After the lifting of sanctions by the United Nations in 2003, Libya has drawn investors not only from the European Union but also from Thailand and other Asian countries to source energy and export foods, auto parts, construction materials, services and labour.
Thai companies have generally been interested in accessing the market directly rather than exporting via some countries in the Middle East such as the United Arab Emirates.
Libya is opening its market to foreign trade and investment as part of the government's policy to expand its economy. Buildings and residential areas are under construction, which opens up opportunities for Thai constructors and construction material manufacturers.
Libya is also one of the biggest oil exporting nations, providing 2 million barrels per day to the international market. Related businesses such as natural gas and oil refining are promising for Thailand.
The Commerce Ministry's Department for Export Promotion led a trade mission to two African countries that show great export potential - Libya and Egypt. In particular, Libya has been defined as a new market.
Srirat Rastapana, director-general of the department, said the Thai Chamber of Commerce yesterday inked an agreement with the Libya Chamber of Commerce to increase trade cooperation between the two countries.
Two-way trade reached US$240 million (Bt8.1 billion), making Libya Thailand's seventh largest market in Africa. Of total trade, $220 million was exports from Thailand.
Thailand should focus more on the benefits under the Arab Maghreb Union, which is a free-trade agreement among five countries - Algeria, Morocco, Mauritania, Tunisia and Libya. Members of the group enjoy zero tariffs on cross-border trade.
"We are interested in using Libya as our distribution centre to boost exports to those members," Srirat said.
The Libyan market has been divided into high-end and low-end consumers. However, the high-end group prefers mainly brand name products while the low-end market purchases imported products mainly from China. Thai goods can fill the middle market with higher quality than China.
Basheer Mohamed al-Darwish, chairman of the Export Promotion Department under Libya's Ministry of Trade and Economy, said the Libyan government has assisted SMEs to export more products. Those SMEs will be supported by the government to upgrade quality to meet international standards.
Construction in Libya is booming. Now the government is expanding the airport. This is creating business opportunities for all.
Libya was also interested in developing the packaging industry. He wants to see more training cooperation from Thailand.
Sompol Tanadumrongsak, director of the Thai Auto Parts Manufacturers Association, said Thailand cannot export directly to Libya because no commercial banks in Thailand accept letters of credit from the country.
"Exports to Libya have to go via Dubai to ensure bank guarantees [for letters of credit], otherwise we cannot trade with the country," Sompol said.
This is also the first time for Sompol to meet his trading partner, a major aftermarket auto parts importer in Tripoli. Sompol has sold his plastic auto parts to Tripoli for seven years but had declined to visit his customers due to security fears.
"The market has high export potential but we should solve the bank guarantee problem," he said.
Mohamed Abusneina, director of banking supervision and exchange control at the Central Bank of Libya, said Thailand should deal directly with local banks in the country on the L/C problem. The central bank has no restrictions on L/Cs but tries to deregulate the business to facilitate trade and foreign direct investment.
Sriwan Eamrungroj, executive vice president for strategy and portfolio management at PTT, said it was not easy for PTT to win an oil concession in Libya due to high competition from many countries.
Oil companies and related businessmen suggested other interesting ways to access the market, such as natural gas exploration, independent power production and oil refining.
"PTT is keen to expand abroad, including Africa. It has already invested in Algeria, while Libya and Sudan also have high investment potential," he said. PTT would participate in the next oil bidding in Libya after failing in the first round last year.
"We have to be concerned most about return on investment, which should be at least 10 per cent," she said.
Libyan exports 2 million barrels of oil per day, of which 35 per cent is for Italy.
