Investment Attractiveness in Yemen
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Investment Attractiveness in Yemen
Yemen enjoys natural advantages favorable for attracting investment. Advantages include the geographical location at the southwestern tip of the Arabian Peninsula and Asia overlooking the Bab Al Mandab Strait controlling the entrance into the Red Sea. Yemen also enjoys a coastal strip spanning 2500 kms on the Red Sea, the Gulf of Aden, the Arabian Sea and Indian Ocean with vast fish wealth and marine life. There is also a big number of islands off the Yemeni coastal strip. The diversity of the landscape ranging from the highlands, lowlands, coasts and desert provides diverse climatic conditions and varying temperatures. Such features make Yemen a promising place for substantial investment prospects and a virgin land for many economic activities especially mineral exploration.
The transformation into a market economy and the ongoing economic reforms adopted by the government during the second half of the 1990s have created conditions conducive for investment. An Investment Law no. 22 for 1999 has been issued so as to create an institutional and legal infrastructure providing a confidence base for investors and promoting Yemeni, Arab and foreign investment prospects into Yemen. The Law reflects those changes through measures that are based on the following:
* the involvement of the private sector in all economic activities;
* the utilization and exploration of natural resources;
* the attraction of Arab and foreign investment;
* the completion of legislation related to investment and attunement to an encouraging investment environment;
The Law has noted the fields of investment that are governed by its provisions as follows:
* Industry and energy (except oil, gas and mineral exploration that are governed by special agreements);
* Agriculture and livestock including fishing and fish culture;
* Tourism;
* Health;
* Education and vocational and technical training;
* Transport and telecommunication;
* Construction and housing.
Investment Law Privileges
The Investment Law has defined the privileges granted to an investor as follows:
* comprehensiveness of the law to include all investment enjoying the same advantages;
* equality of the Arab and foreign investor to the Yemeni investor;
* simplification of administrative procedures required for investment licenses;
* guaranteeing the re-transfer of foreign capital with profits;
* putting in place diverse mechanisms recognized internationally to resolve conflicts and disputes;
* creation of a General Investment Authority as the sole agency for facilitating investor activities (a one stop shop)
Investment Incentives in Yemen
The Investment Law has provided a set of incentives, financial and non-financial exemptions for investment projects as follows:
* exemption from tax and custom fees on project fixed assets;
* exemption from profit tax for 7 years extendable to 16 years according to clear and specific conditions;
* exemption from real-estate tax and taxes imposed on capital and contract documentation fees;
* exemption from proceeds of licensing on technology use for 5 years;
* exemption from custom fees on inputs for livestock, agriculture and fisheries production;
* the right for ownership of land and buildings;
* opening up commercial shops for marketing project products in any region of the Republic;
* the investor managing his own project according to his appraisements;
* the ban of additional financial and non-financial burdens that contradict the principle of equality among projects or the imposition of price controls.
The government has made sure the Investment Law is clear and transparent leaving no room for any improvisation or disparity of treatment among competitive projects. All projects are equal before the Investment Law and grants equality among investors. Yemeni, Arab and foreign investors all enjoy equal treatment and privileges. This even includes the right of a unilateral purchasing of real-estate by foreign investors for an investment project with no need for a Yemeni partner.
Investment Guarantees
Privileges are insufficient to attract capital. The Investment Law has therefore made sure potential investors get sufficient guarantees guarding against nationalization, seizure of the project, imposition of project arrest or freeze of project funds except through the judiciary. It also ascertains that the ownership of a project real-estate can not be taken away but through a ruling and for public interests and according to fair compensation based on the market value of the real-estate.
The Republic of Yemen has joined a number of regional and international investment guarantee institutions in a bid to strengthen mechanisms safeguarding investors’ projects and legitimate rights against non-commercial risks. In addition, the law has facilitated for investors several ways to address potential investment disputes among investors or between investors and the state. It leaves all options in the hands of investors.
The most important investment guarantee institutions:
* The Arab Corporation for Investment Guarantee based in Kuwait;
* The Islamic Corporation for Investment and Export Credit Guarantee based in the Kingdom of Saudi Arabia;
* The Multilateral International Guarantee Agency (MIGA) based in the United States.
The government has sought to enter into negotiations on the signing of investment promotion and protection agreements. Yemen has been able to go into negotiations and to sign agreements with the following countries:
* The Arab Republic of Egypt;
* The Kingdom of Morocco;
* The Islamic Republic of Iran;
* The Federal Republic of Germany;
* The Royal Kingdom of the Netherlands;
* The Republic of Djibouti;
* The Kingdom of Malaysia;
* The Kingdom of Belgium;
* The Republic of Lebanon;
* The Republic of Pakistan;
* The Syrian Arab Republic;
* The Hashemite Kingdom of Jordan;
* The United Kingdom;
* The Republic of France;
* The Republic of Tunisia;
* The Peoples Republic of China;
* The Republic of Indonesia;
* The Republic of Ethiopia;
* The Republic of Algeria.
The Legal and Institutional Infrastructure
The government has issued a number of laws – in addition to the Investment Law – of strong relevance to the creation of an appropriate and attractive climate for investment. These include the Attorneys Law, Chartered Accountants Law, Judicial Authority Law, Arbitration Law, Deliberations Law, Commercial Registration Law, Real-estate Registration Law and the Commercial Companies Law.
