privatization in yemen: policy and performance abdullah alameer faculty of economics and

305 Pages·2013·4.67 MB·English

PRIVATIZATION IN YEMEN: POLICY AND PERFORMANCE

ABDULLAH ALAMEER

FACULTY OF ECONOMICS AND ADMINISTRATION
UNIVERSITY OF MALAYA
KUALA LUMPUR
2013
PRIVATIZATION IN YEMEN: POLICY AND PERFORMANCE

ABDULLAH ALAMEER

THESIS SUBMITTED IN FULFILMENT OF THE
REQUIREMENTS FOR THE DEGREE OF DOCTOR OF
PHILOSOPHY

FACULTY OF ECONOMICS AND ADMINISTRATION
UNIVERSITY OF MALAYA
KUALA LUMPUR
2013
PERAKUAN KEASLIAN PENULISAN

Nama: Abdullah Alameer (No. K.P/Pasport: 3569977)
No. Pendaftaran/Matrik:EHA080025
Nama Ijazah: Doctor of Philosophy

Tajuk Kertas Projek/Laporan Penyelidikan/Disertasi/Tesis (“Hasil Kerja ini”): Privatization in
Yemen: Policy and performance

Bidang Penyelidikan: Public Administration

Saya dengan sesungguhnya dan sebenarnya mengaku bahawa:
(1) Saya adalah satu-satunya pengarang/penulis Hasil Kerja ini;
(2) Hasil Kerja ini adalah asli;
(3) Apa-apa penggunaan mana-mana hasil kerja yang mengandungi hakcipta telah
dilakukan secara urusan yang wajar dan bagi maksud yang dibenarkan dan apa-apa
petikan, ekstrak, rujukan atau pengeluaran semula daripada atau kepada mana-mana
hasil kerja yang mengandungi hakcipta telah dinyatakan dengan sejelasnya dan
secukupnya dan satu pengiktirafan tajuk hasil kerja tersebut dan pengarang/penulisnya
telah dilakukan di dalam Hasil Kerja ini;
(4) Saya tidak mempunyai apa-apa pengetahuan sebenar atau patut semunasabahnya tahu
bahawa penghasilan Hasil Kerja ini melanggar suatu hakcipta hasil kerja yang lain;
(5) Saya dengan ini menyerahkan kesemua dan tiap-tiap hak yang terkandung di dalam
hakcipta Hasil Kerja ini kepada Universiti Malaya (“UM”) yang seterusnya mula dari
sekarang adalah tuan punya kepada hakcipta di dalam Hasil Kerja ini dan apa-apa
pengeluaran semula atau penggunaan dalam apa jua bentuk atau dengan apa juga cara
sekalipun adalah dilarang tanpa terlebih dahulu mendapat kebenaran bertulis dari UM;
(6) Saya sedar sepenuhnya sekiranya dalam masa penghasilan Hasil Kerja ini saya telah
melanggar suatu hakcipta hasil kerja yang lain sama ada dengan niat atau sebaliknya,
saya boleh dikenakan tindakan undang-undang atau apa-apa tindakan lain sebagaimana
yang diputuskan oleh UM.

Tandatangan Calon Tarikh

Diperbuat dan sesungguhnya diakui di hadapan,

Tandatangan Saksi Tarikh

Nama:
Jawatan:
ORIGINAL LITERARY WORK DECLARATION

Name of Candidate: Abdullah Alameer (I.C/Passport No: 3569977)
Registration/Matric No: EHA 080025
Name of Degree: Doctor of Philosophy

Title of Project Paper/Research Report/Dissertation/Thesis (“this Work”): Privatization in
Yemen: Policy and performance

Field of Study: Public Administration

I do solemnly and sincerely declare that:

(1) I am the sole author/writer of this
Work; (2) This Work is original;
(3) Any use of any work in which copyright exists was done by way of fair dealing and
for
permitted purposes and any excerpt or extract from, or reference to or
reproduction of any copyright work has been disclosed expressly and sufficiently
and the title of the Work and its authorship have been acknowledged in this Work;
(4) I do not have any actual knowledge nor do I ought reasonably to know that the
making of this work constitutes an infringement of any copyright work;
(5) I hereby assign all and every rights in the copyright to this Work to the
University of Malaya (“UM”), who henceforth shall be owner of the copyright in this
Work and that any reproduction or use in any form or by any means whatsoever
is prohibited without the written consent of UM having been first had and obtained;
(6) I am fully aware that if in the course of making this Work I have infringed any
copyright
whether intentionally or otherwise, I may be subject to legal action or any other
action as may be determined by UM.

