015 for Syrians status as a result of this decision. Un- In 2015, however, the number of attempting entrance into Lebanon. der normal circumstances, UNHCR registered Syrian refugees in Lebanon The country still grants Syrians only deregisters refugees if they have began going down. The slight decrease humanitarian visas, but UNHCR died, left the country or stopped (approximately 77,000 refugees or says “very few” cases have since showing up for meetings or other 6.7 percent as of November 30, 2015 qualified. In tandem with these new interactions with UNHCR. In the — according to the most recent data visa rules, the government passed a first nine months of 2015 — the most available) is no indication that stabil- decree in 2015 to deregister refugees, recent data available — UNHCR’s ity is returning to Syria. Rather, it is also lowering the number of refugees representative in Lebanon, Mireille the direct result of a Lebanese policy supported by UNHCR. In an email Girard, told Executive in a Novem- decision to push the number down. exchange with Executive, UNHCR ber interview that 149,000 refugees The decline is in part attributed explains that, “On April 24 [2015], had been deregistered, up from the to stringent visa restrictions put in the Ministry of Social Affairs noti- 125,000 deregistered in 2014.

26 JANUARY 2016 | www.executive-magazine.com REFUGEES RESETTLED

2011 12

2012 64

2013 846

2014 4,905

2015 4,288 (through October)

TOTAL NUMBER OF SYRIAN REFUGEES RESETTLED FROM LEBANON TO THIRD COUNTRIES ONE PERSON REPRESENTS 24

LIFE AFTER LEBANON of hope that things have gotten For UNHCR, determining where “AROUND 40 PERCENT better [in Syria].” Some, she adds, people have gone after deregistration OF PEOPLE SAID have either left Lebanon to live with is no easy task. Some, Girard says, THEY EITHER KNEW family elsewhere in the region while have returned to Syria, though she SOMEONE OR others have turned to smugglers, notes that it is not a choice refugees HEARD OF SOMEONE hoping to make their way to Europe. make “unless they have a compel- WHO HAS LEFT.” There is a solid number of dereg- ling reason. It is not a decision full istered refugees who have illegally

www.executive-magazine.com | JANUARY 2016 27 ECONOMICS & POLICY > Refugees

REFUGEE MOVEMENT

left the country by paying traffick- Executive was only able to In the near term, that target for ers to smuggle them into Turkey obtain conclusive data on the Lebanon will be slow to reach. The or Europe. “We get information number of formal resettlements to process of resettlement takes time, from different sources to try and third countries. Since 2013, coun- with refugees sometimes departing triangulate the information. We do tries have agreed to resettlement more than a year after their applica- try to find out if there are indica- pledges for some 162,000 Syrian tion is submitted. Since 2011, only tions that people have tried to go refugees from countries across the 10,155 Syrian refugees in Lebanon to Europe. We conducted a random Middle East. For 2015, the number have been resettled — primarily to survey recently and found around of pledges allocated for refugees countries in the Americas, Europe 40 percent of people said they in Lebanon is 16,600. Through and Oceania. UNHCR says they can- either knew someone or heard of October 2015, some 4,228 Syrian not give a specific country-by-coun- someone who has left,” Girard says. refugees had left Lebanon to third try breakdown of where refugees Lebanon’s Internal Security Forces countries through resettlement were resettled. have prevented illegal departures. programs. The aim, UNHCR’s Gi- For 2016, UNHCR is still waiting According to United Nations’ rard told Executive, is to sooner- to hear what resettlement quotas will estimates, about half of the Interna- rather-than-later resettle 10 percent be allocated for Lebanon. With seem- tional Organization for Migration’s of Lebanon’s Syrian refugee popula- ingly no end to the war alongside figure of 332,000 asylum seekers tion. “With 1 million refugees in deteriorating living conditions, Syrian through August 2015 that tried to Lebanon, our target is 100,000. That refugees in Lebanon no doubt ques- reach Europe from the Mediterra- would be noticed by everybody and tion their future. Only a few, however, nean Sea were Syrian. would have an impact,” she said. will receive a permanent answer.

28 JANUARY 2016 | www.executive-magazine.com www.executive-magazine.com | JANUARY 2016 29 www.eden-park.com ECONOMICS & POLICY > Comment by Mona Sukkarieh

> Oil & Gas Renewed dynamism 2016 looks good for the offshore oil and gas sector in the Eastern Mediterranean

Italian energy company Eni was involved in the discovery of large gas reserves off the Egyptian coast.

fter a year riddled with ensure a favorable climate for done, yet policymakers are already difficult market conditions, investors, and encourage exploration backpedalling on earlier promises. A dry wells and regulatory and production. Although tempting, On December 14, Prime Minister hurdles, the offshore oil and gas it would be unwise for Egypt to Sherif Ismail cancelled the previous sector in the Eastern Mediterranean halt reforms at this stage. Pricing government’s decision to fully finally has good reasons to look reforms, plans to phase out subsidies eliminate subsidies within five years; forward to 2016. and paying down debt owed to now we are talking about a much less In Egypt, the August 2015 international companies (now ambitious 30 percent reduction. discovery of the so-called standing at $3 billion, down from “supergiant” Zohr offshore natural $6.5 billion) have all contributed PROGRESS IN 2015 gas field could not have come at a to restoring confidence in the Cyprus, too, received a better time. While the exact size sector. There is still more to be boost from Zohr after several of the field will only be clear after disappointments in the first half of appraisal drilling, Zohr is hoped to 2015. France’s Total relinquished its bring Egypt some balance between ZOHR [OFFSHORE rights to one piece of the country’s supply and demand, and extricate the NATURAL GAS FIELD] IS offshore acreage (Block 10) in country from its energy crisis. That HOPED TO EXTRICATE February 2015, one month prior to said, and based on what we currently [EGYPT] FROM ITS Italy’s Eni having drilled a second know, more gas is needed to restart ENERGY CRISIS well that failed to find exploitable exports. All the more reason to hydrocarbons. After Zohr, however,

30 JANUARY 2016 | www.executive-magazine.com Total looks set to extend its soon- Knesset in September, but to bypass patrol vehicles are delivered in 2019. to-expire license in Block 11 for the Antitrust Authority, the Minister For its part, Lebanon stands another two years. The company, of Economy — at the time Aryeh exactly where it was a year ago, as well as others, has also recently Deri — would have had to activate with only negligible progress, been inquiring about areas along the clause 52 by invoking national including data interpretations and Cypriot–Egyptian maritime border. security. Deri refused. However, he reinterpretations. The offshore This renewed interest has prompted resigned from his post on November tender, launched in the absence of some to consider the possibility of 1 and was replaced by Benjamin basic documents to actually close organizing a new licensing round. Netanyahu who proceeded with the bid round, is still on hold. Delays The end of 2015 brought more good the gas framework deal soon after. in the sector are largely a part of the news for Cyprus: On November A petition was filed at the High overall political deadlock, although 23, the UK’s BG announced it was Court of Justice against some of the a possible breakthrough in electing acquiring a 35 percent stake in Block a new president could have positive 12, where the Aphrodite gas field is ramifications elsewhere, potentially located. This is a major development, LEBANON STANDS even unlocking the oil and gas file. which will see the entry of another EXACTLY WHERE IT However, the opportunity cost big player in the Cypriot gas WAS A YEAR AGO, WITH of procrastination was entirely sector (BG is about to complete a ONLY NEGLIGIBLE neglected. International interest, merger with Shell). But its main PROGRESS currently at its lowest, would have advantage could well be the stake to be revived. In current market that BG holds in the Idku export conditions, this is easier said than facility in Egypt, improving the clauses in the deal, and the Court done. prospects of sending Aphrodite gas will examine the case in early 2016. Finally, while the war is (from Block 12) to Egypt, although Once the process is complete, it still raging in Syria, post-war some difficulties could persist. A is hoped to bring some stability reconstruction and opportunities, breakthrough in the negotiations to the regulatory framework. The including in the energy sector, are between Greek and Turkish authorities are building on that to on everyone’s mind. Identifying Cypriots, resumed in May 2015, resume offshore exploration, and offshore prospects is a process could lead to gas cooperation with are hoping to organize bid rounds in that can take place before the arms Turkey and the laying of a pipeline 2016 or 2017. are silenced. The opportunities, carrying Cypriot (and possibly on the other hand, depend on the Israeli) gas to Turkey and European DIPLOMATIC HURDLES outcome of the war. In December markets, if conditions are right. Also, on December 17, a major 2013, Russia’s state-controlled In Israel, Prime Minister breakthrough in the negotiations Soyuzneftegaz was awarded an Benjamin Netanyahu, acting in his between Israel and Turkey was exploration and production license capacity as Minister of Economy, announced. A normalization in Syria’s block 2. In September approved a gas framework deal of relations between the two 2015, its chairman Yuri Shafranik on December 17, after invoking countries would pave the way for decided not to proceed with the national security. A year earlier, the gas cooperation. The frequently project because of the risks involved antitrust commissioner David Gilo discussed laying of a gas pipeline at this point, and announced that had revoked a previous agreement between the two, however, will have the project would be passed to that allowed US based Noble Energy to go through the Cypriot Exclusive another Russian energy company. and Israeli company Delek to Economic Zone, a considerable The current Syrian regime would retain ownership of Israel’s biggest obstacle for now, unless progress is like Russian involvement in offshore offshore field, Leviathan, in return indeed made between Greek and Syria, but does not perceive this for giving up two small fields, Tanin Turkish Cypriots. involvement as exclusive. and Karish. The decision brought Meanwhile, the vulnerability of All told, 2016 looks like a the Israeli gas sector to a halt and offshore installations is still a matter promising year for offshore oil and both delayed and complicated of concern for Israeli authorities. gas in the Eastern Mediterranean. development of Leviathan, the Israel is reportedly planning to country’s largest offshore gas install the Iron Dome missile defense MONA SUKKARIEH is the cofounder field. The gas deal outlined by the system on navy vessels, a temporary of Middle East Strategic Perspectives, a government was approved by the measure until German offshore Beirut-based political risk consultancy.

www.executive-magazine.com | JANUARY 2016 31 COMPANIES & STRATEGIES > Digital marketing

WHAT HAS BEEN IS WHAT WILL BE, AND WHAT HAS BEEN DONE IS WHAT WILL BE DONE; THERE IS NOTHING NEW UNDER THE SUN. Book of Kohelet (Ecclesiastes) Spinning content from every virtual angle JWT and Cleartag join hands for riding the digital wave By Thomas Schellen

othing is essentially new, tional continuity. His company will not MENA, is equally adamant that Cleart- neither under the sun nor in be turned into an internal supplier of ag will not be assimilated into the larger N the virtual world of digital digital services for JWT in the Middle brand agency. The value which a com- marketing and social networking. The East and North Africa (MENA), insists pany like Cleartag adds to the group re- insight is not new either but — in the Tarek Dajani, Cleartag’s chief executive. sides in the areas of creative technology context of examining a digital acquisi- “Cleartag is not being acquired to be an- and analysis of customer interactions for tion in Lebanon — notable for having nexed as part of the digital capability of delivering new solutions to clients, he been voiced in a recent iteration by a JWT. To the contrary, JWT might and explains. “Today a solution is not only a key brain in the marketing commu- will probably be continuing its natural creative solution but it is more an end- nications empire of WPP, the world’s buildup, whereas we will find synergies to-end solution for how you engage the top-grossing conglomerate in the realm. where we find them and we will build customer, build loyalty with the custom- “Our industry seems to move in cycles, on capabilities where we have to, but er and enhance his experiences. This is with the same topics resurrected and there will be some orchestration,” he where the forte of the digital comes in. rebooted every few years. In fact, one emphasizes. It is a complementary offer; they are not could argue that there is really nothing Dajani will stay on as the company’s either-or kind of offers,” Haddad tells new, just old ideas and issues recharged CEO with no plans to step away from Executive in an interview organized with new technology, new names and the enterprise that he founded in 2000 jointly with Dajani. new passion,” wrote Norm Johnston, top together with three teammates. Accord- Even if the relationship was to see global strategist and chief digital officer ing to him, the JWT deal was met with diverging opinions on the ecosystem of WPP unit Mindshare in an outlook hearty enthusiasm by Cleartag employ- and creative differences, this would be on digital for 2016. ees to the point of the team being “ec- integral to the deal, Dajani chimes in. “If The context that warrants local at- static” about how he afforded them the I give you another spin on the ration- tention to this view on digital marketing opportunity to “make a difference in the ale it is simply because the beauty of the is the communications industry news world”. While he would not offer an out- step is that we will be able to attack a of the acquisition of Cleartag, a digital look on how many new jobs the digital market from so many different perspec- marketing agency based in the Beirut agency might aim to create at its Beirut tives and facets. Unlike trends where Digital District, by J. Walter Thomp- head office in 2016 or in terms of other agencies build capabilities in-house or son (JWT), a big brand agency in the near-term expansion options, Dajani af- acquire them through annexing a de- WPP Group. While the assimilation of firms that Cleartag will seek to branch partment, a key part of this partnership Lebanese advertising agencies into any out into additional offices and grow its is an understanding that we all have a of the four first-tier (WPP, Omnicom, reach first within the MENA region. He role to play and the decision is that the Publicis and Interpublic) and half a says, “We [have been operating] from partnership is creating complementarity, dozen second-tier international market- Beirut and Dubai, serving a big chunk scale, speed and agility,” he says. ing communications conglomerates is of the region; we definitely intend to a long-standing practice, the pairing of continue doing so and hopefully have RISE OF THE DIGITAL JWT and Cleartag could be breaking presence beyond Beirut and Dubai, to SOPHISTS new ground for Lebanese advertising serve our clients locally. The idea is that If what Haddad and Dajani say talent from the perspective of the rise of there is no limit [to where we can grow sounds like marketing speak, one can digital in this industry. internationally] but that there is plenty safely assume that it comes naturally to The strongest affirmation on the to do [within the region].” them. The art of producing a rationale future of Cleartag covers its opera- Roy Haddad, chairman of JWT in for a transaction and narrating it con-

