Economics and Policy
The European Union has placed Lebanese party Hezbollah's military wing on its terrorism blacklist because of its alleged role in plots in Europe and the Syrian civil war.
Economics and Policy
The European Union has placed Lebanese party Hezbollah's military wing on its terrorism blacklist because of its alleged role in plots in Europe and the Syrian civil war.
Iraq has signed an agreement to import natural gas from Iran for power generation.
Prime residential sales prices in Abu Dhabi increased by five percent during the second quarter of 2013, according to a new report by Jones Lang LaSalle.
UAE-based bank Emirates NBD beat estimates for second-quarter profit as the rebounding economy drove demand for new loans and the bank lowered its forecasts for bad debts this year.
Economics and Policy
Iran has denied it failed to make payments on its loans to the World Bank for the last six months, blaming Western sanctions for preventing an intermediary from forwarding funds to the global lender.
The biggest mistake deposed Egyptian President Mohammed Morsi made was stopping wheat imports, Egypt’s new supplies minister has said.
Companies and Business
Dubai Financial Market (DFM), the Gulf's only listed stock exchange, said second-quarter net profit surged on the back of higher trading values and renewed interest among investors lured by an economic recovery in the emirate.
Beirut's real estate is the second most expensive in the Middle East, a new report has shown.
Emirates NBD said its second-quarter net profit rose 50 percent, beating analysts' forecasts, as Dubai's largest lender benefited from an economic recovery in the emirate.
The Middle East, and the Gulf Cooperation Council in particular, is investing heavily in education to tackle high levels of youth unemployment and close the wide gap in skills between what students learn and what the market wants. While higher quality and relevant educational offerings are important, our research has shown a corresponding need for career development programs where large unused potentials wait for public and private sector engagement instead of the current haphazard approach.
Industrialized countries’ education systems teach career development directly and indirectly. For instance, the United Kingdom and Canada have built indirect career development opportunities into higher education curricula, widening the focus from immediate choices to personal development and broader decision-making. In combining traditional career counseling and personality aptitude testing with extracurricular activities, the broader programs instill confidence in students, an understanding of the importance of enterprise plus the ability to seize opportunities and to engage in life-long learning.
By contrast, the Gulf region’s education systems still prioritize knowledge absorption over skill acquisition and governments still use a haphazard approach in which career development programs are not integrated into curricula, even though some career counseling may be offered. The focus on knowledge absorption fails to build students’ problem-solving abilities, leadership skills and creative aptitude. While governments address this issue with varying levels of effectiveness, the absence of career development from the curricula exacerbates the problem of making sure students are ready for the real world. Far too many students have a limited view of their future, which can lead them to believe that a career within the public sector is their only option.
In our recent survey of more than 1,300 students in the GCC, we found that students are largely uninterested in working for the domestic private sector, the part of the economy that governments want to expand. For the most part, students choose the public sector for job security, or multinationals for career development, something which they believe is not offered by the local private sector.
Students have insufficient exposure to entrepreneurship, whether of the commercial or civic variety, and have little experience in volunteering for charities or civil society organizations. This robs the economy of potential entrepreneurs and prevents talented students from becoming wealth creators.
Shifting focus
To address this problem, Middle Eastern countries need to educate students about employment, not just for employment. In the GCC, governments will have to lead the way. Over many years, Gulf states have invested in public sector employment programs that were benefiting their citizens and increasingly supporting the advancement of women. However, the focus on making the public sector the employer of choice has hindered private sector development.
It is difficult for Middle East companies to compete with the security and generous pay of the public sector. Governments should address this imbalance by restructuring public sector employment in ways that reduce the differential with their national private sectors.
In opening private sector potential by leveling the playing fields, governments will provide a central and effective boost to national private sectors and economic diversification. To unleash the potential further, government agencies will need to change their focus in career development programs. At present, many governments are tackling career development issues through re-skilling programs available only to graduates. While these are useful, governments need to create career development initiatives run by ministries of education that teach students from the start of the education process.
Governments can also act as convenors of the stakeholders: ministries, private companies, teachers, parents and the students themselves. Governments need to publicly articulate the importance of career education for the region’s students while enlisting the support and input of other stakeholders.
