Executive Magazine

Business briefing: 28 Oct 2013

by Executive Staff October 28, 2013

written by Executive Staff

Economics and Policy

Lebanese caretaker Energy Minister Gebran Bassil said new estimates for nearly half of Lebanese waters suggested the country’s reserves of natural gas and oil might be larger than previously thought.

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Egypt's closure of tunnels used to smuggle goods into the Gaza strip has caused monthly losses of $230 million to its economy.

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Algeria's energy minister says a new oil field containing an estimated 1.3 billion barrels has been discovered.

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October 28, 2013 0 comments

Hospitality & Retail

An ode to civil turmoil

by Executive Editors October 25, 2013

written by Executive Editors

The presence of Syrian artists in Beirut is far from new, due to the city’s international connections, and the higher prices artworks fetch. “Syrian artists have always been part of the Lebanese art scene for as long as I can remember,” gallery owner Joanna Seikaly says.

However, currently more work by Syrian artists is being showcased in Beirut than ever before, as Damascene gallerists and artists have shut up shop and relocated to avoid war in their homeland. Seikaly has featured five Syrian artists over the past year.

Of all the Syrian creatives now in Beirut, it is visual artists who have found their place in the city’s art galleries and on the stage of international culture, as well as its open and internationally recognized cultural scene, which affords creative minds more opportunities and liberties than elsewhere in the Arab world.

Syrian art has long been held in high regard by collectors and galleries in the region and further afield. Prompted by his connections to the Syrian art world, coupled with a shortage of space for the art he had acquired over the last 20 years, collector Antoine Haddad opened Artlab in late 2012. For the first nine months, the gallery only featured Syrian artists. “Syrian artists have given the local art scene a boost,” he says.

According to the sculptor Mustafa Ali, Syrian art has become more open. The volume and focus of the artistic output since the uprising, itself marked and driven by a widespread use of creative media, has indeed fundamentally changed. Before the uprising, art that consistently challenged the regime, such as the cartoons of now-exiled Ali Ferzat, were the exception rather than the rule. But the mold is changing.

In late 2012 Houmam al-Sayed expressed his rejection of violence against children in his “From Damascus to Beirut” exhibition at the Mark Hachem Gallery in Minet el-Hosn. Tackling injustice, confronting the status quo and condemning violence on a wider scale are adding new dimensions to Syrian art in an unequivocal manner.

Focusing on work with the war raging close by can be painful and challenging. “You’re thinking about people, how they live, how they take this. You feel guilty,” says Fadi al-Hamwi, who painted a large portrait of a friend who had been arrested. “It’s not a quiet situation in which we find ourselves.”

“Before things got messy, before they started to use guns and threaten us, my only way to express my opinion freely was through my art,” Heba al-Akkad says. “[Now] it is my duty to talk about it [the war] in my art.”

Akkad’s show of mixed media work, “Things are still the same,” shown at Galerie Tanit this summer, is a powerful message of hopes dashed. Her colorful yet macabre, naïve yet highly symbolic and evocative body of work turns out to be an obituary to a still-born infant: the revolution. Some of Akkad’s recent work was produced during a month’s stay at Raghad Martini’s Artist Residence in Aley (ARA), a creative hub established to help Syrian artists connect with local galleries and collectors.

On the terrace of his home studio, painter, videographer and installation artist Hamwi points to works similarly influenced by current events in Syria. For a 2012 installation in Damascus titled “4am”, Hamwi painted the walls of the 5x5m gallery room black, put grass on the ground and placed his bed in it, with bricks aligned to look like a mattress. “People would enter my dream. I was not telling a story but putting you in a situation,” he says.

Symbols of hardship

This year, Hamwi painted dinosaurs, each wearing a gas mask while holding a single flower, and human skulls and machine guns in X-ray vision. “A Bone In The Head”, the first in the ‘transparent’ series, features a pistol inside a brain, as the artist tries to get inside the heads of killers and tormentors.

“This is the change that came to my work when I was in Syria. How do they think when they shoot a human being? When they cut a body part? Many people are prepared to do these kinds of things,” he says.

Akkad gave birth to her first child in Lebanon last year. Already pregnant, and with her husband facing the draft, leaving Damascus became inevitable. Her 10-month-old son has no birth certificate, a consequence of her husband’s refusal to join the Syrian army.

Without papers to prove her son’s identity, Akkad used her art to provide him with one: “Black & Yellow and vice versa” is dominated by a large male head at the center symbolizing her son. It also bears witness to friends and family she has lost, featuring in one corner a beautiful sketch of a woman sitting cross-legged, drawn by her teenage brother. Akkad recently found out that he’d been killed in tragic circumstances.

With her husband studying, Akkad became the sole breadwinner. Syrian artists can make up to three times what they would in Damascus for their work, in line with prices for other goods, but they have to contend with much higher living expenses and renew their visas every six months. Though she has sold art in both Lebanon and Jordan, Akkad has also been forced to take on low paid casual work.

While some Syrian artists struggle to get by in Lebanon, others are making the city work for them.

