Bajammal to YT: “Corruption is Something All People Share” [Archives:2001/23/Interview]

June 4 2001

Interview by
Mohammed Hatem Al-Qadhi
Yemen Times

Prime Minister Abdulakader Bajammal stressed that his government is not able to come into confrontation with the corrupt and crooked people at the power center. He said joint efforts by all democratic institutions should work together to fight against this epidemic. He pointed out that his government will provide investors with all assistance so as to attract them to Yemen adding that the government has got a new vision of privatization. Bajammal also said that there must be a nation-wide campaign to overhaul the educational system.
Mr. Bajammal is one of the shrewd and outstanding politicians. He served in different political positions. He was appointed as the PM last March. It was believed that he would be able to do something as he enjoys good experience. Yemen Times met him and filed the following.
Q: What are the first steps your government is likely to embark on to continue the restructuring process of Yemen’s economy and how many establishments will privatization hit?
A: We have principal tendencies with regards to restructuring reforms. For privatization, we do not really have that many big companies as other countries to privatize. In fact, some establishments are no longer working as the state’s commitment towards the economy has stopped. For example, the General Authority for Cereals and Foreign Trade no longer exists except for a number of employees receiving salaries and doing nothing. The state has privatized this trade. Such companies are governed by the law that stipulates that if a companies loses over 50% of its capital, it should be liquidated. This liquidation is carried out according to a cabinet decree. For the companies which are eligible for privatization, we have certain amendments on the concept of privatization. In other words, the government will not sell off its shares in the companies concerned, rather it will preserve its share. For instance, we will not sell the Aden Oil Refinery. We will ask investors to come and share in the running of the refinery. Our share will be range from 25-30%. This is our new policy. Instead of pouring our money into such establishments which are not of priority to us, we will spend this money on projects of primary concern like schools, roads, airports, health …etc. For the banking sector, we believe there is no longer a need for government banks because if such banks lose or make mistakes, the government is to be held accountable. We would like to spare the government such trouble. It is almost the same to have a private or government bank. The National Bank of Yemen will not be sold, rather we will keep our share in it and ask investors to raise its capital. In this way, we will have a good resource for the country as well as a good banking service. In my opinion, the capital of any bank should not be less than $30 million. Unfortunately, our banks’ capital do not exceed $10-12 million.
Q: Does this mean a new condition for investment in the banking sector?
A: The new condition is that each bank’s capital should be $13 million(YR 2 billion). This condition should be flexible and reviewed every now and then. This small capital does not give bankers opportunity to make a good business. They can start small businesses like currency exchange, treasury bonds ..etc. But this is not a complete banking business. We are studying the situation of the banking sector and we will ask banks to overhaul themselves, at least to cope with the new development so as their capital can reach $12 million.
Q: Why has the government requested the abolishing of a loan to fund the privatization process?
A: The opposition made a big fuss about a loan from the World Bank(WB) put at $ 10 million to finance the program of privatization. The opposition was surprised when we asked for cancelation of the loan. Let me tell you the story of the loan. I myself invented the idea of the loan but the WB elaborated and designed it. The WB embarked on working on the idea without taking our opinions. The idea was that we will take a loan from the WB and some of it is to be channeled to restructuring of some companies. This amount of money was planned to be reimbursed to the public treasury after the establishment concerned is handed over to the investor. However, when we worked through the topic, we found it different. Some money out of the loan was given to foreign companies to conduct studies on the benefits of the privatized companies. These studies were baseless and did not take into account the situation of each and every company. In fact, experiences of other countries were literally brought to Yemen without considering its peculiarity. They wanted to sell Aden Oil Refinery as scrape metal rather than privatize. Another funny story is that a group of people from the Privatization Technical Office and parliament went to Britain at the expense of the loan and came back with British concepts of privatization which can never be applied to the case of Yemen. Then, they had an excuse to lash out at the government.
This is why we decided to cancel the loan. Our new policy in this regard is that each company should spend money from its budget on its restructuring. Investors are to refund this money. The government will no longer carry out studies and will leave this to investors themselves. In an elaborated letter, we spelled out our views about this misconception of privatization to the WB. We said we would like to spare the government the trouble of disputing with the parliament over this loan as long as we can create a fund for self-financing. However, the WB should not give up its responsibility towards Yemen. It should continue providing us with technical assistance.
