Invest in Yemen
Yemen is an open economy that welcomes foreign direct
investment in all sectors. Its stable political and economic
environment, well-qualified workforce and strategic position
in the south of the Arabian Peninsula make it an attractive
place for investment. There are a number of investment
opportunities that exist in Yemen, but one cannot begin to
talk about them without highlighting first the role that
Yemen has played in the ancient global economy.
During the eighth century B.C.E and the sixth century A.C.E,
Yemen derived its wealth from the control over the caravan
routes that crossed the Southern Arabian Peninsula – and
later from the control of maritime trade routes in the Red
Sea coast, the Gulf of Aden, and the Indian Ocean. Of
particular importance was the international trade in
frankincense and myrrh. The Kingdoms of Sheba, Qataban, and
Himyar cultivated spices and plants, and was one of the few
sources of the world’s supply for these items.
Yemen flourished during those times and became home to
sophisticated civilizations that constructed complex
irrigation systems and built imposing palaces and temples.
When the maritime trade superseded caravan routes, the
Kingdom of Himyar became dominant and ruled the entire
southern Arabian Peninsula.
In the last few years (2004-2006), Yemen has adopted the
principle of urgent economic reform and the need for strong
growth and mobilization. It is expected that 2007 would
undergo the attraction and flow of the biggest number of
investors and investments to Yemen. This is due to President
Saleh’s increasing support for investments issues and to the
government’s realization of the need for change and in
moving forward in this area.
“Yemen witnesses major transformations characterized by
the force of change, true will, and determination to shape a
flourishing future encompassed with peace and welfare in all
aspects of life. Thus, to cope with these changes, we have
started firm steps to open the doors for investors from all
nationalities with the hope of widening the scope of
development in Yemen and integrating its economy with that
of the surrounding countries and the world at large.”
Persident Saleh, February, 2007
Adopting these principles promises a positive economic leap
that will construct the foundations that encourage the flow
of foreign direct investments into the country. Among the
most significant objectives pursued by the government at
this stage is the creation of new job opportunities, and the
application of advanced technologies to minimize
environmental hazards that may emanate from the reforms. By
simplifying procedures to encourage and attract more
investments in the country, this will contribute towards
achieving the comprehensive development plans that were set.
The country also enjoys a number of natural advantages to
attract investments, particularly for tourism. It possesses
a varied topography with beautiful landscapes, and diverse
climates from the coastal mountains to the interior desert.
These features make Yemen a promising place for tourism
investment, especially when one is aware of the fact that
the country is an untapped market, and is getting underway
in many economic activities.
Attractive investment opportunities also exist in other
sectors in Yemen, from petroleum & mining, to, agriculture,
and in the manufacturing sectors. In pursuance of
diversifying the Yemeni economy, and for realizing the
importance of bringing about a greater leap in the
investment levels in all these sectors, the government has
identified various investment opportunities and objectives
aimed at bringing them into reality by promoting them to be
within reach of Yemeni, Arab and foreign investors at the
local and international levels.
We invite you to explore all that Yemen has to offer.
Whether you are considering establishing your own Yemeni
operation, working with a Yemeni partner, or gaining a
Yemeni base for access to the Gulf markets, Yemen is your
low-cost, competitive place to do business. We encourage you
to do your own research into the Yemeni economy and see for
yourself the progress and potential of the country.
Investment Law No. (22) was issued on 10/4/1991, and put
into force 10/7/1991. In 2002, the law was amended and
updated. The law aims to regulate, promote and license
investments in all aspects of economic activity.
The most important guarantee underlined by the law is the
prohibition of nationalization or seizure of the project
or placing it under guardianship “freezing its capital”.
Investment laws have also ensured the investor the liberty
of re-exporting foreign capital invested in the case of
liquidation or disposal, in addition to the freedom of
exporting the profits resulting from the investment.
Another aspect of the law is that it ensures equality
between Yemeni, foreign and expatriate capital without
distinction or discrimination between rights, duties and
The Legal and
the importance and the strong relevance of promoting
competition to create an attractive climate for investments.
