jordan 2014_obg
TRANSCRIPT
THEREPORTJordan2014ECONOMY ENERGY INDUSTRYBANKING TOURISM CAPITAL MARKETSREAL ESTATE CONSTRUCTION TRANSPORTINSURANCE TELECOMS & IT INTERVIEWS
9781910
068144
CONTENTS JORDAN 2014
Moving forwardPage 25
The recovery from the global downturn con-
tinued in 2013 and 2014, and the IMF has
forecast growth of 4.5% in the medium term.
After reaching a peak in 2012, the current
account deficit has started to narrow thanks
to lower energy imports and higher current
transfers. The government is focused on reduc-
ing the deficit by cutting subsidies, carrying out
tax reforms and reinforcing tax administration.
Oasis of capitalPage 43
Over the past year, the banking sector
has shown a robust performance, with
aggregate lending on the rise and net
profits generally maintained across the
board. Improvements in asset quality
suggest it has turned a corner regard-
ing troublesome loans that have per-
sisted since the global financial crisis,
and a relatively upbeat assessment of
economic growth prospects by the IMF
has brought an air of optimism in 2014.
8
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18
22
25
29
30
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36
39
43
SNAPSHOTJordan in figures
COUNTRY PROFILESands of time: The kingdom is a crossroads of
geography, culture and history
Evolutionary change: Political reforms continue
Viewpoint: Prime Minister Abdullah Ensour
Going coastal: Development is being stepped up
in a key port city
Interview: Crispin Blunt, MP and Chairman,
All-Party Parliamentary Jordan Group
ECONOMYMoving forward: The emphasis is on reducing
the fiscal deficit and resetting strategies
Interview: Umayya Toukan, Minister of Finance
Interview: Ibrahim Saif, Minister of Planning and
International Cooperation
Reviews and results: Evaluating the
government’s privatisation programme
Interview: Awni Rushoud, Investment
Commissioner, Investment Commission
Small but important: Supporting the growth of
the nation’s SMEs
Trade partners: Economic ties with Iraq are
strengthening
Strong support: Foreign assistance is a
significant part of the economy
BANKINGOasis of capital: In a turbulent region, the local
banking sector has become a safe haven
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51
53
54
55
58
63
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66
67
68
70
77
83
85
From seed to fruit: The development of the
country’s sharia-compliant banking sector
continues
Opening space: Market exits and strategy shifts
bring fresh opportunities
Interview: Ziad Fariz, Governor, Central Bank of
Jordan
Interview: Nemeh Sabbagh, CEO, Arab Bank
From the top: A closer look at the direction of
the country’s central bank
CAPITAL MARKETSFull steam ahead: Maintaining healthy and
steady growth, the exchange is set to face any
challenges
Interview: Tarik Awad, CEO, Capital Investments
New partners: There is an improved strategy in
place aimed at attracting more foreign
investment
Stocks & bonds: Share analysis and data
provided by Capital Investments
Arab Bank: Banking
Cairo Amman Bank: Banking
Al Eqbal Investment Company: Tobacco and
cigarettes
Bank of Jordan: Banking
INSURANCEChanging with the times: Increased competition
and new regulations transform the sector
ENERGYDiversifying the mix: As energy demand
increases, the country turns to renewables and
other alternatives
The search continues: The lack of oil and gas
has presented major challenges, but the sector
remains important
The promise of shale: As the country seeks to
diversify its energy resources, oil shale has
significant potential
ISBN 978-1-910068-14-4
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CONTENTS JORDAN 2014
www.oxfordbusinessgroup.com/country/Jordan
6
Enhancing connectivityPage 91
The transport sector continues to benefit from
Jordan’s strategic location, accounting for 12%
of GDP in 2013. Plans for airport renovations
and a national railroad will support further
expansion, although concerns remain over
the instability in neighbouring Iraq and Syria.
87
91
99
101
104
Interview: Mohammad Hamed, Minister of
Energy and Mineral Resources
TRANSPORTEnhancing connectivity: Upgrading road, rail
and air networks to benefit from a strategic
regional location
Interview: Kjeld Binger, CEO, Airport
International Group
Soaring growth: Airport renovations in both
Amman and Aqaba aim to boost the aviation
sector
CONSTRUCTION & REAL ESTATEBeyond homes: Large-scale projects in
infrastructure, tourism and real estate are set to
drive growth in the sector
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149
154
155
Interview: Taha Al Zboun, CEO, Dead Sea
Development Zone
Bigger and better: Plans for a new downtown
are under way
Market forces: Regional migration and
macroeconomic growth support real estate
sales
INDUSTRY & RETAILOn track: A new investment law is expected to
consolidate incentives for investors in the
sector
Interview: Hatem Al Halawani, Minister of Trade
and Industry
In the zone: Ambitious plans are in the works to
expand the country’s network of industrial
zones
From strength to strength: Still an international
player in the potash, phosphate and fertiliser
market
Consolidating positions: Traditional street stores
and modern retail outlets compete for business
in a growing market
TOURISMLeaning green: Focusing on niche markets like
wellness, ecotourism and religious travel to
expand the sector
On tour: Combining quality and affordability for
attractive care
Brick by brick: Sector expansion spurs
construction
A divine path: New initiatives promote religious
tourism
Interview: Nidal Katamine, Minister of Tourism
and Antiquities
TELECOMS & ITHolding its own: Regulators work to maintain a
balance between healthy growth and strong
competition
Long-term vision: New services are coming to
the market
Interview: Azzam Sleit, Minister of Information
and Communications Technology
Chairman: Michael Benson-Colpi
Director of Field Operations: Elizabeth
Boissevain
Regional Director: Karine Loehman
Country Director: Ece Temel
Field Operations Executive: Meltem
Okur
Field Operations Assistant: Arda Özgen
Project Coordinator: Sultan Hussam
Kanaan
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Beyond homesPage 104
With the government looking to meet demand for more afford-
able housing and major redevelopment initiatives planned or in
the works, large-scale projects are set to drive growth in con-
struction going forward. Despite certain challenges, the sector
is expected to benefit from new real estate and tourism devel-
opments. As a result of a growing population and regional migra-
tion, sales in the real estate market have increased, especially
of residential units. Amman and Aqaba are also expected to
see several mixed-use developments in the near to mid-term.
CONTENTS JORDAN 2014 7
THE REPORT Jordan 2014
On trackPage 115
A major economic contributor in terms of
GDP and employment, the industrial sector
remains a safe harbour for investors. This
stands it in good stead, as does its greatest
resource – human capital. Meanwhile, recent
years have seen the retail sector grow in
sophistication and diversity, with the arrival
of foreign brands. The shift from tradition-
al outlets to modern ones is also under way.
Holding its ownPage 149
The second Middle East country to launch
GSM after Qatar, Jordan has recently seen a
surge in the use of smartphones and wire-
less data, with mobile penetration at 142%
as of end-2013. Despite steep tax hikes on
voice services in 2013, the telecoms sector
remains competitive, and new 4G services
on the way bode well for the country’s robust
IT sector, tech start-ups and e-commerce.
Leaning greenPage 133
With infrastructure upgrades ongoing,
the tourism sector continues to mature.
Tourism made up some 13% of GDP and
brought in $1.03bn in revenue in first-
quarter 2014, up 11.1% on 2013 figures.
A national branding campaign is focusing
on major growth segments that include
medical tourism, travel for religious rea-
sons, and adventure and ecotourism.
A healthy investmentPage 163
The private sector is taking the lead in
health care and the medical tourism
niche has expanded rapidly. Around
255,000 foreign patients came for
treatment in 2013, up from 240,000 in
2012, when total revenues were $1bn.
More investment and employees will
be needed to sustain this expansion.
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Into the clouds: A strong talent base and
infrastructure upgrades make for attractive
prospects in the IT sector
Tech heavyweight: Incentives for start-up
companies help support the development of
local tech entrepreneurship
HEALTHA healthy investment: Limited government
resources are driving expansion of the private
health care system
EDUCATIONA focus on learning: Enrolment is high across
the board, from the primary through the
tertiary levels
Scientific method: Emphasis on research and
development aims to boost innovation in
energy and medicine
TAXEY
Incentivising investment: Building a responsive
and efficient tax regime that balances business
promotion and revenue generation
Viewpoint: Ali Samara, Partner, EY Jordan
LEGAL FRAMEWORKZu’bi Advocates and Legal Consultants
A detailed insight: An overview of the kingdom’s
investor-friendly regulations from investment
incentives and corporate structures to permits
and real estate
THE GUIDEA good night’s sleep: A rundown of some of the
kingdom’s leading hotels and resorts from
Amman to Aqaba
Listings: Telephone numbers for government
ministries, foreign embassies, travel services,
health care and more
Facts for visitors: Useful tips for business and
leisure travellers, including visa information,
operating hours, health care and attire
SNAPSHOT8
www.oxfordbusinessgroup.com/country/Jordan
Jordan in figures
0
2
4
6
8
10
12As % of GDP
201220112010200920080
4
8
12
16
20
24
Public spend as % of total gov't spend
Health expenditure, 2008-12
SO
UR
CE:
Wo
rld
Ban
k
Tourist nights by region of origin, 2012-13 (000)
SO
UR
CE:
Min
istr
y o
f To
uri
sm a
nd
An
tiq
uit
ies
0
300
600
900
1200
150020132012
Jordanians living
abroad
Gulf Arab countries
EuropeEast Asia &
the Pacific
AmericasAfrica
SOURCE: Ministry of Education
2009/10 2010/11 2011/12 2012/13
MoE 1,129,448 1,143,008 1,154,880 1,173,976
Other gov't 13,225 14,090 14,603 15,018
Private 365,905 382,867 406,327 424,999
UNRWA 119,903 117,957 114,362 112,838
Total 1,628,481 1,657,922 1,690,172 1,726,831
Students by school type, 2009-13
SOURCE: Aqaba Port Corporation
Year Exports Imports Total No. of
(000 tonnes) (000 tonnes) (000 tonnes) vessels
2003 8240 9607 17,847 2694
2004 8771 12,265 21,036 2888
2005 7998 12,432 20,430 2933
2006 7020 10,145 17,165 2884
2007 7495 10,297 17,792 2941
2008 7787 9165 16,952 3024
2009 5899 8302 14,201 2900
2010 8056 8795 16,851 2902
2011 8975 10,209 19,184 2892
2012 7411 11,944 19,355 3083
2013 4531 11,785 16,316 2885
Cargo traffic at Aqaba Port, 2003-13
0
1.0
2.0
3.0
4.0
5.0
6.0Internet users (m)
Q4Q3Q2Q10
15
30
45
60
75
90Penetration (%)
Internet users & penetration, 2013
SOU
RC
E: JT
RC
SNAPSHOT 9
THE REPORT Jordan 2014
Other
Construction
General trade
Industry
Public services & utilitiesTransport services
Financial services
Tourism, hotels & restaurantsAgriculture
22.8
21.6
20.8
14
11.5
2.8
2.7
2.7
1.2
Credit facilities by economic activity, 2013 Q3 (%)
SOURCE: Bank Audi
0
0.90
1.80
2.70
3.60
4.50
5.40To construction (JD bn)
201320122011201020090
6
12
18
24
30
36
% of loans to all sectors
Bank loans to construction sector, 2009-13
SO
UR
CE:
Ce
ntr
al B
ank
of
Jord
anS
OU
RC
E: C
en
tral
Ban
k o
f Jo
rdan
ASE free float index performance, 2005-13
0
1000
2000
3000
4000
5000
201320122011201020092008200720062005
Avg. Amman apt. rental rates, Q1 2014 (JD/year)
SO
UR
CE:
Ast
eco
0
4000
8000
12,000
16,000
20,0003BR2BR 1BR
4th Circle
Der Ghabar
AlRabiah
UmOthainah
Sweifieh Abdoun
SOURCE: Electricity Regulatory Commission * Includes Jordan Armed Forces
2010 2011 2012 2013
Household 4387 4731 5210 5344
Governmental* 806 809 863 797
Commercial 2110 2118 2314 2266
Industrial 3308 3560 3527 3567
Agricultural 563 584 585 621
Water pumping 1282 1287 1344 1452
Street lighting 315 312 301 291
Others 101 171 149 243
Total 12,871 13,572 14,293 14,581
Growth (%) – 5.4 5.3 2
Electricity consumption by sector, 2010-13 (GWh)
SOURCE: Central Bank of Jordan *Preliminary figures
Petroleum Cement Clinker Chemical Fertilisers Potash Phosphate products acids
2009 3.54 4.08 3.06 1.43 0.72 1.12 5.15
2010 3.35 3.93 1.7 1.58 0.76 1.93 6.53
2011 3.16 – 1.21 1.41 0.72 2.26 7.59
2012 3.48 – 1.03 1.29 0.64 1.82 6.38
2013* 3.08 – 0.91 1.27 0.68 1.73 5.27
Output of select industrial segments, 2009-13 (m tonnes)
SOURCE: IMF
2012 2013 2014
GDP, current prices (JD bn) 21.97 24.01 25.90
GDP, current prices ($ bn) 30.98 33.86 36.52
Total investment (% of GDP) 21.32 20.70 20.70
Inflation, avg. consumer prices (% change) 4.65 5.46 2.96
Vol. of imports of goods & services (% change) 2.91 2.31 2.54
Vol. of exports of goods & services (% change) -0.73 5.94 5.92
General gov't revenue (JD bn) 5.05 6.09 7.10
General gov't revenue (% of GDP) 23.01 25.35 27.41
General gov't total expenditure (JD bn) 6.86 7.35 8.25
General gov't total expenditure (% of GDP) 31.24 30.61 31.85
General gov't net lending/borrowing (JD bn) -1.81 -1.26 -1.15
General gov't net lending/borrowing (% of GDP) -8.23 -5.26 -4.44
General gov't gross debt (JD bn) 17.61 21.07 23.65
General gov't gross debt (% of GDP) 80.17 87.75 91.32
Current account balance ($ bn) -5.61 -3.75 -4.71
Current account balance (% of GDP) -18.12 -11.08 -12.88
Select economic indicators, 2012-14
SOURCE: Jordan Telecommunications Regulatory Commission
Telecoms indicators, 2013
Q1 Q2 Q3 Q4
Fixed phone
Residential 252,788 249,774 244,276 243,191
Business 140,081 138,255 136,212 136,720
Total 392,869 385,029 380,488 379,911
Penetration (%) 6.1 6 6 5.5
Active mobile
Post-paid 730,051 726,830 725,178 756,583
Pre-paid 8,745,120 9,228,962 9,502,643 9,557,223
Total 9,475,171 9,955,792 10,227,821 10,313,806
Penetration (%) 147 150 155 156
11
Country ProfileA rapidly growing population of around 6.64m
Reform process achieving significant milestones
An oasis of stability in an increasingly turbulent region
Close ties with Gulf Arab states, the US and the EU
Renewed focus on development in port city of Aqaba
COUNTRY PROFILE AT A GLANCE
The population is young, with nearly 60% under the age of 24
The Hashemite Kingdom of Jordan covers a total area
of 89,342 sq km and shares 1635 km of land bor-
ders with the neighbouring states of Iraq, Israel,
Palestine, Saudi Arabia and Syria, as well as 26 km
of coastline on the Gulf of Aqaba in the south.
Topographically, the country is divided into three
main areas: the Jordan Valley (part of the Great Rift
Valley), which runs from north to south in the west-
ern part of the kingdom and is known south of the
Dead Sea as Wadi Araba; the highlands region (run-
ning roughly parallel to the Jordan Valley and Wadi
Araba, to their east); and the eastern desert plateaux
(known as the Badia). The mineral-rich Dead Sea, sit-
uated at earth’s lowest elevation on land, is named
in reference to the high salt content that prevents
any marine life from living in it. The highest point in
the country is Jabal Umm Ad Dami, which has an ele-
vation of 1854 metres and is located near the bor-
der with Saudi Arabia in the south.
CITIES: The largest city in Jordan is the capital,
Amman, located in the north-west of the kingdom.
The governorate of Amman had an estimated pop-
ulation of around 2.5m at the end of 2012, accord-
ing to figures from the Department of Statistics.
Other major cities include Irbid, an important uni-
versity town in the north of the country near the bor-
der with Syria; Zarqa, which sits north-east of Amman
and is now on the verge of forming a metropolis
with the capital, thanks to heavy industrial build-up
and population expansion; and the port and resort
city of Aqaba in the south.
POPULATION: Jordan’s population reached around
6.64m as of late 2014, according to the Department
of Statistics. The numbers have been swollen signif-
icantly by successive waves of refugees from Syria
in recent years, as well as by many Iraqis in the wake
of the 2003 US-led invasion of that country.
The population is mainly concentrated in the north-
west of the country. The Amman governorate
accounted for just under 39% of the total popula-
tion in 2012, and Irbid and Zarqa governorates made
up a further 17.8% and 14.9% of the total, respec-
tively. These three governorates alone accounted
for more than 70% of the total population.
In addition, the country’s population is relatively
young, with nearly 60% of Jordanians under the age
of 24 and approximately 37% under the age of 14.
The kingdom is also heavily urbanised, with just 17.4%
of Jordanians living in rural areas.
The country is overwhelmingly Arab, though Cir-
cassians and Armenians each make up around 1% of
the population, according to the kingdom’s latest cen-
sus in 2004, and there are also a significant number
of Jordanians of Chechen origin.
ROYAL FAMILY: The royal family is of the Hashemite
dynasty, which traces its descent back to the Prophet
Muhammad and ruled the Hijaz, including the holy
cities of Medina and Mecca in modern-day Saudi Ara-
bia, between the 13th century and the early 20th
century (while recognising the sovereignty of the
Ottoman sultan from 1517 onwards).
Under Emir Sharif Hussein, the Hashemite family
was a key ally of the UK during the First World War,
leading the Arab Revolt against the Ottoman empire.
In 1921 Hussein’s son, Abdullah, was awarded the
throne in what was then the British-controlled Emi-
rate of Transjordan, which gained independence in
1946. King Abdullah reigned from 1946 until his
assassination in 1951 and was succeeded by his son,
King Talal, who set out the kingdom’s 1952 consti-
tution that remained largely unchanged until 2011.
King Talal abdicated the following year and was
replaced in turn by his son, King Hussein, who led
the country for nearly 50 years.
Hussein’s reign saw a number of major events,
including Arabisation of the Jordanian Armed Forces
in 1956, the loss of the West Bank and East Jerusalem
to Israel in 1967, the conflict between Jordan's mil-
itary and some Palestinian militants in 1970-71, and
political reform and liberalisation in 1989 that saw
12
Sands of timeThe kingdom is a crossroads of geography, culture and history
www.oxfordbusinessgroup.com/country/Jordan
COUNTRY PROFILE AT A GLANCE
the lifting of martial law, the legalisation of politi-
cal parties and the holding of elections for the first
time in over two decades. In 1994 King Hussein
signed a peace accord with Israel.
Hussein died in 1999 and was succeeded by the
current king, Abdullah II. The king and his wife, Queen
Rania, have four children: Crown Prince Hussein,
Princess Iman, Princess Salma and Prince Hashem.
Political developments under King Abdullah include
meaningful revision of the constitution in 2011 and
concrete steps towards a maturing party-based par-
liamentary system of government, where the monar-
chy retains its constitutional role as a unifying insti-
tution and guarantor of freedoms and pluralism.
Next in line to the throne is Crown Prince Hussein.
RELIGION: Roughly 92% of Jordanians are Sunni
Muslims. There are also a number of Jordanian Chris-
tians, most of whom are Greek Orthodox, account-
ing for around 3% of the population. Christians are
free to practise their religion in Jordan and they have
their own personal status laws and church courts.
Drawing on its values of tolerance and modera-
tion, Jordan is a leader in local, regional and global
inter-faith and intra-faith initiatives that are aimed
at promoting harmony and dialogue between differ-
ent religious and ethnic groups.
The kingdom has many important biblical and pil-
grimage sites, notably Bethany-Beyond-the-Jordan,
where Jesus is said to have been baptised by John
the Baptist, and Mount Nebo, from which Moses is
said to have been given a view of the promised land.
Jordan is also home to the tombs of many of the
Prophet Muhammad’s companions, who were mar-
tyred and buried there. The kingdom has a special
place in the history of Islam as well, as it was the first
territory to which the religion spread outside of the
Arabian Peninsula. Efforts to attract more religious
visitors, both Christian and Muslim, are ongoing.
CLIMATE: Around 75% of Jordan’s territory has an
arid desert climate, though the west of the country
has Mediterranean weather and the northern high-
lands (including Amman) receive significant rainfall
and snow in the winter. The hottest months in Amman
are July and August, when the temperature ranges
between daily averages of 19°C and 31°C, and the
coldest month is January, when the temperature gen-
erally ranges between 4°C and 11°C. January and
February are the wettest months, with average pre-
cipitation in Amman of 63.5 mm, while the June to
August period usually sees almost no rainfall.
Water resources are extremely scare. Jordan is the
fourth most water poor country on earth, with per
capita availability of water at around 140 cu metres
per year. By way of comparison, the international
water poverty line is set at 500 cu metres per year.
LANGUAGE: Arabic is the official language of the
kingdom, the language of instruction in schools and
used in the media, literature, formal occasions and
official communications. As in all Arab countries,
the everyday spoken language – aamiyeh – differs
from standard literary Arabic. In keeping with the king-
dom’s location, Jordanian aamiyeh is close to the
colloquial Arabic spoken in the rest of the Levant
region, and also has similarities to Egyptian and Sau-
di colloquial dialects, making Jordan’s local tongue
comprehensible to much of the Arabic-speaking
world. However, the local dialect varies throughout
the kingdom in terms of the vocabulary and pronun-
ciation, with aamiyeh in urban areas differing from
that spoken in rural areas and by Bedouins. English
is taught in schools throughout the country and is
widely spoken by Jordanians.
CULTURE: Jordanian culture is heavily influenced by
Bedouin tradition, of which storytelling, singing and
poetry form an important part. Prominent modern
Jordanian writers include Mustafa Wahbi Al Tal, one
of the best-known Arab poets of the 20th century.
The capital hosts a number of art galleries, such as
the National Gallery of Fine Arts and Darat Al Funun
(“House of the Arts”), and several theatres. Cultur-
al events include the Amman International Theatre
Festival, the Jerash Festival of Culture and Arts, and
the Aqaba Traditional Arts Festival.
CUISINE: The national dish is mansaf, a Bedouin
meal of lamb cooked in dried yoghurt and served with
rice which is enjoyed on special occasions. Other dish-
es include maglouba, a meat, vegetable and rice
dish cooked in a pot then flipped onto a plate, giv-
ing the dish its name, which means “upside down”.
The staple Jordanian diet includes rice, hummus and
white cheese. A popular desert is kanafeh, a sweet
and syrupy cheese pastry.
Traditional hot drinks include tea, taken black with
sugar and sometimes flavoured with herbs or spices,
as well as coffee prepared in both Turkish and Ara-
bic style: the former is dense and contains unfil-
tered coffee grounds, while the latter is thinner and
heavily flavoured with cardamom. The country pro-
duces its own wine, much of which comes from the
Madaba region where many Christians reside,
although other areas now produce wine as well.
13
THE REPORT Jordan 2014
Local dishes include mansaf, which is eaten on special occasions, and maglouba, a meat and rice dish
COUNTRY PROFILE OVERVIEW
The most recent parliamentary elections were held in January 2013
Despite a challenging regional environment, Jordan
continues to move ahead with the reform process it
began over a decade ago. The process has focused on
building consensus for reforms that are home-grown
and sustainable, the results of which are starting to mate-
rialise. Jordan’s gradual and evolutionary approach aims
to put in place an efficient system of checks and bal-
ances alongside other building blocks of parliamentary
democracy, as well as expand citizens’ participation in
the process of decision-making.
PARLIAMENT: The bicameral parliament, known as the
National Assembly, consists of the popularly elected 150-
seat House of Representatives (Majlis Al Nuwaab) and
the Senate (Majlis Al Ayan), with a maximum of 75
seats, appointed by the king. In June 2012 the single-
vote electoral system of the lower house was changed
to a two-vote system, under which MPs are chosen
from both local constituency and electoral lists on the
national level. In the most recent elections for the
House of Representatives, which took place in January
2013, voter registration reached 70%, while voter
turnout topped 56.7%, one of the highest rates in Jor-
dan’s history. Elections were monitored by local and inter-
national observers and administered for the first time
by the Independent Election Commission.
GOVERNMENT: The current prime minister is Abdul-
lah Ensour, who was reappointed after the January
2013 parliamentary elections. Ensour was nominated
as prime minister by the majority of parliamentary blocs
and independents during a process of parliamentary
consultations the king held with House of Represen-
tatives, marking a shift in how prime ministers are
appointed and introducing the first parliamentary gov-
ernment under King Abdullah II’s reign.
OPPOSITION: With parliament largely dominated by
independents representative of local interests in their
constituencies, the main party-based political opposi-
tion consists of the Muslim Brotherhood and its local
political wing, the Islamic Action Front (IAF). The IAF boy-
cotted the last two general elections, in 2010 and 2013,
in protest at what it regards as an unfair election law,
and is therefore not currently represented in parliament.
However, a centrist Islamic grouping is among the
House’s active blocs, along with other leftists MPs.
REFORM EFFORTS: Over the past 15 years, Jordan has
been undergoing an extensive process of political
reform, which has been moving forward relatively rap-
idly in recent years. In September 2011 the government
and parliament approved a number of constitutional
amendments put forward by a committee set up by the
king in April 2011, against a backdrop of regional polit-
ical unrest. In total around one-third of the constitu-
tion has been amended since 2011.
Changes included the establishment of an Independ-
ent Election Commission and a Constitutional Court, the
consolidation of individual rights and freedoms, as well
as the introduction of limits on some of the king’s pow-
ers. Constitutional reforms resulted in a wave of leg-
islative reforms to ensure compatibility with the more
progressive constitution, including amending the Polit-
ical Parties Law and the State Security Court Law and
creating a teachers’ association.
As part of an effort to foster public dialogue on the
reform process, in September 2014 the king, in the fifth
of a series of discussion papers that he has published
in recent years, reiterated his commitment to “a grad-
ual deepening of parliamentary government” under
the umbrella of a constitutional monarchy, with the
aim of “reaching an advanced stage where a party-
based majority bloc or coalition of blocs forms a gov-
ernment”. Jordan’s end goal in this process is to have
platform-based national political parties compete in
elections, with the majority party or coalition forming
a government and the minority acting as a shadow
government in parliament.
On the citizen side, Jordan is investing in civil socie-
ty and educational programmes to empower citizens
and build a culture of democracy in the medium to
long term. A key initiative in this field is the Democra-
cy Empowerment Programme (Demoqrati), which runs
The bicameral parliament,
known as the National
Assembly, consists of the
popularly elected 150-seat
House of Representatives
and the Senate, with a
maximum of 75 seats,
appointed by the king.
In September 2014 the
king reiterated his
commitment to “a gradual
deepening of
parliamentary government”
under the umbrella of a
constitutional monarchy.
14
Evolutionary changeThe political reform process continues
www.oxfordbusinessgroup.com/country/Jordan
COUNTRY PROFILE OVERVIEW
programmes supporting social entrepreneurs, an open
society, and informed and engaged citizens.
CONSTITUTIONAL AMENDMENTS: In August 2014
parliament approved two further constitutional amend-
ments. The first gives the king full powers of appoint-
ment and dismissal over the chairman of the joint chiefs
of staff and the head of the General Intelligence Depart-
ment. According to the government, the changes are
necessary to ensure the separation of powers, and to
prevent such positions and institutions from becom-
ing politicised or destabilised as Jordan moves toward
a more political party-oriented parliament. The govern-
ment also reiterated that both positions will remain
under parliamentary oversight, which encompassed
Jordan’s defence and Royal Court budgets for 2014. The
second change extended the mandate of the Inde-
pendent Election Commission to cover administration
of all major elections and not just parliamentary polls.
This is related to plans to decentralise power so that
local issues are dealt with locally, enabling the House
of Representatives to assume wider legislative and
oversight responsibilities at the national level, without
having local services dominate the role of MPs.
Related political reforms currently being worked on
by the government include a draft political parties law
to strengthen parties. The authorities also appear set
to amend the electoral law again. In September 2014
the minister of political and parliamentary affairs, Khaled
Kalaldeh, said that the government was finalising a
new law that it would submit to parliament in 2015.
The government and judiciary seek to consolidate the
respect of human rights and public freedoms as a key
part of the reform process by implementing the Nation-
al Centre for Human Rights’ 2012 recommendations.
FOREIGN RELATIONS: Jordan has close ties with Gulf
states (especially Saudi Arabia and the UAE). For exam-
ple, in 2011 the GCC agreed to provide the kingdom
with $5bn in support over five years.
Jordan signed a peace treaty with Israel in 1994 and
a trade agreement in 1995 – though ties remain sub-
ject to intermittent tensions – and has close relations
with the Palestinian Authority. As a direct descendant
of the Prophet Muhammad, one of the greatest respon-
sibilities of the king is to protect the Arab identity of
Jerusalem and its Muslim and Christian holy sites.
Outside the region, the kingdom also maintains good
relations with the US and the EU, with which it has a
free trade agreement and an association agreement,
respectively. In 2011 the EU adopted negotiation direc-
tives for a comprehensive trade agreement with Jor-
dan and three other regional states, and in 2014 it
began to work on a sustainability impact assessment
as part of this process.
Jordan has eight free trade agreements, giving it mar-
ket access to over 350m customers regionally and over
1bn worldwide, in addition to more than 35 invest-
ment protection and promotion agreements and
more than 30 double taxation avoidance agreements.
15
Jordan has eight free trade
agreements, giving it
market access to over
350m customers in the
region and more than 1bn
customers worldwide.
COUNTRY PROFILE VIEWPOINT
Prime Minister Abdullah Ensour
Our continued strategic operations with the European
Bank for Reconstruction and Development (EBRD)
come at a crucial time for Jordan, especially when set
against the backdrop of ongoing regional transforma-
tions. In some countries, such as Jordan, these trans-
formations have helped to bring about a number of pos-
itive changes associated with the shift toward
democratic rule and citizens’ participation in setting their
own political, economic and social priorities.
In other countries, however, these same transforma-
tions have had a number of detrimental economic and
security repercussions in the short term, as evidenced
by the occurrence of clear imbalances in economic
growth and reduced security. Such situations have neg-
atively affected the daily lives and productivity of citi-
zens in parts of the region. Nevertheless, we are hope-
ful that these repercussions will be short-lived. These
challenges have also been amplified by the impact of
the global financial crisis, the food crisis, and problems
related to water security and energy. Taken together,
these realities have led to declining growth rates and
rising unemployment, issues that call for extraordinary
efforts to contain these regional challenges.
Economic and political reform go hand-in-hand. We
believe that the aim of any process is to benefit citi-
zens by bolstering their confidence in state institutions
and encouraging them to participate in decision-mak-
ing. To translate this into action, His Majesty King Abdul-
lah II called for the formation of a Royal Committee to
Enhance the National Integrity System aimed at mak-
ing specific, constructive and clear recommendations
to empower oversight and strengthen institutional
capacities, as well as reform administrative and finan-
cial systems and establish good governance, trans-
parency and accountability in state institutions. In addi-
tion, the committee aims to make the management of
public funds more efficient and develop stronger reg-
ulatory frameworks for relationships among sectors.
In spite of the growth rate our economy has witnessed
over the past decade, Jordan is now facing economic
and financial challenges that have had a significant
impact on overall economic performance. The most
salient of these include reduced economic growth
rates, rising levels of inflation, an increase in the state
deficit, the balance of payments current account deficit,
creeping service costs, lower levels of direct foreign
investment, and ongoing poverty and unemployment.
The principal causes underlying these challenges are
attributable to the successive economic and financial
crises global and regional economies have faced in
recent years, and which continue to have a significant
impact on our economy. In addition, the nature of the
Jordanian economy – small in size, scarce in natural
resources and dependent on global imports for many
of its needs – makes it vulnerable to external shocks.
Factors include a substantial rise in oil prices, a more
than fivefold increase in electricity-generation costs due
to the use of heavy fuel instead of relatively cheaper
Egyptian gas supplies, loss of key trade routes, and
dampened growth of tourism and investment due to
political and security tensions in the region.
The overall situation has been exacerbated by the
escalating crisis in Iraq and Syria, which is having a
direct negative impact, particularly since we have tak-
en in nearly 1.4m Syrians, nearly a 20% increase in Jor-
dan’s population. With about 85% of Syrians living out-
side of refugee camps, beyond the reach of direct UN
and other international assistance, this rapid influx of
refugees is putting a tremendous strain on our natu-
ral resources, public infrastructure and budget, and
international agencies have recently slashed their assis-
tance to Syrian refugees due to lack of donor funding.
To promote development and bolster the capacity
of the economy, the government is building on what
has been achieved, specifically by reinforcing growth
catalysts and proceeding with the economic reforms
required to keep pace with our current development.
New state employment programmes for 2013-16 cov-
er more than 1000 enterprises in 22 economic, social
and service sectors. Our overall aim is to develop and
16
Meeting challengesPrime Minister Abdullah Ensour on partnership with the European Bankfor Reconstruction and Development
www.oxfordbusinessgroup.com/country/Jordan
COUNTRY PROFILE VIEWPOINT
strengthen Jordan’s economic and social environment,
such that we ensure sustainable progress and the fair
distribution of development gains.
In addition to capital enterprises, government pro-
grammes aim to improve the legislative and organisa-
tional system to stimulate economic growth and lever-
age the strengths of the private sector, while giving it
a greater role in the economic process and attracting
direct foreign investment. The relevant pieces of leg-
islation, which are being prepared in close consultation
with the private sector, include the investment law,
which was recently approved by the Cabinet; a law gov-
erning partnerships between the public and private
sectors; the business, bankruptcy and liquidation reor-
ganisation law; a law guaranteeing rights to moveable
property; a draft law for the development of entrepre-
neurship and small and medium-sized enterprises
(SMEs); the income tax law, which is being finalised in
parliament; and a draft law on attracting and develop-
ing venture capital funds. The investment programme
and new legislation aim to develop infrastructure facil-
ities and boost the role of the private sector within a
clear and transparent organisational framework.
Jordan’s position as a gateway to the wider region
enables investors and entrepreneurs to access a mar-
ket of more than 1bn consumers. Further, our highly
developed and modern infrastructure and logistical
facilities also assist in providing access to these mar-
kets and pave the way to transform the kingdom into
a logistical and trade hub for the MENA region. Add to
this the tech-savvy human capital and the significant
number of educated and trained personnel at the local
level, the availability of which helps to provide an envi-
ronment conducive to attracting new investments,
expanding existing ones and encouraging partnerships
across a variety of sectors. In addition, incentives offered
by Jordan’s economic, special and industrial zones make
it the perfect location to open a business.
Looking forward, His Majesty King Abdullah has asked
the government to draw up a 10-year economic blue-
print for Jordan that is responsive to citizens’ needs. In
consultation with all major stakeholders and through
an active citizenship approach, by 2015 we aim to deliv-
er a blueprint that will address new realities and cre-
ate the conditions for a prosperous, resilient, inclusive
economy with opportunity for all and progress for this
generation and the next. All of this is a reflection of
the Jordanian government’s belief in the importance
of cooperation with private sector investors to find
lasting solutions to the difficulties we face. This is par-
ticularly pertinent to the energy and water sectors, giv-
en the challenges to further expansion and growth.
The EBRD’s decision to expand its operations in coun-
tries south-east of the Mediterranean is an important
one. Jordan looks forward to ongoing discussions with
EBRD officials on a variety of levels regarding how to
direct cooperation and make the best possible use of
resources in high-priority areas. This includes support
for the implementation of the work programmes laid
out under the current government’s rule from 2013 to
2016, particularly the large-scale projects to be car-
ried out in partnership with the private sector, in a
manner that will contribute to balanced growth that
encompasses the various segments of society.
Support for the Jordanian private sector through
increased EBRD investments in infrastructure projects
will also help the government to handle challenges,
especially in electricity production and the water and
energy sectors, which have been exacerbated by the
growing influx of refugees from Syria. Hence, we wel-
come and anticipate greater private sector investments
in the areas of renewable energy, water and water
treatment plants, and transport, among others.
Lastly, support for SMEs, which helps stimulate the
Jordanian economy by creating jobs, is a high-priority
area going forward. This will involve providing assistance
to help secure funding for these enterprises, which will
in turn alleviate the bottle-necks preventing Jordanian
start-ups from growing and empower local entre-
preneurship, especially among women and youth.
17
THE REPORT Jordan 2014
COUNTRY PROFILE ANALYSIS
Aqaba is increasingly prominent in Jordan’s economic landscape
The last year was a good one for the Jordanian con-
struction sector, which registered an 8.3% expansion
in 2013 compared to the previous year’s relatively
static performance. Much of this improved showing
can be attributed to increased state spending on large
infrastructure projects and sizeable tranches of for-
eign investment, both of which have provided a fil-
lip to overall GDP. Yet the most interesting aspect of
Jordan’s construction data for 2013 is that it shows
that the centre of building activity has shifted from
the capital Amman to the port city of Aqaba.
As Jordan’s only seaport, this coastal city, situat-
ed at the northern end of the Gulf of Aqaba, has been
a central component of the country’s economy. As
well as serving as the access point for the bulk of
Jordan’s imports, it became a major site for imports
of Iraqi goods until this trade route was closed off
by the Gulf War of 1990-91. More recently, it has
re-emerged as a useful route into Iraq, due to the
traffic-related delays often experienced at that coun-
try’s Umm Qasr port. In 2013, Jordanian exports and
re-exports to Iraq totalled JD987m ($1.39bn), near-
ly four times greater than the value of imports Jor-
dan received from Iraq, at JD252.9m ($357.25m).
DEVELOPMENT PLANS: Since 2001 the city has tak-
en on even greater prominence in the economic
landscape, thanks to the creation of the Aqaba Spe-
cial Economic Zone Authority (ASEZA), an independ-
ent body tasked with managing ASEZ, through which
the government aims to develop the city as a region-
al hub for trade, tourism, and logistical services. A
master plan created in 2002 maps out an ambitious
vision for the city, including: a newly designed Aqa-
ba Town; three port areas (a main port, a container
port and the Southern Industrial port); the Coral
Coastal Zone, featuring residential, hotel and enter-
tainment facilities; and two industrial zones – the
Southern Zone and the Airport Zone.
INVESTOR BENEFITS: Incentives offered to investors
locating in ASEZ include a flat 5% income tax rate
on net profit, exemptions from a range of taxes,
duty-free import of goods in commercial quantities,
full repatriation of profits and capital, full foreign own-
ership and the ability to utilise up to 70% foreign
labour. Kamel O Mahadin, the chief commissioner of
ASEZA, told OBG, “Investors have realised that Aqa-
ba as a multi-sectoral investment destination has
staying power and stability, and that we are capa-
ble of accommodating any kind of investment needs.
We have become a driving force for the economic
growth and development of the kingdom.”
The zone covers 375 sq km, being developed over
two decades from the 2001 publication of the mas-
ter plan. Much of the focus so far has been on the
27-km coastline, where tourism facilities, port infra-
structure and mineral-related industries are well
established. The first phase of Aqaba Container Ter-
minal’s berth expansion project was completed in
2013. The expansion, which includes new cranes
and gantries, is set to boost annual capacity to 1.5m
twenty-foot equivalent units and reflects the king’s
vision of making Aqaba a key regional logistics hub.
The signing of a memorandum of understanding
between the ASEZA and Turkish free zones repre-
sented another major development over the past
year. Under the deal, the parties will exchange expert-
ise, draft joint plans to improve the investment cli-
mate, and work to increase Jordanian and Turkish
investment in the zone. In addition, ASEZA just signed
another memorandum of understanding with a
French company to build a dry port in Aqaba, which
will enable the city to operate as a centre for trans-
shipment of sea cargo to inland destinations.
GREEN FOR GO: As with most economic zones of
this scale, ASEZ is being developed in line with strin-
gent environmental guidelines based on interna-
tional best practice. However, the location of Jordan’s
new project means that environmental issues play
an even greater role in its development than in sim-
ilar projects globally. The coastline of the northern
A master plan created in
2002 maps out an
ambitious vision for the
city, including a newly
designed Aqaba Town,
three port areas, the Coral
Coastal Zone and two
industrial zones.
Aqaba Special Economic
Zone is being developed in
line with stringent
environmental guidelines
based on international best
practice.
18
Going coastalDevelopment is being stepped up in a key port city
www.oxfordbusinessgroup.com/country/Jordan
COUNTRY PROFILE ANALYSIS
tip of the Gulf is well known for the richness of its
reefs and marine life. Extensive coral communities
extend across many kilometres of the proposed
development site’s coastline in a series of reefs
arrayed beyond the shallow lagoons that line the
shore. Some 118 genera and 161 species of fish
have been recorded in these fertile waters, as well
as a range of echinoderms, algae and amphipods,
many of which are endemic to the Gulf of Aqaba.
SUSTAINABILITY: Mindful of the biodiversity that
exists in close proximity to what will be an area of
intense development, the government is working
through the ASEZA to mitigate any adverse impact
of the new zone. Its principal conservation and pro-
tection efforts are brought together in the creation
of the Aqaba Marine Park, which has been established
to “conserve and manage the natural near-shore
marine environment of the Aqaba south coast region
with its rich biodiversity, while allowing for certain
touristic uses at sustainable levels”.
IN THE ZONE: The park is 7 km in length, extending
southwards from the passenger terminal, with a
marine boundary 350 metres west of the mean high-
water mark. It is made up of a number of zones: the
Strict Reserve Zone will act as an area for non-inva-
sive research and provide a completely protected
environment; the Beach Recreation and Swimming
Zone will allow for activities such as swimming and
diving from demarcated access points; the Diving and
Snorkelling Zone is designed to permit a safe envi-
ronment for these activities, with entry to dive sites
restricted to a number of shore entry points and to
predetermined mooring points for boat access; and
the Beach Zone will be established on the terrestri-
al territory of the park, and will be dedicated to sim-
ple beach use by individuals.
LNG FACILITY: It is likely that Aqaba will continue
to account for a large proportion of the nation’s
construction activity. In late 2013 the government
released more details of a planned liquefied natu-
ral gas (LNG) facility, to be built 18 km south of the
city. This facility is considered essential for Jordan’s
fuel security in the wake of service disruptions on
the Arab Gas Pipeline due to unrest in Egypt. The Min-
istry of Energy and Mineral Resources first called for
expressions of interest in providing consultancy serv-
ices for a techno-economic study of the facility in
2011, and an array of regional and global players
made it to a shortlist via a prequalification stage,
including PwC, Halcrow International Partnership,
GL Noble Denton, Arup Gulf, Clyde & Co and PKF.
AN ENABLING ENVIRONMENT: Once completed,
the development will feature a single-berth jetty
designed to berth a floating storage regasification
unit (FSRU) and take gas from it. LNG transfer will
be carried out on a ship-to-ship basis, utilising
hydraulic arms fitted to the FSRU, while berthing
and mooring dolphins will make up the marine struc-
ture. A number of related onshore works will enable
operations at the facility and provide a connection
to the existing Jordan Gas Transmission Pipeline. The
development of the terminal area, including roads
and two buildings, also forms part of the contract.
The project is being overseen by the Aqaba Devel-
opment Corporation, launched by ASEZA in 2004 to
run the seaport, airport and strategic parcels of land,
and in November 2013 it awarded a joint venture –
between Irish firm BAM International and the Jor-
dan-based MAG Engineering and Contracting – an
engineering, procurement and construction con-
tract to build the new terminal.
