TOP INTERVIEWS Interview with Dr. SHUKRI MOHAMMED GHANEM Secretary of The General People's Commitee for Economy and Trade   Tripoli Can you give us a background of the Ministry of Economy and Trade, its structure and main activities, especially after the recent Government changes? The Ministry of Economy takes care of the good health of the Libyan economy in general, whether it is the policy design itself or the implementation of it. This ministry has gone through a lot of changes and restructuring in the last times, but what is required now from it is that it has to regulate a number of important issues such as promoting the role of the private sector in the economy, regulating all the import/export activities, looking after the general level of the prices, looking after the general development plans and its projects, allocating the funds needed, enhancing trade relations with other countries or free trade areas, etc. The activities of your Ministry must be coordinated closely with the two Deputy Prime Ministers for Production and Services and with the General Planning Council. Which channels do you use to achieve the common goals? We are in close cooperation with all the ministries, especially those related to economic activities. But we have a special collaboration with the Deputy Prime Minister for Production, because they are in charge of enhancing and improving local production and industries, and we are in charge of the trade barriers, which affect directly these industries. So together we study which barriers should be lifted and which not, in order to protect or not the local investment. I see myself first as a protector of the consumer. My goal is to provide the consumer, the Libyan population, with the best and widest range of products at the cheapest price. The Deputy Prime Minister for Production is the protector of the local industry, so the decision must be taken in harmony between the two of us, not to create major difficulties for neither of both sides. With the Planning Council we have also a very close relation. We are in continuous discussion about the drawing of the master plan for development, and we are the ones implementing the projects and allocating the funds required for these projects. We have had news of a 35 billion USD development plan designed by the Government to modernise and update Libya's economy. Could you explain us the main guidelines of this plan? This amount is quite difficult to precise. There are different ways to calculate it, if you take into account the oil investment or not, the private investment or not, etc. This plan has certain priorities: We are very interested in improving the infrastructure: roads, bridges, etc. In the production field we are trying to avoid direct involvement, because we want the private sector and the foreign investors to take more responsibilities in it. Another of the main goals is investment in the oil sector, in its production facilities, because it is very important for the overall performance of the economy and provides with the most significant revenues in foreign exchange. Which are the weaknesses and the strengths of the Libyan economy? The main weakness of our economy is the big dependence on the oil sector. Another weakness is the lack of efficiency in the management of some enterprises. Then we have the problem of a small market and the lack of high trained labour force, of specialization. The main problem for us is that we have the resources but we don't have the know how, the managing skills. Bureocracy and the abundance of laws confuse also the entrepreneurship. Now, the strengths are that we don't suffer from the lack of funds, which are available thanks to the oil sector. There is fairly good infrastructure and the first and second economic sectors are quite developed (fishing, agriculture, industry). Finally, there is a lot of potential in many other areas like tourism, for example. Another advantage is the proximity of Libya to the European markets and the African markets. The key word in Libya's economy nowadays is diversification. As you said, the country is too dependent on oil. In your opinion, from all the economic sectors, which one has the greatest growth potential and why? Libya is a good place to invest in certain sectors. For example, it could be used very well in producing certain goods for export, because Libya has a very low tax system, it offers cheap resources, land, labour and energy, less straining pollution regulations, etc. So many industries could be transferred here to supply Europe. Also we are trying to open free trade areas and as I said before investing in infrastructure that can be used by these investors for their industries. Tourism can also offer a lot of potential if the necessary investment in infrastructure is provided. Libya is currently holding negotiations to enter the World Trade Organization. Which are the measures taken and to be taken by Libya in order to liberalize trade? We are working very hard in order to prepare the country for this organization. We are not yet in the pre-negotiations but there are a number of challenges we know we have to face and we are trying to work on them. Some of the requirements to enter this organization are economical, but some other are political and unfortunately there are some countries that are blocking, or postponing the discussion for the future accession of Libya. But we are already preparing for it. There have been a lot of changes in the legislation, we have created a number of committees that look very closely to our regulations and laws to make sure that