Economics and Policy
Lebanon will close any illegal Syrian businesses after a nationwide survey on these enterprises is completed, a senior official at the Economy Ministry said over the weekend.
Egypt is revising the prices it pays to buy gas from foreign energy companies operating in the country and plans to sign new contracts to “reassure” the firms
Qatar has donated $350 million to a fund to compensate civilians and security force members in south Yemen who were forced from their jobs.
Have you lately made any risqué appearances? Given speeches calling for peace with new or old enemies, offered daring toasts about the virtue of national unity, hugged your neighbor from a different sect, or made a proposal to strengthen the authority of the state, raise taxes or, unimaginably, have a new cabinet?
Luckily, one is not likely to get shot at for doing any of these things in Lebanon today. A company that sells bulletproof clothing in the Americas trumpets that this protective gear has become a must not only for “politicians in general” but also for war correspondents, traveling missionaries, university and school teachers (and students), business owners, convenience store clerks and taxi drivers.
One has to concur on high-profile politicians, business magnates and journalists in the field. When dispatching a team to Aleppo a year ago for an in-depth reportage and pictorial of the north Syrian city’s emerging devastation, Executive indeed had our team outfitted with ensembles of fetching green helmets and matching ballistic-steel vests.
But there was no sign of panic in Beirut this month that everybody ought to be wearing a bulletproof outfit due to excessive danger. When talking to university professors, industry captains, real estate tycoons, vendors of protective gear and owners of security agencies in the past weeks, the overriding impression was that no one had crossed the line into paranoia — the university professor had his driver as always, the captain of industry said he “didn’t change a thing” in his personal security, the real estate tycoon was relaxed in his office (but kept an eye on his wall-sized array of CCTV monitors), and the owner of a security agency asked in retort, “Don’t you feel safe in Lebanon?”
I had to concur that — with the exception of times of foreign invasion and recent threats of punitive but likely incendiary strikes — I have felt remarkable personal safety in Lebanon for over 15 years and still feel generally safe today.
However, there are pockets of doubt and concern — not least this week's bombing in Jnah — and I do not roam the country as freely and widely as I did five or 10 years ago. People say that there are a few areas they don’t visit anymore, or they share small stories about relatives made nervous by altercations that turn out to be nothing, and practically every taxi ride is garnished with exaggerated accounts of this vehicle that has been found with explosives or that guy who has been arrested for plotting the next terror attack.
But underneath the nervous perceptions and excited gossip is the reality that the country is more vulnerable today than in many years. A nuanced view of personal security suggests that it is time to review and possibly renew that armor of individual protection.
To support the task, here is a checklist of what the managers and operators of local security-related companies see as must-have basics and prudent options for a business executive who wants to maintain his or her personal safety at a very high level in these times, around the home, on the road, in public and at work.
Around the home
Closed Circuit Television (CCTV)
Information is the key to preventive security and often the decider in whether an attack or intrusion can be repelled. CCTV systems have advanced to the point that the more powerful ones can read the license plate of a suspicious car over hundreds of meters away; thus late-generation CCTV systems provide the first line of information-based defense against terrorist or criminal threats targeting your home. Prices are flexible, as a high-end dome camera retails for $4,000 and a good basic camera is about $500. Lebanese security experts told Executive that a well functioning home system with cabling can be purchased for around $5,000 but a discerning homeowner can easily spend $35,000 to $40,000 to envelop his villa with a top-notch system. The cool tech factor: You can monitor the live feed from your driveway on your smartphone. Social factor: You can show it to your friends.
Movable barrier / road blocker
This is a must-have if the threat level for your home is such that it includes suicide car bombers. A movable barrier prevents vehicles from smashing through your driveway gates and delivering explosive payloads up to or even into the building, where their effect is worst. Advanced level protection of this type comes at prices ranging from $10,000 to $70,000. Social factor: A heavy-duty barricade enforces the fortress look of a property and while possibly attracting attention from target seekers, it will also intimidate them.
Armored door
The external door is a crucial entry point to think of when protecting your home. An armored door will withstand most attempts at breaking it down. Wood look-alike or veneered entrance doors with reinforced core provide resistance to violent intrusions for a cost of $2,500 to $3,500. Social factor: The unobtrusive appearance means most armored specimens look as uninspired as any manufactured door.
Intrusion alarm
Sophisticated lock and key, and intrusion alarm systems are a baseline of property protection for any family of moderate wealth almost everywhere in the developed world and as vital as buying the homeowner’s insurance that often enough requires the installation of such security measures. Installation of a monitored system starts at a few hundred dollars but costs add up over time when one sensibly subscribes to a security agency that responds when the alarm is triggered. Intrusion alarms can be beaten in numerous ways by determined intruders and should not be selected as the only or main security measure by anyone at risk. Social factor: The ubiquity of intrusion alarms in crime-infested modern societies means the main protective effect of a burglar alarm siren on your building often lies in directing a criminal to an easier target nearby.
Shatterproof glass
Shatterproofing your windows is totally essential protection against the most common and farthest reaching impact of terrorist or accidental explosions in your neighborhood. A polyester film from a manufacturer such as 3M is affixed by a professional installer at a cost of about $15 per square meter (sqm) plus installation, making it one of the most affordable security features in the market. The safety film assures that the glass in your windows will not shatter when the blast wave from an explosion hits the building. Usefulness is not a question. Injuries from flying glass are an almost guaranteed fallout from bombs, whether targeted assassinations or terrorist attacks.