To make higher education more practical and oriented to both national economic needs and the career needs of students, the leadership of governments has to be complemented by the broad involvement of educators, professionals and companies. Education ministries, and other official education bodies, have to work closely with teachers and academics to modernize the curriculum. They should use curricular and extra-curricular mechanisms to communicate the importance of careers, enterprise and private sector work.
The region’s education ministries can consider developing national frameworks for career education that outline the government’s priorities and plans so that pupils and their parents are aware of these career development efforts. For example, Australia’s Department of Education recently introduced a National Career Development Strategy that announced the country’s career development objectives and sought to obtain input from the public.
The education system should deliver lessons about employment and careers in a sustainable manner. Curriculum standards will also need to change to encourage a positive attitude toward work and learning. The curricula of the future should ensure that high school students are able to evaluate the relationships between their individual interests, their abilities and skills, and achieving their goals, whether personal, social, educational or career-related.
reaching out
The private sector has a vested interest in participating in building career skills. Yet there is a reflex in some parts of the private sector to sit back and wait for governments to take the lead. Instead, companies should be proactive and incorporate the career development of their community’s youth into their corporate social responsibility plans. Such plans can involve forging alliances with schools and universities to offer apprenticeships and summer placements that will make students more employable. Too many students miss precisely this exposure to the private sector that is routine in developed economies.
Families are also important. In a recent survey in the GCC, we found that a large majority of parents want their children to have a safe public sector job. Often, this desire is influenced by a lack of awareness of the added opportunities that private sector employment has to offer. If government agencies and educators provide parents with information on their children’s career development opportunities, parents can be taught to encourage their children to take risks and support them in their career choices or accept these choices if they choose to break with family tradition when it comes to their career.
Finally, the students have to be engaged in career education and development. Our survey indicated that GCC students understand the shortcomings of their education and want to be involved in reforming it.
Career education has multiple benefits, preparing students properly for university life and teaching them to prioritize their studies and learn independently. Above all, it instills in them the value of life-long learning and personal development, attitudes that drive the innovation that the region’s economy needs.
Leila Hoteit is a principal at Booz & Company and Mounira Jamjoom is a senior research specialist at the Ideation Center, Booz & Company’s think tank in the Middle East
Beirut is a growing city. It extends well beyond its official municipal borders, and there is pressure for it to spread even farther. The need to accommodate young families and individuals demands a wholesome living environment, and so does the future of Beirut and its property sector. Planners, developers and real estate professionals have urgent stakes in responding to the growing demand for affordable housing, and we hold to the view that adequate, inexpensive housing for limited-income families can be provided within a 25- kilometer belt outside Beirut’s city limits.
A promising calculus
Several factors have put growing pressure on Beirut to spread out from its current tri-partite center of the Central District, Ras Beirut and Ashrafieh.
The first is demographics. Beirut already accommodates more people than its space and infrastructure can adequately support. One need only look at the traffic jams or the sewage system that floods with the first drop of rain.
Secondly, local, middle-income families are increasingly finding themselves priced out of housing. It is nowadays impossible to own a new apartment anywhere in Beirut for less than $250,000.
Lastly, Beirut plainly lacks green spaces, public gardens and even trees along many of its sidewalks.
The trend for development to move away from Beirut is well under way. Together with the Greater Beirut region, the provinces around the capital are home to the majority of the population. In our opinion, however, development is not spreading fast enough, and certainly not reaching far enough.
We believe that spreading development to regions within a 25-km radius from Beirut will translate into a sizable drop in the cost of housing. While land in Beirut and its immediate surroundings costs today anywhere between $1,000 and $5,000 per square meter (sqm) of sellable built-up area (BUA), the cost of land in areas between 20 and 25 kilometers from Beirut can be as low as $150 per sqm of BUA.
Construction costs of $500 to $600 per sqm can be achieved for mid-market housing, bringing total costs to around $700 per sqm. Adding in developers’ borrowing costs and profit margins brings the selling price of the most affordable finished apartment at the lowest end of the market to about $1,000 per sqm.
