doing business in libya guide

UK Trade & Investment Doing business in Libya

Doing business in

Libya


Are you a member of a UK company wishing to export overseas? Interested in entering or expanding your activity in the Libyan market? Then this guide is for you!

The main objective of this Doing Business

Guide is to provide you with basic knowledge

about Libya; an overview of its economy,

business culture, potential opportunities and an

introduction to other relevant issues. Novice

exporters, in particular will find it a useful

starting point.

Further assistance is available from the UKTI

team in Libya. Full contact details are available at

the end of this guide.

The purpose of the Doing Business guides, prepared by UK Trade & Investment (UKTI) is to provide information to help recipients form their own judgments about making business decisions as to whether to invest or operate in a particular country. The Report’s contents were believed (at the time that the Report was prepared) to be reliable, but no representations or warranties, express or implied, are made or given by UKTI or its parent Departments (the Foreign and Commonwealth Office (FCO) and the Department for Business, Innovation and Skills (BIS)) as to the accuracy of the Report, its completeness or its suitability for any purpose. In particular, none of the Report’s contents should be construed as advice or solicitation to purchase or sell securities, commodities or any other form of financial instrument. No liability is accepted by UKTI, the FCO or BIS for any loss or damage (whether consequential or otherwise) which may arise out of or in connection with the Report.

Important Information - Sanctions and Embargoes

Some countries maybe subject to export restrictions due to sanctions and embargoes

placed on them by the UN or EU. Exporting companies are responsible for checking that

their goods can be exported and that they are using the correct licences.

Further information is available on the Department for Business, Innovation & Skills (BIS)


Content

Introduction 4

Preparing to Export to Libya 10

How to do business in Libya 11

Business Etiquette, Language and Culture 17

What are the challenges? 19

How to Invest in Libya 20

Contacts 21

Resources/Useful Links 22


Introduction

1st September 2009 marked Colonel Qadhafi's 40th year as the ‘Leader’ of Libya. Foreign

companies have taken an ever-greater interest in Libya since Colonel Qadhafi decided in 2003

that Libya would relinquish its weapons of mass destruction. Today, Libya is back on the business

map, though politics and business remain intertwined.

Change is in the air in Libya. Not just the sprucing-up of the main cities for the 40th anniversary

of Colonel Qadhafi's revolution. Not political change, but clear business opportunity for those

patient, persistent and determined enough to take it. The overall business climate has changed

little, but Libya has proved that it is well resourced to withstand shocks in the global business

network. Personal relationships really matter a lot in Libya, as elsewhere in the Middle East - you

will not do business here long-distance, but by being here, often.

Libya is also now a (dry) niche Mediterranean holiday destination for some, only a 3¼ hour flight

from London (two flights a day direct with BA seven days a week). It is once more a regular port

of call for cruise ships. Its tourist industry is expanding, if slowly, to meet the demands of

increasing numbers of visitors. You have to see Libya for yourself - it is well worth the undoubted

effort to secure a visa!

Strengths of the market

� English is widely spoken & used as the main international business language.

� Libya has the second highest gas reserves in Africa, and the third highest oil.

� Libya has huge foreign currency reserves, which are increasing all the time.

• Regular flights from UK – Tripoli is only 3¼ hours flight away: twice daily from Heathrow;

once daily from Gatwick; and several flights a week from Manchester. 8,000 Libyans are studying in UK Universities, 5,000 of whom are on Libyan Government funded scholarships. There are more Libyan post-graduates studying in UK than from any other Arab country.

� 4,000 Libyan doctors are either working or undergoing medical training in the UK.

� UK visible exports to Libya increased by 14% (in 2007), 21% (in 2008) and 51% (in 2009), year on year.

� In a recent UKTI study, Libya was identified as potentially the 4th most attractive overseas

market for UK exporters, by 2012 - 2014.

Opportunities in Libya

There are many opportunities in Libya across most sectors. Owing to the large number of new infrastructure projects planned, there are real opportunities for both large and small UK companies in Libya. Priority sectors identified by UK Trade & Investment are:

� Oil & Gas � Airports � Healthcare

� Education & Training � Retail � Ports � Defence & Security

� Construction � Financial Services


Trade between the UK and Libya In 2008, UK visible exports to Libya were £279.8 million, up 21% on 2007 (£232 million). In

2009, UK visible exports to Libya were up 51.3% to £423.3 million compared to 2008. Also in

2008, Libyan visible exports to UK were £960 million, up 66% on 2007 (£577 million). However

in 2009, Libyan visible exports to UK were down 23.2% to £737 million compared to 2008. UK

invisible exports (i.e. trade in services) to Libya in 2008 were £244 million and invisible exports

from Libya to UK were £137 million.

There are strong links between the UK and Libya in the oil and gas sector with Shell and BP

looking for gas here. Shell is one of the largest investors in Libya. In 2007, BP returned in

strength launching a US$1.3 billion gas exploration programme. If they are successful in their

search, both Shell and BP’s investment is set to increase significantly in the longer term, with

significant job creation, and an educational component.