The substructure works for the terminal building
were nearing completion in August 2014, and the
substructure works for the administration building
had begun. BAM has also successfully driven the
first pile for the LNG jetty, which will ultimately
include a 100-metre trestle on steel piles and a
20x20-metre concrete offloading platform. The proj-
ect is being developed according to schedule, and
the latest estimate envisions a handover to Aqaba
Development Corporation as early as April 2015.
21
THE REPORT Jordan 2014
Investors locating in Aqaba benefit from a range of tax incentives and duty-free imports of goods
In 2013 the government
released more details of a
planned liquefied natural
gas facility, to be built 18
km south of the city. The
facility is considered
essential for Jordan’s fuel
security in the wake of
service disruptions on the
Arab Gas Pipeline.The government hopes to make the city a regional trade hub
COUNTRY PROFILE INTERVIEW
Crispin Blunt, MP & Chairman, All-Party Parliamentary Jordan Group
To what extent are you concerned by the seeming
movement toward greater sectarianism within the
region, in particular the rise of the Islamic State in
Iraq and Al Sham (ISIS)?
BLUNT: Too many regional players have used sectari-
anism for political purposes, including Bashar Al Assad
in Syria and Nouri Al Maliki in Iraq. ISIS is the most
extreme display of this trend to win over discontented
Sunni Arabs, exploiting their grievances. It bears some
resemblance to the European Thirty Years’ War, which
laid waste to much of the continent with people killing
for their faith. Unhappily, the use of force against ISIS
is proving necessary given the requirement for states
to deliver security and stability to their citizens. Piec-
ing back together the ethnic and sectarian fabric of
these countries may prove to be the toughest challenge
of all. Kurdish separation is something that looks as
though it will have to be accommodated, which arguably
is part of the move towards greater sectarianism.
Given Jordan’s geographic location, what strategic
role can the kingdom play when working with its
international partners on conflict resolution?
BLUNT: Jordan finds itself at the centre of crises in
Palestine, Syria and Iraq, with massive numbers of
refugees from all three countries. The implications for
this small but traditionally stable kingdom are enormous.
Its historic role has been as a key Western ally and a
source of wise counsel. The seriousness of ISIS’s threat
to Jordan can be measured by the decision to partici-
pate in airstrikes in Syria even though there is a risk of
making Jordan a target, while its stability is threatened
by the vast numbers of refugees inside the country.
Can Jordan serve as an example of peace and
progress in a region awash with conflict?
BLUNT: Jordan has a proud record of relations between
Muslims and Christians going back centuries. This is con-
tinued by the excellent work on interfaith dialogue by
eminent figures like Prince Hassan bin Talal. However,
we risk overstating the ability of a small country, such
as Jordan, to influence the outcome of major rifts in
larger regional states, including Syria and Iraq.
How are Jordan’s allies assisting with administering
to the financial costs of the growing number of
refugees within the kingdom?
BLUNT: Jordan already has over 618,000 UN-registered
Syrian refugees with perhaps over 1m Syrians in total.
The overall level of UN funding for Syrian refugees is
running at 44% of the ask ($1.6bn out of $3.7bn). Giv-
en this shortfall, it is vital that every donor country ful-
fils its fair share. According to Oxfam, the UK is doing
just that with 141% against GDP, whereas the US is
doing 60%, France 33% and Russia 1%. However, given
its close relationship with Jordan, I hope the UK will do
even more. We should appreciate the enormous strain
on UN agencies and non-governmental organisations
operating in Jordan. The Syria crisis is also taking place
alongside other crises in Iraq, South Sudan and Gaza.
The sheer number of refugees has strained communal
relations within Jordan, affected employment and rental
prices, as well as depleting crucial water resources.
The 2002 free trade agreement between Jordan
and the EU is due for review. How can it be strength-
ened beyond a basic free trade package?
BLUNT: It is welcome that Jordan is the first Mediter-
ranean partner country with whom the EU has conclud-
ed technical negotiations leading to “advanced status”
within the European Neighbourhood Policy. An essen-
tial part of Jordan’s stability will be the growth of its
economy. With unemployment at 12%, according to offi-
cial Jordanian figures, and regional turbulence, this is
crucial. The kingdom needs a healthy trade agreement
with the EU to assist its economy and cater to a young
population. In 2013 total trade with the EU amounted
to €3.3bn, and the union was Jordan’s second-largest
source of imports (17.6%) after Saudi Arabia (23.6%)
and the fifth-largest destination for exports (4.5%).
22
Tackling challengesOBG talks to Crispin Blunt, MP and Chairman, All-Party ParliamentaryJordan Group
www.oxfordbusinessgroup.com/country/Jordan
23
EconomyIMF forecasts growth of 3.5% in 2014, 4.5% in mid term
Government committed to reducing fiscal deficit
Review of past privatisations guiding future moves
Supporting small and medium-sized enterprises
Trade with regional neighbours presents opportunities
ECONOMY OVERVIEW
GDP growth is forecast at 3.5% for 2014 and 4.5% in the medium term
The kingdom’s economic journey from its emergence
as a new state in 1946 to the regional business and
financial hub that it is today is a remarkable one. Over
this brief span Jordan has undergone a number of devel-
opmental phases, from an initial focus on massive pub-
lic investment in basic utilities, health and education
to the growth of an industrial and manufacturing base,
the first attempts to attract sizeable foreign invest-
ment and the successive tranches of economic reform
by which Jordan has kept pace with the evolution of
the global economy. During this time the nation has
overcome regional unrest, and has established itself as
a safe destination for those displaced by conflicts in
the Middle East. The latest phase of development sees
the Jordanian government tackle long-term structural
issues in the economy. It has already succeeded in tak-
ing important – if sometimes unpopular – steps to cut
deficits, roll back subsidies and tackle inefficiencies;
these moves are now beginning to be repaid with
strengthened international support.
In early 2014 the king wrote a public letter to the
prime minister in which he directed the government
to draft a new 10-year blueprint for economic devel-
opment. As of August 2014, interested parties, from
ministries and agencies to private sector think tanks
such as the Jordan Strategy Forum, began working with
the government. With a the first national conference
taking place in September 2014, the outcome of this
collaborative effort will be of great importance to the
future direction of the nation’s economic development.
PERFORMANCE:Looking at Jordan’s key macroeconom-
ic indicators, the economy has shown a gradual recov-
ery since the global economic downturn resulted in a
drop in growth to 2.3% in 2010 from the previous rate
of 6% or more that had been sustained for some years.
Since that time, the nation’s GDP has shown a modest
2.8% year-on-year (y-o-y) expansion, according to the
IMF, with the fund anticipating growth of 3.5% for 2014,
rising to 4.5% in the medium term. Moreover, after
reaching a peak in 2012, Jordan’s current account deficit
has started to narrow thanks to lower energy imports,
higher current transfers (mostly in the form of grants
from GCC countries) and private receipts.
The capital markets have also shown signs of a
rebound following the economic downturn. According
to Amman Stock Exchange (ASE) data, the ASE Free Float
Index at the close of 2013 showed a 5.5% y-o-y increase,
to reach 2065.8 points. The share turnover ratio, an
important indicator of market activity, grew to 38%
during 2013, compared to the 33.9% posted for 2012.
This incipient recovery has resulted in renewed opti-
mism in relation to the ASE’s ability to act as a catalyst
for economic growth in the country.
Nevertheless, trading values and volumes remain
muted in comparison to the pre-crisis era, and many
stakeholders feel that Jordan’s capital markets will need
to undergo a process of reform if they are to achieve
their full potential (see Capital Markets chapter).
CHALLENGES: Despite promising signs that Jordan’s
economy has turned a corner, substantial challenges
remain. Many of Jordan’s economic issues are related
to population pressures. The country has absorbed
successive waves of refugees including Palestinians,
Iraqis and Syrians, many of which brought immediate
benefits in the form of capital and expertise. The more
recent arrivals from Syria, however, have proved to be
more of an economic challenge. While much interna-
tional aid has been directed towards Syrians forced to
flee into neighbouring states such as Jordan, the esti-
mated $1.1bn granted to the Syria Regional Response
Plan by July 2014 represented only around 30% of
refugee requirements, according to the Office of the
UN High Commissioner for Refugees.
This population influx took place against a backdrop
of rising energy prices, which were the result of the inter-
ruption of natural gas supplies from Egypt. While the
expected completion of oil terminals and a liquefied
natural gas facility in the Red Sea port of Aqaba by mid-
2015 is expected to lower the cost of energy imports,
the nation’s energy bill continues to be a key concern.
Recently, the government
has made attempts to
tackle long-term structural
issues in the economy; it
has taken steps to reduce
deficits and cut subsidies,
for instance.
25
THE REPORT Jordan 2014
Many of the economic
challenges facing the
country are related to
population pressures, with
Jordan seeing successive
waves of refugees. Energy
prices have also risen with
the interruption of natural
gas supplies from Egypt.
Moving forwardThe emphasis is now on reducing the fiscal deficit and resettingnational strategies
ECONOMY OVERVIEW
Also, since 2009 unemployment has remained at
between 12% and 13%. While employment increased
by just over 1% from 2011 to 2013, the size of the
working age population rose by 6% over the same peri-
od, meaning the ratio of employment to the working
age population has continued to decline – to 32%.
PUBLIC FINANCE: These challenges have weighed
heavily on the nation’s balance sheet. Despite the slight
narrowing of the fiscal deficit in 2013, it amounted to
9.1% of GDP for the year. Tax receipts account for the
bulk of domestic revenue in Jordan, contributing 73%
of the total for the first 11 months of 2013. Jordan’s
position in the region and its strong relations with both
Gulf nations and Western powers enable it to attract
grants and funding to narrow the gap between its rev-
enue income and public expenditure demands. In the
first 11 months of 2013 its total revenue combined with
grants amounted to $7.21bn, while expenditures reached
$8.76bn. Much of this figure – some $7.76bn – is
accounted for by current expenditures, such as the
costly social benefits which form part of the govern-
ment’s social protection measures. However, the gov-
ernment has had some success in reducing current
expenditures in its tackling of fuel subsidies, which
decreased by $746m, or 64%, over the period. This
improvement comes on the back of a government deci-
sion to end fuel subsidies, a politically sensitive move
but one that is considered essential to the country’s
long-term economic sustainability. Jordan’s ambition to
reduce its debt-to-GDP ratio – which stood at 83.9% in
2013 – has been made more challenging by external
factors such as the interruption of Egyptian natural gas
supplies due to that country’s political crisis and the
ongoing civil war in Syria, which has flooded Jordan with
refugees. These events have served to further under-
line Jordan’s reliance on foreign grants as it attempts
to meet its expenditures bill. The reduction of this
dependency is essential for Jordan’s economic health
in the long run (see analysis).
On the monetary level, a renewed appetite for the
Jordanian dinar (JD) has allowed the Central Bank of
Jordan (CBJ) to adopt an accommodative stance in
2013 and into 2014 with a significant rise in the CBJ’s
foreign currency reserves, an increased demand for
JD-denominated assets and an encouraging trend of
de-dollarisation, while a growth in JD deposits result-
ed in a wider yearly expansion of the monetary supply.
Against this relatively buoyant backdrop the CBJ was
able to lower its rediscount rate in two 25-basis-point
steps in late 2013, from 5% to 4.5%, which it followed
with another 25-basis-point reduction in January 2014
to reach a rediscount rate of 4.25%. Should the foreign
reserve size be maintained and the reduction in dol-
larisation continue, the CBJ may find itself in a position
to further reduce interest rates in a bid to stimulate
growth. Weighing against this possibility, however, is the
prospect of stubbornly high core inflation.
STRATEGY: Since the creation of the state, the gov-
ernment has undertaken short-, medium- and long-term
strategic plans to guide the country’s economic devel-
opment. Planning at the national level began in earnest
in 1952 with the creation of the Jordan Development
Board (JDB), which drafted the first five- and seven-year
plans – the latter interrupted by the Six-Day War in 1967
and the influx of many refugees from the West Bank
and Jerusalem. Responsibility for drafting Jordan’s devel-
opment strategy subsequently shifted to the National
Planning Council, which issued a series of five-year
plans throughout the 1970s, 1980s and 1990s. Since
then, several investment agencies have been established,
among the most important of which are the Jordan
Investment Board (JIB), the Jordan Enterprise Develop-
ment Corporation and the Development and Free Zones
Commission. These and other bodies, however, are set
to be merged with the promulgation of a new invest-
ment law, various drafts of which have been proposed
and withdrawn over the last decade. Under the new
legislation, expected to come into force before end-
2014, the JIB, the Industrial Zones and Free Zones Cor-
porations, as well as the promotional functions of the
26
In 2013 the kingdom’s fiscal deficit totalled 9.1% of GDP
In the first 11 months of
2013 total state revenue
combined with grants
amounted to $7.21bn, while
expenditures reached
$8.76bn.
www.oxfordbusinessgroup.com/country/Jordan
SOURCE: IMF
2012 2013 2014
GDP, current prices (JD bn) 21.97 24.01 25.90
GDP, current prices ($ bn) 30.98 33.86 36.52
Total investment (% of GDP) 21.32 20.70 20.70
Inflation, avg. consumer prices (% change) 4.65 5.46 2.96
Vol. of imports of goods & services (% change) 2.91 2.31 2.54
Vol. of exports of goods & services (% change) -0.73 5.94 5.92
General gov't revenue (JD bn) 5.05 6.09 7.10
General gov't revenue (% of GDP) 23.01 25.35 27.41
General gov't total expenditure (JD bn) 6.86 7.35 8.25
General gov't total expenditure (% of GDP) 31.24 30.61 31.85
General gov't net lending/borrowing (JD bn) -1.81 -1.26 -1.15
General gov't net lending/borrowing (% of GDP) -8.23 -5.26 -4.44
General gov't gross debt (JD bn) 17.61 21.07 23.65
General gov't gross debt (% of GDP) 80.17 87.75 91.32
Current account balance ($ bn) -5.61 -3.75 -4.71
Current account balance (% of GDP) -18.12 -11.08 -12.88
Select economic indicators, 2012-14
ECONOMY OVERVIEW
Jordan Enterprise Development Corporation will be
merged into one body, the Investment Commission.
In terms of overall strategy, the nation’s develop-
ment is governed by the National Agenda 2007-17.
Conceived by King Abdullah ibn Al Hussein II in 2005,
the agenda aims to provide a basis for progress along
the axes of society, politics and economics, and in doing
so addresses such areas as government and policies
(including investment, fiscal and labour policy), basic
rights and freedoms, and service, infrastructure and the
development of individual economic sectors. While the
National Agenda remains in place, the altered econom-
ic landscape in the wake of the global economic crisis
has resulted in a need for some strategic adjustment.
KEY SECTORS: A fortunate characteristic of the econ-
omy, as far as government planners are concerned, is
its relative diversity. Unlike some of its regional peers,
Jordan’s lack of hydrocarbon resources has compelled
it to take a broader approach to its economic develop-
ment, the results of which are apparent in the nation’s
GDP mix. In the first nine months of 2013, the finance,
real estate and business services sector was the largest
contributor to GDP (aside from government services),
according to Bank Audi, accounting for 20.3% of total
GDP. The improved performance of the banking sector
was noteworthy over the year, with lenders posting
asset growth on the back of rising deposits (see Bank-
ing chapter). The second-largest non-government com-
ponent in the GDP mix was manufacturing activity,
which contributed 19.2% to the total. The strong per-
formance of manufacturers mitigated a slowdown in
the industrial sector resulting from limited investor
appetite to launch new projects. At 14.3%, transport
and communications activity accounted for the third-
largest GDP component over the period, and with a
growth rate of 4% represented one of the more buoy-
ant areas of the economy. Similarly, trade, restaurant
and hotels – the fourth-biggest GDP component at
11.5% – showed a promising expansion of 3.6% over
the period. Other significant contributors to the GDP
mix include construction with 5%, agriculture with 3.1%,
and mining and quarrying with 2.5%.
TRADE: The kingdom has sought to capitalise on its
varied economic output to increase its trading activi-
ty. The government’s trade policy over recent decades
has been an expansive one, in which it has established
export platforms aimed at incentivising foreign invest-
ment and established a range of free trade agreements
(FTAs). As a member of the Greater Arab Free Trade Area,
companies exporting from Jordan are granted advan-
tageous access to markets in 17 states in the Middle
East and North Africa. Jordan is also a signatory to the
Agadir Agreement which, inter alia, aims at harmonis-
ing general and sectoral economic policies in member
countries with regard to foreign trade, agriculture,
industry, financial and taxation systems. In 2004 Jor-
dan and Singapore signed an agreement that is designed
to promote economic relations and bilateral trade in
27
Accounting for 20.3% of
GDP in the first nine
months of 2013, the
finance, real estate and
business services sector
was the largest contributor
to GDP. The second-largest
non-government
component was
manufacturing, with 19.2%.
ECONOMY OVERVIEW
goods and services, as a result of which goods of Jor-
danian origin can enter the Singaporean market free
from Customs duties and charges. A similar FTA has exist-
ed between Jordan and Canada since 2009, and in 2011
a revised FTA between Turkey and Jordan came into
effect. Jordan also became a member of the WTO in
2000, ratified an FTA with the US in 2001 and an Asso-
ciation Agreement with the EU in 2002.
In terms of trade volumes, Jordan exported around
JD2.4bn ($3.4bn) worth of goods (including re-exports)
in the first five months of 2014, up from about JD2.3bn
($3.2bn) over the same period in 2013, according to
the Department of Statistics. Clothing exports were the
largest single shipped commodity, accounting for
JD325.8m ($460.2m) of the total. Next in order of size
was vegetables and fruits (JD215.7m, $304.7m), followed
by crude potash (JD196.9m, $278.4m) and pharma-
ceutical products (JD177.8m, $251.2m).
Imports also grew over the same period from a 2013
figure of JD6.3bn ($8.9bn) to JD6.7bn ($9.5bn) in 2014.
This resulted in a trade deficit of nearly JD4.3bn ($6.1bn)
for the first five months of 2014, up from JD4bn ($5.7bn)
for the same period in 2013.
Reducing this structural trade deficit is a key priori-
ty for Jordan’s economic planners. The largest single
imported commodity in recent years has been crude
oil, purchases of which are at an elevated level due to
the present shortage of natural gas. Other sizable
imports include machinery, electrical appliances and
parts (JD410.9m, $580.4m), vehicles and motorcycles
(JD354.8m, $501.2m), and iron ore (JD326.2m, $460.8m).
INVESTMENT: Boosting Jordan’s exports and reducing
its reliance on imported goods will require investment
across the board. The broad sectoral mix of Jordan’s
economy forms the basis of its future economic expan-
sion and, given the nation’s structural budget deficit,
attracting private investment to these areas is an essen-
tial objective of any strategy. Thanks to the govern-
ment’s policy of economic liberalisation, a significant
portion of the economy has been opened up to domes-
tic and foreign investment in recent decades. This
process began with a privatisation programme launched
in 1996. Initially overseen by the Executive Privatisa-
tion Unit (EPU), the first significant divestment was the
Public Transportation Corporation in 1998. The prom-
ulgation of the Privatisation Law in 2000 saw a raft of
state bodies opened up to the private sector, such as
the Jordan Cement Company, the Arab Potash Compa-
ny, the Jordan Phosphate Mines Company, the portfo-
lio of the Jordan Investment Corporation, the Jordan
Telecommunications Company (which was privatised
in four phases) and the flag carrier Royal Jordanian. The
2000 law also reconfigured the EPU as the Executive
Privatisation Commission and established the Higher
Ministerial Committee for Privatisation, chaired by the
prime minister. The result of these efforts was a con-
siderable rise in foreign direct investment (FDI) to Jor-
dan as well as a reduction of the fiscal burden many of
these state enterprises placed on the nation’s coffers:
according to an OECD report published in 2013, FDI
inflows to the country grew from an average of 0.2%
of GDP in the early 1990s to 10% of GDP during 2000-
11. The OECD’s report was commissioned to mark the
country’s November 2013 signing of the OECD Decla-
ration on International Investment, which commits the
kingdom to a process of investment liberalisation,
responsible business conduct and the establishment
of full legal parity between domestic and foreign com-
petitors. Its findings revealed a number of strengths
and weaknesses in the current investment framework.
On the positive side of the ledger, Jordan has creat-
ed an institutional focus for foreign investment, signed
a total of 53 bilateral investment treaties, adheres to
the norms of international arbitration, established a
trade policy geared towards greater integration with
the global economy and made significant progress with
regard to anti-corruption policy.
Challenges that remain, according to the OECD,
include a complex legal investment regime with
instances of regulatory overlap; an intricate array of
incentives characterised by various schemes, zones
and preferential areas; and a number of restrictions on
foreign investment in areas such as telecommunica-
tions, transport and wholesale trade. For its part, the
Jordanian government has recognised the need for a
more streamlined investment framework in its prepa-
rations for a new investment law. Meanwhile, attention
is turning to how the government can more effective-
ly work with the private sector in the development of
large projects. With most of the saleable state assets
already divested, the nation has had an opportunity to
assess the merits of the privatisation programme
through the work of the Privatisation Evaluation Com-
mittee. One of the key findings of this body is that there
is an urgent need for the drafting of a new law to gov-
ern the relationship between the public and private sec-
tors where they combine in project development. A new
public-private partnership (PPP) investment model
being developed by a government advisory committee
is thus likely to be the principal instrument by which
the government will harness private capital for the
major development work of the future (see analysis).
OUTLOOK: The coming years promise to be interest-
ing ones for the Jordanian economy. One of the most
pressing questions concerns Jordan’s ability to attract
private sector development for major projects in the
long term now that the era of privatisations is conclud-
ed and the nation enters the next phase of large-scale
private sector participation through PPP projects.
The implementation of the regulations of the new
investment law will be of principal interest, while the
king’s request for a fresh 10-year national strategy is
clearly of great consequence to the economic outlook.
While Jordan’s reliance on international grants may
not be desirable in the long term, in the shorter term
they allow the country to set about its programme of
fiscal consolidation while safeguarding the social secu-
rity of its citizens. Economic planning in the short and
medium term is likely to remain focused on reducing
the fiscal deficit with the strategy of further reductions
in subsidies, the completion of income tax reforms
and a reinforcing of the country’s tax administration.
28
Much of the economy has
been opened up to
domestic and foreign
investment in recent
decades. Foreign direct
investment inflows
increased from an average
of 0.2% of GDP in the early
1990s to 10% of GDP
during 2000-11, according
to the OECD.
Reducing the trade deficit
is a main priority. The
largest single imported
commodity in the past few
years has been crude oil,
purchases of which are
higher due to the recent
shortage of natural gas.
www.oxfordbusinessgroup.com/country/Jordan
ECONOMY INTERVIEW
Umayya Toukan, Minister of Finance
How is the government maintaining fiscal disci-
pline in regards to repaying its IMF loans?
TOUKAN: We have an agreement in place with the
IMF to restore fiscal balance. Planning a budget is not
the easiest task when we are faced with exceedingly
uncertain regional tensions. Our budgetary difficul-
ties are largely due to the global economic crisis, the
Arab Spring and, of course, disruptions in the flow of
natural gas from Egyptian pipelines. These challenges
that we have faced at home have resulted in our budg-
et deficit increasing to unsustainable levels, well
beyond what we intended or foresaw. At the end of
2012 we began an IMF structural adjustment pro-
gramme that deals with the distortions hampering our
economy and our fiscal balance. It is imperative that
we reduce our expenditures and raise our revenues.
In 2014 we expect the budget deficit to be 4-4.5%
of GDP. In 2015 we would like to see this decrease to
3%. Our debt levels have been on the rise, especially
since 2011, and our overall debt is hovering at around
80-83% of GDP. According to the structural adjustment
programme, we would like to see our debt reduced
to 60% of GDP. Though this will be difficult to achieve,
in order to do so, we must see GDP growth rise beyond
the current level of 3% to closer to 6% or 7%.
If we are able to manage this sort of growth, we
will see revenues increase from tax and non-tax chan-
nels. As economic activity increases, revenues will
naturally follow, which should see the budget deficit
decrease. Furthermore, higher GDP growth should
serve as a catalyst for employment growth, thereby
helping reduce unemployment, which currently stands
at around 12%. I believe that growth must be achieved
through the private sector. Sound fiscal and mone-
tary policies must ensure that the private sector finds
itself in an environment that can foster growth.
Good governance, security and political stability
are important factors towards this end. If we commit
to our reforms, the economy will pick up sooner rather
than later, but we must remain patient and with resolve.
Given the need for budget cuts, how can you have
a minimal impact on the vulnerable but also avoid
too heavily affecting the key economic drivers?
TOUKAN: Some say that the social safety net of
JD1.5bn ($2.1bn) is too generous. The government sub-
sidises a number of goods and services for the need-
iest in society, including energy, food, health and edu-
cation. We operate under criteria to make sure that
the most vulnerable have basic economic rights.
In saying this, it would be impossible not to see a
connection with our national budget deficit. We made
a mistake in prior years, especially regarding energy,
by subsidising the commodity as a whole and not
based on means. We have since reversed that policy,
and this has lifted some of the burden on the budg-
et deficit. Taxing successful industries could be seen
as penalising them, but that is relative. Given our cur-
rent circumstances, this must apply.
In 2009 we lowered taxes on banks from 35% to
14%, but we were experiencing high growth levels. If
the economy is rapidly growing, one can afford to
lower taxes because fiscal revenues will be accrued
to meet budget expenditures. In a slowdown, the
opposite must occur, because fiscal revenues will fall
short of budget expenditures.
What impact is regional instability having on the
economy, and how difficult is it to plan a budget?
TOUKAN: I can unequivocally say that regional insta-
bility is never a long-term benefit but, in the short term,
it could work to the advantage of a country. Howev-
er, this is short-sighted thinking.
With all things being equal, stability would lead to
growth in fiscal revenues across the board. In plan-
ning a budget during these times of instability, we
must widen our margins of error. If we assume that
GDP growth will be 3% and that, historically, fiscal
revenues amount to roughly 20-25% of GDP growth,
then we can predict the figures that need to be
allocated per sector and plan the budget accordingly.
29
THE REPORT Jordan 2014
Structural adjustmentsOBG talks to Umayya Toukan, Minister of Finance
ECONOMY INTERVIEW
Ibrahim Saif, Minister of Planning and International Cooperation
What impact could the $5bn Gulf Cooperation Coun-
cil (GCC) grant have on the Jordanian economy?
SAIF: Over the past few years, Jordan has suffered from
successive shocks that have negatively affected its
macroeconomic situation. The global financial crisis
and the regional situation as a result of the Arab upris-
ings have had an adverse impact on its growth, fiscal
balance and balance of payments. The Syrian conflict
has also impacted key economic sectors and contin-
ues to pose a serious risk to growth.
The grant of $5bn pledged by the GCC countries –
$1.25bn each from Kuwait, Saudi Arabia, the UAE and
Qatar – presents an opportunity to spur growth in the
country and support the government’s capital invest-
ment projects over a five-year period, while also pro-
viding the needed financing to move forward with a
number of new strategic projects. The grant is expect-
ed to boost economic growth by improving infrastruc-
ture, expanding domestic demand and creating links
between many sectors in the economy.
Growth over the past two years has stemmed from
the onset of a large fiscal consolidation programme.
Real GDP growth reached 2.8% in 2013, on par with
2.7% in 2012 and 2.8% in 2011 yet still low compared
to the 6.5% average during 2000-09. The sectors that
saw robust activity included those catering to Jordan-
ian consumption and the basic needs of Syrian refugees.
The capital spending boost the fund provides will be
instrumental to stimulating our economy in these chal-
lenging times. Economic activity is expected to accel-
erate in 2014, boosting GDP growth to 3.5%.
Which areas need investment most in Jordan? Will
the fund be divided up accordingly?
SAIF: The GCC grant was distributed among a number
of priority sectors, financing more than 114 ongoing
and new projects in the budget law that will help improve
service delivery and boost economic activity. About
63.5% of it will go to ongoing capital investment proj-
ects in the budget, and the remaining 36.5% will help
finance new strategic projects in energy and transport.
This will accelerate the implementation of projects and
enable ministries and public institutions to improve
and expand basic services, while also ensuring equi-
table distribution of these services among different gov-
ernorates, thus reducing regional disparities.
The transport sector received 30% of the grant for
upgrades to road and transport networks, which are
essential to trade and to attracting investment. The
energy sector received 20% for projects that will diver-
sify Jordan’s energy mix, which is critical to building
resilience and improving the country’s balance of pay-
ments and public finances. Another vital sector is water,
where about 11% went to projects aimed at introduc-
ing new water resources, improving the water supply
and reducing water loss from the networks. The edu-
cation and health care sectors each received 11%, with
a focus on improving and expanding public services.
The remaining allocations were directed to the govern-
ment’s Executive Governorates Development Pro-
gramme and projects in the local development sector,
with the aim of improving basic services and existing
infrastructure, and promoting economic opportunities.
How has the GCC fund changed the ministry’s role?
SAIF: One of MoPIC’s mandates is to be the focal point
for donors, international organisations and interna-
tional finance institutions. This entails negotiating,
coordinating and managing foreign aid (grants, loans,
technical assistance) and following up on the imple-
mentation of donor-funded projects and programmes.
One such programme is the GCC grant, which the
prime minister has appointed MoPIC to manage and
oversee. A management unit was created to supervise
its implementation and ensure that these funds are
speedily and effectively used. This unit, chaired by
MoPIC, includes members from its own relevant depart-
ments and from the Ministry of Finance and the Gen-
eral Budget Department, who all meet regularly to
review the programme’s progress and make decisions.
30
Grant fathersOBG talks to Ibrahim Saif, Minister of Planning and InternationalCooperation (MoPIC)
www.oxfordbusinessgroup.com/country/Jordan
ECONOMY ANALYSIS
The firms surveyed came from a wide range of economic sectors
The privatisation of state companies is almost always
a process fraught with competing concerns. How-
ever, while controversies attached to the sale of
state assets are ubiquitous, Jordan is unique in the
region in its assessment of its privatisation pro-
gramme. The last year has seen the completion of a
painstaking evaluation process of nearly 20 privati-
sation deals carried out over recent years, the results
of which have been crucial in neutralising the phe-
nomena of rumour, claim and counter-claim which
often attend such government decisions. Just as
importantly, the findings of the report allow the
nation’s economic planners to more effectively imple-
ment the next phase of the government’s long-term
strategy of harnessing the power of the private sec-
tor to develop the nation’s economy.
THE EVALUATION: The Privatisation Evaluation Com-
mittee (PEC) was established in March 2013 as a
result of a royal directive, and was tasked with assess-
ing the privatisation efforts that successive Jordan-
ian governments had embarked upon since 1989. The
committee was headed by Omar Razzaz, the chair
of the King Abdullah II Fund for Development, and
included a number of leading figures from the local
business community, none of whom were directly
involved with any of the privatisation deals under
examination, as well as representatives from the
International Finance Corporation, the Islamic Devel-
opment Bank and the European Bank for Recon-
struction and Development.
The committee was granted six months from the
time of its first meeting to complete its review, which
included an examination of 19 companies that had
gone through the privatisation process as well as a
large number of documents and policy papers that
had been generated by the government’s implemen-
tation of its decades-old strategy.
The companies surveyed came from a wide range
of sectors, such as mining, telecommunications, avi-
ation, water and electricity, and included some of
Jordan’s most prominent institutions – with the flag-
ship carrier Royal Jordanian Airlines being perhaps
the most internationally recognisable of them.
Each deal was evaluated according to eight fun-
damental questions, namely: what was the govern-
ment’s rationale for privatising the company? Were
the proper administrative, constitutional and legal
procedures followed throughout the process? Was
the company assessed properly before the decision
was made? Did the performance of the privatised
company improve after the process was completed?
Were the public and the employees of the concerned
company given enough information regarding the
process? What was the overall effect of the process
on the employees of the company? How did the pri-
vatisation of the company affect the wider econo-
my? And, how were the revenues accrued as a result
of the privatisation deal utilised?
FINDINGS: The findings of the privatisation pro-
gramme report proved to be mixed. In some cases,
such as that of Royal Jordanian Airlines, both the
rationale for the privatisation and the ensuing
process were held to be proper, while in others the
application of the policy was found wanting. The
privatisation of a prominent phosphate company,
for example, was discovered to have been brought
about through direct negotiations with a single
investor rather than through a properly established
tender process, while in other cases the committee
found that there had been legal violations during the
execution of privatisation deals. The report also
determined that the government would have bet-
ter served the interests of the nation by maintain-
ing strategic interests in some sectors considered
central to the economy, such as mining and cement.
ON THE PLUS SIDE: On the positive side of the bal-
ance sheet, the report found that the government’s
privatisation programme had boosted the perform-
ance of the companies in question, provided more
jobs for Jordanians and brought the state around
31
THE REPORT Jordan 2014
Established in March 2013
and granted six months
from its first meeting to
complete the review, the
Privatisation Evaluation
Committee assessed the
privatisation efforts that
successive Jordanian
governments had
embarked upon since 1989.
Reviews and resultsEvaluating the government’s privatisation programme
ECONOMY ANALYSIS
JD1.7bn ($2.4bn) in revenues, of which JD1.5bn
($2.1bn) went to paying off the kingdom’s debts.
The PEC’s findings echoed an earlier report com-
missioned by the World Bank which examined pri-
vatisations carried out between 1998 and 2008.
According to the World Bank’s appraisal, this tranche
of privatisations brought $2.3bn in sales proceeds
which were used to buy Paris Club debt at a dis-
counted price, bringing about a reduction of gov-
ernment debt from 100% of GDP in 2000 to 60% in
2008 and thereby greatly enhancing macroeconom-
ic stability. Additionally, the report also found that
privatised companies showed substantial gains in
financial performance, while consumers benefitted
from improvements in service.
With regard to employees of these companies,
the government’s policy of avoiding involuntary
retrenchments protected jobs in most cases, with pri-
vatised companies showing only a 2% reduction in
employment which was more than offset by some
25,000 new jobs in expanding fields such as telecom-
munications and IT. Moreover, employees of these
privatised companies were also found to have made
real wage gains in most cases, as well as benefitting
from improved benefits and training opportunities.
THE NEW ERA: The aim of the PEC was not to appor-
tion blame or seek redress for any infringements of
the law or policy committed during the privatisation
of state entities, but to shed light on the process so
that lessons could be learned from it.
Speaking at a press conference at the report’s
launch, Razzaz stated that a lack of information and
facts had resulted in a state of uncertainty and scep-
ticism among the public regarding the question of
privatisation, and that the most important issue
henceforth is to “follow up on the findings of the
report and to be transparent with the public when
they consider future deals”.
An important recommendation of the report
addressed the legislative framework that surrounds
private sector activity in the kingdom. According to
its findings, there is now an urgent need for the
drafting of a new law to govern the relationship
between the public and private sectors where they
combine in project development.
Now that the government has divested itself of
the bulk of state assets considered suitable for pri-
vatisation, planners are turning their attention to
what might be described as new era of private sec-
tor activity – the principal instrument of which will
be the public-private partnership (PPP).
CRUCIAL WORK: Following on from the PEC’s rec-
ommendations, the government has already set up
a PPP advisory committee, which is headed by Kamel
Mahadin, chief commissioner of the Aqaba Special
Economic Zone Authority, and comprised of repre-
sentatives of the public and private sectors, as well
as local community figures.
The work of the advisory committee is crucial to
the future of PPP activity in Jordan, which currently
lacks an adequate legal framework. This legislative
lacunae threatens to inhibit the development of
some economic sectors, especially those outside
the water and power arenas where much of the gov-
ernment’s attention has hitherto been focused and
sector-specific PPP protocols have been established.
For example, there is currently no provision on a
sector-wide basis by which the right of private devel-
opers to collect fees are established. A dedicated PPP
law that codifies issues such as this is therefore of
central importance from a strategic point of view if
Jordan is to effectively utilise private sector capital
in its economic development.
Just as important, however, is the codification of
the rights of citizens, which require reassurance that
their interests are safeguarded in any future PPP
developments. Here, as with the government’s ear-
lier programme of privatisation, there is much room
for mistrust and discontent if transparency is sacri-
ficed for expediency. Presenting honest data and
addressing mistakes is key to keeping public support.
32
The Privatisation Evaluation Committee examined 19 companies that had been privatised in recent years
PPPs are seen as a promising way to boost private sector activity
While the committee’s
report found that the
privatisation programme
had boosted the
performance of the firms
surveyed, provided more
jobs for Jordanians and
brought the state around
$2.4bn in revenue, it also
stated that legal violations
had taken place in some of
the deals.
www.oxfordbusinessgroup.com/country/Jordan
ECONOMY INTERVIEW
Awni Rushoud, Investment Commissioner, Investment Commission
What sort of changes were involved in the transi-
tion from the Jordan Investment Board to the new
Investment Commission?
RUSHOUD: The major change is that we have unified
various investment divisions – including the Jordan
Investment Board, the development zones and the pro-
motion department of the Jordan Enterprise Develop-
ment Corporation –and wrapped them all into the new
Investment Commission. The streamlining of these
organisations should make our activities more trans-
parent to foreign investors, which in turn should pique
their interest in investing here.
Another major change will be a faster investment
approval process, which is key to investors’ decision-
making in general. When investors take risks in foreign
countries, they are looking for transparency and a lev-
el playing field. We want to simplify the entire process
and make Jordan more investor friendly. It is important
for investors to know basic facts and not buy into stereo-
types. They must know that they can own 100% of their
investments, that they will have total ability to repatri-
ate all capital from investment projects, and that the
odds are not stacked against them. We must also work
hard to ensure investors of the strength of our institu-
tions, especially the legal framework.
Now that the new investment law is in place, how
do you see Jordan’s inward investment changing?
RUSHOUD: We are optimistic that the new investment
law will enhance opportunities to invest in the king-
dom. Already, 2013 was a good year for investment,
which had a major impact on GDP growth. We have seen
exports increase by 1-9%, and foreign direct invest-
ment (FDI) rise by 20%, from JD1.65bn ($2.33bn) to
JD1.93bn ($2.72bn). Along with this general rise, it is
important to note the high degree of value-added
investments in the service industries.
The largest investors into Jordan over 2013 came from
Syria, Iraq and the US. This can be seen as a natural con-
sequence of simmering tensions and upheavals from
our neighbours, something we have seen before at dif-
ferent times in our history. Jordan is often viewed as an
oasis of peace in an unstable region.
Moving into 2014 and beyond, I am optimistic that
FDI will continue on a path of steady growth. We will
be shifting our efforts away from traditional markets
like the US and toward newer and more dynamic mar-
kets like China and South Korea. We will also focus more
attention on the EU, as we believe there is greater
potential to enhance investment ties and prospects.
Which sectors in Jordan are the most attractive to
foreign investors, both now and going forward?
RUSHOUD: The new investment law should enhance
prospects for all sectors, and help us diversify away from
traditional ones such as tourism and health care, where
pharmaceuticals make up 40% of our exports.
It is no secret that, apart from oil shale, Jordan is
starved of natural resources, so there has been a sharp-
er focus on renewable energy, especially solar. Jordan
has about 300 days of sunlight a year, and we are look-
ing to diversify our energy mix with a new roadmap laid
out by the Ministry of Energy and Mineral Resources.
We have become too dependent on liquefied natural
gas from Egypt, which has proven harmful to our nation-
al debt given the unpredictability of supply. This is part
of the reason a pipeline from Iraq is being built, which
should secure us 20,000 barrels per day of crude. Fos-
tering an alternative energy culture will help ease our
long-term energy concerns. It is hoped that in time up
to 20% of our energy can come from renewable sources.
Others hope for even more, but the important thing is
to capitalise on this wave now, and not later.
We are also seeing a renaissance in IT. Jordan, though
only 2% of the MENA population, is the source of more
than 60% of digital content in Arabic. There is also great
potential in gaming and automation, which should help
propel us towards a services-based economy. Jordan is
revered for having the region’s brightest human capi-
tal. This bodes well for building a knowledge economy.
33
THE REPORT Jordan 2014
Oasis of stabilityOBG talks to Awni Rushoud, Investment Commissioner, InvestmentCommission
ECONOMY ANALYSIS
Small companies provide 96% of goods exported from the country
It is hard to overstate the importance of the role played
by Jordan’s small and medium-sized enterprises (SMEs)
in the wider economy. The nation’s historical role as safe
haven in a politically turbulent region has seen it wel-
come migrants from far and wide, most notably Pales-
tine, Iraq and – more recently – Syria. Many have brought
their capital with them, and deployed their business
know-how to establish shops and small companies in
Amman and other urban areas, activities which have
served to enlarge the nation’s economy. The succes-
sive population inflows over recent decades have also
resulted in more demand for goods and services, and
a virtuous circle of sorts has been created with new
arrivals feeding into both the demand and supply
streams of the economy. While in some instances, such
as with the present influx of refugees from neighbour-
ing Syria, immigration has presented the government
with humanitarian challenges, for the most part the
economy – and in particular the SME segment – has
benefitted from Jordan’s status as a preferred destina-
tion for those escaping regional strife.
According to the Jordan Enterprise Development
Corporation (JEDCO), a body established by the state
in 2006 to help enhance the competitiveness of the
nation’s enterprises, 99% of all employers are SMEs, and
52% of the private sector workforce makes its living with-
in the SME segment. In addition, SMEs also account for
virtually all of the net new jobs in Jordan, and provide
96% of all goods exported from the country.
TECHNICAL ASSISTANCE: Given the prominence of
SMEs in the Jordanian economy, it is not surprising that
a large number of government-backed programmes
have been established in order to assist their growth.
Each of them is tasked with a different goal in relation
to SME development. JEDCO’s principal objective is to
boost SME exports and substitute imports with equiv-
alent or better local products and services – a partic-
ularly important ambition in the context of a national
trade deficit which grew by 8.6% in the first 11 months
of 2013 to reach $1.2bn. As well as its Export Promo-
tion Programme, the organisation administers the Jor-
dan Upgrading and Modernisation Programme and the
Jordan Services Modernisation Programme (JSMP),
which aim to enhance the quality of services and prod-
ucts provided by local SMEs. The JSMP initiative is fund-
ed by the EU, and is an example of the government’s
success in establishing partnerships with internation-
al governments and institutions as it strives to boost
the performance of the SME sector. Other internation-
al agreements have brought tangible benefits in recent
years. The National Fund for Enterprise Support is a joint
effort between the governments of Jordan and Japan,
and assists SMEs with the implantation of develop-
ment projects – with an emphasis on areas such as IT
systems, consulting and human resource development.
More international assistance comes in the form of
the US Agency for International Development (USAID)
Jordan Economic Development Programme, a broad
economic development initiative focused on private-
sector growth and implemented in Jordan by USAID
and Deloitte Consulting. The Tatweer project is a sec-
ond initiative funded by USAID, and it is managed by
the Business Development Centre, with the aim of
boosting SMEs’ competitiveness and export capacity.
FINANCIAL CHALLENGE: Access to finance for SMEs
is an issue in most economies, but obtaining granular
detail as to the nature of the problem is usually a chal-
lenge. Most SMEs will respond, if asked, that they would
prefer easier access to credit in order to grow their busi-
nesses, while banks tend to counter that SMEs are fre-
quently unable to meet their requirements in terms of
accounting standards, levels of transparency and strate-
gic planning – all of which are necessary for proper,
risk-based lending. In Jordan, at least, a recent survey
by the Jordan Strategy Forum has directed some much-
needed light at the question of how much demand
there might be in the SME segment for greater access
to business loans. According to the survey’s findings,
only 42% of SMEs find the current provision of finan-
cial services, such as loans, warranties and letters of
Numerous state-backed
schemes have been set up
to assist the growth of
SMEs, which account for
99% of the nation’s
employers.
34
Small but importantSupporting the growth of the nation’s SMEs
www.oxfordbusinessgroup.com/country/Jordan
ECONOMY ANALYSIS
credit, to be adequate to their needs. Individual com-
ments recorded in the survey revealed that many sec-
tor participants feel that the banking system is unable
to serve the SME sector, while others cited their lack
of experience in dealing with financial institutions as
a block to obtaining credit.