32 JANUARY 2016 | www.executive-magazine.com vincingly is what the marketing com- COMING FROM BEHIND, REGIONALLY SPOKEN munications business has been about since the dawn of argumentation. Ar- The importance of digital has definitely not been lost on WPP. Recent annual as- istotle, presumably influenced by Plato sessments of worldwide merger and acquisition (M&A) trends in the communications in his rejection of the trade of soph- industry by New York-based investment bank and M&A consultants Coady Diemar ists, wrote disparagingly that “the art of cite WPP as one of the most active acquirers in the digital space for more than two the sophist is the semblance of wisdom years, competing for inorganic growth leadership against ad group rivals Publicis without the reality, and the sophist is and Dentsu but also against tech contenders such as Google, Facebook and Yahoo!. one who makes money from an appar- In their latest published assessment of the industry in the first half of 2015, Coady ent but unreal wisdom.” Diemar says that M&A activity in digital media, information and technology saw a 24 This involves singing the praises of percent year-on-year increase within an overall vibrant global market for acquisitions; win-win scenarios for sellers and buyers it added that strategic acquisitions in the first six months of last year represented more than two thirds of announced transactions with available data. Transactions attribut- as much as intoning chants of business able to private equity investors increased from 21.7 percent in the first half of 2014 to culture preservation, employee satisfac- 32.5 percent of announced transaction values in the same period in 2015. tion and new job creations, whether WPP appeared extremely eager to expand its digital footprint, as evidenced in such statements are true or uttered be- various financial news releases posted in 2015 on the WPP website. News releases cause they sound good. But sophistry, from the five last quarters until end 2015 showed close to 20 items on acquisitions or by all historic evidence, is part of what investments into digital agencies and more than 10 items on investments or acquisi- people want in their communications. tions of companies focused on data and CRM analytics. According to those releases, It thus cannot surprise that Lebanese the group has already passed the 30 percent mark of digital contributions to its $19 marketing communications talents do billion global turnover and aims to increase the share of digital from 36 percent, or not want to be left out as today’s global $6.9 billion, of its annual revenues in 2014 to 40–45 percent in the next five years. academies of sophistry, the worldwide However, these ratios are still quite far for the advertising industry in MENA. marketing communications conglomer- Despite loads of chatter over the alleged catalytic role of digital communications in the Tahrir uprising and other Arab Spring events five years ago, MENA has been a laggard ates, are taking their trade increasingly in digital marketing communications when compared with other world regions. This into the digital realm where they can sell lateness, which has been discussed in many a regional advertising industry gathering their skills dearly as creators of virtual of the past five years, has been quantified in estimates of digital advertising at around dialogues with the consumer. 10 percent of the MENA ad market in 2014. As a matter of fact, the global popu- lar hunger to be imbued with marketing narratives seems to be so insatiable that current predictions describe digital as tal agencies that Cleartag will, according impression of overall digital expansion- the future cash cow of communications. to Haddad, be a part of. Mirum, with ism in which the Cleartag story looks A recent paper by the Boston Consult- its head office in Hong Kong, says on its like but one, and not very large, stone ing Group cites industry predictions website that it has presence in 20 coun- in the group’s communications and that global spending on digital advertis- tries and 46 offices. Not only does nei- marketing mosaic. ing will reach $178 billion in 2016, or ther count yet include Lebanon and Bei- almost 30 percent of total ad spending. rut at time of checking in late December SECRECY ON CASH Skill gaps in the digital realm are there- but, more tellingly, the only Middle East VALUATIONS fore huge concerns for chief market- presence of a Mirum company until the This analysis of the rather humble ing officers, BCG says, and advises that end of 2015 was the Dubai office of UK- position of Arab markets and Lebanese “Marketing organizations need to evalu- based HeathWallace, a digital specialist digital providers in relation to trends ate their current capabilities and build which WPP acquired in 2008 and which in the global advertising industry does those needed for the next generation of expanded into the United Arab Emir- not make the Cleartag transaction marketing. After taking stock of their ates in 2013. less interesting, however, and espe- current organization structure, they In the overall picture of its invest- cially does not subtract anything from need to design their structure for in- ments into companies in emerging the partnership’s role as an example creased efficiency and effectiveness.” economies, WPP, according to its fi- that other digital agencies in Lebanon A gap in digital capacity between nancial news releases, seems particu- might seek to follow. other markets and the MENA region larly hungry for digital market share in In this regard, the rationale and the also peeks out from behind the num- places such as China, India, Brazil and reward of an entrepreneurial company’s bers for WPP acquisitions in the digital South Africa. Combined with acqui- sale are two issues of primary interest realm and from the geographic presenc- sitions of digital and data capabilities to other members of an entrepreneur- es of Mirum, the WPP holding for digi- in mature markets, WPP creates an ship ecosystem. For Dajani and Haddad,

www.executive-magazine.com | JANUARY 2016 33 COMPANIES & STRATEGIES > Digital marketing

answers come easy in response to the Middle East and that the transaction yond the benefits for the clients and for question of the rationale for going with happened within parameters for which us, also setting a new model of how you a strategic partner instead of a financial WPP has refined a model of multiples. could take locally grown talent pools investor from the private equity (PE) or “These multiples have to have a bearing and create global impact. I think one venture capital (VC) side. Dajani con- on the way the business has been growing, should not shy away from such trajecto- cedes that VC funding in the current the kind of clients it holds [and] the reten- ries,” he enthuses. Lebanese scenario is a valid formula for tion [span] of these clients. All these affect Given that valuation multiples these injecting capital into startups but says the multiple and the multiples are not un- days appear to range in single digit earn- that Cleartag is a profitable business like any other multiples around the world. ings, the Cleartag acquisition should that was not in need of VCs. “We did Let’s be very clear. It is not a discounted not cause other digital entrepreneurs not need capital. What we want is value multiple; it is a fair multiple based on a in Lebanon’s tech ecosystem to break added and synergy, and the big wave to global standard. We are not vultures; on out in dreams of billion-dollar fortunes ride. Cleartag was growing and we will the contrary, we like to help people create quite yet. But this might actually be grow more but I’d like to see Cleartag wealth and that is basically why the deal helpful since Haddad claims that local grow globally. [To do that], these are the happened,” he emphasizes. companies need to become more realis- kinds of partnerships or affiliations you A hint to numbers on which a multi- tic and more pragmatic, managing their want,” he explains. ple might be based in the case of Cleartag expectations when it comes to negotiat- JWT and its parent WPP don’t need comes from the WPP financial news re- ing deals with strategic investors. to shy away from comparison with any lease on the transaction. While a parallel Despite cash rewards that may be PE firm when it comes to introducing JWT release provided only soft informa- lower than in a so-called perfect exit in new efficiencies to an acquired com- tion on the deal, WPP said that at year- London or New York, a partnership with pany, Haddad adds. He says, “The VCs end 2014 Cleartag’s unaudited revenues a global player can be expected to pro- don’t have the appreciation of how im- vide fundamental appeal to young com- portant it is to attract talent, grow talent THE GROWTH RATE panies in the Lebanese communications and retain talent. WPP over its history IN INTERNET USERS industry and perhaps act as a virtual has refined the art of creating financial FOR 2000–2015 IN THE elixir of youth in reinvigorating the role models to the max and from a financial MIDDLE EAST WAS of Lebanese talent in the regional adver- perspective, the added value contribu- THE WORLD’S SECOND tising game, where prospects for mobile tion that we can have on a business like HIGHEST and online marketing are supported by Cleartag is endless. Plus, sharing of back high mobile penetrations and strong office, of our treasury, [and] giving them growth rates in Internet usage. Accord- access to all that they require financially for the year were $3.6 million with gross ing to Internet World Stats, Internet us- to be able to only focus on their busi- assets of approximately $1.5 million. ers in the Middle East region (excluding ness is different to a VC where they will Whatever its size, a good portion of North African countries) number 123.2 be hampered by the financial demand. the reward has to have benefited Dajani, million, or 52 percent of the regional [With us] all the anxieties about finance who is not only co-founder and CEO of population in the 14 countries includ- are the role of the holding company to Cleartag but also chairman/shareholder ed in the stats. The regional Internet assume whereas the [Cleartag] team ba- of DNY Ventures which last month still penetration rate as per November 2015 sically just focuses on how to add value was shown in the Lebanese commercial was six percentage points ahead of the and add revenue.” registry as the majority shareholder of global average and the growth rate in How much revenue Cleartag might Cleartag Holding, which is the majority Internet users for the 2000–2015 period, add to the group and how much this shareholder in Cleartag sal. He does not at roughly 3,650 percent in the Middle potential was worth to JWT in cash want to discuss the size of his sharehold- East, was the world’s second highest after compensation under the acquisition ing in Cleartag after entering the part- Africa. When considering the mixture agreement is something that Haddad is nership with JWT and like Haddad, re- of achieved ground and open poten- not willing to discuss. He refuses to pro- fuses to say anything about the value of tials that these numbers encapsulate, the vide any number related to the transac- the transaction. But the deal unmistak- Middle East appears to be a rather sweet tion even upon the most emphatic plea ably has been personally motivating for spot for taking digital marketing com- for more transparency and only affirms him. “I will still be the entrepreneur that munications to new profits in the com- that the transaction was based on a “fair I am and I will still be taking Cleartag in ing years and the Cleartag transaction price”. Elaborating a bit further, Haddad the direction that I am taking it but I do does herald potential for Lebanese mar- adds that the valuation of Cleartag was feel that we have a kind of synergy and keting talent and all local adepts of soph- not discounted because it is based in the chemistry that will have an impact be- ism of the new, digitally enabled, type.