Many other well known UK-based companies are also active in the Libyan market, such as:

Biwater, AMEC, WS Atkins, British Airways, Cummins Power Generation, Buro Happold, FG Wilson

(Engineering) Ltd, Mott MacDonald, Halcrow, Bhs, Marks & Spencer, Monsoon Accessorize, Next,

G4S, HSBC, GSK, Arup, Davis Langdon, British Arab Commercial Bank, GD(UK), Corus, KPMG,

GSK, AstraZeneca, JCB, Rentokil, De La Rue, BT, Interserve, Unilever, Ernst & Young, Parsons

Brinckerhoff, PWC, Herman Miller, Land Rover, Aggreko, International Hospitals Group,

Chesterton Humberts and Weir Group; and the number is growing all the time.

More than 150 UK based companies operate here. The local British Business Group has increased

its membership by 20% in the last year.

Education and training are particular growth areas. The local British School (established in 1968),

which goes up to Year 8 (and Year 9 is to be added in September 2010), continues to expand,

and has doubled in size since 2006. It currently has 150 pupils.

The UK/Libya relationship is strengthened by Libya's thirst for the English language, and by

familiarity - many senior Libyans in government or in business have studied in the UK, and want

their children to do the same. The Ministry of Education and Scientific Research allocates over

3,500 scholarships for study in the UK every year, worth over £130 million to UK Universities and

colleges in fees. As at January 2010, there were over 8,000 Libyans studying at Universities in

the UK of whom 5,000 were funded officially. There are more Libyan postgraduates studying in

the UK than from any other Arab country: remarkable, given that Libya’s population is just over 6

million.

The English language, and the British Council (BC), are one of the UK’s greatest assets in Libya,

as English is the (unofficial) second language. The BC, which has 83 staff in country, teaches

more than 1,200 Libyans directly at its teaching centre in Tripoli, and thousands more through

the 28 BC lecturers working in Libya’s Universities across the country. The BC also organises the

ELTEX Exhibition each spring, bringing scores of UK universities and educational/training

institutions to Tripoli and Benghazi.

Economy

The Libyan economy is driven by the oil and gas sector, with around 95% of foreign export

earnings deriving from it. The country has made considerable efforts in recent years to encourage

more foreign companies to do business in Libya, but progress has been mixed. Libya is moving

slowly and patchily from centralised state control to engaging with globalisation. The state earns

more in oil revenues than it spends in the annual budget, and has no external debt. One of the

credit agencies rates it AAA minus, another BBB+. State control remains in areas such as

insurance and banking; the banking sector is moving faster than insurance. The playing field for

business is improving, but is not yet level: foreign investors need to associate with the right

Libyans, to get on. Many more investment projects are announced than actually happen. A well-

chosen Libyan partner will help you to know what is real. There is an acknowledged need to


diversify the Libyan economy, and to provide quality jobs for its growing student population. The

private sector is growing, cautiously, after the many years of nationalisation and state control.

The quality retail sector is set to grow as large shopping malls are being constructed in Tripoli.

Oil & Gas

With production currently at 1.7 million barrels of oil per day, Libya is the second largest of

Africa’s oil producers and the third largest gas supplier. It is Europe’s single biggest oil supplier.

The state run National Oil Corporation (NOC) is working to increase oil production to 3 million bpd

by 2017.

Libyan crude oil is light and "sweet", costing less to refine. Only 25% of Libya’s surface territory

has been explored to date. It has the largest proven oil reserves in Africa of 42 billion barrels,

and over 53 trillion cubic feet of gas. There is every chance that actual reserves are twice those

figures.

Libya has recently approved a $9.9 billion plan that will see the National Oil Corporation and its

affiliate companies develop and upgrade 24 existing oil fields. They will implement the plan to

develop those fields that are technically, financially and economically proven to be productive.

NOC will therefore focus on developing what resources Libya already has, rather than to try

finding any new oil. But another bidding round for acreage is still possible, perhaps in 2011,

depending on the demand for oil globally.

With over 40 International Oil Companies active in the Libyan market, in 5-10 years' time, Libya

could be supplying gas to the UK - already, Libya provides a third of Italy's energy needs.

Infrastructure

After decades of standstill, the construction sector in Libya is buzzing. Tripoli and the other major

cities are developing; architectural design and infrastructure improvements are changing the

skyline. There was a new impetus to building activity to mark the 40th anniversary of the Libyan

Revolution in September 2009; the trend continues thereafter.

Work is well underway on the Tripoli Airport, project due for completion in 2012, designed to

handle up to 20 million passengers per year. Building has also started on several 5-star hotel

projects; business visitors will have more choice in years to come. Today, the Corinthia Hotel, the

Al-Waddan and the Radisson Blu are the best in town, but will soon have more high quality

competition.

Libya's state-owned Housing and Infrastructure Board has approved contracts worth $50 billion in

the last 2 years - mainly in housing and utilities, but also roads and bridges. Libya's infrastructure

is improving, though there is still a long way to go to join things up, e.g. in wastewater

treatment.

