China counting financial losses in Libya

0 CommentsPrint E-mail Global Times, March 4, 2011
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In the wake of thousands of workers being pulled to safety from Libya, Chinese authorities are scratching their heads to put a cash value on the amount of business being lost in the North African country.

Government figures released Thursday showed that 35,860 Chinese have left Libya, leaving behind construction materials, machines, vehicles and project contracts totaling in the billions of dollars.

According to China's Ministry of Commerce (MoC), there are 75 Chinese enterprises with investments in Libya, operating 50 joint projects and employing more than 36,000 workers. And 13 of those firms are State-owned.

In the first week after protests erupted February 16 against Colonel Muammar Gaddafi, 27 Chinese construction sites and camps were attacked and looted, the ministry said in a statement February 24.

"Working alongside the MoC, we are busily helping enterprises calculate losses and have begun to organize compensation claims and loss recovery," Zhang Xiang, a spokeswoman of the China International Contractors Association (CICA), told the Global Times Thursday.

"We don't have an exact number at the moment, since those companies are still focusing on evacuating personnel and on their resettlement back in China," she added.

The China State Construction Engineering Corporation said in a statement Tuesday that its 20,000 residential construction projects in Libya, worth 17.6 billion yuan ($2.68 billion), were threatened.

The company said that only half of the projects had been finished, and the firm was forced to stop due to the country's internal fighting.

The China Railway Construction Corporation reported that it had to leave $4.24 billion worth of unfinished projects in the country, which may add more misery to the company that suffered a third-quarter loss of $207 million in 2010.

The State-run Metallurgical Corporation of China said Thursday that it had suspended two projects in Libya that have a remaining value of 5.13 billion yuan, AFP reported.

"Given the uncertain situation in Libya, future development of the above projects remain unclear," the company said in a statement.

Shi Zhifei, a 40-year-old project manager who returned from a campus construction project in Tubruq, 170 kilometers away from the Libyan capital of Tripoli, told the Global Times that local Libyans had been hired to watch the sites.

"We're still keeping a close eye on the current situation in Libya. If it is safe, we will go back," Shi said, adding that all of his colleagues have returned home, and some have already found new jobs.

Media reports suggested that, before the evacuation, many Chinese companies ordered their personnel to back up important files and make detail lists of equipment, for future compensation claims.

MoC figures showed that China's outbound foreign direct investment in the non-financial sector hit $59 billion last year, up 36.3 percent year-on-year.

The National Business Daily reported that the combined Chinese contracts signed last year in Libya were worth $1.8 billion.

Cui Shoujun, director of the International Energy Research Center at the Renmin University of China, told the South China Morning Post last week that many of the country's energy projects in Africa were based on bilateral ties rather than business contracts.

"This sort of relationship makes Chinese businesses there very vulnerable in case of upheaval," Cui was quoted as saying.

Lin Guijun, a professor at the University of International Business and Economics, told the Global Times that the government should offer better guidance for Chinese companies to expand their businesses overseas to avoid suffering huge losses in conditions similar to the Libyan unrest.

"The authorities should thoroughly evaluate the business environment in those countries regularly," Lin said, adding that there is a lot of work to do in helping those companies get compensated for losses.

Zhang with the CICA said Chinese companies must attach more importance to risk assessment and risk management in future foreign investments, noting that most of the companies used to depend mainly on experience and neglected feasibility studies.

Separately, the International Criminal Court's prosecutor said in The Hague Thursday that Gaddafi and key aides will be probed over allegations that they have committed crimes against humanity while fending off the uprising, AFP reported.

"We have identified some individuals with de facto or formal authority who have authority over the security forces" that have clamped down on the rebellions, prosecutor Luis Moreno-Ocampo told journalists.

"They are Muammar Gaddafi, his inner circle, including some of his sons."


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