Negative Aspects of the Privatization Law [Archives:2001/50/Business & Economy]
Privatization is one of the techniques included in the economic, social, financial, and administrative reform program which many countries have embarked upon due to many foreign debt problems and chaos in their economic and development structures. These problems are associated with permanent deficit in the budget of the state; deteriorating the level of performance in public establishments; increasing the level of unemployment; inflation, which is associated with a remarkable increase in population; deficit in the trade balance, etc. Yemen is one of these countries suffering such problems and has started implementing this program.
As part of the Five Year Plan (2001-2005), the government has directed its focus towards expanding the privatization program using new techniques, including selling productive economic institutions such as the Land Transportation Corporation, cement plants and telecommunication centers. The privatization program has still been unproductive; the government, according to the opposition parties, has entered a new phase of misapplication of a profitable tax policy. In this respect, the government has placed great significance on diversification of exports, activating the role of agricultural and economic production, reforming means of transportation and improving means of marketing and research. The opposition parties have criticized the privatization law for not including effective mechanisms to ensure development with the aim of increasing production.
Businessmen and the general privatized projects are secondary and do not encourage the investment of foreign capital in Yemen. Aspects of the privatization law have been changed to have negative consequences, particularly to those who are interested in investing their capital in sectors such as economy and agriculture, as the government has increased their taxes as compared to the exemptions granted for investors. The absence of the stock exchange has resulted in the financial mediators saving, ensuring its arrival to investors in all productive sectors through free exchange. The government has insisted that implementing the privatization law will double the volume of its reserves. The opposition has said that unemployment, the decrease in local production growth and the conditions of thousands of poor families is the result of implementing the privatization law.
The government intends to sell the assets of some banks or to purchase factory shares such as the Textile and Weaving and Fish Canning factories. The major problem is that the privatization law ignores low-paid employees. They are greatly affected by the policies of privatizing because they can’t find job opportunities or social insurance for their families.
The private sector in Yemen has participated in the process of privatization and is beginning to show fears of losing its capital. The private sector wants to invest its capital with concern to improving the imported goods to the adjacent countries.
Generally speaking, the privatization program is more than an economic process. It includes economic, social and political dimensions and should be based on transparency, objectivity, publicity and careful analysis of the social and economic realities of the society.