Political Stability Will Provide Opportunities for Investment in the Industrial Sector

Sawt Al-Amal (Voice of Hope) – Hebah Mohammad

The reality of investment in the industrial sector in Yemen is going through a difficult stage, and it has not developed or expanded for years in a country worn out by conflicts. Additionally, investing in the industrial sector is mentioned as if it were a wish. Nevertheless, despite the efforts of the competent authorities to promote investment in the industrial sector, there are still only a limited number of industrial investments in the economic scene.

The investment situation in the industrial sector, as well as the main challenges and solutions put forth by the competent authorities, were discussed by “Sawt Al-Amal” newspaper.

Investment Opportunities in the Industrial Sector

Investment opportunities in the industrial sector are countless. There are more investment opportunities in the industrial sector as new fields enter the investment field. In addition, a number of investment opportunities were promoted, including three sites with areas that can accommodate more than 100 investment projects, including an industrial project and two tourism projects.

During the conference, a number of competitive advantages of Al-Hodeidah Governorate were discussed, including how the city of Al-Hodeidah is an industrial city and how its external environment is conducive to investment. These advantages create investment opportunities in the industrial sector and others. Its proximity to regional and local consumer markets, its location near international sea and air commerce routes, and the availability of logistical investment options all contribute to this.

During the conference, Yasser Al-Mansour, the Head of the General Authority for Investment, explained that there are numerous investment opportunities in Al-Hodeidah including, the allocation of an intermediate industrial zone for the sites of the port of Al-Hodeidah and the ports of Salif and Ras Issa. Accordingly, the industrial zone in Al-Hodeidah serves as an important site for the Yemeni ports on the Red Sea. Besides, investment opportunities in the industrial sector should be selected on the basis of reducing the target import bill by increasing the local added value.

He pointed out that the General Authority for Investment worked to build a list of investment opportunities for Al-Hodeidah during the year of 2021. It also works to coordinate the documentation of sites for investment opportunities, stressing that there are incentive offers that will be presented to investors.

Al-Mansour also claimed that there is a decrease in the number of projects compared to the period prior the beginning of the conflict. Among the positive indicators is that the largest Yemeni industrial groups obtained funding to expand their projects with $70 million. This is a promising sign and an incentive for capitals to invest in the industrial sector. Through the investment conference, studies will be carried out in the activities of the food manufacturing industry and building materials in the industrial zone of the city of Al-Hodeidah.

Regarding the situation of investment during the conflict, he added that in light of the conditions of the ongoing conflict, some economic activities disappear and others prosper. The food, pharmaceutical, plastic, and clothing industries, among others, all had prosperous economic activity during the conflict. In addition, he urged all investors in the manufacturing sector to begin their investment projects.

According to a 2010 World Bank report, investors were very reluctant to invest in Yemen in 2006. The total foreign investment amounted to $144 million. The report indicated that during the donors’ conference held in Hague in 1995 and in London in 2006-2010, Yemen received large promises amounting to five billion dollars. However, in 2010, the World Bank concluded that Yemen had received only 10 percent of the 2006 package.

Alaa Ibrahim, Director of the General Authority for Investment in Lahj, said, “the branch of the General Authority for Investment in Lahj Governorate is striving to consolidate the relationship between it and the investors by providing the branch with more facilities. It also seeks to activate flexibility and smoothness in the procedures for registering their investment projects and issuing their licenses, in addition to addressing any problems they encounter when implementing their vital projects. Additionally, it strives to achieve the goals.”

In the annual statistics report of the General Investment Authority for the year of  2016, 55 investment projects were registered with a capital of 16.3 billion riyals and fixed assets of 10.7 billion riyals. It was distributed over ten provinces.

Among the investment opportunities, according to the annual report of the Ministry of Industry and Trade for the year of 2021, three sites were handed over to establish three various investment projects in the industrial zone in Al-Hodeidah. During the year 2022, 61 projects will be delivered, which were announced at the first investment conference in Al-Hodeidah at the end of January 2022. In addition, the competent authorities opened Socotra Island Mineral Water Factory in Sana’a.

