The Report: Jordan 2013
The past several years have seen significant changes in Jordan, with elections held in early 2013 the latest event reshaping the country’s political landscape. The state is pushing ahead with structural reforms that should provide a sound base for future development, as the economy shows signs of a brisk recovery from the difficult years it has faced in the wake of the global financial crisis. GDP is forecast to expand by 3.5% in 2013, and the government has made cutting the fiscal deficit a priority. Efforts to reduce reliance on imported energy sources continue, with access to domestic oil and shale gas reserves being particularly important. All in all, continued political stability, a brisk economic recovery, large-scale transportation developments and government efforts aimed at overcoming energy imports reliance should see Jordan retain and build on its already strong strategic position in the region.
Country Profile
Home to many important biblical and pilgrimage sites, the past several years have seen significant changes in Jordan, with protests, constitutional reforms and most recently, elections held in early 2013 all reshaping the country’s political landscape. With a Parliament made up of Chamber of Deputies and Senate, the development of political parties is high on the agenda, with King Abdullah initiating a processes aimed at bring around constitutional reform. Jordan retains its close ties with the US, the EU and GCC neighbours. This chapter contains interviews with Abdullah Ensour, Prime Minister of Jordan; and Baroness Morris of Bolton, Head of UK Trade Envoy to Jordan, Kuwait and Palestine.
Explore chapterEconomy
The state is pushing ahead with structural reforms that should provide a sound base for future development. GDP is forecast to expand by 3.5% in 2013, while the government has made reducing the fiscal deficit a priority. Trade opportunities with Iraq are also being explored, and longer-term initiatives, including the development of shale oil and renewables, should help to address long-standing energy challenges. This chapter contains interviews with Umayya Toukan, Minister of Finance; Awni Al Rushoud, Acting CEO, Jordan Investment Board; Abdulwahab Al Bader, Director-General, Kuwait Fund for Arab Economic Development (KFAED); and Henry Azzam, CEO, Social Security Investment Fund (SSIF)
Explore chapterBanking
The banking sector has shown signs of a brisk recovery in the past year, with expansion of both assets and deposits at major firms. Banks have boosted profits and built healthy balance sheets by tackling non-performing loans, auguring a return to the growth seen in pre-crisis years. Near-term sector growth is set to come from new lending to small and medium-sized enter-prises and Islamic financial products. This chapter contains interviews with Nemeh Sabbagh, CEO, Arab Bank; Ziad Fariz, Governor, Central Bank of Jordan (CBJ); and Ahmad Abu Eideh, CEO, Standard Chartered.
Explore chapterCapital Markets
After the rough and tumble of the last few years, Jordan’s capital markets are now at a potential turning point. Although the Amman Stock Exchange saw four de-listings in 2012, it is still one of the most populous exchanges in the MENA region, with 243 companies listed. The three-tier market structure has been welcomed by investors for providing clarity on the status of companies. New regulations, including daily limits established on stock price volatility and different trading hours for the third tier of the exchange, are designed to increase stability and investor confidence. Further to this, a US offer to back Jordanian bond issues may help lower the kingdom’s borrowing costs, further boosting confidence in the country’s securities and aiding in reducing the budget deficit. This chapter contains interviews with Adel Kasaji, CEO, AB Invest; and Nader Azar, Acting CEO, Amman Stock Exchange.
Explore chapterInsurance
The insurance sector contributed 1.2% of total trade in the first nine months of 2012, down 54% on the same period of 2011, when it stood at 2.6%. While things are looking more positive for the sector in 2013, it nonetheless faces some major challenges, particularly in the dominant motor segment. Regulatory issues have been on insurers’ minds in recent times too, with the industry’s overall profitability and sustainability likely to be affected by the outcome of these structural debates. Changes in the regulatory environment are in the offing, and liberalisation of the sector remains a contentious issue.
Explore chapterEnergy
The kingdom is expected to reduce its reliance on energy imports by tapping into domestic oil shale reserves and promoting renewable energy development. The construction of a nuclear power plant and increased use of solar power promise to further help diversify electricity generation in coming years. In addition, discussions are under way to liberalise fuel distribution by removing the set price for petrol that the government controls, allowing competition over prices. This chapter contains an interview with Alaa Batayneh, Former Minister of Energy and Mineral Resources.
Explore chapterTransport
Access to the Red Sea via the expanding port of Aqaba and proximity to emerging markets in the region, like Saudi Arabia and Iraq, has encouraged Jordan to strengthen its transport offerings and enabled it to support several key infrastructure and real estate projects. While fuel costs remain high, a $1.8bn investment programme to boost the road network, in addition to aviation, rail and maritime upgrades, stands to aid the sector in the medium to long term. Railway capacity is set to rise with the $2.43bn Jordan National Railway project. This chapter contains an interview with Søren Hansen, CEO, Aqaba Container Terminal.
Explore chapterReal Estate & Construction
Average rental and sales prices for residential real estate have remained steady, although there has been a slight drop in the capital’s commercial segment. The construction sector is characterised by a host of large-scale, mixed-use developments. Plans have also been announced for the kingdom’s first solar cooling plant, while multiple water projects are progressing well, offering a range of opportunities for contractors.
