A New Vision for the Libyan Economy
Author: aliktisad Posted February 20, 2012
"Planning to make use of the available resources and activating them to achieve development, coordination between all ministries and sectors, and evaluation of the performance of the investment institutions belonging to the government" are the main tasks shouldered by the Libyan Minister of Planning Dr. Isa al-Tuwayjri, who explains to Al-Iktissad wal-Aamal how "planning is the shortest way to reaching one's goal."
Al-Tuwayjri notes that the "success of the Ministry of Planning in performing this vital role requires a lot of tools, mainly conducting statistical studies, collecting data, and issuing indices. Unfortunately, all the institutions who were supposed to do these tasks were marginalized by the former regime. We are working on rebuilding them from scratch in cooperation with the World Bank, the International Monetary Fund, and the United Nations Development Program."
That is How We Fight Unemployment
"There is no justification for saying that we cannot plan since we are in a transitional period, because planning is the shortest way to reaching our goal. That is why we are focusing now on engraining the concept of planning in state institutions, away from the reactionary policies and the random initiatives that previously prevailed. This applies to our approach to finding solutions to existing problems such as how to provide medical treatment to injured people in foreign countries, which was aggravated by the lack of planning," as put by Al-Tuwayjri.
He stresses that "development of human resources should be given priority at the level of long-term planning, which should take place beginning with improving the quality of education from elementary school up until college, along with specifying the required majors so as to align educational outcomes with the requirements of the [employment] market. For instance, most of our students adopt an unplanned approach by enrolling in medical and engineering schools while we severely lack vocational majors in all [other] fields."
The minister of planning supports his vision by highlighting "a big dilemma suffered by the Libyan market. We provide more than two million job opportunities to foreigners, most of whom are medium-skilled, while the percentage of unemployment in Libya reaches 40%. This paradox is primarily due to the neglect of vocational education and training over several decades, and the tendency of university graduates to head into government jobs."
Al-Tuwayjri believes that "activating the role of the previously-marginalized private sector can play a pivotal role in developing and attracting Libya’s human resources, and allowing the government to focus on its real job, namely policy making, strategy development, and passing legislation, in addition to providing the appropriate environment for investment." He points out that "this transitional period could take years before the Libyan private sector is ready to assume this role."
The Investor is a Partner
Al-Tuwayjri does not support adopting the principle of [labor] sponsorship, as in Gulf states, nor imposing partnership with a local partner on foreign investors [according to the rule of] 35% for the [local partner] and 65% for [the foreign investor], as was previously the case. Instead, “the Libyan private sector should have the choice to select its partners and the mechanism by which it deals with them." However, he believes that in return, "partnership with a local [company] that has a good standing and reputation within the Libyan market is in the interest of the foreign company, because it enhances its chances of winning projects and contracts. Employing Libyans is also in the interest of a foreign company because it is less costly than bringing in foreign labor. At the same time, if a foreign investor has an economic activity or a project that needs to be done quickly and requires bringing in labor from abroad with competencies or specializations that are not available in Libya, [the investor] will be given the necessary licenses to start with his project, based on our new policy toward the foreign investor or contractor, who we see as a partner in development. We have allowed foreign investors to enter our country to contribute in its reconstruction and development. The foreign investor is not a person who is here to exploit the resources of the country, and therefore we must not obstruct him."
The Tenth Goal
Immediately after its formation on 22 November, the Libyan Government identified ten goals that should be achieved during the transitional period, which extends until the middle of this year. Nine of the goals are related to solving existing security, social, and living problems. The tenth goal is to develop a vision for the future of the Libyan economy, in parallel with restructuring and building state institutions and government-owned companies.
According to Al-Tuwayjri, "a committee headed by the minister of planning should be formed to assess the status of the Economic and Social Development Fund, which includes four holding companies, including 162 investment, industrial, agricultural, and banking companies. The committee will also propose the necessary solutions to address the situation of the beneficiaries of the investment funds, whose number reaches around 220,000 shareholders. The same case applies to the Libyan Investment Company, where a committee was formed headed by the prime minister to evaluate all foreign investments under its umbrella. The committee is also responsible for developing regulatory frameworks for the domestic investment fund, which is still in its formative stage. In other words, the whole domestic and foreign policy of the state regarding investment is undergoing review and evaluation to develop a clear and transparent strategy aimed at ensuring the development of these investments and safeguarding the rights of future generations."
