The Libyan experience of handling incoming investment is under strain, as a slump in foreign interest in the economy currently weakens the case for overseas corporations accepting the risks inherent in involvement in a basically difficult market place.
While Libyan foreign exchange reserves are considerable, it also has heavy commitments. In the past, the country has had a record of being able to manage no more than one large-scale project at a time. The Great Man-made River (GMMR) fulfilled this role until the present time. Now, there are major non-oil projects in hand in road and rail transportation, construction of housing - all in addition to the continuing GMMR scheme and large developments planned in oil and gas. These are either underwritten by the country concerned or are at the risk of the commercial company.
Nothing, meanwhile, has yet been done by way of passing a law on the attraction and protection of foreign investment to escape from the ramshackle legal structures under which foreign corporations labour, and which give so insecure a status in respect of payment for work done, and conditions that surround joint venture arrangements between Libyan and foreign firms.
Until such time as a more reassuring legal foundation is provided and acted on in good faith, Libyan attractiveness to foreign investors will remain volatile and will not necessarily bring in the best of suppliers.
For more news and expert analysis about Libya, please see Libya Focus and Libya Politics & Security.
© 2010 Menas Associates
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