Jacques Sarraf is something of a godfather in Lebanese industry. The former head of the Lebanese Association of Industrialists runs Malia Group, which has 1,608 staff across the region — around a third of them in Lebanon. Executive sat down with him to discuss how the sector is developing.
How would you assess the mood of Lebanese industrialists right now?
The problem is what is happening in our environment. Today we are suffering a lot from what is happening in Syria because Lebanon is connected to Syria and all our exports, whether to Iraq or the Gulf [go through Syria]. When Syria has a high risk with the transport this is the first big problem we are encountering.
But if we look at different sectors within the environment of Lebanon, industry is still on the safe side. I would say that despite all that is happening in our environment, still we are surviving.
What advice would you give to companies looking to stay afloat?
There are no tips on that, no magic formula. Frankly speaking each [company] knows how to survive in a critical situation. We are in pharmaceuticals, which can survive. We are in the water industry; the water industry isn’t suffering at all. But on the cosmetics we have to find more export markets, diversify our markets.
Do you have an estimate for the amount you lost in Syria?
All our investment in Syria was completely destroyed. It is in Qaboon — an area that is no man’s land between the two factions there. This year is better than last year because [when] the Syria problem began in 2011 it was very surprising for us. 2012 we got the big losses, in 2013 we are acquainted to it, we know how to survive. And at the same time Syrian industry is 80 percent destroyed and now you have 20 million to feed — they have to eat, they need everything.
Have you been able to increase exports to Syria?
[Last month] the [Syrian] minister of economy again put import licenses, [meaning] any product officially entering the Syrian market has to have a license. The licenses are only for the first priority [goods] — for pharmaceutical products it is easy to get an import license, food it is easier than others, but cosmetics are not a priority for them. [In the future] if we are doing something I would say we may do it illegally and non-transparent. Because it has to go there illegally, any product that doesn’t have an import license cannot enter Syria.
Right now your products are going in legally?
It used to be legally but now we have to find ways and means with our partner or distributor in Syria to get licensing to let the goods go inside.
The general perception is that the government has failed to support industrialists in recent years. Is that a fair representation?
In my mind, I tell my industrialist friends ‘forget about the government…’ It is not the case of whether [there is a government] or not, [industry] is not their priority. In 2005 we succeeded with Omar Karami’s government to get a 50 percent reduction on tax for exports. We are now in 2013 but still [it hasn’t been implemented]. Today we have three ministers [who have come] from the private sector, supporting us, helping us — they didn’t succeed. Why? Because the government doesn’t have the priority to support the industry and the economy as a whole. They are always happy to let the private sector do it themselves. When they need the money they go to the private sector to finance their budget. Now if we said “we are not going. We will not finance you until you solve our problem” — they would do it.
An increasing number of Lebanese industrialists are changing strategy to have their logistics hub in Lebanon but to start outsourcing industrial production and targeting other markets. What is your strategy?
This is what is happening for us. We use Lebanon as a hub, all the service company is in Lebanon — banking, financing, human talent, whatever it is — but investments are in the region. Iraq today is still the area where we feel we have big possibilities.
How would you assess the impact of the initial stimulus package organized by Central Bank governor Riad Salameh?
It was very positive. Salameh knows what he is doing and we assess it very positively.