To that end, it has issued a number of laws in addition to
the Investment Law , These include: The Commercial Law
(encourages investments and attract new investors in various
sectors), The Commercial Company Law (
facilitates registration procedures and attract foreign
trade investments), The Sales Tax Law (decreases sales tax
rate to 5%, and gives exemptions to most goods), The Customs
Law ( reduces most customs rate to 5% and makes exemptions
to most goods), and The Arbitration Law ( an important tool
for settling commercial disputes).**
Zones and Trade Agreements:
Free trade zones
(particularly the Aden Free Zone) are significant
ingredients for economic development in Yemen. The
government of Yemen has exerted earnest efforts to
strengthen its economic relations with other nations. This
has been crowned by more than 60 commercial and industrial
agreements and protocols in trade and industry which all are
aimed to: achieve sustainable economic growth, help reduce
existing trade barriers, and increase trade and investment
with other countries.***
Free Zone: In 1991, a Free Trade and Industrial
and the Republic of Yemen established the Aden Free Zone (AFZ).
The AFZ lies on a major world trading route, and provides
investors and businesses with a complete transportation
center – including the services necessary for the
transshipment of goods.
As a priority,
the government works to maximize the utilization of the
economic, geographical and human resources endowed in the
city of Aden by developing it as an international trade
center and as a source of economic growth and investment.
Greater Arab Free Trade Area (GAFTA):In 2002, Yemen
became a member of the Greater Arab Free Trade Area. GAFTA
requires member countries to undertake specific commitments
regarding the elimination of tariffs, non-tariff measures,
and rules of origin. In 1997, Yemen adopted the Executive
Program of the Agreement for the Facilitation and Promotion
of Trade for the implementation of GAFTA, which calls for
tariff reductions at a rate of 16% annually. Thus, tariffs
would be reduced to zero by 2010.
Trade Organization (WTO):
Currently Yemen has an Observer Status within the World
Trade Organization, and is moving strongly towards full
membership. Yemen continues to make amendments to
legislation to meet certain requirements to help advance in
realizing the benefits of joining the WTO (i.e., boosting
trade and attracting more investment).
Cooperation Council (GCC): GCC member states are the
primary trading partners with Yemen and are the most
significant importers of Yemeni [non-oil] products
(including agriculture and fisheries). In the meantime, they
top the list of countries exporting to Yemen. Commercial
relations between Yemen and the GCC gained additional
significance in recent years due to the signing of numerous
economic and commercial agreements and protocols. The GCC
secretariat and Yemen have established joint ministerial
councils, committees and working groups to study the
commercial legislative and legal aspects in Yemen and the
Trade and Investment Frame work Agreement (TIFA):
2004, Yemen signed a Trade and Investment Framework
agreement (TIFA) with the United States. The agreement
creates a joint council for discussing a wide range of
commercial issues and sets out a permanent dialogue with the
expectation of strengthening bilateral trade and investment
between the United States and Yemen. It is also considered
to be the gateway to WTO accession and a stepping stone to a
Free Trade Agreement with the United States.
Trade Agreements: Yemen maintains strong trade
relations with other countries. Currently, it has signed
more than 60 trade and investment agreements and protocols;
and it is dedicated to increase its participation in the
world market by reforming its laws and policies.
coordinates with the Ministry of Finance to ensure stability
the foreign exchange market. By extension, it has adopted a
floating exchange rate
policy. Moreover, its monetary policy has also entailed
allowing some flexibility for movement of the interest rate
of the Yemeni Riyal to reflect the real picture with respect
to liquidity and inflation. The
CBY has worked
towards developing its own resources of foreign currency
of improving the management of reserves through an
investment mentality, without prejudice to the standards and
controls of liquidity and security. CBY has decided to raise
the capital requirements of banks operating in Yemen to YR 6
billion, in a bid to enhance their conditions to meet
international standards and to keep pace with international
in the Banking Sector:
Banking in Yemen
has made significant progress with the introduction of
consolidated balance sheets of Commercial and Islamic Banks.
