Libya's LIA says stakes in UniCredit, Finmeccanica unfrozen

The Chairman of the Libyan Investment Authority (LIA) said on Monday a Rome court had ordered the release of the sovereign wealth fund's stakes in Italian bank UniCredit and Italian air defence group Finmeccanica.

"I am very pleased with this result," LIA head Mohsen Derregia said in a statement.

The assets had been seized in March following a request by the International Criminal Court in the Hague on the grounds that they were held by LIA on behalf of the family of former Libyan leader Muammar Gaddafi.

In July LIA's stake in oil and gas group Eni was also unfrozen.

Source: Reuters 

Benghazi attack a short-term setback for Libya investment revival

(Reuters) - The taxi driver parked outside a luxury hotel in Tripoli says most of his business there has ground to a halt in the past two weeks.

Since an attack on the U.S. consulate in Benghazi on September 11 killed the U.S. ambassador and three other Americans, heightening fears for the safety of Westerners in Libya, there have been fewer foreign customers requesting his services.

"There has been a change, the foreigners are much more cautious now," the driver, who did not wish to be named so as not to be recognized, said. "They won't just come up to the taxi rank, they want to be careful. Some have gone, others are staying inside the hotel. But they're not going out with us."

The assault on the U.S. diplomatic mission was the most serious security incident in Libya since the end of the eight-month uprising that finished Muammar Gaddafi's 42-year rule last year.

Coupled with a lull in policymaking as the country awaits a new government that will take over soon from the interim administration, the attack risks scaring off foreign investors in the short term. It will also pressure the new administration to focus heavily on security, which could further delay much-needed reforms and reconstruction in Libya.

Security has been an issue as the country's new rulers have struggled to contain armed militias who have refused to give up their weapons since the war ended.

The Benghazi attack has led many companies to beef up security measures in Libyan cities, restricting staff movements, and as embassies warn against non-essential travel to the North African country, risk premiums are rising.

"Suddenly you will have people who won't be able to come because of insurance - companies may not send them because they see Libya as too risky," one foreign businessman in Tripoli said. "That will slow things down. And for those who had plans to bring their families here, that will be postponed."

Libya had been making progress in trying to attract foreign investment and stimulate its private sector: officials have been working to update a 2005 banking law which first allowed foreign banks into the country and have plans to introduce Islamic banking.

International oil companies were the first to return to the country after the uprising, helping oil production return to almost pre-war levels of 1.6 million barrels per day.

But recovery has been prone to setbacks: in July around half of Libya's oil-exporting capacity was temporarily shut down after protests by groups demanding more autonomy for eastern Libya, the source of most of the country's oil.

Major construction and transport projects have been untouched since last year, awaiting the authorities' approval to resume.

"The incoming government's focus will be so much on security, which has always rightly been a priority but there is now an added risk that restarting essential infrastructure projects may be put down the agenda in the immediate term," said Alex Warren of research and advisory firm Frontier, which runs The Libya Report business website.

Benghazi air space was temporarily closed after the attack, expatriate workers in the eastern city were relocated to Tripoli or fled overseas, and a British trade delegation was cancelled.

"What happened in Benghazi has a very negative impact because it may lead foreign businessmen to freeze plans to come and invest in Libya," said Issa al-Babaa, executive director of the Libyan Businessmen Council.

Yet the country's tiny stock market has barely reacted, dipping less than half a percent in the two weeks since the attack, according to Ahmed Karoud, general manager of the stock exchange, which lists about a dozen local companies.

That suggests the Benghazi attack may not have a lasting impact on business and, like in Iraq, foreign investors in the longer term may be willing to invest there despite security concerns if they see high returns.

CRACKDOWN ON MILITIAS

Many investors, including Chinese companies expected to bid for infrastructure projects, may not be deterred as violence has been directed mainly at Western targets.

"Given the current state of the economy, I don't think it's affected the macro picture or overall GDP growth. Oil production and trade has not been disrupted, there are no tourists to scare off and foreign investment is minimal at the moment," said Warren.

