BUSINESS IN LIBYA
Click here to load reader
-
Upload
nikita-agrawal -
Category
Documents
-
view
87 -
download
3
Transcript of BUSINESS IN LIBYA
First one should consider various aspects of the country for starting a business. Here, let us start
with it:
Introduction
Foreign companies have taken an ever-greater interest in Libya since Colonel Qadhafi decided in
2003 that Libya would give up its weapons of mass destruction. Hence, this step made Libya
back on the business map, though politics and business remain intertwined. But theh current
status of political tension that is going around in Libya has made businesses to think again before
entering the country.
But, change is in the air in Libya. Not political change, but clear business opportunity for those
patient, persistent and determined enough to take it would also come. 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 – one cannot do business there long-distance, but by being there, often.
Libya is also a (dry) niche Mediterranean holiday destination for some. 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.
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.
4,000 Libyan doctors are either working or undergoing medical training in the UK.
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 foreign
companies in Libya. Priority sectors identified are:
Oil & Gas
Airports
Healthcare
Education & Training
Retail
Ports
Defence & Security
Construction
Financial Services
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 centralized state control to engaging with globalization. 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 one 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 nationalization
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 estate 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. Currently, the Corinthia
Hotel, the Al-Waddan and the Radisson Blu are the best in town, but it would 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 was underway in 2010 on a $5 billion ‘Energy City’ project near the town of
Sabratha, which was 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 privatize part of the National
Commercial Bank (NCB) and will open the sector to more competition by selling bank licences.
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 licenses 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 license 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 centralized 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 privatization.
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 licenses 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 gave licenses for foreign banks to launch
operations in 2010, either alone or in partnership with Libyan investors.
Politics
Libya's political structure is unique. It might change after the current protest. But before the
protest started, the system was as described below:-
There were 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 organizations also attend.
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 lives 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
By air
There is no direct flight from New Delhi to Libya
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
Every resident want to go to Libya, they need to obtain visa before visiting this place. And they
can go to embassy of Libya in New Delhi to apply visa. Visa is compulsory procedure for every
resident when coming to Libya.
Telephones
Telephones can be unreliable in Libya. Voicemail is unusual. Mobile phones are used far more
for core business. It is acceptable to contact someone for the first time on a mobile phone.
If one choose to bring their 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
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 of today 1LYD= Rs.36.3
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 one is planning their 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. One should expect to pay a
flat fare of LYD5 for any reasonable journey inside the main Tripoli City boundaries. If one
expect a driver to wait for them 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.
There are many local and international car hire companies operating in Libya. Visitors will
require an international driving license to hire a car in Libya, but it is far safer to hire a car and
driver.
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 favored 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 one is 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 one tries!
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.
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.
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 Foreign 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 it would 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.
PRODUCT DESCRIPTION:
The Medical College would be run by making a collaboration deal with one of the Libyan
College. It would be providing the basic degree of MBBS initially and based upon its success the
further expansion in higher studies would be done.
Tie ups with Indian Hospitals would be done for providing the students a platform to learn and
practice over here for some time. There would be a compulsory visit to any of the big Hospitals
in the Curriculum and the Visit to India for learning and practice would be kept optional and
extra charge would be there for each.
The admission procedure would be based upon the merit system as followed in India. The course
would be offered for MBBS and MDS i.e. for being a General Physician and for being a Dentist.
Later on the courses for being a MS i.e. a Surgeon would be added.
IT’S SUITABILITY IN THE TARGET MARKET:
After seeing all of the above facets of doing business in Libya, it can be said that Education is the
sector that is not affected by all these and hence, one can find a good opportunity in finding this
as a feasible option. Even government of Libya is trying to encourage FDI in this sector and
hence government even would not raise any problem.
The healthcare sector is also growing and least affected by all the Political changes that are
currently taking place in Libya as a whole.
Libya’s hospitals and clinics for the most part do not meet international standards. Those
Libyans who can afford it generally travel to Tunisia, Jordan, or Europe for medical care.
Benghazi Medical Centre recently announced a $120 million tender for middle-level
management staff and completes renovation of the facility, including advanced imaging
equipment, basic supplies, furnishings, etc.
To deal with this problem one has to first solve the problem at the grass root level that is with the
less number of doctors over there.
As seen earlier that around 4000 Doctors of Libya are either attaining training or practicing in
Europe. A huge gap or opportunity is hence available for opening up a Medical college over
there.
The college is a feasible option by considering the above given option that here in Libya there is
a huge opportunity in Education and Training sector and as majority of people lie in the age
group between 15 to 60 and below 15 as well, so it provide a huge scope of it.
With less of the medical colleges over there it would provide the people over there a good option
for those who want to study in their Home country. As India is one of the best in education sector
collaboration of an Indian Medical College with a Libyan college would provide a good entry
option in the market. The country of origin would be having an added advantage over here.
PRODUCT POSITIONING:
The college would be positioned as a best college to study with as it is in collaboration with an
Indian College and hence would be offering one of the best educations.
