The new Minister of Industry, Vrej Sabounjian, has made his mark in Lebanese business as the president and owner of the food service and laundry manufacturing firm, Vresso. Having just gotten his seat warm at the ministry following his appointment, Executive met with him to discuss his vision for the sector.
E: Do you have any intention of pursuing a policy of tax exemption on income from exports?
I am pro that decision 100 percent with some little modifications. I think she [former Minister of Finance, Rayya Hassan] wanted to limit it for only five years. Industry doesn’t return its capital within five years, so I suggest somewhere between 50 and 100 percent tax credit on exports without a time limit.
E: How much continuity can we expect from this government with regards to previous policies in the industrial sector?
The minister who was here was doing a great job, taking into consideration the situation of the previous government. I am very optimistic that whatever plans we bring to the new government, with a very pro-business prime minister, we will find quick acceptance.
E: What does it mean when it is written in the ministerial statement that the government ‘will also create a committee to administer industrial centers and look for industrial zones’ and how will these zones be funded?
We are going to create a committee which is going to oversee a number of regional committees. The regional committees will make their own recommendations and then the main committee will adapt or make any modifications. If we have a good credible project in hand I’m sure there’s going to be a lot of help from the private sector.
E: Lebanese industry is very heavily concentrated around Mount Lebanon and Beirut. Do you have any policies to revive industry in the outlying areas?
That is the whole purpose. We can create a zone, for example, in the north and it will probably not be very active and we can do another zone in Mount Lebanon and it will probably be very active. It depends where the industrialists and the manufacturers are from and where they want to do their business.
E: But will the ministry try and encourage industrial activity in areas where industry has declined over the past years?
Well there must be a reason for a decline. All I can tell you is the ministry will be fair for all the areas.
E: Are there certain sectors that would benefit from giving small firms incentives to merge and consolidate?
Merging in my personal opinion is a matter of culture. Now that we are in a global economy and the Lebanese are known to adapt good ideas immediately I don’t see why they should not try to merge. I don’t think a company should merge with another company because of government incentives though.
E: A lot of the policies you are going to want to enact will require the support of other ministries. Will you get it?
For the first time in a long time this government is pro-industry. I think the policies previous governments adopted were not pro-industry. In this government there is a shift to giving industry its fair space to grow and have good policies for all the industries in Lebanon.
E: How much power do you have as a ministry to alleviate that burden of expensive and unreliable electricity and energy on industrialists?
You know unfortunately Lebanon is one of the countries in the Middle East that has no resources, until now, for energy. This is a big concern for all of us. I don’t think it’s just going to be a case of drawing a line and having a final solution but it is in the government’s intention to work on this issue and to try to come up with solutions. How long it is going to take, I don’t know.
E: In the interim period, could industrialists get subsidized fuel for their generators or a more preferential tariff on their energy from the government?
I don’t know if Lebanon can subsidize or give more preferential tariffs. As you know we are buying our energy. But the Ministry of Industry is working on a program to try to make the cost of energy less. This is a priority for us.
E: You have a comparatively small budget. Do you have the resources to enact the policies and reforms needed to develop the industrial sector?
We asked to have our budget increased 25 percent, and I am confident we are going to get it. For us to be successful we need to listen, be transparent and be honest about what we can realistically achieve.
E: What are your intentions with regards to World Trade Organization accession?
It is still in the cards.
E: What niches of Lebanese industry will be most competitive in the international arena as barriers to trade come down?
If we are talking about appliances I don’t think Lebanon is going to have lots of factories making TVs or cameras for example. But there are a lot of things which we are doing tastefully and at good prices. Clothes, food, jewelry, fashion, wine…
E: Is the agro-food sector too fragmented?
No. I’m not always a believer in a big firm and the big size. Why don’t we look at the profitability? We should be concentrating more on the profitability and the possibility of adapting and changing quickly. If you have a huge-sized company you cannot change as easily. So if you have a smaller size but a profitable business you can change and see what the market requirement is and make the necessary changes.
E: Is the ‘law for the protection of national production’ fit for the purpose and can you assure industrialists it will be applied to protect them from over-subsidized imports?
I don’t like protection in business. I like competition. Competition is good for the consumers, and it’s good also for the manufacturers. However, from the point of protection we should be aware of our size. If we have a contractual agreement with any other country we should take into consideration the size and capabilities of both parties.
E: Lebanon has a big problem with regards to infringement of intellectual property rights, which is particularly damaging to the knowledge-based industries. How do you intend to address this problem?
It is our priority to try and enforce the laws that exist. We all have to live under the law…
E: …but now they are not being properly enforced.
This is very important to us. I can assure you.
E: How adversely affected do you think Lebanon has been by the unrest and political uncertainty in Lebanon and the wider region?
In Lebanon I don’t see any situation that is not pro business. The laws are pro business and I think there are good opportunities here. I also encourage Lebanese businesses to see this as an opportunity to search for new markets if their markets in the Middle East have been affected. It presents new challenges and new opportunities.