Business

Building a fashion empire

by Anthony Mills
written by Anthony Mills

Wassim Daher would have never imagined when he opened a small multi-brand clothing retail outlet in Hamra in 1978 that over the next 27 years it would grow into a holding group, controlling more than 60 companies spanning the retail, leisure and food and beverage sectors, active in seven different countries on two continents, employing 1,800 people, and turning over more than $250 million a year. Among the franchises held by the azal GROUP are those for the globally ubiquitous retail brands Zara, Massimo Dutti and Mango, as well as the Virgin Megastore franchise in Kuwait, the UAE and Egypt.

Expanding its reach

Not content to sit on its laurels, today the azal GROUP has its sights squarely set on expansion, both locally and internationally. It intends to breach the billion dollar sales mark in four to five years by increasing outlet numbers from 67 to more than 270 over the next two years. In Lebanon, the group is opening another 16 outlets, 11 of them in Beirut. It plans to open a further 20 stores in the UAE by the end of the year, including another Virgin Megastore. It intends to establish its fashion retail business in Egypt by October or November as well as a Virgin Megastore in September. In Qatar it aims to open another 18 stores by 2006, while in Jordan a further 12 or 13 outlets are set to open by the end of 2006. As if that were not enough, more shops will open in Bahrain by 2007, while in Romania, the group envisages 18 more outlets by 2007, and is considering further branching into Eastern Europe. It also plans to enter markets in Saudi Arabia and Turkey by the end of 2006. Meanwhile, it is also on the lookout for new brands. In its sights are the US-based Gap, Old Navy, Banana Republic and Victoria’s Secret. Overall, the azal GROUP’s fashion retail portfolio now comprises over 30 brands.

The azal GROUP broke into the Dubai market in 1990 and into Kuwait in 1994, but the real milestone was reached in 1998. That was the year DGroup, as it was then known, acquired the Zara and Massimo Dutti franchises – owned by the Spain-based Inditex fashion retail clothing giant, as well as the franchise for fashion retail group Mango, also from Spain. Today, Zara is the azal GROUP’s top seller.

“That was when we moved from the traditional retail concept involving high-end fashion brands, to the new, fast-moving retail concepts in the market,” said azal GROUP CEO Said Daher. “What distinguishes these brands from others is that stock replenishment is very quick. It’s the ‘just-in-time’ inventory model. You can order and receive merchandise within a week. This way you can react to market conditions much faster than many [other] retailers. If the market is favorable you can replenish your inventory in no time. If the conditions are not favorable you can limit your exposure to inventory. With the traditional retail concepts, you’re buying way ahead of time, your replenishment time is about four to six months, and you can’t react as fast as you need to.”

But the azal GROUP has headaches too. “If you compare Lebanon to the Gulf, there are many challenges,” said Daher. In Lebanon, his group has to contend with excessive bureaucracy, high electricity and IT infrastructure costs, a host of high direct and indirect taxes, low spending power, restrictive labor laws and general economic malaise. “You have to bear a huge burden to be able to compete with neighboring markets,” complained Daher. “Beirut was recently rated as the second most expensive city in the Middle East. Combine that with low GDP and you get very low discretional spending power. That affects the fashion and luxury retail business.”

An unstable market

Azal’s biggest headache in Lebanon, though, is the market instability caused by continuing political and economic turmoil combined with a sustained spate of assassinations and bombings. “Expanding the operation in Lebanon is much more challenging than in other markets,” Daher said. “The unfortunate incidents of the last few months crippled the market here.” His outlets closed for a total of six or seven days in February and March, causing a loss in revenue of 15%. “We are now more conservative regarding our expansion strategy in Lebanon than before,” Daher said. Since the February 14 assassination of former prime minister Rafik Hariri, the azal GROUP has not committed itself to any new stores in Lebanon.

The group’s frustrations in Lebanon, where it employs 500 staff, are compounded by the country’s brain drain problem: Many of Lebanon’s brightest young professionals are fleeing the country’s stifling labor climate to seek success elsewhere. As a consequence, the azal GROUP has had to headhunt many of its star employees from outside Lebanon, from the Gulf and the United States.

Despite the willingness of fashion-conscious Lebanese to spend on affordably chic clothing brands, the difficulties associated with operating in Lebanon translate into reduced profit margins. In Lebanon, azal’s profits run at 7% to 8% of net sales, compared to 12% to 13% in other markets. “In the UAE, Kuwait or Qatar, you’re looking at almost zero taxes, favorable conditions, and extremely high spending power,” noted Daher.

The group also anticipates challenges in Saudi Arabia, where a restrictive legal environment makes investing by foreign companies perplexing. And in Turkey, a mature market, the scarcity of prime real estate locations and the fact that the azal GROUP’s flagship franchisers, the Inditex Group and Mango, are already operating their own branches, are further obstacles that will have to be overcome. Daher insisted, though, that Turkey was a “promising” market.

Going East

Romania, too, had immense potential, he went on. “We were positively surprised by Romania,” he said. “The market is extremely similar to Lebanon but competition is not as fierce.” The move into Romania was in part prompted by the country’s planned accession to the EU within the next few years, a development that will facilitate trade and boost the country’s economy.

Daher claimed it was difficult to say what share of Lebanon’s fashion retail market the azal GROUP accounted for. “But we are definitely the leading franchise retailer in the market,” he said. “Although anyone who sells clothes is a competitor, and there are many, none of the other groups have as many outlets, or our presence, or the size of our outlets and there is no distinct competitor who can compete on all levels.”

The azal GROUP’s success – revenues are growing by 25% a year according to Daher – highlights the quick rewards offered by well-run franchises, he said. “You can grow much faster as a franchise than if you’re operating your own brand,” he explained. “With a franchise, you’re implementing already-successful business models. It’s very hard to grow when you’re operating your own brand. Why bother establishing a vertically-integrated business model which will take you years and years to perfect when you can get involved at the end of the supply chain and start opening outlets in promising markets in a matter of months?” Of course, he noted, you have to make sure that you’re always observing the rules laid down by the franchise owner.

This year, the Daher family holding company changed its name from DGroup [D for Daher] to azal GROUP, in a move designed to reflect its evolution from a “mom-and-pop operation” into a corporation and to unify its international holdings under one umbrella. “We don’t think of ourselves as a family business anymore,” Daher said. “Most family businesses barely survive the second generation. We want to expand the business and ensure continuity. That’s why most of our senior managers are from outside the family. We see ourselves as a new business, which really got off the ground when we acquired the key franchises in 1998.” The company, though, is still wholly owned by the five Daher brothers, of whom Said is the youngest and founder Wassim the eldest. In some of its ventures, though, the azal GROUP has taken on partners to mitigate risk. Azal Management, a management company run by the azal GROUP, helps manage the group’s different companies.