It is therefore perfectly conceivable and indeed very possible to offer adequate housing to middle-income families at a starting budget of $80,000 for a 100 sqm apartment. This is well within the subsidized housing loan (iskan) ceilings and within the reach of every income-earning family, which could easily transfer the minimum currently required monthly rent of $400 — equivalent to $4,800 per year — to housing loan payments.
A greater vision
Taking the 25-km belt as our development scenario, we envision a huge urban hub around Beirut, stretching from Nahr Ibrahim in the north to Jiyeh in the south, going through areas such as Qleiaat, Metn, Sofar and Deir el Qamar. We expect that the creation of the hub will provide a much-needed boost to economic growth and also boost the entire real estate industry if certain obstacles can be removed.
The most obvious problem is the creation of an infrastructure that will facilitate a daily commuting time that should not exceed 45 minutes from anywhere in the 25-km zone. While all the areas within this radius are serviced with roads, electricity, sewage systems, telecoms, etc., the commute to and from Beirut, which will remain the business hub and thus a daily destination, is restricted to very few means of transportation — cars, mainly.
Developers might also require an incentive to venture out of town, such as tax exemptions or easements of permits and other official paperwork. In many instances, exploitation ratios are low, limiting development to independent housing or villas. Local municipalities might have to revise their construction regulations to allow for higher exploitation within, of course, a cohesive master urban plan. Urban planning, which for decades has been almost non-existent in all areas except for the Beirut downtown, is a must to successfully develop the city and its belt.
As for alluring prospective homeowners, the opportunity to live in a decent, healthy environment should be motivation enough. However, local services — such as schools, hospitals, shopping and entertainment — should also be encouraged.
The need to develop a 25-km city belt is dictated by Beirut’s demography and geography. Our job is to make it happen in an orderly manner with intelligent urban planning and far-sightedness.
Karim Makarem is director of Ramco Real Estate Advisers
Economics and Policy
Israel is set to drill for oil in a geological layer beneath its Leviathan gas field. The field could provide up to 1.5 billion barrels of oil.
Ministers in Egypt's new government pledge to end shortages but are cautious about deeper reforms.
Qatar moves to displace Dubai as region's financial hub.
Companies and Business
Dubai real estate transactions were up 30 percent in H1 2013, year-on-year.
Audi Saradar Group posts flat year-on-year profits in H1 2013.
Mubadala sells stake in Petrofac oilfield-services venture in order to grow private energy sector.
In an alleyway corner in an impoverished Beirut district, a small group of youngsters gather. Nearby, barefoot infants play in wastewater falling from a drain, and a maze of loose electricity cables haphazardly zigzag overhead. While thousands of their peers across the country are sitting in classrooms, these children-cum-adolescents are typical of many from their neighborhood and have long since left education for a life of work.
“The situation at home was difficult and I didn’t think school would help me find a job in the future, so I decided it was better to go and work than to stay in school,” says Haydar, a 15 year old from the area. He dropped out of school when he was 12 and has since been working full-time in a number of different jobs.
Abboudi, 12, from the Syrian city of Aleppo helps support his family by selling flowers to revellers in the Mar Mikhael district of Beirut
Beside Haydar stand two of his friends who have also forgone any formal education in their youth so as to get to work and start earning as soon as possible: a boy who works in an aluminum workshop and a young girl who packs rat poison into little plastic bags. All of the youngsters, who are between 12 and 15 years old, work at least eight hours a day, often closer to 10, and receive around LL50,000 ($33.33) to LL75,000 ($50) for their services for a six-day work week.
The 12-year-old aluminum worker, Ahmad, is illiterate and never expected, nor desired, an education. “None of my three brothers ever really went to school, and I didn’t like it. The teachers weren’t good to us. We all try to get work when we can, which is the way it is for most of us around here,” he explains. Much lip service has been paid to decrying the problem of child labor and its increasing prevalence in Lebanon, but to date very little has actually been done to tackle it.
There are no accurate statistics on this issue, but between 2005 and 2006 the child labor unit at the Ministry of Labor (MoL) said there were around 100,000 youngsters engaged in child labor; it has since updated this estimate to 180,000. However, the unit’s head, Nazha Shallita, concedes that in reality the number is probably significantly higher, “with the effect of the war in Syria and the general declining economic situation.”
