Partners in development: The government is reaching out to private sector stakeholders to plan projects, promote investment and improve tourism infrastructure

In recent years lawmakers have found themselves in an increasingly difficult position, as regional unrest has contributed to both falling revenues and rising costs for government operations within the kingdom. “The country has faced challenges during the year from the disruption of the flow of natural gas, the ongo-ing conflict in Syria and an acceleration of [the] influx of refugees,” the IMF said in its 2012 year-end assess-ment of the country. “Combined with higher oil and food prices and a shortfall in grants, this has put fur-ther pressure on the country’s economy.”

Even in the face of unforeseen obstacles, the pic-ture was not entirely grim. The Washington DC-based organisation also praised the country’s leaders for choices that have helped manage the deficit. “Despite this challenging environment, the authorities have been implementing sound macroeconomic policies aimed at reducing fiscal and external imbalances in a socially acceptable way,” stated the IMF.

MEETING COSTS: As a result of tough fiscal deci-sions, however, the private sector and individuals have begun to shoulder more of the costs once covered by the government. The elimination of most energy subsidies in late 2012, for example, was a difficult but necessary move in the eyes of policymakers trying to rein in spending. Cuts in public investment have also been introduced. Accordingly, the authorities have renewed their focus on public-private partnerships (PPPs), since they can provide the government with funding that does not increase deficit spending. In these arrangements, private companies, in return for upfront investments, receive rights to own and oper-ate a project for a fixed period of time, during which they collect the resulting profits. For governments like Jordan that are low on capital, the model creates opportunities to execute investments that would oth-erwise incur public borrowing.

PPPS: The authorities are looking into more PPPs in the tourism sector, since projects like hotels and trans-port infrastructure often require high upfront capital and can be paid off gradually. The renovations of Queen Alia International Airport (QAIA), for example, were carried out on a build-operate-transfer (BOT) basis with the Amman-based international consortium Airports International Group. This model has allowed the government to go ahead with the construction of the new airport without dipping into state coffers.

“The use of the BOT model at QAIA helped both the project and the tourism industry as a whole move for-ward,” Bassem F Maayeh, the managing director at Arab International Hotels, told OBG. “Every new airline route brings new business.”

Indeed, the new terminal was much needed. More than 6m passengers used the airport in 2012, far higher than the facility’s intended capacity of 3.5m passengers. Through a combination of marketing, investment promotion and project research, several government agencies have been working to further the development of more PPPs in the tourism sector.

A RISING PROFILE: One of the most visible examples of the state cooperation with the private sector has been the Jordan Tourism Board (JTB), a PPP aimed at marketing Jordan as a tourism destination to global markets. Created in early 1998, the organisation rep-resents Jordan in international events, conferences and exhibitions, and maintains 11 branch offices in Europe and North America. Its board, made up of public and private sector tourism figures and headed by the min-ister of tourism, guides the organisation in its mission of raising the visibility of Jordan’s tourism brand.

For 2012-13, the organisation is focusing on the development of distribution channels for tourism, reinforcing marketing tools for operators, and build-ing partnerships outside of Jordan, Siham Gammoh, the director of research at the JTB, told OBG. The lion’s share of the JTB’s budget comes from government allo-cations, which have been shrinking in recent years due to state budget cuts. As a result, the JTB aims to increase its activities with the press and digital media. The organisation also has its sights set on building more partnerships with organisations that are outside of Jordan, especially in countries like Turkey and the UAE. The idea is to deepen ties with areas that have not been so affected by political unrest, since package tours with countries like Syria and Egypt have seen shrinking numbers in the wake of the Arab Spring. By these and other means, the JTB aims to raise the pro-file of Jordan’s tourism sector globally, both to attract visitors and prospective investors.

SHOWCASING POTENTIAL: Attracting private invest-ment is also a key priority for tourism authorities. The Ministry of Tourism and Antiquities, the government’s main actor in the sector, has been working with stake-holders like municipal and central governments, the Jordan Investment Board, and tourism operators to pro-mote investments in several different regions. The idea is to stimulate business activities across the coun-try, since the majority of economic activity is concen-trated in Amman. These efforts are laid out on the Tourism Investment Map, an interactive country map dotted with proposals for small and medium-sized enterprises in areas like Ajloun, Al Azraq, the Dana Nature Reserve, Wadi Rum and Shobak. These loca-tions all have areas of potential interest, including ruins, Crusader castles and natural scenery. An influx of capital, the authorities believe, could easily raise visitor numbers dramatically.

The north of the country has come under special focus. The government announced in October 2012 that it would spearhead four tourism projects in the northern areas around Jerash and Ajloun. “We have chosen the north because it has more than 200,000 visitors each year, with total revenues of $1.3m,” said Abdul Razak Arabiyat, the director-general of the Jor-dan Tourism Board, according Dubai-based Zawya, a MENA business database service. “This is a very low amount, as there are some problems with the tourism infrastructure, and we need to develop the area to become more attractive to tourists.” In Ajloun, the public sector has partnered with international organisations to improve the region’s accessibility. The area’s picturesque landscapes, while beautiful, are still in the process of developing tourism infrastructure to simplify transport, making sites more accessible to a wider audience. Investment authorities have also proposed several projects in niche segments. The hillsides of Ajloun, for example, are well suited for olive and grape production, a factor the authorities hope they can exploit to cultivate food tourism through the development of olive groves, wineries and a culinary arts academy. Several nature reserves, meanwhile, open the possibility of more ecotourism. To that end, the construction of an ecotourism academy began in January 2012. The complex is set to train nature guides and rangers in addition to acting as a tourist infor-mation centre and accommodation cluster.

“We envision [that it will be] the first stop for tourists arriving in Ajloun,” nature training centre project man-ager Chris Johnson said in an official statement issued by the Royal Society for the Conservation of Nature. “It will not only provide tourists with information about nature trails, accommodations and archaeological attractions, but also run shuttle buses to and from the various attractions and connect them with guide serv-ices.” The centre is set to open in mid-2013, when it should also receive its first visitors. Funding for the project’s estimated JD6m ($8.4m) price tag is set to come from the US Agency for International Develop-ment and the Technical and Vocational Education and Training Fund, part of Jordan’s Ministry of Labour.

HISTORICAL INVESTMENTS: Jerash, also in the north of Jordan, sits about 30 km away from Ajloun. The city is home to the ruins of Gerasa, a Roman provincial city whose history stretches back into the Bronze Age. The JTB bills the area as a “close second to Petra”, since a restoration and excavation project, ongoing for the past 70 years, has come far in bringing the remains of the ancient city to life. The government is current-ly on the lookout for an operating partner in a PPP to construct a museum, lodging and historical site com-plex to be located near the ruins, according to the Jor-dan Investment Board.

LOOKING AHEAD: In time, the authorities see oth-er activities, like summer camps, study tours and even international events taking place in the area. The gov-ernment is also looking for a firm to develop a long-term vision for the site and manage it on a 30-year concession through a separate PPP proposal.

While capital remains tight in the region, positive tourism figures from 2012 in Jordan and the region could encourage investors and potential partners to look more intently at investments in the kingdom. Jor-dan fared particularly well in 2012, with hotel occu-pancy in Amman increasing 15.1% y-o-y, the fastest rate of any city in the region, according to Jones Lang LaSalle’s EMEA newsletter for the fourth quarter of 2012. In 2013 prospects look brighter for the region as a whole. According to the UN World Tourism Organ-isation, MENA’s tourism operators will come out of their negative growth spell of the past few years, seeing growth between 0% and 5%, attracting more partners.

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The Report: Jordan 2013

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