# ![](media/image1.jpeg){width="0.7395833333333334in" height="0.78125in"}  Doing Business In Yemen: A Country Commercial Guide for U.S. Companies

# INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 2006. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

-   [Chapter 1: Doing Business In
    Yemen](#chapter-1-doing-business-in-yemen)

-   [Chapter 2: Political and Economic Environment](#section-1)

-   [Chapter 3: Selling U.S. Products and Services](#ch3)

-   [Chapter 4: Leading Sectors for U.S. Export and Investment](#ch4)

-   [Chapter 5: Trade Regulations and Standards](#ch5)

-   [Chapter 6: Investment Climate](#ch6)

-   [Chapter 7: Trade and Project Financing](#ch7)

-   [Chapter 8: Business Travel](#ch8)

-   [Chapter 9: Contacts, Market Research and Trade
    Events](#chapter-9-contacts-market-research-and-trade-events)

-   [Chapter 10: Guide to Our Services](#ch10)

#   {#section .unnumbered}

# Chapter 1: Doing Business In Yemen

-   [Market Overview](#marketoverview)

-   [Market Challenges](#market-challenges-return-to-top)

-   [Market Opportunities](#market-opportunities-return-to-top)

-   [Market Entry Strategy](#market-entry-strategy-return-to-top)

## Market Overview [**Return to top**](#chapter-1-doing-business-in-yemen)

The Government of Yemen is currently working with the private sector to
develop a strategic plan to enhance the business environment. It aims to
provide more incentives than those currently provided under Yemen's
investment law, accelerate Yemen's accession to the WTO, execute free
trade agreements with the European Union and the United States of
America, and encourage privatization, particularly in the field of
telecommunications.

The introduction of the General Sales Tax (GST) and the reduction of
petroleum subsidies are part of the government's strategic plan to
improve transparency, reliability, and efficiency of revenue
mobilization in Yemen.

Yemen presents a wealth of opportunities and a variety of challenges to
international businesses interested in working in the Yemeni market. The
Yemen Country Commercial Guide presents a comprehensive look at Yemen\'s
commercial environment using economic, political, and market analysis.

The ROYG held its first general presidential election in September 1999,
electing the General People's Congress (GPC) party candidate, Ali
Abdullah Saleh (the incumbent), as president for a five-year term
(extended to seven years through a February 2001 constitutional
amendment). His election, along with the parliamentary elections in
April 1997 and April 2003 assured a solid parliamentary majority for the
GPC and strengthened internal political stability.

According to the Central Statistical Organization's most recent report
(2004), the population of Yemen was 19.7 million. More than 42% of the
population lives below the poverty line. The ROYG has sought to improve
the economic situation of the people and increase development in
different economic sectors. For this purpose, the government established
the Poverty Reduction Strategy Paper (PRSP). The PRSP includes a number
of strategic projects financed by foreign donors through the Social Fund
for Development (SFD), Public Works Project (PWP), and the Social
Welfare Support Fund (SWF).

SFD seeks to reduce poverty, affecting 75% of the population, by
improving living conditions and providing income generating
opportunities for the poor. SFD was the first organization in Yemen to
help introduce micro-finance projects. Since its establishment, SFD has
used internationally recognized best practices in the field of
micro-finance. SFD provides grants for set-up, training, and technical
assistance to enable local organizations to provide sustainable
micro-finance services.

The Public Works Project is a government-run agency which seeks to
deliver and improve services to dense population groups in cities by
building roads, hospitals, dams and schools.

The Social Welfare Support Fund focuses on lending to small and micro
enterprises with soft loans and long grace periods.

Ensuring environmental sustainability for Yemen's future is crucial. Few
countries face as difficult a challenge as Yemen in environmental
sustainability, particularly water depletion. The depletion of
groundwater has a direct impact on poverty, employment, and the social
order. Given Yemen's heavy reliance on rainfall capture and diversion of
floods for irrigation, watershed protection is a major priority.
Groundwater management is now incorporated into joint urban and rural
planning efforts. In addition, the rural economy's dependence on
agriculture has created the need for a new focus on soil conservation.

Under President Saleh\'s leadership, Yemen has remained committed to the
comprehensive economic reform program initiated in 1995 under the
guidance of the International Monetary Fund (IMF) and the World Bank.
The Yemeni government has floated and stabilized its currency, reduced
inflation from 70% in 1994 to 14.5% in 2004, and eliminated government
subsidies on basic commodities such as wheat, and wheat flour. Also, in
mid-2005, the Yemeni Government reduced subsidies from oil derivatives.
Confidence in the Yemeni rial was weak as many consumers rushed to
dollarize their savings. This caused the rial to drop to 197 YR/1USD.
Recently, the Central Bank of Yemen was able to supply the market with
USD 236 million, which stabilized the currency at 192-193 YR/1USD and
reduced inflation to 10.8%. Rising world oil prices have restored
Yemen\'s foreign exchange reserves to USD 4.6 billion..

The ROYG committed itself to implementing the projects and programs
stated in the World Bank's Poverty Reduction Strategy Paper during
fiscal years 2003-2005. The program provides 70% of the funding for
development and infrastructure projects with financing for the remaining
30% from the international community. The ROYG, with the assistance of
the World Bank and the International Monetary Fund, joined the
consultative group meeting, which took place in mid-October 2002 in
Paris, France.

In 2001, Yemen resolved its debt issues with Kuwait and Saudi Arabia,
thereby unblocking soft loans for infrastructure projects from these
wealthy neighbors. In July 2002, Yemen rescheduled its debt owed to
Japan and the United States, and in August 2002 rescheduled debt owed to
Italy. Russia's accession to the Paris Club in September 1997 proved
fortuitous for Yemen's total bilateral debt obligations. Eighty percent
of its debt to Russia, (primarily former South Yemen's debt to the
former Soviet Union for arms purchases), was forgiven outright. The
remainder of the Russian debt, along with debt from other Paris Club
members, was rescheduled. In June 2001, Yemen\'s stock of debt to Paris
Club members was also rescheduled as donors provided an \"exit
treatment\" that allows Yemen to reach a sustainable indebtedness level.
Through a World Bank grant, most of Yemen's commercial debt has also
been settled, leaving total external outstanding debt at USD 5.757
million as of December 2004.

According to the Central Bank of Yemen (CBY) Annual Report for 2004,
Yemen's total exports were valued at USD 3.58 billion for 2003 and USD
3.94 billion for 2004, while the country's total imports were valued at
USD 3.66 billion for 2003 and USD 3.96 billion for 2004. Furthermore,
Yemen's GDP was valued at USD 11.8 billion for 2003 with a growth rate
of 3.70%, while 2004's GDP was valued at USD 13.8 billion with a growth
rate of 4.02%.

After adopting key economic reforms in the 90s, progress stalled in
2001. In October 2004, a World Bank report noted, "because of the
slackening pace of reforms \[in Yemen\] downside risks to medium-term
macro-economic stability have increased." In the summer of 2005,
however, the ROYG took steps to restart reform, partially introducing a
General Sales Tax (GST) and reducing petroleum subsidies, both part of
the government's strategic plan to improve revenue mobilization in
Yemen. Yemen still has considerable ground to cover in order to comply
with WTO standards, but in 2005 the ROYG took the significant step of
streamlining tariff policies and is in the midst of a number of
administrative and legal reforms.

With the implementation of tax incentives for merchants, Yemen's trade
environment is steadily improving but more government focus is needed on
privatization and regulatory reform. An April 2004 Presidential
directive decreed that land be granted to investors at no cost and that
the investment projects enjoy profit tax exemption if the project
capital is more than 10 million USD. A privatization program started in
1998 with sixteen enterprises in industry, tourism, and trade, came to a
standstill in April 2001 when Parliament refused to approve a World Bank
credit to fund a larger, long-term privatization program. However, few
years later, the government funded the privatization program. Also,
according to the technical Privatization Office, in 2005, the government
privatized two enterprises and is working to privatize three more by the
end of 2006.

The country still has an inefficient, overstaffed, and sometimes corrupt
bureaucracy that must be streamlined, appropriately compensated and
adequately trained. The government needs to take action to stem the
current annual population growth of 3.5 percent, which is consuming
scarce renewable water resources at 140-150% of recharge rate. It must
create a transparent legal environment that can objectively and
independently resolve disputes, and a sound financial market. Finally,
the government must find a way to extend its authority appropriately
throughout the entire country. Further complicating the government's
efforts is the fact that the public's tolerance for further economic
hardship brought by reform is wearing thin, as evidenced by the riots
that occurred in several cities when fuel subsidies were reduced in
2005.

A lack of adequate infrastructure, coupled with an uncertain security
environment, continues to impede foreign investment; nevertheless,
risk-tolerant investors can find attractive opportunities in Yemen.
According to the CBY 2004 report, the United States is among the top
five exporters to Yemen, with exports totaling USD 185.08 million in
2004. At the moment, there is almost no gas production in the country,
but U.S., French and Korean oil companies, along with the Ministry of
Oil and Mineral Resources, formed a liquefied natural gas (LNG) joint
venture to process Yemen\'s 17 trillion cubic feet of proven natural gas
reserves for export. Companies such as Canadian TransGlobe Energy and
South Korean KoGAS guaranteed to buy the LNG. Yemen's USD 3.5 billion
LNG project is scheduled to come on line by 2009. The project will
involve construction of gas-gathering facilities, a pipeline to Balhaf
at the Gulf of Aden, and an LNG plant. A second pipeline will carry gas
for local consumption to Sana'a.

In the port of Aden, a container terminal owned and operated by the Port
of Singapore Authority opened for business in March 1999. In October
2003, the government cancelled that contract. In late 2005, Dubai Port
World (DPW) assumed management of the container terminal. The Port of
Aden raised 5.3 billion Yemeni rials (USD27.6 million) in customs
revenue in the first half of 2005. Exports via the port totaled 55,942
tons of products, including fish, sweets, bananas, perfumes, and canned
tuna, among others \-- items that traditionally make up the largest
share of Yemen\'s exports. .

The development of the Aden Free Zone also presents opportunities for
manufacturing companies to process and ship products to the Gulf, the
Indian subcontinent, and East Africa. Plentiful stocks of fish and
shellfish provide opportunities for packing and export. Yemen's unique
culture, history and geography offer attractive prospects for tourism
development.

Although the government appears willing to allow private investors to
expand Yemen's woefully inadequate electricity generation capacity, the
first attempt at a build-own-operate power plant was not successful.
Likewise, three years of negotiations with U.S. Northwest Regional Power
LLC, to build a 400 MW power facility in Marib broke off in late 2002.
The USD 45 million project was awarded to an Iranian company after the
Iranian President's visit to Yemen in May of 2003.

Another U.S. consulting company was invited to do a feasibility study
for another power plant in the Marib area. Other projects are currently
in the planning stages, but government revenues are insufficient to
guarantee commercial power purchase contracts. In addition to the
electricity sector, the World Bank and other donors are financing road,
water and sewage treatment projects.

The Embassy believes export potential exists for oil field equipment and
services; irrigation and agricultural equipment; electricity generation,
transmission and distribution equipment; hotel and restaurant equipment;
medical equipment, supplies, and pharmaceuticals, and telecommunications
equipment and services. The U.S. Commercial Office periodically posts
unplanned market research, tender announcements on Yemeni projects, and
commercial highlights for the benefit of U.S. businesspeople on the
Department of Commerce Website (see chapter 10). Details on the tenders
are available at: [www.export.gov](http://www.export.gov/).

The Ambassador and Deputy Chief of Mission (DCM) take U.S. trade
promotion seriously and are always willing to meet visiting
representatives of U.S. businesses. Those interested in doing business
in Yemen should contact the Embassy for the latest information
available. Five Political/Economic Officers, a Yemeni Commercial
Specialist, and a Yemeni Agricultural Trade Specialist support the
efforts of the Ambassador and the DCM. The Embassy\'s Agricultural Trade
Officer resides in Riyadh, Saudi Arabia.

## Market Challenges [**Return to top**](#chapter-1-doing-business-in-yemen) 

[Major Trends and Outlook]{.underline}

Real GDP expanded by 5.53% in 2004 compared with 4.48% in 2003. The
medium-term challenges are formidable. With no significant findings in
the oil sector, most analysts expect real GDP growth to stay at
approximately 4.02% for the next few years.

The ROYG approved a budget of USD 6.08 billion for 2006, with a deficit
of USD 656 million.

In mid 2005, the Yemeni rial fell to 192-193YR/1USD. The ROYG announced
reduced subsidies on oil derivatives. Confidence in the Yemeni rial was
weak as many consumers rushed to dollarize their savings, which caused
the rial to drop to 197 YR/1USD. By the end of 2005, the Central Bank of
Yemen (CBY) pumped USD 476 million into the market in order to control
the currency depreciation. In January 2006, the CBY pumped USD 65
million into the market and another USD 96 million in February.

Yemen's budget situation remains precarious due to its high reliance
(70%) on oil export revenues. In addition, according to the CBY,
unfavorable weather, rising public expenditures and an increase in world
commodity prices caused the Consumer Price Index (CPI) to increase by
10% in 2004 compared to 13.6% in 2003. In 2005, the Ministry of Social
Affairs and Labor estimated that Yemen needed at least 210,000 new jobs
annually to engage the rapidly growing labor force. It also estimates
the rate of unemployment for 2006 at 17%. Local and international
organizations, however, estimate the rate of unemployment in Yemen at
more than 25%.

Private sector confidence in Yemen's economy had been weak since 1990
due to civil unrest, rampant inflation, and an unstable currency. This
began to change in recent years as the macroeconomic picture brightened,
the rial stabilized, and the border dispute with Saudi Arabia was
settled. Private construction activity, especially in Aden, is
expanding, although at a cautious pace. The availability of foreign
consumer products in major urban areas continues to increase, notably in
foodstuffs and pharmaceuticals, but much is smuggled into Yemen from
Saudi Arabia, the UAE and other neighboring states.

The Aden International Airport, nearly destroyed during Yemen\'s 1994
civil war, was officially opened in May 2001, and has been completely
renovated and modernized. Other prospects in Aden include the
privatization of the Aden Oil Refinery Company and the \"Aden District
Park\".

[Balance of Payments:]{.underline}

Yemen's overall balance of payments in 2004 realized a surplus of USD
532.3, against a surplus of USD 335.6 in 2003, primarily as a result of
rising world oil prices. Yemen's bilateral and multilateral debt picture
continues to improve. Debt to Russia was reduced dramatically with
Russia's accession to the Paris Club. Additionally, in 2000 the World
Bank financed a commercial debt reduction program. In June 2001, the
Paris Club members agreed to reschedule Yemen\'s stock of debt as Yemeni
officials committed to continuing the country\'s economic reform
program. As a result, Yemen\'s outstanding debt for 2004, after
rescheduling, is approximately USD 5.757 million as of December 2004, a
level considered sustainable by international financial institutions.

[Infrastructure]{.underline}: Yemen's infrastructure is inadequate for a
country of more than19.7 million people. According to the Central
Statistical Organization's recent report, the Yemeni population will
double in 23 years. Yemen's maximum electricity capacity is 600
megawatts, but actual output is between 350 - 400 megawatts, and that
reaches only 30 percent of the population. Water and sewage services are
even less adequate.

Most citizens of Taiz, Yemen\'s third largest city, receive public water
only twice every 30 days. In Sanaa, raw sewage runs onto major
thoroughfares in some parts of the city, but projects are underway to
build sewage systems in the remaining districts. The World Bank and
other donors are financing projects to improve water and sewage
services. In addition, in Sanaa, a joint U.S.-Yemeni water drainage and
flood control project called the Sailah, was undertaken in 1996 and is
estimated to be finished by the end of 2009.

Seaport and airport operations are steadily improving. In September
1999, the Aden Container Terminal (ACT) officially opened. The port
mainly serves as a trans-shipment hub, but attempts are being made to
increase the percentage of local cargo through the development of the
industrial and warehousing estate. Both the container terminal and
industrial estate are run by Dubai Port World (DPW). The industrial and
warehousing estate called Aden District Park (ADP) was launched in
November 2002. The first 30 hectares are ready for occupation, and there
are plans to expand capacity.

The Port of Hodeidah, Yemen's busiest domestic port, experiences delays
in unloading grain and container vessels. The Port of Salif, which is 70
kilometers north of Hodeidah port, is also handling grain vessels and
reducing congestion at Hodeidah.

Aden International Airport has been renovated, including its terminal,
tower, navigational equipment and runway. The first and second
renovation phases of the Sanaa International Airport were completed in
2005. This project is partially financed by a loan from the Arab Fund
for Social and Economic Development. Taiz International Airport has
always operated without navigational equipment, despite experiencing the
most violent thunderstorms in Yemen. On March 1, 2006, the Civil
Aviation & Meteorology Authority (CAMA) signed a USD 114 million project
with a Chinese company, Beijing Urban for Construction and Engineering
ltd., to build another international airport in the Jader area, Sanaa.
The work is scheduled to begin on April 01, 2006 and end on September
30, 2008.

On September 19, 2005, Yemenia, the only national airline carrier in the
country, announced its intention to support the growing requirements of
its fleet by buying 10 new airplanes. Boeing and Airbus each negotiated
offers for the deal with Yemenia. A decision is expected by Yemenia in
the near future.

Decent, two-lane paved roads connect Sanaa to Aden, Hodeidah, Sa\'dah,
and Taiz, but the terrain is mountainous and difficult. It often takes
12 hours to haul a 40-foot container the 346 km from Aden to Sanaa or 6
hours for the 226 km from Hodeidah to the capital. The Arab fund for
Social Development is currently financing a major road project
connecting the city of Mukalla in the Hadhramout governorate to the
Omani border. Nearly 30% of the project is complete. A direct link
between Sanaa and Wadi Hadhramout and Mahara governorates was
inaugurated in early 2002. A parallel new road linking the city of
Amran, through Sanaa to Aden, is projected to minimize pressure on the
existing road. The estimated cost of the project is approximately USD
1.5 billion.