"But it's going to make it more difficult to move away from those current dynamics. Sentiment has been affected and the government will have to work harder to persuade foreign companies to come to Libya in the short term, given the added risk they will feel is involved."

Keen to make a break from the Gaddafi regime, the interim government said no major new concessions would be awarded until after the national assembly elections that were held in July.

The International Monetary Fund forecast in July that Libya's gross domestic product would double this year after shrinking 60 percent last year, helped by rebuilding and the release of pent-up private demand.

The attack is unlikely to hurt growth when oil accounts for the lion's share of revenues.

Libya aims to raise its oil production to 1.8 million bpd next year, above levels seen before the uprising.

But no new exploration and production contracts are expected for at least a year before a clearer landscape emerges from the OPEC member's democratic transition.

Gaddafi isolated the economy from much foreign competition, reserving licenses and contracts for his own circle, which makes some sectors attractive now he is gone, including telecommunications.

There are only two mobile operators, Al Madar and Libyana, which are both state-owned and a number of foreign telecom operators have been eying Libya including Etisalat of the United Arab Emirates, Qatar Telecom (Qtel) and Saudi Telecom.

Business potential highlights a lack of infrastructure which the new government will quickly need to address. In 2010, 14 percent of people in Libya were using the Internet, according to the International Telecommunications Union, compared with 49 percent in Morocco, 37 percent inTunisia and 27 percent in Egypt.

The stock exchange has wanted to attract more foreign investors to trade shares since it reopened in February after closing during the war, but says rules on bringing funds into the country need to be relaxed.

"We are waiting for the new government to be formed. Nothing is known until then and we hope it will be stronger in making decisions," said Karoud.

The killings in Benghazi fuelled public anger at the continued presence on the streets of armed units, driving an Islamist militia, Ansar al-Sharia, out of the city on Saturday while the army ordered unauthorized armed groups to leave public premises in Tripoli as leaders vowed to dissolve rogue militias.

Central Bank Governor Saddek Omar Elkaber said the crackdown would be positive for the investment climate.

"What happened at the consulate eats away at the trust that has been gained in Libya," he said. "The steps now being taken are the right ones, it will help renew the trust for foreign investors."

In Benghazi itself, birthplace of the revolution, recovery could take longer, delaying regeneration after decades of neglect under Gaddafi, who fashioned the capital Tripoli into his power base at Benghazi's expense, its residents say.

"The events (are) going to delay things even more. Things were starting to look on the up. That is going to set them back, which is unfortunate," said Richard Weeks, a British engineer who has lived in Benghazi for more than 20 years.

Libya's second city, Benghazi is a major oil port but many foreigners working there were evacuated after the attack. Even before that, the city had seen several attacks on Western missions and organizations.

"Libya needs foreign business partners," a European worker said as he left Libya temporarily following the attack.

"But when even friendly Arab businessman are planning to leave and there is no government support to foreign companies, there are a lot of question marks."

Arab Bank Plans Return to Libya After Uprising Forces Exit

Arab Bank Plc. (ARBK), Jordan’s largest lender, is seeking to regain access to its Al Wahda bank unit in Libya after last year’s uprising forced it to exit the country.

“As a result of the events which took place in Libya, we have not been involved in the management of Al Wahda bank since early 2011,” Arab Bank Chairman Sabih Al Masri wrote in an e- mailed response to questions to Bloomberg on Sept. 6. “We hope to be in a position to discuss with the new authorities in Libya how we might reengage our presence in the country.”

Amman-based Arab Bank owns 19 percent of Al Wahda, with more than 70 branches across Libya, and has the right to increase that stake to 51 percent, Al Masri said. He took over management of Arab bank on Aug. 26 after former chairman Abdul Hamid Shoman resigned because of differences with the board.