Ignored agreements
This kind of child labor is not about youngsters doing a couple of shifts a week in the coffee shop for pocket money or taking on holiday jobs to build up the resume. The worst forms of child labor are those kinds of work that expose children to physical, sexual or psychological abuse, deprive them of the right to education or endanger their health, safety or morals. Think factory floors, brothels, machinery workshops, agricultural fields and rubbish dumps.
Despite the scant attempts to remedy child labor on the ground, Lebanon is in fact a signatory to a number of international treaties on the subject and has made some strides in addressing its legal and policy framework to tackle the problem. However, “until now we are talking about planning and more planning, but in reality all we are seeing are small interventions from civil society,” complains Marie Assi Khayat, program manager and co-founder of Beyond Association, a Lebanese non-governmental organization that works to eliminate child labor and its root causes, such as lack of remedial education, vocational training and social services.
Ali Shahine, 15, works as an auto electrician at his father’s garage in Nabatiyeh. “I got bored at school, but I am happy now,” he said.
To bring Lebanon in broad accordance with the international agreements to which it is committed — the United Nations Convention on the Rights of the Child (1989), International Labor Organization (ILO) Convention 138 on the Minimum Age of Admission to Employment (1973) and ILO Convention 182 on the Worst Forms of Child Labor (1999) — there have been several key adjustments to the domestic legal code. How rigorously these amendments have been implemented and enforced, however, is a different matter altogether.
In 1996, a special chapter dealing with working children was introduced into the labor code, and the minimum age of working children was raised from nine to 14 years old — 15 years old in industrial projects and activities which are physically demanding or detrimental to children’s health. The minimum age was also raised to 16 or 17 for occupations that are deemed to be “industrial, arduous or unhealthy”, such as smelting, slaughter and construction.
It is ultimately up to the MoL to monitor compliance with these laws and investigate any breaches, but in reality there is minimal action. In a recent pilot project, the NGO War Child Holland, based in Lebanon, offered training to 19 of the ministry’s 73 labor inspectors but, “the inspectors were not even aware of the child labor unit within the ministry or that they had any remit to inspect for child labor,” says the project’s advisor, Haifa Hamdan.
What is more, the labor inspectors are not permitted to delve into the informal sector, which encompasses those corners of the economy that are not taxed or monitored by any government institution nor directly included in gross domestic product calculations. According to the International Monetary Fund, the informal sectors account for just under a third of the Lebanese economy, and it is, of course, in exactly these kinds of areas where child labor is most likely to be present.
“A draft of the labor law allows inspectors into the informal sector, increases the age children are allowed to work and criminalizes those that employ the worst forms of child labor, but it has been stuck with the Council of Ministers awaiting an implementation decree since 2001,” explains the MoL’s Shallita.
Implementation decrees are meant to be issued by the Council of Ministers, Lebanon’s cabinet, to bring into force legislation passed by Parliament. However, in this case and countless others, the intransigence, ineptitude or incongruity of the executive branch of government has squashed crucial statutes passed by the legislators.
The value of education
Back on the Beirut street corner, two of the young workers have differing views on the value of school. “I thought that work would be better for me than school but I made a mistake. School is better than work. I really regret so much that I left school for work but it is too late now,” says Haydar, while his friend Ahmad still feels that “school is a waste of time. I hated it then, and I don’t see the point in ever going back.”
The failure to keep more of Lebanon’s youth in education is one of the fundamental reasons for the high prevalence of child labor across the country. In the absence of any nationwide study, this is best demonstrated by a single November 2012 report by War Child. Based on interviews with more than a thousand workers under the age of 18 in Beirut’s impoverished southern suburbs, this survey found that approximately one out of 10 respondents had never attended school. A quarter of those who did attend school dropped out before they were 10 years old and 16 percent could not read or write at all.
While those statistics may be a sobering reflection on the state of education in Lebanon, the reasons given by the youngsters for leaving school reveal further systematic failings. Of the 96 percent of respondents who were no longer in school, a quarter were driven out for reasons such as repeated failure, bullying or ill-treatment by teachers, rather than having abandoned it for financial or other reasons.