## Market Opportunities [**Return to top**](#chapter-1-doing-business-in-yemen)

The United States supports Yemen's accession to the WTO and is extending
technical assistance to help Yemen meet the organization's requirements,
especially IPR conditions, technical and health aspects, plant health
and issues related to trade, customs tariffs, standardization, local
development, poverty reduction, and decentralization.

The World Bank International Finance Corporation (IFC) opened its Yemen
office in 2004 and began supporting appropriate private sector projects.
The U.S. Trade and Development Agency (TDA) has financed or partially
financed feasibility studies for several infrastructure projects over
the past six years, including a study for a private sector oil refinery
north of Hodeidah, a cement plant in Bajil (Hodeidah Governorate), a
private hospital in Sana'a, expansion of the Marib Oil Refinery, a study
for the upgrade of Yemen\'s electricity grid, and a study for the
Wastewater Project in Taiz city.

**Major investment projects are:**

1.  The Privatization Program: This program seeks to reinforce the role
    of the government in the management of the market-based economy by
    reducing government expenditures on public economic enterprises and
    enhancing their efficiency on a competitive basis, in addition to
    encouraging private sector investment and the realization of broader
    participation in ownership through public subscriptions. The program
    seeks to accelerate privatization, starting with the preparation of
    61 economic units after their evaluation and assessment by
    specialized and neutral offices. The program includes units from the
    various economic sectors, including a number of large units expected
    to be an important step for revitalizing the private sector.

2.  The Free Zone: Supports the role of the Free Zone in Aden and
    improvement of the competitive capacity of the zone regionally and
    internationally by developing its management and training employees
    to deal with the conditions and properties of the zone, in addition
    to completion of the infrastructure projects and the utility
    services for the zone.

3.  Port Cities Development: Enhances the competitive edge of port
    cities, starting with Aden, Hodeidah and Mukalla by rehabilitating
    and improving their basic services. It supports the administrative
    and technical capabilities of the local authorities, keeping them at
    least in parallel with the systems found in the ports of neighboring
    states while supporting partnerships between the local authorities
    and the private sector and facilitating procedures and processing.

4.  Improving the Investment Climate: Undertakes regulatory and
    institutional reforms for investment and promotion of exports by
    improving the performance of the General Investment Authority (GIA)
    and the Higher Council for Exports and its technical organs. In
    addition to stimulating the extractive industry and encouraging the
    private sector to set up industrial zones.

5.  Gas Pipelines and Power Generation: Constructs pipelines to
    transport gas extracted from the Marib-Shabwah fields to the regions
    of Aden, Al-Hodeidah and Hadhramout for local use. Specifically,
    seeks to build gas-powered stations and to link to the establishment
    of industrial estates in those three regions.

To view the Investment Law, please double click on the General
Investment Authority's website: <http://www.giay.org/index.htm> . Then,
click on Investment Law.

[Principal Growth Sectors]{.underline}: Since the discovery of oil in
commercial quantities in the Marib Governorate in 1984, the petroleum
industry has led Yemen\'s economic growth. Yemen\'s oil production
currently stands at 400,000 barrels per day. According to the Central
Bank of Yemen, oil revenues of 2005 totaled USD 3.1 billion, compared to
USD 2.2 billion in 2004, an increase of 37.85%. While output from the
Marib concession is falling, the introduction of new technologies will
minimize the decline in the short term. Only new discoveries, however,
can sustain Yemen's output in the medium term. Cognizant of its oil
dependency, Yemeni officials have worked to improve exploration and
production contract terms. According to the CBY, oil production is
expected to increase to 750,000 barrels per day by 2007, but most
international observers believe production will sharply decrease in the
next 10 years. On August 30, 2005, the Petroleum Exploration and
Production Authority (PEPA) invited international oil companies to bid
for the exploration and production opportunities on 14 open oil blocks
in Yemen. On February 16, 2006, the Ministry of Oil and Minerals stated
that 63 companies, of which five are American, applied to the tender.

A long-term prospect for the petroleum industry in Yemen is a proposed
liquefied natural gas project (YLNG). Yemen has over 17 trillion cubic
feet of proven associated and natural gas reserves. The ROYG negotiated
a gas development agreement with Total in 1995, and, in June 2002,
renewed the contract for another five years. The investment group
includes Total, with 42.9% of LNG shares, Yemen Gas with 23.1%, US Hunt
Oil with 18%, South Korean SK Corp. with 10% and Hyundai with 6%. The
YLNG project calls for construction of two liquefaction trains with
total capacity of 6.7 million mt/y (315.4 billion cu ft/y). The project
envisions a USD 20 billion investment over 20-25 years, with two trains
of 3.1 million tons producing approximately 6.2 million tons of LNG
annually. The facility will be located at Belhaf, on the Gulf of Aden,
and will be connected to the Marib fields by a 320 km pipeline. A
Bechtel-Technip joint venture conducted a preliminary engineering study.

In 2005, YLNG signed two agreements for the sale of 2.5 million mt/y to
Tractebel and two million mt/y to Total Gas and Power. From both
proposed deals, YLNG will be destined for the United States starting in
2009.

Expanding Yemen\'s woefully inadequate infrastructure will be a major
element of economic growth over the next ten years. The Ministry of
Electricity has publicly announced its support for private power
generation, and wants to add 1,100 megawatts of capacity over the next
ten years. However, government resources are inadequate to guarantee
power purchase contracts to supply the national grid. Because Yemen
faces severe water shortages in the near term, the government is
considering using private water and sewage utilities to manage this
vital, scarce resource more efficiently. The expansion of infrastructure
implies that the construction industry will grow with it. Currently,
local factories, which produce construction materials, are running at
60% of capacity or better and are looking to expand. Several of Yemen\'s
larger trading houses are conducting feasibility studies for
establishing private cement plants.

In transportation, the government established a Free Zone in Aden and
contracted private companies to develop a modern container port, airport
facilities, and an industrial estate. The Yemeni government is planning
to extend the port to 2 KM wide. That extension will raise the container
capacity of the port to 3 million in two years. The seaport is 18 meters
deep, which facilitates the navigation of large ships into the port
area. Half of the world\'s annual container trade and a large number of
oil shipments pass within four nautical miles of Aden.

For more information about the Aden Free Zone, please go to:
[[http://www.aden-freezone.com/]{.underline}](http://www.aden-freezone.com/)

Yemen also offers a number of tourism-related investment opportunities.
The country's long coastline offers beautiful beaches and islands, while
its interior provides unique cultural experiences, archeological sites,
and historical sites. According to the Ministry of Tourism's most recent
report, the total revenue from tourism in 2004 was about USD 214
million. The World Travel and Tourism Council estimates that the travel
and tourism sector in Yemen could generate up to USD 4.5 billion of
revenue by the year 2015.

## Market Entry Strategy [**Return to top**](#chapter-1-doing-business-in-yemen)

[Nature of Political Relationship with the United States]{.underline}:
Since their nadir during the 1991 Gulf War, relations between the United
States and Yemen have steadily improved. The Yemeni government
appreciated the United States\' pro-unity stance during the 1994 civil
war, and the two countries have cooperated increasingly on regional
issues, including counter- terrorism. The U.S. Government significantly
increased anti-terrorism training and security assistance to the Yemeni
government after 2001.

The U.S. Agency for International Development's (USAID) strategy in
Yemen focuses on the five remote and very poor, rural governorates most
at-risk of generating political, social, and economic instability: Al
Jawf, Amran, Marib, Saada, and Shabwa. The USAID program particularly
addresses reproductive, maternal and child health issues; basic
education and literacy; food security, and jobs in a predominantly
agricultural economy. USAID also makes selected investments at the
national level to improve policy and expand options for longer-term
sustainable development. In addition, USAID works closely with key
ministries at the national, governorate and district levels as they
implement the Yemen government's decentralization policy.

The USAID program is only one part of the United States Government's
economic development assistance in YemenUSAID programs, projected to
total more than USD 8 million in FY 2006, are complemented by funding
from the U.S. Department of State's Middle East Partnership Initiative
(MEPI) for economic, education, and political reform, as well as an
average of USD 10 million per year from the U.S. Department of
Agriculture's food aid programs. The United States also funds smaller
grant programs and humanitarian demining assistance.

[Major Political Issues Affecting the Business Climate]{.underline}:
Bureaucratic corruption at all levels of government affects all aspects
of business in Yemen. This corruption includes distorted judicial and
administrative procedures, fiscal policy, security and slow progress in
democracy efforts, a free market economy, and respect for human rights.
Because of practices such as illegal commissions, nepotism, and the
collection of salaries from multiple government jobs, administrative
reform may be a long and difficult process. A World Bank-led effort to
support civil service and administrative reforms was launched in 1998
and has thus far achieved mixed results.

Thanks to Yemen\'s June 2000 treaty agreement with Saudi Arabia
resolving their 66 year-old border dispute, Yemen now enjoys
internationally recognized land and marine borders with all of its
neighbors, including Oman and Eritrea,although implementation of the
traditional fishing rights sections of an international arbitration
agreement with Eritrea remains contentious. While its international
borders have stabilized, the country still suffers from political
unruliness,usually from tribesmen in impoverished rural areas,
increasing the risks and costs of doing business in Yemen. Tribal
kidnappings of foreigners and thefts of foreign-owned vehicles continue,
but at sharply decreased levels compared to the late 1990s. Most victims
of kidnapping in Yemen have been tourists, diplomats, or oil company
workers and have been released unharmed. In 2005 and 2006, the ROYG took
decisive legal action against tribal kidnappers, sentencing the group
responsible for the most recent kidnappings to 20 years in prison.

In December 2005, World Bank aid to Yemen was reduced from USD 420
million to USD 280 million for the next three years. According to the
Bank, the decision was made as a result of spreading corruption in WB
projects. In February 2006, the United States and Europe strongly
encouraged the Yemeni government to undertake significant short-term
reforms aimed at managing public funds more transparently. That same
month, President Saleh re-shuffled his cabinet, appointing new ministers
of Planning and International Cooperation, Finance, and Health, among
others.

[Brief Synopsis of the Political System]{.underline}: Yemen has two
functioning political systems: an emerging modern democracy and an
ancient tribal/feudal system. Yemen\'s government is divided into three
branches: the executive, with the President appointing a cabinet headed
by a Prime Minister; the bicameral legislature composed of a 301-member
elected House of Representatives and a 111-member
presidentially-appointed Shura Council; and the judiciary, consisting of
three levels of courts (magistrate, appellate, and supreme). Yemen held
its first direct presidential elections in September 1999, electing
President Ali Abdullah Saleh to a five-year term (later extended to
seven years through a referendum) in what were generally considered free
and fair elections. Yemen held its second multiparty parliamentary
elections in April 1997 and its first local council elections in
February 2001. Legislative elections took place in April 2003. The
President\'s party, the General People\'s Congress (GPC), holds an
absolute majority of 229 seats in the current Parliament. The main
opposition party, the Yemeni Congregation for Reform (Islah), holds 45
seats. Smaller parties and many independents also won seats. The country
has more than 40 registered political parties and more than 30 daily and
weekly newspapers.

The election of President Ali Abdullah Saleh consolidated the power of
the GPC, a party that places less emphasis on ideology and more on
following the lead of the President in governing the country. Islah is a
tribal/Islamic party under the leadership of Speaker of Parliament
Shaykh Abdullah Al-Ahmar, who is also the paramount shaykh of the Hashid
tribal federation. Before the 1994 civil war, the Yemeni Socialist Party
(YSP), which had ruled the former People\'s Democratic Republic of Yemen
(PDRY) before its unification with the Yemen Arab Republic (YAR) in May
1990, was a partner in the government. Since the 1994 civil war,
however, the YSP has been marginalized. Ideological infighting and
disorganization have diminished what political power it once had. The
YSP participated (with a poor showing) in the 2001 and the 2003 local
elections, and it boycotted the 1997 parliamentary and 1999 presidential
elections. The YSP, Islah, and other opposition parties allied to form
the Joint Meeting Parties to present a united front in the 2006
presidential and local council elections.

[Return to table of
contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

# 

# Chapter 2: Political and Economic Environment

For background information on the political and economic environment of
the country, please click on the link below to the U.S. Department of
State Background Notes.

> <http://www.state.gov/r/pa/ei/bgn/35836.htm>

[Return to table of
contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

[]{#ch3 .anchor}

# Chapter 3: Selling U.S. Products and Services 

-   [Using an Agent or
    Distributor](#using-an-agent-or-distributor-return-to-top)

-   [Establishing an Office](#establishing-an-office-return-to-top)

-   [Franchising](#franchising)

-   [Direct Marketing](#direct-marketing-return-to-top)

-   [Joint Ventures/Licensing](#joint-ventureslicensing-return-to-top)

-   [Selling to the
    Government](#selling-to-the-government-return-to-top)

-   [Distribution and Sales
    Channels](#selling-factorstechniques-return-to-top)

-   [Selling
    Factors/Techniques](#selling-factorstechniques-return-to-top)

-   [Electronic Commerce](#electronic-commerce-return-to-top)

-   [Trade Promotion and
    Advertising](#trade-promotion-and-advertising-return-to-top)

-   [Pricing](#pricing-return-to-top)

-   [Sales Service/Customer
    Support](#sales-servicecustomer-support-return-to-top)

-   [Protecting Your Intellectual
    Property](#protecting-your-intellectual-property-return-to-top)

-   [Due Diligence](#due-diligence-return-to-top)

-   [Local Professional
    Services](#local-professional-services-return-to-top)

-   [Web Resources](#webresources)

## Using an Agent or Distributor [**Return to top**](#ch3)

Doing business in Yemen can be a difficult, time-consuming and confusing
process. Most international companies in Yemen hire a Yemeni agent,
although this is not required by Yemeni law. U.S. exporters in
particular may require a local agent/distributor to manage their
distribution in Yemen. Due to infrastructure constraints and to ensure
widespread distribution, U.S. companies may need multiple agents and
distributors. Sanaa, Aden, Taiz, Mukalla and Hodeidah are the country's
primary commercial centers. At an exporter's request, through the
Department of Commerce Export Assistance Center, the Embassy\'s
Commercial Office can research and draft International Partnership
Service (IPS), Gold Key Service (GKS), International Company Profile
(ICP) reports on a fee basis. The U.S. Commercial Office's website
[www.buyusa.gov/yemen/en](http://www.buyusa.gov/yemen/en) lists all
services and fees offered by the office.

Yemeni Law 23/1997 (amended) regulates the branches and agencies of
foreign trading companies. All agent/distributor agreements with local
companies must be registered with the Ministry of Industry and Trade.

To view the Trade Laws of Yemen, go to the Ministry of Industry and
Trade website at: <http://www.most.org.ye/> , then click on Trade Laws.

## Establishing an Office [**Return to top**](#ch3)

[]{#franchising .anchor}Following are the World Bank Guidelines:

-   Obtain a letter from a Yemeni bank indicating that the business has
    accounts in dollars. The cost is free. (Timeframe about 3 hours).

-   Rent an office and keep a copy of the rental agreement. (Timeframe
    1-3 days).

-   Register the company with the Ministry of Industry and Trade (MOIT).
    On the registration form, indicate the type of business (i.e.
    import-export, services, wholesaler, and retailer), state the amount
    of capital, and whether it is a private or a public enterprise. Once
    approved, the Ministry will assign a registration number. This
    registration number must be presented upon request to any government
    agency. The fees for registration, permit and publication in the
    official gazette and announcement in the commercial register are
    67,000 Yemeni rials (USD349). These fees cover the initial payment
    for commercial registration at the Ministry and are valid for five
    years. The annual renewable permit fee is 20,000 Yemeni rials (USD
    104). (Timeframe 2-3 days).

-   Apply for membership with the local chamber of commerce, indicating
    the name and type of business. The cost is USD 500, plus 10,000
    rials (USD 51) per year for renewal of membership. (Timeframe about
    2 hours).

-   Apply to the municipality, indicating the type of business. The
    business will be given a permit with a number which must be
    displayed in the business office. The cost is 50,000 rials (USD 260)
    including fees for the City of Sanaa Trust Office. (Timeframe 2-3
    days).

-   Register with the Yemeni government ministry that oversees the
    business. Depending on the type of business, costs can range from
    750 rials up to 50,000 rials, (USD 260). (Timeframe 2-3 days)

For information about the World Bank activities in Yemen, please go to
[www.**worldbank**.org/ye](http://www.worldbank.org/ye)

## Franchising [**Return to top**](#ch3)

Yemen\'s Investment Code (Law 22 of 2002 amended, see Chapter 7)
encourages investment in this sector. Presently, Pizza Hut, Kentucky
Fried Chicken, and Baskin-Robbins operate in Yemen.

To view the Investment Law, please double click on the General
Investment Authority's website: <http://www.giay.org/index.htm> . Then,
click on Investment Law.

## Direct Marketing [**Return to top**](#ch3)

To date, telemarketing services have not yet entered the Yemeni consumer
market; this may be due to the low levels of landline telephone
penetration in the consumer market. Direct marketing and advertising
companies may, however, reach mobile phone users.

