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Investing in Libya
has been much speculation and interest in Libya as an emerging or, more
appropriately, a re-emerging market, over the last few years. As the high
foreign turnout at recent trade and investment exhibitions in Tripoli has
shown, there is growing interest in investing in Libya, not only in the
oil and gas sector but in other sectors as well.
This interest is slowly translating into commercial activity, although
interested parties are face a number of questions: How do we invest in
Libya? Do we establish a new company in Libya, a branch office, or appoint
an agent? Can profits be repatriated? Can we employ foreign staff or must
we employ only local nationals?
While it is impossible to answer all these questions here, it is possible
to provide an outline of the framework involved.
The relevant legislation is contained primarily within the commercial code
together with a number of specific decrees or laws. The Sharia code
applies only to family and inheritance disputes.
The principal decrees of concern to a company interested in investing in
Libya are: Law 25, Petroleum Law 1955, Law 5, the 1997 Encouragement of
Foreign Capital Investment Law, and various laws on social security,
immigration and employment.
Investment in the oil industry, through exploration and production, is
mainly governed by Law 25. This law is currently under review not least
because it only deals with oil, without any reference to gas. Investment
in any industry peripheral to energy is governed by Law 5 which was
introduced to encourage foreign investment and a specific authority was
established to administer the system. The aim of the authority is to
provide a one-stop-shop for foreign investors and to help cut through the
Law 5 relates specifically to investment in industry, health, tourism
services, and agriculture. The type of investment encouraged includes:
machinery, equipment, tools, spare parts and raw materials, transport
means unavailable locally and internet protocol rights.
The foreign capital investment law provides a set off incentives to
foreign investors and to locals engaged with foreign partners. Such
incentives include exemption from customs duties and tax on machinery and
equipment, the transfer of the project ownership and re-export of capital
employed, the right to employ foreign personnel in the absence of national
substitutes etc. q