Artist and musician Samer Saem el-Dahr lives and works with Waraq, an artists’ collective located in a traditional house painted bright yellow and turquoise in Ras el-Nabaa.

Last year, he contributed to a collective exhibition and managed to sell two paintings. He subsequently approached Seikaly who encouraged him to put together his first solo exhibition: “This is not politics!” — which included 26 new expressionist paintings — was held in early 2013.

The 23-year old artist left Aleppo in September 2012. “The plan was to stay here for one month but then things got worse,” he says. “I’m comfortable here now, because I’m producing a lot. For now Lebanon is good for me, for another couple of months. There is the stress though of what’s coming up next, what if Lebanon doesn’t want us? Where will we go? All over the world, we’re not wanted.”

“For sure I feel homesick,” says Hamwi, who left much of his art behind. “I left the old memories as well. All the small details, my whole life — it’s there.”

Nostalgia infuses some of the personal projects the artists undertake, notably Hamwi’s painting of the logo of Derby — a Syrian chips brand — which created a buzz on his Facebook page, or Dahr’s Hello Psychaleppo, an electronic-classical Arabic music collaboration with Lebanese music producer Nabil Saliba.

visions of home

Dahr’s career took off in Beirut but he sees his future in Syria. “I will be going back to the country, [but now] it’s a war zone. There will be nothing. Then there will be a lot. We’re the youth. If it’s not us, nobody will do it.” For Mustafa Ali, who was born in 1956 in Latakia, relocating to Beirut was fairly easy. Dividing his time between Paris, Damascus, and Beirut where he took an apartment in early 2013, he is among those who still regularly enter Syria, but has sent his small children to school in Paris. Working primarily as a wood and metal sculptor, based in Damascus since 1974, he has exhibited widely and received prestigious commissions, notably from the Institut du Monde Arabe in Paris.

While he has moved work to Dubai, Paris and Beirut, Ali still has his main studio and most of his art in Damascus; his large sculptures are simply too heavy to be moved. His cellphone is filled with images of his work, of openings or events at his Damascus gallery that used to attract a thousand people. Besides his gallery in the old city, he has three workshops; the largest in Al Ghouta, which he has been told has been partially destroyed.

Though better connected in Beirut than younger Syrian artists, Ali heads to Damascus to work. Dahr on the other hand, consciously refrains from drawing inspiration from his surroundings. “That way I’m not dependent on it or on being in Syria.”

“I don’t like to take advantage of what’s happening,” Dahr says. He refers to a sketch he did of the artist Youssef Abdelke who was held captive for a month between July and August 2013. “For this one I did it…He came twice to my studio; I’ve known him since I was very young. When I heard he was arrested, to spread the word, in favor to someone I know personally, I did this sketch.” Syrian artists are aware that their work has now become fashionable and generates considerable media interest, a fact that is not without its complications. “People want to buy the story,” Hamwi commented. “We have the story. We’re now the ‘world victims’. This is very clear to us. Some artists play into that, but it shows. To do archiving of this era you need to be super sane and stay objective.”

Syria Contemporary Art Fair will take place at Artheum from 2 to 9 October 2013. The exhibition will be featuring over 45 contemporary, established and emerging artists from Syria, covering a variety of styles and techniques.

October 25, 2013 0 comments

Banking & Finance

Engineering exclusivity

by Joe Dyke October 25, 2013

written by Joe Dyke

Lebanon may be a small country, but never let it be said that its dreamers don’t think big. Should it score the investment to become a reality, entrepreneur Ralph Debbas’ $3.4 million Lykan Hypersport is set to become the Arab world’s first supercar.

The basic facts of the car are incredible — twin turbo-charging engine reaching 7,100 revs per minute, 0-100 kilometers per hour (KpH) in 2.8 seconds and a maximum speed of 395 KpH. It also looks beautiful and is, as supercars tend to be, exorbitantly expensive — at $3.4 million dollars each, Debbas’ W Motors are planning to make only seven, with the designers dubbing it “the most exclusive car in the world.”

Supercars are a naturally niche market — targeting not merely the world’s 1 percent but the 0.01 percent — and breaking into that market is a daunting challenge, especially with competitors including Ferrari, Lamborghini and Porsche.

But it appears that Debbas and partner Sari el-Khalil are getting there. With the backing of FFA Private Bank, last month they launched a search for $6 million in investments to finalize the first version of the car, due to be launched at the Dubai Motor Show in early November.

While the Lykan may initially seem a strange project for FFA to be involved in, it is part of an increasingly varied portfolio of deals: the bank was recently involved in the financing of the Hollywood blockbuster Two Guns. The bank’s head of investment banking, Julien Khabbaz, said their involvement, though their first foray into the world of supercars, was based on solid financial decisions. “It is a great opportunity for investors, with an estimated internal rate of return of between 31 and 43 percent.”

While half of the investments by private customers are exchanged for equity, the other half are secured debt guaranteed by Debbas’ Lebanese real estate, so risks are also slightly lower than other investment opportunities. Investors will also have priority return over founders through annual reimbursement of the debt.