34 JANUARY 2016 | www.executive-magazine.com www.executive-magazine.com | JANUARY 2016 35 COMPANIES & STRATEGIES > Q&A

The blue appeal Executive talks to Air France about shifts in the regional aviation market By Yasser Akkaoui

Beirut and Paris were both victimized pressure on a government like the by bomb attacks, did the Air France Lebanese government to comply with route to Beirut suffer too? these globally recognized security First of all, we never canceled any regulations? flights after the events of Paris. We The application of international maintained the full network and the safety rules is an approach that we and full flight schedule everywhere. Sec- the other airlines have everywhere, ondly, the safety rules changed a bit, of and that has a political expression course, in Charles De Gaulle [Airport] through IATA (International Air but traffic remained fluid and on track Transport Association) and ICAO at all times. We kept the operations (International Civil Aviation Organi- going with the safety measures that zation). Secondly, [adherence to] the we have [always had in place] and rules and regulations for safety is a with extra measures for airports like must for us. So you can imagine that Charles De Gaulle and also for Rafic we ask [in every country] for compli- Hariri Airport in Beirut. For the sec- ance with our safety rules mainly via ond part of your question, the answer those organizations and sometimes di- is that, yes indeed, Paris as a destina- rectly. The minimum that we request tion was hit during the last 15 days of is more or less international. On top November, but what I can tell you is of those local measures, Air France it- that as far as we can see for January we self applies some [safety] measures for have now a positive sense of booking. its aircraft. But as long as we fly [to a Is there a special impact on [the route destination] it means that we consider Patrick Alexandre to] Beirut? The answer is no. Beirut we can make [this destination safe]. traffic to Paris has been affected more And we fly [to] Beirut. or less the same way as others. But to or many Lebanese travelers, Air be frank with you, markets are not E What do you rate as the top France is not just any airline reacting the same way to those events. challenges for the airline industry today? F but an institution of memories. The more affected markets were Japan I think it’s a mix of at least two When times were tough, flying from for individuals, groups and business; things, maybe more. Of course there Beirut to Paris represented a lifeline North America, the USA in particu- are challenges related to operations, connection to personal safety, not to lar, and a little bit the Gulf region. such as what are the aircraft and the mention savoir vivre and commerce. We have seen less effects on Africa most problematic issues, such as safety Today, the links between Lebanon and and South America, and in Europe it etc. But then the story is about the Europe are numerous and airlines have depended on the situation. combination of product and price. to win over travelers with more than just This is why we actually do invest in their name. But the journey to Paris still E Lebanon has been requested the best approach with the long-range has many meanings and commercial to comply with Annex 17 of the product presented today, which we values, and Executive sat down to Chicago Convention that relates to have been flying to Beirut for a few discuss these facets with Patrick Alexan- the security of airports. And while [months] now, since the 14th of dre, Air France’s executive vice president Lebanon has been trying hard to September. So first of all [the chal- commercial, sales and alliances. comply with these requirements, we lenge] was investing, and investing a know for a fact that there have been lot. Talking for Air France, we have E Beirut and Paris were joined last shortcomings in compliance. Given made an investment of more than 500 November in shared tragedies and the heightened need for security in million euros only for the long-range there were news reports of flight the current environment, to what as the first part of the investment [into cancellations and flight diversions extent does an airline like Air France our fleet of Boeing] 777 for all the cab- because of bomb threats. Given that see it as part of its duty to also put ins including La Premiere, Business,

36 JANUARY 2016 | www.executive-magazine.com Economy Premiere and Economy. something we can do and [combine as a market covers all the segments of The second important thing is the with] the quality of the product we our business, which is not the case in price. We are addressing [this issue] can give to our passengers. [This all the stations and destinations. But with this kind of product. It’s a mix product quality is present] not only in Lebanon we have the ‘La Premiere’ of two, which makes the customer in the cabins, and in the service given (first class) segment and the business happy. On the other hand we are also by cabin attendants but also [in our] segment. [People here] travel for busi- working a lot on our [cost] savings stations. [There is] also the invest- ness reasons and personal reasons. and this is why the famous plans have ment we are making in technology, This makes it very interesting to been launched since a few years. The mobile applications etc, and that mix manage [this market] and it allows us first plan [for improved efficiency] is how we compete. to deploy the whole range of products, has been implemented and the sec- [Value for money] is a very at least in-flight products including La ond plan is for transforming all the interesting point, because Lebanon Premiere, in Beirut just as we do for categories of staff. I was making some instance in New York. efforts to be and remain competitive. Being competitive is a mix of cost, “WE NEVER CANCELED E Air France–KLM has seen a which drives the price, [and using] ANY FLIGHTS AFTER weakening of market shares and has tools we have in review management. THE EVENTS OF PARIS” been plagued by labor actions, whose [Because of] this we now have a lot only positive element might be that of facilities to offer interesting prices, you are not the only big European with fares that are so low. Low fare is airline to suffer in this regard. How,

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for you, do European carrier labor creating value — not only by creating to exchange. If you don’t have two challenges, regulatory burdens and jobs. If one day European airlines are market positions to exchange, [the competitive pressures in Europe, rate replaced by some Gulf line, there will deal] remains a deal with money when compared to changes in global be a lot of job losses — thousands. So against market. When you do that I traffic patterns, and rising competition the European airline business is creat- don’t think you have improved your from carriers in the Far East and ing value directly and indirectly. industrial positions; [this is] part of Middle East? my answer in response to the com- It is true that not only Air France, E The Air France–KLM collaboration ment you yourself made concerning but all the biggest European carriers are is now more than 10 years old. the Gulf companies. The next steps fighting to be competitive. So we have In the meantime we are seeing a to this [process of forming alliances] somewhere to benchmark ourselves, in growing variety of consolidation and is in reinforcing a JV. You are right to order to have the right cost [of op- collaboration models, from alliances say that this will most likely involve erations]. And what is the right cost to and mergers to equity partnerships equity moves, as Delta is making operate? [In other words] what depends such as practiced by Etihad Airways today with China [Eastern Airlines] on our efforts and what depends also and strategic partnerships such or as Air France has done by investing [on the environment], which is labor, as Emirates–Qantas. From your into [owning] a few percent in Gol in taxes and such. We have to address the perspective, what collaboration Brazil. So [there is] no future without labor cost through better productivity. It models make the most sense today for alliances. Those alliances range from doesn’t mean we want to pay less. air travelers and for operators? complicated joint ventures to simple Regarding fair competition [with When we discuss consolidation, ones, where the alliance we have with other regions], some friends not far our future will first of all see more Middle East [Airlines] is interesting. from here in the Gulf are playing alliances. You have different steps for games in which all the conditions for E When you are looking at the Middle competition are [not] the same. So if East and Africa, do you see any role for instance, a Gulf company is asking “IF ONE DAY EUROPEAN for Beirut that could be larger than the for open skies, the condition for it is AIRLINES ARE role it’s playing now? transparency, reciprocity. I fully rec- REPLACED BY SOME Beirut is a market for us because ognize that [the aviation industry] has GULF LINE, THERE WILL of Lebanese people and because a been a tool used by those countries for BE A LOT OF JOB LOSSES” lot is happening with the diaspora their economic development, but do all over the world. It is, as you say, a you really think that for instance there larger market than Beirut itself. is traffic between Dubai and Orlando? alliances and as you know Air France Do you really think you can make it has taken part in collaborations first E How are your efforts progressing in profitable? Do you really think you in Europe. Some [alliances] are big Abidjan as far as making it a hub for can open a daily Dubai–Panama City but the value of an airline is not only Air France in Western Africa? flight of 17 hours? its number of aircraft. The value of I was in Abidjan last Monday, I recognize the fact that we have an airline is the market share they just to give you an example [for how to make some efforts, as Lufthansa is have, [and] the grip they have on the important it is for us]. As you know, doing. For me the reference is to be as market. Knowing this leads [airlines we are developing [this hub] with a competitive as Lufthansa and British to enter into] joint ventures. We as Air strong investment. Airways can be. Then there is a ques- France–KLM have a big joint venture tion of competition linked to Euro- for instance with Delta Airlines. This E Could you envision to have similar pean regulations and [with regard to] JV is a virtual company which is larger plans for Beirut as Air France has for Europe and the Gulf carriers. Do we than British Airways; I’m talking Abidjan, for developing a hub for the have the same rules? Can they go and about a $16 billion joint venture on a Middle East or creating links between take the market in Europe? And if yes, yearly basis. So this kind of thing will the Middle East and hubs in Africa? with what conditions? By the way the continue to develop and one example That’s a good idea, linking Beirut same [goes] for American companies. for that is that we as Air France–KLM to Abidjan. As Air France is currently For me, it is a question of [how we already have a younger JV than the investing in Ivory Coast into mak- compete], the rules of competition. one with Delta, with China. This goes ing the Abidjan hub, I think there is That’s the main problem. But we will back to my remarks saying that when something to be done. Maybe I will do our job. I really think today airline two airlines discuss [a partnership] take care of this tomorrow with [MEA transport in Europe is bringing and they need to have market positions Chairman] Mr. El Hout.

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www.executive-magazine.com | JANUARY 2016 39 ENTREPRENEURSHIP > BDL Accelerate

Smart money talks Resolutions for better exits By Thomas Schellen

investments, and Middle East Venture Partners (MEVP) need exit oppor- tunities that jibe with the seven-year timespan of Circular 331 funding of up to $400 million; a small cap exchange will open part of that realm at least in principle. It is beyond dispute that the ratio of market capitalization to gross domes- tic product in Lebanon is in serious need of improvement. However, an electronic exchange with a market capitalization of a few hundred million dollars would be nowhere near enough to lift the Lebanese market cap to GDP Big words at BDL Accelerate 2015, but what will the result be? ratio into the 50 to 100 percent range that is often considered indicative of stronger economies when compared t had to be one of Lebanon’s top the BSE is not a likely event in the with very low ratios associated with resolutions for 2016 when Banque 2016 timeframe, the prospectus for poor countries or with countries at less I du Liban Governor Riad Salameh the SME electronic exchange should than 50 percent ratio that are consid- pledged at the BDL Accelerate event in provide a private sector path to its ered undervalued. In this regard, the December to see to the establishment creation. A hint in support of that may call for creation of greater liquidity of an electronic stock exchange for small be Salameh’s remark in the Decem- in Lebanese financial markets raises and medium enterprises. “Our aim for ber 10 speech that participants in the the question of what other securities, the year 2016 is to succeed in the launch- electronic trading platform will be besides stocks in startups, the new pri- ing of an electronic trading platform,” “banks, financial companies, brokers, vately-held and privately-run market Salameh said in his speech to open the family offices [and] professionals”. List- could trade and if it would be instituted event, and told Executive after his ings will be supervised by the Capital with an intent to challenge the Beirut speech that the prospectus for the new Markets Authority, he added. The pur- Stock Exchange. exchange will be circulated in January. pose of the new mart is easy enough The creation of the electronic to divine: as per the governor, it will BETTER MARKET MECHANISMS exchange for Small and Medium allow startups to list and provide exit NEEDED FOR LEBANON Enterprises (SMEs) is an important opportunities for successful companies, The attention in the BDL Acceler- proposition and one that deserves to be with creation of liquidity in service of ate event’s opening session was fully monitored religiously, particularly after “startups and others” as its true aim. focused on Governor Salameh, docu- announcements for realizing the project Another motivating force in menting the awareness that most of the within 2015 came to a quiet demise the establishment of the electronic Lebanese entrepreneurship ecosystem’s – possibly because the BDL governor exchange must be the limited lifespan progress in the past three years is owed had vocalized the project idea last year of the central bank’s funding flow into to the central bank. But notwithstand- without any regulatory groundwork the startup ecosystem under the famed ing the applause with which the crowd having been implemented by the Capi- Circular 331 that incentivizes banks to received Salameh’s electronic exchange tal Markets Authority. This is probably channel investments into knowledge announcement, the main thrust at BDL also due to a margin of severe uncer- economy ventures at greatly reduced Accelerate was the quest for capital; a tainty over the ability to institute the risk. The system’s venture capital play- plurality of young entrepreneurs told SME exchange under the umbrella of ers such as the Berytech Fund II, which Executive that they had raised funds, the Beirut Stock Exchange (BSE). used the BDL Accelerate event to an- were engaged in fundraising or were Given that the privatization of nounce close to $20 million in startup seeking to raise money in early 2016 in