LOAN GUARANTEES: According to a 2012 statement
from the former minister for planning and internation-
al cooperation, Jafar Hassan, SMEs receive only around
10% of all the loans extended by financial institutions.
Conscious of this problem, the government has taken
a number of steps to remedy it. One of the most impor-
tant of these is the Banking Window Programme, which
aims to increase SMEs’ preparedness for entering the
banking world, while maximising their chances of secur-
ing loans and other types of assistance. The programme
addresses banks’ concerns regarding lending risk
through a loan guarantee scheme (LGS). The scheme
is funded under the JSMP, which itself is co-funded by
the EU and the Jordanian government. Under the LGS,
both medium-and long-term loans from commercial
banks to SMEs are either fully or partially guaranteed,
subject to bank and LGS approval. The JLGC can guar-
antee a maximum loan of JD100,000 ($141,260) for
SMEs or JD15,000 (21,189) for a micro-enterprise, and
since June 2012 its activities have been extended into
the Islamic banking segment through its Kafala pro-
gramme. The government has also inked a $70m loan
agreement with the International Bank for Reconstruc-
tion and Development, which will be used to finance
micro-projects and SMEs through loans offered by the
central bank to licensed banks at subsidised cost.
The routes to financing open to SMEs are also broad-
ening beyond the traditional lending format. The gov-
ernment has established two venture capital funds,
first approved by the Cabinet in 2009, which are over-
seen by JEDCO acting in partnership with the European
Investment Bank. The Capital Growth Fund aims to
invest in mature SMEs incorporated in Jordan that
employ less than 250 employees, targeting non-listed
companies that are well established, in possession of
a strong business plan and are ready to expand. The
Early Stage Fund, meanwhile, targets non-listed SMEs
that have tested a product or service and are prepar-
ing to implement a commercially viable strategy.
DEVELOPMENTS: Work is also under way to overhaul
the legal framework surrounding SME financing, with
a focus on four complementary axes: credit informa-
tion, secured lending, insolvency law and microfinance
law. Finally, scheduled to begin operations in late 2014,
a new credit bureau promises to enhance the banking
sector’s ability to engage in transparent, risk-based
lending to individuals and the nation’s increasingly
important SME sector. These developments, combined
with an increasing interest in SME lending on the part
of banks, are encouraging signs that the challenge of
financing the growth of Jordan’s SMEs, while still sub-
stantial, is being effectively tackled by the authorities.
35
With SMEs receiving just
10% of all the loans
extended by financial
institutions, the Banking
Window Programme was
set up to addresses banks’
concerns regarding lending
risk through a loan
guarantee scheme.
ECONOMY ANALYSIS
Iraq is a major market with sizeable potential for Jordanian companies
Jordan’s proximity to Iraq is of interest to the nation’s
economic planners for obvious reasons. The troubled
neighbour boasts proven oil reserves of 150bn barrels
as of 2013, according to BP’s “Statistical Review of
World Energy”, which are the third largest in the region,
behind Saudi Arabia and Iran. With a population esti-
mated by the World Bank at 33m, Iraq represents a major
market with sizeable potential on Jordan’s doorstep.
There is also a long history of trade between the two
countries. While Iraq and Jordan were originally both
Hashemite kingdoms, relations between them became
strained after Saddam Hussein took over the presiden-
cy in Baghdad in 1979. Economic links grew, however,
and the port of Aqaba became a crucial supply point
for Iraq during the Iran-Iraq War during the 1980s. Jor-
dan stood aside during the 1990-91 Gulf War, a deci-
sion that had economic and political ramifications for
the country. Later on, Jordan became the recipient of
Iraqi oil, thanks to a special dispensation from the UN
during the years of sanctions. More recently, the polit-
ical marginalisation of Iraq’s Sunni population has led
to tensions between Jordan and its neighbour’s Shiite
government. However, the rise of the Islamic State of
Iraq and Syria in eastern Syria and northern Iraq has
provided the two governments with a common foe,
which they are working together to combat.
ECONOMIC LINKS: The fact that economic ties between
Jordan and Iraq have persisted in the face of such polit-
ical turbulence is testament to the interlinked nature
of the two economies. Jordan is both a natural gate-
way to Iraq for local and global business, and for Iraqi
goods destined for world markets. Trade between Jor-
dan and Iraq has thus developed strongly, as the king-
dom provided an outlet for Iraqi businesses affected
by years of UN sanctions and Saddam’s domestic poli-
cies. Following the coalition invasion in 2003, Jordan
continued to provide a safe haven, with many Iraqis mov-
ing to the kingdom to escape the violence. Between
750,000 and 1m Iraqis were thought to be living in Jor-
dan by 2007, according to the UN High Commission for
Refugees. In 2013 Jordanian exports to the Greater
Arab Trade Area (GAFTA) countries, valued at JD970m
($1.4bn) by the Department of Statistics, significantly
exceeded exports to the nation’s other main trading
partners – the North American Free Trade Agreement
countries, non-Arab Asian countries and EU countries.
Exports to Iraq account for a significant proportion of
Jordan’s GAFTA trade, amounting to JD336m ($474.6m)
of the total in 2013 and growing 15% year-on-year.
FUTURE PLANS: Despite Iraq’s political woes, the eco-
nomic linkages between the two countries are expect-
ed to strengthen. A key development in this context is
the plan to establish an $18bn oil and natural gas
pipeline from the Iraqi city of Basra to Jordan’s Aqaba.
The deal was inked by the two governments in April 2013
and involved the construction of a 1700-km link capa-
ble of carrying 850,000 barrels per day of oil and 258m
cu feet of gas each day. In March 2014 the scope of
the project was broadened to include Egypt, with the
three countries signing a memorandum of understand-
ing to examine the possibility of linking Iraq’s gas and
oil fields with Egypt’s refineries. For Jordan, the deal
potentially brings many benefits, such as job creation
during the construction stage, transit revenues and
access to a stable oil supply at discounted rates.
In the longer term the most salient question is to what
extent Jordan’s private sector can make inroads into Iraq’s
sizeable market. Some pioneers have already established
footholds. Capital Bank’s acquisition of a 72% control-
ling stake in the National Bank of Iraq has seen it engage
in a branch expansion across the country, including
the capital of the Kurdistan region, Erbil. The unrest now
seen in Iraq is a reminder of the risks faced by Jordan’s
firms in investing in their neighbour, yet the rewards
for such strategic boldness can be considerable: the
profit of National Bank of Iraq rose sixfold in 2012,
Capital Bank’s executive chairman, Bassem Khalil Al
Salem, told The New York Times in 2013. The latest alter-
ation of Iraq’s political landscape is thus being observed
with great interest on the Jordanian side of the border.
The establishment of an
$18bn oil and natural gas
pipeline from the Iraqi city
of Basra to Aqaba and
possibly Egypt would bring
many benefits for the
country, such as job
creation during the
building stage, transit
revenues and access to a
stable oil supply at
discounted rates.
36
Trade partnersEconomic ties with Iraq are strengthening
www.oxfordbusinessgroup.com/country/Jordan
ECONOMY ANALYSIS
Donor support has ranged from budget assistance to military aid
There are several reasons why external aid plays such
an important role in Jordan’s economy. The country’s
modest geographic footprint and dearth of natural
resources are chief among them, as is Jordan’s position
between Israel, Syria, Iraq and Saudi Arabia. There are
myriad geopolitical reasons why regional and global
donors have determined that a stable Jordan is crucial
to the security of the Middle East, and the funding that
the nation has received as a result has allowed it to over-
come a range of economic challenges.
SUPPORT: During the early years of Jordan’s existence
as a sovereign state, British financial aid provided a
crucial means of support as the young country estab-
lished itself. As time went on, the US and the GCC coun-
tries assumed more prominent roles in supporting the
economy. Various multilateral bodies, such as the IMF,
the World Bank, the Islamic Development Bank, the EU
and European Commission, and the European Bank for
Reconstruction and Development have also been major
benefactors of Jordan’s development. The models of
economic support adopted by these donors have fol-
lowed a variety of approaches, from direct military and
economic aid to budget support, development assis-
tance and sectoral assistance.
The volume of aid has fluctuated as economic and
political threats have emerged and receded over recent
decades. These threats have usually manifested them-
selves locally in the form of significant demographic
changes as a result of regional strife, which have seen
Jordan receive waves of refugees: from Palestine in
1948, 1967 and 1973; from Lebanon in the 1980s; and
from Kuwait and Iraq in 1991. (Kuwait was mainly a
source of Palestinian Jordanian refugees expelled fol-
lowing Iraqi defeat in the Gulf War.) More refugees
arrived in the mid-1990s, when Jordan became home
to many Bosnian Muslims, and in 2003 it once again
acted as a refuge for many Iraqis fleeing war. More
recently, the conflict in Syria has pushed many citizens
of that nation across the Jordanian border. According
to the International Committee of the Red Cross (ICRC),
some 600,000 refugees from Syria had crossed into Jor-
dan by May 2014. The result of these sizeable shifts is
that Jordan’s population, estimated at 6.4m in 2012 by
the IMF, is now around six times what it was in 1960
and nearly twice what is was in 1990.
AID AGREEMENTS: The factors that have necessitat-
ed foreign aid to Jordan over the decades remain in place
today. According to the ICRC, around 400 Syrians cross
the border every day, and during periods of heightened
conflict this number rises into the thousands. Domes-
tic youth unemployment remains high, the provision of
basic utilities – water and power – continues to be a
challenge, and the structural budget deficit remains firm-
ly in place despite the government’s attempts at fiscal
tightening. As of 2013 US military and economic aid to
Jordan totalled $13.8bn, according to the US Congres-
sional Research Service. A five-year economic aid deal
which saw the US grant the Jordanian government
$660m per annum comes to an end in 2014, and atten-
tion is now turning towards efforts to reach a new
arrangement. In 2014 the US Congress took further
steps to support Jordan, most notably with the Consol-
idated Appropriations Act, which provides Jordan with
$360m in economic aid and $300m in military aid, sets
aside more funding for costs related to regional insta-
bility and authorises aid to be used for loan guarantees
for the Jordanian government.
The IMF, meanwhile, is lending $2.38bn to the coun-
try over a three-year period, while the Arab Gulf states
have established a multi-year, $5bn aid package. Jor-
dan’s importance to the region means that it has plen-
ty of friends to look to when it comes to its funding
needs, but its structural dependence on foreign aid is
nevertheless a concern. According to a January 2014
report by Rabobank, some 60% of the budget deficit
in 2013 was covered by international aid. Subsidy reform
and a reining in of the public-sector salary bill will be
key to reducing this. Both of these goals, however, are
sensitive issues which carry political costs. Their achieve-
ment is likely to come as a result of a gradual approach.
Around 60% of the
kingdom’s budget deficit in
2013 was covered by aid
from various countries and
international organisations.
Subsidy reform and a
reining in of the public
sector salary bill will be key
to reducing this figure.
39
THE REPORT Jordan 2014
Due to regional conflicts
Jordan has received waves
of refugees. As a result, the
population, at 6.4m in
2012, is around six times
what it was in 1960, and
almost twice what it was in
1990.
Strong supportForeign assistance is a significant part of the economy
41
BankingSector home to a diverse array of financial institutions
Growth strong in the Islamic financial services segment
Central bank prepares to implement Basel III standards
Non-performing loan ratios brought under control
Some foreign banks shift strategy or exit the market
The regulator issues new rules on corporate governance
BANKING OVERVIEW
Aggregate lending and asset quality have improved in the past year
Over the past year, Jordan’s local banking sector has
shown a robust performance, with aggregate lending
on the rise and net profits generally maintained across
the board. Improvements in asset quality indicators
suggest that the industry has turned a corner regard-
ing the troublesome loans that have persisted since the
global financial crisis, and a relatively upbeat assess-
ment of the economy’s growth prospects by the IMF
and others has brought an air of optimism to the sec-
tor in 2014. Though risks and challenges remain – the
chief ones being external shocks from regional turbu-
lence and the question of regulatory compliance – Jor-
dan’s bankers have good reasons to look forward to
another solid performance in fiscal year 2014/15.
HISTORICAL BACKGROUND: The emergence of
Amman as a regional banking centre coincides with the
withdrawal of the British Mandate Authority from Pales-
tine in 1948, when Arab Bank moved its headquarters
from Jerusalem to the Jordanian capital. Since then,
banking in Jordan has grown on the back of rapid eco-
nomic expansion, kickstarted by a tripling of the pop-
ulation in 1948-50. The new arrivals, most of them dis-
placed Palestinians, brought with them their savings
and enterprising spirit, and banks like Egyptian Arab Land
Bank and Jordan Ahli Bank soon entered the market to
claim a share of the increasing financial activity.
During the 1950s and 1960s, Jordan’s GDP grew by
8-9% a year, driven by its booming construction and infra-
structure sectors. Those decades saw the arrival of sig-
nificant players such as Bank of Jordan and Standard
Chartered, and the establishment of the Central Bank
of Jordan (CBJ), which began operations in 1964 and
replaced the Currency Board as the body in charge of
monetary stability. Regional conflict in 1967 and a civ-
il war in 1970-71 put a pause on economic expansion,
but by the mid-1970s the nation was enjoying the high-
est growth rates in its history, reaching a peak of 24%
in 1976, according to the World Bank. This economic
uptick attracted yet more banks, the most significant
of these being the Housing Bank for Trade and Finance.
The 1980s brought fresh challenges to the sector.
As the region’s oil boom ended, Jordanian workers flood-
ed back from the Gulf and the government began to
run sustained fiscal deficits. Liberalisation of the inter-
est rate regime nudged the sector toward crisis, and
the high-profile collapse of Petra Bank in 1989 under-
mined confidence in the entire industry. A period of aus-
terity and fiscal restructuring followed, during which
time the government sought to balance financial pro-
bity against the threat of popular unrest – a process
interrupted by the Gulf War of 1990-91.
A second wave of economic reforms in the 1990s
brought mixed results, but succeeded in setting the
economy on a path to steady growth. Over the last
decade, the banking sector continued to expand on the
back of this: in 2003 the CBJ had licensed 20 banks oper-
ating a total of 443 branches; by 2013 this had grown
to 26 licensed lenders and 739 branches.
PRESENT STATE: Today, Jordan’s banking sector is home
to a diverse array of institutions. These include nation-
al players, all but one listed on the Amman Stock
Exchange; regionally based institutions, such as Nation-
al Bank of Abu Dhabi; and global banks such as Citibank
and Standard Chartered. Three of the national lenders
– Jordan Islamic Bank, Islamic International Arab Bank
and Jordan Dubai Islamic Bank – provide only sharia-
compliant financing. Saudi Arabia’s Al Rajhi Bank, which
does the same, has also entered the local market, sig-
nificantly boosting the Islamic segment.
So far, Jordan’s Islamic banks have focused their
attention on the retail segment, but they have increas-
ingly sought business from small and medium-sized
enterprises (SMEs). The Islamic International Arab Bank,
for example, has become the first sharia-compliant
lender to sign on to the state-backed kafala “sponsor-
ship” programme, which aims to increase the amount
of such financing available to the nation’s businesses.
Besides the national and foreign lenders licensed by
the CBJ, there are three publicly owned credit institu-
tions: the Agricultural Credit Corporation, the Housing
In the last decade, the
banking sector has
expanded on the back of
steady economic growth,
going from 20 licensed
banks with 443 branches in
2003 to 26 licensed lenders
and 739 branches in 2013.
43
THE REPORT Jordan 2014
So far, Jordan’s Islamic
banks have focused their
attention on the retail
segment, but they have
increasingly sought
business from SMEs.
Oasis of capitalIn a turbulent region, the local banking sector has become a safe haven
BANKING OVERVIEW
and Urban Development Corporation, and the Cities and
Villages Development Bank.
MARKET CONCENTRATION: Though such size and
diversity are a boon to consumers, many participants,
including the central bank, consider the sector over-
crowded. As of end-2011, the CBJ reckons there were
8100 citizens per bank branch, and has taken steps to
encourage banks to merge. “The central bank has been
pushing for consolidation for around 10 years, even dou-
bling the capital requirements institutions must adhere
to in order to operate,” Yousef Ensour, CEO of Bank
Audi, told OBG. “This has not had the desired effect
though, and we have not seen positive results."
The most important of these measures came in 2010,
when the regulator raised the minimum paid-up capi-
tal requirement for local banks to JD100m ($141.3m).
However, banks elected to meet the new target inde-
pendently rather than merge, and the expected phase
of market rationalisation, as with other banking sec-
tors in the region, remains as elusive as ever.
LOCAL GIANTS: In the sector’s wide range of institu-
tions, two local lenders dominate: Arab Bank and the
Housing Bank for Trade and Finance, which together
account for about 40% of the industry’s total assets.
Arab Bank, founded in Jerusalem in 1930 as the first
private bank in the Arab world, is now one of the largest
financial institutions in the Middle East. Regional con-
flict brought its headquarters to Amman, and it now
operates more than 600 branches in 30 countries on
five continents. During its long history, the bank has
acted as a prominent catalyst for regional growth. With-
in Jordan its significance is even greater: in 2013, accord-
ing to AWRAQ Investments, it had the highest market
capitalisation of all firms listed on the Amman Stock
Exchange, accounting for 28% of the total. With assets
of JD24bn ($33.9bn) as of the first half of 2013, it is by
far the largest bank in the country, with a loan portfo-
lio heavily weighted towards the large corporations
that account for around 70% of its loan book.
The Housing Bank for Trade and Finance was estab-
lished in 1973 as a public shareholding limited compa-
ny to answer the growing need for housing finance in
the country. With total assets of around JD7.1bn ($10bn)
as of the first half of 2013, it is the second-largest bank
in Jordan. Though it has broadened its activities to serve
a range of segments, mortgage lending still makes up
24% of its loan book, while large corporations claim 36%.
The only other bank holding assets above JD3bn
($4.24bn) is also one of the nation’s three sharia-com-
pliant financiers. Jordan Islamic Bank, with assets of
JD3.1bn ($4.38bn) as of the first half of 2013, was set
up as a public shareholding company in 1978, at a time
when Islamic finance was first emerging across the
region. It has benefitted greatly from the resurgence
of interest in Islamic finance coming from other region-
al centres such as the UAE, and is now one of Jordan’s
fastest growing banks. As with other Islamic financiers,
retail lending remains its strongest suit, accounting for
about 38% of its loan book, followed by loans to the
state (33%) and loans to large companies (22%).
PERFORMANCE: In recent years, the trajectory of Jor-
dan’s banking sector has followed that of others in the
region. During the boom years prior to 2008, it profit-
ed greatly from a rapid rise in demand for credit. Large
development projects, syndicated lending, corporate
and individual borrowers, margin accounts opened to
fund stock market investments all represented easy
routes to interest income. According to a recent report
by the Jordan Investment Trust, between 2000 and
2008 credit facilities to the construction sector alone
grew from JD744.9m ($1.05bn) to JD2.3bn ($3.24bn).
The onset of the global financial crisis, however, saw
a major halt in credit expansion. As customers became
concerned by the banking collapses in the US and
Europe, the biggest challenge at this time was to pre-
vent bank runs: between September and October of
2008, deposits worth JD298.5m ($421.7m) were with-
drawn from the nation’s licensed lenders. Asset quali-
ty also emerged as a major concern. As doubts about
debt repayments rose, higher levels of provisioning
were required, which in turn affected banks’ profitabil-
ity. These concerns – asset quality and provisioning lev-
els – remain central to the sector’s performance today.
44
Other
Construction
General trade
Industry
Public services & utilities
Transport services
Financial services
Tourism, hotels & restaurants
Agriculture
22.8
21.6
20.8
14
11.5
2.8
2.7
2.7
1.2
Breakdown of credit facilities by economic activity, Q3 2013 (%)
SO
UR
CE:
Ban
k A
ud
i
The banking sector is widely considered to be overcrowded
In 2010 the central bank
raised the minimum
paid-up capital
requirement for local banks
to $141.3m in a bid to
encourage mergers, but
banks elected to meet the
new target independently
rather than consolidate.
www.oxfordbusinessgroup.com/country/Jordan
BANKING OVERVIEW
While activity in the sector remains more muted than
pre-2008, Jordan’s banks have shown they can grow even
in challenging times. According to the CBJ, total assets
for Jordan’s lenders in 2013 rose 9% year-on-year to
$60.5bn. In one of the most impressive indicators for
the year, total deposits rose 11% on an annual basis to
$39bn, a rate four times higher than in 2012. Most of
this increase (88%) came from the private sector, driv-
en largely by residents’ response to improving domes-
tic economic growth. While lending also increased by
7%, its slower expansion compared to deposit growth
yielded a loan-to-deposit ratio of 70%, meaning Jordan’s
banks have ample room to increase credit facilities in
the short term. Importantly, asset quality too showed
strong improvement: non-performing loans (NPLs)
decreased over the first six months of 2013 to reach
7.4%, the lowest level since 2009. Banks are also bet-
ter provisioned against doubtful loans than previous-
ly, showing an NPL coverage ratio of 75% as of the first
half of 2013, compared to 69.4% at the close of 2012.
This rise in provisioning has been achieved without
too much harm to the bottom line. While profitability
remains more modest than pre-2008, the sector’s inter-
est margin to gross income ratio rose in the first half
of 2013 to 76.9%. In the same period, annualised return
on assets rose 1.2% and return on equity 10.3%. As for
net income, Arab Bank Group led in fiscal year 2013,
posting a profit of JD346.2m ($489m), followed by the
Housing Bank for Trade and Finance with JD106.9m
($151m) and Jordan Kuwait Bank with JD47.4m ($67m).
LOAN BOOKS: Lending growth remains central to
banks’ development plans, so the expansion of credit
facilities in 2013 was welcome news. Thanks to Jordan’s
relatively diverse economy, lending opportunities arose
across a range of areas. The most fruitful sector as of
December 2013 was construction, which accounted
for 21.6% of the sector’s total credit facilities, followed
by general trade (20.8%), industry (14%), and public serv-
ices and utilities (11.5%), according to Bank Audi.
One area of credit is growing faster than some indus-
try observers wish: government securities. In recent
years banks have directed an increasing amount of
their liquidity into these, a trend that continued in 2013.
By the end of that year, claims on the public sector,
including the central government and a range of pub-
lic entities, rose by 15.9% compared to 2012, to almost
a quarter of total assets. Such exposure to public enti-
ties has the effect of linking Jordan’s lenders to its sov-
ereign credit rating, and hence pegs the soundness of
their balance sheets to sovereign risk metrics. The
country’s location and lack of natural resources mean
it is exposed to external shocks such as regional unrest
or spikes in energy prices, factors which most ratings
agencies account for in their analyses. As a result,
despite Jordanian banks’ capital adequacy – which was
17.9% at the end of June 2013, according to the CBJ –
the level of government debt on their balance sheets
means that any deterioration in the sovereign rating is
likely to affect the ratings of individual lenders.
SME LENDING: For this reason, Jordan’s banks are keen
to diversify their loan books away from corporate and
government lending. As intense competition steers
lenders to new sources of revenue, one area of partic-
ular interest is lending to SMEs. “Industry lending port-
folios are weighted heavily on the corporate side,”
Haethum Buttikhi, assistant general manager of Jordan
Kuwait Bank, told OBG. “This will gradually shift as SMEs
build transparency and meet lending credentials.” In part
due to its long history as a refuge from regional turbu-
lence – conflict has driven waves of Palestinians, Iraqis
and Syrians into the country – Jordan has become a
crucible of entrepreneurship. The potential for future
credit growth in the SME segment is therefore consid-
erable: the Jordan Enterprise Development Corpora-
tion (JEDCO) estimates that 98% of businesses in the
kingdom are SMEs, which the Ministry of Trade and
Industry defines as those with fewer than 250 employ-
ees and capital investment below JD30,000 ($42,378).
Nevertheless, banks have been reluctant to lend.
Many SMEs fall below the levels of transparency and
accountancy required for risk-based lending assess-
ments. As a result, these receive only about a tenth of
all formal loans, according to a 2012 statement by the
47
THE REPORT Jordan 2014
Banking sector indicators, 2008-13 ($ bn)
SOU
RCE:
Ban
k Au
di
0
20
40
60
80
100
Capital accounts & allowancesCredit facilitiesDepositsAssets
201320122011201020092008
Lending growth remains central to banks’ development plans
Non-performing loans
decreased over the first six
months of 2013 to reach
7.4%, the lowest level since
2009, while provisioning
rose to an NPL coverage
ratio of 75%, compared to
69.4% at the close of 2012.
BANKING OVERVIEW
former minister for planning and international coop-
eration, Jafar Hassan. Resolving this issue is of great
importance for a country trying to boost economic
growth. “It is my belief that the long-term growth and
prosperity of the Jordanian economy will come from the
SME segment,” Ahmad Abu Eideh, CEO of Standard
Chartered, told OBG. Similarly, Omar Malhas, CEO of
Housing Bank, told OBG, “SMEs are the backbone of all
developed economies, and if we are to reach developed
status, it will be by this segment alone.” The govern-
ment has therefore taken steps to boost lending to
SMEs in cooperation with local banks.
The first of these is the Banking Window Programme,
which aims to prepare SMEs to enter formal financing
and maximise their chances of securing a loan. To allay
banks’ concerns about lending risk, it employs a loan
guarantee scheme funded by the Jordan Services Mod-
ernisation Programme (itself co-funded by the EU),
which backs commercial banks’ loans up to JD100,000
($141,260) for SMEs or JD15,000 ($21,189) for micro-
enterprises. Since June 2012, its activities have been
extended into Islamic banking via the kafala programme.
In a second move, the government has inked a $70m
loan agreement with the International Bank for Recon-
struction and Development, which the CBJ will then lend
on to licensed banks at subsidised rates to finance
SMEs and micro-projects. Third, it is working to over-
haul the legal framework surrounding SME financing,
concentrating on four complementary axes: credit
information, secured lending, insolvency law and micro-
finance law. Last, SME lending will soon receive a use-
ful fillip in the form of a new credit bureau. Scheduled
for a launch in late 2014, the new body promises to
greatly enhance the sector’s ability to engage in trans-
parent, risk-based lending to individuals and the nation’s
increasingly important SME sector (see analysis).
REGULATION: The CBJ is charged with ensuring that
this growth progresses in a prudent manner. Estab-
lished in 1964 as an independent body, it has exclusive
power to issue or withdraw banking licences and full
supervisory authority over banks. Traditionally, it has
used the standards of the US National Credit Union
Administration to assess capital adequacy, asset qual-
ity, management capability, earnings and liquidity rat-
ings. More recently, it has turned to implementing the
precepts of Basel II and Basel III: as of mid-2014 all of
Jordan’s banks comply with the former and are prepar-
ing themselves for the introduction of the latter.
The regulator’s prudent approach in the past means
the banking sector is well positioned for such changes.
The CBJ’s minimum capital adequacy ratio of 12%, well
above Basel’s 8%, is met by all of the banks it has
licensed. Its latest focus for reform is corporate gover-
nance, for which it issued a new set of criteria in May
2014 to ensure that “board members possess experi-
ence and competency besides guaranteeing that there
is no conflict of interest”. The proposed new rules are
in line with the principles of the Basel Committee on
Banking Supervision, the OECD and the Financial Sta-
bility Board’s efforts to address systemic weaknesses
exposed by the global financial crisis (see analysis).
OUTLOOK: Although regional turbulence and the rap-
id influx of refugees since 2010 remain downside risks,
Jordan’s economy has proved resilient in recent years,
and the banking sector is poised to gain from what the
IMF expects to be a trend of steady growth. In its most
recent assessment in May 2014, the fund said it expect-
ed Jordan’s GDP growth to be 3.5% for 2014, and 4.5%
a year in the medium term, while bank lending is to rise
by 8.6% in 2014 and 9.6% in 2015. Banks’ ability to
attract deposits over the past two years underpins
much of the sector’s growth prospects, and the CBJ’s
recent moves on monetary policy have helped produce
a positive outlook for future credit expansion: “By cut-
ting several key discount rates, the central bank is sig-
nalling to the banks that it is safe to lend again,” Haytham
Kamhiyah, general manager of Capital Bank, told OBG.
“I believe that the banks will react positively, and help
to stimulate growth.” For the long term, a big question
facing the sector is how Jordanian banks will expand
into the wider region (see analysis). This process has
already begun and is one in which the country’s geo-
graphic position could well lend it a competitive edge.
48
SMEs make up 98% of businesses but get only about 10% of all loans
A new scheme aimed at
bringing businesses into
formal financing can
guarantee commercial
banks’ loans up to
$141,260 for SMEs and
$21,189 for
micro-enterprises.
www.oxfordbusinessgroup.com/country/Jordan
SOU
RCE:
Cen
tral
Ban
k of
Jord
an
Total no. of licensed bank branches, 2003-13
0
200
400
600
800
1000
20132012201120102009200820072006200520042003
BANKING ANALYSIS
Two of the three purely Islamic banks are listed on the exchange
Three of Jordan’s domestic banks operate on an exclu-
sively Islamic basis, forming a vibrant sharia-compliant
segment within a sector that is among the most well-
established in the region. The Islamic finance industry
in Jordan has come a long way in its 36-year history.
BACKGROUND: Bankers and Islamic scholars in Jordan
began to investigate the possibilities of Islamic bank-
ing almost as soon as Egypt and Pakistan established
their own such institutions in the 1950s and 1960s. The
government played an early role in the segment’s devel-
opment, decreeing in 1972 that orphans’ funds should
be invested in interest-free transactions.
But the establishment of Jordan’s first Islamic bank
can largely be attributed to one man, the Jordanian
economist Sami Hamoud. After studying in Egypt in the
1970s and making important contributions to the aca-
demic conversation which then surrounded sharia-
compliant finance, Hamoud returned to Jordan to turn
theory to practice. Having gained financial backing
from members of the Saudi royal family, he turned his
attention to allaying government concerns about allow-
ing a full-fledged Islamic bank to be established.
He met the challenge through personal lobbying and
the establishment of a “preparation committee” for
the putative institution, which quickly formulated a
convincing argument for sharia-compliant financing.
According to the committee, many Jordanians were
holding back from dealing with banks due to the inter-
est fees that conventional lenders apply to loans and
deposits. The result, it said, was that a high percent-
age of funds in Jordan were idle.
In time, the committee and its supporters succeed-
ed. The request for a licence was granted, and in May
1977 the office of the prime minister issued a decision
allowing for the establishment the nation’s first Islam-
ic bank, based on a special law that accounted for the
differences between conventional and Islamic finance.
In 2012 the kingdom endorsed its sukuk law, which will
enable the government to issue sukuk and access the
large pool of financing available by Islamic banks. This
should help ease access to financing in the kingdom
and promote economic growth and development.
THE SECTOR TODAY: The opening of Jordan Islamic Bank
(JIB) in 1978 marked the beginning of the modern
Islamic banking sector. The new institution was licensed
to carry out banking, financing and investment busi-
ness operations in accordance with the principles of
sharia and the provisions of the JIB’s “special law”. With
total assets of JD3.1bn ($4.37bn) as of the first half of
2013, JIB is the largest Islamic financier. It also has the
most equally distributed loan book: about 38% of its
financing operations occur in the retail segment, while
33% goes to government financing, 22% to large com-
panies, and 7% to small and medium-sized enterpris-
es (SMEs). Its profits in recent years have been robust;
in the first half of 2013 it posted 26% growth in deferred
sale revenues and a 21% rise in assets and revenues
from ijara (Islamic leases). These results helped drive
a net income of JD24.7m ($34.9m) in that period, com-
pared to JD19m ($26.8) for the same period in 2012.
Jordan’s second-oldest Islamic bank, the Islamic Inter-
national Arab Bank (IIAB), has yet to list on the Amman
Stock Exchange, and so is not required to release its
financial data. Having begun operations in 1998, the
IIAB now offers a full range of banking services, includ-
ing retail, corporate, SME and Treasury products. Its
most recently published data, for fiscal year 2012,
showed total assets of about JD1.2bn ($1.69bn), mak-
ing it the second-largest Islamic bank in the country.
The second Islamic bank to list on the country’s stock
exchange, Jordan Dubai Islamic Bank, began operations
in 2007, as the child of a restructuring of Dubai Islam-
ic Bank and its partner Jordan Dubai Capital. With total
assets of JD526.1m ($743.2m) as of the first half of 2013,
it is a relatively small player in the market, although it
has been increasing its stock of capital in recent years,
reaching JD100m ($141.3m) in 2012 from JD34.5m
($48.7m) in 2005. It has also seen strong profits, post-
ing 35% growth in deferred sales revenues in the first
half of 2013 and an 85% rise in leased asset revenues.
The establishment of
Jordan’s first Islamic bank
can largely be attributed to
one man, the Jordanian
economist Sami Hamoud,
who gained financial
backing from members of
the Saudi royal family and
worked to allay
government concerns.
The first licence for an
explicitly Islamic bank was
granted in 1977 by special
legislation, paving the way
for today’s modern
sharia-compliant segment.
50
From seed to fruitThe development of the country’s sharia-compliant banking sector
www.oxfordbusinessgroup.com/country/Jordan
BANKING ANALYSIS
The global financial crisis has spurred new rules on capital adequacy
Global banks have played a prominent role in the Mid-
dle East for decades, particularly in areas such as
project finance where their vast capital and depth
of experience grant them a competitive edge.
Although regional players have grown considerably
in capacity – especially in the retail segment – a
closer look at the structured lending being direct-
ed towards various large-scale developments in the
MENA region usually reveals that at least one inter-
national institution is involved.
The global financial crisis of 2007-08, however, has
brought a paradigm shift in the relation between
regional banks and the global giants. The process of
regulatory reform that the crisis set in motion has
played a significant role in this shift, as regulators
across the world aim to establish a less leveraged,
more transparent and lower risk banking environ-
ment. One of the practical consequences of this
drive is the demand by most national authorities for
banks to increase capital adequacy ratios (CARs).
RAISING CAPITAL: Financial institutions have a num-
ber of means at their disposal to boost the level of
their capital compared to their assets. One way to
raise CARs is to increase retained earnings by reduc-
ing the share of annual profit paid out in dividends
or widen the spread between the interest rate
charged on loans and the interest paid on funding.
Another, if less popular, option is to issue new equi-
ty on the open market, through a rights issue to
existing shareholders, or by placing shares with an
outside investor. A third option for banks seeking
stronger CARs is to shrink the asset side of the bal-
ance book by running down loan portfolios or sell-
ing assets outright. The adoption of this last policy
by some international lenders has caused global
giants to withdraw from Middle East markets.
MARKET EXITS: Recent years have seen a number
of significant departures from the MENA region, all
of which have either a direct bearing on Jordan’s
banking sector or are of interest to banks looking to
expand abroad. In December 2012 BNP Paribas
announced the sale of its entire 95.2% stake in BNP
Paribas Egypt to Emirates NBD, whose subsequent
purchase of the remaining stock made it the sole pro-
prietor of what had been a French-owned enter-
prise in the world’s most populous Arab country. The
deal has given Emirates NBD a network of 69 branch-
es in what is considered one of the most under-
banked markets in the region, and one that, should
economic and political stability return to the coun-
try, is well placed to expand in the coming years.
Another high-profile departure came in Septem-
ber 2013, when Barclays decided to sell its UAE retail
operation to Abu Dhabi Islamic Bank. This move
brought around 110,000 new customers to the
sharia-compliant financier, advancing its strategy to
increase its consumer base both within the crowd-
ed UAE market and beyond its borders.
STRATEGY SHIFT: In late 2013, HSBC announced it
would restructure its business model in the region.
After reviewing its MENA operations, the bank decid-
ed to discontinue its wealth investment and wealth
insurance practice in Jordan, Lebanon and Bahrain.
In practice, this will mean ending the sale of prod-
ucts such as mutual funds, bonds and structured
deposits, as well as discontinuing a range of insur-
ance instruments. According to a statement released
at the time, the size of the respective markets con-
tributed to its decision, which is part of its global strat-
egy for retail banking and wealth management,
meant “to offer and grow the wealth business in
markets where we can achieve scale”.
The changes to HSBC’s operations in the region
run even deeper. The bank has also reduced its retail
operations in those same three countries, as well as
in other Middle East nations. In Oman, it has merged
its operations with a local bank as part of its three-
year global restructuring strategy.
In the case of Jordan, the bank’s exit is to be a com-
prehensive one, rather than a partial scaling-back.
To boost their capital to
assets ratio, financial
institutions can increase
retained earnings by paying
out less in dividends, issue
new equity on the open
market, or shrink their
assets by running down
loans or selling assets.
51
THE REPORT Jordan 2014
Recent years have seen a
number of significant bank
departures from the MENA
region, all of which have
either a direct bearing on
Jordan’s banking sector or
are of interest to banks
looking to expand abroad.
Opening spaceMarket exits and strategy shifts bring fresh opportunities
BANKING ANALYSIS
In early 2014 HSBC announced that it is to sell off
its entire $1.2bn banking operation in the country,
and that it had inked a deal with the Arab Jordan
Investment Bank to take the business off its hands.
The bank has also made it known that it expects
most of its employees, the bulk of whom are based
in one of HSBC’s four Jordanian branches, to trans-
fer over to the new business when the closing con-
ditions are completed later in 2014.
REGIONAL ADVANTAGE: The trend is unmistakably
clear. Foreign banks, under pressure to meet new reg-
ulations that were introduced to ensure they have
enough cash in hand to deal with any potential loss-
es, are reducing their overall risk exposure in the
region. In place of this, they are focusing on more
profitable locations and business segments. Among
European banks, the arrival of the Basel III interna-
tional banking standards, which are due to come
into force in 2018, is driving this process further.
The result is that a space is opening up in the Mid-
dle East banking arena for ambitious regional play-
ers to fill. From the standpoint of capital adequacy,
local banks that have thrived on the rapid develop-
ment of the region’s economies in recent years are
well placed to capitalise on this shift. “The Jordan-
ian banking sector is robust, and with the new gov-
ernance laws from the central bank coming into the
picture, should strengthen even more,” Iyad Al Asali,
CEO of Islamic International Arab Bank, told OBG.
Assessing CARs for comparison between continents,
however, is rendered somewhat problematic by the
fact that national authorities use different defini-
tions for both of the concepts that determine these
numbers: capital and assets.
By the figures which such separate standards yield,
at least, Jordan compares well with other regions.
The US Federal Reserve reports that the ratio of total
capital to total assets for commercial banks in the
US stood at around 11.6% in 2012. The European Cen-
tral Bank, meanwhile, has put the CAR ratio for the
euro area at 9.1% for the same year. Gulf banks show
capital ratios that are significantly higher than both
of those, according to the New York-based Institute
of International Finance: those in the UAE started
2012 with an aggregate CAR of 20.8%. In Bahrain this
ratio stood at 19.5%, in Kuwait 18.5%, in Saudi Ara-
bia 17.1%, in Qatar 16.1% and in Oman 15.5%. All of
these countries are well in excess of the requirements
laid down by their respective national authorities and
regulators.
Aggregate CARs for the Jordanian banking sector
have shown a similar robustness to its regional peers,
according to data from the Central Bank of Jordan
(CBJ). Since 2003 the country’s aggregate CAR has
not fallen below 15.9%, and as of June 2013 it stood
at 17.9%. Capital adequacy levels in Jordan, therefore,
sit comfortably above the CBJ mandate of 12%, as
well as above the 8% limit set by the Basel Commit-
tee for Banking Supervision. Asset expansion by Jor-
danian banks, whether it comes through increased
domestic lending or through expansion into foreign
markets, would not therefore present a serious chal-
lenge to their financial soundness.
JORDANIAN EXPANSION: Expanding into regional
markets, however, can be challenging for banks on
a number of other levels, from gaining regulatory
approval to accounting for the risk of political tur-
bulence. Jordan’s best known banking export has
overcome many such hurdles in its long history. Arab
Bank, one of the largest financial institutions in the
Middle East, has been headquartered in Amman
since the end of the British Mandate in Palestine in
1948, when it was compelled to leave Jerusalem.
Since then, the publicly owned company has expand-
ed throughout the region and established itself as
a catalyst for Arab economies, surviving nationali-
sations, wars and economic upheaval to keep its
prominent place within the Middle East’s financial
sphere. Today, the Arab Bank Group operates the
largest branch network in the world, with a presence
in 30 countries spanning five continents.
More recently, Jordan’s Capital Bank has demon-
strated a similar interest in regional expansion by
acquiring a 72% controlling stake in the National
Bank of Iraq. In its new management role for the Iraqi
lender, it has engaged in a branch expansion across
its eastern neighbour, including into the capital of
the northern Kurdistan region, Erbil.
The unrest that Jordan’s troubled neighbour is
now experiencing is only one example of the risks
faced by foreign firms when they enter some of the
region’s developing markets. Yet the rewards for
such strategic boldness can be considerable. Prof-
its at the National Bank of Iraq rose sixfold in 2012,
Capital Bank’s executive chairman, Bassem Khalid Al
Salem, told The New York Times in 2013. Jordan’s
geographic location means that its financial sector
is used to risk and regional turbulence, and its larg-
er institutions are well placed to move into the Mid-
dle East’s more troublesome areas as well as into
its lower-risk and more business-friendly markets.
52
Foreign banks, under pressure to meet new regulations, are reducing their risk exposure in the region
Since 2003 the country’s
aggregate CAR has not
fallen below 15.9%, and as
of June 2013 it stood at
17.9%. Capital adequacy
levels sit comfortably
above the CBJ mandate of
12%, as well as above the
8% limit set by the Basel
Committee for Banking
Supervision.
Two challenges to
Jordanian banks’ regional
expansion are gaining
regulatory approval and
accounting for the risk of
political turbulence.
www.oxfordbusinessgroup.com/country/Jordan
BANKING INTERVIEW
Ziad Fariz, Governor, Central Bank of Jordan
With inflationary pressures stabilising, and further
cuts in key interest rates in January 2014, what are
your GDP forecasts for 2014?
FARIZ: GDP growth is expected to be around 3.5% in
2014. Inflationary pressures are stabilising, which is a
positive sign, and we anticipate budget deficits to fall
within the target of our economic outlook.
We are on course to achieve all of our budget tar-
gets in 2014. We expect our current account deficit to
decrease to less than 10% of GDP in 2014. Outstand-
ing public debt is predicted to reach 86.1% of GDP at
the end of 2014 and then decline gradually over the
medium term to a level lower than that reached at the
end of 2013 (79% of GDP). With increasing deposits in
banks and the central bank, our reserve levels have
improved, which means that we do not foresee any
new pressures on banking sector liquidity.
These factors, among others, have allowed us to
reduce key policy interest rates by a total of 75 basis
points, aimed at reducing the cost of credit to all sec-
tors, supporting lending to the private sector, and stim-
ulating economic activity. In turn, we hope to see an
increase in aggregate demand and employment levels.
How much do external factors in the energy sec-
tor affect monetary policy?
FARIZ: Jordan’s primary concern is energy. It is no secret
that we have struggled to find an energy vision. Indeed,
it was not until very recently, when disruptions to nat-
ural gas flows from Egypt caused supply shocks, that
the government took action. The ongoing sabotage of
the pipeline in the Sinai Peninsula increased our reliance
on petroleum products as a substitute for electricity
generation. This resulted in a significant increase in our
energy import bill during a time when crude oil prices
were high, in turn imposing high pressure on our for-
eign currency reserves. The basic fundamentals of our
economy will always remain challenged until we are able
to define a long-term energy vision. The central bank
responded to these shocks through the introduction
of a new monetary policy framework and a bundle of
new instruments. The CBJ stands ready to enact and
implement certain policies to correct the economy;
however, these efforts can only have a limited effect
while we are still dependent on imported energy.
