Japan

September 2017 · Middle East·

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Focus on Jordan

Interview with Mr. Hamdi Tabba'a, Chairman Jordanian Businessmen Association, The Hashemite Kingdom of Jordan

Biznews (BN): Please elaborate on Jordan’s current business environment and investment climate and what are the competitive advantages the Kingdom offers to potential investors.

Despite the region’s ongoing political and security challenges, Jordan’s economy has been flexible. The economy has benefited from earlier years’ reform agenda in the areas of privatization and public finance management. Jordan’s business environment has experienced significant and rapid changes in terms of both its complexity and competitiveness in global markets, high levels of trade freedom and investment freedom continue to sustain market openness, keeping the economy relatively competitive.

The increased demand for qualified labor, coupled with growing international competition for resources, have forced Jordanian businesses to remain flexible and become more resourceful. The government has worked diligently at implementing a raft of different measures to support local businesses and promote investment in the kingdom, while at the same time maintaining a balance with its need to generate tax revenues that form a large percentage of its annual budget.

With relatively well-developed basic infrastructure and business- friendly facilities, Jordan’s economy makes an attractive investment proposition, which the government is working to strengthen through investment promotion laws that aim to maintain a certain amount of tax revenue, while at the same time providing the additional edge sought by investors and business owners alike. Investment in Jordan advantages and attributes are but not limited to unique and strategic location, stable political environment, free market-oriented economy, attractive investment climate and package of incentives, access to major international markets, Free Zones and Industrial Estates, qualified and competitive human resources and world class infrastructure and communications.

Biznews (BN): What is Jordan’s potential to serve as a business hub in the region and a gateway to regional markets?

Jordan facilitates access to 17 Arab countries through the GAFTA, is member of the Multilateral Investment Guarantee Agency (MIGA), has bilateral agreements and favorable protocols with over 20 countries, gives access to the Red Sea through the Port of Aqaba and other ports via neighboring countries. The Port of Aqaba acts as a strategically located gateway to Jordan, the developing Red Sea region, and the Middle East as a whole.
There are major trucking lines ensuring the movement of raw materials to and from the port of Aqaba, as well as to and from ports of neighboring countries. Jordan enjoys a strategic location at the meeting point of Asia, Europe and Africa. There is duty and quota free access to the US market through the Qualifying Industrial Zones (FTA) and duty free access to EU markets.

We enjoy a stable leadership under the Hashemite monarchy, supported by the democratically elected Parliament. There is guaranteed freedom of speech, conscience, press, association, private property including intellectual property rights and a firm commitment to private sector development. It is indeed the most stable country in the Middle East in terms of security and personal safety.

Biznews (BN): The World Bank stated economic growth is expected to marginally improve to an estimated 2.6 percent on average over 2017-2019. What are the key economic sectors and market opportunities?

I will give a sectorial analysis and characteristics.

1) Industry
The industrial sector is one of the most promising sectors in Jordan due to the number of industrial cities and areas of development concerned with the support of medium and small industries many of which benefited from the free trade agreements Jordan has. The Jordanian industrial sector consists mainly of "manufacturing industries" sector, "extractive industries" sector and "electricity and water" sector, and due to its forward and backward links with many sectors such as transport, insurance, trade, and others, it is concluded that this sector is playing a greater role to directly or indirectly contribute to about 40% of GDP.

Business Opportunities:

  • Technology transfer Expansion of building stones (travertine)
  • Glass manufacture and silicon manufactured from silica.
  • Copper and uranium.
  • Mineral exploration projects – phosphate, copper, uranium
  • Oil Shale extraction for direct combustion power plants
  • Copper mining and processing
  • Uranium exploration / proving and processing



2) Healthcare Sector:
The Jordanian healthcare sector is known for its high-quality healthcare services both regionally and internationally due to the presence of world-class internationally qualified doctors and accredited hospitals equipped with the latest machinery and equipment, leading to shorter wait times for treatment.

Overview:

  • World-class medical tourism destination - Jordan is the region’s medical treatment hub over 250,000 foreign patients.
  • Jordan is ranked first in the MENA region and fifth internationally as a medical tourism destination (World Bank, 2015).
  • Medical tourism generated more than JD1.2 billion in 2015.
  • Jordan has 106 Hospitals, while healthcare costs in Jordan are lower than those in Europe and USA.
  • Jordan has 22,000 physicians, 5,000 dentists, and 9,000 registered nurses - a high-density relative to the population
  • More than 30,000 undertaking courses in Para-Medical Sciences, Medicine, Pharmacy and Physical Education, underpinning a well-educated and experienced workforce for the future healthcare industry in Jordan (official 2014 statistics).


Business Opportunities:

  • Medical centers/ hospitals with 5-star services
  • Specialized medical centers
  • Medical tourism facilitators
  • Medical colleges
  • Health Spas
  • Dead Sea Cosmetics
  • Private Hospital
  • Specialized medical center


3) Tourism Sector: The tourism sector in Jordan is fast-growing and involves many economic and social sectors. It contributed by 11.8% to Jordan’s GDP in 2015. Jordan has become a safe destination for tourism due to its strategic central location in the region, moderate climate, safety, and security.
Overview:

  • A healthy leisure and tourism industry characterized by low risk across security and economic measures (EIU ratings 2015), providing a safe, more stable environment for tourists and visitors
  • An established leisure and tourism cluster of more than 2,200 establishments supporting more than 49,000 jobs (Ministry of Tourism Report, 2015).
  • Significant tourism infrastructure assets in Amman, Aqaba, Jordan Valley and the Dead Sea, Ma’an (Petra) and Wadi Rum.
  • Jordan has 558 classified and non-classified hotels with 27,073 beds.
  • A total number of tourist arrivals reaching 4.8 million with receipts of USD 2886.1m (Central Bank statistics, 2015).
  • Jordain is ranked 35 (out of 140) in the WEF tourism Global Index,2015 in terms of Business Environment, and 32 in Ease of finding skilled employees.
  • Strong levels of English language skills (2014 EF Proficiency Index), supporting the ease of travel and tourism in the country
  • Provides good quality of life (high rating on the UN Human Development Index and a ranking of 26th on the Happy Planet Index)
  • Availability of Development Zone incentives for operations in Aqaba Special Economic Zone and Jordan Development Area (Jabal Ajloun and the Dead Sea).

Business Opportunities:

  • Three, Four and Five Star hotels.
  • Boutique Hotels.
  • Country-Side cottages (Ajloun).
  • Theme Parks and entertainment cities.
  • Spas and Resorts



4) Agricultural sector: The Jordanian agricultural sector is economically important in Jordan, despite its small share contributed 4% to the nation’s GDP ($1381m), employing 1.7% of the country’s labor force (Center Bank of Jordan Statistics,2015). Jordan is self-sufficient in a number of agricultural products such as olive oil and tomatoes but must import some basic items such as cereal, animal and dairy products, and sugar.

Business Opportunities:

  • Marketing firms focusing on promoting agricultural products
  • Research and development for enhancing attributes of food and beverage products
  • Extraction of flavors and fragrances from local plants
  • Development of post-harvest activities for fruit and vegetables, as well as working towards adopting an orchard to market approach that aggregates production and establishes economic packing, storage, and marketing functions
  • Fruit concentrate production
  • Cottage farming, livestock production, and processing, and export of fresh fruits and vegetables
  • Organic farming for the production of vegetables, as well as medical and aromatic plants production for local and overseas markets
  • Production of animals feeds on farm by-products
  • Utilization of date palm by-products in the manufacturing of containers, floor mats, and more.



5) ICT: Jordan has developed one of the leading information and communications technology (ICT) sectors in the region, with more than 400 active companies, directly employing about 16,000 employees and overall contributing about 84,000 jobs. Jordan succeeded in creating and developing a highly-competitive information and technology sector which is considered one of the pioneering sectors in MENA. Today, Jordan is capable of providing all the key elements required by international companies; becoming a new regional window that serves the region and a regional tech startup hub thanks to an ICT-focused educational system, business-friendly environment, and low startup costs.

Business Opportunities:

  • Design studios for gaming and animation and localization of content.
  • Equity funds (VC) to target growing IT start-ups in Jordan and the region (seed, growth and beyond).
  • Customer Call Center.
  • BPO/ITO Service Park an export hub for back-office business and IT services.
  • E-learning Arabized content
  • Software Technology Park
  • Financial sector IT solutions



6) Energy Sector: The Kingdom does not have the natural resources of its neighbors and imports 96% of its fuel and energy requirements (about 20 % of the GDP). Therefore, Jordan is emerging as an ideal location for investment in renewable energy and clean technology that offers a starting point for international companies with the intention of regional and/or global expansion.

Business Opportunities:

  • Utilizing oil shale
  • Manufacturing Solar Cells, Photovoltaic cells, wind turbines and solar reflectors
  • Generating electric power from solar, wind, and geothermal energy.
  • Wind turbines and PV inverters
  • Turnkey Projects
  • Water Purification and Treatment Plants
  • Desalination projects
  • Water Desalination
  • Waste Treatment and Recycling
  • Waste Oils Recycling



Biznews (BN): What are the milestones achieved by the Jordanian Businessmen Association since its establishment 32 years ago and what is the role of the Association to support Jordan’s overall socioeconomic development?

The private sector, being committed to free enterprise and entrepreneurship, and working in collaboration with the Public Sector, believes in partnership and cooperation with the Arab and friendly countries, In this context, joint business councils have been set up so far with similar associations in 40 countries.

The (JBA) runs dialogues with ministries concerned with economic affairs in Jordan to boost the role of the private sector in the economic development in the Kingdom. It receives missions of the foreign business communities that visit Jordan, and arranges the meetings between such missions and their Jordanian 
counterparts. 
We attract a large number of investments to Jordan, and this contributed to creating jobs for the citizens of the country. We also expand trade cooperation with Arab and foreign countries to serve the interests of both parties.

Biznews (BN): What are the MoUs and agreements entered with different government entities and private sector institutions in order to facilitate business and transactions of traders and your contribution to the legislative framework?

The Jordanian Businessmen Association organizes dialogues with relevant ministries on economic and investment matters in Jordan. We foster 
dialogue with officials to overcome obstacles to Jordanian businessmen and investors and communicate their views and problems to officials through the channels of communication provided by the association to its members.

The JBA participates in national committees to review key laws such as the Companies Law and the Income Tax and Sales tax law and have MoUs with local institutions such as; Jordanian Palestinian Business Forum and Economic & Social Association of Retired Servicemen & Veterans (ESARSV).

Biznews (BN): Which are the latest policies and strategies to support the private sector and the JBA’s ongoing projects?

Jordan is committed to creating the right environment to attract investments that would create job opportunities for Jordanians while at the same time opening up the Kingdom to initiatives that would invest in order to generate employment opportunities for the Syrian brothers in a manner not at the expense of local labor and sectors not occupied by Jordanian labor. The first of Jordanian citizens in the first place and our national economy.

The involvement of the private sector will help establish companies in the logistics, light industry and business services sectors and provide capital to companies in the form of loans or shares in the capital of the company for companies already existing in the regions or as a soft loan, and the purchase of products manufactured in Jordan from industries in our regions or agricultural producers. The main objective of the JBA is to create and maintain a business climate that will enable the private sector to accomplish its role in the sustainable economic and business development in Jordan.

The JBA represent the core of the private sector and this qualifies the Association to act as the single unified spokesman for Jordanian businessmen in communications and meetings with similar foreign businessmen associations. 
The private sector, being committed to free enterprise and entrepreneurship, and working in collaboration with the Public Sector, believes in partnership and cooperation with the Arab and friendly countries.

The JBA embraces a wide spectrum of well-reputed entrepreneurs. It comprises about 360 members of senior businessmen in Jordan, active in the different Jordanian economic sectors including industry, commerce, agriculture, banking, insurance, construction, tourism, transport and others. In January 2017 The Ministry of Planning and International Cooperation signed a grant agreement from the European Union as a sector support through the general budget for the development of the private sector in Jordan with a total value of € 55 million.

The European Union is one of the most important international bodies supporting Jordan at various levels. It has already provided grants and assistance in various sectors. The total EU support for the end of 2016 was about 500 million Euros, of which 300 million were grants and 200 million soft loans.

