Seklaoui for “Al-Sharek”: Our goal is to be one of the best tobacco companies in the MENA region.

Commenting some opinions saying that taxes over tobacco should be increased in favor of public wage scale, the Director-General of the Board of Directors at the Regie, Eng. Nassif Seklaoui, pointed out that "random increases over marginal tax rate that is not coinciding with border control and increasing smuggling rate to lowest levels, will undoubtedly lead to catastrophic outcomes. “The experience has taught us since 1999, when customs duties were raised up to 13 percent, and sales dropped from 1,200,000 (tobacco) boxes to 600,000 boxes. Then, we fall into a huge financial deficit”, he added.
Yehia Jaber

Many Lebanese regions; such as South, North, and Bekaa, have long been associated with tobacco cultivation. However, most Lebanese have no clue about the exact age of this sector that is suffering from heavy pressures, how and when it had began, the area of the fields that it occupies, how many families are benefiting from it, the income it provides to farmers, as well as the national treasury, and the readiness of this sector for development, growth, and competition… The questions we have to ask to the Director General and Chairman of the Board of Directors of the Regie Eng. Nassif Seklaoui are numerous. The man came into this position since the nineties of last century and gained a great experience that increased his ambitions to expand this sector, not only to stand against foreign competition and smuggling, but also to cross national borders and provide the Lebanese government with unprecedented opportunities of investment, enhanced with an international, regional, and domestic confidence.

We must admit that whoever visits this establishment would be surprised by the fact that there exists a national Lebanese establishment at this level of high sophistication and management. More importantly he/she would be surprised by the organization, hygiene, and distinctive interior architecture. I met Mr. Seklaoui in his office, at the Regie’s Hadath Department, where the factory (empire) occupies an area of approximately 65,000 square meters. During the interview, I had the chance to ask about each and every detail, starting day one up until today, and his future aspirations.
I initiated by asking him about the age of this sector, and the circumstances of establishment.
The Regie’s history

"In 1935, under the French Mandate, the originator of the project, tobacco sector was established in Lebanon and Syria," said Mr. Seklaoui. "There was a joint administration where the main purpose was to provide political and economic stability in countryside and prevent movements against the mandate…

In 1952, the Lebanese administration split off from the Syrian. The Lebanese Regie became the company that manages the sector for the benefit of the state under a book of terms specifying the authorities and duties. The mission of the company was extended three times by virtue of the so-called continuity of public facilities…

In 1992, the Lebanese government replaced the private company by appointed persons within the so-called "Tripartite Commission". In 1993, I was appointed as Director General. In 2000, I was appointed Director General and Chairman of the Board of Directors… in accordance with the same book of terms.”
Area and distribution of the sector

* What is the area of the sector and how is it distributed?

- Our establishments are distributed between Tripoli, Kfarhaloun, Batroun, Bikfaya, Hadath, Saadiyat, Ghazia and Kafr Riman. The total area of the establishments is more than 225,000 square meters. Alone, Al-Hadath establishment is around 65,000 square meters.

The total area in which tobacco is grown is about 85,000 square meters and is spread in North, over 106 villages and in South over 171 villages.
25,000 families

* How many families currently benefit from this sector?

-There are about 25,000 families benefiting from the tobacco sector, who are distributed as follows; 5,000 families in the North, about 5,400 families in Bekaa and about 15,000 families in the South, which is the equivalent to about 150,000 individuals if we consider 5 or 6 person per family.

LBP 92 billion

*How much does the sector provide for farmers and workers in this field?

- The value of the purchase of crops is about LBP 92 billion. It is paid to farmers in the North, South, and Bekaa following a very simple, transparent, and smooth mechanism. The duration between receiving crops from farmers and paying dues does not exceed few days.
Nature and distribution of income and profits

*What are the national treasury’s share and incoming amounts, and net profits?

- In 2016 total revenues of the sector amounted to $ 442 million. The treasury’s direct share (customs fees and TVA) was $ 230 million, whereas the Regie’s share was $ 213 million, of which $ 41 million were dedicated to support the crop, $ 31 million to operational cost, $ 21 million to public expenditure and $ 13 million in form of savings and amortization. The net profit of the establishment was $ 107 million, of which $ 95 million were transferred to the treasury. Thus, the treasury’s total revenue was $ 325 million.
Farmers saved the Land

*It says that tobacco farmers are the ones who saved Lebanese border lands… what do you think?

- Let's go back in history, to 1993 precisely. Back then, Prime Minister Hariri invited us to a meeting in Koreitem where the following topic was raised: "How do we support people in the territories of the so-called "border strip"?

I made a proposal to Prime Minister Hariri in order to support tobacco cultivation at encouraging prices in the areas at the borderline without setting a limit to purchased quantities. In this way we could encourage farmers to stay in their land and encourage them to grow as much tobacco as possible. My proposal met positive reaction, where Prime Minister Hariri and President Bari discussed the issue and the Regie’s proposal was adopted. We achieved important results at national level; between 1993 and 1996, some 5,000 families from the villages of the border strip and its surrounding areas resumed their agricultural activities. Unfortunately, these households worked in Israeli factories since no job opportunities were available in Lebanon…

Undoubtedly, the process had an essential role in preventing economic and cultural normalization of relations with Israel, whose response was to constrain our delegate for several days while receiving crops. Also, they hold back money transfer to the farmers across the borderline ... Not to mention Israeli daily hostile shelling in order to displace people from border villages. However, our plan was able to provide them with all elements of steadfastness in order to stay in their land, regardless their sects.
Sectarian distribution of employees

*It is widely spread that the Regie has a vast number of personnel, around 5000, and that the majority of them follows a certain party. What is your response?