Diversified business

Over the years, the azal GROUP has branched out into the leisure and food and beverage industries. It runs four Virgin Megastores in the UAE and two in Kuwait. Asked why the Beirut-based azal GROUP had not acquired the Lebanon Virgin Megastore franchise, Daher said that the possibility had been examined but the group had decided that Lebanese copyright law offered insufficient protection.

The azal GROUP also represents French coffee shop chain Columbus Coffee and bakery chain Paul in the UAE. And it is in the process of opening its first outlet in Bahrain for Australian juice company Pulp Juice. However, 85% of the azal GROUP’s business interests remain anchored in fashion retail. Although Daher sees the azal GROUP as a general retail franchisee, he plans to continue focusing on fashion. “We would like to expand all lines of business,” he said, “but no matter what we do, our core line of business is fashion retail.”

How did the azal GROUP acquire its position of market pre-eminence? “I think number one we were very lucky,” acknowledged Daher. “And plus we have a great team.”

Getting locations right

The group also appears to have an eye for prime real estate. A number of its stores are located in the upscale Verdun district of Beirut, an area Daher said is Lebanon’s prime retail location. “Sales in Verdun are up to par with those in the UAE, Qatar and even Europe,” he stated.

The azal GROUP has no stores in the downtown area because the kind of surface area it needs for its stores isn’t available. “Our requirements are greater than anyone can accommodate. We’re talking 2,000 square meters,” said Daher.

But when the recently kick-started Souks project is completed – possibly by 2006 or 2007 –the azal Group will have its fingers in the pie. It intends to open a number of stores in the Souks unveiling new brands.

“Real estate is the driving force of our business,” said Daher. “Today, in Verdun, you can’t find an empty slot. There are plenty of real estate projects, such as malls, throughout the area. They will help us expand.”
 

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Business

freeing up the media

by Michael Young
written by Michael Young

Following the assassination attempt against Defense Minister Elias Murr last month, Lebanese newspapers placed on their front pages a photograph of the “reconciliation” between Michel Murr and his brother Gabriel. Beyond what that meant politically, or filially, the episode prompted reflection about what it would mean for MTV, the television station closed down by a government writ after a 2002 by-election in the Metn, for having allegedly broken the law on political campaigning.

With so many priorities on the agenda of a new Lebanese government, little attention has been paid to media matters, though in many respects that is one of the paramount issues that will define Lebanon in the future. In a Middle East where media are becoming increasingly competitive, will the country become a leading regional media hub? Can Lebanon compete with the likes of Dubai, and if so what are the political implications of an otherwise sensible strategy?

In all likelihood, and presuming the Murr brothers can agree, the MTV issue will be resolved in the foreseeable future, since the politics leading to the station’s closure were made superfluous by recent transformations in Lebanon. However, there is as yet no sense of the wider media role Lebanon can play; or how the local media market must change to accommodate the new realities of a post-Syria Lebanon.

The most fundamental problem is one of entry into the marketplace. Both the audio-visual and print media are walled in fields where outsiders, except those with considerable money and influence, are unwelcome. When the airwaves were organized in the mid-1990s, station licenses were conveniently distributed to the major political actors and their allies. This was financially advantageous to the owners, because it created a cartel. But it also had political advantages by imposing conformity on how news would be covered, especially on news related to Syria.

Few licenses

The same exclusivism governs the issuing of political licenses to newspapers (which, simply, authorizes them to cover politics). However, under the Syrians, the newspaper market was less controlled politically than the audio-visual media, partly because it is much smaller. Though the newspaper licensing law authorizes any investor to buy a new license, in reality the government will not issue any, obligating budding press barons to purchase an existing idle license from an owner. This inflates prices tremendously, so that a license may cost hundreds of thousands of dollars, providing a major disincentive to those seeking to enter an already saturated press market facing declining advertising revenues.

Making matters worse, this filtering process is quietly backed by newspaper publishers. While such duplicity makes self-interested economic sense, it does taint the principled protests of those owners who lament limits on press freedoms, since opening a newspaper is as significant a freedom issue as is what publications are allowed to say.

Lebanon’s media market must open up to more competition. In post-Syrian Lebanon, there is also no reason for the market to be artificially divided between political grandees, many of whom don’t have the clout they once did. If that means some outlets close down, then so be it; several papers, for example, survive because of cash payments to influence certain news coverage, and that practice would be curbed.

At the same time, freer political licensing would allow for a much wider variety of publications – cheaper-priced political tabloids, satire publications, mixed political-cultural publications, etc. At the moment, the market is dominated by expensive political broadsheets, and the laws in place are inflexible when it comes to pricing.

There is also the question of Lebanon’s media destiny. The country is better placed than most to be a regional media center. The political climate is relatively free, the media sector is well developed and professional, and Lebanon needs to economically diversify. While no legislative, financial or logistical framework yet exists to allow Beirut to compete with Dubai’s Media City, now is the time to remedy this. A prerequisite, however, is domestic reform. One thing that means is appointing visionary information ministers who are more than mere government spokesmen.

The real question, though, is political. Is Lebanon willing to accept the political price of hosting free media? This is a tough question – one highlighted recently by Syrian efforts to ensure that Lebanon not purvey anything that might weaken the Syrian regime. Absolute freedom may be a pipe dream, but any media capital, to be successful, must defend its independence.
 

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Economics & Policy

Theories from the fringe

by Faysal Badran
written by Faysal Badran

Even the most strident hawks in Washington could not have anticipated the stunning costs of the wars in Iraq and Afghanistan. They have cost American taxpayers more than $314 billion so far, to the extent that the Bush administration’s open-ended commitment has raised concerns, even among war supporters.

