Companies affected by the Libya crisis will probably have to start laying off staff by the end of the year, the chairman of the Libyan Action Committee Frank Farrugia warned.

The committee, which falls under the Malta Chamber of Commerce, Enterprise and Industry, has been monitoring the impact of the crisis which broke out in Libya last July. It has been lobbying for the government to help on three fronts – the settlement of government dues; the deferment of payments to government; and visas for Libyan businessmen – with success in one, delays in another and an impasse on the third.

The government, aware of the squeeze on company cashflow, had promised to speed up payments for its own contracts, refunds and so on. Mr Farrugia said the committee had not “received any complaints” on this point so the assumption was that this was being done.

However, when it came to the deferment of payments to government – mostly for VAT – little has actually been achieved. The problem is that the government obviously wants to make sure that only those genuinely affected will get this concession and so the 200 companies identified by Malta Enterprise as having Libyan connections are being screened on a case-by-case basis to ensure that they were actively involved there and substantially affected.

The 200 companies identified by Malta Enterprise as having Libyan connections are being screened on a case-by-case basis

Mr Farrugia said the committee estimates that no more than 50-60 companies fall into this category – but it is taking far too long for the screening to be carried out so that the deferments can start.

“We appreciate that not everyone should get this concession; it would bankrupt the country if that happened. Of course we must focus on the genuine and urgent cases,” he said.

“But some companies have not been contacted yet and the pressure on them is building up. Very few have managed to keep operating – and even those that did are affected by the closure of the Libyan banking system. Others brought their staff back to Malta and, although some were redeployed, many are either paying them to stay at home or giving them half-pay.

“That cannot continue indefinitely. By the end of the year, we will start to see lay-offs unless their cash flow situation is eased,” he warned.

Libya business woes

The committee had also offered a way to facilitate the issue of visas to Libyan businessmen – which is currently at a standstill. At one stage, before the current conflict, 700 applications a week were being received – most of them for businessmen.

The situation is complicated by the fact that the Maltese embassy is not operating, and since fingerprints are needed with the application, the only way for the non-EU nationals to apply for a Schengen visa is to go in person to the nearest embassy in Tunis or Cairo. But even this is only permitted once they have sought approval to apply from the Central Visa Unit. And approval to apply does not in any way guarantee that the visa will be issued.

By the end of the year, we will start to see lay-offs unless their cash flow situation is eased

The chamber proposed that it would act as a ‘single point of contact’ for applications from its members for their business contacts. Aware of the implications of issuing Schengen visas, it is proposing a temporary visa only valid for 90 days and only valid for travel to Malta.

“We are also suggesting that the visas should only be issued to the business contact – and not to their spouse or dependents. We want this to be a system that facilitates what little business there remains, and find a way to curb any possible abuse,” Mr Farrugia said.

There have been media allegations of people offering to get visas for around €1,000, which certainly does not help when it comes to genuine cases.

The committee is proposing that companies would put up a bank guarantee that they would forfeit if the visa were in any way abused.

The visas would only be issued against a return flight ticket and each application would be given a unique number to make them harder to fake.

“At one point, meetings were being held in Tunis, but even that is becoming harder. And it certainly does not make sense to encourage Maltese to travel to Libya for meetings, exposing them to unnecessary danger,” he said.

“However, weeks have passed and we have not heard anything from the government at all. We appeal to them again: do not shut the door for legitimate businessmen. Let us salvage as much business as we can.”

Questions sent to the Home Affairs Ministry weeks ago by the Business Observer have not yet been answered.