- Unfortunately, some people, in the light of the very special relationship between us and President Nabih Berri, are trying to spread that this establishment is nothing but a "farm" and so on… and that it belongs to Shiites. I want to clarify one thing; when I came into office, the Regie had 2,700 employees. Today, the number is less than a thousand. Concerning the proportion of sectarian distribution; 43 percent are Christians and 57 percent are Muslims. Hence, I shall ask, how could this establishment be following this party or that or this sect or that, as some promote for some unfair reasons that by no mean could be acceptable!
Increasing production and fighting smuggling

*Do you have a plan to increase production?

Yes, we, certainly, do have a plan to increase production. However, for years, we have been struggling against smuggling. We vainly appealed to law enforcement, until we decided to deal with smuggling through competition and supporting national industry at low prices, giving retailers and wholesalers the opportunity to choose the best for their trade. We took the challenge, enabled our production capabilities, and within 3 years we installed four production lines. Yet we still cannot meet the market’s needs, and we are setting for new production lines. Still, we have adopted a series of punitive measures for trading with smuggled tobacco products. As well, we have amended importing policies, so that whenever we seize smuggled goods the responsible company would be fined. During the last couple of years, the amounts of settled fines reached 8 million dollars.
Obstacles to cigar production

*Do you have any plan to produce cigar?

- In 1999, I was visiting Cuba and a contact was made between President Nabih Berri and Cuban President Fidel Castro, agreeing upon producing Cigarillo, not Cigar, in Lebanon. There is a difference between both; Cigarillo can be produced in Lebanon, while cigar is mainly planted in certain places in Latin America (Honduras, Nicaragua) and it is manually processed. We, in Lebanon, do not have the required craftsmanship, and while it is not cultivated in our fields, it does not have a feasibility study.
Investment project in Jordan

*Lately, you have visited Jordan. We came to know that the purpose of the visit is a joint Lebanese-Jordanian project regarding tobacco production. Is it true?

-Honestly, we do have great ambitions, which are not limited to local market; we aim to reach the whole region. Hence was the visit to Jordan, where we have studied the readiness of Jordanian consumer to accept Lebanese cigarettes. Feedbacks were great; however we faced the obstacle of high custom charges that may reach up to 150%. Unworthily, Ceedars brand will be sold at a very high price, without getting the required popularity.

We went to Jordan for a very simple reason; tobacco sector is not monopoled, it is run by private companies, including Philip Morris, where it has a huge factory. The idea is to manufacture our national cigarettes at Philip Morris plant through our experts, thus we could overcome high customs duties ... When we say Jordan, we mean that Iraqi market would be disposed.
Iranian facilitations

*Few weeks ago an Iranian delegation visited the Regie, what was the purpose?

-We have discussed with the Iranian delegation the same issue of manufacturing Lebanese cigarettes in Iran; a market of 300 million local consumers, along with surrounding neighboring countries. They expressed their readiness to offer facilitations so we can build an integrated plant. As for us, we have all the required capabilities, courage, competence, finance in order to seek such project in the interest of Lebanese government.

Financial audit

*What about financial audit?

- I must point out that we are the first facility in Lebanon to introduce financial auditing avoiding claims of being a "gold mine" or a "diamond mine". Yes, we are, but revenues go back to the government. We have appointed some of the best financial audit companies that annually issue a clear and unequivocal report.
Biggest plants in the Middle East

*Have you set a plan to develop the sector in general and sorting plant in particular?

- Sorting plant is different from processing factory. Sorting process of what we receive from farmers begins with fermentation, then treatment, classification, removal of impurities, and humidification. It is an integrated process taking place in the so-called sorting plant. Later comes the process of classification, packaging, and exporting. I do not exaggerate by saying that today we have the most two important plants in the Middle East with a high production capacity and an integrated production line, subject to a constant professional and accurate quality control.

Hierarchy and sustainable development

*What management hierarchy does the Regie adopt?

- Your question is critical. When Mohammad Safadi was a Minister of Finance, I presented him a hierarchy plan that made him surprised. Four years ago, the Regie’s hierarchy had around 1700 employees; however I presented a project of 680 employees. The minister told me: “public establishments are seeking to expand and you come here to reduce yours!” I answered him: “those who want to benefit a political party will seek to expand not to reduce. However, the experience had taught me that what matters is a well planned hierarchy and not the number of employees.”

The Regie had more than 20 managers, while today there are no more than five. Heads of departments were 44, reduced to no more than 14. Not to mention other posts, where we sought private sector in some aspects; such as hospitalization, cleaning, transport, and printing.

Briefly, our mission is to be one of the best tobacco companies in the MENA region, to seek high quality clean, bug and pesticide free agriculture, and to use pioneer technical methods. The Regie is currently the only public facility working on the sustainable development of its local community at all levels. Actually, we have introduced into our structure «the Department of Sustainable Development and Quality Office» following international norms, where successful companies get engaged in such activity. We have introduced a working team, specialized in this domain, which has suggested thousands of projects that we have offered to different parties according to their needs. We have achieved 89 projects with municipalities starting from Aboudieh in the North till Naqoura in the South and Bekaa.

*What does the sustainable development include?

- It includes providing water to dozens of towns and transportation for students, sons of tobacco farmers, to their schools, as well as to provide scholarships. Moreover, we fight against illegal trade in order to protect consumers, where counterfeiting international brands has become a "global trend", with more than ten thousand factories counterfeiting authentic tobacco brands.

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