Candidate’s Signature

Date

Subscribed and solemnly declared before,

Witness’s Signature

Date

Name:
Design
ation:
ii
ABSTRACT

Komponen utama dalam reformasi ekonomi termasuk kerajaan menarik diri daripada
sektor perusahaan dan perkhidmatan melalui penswastaan sektor-sektor tersebut. Cabaran utama
yang dihadapi oleh kerajaan Yemen, selepas tamatnya konflik yang berakhir dengan penyatuan
Yemen Utara dan Yemen Selatan, adalah untuk meningkatkan kembali pertumbuhan ekonomi.
Oleh sebab kerajaan Yemen masih baru, ia masih lagi mempunyai saki-baki sistem kerajaan
lama yang mana sektor awamnya sangat terpusat. Peraturan dan monopoli yang tidak cekap
dalam syarikat awam menghadkan banyak aktiviti sektor swasta.
Sebagai salah satu usaha untuk memperbaiki ekonomi secara menyeluruh, kerajaan
Yemen telah melaksanakan program penswastaan sejak awal tahun 1995 untuk menyusun
semula sektor perusahaan agar menjadi lebih cekap, menguntungkan, dan berdaya saing.
Objektif kajian ini adalah untuk mengenal pasti kaedah penswastaan yang sesuai, masalah dan
halangan yang dihadapi oleh Yemen; menentukan motif dan matlamat penswastaan di Yemen;
menilai kesan penswastaan terhadap firma-firma di Yemen dari segi keberuntungan, kecekapan
operasi, perbelanjaan modal, output dan pekerjaan; mengenalpasti halangan utama yang
dihadapi ketika tempoh peralihan penswastaan; dan mengenalpasti langkah-langkah
penstrukturan utama selepas penswastaan. Walaupun terdapat peningkatan dalam beberapa
pembolehubah ekonomi yang diguna pakai, prestasi sektor perusahaan selepas penswastaan
masih lagi tidak banyak berubah dalam tiga syarikat yang dikaji. Tiga penunjuk pembolehubah
keberuntungan iaitu pulangan atas jualan, pulangan atas aset, dan pulangan atas ekuiti didapati
tidak signifikan. Penunjuk kecekapan pendapatan bersih (kecekapan operasi) juga tidak
signifikan. Purata perbezaan antara tahun asas dan tahun ketiga selepas penswastaan bagi nisbah
perbelanjaan modal terhadap jualan dan nisbah perbelanjaan modal terhadap aset juga
menunjukkan tiada peningkatan yang signifikan. Walau bagaimanapun, dari segi kecekapan
operasi untuk jualan, jualan output dan jumlah pekerjaan menunjukkan peningkatan yang
signifikan. Kesimpulannya, hasil dapatan kajian ini menunjukkan penswastaan di kalangan
syarikat terpilih yang dikaji secara khususnya dan secara umumnya di Yemen tidak
mendatangkan kejayaan.
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ABSTRACT

A major component of economic reform includes the government's
withdrawal from the production and service sectors of the economy, including
privatization of most public sector enterprises. The main challenge that the
government of Yemen faced after a conflict and unification period was to increase
the economic growth at the time that government of Yemen inherited the over-
centralized public sector. Therefore, an inefficient monopoly and over regulation
appeared in public enterprises and restricted many private sector activities.