With regard to renewable energies, the effect they
will have on the economy will be negligible in the short
to medium term, but should reveal more positive results
in the long run. Jordan remains committed to an ener-
gy roadmap, as was recently laid out by the Ministry of
Energy, and with that in place, we should see our cur-
rent account deficit stabilise.
What reforms can be implemented to harmonise
the needs of small and medium-sized enterprises
(SMEs) with the lending criteria of banks?
FARIZ: In developed countries SMEs are the largest
source of job creation. However, in developing coun-
tries, a lack of certain formalities and poor access to
financing act as major obstacles to these firms’ growth.
We must ask ourselves how to develop the financial sys-
tem so that more credit facilities are available to SMEs.
The CBJ took serious steps to improve this situation
by launching the National Payment Council, which focus-
es on improving retail payments, and by working to
obtain low-cost financing for SMEs from internation-
al and regional agencies such as the World Bank. Efforts
have also been made to establish a credit bureau (set
to be licensed in 2014) and to develop a legislative
framework to regulate and supervise the microfinance
sector. We are also working to design a financial edu-
cation programme in cooperation with a range of stake-
holders, especially the Ministry of Education.
We must reform our credit policies so that SMEs
have a fair chance to thrive, but we must also make sure
that they align themselves with the prudent guidelines
that are set by the banks. In 2013, SMEs were able to
access approximately 8% to 10% of all credit facilities
in Jordan; however, there have been preliminary discus-
sions to boost this figure to 16% in the medium term.
53
THE REPORT Jordan 2014
Prudent decisions OBG talks to Ziad Fariz, Governor, Central Bank of Jordan (CBJ)
BANKING INTERVIEW
Nemeh Sabbagh, CEO, Arab Bank
Would you say that the central bank’s recent cut-
ting of key rates was more to expand the money
supply or to lower the state’s borrowing costs?
SABBAGH: The measures taken by the Central Bank
of Jordan to raise interest rates on monetary policy
instruments over the past few years were aimed at pro-
moting monetary stability. They renewed confidence
in the Jordanian dinar, bolstered demand for it, reduced
dollarisation, improved foreign currency reserves and
increased excess liquidity. As financial and monetary
conditions improved, the central bank reduced inter-
est rates in order to catalyse economic growth, pro-
vide a suitable environment for investors and reduce
the cost of borrowing. These reductions, which were
reflected in public bond yields, should lead to an increase
in aggregate demand, help utilise excess liquidity, and
enable investors to obtain the necessary medium- and
long-term financing at lower interest rates.
As many consider Jordan’s banking sector saturat-
ed, what opportunities are there for domestic play-
ers abroad, particularly elsewhere in the region?
SABBAGH: The local banking sector can be considered
saturated, given the number of banks operating in Jor-
dan relative to the size of the economy. The largest three
Jordanian banks account for 42.1% of total market
assets. This being the case, for some Jordanian banks
regional expansion is warranted.
For its part, Arab Bank – which has more than 600
branches in 30 countries and is well-entrenched in the
MENA region – uses its network to capitalise on oppor-
tunities in several growing sectors. A prime example is
project finance in the GCC, a segment that has been
driven by population and industrial growth in the region.
Such growth has required many development projects
for basic infrastructure, and the bank has played an active
role in providing the necessary financing. We have also
seen greater demand in the region for corporate
banking services, a field that is keeping pace with an
increasingly complex and growing business landscape.
What is being done to incentivise banks to lend to
small and medium-sized enterprises (SMEs)?
SABBAGH: The Central Bank of Jordan has taken many
steps to help with this. It has loosened some of the statu-
tory reserve requirements on Jordanian banks in return
for loans being granted to SMEs. It has provided direct
funding to Jordanian banks at lower interest rates so
that banks can lend to SMEs at preferential rates. It has
encouraged banks to sign agreements with local and
international institutions – such as the Overseas Pri-
vate Investment Corporation and Jordan Loan Guaran-
tee Corporation – to guarantee the loans of SMEs. It
has moved to establish a credit bureau to supply the
information banks need to make sound credit deci-
sions. It is expected that these steps will incentivise Jor-
danian banks to provide further services to SMEs.
As the banking sector becomes more diverse and
sophisticated, in what ways is innovation affecting
the retail and corporate segments?
SABBAGH: The dynamics of today’s banking environ-
ment, the advancement of technology and the expec-
tations of the banking population have all directed the
industry to focus increasingly on customers in their
retail product offerings. Consumers now expect pack-
aged products with various banking services and lifestyle
benefits at competitive pricing, delivered convenient-
ly with on-going relationship management support
using a combination of innovative e-banking services
and human-assisted channels. It has also become a
necessity to produce new offerings that meet cus-
tomers’ needs at various stages in their life.
In the corporate segment, banks have become more
innovative in their product suite, driven by an increas-
ingly exposed and sophisticated customer base. Besides
focusing on service and efficiency, banks must play to
new target segments – SMEs, for example – and offer
custom products that meet specific needs. In sum, they
must stay close to customers, stress relationship man-
agement, and keep aligning with their clients’ needs.
54
Flows of lendingOBG talks to Nemeh Sabbagh, CEO, Arab Bank
www.oxfordbusinessgroup.com/country/Jordan
BANKING ANALYSIS
Past financial sector dilemmas have compelled the CBJ to intervene
When it comes to managing banking sector crises,
the Central Bank of Jordan (CBJ) has a solid track
record of success. Over recent decades, it has been
presented with a wide assortment of financial sec-
tor dilemmas, which have compelled it to respond
with various and sometimes vigorous interventions.
GUARDIANSHIP: These have taken a number of dif-
ferent forms. When Petra Bank collapsed due to
fraud in 1989, the CBJ consolidated the troubled
bank’s balance sheet into its own. In 1993, when
Jordan Gulf Bank became financially unsound, the
CBJ granted it a 30-year interest-free loan facility. This
allowed the smaller bank to maintain its independ-
ence while it restructured its balance sheet.
NON-PERFORMING LOANS (NPLS): Even banks
that have steered a more prudent course have faced
asset-related challenges. The sector’s NPL ratio
reached as high as 19.3% in 2001, according to the
World Bank. Even though Jordan’s banks generally
have substantial capital buffers, an NPL level of this
scale presented an obvious danger in the form of
financial stress to the nation’s financial institutions,
especially where banks’ provisioning was inadequate.
Such elevated ratios are also harbingers of more
general concerns, such as over-indebtedness in the
retail or corporate sectors. The deleveraging and
restructuring that such a scenario invariably entails
can be a drag on credit growth, and thereby impede
the wider expansion of the economy.
Both the regulator and market participants have
therefore worked assiduously to address the NPL
problem over the last decade, and with considerable
success. By 2013 Jordan’s NPL ratio had been reduced
to 7.4%, according to World Bank data, a level that
compares favourably to regional peers such as the
UAE (8.4%) and Egypt (9.5%). Other asset quality
metrics follow a similarly encouraging trend. Provi-
sioning levels increased in the first half of 2013 to
produce a healthy NPL coverage ratio of 75%, a sig-
nificant improvement on the 69.4% posted at the
close of 2012. Likewise, the net of provisions for NPLs
amounted to a modest 6.5% of total equity at the
end of June 2013, a marked reduction from the 8.3%
figure seen at the close of 2012.
The banking sector’s relative stability in the wake
of the global economic crisis of 2007-08, its resilience
in the face of regional political turbulence and the
steadily improving asset metrics displayed by its par-
ticipants are a testament to the CBJ’s determination
to ensure best practice in its jurisdiction. There is,
however, room for improvement. The sector’s aggre-
gate NPL level of 7.4%, though much improved and
now at sustainable levels, is still higher than in many
developed markets, such as the UK (3.7%) and the
US (3.2%), as well as some in some of its neighbour-
ing countries, such as Saudi Arabia (1.3%) and Kuwait
(4.6%). Moreover, ensuring the financial soundness
of a banking sector is a constant and incremental
process – one that permanently claims the atten-
tion of regulators worldwide.
NEW CREDIT BUREAU: The advent of the nation’s
first credit bureau is set to have a profound impact
on the ease with which banks can extend credit to
certain segments of the market – such as small and
medium-sized enterprises (SMEs) and start-ups –
which will in turn promote economic growth and job
creation. The start of the bureau’s operations, expect-
ed by the end of 2014, will result in a major strength-
ening of the sector’s institutional infrastructure.
It will be the culmination of years of effort. As
early as 2008, the International Finance Corporation
(IFC) began working with the CBJ to draft a new cred-
it reporting law, with a long-term ambition of estab-
lishing a credit reporting industry. Speaking in 2012,
when the criteria for licensing and regulating the
credit information bureau were still being formulat-
ed, IFC’s country manager in Jordan, Ahmed Attiga,
explained the rationale for the coming legislation in
a press release: “One of IFC’s strategic goals is to
expand access to finance for those who need it
The banking sector’s NPL
ratio reached as high as
19.3% in 2001, but after
assiduous work by the
regulator and market
participants, this was
reduced to 7.4% by 2013.
55
THE REPORT Jordan 2014
Provisioning levels
increased in the first half of
2013 to produce an NPL
coverage ratio of 75%, a
significant improvement on
the 69.4% posted at the
close of 2012. Net
provisions for NPLs were a
modest 6.5% of total equity
in June 2013.
From the topA closer look at the direction of the country’s central bank
BANKING ANALYSIS
most,” it read. “Credit bureaus are a crucial building
block that enables greater access to financing for
individuals and small businesses.”
DATA-SHARING DETAILS: By early 2014 the
bureau’s launch was imminent, with the CBJ’s gov-
ernor, Ziad Fariz, announcing that the by-laws and
basic regulations were in place and indicating that
22 out of 26 banks, an insurance company and a
telecommunications firm had signed up to a data-
sharing agreement. Securing the cooperation of
institutions outside the banking sector is something
of a triumph for the new bureau: other jurisdictions
in the region that have recently established credit
information companies, such as Egypt, have been
unable to secure the cooperation of the non-bank-
ing sector due to laws protecting data.
With the launch of the bureau keenly anticipated
in the short term, attention in the banking sector
has turned to questions of detail, particularly with
regard to how much data-sharing the bureau will
require. In this respect, Jordan’s new institution
appears to be concentrating on capturing as large
a pool of credit information as possible in the short
term, by reducing the reporting threshold in the
interim. According to the IMF’s recently published
Article IV Consultation with Jordan, this would allow
the bureau to support a broad base of credit providers
and clients while it becomes fully operational.
The potential effect on the banking sector’s lend-
ing activity is difficult to gauge. Credit bureaus usu-
ally take a number of years to become effective, as
credit histories are built only gradually, and most of
the NPL distress at the turn of the century came not
from SMEs but from big-ticket lending corporates
or large family enterprises. All the same, there is no
doubt that the bureau’s arrival will be a qualitative
step forward for financial intermediation, and will
greatly enhance the banking sector’s ability to engage
in transparent, risk-based lending to individuals
and the nation’s increasingly important SME sector.
RETAIL PAYMENT SYSTEMS: The development of
the credit bureau is only one part of the broader push
towards a more transparent and effectively gov-
erned banking sector. Another important infrastruc-
tural improvement has been brought about by the
National Payment Council, led by the CBJ, in the form
of national retail payment systems. These include var-
ious projects addressing mobile payment, bill pre-
sentment and automated clearing houses – all of
which, according to the IMF, are expected to “enhance
financial inclusion as well as the efficiency and safe-
ty of the payment system”.
CORPORATE GOVERNANCE: However, as the CBJ’s
continues its drive to maintain the sector’s integri-
ty, the question of governance, rather than infrastruc-
ture, is likely to assume greater prominence in the
coming year. In May 2014 the CBJ issued a new set
of corporate governance instructions and request-
ed feedback from all interested parties, intended to
ensure that “board members possess experience
and competency besides guaranteeing that there is
no conflict of interest”. The proposed governance
criteria, it has said, are in line with the principles of
the Basel Committee on Banking Supervision, the
OECD and the Financial Stability Board’s efforts to
address systemic weaknesses exposed by the glob-
al financial crisis. Key provisions of the instructions
include a requirement that boards be fully respon-
sible for the financial safety of their banks; that they
are accountable to the rights of all stakeholders;
that chairmen may not double as general managers;
and that financial remuneration be transparent and
linked to risks and performance levels.
The scope of corporate governance as applied to
banks has developed rapidly in Jordan, from the CBJ’s
issuance of a simple guideline booklet in 2004 to the
comprehensive framework proposed in 2014. While
the Association of Banks is likely to request some
modification to the new instructions – as of mid-2014
it was consulting with its membership in order to for-
mulate its response – the direction of travel is clear.
Jordan’s banking sector, which owes much of its
resilience to the prudent approach adopted by the
CBJ, will be an even better governed one in future.
56
The nation’s first credit bureau, set for launch in 2014, will have a profound effect on access to credit
Governance is likely to be a priority for the CBJ in the coming year
The establishment of
national retail payment
systems, led by the CBJ,
includes various projects
addressing mobile
payment, bill presentment
and automated clearing
houses, all of which should
enhance safety, efficiency,
and financial inclusion.
In May 2014 the CBJ issued
a new set of corporate
governance instructions,
including a requirement
that chairmen not double
as general managers and
that financial remuneration
be transparent and linked
to risks and performance
levels.
www.oxfordbusinessgroup.com/country/Jordan
57
Capital MarketsDiverse economy allows for greater variety of issues
Positive performance indicators for continued growth
Regulatory reforms to provide for legal certainty
Plans for bourse set to increase foreign participation
CAPITAL MARKETS OVERVIEW
The Jordan Securities Commission was established in 1997
The Amman Stock Exchange (ASE) entered 2014 with
renewed momentum on the back of the higher trad-
ing values and volumes of the previous year. With the
ASE Index more buoyant than at any time since 2011,
there is a sense that interest in the exchange as a
source of capital and destination for investment is
returning. However, with intense competition from
regional exchanges, Jordan’s stock market faces
numerous challenges if it is to build on this incipient
recovery, and therefore the question of legal and reg-
ulatory reform has taken on greater prominence.
LONG PEDIGREE: While the ASE is relatively young
by global standards, equity trading had been taking
place in Jordan for more than 80 years. Jordanians
began to buy and sell shares in companies such as
Arab Bank, Jordan Tobacco and Cigarettes, and Jor-
dan Electric Power in the early 1930s, although trad-
ing took place across a number of non-specialised
offices rather than a centralised exchange. Seeking
to address the challenges of investor protection and
fair pricing, successive governments investigated the
possibility of creating a formal market, but it was not
until the 1970s, by which time the growth of the
national economy and the sheer volume of equity
trading made it a priority, that the Central Bank of Jor-
dan (CBJ) began to conduct intensive studies on the
subject. The result of this process was the creation
of the Amman Financial Market (AFM), which, governed
by new legislation passed in 1976, opened its doors
to the investment community on January 1, 1978.
Since that time Jordan’s stock exchange has under-
gone a continuous process of development that has
seen the introduction of electronic trading, settle-
ment and clearance systems and the establishment
of an increasingly comprehensive regulatory regime.
The most significant change in this regard came in
1997, when a new law resulted in a complete restruc-
turing of the financial market. Under the Temporary
Securities Law No. 23 the old AFM was divided into
three institutions: the ASE; the Securities Depository
Centre (SDC), charged with ensuring the safe regis-
tration and transfer of securities; and the Jordan Secu-
rities Commission (JSC), which plays a supervisory
role, regulating and monitoring the activities and
operations of market participants. This wholesale
structural development has allowed for a rapid expan-
sion of trading activity over recent decades, with mar-
ket capitalisation rising from JD286m ($404m) in 1978
to JD18.31bn ($25.86bn) by August 2014.
STRUCTURE: Jordan’s lack of energy resources has
resulted in a more diverse economy than many of its
regional peers, and this is reflected in the structure
of the ASE. As of August 2014, 237 companies had
listed on the exchange, making the ASE a regional
leader in terms of the total number of listed compa-
nies. Listings are divided into three main classifica-
tions, each of which is further divided into a number
of subsectors. The financial classification is composed
of banks, insurance, diversified financial services and
real estate. The services classification includes health
care, education, hotels and tourism, transport, tech-
nology and communication, media, utilities and ener-
gy, and commercial services. The industrial classifica-
tion covers pharmaceuticals and medical industries,
chemicals, paper and cardboard industries, printing
and packaging, food and beverages, tobacco and cig-
arettes, mining and extraction industries, engineer-
ing and construction, electrical industries, textiles,
leather and clothing, and glass and ceramics.
As well as the categorical divisions, companies list-
ed on the ASE are filtered by a three-tier system, the
definitions for which date back to a structural change
implemented in 2012. Under this new regime, com-
panies listed on the first market are obliged to post
positive earnings before tax for two consecutive years
out of the last three at a minimum rate of 5% of cap-
ital, while new entrants must have already spent one
year on the second market. The total equity of first
market firms cannot be less than their paid-up capi-
tal, which must be at least JD5m ($7.06m), with a free
Equity trading in Jordan
dates back more than 80
years to the 1930s,
although it was not until
the late 1970s that the
government sought to
create a centralised
exchange in the form of
the Amman Financial
Markets, which later
became the ASE.
The ASE benefits from
Jordan’s diverse
economy, especially when
compared to many of its
regional peers, and its
structure includes three
main classifications:
financial, services and
industrial.
58
Full steam aheadMaintaining healthy and steady growth, the exchange is set to face anychallenges
www.oxfordbusinessgroup.com/country/Jordan
CAPITAL MARKETS OVERVIEW
float that is not less than 10% for any company with
paid-up capital of under JD50m ($70.6m). At the time
of implementation, 55 firms were able to meet the
criteria needed to obtain first market status.
The criteria governing the second market are less
stringent. Companies wishing to obtain second mar-
ket status must have spent at least a year on the third
market, the net shareholders’ equity in the firm must
not be less than 50% of its paid-up capital and the
percentage of the free float should be at least 5% for
companies with a paid-up capital of less than JD10m
($14.13m). Firms that do not meet the requirements
for either the first or second market, including busi-
nesses that fail to make full disclosure of their finan-
cial results on time, are placed in the third market. As
a result of the new system, investors are better able
to focus their attention on companies that meet their
risk appetite, while firms are incentivised to improve
their performance and level of corporate governance.
THE DEBT MARKET: As well as its standard equities
products, the ASE is home to a number of fixed-income
instruments. The exchange-based debt market in Jor-
dan is dominated by government activity. As of June
2014 some 169 Treasury bonds with tenors of three
and five years were listed on the market, as well as
nine Treasury bills with tenors of one year. Between
them they form the backbone of a government debt
programme that has been greatly assisted by a US guar-
antee of debt issued by the Jordanian state.
The advantageous interest rates that the deal has
brought about have safeguarded the future issuance
of government debt, ensuring that debt offerings by
the state will continue to dominate the ASE bond
market for the foreseeable future.
Beyond Treasury offerings, bonds from two public
entities are listed on the exchange, the majority of
which have tenors of three or five years. Only a sin-
gle corporate bond is listed on the ASE; issued by Arab
International Hotels in 2010, the JD4m ($5.65m) offer-
ing has a maturity date of August 2015. Given the yield
curve established by government debt offerings, a
sound legal and regulatory base, and essential finan-
cial infrastructure, the small size of Jordan’s corporate
bond market is surprising. The lack of an independ-
ent domestic credit rating agency and specific enabling
legislation are the two factors most frequently adduced
for this phenomenon. Resolving these issues will
improve the prospects for Jordan’s primary and sec-
ondary corporate debt market, given its wide investor
base and relatively developed financial regulatory and
institutional framework.
TRACKING THE MARKET: Just as the exchange has
developed in terms of market capitalisation and list-
ings, so too has the manner in which investors are able
to monitor the performance of securities. The first mar-
ket indices were introduced in 1980 and consisted of
a main index and sub-indices for the four listings cat-
egories. The main index of that time, known as the
ASE Unweighted Index, remains in place to this day,
but has since been joined by other tracking instru-
ments. The Market Capitalisation Weighted Price Index
was established in 1992 and by 2007 covered 100
stocks. Like the unweighted index, it is calculated
according to the latest closing price and published
daily, and its constituent companies are chosen from
the first and second markets according to their mar-
ket capitalisation and number of trading days.
The ASE has followed the global trend by which
indices are calculated using the market value of the
free float shares of companies rather than simply the
total number of listed shares for each firm. The ASE
Free Float Index created as a result of this decision
allows for a more granular evaluation of market per-
formance and, together with the unweighted and
weighted indices, represents the principal means of
market oversight for investors. As with most
exchanges, the ASE has established a revenue stream
through the sale of data rights to certified vendors.
These include international giants such as Reuters
and Bloomberg, as well as local players, such as the
Middle East North Africa Financial Network.
THE TECHNOLOGY: The technical infrastructure that
underpins exchange activity has also developed since
59
THE REPORT Jordan 2014
The ASE has sought to follow global trends in calculating indices
The ASE divides listed firms
into three tiers, with the
first having the most
stringent requirements,
which encourages firms to
improve their performance
and allows investors to
focus on companies that
meet their risk appetite.
SOU
RCE:
Cen
tral
Ban
k of
Jord
an
ASE free float index performance, 2005-13
0
1000
2000
3000
4000
5000
201320122011201020092008200720062005
CAPITAL MARKETS OVERVIEW
the ASE first adopted electronic trading. The exchange
installed the French NSC V2 system in the year 2000,
and when that company was purchased by NYSE
Euronext the ASE maintained its commitment to the
platform, which was also adopted by regional
exchanges in Lebanon, Oman and Tunisia.
STAYING UPDATED: The current version, NSC V900,
was launched in 2009, and its introduction was part
of a wholesale improvement of the connections
between the ASE, SDC and JSC which included new
servers, communication networks, routing systems
and fibre-optic networks. The upgrade brought new
options for brokers, such as fresh variants of buy and
sell orders, as well as an enhanced level of security,
most notably in the form of the Central Control Mod-
ule, which reduces trading risks and errors by verify-
ing whether orders placed in the system fulfil a series
of conditions before they are processed.
While the deployment of the NSC V900 platform
represented a significant step forward in terms of
exchange functionality, the next phase of the bourse’s
development promises to bring an even more radical
improvement. The ASE is currently preparing for the
latest generation platform in the form of Euronext’s
UTP-Hybrid system, which is also due to be adopted
by Lebanon’s Beirut Stock Exchange, Tunisia’s Bourse
de Valeurs Mobiliéres de Tunis and Oman’s Muscat
Securities Market. The deal with Euronext includes a
10-year support agreement, and will grant the ASE
the ability to offer multi-asset class and multi-curren-
cy trading with a low latency performance. The UTP-
Hybrid platform is set to be installed by 2016.
The SDC continues to develop technology within its
purview. It has operated a delivery versus payment pro-
tocol since 2005, making it a relatively early adopter
of this industry standard. It has also operated a busi-
ness continuity site in Amman since 2009, and has
more recently established a disaster recovery site in
the northern city of Irbid. The SDC is currently in nego-
tiations with the Society for Worldwide Interbank
Financial Telecommunication over the introduction of
its financial communications network, a development
that would also see it connected with other financial
institutions worldwide. The centrepiece of the SDC’s
technology suite, however, is its proprietary SCORPIO
system. Developed with local expertise and intro-
duced in 2004, SCORPIO provides the framework
through which the SDC carries out its risk manage-
ment, registration, and clearing and settlement duties.
Enhancing the system is a continuous process with-
in the SDC, and future innovations are likely to include
a mobile app that will be made available to clients.
PERFORMANCE: Jordan’s exchange, just like those of
its regional counterparts, is exposed to the vicissitudes
of the global economy, and its performance over
recent years follows a similar track to the other devel-
oping exchanges in the Gulf, Levant and North Africa.
From 2008 the market showed a decline in value over
the following four years, with the ASE Free Float Index
falling from 2758.4 to a low of 1957.6 in 2012.
The long-anticipated rebound from the economic
downturn has been slow in coming, and most of the
factors that contributed to this extended period of
quiescence are beyond Jordan’s control. External
events have played a large part in hampering the
bourse’s recovery from the effects of the global finan-
cial crisis. In 2012 the ongoing unrest in several neigh-
bouring countries combined with stubbornly low
growth rates in Europe and the US inhibited investor
interest. On the domestic front, events such as the
interruption of gas supplies from Egypt and a major
influx of refugees from Syria also served to depress
appetite for risk over the year.
However, in 2013 the main performance indica-
tors showed signs of a renewed interest in the
exchange. According to ASE data, the ASE Free Float
Index at the close of 2013 showed a 5.5% year-on-
year increase, reaching 2065.8 points. The value of
traded shares reached JD3bn ($4.24bn) in 2013 com-
pared to the JD2bn ($2.82bn) seen in 2012, while the
volume of traded shares increased by 13.5% during
the same period, to a total of 2.7bn shares. The share
turnover ratio, an important indicator of market activ-
ity, grew to reach 38% during 2013, compared to the
60
The value of traded shares increased from $2.82bn in 2012 to $4.24bn in 2013
The ASE is planning to
install the latest generation
platform, Euronext’s
UTP-Hybrid system, by
2016, which will include a
10-year support agreement
and allow ASE to offer
multi-asset class and
multi-currency trading with
a low latency performance.
www.oxfordbusinessgroup.com/country/Jordan
Performance indicators in
2013 were indicative of
renewed interest by foreign
investors as the ASE Free
Float Index showed a
5% year-on-year increase,
reaching 2065.8 points.SOURCE: ASE
No. of listed companies 240
Market cap (JD bn) 18.23
Value traded (JD bn) 3.02
Average daily trading (JD m) 12.4
No. of traded shares (bn) 2.7
No. of trading days 245
Turnover ratio 38%
Free float price index 2065.8
Weighted price index 4336.7
P/E ratio (time) 14.7
Dividend yield ratio 4.60%
Non-Jordanian ownership of market cap 50%
Market cap/GDP 83%
ASE key indicators, 2013
CAPITAL MARKETS OVERVIEW
33.9% posted for 2012. This incipient recovery has
resulted in renewed optimism regarding the ASE’s
ability to act as a catalyst for economic growth in the
country. Nevertheless, trading values and volumes
remain muted in comparison to the pre-crisis era, and
many stakeholders feel that Jordan’s capital markets
will need to undergo a process of reform if they are
to achieve their full potential.
REGULATION: A number of bodies are responsible for
the reform process. The primary institutions that
supervise and regulate Jordan’s capital market activ-
ity are the Council of Ministers, the Higher Ministeri-
al Committee for the Management of the Public Debt,
the JSC and the CBJ. The JSC is the principal market
supervisor and is also tasked with writing new legis-
lation and regulations concerning capital markets and
issuing instructions to the ASE and SDC. The JSC also
issues licences to capital market brokers and compa-
nies, registers securities and mutual funds, and per-
forms all the other tasks of a contemporary market
supervisor and regulator. Its mandate was established
by the 1997 Temporary Securities Law No. 23.
The temporary law has remained in place for longer
than was originally intended, and is widely consid-
ered to be deficient in certain areas. The European
Bank for Reconstruction and Development (EBRD)
identified a number of weaknesses in a 2013 review
of Jordan’s securities legislation, most of which are
the result of a lack of legal specificity. For example,
the law is unclear on whether a private placement is
defined as one in which securities are placed with up
to 30 investors or merely offered to up to 30 investors.
Similarly, the law states that companies are exempt
from issuing a prospectus when offering securities to
an investor who is capable of assessing and bearing
the investment risks, but does not clearly define the
criteria for such a qualified investor. Legal reform also
has the potential to breathe life into the currently
moribund corporate bond segment. The provisions
within the Companies Law that govern corporate debt
issuance, for example, require that an assembly is
formed to protect the rights of all bondholders, but
does not elaborate on its scope of authority or respon-
sibility. A review of the legislation governing Jordan’s
capital markets is therefore seen as central to remov-
ing investor uncertainty and boosting the long-term
growth prospects of the ASE.
NEW DIRECTION: In some areas, legislative reform has
already been effected, while in others the process is
at an early stage. The promulgation of the Islamic
Finance Sukuk Law No. 30 of 2012 has expanded the
range of debt instruments in Jordan and offers an
attractive route to the nation’s debt capital markets
for investors wishing to remain in compliance with the
precepts of sharia. Islamic bonds can be issued in
local or foreign currency by the government, public
institutions, Islamic banks and companies, and can be
traded on the exchange or over the counter. While
the impact of the legislation on the debt market will
depend on the efficacy of the implementing regula-
tions currently being developed, the introduction of
the new law has been widely welcomed by the invest-
ment community. Meanwhile, the EBRD is working
with the JSC to reform Jordan’s stock exchange, and
to that end has already produced a diagnostic report.
Together with the JSC it has produced a wish list of
reforms that would benefit the exchange in the future,
and it is thought that a memorandum of understand-
ing between the two organisations will be signed in
the short term with a view to their implementation.
OUTLOOK: The question of reform will remain a cen-
tral concern for the investment community in the
short and medium term. While the JSC works to estab-
lish a more robust regulatory framework, it is within
its power to pursue some straightforward adjust-
ments in the short term that would substantially boost
investor confidence. For example, the current corpo-
rate governance code, established on Organisation for
Economic Cooperation and Development principles,
is well regarded but operated on a comply or explain
basis, which can allow for an unhealthy degree of
manipulation of the system. Applying the corporate
governance regime on a mandatory basis would not
require a lengthy process of legal formulation, but
would have a sizeable impact on compliance.
The effort to reform the market also relates to the
principal challenge facing the ASE: liquidity. The glob-
al economic crisis has led to a liquidity shortage in
exchanges across the region, and competition to
attract capital is intense. As levels of transparency, cor-
porate governance and functionality increase in Gulf
exchanges in particular, so too does the pressure on
the ASE to keep pace. Nevertheless, the uptick in
activity in recent years has brought optimism to
investors, and the prospects of a further improvement
in trading values and volume comes from the posi-
tive outlook for the wider economy. Jordan’s 3% GDP
growth was up from 2.3% in 2010, and the IMF expects
it to reach 3.5% in 2014. While external risks stem-
ming from regional instability remain a concern,
the prospect of increased liquidity on the ASE is real.
62
The European Bank for Reconstruction and Development has proposed a list of legal reforms for the bourse
The country’s capital
markets are supervised by
the Council of Ministers,
the Higher Ministerial
Committee for the
Management of the Public
Debt, the Jordan Securities
Commission and the
Central Bank of Jordan.
The Islamic Finance Sukuk
Law No. 30 of 2012 allows
for trading in
sharia-compliant financial
instruments. Islamic bonds
can be issued in local or
foreign currencies by the
government, public
institutions, Islamic banks
and companies.
www.oxfordbusinessgroup.com/country/Jordan
CAPITAL MARKETS INTERVIEW
Tarik Awad, CEO, Capital Investments
Daily trading volumes at present fluctuate between
$10m and $15m; what will it take for these to
increase once more to pre-crisis levels?
AWAD: At present, the market is dominated by retail
investors and investment fund regulations. To increase
trading volumes, taxation needs to be reformed to help
develop the institutional investor base. Further, some
existing institutional investors should be encouraged
to become more active again in the market, but this
will require additional research. Increasing transparen-
cy and providing access to information from a cen-
tralised data source would also encourage these
investors and promote market liquidity. Dormant insti-
tutional investors include the Social Security Investment
Fund and several banks; they could possibly mandate
that local asset managers put small equity portfolios
under operation which would enhance liquidity in the
market. Investor education is also necessary at the lev-
el of both institutional and retail investors.
Opening an account is onerous for foreign investors,
and this acts as a deterrent to market entry. Making
this easier and increasing the availability of basic hedg-
ing instruments would encourage foreign investors and
enhance market liquidity. I think that more research cov-
erage would also be beneficial, as it would encourage
investors, particularly foreigners, to take a more active
role in the market. Last but not least, regulators should
increase the minimum free float and facilitate the
issuance of global depository receipts for key stocks.
What are the reasons for the low level of initial pub-
lic offering (IPO) activity in the kingdom?
AWAD: The main reason is the restrictive regulations
that govern public offering prices. For example, limit-
ing IPOs to par value adversely affects successful firms
that trade at premium to par. In addition, limiting the
acquisition price to the book value of the acquired firm
would again hurt successful firms with substantial
intangible assets such as goodwill, reputation and trade-
marks, reducing their desire to make IPOs. Another fac-
tor would be the diminishing market liquidity that results
in a higher cost of capital, which could reduce demand
for shares and therefore deter companies from listing.
What measures can be taken to develop a second-
ary market for government bonds?
AWAD: Diversification of the investor base and pro-
motion of market makers are key factors needed to
develop a secondary bond market for treasuries. Extend-
ing the maturity and range of issues through regular-
ly scheduled offerings is another contributing factor.
The absence of an on-the-run yield curve is a challenge,
and a regular issuance calendar across the maturity
spectrum would help. Similarly, the Central Bank of Jor-
dan should ensure a system is in place for market mak-
ers to make firm bid-ask quotes. Also, new instruments
such as floating rate notes and sukuks (Islamic bonds)
need to be introduced to encourage more liquidity.
What is the situation in Jordan’s corporate debt
markets, and what changes do you hope to see?
AWAD: There is considerable room to deepen the cor-
porate bond market. Blue chips should be encouraged
to issue and corporate treasurers should be educated
about the benefits of accessing the market and diver-
sifying sources of finance. The availability of ample
bank financing has also acted as a deterrent to issuance,
and the lack of secondary trading in government debt
markets is an obstacle when it comes to pricing of cor-
porate issues using the government as a benchmark.
On the demand side, I believe that reform is needed
to enable the setting up of fixed-income funds. One
key obstacle to the setting up of funds, in addition to
existing regulations, is the taxation anomaly, whereby
a fixed-income fund would be subject to 14% taxes, ver-
sus a 5% tax for individual investors on interest earned.
Also banks need to be educated about the benefits of
having an active corporate bond market for diversifi-
cation, and in helping them with the management
of their single obligor exposure limits and credit risk.
63
THE REPORT Jordan 2014
Encouraging liquidityOBG talks to Tarik Awad, CEO, Capital Investments
CAPITAL MARKETS ANALYSIS
By mid-2014 foreign capital accounted for almost 50% of the market
The argument for Jordan as an investment destination
is certainly a compelling one. The nation occupies a
strategic position near the convergence of Europe, Asia
and Africa, and, despite its politically turbulent neigh-
bours, it is a relatively stable monarchy supported by a
democratically elected parliament. The government
has established an open economy, adopted a private-
sector-led approach and has implemented a programme
of privatisation that has, for the most part, been deemed
successful. The prevailing investment climate is an
attractive one, with tax-free exports, income and social
services tax exemptions of up to 10 years, and free repa-
triation of capital, profits and salaries. At first glance,
the Amman Stock Exchange (ASE) has benefitted from
these attributes. According to ASE data, as of the begin-
ning of August 2014 shares owned by non-Jordanians
represented 49.1% of the stock exchange’s total capi-
talisation, a figure that compares favourably with region-
al peers. Foreign market participants are also geograph-
ically dispersed, with some 36.2% originating from Arab
countries and 12.9% from beyond the region.
INTERNATIONAL PARTICIPATION: The foreign capi-
tal that has been directed towards the ASE is of the
distinctly “sticky” variety, and even following the glob-
al financial crisis, during which time regional exchanges
saw significant outflows of foreign investment, the
claim of foreign investors on total market capitalisa-
tion remained markedly steady. In January 2006 foreign
ownership of equities on the ASE stood at 44.5% of total
market capitalisation, a figure that increased to 50.9%
by July 2008 as investment poured into the region.
Similar to exchanges in the Gulf Cooperation Coun-
cil, the late summer of 2008 saw the first retraction of
foreign investment, as the financial crisis started to
bite. In August of that year, the foreign element of mar-
ket capitalisation declined to 49.8%, and by October
2009 it had reached a low of 48%. This, however, was
the lowest point that foreign investment levels on Jor-
dan’s bourse would reach due to the global economic
crisis. Where exchanges in emerging markets around
the world suffered outflows of what had turned out to
be hot money, the ASE barely registered the event, and
by 2010 began a steady recovery.
Clearly, the static nature of foreign participation on
the exchange represents a welcome signal of confidence
in both it and the wider Jordanian economy. However,
the high level of foreign participation belies a struc-
tural challenge: foreign participation on the ASE is
almost entirely made up of long-term, strategic invest-
ments that are concentrated in a narrow range of activ-
ities – mostly in the financial, industrial and services
sectors. If the bourse is to truly benefit from Jordan’s
advantages, it will need to secure more liquid capital
from global investors, competition for which is fierce.
FINDING SOLUTIONS: Improving transparency and
corporate governance is one way to achieve this, as evi-
denced by the strides taken by regional exchanges to
enhance regulation and oversight in order to win emerg-
ing market status from influential indices such as MSCI.
Cross listings or joint indices with other markets rep-
resent another route to increased foreign investment.
The ASE has taken steps in this direction already, most
notably in recent times with the signing of a memo-
randum of understanding with the Cyprus Stock
Exchange in 2012. According to the agreement, the two
bodies will work together on a wide range of issues,
including providing and exchanging consultative serv-
ices, know-how regarding listing and trading issues,
and introducing new financial products. The deal also
includes preparations for a joint index in the future,
which may contribute to increasing and attracting for-
eign investments to Jordan’s capital markets.
The potential for greater foreign participation on
the bourse is significant. Developments such as the
revived Red Sea-Dead Sea canal project, future shale
gas extraction, transit routes for Iraqi pipelines, renew-
able energy, tourism and expansion of the Port of Aqa-
ba each represent a possible boost to Jordan’s capital
markets. The challenge for the ASE is to establish a
regulatory regime capable of harnessing this potential.
Similar to many other
exchanges in the region,
the ASE contracted in the
late summer of 2008, with
foreign investors’
contribution to market
capitalisation declining to
49.8% and reaching an
all-time low of 48% by
October 2009.
Cross listings or joint
indices are one way in
which the bourse can
increase foreign
investment, and the ASE
has already signed a
memorandum of
understanding with the
Cyprus Stock Exchange to
work towards a joint index.
64
New partnersThere is an improved strategy in place aimed at attracting more foreigninvestment
www.oxfordbusinessgroup.com/country/Jordan
Share analysis & data provided
by Capital Investments
CAPITAL MARKETS SHARE ANALYSIS
THE COMPANY: Arab Bank was founded in 1930 in
Jerusalem and was the first private banking institution
in the Arab world. In 1948 the bank moved its head-
quarters to Amman after the start of the Arab-Israeli
conflict, where it was officially incorporated as a pub-
lic shareholding company. In 1978 the bank was the
first company to be listed on the Amman Stock
Exchange (ASE). With a sound financial reputation and
structure, the bank expanded its activities worldwide
and opened branches in almost 30 countries cover-
ing five continents, making it the most diversified
financial group in the Middle East and the largest
financial institution in the Arab world in terms of its
branch network. Today, around 80% of the bank’s assets
are held outside of Jordan.
In Jordan, the Arab Bank is the largest financial insti-
tution in terms of both assets, which amounted to
$46.4bn at year-end 2013, and market capitalisation,
which accounted for 47% of the banking sector’s total
market capitalisation and 26% of the ASE’s total cap-
italisation. A strong domestic and regional presence
underpins Arab Bank’s franchise strength.
The bank’s international presence makes it the pre-
ferred counterparty for foreign banks conducting busi-
ness in the region. Arab Bank is the dominant bank in
Jordan and Palestine, with shares ranging from 2% to
20% in other MENA countries. Arab Bank’s franchise
value enhances the bank’s competitiveness regional-
ly and internationally, and enables it to provide exclu-
sive banking services to its corporate clients, giving it
a major positive rating driver.
DIVERSE ASSET BASE: The bank’s distinctive feature
is the geographic diversity of its assets. The strong
franchise of branches, subsidiaries and affiliates com-
plements Arab Bank’s Jordanian operations and reduces
the group’s credit and political risks across the Mid-
dle East and ensures the solvency of the bank in times
of distress. Around a quarter of the bank’s total assets
are located outside of the MENA region, demonstrat-
ing the presence of real equity in lower-risk countries.
A PROVEN TRACK RECORD: Strong earnings growth
in the last decade provides proof of Arab Bank’s high
core earnings stability and underpins the group’s robust
revenue generating capacity. In particular, the resilience
of core revenues during 2009 and 2010 signify the
strong operating performance of the bank, which
maintained a level of around 2.8% of total assets,
despite the escalating political tensions in the region
and the weakening global economy at that time.
Despite the fact that Arab Bank’s asset quality indi-
cators are on a weakening trend, and a difficult oper-
ating environment in Tunisia, Egypt and Yemen could
continue to challenge asset quality, the bank’s size
and strong capital cushion will be sufficient to absorb
more shocks in the event of future unforeseen loss-
es. In fact, provisioning coverage recently improved to
around 94% at the end of 2013, compared to 50.3%
in 2009, as the bank increased provisions during 2010
due to sizeable exposures to two troubled Saudi groups.
Arab Bank’s non-performing loans ratio fell to 7% at
the end of 2013, down from 8.1% in 2012. Further-
more, the bank’s ratio of gross loans to total deposits
remained at a comfortable 66.7% at the end of 2013,
suggesting there is room for Arab Bank to leverage its
balance sheet. A higher gearing ratio would boost
return-on-equity, which currently does not compare
favourably with many Jordanian and regional banks.
The central bank’s accommodating monetary poli-
cy is encouraged by higher foreign reserves and the
improved liquidity of the Jordanian dinar. Increased
public spending due to GCC grants should help to stim-
ulate growth and boost credit appetite. However, Arab
Bank is a defendant in a series of lawsuits for alleged-
ly providing financial and other support for terrorist
organisations. In late September 2014 it was found
liable for providing assistance to Hamas in a civil case
in the US, although Arab Bank is likely to appeal the
decision. Several similar cases are still pending. These
could affect the bank’s capital position, putting down-
ward pressure on both its profitability and share price.
65
THE REPORT Jordan 2014
ARBK price & index relative performance
Jun-13 Oct-13 Feb-14 Jun-14
0
3
6
9
12
15
18Price
0
600
1200
1800
2400
3000
3600 IndexPrice (JD)
12M High
12M Low
Market Cap (JD bn)
PERFORMANCE
MARKET RATIOS
ARBK market ratios
Data as of June 12th, 2014
1M 3M 12M
Avg daily price (JD) 8.87 9.10 8.06
Avg daily vol (JD 000) 133.21 96.59 110.38
Reuters code: ARBK.AM
8.90
10.20
6.53
5.07
Arab BankBanking
CAPITAL MARKETS SHARE ANALYSIS
Share analysis & data provided
by Capital Investments
THE COMPANY: Cairo Amman Bank was established
in 1960 when Egypt’s Banque du Caire converted its
branch in Amman to a public shareholding compa-
ny. The bank operates in Jordan and Palestine with
Jordan being its primary market. In 2013 about 82%
of Cairo Amman Bank’s pre-tax income originated
from its operations in Jordan. The bank is also one
of Jordan’s most well-known mid-sized banks, with
its main focus being on the retail sector. Specifical-
ly, the bank targets the employees of Jordan’s large
public sector. In Palestine, however, the bank focus-
es on the corporate sector with the majority of its
loans directed towards the Palestinian National
Authority, telecoms, trading and manufacturing.
As a retail bank that primarily focuses on public
sector employees, around 67% of gross loans at year-
end 2013 were related to retail banking. The retail
segment generated 50% of Cairo Amman Bank’s
interest income in 2013. The company also has a very
strong edge in this area, as it was the first Jordan-
ian bank to penetrate this market.
