Yemen to establish bourse authority to draw investment

Source: Reuters, 03/09/2010

By Mohammed Ghobari

* Securities exchange authority plan approved by parliament

* Lawmakers to change laws in hopes of joining WTO

* Efforts to improve economy threatened by security risks


SANAA- Lawmakers drafted a bill to start a securities exchange authority in Yemen, hoping to speed up the opening of a bourse and encourage investment despite its sinking economy and severe security risks such as a resurgent al Qaeda.

"For us to move out of the challenges we face, we need a lot of investment in the development of Yemen, whether it's domestic or foreign...a strong stock market would help that," Jalal Yaqoub, a spokesman for the minister of finance, told Reuters.

There is little chance seen of significant investment in Yemen in the near future, apart from its oil industry.

The government hopes that establishing a bourse authority will create a better economic environment, but it will likely be considered a small achievement in the face of Yemen's instability, poor infrastructure, and corruption.

Impoverished Yemen faces an increasingly violent struggle with southern secessionists just as it is endeavouring to cement a truce with northern rebels after a six-year war that has displaced 350,000 people.

The government is also trying to quash a resurgent al Qaeda wing in Yemen that sparked Western and Saudi security concerns when it claimed a failed December bombing of a U.S.-bound plane.

In recent months the militant group has increased strikes on Yemen's security personnel, claiming responsibility for several bloody clashes that have killed dozens of people.

But many analysts say the biggest existential threat to the government is its economy, with nearly a third of the workforce jobless and more than 40 percent of the country's 23 million people surviving on under $2 dollars a day.

Corruption also pervades life in Yemen. The country lies near the bottom of Transparency International's corruption index, ranking 154 out of 180 countries last year.

Yaqoub says the bill which parliament has drafted to establish a securities exchange authority would ensure the bourse's transparency and protect investor money.

The bill now needs final approval from the president.

Yaqoub rejected the idea that there would be little interest in a Yemeni exchange, citing internal investment.

"There are considerable funds in the domestic market but it needs to be channelled properly," he said.

Lawmakers hope that by establishing an authority, the process of opening the bourse will be sped up. But Yaqoub would not give a specific date for starting the authority or the stock market, saying it would happen "sooner rather than later".

Separately, Minister of Trade and Industry Yahya al-Mutawakil said the government planned to change several laws in order to comply with World Trade Organisation regulations, according to the defence ministry newspaper September 26.

Yemen will hold negotiations with the international trade regulator in Geneva later this month, Mutawakil said.