Yemen’s Location Attracts More Than 50 Million Customers The Private Sector Manages Industrialization, the Government Provides Services [Archives:2001/20/Business & Economy]

May 14 2001

In a recent government industrial strategy, three industrial areas of the private sector are identified to treat weaknesses of local industrial products and materials. The government has proposed to provide adequate hired-lands in these area and introduce basic services required for industrialization.
Reports of studies have envisaged establishment of three industrial areas to be managed by the private sector. The first is located within the triangle Aden, Lahj, Abian, the second in Broum and Hadramout governorates; while the third is located at the crossroad of Harad-Asaleef road in the Hodiedah governorate on the Red Sea.
The studies aim at assisting the private sector to develop industries and open doors for competition in order to widen Yemen’s capacity for industrial export to foreign markets.
While national industrialists were keenly awaiting the government’s radical policies to support and protect local industrial products, the Ministry of Industry considered the assignment of the three industrial areas, managed by the private sector in an environment that offers low-waged labor, is sufficient to develop industrial production together with continued imposition of taxes on local industries.
Industrialists, however, believe that the strategic geographical location of Yemen attracts around 50 million consumers in the region, and it requires pursuing a comprehensive policy facilitating the establishment of developed industries. The establishment of three industrial zones without providing protection for their products against smuggled goods would weakening the domestic products preventing them from having competitive prices and would minimize the producers’ profits.
In return, the Ministry of Industry sources say that identifying the three potential industrial areas managed by the private sector, is a first step towards sorting out various obstacles for sustained industrial growth. The decision comes in the wake of a plan to encourage foreign investment in the process of industrialization.
It is worth mentioning that the new government’s credibility depends on the freedom of the economy, market mechanisms, and for providing incentives for investment taking into account the difficulties facing the private sector which invests capital for investment in the industrial field.
But industrialists say that the government has been so preoccupied with structural reforms that it has neglected ensuring protection for local industrial products and has redoubled tax rates imposed on industrialists. This is a factor which caused regression in the industrial output of goods and services.
However, official industry surveys indicate that 95% of national industrial firms are categorized as small industries. Thus, the new policy envisages establishment of industrial areas to develop the productive side and change its traditional image towards an extraction and transformation of industry.
However, high costs of production, power, transfer and weak support for the industrial-agricultural sector, are considered major impediments for promoting industrials sector. Providing facilities for investors, would assist them to constructively utilize the opportunities made available though the planned industrial areas.
The three areas are expected to promote a sustained industrial growth to cater to the needs of domestic markets in conformity with state policies to
developing and increasing the export of industrial products to neighboring markets.