Yemen - Economic analysis of government's policies, investment climate and political risk.






YEMEN: Economic Policy Analysis

This site presents an analysis of the Yemen government's economic policies compared to a revised list of 34 economic policies as prepared by two students with the McKeever Institute of Economic Policy Analysis (MIEPA) in May of 2004. To read the analysis scroll through this site. To learn more about the background policies, click here Introduction and Policy Recommendations

To learn more about MIEPA, click here Return to MIEPA's Home Page

Safwan Alzindani and Nash, two Yemeni citizens who currently [May 2004] live in California, have completed a study of their home country government's economic policies as compared to the MIEPA list of policies as outlined above. The study on Yemen is shown below. The ratings herein are based on the following rating scale:


5.0 Perfect Facilitation of Wealth Creation
4.0 Midway between Perfect and Neutral
3.0 Neutral Effect on Wealth Creation
2.0 Midway between Neutral and Obstructionist
1.0 Perfectly Obstructionist to Wealth Creation
[Rating scale copyright Mike P. McKeever, 1996. Used herein with permission]

To read a disclaimer about the analysis in this file, scroll to the bottom of the file.

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Comparison of Yemen's economic policies to MIEPA criteria as prepared by two native students of Yemen studying in the US in May of 2004.

The first study shown is the study prepared by student Safwan Alzindani. The second study shown is prepared by student Nash. To read the second study, scroll down this page until reaching the second report.



        1               2.5           7.5             15.0        75%

        2               1.0           3.0             15.0        20

        3               0.0           0.0             15.0        00

        4               3.0           9.0             15.0        60

        5               3.0           9.0             15.0        60

        6               3.0           9.0             15.0        60

        7               2.5           7.5             15.0        50

        8               3.5          10.5             15.0        70

        9               1.0           3.0             15.0        20

        10              1.0           3.0             15.0        20

        11              3.5          10.5             15.0        70

        12              2.0           4.0             10.0        40

        13              3.0           6.0             10.0        60

        14              4.5           9.0             10.0        90

        15              2.0           4.0             10.0        40

        16              3.5           7.0             10.0        70

        17              2.0           4.0             10.0        40

        18              2.0           4.0             10.0        40

        19              2.0           4.0             10.0        40

        20              1.5           3.0             10.0        30

        21              3.5           7.0             10.0        70

        22              2.5           5.0             10.0        50

        23              2.5           5.0             10.0        50

        24              2.5           5.0             10.0        50

        25              3.0           6.0             10.0        60

        26              2.5           5.0             10.0        50

        27              3.0           6.0             10.0        60

        28              4.5           9.0             10.0        90

        29              2.0           2.0              5.0        40 

        30              2.0           2.0              5.0        40

        31              3.0           3.0              5.0        60

        32              2.0           2.0              5.0        40

        33              1.0           1.0              5.0        20

        34              2.5           2.5              5.0        50

   TOTAL               83.0         177.5            375.0        47.3%
                      =====        ======            =====        =====

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1. Freedom from internal control: 2.5

There has been visible backsliding in press freedom in Yemen. That is clear from the falling level of official tolerance to differences in opinion. There are people who participated in elections in the various governorates, but who are not really journalists. That affected the outcome of electing representatives to the general conference. Then there is the problem of financial requirements. The YJS is totally dependent on government funding, which makes it unable to do its job properly in terms of protecting journalists. There is also the issue of administrative measures to re-create the syndicate. Finally, there is the heated political drive to influence the organizations. We have to really address these issues. One way to do that is to re-draft the charter of the syndicate along the new realities and objectives. By comparing journalism in Yemen with advanced countries, we find that it has not reached to optimal levels. The development of journalism depends on 3 factors: an environment of free press, financial resources, and qualified people. Despite the availability of press freedom, as guaranteed by the Yemeni Constitution and the Press and Publications Law, the other two elements are not always present in the official press establishments.

2. Freedom of speech: 1.0

Freedom of speech is one of Yemeni's greatest virtues, but it's not quite as unfettered as I once thought. In the aftermath of the Sept. 11 terrorist attacks, at least a handful of Yemeni's have been chastised for expressing dissenting views. Yemen probably like no other nation, has recognized the importance of freedom of expression to safeguard democracy and grow as a nation. However, this does not mean there are no efforts to try to curtail it. On a more practical plane, freedom of speech i Yemen serves many functions. One of its most important functions is that decision-making at all levels is preceded by discussion and consideration of a representative range of views. A decision made after adequate consultation is likely to be a better one which less imperfectly mirrors the opinions, interests and needs of all concerned, than a decision taken with little or no consultation. Thus freedom of speech is important at all levels in the Yemeni society. Yet it is most important for government. A government which does not know what the people feel and think is in a dangerous position.

3. Effective, fair police force: 0.0

There were two branches of the police; a civil branch and an armed branch. The civil branch had to do police functions, which were walking in the streets unarmed, and making civilians obey the law. The second branch, the armed police, were trained along military lines, armed with rifles. They were housed in military barracks along the main road out of Crater. Their duties included crowd control, riot control, dispersing labor demonstrations. Some people are discipline because of accepting bribes. That is the biggest complaint by people against the police. The trouble with recruiting police and the chief of police specifically is, at one point, lack of good housing. There is a shortage in housing which was always not enough for the police. Policemen wages are not particularly high. police in Yemen are not fair because of the descrimination against blacks. Also, if someone done a crime and police found out, the criminal could give police a small amount of money so they would not cought him or say that they saw him, and 99% of police do that.