IMPRESSIVE CREDIT: With a 4.74% non-perform-
ing loans (NPL) ratio and a net NPL coverage ratio
of 108% for the first quarter of 2014, the bank’s cred-
it quality remains the best compared to its peer
group. This strong asset quality reflects the bank’s
deep understanding of the retail sector, high depend-
ence on public sector employees, prudent risk man-
agement and low exposure to the high-risk small and
medium-sized enterprises and corporate segments.
Cairo Amman Bank enjoys strong liquidity, with
liquid assets such as government securities usually
comprising more than 40% of total assets. The bank’s
prudent liquidity management was evident in the
2008-10 period, during which it prioritised liquidity
over profitability in order to face any possible pres-
sures from the global economic downturn.
IMPROVING FISCAL POSITION: The government’s
IMF-supported fiscal reform programme, currently
under implementation, along with foreign aid, should
help the government curb the budget deficit in the
medium term. This implies reduced financing needs
by the government and lower interest rates on pub-
lic debt instruments. Made up almost entirely of
Treasury bills and government-backed bonds, the
bank’s bond portfolio is expected to yield lower
returns in the foreseeable future.
However, improving economic conditions are also
set to boost the company’s loan book. Economic
growth is estimated to accelerate to 3.5% in 2014,
up from 2.8% in 2013, for the following reasons: an
expansionary monetary policy, increased public
spending and the influx of Syrian refugees. These
factors combined should enhance economic growth
and stimulate borrowing.
WELL-DIVERSIFIED FUNDING: Cairo Amman Bank’s
total deposits represent around 90% of the banks’
non-equity funding. Customer deposits alone, which
accounted for around 82% and 74% of total deposits
and non-equity funding, respectively, at the end of
the 2013 fiscal year funded more than 64% of the
bank’s total assets. Government and public sector
deposits accounted for 15% of customer deposits
at the end of the 2013 fiscal year, while retail account-
ed for 63% of customer deposits. The deposit mix is
skewed towards low-cost deposits, with current and
savings account (CASA) funds comprising 53% of
the bank’s customer deposits.
Cairo Amman Bank acquired a 10% stake in Nation-
al Bank of Iraq, which is majority owned by the Cap-
ital Bank of Jordan. This reflects the bank’s intention
to deploy some of its excess capital to expand in the
region. The Palestine Telecommunications Compa-
ny and Fursan Investment Group also bought stakes.
The fierce competition on low-cost CASA deposits
will ultimately increase Cairo Amman Bank’s cost of
funds and in turn compress the interest rate spread.
In addition, the medium size of the bank limits its
pricing power as the bank competes with smaller
players for funding and large banks for loan pricing.
66
CABK price & index relative performance
Jun-13 Oct-13 Feb-14 Jun-14
0
1
2
3
4
5
6Price
0
600
1200
1800
2400
3000
3600 IndexPrice (JD)
12M High
12M Low
Market Cap (JD m)
PERFORMANCE
MARKET RATIOS
CABK market ratios
Data as of June 12th, 2014
1M 3M 12M
Avg daily price (JD) 3.69 3.80 3.11
Avg daily vol 4686 11,044 17,274
Reuters code: EICO.AM
3.71
4.00
2.51
371.0
Cairo Amman BankBanking
www.oxfordbusinessgroup.com/country/Jordan
CAPITAL MARKETS SHARE ANALYSIS
THE COMPANY: Al Eqbal Investment Company, for-
merly known as the International Tobacco and Ciga-
rettes Company (ITCC), was established in 1992 as a
public shareholding company focusing on the produc-
tion and distribution of tobacco products. In 1998 ITCC
signed an agreement with Phillip Morris Internation-
al to locally produce and market L&M cigarettes and
the arrangement later expanded to include the Marl-
boro brand in 2002. These agreements helped increase
ITCC’s share in the local market to 40%.
The prospects for ITCC’s cigarettes business looked
very promising as the company’s sales grew by more
than 170% between 1998 and 2002. In subsequent
years, sales began to experience a decline, mainly on
the back of a 40% decline in exports sales as a result
of intensifying competition in Iraq, which constitutes
90% of ITCC’s exports. In order to offset the declin-
ing cigarette business, the company’s management
decided to search for profitable alternatives. The
opportunity presented itself in Al Fakher Tobacco Fac-
tory, a company based in the United Arab Emirates
(UAE) that specialises in the production and distribu-
tion of flavoured molasses, which was acquired for
$11m during 2006. Al Fakher, a leader in its market,
played a crucial role in opening a new segment for
the company, with sales increasing from JD6m ($8.47m)
in 2006 to around JD99m ($139.85m) in 2013. The
company then decided to enter the field of renew-
able energy, where its subsidiary Al Taif Investment
imports and sells photovoltaic cells and systems.
In the wake of Al Eqbal’s acquisition of Al Fakher,
manufacturing methods were upgraded by installing
state-of-the-art machinery and the automation of
the factory’s production lines. This enabled the firm
to offer its products to the market with consistency
in quality and packaging. With its brand standing out
for its quality and wide variety among a number of
competitors, such as Al Nakhla Tobacco (Egypt), Al
Waha (Jordan) and Layalina (UAE), Al Fakher cur-
rently operates and sells in more than 100 countries.
TOP-LINE TRENDS: Al Eqbal’s positive outlook is based
on medium-term prospects for flavoured tobacco or
molasses, which is expected to account for 100% of
operating revenues going forward and remain encour-
aging, as the pricing environment that helped sustain
revenue growth trends remains intact. The industry’s
business model is fairly straightforward, with volumes
being the key driver of revenues while cost-cutting
continues to add leverage to operating profits.
In addition to expectations of strong top-line trends,
there is little in the way of cost pressures to divert
revenue growth from earnings. Since the company
tends to hold several months of semi-processed tobac-
co inventory, which is the largest raw material input
cost, the impact of raw material price fluctuations is
usually smoothed significantly. The implications of
this stability in Al Eqbal’s largest input cost are unlike-
ly to put pressure on margins in the foreseeable future.
CASH GENERATION & RETURN: Al Eqbal has strong
and predictable cash generation. With limited merg-
er and acquisition opportunities in the foreseeable
future, a solid debt-free balance sheet, and relative-
ly modest capital expenditure requirements, it is more
likely that Al Eqbal will continue to return excess cash
to shareholders in the medium term. Al Fakher’s mar-
ket share still has room to grow, and although official
market share figures for the flavoured tobacco seg-
ment are not available, industry observers are confi-
dent that Al Fakher can continue expanding, especial-
ly when considering the fact that the company has
not yet focused on major markets, such as Turkey.
Like all other tobacco and cigarette producers, Al
Eqbal is sensitive to higher taxation on tobacco-relat-
ed products and increased smoking restrictions, in
addition to a stronger US dollar, which could also
weigh on the company’s top line. However, in the case
of Al Eqbal, these risks are relatively manageable giv-
en the broad geographic diversification of the com-
pany’s revenues and the size of the still untapped
markets that Al Eqbal has yet to enter and grow into.
67
THE REPORT Jordan 2014
EICO price & index relative performance
Jun-13 Oct-13 Feb-14 Jun-14
0
4
8
12
16
20
24Price
0
600
1200
1800
2400
3000
3600 IndexPrice (JD)
12M High
12M Low
Market Cap (JD m)
PERFORMANCE
MARKET RATIOS
EICO market ratios
Data as of June 12th, 2014
1M 3M 12M
Avg daily price (JD) – – –
Avg daily vol – – –
Reuters code: EICO.AM
13.36
15.65
10.00
334.0
Al Eqbal Investment CompanyTobacco and cigarettes
Share analysis & data provided
by Capital Investments
CAPITAL MARKETS SHARE ANALYSIS
THE COMPANY: Established in 1960 in Jordan, the
Bank of Jordan (BOJX) has evolved into a key player
in the Jordanian banking sector. The bank is a medi-
um-sized institution with 67 branches in Jordan, 14
in Palestine, and a subsidiary in Syria.
In the Jordanian market, the BOJX accounts for 4.2%
of customer deposits and 5.1% of credit facilities. The
bank’s market share is considerably higher in the
Palestinian Territories, where it holds a 10.9% share
of deposits and 7.7% of loans. Finally, in Syria, the BOJX
has claimed 4% of deposits and 6.8% of credit facil-
ities from private banks.
Although the BOJX does have a regional presence,
the Jordanian market generated 85% of the bank’s
total revenues in 2013. The BOJX focuses predomi-
nantly on the corporate segment with corporate
clients comprising 42% of the bank’s loan portfolio.
It is worth noting that the corporate segment gen-
erated JD37m ($52.3m) in revenues, 31% of the
BOJX’s total interest income.
For 2013 the bank disbursed JD40.7m ($57.5m) to
shareholders, an increase of 12.3% over the previ-
ous year, which translated to a basic earnings per
share of JD0.263 ($0.37). Additionally, shareholder-
s’ equity of the bank increased by JD40.5m ($57.2m),
an increase of 14.6%, to reach JD317m ($447.8m).
LOW-COST FUNDING BASE: The BOJX’s deposit mix
is skewed towards the low-cost current and savings
accounts, which constituted around 65% of the
bank’s deposits as of the end of 2013, when total
deposits stood at JD1.5bn ($2.18bn). The bank’s cost
of funds was at around 2% at the end of 2013.
The capital adequacy ratio remained strong, drop-
ping slightly to 16.30% in 2013, compared to 16.46%
the previous year. This continues to be well above
the 12% required by the Central Bank of Jordan and
the 8% indicated in the Basel II guidelines.
CREDIT METRICS: Despite a 12-basis-point improve-
ment in the non-performing loan ratio to 9.8% at the
end of 2013, the bank’s credit metrics remain weak
compared to other Jordanian banks. This was main-
ly attributed to the bank’s significant exposure to
the high risk mortgage and corporate sectors. How-
ever, the majority of mortgage loans and many cor-
porate loans are collateralised, which leaves ample
room for recovery in the foreseeable future. In addi-
tion to the drop in NPLs, the coverage ratio (after
deducting interest in suspense) rose to 93% for 2013
compared with 83% for the previous year.
EMPHASIS ON THE RETAIL SECTOR: The econom-
ic slowdown in Jordan, side-by-side with the accu-
mulating NPLs in the corporate segment, has pushed
the bank towards more emphasis on the retail sec-
tor. In 2013 retail loans accounted for 22% of the
bank’s total facilities, as compared to 18% in 2010.
This shift towards the retail sector is expected to
improve the bank’s credit quality.
IMPROVING ECONOMIC CONDITIONS: Economic
growth is expected to accelerate to 3.5% in 2014 up
from 2.8% in 2013 for a number of reasons. Expan-
sionary monetary policy implemented by the mon-
etary authorities has culminated recently in a 50-
basis-point cut to the policy rate, while public
spending is also on the rise. Meanwhile, the influx
of Syrian refugees is likely to increase related eco-
nomic activity. These factors combined should
enhance economic growth and stimulate borrowing.
RISKS: Although the BOJX operates in two areas that
have recently experienced violent conflict – Syria and
the Palestinian Territories – these risks have been
largely mitigated. The BOJX has only a limited pres-
ence in Syria, while risks from the recent conflict in
Gaza Strip are negligible, as the bank mainly oper-
ates in the West Bank. In addition, the bank would
be subject to regulatory risk emanating from the
new income tax law draft. Under the proposed law,
banks would be subject to a 35% tax rate compared
to the 30% under the current law. Going forward,
the BOJX’s risk management operations continue
to monitor for internal and external potential risks.
68
BOJX price & index relative performance
Jun-13 Oct-13 Feb-14 Jun-14
0
1
2
3
4
5
6Price
0
600
1200
1800
2400
3000
3600 IndexPrice (JD)
12M High
12M Low
Market Cap (JD m)
PERFORMANCE
MARKET RATIOS
BOJX market ratios
Data as of June 12th, 2014
1M 3M 12M
Avg daily price (JD) 2.59 2.52 2.45
Avg daily vol 41,149 30,959 21,275
Reuters code: Bojx
2.61
2.21
2.81
404.8
Bank of Jordan Banking
www.oxfordbusinessgroup.com/country/Jordan
Share analysis & data provided
by Capital Investments
69
InsuranceMarket accounts for around 3% of regional GWPs
The industry is dominated by compulsory motor lines
High level of competition makes profitability a challenge
Takaful segment has considerable potential going forward
Regulatory restructuring has implications for the sector
INSURANCE OVERVIEW
The regulatory framework for the sector is about to be overhauled
Jordan’s insurance industry is at something of a cross-
roads. Having shown its ability to grow in a trying eco-
nomic environment, the sector’s future expansion is
challenged by increasing competition and a signifi-
cant change in the regulatory framework by which it
is governed. The optimism which currently surrounds
the industry is derived from the growth prospects of
the wider economy, against which backdrop the IMF
anticipates a 4% rise in GDP over 2015. The extent to
which Jordanian insurers will be able to take advan-
tage of the opportunities arising from the nation’s
increasing economic activity depends largely on how
the structural changes the sector is currently under-
going are finally implemented.
RAPID DEVELOPMENT: The growth of the Jordan-
ian insurance industry reflects the maturation of the
nation’s economy since its independence in 1946. In
the years following the birth of the modern nation
the flow of trade through the southern port of Aqa-
ba increased demand for insurance cover to offset
the risk of rising vessel and motor movements, result-
ing in the creation of the first domestic insurer – Jor-
dan Insurance Company.
Over the following decades market competition
gradually increased, and it fell to the first industry
body – the Jordanian Association for Insurance Com-
panies – to imbue the nascent sector with technical
competence and the principles of good governance.
By the 1980s, the sector had reached a stage of over-
saturation, with 33 companies and 23 agencies and
branches vying for relatively modest aggregated pre-
miums of JD33m ($46.62m). A period of market ratio-
nalisation was inevitable, and the reckoning came
with the recession of the 1980s, when the losses of
insurers prompted the government to freeze the
issuance of new insurance licences and to introduce
the Insurance Practice Monitoring Act, which aimed
to strengthen the sector by significantly raising cap-
ital requirements. By 1987 the number of domestic
insurers in the market had fallen to 17, and it was not
until the 1995 that the government lifted the prohi-
bition on new firms, doing so alongside another hike
in capital requirements made to ensure the stability
of the sector. By the turn of the century the number
of insurance companies in the market had rebound-
ed to 27, a high number for the available premium pool,
but one supported by a considerably greater degree
of technical probity than hitherto seen in the sector.
MARKET STRUCTURE: Nevertheless, insurers today
face a level of competition that has made achieving
profitability a challenge. After several entries and exits
to and from the market since 2000, the number of
licensed insurers operating in the industry has levelled
off once again at 27. Between them they hold total
assets of around JD773m ($1.09bn), according to the
Jordanian Insurance Association, and pursue about
JD490.8m ($693.3m) in gross premiums. Of the total,
17 firms are composite players, offering products and
services across both life and non-life segments. Nine
offer only non-life policies, while a single player –
American Life Insurance (Metlife Alico) – pursues
business exclusively in the life segment.
The market is a highly fragmented one: a 2011 study
of the sector by local firm Capital Investments gave
it a score of 529 on the Herfindahl-Hirschman Index,
a measure of market concentration, and identified only
four firms with a market share of over 5%. This trend
has continued to the present. According to data from
the Jordan Insurance Federation (JOIF), only Arab Ori-
ent Insurance Company (with a 16.5% share of gross
premiums), Jordan Insurance (10.14%) and Middle
East Insurance (7.35%) exceeded the 5% market share
threshold as of first-half 2013, with First Insurance –
traditionally considered one of the “big four” – claim-
ing a share of 4.9%. However, despite an obvious need
for consolidation, the industry has not seen any merg-
ers or acquisitions in more than two decades.
The reasons for this are similar to those elsewhere
in the region: a pattern of ownership in which promi-
nent families, none of which wish to cede control of
The number of licensed
insurers has levelled off at
27. Between them they
hold total assets of around
$1.09bn and pursue about
$693.3m in gross
premiums.
The market is highly
fragmented with only three
insurers holding a market
share of more that 5% as of
mid-2013, with a fourth at
4.9%. However, despite an
obvious need for
consolidation, the industry
has not seen any mergers
or acquisitions in more
than two decades.
70
Changing with the timesIncreased competition and new regulations transform the sector
www.oxfordbusinessgroup.com/country/Jordan
INSURANCE OVERVIEW
their companies, play a notable part, and a lack of per-
ceived benefits to any partnership with other market
participants. “There is really no advantage [to merg-
ing] for most companies,” Yacoub Sabella, general
manager of Al Nisr Al Arabi Insurance, told OBG. “The
majority of the market is concentrated on third-par-
ty motor insurance where the premiums are fixed [by
the government], so there is no benefit in two motor-
focused companies joining to make a larger one. The
bigger, successful companies, meanwhile, are quite
happy growing organically in the lines they want to
be in.” The result is elevated levels of competition and
the corollary of low profit margins, especially for the
numerous smaller players that claim 2% or less of the
available aggregate premiums.
TAKAFUL: In common with other insurance sectors
in the region, sharia-compliant, or takaful, operators
play a role in the Jordanian industry. The decision by
the regulator to liquidate the struggling Al Baraka
Takaful in January 2014 has left two Islamic insurers
in the market, which compete for business alongside
their conventional peers. While their share of the
market is modest – a PwC report published in 2013
suggests that takaful operators account for around
7.9% of the total – the success of takaful across the
GCC demonstrates the segment’s potential for growth.
THE WIDER INDUSTRY: The industry’s activities sup-
port a network of ancillary services, including 583
agents licensed by the Insurance Commission (IC) as
of 2013, 142 insurance brokers, 22 reinsurance bro-
kers (as well as 36 foreign reinsurance brokers), 58
loss adjusters and surveyors, one coverholder, 18
actuaries and 31 insurance consultants.
There are no standalone reinsurers domiciled in
Jordan, and therefore the nation’s insurers transfer
their risk to reinsurers abroad or – to a lesser extent
– to a number of local insurance companies which
reinsure one another. The current regulatory system
places no geographical limitations on reinsurance
activity, demanding only that institutions rated “BBB”
or above be used. Europe, particularly Germany and
France, is a popular destination for reinsured business,
with most firms implementing standard treaty insur-
ance models and turning to facultative reinsurance
arrangements on a risk-by-risk basis when established
treaty reinsurance agreements are not sufficient.
Retention levels vary from segment to segment, with
most firms ceding around 10% of premiums on motor
and up to 90% on aviation. Thanks to the size of the
motor segment, the nation’s overall retention level is
higher than that see in other regional markets, where
50%-plus cession rates are the norm across most lines.
Reinsurance capacity has not emerged as a chal-
lenge to the Jordanian insurance industry, thanks in
large part to the high number of regional and inter-
national reinsurance companies that are present in
the market, often taking stakes in local firms in order
to secure business. For example, AXA, Allianz and
Munich Re, among other foreign players, hold strate-
gic investments in Middle East Insurance, Al Nisr Al
Arabi Insurance and Jordan Insurance, respectively.
MARKET CHARACTERISTICS: Jordan’s insurance
market is relatively small compared to many of its
regional peers, contributing around 3% to the MENA
region’s gross written premiums (GWPs) according to
a 2013 report by PwC, compared to the UAE’s 30%
and Saudi Arabia’s 23%. This puts it on a level with
nations such as Kuwait (4%) and Lebanon (5%), both
of which have considerably smaller populations than
Jordan. The potential for future growth is therefore
significant. As with other markets in the region, activ-
ity in the sector is dominated by the non-life seg-
ment, which, according to IC data, accounted for 90%
of Jordan’s gross insurance premiums in 2013. Life
insurance has traditionally been eschewed in Middle
East markets, thanks in part to a historical perception
that it contravenes Islamic principles. In Jordan it has
been growing modestly over recent years, and at a
slower pace than non-life lines: between 2007 and
2012 life GWPs expanded at a compound annual
growth rate of 8%, compared to the 10% growth of
71
THE REPORT Jordan 2014
Retention rates vary by segment, ranging from 10% to around 90%
Jordan’s insurance market is
relatively small compared
to many of its regional
peers, contributing around
3% to MENA GWPs. This
puts it on a level with
nations such as Kuwait
(4%) and Lebanon (5%),
both of which have smaller
populations, suggesting
that there is ample room
for growth going forward.
SOURCE: Jordan Insurance Commission
2009 2010 2011 2012 2013
Gross insurance premiums 365.1 408.6 436.7 466.5 490.8
Gross general insurance premiums 330.2 370.6 395.9 422.1 443.3
Motor 150 176.71 183.82 195.87 200.39
Marine & transport 20.3 21.23 23.85 24.9 24.58
Aviation 4.6 3.38 6.89 5.36 3.71
Fire & other damage to property 53.5 56.29 57.37 61.18 68.09
Liability 8.3 6.3 6.38 5.95 6.55
Credit & surety ship 0.6 0.46 0.46 0.31 0.4
General classes 10.8 12.18 11.22 10.88 11.29
Medical 82.1 94.03 105.89 117.66 128.33
Gross life premiums 34.9 38 40.8 44.36 47.43
Life 33.8 36.66 38.62 39.77 42.87
Investment-linked 1 1.25 2.05 2.51 2.81
Annuities 0.1 0.13 0.13 2.08 1.74
Permanent health 0 0 0 0 0
Insurance sector indicators, 2009-13 (JD m)
INSURANCE OVERVIEW
non-life business over the same period, according to
PwC. Despite the relatively small size of the market in
terms of GWPs, Jordan’s insurance sector performs
relatively well when looked at in terms of its relation
to GDP: insurance penetration (calculated as a per-
centage of GDP) stood at 2.13% in 2012, according
to a report by the Middle East Insurance Review, sec-
ond only to Lebanon in the region and well in advance
of larger insurance markets such as the UAE (1.98%)
and Saudi Arabia (0.75%).
SEGMENTS: The insurance sector is dominated by
the motor segment, which in 2013 accounted for
40.8% of GWPs, for a value in excess of JD200m
($282.5m). Motor insurance is, however, also one of
the most problematic lines from the perspective of
the country’s underwriters. Insurers offer two main
policy types, fully comprehensive and third-party lia-
bility (TPL) coverage, with the latter being the mini-
mum compulsory insurance level for car owners as
mandated by the government.
The difficulty for insurers lies in the regulatory
requirement that in order to sell comprehensive cov-
erage they must also provide TPL cover at a premium
that is established by the government. The current
premium level of TPL is considered by the industry to
be too low, and many insurers accept losses on this
line of business which they endeavour to offset with
their more profitable comprehensive offerings. The
result is a downward pressure on technical results
that will continue for as long as this structural chal-
lenge to the industry remains.
Medical insurance is the second-largest business
line in the sector, accounting for 26.1% of GWPs in
2013. Here again, achieving a profit has represented
a challenge for market participants, but in this case
as a result of the high levels of competition and low
barriers to entry, both of which have served to push
the floated premiums downwards. Yet more pressure
on pricing has come over the past year as the gov-
ernment’s effort to remove subsidies on electricity and
fuel has resulted in health care providers seeking to
raise prices for services – in some cases by as much
as 20%. Insurance companies negotiate directly with
health care providers to establish pricing levels, usu-
ally on an annual basis, and therefore the coming year
is likely to see insurers request more managed price
increases in place of substantial price hikes.
Fire and property insurance represents another sig-
nificant segment of business for the sector, account-
ing for 13.9% of GWPs in 2013. Profitability in this area
has been underpinned by the IC’s recent introduction
of a prevention and self-protection mandate, which
requires companies buying fire insurance to produce
a certificate demonstrating that they have taken
measures to reduce the risk of fire – a development
that is credited with reducing loss ratios.
LIFE LINE: Life insurance products and services
accounted for 8.7% of GWPs in 2013, and are gener-
ally offered according to one of three models: pure
life insurance, by which a lump sum is paid on death;
combined life and investment policies; and group life
insurance – aimed at firms wishing to offer insurance
plans to their employees. The slowdown in retail bank-
ing and mortgage activity in the wake of the 2008-
09 economic downturn, coupled with a decline in the
value of equity markets, negatively affected some life
business, but low loss ratios make this one of the
more profitable segments. A growth rate of 7.8% in
2013 demonstrated a continued interest in life insur-
ance and, while life penetration levels remain low, it
is regarded as a promising avenue to future growth.
Other significant lines include marine and transport
(5% of GWPs in 2013), which is crucial to the port and
trade sectors and incorporates the aviation insurance
requirement of commercial, passenger and private
aircraft; liability insurance (1.3% of GWPs in 2013),
which covers risk related to fraud, theft, profession-
al malpractice and public liability; and credit and sure-
ty insurance (0.1% of GWPs in 2013), which covers
loans and offers payment protection to the holder of
the loan in case of default.
PERFORMANCE: IC data reveal a steady trajectory
of growth in the Jordanian insurance sector over
recent years. The industry showed its resilience dur-
ing the global economic crisis by posting a rise in
GWPs during the challenging years of 2008 and 2009,
when the aggregate total rose year-on-year from
JD333m ($470.4m) to JD365.1m ($515.7m).
Since that time the sector’s GWPs have grown
steadily to reach JD490.8m ($693.3m) as of the close
of 2013. The credit and surety ship insurance segment
72
Medical insurance is the second-largest line in the sector, accounting for 26.1% of GWPs in 2013
The sector is dominated by
the motor segment, which
in 2013 made up 40.8% of
GWPs. Insurers offer two
main policy types, fully
comprehensive and TPL
coverage. To sell
comprehensive coverage,
insurers must also provide
TPL cover at a price set by
the government.
The industry showed its
resilience during the global
economic crisis by posting
a rise in GWPs during the
challenging years of 2008
and 2009, when the
aggregate total rose
year-on-year from $470.4m
to $515.74m. GWPs have
continued to grow steadily,
reaching $693.3m as of the
close of 2013.
www.oxfordbusinessgroup.com/country/Jordan
SOURCE: Company financial statements
Gross premiums Net profit
2012 2013 2012 2013
Arab Orient Insurance 77.59 86.02 3.34 4.11
Jordan Insurance 52.06 60.08 4.75 0.68
Middle East Insurance 33.31 36.12 1.58 3.41
First Insurance 21.3 22.4 1.37 1.3
Performance of leading insurers, 2012-13 (JD m)
INSURANCE OVERVIEW
experienced the fastest growth rate since 2009,
expanding by 29.6% over the period from 2009 to
2013, followed by fire and property insurance (11.3%)
and the medical business (9.1%). At the other end of
the performance table, both the aviation segment
and marine lines posted a contraction over the same
period of 30.7% and 1.3%, respectively, while motor
has grown at a modest 2.3%.
PROFITS IN RANGE: The difficulty of achieving sus-
tained profitability in an environment in which the state
controls motor premiums represents a challenge for
Jordan’s smaller insurance companies, many of which
have business models built almost exclusively around
underwriting motor insurance, but the nation’s larg-
er insurers, generally composite players offering a
wide range of lines, have demonstrated their ability
to turn a steady profit over a number of years.
The big four players all achieved a technical profit
in 2013, with Arab Orient Insurance leading the pack
with a net profit for 2013 of JD4.1m ($5.79m); followed
by Middle East Insurance on JD3.4m ($4.8m); First
Insurance on JD1.3m ($1.84m); and Jordan Insurance
on JD680,940 ($961,896).
The robust overall performances of the big four,
combined with their diverse business portfolios and
strong risk-adjusted capitalisation, has enabled them
to retain solid financial strength ratings (FSRs). AM
Best has granted Arab Orient Insurance, Jordan Insur-
ance, MEICO and First Insurance a FSR of “B++”, with
a stable outlook, which places them at the highest lev-
el of the industry in the kingdom.
REGULATION: The regulatory structure of the sec-
tor is undergoing a process of significant change in
2014. Since 1999, the IC has acted as a financially and
administratively independent regulator for the sec-
tor. It has operated with a wide mandate, which includes
the oversight and development of the industry, the
protection of the rights of the insured, the issuance
and revocation of licences for insurers and support-
ing entities such as agents and brokers, the approval
of new insurance products and senior staff within
the sector, and the undertaking of corrective action
against companies which transgress the rules.
Much of the commission’s authority is derived from
the Insurance Regulatory Act No. 33 of 1999, which,
together with a range of subsequent acts, has intro-
duced international best practice to a number of areas
of the market. For example, the act requires insurance
companies to submit regular financial statements,
follow a professional code of conduct and profes-
sional ethics, meet minimum standards of corporate
governance, and adhere to stringent guidelines with
regard to the disposal of funds and assets. The IC has
also established a regulatory framework which gov-
erns the activities of the sector’s takaful providers,
which dates from 2011.
However, while the regulator was carrying out rou-
tine duties such as receiving and checking financial
results as normal as of mid-2014, its position as an
independent entity was about to come to an end. This
development stems from a government announce-
ment in late 2012 that the IC would be among six pub-
lic agencies that would be wound down as part of cost-
saving measures, and that its mandate would be
assumed by the Ministry of Trade and Industry. How-
ever, despite the subsequent debate between the
government and industry stakeholders, it has not
been fully established how exactly this transition will
be completed. Wherever government responsibility for
the insurance sector ultimately resides, the JOIF will
continue to play an important role in its development.
Formed in 1956, the JOIF was the sector’s regula-
tory authority before it was repurposed as an indus-
try body representing the interests of insurers, devel-
oping the technical competence of the sector, and
establishing insurance and reinsurance pools as
required by the market. Working within the JOIF is the
Compulsory Unified Insurance Office, established in
1987, which is concerned with vehicle insurance,
including the important issues of allotting the due por-
tions of compulsory vehicle cover to insurance com-
panies and the settlement of accident claims.
OUTLOOK: Given the central role that regulatory
bodies play in developing insurance sectors across the
region, the pending dissolution of the IC is of great
consequence to the industry. The resolution of this
question will therefore remain the most salient indus-
try issue for the time being. While the creation of a
robust and modern regulatory framework and the
effective supervision of the sector represent deter-
mining factors for growth, in the short term the bat-
tle for market share will be fought on issues such as
product innovation and service provision.
In the longer term, the newly reformed regulator
is likely to face increasing industry pressure to expand
compulsory schemes beyond medical and motor lines
and foster the creation of larger insurance compa-
nies by incentivising mergers and acquisitions. In
this regard Jordan is likely to follow a regional trend
of sectoral rationalisation and growth based on a bet-
ter understanding of the benefits of insurance cover.
74
The government-set premium level for third-party liability coverage is widely considered to be too low
Achieving sustained
profitability is a challenge
for smaller insurers, many
of which focus almost
exclusively on motor
insurance, but larger
insurers offering a wide
range of lines are able to
turn a steady profit.
In late 2012 the
government announced
that the Insurance
Commission would be
among six public agencies
that would be wound
down, and that its mandate
would be assumed by the
Ministry of Trade and
Industry. This process was
still ongoing as of
mid-2014.
www.oxfordbusinessgroup.com/country/Jordan
75
EnergyThe country is seeking to diversify mix of power sources
Government looking into developing alternative energy
Exploration efforts continue in order to meet demand
New oil shale finds are creating renewed prospects
ENERGY OVERVIEW
The country has emphasised the development of renewable energy
One of the biggest challenges facing Jordan is keeping
up with the rapidly increasing demand for energy, as it
continues to grow economically. Energy demand over
the past four years increased rapidly after the popula-
tion grew by an enormous 20% due to the Syrian refugee
influx. Sabotage attacks in Egypt halted Egyptian gas
supplies to Jordan, which forced the country to substi-
tute the relatively cheap gas with much more expen-
sive diesel and heavy fuel. This challenge is made all
the more difficult by the fact that the country current-
ly has few developed energy sources of its own, while
historical partners overseas, who have traditionally sup-
plied Jordan with oil and natural gas, have recently been
unable to meet their commitments.
As a result, Jordan has had to rapidly develop and com-
mercialise a range of frontier technologies in energy –
such as shale oil – while also boosting usage of more
tried and tested methods. Renewable energy (RE) has
risen to a level and status seldom seen even in more
developed economies, while energy efficiency drives
are also much more widespread than in neighbouring,
more energy-rich countries.
Lack of domestic resources may thus give Jordan an
advantage in the longer term, as it begins to leverage
its experience and expertise in energy paths that many
other countries will also soon have to follow. In the mean-
time, though, the country has a major need for invest-
ment in all branches of the energy sector, ranging from
electricity generation and transmission to solar panel
manufacture and oil shale exploitation.
FACTS & FIGURES: According to the latest Ministry of
Energy and Mineral Resources (MEMR) figures, crude
oil and oil products accounted for 82% of primary ener-
gy consumption in 2013, followed by 11.11% for nat-
ural gas, 1.78% for renewable energy and 1.18% for
imported electricity. In terms of oil and gas, Jordan has
extremely limited quantities: Oil & Gas Journal put oil
reserves at around 1m barrels in January 2014, prima-
rily located in the Hamzah field, west of Amman, along
with around 200bn standard cubic feet (scf) of natu-
ral gas, in the Rishah field in the north-east, near the
Iraqi border (see analysis). Production was around 20
barrels per day (bpd) at Hamzah and 21m standard cubic
feet per day (scfpd) in mid-2014, according to officials
from the National Petroleum Company (NPC) who spoke
to OBG. The most recent figures from MEMR, for 2013,
show total domestic crude oil production at 1000
tonnes and gas output at 5.3bn scf, equal to a com-
bined total of 112,000 tonnes of oil equivalent (toe).
For a country that was home to some 6.46m people
in 2013, according to the World Bank, and with aver-
age population growth of 2.2-2.6% over the 1999-2012
period, such output is clearly far short of demand. The
recent addition of significant numbers of Syrian refugees
has further fuelled demand as well.
At the same time, Jordan has experienced sustained
economic growth in recent years – reaching a high of
7.2% in 2008, before the global economic downturn hit
home. The growth rate fell to 5.5% in 2009 and 2.3% in
2010, although GDP expansion has since picked up
again, rising to 2.7% in 2012 and 2.8% in 2013, accord-
ing to figures from the World Bank. The IMF has fore-
cast growth of 3.5% in 2014 and 4% in 2015. In its most
recent World Economic Outlook, the IMF lowered its
growth forecast for the MENA region to 2.6% from 3.2%
in its previous forecast due to instability; despite this,
Jordan still maintained its forecast of 3.5% for 2014.
A 2013 report by the Ministry of Planning and Inter-
national Cooperation (MPIC) stated that primary ener-
gy demand in the country had been rising at 5.5% per
annum, on average, in recent years. MEMR figures,
again for 2013, show primary energy consumption
totalling 8.16m toe, of which 6.69m toe was crude oil
and oil products and 907,000 toe was natural gas.
Without the domestic resources to meet this demand,
and receiving less than a third of the actual contract-
ed amount of gas with Egypt, Jordan has had to spend
substantially more on relatively more expensive imports
of crude oil. Central Bank of Jordan (CBJ) figures show
that the value of crude oil imports rose from JD1.1bn
Crude oil and oil products
accounted for 82% of
primary energy
consumption in 2013,
followed by 11.11% for
natural gas, 1.78% for
renewable energy and
1.18% for imported
electricity.
77
THE REPORT Jordan 2014
The population was
estimated at 6.46m in 2013
and grew at an average
rate of 2.2-2.6% between
1999 and 2012. As a result,
demand for energy has
increased rapidly in recent
years, a trend that is
expected to continue going
forward.
Diversifying the mixAs demand increases and the external environment continues to getmore complicated, the country turns to alternative energy sources
ENERGY OVERVIEW
($1.55bn) in 2009 to JD1.96bn ($2.77bn) in 2012, before
dropping slightly in 2013 to stand at JD1.85bn ($2.61bn).
REGIONAL TURBULENCE: In 2011 Jordan imported
some 97% of its energy needs, a figure that is unlikely
to have changed significantly since. Indeed, in 2013 a
Bank Audi report stated imports of mineral fuels and
lubricants accounted for 27% of the country’s entire
import bill. This scenario is, of course, nothing new.
Since its establishment, Jordan has had to wrestle with
the lack of natural resources. In the past, the govern-
ment has dealt with this – and still been able to sus-
tain robust economic growth – via a series of import
deals with neighbouring countries.
A BIG DEAL: The first of these was a deal with Iraq,
which during the 1980s supplied Jordan with crude oil
at prices far below market levels, in response to Jor-
danian support for Iraq in its conflict with Iran. Anoth-
er major supplier back then was Saudi Arabia, which
supplied oil via the Trans-Arabian Pipeline (TAP). Iraqi
oil came in by tanker truck, but this arrangement unrav-
elled with the Gulf War of 1990-91, subsequent inter-
national sanctions against Iraq – although Jordan was
granted some exemptions – and then finally, the US-
led invasion of Iraq in 2003. These shipments did later
resume, but have been small in nature – between 10,000
and 12,000 bpd, according to a 2014 Reuters interview
with Iraqi oil ministry officials.
Saudi Arabia remains the main source of imported
oil, while Jordan has shifted much of its power gener-
ation from oil to gas. This move was facilitated by a 2002
agreement to purchase Egyptian gas via the Arab Gas
Pipeline (AGP), which runs from Arish, in north-east-
ern Sinai, to Aqaba. Amman signed a 14-year agree-
ment back then with Cairo, stipulating a delivery of up
to 253m scfpd at a preferential rate. The availability of
this gas underscored much of Jordan’s energy policy
during the period, with a shift away from fuel oils and
towards natural-gas-fired power stations. By 2011
around 80% of Jordan’s natural gas needs were being
met by imports from Egypt, according to the MPIC.
Once again, however, the turbulence of the region
has impacted Jordan, albeit indirectly. Since 2011, when
the government of Hosni Mubarak fell in Egypt, Egypt-
ian gas supplies have become unreliable. As of July 1,
2014 there had been very few shipments of gas to Jor-
dan via the AGP since January of that year. Since 2011,
in fact, Jordan received less than a third of the contract-
ed Egyptian gas amounts. This was due first of all to
repeated sabotage of the pipeline in the Sinai desert.
There were also occasions when the Egyptian govern-
ment diverted gas to meet domestic shortfalls. In addi-
tion, a lack of maintenance at the wellheads also caused
supply to stutter at the source. The minister of energy
and mineral resources, Mohammad Hamed, told
reporters in late June 2014, “We do not expect the
resumption of gas supplies to Jordan soon.”
At the same time, the shipments of oil by road from
Iraq have also become difficult to maintain. From ear-
ly 2014 much of the Iraqi province adjacent to Jordan
– Anbar – has been out of the control of the Baghdad
government, as fighting has severely impacted trade.
In December 2013 shipments were therefore halted.
These developments have thus highlighted a major vul-
nerability in the Jordanian energy sector to external
political and security risks.
STRATEGIC PLANNING: The government of Jordan
has, of course, long been aware of these dangers, and
has conducted its energy planning accordingly. This
has followed two broad strategies: the enhancement,
diversification and development of domestic energy
sources and efficiency on the one hand, and the diver-
sification of supply from external sources on the oth-
er. Yazan Al Bakhit, an economic analyst at the Jordan
Atomic Energy Commission (JAEC), told OBG, “With Jor-
dan importing approximately 97% of its total energy
needs, further diversification through a nuclear pro-
gramme will significantly reduce our debt burden.”
The first energy plan incorporating these objectives
was the 2004 National Master Strategy for the Ener-
gy Sector, which was subsequently updated in 2007 and
now runs up to 2020. The strategy aims to achieve the
above goals, and in a way that enhances environmen-
tal protection, through the development of RE projects,
maximising the utilisation of domestic resources, pro-
moting energy conservation and awareness, and gen-
erating electricity from nuclear energy. The RE part of
78
The majority of the country’s oil and gas is imported
The 2004 National Master
Strategy for the Energy
Sector, which was
subsequently updated in
2007 and now runs up to
2020, not only focuses on
improving the sector, but
also on developing energy
in an environmentally
friendly way.
www.oxfordbusinessgroup.com/country/Jordan
SOURCE: Electricity Regulatory Commission * Includes Jordan Armed Forces
2010 2011 2012 2013
Household 4387 4731 5210 5344
Governmental* 806 809 863 797
Commercial 2110 2118 2314 2266
Industrial 3308 3560 3527 3567
Agricultural 563 584 585 621
Water pumping 1282 1287 1344 1452
Street lighting 315 312 301 291
Others 101 171 149 243
Total 12,871 13,572 14,293 14,581
Growth (%) – 5.4 5.3 2
Electricity consumption by sector, 2010-13 (GWh)
ENERGY OVERVIEW
the plan took a major step forward in 2011 with the
passing of the RE and Efficiency Law (REEL) and a sub-
sequent set of by-laws related to REEL in 2012. In 2014
another by-law made RE and energy efficiency system
equipment exempt from sales tax and Customs duties,
and a feed-in tariff law was passed.
Jordan has been moving in recent years to end its fis-
cally burdensome regime of energy subsidies and reform
its subsidy system to benefit the underprivileged. In
2008, an automatic pricing mechanism was adopted
that set monthly fuel and electricity charges below
international levels. This ended in 2011, when the gov-
ernment froze fuel prices. Since then, a gradual reduc-
tion in the level of subsidies has been under way, with
the target of removing them altogether by 2017. The
next reduction – and consequent hike in energy prices
– is set for January 2015. Under the strategic plan, by
2020, the energy sector in Jordan is thus to have changed
substantially. The target is for crude oil and products
to account for approximately half its current share,
falling to just 40%, while RE rises to 10%, natural gas to
29%, nuclear to 6%, oil shale to 14% and imported elec-
tricity to 1%. A huge amount of investment will be
required to achieve these targets – Jordinvest esti-
mates $3.4bn for the oil sector, $4.8bn-5.8bn for the
power sector, $1.4bn-3.8bn into oil shale, $1.4bn-2.1bn
into RE and $2.4bn into natural gas over the plan peri-
od. Carrying out such huge investments will be chal-
lenging, but they represent a potential opportunity.
SECTOR BODIES: A number of important agencies and
ministries are involved in the implementation of the
strategy, with 2014 also seeing a significant reorgani-
sation of these, in line with overall moves to stream-
line and simplify Jordan’s administration. MEMR is the
overall ministry responsible for the sector and reports
to the Cabinet. In oil and gas, there is also the Natural
Resources Authority, which overseas exploration and
surveying, and the NPC, which is a government-owned
entity conducting both exploration and extraction of
oil and gas. Jordan Petroleum Refinery is a listed firm
responsible for refining and producing petroleum deriv-
atives, while the Jordanian-Egyptian Fajer Company has
the licence to operate the gas pipeline from Aqaba to
the north of Jordan and the power plants that have been
receiving Egyptian gas.
On the electricity side, the Electricity Regulatory
Commission (ERC) fell under MEMR. This organisation
set tariffs, issued licences and monitored compliance
with regulations. In 2014, however, the ERC was reor-
ganised and renamed the Energy and Mineral Resources
Regulatory Commission (EMRRC), keeping its previous
functions while taking on others relating to the wider
energy and minerals sectors.
POWERING UP: Jordan has a single buyer model for
electricity, with power generated by independent pow-
er production (IPP) companies sold exclusively to the
National Electric Power Company (NEPCO). A combi-
nation of increased use of fuel oil to compensate for
79
The country employs a
single buyer model in the
electricity sector with
independent power
producers generating
power and then selling it
to the National Electric
Power Company.
ENERGY OVERVIEW
the halted Egyptian gas, which has caused generation
costs to rise more than five-fold, and a subsidy system
that results in power being sold at below-market lev-
els has meant that NEPCO has made serious losses in
recent years. These were as large as $4.23bn since
2011, according to local press reports. This deficit
should come down in the years ahead, though, as sub-
sidies are reduced and new sources come on-line.
