Thursday, 9 September 2010

Libyan business environment inhibited by incompetence

An assessment by Reuters of risk factors in Libya demonstrates that a number of economic and political risks will affect foreign companies in the immediate future. Among the major factors – all of them predictable – are the uncertainties over the succession, and the inbuilt suspicion and xenophobic attitude of the government. It also points out the volatility of policies and notes that unrest could pose a risk to foreign investors. Although little of its analysis is original, the review contemplates the extent to which Saif al-Islam is a likely successor but misses the key reason in the situation – that Colonel Qadhafi himself seems entirely averse to any diminution in his own personal authority.

Interestingly, the report suggests that “business-friendly reform” has been almost totally lacking, which will come as no surprise to those who have been acquainted with the now long history of the proposed legislation on the encouragement and guarantees for foreign investments.

Business opportunities are seen to be available but face intense competition. At the same time, the business environment is inhibited by incompetence, inefficiency and ill-will.

The report correctly suggests that the recent frictions with Switzerland demonstrate just how difficult the diplomatic environment and its effects on trade can be. Other examples which might also have been sited include spats in the past few years with Italy, Denmark and Germany.

For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.

© 2010 Menas Associates

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