With the advent of Internet services in Yemen in 1996, direct marketing
by major companies via email arrived in Yemen. Noting that high-end
consumers are Internet customers, some Yemeni companies use e-mail to
advertise their products/services. Two operators, TeleYemen and the
Public Telecommunication Corporation (PTC), provide local Internet
services. Connections are generally adequate. Dial up, cable modem and
DSL services are available. According to the Central Statistical
Organization's Report of 2004, there are more than 75,500 internet
subscribers and 7,526 telecommunication centers and internet cafes in
Yemen.

## Joint Ventures/Licensing [**Return to top**](#ch3)

Most joint ventures are regulated through the new Investment Code, Law
22 of 2002, implemented in October 2003. Section VI (Investment
Companies), Articles 42 to 57

To view the Investment Law, please double click on the General
Investment Authority's website: <http://www.giay.org/index.htm> . Then,
click on Investment Law.

## Selling to the Government [**Return to top**](#ch3)

Large government contracts may present opportunities for American
investors; however, corruption and extensive bureaucratic procedures
hinder the process. In some cases, sealed bids are opened and shown to
competitors, contracts are awarded to political contacts, and tender
awards canceled.

According to Yemen's tendering law, government purchases are made
through a tendering system managed by the Supreme Tender Committee,
chaired by the Prime Minster. Law 3/1997 (amended) governs purchasing
tenders valued at over 125 million rials (USD 641,025). Local agents can
be a critically important factor in shepherding bids through the tender
process. Tenders are announced in the local and foreign press. Tender
conditions are based on standard international regulations used to
evaluate tender offers. Price is usually the determining factor,
although quality and nationality of the product also play a role.

Efforts to reform and streamline the tendering system are ongoing. The
Embassy has advocated successfully on behalf of U.S. firms in public
tender competitions.

## Selling Factors/Techniques [**Return to top**](#ch3)

Some producers will provide goods or stocks to retailers who guarantee
to increase shelf space;however, many consumer goods are smuggled over
the Saudi Arabian border. So, while some supermarkets and stores are
willing to guarantee space on the shelves to provide set quantities of
products, legitimately imported products must often compete against an
array of smuggled goods, including a large number of counterfeit items

## Electronic Commerce [**Return to top**](#ch3)

While Internet rooms are sprouting rapidly in most major cities in
Yemen, the general population does not utilize the banking system needed
to facilitate financial transactions over the Internet, such as checking
account, credit card or debit card purchases. Only three percent of the
population owns a checking account. Even fewer have a credit card. In
February 2005, the International Bank of Yemen introduced Yemen's first
credit card. Cash transactions dominate most of the consumer market even
for most durable goods purchases. In fact, the lack of a viable credit
system stymies the durable goods market so that any anticipated
e-commerce growth must await technological and financial infrastructure
advancements and acceptance.

## Trade Promotion and Advertising [**Return to top**](#ch3)

Yemen has two state-run television channels and two state-run radio
stations. Yemen TV transmits from the capital Sanaa and can be seen
locally and throughout the Arab world. Channel Two transmits from Aden
for local viewers only. Most programs are in Arabic, but there is one
nightly newscast in English. Sanaa University is preparing to launch the
first-ever independent channel with programming directed at youth. The
university has completed setting up studios for the new channel and
provided it with a professional cadre and necessary equipment. The
channel will begin broadcasting in in Yemen, beginning in September
2006.

The Public Corporation for Radio and Television offers two pricing
schedules for media advertisements, differentiating between
locally-manufactured domestic products and imported ones. For imported
products, Channel One ad rates range from USD 300 to USD 650 per
half-minute in addition to the commercial agency's commission. Ad rates
on Channel Two start at USD 200 per half-minute for imported brand
products during late afternoon hours. During prime time, rates increase
to USD 350 per half-minute; this rate does not include the commercial
agency commissions. For more information, please contact Al-Khail for
Advertisement and Information Services, Fax: 967-1-237-376, Telephone:
967-1-226-143, email: <alkhail2000@y.net.ye>.

Due to low literacy rates, television is one of the primary marketing
and communications media, while the market for print advertisements is
comparatively small. The World Bank estimates a 50 percent literacy rate
for adults 15 years and older. The daily newspaper runs for
non-government papers are on average 20,000 to 30,000 issues. Government
newspapers, distributed free of charge throughout many ministries, print
more copies. Newspaper advertising rates depend on page space, and rates
vary between daily and weekly papers. The general advertisement rates
for foreign firms or products start at USD 500 for a quarter page up to
USD 2,000 for a full-page in the official daily newspaper. Official
newspapers offer special rates for locally-manufactured domestic
products of a foreign company, 36,500 rials for a quarter page to 44,000
rials for a full-page advertisement. The average rates for advertisement
for foreign firms or products in the daily independent newspapers are:
USD 500 per quarter page to USD 1,500 per full page. The average rates
for an advertisement for products in the two weekly English-language
newspapers are: USD 400 for a quarter page to USD1,400 for a full-page.
For color advertisements, the rates usually double.

Following are contact addresses for Yemen\'s leading daily and weekly
newspapers:

Al-Thawra (Arabic official daily)

P. O. Box 1475 or 2195, Sanaa, Republic of Yemen

Telephone: 967-1-321-528/ thru 533, Advertising: 967-1-274-038, Fax:
967-1-274-035

Fax: 967-1-274-035 or 967-1-332-505

E-mail: <al-thawrah@y.net.ye> ; or <editor@althawra.gov.ye>

Website: [www.althawra.gov.ye](http://www.althawra.gov.ye/)

Al-Gumhurriyah (Arabic official daily)

P. O. Box 6604, Taiz, Republic of Yemen

Telfax: 967-4-230-953

E-mail: <algomhuryah-np@y.net.ye> Website:
[www.y.net.ye/al-gumhuryah](http://www.y.net.ye/al-gumhuryah)

14th October (Arabic official daily)

P. O. Box 5487, Ma\'alla, Aden, Republic of Yemen

Telephone: 967-2-242-660, Advertising: 967-2- 241-186/247-297

Telfax: 967-2-241-193/242-301/ 241-764

E-mail: <14oct.adn@y.net.ye> ; Website:
[www.14october.com.ye](http://www.14october.com.ye/)

Al-Ayyam (Arabic Independent daily)

P. O. Box 648, Crater, Aden, Republic of Yemen

Telephone: 967-2-255-170/254-135 or 967-1-449-733;

Fax: 967-2-255-692 or 967-1-449-722

E-mail: <editor@al-ayyam-yemen.com> ; Website:
[www.al-ayyam-yemen.com](http://www.al-ayyam-yemen.com/)

26th September (weekly, issued by the Ministry of Defense)

P.O. Box 17, Sanaa, Republic of Yemen

Telephone: 967-1-262-626, 282-626; Fax: 967-1-274-139

E-mail: <26Sept@y.net.ye>; Website:
[www.26september.com](http://www.26september.com/)

Yemen Times (Independent English bi-weekly)

P. O. Box 2579, Sanaa, Republic of Yemen

Telephone: 967-1-268-661/2/3, Advertising 264-253; fax: 967-1-268-276

E-mail: [yementimes@yementimes.com;]{.underline} Website:
[www.yementimes.com](http://www.yementimes.com/)

Yemen Observer (Independent English weekly)

P. O. Box 19183, Sanaa, Republic of Yemen

Telephone: 967-1-203-393, Fax: 967-1-207-239

E-mail: <editor@yobserver.com>[;]{.underline} or <info@yobserver.com>

Website: [www.yobserver.com](http://www.yobserver.com/)

Below is a list of the local advertising agencies:

Hams

P. O. Box 19038, Sanaa

Republic Of Yemen

Phone: 967-1-240-455

Fax: 967-1-240-460

Contact: Nadeem A. Hassan Ali

Mass Advertising

P. O. Box 5302, Taiz

Republic Of Yemen

Phone: 967-4-218-086

Fax: 967-4-218-086

Contact: Abdul Rahman Besher, Manager

Vidcom Advertising

P. O. Box 7042, Sanaa

Republic Of Yemen

Phone: 967-1-208-910

Fax: 967-1-208-910

Contact: Abdulkarim Al-Maqaleh

Sscom Advertising & Marketing

P. O. Box 1289, Al Muthahar Building

Sanaa, Republic Of Yemen

Phone: 967-1-206-283

Fax: 967-1-207-777

Contact: Naguib Saleh Ibrahm, Owner & Director

Vision Advertising & Marketing

P. O. Box 25159, Sanaa

Republic Of Yemen

Phone: 967-1-218-142

Telefax: 967-1-209-940

Contact: Masood R. Al-Harazi, Gen. Mgr.

## Pricing [**Return to top**](#ch3)

Most items and products in Yemen do not carry price tags as buyers and
sellers usually negotiate with each other until they agree on a price.
However, there are fixed prices on certain items, like pharmaceutical
products and petroleum derivatives.

The government of Yemen removed subsidies for wheat and flour in 1999.
Subsidies for diesel, electricity, water, and sewage services were
reduced slightly in 2001. Subsidies on petroleum products were further
reduced in 2005. The free market sets all other prices. When the rial
appreciates and retail prices fall, distributors often demand immediate
rebates on stock in possession; however, when the rial falls, they
usually raise retail prices to capture windfall profits. The CBY
exchange rate by late February 2006 was as follows: buying USD 1=195.94,
selling USD 1=196.24

## Sales Service/Customer Support [**Return to top**](#ch3)

Strong customer service can provide a competitive advantage in Yemen,
but development of an effective sales/service team may require
considerable training. If training must be conducted in the United
States, early and close coordination with the Embassy\'s Consular
Section on visa matters is strongly encouraged. Additionally, the use of
promotional materials, like bumper stickers, posters, and low-value
gifts associated with the product or company help to engender goodwill
in the community.

## Protecting Your Intellectual Property [**Return to top**](#ch3)

As Yemen prepares for WTO accession, the government must improve IPR
laws and practices. In short, Yemen has an adequate copyright law (Law
19/1994), but a weak legal system. It is a member of the World
Intellectual Property Organization (WIPO) but has not acceded to any
international IPR conventions. Yemen is in the process of revising its
IPR laws under WIPO guidance to meet international standards. In 1999, a
major U.S. multinational corporation, with a small processing plant in
Yemen, won a significant trademark infringement lawsuit in the local
courts after a multiyear legal battle. However, enforcement of the
judgment has not been effective and the case remains under appeal in the
Supreme Court. In 2003, the Supreme Court rejected the appeal of the
company producing the infringing products and ordered it to cease
production and delete the infringed trademark, but the Ministry of
Industry and Trade has not yet enforced the decision, pending the
submission of additional evidence for the defense.

The WTO General Council accepted Yemen's application to join the WTO in
2000. As a next step in the accession process, Yemen presented to the
WTO a memorandum of foreign trade regime on 2002. Yemen is currently
responding to questions raised by members of the WTO regarding issues
such as IPR, environment, and commercial laws. Within this framework,
Yemen is working to ensure that its laws are TRIPS-compliant and moving
closer to the international trade community on these issues. In October
2005, a delegation from the Ministry of Industry and Trade attended a
WTO session in Geneva, Switzerland and discussed the above mentioned
issues.

## Due Diligence [**Return to top**](#ch3)

An updated list of attorneys is available from the Embassy Commercial
Office. The Embassy advises the use of local counsel in the drafting of
contracts to help prevent future disputes. Yemen\'s legal dispute
resolution mechanisms are underdeveloped and many contracts specify that
arbitration be conducted overseas. There is also a private arbitration
center, the Yemeni Center for Conciliation and Arbitration that was
established in 1998 to resolve commercial disputes. It has gained a
reputation as a viable alternative to the courts. Commercial disputes
among Yemenis are often resolved via extra-judicial means such as
private arbitration.

## Local Professional Services [**Return to top**](#ch3)

While KPMG, Ernst and Young, and Deloitte and Touche have partner
offices in Yemen, few firms use the services of internationally
accredited accounting services.

[]{#webresources .anchor}

[Return to table of
contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

[[]{#ch4 .anchor}Return to table of
contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

# Chapter 4: Leading Sectors for U.S. Export and Investment 

-   Telecom

-   Construction Equipment

-   Electrical Power Systems (ELP)

```{=html}
<!-- -->
```
-   [Agricultural Sector](#agricultural-sectors-return-to-top)

```{=html}
<!-- -->
```
-   Wheat

-   Corn

-   Soybean Meal

-   Rice

-   Honey

### Telecom [**Return to top**](#ch4)

Telecom is one of the most promising sectors available in Yemen for
trade and investment. Currently two GSM-mobile companies, Sabafon and
Spacetel, have operated with exclusivity contracts from the Ministry of
Communications since 2000. In late 2004, the Ministry of
Telecommunications announced operations for a third mobile telecom
provider, YemenMobile, owned exclusively by the Ministry. YemenMobile
started operations on the CDMA-protocol, the only country to utilize the
standard in the Middle East. There is no separation of power between the
regulatory function of the Ministry and the state-owned competitor
company, YemenMobile, which should cause concern for any international
telecom investor. Nonetheless, by informal estimates, the market has
grown from some 8,000 subscribers in the first year to an estimated 1.3
million in 2005. According to the Central Statistical Organization's
Report of 2004, there were more than 798,136 telephone land lines. In
2005, UNITEL was awarded a contract to operate Yemen's third GSM-mobile
company, but has been unable to raise the funds necessary to pay for the
contract, despite repeated extensions from the ROYG. The contract award
was criticized by international observers because, although UNITEL was
the highest bidder, it had no experience in mobile telephone operation
and no significant financial backing.

### Best Prospects/Services [**Return to top**](#ch4)

As is common in technologically evolving countries, ongoing
opportunities will continue to open as the mobile telecommunications
networks out-pace land line telephone operations. Demand is expected to
double according to sources in the network project implementation
sector. The marketing of more advanced services has also reached the
consumer in Yemen with the existing operators now offering services such
as multimedia messaging, internet browsing, camera phones, and friends
and family group rates.

### Opportunities [**Return to top**](#ch4)

It appears from its promotional strategy that YemenMobile is targeting
low income customers. Since puchasing power in Yemen is low, YemenMobile
offers CDMA handsets with full accessories to public sector employees
who sign agreements authorizing the company to deduct a certain amount
from their salary. This technique has captured a wide market and created
more demand for handsets.

As YemenMobile builds its networks, the demand for CDMA handsets,
accessories, towers, switches, and other equipment related to creating a
new network continues to increase.

### Resources [**Return to top**](#ch4)

For more information, please contact the Embassy\'s Commercial
Specialist, Ammar Al-Anssi, at <al-anssial@state.gov> .

### Construction Equipment [**Return to top**](#ch4)

The construction industry in Yemen witnessed much progress over the last
decade. Construction of asphalted roads facilitated the import and
movement of building materials such as cement, steel, wood, etc.
According to the WB, Yemen now has approximately 5,960 KM of asphalted
roads compared to 365 KM in 1973.

One problem faced by the construction industry is bottlenecks in supply.
This is especially true of cement, which is often stockpiled by some
cement wholesalers in anticipation of price increases. In mid-2005, the
price of cement doubled for several weeks, but no major slowdown in
industry growth occurred. In fact, some observers believe that
construction in Yemen is one of the least affected industries due to a
steady demand for building supplies associated with the housing needs of
a rapidly growing population.

On the consumer level, most Yemenis approach medium-sized construction
companies to build their homes. These companies purchase equipment such
as cranes, mixers, and trucks and are able to take full responsibility
for an entire construction project.

Observers of the construction industry believe that it suffers from a
lack of feasibility, cost management, and construction studies. There
are often questionable construction practices or inappropriate material
selections. However, no formal research has been conducted and little
data exists on the extent of the problem.

### Best Prospects/Services [**Return to top**](#ch4)

Yemen's' population growth is one of the highest in the world at 3.5%.
Such a rapid growth in population pushes demand for housing.

Furthermore, the Foreign Trade Statistics for 2004, issued by the
Ministry of Planning and International Cooperation, listed construction
equipment and supplies such as cement, electric motors, generators, and
wire rods of iron and steel, as the top import items of Yemen.

### Opportunities: [**Return to top**](#ch4)

Skilled and cheap manpower is available locally. Foreign expertise may
be recruited from abroad. According to the Ministry of Industry and
Trade, Sanaa and Aden are select locations for investment opportunities
in the construction industry due to the high growth and expansion in
both the private and public sectors.

### Resources [**Return to top**](#ch4)

For more information, please contact the Embassy\'s Commercial
Specialist, Ammar Al-Anssi, at <al-anssial@state.gov> .

### Electrical Power Systems (ELP) [**Return to top**](#ch4)

While Yemen has introduced measures to address the growing demand for
electricity, only the construction of new power plants can alleviate the
problem. Because of Yemen's mountainous terrain, only 30% of the
population utilizes publicly-produced electricity. The terrain makes it
unlikely that the national grid will reach the majority of rural Yemenis
during the next few years. With the constant optimal sunlight conditions
and wind funneling terrain in Yemen, alternative power sources, such as
solar and wind power, may present opportunities for rural
electrification.

### Best Prospects/Services [**Return to top**](#ch4)

The Ministry of Electricity hopes to increase power capacity by 1.1
gigawatts over the next ten years. Demand is expected to rise more than
10% annually. Furthermore, Yemen will need to strengthen its
transmission and distribution systems. In 2005, a USD 45 million
contract for the construction of power transfer substations for the
Marib power plant of Yemen was signed between the Ministry of
Electricity and Iran Parsian Company in Sana'a. The project is funded by
the government of Yemen and the Arab Fund for Economic and Social
Development. The project involves the construction of four substations.
Two of them, from Marib rerouted to Sana'a, will transfer 400 KV and
1,200 MVA of electricity. The other two, located in Rahban and Haziz
regions in the vicinity of Sana'a, will be constructed with the capacity
of 33,132 KV and 248 MVA.