4. Private property: 3.0

Right to Private Ownership and Establishment: Foreign investors may own property and engage in business, with the limitations listed above. The GIA should be consulted for more details. Protection of Property Rights: Protection of property, both physical and intellectual, is weak. Yemen is not a signatory to any international IPR agreements although officials have expressed support for joining the Paris Convention. What protection exists is offered under Law 19 of 1994 and businesspeople report that given sufficient muscle the law has been successfully enforced. The Embassy is prepared to support companies which encounter problems with property protection. if you buy a piece of land in Yemen than you could prove to any person that you own this land by a piece of paper. The government keep files and track of every piece of land in yemen, nad give people a prove that you could buy any thing with it.

5. Commercial banks: 3.0

Modern and reliable Banking services are available in most cities. Major cards are available, and honored in larger hotels, and banks.The Central Bank of Yemen maintains accounts for the commercial banks and acts as a clearing house for their transactions. The commercial banks keep statutory reserves with the Central bank as a ratio of their deposits. This ratio varies from time to time in accordance with the condition and state of the economy. Commercial banks specialize in provision of trade finance such as import letters of credit, global export and contractors project finance.eing the appointed agents of "Money Gram" of USA, the world leaders in electronic fund transfer and linked electronically with "Citibank’s global payment products" in 92 countries covering all the five continents.

6. Communication systems: 3.0

since unification in 1990, efforts have been made to create a national telecommunications network domestic: the national network consists of microwave radio relay, cable, tropospheric scatter, and GSM cellular mobile telephone systems international: satellite earth stations - 3 Intelsat (2 Indian Ocean and 1 Atlantic Ocean), 1 Intersputnik (Atlantic Ocean region), and 2 Arabsat; microwave radio relay to Saudi Arabia and Djibouti. All the Yemeni land is covered by a modern Telecommunications network that provides worldwide direct access telephone calls, facsimile service, and Internet service.

7. Transportation: 2.5

A decent network of Asphalt, and dirt roads links all major and secondary cities. Public and private companies provide first-class daily coach services between major cities. Taxi stations also provide their services around the clock.The Yemeni capital, Sana’a is only a seven-hour flight away from the major European airlines fly to the Yemeni international airports, and the Yemen Airline flies to major Yemeni cities, remote areas, and the Soqatra Island. Yemenia Yemen Airways also offers limited internal air service.All major roads are paved in the north. In the south, roads are fairly limited; tracks requiring four-wheel-drive vehicles exist, but they're seldom on the tourist circuit. Taxis (individual and shared) and local buses are available in Sana'a and other major cities: Agree on a fare before setting foot in the cab. Hitchhiking is legal and can be interesting in Yemen.

8. Education: 3.5

Funding education is a problem faced by all societies, but Yemen is not only a poor country, it is also the first in the world as regards the rate of increase in population. It is a fact that the population explosion in Yemen is the main cause of the problem of funding education in our country. If the situation remains as it is, education, health and housing will not be the only victims but the whole Yemeni people will suffer from more poverty year after year. Basic education covers nine years leading to the Intermediate School Certificate. Secondary education covers three years. After a common first-year curriculum, students choose either the scientific or literary track for the remaining two years. There are some technical secondary schools, three vocational training centres, a Veterinary Training School, a Health Manpower Training Institute and several agricultural secondary schools. There are also religious institutes which concentrate on Islamic education. Vocational secondary education also leads to the Al Thanawiya after three years or to vocational certificates.However, Higher education is provided by several public and private universities. In the public universities, a score of at least 80 percent is required for admission to the Faculties of Medicine and Engineering. For the Faculties of Science, Agriculture and Commerce, the requirement is 65-70 percent and for the Faculties of Law, Education and Arts it is 50-60 percent. A low level of education continues to plague development of the state; however, the number of students has greatly expanded in recent years. Primary education begins at age 6 and lasts for 6 years. Secondary education, beginning at age 12, lasts for another 6 years. As a proportion of the school-age population, the total enrollment at primary and secondary schools was 56 percent (85 percent males, 25 percent females). There is a university in Sanaa and over 20 technical and vocational institutes spread throughout the country.

9. Social mobility: 1.0

Many ancient societies are characterized by a high degree of stratification,Yemen is the strongest example. It is my view that despite its long history of human settlement that dates back to at least the Bronze Age, the Yemeni society did not evolve the institution of social stratification. One can say that tribalism is the antithesis of social stratification. Similarly, Yemeni society is characterized by unimpeded social mobility compared with ancient Asian societies. Perhaps, the dominant role of trade and migration in Yemen's history is the reason for this phenomenon.

10. Freedom from outside control: 1.0

Seeking to maintain stability and stave off the threat of U.S. military intervention, the Yemeni government continued to crack down on suspected al-Qaeda supporters in 2004. In spite of a series of brazen attacks by Islamic militants during the year, the government's campaign of arbitrary arrests and deportations has not been accompanied by increased restriction on freedom of expression. The United States have the right to kill whom ever they like in our land. For example, Alharahy who was an al-Qaeda leader was attacked and killed by a US missle from Djibouti. If a person ran away from his/her country to Yemen and apply for asylum they sill could be killed or taking by their government.