At the rate the United States is spending, the military campaigns could become the most expensive operations in the past 60 years, far exceeding the costs of the Korean and Vietnam conflicts. One nonpartisan Washington think-tank estimates that the cost of the war in Iraq could exceed $700 billion – a remarkable sum considering that polls show that a majority of Americans believe that the war wasn’t worth starting and feel that they are no safer today than they were before September 11, 2001. Such mind-numbing spending on a scenario with no discernible exit strategy is all the more troublesome because it has occurred outside the normal budget process, with a series of pay-as-you-go supplementary appropriations. The stealth-funding approach has come without comparable reductions in other government programs, thus saddling the country with an enormous debt burden that exceeded more than $400 billion last year. President George W. Bush’s recent efforts to sell the war to the American people have never been accompanied by solid fiscal policy. The Congressional Budget Office estimated three years ago that the wars would cost between $1.5 billion to $4 billion per month, when in fact the campaigns are costing up to $8 billion per month. Given that the astonishing spending levels have done little to curb the insurgency that has claimed the lives of 1,763 US soldiers and wounded more than 13,000, it’s no wonder that many lawmakers in Washington are questioning whether the cost of these wars has grown too high. Republican Senator Chuck Hagel of Nebraska has termed the military spending priorities as “dangerously irresponsible.” That’s the only reasonable response to a war policy that lacks a coherent plan for bringing stability to Iraq.

At least the Bush administration should be forthright enough to include the cost of the Iraq mission in the budget. What is disturbing about the overreach of the US, aside from its unilateral and destructive policies, is that it may be a symptom of a nation, which no longer has the means to accomplish its objectives, however noble they may be deemed.

Problems ahead

Empires collapse usually due to a combination of military overreach and economic weakness, and judged by these criteria, many believe the US to be heading for a fall. Washington’s occupation of Iraq has been a disaster. Even after two years, the US Military has failed to subdue the Iraqi resistance. The war, more and more, seems “unwinnable.”

Developments on the economic front are even more dangerous for the US. Its power rests on two main pillars: firstly, military superiority, and secondly, the role of the dollar as the world’s reserve currency. Iraq is making a mockery out of the first, and the second is in jeopardy. America’s massive trade and budget deficits ($630 billion and $500 billion respectively) are driving down the dollar to such an extent that its status as the global reserve currency is imperiled. Since world trade is largely conducted in US currency, most countries have to export goods and services in order to earn these dollars, but all the US has to do is print more dollars. As economist James K. Galbraith has explained: “[The US gets] real goods and services, the product of hard labor by people much poorer than ourselves, in return for chits that require no effort to produce.”

The purchase of massive amounts of dollars by the rest of the world allows Washington to borrow cheaply, keep interest rates low, and run up a trade deficit that no other country could get away with. The world thus pays for US over-consumption and underproduction, as well as its wars. This arrangement, as economist Andre Gunder Frank has put it, is “a global confidence racket,” or a racket that can continue as long as other countries keep on buying dollar assets such as US Treasury Bills, thus financing Washington’s enormous deficits.

The global move away from the dollar portends economic devastation for the US. Stephen Roach, chief economist at Morgan Stanley, one of the world’s leading investor firms, has told clients that the US does not have more than a 10% chance of avoiding “economic Armageddon.” He points out that the $2.6 billion the US has to import every day to finance its trade deficit constitutes an incredible 80% of the world’s net savings. Obviously it’s an unsustainable situation. According to Roach, the dollar will keep falling due to America’s record trade deficit. To attract foreign capital and check inflation, the Federal Reserve Board’s chairman, Alan Greenspan, will be forced “to raise interest rates further and faster than he wants.” US consumers, already deep in debt, “will get pounded.” The record US household debt is now equal to 85% of the economy [the US national debt is $7.7 trillion, while total US debt is an unfathomable $43 trillion]. Americans already spend a record proportion of their income on interest payments, and interest rates have not even substantially increased yet. Thus the stage appears set for massive national bankruptcy.

Former Federal Reserve Chairman Paul Volcker has put the likelihood of a financial disaster at 75%, while the US comptroller-general (head auditor), David Walker, “makes no bones about the fact that the situation is dire.” For Martin Wolf, associate editor of the Financial Times, “the US is now on the comfortable path to ruin. It is being driven along a road of ever-rising deficits and debt … that risk destroying the country’s credit and the global role of its currency.” Paul Krugman, economics professor at Princeton University who writes a column for The New York Times, said: “We’ve become a banana republic … If you ask the question, ‘do we look like Argentina?’ The answer is: ‘a whole lot more than anyone is willing to admit at this point.’” Argentina defaulted on $100 billion of debt in 2001, with catastrophic effects: its currency plunged and the economy collapsed, bankrupting thousands of businesses within weeks. National income plummeted by 67%, pushing half the population below the poverty line.

The weakness of the dollar and the huge deficits are symptoms of the decline of US manufacturing. “Americans don’t produce enough and don’t save enough,” said Schiff. US manufacturing is only 13% of GDP and, according to Roach, “manufacturing employment currently stands at only about 13% of the US’ private non-farm workforce – down sharply from 23% … in the mid-1980s.” Since 2000, the US has lost close to three million manufacturing jobs. Between 1989 and 2004, the US savings rate fell from 6% to 1%. Foreigners now produce most of the goods Americans are consuming and lend Washington the money to buy these goods, leading to skyrocketing deficits.

American companies clear out

An important factor behind the manufacturing decline is the abandonment of the US by its own corporations, many of which have relocated operations to Asia from where they export to the US. John Chambers, chairman of Cisco, said recently: “What we’re trying to do is outline an entire strategy of becoming a Chinese company.” Cisco is the leading US supplier of networking equipment for the internet. The company manufactures $5 billion worth of products in China, where it employs 10,000 people.

In fact, the US economy has been in decline for more than three decades, accounting for a plummeting share of world economic output. The first dollar crisis occurred at the end of the 1960s when then US President Lyndon Johnson’s escalation of the Vietnam War led to increasing public deficits. This coincided with the rise of Western Europe and Asia as strong exporters, to whom Washington lost its manufacturing lead. To retain its global domination, the US then depended on its military superiority and the dollar’s role as the world’s reserve currency.

As America’s deficits rose due to the Vietnam War, France demanded gold in exchange for the dollars it held, since at the time the greenback was backed by Washington’s gold reserves. Other countries followed suit and, as US gold reserves were drained, President Richard Nixon de-linked the dollar from gold and floated it against other currencies. This coincided with the oil crisis of the 1970s, when crude prices shot up 400%. Suddenly, oil became the most important traded resource, and Nixon linked the dollar to it. In June of 1974, US Secretary of State Henry Kissinger made a deal with Saudi Arabia (the biggest OPEC oil producer) stipulating that oil could only be bought in dollars. In return, the US agreed to militarily protect the Saudi regime. In 1975, OPEC (following the Saudi lead) officially agreed to sell oil only in dollars. The age of the petrodollar was thus born. As long as oil was traded in dollars, so would other goods, and the dollar would remain the world’s reserve currency. This arrangement allowed the US to continue its dominant imperial role despite its crucial economic weakness: the inability to compete with the European and Asian countries in manufacturing and export capacity. But now America’s position became highly vulnerable to the whims of the oil-producing countries and to the fate of the resource itself. The first challenge to the petrodollar system came with the Third World debt crisis.

