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TRIPOLI : Senior Minister Goh Chok Tong appears to be cautiously optimistic about whether Singapore and Libya can do business together.
He prefers a step-by-step approach, and both countries have set up a high-level working committee to set out an agenda for cooperation.
During what he called a "useful and potentially productive visit", Mr Goh met with various leaders, including Colonel Muammar Gaddafi.
Mr Goh said, "It's important for us to get this feel, because unless we are sure of the clarity of the direction of the Libyan economy, it will be a bit difficult for us to consider investing in the economy in a big way."
Mr Goh acknowledged investors' concerns that rules may change along the way, saying this is because Libya is a transforming economy and businesses will have to negotiate around the potholes.
And even though business cooperation will be led by the private sector, both countries signed an agreement to set up a working committee.
Led by Senior Minister of State for Trade and Industry S Iswaran and the Libyan Director-General of the Libyan business development office, the committee will define some areas of cooperation.
Libya's wealth comes from oil - with the country having the 9th largest oil reserves in the world - but leaders have now realised that they need to diversify the economy.
Libyans have to become more economically productive, and rely less on heavy state subsidies. Mr Goh was told the Libyan people receive heavy subsidies in areas like basic foodstuff and petrol. They also get free education and healthcare.
As for housing, when a Libyan gets married, he gets an apartment similar to a three-room flat, with a value of about US$100,000.
Instead of subsidies which cause distortions in the economy, one option could be similar to Singapore's way of giving cash transfers, so that people can decide what they want to do.
Mr Goh said, "For me, the most important lesson is an affirmation of what we know - that a welfare state and subsidies will lead Singapore to ruin. We must never make a mistake and change our policy and go the other way.
"At some stage, when we give out the Growth Dividends, I will tell the Prime Minister, please be careful - it's never enough. You must find a formula where you never go beyond what you can afford to give."
The Libyans have said they would like to learn from Singapore, but Mr Goh said this works both ways.
He said, "The Singapore government is not looking for profit or consultancy fees, so when we help them, there must be... benefits to Singapore as an economy.
"So they understand that there must be several projects which will be parcelled out on a negotiated or commercial basis to our private sector. Then that makes it worthwhile for us to help them in a big way, because our private sector companies will benefit."
Over time, if things develop, Singapore could even set up an economic office in Libya, but that is somewhere down the road.
Mr Goh said the visit has advanced political relations, and hopes to see stronger economic ties - although Singapore has to proceed "gingerly", taking into account Libya's changing economy. - CNA/ms
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