It is vital the government acts in a manner which preserves good business relations with Libya so that Malta is involved in the re-building of the country, Chamber of Commerce president Helga Ellul told The Times Business yesterday.

“It is vital that the Maltese government acts in a manner which will secure the continuation of good business relations with Libya, so that Malta may play a key role in re-establishing trade and investment flows that will be necessary for the re-building of the country once the present turmoil is over,” Ms Ellul said.

The Malta Chamber of Commerce and Industry, which later yesterday issued a press statement, said it is deeply concerned about developments taking place in Libya and has called for the setting up of a task force to deal with the unfolding situation.

Ms Ellul said the task force must include the main stakeholders involved including key ministries, authorities, Malta International Airport, Air Malta and other international transport providers.

“The aim of the task force must be to co-ordinate efforts, opinions and resources to protect the interest of business and minimise the impact of these momentous developments on our economy. The task force would support government’s efforts and ensure better communication with the people and companies directly affected,” Ms Ellul said.

Meanwhile, the Chamber was yesterday invited to an urgent meeting at Auberge de Castille to discuss the latest situation in Libya and for it to communicate its members’ concerns.

Ms Ellul said the Chamber’s primary concern was the welfare of Maltese nationals and employees of companies with Maltese business interests in Libya.

“We are thankful to the government, Air Malta and its employees who have gone beyond their call of duty to ensure the safe return of Maltese working in Libya.

“Subsequently, we are concerned about the property of Maltese businesses and the protection of their investment. We are in contact with our members to determine the extent of the business risks involved and the resultant effect on the national economy,” Ms Ellul said.

Ms Ellul said that besides the immediate economic repercussions of loss of business, exports and employment, Maltese entrepreneurs have a long history of doing business in Libya.

“These well-established links have served as one of the core competencies of many Maltese companies. They have also played a key-role when foreign companies and individuals choose to do business in or through Malta,” she said.

Last year Malta’s imports from Libya amounted to €34 million while Maltese exports totalled €85 million. There are 310 companies in Malta which have Libyan shareholders, and about 300 Maltese work in Libya.

One Maltese businessman told The Times Business that a Libyan colleague sent him a message on Facebook saying: “I am ok, it’s a massacre. It’s so bad beyond any words. Please, we need you guys’ help in spreading the word, putting pressure on the international society for some action immediately. We have got Africans and Bangladesh mercenaries shooting randomly at people and all we have got is a few bricks and knives. It’s not a fair fight.”

A spokesman for the Corinthia Group, which has a large Libyan shareholding, and which has major business interests in Libya said simply: “We are monitoring the situation very closely.” The spokesman added, however, that both the Corinthia Bab Hotel in Tripoli and the Palm City residential complex in Tripoli were unaffected by the crisis.

He also said that construction work on both the Benghazi Hotel and the 40-storey Medina Tower in Tripoli had not been affected “as work was still at the planning stage”.

Malta Freeport operator CMA CGM, the shipping group, said on its website yesterday all Libyan ports and terminals were temporarily closed. CMA CGM said it was using storage capacity in Malta pending the ports’ reopening, although an official had no information on when the ports might reopen. Its Libyan agent’s offices in Misurata, Khoms and Benghazi were all temporarily closed.

Alberta Group said the Libyan operation of its subsidiary International Safety Training Centre had been “paused” until further notice and all Maltese personnel had returned home safely.

Several other Maltese companies with interests in Libya were contacted by The Times Business but most were reluctant to discuss the status of their operations in the crisis-hit country.

None of the listed companies which had projects in Libya had until yesterday issued company statements to update investors on the situation.

International Hotel Investments plc – which owns Corinthia’s Bab Africa hotel in Tripoli and incorporates the construction of a multi-million euro mixed use development in Benghazi in its portfolio – was affected by dampened investor sentiment this week.

Corinthia subsidiary Mediterranean Investments Holding plc holds a board meeting to approve the financial results for the year ended December 31, 2010 today. Just a few days ago the company said 70 per cent of the 413 units at its €150 million luxury Palm City Residences in Janzour outside the capital had been leased and the rest reserved for corporate tenants. MIH had also recently finalised design plans for the Medina Tower in Tripoli.

Small investors, instead, turned to stockbrokers for guidance.

Edward Rizzo, a director of Rizzo Farrugia & Co Stockbrokers, said yesterday investors had called the Sliema firm asking to discuss companies having an exposure to Libya.

“The situation is fluid,” he said. “There are investors who are looking to liquidate their bonds. Some people are managing to sell below par as buyers entered the market since they view this as a good opportunity to buy some bonds at below par.

“People are understandably concerned and watching the situation closely.”

Mr Rizzo said decisions on investments hinged on individual circumstances and investors’ attitude to risks. There is no blanket advice that can be given to all investors.

He recalled how some investors had been rewarded for their perseverance and patience during the 2008 crisis and said the same attitude could also apply to the Libyan crisis.

