Public sector in Yemen has been introduced through either of two means:

Projects nationalized or confiscated by the state.

Public investments provided by the government to establish new projects (totally or partially), or earmarked to project expansion, replacement or renovation.

There are no accurate estimates of the value of assets pertained to the public sector, nor for those subjected to nationalization in the southern part of the homeland during the totalitarian regime, or even at the sectoral level in both parts. Similarly, there are no precise figures on investments undertaken to add to or replace public sector’s capital during the last period.

The privatization policy is considered one of the various economic policies based on market mechanism and on a major role for the private sector in the economy. The policy has been developed and adopted as a direct consequence to the failure of the public ownership model in achieving the desired progress. Implementing privatization has been also justified by the inefficiency associated with public enterprises’ activities.

However, the absence of a central frame (authority) which enjoys powers to enforce political resolutions relating to regulations and rules in privatization, led to Government’s inability to prepare a comprehensive and integrated program for privatization. Hence, the various ministries tend to approach privatization from a different perspective, with all the negative impact on the overall program.

On the other side, any economic evaluation of a policy requires passage of reasonable period of time to enable just and accurate evaluation, and to allow for considering positive and negative effects of the policy through using adequate economic tools and criteria. Nonetheless, and needless to say that the multiplicity in undertaking privatization, coupled with absence of both an overall policy and a law has negatively influenced the process.

A proposed privatization law has been recently finalized which takes into account the experiences of the various privatization committees set up in the relevant line ministries as well as the effectiveness and efficiency of the diverse organizational regulations. Moreover, and for the first time, the Government has prepared a comprehensive program for the public enterprises to be privatized during the period 1998-2000. However, we still believe that absence of a law that organizes privatization would still cause legitimate concern to those willing to take part in the program.

Hence, and based on the above, the privatization program should incorporate the following elements:

Determine the overall policies for privatization.

Specify enterprises and projects to be privatized, starting with designing pilot programs.

Consider a black list for enterprises not to be privatized because of their strategic importance.

Encourage wider ownership for privatized projects as well as public issue method.

Moreover, the privatization program should consider the following regulations and objectives:

Establishing a financial market.

Preventing monopoly or control of shareholding and limited-liability companies by certain groups.

Extending support from all participants to the program.

Organizing and preparing special guidelines for foreign participants.

Legislate anti-trust laws.

Prepare regulations for national financial institutions that would enable them to undertake neutral assessment and evaluation.

Provide regulations that protect labor rights, since failure to do so would undoubtedly lead to resisting the program by this vital group.