### Opportunities: [**Return to top**](#ch4)

Rural Yemenis, comprising more than 75% of the population, continue to
depend on private and village diesel generators for power rather than
the national grid. The demand for small generators up to 2 MW is great.

Many of Yemen\'s rural areas are perfect for solar or wind generators.
Yemen\'s Public Telecommunications Corporation, for instance, relies on
solar cells to run its national microwave transmission grid.

Yemen\'s climate suggests that alternative energy sources hold excellent
potential for providing electricity to rural Yemen. According to
Yemen\'s Civil Aviation and Metrological Agency (CAMA), weather stations
across the country show sunlight energy averages of 350-500 cal/sq
cm/day. Weather conditions in northern and southern Yemen are perfect
for solar applications.

Furthermore, Ministry of Electricity officials cite Socotra Island,
where winds blow almost constantly, as a prime location for
wind-generated energy applications and technology. Throughout the
country, Yemen\'s deep canyons often act as funnels, increasing wind
velocity in certain isolated rural locations. However, to date, donor
countries, with the exception of the Dutch, have not funded a wind power
project, nor has the Ministry of Electricity had the resources to
finance the purchase of wind turbines.

### Resources [**Return to top**](#ch4)

For more information, please contact the Embassy\'s Commercial
Specialist, Ammar Al-Anssi, at <al-anssial@state.gov> .

## Agricultural Sectors [**Return to top**](#ch4)

In 2005, Yemen\'s population grew at a rapid 3.5% and unofficial
estimates anticipate that the population will double by 2026. With a
geography containing only 3 percent arable land, the country will remain
a net food importer for the foreseeable future. Wheat is the largest
U.S. agricultural export, but opportunities for other products are
growing. Currently, the poultry industry demands significant non-wheat
products and services and other livestock industries may modernize in
the near future, thereby increasing demand. Additionally, U.S. processed
foods appear to be competing effectively for consumers.

The urbanization of Yemen\'s growing population is creating a large
demand for fresh and processed food products. Additionally, the Yemeni
government has made significant progress recently in reducing barriers
to trade and opening up their market (see chapter six). While the market
remains small, U.S. exporters can expect to find growing opportunities
for selected foodstuffs. Total 2004 value of exports of agricultural,
fish, and forestry items from the U.S. to Yemen reached USD 135 million.

## Wheat

### Overview: [**Return to top**](#ch4)

The U.S. has consistently exported approximately 500 thousand metric
tons (MT) of wheat and approximately 300 thousand MT of wheat flour to
Yemen in each of the last few years. Wheat and wheat flour have also
been a significant part of USDA\'s food aid programs over the past 6
years. The withdrawal of government subsidies on wheat and wheat flour
in the first half of 1999 did not have a significantly negative impact
on consumption. Even with subsequent world price increases in the
following years, as a staple in the Yemeni diet, wheat bread exhibits an
inelastic market demand. The Embassy believes the U.S. will continue to
be a major supplier of wheat to Yemen along with India and Australia.
Wheat is the largest U.S. agricultural export to Yemen.

  -------------------- ---------- ---------- --------------- --------------
                                  2003       2004\)          2005
                                                             (estimated)

  Total Market Size               360        398             408

  Total Local                     18.5       17.86           18
  Production                                                 

  Total Exports                   \--        15.66           17

  Total Imports                   342        380.80          390

  Imports from the                90         98.12           100
  U.S.                                                       
  -------------------- ---------- ---------- --------------- --------------

Source: Yemeni Ministry of Agriculture, and Ministry of Trade

### Best Products/Services [**Return to top**](#ch4)

Shipping from the United States is one of the major trade constraints
between the U.S. and Yemen. Providing cheaper shipping services would
reduce costs dramatically. In 2005, shipping premiums to Yemen's ports
levied following the 2002 attack on the Limburg oil tanker in the port
of Mukalla were lifted.

### Opportunities [**Return to top**](#ch4)

The Embassy believes the U.S. will continue to be a major supplier of
wheat.

### Resources [**Return to top**](#ch4)

For further information, please contact Embassy Agricultural Specialist
Mohamed Sharaf-Aldin at: <sharafaldm@state.gov>

## Corn

### Overview: [**Return to top**](#ch4)

Corn is the main ingredient for animal feed, especially in the poultry
industry. Major local traders import feed as cartels to resell to other
poultry producers. The usual feed shipment size is 27,000 MT, with a
composition of 70% corn and 30% soybean meal. The U.S. supplies
approximately 20 thousand MT out of 300 thousand MT of corn imported by
Yemen each year. Long-term prospects for the poultry industry in Yemen
remain strong and will continue to have a positive effect on U.S. corn
exports to Yemen.

  -------------------- ---------- ---------- --------------- --------------
                                  2003       2004\)          2005
                                                             (estimated)

  Total Market Size               40         81.39           84.0

  Total Local                     8.4        39.51           41.0
  Production                                                 

  Total Exports                              \-\--           \-\--

  Total Imports                   32         41.88           43.0

  Imports from the                1          2.7             3.0
  U.S.                                                       
  -------------------- ---------- ---------- --------------- --------------

Source: Yemeni Ministry of Agriculture, and Ministry of Trade

### Best Prospects/Services [**Return to top**](#ch4)

Shipping from the United States is one of the major trade constraints
between the U.S. and Yemen. Providing cheaper shipping services would
reduce costs dramatically. In 2005, shipping premiums to Yemen's ports
levied following the 2002 attack on the Limburg oil tanker in the port
of Mukalla were lifted.

### Opportunities: [**Return to top**](#ch4)

The poultry industry in Yemen is growing, and therefore prospects for
U.S. corn exports is positive with a steady growth potential.

### Resources [**Return to top**](#ch4)

For further information, please contact Embassy Agricultural Specialist
Mohamed Sharaf-Aldin at: <sharafaldm@state.gov>

## Soybean Meal

### Overview: [**Return to top**](#ch4)

Market prospects are also good for soybean meal, the other main
ingredient of poultry feed. The U.S. is generally one of the main
suppliers of soybean meal to Yemen and soybean meal is frequently
imported and shipped with corn. The U.S. supplies 5,195MT in 2002, out
of 97,000MT of soybean meal imported by Yemen. Strong price competition
by other suppliers, however, has limited the growth of U.S. soybean
sales.

  ------------------- ---------- ---------- --------------- --------------
                                 2003       2004            2005
                                                            (estimated)

  Total Market Size              18         0.75            5.0

  Total Local                    0          0               \-\--
  Production                                                

  Total Exports                             \--             \-\--

  Total Imports                  18         075             5.0

  Imports from the               0          0               0.1
  U.S.                                                      
  ------------------- ---------- ---------- --------------- --------------

Source: Yemeni Ministry of Agriculture, and Ministry of Trade

### Best Prospects/Services [**Return to top**](#ch4)

Shipping from the United States is one of the major trade constraints
between the U.S. and Yemen. Providing cheaper shipping services would
reduce costs dramatically. In 2005, shipping premiums to Yemen's ports
levied following the 2002 attack on the Limburg oil tanker in the port
of Mukalla were lifted.

### Opportunities [**Return to top**](#ch4)

The U.S. is generally one of the main importers of soybean as feed
composition frequently combines soybean meal with corn.

### Resources [**Return to top**](#ch4)

For further information, please contact Embassy Agricultural Specialist
Mohamed Sharaf-Aldin at: sharafaldm@state.gov

## Rice

### Overview [**Return to top**](#ch4)

As of 1999, the Yemeni government no longer subsidized rice, a major
commodity in the market and the Yemeni diet, particularly in the
southern and eastern regions. American long-grain rice is considered the
best quality product, for which Yemeni consumers are willing to pay a
premium. The demand for American long-grain rice is especially high in
the northern regions. However, Thai and Pakistani rice dominate the
southern and eastern markets.

  ------------------- ---------- ---------- --------------- --------------
                                 2003       2004            2005
                                                            (estimated)

  Total Market Size              75.2       133.76          150.0

  Total Local                    0          0               0
  Production                                                

  Total Exports                  0          0               0

  Total Imports                  75.2       133.76          150

  Imports from the               1.4        2.04            3.0
  U.S.                                                      
  ------------------- ---------- ---------- --------------- --------------

Source: Yemeni Ministry of Agriculture, and Ministry of Trade

### Best Prospects/Services [**Return to top**](#ch4)

Shipping from the United States is one of the major trade constraints
between the U.S. and Yemen. Providing cheaper shipping services would
reduce costs dramatically. In 2005, shipping premiums to Yemen's ports
levied following the 2002 attack on the Limburg oil tanker in the port
of Mukalla were lifted.

### Opportunities [**Return to top**](#ch4)

American long grain rice is considered the best quality product, for
which Yemeni consumers are willing to pay a premium.

### Resources [**Return to top**](#ch4)

For further information, please contact Embassy Agricultural Specialist
Mohamed Sharaf-Aldin at: <sharafaldm@state.gov>

## Honey

### Overview [**Return to top**](#ch4)

Honey is a traditional food product in Yemen, but a significant amount
is imported to supplement local production. Good quality U.S. honey can
be shipped at competitive prices. U.S. exports of honey to Yemen
declined from 600 thousand MT in 2003 to nearly 580 MT in 2004.

  -------------------- ---------- ---------- --------------- --------------
                                  2003       2004            2005
                                                             (estimated)

  Total Market Size               4.6        8.66            10.6

  Total Local                     7.2        8.21            10
  Production                                                 

  Total Exports                   3.6        3.02            4.5

  Total Imports                   1          0.45            0.6

  Imports from the                0          0.06            0.1
  U.S.                                                       
  -------------------- ---------- ---------- --------------- --------------

Source: Yemeni Ministry of Agriculture, and Ministry of Trade

### Best Prospects/Services [**Return to top**](#ch4)

Shipping from the United States is one of the major trade constraints
between the U.S. and Yemen. Providing cheaper shipping services would
reduce costs dramatically. In 2005, shipping premiums to Yemen's ports
levied following the 2002 attack on the Limburg oil tanker in the port
of Mukalla were lifted.

### Opportunities [**Return to top**](#ch4)

The Yemeni market appears to prefer U.S. honey. Good quality honey can
be shipped at competitive prices.

### Resources [**Return to top**](#ch4)

For further information, please contact Embassy Agricultural Specialist
Mohamed Sharaf-Aldin at: <sharafaldm@state.gov>

[Return to table of
contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

[[]{#ch5 .anchor}Return to table of
contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

# Chapter 5: Trade Regulations and Standards

-   [Import Tariffs](#import-tariffs-return-to-top)

-   [Trade Barriers](#trade-barriers-return-to-top)

-   [Import Requirements and
    Documentation](#import-requirements-and-documentation-return-to-top)

-   [U.S. Export Controls](#u.s.-export-controls-return-to-top)

-   [Temporary Entry](#temporary-entry-return-to-top)

-   [Labeling and Marking
    Requirements](#labeling-and-marking-requirements-return-to-top)

-   [Prohibited and Restricted Imports](#twentythree)

-   [Customs Regulations and Contact
    Information](#customs-contact-information-return-to-top)

-   [Standards](#standards-return-to-top)

-   [Trade Agreements](#trade-agreements-return-to-top)

-   [Web Resources](#web-resources-return-to-top)

## Import Tariffs [**Return to top**](#ch5)

The Yemeni Customs Authority (CA) continues to be an inefficient agency
prone to corruption. Frustrated by several months of delay after the
arrival of their shipments, international companies have been known to
"hire" customs officials \-- putting them on the company payroll \-- to
facilitate payments to expedite the slow process. Since 2004, the CA has
been recognized by western representatives as one of the key agencies
contributing to the corruption and economic stagnation endemic
throughout the government and in need of focused attention and reform.

A party to regional and global customs protocols, Yemen has the
opportunity to build upon a solid foundation of laws and regulations to
achieve more openness and transparency in customs procedures. Since
1993, Yemen has been a member of the World Customs Organization (WCO).
The Yemeni Customs Authority follows Law 37/1997, which regulates
tariffs on imported goods. In 2001, in exchange for participation in the
Gulf Cooperative Council (GCC) institutions, Yemen moved toward amending
customs levies to levels closer to those adopted by the GCC.

In April 2000, in an effort to facilitate procedures and enhance
transparency, the Customs Authority (CA) installed the Automated System
for Customs Data (ASYCUDA). ASYCUDA, programmed in compliance with
Yemeni legislation and national security, helps combat smuggling, fraud,
and document counterfeiting. In 2004, CA launched an electronic
clearance processing service at 15 entry points. Furthermore, CA
anticipates that the USD 23 million Container Vehicle X-ray Special
System will be fully installed and operational in a number of entry
posts by mid-2006.

The Yemeni Customs Authority assesses the value of imports at the
Central Bank exchange rate, which is allegedly the same as the market
rate. From 1996 to 2005, in an effort to simplify and make transparent
the customs procedures, the ROYG steadily reduced tariffs as the Cost of
Insurance and Freight (CIF) decreased for all imports. The tariff
schedule consists of ad-valorem duties of 5, 10, 15 and 25%. At the 10%
or less bracket, duties are levied on 3,134 items, which represent about
51% of the total of 6,237 scheduled items.

Under the positive influence of Yemen's pursuit of WTO accession, the
government contemplates reducing the custom tariffs. In 2004, CA
submitted a draft custom tariff law for approval by the Cabinet of
Ministers and the Parliament. The draft law proposed significant tariff
reduction on several high-tariff goods decreasing from 15 percent and 25
percent to 5 percent or less. The tariff reduction proposal was
implemented in 2005.

## Trade Barriers [**Return to top**](#ch5)

The ROYG demonstrated constructive movement to remove trade barriers by
eliminating import licensing in 1996 on most products except for
controlled materials and products such as alcohol and explosives, and
cut tariff rates to four bands between 5% and 25% ad-valorum. On the
other hand, unlike other countries in the region, Yemen imposes tariffs
on raw materials that are not available locally. It instituted an excise
tax on industrial inputs and a production tax on local manufacturers in
a declared effort to create a level playing field between imports and
local industrial products. The Yemeni government also streamlined
customs procedures somewhat, but businesses still consider them to be
the primary trade barrier. In 1995, the government renounced the
secondary and tertiary aspects of the Arab League boycott of Israel, but
the primary aspect remains in force.

Bureaucratic corruption at all levels of government affects every aspect
of business in Yemen. Judicial and administrative corruption has
distorted the free market economy. Illegal commissions and nepotism
involved in trading, tendering and investment undercut transparency and
enforcement of related laws and practices. In June 2004, some
parliamentarians criticized other members and government officials,
calling on them during parliamentary debate to refrain from operating
businesses that receive contracts from the state.

An annual income tax remains on commercial, industrial and service
establishments as well as transport, shipping, cargo and packing service
businesses. The tax is based on the company's profits, the owner\'s
profits, and depends on which sector the company operates in, whether
industry, trade, finance or real estate.

## Import Requirements and Documentation [**Return to top**](#ch5)

Import documentation and requirements are available from the Ministry of
Industry and Trade and/or the relevant ministry governing a company\'s
activities. A health certificate must be obtained to export animal and
fisheries products. The government eliminated import licensing in 1996,
except on controlled products and materials such as alcohol and
explosives.

The following documents are required:

\- Commercial Invoice

Three copies of the ordinary commercial invoice should accompany
shipments. The invoice should contain a full and accurate description of
the goods, the marks and numbers, value of the merchandise, country of
origin and net and gross weight.

\- Certificate of Origin

A separate certificate of origin is required for shipments to Yemen. The
general form sold by commercial stationers is acceptable.

\- Bill of Lading

There are no regulations specifying the form or number of bills of
lading required for any particular shipment. A bill of lading
customarily shows the name of the shipper, the name and address of the
consignee, port of destination, description of the goods, the listing of
the freight and other charges, the number of bills of lading in the full
set, and the date and signature of the carrier's official acknowledging
receipt on board of the goods for shipment.

\- Health Certificate

A health certificate is required for shipments to Yemen of animal stock,
food, and agricultural products.

\- Free Sale certificate

Imports of pharmaceuticals require a free sale certificate stating that
the commodities in question are in free circulation in the country of
export.

In a dispute between the CA and the shipment's owner, it shall be
referred to two experts, one appointed by the authority and the other by
the goods owner, within 8 days. If both experts agree, their opinion
shall be final. If not, an arbitration committee, consisting of a
permanent representative of the Minister of Finance or two CA and Yemen
Standardization, YSMO, and Metrology Organization representatives, shall
make a final and binding decision, and the losing party shall incur the
arbitration expenses.

## U.S. Export Controls [**Return to top**](#ch5)

The government does not tax exports, though it does require export
licensing for statistical purposes. However, in 2005, the Ministry of
Fish and Wealth imposed a 6% Fish Catch tax on all fisheries at the time
of catch.

In order to maintain stock and oceanic health, the Ministry of Fish
Wealth limits the export of certain categories of seafood products. In
addition, exports of antiques and archeological items exceeding USD 100
in value are prohibited. Often, airport customs officials confiscate
souvenirs, mistaken for antiques, without properly identifying or
investigating the item or providing compensation.

## Temporary Entry [**Return to top**](#ch5)

Temporary entry of equipment and furniture for projects is allowed
provided that they are re-exported upon completion of the project;
otherwise, they will be taxed. Goods coming through the Free Zones into
local markets are considered imports and, therefore will be subject to
all applicable taxes and measures.

Commercial samples are recorded in the visitor's passport and deleted
once they are taken out of the country. A significant number of samples
imported for exhibitions and expos require a cash guarantee or deposit
covering the customs and tax duties. If the items are sold or disposed,
the deposit will be returned with a deduction.

