BizNews: Jordan's current business environment and investment climate. Competitive advantages the kingdom offers to investors
H.E. Eng. Yarub Qudah (YQ): The attractive investment environment in Jordan is a key point of motivation for Business. Jordan became one of the most attracting destination for investment due to the sound macroeconomic fundamentals and; the prevalence core elements of good governance such as the protection of private property and the general safety from crime; the favourable regulatory environment; the quality of transport, information, and telecommunication infrastructures; and a well-developed financial market.
On the institutional and legislative levels, The Investment Law for the year 2014 overcome red tape and grant exemptions to investments irrespective of their size or location to ensure equality between projects. The “One Stop Shop” set up at Jordan Investment Commission offering complete guidelines on all procedures, time lines, and documents needed to start a business.
Additionally, we have established several special economic zones and industrial zones that provide further incentives for foreign investment, including income tax rates of only 5%. Companies may also have 100% foreign ownership in industrial sectors.
Investment into human capital has always made Jordan successful and it prides itself on having a highly talented and skilled population to international firms operating in Jordan.
BN: Jordan as a haven of stability and its potential to serve as business hub in the region. Jordan as a gateway to regional markets.
YQ: Jordan can serve as a hub for business capitalizing on its value and geographical location. The safe and stable environment in Jordan is a key advantage that we offer to foreign investors a long with the feasible opportunities that are available in such a growing dynamic economy. Jordan has strong relations with its neighbors and its economy continued to be viewed more stable than other countries in the turbulent region.
The free trade agreements Jordan has signed with global and regional partners; mainly with the Arab Countries, United States of America, European Union, Canada and Turkey, makes Jordan an attractive destination for foreign investments to access to major international markets.
Moreover , the year 2016 witnessed a significant qualitative shift to the Jordanian exports under the recent agreement with EU in terms of the relaxation of rule of origin. This is another motivation to investors.
Also, the Government is seeking new markets to Jordanian exports, main focus on Africa continent.
BN: World Bank statement: Economic growth is expected to marginally improve to an estimated 2.6 percent on average over 2017-2019. Key economic sectors and market opportunity.
YQ: Jordan’s GDP growth between 2000 and 2009 averaged 6.5%, but from 2010 until 2016, average growth was a mere 2.5% due to effects of the regional turbulence particular as a host country, energy crisis, closure of trade routes. To revive the economy several steps will be under taken:
The next years aim at putting public debt firmly on a downward path streamlining non-priority current spending, prioritizing social and capital spending.
The Government is also pursuing with measures to enhance business environment and prioritize investments and maximize using PPPs which are considered the most important employment source for Jordanians and a key contributor to economic growth. On the other hand, the Government has committed to re-engineering, digitizing and outsourcing the key business interactions, as well as upgrading its legislation framework such as for bankruptcy and insolvency, upholding of shareholders agreements, the movable assets law, the companies law and removal of goodwill tax. Judicially, Jordan will set up a specialized chamber for economic cases and will adopt electronic notifications to streamline adjudication.
The coming Government plans will cover and stimulate key economic sectors and drivers of growth: energy, water, industry, transport, tourism, construction, agriculture, infrastructure, specialised vocational services, entrepreneurship and small- and medium-sized enterprises, and the social and service sector, including health and education.
Special focus will be on strengthening and enhancing exports. In the years ahead, approximately 50% of the economy will focus on the productive sectors to drive growth that requires a significant jump in; Tourism; ICT; Manufacturing; Transport.
BN: Latest policies and strategies to increase the kingdom’s competitiveness, increase value added industries, enhance trade and support the private sectors.
YQ: Recently, a 5-year Jordan economic growth plan was adopted by the Government to recapture the growth momentum and realize Jordan’s development potential.
This new plan was built on the Jordan 2025 Vision to help achieving its goals. it also builds on efforts over the past few years to develop comprehensive and sectoral strategies, based on the royal vision outlined in the Letter of Designation to the government, the National Strategy for Human Resources Development, “REACH 2025: Jordan’s Digital Economy Action Plan”, and the recommendations of the Royal Committee for Developing the Judiciary and Enhancing the Rule of Law.
