Toward a New Strategy for Attracting Foreign Investors [Archives:2001/32/Business & Economy]
A thorough review and a clear plan to attract foreign investment in Yemen is urgently needed. For a couple of years the Yemeni government has adopted a number of measures and regulations to promote investments and attract foreign capital. However, the facilities offered to foreign investment by the Yemeni law are not widely known abroad, which could be the reason behind the slow growth in foreign investment in Yemen. A new vision must be adopted to improve the situation and create confidence among potential investors.
Low investments in fisheries & tourist services
The latest official figures reveal that the General Authority for Investments has licensed about 107 projects during the current year. All these projects are estimated to have cost YR 14.5 million and to have created 3091 job opportunities. Yet, these figures indicate that the licensed projects in fisheries, with a total of 13 projects at an estimated cost of YR 60 billion, sharply decreased. In addition, the tourism-related projects have decreased to 12 projects at an estimated cost of one billion Rials. Despite the significance of the fisheries sector and its great potential, there were only fish-related 2 projects at an estimated cost of YR 738 million.
In the manufacturing sector, the number of the licensed projects equalled 49 at an estimated cost of YR 7 billion while the agricultural sector totals only 31 projects at the estimated cost of YR 4 billion.
Globalization & Investment
Amidst this rapidly changing world and trade liberalization, a big number of huge companies are trying to diversify their investments base in different parts of the world. The availability of ample information and its communication are therefore of paramount importance for foreign investors. Thus, it is essential that the Yemeni government focus on efficiently disseminating information related to the available investment opportunities in the different sectors.
Nevertheless, it is clear that the Yemeni government has amended the investment law which offers facilities to local and foreign investors. Moreover, the Free Zone General Authority and a Higher Council for Investments were created in the sole purpose of assuming the issuance of permits for investment projects.
Some observers point out that the following steps would solve the issue of slow investment in Yemen:
First: Undertaking feasibility studies for potential investment projects taking place in the free zone and sectors such as oil, manufacturing, tourism, agriculture and infrastructure.
Second: Targeting the Arab and foreign countries with potential investors and then publicizing the investment opportunities in these countries.
Third: Modeling the means to communicate the information related to investment projects, Yemeni laws and regulations with the aim of getting the businessmen and investing companies acquainted on the economic situation in Yemen.
Fourth: Organizing business meetings between Yemeni investors and their foreign counterparts in an effort to contemplate possible joint ventures to be established in Yemen.
Fifth: Initiating bilateral agreements between Yemen and important partners to protect investments, restrict double taxation, and look into new economic and trade cooperation.
Sixth: Preparing a marketing campaign which will underscore the various advantages that Yemeni laws and regulations offer to foreign investment.
It is certain that these measures will boost foreign investment in Yemen and will make the country more attractive to foreign capital. Moving from promulgating laws and regulations to the advertising phase will contribute to an increasing flow of investment and capital to the country.
As foreign investors need assurances and guarantees protecting their capital in any country seeking foreign investment, the Yemeni government must create an environment favorable to the economic prosperity and safeguarding foreign capital. A clear vision to attract investment in the country needs to be rapidly formulated. Due to its unique location and advantages offered to investors, the Aden Free Trade Zone should also play a major role in this new scheme.
Yemen is ideal for investment and will without any doubt witness a great economic prosperity if the government and the competent authorities of Yemen focus on establishing contact with the foreign investors and attracting them by creating an environment prone to investment growth.