In the midst of Beirut’s beleaguered southern suburbs, statements for logic and reason, as well as empathis condemnations of terror and weapons, were solidified on this February 11, as clerics and dignitaries from Lebanon’s religious communities along with several foreign ambassadors joined with activists and family in the funeral of slain Lebanese filmmaker and fearless journalist Lokman Slim
Tripoli protests continued to be intense, on January 31, 2021, in Al Nour square. It started with the arrival of demonstrators from Beirut, and ended up with armored vehicles and the Lebanese army soldiers’ pursuit of a group of young demonstrators in the streets of Tripoli.
Executive’s faith in the Lebanese spirit of entrepreneurship remains strong. Despite compounded crises that have blocked foreign transactions, raised operational costs, and accelerated the migration of a skilled workforce, entrepreneurship in Lebanon continues to demonstrate its resilience, creative problem-solving, and untapped potential.
To reaffirm its support to entrepreneurship, Executive produced this video in collaboration with Konrad-Adenauer-Stiftung (KAS).
Tripoli protests January 28, 2021, in Al Nour square.
7:30 p.m.
Protesters have already set fire to one of the doors of Al Tell police station, Bechara El Khoury street. Tear gas grenades rain down from the roof of the building and the air is unbreathable.
Gas floods the adjacent streets for more than 2.5 hours, which did not prevent protesters from throwing Molotov cocktails at the police station.
10 p.m.
The army on the outskirts of the square decides to dislodge protesters by storming the square.
Driven from their place of protest, the demonstrators headed for the town hall of Tripoli, left unprotected, and ransacked and burned it.
11:00 p.m. The army arrives in front of the burning serial.
11:15 p.m. A fire truck arrives on the scene, but does not have sufficient water, so there is confusion and disorder before another fire truck arrives 20 minutes later.
DECEMBER 19
Parliamentary consultations take place. Mr. Hassan Diab is nominated to form a government, backed by the Amal movement, Hezbollah, the Free Patriotic Movement, the Marada and others.
DECEMBER 20-31
Heavy protests take place, protesting the nomination of Hassan Diab as Prime Minister.
JANUARY 14
Lebanese Protests resume after weeks of calm. Banks are heavily targeted as the focus of popular anger centers around the Lebanese banking sector. Roads are closed by protestors all around Lebanon.
JANUARY 16
Contrary to cabinet leaks circulating in the news, the formation of the government does not take place, without any explanation.
JANUARY 18
Clashes occur between protestors and the police, resulting in 400 wounded and 34 arrested. Protestors were dispersed by the police, the latter using teargas, water cannons, batons and rubber bullets, in violation of international conventions.
JANUARY 21
A new cabinet is formed. The government, essentially backed by the March 8 coalition and its allies, is heavily rejected and protestors go to the streets in a clear sign of rejection.
JANUARY 22
Clashes occur between the police and protestors outside the Lebanese parliament.
JANUARY 25
Crowds gather around Beirut to celebrate the 100th day of the Thawra, protestors demand for a complete overhaul of the Lebanese political system.
FEBRUARY 1
Protesters gather outside the US Embassy in rejection of US President Donald Trump’s Middle East Peace Plan.
FEBRUARY 5
Protests ongoing in refusal to recognize the new government.
FEBRUARY 6
In light of the financial crisis, the new government presents its plan to fight tax evasion and publishes a detailed policy paper in this regard.
FEBRUARY 11
Protests occur in light of the new government’s confidence vote. Protests become violent in front of parliament due to the police’s heavy use of batons, teargas and rubber bullets.
FEBRUARY 21
The 1st case of COVID-19 is confirmed in Beirut.
FEBRUARY 28
Lebanon bars all travel by non-residents by air, sea or land from countries worst hit by COVID-19. The Public Works Ministry named China, South Korea, Iran, and Italy as affected countries.
MARCH 8
Lebanon announces default on $1.2 billion Eurobond payment.
MARCH 10
The first COVID-19 related death is recorded.
APRIL 21
Ten people are killed in a shooting in the village of Baakline.
APRIL 22
Mazen Harfoush, the gunman in the Baakline shooting, is apprehended and confesses to his crimes.
MAY 31
Lebanon reaches 1,220 cases of Covid-19 infections
JULY 27
Exchange of fire between Israeli soldiers and four Hezbollah members, no escalation occurs.
AUGUST 4
An explosion in the port of Beirut kills 203 people, wounds thousands and results in 300,000 people losing their home
AUGUST 5
The government declares a two-week state of emergency following the explosions, effectively allowing the military a free hand in tackling the security situation.
AUGUST 6
French president Emmanuel Macron arrives in Beirut and visits the scene of the explosion and tours the damaged quarters in Beirut. He engages in discussions with residents of Beirut and calls for government reforms and anti-corruption measures. Macron declares that he would help gather international aid through an international summit with the European Union, Arabic countries and the USA, with such aid being conditional on the government implementing reforms. Protests break out as a popular anger is at an all-time high due to the blast. 16 port employees, accused of being connected to the explosion, are arrested according to the military court spokesman.
AUGUST 7
Lebanese officials declare that the victims of the explosion are numbered to 157 deaths and 5,000 wounded. The European Union releases emergency funds for aid amounting to $38 million. According to Boris Prokoshev, former captain of the ship that brought 2,750 tons of ammonium nitrate to Beirut, Lebanese authorities were “very well” aware of the risks of stocking the said amount in the Beirut port.
AUGUST 8
Protests occur all over Lebanon, with over 700 reportedly wounded and one policeman killed. Protestors storm through various official buildings, including the foreign ministry, as the crowds of protestors face police violence. Prime Minister Hassan Diab calls for new elections, while the 3 MPs of the Kataeb party resign.
AUGUST 9
Ministers Manal Abdel Samad and Demianos Kattar submit their resignations. International leaders join a donor conference by videoconference with the United Nations. France pledges nearly $300 million of direct assistance to the Lebanese population.
AUGUST 10
Prime Minister Hassan Diab announces that he and his cabinet’s resignation.
AUGUST 27
Clashes between Hezbollah and tribal members in the town of Khalde resulted in two deaths and ten wounded.
AUGUST 31
Lebanon reaches 17,308 cases of Covid-19 infections.
SEPTEMBER 8
Ali Hassan Khalil and Youssef Fenianos, two former ministers, are sanctioned by the US Treasury’ Office of Foreign Assets Control (OFAC).
OCTOBER 9
A fuel tanker explodes in Beirut, leaving at least four people dead and thirty injured. The blast occurred after the tank caught fire in the Tariq-al-Jdide district.
OCTOBER 14
A delegation led by Brigadier General Bassam Yassine launched talks facilitated by the United Nations and the United States with Israel over the disputed maritime border.
OCTOBER 22
Saad Hariri is charged with the formation of a new government.
NOVEMBER 6
Free Patriotic Movement leader Gebran Bassil is sanctioned under the Global Magnitsky Human Rights Accountability Act by the United States.
DECEMBER 21
Parliament passes a law to lift banking secrecy for the duration of one year
DECEMBER 28
Lebanon reaches 171,226 cases of Covid-19 infections, with the death toll at 1394
Dear Executive readers,
It is our honor to present to you our end-of-year issue. The year behind us has been tumultuous worldwide, and especially for Lebanon – a small country that has many times carried its weight throughout international and regional crises. The tri-tragedy of the pandemic, the port explosion, and the collapse of the economic system has revealed our brightest and strongest asset: ourselves. As a people, we have risen with grace and generosity in facing 2020. A spirit we feel confident will carry into 2021.
In this issue we take a bird’s eye view of 2020. It includes in-depth overviews of banking, energy, trade, and retail. The magazine also includes two special reports produced in partnership with the Konrad Adenauer Foundation: the first focuses on health care, and the impacts of Covid-19 and the port explosion; while the second focuses on entrepreneurship, covering the grim reality of the sector, but its potential to grow into a regional knowledge economy hub.
As a highlight, the issue features an updated version of the Economic Roadmap. It outlines urgent emergency measures for the near future as well as longer term needs in detailed strokes; measures Lebanon must take to place itself on solid economic, social, and political grounds for recovery.
With this, we wish you a very happy new year. May your year be blessed and full of wonder.
Executive Editors,
Eager to capitalize on the tech-savvy population,high education rate and entrepreneurial spirit, Banque du Liban’s (BDL) Circular 331, released in 2013, paved the way for the creation of dozens of startups in Lebanon, in addition to accelerators and incubators. Despite this support, events of the past few years have put a stop to the generous investments in startups.
Circular 331 was meant to incentivize local banks to invest in the local tech scene to turn Lebanon into a start-up nation. The circular encouraged banks to allocate up to 3 percent of their capital in startups, incubators, accelerators and venture capital funds by a mechanism that would guarantee reimbursement in case of failure of the said venture up to 75 percent of direct startup equity investment or indirect support entities. Local banks would be authorized to obtain a seven-year loan from BDL with zero interest, in exchange for investing it in Lebanese Treasury Bills with an interest rate of 7 percent, in return for the banks committing to invest in the knowledge economy with BDL guaranteeing the investment up to 75 percent and sharing the profits with the banks at 50 percent.
The structure of the initiative allowed for more guarantees. In 2014, this allowed for an injection of $400 million in the Lebanese knowledge economy. According to Bassel Aoun, program manager at Kafalat for the Innovation in Small and Medium Enterprises (ISME) program, a project supported by the World Bank, the major source of startup funding has come through Circular 331 subsidies. Banks are the main suppliers of funds through Circular 331, so the current banking crisis has resulted in this money drying up overnight.
“Most of the funds came from the banks’’, says Fadi Bizri, a partner at B&Y Venture partners. Indeed, in the absence of well-developed capital markets in Lebanon, the attempts to reach international investors have been lukewarm, and the ecosystem has been resting mostly on BDL’s shoulders.
Nevertheless, in light of Lebanon’s financial woes, and due to regulatory hurdles and other shortcomings of the Lebanese economy, the support mechanism established through Circular 331 have stalled.
Due to the current financial crisis, and to capital controls, it has been difficult to get investments from abroad to local startups, and trying to attract such investors is, according to Aoun, “counter intuitive”. “Capital controls are affecting the performance of our companies,” Aoun continues.
Indeed, startups in Lebanon are being barred from wiring money abroad to pay for marketing, software, ads, and foreign talent, which is having an adverse effect on their financial standing. “It’s a nightmare” says Fadi Bizri, taking into account that the value of a startup is heavily related to the value of its software (hosted on servers such as Amazon Web Services), data and cloud management, all of which require international payments to be maintained.
To add, startups are no longer able to hire talent from abroad, and are even losing talent to emigration. “Between the thawra, capital controls and Covid-19, there is a lack of trust from abroad in the local economy and therefore very little to no investment,” says Nicolas Rouhana, general man-
In collaboration with 43 ager at IM Capital, an initiative funded by USAID
which provides capital and support to companies through early-stage investors like angel investors, venture capital funds, accelerators and incubators .
Efforts to mobilize international investors have had little to no tangible result, most finance experts say. Consequently, many startups are considering moving abroad to re-incorporate in a different jurisdiction. Start-ups are also being pushed to relocate by investors, who are nervous about the current situation and Lebanese judicial regulations, as Lebanese commercial laws are deemed too rigid for the corporate structures needed in venture capital. Also, the relocation of these start-ups abroad would allow them to raise capital from different pools of investors, in jurisdictions where money would be more easily accessible.
Nevertheless, initiatives to channel foreign money into Lebanese startups have not fully dried up. IM Capital, for example, to help provide relief for affected SMEs in light of the August 4 Beirut port explosion, recently launched the “heartfelt support to Beirut” – initiative supported by USAID
to help channel 2 billion LBP through its companies across four sectors: education, housing, food and water, securities and business platforms. The
money will be used to provide relief packages to clients and beneficiaries who have been affected by the port explosion.
HAVE START-UPS TRIED TO CHANNEL SOME OF THE LOCAL EPOSITOR MONEY?
Startups would, in principle, be seen as attractive investments to local depositors worried about capital controls and talks of haircuts on deposits. “We have witnessed this trend”, says Aoun, mentioning investments in local dollars – “lollars” – in startups, “though it has been minor for early stage startups”.
Nevertheless, for startups less dependent on foreign money, Rouhana believes that this could result in a mix of “fresh” dollars and local dollars
as an investment tool in the near future. Such a mix of local and international dollars, according to Fadi Bizri, would not depend so much on the startup’s industry, but more on how mature the company is. Mature companies wishing to pay higher salaries, for example, or needing to transfer money abroad, would be less interested in the use of local dollars.
Other ways to circumvent the difficulty of accessing capital and sending money abroad is the use of crypto-currency and crowdfunding. The use of crypto in Lebanon is not obvious as such tokens would have to be converted to hard cash – and buying them would prove difficult due to capital controls. Regarding crowdfunding, there have been minor initiatives but they have been made on a small level. According to Bizri, “You have small initiatives from people abroad who want to help”, but those happen mainly for companies with exportable (or potentially exportable) products who are in need to import things like raw materials or machinery, and that can repay investments with ‘fresh’ dollars, which is not the case for most startups in Lebanon who are engaged in the local production and distribution of services.
“The last 14 months have been challenging in abnormal ways for any entity across Lebanon” says Mouhamed Rabah, Chief Executive Officer of the Beirut Digital District (BDD), a privately-funded community space that
hosts startups, incubators, accelerators and funds. According to him, startups are looking for international funding, but this comes with a requirement to reincorporate abroad. He argues that two elements are driving these companies to reincorporate: the drying up of funds for startup investments in Lebanon, and a loss of trust in the government and institutions due to the August 4 explosion. Indeed, the latter seems to have been the breaking point for many talents, who do not see the need to risk their lives or their childrens’.
“We are seeing an increase in demand from companies wanting to set-up their back office in Lebanon due to a more competitive financial cost and this could help Lebanon transform into an added value outsourcing hub, building on the yearly graduating talents” says Rabah. For example, a Saudi company is opening up their engineering office in Lebanon at BDD to profit from these now more affordable talents. More of these examples can be found at BDD, according to Rabah.
As local funds dry up, startups can turn to their networks in the diaspora, as incorporating outside of Lebanon doesn’t necessarily mean to pack bags and leave. Indeed, reincorporating abroad can mean setting up another legal structure and bank account for cash management outside of Lebanon, but does not imply leaving the Lebanese market as a whole or moving out completely.
Over two decades of experience
The Investment Development Authority of Lebanon (IDAL) was established in 1994 with an economic vision to attract mega investments to the country. It targets foreign and local investors and provides them with services on three main levels: investment promotion, export promotion and startup support. IDAL grants incentives and provides facilitations to eight priority sectors that represent promising opportunities in terms of investment, and have an impact on socio-economic growth. These are agriculture, agro-industry, industry in general, media, technology, IT, telecommunication and tourism. IDAL is currently offering its services to more than 80 investors, and aims to reach double the number during the term of the new board of directors.
Executive talked to Dr. Mazen Soueid, chairman and general manager of IDAL, who shares about the initiatives of the new board, and the different programs and agendas that support large and small businesses, despite the difficult times that Lebanon is facing.
IDAL’s new board
IDAL’s new board of directors was appointed on October 10, 2019, which created a major strategic shift after 14 years of having the same board. “We instituted this board at a time that Lebanon is witnessing unprecedented changes and events, and we are working on rebuilding the institution,” reveals the chairman.
The new board is composed of young members, with expertise in the Lebanese private sector. It is composed of Dr. Mazen Soueid (Chairman and general manager), Alaa Hamieh (Vice President), Simon Souhaid (Vice President), Me. Rana Dabliz, William Charo, Mohamad Al Mohtar, and Me. Rabih Maalouli. The board members are well known in the business, economy, real estate, entrepreneurship and law fields. “I was appointed chairman after long experience in both international and local policy making, and I came to IDAL with big ambitions,” said Soueid.
Despite all the events that hit Lebanon, Soueid has high hopes in Lebanese investments. “I learned to look at crisis as a great opportunity,” affirms Soueid, “The period of feeling down is behind us. We started to adapt and we are preparing many interesting ideas.” He also points to the necessity of preventing citizens from losing faith in the country and providing them with motivation. “I understand my friends who packed and left, but I do not agree with them,” Soueid said. “The country is not a hotel and I have to fight to make it a better place.”
Encouraging investment
IDAL supports investors on different levels in the pre-investment, financing and licensing stages with various services. It offers a package that comprises fiscal, financial and non-financial incentives. The institution helps in getting investments exemptions from corporate income tax, reduction on land registration fees, the issuance of administrative permits and licenses as well as granting employees work permits. The service also provides information and data on different investment opportunities, in addition to legal and tax advice. IDAL ensures follow-up with investors after starting their operations for an opportunity to grow.
IDAL started building an initiative last December called The Business Matchmaking Platform. Soueid describes its role as “the bread and butter of what the investment promotion authority should do.” He explains further, saying, “I wanted to channel large depositors, big investors and expatriates who can no longer access credits from the banks, into an investment opportunity. We invited many small, large businesses and SMEs at all levels to open their capital for investment in this very challenging time.”
Through this platform, IDAL offers finalizing the due diligence and the high-level presentation for those wishing to invest or those wishing to increase/open their capital. However, the launch of the platform on the national level was postponed due to the Covid-19 crisis that was followed by the Beirut 4 port explosion.
IDAL affirms that many investors reached out to the institution early in the crisis, wishing to manufacture -in Lebanon- the imported products that are disappearing from supermarkets. So, the institution was able to support them in finding lands and zones with tax incentives.
“Investors come to IDAL to validate their investment idea because we have the market know-how, but they are not doing it initially to be incentivized or to get tax credits,” explains Soueid, “They are doing it because they believe that a crisis is an opportunity and these are the people that we enjoy working with.”
