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 end2012, 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. 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.

Theoretically

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