Saudi investors are gradually withdrawing most of their investments in Yemen in the wake of the worsening law and order crisis in the country.

They are reconsidering their business plans in Yemen because of declining demand and weak purchasing power among customers, according to reports.

The investors are also concerned over increasing incidents of looting and destruction in the country.

Some businessmen have stopped pumping liquidity into their existing businesses in many Yemeni cities.

Mohammed Jamjoom, economic analyst and investor, said that political instability in Yemen was negatively impacting Saudi investments.

Businessmen have started incurring losses. They fear that the situation might get worse, he said.

According to Jamjoom, Saudis who had insured their businesses, will be compensated if their investments are harmed. But he does not expect them to continue their operations despite insurance protection.

He also believes that new funds that had been earmarked for projects in Yemen are unlikely to be sent there until normalcy is restored in the troubled state.

Saudi businessmen may opt for other investment opportunities in the Middle East, he said. No new capital will enter Yemen this year, he predicted.

Fouad Bin-Mahfouz, member of the Jeddah Chamber of Commerce and Industry (JCCI), said that Saudi investments in Yemen are divided into two categories: fixed assets such as land and buildings and factories built without great investments, which generally bring in good returns.

Such investments and assets cannot be sold now because of the current situation, said Bin-Mahfouz.

He indicated that the only people who might buy such assets are traders who wait for such investment opportunities and buy real estate at a much cheaper price.

This is very similar to the situation in Lebanon in 1985, but investors found that real estate prices actually continued to drop even after the civil war ended.

“Factory owners will try to transfer the raw material out of the warehouses and send it back to Saudi Arabia and sell it in other countries, but this is not likely to happen because they fear launching new ventures,” he said.

More than 80 percent of Saudi investments in Yemen are in the real estate sector, he pointed out.

Saeed Al-Bassami, another member at the JCCI, confirmed that the flow of tankers between Saudi Arabia and Yemen had also stopped as concern grew among operators about growing violence.

“Most of the operational tankers between the two countries are medium-sized, and investors are unlikely to send their tankers unless the situation is stabilizes,” he said.