The plan covers 19 fields and sectors of reform, identifying 95 measures for economic reform and 85 government projects at a cost of around JD6.9 billion. It also highlights 27 investment opportunities for the private sector worth around JD9.5 billion in total.
A successful implementation of the plan along with IMF Extended Fund Facility Program will put Jordan on a sustainable development arriving at a resilient economy in the face of regional and global challenges.
BN: Efforts to encourage research, development and innovation
YQ: Let me quote H.M the king in his 7th Discussion Paper focusing on education and human resources as the main wealth of Jordan, he said: Jordanians are innovative by nature”. This is due to the strong educated and high skilled citizens.
As the spending on research and innovation is limited due to the lack of resources, the national policy has been directed its efforts and initiatives towards fostering research and devoting the necessary resources. The government is committed to implement a comprehensive, strategic and well-defined system that reflects the vision of his Majesty King Abdullah with emphasis on capabilities, innovation, entrepreneurship and research.
The Higher Council for Science & Technology worked on identifying the scientific research priorities in Jordan for 10 years. The initiative targets national institutions and researchers in Jordanian universities to contribute to realizing the sustainable comprehensive national development.
Number of programs to be implemented under Jordan vision 2025 aims at raising the efficiency of scientific research and encouraging innovation.
The National Strategy for Entrepreneurship Development and MSMEs 2017-2021 aims at promoting the spirit of entrepreneurship and innovation across different economic sectors.
In order to create future generations with tools of knowledge and education as well as excellence and innovation, the Government also adopted a 10-year plan; "National Strategy for Human Resources Development".
Furthermore we are working on activating the role of research in the field of trade policy and industry through cooperation with colleges, universities, and professional institutes, and promoting the role of business incubators in universities and the value of academic expertise in developing them.
BN: MOUs and cooperation agreements with different international institutions.
YQ: Jordan is a member of a number of international organizations and has signed several agreements and memorandum of understanding with such institutions such as the World Bank and the International Monetary Fund to promote bilateral cooperation and accelerate the efforts exerted by the Government to achieve national sustainable goals.
BN: Support to MSMEs, as the fabric of the private sector
The Government will continue to achieve its objectives of developing MSMEs and creating a secure and attractive environment to MSMEs in light of Jordan vision 2025. In order to eliminate obstacles standing in the way of expanding and empowering MSMEs, the Government will take necessary steps to ensure:
- Accelerating reforms related to the legal and regulatory environment by preparing a draft law for small and medium enterprises;
- Mobilizing more funding sources for Micro, Small and Medium-sized Enterprises with reduced interest and through enhancing the role of the Jordan Loan Guarantee Corporation in guaranteeing;
- Lowering cost of tax compliance for SMEs through allowing semiannual reporting;
- Enhancing financial inclusion and ensure adequate financing to SMEs through Allocate 15% of the international and regional financial institutions loans to SMEs startups.
- Providing technical and financial support for small and medium enterprises especially through Jordan Enterprise Development Corporation (JEDCO)
- Financing new and existing development projects in governorates through the Governorates Development Fund.
- Contributing to financing start-ups through the network of Jordan Innovation Centers
BN: Relations with Germany, one of Jordan’s top strategic partners and most important trading partner in Europe. Overview of both nations.
YQ: Jordan – Germany trade relations go back to the last century and are considered a symbol of a successful and fruitful partnership and a role model in international relations, and the notion to enhance such relations has always been mutual.
Jordan considers Germany as a close partner in all aspects, whether it is on the bilateral or regional level, noting the vital role of Germany under the European Union.
Jordan and Germany trade relations are governed by the Jordan- EU Association Agreement signed on 24/11/1997 and entered into force on 1/5/2002.
