YEMEN INDUSTRY- TRADE SECTOR IN DEVELOPMENT AND LAUNCH ERA

By: Abdul-Salam al-Doais

Translated by: Yahya Arhab

SANA’A, May 18 (Saba) – The declaration of the reunification of North and South Yemen and the establishment of the Republic of Yemen on 22 May 1990 was incentive widely to develop and grow industrial and commercial sectors in the country, witnessing a Witness a significant change for the better in the field of economic development.

Over the past two decades, governmental bodies worked hard to engage potential and increased resources in the industrial sector, creating encouraging and incentive policies for increasing investments in this sector.

According to official statistics, a high growth of 6.8 per cent has been achieved over 2006-2008, surpassing the rate of target growth of 4.8 per cent in the third five-year plan for economic and social development 2006-2010. The number of manpower in the industrial sector increased from approximately 110,126 workers in 1996 to about 344,000 in 2008.

The government has recently taken a number of measures aimed at reforming and developing the industrial sector, encouraging the private sector to play its primary role in productive and investment activities and foreign investments, supporting and developing the infrastructure of the industrial sector through the issuance of its own regulations and legislations, establishing industrial zones and updating industrial database.

This process has led to a quantifiable improvement in the number of industrial installations which increased from 29,000 ones in 1990 to 44,000 in 2008. The government is working hard to develop and diversify the structure of the national economy in order to reduce dependence on oil.
The manufacturing sector is now contributing to more than 14 per cent of the gross domestic product (GDP).

Industry and Trade Minister Yahya al-Mutawakil has emphasized that the Ministry is working hard to accomplish large and important tasks and plans , including means of accelerating and expanding industrialization of the industrial sector through the optimum utilization of natural materials and cheap labor and the establishment of industrial zones and complexes and cross-border economic zones under the new economic realities and the adoption of a free market economy by the government.

Industrial Investment
The government seeks to encourage investors to set up industrial investments through improving infrastructure and establishing industrial zones. Licenses granted to projects in the industrial sector amounted to around 2708 industrial projects at a total cost of YR 5556 billion, providing 794,000 jobs.

Yemen has many investment opportunities in the industrial sector, including both manufacturing or extractive industries. The government pursues policies and procedures designed to encourage the industrial investments through enhancing the competitiveness of local industry and promoting investment opportunities of the country, in addition to revise the laws on investment and provide various facilities and exemptions from tax and customs duties for industrial projects, including the exemption of production requirements by 50 per cent from the customs and tax duties, contributing to reduce the cost of production and enhance the ability of the local products to compete.

Industrial Zones

The Ministry of Trade and Industry works hard to complete the establishment of 11 industrial zones in several major cities in order to enable local, Arab and foreign investors to get land and basic services easily.

The Ministry also plans to set up three cross-border economic zones in the Yemeni towns of Wadiah, Shyhn and Haradh. It also coordinates with the Ministry of Oil and Minerals and local authorities in the provinces of Amran, Marib, Dhamar and Taiz for the establishment of industrial complexes of building materials. Their locations and areas have been designed.

The Ministry has succeeded in attracting investors, developers and operators of the industrial zones that have been put forward for investors in the provinces of Aden, Hodeidah and Lahj. The Ministry signed recently with the Egypt-based Mena for Touristic and Real Estate Investment a memorandum of Understanding on the development and operation of a 196 hectares industrial zone of Aden.

It also signed with the Chamber of Commerce and Industry in Hodeidah a minutes to set up a joint company to develop, invest and operate an industrial zone by an initial capital of YR 10 billions.

The industrial zones of Aden, Hodeidah and lahj have attracted a number of industrial and investment projects. In Aden, 28 projects have been licensed at a cost of YR 3 billions. In Lahj, there are several industrial projects, including Aden Steel Company at cost of US$ 125 million, the Swedi factory for Cables is at cost of US$ 45 million. The industrial zone in Hodeidah is also absorbed a number of investment projects, including a project of the Yemeni-Chinese Iron Company, in addition to a number of licenses granted to several investors.

Commercial Sector

The Trade sector has witnessed fundamental and wide changes since the reunification of Yemen through the creation of structural changes in trade policies and correction of imbalances suffered by this sector during the last period.

In the framework of the implementation of a reform program adopted by Yemen in 1995, the government liberalized foreign trade, removed trade restrictions and abolished import-export licenses.
It also promoted the national exports to compete foreign ones and commercial banks to open credits for imports and exports. In addition, it reviewed and amended legislations and laws regulating commercial activities in line with the international economic variables and Yemen’s ongoing efforts to join the World Trade Organization.

Local Trade

The sector of local trade plays a key role in providing the needs of the national economy, including various goods and services required for the implementation of development projects and programs. It also provides the growing domestic demand for goods and services in the light of the increasing population.

The number of commercial facilities in Yemen reaches 206,214 facilities, according to the results of General Census of Population and Housing held in 2004. This sector also contributes to absorb 12.2 per cent of the total manpower working in the national economy, more than 504,000 workers in 2004 compared with 256,000 workers in 1990.

In addition, the number of wholesale importers doubled to 14,000, compared with 7,500 dealers in 1990, while the number of export traders increased from 1700 dealers in 1990 to 2900 in 2004.
The contribution of this sector in the GDP increased by 13.3 per cent in 2007, compared with 7.5 per cent in 1995.

The total number of companies registered by the Ministry of Industry and Commerce until the end of 2009 amounted to 3931 companies, including 2905 companies with limited liability, 183 joint-stock companies and 734 joint ventures. The number of commercial agencies reached 7848 foreign agencies.

Foreign Trade

The total foreign trade value rose to YR 3607 billion in 2008, compared with RY 2104 billion in 2005, but it reduced to YR 2707 billion in 2009 due to the impacts of the Global Economic Crisis.
It is expected the foreign trade value to increase to YR 2987 billion in 2010 due to the ongoing improvement in world economic growth.

Depending on exports, the Ministry of Industry and Trade is currently preparing a strategy for the foreign trade in order to develop non-oil exports, narrow the gap in the balance of trade and increase the contribution of commercial activities in the GDP.