Awash in petrodollars, Western banks loaned hundreds of billions of these to developing countries, which could not repay the loans when Washington raised interest rates to nearly 20% in 1979 to save the falling dollar. It was crucial for the future of the petrodollar system that this money be recycled back to the West, and so the US used the World Bank and IMF to ensure this would happen. The loans were repaid several times over (the payments continue), and the petrodollar system was saved, but at the cost of decimating Third World economies with structural adjustment programs that devastated their industry, employment, and health and education sectors.

America’s petrodollar hegemony “was based on ever-worsening economic decline in living standards across the world as IMF policies destroyed national economic growth.”

Downward spiral

The collapse of the dollar and that of the US economy could end America’s superpower status as Washington becomes incapable of financing a colossal military machine that currently occupies 725 bases around the world with 446,000 troops. Economic power will center on the European Union, China and India, which are already creating new global structures that exclude the US. These endeavors show that the U.S. is already, to some extent, a “has-been” global power whose desperate military aggression only makes it weaker on the world stage. As the Financial Times has explained: “A new world order is indeed emerging – but its architecture is being drafted in Asia and Europe at meetings to which the Americans have not been invited.” In contrast to Washington’s endless military ventures, Europe and China emphasize economic might as the main instrument of foreign policy. As Newsweek pointed out, “the strongest tool for both is access to huge markets.”

No single country has posed more of a challenge to Washington than China, which recently replaced the US as the leading consumer market in the world. Beijing has economically displaced the US all over Asia and is now doing so in the latter’s so-called back yard, Latin America. China is now Chile’s largest export market and Brazil’s second biggest trading partner.

In November 2004, Chinese President Hu Jintao went on a tour of Latin America and agreed to invest $30 billion in the region. Most importantly, China and Venezuela signed a bilateral energy pact in December 2004, under which the latter agreed to supply Beijing with 120,000 barrels of fuel oil a month. China pledged to invest in 15 Venezuelan oil fields. China has become the world’s second largest importer of oil after the US. Venezuela is America’s fourth largest oil supplier, and the deal with China cuts into one of Washington’s “few remaining relatively stable sources of crude.” China intends to make a similar move towards Canada, America’s biggest oil supplier. What can Washington do about such incursions into its “vital interests?” Not much, since Beijing could cripple the US economy simply by stopping its purchase of American Treasury Bills. If Bush continues on Napoleon’s imperial path, so the theory goes, America will follow the fate of Napoleon’s empire. Regardless of the Bush administration’s vainglory, the US cannot afford hundred-billion-dollar-a-year and protect itself as well. Eventually, financial reality will set in, and the US would have to withdraw from the Middle East or risk running into serious trouble.

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Finance

Hedging your bets

by Faysal Badran
written by Faysal Badran

with many businesses across all sectors suffering from the fluctuation in the euro and watching their profitability erode, it is important to recap on hedging, the process via which businesses can lessen the impact of unexpected currency moves on their bottom line. Without delving into the complex types of hedging, simply put, here is how it works.

Lebanese companies that engage in overseas trade, such as car and food importers, regularly face a problem that stems from importing products or services in a currency different than the base currency. Lebanese companies that import from countries using the euro face currency risks. The fluctuations in the euro can cause profit margins on the final items to fluctuate. If the company is hit with a sudden rise in the euro, it must absorb the change, and if it is unable to pass on the change to the consumer, it may end up with a net loss.

For companies that trade in large amounts annually, the changes can cause serious strains if not neutralized. We have all heard the anecdotal pretexts given by everyone down to the vegetable seller, that things are pricier, “because of the euro.” Simply put, unlike other Arab countries like Saudi Arabia, where the Toyota/Lexus agent carries out very complex hedging procedures to offset any sudden fluctuations in the yen, most Lebanese companies remain unhedged and pass on any increases to the consumer.

Taking precautions

Companies who want to neutralize the effect of currency variations will typically sell an equivalent amount of foreign currency forward in order to lock in a specific rate and have clarity as to their upcoming results. They will for instance, if they are worried about a rise in the euro, buy euros forward to a specific date which covers the duration of their liabilities. This way, they have in a sense, taken care of their needs without having to worry about paying up more for their euros later on. Or if they have merchandise coming in, which was priced in euros to start with, they can do the same so that when they receive their goods, they can price them appropriately.

The raison d’etre of hedging came about with the assumption that the pricing of the final product ought not to be dictated by wide swings in exchange rates. Hence the process of hedging, the key to which is offsetting future risks by using the foreign exchange markets. When a company decides to tackle the currency element in its operations, it will typically look at its forecasted cash flows in currencies outside its base, and use tools to blunt, or lessen the effects of future movements. If the company has liabilities in euros for instance, or if it imports products in euros, it will look for ways to match those flows in a way that gives it visibility going forward. Of course, a company may decide to leave foreign exchange risks un-hedged, but then it would be taking a speculative view on currencies, an exercise that involves risk and risks can make or break its fortunes. More importantly, it would be over stepping its core operations, for it is not in the speculation business.

Recently, with the advent of very complex instruments, many multinationals have in fact engaged in speculations under the umbrella of hedging. Some have ended disastrously; such was the case of a large European conglomerate based in Germany, which had decided to go un-hedged on large contracts. So any business no matter how small can, in effect manage its currency exposure. A shop importing clothes from Milan as well as a large corporation face in essence, the same issues, but with varying degrees of scale and complexity.

But it is not just importers that face a currency dilemma. Companies that have overseas operations also face a currency decision which relates to the translation of its profit/loss accounts from overseas back into the base currency. The bottom line is that a proactive approach, with the assistance of a bank treasurer can help reduce the effect of currency swings on the operations of a company. While hedging techniques have developed, it is crucial for businesses to have a clear view of their upcoming liabilities to optimize the hedging process. The tools available range from straightforward contracts to complex options that are most often used by multinationals to offset complex transactions.

