Biznews (BN): Since His Majesty King Abdullah II ascension to the throne in 1999, Jordan has taken steps to have a more market-based, outward-oriented and globally competitive economy. How would you describe today’s investment and business environment in the Kingdom?

H.E Hamad Kasasbeh (HK): Jordan is a small and open economy. We have a lack of natural resources, we are water poor and energy dependent, but we are rich in human capital. We still rely on grants and loans in order to develop our different market needs. We have had this structural weakness from the beginning.

In 1989, Jordan was facing a financial crisis. So, in cooperation with the IMF and international organizations we tried to follow up the structural program of the IMF. From 1989 until June 2004 Jordan has graduated from structural reforms and we have achieved successful results under this program’s objectives. For example, budget deficit declined, our international reserves built up and our current account improved. We have also achieved internal and external stabilization, financial stability in our economy and we have reduced our external debt. Back in 1989,our external debt was about 237% of our GDP, and this was reduced to about 100% in 2004. Once we graduated from the international program, we have tried to rely on ourselves and to design our own program. We have a lot of subsidies in our economy, for example for oil or water, and these subsidies affect our budget. Thus, we have a chronic budget deficit, so we have tried to gradually reduce these subsidies to reduce our budget deficit.

The economy has grown on an average of 5.4% from 2000 to 2009, it was good because it was higher than the population growth. At the end of 2009, the Arab Spring started and Jordan has suffered from that. We had to face the problem of reducing our exports and increasing our imports. So, our program was distorted. From 2009 until now, the economic annual growth is about 2%, while the population growth is around 8%. There is a gap between the population growth and the real growth of our economy. This leads to different problems such as unemployment, budget deficit, higher debt, etc. and these are chronic problems.

We rely on grants from friendly and Arab countries to finance our budget deficit. But we have to become independent, by using our resources very efficiently to handle our problems. We have unemployment problems, so we have to attract foreign investments to first create jobs to reduce poverty, and to finance the current account deficit, because if we do not have grants we have to rely on foreign and local investments. In Jordan we benefit from a great location, we have political stability, we have security and an open economy. We have many things to become a hub in the region. Unfortunately, our economy is linked to the region and to its problems. From the beginning, we have tried to face the small size of the economy by opening our economy to the world. We have many trade agreements worldwide to access billions of consumers, and to attract investments to our country. We are suffering, but we are working hard to face these problems.

Biznews (BN): Despite recent challenges, the World Bank estimates economic growth is expected to marginally improve to an estimated 2.6 percent average over 2017-2019. The Cabinet adopted in September the economic reform package proposed by the Economic Policy Council to boost growth. What is your forecast for Jordan’s potential growth and what sectors will be leading it?

H.E Hamad Kasasbeh (HK): We have promising indicators, for example at the first quarter of this year real growth was about 2.25%. The World Bank estimated it to be about 2.6% by the year’s end, and I think it is realistic.

Concerning the promising sectors, we have the telecommunications sector, renewable energy and tourism. We have a big potential of attracting foreign investments. In the near future, if there is stability in the region, Jordan will have a lot of chances to become a hub, because it is getting prepared for that. We are watching close what happens in both Syria and Iraq, and even in the Gulf. Most of our trade goes through Iraq and Syria, and their situations put a heavy pressure on our international trade. We are suffering but we are working hard and getting prepared for when there is peace again.

Concerning the financial situation for this year, we are moving in the right track. The budget deficit is under control and as projected by the IMF and the Government. The debt ratio to GDP is as projected, it is high, around 4%, but it is declining and not increasing. The Government introduced a stimulus plan for the economy from 2018 to 2022. With this Government growth plan, is it estimated that the economy will double by 2022. This is an important and comprehensive plan that focuses on all types of sectors with big emphasis on the demand and supply sides of the economy. The plan also will focus on the human resources part, since we consider that Jordan has a strong competitive advantage in terms of human capital. Jordan is seeking to achieve important economic growth for the future and, in order to get there; we need to increase the productivity of our workers both in the public and private sectors. We believe that there is a direct correlation between productivity and economic growth and since we have a strong and important human capital, we will work toward our main competitive advantages to reach our objectives.

Biznews (BN): Knowing how important the SME sector is, how would you assess the efforts done by the Government in order to support it?

H.E Hamad Kasasbeh (HK): SMEs are very important in order to face the problem of unemployment in our country. SMEs employ around 90% of the country’s labor force. With the help of our monetary policies we tried to give some incentives to the banking system in order to finance SMEs. Unfortunately the access to bank financing is very difficult, therefore with these monetary policies are trying to support the SMEs and their development.

