Yemen resolved to establish stock market [Archives:2002/29/Business & Economy]

YEMEN TIMES STAFF
Yemen plans to establish a stock exchange market in order to help boost the national economy.
Technical Committee, entrusted with studying the economic feasibility of the project, is expected to put the final touches to a draft law which will create Yemens first stock exchange market.
The draft has been presented to the financial committee, which is a subordinate body to the cabinet. It is also expected to be presented to the parliament to be approved before the end of 2002.
Sources say that Yemen is being advised by a variety of international experts from the Arab Monetary Fund, the Oman Stock Exchange Market, and a Canadian consultative firm.
The committee has so far taken five years to produce the first draft of the law after making a study for the regulations of international, Arab, and Islamic stock markets .
A delegation from the Arab Monetary Fund has recently conducted a comprehensive survey for the Yemeni market and carried out a study on requirements for establishing a stock market.
Experts believe that this delay in establishing a Yemeni stock market is related to drop in local savings as well as investment revenues. This is also associated with a need for regulatory and legal reform in order to create an environment conducive to investment.
Economist Salah Hadash of Sanaa University pointed out that existing legislation needs amending to accommodate a stock market. Most pressing is the need to change the following laws: corporate, privatization, commercial bank, public enterprise, accountants, insurance, tax, Islamic bank, penalty and criminal laws.
Figures show that the components of the stock market are still in their infancy stage. The Yemeni banking system is limited in terms of the number of institutions currently operating – only 150 along with their branches in the governorates. There are 4 state-run insurance companies and 5 private- sector insurance companies.
The number of mixed companies is 152 as well as 1765 limited companies and 457 cooperative companies.
The total number of government-run, private-sector, commercial and foreign banks operating in Yemen is 14, plus three Islamic banks.
The total amount of deposits at banks amounts to YR 308.1 billion, while the total amount of unified budget of banks totals 358.3 billion. In addition, the total number of remittances and loans amounted to YR 95.3 billion.
Banking experts say that the number of banks is few if compared to the number of banks in some other Arab countries.
The Central Bank of Yemen has launched a program of financial reform, amended banks law, and has raised the minimum of capital needed for establishing banks to more than YR one billion.
It is said that the establishment of the stock market will achieve for banks extra advantages like diversifying investment and liquidity portfolio in relation to the secondary markets.
Economic and financial studies show that the amount of money outside commercial banks is bigger than the number of deposits, which is an indicator of the weakness of the banking sector in Yemen.
The establishment of a stock market will help the flow of deposits to the market which will encourage speculators.
Dr. Taha al-Fusayel, professor of economics at Sanaa University confirmed that Yemen needed to achieve economic stabilization and improve investment climate to ensure the successful creation of the stock exchange market.
As the Technical Committee is about to finalize the regulations required for establishing the stock market, some economists from the opposition argue that it is necessary to increase the number of finance institutions, promote savings-oriented awareness and outline adequate financial and monetary policies as a prerequisite for its establishment.
The lack of a well-qualified staff to run the stock market remains a major concern for the establishment of the stock market, particularly with regards a serious shortage in necessary expertise in IT management.
Qaed Sultan, a researcher, believes that it is necessary to hire well-qualified staff for the proposed market whether being executives, administrators, brokers, IT experts, etc. Its also important, according to Mr. Sultan, to furnish this market with the latest high-tech equipment to facilitate dealings and to permit a range of modern and international financial operations.
Ahmed al-Khawi, head of the Technical Committee, says that only after the related legislation has been enacted will the stock market be staffed and equipped. However, many businessmen complain that they have not been properly informed about how they will be affected by what is undoubtedly a major event in the modern history of Yemen.

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