Khabbaz is confident that the company’s growth targets will be met: “The estimated returns are based on the first seven cars [being] sold in two years but my assumption is it will be faster than that [and yield better returns].” He added that the highest-end luxury market has been less affected by the current global economic climate as billionaires continue to spend.

all revved up

Potential investors must have deep pockets, however, with a minimum spend of $100,000. Khabbaz said he was not sure how many investors would be needed to make up the $6 million, as one or two may invest over a million dollars each.

As Executive went to print, FFA had raised 75 percent of the $6 million needed, with expectations that the rest would be received within a week. The money will raise W Motors enough capital to launch the first version of the car later this year. The next challenge will be to convince the world’s richest that their product is this year’s must-have play thing.

To do this they will need to develop a brand, something they are in the process of doing. Pitching itself as the first ‘Arab supercar’, Debbas is cleverly trying to tap into pan-Arab sentiments while creating a product so good that billionaires globally will want it too. The car is set to play a major part in the forthcoming seventh movie in the Fast and the Furious franchise, with much of the film based in the United Arab Emirates.

So while many of the car’s features may seem a little gaudy (diamonds and rubies in the lights, for example), they may play well in the Gulf where bling is most definitely still in. And behind the not one but two holograms that the Lykan features is the potential for an incredible car, with Austrian firm Magna Steyr responsible for the interior and exterior design and Germany’s RUF Automobile developing the chassis and engine.

With only seven cars to sell, the difference between the venture’s success and failure will be incredibly fine — with the initial reaction of those lucky (and rich) enough to test it at the end of 2013 likely to determine whether it is a hit or a miss. Success will lead to a ‘more affordable’ and only slightly less exclusive sister car, with 25 of the $1.5 million Supersport version planned. For those looking at investing in the firm, it represents a risky opportunity, but a potentially lucrative one.

October 25, 2013 0 comments

Uncategorized

Routes out of crisis

by Executive Editors October 25, 2013

written by Executive Editors

Business is “flourishing.” It’s a rarely heard sentiment in Lebanon today given the war in neighboring Syria and unease at home. Despite these challenges, Mourad Aoun, Chief Executive Operator of logistics group Net Holding, claims his businesses are doing even better — far better — than they were last year. “For the express industry, it’s flourishing. … If we go to the shipping side, it’s been even better,” he says.

Aoun’s counterintuitive assessment is one of the bright spots in an otherwise moribund economy. And data from the Customs Higher Council supports the claim: from January to May 2013 — the most recent available public data — total import values were off just a fraction of a percent from the same period a year prior, while exports were up more than 7 percent. These modest changes, however, mask big movements in how the logistics sector is operating, and where companies are making and losing money.

Veering off the road

Before the Syrian uprising erupted in March 2011, trucks were the cheapest way to transport goods between Lebanon and the Gulf. But as the crisis escalated, drivers and their cargo came under greater threat, pushing costs higher. Then in March of this year, Jordan closed its northern border — effectively ending ground transport as a viable option.

“When the border closed, we were obligated to take our cargo by sea,” explains Nour Ghandour, operations manager at Gifco, a Lebanese offshore logistics company. But, she says, taking cargo by sea “is more expensive and profitable. …We took advantage of this.” Gifco’s book shipping business has now shifted entirely from ground to sea transport. “In logistics, when one door closes, another opens,” she says.

Net Holding has witnessed a similar shift. “We’ve seen tremendous growth in ocean export. It’s been unusual,” says Aoun. There are two reasons for this. First, “people do not want to risk losing their cargo,” he explains. But more important is the uncertain transit time for the few truckers still willing to transit Syria and able, whether legally or illegally, to get through the borders. “The trip can take you 10 days … or 20 days to be in Saudi Arabia, whereas usually it would take four days.” For exporters who need to fill orders on time, this is unacceptable.

Net Holding and Gifco’s shift to sea traffic is part of a wider trend. Shipments of 20-foot-equivalent unit (TEU) containers averaged 56,103 per month from January through March of this year. In the five months since the Syrian–Jordanian border closed, TEU shipments have averaged 68,954 per month. This amounts to a 22.9 percent increase — larger than seasonal increases in 2011 and 2012 at 18.0 and 21.7 percent, respectively. The increased traffic has led to congestion at the port as it completes a project to expand capacity by some 60 percent. This expansion is due to be completed in November.

But while shipping through the port may work for goods that don’t need to be delivered quickly, it won’t suffice for time-sensitive orders. Before the border closing, Net Holding’s subsidiary TNT had an express trucking service that operated on a time-definite basis. TNT now ships these time-sensitive products by air. Since the trucking service was premium, the air alternative is only slightly more expensive, explains Aoun. “Instead of having a problem and saying, ‘Ah, we don’t have service,’ we created an economy product that is a very viable product … and clients are using it to substitute for the trucking service.”

Global giant DHL’s air business has similarly seen an uptick. When the border closed, business that had gone to the company’s truck delivery service was channeled into its air and sea options. However, DHL Express country manager John Chedid says, the new air traffic “didn’t suit our timetable … so about a month ago we started using our own plane. … This is one of the benefits of using a company like DHL.” The new DHL-owned plane service allows the company far greater flexibility. “We’re able to control capacity; we’re able to control scheduling; we’re able to control what’s on it, what’s not on it; therefore we’re able to control price,” says Chedid.