Former Libyan ruler Muammar Qaddafi was killed in October after an eight-month uprising that left thousands dead, one of a series of uprisings against Middle Eastern dictators known as the Arab Spring. The country’s new interim legislature elected Mohammed Yussef Magariaf, leader of the National Front Party, as its head last month as the country rebuilds.

The bank is also studying a possible return to Iraq after the nationalization of its branches in 1964, Al Masri said.

“Given the potential of the Iraqi market, it is natural that at some stage we would study the feasibility of reentering,” he wrote. The bank is present in all Arab countries with the exception of Iraq and Kuwait, he said.

Established in Jerusalem

Arab Bank, established in Jerusalem in 1930 and the first public shareholding company on the Amman stock exchange in 1978, posted net income of $360.3 million for the first half, a 10 percent increase compared with the year earlier period, he said.

Arab Bank fell 0.6 percent to 7.15 Jordanian dinars as of 1:05 p.m. in Amman.

Kuwait-based Al-Rai newspaper reported Aug. 23 that unidentified Qatari investors were in talks to buy a 20.7 percent stake in Arab Bank, controlled by Lebanese former prime minister Saad Hariri through Saudi Oger Ltd., Oger Middle East Holding and BankMed SAL. The report prompted the stock to surge the most in three months on the day, gaining 5 percent.

Arab Bank headquarters will remain in Jordan and the lender has no plans to reduce its workforce or change positions, Masri told a news conference in Amman three days later.

Source: Bloomberg 

Elections to mark new start for Libya economy

For Tripoli businessman Salem Mohammed, Libya's first elections in a generation on Saturday will pave the way for what he believes the North African country should become - a new Dubai.

"We have oil, we have money, Libya can easily be just like Dubai," the 47 year old, who works in manufacturing, said.

"We just need foreign investors and hopefully they will now start coming and business will boom."

Nine months after the end of Libya's uprising, Mohammed hopes Saturday's election of a national assembly will mark a new start for an economy that stagnated under Muammar Gaddafi's 42-year autocratic rule.

Investors will be closely watching the outcome of the vote - with no indication of a leading contender - to see what it will mean for projects that were frozen during the fighting and for the vast opportunities likely to emerge in an oil-producing nation with the wealth to pay for construction and healthcare.

Libya's new rulers have said no major new concessions would be awarded until after the polls and are reviewing past deals.

Once elected, the new 200-member assembly will appoint a government to replace an interim administration that lacked the mandate to make major decisions, and expectations are for old projects to restart and for new contracts to be signed.

"There are a lot of projects (on standby), everyone wants to settle their projects from before," said Klaus Fodinger, head of the cement division at Austria's Asamer Holding, which resumed operations in Libya in October.

"If there are no institutions, no one to talk to, how do you settle deals from the past? The elections are a crucial event."

Many international businesses came to Libya in recent years, attracted by its huge energy reserves and a population, which although numbering just 6 million, has median incomes much higher than elsewhere in the region.

But the eight-month NATO-backed uprising sent foreigners fleeing.

While oil companies were the first to return and have helped Libya climb back close to pre-war output levels of 1.6 million barrels per day, others have not been as fast.

Government trade delegations from around the world have visited, vying for future contracts. As commercial flights have resumed, businessmen have also jetted in for short stretches. Most companies which had a foot in Libya before have mainly wanted to get their ventures back up and running as they await a clearer political and legal landscape.

Tarek Alwan, managing director of London-based consulting firm SOC Libya, said he had been approached by numerous companies seeking guidance on how to enter the Libyan market.

"Major ones are seriously interested but they have not committed yet because the situation is not fully stable, economically and politically," he said.

"They have been waiting for the elections so this will give them some sort of assurances that there will be proper elected (authority) to represent the country."

WAITING FOR THE GREEN LIGHT

Major construction, such as residential property and hotels, as well as transport projects are untouched since last year, awaiting the green light from the authorities to restart.