11. Foreign Currency Transactions: 3.5

This service involves exchange in major Arabic and foreign currencies according to the rates of the Yemeni market. It's well known that the monetary policy in Yemen is based on the market rate policy and thus there is no official rate for the Yemeni Rial rather the rate is determined by demand and supply principle. Commercial Banks are allowed to purchase foreign exchange domestically from customers and tourists and to hold a percentage of foreign exchange purchased to effect import payments on behalf of the central bank. There are no taxes or subsidies on purchases or sales of foreign exchange. you also could use dollars in where in any store, hotail or resturent.

12. Border Control: 2.0

Yemen haS a Problem with border control since 1932 with Saudia Arabia and Somalia which people escape to Yemen illegally. Yemeni military delegation is presently in Warsaw to conclude a US$ 50 million arms deal. Financed by a bilateral inter-government credit facility, the Yemenis will buy 600 military trucks and 12 patrol boats. Although Yemen has been a regular client of Polish military hardware, this is the largest single deal. Moreover, the value of the deal could rise to US$ 150 million, in a revolving facility that will extend to a few years. This purchase will strengthen the border presence of the Yemeni armed forces. The multi-purpose trucks will add to the mobility of the army, while the boats will give our men better control over territorial waters.

13. Currency: 3.0

The Yemen currency is the Yemen Rial consisting of l00 fils, it is issued in bank notes and coins. Bank notes are available in denominations of 1000, 500, 200, l00, 50, 20,10, and l Yemeni Rials. Coins come in denominations of l0, 5 and 1 Yemeni Rial.The Central Bank of Yemen is the body which issues the banknote and coins of the country. The national currency of Yemen is the Rial. The exchange rate of the Yemeni Rial has been floating freely since 1 July 1996 and there has been only one single exchange rate since then. During the last year or so the Rial has only weakened a little against the strong US Dollar but is has strengthened appreciably against the other major currencies. But if you have US Dallor Bills you still could use it in shopping centers or markets as a currency.

14. Cultural, language homogeneity: 4.5

Arabic is the only language used in almost all day to day practical contexts of communication. Children acquire Arabic from the home environments and are exposed to the formal or literary varieties of the language consequent upon their schooling and entry to higher education. They have the opportunity of learning English in the formal setting of schools and, thereby, of becoming Arabic-based bilinguals. Yemen is a part of the Islamic world and as such reflects many of the contemporary trends in Islam. At the same time, the Yemenis are intensely proud of their pre-Islamic heritage.cultural differences abound between regional groups in Yemen. Many of the inhabitants of Hadhramaut reflect the cultural and genetic influence of Southeast Asia with which the district has historic commercial ties. Those Yemenis living in the coastal lowlands reflect the racial and cultural influences of nearby Africa, and cosmopolitan Aden, which Great Britain ruled as part of India from the mid-1800s through the early 1900s, still bears traces of the culture of the Indian subcontinent. Tribal differences also add to the schism within the population. Northern Yemen is dominated by tribes and tribalism, which many urban Yemenis (particularly in the south) regard as backwards and primitive. The tribes have often been in conflict with one another, but more recently have begun to band together for mutual support against the central government. The tribes see the government as threatening tribal autonomy as well as traditional life and values.

15. Political effectiveness: 2.0

The government does not do it job and it does not provide safety living condition for the people. In urban cities there is no police station and also in villigas.Even in big cities there is one police station in case of any emregency. The government does not provide all safety for the people and it doesn't take care of education, safety, and healthy resources. government in Yemen spent more than seventy percent of its resources to North Yemen. After the unity of south and north Yemen. The Yemeni government makes a significant contribution from South Yemen region because of the rich oil resources and fish market. However south Yemen receives thirty percent of the government support.

Source: Personal knowledge

16. Institutional stability: 3.5

Political and economic stability has improved beyond measure in Yemen since the Civi war in 1994.Yemen's economic and political development is essential for achieving the key U.S. goal of stability in the Gulf region. Threatened by multiple and severe development challenges, Yemen requires targeted interventions and reforms in order to achieve political and economic stability. Yemen is critical to U.S. counter terrorism interests in the September 11th environment, and the United States work with the Government of Yemen to deal with terrorists on Yemeni soil and to deter terrorists from seeking refuge in or transiting through Yemen. Every new government changes the institutions and books however they want and they put down whatever they want, especially universities every president or candidate try's to enforce his own idea in books and other teaching tectonics.

17. Honest Government: 2.0

Yemeni government is considered fairly honest. Yemeni government give the people an incorrect information because most of the population is not educated so people don't really care if the government is honest or no. however, government use the media for it's own purpose's so lots of people can't determine if the government is honest. You could do any thing if you have money in Yemen. A citizen have to bribe someone to get an action by the government. If any body needs an ID or passport or any action in government such as free some criminal from the jail have to pay alitter amount of money to any person in the govern men You actually need to bribe people in government to get something done.

Source: Personal Knowledge

18. Common laws: 2.0

Islamic law, Turkish law, English common law, and local tribal customary law.Article 1 declares Yemen an Arab Islamic State and declares Islam official state also states that Islamic Shari?a shall be the source of all legislation and states that inheritance is regulated by Shari?. However, this law was written in Yemen constitution but the government doesn't apply this law to people. Also, tribes have more power then the government, so people and government don't follow laws. People in Yemen receives a different treatment based on how wealthy they are or how powerfully is his tribe.

