Ambitious plans are in the works for the expansion of industrial zones

As Jordan has expanded the global reach of its industrial sector over the years, the kingdom has also developed a range of industrial zones. These aim to give the companies based there important advantages when it comes to both exports and imports, while also aiming to attract more foreign direct investment, international companies and joint ventures. The kingdom is also embarking on yet another ambitious programme to establish industrial zones in each of the country’s governorates, signalling still more opportunities to come.

Development Areas

Following a law enacted in 2008 the kingdom built four designated development areas – the King Hussein Business Park (KHBP) in Amman; the King Hussein Bin Talal Development Area ( KHBTDA), located in Mafraq; the Irbid Development Area; and the Ma’an Development Area (MDA). In all of these areas sales, social services and dividend taxes are zero, while income tax is just 5%. The areas have particular business focuses. The KHBP targets the health care, ICT, media, education and security industries, while the KHBTDA targets industrial and logistics outfits. Irbid, meanwhile, seeks to leverage local universities to also expand research and development facilities, alongside IT outsourcing, and health care. Ma’an looks to manufacturing and construction, renewables and minerals.

The Aqaba Port also has its own Aqaba Special Economic Zone (ASEZ). While established in 2001, and offering low taxes and zero Customs duties, the ASEZ really took off after 2004, when it came under the auspices of the Aqaba Development Corporation (ADC). A private company owned equally by the ASEZ Authority and the Jordanian government through a successful example of a public-private partnership, the ADC has been mandated to expand the ASEZ’s existing facilities and to establish new infrastructure. Private investment has been selected as the main means of achieving this, meaning that the ASEZ has become a key focus for the country’s overall foreign and domestic investment drive. Aqaba is a vital port and multi-modal transport hub, strategically located near one of the world’s most important trade routes – that between the Mediterranean Sea, the Red Sea, the Indian Ocean and the Far East. Thus, a major port expansion has been under way in recent times, with June 2014 seeing BAM International and its Jordanian partner, MAG, announce the completion of a major first phase in the construction of the new Aqaba Port. Four new berths are now available, along with breakwaters and revetment works. In 2013 a new container port was completed, while a liquefied natural gas terminal is also under way south of Aqaba.

Growth of the ASEZ has been helped along by regional instability, as it can continue to offer international logistics firms a safe base for operations. Plans for two new railway lines – one to the phosphate mines in Chidiya and the other to Amman – are likely to further enhance the zone’s importance.

Industrial Estates

The Jordan Investment Corporation, the kingdom’s investment promotion agency, also offers six public and six private industrial estates, with several others in the pipeline. These estates benefit from cheap land and fast-track procedures, along with a two-year exemption from income and social service taxes. Local municipality fees are also reduced.

Three of the public estates are also qualified industrial zones (QIZs, see overview), special zones created to give occupants access to the US market without having to pay duties or be subject to quotas, provided they take inputs from Israel. The three are the Al Hassan Industrial Estate in Irbid, the first and largest QIZ in Jordan; the Al Hussein bin Abdullah II Industrial Estate in Al Karak governorate; and the Aqaba International Industrial Estate, which lies within the ASEZ.

The overall authority for the public sector QIZ and non-QIZ estates is the Jordan Industrial Estates Company (JIEC). The public non-QIZs are the Abdullah II Ibn Al Hussein Industrial Estate (AIE) in Amman, which is the largest estate in the country; the Ma’an Industrial Estate (MIE), on the highway linking Saudi Arabia, Amman and Iraq; and the Al Muwaqar Industrial Estate, located between Saudi Arabia, Jordan and Iraq, which is equipped with state-of-the art infrastructure and enjoys a 50% exemption on income and social services taxes for a period of 10 years.

The AIE has some 358 different small and medium-sized enterprises (SMEs) located within it, underscoring the main focus of the estates – the development and support of SMEs. Over JD1bn ($1.41bn) has been invested in the AIE, according to the JIEC, providing jobs for more than 13,000 workers. The MIE, meanwhile, forms part of the Industrial Park, one of four clusters within the MDA. The other three are a skills development centre, a residential community and the Hajj Oasis, a 200,000-sq-metre site dedicated to serving pilgrims on their way to the holy cities.

When it comes to the private sector, there are eight industrial estates, with responsibility for these falling under the Free Zones Corporation. Among the largest are the Al Tajamouat Industrial City in Sahab – the first private estate – the Ad Dulayl Industrial Park, northeast of Amman; the Cyber City Park, near Irbid; and Al Zay Century, in Russaifeh. These all have QIZ status.

Free Zones

Some of these have also obtained free-zone status, the last category of special economic zones in the country. These too are both public and private, with some of the most important public ones being the Sahab Free Zone, which also includes the smaller Al Muaqar Free Zone; the Queen Alia International Airport Free Zone; the Al Karak Free Zone – also a QIZ – and the Al Karameh Free Zone on the Jordan-Iraq border. The benefits of operating in these zones are extensive, including exemptions from project income taxes for goods exported outside the kingdom, or for transit trade. Income and social security taxes are also waived for non-Jordanian employees. Import fees and Customs duties for goods brought into the zones, if they are not for domestic market consumption, are also waived. Thus the export focus of the zones is clear, with, once again, SMEs being the main beneficiaries.

Sharing The Benefits

As part of the plan to establish estates in each governorate a new industrial estate is to be built in Jerash, with plans also announced for others in Tafileh and Ajloun. All three of these are areas of above-average poverty. They are also areas with less well-developed infrastructure.

Successful industrial zones in every governorate will thus likely need to be accompanied by more investment beyond the boundaries of the zones, in areas such as better roads and data networks. To this end, the Jordanian government is also looking to establish strong partnerships with the private sector to facilitate such investment, while planning to establish a financing institution to take on the role of the now-dissolved Industrial Development Bank.

The plans are ambitious, with the wide collection of industrial zones likely to be enhanced in the years ahead. A new investment law being drafted and debated will probably help facilitate a simplification of the current mosaic of different types of industrial zones.

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The Report: Jordan 2014

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