Exportation Agenda
As per law No.360 (16-08-2001), IDAL is entrusted in helping Lebanese producers identify new markets. It has three programs that work on promoting the exportation of products and services. It helps investors in branding, developing their business strategy and identifying the markets to which they can export, specifically in the fields of industry and agriculture. In addition to this, the authority funds the participation of investors in international fairs or events, and connects them with foreign distributors through B2B meetings, especially in the gulf countries.
“I went within three months of my appointment as a Chairman to KSA, UAE, Bahrain, Kuwait and Jordan, where I met with the heads of chambers, and discussed the importance of Lebanese products in their markets during this crisis,” confirms Soueid, “We identify in every country the added value and the comparative advantage of Lebanese products depending on the interest.” He added that many activities were postponed due to the hit of Covid-19, yet he aims to relaunch the initiative of connecting the Lebanese exporters directly to distributors in the gulf, once the Covid-19 vaccine is projected to be availalbe in Spring 2021.
IDAL’S Chairman explains that the Lebanese private sector has been introverted for a long time, in the sense that there is high domestic consumption with minimal exportation. In this context, he says, “The company that cannot export cannot survive, because Lebanese purchasing power is significantly poorer than it was a year and a half ago. And thus, domestic companies cannot increase their sales, but the cost is increasing due to the rise in price of raw material.” He also mentions that, “In order to export, investors need to become more productive, more competitive and more efficient.”
Startup support
Supporting startups is very important at IDAL. “Part of my vision for IDAL is to focus on startups, the knowledge economy and the media sector, which will create the advantage of making Lebanon an outsourcing hub; especially that investors will be working from Lebanon and get paid abroad: the money they will be making will be spent here,” affirms Soueid.
“We have established the Business Support Unit (BSU), that is responsible for providing free services for people who have ideas, existing business plans or projects in the sectors we target,” explains Soueid, “We help them run their business and provide them free legal, audit and tax advice. We also assist them in finding angel funds, accelerators or incubators in some cases through our chain of networks that we work with very closely.”
Soueid views IDAL in a different perspective from other institutions. He explains the recognition of institutions, saying, “What is special about IDAL is that although it is a public institution, yet it works little with the public sector. It is an unusual public company that works with the private sector.”
Exclusive announcement, setting the example for public-private partnerships
Chairman and general manager Soueid, revealed exclusively to Executive, the new initiative that IDAL will be launching in 2021. “We are going to launch a Private Sector Development Agenda,” announced Soueid. “It is overreaching and ambitious, and it will be the best example for public private partnership. It will include how a government agency can work with the private sector in a transparent way to help it achieve its objectives,” explains Soueid.
IDAL’s chairman believes that it is the time to make the Lebanese private sector strong and easy to invest in, since it brings growth to the Lebanese economy. “We will work with the existing companies and businesses, to help them reform and reorient their operations towards export,” he mentions, “Once the situation in Lebanon changes, by getting the IMF program, reforming the banks and the political clouds are gone, we will be able to attract many investments because the private sector will be ready.”
IDAL is considered a crossroad between the private and public sectors, and is always open to collaborating with and between both sectors. The new board established a workshop to reform the institution’s decrees – that were not updated for a very long time – and many ministers were invited to IDAL’s premises to discuss future collaborations and projects. “We have to work all together as public institutions and ministries regardless of politics in order to provide the best service to the ultimate consumer which is the Lebanese citizen,” says Soueid.
To step back to the macro level, Soueid views that it is crucial for the new government to be able to attract fresh funds to Lebanon because this will be the only way to sustain Lebanese purchasing power. “Without injecting fresh dollars into the economy, we will see the parallel rate depreciating, the purchasing power eroding and Lebanon will be digging deeper into the crisis,” said Soueid.
Promise for youth and fresh graduates
IDAL offers the opportunity for all university students and fresh graduates to have internships on its premises. It makes sure to provide them with professional training and to link them with the network of investors that the institution works with. “IDAL is open to youth and fresh graduates at all levels, and is ready to provide guidance for startups ideas,” the chairman explains, “We will help them on the macrolevel to work for a better Lebanon and advocate the right policies.”
Projections for the new year
Soueid concluded by sharing his thoughts on the new year projects that will start coming to light in the first three months of 2021, saying, “If we can achieve excellent outcomes that shine in collaboration with the private sector, then I will say that I came to IDAL for a reason. In the most difficult time, it was fate and not misfortune.”
“As a chairman and as a board, we are working to make IDAL in 2021, an exemplary public institution through our private sector agenda, to establish a hub of excellence that will remain after the tsunami recedes,” Soueid emphasizes.