"Despite the fact that most major public-sector projects are on hold, there is nonetheless a great deal of planning going on across many ministries and government agencies, and this is a positive sign," said Alex Warren, of research and advisory firm Frontier, which runs The Libya Report business site.

"It suggests that once an elected government is in place, then many projects look set to start or be resumed."

The question is how quickly they will resume. The fasting month of Ramadan, when daily life usually slows, begins shortly after the elections.

The assembly is expected to be named at least two weeks from July 7 after ballot counting is finalised and an appeals process. Within 30 days of its first meeting, it will appoint a new prime minister who will form a government.

"For major projects and contracts, I don't see it really picking up, in terms of new tenders or companies returning, until the last quarter at the earliest," Warren said.

The election is expected to lead to reforms and investors want to know what those policies will be. In May, the economy ministry issued a decree enabling foreign companies to set up joint ventures, branches and representative offices in most sectors, more easily.

"Businesses are looking with great hopes towards the elections," David Bachmann, head of the commercial section at the Austrian embassy in Tripoli, said.

"However, they are aware that probabilities are high that even after the elections it might take some months - hopefully not years - before decisions are taken."

While public sector entities await, the private sector is flourishing, especially trade. Tripoli's port is heaving with activity and foreign produce is stocked on supermarket shelves. A cash crisis has eased and shops and cafes have re-opened.

Monoprix Tunisia, an affiliate of the French supermarket chain, wants to start opening 10 stores in Libya from late 2012, after uprisings in both countries delayed earlier plans.

On the construction side, small-scale private projects have taken off - homes are being built, businesses being refurbished.

HUGE POTENTIAL; SECURITY RISKS

Austria's Asamer, which operates cement factories in Libya through a joint venture, has gradually increased production since January.

"We see a huge potential - there are the needs of young population and a lot of infrastructure to be reconstructed. We expect a boom in construction activity," Fodinger said.

Gaddafi isolated Libya's economy from much foreign competition, reserving licences and contracts for his own circle, so the prospect of a more open market is attractive to new entrants.

Dependent on oil, Libya needs basic infrastructure development as well as investment in property, consumer industries and telecoms after a fifth of transmitter stations were destroyed in the war. It will also need foreign investment and expertise to increase oil and gas production.

Its tourism industry is largely unexplored, despite stretches of beaches and well-preserved Roman ruins.

Various fairs drawing international businesses have allowed companies to cultivate relations. Industry Minister Mahmoud Al-Ftise said there were plans to increase privatisations, and Libya was interested in more foreign investment.

"We would like to have a participation from foreign and local private business so we can see results because we would like to have competition among the business," he told Reuters.

However security remains a concern. Bouts of violence are deterring foreign firms from bringing back all their expatriates on the ground for now. For those who were once used to living in villas or flats in Tripoli, they now find themselves confined in secure compounds without their families.

Many businessmen travel with security advisers.

Libya's interim government has struggled to impose its authority on a country awash with weapons. Attacks on diplomatic and aid missions in the east have highlighted the ongoing volatility.

Last month, Tripoli's international airport was seized by an armed group for several hours.

"Security is a concern and when you hear of such violent incidents as we have recently, you worry and it may deter some foreigners from coming here," one European businessman said during a recent trip to Tripoli.

"But you have to weigh the risks against the opportunities."

Source: Reuters 

Dubai Chamber eyes Libyan trade opportunities

The Dubai Chamber of Commerce and Industry will lead a trade mission to Libya before year-end to assess investment opportunities, a senior Dubai Chamber official has said.

Speaking to Gulf News on the sidelines of the Libya Development Forum, Atiq Juma Naseeb, senior director of Commercial Services Sector at the Dubai Chamber, said: “Libya has strong potential for our members and the mission would serve as a platform to acquaint Dubai business professionals with the Libyan market.”

The delegate is made up of Dubai prominent businessmen and SME operators from different sectors, he said.

“The dramatic change in Libya marks a new era and the chance for foreign partners to assist in the rebuilding of a nation is required. Thus, Dubai is looking to drive investment in the country and aid our local businesses in penetrating and showcasing their products and expertise to their target markets.”