The balance rose to YR 660.2 billion by the end of 2004,
with an annual growth rate of 22.4%. National banks
increased the volume of their banking activities to YR 449.8
billion (i.e., by an increase of YR 91 billion over 2003).
The contributions of local banks rose to 68.1% of all
banking activities, with a growth rate of 25.4%. In the
meantime, Arab and foreign banks contributed about 31.9%
with an annual growth of 16.4%. The balance of deposits with
the Yemeni banking sector amounted to YR 576 billion; and
Yemeni Riyal deposits increased to YR 309.4 billion, with an
annual growth rate of 31.1%. The foreign currency deposits
increased to YR 266.9 billion or the equivalent of $1.4
billion by the end of 2004. Balances for loans, credits and
transfers by commercial banks operating in Yemen to the
various economic sectors reached YR 183.6 billion. Yemeni
Riyal loans and transfers however amounted to YR 101.5
billion; and foreign currency loans, credits and financing
rose to YR 82.1 billion. Investment in securities and
certificates of deposits rose to YR 187.8 billion at a
growth rate of 26.1% per annum. Local securities increased
to YR 156.4 billion, an increase of 41.9%.
By the end of
2004, international monetary agencies improved Yemen’s
credit rating from (C-) to (B+), due to improved efficiency
in monetary policies and credit conditions safeguarding
banking transactions. The government also took several
precautionary measures and safeguards in the banking system.
A special ministerial committee was formed to combat
money-laundering activities in accordance with a relevant
law that was issued in April 2003. CBY is also implementing
strict regulatory measures on all operations that entail
illegitimate fund earnings. The government is also
considering the prospect of joining a Uniform Banking
Network of regional Gulf states as part of regional
integration. The latter move would facilitate inter-banking
cooperation within the region. The government is also
considering the prospect of establishing a stock exchange in
Yemen as the government contemplates the implementation of
the privatization program.
There has been
good progress in establishing a sufficient infrastructure
for the various sectors. The advances that Yemen has
realized in the service and infrastructure sectors have been
linked to the need for providing investors with the adequate
means to establish businesses.***
Transportation sector has seen notable progress. In the last
ten years, there have been great improvements in the
infrastructure of airports, sea ports and roads. All were
developed and improved to link businesses and people
domestically and internationally..
have been upgraded with equipment and enhanced technical
capacities, meeting modern international classifications,
standards and requirements. An Air Control Center was set up
with five terminals for communicating with aircrafts by
satellite; and 14 international routes and 26 local routes
were opened up to link African states with Southeast Asia
and Gulf States through Sana’a Aviation Region. The
government has also modernized and maintained the country's
airports. Currently, construction of the new Sana’a
international airport is underway (at a cost of
$500million), and it is scheduled to be completed in 2008.
possesses a good road network which is an integral component
for realizing socio-economic development and the growth of
trade and investments. The road network in Yemen currently
consists of 10,000 km of asphalted roads and about 3,200
kilometers of gravel roads in addition to 54,000-60,000 km
of dirt roads. The road network is divided into strategic
roads that link more than one governorate, with
international linkage roads for passing through Yemen. The
length of these roads extends to 4,000 km and includes a
coastal strip of 1,800 km linking Yemen with Saudi Arabia
Sea transport is
also a major link – which stimulates world trade and
investment –that connects Yemen with international shipping
lines. The government has doubled investment in this sector
in excess of YR 48 billion by 2004. The investment helped
improve and expand capacities in the various ports. In 2005,
Dubai Port International (DPI) won the bid to operate and
develop the Aden and Mualla container terminal for the next
35 years. Investment on the infrastructure and upgrades of
the port are valued at $490 million, with $370 million made
as an initial investment in capacity expansion. These
improvements to the port infrastructure will drive yearly
container capacity to an estimated 1.5 million containers by
Yemen is also
party to a number of international conventions and treaties
on maritime safety and risk mitigation resulting from
illegal activities in regional and international waters.