Construction will be underway in 2010 on a $5 billion ‘Energy City’ project near the town of

Sabratha, which will be funded jointly by the government’s Economic & Social Development Fund

(ESDF) and Gulf Finance House. The project is designed to provide business infrastructure for

companies operating in the energy sector in Libya, including producers, refiners and support

services. The project is expected to take five years to complete.

Financial Services/Banking

Libya has an estimated $136bn in foreign currency reserves and is looking for places to invest.

The Libyan Central Bank currently holds $67bn of these reserves. A further $69bn is held by the

Libyan Investment Authority, which has recently opened its first overseas office in London. But

the economic traffic is not all one-way. The private sector’s share of the Libyan banking sector is

steadily increasing. Foreign consultancy services are in demand and UK banks are investigating

the potential of the market.


The Central Bank of Libya announced in May 2009 that nine commercial banks could seek

"strategic partnerships" with foreign banks, capping at 49 per cent the stake foreign investors can

own. The participation of the foreign partner should increase the capital of the local bank by at

least 70 million dinars ($55 million). Any agreement between a local bank and its foreign investor

should provide for at least 90 per cent of the venture's employees to be Libyan nationals.

In September 2009 it was announced that Libya aims to privatise part of the National Commercial

Bank (NCB) and will open the sector to more competition by selling bank licences. There will be a

bidding round in 2010 for two to three licences for new banks. The tender process would be open

to international banks, which would not need a local partner. A 15 percent stake in NCB worth 50

million dinars would be floated. Libya sold minority holdings in two other banks to foreign lenders

in 2007 and 2008.

In February 2010 the Central Bank invited foreign banks to submit applications to set up

subsidiaries in the country. The Central Bank would issue two licences to foreign banks that would

own up to 49% of new banks, with full management control. Domestic investors would own the

remaining 51%. Banks wanting to apply for a licence must have a tier 1 capital of more than $2

billion.

The move follows the flotation of 15 percent of Al Joumhouriya Bank on the local stock market in

2009 and government is encouragement to its commercial banks to seek strategic partnerships

with foreign banks. The measures are part of the Central Bank's strategy of reforming the

country's banking system and improving its competitiveness. The authorities are trying to reform

the highly centralised banking system, which is widely seen as the main obstacle to growth, and

to attract more private investment outside the oil and gas industry.

Libya sold 19 per cent stakes in two banks to two foreign banks (BNP Paribas and Arab Bank) in

2007 and 2008.Government officials said they wanted to assess what benefits the country's

banking system would gain from these sales before deciding whether to expand the privatisation.

In March 2009, it was announced that the government was planning to float at least 15 per cent

of Al Joumhouriya Bank on the local stock market and aims to grant licences for three foreign

lenders to open branches in Libya next year. Joumhouriya (Republic), Libya's biggest state-owned

bank by assets, has capital of more than 1 billion dinars after merging with another bank, Al

Oumma (Nation) Bank. Government officials plan to give licences for foreign banks to launch

operations in 2010, either alone or in partnership with Libyan investors.

Politics Libya's political structure is unique. There are no political parties, and no MPs. Col Qadhafi leads

the country, but is not head of state. The General People’s Congress (GPC) is formally

responsible for formulating policy and passing laws in accordance with the decisions of the many

local and regional People’s Congresses, which feed, into it. The GP Congress meets annually and

comprises delegates from the Basic People’s Congresses, the 20 administrative Sha’abiyat

(regional level) Popular Committees and the newly elected communes. Representatives from the

trade unions and professional organisations also attend. The GP Congress, which has its own

Secretariat, last met in January 2010.

The GP Congress provides a forum for debate and criticism and has on occasion obstructed

policies proposed, but strong direction from the Leadership is followed. Political considerations in

Libya are never far away from major business decisions.

Central government is made up of a Prime Minister and General People’s Committees who cover

the core national issues: Foreign Affairs, Finance and Planning, Justice, Public Security, Economy

and Trade, Workforce and Training, etc. Secretaries of the GP Committees hold the equivalent of

ministerial rank and act as a link between the People's Committees and the Executive.


Population

The current population of Libya is 6.17 million. Around 90% of the population live along the

coastal area. A diminishing proportion is still living in desert areas. The population of Libya is very

young, with nearly 50% under the age of twenty.

Getting here and advice about your stay

Getting here

By air

British Airways operate twice daily services to Tripoli. The Libyan airline, Afriqiyah, operates daily

from Gatwick. A few fly to Benghazi.

At the airport

Taxis from Tripoli airport into the city centre cost around LYD25-30, with a single charge of

approximately LYD5 for luggage. The journey may take up to take 30-45 minutes by road. There

is no train service.

Visas

British nationals require a visa to visit Libya. Securing a visa can be a very time consuming

process and you will need a local sponsor. For details of how to obtain a Libyan visa, please

consult the Libyan Embassy in London.

Your stay Telephones

Telephones can be unreliable in Libya. Voicemail is unusual. Mobile phones are used far more for

core business than in Europe. It is acceptable to contact someone for the first time on a mobile

phone.

If you choose to bring your UK mobile phone to Libya, please note that currently only T-mobile,

Vodafone and 3 work in Libya.

