Hundreds of Maltese workers brought back from Libya by their employers are being kept on the books – but that might not be possible if the crisis goes on much longer.
“If you have trained and experienced employees – especially in specialised jobs – you would not want to lose them. But companies might not have any choice if the situation persists. And it is not only those 450 who work in Libya but also others who provide ancillary services and products,” Malta Chamber of Commerce, Enterprise and Industry vice-president Frank Farrugia said.
One of the most immediate problems is cash flow. In fact, the government recently announced measures to help the 200 companies affected by the latest fighting. It will speed up any payments due to firms, such as VAT refunds, and will also extend the deadlines for the payment of tax and social security contributions.
There was a huge surge in activity after the 2011 revolution with tenders being issued to rebuild the infrastructure – although the Malta Chamber estimates that only half the Maltese companies went back at the same levels.
Many companies had little choice as they have huge investments tied up. International Hotel Investments, which runs Corinthia Bab Africa, said in its interim results that the current conflict had seriously affected hotel occupancy. The hotel is currently operating with just a core nucleus of personnel.
Medserv, which operates a base at Misurata, also recalled its staff, leaving just the Maltese country manager and his assistant. Its warehouses are full of clients’ equipment and, although the port is open, it was not always easy to approach, managing director Anthony Diacono said.
Oil production had just started to recover, reaching up to 550 kbpd compared with just 200 kbpd for most of last year. It was 1,483 kbpd just a few years ago. Operations to service this offshore activity are now being run from Malta, with Medesrv’s new yard already packed with material and its offices being used by oil companies who moved their staff here.
Mr Diacono called for high level intervention. “We will be able to get international fora to listen much more than Libya would on its own,” he said, stressing the opportunities that would become available once the situation is resolved – as long as short-term greed did not take over.
There is a lot more at stake here than just oil and gas: it also impacts migration and idealism
“There is a lot more at stake here than just oil and gas: it also impacts migration and idealism. We need to wake up to the realities.”
The Libyan-Maltese Chamber of Commerce identified three problems: stock trapped there; debt collection; and money trapped in Libyan bank accounts.
“These are causing massive cash flow problems – so the government’s initiatives will definitely help,” president Tony Micallef explained.
“Our advice is to wait and see – but to use the time as wisely as possible, for restructuring, training and so on.”
The Malta Chamber had set up a Libya Crisis Committee in 2011, which has now been reconvened under Mr Farrugia. He said that many companies have letters of credit or bid bonds opened in favour of the Libyan government or companies – and are unsure what to do.
“If you close or cancel them, you will lose all that you have done till now. But how long can you afford to leave them open?” he said.
Mr Farrugia believes it will take much longer for things to get back to normal after the fighting stops – with the airport alone requiring months of work to re-open.
The committee believes is it very important to have a strategy for the future.
“How can we consolidate our economic presence there? Can we put together a delegation to talk to the government as soon as one is appointed? We cannot let others beat us to it,” he said.
“We have to be prepared to seize opportunities – which will be huge. So much of the infrastructure has been destroyed.”
The Crisis Committee called for local investors to consider the advantage of a regular sea transport link between Malta and Libya for cargo and passengers – as there was during the sanctions.
“Malta gained a lot from this link – and could do so again. Ports like Misurata are quite safe and are vital for the provision of services to offshore rigs,” he said.
The impact on the Maltese economy is much larger than people assume as trade figures do not capture transhipment or parallel trading, or services like education and health.
Air Malta lost its lucrative Tripoli route once the airport there closed. It recently started flying to Djerba in Tunisia twice a week and may add frequencies as and when required. There is also a possibility that it will fly to Tunis in the near future.
The crisis also had an impact on Libyan investment in Malta, as the home situation has distracted their focus. However, it is not all bad.
Oil companies are operating from here – and what started off as a transitional arrangement could easily turn into something longer term. And numerous Libyan and expatriate families moved here, renting accommodation and filling places in schools.
One thing is clear: the forecast is still bleak. An international law firm this week reported that “the prevailing view ... is that Libya is destined for a period of sustained conflict, as the two main groups remain evenly matched in a fruitless stalemate”.