Understanding Yemen Needs for Investment
Yemen is one of the least developed countries which is struggling to shape up a better future for it growing young population, which is over 50% of its 21.6 million (2006).
Since reunification in 1990, Yemen has been a victim of politically motivated labeling as an unsecured investment environment; Yemen itself has been a target of international terrorism and suffered greatly of terrorist attacks. As such, Yemen has joined hands and become a strategic and active partner in international anti-terrorism campaign.
Consequently, Yemen was able, together with Gulf Cooperation Council (GCC), International Monetary Fund (IMF), and UK Department for International Development (DFID), to hold the 4th Yemen Consultative Group Meeting in London in November 2006, the outcome of which was that Yemen’s development partners reaffirmed their support for the efforts of Yemen to reduce poverty through macroeconomic stability and structural reforms.
Approximately US $4.7 billion was pledged for the four-year period 2007-2010. This is a significant increase in assistance, and represents over 85 percent of the Governments' estimated external financing needs. Those pledges increased to $5.31 billion by the end of Dec. 2007.
The pledges include $2.92 billion in grants and $2.39 billion in soft loan. The GCC pledges represent 50% of the total pledges with Saudi Arabia offering its majority, international and regional multi-laterals represents 36% of the total pledges and the remaining pledges are from traditional donors of the members of Organization for Economic Cooperation & Development (OECD).
By the end of 2007, 70% of these pledges were received by the government of Yemen, and 18.5% of the allocations have been signed into actual financing agreements. Furthermore, Yemen was reinstated in the U.S.'s Millennium Challenge Corporation's threshold program.
To enhance foreign direct investment inflow to the country, Yemen’s General Investment Authority, with collaboration with GCC, held the Conference for Exploring Investment Opportunities in Yemen from 22-23 April, 2007, targeting investors from GCC and other countries worldwide, resulting in considerable investment in real estate and tourism sectors.
Yemen is sparing no effort to accommodate all necessary requirements to be where it should be, a strategic integral part of its neighborhood, the Arabian Peninsula, and its regional organization of the Gulf Cooperation Council. The GCC has come forward to support Yemen’s integration into its economies and to show strong commitment to enhance Yemen's efforts to scaling up development and poverty reduction efforts. Pending full membership in the GCC, Yemen now is a member of several GCC ministerial organs and activities.
In a new development in this direction, H. E. Dr. Abu Bakr Al Qirbi Minister of Foreign Affairs of Yemen participated in the meeting of the Foreign Minister of the GCC countries which was held in Riyadh, Saudi Arabia, Sunday March 2, 2008. This is the third meeting Yemen attended in less than a year, which is a clear indication how fast Yemen status is developing with GCC.
Yemen has proven crude oil reserves of 10.9 billion barrels in 2007. Oil production in Yemen is executed by international companies. Additional exploration activities for 2007 have targeted offshore blocks where little development has taken place so far.
Yemen has 18.2 trillion cubic feet (Tcf) of proven natural gas reserves in 2007, of which 9 Tcf have been earmarked for the Total-led Yemen LNG (YLNG) project. The project is expected to produce 6.7 million tons per year (900 million cubic feet per day) of LNG. The plant plans to export approximately two-thirds of its production to the U.S. and the remainder to Asia. A few days ago, on Feb 21, Total Gas and Power in London, confirmed that Yemen LNG liquefied natural gas project is on target to come online on schedule at the end of this year.
The cost of this project has risen to $4 billion, $300 million more than the previous estimates. Shareholders are French Total (39.62%), U.S. Hunt Oil (17.22%), Yemen Gas Company (16.73%), Yemen General Authority for Social Security and Pensions (GASSP) (5%), Kogas (6%), SK Corporation (9.55%) and Hyundai (5.88%).
The project is the largest direct investment in Yemen, and it is expected to generate the largest single revenue for the country during the coming 20 to 25 years. Two out of four tanks being built for Yemen LNG are built by Mitsubishi Heavy Industries. The other two tankers are being built in South Korea.
Yemen has over 2200 Km of coastal line over the Red Sea, Gulf of Aden, Arabian Sea and the Indian Ocean, with very rich resources of excellent fisheries.
Yemen offers a very attractive tourism opportunities, were investment is extremely required for infrastructure and facilities. Yemen has three UNESCO recommended world heritage sites in Sana'a, the Capital, Shibam in Hadhramout and Zabid in the Tihama on the Red Sea, together with Soqatra Archipelago, which is one of its kind of ecological touristic attraction in the world.
IMF Executive Board in Septembers 27, 2007, welcomed "Yemen's generally favorable recent economic performance, including the decline in the poverty rate, as well as the progress being made on a number of structural reforms."
General Investment Authority and Embassy of Japan in Yemen are finalizing arrangements to hold the first Workshop for Japanese Companies on Trade and Investment in Yemen, from 13-14 April 2008, to which all Japanese interested companies are invited to.
One should not forget to mention Aden, which is the most important commercial business center in Yemen and the most important seaport, which was once, in the 1960's, one of the top three seaport in the world. Aden Free Zone is offering a unique opportunity to international trade and investment in the area with its distinguished location near Bab El Mendab Strait and with its proximity to the Horn of Africa and East African market in general.
To conclude, Yemen need direct investment from Japan so as to enable Yemen to be strengthened in face of all its challenges to secure economic and political stability which is vitally important to Yemen and to regional oil producers as well as all maritime nations. Yemen has a strategic location at the entrance of Bab el Mandab strait, which links the Mediterranean Sea and Red Sea to the Indian Ocean. The strait is one of the most strategic shipping lanes in the world. Yemen is the leading democratic country in the region with free market economy and is the most dynamic and promising country.
As it is said "a friend in need a friend indeed", and Yemen needs Japan's partnership.
Mr. Marwan Noman
Former Ambassador of the Republic of Yemen
5 March 2008 Tokyo, Japan