The international dialing code for Libya is +218. Landline numbers in Tripoli are prefixed with

021 and mobile numbers with 091 (Al Madar) or 092 (Libyana).

Post

The postal system is very unreliable in Libya and sending key documents by courier is

recommended. Fax is the preferred method of communication, although there is an increase in

the use of email. Not everyone has access to the internet, so including a brief summary of

FCO Travel Advice

The FCO website has travel advice to help you prepare for your visits overseas and

to stay safe and secure while you are there.

For advice please visit the FCO Travel section


website material in print may be appropriate. Telephones, faxes and emails are not suitable in

Libya for commercially or personally sensitive material.

Currency

The unit of currency is the Libyan Dinar (LYD). The bank notes come in denominations of LYD ¼,

½, 1, 5, 10, 20 and 50. The currency is pegged to the SDR, a basket of currencies, and floats

within narrow ranges. As at February 2010, £1 = LYD1.99.

Money

Libya is a cash society. Credit Cards are not widely used, although VISA and MasterCard are

starting to be accepted in some outlets. There are few reliable ATMs in Tripoli.

Electricity

Electricity is supplied at 220 volts, 50 cycles AC. Plug fittings are of the 2 pin round continental

variety and light fittings of the screw type.

Hotels

When you are planning your visit to Libya please bear in mind that hotel space is at a premium. It

can be very difficult to find good quality hotel accommodation during busy seasons and the

problem is particularly acute around the dates of major exhibitions or multilateral summits.

Getting Around

Libya is the fourth largest country in Africa (1,775,000 square kilometres), with no railways or

public transport system.

The easiest way to get around during a visit to Tripoli is by black and white taxi. They are

generally inexpensive. They can be flagged anywhere on the street. You should expect to pay a

flat fare of LYD5 for any reasonable journey inside the main Tripoli City boundaries. If you expect

a driver to wait for you throughout a meeting, to find out directions to the next meeting or to

help with additional services (such as helping you get through reception) it will cost more.

There are no reliable street maps of Tripoli. Taxi drivers are not always familiar with companies

and most work from prominent landmarks or well-known shops. Make sure the driver knows

exactly where he is going before you set off, and have to hand the mobile number of the person

you are going to see, in case you need to ring for directions.

There are many local and international car hire companies operating in Libya. Visitors will require

an international driving licence to hire a car in Libya, but it is far safer for you to hire a car and

driver.


Preparing to Export to Libya

In most cases, doing business successfully/long-term in Libya requires local representation.

The appointment of a local partner/representative will only be the first step. Libya is a market in

which family/tribal structures and personal contacts predominate in the business environment,

and where personal relationships are very important. This requires an investment primarily of

time and personal presence. Likewise, product training for the agent's workforce is essential, as

are regular updates on developments, modifications, competitor activity etc. Therefore regular

visits to the market, especially during the early phase, are an important part of a successful

interaction with the agent/distributor/partner.

British companies wishing to approach the Libyan market are advised to undertake as much

market research and planning as possible in the UK.

The UK Trade and Investment (UKTI) team in Libya can provide a range of services to UK-based

companies wishing to grow their business in the Libyan market. Our services include the provision

of market information; validated lists of agents/potential partners or potential customers;

establishing the interest of such contacts in working with the company; and arranging

appointments. In addition, we can organise events for you to meet contacts or to promote a

company and its products/services.

You can commission our Overseas Market Introduction Services to assist your

company to enter or expand your business in Libya. Under this service, the

Embassy’s Trade & Investment Advisers, who have wide local experience and

knowledge, can identify business partners and provide the support and advice most

relevant to your company's specific needs in the market.

To find out more about commissioning work, please contact your local UKTI office.

See also: www.ukti.gov.uk


How to do business in Libya

What companies should consider when doing business

Although the business climate in Libya is slowly improving in some areas, obstacles remain e.g.

bureaucracy, corruption, lack of clarity and transparency in the decision-making process, poor tax

administration, the slowness of the Libyan judicial system. Libya still has relatively under-

developed infrastructure and no public transport system, which makes things that bit harder for

visitors.

Libya is an emerging market and is often a difficult one for beginners. It is not as sophisticated as

Saudi Arabia or UAE where they have been developing the general infrastructure for the past 30-

40 years and where there is a large and strong private sector. This is not the case in Libya - a

vast country with a very small population. The State dominates the local economy with over 1

million people employed in the public sector and only 600,000 or so in the private sector. The

private sector is small and growing slowly. Most private companies were closed down in the

1970s & 1980s and only allowed to return in the 1990s. Most companies do not have websites;

there are few major projects properly advertised except in the oil & gas sector; there are no

private sector Libyan corporates; there are no databases of companies; nor is there a real postal

system and there are very few street names. Finding contacts and verifying any detailed

information about them are both difficult.

Gateways/Locations – Key areas for business

Tripoli and Benghazi are the two largest commercial centres, with a population of over 1.5 million

and 700,000 respectively.