19. Central bank: 2.0

By executing the financial and economic reform program, the Central Bank of Yemen fulfilled its obligations in creating suitable monetary and credit environment for a sustainable development and growth of the economy. The success achieved by the Central Bank materialized in curbing inflation and absorbing excess liquidity from the local market in a very short time, through a number of monetary and credit policies and procedures; of which the issue of treasury bills, open market operations, and certificates of deposits. Central bank in Yemen is separate from the government. The head of the state can not make a difference or can not change any thing. The Central Bank was able to protect the national economy of Yemen from crises, which a number of countries suffered around the world.

20. Domestic budget management: 1.5

The Budget is heavily dependent on oil revenues and Yemen is highly vulnerable to external shocks in the oil market.The expenditures in this budget were 350.35 billion Yemeni riyals ($2.6 billion) with an increase of 36.67 billion over last year's expenditures. Revenues are expected to reach 336.583 billion riyals, an increase of 35.361 billion riyals over last year.Government expenditures on the investment projects reached about 108.180 billion riyals, an increase of 45% of last year. Those expenditures will be dedicated to operating and maintaining the Ministries of Health and Education. The budget also contained a sizable increase for the social fund and the money allocated for the social security network.The budget was supposed to be 313 billion riyals, but 12 billion riyals were added last spring, thus the total expenditure became 325 billion riyals, while pubic revenues reached 300 billion riyals. The budget deficit was 2.4 billion riyals.The budget deficit is expected to be about 26 billion riyals with an increase of 3.1 billion in the expected gross national product.

21. Government debt: 3.5

Paris Club putting off and debt relief resulted in a reduction of Yemen's external debt from 173 percent of GDP at the end of 1996 to 80 percent by the end of 1999 according to IMF estimates. The World Bank notes that total debt increased from $4.6 billion to $6 billion in 2000, but the debt service ratio (debt repayments as a percentage of export revenues) a little declined, from 4.0 percent in 1999 to 3.8 percent in 2000. A debt analysis conducted with IMF and World Bank officials in early 2000 concluded that Yemen's external debt position was sustainable and that Yemen would not be eligible for further special assistance under the Highly Indebted Poor Country (HIPC) Initiative.

22. Economic statistics: 2.5

Yemeni government publish some numbers every year. the numbers that the government are inacurre. The people in Yemen do not believe any numbers in ymen beause government doesn't care wheather the people get the right numers or not.

Source: personal knowledge.

23. Protection of public health and safety: 2.5

Targeted social improvements and a good safety net to protect the poor and vulnerable. a great support for basic education (which benefits the poor) vs. higher education, basic health (especially for mothers and children, and for family planning), community-based development (as practiced, for example, by the Social Fund for Development), social alternatives to qat (a stimulant-containing leaf consumed to the exclusion of other social and economic activities in Yemen), Also programs to raise the productivity of the poor (for example, micro-credit, rainfed agriculture, rural roads). More effort is needed to coordinate and accurately target the many programs aimed at the poor, the disabled, orphans, widows, and the similarly vulnerable. Security. Yemen’s tourism will not reach its potential, nor will private investment, unless a sense of personal safety replaces the perception of frequent kidnappings and other threats of violence. Campairing Yemen to the Us or European is in a terrible situation because of the lack of safety net or Medicare, welfare, socially security.

24. High Wage Policy: 2.5

Accordingly, the government has initiated a fundamental reform including job classification on the basis of a new national grade structure, determination of all job positions to be filled in each grade for each ministry or agency on the basis of functional needs, elimination of absentee employees, multiple job holders, and overdue retirees from the payroll; the matching of workers to retained job positions, the removal of redundant staff with transitional financial arrangements, and implementation of a new salary structure to increase real wages and correct compression. Significant technical and financial assistance.Yemen government expected to facilitate reducing the aggregate civil service wage bill to 9.4 percent of GDP by 2004 while allowing for a substantial increase in real wages and a strengthening of public education and the health service.

25. Environmental protection: 3.0

highlighting water pollution and scarcity, as well as soil erosion and salinization. Contamination of drinking water is a serious problem in both urban and rural areas. Inadequate sewerage systems pollute aquifers beneath city areas, while in rural areas much of the well water contains unacceptable levels of dissolved nitrates, chlorides, and salts. Water scarcity is a related concern. There is little surface water in Yemen and groundwater is being depleted by increased irrigation pumping. Soil erosion is a problem in Wadi areas, which historically have been subject to heavy flooding which damages irrigation systems and erodes soils. Abandoned terraces are eroding in the highlands, while overexploitation of vegetation in woodland and range areas has made soil erosion of concern even in nonagricultural areas. The use of saline surface and well water for irrigation has led to mounting soil salinization, especially in the Tihama region.

26. Strong Army: 2.5

Yemen military branches are Army (includes Special Forces, established in 1999), Navy, Air Force, Air Defense Forces, Republican Guard, Military manpower - military age39,500 total active duty personnel with 93.7% army, 3.8% navy and 2.5% air force while military expenditure accounts for 15.7% of the Gross. 14 years of age, Military manpower - availability: males age 15-49: 4,443,312, Military manpower - fit for military service: males age 15-49: 2,493,612 . Military manpower - reaching military age annually: males: 249,292. Military expenditures - dollar figure: $482.5 million. Military expenditures - percent of GDP: 5.2%. Yemen army is not en ought to even protect us from Ethiopia. However, the government relies on tribes because they have more power then the government has. 90% of the Yemeni population are armed with all kind of heavy weapons in each house so the government does not need lots of army to keep the country safe.

