Libya is renowned for its investment in ambitious major projects, most
notably the multibillion dollar Great Man-made River (GMR) ongoing for
some two decades. This project, designed to draw water from desert
aquifers for use by the major urban population centres, faced
obstacles in the past year when its South Korean contractor pulled
out, but is now back on course with the appointment of new partners.
The UK's Halcrow Group and Nippon Koei UK are currently working on
phase 3 of the project for new pipelines with tenders not due to be
issued until 2004. Possibly joining the GMR is a proposal to build a
North Africa railway network link, which Libyan officials were
reportedly expressing interests in December. The plan seems to be to
construct two tracks, one running east to west linking Libya with
Tunisia and Egypt, and another north to south passing through the
Sahara to link up with Chad and Niger. As yet the scheme's status is
unclear with no costing or time scale available.
Overcoming Past Obstacles
Disputes at root political level have obstructed Libya's international
economic and trade relations over recent decades, manifested most
clearly in the imposition of economic sanctions which have had a wide
and adverse impact. Today a process of reconciliation is well
established with international sanctions progressively removed. This
gradual removal of impediments has started to free up the Libyan scene
for potential investors and offered the country new opportunities to
integrate into the global market. The change is already apparent in
the increased activities with European interests exploiting their
current advantages over American counterparts whose government
currently still imposes sanctions. On the diplomatic level, Libya is
strengthening co-operation with the EU and aiming to participate in
the Euro-Mediterranean system.
Re-integrating Into the World Economy
The impact of Libya's relative isolation from the international market
has been profound and is seen most obviously in such key areas of the
modern economy such as information technology and telecommunications
(most evident in the underdevelopment of mobile phones, internet and
satellite television). The extensive upgrading requirements of the
country appear especially far-reaching considering dramatic advances
in technological innovations across all aspects of economic and social
life in recent years. Libyan industry has been cut off from these
developments and many industrial sectors have become decayed and
outmoded. Thus they are in dire need of upgrading and reconstruction.
With Tripoli planning to invest $35bn on infrastructure upgrading and
development over the next five years, there is a huge programme of
work opening up.
Changes to Investment Regulations
The country's opening up is evident in the formal adoption of new
regulations designed to facilitate easier access for foreign investors
in the Libyan market and the offering of a series of financial
incentives, including exemptions from tax and custom duty in certain
circumstances. The investor friendly intentions are reflected in the
law passed in 1997 known as the "Encouragement of Foreign Capital
Investment Law" or Law 5, which covers the non-oil sectors such as
agriculture, tourism and services. The law has led to the
establishment of a new authority designed to offer advice and
assistance to foreign investors. One concession is the granting of the
right to employ foreign nationals when a new enterprise is set up in
the country. Of great significance to establishing a climate of
business confidence, is the provision in the law stating that
enterprises cannot be taken over by the authorities or confiscated
without due process of law. Libya has identified a set of key priority
areas, including machinery, tools and spare parts, for attracting
foreign investment and are covered by the new regulations.
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