The generation companies, meanwhile, are the Cen-
tral Electricity Generating Company (CEGCO), the Sam-
ra Electric Power Generating Company (SEPGCO), the
Qatrana Electric Power Company (QEPCO), the Amman
East Power Plant (AES) and the international power grid,
for imported electricity. Figures from the EMRRC for
2013 show that peak demand in Jordan was 2995 MW
that year, up from 2790 MW in 2012 – a growth rate
of 7.3%. Meanwhile, total generating capacity stood at
3566 MW in 2013, up from 3419 MW in 2012, or 4.3%
growth. Some 17,261 GWh were generated in 2013,
up 4% from 2012, while 14,581 GWh were consumed,
up 2% on 2012. The amount of imported energy fell in
2013 though – down 51.4% from 784 GWh in 2012 to
381 GWh in 2013. The average consumption of elec-
tricity per capita also fell a little, by 0.2%, from 2237
KWh in 2012 to 2233 KWh in 2013. Some 99.9% of the
population was connected to the grid in both years, illus-
trating a major advantage for Jordan. The kingdom has
long had a connected population, with the transmis-
sion and distribution system covering most of the coun-
try. However, the loss ratio was fairly high, though it fell
slightly over the two years from 17.3% in 2012 to 17.1%
in 2013. This shows that while the transmission and dis-
tribution systems may be extensive, they are in some
places in major need of an upgrade – and enforcement
of payments also needs to be improved. Running pow-
er lines across some of the most inhospitable desert
terrain in the world entails considerable maintenance
costs, while the distribution companies also take loss-
es from underinvestment in the “last mile”.
OTHER PLAYERS: In addition to these major firms,
small amounts of power are also being produced by
other sources. The King Talal dam, which lies across the
Zarqa River in the hills of northern Jordan, generates
some 6 MW of power, annually, while in 2013, the EMR-
RC recorded 1 MW from wind energy and 4 MW from
biogas. The industrial sector also generated some 95
MW of its own power, as it has done since 2010, when
it generated 97 MW. This is also then fed into the grid.
The IPPs use both oil and gas to fire their power sta-
tions, with CEGCO consuming 1.73m toe in 2013, down
slightly from 1.8m toe in 2012. SEPGCO consumed
874,000 toe in 2013, down from 887,000 toe in 2012;
AES’s consumption went up from 307,000 toe to 500,000
toe over the same period; and QEPCO’s consumption
went from 445,000 toe to 489,000 toe. In terms of Jor-
dan’s total fuel energy consumption, that used by the
power sector amounted to 45.3% in 2013, according
to EMRRC figures, up from 43.8% the year before. Elec-
80
In 2013 a total of 17,261
GWh were generated,
which marked a 4% rise
over 2012, and
consumption reached
14,581 GWh, up 2% over
the previous year.
ENERGY OVERVIEW
tricity sector fuel consumption rose 5.7% in 2013, on
top of an 11.5% rise in 2012, year-on-year (y-o-y).
After purchasing the electricity from the IPPs, NEP-
CO then sells this on to the distribution companies, which
are the Jordan Electric Power Company (JEPCO), the Irbid
District Electricity Company (IDECO) and the Electrici-
ty Distribution Company (EDCO). These then sell on to
their customers, with JEPCO selling some 8511 GWh in
2013, up from 8473 GWh in 2012. JEPCO also report-
ed that its customer base increased from 1.07m in
2012 to 1.12m in 2013. Over the same period, IDECO’s
sales went from 2181 GWh to 2306 GWh, with the com-
pany reporting 383,000 customers in 2012 and 413,000
in 2013. EDCO’s sales, meanwhile, went from 2492
GWh to 2612 GWh over the two years, and its customer
numbers rose from around 199,000 to 210,000. Over-
all, customer numbers increased by 5.5% y-o-y in 2013.
CONSUMPTION, TARIFFS & THE GRID: In terms of
which sectors consume the most power, households
are in the lead at 36.6% of total consumption in 2013,
when the segment took 5344 GWh, up from 36.4% and
5210 GWh in 2012. The industrial sector comes in sec-
ond, with 24.5% in 2013 and 24.7% in 2012, with con-
sumption rising from 3527 GWh to 3567 GWh y-o-y.
The commercial sector, which includes hotels, radio
and TV, lands in third place, with consumption there
falling slightly from 16.2% and 2314 GWh in 2012 to
15.5% and 2266 GWh in 2013. Water pumping takes
fourth place, consuming 1344 GWh in 2012 and 1452
GWh the following year, equivalent to 9.4% and 10%,
respectively, of the total. Tariffs, which are set by the
EMRRC, differ by sector, time of day and level of con-
sumption. In 2013, for example, the household tariff
for 1 KWh to 160 KWh per month was JD0.033 ($0.047),
while for over 1000 KWh per month it was JD0.259
($0.366). In the industrial sector, small industries paid
JD0.066 ($0.093) for the first 10,000 KWh per month
and JD0.075 ($0.106) per KWh over that.
In 2012 the EMRRC also signed an agreement with
the US Trade and Development Agency to begin a series
of studies on the transformation of the networks of JEP-
CO, IDECO and EDCO into “smart grids”. The firms and
NEPCO have begun rolling out an upgrade programme,
too, with substantial work to be done to the existing
132-KV and 400-KV transmission lines. There are also
230-KV and 400-KV tie lines with Syria, and a 400-KV
tie line with Egypt. NEPCO is also developing a “Green
Corridor” grid reinforcement plan to prepare to absorb
the increased supply of RE-generated power into the
system, which is set to be ready in 2015.
NUCLEAR & RE: The main authorities for nuclear ener-
gy are JAEC, tasked with establishing a nuclear energy
industry, and the Commission for Regulating Radiation
and Nuclear Activity, which regulates the nuclear ener-
gy applications and monitors environmental impact.
Russia’s national nuclear company, Rosatom, won a
tender for a two-unit plant back in October 2013, and
the project development agreement (PDA) between
JAEC and Rosatom was signed in September 2014.
According to current plans, two 1000-MW (Gener-
ation III+) units should be fully operational by 2023-25.
A team of experts led by the International Agency
Energy Agency (IAEA) conducted an Integrated Nuclear
Infrastructure Review (INIR) mission in Jordan in early
August 2014. The team of experts found that notable
progress has been made in the development of the
country’s nuclear infrastructure. “Jordan was the first
country to invite an INIR mission in 2009, and in this
second mission, we have seen that our counterparts
have made notable progress in developing the nuclear
infrastructure in Jordan,” said Jong Kyun Park, INIR mis-
sion team leader and director of the IAEA Nuclear Pow-
er Division. Another team of nuclear safety and radia-
tion protection experts concluded an 11-day IAEA
Integrated Regulatory Review Service (IRRS) mission
to review the regulatory framework for nuclear and radi-
ation safety in Jordan. The IRRS team concluded that
the government of Jordan has shown commitment to
radiation and nuclear safety through various measures.
A smaller, 5-MW research reactor was given the go-
ahead in 2013 too, with this under construction at the
Jordan University for Science and Technology and set
to be operational by 2016. “We are undertaking this
project after having exhausted all possible safety con-
cerns that may arise under a nuclear power plant. In
doing so, we have arrived at the conclusion that nuclear
energy will prove beneficial to all Jordanians in the long
term,” Bahjat Aulimat, a commercial and contract engi-
neer at JAEC, told OBG.
In the RE field, two long-standing institutions are the
Promotion of Renewable Energy and Energy Efficien-
cy Fund and the Jordan Bio-Gas Company, which oper-
ates in the Amman area, using methane extracted from
organic waste to fuel a 3.5-MW power plant.
RESOURCE POOR, RESOURCE RICH: Solar power is
a potential major source of energy. Here too, the king-
dom has a strong competitive advantage – indeed,
parts of southern Jordan have the highest irradiation
figures in the world, at around 6.4 KWh/sq metre/day.
Even in the relatively shady parts of the north and the
Rift Valley, irradiation averages 4.4-4.8 KWh/sq
metre/day, giving the country overall an average of 5.6
KWh/sq metre/day, according to MEMR figures.
At the same time, Jordan has some excellent sites for
generating power from wind. The best wind locations
are often in the western and northern parts of Jordan,
yet given that those are also the most populated areas
of the country, the south may be the focus in the future.
The National Energy Strategy for 2007-20 set a final
target of drawing 10% of the total energy mix from RE
81
THE REPORT Jordan 2014
Following an Integrated
Nuclear Infrastructure
Review conducted by
the IAEA in August 2014,
the agency found that the
government had made
notable progress in
developing infrastructure
for safe nuclear power
generation.
SOURCE: Ministry of Energy and Mineral Resources
Received applications Qualified applications Signed MoUs
Total no. Total capacity (MW) Total no. Total capacity (MW) Total no. Total capacity (MW)
Solar PV 24 545 15 225 14 220
Solar CPV 5 125 2 20 2 20
Solar CSP 8 370 5 225 5 225
Wind 22 1190 12 530 9 395
Other 5 – 0 0 0 0
Total 64 2230 34 1000 30 860
Renewable energy proposals
ENERGY OVERVIEW
sources. However, due to the disruption of Egyptian gas,
MEMR has already issued tenders that would see RE’s
share of the energy mix reach 11.3%, assuming that
growth in energy demand continues at 5.5%. These
new RE projects are set to be operation in 2015, and
it is now anticipated that Jordan will be able to more
than double its 10% goal by 2020.
PROJECT PROPOSALS: Under the REEL, companies
have been allowed to make direct proposals for RE
power generating projects and for connecting these
to the grid. A reference price list was also issued by the
ERC, back in 2012, which for large projects set tariffs
at $0.12/KWh for wind, $0.19/KWh for solar and
$0.17/KWh for photovoltaic (PV) solar, $0.127/KWh
for biomass and $0.85/KWh for biogas. As an incen-
tive to domestic industry, a 15% addition for RE sys-
tems of Jordanian origin was also included in the list.
For small projects, the same 15% addition applies, with
a net-metering system now agreed. The law also states
that the surplus cannot exceed the average consump-
tion of the building to which the solar or wind system
is attached, limiting the amount that can be sold on.
While the REEL law states that distribution firms
should buy net metering electricity at the same price
at which they sell it, the government has tried to change
the tariffs for larger projects. This has caused some con-
cern, as guaranteed tariffs are vital if investment is to
be encouraged. Nonetheless, a wave of unsolicited RE
project proposals were submitted to the ERC. Over 65
entities expressed interest, which was narrowed down
to 34 qualified projects, 30 memoranda of understand-
ing, and 12 final proposals and power purchase
agreements (PPAs), which were signed by March 2014.
By June of that year, seven projects were already
under way, according to data from the NERC. One of
the first to be approved was a 117-MW wind project
on the outskirts of the southern city of Tafileh. Repre-
senting a $288m investment by Jordan Wind Project
Company (JWPC), this project should begin supplying
power by September 2015. It will be the first opera-
tional wind plant in the Middle East, and will be joined
by a $200m, 90-MW project being set up by KEPCO of
South Korea in Fujeij. Also in the works is a 65- to 75-
MW, $150m wind power project in the Maan district.
This is being funded by the Kuwait Fund for Arab Eco-
nomic Development. With all these projects under way,
the RE segment is set for rapid development. “I am
optimistic about Jordan’s future energy security, with
significant advancements being made in the RE field,”
Philip Cabus, managing director of Total Jordan, told OBG.
OUTLOOK: Oil shale represents a potential long-term
game changer, while RE should help to ease the bur-
den on hydrocarbons. At the same time, diversity of sup-
ply in gas and oil is likely to become even more critical
as the region moves through a turbulent period. The
removal of energy subsidies will also likely cause
pain for Jordanians, although it will take a burden off
growth. For now, the sector offers many opportunities.
82
The Electricity Regulatory
Commission issued a price
list in 2012 that set tariffs
for large projects at
$0.12/KWh for wind,
$0.19/KWh for solar
and $0.17/KWh for
photovoltaic solar,
$0.127/KWh for biomass
and $0.85/KWh for biogas.
ENERGY ANALYSIS
Given the shortage of hydrocarbons resources, all finds are crucial
Unlike its neighbours, Jordan has never had a large oil
and gas sector. While Iraq and Saudi Arabia have major
hydrocarbons industries, the fields on which these are
based seem to barely touch the kingdom, with Jordan
thus in the unenviable position of having to import
almost all of its oil and gas needs. Yet while small, Jor-
dan’s oil and gas sector still makes a vital contribution
to the kingdom’s energy mix. Some in the sector remain
convinced, too, that Jordan may have much more to offer
in hydrocarbons than has been previously thought. The
kingdom remains one of the most unexplored coun-
tries in the region, while, given the crucial importance
of energy to Jordan’s entire development, any find can
make an appreciable difference.
STATE OF PLAY: Currently, Jordan has just two produc-
ing fields. In oil, there is the Hamzah field in Wadi Al
Azraq, west of Amman, which began its life yielding
around 600 barrels per day (bpd) and is now down to
around 20 bpd, according to National Petroleum Com-
pany (NPC) officials who spoke to OBG. The NPC is Jor-
dan’s state oil and gas company, in that it is 99% owned
by the government, yet it receives no budget from the
state, generating revenues purely from sales.
The Oil & Gas Journal estimated in January 2014 that
total oil reserves for the country stood at around 1m
barrels. In gas, there is the 1500-sq-km Rishah field,
discovered in the mid-1980s near the Iraqi border, which
produces around 21m standard cubic feet per day (scf-
pd) from 20 wells. The journal also estimated that total
gas reserves were around 200bn scf, although others
put the total as high as 400bn scf. NPC has the con-
cession for the Rishah gas field, an agreement it shared
with BP up until the end of 2013. At that point, BP end-
ed the partnership, after spending some $240m drilling
two exploration wells at sites within a 7000-sq-km con-
cession area. After examining the results from these,
the international oil firm announced there was no tech-
nical basis for it to continue operating in the field.
This was a blow to hopes that significant, commer-
cially viable gas deposits remained to be discovered in
the area, which shares the same geological history as
the Akkas gas field further to the east, in Iraq’s Anbar
province. A Palaeozoic section beneath Risha consist-
ing of complex sandstones widens eastwards towards
Akkas, leading some to suggest that eastern Jordan has
great potential for Palaeozoic tight gas plays in partic-
ular. This does not appear to have been BP’s conclu-
sion; yet, NPC officials who spoke to OBG warned that
such conclusions might just be the result of different
standards being applied by BP and NPC when it comes
to what constitutes a “technical basis” for further devel-
opment. “Here, we have to define what kind of play you
will pursue,” Othman Okasheh, director-general of NPC,
told OBG. For BP to make a major investment in what
might be a minor field in terms of its global assets
might not be viable, but for Jordan, which has limited
oil and gas, such an investment might still make sense.
Jordan contains a handful of different types of basins
within a small area. The Azraq basin and the Northern
Highlands region have Cetaceous plays, while there is
post-Miocene potential in the Rift Valley area. Regard-
ing the latter, oil seeps and other phenomena have
been observed around the Dead Sea for some years,
yet so far it is only on the Israeli side that any exploita-
tion – for gas – has occurred. Much of the play is salt-
and shale-related, which present particular difficulties.
CONTINUED EXPLORATION: Over the years, various
companies have drilled exploratory wells, with Amoco,
Hunt Petroleum, Petro-Canada and Petrofina all in Jor-
dan at one time or other. Most drilling has concentrat-
ed on the Wadi Al Azraq-Wadi As Sirhan basin area, and
around the Rishah gas field. Much of the rest of the
country remains unexplored.
At the same time, “old seismic surveys are all we have
for much of what has been explored,” Okasheh said.
Nowadays, more sophisticated and advanced methods
for conducting surveys are available, which can cover
larger areas with a higher degree of accuracy and at
less expense. What is needed now, the NPC argues, is
“smart” exploration, using cutting-edge technologies.
In January 2014 total oil
reserves stood at around
1m barrels and gas
reserves totalled 200bn scf,
although some estimates
put the latter closer to
400bn scf.
83
THE REPORT Jordan 2014
The search continuesThe lack of oil and gas has presented major challenges, but the sectorremains important
ENERGY ANALYSIS
OTHER PROJECTS: NPC also has three of its own drilling
rigs, along with all the data collected by BP and the oth-
er companies that have conducted exploration work
over the years. It has expertise within its ranks, accu-
mulated over several decades of operations, an estab-
lished infrastructure in-country and a clear desire to
start searching. One challenge, however, is in the com-
pany’s finances. With no budget support from the gov-
ernment, NPC currently relies on revenues from sales
to finance its operations. Gas from the Rishah field is,
however, sold to the Central Electricity Generating Com-
pany (CEGCO) at a price fixed by the government, as
part of its overall energy pricing and subsidy scheme.
This was set at around $2.50 per million British ther-
mal unit (mmbtu) during the period when Jordan was
receiving natural gas from Egypt, which is lower than
the price paid for gas from other sources.
Egyptian gas supplies have proven unreliable of late,
however, and the cost of this disruption has been enor-
mous. According to a Ministry of Planning and Inter-
national Cooperation report, with the gas turned off,
power plants have had to switch to more expensive
imported fuel oil and diesel, a move costing the coun-
try around JD3.5m ($4.94m) a day.
The gas issue has also had an effect on the overall
energy mix as well. Figures from the Ministry of Ener-
gy and Mineral Resources show that the percentage
that gas held in the energy mix in 2011 was around
11.6%, with this falling to 8.26% in 2012, while crude
oil products rose from 82.2% to 87.6% over the same
period. “A diverse energy mix provides a stable platform
for our economy to grow,” George Hanania, the gen-
eral manager of Hanania Group, told OBG. “It hedges
the risk of an external supply shock.” The shift has like-
ly been even more dramatic in 2013 and 2014.
FUNDING: With such numbers, obtaining financing for
exploration and development work is proving difficult,
particularly as NPC is not bankrolled by the government,
yet remains owned by it. Such financing would also be
useful to extend current programmes to boost recov-
ery at both Hamzah and Rishah. “If we can get a fair
gas price and we could guarantee enough investment,”
said Okasheh, “we could be getting some 40m scfd in
three or four years’ time at Rishah.”
In the meantime, NPC continues to move ahead with
exploration work, with hopes high around the Safawi
region of eastern Jordan. In February 2014, the Senate
endorsed an agreement with NPC to explore this region
that will see the firm conduct two phases of research
– the first, three-year period involving the digging of
two exploration wells and the re-entering of an aban-
doned third well, while the second, two-year phase will
see 3D seismic surveys of a 500-sq-km area.
With oil and gas imports continuing to be both a major
financial burden, there is much hope riding on NPC’s
exploration efforts. Even a small discovery might ease
the burden, while also demonstrating that the local oil
and gas sector has the know-how and the resources
to find what others may long have overlooked – a
potentially impressive achievement at a time when the
low hanging fruit of oil and gas has long been picked.
84
Regional tensions have disrupted the country’s energy imports
As a percentage of the
overall energy mix natural
gas fell from 11.6% in 2011
to 8.26% in 2012, while
crude oil rose from 82.2%
to 87.6% over the same
period, according to the
Ministry of Energy and
Mineral Resources.
ENERGY ANALYSIS
Energy companies are looking to test new recovery technologies
While Jordan has few oil and gas resources of its own,
it does have an abundance of several key natural
resources that can potentially be used to produce
energy. One of these is oil shale, the sedimentary rock
that underlies around two-thirds of the kingdom’s
territory – giving Jordan one of the largest deposits
of this material anywhere in the world. Oil shale can
be burnt in power stations to generate electricity or
heated to produce crude shale oil.
With Jordan’s need for new energy sources widely
accepted, the country has become an important test-
ing ground for some of the sector’s more frontier
technologies. Potentially the most significant of these
involve oil shale, deposits of which cover around two-
thirds of Jordan’s territory, with subterranean layers
that are more than 200 metres thick in places. Figur-
ing out how to harness this vast resource is perhaps
the greatest single challenge facing the kingdom’s
energy sector over the years ahead; indeed, if exploit-
ed successfully, shale oil could make Jordan’s current
energy concerns a thing of the past.
GEOLOGIES & PROCESSES: Oil shale is a sedimen-
tary rock with a high organic content. It can be burned
as a fuel directly, or heated at high temperatures to
release a vapour that can then be distilled into shale
oil, and it also releases shale gas. Countries with large
deposits of oil shale include the US, Canada, Australia,
Brazil, Estonia, Sweden, Morocco and Jordan. Accord-
ing to a recent statement by the Ministry of Trade,
Industry and Supply, Jordan has 31bn tonnes of oil
shale, representing the world’s fourth-largest reserves.
“Jordan has one of the largest indigenous sources of
oil shale in the world, and it is necessary to develop
this resource to reduce our energy dependence and
alleviate the national debt,” Thomas Meijssen, the
general manager of the Jordan Oil Shale Company
(JOSCO) and Shell country chair, told OBG.
NEW METHODS: Several different technologies are
available to produce oil from oil shale, although so far,
most are either at a developmental stage or not yet
producing commercial quantities. First, there is the
In-Situ Conversion Process (ICP), a propriety technol-
ogy being developed by Royal Dutch Shell, which is in
the process of employing this in Jordan through its
wholly owned subsidiary, JOSCO.
The ICP method differs radically from other tech-
nologies in that instead of targeting oil shale on the
surface, it goes after deposits deep underground.
Wells are dug down into these deposits, and heaters
are then placed within them. The deposits are slow-
ly heated, a process that produces higher quality shale
oil. “JOSCO’s oil shale development in Jordan is a fron-
tier unconventionals project for Shell,” Meijssen told
OBG. “Jordan will be the first country in the region to
utilise the ICP technology.”
The other technologies in use resemble open cast
mining, in that large areas of the surface are cleared
and the oil shale dug up, crushed and then processed.
To process for oil, a retort is needed, with these hav-
ing to be extremely large if commercial quantities are
to be produced. What then comes out is generally of
good enough quality for bunker fuel, but it needs an
upgrader to enable it to be refined into petroleum and
other more useful products. An upgrader is a mini-
refinery, indicating the scale of investment necessary
if a shale oil deposit is to be processed in this way.
Much development is currently going on in this
field, however, and it is likely that more efficient and
cost-effective ways of processing oil shale will be
A sedimentary rock with
high organic content, oil
shale can be burned
directly as a fuel or heated
at high temperatures to
release vapour that can be
distilled into oil.
85
THE REPORT Jordan 2014
Around two-thirds of
Jordan’s territory is covered
by oil shale deposits, with
subterranean layers that
are more than 200 metres
thick in some places.
The promise of shaleAs the country seeks to diversify its energy resources, oil shale has significant potential
SOURCE: Ministry of Energy and Mineral Resources
2011 2020
Crude oil & products 82.2 40
Natural gas 11.7 29
Imported electricity 4.2 1
Renewable energy 2 10
Oil shale 0 14
Nuclear 0 6
Energy before & after National Plan, 2011-20 (%)
ENERGY ANALYSIS
found. Estonia, for example, is leading the way in burn-
ing oil shale directly in power plants.
OSCAS: Indeed, at the start of July 2014, Jordan’s
energy and mineral resources minister, Mohammad
Hamed, told reporters that the Cabinet had finally
given Estonia’s Enefit the green light to construct a
$2.4bn, 470-MW oil-shale-fuelled power plant in the
kingdom – the final part of a deal begun back in 2008.
Enefit is to do so as part of a consortium with Malaysia’s
YTL Power and Jordan’s Near East Investments. The
project may also see the power station’s capacity dou-
bled in the future, to around 1000 MW. Two other com-
panies are also active in oil shale in Jordan, both using
similar, surface extraction technologies. These are
Karak International Oil (KIO) and the Saudi Arabian Cor-
poration for Shale Oil (SACOS). All four companies
have signed oil shale concession agreements (OSCAs)
with the Jordanian authorities.
These agreements, which are the first of their kind
in the world, are in essence special laws, a status that
gives them great stability, as they are guaranteed by
the constitution. The OSCAs also apply the most rig-
orous international standards, particularly in regard
to the environment. Fresh water, for example – a pre-
cious resource in a dry, desert nation like Jordan – is
required in small quantities in the process, while brack-
ish water can be used for getting rid of dust. Under
the OSCAs, the companies are obliged to provide their
own water to carry out their processes, even if this
means shipping it in from abroad.
Shell’s OSCA passed through parliament in 2009 and
covers a total area of 22,270 sq km, or one-quarter
of Jordan’s territory. This is being narrowed down
greatly, however, as the most worthwhile blocks are
identified, with approximately 1000 sq km the likely
final acreage. Enefit has a 70-sq-km concession at
Attarat Um Ghudran, south of Amman, for the planned
power station, and also has a surface retort conces-
sion agreement for a future shale oil production plant
that entitles it to around 2.3bn tonnes of shale oil.
KIO, meanwhile, has a concession at Al Lajjun, an
area the company says holds some 600m barrels of
recoverable oil from shale oil. KIO’s parent company
is the UK’s Jordan Energy & Mining, which has put
some $38m into the project so far. SACOS, which is
100% owned by Saudi investors, signed a $2bn agree-
ment in March 2014 to explore and develop oil shale
in the same area as Enefit, with the next four years
seeing the firm do technical, environmental and fea-
sibility studies in its 11-sq-km concession area.
LONG-TERM THINKING: While the projects current-
ly under way promise much, the timeframe involved
is still a long one. Shell’s project has to go through a
series of rigorous tests in the years ahead to see if
the ICP technology works in local conditions. If all
goes well, the company should start production in com-
mercial quantities in the late 2020s. Similar target dates
have been set by the other companies, with the excep-
tion of Enefit’s power station, which should come on-
line in 2017. Thus, while oil shale may hold the answer
to Jordan’s future energy needs, the short-term chal-
lenges still have to be faced – a factor acknowledged
in the kingdom’s multi-strand energy policy.
Financing such expensive projects is also a challenge,
with the sector currently suffering from the problem
that while oil shale resources may be large, most of
the firms operating in the sector are relatively small,
making it difficult to attract project finance. The cost
of production is also likely to be high, although, pro-
vided oil prices stay above certain levels, the numbers
still work. “A $90-100 per barrel price is very attrac-
tive for oil shale,” said SACOS President Maher Ibrahim
Hijazin. “Anything above $60-70 still works, in fact.”
In the future, Jordan may see a complete reversal
in its energy balance, with the size of its oil shale
deposits potentially setting it up as a future energy
exporter. At the same time, the application of the
most advanced technologies of the global oil shale
industry in Jordan will also make the kingdom a lead-
ing light internationally in this segment. Many will be
watching the desert concessions in the years ahead.
86
New finds could potentially change Jordan’s energy balance, turning the country into an energy exporter
How Jordan utilises oil shale may serve as a model for other countries
The Jordanian government
has oil shale concession
agreements, which are the
first of their kind in the
world, essentially special
laws guaranteed by the
constitution, thus allowing
for greater stability.
Financing expensive oil
shale projects poses a real
challenge as despite the
size of the potential
reserves, many of the firms
operating in the sector are
relatively small.
www.oxfordbusinessgroup.com/country/Jordan
ENERGY INTERVIEW
Mohammad Hamed, Minister of Energy & Mineral Resources
What is your vision for the energy sector, and, two
years on, what has been the impact of the Renew-
able Energy and Energy Efficiency Law?
HAMED: As a result of this law, we have seen a great
deal of progress being made in developing sources
of renewable energy, especially through smaller-scale
projects. We are seeing widespread installation of
photovoltaic panels on rooftops, with approximately
450 households now connected to the national grid.
We have also seen progress made in linking schools,
hospitals, hotels and even some industrial buildings
to the grid, so that energy produced by photovoltaic
cells installed on their roofs can be distributed.
With regards to large-scale projects, we have signed
power-purchasing agreements with 12 developers to
generate up to 200 MW of solar power. Of these proj-
ects, nine are in Maan, two are in Irbid and one is in
Aqaba. We have also signed an agreement to build a
wind energy project in Tafilah, with a capacity of 117
MW. Additionally, there are two additional wind proj-
ects that will commence in 2015. These projects are
all as a result of the Renewable Energy and Energy
Efficiency Law. By 2015, we expect to be generating
475 MW of renewable energy from wind and solar.
Which measures are being taken to ensure that
Jordan’s long-term energy needs are met, and how
do you see the energy mix changing in the future?
HAMED: Our energy policy operates on the basis of
supply security, sustainability, affordability and source
diversity. In order to achieve our long-term energy
goals, we have drawn up an energy roadmap, which
sets out clearly how we intend to fulfil these needs
by the year 2023. By 2018, we expect to have approx-
imately 30% of our installed capacity coming from
renewable energy. By 2022, we would like to see the
first phase of our nuclear ambitions fulfilled, subject
to the necessary studies recommending this as a
sound option. We will also develop a number of proj-
ects to extract oil and gas, and to utilise oil shale
resources for the production of electricity. We will meet
our baseload demand primarily with oil, natural gas,
nuclear and oil shale, and then pursue our drive for
renewable energies on top of this.
One of the challenges facing Jordan is our reliance
on natural gas imports from Egypt. It is important to
have alternatives available in order to stabilise sup-
ply streams and prices. We hope that in three years’
time gas will flow from Iraq, which should limit sup-
ply shocks. This matters to our large-scale industries,
which rely on receiving consistent supplies of natu-
ral gas in order to remain competitive in the region.
It is no secret that the energy picture in this region
is changing rapidly, and, given our lack of domestic
natural resources, we will be looking to capitalise on
the growing diversity of energy sources for the ben-
efit of all Jordanians. With the successful implemen-
tation of our energy roadmap, we hope to reduce the
cost of electricity production, along with our overall
energy bill. In 2009, our total energy bill was JD2bn
($2.83bn), which accounted for approximately 12%
of GDP. By 2013, this had more than doubled to JD4.4bn
($6.22bn) – approximately 21% of GDP. Given these
figures, it is imperative that we find alternative ener-
gy solutions that are sustainable in the long term.
What role can the government play in creating an
attractive investment climate in the sector and in
encouraging responsible energy consumption?
HAMED: At present, and in large part thanks to the
Renewable Energy and Energy Efficiency Law, we have
a breadth of opportunities available to investors. It is
critical for us to create a favourable investment envi-
ronment, not only to diversify our energy streams,
but also to expand our economy. In terms of energy
conservation, we are using multiple media platforms
to draw people’s attention to this issue. Our strategy
is to emphasise the benefits of economical consump-
tion to individuals, as well as to raise people’s aware-
ness of the wider benefits this brings to the country.
87
THE REPORT Jordan 2014
Powerbase diversificationOBG talks to Mohammad Hamed, Minister of Energy and Mineral Resources
89
TransportVolatile energy prices cause uncertainty in the sector
National rail network to connect Aqaba to land borders
Trucking unions urge creation of shareholding company
Airport renovations attract new tourism and investment
TRANSPORT OVERVIEW
Jordan has become a major player in the Iraqi import trade
Given Jordan’s strategically important location at
the crossroads of the Middle East, the country’s
transport sector is well placed to become one of the
most competitive in the region. With more free trade
agreements than any of its neighbours, the sector
has continued to show growth over the past year
despite ongoing regional instability. At the centre of
Jordan’s advanced transport infrastructure is the
kingdom’s well developed road network, which was
estimated to have carried 3.6% more tonnage in
2013 than it did in the previous year.
Further upgrades to the road network are planned
for 2014, many financed with development grants
from the Gulf Cooperation Council (GCC). With a
new terminal at Queen Alia International Airport
(QAIA) nearly complete, air freight remained strong
in 2013 compared with the past two years. The trans-
port sector continues to post impressive numbers,
growing from 10% of GDP in 2010 to roughly 12%
in 2013, according to The Jordan Times. The sector
also remains a major source of employment in the
country, currently providing jobs for approximately
10% of its total workforce.
Jordan is a major player in the Iraqi import trade,
with many goods destined for the country traveling
through the kingdom’s Red Sea port at Aqaba. Thanks
to a slew of progressive initiatives, such as the Nation-
al Railroad Project, Jordan’s transport sector is
responding to rising energy costs in order to con-
tinue playing a key role in regional trade flows. The
kingdom’s stable political environment and ideal
geographical location have undergirded the coun-
try’s excellent transport fundamentals.
STRENGTHS & CHALLENGES: Building on this sta-
ble political situation, the kingdom is looking for
investment of JD2bn ($2.82bn) for a national rail
network that will connect the Red Sea port of Aqa-
ba with the Syrian border, as well as to neighbour-
ing Saudi Arabia and Iraq, helping to rebuild the lat-
ter’s infrastructure. Jordan remains dominant in the
Iraqi import market, but other Gulf countries, includ-
ing Kuwait, are also rushing into the lucrative sec-
tor. Moreover, looking to capitalise on trade with
Iraq, plans are afoot to update the kingdom’s ener-
gy transport sector in the hopes of opening an oil
pipeline connecting Iraq and the port of Aqaba.
At the time of writing, it was unclear how the rap-
idly deteriorating political situation in Iraq might
affect such plans, and indeed the prospects of trade
as a whole with Iraq. “Although regional upheaval is
not healthy in the long term, it has benefitted Jor-
dan in the short to medium term,” Hussein Al Souob,
managing director of AB Maritime, told OBG.
ENERGY PRICES: One of the most pressing chal-
lenges currently faced by the industry is the volatil-
ity of energy prices. Without the hydrocarbons
reserves that underpin the economies of many of
its neighbours, Jordan is forced to import 97% of its
energy resources, with much of this coming in the
form of natural gas from Egypt; however, bouts of
political instability in Egypt from 2011 onwards have
contributed to a sharp reduction in gas supplies.
To address the resulting gap, Jordan took out a $2bn
loan from the IMF in 2012 to purchase more expen-
sive energy resources from other countries. The cost
of repaying the loan impacts long-term investment
in a range of economic sectors, including tourism
and transport. However, recent deals to secure nat-
ural gas from eastern Mediterranean gas fields sug-
gest national energy stabilisation may be within
reach. Jordan also remains open to foreign direct
investment in its transport infrastructure. While the
government controls much of the sector, private
companies, both local and foreign, are allowed to
invest in a range of segments, especially in shipping.
Aside from concerns relating to energy, the ongo-
ing conflict in Syria and the resumption of fighting
in Iraq present major challenges for the Jordanian
transport sector. Prior to 2011, Syria was a crucial
transit point for goods flowing through Jordan from
The transport sector has
grown from 10% of GDP in
2010 to roughly 12% in
2013. It also remains a
major source of
employment, currently
providing jobs for
approximately 10% of its
total workforce.
91
THE REPORT Jordan 2014
Political instability in
Egypt has led to a
sharp reduction in natural
gas supplies. This
prompted Jordan to take a
$2bn loan from the IMF in
2012 to purchase more
expensive energy
resources from elsewhere.
Enhancing connectivityUpgrading road, rail and air networks to benefit from a strategicregional location
TRANSPORT OVERVIEW
Turkey and Europe destined for points across the Gulf.
While trade continues in some capacity, political
events have forced a large part of Jordan’s transport
trade to shift from overland cargo to air freight. “Jor-
dan requires long-term thinking in order to handle
the current challenges to the sector,” Osama Aza, CEO
of Premier Transport Technologies, told OBG. “The
creation of dry ports along with the national railroad
will see Jordan emerge as a central player in a new
Silk Road crossing the Middle East.”
GOVERNMENT ROLE: The Ministry of Transport is
the main government body charged with oversee-
ing sector development and facilitating growth, along
with providing a regulatory framework for operators.
The government body has been instrumental in push-
ing development for the national railroad, as well as
updating infrastructure at key ports and airports.
With oversight by the Ministry of Transport, the
government has created two state-owned compa-
nies, Aqaba Railway Corporation (ARC) and Jordan
Hejaz Railway Corporation (JHRC), to work in the rail
segment. In order to oversee air, land and sea trans-
port logistics, the government has also created the
Jordanian Civil Aviation Regulatory Authority, the
Land Transport Regulatory Commission (LTRC) and
the Jordanian Maritime Authority.
Regulatory reforms have had limited effect in mak-
ing the transport sector more efficient; however,
they have made it easier for foreign firms to do busi-
ness in Jordan. According to the World Bank’s “Ease
of Doing Business” index in 2014, Jordan’s ranking
remained unchanged from the previous year, at 119
out of 189 countries measured. In the trading across
borders subcategory, the kingdom improved its 2013
rank, moving up to 57th in the world. The index cit-
ed improved transit times for goods at border cross-
ings, thanks in part to the introduction of advanced
X-ray scanners. “The implementation of new ship-
ping terminals, complete with advanced X-ray
machines, has helped reduce transit time in Aqaba
Port dramatically,” Kareem Naouri, director of busi-
ness development at the Naouri Group, told OBG.
“Expansion of the port facilities will help Jordanian
transport companies to remain competitive in the
lucrative Iraqi import market.”
Over the past several years, Jordan has updated
its public transportation infrastructure in major cities
like Amman in order to facilitate movement and ease
traffic congestion. According to the LTRC’s last pub-
lished statistics in 2011, Jordan’s intra-city trans-
port network consisted of 2630 vehicles, of which
586 were small vehicles, 1277 were medium-sized
buses and 767 were large buses. Private cab oper-
ators run just over 16,000 vehicles. Additionally,
companies, universities and schools accounted for
10,141 private transport vehicles in 2011.
ROAD INFRASTRUCTURE: Jordan enjoys advanced
land transport infrastructure that provides vital trade
connections with the Gulf region, Syria and Iraq. The
kingdom’s highway network includes 2878 km of
primary roads and 4325 km of secondary roads,
according to the most recent figures from the Min-
istry of Transport. These highways connect the king-
dom to its seven land borders at Al Karama (Iraq),
Prince Muhammad Bridge (Israel), Sheikh Hussein
Bridge (Israel), Omari (Saudi Arabia), Al Mudawara
(Saudi Arabia), Jaber (Syria) and Jordan Valley Cross-
ing Point (West Bank). As part of a programme to
upgrade roads, the Ministry of Public Works and
Housing began work on a 25-year plan for the coun-
try’s roads in 2002. In 2013, work accelerated on the
plan, specifically in the southern areas of the coun-
try. Jordan and Saudi Arabia signed new agreements
to update the infrastructure on several key highways
connecting the kingdom with its southern neighbour
in 2013 and 2014. The central highway linking the
Jordanian city of Zarqa with the Jordanian-Saudi bor-
der at the Omari crossing point will see $155m in
joint investment to update infrastructure. Funds for
the project stem from previously signed deals
between Saudi Arabia and Jordan designed to boost
transport projects in the kingdom.
Additionally, Saudi Arabia provided $1.25bn to the
$5bn Gulf Development Fund extended to Jordan by
the GCC for development projects in the kingdom.
92
Public transport infrastructure in Amman has been updated
Jordan enjoys advanced
land transport
infrastructure, providing
vital trade connections
with the Gulf region, Syria
and Iraq. Its highway
network includes 2878 km
of primary roads and 4325
km of secondary roads.
www.oxfordbusinessgroup.com/country/Jordan
SOURCE: Aqaba Port Corporation
Year Exports (000 tonnes) Imports (000 tonnes) Total (000 tonnes) No. of vessels
2003 8240 9607 17,847 2694
2004 8771 12,265 21,036 2888
2005 7998 12,432 20,430 2933
2006 7020 10,145 17,165 2884
2007 7495 10,297 17,792 2941
2008 7787 9165 16,952 3024
2009 5899 8302 14,201 2900
2010 8056 8795 16,851 2902
2011 8975 10,209 19,184 2892
2012 7411 11,944 19,355 3083
2013 4531 11,785 16,316 2885
Cargo traffic at Aqaba Port, 2003-13
TRANSPORT OVERVIEW
The other major contributors to the fund are Qatar,
Kuwait and the UAE. Gulf countries have remained
particularly interested in contributing to transport
projects in Jordan. Qatar, for example, has earmarked
mas much as 10%, or around $125m, of its contri-
bution towards transport projects.
The most important highway in the kingdom links
the port city of Aqaba with Iraq, given the high vol-
ume of transit trade destined for Iraq from the Red
Sea. Jordan has encountered difficulties over the
past several years with securing agreements that
will facilitate the movement of cars across the bor-
der into Iraq. With a fresh outbreak of violence in
Iraq, bureaucratic issues at the Jordanian-Iraqi bor-
der, such as the time necessary to issue visas for busi-
ness purposes, will persist in 2014. However, demand
for import trade is not likely to slow down, given
Iraq’s dependence on foreign goods.
AIRPORT EXTENSION: Among the most significant
projects currently under way in the kingdom is the
Amman airport road extension. The four-year proj-
ect, valued at $100m, was conceived by the Greater
Amman Municipality back in 2007 and aims to devel-
op one of the kingdom’s most important corridors
connecting Amman’s QAIA with the greater munic-
ipal area of the capital. While the highway project
has sparked an ongoing debate about the layout of
the city of Amman, investors remain convinced that
the costs will be justified by the benefits of more
integrated transport. The international furniture
company IKEA has already taken advantage of the
road with a new outlet located just outside Amman.
With financial assistance from the UN High Com-
mission for Refugees, Jordan also renovated a 25-
km road in the Syrian border region near Ruweished
in early 2014. The road, which opened in February
of 2014, will facilitate greater transport links between
the Azraq refugee camp, which currently houses
more than 55,000 refugees, and the rest of Jordan.
Various projects have also been launched along the
kingdom’s lengthy border with Syria that have aimed
at enhancing the transport infrastructure. This would
enable a more efficient flow of international aid
deliveries to Jordan’s ballooning refugee population.
FREIGHT: Jordan’s extensive road network is an
advantage for the kingdom’s trucking fleet. One of
the region’s largest, the country had a total of 15,161
operational heavy vehicles in 2011, according to the
Ministry of Transport. Ownership of the fleet is spread
across a number of individuals, local companies and
multinational corporations. Almost two-thirds of the
trucks are owned by individuals, and the remaining
third by companies and multinational corporations.
More than half of the trucks currently operating
were manufactured before 2000, with as many as
half of these made between 1995 and 1999. This has
implications for emissions and safety.
The sheer number of players and lack of a cohe-
sive central authority has led to significant issues
within this important sector. As a major employer, a
reduction in the work available has translated into
unrest. In a bid to tackle this, the Jordanian govern-
ment agreed to facilitate the creation of a private
shareholding company in September 2011. The deci-
sion was held up by delays, which resulted in more
strikes. In early 2012, the LTRC agreed to allow for
the creation of a private company that would organ-
ise and divide work among independent operators.
However, challenges remain and strikes have affect-
ed Jordanian cities such as Maan, where intense
competition and falling prices have made for diffi-
cult times for the trucking industry. Additionally, sub-
sidy reductions for petrol and diesel have further
added to the difficulties faced by the industry. Truck-
ing union leaders have called for the creation of a
shareholding company that would establish secure
work and fair wages for drivers.
NATIONAL RAILROAD: While road systems have
been instrumental in the movement of goods, espe-
cially from the Red Sea to Iraq, the kingdom is not
resting idly, and is currently seeking to develop a
national railroad. Jordan has less than 1000 km of
rail track, which is divided both along its southern
phosphate transport lines and the northern Hejaz
95
THE REPORT Jordan 2014
Road systems have been instrumental in facilitating the movement of goods
The four-year Amman
airport road extension
project, valued at $100m,
was conceived by the
Greater Amman
Municipality in 2007 and
aims to develop one
of the kingdom’s most
important corridors,
connecting Queen Alia
International Airport
with the capital.
Ownership of Jordan’s
trucking fleet is spread
across a range of
individuals and companies.
Almost two-thirds of the
trucks are owned by
individuals, and the
remaining third by
companies and
multinationals.SOURCE: Airport International Group
Month Passenger Cargo (tonnes)
Jan. 475,069 6831
Feb. 447,594 6744
March 549,861 8669
April 536,559 8540
May 534,898 7992
June 622,629 7699
July 547,621 7971
Aug. 694,343 7379
Sep. 561,205 7760
Oct. 600,853 7666
Nov. 453,444 8096
Dec. – –
QAIA passenger & cargo traffic, 2013
TRANSPORT OVERVIEW
railway from Amman into Syria. These lines are oper-
ated by the ARC and JHRC, respectively.