Hedging is a tool which enables companies to protect against changes in their base currencies, but it is also useable in a variety of other investment forms such as interest rate risks, equity crash risks as well as a range of commodities. It’s a smart move.
 

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Economy & Finance

by Executive Contributor
written by Executive Contributor

Capital Intelligence Raises First Gulf Bank’s Rating to A-

Capital Intelligence (CI) rating agency has raised FGB’s (First Gulf Bank) long-term foreign currency rating and financial strength rating from BBB to A-. The bank’s short-term foreign currency rating was increased from A3 to A2, the support rating was raised from 3 to 2, whereas a stable outlook was assigned to all the ratings. The agency noted that this upgrade is attributable to the bank’s ability to raise a substantial amount of new capital amid the strength of its ownership by the ruling family of Abu Dhabi and the family’s confidence in its management team and board. FGB was last trading at around AED25 ($6.8) per share on the Abu Dhabi Stock Market.

IFA Announces a 46% Rise in H1-2005 Profits

Kuwaiti-based International Financial Advisors (IFA) announced a 45.8% year-on-year rise in first-half profits to KD33.3m ($114m). The six months profits included around KD30m ($103m) in unrealised profits on investments, the result of a sell-off of some of the company’s assets. Earnings per share rose to  KD0.109 ($0.37), up from KD0.077 ($0.26) in first-half 2004. IFA is the parent company of IFA Hotels and Resorts which launched a $150m residential project in Abadiyah, Lebanon. IFA’s listed shares, amounting to 239,813,827, were last trading at around KD1.5 ($5.14) per share on the Kuwait Stock E

Country Profile: Qatar

Capital Intelligence (CI) rating agency has raised Qatar’s long and short-term foreign currency ratings from A- to A+, and from A2 to A1 respectively. CI also assigned a long-term local currency rating of A+ and a short-term local currency rating of A1 to the sovereign, whereas a stable outlook was assigned to all the ratings. The agency noted that this upgrade reflects the investment in the gas sector and other export-oriented industries which will carry budget and current account surpluses over the medium term, hence further improving already strong debt-servicing ability. Qatar is expected to become the world’s largest producer and exporter of Liquefied Natural Gas (LNG) in the next five years. CI assumes that earnings from LNG and related products will exceed those from oil by the year 2008. High oil prices, increasing output in oil and gas industries, and advances in fiscal management have resulted in an average budget surplus of 6% of GDP in each of the past five years. Government debt decreased progressively to stand at 30% of GDP in the fiscal year ending in March 2005.

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Society

Time to take us Seriously

by Fadi Saab
written by Fadi Saab

While the saying goes that “you can’t please all the people all the time,” it seems in our Lebanese politico-economic scene, that many ‘leaders’ and ‘leaders-to-be’ keep wishing to challenge that proverb. Is it that they are attempting to become the exception that confirms the rule in gaining a growing recognition? Or is it that they are relying on the abnormality of our system to justify their endeavors to climb the ladder of popularity?

One thing is for sure, these individuals are constantly seeking the easy way out. They are relying on the comfort of adopting the most obvious broad headlines and embracing generally accepted titles, as the basis of their ‘Program for the future’. As such they are hoping that we the people, in our entirety, will find their approach pleasing and consequently accept their proposed leadership on the basis that they unequivocally understand our views and can unmistakably solve our concerns. Of course, another common attitude to gain popular support is to constantly attack any ideas suggested by political opponents regardless of the correctness of their content. Consequently, the people are encouraged to automatically judge such programs based solely on their political loyalties or rivalries.

But do the hypotheses behind these tactics still hold true… for are the people of the new era in Lebanon whether consciously or reluctantly still willing to be so naive? Obviously not!

The time has come for leaders to adopt full transparency in presenting issues to the public in their entire complex nature, and to clearly debate the proposed solutions in their probable compounded results. Thus, being truthful with the public involves that they stop making future promises based only on reminding us of their past successes, or on recalling the past mistakes of their opponents.

It is now clear that the public expects from our leaders much less history lessons and theoretical proposals, in return for much more practical undertakings and measurable actions. Certainly the country cannot continue to pay the cost of political non-collaboration nor the resulting waste of valuable time, and definitely the people will not tolerate further squandering of limited resources on tasks lacking the benefits of cooperation.

Maybe now the concept of moving from theory to practice and from expansive promises to specific activities would finally be applied by those future leaders who are seeking to gain our confidence and support. Surely, if they succeed in adopting a functional model and in joining forces while targeting a unified national vision and strategy, then our votes of confidence will certainly go to validate the principle that “… you can please most of the people most of the time”.

TOOLS NEEDED FOR LEBANON’S ADVANCEMENT

1) “National Agenda” for the Future

• Blend the different approaches and agendas for Lebanon’s development into ONE

• Unify the Lebanese people around a single comprehensive ‘National Agenda’

• Allocate required resources to assure swift and successful execution in its entirety

• Fend-off attempts to claim individual political authorship or personal benefits

• Emphasize the importance of immediate actions & the opportunity cost of delays

• Implement a dynamic approach for active progress evaluation and review of goals

2) “Think Tank” Group

• Up to 10 people with related academic credentials & different backgrounds/views

• Shadow the Government on policy decisions and impact assessment evaluations

• Hold round-tables setting action priorities on all social/financial/economic issues

• Produce diverse position papers with updated reliable indicators & statistical data

• Liaise with the various Economic Associations/Syndicates on a proactive basis

• lobby for a valid cause-effect relationship linking politics, the economy & society

3) “Horizon 2010/2015/2020” Program

• Publish a detailed socio-economic ‘White Paper’ by end summer 2005

• Produce a series of reports on major economic/financial/social issues of concern

• Draw-up on input from the ‘Think Tank’ and the various economic associations

• Propose a short/medium/long term vision, with identifiable goals & objectives

• Offer a databank of accurate statistics on current and projected prime indicators

• Provide a yard-stick to measure the performance of politico-economic policies

4) “Confidence Restoration” Activities

• Prepare a detailed crisp presentation on the economy and its future potential

• Organize business trips to main international cities & hold networking sessions

• Seek the assistance of the Lebanese Diaspora in connecting with major investors

• Fund a broad public relations and advertising campaign on an international scale

• Invite prominent businessmen/investors to conferences/workshops in Lebanon

• Produce specialized business-economic image building programs on satellite TV

5) “Institutional” Framework

• Protect the various socio-economic associations from any political interference

• Apply proper governance to all associations & ensure regular leadership rotation

• Encourage effective working methodology/coordination among such associations

• Unify the different governmental agencies responsible for economic policies

• Establish a formal structure to maintain public-private sector expert collaboration

• Seek input from all professional groups prior to taking positions on related issues

6) “Socio-Economic” Awareness

• Expand the priority of socio-economic issues beyond specific political agendas

• Encourage local and satellite TV’s to air more specialized roundtables/talk shows

• Persuade prominent Newspapers to maintain regular socio-economic sections

• Launch Civic awareness programs to educate the population about proper actions

• Organize a series of specialized lectures/seminars open to the general public

• Distribute briefings and recommendations relating to socio-economic programs

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Business

A Unique vision of property

by William Long
written by William Long

There are a few points that thirty-six year old real estate developer and entrepreneur Karim Bassil wants to make perfectly clear to any reporter interested in untangling his rapidly growing business interests.

First, contrary to some press reports, the general contracting company La Constructa that Bassil began with partner Walid Marchi a few years ago, is but one element in a vertically integrated group of firms that services both his own development projects as well as those of other clients.

So although there is no overall holding company as yet, Bassil Real Estate Investment (BREI), not La Constructa, is more or less de facto company leader, given its role as advisor and manager on several ongoing projects.

Second, although he’s been the driving force behind the various related companies (which now number six according to his most recent business card), Bassil is insistent that he is “a very, very bad manager who just partners with great managers.” 

A traditionalist

Finally, and perfectly in line with his outward demeanor which shifts effortlessly from self-effacing modesty to sprawling aquisitiveness, Bassil is adamant that development in historic neighborhoods like Gemmayze, no matter how new in concept or how bold, must be harmonious with the surrounding area, not in contradiction to it. 

Of course, this last point stands as a rare dictum in Lebanon, where enlightened urban planning is usually a mere afterthought (if a thought at all). However, after taking one reporter on a tour of his most recent construction project, a boutique hotel cum residency in the middle of trendy Gemmayze street, one gets the sense that Bassil is indeed willing to put his money exactly where his ideals are. 

“Look at that tree,” he said, motioning to a towering Magnolia that rests in the middle of the bustling construction site. “That tree is so beautiful and old. How could we just cut it down…. Instead we’re building around it.

“You see, in general,” he continued, “if we really wanted to exploit this space fully, the only way to do it is by building a tower. But that would be completely against the character of this street, so instead of building16,000 sellable square meters, which we could, we are building 8,000 square meters.” 

Since Bassil began developing real estate for himself in Lebanon in 1998 (and launching successive affiliated companies thereafter), he’s been able to complete or initiate a total of five projects – something that has given him credentials really with which to prove both his sincerity in matters of organic building practices as well as his own prowess. 

With each one, as a perusal of relevant architectural sketches demonstrates, a sense of synergy rather than opposition really does seem to dominate; although, so too does the notion that the projects themselves will only get bigger.

“We wanted to preserve the old style of the neighborhood here,” Bassil said, referring to his three completed Gemmayze projects: Convivium One, a 4,000 square meter townhouse with five apartments valued at $4 million, Convivium Two, a $7 million two building project, and Convivium Three, a $5 million “ core and shell” project (i.e. without interior amenities or infrastructure).

“Convivium Four, where we have rehabilitated a turn of the century house into four apartment rentals, will be finished in the next six months,” he explained. “There too you have the same idea of a building that is in harmony with the surroundings… you see large ceilings, exteriors as in the neighborhood, a similar scale.” 

Last but not least

It is Convivium Five though, the 8,000 square meter development in the heart of Gemmayze street, that has marked a departure of sorts for Bassil (though not from his commitment to aesthetic unity in practice).

After all, the development is Bassil’s most ambitious to date – a $17 million effort that will put a boutique hotel with 33 suites, branded under the name of an as yet undisclosed fashion figure, three residencies in the back area and a five floor clock tower all on the market by next year. 

And unlike Bassil’s earlier projects, which typically ranged from $1,100-$1,200 per square meter, Convivium Five’s residencies will start at $1,750, with every additional floor level tacking on an added $75 per square meter.

So perhaps somewhat naturally, the changes in price, cost and scale are having a direct effect on the developers bottom line strategy. 

In fact, it now seems increasingly likely that with three new projects in the offing, including a $33 million residential project in Gemmayze, Bassil may finally have to turn to outside investors instead of relying on pre-sale down payments and bridge loans from banks. 

Expanding out

It is a move that may also unfortunately mean he is unable to keep all aspects of a project under one roof, as he has in the past.

“La Constructa has acted as the General Contractor on other projects, including the Byblos Bank tower in Sassine, the New French Embassy and the University of Balamand… and it is the General Contractor on Convivium Five. But for the upcoming projects where we may have to turn to outside investors we have to be careful about any possible conflicts of interest like having the general contractor and the project manager be affiliated.” 

Of course, avoiding such conflicts of interest will not be easy: Bassil has intentionally structured his companies to work together seamlessly, sometimes in an almost a turnkey fashion all in an attempt to consolidate projects and contain costs.

Thus, there is the facilities management company MMG that currently manages over 300 sites across Lebanon. There is the property management company, PMG that handles more than a dozen high-end buildings. There is the security company, Group 4 security that started four months ago and now already has over 200 employees. And there is the concrete pouring company Stratum.

“BREI,” Bassil explained, referring to the project management company, “was structured because I decided to have a company that would service real estate developments… my own and now those of other people. 

“But in Convivium Six Stratum will have to bid for the concrete pouring contract and it will not be possible to have BREI and La Constructa functioning as project manager and General Contractor respectively… The projects are growing and the rules have changed.”

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Business

Beirut: open city

by William Long
written by William Long

Even as the journalist Samir Kassir lay dead in his car on the morning of June 2, politicians, journalists and analysts tried to make sense of a wantonly barbaric killing. And the answer many reached went to the heart of what it means to own a free mind in the Middle East, and the deep political dangers this poses for the region’s regimes.

Kassir’s death was initially regarded as an act of retribution for the journalist’s past outspokenness, particularly his denunciation of the former head of the General Security directorate, Gen. Jamil al-Sayyed. Several years ago, Sayyed ordered his men to tail and harass Kassir, after he had written an article criticizing the general. It seemed the journalist had had the last word after the Syrian withdrawal, and therefore had to pay. There were other messages in the killing, observers insisted, including a warning to opposition groups to watch out (Kassir was a leading member of the Democratic Left movement), to Al-Nahar to watch out, and to journalists in general to watch out about defying the security services.

