For Tripoli businessman Salem Mohammed, Libya’s first elections in a generation will pave the way for what he believes the North African country should become – a new Dubai.
“We have oil, we have money, Libya can easily be just like Dubai,” the 47 year old, who works in manufacturing, said.
“We just need foreign investors and hopefully they will now start coming and business will boom.”
Nine months after the end of Libya’s uprising, Mohammed hopes Saturday’s election of a national assembly will mark a new start for an economy that stagnated under Muammar Gaddafi’s 42-year autocratic rule, Reuters reports.
Investors will be closely watching the outcome of the vote – with no indication of a leading contender – to see what it will mean for projects that were frozen during the fighting and for the vast opportunities likely to emerge in an oil-producing nation with the wealth to pay for construction and healthcare.
Libya’s new rulers have said no major new concessions would be awarded until after the polls and are reviewing past deals.
Once elected, the new 200-member assembly will appoint a government to replace an interim administration that lacked the mandate to make major decisions, and expectations are for old projects to restart and for new contracts to be signed.
“There are a lot of projects (on standby), everyone wants to settle their projects from before,” said Klaus Fodinger, head of the cement division at Austria’s Asamer Holding, which resumed operations in Libya in October.
“If there are no institutions, no one to talk to, how do you settle deals from the past? The elections are a crucial event.”
Many international businesses came to Libya in recent years, attracted by its huge energy reserves and a population, which although numbering just 6 million, has median incomes much higher than elsewhere in the region.
But the eight-month NATO-backed uprising sent foreigners fleeing.
While oil companies were the first to return and have helped Libya climb back close to pre-war output levels of 1.6 million barrels per day, others have not been as fast.
Government trade delegations from around the world have visited, vying for future contracts. As commercial flights have resumed, businessmen have also jetted in for short stretches. Most companies which had a foot in Libya before have mainly wanted to get their ventures back up and running as they await a clearer political and legal landscape.
Tarek Alwan, managing director of London-based consulting firm SOC Libya, said he had been approached by numerous companies seeking guidance on how to enter the Libyan market.
“Major ones are seriously interested but they have not committed yet because the situation is not fully stable, economically and politically,” he said.
“They have been waiting for the elections so this will give them some sort of assurances that there will be proper elected (authority) to represent the country.”
WAITING FOR THE GREEN LIGHT
Major construction, such as residential property and hotels, as well as transport projects are untouched since last year, awaiting the green light from the authorities to restart.
“Despite the fact that most major public-sector projects are on hold, there is nonetheless a great deal of planning going on across many ministries and government agencies, and this is a positive sign,” said Alex Warren, of research and advisory firm Frontier, which runs The Libya Report business site.
“It suggests that once an elected government is in place, then many projects look set to start or be resumed.”
The question is how quickly they will resume. The fasting month of Ramadan, when daily life usually slows, begins shortly after the elections.
The assembly is expected to be named at least two weeks from July 7 after ballot counting is finalised and an appeals process. Within 30 days of its first meeting, it will appoint a new prime minister who will form a government.
“For major projects and contracts, I don’t see it really picking up, in terms of new tenders or companies returning, until the last quarter at the earliest,” Warren said.
The election is expected to lead to reforms and investors want to know what those policies will be. In May, the economy ministry issued a decree enabling foreign companies to set up joint ventures, branches and representative offices in most sectors, more easily.
“Businesses are looking with great hopes towards the elections,” David Bachmann, head of the commercial section at the Austrian embassy in Tripoli, said.
“However, they are aware that probabilities are high that even after the elections it might take some months – hopefully not years – before decisions are taken.”
While public sector entities await, the private sector is flourishing, especially trade. Tripoli’s port is heaving with activity and foreign produce is stocked on supermarket shelves. A cash crisis has eased and shops and cafes have re-opened.
Monoprix Tunisia, an affiliate of the French supermarket chain, wants to start opening 10 stores in Libya from late 2012, after uprisings in both countries delayed earlier plans.
On the construction side, small-scale private projects have taken off – homes are being built, businesses being refurbished.
HUGE POTENTIAL; SECURITY RISKS
Austria’s Asamer, which operates cement factories in Libya through a joint venture, has gradually increased production since January.
“We see a huge potential – there are the needs of young population and a lot of infrastructure to be reconstructed. We expect a boom in construction activity,” Fodinger said.
Gaddafi isolated Libya’s economy from much foreign competition, reserving licences and contracts for his own circle, so the prospect of a more open market is attractive to new entrants.
Dependent on oil, Libya needs basic infrastructure development as well as investment in property, consumer industries and telecoms after a fifth of transmitter stations were destroyed in the war. It will also need foreign investment and expertise to increase oil and gas production.
Its tourism industry is largely unexplored, despite stretches of beaches and well-preserved Roman ruins.
Various fairs drawing international businesses have allowed companies to cultivate relations. Industry Minister Mahmoud Al-Ftise said there were plans to increase privatisations, and Libya was interested in more foreign investment.
“We would like to have a participation from foreign and local private business so we can see results because we would like to have competition among the business,” he told Reuters.
However security remains a concern. Bouts of violence are deterring foreign firms from bringing back all their expatriates on the ground for now. For those who were once used to living in villas or flats in Tripoli, they now find themselves confined in secure compounds without their families.
Many businessmen travel with security advisers.
Libya’s interim government has struggled to impose its authority on a country awash with weapons. Attacks on diplomatic and aid missions in the east have highlighted the ongoing volatility.
Last month, Tripoli’s international airport was seized by an armed group for several hours.
“Security is a concern and when you hear of such violent incidents as we have recently, you worry and it may deter some foreigners from coming here,” one European businessman said during a recent trip to Tripoli.
“But you have to weigh the risks against the opportunities.”