Law 686, passed in 1998, made education free and compulsory until the age of 12. It was reinforced by Law 150, passed in August 2011, which reiterated these rights to education. While this could have amounted to a significant step forward in tackling child labor, the laws have essentially never come into effect because, once again, their implementation decrees were never issued.
“Free and compulsory education is quite frankly not implemented,” explains Hoda Kara, director of Bayt Al Amal, a Lebanese NGO that works with vulnerable children from very poor families. “There simply are not enough places, and they still have to pay fees.”
Some steps were taken in 2003 to help in the implementation of the law, such as exempting children in preschool and first and second grade in public schools from registration fees, establishing public schools in almost all regions of the country and subsidizing schoolbooks.
But these steps were also sporadically applied. Until the implementation decrees are passed, which can’t happen until a new cabinet is formed, there will not be free and compulsory education available for children. “Of course we need the help of other stakeholders. Once they are in school we will take care of them, but if families don’t send their children to school, for example, we advocate to get them into school and we need the help of other ministries to get them into school,” says Sonia Khoury, acting director of guidance and orientation at the Ministry of Education.
With his father’s gun around his neck, a young resident of Tripoli’s Bab Al Tabbaneh district tucks into lunch
Beyond asking the government to implement the decisions it made 15 years ago, advocates such as the United Nations’ Committee on the Rights of the Child are also asking for the maximum age of free and compulsory education to be raised to correspond to the minimum age for entering full-time work. The War Child report on child labor found that the average age for leaving school among the young workers interviewed was 12 years old, which corresponded with the average age they started work. The logic follows that were free and compulsory education enforced up until the age of 15, children would be more likely to stay in education and not enter the workforce.
In plain sight
In the pulsing nightlife districts of Beirut such as Hamra or Mar Mikhael, dozens of street children can be seen hustling among the nighttime partygoers. With a bunch of roses in hand, they banter with revelers hoping to pick up a dollar here and there in exchange for their flowers.
These street children, who can also be seen amid rows of traffic hawking tissues or chewing gum or anything they can get their hands on, are perhaps those child laborers who are most visible and commonly encountered by the public at large. While they are only the tip of the iceberg, their situation is somehow unique.
“I work until I sell all of these flowers and bring LL60,000 every night, normally until two or three in the morning,” explains Jihad, an 11-year-old flower seller outside the busy bars of Mar Mikhael. Estranged from his parents, who are stuck in war-torn Aleppo, he works the streets of Beirut six nights a week with his 12-year-old brother, Ahmad.
With an innocent enthusiasm that betrays his age and a savvy swagger that befits his trade, he tells of how he would love to be in school but instead spends his days and nights collecting the cheap nylon flowers from his brother-in-law’s friend’s factory, wrapping them in plastic and heading to the streets to sell them all.
While the Syrian crisis has compounded this issue, it was very much a problem beforehand. “Of course there are Syrians like me and my brother working these streets, but most of the kids you see are Lebanese,” says Jihad.
The main body responsible for getting these children off the streets is the Internal Security Forces (ISF), which falls under the Ministry of Interior. In 2002 a special unit was created to deal specifically with this problem. However, with the political crisis that followed the assassination of premier Rafiq Hariri in 2005, the funding dried up and the unit, which consisted of around 500 specifically trained staff, was disbanded.
“Our role regarding street children is to take them from the street but the problem then is what can we do and where can we put them… first we need to establish organizations that can deal with the children, and then we will be in a position to take them and keep them off the street,” says Lt. Colonel Ahmad Nazih Abu Dagher, the ISF officer now responsible for policing street children.
There is one main center where street children are taken to in Kahale in the Mount Lebanon region, but it is little more than a “dumping ground”, according to Hayat Osseiran, consultant at the ILO and the International Program on the Elimination of Child Labor. Within days most of the children that end up in the center are back on the streets, and anyone that can prove they are a relative of the child can remove them, regardless of any suspicions that it is the family that is putting the minor to work on the streets in the first place.
