Yemen: Investing
The war represents a serious obstacle to FDI in Yemen amid the deterioration of an already unfavourable business climate. UNCTAD's 2022 World Investment Report does not provide official figures concerning FDI inflows to the country; nevertheless, Yemen recorded a cumulative outflow of USD 923 million between 2017-19 (latest data available). UNCTAD estimated the total stock of FDI at USD 1.9 billion in 2021, representing around 8.8% of the country's GDP (a share that has been declining since its peak of 10.7% of GDP in 2018). The United States and France are the main investing countries in Yemen, owing to the presence of their energy companies. Data from Eurostat show that as of 2020 the stock of FDI in Yemen from the EU amounted to EUR 0.5 billion (latest data available). Before the conflict, Yemen had attracted FDIs mostly in the oil and gas industry, with lower shares for agriculture and tourism.
Foreign direct investment (FDI) in Yemen has been limited in recent years due to the ongoing conflict and political instability. The conflict has led to a significant decline in economic activity and a deterioration of the investment climate. Due to the current political situation and the ongoing conflict, property rights and business activity are impaired by insecurity and corruption. The nominally independent judiciary is weak and susceptible to interference from the executive branch. Authorities also have a poor record of enforcing judicial rulings. Access to basic services such as electricity, water, and health care is severely limited in much of the country. Foreign investments in Yemen are governed by the Investment Law No.15 of 2010. Corruption is widespread, and the country ranks 176th out of 180 in the 2022 Corruption Perception Index. The poor business climate is also reflected in Yemen's performance in the 2023 Index of Economic Freedom, which does not rank it.
| Yemen | Middle East & North Africa | United States | Germany | |
|---|---|---|---|---|
| Index of Transaction Transparency* | 6.0 | 6.4 | 7.0 | 5.0 |
| Index of Manager’s Responsibility** | 4.0 | 4.8 | 9.0 | 5.0 |
| Index of Shareholders’ Power*** | 3.0 | 4.7 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
| Foreign Direct Investment | 2020 | 2021 | 2022 |
|---|---|---|---|
| FDI Stock (million USD) | 1,942.1 | 1,942.1 | 1,942.1 |
| Number of Greenfield Investments* | 0.0 | 0.0 | 2.0 |
| Value of Greenfield Investments (million USD) | 0 | 0 | 358 |
Source: UNCTAD - Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
| Personal income tax | |
| Up to YER 120,000 | 0% |
| YER 120,000 - 240,000 | 10% |
| Over YER 240,000 | 15% |
| Non-residents and resident foreigners | 20% |
| Yemen | Middle East & North Africa | United States | Germany | |
|---|---|---|---|---|
| Number of Payments of Taxes per Year | 44.0 | 20.8 | 10.6 | 9.0 |
| Time Taken For Administrative Formalities (Hours) | 248.0 | 204.0 | 175.0 | 218.0 |
| Total Share of Taxes (% of Profit) | 26.6 | 32.1 | 36.6 | 48.8 |
Source: Doing Business - Latest available data.
| Setting Up a Company | Yemen | Middle East & North Africa |
|---|---|---|
| Procedures (number) | 6.00 | 6.28 |
| Time (days) | 40.50 | 19.51 |
Source: Doing Business.
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Latest Update: September 2023
