Business

Q&A: Samir Homsi

by Thomas Schellen
written by Thomas Schellen

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?

 

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Business

Q&A: Rose Martinelli

by Executive Contributor
written by Executive Contributor

E: When you say you are looking for the best, what defines ‘the best’?


RM: A quality that I especially like to see it is the passion to make an impact on the world that goes beyond making individual gains. It begins with developing the professional side and the personal side and then reaching out to the community, in terms of giving back to society.

E: How do you spot these special qualities in applicants?

RM: They have that drive, that energy, that special electricity. When you see it, you know it.

E: Was it in any way a political or economic decision for the school to intensify your presence here?

RM: Not necessarily. We started in the Middle East about five years ago. Then all the disruptions occurred and we just pulled back. I feel the disruptions in the region will continue for quite some time, but I decided that it is time to come back, regardless, and be part of an answer to some of the problems instead of leaving things stay as they are.

E: Wharton does not have a shortage of student applications. What is the average academic level for students who gain admission?

RM: We use the GMAT score, and the average score is 714. But I think the range is much more important. It is from 640 to 780. You don’t have to have the highest score. It is everything else that really makes the candidate stand out.

E: Can people easily recoup their investment if they attend Wharton, which is an expensive program?

RM: The MBA is a long-term investment. In light of that, Wharton has created a number of programs for financing your MBA that help student to gain access immediately, through loans given to students based on their needs. We hope that students come with a contribution of some small percentage, 10% or 20 %. But if a student can’t do that, it really is the responsibility of the school to provide grants. Students might face short-term pain in terms of servicing loans. But longer term, they will be fine. The gains to society, themselves, and their company will greatly outweigh the short-term pain of those first initial years of loan repayment.

E: But in order to be able to pay back those loans, they almost automatically will have to take a job with an American or multinational corporation?

RM: There is an advantage in working in a different nation for a year or two in order to broaden the experience of the MBA. If a Lebanese student would opt for working in London or Paris to gain diverse experience in the first years, and then come back, usually the salaries and bonuses from those first years do a lot towards paying back the loan.

E: Do you have the impression that anti-American bias has grown in the target group that you approach?

RM: There is no anti-American sentiment when it comes to education.

E: How about visa?

RM: This last year, I had no problems getting visa for my students from the Middle East. They went through an additional screening process but they had no problems because they did things correctly.

E: It is then safe to assume that people coming to Wharton from the Arab world will not experience an anti-Arab bias stateside?

RM: Not at Wharton. After 9-11 and the whole student body was very protective of our Arab students.

E: How many Arab students does Wharton have at present?

RM: Probably 1 to 1.5 %; that is something I’d like to increase.

E: How high is the percentage of non-acceptance of applications?

RM: If we have about 7,000 to 8,000 applications and a class of 800, there is a lot of it. We use a structure where we view the application first and then evaluate these twice, dividing them into two groups, one of about 40 % whom we want to interview and another group whom we don’t want to interview and will deny at that point. We then weed the first group down. It works out fairly well.

E: But you would advocate Wharton as offering a better opportunity than a local school?

RM: Students, who really have aspirations to create value and provide leadership, need to get abroad. The MBA is much more than a functional skill at learning. It is an experience of other cultures, worlds. It is the intensity of the experience. But some people just want to be functional experts that don’t want to leave. There are those who want to make money and therefore are interested in taking the credentials. To them I would say, stay, don’t take that risk; don’t spend the money. It really depends on the needs.
 

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Business

Revamp!

by Anthony Mills
written by Anthony Mills

Khalil Daoud, the new chairman and managing director of LibanPost, has set aside a small patch of land outside the company’s headquarters, next to Beirut Airport. “It’s for the employees, so they can grow cucumbers and tomatoes.” he explained. “But they don’t care.” The failed horticultural experiment illustrates how difficult it is to spawn a sense of esprit de corps among LibanPost’s 600 employees, as well as the notion that they have a stake in its success or failure. Only a year and a half ago, after the original LibanPost had folded, many thought they were going to be laid off.

In a bid to bolster consumer confidence, Daoud has started giving the country’s post offices a “rejuvenated look,” by redecorating the offices. LibanPost is now allocating $300,000 to $350,000 a year – about 2% of its roughly $16 million annual budget – to this endeavor, and has spent $300,000 on a new post office off Riad al-Solh Square, in the Beirut Central District.

In addition, the company pays Canada Post $500,000 a year for consultancy services, which include training, and has spent over $1 million this year upgrading its technical capacities. Since he took over LibanPost in February 2002, Daoud has been implementing his vision of an overhauled Lebanese postal system. No easy task, since the country’s postal service was obliterated by the civil war and it was only thanks to local and international courier companies that any post flowed at all during that time.

Daoud said he has had to coax a people grown unaccustomed to using postal services back into the fold. “The core objective was to revamp the mail culture, which was non-existent over here. You had a whole generation without any idea about what a postal administration can offer.”

To this end, LibanPost is attempting to establish itself as a conduit for government services such as passport/residency permit renewals and military service exemptions/postponements. The effort, argued Daoud, bolsters President Emile Lahoud’s anti-corruption drive because it cuts out face-to-face transactions between citizens and government employees, thus reducing the potential for “under-the-table” deals. LibanPost exacts no fees for the renewal services, which it began offering about two years ago. So far, Daoud said, between 75,000 and 80,000 people have renewed their documents through LibanPost. The decision to offer assistance with military service formalities was born, Daoud noted, of his frustration with the time wasted sorting out an exemption for his university-bound son at one of the country’s five military service centers in the Bekaa region. “We had to wake up very early in the morning and when we arrived, there were some 2,000 to 3,000 students in line. We had to wait for several hours.” Initiated at the beginning of the year, the service costs LL6,000, or $4. Every week, the number of related transactions grows by 20% to 25%. LibanPost has processed a total of about 3,000 military service-related requests. In 2004, the company expects an increase to about 25,000 to 30,000 requests.