## Labeling and Marking Requirements [**Return to top**](#ch5)

[]{#twentythree .anchor}Yemen observes a few clear labeling
requirements: the country of origin must be clearly marked in English on
all imported goods, foodstuffs or pharmaceutical products entering Yemen
and production and expiration dates must be clearly printed on the
package. Otherwise, GCC and international standards are followed.

## Prohibited and Restricted Imports [**Return to top**](#ch5)

The government prohibits or restricts the importation of some items such
as pork and pork products, coffee, alcohol, narcotics, a limited list of
fresh fruits and vegetables during their local production seasons,
weapons, explosives and the endangered rhinoceros horn.

To view the list of prohibited items, please double click on the
Ministry of Trade and Industry's website at: <http://www.most.org.ye/> ,
then, click on "Prohibited Good."

## Customs Contact Information [**Return to top**](#ch5)

P. O. Box 2466, Sanaa, Republic Of Yemen

Phone: 967-1-260-388, Fax: 967-1-260-383

Chairman, Dr. Ali Ali Saleh Al-Zubaidi Tel: 260385, Telfax: 260-384/5/6

Office Manager Mohamed Al-Mahfadi, Tel: (967 1) 260386, Mobile: (967)
77181920, Dr. Deputy Chairman, Dr. Lutf Mahmoud Barakat t Tel: (9671)
500522, Mob: (967)77111213 Fax: 260381/3

Assistant Deputy Chairman for Customs Enforcement, Dr. Abdulrazaq
Al-Marani, (9671) 500459

Technical Assistant Deputy Chairman, Dr. Hamoud Shamsan (967 1) 500979

Legal Affairs, Abdullah Rajih, (9671) 500461

Yahya Yassin: Supervision Dept (9671) 261024

## Standards [**Return to top**](#ch5)

-   [Overview](#standardsoverview)

-   [Standards Organizations](#standardsorganizations)

-   [Conformity Assessment](#standardsconformityassessment)

-   [Product Certification](#standardsproductcertification)

### Overview [**Return to top**](#standards-return-to-top)

Multiple organizations within the Yemeni government are responsible for
standards and product quality control. Among them are the Yemen
Standardization, Meteorology, and Quality Control Organization (YSMQCO)
of the Ministry of Industry; the Customs Authority (CA); the
Environmental Protection Authority (EPA); and the Environmental
Department of the Ministry of Construction, Housing and Urban Planning.
Yemen is a member of the International Standards Organization (ISO
9000), the World Meteorological Organization, and the Arab Standards
Organization. YSMQCO supervises testing imports and has legal authority
to order a product's removal from the market if it does not meet
accepted standards. On August 16, 2002, the Prime Minister issued a
decree to adopt the GCC standards and specifications on Yemeni and
imported products.

### Standards Organizations [**Return to top**](#standards-return-to-top)

Standardization, Metrology and Quality Control law 44 of 1999
established the Yemen Standardization, Meteorology, and Quality Control
Organization (YSMQCO) in order to protect human, animal and plant health
and environmental safety. YSMQCO works in association with customs staff
on all the major land, coastal, and air ports of entry. A relatively
young institution still negotiating their mandate and authority in the
panoply of government agencies, YSMQCO has limited capabilities with
only one central laboratory and a limited number of modest laboratories.

A government decree imposes the GCC standards and specification on the
local and imported products. Yemen is a member in the International
Standardization Organization (ISO9000), World Meteorological
Organization and the Arab Standards Organization.

### Conformity Assessment [**Return to top**](#standards-return-to-top)

YSMQCO requests the following documents from the importer:

-   bill of lading

-   certificate of origin

-   analysis certificate, and

-   packing list

### Product Certification [**Return to top**](#standards-return-to-top)

For product certification of animal imports, YSMQCO requests the above
documents in addition to the following:

-   health certificate

-   Halal food certificate, and

-   A certified document from the country of export proving that imports
    are not affected by epidemics or were not exposed to radioactivity

For plant imports, YSMQCO adds the following documents:

-   A certified document from the country of export proving that imports
    are not affected by epidemics or were not exposed to radioactivity

## Trade Agreements [**Return to top**](#ch5)

Yemen has entered into major trade agreements with Saudi Arabia and has
applied for World Trade Organization (WTO) accession. Provisions of the
1934 Taif Treaty with Saudi Arabia call for establishment of open
markets, a single customs system for both countries, reciprocal most
favored nation trading status, and unimpeded transit rights through both
nations. The treaty was reaffirmed in the June 2000 Saudi-Yemeni border
treaty, also called the "Jeddah Treaty". Yemen is also a founding member
of the Indian Ocean Rim Association, has applied for membership in the
British Commonwealth, and was granted observer status at the WTO in
1999. In 2000, the General Council of the WTO accepted Yemen's
application for accession. Yemen presented a memorandum of foreign trade
regime to the WTO in 2002 and had its first working party meeting in
November, 2004. In 2005, Yemen\'s request to join the WTO discussion was
considered and a delegation from the Ministry of Industry and Trade
attend its first meeting in Geneva, Switzerland.

The Yemeni government has passed its Free Trade Zone Law (Law 4 of
1993), and designated 170 square kilometers of land in Aden as the
country's first free trade zone.

## Web Resources [**Return to top**](#ch5)

For more information about the Aden Free Zone, the Aden Container
Terminal, please visit: <http://www.aden-freezone.com/>

[Return to table of
contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

[]{#ch6 .anchor}

[Return to table of
contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

# Chapter 6: Investment Climate

-   [Openness to Foreign
    Investment](#openness-to-foreign-investment-return-to-top)

-   [Conversion and Transfer
    Policies](#conversion-and-transfer-policies-return-to-top)

-   [Expropriation and
    Compensation](#expropriation-and-compensation-return-to-top)

-   [Dispute Settlement](#dispute-settlement-return-to-top)

-   [Performance Requirements and
    Incentives](#performance-requirements-and-incentives-return-to-top)

-   [Right to Private Ownership and
    Establishment](#right-to-private-ownership-and-establishment-return-to-top)

-   [Protection of Property
    Rights](#protection-of-property-rights-return-to-top)

-   [Transparency of Regulatory
    System](#transparency-of-regulatory-system-return-to-top)

-   [Efficient Capital Markets and Portfolio
    Investment](#efficient-capital-markets-and-portfolio-investment-return-to-top)

-   [Political Violence](#political-violence-return-to-top)

-   [Corruption](#corruption-return-to-top)

-   [Bilateral Investment
    Agreements](#bilateral-investment-agreements-return-to-top)

-   [OPIC and Other Investment Insurance
    Programs](#opic-and-other-investment-insurance-programs-return-to-top)

-   [Labor](#labor-return-to-top)

-   [Foreign-Trade Zones/Free
    Ports](#foreign-trade-zonesfree-ports-return-to-top)

-   [Foreign Direct Investment
    Statistics](#foreign-direct-investment-statistics-return-to-top)

-   [Web Resources](#web-resources-return-to-top-1)

## Openness to Foreign Investment [**Return to top**](#ch6)

As one of the world's least developed countries, Yemen offers
international investors natural resources and an inexpensive labor
force. On April 14, 2000, the government of Yemen requested accession to
the World Trade Organization (WTO) to integrate more fully into the
world economy, and gained observer status in 2002. In November 2004, the
United States Trade Representative, Department of State, Department of
Commerce and other key US agencies began talks under the bilateral Trade
and Investment Framework Agreement (TIFA). The United States anticipates
that Yemen's preparation for WTO accession will further facilitate a
free and open investment climate for international investors.

Since the unification of North and South Yemen in 1990, the Republic of
Yemen embarked on a series of reforms aimed at stabilizing the economy
and increasing investment. An International Monetary Fund (IMF) and
World Bank-sponsored government economic restructuring program began in
1995. The IMF helped introduce indirect monetary policy instruments,
such as open market operations, rediscount facilities and reserve
requirements. Since then, Yemen's macroeconomic factors have largely
stabilized. Inflation, as measured by the Consumer Price Index (CPI),
declined from 70 percent in 1994 to 14.5 percent in 2004, and
preliminary figures show continued double digit figures for 2005 and
2006.

These new policies helped create foreign currency reserves that by
January 2006 reached USD 6.3 billion, or 19.1 months of imports. As of
June 14, 2001, the Paris Club rescheduled most of the external debt,
which currently stands at USD 5.3 billion, and commercial debt has
largely been eliminated through a World Bank grant program. In 2004, the
IMF reported Yemen's debt-to-GDP ratio at 41.4 percent and its debt
service-to-export of goods and services was 3.6 percent, although the
World Bank projects a steady increase in each of these figures over the
next ten years.

After adopting key economic reforms in the 90s, progress stalled in
2001. In October 2004, a World Bank report noted, "because of the
slackening pace of reforms \[in Yemen\] downside risks to medium-term
macro-economic stability have increased." In the summer of 2005,
however, the ROYG took steps to restart reform, partially introducing a
General Sales Tax (GST) and reducing petroleum subsidies, both part of
the government's strategic plan to improve revenue mobilization in
Yemen. Yemen still has considerable ground to cover in order to comply
with WTO standards, but in 2005 the ROYG took the significant step of
streamlining tariff policies and is in the midst of a number of
administrative and legal reforms.

With the implementation of tax incentives for merchants, Yemen's trade
environment is steadily improving but more government focus is needed on
privatization and regulatory reform. An April 2004 Presidential
directive decreed that land be granted to investors at no cost and that
the investment projects enjoy profit tax exemption if the project
capital is more than 10 million USD. A privatization program started in
1998 with sixteen enterprises in industry, tourism, and trade, came to a
standstill in April 2001 when Parliament refused to approve a World Bank
credit to fund a larger, long-term privatization program. However, few
years later, the government funded the privatization program. Also,
according to the technical Privatization Office, in 2005, the government
privatized 2 enterprises and is working to privatized 3more by the end
of 2006.

Commercial banks have also been required to improve their accounting
procedures and loan recovery rates, and the Central Bank recently raised
capital requirements to YR 6 billion, or about USD 30 million. The
banking system remains weak, however, with most commercial banks owned
by large business families who are reluctant to lend outside small
circles. Roughly three percent of Yemenis have bank accounts and most
financial transactions occur outside of the commercial banking system.
On January 2, 2006, the CBY announced the first liquidation of a local
bank, the Watani Bank. A CBY committee was assigned to evaluate the
bank's assets and financial obligations in order to start distributing
the available and collected funds to the depositors and creditors.

The government adopted a policy of uniform treatment for all investors,
domestic and foreign in 1992. The lead government agency is the General
Investment Authority (GIA), established in the same year. The GIA
coordinates between 8 government agencies to identify investment
opportunities and viable projects for investors as well as obtains
necessary approval needed by government agencies on behalf of investors.
Over the last decade, the GIA has cooperated with the World Bank\'s (WB)
Foreign Investment Advisory service to update Yemen's Investment Law 22
of 1991 (as amended). The alternative Investment Law Number 22 of 2002
was adopted by Parliament on June 2002 and signed by the President on
July 20, 2002. Implementation began in October 2002.

As written, the 2002 investment law safeguarded all exemptions and
benefits called for in the previous investment law and mandates that the
GIA de-emphasize licensing and focus on registration and promotion.
Recently, the GIA published registration and tax exemption procedures as
well as administrative appeals and disputes procedures on line for
foreign and local investors

The law eliminated government and GIA intervention in investment
projects and gave wider freedom to investors in running their projects.
The law canceled some legal provisions, which provided special
exceptions for investors from obtaining import and export licenses from
the Ministry of Industry and Trade. The law is intended to encourage
local production by reducing customs duties by 50 percent on imported
raw materials and 100 percent on raw materials produced locally for
agricultural and fisheries projects. Finally, the law canceled some tax
categories. This investment law falls under the government's financial,
economic and administrative reform program, and is intended to encourage
foreign investment.

Under amended Law 22 of 2002, the GIA registers and promotes investment
opportunities. The GIA provides potential investors with an information
packet that includes a copy of the investment law, an investment guide
summarizing GIA activities, and an application form with instructions.
Packets may be obtained from the promotion section, General Investment
Authority, P.O. Box 19022, Sanaa, Republic of Yemen (Telephone:
967-1-262-962/3 or 268-205; Fax: 967-1-262-964, E-mail:
<mohdhussein@yahoo.com>; Website: [www.giay.org](http://www.giay.org/)).

The GIA welcomes investment in all sectors with the exception of arms
and explosive materials, industries that could cause environmental
disasters, banking and money exchange activities, and wholesale and
retail imports. Investments in the exploration and production of oil,
gas and minerals are subject to special agreements (e.g., production
sharing agreements) under the authority of the Ministry of Oil and
Minerals and do not fall within the purview of the GIA. Investment is
open to Yemeni, Arab, or foreign investors acting solely or in
partnership on any project.

Boycott issues: However, occasional reports of violations have occurred
due to Yemeni companies use of old purchase order forms that contain
prohibited language. Yemen has stated that it will not renounce the
primary aspect of the boycott absent an Arab League consensus.
Occasionally individuals or organizations will call for boycotts of U.S.
products.

In November 2004, the government announced the creation of three
industrial zones in Aden, Hodaida and al-Mukallah that will concentrate
on manufacturing The Executive Order provides for the regulation,
management, and supervision of industrial zones. In conjunction with the
establishment of the industrial zones, the government is lobbying
industrialists to invest in these zones, construct its infrastructure,
and manage operations. However, the private sector, represented by the
chambers of commerce in major cities, has repeatedly expressed their
concern towards the government's shifting the infrastructure
responsibility over the private sector's shoulders.

## Conversion and Transfer Policies [**Return to top**](#ch6)

The Yemeni Riyal is currently trading at 195YR/1USD. Most foreign
currencies, especially US dollars, are readily available and trade
freely at market rates. Investors may transfer funds in hard currency
from abroad to Yemen for the purpose of investment and may re-export
invested capital, whether in kind or in cash, upon liquidation or
project disposal. Net profits resulting from investment of foreign funds
may be transferred freely outside of Yemen. Cash transfers are limited
to 10,000 USD. Transfers above that amount must receive approval from
the Central Bank of Yemen.

The Central Bank of Yemen intervenes regularly in the currency market.
At the end of 2005, the Central Bank of Yemen (CBY) infused USD 476
million into the market in order to control currency depreciation. In
January 2006, the CBY added another USD 65 million into the market. One
month later, another USD 96 million was pumped into the market.

## Expropriation and Compensation [**Return to top**](#ch6)

In the Republic of Yemen's fifteen-year history, there have been no
cases of outright property expropriation, although a dispute with Yemen
Hunt over the extension of a production sharing agreement is currently
in arbitration. The government recognizes that expropriation (which
existed in the former socialist Peoples' Democratic Republic of Yemen
(PDRY) until reunification in 1990) is contrary to its economic
aspirations. Most of the lands expropriated by the PDRY were returned to
the rightful owners. Land registration, however, is in its infancy and
disputes over both residential and commercial plots are frequent and
nearly impossible to adjudicate legally (see Dispute Settlement
section). Since deed information is inexact, owners can sell multiple
copies of a deed, and commercial suit options are extremely
time-consuming, prone to corruption, and judgments are often not
enforced.

Yemen\'s investment law stipulates that private property will not be
nationalized or seized, and that funds will not be blocked, confiscated,
frozen, withheld or sequestered by other than a court of law. Real
estate may not be expropriated except in the national interest, and
expropriation must be according to a court judgment and include fair
compensation based on current market value.

## Dispute Settlement [**Return to top**](#ch6)

Yemen is a signatory to the Convention on the Settlement of Investment
Disputes, but not the 1958 New York Convention on Arbitration. Yemen is
currently engaged in arbitration in Paris with American company Hunt
Oil. Yemen is expected to abide by the arbitration decision.

Yemen's judicial system is inefficient and subject to influence from
bribes or family connections. While Yemen's investment-related laws are
generally sound, enforcement remains problematic at best. The government
has special commercial courts which provide a mechanism for commercial
dispute resolution, but they are generally considered unreliable.

Business disputes are generally handled by informal arbitration or
within Yemen's court system. In 1998 the Yemeni Center of Conciliation
and arbitration, a private arbitration center, was created by a group of
lawyers, bankers, and businessmen as an alternative to the courts. The
center has settled about 52 disputes so far in the areas of trade,
finance, construction and industry, and is gaining recognition as a
viable alternative to court battles.

Most investors are best served by establishing a partnership with a
Yemeni who knows the system, and by including an international
arbitration clause in their contracts. In cases involving interest, most
judges use Shari\'a (Islamic) law as a guideline, under which claims for
interest payments due are almost always rejected. Local commercial banks
are sensitive to this problem, and rarely lend to other than large
established trading houses well known to them.

## Performance Requirements and Incentives [**Return to top**](#ch6)

Yemen's investment law does not specify performance requirements as
conditions for establishing, maintaining or expanding investment.
Incentives permitted under the law include, but are not limited to:
Exemption from customs fees and taxes levied on fixed assets of the
project; tax holiday on profits for a period of seven years, renewable
for up to 18 years maximum; the right to purchase or rent land and
buildings; and, the right to import production inputs and export
products without restrictions and registration in the import/export
register.

## Right to Private Ownership and Establishment [**Return to top**](#ch6)

While foreigners may own property, Yemen's commercial law requires
foreign companies and establishments to operate through Yemeni agents.
Law 23 of 1997 (as amended) regulates agencies and branches of foreign
companies and firms and outlines the requirements for establishing a
Yemeni agent. Chapter 3 of Law 23 permits foreign companies and firms to
conduct business in Yemen by establishing foreign-owned and managed
branches. Foreign establishments wishing to open branches in their own
names must obtain a permit by decree from the Minister of Industry and
Trade.

