YEMEN: An Introduction to General Business Law

The Investment Climate in Yemen

Yemen has been classed by business analysts as being attractive for opportunists. The country is totally raw and requires development in almost every field. The scope of opportunities is so wide that it would suit an investor of almost every description and financial means.

The Investment Law has been amended a number of times since 1990 in order to meet the requirements of foreign and local investors. The main features of Investment Law No 22 of 2002 are as follows.

• Parity between a foreign and a local investor in terms of rights, privileges and obligations.
• A foreign investor may solely own their investment project without the sponsorship or participation of a Yemeni national and may also own land.
• Exemption from income tax, profit tax, real estate tax and other fees for a period of up to seven years.
• Exemption from Customs Duty on all machinery, equipment and materials needed for the project.
• Repatriation of profits and capital and a number of other relevant privileges granted to investors from other countries.

The Commercial Courts have exclusive jurisdiction to deal with and look into matters relating to investment projects.

Whereas the above-mentioned incentives offered by the Investment Law are certainly very attractive to a foreign investor, they will be concerned about a number of surrounding factors such as political stability, the independence of the judiciary and an efficient and clean civil service, which are vital to an investor and which have so far hindered foreign investment in Yemen.

In this respect, it is to be noted that stability in Yemen has been steadily and gradually improving. Yemen has sound relationships with the US and the EU. World Bank projects are on the increase and are progressing satisfactorily. The International Monetary Fund (IMF) deals with the country’s monetary problems sympathetically. The International Finance Corporation (IFC) has fully opened its doors to give loans to the private sector and the UN Development Programme’s reports are more than encouraging. Donor countries are showing more interest in Yemen than ever before.

As a result of these developments, investors’ concerns can be eased. It may be added that the degree of instability differs from area to area within the country. A foreign investor can choose the area suitable to his or her needs. Whereas inefficiency and the integrity of the Civil Service are questionable, there are a few good ministries and a number of first class civil servants perform their jobs honourably. The Investment Authority is one such body. Whereas the independence of the judiciary is, again, questionable, good, independent judges do function appropriately in the courts.