Fokus Pasaran: YEMEN

by Ala Abdullah

Country Background

Yemen lies at the southern end of the Arabian Peninsula and has frontiers with Saudi Arabia and Oman and controls the strategic straits at the Southern entrance to the Red Sea (Bab al Mendab).
The north of the country has three well-defined areas: a coastal strip along the Red Sea, the highlands inland and a desert area to the east.
The south consists largely of mountains and desert.
The population is poor and largely rural, but there has been large-scale urbanization in the last decade and almost half of the population now lives in towns.

Main Challenges

Major Trends and Outlook.
Balance of Payments.
Yemen’s infrastructure is inadequate for a country of more than 20.7 million people.

Major Opportunities

Power Generation and Transmission – Yemen plans to add 2000 MW of power immediately and 10,000 MW in the distant future.
Oil and gas machinery - opportunities through the Yemen LNG project
EPC Contracts
Pharmaceuticals - Yemen has over 2,000 pharmacies.
Agricultural equipment - demand for irrigation and bee-keeping equipment
Food processing and equipment - especially fish
General Trading.

Doing Business in Yemen

You have to make personal relationships with local representatives and customers whether by:

Using an agent/distributor

Rather than opening an office or subsidiary in Yemen, Indian companies may wish to appoint an agent or distributor to look after their interests.
However, there is no requirement that a foreign seller
Appoints a commercial agent, and they can sell direct.
The appointment of a local partner/representative will only be the first step. Yemen is a market in
Which family structures predominate in the business environment, and where personal relationships therefore are important.
Regular visits to the market, especially during the early phase, are an important part of a successful
Interaction with the agent / distributor.

Selling to the government

Large government contracts may present opportunities
Government purchases are made through a tendering system managed by the Supreme Tender Committee.
Local agents can be a critically important factor in shepherding bids through the tender process.
Tenders are announced in the local and foreign press.
Tender conditions are based on standard international regulations used to evaluate tender offers.
Price is usually the determining factor, although quality and nationality of the product also play a role.
Efforts to reform and streamline the tendering system are ongoing.

Electronic commerce

While Internet cafés are sprouting rapidly in most major cities in Yemen, the general population does not utilize the banking system needed to facilitate financial transactions over the Internet, such as checking account, credit card or debit card purchases.
Only three percent of the population owns a checking account. Even fewer have a credit card.
In February 2005, the International Bank of Yemen introduced Yemen’s first credit card.
Cash transactions dominate most of the consumer market even for most durable goods purchases.
In fact, the lack of a viable credit system stymies the durable
Goods market so that any anticipated e-commerce growth must await technological and financial infrastructure advancements and acceptance.

Openness to foreign investment

Yemen is an open economy that welcomes foreign direct investment in all sectors.
Its stable political and economic environment, well-qualified workforce and strategic position in the south of the Arabian Peninsula make it an attractive place for investment.
There are a number of investment opportunities that exist in Yemen, but one cannot begin to talk about them without highlighting first the role that Yemen has played in the ancient global economy.

Right to private ownership & establishment

Business customs

Customs Duties are charged according to the value of the goods that are being imported.
Import duties are generally levied at rates varying from 5% on essential goods to 25% on luxury items.
Medical and agricultural items are duty-free.
Tobacco is dutiable at 145%.
The law offers the exemption from profit tax for 7 years.

Local time, business hours, & holidays

Public Holidays

Fact Facts

Population	23,580,000
Capital	Sana’a city
Area	555,000 km2
Ethnic Groups	Arab 92.8% Somali 3.7% Black 1.1% Indo-Pakistani 1% Other 1.4%
Religions	Muslim 98.9% Hindu 0.7% Christian 0.2% Other 0.2%
Major Language	Arabic (official), English
Monetary Unit	1 U.S. dollars= 221.25 Yemeni riyal
Major Industries	Petroleum industry, natural gas, fishing, agriculture, manufacturing
Major Export	Petroleum, textiles, hides and skins, and coffee
Major Imports	food, manufactured consumer goods, machinery, transportation equipment, and chemicals
GDP	US$ 25.131 billion
GDP per capita	US$ 1,061

References:

Fokus Pasaran