Bulletproof windows
.gif)
A window with bulletproof glass offers a different level of protection from the security film that every window in and around Beirut should be covered with. For the exposed individual, or the person who feels targeted by everyone, installing bulletproof windows and frames at a cost of $705 to $1,000 per sqm may be a good investment. Social factor: freedom to take a fearless look across the million-dollar vistas of Lebanon.
Safe room
The piece de resistance in turning a home into a fortress is the safe room, the Hollywood-educated age’s equivalent of the keep in a medieval castle. The function is the same: enabling survival until the relief troops arrive. When constructing a safe room, it is time for putting in that bulletproof door, emergency supplies, and air purification and communications equipment. Elegance is not a priority and the cost is as serious as the strength of the ballistic steel panels embedded into the walls. A basic 6 sqm concrete safe room represents an investment of $8,000 to $10,000 but integrating a true panic room into a VIP home at time of construction will add tens of thousands of dollars in cost. Historic factor: Most keeps in European castles had a rather low success rate and the inadvertent death of at least one prominent Lebanese user of a panic room feature in his European home is established knowledge.
On the road
Armored car
An armored car is no Batmobile that protects against any imaginable threat, as Patrick Aouad of Beirut-based car armoring company Yaka Group told Executive. Sadly, history has proven this to be all too true but Lebanese experience has also shown in many examples that an armored car can save your life. From a certain level of risk, an armored car is a VIP’s best bet for road security. Popular makes include Toyota for SUVs and Mercedes for sedans but armor can be installed in a wide variety of models. Prices for armoring range from $20,000 for entry-grade protection to $200,000 for the best presidential armor, which is locally available. Social factor: No wow effect whatsoever is strongly advised. Armored cars should be as inconspicuous as possible and long convoys are out, decoys are in.
Bulletproof clothing
A bulletproof vest is standard wear for security guards, emergency responders in conflicts and any professionals entering active conflict zones. Importation and sale to persons in Lebanon is restricted to permit holders. If you are highly exposed and make public appearances, body armor will at times be a necessity. Besides the standard body armor, some producers have specialized in providing the market with stylish protective vests and other bullet resistant fashion such as leather jackets, coats and blazers. Cost for a protective garment should be from a few hundred dollars to $1,200 and may be well below what your Saville Row tailor charges for a double-breasted. Social factor: In discussion of your clothing brand you can expect a novelty effect as the label will be known only to the very few.
In the business, commercial and public realms
For the standard office environment the first lines of protection parallel the prudent home defenses: CCTV, armored doors and intrusion alarm systems are primary choices. For manufacturing sites and buildings with parking lots, perimeter fencing and vehicle entry controls are no-brainers. Access control systems can be beefed up to protect vulnerable and high-value commercial and business sites but their general role is mainly related to internal management of employees. For representations and country offices of exposed international companies, an established security recipe is anonymity, leaving the big signs in storage and even the corporate name off the well-armored and monitored door. A further range of items come into play in the commercial and business realm but also can be indispensable in private events and homes with large visitor numbers. They include:
Walk-through and handheld scanners
Airports, upscale hotels, shopping malls, event sites and public buildings around the world are routinely equipped with walk-through and/or handheld metal detectors or their descendants using millimeter wave or x-ray technology. Their use for security has steadily expanded since the first people scanners were installed at airports in the early 1970s and any global citizen who has stepped outside her/his home in the past 30 years has walked through metal detectors. Walk-through detectors sell for $4,000 to $6,000; handheld units cost $250 to $400. Main questions on use of metal detectors in many locales, including Lebanese ones: a) Is the machine switched on/in proper working order? b) Does the operator know what he/she is doing? Cool tech factor: nil for the metal detector family which is so 20th century; recent backscatter x-ray and millimeter wave scanners are being phased in for airport screening in many countries and demand growth has been predicted despite major controversies over both effectiveness and privacy protection of the pricey units. Social factor: increasing annoyance over intrusive scanning procedures.
Explosive vapor detectors and antenna-based “scanners”
Known to be perfectly incapable of detecting explosives and notorious for having been sold fraudulently at unit prices of up to $40,000, antenna-based swivel rod detectors were still in use in parking garages at several Lebanese shopping malls last month. Described last April as representing a $20 dollar value in court proceedings against their British marketer, continued use of the rods seems to be worth creating a reward for criminal stupidity, were it not for the risks that the device represents to the entire consumer population. Real handheld explosive trace detectors can identify the presence of bomb materials from particles or vapors. They have no antennas, swivel or otherwise, and their detection cups work but not by magic, i.e. their use requires proximity and time. An even better and more reliable sniffer, however, is the one with four legs: a trained bomb detection dog. Explosive vapor detectors are offered in the market for $22,000 to $32,000 and represent a vital addition to security equipment used at entrances of at-risk sites, especially those accessed by vehicles. Social factor: Knowing how to distinguish a real from a fake bomb detector has a high conversation value these days, in addition to being helpful in deciding which shopping venues and parking structures to avoid.