Market entry and start up considerations

Making decisions on setting up a business in Libya can be a complicated process. It requires a

detailed knowledge of the local rules and regulations, but also an acceptance that things can

change from day to day. UK companies planning to do business in Libya are strongly advised to

get up to date information and advice on the rules from local professionals.

In most cases doing business in Libya requires local representation in the form of an agent or

distributor as business with end users is done face to face and not by email or phone. Building

long lasting personal relationships is key and this cannot be done remotely. If you are really

serious about Libya consider sending some one here permanently. Generally, Libyans like to see

British nationals representing UK companies.

On joint venture partnerships, the success of this form of relationship will very much depend on

the nature of the product/service and the level of local competition. Libya is a small market, so

personal acquaintances are important. Personal contact with potential and existing clients and

regular visits to the market are vital.

The appointment of a local partner/representative will only be the first step. Libya is a market in

which personal relationships are very important. This requires an investment of time and

personal presence. Likewise, product training for the agent's workforce is essential, as are regular

updates on developments, modifications, competitor activity etc. Therefore regular visits to the

market, especially during the early phase, are an important part of a successful interaction with

the agent/distributor.

British companies can approach the Libyan market in several ways in addition to exporting direct.

They can: appoint an agent or distributor; open a Branch office; form a Joint Venture or Joint

Stock Company; open a representative office; or enter Libya under Investment Law 5.


Branch Registration and Joint Ventures

• To carry out any work (such as construction and commissioning) in country it is a legal

requirement to have a registered Libyan entity.

• Three options are branch registration, forming a Libyan joint stock company or operating

under the umbrella of a company already in Libya.

• Branch registration is a complex, time-consuming process and only companies

undertaking an ‘allowed activity’ may register a branch.

• Companies formed in Libya can be up to 65% foreign owned.

• Operating under the umbrella of another company in Libya is a good option in the short to

medium term.

To be eligible to carry out work in the longer term in country it is essential for the company to be

registered in Libya, for the company to take part in a joint venture with an already established

partners or for the company to work under the umbrella of an already registered company.

It is extremely unusual for companies in Libya to sign contracts for work to be carried out in Libya

by a foreign company that is not already registered or intending to register. Where a contract is

signed with an unregistered company there is no legal recourse should the client refuse to pay

invoices. The tax authority may instruct the client to withhold payment until accounts have been

submitted and taxes settled.

To bid for contracts in Libya direct with state-owned oil sector companies it is recommended that

the company also registers with National Oil Corporation and the NOC subsidiaries.

Forming a Joint Stock Company (JSC)

If you opt to form a JSC it is essential that you take legal and financial advice. The current

maximum foreign ownership is 65%.

A joint-stock company with a majority Libyan participation will mean that the company is subject

to auditing of accounts by the Libyan government. This option can offer a number of advantages

bidding for jobs in country as foreign and Libya operators have a preference for awarding to high-

quality local companies where possible. If you are reluctant to relinquish so much control it may

be worth registering a joint stock company with a majority foreign shareholding or registering a

branch if possible and putting together a joint bid with a Libyan company.

Foreign companies submitting applications to register a joint stock company must submit an

application setting out the activities that the company will undertake and, if this is approved:

• A Board resolution of the foreign company making an affirmative decision to establish a

JSC in Libya.

• A detailed statement of the objects of the JSC in Libya.

• Articles of Association of the Libyan JSC.

• A letter from a Libyan Bank confirming the receipt of Share Capital. Each Shareholder

must separately transfer his share of Capital.

• A copy of the foreign shareholder's company registration abroad.

The amount to be issued as Share Capital: the authorised Share Capital must be a minimum of

LD 1 million and the issued and paid Share Capital must be a minimum of 30% (LD 300,000).

The balance must be paid within 5 years.


Branch Registration

Branch registration is a complex process that will take months or even years to complete. In

2006 new laws were introduced - we strongly recommend that companies wishing to take this

route take professional advice before doing so. Several companies publish a free advisory booklet

about it and can give advice about the process. In the long term, it offers the greatest degree of

company control and enables a company to demonstrate commitment to Libya and build a brand

name in Libya. There is a list of allowed activities that branches may undertake, but it is

becoming increasingly difficult to register a branch nowadays.

There are a number of procedures that must be completed before a company can apply for

branch registration such as:

• You must import a minimum amount of foreign currency as branch capital and obtain a

bank certificate confirming receipt of funds.

• Prepare a number of official documents (including Articles of Association, a Board

Resolution agreeing a number of areas to do with operating in Libya, detailed performance

certificates of other projects completed endorsed by the Chamber of Commerce in the

country of completion and head office accounts). All of these documents must be original

or authenticated copies and translated into Arabic. There are a number of other

specific requirements that must be fulfilled if the application is to be considered valid.

• Once registration is complete a five-year renewable business licence is issued.

Opening a Representative Office

This option provides a presence in Libya, but representative offices cannot legally conduct many

basic business activities. This includes the right to market and sell goods or conclude contracts. A

number of foreign banks, e.g. HSBC operate representative offices in Libya. Some people see it a

stepping stone to establishing a more substantial presence in future.