Explore chapterIndustry & Retail
Industry accounts for about one-fifth of GDP and around 90% of exports. Mining, chemicals, and textiles and garments manufacturing are the top segments, but the kingdom is also the largest exporter of pharmaceuticals in the Arab world. Several new free trade agreements –including one with Turkey – are expected to boost export volumes and revenues. More malls are expected to be added to the three shopping facilities already in place, further adding to the size of the retail sector.
Explore chapterAqaba
While most economic activity in Jordan is concentrated in Amman, the southern city of Aqaba is playing an increasingly significant role. The population of the city is expected to increase by 130% to 250,000 by 2020, making expansion of Aqaba’s infrastructure to improve air and maritime links within and beyond the region a key objective. A mix of development projects is under way to widen the city’s image. Water security will be key to infrastructure development, along with transport upgrades that are necessary to sustain this diversification. Large-scale projects in the area are set to fuel construction growth, and a number of tourism-related projects have been planned for the city, including the development of hotels, entertainment areas, shops, restaurants and cafes, and a marina, which are all aimed at increasing tourist numbers.
Explore chapterTourism
A major airport expansion, along with the addition of new international air routes, is expected to boost tourism and ease bottlenecks in the near term. Niche markets like medical tourism and ecotourism are offering promising avenues for sector expansion. The industry resumed brisk revenue growth in 2012, marking its continued recovery from the regional slowdown. The meetings, incentives, conferences and exhibitions segment is expected to continue to grow, and several medium-sized venues already exist in Amman for these purposes, further helping to boost tourism’s contribution to the economy.
Explore chapterTelecoms & IT
Subscriber numbers among the four mobile operators have continued to grow in recent years. Operating costs have risen somewhat and profits have fallen, due mostly to heightened competition. The outlook for this sector remains positive – the kingdom’s telecoms industry is progressing toward a more IT-oriented future, as data demand grows and network operators ramp up their mobile broadband and mobile content offerings. As one of the most productive sectors of the Jordanian economy, ICT accounts for some 14.1% of the kingdom’s GDP, with operators continuing to invest in infrastructure. Further, the highly skilled local labour force, stable business environment and government support have helped to support IT sector growth. This chapter contains a roundtable with Jean-François Thomas, CEO, Orange; Ihab Hinnawi, CEO, Umniah; and Ahmad Hanandeh, CEO, Zain.
Explore chapterHealth
Life expectancy within the kingdom is above the regional average, with a medical insurance safety net available for citizens. Medical care is provided by public, private and aid operators. Advanced procedures and improving care standards are drawing health tourists to the kingdom, and Amman has become a growing medical manufacturing base, with free zones offering an attractive location for businesses looking to access Middle Eastern and East Asian markets. Industry leaders in the kingdom are looking to partner with ICT groups in the US, with a view to building Arabic-language editions of US software, and licensing US medical products by Jordanian firms.
Explore chapterAgriculture & Water
European countries pose a promising market for farmers, as the Jordanian climate is ideal for cultivation of out-of-season produce. The government has made resource conservation a priority and major projects are under way to improve network reliability. A number of initiatives have been implemented recently to increase the reliability of water sources, including a project to pump water from a southern aquifer to Amman.
Explore chapterEducation
The kingdom has both a private and a public education system, with high rate of female student in all levels of education. In 2010/11 roughly 1.5m students attended government schools, while private enrolment that year stood at about 380,000. Efforts are also being made to increase the use of technology in classrooms, with the government now requiring all public schools to provide computer access to students from the second grade through secondary school. Numerous initiatives are also in place to spearhead academic improvement, with greater focus being put on aligning education with market needs. This chapter contains an interview with Princess Sumaya bint El Hassan, President, Royal Scientific Society, and Chairman of the Board of Trustees, Princess Sumaya University for Technology (PSUT)
Explore chapterTax
Ranked 10th among MENA countries for doing business, a new Investment Law looks set to offer further incentives for foreigners doing business in Jordan. Policy changes, combined with the rise of Jordan as a stable environment in which companies can operate, have transformed the country into an attractive investment area in the region. Investment incentives take the form of exemptions from income tax and Customs fees that can be granted to either domestic or foreign investors. This chapter contains a viewpoint from Yasmeen Muhtaseb, Partner of Advisory Services, Ernst & Young Jordan.
Explore chapterLegal Framework
The government of Jordan has been working to achieve economic stability through encouraging investment, particularly foreign investment. The kingdom’s legal framework not only creates a secure environment for investors and encourages investment in specific sectors through various incentive and benefit schemes, but also provides a well-structured and easily implemented mechanism for establishing fully operational companies. The Free Zones Law grants projects and activities conducted within designated free zones various exemptions and benefits.
Explore chapterThe Guide
With conservation and environmental projects taking on an growing role within the kingdom, a number of reserves are seeing the benefit of increased interest from ecologically minded tourists. The Guide contains listings of some of the leading hotels and resorts in Jordan and contacts for important government offices and services. It also contains useful tips and information for first-time or regular and business and leisure visitors alike.
Explore chapterTable of Contents
There are no articles in this chapter. To view the table of contents, please open click the "View in online reader" link above.
