Critics raise alarm over privatization policies

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Date: Mar. 25, 2014
Publisher: SyndiGate Media Inc.
Document Type: Article
Length: 596 words
Lexile Measure: 1350L

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A new wave of privatization has is causing widespread concern among public sector employees. The growing concern began to surface after Yemen's national agreement to join the World Trade Organization, which obligates Yemen to liberalize 11 service sectors within a maximum of five years starting from January next year.

The reconciliation government considered the signing of the protocol for Yemen's accession to the World Trade Organization at the beginning of December to be a pivotal move that would enhance Yemen's economic development. However, the government is facing internal challenges to the move. Critics argue that the concerned sectors are not prepared to compete in the free market.

The Yemeni banking, agricultural, electricity and oil sectors have made no comment on the agreement, while the Ministry of Telecommunications and Information Technology has warned against carrying out the liberalization of the local service sector. The ministry described the planned liberalization of the telecommunications sector as 'tragic', saying that over 12,000 employees would pay the price.

Such warnings have failed to stop the reconciliation government from signing the agreement and referring it to parliament for approval.

This prompted threats of strike action within the telecommunications sector. The ministry and state-run telecommunications companies called on the government to negotiate with the member states of the WTO to exempt the sector.

Yahia bin Yahia Al-Matawkl, former minister of industry and trade, called on the government to prepare a plan to reduce the negative impacts that the agreement will have on the telecommunications sector.

He said that the sector has been growing over the past few years, but he also cautioned that Yemen should not lose the opportunity to join the WTO. Marzouk Abdulwadood Mohsen, the executive manager of the Economic and Development Research Center, said in a statement to the Yemen Times that the ministries that expressed concern over the implementation the WTO agreement had representatives in the negotiation team and its liaison committee. According to Mohsen, over the 13 years in which Yemen put in efforts to join the WTO it was asked to liberalize the service sector gradually. It began with partial privatization in the field of education when the establishment of private universities and schools was permitted.

Mohsen expressed concern about what he sees as the stagnation of government service institutions, which he claims have not made any organizational or legal changes. But he also cautions that liberalizing the service sector without regulations is risky.

He said that while state-run banks are able to adapt to the WTO requirements because of the significant growth in banking over previous years, several recently privatized companies have failed due to haphazard privatization, mismanagement and cronyism.

Khalil Saeed Al-Subari, deputy head of the WTO Communication and Coordination Office in Yemen, played down the concerns of those within the public service sector.

Al-Subari said that the government's commitment to liberalize 11 of the 12 main sectors and 78 of the 160 sub-sectors is gradual.

He added that the postal services are not slated for liberalization and the Ministry of Trade and Industry agreed with the Ministry of Telecommunications not to implement the GATT terms on liberalizing the telecommunication services.

The parliamentarian committee appointed to study the public state budget in early 2014 said that 66 state-run firms, about 79 percent of the total number, have failed. It recommended that the government take practical measures to boost the performance of the firms or privatize them.

Yemen has privatized about 61 companies and institutions over the past two decades under presidential decrees.

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Gale Document Number: GALE|A362712912