Investment Environment [Archives:2001/03/Business & Economy]

Abdul Aziz Mohammed
Economic Analysist
After the unification on 22nd May, 1990 and the Republic of Yemen was established, many unified laws have been formed. Among them a unified law for investment ( law No 22 for the year 1991), which was issued on the 10th April, 1991. The said law contains (10) sections, (3) chapters and (85) articles. This law states in Article (1) of section (one) a designation to promote and regulate the investment of Yemeni, Arab and foreign capital subject to the provision of the law (investment law), within the context of public state policy and the goals and priorities of the economic and social development plan in the following sectors:-
a) Industry ( excluding prospecting for the extra oil, gas and minerals which are granted by special agreements).
b) Agriculture and livestock resources including pisciculture and fishing.
c) Tourism
d) Health
e) Education and technical and vocational training
f) Transportation
g) Construction and housing
h) Any other economic activity specified by Deputy of the Council of Ministers upon a proposal by the board of Directors of the Authority (and here is the General Investment Authority which has been established later, its head office located in Sana’a and its branches in all main governates).
Through Section (2) of the law which deals with Goals and Benefits Accorded Projects article (A) states that State shall guarantee Yemeni, Arab and Foreign investors freedom to invest in Investment Policy in accordance with the provision of the law. And article (3) confirms that Arab and foreign Capital and Arab and Foreign Investors shall be at par with Yemeni Capital and Yemeni Investors without discrimination with respect to the rights, obligations, rules and procedures set forth in this law and the decrees and regulations enacted in execution thereof.
Exemption from compulsory price regulations and profit limiting is given to all projects products as per article (12) subject to the project not creating or indulging in monopolistic practices or trying to fix prices in overt or implicit agreement with other producers or vendors of similar products and services, but item (b) of the same article in cases of necessity, The council of ministers may enact compulsory price regulation in any of the following commodities, guided by the economic loss thereof:-
– Flour and bread
– Milk and infant food stuff
– Pharmaceuticals
If we have to highlight nationalizing projects in the law then we have to refer to item (a) of article (13) which says; Projects may not be nationalized or seized. Moreover their funds may not be blocked, Confiscated, frozen, withheld or sequestered by other than the courts of law and item (b) of the same article states that all or part of project real estate may not be expropriated save for the public wealth according to the law and against fair compensation on the basis of the market price of such real estate. In cases where the Invested funds, subject of such action, are foreign funds, such compensations may be freely transferred abroad regardless of any law or decree providing otherwise.
In regard to custom duty, Tax and other exemptions, mainly all projects are granted custom duty and Tax exemptions while others may also obtain other exemptions such as technology transfer revenue and loan interest exemption. Article (23) and (25) of the law explains clearly those matters but also it is advisable to all investors to go through the said law and its amendment law No (14) and the Investment guidance which covers very important procedures and contains other information and remarks such as annex No (1) which deals with negative projects list, list of projects which must have a Yemeni capital contribution, list of projects limited to Yemeni capital investors as well as definition of (A) and (B) Investment sector and addition of Investment field added to article (1) of the law such as electricity, water, telecommunication and investment banks.
Furthermore it is also known that the government is conducting a study that will introduce new amendments and additions to the existing Investment Law aiming to facilitate procedures of investment and encourage all investors (Yemeni, Arab and Foreign) to participle in the development of Yemen.

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