infrastructure of telecommunication sector has witnessed
distinctive progress in the recent years. The progress in
this sector has been achieved by:
establishment of reliable telecommunication systems covering
all the areas and governorates of the country;
establishment of digital systems and satellite
reliable telephone system and internet services for
companies in most areas of the country;
private cable and wireless telecommunications for investment
Also, a regional
linkage project was launched connecting Yemen with
neighboring Saudi Arabia, the other the Arabian Gulf
Countries, and Jordan using digital transmission at a cost
of YR 630 million. Inter-connection using fiber-optics cable
also linked up the remaining regions of the country spanning
2,455 kilometers. Yemen and other countries have contributed
to the financing of the CMD2 undersea cable project
extending from Singapore in Southeast Asia, and passing
through the Middle East to Marseilles (France). Yemen, along
with Djibouti, also contributed to financing a subsidiary
Aden-Djibouti cable, linking Yemen with the CMD2. The
significance of CMD2 cable link is seen in supporting
international telecommunication to and from Yemen. The
capacity allotted for Yemen in submerged cable network is
345 telephone channels. PTC has signed an agreement with
Arabsat Corporation for partially investing in a satellite
channel in Arab satellite for local calls and the
interconnection of a number of remote regions through V-Sat
sector has witnessed considerable development. The Public
Electricity Corporation (PEC) was able to raise the average
generated electricity by 8.7% during 2003; and coverage by
the national grid expanded to 42.9%, with maximum load
capacity reaching 766.2 megawatts. Four new power stations
have been introduced in 2003, which are expected to generate
a total capacity of 60 megawatts. Other Power Stations are
being expanded to reach an additional 80 megawatts. The new
power stations and the expansion of others are meant to
boost power generation to meet the growing demand from
businesses and to meet the economic and social development
needed for growth.
Oil and Gas
unification, the government further promoted the development
and exploration of oil and gas in the country, inviting
international oil companies and creating a more efficient
mechanism to market concession areas. Revenues from oil
exports are a primary source of foreign currency and
financing for Yemen’s development plans and programs. Oil
contributes about 30% of GDP, about 76% of total government
revenues and more than 90% of export revenues. The General
Authority for Petroleum Exploration and Production was
created and is in charge of overseeing exploration and
production activities in the country. Giant international
oil companies, such as Exxon, Shell and Chevron maintain
exploration and production areas in different areas of
Yemen. The current petroleum map shows 84 concession blocs
and 26 exploration blocs, in which 14 companies operate.
There are nine production blocs where eight companies are
The discovery of
gas coincided with the discovery of oil in Bloc 18 in Marib/Al-Jouf
in 1984. Proven gas reserves are estimated at 17 trillion
cubic feet, against 31 million metric tons of liquefied
petroleum gas reserves. The total daily production is about
2.75 billion cubic feet per day. Some 2.5 billion cubic feet
is re-injected daily in order to preserve the latent
pressure and to keep oil production steady.
In 1996, the
Yemen Liquefied Natural Gas Company was created. Since then,
the company has been responsible for building and operating
the facilities for liquefying natural gas, production lines,
storage facilities, loading and ship docks and exports.
Recently, three agreements for the sale and export of
liquefied natural gas to international markets were signed
with international companies (i.e., Tractel of Belgium for
the export of 2.5 million tons per annum; Total of France
for export of about 2 million tons per annum; and KOGAS of
Korea for the export of 1.3 to 2.0 million tons per annum
for twenty years, beginning in 2008).
The private sector has contributed to the
development of the economy through expanding its activities
to include the industrial, agricultural, fisheries and
services sectors. As a result, its contribution to the
Non-oil GDP has increased to about 79-80% year ending 2004.
Also, the number of foreign companies operating in Yemen
rose to include 312 companies; and the number of foreign
companies doing business (either through agents or regional
distributors) rose to 5534 companies.
sector’s share is expected to increase when further
investment policies and rules that hinder economic growth
are removed, hence inviting and increasing FDIs.
