Innholdsfortegnelse for Quarter 2 /2021 i Lebanon Opportunities

Bla bla and not The media is covering all pressing and poignant issues – except for the single important one. Politicians, so-called experts, innocent citizens, or ill-intentioned provocateurs, all got heard. Each hot or not-so pressing matter has been discussed ad nauseam, resulting in a non-ending verbal diarrhea. Here’s a partial list, in no particular order because it doesn’t really matter as long as the chatter continues. Bla bla: The distracting noises veiling the core issue Thawra. Killon ya3nee Killon? Demonstrations, counter demos, road blockages, clashes with security forces and Le Hezb thugs ∣ Vilification of Gibran Bassil, Riad Salameh, banks, and the politician flavor of the month ∣ Capital Controls: No, maybe, yes! Well, maybe not. Recuperating funds stolen or transferred abroad ∣ The exchange rate. Role of Foreign…

Fr. Bechara Khoury President of NDU Notre Dame University-Louaize (NDU) has appointed Fr. Bechara Khoury as President to succeed Fr. Pierre Najem. During the last 12 years, Khoury was in charge of NDU’s offices of student affairs and financial affairs. He was also involved in the university’s expansion project. Khoury said: “We will be deploying unyielding efforts to shield our university from the fallout of the crisis and the Covid-19 pandemic at the institutional, human, and academic levels.” He said that NDU is one of three local universities that enjoy the accreditation of the New England Commission of Higher Education (NECHE) and that despite the financial difficulties they will be doing their best to maintain education quality in order to keep this international accreditation. “This requires extra efforts to prevent…

Mounir Rached President of the Lebanese Economic Association ∣ Fully free the exchange rate and apply a unified rate on all financial, commodity, and service transactions domestically and on international transactions ∣ Target an immediate fiscal balance, to be achieved within one year ∣ Reschedule public and private sectors’ debt in lira and dollar, as well as assets and liabilities of the banking sector Total liberalization of the exchange rate of the lira against the dollar will contribute to achieving internal and external balances. It will improve price competitiveness of local production and therefore increase demand for it, and will curb demand for imported goods and services. There are signs that this trend has already begun. Except for subsidized goods, most imports have declined significantly. This has led some sectors…

STORIES Need is the mother of all inventions. Rapid adaptation to rapidly changing – or crumbling – business conditions has become a survival requirement. Even old and established companies, faced with the economic crisis challenges, are being forced to act like startups with strong entrepreneurial spirits. Lebanon Opportunities is uncovering 15 examples of success in various sectors. It has talked to the leadership of these companies. The common denominators amongst them are agility, flexibility, and daring to explore uncharted territories. Export oriented Many companies are increasing their exports to secure hard currency and to tap the recently gained competitive advantage resulting from the decline of the lira. Exporters are also keen to abide by international quality standards in order to create a sustainable foothold on global markets. Several businesses are…

From medium to premium Chateau Kefraya, which produces wine and arak, saw its exports increase by around 50 percent compared with pre-crisis levels. The company has introduced two new wine products since the beginning of the current year: ‘Phoenician Gate’ red wine and ‘Blanc De Blancs Ice Edition’. It has also redesigned the bottle and the labeling of its ‘Myst’ rosé wine. Exports used to represent one third of its total output. They now account for half. “Exports are now rising at faster a pace with the easing of Covid-19 restrictions abroad. They have become the oxygen of our business. We have been working to develop and consolidate our overseas sales since seven to eight years and we are now reaping the fruits of our efforts,” said General Manager Edouard…

Plan B: Solar power and satellite Internet Data Consult, a provider of Information and Communications Technology (ICT) solutions, is boosting its overseas sales to offset the slump on the local market. It has also come up with suitable solutions for fuel shortages and a potential failure of the Internet connection. The company has increased its international sales from 10-15 percent of total output to 25 percent. “We are seeking to bring this percentage to over 50 percent. The aim is to offset the sharp decline in local sales (70 percent) and to secure fresh dollars to pay our employees in order to keep them because they are highly skilled and can easily land a job abroad,” said CEO Elias Houayek. The company sells its software solutions in Saudi Arabia, Jordan,…

Green begets the green Phoenix Group is boosting exports and gearing up to meet soaring local demand for solar power and solar heating solutions. It is developing new products to tap the rising competitive advantage of local manufacturing. Phoenix Group has kept its total turnover at the pre-crisis levels by boosting exports in order to offset the decline in local sales due to the economic and financial crisis in Lebanon, according to Rabih Osta, the Group’s Vice President. Phoenix is one of the technology and manufacturing companies of the INDEVCO Group. It is involved in renewable energy and waste management solutions, as well as engineering services. “The percentage of our exports has increased to 70 percent of total output from 30 percent before the crisis,” Osta said. Phoenix is carrying…