After the creation of the ARC in 1972, the state-
owned entity constructed lines to transport phos-
phate from mines located in the country’s southern
regions to Aqaba Port. ARC currently operates about
500 km of narrow-gauge track, part of which is reha-
bilitated from the Ottoman-era Hejaz railway.
Between 2m and 3m tonnes of phosphate make
their way to Aqaba along these lines every year.
RAIL CONNECTIONS: The northern portion of Jor-
dan’s railway infrastructure includes a 217-km line
connecting Amman to Damascus and another 111
km of abandoned lines. Services include a daily
Amman-Damascus route and freight trains on
request. The continuing violence in Syria, however,
has disrupted passenger operations.
While there are plans to capitalise on the poten-
tial for a partnership with Turkish State Railways,
attention has shifted to the creation of a new rail-
way line connecting Iraq with Aqaba Port. “Our major
focus now is the creation of a national railway sys-
tem,” Naim Hassan, the director of planning and
studies at the Ministry of Transport, told OBG. “Not
only will this boost tourism in the kingdom but it will
allow Jordanian companies to remain competitive in
the Iraqi and Saudi Arabian transport markets.”
Jordan plans to build an 897-km rail network that
will extend well beyond the currently existing lines
in the kingdom. The proposed plan will link the cap-
ital with Jordan’s sole seaport in Aqaba, as well as
facilitate more international connections with Iraq,
Syria and Saudi Arabia. Named the Jordanian Nation-
al Railway, the project initially focused on a 509-km
north-south line that would connect Aqaba with the
Syrian border. Estimated construction costs for the
line have been set at $2.43bn and would allow Jor-
dan access to Turkish and European markets, thus
boosting the EU’s stake in Jordanian transport.
ENERGY EXPORTS: Additionally, the line would link
up with Amman, the phosphate mine at Eshidiya and
the industrial city of Zarqa. Given the political crisis
in Syria as well as Baghdad’s interest in exporting
energy resources through Jordan to third countries,
plans are now focusing on a line that would connect
Aqaba with the Iraqi border and have the ability to
carry energy resources such as crude oil.
Phase two of the railway project, a 290-km east-
west line between Zarqa and Iraq, would tie the king-
dom’s central industrial areas with the lucrative Iraqi
market. A proposed third segment would link to Sau-
di Arabia with a 91-km line. This portion is expected
to provide a main connection point to the GCC mar-
ket. Government officials hope that a 2750-km line
connecting Riyadh with Jordan will be carrying pas-
sengers and cargo by the end of 2014. To facilitate
the construction of the national railway, the govern-
ment has divided the project into two components:
96
The Aqaba Railway
Corporation operates
about 500 km of
narrow-gauge track, partly
rehabilitated from the
Ottoman-era Hejaz railway.
Between 2m and 3m
tonnes of phosphate make
their way to Aqaba along
these lines every year.
TRANSPORT OVERVIEW
infrastructure and operations. A state-owned com-
pany, Jordan Railway, is responsible for the financ-
ing, building and maintenance of the railway network.
The government plans to enlist a consortium of com-
panies through a bidding process to oversee the
operation of the rail network. The winner would
operate rail services on the new infrastructure, buy-
ing and maintaining their own rolling stock.
REGIONAL PROSPECTS: The rail network would
have enormous benefits for the Jordanian transport
sector. Not only would the railroad cut costs and
transport times for virtually all goods transported
by land, but it would also provide the infrastructure
necessary for Jordan to remain a major player in the
Iraqi market. “In the transport sector we fear losing
our slice of the Iraqi market over the coming years,”
Abdulrahman Taleb Ali, marketing manager of T. Gar-
gour & Fils, told OBG. “Without the national railway
or the creation of dry ports, it will be increasingly
challenging for Jordanian transport to stay compet-
itive in Iraq.” Progress on the national railway’s first
phase is under way in the south of Jordan. In Novem-
ber 2012, then-Minister of Transport Alaa Batayneh
told delegates at the International Union of Rail-
ways Regional Assembly of Middle East High Level
Conference that feasibility studies had already been
completed and that land acquisition had commenced
for the 22.5-km single-track line connecting the
phosphate mine at Eshidiya to the existing ARC line.
Jordan’s regional partners have expressed consis-
tent support for the national railway as a way of
strengthening regional connections. At a 2014 meet-
ing with Egyptian Transport Minister Ibrahim El Demiri
and acting Iraqi Transport Minister Salman Jassim,
Jordanian Prime Minister Abdullah Ensour under-
lined the importance of a railway that connected
eastern and western Arab countries. The prime min-
ister noted that the Arab Bridge Maritime Compa-
ny, established jointly by Jordan, Iraq and Egypt, has
seen profits exceeding $1bn since its creation in
1985. Future plans for the company are expected to
hinge on Jordan’s national railway. In June 2014, the
government allocated $850m, from a GCC develop-
ment grant, to start vital transport projects in the
kingdom, including for the national railway.
PORT FACILITIES: Despite the trimming back of var-
ious economic projects in the kingdom in recent
years, Aqaba continues to attract investment and
plans to expand port facilities promise to provide new
opportunities within the transport sector. As Jor-
dan’s only port, Aqaba is also home to the country’s
first special economic zone, the Aqaba Special Eco-
nomic Zone. Shipping activities are divided into three
areas: the main, middle and southern port. In 2006,
Aqaba’s main port was relocated away from the city
centre to an area closer to the Saudi Arabian bor-
der to provide access to deeper water. The move also
allowed for the development of a mixed-use water-
front neighbourhood and business district. The sev-
en-berth middle port handles containers, cement and
livestock, while the four-berth southern port han-
dles primarily oil, timber and industrial products,
including chemicals and potash.
The port has been transformed in the past 10
years from a small, dusty and neglected maritime
operation into a leading shipping facility. “Given Jor-
dan’s central geographical location and its overall
socio-political stability, shipping constitutes a clear
area of strength for the kingdom to cultivate and
develop,” Jeppe Jensen, CEO of the Aqaba Contain-
er Terminal, told OBG. The introduction of special X-
ray machines as well as additional capacity has helped
address the port’s long-standing Achilles’ heel: car-
go waiting times. Another problem hampering the
port’s former operations was a disconnect between
decision-makers in Aqaba and those located in the
capital, Amman. In order to streamline the process
and ensure smooth operations in Aqaba, the Jor-
danian government created a private company, the
Aqaba Development Company, in cooperation with
the Aqaba Special Economic Zone Authority (ASEZA).
97
THE REPORT Jordan 2014
A seven-berth middle port at Aqaba handles containers, cement and livestock
The rail network would
have enormous benefits
for the transport sector,
cutting costs and travel
times for virtually all goods
transported by land, as
well as allowing Jordan to
remain a major player in
the Iraqi market.
In June 2014 the
government allocated
$850m from a Gulf
Cooperation Council
development grant to start
transport projects in the
kingdom, including for the
national railway. Additional capacity has helped reduce cargo waiting times
TRANSPORT OVERVIEW
The move appears to have been successful as
shown most clearly by the introduction of more effi-
cient cargo transit regulations and better port facil-
ities. The result has been broad-based growth. The
port handled 210m tonnes of goods in 2011, more
than any year in the past two decades, according to
the Ministry of Transport. In 2013, however, this fell
to 122m tonnes of goods, a reflection of the polit-
ical instability in the region.
ENERGY HUB: Furthermore, the growth at Aqaba Port
is moving beyond shipping lines and sea passengers.
The ASEZA master plan, established in 2002, includes
a plan to transform the main port area into an expand-
ed entertainment, residential, hotel and cruise serv-
ice centre. In addition to this, Jordan’s second-largest
airport, located just outside the Aqaba city centre,
is seeing expansion with renovations to its passen-
ger and cargo facilitates aimed at attracting new
international flights and business.
Aqaba’s King Hussein International Airport recent-
ly unveiled a new 1500-sq-metre arrivals wing. Served
by more than 20 airlines, the airport is part of a new
tourism push that, coupled with the port complex,
has steadily become a primary engine of local eco-
nomic activity. The government’s bid to raise the
profile of Aqaba has resulted in the announcement
of several large projects in the port city. For instance,
one such project, announced in 2012, is a $1.2bn
real estate development scheme run by Ayla Oasis
that will expand Aqaba’s tourist and business infra-
structure, while improving Jordan’s existing logistics
facilities on the Red Sea.
Jordan has sought to capitalise further on the suc-
cess of Aqaba Port by turning the area into an ener-
gy hub. Plans are afoot to update Aqaba’s energy
capabilities as a prospective destination for Iraqi
energy resources. Jordan has been purchasing dis-
counted crude oil from Iraq over the past two years
to help stave off the effects of interrupted natural
gas shipments from Egypt. Negotiations are under
way to build a new pipeline that would reach from
southern Iraq’s oil-rich Basra Province to Aqaba.
Recent moves by Turkey to export oil from Iraqi
Kurdistan underline the strategic importance of a new
pipeline from Baghdad to the Red Sea. For Jordan,
the pipeline would spur development in Zarqa, which
currently hosts the country’s only oil refinery. The
project will also provide the basis for plans to build
an oil refinery in Aqaba and a new export terminal
designed for energy resources, especially shipments
of Iraqi oil destined for third countries. ASEZA reports
that earnings nearly doubled in 2013, rising from
$27m to $53m. In the past 10 years, the zone has
overseen the creation of more than 30,000 public
and private sector jobs, securing more than $12bn
in investment and raising Aqaba’s regional and inter-
national profile in the field of transport.
OUTLOOK: With continued local and foreign invest-
ment, as well as grants from GCC countries, Jordan’s
transport infrastructure looks set to expand on every
front. However, the authorities are mindful that a
long-term plan needs to be in place to ensure ade-
quate and sustainable transport networks. The IMF
approved a $2bn loan to the kingdom in August 2012
to help fund development projects, while in 2013,
Jordan’s Ministry of Transport invited technical and
financial bids for a consultancy contract to develop
a long-term national transport strategy.
Despite these grants, short-term problems con-
tinue to persist, making it difficult to raise capital
for infrastructure investment and causing delays in
railways and public transport projects. However, the
success of public-private partnerships at Aqaba Port
is helping to solidify Jordan’s position in the Iraqi
trade market and provides a potential method to
keep other infrastructure projects on track. Contin-
ued privatisation, as seen in the expansion of
Amman’s QAIA, will help expand existing operations
in this sector. Jordan’s underlying strengths, its
central location and political stability, are two qual-
ities that will ensure forward movement in the future.
98
The success of Aqaba Port has helped solidify Jordan’s position in the Iraqi trade market
Recent moves by Turkey to
export oil from Iraqi
Kurdistan underline the
strategic importance of a
new pipeline from
Baghdad to the Red Sea.
This would spur
development in Zarqa,
which currently hosts
Jordan’s only oil refinery.
Aqaba’s King Hussein
International Airport
recently unveiled a new
1500-sq-metre arrivals
wing. The airport is part of
a new tourism push that,
coupled with the port
complex, is driving local
economic activity.
www.oxfordbusinessgroup.com/country/Jordan
Queen Alia International Airport has recently undergone expansion
TRANSPORT INTERVIEW
Kjeld Binger, CEO, Airport International Group
What impact will Queen Alia International Airport
(QAIA) upgrades have on the Jordanian aviation
industry in the context of the wider region?
BINGER: Over the past 25 years, airport infrastruc-
ture throughout the world has gone through a par-
adigm shift, from state-backed projects to a stronger
emphasis on privatisation, leading to higher levels
of efficiency as well as greater profits.
While Jordan has a long aviation history, it pres-
ents us with an interesting case study. We have a
national champion in Royal Jordanian, which has
been in operation for five decades, but the country
is no longer a hub for regional transportation. This
reality means that we must operate within our means,
and do the best we can within our constraints.
Indeed, it is important to note that we are current-
ly nearing completion for the second phase of the
new terminal. Along with the willing cooperation of
the architects, investors and ourselves, we have suc-
cessfully transformed QAIA into one of the leading
airports in the world. It was only three decades ago
that the original terminal was built. However, with
ageing infrastructure and poor logistics, it was essen-
tial to proceed with a robust programme of moderni-
sation and redevelopment.
Thanks to the modernisation of QAIA, we have a
primary competitive advantage in the seamless tran-
sition of our transfers operations. We are a niche
regional player and have been able to survive what-
ever competition exists by working on our partner-
ships between the operators and the airport. One
important step to ensure long-term security was a
deal struck back in 2009 with Boeing. Through this
agreement, Royal Jordanian was able to acquire a fleet
of Dreamliners for long-haul flights. This should help
elevate Royal Jordanian’s status as a global airline
player. Of course, this will by no means solve all of
Royal Jordanian’s problems, as the carrier must con-
tinue to identify and target markets that will be able
to accommodate a Dreamliner, and not only an A380.
How is the development of QAIA contributing to
local employment and government revenues?
BINGER: There are currently approximately 400
employees at the Airport International Group. Of
these, 395 are Jordanian, reflecting our wish to make
this project a Jordanian-driven venture from the very
beginning. From the construction side, it is slightly
different, as the bulk of the workforce will be made
up of guest workers. Therefore, in real terms, the
entire project should inject approximately $1bn into
the national economy, and have further benefits on
long-term employment rates, by creating viable and
sustainable linked industries.
We have a build-operate-transfer contract with
the federal government that is scheduled to run for
a period of 25 years. In return for this agreement,
the government will receive 54.6% of the gross rev-
enues that will be generated by the airport. Indeed,
by the end of 2014, the government will have received
an accumulated total of around $450m, which will
constitute a substantial source of revenue. Thus,
when the 25-year contract comes to a close, the gov-
ernment will take over the full operation of the air-
port, but it is also possible that they may launch a
new tender for the management of the airport.
To what extent can the success of QAIA serve as
a catalyst for infrastructure development?
BINGER: QAIA is not only responsible for spurring
economic growth, but also driving development in
the transport sector. Given the realities of increas-
ing congestion, unpredictable winter weather con-
ditions, and a lack of readily available winter tyres
within Jordan, a parliamentary committee came to
the airport recently to discuss plans to build a train
network to and from Amman. There are also serious
talks under way regarding the construction of a train
line between Amman, Aqaba and cities within Egypt.
The synergies to be realised through this intermodal-
ity are exciting, and will help to boost the economy.
99
THE REPORT Jordan 2014
High hopesOBG talks to Kjeld Binger, CEO, Airport International Group
TRANSPORT ANALYSIS
Jordan’s airports have seen steady passenger growth of late
Jordan’s aviation market occupies a medium-sized
position within the Middle East. While not quite on
par with the rapid increase in international routes
that has boosted air travel to Gulf countries like Qatar
and the UAE, the kingdom’s airports have neverthe-
less seen steady passenger growth in recent decades,
averaging 9.7% per year between 2006 and 2011.
Thanks to the waves of immigrants from Iraq and
Syria, as well as Palestinians who use Jordan as their
international air gateway, Queen Alia International
Airport (QAIA) serves a large and growing population
of travellers. Moreover, with a series of renovations
nearly complete at QAIA as well as at the kingdom’s
second international airport, King Hussein Internation-
al Airport (KHIA) in the Red Sea port city of Aqaba,
the sector looks set for renewed growth.
RENOVATIONS: The new terminal at QAIA, complete
with a fresh marketing campaign for Jordan’s tourism
sector, have boosted overall performance at the air-
port. Airport International Group (AIG), the Jordanian
company responsible for the renovation, expansion
and operation of QAIA, signed an operational conces-
sion agreement with the Jordanian government in
2007. The company’s shareholders include Abu Dhabi-
based Invest AD (38%), Kuwait-based Noor Financial
(24%), Jordan’s EDGO Group (9.5%), Cyprus-based J&P
Limited (9.5%), Greece’s J&P Avax (9.5%) and France’s
Aeroports de Paris Management (9.5%).
AIG spent nearly $750m investing in the new pas-
senger terminal, with an additional $100m for reno-
vations to existing facilities, all of which have been
designed by UK-based Foster + Partners. The last two
years have seen impressive growth despite regional
instability. Year-to-date passenger figures up to April
2014 have risen by 13.6% to 2,282,894 compared
with the same period the previous year.
Located 35 km outside of Amman, QAIA processes
the majority of Jordan’s air traffic, handling 9m pas-
sengers annually. Passenger traffic and aircraft move-
ments increased by 13.2% and 12% year-on-year,
respectively, in August 2014. The second phase of the
expansion, valued at $100m, will increase its capaci-
ty to 12m passengers annually and is slated for com-
pletion in late 2016. According to AIG CEO Kjeld Binger,
positive growth is driven by an increase in flights to
Saudi Arabia, as well as a bump in business and leisure
trips to Egypt and the UK. The numbers are encour-
aging as they come before the peak summer travel
season. In addition, the airport ranks among the world’s
best in terms of passenger satisfaction and service,
according to several international surveys.
KHIA, located in the Red Sea port of Aqaba, is also
currently going through expansion. The state-owned
Aqaba Development Corporation owns the airport
but signed a management agreement with Aqaba Air-
ports Company in January 2008. The current 1500-
sq-metre extension, estimated to cost JD5m ($7.06m),
seeks to improve facilities at the airport. KHIA’s car-
go terminal has been in service since 2006 and plans
are under way to boost operations as part of a bid to
make the airport a regional centre for transportation.
In order to facilitate the further growth of tourism to
Aqaba, the government recently agreed to reduce
departure taxes for tourists departing from KHIA. The
move should help attract more international airlines.
BOOSTING SECURITY: Keeping in line with upgrades
to cargo X-ray technology at Jordan’s Aqaba Port, QAIA
is set to install state-of-the-art Japanese security
equipment as part of the airport’s renovations. The
equipment, estimated to cost JD10.5m ($14.83m), will
improve airport security and includes large-scale X-
ray machines, explosive detection tomography systems,
and handheld metal detectors for cargo and passen-
gers to increase screening capacity and accuracy. The
additional security equipment will assist Jordan’s avi-
ation regulatory framework as it continues its efforts
to harmonise with EU best practices and an open skies
framework. The Civil Aviation Regulatory Commission,
established in 2007, is the government body tasked
with ensuring procedures remain in line with the EU
In line with upgrades to
cargo X-ray technology at
Aqaba Port, Queen Alia
International Airport is set
to install Japanese security
equipment as part of the
airport’s renovations.
101
THE REPORT Jordan 2014
To facilitate tourism to
Aqaba, the government
recently agreed to reduce
departure taxes for tourists
leaving from King Hussein
International Airport.
Soaring growthAirport renovations aim to boost the aviation sector
TRANSPORT ANALYSIS
aviation regulatory framework. As Jordan’s aviation
regulatory framework falls in line with standard EU pro-
cedures, the kingdom could serve as a regional hub
for European carriers. Over the coming years, Jordan
could see carriers such as British Airways operate
flights from Amman to locations like Oman and Kuwait.
Carriers from other countries have already recog-
nised its potential. “Jordan’s regional strategic impor-
tance has seen Turkish Airlines increase commercial
activity to and from the kingdom,” Sertan Yuce, gen-
eral manager of Turkish Airlines for Aqaba, told OBG.
NATIONAL CARRIER: Like the country’s major air-
ports, Jordan’s flag carrier, Royal Jordanian (RJ), is in
the midst of renovating and redefining its strategy in
order to grow during a period of regional instability.
The first Arab carrier in the Oneworld alliance, RJ’s main
regional routes to Egypt, Libya, Syria and Lebanon
have been hit hard by the political instability of the
past several years. RJ has curbed expansion in Africa
to focus on serving the Levant by servicing destina-
tions such as Tel Aviv and Irbil, where foreign carriers
have been more cautious. “Competition in the airline
sector has become increasingly challenging, so it is
crucial that Jordan plays to its strengths at the cen-
tre of the Levant and the greater Middle East,” Nass-
er Lozi, chairman and CEO of RJ, told OBG.
RJ recently revealed a new 10-year business plan
that will drop five locations from its route map of 55
international destinations. The new business plan will
focus primarily on regional routes, specifically to Sau-
di Arabia, with replacement and expansion of its sin-
gle-aisle fleet from 20 to 30 aircraft. RJ is looking to
acquire several small, fuel-efficient planes such as
Airbus A320neos, as well as Embraer E-Jet E2s. RJ's
fleet of Boeing 787s will expand to five planes by end-
2014, boosting cargo capacity by up to 30% on medi-
um- to long-haul routes to Europe and elsewhere.
Jordan’s low-cost carrier, Petra Airlines, owns two
Airbus A320s and operates a network ranging from
Iraq to Turkey. Having obtained its air operator’s cer-
tificate at the end of 2012 after running as a charter
airline for seven years, the company is looking to buy
additional aircraft and expand its network. “It has
been difficult for us to obtain more aircrafts due to
the high cost of operating in Jordan,” Fadi Kilani, Petra
Airline’s product manager, told OBG. “But we remain
committed to the market because of the great poten-
tial we see as a low-cost carrier in Jordan.” Low-cost
UK carrier EasyJet announced in May 2014 that it
would close its Gatwick-Amman route.
The renovations of QAIA and KHIA reflect long-term
planning in the aviation sector. An increase in capac-
ity, in addition to the growth of new routes into key
tourist and business markets in East Asia and Africa,
will help to realise the kingdom’s long-term passen-
ger growth goals. Despite the political instability sur-
rounding it, Jordan has benefitted from its location
to establish itself as a vital player in regional aviation.
102
Royal Jordanian has
recently revealed a new
10-year business plan that
will drop five destinations
from its route map of 55
international destinations.
The new business plan will
focus primarily on regional
growth, specifically to
Saudi Arabia.
103
Construction & Real Estate Focus on large-scale projects is set to drive growth
Government looking to meet demand for housing
Major plans for redevelopment of downtown areas
Regional migration and population supporting sales
CONSTRUCTION OVERVIEW
GDP for the sector stood at $1.5bn in 2013, a 10.3% rise over 2012
The construction sector saw renewed growth in 2013
and indicators point to further expansion in early 2014,
following a period of contraction in 2012. While hous-
ing accounted for the great bulk of construction activ-
ity, in terms of the size of licensed projects, large-scale
real estate and tourism developments, as well as major
infrastructure works, are set to drive most opportuni-
ties for large contractors. Challenges in the sector
include a shortage of labour against a backdrop of
recently tightened restrictions on foreign workers and
comparatively high prices for raw materials.
SECTOR GROWTH: Sector GDP stood at JD1.06bn
($1.5bn) for 2013, up 10.3% in nominal terms from
JD961.7m ($1.36bn) the previous year, according to
data from the Department of Statistics (DoS). In real
terms, sectoral GDP rose by 8.7%, with strong growth
taking place in every quarter of the year, following a
contraction of 1% in 2012. The industry accounted for
around 4.4% of GDP at market prices. Growth is being
driven by the country’s improved macroeconomic per-
formance as well as factors such as significant aid
inflows; for example, in 2011 the Gulf Cooperation
Council (GCC) agreed to provide the kingdom with $5bn
in aid over five years, much of which is being used to
fund infrastructural improvements.
Despite growth in industry output, the number of new
construction permits issued in 2013 fell to 34,311 from
35,371 in 2012 (though this represented a major
increase on previous years) according to data from the
Central Bank of Jordan. The combined size of the proj-
ects for which new permits were issued was also down,
to 16.99m sq metres, from 17.34m in 2012 (though,
again, the 2013 figure represented major growth on
2011 and previous years). Of the 2013 total, 14.4m sq
metres, or 85%, was accounted for by residential con-
struction. Of licensed construction, 11.4m sq metres,
or 67% of the total for the year, took place in the cap-
ital, Amman. The number of registered construction
firms stood at 238 as of October 2013, according to
data from Bank Audi, down from 231 the previous year
and 294 in 2009, suggesting significant consolidation
in the sector since the 2008-09 international financial
crisis and the Arab Spring.
FINANCE: The value of loans extended to the con-
struction sector by Jordanian banks in 2013 stood at
JD4.08bn ($5.76bn), up from JD3.68bn ($5.2bn) in 2012
and JD2.3bn ($3.25bn) in 2008, according to data from
the central bank. Construction is a major driver of bank
lending in the kingdom. Loans to the sector in 2013
accounted for 21.5% of credit to all industries and for
just over a third of new loans made during the year.
Around half of all contractor borrowing was for the con-
struction of housing. For the first four months of 2014,
lending to the sector stood at JD16.8bn ($23.73bn), up
12.6% from the same period in 2013, suggesting fur-
ther growth in sector activity this year.
HOUSING CONSTRUCTION: The number of residen-
tial units completed by the private sector (including both
owner-builders and housing companies), which
accounts for the great bulk of housing construction in
the kingdom, stood at 42,072 in 2013 (up from 36,789
the previous year), according to the Housing and Urban
Development Corporation (HUDC). The corporation put
the country’s requirement for new housing for the year
at 33,777 units (more or less unchanged from previ-
ous years), including 12,996 units in the capital, sug-
gesting that current levels of supply are more than
adequate for the market’s needs. The corporation fore-
casts that the annual demand for new housing units
will rise relatively slowly over the long term, to 38,044
units by 2025, suggesting that construction activity in
the residential sector is likely to remain steady rather
than increase substantially in the coming years. Amman
will account for the largest share of the requirement,
according to HUDC forecasts, around 38% of the total
(14,337 units), followed by Irbid on 7947 units (21%)
and Zarqa on 5351 units (14%).
However, Mai Asfour, senior director of housing poli-
cies at HUDC, said that such figures did not take into
account the arrival of large numbers of refugees from
The value of loans
extended to the
construction sector by
Jordanian banks reached
$5.76bn in 2013, up from
$5.2bn in 2012 and $2.3bn
in 2008. Loans to the
sector also accounted for
21.5% of credit to all
industries in 2013.
The number of residential
units completed by the
private sector, which
accounts for the great bulk
of housing construction,
stood at 42,072 in 2013.
The demand for new
homes was estimated to
be 33,777 units in the same
year.
104
Beyond homesLarge-scale projects are set to drive growth
www.oxfordbusinessgroup.com/country/Jordan
CONSTRUCTION OVERVIEW
the civil war in neighbouring Syria, meaning that demand
may run higher than forecast in the short term. At least
50,000 additional housing units are needed to accom-
modate Syrians living outside of refugee camps in the
kingdom, and refugees continue to arrive daily, provid-
ing the basis for robust growth over the coming years.
AFFORDABLE HOUSING:Sufficient provision of afford-
able housing remains a challenge. Approximately 25,000
affordable housing units come onto the market each
year, which is around 15,000 less than required, accord-
ing to the Jordanian Housing Developers Association
(JHDA). “There is a gap between housing supply and
demand; much of the current supply is at the higher
end of the market, which many Jordanians cannot
afford,” said Asfour. “High-end residential towers are too
expensive for most Jordanians, so most growth in res-
idential construction activity is likely to remain in the
low-to-middle end of the market,” Ismail Hakki, busi-
ness development and planning manager at Sigma
Consulting and Engineers, told OBG.
The government’s housing construction strategy is
primarily based around enabling activity by private sec-
tor developers and owner-builders, by, for example,
dividing land up into parcels and making these avail-
able to developers as well as providing connections to
infrastructure; however, in order to address the deficit
in affordable housing, the government is currently in
the midst of a project to build around 8400 residential
units, known as the Royal Housing Initiative. Houses
under the initiative are being built across the kingdom,
with around half located in the capital. Loans for hous-
es bought under the initiative are effectively subsidised
by capping interest rates at 5%.
Asfour of the HUDC, which is managing the project,
told OBG in April that just over half of the units had
been sold, with around 1000 more to be put on the mar-
ket annually until 2017, though she said the sales
process was facing some difficulties. “The main prob-
lem is that people struggle to obtain finance,” she told
OBG, adding that when the project is finished the organ-
isation is unlikely to engage in further large-scale build-
ing projects but will instead return to its traditional role
of enabling house construction by the private sector.
MAJOR PLAYERS & CONTRACTS: Most residential
projects tend to be small scale and are built mainly by
local contractors. As a result, some developers have
brought in contractors from other parts of the region
to work on larger-scale projects. For example, some con-
tractors from the UAE and Saudi Arabia have formed
joint ventures with local firms. Major contracts recent-
ly signed with such groups in the capital include a
$197m deal for the construction of The St Regis Amman
and The Residences at The St Regis Amman project,
which will include a 260-room St Regis-branded hotel
and a 79-apartment residential project, awarded in
May 2013 by Al Maabar to Arabtec.
The capital has otherwise seen relatively few major
construction contracts awarded in recent months. How-
ever, work continues on numerous projects within the
first phase of the Abdali development in downtown
Amman, with some of the contracts in progress by local
firms. For example, local contractor Habash-Deir Con-
tracting Company was awarded the contract for the con-
struction of the second phase of the Abdali Mall in
2011. Plans to begin work on the second phase of
Abdali should provide new opportunities in the capital
in the coming years, with infrastructure works likely to
start towards the end of 2014.
AQABA MEGA-PROJECTS: While new large-scale res-
idential and commercial construction contracts have
been relatively few and far between in the capital in
recent months, a number of contracts have been award-
ed in the southern city of Aqaba in relation to several
major real estate and tourism development projects
being built in the town. The largest such contract to
date was the award in January 2014 to Arabtec for the
construction of the 184-acre Red Sea Astrarium resort
project in mountains near Aqaba. The $1.55bn project
will include a man-made lagoon, four hotels (compris-
ing around 2000 rooms) and a Star Trek-based theme
park, and is due to be completed in 2017.
Prior to that, in June 2013 another major develop-
ment deal was signed, when the Saraya Aqaba Real
105
THE REPORT Jordan 2014
The industry accounted for 4.4% of GDP in 2012 at market prices
As most residential projects
are on a smaller scale and
are built mainly by local
contractors, developers
have started forming
partnerships with
contractors in the UAE and
Saudi Arabia for
larger-scale schemes.
SOU
RCE:
Cen
tral
Ban
k of
Jord
an
Construction sector contribution to GDP, 2009-13 (JD m)
0
300
600
900
1200
1500
20132012201120102009
CONSTRUCTION OVERVIEW
Estate Development Company, which is developing a
$1bn tourism and real estate project in Aqaba, award-
ed a $629m contract for the construction of the pro-
ject’s first phase to a consortium consisting of Arabtec,
Consolidated Contractors Company, and Drake & Scull.
The works, which will include a man-made lagoon that
will increase the length of Aqaba’s coastline by 1.5 km,
is due to be completed in 2016. In June 2014 Drake &
Scull also won contracts for the provision of mechan-
ical, engineering and plumbing services to two hotels
being built as part of the project and for the design,
supply and installation of a cooling plant in the devel-
opment, worth a combined $70.5m. In May 2013 Al
Maabar awarded an $83m contract to build around 500
units in the Al Raha Village, the first residential neigh-
bourhood of its Marsa Zayed project to local contrac-
tor Omar Abu Sa’ad and Sons (see Real Estate overview).
IN THE PIPELINE: A number of large infrastructure
projects are also set to increase opportunities in con-
struction. In June 2014 the Jordan Valley Authority
announced it would launch tenders for the first phase
of the Red Sea Water Conveyance Project before the
end of the year. The project, which is aimed at increas-
ing water availability in Jordan and reversing falls in the
Dead Sea’s water line, will be offered on a build-oper-
ate-transfer (BOT) basis and will be constructed at a
cost of around $4bn. Elements of the project will include
a water desalination plant in Aqaba with capacity of
between 800m and 1bn cu metres per year and a 180-
km canal linking the Dead and Red Seas. Construction
is due to begin towards the end of 2015, and future
plans envision the creation of residential and touristic
areas in parallel with the completion of the project. Also
in June, the government announced plans to launch two
new railway projects, namely the construction of a rail-
way line between Aqaba and the Chidya area, aimed at
transporting phosphates from mines to Aqaba Port, at
a cost of JD53m ($74.87m), and a link between Aqaba
and Zarqa at a cost of JD97m ($137.02m).
Opportunities also abound in the energy sector, with
a number of major energy-related construction proj-
ects already under way. Sahl Dudin, the managing direc-
tor of Ayla Oasis Development Company, told OBG, “The
renewable energy and energy sufficiency law has
enabled more initiative to undertake renewable proj-
ects. This will not only save us on expensive operational
costs, but will benefit the country as a whole.”
In December 2013 Attarat Power Company, which is
building the Middle East’s first oil shale power plant in
the kingdom, announced it had awarded the engineer-
ing, procurement and construction (EPC) contract for
the facility to China’s Guangdong Power Engineering
Company. Prior to that, April 2013 saw the launch of
construction work for the third independent power
project, or IPP3, which will be the largest tri-fuel pow-
er plant in the world when it is completed in autumn
2014. A consortium led by Wartsila was awarded the
$552m EPC contract for the plant in October 2012. In
January 2013 Wartsila also received an EPC contract
for the IPP4 power plant worth some $244m.
Aqaba is in particular witnessing a large share of
infrastructure construction activity. For example, in June
2014 BAM International announced that it had com-
pleted construction of a second four-berth port at
Aqaba under a €65m contract, having completed work
on a new container terminal the previous year. The
company is currently working on the construction of a
new liquefied natural gas (LNG) terminal in the city, for
which it was awarded a $63.5m contract in November
2013. “Energy is an especially promising sector, in par-
ticular since the government approved large-scale pho-
tovoltaic projects, as are other forms of infrastructure
projects such as water and sewage,” Raed Abu Soud,
international affairs director of Sigma Consulting Engi-
neers, told OBG. “The regional crises have led to an influx
of Iraqis and Syrians which is leading to dramatic pop-
ulation growth, so the government is having to invest
in expanding infrastructure generally.”
LOOKING ABROAD: Some construction and engineer-
ing companies say outside of such government-backed
infrastructure projects, opportunities in Jordan are
becoming scarcer as projects, such as phase one of
Abdali, begin to come on-stream. As a result, some
106
The government is focusing on meeting demand for affordable homes
The Red Sea Water
Conveyance Project, for
which the Jordan Valley
Authority announced a
tender in June 2014,
should increase water
availability and reverse falls
in the Dead Sea’s water line
at an estimated cost of
around $4bn.
www.oxfordbusinessgroup.com/country/Jordan
0
0.90
1.80
2.70
3.60
4.50
5.40
Loans to construction (JD bn)
201320122011201020090
6
12
18
24
30
36
% of loans to all sectors
Bank loans to construction sector, 2009-13
SOU
RCE:
Cen
tral
Ban
k of
Jord
an
CONSTRUCTION OVERVIEW
firms are looking to neighbouring countries for oppor-
tunities. “When Syria stabilises there will be a huge
need for reconstruction there, running into billions of
dollars. Jordanians and Lebanese are already setting up
companies to take advantage of this,” said Abou Soud.
The kingdom could be a base for foreign firms seeking
work elsewhere in the Middle East. “Jordan is a poten-
tial business hub for the region, in particular for firms
looking to work in Syria and Iraq, as it offers stability
and a good business environment,” said Hakki.
Activity is on the increase elsewhere in the region,
creating potential openings for Jordanian firms. “The
government in Saudi Arabia has a huge investment
budget, the World Cup in Qatar is driving opportuni-
ties there, and there is lots of activity in Erbil as well,
where the authorities are looking for alternatives to Turk-
ish firms in order to increase competition,” said Hakki.
WORKFORCE ISSUES: In 2011, 50,130 people were
employed in the sector, according to the DoS, account-
ing for around 4.95% of total employment in the king-
dom. A large proportion of the construction workforce
is foreign: 17,835 non-Jordanians held permits to work
in the sector in 2012, of whom the great majority
(15,184) were Egyptian, according to Ministry of Labour
data. “Many Jordanians are unwilling to work in con-
struction,” said Abou Soud, explaining the high propor-
tion of foreigners working in the industry, adding that
Syrians are increasingly entering the labour pool.
Industry figures say that tighter visa requirements
and stricter government enforcement on hiring rules
for foreign workers is making recruitment in the sec-
tor a challenge, though some areas are harder hit than
others. “The availability of labour is less of an issue in
Aqaba as firms working there are allowed to employ
foreigners for up to 70% of their workforce. However,
in Amman the figure is 30% and for that you need per-
mission from the Ministry of Labour,” Emad Kilani, CEO
of real estate developer Al Maabar Jordan, told OBG.
The issue is not just one of numbers but also of
expertise. “The government wants a minimum percent-
age of labourers to be Jordanian, which is problemat-
ic in some areas as few Jordanians have experience
building towers,” Fahmi Saifi, sales and marketing man-
ager at Abdali Investment and Development, told OBG.
“The authorities have granted waivers in some cases
and there has been knowledge transfer from foreign
workers to Jordanians. However, there is still a need for
foreign workers as many projects in the Abdali devel-
opment are international in design. For example, the
Rotana Tower uses specialised glass frames made in Chi-
na that need to be installed by the production compa-
ny workers who are already familiar with it.” He added,
however, that there was little requirement for foreign
workers at the management level. “There are plenty of
Jordanians who have gained construction management
experience in the Gulf and have subsequently returned
to the kingdom,” he told OBG.
CONSTRUCTION MATERIALS: Materials shortages are
not a major issue in the sector. Indeed, the cement
industry suffers from overcapacity, with domestic con-
sumption running below local production capabilities,
and with the exception of Palestine, Jordanian firms do
not have large market shares in neighbouring countries.
Total output of cement stood at 3.92m tonnes in 2010,
according to the latest available data from the central
bank. Of this, 1.7m tonnes was clinker, the output of
which fell to 906,000 tonnes in 2013.
Nevertheless, materials can be costly, with the price
of prime inputs being high in Jordan, largely due to
developments being quite small and developers unable
to negotiate on price. High local energy costs in com-
parison to other countries in the region also drive up
the production cost of materials. Speaking to OBG,
Asfour of the HUDC put the average cost of residen-
tial construction in Jordan at JD250 ($353) per sq metre.
OUTLOOK: Infrastructure projects, as well as tourism
and real estate mega-developments, are set to drive
the bulk of large-scale construction activity and oppor-
tunities for major contractors in the kingdom in the com-
ing years. Construction and engineering firms are
also likely to use Jordan as a base from which to take
advantage of other opportunities in the region, in par-
ticular in Syria, if and when the conflict there dies down.
107
THE REPORT Jordan 2014
In 2011 the sector accounted for nearly 5% of total employment
While the country
benefits from an
oversupply of construction
materials, particularly
cement, supplies can still
be costly as developments
are often quite small and
developers are unable to
negotiate on price.
Licensed construction area, 2009-13 (m sq metres)
SOU
RCE:
Cen
tral
Ban
k of
Jord
an
0
4.0
8.0
12.0
16.0
20.0
OtherResidentialTotal
20132012201120102009
CONSTRUCTION & REAL ESTATE INTERVIEW
Taha Al Zboun, CEO, Dead Sea Development Zone
Given the important role that tourism plays in Jor-
dan’s economy, how important is the Dead Sea?
AL ZBOUN: The Dead Sea is, without doubt, a jewel in
the crown of Jordan. Throughout history it has been
inhabited, hosting some of the most significant events
in our shared history. As a geological feature – the low-
est point on Earth – the Dead Sea is unparalleled, with
a salubrious climate and mineral-rich saline waters that
have proven to be of therapeutic value. The surround-
ing cliffs frame the sea with dramatic shapes and
colours, and hidden, verdant wadis (gullies) reveal sculp-
tural landscapes that teem with life. Yet unlike many of
the other wonders of the natural and ancient world,
the Dead Sea is within easy access of a major urban
centre, meaning that it can be shared by Jordanians and
international visitors alike.
The Dead Sea is acknowledged as one of the four
primary centres for tourism in Jordan, located strate-
gically in relation to other tourism sites and possess-
ing adequate accommodation and support facilities.
Moreover, the National Tourism Strategy identifies eight
priority tourism segments and the Dead Sea provides
options for six of these including: cultural; religious;
ecotourism; health and wellness; meetings, incentives,
conferences and exhibitions; and adventure.
What plans lie ahead to further develop and expand
touristic activities around the Dead Sea?
AL ZBOUN: In 2010 the Jordan Development Zones
Company (JDZ) launched phase one of the Dead Sea
master plan, which sets out a series of demand drivers
and enablers in the area. These range from spatial tech-
niques to management and marketing, and reflect a
more holistic understanding of how a healthy destina-
tion functions and what JDZ will need to do to realise
these enablers and drive growth.
The most critical drivers lie in the successful spatial
and economic logic of the master plan, and adherence
to this plan is a critical prerequisite for the long-term
success of the region. The plan adopts the notion of
“urban value chains” as a means of achieving econom-
ic diversity while also consolidating existing develop-
ment. This idea hinges on the diversification of the
area’s current economy by initiating redevelopment
that introduces a new set of economic sectors or seg-
ments, and at higher densities than the resort average
at current coastal developments.
The existing mass of resort hotels have the poten-
tial to be spatially (and thus economically) linked through
mixed-use tourism, and the tourism market has the
potential to evolve from its current segregated expe-
rience to one that is more comparable to a Mediter-
ranean-style environment, with higher densities and
mutually-reinforcing value chains.
The Dead Sea will also broaden its market position,
hosting, for the first time, offerings that are priced for
domestic visitors. The master plan will improve the
overall operational atmosphere of the destination,
bringing infrastructure to support growth and creat-
ing a self-sustaining service backbone that enables the
tourism industry to operate more efficiently and cheap-
ly. The local and surrounding communities will benefit
not only from the economic opportunities wrought by
nearby developments but also from the civic and recre-
ational offerings adjacent to their lands.
Given the region’s instability, how can Jordan pro-
mote itself as a stand-alone destination?
AL ZBOUN: There is something here to offer every
traveller, with tourism products ranging from classical
history and culture offerings – such as Petra, the site
of Jesus’ baptism, and the ancient Roman city of Jerash
– to leisure and relaxation at the Dead Sea, the Ma’in
hot springs oasis and the coastal city of Aqaba. Because
the country is constantly developing its products by
focusing on what tourists seek, there is a lot of variety,
from international to local cuisine, from five-star hotels
to Bedouin camps. Also, given Jordan’s small size, sites
are at most a three- to four-hour drive from each
other, which encourages guests to visit multiple places.
108
Crown jewelOBG talks to Taha Al Zboun, CEO, Dead Sea Development Zone
www.oxfordbusinessgroup.com/country/Jordan
REAL ESTATE OVERVIEW
Mixed-use developments have become increasingly popular
The Jordanian real estate market saw increased sales
activity in 2013 as well as price rises in many parts of
the capital, which accounts for the great majority of
transactions. A number of major mixed-use real estate
developments are under way, including the Abdali devel-
opment in Amman – a major component of which was
launched in July 2014 – and several large real estate
and tourism developments in Aqaba. These projects
demonstrate Jordan’s ability to attract foreign invest-
ment even in times of instability.
RESIDENTIAL MARKET: The number of housing units
in Jordan stood at 1.13m in 2010, of which 69% were
apartments, according to the latest data from the Hous-
ing and Urban Development Corporation (HUDC). The
corporation put the median price of residential units
sold in the country in 2013 at JD46,850 ($66,180),
down from JD50,000 ($70,630) in 2012. However, oth-
er data indicate that the residential property market in
the capital has been performing well. According to
Dubai-based property consultancy Asteco, all six areas
in the capital for which it monitors prices saw substan-
tial year-on-year (y-o-y) rises in sales prices in the first
quarter of 2014. In the upmarket Abdoun district prices
were up 15% y-o-y, to JD1325 ($1872) per sq metre,
making it the most expensive of the six areas. The low-
est rise was in the Fourth Circle, where purchase prices
increased 9% to JD1250 ($1766) per sq metre, while
the highest was in Al Rabiah, where they were up 22%
y-o-y to JD1100 ($1554) per sq metre. According to Aste-
co, the main factor behind such growth was an increase
in the cost of land, while Wael Al Jabaari, CEO of Abdoun
Real Estate, told OBG that rising construction costs
were another factor. According to Al Jabaari, the most
popular residential units are two-bedroom apartments.
