TBY talks to Dr. Fouad Zmokhol, President of Association of Lebanese Business People in the World (RDCL World), on the role of the association, the election of a president in Lebanon, and the main challenges faced by investors in the country.
In 2016, RDCL celebrated its 30th anniversary and, earlier this year, we have seen the launching of RDCL World. What is your main mission and how would you evaluate these 30 years?
We are proud to be an elite group, and new members must first receive an invitation from two existing members and be subject to a vote requiring a two-thirds majority of the board before they can join. In this way, we ensure that we attract and retain the most influential Lebanese business leaders in Lebanon and in the world. Additionally, our organization is totally apolitical and does not engage in any political activity. This would entail that if any member becomes a minister or a political representative, their membership is temporarily frozen. This helps us maintain complete independence. Many of our members become active in the political realm, because we believe that it is important to have the Lebanese private sector play a key role in the direction of the country and in its various decision-making processes. Economically, Lebanon has survived several episodes of instability, essentially thanks to its private sector. Our major objective is to bring different business people together at the same table. We participate, in one way or another, in almost all major economic decisions in Lebanon, and in the course of the last six years we have sent delegations all over the world.
How are you promoting greater cooperation between the public and private sectors, with a view to a more stable socioeconomic development?
We are active in both the public and private sectors. With regard to the public sector, we have successfully lobbied for a number of new laws, and over the last two years we have presented five laws. I would like to stress that, as a lobby group, we are able to pass several types of economic laws. Whilst general public-private partnership laws (PPPs) are difficult to pass, highly technical economic laws are much easier to gather support for, and, as a matter of fact, many members of parliament (MPs) frequently ask for our input. In Lebanon, business-lobbying groups can present laws on condition they are signed by 10 MPs. We, however, usually gather up to 50 signatures on the laws we present. Politicians understand that we have no political agenda; rather we are solely focused on business. We are particularly interested in bringing many people together from different backgrounds of expertise. While Lebanese business people have innumerable strengths, one of their weaknesses remains their persistence in working independently. Our purpose is to try and change this way of thinking, and encourage them to work together in groups. The points of strength that have fueled the success of Lebanese companies in the last 30 years have dramatically shifted, and a change of mentality is now necessary to survive. Business people need to heed the lessons of the past, while at the same time developing their mindset to evolve into a more powerful and reliable platform in the modern era we live in. Most of the successful Lebanese companies were developed and have grown in times of war, which means they are resilient and able to be flexible. These companies now simply need to adjust to the new environment.
After 29 months without a President, the election is expected to boost the confidence of investors, both local and foreign. What are your prospects on its economic impact?
What we witnessed at end-2016 is what we have been hoping and waiting for during two and a half years. It is completely unacceptable to have the constitution disregarded and the power of the government frozen the way it was. The 29-month presidential vacuum halted the economic cycle of the country, and we have seen a decrease in foreign investments by 50%. At the end of 2010, we roughly had USD4.85 billion in FDI, and we ended up with USD2.4 billion The long-awaited political agreement was a tremendous positive shot in the arm for the economy and the country as a whole. We have been paying a high price for regional tensions over the last five years. It is the first time since WWI that so many armed conflicts are simultaneously raging in the region, and let us not forget that our economy is based on the region's growth. This is an important test. As business people, we want to see tangible results. We require new laws that can fuel an expansion across the region. Our expectations are high. We are in a period of testing and analyzing, but are hopeful nonetheless.
What are the main attractions and challenges for investors?
Lebanon's sovereign risk has been quite stable over the last 30 years. In Lebanon, we have an acceptable judicial system that ensures the protection of investors' rights. Furthermore, we are working to increase the return on investment. Currently, the ROI in the country is only 5-7%, which is alarmingly low. Our major objective is to reduce sovereign risk and collaborate with different companies to boost the ROI. We want to reduce costs and improve infrastructure across the country. Lebanon is a hub for the region, hence multinationals with regional ambitions would be wise to operate out of Beirut. We are focused on attracting international companies –interested in relocating here– that could play a major role in the rebuilding of Syria. The reconstruction of Syria is poised to take place out of Lebanon. Naturally, we will not rebuild Syria all by ourselves, but will play a major role in facilitating its reconstruction. Any company that wants to efficiently operate in the Middle East would sooner or later strategically choose to headquarter in Lebanon. We are hoping that the country's natural assets and our focus on stability would appeal to investors, while also recognizing and endeavoring to fix our problematic public system and the high levels of corruption.
What are some of RDCL World's main goals and priorities for the year ahead?
Firstly, we are looking to close 2017 with substantial growth (2-2.5%). This is vital for the economy. Secondly, we want to create new micro companies. The most dynamic engine of a small economy like ours revolves around new entrepreneurs and SMEs. Our economic ecosystem must be changed, and here comes the necessity for new blood ready, willing, and able to tackle complex issues. We are living in a shifting economic environment marked by fierce competition, and in order to survive we have to arm ourselves with courage and focus on creativity and development. We aspire for investments not merely coming to Lebanon, but also going through Lebanon. Finally, we are yearning to stimulate M&As across the economy. Again, we should not be working individualistically, but rather cooperatively. This is key. The golden opportunities, however, lie in our Expatriates' Network, and we are keen to leverage the latter to successfully stimulate the Lebanese economy. You could say that this is RDCL World's major goal and objective.