Within weeks, a US government-funded, 24-hour Arabic-

language satellite television network is to start airing in the Middle East as part of Washington

The use of electronic payment cards in Lebanon and the region has grown rapidly in the past four years, according to statistics by Visa Card International. But with few exceptions, Middle Eastern markets remain debit card markets. Data provided by Visa International for the region in the period from March 1999 until March 2003 show a doubling and even a tripling in the number of payment cards issued, transaction volume and transaction value. Lebanon, which showed increases in total transaction volume of 832% over the four years (and 58% for the year ending March 31, 2003), was the second highest gainer. In terms of cards issued, the numbers quintupled in Lebanon during the past four years to about 331,000, an increase far exceeding the region-wide average growth rate of 134 percent for the same period. Only Jordan and Oman led Lebanon in the growth rates of numbers of cards issued and transaction value.

Although the network of outlets accepting cards grew by under 25% in terms of a regional average over the four years, expenditures of cardholders in Middle Eastern transactions developed healthily. In Lebanon, where the number of outlets accepting Visa cards grew from 7,700 in 1999 to 10,700 in 2003, retail card expenditures more than tripled from $62 million to reach $194 million in retail sales value, suggesting that participating merchants benefited well from their card facilities.

While electronic payment cards are advancing, the Visa International data does not show significant progress in the region

Shopping month is upon us again. But this year it has come almost as a surprise. In mid-January there had still been no pre-festival publicity.

In late September, as the US Congress debated the Syria Accountability Act, a new cabinet was appointed in Syria. After Muhammad Mustapha Miro stepped down as prime minister, President Bashar Assad

ARAB COUNTRIES: Insurance Density and Insurance Penetration (SOURCE: Muhanna Foundation)

This could be a very opportune time to take a good long look at the Middle Eastern insurance industry, where far-reaching changes are expected region-wide. On the static side of how things are, stand the numbers on territory, population and economic performance, in relation to insurance. According to data circulated by the General Arab Insurance Federation (GAIF), these basics are a surface of 14 million square kilometers, a populace of 300 million people and a compounded GDP exceeding $700 billion, of which 1%, or $7 billion, are spent on insurance. In per-country averages, citizens of Arab states each allocate between $5 and $243 for general insurance, with average annual spending computing at $22 per capita for the region, says GAIF.
Studies from the other side indicate that the Arab contribution to global insurance premiums is a mere 0.22% overall, split into just under half a percent of non-life and less than a tenth of a percent of life premiums (2002 figures, as presented in an overview of the Lebanese insurance sector by financial institution Saradar Investhouse).
In global comparison, the Arab region is critically under insured, but so is most of the world. The average Swiss citizen, for example, spends about $5,000 annually on insurance

Small and nimble players are consistently finding innovative ways to strike big against the Goliaths. This is true whether in today

Less popular cruises?

While 60 cruise ships dock at Beirut each summer only one, the Ausonia, takes on new passengers, and for three years now, Lebanese holidaymakers have signed up for the weeklong Greek island cruise, organized by the Cypriot company, Louis Cruise Lines. That was until this year, when prices went up by about 5%, noted Toufic Keyrouz, general manager of the travel agency Lebanese International Tours, who feels that the budget cruise may have had its day.

Paul Zahlan, a director of Lebanon

According to Chateau Musar, the 2003 wine harvest promises wines that are

Lebanese experts on urban planning and zoning contend that this communal discipline of real estate management exists as nothing more than a quasi-reality here. Sights from nearly every nook and cranny of the country corroborate the judgment. From north to south, communities overflow with building structures that defy common sense, communal planning and esthetics.

The Automobile Importers Association teams up all local car agents who hold distributor contracts with international auto manufacturers. Avidly working to represent the interests of these primary agents, the AIA emphasizes a unified presentation of official importer concerns to the media and Lebanese public. EXECUTIVE talked to the president of the AIA, Samir Homzi.

E: What are the association’s main concerns?

SH: Our aim is to make new cars available to all people of all budgets. New car dealers are today making vehicles available in a price range that starts at around $5,000 to $6,000. These are economical, trouble-free new cars that consume very little unleaded gasoline. They are sold with manufacturer warranties and with payment arrangements over five years that make for monthly payments of $100 or $125 to families with a lower income.

E: How long does it take before new models are available in the local market?

SH: Sometimes new cars are launched in Lebanon prior to Geneva, Frankfurt, and Paris and in some instances, new cars have been launched in Lebanon for the Middle East and for the whole world. In many instances, new models are launched in Europe prior to being introduced to the Middle East. This is for technical reasons, whereby the manufacturer would like to optimize the vehicle for this area.

E: Turning to recent developments of automotive sales, is it correct that the association has observed a decrease of new car sales by 50% or more when comparing annual sales in 2002 with those in 1997 or 1998?