As Winston Churchill worked to form the United Nations after WWII, he said, “Never let a good crisis go to waste”. This has been Antoine Assi’s motto and business model, Managing Partner of ESTIA Real Estate Group.
Assi predicted the crisis in Lebanon three years before it happened. At the time, a similar hurricane of crises was afflicting Greece. Assi decided to capitalize on the Greek crisis, and expanded his real estate business, where he eventually benefited from the sharp drop in real estate prices. Assi sold over 2,000 apartments, developed over 20 hotels, and manages over 500 million euros in property.
In this interview, Executive sits down with Assi, to get a better sense of his experiences and successes as a dominating figure amongst the Lebanese diaspora.
Can you tell us about ESTIA as a company and what kinds of services it offers?
ESTIA is a real estate development company that develops residential and touristic projects. We focus on residential development specifically in Athens and Portugal. We offer residential apartments ranging from 50 sqm lofts in the center of Athens up to 400 sqm apartments in the south and other luxurious areas along the Greek riviera. The budget of the properties we offer ranges from 180,000 euros to 3 million euros per apartment, we also offer villa development ranging from 2 to 5 million euros.
Estia manages everything in-house, from architects, lawyers, property managers to rental management. We provide a full 360-degree service for our clients and investors.
Estia Capital, a division of Estia group manages 3rd party investors and gives them the opportunity to invest in any of our ongoing residential developments or hotels.
We were reluctant to venture into commercial real estate development. We believe that when you have a crisis like COVID-19 the commercial tenants are the first ones to leave. Thus, we prefer, as a group, to have exposure on residential or touristic projects than to have exposure on commercial tenants.
ESTIA started in Athens in residential rentals during the crisis. It started buying apartments, renovating, and renting them as short term (Airbnb etc..), medium- and long-term rentals, because the yield was at that time very high, around 16 -17%.
The team grew from a two-person operation to a 200-employee operation in less than 4 years.
Where are ESTIA properties located? How do these locations attract investors?
Most of our properties are in Athens which is a strategic location that generates high rent. Wherever we decide to develop a residential building, the number one requirement is to be in a strategic location, so that the client or investor who is buying the property can generate a decent profit of 7 to 10% annually.
We also have properties in Portugal. It is always interesting for us to choose locations that give us long-term opportunities. We don’t just want to sell our apartments; we want to retain the management of the property to generate the maximum income to our clients.
Our rental division in Athens is managing over 2,000 apartments. These locations are prime locations that get high yields and will always have a demand for rent.
The clients can decide to rent the apartment for short-term use, and use it themselves in the summers, for example; or, they can rent it for a longer contract when they don’t need it.
The apartment serves as a three-dimension investment: firstly, for their own use, secondly for getting a Golden Visa and becoming permanent residents of Europe, and thirdly, making yearly rents and [passive] income.
What experience does ESTIA have in Airbnb hotels?
I will tell you a small story. When I came to Athens, I was staying in the Hilton hotel. I saw that during the worst year in the history of Greece – when there were riots, political and security problems – the Hilton was running on full staff and offering food every day. So, I said to myself, “I want to establish a hotel that doesn’t offer food nor has a staff problem”.
My dream was to launch one hotel that runs on one employee. This way when there is a crisis, investors will be safe from pouring money back into the project because of the high cost of the hotel. Thus, I started something close to an Airbnb hotel, where the whole building is running like a hotel but with one employee. And this is done through our application and center management.
We provide our clients with a delivery menu and all our Airbnb hotels are strategically located. The clients love to go down and have breakfast in the different nearby restaurants. The unit at our hotels ranges from 25 to 200 sqm. Our 3-bedroom unit is around 80 sqm that can cater to eight people for just 150 euros a night, where the 16 sqm couple room at Hilton stands for 280 euros/night.
This advantage raised our ratings to 9.5 in comparison to 8.3 rating for Hilton hotel. So now the families prefer our concept.
Our Airbnb concept is very competitive, and its real estate value is high because it is a custom-made project. Our interiors are well designed, and we make sure that every unit is a signature apartment.
In terms of luxury, they are even higher than the ones in the market with more amenities such as furnished kitchen, high end gym, laundry area, bags storage etc. while being three times cheaper than a typical hotel. In October 2020, the worst time of the year, we had 85% occupancy, while most hotels had 20%. Our experience in Airbnb hotels started in 2016 and now we have over 20 under development.
Do you have any advice for people seeking to invest in real estate?
In the past thirty years, we have seen that real estate has been the safest investment and the most secure. I would advise anyone to invest in any real estate property that generates income. The real estate investment can turn into a burden if it does not generate income.