As part of comprehensive economic reforms, the Government of Yemen initiated a
privatization program in early 1995 to restructure enterprises towards more
efficiency, profitability, and competency. The objectives are to identify privatization
methods, problems and obstacles that Yemen faced; to determine the motives and
goals of privatization in Yemen; to assess how privatization affects firms‟
profitability, operation efficiency, capital expenditure, output, and employment; and
to assess the major problems and constraints the target enterprises encountered at the
time-of-handover and explore the major post-privatization restructuring measures
adopted. In spite of the presence of some increase in the measured variables, the
performance of these enterprises after the privatization process was not better than
before the privatization process in the three enterprises examined. The tests of the
three profitability variables (return on sale, return on assets, and return on equity)
were found to be not significant. The net income efficiency (operating efficiency)
indicator was also not significant. The mean difference between the baseline and
three years after the follow up privatization for both the capital expenditure to sale,
and capital expenditure to assets recorded no significant increase respectively.
However, in terms of operating efficiency for sale, the output sale and employment
indicators each recorded a significant increase respectively. In conclusion, the
findings of this study demonstrate the privatization of these selected enterprises
specifically and generally in Yemen was not successful.

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ACKNOWLEDGEMENT

I would like to express my deepest gratitude to my supervisor Assoc. Prof.
Dr.Beh Loo See for her advice, guidance and invaluable assistance in completing
my thesis. Without her, this thesis would be much more difficult to be embarked
upon and completed. Her patience and time are very much appreciated.

I also wish to express my deepest appreciation to my family members for their
support throughout the entire duration of my thesis. Without them, I would not
have made this far. Also to those who have helped me in data collection.

