Abdul Hafiz M. Taha Naji: “Free trade doesn’t mean chaos.” [Archives:1999/07/Business & Economy]
February 15 1999
The current deterioration in the economy is forcing many businesses to go bankrupt. The problem is most troubling in the more industrialized parts of the country. Taiz is a good example. The business community in Taiz is constantly reminded of its precarious conditions by the many bankrupt companies, and the many other establishments that are in jeopardy.
Q: In your opinion, what are the reasons behind the problems of so many industrial establishments?
A: It is no secret that national industries are facing a number of problems. These include:
1- The heated and often unfair competition between national industries and international companies is the main reason. In my opinion, it is the General Investment Authority (GIA) that bears responsibility for this situation. The GIA should have a clear policy on the industrialization effort in this country. There must be a certain level of commitment to the welfare of the industrial sector of Yemen.
2. Another problem is the constant change introduced by the state in the laws and business climate of Yemen. Many investors do their feasibility studies for investing in projects on the basis of certain realities and facts. For example, we study taxes, customs tariff, market size, and other factors. Then, the government steps in and changes those facts, thus rendering many projects unfeasible.
3. Third, there is a confused understanding of what free trade really means. Many of our officials think that free economic activities mean chaos. That is not true. Economic freedom means integration with the world economy with the purpose of optimizing and maximizing your own interests. Look at Europe or even the USA – the heartland of capitalism. You cannot import just about anything you want.
4. Then there is the need for transparency and open-book business deals. Many of the companies licensed by the GIA fronts, are at best simple shops which do not care about standards or proper business practices. The GIA has given licenses to small entities which do not pay taxes.
5. A final serious problem is smuggling. This is a real stumbling block in the progress of our national economy. We really feel unable to compete with smuggled products. This is because they don’t pay taxes or customs duties. Let me give you an example. I might pay for a raw plastic material $80 per a ton while I can get the product made ready at $70. How come? I don’t know. This makes traders in a better position than industrialists.
This doesn’t man that we are against fair competition. On the contrary, we are in favor of open trade and free economic activities. But the rules of the game must be fair, to all.
Q: Many consumers believe local industries don’t adhere to international standards. They feel the products are inferior. Is this true?
A: I challenge any person who claims that the national industries are deficient or don’t abide by quality standards to prove such allegations. We bring our equipment and raw materials from abroad. And, of course, there are standards which we maintain in producing our products. Many local factories and products have been honored with ISO awards.
I also want to indicate that we export our products to many markets worldwide, including Europe and the USA. If these products were not up to standard, do you think they would allow them in such markets?
I will take you now to my factory and you will see what is going on. We also welcome anybody who wants to visit us. He/she can come without informing us beforehand.
Q: Marketing has become one of the problems of our national industries. What can be done?
A: Marketing is very important for any business. This is a universal concern, whatever you sell, including newspapers.
I want to point out that most Yemeni industries and companies now pay more attention to this matter. Some have opened distribution centers and branches in the various governorates.
For us, we regularly participate in exhibitions, fairs, and other methods of reaching out to our customers. But the Yemeni people are prejudiced and have reached unfair judgments against national products. This is partly because of the negative media position, which is not helpful.
In addition, we would like our government to react just like Britain did regarding the problem of the mad cow disease. It worked hard and stood by the farmers. In other words, our government should launch a serious campaign to encourage national industries and build public confidence in our national products. Yemen has made a tremendous progress in the field of industry and this has to be protected. In short, we as industrialists feel very disappointed. We worry about the future of our industries which at the moment looks very gloomy and dark, unless something is done fast.
Q: You have not mentioned kidnapping and other terrorist incidents. How has that affected you?
A: We should all condemn such unlawful actions. We must work together to fight against all kidnappers and terrorists.
A safe and secure environment is a very important consideration for any investor. No nation can prosper unless law and order prevail. Unfortunately, because of these events, we are now seen as a risky land.
We are directly affected by these incidents because our potential partners in investments are not willing to come. Visitors avoid Yemen thus reducing the market size and total purchasing power of our society. Other businesses decline to invest, leading to lower levels of economic activity, as well as less purchasing power.
Therefore, we are hopeful that president Saleh and the government will take stiff measures in order to put an end to such an abnormal phenomenon.
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