Biznews (BN): In August 2016, the Free Zones Company was merged with Jordan Development Zones Company and Jordan Free and Development Zones Group was established. What was the reason for the merger and how will it boost efficiency?

H.E Hamad Kasasbeh (HK): Jordan’s experience with free zone dates back to 1973. The first one was established in Aqaba in order to facilitate exchange, transit trade and trade in Jordan. Seeing the benefits it brought Jordan established the Free Zones Company in 1979.Today we have 6 public free zones and 33 private free zones. The ultimate goal is to attract foreign and local investments. The amount of trade through these free zones is more than 3.5 billion JOD. Currently, the free zones are going through a difficult moment, bearing in mind the political instability of the region. Our main export and trade partners are Syria and Iraq, and both are experiencing a difficult political and economic situation. Once these two countries solve their issues and our bilateral trade resumes; most of our economic problems will be solved.

Biznews (BN): What competitive advantages and one-stop shop services do Jordan’s free zones offer?

H.E Hamad Kasasbeh (HK): The ultimate objective of the free zones is to attract investors in an area that is tax-free, giving them incentives and a place where they have the opportunity to establish their businesses and export into their countries of interest. We also give them an incentive to enter 25% of their products into the Jordanian market. Jordan is among the first countries in the region to establish free zones and we are well experienced. Currently we have more than 3,000 investors in free zones, and this is due to our strength in the free zone business.

Biznews (BN): One of your objectives is strengthening the leading role of the private sector in the establishment of private and joint free zones that use local primary resources in production inputs. How is Develop Jordan encouraging the private sector to invest and operate in the free zones?

H.E Hamad Kasasbeh (HK): We have around 33 private free zones in Jordan. For any private company willing to establish itself in the country, we will encourage and support them in order to achieve that. This will enhance the role of the private sector in Jordan, as we know it is the engine of growth and it represents more than 50% of our economy. Therefore, we will always strive to support them in order to give them the best service.

Biznews (BN): Amongst the first things an investor looks into before entering a new market, a part of political stability and security, that you enjoy, is infrastructure. How would you describe Jordan’s infrastructure?

H.E Hamad Kasasbeh (HK): Jordan has one of the most developed infrastructures in the region. Our Government has invested a lot in terms of infrastructure, since it is considered as a pillar behind a strong economy. As an example we have one of the best airports in the region and the quality of our roads from north to south or east to west is absolutely remarkable.

Biznews (BN): In July last year the EU and Jordan agreed to simplify the rules of origin for Jordanian exports. How are you working to harness its maximum potential and what opportunities would you like to highlight to German companies and investors?

H.E Hamad Kasasbeh (HK): This is an outcome of the London Conference, which was aiming to help Jordan face the issue of the refugees, especially those coming from Syria. That is why we simplified the rules of origin. This simplification will encourage foreign investments and also give opportunity to Syrian labor forces. It will help exportation into Europe, which will have a positive impact on unemployment and development of the country.

Biznews (BN): Over the past 10 years, Jordan has pursued structural reforms, amongst others, in privatization and liberalization and has created the conditions for public-private partnerships. World Bank President Mr. Jim Yong Kim proudly stated, “The airport that was built in Amman, Jordan is an example of how public private finance can deliver infrastructure projects that bring enormous economic benefits for the country.” What PPP opportunities does Jordan offer in general to the international community and in particular to German investors?

H.E Hamad Kasasbeh (HK): Jordan is a country that strongly believes in the private sector and its resources in order to contribute to its development. We do want the private sector to participate heavily into our economy because we use our public sector for economic and organizational efficiency, while we expect the investment and development to come from the private sector. Therefore, we strongly believe in the partnership between the public and private sectors in order to drive forward our economy.

Biznews (BN): King Hussein I once said, “All what we hope for is that a day will come, when we have all gone, when people will say that this man has tried, and his family tried. This is all there is to seek in this world.” What is the legacy you would like to leave behind?

H.E Hamad Kasasbeh (HK): I think that improving the living conditions of the Jordanian citizens, improving the economic and financial environment of the country, and Reducing the unemployment and budget deficit are the main goals we are working on closely with the Government. From the other hand, Jordan has an important debt towards our strategic partners and we are willing to reduce it in order for us to gain international respect with countries and institution that support us and also with the ultimate objective of raising the standards of living in Jordan. It is also very important to mention the case of Germany, which always had a historical contribution to the improvement of the Jordanian economy. We signed over 30 agreements with the German government in the previous years, which shows how strong our relations are. They mainly focus on education and providing us with needed resources such as water and energy. Therefore we can say that the Germans are very close to us and that we are happy to keep working with them for the benefit of our country.