Engineering Partner in Jordan

Interview with Eng. Bisher Jardaneh, CEO of Arabtech Jardaneh and Chairman of InvestBank

Jordan has been affected by the economic crisis and many predict that the growth this year will reach 4%. What is your frank assessment of Jordan’s economy? Many argue that it is dependant, it has a problem of over employment in the public sector, and the economy is dependant on foreign sources of energy and gas. What is your overall assessment of the business climate in Jordan and what is the outlook for the future?

I tend to agree with what you have said; there is no question that the points you have alluded to are definitely a big challenge for the Jordanian economy. My opinion is that Jordan, however, does have many strong foot holds such as educated people.  We are seeing this more and more in the market place and especially over the last 10 years for example.

I like to look at things in a long term perspective rather than quick fixes. Due to the presence of a highly educated workforce, there has been a strong come back into the services sector, which I believe will probably be the savior of the Jordanian economy in the long run and will help in transforming quite a lot of the people who depend on the public sector into the private sector. That is where I see the future lying.

So is there a migration from public to private sector now taking place?

Not yet. I see a stronger private sector; I see a larger growth in the services side of the economy. Today, 67% of Jordan’s economy is service-oriented and I can see those service industries becoming more attuned with international best practices and are able to actually live up to the international promise in terms of service delivery.

I feel that this is something we will see more of in the long run. Now on the other side, the government has been up for change and I hope that this will be a sustainable mindset – to realize that they can no longer sustain this as a welfare society and that they have to enable the private sector to become more independent and in a sense to start putting the mechanisms in place that will allow that shift. I think that we are far from that shift; I don’t think we will see that it take place in months, it will take years. The positive thing is that there has been a mindset change within the government and the realization at the larger level within the country, at all stake holders’ level, that there needs to be that shift and everybody is willing to take the necessary steps.

So with the attempt of the government to control financial deficits, which mostly come from ongoing expenses or our running expenses rather than capital investments, this will in a sense set the mode for everybody to realize that their only choice forward is to enable the private sector to start creating the opportunities and the jobs in order for that shift to take place. Hopefully, all of that collectively will be the savior to the most crippling causes of problems that exist in Jordan.

Which is public spending?

Public spending, and the dependency on that and the deficits. Other than that, I think that Jordan, to a great degree, is doing quite a lot of the right things. To be fair to the current government, I think they were able to do that mindset change in a sense and they are probably going in the right direction. We still have to see if they are good on that promise.

What positive signs do you see as you do your day to day business?

Unfortunately, whenever we have had a positive sign, it has always been followed by something that has come up that gave us a negative dip. However, those dips in the rollercoaster are getting to be less steep than they were before. So, I still do not see full stability nor a trend towards the upside because whatever upside we have seen towards the end of last year has been hit by a couple of pieces of bad news whether it is about the Greek market, or Spain or Portugal or even the U.S lately. But I feel that at least the surprises are becoming less steep and the downside of the roller coaster is a bit less steep. So let’s hope that this will just become the base under which recovery could take place.

The total value property deals in Jordan rose 18% in the first 6 months of 2010 compared to the same period last year as lower prices push up demand. What do you expect next and what is the outlook for property prices in Jordan?

Just coming back to one of the things the government has done in the last 6 months or so: it has taken a few steps in an attempt to stimulate the economy. Now of course those were very small steps because the means in Jordan are limited, but they have helped a bit in trying to push some of those things forward.

These are all quick fixes that will not necessarily be sustainable and basically what happened globally and in Jordan should have taught all of us that we should go back and stick to basics. Now I believe that the basic fundamentals are still not in place because of what we have suffered from the speculations that took place in the real estate market. The real estate activity that took place over the last few years was all speculation-driven and it was based on a bubble. Unless there is a reality that takes place eventually where there is a shift in economic activity and where we have productive sectors such as services, industry and so on, there will continue to be a bit more supply than there is demand. And although things will stabilize, and I don’t envision that there will be trends of down dips, but nevertheless, I do not anticipate that there will be a pick up in the market very soon.

I anticipate that we will have a relatively stable down-going trend for the next 12 months and then after that we will perhaps have a slow recovery going up, but I don’t see us going back to the 2008 numbers  any time soon.

So you don’t think there are many speculators on the market now and it’s driven by the fundamentals?

Of course.  Also, there is a tightening in the cash. Basically, investors are a bit on the skeptical side and I do see that sentiments could start to shift within 2010. I believe 2010 will be a year that is important for Jordan in terms of testing the government on its promise. If they live up to their promise, which I hope they will do, then this will be the start of shifts in the sentiments of the private sector and perhaps you could see a certain push that will take place at the end of this year and early next year on all fronts. Again, I don’t believe in compartments; at the end of the day it’s a full economy that needs to recover all together. There will always be winners and losers in any economy and there are certain sectors that will be able to recover better than others.

