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A Brief & Informal Guide To Doing Business in Libya

General

Persistence and Patience are Key To Success: Libya is not an easy place to do business. Those who will succeed here will have identified a specific market opportunity and will be committed to a long-term engagement. Several U.S. and foreign firms have found sizeable opportunities. They are typically willing to hire someone (whether an expatriate, or Libyan) to represent them on the ground, full-time.

Real Opportunities: Apart from the obvious opportunities in the oil & gas sector, there appear to be profitable niches in oil services, maintenance facilities, telecom services and equipment, aircraft parts & supplies, agricultural equipment (pivot irrigation & desalinization), road-building materials, industrial and interior paints, hotel & tourist facilities, personal and household electronics and consumer goods-all kinds. Keep in mind this is a country of only 5.5 million people. While the local market is modest, there are opportunities to use Libya as a base for expansion elsewhere in the region.

Go through the front door. Do not attempt to circumvent bidding processes by finding special sources of patronage or going through a local middleman.  This is a tempting option, but the vast majority of the time it will backfire.

Trade Conferences: Numerous trade shows and conferences have been held in Tripoli in recent months, by a variety of organizations. Most of these have not lived up to attendee and sponsor expectations. With rare exceptions, conferences are not the optimal means of making substantive local contacts. Perform due diligence prior to sending representation to any given event; if you have questions, contact USLO Tripoli.

VISAS 

Prepare Libyan visa applications well in advance, as early as possible, 6 weeks minimum. When having your visa processed by a local firm or government entity, make sure wherever possible that this entity is in fact effective in handling these procedures. Several companies have experienced lengthy delays due to having their visas processed by a local subsidiary/sub-ministry as opposed to the parent outfit.  USLO Tripoli cannot advise on the effectiveness of any of these entities.

LOCAL REPRESENTATION

Consider carefully the “agency” vs. “branch office” approach to setting up shop in Libya. The vast majority of foreign firms go the agency route while they evaluate longer term prospects. The exceptions should be: 1) if you are certain you have a market here, and 2) are looking to facilitate the movement of large numbers of foreign employees into and out of the country. The registration process is lengthy (average time: 4-6 months), and fraught with bureaucracy. Only two U.S. companies have completed the branch office registration process in the last year.

a.       AGENCY: Libyan Investment Law #5 provides for the engagement of a local (Libyan National) representative. Agency management may be wholly foreign. Agent compensation is typically a percentage commission on net sales. In some cases, agency requirements for firms whose primary interest is in marketing goods in Libya have been waived with a (minimum and “substantial”) direct in-country investment. 

b.      BRANCH OFFICE:  A formal registration process allows foreign entities to establish independent office in-country. The Registration Office of the Ministry of Economy and Trade outlines a series of requirements for establishing branch offices, including (but not limited to 1.) opening of a local bank account, and 70000 LD deposit  2.) Parent company has 7 years’ experience in field of branch office activity; 3.) Company has sufficient personnel and capital to accomplish stated goal.  See also, Israel Boycott Law.

CORRUPTION/IP INFRINGEMENT/ISRAEL BOYCOTT LAW

Reject all bribe solicitations. Solicitation by lower-level officials is commonly reported. Report all incidents to USLO.

Beware of Middlemen: USLO has seen a proliferation of unscrupulous “Western” and Libyan agencies, claiming to be able to arrange meetings with specific, high-profile individuals.

Hire a competent local lawyer and/or notary public, esp. when dealing with real estate and IP infringement/protection issues, which are reasonably common.

Israel Boycott Update: In response to U.S. complaints, Libya has revised its law concerning the Israeli boycott of Israel so that companies are no longer required to report business with Israel.  Most companies, both U.S. and foreign, and especially if they were known entities in the early 60’s, have been handed a copy of the Israel Boycott Questionnaire, asking them to attest to not having done business with Israel. Once a company makes clear it knows the law has changed, however, the questionnaire is usually withdrawn.  When operating through an agency, this questionnaire may come up in the context of arranging letters of credit; otherwise, the form usually surfaces during the branch office registration process.     U.S. law does not allow U.S. companies to sign such questionnaires and you are required by U.S. law to report any local government requests to comply with the Israel Boycott Law, including the receipt of the questionnaire.

FINANCING        

When arranging financing terms, letters of credit drawn on foreign banks are de rigeur.  Many U.S. firms have had problems with timely payment for goods, though the situation is not as bad as it once was. Negotiate terms in advance, clearly and decisively.  

OPIC & EXIM Currently do not provide guarantee/financing support for trade with Libya.  This situation is currently under review. 

Assistance may become available from the U.S. Trade and Development Agency (TDA) to fund feasibility studies and the like.   

EXPORT LICENSES  

Familiarize yourself with U.S. export licensing requirements, tied to Libya’s continuing presence on the Terrorism List. This includes most computers, M/S office and related encryption software. It is a legal requirement to report all “installed base” (material illegally imported into Libya against sanction) to the Commerce Department’s Bureau of Industry and Security. 

OTHER

Translate advertising/marketing materials and brochures into Arabic, where possible. While English is widely spoken by educated businessmen, you will be well served with supplemental Arabic-language materials. Avoid sizeable expenditures on certain types of public advertising, esp. those involving display of corporate logos (billboards, etc.), as regulations governing such vehicles are currently unclear/contradictory.

USLO Tripoli Capabilities:

What USLO Tripoli can provide:  

q    The U.S. Liaison Office has only been in existence since June 28, 2004.  The Economic/Commercial Section consists of one Foreign Service Officer, in place since August 2004, and one commercial assistant (a local Libyan employee).  USLO Tripoli receives on average 100 serious requests per week

q     USLO can respond to specific email queries.

q     In cases where USLO Tripoli has good relationships with the relevant entities (public and private), it  can provide contact information and/or referrals.

q     USLO Tripoli is in the process of compiling a Country Commercial Guide, which should be available Q1 2005. Other information products include a soon-to-be released business news & tenders Listserv, administered by DOC.   

What USLO Tripoli cannot yet provide:

      q       Gold Key Services

q       Consular Services