Dr. Saleh Yahya Mohsen in his office in Sana’a (Asharq Al-Awsat)
However, despite its political and economic problems, the country is taking steps to attract regional and international investors, drawn by low labor costs and access to the Red Sea and the Gulf.
Asharq Al-Awsat spoke to Dr. Saleh Yahya Mohsen, the head of Yemen’s General Investment Authority, about the steps the country is taking to attract investment, the obstacles it faces, and his hopes for the future of the Yemeni economy.
Asharq Al-Awsat: What are the missions and tasks undertaken by the Investment Authority?
Yahya Saleh Mohsen: The Investment Authority is the only agency tasked with regulating investment activity and carrying out the registration process. The Investment Authority has what is called “One-Stop Shop” services. In order to facilitate the investment process there are twelve offices for various governmental agencies, including offices to deal with passports, taxes, visas for employees, the environment, and constant supervision in the event that an investor meet with any problems or difficulties. The Investment Authority works to overcome any difficulties or problems an investor might face.
Q: What are the advantages of investing in Yemen?
Yemen is located in a strategically important position with 2.2 thousand kilometers of coastline and a large market of more than 25 million people. Additionally, Yemen overlooks both the Red Sea and the Arabian Ocean. Because of these features Yemen has investment opportunities in a number of economic sectors including agriculture, industry, tourism, the service industry, and fishing.
Q: How would you describe the investment situation in Yemen? What constraints could you face? In what ways could it improve?
We won’t deny that there are problems right now. These problems are a product of the Arab Spring that affected the entire region, especially the six nations at the center of the revolutions that have seen negative effects on their political, economic, and security situations. Despite the effects on Yemen, we feel there has been improvement and an increase in projects. The figures recorded by the General Investment Authority support this. Considering what the Investment Authority has shown, we believe that Yemen has started to recover from the shock.
The Authority is constantly working in a number of sectors to improve Yemen’s image by participating in national and regional events to promote investment in Yemen. The Authority is also working on improving infrastructure with the help of other nations and international organizations, since an improved infrastructure is one of the basic pillars in building a positive climate for investment in the country.
Q: How are the investment laws and legislation in Yemen?
Legislation in Yemen has some shortcomings. In 2002 we had legislation passed that had a lot of privileges, tax and customs exemptions. After that came Law No. 15, which is currently in force. It cancelled the tax exemptions and kept customs exemptions for lowered taxes on profits. Taxes on profits were at 35% and then lowered to 15%. In exchange, tax exemptions were reduced.
I think that the investment climate in Yemen needs revision and improvement for some laws. The Authority is working hard in this direction and the national accord government’s program has made clear the importance of improving the investment environment and legislation. We started preparing new legislation that allowed for many privileges and exemptions for investors. We’re still working on it and awaiting the results of the national dialogue that will determine the form of the government, whether the government will be federalist, a composite state, or a simple state as it was. The new legislation depends on the results of the National Dialogue.
Q: The Yemeni president ordered that the new investment legislation be stopped. Why?
We are waiting to see the results of the National Dialogue so we know what form the new law will take. We work with administrative bodies independent of the central government and are awaiting the results of the dialogue.
Q: How many projects has the General Investment Authority recorded for the first half of 2013?
Many of the investment projects don’t come to the Authority since they don’t need help with facilitation or exemptions. Also, projects involving oil, water, and electricity don’t come to the Authority as they are controlled by those ministries and in need of precise agreements and specialized personnel. In the first half of this year the Authority has registered 59 projects.
Q: What factors have helped the Authority develop investment in Yemen?
A large market is one of the most important factors that has helped the Authority develop investment in Yemen, in addition to cheap labor and extensive coastlines. Yemen has a lot of industrial raw materials and big ambitions. Import substitution is one of our goals and policies.
Q: Is the Authority authorized to grant tax exemptions under the current investment law?
We have a special office for taxes in the Authority, as well as for customs. The Authority supervises these offices and is authorized to grant exemptions according to what the law allows.
Q: Socio-economic indicators show that the poverty rate is near 55% and that youth unemployment has reached 53%. How can the nation be lifted out of this crisis?
We don’t have a magic wand to change the reality of the situation. We can’t deny that Yemen is suffering, that the people are suffering. We recognize that there is unemployment. I think that the situation encourages investors to invest in Yemen. Despite these problems we see aspects of improvement in the economic indicators. In general the political situation has improved, as has the security situation. The Yemeni currency has stabilized, inflation has decreased, and foreign reserves have increased from YER 4.6 billion to 6 billion which is a great indicator supporting the currency, the economy, and foreign commercial activity. Further, our conversations with investors have told us that conditions are always improving and foreign interest in Yemen is increasing. We have a strong impression that conditions in the country are improving.
Q: What is the general trajectory for oil resources in Yemen?
There have been new discoveries in the al-Jawf region of Hadhramaut and the Shabouh region which we are waiting to be announced. At this point we don’t have any indicators or official calculations detailing the size of the oil deposits. However, investment companies and other companies from America, France, Canada, and Russia have come to Yemen and begun arranging oil exploration contracts, some of which have been submitted to companies and we waiting to hear their results.
Q: What is the goal of the Special Economic Zones? What is meant by the term “the future of Yemen?”
There is a law for the General Investment Authority and another for partnerships in the private sector and both laws are before parliament. The economic zones greatly help investors. When economic zones are set up for investors and supplied with an infrastructure investors will use their capital and be assured of the future of their rights.
Q: What are the commercial incentives that Yemen can offer to attract investment?
The Authority has no relationship to commercial relations or oil. According to Law No. 15 the Authority is interested only in investment issues excluding oil, minerals, the stock exchange, and the foreign currency market. However, we are looking forward to Yemen joining the World Trade Organization which, after twelve years of negotiations, I believe will happen very soon. We hope to hear some news very soon.
There could be benefits for Yemen to strengthen commercial relations with neighboring nations or others in the region as the WTO allows for economic blocs. When it comes to the Gulf Cooperation Council our membership is limited. This in itself is a victory and strengthens future commercial and economic relations.
In Yemen we are very much interested in improving standards and specifications so that we might be able to discuss not only domestic markets but international markets as well.
I believe that commercial relations abroad are improving. That improvement will be reflected in the nature and development of commercial relations with the outside world.
Q: What nationalities are investing more in Yemen?
The Saudis have the lion’s share of investments in Yemen compared to the other nations of the GCC, followed by the UAE. The department of statistics and information at the General Investment Authority documented 79 projects from Saudi businessmen out of 123 projects in a number of fields including health facilities, hospitals, factories, and hotels over the last ten years worth USD 1.5 billion.
Meanwhile, 44 projects were led by businessmen from other countries in the GCC. The Authority has formed a council to work with CRM, an organization supported by Holland which is a customer service network connecting the main center in Sana’a, the rest of the branches in Yemen, and investors. Under this system, the investor only has to come and present the necessary papers and special forms. From there on out the investor only needs to follow procedures via the website to avoid direct interaction between the employees and investors. This helps avoid inappropriate practices and supports transparency.
This interview was conducted in Arabic. The original can be read here.