Capital Pirates Part II [Archives:2001/08/Business & Economy]
Dr. Najat Mohamed Juma’an
To identify the problems resulting from capital pirates and work on solving them, we need to understand the mentality of investors and capital owners. We know that capital is initially without identity and its owner looks for a place where it could find stability and growth. We know that we are slowly joining a global system in a new world order, in which the World Trade Organization (WTO) is of great influence, and in which a stronger role is played by the national and international economic market. This resulted in opening the door for national capital to gain international momentum and move from poor countries with little investment opportunity to powerful and profit offering countries. In most cases, capital owners look for easy profit and risk-free investments. This is only achievable in gigantic banks that usually guarantee risk-free investments with competitive profits. In such conditions, capital owners could achieve easy success and growth, especially with the emergence of the capital and stock markets, which welcome capitals from all over the world to be invested in various projects in developed countries. These capitals are invested in markets that meet the conditions of efficiency which are measured using available information about the specific market’s share in the stock exchange and the risks of a possible loss in investments because of general risks related to the market environment.
On the other hand, the emergence of stock markets and stock exchanges has resulted in development skills in fund management as it has become the responsibility of fund managers to collect assets from all over the world and gather and invest them in long-term investments with very little risk.
Hence, it is obvious that with the current conditions, it is more secure and profitable for capital owners to respond positively to the calls of capital pirates and put their capital in their hands.
The main conclusion out of what has been mentioned so far is that the mass one-way flow of national capital from developing countries to developed countries is very difficult to prevent. It is also obvious that this leads to devastating effects on the national economy including scarcity in available capital to be used for national investment. This in turn hinders the economic progress and prosperity of the country in preventing capital owners from using their assets in industry, agriculture, and long-term investment using the available resources. The lack of investment of national capital in Yemen has further far reaching effects including increasing unemployment and inflation, leading to a decrease in the average annual income, which in turn widens the gap between the rich and the poor.
As mentioned earlier, there are many businessmen who decided to invest their capital in Yemen rather than sending them to capital pirates. However, there are also many examples of failed investment attempts in the country. For example, some locally available capital were used by their owners in national investments, but it was later discovered that the provided capitals were not enough to complete the started investment projects, leading to their eventual and inescapable collapse and the loss of all the capital used. This further discourages investors to invest in Yemen and encourages them to send their capital to overseas investors, particularly in risk-free investments, again run by capital pirates.
This also comes at a time of competition, because globalization requires more sophisticated and technologically advanced equipment along with a skilled and professionally trained workforce, which obviously require a larger capital for investment. This in itself constitutes a major challenge for good-will attempts to invest on national soil.
The state has tried to combat the effect of outgoing capital and worked extensively to cover the deficit in the national capital, or in other words, work began on finding other ways to escape the development crisis in national capital deficit. These efforts included joining international companies as shareholders, creating income from taxes and customs, getting financial support from friendly countries, or in the worst case, depending on facilitated loans on the condition that these loans will definitely lead to true economic development. No matter what the strategies of the government are, there is no doubt that preserving what is left of national capital and reclaiming the national capital abroad is important for national development. Eventually, the responsibility of creating an environment that encourages investment is a national duty and obligation that should be fulfilled by the government, who could help in bringing national capital back to it’s homeland and working on limiting the reasons why national investors choose capital pirates over local investment.
We find ourselves facing the might and power of these capital pirates in the form of worldwide renowned international banks and companies that try to take away our capital and invest them for their own sake. Why can’t we learn from them and know how they succeeded in attracting these assets?
Only a little effort is needed to realize that the main factor behind any success in attracting capital is the psychological factor that supports long-term investment. This factor lies in our faith that there is potential for considerable profit in investing in our country and that we could work hard to create a national environment capable of competing worldwide and attracting national capital owned by Yemeni investors abroad.
Long-term investment requires an optimistic look to the future and the abandoning of all pessimistic ideas and thoughts by many of Yemeni businessmen who believe that Yemen is not a country suitable for investment. Even though the future is promising, the responsibility of working on limiting the effect of capital pirates falls on all of us as citizens, businessmen, strategy-developers and decision-makers.
In fact, if we strategically analyze Yemen’s points of strength, I am confident that we would conclude that it has great potential to provide more profit to capital owners, who will also be confronted by the fact that they would have served their national economy instead of the capital pirates. With its mountains, deserts and seashores, Yemen is a country with interesting geological diversity, making it a haven for agriculture due to its different climates. It is a country known for its hard working and talented population of which 60% are in the productivity age, and which if given the appropriate vocational training and human resource development could be more efficient than any foreign workforce. Our country is also rich in many natural resources including oil, natural gas, natural gems, fish, plus many other resources.
It is no surprise that if we take the appropriate steps for building a truly investor-friendly environment, we can not only bring back the exiled capital, but also attract foreign investment in large amounts as well.
Another factor to bring back the national capital to the country that had been pirated by capital pirates, is to create trust among the different investors in the stock, product, and service exchange market and this can only be achieved by developing alliance strategies instead of competitive strategies.
Having trust in the political leadership is also of vital importance at the local and international level for investors. Even though some are trying to misguide capital owners about this fact, there always is a vital association between the trust of the investor or businessman in the leadership and the amount and period of his investment. When the political leadership is capable of taking major political and economic decisions and enacting them appropriately in favor of the national economy, it raises the confidence within national and foreign capital owners, thus encouraging them to put their capital into national investments on national soil. The trust of the general public in their political leadership and the trust of the leadership in the potential in the public are both of equal significance in this respect.
In conclusion, the one-way flow of national capital from Yemen to other countries in search for a better place for stability and true growth is a sad fact caused mainly by powerful capital pirates that know what they are doing and how to attract capital. It is our role as politicians, economists, administrators, and citizens to work on creating an investment-friendly environment that could attract not only overseas national capital, but also foreign capital that seek a place for investment. It is a matter of commitment and understanding what we should do to prevent further damage by capital pirates.
Yemen Times would like to correct a statement in Part I of the “Capital Pirates” article published last week. The correct statement that should have been the first sentence of the third paragraph is , “Financial assets pirates emerged recently as a number of influential persons, who represent multi-millionaire international banks that have offices.. etc.” Our Apologies.