While many of the street kids, such as Jihad, are put to work by their family either out of desperate circumstances or cynical exploitation, it is also common for criminal gangs to organize the children into what can only be called slave labor. “We had a big project to deal with this problem and get the kids off the streets but very strong pressure was applied [on our supporters] and one by one influential and important people started to drop off,” explains lawyer and children’s rights activist, Khaled Merheb. “There is a big mafia behind much of this exploitation.”
While the ISF’s ability to take and keep the children off the streets may be limited, they also have the responsibility and power to investigate and punish those adults exploiting street children for profit. Discussing what success his forces have had in this domain, Lt. Colonel Abu Dagher said his men detained and charged those responsible but when pushed could not provide any statistics. Merheb’s experience in the field is somewhat more revealing: “When we talk about cases against adults putting kids to work on the street, well these don’t really go to court. I’d be surprised if you found one,” he says.
Replacing books with guns
As violent fractures start to crack Lebanon and the specter of war rears its head once again, ever more children and young adolescents are prone to being pulled into the miasma. Perhaps one of the most malign forms of child labor, child militancy, is on the rise in many areas where poverty is crushing, the state is all but absent and sectarian sentiment is rife.
The Bab Al Tabbaneh neighborhood is in the middle of a belt of neglect and destitution in Lebanon’s northern city of Tripoli, where frequent and fierce clashes have left dozens dead over the last few months. On the front lines of the battle on Syria Street, which separates them from their rivals in Jabal Mohsen, groups of local men sit drinking coffee as they take a break from their shifts behind the sandbags.
Among the militants, children as young as 10 handle M4 semi-automatic rifles and Kalashnikovs. While these youngsters are merely playing with the guns for show, their brothers and neighbors who are only a couple of years older have joined the real fight.
On one of the street corners, 14-year-old Ghadab sits with his father, each sporting a Kalashnikov rifle on his lap. The boy’s effeminate hands and hairless face would be completely incongruous alongside his rifle in most settings but somehow they are not so ill-fitting amid the bullet riddled destitution around him. “School? I don’t know school. This is my school,” he says as he points at the urban battleground around him as rifle shots crack in the air. When asked what he would like to do in the future, he shrugs his shoulders and gives a puzzled look as if it is the first time anyone has ever asked him the question.
On the same block, Fouaz Harouk, a middle-aged father of four and small time trader, rails at the political and business elite who have completely washed their hands of the neighborhood. “This unemployment and complete lack of activity, it drives you mad. It has been near impossible to provide for my family on my earnings this past couple of years. Many others have not earned a thing,” he laments.
A group of teenagers and young men surrounding him drop their bravado and give nods of regretful agreement when he talks of the lack of opportunity, hope or aspiration in the neighborhood. They share a sense of abandonment by those in power, except when it comes to providing them with arms so they can be “used as pawns” in the festering, internecine conflict in the area.
The great divide in wealth in Lebanon and the many pockets of neglect coupled with rudimentary social support systems are at the heart of the problem of child labor. In 2007 almost a third of the population lived below the upper poverty line of $2.40 a day, a rate which rose to over 50 percent in the north of the country, according to the most recent statistics from the UN’s Office for the Coordination of Humanitarian Affairs. Considering the immense strain the Syrian crisis has put on the country, these numbers are likely to have risen significantly.
“For most of the kids the problem is poverty. They want to go back to school but there is a lack of hope,” explains War Child’s Hamdan. “We really need income-generating projects for their families. We can get some kids back into school but for many we simply can’t because they are the main breadwinners and their families rely on them.”
Child labor in the spotlight
Under the direction of the ILO and the Ministry of Labor, there is a drive to bring the issue of child labor back to the table and to implement laws and policies that will help tackle the problem. In May 2012, the national steering committee, which brings together all the main stakeholders in combating child labor, was reactivated and in October 2012 decree 8987 was passed, which classified in greater detail jobs that are considered hazardous and are therefore prohibited for youngsters under the age of either 16 or 17.
There is also a national action plan in the pipeline from the National Committee to Combat Child Labor, under the direction of the MoL, that has, “an emphasis on education, the capacity of labor inspectors and boosting the income capacity of the family,” says Shallita at the MoL. “Prevention, withdrawal and rehabilitation are the main objectives.”
