Economic ReformsA Gulf race and Saudi pressure to enter Yemeni markets [Archives:2004/753/Opinion]

July 8 2004

By Prof. Dr. Abdulaziz Altarb
For Yemen Times

Yemeni markets are flooded with all kinds of brands of products and a wide variety of consumer goods in a combination of original, intimidated and fraud brands. The Republic of Yemen regularly lose millions of riyals of customs revenues because many of these products infiltrate Yemeni markets illegally as smuggled goods. Moreover, Yemen also loses vital hard currency spent on the treatments of illnesses associated with smuggled products that have either expired or are unsuitable for human consumption. If we would logically and expeditiously reduce or cancel customs tariffs, we would eradicate permanently smuggling and the corrupt mafia involved in them, and subsequently this would increase the state's revenues.

Administrative reform is the basis for effective financial and economic reforms. However, this requires first of all a political will and that is why we have raised this issue to the President of the Republic. Modern and successful administration must not remain in the same position, the new world order does not give any option other than to commence immediately reforms.
We request to join the Gulf Cooperation Council and at the same time we do not allow or facilitate the flow of products from the Gulf into our markets. Why and where is the deficiency?
The commercial balance between Yemen and Gulf countries is weighted in favor of the latter. Yemeni imports from these countries stands at US$600 million in return for US$155 million in Yemeni exports to these countries.
The intention to create or establish a free market zone between Yemen and the Gulf countries would definitely be in favor of goods and products coming from the Gulf at the current time. There are pressures to grant their products total exemption. United Arab Emirates, Oman and Saudi are competing to reach an exemption status on the bilateral level.
In my estimation, the problem is merely an administrative and economic one since many of our national products enter and compete in their markets despite many internal obstacle and lack export support and exemptions on the import of essential raw materials. Therefore, the state, represented by the Ministry of Industry and Trade should organize workshops to include chambers of commerce and industry, businessmen, investors, Yemeni industrial associations, and a number of academics and researchers in order to examine and study the situation instead of preventing commercial deals, especially since the high customs tariffs have encouraged smuggling in almost every field.
Yemeni businessmen demand now, more than in anytime in the past, the restructuring of their condition in order to be able to confront the challenges facing them to sustain a viable position in the market and to be able to compete effectively with others inside and outside. If they could not compete in the local market, surely they would not be able to compete in foreign markets? This requires of the state reconsideration of several matters, mainly industries subsidies and other obstacles. The discussion of all economic, commercial and financial matters with businessmen unions, chambers of commerce and industries and civic society organizations and NGOs is also critical before issuing any legislation related to economic activity and attracting investment.
The discussion of opening our markets to foreign products and goods has become a very urgent matter. A fund must be created to be concerned with exports, the beneficiary countries and paying compensation to countries hurt by the cancellation or reduction of customs tariffs. Therefore, we support the establishing of a free zone with Gulf countries toward the ultimate goal of establishing an Arab free trade zone, and complete Arab integration and coordination. We will learn a lot about improving the quality of our goods and products and how to work hard and how to reduce operating expenses and for the citizens to have a variety of choices without having to compromise the quality of products. It will a real test to compete independently at the international level instead of having the World Trade Organization and the new world economy impose their restrictions on us.
The faster we establish encourage joint stock companies and corporations, the sooner we will establish a capital base, stocks and a free market economy, especially since our economic identity is still unknown or it is still yet undefined.
The economic and administrative reforms must focus on the following:
1- Working to increase the economic growth rate, increase living standards, eliminating unemployment, creating new job opportunities by reviving the economy and getting out from the current economic stagnation and chaos.
2- Resolving outstanding problems such as controlling prices according to supply and demand, especially for low income individuals, the relations between owners and leasers, confronting all ineffective administration routines
3- Continuing to focus on exports as it is a major factor in reaching a comprehensive renaissance.
4- Supporting the tourism industry as it could form a major source for hard currency. We have requested the President to have independent ministries for tourism, economy, and foreign trade.
5- The better use of our agricultural and fish capabilities, modernization of industry and activating agreements between Yemen and Arab countries and foreign countries.
6- Creating a suitable atmosphere to attract more local, Arab and foreign investment that would help in increasing development growth rates.
Expediting economic, financial and administrative reforms would strengthen the atmosphere for more political stability and it will be the gateway for the ruling party to commence preparation for more fair and honest elections. At the same time, it will be an incentive for citizens to react instead of waiting for foreign pressure to impose reforms or resorting to boycotting the elections.
This the reality of the extent of the reforms we present to the president, who is fully aware of them, but the authorities and his assistants are not reacting to them. These reforms are now urgent and they have been demanded by the various segments of the general public since the president's address on the 14th anniversary of the National Day on 22 May, 2004.
We are waiting. I can confidently say that the president is able to translate words into deeds in order reach the modern state of Yemen soon amid reforms workshops in all of the various fields and levels. These deeds would be the gift from the president to the general public hopefully delivered from the anniversaries of the Yemeni revolutions, September and October and Independence Day of this year.
I conclude by saying that the year 2005 could be the year of more comprehensive reforms and changes.