Who is Benefits from Ruining the National Industry? (PART 1) [Archives:2001/44/Business & Economy]

October 22 2001

Jalal Al-Sharaabi
Managing Editor
Yemen Times
Yemeni industries and industrialists are going through a real crisis which will have disastrous consequences on Yemeni economy with the closure of many industrial plants, the dismissal of many workers and numerous bankruptcies. The absence of a clear policy to promote local investments and protect the manufacturing sector from imports flooding the local markets is one of the major factors leading to this deteriorating situation.
Moreover, the belief in the Yemeni market that the foreign products are better than the local ones is wrong. In fact, this sentiment has also been promoted by the Yemeni investors themselves who have been always away from the local press considered to be their enemy. So, most of the ads are run by the official TV channel but in a very unprofessional way. Similarly, the advertisement-related techniques are not used in a convincing manner, especially when performed by foreigners who know nothing about the Yemenis, their culture or dialect.
Now, what matters is that the local producers went bankrupt and are still subjected to official and non-official blackmail.
The most important question to be asked is: What are the challenges facing the national industries?
Smuggling and flooding local markets with foreign products is the first one. Smuggling deprives the public budget from substantial revenues which could help the national economy. Without any doubt, the government itself has played a major role in this respect by neglecting its role of protector of the national industry.
Yemen signed a trade agreement with Saudi Arabia. This agreement is however in favor of Saudi Arabia and at the expense of our national industry. Indeed, the agreement allows Saudi product to enter our market, while the Yemeni products are not allowed to enter the Saudi market. There have been many media reports relating the fact that various Yemeni products, such as vegetables and fruits, were not allowed to be exported in Saudi Arabia. On the long run, flooding local markets with foreign products without finding solutions for promoting the national industries will have disastrous consequences on the national economy.
According to some statistics, more than 20 factories have shut down within the last two years due to the failures of the government’s policies.
The State Absent of its Role
The absence of the state’s role is imposing great demands and responsibilities on the business owners side in addition to the official demands such as taxes, services and others. Many businessmen also complain of blackmailing they have been exposed to, particularly in money requested for protecting the military installations.
Furthermore, the absence of the role of the state is reflected in some economic laws, the last of which being the Sales Taxes Law, approved by the parliament despite harming to the national industry. The state must take its responsibilities by placing outlets nationwide under strict surveillance. Moreover, the state has to vigorously promote and focus its attention on the national industry. For instance, the products of the well-known business groups like Hail Saeed Group, Thabet Brothers Group, Athban Group and others are subjected to supervision and testing, while the imported products are not subjected to the same measures which is an additional cost.
Security before Investment
Business families in Yemen do not feel secure as their products are always intercepted for blackmail purposes by some tribal groups, in addition to the municipality development fees demanded at each check-point.
The new questions are: Who benefits from ruining the national industry in this ruthless manner and what are the benefits of doing so?
The state has to reconsider its approach in this regard before the catastrophe is unavoidable. The Yemeni economy is in a desperate condition and will not support any further deterioration which can be caused the businessmen who could move their activities overseas instead of being bothered in doing business in Yemen.