Interview with Jacques Sarraf, Chairman of Malia Group
Let’s start with the overall picture. How would you assess the doing business in Lebanon nowadays?
Despite having a relatively resilient economy, the situation in Lebanon is precarious at the moment. The government institutions are not functioning properly which is creating uncertainty in the market and investment and consumption are significantly lower. For the moment, Lebanon is not in an economic crisis but we are teetering on the edge. It is vital that the political deadlock be broken and that parliament convenes to pass laws essential to the welfare of the Lebanese people, the state, and the economy.
Moreover, indicators are not very encouraging. Knowing that the forecasted increase in GDP for 2015 is 1.6%, credit rating agency Fitch affirms Lebanon at 'B' rating with negative outlook. Lebanon still captures very weak public finances and is experiencing increasingly costly funding structure and a weak economic performance relative to its peers.
Adding to this is the spillover from the situation in the rest of the region whereby Lebanon is taking a hit. For instance, Iraq represents about 25 percent of our foreign trade as a country and the rise of ISIS has done much to limit the flow and distribution of goods in the country. As you can also imagine, the situation in Syria has also negatively impacted our economy, from increasing overland costs to a decrease in consumption of Lebanese products by a once thriving Syrian market.
Saying that you are successful, in our eyes, means that you are at the end of the road and we have so much more that we want to achieve.
The good thing about Lebanon is that when things pick up they will pick up quickly.
Yes this is true and that’s due nominally to the private sector but also the creativity and work ethic of the Lebanese people. However, both the private sector and the Lebanese people are under great pressures from inside and outside of the country. This is a situation that can only really be resolved, in the longterm, by a break in the political deadlock that has been heightened over the last 17 months at least.
We have met a year ago, what have been the latest developments in Malia Group? What have you accomplished in the past year?
On the level of Malia Group, we are trying to diversify our presence in countries not affected by the turmoil in the region. We continue to expand our technology management business in Algeria. Moreover, we have now moved into Saudi Arabia as a market. We recently signed a joint-venture agreement with Al Rashid Group to build and operate Pharmaline Saudia, which is part of Pharmaline Lebanon’s expansion plans. Pharmaline Saudia will manufacture branded products for the GCC market from a dedicated plant located in King Abdullah Economic City (KAEC) in Jeddah (KSA). Currently, only the Gulf countries have the potential for us to diversify our business.
You are expanding, but apart from that what are you doing in order to maintain your position?
We are maintaining our position by creating new opportunities for employment in the markets in which we are present. Moreover, we are continuing with the plans outlined in our roadmap. We are building a second hotel called the Erbil Arjaan by Rotana which will offer 11 floors dedicated to furnished studios and suites as well as other amenities. We have also started construction on Magma Square which will house F&B, retail, and entertainment concepts among others on its 17,500 square meter of gross leasable area facing the University of Sulaimani. Finally, built on a total of 60,000 square meters of land in the Kurdistan region, Malia Logistics will be a park of warehouses and offices dedicated to bringing efficiency to supply chains by offering a menu of logistics solutions.
For the Group, you have different businesses and industries, which are you pushing the most?
There is not one which we are pushing more than the other. Our strategy has always been to find the opportunity and look for ways to fill the gap. This has made us pioneers in the markets in which we operate.
What was the growth of the Group?
In spite of the problems facing the region, we are in a good place and there has been significant improvement in the sectors in which we operate. For instance, our pharmaceutical manufacturing business is one of the best performing. Our FMCG businesses are on the right track and have seen a steady growth since the end of September, and we are performing well in our other businesses too.
If you go to Ghana or Ivory Coast, Congo, and some other African countries, they have had 10% growth for the past 4 years. There are some countries where there is growth. Plus, there is the Lebanese diaspora.
We go where opportunities present themselves to us. Malia Group is present in a lot of regions where we believe we have an added value. Aside from our operations in Algeria, the rest of the continent is not part of our strategy of growth and diversification at this stage. However, we know Africa has potential. We are looking into having a strategic partnership in Angola.
Don’t you think that once the situation in Syria stops, there will be a huge potential from Syria for reconstruction and Lebanon will be able to be the place for that?
The potential in the re-building of Syria is large in scale. But, we believe that the Syrians have the capacity to do the rebuilding themselves, similar to how the Lebanese rebuilt their own country. However, if we see a potential for us to participate in the re-building of Syria, and in partnership with the Syrian people, we will do so.
How do you see the situation evolving?
Frankly speaking, from now until 2018, we believe that there will be a solution. It is not going to be from one day to the next, but there will be a solution.
What about Iran?
We are looking at the possibilities and Iran has a lot of potential. We have contacts and we will be pursuing them as best fits our strategy as a Group.
What is the secret to your success?
There are many values that have contributed to where we are today as a Group including the hard work, perseverance, and creativity of our talent. As a Group, we also have a strong belief in systems and always look to update and upgrade them. Saying that you are successful, in our eyes, means that you are at the end of the road and we have so much more that we want to achieve.