Ports in a storm
A combination of relaxed trade regulations, high transit demand and soaring local consumption has helped Syria’s two ports achieve record levels of cargo traffic and position themselves as potential transshipment hubs for the eastern Mediterranean.
Lattakia and Tartous provide an increasingly vital outlet for the Syrian economy. The former has doubled its productivity and more than tripled its income over the last five years, while Tartous has grown by 115% since 2003, thanks mainly to dry bulk goods being shipped onwards through Syria to Iraq.
“Syria provides the cheapest and quickest route to the Iraqi market,” says Michel Sawaya, assistant manager at Eagle Shipping and Logistics, the Syrian agent for the French CMA-CGM container giant.
“If you go via a Turkish port, then you have to deal with mountains. If you ship through Jordan, then you have to pay Suez Canal costs and also deal with Aqaba, which is very congested. Shipping direct to the Gulf takes at least another 20 days, and even then the port of Umm Qasr in Iraq is also extremely congested.”
Lattakia mainly sees container traffic, destined for a local market with booming demand, while Tartous, some 100 km closer to the Damascene and Iraqi markets, depends on bulk goods such as cement, foodstuffs, animal feed, spare parts and iron. The majority of this is shipped on to Iraq or Jordan.
Major developments are now planned at both ports, aiming to increase capacity, upgrade existing equipment, and deepen berths to allow larger mother vessels to dock.
“We are currently working with the UNDP on a study to enlarge and upgrade the port,” says Suleiman Balouch, general manager of the Lattakia Port General Company (LPGC). “It should be complete by 2007, and then we expect construction to take another 2-3 years.”
In Tartous, a decision is soon expected on a BOT tender for a new container terminal. Of the four companies that bid for the 10-year contract, CMA-CGM and a Filipino firm, International Container Terminal Services (ICTS), have been shortlisted.
The Port of Beirut has also grown thanks to onward shipments, although to a lesser extent than its Syrian counterparts. Transit goods landing in Lebanon must pass through Syria anyway – meaning two sets of paperwork, lengthy security checks at the border and a mountainous drive.
The Syrian port companies also say that their fees are 25% less than in Beirut, a factor which they argue will drive more and more traffic through Lattakia and Tartous in the coming years.
All change at Cave Kouroum
All change at Cave Kouroum
Cave Koroum, a Kefraya winery that has so far failed to make a significant impact on the local market, has signed a distribution deal with K&M (Khoury & Moallem) which will see its wines join the ranks of other Lebanese producers on the supermarkets shelves. “We are in Spinneys, Bou Khalil, and Aoun, and will soon be in Geant,” said Cave Koroum’s sales manager Ibrahim Serhal.
Sadly, those visiting and departing Lebanon this summer will not find Cave Kouroum on the shelves of the Beirut Duty Free, as the winery has joined a handful of other producers who find the rates charged by PAC, the company that runs Beirut Duty Free, prohibitive. “To be at the airport, we must pay $25,000 a year for wine and $16,000 for arak. We would have had to spend even more on tastings, which can cost as much as $1,500 per week. I decided to allocate the funds elsewhere,” said Serhal.
There were rumors in the Lebanese community that Kouroum’s colorful wine maker Yves Morard had ended his long relationship with the town of Kefraya (he had previously worked at Chateau Kefraya since the early 1980s), but Serhal was at pains to point out that, while he spends most of his time in France, he is still under contract and was working closely with the wine-making team on the ground.
The company is the only Lebanese producer to sell its wines in boxes – the so-called bag in a box concept – but Serhal admitted that in Lebanon, at least, the concept had few takers. “You know the Lebanese consumers. They see it as low quality.” That said, Koroum aims to position its wines in the top drawer. The wines have won a slew of medals in the last six months and Serhal says the winery has great hopes for its new premium reds – Syrah/Cabernet Sauvignon and Syrah/Carignan. Koroum is also looking to increase exports. The wines are already available in Norway, Germany, Switzerland, Belgium and Mexico. According to Serhal, at least half of the winery’s 450,000 bottles are destined for the export market.
