AT EVERY LEVEL

Lebanon 2014 | ECONOMY | INTERVIEW

TBY talks to HE Alain Hakim, Minister of Economy and Trade, on keeping the economy growing despite challenges in the region.

HE Alain Hakim
BIOGRAPHY
With a PhD in Business Management, Alain Hakim is currently the Minister of Economy and Trade in Lebanon. Having a career in the financial sector, he is currently serving as Deputy General Manager at Credit Libanais Group and is also the CEO of Hermes T&T company (part of the Credit Libanais Group), as well as a board member in several group subsidiaries. This comes in addition to several other positions he previously held in the banking sector. Alain Hakim has kept a close relationship with the academic world, where he is chairperson at the Business Administration Faculty of Saint Joseph University as well as lecturer at the Institut Supérieur d’Etudes Bancaires. He participates in several academic research studies in the business management field.
Alain Hakim believes that the role of the economy is to benefit the welfare of its citizens and not the opposite. His actions under his mandate as Minister of Economy and Trade revolve around this idea, where he encourages reforms that aim to increase competition in the market, protect consumers’ rights, and create job opportunities for youth.

How effective has the Banque du Liban (BDL) stimulus plan, introduced in November 2013, been in creating growth?

In 2013, approximately $1.5 billion was injected into the Lebanese economy by BDL, our central bank. This had, of course, a great impact and allowed growth to reach between 1% and 1.5%, despite all various internal and external complications. It is worth mentioning that this $1.5 billion targeted several sectors; however, it was mainly used to prop up the real estate industry. The real estate sector has great potential for the future. We have low rates if you benchmark them with the region and our surroundings. Lebanon offers a great return on investment at that level. My disappointment was in regard to renewables, where, if I recall, 2.6% of the funds available were invested in the sector, while the rest went into real estate. It was not a problem, but a disappointment because I am a strong believer in renewable energy. In 2014, we will inject a further $800 million. Expectations are good, despite everything. We should reach 2.74% growth if everything is positive until the end of 2014. They expect that, with political stability, Lebanon could achieve 4.5% growth over 2014.

What do you feel the priorities should be in the Lebanese economy to reduce the deficit?

There are three main priorities today. First of all, we have the Syrian refugees in Lebanon, which is like an open wound in the country, costing us directly almost $1.7 billion per year. The second big wound we have is at the energy level, especially electricity, because when I talk energy, I like to talk about electricity, renewables, and water (ERW), but I will strictly talk about electricity. The cost of electricity per year to Lebanon is $2 billion. If you put together the cost of electricity and the cost of the Syrian crisis, they are draining $3 billion plus from the economy annually. The third problem is waste and corruption. Waste is about how we are losing money for nothing. If we just manage these three points, we can manage the entire Lebanese economy in just one year's time. However, we need support on all three levels. On the first level, we have some commitment from the international stage, and we should have a clear plan for the Syrian refugees. On the second point, we should have a clear plan on how to exit from the electricity problem that we have, especially by implementing the public-private partnership (PPP) approach. On the third point, the Lebanese government should do something specifically about the ports and airports, so as to end the waste of money on customs. In essence, we need better customs management. The third one is the easiest, and we should achieve it in a matter of weeks. On the second point, in July 2014 we had a meeting with the privatization council that is tackling the problem of PPPs. We reached several main decisions to achieve better management over this area. This includes electricity, telecommunications, and water, but the main focus would be electricity as the first step. If you can arrange this sector, you can use the funds we are losing for investments, for example on railroads.

What would you like to see as the next concrete step in the electricity and telecommunication sectors?

The next step would be to tackle the legal aspect, because we don't have anything on that level. If we can tackle the legal aspect first, we can achieve almost 50% of the road map to reach this, mainly on the electricity front. For telecommunications, we still have a sort of duopoly in Lebanon. Also during the council of ministers meeting, we were discussing how to open this sector up to a third-party operator owned by the government, Liban Telecom, and how to implement this to achieve better services and prices, and to reduce the monopoly element in the sector. This is how we can liberate both electricity and telecoms through PPPs. It should be a similar process for both.