Investments in new projects in Yemen fell 54 per cent per cent in the first nine months of 2009 as local and foreign investors became increasingly wary of injecting capital into the fragile state.

Yemen’s General Investment Authority (GIA) reported that investments totalling YR146.2m ($718,428) were made in new projects between January and September 2009, a fall of YR171.2m from the YR317.4m reported in the same period of 2008.

The GIA did not give a reason for the decrease in investments, but diplomats and sources close to the government say that an ongoing war in the northern province of Sadaa, a secessionist movement in the former republic of the south and the growing influence of the extremist group al-Qaeda are putting investors off.

This was shown in the GIA’s figures for foreign investment, which totalled YR462,453 in the third quarter of the year. This marks a 98 per cent fall from the YR28.3m which foreign investors spent in the country between July and September 2008.

The Sanaa government of president Ali Abudullah Saleh is desperate for investors to move into the country as its chief source of revenues, oil exports, dries up. Yemen made $1.47bn from oil exports in the first 10 months of 2009, down 65 per cent from the $4.15bn it earned in the same period of 2008.

Income from oil, which made up 70 per cent of government receipts in 2008, fell on lower production levels and oil prices.