Even typically cheap goods that would be uncompetitive if expensively shipped by air must occasionally be flown to meet orders. Gifco’s Ghandour claims the company has handled several such shipments of vegetables, which would go bad if shipped by sea.

The Syrian connection

Trade between Lebanon and the Gulf is not the only route affected by the Syrian crisis. Syria’s own economy — while tailspinning — must still export and import goods. With civil war raging, it is not always possible to get goods out through the ports in Latakia and Tartus, or through the airports.

As a result, says Ghandour, “We’re serving as a gate to Syria. …We are moving cargo via sea [to Lebanon] and [and then via] land to Syria.” For exports, Gifco has forged partnerships with Syrian companies who used to ship through Latakia and Tartus. “Syria has so many things they export … so when they had a problem with the ports, their only option was Beirut,” Ghandour explains, adding that since many Syrians left to work in the Gulf, Gifco has handled more shipments of personal items such as cars through Lebanon.

This service has proved lucrative due to the risk involved on the Syrian side of the border. According to Ghandour, freight charges have doubled since the uprising began. On top of that, she explains that while insurance used to be an option, “Now it’s a must.” This is good for companies like Gifco that offer insurance plans — premiums have “doubled or more to risky areas,” she says.

Such business, however, is shunned by Net Holding. Conceding the opportunities missed by not entering the market, Aoun takes a more cautious approach. The group’s subsidiary SkyNet — a local franchisee of the global SkyNet brand — maintains a presence in the country, but “what we’re moving into Syria is only documents and things that cannot be in breach of compliance issues” such as US sanctions. This strategy accommodates three of Net Holding’s goals: to provide global services and demonstrate the company’s commitment to clients currently living under harsh conditions, while maintaining the company’s ties to American businesses.

Bottom lines

Net Holding’s cautious strategy in the Syrian market has not hurt its financials. Instead, it has seen a dramatic increase in cash flow. Revenues for its express businesses have increased approximately 35 percent over the past year according to Aoun.

But the larger and more lucrative volumes of sea and air traffic do not always make up for the steep decline in trucking services. Gifco’s Ghandour estimates the company’s overall volume of shipments has decreased by 40 percent over the past year and a half. “We used to get two to three containers per month,” from some clients, but “now we’re getting one,” she explains. And increased revenues from sea and air transport have not made up for the loss. Ghandour estimates the company’s revenues are down from pre-crisis levels, but only slightly.

The shifts in the market hit small companies much more heavily. Global Freight and Logistics, a firm started in 2008 specializing in wood and furniture shipments, had to stop land service to the Gulf late last year due to the deteriorating security situation. Its owner and CEO Nagy Feghali explains that while prices have gone up — a typical land shipment from Saudi Arabia costing $1,800 now ships by sea for $4,000 — volumes have decreased even more.

A greater concern, though, is clients’ ability to pay. “We used to get our payments after one month” post-delivery, says Feghali. “Now everyone’s asking for three months, or even four. For one client in Tripoli, it’s been eight months.” While larger businesses only deliver paid orders, Global Freight allows clients to pay as they’re able — usually as they sell the product they’ve ordered.

Despite this, Feghali’s business model does offer an added measure of resilience. “My clients are my friends. Only maybe 30 percent [strict] business relationships, but they become friends,” he says, adding that “they will stay with you. …They don’t even ask about the rate.” Accommodating their financial difficulties thus becomes part of Feghali’s service.

Contingencies …

or opportunities

Amid a deteriorating security situation at home, a ceaseless civil war next door, a potential western attack and sky-high regional tensions, each company Executive spoke with was concerned — enough to have contingency plans — but not overly worried.

Net Holding’s Aoun and DHL’s Chedid both emphasize their companies’ long histories in Lebanon. Net Holding is celebrating its 20th anniversary this year. Aside from temporary disruptions, DHL has continuously operated in the country since 1979, according to Chedid.

When the airport became inaccessible during the 2006 war, DHL Express moved operations to its center in Jal al-Dib, using the land route to Jordan to send and receive shipments, says Chedid. That wouldn’t be a possibility under the current situation. “If the airport is closed, we may have to consider a ferry to Cyprus, which is something we did during [Lebanon’s] civil war,” he says. But failing an airport closure, DHL appears to be moving in the opposite direction — namely, its new weekly flights to Beirut.

For his part, Aoun doesn’t entertain any notion of shutting operations. “We’re not a local company; we’re a Levant-based company. We cannot just stop.” Pointing to SkyNet’s office in Syria, he adds, “If we’re still operating in Syria, I don’t see why we would stop operating in Lebanon.”

If the situation worsens, Aoun says Net Holding has alternate operations centers ready. “We have a war operation type of scenario where we decentralize everything. …This is what we did in 2006; people were working either from home or from a secure location,” he explains.