Soundbytes Enough using Lebanon for foreign gains Pope Francis The caretaker government has not failed to fulfill its responsibilities Caretaker Prime Minister Hassan Diab The ‘Poverty Loan’ will be disbursed in (fresh) dollars Saroj Kumar Jha, Regional Director of the World Bank We are ready to help Lebanon in many areas Heiko Maas, Minister for Foreign Affairs of Germany The US and the international community are ready to help, but they need a Lebanese partner David Hale, (then) US Under Secretary of State Yes, the situation is terrifying, but what is terrifying is that the harsh impoverishment of today is the result of mismanagement and inaction for years, and not the result of an external blockade Anne Grillo, Ambassador of France It cannot continue like this! Josep Borrell, High Representative…

Biometric tech firm Zwipe starts MENA hub from Beirut Zwipe, a Norway-based biometric technology company, plans to enter the Middle East and North Africa (MENA) and has selected Lebanon as regional headquarters, said Ramzi Saboury, Zwipe’s newly-appointed General Manager for the MENA region. Saboury said that a physical office will not be set up before forming the team and that they will adopt a decentralized model as a team could be formed in Saudi Arabia, for instance, to serve the Gulf region and another one could be established in Egypt to serve North Africa. Lebanon is favorably located in the middle of the MENA region and its human resources are skilled and bilingual, he said. Zwipe had been developing this pilot product consisting of fingerprint biometric technology for payment cards…

Name Coders Sal Shareholders Mohamed-Imad Adnane Kozm (Chairman & Gen. Mgr) (845), Zehdi Wafic Ahwal (845), Abdelsamih Abdalla Charif (1,310) Reg. address Farah building, Mama street, Lot No. 4880/4 Mousseitbeh, Beirut Object General trade, industry, import, export, commerce, design and maintenance of telecommunication and computers programs, electrical supplies and contracting Banker BLOM Bank Solicitor Me Ahmad Abdalla Charif Auditor Ali Rustom Anouti Name Foodrex Sal Capital (Shares) LL30,000,000 (1,000) Shareholders Salim Abdo Bachalani (Chairman & Gen. Mgr) (790), Francois Abdo Bachalani (200), Rose Diab Harb (10) Reg. address 1st floor, Librex building, Al-Arz street, Lot No. 30/5a Wata Amaret Chalhoub Object General trade, commerce of food products, beverages, home appliances and supermarket Banker Creditbank Solicitor Me Camille Diab Harb Auditor Hatem Rachid Hatem Name Green Sky Sal Capital (Shares) LL30,000,000 (3,000) Shareholders Akram Raymond Bacha (Chairman & Gen. Mgr) (2,980),…

Imports plummeted in 2020 driven by weakening purchasing power and the capital controls. This has resulted in a substantial narrowing of the trade deficit. The emergence of a competitive advantage in terms of labor cost, did not lead to an improvement in exports which have decreased five percent. Despite a shrinking trade deficit, the deficit in the Balance of Payments widened 80 percent to $10.6 billion last year due to the sharp decline in financial inflows. Real Trade Deficit at $5.1 billion Real exports, which consist of total exports excluding pearls, precious metals, and petroleum products, decreased 4.6 percent in 2020 to $2.1 billion, according to Customs data. They reflect the combined activity of manufacturing and agriculture. Services are not accounted for. Real imports, which also exclude the same goods,…

Atyab – Zeit Boulos Expanding the product line and eyeing the US Atyab - Zeit Boulos, which produces olive oil and other Mouneh products such as olives, vinegar, pickles, molasses, and rosewater, has been able to increase its exports and to introduce new products. The company has recently introduced flavored olive oil varieties and special editions of extra virgin olive oil. It is also considering launching a new range of dressings and sauces. “We are waiting for more stable economic and financial conditions in order to invest more in our company and introduce other products,” said CEO Tony Maroun. Atyab is focusing on exports as the volume of their sales on the local market has decreased due to weakening purchasing power. “We have become more aggressive in exports after gaining…

New 24/7 factory and expanded product range to supply global markets Cortas canning and Refrigerating Co., an export-oriented food producer, has intensified its focus on overseas sales and relocated to an upgraded factory. It boosted its production capacity and introduced new products. “We have always been an export-oriented company. Our overseas sales represent now 95 percent of total output up from 90 percent in 2019,” said CEO Pierre Battikha. The company’s major export markets include the USA, Canada, Australia, Europe, and Arab countries. “We will expand our sales in France and we will enter new European markets such as the Netherlands,” he said. Cortas moved to its new factory in 2020 amid the peak of the Covid-19 pandemic and reached full production by September of the same year. “The factory…

Taking advantage of a depressed currency, sales are soaring Sales of Jamil Haddad Co. (JHCo), a producer of alcoholic drinks, have surged 20 to 30 times! The company, famous for its Colonel Beer, also produces gin, vodka, and arak. It has recently added rum to its product range, and plans to start producing whiskey next year. Owner Jamil Haddad said: “Our prices have become very competitive compared with similar imports. For example, before the crisis, the price of a bottle of imported gin of the ‘Hundred’ brand was LL32,000 while our gin was sold at LL35,000. Now at an exchange rate of LL20,000, our gin is offered at LL69,000 while Hundred is sold at LL350,000-LL400,000.” JHCo used to sell 2,000 bottles of gin per year. It is now selling 6,000-7,000…

