For mega corporate companies to emerge:Judicial reforms badly needed in Yemen [Archives:2003/681/Viewpoint]

October 30 2003

In a time least developing countries like Yemen are left behind in terms of developmental pace and speed, other developing countries are starting to show signs of developed countries in many aspects.
A good example is the visible trend in some developing countries to form corporate companies that can implement mega projects with huge capitals. This is done by opening the way for investors to invest in companies with very transparent and risk-free agreements that would guarantee their shares, their profit, and legal rights.
However, when we look at the specific case in Yemen, we would easily find that most of the companies and establishments in the country are not even comparable to those in the West or in other more progressive developing countries. This is due to the fact that most of those companies are private enterprises owned by families. There are very few large-scale companies with equally small shares of different investors.
When trying to understand why this is the case, the issue of judicial incompetence is the major cause. The mostly corrupt, inefficient, and out-of-date legal system in Yemen has made investors and capital owners wary of investing in the country so as not to arrive at unpredicted results.
Hundreds of cases of investors who have been ripped off by their more influential partners have topped the list of reasons why investors don’t want to be partners with any local businessman in Yemen.
“You will either be eaten or be the eater if you are in a partnership in this country” one of the Yemeni businessmen told me when asked why he would not go for a partnership.
This again points to the fact that without a just and efficient legal system, the country’s economy will continue to suffer and investors will continue to hesitate in investing.
In a time of rapid development and growth worldwide, companies will always feel the need for merging with each other to create larger enterprises among a fierce competition of rivals. Future trends point to the direction of more influence of larger companies on smaller ones, and domination of wider networks on limited ones. Hence, one day, a grocery store that is owned by a family can be simply put out of business with a multiple storey mega mall complex having all there is to think of inside.
The days when those corporate companies will invade Yemen will come sooner or later, and without even knowing it, our small local companies could go bankrupt over night. This change will be imposed on us due to World Bank and GATT agreements rather than domestic decisions.
Hence, it is always better to clean up our houses and be prepared by reforming our judicial system and ending cases of corruption and inefficiency. This will be the fundamental and basic step to be taken before investors would ever think of building a competitive local market in the country and bring the change that is now driving the new market economy in the world.