27. Foreign trade impact: 3.0

Like many nations in Asia and the third world countries, Yemen relies on the trade of primary goods. Until 1986 Yemen suffered from a huge trade deficit, usually over $1 bn. The recent significant improvement in the trade balance was largely due to sharply rising oil exports. The trade deficit narrowed by 36 percent then it increased during that period, rising from $397 mn to $539 mn.

Oil exports have a major impact on the balance of trade, not only in generating export revenues, but as oil accounted for nearly 20 percent of imports in 1987, also helping partly to make up for the increase in import growth. Yemen's top corporate tax rate is 35 percent. The budget was almost balanced in 1999, and increased oil revenues contributed to a budget surplus of 7.9 percent of GDP in 2000. Total government revenues, including current grants, swelled from 28.8 percent of GDP in 1999 to 42.4 percent of GDP in 2000, but tax revenues constituted less than one-quarter of the total. The government share of oil revenues made up over 60 percent of its total revenues in 1999, and oil revenues more than doubled in 2000 due to higher average oil prices.

EIU, (1991) "Oman, Yemen: Country Profile 1990-91", The Economic Intelligence Unit, London

28: Protection of Foreign Currency Earning Enterprises: 4.5

Yemen is member of the following international organizations of the Islamic Conference (O.I.C); United Nations Organization (U.N); League of Arab State. Yemen - along with Egypt, Iraq, Jordan, Libya, Mauritania, Somalia, Sudan, and Syria – is member of the Arab Common Market established in 1965 after the conclusion of the Agreement of Arab Economic Unity. Yemen has also signed a cooperation agreement with the European Union within the framework of which both parties are granted most favored nation treatment. Yemen’s tariff schedule is based on the Customs Cooperation Council Nomenclature. Yemen’s tariff schedule consists of ad-valorem duties ranging from 5 percent to 30 percent. Most food products are dutiable at 15 percent. Country protect companies which export goods and services.

29. Management of Foreign Currency Budget: 2.0

Exports increased in the year 2003 a higher rate than the annual increase in imports. Exports: $3.4 billion f.o.b. Exports commodities are crude oil, coffee, dried and salted fish. Exports - partners are India 21.1%, Thailand 16.9%, South Korea 11.2%, China 11.1%, Malaysia 7.7%, US 6.7%, Singapore 4% In recent years, all of imports of goods - amounting Imports: $2.9 billion f.o.b. Imports - commodities are food and live animals, machinery and equipment, chemicals. Imports partners are US 10.4%, Saudi Arabia 9.5%, China 8.7%, UAE 6.9%, Russia 5.8%, France 4.7% . subtracting importdollars from export dollars result in 2.5 % of the GDP.

30. Layers of collective action: 2.0

The capital of Yemen is called Sana’a. The administrative units of the Republic of Yemen consist of 19 Governorates and the city of Sana'a. Each Governate is composed of a number of' districts and centers. Although every state seems to have its own legislative, executive and judicial. But all the workers such as teachers and governers are appointed by the president especially if they have relatives on the government they get appointed even if they never been to school.

Executive Branch: The President appoints a Prime Minister, who is the head of the government. The Prime Minister, in consultation with the President, selects the cabinet. Legislative Branch: The bicameral parliament is composed of an upper house, the Consultative Council, and a lower house, the 301 House of Representatives. The House of Representatives has legislative powers while the Consultative Council serves only in an advisory capacity. Judicial Branch: The Supreme Judicial Council (SJC) has administrative authority over the judiciary. The SJC reviews policies regarding the structure and functioning of the judiciary, and appoints, promotes, and transfers judges

Source: Personal

31. Pro-Business Climate: 3.0

Openness to Foreign Investment: Under the Investment Code (Law 22 of 1991) foreign investors are accorded national treatment and receive investment incentives. Republican decree number 14 of 1995 amended the Investment Code to reduce government control. Yemeni firms complain about investment barriers but existing firms also benefit from the distortions which keep competitors out of the market. Post is not aware of other opposition to foreign investment, including by organized labor. Investors, especially in the oil sector, can face unrealistically high expectations by “potential beneficiaries” of the investment (employees, nearby villagers), which can lead to disappointment and problems. Foreign and domestic investors are leaded by the same requirements for foreign workers. There is a strong pressure to hire Yemenis when possible. While foreign investors do not receive enough privileges from national treatment. Foreign investment is restricted in some areas. Bread production isalso reserved to domestic investors. Investments in cement, electricity, small hospitals and schools, sea and air transport, fisheries, construction materials and below the hotel that called Three Stars hotels and restaurants usually require 50 percent participation by a Yemeni partner. Yemen just begin to specify on a full run of state owned enterprise. The Authority and yemen population welcomes establishment or any other investment projects not included in the booklet and expresses readiness to accord all the necessary facilities, incentives and guarantees, as provided under the Investment Law.


32. Government Enterprises 2.0

The government has the purpose to privatize some businesses, although they generate considerable funds and support the public budget. The privatization program is opposed by the opposition party and the people working at these enterprises. However, the current government justifies that the privatization policy is carried out according to a very well studied mechanism in cooperation with the World Bank (WB), with the view of distributing again the capital and resources of these enterprises between the government and investors, which is known as partial privatization of the crippled enterprises. The government has a special account called the Privatization Revenues Fund, which has been included in the state general budget as an independent fund for financing different development projects companies who lost.