The gap is shrinking between the prices of organic and conventional fruits and vegetables. Organic agriculture is gaining some cost advantage because it does not use pesticides, synthetic fertilizers, and other chemicals. These inputs are imported from abroad and are paid for in hard currencies. Conventional farming, which relies on these chemicals in order to boost productivity and benefit from economies of scale, is witnessing a sharp rise in its production costs. But organic farmers still have to pay for imported natural pesticides such as bacteria, sulfur, eucalyptus oil, and extracts from the chinaberry tree in addition to organic certification fees. Both organic and conventional farmers have to bear other expenses such as imported agricultural equipment, seeds, and fuels. The subsidies provided by the government cover only a small portion…

• $6.56 billion in wages were paid to public sector employees last year• $1.17 billion in medicines and medical equipment were imported in 2020, a 93 percent market share• 850,000 hospitalizations per year are recorded including 150,000 by non-Lebanese• 3,000 bankers, more than ten percent of the banking industry workforce, have resigned or lost their jobs since the financial crisis• 87 percent of the population lives in urban areas, 64 percent in large cities• $924 million were transferred to EDL last year• 4,000 cows are imported monthly, down from 30,000 in pre-crisis times• 77 percent of households are without enough food…

EV Electra, a new local manufacturer of electric cars founded by Jihad Mohammad, a Palestinian entrepreneur born in Lebanon, has launched a prototype. The sports car, with butterfly doors, has taken ‘Quds Rise’ as its brand name. This is the first time a car is being produced in Lebanon. Another car company, W Motors, was founded in Lebanon in 2012 by Ralph Debbas, but it relocated the following year to the UAE. Mohammad said: “It is built in Lebanon from start to finish.” Production likely to start this summer The model was designed by the company’s team that includes 15 engineers. The body and the chassis will be manufactured locally. The engine and the batteries will be imported while the battery pack will be assembled in Lebanon. Mohammad said in…

Makram Sader Secretary General of the Association of Banks On June 4, the Central Council of the Central Bank (BDL) took a decision that costs more than $6 billion, in real (fresh) dollars, i.e. transferable abroad, and not local dollars (lollars). BDL’s statement said the decision was taken unanimously by the members of the Central Council, and unusually named each member. The approval of the Director General of the Ministry of Economy on the one hand, and the absence of objection of the government commissioner at BDL on the other, clearly means that the decision enjoys strong political support from the ruling class, as indicated at the time by the National News Agency. The planned $6.1 billion covers three areas. First, the distribution of $400 in cash to depositors. We…

The power of substitution Ch. Sarraf & Co., Malia Group’s local distribution arm, was quick to adapt to the sharp decline in purchasing power of consumers while tapping the group’s synergetic potential. “In light of rapid market changes, we had to adapt our strategy almost on a weekly basis. We were closely monitoring new developments in order to make the required adjustments,” said Muriel Boustany, Business Manager of the Cosmetics and Fragrances Unit. Georges Ghosn, Business Manager for the Professional Care Unit that markets products to hairdressers, said that their company has taken a decision to maintain a low profit margin on the local market and to rely instead on overseas profits. “We didn’t panic and we didn’t start to raise prices uncontrollably like others. We increased prices only when…

Launching, re-launching, and repackaging alcoholic brands This is a producer of alcoholic drinks, ethyl alcohol, and vinegar. It produces wine, arak, whiskey, vodka, gin, and brandy, under its own brands such as Arak Al Assi, Arak Al Amir, Baalbek Arak, Adonis Wine, and Jack Colson Whisky. It is now introducing new brands – mainly for export – on which it is counting to generate profits. Its sales have increased ten to 15 percent in terms of volume. The share of local sales in its total output has risen from 30 percent to 45 percent. “Our profitability has declined on the local market because we want to keep in line with prevalent prices. We have maintained our profitability on exports. These support our local business,” said Co-owner and Managing Director Ramez…

Business relations between food distributors and artisan and organic food producers are becoming increasingly symbiotic and mutually beneficial. With declining demand for imported brands and growing demand for local products, distributors are ultimately realizing that they have to increase the domestic portion of their product portfolio. Domestic food brands are witnessing a surge in local demand for their products. They are eager to seize the opportunity in order to boost their market reach. Thriving business The de facto capital controls and the collapse of the lira have made importing goods from abroad a challenging and costly task causing a radical shift in demand towards local products. Anthony Massoud CEO of Ets Antoine Massoud (EAM), a distributor of food products, said that compared with pre-crisis levels their turnover of local…

Marwan Iskandar Published by M.I. Associates 343 pages in English LL60,000 In a scathing critique of the presidency of Michel Aoun, the book lays the stage with an economic and financial background of events starting in 2008. The international financial crisis ignited by the fall of Lehman Brothers in the United States has led to the equivalent of $24 billion seeking refuge in the Lebanese banking system, mostly by Lebanese nationals, according to the author. This had reinforced the balance of payments. Soon after, the Syrian crisis began (2011) engendering a number of game-changing ramifications on the Lebanese economy, most prominently the doubling of the import of fuel, only to be (illicitly) exported to Syria. As new fund transfers from abroad declined, the balance of payments receded. This was the…