40 JANUARY 2016 | www.executive-magazine.com a variety of funding stages. By contrast, tronic exchange that should probably while falling quite short of evaluating these entrepreneurs’ — and also some achieve more than just help startups in hubs from all parts of the world, made investment bankers’ — comments price discovery. several noteworthy observations on on the potential and practicality of a trends in what Compass described as a Lebanese SME exchange were at best QUESTING FOR HUB APPEAL rapidly emerging and interconnected enthusiastic in the vaguely affirmative When compared with the market- global startup landscape. way of someone who has not given a ing talk about Lebanon’s role as emerg- In an observation on the environ- lot of thought to the matter. ing hub, the number of genuinely ment for exits, the report expects More important for the project of international startups that presented Silicon Valley to stay in the lead for exit an electronic exchange is that promises themselves in booths provided for free values for several more years but antici- and acclamations do not compensate to entrepreneurs at BDL Accelerate was pates “ultimate convergence towards an for absence of market fundamentals. hardly a handful, among them a UK equilibrium that looks a fairly conven- Well regulated stock markets are noted firm that took advantage of the UK– tional 80/20 power law” in the world’s for their macroeconomic value as they Lebanon Tech Hub avenue to come 20 largest startup ecosystems, meaning facilitate price discovery, flows of capital, to the Middle East. And just as BDL that Silicon Valley would capture be- and efficiency. But markets need to be Accelerate did not feel like a magnet tween 30 and 50 percent of the annual supported by adequate economic incen- for international participants outside exit pie, followed by three ecosystems tives and, as researchers for the Organi- of some very isolated cases, global that combined would also capture 30 to zation for Economic Co-operation and eyeballs did not seem drawn to Beirut 50 percent, and another 16 startup eco- Development argued in 2013, “radically in any approximation of the great at- systems that will draw in the remaining different intrinsic nature[s] of markets tractiveness that local promoters talk 20 percent of the exits pie. for large cap and small cap stocks” man- about. In December, for example, a Just as interesting as the startup date that markets for small caps should Huffington Post piece on dark horses exchange for the development pros- be designed differently from large cap in the race to attract international pects of tech ventures is the issue of markets. How the proposition of a small startups to rising tech hubs pointed not Beirut’s startup-hub appeal beyond cap market can work in an environ- to Beirut but to Amman as one of three the ranks of resident and expatriate ment with an anemic large cap market worth taking a closer look at. Ironically, Lebanese that comprise the ecosys- is, from a common sense perspective, tem’s natural stakeholders. The idea of a question that needs to be asked when advocating Lebanon as an internation- deploying a small cap exchange formula [THE ELECTRONIC ally attractive hub was an important in Lebanon. EXCHANGE] WILL premise of BDL Accelerate. However, Small cap ventures are notorious ALLOW STARTUPS TO while the event constituted a great for their liquidity risk, meaning that in- LIST AND PROVIDE EXIT initiative for showcasing the emerging vestors in SME stocks may not be able OPPORTUNITIES startup ecosystem, it came dressed up to divest of shares at the time and/or with marketing messages that were far price they need. It has to be asked how stronger than the event organization. an electronic exchange in Lebanon it was posted right at the time of BDL The gaps between advertorial lore of could be enabled to attract market par- Accelerate. Other cities in MENA that huge local and international partici- ticipants in sufficient numbers on both recently found mention in stories on pation (presences of “100 speakers, sides of the equation, namely in terms up-and-coming startup hubs world- 200 exhibitors and 100 startups from of qualified investors and of startups wide included Tunis, Cairo, Dubai and around the world” had been trumpet- that can qualify as issuers of equity. Tehran besides the familiar interna- ed all over the media) and the reality This question cannot be unreasonable tional contenders in Asia, Europe and of attendances were visible every- in a financial market that has been de- Latin America. where in the Beirut Forum venue but fined by lack of liquidity for more than Of greater indicator value than never more so than on the second 10 years. So the compounded bigger such — usually partisan and typically day when scheduled discussions went question is if a country with a fledgling somewhat coincidental — rising eco- completely off schedule and when capital markets authority, a history of system stories or promotional messages main-stage speakers and moderators illiquidity in its stock exchange and about the attractiveness of startup hubs sparred in front of a thousand empty no recent experience with any initial in this or that emerging economy may chairs, while the more vibrant conver- public offering or much activity in be the 2015 Global Startup Ecosystem sations were those of the people queu- secondary markets can pull off the Ranking of San Francisco-based firm ing for free coffee and a doughnut at launch and invigoration of an elec- Startup Compass Inc. Their report, the convention’s “coffee sponsor”.

www.executive-magazine.com | JANUARY 2016 41 ENTREPRENEURSHIP > Exit strategies

pipeline of “around nine companies that Bireme ad(ventures) are at various stages of development but The lure of migrating to the US By Thomas Schellen are generally post-A” in their funding stages and Bireme is ready to source companies from any VC in the region. tartup ecosystems in the United only region that does not have represen- While MEVP is a strategic partner, “this States continue to be major tation in the US [through] capital from is not about [working with] any specific S magnets for young Lebanese or direct influence on startups coming [VC] firm but about investing into companies that want to benefit from from that region is the Middle East,” he breakthrough best-in-class Lebanese or valuations that the local market seems claims. Middle Eastern entrepreneurs that have unlikely to generate. Executive He warns that it is very difficult the capacity, potential and product to go learned of a new fund called Bireme for young companies to transplant global,” Habib emphasizes. Ventures from Elie Habib, the fund’s themselves into the US because of the Bireme Ventures will have a struc- managing partner. In an interview American market’s legal and organi- ture of limited partners (LP) and general during the central bank’s international zational requirements and that being partners (GP). The management team startup conference BDL Accelerate accepted by American venture capital comprises three Lebanese-Americans 2015, Habib tells us that the fund has (VC) and private equity (PE) firms is under Habib’s leadership. In legal terms, a target of $20 million and wants to especially challenging for startups from it will be a US-based partnership with a achieve a first close of $5 to 10 million the MENA region. “Many US VCs management company in Delaware and by the second quarter of 2016 to be are very hesitant to deal with Middle a GP-LP fund in the Cayman Islands in deployed in facilitating the sojourns Eastern startups and invest in Middle order to facilitate participation by inter- of Lebanese and Gulf-based startups Eastern companies. The barriers are national investors. The fund will require across the Atlantic Ocean. cultural, legal and perception based, no licensing from the Lebanese central “We are seeing more and more and [about] intellectual property rights. bank, Habib says. He expects LP partici- companies maturing and facing the [US VCs] are not going to invest into an pations to comprise approximately 60 need to expand into the United States intellectual property that is not correctly percent in investments from members to accelerate their growth and acquire protected – that is where their assets of the global Lebanese diaspora and new customers. These companies need are,” Habib explains. about 40 percent from individual and capital to reach the place from where Bireme aims to build relationships institutional investors in Lebanon. they can reach the next level in their between Arab startups and US VCs in Planning for a total life span of eight performance,” Habib tells Executive. order to present the American funders to 10 years, the fund’s strategy hinges on Habib, a Lebanese-American who with Middle Eastern companies that bringing in US-based VCs and motivat- spent most of his career in Silicon Val- meet their investment criteria. Accord- ing them to co-invest in the compa- ley and has been involved with funding ing to Habib, this approach positions nies in Bireme’s portfolio. Beyond the efforts in the Lebanese startup scene the fund outside of the realm covered envisioned US money, the fund at a later since 2009, says that the move into the by BDL Circular 331 by addressing stage will also grant its LPs the right to US is as challenging as it is necessary for the needs of Lebanese companies that co-invest directly into the companies. those local startups that have potential seek international acceleration. Startup As Habib notes, the whole enterprise to penetrate global markets. He argues profiles that will be a good fit for Bireme is based on a calculated expectation that such companies will do best if they will nonetheless include companies that of high mortality among the invested take advantage of the US market for received funding from a Lebanese VC startups with an aim of developing a raising funds and later on for realizing under the 331 framework, or companies group of winners that will provide high the fairytale returns that people associ- that have been nurtured by VCs in the returns. He says, “What we are focused ate with the American entrepreneurship United Arab Emirates. on is an [internal rate of return] of 25 ecosystem. In this context, Habib points to percent and a return of 3 to 3.5 times According to Habib, entrepre- his ties with Middle East Venture money for the fund. We are going to neurial communities of many countries Partners (MEVP), with whom he has play the role of the physical platform are represented in the US market by been a venture partner for several years that is going to impact the three stake- funds that enable startups from nations already. Within the now burgeoning holders (the fund’s participants, the such as India and China to enter the environment, the possibilities for sail- startups and the US VCs), but we are American scene but the Middle East is ing startups to the US under Bireme’s ultimately going to look for creating ex- lacking such representation and this is participation are much improved, Habib its — this is not a developmental fund; the gap that Bireme wants to close.“The enthuses. He says that the fund has a this is for profit.”

42 JANUARY 2016 | www.executive-magazine.com www.executive-magazine.com | JANUARY 2016 43 RETAIL > Q&A

Growth amid the thorns Executive talks to LG about their growth and coping strategies in the difficult Lebanese market By Thomas Schellen and Nabila Rahhal

E Are you specifically segmenting E Is it correct that you maintain your target markets in the Middle no LG-owned sales organization in East for the household and electronics Lebanon? products that LG manufactures? We have a legally established Yes. There are so many suppliers branch office in Beirut but did not and brands and each supplier and acquire a license to sell directly in brand has their own target audience. Lebanon. We have three distributors The market now is seeing many in the country. Chinese low-cost products. The names of their manufacturers are E When you buy international brand not known, and they are targeting products in Lebanon, you often find the low- to middle-income demand stores that sell them, perhaps at segments. We have passed through discounted prices, but then do not such stages a long time ago as we continue to offer these products or are in this market for more than 30 any after-market service. On the years, first under the Goldstar brand other hand the local market for major and then as LG. We have continu- household consumer goods appears Tae Hun Ryu, LG Levant general manager ously upgraded our position, and to be dominated by a handful of large today we no longer position our importers and competition in this etailers in Lebanon have been brands as affordable for earners of segment seems very limited. How are faced with challenging circum- middle- or low-incomes. People who you handling these challenges? R stances for the past four years. want low-cost products have to look This is a very complicated issue. Regional turmoil that began with the for other brands. We are targeting The consumer has the right to get war in Syria has been pushing tourist the upper 35 percent of customers to the lowest possible price for the same numbers down, and the remaining be our loyal customers. products and the market is protecting clientele – those residing in Lebanon consumers from monopolies. [But] if – have decreased purchasing power E In your home market of Korea, LG is you have multiple distributors, they compared to the visitors who were so number 2 in brand value after Samsung. sometimes enter wild competition common a few years ago. Have you measured your brand and blindly cut their price so that at The Fransabank- Beirut Traders awareness in Lebanon and how much it the end of the day everyone in the Association retail index shows that has grown in the past four years? market is losing. although the Consumer Price Index is I can say that the LG presence in We have to be very well balanced on a continuous decrease (for the fourth the Middle East is much higher than on how to protect the consumers’ quarter in row), some sectors of the re- it is on average in global markets. interests but also the distributors’ tail market did not pick up as one would Lebanon and Jordan are among the few interests at the same time. We have expect in a deflationary environment. In markets where LG enjoys extremely to satisfy both, and it is one of our fact, the Lebanese retail market gener- high brand awareness as top consumer hallmarks that we try to support our ally remained stagnant in 2015. choice. Above 82 percent of consum- distributors with better advertisement Given such a scenario, it is no won- ers in Jordan and Lebanon name LG or better showrooms like the one we der that many retailers were reluctant as number one or number two when are meeting in. to share their woes with the media. asked for their favorite brands in televi- Not so LG, the Korean consumer goods sions and washing machines. E Do you finance their showrooms? and electronics manufacturer. Execu- No, we don’t finance them but we tive sat down with Tae Hun Ryu, the E What markets do you cover from support the distributors with decora- general manager of LG Electronics in your Amman regional head office? tions or trainings for their staff on the the Levant, to discuss the company’s My coverage area is Iraq, Syria, selling of premium goods. One of our performance in Lebanon and the chal- Lebanon, Jordan of course, and Pales- refrigerators here retails for $3,500. This lenges it faces in this market. tine. It is the most conflict-prone area. is no small money for anybody and so

44 JANUARY 2016 | www.executive-magazine.com we have to give the distributors training to sell not by price but by product. Service requires a lot of systems be- cause you need more than half a million different [spare] parts, and it requires a very well organized system to manage these components. We have a big ser- vice depot in Jebel Ali, Dubai, and from there we supply each distributor.

E Lebanese traders are perhaps craftier than others in sourcing products informally from abroad. When it comes to pricing strategies for mobile phones for example, do WE ARE TARGETING you face problems from grey imports THE UPPER 35 PERCENT because your official brand dealers TO BE OUR LOYAL are not as competitive? Do you price CUSTOMERS mobile products to be competitive against the street market or based on your customer assessment? What you are describing is a big current headache and very important issue that we face in the mobile [hand- set] market. This is what happens in Lebanon and in the whole Levant, even worse in Syria and Iraq, and also in Jordan. It is difficult to solve. Even if LG provides the products at the same price to the over 200 markets that exist around the world, these products do not necessarily sell for the same price because of differing mar- gins that are added. We are business- men and have to make our business flow despite such situations where two factors are conflicting. We cannot dictate to anyone what price they put but we can say that anyone who adds the official premium will have support from us and can provide a differenti- ated service offer to their customers.