Mr Rizzo explained that the companies listed on the Malta Stock Exchange with exposure to Libya had to be very careful about making official announcements. In such a delicate situation, announcements on specific developments could potentially misguide investors into making hasty decisions they might regret in the short-term. He said companies could consider making announcements or holding meetings with the financial community when the situation became clearer.

“Announcements have to be based on hard facts so I would not be too critical of companies maintaining their silence on the stock exchange for now. They are weighing the situation and they need time as events unfold.”

Another financial advisory firm said it was concerned about Maltese investments in Libya and confirmed there had been some sales on both bonds and shares of companies involved in Libya.

“However our market is very illiquid,” the advisor emphasised. “If a large amount of sellers want to offload their shares or bonds, it would be very difficult for them to do so as the buyers have evaporated. There are some buyers around but the prices that they have put on are very low. They would be waiting to buy some stock at giveaway prices hoping to make a killing when the situation returns to normal in the coming months.”

The firm confirmed some share- and bondholders had called in to sell their holdings but small amounts went through as there were no buyers. The advisor pointed out that had there been market makers involved in the market then there might have been some liquidity available.

“What we are telling our clients is that taking decisions in a panic may not be a good idea and they had to keep in mind they would have to shave off a substantial amount if they really wanted to sell. At the moment the best thing to do is wait to see how things develop over the next few weeks,” the firm added.

Economist John Cassar White told The Times Business that the current political crisis in Libya could negatively affect the Maltese economy both directly and indirectly.

“A number of Maltese companies have a significant part of their business depending on the Libyan market. These companies not only have capital invested in Libya, but also employ a number of Maltese workers both in Malta and in Libya itself to support this business.

“The investment ranges from the ownership and management of a major hotel in Libya, to businesses that provide medical services, engineering services and products, as well as offshore and onshore oil exploration services. If the disruption of business in Libya persists for a long time, these Maltese companies may find themselves in financial difficulties,” he said.

Mr Cassar White said some Maltese banks have exposure to these companies, even if this exposure is unlikely to be connected with direct lending for projects in Libya itself.

“However, one particular group of Maltese companies is known to have both direct and indirect investment in Libya and also Tunisia. Disruption of business in these two countries is likely to affect the whole group, even if this group has now diversified its activities in other countries.”

Mr Cassar White said some Maltese banks may also have exposure to trade financing connected with exports to Libya. There is at least one engineering firm partly owned by Libyan interests, he pointed out, but based in Malta, that exports almost exclusively to Libya.

“It is likely that this firm obtains its trade finance through Maltese banks. A private airline that provides chartering services in Libya is also known to be financed by Maltese banks. Any major disruption in the business of all these companies is likely to have a negative impact on these companies, their employees and their bankers in Malta.”

Mr Cassar White said many workers also work directly for the oil exploration companies based in Libya. “They usually earn good wages and as long as the disruption in the oil fields is protracted, there may be a risk of some of these workers being laid off. The worst case scenario for all these employees dependant on Libyan business is an extended period of civil and political unrest in Libya,” he said.

Mr Cassar White said Libyans who visit Malta on business or for family, health, or holiday reasons are known to spend significant amounts of money when they are here. The number of Maltese who visit Libya on business is also likely to fall if the business environment in Libya remains in turmoil, he said.

“On the political level, the landing of two fighter aircraft in Malta is likely to complicate political relations between Malta and Libya, especially if the present regime clings on to power for any length of time. Politics in Libya have a much more significant impact on business than they would in most other counties, so one has to see how things develop with regards to the two Mirage aircraft that at present are parked in our airport.

“More indirect, but possibly of a more serious nature, are the consequences that the Libyan crisis could have on Malta through the dynamics of the global economy. Many EU countries, especially Italy, are heavily dependent on oil exported from Libya that is still one of the major players in oil production. Many are predicting that as a result of world shortage of oil supply, while the Libyan oilfields are closed, the price of crude oil will rocket. Malta is one of the EU economies most dependant on oil as we consume more oil per unit of GDP we produce than most EU countries. So an increase in oil prices will indeed be bad news particularly for Malta,” he said.

Mr Cassar White said tourism is also bound to suffer indirectly as the central Mediterranean is perceived to be once again a troubled area that tourists will want to avoid.

“With the entry of two Iranian nuclear military ships in the Eastern Mediterranean, it is likely that tensions will continue to increase. This is quite apart from the fact that if the countries from where traditionally some of our tourists come from suffer an economic downturn because of the events in Libya, we may find fewer tourists travelling for their holidays abroad. I am here referring in particular to Italy.”

Mr Cassar White said that perhaps the most serious threat is the possible mass exodus of migrants from North Africa to Southern Europe if the political crises in Libya, Tunisia and Egypt are not resolved soon.

“Malta is one of the European frontiers that boat people from North Africa can reach most easily. If the EU does not take some form of preventive action, it is a question of time before this threat becomes a reality. The Maltese economy will suffer substantial knocks if our resources and attention are directed to defending our shores rather than concentrating on more important competitive issues.

“One hopes that this worst case scenario does not in fact become reality, because if it does the risk of our economy slipping once again into recession will be high,” he said.