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TABLE OF CONTENTS
Contents
ABSTRACT .................................................................................................................................. iv
TABLE OF CONTENTS .............................................................................................................. vi
LIST OF APPENDICES ............................................................................................................... xi
CHAPTER ONE: INTRODUCTION ........................................................................................... 1
1.1. Introduction to Privatization ............................................................................................. 1
1.2. Definition of privatization ................................................................................................. 3
1.3. Privatization in developing countries ................................................................................ 9
1.3.1. Preparation of privatization ......................................................................................... 10
1.3.2. What method should be adopted ................................................................................. 10
1.3.3. What should be privatized? ......................................................................................... 12
1.3.4. Capital markets development ...................................................................................... 13
1.3.5. Ownership structures .................................................................................................. 14
1.4. Privatization in MENA countries .................................................................................... 15
CHAPTER TWO: PRIVATIZATION IN YEMEN ................................................................... 22
2.1. INTRODUCTION ...................................................................................................... 22
2.2. Yemeni studies of privatization .................................................................................. 22
2.3. Background of Yemen ................................................................................................ 26
2.3.1. Macroeconomic Review ............................................................................................. 26
2.3.2. Policy of Privatization in Yemen ................................................................................ 28
2.3.3. Reasons behind privatization in Yemen ...................................................................... 32
A. Overview of Economic development ........................................................................... 32
B. Weak Performance Of Public Sector .......................................................................... 37
C. Problems of Government Finance .............................................................................. 41
D. Enhancing Private sector ............................................................................................ 54
2.4. Privatization option in Yemen .................................................................................... 60
2.4.1. Privatization Process ................................................................................................... 62
2.4.2. The Status of Privatization Process ............................................................................. 70
2.5. Problem Statement ...................................................................................................... 72
2.6. Objectives of the Study ............................................................................................... 74
2.7. Scope of Study ............................................................................................................ 76
2.8. Limitation of study ...................................................................................................... 77
2.9. Organization of thesis ................................................................................................. 77
CHAPTER THREE: LITERATURE REVIEW ......................................................................... 79
3.1. Privatization and Growth of the State ......................................................................... 79
3.1.1. Deal with the problem of payment .............................................................................. 80
3.2. Theories of Privatization ............................................................................................. 82
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3.2.1. Reconsider state theories ............................................................................................. 88
3.2.2. Arguments for and against privatization ..................................................................... 96
3.3. The Political Determinants of Economic Performance and underpinning of
privatization .............................................................................................................................. 103
3.3.1. The administrative perspective ................................................................................. 113
3.3.2. The economic perspective ......................................................................................... 115
3.3.3. Administration and economic perspectives limitations ............................................ 116
3.3.4. A political perspective .............................................................................................. 118
3.3.5. Pragmatic Privatizations ........................................................................................... 122
3.3.6. Systemic Privatization............................................................................................... 129
3.3.7. Conceptualizing Political Interests ............................................................................ 131
3.3.8. From Motive To Consequence .................................................................................. 135
3.4. Modes of privatization .............................................................................................. 136
3.4.1. Privatization by Selling Shares to the Public ............................................................ 136
3.4.2. Privatizing Through Share-selling to Private Investors ............................................ 138
3.4.3. Management Buy-in Privatization (MBI) ................................................................. 138
3.4.4. Management and Employee Buy-out Privatization (MBO or EBO) ........................ 139
3.4.5. Privatization Through the So Called Phenomenon of “Leveraged-buy-out” ............ 140
3.4.6. Privatization through Selling of the Privatization Individual Assets ........................ 140
3.4.7. Privatization Through Restitution to Former Owners ............................................... 141
3.4.8. Privatization Through Coupons (Voucher Privatization) ......................................... 141
CHAPTER FOUR: RESEARCH METHODOLOGY .............................................................. 143
4.1. Research approach .................................................................................................... 143
4.2. Research Design ........................................................................................................ 145
4.2.1. Exploratory research design ...................................................................................... 147
4.2.2. Conclusive research design ....................................................................................... 148
4.2.3. Research Design adapted in this study ...................................................................... 149
4.3. Conceptual Framework:-........................................................................................... 150
4.4. Sampling Design ....................................................................................................... 151
4.4.1. Population and Sampling .......................................................................................... 153
4.4.2. Primary data .............................................................................................................. 157
4.4.3. Secondary data .......................................................................................................... 159
4.5. Analysis and Interpretation of data ..................................................................... 164165
CHAPTER FIVE: FINDINGS .................................................................................................. 168
5.1. INTRODUCTION .................................................................................................... 168
5.2. Brief history and analysis of the enterprises under study ......................................... 168
5.2.1. Brief History of case study enterprises ..................................................................... 169
(i) National Grain Silos Ltd. .......................................................................................... 169
(ii) National Cigarette and Matches industries Ltd ........................................................ 174
(iii) Al-Esayi Beverages Company Ltd Canada Dry/Aden .............................................. 178
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5.2.2. Analysis of the enterprises under study .................................................................... 182
I. Profitability Changes ................................................................................................ 183
II. Operating Efficiency Changes .................................................................................. 185
III. Capital Expenditure Changes ................................................................................... 187
IV. Output ....................................................................................................................... 189
V. Employment ............................................................................................................... 189
5.3. Analysis of Questionnaire ......................................................................................... 191
5.3.1. Inferential statistics ................................................................................................... 192
5.3.2. Questionnaire analyses .............................................................................................. 195
a) General aspects ......................................................................................................... 195
b) Procedural aspects ..................................................................................................... 205
c) Objective aspects ...................................................................................................... 208
d) Progress aspects ........................................................................................................ 214
e) Ownership aspects .................................................................................................... 217
f) Evaluation aspects ..................................................................................................... 219
CHAPTER SIX: DISCUSSION AND CONCLUSION ........................................................... 228
6.1. Discussion ................................................................................................................. 228
6.1.1. The motives for privatization in Yemen ................................................................... 230
6.1.2. The goals of privatization in Yemen ......................................................................... 235
6.1.3. Evaluation of privatization program in Yemen (performance of enterprises and
viability of privatization program) ............................................................................................ 240
6.1.4. Major problems that affect privatization performance in Yemen ............................. 243
6.2. Conclusion ................................................................................................................ 244
6.2.1. Summary of results ................................................................................................... 244
6.3. Contribution of the study .......................................................................................... 246
6.4. Political problem in Yemen ...................................................................................... 252
6.5. Security problems ..................................................................................................... 255
6.6. Recommendations ..................................................................................................... 257
REFERENCES .............................................................................................................................. 261

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