Entering Libya under Investment Law 5 (as amended by Tourism Law 7)

Law 5 and Law 7 allow for 100% foreign ownership of companies licensed under this law, allowing

for corporate tax exemption for approved projects and exemption from customs duties for a

minimum five-year period. Tourism projects, including hotel projects, frequently register under

Law 7 and benefit from this exemption.

Advertising & Sales Promotion

Advertising in Libya is basic and can prove costly, so many foreign companies tend not to bother

and rely on word of mouth recommendations. So most ‘marketing’ is done face to face, and on

the basis of personal recommendation or corporate reputation.

Internet/email usage is much lower than in the UK, but has increased in recent years, especially

with the investment being made by both the private and public sector in better IT. Few Libyan

ministries or companies have their own website.

Customs and Regulations

Customs procedures can be bureaucratic and slow. We recommend that a good shipping agent be

used, as delays in clearance are common.

Customs Duties were abolished in 2006 except on tobacco (10%) but there is a flat fee ‘service

charge’ of 10% on imported products. There is a Consumption Tax on protected and luxury items,

which has the same impact as an import duty. Rates vary depending upon the nature of the

product but can rise to 50%. Equipment imported for use in the oil & gas sector is exempt from

import duties. Temporary importation is allowed subject to conditions and the payment of a


deposit or submission of a guarantee. Some items are prohibited in Libya, such as alcoholic

beverages, pork and pork-products, and goods made in Israel.

Legislation and Local Regulations

Companies are always advised to seek legal/taxation advice before entering into a joint venture

or similar type of partnership. Lists of local lawyers and chartered accountants are available on

request from the UKTI Section of the British Embassy in Tripoli. The Libyan legal system is

complex and slow.

Local Regulations

Whilst there has been an easing in tariff-based barriers to trade and investment in Libya over the

years, there are other real barriers to foreign companies. The minimum capital investment for

starting up new businesses is not always clear. Ad hoc changes to rules/legislation leave some

newcomers puzzled, given the lack of publicly available information.

Taxes

Taxation issues are complex in Libya. Rules are not interpreted in a consistent way and practices

can change with little notice. Local professional tax advice is recommended. A new tax law was

approved in January 2010; implementation is expected by the second quarter of 2010.

The export of goods to Libya is not subject to tax if the supplier's commitments end before

customs clearance and the supplier is not registered in Libya, although the Tax Department now

seeks to assess Stamp Duty on the recipient. It has been accepted that there is no income tax

on such supply.

If the supply of goods forms part of a contract for onshore installation or commissioning then the

full contract value, including supply, will be subject to Stamp Duty and will be taxable.

The principal taxes are outlined briefly below. A further 0.5% is also payable on any official

receipt including receipts for contract registration duties, corporation taxes, personal tax etc.

Stamp Duties - Any contract negotiated in Libya is subject to stamp duty and must be registered

with the Tax Department within 60 days of the effective date of the contract (usually the date of

signature). A duty of 2% (new law 1%) of the total contract value and a further 0.1% on any

proportion that is sub-contracted is payable on registration. All invoices must bear the Tax

Department stamp to show that stamp duty has been paid. Any delays result in a penalty of 2%

of the duty per month up to a maximum of 50% of the duty. The Contractor is liable for the

payment of duty and a Company should not accept an invoice from a contractor that has not

been registered - if the contractor has not paid the registration duty then the company could

become liable.

Government bodies withhold a stamp duty of 0.5% from all payments made by them.

Corporation tax - Companies are assessed to tax in two stages:- a preliminary assessment when

the company's accounts are submitted, and a final assessment when the tax department

examines the accounts submitted (usually for three years at a time, in arrears). Taxes are levied

on profits assessed by the Tax Department who assume a certain profit margin for different

business activities (e.g. 5%-8% profit on supply, 15%-20% profit on oilfield service). Corporation

taxes range from 15% on LD 200,000 profit to 40% on profit of over LD 2,000,000 (new law –

flat rate of 20%)

Salaries and wages tax - Libyan salaries and wages tax applies to all salaries, bonuses and

benefits that arise from employment in Libya. Personal Tax rates range from 8% to 15% (new

law – 5% and 10%) and there is also a deduction of 1% paid to the Social Unity Fund. Social

Security deductions are 3.75% paid by the employee and 11.25% paid by the employer.


Together with Jihad tax noted below, deductions comprise almost 35% of gross salary. Foreign

companies may by concession pay their foreign nationals overseas but must deduct the Libyan

taxes and Social Security due and pay them to the Tax Department or Social Security

Department.

General Income Tax (GIT) - There is no GIT in Libya (it has been abolished).

Jihad tax - A 3% tax levied on personal incomes and 4% on corporate profits.

Value Added Tax (VAT) - there is no VAT in Libya.

Responding to Tenders A very limited number of projects are advertised through public tenders (the oil & gas sector

being the exception). There are no reliable commercial project databases available in Libya.

Projects which are considered an opportunity for UK companies will be published on the UKTI

Website, under the ‘Business Opportunities’ section.

Recruiting and Retaining Staffing

The local recruitment industry is not well developed in Libya. The UKTI Team at the British

Embassy in Tripoli can provide free details of recruitment agencies.

