Dubai private sector trade with Libya, Iraq soars

Dubai Chamber director general Hamad Buamim.

After a topsy-turvy year in which trade was largely dictated by geopolitics, Dubai’s overall exports and re-exports from the private sector rose by 9 percent in 2012, according to data for the Dubai Chamber. 

The biggest losers were Iran and Syria, both of which saw their trade with the emirate dip by more than 50 percent. 

More than making up the shortfall were Iraq, where exports and re-exports from Dubai rose by more 350 percent to value US$11.4bn; Libya, where the increase was 300 percent; and Turkey, where trade doubled.

The overall value of private-sector trade out of Dubai amounted to US$73bn, up 9 percent on last year, and 26 percent higher than the peak year of 2008.

Membership of the Dubai Chamber – which is mandatory for all private-sector firms based in the emirate – also rose by 9 percent to 140,000, with more than 12,700 new companies moving to the emirate last year.

Dubai accounts for 75 percent of the UAE’s private-sector trade, added Hamad Buamim, the Dubai Chamber’s director general. Around 70 percent of goods imported into the emirate are re-exported.

“ We've seen more of a focus on services, healthcare, trade and commerce – these are all still major sectors,” Buamim told reporters. “Real estate is coming back, and there are more lawyers too.”

“We are seeing a big spillover from the Saudi budgets [which reached a record US$223bn for 2013] and that’s going into tourism, business and real estate. The Saudis are coming, enjoying their time, spending more and doing a good job.”

While 2012 official GDP figures have not yet been released, Dubai announced at the end of December that it was raising its budgetary spending by almost 6 percent this year, to US$9.3bn. Revenues are projected to increase by nearly 8 percent to $8.9bn. 

By Ed Attwood

 Business Arabia 

IMF generally positive on Libya, with caveats

The International Monetary Fund has expressed generally positive views about the direction of the Libyan economy.

Though working from June figures, which made the Washington-based economists think that Libya would not return to its pre-revolution hydrocarbon output until next year, when in fact the country hit that 1.6 million barrels daily this September, the report is generally upbeat.

As part of its biannual regional economic outlook, the IMF predicts a record-breaking 2012 GDP growth of 120 percent for Libya, coming after last year’s radical 60 percent contraction. If the security situation improves as predicted, the IMF believes that economy will remain robust, with growth for next year of 17 percent, easing thereafter to seven percent from 2014-2017.

Given no radical change in oil prices,  it says, Libya can expect a fiscal surplus this year, equivalent to 19 percent of GDP, while the current account surplus rises to 22 percent of GDP.  Inflation, which the IMF estimates was running at 16 percent last year, will, it expects, ease back to ten percent this year and drop to just one percent next year.  This sharp decline willF come about, “ despite upward pressure on domestic prices arising from supply bottleneck in housing and transportation.”

It warns however that if the global economy continues to struggle with recovery, oil and gas prices could fall, which would present the hydrocarbon-dependent Lbyan economy with challenges.

The IMF speaks of concern over security and political stability, but majors on the government’s need  to  exercise fiscal discipline, while maintain macroeconomic stability.

“As a short-term response to the aspirations of the revolution, the interim government raised wages and subsidies. “notes the report, “Although Libya can afford elevated levels of current expenditure during a transitional period, the increase in wages and subsidies is eroding the country’s fiscal buffers and undermining prospects for fiscal sustainability”.

The IMF also warns that Libya must tackle a whole range of pressing issues from improved education, rebuilding infrastructure, developing a financial market, cutting economic dependence on oil and gas production and putting in place an efficient social security net.

To this end, it says: “The country will need to establish a governance framework to improve transparency and accountability, to better manage its resource wealth, and help promote private sector-led economic development.”

By Hadi Fornaji " Libya Herald" 

Turkey, Libya sign cooperation accord

Turkey’s Minister of Science, Industry and Technology Nihat Ergün speaks during the second Turkish-Arab Industry Cooperation Conference in Benghazi. REUTERS photo

Turkey and Libya have signed a memorandum of understanding for cooperation in industry and technology. 

The memorandum was written during a visit by Turkish Science, Industry and Technology Minister Nihat Ergün to Libya on the sidelines of the second Turkish-Arab Industry Cooperation Conference held in Benghazi.

Ergün said the agreement would allow for the preparation of a strategy document and an action plan to create financial support devices for small- and medium-scale enterprises as well as setting up industrial zones and technology parks.

Ergün said Turkey was ready to share its experiences in industrialization with Libya, adding that an environment should be created where both countries would win.

Libyan Industry Minister Mahmoud Ahmad al-Fitisi said a new Libya was being established and they would like to receive technical assistance from Turkey, particularly in industry.

Meanwhile the economy minister said nine Turkish firms were taken off the list of institutions that Libya took hold of the assets of. The Libyan National Transitional Council had introduced a law and seized the assets of many firms active in Libya including Turkish firms, he said.

Other nations still on list

“We find it meaningful that other firms that Turkish firms do business with have been taken off the list,” he said.

Libya had taken a cautionary judgment on the assets of 338 institutions and individuals owing to suspicions that these entities had links with the Gadhafi regime.

Noting that Libya is a very significant market for the Turkish contracting sector, he said Turkish contractors had constructed many buildings which were ruined during the revolution free of charge. 

“We have talked [with the Libyan government] about Turkish contracting firms’ returning to Libya. Payments of progress billing are scheduled,” he said. 

Turkey will sign a deal regarding the payments of ongoing construction projects, he said.

The Ministry of Economy is working on all the losses Turkish firms have suffered in Libya, he added.

Source: hurriyetdailynews.com 

New decree regarding foreign ownership in Libyan companies released

A new decree has been issued by the Libyan Minister of Economy (No (103) 2012) setting out the purposes, conditions and percentages for foreign individuals or companies to set up business in Libya.

The decree is entitled ‘The participation of foreigners in partnership companies and opening of branches and representative offices for foreign companies in Libya’.

The decree allows for both foreign individuals and companies to partner with Libyan individuals and Libyan companies according to their activities registered and based in abroad. But not forming Holding Companies.

The partnership companies can either be:-

 Shareholding (musahama) companies according to degree (No (23) 2010)

Or

Limited (mahduda) companies.

For the shareholding companies, the capital must be a minimum of one million LYD of which 30% (300,000 LYD) must be deposited at a Libyan bank at the stage of establishment.

There are five compulsory requirements such registration documents, licences, evidence of depositing the agreed share etc.

The limited companies can be set by individuals and a minimum capital of 50,000 LYD is required.

There are six compulsory requirements such as proof of identity, he/she has no criminal past, no bankruptcy history, evidence of depositing the agreed share etc.

The main purposes of forming the partnerships are to achieve followings:-

       ·         Transfer and localise the know-how and technology.

       ·         Annual technical and vocational training programmes for Libyans.

       ·         Annual development programmes for local labour to replace non-Libyans.

       ·         The use of equipment, machinery, raw materials and production inputs available in the local market

The maximum shareholding allowed for non-Libyans is 65%, but in exceptional circumstances the Ministry of Economy can raise the limit to a maximum of 80%. Libyan partners will be represented according to their shares.

There are 12 areas of activity where foreign partnerships are prohibited from operating in Libya as follows:

1.      retail and wholesaling

2.      importation

3.      catering

4.      agencies/distributorships

5.      auditing and legal firms

6.      Land transporting

7.      Inspection activities on all good supplied or imported only with the permission from the Ministry.

8.      Marine handling, shipping and air cargo activities.

9.      Packaging activities.

10.   Stones and rockets crashing.

11.   Civil construction for contracts for less than 30 million LYD.

12.   Any other restricted activities only allowed for Libyans

This decree excludes companies which already have legally set up branches in Libya at the time of the passing of this decree and which are contracted to implement projects – until the expiry of their contracts .These companies must thereafter renew their documentation upon expiry.

Companies with no branches or partnership agreements can apply for branch offices for market research etc, without the right to sign contracts. Branch offices can be opened for 2 years and are renewable for another 2 years only once. Branch offices discovered to be transacting commercial activities would be closed.

Article 18 of the decree stipulates that applicants to form Libyan-foreign companies shall receive a reply regarding their application, either way, within 30 working days.

Companies wishing to renew their presence in Libya should do so 3 months before the expiry of their licence.

Finally the decree in its ultimate article No.(21), stipulates that this decree is in force as of its date of publication (13 May 2012), and that Libyan-foreign partnership companies must legalise their status within one year of the passing of this decree.

Please click here to download the decree (Arabic version) http://www.docstoc.com/docs/120962773/D103

NOTE: All documents in forming the partnerships must be translated into Arabic in LIBYA and must be stamped at Libyan embassies or counsels of the country-based individuals or companies.

by Sami Zaptia (Libya Herald) and improved by Tarek Alwan (SOC Libya Ltd).

For more information please get in touch at T: +44 208 9878450 or E: info@soclibya.com

Libya on Recovery Path but Faces Long Rebuilding Effort

• Libya faces urgent, costly task of rebuilding its economy
• Improved institutions, management of resources to help unleash potential
• IMF remains committed to helping Libya through capacity building

Libyan oil production has recovered faster than expected following the overthrow of Muammar Gaddafi, but the country faces the challenges of building modern institutions, repairing infrastructure, and diversifying the economy, a senior IMF official said.

With the lifting of most United Nations sanctions, the bulk of frozen assets abroad have been released and normalization of the banking system is under way.

But, in an interview, the head of the IMF’s team on Libya, mission chief Ralph Chami, said the North African country faces many immediate and longer-term challenges that need to be addressed. He added: “Libya could realize its great potential if the right institutions and policies are put in place.”

A staff team from the IMF’s Middle-East and Central Asia Department, led by Chami, prepared a report entitled “Libya beyond the Revolution: Challenges and Opportunities”. Speaking to IMF Survey—the IMF’s online magazine—Chami discusses recent developments and looks at what it will take for the Libyan government to overcome the steep challenges ahead, rebuild the economy, and address the people’s aspirations.