E Where do mobile handsets rank within your different products, in terms of unit sales and in terms of value added to the LG company in the Levant? LG is number two for television both in value and quantity [of sales]. For refrigerators and air conditioning units we are number one. In mobile we are number three in some markets and number four in others. We want to be number one or two someday but

www.executive-magazine.com | JANUARY 2016 45 RETAIL > Q&A

to be frank with you, this will not be minus growth in demand cumulative difficult time brings an opportunity easy to achieve in the coming two to for 2015 until end of September. We for us to expand our influence. That is three years. made a very slight positive growth in how we view it. this period and I am very pleased with E Did you then allocate a particularly this, because it is no small achieve- E How much does Syria usually healthy marketing budget to expand ment under the circumstances. contribute to demand for LG products you position in Lebanon and what are in the Levant region? your market share targets for 2016? E Is it then correct to say that an Syria traditionally gave us 30 I discussed this the other day amount of positive growth that was percent of our business; this has now with our Lebanon manager, Mr. Lee. in the single digits in absolute decreased to less than 15 percent. That [In 2015], we expect to have about terms, allowed you to increase your is still a good pie for us, given the situ- 10 percent market share in Lebanon market share to 10 percent, because ation in the country. and we are hoping to increase our competitors did not grow? market share to 15 percent [in 2016]. That is what happened. E Is Jordan number one for you To achieve 15 percent means [that we in terms of the contribution to LG’s need to have] 50 percent growth; this E What is your strategy for this year regional sales? is a very aggressive target. Hence, to from this angle? Iraq is number one. It accounts for grow from 10 to 15 [percent market Overall I do not expect any over 50 percent of my business; Jordan share] you have to calculate what meaningful growth in prosperity in and Lebanon combined contribute this means in terms of input needs in both the Levant area and Lebanon for about 30 percent to our business, at terms of your investments, your chan- [2016]. How I predict it, [2016] will almost equal proportions. We sell less nels, your in-store [promotions and be another year like 2015. However, quantity here than in Jordan but we activities] or your communications. sometimes have more value generated All these must be changed accord- than in Jordan. This means Lebanon is ingly, including your logistics. “LEBANON IS VERY a premium market and it is very much IMPORTANT FOR US worth it for us to maintain a good E Was there any specific difficulty IN TERMS OF OUR market share here. or special opportunity that you PREMIUM MARKETING” encountered in Lebanon in 2015? E But you do not intend to move into As you already mentioned, the direct sales in Lebanon? difficulties for the mobile business that does not necessarily mean that We do not have such a plan in Lebanon are very specific and the your business will shrink. We have a because in order to establish a direct parallel market was the biggest dif- strategy how to deal with this kind sales presence, the business volume ficulty for us. If there had not been of situation and we are ready to take must be quite huge, something like the parallel importers, we could on those challenges. The market, if $200 million in annual sales. This is have gained even more market it is good, may suffer a decrease of not predictable for Lebanon. share. about five percent or in the worst case even see minus growth of about E Out of LG’s total product portfolio, E Did the economic difficulties that 10 percent, but for the LG opera- how much is available in the Lebanese we saw in 2015 have a negative tions in Lebanon we are expecting market? impact on your sales? growth of something like five percent As I said, this is a test bed for us, Absolutely. Our region is very also in 2016. and we carry in Lebanon almost every heavily impacted by two factors. One product which we offer in other mar- are the regional conflicts; these wars E Are you advising your distributors to kets. I would like to add that I have affect not only the whole region but increase their workforce or strengthen come to realize that Lebanon is very also Lebanon. The other factor is the their networks this year? important for us in terms of our pre- fall by half in the petroleum price Our distributors’ channel power is mium marketing. Lebanese customers which reduced the budget of every one of the most important factors for have given us a very good opportunity government and every individual us to spend on, and we have already [to test] how we can interact with in all surrounding markets and this started doing so. We will expand our all consumers in the Middle East. I indirectly affected Lebanon; according channels, and I already talked to most very much appreciate the continuous to the statistics, this market suffered of our distributors and they are ready support and affection that Lebanese more than 10 or even 15 percent of to do so. Each crisis, recession or customers have given us.

46 JANUARY 2016 | www.executive-magazine.com AB16-Executive-W200xH270 mm.pdf 1 12/23/15 11:22 AM

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www.executive-magazine.com | JANUARY 2016 47 EXECUTIVE LIFE “The quality of life is more important than life itself.” Alexis Carrel

BEIRUT CHANTS UNITING LEBANON THROUGH CULTURE

Words by Olga Habre

he holidays are always fertile ground for thought. Family and friends come together under what is collectively called the Christmas spirit. But what ex- actly does this common phrase mean? However it manifests itself, this spirit is one of unity, love and peace. Over the past eight years Lebanon has united throughout the month of December for the Beirut Chants concerts in that very spirit, using culture and tmusic to spread a message of hope for the nation. The free concerts draw thousands of people to various churches around downtown Beirut every ed not only in Lebanon but also internationally,” says night from December 1–23 for one hour of music — the rightfully proud Abou Samra. Over the years the some classical, some religious and some pleasantly concerts have grown in response to an obvious need unexpected. This year Beirut Chants opened with and have become a marker of Christmas in the city. the outstanding Messa di Gloria featuring Lebanese “Now every December 1st people don’t even have to and Italian talent, and ended with an angelic opera be invited, people are already waiting for us. It has be- aria assortment by soprano Cinzia Forte. But Beirut come a ritual,” she beams. Chants is not just about bringing culture to the mass- Abou Samra says attendees vary from night to es for free and bonding over beautiful music, it’s also night. “The crowds are very diverse depending on about voicing a powerful message. the program. Some are religious concerts, like this Two of the most notable concerts this season year with Ghada Shbeir. People that were there were featured music from the Quran. “I don’t like to speak not the same as those at the harp concert by award about coexistence but I feel we are one nation and winning Xavier De Maistre,” she explains. What con- Beirut Chants has proven it. The people giving stand- certgoers do have in common is their love of culture. ing ovations [at those concerts] understood the mes- “Throughout our eight year experience we’ve seen sage of love and tolerance and the big hope that the that the Lebanese people appreciate and encour- differences in our society are our strengths,” says age us when they see real good will and good music. founder Micheline Abou Samra, adding, “We should They are thirsty for high-end results, whatever [they work on more projects that make us all one nation.” may be], whether a concert or something else. There Beirut Chants began when Abou Samra wanted is a need for this,” she says, emphasizing that “culture to make use of the beautiful renovated churches in should be within the reach of everyone.” downtown Beirut and thought to bring life to those She credits the sponsors (individuals and compa- spaces to “feel that the community is participating nies) with keeping the festival afloat, not only finan- and living the Christmas spirit in a beautiful way.” cially but also with their constant support and en- Three years ago Beirut Chants was accredited by the couragement. Abou Samra describes their donations European Festival Association, meeting international as “giving a gift to society” — perhaps one of the nicer festival standards. “We are a festival that is appreciat- Christmas gifts we all received this past year.

48 JANUARY 2016 | www.executive-magazine.com www.executive-magazine.com | JULY 2015 49 EXECUTIVE LIFE “The quality of life is more important than life itself.” Alexis Carrel

UBAY: ZEN INDEED AUTHENTIC JAPANESE CUISINE WITH A VIEW IN JOUNIEH

Words by Olga Habre

s Jap worth the drive? If you’re already in Jounieh (or Forget Americanized maki – which Jap also has, further north), the question is irrelevant. But if you’re and for the record are delicious to Westernized taste an overindulged Beiruti with a plethora of sushi joints buds – the authenticity of Jap’s dishes goes beyond at your doorstep you might not be too keen on ven- the standard sushi selection of other restaurants. In turing through a traffic trap of a highway to indulge in fact the menu created by Chef Masato is remarkably some Japanese cuisine. Or would you? close to genuine Japanese cooking; he promises Jap’s The UBay complex in the old town of Jounieh, miso soup is exactly what you’d taste in Tokyo, and which already houses renowned fine dining estab- the black cod, tempura and grill items are almost 100 ilishment Table Fine, recently opened another high- percent authentic. end (but not fine dining) restaurant: Jap. Recruited “The Japanese foods we call wa-sho-ku in Japa- to spearhead the gourmet venture was Chef Masato nese are quite different from the Japanese foods out- Okamoto, a star chef with 30 years of culinary experi- side of Japan,” he says, explaining that this is not at ence across six countries and in cities like Los Angeles, all a matter of good or bad but rather a natural devel- Las Vegas and New York. Hailing from Kyoto, Japan, opment that stems from catering to local tastes. He the chef says he wasn’t too enthusiastic about mov- compares it to pizza: the authentic Italian Margherita ing to Lebanon at first, but after a Google search he versus neo-topping combinations like pineapple and discovered he would be working in a beautiful coastal barbequed salmon. town and changed his mind. As such, a few items were created to suit Leba- We’re glad he did. What he has created for Jap nese tastes – namely the crunchy spicy shrimp salad, gives the Lebanese a new take on Japanese cuisine. sesame ginger marinated chicken and a few other

50 JANUARY 2016 | www.executive-magazine.com modern Japanese foods that he hesitates to label as “fusion”. “‘Fusion food’ is an ambiguous expression. My friends and I usually call it ‘confusion food’,” he jokes, adding that the term is misleading because it sounds new and cool whereas the idea is nothing new at all because food culture slowly evolves every day. “Today’s traditional foods are different from centuries ago. As far as I can see, sushi will become one of the world’s staples by the next century,” he says. Judging by the flourishing sushi restaurants in Lebanon alone, this seems very likely to be true. Toufic Khoueiri, owner of the UBay complex, says the dishes at Jap can “put tears in your eyes,” and while levels of emotion might vary, your taste buds should be left very content. Not only are the ingredi- ents of the highest quality in Lebanon, the food is as delicious as it is beautiful, plated artfully into an Insta- gram foodie’s dream. And it’s not only the food at Jap – the view alone is worth the drive. Nestled in the Jounieh Bay, the entire UBay complex boasts picturesque views of the Mediterranean. Khoueiri says the panorama “enhanc- es the experience, melding experiential visuals with fresh seafood,” calling it “a world of zen.” It’s zen in- deed. Friendly waiters are well informed and the ser- vice is punctual. The decor is elegant, the ambiance is laid-back and the tables are spaced far enough apart to be able to have a conversation without accidentally over-sharing with your neighbors. Conclusion: Jap is definitely worth the drive – and the best time to go is post rush-hour traffic for a beau- tiful moonlit dinner.

www.executive-magazine.com | JULY 2015 51 EXECUTIVE LIFE “The quality of life is more important than life itself.” Alexis Carrel

THE CRAFTSMANSHIP OF ROLEX A&S CHRONORA MAKES TIME FOR WATCH LOVERS

Words by Olga Habre

ome luxury brands are so iconic they become 2015 marked the launch of the Rolex Oyster household names, and while this might seem like Perpetual Day-Date 40mm with a new-generation a good thing, it can also be tricky since one of the movement, the Caliber 3255. A&S Chronora gave markers of luxury is exclusivity. As a name synony- the timepiece a warm Lebanese welcome with mous with high-end timepieces, Rolex must walk a a one-of-a-kind public exhibition at the brand’s fine line between accessibility and exclusivity. The downtown Beirut boutique, as well as a series of sRolex commitment to horology is reflected locally private workshops for handpicked aficionados. through its Lebanese distributor A&S Chronora, The first in the Middle East and one of only a hand- who have an even thornier path to trek in a country ful internationally, the exhibition was dedicated to that is plagued with third world problems as well the “president’s watch” (as it is also known for its as strong competition from an enigmatic satura- popularity with national leaders) and showcased tion of luxury goods. beautiful photos, archival material and interactive Lebanon has always been an important gate- panels, all in a bid to highlight the true essence of way market to the rest of the region, and even Rolex. Though it is unsual for an exclusive brand though the country is small, it is an avant-garde like Rolex to hold such a public event, A&S Chrono- hub for luxury as well as a highly influential and ra wanted to share something they are very proud well-respected market that serves as a reference of with the public. for the Gulf nations. At the workshops, which were held in collabora-

52 JANUARY 2016 | www.executive-magazine.com tion with Executive, guests heard about and inspect- ed the inner workings of a Rolex and even attempted to build a watch movement themselves. They also visited the after-sales service atelier to observe cer- tified Rolex watchmakers at work. This was the first time the public was allowed to see how things are of the movements. So what separates the aver- done behind the scenes and observe how delicate age Joe who recognizes a classic Rolex model and and intricate the process is. The workshops were an knows it’s “expensive” from a genuine enthusiast opportunity for A&S Chronora to interact with watch is the understanding of the materials’ value and lovers on a new level and their efforts were clearly the extent of the workmanship that goes into each appreciated. Many attendees had more questions timepiece. than time permitted and others, many of whom were While the brand is already very well respected, already wearing Rolexes of their own, voiced their not many people get to see just how much atten- newfound respect for the product as well as all the tion, time and effort is poured into every single craftsmen who create it. watch. Those visiting the Rolex exhibition were One Rolex watch takes a whole year to make able to enjoy a wealth of information not normally (sometimes more), and that’s not counting years available to the public, and privileged guests at the of research and development. Every piece inside workshops got a truly exceptional peek into the a Rolex is created in-house, and the brand even world of Rolex craftsmanship — a perfect example makes its own tools — a Rolex watch is made us- of how the brand manages to smoothly blend luxu- ing only Rolex instruments. There are hundreds of ry and mass appeal, while navigating the Lebanese skilled workers who toil over each of the tiny parts market.

