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A FRESH NEW START? What the elections mean for the Libyan economy?

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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.

July 5, 2012 5:23 by



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.



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