Dr. Bafadel to Yemen Times:

Yemen is suffering a lot from diferent economic problems including unemployment, lack of investment, inflation, smuggling and many others.
Dr. AbdulRahman Bafadel is a very outstanding economist. He has got a PH.D. in Industrial Engineering from France. He was the MInister of Trade and Supply(1993-94) and Minister of Fisheries (1995-1996). He is now member of the parliament and the head of the Islah carcus. Mohammed Bin Sallam of Yemen Times met Dr. Bafadel to highlight various economic issues and filed the following interview.

Q: The government issued new bank notes of YR 500 and YR 1000. Some economic sources say the government is planning to issue new bank notes of YR 5000 and YR 10,000. How will it affect the national economy in general?
A: Printing currency with very high values such as 500, 1000 and more will have its influence negatively on our economy.
First, it facilitates black market traffic of our currency towards neighboring countries. Secondly, it eliminates low value currency such as one riyal, five riyals which have already disappeared. It might lead to the elimination of ten riyals as well as twenty. Thirdly, it increases inflation. Fourthly, it leads to price increase and limited salary people will suffer more by having two or three bank notes to spend for the whole month.

Q: Smuggling is dangerous to the national economy. What are the reverse affects, hazards and economic damages of this phenomenon?
A: Smuggling is one of the most economy disasters. It is enough for this government to resign. In a debate held by government they announced that 70% of goods in the market come through smuggling; not only that, but a list of names of smugglers was presented to the government. However, nothing was done.
The Minister of Finance himself declared on Wednesday 17.11. 1999 in a debate held in the Finance committee of the parliament that smugglers are protected by high post leaders in the government.
The minister and the government ‘REQUESTED’ those high post authorities to give up protection of smugglers. ( I wonder why this government should stay in power, smuggling is her policy that damages our economy severely?

Q: What is the economic value of treasury bonds and how do you assess them? Are you of the view that these measures can solve the economic crisis in the country?
A: Such policy is fictitious. It will lead sooner or later to economy collapse. Firstly, it liquidated investment, increased idleness and jobless labors. Such high rate guaranteed profit margin lead private sector to abandon business, industry, agriculture, real estates as all are risky without guarantee to have such profit margin. Moreover the Central Bank gives profit against no work. People sleep without no effort to do and they get guaranteed profit. That is why Islam forbids interest as Islam encourages those who work but not who sleep. Those who take risk are not those who want guaranteed profit.
The biggest question that we pose here for the Central Bank as well as World Bank authorities, who has been the advisor of the Central Bank is “Where does such billions of local currency are invested so as to get such fixed high rate of profit? Does such high amount of private sector billions is invested? At least to create jobs? Moreover, the creation of the bourse will lead to severe economic situation, for the simple reason that such activities are not real in a sense that money is not exploited in industry or agriculture or anything that will flourish the economy and provide job opportunities for all categories of man power.

Q: In your point of view, what are the main flaws that have affected the Yemeni economy and led to the visible deterioration and how do you think we can solve them?
A: Government’s shortcoming as well as killing mistakes for Yemen’s economy as per budget alternative presented to the parliament by the opposition parties: Ba’ath, Nasserist, independent and Reform party (Islah) during budget discussions are:
1) Budget deficit was put as 34 billion meanwhile after verification we found the following:
a) Oil barrel price was US $ 17 only, but today it is $ 29. We requested them at that time to modify it to US $ 21 as an average, but they refused. They claimed that oil price will shoot down.
b) We requested them calculate dollar price YR 160, they refused. The government insisted to consider it YR 155 only for the dollar. It claimed that dollar price will shoot down.
c) Quantity share for government is around 92 million barrel but not 85 mb as government claimed. So oil income is more by 78 to 80 billion YR to what government stated.
2) Government budget for 2000 showed interest to be paid is YR 28b which means selling treasury shares at YR 165b with interest rate 17%.
3) Economic Units based in sectors are all negative as shown by the government budget:
profit from agriculture & fisheries sector: - 35.2%. (negative)
Profit from industrial sector: - 4.7% (negative)
Profit from construction sector: - 34.6%. (negative)
Profit from commercial sector: - 92.4%. (negative)
All this indicates corruption policy carried by the government . It recognizes not only corruption but also encouraging it.
What solutions and remedies they have taken? Simply nothing.
4) In brief: YR 80b from oil + YR 11b of wheat subsidy in 2000 (nothing in principle for 2000) + YR 28 baccredited for fictitious jobs and multi-job posts non engaged, all this will lead to YR 84b profit rather than YR 34b as deficit.