Under the 2002 investment law, foreigners can own 100 percent of the
land and can execute projects without a Yemeni agent and without
obtaining import/export license from the Ministry of Industry and Trade
or implementing Law 23 of 1997 (the investment law implemented in
October 2002 has precedence over other laws. This is contradicted by the
commercial law, however, which limits foreign ownership to 49 percent.
The government is currently reviewing the laws in an attempt to remove
inconsistencies.

Mortgage lending in Yemen is rare because of the unwillingness of the
court system to uphold the payment of interest or to accept land as a
form of collateral. In addition, Yemen has a long history of incomplete
or inaccurate land records and frequent land ownership disputes, making
the use of real estate as collateral difficult. While the General Survey
Authority is working to establish a just and legally defensible land
registry system, implementation remains years away. A republican decree
has been issued in 2006 to merge agencies overseeing land tenure,
registration and urban planning in one agency to avoid overlapping.

## Protection of Property Rights [**Return to top**](#ch6)

Yemen has a record of inadequate protection of intellectual property
rights (IPR), including patents, trademarks, designs, and copyrights. In
late 2004 the Cabinet approved the Berne Convention for the Protection
of Literary and Artistic Works, as well as the International Agreement
on Protecting Intellectual Property Rights. Parliament has yet to ratify
these agreements. Yemen has yet to accede to any international IPR
conventions and its IPR Law number 19 of 1994 is not TRIPS compliant.
Yemen's Ministry of Industry and Trade drafted a new patents law;
trademark law, and a design and copyrights law, pending final
adjustments the laws will be sent to the Cabinet and later to Parliament
for final approval. In continuing efforts, the Ministry of Culture and
Tourism drafted the Related Rights Law, which awaits Parliament's
approval. In March 1999, Yemen became a member of the World Intellectual
Property Organization (WIPO) and is now revising its laws with WIPO
guidance. Yemen\'s application to join the World Trade Organization
(WTO) was approved in July 2000 and the country gained observer status
in 2002. Yemen held its first working party meeting for WTO accession in
November 2004 and held its second meeting in 2005. As part of its
accession requirements, Yemen will need to enact its recently revised
IPR legislation and take concrete steps to enforce these laws
adequately.

In 1999, a large US-based multinational firm litigated successfully a
trademark infringement case in Yemen's courts. The ruling is now under
appeal and the violator continues to infringe on the trademark despite
the court ruling. A final resolution was expected by the end of 2000,
but it is still pending in the Supreme Court. Three rulings by Primary
Court, Appeal Court and Supreme Court were in favor of the US Company.
Due to the difficulty in enforcing the ruling, both disputing parties
agreed on an amicable arbitration. In a second case involving a US
Company\'s trademark, the Appeal Court handed down a final ruling in
April 2001 in favor of the US Company. In August 2003, the Supreme Court
rejected the appeal of the company producing the infringed products and
ordered it to cease production and destroy the infringed trademark.
However, this ruling has not been enforced.

## Transparency of Regulatory System [**Return to top**](#ch6)

Implementation and enforcement of Yemen's environmental protection
regulations and labor laws are inadequate and non-transparent. Health
and safety standards are rudimentary and not enforced. Customs tariff
regulations and tax laws remain inconsistent and smuggling is common,
but the government has taken steps in recent years to standardize the
process with ASYCUDA systems and a WTO-compliant valuation methods.

## Efficient Capital Markets and Portfolio Investment [**Return to top**](#ch6)

In the 1990s Yemen's banking system suffered from a large volume of
non-performing loans, inadequate loan provisioning, low bank
capitalization, and weak enforcement of prudential standards. Under a
1997 World Bank-sponsored financial sector reform program, the
government took actions to address these problems. A bank reform law was
passed in 1998 to update, strengthen, and regulate the industry. By
2000, the Central Bank of Yemen (CBY) had circulated strict regulations
pertaining to credit risk management, liquidity, insider lending,
foreign exchange exposure, financial leasing and external auditors.
Banks are required to reach a capital adequacy ratio of eight percent
and meet new classification and provisioning standards for loan
portfolios and most comply. Nevertheless, commercial banks still suffer
from extremely low capitalization rates and are essentially owned by
large trading families who establish the bank to service their own
business needs.

In 2005, the Cabinet of Ministers restructured the Agricultural
Cooperative Credit Bank into the Rural Development Bank and raised its
working capital to 32 million USD. The new bank aims to augment the
state's efforts in the local rural development.

Private sector lending is constrained by a lack of judicial recourse to
recover bad loans. To correct this weakness, a steering committee
produced a series of reform recommendations in 1999. Among the
recommendations was the establishment of special loan recovery courts.
The recommendations have not been implemented.

In 1999, under the WB/IMF's financial sector reform effort, the
government announced the merger of four majority-government-share banks
with an eye toward privatizing the merged entity. In 2004, the press
speculated that the National Bank of Yemen was solvent and would be part
of the merged entity. The Yemen Bank for Reconstruction and Development
was also restructured and likely to be part of the privatized bank. The
two remaining specialized banks, housing and agriculture, were also
restructured but are not healthy enough to be merged with the others. At
present, the merger has not moved forward on any of the four
government-owned or majority government-share banks.

In June 2000, the president signed the Central Bank Law Number 14
granting the CBY greater independence. Its mandate is to focus on price
stability, limit public sector financing to emergency loans, adopt its
own monetary and exchange rate policies, and enforce greater commercial
bank accountability. The CBY is authorized to conduct inspections of all
bank implementation provisioning and capital increase schedules, and it
enforces penalties and corrective measures. In 2003, Parliament passed a
Money Laundering Law, which the CBY has begun to implement and enforce.

Inter-bank activities are limited, and there are no equity or bond
markets. In the recent past, the government hoped to establish a stock
market in Yemen to promote the government\'s private sector-led growth
strategy. However, the consensus of most Yemeni and foreign observers is
that the country currently lacks the expertise to establish a stock
market, and there are not sufficient numbers of Yemeni investors to
sustain an active stock market. The CBY began offering treasury bills in
December 1995. Commercial banks purchased a large share of the bills,
investing up to 30 percent of their assets. The interest rate on T-bills
was gradually reduced from a high of 23 percent in 1999 to about 13
percent in 2006 in order to encourage investment lending.

## Political Violence [**Return to top**](#ch6)

Yemen faces recurring problems with political and tribal violence.
Kidnappings have traditionally been seen as a means for tribes to
pressure the government to accede to their demands, such as development
projects or improved services. Abductions have generally declined over
the past five years in the wake of government crackdown.

In December 2005, however, a former German diplomat and his family were
kidnapped and released unharmed several days later. Shortly thereafter,
four Italian tourists were kidnapped by a tribe in the Mareb region. The
hostages were released after several days following extensive
negotiations and a successful rescue operation by the Yemeni government.
Earlier in the year, two Spanish tourists and representatives of UNICEF
were also kidnapped. The last incident involving Americans came in
December 2002, when three American doctors were killed near the city of
Ibb. The perpetrator was caught, convicted and sentenced to death. The
sentence was carried out in February 2006. The government of Yemen has
sent strong signals that it will no longer tolerate kidnapping..

Some tribal elements hijack automobiles or other expensive equipment
owned by foreign companies as means to pressure the government to share
wealth with local tribes or resolve tribal disputes. This occurs most
frequently in areas of oil and mineral extraction, with some tribes in
these regions claiming they are not getting their share of the wealth.
Investors in such ventures should be sensitive to the need to build
community relations. The provision of community-based services, such as
healthcare and education contribute to protecting investments in
isolated areas.

The Republic of Yemen Government and the United States cooperate closely
on counter-terrorism. The October 2000 attack on the USS COLE in Aden
harbor, in which 17 US servicemen and women were killed, and the October
2002 bombing of a French oil tanker the M/V Limburg off the coast of
Mukalla were acts of international terrorism. In January 2006, 23
convicted terrorists managed to escape from the Political Security
Organization's prison in Sanaa. According to Yemeni and U.S. government
sources, some of the escaped terrorists were behind the attack on USS
COLE and the French oil tanker the M/V Limburg. The Yemen government's
efforts to recapture the escapees have resulted in the surrender of 9 of
the fugitives to date.

Since 2004, the government has periodically been involved in armed
conflict with rebels in the northern Sa'ada governorate, originally led
by anti-American Shiite cleric Al-Houthi, who was killed in August of
2005. In early 2006, the government reached a cease-fire with rebels,
and there have been no recent attacks on government forces.

## Corruption [**Return to top**](#ch6)

In 2005, Yemen's ranked 103^rd^ out of 158 countries on Transparency
International's corruption perception index. One of the poorest
countries in the world with a hugely overstaffed and underpaid civil
service, Yemen has a significant and widely acknowledged corruption
problem. Illicit activities include soliciting and paying bribes to
facilitating or obstructing projects, leveraging dispute settlements,
skewing taxation and customs tariff augmentations, and engaging in
family or tribal nepotism. The government recognizes that it must enact
civil service and administrative reforms to create new disincentives to
corruption, but progress has been slow. In 2003, a new Minister of Civil
Service was appointed who initiated several programs to improve the
civil service. In September 2004, the Cabinet approved the United
Nations' Convention combating different forms of corruption. In 2006,
the government proposed a law creating an independent anti-corruption
committee, which awaits approval by Parliament.

## Bilateral Investment Agreements [**Return to top**](#ch6)

The US and Yemen signed a Trade Investment Framework Agreement in 2004.
According to the General Investment Authority, Yemen signed three
agreements in 2003 and one in 2004, bringing the total bilateral
treaties to 35. Yemen has bilateral investment treaties with Algeria,
Austria, Bahrain, Belarus, Belgium, Bulgaria, China, Djibouti, Egypt,
Ethiopia, France, Federation of Russia, Germany, Hungary, India,
Indonesia, Iran, Jordan, Kuwait, Lebanon, Malaysia, Morocco, the
Netherlands, Oman, Pakistan, Qatar, South Africa, Sudan Sweden, Syria,
Tunisia, Turkey, the UAE, Ukraine, and the United Kingdom. Yemen has
initialed agreements with Croatia, Mongolia, and Romania.

## OPIC and Other Investment Insurance Programs [**Return to top**](#ch6)

Yemen and the United States signed an investment guarantee agreement in
1972. As of October 1997, OPIC and EXIM Bank provide guarantees for both
private and public sector projects of short and medium duration (up to
seven years). Yemen is a member of the Multilateral Investment Guarantee
Agency (MIGA).

## Labor [**Return to top**](#ch6)

The Yemeni government generally follows International Labor Organization
(ILO) standards regarding labor laws and worker rights. In 1999 it
ratified ILO conventions on the elimination of the worst forms of child
labor and the minimum work age for employment. As in other areas,
enforcement of labor laws is weak. Child labor is an issue of special
concern. Some children work with their families in agriculture. To
address this issue, the government signed an agreement to cooperate with
the International Program on Elimination of Child Labor (IPEC) in 2000.
After ratification of the ILO, the government established the Child
Labor Unit at the Ministry of Social Affiars and Labor to implement and
enforce child labor laws and regulations. Investors find the local pool
of skilled labor for technology intensive ventures limited.

Yemen\'s overall illiteracy rate for persons age 15 and older is 50
percent (World Bank, September 2004), 28 percent for men and 68 percent
for women. In 2005, the Ministry of Social Affairs and Labor estimated
that Yemen needs at least 210 thousand new jobs annually to encounter
the rapidly growing local labor force. There are conflicting reports
from different government agencies about the rate of unemployment, but
the Ministry of Labor and Social Affairs estimates the rate of
unemployment for 2006 as 17 percent. Many local and international
organizations estimate the rate of unemployment in Yemen to reach 25
percent or higher.

Those who complete secondary education and university studies in Yemen
often do not possess the same professional standards as their
counterparts from Western educational institutions. University graduates
also experience difficulty finding appropriate employment and are
sometimes unwilling to accept lower skilled jobs. The government is
beginning to focus on increasing access to and improving the quality of
vocational training as a means to develop a cadre of skilled laborers in
high demand fields, including construction workers, medical technicians,
electricians, plumbers and carpenters.

## Foreign-Trade Zones/Free Ports [**Return to top**](#ch6)

The Yemen Free Zone Public Authority was established in 1991 to develop
the Aden Free Zone. Yeminvest, a joint venture between the Port of
Singapore Authority (PSA) and the Bin Mohfoud Group of Saudi Arabia, was
awarded the concession to develop the area. The government bought out
the Yeminvest contract in October 2003 and Overseas Port Management is
temporarily operating the Aden Container Terminal. In 2005, Dubai Port
World (DPW) won a tender to become new operator for the Aden Container
Terminal (ACT), but is awaiting approval of the bid from Parliament.
Opened in September 1999, ACT logged steady growth through 2001. The
October 2002 terrorist attack on the French oil tanker M/V Limburg
caused shipping insurance premiums to raise 300 percent. As a result,
ships were diverted to the ports of Djibouti and Salalah in Oman. Since
the summer of 2003, shipping insurance premiums have dropped to zero
percent, as is standard in Dubai and other nearby ports. The port mainly
serves as a transshipment hub, but attempts are being made to increase
the percentage of the local cargo through the development of the
industrial and warehousing estate.

In its first phase of development, ACT planned to handle up to one
million Twenty-feet Equivalent Units (TEUs) annually on its two-berth,
700m quay. Those plans have been scaled back, and current capacity is
650,000 TEUs annually. The 35 hectare container yard can store 10,000
boxes. Yemen Ports Authority constructed a new 270-meter long and 12
meter deep dock assigned for unpacking the wheat-loaded vessels. The
dock will alleviate burdens of the other seven docks in the port.

An industrial and warehousing estate called Aden District Park (ADP) was
launched in November 2002. The Aden Container Terminal and the Aden Free
Zone are promising areas for investment. Opportunities in light
industry, repackaging and storage/distribution operations are welcomed.
Future plans include development of heavy industry and more extensive
tourist facilities in the greater Aden area.

Free zone incentives include 100 percent foreign ownership, no personal
income taxes for non-Yemenis, and a corporate tax holiday for 15 years
(renewable for 10 additional years), 100 percent repatriation of capital
and profits, no currency restrictions, and no restrictions on, or
sponsoring required, for the employment of foreign staff. Aden's main
selling point is its strategic location -- nine days steaming from
Europe and seven from Singapore. It is four nautical miles off the main
Far East - Europe sea route. For further information, contact: Free
Zones Public Authority (AFZPA), (Main Center) P.O. Box 5842 Khormaksar,
Aden, Republic Of Yemen, Telephones: 967-2-234484/5/6, Fax:
967-2-235-637, e-mail: [Adenfz@Y.Net.Ye](mailto:adenfz@y.net.ye);
Website: [Www.Aden-Freezone.Com](http://www.aden-freezone.com/)

In May 2001, a new terminal at Aden International Airport was officially
opened. In addition, a study was completed in August 2001 for future
plans for the airport to include a duty free zone and cargo village to
facilitate transit trade with the Aden Free Zone port facilities.

## Foreign Direct Investment Statistics [**Return to top**](#ch6)

According to the GIA, the foreign direct investment in Yemen for 2005 is
approximately USD 205 million, 44 percent of total investment. Most U.S.
investment in Yemen is in oil exploration, production and oil field
services.

## Web Resources [**Return to top**](#ch6)

United States Embassy in Sanaa, Yemen

<http://usembassy.state.gov/yemen/>

The US Embassy website provides latest embassy news, reports, travel
warnings, visa information, programs and events.

Export.gov

<http://www.export.gov/>

Export.gov provides online trade resources and one-on-one assistance for
American businesses who would like to start or expand global sales.

# Chapter 7: Trade and Project Financing

-   [How Do I Get Paid (Methods of
    Payment)](#how-do-i-get-paid-methods-of-payment-return-to-top)

-   [How Does the Banking System
    Operate](#how-does-the-banking-system-operate-return-to-top)

-   [Foreign-Exchange
    Controls](#foreign-exchange-controls-return-to-top)

-   [U.S. Banks and Local Correspondent
    Banks](#u.s.-banks-and-local-correspondent-banks-return-to-top)

-   [Project Financing](#project-financing-return-to-top)

-   [Web Resources](#web-resources-return-to-top-2)

## How Do I Get Paid (Methods of Payment) [**Return to top**](#ch7)

Embassy strongly recommends that all contracts and transactions be paid
through confirmed and irrevocable letters of credit (LOCs) or cash
payment in advance.

## How Does the Banking System Operate [**Return to top**](#ch7)

Twelve commercial banks, and two public sector specialized banks
(Agriculture and Housing) operate in Yemen under the oversight of the
Central Bank of Yemen (CBY). Since 1996, three Islamic banks opened
their doors and are competing successfully in the banking sector. CBY
has maintained a 13 percent interest rate on rial deposits and now
allows each commercial bank to determine interest on its foreign
currency accounts. The change reflects expectations for a high but
stable inflation rate and for a stable rial-to-USD currency exchange in
2006.

In addition to its oversight of 14 banks, the CBY issues licenses for
banking activities to supervise the banking sector. Of the 17 licensed
banks, 10 are national banks, three are local branches of foreign banks,
and four are joint venture banks. CBY only licenses the banks rated as
"A+" by Dunn and Bradstreet, who meet the Basle Standards, i.e. a
minimum capital adequacy ratio of 8 to 12 percent.

CBY directs monetary policy with modifications to the overnight reserve
requirement as needed. Any CBY officer must have CBY written approval in
order to possess more than 10 percent of voting power or shares in any
commercial bank. The banking and currency exchange-related laws do not
contain any discriminatory provisions against the US bank of a company.