Biznews (BN): What are your cooperation agreements with foreign institutions?

There are about 40 cooperation agreements and business councils with a countries from different continents; Egypt, Canada, Turkey, France, Lebanon, China, Brazil, Belgium, Germany, South Africa.

Biznews (BN): Germany is one of Jordan’s top strategic partners, especially in the fields of trade, agriculture, education, renewable energy and tourism. What is your overview of both nations’ relations?

Our two countries enjoy excellent historic political relations as well as long lasting and developing economic relations. In addition to the large volume of trade transactions between our countries, the economic and humanitarian aid commitments from Germany to Jordan reached a historic level in 2016 to the amount of 472 million Euros. Jordan has been always considered a strategic partner to European countries at all levels, especially in the field of economic relations since the signing and activation of many agreements, which was the most recent “Relaxing rules of origin” which signed on July, 2016. The trade deficit is always in favor of Jordan, in 2016 and 2015, the Jordanian imports from Germany reached 884 and 942 million US Dollars respectively, while the Jordanian exports reached only 15 and 13 million US Dollars respectively.

Our appeal to our German partners is to increase their imports from Jordan such as fertilizers, potash, phosphate, pharmaceutical products, Dead Sea minerals, apparels and vegetables. Unsurprisingly, Germany is Europe's most industrialized nation, boasting major players in industries like automobile manufacturing, machinery, precision equipment, heavy automotive, technology and software. Therefore, Jordan is looking to benefit from the German expertise. And we encourage the German businessmen to establish investments in many projects in promising sectors as Jordan enjoys favorable investment climate in terms of legislations, infrastructures, skilled labor, political stability and social safety and security.

In the field of higher education, the German-Jordanian University has become one of the most prestigious universities among Jordanian universities in recent years, it is the strongest and most successful joint project between Jordan and Germany in the field of joint education.

The German-Jordanian University project is the result of a strong friendship between Germany and Jordan. Twelve years after its establishment, it became a pillar of friendship and building bridges of cultural relations between the two countries.

Regarding German renewable energy, it is one of the most innovative and successful sectors in the world. The output of renewable energy increased from 6.3 percent in 2000 to about 34 percent in 2016, where the latest solutions in photovoltaic power generation and energy efficiency of buildings can be utilized. Jordan can benefit from the experience of the city of Hanover in the recycling of waste to generate energy especially that the Greater Amman Municipality intends to implement similar projects in this regard. The German support for Jordan's energy plans seeks to prepare Jordan's sustainable energy future by boosting bilateral business opportunities and transforming ambitious energy plans in the country into reality. Jordan has a future to be one of the leading countries in the field of renewable energy and related investments due to its unique investment attractiveness factors.

As for tourism, Jordan has won the second place as the best tourist destination for German tourists to the Arab countries according to the statistical indicators for the year 2015 of the Group "Go Asia Go-Arabia", specialized in the statistics of travel and tourism in Asia and the Arab region. This award confirms the position of the Kingdom for European markets in general, and German market in particular. The relative stability and moderate weather in summer, in addition to the unique effects - such as Petra - and the important religious sites of Christianity are an attraction for European and German tourists. Indeed, 40,000 Germans tourists have visited Jordan in 2015.

Biznews (BN): What PPP and investment opportunities would you like to highlight to German companies?

The PPP (Public Private Partnership) are 10 projects so far, such as Amman Civil airport, New Amman Slaughterhouse, Fiber Optic Cable with a total amount for 8 of those projects of 200 Million JD. 


There are different investment opportunities that reach, by sector the following amounts in USD: Tourism sector, 8.4 billion, Infrastructure 3.6 billion, Energy sector 3.4 billion, Transport sector 1.3 billion, Water sector 540 million, Industrial sector 355 million and the Health sector 223 million.

Biznews (BN): What is your vision?

To assume leadership among business associations through dedicating the expertise of our association’s members, in developing an investment climate in a way that enhances a supporting business environment for the national economy in Jordan. 
To promote the suitable environment that empowers the private sector to effectively play its leading role in enhancing the economic and social responsibilities stimulating investments and serving our national economy in Jordan.