Local Industries at Stake [Archives:2002/02/Business & Economy]

January 7 2002

Fathi Abu Annasr
Local industries are currently facing a host of problems owing to the government wrong economic policies that encourage dumping the market with foreign products.
The Yemeni industrial sector, which is still in its infancy, finds itself in a heated competition with reputed international products which are manufactured in more suitable circumstances, totally different than the situation here.
Owing to this miscalculated policy of opening the Yemeni market for imported products and lack of encouragement and protection of the national industries, several blows have been repeatedly administered to the industrial sector. Consequently, a number of factories have been closed down and hundreds of workers lost their jobs. On their part, manufacturers turned to import activities which have been proven to be more profitable.
In a related seminar organized by the Consumer Protection Society in Sana’a, a working paper estimated losses suffered by the government resources at YR 14.4 billion as a result of wrong calculations. There have been other difficulties which seem to put the national industry at risk if the government goes on in its policy.
The paper discussed some facts that make competition between the national and imported products an unfair one. In addition to the high costs of energy and transportation, heavy taxes are imposed on the national products. For example, a consumption tax is imposed on production machinery which does not happen elsewhere in the world. A consumption tax is also required on production material plus the double tax demanded on some material used in production. In addition, there are customs tariffs imposed on material of the local products (15%), profits tax (35%), employment tax (16%), insurance (15%), Zakah (alms) (2,5%), property tax, city improvement tax, etc..
The Yemeni market, in fact, is dumped by foreign products. This happens directly by importing and indirectly by smuggling.
Since the government launched negotiation to join the WTO, it has abandoned all policies of protecting the national industries, ignoring all facilities granted by the WTOs agreements for the developing countries, including Yemen, to enhance and improve their national industries.