The success of this drive will depend on the government’s ability to bring into force legislation that already exists, such as the draft labor code and compulsory free education until grade nine — and potentially older. Similarly, significantly more funding and resources need to be made available to those organizations and bodies that are working on the ground to combat child labor, such as the labor inspectors, the ISF, civil society groups and the social services offered by the Ministry of Social Affairs.
Any investigation of the issue is hampered by the paucity of data on specific types of exploitation and abuse of minors in Lebanon, but it is unmistakable that child labor is not a trivial inconvenience on the margins of society. It is a blight that afflicts swathes of the nation’s youth, robbing them of their education and childhood. It is also a sad reflection of the poverty and dereliction endured by far too many families that call this country home. The matter of child labor is of considerable consequence for the stability, prosperity and harmony of Lebanon’s coming generations.
Shopping centers and commercial complexes are on the agendas of real estate investors across the Middle East. The phenomenal contribution of malls to tourism and retail growth in metropolises such as Dubai and Beirut has led capital to fund the ambitions of even second-tier cities to grow shopping centers in size, sophistication and number.
Advisors to the retail industry see demand for shopping mall concepts come from the Gulf region and as far afield as the Congo. As locally the regional sector evolves to the standards of a highly competitive global retail industry, private and public investors will need to understand the industry and its drivers if they want to succeed in creating shopping destinations.
A successful retail destination requires a well-articulated vision supported by a sound business plan that incorporates shopping center development.
A good retail design should maintain a balance between commercial and civic concerns while taking into consideration the socio- and macro-economic environment. The design should create an environment that enhances the shopping experience, addresses community aspirations and meets the landlord’s objectives.
Balancing retailer demands…
A retail destination’s success depends on established relationships with global brands and an understanding of their strategic objectives and requirements, together with an understanding of the needs of tenants and customers. For example, some international brands, especially ‘anchor’ or ‘flagship’ stores, have pre-set design and technical requirements, such as specific locations and adjacency with other brands or a specific unit size with a defined shape and area for their concepts, not forgetting the technical requirements on mechanical, electrical and plumbing provisions.
Incorporating these specifications into the project ahead of time is critical to ensure that targeted brands and anchors are attracted to the mall. Shop front sizes and ceiling heights are also prerequisites on which brands will not compromise.
Ongoing technical assistance through the development cycle is a major contributor to asset value creation for landlords. Shopping center specialists ensure that projects are implemented as planned and that any changes to specifications, provisions, mix and tenants are properly assessed ahead of time and the impact on the retail development quantified. The objective of such work is also to ensure that the operation of the mall is smooth and cost effective and that the value of the property increases annually.
… And customer desires
Customers want to be able to choose from a variety of products in each merchandise category. This can be achieved especially at large shopping centers, where ‘area clustering’ creates a distinct destination for each customer need, be it neighborhood services, fashion or food and beverage. A shopping center should be a one-stop-shop destination, as convenience is one of the main attractions of a mall.
Developers sometimes overlook details such as access and circulation. A good parking and a well-designed navigation system are a must for a comfortable and enjoyable shopping experience. Traffic management does not stop in the parking lot, however, as shoppers in the mall need organic pathways of circulation. If not properly sized, passageways can create bottlenecks and congestion that affect the entire area of a mall, potentially turning it into a ‘deserted’ space.
A mall’s interior design program must also develop a balanced retail mix and merchandise plan and include backroom areas, which are not available for customer access.
Public spaces should offer a comfortable and inviting environment. This is where the quality of the finishes in the common areas, the nature of the meeting points and piazzas, the technical provisions, the lighting and the like should be carefully considered.
Landlord and tenants will look for footfall generators such as flagship stores, exclusive brands, cinemas and hypermarkets, each with its own selling proposition, as well as a balanced and interesting mix of activities and brands, in line with the project positioning, which is based on identification and assessment of the projects’ catchment areas.
These elements encourage customers to return to the mall and increase the length of their stays.
Claudia Kassab Tarazi is the managing director and founding partner of Retail Consulting Group, which specializes in shopping center development.