All these explanations may well have been true, however they were all part of a more focused accusation, namely that the Syrian intelligence services had engineered Kassir’s killing to warn other Lebanese journalists, but also opposition members inside Syria, against threatening the stability of the Syrian regime. This appeared different than the subsequent killing of George Haoui, which seemed to be a backhand to the forehand of the large Hariri victory in parliamentary elections.

If respecting the durability of Syria’s regime was indeed the motive in Kassir’s death, it suggests that, since Syria dismantled its security curtain last April, it has concluded two things with respect to freedom of expression: that Lebanon must not again become, as it was in the 1950s and 1960s, a center from or through which foes of the Syrian regime might destabilize it; and that though its soldiers are gone, the margin of maneuver Syria has to punish its enemies is now, paradoxically, wider.

If that is indeed the Syrian rationale, it shows a remarkable sensitivity to the power of liberal ideas – no doubt understandable from a regime so single-mindedly fixated on denying them. But what aspect of Kassir’s exhortations so disturbed the Syrians? After all, Al-Nahar is denied entry into Syria, and while many of its articles are passed around in samizdat, those bound to read them do not pose a serious challenge to the Syrian regime, with its control over myriad apparatuses of violence.

According to a close friend of Kassir, and a careful observer of Arab media, Damascus couldn’t stomach his regular appearances on Arab satellite channels, often talking about Syria. While his articles were savage in their dismissal of the Syrian dictatorship, his television appearances reached a far larger audience. As someone who famously remarked, “The Syrian army must withdraw from Lebanon, and from Syria as well”, Kassir hit a sensitive nerve. He also reportedly planned to travel to Damascus soon to make a similar case. There was no ambiguity there: Kassir believed the Syrian regime had to go.

More broadly, this underlines the central role Lebanon is set to play in the future as a liberal command center, if it can eliminate the vestiges of the security edifice set up by Syria. The country played this role in the period before the civil war in 1975. However, idealism aside, this implied not just issuing democratic invocations; it also involved offering shelter to the political opponents of Arab regimes, so that Beirut became much more than a place of intellectual tolerance; it became a fount of prospective coups and revolutions and, therefore, a source of regional instability. In effect, it became a playing field for Arab rivalries.

The situation has changed somewhat, in that most Arab countries are not quite as murderous as they once were in carrying their conflicts elsewhere. Today, the weapons of choice might as easily be satellite channels and public relations firms as car bombs and bullets. However, Syria, among a dwindling group, remains an anachronistic exception. However, even in their modestly pacified political climate, the Lebanese must ask themselves whether they are prepared to defend their country if it resumes playing the dangerous part of liberal outlet.

As Kassir observed in an interview last year: “Yet, Beirut also has something unique – human diversity and, thanks to its history, linguistic and political diversity. Let’s hope it will keep it. If Beirut loses this diversity – and the city did not do so, despite its 15-year conflict between 1975 and 1990 – it means it would have been seen as the contradiction of the Arab city, which would represent a triumph for regression.”

Who can disagree? As Kassir’s murder showed, the only real hope for stability Lebanon will enjoy requires its being surrounded by pluralistic systems, in a region at peace. Some Arab regimes will use money and other means to fight open minds in Beirut. But for once, they are on the defensive, and changes in Lebanon are a reason. What better example of bald fear do we need than a particular regime’s need to liquidate a man who deployed only ideas, a voice and a pen against them?

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Economics & Policy

Nabil Sukkar

by Nicholas Blanford
written by Nicholas Blanford

Syria’s ruling Baath Party introduced a meager set of reforms at its June 6-9 congress, dashing hopes that the eagerly-awaited event would launch a more rapid process of economic and political liberalization. Facing unrelenting pressure from the United States and growing regional isolation, the Syrian government is attempting to bolster internal unity by establishing clear red lines for the opposition while loosening slightly its tight grip on Syrian society. But what will that entail for Syria’s struggling economy? Executive spoke to Dr Nabil Sukkar, managing director of the Syrian Consulting Bureau for Development and Investment.

Do you consider the speed of economic reform over the past five years as satisfactory? If not why not? What are the major obstacles?

The speed of economic reform over the past five years has not been satisfactory even though the pace of reform has accelerated. The reason is that domestic problems are mounting and external pressures to carry out reform are also increasing. I don’t mean political pressures but the pressures of having to join the Euro-Mediterranean Association Agreement. Domestic problems are mounting tremendously. We have increasing unemployment, economic growth is running at about 3 percent a year, the oil situation is becoming more serious in the sense that we are approaching a period where Syria will become a net importer of oil. Oil, so far, has been bringing us about 70 percent of the country’s foreign exchange receipts and about 50 percent of the budget revenues. When the oil dries up, this positive contribution will come to an end and we have to prepare ourselves as of now to find alternative foreign exchange income.

There has to be much faster economic reform to cope with all these internal and external challenges.

What reforms are being planned at this stage, and what is the projected speed of implementation?

There is no specific reforms on the agenda because there is no economic reform program. This is one of the problems. Syria has been carrying out economic reform, though slowly. But it was not part of a comprehensive economic reform program. It was an ad hoc reform, responding more to crisis needs than a program prepared in advance with a clear objective strategy and timeframe. There seems to be a reform and development program being prepared at the present time which will take us from 2006 to 2010. It is being prepared by the Planning Commission and is supposed to be put into effect in January 2006. It will be a new type of planning. It will be reform plus development in one package. We don’t know the framework of this plan but it will be announced.

Is the pace of economic reform dependent more on the Baath Party issuing directives or the government’s efficiency in implementing those directives?

What’s more important are the directives that come out of the Baath Party. One of the reasons we have not been moving fast on economic reforms is that there is still an ambiguity on the identity of the Syrian economic system. Are we still a socialist economy or are we moving toward a market economy? And if we are moving toward a market economy, what’s it going to look like? Once we cross that threshold and identify [what kind of economy] we will have, then there will be more clarity to guide the government. Right now governments are caught by the ideology of the party which says Syria has a socialist economy and a centrally-planned economy. It’s that conflict that has been delaying reform, or slowing down reform.

How much of the economy is driven today by the private sector and how large is the public sector share in economic activity?