www.executive-magazine.com | JULY 2015 53 EXECUTIVE LIFE “The quality of life is more important than life itself.” Alexis Carrel

SILVER SCREEN’S GOLDEN AGE NEW BOOK AND EXHIBITION SHED LIGHT ON LEBANESE CINEMA

Words by Olga Habre

trolling amid vintage cinema posters at the Le Yacht treasures. He decided to produce the book when he Club gallery in Zaitunay Bay was a glamorous walk realized Lebanon’s Ministry of Culture had no com- through the Golden Era of Arab film, albeit a brief plete index of national films. His book tells the story of and ultimately sad one. A colorful patchwork of smil- Lebanese cinema over 50 years, illustrated with hun- ing and theatrically glaring famous faces — Fayrouz, dreds of photos and posters, as well as press books, Sabah, Chouchou and others — these posters are articles, advertisements and more. sthemselves works of art, a lost art in fact. Lebanon’s The public exhibition of Abou Jaoude’s private once great cinema industry began with the silent film poster collection was held in association with Fonda- “The Adventures of Elias Mabruk” in 1929, and though tion Liban Cinema (FLC), who adopted the project be- the industry hasn’t stopped producing since, it took cause they are fighting for the same cause — Lebanese a tumble during the Lebanese Civil War and is today cinema. “Abboudi is so passionate about old movies struggling under numerous challenges. and posters, and what he’s doing is exactly what we are This distant memory of an industry received a doing. We have the same goal,” says Pamela Nabhan tribute in December in the form of a new book, “To- from FLC, adding that the organization is working to- night – Cinema in Lebanon 1929–1979” by Abboudi ward developing Lebanese cinema. Abou Jaoude, and an exhibition dedicated to its re- While the film industry boomed during the era lease. Abou Jaoude has been collecting cinema post- depicted in Abou Jaoude’s book, today, a tiny rem- ers as a hobby for decades, searching throughout nant of the past is held together by a few very pas- Lebanon and other Arab countries like Egypt, Syria, sionate individuals and entities including the FLC. Morocco, Tunisia, Iraq and more to find the cinematic Even with all the local talent today, there isn’t much

54 JANUARY 2016 | www.executive-magazine.com hope the industry can return to its former glory. Refer- with release dates planned for later this year. ring to the book, Nabhan says, “This was the golden The FLC is doing its part to support the indus- age of cinema, and not only cinema. The Arab World try as best as it can. This year they have scheduled had peace. We still have many productions every a script-writing workshop for professionals with ex- year, very good productions, but now even the stories perts from France, as filmmakers often have trouble themselves are mostly about conflict.” She lists a host with weak scripts and Lebanese university programs of challenges ranging from regional wars that affect lag in this particular aspect of cinema. Nabhan quips the general situation, to censorship, all of which offset that the biggest problem facing the industry today is the visual stories Lebanon could have to offer. funding, and to address this and other big questions, Nabhan acknowledges 2015 was not the best the FLC is holding roundtable discussions in the com- year for the local film industry in terms of features, ing month, including one to discuss the industry from with one exception being “Film Kteer Kbeer” which a very economic perspective. Perhaps with a hearty has been very well received in various festivals from helping of capital the industry can blossom again, but Toronto to Morocco. But there are high hopes for until then we can relish in our glory days through “To- 2016; a handful of filmmakers are currently shooting, night – Cinema in Lebanon 1929–1979.”

www.executive-magazine.com | JULY 2015 55 BUSINESS ESSENTIALS > Executive bulletin

Marking its official launch in the its eighth edition on December 1, 2015, event at its Zalka boutique from December Lebanese market, LG Electronics at Saint George Maronite Cathedral in 8 to 11, for media representatives and unveiled its latest TurboDry washer/dryer, downtown Beirut. The opening concert socialites. the Titan 2.0, in an exclusive brunch was organized in collaboration with the which brought together representatives Italian Cultural Institute in Beirut Total Liban inaugurated a French of the media and press as well as and was conducted by the festival’s language laboratory at the Military technology enthusiasts on November 19, artistic director, Father Toufik Maatouk. Academy in Hazmieh on December 9, 2015. 2015. The ceremony was attended by The eleventh H&M store in Lebanon, representatives from the Defense and Adding a festive glow to the heart which opened in Verdun on December Cooperation Mission of the French of Beirut, Patchi, the chocolate gift 1, 2015, is its first flagship store in Embassy in Lebanon, Lebanese store, showcased its exquisite Christmas the Middle East. The two-story flagship military figures and a delegation from window display and iconic front façade features H&M’s latest fashion for ladies Total Liban. lighting at its flagship boutique in and men. downtown Beirut on November 26, 2015. On December 9, Viviane Debbas On December 4, in cooperation with unveiled her latest creations at her On November 26, Alice Eddé Amchit municipality, IPT inaugurated Downtown boutique, where clients and launched her new fragrance, Eddé Hills, and lit up the 2015 Green Christmas friends joined for the occasion. at éCafé Sursock. The buzzing reception Tree and decorations at the entrance of was an exciting opportunity to discover its hometown Amchit, along the Beirut– Bassma, an award-winning non- this home fragrance collection created in Tripoli highway. The event was attended governmental organization working on collaboration with some of France’s top by Amchit municipality members, IPT empowering destitute families, hosted its parfumeurs. Chairman Mr. Michel Issa, IPT board 13th annual gala dinner under the theme members, employees and families. of ‘Talking Windows’ on December 9 at The Cheesecake Factory® made the Pavillon Royal in BIEL. its much-anticipated debut in Lebanon Scuderia Lebanon sal, the official on November 30, 2015. The brand’s first Ferrari importer in Lebanon, organized a Infiniti, one of the region’s fastest restaurant location is at V Verdun in Beirut. test-drive experience for its diverse models growing premium automotive brands, from the Ferrari Approved Pre-owned line- held the regional final of‘Infiniti Speed Ritz Banc Group, a private equity up on December 6, 2015. Pitching’ at the Dubai Autodrome and alternative asset management on December 9. Out of more than 100 firm, announced on November 30 the CMA CGM, the world’s third largest applicants, three finalists were chosen to acquisition of Sterling Forest Apartments, container shipping firm, announced on go to Hong Kong for the chance to win a 178-unit multifamily asset located in December 7 a pre-conditional voluntary $40,000 of seed funding. Raleigh, North Carolina, USA. general cash offer for Neptune Orient Lines (NOL), Southeast Asia’s largest On December 10, Dubai-based LG Electronics showcased container shipping company, subject flydubai signed an agreement with its newest Variable Refrigerant Flow to the satisfaction of the pre-conditions Visit Russia, a Russian federal state commercial air conditioning system, the specified in such announcement. unitary enterprise, to promote Russian Multi V4, at the Lebanon Mechanical destinations in the Middle East. This Week exhibition from November 30, More than 120 of Lebanon’s travel coincided with the opening of the Visit 2015 to December 2, 2015. industry leaders gathered at an industry Russia office in Dubai. awards ceremony on December 8 The Lebanese Association for hosted by Travelport, a leading travel In his welcoming address at BDL Hemophilia and global research and commerce platform providing distribution, Accelerate 2015 on December 10, treatment field leaderNovo Nordisk technology, payment and other solutions central bank Governor Riad Salameh have teamed up to provide career for the $8 trillion global travel and tourism announced a major project for 2016: orientation to children and youth living industry and Middle East Airlines, the the launch of an Electronic Trading with the rare and predominantly genetic national flag-carrier of Lebanon. Platform that will list startups and create bleeding disorder. liquidity. Galler Chocolatier, a producer of Beirut Chants Festival inaugurated Belgian chocolate, organized a tasting CosmoCity, an entertainment center

56 JANUARY 2016 | www.executive-magazine.com built and operated by gamers for gamers, with its partners. ceremony took place on December 16, celebrated their official opening inBeirut 2015, at the Badguèr Center in Bourj Souks on December 10, 2015, under Under the patronage of Princess Hammoud. The contest, organized jointly the patronage of Minister of Tourism Haya Bint Al Hussein, wife of Sheikh by PRIME project and Badguèr Michel Pharaon. Mohammed Bin Rashid Al Maktoum, vice- Center for Artisans and Creators, president and prime minister of the UAE aims at showcasing the talents of young In partnership with Banque Libano and ruler of Dubai, the eleventh edition of Lebanese creators in jewelry design and Francaise, BeitMisk’s Santa’s Factory the prestigious Cartier International promoting this sector in general. Express – an initiative to bring holiday Dubai Polo Challenge 2015 concluded cheer to less fortunate children – travelled on December 12, 2015, with an 8–4 win The National Commission for to four of the Lebanese Association of for Desert Palm, featuring Tariq Albwardy Lebanese Women in cooperation with SOS Children’s Villages on December and Rashid Al Habtoor. the United Nations Population Fund 10, 11, 12 and 13. In addition to released their legal study related to the presents, donations provided heaters, Samsung Electronics Co., Ltd. refugees in Lebanon on December 17. fridges and other basic appliances to the announced the launch of the Samsung villages. Gear S2 smartwatch in Lebanon, on On December 17, Liza Restaurant Saturday December 12, during an open in Ashrafieh held a casual afternoon tea The second edition of Christmas event at Mike Sport Jal el Dib, hosted by for food lovers where press and bloggers at the Villa — the charity Christmas Radio One Lebanon’s Clint Maximus gathered to celebrate the end of the year. event organized by Gata Events & and Stephanie. Promotions — kicked off on December LG Electronics was honored 11, 2015 in the presence of Lama Memac Ogilvy PR cemented its with the title of Brand of the Year by the Tammam Salam, the wife of the Lebanese dominance as the most awarded agency prestigious Red Dot Award, one of the prime minister, and the media at the in the Middle East following a perfect top design award competitions in the iconic Villa Linda Sursock in Ashrafieh. ten at the Middle East Public Relations world, bestowed on LG for its 13 wins The event’s opening ceremony coincided Association (MEPRA) Awards held in in the Red Dot Award: Communication with the fundraising reception of local Dubai on December 14. Design category over the course of 2015. NGO himaya. Sapa, a new Peruvian restaurant and The international partners of the EU As part of the company’s core values high-end cocktail bar, opened its doors funded project, MED-SOLAR, are to create, enhance and maintain strong on December 15 in Beirut’s Sodeco area, building three pilot photovoltaic plants relations with clients and media partners, where Zinc used to be located. This is in Lebanon within the framework of TRACCS, one of the largest public the second Peruvian-inspired venture by this initiative, whose main objective is relations networks in the Middle East & sisters Yasmina and Elissa Yared, and the promotion and implementation of North Africa, organized a lunch on Friday, their partner Rony Jabbour, following innovative technologies. December 11, at Le Telegraphe de Belle- their cocktail bar Cinco Lounge. Vue in Bhamdoun to celebrate the year The Ruby collection by Mouawad On December 15, L’Atelier Nawbar was released this winter season ahead of and Label Queen celebrated the festive the festivities. The range of earrings, rings season and their new collections of and pendants puts the glowing red rubies jewelry and designer wear, respectively, in at the center of an 18k white or yellow a collaborative event held at Saifi Village. gold setting, with various pieces also surrounded by diamonds. On Wednesday December 16, Luxury Limited Edition organized The fifthArab Aviation and an event at O1NE Beirut to celebrate Media Summit concluded in early the launching of Fashion & Stars, December 2015 with speakers in broad a new publication featuring articles agreement about the positive outlook for about celebrities and their relation the Middle East’s aviation and tourism to the most up-to-date fashion and industry, despite the potential impact luxury products. from a number of existing and emerging challenges. The Design it! contest award

www.executive-magazine.com | JANUARY 2016 57 BUSINESS ESSENTIALS > Executive bulletin

