Yemen to establish 11 industrial zones [Archives:2007/1105/Business & Economy]

November 22 2007

The Ministry of Trade and Industry has confirmed plans to establish eleven industrial zones throughout the country. Although this announcement has been made previously, the Minister of Trade and Industry Dr. Yahya Al-Mutawakel indicated that Small and Medium Enterprises (SMEs) are the targeted business organizations which will play a major role in the development of the industrial zones, contrary to other statements that industrial zones will thrive as a result of foreign direct investment and large-scale projects.

The Ministry of Trade and Industry is also finalizing preparations for the Arab Conference for Small and Medium Enterprises, under the theme of Quality and Creativity for a better industrial future. It is considered by many as an effort to connect local SMEs with their counterparts from the region, in order to share experiences and discuss business opportunities.

The largest proportion of Yemeni SMEs are focused within twelve subsectors, mainly within the service sectors. While there are very limited SMEs in other subsectors particularly within the industrial sector, thereby raising questions if Yemeni SMEs will be interested in venturing into the industrial zones.

The strategy for developing SMEs focused on improving financial services and sources of funds for promising SMEs, while the industrial zones promise tax free business operation, as well as an opportunity to attract large number of SMEs in order to create a viable collective subsectors within the industrial zones. Such models have proven to attract multinational corporations to invest in industrial zones where supplementary industries already exsist.

Small and Medium Enterprises are the second-largest employer in Yemen, giving direct employment for around 700,000 workers, and indirect employment to another 200,000. However, there are around 350,000 SMEs working in the country, indicating that SMEs average 2 – 3 employees each.

The Government of Yemen through various agencies aim at stimulating the growth of the SME sector, through providing grants and technical assistance through the Social Fund for Development and its Subsidiary the Small and Micro Enterprises Promotion Service (SMEPS), which has had a notable impact on the growth of SMEs in the country.