Ever since the killing of former Prime Minister Rafic Hariri, the Virgin Megastore stands on an island. To the left, Martyrs Square is effectively a camping site. Consequently, the road to reach Virgin has been closed, due to security concerns. Virgin’s former parking in front of the store has been turned into a memorial site for Hariri, while two construction pits separate the store from the rest of the BCD.

“The building sites don’t hurt us that much,” said Jihad el Murr, CEO of the Virgin Megastore. “Construction started well before the killing of Hariri and in that time sales were still good. Only after the death of Hariri sales went down by 70%, which in recent months has slightly improved. Today we have about $40% less in sales. I expect it to improve further when the tents are removed.”

The last diehard demonstrators in downtown have sworn to stay under Lebanon’s statue of independence, until former Lebanese Forces leader Samir Geagea is released, which according to many may happen any time between July and September. There are no signs yet that the tent in honor of Hariri will disappear. In fact, some say it will remain permanently, a move that could severely affect the store’s access and positioning in Lebanon’s retail consciousness.

“As we now we have a new parking left of Martyrs Square, the Hariri site doesn’t affect us much,” said Murr, who is mildly positive about the upcoming summer. Last year the months of July and August produced a 60% sales increase thanks to the large numbers of Arab tourists and Lebanese expatriates that visited Lebanon. “The signals we get from the hotel sector are positive,” he said. “Most hotels claim they are fully booked, so I’m upbeat about the summer. It will probably not be as good as last year. If that’s the case we are happy.”

Lebanon’s two southernmost districts, Hasbaya and Marjajoun, are rapidly becoming the place to be, as far as eco- and rural tourism go. Funded by a $12.5 million US Aid grant, the American non-governmental organization Mercycorps has been working on a series of interconnected development projects deep south since November 2002.

“By focusing on eco- and cultural tourism, as well as ecologically sound agriculture, we hope to bring sustainable development to this beautiful, yet forgotten region,” said senior business development officer Hala Kilani.

So, in Khiam a WWII bunker built by the British was cleaned up and opened to public, while in Hasbaya the 12^th century castle and khan were made visitor friendly. El Saqi, 28 hectares of woodland overlooking the Hasbaya River, is promoted as a paradise for migration bids, while in the Chebaa plains at the foot of Mount Hermon hiking trails have been set out.

When combined, the dozens of separate projects make a perfect roundtrip to discover the region. The combined project is currently in its final stages and will be finalized by November. Mercycorps is an NGO offering emergency relief, rehabilitation and sustainable development in countries suffering the consequences of conflict and war. Founded in the late 1970 in response to the humanitarian crisis in Cambodia, the organization operates in some 35 countries worldwide. Following 20 years of Israeli occupation and economic decline, Hasbaya and Khiam fit the definition perfectly.

The big question is: are people willing to drive 2,5 hours to visit the beauty of the south? “It is all a matter of promotion now,” said Kilani. “We had a stand at the 2005 Garden Show last May and it was remarkable to see just how many people did not know anything about the south, yet were very enthusiastic after they saw our work.”

Since, for decades it seems, the Lebanese government has generally been unwilling or unable to protect Intellectual Property rights, it should come as no surprise that multinational corporations are pushing for governments to collectively punish the country.
In one prominent example, the International Intellectual Property Association (IIPA) said in its recently released 2005 report that U.S. copyright industries lost $31 million last year because of piracy in Lebanon.”
The Association’s recommendation: “Lebanon must take concrete steps toward eradicating piracy…otherwise, its trade benefits under the Generalized System of Preferences (GSS) should be suspended.”
The report ominously added that in the first 11 months of 2004, Lebanon imported more than $31.1 million worth of products into the United States without duty under GSS, “or a staggering 45% of its total imports into the U.S.”
Of course, even if one of the most obvious IP issues is tackled successfully – mainly, cable piracy which is estimated at almost 90 percent in Lebanon and which cost the Finance ministry $12 million in lost revenue last year – the IIPA report said end-user piracy of software and pre-recorded music and films is still widespread “among large companies, banks, trading companies, and most government ministries.
What’s more, “There are only four, part-time inspectors in the [Beirut] Department of IP Protection. In the area of software piracy, these inspectors lack computer knowledge [and] startlingly, these officers only work until 2 p.m. and won’t work with computer experts.”
In one particularly troubling case of bureaucratic inanity, the IIPA said that even when inspectors were charged with raiding a pirate reseller at 4 p.m. at a computer fair, the inspectors said the raid could not go forward because it was “after working hours.” Plus ca change…