The International Diabetes Beirut collaborated to deliver a unique their M upgrade in early December with Federation has announced new figures Christmas masterpiece in the heart of the other markets in Europe, Asia and the showing that the number of people living hotel lobby. Americas following. with diabetes in Lebanon is 12.2 percent of adults between 20 and 79 years old, Zomato celebrated its one year GAIA-Heritage sal launched a translating into 464,200 individuals in anniversary in one of the largest two-week-long exhibition titled “Weaving this age bracket, and up to 41.2 percent bar lounges in Beirut, Indie, which the Sea”, at Villa Audi (Ashrafieh), of them remain undiagnosed. also happened to be celebrating its under the patronage of Minister of anniversary. Culture Raymond Araygi, as part of Horologist Officine Paneraihas the EU-funded MEDNETA Project, to released a new model for its Radiomir Land Rover ambassador and reinforce creativity and the regeneration of 1940 collection: the Radiomir 1940 3 polar explorer, Ben Saunders, swapped Mediterranean neighborhoods. Days Automatic, which features a white his snowshoes for winter tires to put the dial. Panerai has also published a new Range Rover Sport SVR through its Owned by Siam Motors Group, book entitled Orologeria Svizzera paces at a unique yet familiar test track Mövenpick Siam Hotel Pattaya is delineating the history, technique and near the Arctic Circle. poised to usher in a new era of upscale design of its watches. hospitality experiences on the pristine Ford is investing an additional $4.5 Na Jomtien Beach with elite beachfront In the framework of its search for a billion in electrified vehicle solutions accommodation, gourmet cuisine and development project of greenhouse gases by 2020 as well as changing how the superb destination experiences such as and carbon management policy which company develops vehicle experiences for yachting and island exploration. was launched in 2013, Boecker®, the customers. leading provider of a holistic range of Nahla Khaddage Bou Diab, chief public health services in the region, invited According to a recent ‘The Role of operating officer atAl-Mawarid Bank its staff to attend an evaluation session of HR in the Middle East and North Africa sal, was named among the Leading the project and announce annual results. Workplace’ poll conducted by Bayt.com, Arab Women influencers in Economy human resources practices in MENA are and Banking Industry in 2015. Under the auspices of the Minister flourishing with 73.4 percent of polled of Telecommunications Boutros professionals saying that there is a strong Land Rover has unveiled the world’s Harb, and as part of its “Alfa-4-Life” alignment between their company’s overall first luxury compact SUV convertible. The CSR program to empower women, Alfa business vision and that of their HR Range Rover Evoque Convertible organized an exhibition of artwork, department. combines the bold design and refinement decorative crafts and embroidery made of Evoque with comprehensive by the women and mothers of the SOS Cadbury Adams Middle specification and a sophisticated folding Children’s Villages Association. East sal, a subsidiary of Mondelez roof to create a no compromise, all- International, kicked off its winter season convertible. The Swiss watchmaking company holiday celebrations with Côte D’Or Longines reissued a model inspired by chocolates, creating memories that UAE-based Air Arabia has won military requirements. For the Longines families and friends cherish the most. the prestigious World Travel Market Heritage Military COSD, the brand adopted 2015 “World Travel Leaders Award” in the sober and characteristic design of a The Wild Discovery travel network, recognition of its leadership of the low- watch created for British paratroopers in affiliated toJohnny R. Saadé Holdings, cost aviation sector in the Middle East. the 1940s. celebrated the country of Jordan in The award was presented to Air Arabia December 2015 in collaboration with the during a ceremony in London. Obegi Chemicals announced the Jordan Tourism Board allowing every launch of innovative and revolutionary traveler to benefit from exceptional offers Nivea, the number one face WETSUIT® system across the Middle and last minute deals. cleansing brand, introduces the Nivea East during an event that gathered Face Care Double Effect Eye Make-Up architects, consultants, contractors and Owners of LG Electronics’ G4 Remover that eliminates even the most high profile potential clients. smartphone were the first in the world to resilient waterproof mascara with a gentle receive the Android 6.0 Marshmallow OS. swipe while protecting the eye-area. Elie Saab and Four Seasons Hotel LG G4 owners in Poland began receiving

58 JANUARY 2016 | www.executive-magazine.com At the company’s headquarters, The House of Aziz & Walid party sustainability certification provider. Alfa CEO and Chairman Marwan Mouzannar hosted an all-day event to MINI fans across the Middle East Hayek received Al Riyadi Club showcase the 2016 Collection among can now design the car of their dreams President Hisham Jaroudi and the the brand’s loyal clients. The event also as the car manufacturer has launched the club’s women’s basketball team. marked the launch of the exclusive Hayet MINI Configurator on their regional Jaroudi presented to Hayek the “17th Albi Collection whose proceeds benefited website. Arab Clubs Championship for Women” the Brave Heart Fund in Lebanon. and the “International Hisham Jaroudi Bassoul-Heneine sal, the official Championship” trophies as a token of Chedid Re, a multi-awarded importer for BMW Group in Lebanon, appreciation for sponsoring the team leading regional reinsurance broker, has reported a 50 percent year-on-year during these championships. announced the opening of a new office increase in sales for the first 10 months in Casablanca Finance City, as part of 2015, driven by the BMW 4 Series and Rizkgroup, which includes of an expansion strategy enhancing the the BMW X model family. advertising agencies, a PR firm, a media company’s presence in North and West buying unit as well as offices in five Africa. To help festive shoppers narrow countries, celebrates its 50th anniversary down what to choose, British Airways at Babel Dbayeh. In response to the current garbage recently conducted a survey of Lebanese crisis, Almaza, in collaboration with residents to find out their ideal gift from International communications group Green Glass Recycling Initiative the airport. Of those asked, 49 percent of Publicis Worldwide has announced Lebanon, decided to tackle the problem women preferred perfume and just over a partnership with the fast casual diner by collecting used green Almaza bottles one in three men (34 percent) listed an Zaatar W Zeit after a successful pitch and sending them to Khalife Brothers electronic gift. involving another international agency. in Sarafand, one of the last glassblowers Since 1999, Zaatar W Zeit has established in Lebanon, to be crushed and recycled Bassoul Heneine sal announced itself as an eatery that promotes a sense into re-usable beer glasses. its partnership with Jouzour Loubnan of togetherness with a dedicated fan base at the start of 2016 with the aim of that allowed them to spread over five Classic Burger Joint signed its first contributing to the reforestation of countries in the Middle East. Lebanon single unit franchise agreement Lebanon. The Lebanese company has with Food Pack sarl and a location committed to planting a tree for every car Alfa, managed by Orascom Telecom, is already under construction in Zouk. or motorbike sold from the BMW, MINI, celebrated the festive season with a choir Classic Burger Joint is embarking on a Renault, Dacia, Rolls Royce, and BMW of 80 children from the SOS Children’s global strategic expansion plan and has Motorrad ranges. Villages Lebanon, in a program that recently set an aggressive goal of growing has been running for nine consecutive to 100 stores by 2020. Credit Libanais reaffirms its years. commitment to the service of the Lebanese Bassoul-Heneine sal, the official and region’s economies with its new BMW Group importer in Lebanon, 32-story headquarters in Beirut. has announced the arrival of the 6th generation BMW 7 Series, the latest The all-new Ford Figo has an edition of the sophisticated sedan that interior usually associated with higher trim comes with a number of new technologies specification models and central to that is and design features. It also welcomed the MyFord Dock, a dashboard casing that new BMW X1 to its showrooms during allows users to safely store, mount and Q4 of 2015. charge their smartphones in the car.

Samsung Electronics Co., To celebrate the release of the Oyster Ltd. announced that its five newest Perpetual Day-Date 40, Chronora business monitors – the SE200, Rolex Boutique in downtown Beirut SE450, SE650, UE850 and hosted its first international Rolex UD970 models – have earned New exhibition paying tribute to the “presidents’ Generation TCO Certified status fromTCO watch”. Development, an international third-

www.executive-magazine.com | JANUARY 2016 59 BUSINESS ESSENTIALS > Events CONFERENCES DATE NAME ORGANIZERS CONTACT / E-MAIL WEBSITE LEBANON 8-9 Mar Risk Based Approach for Money on Value Union of Arab Banks +961 1 377800; [email protected] www.uabonline.org Transfer Services 7-8 Apr MENA Games Conference IFP +961 5 959 111 ; [email protected] www.ifpexpo.com 13 Apr The New Arab Woman Forum Al Iktissad Wal Aamal Group +961 1 780 200; [email protected] www.iktissadevents.com

DUBAI 19-20 Jan Sixth Annual Middle East and Africa Fleming Gulf +971 4 609 1555; [email protected] www.fleminggulf.com Insurance Summit 24-27 Jan Drones for Government, Energy and Utilities IQPC +971 4 364 2975; [email protected] www.iqpc.com 25-28 Jan Eleventh Annual Healthcare Insurance Forum Informa Middle East +971 4 336 5161; [email protected] www.informa-mea.com 27-28 Jan GCC Corporate Business Intelligence Summit Datamatix Group +971 4 332 6688; [email protected] www.datamatixgroup.com 2-3 Feb Fifteenth GCC Smart Government and City Datamatix Group +971 4 332 6688; [email protected] www.datamatixgroup.com Customer Care Excellence Conference 16-18 Feb Fifth GCC Construction and Infrastructure Summit Datamatix Group +971 4 332 6688; [email protected] www.datamatixgroup.com 23 Feb Destination Dubai 2020 Meed Events +971 4818 0200; [email protected] www.meed.com 1-3 Mar Third Annual Iran Oil, Gas and Energy Week +44 20 7111 1615; www.irn-international.com [email protected] 7-8 Mar GCC Universities Summit Datamatix Group +971 4 332 6688; [email protected] www.datamatixgroup.com 7-9 Mar Nineteenth Global Women Leaders Conference Datamatix Group +971 4 332 6688; [email protected] www.datamatixgroup.com 9-10 Mar Outreach 2016 - The Digital marketing Summit Fleming Gulf +971 4 609 1555; [email protected] www.fleminggulf.com 14-15 Mar Second Annual Outdoor Lighting Projects UAE Advanced Conferences +971 4 361 4001; www.acm-events.com and Meetings [email protected] 16-Mar GCC Corporates Legal Strategy Summit Datamatix Group +971 4 332 6688; [email protected] www.datamatixgroup.com 22-Mar GCC International Water Day Summit Datamatix Group +971 4 332 6688; [email protected] www.datamatixgroup.com 21-22 Mar The Middle East and North Africa Project Euromoney Conferences +44 20779 8452; www.euromoneyconferences.com Finance Forum [email protected] 28-29 Mar Hotel 360 - The Hotel Business Conference IQPC +971 4 364 2975; [email protected] www.iqpc.com 6-7 Apr Sixth GCC Government Future Leaders Conference Datamatix Group +971 4 332 6688; [email protected] www.datamatixgroup.com 10-13 Apr Fifth Annual Customer Experience IQPC +971 4 364 2975; [email protected] www.iqpc.com Management in Telecoms Middle East 17-19 Apr The FAHR International Conference Informa Middle East +971 4 336 5161; [email protected] www.informa-mea.com 20-21 Apr Islamic Banking Forum Union of Arab Banks +961 1 377800; [email protected] www.uabonline.org 23-24 Apr The Arab Region Internal Security Conclave Fleming Gulf +971 4 609 1555; [email protected] www.fleminggulf.com

ABU DHABI 18-21 Jan World Future Energy Summit Reed Expo +971 4 3642813; [email protected] www.reedexpo.com 8-9 Feb Future Landscape and Public Realm Abu Dhabi Advanced Conferences +971 4 361 4001; www.acm-events.com and Meetings [email protected] 6-9 Mar Asset Integrity Management in Abu Dhabi IQPC +971 4 364 2975; [email protected] www.iqpc.com 15-17 Mar Emergency Response and Disaster Prevention Reed Expo +971 4 3642813; [email protected] www.reedexpo.com 21-22 Mar Data and Information Management Utilities IQPC +971 4 364 2975; [email protected] www.iqpc.com 21-22 Mar ITS & Road Safety Forum IQPC +971 4 364 2975; [email protected] www.iqpc.com

QATAR 25-27 Jan MENA Rail Operational Readiness Summit IQPC +971 4 364 2975; [email protected] www.iqpc.com 21-23 Feb Eighth Annual Façade Design and Engineering IQPC +971 4 364 2975; [email protected] www.iqpc.com Middle East Summit 15-16 Mar Qatar Projects Meed Events +971 4818 0200; [email protected] www.meed.com 16-17 Mar The Gulf Banking Forum Union of Arab Banks +961 1 377800; [email protected] www.uabonline.org 18-19 Apr Smart Parking Qatar Advanced Conferences +971 4 361 4001; www.acm-events.com and Meetings [email protected]

