SANA'A - A new government decision to increase the custom fees on 71 different types of imported goods has sparked criticism for causing price increases.
According to Sunday's decision, the fees will increase from 5 to 15 percent of the value of the imported goods.
The decision will apply to cars, motorcycles, bicycles, cigarettes, tobacco, perfumes, cosmetics, decorative items, toys, furniture, construction materials, cleaning substances, and electric appliances, all imported into Yemen.
This increased fee will also apply to imports of vegetables, fresh or canned, grains, crackers, milk, cheese, honey, cooking oils, canned fish, sweets, biscuits and drinks, except powdered milk and those used in manufacturing.
This measure came only three days after the National Defense Council's meeting on Wednesday that discussed strategies to tackle the economic deterioration in the country.
Merchants have said that the price of these items has already been increased without exception for basic goods, such as food.
"The price of everything has increased, even local products produced by the Hayel Saeed An'am group, the biggest in the country," said wholesaler, Ghailan Assoudi.
He explained that the market has witnessed two separate increases, the first as a result of last week's devaluation of the Yemeni riyal against the dollar, and the second after the government decision to increase custom fees.
As an example of the increase, he said that the price of a 14-kilo can of ghee has increased from YR 4,400 to YR 5,000 and a 25-kilo sack of milk powder has increased from YR 18,000 to YR 18,800.
Even the price of white flour has risen, he said, although it was not included on the list of items for the custom fee increase. The price of a 50-kilo sack of wheat has also increased from YR 3,750 to YR 4,000.
Yemenis have complained about the latest price increases.
"This new increase is a heavy burden on our shoulders as our salaries are low and are already not enough to cover our daily needs," said Ali Saleh, an employee who receives monthly salary of YR 33,000.
A measure to save the Yemeni riyal
Secretary General of the Cabinet, Abdul-Hafiz Al-Semah, said the decision is part of the government's many measures to avoid any further Yemeni riyal devaluation against the US dollar. The measure aims to save the hard currency spent on imports, and favor the purchase of local goods at lower prices.
In a statement to the ruling party's website, Al-Semah said that the devaluation of the Yemeni riyal against the dollar and its use for importing goods to Yemen affects the national economy. He said that the government's latest measure is aimed at limiting currency exhaustion and controlling price increases.
"The government has cut off its nose to spite its face," said economist, Mohammad Jobran, explaining that instead of imposing extra taxes on traders, it has instead ended up inflicting them on ordinary citizens.
"Imposing these additional fees means that the Yemeni economy is in an even worse condition," he said. "If the government continues with this policy, the price of the dollar will not retreat and speculation will continue, because they haven't solved the root of the problem."
He suggested fighting corruption as a more effective way to rescue the economy, by limiting the demand for hard currency, because the corrupt have great liquidity and will continue buying dollars and transferring them outside Yemen.
He also recommended that the government improve its income, and impose taxes and custom fees on those who are stealing tax money.
He finally suggested that the Ministry of Trade ban merchants from selling goods in dollars, as this policy increases the demand for the dollar and devalues the local currency.
By Mahmoud Assamiee
© Yemen Times 2010