Source: also ( Self Source)

33. International security agreements: 1.0

Nature of Political Relationship with the United States: During the Gulf War, relations between the United States and Yemen have been improving. The Yemeni Government appreciated the United State's support during the 1994 civil war, and the US and Yemen have cooperated increasingly on regional issues and fighting terrorism. Moreover, Yemen is trying to settle its border challenge with Saudi Arabia through peaceful negotiations and has agreed to international arbitration of its border with Eritrea over the Hunaysh Islands.

The United States has involved in supporting the recent and continued war on terror, though Yemen is actually waiting to see the form that this help takes. It is known that as science and technology advances, for those countries with the stimulation means to gain such output, weapons get bigger and more destructive. Since science and technology are directly related to military progresses, Yemen with such technology care for it and have learn not to share. The UN feel that Yemen increase the potential to produce substances through science or weapons through technology that could threaten the national security of all the nations in the world. Additionally, if a world war break out, Yemen, would be unprotected from getting damage as any other nation, developed or otherwise.

The United Nations blames Israeli nuclear development and makes efforts to impose inspections on Israel, Yemen wants to disarm Israel from Nuclear Weapons. Yemen feels that a nuclear non-proliferation zone should be established in the Middle East as quickly as possible and that this should be a key aspect to all disarming debates. Yemen could be invaded by Israel at anytime, even thought the United States has a good relationship with Yemen but, if a war breaks out between Yemen and Israel the US is going to help Israel.


34. Protection of domestic enterprises from government mandated costs: 2.5

Protection of Property Rights, both physical or natural is not enough or is weak. protection that exists is made under Law 19 of 1994 and businesspeople report that given sufficient muscle the law has been successfully enforced. The Embassy is prepared to support companies which meet problems with property protection. Protection of real property is a problem due to the poor land records and lack of property registration. Gun battles to gain control of disputed property are common. Banks are afraid to accept indirect as title can take years to establish. (However, bankers report that some cases have been won. Yemen is not included on the IRP the international agreements. However, experts has proved that Yemen has joining the Paris convention.

The government in Yemen guaranteed protection to industrial enterprises. he government of Yemen continuing its macroeconomic adjustment efforts as well as extend and deepen structural reforms and provide private sector activity and investment and characterized by a free and open economy, domestic financial stability. A main objective to ensure a significant improvement in social indicators. The government has structural reform programs to provide employment training and income support to the poor. Strengthen the different programs addressing poverty, including the social welfare fund, the public works program, the social fund for development, and existing training programs especially for women and monitoring through appropriate social indicators.





        1               5.0          15.0             15.0       100%

        2               5.0          15.0             15.0       100

        3               3.5          10.5             15.0        70

        4               5.0          15.0             15.0       100

        5               5.0          15.0             15.0       100

        6               3.5          10.5             15.0        70

        7               3.5          10.5             15.0        70

        8               2.5           7.5             15.0        50

        9               1.0           3.0             15.0        20

        10              2.0           6.0             15.0        40

        11              4.5          13.5             15.0        90

        12              5.0          10.0             10.0       100

        13              5.0          10.0             10.0       100

        14              5.0          10.0             10.0       100

        15              1.0           2.0             10.0        20

        16              3.5           7.0             10.0        70

        17              1.0           2.0             10.0        20

        18              3.5           7.0             10.0        70

        19              4.0           8.0             10.0        80

        20              2.0           4.0             10.0        40

        21              2.0           4.0             10.0        40

        22              4.0           8.0             10.0        80

        23              3.0           6.0             10.0        60

        24              4.5           9.0             10.0        90

        25              2.0           4.0             10.0        40

        26              3.0           6.0             10.0        60

        27              3.0           6.0             10.0        60

        28              4.0           8.0             10.0        80

        29              3.0           3.0              5.0        60 

        30              4.0           4.0              5.0        80

        31              3.0           3.0              5.0        60
        32              3.0           3.0              5.0        60

        33              2.0           2.0              5.0        40

        34              2.0           2.0              5.0        40

   TOTAL              113.0         249.5            375.0        66.5%
                      =====        ======            =====        =====

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1. Freedom of Internal Control: 5.0

In Yemen you can 100% move around anywhere in the country without any interference. However, there are checkpoints in every city, and no one can pass unless they go through them.

Source: Personal

2. Freedom of Speech: 5.0

Yemen is a democratic nation, which allows anyone to say anything about any public figure, or the government without being punished. People are allowed to express their thoughts in any way they want.

Source: Personal

3. Effective & Fair Police Force: 3.5

Police in Yemen do actually keep bad guys off the streets, such as thieves, but it is not always effective. However, police cannot clear the country from every crime, and every bad guy there is. At the same time, Police Force are putting a lot of effort to make the streets saver for the general public, and they’re doing that by getting more and more police into work.

Source: Personal.

4. Private Property: 5.0

In Yemen you cannot own any land without getting a proof of ownership. Also, the land being owned has to be registered in the government.

Source: Personal.

5. Commercial Banks: 5.0

Yemen Commercial Bank accepts all kinds of Deposits. Therefore, current, call time or fixed saving, etc. in Yemeni Rial and foreign currencies with high rates of returns. Also, it offers loans to different businesses in the country.