Business excellence
Business excellence
The American University of Beirut’s Olayan School of Business, in cooperation with the Reuters Foundation, a nonprofit associated with the Reuters news agency, has announced the launch of an Academy of Business Information. According to George Najjar, Dean of the business school, “the proposed academy is to be part and parcel of the Olayan School. As such, its activities go beyond business journalism to focus on the process of generating, analyzing and using business information.”
Activities of the academy for the next year include a pair of two-day workshops in November and December and a proposed international conference in January on business information in the Middle East. But the main event will be a formal, one-semester program conferring a certificate in Business Information. The first classes toward the certificate will be held in February, 2007.
Coursework for the certificate will consist of five one-week modules, each of which can be taken independently, and which will be taught every other month. Although the syllabus is still in development, each course is likely to consist of a short, intensive session of four 8-hour days, with classes capped at 12-15 people. According to Najjar, “a participant may opt to register for only one module, but then they would obviously not get a certificate.”
The coursework will be based on a syllabus being developed by the Reuters Foundation in cooperation with AUB faculty. According to Jo Weir of the Reuters Foundation, the academy will mark the first time the foundation has participated in a formal program granting a certificate in business reporting. On the other hand, the foundation has been training journalists and businessmen around the globe in business information for years, and has cooperated with AUB since donating a news room to the school in 2001. The news room, along with a dealer’s room (donated later), will form an important base for the practical elements of the new academy.
Although the coursework will be in English, Weir expects that many beneficiaries of the program will work mainly in non-English media, based on the Reuters Foundation’s experience both in the region and around the globe. “The basic principles of journalism remain the same and can be transferred to work in other languages,” she says, “And this is especially true of business reporting.”
Najjar emphasizes that the program will not be intended only for journalists, but will be “intended to serve as a major platform for all three constituencies, namely producers, analysts and users of business information including business journalism. The program is intended to significantly upgrade the quality of business information services available locally and regionally.”
Web alliances
Web alliances
Last month, Franco-Lebanese web marketing firm Ebizproduction finalized a partnership with Weborama, a French industry leader in e-commerce services. Through the agreement, Ebizproduction can now offer its clients access to Weboscope, Weborama’s premier website analysis tool. The partnership is Weborama’s first foray into the Middle Eastern market, and coincides with the company’s euro 20 million worldwide expansion plan.
According to Communications and PR Manager Yann Rotil, Ebizproduction sought out the agreement: “We were looking for the solutions that they were providing,” he explained to Executive. “There was another group we could have partnered with in the United States, but as a French-Lebanese company ourselves, it was easier to use Weborama.”
Weboscope, the service at the center of the agreement, provides detailed website traffic analyses and Return on Investment (ROI) data for online advertising campaigns. By providing precise turnover figures for each investment (such as a banner ad or Google “sponsored link”), Weboscope enables clients to monitor – and potentially increase – the effectiveness of e-marketing strategies. Although Ebizproduction and its competitors have been offering more basic site analyses for years, Weboscope provides a far wider range of data than any other service on the domestic market and is the only tool to analyze ROI and effectiveness statistics. Rotil reports that several of Ebizproduction’s high-profile Lebanese and regional clients have wasted no time signing up.
As for the Lebanese e-commerce sector itself, Rotil anticipates it will heat up in the next few years as web marketing companies provide their clients with better solutions (and returns). For Rotil, this means keeping up to speed with European technologies: in addition to the Weborama deal, Ebizproduction is currently in partnership talks with another top French firm.
Rotil sees tremendous potential for online business in the region – as long as red tape doesn’t get in the way. “In North America and Europe,” he explains, “E-commerce has been booming for the past five years. In Lebanon, the industry hasn’t taken off yet, primarily because of the quality of internet connections in the country. Once that problem is addressed, e-commerce will boom here, too.”
IDAL hits the road
IDAL hits the road
The Investment Development Authority of Lebanon (IDAL) was created to provide financial incentives and fiscal exemptions to lure investors to Lebanon. According to Nabil Itani, IDAL chairman and general manager, $800 million has been invested and 3,000 jobs created thanks in part to the Authority, which was formed by Investment Law 360 in 2003. He told this to reporters gathered for lunch at an almost empty Habtoorland following a June press tour of some of the projects that have profited from the new law.
But while the owners of projects visited by journalists during the IDAL press tour were unanimous in praising the fiscal incentives offered, they were less flattering in their assessment of the administrative procedures they have had to negotiate. (In addition to providing financial incentives, IDAL is supposed to be streamlining Lebanon’s laborious investment bureaucracy.)
Pierre Abou Jaber is CEO of VEN Invest Holding, a development group that comprises a number of foreign shareholders and has invested $350 million in Lebanon, $90 million of which is in the Le Gray Hotel project in downtown Beirut. According to him, “We would have expected a little bit more on the administrative and legal side … It took us a couple of years to get the necessary permits. The administrative side needs to be completely restructured. What we lack is transparency. The procedure is not accurate. You have to deal with the municipality. And it depends on the political mood. They’re stuck a little in the past, Ottoman procedures.”
Issam Tannir, part owner of the Grand Hyatt hotel being built in the Solidere area, said, “We have had many administrative problems. It is within IDAL’s remit to help with these problems, but they have not been fully involved in the matter.”
Dr. Nizar Younes, part-owner of the $70 million Hilton hotel under construction in Downtown Beirut, was fuming when the IDAL press group showed up. He had been ordered to stop work the preceding day because, according to an IDAL staffer, changes had been made to the building plan without the permission of the municipality. “There is no state,” Younes complained. “It takes too long to deal with administrative problems. Our administration can’t oversee development of the country.” IDAL staffers wrapped up the interview quickly.
“Maybe work will stop for two months now,” an IDAL employee said. But by lunchtime, the problem had been resolved. IDAL Director Nabil Itani told Executive he had “made some calls,” but with a broad smile declined to reveal exactly who he had called.
One IDAL official said the organization’s inability to streamline administrative procedures was a consequence of the political disputes that have paralyzed Lebanon in recent months. Itani acknowledged the need for administrative “improvements,” but when asked if politics was hindering IDAL’s work responded only, “The issue is not about supporting IDAL, it’s about supporting investors. All politicians support investment.”
Lebanon’s tourism sector has been a principal beneficiary of Investment Law 360. Itani said that 50% of the projects – worth 96% of total IDAL-supported investment expenditure – enjoying financial incentives under the new law were hospitality- and tourism-related.
Football financials
Football financials
As football fever grips the nation, some enterprising financial services firms have cashed in on the flurry of spending generated by the World Cup.
Al-Mawarid Bank (AMB) erected its own stadium tent downtown – with access reserved for customers who were generous with the bank’s MasterCard during the build-up to the tournament.
AMB devised three levels of spending under a special promotion which ran between April 20 and May 20. Customers forking out $100-250 on retail transactions during this period won a seat to watch all first and second round matches on the stadium’s projectors and plasma screens.
Spending $250-500 allowed two people to watch all games except the semi-final and final; access to the semi-final and final is restricted to those who made at least $500 of retail purchases.
“We definitely noticed higher spending on our credit cards during the promotion,” says Rana Karaki, Sales Manager at AMB. “Overall, we’ve given out 2,000 passes to the stadium, which holds about 150-200 people. The first few games were relatively quiet, but since then there’ve been about 150 people every night. We expect the final to be full.”
Société Nationale des Assurances (SNA) has also capitalized on the tournament, launching an online football game featured on their website.
“You log on, register and play as many times as you want,” says Rita Bakhos, from SNA’s corporate communications department. “Your score is recorded on the system and on July 9, at the end of the World Cup, we will award prizes to the top scorers.”
Booty includes a Chevrolet Aero, Acer laptops, digital cameras and mobile phones, although the bad news for more grizzled World Cup veterans is that only 15 to 30-year-olds are allowed to enter.
“The idea of this campaign was to tell young people in particular about SNA, promote our new website, and raise awareness that SNA is a part of the Allianz group – which is associated with the football stadium in Frankfurt,” says Bakhos.
Rustic charm
Rustic charm
As boutique hotels move into the mainstream, a trend has emerged at the cutting edge of the Lebanese hospitality industry: ultra-exclusive, niche venues offering five-star quality – at five-star prices – in an intimate setting. The movement is led by restaurants like Ashrafieh’s Metropolitan Club, and in the hotel sector, Bikfaya’s Locana Corsini.