What people do not know is that there is a holding cost. For example, if you are buying land, your holding cost for it is the interest of your money that you are not receiving. When you are buying an apartment that is not rentable you have municipality taxes and common charges and utility to pay that will be a burden on you. So, when you buy a real estate property you need to see the location, the quality, and how rentable it is, because at the end of the day, you need to account for one month of every year of rental going towards the payment of these costs, which are the municipality taxes, utility, and common expenses.
So, if you buy in places that cannot be rented, the real estate will turn into a burden. Besides, I always advise people to buy early from the developer when he is launching his project because they can get a 10% to 20% discount.
What types of investment opportunities does ESTIA offer for potential or seasoned real estate investors?
We offer opportunities in the typical residential business, where people can either invest with us to buy the lands and develop them, or they can buy apartments from us and we can rent them so they can make a good profit. And they can also invest in our upcoming hotels where they can make a very good return by owning shares.
What types of architecture and interior design does ESTIA provide to its diverse clients?
First, it is important to highlight that we have a team of thirty engineers, interior designers, and a furnishing department. We give the clients the option to do everything with us in terms of interior design. We have a department that offers interior design since most of our clients live abroad.
As part of our services, we handle the full furnishing of their apartments, we deliver the apartment ready to move in.
For the architecture, we are working with a panel of top architects in Athens to provide multiple architectural projects for every taste. We are delivering different styles from modern architecture to the renovation of heritage buildings.
What kind of residency does “owning a property” in Greece provide the owner? How can ESTIA help in this regard?
ESTIA has provided until now over 1,000 residencies in Greece alone. Every country has different laws regarding residency, but what is common between all these residencies is that they give you access to all Europe.
When you become a resident of Greece you become a resident of Europe. It is a permanent residency (PR). So as long as you buy an apartment for 250,000 euros, and maintain it, your residency remains for life. Every five years you would have to renew the PR and simply show that you still own the apartment.
What people don’t know, and what they are discovering now, is that when they become residents of Greece, they don’t have to pay taxes. In comparison to the Schengen Visa, the PR is more stable since all the Schengen Visas were cancelled or recalled when the crisis started in Greece, but the PRs were still active. When you have a PR, it is easier to submit a work permit application to the ministry of interior.
What is important to highlight in this regard is that most people think that a Schengen acts like a PR, which is not true. They must understand that when they have the Schengen for 5 or 10 years, they cannot stay in Europe more than 50% of their visa period, which means 182 days per year.
Any last words of advice for the Lebanese looking for a way out of the crises?
I believe that the economy in Lebanon collapsed and what the Lebanese are witnessing is the tip of the iceberg.
The state in Greece is protecting the Lebanese expatriates. In the COVID-19 crisis, the Greek banks called us suggesting to extend the payment of our loans and to reduce the interests. However, I heard that some Lebanese banks increased the interests from 8 to 27% during the crisis.
Soon, the Lebanese will be banned from entering several countries. So, every Lebanese should have a Permanent Residency and an income generating property in Greece or Portugal to safe keep their families in terms of crisis.
In Lebanon, as in virtually all other countries around the globe, health has in 2020 been catapulted to the top spot of social concern after the onset of the Covid-19 pandemic. To assess the correlation between the pandemic, national governance, the economic and liquidity crises, and the overall state of public health in Lebanon, Executive sat down with Dr. Walid Ammar, the director of the doctorate and research program in public health at St Joseph University and previously, up to the middle of this year, the director general of the Ministry of Public Health (MoPH).
How would you assess the resilience of the Lebanese healthcare system overall, when considering all of this year’s stresses, especially the Covid-19 pandemic?
Previously [in a 2018 interview] we discussed the elements of resilience in the Lebanese Healthcare system and the characteristics related to having a system of collaborative governance. Having a diversified system with multiple partners meant that when some [healthcare providers] were facing difficulties, the system could rely on the others, because [these partners] are working in a network with good collaborative governance. In principle, all the elements of the system [exist today] but I think we have a problem of governance at the ministry of health.
Additionally we have the financial crisis and the Covid-19 pandemic. But I would say that we have always operated in a context of crises. We were running different programs, such as accreditation and auditing hospitals, despite [living through] war time. We were conducting immunization campaigns in war times. What we are facing now is exceptionally difficult, but that is no excuse for us having this relatively bad performance in fighting Covid-19, compared to the first three or four months of the pandemic when we had an excellent performance. The situation also does not explain the very mediocre results in a recent immunization campaign [against polio, measles, mumps and rubella] in which we had on average 30 percent coverage. We did never have such low coverage; even during wars we were conducting campaigns then when we were not happy when we had 80 percent coverage because we wanted to exceed 90 percent coverage. Now it is 30 percent. This is of course a combination of many factors but I would say governance at the ministry is the problem.
