Business & Economy
Written By: Faisal Darem
Article Date: Jan 30, 2012 - 8:22:25 PM
The national unity government confirmed its intention to complete the establishment of a stock market during the discussion it held of its national program in the Parliament.
Yemen PM Mohammed Salem Basindwah.
The Parliament approved on Wednesday Dec, 28 the general program of the newly national unity government and gave its confidence.
"The economic situation in Yemen is in a state that makes it possible to establish a Yemeni stock market as one of the components of the Yemeni economic system based on the principles of free market economy," said Dr. Taha al-Fusael, advisor to the Minister of Industry and Commerce and Professor of Economics at the University of Sana’a.
Al- Fusael praised the results achieved by the economic and financial reform program in its earlier stages, noting the existence of a number of joint stock companies, which could constitute the nucleus of the equity market.
"The privatization program will result in transfer of state ownership of a number of companies and relatively large firms to private sector ownership as joint stock companies. Many companies within the private sector have expressed their desire to convert to public joint stock companies.
The proposal to establish a stock exchange in Yemen has been widely welcomed by the government and the industry sectors as many saw in the initiative a mean to stimulate Yemen’s economic growth as well as modernization of its economy.
The most important role of a stock market is to gather capital investors and utilize their intentions for developmental projects as a tool for funding. Yemen enjoys high financial liquidity in developmental projects. An equity market will enhance the government’s abilities to finance new developments and strategic projects.
“The establishment of a financial securities market is essential to achieving economic growth," said Dr. Mohamed al-Maitami, an Economics Professor at Sana’a University.
The stock exchange "will work to channel the financial liquidity of citizens into investment projects", he added.
Al-Maitami announced that the savings of citizens in Yemen's banks exceeded one trillion Yemeni riyals.
The Ministry of Finance and the Ministry of Trade have made efforts to carry out amendment plans to commercial and corporate laws. It has coordinated with a joint technical committee to study such laws with the guidance of Jordanian experts in civil, constitutional and commercial law as well as penal codes so that the legal and organizational structures can be set up according to international standard.
The Yemen Businessmen Club has already issued a guide for corporate governance and compliance with the criteria that matches the enrollment requirements. The financial sectors in Yemen are qualified to contribute with their shares to the stock market.
This includes sectors such as telecommunications, banks, insurance and infrastructure companies that deal with cement and contracting. There are many other promising sectors like tourism, fishing and mining.
The economic benefits Yemen would see with the establishment of the stock exchange include the investment of emigrant capital and savings which will provide means to draw investments that would create real development in different areas.
The Stock Exchange will help the economy grow: Yemen is a developing nation and it needs more capital to fund new projects, set up plans, grow and expand operations.
* Banks do not like risk: A banker is a guy who lends you an umbrella on a fine sunny day, but takes it back the moment clouds appear on the horizon. However investors are known to be much more patient and show overwhelming support to good enterprises, which are in distress.
* Curb Corruption. Stockholders want records, audits and paper trail of every transaction. They stay away from companies, which deal in grey market, for these companies tend to make the promoters richer at the cost of the investors, hence stock markets make a friendly environment to do business in.
* Reward Ingenuity: Gone are the days when the revenues and profits increased by a fixed predictable percentage every year. In a knowledge-based economy, the best companies do not think about capturing 1-2% more of the market share, but creating a whole new market. The only way to value these companies is the stock market for the companies are many times more than their book value.
* Mobilizing the savings: It gives a common man to relax and let his investments work for him.
* Redistribution of wealth: Money attracts money. A common man like you and me cannot hope to start a whole new industry and reap the benefits, but through stock markets, we can definitely become a partner.
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