Q: How do you assess privatization? Do you think it serves the national economy in this critical stage?
A: We believe that it will lead to more problems and severe standard of living as well as increase in unemployment.
In fact, the government has no transparency at all. They want to do it alone away from the parliament. Maroc created a Ministry for Privatization. Our government created an office!! The mechanism to execute privatization is not clear. Our main problem in public sector is “MANAGEMENT”. Unfortunately, the government wants to sell all in all fields in all governorates. Some say they have already nominated those who will buy cement factory in Amran, Bagil and Barh in Amran, Hodeidah and Taiz governorates respectively. This is an example of the government’s corruption. Such non-defined methods and mechanisms will lead to more poverty, more jobless people etc....,
If foreigners are allowed to go into privatization, situation will be worse. We might loose country sovereignty and even foreign economic lobbies to manipulate the society politically. Worst is the engagement of Jewish tourists in privatization. Another Palestine situation will take place for Yemeni people. Government office for privatization has full freedom to evaluate assets, to make tenders, to choose clients, to define conditions, etc. It is expected that assets will be sold with tenth of their prices which will mean big loss for the country. Really, we are pessimist towards the process of privatization due to mechanisms and environment, besides corruption factor that leaves nothing for the country.

Q: Could you please brief us on the reasons that make foreigners avoid investment in the country and what are the obstacles facing investment?
A: Investment in Yemen lacks every thing. The government has done nothing towards the creation of good environment for investment. Security reinforcement comes first, efficient judiciary , commercial tribunals are a must, laws for investment need to be developed, governmental investment needs to be eliminated . The only large scale investment is in oil fields which goes to previous governments and not the current one. Aden Free Zone project is going very slowly. We started this project in 1993-1994; yet time goes quickly, work goes so slow!!
The presidency did too much to create stability for the government to work. The agreement with Saudi Arabia should lead to smooth business relation as well as free movement of Yemeni as well as Saudi Capital towards Yemen. The government unfortunately is paralyzed by corruption and lack of administrative as well as technical cadre to grasp this fruitful occasion.
Its policy is based on loans and taxes. Loans that go to unknown resources with only 20% to 30% for the defined projects. The taxes, on the other hand, proposed by the World Bank nobody knows where it goes. Individual income decreases with time, and development is negative. As published by the government that one third of the nation gets two thirds of national income meanwhile two thirds of the nation share only one third. Tax system with corruption policy lead to severe living standard mainly government staff with exception of high posts and poverty covers large sectors in the country. Individual income does not match with the increase in prices such as electricity, water and telephone more over elimination of subsidies, all lead to a big question mark for the government: Where does money fund for subsidies go? And worst of all different taxes on the shoulders of the citizen namely: income tax (16%) Real estate tax, sales tax rejected by chambers of commerce, production tax, and consummation tax, etc. God knows what comes next for taxes. Once again where all these taxes go? !
To cut it short, we think that this government has achieved nothing economically, neither for trade nor for investment, nor for national individual income. All is negative with negative development. If we refer to World Bank report in July 2000 they stressed that : poverty increases, non-work ability and jobless people on the rise, oil reserve decreases, water resources decreases, and corruption is there. Why should this government stay in position?!

