Government to Privatize Big Enterprises [Archives:2001/41/Business & Economy]

October 8 2001

The government has the intention to privatize some enterprises, although they generate considerable funds and support the public budget. The privatization program is opposed by the opposition party and the people working at these enterprises. However, the current government confirms that the privatization policy is carried out according to well-studied mechanism in cooperation with the World Bank (WB), with the view of redistributing the capital and assets of these enterprises between the government and investors, which is known as partial privatization of the crippled enterprises. The Higher Committee for Privatization, chaired by the Prime Minister Abdulqadir Bajamal, has recently approved upgrading some of the crippled public enterprises. However, the Second Five Year Plan for 2001 – 2005 includes privatization of 60 enterprises operating in the fields of manufacturing, transportation and public services. Their capital will be redistributed between the government and investors. Sources at the Technical Office for Privatization mentioned that the implementation of what has been outlined at the government program concerning the selling of the crippled enterprises is making slow progress due to the delay in enacting the Privatization Law of 1999. 
The privatization strategy for the General Corporation for Cement Manufacturing and Marketing, the General Corporation for Land Transport, and the General Corporation for Pharmaceuticals, besides selling and liquidating other enterprises, has been mapped out despite the existence of opposition to this program. Moreover, despite the controversy over this program the following steps have been taken: 
a – The privatization study for the Agricultural Bank and the Housing Bank has been finalized. 
b – The National Bank has been re-capitalized and the Industrial Bank has been liquidated. Sixteen other enterprises have been privatized as well, 17 other tourist enterprises have been leased and government-owned farms have been liquidated. 
The Second Five Year Plan aims at implementing the privatization program, which includes the privatization of 13 industrial enterprises, by redistributing the shares of the Textile Factory in Aden, although the government created a plan to upgrade it in cooperation with the Peoples’ Republic of China. Furthermore, the government intends to re-capitalize the General Corporation for Dairies, selling the General Corporation for Pharmaceuticals and re-capitalizing Aden Refineries. 
The Second Five Year plan further aims at privatizing 13 agricultural enterprises, such as leasing agricultural machinery, selling the General Corporation for Poultry and two corporations for seed production, as well as selling the fish canning plants. Regarding the trade sector, there are eight corporations that have been selected for privatization, such as the General Corporations for Construction Materials and the Textiles Trade. 
The government intends to privatize the Housing Credit Bank, Yemen Marine Corporation and the other air cargo corporations. The proclaimed goals of privatization are: to promote investment; to create a climate favorable to competition in the private sector; to gain additional funds; and to ease the debt burden on the crippled public enterprises. The government said that it is striving to upgrade the technology used at the crippled institutions and to increase their productivity, particularly in the manufacturing sector, with the view of developing national exports to foreign markets. The government has entrusted the Central Organization for Control & Audit (COCA) with monitoring the privatization process in order to stop any wrongful practices. 
As far as the revenues of the privatized enterprises are concerned, the enacted laws stipulate that they should be channeled into a special account called the Privatization Revenues Fund, which has been included in the state general budget as an independent fund for financing different development projects in the country. However, the negative aspects of privatization remain a nightmare, especially for the laborers working at the crippled institutions. This necessities giving assurances and compensation to these people.