Abstract
The prospects for Yemen' s construction industry are unexciting. We envisage
that spending will rise from
US$0.6bn in 2007 to US$0.8bn in 2013.
Construction spending will likely remain at below 2% of GDP
through the
forecast period.
Conversely, the outlook for capital investment in
infrastructure is rather more promising. We are looking
for investment to
increase from US$4.4bn in 2007 to US$6.4bn in 2013. Investment should remain
at
around 15% of GDP through the forecast period. We are looking for the
government to account for about
one-tenth of investment in
infrastructure.
In essence, infrastructure development is being driven by
protagonists who are insensitive to the risks and
challenges of doing
business in Yemen. Aside from the government, these protagonists include
multilateral
lenders such as the World Bank, multi-national energy
companies such as Total of France and
several well-established local
contracting firms such as HAWK International.
Broadly speaking, the risks
and challenges can be categorised as being of a long-term or a short-term
nature. The long-term challenges include the lack of skilled workers,
widespread poverty, a tribally-based
political system and a consistently
poor environment for business. The short-term challenges include the
impact of the global financial crisis on the prices of oil and gas - Yemen' s
main exports - and political
instability. The latter, as we explain, is
being exacerbated by the return of Yemeni detainees from the
USA' s
Guantánamo Bay prison at a time when long-scheduled elections have been
postponed.
Early 2009 is something of a landmark for the infrastructure
development of Yemen. This is because
Yemen LNG Company Limited' s LNG
operations are due to begin working. The construction of new
processing
facilities in the Marib oilfields of central Yemen, a 320km pipeline to the
coast (together with
two smaller pipelines) and a new port and handling
facility at Balhaf represents the largest single project
in the country to
date - with an estimated capital cost of US$4bn. When working at full
capacity, the
project - which began in 2005 - will enable the participants
to capture LNG that would otherwise have
been lost, and to export 6.7mt
per annum to customers in the USA and South Korea.
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