ABDULGADER ELKHAIR Secretary for Economy and Trade

Mr. ElKheir: With the evolution of oil, the country started to change gradually and precisely after the 1969 revolution, we adopted the 3-year plan and subsequent 5-year plan and other development plans for the country. Our main aim was to diversify the economy and learn how best to invest this newfound wealth; prior to the oil, Libya depended heavily on foreign aid. We started investing in industrial projects, in agriculture and in infrastructure building (roads, schools, and hospitals). During this era of the 1970's and 1980's we invested more than LYD 35 billion in development. Our oil revenues were impacted by the market prices in the late 1980s. This also affected foreign investment into our plans. We were forced to stop our development projects as a result. Since then, we have been working on a yearly plan. Our annual budget plan consists of a development and what we call a physical budget. The goal is to increase our per capita income.

We began motivating our private sector in the early 1990's. We realized the need to move away from a state-owned economy. Most of the companies that deal with trading, in food, or agricultural commodities, have been liquidated. The problem with our economic reform plans in the 1990's was that it was interrupted by the sanctions we came under; there was low investor confidence in the people. In 1997, we introduced law no. 5, whereby it stipulated that foreign investors may participate alongside the local private sector. Foreign investment at the time was still very small due to the complications posed by the embargo. Statistics show that we currently have about LYD 1.3billion in foreign investment, which is a very small figure. Our own 2005 budget is approximately LYD 19 billion; you can see the difference.

This year however, we have a company called Exotech that will be building a refinery in the east of Libya, at a cost of $2 billion. There will also be another company building a refinery in the West of the country, near Zwara. These are still blueprint projects; I hope they are successful in implementing them.
Libya needs more technical know-how and big investments; this is why we changed our regulation, which does not accept investment under LYD 50 million. We changed that regulation this year because we found that the smaller investors have been very sluggish in their work and we need more know-how than capital investment. Our GDP has increased by approximately 24 times. The per capita income average growth is more than 3%, which is quite good because we have a decreasing population growth. We aim on doubling our GDP in the future. We realize it's all very ambitious and difficult.

We spend a lot of money on subsidized goods and services for the people, and this is a practice that needs to be eliminated eventually. However, in a country like Libya, where the decision is not in our hands, but with the people, it's difficult; people have rejected such moves recently. We even prepared a proposal that started with the food subsidies. We divided how much we spend a year on food subsidies by the population and it came out to 150 LYD per head. So we said we'd pay that amount added to your salary if you're a government employee. We even specified that they would get this increase depending on how many children that person has etc. We drafted the proposal, and explained the negative results of subsidies, where we are losing a lot of money because there is so much going to waste or being smuggled out and resold because they are so cheap. They have not been convinced so far, but I really don't think this can continue; neither in the food products or sources of fuel.

United World: To what extent do you feel privatization can end this culture of subsidized goods and services?

Mr. ElKheir: I don't think privatization will solve this problem; this is an internal, domestic issue that will be dealt with as such. We will continue to hammer in our proposal till we get somewhere. We simply cannot continue doing what we are doing.

United World: How do you think Libyan attitudes towards today's reality are changing?

Mr. ElKheir: I think the Libyans also need to know that we will succeed in the private sector. Everything they are accustomed to lies in the heritage of the state-owned economy. Most people go to work only for the sake of getting their fee at the end of every month; productivity is very low. We need to stimulate the private sector and make sure it succeeds so that more employment opportunities come up and better chances arise for local investors. They are still quite skeptical with the changes taking place. We need to do this for the new generation. We need to change that mentality of "you can get paid for something you didn't do." The state employs 900,000 people in the health, education, and communication sectors; this is excluding public companies like cement and steel. The Tunisian government employs only 300,000 people. Previously, I suppose we didn't have a choice but we have no excuses today. We are trying to facilitate things for private local investors as much as we can. For example, in the past, if a Libyan wanted to open a company or a new business, he/she would have to wait for approval from the ministry of economy and their municipal committee. Two months ago, we changed that law and today, like in many other countries, if a Libyan wants to open a new business he does it via the notary public. We did this to cut down on bureaucracy of the government and corruption. People had to get numerous papers or approvals from places like public security, the military etc…our policy is that should such entities want anything from you, then they should come to you and not the other way around. Now the notary public is required to give you an answer within a month, either they inform you what is legitimately missing from your documents or you go on with your business if they fail to get back to you. We are now proposing that this one-month waiting period be reduced to 10 days and then even less in the near future. This needs to be done to encourage the local private sector. We now need a more dynamic approach in our banking system, to minimize the conditions for credit and with less interest rate, which we feel is still relatively high. These changes will bring about a change in our economy. The Libyan insurance company is still public and most of the experts in this field are employed in it; they had no other choice. When we allowed private insurance companies to open, the employees in the public one stared leaving; who can blame them? They now get 1000 LYD rather than 300 LYD. We hope that by next year the public insurance company will be privatized; they can no longer compete and this is the way it should work. The foreign companies working in Libya have not participated in solving some of our issues. In the past, they used to train Libyans abroad or in the country. Today, they do it on a much smaller scale, which is quite disappointing. We found out that some companies have a cook or even a driver who came into the country under a different professional title.

United World: What is your message to our readers and what would you like American investors to bring in to the country?

Mr. ElKheir: As I mentioned, Libya is still virgin territory and oil is so far the dominant factor in our economy. We have a lot of other natural resources and we are keen to develop an economy where we can use the oil revenue to discover other resources. We would also like to generate income from sectors like tourism. We think it is the right time to invest in technical know-how, particularly American knowledge in this field, which has been absent for a long time. We have no bi-lateral agreement that gives us access to European markets and vice-versa, like our neighboring countries do. We have an important geographical location and can potentially play a leading role in trade. We have the chance to achieve what we want with the help of entrepreneurs. Our policy is to diversify the economy, which can be done by a mutual effort from both sides. Since March, we have had a stock-market control, which is an indicator of how we are progressing. So far, we have not performed as well as we would have hoped but we are encouraged by the results.

United World: Thank you very much for your comments.

Mr. ElKheir: Thank you.