pest analysis of libya

5/22/2018 Pest Analysis of Libya

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PEST N LYSIS OF LIBY

Harshada Chavan

Roll No. 16


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ECONOMYOFTHECOUNTRY

Libyas economic driven primarily by the oil sector. The 2011

conflict caused large disruptions in oil production, and theeconomy contracted by more than 60 percent that year. By end-2012, however, oil production was nearly back to pre-war levels(1.6 million bpd), supporting a doubling of real GDP. Stronggrowth is also expected in 2013.

Libyas Central Bank forecasts real GDP growth between 16

percent and 18 percent in 2013 (compared to a forecast of 20percent GDP growth by the International Monetary Fund).

A surge in public sector spending, part of which on generoustransfers that have boosted household incomes andconsumption, is supporting recovery in the non-oil economy as

well44 percent real growth in 2012, with another 25 percentgrowth expected this year as the reconstruction processaccelerates. Growth in the non-hydrocarbon sector is expectedto have fully recovered from the conflict by 2014, but this hingeson restoring stability and security to allow for investments topick up again.


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INWARDANDOUTWARDFDI

Stock of direct foreign investment - at home

$17.15 billion (31 December 2012 est.)$16.43 billion (31 December 2011 est.)

Stock of direct foreign investment abroad $17.47 billion (31 December 2012 est.)

$16.89 billion (31 December 2011 est.)

Data courtesy- indexmundi.com


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GDP ANDCPI INLIBYA


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ROLEOFWORLDORGANIZATIONSINCOUNTRY

The World Bank Group is coordinating closely with the United

Nations, the European Union and the Department forInternational Development (DFID) in its program in Libya.DFID is financing two public sector governance specialists tobe based in Tripoli as part of the World Bank team. It is alsoproviding technical support in coordinating donor assistance

for economic governance and recovery. The Multilateral Investment Guarantee Agency (MIGA)

provided a guarantee in 2012 to TunInvest-AfricInvest Groupfor a US$8.9 million investment in Jafara Co., a water and

juice bottling company based outside Tripoli. The 10 year

guarantee is MIGAs first in Libya and protects the investorsagainst risks such as transfer restriction, expropriation, warand civil disturbance. TunInvest-AfricInvest Group is a privateequity house established in Tunisia.


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ROLEOFWORLDORGANIZATIONSINCOUNTRY

The International Finance Corporation (IFC), the World Banksprivate sector arm, fielded two reengagement visits in 2012and plans to support trade finance and access to credit andleasing to promote small and medium enterprises. The IFCand the World Bank are coordinating support to strengthen the

financial and private sector. The World Banksprogram in Libya prior to the 2011 conflict

was fee-based, financed by reimbursable technicalassistance, now referred to as Reimbursable AdvisoryServices (RAS). The Banks support to Libya during the

transition in FY13 and FY14 is expected to be funded withBank resources and grants financed by trust funds. The WorldBank is open to identifying bridging activities leading to RAS.


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WHYINVESTINLIBYA? In May 2013, a conference entitled 'Libya Projects 2013' was held with

a view of breaking down the new projects that will be undertaken in

Libya over the next few years. Projects of particular national importance include infrastructural

projects within the oil and gas industry, as well as construction servicesin the housing, energy utilities and airports segments.

Interestingly, it is estimated that Libya will face a housing shortfall of500,000 units by the year 2020. In fact, the Housing and Infrastructureboard (HIB) has been given the task of building 200,000 new houses

and the necessary infrastructure by 2020. The HIB is also required tooversee the construction of numerous roads in Libya as well as othersignificant infrastructural projects such as water and sewage pipelines,schools, hospitals, clinics, libraries which are pertinent for furtherdevelopment.

Aecom is the appointed US consultant firm to oversee the execution ofthe programme of HIB. Meanwhile, other important emerging industriesin Libya relates to renewable energy, transportation and also thetourism sector.

The tourism industry has the potential to be Libya's second largestindustry as the country boasts of its UNESCO world heritage sites, searesorts and desert tourism.


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WHYINVESTINLIBYA?

To facilitate this process to potential foreign investors, the

government set up free investment 'stop shops' in Tripoli, Misrata andBenghazi to offer diverse services such as immigration services.

The PIB is responsible for all foreign and local investments and is theresponsible authority for issuing permits under Investment Lawnumber 9. In particular, this Law is aimed for the promotion of foreigndirect investment that fall under Libya's policy objectives, particularlynew investments within the industrial, health, tourism, services, andagricultural sectors.

As from 2010, foreign investors benefit from an elimination of stamp,export and import duties, exemption from corporate taxation for thefirst five years of operation and, international insurance.

This Law also guarantees rights for foreign companies including theright of opening a bank account in any of the three banks operating

in Libya, the right of remitting net profits and interest generated inLibya to other countries and rights to use and own land andbuildings.


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FTAOFLIBYA

Libya is a part of the Greater Arab Free Trade Agreement,(GAFTA), also called PAFTA, pan Arab Free Trade

Agreement.

Libya is a member of the COMESA (Common Market for

Eastern and Southern Africa) free trade area (FTA) Libya has an observer status in the Euro med partnership.

The Euro-Mediterranean Partnership (Euro med) promoteseconomic integration and democratic reform across 16neighbors to the EUs south in North Africa and the Middle

East. One important part of this work is to achieve mutuallysatisfactory trading terms for the Euro med region partners.


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PESTANALYSISPOLITICALFACTORS

Despite relative political calm following the National TransitionalCouncil's (NTC) handover of power to the General NationalCongress, the country's security remains in jeopardy because ofcontinuing outbreaks of severe violence.

There are signs that trouble is intensifying and that the honorable

treatment of fellow Libyan nationals as a social and political objectiveis fading.

The pattern of kidnapping and assassinations which has continuedfor several months points to a systemic failure of the authorities toimpose law and order in the wake of the war, thus it is imperative thatIOCs and other foreign investors keep abreast of all the latestpolitical and security developments.


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ECONOMYRELATEDFACTORS

(-) Relatively poor agriculture resources

+ A wealth of high quality fish + Relative wealth of non-oil mineral resources

+ Wealth of archaeological resources and naturetourism

+ Representatives of foreign and joint companies aresatisfied with importing capital and accountingprocedures

(-)Representatives of foreign and joint companies arenot satisfied with exporting funds and the auditingsystem

+ Strong financial position + Strong GDP growth in recent years

(-)High dependency on the oil and gas sector

+ Economic activities are based on private SMEs


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SOCIALFACTORS

Libyan is mainly desert or semi-desert with coastal plains and basins,mountainous highlands and valleys. The diversified nature of the Libyahas resulted in a diversity of life patterns, including the pastoralBedouin who base their society on the idea of tribalism in contrast tolife in rural areas where the agricultural environment is important. Forthis reason every region in Libya has its own customs and traditions

that make it unique.Theoretically speaking there is nothing that prevents women from

taking jobs and partaking in all social and economic activities, as alllegislation supports this, even allowing them to take senior jobs in thepublic sector. However, in practice, despite that women are now takingpart in all aspects of life, there are still obstacles preventing women

from fully participating in the job market.Maternity leave given to working women in accordance with Article 25

of the Social Security Law is not consistent with jobs such as teaching.


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TECHNOLOGYANDR&D RELATEDFACTORS

(-) Poor infrastructure in the area of informationexchange

(-) Lack of business information

(-) Lack of exploration studies


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pest analysis of libya

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