Tawfeeq Al-Khamiry: “If our officials are serious about economic growth, law and order must prevail.” [Archives:1999/10/Interview]
March 8 1999
The predicament of Yemeni businessmen is indeed a difficult one. They have to cope with many problems – all at the same time.
First, they have to handle the fall-out from the reform programs. Many investors who had invested under certain conditions now find their investments evaporating and their enterprises rendered useless.
Second, the condition of law and order is not so good. Many people fear even for their own lives.
Third, they are under pressure to be ‘patriotic’ and put their money in the country through new investments.
Excerpts.
Q: Could you tell us about your beginnings in business?
A: I started work in business with my father when I was in school. We had many shops in Sana’a. Today, we work in many areas and represent various international companies.
Q: Do you specialize in certain fields?
A: In Yemen, most business people have no specific specialization. We deal in electronics, jewelry and watches, and medical apparatus. We also represent international companies that have no offices in Sana’a. For example, we represent the American Junior Motor Company.
Previously we had engaged in oil exploration, but that did not work out well, meaning we did not hit oil.
In tourism we represent The Yemeni Company for Hotels and Investment. We were involved in considerable efforts to strengthen our hotel business given the work done in Haddah Hotel. We are looking forward to engaging a 5 star hotel management company that can offer professional facilities and services.
Q: How do you assess the economic situation in Yemen?
A: The economic situation in Yemen is depressing, but things are bad in many corners of the world. We are expecting an international economic collapse. The victims, at least in the beginning, are always the small countries, our country included.
Besides the slump in oil prices has hurt many Arab countries. This is particularly worrisome in countries which depended on oil revenue in almost a total way. But the stagnation has also been affecting us.
We are a multi-sector economy, as there are many other areas of activity such as agriculture, tourism and fishing. They should be organized and mobilized by professionals and honest administrators to protect this wealth. Bad administration and corruption results in unemployment and complications.
Finally, I think it is necessary that the government provides security in order to secure more investments.
Q: What advantages and facilities are offered to investors in Yemen, and what is the future of investment, especially for the hotels and the trade sectors?
A: Regarding new investments, many companies were turning to Yemen. The General Investment Authority has done its best,. But there were obstacles that investor faced.
For example, there is a large gap between what the law stipulates and the reality. I am referring here to bureaucrats who create all kinds of hurdles simple to get your money. I request the General Investment Authority to remove such obstacles.
Q: What exactly stands in the way of new foreign investors coming to Yemen?
A: I think our officials and media are fixated on foreign investors. I think it is more relevant to focus on local investors. Once local investors are encouraged, the foreigners will come.
But, if I may answer your question about the obstacles, the justice system does not work in Yemen. Commercial Courts impose an advance payment on you when you sue somebody. Such payments are not refunded, even if you win the case. It reflects poorly on Yemeni justice, a factor that keeps investors away.
Some tax laws are unfair, and their application is not universal. There are many obstacles including an undeveloped infrastructure and utilities.
Q: If a foreign investor wishes to pack up and leave, do the authorities permit him to transfer his fund back? And what about Yemeni businessmen, are they permitted to transfer some of their capital abroad for any reason?
A: Regarding Yemenis there are no obstacles to transferring their capital. An investor can transfer his money any time he wishes. The law states that a foreign investor can transfer his capital, but bureaucratic difficulties come at every step. Some bureaucrats impose obstacles in proper implementation of the law. At the very least, you will agonize over slow completion of procedures and other paper-work. Every employee acts according to his mood, knowing that there will be no accountability.
Q: Our sources indicate that there are problems in the Chamber of Commerce and Industry. As a member, could you clarify for us the causes of these problems?
A: I feel sad for the things that occurred recently at the Federation of Yemeni Chambers of Commerce and Industry. These are personal problems for personal interests.
Some members do not perform their roles as stipulated in the law and charter of the chamber. I hope that there will be a real push on the part of businessmen to put the interests of the business community as a whole, and of the country above all other.
I think there must elections soon to be supervised by the Ministry of Supply and Commerce.
The Federation is at crossroads, and it is important to behave in a professional way.
Q: How do you assess the role of the public sector and do you encourage the privatization of this sector?
A: I don’t agree privatization is the answer to all problems of the public sector companies. Of course, in some cases, this is appropriate, but in many cases, the protective umbrella of the state is required for social harmony. We cannot let the profit-driven private sector control the livelihood of the people.
I believe in free trade, but there are guidelines.