LibanPost is trying, as well, to foster a retail environment in its post offices by offering stationary products such as greeting cards, postcards, envelopes, packages, newspapers, magazines, Lebanon-themed screensavers, floppy diskettes, books about stamps, prepaid internet cards, credit cards and fuel coupons, bus tickets etc. Post offices also offer fax and photocopy services. “We’re gradually expanding the retail services so that it becomes a one-stop shop for people who are in any case visiting the post office,” said Daoud. On a less enthusiastic note, Daoud bemoaned the paucity of banking-related transactions registered by LibanPost. “So far, we haven’t been very successful with the financial institutions. The bulk of mail from banks consists basically of statements of accounts. Most banks today are not distributing statements of accounts, although [bank clients] pay a quarterly fee for them.”

Before the civil war in 1975, Lebanon’s postal services were under the direct control of the ministry of telecommunications. LibanPost, formed in 1998, is a private company under contract to the Lebanese government to operate the country’s postal services. The ministry of telecommunications and the general-directorate of the post regulate the service, but Daoud said the two institutions do not meddle in LibanPost’s affairs or impose strategy. Revenues are shared, but Daoud said that under the terms of the 15-year agreement he could not disclose the breakdown. Daoud refused to reveal the company’s revenues, but acknowledged that the company is still losing money, and probably will continue to do so until the end of 2003. “Next year, however, we hope to start generating profits. I am 100% convinced that there are ways of making a profit without simply waiting for the government to give us business. In all postal organizations around the world, the government is a major contributor to the well-being of the postal administration – this is not the case in Lebanon,” said Daoud.

LibanPost’s shareholders changed in 2001, and an amendment to the original contract spawned the agreement under which LibanPost in its current form operates. Daoud claimed he was not sure why the previous LibanPost agreement disintegrated, but likened its failure to a “wedding that breaks up – the chemistry didn’t work.” In the belly of the company’s headquarters, video cameras and supervisors monitor employees as they handle the roughly 14 million annual transactions. Mistakes are not tolerated. “We are ruthless with errors,” acknowledged Daoud, from behind the broad desk of his white, spartanly furnished office. “Our clients are like people who go to the same restaurant every day. If one day they find a hair on their plate, that’s it, finished. If we hear of any moral irregularities proved to have been committed by one of our employees, then they are fired on the same day,” said Daoud, explaining that he LibanPost operates a “clean floor” policy. Shortcomings are exposed and discussed during daily, early-morning “debriefing” sessions. “Over the last 18 to 20 months, the quality of the service has been continuously improving,” asserted Daoud.

Nonetheless, in the mail sorting room, boxes full of undelivered letters abound, the envelopes marked in some instances with unintelligible scrawl, or an unidentifiable address – after all, Lebanon has no post code system. Thus, delivering letters in the oft labyrinthine streets of Beirut and its southern suburbs, can be a frustrating, sometimes impossible, task – especially if the envelopes sport addresses such as: “Current resident, 14, Blue Cliff Drive, Lebanon,” or “Ms. ‘X’, Lebanon.” Not surprisingly, the ‘Return to Sender’ stamp is in constant use. According to Daoud, Lebanon’s chaotic or non-existent address system is one of LibanPost’s biggest challenges. “Most of the addresses are either wrong or approximate, like ‘opposite that place,’ ‘next to the mosque,’ or ‘over the petrol station.,’” he lamented. In an effort to push for a postal code, LibanPost has already spent $2 million, but the investment has yet to bear fruit because municipalities will not allow plaques bearing postal codes to be affixed to buildings. “We have sent several reminders on the subject, and nothing has been done,” noted Daoud. An alternative, he said, would be to ensure that every street in Lebanon has a name and every building a number. But because the “ownership” of this initiative lies with the municipalities – of which there are 752 – the process is potentially lengthy. The stack of official approvals that must accompany each act of renaming merely serves to complicate the process. LibanPost’s obstacles, however, do not all arise from bureaucratic red tape. Daoud acknowledged that occasionally mail does go astray, but asserted that only in rare instances is it the fault of LibanPost. Inhospitable janitors or doormen sometimes refuse postmen access to a building, saying they will deliver the letters but do not. “The absence of letterboxes can also contribute to the loss of mail. When letters are left lying in front of doors, perched on walls, or propped up against electricity meters, they are easy prey for dishonest neighbors.”
 

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Finance

Balancing act

by Tony Hchaime
written by Tony Hchaime

At the press conference in which he outlined the 2004 budget, minister of finance, Fouad Siniora, began by justifying why the 2003 budget was missed by such a sizeable margin. According to figures for the first nine months of 2003, the deficit stood at around 38%, compared to almost 40% for the same period last year, thus registering a modest improvement. While revenues seem to be on target for the year, and may reach the budgeted LL6.475 billion by year-end, expenditures remain high. Current expenditures (excluding debt servicing) grew almost 8% between January and September 2003, compared to the same period last year, reaching LL3.4 billion against a full year budget of LL4.2 billion. On the other hand, debt servicing, which was expected to be capped at LL4 billion for the year, has already exceeded LL3.4 billion by September, and remains the main factor behind the government’s failure to trim the deficit further. In an effort to justify this performance, Siniora stressed that failure to implement structural reforms in the public sector was to blame for the government’s inability to trim current expenditures and meet its targets, while debt servicing targets set for 2003 were primarily dependent on the proceeds from privatization of state assets, a move yet to be implemented.

In doing so, Siniora absolved his ministry from failing to meet the budget for 2003, placing the blame primarily on the political bickering that has hampered the implementation of structural reforms and the progress of privatization. That done, Siniora moved on to sketch the main highlights of the government’s draft budget for the coming year, repeating the importance of structural reforms in the public sector, and their critical role in achieving any target set for 2004.

