MULTI-YEAR EXPERT MEETING ON SERVICES, DEVELOPMENT AND TRADE: THE REGULATORY AND INSTITUTIONAL DIMENSION

Geneva, 17-19 March 2010

TELECOMMUNICATIONS, FINANCIAL AND TRANSPORT SERVICES IN YEMEN

By

Khalil AL-SUBARI Deputy-Chief Ministry of Industry and Trade

COMMENCING THE IMPLEMENTATION OF GOOD GOVERNANCE 1. MEASURES Yemen Government has longed to implement several delayed reforms including macroeconomic reforms; public financial management; improving the quality of regulatory and public sector reform. Since January 2006, the Government has proposed a comprehensive governance reform agenda through a Cabinet approved National Agenda for Matrix of Good Governance Measures Reform Including an anti-corruption legislative framework consistent with commitments made under the UN Convention Against Corruption; joining the Extractive Industries Transparency Initiative; increasing transparency in public procurement and financial management; and ensuring greater independence of the judiciary and the supreme audit institution from the executive branch. This National Agenda for Reform has become a central focus of a new Government formed in early 2006, which closely monitored its implementation. In January 2006, the Government adopted and commenced implementing its National Agenda for Reform which includes concrete actions in twenty focal areas including: Anti-Corruption Laws on Anti-Corruption and Financial Disclosure to reduce conflict of interest and put in force commitments included in the UN Convention Against Corruption; National Corruption Record; and confidential reporting mechanism and protection for whistleblowers. Recently the Parliament has passed a law imposing on top administrative and judicial officials to disclose their properties and another law establishing a Superior National Committee to Fight Corruption, which composes of thirty members nominated by the Shoura Council and voted in by the Council of Representatives. Revenue Transparency Yemen Joined the Extractive Industries Transparency Initiative (EITI), which supports improved governance in resource-rich countries through the full publication and verification of company payments and government revenues from oil, gas and mining. Studies have shown that when governance is good, such revenues can foster economic growth and reduce poverty. Procurement reform Cabinet approved a National Procurement Manual and Standard Bidding Documents; the establishment of a tracking system to monitor all public procurement; invitation of international experts and local external observers to participate as observers in the High Tender Board; and amendment of the Public Tenders Law to better define the role of the HTB.

Public Financial Management Implement the Public Financial Management Strategy; amend the law of the external audit entity to ensure its independence from the Executive Branch and establish mechanisms for its reports to be published; and expedite Parliamentary approval of Public Debt Management Bill.

2.

COMMUNICATION SECTOR

Introduction The telecom sector is a strategic and vital sector being of direct link with the citizen and public and private institutions alike. The sector has witnessed substantial change and developments during the last ten years. The infrastructure of telecommunication sector has witnessed distinctive progress in the recent years. Reform Many steps have taken place forward conducting reform the most important of which: legislative and regulations Restructuring Ministry of Telecommunications and Information Technology Establishing regulatory body for telecommunication sector.

The progress in this sector has been achieved by: The establishment of reliable telecommunication systems covering all the areas and governorates of the country; The establishment of digital systems and satellite telecommunications; Providing a reliable telephone system and internet services for companies in most areas of the country; Providing private cable and wireless telecommunications for investment companies.

Institutional Arrangements Ministry of Telecommunication and Information Technology Related Foundations/ Bodies: The General Post Public Institution for Telecommunication

Regional Cooperative Mechanism that Yemen is Involved in Regional linkage project was launched connecting Yemen with neighboring Saudi Arabia, and the other Arabian Gulf Countries, and Jordan using digital transmission at a cost of YR 630 million. Inter-connection using fiber-optics cable also linked up the remaining regions of the country spanning 2,455 kilometers.

3.