IMF Survey online: How is Libya faring after the revolution? Is the economy getting back on its feet?

Chami: The conflict had a severe impact on the economy and especially on the hydrocarbon sector, which is the main source of public revenues and foreign exchange. During the uprising, oil production dropped precipitously from 1.8 million barrels a day to only 22,000 in July of 2011. Since the conflict ended, the production of oil has recuperated faster than expected.

Reconstruction efforts should boost nonhydrocarbon output in the coming years. In addition, the assets that were frozen during the revolution have been largely unfrozen as most UN sanctions were lifted. So there is no longer a shortage of foreign exchange, and normal imports have resumed.

IMF Survey online: What are the challenges facing the Libyan economy in the near term?

Chami: In the short term, the country faces complex and costly tasks. Coming out of the conflict, Libya needs to rebuild infrastructure and address the humanitarian needs of its people. There is a need to restore the functioning of the banking system and to consider medium-term implications when making decisions about public spending. Safety and security are also important because these would facilitate investment and the return of expatriate workers. Many well-educated Libyans live abroad and, as in other Arab Spring countries, the diaspora could come back to help rebuild the country.

IMF Survey online: How did the government respond to the peoples’ demands after the uprising?

Chami: Before the revolution, growth was not inclusive. Like in other Arab Spring countries, economic opportunities were not shared fairly among different segments of the population. Unemployment rates and the incidence of poverty have been surprisingly high for such a resource-rich country. Those reasons, combined with a lack of representation, contributed to the revolution. To respond to the needs and aspirations of the people, the government has started to increase subsidies and provide public-sector employment, especially, for young people.

IMF Survey online: What is your assessment of the measures that the government has introduced in responding to those demands?

Chami: Spending on wages and subsidies is truly needed to ease the social pressures in the near term. But, to ensure that these social protections can continue to be provided over time, the priority should be to design a well-targeted social safety net. Increasing wages and public sector employment have resulted in a 60 percent increase of the wage bill in 2011. The cost of subsidies has also gone up significantly.

While we understand the need to provide employment, we think it should be productive employment. We also understand the need to provide subsidies, but untargeted subsidies do not necessarily help the people they are supposed to help. In contrast to generalized subsidies that benefit everyone, well-targeted schemes provide assistance only to those most needy. So, fiscal discipline is needed in the coming years.

The government should make sure that the short term does not trump the long term. My advice is: in addressing temporary problems, policymakers should come up with measures that are not inconsistent with long-term overarching developmental needs. For example, we do not want to solve the problem of unemployment by providing employment for everybody in the public sector, because that would not be the most desirable permanent solution.

IMF Survey online: What are the medium-term challenges that Libya has to deal with?

Chami: Libya faces many structural problems including a lack of institutions, weak governance, and chronic structural unemployment. Over the medium term, Libya will need to build its institutions and respond to the demands and aspirations of its population. To achieve this, Libya needs to diversify its economy away from oil dependence. There is also a need to create an enabling business environment that will facilitate private sector–led growth and job creation. Areas where the business environment needs improvement include governance, transparency, accountability, rule of law, property rights, and access to finance. In addition, there will be a need to put in place an efficient social safety net to protect the most vulnerable groups of the population.

IMF Survey online: What are Libya’s economic prospects now?

Chami: Despite the challenges in the period ahead, the revolution could unleash Libya’s huge economic potential by promoting greater inclusiveness and transparency, and enhanced governance. Combined with sound management of resources, these positive factors can leverage the country’s inherent strengths: a dynamic and young population, an abundant wealth, a beautiful coastal line, access to key markets, and a privileged geographic position.

Libya has a great potential to diversify meaningfully by having vibrant tourism and service sectors. An undesirable path would be to continue to have an oil-dependent economy in which the government is the main employer and the private sector employs mostly expatriates.

IMF Survey online: How is the IMF helping Libya during the transition period?

Chami: Given the abundant resources Libya possesses, there will be no need for financial assistance from the IMF. What Libya needs in the coming years is technical assistance to build capacity and better manage its wealth. With a mission in late 2011, we have already provided the new government with advice on measures to improve governance at the sovereign wealth fund and, in January 2012, the IMF and World Bank started work with the authorities to strengthen public financial management. In addition, we are resuming technical assistance activities at the central bank.

When the Prime Minister met with the IMF’s Managing Director a few months ago, he explicitly asked for the Fund’s help in capacity building. To this end, the government has requested assistance in reforming the system of untargeted subsidies and an IMF Fiscal Affairs Department expert is to arrive in Tripoli in April. The view is to develop a comprehensive safety net, in an effort to make growth more inclusive.

The Fund will continue to help in the area of public financial management. This includes assessing the financial management of all Libyan funds run by the central bank and the sovereign wealth fund, with the aim of providing recommendations on how to enhance accountability and transparency. The attitude of the new government in this particular area is incredibly positive, and we commend them for that.

(Source: International Monetary Fund Survey)