He said that the new budget would take into consideration the current and expected burdens on the ministry and the treasury. No new taxes would be levied, nor would there be any modifications to existing taxes, including the famed Value Added Tax, expected to remain at 10%.

On the revenue side, total proceeds were expected to remain stable at around LL6.4 billion, yielding an initial surplus in the budget of LL1.45 billion – until debt servicing comes into play.

Setting the debt-servicing burden aside, total expenditure by the government is expected to stretch by almost 8% to reach LL4.95 billion. Around 69%, or LL3.4 billion of such expenditures are allocated to salaries and wages for the workers of the public sector. With the national debt holding steady at current levels, total interest on the debt for the year 2004 is expected to reach at least LL4.3 billion, constituting 46% of total expenses, 67% of total revenues, and yielding a net deficit for the budget of LL2.85 billion, or 30.8% of spending.

As such, wages and salaries, in addition to debt servicing costs, amount to a staggering LL7.7 billion, or 84% of total expenditures. The remaining 16% of expenditures, or LL 1.9 billion, are allocated among various ministries as normal operating expenses for government entities. While such “discretionary” costs may be trimmed, it would conceivably be difficult to significantly improve efficiencies on that front with no radical structural reforms.

On the other hand, if privatization plans do materialize early in 2004, and if proceeds from such efforts are up to expectations, total debt servicing for the year may drop to LL3.9 billion. Such a drastic improvement would reduce the deficit to LL2.45 billion, or 27.7% of spending. The ability of the government to meet even the high end of the deficit for 2004 remains to be assessed, however, as it still marks a significant improvement over the numbers seen in the second half of 2003, where the deficit reached 38% of spending. In fact, as it has been clearly outlined by Siniora, prospects for additional cost-cutting outside debt servicing are bleak, while revenues are expected to remain flat. On the revenue side, options appear to be very limited, or so the government would want us to believe. Income taxes are already being levied on companies and individuals alike. Consumer taxes are being levied through a 10% Value Added Tax system being applied to almost every type of good or service. Custom duties are still applied to almost all import, including unfortunately raw materials and semi-finished goods for industrial use. From this perspective, it does seem that there is virtually no room for improvements. Any additional or higher taxes and the already high cost of living in Lebanon would squeeze consumption, investments, and subsequently economic growth.

Nevertheless, the case may not be as hopeless on that front as the government is painting it out to be. The government should be able to significantly improve its income not from increasing taxes and duties, but by simply improving tax collection. While no official records are kept on who pays what taxes, or at least no records are disclosed, the possibility of digging in that direction should be seriously considered because the current situation leaves no room for slacking off, especially with the World Bank and IMF breathing down the government’s neck. Improvements can be achieved through better tax collection on currently levied taxes, in addition to levying taxes on some job sectors to this day indemnified from paying taxes (medicine, law, etc…).

On the expenditure side, and apart from debt servicing, it was made clear by the government that the overwhelming majority of expenses (or 86%) is non-discretionary and cannot be significantly reduced. Furthermore, almost two thirds of all expenses are allocated to wages and salaries of public sector “servants”. The majority of members in the government and the parliament seem to believe that no cuts can be implemented on that front. Basic finance stipulates that reducing the debt servicing cost can be achieved by either trimming the amount of debt on the books, or negotiating lower interest rates on the existing loans. It appears that perhaps the easier solution is negotiating lower rates on existing loans, or replacing existing obligations with more suitable ones. However efforts in that direction are limited, with the benefits of Paris II beginning to dissipate as the country still fails to meet the requirement set during the summit last year. The government has failed to prove to potential lender/donor countries it ability to implement needed reforms and complete privatization.

As the current situation stands, on the other hand, reducing the overall debt level without privatization seems practically impossible. Severe drainage at the power company, a sizeable budget deficit, and increasing spending on social welfare are likely to force the government to continue borrowing over the near term. As such, the total public debt level is expected to breach the $33 billion level in the foreseeable future.

Therefore, we again realize that the fate of the country hinges on a matter debated so many times over the past five years: privatization of state assets. Three matters should be addressed with that regard:

– The importance of privatization and its impact on government finances

– The urgency of completing privatization plans

– The likelihood that privatization takes place in 2004.

The critical importance of privatization of state assets and its proceeds has been underlined so many times by various parties, including the World Bank, the IMF, international banks such as Citigroup, Merrill Lynch, and rating agencies such as Standards and Poor’s and Moody’s. The country’s economy is severely burdened by the level of debt, high debt servicing costs and the resulting deficits forcing the government to borrow more. Such factors have prompted a number of rating agencies to downgrade Lebanon’s sovereign rating yet again, stating the pace of reforms and privatization as the main factors behind such a move. Furthermore, the presidential elections to be held towards the end of 2004 are likely to stall any major moves on the part of the government.

Standard and Poor’s proceeded to revise Lebanon’s outlook from Positive to Stable due to fiscal consolidation delays. “The outlook revision reflects our view that the draft budget for 2004 implies a postponement in fiscal consolidation and hence delays the envisaged reduction in the government’s debt burden,” said S&P’s credit analyst Ala’a Al-Yousuf.

The only conceivable solution to reduce the level of debt is through the privatization of some state assets. The two profitable cellular operations should CONCEPTUALLY be easily sold. The power company, on the other hand, is a losing business, with accumulating debts and losses. Nevertheless, serious efforts should be undertaken to sell-off EDL, which by itself is burdening the treasury and forcing on more debts. Proceeds from privatization can range from $2 to $4 billion, and can substantially reduce the overall debt servicing cost by more than 10% in 2004 alone.