FINANCIAL SERVICES

Introduction The banking sector comprises 14 banks including 9 commercial, two specialized banks in housing and agriculture and 3 Islamic banks. The Republic of Yemen has sought to develop and restructure the banking sector and establish a stock exchange market to boost the ongoing financial and economic reform program. Attention is also directed towards the creation of insurance companies and the mobilization of resources of insurance and social pension funds. The government also gives careful attention to regulating the money exchange business and exchange market. The reunification seemed to be missing a clear strategy. The old strategies that prevailed before 1990 became inapplicable under domestic and international changes, the absence of external support and decline in remittances. This led the state to take a courageous decision by launching financial and monetary reform measures since March 1995 in a bid to realize economic stability and then to move towards targeting high and sustainable growth rates. The objectives of the economic, financial and administrative reforms can be summarized in the following:

realizing real growth rates for economic sectors; reducing rates of inflation and unemployment and realizing a stable exchange rate; bringing about stable balance between the balance of payments and the state budget; creating a climate conducive for attracting investment through structural reforms; strengthening the role of the private sector; Realizing further economic openness to the outside world.

The state began a stabilization program with the aim of reducing the budget deficit and the balance of payments through the implementation of a set of financial and monetary policies. The state the undertook the implementation of structural reform programs, which include the liberalization of prices and trade, privatization of public enterprises and the enhancement of export oriented production. The start was encouraging. The government took a number of decisions during 1995-1999 as follows: 1. State Budget: the program targeted the rationalization of expenditure especially current expenditures, increasing tax pays, reducing subsidy and the transfer of ownership of public entities to private ownership. In order to reduce subsidies, the 3

2. Reforming Public Administration Yemen has declared its commitment to democracy and called for peopleparticipation in developing, implementing and reviewing policies, in cooperation with the private sector and other civic society-organizations. Yemen has already made a great leap toward administrative decentralization. Still many chronic obstacles and shortcomings remain. The Yemeni public administration needs structural reforms and adjustments. The justice sector is still suffering many shortfalls, straining the process of development. Institutional Arrangements Ministry of Finance Related authorities:

Internal Revenue Service ( Tax Authority) Customs Authority

Bilateral, Regional and international Cooperative Mechanism that Yemen is Involved in World Bank is a key player in the reform process. There is also a real cooperation from our development partners the most important of which, Donors of Yemen.

4.

TRANSPORTATION SECTOR

Introduction Transportation is vital to realizing further development and a better investment climate. There has been substantial achievement in the field. Asphalt roads cover 5955 km at an average growth of 18% per annum in addition to gravel roads of around 4008 kms. The number of passenger vehicles has increased to reach 301,223 private vehicles, 98,873 taxis and 423,460 general transport vehicles. Land transport has recently 4

improved with the introduction private operators. Yemeni air transport includes the Yemeni Airlines Company and 8 airports led by the Sanaa and Aden airports. Reform General authority for road transport affairs regulation has been established as a step forward reform in this sector, and the issuance of land ports Regulation in the Republic of Yemen and the procedures that are to reform Yemen Airways. Institutional and legislative reforms have taken place along with the implementation of administrative reform and organizing different authorities work at airports, and the completion of the regulation to comply with the Aviation Act. Institutional Arrangements Ministry of Transport Related authorities: 1- General Authority for Civil Aviation and Meteorology 2 - General Authority for Maritime Affairs 3 - The General Authority for road transport regulation. 4 - Foundation Aden Gulf Ports. 5 - Foundation of the Yemeni Red Sea Ports 6 - Foundation Arab Sea Ports 7 - Yemen Airways Bilateral, Regional and International Cooperative Mechanism that Yemen is Involved in Yemen has signed Accession to the Convention on the multimodal transport of goods between the Arab countries. More than that, Yemen has many bilateral and plurilateral Agreements in nearly all transport sectors Aviation, Maritime, road transport.

5. SUCCESS AND CHALLENGES AND CONSTRAINTS YEMEN ENCOUNTERED

Remarkable Success can be seen via many things such as: 1- The stability of Macro-Economic. 2- Maintain the economic deterioration rate in its lowest levels. 3- Judicatory and Administration Reforms. Challenges can be seen through: 1- The increasing high population Rate. 2- The aggravation unemployment 3- The continuous decrease in Oil prices.