But the government’s supervisory role should not be taken to mean favoritism, nepotism or other forms of distortions leading to monopolies and oligopolies. For example, during the last ten years five businessmen took the subsidization of wheat and flour, while citizens are hardly able to receive their small shares, this event is well-known but nobody investigates or punishes it.
Our government stands today against market freedom. It creates many obstacles.
I agree with an organized privatization of the public sector, especially in cases where companies and corporations lead to enormous burdens on the public budget. But, the process must be selective.
In other words, we cannot pass a total judgment.
Q: How does commerce work in Yemen, with no economic indicators, statistical data or field research and studies? Is there is any proposal for founding a center that could assist in providing such data?
A: I agree with the idea of having an organized center for producing accurate, reliable and up to-date data for the private sector. This will be an important development in the Yemeni society.
A good data base is an important requirement for wise decisions – whether in government or business.
Such a center would help a lot and I am willing to participate in financing such an endeavor.
Q: The Yemeni private sector is facing today huge problems that slow its growth. Some of the problems relate to the old ways of thinking and doing business in Yemen’s private sector. What do you think?
A: There is a great need to continue to upgrade and modernize all enterprises. You have passed a general sentence which is not correct.
Many business households and companies have been training their young folks and new generation of employees. Many private sector companies have a very modern and computer-based administrative structures.
Q: In spite of the presence of several businessmen in parliament, private sector influence is still very week, even when enacting laws on business. Why?
A: In the past, people thought that legislation was part of politics. Therefore, they left it to the politicians. Today, we have a rising number of MPs who have a business background.
Even then, however, I agree that the private sector should participate more actively in legislation. This applies first to those who are already in parliament, and second it applies to all of us outside the legislature.
But, there could be a conflict of interest here. Some members of parliament who have business interests, try to influence legislation that could serve their personal interests.
Q: You have major investments in tourism-related businesses. Recently, tourism was badly hit. What do you think should be done?
A: The government should exempt tourism-related activities from taxes and other dues until market conditions change. Otherwise, this sector will be crippled for a long time.
Besides, of course, there are other measures that need to be taken. These include implementing the law in a better way, introducing new publicity and marketing methods, etc.
Q: What do you think of the reform program?
A: These are steps badly needed by Yemen. It is like taking a bitter medicine. You need it to make sure you are better at a later stage.
I think subsidies should be ended. The Government should improve its bureaucratic performance including better tax collection methods and more optimal expenditure patterns.
The reform programs are good, but we should watch out for the following:
– the process should be transparent and open;
– those involved in it should be held fully accountable;
– law and order must prevail and on an equal footing to all;
– the vulnerable members of our society must be helped.
The economy must be put back on the right track. You cannot continue taking painkillers to treat an illness. I think the time is right to take bold measures. The point is you have to have the people of Yemen believe in what you are doing and what you are trying to achieve. It is a question of credibility.
Q: Smuggling has recently grown out of proportions. What do you think should be done?
A: The question has two parts. Firstly, there are customs tariffs. In my opinion, the state should reduce tariffs in order to reduce the incentive for smuggling. Some levels of tariffs are high.
Secondly, we should enforce the law. In some cases, there is proof that the people involved in smuggling are senior military/security officers or tribal leaders who are closely associated with the system.
Is there someone in town who can stand to these people? Is there someone in the power structure who is willing to knock his head with these people?
Q: Do you think that some local products are not up to the international specifications?
A: It is true that not all local products are up to international specifications, we should make that clear. We should have an administration to determine the specifications of the products – whether local or foreign. So, this should not a pretext to build new walls and barriers against trade.
Having said that, it is also true that we have become the dumping ground for foreign goods which are not up to standard. Some goods whose validity is about to expire is re-exported to our markets at nominal prices, thus killing national products.
Q: According to the WTO, Yemen has be fully integrated in the world market by 2006. Are we up to such demands?
A: I think we are moving to a world without borders. We have to accept that and see how we can positively interact.
Yemen is not yet ready for such a move. But, we should prepare ourselves.
I think some people address this matter as if it were a conspiracy against us. It is not. In fact, we can benefit from a stronger association. But we have to understand what is at stake, and prepare ourselves.
Q: How do we prepare?
A: That is up to the government, media and educational institutions. But I think the reform program is one part of the preparations.
Q: Anything to add?
A: I feel sad for our situation. Yemen offers a great potential which our politicians are unable to harness and mobilize.
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