QATAR - Economy
Chairman & CEO, Salam International
Issa A.S. Abu Issa is the Chairman and CEO of Salam International. He has a degree in Business Administration from the International University in San Diego. He holds membership in the World Economic Forum and is also the Secretary General of the Qatari Businessmen Association. On top of that, he is a Member of the Board of Trustees of Al Shaqab Equestrian Academy Qatar, Vice-Chairman of Serene, Lebanon, and Co-Chairman of the Qatari-Turkish Business Council.
Most family companies start the same way. Throughout the whole area, there was very little wealth. We consistently grew with the economy and we have managed to continue my father’s business. My father passed away in 1982 and we took over the business. We are five brothers and each of us was responsible for a certain area. From there, we developed and grew. Today, the bigger the economies are, the bigger the companies are. We stayed the course and we have developed ourselves quite well. The most important thing is that we have a deeply rooted history in the economy and that helped us a lot. In 1952, my father started the business and went international in 1966 in Abu Dhabi and in Dubai in the late 1960s, then Muscat in the 1980s. We grew from there into different areas.
Salam International has diversified its business interests. We have divided our business into five sectors; real estate, technology, retail, construction, and oil and gas. Under each of those sectors sits a number of companies that are managed by a managing director specialized in his line of business. They manage the business, project flows, and they have budgets, which are reported to the head office. Being diversified means less volatility and more stability. Our company has five legs, and it can move around. This is like the 1940s and 1950s used to be in Europe. Most of the new companies are specialized. Because we are in a developing economy, it is working so far.
In real estate, we are conservative players. We developed a project called the Gate Mall in Doha, and we have a few other properties; however, right now we are not investing more in real estate when it comes to the company. It is quite a conservative policy that we are taking in real estate. We are investing more in whatever is operational.
Retail is important, followed by technology; it varies. Construction used to be the strongest pillar, but right now the economy has not yet picked up in Doha. The main 10-12 construction companies usually perform much better than they are currently. The market is a little tough at the moment, and the competition is strong. We are surviving, but it should pick up by the end of 2014. I expect to see a boom in the construction industry by that point.
We were the first company in Qatar to go public, though have been through really tough times. The market in Qatar, when we started 10 years ago, was still undergoing a learning curve. The rules and regulations were not clear. We went through a rough ride with the legislative bodies. We started the fund in 1996. Then, in 2002 and 2005 we went through our first, second, and third mergers. We took it in steps; however, in the last 10 years, when the company was a fully public shareholding company, we had some difficulties with the legislative body. Right now, it is settling down; therefore, I think our experience was not great, but it was an important step, not only for us, but also for Qatar. Today, it is showing results and has improved. The market is maturing gradually, but it has a long way to go.
Yes, if they are willing to take on the challenges of becoming a public shareholding company and go through the learning curve. Switching the mindset from a private company to a public company is not simple. Even my mindset now is that I own shares, not the company. This is the mindset that the families have to realize and accept. Everybody should worry about their shareholding, but the performance of the company is the responsibility of the management. You have to regulate your books and processes. It is quite tedious work. I will leave it up to other companies to judge; it depends on what their objectives are.
We are a regional company, though not exactly international. We operate in the GCC and Levant area, from Lebanon to Jordan and across the countries of the GCC. That is our footprint right now, operationally. We have investments in Saudi Arabia and different places, and we have operations in five markets: Oman, UAE, Qatar, Lebanon, Jordan, and Saudi Arabia. We manage the company in those markets. In the future, we are looking to expand. It is a generic style of growth, because we completed all our investments in the last five years. We upgraded our systems, and now we are in Phase II of upgrading the management and financial systems. We are leaving it to the managing directors to take the company to new heights.
The problem is that it is over publicized in the media. Qatar is a small economy. Unfortunately, there is an oversell of Qatar. While many countries were suffering during the recession, Qatar was sticking its neck out and talking about megaprojects. Actually, in reality, they are humble projects. It is a boom for the people of Qatar, but not for the world. Many companies entered the Qatari market and were disappointed. They came for a project, did the project, but then there was no continuity of work. While the country has a strong economy in the oil and gas industry—and it is a very strong player in the world in that segment—that is about it. In five to seven years, many major infrastructure projects will finish, and the country will then experience more normalized growth. It is a window of opportunity now when the boom will continue. We don’t see Qatar becoming a destination like Dubai; it is a small country, and I think it will stay small. There will be some activities and development in the oil and gas fields, and a little bit in the SME sector, but that’s it. Our tourism is limited to a special niche in the market. I don’t think there is an intention from the government to open it up to become a destination like Dubai. The parameters and outlook are different, and there is no need for the country to become a tourism destination in a big way.
The most important thing is that there is great focus on two things: education and medical care. Those are the two major initiatives that will provide the country with a healthier economy. Education and health are the basis for development. Right now, we have an excellent number of universities, and these are attracting many young people. Everyone wants their children to have a better education, and that is now available in Qatar. The quality of the children graduating now from universities is excellent. In five to 10 years, we will see a new generation that is very well educated and ready to take over responsibilities in a good way. That is really the road to 2030. Those are the two pillars that will take the country forward and achieve the vision.
© The Business Year – August 2014