X-ray machines
The ensemble of threat detection equipment is not complete without an x-ray machine that scans handbags, etc. for weapons and suspicious objects. Advanced x-ray scanners sound their alarms for explosives as well as narcotics, in addition to weapons and items such as nail cutters and hair gels that were banned or restricted as carry-on items in 2006 because terrorists tried to conceal liquid explosives in hand luggage. With a history of being deployed in airports since 1973, x-ray machines are standard components of security checks in high-end hotels and government buildings. Although x-ray scanners are far from universally present in top Lebanese hotels and office buildings, local security experts recommend that exposed persons and establishments have them installed in their homes and businesses. Million-dollar investments into a battery of heavy-duty units are not a matter for normal corporate and event use. Chinese-manufactured x-ray scanners are offered online starting for under $10,000 for a small unit, but as with all security equipment bargain hunting is probably a false economy. It is better to get proper advice from an expert and always remember that the x-ray scanner is only as good as its human operator.
Under-vehicle inspection systems
The heightened awareness of car bomb threats this year has driven up demand for under-vehicle inspection systems. The simplest system is the inspection mirror mounted on a handle that retails for around $100, but the industry also offers portable systems that use cameras, as well as fixed solutions that are permanently embedded in a driveway. Software of advanced systems helps with identifying suspicious objects attached to the bottom of the inspected car. As always, heavy-duty equipment comes with higher expenditures, going above $1,000 for some handheld camera-based systems. Remember also, the most important part of the security system is the person holding the mirror or viewing the vehicle’s undercarriage on a screen.
Body suits and face masks
Another piece of protective gear that has gotten a lot of attention in recent weeks is the full-face mask. When equipped with an adequate filter, a new full-face gas mask offers at least partial protection against chemical weapons. Sarin, the deadly nerve agent that was used near Damascus in August, can penetrate the skin and a full-body protective suit with face mask offers the most protection. But experts say that a full-face gas mask is a million times better than no protection at all. According to reports in Israeli media from May 2013, Prime Minister Benjamin Netanyahu promised at the time that every citizen should be supplied with a gas mask; when people queued outside of supply centers at the end of August, government officials bemoaned that only 60 percent of the population had the equipment. Gas masks and filters degrade with time and old masks cannot offer protection. In Lebanon, which has an unknown quantity of gas masks in circulation, one can purchase a full-face mask for less than $200. If chemical warfare were to affect the country, a gas mask could be the best investment one has ever made. But it is crucial to have it handy and know how to use it.
Equipment prices cited above are based mainly on information provided by the security professionals Executive interviewed for this report, plus online references. This list was created with the intention to provide a quick overview of security instruments that can be of benefit to the Lebanese businesswoman and businessman.
To rank the items that top the list for cost-benefit, the items with the lowest unit cost — the film on the window and the gas mask under the desk — may be the most beneficial to invest in for both the wealthy among us and those of more modest means.
The list provided here is not exhaustive. For an exposed VIP it is advisable to have the services of one or more bodyguards and no technology can substitute for the skills of a qualified close protection operative.
Some of the highest priorities among the intangibles that no equipment list can cover include: A person at risk ought to rely on no single measure but on a network of measures; he or she should work with security professionals; security is positively correlated with discreet behavior; and it is paramount to never allow oneself to feel invulnerable.
The key lesson garnered from reviewing the development and setbacks of security in the past 40 years is that protection cannot be procured with cash alone. Security is an attitude.
Lebanon’s security guards are a common sight, a standard feature of larger businesses and high-end apartments. Although some may seem to do little more than watch the world go by, the job is certainly no sinecure. It is a line of work that holds very few prospects and many agencies pay measly wages so that guards often struggle to make ends meet despite working a standard eight or even an extended 12-hour shift.
For the employers, the guarding business is also no fast track to amassing riches. Patrick al-Khoury, who leveraged his experience in the Special Forces of the Lebanese Army to set up Patrick Security Services Agency (PSSA) in 1996, gives the impression of being proud of what he does but says he is “not rich, not poor”. With a payroll of about 600 male and a few female agents — he estimates the number of female guards at about 2 percent in his workforce — he has substantial financial obligations to meet every month, whether his clients all pay their bills on time or not.
This year, the asking prices for regular guard services have come under extra pressure, Khoury says, because a number of guard agencies have taken on Syrian and Iraqi employees. These men accept relative pittance in pay and their employers don’t pay national social security fund contributions for them as their employment is not legal. The interior ministry is in the process of cracking down on these practices and removing foreign hires from the agencies, he adds, because “the law says strictly that it is not allowed to let a non-Lebanese work in a security firm”.
In the specialized area of event security, where agencies undertake risk assessments and deploy dozens of agents, earnings margins are tight. According to Khoury, who claims to provide event security to four out of five concerts and festivals in Lebanon, the event organizing and promotion companies drive a hard bargain and competition pushes the service fees down because of the positive public relations that protection of a celebrity performer provides to the agencies. As PSSA has been involved in security for high-profile events going back to Lebanon’s one-and-only Pavarotti concert in 2000, Khoury can present an ample timeline of photos, some autographed, with visiting stars as evidence of the job’s PR value and related perks.
A lucrative business?