Private sector organizations (Federation of Commerce and
Independent Chambers of Commerce) tend to improve their
activities and programs by way of strengthening their
research base in economic, professional and technological
fields which enables the private sector to be aware of new
changes, perform assessments of present conditions, diagnose
constraints and devise counter-proposals. It also organizes
and participates in exhibitions that promote Yemeni products
and services; and it establishes centers to provide
investors with various trade and investment services – such
as feasibility studies, administrative and technological
consultancies, information on technology import markets, raw
materials and exports markets.
government of Yemen understands the significance of
involving the private sector in the development process, and
recognizes the necessity to bring about a greater leap in
the investment levels for various sectors. It provides
investment opportunities in all sectors and aims at
promoting them at the local and international levels to be
within reach of Yemeni, Arab and foreign investors.***
Telecommunication, Transportation, and Energy:
the Telecommunication and Transportation sectors along with
Energy are vast, and further development of infrastructure
in these sectors is needed. In the telecommunication sector,
attention is focused to expand the telecommunication systems
and mobile services, and to increase the efficiency and
quality of service. In the transportation sector,
opportunities are available to further develop the sea
ports, air ports and roads.
also exist for international companies to participate in
joint ventures with Yemeni local companies for the
construction of power plants as well as to supply equipment
and technical information. Some of the opportunities in this
electric power station with all units using natural gas as a
power generation fuel;
-The exportation of liquid gas and the establishment of
export points, or putting in place a pipeline reaching
African Horn countries;
-Establishing gas-burning power stations to supply
electricity for large organizations whose consumption is
bound to increase in the near future;
transmission systems and distribution Centers;
power station on the Aden Free Zone to enhance the
electrical power for the industrial projects in the zone.
There is also a
need for projects in renewable energy, such as establishing
wind energy plants (wind farms), and solar thermal power
several investment opportunities in the manufacturing sector
in areas like food manufacturing and processing of fruits –
such as mangos, grapes, peaches; in addition, investment
opportunities exist for packaging and canning of fish and
apparel manufacturing due to the availability of high
quality Yemeni cotton. The construction industry is another
area for investment, mainly in production of cement, marble
and granite which are available in commercial quantities in
opportunities also exist in the petrochemical industry such
ammonia and urea plants for production of manure and other
ethylene plants for production of plastic of all types(
films, synthetic fibers, and building materials);
acetylene plants for production of pipes, hoses, electrical
cables, and fibers.
Opportunities also include:
of brick molds, and tile presses and polishing equipment.
-Manufacturing of rock wool, which is used for insulation.
Basalt can be extracted in the Sana'a, Dhamar, Hodediah and
-Manufacturing of glass, in which raw materials, such as
limestone, sandstone and sodium carbonates, are available in
large quantities in the Shabwa, Al-Baidha, Abyan, -Hodeidah
and Sana'a provinces. Opportunities to export to neighboring
countries are promising;
-Establishing of a smelter for melting scrap iron and
imported alloys to manufacture iron pipes for irrigation and
-The production of limestone used by a number of industries
and in agriculture and is available in the Sana'a and Dhamar
-The production of raw materials for manufacturing
detergents, in which there are many manufacturers in Yemen;
-Manufacturing of fertilizers for farmers to increase and
improve agricultural production. This industry could depend
on natural gas, which is available in large quantities but
has not been utilized yet;
aluminum processing plants;
sugar refining plants.
seen as a promising sector, given its impact in supporting
the national economy with new and renewable resources.
However, the sector lacks the infrastructure required to
support the growing number of tourists coming every year.
The infrastructure investment opportunities in this sector
-Construction of three or four-star hotels for tourists with
the required facilities and utilities in the provinces of
Sana'a, Ibb, Taiz and Hadramout;
-Building tourist villages with chalets, with amenities and
basic hotel services;
for water sports in Al-Khokha on the Red Sea and on Yemeni
tourist villages in places close to hot springs (i.e.,
Sana'a, Dale and Ibb provinces) with all amenities and basic
services. They should be designed for purposes of physical
land transportation for tourists;
entertainment facilities, movie theaters, theme parks and
resorts for sports, scuba diving, climbing, camping and
also invest in developing the infrastructure of the Yemeni
islands, and provide sea transportation for tourists
visiting the islands.
