Would foreign investment push forward development in Yemen? [Archives:2005/883/Business & Economy]

October 6 2005

Mahyoub Al-Kamaly
The Yemeni government has embarked on offering facilities, it describes as tempting, and to the local and foreign private sector through granting it plots of land in areas possessing economic advantage. Nonetheless, the government emphasizes he stabilization of security and stability for the attraction of capitals for investment in Yemen.

Parliamentary sources say there is conciliation with the government regarding amendments in the investment law that is considered by the ministry of finance in participation by the committee of development and oil, especially pertaining the principle of encouraging investment and curbing unjustifiable exempts for investors. The parliament mentions that those unjustifiable exempts open gaps for those it described as exploiters gaining exempts for projects encouraged by the law and through follow-up it appears they are unreal.

The sources indicate in statements to the Yemen Times that the committee has delayed discussion of investment law as it is being connected to the amendment of the income tax law which revealed that lowering it is the most important incentive for investors. They indicate that the committee has urged the government to speed up presenting a new law for the income tax. While businessmen view that there are very many impediments making investment in Yemen as risky and needs exceptional courage, they also view that foreign investment is declining and the country is in need of law and order and stressed the importance of reforming the judicial system for the realization of justice and enabling it to resist dealers of investment, as the Yemeni businessman Mahmoud Shamakh points out.

On the other hand the Yemeni government affirms it has been endeavouring to create circumstances that should be available for causing success for private investments. Democracy represented the first of orientations that provided the suitable atmospheres for the aspired for developmental launch and helped adopt convenient economic policies, revising existent laws and legislations and the work for achieving efficiency and decency of the judicial system. After issuance of the investment law and its amendments that simplified measures of acquiring licenses and limiting bureaucracy and administrative complication, a group of privileges have been available for investors and their projects. The prominent among those are the exempts of projects from profit taxes for seven years starting from the date of production, the immovable property imported for the building, development and expansion o investment projects from customs duties, requisites of animal, agricultural and fish production and the exempt of projects from the income tax on profits the projects distribute. The law has also provided a group of guarantees for investors and their investments, such as freedom for investors to choose the field of their investments, guarantee the freedom of running their projects according to their own considerations of the economic circumstances and situations of their works as well as their freedom in re-exporting the invested capital outside at time of liquidation, whether that capital was in cash or in kind. They can also have the freedom of transferring the net of profits resulting from investments of foreign funds in investment projects abroad besides the equality between the Arab and foreign capital with the Yemeni capital and the Yemeni investors with the Arab and foreign investors without any discrimination in rights and duties and procedures.

According to official statistics, growth of local and foreign investments in Yemen during the past four years it has been clear that in 2001 the number of investment projects amounted to 363 at a cost f YR 79 billion and 614 million, in 2002 382 at a cost of YR 104 billion and 868 million, in 2003 YR 339 projects at a cost of YR 106 billion and 218 million and in 2004 their number receded to 263 projects wit a cost realizing an increase amounted to YR 120 billion and 11 million.

Those results confirm fluctuation of the investment process and retreat that requires more research for investors and supporting them in order to realize advance in this domain.