Tourism is key [Archives:2004/762/Business & Economy]

August 9 2004

By Peter Willems
Yemen Times Staff

Many are still wondering when full-fledged economic reform will be put into place whilst Yemen's economy continues to be stagnant. Analysts ask if there will be a reduction in $600 million annual oil subsidies and if other measures will take hold to give the economy a boost.
Many believe, however, that Yemen's quickest and most effective way to get the economy out of the doldrums is to focus on the tourism sector.
“Tourism could be the strongest driving force in Yemen's economy in the future,” said Mohamed Qaflah, Deputy Minister of the Ministry of Culture and Tourism.
The tourism industry saw promise between 1995 and 1998 as the number of tourists increased by 35%. But after the incident in Abyan where tourists were killed after being kidnapped in 1998, tourists coming to Yemen started to drop. The attack in America on September 11th 2001, and the war on terror that followed, also put a lid on the growth in tourism.
“Because of Yemen's image and security issues, the tourism industry has been hit badly,” said Naji Abu Hatim, Senior Rural Development Specialist at The World Bank based in Yemen.
Even though there has been a jump in foreigners coming to visit Yemen in the last couple of years – from 76,000 in 2001 to 155,000 last year – the numbers still don't amount to much. According to The World Bank, the tourism sectors contribution to the overall economy is “insignificant,” as it takes up less than one percent of the gross domestic product.
Besides foreign money being injected into Yemen's economy and providing growth to hotels, restaurants, transportation, entertainment and many other areas in the Yemeni market, tourism is one of the best means of creating jobs. Even though there are different figures on unemployment, some have calculated that between 25% – 30% of the Yemeni population is out of work.
The pillar of Yemen's economy is oil. Over 70% of the government's revenue and around 70% of the country's export revenue comes from oil. More than 30% of Yemen's GDP depends on the flow of oil. However, oil production generates very few job opportunities.
“The oil industry does not create jobs. It creates income, but not jobs,” said Robert Hindle, Country Manager at the World Bank in Yemen. “Unless you can use oil royalties in ways that will create jobs for Yemenis, you will always have this surplus of labor. What you need to do is bring in tourists. One thing that is great for this is that it creates a huge number of jobs. If you think about what would happen in terms of employment generation, if you begin to have beach resorts here, if you begin to have companies taking tours through the mountains, you would create an enormous amount of jobs.”
It is also argued that tourism can be a prime mover in reducing poverty. 42% of Yemen's population lives below the poverty line, with 25% living just above poverty.
“If there is a big increase in tourists, jobs could be available far and wide in cities, in rural areas and on coastlines,” said one economist. “People would have new money to better their living conditions and would have increased purchasing power that could help the overall economy.”
According to Qaflah, the Ministry of Culture and Tourism has put together a plan to help the sector grow. The plan includes establishing an institute to supervise development, upgrade the master plan and the short to long-term strategy, train human resources to improve the quality of tourism businesses, promote the country to attract tourists and encourage private investment.
Qaflah said, “The government is seriously considering supporting the Ministry's plan.”
Many in the tourism industry want to see is the government develop a full-scale promotional campaign. Last year, around a half million dollars came out of the government's budget for promoting the country.
“This is very little,” said Abu Hatim. “You cannot promote a country with this amount, especially when you look at the potential of this sector. With oil revenue going down, the government must diversify into other sectors, and the starting point is tourism. The country has so many features, like landscape, mountains, coastlines, and cultural heritage, so tourism could easily boom. It's so simple: advertise.”
And as a salesman at a travel agency put it, “Yes, there are clashes in Saada, but that is an isolated conflict. We have had skirmishes here and there, but every time I have spoken to a tourist, they always told me that this is a safe country. Right after the bombing in Bali that killed many a couple of years ago, the country immediately promoted itself and tourism went straight back up again.”
Another goal is for the government to develop a more investor-friendly environment. This could attract domestic and foreign investment that could be pumped into tourism.
“It is necessary to insure that private businesses can operate securely and honestly,” said Hindle. “I'm talking about a judicial system that functions, property rights that are acknowledged and enforceable, easier business permits and licensing. When I ask people 'why don't you do a beach resort,' they say, 'Look, we can't get from the government a clear title to a piece of land.'”
Recently, the government made a move that may indicate that changes are on the way. Last month, travelers from over 30 countries were allowed to get visas entering Yemen at Sana'a International Airport or other places of entry. Before, travelers needed to join a tourist group or come for business and get a visa at embassies abroad.
According to the Tourism Promotion
Board, the government is also thinking about getting rid of tourist restrictions such as having to get permission, and being escorted, to reach certain areas of the country. This will make visiting Yemen more attractive since it will be easier to travel once they are inside the country. Travel warnings from other countries have had an effect on travelers deciding not to tour Yemen. According to one travel agency, many travel companies abroad have decided not to include Yemen in their travel programs in 2005 following warnings.
Last month, the British government stopped warning its citizens against visiting Yemen, which might lead to other countries following suit in the near future. And security in Yemen has improved since the attacks in September 2001. Hundreds of suspected terrorists have been rounded up, including key members of the Al-Qaeda network. It has been three years since a foreigner has been kidnapped in Yemen.
But according to some in the tourism industry, if the government does not act soon to boost the sector, many may go out of business.
Lutf Al-Sonidar, owner of Taj Talha Hotel and Restaurant in the middle of Old Sana'a, said that in the nineties, he had an average of 80 customers per day. It is now down to five and the hotel has reduced its staff from 23 to only three.
“What we want from the government is to push this sector forward, by promoting tourism and attracting investments,” said Al-Sonidar.
“Tourism could be the biggest business in the country, bigger than oil.”