As the temperature rises and the outdoor life spreads to the beaches and open-air bars, RTDs (Ready to Drink) beverages become the tipple of choice for Lebanon’s younger drinkers. According to the International Wine and Spirit Record’s latest report, some 134,000 9 liter cases of RTDs were sold in Lebanon in 2004. Out of these, 76,000 cases were Bacardi Breezer, Smirnoff Ice and Smirnoff Black Ice. Bacardi Breezer is the leader in sales, with 2 million bottles sold in 2004, and dominates both the off-trade and on-trade market by 50%.  Overall, the bulk of total RTD sales were done in off-trade sites.

Kassately, manufacturers of local brand Buzz, is forecasting to sell some 40,000, 9-liter cases over the course of May to October, representing an estimated $450,000 worth in sales.

We have been involved in quite an aggressive marketing campaign, we’ve improved the quality and packaging of our product, and I believe that it will pay off,” said managing partner, Nayef Kassatly, revealing that $500,000 had been spent in advertising the brand.

Carlo Vincenti, of the Vincenti Group agents for Bacardi Breezer, is more cautious with regards to his predictions for the summer months.

“Sales will be good if things remain calm,” he says. “But we have detected a drop in sales since February 14, mainly due to a drop in tourism and on-trade activities.”

Introduced in Lebanon in May 2001 with Bacardi Breezer, RTDs’ instant success was a short-lived one.

The easy-on the-palate concoction was initially a smooth sell in a country marked by a young consumer population, and up until 2002, the beverages benefited from a steady growth, reaching its peak at some 105,000 9 liter cases imported into the country.

The fad subsequently died down and the market has been declining over the course of the last 3 years by over 25% to subsequently stagnate, reaching 75,000 9 liter cases imported in 2004, according to Vincenti. Today, he estimates the total value of the market at some $2.5 million.

The once salmon-coloured façade of Beirut’s St. Georges hotel remains a smashed, blackened testimony to the massive February explosion that killed former Prime Minister Rafiq Hariri just in front of the building. St. Georges owner Fadi Khoury had finished refurbishing the hotel structure and exterior, at a cost of $15 million, shortly before the blast. Nearly five months on, he still has no office, he can’t begin repairs until the UN investigation is completed and he is struggling to replace the five staff killed in the attack. On top of all this he says, the long-running dispute with Downtown developers Solidere has shown sign of weakening. 

“We’re nowhere,” Khoury said despondently. “All we’re doing right now is trying to exist.”

But although a disillusioned Khoury told EXECUTIVE in March he might “step back and rethink the whole thing from a different perspective” he hasn’t yet thrown in the towel. The St.Georges beach and yacht club, adjacent to the hotel, is open for business, thanks to a $100,000 investment program that began before the February blast. True, anyone arriving by land must pass through a nondescript metal gate and along a rough gravel pathway – the original entrance is inaccessible because it is still part of the crime scene.

“If it appears that the world has changed in Lebanon, if there is so much as a sliver of positive attitude from the government, I will go ahead and start work on the hotel again,” Khoury pledged. “I am still hopeful that things will look and better and that I will emerge from my slumber.”

“The St. Georges hotel is a monument that must be reconstructed,” said real estate consultant Raja Makarem. “It is part of the history of Lebanon. Unfortunately, once the investigation into Hariri’s murder has ended, I fear the St. Georges situation will go back to what it was. Mr. Khoury will have to resign himself to either rehabilitating or selling the hotel.”