In accordance with the Investment Law, the General Investment Authority was established as an instrument for implementing the law with the following mandate:
* receiving investment applications, issuing investment licenses and getting the necessary approvals from the relevant government agencies;
* issuing custom fee exemption import licenses for projects fixed assets;
* assisting projects to overcome any obstacles hindering implementation;
* allotting the necessary land for projects;
* undertaking studies relevant to investment and problems hampering investment promotion;
* disseminating information on the investment climate in Yemen;
* preparing lists of potential investment projects and undertaking relevant promotion in the country and abroad.
The government through the implementation of the Investment Law and studies carried out by the General Investment authority in collaboration with a number of investment related regional and international organizations and agencies keeps close follow-up on amendments to laws and legislation that are necessary for removing any obstacles facing investment in Yemen. The General Investment Authority also organizes local conferences assessing investment conditions and constraints and identifying the necessary efforts to improve the investment climate. It also undertakes an annual evaluation of the progress of implementation of licensed investment projects.
Investment Promotion
The General Investment Authority along with other government agencies maintains efforts to strengthen promotion of investment in Yemen through the participation in several regional and international conferences and bilateral forums with Arab and foreign countries related to investment promotion. The Authority builds bridges and communication contacts with its counterpart agencies in other countries to exchange expertise and information and support trade exchange and investment. The Authority also uses modern promotional methods like fast mail, promotion through the Internet in addition to printing promotional literature on the investment climate and investment prospects in Yemen.
Promotion activity focuses on the Yemeni communities abroad and on Arab and foreign investors. Promotion takes the form of investment tours addressing the investment climate in Yemen and the available advantages and guarantees under the Investment Law and marketing the important investment prospects in Yemen. Such tours usually include presentations and distribution of investment literature and answering potential investors’ queries on investment aspects and needs. The Authority had invited along a number of Yemeni businessmen to be part of such tours and benefit from meeting their business counterparts and exchanging views on joint investment ventures.
The Authority has over recent years made great use of presidential visits to fraternal and friendly countries and meetings of the President of the Republic with foreign investors and Yemeni communities on investment promotion. The President of the Republic has been calling on investors to invest in Yemen clarifying measures that have been taken by the government to facilitate and protect investment. He also asserts the state’s commitment to protecting investment, which clearly reflects that investment promotion has become a national duty and responsibility of everyone.
Investment Evolution
The Headquarters of the General Investment Authority has issued since its establishment in March 1992 through the end of December 1999 a large number of investment licenses that reached 1,733 with a total investment of approximately 457 billion riyals providing around 76,541 job opportunities. The other four branches of the Authority in Aden, Hadhramout, Hodeida and Taiz had also issued licenses for 1,474 investment projects with a total investment of around 55 billion riyals providing 28,772 job opportunities.
The investment projects cover different sectors of the economy. There were 859 projects in the industrial sector costing 145.2 billion riyals, agriculture with 127 projects costing 12.7 billion riyals, fisheries with 32 projects costing 9.5 billion riayls, services with 476 projects costing 212.2 billion riyals and finally the tourism sector with 239 projects costing 78.1 billion riyals.
Promising Investment in Yemen
The availability of natural and human resources in Yemen provides vast opportunities for Yemeni, Arab and foreign capital. The General Investment Authority prepares a guideline list on the most important and promising investment opportunities in Yemen outlined as follows:
* the production of fertilizers which are needed by farmers to enhance and improve their agricultural production. Such industry could depend on natural gas which Yemen has a huge reserve;
* the production of benzene dodcel which is used as a main input in the production of detergents. There are a number of detergent factories in Yemen;
* the export of LPG through the use of gas transport fleet or establishment of export terminals or pipelines and export stations to the Horn of Africa and the establishment of stations inside Yemen to supply bigger installations;
* the establishment of a power generation plant using natural gas as operation fuel. Power generation in Yemen is in short supply and there is an increasing demand for additional generation in the near future;
* Limestone rock exploration available in abundant and economic quantity in Sana’a and Dhamar. Limestone rock is used in existing industries and in agriculture;
* the Felt/Asbestos industry. Basalt is found in commercial deposits in Sana’a, Dhamar, Hodieda and Taiz and is used in manufacturing thermal insulators;
* Granite mining, cutting, molding and burnishing. . Granite is used for the production of tiles and slab-stones and is available in commercial quantities in Shabwa, Al Beidha and Abyan. Export prospects to neighboring countries are encouraging.
* Glass industry. Raw materials for the glass industry are available like limestone, sandstone rock and sodium carbonates in abundant quantity in Shabwa, Al Beidha, Abyan, Hodieda and Sana’a. Export prospects to neighboring countries are immense;
* The establishment of 4 or 3 star hotels with all basic hotel facilities and services in Sana’a, Ibb, Taiz and Hadhramout.
* The establishment of a number of tourist villages similar to chalets with all hotel facilities and services in Khokha overlooking the Red Sea and on Yemeni islands which are considered centers for scuba diving;
* The establishment of tourist resorts of 3 star facilities and hotel services near mineral water sources for tourism and natural treatment purposes in Sana’a, Dhalaa and Ibb;
* The production of animal and chicken feed from fish remains rich in protein. Remains are available in the fish packaging factories in Abyan and Hadhramout;
* Scrap metal re-cycling and metal slabs imports for pipe production used in irrigation and other purposes;
* The concentrates industry like orange and tomato which use raw materials grown in abundance;
* Fishing and fish and marine life exports through the use of modern fishing boats. There is abundant fish and marine life in Yemen’s 2500 km territorial waters and coasts;
* The establishment of poultry breeding nurseries including eggs, meat;
* The establishment of modern livestock breeding farms for the production of meat and dairy products in the Tihama region.
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