While Law No. 9 of 2010 on the Promotion of Investment (the “Investment Law”) provides a remarkably favourable framework for the promotion of inbound foreign investment on paper, the Ministry of Economy’s overly restrictive interpretation of said law and its efforts to slow-walk the procession of applications by foreign investors gravely undermine this policy framework and create a deeply unfriendly environment for foreign investors in Libya – as if the unstable security situation and the uncertainties caused by the division of the Libyan government into competing authorities were not bad enough.
Itkan has had extensive direct experience with this restrictive approach through its representation of two separate foreign investors in their applications for foreign investment licenses. In the first case, the application of Itkan’s client has been pending before the Ministry for six months. Itkan has repeatedly demanded a justification for this egregious processing delay, but so far, in vain. It does not seem that the Ministry grasps the idea that for investors, time is precious.
In the second case, the story becomes almost ridiculous. The client’s application was approved by the Investment Board and forwarded to the Ministry according to the standard procedure. The Legal Department of the Ministry then rejected the application for illegality on the grounds that it envisaged the establishment of a limited liability company 100%-owned by the foreign applicant – even though the Investment Law clearly allows for this. After negotiations with the Minister and the submission of a legal memorandum explaining why the Legal Department of the Ministry had wrongly interpreted the Investment Law, the Ministry requested Itkan to resubmit the application once again, promising that approval would be granted this time. Itkan did so but, nonetheless, the Ministry delayed approval for a few weeks because it “lacked the approval forms”. The General Manager of the Investment Board even confirmed to Itkan that he personally witnessed the Minister signing his approval of the application.
However, this approval then somehow “disappeared” from the Ministry and was never forwarded to Itkan. It was then decided to submit a third application to the Ministry. This time the Legal Department of the Ministry of Economy requested that the file be forwarded to the Law Department of the Ministry of Justice to obtain a confirmatory legal opinion as to the legitimacy of establishing a company wholly owned by a foreign investor – the exact plan of action Itkan had suggested from the very beginning. This referral was finally accomplished after eight months of back-and-forth discussions between Itkan and the Ministry and several wild goose chases. Three months then passed, waiting for the legal opinion from the Ministry of Justice. At the request of the Ministry of Justice, Itkan then resubmitted the application a fourth time – this time requesting the establishment of a branch under the Investment Law. After three more weeks of waiting, Itkan was informed that the approval of this fourth application has been signed, but – naturally – no one seems to know where the approval document actually is.
Meanwhile, the Ministry of Economy has directed the Investment Board to draft a resolution requesting that the Council of Ministers issues a decree placing restrictions on foreign ownership of activities permitted under the Investment Law – an action which arguably is not within the power of either the Ministry to undertake!
Finally, and most shockingly, on 13th November 2022, Mr. Gamal Lamouchi, Chairman of the Foreign Investment Board, was detained by security forces at Mitiga Airport, reportedly for being “too open” to the promotion of foreign investment in Libya by seeking to facilitate investment license applications by foreign investors. Mr. Lamouchi remains in custody as of this writing.
The events outlined in this post, are direct indications of efforts by elements within the Libyan bureaucracy to discourage foreign investments in Libya and thereby undermine a longstanding and clearly articulated policy of the Libyan State. Itkan believes that these efforts must be rejected by the political leadership of Libya because increasing foreign investment over current levels remains an essential precondition for the continued growth and development of Libya.