02.09.2014 11:00 PM views: 2525 ECONOMICS Pavel V. Gusterin.
Pavel V. Gusterin. Center for Asia and the Middle East of The Russian Institute for Strategic Studies (RISS). Download PDF file

   First elements of privatization in Yemen appeared immediately after the country’s uniting in 1990, when economy of the new state began focusing on private sector. However, real movement towards denationalization of the property coincided with the steps for implementation of the Economic Program in 1995.

   Privatization in the full sense of the word began in Yemen only after 1994 with the end of hostilities between the North and the South. That time, privatization was part of economic reform program launched in March 1995 and aimed at reconstruction of Yemeni economy by defining the prerogatives of the state. The role of the state has been reduced to ensuring freedom of economic activity and necessary economic conditions, as well as implementation of the tasks that are only unique to the state, where private sector could not be allowed: defense, security, international relations, etc.

   Based on a common line of private sector development, the Government of the Republic of Yemen has adopted a number of laws and regulations on privatization, the most important of which are the following:

   - The Decree of the Council of Ministers of the Republic of Yemen No. 8 dated 1995 on conduct of activities to organize and conduct privatization;

   - Collection of Definitions and Rules on Privatization adopted by the Council of Ministers of the Republic of Yemen in 1996;

   - The Decree of the Council of Ministers of the Republic of Yemen No. 6 dated 1996 on establishment of the Technical Office for privatization;

   - Public Law No. 45 dated 1999 on privatization process.

   Privatization process in Yemen has been very slow for two main reasons:

   1) The government’s lack of knowledge of how to implement privatization program;

   2) Unreadiness of the financial market of Yemen to conduct privatization.

   Notwithstanding the fact that the law on privatization was adopted only in 1999, hotels and cinemas were quite successfully privatized during the period from 1995 to 2000, mainly in the southern governorates, which undoubtedly was a manifestation of the desire to get rid of socialist heritage.

   In the period from 2000 to 2003, privatization process has dramatically slowed and eventually was actually stopped for the following reasons:

   1) The Republic of Yemen government’s lack of clear understanding of how to conduct privatization;

   2) Lack of the necessary conditions in the Yemeni financial market and, as a consequence, inability to implement privatization program including expansion of private property and transformation of state-owned enterprises into joint-stock companies;

   3) Waiver of the House of Representatives of the Republic of Yemen from proposals of the World Bank to finance enterprises evaluation procedures and their preparation for privatization.

   A member of the House of Representatives of the Republic of Yemen Abderrahman Bafadel, in his article for “Yemen Times” newspaper dated September 30, 2004 (No. 777), called privatization activities carried out by the Yemeni government unfair and lacking in transparency.

   Based on the above, the results of privatization in the Republic of Yemen can be given the following assessment:

  1) They can be called more than modest, as only a small part of planned enterprises were privatized, and to date only small businesses are privatized that do not play an important role in the field of production;

    2) The objectives pursued in privatization of industrial enterprises were reduced to their liquidation and sale of their property;

   3) The most part of the proceeds from privatization came to the Ministry of Finance which used them primarily to pay for operating expenses, not for investing projects for development of the country, as required by law.

   Major industrial enterprises, as a rule, are in state or corporate ownership with mixed capital. Privatization conducted with great difficulties in 1995-2003 was eventually frozen.

Keywords yemen, Saleh