Foreign investment in Yemen declines [Archives:2006/935/Local News]

April 6 2006

SANA'A, April 4 ) According to official scores, Arab and foreign investment in Yemen has declined to its worst level over the past few years.

A recent economic report prepared by the Ministry of Planning and International Cooperation's research unit revealed that Arab investment declined from 27.1 percent in 2002 to 8.1 percent of total investments in Yemen in 2004. The report indicated that investment declined to 22.1 percent in 2003.

Foreign investment decreased from 11.4 percent in 2002 to 0.6 percent in 2004, with the ministry acknowledging that many challenges and obstacles caused the decline. The survey identified such challenges and obstacles by evaluating investment and private business environments. The ministry implemented the survey in collaboration with the World Bank.

Lack of government, political and economic stability, tax increases and poor performance of tax and customs authorities, corruption, bribery in government systems and the high cost of business licenses constitute the most prominent obstacles, the ministry noted.

Survey findings revealed that there is unjust investment competition due to smuggling via Yemeni outlets, plus the declining level of infrastructure services and high estate prices.

Rising costs, prolonged procedures to obtain funding, the legal system's poor performance and lack of skilled human resources are the most prominent challenges, the survey found.

According to the report, 60 percent of Arab and foreign investors implement business related to providing education, health and transportation services. The industrial sector attracted 27 percent and tourism 15 percent of Arab and foreign investment, thereby occupying second and third place respectively.

The report attributed Arab investors' concentration on services to the availability of electricity and transportation in cities where they establish their projects. Additionally, these investors provide security services in such densely populated areas, taking their attention away from rural areas, despite the fact that only 16 percent of Yemen's population live in cities.

The report mentioned that the above reasons are behind lack of investment in agriculture and transformation industries.