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The Issue of privatization in the Republic of Yemen

Date: 11/8/00
Time: 2:27:14 AM
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The Issue of privatization in the Republic of Yemen

Nowadays people in the street and those working with the public sector on one hand, and the private and foreign corporations on the other, talk much about the issue of privatization in the Republic of Yemen. So what is meant by this terminology?

In the fields of politics and economics, privatization is proportionally one of the new terms used within the developing countries since the last two decades or so. It stands on the call by the state to free off its hands from the public sector in respects of its products and services. In turn, these could be placed, or offered, for sale and/ or marketing by the private, mixed, or foreign establishments.

Privatization forms one of the basic elements related to the policy of economic freedom that has prevailed the world the last few years. It has been presented as if to represent the suitable remedy for "curing" the economic problems nowadays facing many countries of the world irrespective of their economic and social system, and variation of their levels of progress. The question here is how?

The principle of privatization starts with improving the performance of the public sector's units of production. It then proceeds with widening the basic structure of participating in the national wealth and income-generating resources inherent in the components of this sector. It is, thus, basically a transformation in the developing and under-developing countries that had been brought about by some inter-connected impacts resulting from the internal economic crisis occurring here and there, but at each country's economic and intellectual levels.

However, it seems that this transformation; mainly happening in the developing and under-developing states; adopts a certain direction for itself through some foreign influences inter-acting on it in the first place. These specifically arise through the policies designed for these states by international bodies, such as the International Bank. Such designing is derived in accordance with the nature and features of the crisis felt by the concerned states. Its distinctive pattern may usually represent the question of the debts which stands as the general basis to connect each debtor- country directly with this world-wide financial institution. Therefor, its is important to notice that the motivation towards privatization is generally arised as one basic component of a particularly- designed program for economic stability and reforming the economy's framework. It is then proposed by that institution and/or the International Monetary Fund!

However, privatization is not an easily procedural operation. Its evaluation as a specific field-experiment seems to be quite complicated-not just of being recently adapted, but in view of its particularly inter-related and variable matters involved in both the theoretical and practical aspects. The results that may evolve from this operation is largely connected to its pre-conducted procedures starting an appropriate diagnosing of the status and conditions of the public sector in Yemen, and in terms of their association with the whole national economy. It then passes to initializing the best appropriated economic environment for it. This includes; among others; establishing the most active financial market. It is, too, related to the provision of a clearly-defined procedural program where its basic aims and methods, or utilities, should also be so specific as to be dependable for its achievement in a successful manner.

Respectively, the structural aspects that should fit the privatization process also to be, on one hand, considered, e.g. total or partial transference of ownership; privatization of the administrative units only, ownership through living contracts; etc, etc. On the other hand, there is the question the techniques that should be undertaken for functioning the operation of the transfer, e.g placing its shares openly in the market; sale of the shares on individual basis, or the certain already-established organizations; sale of the sector's units to foreign firms etc, etc.

In addition, there are other numerous aspects to be taken into particular relevance e.g features of utilizing the expected incomes derived from sale of the public sector's establishments; dealing with the extra labor force ex-utilized by such establishments; etc, etc.

Therefore, evaluation of privatization as a field -experiment, and respective to its economic impacts, also seems to have a very close relationship with those criteria and fundamentals fitted for establishing to the aspect of its evaluation. However, as regarded a newly-developed issue in many countries, it is ought desirable to visualize evaluating its expected economic impacts evolving in a the form of an analytic dimension, as the basis structured ; to a large extent; through the already-available theoretical information about the subject on one hand, and the forms of summaries, on the experience of other Arab counties; (e.g Lebanon, Egypt, Jordan, Syria etc etc) that could be extracted on the other.

In view of the general conditions of the public enterprise, there is already an almost generally agreeable view that it should be tackled through a more-widely expandable horizon.

In other words, it should be realized that public enterprise in almost all Arab countries (including R.O.Y) still forms the fundamental basis and main motivator of their individually-related national economy.

As for Yemen, it has been seen clear that since the ninetees, the public sector started to collapse; together with; an associated loss of its public properties, and a deeply-directed move in adopting, or implementing, the proposals, recommendations and instructions of the international institutions, of which the International Montary Fund comes in the first rank!

________________________________________ Source: An article by A. Aziz Al-Shawafi published By Al-Thowra newspaper, issue No. 12337 of 22/8/98

Last changed: September 15, 2002