The unemployment rate is at least 30%. Retaining good staff can be a problem the resident

International Oil Companies tend to attract the best local talent.

Documentation

Required customs documents: a) original bill of lading; b) copies of invoices; c) health certificate

(if applicable); d) packing list; e) certificate of origin.

Labelling and Packaging Regulations There are no specific packaging requirements for products being exported to Libya. Although not

mandatory, it is highly recommended that all printed contents be in Arabic and English.

Containers should show the consignee’s name and port.

Getting your Goods to the Market

The main options for Libya are airfreight, sea-freight or courier service. It is often easier to use a

freight forwarder. Forwarders should be approached in the early stages of market research rather

than waiting until the goods are ready to go.

Standards and Technical Regulations

For standards and technical regulations contact the Libyan National Centre for Standardization

and Metrology (LNCSM)

Intellectual Property Rights

As in many developing countries, the scale of Intellectual Property Rights (IPR) abuses across

Libya's industrial sectors continues to outgrow the government's enforcement efforts. Losses to

international companies due to trademark counterfeiting and copyright piracy are growing.

Solutions to this problem, which significantly affects the film and software industries, are

hampered by a lack of capacity and co-ordination among law enforcement agencies. Copyright

piracy therefore remains a major problem in Libya. Counterfeit motion picture recordings are


widely available throughout Libya, where piracy has shifted from traditional formats to optical

discs (DVD, CD-ROM).


Business Etiquette, Language and Culture

Libyans are known for their hospitality. They normally communicate well and pay much attention

to verbal agreements. They look for trust and wholeheartedness. They value long-term

commitment, and frequently do business with the same company for many years in a

relationship, which can become more of a friendship than a business. They have a preference for

friendships, and seeing the same faces. Other key pointers for doing business here include:

• Have a good product or service that the Libyans really want;

• Choose the right local partner - be cautious; some new entrants in Libya meet would-be

partners making big claims;

• Get a good local lawyer;

• Use local knowledge e.g. British Business Group of Libya;

• Be in it for the long term; and

• Persistence and personal relationships are the keys to success.

Language

English is widely spoken in Libya by business people, and is by far the favoured second language

in the field of commerce after Arabic. Senior government officials will also normally speak

reasonable English, and if they do not, they will let you know! But until it is clear that a person is

fluent in English, it is advisable to speak clearly, slowly and without resorting to idiomatic

expressions, which may be difficult for a non-native speaker to understand.

Depending on the type of company you will be in contact with, the relationship (even between

colleagues) may be more or less formal. But in general, the Libyans are relaxed about etiquette

and attribute a higher value to how polite and considerate you prove to be.

People won’t be surprised or offended if you do not know how to pronounce their name correctly,

but will always be impressed if you try!

Whilst it is preferable for written correspondence to be in Arabic, it may also be conducted in

English. Trade literature should be in Arabic and English, as well as business cards.

A list of local translators and interpreters is available from the UKTI Team of the British Embassy

in Tripoli.

Meetings and Presentations

As in other countries, it is important to target the right person in your contacts: - the decision-

maker. It is also highly preferable to establish new business contact via an introduction by a

mutual contact, someone the company already knows and trusts.

Libyans much prefer to have face-to-face (and sometimes long) meetings, rather than keep to

contacts by phone or email, which are seen as more impersonal. Some Libyans also enjoy

discussing business over an evening meal.

Appointments are often made at the last minute, but are sometimes confirmed a few days before

the actual meeting. Punctuality is not always a strong feature, but UK companies are expected to

be on time!

Negotiations

When negotiating, companies will respond to your approach in an equal manner. If a potential

partner demonstrates flexibility and willingness to commit, they will gladly put the same effort

into the partnership.


Success in any business relationship will very much depend on the nature of the product/service

and the level of domestic competition, given that Libya is a small market. But developing a

personal relationship with a Libyan partner can be just as significant as the product or service

offering itself. Personal contact with potential and existing partners/clients and regular visits to

the market are of the utmost importance. It is natural for the business relationship to be built up

with time.


What are the challenges?

The principal problems that UK companies face are:

• The absence of a level playing field for all companies, both Libyan and foreign;

• Increased commercial competition: all the world wants to share Libya's wealth;

• The lace of transparent bureaucratic and judicial processes e.g. for licences, and meager

information about future developments;

• Unwieldy bureaucracy, particularly visas for visiting British business people.

• Late payments.

• Information, whether statistics, data about institutions, contact information or anything

else, remains very hard to find.

• Whilst Libya is a challenging business environment at times, persistence, patience and

optimism are the keys to doing business successfully. Life is never dull!

Getting Paid - Terms of Payment

Think carefully about the method and timing of payments. Whilst the payment situation is slowly

improving in Libya, do not assume that you will always be paid on time. Payment terms in

contracts are critical to getting paid. It is recommended that an irrevocable Letter of Credit is

used when exporting to Libya.

Lists of local lawyers and chartered accountants are available from the UKTI Section of the British

Embassy in Tripoli.


