By leveraging its strategic location on the Red Sea, a short distance from the Israeli, Egyptian and Saudi Arabian borders, Aqaba has become a lively base for manufacturing industries, as well as a transport and tourism centre. The rail and road network for the rest of the kingdom also begins here, connecting industries with the main domestic markets of Amman and the north, as well as a range of other countries beyond. Logistics and tourism have traditionally taken priority in the city, but this is now changing, as the city – and the wider region – raises its industrial profile.
Free Zone
Key to all this was the establishment in 2001 of the Aqaba Special Economic Zone (ASEZ) by the government. Managed by the autonomous ASEZ Authority (ASEZA), the zone now covers a 375-sq-km area, which includes the land border districts with Israel and Saudi Arabia, and a stretch of sea that extends out to the maritime boundary with Egypt. A population of approximately 139,200 people is under the ASEZA’s mandate, according to the most recent estimates by the Department of Statistics in 2012.
In 2004 the government and ASEZA set up the Aqaba Development Corporation (ADC). The ADC was given a mandate to accelerate development of ASEZ and implement the zone’s master plan. On the industrial side, the zone’s current focus is the Aqaba International Industrial Estate (AIIE), a 2.8m-sq-metre area east of King Hussein International Airport and 20 km from the Aqaba Container Terminal. The AIIE is developed and managed under a concession contract by PBI Aqaba Industrial Estate, which is a UK-registered partnership with US, UK and Turkish contributors. Companies located at AIIE receive benefits, including a 5% flat income tax on profits; duty-free imports of capital equipment, raw materials and other consumables; as well as a computerised Customs system and one-stop-shop facilities. This package has drawn a range of businesses, including electronic goods outfits, engineering firms, and security, logistics and consumer goods companies.
The AIIE has also recently focused on businesses making use of renewable energy, and this has had spin-off benefits for the estate’s own infrastructure. For example, in February 2016 PBI Aqaba signed an agreement with SoloPower Systems for the development of commercial, rooftop solar photovoltaic (PV) projects around the kingdom. This initiative will start with the 700,000 sq metres of infrastructure currently operational on the estate itself. Lightweight rooftop PV will be a feature of many of the AIIE’s buildings.
Future Growth
The kind of light industry the AIIE now specialises in is also good for job creation. Some 1000 people currently work on the estate, with around 80 company contracts signed and $300m invested. The number of employees is set to double when the AIIE reaches full capacity in the next three to five years, with a further 500,000-sq-metre space set be rolled out. This will bring the AIIE’s total investment up to $600m.
The AIIE also has other expansions planned, announced in September 2015, with the signing of a memorandum of understanding between PBI Aqaba, the ADC and China’s Shenzhen Chamber of Investment. The new Shenzhen Aqaba Estate will be managed as an expansion of the AIIE and will see 1m sq metres of area added. The expansion is expected to create a further 2500 jobs as a result of $750m of additional investment. PBI Aqaba expects work to begin by the end of 2017.
Industry players in Aqaba stress that much more can still be done to attract businesses to the port city and its environs. “Jordan’s industrial sector needs to figure out what they are good at and develop around that skill instead of just simply choosing a particular industry,” Sheldon Fink, chairman and CEO of PBI Aqaba, told OBG. “Let’s not forget that some of the biggest companies are in countries where they don’t really have the natural resources, but they have the people and it works.”
The AIIE has demonstrated that light industry and manufacturing firms can find success in the kingdom, getting this message out is now high on the agenda.
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