Q: Has this created a problem with the WB?
A: Absolutely not. The WB understood our opinion and accepted our reasons.
Q: People are afraid of new price hikes of foodstuff, diesel..etc?
A: We should make it clear that the economic reform program started during the government of the Yemeni Socialist Party when government subsidies of rice were lifted. It was mentioned in the National Comprehensive Reform Program adopted by the YSP and GPC coalition government that the philosophy of the system is that of a free economy. The same thing happened during the GPC and Islah coalition government. There is no reason to feel afraid now as most of the tough reforms have been completed. We had to do them as the economy was hanging in the balance. But we have few things to do now that will cause any harm to the people as we are trying to balance things.
Q: It is believed that corruption in Yemen has become so deeply rooted and that it is protected by influential figures at the power center. So are you ready to confront them as corruption is one of the priorities of your government as mentioned in your agenda?
A: For the first time we talked about corruption in a transparent language of president Ali Abdullah Saleh who himself talked about it with resentment to the military people. I believe every thing is clear now. Corruption is not a government behavior. It is something which all the people inside and outside the government share. I openly said before the parliament that people do not suffer from price hikes or inflation. Rather they are suffering from oppressions being practiced against them. Having this feeling of being unequal before the law is corruption and is not only the business of the government. It should be the issue of everybody; of all democratic institutions in the country. I think it is an appropriate time to nip corruption in the bud. For instance, when the National Defense Council decided to suspend the law of obligatory military service. It was meant to curb corruption in the military sectors. This is because millions of dollars used to be taken from students to get waivers from the service. The money went directly into the pockets of crooked officials. Imagine if we have 150,000 students and each one pays $100 we will have $ 15,000,000. But if they pay $1000 each, we will have $ 150 million. At this time we do not need to have a big military. We have sorted out all our border disputes with Saudi Arabia, Oman and Eritrea. What we need is a well qualified army who could be instrumental in fighting corruption.
We have assistance from other countries. There are projects financed by donor countries. But when we checked these projects we found them not working and they are registered as working projects.
Frankly speaking and in a reply to your question whether we are ready to encounter crooked officials at the power center, I can say No!
We can not launch a war against them. What we can do during this two-year term in office is to have the strict mechanisms of change. We will create examples of good and honest people every where so that people realize that we do not have any room for corrupt people. A good number of reforms are taking place soon at all levels. Local authorities will be responsible for monitoring everything in all districts. This means that real democracy and public participation will be a more critical tool to curb corruption.
Q: Education in Yemen is also victim of corruption. It suffered a lot from duality. You have been courageous when you decided merging the scholastic institutions but will this be followed by a radical reforms in the educational system in Yemen?
A: Well, education will not improve overnight just after scholastic institutions have been merged in the overall educational system. It was just the first step. However, the educational system in general should be restructured so that all students have a unified national culture based on Islamic teachings. The next point is that vocational and technical education should be focused on more. Higher education should be more specialized. The private sector investment in this field should be well-organized. We might be lenient with fraud in manufacture but we will not allow this in education. The standard of education has to be superior.
Q: What is the ratio of Yemen’s foreign loans and how are they rescheduled?
A: Well, the amount of the loans were $ 7.2 billion. It is now around $ 440 million. The Russian loans to Yemen have been liquidated and rescheduled. Around 6.6% of it remains and 33% of the European loans.
Q: What are the facilities and protection you provide to investors since in your agenda you mentioned that three industrial blocs will be established?
A: We provide every possible assistance and protection. The investment law provides all legal protection. We are ready to further the privileges that make our contracts with the investors turn into a law passed by a republican decree. This depends on the size and the strategy of the investment project like oil refineries, terminal containers, power, and petrochemical industries. We can give such investments special laws; an experience that has flourished in China. I believe such industries can prosper in Yemen with Saudi capital.
I call on Saudi investors to respond positively to our initiative to embark on establishing industrial zones in Aden, Hodeidah and Mukalla. This can satisfy not only the needs of Yemen and Saudi Arabia but it can cover African countries as well.