The Second Yemeni Economic Conference
Sana'a  18 - 20 April, 1998

Abstract 30

The topic of this paper addresses the private sector and the Economic Reform Program by introducing the early starts of activities of the private sector during the times of the Immamite regime in the Northern part of Yemen and the British colonial rule in the South. The second period relates to the post-revolution and the independence era, when the private sector faced considerable difficulties as a result of the existence of two quite different economic systems. Whereas in the South, a socialist regime dominated economic activity rejecting any role for the private sector, in the North, a shy capitalist regime was overriding the activity. Hence, in such environment, the private sector failed to play its role and to participate in reviving the economic activity in Yemen.

Under the umbrella of the United Yemen, however, and the serious Government attempts to resolve the many problems and difficulties encountering economic development through the Economic, Financial, and Administrative Reform Program, there has been successes in some aspects and failures in others. There has been, also, some conflict of interest with some power centres as well as resistance to reforms emanating from corruption in the various Government agencies.

This paper, hence, tries to offer a serious vision on the role of the private sector during the forthcoming period by starting to reform the sector’s own institutions based on the following:

Reorganizing the private sector’s institutions and mainly the chambers of commerce and the Federation. A termination of the monopoly of power is crucial in this endeavor and the transfer of responsibilities to a professional management capable of bearing the responsibility and to guide its members in accordance with anticipated objectives.

After reorganizing, the Government ought to delegate more responsibility to the private sector’s institutions such as to supervise the economic attaches abroad. Also, the Government should invite the private sector to participate in the planning, supervision, and the following up of the various governmental economic activities, as well as grant them the right to be informed of the relevant decisions and information.

After undertaking the necessary reforms, private sector’s institutions should correct all distortions that have through the years tarnished it reputation locally and at the international level.

The private sector should be prepared to absorb highly qualified personnel, and to run high skilled training programs to enable the country to reach a competitive stage.

The private sector envisages the implementation of the financial and administrative sides of the Economic Reform Program in following these procedures:

Adopting decentralization is a must, in relation to project implementation, while at the same time the Ministry of Finance should improvise a monitoring system on spending centres.

Government tender procedures should be open and transparent.

Reconsidering tax laws, by-laws and the relevant regulations, and the need to provide incentives to the caliber of the Tax Authority.

Reform the customs system and simplify its procedures.

The immediate privatization of all Public Enterprises that represent a burden on the budget.

Preserving public money through the collection of outstanding bills.

Improving the performance of the Central Bank and including the Banking sector in development programs.

Eradicating masked (disguised) unemployment and identifying “ghost” jobs by carrying out an accurate and comprehensive survey of all public servants.

Reforming the judiciary and in particular commercial courts, recruiting qualified and honest caliber, and ensure the respect and implementation of court sentences.

Establish cultural awareness to match the implementation of the Economic Reform Program through an independent media institution.

Establish a logical and practical methodology and mechanism of communication with investors.

Seize reproduction of “authoritative businessmen” at the expense of family business.

Reconsider many of the economic agreements that have been signed by the Government but do not accommodate the current economic situation.