SH: The figures definitely went down. They went down first of all because of all the taxation. Vehicles are overtaxed in Lebanon. We are paying high customs duties in Lebanon, on top of which we are paying VAT, on top of which we are paying registration fees.A country like Lebanon deserves to have much lighter taxes.

E: Does the AIA have a figure for how many cars are operating in Lebanon today?

SH: To be really honest, the only way to get to this number would be to go to the traffic department and look at their data. They are getting better and better under the minister of the interior and have made great improvements. We prefer to keep track of only our own auto figures, which means each dealer provides his figures to the association and at the end of the day we calculate these figures as those of new car sales in Lebanon.

E: A study in the late 1990s placed the average age of cars circulating on Lebanese roads at about 14 years. Do you have any update or opinion on the current age of the country’s fleet of cars?

SH: I don’t think my figures would be far from that. But I won’t venture to give out figures because we don’t have the mechanism to determine what is the average age of the cars here. However, when you drive around, you can see that the age is quite high.

E: Can you comment on the mechanique fee schedule that does not advantage new or environmentally sound cars but is cheaper for the oldest cars?

SH: We worked on that issue but unfortunately we did not get what we wanted. We believe that the mechanique should stimulate people to renew the car stock in Lebanon. We are seeing every day cars on the road that nobody would accept in other countries. We would like to see these cars slowly replaced by new cars, and we are working seriously to have the government first of all cancel the registration fees and lower customs duties. Once the mechanique becomes a technical inspection in January 2004, we would like to see these cars pulled out of circulation because not only their appearance is less than exciting but also because they are a danger for people using the roads of Lebanon.

E: Without the high taxation levels, and under a favorable environment for financing of car purchases, how many new cars could the Lebanese market absorb annually?

SH: The total market today is about 12,000 units per year, distributed over 35 dealers. By contrast, in some neighboring countries, one dealer sells about 10,000 cars each year. We are not calling for elimination of customs but ask for their reduction and complete cancellation of registration fees, in order to encourage people to replace their old vehicles with new ones.

E: In a macro-economic context, how important is the contribution of automotive sector to fiscal income?

SH: Customs duties on vehicles and petrol tax and so forth make a very big contribution to the government income. But we believe that if registration fees are cancelled completely and customs duties are reduced, we will sell more vehicles. The government will benefit more from the taxes we just mentioned, and we would have cleaner air from cars that produce less pollution. We would have safer cars on the road, and more pleasant cars to look at for this country and its image as a tourism destination. On all fronts, we would be better off if we decrease the taxes.

E: How much does the automotive sector contribute to Lebanon’s GDP?

SH: Today we don’t have such a figure and I don’t want to jump and give a figure off the top of my head. We do contribute to the economy in various ways, to the banks and the insurance companies for example, where car loans and the motor insurance are important businesses.

E: How can the cost burden of car ownership be distributed more equally and fairly?

SH: If we dealers would take our profit margin up from 4% or 5% and put it at 25%, we would be selling a quarter of what we are selling today. That is not the case at all. As I said, competition is very high among the dealers and profit margins are very tight. But I am saying that with its tax burden, the government is trying to milk this cow to its limits. Asking too much from the cow and taking all eggs from the chicken is killing the chicken and killing the cow.

E: Would a change in taxation of cars not put the government under additional financial pressure?

SH: Sales of new cars should increase for three reasons: economic, safety and fiscal. The whole set of taxes today is too high. If it is lower, the fiscal power of Lebanon will be the first to enjoy a better situation. One point is that our invoices come from the biggest car manufacturers and there is no chance of them being tampered with. Importation of used vehicles happens not through a manufacturer but through a dealer or a roadside trader, who can deliver an invoice that does not reflect the value of the vehicle. If we can stop the importation of used cars, or at least limit it to vehicles of two years of age, plus have a flexible taxation, the government will be the first to benefit and the country will definitely be winning.

E: Do you have any information on the number of used car dealers in Lebanon?

SH: We have no relationship with used car importers. We have relationship with used car dealers with whom we exchange the vehicles that we receive from our customers. They take these cars from us and recondition them. These were cars that have run in Lebanon and were used in Lebanon. But we have no relation with importers of used cars. I have personally no contact with importers of used cars.

E: It seems that you view the activity of used car imports not very favorably.

SH: I said from the beginning that I wish to see the importation of used cars stop, or if that is not feasible, to limit it to the acceptance of vehicles two years of age. I believe that trashy cars, which were refused in Europe and should have gone to the junkyard, ended up here.

E: Apart from lower taxes, do you see ways in which people could reduce their cost of car ownership?

SH: Wherever you look here, you see that most cars only have one driver. When I was in the United States, I experienced car-pooling. In a company, three or four people who share the same office hours agree to travel together to and from the office, and each car owner has to use his car only four one week a month. In this country, we have invented the service taxi. It is a Lebanese philosophy. Why don’t car owners do more ride-sharing in Lebanon?