[17/February/2010]

By: Ibtisam Alshafaq

Edited into English by: Tawfiq Alnadhif

SANA'A, Feb. 17 (Saba)-Since 2004, we have been hearing the Yemeni officials announce about preparations for establishing stock markets in Yemen, as it will play an important role in establishing a good investment climate and will attract and mobilize savings besides directing them towards the productive investments.

Alseyasia Newspaper prepared a special report investigates the preparations and the practical procedures and steps for establishing the stock market in Yemen or is it just talk for media consumption.

Before talking about the economic potentials and demands needed for establishing the stock market in Yemen, lets us be a little closer to see what the stock market is? The traditional definition for the common market defines it as a place for sale and purchase.

The economic concept of market lies in being the place which brings together buyer and seller to exchange a commodity or service. The limited concept of the stock market on the place or the market you are trading in currencies in different forms of financial stocks, trading shares and securities or the financial checks that organized by the laws and regulations and regulations to ensure complete exchange of buying and selling quickly and easily as well as safely if the stock market is a market trading in securities, buying, selling, or are stock markets.

The Yemeni researcher Nabil Alolofi made a research in 2005 about the necessary requirements to establish a stock market in Yemen and the current conditions to establish such a market. The study came out with some recommendations regarding the establishment of the stock market and the most important ones are: to complete the establishment steps of market which is identified in this study, according to reports, identifying staff and training and rehabilitating them, as well as continuing the program of economic and financial reform and achieving positive results in reducing the rate of inflation, budget deficit and trapping, and preserving exchange rate stability. The study recommends also developing of the banking system, encouraging the establishment of institutions of financial intermediation, saving and investment, and supporting the establishment of joint stock companies and encouraging investment in securities.

Although the result of the study said that the situation is ripe for establishing a stock market to become a component of the Yemeni economic system based on the principle of economic freedom, we have not seen a starting point for that market.

Many questions are aroused, why it was such a market and a question to ask is Yemen qualified to have a stock market, like other countries, starting with the President of the Malaysian International Tontek University of Technology, Dr. Mohamed Mutaimi, who indicates that the reason for delaying the establishment of the market is due to the conditions in Yemen, adding that those conditions imposed themselves strongly, leading to the Government deferred consideration of the market until the end of these crises.

"Delay does not mean forgetting or rejection of such a market, but needs requirements and conditions," said Mutaimi, adding there are conditions of institutional, legal, financial and banking system in Yemen need to be modified.

He further said there are reasons for the weakness of the institutional development in Yemen and this makes a market in shares and bonds in the absence of institutional capacity reasonably effective barrier within the constraints that hinder the establishment of the financial market.

Is Yemen qualified to have a stock market?

We asked the specialists of economic affairs this question so many times. Although the statements of government officials suggest that there are serious steps taken by the government for establishing such a market, we raised the question early to Jalal Yaacoub, the undersecretary of the Ministry of Finance for Foreign Affairs, the one who is concerned about the market but and communicate with Abbas Al-Basha, the Director of Stock Unit at the Ministry, who gave us the details and clarifications on these questions.

Al-Basha says: "Efforts were made in 2000 to establish a stock market and many studies were made also. All these studies indicated the possibility of creating and launching this market in Yemen, of course, needs exerting great efforts and there was a technical committee studies for establishing a stock market. "

Despite these positive steps, Al-Basha acknowledges some difficulties facing the market, including the absence of the well qualified staff in the country to fill positions and conduct the work in this body and therefore we are working in parallel with all operations and other tasks for the establishment of the market. "We are attracting, training and rehabilitation of cadres and a key part of where we went to our brothers in the Arab countries to benefit from their experience."

What Yemen needs to establish such a market?

The Undersecretary of the Ministry of Planning and International Cooperation for Economic Studies and projections Dr. Mohammed Alhaweri said that the requirements to establish the market needed to reform the first step of investment. He said "I think is possible get different requirements for establishing this market."

He also pointed out that the basic requirements for a stock market and the available tools in Yemen such as the requirements of economic and legislative requirements related to improving the investment environment and the judicial requirements.

Saba