When compared with event security, close protection services generate better profit margins. A bodyguard working as professional security detachment (PSD) to a VIP can make a multiple of what a simple guard earns per shift. However, the fees that a highly trained operative can charge for close protection in Lebanon appear still quite modest: He can make perhaps “$100 per mission but he cannot do a mission every day,” Khoury says.
Considering the high number of assassinations, attempted assassinations and other security incidents in Lebanon’s past, this seems a somewhat low compensation for a high-risk role and a far cry from something like the rumored $2.6 million annual bill that actor Tom Cruise is footing to have his young daughter surrounded by double PSD teams at all times.
The most lucrative aspects of the protective business for local companies are consulting services, which they provide to projects inside and outside of Lebanon. According to the firms interviewed by Executive, these services are provided based on the expertise that companies like Zod Security, PSSA and also car armorer MSCA have acquired in their many years of working in the security field. The companies advise on planning for corporate buildings, private residences, access routes and all the related needs.
The country’s hundreds of guards could probably benefit greatly from greater incentives, especially from better training, more recognition and a career path. As the heads of the industry confirm, the human element, beyond cameras and facial recognition software and innovation in detection technologies, is the critical brain of every security cell and structure.
In Khoury’s estimate, the private sector security agencies have a workforce of 5,000 to 7,000 persons. There is collaboration with the state in terms of things such as reporting employee lists to the Ministry of Interior on a monthly basis. Those involved in the sector see it as very feasible that the private-public security collaboration could be boosted and that the Lebanese workforce of private security agencies could receive enhanced training to achieve their integration into emergency response plans. If 5,000 better-trained agents are then doing their work in Lebanese private security, Khoury says, “These are 5,000 pairs of eyes working for the government.”
South Sudan, the world’s youngest nation, is distant from and very different to Lebanon in practically every respect. The World Bank estimates that the South Sudanese GDP contracted by 56 percent to $9.3 billion in 2012. According to warnings by the US State Department, the risk of violent crime is high in the capital Juba and carjacking and banditry occur regularly outside of the city. And the country’s 7,000-kilometer road network, of which all of 60 km have been paved, makes Lebanese highway infrastructure look like Switzerland by comparison.
When South Sudan celebrated the second anniversary of its independence this July, however, the country’s top officials and visiting dignitaries benefited from automotive security made in Lebanon. This is owing to the ingenuity and expertise of Beirut-based M. Special Car Armoring (MSCA), which according to general manager Christelle Yared is one of the longest-established producers of armored sedans and sports utility vehicles in Lebanon and the Middle East.
Armor fit for kings
Back in spring 2011, Yared tells Executive, MSCA got an order from the South Sudanese government to deliver 16 armored vehicles (including presidential limousines) to Juba in time for the country’s declaration of independence on July 11. “For two months up to the Independence Day in Juba we worked day and night in three shifts in order to get the vehicles ready,” she says.
At stake were the safety of South Sudan’s president and visiting heads of state who attended the birth of the new nation. Also at stake was a promising business expansion for MSCA. When the company airlifted the 16 vehicles to Juba on time by four chartered aircraft, the resulting customer satisfaction certainly widened new roads of growth for the Lebanese company.
According to Yared, MSCA has been focusing its expansion on North and East Africa for the past three to four years. “We are doing well over there,” she says, to the point that the business “has flipped 180 degrees”. Whereas in earlier years, the market used to be 80 percent Lebanon and Middle East, today 75 to 80 percent of the company’s business is generated in North and East Africa. Besides South Sudan, her current customer base on the continent includes clients in Kenya, Tanzania, Egypt and Libya.
Christelle Yared says business is good
MSCA, which started in 1973 as a family business of two partners with roots in the importation of middle-of-the-road cars, is not the only company in Lebanon that converts regular or luxury sedans and SUVs into armored vehicles that aim to provide the political and business classes with various levels of protection against property crimes, kidnappings and terrorist threats.
According to Patrick Aouad, chief executive officer of armoring company Yaka Group in Beirut, four companies competently offer the pricey conversions in Lebanon, which can easily boost the cost of owning a Mercedes S-Class car to something like half a million dollars and involve fitting the vehicle with ballistic steel panels, Kevlar and bulletproof glass around the entire passenger cell.
Elie Makadessi, managing director of Zahle-based firm Armored Car Professionals (ACP) says Lebanese armoring companies do the job for half the cost or less than the few original manufacturers offering armored sedans.
Currently only German premium brands (Audi, BMW, and Mercedes)sell special protective versions of their up-market models. A few years ago Korea’s Hyundai came up with an armored version of its top model, the Equus, and last year presented one to Korean-born UN Secretary General Ban Ki-moon, but the armored Equus sedan is reportedly not yet broadly available.
The logic of protection
It might seem almost natural that Lebanese companies should have acquired export-grade expertise in the armoring of vehicles seeking to protect exposed persons against attacks. Far too many memories of terror in Lebanon — the ones that are not related to military invasions and paramilitary violence — involve vehicular bombs, and the number of victims has been far too large.
Most recently, with the indiscriminate terrorist car bomb atrocities against civilians in South Beirut and Tripoli, any passing traveler faces an increased danger of becoming a casualty of hideous and cowardly attacks.