New investors will find it difficult to obtain financing or credit from
a bank in Yemen. The banking system suffers under system-wide structural
problems such as non-performing loans, the absence of a credible credit
rating system and uneven implementation of existing regulations. However
the most significant constraint on lending to new investors lies in the
non-independent judiciary that cannot reach judgments in a timely
manner, cannot enforce judgments, and are prone to bribery. In that
context, banks are disinclined to lend to customers with whom they do
not already have a well-established relationship.

The banking system is not an effective vehicle for financing investment.
Most Yemeni bank assets are invested in foreign banks or treasury bills.
They do not provide the required cash margin of 50 to 100 percent for
letters of credit. Most of the credit activity and financing of the
commercial banks deals solely with the large family-owned enterprises
that dominate the business sector and are also the main shareholders of
the banks.

On January 2, 2006, and for the first time ever, the CBY announced the
liquidation of a local bank, the Watani Bank. A CBY committee was
assigned to evaluate the bank's assets and financial obligations in
order to start distributing the available and collected funds to the
depositors and creditors. CBY officials instructed banks in Yemen to
raise their capital up to six billion rials, about USD 30 million.

## Foreign-Exchange Controls [**Return to top**](#ch7)

There are no limits or controls on the transfer of funds into and out of
Yemen or on funds garnered from an investment in Yemen. Any individual
or company may import foreign currency into Yemen; exporting currency
out of Yemen should not exceed USD 10,000 unless otherwise approved by
the Central Bank. Again, CBY does not impose restrictions on foreign
payments and transfers and allows the transfer of foreigners' accounts
resulting from foreign transactions. Commercial banks and private
exchangers are allowed to purchase foreign currency from customers and
to hold a percentage of foreign exchange for import payments. There are
no taxes on purchases or sales of foreign exchange.

The Yemeni rial has floated freely since 1996, and the exchange rate was
stable in the 174-175YR/1USD range until October 2002. After falling to
182-183 YR/1USD by the end of 2002, the rial has remained relatively
stable. At the end of 2005, the rial sold at a market rate of
194YR-195YR/1USD. In order to evaluate imports for tariff collection,
the Customs Authority bases its calculation on a monthly average
exchange rate published by the Central Bank of Yemen set to the
prevailing market rate.

## U.S. Banks and Local Correspondent Banks [**Return to top**](#ch7)

While U.S. banks or branches have not set up operations in Yemen, most
Yemeni banks have U.S. correspondent banks.

[List of Banks with Correspondent U.S. Banking
Arrangements]{.underline}: Arab Bank, Credit Agricole Indosuez,
International Bank of Yemen, National Bank of Yemen, Yemen Commercial
Bank, Yemen Kuwait Bank for Trade and Investment, Yemen Gulf Bank, and
Shamil Bank of Yemen and Bahrain. (See Section 9 for contact
information.)

## Project Financing [**Return to top**](#ch7)

The international credit ratings of Yemen's commercial banks have been
steadily improving in recent years. International commercial banks
confirm locally issued LOCs on less than 100% cover and are lengthening
their tenure from sight to 90-120 days. Local banks have sufficient
stock to lend to the private sector for most projects, but they will
lend only to known customers because the Yemeni legal system will rarely
support their claims against defaulters.

Both OPIC and EXIM Bank have been "on cover" in Yemen since October 1997
for both private and public sector projects of up to seven years
duration. The Embassy strongly recommends that all contracts require
payment via confirmed irrevocable letter of credit or cash in advance.

The ROYG committed itself to implementing the projects and programs
stated in the World Bank's Poverty Reduction Strategy Paper managed by
the Ministry of Planning and International Cooperation (MOPIC). These
projects cover areas of economic growth, human resources development,
infrastructure, and social protection. Some of the projects were
implemented during the 2003-2005 period and 70 percent of these projects
were self-financed through the ROYG budget. The government seeks
assistance from the international community to finance the remaining 30
percent.

In December 2005, the World Bank aid to Yemen was reduced from USD 420
million to USD 280 million for the next three years. According to the
WB, the decision to reduce aid came as a result of increasing corruption
in WB projects.

The U.S. Trade and Development Agency (TDA) has financed or partially
financed feasibility studies for several infrastructure projects over
the past six years, including a study for a private sector oil refinery
north of the Red Sea port of Hodeidah, a cement plant in Bajil (Hodeidah
Governorate), a private hospital in Sanaa, expansion of the Marib Oil
Refinery, a study for the upgrade of Yemen\'s electricity grid, and a
study for a wastewater project in Taiz.

## Web Resources [**Return to top**](#ch7)

Export-Import Bank of the United States:
[http://www.exim.gov](http://www.exim.gov/)

Country Limitation Schedule:
<http://www.exim.gov/tools/country/country_limits.html>

OPIC: [http://www.opic.gov](http://www.opic.gov/)

Trade and Development Agency: <http://www.tda.gov/>

SBA\'s Office of International Trade: <http://www.sba.gov/oit/>

USDA Commodity Credit Corporation:
<http://www.fsa.usda.gov/ccc/default.htm>

U.S. Agency for International Development:
[http://www.usaid.gov](http://www.usaid.gov/)

International Cooperation for Development:
[http://www.ciir.org](http://www.ciir.org/)

International Trade Agency: http://www.ita.gov/

[Return to table of
contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

[]{#ch8 .anchor}

# Chapter 8: Business Travel

-   [Business Customs](#business-customs-return-to-top)

-   [Travel Advisory](#travel-advisory-return-to-top)

-   [Visa Requirements](#visa-requirements-return-to-top)

-   [Telecommunications](#telecommunications-return-to-top)

-   [Transportation](#transportation-return-to-top)

-   [Language](#language-return-to-top)

-   [Health](#health-return-to-top)

-   [Local Time, Business Hours and
    Holidays](#local-time-business-hours-and-holidays-return-to-top)

-   [Temporary Entry of Materials and Personal
    Belongings](#web-resources-return-to-top-3)

-   [Web Resources](#web-resources-return-to-top-3)

## Business Customs [**Return to top**](#ch8)

Personal relationships are the key to developing business ties in Yemen.
Although Yemeni law does not require an agent, businesses rarely succeed
without a local agent working on their behalf. While Yemenis will agree
to formal business meetings, most effective discussions occur at \"qat
chews\" or social sessions after lunch. These events are held at
businessmen\'s homes where guests sit on cushions on the floor. Chewing
qat is not obligatory, but your host will be complimented if you give it
a try. Chemically related to amphetamines, qat is a \"Class 1"
controlled substance under U.S. law and may not be brought to the United
States. Individuals with heart problems, high blood pressure, insomnia,
or gastro-intestinal problems should not chew qat.

Yemenis have been engaging in trade for millennia and have refined the
art of negotiation. Delay is a favorite tactic, but it can also be a
polite refusal. The common use of the phrase \"inshallah\" (God willing)
should not necessarily be interpreted as approval or agreement.

Most private sector business offices open in the mornings, close for
lunch, and reopen in the early evening. The Embassy's workweek is
Saturday-Wednesday from 8:00 a.m. to 4:30 p.m., the Yemeni government
workweek is Saturday-Wednesday from 9:00 a.m.-1:00 p.m., and the private
sector workweek is Saturday-Wednesday from 8:00 a.m.-1:00 p.m. and 4:30
p.m.-7:30 p.m. and Thursday mornings from 8:00 a.m.-1:00 p.m. Bank hours
vary from bank to bank. However, all banks are open mornings
Saturday-Thursday from 8:00 a.m.-1:00 p.m. and some offer evening hours.

During the month of Ramadan, most Yemenis fast from dawn to dusk.
Private businesses elect various schedules such as working in the
morning and/or late evening or simply closing for the entire month.
Ramadan is celebrated according to the lunar calendar so the exact time
varies from year to year. Government ministries are open for two to
three hours a day from 10:30 AM to 1:30 PM. Most private companies work
morning session, from 10:00 AM to 2:00 PM and night session from 9:00 PM
to 12:00 AM. Also many private and public sector contacts will take
leave from work during the week preceding and the week following
Ramadan.

"Guide for Business Representatives" is available for sale by the
Superintendent of Documents, U.S. Government Printing Office,
Washington, DC 20402, telephone:

\(202\) 512-1800, fax: (202) 512-2250). Business travelers to Yemen
seeking appointments with U.S. Embassy Sanaa officials should contact
the Commercial Section in advance.

## Travel Advisory [**Return to top**](#ch8)

For the latest, most up-to-date travel information, U.S. citizens can
refer to the State Department's Consular Information Sheet; available 24
hours per day at (202) 647-5225 or on the Internet at
[www.travel.state,gov](). Upon arrival to Yemen, Americans should
register with the Embassy's Consular Section for information and
assistance in case of emergency at 967-1-755-2266 or at
<consularsanaa@state.gov>. More information such as any recent warden
messages is available at
<http://usembassy.state.gov/yemen/citizen_services.html>.

## Visa Requirements [**Return to top**](#ch8)

Since July 2004, citizens of the G-8, GCC, and select countries,
including the U.S., may obtain a visa upon arrival at the airport. In
practice, airport visas are difficult to procure for U.S. citizens. The
Embassy strongly recommends that U.S. citizens traveling to Yemen obtain
an entry visa prior to arrival. Visas can be obtained from the Embassy
of Yemen in Washington, DC or from Yemen's UN Mission in New York City.
Please note: Immigration officials may turn back travelers with Israeli,
Pakistani, Iranian or Afghani visas in their passports. More information
may be found at the following websites:

State Department Visa Website: <http://travel.state.gov/visa/index.html>

United States Visas.gov: <http://www.unitedstatesvisas.gov/>

## Telecommunications [**Return to top**](#ch8)

The telecommunications network is reliable and comparatively well
developed among infrastructure networks in Yemen. Landline telephones
are common in most urban offices and some urban homes. It is less common
in rural areas. In the last four years, the mobile telecom sector has
quickly surpassed the landline telecom network as a critical tool for
business people and private use in the general population. Internet
access is slow, DSL is hard to get, and most hotels do not provide good
internet service.

Infrastructure improvements over the last decade have gradually brought
a functional intercity highway network and an expanding mobile telecom
grid. Yemen has adequate road and air transportation, but delays often
occur. Most business transactions are conducted via telephone and fax.
While e-mail use is rising, most government agencies and businesses,
except for the very largest, share one email address. Government owned
and managed TeleYemen operates the country\'s international, fax and
cellular telephone network and opened Yemen\'s first Internet node in
1997. Yemen's Public Telecommunication Corporation also opened its own
Internet node in 2002. In 2001, three private sector companies opened
for operation using the GSM cellular telephone network. Yemen\'s large
cities often experience rolling blackouts because of insufficient power
capacity. In 2005, the supply of electricity met approximately 30
percent of Yemen's total demand for electricity, though urban areas
enjoy greater consistency of coverage.

## Transportation [**Return to top**](#ch8)

According to the World Bank, Yemen now has 5,960 KM of asphalted roads
compared to 365 KM in 1973. There are two-way asphalted roads between
major cities. There are three bus transportation companies and one
taxicab company, named \"Rahah\", all of which provide transportation
services between governorates. As for in-city transportation, Rahah,
which started operating in early 2005, can provide taxi services to
customers on demand. Independent taxis and small buses serving set
routes abound in the large cities.

Yemen has eight airports, four of which are open for international
flights. These arelocated in Sanaa, Aden, Mukhalla, and Hodedia.
Yemenia, the only local airline, has travel agencies in all of Yemen's
major cities.

As for transportation in rural areas, the roads are not asphalted and,
in some areas, it is difficult to reach certain villages due to the
mountainous terrain.

## Language [**Return to top**](#ch8)

Many businesspeople and government officials speak some English, but
Arabic is the official language. The majority of Yemeni companies with
international business ties have senior personnel who have studied in
the West and have a proficient grasp of business English. To do business
with smaller companies, an American company may want to hire a
translator.

## Health [**Return to top**](#ch8)

Yemen\'s medical system is inadequate. The Embassy strongly urges
visitors to obtain medical evacuation insurance prior to their arrival.
The greatest threat comes from automobile accidents, though Sanaa\'s
alpine altitude (over 7,200 feet), dryness, and dust may aggravate
allergies or cause respiratory problems. Visitors may experience
lightheadedness and dizziness during physical exertion. Malaria is
prevalent in coastal areas, soisitors to Aden, Hodeidah, Mokha, or
Mukalla should take preventative measures. Immunization requirements can
be obtained through the Centers for Disease Control in Atlanta at
[http://www.cdc.gov](http://www.cdc.gov/).

## Local Time, Business Hours, and Holidays [**Return to top**](#ch8)

In general, Sanaa\'s climate is pleasant year-round. Temperatures are
warm during the day and cool at night. Sunny skies predominate, although
two-annual rainy seasons occur in March-April and July-August. The
coastal climate differs dramatically. Aden, Hodeidah and Mukalla see
temperatures above 100 degrees Fahrenheit for half of the year with
equally high humidity

The time zone in Yemen remains at Greenwich Mean Time plus 3 hours
(GMT+3). Yemen does not observe Daylight Savings. As a result, the time
difference between Yemen and the U.S. in the spring-summer seasons is
one hour less than in the fall-winter seasons.

+-----------+-----------+-----------+-----------+-----------+-----------+
|           | Pacific   | Mountain  | Central   | Eastern   | Yemen     |
|           |           | Time      | Time      | Time      |           |
|           | Time      |           |           |           |           |
+-----------+-----------+-----------+-----------+-----------+-----------+
| Spri      | 9 a.m.    | 10 a.m.   | 11 a.m.   | 12 noon   | 7 p.m.    |
| ng-Summer |           |           |           |           |           |
+-----------+-----------+-----------+-----------+-----------+-----------+
| Fall-     | 8 a.m.    | 9 a.m.    | 10 a.m.   | 11 a.m.   | 7 p.m.    |
|           |           |           |           |           |           |
| Winter    |           |           |           |           |           |
+-----------+-----------+-----------+-----------+-----------+-----------+

Dates of Islamic holidays are dependent upon lunar observation and are
approximately 11 days earlier each succeeding year due to the lunar
calendar. The Embassy observes all American holidays. U.S. holidays that
fall on a Monday are generally observed by the Embassy on the preceding
Saturday.

[The American and Yemeni official holidays for 2006:]{.underline}

+----------------+-----------------------+----------------------------+
| **[Date]       | >                     | >                          |
| {.underline}** | **[Day]{.underline}** |  **[Holiday]{.underline}** |
+----------------+-----------------------+----------------------------+
| January 1      | Sunday                | New Year\'s Day            |
+----------------+-----------------------+----------------------------+
| January 10,    | Tuesday, Wednesday,   | Eid al-Adha (Y)\*          |
| 11, 14         | Saturday              |                            |
+----------------+-----------------------+----------------------------+
| January 15     | Sunday                | Martin Luther King\'s      |
|                |                       | Birthday (U.S.)            |
+----------------+-----------------------+----------------------------+
| January 31     | Tuesday               | Islamic New Year (Y)\*     |
+----------------+-----------------------+----------------------------+
| February 18    | Saturday              | President's Day (U.S)      |
+----------------+-----------------------+----------------------------+
| May 22         | Monday                | National Day (Y)           |
+----------------+-----------------------+----------------------------+
| May 27         | Saturday              | Memorial Day (U.S)         |
+----------------+-----------------------+----------------------------+
| July 4         | Tuesday               | Independence Day (U.S.)    |
+----------------+-----------------------+----------------------------+
| September 2    | Saturday              | Labor Day (U.S.)           |
+----------------+-----------------------+----------------------------+
| September 26   | Tuesday               | Revolution Day (Y)         |
+----------------+-----------------------+----------------------------+
| October 7      | Saturday              | Columbus Day (U.S.)        |
+----------------+-----------------------+----------------------------+
| October 14     | Saturday              | Revolution Day (Y)         |
+----------------+-----------------------+----------------------------+
| October 23,    | Monday, Tuesday,      | Eid Al-Fitr (Y)\*          |
| 24, 25         | Wednesday             |                            |
+----------------+-----------------------+----------------------------+
| November 11    | Saturday              | Veteran's Day (U.S.)       |
+----------------+-----------------------+----------------------------+
| November 22    | Wednesday             | Thanksgiving Day (U.S.)    |
+----------------+-----------------------+----------------------------+
| December 25    | Monday                | Christmas Holiday observed |
|                |                       | (U.S)                      |
+----------------+-----------------------+----------------------------+

\*Dates marked with an asterisk indicate a holiday determined by the
lunar calendar. Exact dates for these holidays will be established
shortly before the holiday and published by local authorities.

## Web Resources [**Return to top**](#ch8)

U.S. business travelers are encouraged to obtain a copy of the \"Key
Officers of Foreign Service Posts: Guide for Business Representatives\"
available for sale by the Superintendent of Documents, U.S. Government
Printing Office, Washington, D.C. 20402; Telephone: (202) 512-1800; Fax:
(202) 512-2250 or through the State Department website
[www.state.gov](http://WWW.STATE.GOV/). Business travelers to Yemen
seeking appointments with U.S. Embassy Sanaa officials should contact
the Commercial Section in advance. The Commercial Section can be reached
by contacting Commercial Assistant, Ammar Al-Anssi, at
011-967-1-755-2198, by fax at 011-967-1-303-183, or by E-mail to:
alanssial@state.gov.

