Mahyoub Al-Kamali
According to the 5-year plan for 2001-2005, GDP per capita is expected to raise up to YR 84448 in 2005 compared to YR 75276 in 2001, growing at a yearly average rate of 2.3 percent. The plan also forecasts a rise in the balance of payments to YR 457.8 billion.
The plan focuses on a continuing government support to enhance the economic stability and augment labor force in the national economy by 876,000 workers between 2001 and 2005. The government is optimistic about this plan and says the economic growth would create about 896,000 work opportunities.
It expects to attract foreign capital to increase investment in the available domains by 28.6 percent by 2005.
The plan also aims to control unemployment and inflation rates related to non-oil GDP.
Expenditure on the final consumption is likely to rise from 71.8 percent in 2000 to 72.4 percent in 2005. The augmentation is attributed to an increase in governmental expenditure by 12 percent to cover the demands of implementing the local council system and improve the administrative system of the government and its staff.
The government is targeting GDP growth of 5.6 percent yearly as well as an increase of non-oil economy from 66.3 percent in 2000 to 74.3 percent in 2005. It is also working to provide the necessary resources, expected to amount YR 3 trillion in 2005, for a comprehensive development.
Around YR 198.821 billion (23 percent of total public expenditure and 11 percent of the GDP) has been allocated to education until 2005. In addition, about 6 to 7.6 percent of total public expenditure has been allocated to promote health services.
The first 5-year plan of 1996-2000 was said to have achieved an annual growth of 5.5 percent out of 7.2 percent targeted.
The first plan achieved a 21.3 percent rise in investments and a 44.2 percent increase in exports. The increases in oil prices greatly helped converting the 5.2 percent deficit of the budget in 1995 to a 7.1 percent surplus in 2000.
The new five-year plan seems more ambitious in economic and development growth rates. However, anticipation of the plan's efficiency to solve and overcome the economic problems and challenges remains to be determined by its implementation.

Aden sea port, which has lately tried to revive its past glory as a navigation transit point, faces tough competition from Salalah, Dubai and Djibouti.
Since the terrorist attack on USS Cole in October last year, local authorities of the Aden Sea Port have been studying a promotional plan to restore confidence in the harbor. The plan includes converting the port into an important export center and achieve a good rank among the other important seaports in the region.
Aden port has an advantage over Dubai port which is the saving of two sailing days through the Ormuz Straits to the Arab Gulf. However, it still needs a more developed infrastructure to compete against the 23 titanic cranes featured in Dubai port.
Like Aden seaport, the Omani Salalah port enjoys an excellent strategic location. The Omani authorities have been working hard to develop the container terminal in Salalah in order to offer better services for the Gulf and the Indian Ocean. The port sees about 1.5 million containers transiting per year and features 12 gigantic cranes.
Economists believe that Aden port could offer strong competition to Dubai and Salalah ports by offering better prices for good services. They add that its significant location is attractive to vessels from the Red Sea and the Indian Ocean. According to them, the real threat on its future may come from Djibouti if a free zone is established there.
Navigation sources say Aden port serves huge vessels that are usually served by a few great ports, which means that this will affect both Dubai and Salalah ports as transit companies will shift their activities to Aden.
It is expected that someday Aden port will be a very busy and active trading center that will help Yemen gain revenues to strengthen the general budget. To achieve such a position, authorities should work out plans to attract the huge vessels and develop the port services.

Marketing experts believe that the local industrial sector has a good chance to increase its production of foodstuffs, home appliances and fashion to cover the needs of the local market owing to the high prices of imported goods as a result of the rise in US dollar prices.
The increase in the prices of imported goods following the September 11 events demands local alternatives at lower prices.
Increases in prices was accompanied by the Yemeni Riyal losing 3 percent of its value since September 11. Dollar exchange rate has mounted to YR 172 from YR 169 two months ago, leading to a 3 to 4 percent increase in the prices of imported goods.
Marketing analysts think that increasing production of local factories will help the private sector compete with the export sector and win consumers' confidence. However, the industrial sector seems likely to be unable to improve its production due to the stagnant market and push on imports.
They also say that the bad performance of the industrial sector in Yemen started during the freeing of foreign trade, which was accompanied by a sharp decrease of national imports and production. Studies show that growth of the industrial sector is not improving because of the high cost of workers and fluctuation in the national currency exchange rate. Furthermore, neglecting the role of investment in improving industrial production also created a lot of problems for the local industry.
Industrial people accuse traders of creating a liquidity crisis by purchasing hard currencies which affects the available cash. Traders respond by saying that purchasing hard currencies enable them to continue dealing with foreign companies, which is a matter that always affects the national industry. However, market researchers recommended the industrial sector to activate demands on their products, attract foreign investors to local industry, direct resources to increase industrial production, and increase exports to foreign markets.
The government plans focus on increasing non-oil exports by an annual growth of 17.1 percent through promoting tourism and the Aden free trade zone.
Therefore, there is a chance for the industrial sector to increase its production under the current circumstances which make it difficult for importers to offer lower prices.