According to the report, it was emphasized that the establishment of investment projects in all fields has support and encouragement by the Ministry through providing all facilities. In addition, it encourages the national capital for investment, especially in the food and pharmaceutical fields. This would lead to the growth of the national economy and the advancement of local production.

Farouk Al-Mowaffaq, the director of the General Authority for Investment, Ibb branch, told “Sawt Al-Amal” that industrial projects in Ibb are few compared to some other governorates. This is due to the fact that Ibb governorate has its unique characteristics as a tourist governorate in the first place rather than being an incubator for industrial projects. However, there is a tendency by the authority’s presidency, in coordination with the General Authority for State Lands and Real Estate, to allocate land as an industrial city that can contain many industrial projects.

Obstacles to Investment in the Industrial Sector

The annual report of the Ministry of Commerce and Industry for the year of 2021 mentioned some of the difficulties facing investment in the industrial sector, which are represented in the lack of adequate industrial infrastructure, as well as the lack of specialized investment research and development centers.

A number of Yemeni businessmen explained, in the ministry’s annual report, their enthusiasm for establishing industrial zones, pointing out that the problem of investment in Yemen lies in the routine procedures, the lack of land, the permanent disputes over it, as well as the lack of infrastructure. The report mentioned that the technical problems are represented in the scarcity of technical and trained manpower for the implementation of industrial projects, the lack of external grants or loans, as well as the absence of investment projects aimed at achieving tangible objectives in industrial development.

A number of specialists in Yemeni industries believe that investment in the industrial sector suffers from several problems, the most prominent of which is the lack of encouragement for the industrial investor, and the failure to meet the industrial sector’s demand for investment funds and facilities by banks and commercial financial institutions needed by industrial projects. In addition, there is no information for the industrial investor that are necessary when an investor decides to start his investment project, which presents difficulties for the investor and discourages small investors from investing in the industrial sector.

Farouk Al-Muwaffaq, the director of the office of the General Authority for Investment, Ibb Governorate branch, added to “Sawt al-Amal,” “the lack of land is one of the obstacles facing investors. This is true especially when the investors buy or rent it before referring to the General Investment Authority, in order to ensure that the site is suitable for establishing the project and that it is subjected to all engineering, environmental and technical requirements. The presidency of the Commission pays a great attention to improving the image of Yemen in general, as well as promoting investment through all available means. Furthermore, the authority’s leadership looks forward through the second investment conference that will be held in Sana’a, that next year will witness a great deal of investment in industrial projects.”

“One of the obstacles that the investment office faces in Ibb governorate is the shortcomings in the media aspect, because it does not try to highlight its role in clarifying the importance of investment and its positive effects that the General Authority seeks. Additionally, one of the obstacles to investing in the financial system industry sector is represented in the transfer process that impedes the movement of investment,” he added.

He stressed that political and security stability will improve macroeconomic indicators, which is a key factor in attracting investments of all kinds, because stability creates a suitable environment for attracting domestic and foreign capital. This is because the investors are looking for the location of the country and its political stability. Due to the fact that Yemen is a country where there is no security and stability, this was a hindrance and a barrier for many investors.

Treatments and Solutions

The annual report of the Ministry in 2021 mentioned some solutions, including studying and paying attention to the issue of infrastructure related to industrial investment zones, as well as the need to start strengthening a work mechanism that achieves benefits from investment research and development centers in industries with these centers. Besides, a regulation should be issued to regulate land management for investment projects in industrial areas.

He stressed on the need to develop laws and legislation related to investment in general and all industrial investments in particular, and to study and pay attention to the issue of infrastructure related to industrial zones, in addition to the need to develop a project to operate industrial zones and prepare them for investment. The role of the General Investment Authority in providing all facilities for the construction of many projects, whether service or industrial, will improve the economy in the country. Thus, the per capita income level improves by creating new job opportunities and improving the standard of living.