Officials from the UAE, and Dubai in particular, have made several instructive visits to Libya to examine how they can play an active role in the country’s development vision.

“As banking, construction, tourism and telecommunication are presenting major opportunities for investment, Dubai is well placed to assist since it has significant expertise in these sectors,” he said.

“One major opportunity for trade is going to come from Libya’s reconstruction efforts, with demand for rebar, cement, wood, iron and steel as well as technical expertise set to increase. Dubai has a strong industrial manufacturing base and excellent export and logistics facilities, so is ideal to meeting this increased need.”

Trade volume

“One area of investment that has significant potential and which Dubai has a major advantage is trade. Dubai’s trade with Libya has increased steadily since an end to international sanctions in 2005. Then Dubai’s exports to Libya valued Dh2.8 billion and imports Dh0.3 billion, but moving forward to 2010, Dubai’s exports [stood at] Dh3.5 billion and imports [at] Dh4.1 billion. “

Last year, Dubai’s non-oil trade with Libya reached Dh2.13 billion between January and October — a slight decline due to the impact of political unrest.

However, Naseeb added that the unrest had not proved to be as damaging as first anticipated.

“Dubai’s main imports from Libya are precious stones, which account for almost 96 per cent of the total. Meanwhile, Dubai’s exports are much more diversified, with electrical equipment, machinery and vehicles making up around 70 per cent and the remaining 30 per cent made up with categories that account for less than 2 per cent each,” he said.

Source: Gulf News

Betting On Libya's Future

The demise of Gaddifi has unleashed a treasure trove of opportunity, but one that’s fraught with risk.

By Robert Bailey

The demise of the Libyan dictatorship has thawed long frozen relations with the Gulf that could lead to wide-scale investment in a country whose political idiosyncrasies for decades denied it viable links to the region and the global economy.

An estimated $200 billion of investment opportunities will emerge over the next ten years according to the French Business Council, which recently took a large group of company representatives to Libya. They and others from countries that supported the overthrow of the regime are anxious to capitalise on the goodwill that has been generated.

In Dubai, a Libya Strategic Investment Forum was organised by the Chamber of Commerce recently, it also supported a Libya Infrastructure and Rebuild conference in the emirate.

The big question is whether the timing is ripe for these initiatives. Even though the National Transitional Council (NTC) is proposing a $54 billion budget in addition to an un-quantified emergency budget for 2012 it has little or no ability to enter into long-term contracts simply because it is an interim government.

Nevertheless observers believe that with its significant energy resources that have still to be exploited, and a potential to become an important aviation and logistics hub between Africa, the Middle East and Europe, Libya has the potential to rapidly expand its economic base.

However, there is a growing sense of unease at the slow progress in establishing any firm central authority. Recently there have been calls for eastern Libya to break away from Tripoli and there is concern is that Libya may face years of instability.

Until a functioning national army and police force is formed the existence of armed, tribally and community-based militias represent a threat to stability.

Members of the militia in Zintan, southwest of Tripoli, for example, still hold Saif al-Islam Qaddafi prisoner in spite of demands that he is handed over to the council in Tripoli.

In spite of uncertainties, work towards agreeing a constitution in mid-2012 goes on though the head of the NTC, Mustafa Abdel Jalil has stated that “if there is no security, there will be no law, no development and no elections.”

Even after such elections it may take some time before a new administration is bedded in and confident enough to award significant contracts.” The interim government in principle is unwilling to take decisions with long-term consequences, and lacks the resources to do so which is frustrating for the conduct of business,” says Oliver Miles a former British ambassador to Libya and now a director of MEC International.

SIGNS OF RECOVERY

But negatives can be overstated.

Physically the country is returning to normality. Telephone links have been reconnected between east and west and, at least, in Tripoli electricity supplies as well as water and sewerage networks are functioning.