Car bombs have been the primary weapons that have exacted high death tolls in Lebanon up to today; many (but not all) high-profile victims of car bombs in Lebanon were attacked while they were traveling in cars.
What is surprising, then, is that the Lebanese car armorers have their main markets outside of the country and have not actually seen massive growth in local demand over the past few months. Yaka Group’s Aouad tells Executive that he delivers to clients in Libya, Iraq and Afghanistan, has large contracts coming up in Egypt and Saudi Arabia and has regular orders from the French, Algerian and Chinese governments to provide vehicles to diplomatic missions, but he says his market in Lebanon is “very small”.
Makadessi, who took his work experience with the armoring division of Mercedes Benz back home to build a production and trade business in armored cars from Zahle, says he converts up to 20 cars a month but has “zero” focus on the Lebanese market and any business he has here is accidental. His list of clients includes companies in Germany and the United States, he enthuses, along with buyers in Iraq, Nigeria and Afghanistan. “The market is good,” he says.
Among the main reasons why Aouad and Makadessi don’t see much business potential in Lebanon at this point appear to be the market’s fickleness and fleeting demand. On the days following any recent security incident, the phones ring off the hook with enquiries but it never lasts, says Makadessi. “In Lebanon this happens: A bomb blows and I get 100 phone calls [from people] saying, ‘we need an armored car’. When they are scared, everybody asks for an armored car. The second day, nothing.”
Aouad concurs, saying his local business amounts to perhaps 10 cars a year and the inquiries he receives after security incidents are numerous but hollow: “There is a lot of demand. No one is buying.”
MSCA’s Yared, though, claims a different experience with local customers. Having introduced a basic protection package to the market in November 2011, MSCA has sold some 130 of these packages until now. Yared says she serves a stable clientele of highly exposed persons in Lebanon, namely political and business leaders, at the top end of the market. When people call to inquire about the details, they are usually serious, she claims. A very high rate, around 85 percent, of the inquiries result in closing a deal.
Pricing the armor
Cost plays a definite role in turning immediate fear into buying decisions, of course. The basic packages that MSCA trademarked as “Hijack ByeJack” are lightweight and can be implemented in most makes and vehicle sizes for about $20,000.
This type of armoring can help against an accidental bullet hit or peripheral impact from a blast that happens at some distance or against a pistol-toting wannabe carjacker or kidnapper who may shoot at a driver with a handgun or swing a hammer to smash in the car window, Yared says.
More serious protection is available in different categories, from resisting conventional magnum caliber bullets up to withstanding some armor-piercing munitions. Vendors commonly describe these safety levels with a combination of letters and numbers, such as VR4 or B6/7. According to the armoring companies, prices vary greatly and increase from one level to the next. Aouad cites an SUV B6 armoring as going for $45,000 to $60,000 and Yared says this can climb to $250,000 for a high-end sedan with the highest available, “presidential-level”, shielding.
The price tag for a high-end conversion is still lower than the cost of buying an equally armored version from the original manufacturers. The purchase of a 2012 S-Class Mercedes Guard can cost 450,000 euros ($607,400) according to Makadessi.
The core reason for the high cost of locally armoring a luxury sedan lies in the materials, says Aouad. Steel and glass that meet the highest specs make up “80 percent” of the cost to convert a vehicle.
The reason for the price differentials is not only that the European models have more complex cost structures which come to bear heavily on the special models, but when importing a manufacturer-armored vehicle into Lebanon, there is also the not-so-small matter of extra customs duties.
As customs and excise duties are levied at a rate of close to 60 percent on the value of the luxury vehicle including armor, the state share in the expenditure on automotive protection is particularly hefty. Even members of parliament, who can import one car per legislative term free of customs, prefer to have their armoring done locally, Yared says, arguing “which deputy has only one car?”
Trust and Relationships
At least for the Lebanese armorers, the marketing of their vehicles is not according to a page in the manual for transparent tendering. Trust and relationships are usually what creates the business.
The relative lack of checks and balances in who Lebanese companies are allowed to export their products to may have some positive impact on their international demand.
On the downside, the lack of distance between Lebanese people and products made in Lebanon makes it too cumbersome for a company like ACP to convince the small local market of its products, claims Makadessi.
Lebanese tend to trust products that come from Germany or the United States and some want to buy only non-Lebanese products, he says, and so he supplies his armored cars to dealers who are based in Europe or the US, with delivery to the free zone at Beirut Port.
However, he’s sometimes amused to discover one of his products later on rolling on the streets of Beirut with a Lebanese license plate or even arriving at his workshop for maintenance.
On the upside, the Lebanese prowess at developing and maintaining cordial relationships helps the local producers to connect with buyers of their armored vehicles. Having success in finding customers “is mainly a matter of relations, and being at the right place at the right time,” says Aouad.
According to Yared, one argument working in favor of Lebanese armorers is that they produce vehicles that are fit for the security conditions of countries in turmoil and for driving on poor roads. Africa and the Middle East are regions with higher security risks than Europe or the US, she says, so armor installed in Europe, which tends to rely on lightweight and composite materials, is less suitable than the ballistic steel and other shielding favored by Lebanese armoring companies.