Moreover, the benefits of privatization are not limited to the use of proceeds to reduce debts, but such a move would considerably boost the government’s image on the international scene, prompting cheaper lending, more donations, and improve the overall foreign investment climate in the country.

However, as the political bickering has delayed privatization for almost 4 years, the value of the assets, to the contrary of the level of national debt, are certainly not rising. The longer the privatization is delayed, the less the proceeds of such a move will be, and the more damage the government’s already frail credibility will suffer.

The year 2004 is the presidential election year. President Emile Lahoud is eager to improve his public image, while Prime Minister Rafik Hariri is equally keen on meeting his economic targets. It remains to be seen, however, if their plans to improve their public image include a certain compromise on such critical issues as privatization, and how soon, if ever, such precarious steps are to be taken.
 

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Economics & Policy

Happy days?

by Faysal Badran
written by Faysal Badran

The stock market’s upward move this year has humbled many analysts and perplexed even the most optimistic financial experts. Take the all-tech/all-emotions Nasdaq as an example: it’s up a mind-boggling 73% from its October 2002 lows, a tempting sign to many that it’s safe to invest again. But are Wall Street’s happy days here to stay, or is the stock market’s upswing operating on borrowed time?

It is crucial when looking at the market to keep an eye on the big picture, which in this case is that stocks cracked in 2000 and have embarked on a massive bear market. Any moves up within this bear market have to be analyzed in the context of the larger force in action: the bear. In fact, for the SP500 index, the bear market is in the earlier stages of its decline. The Nasdaq, although on the rise – some Nasdaq dream makers are up two, three, even five-fold – it is still down 60% from its March 2002 numbers. This latest rally has brought little real solace for the buy and hold crowd, as they are still down. The short-term punters that have played the move up, however, have cleaned up nicely. But in the meantime, the individual investor must ask the following question: “Is it for real and do I keep my money in?” The answer to both is a resounding “no”.

The move up, from a technical perspective is not so irrational – there have been three other moves up since the crash started, and all had been mistaken for a real revival. This latest surge came with a whole media blitz on how “the US economy is recovering” and in three months, the word “recovery” replaced the word “recession”. The current mainstream view is that the recovery in the US will lead to ever-higher asset prices, but there are two important cautionary factors that should be considered. The first is that the sentiment is extremely positive. This may seem counter-intuitive, but with market participants feeling so buoyant, there is ample room for disappointment. Ever forgetful of the past, the public and the media are being lured into a false sense of security. The market never bottomed at multiples beyond seven or eight and we are currently at 28 times earnings on the SP500. The second factor is that with consumption being the catalyst of any recovery, it is hard to imagine it staying robust without improvements in job creation. Job growth, especially weak in Europe, has faded significantly in the US, with the unemployment rate increasing from 4% at the height of the mania, to near 6%. Chances are, unemployment will continue to rise given the massive overcapacity in most sectors.

The technical factors abound, but the most relevant for the individual investor, is that the bear market is not over. People should be looking at their portfolios and cutting stock exposure to a bare minimum, and while the media and large financial institutions will have you believe that “cash is trash”, this advice will likely turn out ruinous. The notion that people must invest in the stock market is outdated. From 1982 to 2001, the markets were hugging a near perfect up trend (see chart). Since then, it has gone back and forth, sometimes with inebriating speeds, but the market remains below the trend line broken three years ago. What does that entail? It simply reinforces, visually, that despite the recent large move up in stocks, and the hope driven discourse about elections, recoveries, and the “new world”, the markets are still in dangerous territory. Even the sexiest alternative investment will not dodge the coming deflation in prices across the global markets, especially in US stocks and corporate bonds. It is much simpler to adopt the optimistic scenario, as it flows strongly in the ambient media. But one must be more cautious than ever before of the dream of long-term prosperity in stocks. Having been devastated by hope on multiple occasions in the past, it is an elixir that should be passed up. Stay in cash, invest where you live, and preserve hard-earned money. Cash, far from being trash, is the ammunition for investing when no one, including CNBC, will be positive on stocks. For now, stay liquid for the stormy winter.

 

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The Buzz

Oriental bull market

by Isabelle De La Bruyere
written by Isabelle De La Bruyere

Prices for paintings of Middle Eastern subjects, especially those of the so-called Orientalist school, have soared since the 1973 oil boom, escalating from a mere $3,000 to $500,000 for top-quality works. Today, the record price for an Orientalist work is held by Christie’s for the Ludwig Deutsch’s1892 painting The Palace Guard, which they sold for a staggering $3,192,500 in 1999.

Wendy Goldsmith, former head of the 19th Century European Art Department at Christie’s and now an art advisor, noted: “The demand for Orientalist pictures is going from strength to strength but only, however, for a certain segment of the market. More and more new clients from both the Middle East and America are looking for top works by the major artists such as Jean-Léon Gérome, Ludwig Deutsch and John Frederick Lewis, and this is driving prices ever higher. They are very particular in their tastes, and don’t want to “settle” for more medium artists or works, unless they are extremely decorative.”

Indeed, Orientalist art is one of the few areas in which collectors can still find affordable museum-quality pieces, and with more and more of these top works going into private collections – leading to a decrease in supply – we will most likely see prices continue to rise in the coming years.The term Orientalism describes a penchant for the iconography connected with the Near and Middle East, and from the early decades of the 19th century and well into the 20th century, Orientalist art was created with a variety of motifs and collected passionately in the West. Widespread interest in the genre began soon after Napoleon’s abortive 1798 venture into Egypt and started to boom some 40 years later, courtesy of the expanding railway lines and the relaxation of the Ottoman Empire’s travel and trade restrictions.

