The general argument is that Libya is gradually liberalizing since sanctions, not only in oil sectors, but various other areas in infrastructure. They'er on the "right track" for attracting FDI. Hopefully the info below will offer you better insight. This is only the basics so hope it helps.
*by the way, sorry if there's mispellings and what not--i've been staring at this computer for far to long*
Quick look at Libyan Economy:
Reasons for increased interest in Libya since lifting of sanction in 2004:
- Libya is rich in natural and mineral resources that can be considered the basis for many potential industrial, agricultural and tourism projects
- Libya is a major oil produces and can be considered the hot spot for new explorations
- profiles and ready access to European markets make Libya one of the industry's highest profile targets
- After its concessions to the US and the UN (by andandoning development of WMDs and returning suspects for Pan Am bombing), Libya has re-entered the world economic scence; viewed as a stable/secure partner.
- Libya has a pool of skilled workers eager to emerge in the work force.
- New political and economic reforms (often referred to as the "Green Perestroika) in which Gaddafi has attempted to liberalize more markets and change government/business relations; these changes have been designed by the Libyan government in its developments goals and to sustain the new course.
Libya is still not a simple market due to intricate laws and regulations, but there has been some improvement. These laws illustrate Libya's gradual change as they worked towards getting the sanctions removed:
Turning Points:
Investment Law No. 5
- amended in June 2003
- amendments allow co-investments between Libyan and foreign partners
- subtracted the projects of foreing investments to the main legal obligations regulating the activities of Libyan societies, in particular, to the registation procedures in the trade or industrial registers
- Application field of the laws remains restricted as it confirms that investments in Libya (even by Libyan nationals and subjects of Arab and non-Arab states) are still permissible in 5 main sectors, while all other domains should be determined by the government.
- established Authority for the Encouragement of Foreign Investment
created with the purpose of facilitating foreign investment procedures and overseeing the application process - components of Law presented below:
- most important body in charge of foreign investment
- Main objectives of board
- provide advice, information and support for investors
- identify and promote investments opportunities throught the elaboration and presentationof investment plans and economic studies for development of the country
- receive and consider applications for foreign capital investments
- issues licences as well as obtaining approvals required for investment projects
- develop investment programs and promotional activities to attract investors.
- recommend or renew exemptions, facilities or benefits for the investment projects
- look into complaints and protests of investors without affecting the investor's right to petition and legal action
- provides all services needed by foreign investors --being done by means of administrative offices within the premises of the LFIB
- considered an important sign in the context of "the simplification of procedures"
- Services/Offices:
- customs office
- immigration and passport office
- tax office
- labor force office
- Procedures and approvals that fall within the one-stop shop services:
- license and permits procedures
- export and import procedures
- import on foreign man power procedures
- amendments and changes introduces to the projects procedures
- ownership and renting or real estate procedures
- transfer of dividends procedures
- complaint procedures
- License and permits' procedures (further details to be posted)
- application for investment must be submitted to appropriate dept. in LFIB.
- GPC must approve
- LFIB will forwrd application to Management Committee of LFIB for further discussion and reccomendations.
- Once Management Committe approves, the Secretary of the GPC for economic trade will issues his decision for establishing the project under investment law 9
- investor shall open account under project's name in one of Libyan commercial banks of in the Libyan Arab Foreign Bank and start transferring project capital
- Investor Obligations
- maintain accounting books and records of the project
- prepare annual budget and cost-benefit accounts approves by legal accountant in Libya
- enable Board to review accounting books and other related documents
- Abiding by investment regulations and laws.
- Not to practice any other activities not mentioned in the license.
- Abide by all Libyan regulations and laws.
- Incentives and guarantees for investors--goal--better business environment
- exemptions for any projects from income taxes on its activities for a epriod of 5 years as of the date of commencement of the production or work. --period could be increased based on discretion of Secretary or GPC
- exemption from customs and other import taxes of equipments and machineries for the realization of the project and the necessary inputs to operation for the first 5 years of activity
- exemption from taxes and customs taxes to the export
- Article 23: prevents any possibility of nationalization of the investment
Free Trade Act of 1999
- established off-shore free trade zones (FTZ)
- 2006--two FTZ established (mostly for building toursism infrastructure)
- Zwara Aba Kemmash FTZ
- Musrata FTZ
- Field of Activities in Free Trade Zones:
- storage of transit and domestic goods, as well as goods produces within the Free Zones which are intended for export zones and goods imported for re-export
- unpacking, cleaning, re-packing and similar operations which change the state of products in the Free Zone and guarantee their manufacture to meet the demand of the market
- performing industrial processes
- rendering financial, bamking, insurance and other related services needed by investors within the Free Zone
- Privileges and Exemptions of Free Zones
- Free repatriation of invested capital and gained profits.
- Movement of capital and products between the Free Zone and foreign countries is not subject to any monetary restrictions or monitoring regulations
- Profits gained from activities also enjoy the same exemptions if reinvested.
- Investors can transfer losses suffered during exemptions period to the following years.
- Legal guarantees against the nationalisation of projects.
- Ownership of projects can either in full or in part can be transferred to another investor.
- Project periods according to clients demand.
- Easy establishment of projects in the Free Zones.
- Machines, equipment and instrumentation needed for projects established in the Free Zone are exempted from customs duties and other taxes of similar effect.
- Equipment and spare parts are exempted from all customs duties, import taxes and all taxes of similar effect.
- Goods exported or imported from or to the Free Zone are not subject to time limitation of warehousing.
- Movement of goods between the Free Zone and outside of the Libya are not subject to customs duties.
- Projects established in the Free Zone are not subject to procedures of trade register and register of importers and exporters.
- Investors are entitled to employ and import foreign labour with specialized technical qualifications needed for the establishment or operation of projects.
- Services Available to Investors
- Land plots of different sizes according to investor’s needs,
- Modern offices and covered warehouses at reasonable costs,
- Energy (oil, gas, electricity) at low price,
- Drinking water and sewage utilities and other services at suitable costs,
- Modern and versatile financial and banking services according to investors needs,
- Modern telecommunication services,
- Marine transport services to different international ports,
- Road transport services to African countries across the desert and to neighbouring Arab countries,
- Health insurance services to investors and employees working in projects established in the Free Zone,
- Complete insurance services,
- Legal and other consulting services.
Current Conditions:
- Gaddafi allowing for more privatization in public sectors
- All companies are still Libyan owned, but foreign investors are allowed to take majority stakes in companies
- General consensus is that due to Gaddafi's gradual "liberalization" and the meticulous laws and regulations, Libya is on the right track towards establishing itself on the world level with regards to FDI.
- Libya has a long way to go as the oil and gas sectors are still largely state directed and dominate the economy (90% of foreign exchange earnings and 75% of government revenue) http://www.dcci.gov.ae/content/Bulletin/Issue14/MarketMonEn_ISSUE14.pdf
- Many suggest that Libya needs to further liberalize its bureaucracy and further develop its banking sectors for security purposes
- Overall though, in reference to the chart below, FDI has substantially increased since the lifting of sanctions: (these are the most recent stats)
Things to DO...
- so at this point im going to look further into the Phoenicia Group, which is the leading U.S. Libyan diversified business and consultancy group. They're a major presence in Libya since 2004 and i'm really interested to see how interactive they are in Libyan business--main focus is on NON-OIL sector--so schools, hospitals, hotels...
- UAE in Libya: many UAE countries, particularly Dubai, are competing to gain stakes in the privatization of basic infrastructure. UAE is a major hand in developing the banking industry so i want to see how those economic relations play out and how competition is with Phoenicia.
Take Care,
Sahar
No comments:
Post a Comment