Everybody is talking about the stresses on hospitals and healthcare professionals because of the coronavirus. How is the situation with regard to treatments and coverage of non-Covid-19 diseases such as heart and diabetes and other chronic diseases in 2020?
Covid-19 has undoubtedly affected all the other services for other diseases. For a certain period this was done on purpose [in order] to have enough beds for Covid-19. So elective surgery and [procedures for treating] chronic conditions were postponed. We don’t yet feel the implications of this on the population. I can say, however, that considering the economic crisis, patients for now have [held back] from demanding sophisticated treatments. Before, when a prosthesis was needed, people required the most sophisticated ones. Now we are not hearing people claiming this kind of service. I think that people’s expectations, perhaps for the first time in the history of Lebanon, have really been lowered and are going down.
Is the increased cost and difficulty of obtaining imported medicines and equipment a factor in patients abstaining from requesting the most sophisticated treatments?
I would say it is rather related to the mental situation and to the fact that people are depressed. Before we were using very expensive technologies, something which was disproportionate to our resources. People were requesting this. I think now there is a climate of depression and people are not enthusiastic anymore. They are losing hope.
In this context, how do you expect the healthcare system to perform in 2021 and going forward? Do you think that this depressed mode will persist? And how do you see potential treatments for Covid-19 impacting the Lebanese healthcare system?
Everybody expects hard times in the healthcare sector. However, I believe that the governance issue is very important because the governance style of the health sector has changed lately. The system of networking [in collaborative governance] is not really functioning as well as before. Some programs have been disrupted for no reason. They were stopped and the staff is demotivated. There is a real problem of leadership.
Is this demotivation and disruption of governance happening also at the level of hospitals, or is it mainly at the level of the government or ministry?
Anything that is related to providing services is there, but anything that is related to quality is not there anymore… Anything that is related to the information system and collecting data and indicators is also dysfunctional. The infrastructure is affected mainly because of the problem of governance.
So if we talk in terms of total number of hospital beds or primary care centers, what are the trends?
Quantitatively, everything is still there. As you know, three major hospitals were affected by the [August 4] blast but they are starting to operate [again]. This was an incident. But the overall primary healthcare system and hospital system is still entirely functioning. The number of services decreased because of Covid-19 and for obvious [other] reasons but this is not where the problem lies. They will still be able to provide services. However, the quality will be significantly affected.
The syndicate of physicians recently referred to several hundred doctors and nurses migrating away from Lebanon in the last months. Considering that universities have been and still are producing new medical graduates every year and that our ratio of physicians per 100,000 inhabitants is rather high, how severe do you see the impact of doctors’ leaving the country?
I don’t think it would affect the system because we always had [an] oversupply of physicians. In terms of medical practitioners and specialists, I don’t think we will be having a problem. This is not the case with nurses – [as] we have always had a problem with shortage of nurses, so this is not recent. However, if you ask the president of the order of nurses, she will tell you that we have too many nurses who are still in the country and who are unemployed . The migration is an issue but it is not the main problem for the time being.
One question regarding the local manufacture of pharmaceuticals. You have been concerned over many years at the Ministry of Public Health with the issues of local production, pricing of medications, and things such as the lists of registered pharmaceuticals and substitution drugs and generic drugs. Do you think it’s plausible to substitute imported medications with locally manufactured ones, and to what extent?
I think we have a good capacity to manufacture good drugs in this country. This is a time when local production should be boosted. Of course the raw material is imported from outside but this represents only 30 percent of the production cost. This is not negligible but [local drugs] can still be more competitive and [the manufacturers] have a good capacity to produce them.
It was indeed my assumption that there is a capacity to substitute many imported drugs for heart disease or diabetes and minor ailments with locally produced ones, even if this means using imported ingredients and production under foreign license. While there were many reports of people stocking up on medications for chronic conditions, however, I did not read or hear any media or industry comments on how much capacity we have to substitute such imported medicines with Lebanese-produced ones.
This has to do with the mentality of people and their trust in local manufacturing. For example, a few weeks ago we had a big problem that Panadol is not available in pharmacies. We have similar locally manufactured drugs. Drugs of similar quality and half the price exist but people made a scandal that Panadol is not available. We have Paracetamol and all drug manufacturers in Lebanon are producing these kinds of drugs. This has to do with the mentality of people.
“We have a good capacity to manufacture good drugs in this country. This is a time when local production should be boosted.”