Operating an armored sedan in the African or Middle Eastern terrain means “you need big engines and reinforced suspensions and braking systems. What makes us experts is that we know the roads and the types of ammunitions and explosives used in the region, and even our run-flats are suited to the asphalt used on our roads,” she explains.
Future expansion
Beyond this experience-based knowledge, she puts great emphasis on investing in both pre- and post- sales efforts. This means that she and her team consult with their clients, study the roads they are using and the security threats they are under, have extensive meetings with them and their security experts, and “give strong recommendations” advising them on the appropriate protection that MSCA recommends.
After sales Yared maintains strong relationships with her clients. She includes complementary maintenance visits in her contracts — MSCA experts traveled to Juba about once every three weeks during the past two years, and makes sure to tune in to high-profile clients when they deliver public statements on television, calling them the next morning if she thinks that the tone and content of a speech means that the current level of their vehicle’s armoring is no longer adequate to the threats they have to expect. To her mind, the responsibility of protecting client lives makes her role all passion and not just work. “It is a continuous job with after sales service which I love to do.”
The business reach of the Lebanese armorers with production staff in the dozens and monthly output capacities of perhaps 100 units between them is not huge. Larger armoring companies with outputs in the hundreds of vehicles per month serve Arab and African markets from the United Arab Emirates and it is hard for the Lebanese to compete against the advantages that the free-zone locations and labor markets of the emirates provide to producers there.
If Arab and African emerging markets were characterized by growth instability, low crime and dwindling corruption, the use of an armored sedan with its high acquisition and operating costs and comparatively low lifespan would be a poor investment decision. As this is not the state to describe the region today, however, it is to be expected that the expertise and products of Lebanese armoring companies will have a growing market in Africa, and very probably also closer to home, for years to come.
As Makadessi observes, the market for armored civilian vehicles in Iraq was minimal when the war raged in 2003 and 2004 but demand skyrocketed in 2005. Syria today is as yet a market that is limited and where being a supplier is complicated by political issues, but, he says, “Usually, when a war calms down, and things get stable, there are requests for armored cars.”
Economics and Policy
Tuesday’s bombing of the Iranian Embassy in Beirut will damage efforts to encourage investment in Lebanon, experts told The Daily Star, warning that another spate of deadly bombings linked to the war in Syria might be the last straw for the economy.
Syria’s army has pushed rebels out of the mountain town of Qara near Lebanon, strengthening its hold on a highway linking the capital to regime strongholds along the Mediterranean coast.
Iraq’s oil industry is poised for a second year of only modest growth in 2014, starting off slowly as extensive work at a major port curbs exports and red tape and violence prompt some oil firms to delay projects.
Egypt’s natural gas shipments are set to drop by about half this year, undermining the military led-government’s attempts to stabilize the largest economy in North Africa.
Companies and Business
Dubai’s property market is not “overheating” and recent government regulations are “prompting a cooling in the pace of growth,” according to the Q3 property report from consultant Cluttons.
Economics and Policy
A new stimulus package from Lebanon’s Central Bank will boost economic activity in 2014, economists have said.
Iran’s state-owned National Iranian Gas Co. has declared bankruptcy with more than $4 billion in debt, local media has reported.
Libya's deputy intelligence chief was kidnapped outside Tripoli's international airport on Sunday, a month after the prime minister was snatched by militiamen.
Companies and Business
Emirates' appetite for plane purchases will not cease, the airline's president Tim Clark has said, a day after the Dubai-based carrier ordered 200 planes from Boeing and Airbus.
Foreign sales of the V-22 tilt-rotor aircraft built by Boeing Co and Bell Helicopter could grow significantly in the "very near future," top US military officials said, citing interest in both military uses and for VIP transports.
Abu Dhabi’s largest lenders are embarking on an overseas expansion drive in pursuit of a $137 billion corporate-banking market stretching from Asia to Africa.
Jonathan Ortmans is the president of Global Entrepreneurship Week (GEW), and was among its founders when it launched in the United States in 2007. GEW is now held in over 115 countries including Lebanon. He is also chair of the Global Entrepreneurship Congress, senior fellow at the Kauffman Foundation and president of the Public Forum Institute. Ortmans spoke with Executive from Washington, DC on the changes in the global entrepreneurship scene, the role of policy makers, and the responsibility of entrepreneurs in creating a dynamic ecosystem for entrepreneurship.
What have been the most recent developments in entrepreneurship on a global level?
What’s changed now is that you have a global class of start-up communities all over the world. If I were to draw a picture for a magazine I would draw a flat world, with thousands of start-up communities and no national boundaries. A world where technology and communications has made it very easy for people in start-up communities to know what other start-up communities are doing, and what other methods entrepreneurs are using to try to scale ideas.
Many entrepreneurs in Lebanon get investment from family and friends or are bootstrapping to create their own start-ups, and most are still waiting to turn a profit. How hopeful should we be that initiatives such as these will be successful?
I think you can be very optimistic about that. Some of the ventures that started 2-3 years [ago] were often given advice to try to get outside capital. At the Kauffman Foundation, we advise entrepreneurs to hold out as long as you can [while] bootstrapping [your] idea because you have to focus first and foremost on getting the idea right. Too often entrepreneurs were taking out capital too soon, which was the case in Lebanon. They didn’t have the chance for failure.
