When the Libyan Parliament discussed the government’s budget earlier this year, at a special session held in the coastal town of Sart, located some 450 km east there of Tripoli, there were two particularly salient features.
According to an article appearing in Al-Quds, Muhammad Abdullah Beit Al-Mal, the Libyan Minister of Finance, said the budget will include higher government oil revenues and lower tax revenues.
In Sart, the finance minister reported that government expenditure would total LD 3.07 billion ($6.6 billion), compared to LD3.5 billion in 1999. As a result, its own development budget will drop to LD 1.7 billion.
But, at the same session, Abed Al-Qader Baghdadi, the chairman of Libya's National Infrastructure Council, expressed the Government's intention to encourage foreign investments in the country, asserting that the Five-Year Plan for 2001-2005 provided for major public and private sector investments.
In an interview published in August in Al-Ahram al-Arabi, to coincide with the first anniversary of the dropping of economic sanctions against Libya, Bashir Ali Zunaybal, the head of the Libyan Investment-Encouragement Agency, said that legislation has been passed to encourage foreign investment in the country.
The primary legislative tool, Zunaybal said, is Law 5. Among its various measures exemption from customs duties on all machines and equipment imported by the foreign investor, over a five-year period, which can be renewed for another three years. It exempts profits from taxation if such revenues are reinvested.
According to Law 5, export-oriented commodities are exempt from production taxes and from stamp duties. Foreign investors are also entitled to re-export their capital and to defer losses sustained during years they enjoy tax-exempt status.
The law also permits an annual transfer of net profits to other countries, as well as the import of foreign labor if it is unavailable locally. The foreign workers are then entitled to transfer out of the country a portion of their salaries. The law also entitles foreign investors to import raw materials if local equivalents cannot be obtained.
Although he provided few details, Zunaybal intimated that Law 5 shows a certain preference to investors from Arab counties. “Though foreign investment is desirable, it has some negative aspects on the economy, especially with regard to social considerations and the preservation of national identity and heritage. Therefore we need to impose restrictions,” he told >Al-Ahram al-Arabi.
"This is not true when it comes to Arab investors, he said, who “we feel they have the same culture, history and heritage. The negative aspects of foreign investment are ruled out in the case of Arab investors.” – (Albawaba-MEBG)
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