Qatar Airways resumed flights to the Libyan capital in February. The airline had been among the first to re-open flights to Benghazi in the east. Alitalia has also restarted services to Tripoli.

Royal Jordanian is flying to Tripoli and Benghazi again as well as to Misrata. The latter has a large medical traffic carrying patients for treatment to Amman.

Emirates began flights to Tripoli again at the end of March. KLM/Air France and British Airways also resumed service. Meanwhile Turkish Airlines has launched scheduled freighter flights to Libya’s Mitiga airport, east of the capital.

Air Malta and Egyptair resumed flights to Tripoli last November and Lufthansa in February. Antonio Tassone, the German airline’s general manager in Tripoli, commented that “the resumption of our flights is a strong and important signal to Libya and the western business community that we are confident to be back.”

Progress on unfreezing assets combined with the unexpected speed with which oil production has returned to nearly three quarters the pre-revolution level, mean that the government is able more or less to pay its way are other positive indicators.

Having plunged below 100,000 barrels-a-day at the peak of fighting upstream production of crude is reported to be around 1.4 million b/d. Pre-war levels of 1.7 million b/d will be reached by the middle of 2012 predicts Christophe de Margerie CEO of France’s Total.

International oil companies with existing contracts are beginning to return. The National Oil Corporation has said that seismic surveys have resumed at concessions run by Arabian Gulf Oil Company while fresh exploration is due to begin in the Sirte basin. Italy’s Eni has resumed offshore exploration 100 kilometres offshore Tripoli.

The Libyan stock market reopened in March albeit in more modest premises on the outskirts of Tripoli. The market though had just five stocks with another eight still to provide up to date financial information.

General manager Ahmed Karoud says that five initial public offerings may come to the market this year including oil and construction companies. There are also plans to list the country’s two mobile operators.

However, optimism needs a reality check. Few are likely to commit to long- term large scale investments where there is chronic political instability particularly if property rights are difficult to enforce and where commercial infrastructure lags far behind others in the region.

GCC'S ROLE

It has been suggested that GCC investors may be more culturally adept working within the currently constrained business environment than Western companies. Whether this is true or not time will tell but there is certainly growing Gulf interest in Libya.

Arriving on Etihad’s inaugural flight to Tripoli in January and accompanied by a 100-strong business delegation, Anwar Gargash, UAE Minister of State for Foreign Affairs declared that “right now our target is to play an important part in Libya’s rebuilding and create viable long- term partnerships.”

The Gulf states, Qatar in particular, played a prominent role in the campaign to oust Gaddafi providing combat aircraft for the NATO air mission as well as material and logistical support to the rebels.

Doha’s help extended beyond military and diplomatic support by marketing a million barrels of oil for the NTC at a crucial phase allowing the rebels to pay salaries in Benghazi.

In addition, Qatar helped launch Libya al-Ahrar in Doha to transmit television programmes and news. The UAE’s telecoms company Etisalat helped restore mobile communications services providing a satellite feed for the rebels after Tripoli cut of cellular links.

In spite of the goodwill generated by such support, Gulf as well as Western interests will be nervous about the Finance Ministry’s review of all contracts signed under the previous regime.

How far this will focus on firms from countries that failed to support the rebels internationally and go easy on those states that provided diplomatic and material military support remains to be seen.

Before the uprising Qatari Diar Real Estate Investment Company had lined up $10 billion of investments with the Libyan Economic and Social Development Fund for a hotel and real estate developments near Tripoli

Dubai-based Al-Ghurair Group, hopes to restart output within months on a joint venture in Libya’s largest refinery at Ras Lanuf and to almost double the present 220,000 b/d capacity over four years.

The group is also assessing openings in other sectors including contracting, civil and mechanical engineering as well as food production. According to Mashreqbank CEO Abdul Aziz Al Ghurair, UAE investment could increase from $2 billion to $5 billion within five years.

In 2009, Abu Dhabi-based Oasis International Power was set to take over a planned power plant at Tripoli West to be built as Libya’s first independent power plant.

