Libya: Investing in Libya
Libya's development has traditionally relied on a number of positive factors, such as the abundance of oil and gas resources, a young and relatively small population (6.5 million inhabitants) and a strategic geographical location between Europe, Africa and the Gulf Region. Nevertheless, the ongoing civil war, along with the country's bureaucratic burden, low-skilled workforce, and very low level of economic diversification constitute severe challenges. The 2022 World Investment Report published by UNCTAD estimated Libya's 2020 FDI stock at USD 18.4 billion, while there was no reliable data concerning FDI inflows in the report.
Libya's industrial sector is based on oil refining, petrochemicals, and iron & steel. Foreign investment mainly targets the oil industry and is vulnerable to the changes in the market. As central Tripoli comes under greater threat of devastation, other parts of the country appear to be attracting investment. Misrata, once known internationally for suffering a protracted siege in 2011, is once again a bustling commercial centre. Benghazi has received significant foreign investment to rebuilt the city after the long conflict.
Foreign Direct Investment | 2020 | 2021 | 2022 |
FDI Stock (million USD) | 18,462 | 18,462 | 18,462 |
Number of Greenfield Investments* | 1 | 2 | 5 |
Value of Greenfield Investments (million USD) | 0 | 12 | 6,362 |
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Libya | Middle East & North Africa | United States | Germany |
Index of Transaction Transparency* | 4.0 | 6.4 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 1.0 | 4.8 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 4.0 | 4.7 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
The Lybian Investment Law is designed to encourage the investment of national and foreign capital in Libya. Tax benefits are granted to companies that can contribute to the diversification of the local economy, the development of rural areas, the increase of employment, etc. The tax exemptions applicable to companies registered/governed by the Investment Law include a five-year exemption from income tax; an exemption from tax on distributions and gains arising from a merger, sale or change in the legal form of the enterprise; an exemption for profits generated from the activities of the enterprise, provided the profits are reinvested; an exemption from customs duties on machinery and equipment; and an exemption from stamp duty. A free zone has been established in Misrata (Qasr Hamad port area).
Foreign investors in Libya are required to have an agent in the country; in addition, it is difficult to find a good business partner and there is an absence of reliable statistics for marketing studies. Through the Law n°5 of 1997, amended by law n°7 of June 2003, the Libyan government has taken measures regarding training of local technicians, transfers of technology, participation to the development of local production, creation of regional development and diversification of sources of income.
Tourism, industry, health, services or agriculture are sectors defined by the General People's Committee as being open to foreign investment. Advantages such as tax exemptions are reserved for projects carried out within the framework of this law. However, the percentage held by Libyans or Libyan companies within the framework of this law cannot be less than 51%.
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Latest Update: September 2023