But Aoun acknowledges the business opportunity afforded by crisis. “War for us is an opportunity to tell our clients we’re here and we’re solid, because the economy cannot stop. People need to eat …cargo needs to move.” The sentiment is echoed by Gifco’s Ghandour, who succinctly notes, “As logistics people, don’t worry about us.”

Global Freight’s Feghali isn’t worried that his clients, most of whom are friends, will abandon him. This applies even if he’s forced to temporarily shut down operations. While he’s concerned about the immediate situation, he’s resolutely positive about a rebound once security gets better: “Once the situation finishes the work is going to be booming.” He’s even planning an expansion into Syria.

October 25, 2013 0 comments

Society

The necessity of decadence

by Nabila Rahhal October 25, 2013

written by Nabila Rahhal

At a time when most 5-star hotels in Lebanon are reporting record low occupancies, Achour Holding has invested $25 million into transforming the Royal Plaza Hotel in Raouche into Lancaster Plaza, a 5-star hotel, marking the company’s third venture into hotel ownership and management under the Lancaster Hotels and Suites name.

Two years ago, company chairman Wissam Achour acquired what was then the Royal Plaza Hotel from the Chehab family and began the process of completely renovating and upgrading the property. Achour is not new to the hospitality business and has two 4-star hotels — the Lancaster Hotel and the Lancaster Suites, both also in Raouche — which he bought from previous owners and rebranded and renovated in the same manner as the Lancaster Plaza. The Lancaster Group, a division of Achour Holding, owns and operates the hotels.

The breakdown

Set to begin welcoming guests this month, Lancaster Plaza is the group’s most ambitious hotel project to date and has 151 units of different dimensions — 14 of which are suites — all with a sea view. The property also boasts two grand ballrooms, three meeting rooms, a piano bar, a rooftop bar, a shisha lounge, two restaurants — one a steak house, the other serving Lebanese cuisine “with a twist” — and a spa and health club with the biggest indoor pool in Lebanon. The food and beverage outlets are fully owned and managed by Achour Holding.

Lancaster Plaza’s operations manager Fadi Musharafieh says no detail has been overlooked to make sure it lives up to its 5-star status and that everything, from the fully interactive smart TV — which allows you, among other features, to order room service or handle your bill online — to the limousine pick-up at the airport is designed with luxury in mind.

Room rates at Lancaster Plaza start at $250 per night for the 30 square meter Pleasant rooms, designed with businessmen in mind. That compares with a starting price of between $310 and $340 at the capital’s other 5-star hotels, such as the Four Seasons, Le Gray or Movenpick. The Noble suite, the hotel’s largest suite which comes with its own fireplace and a jacuzzi in the bathroom, will be priced at no less than $5,000 per night, according to Musharafieh. He explains that they cannot go lower with their room rates as a 5-star hotel requires a large staff — Lancaster Plaza alone will have 220 employees while their two other hotels combined have 100 employees. “The Lancaster Group has one mission and vision, but those who are paying for a 5-star hotel experience need to feel the difference and this all costs money,” he says.

Lancaster Plaza hopes to attract the same high-end clientele of other 5-star hotels in the country and is targeting tourists from the Gulf as they believe the political situation in Lebanon, which is currently limiting the flow of such tourists, will improve in the near future.

Musharafieh says they are probably the only hotel operators in Lebanon who conduct their work as if the political situation in the country is stable. “This strategy is working for us. Lebanon has always had these political problems and if we want to stop [because of] them, then we will achieve nothing and will also be behind when the situation improves. Now, when the situation gets better and the tourists return, we will be ready for them,” he says. According to Musharafieh, Lancaster Plaza will be returning a minimum of 10 percent of the investment each year, provided the situation in the country improves.

The benefits of experience

Lancaster Group’s confidence in the country is probably spurred by the success of their 4-star operations. While Lancaster Hotel mainly attracts individual and corporate travelers for short stays in Lebanon, Lancaster Suites is designed for longer term stays and has a kitchenette in each room. Both these properties are performing well and had full occupancy during the two Eid holiday weeks this summer, according to Musharafieh, who adds that both properties are currently operating at 75 to 85 percent occupancy. Musharafieh admits, however, that room rates are the lowest they have been in a while: “We actually have never seen rates in the Eid period as low as they were this year,” he says. Today, room rates are a maximum of $130 for Lancaster Hotel per night, and $160 for Lancaster Suites.

The properties’ high occupancy numbers are mainly due to the influx of Syrian families who stay long term in the Lancaster Suites and receive special rates, and also Iraqi, Syrian, and some Turkish tourists who still enjoy visiting Lebanon and prefer a 4-star hotel.

Lancaster Group has managed to stand out from the competition by offering guests cost effective deals —also to be offered at Lancaster Plaza — that Musharafieh says people are keen on in these tough economic times. “Our added value is that we have companies that complement our work such as, for example, Rima Rent a Car which allows us to offer free rides,” explains Musharafieh. In addition to airport pick up and return, Lancaster Group also offers its guests complimentary rides in Beirut and access to Jana Beach Resort in Damour.

“When potential guests compare the room rates of hotels in Lebanon, they see that with us they are paying the same price as others, but they are getting more benefits and staying at fully and newly renovated hotels,” explains Musharafieh.