The most important thing is to have more people forming teams, testing formulas — trying to find a way of making the business venture work.
How important do you think policy initiatives are for fostering a start-up ecosystem in a country like Lebanon?
Traditionally, start-up community leaders and entrepreneurs have chuckled and laughed when it comes to the government trying to help. They’ve tended to think of the government as a hindrance. First, the government sets rules and incentives, so you can’t ignore them. But I think the government is important in a new way. When President Obama opened new research, it showed that all new jobs over the past five years have come from companies less than five years old — compared to older companies, which were shedding jobs.
That’s turned government on its head. What it’s done is it’s made government start looking at entrepreneurs in a different way. Now they’re thinking: “How do we help new firms? What do we do to make it easier for them?”
In lieu of government policies, are there any other actors who can take up the role of devising policies to create a coherent system of entrepreneurial support institutions in the ecosystem?
I don’t think another entity can do it, unless they’re implementing rules and regulation. The best way to create cohesion is to form an entrepreneur-led board for the entrepreneurial community. You need to have that. You need to have people talking to local authorities. And you have to have the traditional business leaders helping. And increasingly they want to help. Sometimes entrepreneurs disrupt some of their companies, but I think the best way to get cohesion is an entrepreneur leading with businesses and universities. And that’s what we want GEW to be in Lebanon.
What role should stakeholders in the entrepreneurial ecosystem play in creating a support infrastructure for entrepreneurship?
There is a big challenge: you need to find people from within the start-up communities and you need to invite them to work for the government and help advise. To figure out what are the things that we can do. Our biggest problem in the US is that we get all this talent [from overseas] who come to the best universities, have ideas, but then the US government kicks them out. Every country has got specific paradoxes which are going to be unique. You need to start with a fresh look. The Lebanese government needs to just talk with entrepreneurs and look at the biggest problems they’re having.
I don’t think there’s necessarily a need for all of it to be neatly organized. Entrepreneurship is messy and we should let it be messy. I think when there are authorities that are implementing rules and regulations any of those kinds of institutions should be working together. This is actually the role of GEW. To get Lebanese citizens thinking about joining this community of people.
Economics and Policy
The fall of imports this year has reduced the balance of payments deficit in Lebanon, a leading academic has said.
The United Arab Emirates Banks Federation will recommend that the central bank fine lenders who breach stricter mortgage loan rules as it seeks to prevent a repeat of a property bubble.
Companies and Business
Gulf airlines splashed out over $150bn on new plane deals on day one of the Dubai Airshow, underscoring a shift in power in the aviation industry and giving a boost to the formal launch of Boeing's newest jet, as well as to Airbus's A380 superjumbo.
Airbus parent EADS is close to signing a strategic deal with Abu Dhabi's Mubadala Aerospace on advanced carbon-composite aircraft parts production.
A labourer died as he jumped from a burning building in Dubai, as around 300 workers were evacuated at the weekend.
Starting a business in… Egypt
Instabug’s Moataz Soliman and Omar Gabr
In the wake of Egypt’s 2011 uprising, civil society blossomed, characterized by the booming startup scene led by young entrepreneurs. The efforts have been spurred in part to counter the country’s unemployment rate of 13.5 percent and rising. With a population of 80.72 million as of 2012, this leaves almost 11 million people unemployed.
Amidst tumultuous times, Omar Gabr and Moataz Soliman launched mobile app Instabug in June 2012. Instabug helps mobile app developers find glitches in their apps by engaging users to report them through the simple process of shaking their phone. For apps that have incorporated Instabug into their system, they will have a screenshot of the bug sent straight to the developer with information on location and what network they were using. Gabr explains that this helps shorten the product life cycle to help test apps faster before they reach the store. Instabug was the 2012 winner of MIT Enterprise Forum’s Arab Startup Competition, which brings together startups from all over the Arab world.
Gabr admits that they have experienced some difficulties starting a business in Egypt at this time. “Being in Egypt in this current situation — I don’t think it was the best idea to start a tech startup targeting the world,” he says. He also concedes that there were some perks. “The good thing is that there are not too many startups in Egypt, so the whole ecosystem is trying to help them.”
That ecosystem is still nascent, but there are a lot of people working toward boosting it. “The Egyptian startup ecosystem began to develop after the revolution,” says Gabr. “People had this sense of importance and urgency that they want to build their country and develop their own business and develop their own products. I think now it’s really moving.” Startup accelerator Flat6Labs launched in Cairo in 2011, and every four months six teams move through the acceleration process. Other accelerators are beginning to appear on the scene. One was recently launched by the government under the acronym of TIEC, the Technology Innovation and Entrepreneurship Centre.
Like many startup ecosystems in their preliminary stages around the region, there are important gaps waiting to be filled. One problem that Egyptian entrepreneurs encountered was the absence of early angel investors — perhaps not surprising considering the volatility of the situation. With the exception of the Cairo Angels, Gabr says that Egypt is dry in financial resources between the small amounts given by incubators and accelerators and the larger-ticket venture capital firms (VCs). Instabug received a total of $150,000 from the Cairo Angels and regional VC firm Leap Ventures.
