The Report: Jordan 2016

Economy

Despite facing a set of extraordinary external and internal challenges over the past several years, Jordan’s economy remained resilient in 2015. Although GDP growth fell to a six-year low as the kingdom grappled with a rising refugee population and regional volatility, the banking and industrial sectors continued to record a positive performance. The dissolution of Parliament in May 2016 led to the appointment of Hani Al Mulki, a prime minister who is widely considered to be pro-business and who is expected to accelerate ongoing economic reforms aimed at boosting investment and private participation in a number of major planned infrastructure projects.

This chapter contains interviews with Omar Malhas, Minister of Finance; and Thabet Elwir, Chief of Commission, Jordan Investment Commission.

Financial Services

The financial services sector is one of the most robust and mature in Jordan, remaining resilient in the face of significant external volatility and retaining its role as a driver of economic growth in 2015. The banking sector in particular has been a major source of strength, with the Central Bank of Jordan maintaining a pro-growth monetary stance, following on from growth in deposits and profits at commercial banks in 2015.

This chapter contains an interview with Ziad Fariz, Governor, Central Bank of Jordan (CBJ); and Nemeh Sabbagh, CEO, Arab Bank.

Energy

Though it lacks the petroleum resources of many of its Arab neighbours, Jordan’s limited hydrocarbons have helped its energy industry become one of the most progressive and dynamic in the region. Development of renewable and nuclear energy is set to significantly boost domestic capacity and reduce the kingdom’s fuel bill in the coming years. The emphasis on renewables should help Jordan showcase its commitment to a serious climate change policy; it has already committed to reducing greenhouse gas emissions by 14%.

This chapter contains interviews with Ibrahim Saif, Minister of Energy and Mineral Resources; and Adnan Z Amin, Director-General, International Renewable Energy Agency (IRENA).

Transport

Jordan’s rail, road, sea and air transport infrastructure is undergoing a rapid transformation, with opportunities for investment in all segments. These projects seek to capitalise on the kingdom’s growing domestic market, as well as on the geographic location that has long made it a natural transport and logistics corridor for the rest of the region, including Saudi Arabia, Iraq, the West Bank, Israel and Syria. While recent conflicts over several of these borders have led to closures and some challenging times for the sector, transport remains the lifeblood of the economy, particularly in connecting the kingdom’s main port – Aqaba – in the south with the capital and with larger cities in the north.

This chapter contains an interview with Jeppe Jensen, CEO, Aqaba Container Terminal.

Construction & Real Estate

With demand for mass housing thriving and transport, energy and other infrastructure projects continuing to roll out, the kingdom’s construction sector faces the challenge of meeting a wide range of demands at a time of economic slowdown. Yet with years of experience working in an often uncertain environment, contractors and developers, planners and materials providers are continuously adjusting to new circumstances. Meanwhile few sectors in Jordan have been more dramatically impacted by recent regional turbulence and uncertainty than housing.

This chapter contains an interview with Sahl Dudin, Managing Director, Ayla Oasis Development Company.

Industry & Retail

Jordan’s industrial sector continues to grow, with phosphates and potash, chemicals and pharmaceuticals, and textiles and garments all seeing expansion in both net profits and volume in 2015. That these segments have grown in the face of global economic headwinds and in a region directly affected by major geopolitical tensions demonstrates the sector’s resilience and ability to adapt. The government, which sees the sector as vital to the kingdom’s long-term development plans, has also been actively helping manufacturers and heavy industry through incentives and promotional campaigns, support that looks set to continue strengthening. Meanwhile the retail sector has shown consistent growth in recent years, with its contribution to GDP reaching JD1.13bn ($1.6bn) in 2015, up from JD11.4bn ($15.5bn) in the previous year, or around 10% of the total.

Tourism

Home to some of the world’s finest natural and manmade wonders, Jordan has a well-developed tourism industry that remains one of the most significant private sector pillars of its economy. The country has enjoyed decades of peace and political stability, but the conflicts and tensions afflicting neighbouring countries have impacted Jordan’s appeal as a holiday destination. Faced with falling visitor numbers over the last five years, those responsible for marketing the country’s tourism offerings are strategising to overcome problems of perception, while hoteliers, restaurateurs and tour operators are working to improve all aspects of the experience they offer to visitors and customers.

ICT

Technological transformation and supportive state policies have led to 15 years of rapid growth in the kingdom’s ICT sector, now among the largest in its economy. Liberalisation in the 1990s and early 2000s made its telecoms industry one of the most open in the MENA region, but in recent years both telecoms and IT growth have suffered as a result of slowing macroeconomic growth, weakening global and domestic demand, and, in the telecoms sector, a high tax environment. Recognising the challenges facing the sector, the government has unveiled a host of new policies aimed at returning growth to pre-2009 levels. On the IT side, a new 10-year roadmap, REACH 2025, will help bolster competitiveness, human resource development, access to finance, investor incentives and Jordan’s IT export development.

This chapter contains an interview with Majd Shweikeh, Minister of ICT.

Health & Education

With a long history of advanced surgery, a well-established medical tourism industry and more than 60 private hospitals and clinics, the health care sector in Jordan has long been regarded as a regional example of excellence. For many years, the kingdom has been more advanced than most other countries in the Middle East by many international health indicators, but the escalating emergency and humanitarian situations in neighbouring countries have posed a number of challenges for the sector. The education sector meanwhile has been a cornerstone of Jordan’s development, and the country has spent many years pursuing reforms to prepare the foundations of a knowledge economy.

This chapter contains interviews with Dr Fawzi Al Hammouri, Chairman, Private Hospitals Association; and Princess Sumaya bint El Hassan, President, Royal Scientific Society.

Tax

This chapter contains an overview of the tax framework in which local and foreign investors operate in Jordan, including a look at moves under way to boost investment in export-oriented industries and a rundown of the incentives in place to promote underdeveloped sectors.

This chapter contains a viewpoint from Feras Kilani, Partner, Operational Transaction Services, MENA.

Legal Framework

This chapter contains an overview of the legal framework in which local and foreign investors operate in Jordan, including an outline of sectors in which foreign ownership is restricted and a look at recently promulgated legislation for public private partnerships.

This chapter contains a viewpoint from Khaled Asfour, Managing Partner, Zu’bi Advocates & Legal Consultants.

The Guide

This section contains listings of some of Jordan’s leading hotels and resorts, contacts for important government offices and services, and useful information for visitors.