they comply with the requirements of the WTO and propose the changes needed. We are preparing ourselves "a priori". For example we have regularised our exchange rate, the Libyan dinar with the real exchange rate with the dollar, and this was a big step. We have removed all the import and export licenses and some of the restrictions. We are also trying to promote the involvement of the private sector in the economy, and all these measures will facilitate our membership. The privatisation process is one of the current main issues throughout the world. To your opinion, which are the companies or the sectors that would require to be privatised and which is the model that the Libyan Government wants to follow? We are hoping to do a smooth privatisation. There will be a number of factories or industrial companies that will be owned by the people, by the workers. Beside that, we will transform other companies into stock companies, so different stocks would be put in the market, and finally there are a number of big projects that would be privatised to foreign companies directly. That doesn't mean that we are going to sell out, but we are trying to make an ordinary, gradual change of the ownership and management of the sector. We are very serious in this process, especially in the sense of transforming the workers into shareholders that will give them responsibility of the performance of the company, the benefits and the losses. This doesn't mean that it will solve the problems of these companies, but it's a way to start. And also we cannot do that with all the companies, because it's a small market and it will get easily saturated. Another burden of these companies is the debt that they carry. Is it in the plans of the Government to do a massive write off of the debt in order to make them more attractive to the potential investors? Yes, we realize this is still a big problem. But let me point out that this debt is normally money that these companies keep and don't use to pay, but to produce further, it is funds collected from the Government. If we are ready to do a write off or not is a pressing question, and we are studying this and other possibilities, looking at experiences in other countries. It is not only the debt but also the number of workers, as many companies are with a huge excess of labour. So there are some companies we have to help somehow, but there are also some other inefficient ones with which we will have to make unpopular decisions. But we are still evaluating and we will look case after case individually. In the medium run, how do you foresee the level of competitiveness of Libya as compared to the neighbouring countries? We have a public sector that has delayed the Libyan economy and the Libyan investor and the performance of it is very sluggish. It has always been protected behind the walls of trade barriers, it is not cost-effective and it is not competitive. Even those who have the possibility to be competitive have not taken advantage of it. Now let's see what happens when the trade barriers are lifted. It would make no sense giving subsidies to non competitive companies. We need competition but with qualification. We need competition because we need the testing of our industries, our products. But I don't believe in a fierce competition that will waste too much money and efforts in a price war, for example. The competition should be, let's not say regulated, but scrutinized, controlled. There is an incipient and booming private sector flourishing in Libya. How do you see the further development of this sector in the following years and which role will play in the overall development of the country? Libya has traditionally been a country of traders, merchants, and entrepreneurs. We have the cultural heritage of the Mediterranean traders and the caravan traders. More recently, prominent Libyan businessmen have carried out very important projects that have produced very good profits in few years. Now it is starting to flourish again. How to help this movement? This is what we are discussing now. The Law Number Five to promote Foreign Investment in the country was issued in 1997, five years ago. What is the experience so far, how it has developed this field? We have had many problems for Foreign Investment in the past, but what I can say is that in the last few months things have improved enormously and we are in the right way, cutting down the obstacles that prevent this investment to come to the country. As you may know, I am the chairman of the Libyan Foreign Investment Board and I have witnessed many improvements. We are trying to facilitate the problems foreign investors may have, from the visa procedure to the bureaucracy requirements. And the results are there, we have projects signed or in negotiations worth several hundreds of millions of dollars (out of the oil sector, of course). You have strong background in the oil sector; you were the deputy secretary general of the OPEC for several years. Could you explain us more about your professional background and the steps you have gone through before becoming the Minister of Economy and Trade? I am an economist myself, and have been teacher for many years. I have also worked as a journalist a long time. Then I was appointed as member of the OPEC's board, reaching the deputy secretary general position. There I stayed for about ten years, and a year ago they called me back to Libya to be in charge of this Ministry. Thank you very much for your comments, Dr. Ghanem Thank you Note: WINNE cannot be held responsible for the content of unedited transcriptions.