When asked if he would want to keep his business in Egypt, Gabr was positive. “There are many competitive advantages we have staying here,” he says, having just gotten back from three months in Silicon Valley. Though he says having a presence in the Valley is also essential, Egypt is a competitive place to run a startup in terms of process, salaries of the engineers, legal fees, etc. “So starting a startup is a whole lot cheaper in Egypt,” he says.
Starting a business in… Jordan
Gallery AlSharq’s Riham Mahafzah
Like many startup ecosystems in the Middle East, Jordan did not have much going on until about four years ago. Then two developments came about that changed everything. First Maktoob, an Arab internet services company, was bought out by Yahoo in 2009. It went on to become the Arabic version of Yahoo and became one of the first success stories in the region
This gave hope to many entrepreneurs in the Middle East, who tried to follow in Maktoob’s footsteps. It also spurred the second development, which, in the wake of Maktoob’s acquisition, started as a conversation between King Abdullah II of Jordan and now-executive chairman of Jordanian startup incubator Oasis500, Usama Fayyad. The king had seen the success of Maktoob, and wanted to replicate it. Thus was born Oasis500, with a mission to support entrepreneurs by providing them with training, funding, and mentorship. It has certainly brought some startups to the light by helping them along the way from ideas to concrete businesses.
Riham Mahafzah is one such entrepreneur. She started her business, Gallery AlSharq, through Oasis500. Gallery AlSharq is a website that sells Middle Eastern digital content — stock photography of landmarks, nature, hobbies, food, as well as illustrations. Mahafazah studied architectural engineering and launched her business after having worked for 13 years in an advertising agency for the creative fields. “Starting a business with Oasis500, they opened the door to good connections and mentors,” she says. “And most mentors are CEOs of large companies who help you develop business strategies.” The mentor Mahafzah met through Oasis500 is now an investor in her company.
Unlike many startups in the Middle East, when asked about the challenges she faced in starting her business, Mahafzah did not immediately refer to institutional problems such as lack of funding, inadequate support, problematic laws, or an unstable political situation, which is perhaps indicative of Jordan’s startup environment. Her issues were more business-oriented, such as the lack of human resources. “A real barrier at the beginning was finding the right developer,” she says. Another issue was educating contributing photographers on how to use the platform in sharing their content online. Though Jordan may be a stable oasis compared to the region, it has its limitations. Mahafzah acknowledges that businesses in the Middle East still struggle to find angel investment. “In general angel investment is not easy to generate in the MENA region. It’s not easy to generate $100,000 to $1 million because investors have to be brave,” she says, referring to the risk involved in early-stage companies, exacerbated in the Middle East’s immature startup ecosystems. Mahafzah raised her angel round of $150,000 in September, and had two seed investments prior. Total investment in her company so far has reached $200,000.
Starting a business in… the UAE
Nabbesh’s Loulou Khazen Baz and Rima Al-Sheikh
The United Arab Emirates seems like a bastion of efficiency with its business-friendly laws, infrastructure and its relative ease in attracting investment, which has drawn flocks of international companies to its gates. Oil and gas wealth income since the 1960s has permitted the country to invest in infrastructure crucial to businesses.
The UAE has well-developed telecommunication facilities, low taxation, and a hassle-free system for registering a business. For startups, there are numerous incubation programs such as In5, Silicon Oasis, SeedStartup, and i360 to name a few. Startups from elsewhere in the region have even moved operations to the UAE because of its superior business infrastructure.
Nabbesh is an online platform that connects jobseekers to employers based out of Dubai. Neither of the co-founders are Emirati — Loulou Khazen Baz hails from Lebanon while Rima Al-Sheikh is from Syria — though they stated that their reason for starting a business in Dubai was incidental to the fact that they were living there. Nabbesh was founded in 2012 out of a demand for employment in the Middle East. Highlighting flexibility, it is geared toward short-term, project-based consultancy or freelance jobs.
The Nabbesh team says the UAE’s business hub is a great place for young entrepreneurs to network and seek advice from the more seasoned counterparts in their industry. “The good thing is you get to connect with entrepreneurs from the same industry and you get to talk to them and learn from their experience,” says Al-Sheikh. “This whole network of learning or knowledge sharing is one of the pros.” The UAE also has a large expat community, which adds to the mentorship experience for start up companies. “There’s a lot of learning that you can do from different people, different cultures,” adds Khazen Baz.
Dubai is also a great place to garner investment. “There’s also access to funding here, there are more VCs, there’s more angels in this part of the world. It’s more mature,” says Khazen Baz. After winning a cash prize of 1 million United Emirates Dirhams (approx $272,000) on reality TV show The Entrepreneur, the Nabbesh team managed to secure an additional $81,700 in funding for their project.
Despite the favorable investment climate and the support from different entities, operating a business in the UAE is expensive. “I think this is a major difficulty for most entrepreneurs,” says Al-Sheikh. Particularly for a startup, which can’t afford to pay large salaries, it is difficult to convince talent to work for them instead of migrating to a bigger company with higher wages. “It’s like a war for talent,” says Al-Sheikh. “Most of the people have their jobs and not many are very excited about working in a startup,” adds Khazen Baz.
Caretaker Industry Minister Vreij Sabounjian has met with an official from the United Nations Development Program to discuss the participation of Lebanese firms in the Syrian refugee aid response.