Oil, Gas, and Minerals:
views the development of natural resources including
petroleum and minerals in a positive manner, and has
accorded them special treatment. Article No.1 of the Law
states that prospecting for and extraction of oil, gas and
minerals are governed by special agreements. In the
petroleum sector, the Government has opted to enter into
production sharing agreements with foreign companies. In the
minerals sector, mining is governed by an Exploitation
Contract which is an agreement between the company and the
Government and is ratified by Parliament.
There are ample
opportunities for doing business in this sector. Concession areas for oil exploration span
through a vast area of Yemen, extending from the central to
the eastern parts of the country, in addition to off-shore
drilling in the Gulf of Aden, the Red Sea and around Socotra
The Petroleum and Exploration Production Authority (PEPA)
manages all concessions and promotion activities in Yemen.
PEPA has conducted three major international concession
license rounds and a fourth international bid round is
expected to be announced on July 2007.
average current production of oil reached about 400,000
barrels per day, whereas the oil in place of the productive
blocks reaches 7.9 billion barrels in reserves. Production
of 2.1 billion barrels took place by the end of June 2005,
whereas the gas reserves in Yemen reaches about 17 trillion
the mineral sector include;
and extraction of gold.
-Extraction, breaking and burnishing of granite to make
granite tiles. (Granite is available in large quantities in
the Shabwa, Al-Baidha and Abyan provinces; and opportunities
to export are promising).
exploitation of copper, nickel and cobalt.
-Exploration and exploitation of iron.
information on available opportunities on
the oil sector visit the Ministry of Oil and Minerals
information on available opportunities on
the minerals sector visit Yemen's Geological Survey and
Mineral Resources Board
government and the private sector helped advance the
development and expansion of the fisheries sector in Yemen.
Plans for maximizing fisheries production over recent years
contributed to raising the value of fish exports from $33
million in 1996 to about $213 million in 2004. Plans are set
to realize financial returns exceeding $500 million by the
end of 2010 in this sector. Opportunities in this sector
fishery plantations in fresh and salt water.
fishery service units.
A Guide for U.S.
Companies on doing business in Yemen:
Opportunities in Various Sectors:
Plant to Manufacture
Est. Investment U.S. Million
Ma’areb, Bilhaf, Ma'bar
Gas power plants: A gas turbine plants composed of four
turbines with a 400 megawatt capacity.
Portland cement and packaging: 50 kg bags
Aden, Hodaiah, Sana'a, Al-mukala, Lahij
Provide appropriate housing for low- income earners and
Oil and Gas
Aden refinery, Safer refinery (Ma'reb)
Modernizing and developing the existing refineries to
increase production in conformity with
Creating a marble and granite extraction: Cutting and
glazing industry for ornamental stones.
Creating a company for maritime transport in a
partnership between the private and public sectors.
Building a new port in Dabbam Hadramut .
Bilhaf industrial zone
Exploiting and manufacturing the glass materials. Glass
industry, crystal industry, Ceramic industry.
Aden, Hodeidah, Sheboa-Bilhaf
Iron fusion and shaping by using scrap iron and raw iron
(imported foundries) to produce iron for armament and
other iron products.
Liniralkyl fuel: Produce raw materials used in
Hospital for cancer research and treatment.
From Safer to Sana'a
200 Km Natural gas pipeline.
Hospital for orthopedics, brain surgery and neurosurgery
Aden - Hodaidah - Mukalla
Caustic soda used in soap, chlorine, hydrochloric acid.
Hospital for kidney diseases and surgery.
Hospital for heart diseases and surgery .
Tourist resort and village on the Abu Zahr Khaokha beach
Fruit and vegetable processing plant