KSA 22-23 Feb Cyber Defense Summit Naseba +971 4 367 1376; [email protected] www.naseba.com 20-21 Mar Hotel Technology Summit Naseba +971 4 367 1376; [email protected] www.naseba.com 11-12 Apr Academia Arabia Fleming Gulf +971 4 609 1555; [email protected] www.fleminggulf.com

60 JANUARY 2016 | www.executive-magazine.com DATE NAME ORGANIZERS CONTACT / E-MAIL WEBSITE OMAN 24-27 Jan Second Annual Oman Contractors Forum IQPC +971 4 364 2975; [email protected] www.iqpc.com 6-9 Mar Eleventh Annual Asset Integrity IQPC +971 4 364 2975; [email protected] www.iqpc.com Management Summit 21-23 Mar International Oil and Gas Exhibition Oman Expo +968 2466 0124; [email protected] www.omanexpo.com and Conference 23-24 Mar Oman Economic Forum Al Iktissad Wal Aamal Group +961 1 780 200; [email protected] www.iktissadevents.com 28-31 Mar The Big Show Oman Expo +968 2466 0124; [email protected] www.omanexpo.com

EGYPT 24-26 Jan Global Oil and Gas BME Global +44 207 511 9582; [email protected] www.bme-global.com 28-30 Jan Financing and Investment for Enhancing Union of Arab Banks +961 1 377800; [email protected] www.uabonline.org Stability Forum 14-17 Mar HR Leaders Egypt Informa Middle East +971 4 336 5161; [email protected] www.informa-mea.com 28-29 Mar Power Generation Projects Egypt Advanced Conferences +971 4 361 4001; www.acm-events.com and Meetings [email protected]

JORDAN 25-26 Jan Solar and Wind Projects Jordan Advanced Conferences +971 4 361 4001; www.acm-events.com and Meetings [email protected] 10-11 Feb Mechanisms for Drying up the Sources of Union of Arab Banks +961 1 377800; [email protected] www.uabonline.org Financing Terrorism Forum

KUWAIT 7-10 Feb Maintenance Kuwait Summit IQPC +971 4 364 2975; [email protected] www.iqpc.com 16-17 Feb Process Safety Fleming Gulf +971 4 609 1555; [email protected] www.fleminggulf.com 30-31 Mar The Arab Banking Conference for 2016: Union of Arab Banks +961 1 377800; [email protected] www.uabonline.org Arab Banking Integration

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www.executive-magazine.com | JANUARY 2016 61 BUSINESS ESSENTIALS > Events EXHIBITIONS DATE NAME ORGANIZERS CONTACT / E-MAIL WEBSITE LEBANON 1-3 Mar ARABNET International Business +961 1 751 180; [email protected] www.arabnet.com 5-8 Apr HORECA Hospitality Services +961 1 480081; www.hospitalityservices.com.lb [email protected] 29 Ap - 1 May 5th annual conference on Digital Information Lebanese University +1 732 562 3878; [email protected] www.sdiwc.net/conferences/ and Communication Technology and its applications DUBAI 10-12 Jan Sign and Graphic Imaging Middle East International Expo Consults +971 4 343 7744; [email protected] www.iecdubai.com 17-19 Jan Intersec Epoc Messe Frankfurt +971 4 338 0102; www.epocmessefrankfurt.com [email protected] 19-20 Jan Sixth Annual Middle East and Africa Fleming Gulf +971 4 390 2764; www.fleminggulf.com Insurance Summit [email protected] 9-11 Feb Access Abilities Expo Reed Expo +971 4 3642813; [email protected] www.reedexpo.com 15-16 Feb Marine Data infrastructure GCC Advanced Conferences +971 4 361 4001; www.acm-events.com and Meetings [email protected] 1-3 Mar PaperWorld Middle East EPOC Messe Frankfurt +971 4 389 4500; www.epocmessefrankfurt.com [email protected] 8-9 Mar Middle East Rail 2016 Terrapinn Middle East +971 14440 2500; [email protected] www.terrapinn.com 14-15 Mar Outdoor Lighting Projects UAE Advanced Conferences +971 4 361 4001; www.acm-events.com and Meetings [email protected] 13-15 Apr Gulf education and Training Exhibition International Conferences +971 4 3355001; [email protected] www.icedxb.com and Exhibitions

ABU DHABI 18-21 Jan World Future Energy Summit Reed Exhibitions +971 4 3642813; [email protected] www.reedexpo.com 8-9 Feb Future Landscape and Public Realm Abu Dhabi Advanced Conferences +971 4 361 4001; www.acm-events.com and Meetings [email protected] 10-11 Feb Future Drainage and Stormwater Networks UAE Advanced Conferences +971 4 361 4001; www.acm-events.com and Meetings [email protected] 1-3 Feb Tawdheef Informa Middle East +971 4 336 5161; [email protected] www.informa-mea.com 15-17 Mar Emergency Response and Disaster Prevention Reed Exhibitions +971 4 3642813; [email protected] www.reedexpo.com 12-14 Apr Cityscape Abu Dhabi Informa Middle East +971 4 336 5161; [email protected] www.informa-mea.com

KSA 18-21 Jan Saudi Plastics and Petrochem IFP +961 5 959 111 ; [email protected] www.ifpexpo.com 26-28 Jan AutoMechanica ACE Exhibitions +966 12654 6384; [email protected] www.aceexpos.com 9-12 Feb PROPAC Arabia ACE Exhibitions +966 12654 6384; [email protected] www.aceexpos.com 22-24 Feb Petro Environment ITE Group +44 (0) 203 328 9589; bme-global.com [email protected] 27 Feb - 1 Mar Machinex ACE Exhibitions +966 12654 6384; [email protected] www.aceexpos.com 11-14 Apr Saudi Building and Interiors Exhibition ACE Expos +966 12 654 6384; [email protected] www.acexpos.com 14-15 Apr WEPower ITE Group +44 (0) 203 328 9589; bme-global.com [email protected]

BAHRAIN 9-11 Feb Gulf Industry Fair Hilal Conferences and Exhibitions +973 17 299123; [email protected] www.hilalce.com 26-28 Apr GulfBID Hilal Conferences and Exhibitions +973 17 299123; [email protected] www.hilalce.com

EGYPT 14-17 Jan Plastex 2016 ACG - ITF +202 27538401; [email protected] www.acg-itf.com 27-29 Jan Global Oil and Gas ITE Group +44 (0) 203 328 9589; bme-global.com [email protected] 11-14 Feb Project Egypt IFP +961 5 959 111 ; [email protected] www.ifpexpo.com

QATAR 9-11 Apr Edutec Qatar IFP +961 5 959 111 ; [email protected] www.ifpexpo.com 26-28 Apr Cityscape Qatar Informa Middle East +971 4 336 5161; [email protected] www.informa-mea.com

KUWAIT 18-20 Jan HORECA Kuwait Hospitality Services +961 1 480081 ; www.hospitalityservices.com.lb [email protected]

OMAN 8-10 Feb Oman Packaging and Material Handling Exhibition Oman International Trade +968 9934 1687; [email protected] www.oite.com & Exhibitions OITE 21-23 Mar Oil and Gas West Asia Oman Expo +968 2466 0124; [email protected] www.omanexpo.com 28-31 Mar The BIG Show Oman Oman Expo +968 2466 0124; [email protected] www.omanexpo.com 12-16 Apr COMEX +968 9934 1687; [email protected] www.comex.com 19-21 Apr Global Higher Education Exhibition Oman International Trade +968 9934 1687; [email protected] www.ghedex.com & Exhibitions OITE JORDAN 22-26 Jan Solar and Wind Projects Jordan IFP +961 5 959 111 ; [email protected] www.ifpexpo.com

TURKEY 24-26 Mar Cityscape Informa Middle East +971 4 336 5161; [email protected] www.informa-mea.com

62 JANUARY 2016 | www.executive-magazine.com AD_A4:Layout 1 6/13/11 12:30 PM Page 1 . L . A . S T P E C N O C L A T I P A C STRATEGY - FINANCE - GOVERNANCE

Registery of Commerce of Beirut 1004399 | Capital 30 000 000 LL. Fully Paid Al Bourj Building, Martyrs’ Square, Beirut Central District, Lebanon Tel. + 961 1 991 911 | Fax. + 961 1 997 050 | E-mail. [email protected] | JANUARY 2016 63 LAST WORD > Comment by Jessica Saade

> Consumer spending every six months beginning in 2012. A problem of domestication At time of writing, the most recent Projected increase in consumer spending is ambiguous message for 2016 data covered H1 2015. The surveys cover six categories of consumer goods (clothing, food & beverages, ebanese consumers, living upward trend might be alarming in cosmetics, household goods, luxury in an oil-importing country, countries where it occurs simultaneously items and sports & hobbies) as well L are expected to benefit in with domestic economic problems. as four categories of retail services the coming months from some This combination of upward (hospitality, tourism, medical services benevolent factors in their financial consumer spending and domestic and education).Compared to the first environment, but retailers should economic troubles is the scenario that half of 2013, the sale of goods across not celebrate too soon as the past few most likely applies to Lebanon, as all categories was up 2.8 percent; years suggest stronger purchasing expressed in remarks by central bank however, growth was driven by the power does not translate into Governor Riad Salameh who, according food & beverages (+17.6 percent). significant spending boosts across to media reports, told participants in an Clothing and household goods were retail segments. In its November investor summit on December 22 that the big losers in the two-year period, 2015 reading, the Consumer Price gross domestic product increased at best with sales dropping 12.4 percent and Index (CPI) stood at 96.6 points, by 2.5 percent in 2014 and is estimated to 10.4 percent, respectively. In the same representing a monthly drop of 0.25 see zero percent growth in 2015. time period, retail services also saw percent according to the Central growth of 16.8 percent, largely on the Administration for Statistics (CAS). MORE TO SPEND back of the 37.7 percent sales jump Index charts by the Consultation Available evidence suggests in the tourism category. While these and Research Institute showed Lebanese consumers should have more figures do not suggest a nation with CPI inflation to be practically zero disposable income, but retailers are much excess cash to burn, they do when comparing November 2015 to largely not reporting benefits from this reflect a dichotomy between higher November 2014 and the 12-month extra spending power. Lower global spending and economic productivity. moving average was in negative oil prices have had a direct impact on An extended analysis of the past 30 territory at -0.5 percent, down from what drivers in this car-loving country months highlights domestic economic 0.6 percent inflation a year earlier. pay at the pump. Assuming 1,600L of problems, whereby the retail industry Additionally, projections issued gasoline is needed for 20,000km, which seems unable to achieve a positive rate by international online data platform is the average yearly distance traveled of growth beyond seasonal surges. Trading Economics at the end of per citizen, $15 per 20L at December Looking forward to 2016, there December 2015 expect the CPI to 2015 compared to $17 at December may be a ray of hope in the most hover around 97 points in the first 2014 means an important yearly saving recent Byblos Bank/American three quarters of 2016. At the same of around $3,200 per citizen. More University of Beirut (AUB) Consumer time, Trading Economics’ charts considerably, compared to the $22 per Confidence Index (CCI), which covers for consumer spending in Lebanon 20L at December 2013, the two-year the first half of 2015. In conjunction project gradual increases in the first saving is estimated at $10,000. Oil with the CCI, Byblos and AUB three quarters of 2016. The stage setter prices also likely contributed to the ask consumers about both their for the CPI in 2015 and for estimates deflationary environment Lebanon has assessment of the current situation on CPI and consumer spending been witnessing recently. CPI figures in the country and their expectations going forward is the oversupply of oil released by the CAS show that the leading for the future. For the first time in coupled with its worldwide decrease in contributors to a 3.9 percent year-on-year years, consumers were consistently demand, partly due to the weakening decline in November 2015 were drops in positive about the future. “The Byblos of many international currencies the categories of: water, electricity, gas and Bank/AUB Expectations Index against the US dollar, which has other fuels (-18 percent), transportation posted higher values than the Present been translated into lower oil prices. (-10.7 percent) and health (-6.8 percent). Situation Index in each of the first six This suggests that a global increase Data on consumer spending, months of 2015, constituting the first in disposable income would follow, however, show two years of decline for instance since the first seven months hence strengthening consumers’ most retail segments. The Lebanese of 2011 where consumers have a more purchasing power and boosting their Franchise Association provided positive view about the future.” spending levels. However, while Executive with a booklet showing the generally perceived as positive, this results of retailer surveys conducted JESSICA SAADE

64 JANUARY 2016 | www.executive-magazine.com

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