Achour Holding is clearly not holding back when it comes to investing in the hospitality sector in Lebanon. Musharafieh speaks of three venues opening in the new Achour building in Verdun area in the next few months: a cafe, Ward El Sham, an Italian restaurant called Caprese and a children’s entertainment center. Also in the pipeline is Eden Rock, a 69,000 square meters summer resort in Ramlet El Bayda scheduled to open in five years’ time.

October 25, 2013 0 comments

The Buzz

Business briefing: 25 Oct 2013

by Executive Staff October 25, 2013

written by Executive Staff

Economics and Policy

Iraq plans to sell bonds for the first time since 2006 as surging oil revenue pushes borrowing costs lower even as sectarian violence in the troubled nation escalates.

Business briefing: 24 Oct 2013

by Executive Staff October 24, 2013

written by Executive Staff

Economics and Policy

Egypt is not interested in importing gas via pipeline from Israel and instead is focusing on a plan to import liquefied natural gas, a top state executive said Wednesday.

More from Reuters

Kuwait is trying to persuade Saudi Arabia to take up the UN Security Council seat that Riyadh has spurned in protest at the world body's failure to end the war in Syria, a senior Kuwaiti official said on Wednesday.

More from Reuters

Companies and Business

Qatar National Bank, the largest listed lender in the Gulf Arab world, said it raised $1.5 billion from a two-part bond sale, underscoring investor demand for debt offerings from top-tier names in the region.

More from Reuters

The minimum capital requirement for insurance companies in Lebanon should be raised to at least $10 million to improve the efficiency of the sector and encourage consolidations among firms, the president of the Lebanese Insurance Association has said.

More from The Daily Star

Wataniya, Kuwait's No.2 telecom operator, reported a slight drop in third-quarter profit on Thursday, missing analysts' estimates.

More from Reuters

October 24, 2013 0 comments

Economics & Policy Industry 2013

‘Industrialists have given up on the government’ – Sarraf

by Joe Dyke October 23, 2013

written by Joe Dyke

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.

October 23, 2013 0 comments

Society

Creative endeavour

by Maya Sioufi October 23, 2013

written by Maya Sioufi

Walking through the buoyant Beirut Art Fair on its opening night last month, one could understand why the city has been featured as one of 12 worldwide to watch for contemporary art according to a new book published by Phaidon Press, titled “Art Cities of the future: 21st-century Avant Gardes”. Lebanese artistic talent has even caught the attention of renowned British art collector Charles Saatchi, the backer of Britain’s richest living artist Damien Hirst. Saatchi has amassed work from Lebanese arists including Hussein Madi and Zena Assi in his Middle Eastern art collection. Many were put up for online auction last month. Facing mighty neighbors such as Dubai and Doha, which have significant financial muscle and a keen interest in promoting their image as ‘art savvy’ destinations, Lebanon’s artistic talent is still taking a back row seat on the international art scene. But the country’s gallerists are not sitting idle.

Keeping up appearances

The fourth edition of the Beirut Art Fair, held at the Beirut International Exhibition and Leisure center (BIEL), was a busy affair. Gallerists and collectors mingled with curators, artists and passers by. The backdrop was trendy, with Momo at the Souks’ Blow Up installation, a lounge in the center of the fair, playing hip music. The opening night drew in 7,500 visitors with total attendance standing at 18,000 — up from 11,000 last year — a surprisingly strong figure given current circumstances. Similarly, sales from the 46 galleries present at the fair totaled $2.6 million —up from $2.15 million last year — according to the organizers.

Most gallerists Executive spoke to had not been expecting such a large turnout. Aida Cherfan, a newcomer to the fair this year and one of Lebanon’s best-established gallerists, opened her first art space near Antelias in 2000. Cherfan refused to participate in the previous fairs, partly because they took place in July “when most people are busy or away” and partly because of restriction on art from outside the Middle East, North Africa and South Asia regions, meaning she could not bring along the international artists she represents. “This year they changed it, they said 60 percent Middle Eastern artists,” she says.

With 13 years of experience in the art market and notable artists on her roster including Madi, sometimes referred to as the ‘Oriental Picasso’, Cherfan says that her gallery is performing in line with previous years. When asked if she is worried about the country’s economic crisis, she says “It can’t be worse than [during the war in] 2006 when we couldn’t see the light at the end of the tunnel”.

The performance of Lebanon’s galleries is difficult to know as most galleries, which take between 25 to 50 percent of total art sales, refuse to share their figures. Gallerists need their clients to be economically confident in order for them to reach into their pockets to purchase a piece of art — whether it is a coup de coeur, a short term investment or a strong belief in the potential of the artist. The most established names, however, still manage to flourish even in distressed times.

Established galleries holding up

Mark Hachem, a Lebanese gallerist based in Paris, established his downtown Beirut gallery three years ago. Since then, its sales have grown at a faster rate than in his New York or Paris galleries, with revenues in the past year north of 200 percent. “It is the fastest growing project I have ever entertained,” says Hachem, who opened his Paris gallery in 1996 before branching out to the Big Apple in 2006.