As the CEO of Arabtech Jardaneh, a leading international multidisciplinary consulting organization for engineering, architecture planning, environment, project management and economics, how would you define your main challenge and how do you compete with other regional international and local companies in services you provide?

One of the things that distinguishes Arabtech Jardaneh for example, is that about 70% of our revenue comes from out side of Jordan and only 30% comes from within Jordan. Now this is an example of how Jordanian private sector companies, when run to best international standards, can actually become drivers of economic growth in Jordan. What differentiates us is that we have a multi-sector approach, so we operate in buildings, water, and transportation, but equally so we have a multi-geographic approach and we operate in Jordan, Palestine, the Gulf, Libya and other places. 

That diversity, both in product line and geography, allows us to actually fair out better in the downturn sides of the economy.  Another example is that we are a “Blue Ocean” company if I may say so; we try to look at areas where competition is less; we try to find the market differentiators in our business. We are very much client-focused and we are very much strategy-focused, and that has allowed us to weather out fairly well. I am very proud of how our company has weathered out during the economic downturn and in fact we are using it now as a platform to push into a new era as things start to recover.

Could you speak more about your strategy? How special is the “”Blue Ocean” strategy?

I think what probably makes us special in this part of the world is that we are strategy focused. We actually are proactive; we have a strategy and everyone understands this strategy and everyone sticks to this strategy. Our strategy is basically to focus on specific geographies where we try and go into these geographies and become almost the number one service provider. For example, in Jordan we are definitely among the top service providers. In Yemen, we are among the top service providers. For example, in health care in Abu Dhabi we are among the leading firms through one of our wholly owned subsidiary firms called “HDP Overseas”, which specializes in health. By being very focused in that market we are also a market leader.

We are a balanced scorecard company, which is also a concept in strategy, which makes our initiatives very clear and very focused on high quality service to clients, met by a platform of very sophisticated systems in place. We apply some of the latest technologies in ERP worldwide, we adopt best practices as much as we can, and we try to empower our people through team work and all of that.

So collectively we try to excel through following best international practices, trying to be strategy-focused to grab opportunities that exist in the region through zooming in on those. That has proven good over the years, where you create profits and the rest, and the bad years where you actually enjoy financial depth and stability that allows you to set the scene for the next year and then take it to a different level.

What is your long term vision for the company and how do you see yourself 5 years ahead?

Our motto has always been to double our revenue every 3 years and we have done that for the last 9 years and we hope to continue to do so. By doing so we will be one of the serious regional players when it comes to engineering, in terms of; waste water, transportation, buildings and health,  in the design, supervision and contract management sectors.

What could be the possible challenges or possible threats that would endanger this vision or this position? And how are you mitigating these risks?

I think some of the possible threats could be internal. Ego is a very big enemy so I hope that our organization will stay humble and work as a team and have the leadership in place so that we don’t get any internal threats. Luckily, so far I see that we are going in the right direction. Now externally, the beauty about you being able to manage things internally to a good practice makes the internal environment almost an enemy to all competition. If you’re smart and visionary in trying to read where less of the evils are or where other opportunities exist depending on whether you’re on an upturn or a down turn in general you will fair out to be ok. So I don’t want to seem too optimistic but I always believe that if you have a good strategy and you follow it and you are focused on it then at the worst you are at the level of the competition. If it is a smart strategy then you become a success story. So I am always optimistic.

Everyone talks about sustainable development, and as you are an engineering and design company how do you integrate this concept into the projects you are designing?

Of course sustainability is a very important thing. I am glad that humanity in general is reaching what I believe to be a mental shift in realizing that we can not continue the old practices. It is not as quick as we would like to see but at least there is that shift. Now us being an engineering firm that tries to work to best practices, we try to actually be promoters of those concepts within Jordan. I actually serve on the executive board of FIDIC, the International Federation of Consulting Engineers, which is a leading institution globally on the issue of sustainability. I consider myself within that context an ambassador of sustainability and I believe that Arabtech Jardaneh should also be and is playing that role. So we go into concepts of green buildings, lead, sustainability, and we try to promote that not only internally, but externally to our clients and within the society.

How do your clients and other business people approach these questions? Is it just another expense or do they grasp the issue very seriously? Can you describe also who your clients are?

In general, our clients to some degree are government institutions when it comes to mega projects. The majority of our clients however are large corporations, whether they are private corporations or government corporations in places like the Gulf and Abu Dhabi. Now in general it is a mixture; at times it is an environmental or a planning requirement that they need to abide by and at other times it is just a publicity fad or “flavor of the month” that they would just like to follow. As I said earlier, I believe that there is a mindset where people are realizing that is no longer a luxury and it is a responsibility. Equally so I think engineers are being creative in the way they are doing it where it’s becoming a must and it’s not really an added expense. We are creating solutions under which maybe you would spend a little more in capital expenditure but it would pay its dividends on the running cost and in a way it’s becoming a way of running business which is important for humanity and it is just no longer a luxury.

How would you describe your communication and marketing strategies, especially since 70% of your sales is outside Jordan?

We try to build our image. One of the things is that many of our clients are repeated clients and quite a lot of our business is repeated business. We actually enjoy quite a lot of renegotiated business that is not even done through tendering, because we have committed to services excellence, and that is something I am very proud of. So quite a lot of our marketing is really internal, we don’t go to the outside world marketing per se because of the nature of the services that we produce. However, trying to double your revenue every 3 years is a challenging objective. So in the last few years we have been looking at more corporate re-branding, website restructuring, image and branding, starting public relations and images and participating in industry fairs and things of that sort. We believe that in the next few years this needs to have more of our attention as an initiative to sustain our ability to grow beyond our classical markets and our classical clients.

Do you see the internet as an important player now within marketing strategies?

Of course; quite a lot. We have just started a division 6 months earlier which is purely a web based internet research division. It is headed by 2 people now and we scan the web on a regular basis in a more structured way. Through that we are able to either identify opportunities or market ourselves to the outside world. We believe that the web is a very powerful way on forward.

As chairman of Invest Bank you embarked on a 3 year strategy: a new core banking system, and a full rebranding exercise. What is your personal overview of your strategy and how do you characterize it?

Again, Invest Bank is one of the smaller banks in Jordan. It’s a reputable, credible bank but it’s one that has one of the lesser capitals of the Jordanian banks in Jordan. We have been a corporate bank for the longest time and we have been a trusted corporate partner for quite a lot of corporations over the years. Now trying to go forward, we are trying to build on that trust and credibility that we have created with the corporate structure by also going into a focused strategy that is based on excellence in service. Through that we are hopeful to create products that allow us to go one notch down in the corporation ladder to have what we call a “Mid-market strategy.” So we are going one notch down from corporations into more MEs instead of SMEs; they are more the medium sized corporations where we try and meet their financial services on a partner ship level and in areas where it’s the service that counts more than anything else. So, for example, we have a very strong investment arm where we do quite a lot of investment services. We have just started a supply chain finance company which is a creative new concept that is definitely new to Jordan but I believe is also in the Middle East where we do supply chain finance. This is finding quite a lot of reception in the market because of its creativity. We are about to indulge in a leasing company. So quite a lot of our strategy is based on going down to the mid-market, giving those service-focused solutions that address their needs in a premier manner and to take that to a different level of partnership, even when it comes to retail banking. Our interest there is actually to serve the needs of the owners of the business and their employees, but rather than going into the open market, there will be focused services in that direction. We’ve indulged on multiple initiatives in terms of imagery branding and moving into new premises. We’ve just indulged in a huge IT refurbishment and a new IT system that we will use as a platform to enable us to go into all of these services.

Looking forward, what is your desire or vision for the bank? Where would you like to see it 5 years down the road?

I would like it to become the bank of choice for the business man. It’s a place where the business man will find a collective level of service that is of the highest level, and where this will turn into a partnership with the businesses.

So you see it as a boutique bank?

Of course, boutique is probably the word where we will actually give a level of service for people that appreciate it and it becomes a one on one situation rather than becoming a mass production.

Will this cater only to the Jordanian market or internationally?

In general, we will just cater as a first step to the Jordanian market.

What is your vision for Arabtech Jardaneh?

In 5 years time, to be the engineer of choice – and the partner of choice even – for our clients within the region.

As far as growth goes, how would you like to see it grow? Perhaps more internationally?

Yes, by 5 years we hope to have penetrated our regional market and started looking into our international dimension. And maybe in another 5 years we will be looking into the global dimension. But it’s easier to focus and build within a certain market and then take it to the next level and so on.

What is your final message about Jordan to our international audience?

I’m a firm believer that Jordan has great potential ahead of it. Like any other country we have and will continue to have our challenges, but I believe that there is a serious mindset shift that will allow us to do the breakthrough that is necessary to become a serious service provider in the region and internationally.