Lebanon’s most high-profile products are probably sweets and wine. As an industry, wine generates revenues of about US$50 million annually, the kind of money that might buy a Russian businessman a half-decent London town house. Not much is it? But then again Lebanese industry has always been something of a non-starter, blighted as it is by a lack of government support and the high cost of land, permits and power.
And things, as you can imagine, are only getting worse. While our politicians try to form a cabinet, I read in the local press last week that some “energy-intensive” Lebanese industrial firms, either have, or are considering, relocating abroad. And you know things must be really bad when you read that for many Lebanese business owners, Egypt is the destination of choice. Then again, who cares about a little instability when, as one company confirmed, the move can save a reported $500,000 a year in electricity bills? Instability is after all part of our default setting.
In Lebanon what passes for real industry is the production of paper, cardboard, tissue and plastics. Not very glamorous is it? But it is a manufacturing base that is the mothership of two items, without which we Lebanese would be lost: Ladies and gentlemen I give you the white (it’s always white) plastic chair and a box of paper tissue or Kleenex (emphasis on the “n”, please).
The plastic chair is the ultimate Lebanese invention. (By the way, the “Florence” model, made by Kamaplast in Sidon and which with comes in nine other redundant colours – I have never seen pistachio or navy blue chairs – must surely be the gold standard of this mighty tradition.) Affordable, easy to wipe down and eminently stackable, the white plastic chair is not only practical, a quality the Lebanese love, it performs a huge cultural role. It allows people to instantly gather and sit, always a big deal in Lebanon, where everything takes time.
If political rallies were banned plastic manufacturers would, if not go out of business, then at least take a new strategic direction. But then again there are always funerals, a serious red-letter day for cheap seating. Two years ago, an elderly man in my village died suddenly when I was visiting his house. As news spread of his death, the well-rehearsed protocol kicked in and by the time the local doctor pronounced the poor fellow dead (we already knew), the familiar lines of white chairs had already been set up outside the house to receive the first wave of mourners.
Understandably, tissues are also very big at funerals, but when we Lebanese are not dabbing away a tear, we are also reaching for them in shops, garages and waiting rooms where they are always handed out with unconditional understanding.
“We just don’t use them in the same way,” barked my sister, who lives in London. “Why would anyone want a box of tissues in every room? And what about the environment? No wonder there is so much litter in Lebanon when everyone blows their nose all the time.”
She had a point. All this plastic and all this tissue – I haven’t even touched on the millions of free shopping bags and bottles of mineral water that are consumed every day – add up to one gigantic environmental headache in a country which is already one of the most polluted in the Mediterranean.
Michael Karam is a freelance writer based in Beirut
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Business Insights
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Where to stay: Courtyard by Marriott Titusville Kennedy Space Centre has unparalleled views of the Indian River. Alligators can be spotted from hotel room balconies, as can several rocket launch sites. The hotel also boasts cool space-themed decor.
When to go: Florida is best experienced during the winter months, from November to May, before the humidity kicks in.
How to get there: Emirates currently flies from Dubai to Orlando five times a week.