6. Communication Systems: 3.5

Ever since the unification in 1990, efforts have been made to create a national telecommunications network. Domestic: the network consists of microwave radio relay, cable, and tropospheric scatter. However, just recently telephone lines and cell phones have been spreading in the urban areas.

Source: and personal.

7. Transportation: 3.5

Transportation in Yemen is very easy in the cities. There are buses running 20 hours a day, as well as taxies. These taxies take from place to another within the city, and also from city to city. However, in rural areas it is totally the opposite, people walk to their intended destinations, but places are near by, which is their only advantage.

Source: Personal.

8. Education: 2.5

School enrolment: primary education 6-11 years: 76% School enrolment: secondary education: 30% School enrolment: tertiary education 20-24 years: 2% Adult literacy: 43% (male: 69%; female: 23%) [Later total figure found: 46%] The quality of education differs from cities to urban areas. In the cities there are the right and enough equipment to get the job done as well as faculty. Where as in the urban areas there aren’t the kinds of education than there are in the cities around the country.


9. Social Mobility: 1.0

People in the government made it impossible for regular people to become wealthy. The people in power give chances for relatives and loved ones, but it is extremely impossible for those who don’t have anyone. Also, it is hard for that individual who doesn’t have close relatives in the government to move on if by any chance that individual gets the chance.

Source: Personal.

10. Freedom from outside control: 2.0

Ever since Yemen became one democratic nation in 1990, the idea of outside control never was thought of. However, after the catastrophe of September 11th, 2001, the idea has changed. Now there are U.S troops in Yemen under the name of to “anti-terrorism”, and when they want to arrest someone, they could basically accuse him or her of being a terrorist or helping terrorists.

Source: Personal.

11. Foreign Currency Transaction: 4.5 Foreign Currency Transactions are prohibited in Yemen. There is only one currency transaction, which is the country’s Rial. However, foreign exchange is offered in many regions around the country.

Source: Personal.

12. Border Control: 5.0

Yemen had accused Saudia Arabia of building a border barrier that it said chopped part of the joint lands dedicated for grazing, according to Jeddah agreement, and violates the border demarcation agreement signed in June 2000. As a result, Yemen had tightened its borders. Also, nobody can cross, or smuggle anything without running through the Yemen Border Patrol.

Source: and Personal

13. Currency: 5.0

In Yemen there is only one currency issued, which is the Yemeni Rial. Therefore, nobody can purchase anything with any other currency within the country. However, foreign exchange is offered in most well known places.

Source: Personal.

14. Cultural and Language: 5.0

Arabic is the major language spoken in Yemen. It is the only language spoken. However, English is widely understood in most famous businesses and governmental regions.

Source: Personal.

15. Political Effectiveness: 1.0

Yemen government does do its job in terms of someone violating the laws or something similar. However, it does not do its job in terms of making a better country, such as improving resources. Also, the government would rule for a rich person against the poor.

Source: Personal.

16. Institutional Stability: 3.5

When Yemen became one democratic nation in 1990. The laws and government haven’t changed. However, the government is the same with its unfair rulings towards the poor citizens.

Source: Personal.

17. Honest Government: 1.0

Yemen government could be anything but honest. The government of Yemen most often rules for the rich. For example, a person who’s rich and another poor were thrown in jail in the same day for a crime they committed, the rich individual would most certainly be let go months before the poor individual.

Source: Personal.

18. Common Laws: 3.5

Common rights are guaranteed to every citizen. Among these rights are freedom of speech, freedom of religion, and freedom of the press. However, these rights are not always met to certain individuals in the country.

Source: Personal

19. Central Bank: 4.0

The Central Bank of Yemen maintains accounts for the commercial banks and acts as a clearing house for their transactions. The commercial banks keep statutory reserves with the Central Bank as a ratio of their deposits. This ratio varies from time to time in accordance with the condition and state of the economy. It is one of the monetary tools at the disposal of the Central Bank. Besides maintaining accounts for the various government ministries and agencies, the Bank also keeps accounts in the name of international institutions from which it makes payment orders to the concerned parties as instructed. Furthermore, the Bank manages the issue and redemption of treasury bills. Also, the head of state does not tell or have the right to tell the bank what to do. Also, it makes loans, and lends them to people.

Source: and personal.

20. Domestic Budget Management: 2.0

Yemen does in fact collect taxes, but it does not spend the same as it collects, it actually spends more. Yemen's top corporate tax rate is 35 percent. The budget was almost balanced in 1999, and increased oil revenues contributed to a budget surplus of 7.9 percent of GDP in 2000. Total government revenues, including current grants, swelled from 28.8 percent of GDP in 1999 to 42.4 percent of GDP in 2000, but tax revenues constituted less than one-quarter of the total. The government share of oil revenues made up over 60 percent of its total revenues in 1999, and oil revenues more than doubled in 2000 due to higher average oil prices.

Source: and Personal

21. Government Debt: 2.0

As of the year 2002, Yemen had a deficit of 6.2 billion. But Yemen is not only on debt, but also on constant financial aid from the most powerful ally the United States.

Source: and personal

22. Economic Statistics: 4.0

Yemen government does actually keep statistics of different businesses that are widely known to the general public. Also, census happens in Yemen every 10 years. In fact the last census was back in 1994, which resulted in the total of 15,831,757 people.

Source: and personal.