Ever since the early 1990s, the economy has been driven increasingly by the private sector. In response to Investment Law Number 10 of 1991 and various reform measures that have taken place since then, the private sector started to play a larger role and investments increased considerably in the early 1990s. But Law Number 10 was not accompanied by other measures to liberalize the economy and to create an enabling environment for private business. The private sector hesitated and by the mid 1990s, [it] started slowing down because they realized that the government seemed was just giving them some tax incentives but not undertaking a deep change in the regulatory framework of the economy. The private sector now needs more assurances that we are moving toward a market economy.

Nevertheless, right now the private sector contributes about 60 percent of GDP compared to 40 percent in 1980, so the private sector contribution has increased considerably in the past 20 years.

How much has the private sector’s ability to function been improved in the recent past and where are the current best prospects for private sector development?

I think the private sector has been able to improve better because the regulations have eased up a bit, but not sufficiently. There has been an easing up in import regulations, export regulations, tax regimes.

As far as areas of private sector investment, it’s in practically every single sector. Syria is a virgin country. It has opportunities in tourism, industry, agriculture, telecommunications, transportation, banking. Banking and financial services are important areas. Syria allowed private banks about three years ago and now we have three private banks. There’s large room for financial services and insurance. Funds for venture capital, financing small and medium industries, micro financing, you name it.

Would it at all be economically feasible for Syria to maintain continued dominance of the public sector in the national economy?

Dominance of the public sector is diminishing anyway. But at the same time I don’t think the public sector should withdraw from social services. It should increase its role in the social services, in education, in health care. Otherwise if you open up to a market economy and don’t take sufficient care of social issues you end up with poverty and this is something we want to avoid.

How important is the issue of labor and unemployment in the Syrian economy?

Unemployment is about 20 percent. Official figures are about 11 or 12 percent. Some official sources came up with a figure of 16 or 17 percent recently, but I think the figure is more likely in the region of 20 percent. There are about 300,000 new people coming onto the labor market each year and this needs a high rate of growth to absorb them into the economy. Adding to these two factors of existing unemployment and new labor force is the extent of the disguised unemployment in the public sector. If you want to reform the public sector one of the things you have to do is get rid of the excess labor in the public sector. No less than 30 percent of employment in the public sector is excess labor. That will create another pressure on the labor market.

The problem of employment and unemployment is extremely important and any economic reform has to attend to this issue very seriously otherwise economic reform will be associated with more unemployment and more poverty.

In this context, how large of a contribution to Syria’s GDP do you attribute to Syrian expatriates working abroad, and specifically in Lebanon? How has this been affected in recent months?

Not much. The remittances coming from laborers in Lebanon is not more than maybe $400 million a year. If the number of laborers in Lebanon is 500,000 and they are making $400 million a year. Assume that 20 percent of the labor has come back [to Syria], then that’s the loss. It’s not a significant issue at all. And I think the laborers will return when the situation gets back to normal. I think the loss is more to the Lebanese economy than the Syrian economy.

How do you see economic and business ties between Syria and Lebanon developing in the coming two to three years?

I expect the ties to grow. Now that there are no more Syrian troops in Lebanon, I think economic relations will improve on a more equitable basis and a more relaxed basis and we can build a more sustainable relationship. Once the elections are over in Lebanon I think the two countries can work together and intensify their trade relations, tourism, labor movements and investment flow between the two countries. I think things will improve and become based on a more sustainable basis. I’m very optimistic.

Do you anticipate any short- or long-term economic repercussions on Syria from the US drive for change in the Middle East and from UN resolution 1559 in particular?

I think [US sanctions] are having an impact, not a direct impact because they are US sanctions not UN sanctions and as a result it’s the US that’s sanctioning its own companies. We don’t have much of an economic relationship with the US. Trade volume is about $300 million a year, which is insignificant. There’s little direct foreign investment in Syria. The major [foreign] companies here are Shell and Total. And Shell is a Dutch company and Total is a French company. There are some minor US companies doing some [oil and gas] exploration. But there is a rebound impact, a psychological impact, deterring some non-US companies and other governments from dealing with Syria at the present time because they don’t want to antagonize the Americans.

Resolution 1559 brought the French and US together in rare agreement on a Mideast issue. Do you expect to see that partnership fade now that the clauses relating to Syria in 1559 have to all intents and purposes been fulfilled?

The alliance between the US and France is temporary and all will depend on the results of the investigation into [the assassination of former prime minister Rafik] Hariri. If the results clear Syria, then the EU will go ahead and sign the Association Agreement. If the results raise doubts about Syria’s role in the assassination, then I think this could complicate things and continue this present state of pressure uncertainty, unusual alliances of foreign powers against Syria. The Europeans are not signing the Association Agreement with Syria pending the result of the investigation.

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Comment

Hit list vs. reforms list

by Yasser Akkaoui
written by Yasser Akkaoui

At George Hawi¹s funeral, nearly everyone in the front pew of the church had lost a loved one to murder or assassination. The list included Giselle Khoury, Walid Jumblatt, Solange and Amine Gemayel, Saad and Bahia Hariri and Nayla Mouawad. One could not help but wonder whether each of them had been reminded once again of their personal loss. Add to that the pain suffered by the Franjiehs, the Karamis, the Chamouns, not to forget Sitrida Geagea, with her husband Samir Geagea still in jail, and the Lebanese political scene becomes one filled only with loss.

The murder of kings has been common practice in the history of nations. Next to divide et impera, the Roman method of oppression, killing leaders has been an effective way for ruthless nations to subjugate people.

But we are interested in economics and not in assassinations. Here, the mood of corporate Lebanon and among regional and worldwide investors with a heart for this country is getting restless. Much more mature than the strictly small-time political players who fail to look further than the last house in their village, are the crème of Lebanophile investors and professionals who want to see Lebanon move forward. They have a much clearer vision for Lebanon¹s recovery and know that in the end it will be the Lebanese people, not their politicians or any foreign power, which will keep this country going.

Once they regained their sovereignty, the Lebanese resumed what they do best: consuming and investing. This is what brought back the confidence of Arab and international investors to Lebanon, which manifested itself in a rally in Solidere shares to levels that had been out of reach for six years.

We need to keep this momentum going. While we have heard so much empty rhetoric from our political leaders, in light of the dire state of the country¹s economy, they must start implementing reforms immediately.

We elected the new parliament; we gave them our trust. Now they must show us what they are made of.

We are watching.

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