Initially focusing on kinetic art that depends on motion for its effect, Hachem’s interest for art from the region was triggered after the opening of his New York gallery. “The contemporary expression became more interesting and genuine,” he says. “There is an economic renaissance in the region pushing private Middle Eastern collectors to start developing their own collections. Historically, most collectors are patriotic and that’s what you see here too,” he adds.

Hachem has been participating in the Beirut Art Fair for the last three years. “I would never consider not participating, as it’s a way to resist and show that with culture we can do more than anything else,” he says. Hachem’s optimism comes off the back of an exhibition held in September in Beirut exhibiting the work of French sculptor Polles. Forty percent of the work on display sold in the first two days. “It was an amazing success and I was really surprised as we are living in a tough moment now” says Hachem. Two days after the fair, the gallery opened an exhibition for seven Syrian artists to a packed audience.

Another gallery performing well despite the economic crisis is the well-rooted Agial Art gallery, which has been operating from Beirut’s Hamra district for the past 23 years. The ongoing “Belt” exhibition of Lebanese artist Mohammad Said Baalbaki was 70 percent sold on opening night. “That’s because I’ve been around for 20 years, people trust me; in my first five years it was hard,” says Saleh Barakat, owner of the gallery. Upon opening in 1990 the Agial gallery presented art from throughout the Middle East but shifted its focus in 2005 to exhibit exclusively the work of Lebanese artists.

A painting by Lebanese artist Hussein Madi

The Janine Rubeiz gallery in Raouche follws a similar business model. Nadine Begdache, daughter of the late Janine Rubeiz, says that it’s becoming harder and harder for the gallery to sustain itself. “There are years and months when we have to make sacrifices. Gallerists are a bit crazy like the artists. They have messages and we have messages too,” she says.
Begdache is an established name in the Lebanese art scene. In her office, surrounded by numerous books and art pieces, she shares her frustration with the current crop of Lebanese collectors, without whose investment homegrown art will be unable to flourish. “The Lebanese collector, the old one, collected by pleasure, taste and education. When we bought [prominent Lebanese artist] Chafic Abboud in the 50s, we didn’t think he’d have extraordinary prices in 2013, we bought to help because we appreciated his pieces. Today the collector, the young one, invests in known names at high prices because it’s safe. It blocks a lot of artists, the emerging and the already emerged [from getting financial support],” she says. But not all young collectors are looking to acquire renowned names.

Facing big players like Agial and Janine Rubeiz, Lea Sednaoui’s Running Horse contemporary art gallery, located in the industrial Qarantina zone, has fought hard to establish a name for itself since its 2009 opening. To stand out, Sednaoui chose to represent emerging artists — both from Lebanon and abroad — targeting a younger clientele, with more affordable prices reaching up to a maximum of $10,000. One of her artists, 33 year-old Alfred Tarazi, has featured in an exhibition at the Austrian Krinzinger gallery that represents controversial performance and installation artist Chris Burden. Last year was a record year for the gallery, however in 2013 sales are down 30 percent. “People don’t want to spend as much anymore” she says.

Going international to stay afloat

Many gallerists in Lebanon have had to represent more than just local talent to remain in business. Throughout her career dealing contemporary art, Cherfan has featured international as well as Lebanese artists. “I felt the gallery couldn’t function with only Lebanese art,” she says. Naila Kettaneh-Kunigk’s Tanit gallery, which has exhibit spaces in both Mar Mkhayel and Munich, represents 55 artists of whom 15 are Lebanese. Tanit represents several world renowned artists such as the late American artists Sol LeWitt and Donald Judd. LeWitt also features among gallery Sfeir Semler’s roster of 34 artists, seven of whom are Lebanese. The gallery also owns exhibition spaces in both Beirut and Munich.

But some galleries such as Agial and Janine Rubeiz continue to focus exclusively on local talent, representing some of the most established names in the Lebanese art pantheon: from the late Shafik Abboud to Huguette Caland — daughter of Lebanon’s first president Bechara al-Khoury — to pieces by Lebanon’s first abstract artist Saloua Rouada Choucair. Barakat is proud of his Lebanese heritage and disagrees that Lebanese art is not up to international standards. “Look at Saloua Rouada Choucair: she is sharing headlines with Roy Liechtenstein at the Tate Modern. She was a blockbuster this year,” he says.

A sculpture by Kamel Hawa in downtown Beirut

Lebanon at the Venice Bienniale

Gondolas on the Venetian canals have been packed with more than just sightseers this year as curators, artists and collectors have flocked to the city for its 55th Bienniale, a celebration of arts held in Venice every two years. This year, for the second time in the Bienniale’s history, the Lebanese flag has been planted on one of Venice’s tiny islands. Barakat, along with Sandra Dagher — currently co-director of Beirut Art Center — curated Lebanon’s first pavilion at the Venice Bienniale in 2007, bringing along five artists with the support of Lebanese foundations and corporate donors. This year, artist Akram Zaatari is representing Lebanon. His piece, a video entitled “Letter to a Refusing Pilot”, concerns an Israeli pilot who objected to bombing a school in Zaatari’s hometown of Saida in 1982.

