Since 1995,What has the private sector befited from economic reform? [Archives:2004/751/Business & Economy]

July 1 2004

Mahyoub Al-Kamaly
Nine years after the beginning of the economic reform program in Yemen the private sector finds itself face to face with a host of government measures implemented in the country and in order to assess what it has gained during that period and where it has failed in addition to reasons that led to the foundering of many investments an finally the necessary factors for the achievement of the economic reform goals.
Businessmen harbour the view that the program of economic reform in Yemen has achieved for the government many objectives. The main of those objectives are the re-control over the proportion of inflation, growth of saving, stability of monetary situations and halting the deterioration of the national currency. But the program was confronted with impediments such as the emergence of corruption in the administrative machinery at the state institutions and those dealing directly with investors.
But the program am of the economic reform has achieved a progress in the area of legal legislation encouraging private sector investment, allowing the sector to realize the following goals:
– re-organization of its institutions, particularly the chamber of commerce and industry and its general federation,
-Some private sector establishments have re-reformed their situations,
-The private sector has accommodated part of unemployed scientific skills.
The private sector, However, had during the period 1995-2004 s faced with difficulties and challenges hindered its development due to the slowness in granting licenses, administration bureaucracy and routine and the emergence of a sector claiming investment at the expense of the private sector activities. Hence was born a group hampering the principle of realisation of justice concerning the state tenders system and complicating taxation laws. It also works for delaying the reform of customs system and sluggishness in the process of privatisation of floundering establishments and installations. Thus the elements of judicial reform and commercial judiciary have doubled activities of the private sector, a matter that necessitated reconsideration of the judiciary condition and also that of customs and taxation, in addition to offering additional facilities for encouraging investment. The law of investments has been amended for several times. Nevertheless, those measures were not enough for there still the private sector, after about nine years since the implementation f the economic reform program, suffering from backwardness and lagging behind the realisation of its goals. Moreover, many of the investment projects have not been implemented yet.
According to businessmen, activities f many institutions in the private sector are still inactive or semi-open. What has made it worse is the government direction towards imposing the general tax on sales.
If the law pertaining the sales taxes was implemented in the next period, the conditions of the trading sector would get worse. And hence its confrontation with financial and administrative reforms and rejecting them would increase. That means the economic reforms were in interest of the government and the goals aspired from them for the private sectors have not been realized.