Yemen: progress and ambition.(Sponsored Section)(SabaFon in Yemen )

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Approaching nearly twenty years as unified republic, Yemen looks to the future with hope and ambition. Even as it faces difficulties, Yemen repositions itself as an up-and-coming investment market. It has experienced steady growth, almost 3 percent in 2008, and is pursuing integration into the Gulf Cooperation Council, which would further ease trade relations. At the same time, the government is trying to address its most pressing challenges: high unemployment, high population growth, and an uneasy security environment. Domestic terrorism is a particular problem that Yemen is determined to address at root. "The only way to face terrorism is by improving the standards of living of people, by improving their education" says Abubaker Abdulla Al-Qirbi, minister of foreign affairs.

Access to funding and investment plays a crucial role in the country's long-term growth strategy. A 2006 donor conference in London was hugely successful in mobilizing resources worth more than $5 billion for a wide variety of project-related investments ranging from human resource development to health and education to infrastructure development. But despite the importance of these contributions, "in terms of official development assistance (ODA), we are very much underfunded," says Abdulkarim Ismail Al-Arhabi, deputy prime minister. Private sector development is the obvious alternative and desired choice. Al-Arhabi believes Yemen can market its competitive advantages, as investment conditions are improving. "A lot is being done to simplify procedures and to improve the business environment. We are focusing on the non-oil sectors, while at the same time redefining government functions to provide more space to the private sector and public-private partnerships."

The country does not lack opportunities: Yemen has a 3,000-year history and was known by the Romans as "Felix Arabia"--or "Happy Arabia"--for its fertile lands. It has unique potential for tourism development, it is rich in minerals, and its deep-sea ports are extraordinarily well positioned, connecting the Red Sea, the Gulf of Aden, and the Indian Ocean. Government efforts to improve the overall business and investment climate are reflected in the World Bank's "Doing Business" ranking, where Yemen climbed twenty-five places, moving ahead of countries such as Jordan and Egypt. A general holding corporation for property development and investment, Shibam Holding, has been established with the aim of presenting foreign investors with a full development partner, with considerable success. "Shibam is already a partner in somewhere close to twelve mega-type real estate projects, exceeding $2.5 billon," says Saad Sabrah, CEO of Shibam Holding. Opportunities are there for the taking.

HYDROCARBONS RIDE THE AGENDA

Oil and gas remain the king and queen of the Yemeni economy, representing as much as 90 percent of total export earnings, even as diversification away from oil becomes ever more important. The drop in world oil prices is felt deeply, and greater still is the loss from falling production. Oil reserves are understood to have peaked and are likely to be depleted by 2020. More resources may lay hidden, but exploration has been limited. Vast areas have not been surveyed for their potential. A mid-sized domestic industry stands ready to assist any eventual activity, with players such as HTC Yemen International offering drilling equipment and total project management services. "Our total inventory is worth around $500 million. Anything a company needs, we can get; the only thing we cannot do at the moment is seismic work," says Hussein Al-Hashedi, ...