Shams Tabrez
Director Marketing
United Travels, GSA
Continental Airlines.
The word “Tourism” is used very widely and I am thankful to Mr. Najeeb Yousef Mahyoub Sultan, State Authority for Tourism State Administration for Ecotourism who wrote a very good article under the heading “Ideas for Development of Tourism in Yemen” published in Yemen Times on Monday 10th July 2000 issue No 28 who gave the definitions of tourism and tourist very accurately. Now I think a lot of people must have cleared their concepts of tourism and tourist. Kindly allow me to quote Mr. Zafarullah Siddiqui, what he wrote in “Dawn” Karachi about Direct Marketing in Tourism
“Tourism is no doubt a complex industry, because of its multi-facetedness. Its complexity lies in the fact that tourism promotion has to be directed at large number of people having different needs, wants, attitudes, tastes, expectations, and behavior patterns. The role of tourism marketing therefore, is to investigate the market very carefully, identify potential segments and then develop a marketing plan-strategy to get desired results while meeting consumer demands and expectations. The most important aspect in tourism marketing is to penetrates into the target market through direct contact and create an ‘image’ that could influence client preferences and predispose them in favor of the product/service offered.
The direct marketing approach is therefore important in the sense that tourist is likely to be motivated to buy his holiday, airline ticket or accommodation in a hotel for a destination where most probably, he hasn’t been before or wishes to go again. Hence it is psychological aspect for the potential tourist which he cannot evaluate, sample or taste before purchase, which needs to be addressed through one-to-one approach.
Before we discuss the scope of direct marketing in tourism, let us see how marketing in tourism is defined.
“Marketing in tourism is defined as the systematic and coordinated execution of business policy by tourist undertaking whether private or state owned at local, regional, national or international level to achieve the optimal satisfaction of the needs of identifiable groups and in doing so to achieve an appropriate return”
Having defined tourism marketing let us see the dimensions and dynamics of tourist product. Tourist product is a composite product, a combination of natural or man-made attraction, transport, accommodation and entertainment. Each of these components may be marketed for sales directly by its individual supplier or on a package through an intermediary called tour operator.
In terms of quality tourist products is assessed on its site or event attraction, its facilities, accessibility and on the efficiency and standard of service. As a matter of fact the range of tourist product elements encompasses total experience like beauty of a scenery, antiquity of a civilization, gentleness of a beach, etc.. and other factors for example safety, security, socio-cultural reactions, availability of infra-structure, utilities, entertainment, shopping and more importantly the behavior of fellow users and ‘snob’ appeal of the product. In other words, the good or bad assessment of tourist product depends on consumer’s perception of experience and involvement.
There is however, a word of caution before launching aggressive direct marketing campaigns. The marketer must know the distinguishing features of the tourist product that; firstly, it cannot be moved from the place of consumption. Instead of bringing the product to the customer the consumer must be brought to the product.
Secondly, in terms of supply, the tourist product cannot be stocked in the sense that an empty airline seat is a product lost forever and thirdly product offering must meet the requirements of the local law and environment regulations.
Marketing specialists in tourism have a wide range of promotional tools e.g. advertising, direct mail, films, press articles, editorials, window displays, posters, brochures, travel trade contacts, seminars, exhibitions, conferences, familiarizations, tours of journalists/travel trade, attractive trade commission, lunch on vouchers, bonuses, prizes and many many more tools. Although the relative value of these promotional tools varies according to each potential market and nature of the product, all tourism marketing experts however agree that these promotional tools as marketing activities aimed at attracting travelers will fail to motivate the potential market, if three perceived risks viz. Psychological, Physical and Financial are not addressed in a personalized manner. It is here the concept of direct marketing in tourism takes its roots.
It is now a common practice for most airlines, hotels, tour, operators and even souvenir traders to maintain mailing lists of first time, repeat and of prospective consumers of their product offering. The computer has made this job easier to track down the airline passenger hotel guest or vacationer and keep record of their socio-economic indicators and consumption behavior which are used as a resource for direct marketing purpose.
The readers may recall the powerful impact of frequent flyer programs of airlines, where passengers are encouraged to travel the same airlines and earn “free mileage points.” Through this program the airlines keep a personal record of its customers and awards them with Silver, Gold or Platinum membership cards using the knowledge of individual customer needs, airlines develop facilities of special lounges on the ground to pamper them. Customers on board get addressed by name and served with special pre-ordered meals. The passenger even get served with birthday cake and cheers if his date of birth coincides with the travel date.
Likewise most hotels now maintain a profile of their Commercially Important Patrons (persons) (CIP) and address their guests by name while they check-in or check-out from the hotel. This way the clients feel honored and get “ego” satisfaction.
In order to tailor-make holiday programs most tour operators regularly organize destination shopping sessions for potential clients where they are shown videos of hotels/rooms and facilities, on board airlines services and attractions of the holiday destination thereby substantially reduce their perceived risks.
Tour operators maintain videos and brochure libraries and potential clients are encouraged to borrow cassettes, browse brochures and help themselves with complementary catalogs for choosing the product. Large tour operators have experienced tourist guides who through individual sessions guide vacationers on their choice of destination.
To sum up, the increasing competition, and the emerging highly demanding customers have made direct marketing not just an option but a marketing need.
Direct marketing besides ensuring a tailor-made and satisfying product for the customer also helps suppliers to minimize marketing and promotional budget wastage. “A penny saved being penny earned” which helps marketers to stay competitive in price, quality and service sensitive tourism industry.
Direct marketing in tourism is thus the only viable answer for having satisfied customers: a prerequisite for successful sustainable and growing business.
Travel and Leisure Page is one of the tools of Direct Marketing.