Real Investors Are Welcome
According to Al-Tuwayjri, the other part that requires reevaluation is "the development program contracts worth 170 billion Dinars signed by the former regime with foreign companies to develop the infrastructure of roads, electricity, water, sanitation and airports, in addition to establishing housing projects for low income people. Some of these contracts experience legal and executive issues, and lack proper strategic, architectural, and engineering planning. The Ministry of Planning was part of a committee formed to look into these projects and determine priorities. However, the post-election government will have to complete the contracts with the existing contractors, or try to attract new tenders for these projects."
Al-Tuwayjri stresses that "some have exaggerated by saying that corruption and abuses exist in all of the contracts and development projects." However, he points out that "some foreign investors were part of the previous regime's game, paying bribes to [regime officials] in order to win [contracts for] projects. If we know that any investor contributed to the process of corruption, we will not accept that he invest in Libya again. Therefore, we are eager to see companies wishing to enter the market recognizing that the Libyan people carried out a revolution against corruption and that they welcome real investors, and no other kind, to participate in building Libya's future."
Yes to Decentralization, but With Conditions
Libya has several advantages, particularly related to its natural resources and its geographical location. However, "Libya's weaknesses lie in the weakness of the private sector, as a result of the former regime's deliberate marginalization of this sector and the weakness of government infrastructure at the levels of legislation, performance, management, productivity, monitoring and accountability. [Rectifying this situation] requires the establishment of a general development vision at all levels. Previously, we had an infinite number of monitoring bodies at a time when corruption was spread through all departments, sectors and projects," according to Al-Tuwayjri.
Regarding calls to adopt the principle of decentralization as a solution to the many problems inherited from the former regime, the minister of planning feels that "the use by some people of political slogans, such as ‘sustainable’ or ‘global’ development, is not right. We must look to achieve real development, because Libya is a huge country where the cities of the south, east and west are far from the capital, and therefore these cities must not be linked to the center in all their affairs and procedures. However, we should develop mechanisms to ensure that funds are not wasted because of a lack of monitoring and follow-up. Previously, the thugs of the regime funneled money to the far ends of Libya to take control of it. This must not happen again, and it will be prevented through adopting the principles of good governance and transparency, and putting in place tight financial regulations that are difficult to circumvent, in addition to providing all the operational and monitoring tools needed to achieve these goals."
The "Driving Force" State
In a related context, Al-Tuwayjri feels that "calling Tripoli the political capital of Libya and Benghazi the economic capital and Misrata the industrial capital should not be [limited to] just titles; rather they should form the basis for clear policies taking into account the advantages of each city and focusing on developing them."
Within this framework falls "an initiative to encourage investment and develop an investment plan for Libya, expected to be completed soon. This initiative sheds light on the advantages and the inherent potential of each Libyan region at the commercial and touristic levels and seeks to attract investors to these regions. Among the initiatives proposed in this regard is one for the state to develop the infrastructure of some unique pieces of land owned by the government in Libyan cities. The private sector would be invited to participate in developing [these] projects in every major city, and they would become the city’s landmark - similar to Burj Al Arab in Dubai or the economic cities and free zones in most Arab countries [...] In other words, the state should be the driving force and catalyst for guiding the private sector's investments in a certain direction, [which reflects what] the state believes should be the main focus of each area [or city]."
Al-Tuwayjri concludes his statements by defining his vision of "a new Libya," hoping that Libya will become like "the Scandinavian countries or Canada in terms of the well-being of its citizens and the excellent care that the citizens receive, particularly at the levels of health and education, in addition to the development of the private sector, the productivity of the public administration, and [the promotion of] the rule of the law."
Read More: http://www.al-monitor.com/pulse/business/2012/02/the-libyan-minister-of-planning.html
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