Based on the given information about Yemen will you consider establishing a firm in their territory? If yes, what particular business would you like to establish? If not, explain why?

THE ECONOMY OF YEMEN

Yemen is a low-income country that faces difficult long-term challenges to stabilizing and growing its economy, and the current conflict has only exacerbated those issues. The ongoing war has halted Yemen's exports, pressured the currency's exchange rate, accelerated inflation, severely limited food and fuel imports, and caused widespread damage to infrastructure. At least 82% of the population is in need of humanitarian assistance.

Prior to the start of the conflict in 2014, Yemen was highly dependent on declining oil resources for revenue. Oil and gas earnings accounted for roughly 25% of GDP and 65% of government revenue. The Yemeni Government regularly faced annual budget shortfalls and has tried to diversify the Yemeni economy through a reform program designed to bolster non-oil sectors of the economy and foreign investment. As part of these reform efforts, Yemen exported its first liquefied natural gas in October 2009. The international community supported Yemen's efforts toward economic and political reform in part by establishing the Friends of Yemen group. In 2012, the Friends of Yemen pledged nearly7billionin assistance to Yemen In July 2014, the government continued reform efforts by eliminating some fuel subsidies and in August2014, the IM Fapproved a threeyear,570 million Extended Credit Facility for Yemen.

However, the conflict that began in 2014 stalled these reform efforts. Rebel Huthi groups have interfered with Ministry of Finance and Central Bank operations and diverted funds for their own use. Yemen's Central Bank reserves, which stood at5.2billionpriortotheconflict,currentlystandat1.5 billion. The Central Bank is exposed to approximately7 billion in over draft, more than three times the legality ,directly linked to the Huthis withdrawing 116 million on a monthly basis. The private sector is haemorrhaging, with almost all businesses making substantial layoffs. The Port of Hudaydah, which handles 60% of Yemen's commercial traffic, was damaged in August 2015 as a result of the conflict and is only operating at 50% capacity. Access to food and other critical commodities such as medical equipment is limited across the country due to security issues on the ground. The Social Welfare Fund, a cash transfer program for Yemen's neediest, is no longer operational and has not made any disbursements since late 2014.

Yemen will require significant international assistance during and after the protracted conflict to stabilize its economy. Long-term challenges include a high population growth rate, high unemployment, declining water resources, and severe food scarcity.

Agriculture - products: grain, fruits, vegetables, pulses, qat, coffee, cotton; dairy products, livestock (sheep, goats, cattle, camels), poultry; fish

Industries: crude oil production and petroleum refining; small-scale production of cotton textiles, leather goods; food processing; handicrafts; aluminium products; cement; commercial ship repair; natural gas production

Exports - commodities: crude oil, coffee, dried and salted fish, liquefied natural gas

Exports - partners: China 24.5%, UAE 16.5%, South Korea 10%, Saudi Arabia 10%, Kuwait 9.1%, India 8.5% (2015)

Imports - commodities: food and live animals, machinery and equipment, chemicals

Imports - partners: UAE 20.9%, China 14.3%, Saudi Arabia 9.9%, Kuwait 7.4%, India 4.6% (2015)

Answer rating: 100% (QA)

Based on the given information establishing a firm in Yemen would be challenging due to the ... View the full answer