Indeed, beginning around the end of the 18th century, European travellers set out to explore the East, and set their courses on the established pattern of what has come to be known as “the Grand Tour,” proceeding from the north or the west towards the south and southeast. The Grand Tour was often conducted out of a zeal for archaeology, and many artists, such as the Scottish David Roberts, placed a high value on topographical exactitude and worked from sketches made on the spot. Yet, as the genre became increasingly popular, other followers began to paint Orientalist pictures without ever leaving their studio, and simply used reference books and local models dressed in imported costumes and posed with imported props.

Typical subjects included the horse fair, the slave market, the mosque, the Holy Land landscape, and studies of caliphs, muezzins, Nubian slaves, and soldiers. One of the most favored subjects, however, was undoubtedly the harem, filled with its sensual odalisques and rich interiors. Such images were typically painted in the intensely detailed and realistic academic style, which ruled Europe for several centuries until Impressionism arrived on the scene.

By 1910, however, Orientalism had virtually disappeared from view in the West, not because of its subject matter, but because of its style. Throughout most of the 20th century, academic art was no longer attractive, giving way to a more modern style.

Isabelle de La Bruyère works in the Oriental department of Christies of London. She wrote this column for EXECUTIVE.

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The Buzz

Fools or angels

by Fay Niewiadomski
written by Fay Niewiadomski

The deeper I get into the business of managing change, the deeper my conviction becomes that you must have the blindness of a fool or the quiet wisdom of an angel to succeed. That point was powerfully driven home during the two-day Forum organized by TMS Development in Dublin, Ireland, which brought together 20 international change management consultants from different parts of the world to exchange views and share expertise on the challenges we face in the course of our work.

TMS Development International develops and produces a suite of sophisticated instruments designed by Dick McCann and Charles Margerison to assist consultants in change management, organizational development, human resources management and training and development work. With offices in the USA, UK, Australia and Europe, TMS management considers bringing together consultants from around the world in such a forum of utmost importance in promoting the exchange of ideas and the advancement of the systems.

Twenty consultants specializing in managing change around the world and working with both the public and private sectors gathered together. I was the only delegate from the Middle East and the title of my presentation was Managing Change in a Re-emerging Economy: a Case Study from the Lebanese Banking Sector.

The Forum provided the opportunity for us as change management consultants to exchange views and experiences with one another on the diverse projects we have worked on, further strengthen our international network, build stronger bridges for communication and collegial support using the internet or arranging collaborative projects where we can provide complementary expertise. I would like to focus on some of the issues that were raised and that have direct bearing on our current situation in Lebanon. All ‘change’ processes, regardless of the label, (downsizing, upsizing, transforming, restructuring, re-engineering or re-inventing) have one thing in common: they all impact the lives of people in the organization at all levels. The impact may be for the better or the worse, depending on how the issues being tackled are managed. It is certain that change processes require people to behave differently, establish new relationships, acquire new skills and continue learning throughout their professional lives.

Change management consultants also play an important role in facilitating the integration processes vital to the successful conclusion of mergers and acquisitions. They help individuals in the public and private sectors refocus or change careers or even adapt to leaving one kind of job or organization and accepting another, or taking on a completely new role. In brief, change management consultants deal with the human and organizational dimensions of change in all phases and at every level within organizations undergoing developments or transformations.

Public sector issues that were raised during the forum and that are relevant to us in Lebanon are: Making Sense of Your Career in a Changing Environment, Developing Private Sector Management Skills within a Civil Service Culture, and what statistical analysis of work preferences can tell us about Professional Patterns in the Office of National Statistics. The unifying theme was the need for a leaner, more accountable civil service modeled along the lines of private sector productivity. The changes to be integrated are: the need to give up the idea of a job-for-life in the civil service; civil servants now need to think, work and continuously develop themselves to keep jobs that are becoming scarcer and scarcer. Second, managers must work with their staff to develop their skills and empower them to view their roles not as caretakers, but as individuals responsible for the input, output and outcomes – i.e., what they put into their jobs, the results they produce and the effect this has on the people receiving the service.

What was apparent from these presentations is the effort that is being invested in changing the traditional approach to civil service work and civil service expectations so that people now see themselves as ‘servants of the people’ who must deliver quality service to citizens. The civil service employee cannot expect to keep a job unless the results of the work done justify the resources invested in the production. The achievement of this new mind-set is considered a very difficult task in countries like England and Ireland and highly challenging in places like Hungary and Poland.

I asked myself what words could be used to describe the colossal difficulties we face in Lebanon? We not only have to change details but need to leap across a 50-year time gap created by the war and the local mind-set. We need to bring our facilities up to date; we have to rebuild from scratch all that was destroyed; we must bridge the information and technological gulf imposed by years of isolation; we must review our laws and regulations, modify and modernize them, and most difficult of all, we need to work on attitudes and behaviors that hold us back from achieving our full potential individually and collectively.

On the private sector issues, the topics tackled were linked to strategies for handling global competition by forming new professional partnerships; the redefinition of corporate missions and the translation of these into improved performance and greater profits; ways of unlocking a team’s creativity and innovation potential and turning it into competitive advantage for the company; using influencing skills to sell change within organizations and several other issues directly relevant to the needs of our own situation in Lebanon.

Do we need anything like this in Lebanon? Yes, we are hungry for progress, innovation, success, modernization, world-class standards in what we produce and high profit margins to go along with them, but many seem to want to achieve all this without any pain at all. No matter how smart we work there will be a fair dose of pain and hard labor in getting where we want to be in our businesses. Are we ready to accept the things that these changes will impose on us? As we approach the challenges of managing change in our organizations we will face some monumental obstacles. How should we face them? Have the blind optimism of a ‘fool,’ taking the matter lightly and expecting that things will eventually work themselves out without the cost of our full commitment, total focus and unwavering dedication to a crystal clear mission? Or should we approach the management of change with the wisdom, patience and goodwill of an ‘angel’?