An engineering, procurement and construction contract valued at $1.4 billion was awarded to South Korea’s Hyundai Engineering & Construction.

Others are looking at new opportunities. Advisers working for Mohammed Alabbar, a Dubai businessman, chairman of real estate firm Emaar and a partner in Africa Middle East Resources (AMER), an emerging commodities supply chain company, have reportedly been assessing the viability of bauxite and other natural resources in Libya.

Abu Dhabi’s Al Maskari Holding is backing a $3 billion project to build an integrated energy hub involving solar and conventional generation to provide electricity for domestic use and export to Europe via southern Italy.

DP World has held exploratory talks with Libya’s interim officials on ideas for management of the country’s ports. Interim transport minister Yousef El Uheshi has said the sector needs billions of dollars of investment for the expansion and modernisation of ports and dredging to allow larger vessels access.

According to DP World’s chairman Sultan Ahmed bin Sulayem “we have always been interested in Libya and we are continuing our discussions with them.”

Conversations are likely to be extended though especially in a country where privatisation issues have yet to be tackled. “If they sort out their issues, you will see a lot of UAE companies coming in here, says Al-Ghurair,” but cautions “if it turns out to be a very slow process, they will go somewhere else.

Source: Gulf Business

Libya eyes refund of Goldman, SocGen losses

The Libyan sovereign wealth fund is investigating investment losses of $1.75 billion on structured products managed by Goldman Sachs (GS.N) and Societe Generale (SOGN.PA) to see whether it can claim compensation, the fund's chairman said on Wednesday.

Mohsen Derregia, chairman of the Libyan Investment Authority (LIA), told reporters in Milan that the LIA needed to review these investments and how they were managed.

"These were investments made in 2007 to 2008, and some of those losses are quite surprising. We've had losses for around $1.75 billion, of which $900 million was on a single investment with Goldman Sachs," Derregia said.

"We will have to see how these structured products were created, valued and managed. Then we will talk to the investment houses and see if we can claim a refund."

Asked what kind of structured products were involved, Derregia said: "It's not clear to me."

Goldman Sachs declined to comment and Societe Generale could not immediately be reached for comment.

Derregia was appointed head of the LIA in April and is sifting through tens of billions of dollars in holdings and investments made by the fund worldwide during the regime of Muammar Gaddafi, which was overthrown last year.

"To have a clear oversight of everything will take time; it won't be done in one or two months," Derregia said. "Clearly, there will have to be some write-offs, although they are not huge."

The total value of assets managed by the LIA (about $60 billion) had fallen by less than the LIA feared, Derregia added. "It's now midway between $50 billion and $60 billion. People in Libya feared we had lost 50 percent of our assets. It's not like that."

ASSETS SEIZED

Derregia was in Italy to speak to authorities and the financial community about the LIA's holdings in the country, which were seized in March by Italian financial police on the grounds that they belonged to members of the Gaddafi family.

The holdings, worth about 1.1 billion euros ($1.39 billion), include stakes in Italy's largest bank by assets, UniCredit (CRDI.MI), the oil and gas giant Eni (ENI.MI) and carmaker Fiat (FIA.MI).

The LIA has appealed against the seizure, saying that those holdings belong to the LIA, held on behalf of the Libyan government. Derregia and his lawyers said this view was backed by the Italian economy ministry's Committee of Financial Security, which he met on Tuesday.

The next hearing in the case is on July 12.

Derregia said that the LIA would keep its 1.8 percent stake in UniCredit and could buy more shares in the bank if this was in its own interest.

He said it would not make sense to sell down its Italian portfolio now, given current market conditions. "Clearly the value of the shares has declined substantially. There is no incentive for us to sell the shares now or in the foreseeable future."

Asked whether the fund would buy Italian government bonds battered by the euro zone debt crisis, he said: "We hold a lot of assets denominated in euros, and we already have enough bonds."

Source: Reuters 

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