Libya profile

Current business situation

The Department of Foreign Affairs and Trade (DFAT) provides advice for business travellers and tourists going to Libya. This is regularly updated, and should be checked before planning travel.

Country overview

Capital city:	Tripoli
Surface area:	1,760,000 sq km
Population:	6 million
Official language(s):	Arabic
Head of State:	Colonel Muammar Al-Qaddafi
Head of Government:	Dr Al Baghdadi Ali Al-Mahmodi
Australian exports to Libya:	A$18 million
Australian imports from Libya:	None recorded
Libya's principal export destinations:	Italy, Germany, Spain
Libya's principal import sources:	Italy, Germany, China

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

Economic climate

Libya’s economic performance in recent years has been poor, as a result of sanctions, low oil prices, economic inefficiencies, excessive state intervention in the economy, and corruption.

Key economic indicators and statistics for 2007:

GDP - US$57.1 billion
GDP per capita - US$9,372
Real GDP growth - 6.8 per cent
Inflation - 6.7 per cent

The manufacturing sector is large, but its competitiveness and efficacy is affected by strong state economic intervention and by aging technology and processes. Libya has capabilities in areas such as chemicals, mining, minerals processing, and construction materials.  Unemployment is estimated at 25-30 per cent (a figure that would be much higher if underemployment was also included), and inflation (consumer prices) at 15-18 per cent.  The country’s external accounts vary, often according to oil prices, but the Government typically runs a large budget deficit.

The country was impacted by United Nations (UN) sanctions during much of the 1990s, stemming from Libya’s refusal to hand over two suspects in the bombing of Pan Am Flight 103, which was destroyed in 1989 over Lockerbie, Scotland. The United States retains some sanctions against Libya, but the UN ones – including bans on international flights and aircraft spare parts – have been removed. The sanctions limited the ability to import luxury goods or non-essentials, although as the country increasingly returns to the international fold, and its trade and living standards rise, its consumption and import demands are likely to become more sophisticated.

Political climate

The government interferes heavily in business and trade; there are a number of import restrictions, and foreign currency allocations are heavily controlled. Due to the risk of the reintroduction of United Nations (UN) sanctions, and the lack of legal transparency, foreign companies should be very careful in committing to contracts – especially long-term arrangements – with the Libyan Government or Libyan importers. The legal system is based loosely on Italian civil law, a legacy of Italy’s short colonial rule, although Islamic courts operate separately with limited jurisdiction.

In theory Libya is a peoples’ republic, with popular input into the political at local government level. Suffrage in elections is universal and compulsory at 18 years of age, and through these elections, representatives are selected to People’s Committees that then select members of the national legislature. In practice, Libya is an authoritarian state, with the Head of State not elected (and officially not holding a title), and with national-level positions made by appointment (often through a People’s Committee) rather than direct popular vote.

Sensitive sales (eg. military equipment, dual-use technology, or training services for aviation, scientific, or engineering staff) should be discussed in advance, and as early as possible, with the Department of Foreign Affairs and Trade  (DFAT), and possibly the Department of Defence.

Trade relations and statistics

Libya is not a member of any major trading blocs, receives very little development aid or assistance, and has a relatively high foreign debt. Libya has actively tried to promote itself as a link between Africa and the Arab Middle East. It is actively involved in the Organization for African Unity (OAU) and the Arab League, as well as a number of other multilateral bodies.

Libya’s international role has been constrained by United Nations sanctions and poor relations with the west, especially the US. Relations with the US have been poor since diplomatic relations were severed in 1980, and in 1986 the US undertook a limited military strike against Libya. The two countries remain at odds. Relations with Europe have improved, especially since the Lockerbie trial in 2000–2001, but are not strong. Libyan attempts to attract European investment have not met with great success, although European oil firms are keen to expand their role in the market.

Boundary disputes with several countries have also strained its regional relations, although not seriously in recent years.

Major Australian exports to Libya (2007):

• Meat (excluding bovine) - A$7 million
• Live animals - A$4 million
  
• Cheese and curd - A$1 million
• Metal fastners - A$1 million

Major Australian exports from Libya (2007):

• No significant imports were recorded.

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)