My view is that the challenges that stand before us in Lebanon require the intercession of thousands of angels accompanied by carefully considered intelligence and hard work on every aspect of a change project. This is vital if we are to navigate a safe and successful journey through the treacherous waters that lie ahead. We have little choice. The tides of change are so strong that we must prepare our survival strategy and do it quickly.

We must also be prepared to have the agility of adaptation to the unexpected at any moment during our journey. We do need to believe in the power to achieve the seemingly impossible and we need the energy of the incurable optimist to see us through to safe shores as we cross the turbulent waters of change. In Lebanon we need to be both fool and angel to meet the challenges we set for our businesses and ourselves.

Fay Niewiadomski is the Managing Director and Senior Consultant in Change Management at ICTN-International Consulting and Training Network, sarl

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Society

Money back guarantee

by Michael Karam
written by Michael Karam

In the first six months of 2003, over $1 million in VAT-refunds have been reimbursed to tourists and non-resident Lebanese. It is estimated that 15,000 tourists, roughly 1.5% of all foreign arrivals, took the time to put their purchases through the Global Refund tax-free shopping system, collecting an average of $66 from new tax-free shopping desks at Lebanon’s main border crossings.

Since 2001, Lebanon has touted itself as a shopping destination to eventually challenge Dubai. This claim has been strengthened by the evolution of the BCD, the arrival of modern, well-specified shopping centers and the long-overdue appearance of high-profile international consumer brands have proved a popular complement to Lebanon’s established tourist attractions. When it is eventually built, the long awaited Souks project will be the jewel in Lebanon’s retail crown and the center of tourist shopping.

Retailers can now point to defined shopping periods: summer, Eid el Adha and Eid el Fitr. ”Our boom periods are dictated by the Islamic calendar and, to a lesser degree, Christmas,” explains Khalil Achkar, Global Refund’s general manger in Lebanon. The company works in collaboration with the ministry of finance to refund VAT in return for a 1.85% handling fee. Global Refund operates VAT refund services in 35 countries in four continents. “We service over 210,000 outlets and deliver 10 million refunds globally,” boasts Achkar.

The profile of tourists’ spending habits is still far from comprehensive, but a survey of those who chose to collect on their VAT shows that 74% of purchases took place in Beirut – mainly in the BCD and Verdun – with 18% of shopping activity taking place in the Metn – mainly from the ABC, GS and Sports et Loisirs branches in Dbayeh.

Saudi Arabians make up the bulk of Lebanon’s tax free shoppers (a shopper qualifies for tax rebates if he or she is a foreign national or Lebanese who spends less than three months a year in the country) with Kuwaitis and Egyptians coming second and third respectively, ahead of those nationals from the UAE, Jordan, the US and the “rest of the Arab world.” Clothes (62%) and jewelry and watches (12%) are the most popular purchases, according to global refund statistics. “When it comes to clothes, Lebanon is surprisingly competitive compared to Dubai, but the emirate still has the edge on us in terms of electronic goods,” says Achkar According to Achkar, Arabs are very discreet shoppers. “They show off at home but they shop abroad,” he explains. “Ever since September 11, many have chosen to do their major shopping in Lebanon. There isn’t the stigma towards Arabs that has developed in the West, there are cultural similarities and now many international brands are available here. It is the ideal destination.” Nonetheless, Lebanon’s is still very much a fledgling culture when it comes to international retail. To attract the big rollers, Beirut would have to market itself to the big three international spenders: the Japanese, the Russians and the Americans (not Lebanese Americans). China’s dormant spending power is stirring. The world’s most populated country, which is becoming richer through a modern industrial revolution, recently overtook Hong Kong on its way to becoming the fourth in the top spending nationalities table. Saudi nationals are the world’s eighth biggest spenders.

Global Refund began operating in Lebanon in June 2002, five months after the controversial introduction of VAT. Over 1,000 stores have signed up to offer the service. Achkar says that the more sophisticated retailers are enthusiastic. “They have been quick to understand that offering rebates is an asset to the overall shopping experience,” he says. “Others are fairly ambivalent or just assume that it’s a service that solely benefits the shopper.”

Shops that wish to offer tax-free shopping pay an annual fee of LL75,900, which gives them an unlimited supply of refund checks, technical support, training and, most importantly, monthly data on what is being bought by whom.

Data is a dirty word in Lebanon. Those who do give out statistics often inflate their figures, convinced that the other guy is doing the same. Global Refund’s reports are allaying this national paranoia and setting a new benchmark in transparency.

Although the company can only chart the shopping habits of those customers who choose to use the tax-free shopping process, Achkar believes it paints a valuable picture of what tourists are spending. “The feedback tells the retailers who their customers are and where they come from,” say’s Achkar. “Based on these reports, a retailer might then want to recruit sales staff who speak a certain language (shops in Europe have sent their staff on a basic Japanese course) or who may be more sensitive to the needs of gulf Arabs. Retailers can also plan ahead better if they can identify the trends.” However, Achkar believes there is still more that can be done to get a better profile of the tourist shopper. “Most of those shoppers who are listed as American are in fact Lebanese and many of those who come in on Kuwaiti and other GCC passports are also originally Lebanese. If we could know who are Kuwaiti and who are Lebanese-Kuwaiti we would be able to get a better idea of shopping trends. Lebanese and Gulf Arabs have different shopping habits.” Achkar says that although training seminars (the cost of which is included in the annual fee) are held regularly, retailers have been slow to take advantage of the service. “We do our best to make it attractive by holding the sessions at hotels, but the invitations require a lot of follow up,” he said. “You can just send an invitation the week before and expect them to come. You have to remind them and even pick them up from work and take them to the venue.” The need to train staff may put a strain on main of the smaller retailers but the big players – Aïshti, BHV and GS stable of outlets – have embraced the new system and say they are reaping the benefits of offering the service.