How to Invest in Libya

Libya has taken steps in recent years to try to encourage more foreign investment. The Oil & Gas

sector aside, things have not gone particularly well - despite numerous laws and regulations

intended to improve the local business climate for foreign investors. Anyone considering investing

in Libya should consult this Embassy and a local lawyer. Reliable statistics on foreign direct

investment in Libya are not available.

Major UK investors in Libya include BP and Shell.


Contacts

If you have a specific export enquiry about the

Libyan market which is not answered by the

information on this report, you may contact:

UK Trade & Investment Enquiry Service Tel: +44 (0)20 7215 8000

Fax: +44 (0)141 228 3693

Email: [email protected]

You will be signposted to the appropriate

section on our website, or transferred directly

to the British Embassy in Tripoli.

British Embassy Tripoli Tower 2

Bourj Al Fateh Tower

Tripoli

Libya

Tel: 00 218 21 335 1084-7

Fax: 00 218 21 335 1082


We have 6 staff at the British Embassy in

Tripoli dedicated to helping British exporters

win business in Libya, as well as assisting

Libyan investors in the UK. The following

provides details of the UKTI staff and the main

sectors they cover:

Gareth O'Brien

First Secretary

Head of Trade & Investment

British Embassy Tripoli

Tel: + 218 21 335 1084-7

Fax: + 218 21 335 1082

Email: gareth.o'[email protected]

Omran Abusahmin

Senior Trade & Investment Officer

• Infrastructure

• Healthcare


Tel: + 218 21 335 1084/8

Fax: + 218 21 335 1082


Hutaf Shanna

Trade & Investment Assistant

• Retail


Tel: +218 21 335 1084/8

Fax: +218 21 335 1082


Hesham Ghrairi

Senior Trade & Investment Officer

• Oil & Gas


Tel: +218 21 335 1084/8

Fax: +218 21 335 1082


Erica Kanoun

Trade & Investment Assistant

• Commercial Enquiry point


Tel: +218 21 335 1084/8

Fax: +218 21 335 1082


In the UK Kate Roye

Senior Manager, Libya

UK Trade & Investment Kingsgate House 66-74 Victoria Street London

SW1E 6SW Tel: 020 7215 4892 Email: [email protected]

Sandrine Jayet

Country Manager, Libya UK Trade & Investment

Kingsgate House 66-74 Victoria Street London

SW1E 6SW Tel: 020 7215 4947 Email: [email protected]

Libya is an emerging market for UK plc and

presents good opportunities for UK companies

seeking to export. It can be a difficult test

market for new exporters. Libya can also be a

springboard for UK companies wishing to enter

other North African markets, such as Algeria,

Tunisia, Morocco and Egypt.


Resources/Useful Links

Country Information:

British Embassy website:

http://ukinlibya.fco.gov.uk

BBC Website:

http://news.bbc.co.uk/1/hi/country_profiles/default.stm

FCO Country Profile:

http://www.fco.gov.uk/en/travel-and-living-abroad/travel-advice-by-country/country-profile/

Culture and communications

CILT – National Centre for Languages - Regional Language Network in your area:

http://www.cilt.org.uk/workplace/employer_support/in_your_area.aspx

Kwintessential culture guides: http://www.kwintessential.co.uk/

Customs & Regulations:

HM Revenue & Customs: www.hmrc.gov.uk

Import Controls and documentation (SITPRO): http://www.sitpro.org.uk

Economic Information:

Economist:

http://www.economist.com/countries/

Export Control

Export Control Organization:

http://www.berr.gov.uk/whatwedo/europeandtrade/strategic-export-control/index.html/strategic-

export-control/index.html

Export Finance and Insurance:

ECGD: http://www.ecgd.gov.uk/

Intellectual Property

Intellectual Property Office: www.ipo.gov.uk

Business Link: International Trade

Business Link’s International Trade pages provide an overview of export basics including

licensing, customs procedures, classifying and movement of goods, other regulatory

information and export paperwork issues. It also introduces exporters to the UK Trade

Tariff.

Essential reading for exporters!

Find out more at:

http://www.businesslink.gov.uk/bdotg/action/layer?r.s=tl&r.lc=en&topicId=1079717544


Market Access

Market Access Database for Tariffs (for non-EU markets only):

http://mkaccdb.eu.int/mkaccdb2/indexPubli.htm

SOLVIT – Overcoming Trade Barriers (EU Markets only)

www.bis.gov.uk/EUMarketAccessUnit

Standard and Technical Regulations:

British Standards Institution (BSI):

http://www.bsigroup.com/en/sectorsandservices/Disciplines/ImportExport/

National Physical Laboratory: http://www.npl.co.uk/

Intellectual Property: http://www.ipo.gov.uk/

Trade Statistics:

National Statistics Information: http://www.statistics.gov.uk/hub/index.html

UK Trade Info: https://www.uktradeinfo.co.uk/

Travel Advice:

FCO Travel: http://www.fco.gov.uk/en/travel-and-living-abroad/

NHS: http://www.nhs.uk/nhsengland/Healthcareabroad/

Travel health: http://www.travelhealth.co.uk/

doing business in libya guide

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