Libya is endowed with vast natural resources and a strategic location at the crossroads of Africa, Europe and the Middle East. These advantages and the potential in non-oil sectors, make Libya a strong contender for foreign investment. Law No.9 of 2010 on Investment Promotion, backed by General People’s Committee (GPC) Decision No. 499 of 2010, form the basis of Libya’s foreign investment regulations.

The legal framework

Law No. 9 of 2010 defines the rules governing both local and foreign investment in most sectors. However, Article 27 explicitly excludes the oil and gas sector, which remains governed by the Petroleum Law No. 25 of 1955. The law applies to new investment, joint ventures and privatised companies across sectors like health, tourism, infrastructure, and beyond.  

The executive regulations (Decision No. 499/2010) clarify and expand upon the law by: 

• Detailing licensing, approval, and registration procedures,
• Defining rights to land usage and ownership of project assets, 
• Outlining documentation requirements,
• Establishing minimum capital requirements for investment projects.

Together, they create a structured and transparent legal environment that investors can rely on. 

What qualifies as an investor? 

Under Article 1 of Law No.9, an investor is defined as: 

“Every natural, artificial national or foreign person, who invests in accordance with the provisions of this law.” 

This includes both Libyan and non-Libyan individuals and companies. Investors are not just financial contributors they are expected to bring: 

• International market access,
• Experience and expertise,
• Training and employment opportunities to local workers, 
• Innovative technology and business models.

In return, investors expect legal clarity, enforceable rights, and a predictable process – all of which Law No.9 and its executive regulations aim to provide. 

Incentives and Benefits 

For Libya:  

• Employment – Article 7 requires that at least 30% of the workforce in investment projects be Libyan nationals, 
• Infrastructure development  – investors may undertake infrastructure projects such as roads, ports, and utilities, aiding national reconstruction ( Regulation Article 22), 
• Economic diversification – The law encourages investment in agriculture, industry, education, healthcare, tourism, and services – excluding oil and gas (Article 27).

For investors:

•  Article 10: Five-year exemption from income tax, customs duties, and export taxes, 
• Article 12: Full reparation of capital and profits, and the right to re-export capital if the project is terminated, 
• Article 23: Protection from nationalisation or expropriation, through court order and with compensation, 
• Article 24: Access to arbitration, including where Libya is a party to a bilateral or multilateral investment treaty. 

The executive regulations further offer: 

• Permission to open Foreign-currency accounts in local banks (Regulation Article 12), 
• Extended exemptions for environmentally friendly or energy-efficient projects (Article 26), 
• Simplified and time-bound licensing procedure ( Article 6 – 8).  

Why this is important: 

Foreign investment is central to Libya’s future economic stability. A strong investment law: 

• Shields the economy from oil price volatility and political instability,
• Reduces unemployment (which was 18.62% in 2024 according to World Bank estimates), 
• Fosters global economic integration, 
• Lessens reliance on public expenditure by enabling private sector led development.  

Law No.9 of 2010, along with the GPC Decision No.499 of 2010, provide a clear legal structure capable of attracting and securing high-impact investment which align with national goals. 

Comparing Libya and Egypt’s Investment systems 

Egypt reformed its legal framework with Law No.72 of 2017 ( amended in 2023). A comparative look helps contextualise Libya’s strengths and weaknesses. 

Libya’s Investment Framework: 

Strengths: 

• Clear and concise legislative text,
• Wide sector coverage (Article 2),
• Strong investor protections,
• Less regulatory layering than Egypt. 

Weaknesses: 

• Outdated and not revised since 2010 and lacking digital/modern dispute tools, 
• Weak enforcement record which is seen in the Al-Kharafi case, 
• Political fragmentation affects consistency in implementation, 
• No central investment authority equivalent to Egypt’s General Authority for Investment and Free Zones (GAFI). 

Egypt’s Investment Framework: 

Strengths: 

• Recently updated to reflect international practice, 
• One-stop-shop via GAFI for permits, licensing and support, 
• Special zones and tailored incentives, 
• Court independence – Egypt’s Court of Cassation has upheld investor protections even in politically sensitive cases. 

Weaknesses: 

• Complex legal framework overlapping laws and decrees, 
• Delays in permits, land allocation, and approvals still reported, 
• Heavy state involvement in some sectors,  
• Frequent amendments can create confusion for investors. 

The Case of Al-Kharafi: A Deeper Look 

This case is a landmark in understanding Libya’s enforcement gap. 

In 2006, a Kuwaiti company had entered into a contract with Libya to develop a tourism complex in Tripoli. The projected stalled due to administrative delays and cancellation of land allocation. 

Al-Kharafi brought a claim under the Unified Agreement for the Investment of Arab Capital in the Arab state (1980). In 2013, a Cairo-seated tribunal awarded $935 million to Al-Kharafi in damages. Libya challenged the decision in 2021, the Egyptian Court of Cassation upheld it.

Key Takeaways: 

• Article 24 of Libya’s law permits arbitration, but institutional weakness prevents effective enforcement, 
• Egypt’s courts demonstrate credibility and consistency by enforcing the award, even against a fellow Arab State. 

Conclusion

Law No.9 of 2010 and Decision No.499 of 2010 offer Libya a solid legal base for investment – offering tax exemptions, capital reparation, expropriation protection, and access to arbitration. Yet, to compete regionally, Libya must perform, not just legislate. 

Priority reform should include: 

• Updating the law to align modern business realities, 
• Improve enforcement and dispute resolutions capabilities. 

The Al-Kharafi case highlights that laws alone do not build investor trust – consistent, fair, and credible enforcement does. Libya’s economic future depends on its ability to bridge that gap. 

Raghad Abdurahman Hamed