After numerous false starts and retracted predictions of an imminent ground-breaking, Solidere’s much anticipated 100,000 square meter Souks project in Beirut Central District (BCD) finally shifted out of neutral in early June and into high gear.
For the skeptical observer, no less than seven towering yellow cranes now dot the site located just below Weygand Street, proof positive, it would seem, that a formidable retail complex will in fact be constructed on top of the long-finished underground parking.
“This project will surely boost the profits of Solidere as more investors are showing an interest in the BCD,” said one Beiruti broker quoted in the local press.
Of course, while such a bullish estimation may eventually prove correct, at least for the time being, things are very much still in a kind of wait and see mode for possible retail tenants.
“We have expressed our interest,” said Michel Abchee, Chairman and CEO of Admic, the parent company of BHV and Monoprix as well as the builder of City Mall in Doura.
“We were interested in the past… But today they are just testing the market.”
“There is a difference,” he continued, “between the construction and the commercial stages. They are still on the drawing board, in fact they are redrawing their plans given the changes in the marketplace since they first announced the project.”
Although the Souks project may offer some competition to other area malls when it is completed in 2006, Abchee seemed wholly unconcerned by the prospect that a competitor may eventually reside in the BCD.
“They are not competing at all… Each is going after a different clientele. For the Souks it is a downtown clientele.”
Either way, he added, “there is a definite place in the market for international retailers who want to find space that meets international standards. Beirut is lacking here and that is what this project and others are trying to address.

Ras Al Khaimah (RAK), among the UAE’s least developed emirates, is now positioning itself as a serious place for investment. To help promote this process, the World Bank is organizing an Investors Conference to be held in RAK 28-29 May. Under the heading “Invest and Live in Ras Al Khaimah” the conference aims to draw attention to RAK’s undoubted investment strengths. For a start, industries like glass, packaging, sanitary goods, pharmaceuticals, and tableware, which involve huge investments, are already exporting to more than 100 countries. Nevertheless, there is a lot of potential for more investments in manufacturing. RAK has also just begun to develop it tourism capability, and hopes to attract investors for constructing more hotels, golf courses and many forms of water based recreation and sport. All of this of course will act to promote other sectors, including real estate development, as has happened in Dubai. RAK’s public and private sectors launch a few weeks ago of the new real estate company, RAK Properties has thus been a timely move to promote real estate, leisure facilities and tourism.

RAK has considerable land that can be made available strategically for residential, commercial, and service industry development. A comparison of land prices between RAK and other emirates indicates great potential for this. Besides lower-cost land, RAK should be able to capitalize on its good environment and recreational facilities to attract investors. Strengthening of land use planning and management institutions is one of the priorities of the emirate. With the UAE Highway reaching RAK very soon, travel times to Dubai are being greatly reduced. This enhanced connectivity should make it increasingly feasible for people and businesses to locate in RAK and take advantage of the lower cost land there. More advanced transport such as high speed trains will eventually cut even these times down to make commuting to RAK even simpler. Travel from RAK to Dubai airport via the UAE Highway will be no more than 45 minutes. Success in this respect will establish RAK as a world-class investment destination in its own right.

Details of the coming “Invest and Live in Ras Al Khaimah” conference are available at investinrak.com.

Dubai-based magazine Arabian Business recently published a list of the ten richest Arab singers. Top of the bill was Egyptian heartthrob Amr Diab with no less than $37 million, closely followed by Fairuz with $34 million. Diab’s fortune stems from record sales, concerts and – a staggering $17 million – from advertisement deals among which most notably his contract with Pepsi.

Taking into consideration Diab’s worldwide reputation spanning a 20-year-career, $37 million is not an unlikely nestegg. The same is true for Fairuz, one of six Lebanese singers on the list. The diva does not do commercials but has been performing for over half a century and currently charges up to $500,000 for a concert.