[Return to table of
contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

# Chapter 9: Contacts, Market Research, and Trade Events

-   [Contacts](#contacts-return-to-top)

-   [Market Research](#markeetresearch)

-   [Trade Events](#trade-events-return-to-top)

## Contacts [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

**U.S. Embassy Trade Personnel**

Thomas C. Krajeski, Ambassador

Nabeel Khoury, Deputy Chief of Mission

Joey Hood, Political/Economic Section Chief

Noah Siegel, Economic Officer

Susan Plott, Economic/Commercial Officer

Mohamed Sharaf-Aldin, Agricultural Specialist

Telephone: 9671-755-2199

E-mail: <sharafaldm@state.gov>

Ammar Al-Anssi, Commercial Specialist

P. O. Box 22347, Sanaa, the Republic of Yemen

Telephone: 967-1-755-2198

E-mail: <al-anssial@state.gov>

**Washington-based U.S. Government Country Contacts**

Department of State

Shayna Steinger, Yemen Desk Officer

2100 C Street

NEA/ARP, Room 4224

Washington, D.C. 20520

Telephone: (202) 647-6558;

Fax: (202) 736-4459

International Trade Administration, Department of Commerce

Tyler Hoffman, Yemen Desk Officer

14th and Constitution Avenues, NW

Washington, D.C. 20230

Telephone: (202) 482-0879; Fax: (202) 482-0878

Email: <Tyler.hoffman@ita.doc.gov>

Advocacy Center, Department of Commerce

Christopher James, Senior Regional Manager

Middle East & North Africa

Telephone: (202) 482-3896; Fax: (202) 482-3508

Email: <christopher.james@ita.doc.gov>

TPCC Trade Information Center, Department of Commerce

Abdul Quadar Shaikh

Telephone: 1-800-USA-TRADE; Fax: 01-202-482-4473

Email: <abdul.shaikh@ita.doc.gov>

U.S. Trade and Development Agency (TDA)

Henry D. Steingass, Regional Director, Africa & Middle East

1000 Wilson Boulevard, Suite 1600

Arlington, VA 22209-3901

Telephone: (703) 875-4357; Fax: (703) 875-4009

Email: <hsteingass@tda.gov> ; or <info@tda.gov>

Website: [www.tda.gov](http://www.tda.gov/)

Overseas Private Investment Corporation (OPIC)\
Abed Tarbush, Investment Development Manager\
1100 New York Avenue, NW\
Washington, D.C. 20527\
Telephone: (202) 336-8632; Fax: (202) 408-5145\
Email: atarb@opic.gov\
Website: [www.opic.gov](http://www.opic.gov/)

Export-Import Bank of the United States (EXIM Bank)

Vernoique M. Cavaillier, Officer for the Middle East

811 Vermont Avenue, NW

Washington, D.C. 20571

Telephone: (202) 565-3946 or (202) 566-8990; Fax: (202) 565-3380

Email: <veronique.cavaillier@exim.gov>

Website: [www.exim.gov](http://www.exim.gov/)

U.S. Department of Agriculture (USDA)

Foreign Agricultural Service

Trade Assistance and Promotion Office

Telephone: (202) 720-7420; Fax: (202) 720-3799

Email: hoffman@fas.usda.gov

Website: [www.fas.usda.gov](http://www.fas.usda.gov/)

**Chambers of Commerce in Yemen**

Yemen Chambers of Commerce

Sanaa Chamber of Commerce & Industry

Mahfoth Salem Sahmak, Chairman

Mohamed Kawkaban, General Manager

P.O. Box 195, Sanaa, Republic of Yemen

Telephone: 967-1-232-361/2 or 253-114

Fax: 967-1-232-412

Email <sanaacomyemen@y.net.ye>

Website: <http://www.scci.com.ye/>

Aden Chamber of Commerce & Industry

Mohamed Omer Bamashmous, Chairman

Ahmed Hadi Salem, General Manager

P.O. Box 473, Crater, Aden, Republic of Yemen

Telephone: 967-2-221-176 or 251-104 or 255-446

Fax: 967-2-255-660

Email: <cciaden@y.net.ye>;

Hodeidah Chamber of Commerce & Industry

Abdul Galil Thabet, Chairman

Nabil Al-Wajeeh, General Manager

P.O. Box 3370 Hodeidah, Republic of Yemen

Telephone: 967-3-217-401/217-621; Fax: 967-3-211-528

Email: <hodcci@y.net.ye>

Hadhramout Chamber of Commerce and Industry (Mukalla)

Omer Abdul Rahman Bagersh, Chairman

Lutfi Salem Belfakeih, General Manager

P.O. Box 8302

Mukalla, Hadhramout, Republic of Yemen

Telephone: 967-5-353-258/307-674/308-044

Fax: 967-5-303-437

Email: <HADRAMOUTCH@YEMEN.NET.YE>

**Yemen Government Agencies**

Ministry of Electricity

H.E. Ali Mohamed Mijwer, Minister

Eng. Ahmad Al-Aini, Deputy Minister

Eng. Abdul Moti al-Junaid, Managing Director

Public Electricity Corporation

P.O. Box 11422, Sanaa, Republic of Yemen

Telephone: 967-1-326-193 or 326-191/6; Fax: 967-1-326-198 or 326-150/1

Email: <yempec@y.net.ye>

Ministry of Oil and Mineral Resources

H.E. Khaled Mahfouz Bahah, Minister

Eng. Abdul Malik A'alama, Deputy Minister

P.O. Box 81, Sanaa, Republic of Yemen

Telephone: 967-1-202-309 through 13; Fax: 967-1-202-314

Email: <momormastr@y.net.ye>

Ministry of Communications and Information Technology

H.E. Eng. Abul-Malik Al-Mu'allimi, Minister

Yassin Mahmoud Ali, Deputy Minister

P.O. Box 17045, Sanaa, Republic of Yemen

Telephone: 967-1-331-460/1; Fax: 967-1-331-473

Ministry of Industry and Trade

H.E. Khaled Rajeh Shaikh, Minister

Ali Al-Siaghi, Vice Minister

Iqbal Yassin Ba-hader, Deputy Minister (Trade Sector)

Hazem Baker, Deputy Minister (Industrial Sector)

P.O. Box 7296, Sanaa, Republic of Yemen

Telephone: 967-1-252-471/9-252-340; Fax: 967-1-251-570

Website: [www.most.org.ye](http://www.most.org.ye/)

Ministry of Planning and International Cooperation

H.E. Abdulkarim Ismail Al-Arhabi, Minister

Hisham Sharaf Abdullah, Deputy Minister for International Cooperation

P.O. Box 175, Sanaa, Republic of Yemen

Telephone: 967-1-250-101 through 3; Fax: 967-1-250-665

Email: [mpdminister@y.net.ye](mailto:mpdminister@y.net.ye )

Website:
[http://www.mpic-yemen.org/](../%20http://www.mpic-yemen.org/%20)

General Investment Authority

Abdul Karim Mutair, Chairman

Mohamed Abdul Aziz Abdul Ghani, General Manager

Mohamed Ahmed Hussein, Chief, Promotion Sector

P.O. Box 19022, Sanaa, Republic of Yemen

Telephone: 967-1-262-962/3 or 568-205; Fax: 967-1-262-964

E-mail: <mohdhussein@yahoo.com>;

Website is: [www.giay.org](http://www.giay.org/)

**Commercial Banks (with U.S. correspondent banks)**

Arab Bank PLC

Abdul Mahdi Allawi, Regional Manager (Tel: 276-582)

P.O. Box 1301 & 475, Sanaa, Republic of Yemen

Telephone: 967-1-276-585, 276-592/3; Fax: 967-1-276-583, 276-475

Email: <arabbank@y.net.ye;>

Website: [www.Arabbank.com](http://www.Arabbank.com/)

(Arab Bank PLC, New York)

Credit Agricole Indosuez Yemen

Robin De Mouxy, General Manager

P.O. Box 651, Sanaa, Republic of Yemen

Telephone: 967-1-274-371/2/3 or 274-351; Fax: 967-1-274-501

Email: <caindosuezye@y.net.ye>

(Citibank of New York)

International Bank of Yemen

Mohamed Mokbil Al-Ameri, General Manager

P.O. Box 4444, Sanaa, Republic of Yemen

Telephone: 967-1-407-000 (17 lines); Fax: 967-1-407-020, 407-155

Email: <a.t.alabsi@y.net.ye>

Website: [www.ibyemen.com](http://www.ibyemen.com/)

National Bank of Yemen

Abdul Rahman Mohamed Al-Kuhali, Chairman & General Manager

Queen Arwa Street, P.O. Box 5, Crater

Aden, Republic of Yemen

Telephone: 967-2-253-753, 252-403; Fax: 967-2-252-325 or 252-484

Email: <nby.ho@y.net.ye>

Website: [www.natbankofyemen.com](http://www.natbankofyemen.com/)

(JP Morgan Chase Bank, Bank of New York, Citibank of New York)

Yemen Bank for Reconstruction and Development

Hussein Fadhl Mohamed, General Manager

P.O. Box 541, Sanaa, Republic of Yemen

Telephone: 967-1-274-171 or 271-626 (GM), 270-483/1, 273-649

Fax: 967-1-271-630 or 271-684

Email: <ybrdid@y.net.ye>

Website: [www.ybrd.y.net.com](http://www.ybrd.y.net.com/)

(JP Morgan Chase Bank NA, NY, Doha Bank Ltd.,

NY, Bankers Trust Co., NY, Riggs Bank, Washington)

Yemen Commercial Bank YSCC

Sikander Mahmood, General Manager and Chief Executive Officer

P.O. Box 19485, or 160, Sanaa, Republic of Yemen

Telephone: 967-1-277-238, 277-324, 277-275, and 284-272/3

Fax: 967-1-284-656

Email: <ycbho@y.net.ye>

Website: [www.ycbank.com](http://www.ycbank.com/)

(Citibank Group, Bank of New York-)

Yemen Kuwait Bank for Trade and Investment YSC

Hussain Mohamed al-Maswary, Chairman

P.O. Box 987, Sanaa, Republic of Yemen

Telephone: 967-1-200-005, 401-988, 209-451, Fax: 967-1-206-148, 401-989,
202-085

Email: <ykb@y.net.ye>

Website: www.yemenkuwaitbank.com

(Bank of New York, Citibank Group)

Yemen Gulf Bank Y.S.C.

Mr. Mohamed H. Al-Zubeiri, Chairman

P.O. Box, 100, Sanaa, Republic of Yemen

Al-Shokani Street, Near the Police Academy

Telephone: 967-1-260-823, 260-825; Fax: 967-1-260-824

Email: <ygbank@y.net.ye>

Website: [www.yg-bank.com](http://www.yg-bank.com/)

(Bank of New York)

Shamil Bank of Yemen and Bahrain

Mohamed Nageeb, General Manager

P.O. Box 19382, Sanaa, Republic of Yemen

Telephone: 967-1-264-699, 264-702, and 264-807

Fax: 967-1-264-703, 503-350

Email: <shamilbank@y.net.ye>

(J.P.Morgan Bank, New York)

**Other Offices**

World Bank

Country Manager Mustapha Rouis

P. O. Box: 18152, Street Number 40, off Damascus Road, Hadda Area

Sanaa, Republic of Yemen

Telephone: 967-1-418-731/2, or 418-166/7/8; Fax: 967-1-413-709 or
418-733

Website: [www.worldbank.org](http://www.worldbank.org/)

####### Useful Websites

+------------------------------------+---------------------------------+
| Ministry of Industry and Trade     | [www.most.o                     |
|                                    | rg.ye](http://www.most.org.ye/) |
|                                    |                                 |
|                                    | <http://www.yemen               |
|                                    | .gov.ye/egov/industry-english/> |
+------------------------------------+---------------------------------+
| Ministry of Planning and           | [www.mpic-yemen.o               |
| International Cooperation          | rg](http://www.mpic-yemen.org/) |
+------------------------------------+---------------------------------+
| Who is Who in Yemen                | [www.al                         |
|                                    | -bab.com/yemen/biog/who](http:/ |
|                                    | /www.al-bab.com/yemen/biog/who) |
+------------------------------------+---------------------------------+
| Yemeni islands promising of        | [www                            |
| investments and job opportunities  | .islandsauthority.gov.ye](http: |
|                                    | //www.islandsauthority.gov.ye/) |
+------------------------------------+---------------------------------+
| Labor Market Information System    | [www.lmis-yemen.o               |
|                                    | rg](http://www.lmis-yemen.org/) |
+------------------------------------+---------------------------------+
| Yemenia Airlines                   | [www.yemenia.com.               |
|                                    | ye](http://www.yemenia.com.ye/) |
+------------------------------------+---------------------------------+
| Social Fund for Development        | [www.sfd-yemen.                 |
|                                    | org](http://www.sfd-yemen.org/) |
+------------------------------------+---------------------------------+
| Aden Free Zone                     | [www.aden-freezone.com]         |
|                                    | (http://www.aden-freezone.com/) |
+------------------------------------+---------------------------------+
| Central Bank of Yemen              | [www.centralbank.gov.ye](       |
|                                    | http://www.centralbank.gov.ye/) |
+------------------------------------+---------------------------------+
| General Investment Authority       | [www.giay.g                     |
|                                    | ov.ye](http://www.giay.gov.ye/) |
+------------------------------------+---------------------------------+
| Customs Authority                  | [www.customs.gov.               |
|                                    | ye](http://www.customs.gov.ye/) |
+------------------------------------+---------------------------------+
| Tax Authority                      | [www.tax.                       |
|                                    | org.ye](http://www.tax.org.ye/) |
+------------------------------------+---------------------------------+
| Yemen International Trade Point    | [www.                           |
|                                    | yeitp.ye](http://www.yeitp.ye/) |
| Who is this the link doesn't work  |                                 |
+------------------------------------+---------------------------------+
| National Information Center        | [www.nic.                       |
|                                    | gov.ye](http://www.nic.gov.ye/) |
+------------------------------------+---------------------------------+
| Central Organization for Control   | [ww                             |
| and Auditing COCA                  | w.coca.gov.ye/in_eng.html](http |
|                                    | ://www.coca.gov.ye/in_eng.html) |
+------------------------------------+---------------------------------+
| Petroleum Exploration and          | [www.pepa.c                     |
| Production Authority               | om.ye](http://www.pepa.com.ye/) |
+------------------------------------+---------------------------------+
| Sana'a Chamber of Commerce' Check, | [www.scci.c                     |
| the website doesn't connect        | om.ye](http://www.scci.com.ye/) |
+------------------------------------+---------------------------------+
| General Authority of Tourism       | [www.gtda.g                     |
| Development                        | ov.ye](http://www.gtda.gov.ye/) |
|                                    |                                 |
| Website doesn't connect            |                                 |
+------------------------------------+---------------------------------+
|                                    |                                 |
+------------------------------------+---------------------------------+
| Yemeni Industrialists Association  | <http:/                         |
|                                    | /www.madeinyemen.org/index.htm> |
+------------------------------------+---------------------------------+
| Sabafon                            | [www.sabafo                     |
|                                    | n.com](http://www.sabafon.com/) |
+------------------------------------+---------------------------------+
| Spacetel                           | [www.spacetelyemen.com]         |
|                                    | (http://www.spacetelyemen.com/) |
+------------------------------------+---------------------------------+
| Yemeni Trading companies           | [www.y.net.ye/hostedinynet      |
|                                    | .htm#Governmental%20Web%20Pages |
|                                    | ](http://www.y.net.ye/hostediny |
|                                    | net.htm#Governmental Web Pages) |
+------------------------------------+---------------------------------+
| Hayel Saeed Anam Group of          | [www.hsagroup                   |
| companies                          | .com](http://www.hsagroup.com/) |
|                                    |                                 |
| Website doesn't work               |                                 |
+------------------------------------+---------------------------------+

[]{#markeetresearch .anchor}

## Market Research [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

To view market research reports produced by the U.S. Commercial Office
at the Embassy, please go to the following website:
[http://www.export.gov/marketresearch.html](http://www.export.gov/marketresearch.html )
and click on Country and Industry Market Reports.

Please note that these reports are only available to U.S. citizens and
U.S. companies. Registration on the site is required, but free of
charge.

## Trade Events [**Return to top**](#chapter-9-contacts-market-research-and-trade-events)

Please click on the link below for information on upcoming trade events.

<http://www.export.gov/tradeevents.html>

To find information trade exhibitions in Yemen, the websites of the two
exhibition centers are listed below.

Sana'a International Exhibition Center:
<http://www.shumaila-group.com/site/events.htm>

Apollo International Exhibitions:
<http://www.exposanaa.com/eventscalender.htm>

[Return to table of
contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

[]{#ch10 .anchor}

# Chapter 10: Guide to Our Services

The U.S. Commercial Service offers customized solutions to help your
business enter and succeed in markets worldwide. Our global network of
trade specialists will work one-on-one with you through every step of
the exporting process, helping you to:

-   Target the best markets with our world-class research

-   Promote your products and services to qualified buyers

-   Meet the best distributors and agents for your products and services

-   Overcome potential challenges or trade barriers

For more information on the services the U.S. Commercial Service offers
U.S. businesses, please click on the link below.

Htttp://www.buyusa.com

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contents](#doing-business-in-yemen-a-country-commercial-guide-for-u.s.-companies)

# 

U.S. exporters seeking general export information/assistance or
country-specific commercial information should consult with their
nearest **Export Assistance Center** or the **U.S. Department of
Commerce\'s Trade Information Center** at **(800) USA-TRADE**, or go to
the following website: [http://www.export.gov]()\
\
To the best of our knowledge, the information contained in this report
is accurate as of the date published. However, **The Department of
Commerce** does not take responsibility for actions readers may take
based on the information contained herein. Readers should always conduct
their own due diligence before entering into business ventures or other
commercial arrangements. **The Department of Commerce** can assist
companies in these endeavors.