Economics and Policy
The U.S. has again offered to help mediate a dispute between Lebanon and Israel over the demarcation of maritime borders, Lebanese officials said after meeting with the top American energy diplomat.
Cyprus's international lenders began reviewing how the island is meeting the conditions of it 10 billion euro bailout on Wednesday, looking to see whether it should get the next tranche of aid.
The European Union's top diplomat, Catherine Ashton, yesterday called for the release of former Egyptian president Mohammed Morsi who is being detained by Egyptian military.
Gunmen assassinated a prominent Syrian pro-government figure at his home in southern Lebanon on Wednesday, shooting him nearly 30 times in the latest sign of Syria's civil war spilling over into its smaller neighbour.
Companies and Business
UAE insurance giant Daman is revamping its health insurance policies in a move that could affect almost half a million expatriates.
Abu Dhabi Commercial Bank has terminated its contract with Moody's Investors Service only months after settling a lawsuit with the credit ratings agency.
The Syrian government announced in June the imposition of new restrictions on private sector imports, a move that reflects the authorities’ growing nervousness as all economic and financial indicators are in the red.
In a decision issued on June 10, Syria’s Ministry of Economy and Trade required all traders to apply for an import license before conducting any import transaction. While this license already exists for many items, it is now extended to products that were exempted from it, such as food products and medicines. After obtaining their license, importers will also need to find their own source of financing and will no longer be able to rely on the Central Bank of Syria (CBS) to buy their foreign currencies. By increasing paperwork and making it more difficult for importers to access foreign exchange, the government hopes to slow or discourage impåorts.
At the same time, the ministry announced that it would use state-owned enterprises to import directly a list of key food items such as sugar, rice, tea, coffee and canned food. The ministry will import these items using foreign currencies purchased from the CBS at the official rate, which, in mid-June, stood at only half the black market value.
By importing certain products directly, the government hopes to solve two problems. First, by buying currencies at the CBS’s official rate, it reduces the cost of imports and therefore limits the rise in inflation. Moreover, it ends the practice of many importers who bought foreign currencies from the CBS only to sell them back on the black market and make a profit, instead of using them to finance their imports. The latest decision reflects the growing concern of the authorities over rising inflation, which is running in the triple-digits, and falling foreign currency holdings, which are estimated to have declined to less than $5 billion from $17 billion in March 2011. However, it is only one step further in a policy of curbing the level of imports that began almost two years ago.
In September 2011, the government banned the import of all products that had a customs tariff of 5 percent or more. The idea was to save foreign currencies that would otherwise be used to import “luxury products”, cars in particular. The outcry from the business community was such that the government was forced to reverse its decision 10 days later.
Then, in February 2012, customs tariffs on a long list of consumer products were increased to between 40 percent and 80 percent. The measure, which was officially justified by the need to protect local production and to slow demand for foreign currencies, buried for good the policy of trade liberalization that had begun when Bashar al-Assad came to power some 10 years earlier.
The opposition’s seizure of the north-east part of the country in the first quarter of this year contributed to an increasing sense of urgency in Damascus. The region is, indeed, the source of all the oil wealth of the country and of much of its agricultural resources.
As it is now unable to access these resources, the government is forced to turn to global markets to buy petroleum products and grain and, hence, use its foreign assets. The Ministry of Petroleum and Mineral Resources recently said, for instance, that the government needs about $500 million per month to finance its oil purchases. The $6 billion needed for a year’s worth is more than the total estimated remaining foreign exchange reserves of the CBS.
The government is also trying to offset these pressures by relying increasingly on its political allies. In May the governor of the CBS announced that Iran had provided, or was preparing to provide, to Damascus a total of $7 billion in the form of concessionary loans and credit lines.
This growing political dependence and the rising economic pressures are having an impact on the national currency. The Syrian pound dropped in value from 150 pounds to the dollar at the end of May to 190 pounds on June 17. While this surge is partly the result of the announcement by the Obama administration that it intends to send arms to the opposition, it is symptomatic of the slow, and apparently irreversible, decline of the Syrian economy.
Jihad Yazigi is editor-in-chief of The Syria Report
Economics and Policy
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