Shibam Holding Developing infrastructure,implementing projects

Shibam Chairman and CEO Saad Sabrah and Chief Investment Officer

Maher Luqman discuss the mission of Shibam Holding, the flagship projects, and challenges to the country’s investment climate.

David MacDonald: What are the primary responsibilities of Shibam Holding? What is its relationship to the Yemeni government?
Saad Sabrah: Established in 2008, Shibam Holding is the private investment arm of the Yemeni Government. Through Shibam Holding, the government aims to achieve sustainable economic development and investment management through strategic partnership ventures with the private sector for government lands and assets.
One of Shibam’s key objectives is managing the implementation of real estate projects, fulfilling the nation’s basic infrastructure requirements and, in partnership with developers and investors, introducing leading solutions in a number of strategic sectors. Master-planned communities, advanced educational programs, and leading infrastructure solutions are some of the key priorities for Shibam Holding.

DM: Why is it necessary for an entity like Shibam to go into partnerships with foreign investors?
Saad Sabrah: Our vision is to be the government’s leading investment arm, maximizing Foreign Direct Investment into Yemen, meeting the nation’s needs and reflecting positively on Yemen’s economic prosperity and growth. Foreign and local investors are strategic to Shibam since they allow us to capitalize well on government lands (under Shibam’s management) by providing the necessary planning and finance of projects which will have a positive impact on the economy as a whole.
 
DM : What needs to be done to improve the system of land registration in Yemen?
Saad Sabrah: A lot is being done by the Land Authority which is the main authority in charge of all urban planning, land surveying, and land registration matters. The Land Authority has undertaken a full reform program that is aimed at improving this entire spectrum. From a land registration perspective, the land authority has commenced a revised legislation for land registration. Such legislation has been approved and passed by the cabinet. What needs to happen as soon as possible is for the parliament to approve this legislation for the Land Authority to move it into effect.

DM : What are Shibam’s most important projects.  In addition to high-end real estate development, what other sorts of projects does Shibam do?
Maher Luqman: A number of projects are in the pipeline. Some have been initiated in terms of construction and some are in the final design phase and expected to start later this year. Meanwhile, we also continue to study other projects in terms of feasibility. etc.
One of the projects in the construction phase is Telal al-Ryyan – a stunning integrated development in Sana’a, composed of residences, retail units and a hotel. Phase one is expected to be completed during quarter four, 2011.
Another project for which designs and all necessary approvals have been completed, is an eight residential tower freehold development, opposite the Movenpick Hotel. It is targeting the middle-income sector of society with construction expected to begin later this year.
In Aden, we have a project due to start this year. The project is designed to be built over 8 million sqm and consists of luxury villas, a hotel and luxury apartments on the beach. The project will be built over a number of phases starting with Phase 1 offering 100 luxury villas and a boutique hotel.
It is a snow balling effect in terms of developing and delivering such projects. We are focusing on achieving a number of major milestones in terms of three to four projects out of seven projects in the pipeline before we proceed further. In addition to real estate projects, Shibam Holding is working to introduce the latest innovations in free zone master planning, infrastructure development, education and manpower development, all through new partnerships with specialized companies in the region.

DM : What progress has Shibam made regarding infrastructure development?
Saad Sabrah: We have recently signed a joint venture agreement with a leading regional infrastructure solutions provider and operator. This joint venture will introduce new innovations to the country in terms of power, desalination etc.

DM: How did the Telal al-Ryyan project come together?
Saad Sabrah: Telal al-Ryyan is a project being developed by a joint venture company established 2 years ago between Qatari Diar and Shibam Holding.

DM : What are the main benefits to the Yemeni economy of the Telal al-Ryyan project?
Maher Luqman: There are numerous direct and indirect benefits to Yemen from this project. In the short-term, it is providing many jobs and training in the construction sector, while also energizing related supplier markets, in terms of raw materials, renting cars, you name it. The longer-term benefits may be even more important. The project introduces to Yemen the latest technology in a number of fields. A project of this scale forces the government to update many business- and investment-related laws, which will in turn lay the foundations for attracting greater foreign investment in the future. In general, bringing a world-class project of such a size will create positive trickle-down effects across the board. The most important benefit, perhaps, is that potential investors of the future will see that large-scale investments in Yemen can be successful and, most importantly, profitable.

DM: What are the biggest challenges facing Yemen in terms of its investment climate?
Maher Luqman: Laws and regulations in relation to investment must continue to improve quickly in order for the country to keep pace with neighboring countries in terms of offering an attractive investment climate. In addition, security is a crucial issue and must be improved if we are to see more investors coming to the country seeking opportunities. We must also mention that the global economic crisis and the lack of project finance have been a major challenge. We do see, however, a positive outlook and momentum, particularly in areas such as residential, infrastructure and education. These strategic areas represent necessities for the country and are areas of need for the nation.

DM: What are the particular challenges facing Shibam?
Maher Luqman: There are a number of challenges facing Shibam or any investment holding company looking at establishing its present within a short time. One of the challenges is ensuring that projects follow the agreed time schedule and develop based on a consistent process.
Furthermore, considering the difficulties facing investors globally in terms of access to finance following the economic crises 2009, we believe that this issue is a major challenge and require constant attention and cooperation by all parties and perhaps a different look at how to approach the development of projects. The phased approach is one of the most reasonable strategies appealing to investors, finance houses etc.