As Indian Education System is said to be one of the strongest education system in the world and
this would help to gain an added advantage.
The target customers would be the young school going students who would be later going for
higher education in Science as a field and who want to be a Doctor.
The people who are unable to go abroad for their higher education and those who want to be a Doctor would be the major target. Females would be encouraged to join the college as it being providing them with a chance to earn and be self dependent. The service would hence be rendered at a competitive price compared to other foreign institutes.
As per the rule of the FDI in Education Sector the curriculum and the examination procedure would be approved by the education related-authority in the Great Jamahirya.
OVERALL EDUCATION INDUSTRY:
Compulsory Education: In the Libyan Jamahiriya education is free to everyone from
elementary school right up to university and post-graduate education, both in Libya and abroad.
Pre-university education is divided into primary, preparatory, and secondary education. Schools
are everywhere. For nomads, there are mobile classrooms and teachers.
Age Limits: Education is compulsory between age 6 and 15 years of age. Where preschools
are available, children begin school at age four. Because of herding responsibilities, some
Bedouins do not start school until a more mature age.
Enrollment & Female Participation: In 1978, there were 819,012 students enrolled in
Libyan schools. Roughly 18,956 or 2.3 percent were in private schools. The government closed
private schools during the 1980s. Most enrolled children of foreign workers. Enrollment in
religious schools increased after the revolution. In 1974, there were 15,303 Libyan students
enrolled in religious or kuttab schools. By 1980, this number increased to 59,779 with the
Islamic University of Sayid Muhammad Ali Sanusi at the zenith of religious education. By 1994,
there were over 1.3 million students enrolled in primary school; 49 percent were female. Another
310,556 students were enrolled in secondary schools, and 72,899 university students were
enrolled in school, of whom 46 percent were female. (UNESCO 56)
Women are making great progress in Libyan society if education is a barometer of change. In
east Libya, schools are coeducational, but in west Libya male and female students attend separate
schools. In rural areas, out of economic necessity, because the number of students is so small,
boys and girls attend class together, but boys sit at the front of the class and girls at the back.
Academic Year: Libya's school year consists of 35 weeks of instruction. Students attend
school 6 days per week or 280 days per year. School begins in September.
Language of Instruction: Arabic is the language of instruction. English and French are
taught as second or foreign languages.
Examinations: Rigorous examinations screen students from one level within the system to
the next. Beyond classroom examinations, there are two major statewide examinations. Those
who pass earn a Primary School Certificate. This allows them to enter intermediate secondary
school or junior high school. After graduation from junior high school, students take a state-
administered examination to determine entrance into secondary schools and institutes. Those
who pass are awarded a certificate that admits them to upper secondary school. During their last
year of secondary school, students must pass another state examination to be admitted to
universities and other institutions of higher education. Students who pass the upper secondary
school examination earn a diploma. These state examinations are created and administered by the
Secretariat of Education and Scientific Research. Examination results are published in major
newspapers.
Religious Schools: Private schools were discontinued during the 1980s, but religious
schools were encouraged. In 1975, there were 181 Koran schools that enrolled 15,303 students.
There were 12 Islamic intermediate schools with an enrollment of 674 students. Just 162 students
attended religious secondary schools that year. By 1981, with government encouragement,
59,779 students were enrolled in religious schools.
Curriculum: In six-year primary schools, students study mathematics, natural sciences,
hygiene, art, crafts, literature, and physical education. In secondary schools, students can choose
a literary or scientific program of study. Language studies at this level include English, French,
and Italian, as well as Arabic.
After primary school some students follow a vocational or technical school program throughout
secondary school. Others continue on to religious secondary schools and universities, which
emphasize Islamic law and Arabic.
Textbooks: All textbooks and pedagogical materials are produced by the Secretariat of
Education and Culture. Books used in religious schools must also be approved by the Secretariat
of Education.
Role of Education in Development: Libya uses education as a tool of development. It
makes an inventory of skills needed by Libyan workers and then sets the curriculum and
incentives to encourage students to study those fields so that expatriates can be replaced by
skilled Libyan workers. A "libyanization" of the workforce is the goal. They hope to break their
dependence on foreign labor, given their deep-seated historically rooted mistrust of foreigners.
They have been very successful thus far, especially in recruiting women into non-traditional
occupations. Modern jobs are being filled by Libyans in industry and agriculture. Schools at each
level are directing greater numbers of Libyan students into science and technology to fill Libya's
manpower requirements.
MAJOR COMPETITORS:
Libyan International Medical University (LIMU) and two other medical institutes (Al Fateh University
Al-Arab Medical University). The LIMU provides the degrees in following disciplines:
1. Faculty of Basic Medical Sciences
2. Faculty of Medicine
3. Faculty of Dentistry
4. Faculty of Pharmacy
5. Faculty of Medical Information Technology
6. Faculty of Nursing
But these institutes are not world class institutes and lack the quality. Hence by collaborating with any one of them would be beneficial for both. These only provide degree to the undergraduates.