By: Meir Javedanfar- meepas.com

20/04/2005

Introduction

Economically Yemen is one of the poorest countries in the Arab world. This is despite its natural resources which include oil, gas, and abundant tourism attractions. Yemen's economic problems are due to a number of reasons including economic mismanagement, high population growth rates, lack of security, lack of water, unification costs and external debt. The Yemeni government headed by its President Ali Abdallah Saleh has been making a visible effort to improve Yemen's economy and to some extent he has been successful.

Examples include falling population growth figures, focused efforts to fight anti-government insurgents and development of Yemen's gas industry with the recent $2.5 billion project which will enable Yemeni gas exports to the US and South Korea. This is in addition to drafting of new investment friendly laws as means of attracting foreign investment in Yemen's economy. Foreign participation is also being encouraged with proposals to allow foreign companies to run Yemen's Aden container port. At the same time the Yemeni parliament has proposed a draft law which aims to curb the use of illegal weapons in the country. This is an important step in government efforts to improve Yemen's security situation. Such improvement will have a positive impact on foreign investment in Yemen.

Although currently Yemen may not be a top investment destination, nevertheless the country does offer opportunities which are worth exploring by foreign companies. Furthermore investment in the Yemeni economy will assist the Yemeni government's plans to improve the economic situation in the country as means of reducing terrorism and religious extremism. Therefore although Israeli companies are not allowed to invest in Yemen, it is the opinion of meepas that other foreign companies should be made aware of potential investment opportunities there. This is in accordance to our opinion that fighting poverty and terrorism through economic development in the region is in the interest of all countries of the Middle East.

Subsequently the following analysis by meepas will focus on the most promising sectors of the Yemeni economy for foreign investment.

Investment policy

Yemen has streamlined its investment laws and procedures in an attempt to attract more foreign investment and permits foreign investment in most sectors. A new policy grants equal treatment to all investors, both domestic and foreign. However the following two conditions must be observed: