The Report: Jordan 2018
As ongoing volatility continues to hamper growth in the region, Jordan has made significant progress in preserving macroeconomic stability and reducing its fiscal deficit in the past few years. Efforts to the fulfill the stipulations of a $723m extended fund facility agreement with the IMF continue, and the government may need to pursue more widespread reforms to increase income tax revenues and limit tax avoidance so as to sustain recent momentum.
Country Profile
The Hashemite Kingdom of Jordan is widely seen as a pillar of stability in a region that has been disrupted by conflict in recent years. Despite challenging surroundings, Jordan has managed to maintain efficient political workings and positive economic growth. As a country with scarce natural resources but a highly educated population, the kingdom aims to become a regional leader in sectors with significant growth potential, such as renewable energy, ICT, manufacturing and tourism. Jordan 2025, an economic and social framework plan, and the Jordan Economic Growth Plan 2018-22 focus on these key drivers for commercial growth and social development, as the country works to revitalise the national economy and emerge as a powerhouse in the MENA region. This chapter contains a viewpoint from Crown Prince Hussein; and interviews with Prime Minister Hani Al Mulki; and Imad Fakhoury, Minister of Planning and International Cooperation.
Explore chapterEconomy
Macroeconomic growth hit a 25-year low in 2016 as ongoing regional volatility continued to constrain trade, exports and investment. The Syrian refugee crisis has exacerbated existing pressures on fiscal stability and social infrastructure, while public debt has been on an upward trend as the government attempts to cover the costs associated with hosting over 500,000 refugees. However, 2016 may have also marked a turning point for the economy, with authorities making significant progress in implementing an IMF-backed reform agenda, which enabled Jordan to reduce its budget deficit from 3.5% of GDP in 2015 to 2.6% in 2017, and reduce or eliminate costly fuel, electricity and tax subsidies. The government is now turning its attention to green and digital expansion as it moves forward on a new mid-term economic development agenda, with the aim of improving the business climate and attracting new investment to support targeted double-digit growth in the manufacturing, electricity, water, transport, ICT and construction sectors. This chapter contains interviews with Omar Malhas, Minister of Finance; Muhannad Shehadeh, Minister of State for Investment Affairs; and Abdulwahab Al Bader, Director-General, Kuwait Fund for Arab Economic Development.
Explore chapterFinancial Services
Regulatory reforms aimed at implementing interna¬tional best practices across banks, capital markets and the insurance industry have been undertaken in Jordan’s financial services sector, which already benefits from stable, well-capitalised and profitable lenders, and rapid growth and diversification in Islamic financial services. Yet, there remains room for improvement. The majority of the population is still unbanked and overall financial inclusion is low. Meanwhile, many businesses have difficulty accessing credit, despite growing concerns over excess liquidity, although rising government and donor investment in new lending programmes could see financing to small and medium-sized enterprises improve considerably in 2018. This chapter contains interviews with Ziad Fariz, Governor, Central Bank of Jordan; Iyad Asali, General Manager, Islamic International Arab Bank; and Nemeh Sabbagh, CEO, Arab Bank.
Explore chapterEnergy
Dependent on imports and grappling with regional instability and major supply disruptions, Jordan’s energy sector has faced several challenging years. Rapid population growth – with the kingdom seeing an estimated 1.3m Syrian refugees arrive since 2011 – has also exacerbated existing water scarcity, especially in Amman and Jordan’s northern areas. These challenges have prompted the government to pursue new opportunities through private sector development, with private firms set to play an important role in delivering new water, oil shale, nuclear, and renewable energy projects. Indeed, Jordan has risen to become a regional leader and model for solar energy development, while authorities are reporting steady progress in flagship oil shale and nuclear power projects, as well as the Red Sea Dead Sea conveyance project, which should significantly augment water supply and introduce large-scale desalination activities to the water sector for the first time. This chapter contains an interview with Saleh Kharabsheh, Minister of Energy and Mineral Resources.
Explore chapterTransport
Greater investment of both time and money into Jordan’s local, regional and international transport networks is expected, with King Abdullah II bin Al Hussein underscoring the importance of building and maintaining effective transit systems. Major public transport projects are currently under way, along with continued expansion of land and sea links. In policy and regulation, new laws are expected to bring some much-needed reform. Meanwhile, the country’s strategic position on historical trade routes continues to give it a great comparative advantage for international transport and logistics outfits. Jordan’s location as a natural conduit for trade with Iraq and – in the future – Syria, place it in good stead to contribute to any major reconstruction efforts in the region. This chapter contains an interview with Kjeld Binger, CEO, Airport International Group.
Explore chapterAqaba
While most business activity in Jordan is still concentrated in and around Amman, as the only sea¬port city in Jordan, Aqaba plays an important role in the country’s economy. Since the decision to turn the coastal port city and its surroundings into a special economic zone was announced in 2001, it has grown in significance as an economic base and a tourist destination. Aqaba borders both Israel and Saudi Arabia, 360 km to the south of Amman on the Red Sea’s north-eastern tip, and extends to the territorial waters of Egypt. The city has a long tradition of being a regional centre for trade going back to 4000 BCE, with the Aqaba Special Economic Zone (ASEZ) serving as the catalyst for recent large-scale expansion. This chapter contains an interview with Nasser Shraideh, Chief Commissioner, Aqaba Special Economic Zone Authority.
Explore chapterConstruction & Real Estate
While 2016 saw an overall slowdown in growth in Jordan’s construction sector, there is reason to expect more activity in the near future. A number of factors, including the country’s sizable refugee population and the government’s new focus on transport and infra¬structure development, point to a stimulated sector and increased growth. In addition, any easing of geopolitical tensions in the region could see the kingdom become a major base for reconstruction in the Middle East. Meanwhile Jordan’s real estate sector experienced a largely stable 2016-17 period. Rents and sales prices registered marginal increases in the residential market, while there were slight declines in the commercial segment. Much of this was due to the higher growth and rapid development of recent years, which left a good supply of real estate that put a break on upward price movements.
Explore chapterIndustry & Retail
The manufacturing, mining, quarrying and construction sectors continue to be pillars of Jordan’s economy, collectively accounting for around one-fifth of GDP in 2016. In recent years stable figures have been achieved despite adverse regional events, including war, border closures, population displacement and global market softening. As the relaxed rules of origin agreement with the EU began to affect more businesses in 2017, the sector anticipated higher growth. The border crossing with Iraq officially reopened in late August that year after two years of closure, and there is hope that the situation in Syria could begin to stabilise. Rebuilding the region after years of conflict is a goal both in Jordan and beyond, with important benefits for the kingdom’s businesses. Meanwhile as one of the least-saturated markets in the MENA region for modern retail, Jordan is set to see a new crop of major malls and outlets open throughout 2018, consolidating its reputation as a growth country for the industry. This chapter contains an interview with Yarub Qudah, Minister of Industry, Trade and Supply.
Explore chapterTourism
With sweeping desert landscapes alongside natural and man-made wonders, tourism is an important facet of Jordan’s economy. Visitors flock to the country to see the fabled ancient city of Petra, take in important holy sites for Christians, Jews and Muslims, and bathe in the Dead Sea. While continued tension in the region has dented tourist numbers over the last few years, there are signs that this is turning around, with marketing strategies now in place to better promote the kingdom and further develop niche tourism segments, such as adventure, film and medical tourism. International hotel chains continue to add to the number of rooms available in the kingdom, establishing the foundations for long-term growth. This chapter contains an interview with Lina Annab, Minister of Tourism and Antiquities.
Explore chapterICT
Holding the potential to become a major economic growth driver, Jordan’s ICT sector has seen decades of robust telecoms expansion and a liberalisation agenda launched in the early 2000s, supporting rapid growth in mobile penetration and internet usage. Jordan’s ICT sector has been the focus of a series of recent government reforms aimed at supporting macroeconomic growth, with new lending programmes and multiple tax incentives supporting tech firms and IT service providers. The same cannot be said for telecoms operators, which face one of the world’s highest sector-specific tax burdens, with ongoing government efforts to accelerate fiscal consolidation remaining a cause for concern among stakeholders. Recent sector development strategies have identified multiple ICT business lines offering considerable private sector investment opportunities, with the ongoing e-government services and digitisation drive expected to support private sector growth, enabling sustainable long-term development and the eventual transformation into a knowledge-based economy. This chapter contains an interview with Ghazi Al Jobor, CEO, Telecommunications Regulatory Commission.
Explore chapterHealth & Education
A regional leader in service delivery and speciality care, Jordan’s health sector benefits from a large skilled workforce; a high-quality, low-cost medical tourism segment; and a robust pharmaceuticals manufacturing base. Expenditure on health care provision has risen consistently over the last decade, supporting strong improvements in indicators and outcomes. Meanwhile the kingdom benefits from a well-developed, advanced education system, with literacy rates among the highest in the region, and a large, diverse population of graduate students and researchers. However, the system is simultaneously dealing with rapid population growth and rising demand for post-secondary degrees, which has strained public universities. A mismatch between academic development and labour market demands has also created a shortage of skilled tradesmen. This chapter contains an interview with Labib Khadra, President, Al Hussein Technical University.
Explore chapterTax
This chapter contains an overview of the tax framework in which local and foreign investors operate in Jordan including a look at the changes to the tax code that are currently underway and a breakdown of the investment incentives available in the country’s special economic zones. This chapter contains a viewpoint from Osama Shakhatreh, Assurance Partner, Ernst & Young Jordan.
Explore chapterLegal Framework
This chapter contains an overview of the legal framework in which local and foreign investors operate in Jordan including an outline of workers’ rights and employer regulations and a summary of the types of company for investment. This chapter contains a viewpoint from Khaled Asfour, Managing Partner, Zu’bi Advocates & Legal Consultants.
Explore chapterThe Guide
The guide contains listings of some of the leading hotels and resorts in Jordan, contact details for important government offices and services, as well as useful tips and information for business and leisure visitors alike.
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