Aïshti was unavailable for comment, but Achkar hinted that the up-market clothing store, which sells Gucci, Burberry and other designer labels and which has three outlets in the BCD, was among the most popular outlets for tax-free shopping. Fadi Rayess of Hamra shopping, which owns the GS brand and sells Timberland, Springfield, Hugo Boss and Ralph Lauren Polo, among others, believes that the system is putting Beirut on the retail map. “Our foreign customers are satisfied with the VAT refund process,” he says. “This is a good step towards placing Beirut among the [region’s] top shopping destinations.” Gerard L’Hotel handles the tax-free shopping at BHV, the appliance-driven department store in Jnah. “We had a very good summer especially with those customers from Saudi Arabia,” he says. “We trained our staff in June in anticipation of the rush. It was a good move as we were dealing with purchases made in all departments of the store.” Achkar says it is too early to give accurate measurements of year-on-year growth for tax-free tourist shopping. “Last year we were not at cruising speed,” he says, “so it is difficult to say how we compared year-on-year. Next year’s results will give a clearer picture. This year, there has been greater awareness and this can only increase.”

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Finance

Tough sell

by Tony Hchaime
written by Tony Hchaime

Recent data suggests that commercial banks and financial institutions in Lebanon are increasingly shying away from corporate lending. In fact, most major banks remain wary of the Lebanese corporate environment, as they still attempt to mend their existing portfolios of corporate debt, to the extent of actually reducing the size of their portfolio of commercial loans. BLOM Bank, Banque Audi, and Banque Saradar saw their portfolios of commercial loans shrink anywhere between 1% and 8% over the past year. Typically, and perhaps oddly, the bulk of non-performing loans held by most banks fall into the corporate lending category, as opposed to retail lending to consumers. Corporate banking – including corporate loans and financial assistance – thrived in the mid 1990s as the economy was perceived to accelerate its post-war recovery with a GDP growth of 8.8% per year. Banks were typically more eager to help finance business ventures in Lebanon, coupled with equity capital being contributed by domestic and regional investors alike. New companies were being established, consumption was high, real estate prices were soaring, and the overall outlook for the economy was rosy, to say the least.

In 1996, as banks continuously enlarged their portfolios of corporate debt – typically of a long-term nature – things rapidly took a turn for the worse. Economic growth slipped into reverse, consumer confidence, and consequently consumption, toppled. As businesses saw their margins squeezed by high interest rates on their financing and lower revenues, bankruptcies thrived, creating a substantial burden to anyone and everyone with any kind of exposure to the Lebanese corporate environment. Despite the promising signs of an economic recovery observed over the past few months, and the increased consumer and investor confidence pursuant to Paris II, Lebanese banks are not likely to expose themselves to additional corporate debt until they improve the status of their existing portfolio to a point where they can take on additional exposure, a task typically of a high risk nature considering the unpredictability of the Lebanese economic and business environments.

While no bank has categorically ruled out any form of lending, credit assessment is stringent at most institutions, and conditions for acceptance are as such because only large, well-established businesses are eligible to apply. Many Alpha group banks are extending corporate loans, albeit on a very conservative basis, requiring substantial due diligence and a number of guarantees.

Smaller banks, on the other hand, seem perhaps more eager to venture into corporate lending. Typically, smaller banks have less balance sheet exposure to corporate loans from their past activities. This, coupled with an increasingly competitive environment in retail lending, has prompted a number of medium sized banks to draft strategies that would focus on business loans. As such, conditions are less stringent, interest rates are more flexible, and leniency is more commonplace.

However, the major factors behind the reluctance of banks to finance businesses in Lebanon are being exacerbated by their own policies on the matter. Small and medium sized enterprises have always been the backbone of the Lebanese economy. In fact, SMEs represent around 95% of total industrial enterprises, and employ up to 65% of the total industry labor force. Moreover, SMEs contribute over 40% of the country’s industrial output. Unfortunately however, most SMEs are foregoing profitable business opportunities and are operating below full potential. Production is being limited by the overall reluctance of major banks to provide fairly priced financing facilities to expand production.

While the Lebanese government is attempting to nurture this appetite for small enterprises through subsidies, it does not do so for all sectors, as many promising entrepreneurs are facing difficulty in obtaining debt financing for their projects.

A significant level of risk is typically inherent of small businesses, whose operations are of a typically high volatility. Such a factor is deterring banks from extending to them the much-needed facilities, to the benefit of large and well-established institutions. Such an attitude is somewhat detrimental to the overall growth of businesses in Lebanon, since large institutions typically make use of credit facilities to maintain their operations; whereas small businesses make use of funds made available to them to open up to new markets, increase their product lines, and focus on promotion and advertising.

It should be noted, however, that banks are not the only ones shying away from corporate lending. While Lebanese banks are typically reluctant to offer financing services to local companies, such companies themselves often find it detrimental to make use of such services if and when they are provided. In fact, the cost of debt on corporate loans is so high that it significantly eats into profit margins and forces companies to forego promising investment opportunities. According to Central Bank statistics, interest rates typically charged by Lebanese banks do not fall below 10% p.a. on average, a drastically excessive figure given the typical returns on investments in the country.

A high cost of equity resulting from the geo-political and economic risks associated with the country, coupled with a high cost of debt, are severely undermining appetite for investments in Lebanon. Sought after investments should currently achieve returns in excess of 15% in order to marginally exceed their cost of capital. The issue has been raised numerous times recently, namely in the industrial sector. A number of Lebanese industrialists are reducing output, moving production to other countries, or outright shutting down their operations due to – among other reasons – the high cost of financing their working capital.

It appears then that would-be entrepreneurs should shift their focus towards a perhaps more expensive source of financing: equity capital. Equity capital for new innovative businesses often comes in the form of venture capital, especially in the West. A solid equity base would provide a newly established company with a solid base to launch and expand its operations. Moreover, the ability of a company to attract regional strategic partners would assist in expanding across borders, a critical factor given the limited size of the domestic market in Lebanon.