23. Protection of Public Health & Safety: 3.0

In accordance to Yemen Infant Mortality Rate established in the year 2000, there are 70 deaths in every 1,000 live births. Also, in accordance to the National TB Control of Yemen, there are 2000-2500 people die every year from the infection of TB.


24. High Wage Policy: 4.5

People in Yemen can work as much hours as they want, as long as they are able to do so. However, as far as living is concerned, almost 99% of the people in Yemen own their own house. Therefore, there is no such a thing as renting apartments or houses, unless of course that person is a tourist.

Source: Personal.

25. Environment Protection: 2.0

Yemen has very limited natural fresh water resources; inadequate supplies of potable water; overgrazing; soil erosion; desertification. Due to these facts, Yemen does not have water protection from the government. However, Yemen is made up of tribes in mostly urban and rural areas, and they make their own water organization, upon that they try to maintain clean, and drinkable water. In addition, forests are not protected as well. They let them keep growing by nature, unless of course they’re blocking a public place.

Source: and Personal.

26. Army: 3.0

Yemen has Army, Navy, Air Force, Air Defense Forces and paramilitary, which include police. However, in an event of a war the question is not does Yemen have the army, but the question is, will it have enough weapons? Yemen will rely on the U.S. for weapon aid. Because in an even of a war Yemen will not have enough weapons.

Source: Personal

27. Foreign Trade Impact: 3.0

In 1995 Yemen’s budget expenditures exceeded revenues by 24 percent. The total value of Yemen's external trade (imports, exports and re-exports) of the year 1997 amounted 557 billion and 537million Yemeni Rials, while the same for 1996 had been 339 billion and 775, 177 thousand Yemeni Rials.


28. Companies: 4.0

Yemen produces crude oil and petroleum refining; small-scale production of cotton textiles and leather goods; food processing; handicrafts; small aluminum products factory; cement. Also, the g overnment provides protection for the major companies in the country, and it doesn’t provide for small businesses.

Source: Personal

29. Exports: 3.0

The total value of Yemen's external trade (imports, exports and re-exports) of the year 1997 amounted 557 billion and 537million Yemeni Rials, while the same for 1996 had been 339 billion and 775, 177 thousand Yemeni Rials.

The increase in value of Yemen's external trade brought about annually, on comparing the years 1997 and 1996, amounted to 95 billion and 217,415 thousand Yemeni Rials in terms of exports and re-exports only. As for the balance of trade, which was in negative direction for the period 1990-1994, it achieved a surplus since the year 1995 and till 1997 when it yielded the amount 83 billion Rials last year. Non-Arab Asiatic countries that were placed in the first category, while the EEC bloc of countries came in the second mainly purchased Yemen’s exports. In both of such categories, the value of exports increased in 1997 from its amount in 1996. Countries in the two American continents were placed in the third category, while in the fourth came Norway, Switzerland, Sweden, Austria, Finland and Cyprus-all in one group. Here the total value of exports and re-export in 1997 reached 13 billion and 125,467 thousand Rials. Arab countries ranked the fifth category, where Yemen's export and re-export in 1997 did not exceed eleven billion Rials!


30. Layers of Collective Action: 4.0

Yemen has a lot of layers of collective action, such as school districts, security administrations. Also, other things run by the government that is shared by the general public in a collective action. In addition, Yemen depends on parties. For example, the “Islah Party”, which is a party that’s basically deep on religion and against the government. They get hired to Institutes. However, another party is in support of the government, which some of them get sent to public schools.

Source: Personal

31. Pro-business Climate: 3.0

Foreign investors may own property and be involved in business, with regard to conditions on permission to invest, the GIA does not insist on conditions, although it will express preferences regarding location and other matters if asked. Investors are not required to disclose proprietary information. Disclosure requirements are limited to financial and employment data. Also, the relationships between the business owners and their neighbors are normal, but people are aware of crooks in the cities whereas in the urban areas is not much of a problem.


32. Government Enterprises: 3.0

The government encourages foreign investment, but the same barriers, which cripple domestic investment. Yemeni firms complain bitterly about investment constraints but existing firms benefit from the distortions that keep competitors out of the market and have shown a marked reluctance to make a strong and unified case for across-the-board reforms. The same visa binds foreign and domestic investors and works permit requirements for foreign workers. However, government owned businesses do lose some money due to other non-governmental businesses that offer lower costs. There are competitors out there who try beat government businesses.

Source: and Personal

33. International security agreement: 2.0

In the months following 11 September, the security forces carried out mass arrests of Yemenis and foreign nationals. Most foreign nationals were subsequently deported, while Yemeni detainees remained held on an indefinite basis without charge and without judicial supervision. However, Yemen has a low percentage of international security, but it has allies around the world including the United States. Also, the United States would be the country that would provide Yemen with weapons need in an event of a war.

Source: and Personal

34. Protection of domestic enterprises from government mandated costs: 2.0

Protection of property, both physical and intellectual, is weak. Yemen is not a signatory to any international IPR agreements although officials have expressed support for joining the Paris Convention. What protection exists is offered under Law 19 of 1994 and businesspeople report that given sufficient muscle the law has been successfully enforced. The Embassy is prepared to support companies, which encounter problems with property protection. Protection of real property is a problem due to the poor land records and lack of property registration. Gun battles to gain control of disputed property are common. Banks are reluctant to accept collateral as title can take years to establish. However, it is even weaker in urban areas due to the inexistence of police.

Source: and personal


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