FDI in figures

Libya is a country which is changing quite quickly.

Libyan development reposes on a number of favorable factors such as its abundant oil and gas resources, its young and relatively small population (5.8 million) and a very useful geographical location between Europe, Africa and the Arab countries of the Gulf.

In its report on Libya in 2007, the IMF underlined the sound basis of the Libyan economy, which favors its economic and financial stability.

This positive trend should continue in the next few years under the effects of ambitious and well chosen policies. Indeed, since 2003, the Libyan government has tried to make the country a fully-fledged market economy. The country wants to join the WTO and its macroeconomic policy is supported by the IMF.

To achieve this, emphasis has been put on foreign investment and the privatization of the economy through a scheme whose objective is to liberalize the economy. These positive economic perspectives are also sustained by a relatively dynamic demography. Between 2007 and 2015, the population should increase by 1 million (to go over the 7 million mark).

However, the difficulties that remain are the weight and share of the administration in the economy, and the human factor: education and training which leave something to be desired.

Why you should choose to invest in Libya

Strong points

Libya's geographical situation is one of its advantages. It is a strategic position in the center of the triangle formed by Europe, Africa and the Arab countries of the Middle East. In addition, Libya's natural wealth is considerable.

Thanks to the high prices of the barrel of oil, economic activity is sustained in 2008, to which should be added the strength of private consumption and public investment. Inflows of money linked to petroleum generate large budgetary and foreign trade surpluses.

Opening up and liberalization policies favor private investment and should boost the Libyan economy. Foreign debt is low. Debts have mostly been settled. Finally, Libya has a very young population with a satisfactory level of schooling. And the Libyan potential for tourism is as yet under-exploited.

Weak points

In Libya the economy is mostly State-controlled and remains strongly dependent on petroleum resources. The economy is not very diversified as industry is mainly based on oil refining, petro-chemicals and the iron and steel industry.

Foreign investment is necessary to diversify the economy, which is too dependent on oil and vulnerable to the uncertainties of the market. The country also needs investment to increase the production capacity of the oil sector.

 

The Administration is not very efficient and stops a dynamic private sector increasing in importance. Moreover, foreign investment is subject to the obligation of having an agent in Libya, and to this must be added the difficulty of finding a good partner and the absence of reliable statistics for market research.

The unemployment rate is high (evaluated at 25%) especially among young people. Finally, even if Libya's rehabilitation in the international community leads to renewed confidence among  investors, structural reforms remain essential.

Government measures to motivate or restrict FDI

Law n°5 of 1997, amended by law n°7 of June 2003 and the decrees of application issued by the Libyan government refer to foreign investment in Libya. These measures concern in particular the sectors of training local technicians, the transfer of technology, participation in the development of local production, the realization of regional development and the diversification of sources of revenue.

Tourism, industry, health, services or agriculture are sectors defined by the General People's Committee as being open to foreign investment. Advantages such as tax exemptions are reserved for projects carried out within the framework of this law. Be careful, however, because the percentage held by Libyans or Libyan companies within the framework of this law cannot be less than 51%.

The fields of activity authorized for foreign subsidiaries are specified in decree n°13 of 9 January 2005: building and public works, electricity (except production), hydrocarbons (except extraction; the petroleum sector is governed by th petroleum law n°25 of 1955, amended several times, especially in 1983), industry, topography, environment, IT, engineering and technical studies, health. Moreover, the financial sector, telecommunications and wholesale and retail selling are reserved domains. Foreigners have also been able to buy property since October 2003.

Procedures relative to foreign investment

Freedom of establishment

Freedom of establishment in Libya is recent: Libya's political and economic system, socialist and centralized as it is, has prevented it for decades from opening up to foreign investment (with the exception of petroleum partnerships). To this must be added the international embargo which aggravated Libya's isolation considerably.

 

Since 2003, a new policy has appeared in Libya and the lifting of international sanctions coupled with the new policy of encouraging foreign investment has improved the country's attractiveness. In addition, imports are no longer a State monopoly. Law n°5 creates a bureau to encourage foreign investment which authorizes each investment project by granting a five-year operating license, which can be extended for 3 years.

This law allows partnerships between Libyans and foreigners (with no limit on foreign holdings, except those concluded with State companies and the banking sector). Finally, foreign investment projects are freed from the main legal obligations that govern the activity of Libyan companies.

Acquisition of holdings

 In the authorised sectors (industry, health, tourism, services and agriculture), a majority holding in the capital of a local company is possible.

Obligation to declare

 Before being able to set up in Libya, certain documents must be presented to the Libyan Foreign Investment Board , which authorizes investment projects for a period of 5 years (within the framework of an operating licence). This authorization can be extended for 3 years.
The documents to be submitted are:
- 1 application form that includes the name of the applicant, the nationality, the legal status and headquarters, the description of the project, the investment sector, the schedule of payments, the nature and amount of capital,
- 1 feasibility study,
- 1 certificate of nationality,
- the extract of the company register in the country of origin, 1 copy of the balance sheet and a certificate of non-bankruptcy.

Competent organization for the declaration

The Libyan Foreign Investment Board

Requests for specific authorizations

Apart from the domain of petroleum and associated products which comes under Law n°25 of 1955, and the tourism sector which comes under Law n°7 of 6 March 2004 and Decree n°139 of 26 August 2004, the sectors open to foreign investment include health, industry, services, tourism, agriculture or any other sector defined by a decision of the General People's Committee. Foreign investment is supported by Law n°5 amended by Law n°7 of 2003 and the decrees of application covering the fields of transfer of technology, training of Libyan technicians, diversifiying of sources of revenue, participation in the development of local production in such a way as to allow it access to world markets, and realization of regional development.

Finding assistance for further information

Investment aid agency

The Libyan Foreign Investment Board
Libyan Investment Board
Bank of Commerce and Development

Other useful resources

Invest in Med program