Gleam Of Economic Hope
Yemen, grappling with violent conflicts, al Qaeda militancy and severe poverty, is not everyone's idea of an alluring investment opportunity18/03/2010 | By Ulf Laessing
Indian entrepreneur Ravinder Singh waxes lyrical about the advantages of doing business in a country that attracted little attention until al Qaeda’s Yemen∞based wing said it was behind a botched December 25 attempt to blow up a US airliner.
“I’m amazed at the quality of Yemeni manpower,” said Singh, who set up a steel plant in the southern port of Aden in 2005. “I’ve worked in India for more than 30 years in several places, but I’ve never seen manpower with the commitment of Yemenis.”
This might seem an unusual tribute in a land where UN agencies estimate that only 54 percent of adults are literate and only 55 percent of children go to school. Most Yemeni men spend half the day chewing qat, a mild amphetamine-like drug.
But Singh, whose plant’s yearly output of 100,000 tonnes of steel covers a sixth of Yemen’s demand, described his workers as intelligent, with “virgin minds” that were easy to train.
He thinks Yemen is ripe for a spurt of industrial growth, an outlook at odds with widespread economic gloom focused on the country’s dwindling oil production and collapsing water supply.
Singh, who works for the Yemeni-Saudi Arab Iron and Steel Corp, is overseeing a $1.6bn expansion of the Aden plant to boost capacity to 1.5 million tonnes a year within a decade.
The company is building 150 factory sheds and housing units for investors who, Singh is convinced, will flock to the plant which now employs 400 Yemenis, a number he plans to increase.
The factory is near the road leading to Lahej province, scene of many separatist protests against President Ali Abdullah Saleh’s government in the north, but this doesn’t bother Singh.
Nor is he worried about al Qaeda’s appeal for young Yemenis. “I have met hundreds of them. They want to work, they want to participate,” he said.
Population Pressure
The southern Arabian peninsula country could certainly do with an economic success story – and more jobs for its young population of 23 million, which is set to double in 20 years. Already 45 percent of Yemenis live on less then $2 a day.
Some investors are deterred by the weakness of government authority in many areas. Diplomats say other obstacles to investment include rampant corruption and cronyism, with top jobs often assigned on the basis of loyalty not competence.
Despite Yemen’s meagre resources, funds are available for infrastructure and other projects. Donors pledged $4.7bn in 2006, but the bulk of the money has yet to be spent.
“Many projects get delayed because you find few resources or competent people in ministries,” said a diplomat working for an international organisation in Sanaa. “Often you have to hire expatriate staff to realise a project.”
For better or worse, Yemen is one of the few countries in the world without a McDonald’s or Burger King restaurant – but it is at least trying to draw foreign investors to the Aden free trade zone, where Singh’s steel plant is located.
For years the zone has offered tax∞free profits, no limits on ownership and cheap land to investors, who have committed about $800m so far, according to its manager Abdul-Galil al-Shaibi.
“We have been moving fast but in my view not fast enough,” Shaibi said, adding that the zone hoped to double investments within five years with the help of Yemenis living abroad.
“We have cheap labour...The process is to interest Yemenis in their country, to develop it so others will come,” he said.
Air of Decay
Aden, once one of the world’s biggest ports, is home to much of Yemen’s oil and gas industry, but the city’s drab residential blocks and potholed roads testify to years of neglect.
The port authority building, with its English signboards and wooden stairways, has changed little since British rule, which ended in 1967 and gave way to a Soviet-backed republic.
Many southerners say they were better off before their former socialist state joined the north in 1990, only to fight and lose a war for secession four years later. Since then, they complain, northerners have grabbed most jobs and resources. Yet there are small signs of new economic activity.
Dubai port operator DP World is expanding the container port, hoping Aden will become a regional hub for ships sailing to or from the Suez Canal – despite the threat from piracy in the Gulf of Aden. It has up to 700 staff and is seeking more.
“We’re working with a local university to help us evaluate and assess staff,” said John Fewer, a DP World adviser in Aden.
Yemen is also in talks with investors to modernise the ailing Aden oil refinery, although experts say this will be daunting job requiring billions of dollars. The refinery was built in the British era and damaged during the 1994 civil war.
Preparatory work for a sugar refinery to be built by Saudi investors has just started, Shaibi said. Some other plans for the free zone are unlikely to see the light of the day, such as construction of a new airport. The existing terminal handles only a few flights a day.
