VISA WOES AND LIBYAN BUREAUCRACY: CHINESE COMPANIES FACE SIMILAR ISSUES AS U.S. FIRMS IN LIBYA

C O N F I D E N T I A L SECTION 01 OF 02 TRIPOLI 000741



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E.O. 12958: DECL: 8/5/2019

TAGS: ECON, EFIN, ELTN, LY, ETRD, ECPS, EPET, CH

SUBJECT: VISA WOES AND LIBYAN BUREAUCRACY: CHINESE COMPANIES FACE

SIMILAR ISSUES AS U.S. FIRMS IN LIBYA



REF: TRIPOLI 517



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CLASSIFIED BY: Gene Cretz, Ambassador, U.S. Embassy Tripoli,

U.S. Department of State.

REASON: 1.4 (b),(d)

1. (C) Summary: In a recent meeting, the Chinese Commercial

Counselor outlined the main sectors in which Chinese companies

work in Libya as well as the challenges these firms face.

Twenty Chinese firms are registered with the People's Republic

of China Embassy in Libya, working mainly in construction,

telecommunications, and oil services. Chinese companies face

some of the same challenges as American firms here, i.e. delays

in securing visa approvals, dealing with capricious and

suddenly-announced commercial laws (like the residency visa

regulations),and having to double-track issues through the

byzantine Libyan bureaucracy. End summary.



2. (C) Econoff met with the commercial section of the Embassy of

the People's Republic of China (PRC),which is comprised of a

Commercial Counselor (Guo Chang Zhan) and a Second Secretary for

Commercial Affairs (Qu Yuan). Zhan has had previous postings in

Senegal and Ghana, while Libya is the first overseas posting for

Yuan. They outlined the main sectors in which Chinese companies

work in Libya, as well as the challenges these firms face.

According to Zhan, Chinese companies face some of the same

challenges as American firms doing business in Libya, including

delays in securing visa approvals, dealing with capricious and

suddenly-announced commercial laws (like the residency visa

fees),and having to double-track issues through the opaque

Libyan bureaucracy.



3. (C) Zhan said twenty Chinese firms are registered with the

PRC Embassy in Libya, working mainly in construction,

telecommunications, and oil services. In accordance with Libyan

labor laws, the companies employ Libyan staff in at least 30

percent of their positions. Some Chinese firms are engaged in

the trade of goods, including trucks, which are sold via Libyan

distributors.



CHINESE FIRMS BUILDING HOUSES, INFRASTRUCTURE, AND RAILROADS...



4. (C) In terms of construction, Chinese firms have contracts

with the Housing and Infrastructure Board (HIB),which are

managed by the American company AECOM. [Note: AECOM provides

overall program management and consulting to HIB. End Note.]

China Railway Construction (CRC) is working on the 172 km

stretch of railway between Tripoli and Ras Edjeer and the line

between Al-Khums (east of Tripoli) and Sirte. [Note: Russian

Railways is working on the 554 km railroad line between Sirte

and Benghazi. End note.] CRC is also working on the 800 km

railroad line between Misrata, on the Mediterranean Coast, and

Sebha, in southern Libya.



...AND ALSO ACTIVE IN TELECOMS



5. (C) Chinese firms are also active in Libya's

telecommunications sector. In April, the firm Huawei

Technologies Co., Ltd. won a contract with Libya Telecom and

Technology (LTT) to deploy "fiber to the home" networks for

households in 800 homes on the Airport Road in Alzohor District

in Tripoli in the first phase. The firm plans to expand network

coverage to other districts in the project's second phase. In

2008 the Chinese telecommunications equipment supplier ZTE

Corporation won a USD 58 million network expansion contract from

Libyana, one of two Libyan mobile network operators. The deal

enables Libyana to expand its existing network from 1 million to

6.5 million lines. [Note: Libyana is one of two mobile phone

operators owned by the General Post and Telecommunications

Company (GPTC),the other being Al Madar. GPTC is run by

Mohammed al-Qadhafi, the eldest son of Muammar al-Qadhafi. End

note.] ZTE also has a contract with LTT to build a WiMAX

wireless Internet network, covering eight cities in Libya, and

has already begun offering services in Tripoli.



THE CNPC-VERENEX SAGA



6. (C) Econoff raised the issue of the pending sale of Canadian

oil company Verenex to the Chinese National Petroleum Company

(CNPC) (reftel). While CNPC has made a play at acquiring

Canadian oil firm Verenex - the only successful oil exploration

company in Libya thus far - it has not enlisted the help of the

PRC Embassy in lobbying the Libyan government on its behalf.

Zhan said he heard the proposed deal was "unsuccessful," as he

had heard Libya's National Oil Company (NOC) would not approve



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the CNPC sale because the NOC desired to purchase Verenex.

[Note: The CNPC offer to purchase Verenex expired on August 24,

and CNPC did not move to renew that offer. End Note.]



WITH HEADACHES OVER VISAS AND CUMBERSOME LIBYAN BUREAUCRACY



7. (C) Zhan commented Chinese firms had complained about "sudden

and unreasonable regulations" that caused work delays and

related increases in operating costs. For example, the recent

new decree requiring foreign workers to pay fees for residency

permits (500 Libyan dinars, equivalent to about USD 400) had

caused construction firms' costs to sky-rocket. He

characterized the Libyan government as "inefficient" and lacking

coordination among various entities. On visas, for example, he

said approvals had to be obtained not only from immigration

officials but also from the Labor Office, and there was little

coordination between the two. As a result, companies often have

to wait several months for visa approvals for their employees.

Additionally, Zhan noted that many Chinese companies have had

trouble importing equipment needed for projects due to new

"fees" that are suddenly imposed on those imports.



COMMENT



8. (C) Comment: Chinese companies have carved out some niches

for themselves in the Libyan market, namely in construction and

telecommunications. Anecdotal evidence indicates that the

Chinese commercial presence in Libya is growing, with scores of

Chinese workers thronging flights between Tripoli and Benghazi,

and Turkish Air flights regularly sold out with Chinese workers

transiting Istanbul en route to Libya. Nevertheless, Chinese

companies appear to face some of the same challenges as American

firms, most of which seem to originate from Libya's opaque

bureaucracy. End comment.

CRETZ