Less convincing were the alleged earnings posted for Elissa and Nancy Ajram. Elissa, whose duet with Chris de Burgh brought her brief international recognition, makes the fourth spot with a staggering $31.5 million. Music insiders say that this is far too high a figure for a singer whose first of her four albums was released in 1999. Nancy Ajram has supposedly clocked up $16.2 million, not bad for a 22-year-old with only two albums under her belt and a $500,000 Coca Cola endorsement. 

One notable absentee was starlet, Haifa Wehbe, who along with Nancy Ajram is Lebanon’s hottest selling artist and who was recently voted most popular Arab singer at the Lebanon’s Murex d’Or awards.

Wehbe’s manager, the alluringly-named Cynthia, defended her client’s pulling power by reminding Executive that Haifa, who charges $40,000 for a private concert, has just released her second album and will soon sign her first major advertising deal that would propel her into the big league. With an average of two  concerts a week in the summer season, Haifa has to work quite a bit before she sings herself into the top earners list, which is propped up by Zahleh’s favorite daughter Najwa Karam, who has to make do living on $13 million.

Danny Richa, managing director of Impact BBDO in Beirut was elected President of the Lebanon Chapter of the International Advertisement Association (IAA) on March 30.

Richa is confident that, if Lebanon’s political situation changes for the better over the next few months, the sector as a whole will, despite the political setbacks, be able to match last year’s ad figures, which showed growth for the first time in years. 

“Lebanon has been here before,” he said. “In any other country the consequences of the crisis would have been much more disastrous.”

Richa believes that Lebanon’s leading advertisement agencies have been spared the current economic and political crisis. “We mainly work with international clients and brand builders who plan their strategies months ahead and so far all kept their promises,” said Dani Richa. “Unfortunately, it is the smaller agencies that suffer.”

Advertisement expenditure in Lebanon has been in gradual decline since 1999, when it peaked at $105 million, falling to $80 million in 2003. According to Stat Ipsat, TV advertisement expenditure decreased from $56 million to $33 million, press advertisement from $36 to $24, while only outdoors increased from $12 to $18 million over the same period.

“Last year we crawled back into the low eighties” said Richa. Hopes were high that growth would continue in 2005. According to some experts however, the 2004 figures did not signify a structural change for the better, but were boosted by the massive multi-media campaign for the Dubai Palm Island resort.

The IAA is a tripartite association representing the interests of advertisers, advertising agencies and the media with over 3,500 members in 89 countries.

In yet another testament to the continuing violence ravaging parts of Iraq, for the second year in a row, the country’s main trade show, dubbed “Rebuild Iraq,” was forced to kick off April 4th in a foreign capital.
In one sense, however, the setting for the four-day conference and expo in nearby Amman could not have been more appropriate: Jordan and last year’s host Kuwait have become the undisputed gateways for a deluge of consumer and industrial goods currently flooding the Iraqi market.
Unfortunately, for many Iraqi producers, the import binge has come at precisely the moment when they are least able to compete, leading to fears and impassioned complaints by some that Iraq’s productive sector is in danger of collapsing altogether.
In a sign of the frustration, one conference participant, who identified himself as “ one of the 25,000 Iraqi industrialists who are out of work,” upbraided an (inexplicably) bemused William Lash, US Assistant Secretary of Commerce, for having been more concerned with implementing a near zero tariff policy than supporting the already fragile domestic industrial sector.
In separate interviews after the conference, both Lash and Dr. Mehdi Al-Hafedh, Minister of Planning in Iraq, defended the Iraqi government’s ultra laissez faire approach to the country’s fragile post-war economy.
“All of our colleagues,” said Lash, “Ambassador Bremmer and all of his team spoke with the private sector and the interim government… When you are trying to attract capital in a very challenging environment you need to be as open as possible. The long-term future for Iraq is for opening her markets and opening her doors to capital, technology, ideas and partnerships, not restricting it.”
For his part, Al-Hafedh was less diplomatic in his assessment of the industrialists’ complaints. “Their problem,” he said, “is to always depend on the state, which is over now. We are in need of goods from outside in order to satisfy the needs of the local market. [Our policies] might be reviewed in the future, but the current need is to encourage imports from outside.”]