Lebanese companies should invest abroad
Lebanese businesses should channel some of their investments to more promising regional economies to avert tougher economic conditions ahead, leading industrialist Jacque Sarraf said in an interview Wednesday.
“Lebanese companies have to trim their operating expenses and look for investment opportunities in neighboring countries like Saudi Arabia, Iraq, Algeria and other markets,” he told The Daily Star. Sarraf speaks from experience.
“Of course, businesses should not exit Lebanon. We need to continue investing here but should do so more cautiously, like in other countries facing security and political problems.”
During the interview, Sarraf, who is hailed by many as “dean” of Lebanese industrialists, struck a warning note on the Lebanese economic slowdown. “We would be lucky to have a GDP growth of 1 percent or even no growth in 2012,” he said, mirroring the dim views many other private sector heads recently voiced.
Speaking about his own business ventures, however, Sarraf seemed to be more optimistic. Malia Group, headed by Sarraf, has businesses spanning across pharmaceutical industries, consumer good distribution, IT, legal consulting, fashion and real estate.
Active throughout the MENA region, Malia is an umbrella for 20 companies that have forged alliances with regional companies and multinational corporations.
Sarraf passionately described how, 75 years ago, Malia started as a small pharmacy expanding to warehousing and distributing pharmaceutical products in 1951.
“By 2003, we had six companies focusing on cosmetics and pharmaceutical products, but we realized that we could not remain dependent on one sector,” he added. Sarraf said a turning point happened when an expert from Holland was hired to develop expansion plans. “In a nutshell, the report by the Dutch expert said we should expand aggressively into the cosmetics and fashion industries, where Lebanon has a strong comparative advantage, given ... the country’s positive reputation across the region,” he said.
The expert, said Sarraf, also advised the company to look beyond Lebanon’s small market and seek additional business in the MENA region, where commercial opportunities were riper. “Our corporate philosophy, he said, shifted to focus on diversifying sectors. We look for needs in each country and invest in businesses that meet them,” he said.
The significant need for distribution companies in postwar Iraq, helped Malia create what is now the third-biggest retail company in the country, Sarraf said.
“Utilizing technology, we can monitor all our transactions from the group’s headquarters in Beirut,” Sarraf added, pointing out that the company depends on Lebanese talents for managing regional operations. Despite his belief that rival Lebanese politicians will eventually cast away their differences, Sarraf said Lebanon continues to be a fertile land for instability and divisions that put the economy at significant risk. Malia had marked slowdowns recently.
“Why the fire in Syria did not spread to Jordan, or Iraq, or Turkey, why [is it] only Lebanon cannot protect itself?” Sarraf wondered, blaming politicians “who insist on importing instability to the country.”