PEST ANALYSIS OF LIBYA

Harshada Chavan
Roll No. 16
ECONOMY OF THE COUNTRY
Libyas economic driven primarily by the oil sector. The 2011
conflict caused large disruptions in oil production, and the
economy 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. Strong
growth 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 20
percent GDP growth by the International Monetary Fund).
A surge in public sector spending, part of which on generous
transfers that have boosted household incomes and
consumption, is supporting recovery in the non-oil economy as
well44 percent real growth in 2012, with another 25 percent
growth expected this year as the reconstruction process
accelerates. Growth in the non-hydrocarbon sector is expected
to have fully recovered from the conflict by 2014, but this hinges
on restoring stability and security to allow for investments to
pick up again.
INWARD AND OUTWARD FDI
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
GDP AND CPI IN LIBYA
ROLE OF WORLD ORGANIZATIONS IN COUNTRY
The World Bank Group is coordinating closely with the United
Nations, the European Union and the Department for
International Development (DFID) in its program in Libya.
DFID is financing two public sector governance specialists to
be based in Tripoli as part of the World Bank team. It is also
providing 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 Group
for 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 investors
against risks such as transfer restriction, expropriation, war
and civil disturbance. TunInvest-AfricInvest Group is a private
equity house established in Tunisia.
ROLE OF WORLD ORGANIZATIONS IN COUNTRY
The International Finance Corporation (IFC), the World Banks
private sector arm, fielded two reengagement visits in 2012
and plans to support trade finance and access to credit and
leasing to promote small and medium enterprises. The IFC
and the World Bank are coordinating support to strengthen the
financial and private sector.
The World Banks program in Libya prior to the 2011 conflict
was fee-based, financed by reimbursable technical
assistance, now referred to as Reimbursable Advisory
Services (RAS). The Banks support to Libya during the
transition in FY13 and FY14 is expected to be funded with
Bank resources and grants financed by trust funds. The World
Bank is open to identifying bridging activities leading to RAS.
WHY INVEST IN LIBYA?
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 services
in the housing, energy utilities and airports segments.
Interestingly, it is estimated that Libya will face a housing shortfall of
500,000 units by the year 2020. In fact, the Housing and Infrastructure
board (HIB) has been given the task of building 200,000 new houses
and the necessary infrastructure by 2020. The HIB is also required to
oversee the construction of numerous roads in Libya as well as other
significant infrastructural projects such as water and sewage pipelines,
schools, hospitals, clinics, libraries which are pertinent for further
development.
Aecom is the appointed US consultant firm to oversee the execution of
the programme of HIB. Meanwhile, other important emerging industries
in Libya relates to renewable energy, transportation and also the
tourism sector.
The tourism industry has the potential to be Libya's second largest
industry as the country boasts of its UNESCO world heritage sites, sea
resorts and desert tourism.

WHY INVEST IN LIBYA?
To facilitate this process to potential foreign investors, the
government set up free investment 'stop shops' in Tripoli, Misrata and
Benghazi to offer diverse services such as immigration services.
The PIB is responsible for all foreign and local investments and is the
responsible authority for issuing permits under Investment Law
number 9. In particular, this Law is aimed for the promotion of foreign
direct investment that fall under Libya's policy objectives, particularly
new investments within the industrial, health, tourism, services, and
agricultural sectors.
As from 2010, foreign investors benefit from an elimination of stamp,
export and import duties, exemption from corporate taxation for the
first five years of operation and, international insurance.
This Law also guarantees rights for foreign companies including the
right of opening a bank account in any of the three banks operating
in Libya, the right of remitting net profits and interest generated in
Libya to other countries and rights to use and own land and
buildings.

FTA OF LIBYA
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) promotes
economic integration and democratic reform across 16
neighbors to the EUs south in North Africa and the Middle
East. One important part of this work is to achieve mutually
satisfactory trading terms for the Euro med region partners.

PEST ANALYSIS
POLITICAL FACTORS
Despite relative political calm following the National Transitional
Council's (NTC) handover of power to the General National
Congress, the country's security remains in jeopardy because of
continuing 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 objective
is fading.
The pattern of kidnapping and assassinations which has continued
for several months points to a systemic failure of the authorities to
impose law and order in the wake of the war, thus it is imperative that
IOCs and other foreign investors keep abreast of all the latest
political and security developments.
ECONOMY RELATED FACTORS

(-) Relatively poor agriculture resources
+ A wealth of high quality fish
+ Relative wealth of non-oil mineral resources
+ Wealth of archaeological resources and nature
tourism
+ Representatives of foreign and joint companies are
satisfied with importing capital and accounting
procedures
(-)Representatives of foreign and joint companies are
not satisfied with exporting funds and the auditing
system
+ Strong financial position
+ Strong GDP growth in recent years
(-)High dependency on the oil and gas sector
+ Economic activities are based on private SMEs


SOCIAL FACTORS
Libyan is mainly desert or semi-desert with coastal plains and basins,
mountainous highlands and valleys. The diversified nature of the Libya
has resulted in a diversity of life patterns, including the pastoral
Bedouin who base their society on the idea of tribalism in contrast to
life in rural areas where the agricultural environment is important. For
this 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 all
legislation supports this, even allowing them to take senior jobs in the
public sector. However, in practice, despite that women are now taking
part 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.
TECHNOLOGY AND R&D RELATED FACTORS

(-) Poor infrastructure in the area of information
exchange
(-) Lack of business information
(-) Lack of exploration studies

Thank you