Economy & Investment


Jordan has been dedicated to building up its economy over the last two decade. Devoted to this cause, more recently Jordan has been working with the World Bank and International Monetary Fund (IMF) to establish the economy.

Jordan’s economy suffered immensely when the aid it was promised from certain countries did not come through and it had to pay back the debts from the programs it had already started, and from the sanctions imposed on Iraq, a major trading partner.
With the help of the World Bank and IMF, Jordan has established itself as a model developing country. Jordan has proven to be very serious and responsible and has shocked everybody with what it has managed to do in past year and a half. It was able to join the World Trade Organization (WTO) in 11 months; an extraordinary feat which people doubted could be accomplished. Jordan’s success has caused the international community to be very responsive.

As a result, Jordan has had many foreign investors. It has free trade with the European Union and with many Arab countries. Jordan has Qualifying Industrial Zones (QIZ) that allow free trade into the United States. This creates tremendous opportunities for investing in Jordan. It has taken very important steps towards building its economy and continues to advance. Jordan is very eager to establish good relations with everybody which was initiated by King Hussein and which King Abdullah plans to continue.

Overview
Jordan has a free market oriented economy. It has made significant progress toward economic reform due to the governments five year growth-oriented economic program in 1989 which was supervised by the World Bank and the IMF. There has been a privatization program to liberate the national economy and increase the flow of foreign capital. This program activated the role and efficiency of private investors in the long term development and plans of the kingdom.

Why Invest?
The investment climate in Jordan is very appealing to investors and provides many incentives. In 1995, the Investment Promotion Law (IPL) was passed, opening the economy to business and investment and hence to the creation of wealth. The IPL offers generous and attractive incentives to domestic and international investors. These includes freedom from customs and duties, tax holidays, tax income exemptions, and unrestricted transfer of capital and profits. Under this law, both Jordanian and non-Jordanian investors are treated equally. There are many aspects that make Jordan an ideal base of investment:
1) Its strategic location near Asia, Africa and Europe
2) Future regional markets
3) Abundance of space and lands
4) Access to foreign markets
5) Competitive labor costs
6) Conducive investment climate
7) Because it is part of the MENA region which provides a vital economic power.

Qualified Industrial Zones (QIZ’s)
The development of the QIZ concept gives Jordanian products NAFTA-like free access to the US market. Certain areas in Jordan that meet the requirements of QIZ’s can benefit from the free access. Investors are flocking in due to a killer mix: duty free access, no quotas, plentiful supply of high quality low cost labor, zero income taxes and superb infrastructure. The qualification for QIZ’s is that their products can include material content from any part of the world, but 35% of the appraised value must be added in the QIZ. This can be fulfilled in one of the following three ways:

1. By contributing a minimum of 35% of the value of the materials used in the production of the manufactured good. Of that 35% content, at least 11.7% must come from a Jordan QIZ, 8% from Israel and the remainder of the minimum requirement may be fulfilled by content from a Jordan QIZ, Israel, USA or West Bank/Gaza.

2. Jordanian and Israeli manufacturers must each contribute at least 20% of the total production cost of manufacturing the QIZ good. Production costs may include items such as materials, wages and salaries, design and R&D.

3. Mixing and matching of the above two methods is also allowed. One side may provide at least 20% of the total production cost while, the other side contributes the minimum content requirement, as long as the total cost of production plus the cost of material makes up at least 35% of the appraised value of the product

Achievements
Jordan was the 136th country allowed into the World Trade Organization (WTO) on April 11, 2000. The accession package was approved on December 17, 1999. This was a turning point in the continued development of the Jordanian economy. In addition, it has signed on to the two plurilateral agreements on government procurement and on trade in civil aircraft. Jordan’s accession package includes market-access commitments on goods and services.

Jordan’s main merchandise exports include phosphate and potash, and chemicals. Jordan mainly imports transport equipment, machinery and crude oil. Its major trading partners are other Arab countries and the European Union. Jordan is also going through the process of joining the free trade organization.

Over the past ten years, Jordan has made considerable progress toward achieving macroeconomic stability and in implementing structural reform; a 20-member economic consultative council works in tandem with the government to ensure the implementation of an ambitious program of policies aimed at spurring growth. The large domestic and external imbalances of the late 1980s have been significantly reduced and inflation has been brought under control; year-on-year CPI inflation amounted to only 0.6 percent in 1999. At the same time, entrenched distortions in the economy have been largely eliminated through the abolition of food subsidies and the liberalization of the exchange and trade system. Important progress has been made on privatization and in simplifying and modernizing the regulatory system and the foreign investment code thereby creating a more investor-friendly environment.

Growth performance has been mixed and reflects Jordan’s vulnerability to exogenous factors like drought and regional developments arising from a heavy dependence on neighboring countries for trade, aid (UN compensation transfers), and worker remittances. An external debt burden was alleviated by a number (five) of restructurings under the auspices of the Paris Club. The most recent agreement, concluded in May 1999 under Houston Terms, was based on a new three-year Extended Fund Facility credit arrangement with the IMF, laying emphasis on further structural reform.

The privatization program, one of the centerpieces of the government’s structural policy agenda, has picked up momentum. Following privatization of Jordan Cement Factories in late 1998, the Jordan Investment Company (JIC) divested its shares in 10 companies during 1999 and, in the largest privatization to date in Jordan, the government sold in January 2000 a 40% stake in Jordan Telecommunications Company (JTC) to a French-led consortium that will play a leading role in the company’s management. France Telcom, with minority partners National Bank of Kuwait and Arab Bank paid $508 million. The main focus of the program will now be on the Royal Jordanian (RJ) airline and the power sector, the National Electric Power Company (NEPCO). A new Privatization Law, passed by the Lower House of parliament, would establish a Privatization Council to oversee the privatization process and decide on a use of proceeds, an Executive Privatization Commission, and a Privatization Proceeds Fund.

In the area of trade liberalization, Jordan joined the WTO on April 11, 2000, and as part of the accession process committed to undertake reforms, notably enactment of legislation harmonizing General Sales Tax (GST) rates on domestic and imported goods, amending the customs law, and passage of a new law on intellectual property. Jordan has also concluded negotiations with the United States on the creation of a free trade area agreement. It is hoped that both moves will foster a move away from Jordan’s traditional dependence on minerals and tourism toward new opportunities in pharmaceuticals and information technology.

Related Links
  - Amman Chamber of Commerce
  - Amman Chamber of Industry
  - Amman Financial Market
  - Aqaba Special Economic Zone Authority 
  - Jordanian Chambers of Commerce
  - Free Zones Corporation
  - Information Technology Association of Jordan
  - Investors Association of Amman Industrial Estate
  - Irbid Chamber of Commerce
  - Jordan-U.S. Business Partnership 
  - Jordan Export Development & Commercial Center Corporation (JEDCO)
  - Jordan Exporters Association
  - Jordan Industrial Estates Corporation
  - Jordan Investment Board
  - Jordan Loan Guarantee Corporation 
  - Jordanian American Business Association
  - Jordanian Business Association