Unlike in Britain, where the British Council manages the country’s national pavilion, or in the United States where the Department of State selects a public gallery to manage its pavilion, in the case of Lebanon a private non-governmental organization called the Association for the Promotion and Exhibition of the Arts in Lebanon (APEAL) was behind this year’s initiative. This year’s Bienniale was the third time APEAL has brought Lebanese artists to an international audience, having organized collective exhibitions in Washington DC in 2011 and London in 2012.

The apathy of the public sector

When it comes to supporting the arts in Lebanon through the purchase of Lebanese artists’ works, again, public sector efforts are negligible. Long gone are the days when the Ministry of Culture selected top quality pieces for its collection, which features some of Lebanon’s most prominent names such as Khalil Saleeby, Bibi Zogbe and Said Akl. “The Ministry of Education and of Tourism had a buying committee that went around galleries and bought paintings; that’s how the collection of the government was built,” says Begdache, who regards Michel Edde as the only former minister of culture that had a strong interest in supporting the arts.

Stepping into the public sector’s shoes when it comes to funding and acquiring art pieces are private donors and foundations such as the Mikati Foundation, the Philippe Jabre Assocation, Foundation Saradar and Marwan Assaf. The banking sector is also not averse to the occasional dalliance in the market: Bank Audi has a wide collection of Lebanese and international works, while BankMed and Banque Libano Francaise support the Beirut Art Fair and the Beirut Art Center respectively. “Art is also social visibility and it indicates where the person or organization stands with regards to their evolution,” says Pascal Odille, art critic and artistic director at the Beirut Art Fair.

With no national museum displaying Lebanon’s contemporary art, the private sector has had to fill the cultural gap to increase public access to both national and international art. The Beirut Art Center (BAC), which opened in 2009, and the Beirut Exhibition Center (BEC), which opened last year, are examples of spaces exposing contemporary art. While BEC’s mission is to promote art from Lebanon and the region through regular exhibitions, BAC is increasing the country’s artistic exposure by bringing international art to its space. Another example of a private initiative taking the lead is the Modern and Contemporary Art Museum (MACAM) opened by Lebanese art critic Cesar Nammour in a large compound factory in Jbeil.

The lure of the Gulf

With auction house Christie’s choosing Dubai as its Middle East base and competitor Sotheby’s opting for Doha, collectors and their deep pocket capital have been flowing into neighboring cities in search of the latest names capturing the zeitgeist. “We are now on a wave, it’s unbelievable what’s happening in the region,” says Hachem as he describes how his clients in the United States have been increasingly interested in art from the region, particularly Syrian art. Dubai’s artsy reputation has suffered in recent years due to the financial crisis the city has experienced — Christie’s latest auction for modern and contemporary Arab, Turkish and Iranian art held in April brought in just over $6 million, down $8 million from 2011.

Doha, on the other hand is faring better — Sotheby’s successfully raked in $15 million this year in its second auction in the city, during which international as well as Middle Eastern artists’ work was exhibited. While Beirut currently has no auction houses Odille strikes an optimistic note: “It will come,” he says.

But will it? Lebanon’s well-established gallerists aren’t so sure. “The platform is gone and for a long time to Dubai: they have the stability and the money” says Barakat. Even the younger generation is not optimistic. “We don’t see the end of the tunnel, it’s been years and years, from the days of our fathers and grandfathers” says Sednaoui.

Lebanon’s fatigued financial muscle has not allowed its homegrown creative talent to reach its full potential, curtailing the arts and culture from developing and contributing to the growth of the country’s tired economy. While the private sector — from gallerists to private individual sponsors and donors to associations — fights hard to establish international and local recognition for the country’s artists, the country still has a lot of artistic potential to explore. To support the development of the country’s art and culture and help it gain deserved recognition, it’s up to the Lebanese private sector to discover, enjoy and continue making efforts to promote the abundant local artistic talent.

October 23, 2013 0 comments

The Buzz

Business briefing: 23 Oct 2013

by Executive Staff October 23, 2013

written by Executive Staff

Economics and Policy

Saudi Arabia’s unprecedented rejection of a U.N. Security Council place has pushed the world body into uncharted territory, but fellow Gulf nation Kuwait is emerging as an early front-runner to fill the seat.

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Saudi Arabia's intelligence chief has said the kingdom will make a "major shift" in dealings with the United States in protest at its perceived inaction over the Syria war and its overtures to Iran.

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Egypt hopes that political tensions with natural gas giant Qatar will not undermine efforts to secure supplies from the Gulf state, but sees Algeria and Yemen as other options.

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Companies and Business

Iraqi Kurdistan’s largest oil and gas investor has filed the first major legal case against its regional government over $1 billion in owed payments and production rights, just as the autonomous region looks to become a major energy exporter.

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Phase one of Dubai's $3.3bn Mohammed Bin Rashid Solar Park has opened as part of a push to diversify energy supplies in the UAE.

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A $140 million investment has turned Beirut Port into one of the largest container handlers in the East Mediterranean amid growing demand for transshipment goods from war-torn Syria.