On trade level, bilateral trade volume between the two countries has reached 897.7 million USD in 2016. Although Jordan's exports to Germany doubled in the year 2016 registering 15.2 million USD in 2016 compared to 9.7 million USD in 2015, it is still low compared to 2014 when it registered 23 million USD. There are future opportunities to diversify our exports to Germany especially after the ROO agreement with EU.
Both countries are keen to enhance cooperation and to develop the strategic partnership in different aspects such as: tourism; information technology, education, vocational training. Exchange programs and training offered to German-Jordanian University students in German companies is an example of successful Jordanian-German cooperation.
The German government, represented by GIZ have conducted two scoping missions to the Kingdom in February and May 2017, for the purpose of supporting Jordan in materialising the decision on relaxation of Rules of Origin as well as for enhancing the SMEs capacity to export to other countries. The scoping team met with the Ministry as well as other related ministries and institutions for conceptualising the project on trade and export promotion. Three Areas of intervention have been identified in accordance with the plans of the Jordanian government and initial feedback from stakeholders:
- Firm level assistance
- Capacity development for Jordanian institutions in export promotion
- Supporting employment through trade and export
- Previously, the European Union has funded a twinning project to the Ministry of Industry and Trade, during the period 2006-2008, which aimed at ensuring an effective integration of Jordan’s economy into the global market by enhancing the capacity of the trade-related departments at the Ministry. The project was jointly administered by the German Federal Ministry of Economics and Technology and the French Ministry of Finance, Industry and Economy, which successfully fulfilled the project’s target through implementing a comprehensive action plan; including technical advices, internships, internal seminars and public workshops together with the local business community. As well as individual support for a number of the Ministry’s departments.
BN: PPP and investment opportunities for German companies.
YQ: We in Jordan believe that a solid basis partnerships between public and private sectors can improve economic performance as well as upgrade institutional performance. Major capital projects are in the ground will be implemented through private sector investment and Public-Private Partnerships. For example; the Red Sea-Dead Sea Conveyor project, the second expansion project of the As-Samra Wastewater Treatment Plant and the 50 Megawatt; Renewable Energy project in Al-Dhlai.
The following sectors also offer the best opportunities for investors in the Jordanian market: Energy/Power, including Renewable Energy; Healthcare, including Medical Devices, Medical Tourism,; Information Communication Technology (ICT); Environmental Technologies/Water.
I would like to take this opportunity to invite German business to engage in the implementation of strategic projects in promising sectors mentioned in the "Economic Growth Plan 2018-2022" available upon request
BN: Opportunities as a result of the simplification of rules of origin between Jordan and the EU
YQ: The agreement allows “Made in Jordan” products to include more than 70 per cent of production inputs from non-local materials access to the EU Market. This preference provided to Jordan under this scheme is the same as those applicable to Least-Developed Countries which grants Jordan products competitive prices for the European importers as they enter the market free of duties. This gives Jordan vital access to EU markets and contributes in the economic growth and promoting investments as well as creating more jobs.
The Decision covers most of the industrial products, 50 HS chapters, manufactured in 18 development zones/ industrial cities, which are expected to have greater market access to the EU Market; such as textile, apparel products, electrical and home appliances, chemical products, plastic products, and furniture.
The 18 Zones were selected based on criteria such as:
- Their ability to attract investments
- The presence of well-established industries producing goods included in the initiative.
- Logistic factors such as roads, airports and ports.
- High density of unemployed Syrians and Jordanians willing to work in these factories.
BN: H.E Engineer Yarub Qudah’s vision
YQ: My vision is to move forward with sense of commitment to enhancing Jordan's reform process and to stimulate the economy:
- Promoting and stimulating the business environment ,ensuring an efficient and stable legislative, and maximizing investment opportunities;
- Activating the role of the private sector as a major engine sustainable economic growth;
- Maximizing Jordan’s exports and enhancing the positioning of Jordanian products in international markets
- Raising the efficiency of the Ministry to provide a better level of services
- Creating new job opportunities through industry, trade and investment is an essential part of THE Government comprehensive approach.