According to Cinzia Corsini Abi Farah, her family’s “guest villa” represents a new concept in Lebanon. It was inspired by the locande of her father’s native Italy – small, family-run country inns where guests could enjoy comfort, warmth and personal attention.
With only eight suites, Locanda Corsini is the smallest luxury outfit in Lebanon. Its appeal relies on attention to the unique tastes of each guest. From deciding which magazines to place in a suite to planning individual excursions, niche hotels can make even boutiques look impersonal. Locanda Corsini even boasts home-cooking: all the food at their rustic Italian restaurant is hand-prepared by Abi Farah’s mother.
Aside from a few initial press releases, the Corsinis have relied exclusively on word-of-mouth marketing, a strategy which has left them almost fully-booked all summer. Abi Farah estimates 60% of their guests are Lebanese, 30% European and North American, and 10% Arab. They are already seeing an increase in the number of people coming from abroad.
Hospitality insiders believe that niche operations offer a promising new direction for the Lebanese tourism sector. With an abundance of picturesque countryside and villages, Lebanon is uniquely equipped to develop these kinds of projects in the region.
Abi Farah isn’t worried about competition, although she knows its coming. Locanda Corsini will retain an edge, she says, because of the extra intimacy that comes from being entirely family-run.
Cut Cristal
Cut Cristal
In late May, MENA Cristal announced that the second edition of its advertising awards would be staged at the Faraya-Mzaar mountain resort from February 28 to March 2, 2007. The MENA Cristal awards, an offshoot of Europe’s prestigious Méribel Festival de la Publicité, were introduced in 2005 to recognize talent and creativity in the Middle East and North Africa’s advertising industry.
MENA Cristal is still in its infancy, but the festival’s association with prestigious Méribel leaves it poised to bypass many of the usual growing pains. Méribel’s sole offspring, the MENA event even gives out the same award – the internationally-recognized Cristal.
The 2007 festival will differ somewhat from its debut in Casablanca on February 24 of this year. The range and number of awards presented will be greater: in Casablanca, besides the “MENA Grand Cristal,” awards were given in two categories; in 2007, there will be six areas of competition.
The single-day event has also been transformed into a four-day festival, equal in length to Méribel. In addition to the awards themselves, the festival will include advertising and marketing forums integrating debates, conferences, workshops and roundtables. The final day is set aside for leisure and tourist activities in Faraya-Mzaar.
Organizers are keen to foster an atmosphere similar to their parent award festival, which is held each winter at the ski resort of Méribel in the French alps. “One of the main reasons we chose Lebanon for 2007 is that we wanted to create the same ambiance as Méribel,” explained Emilie Rohmer, the International Development officer for MENA Cristal. Although Rohmer declined to speculate as to whether the awards might settle permanently in Lebanon, she confirmed that the festival is likely to remain in Mzaar for 2008 if next winter’s experience is positive.
Groupe Méditerranée
merger
Groupe Méditerranée
merger
This summer, a second step is being taken in the reorganization program at Group Méditerranée. The program began by rebranding Banque de la Méditerranée as the snappier BankMed. Now, the Group is consolidating all three of its commercial banks: retail-focused Allied Bank was merged with BankMed in May; Saudi Lebanese Bank is set to follow suit within the month. Mr. Mohammad Hariri, chairman and general manager of Groupe Méditerranée, explained the merger as an effort to streamline the Group’s activities and expand its catalogue of products and services. It will also provide customers with access to a far larger, more convenient network of branches and ATMs. However, the primary aim of the banks’ unification is probably to diversify and increase BankMed’s deposit base, chiefly from Gulf investors.
There are also plans to diversify funding by tapping the international investor community. A Euro Deposit Program of $1 billion and the issuance of 12 series of deposit certificates reflect the Group’s desire to broaden investment and boost its image in the international finance community and capital markets. Furthermore, there are plans to dispose of part of the Group’s real-estate portfolio, bringing in around $100 million and further diversifying and optimizing funding.