In addition, a well-capitalized company offers an added incentive to banks to provide debt financing, as the perceived risk to the banking institutions is reduced by the availability of a solid capital base.

It appears then as though the Lebanese business environment suffers from a basic flaw, which severely reduces its ability to promote investments and attract foreign investment capital. Bank’s preferences towards government bonds instead of loans severely limits the sector’s ability to play its basic role of channeling funds from depositors into investments. Several steps should be undertaken, and promptly so, to remedy the situation. It surely does not suffice to attract Arab funds into Lebanese banks if their primary use is lending to the government, and consequently crowding out the private sector. In fact, the government itself should promote corporate lending by reducing interest rates to spur investments, offering subsidies, and encouraging banks to open up their vaults.

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Society

It’s all in the name

by Toby Stevens
written by Toby Stevens

Did it ever occur to you that your email address could be presenting you in a bad light?

Last year, 31 million emails were sent each day. According to the International Data Corporation, by 2006, this number is expected to reach 60 billion, while the number of worldwide email addresses is expected to increase from 505 million in 2000 to 1.2 billion in 2005. Subscribers to email providers such as Yahoo! and AOL are also increasing, with Hotmail the market leader with over three million members. With all the spam (electronic junk mail) received daily in most in-boxes, many email users are growing tired of using the popular, and free, hotmail, yahoo, or AOL services. In fact, in the corporate arena, employees assess how important a company, or individual, is from their email address. More attention is likely to be given to emails using a company’s domain name ([email protected]) rather than an email using an ISP’s domain name ([email protected]). Even riskier is using free email services ([email protected]). “I consider an email message more credible when it has a corporate domain name, rather than a hotmail domain, which I usually discard,” said Rami Majzoub, account director for Levant and Egypt at Reuters Middle East. “ Unfortunately, some Lebanese companies, even well known banks, still use their ISP’s domain name, which shows a lack of seriousness and awareness on their part,” he added. According to Michel Kilzi, general manager at Internet Facilities Group, the reason most corporate employees in the Arab world still use their personal emails for work related issues is because of the lack of awareness and widespread internet penetration. “Whether it is a small, medium sized or huge corporation, all the emails I receive from Europe and the US use the domain address of the corporation,” said Kilzi. “Since most companies have a certain amount of control and restrictions on their corporate emails, every employee separates between their business and personal email accounts. But this is not the case when it comes to the Arab countries. Sometimes I receive an email from Saudi Arabia, Syria or Kuwait from a CEO using his hotmail or yahoo account and I don’t take them as seriously – it’s as if they don’t have a company profile or business card,” added Kilzi.

One thing is for sure, the lack of corporate domain usage is not due to financial or economic constraints. Most companies can register a domain name on the net for as low as $25 per year, and with hosting fees, the cost could reach a maximum of $100. “In Lebanon, 60% of companies have their own domain name, 5% still use hotmail and yahoo, and the rest use their ISP’s domain,” said Rita Hayek, sales and marketing manager at Terravision. “Lebanese companies understand the importance of having their own domain name. It is usually students or small companies that usually use hotmail and yahoo, and they are probably unaware of the importance of a domain name.” Lebanese companies can also register a .lb domain for about LL900,000, or $600. However, some find the procedure too complicated, as they need to register their company trademark with the government before receiving their domain registration. “We have seen many Lebanese companies register .com because they don’t want to go through the lengthy process of registering for the .lb,” said Rim El Kady, IT unit manager at AUB. Companies should especially take care about the email addresses of its employees because, according to analysts, a domain name speaks volumes. For example, it can determine how a corporation treats its employees. If a company uses the full name of the employee in the email address (like, [email protected]), it shows that the organization views its employees as independent entities that provide added value to the company, and as such, respects their individuality. If only the position is used (as in [email protected]), the company is considered more impersonal and viewed as valuing company divisions and apparatuses over personnel. “Sometimes, it is easier for the IT department to create an impersonal address so that when an employee leaves they don’t have to go through the hassle of changing names, adding new ones and deleting old ones,” one IT administer explained. A third method adopted by companies is incorporating the initials of an employee followed by numbers (e.g., [email protected]). In such a case, analysts say the company views its personnel objectively and in a hierarchical manner, while recognizing that they are in charge of services and activities.

But for those of you not wanting to be pigeon holed by a company domain name, or wanting to stand out from the hoards of millions using hotmail and yahoo accounts, do not fear – there is a domain out there for everyone. If you want to show you have a funny bone, you could try [email protected]. Not really in a social mood? Well then [email protected] is just right for you. Whoever said ‘what’s in name’ obviously never had email.

(Box) Revealing messages: Is your position affecting the way you write your emails?

According to an article in The Guardian, your position in a company could influence the way you write your emails. For example, did you know that the higher up you are, the more likely your emails are full of informalities. Since, big honchos have already made it, so to speak, they don’t feel the need to impress through meticulous email writing. In fact, senior executives rarely use corporate jargon and are more likely to talk to a person face to face. Furthermore, the powers that be are less like to use the cc option.

For the middlemen, the story is a bit different because they have a lot to lose or gain. If you’re only half way up the corporate ladder, you probably write lengthy emails to try and impress the higher ups. Middle management also like to sign off with signatures, which include name, position and sometimes a quote even. At the entry level? Well, in that case, according to the Guardian, you like to crowd messages with emoticons, like smiley (?), sad (?), or anxious faces (:S) that MSN or Yahoo messenger have made so popular. Being at the lower end of the corporate food chain also means that you have time to send conversational emails to colleagues, mainly not work related of course. Low status employees are, not surprisingly, more likely to send all those annoying jokes and forwards.

Who knew an email could say so much?

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