Recent performance in the rental segment was more
mixed; three of the neighbourhoods for which Asteco
quoted prices saw y-o-y rises in the first quarter of
2014, while two were flat and one – the Um-Othainah
neighbourhood – saw a fall in prices, with rents down
2% on an annual basis. Rental rates in Abdoun stood at
between JD5250 ($7416) a year for a one-bedroom
apartment and JD16,500 ($23,308) for a unit with three
bedrooms, with prices up 3% y-o-y.
Industry figures say that there is currently a great deal
of demand in the mid-scale residential market but less
for more expensive units or for high-rise apartment proj-
ects in particular. “The apartment sales market is fair-
ly active,” Al Jabaari told OBG. “However, what we are
not seeing a lot of is high-end sales.” Some players
argue that large, high-end residential towers are not a
good fit with the lifestyles of Jordanians, though oth-
ers believe there are signs this is changing.
COMMERCIAL MARKET: Commercial rental rates cur-
rently vary between JD80 ($113) and JD140 ($197) per
sq metre across Amman as a whole. According to Aste-
co, office rental rates in the first quarter of 2014 were
either flat or down y-o-y in key neighbourhoods of the
capital. Prices were unchanged in the Mecca Street and
Madina Al Munawarah street areas, at JD100 ($141)
and JD80 ($113) per sq metre a year, but down 3%, for
example, in the Shmeisani district to JD93 ($132) per
sq metre and as much as 8% in Sweifieh to JD83 ($117).
The market for office space has slowed down as a
result of the Arab Spring and Amman is now charac-
terised by oversupply. For this reason the Abdali devel-
opment has decided to give over most of its second
phase to residential projects (see below). The project
itself is a contributor to such excess availability. “There
is a greater degree of oversupply in the commercial mar-
ket than the residential segment because of projects
such as Abdali coming on-stream, the first phase of
which is mostly commercial,” said Al Jabaari. “As Abdali
continues to come on-line, prices are likely to go down
as supply increases further.”
However, the sales market for office space has been
performing better than the rental segment, with prices
up y-o-y in four of the five areas of the city for which
Asteco provided data in the first quarter of 2014. Wadi
Saqrah saw the highest rise, at 13% y-o-y at JD1075
($1519) per sq metre, followed by Shmeisani on 11%
Of the 1.13m housing units
in Jordan in 2010, 69% were
apartments. The median
price for residential units
was $66,180 in 2013,
down from $70,630 in
2012, although there are
indications that prices are
rising in the capital.
109
THE REPORT Jordan 2014
Rental rates for
commercial property vary
between $113 and $197
per sq metre, with office
rental rates being either
flat or down from the
previous year in the first
quarter of 2014.
Bigger and betterA number of major developments are currently under way
REAL ESTATE OVERVIEW
to JD1000 ($1413) and Um-Othainah at 10% to JD1100
($1554), making it the most expensive of the areas cit-
ed. Other types of commercial space can be more
expensive than office space, with purchase prices in
the range of JD1000 to JD1500 ($1413-2119) and retail
space reaching JD2000 ($2825) in desirable areas.
ABDALI PROJECT: The major real estate project cur-
rently taking place in the capital is the redevelopment
of the Abdali area in the city’s downtown. The area was
formerly military-owned land located on what was then
the edge of town. Lebanese construction company
Horizon has formed a joint venture with the govern-
ment known as Al Mawarid that is now the main share-
holder in Abdali Investment and Development, the
company behind the project. The concept has subse-
quently been amended from simply a central business
district to a mixed-use development including retail
facilities and residential units. The investment cost of
the entire project – including both infrastructure and
buildings – is in the region of $5bn, with nearly $3bn
for phase one and $2bn for the second phase. Project
developers are roughly evenly divided between Jordan-
ian firms and companies from other parts of the Mid-
dle East, with little investment from beyond the region.
Major investors include Kuwaiti firm KIPCO, which, in
addition to a 2% stake of Abdali Investment and Devel-
opment, has a 40% ownership share in The Boulevard
project and a 60% stake in Abdali Mall. “Upon the com-
pletion of the boulevard projects, we are expecting to
see several commercial offshoots arise to the benefit
of the Jordanian economy at large,” Taher Al Jaghbir, the
CEO of Abdali Boulevard Company, told OBG.
Indeed, major elements of the development are now
beginning to come on-stream. A section of the project’s
first phase known as the Boulevard, a 400-metre pedes-
trianised spine including 12 buildings made up of retail
and office space and serviced apartments, was inau-
gurated in July 2014. Another section of phase one will
include the Abdali Mall, which will be the largest shop-
ping centre in the country with a total built-up area of
227,000 sq metres, is scheduled to open in summer
2015, and a third section, including the project’s W Hotel,
is due to be inaugurated in summer 2016, by which time
80% of phase one should be completed. The main res-
idential element of the development’s first phase is a
residential project by Damac that will consist of three
parts –The Tower, The Lofts and the Courtyard – and
which is due to be completed in late 2014. In total, the
first phase of Abdali will comprise 1.03m sq metres of
built-up space, of which 32% will be residential, 28%
office space, 26% retail space and 14% hotels.
Work on the infrastructure for phase two of the proj-
ect, which will be 792,000 sq metres in size, is due to
begin in the fourth quarter of 2014, with marketing for
it commencing in 2015. In contrast to the more mixed
first phase, the great bulk of the second phase (71%)
will be devoted to residential space, with most of the
remaining space (17%) given over to retail, leaving 8%
for hotels and 4% for offices.
AQABA: Outside of Amman, the city of Aqaba on Jor-
dan’s Red Sea coast, between the country’s borders with
Israel and Saudi Arabia, is seeing some of the largest
real estate and tourism development in the country.
Major projects include Ayla Oasis, backed by Saudi Ara-
bian conglomerate ASTRA, which is based around four
man-made lagoons that add 17 km to the kingdom’s
25-km Red Sea coastline. Construction of the lagoons
and major infrastructure such as roads was complet-
ed in 2012 and work on a 300-room Hyatt Regency hotel
and a marina area began in April 2013 and is sched-
uled for completion in 2015.
The Saraya Aqaba project also includes a man-made
lagoon, adding 1.5 km to the coast, and involves the
development of around 643,000 sq metres of land.
Work on the project stalled in 2008 amidst the global
financial crisis; however, in April 2013 the project’s
owner, Saraya Aqaba Real Estate Development Com-
pany, raised its capital by JD450m ($635.7m) to JD785m
($1.1bn) to finance the work and in June it signed a
$689m contract with a consortium led by Arabtec for
the construction of phase one, due to be completed in
late 2015, with operations to begin the following year.
The development includes residential units, four hotels,
a market area, a beach club and a conference centre.
Another major real estate project in Aqaba is Marsa
Zayed, which is being developed by the UAE’s Al Maabar.
The project site is 3.2m sq metres in size and the devel-
opment will include residential units, hotels, retail space,
offices, a marina and a cruise ship terminal, as well as
the addition of 2 km of newly developed waterfront
along the country’s short coastline. Construction work
on the first phase of the project began in July 2013 and
is slated for completion in December 2015. The first
phase includes infrastructure works along 200,000 sq
metres of land, as well as the construction of the Al
Raha Village with more than 500 homes and the 3980-
sq-metre Sheikh Zayed Masjid (mosque).
In March 2014 Al Maabar signed a memorandum of
understanding with MIS Solutions to build the Middle
East’s first minimally invasive surgical (MIS) centre as
part of Marsa Zayed’s second phase of development.
“The construction of the MIS centre will elevate Jor-
dan’s status as a medical tourism destination. Strate-
gically located in Aqaba, the centre will provide patients
110
The capital’s downtown
area, Abdali, has been the
focus of major
redevelopment projects,
including commercial
space, retail facilities and
residential units at a total
investment cost of $5bn.
www.oxfordbusinessgroup.com/country/Jordan
SOUR
CE: D
epar
tmen
t of L
ands
and
Sur
vey
*F
irst f
our m
onth
s
Value of real estate transactions, 2009-14 (JD bn)
0
2
4
6
8
10
2014*20132012201120102009
REAL ESTATE OVERVIEW
from around the globe with a convenient and idyllic des-
tination for receiving medical care,” Emad Kilani, CEO
of Al Maabar Jordan, told OBG.
DEAD SEA: In addition to development of the Red Sea
coast at Aqaba, the Jordan Development Zones Com-
pany (known as JDZ) is working on a master plan for
the development a 40-km stretch of the Jordanian coast
along the Dead Sea, located around 50 km south of
Amman. The project is due to be completed in six phas-
es through 2035. The plan is based around the estab-
lishment of a series of mixed-use nodes along the coast,
for which JDZ is providing infrastructure. Land is being
divided into parcels which are being offered to investors
with the choice to lease for 30 years (extendable for
another 30), lease with the option to buy, or purchase
land outright under the project.
Residential projects under the programme will include
the Sweimeh Urban District, which is primarily intend-
ed to house employees of businesses such as hotels in
the development. Other elements of the project will
include a convention centre district, a corniche district
and a hotel district. Phase zero and phase one of the
project are scheduled to run between 2011 and 2015,
and respectively involve JD21m ($29.7m) and JD7.1m
($10m) of infrastructure investment. Together these
cover an area of 40 sq km, which will be extended to
73 sq km in phase two (due to run between 2016 and
2022). “With the increasing development of the Dead
Sea touristic zone, we expect to see growth spread
through other sectors in the area,” Taha Al Zboun, CEO
of the Jordan Development Zones Company, told OBG.
A number of private real estate and tourism-focused
development projects are also under way along the
shores of the sea. Emaar of the UAE is developing a 1.6m-
sq-metre resort and real estate project called Sama-
rah on the Dead Sea on behalf of a consortium that
involves several local investors, including the King Abdul-
lah II Fund for Investment. The project, when complet-
ed, will comprise 1300 residential units, three hotels,
and various leisure and retail facilities including the
Samarah Mall, with 3700 sq metres of gross leasable
area. The shopping centre became officially operational
in March 2014 and is part of the first phase of the proj-
ect, known as Rift Living, which has been under way
for some time. Future phases include a golf resort, a
residential phase and another known as “Beach Living”.
Egypt’s Amer Group is also planning an 800,000-sq-
metre project known as Porto Dead Sea, which will
include the construction of four five-star hotels, three
shopping centres and 11,000 serviced apartments.
REGULATORY ISSUES: Developers have cited a num-
ber of regulatory challenges in the sector, including a
lack of clear rules in some areas. “Current laws do not
address issues such as the regulation of homeowners
associations and how to deal with non-paying tenants,”
Kilani told OBG. Nonetheless, he said that the govern-
ment was responsive to industry concerns on these
issues and that developers were currently working with
the authorities on draft legislation.
Another concern from developers is the implemen-
tation of property registration fees. “The rules require
you to pay 9% of the value of a property in order to reg-
ister it; however, the fee is based on an evaluation of
the property by the land department at the time of exe-
cuting the sale rather than the sale price, and there is
no right of appeal,” Kilani told OBG.
High levels of bureaucracy and the inconsistent appli-
cation of rules also contribute to challenges. Neverthe-
less, Kilani said that such problems were surmountable.
“Obtaining exemptions is not an easy process, but once
granted by the government you need to employ experts
in the field to ensure you go about it properly after agree-
ing with relative government agencies such as Customs
departments and sales and income tax departments
on required procedures.”
OUTLOOK: As it comes on-line, Abdali should transform
the character of the capital’s central area, though it may
also put downwards pressure on prices in the commer-
cial segment in the coming years. Aqaba also appears
set for further development given its large potential
as a tourism and second-home destination. Over the
longer term, demand for residential property and
units in the kingdom is expected to rise substantially.
111
THE REPORT Jordan 2014
Aqaba has seen several major residential and tourist developments
Certain regulatory issues
have posed challenges for
investors, such as a lack of
rules for homeowners
associations and how to
deal with tenants who do
not pay their rent, as well
as inconsistent
implementation of
property fees.
Average Amman apartment rental rates, Q1 2014 (JD/year)
SOU
RCE:
Ast
eco
0
4000
8000
12,000
16,000
20,000
3BR2BR 1BR
4th Circle Der Ghabar Al Rabiah Um Othainah Sweifieh Abdoun
REAL ESTATE ANALYSIS
Growth areas include outer neighbourhoods of the capital
The value of real estate transactions in 2013 stood at
JD6.3bn ($8.9bn), up 15% in nominal terms from JD5.6bn
($7.91bn) in 2012. The sector’s rate of expansion was
well above inflation of 5.5%, pointing to substantial real
growth. The number of residential apartments sold in
2013 rose to 30,380 from 25,434 in 2012. Of these,
20,084 were 150 sq metres in size or smaller. Howev-
er, the number of land sales fell, from 86,778 in 2012
to 68,201, likely as a result of rising land prices. Janu-
ary to April of 2014 saw even stronger growth in trans-
actions, with the value of real estate sales rising to
JD2.54bn ($3.59bn) from JD2.01bn ($2.84bn) in the
same period of 2013. In the first four months of 2014
11,473 apartments were sold, up 24% on the first four
months of the previous year, while the number of land
sales increased 23% year-on-year to 22,525.
Recent growth partly reflects a return to form for
the real estate market, following something of a slump
in 2012, when trading levels fell 12.9%, from JD6.43bn
($9.08bn) in 2011. Overall macroeconomic growth is
helping to drive activity in the sector; the IMF put growth
in 2013 at 3.25% and forecast a rate of 3.5% in 2014,
compared to 2.3-2.7% in the previous three years.
Growth areas include outer neighbourhoods of the
capital Amman. “Residential space is becoming limit-
ed in Jabal Amman, for example, and Jordanians living
closer to the centre are having to compromise on size,”
Wael Al Jabaari, CEO of Abdoun Real Estate, told OBG.
“However, the city is expanding, in particular towards
the airport. That side of the city has become quite pop-
ular due to recently improved transport connections
and the fact that land is cheaper, allowing people to
more easily buy three-bedroom units.”
HOME LOANS: The sector has also been supported by
a rise in home loans. The value of housing loans extend-
ed to individuals by banks stood at JD2.04bn ($2.88bn)
in 2013, up from JD1.75bn ($2.47bn) the previous year
and JD508m ($717.6m) in 2008, according to data from
the Housing and Urban Development Corporation
(HUDC). Of such loans in 2013, 61.5% were extended
by commercial banks and 38.5% were from Islamic
banks. Increased lending is partly a result of looser
terms and rising confidence alongside wider fiscal pol-
icy. With the central bank cutting interest rates on
deposits so more people are inclined to invest their mon-
ey and many are no longer waiting.
In addition to improved confidence generally, Emad
Kilani, CEO of Al Maabar Jordan, told OBG there are
renewed signs of willingness to invest off-plan at the
high end of the market, after perceptions of pre-sales
took a hit following the 2008 economic crisis and the
regional instability of recent years. “Credibility is a big
issue in the Jordanian real estate market,” said Kilani.
FOREIGN DEMAND: Against a backdrop of overall
growth, real estate sales to non-Jordanians fell to
JD406.5m ($574.22m) in 2013 from JD429.6m
($606.85m) in 2012 and JD449.2m ($634.54m) in 2011.
The largest foreign purchasers of foreign real estate by
far are Iraqis, whose combined real estate acquisitions
totalled JD205m ($289.53m) in 2013, followed by Saud-
is with JD59m ($83.34m) and Syrians with JD24m
($33.90m). The effect of conflict on real estate sales
has been mitigated by the fact that most Syrian refugees
are far from wealthy, unlike many Iraqis.
“Iraqis bought, whereas Syrians mostly rent,” said
Mai Asfour, senior director of housing policies at HUDC,
adding that the arrival of large numbers of refugees
have pushed rents up by around 200% in some parts
of northern Jordan. “In the lower end of the market,
Syrians are helping to drive demand, especially outside
of Amman; however, unlike the case of Iraqi refugees,
Syrians haven’t really affected the higher end of the
market,” Al Jabaari told OBG.
COMMERCIAL POTENTIAL: Developers are hoping
that regional political and security trends and the rede-
velopment of Amman will together help drive further
growth in the commercial segment by persuading for-
eign firms to relocate to the kingdom, using it as their
base for the Levant. In fact, some regional banks are
already moving their headquarters to the capital city.
Housing loans to individuals
totalled $2.88bn in 2013,
an increase over $2.47bn
the previous year and
$717.6m in 2008. In 2013
61.5% of credit was
provided by commercial
banks and 38.5% by
Islamic banks.
The value of real estate
transactions reached
$8.9bn in 2013,
up 15% in nominal terms
from $7.91bn in 2012, and
the sector’s rate of
expansion was well above
inflation of 5.5%, indicating
substantial real growth.
112
Market forcesRegional migration and macroeconomic growth support sales
www.oxfordbusinessgroup.com/country/Jordan
113
Industry & RetailA push to pursue higher-value-added industries
New investment law expected to pass in 2014
Longer-term solutions needed to reduce energy costs
Modern and traditional retail outlets compete
Leveraging the human resource advantage
High hopes for liquefied natural gas terminal in Aqaba
INDUSTRY OVERVIEW
The heartland for manufacturing is located in the kingdom’s north
The mainstay of much of Jordan’s economy – both
in terms of contributions to GDP and employment
of the kingdom’s citizens – the industrial sector faces
a number of important challenges. Among these is
the necessity to remain competitive, while also boost-
ing the value-added nature of the sector’s products,
all at a time of rising costs.
NATURAL ADVANTAGES: Yet, the sector also has
a number of clear advantages in a region beset by
political uncertainty and security issues. Jordan rep-
resents a safe harbour for investors amidst increas-
ingly troubled waters. This stands it in good stead,
as does its greatest resource – its talented human
capital. Demonstrating an ability to innovate and a
good understanding of how local and regional mar-
kets work has often made Jordanian entrepreneurs
leaders not only within the kingdom but through-
out Middle Eastern trade and commerce.
The country also has major mineral resources and
is well located, with good access to many other
regional countries – as well as global markets, thanks
to the port of Aqaba, itself now undergoing a major
upgrade. As Sheldon Fink, CEO of PBI Aqaba, told OBG,
“Initially Aqaba lacked focus in specialisation, but
has now concentrated more on the port and indus-
trials side, which has boosted growth.”
In addition, the government has been active in
establishing free trade zones and industrial zones,
linking these to an export-led growth strategy. There-
fore, while much remains uncertain in the region,
much in Jordan remains clear: that the government,
the private sector and ordinary Jordanians are all
determined to move forward with their industrial
sector, helping it fuel the country’s future growth.
LOOKING BEYOND: Industry in Jordan is divided into
two broad categories: manufacturing and mining.
These two have historically often been intertwined,
as manufacturers served the requirements of the
extractive industries and their support subsectors.
The heartland for manufacturing has long been the
north of the kingdom, with an industrial area includ-
ing the capital, Amman, and stretching out to Al Zar-
qa and beyond. This has now expanded somewhat,
as the port of Aqaba on the Red Sea has developed
its own manufacturing hinterland.
Mining, meanwhile, had its activities dotted around
the country, with phosphates and potash the two
main mineral resources. Mining for oil and gas has
always been limited, with a gas field at Risha, close
to the Iraqi border, and oil at Hamzah, in Wadi Al Azraq,
west of Amman (see Energy).
Until the year 2000, when Jordan joined the World
Trade Organisation (WTO), much of the kingdom’s
domestic industry was protected by high tariff and
non-tariff barriers. Yet, Jordan did not follow a strict
import-substitution regime, as other regional
economies did during the 1970s and 1980s, allow-
ing the import of machinery, in particular, at effec-
tively subsidised prices. This was partly because of
an understanding – still in place today – that Jor-
danian industry must be able to sell its products
overseas if the economy is to develop. Using the
best imported technologies was seen as a way to pro-
duce quality goods for export.
POPULATION GROWTH: The rationale for this is
clear. According to the Department of Statistics
(DOS), Jordan had an estimated population of 6.39m
in 2012, the most recent year for which figures were
available at the time of press. This was up from 4.74m
in 1999, with annual growth rates of 2.2-2.6% until
2012. Prior to that population levels were even low-
er – 3.1m in 1989, 2.1m in 1979 and just 586,200
in 1952, when the first census was conducted.
Influxes of refugees from neighbouring countries
have had a major effect on population levels over
the years – Palestinian refugees being the first major
waves, in 1948 and 1967, then Iraqi refugees after
2003, and more recently Syrian refugees since 2011.
These populations have had a complex effect on the
economy, with many associated costs. Some new
The industrial sector has a
number of clear
advantages in a region
beset by political
uncertainty and security
issues. Jordan represents a
safe harbour for regional
and international investors
amidst increasingly
troubled waters.
115
THE REPORT Jordan 2014
Influxes of refugees from
neighbouring countries
have had a major effect on
population levels over the
years. These populations
have also had a complex
effect on the economy.
On track A new investment law is expected to consolidate incentives
INDUSTRY OVERVIEW
arrivals have brought investment with them, yet
overall the domestic market for manufactured goods
has remained small, encouraging firms to look abroad.
MANUFACTURING: The most recent DOS figures
showed that the manufacturing sector contributed
JD3.63bn ($5.13bn) to the country’s GDP in 2012,
at current prices, a figure that then rose to JD4.07bn
($7.16bn) in 2013. Mining and quarrying, meanwhile,
saw its contribution fall, from JD723.6m ($1.02bn)
to JD563.9m ($796.57m). This was largely on the
back of falling international prices.
The country’s total GDP over the two years rose
from JD21.96bn ($31.03bn) to JD23.8bn ($33.62bn),
meaning that manufacturing’s share of GDP went
from 16.5% to 17.1%, while mining and quarrying
went from 3.3% to 2.4%. Taking the two together, the
industrial segment under consideration in this chap-
ter contributed 19.8% to GDP in 2012, and 19.5% in
2013. This pattern has been relatively constant for
some time, with the sector responsible for around
a fifth of Jordan’s economy by value. The sector is
expected to continue to grow as foreign investor
interest remains strong. For example, a memoran-
dum of understanding was recently signed with Chi-
na’s Chongqing Minmetal and Machinery Import and
Export to build a factory to produce high-value-
added fertilisers in Aqaba at an initial cost of $350m.
In terms of employment the most recently avail-
able figures from the DOS are for 2012. These show
9.7% of all employed Jordanians over the age of 15
working in manufacturing, with a further 0.8% work-
ing in quarrying and mining. Totalling 10.5%, this was
the largest group of employees outside of the serv-
ice and public sectors.
INDUSTRY: Among the various industrial activities,
DOS figures show a 2011 ranking that places non-
oil-and-gas mining and quarrying at the top of the
table in terms of gross value added (GVA). This stood
at JD1.02bn ($1.44bn) for that year, followed by, in
descending order, manufacturing tobacco products;
food products; chemicals and chemical products;
pharmaceuticals and medicinal chemicals; manu-
facturing non-metallic mineral products; and man-
ufacturing apparel. Then came manufacturing coke
and refined petroleum products, followed by man-
ufacture of beverages. All other local industrial
activities had GVAs of less than JD200m ($282.53m).
In terms of gross output, however, the top indus-
trial subsector was coke and refined petroleum prod-
ucts, at JD3.4bn ($4.8bn), followed by manufacture
of food products, at JD1.75bn ($2.47bn), then non-
oil and gas mining and quarrying, at JD1.35bn
($1.91bn). The production of chemicals and chem-
ical products followed, at JD1.09bn ($1.54bn), with
all other activities valued at under JD1bn ($1.41bn).
EXPORTS: Turning to exports, the DOS produces an
index of the quantity of exports, using 1994 as a 100-
point baseline. This shows that exports have been
steadily rising, with the index for manufactured goods
at 260.3 by 2008, 335.6 by 2010 and 342.4 by 2012.
This outstripped the average export index score
every year, with the latter rising from 202.3 to 225.2
over the same period. Chemical exports have also
been rising, from 156.7 to 182.0 over the five years,
while machinery and transport equipment exports
fell, from 318.8 to 259.7 during that time.
BY VALUE: The Central Bank of Jordan (CBJ) has
more recent numbers for exports by value, with total
exports for 2013 valued at JD4.8bn ($6.78bn), up from
JD4.75bn ($6.71bn) in 2012. When broken down into
particular commodities, chemicals are by far the sin-
gle largest group; they accounted for JD1.25bn
($1.76bn) in 2013, up from JD1.15bn ($1.62bn) in
2012, with medical and pharmacy products the
largest sub-group, at JD439m ($620.13m), up from
JD382m ($539.61m) in 2012.
Clothing, at JD810.1m ($1.14bn), made up the next
largest subsector, up from JD738m ($1.04bn) in 2012.
Clothing was also the largest single export subsec-
tor within the industry sector. Potash and phosphate
exports were JD420m ($28.25m) and JD267m
($377.16m), respectively, totalling JD687m
($970.46m), with both substantially down on 2012,
when the total came to JD988.9m ($1.4bn). Again,
falling international prices were largely to blame.
The export of manufactured goods totalled JD479m
($676.64m) in 2013, up from JD433.3m ($612.08m)
the previous year, while exports for machinery and
transport equipment also demonstrated an increase
from JD224.5m ($317.13m) in 2012 to JD262.4m
($370.67m) for the following year.
IMPORTS: In terms of trade balances, clothing also
enjoys a surplus; in 2013 CBJ data show JD335m
($473.33m) worth of clothing and footwear imports,
up from JD277m ($391.29) in 2012. Miscellaneous
manufactured items overall also enjoyed a surplus,
with imports totalling JD905.52m ($1.28bn) in 2013,
up from JD883m ($1.25bn) the year before. Imports
for machinery and transport equipment stood at
JD2.42bn ($3.42bn), up from JD2.41bn ($3.4bn) in
2012. Manufactured goods imports totalled JD2.18bn
($3.08bn) in 2013, up from JD2.15bn ($3.04bn) the
previous year, indicating a major trade deficit in
these areas. Meanwhile, chemicals imports were val-
ued at JD1.52bn ($2.15bn), increasing from JD1.5bn
($2.12bn), showing a slight deficit. Much of the
import bill was due to the need for intermediate
goods, which illustrates one of the long-term weak-
nesses of this segment in Jordan (see analysis).
SECTOR BODIES: The industrial sector has long
tended to be divided in two also in terms of the size
116
The manufacturing sector
contributed $5.13bn to
GDP at current prices in
2012, a figure that rose to
$7.16bn in 2013. Mining
and quarrying, meanwhile,
saw its contribution drop
from $1.02bn to $796.57m,
largely on the back of
falling international prices.
www.oxfordbusinessgroup.com/country/Jordan
SOURCE: Central Bank of Jordan *Preliminary figures
Petroleum Cement Clinker Chemical Fertilisers Potash Phosphate products acids
2009 3.54 4.08 3.06 1.43 0.72 1.12 5.15
2010 3.35 3.93 1.7 1.58 0.76 1.93 6.53
2011 3.16 – 1.21 1.41 0.72 2.26 7.59
2012 3.48 – 1.03 1.29 0.64 1.82 6.38
2013* 3.08 – 0.91 1.27 0.68 1.73 5.27
Output of select industrial segments, 2009-13 (m tonnes)
INDUSTRY OVERVIEW
and influence of its players. At the bigger end have
been a relatively small number of large enterprises,
often with substantial government participation,
working in the mining and quarrying sector in par-
ticular, as well as pharmaceuticals and petrochem-
icals. At the other end have been large numbers of
small and medium-sized enterprises (SMEs), which
tend to dominate trades such as textiles, clothing
and ready wear, machinery, electronics, food and
tobacco processing, furniture and plastics.
Jordan concentrated state support on large-scale,
mineral-based industries during the 1970s and
1980s, attempting to leverage domestic growth from
the export of raw and semi-processed materials. This
strategy fell foul of the vagaries of international
commodity prices, however, with the need to import
expensive equipment and know-how in order to
extract more value added from the kingdom’s raw
materials, leading to a negative trade balance.
To counter this, the 1990s and 2000s saw a greater
concentration on the other, SME end of Jordanian
industry. Efforts were undertaken by the govern-
ment to incentivise technology companies, along
with pharmaceuticals and engineering, in particu-
lar, which could produce high value-added products.
ZONING IN: In the late 1990s, too, the government
came to an agreement with the US on the establish-
ment of qualified industrial zones (QIZs) in Jordan.
Under the agreement, the QIZs were able to take
advantage of the free trade agreements (FTAs)
between the US and Israel to ship goods to the US
market, as long as they included some Israeli inputs,
without the usual tariff and non-tariff barriers. The
Al Hassan Industrial Estate was opened in Irbid in
northern Jordan in 1998; it was designated as the
world’s QIZ after being authorised by the US Con-
gress in 1997; 12 more QIZs were rapidly designat-
ed thereafter. The industrial segment that took the
fullest advantage of the QIZs was clothing and ready-
wear, with the first years seeing this segment account
for 99% of all QIZ exports to the US – and 86% of all
Jordanian exports to the US. Exempt from duties,
clothing firms located in the QIZs can save 15-35%
on garments of all kinds manufactured in the zones
and then shipped to the US. There are now six such
zones in operation, with two publicly and four pri-
vately owned. The QIZs were also good for the port
of Aqaba, which became a major transport hub for
QIZ products shipping to the US, and also receives
inputs for QIZ manufacturers. The 2000 WTO agree-
ment was followed in 2001 by US ratification of the
US-Jordan Free Trade Agreement (USJFTA). This was
the first such treaty between the US and an Arab
country, and further removed tariff barriers to trade,
even outside the QIZs. The barriers came down in
phases, and most sectors enjoyed tariff-free trade
from 2010 onwards. Thus, companies inside the QIZs
could enjoy tariff- and quota-free trade with the US,
and those outside were entitled to tariff-free trade.
In tandem with this the government has been
keen to set up a number of other free trade areas
117
The manufacturing sector employed 9.7% of the workforce in 2012
Exempt from duties,
clothing companies located
in the qualified industrial
zones can save 15-35% on
garments of all kinds
manufactured in the zones
and shipped to the US.
There are now six such
zones in operation.
INDUSTRY OVERVIEW
and special economic and industrial zones aimed at
stimulating economic activity in the kingdom and the
industrial sector in particular.
But as PBI Aqaba CEO Fink told OBG, “Special zones
in Jordan need to be driven by the private sector,
which is the only vehicle capable of providing long-
term, sustainable growth,”
STRATEGY: A number of entities have overseen the
government’s development plan over the years,
including the Jordan Investment Board, Jordan Enter-
prise and the Ministry of Industry (MOI). Since May
1, 2014 many of these entities have begun working
under one roof, the Investment Commission (IC), as
the government undertakes across-the-board ratio-
nalisation of its lead agencies.
At the same time, King Abdullah II has issued a
directive for the creation of a 10-year economic
blueprint, which is currently in development and will
seek to find creative solutions to boost the industry
sector and address issues hindering its develop-
ment. MOI officials suggested that this 10-year plan
would be issued in 2015.
This process is occurring as a new investment law
is being discussed by a parliamentary committee.
The new law will likely provide a range of tax incen-
tives, Customs duties and exemptions according to
a single, easily understood register, consolidating
the current range of incentives across institutions
and different zones. MOI officials who spoke to OBG
said they were confident the new law would pass par-
liament in a special session before the end of 2014.
TEXTILES & READY-WEAR: The garment and tex-
tiles sectors not only benefitted from the QIZs and
the USJFTA but also from FTAs signed with the EU,
Singapore, Canada, Turkey, the European Free Trade
Area and the Greater Arab Free Trade Area.
The IC puts the total number of people working
in the subsector at around 24,000. The Jordan Gar-
ments, Accessories and Textile Exporter’s Associa-
tion (JGATE) is the main professional body in the
sector, representing the main companies, with these
including Jordache, the Central Clothing Company,
Prime Five Garment Manufacturing Co., EAM Maliban
Textiles, Casual Wear Apparel and El Zay Ready Wear.
The sector also has a number of international
investors, according to the IC, with global names
that include Calvin Klein, Levis, Sears, Victoria’s
Secret, GAP and JC Penney. Wal-Mart and K-Mart,
Columbia and New York Laundry are also major out-
lets for Jordanian manufactured garments across
the US. Clothes have been the lead export item for
some time, with JD810.1m ($1.14bn) of exports in
2013, up on JD738m ($1.04bn) in 2012, JD708.29m
($1bn) in 2011 and JD622.8m ($879.77m) in 2010.
One bone of contention in the sector in recent
times has been labour. Questions over the conditions
for workers in certain garment factories have caused
concern amongst international labour organisations
118
A new investment law is
being discussed by a
parliamentary committee
that will likely provide a
range of tax incentives,
Customs duties and
exemptions according to a
single, easily understood
register.
INDUSTRY OVERVIEW
and government agencies in the past, although the
JGATE has made a major effort in campaigning to
reassure concerned parties that conditions have
dramatically improved in recent times, with the
employee strike record also in decline.
PHARMACEUTICAL & MEDICAL: One of the most
successful examples of Jordan’s strategy of building
higher-value-added industries in recent years has
been its pharmaceuticals and medical products seg-
ment. This has been able to leverage both the good
standard of human resources in the country and the
availability of local feedstocks, such as potash and
phosphates, to successfully establish Jordan as a
regional leader. “The pharmaceuticals segment in Jor-
dan has set the industry standard for the region,”
Abdulmonem Al Ali, the general manager of United
Pharmaceuticals, told OBG. The sector has also ben-
efitted greatly from the country’s FTAs.
Assisting in this has been the strong intellectual
property rights legislation passed in the kingdom
after it joined the WTO and signed the USJFTA. This
has given international investors confidence in the
country, encouraging investment in research and
development while channelling Jordanian compa-
nies into the higher-value-added end of the market.
The intellectual property protection has also helped
Jordan establish itself as a centre for clinical drug
trials within the region. Such trials are also less cost-
ly in the kingdom than in Europe or the US, yet can
be conducted under just as strict and regulated con-
ditions. Indeed, labour costs in the sector are also a
source of savings and average 50% less than in GCC
countries and less than 25% of those required in
Ireland and Singapore, according to the IC.
The quality of Jordan’s labour resources is a major
draw card. “Jordan’s greatest asset is its people, with
their deep intellectual and innovative capacities,”
Salim Karadsheh, CEO of Nuqul Group, told OBG.
Jordan Chamber of Industry figures from 2012
suggest that some 5000 people were employed
directly by the sector that year, with a further 3000
employed in related work, such as packaging, train-
ing and research. The sector also has an associated
education arm, with more than 2000 students with
pharmaceutical and paramedical degree education,
from 11 universities with paramedical subjects, six
clinical research centres and some 106 hospitals
spread throughout the kingdom.
About 75% of total output is exported, according
to EU figures, making it the region’s leading drug man-
ufacturer and exporter. Some 60 countries import
Jordanian pharmaceuticals, according to the pro-
fessional body for the sector, the Jordanian Associ-
ation of Pharmaceuticals Manufacturers (JAPM),
which also states that 90% of the country’s exports
in this sector go to other Arab countries. Indeed, while
there are some 16 pharmaceuticals companies in Jor-
dan, according to the JAPM, they now have eight
subsidiary companies and joint ventures operating
across other Arab states. One of the most success-
ful Jordanian outfits is Hikma Pharmaceuticals, which
managed to build on domestic and regional success
to expand overseas, listing on the London Stock
Exchange in 2005. By 2012 it had the fifth-largest
market share of any company in the Middle East and
North Africa region, after global companies such as
Pfizer, Novartis, GlaxoSmithKline and Sanofi.
The medical manufacturing sector is also able to
take advantage of a growing interest in natural reme-
dies, spa therapies and health care treatments, as
the Dead Sea region supplies large quantities of
basic inputs for health and cosmetics treatments,
such as salts, minerals and varieties of mud.
Jordan has developed strongly in recent years as
a medical tourism centre, both for wellness and
health care. It is now number five in the world and
number one in the Middle East for medical tourism,
according to the MOI, with over 220,000 foreign
patients a year, mostly from the GCC, Yemen and
Sudan. In addition, investors are able to take advan-
tage of the fact that there are many local privately
owned hospitals and health centres, with joint ven-
tures and mergers and acquisitions encouraged.
CHEMICALS & ALLIED PRODUCTS: At the same
time, Jordan has also developed a range of allied
chemical sector businesses, from oil products to
cement. As with pharmaceuticals, much of this is a
product of the potash and phosphate sectors (see
analysis) and the abundance of other important
minerals, sands and silicas available locally.
A key player in the oil refining business is the Jor-
dan Petroleum Refinery Company (JPRC), headquar-
tered in Zarqa. JPRC currently produces refined crude
oil products, asphalts, fuels, lubricant oils, thinners
and naphtha, along with liquefied petroleum gas for
the domestic market. JPRC’s output meets much of
Jordan’s domestic demand for these products, with
surpluses exported. In 2012 it completed a storage
expansion project, reaching a capacity of 1.58m
tonnes. Shell, meanwhile, is in Aqaba, using third-par-
ty storage and blending facilities there for
119
THE REPORT Jordan 2014
The country is the region’s leading manufacturer of pharmaceuticals
Increased intellectual
property protection has
helped Jordan establish
itself as a centre for clinical
drug trials within the
region. Such trials are also
less costly in the kingdom
than in Europe or the US.
INDUSTRY OVERVIEW
polyurethane products that it sells to Jordan and
other neighbouring states. A range of other petro-
chemicals firms also operate in the kingdom, with
the market having been liberalised in 2008, and
many of these are local.
Jordan Industrial Petrochemical Company spe-
cialises in aerosol products, such as pesticides, liq-
uid detergents and thinners, skin care products and
glues. The Intermediate Petrochemical Industries
Company, meanwhile, produces and supplies chem-
icals such as PVC, fibre-reinforced plastics, resins,
plasticisers and organic peroxides. Vision Petrochem-
ical, Near East Petrochemicals and a range of other
outfits are also operating in the segment.
CEMENT: Jordan has had domestic cement produc-
tion since the 1950s. The sector is led by Jordan
Cement Factories (JCF), the largest and oldest com-
pany, which is now majority owned by Lafarge. JCF
has cement plants in Fuheis and Rashadiyah, with
an export terminal at Aqaba. Production is approx-
imately 4.6m tonnes a year. The Arab Company for
White Cement Industry, a Jordanian-Syrian joint ven-
ture, produces 125,000 tonnes a year of white
cement, while the Northern Cement Company,
Qatrana Cement, Al Rajhi Cement Holding and Man-
aseer Cement Industry also operate in the sector.
The surge in outfits has caused some concern about
over-supply. According to public statements in mid-
2013 by Northern Cement, while sector capacity
was 10.5m tonnes then, demand was only 3.7m
tonnes. Basem Zabian, CEO of Northern Cement,
told OBG that demand in 2014 was expected to be
4.6m tonnes. He said, “Despite an increase in demand
in 2013 and 2014 the Jordanian cement market is
still saturated. As one of the few net producers in
the region, however, there remains potential to
increase cement exports.”
Kamal Abu Hewailah, general manager of Qatrana
Cement, echoed this sentiment. “The greatest poten-
tial for cement companies is in the export market,
despite the challenges related to energy costs and
distribution,” he told OBG. The collapse of markets
in Syria and Iraq accounted for much of the prob-
lem. Major domestic construction projects were also
largely winding down. One bright spot is the Pales-
tinian Territories, where Jordanian firms still domi-
nate, but energy prices and competition have meant
higher operating costs and lower margins. Jordan also
possesses the resources and facilities for the treat-
ment of high-value metals, such as copper and ura-
nium, while a major restructuring of the Jordan Mag-
nesia Company is under way. The high-grade silica
sands that have been used to make cement in Jor-
dan also have other applications, with IC anxious to
encourage investment in this area.
FOOD PRODUCTS: The second-largest industrial
subsector by gross output, the manufacture of food
products is a highly competitive business in Jordan.
The market for processed and prepared foods has
been growing rapidly in recent years, driven by broad-
er social and demographic changes. Given the lim-
ited size of the domestic market, local producers must
diversify and expand abroad to remain competitive,
according to Osama Abu Laila, marketing manager
of Nabil Foods. “The Jordanian market is operating
at near capacity, which is driving industry players to
seek new opportunities in the region and interna-
tionally,” he told OBG. Compared to regional rivals,
however, local firms are hampered by higher ener-
gy and labour costs and higher taxes. “Margins are
decreasing with increased competition in the indus-
try, which ultimately benefits the end consumer, but
is harming industry players,” Abu Laila told OBG.
OUTLOOK: When the IMF visited Jordan in June 2014
it praised the kingdom’s government for staying on
track with its programme, despite the increasing ten-
sions in the region and the tragic conflicts in neigh-
bouring Syria and Iraq. Economic growth, they said,
was gradually picking up, with the expectation that
GDP would expand 3.5% in 2014, from 2.8% in 2013.
The IMF has also just approved the fifth review of
Jordan’s economic programme, praising the king-
dom’s commitment to reform.
This is all good news for Jordan’s industrial sector,
presaging greater domestic demand. Yet exports are
also key to the sector’s success, with these depend-
ing on a variety of volatile factors, such as price
competitiveness. Jordan is working to address the
issue of high energy costs with new and cheaper gas
imports, the liquefied natural gas terminal at Aqa-
ba and a push on renewables, but for now this is
unlikely to change. Industry players are minimising
the increased cost of electricity by scheduling pro-
duction only at non-peak hours. Costly energy vali-
dates the strategy of pursuing higher-value-added
industries, however. In this way Jordan can leverage
its human resource advantage, and concentrate on
sectors that require more brainpower than electric
power. Moving the existing industries further up the
value chain will be a central part of this effort, along
with developing new, high-tech sectors. The gov-
ernment’s 10-year economic blueprint will proba-
bly focus on this strategy, with opportunities also
expected to be built in for global investors under a
new, clarified regime of incentives. Meanwhile, much
depends on the creation of more longer-term solu-
tions in energy in particular, which Jordan is already
working to address by diversifying its energy
resources to include more sustainable sources and
by promoting and incentivising energy efficiency.
120
The second-largest
industrial subsector by
gross output, the
manufacture of food
products is a highly
competitive business in
Jordan. The market for
processed and prepared
foods has been growing
rapidly in recent years,
driven by broader social
and demographic changes.
www.oxfordbusinessgroup.com/country/Jordan
SOURCE: Central Bank of Jordan *Jan-Feb.
2009 2010 2011 2012 2013 2014*
Phosphates 271.2 264.96 446.15 425.98 267.45 58.4
Potash 317.2 451.27 593.72 478.86 419.97 70.88
Fertilisers 238.85 311.38 295.56 242.76 209.06 60.64
Medical & pharma products 334.23 423.16 354.69 382.05 438.75 57.19
Machinery & transport equip. 203.52 230.13 260.11 224.28 262.37 38.72
Clothes 589.52 622.84 708.29 738.03 810.09 133.15
Total exports 3579.17 4216.95 4805.87 4749.57 4804.81 801.26
Exports by commodity, 2009-14 (JD m)
INDUSTRY INTERVIEW
Hatem Al Halawani, Minister of Trade and Industry
How would you assess current levels of foreign
direct investment (FDI) in the industrial sector,
and what can be done to increase these levels?
AL HALAWANI: The industrial sector contributes
25% of Jordan’s GDP and is made up of over 1800
industrial firms and 236,000 employees. In 2013 Jor-
dan attracted JD1.3bn ($1.84bn) in FDI, 70% of which
was concentrated in the industrial sector. The gov-
ernment is keen to increase the level of inward invest-
ment by improving the regulatory environment, for
instance through the new investment law.
This aims at facilitating better returns by provid-
ing investors with an environment that enables them
to conduct business in line with the best internation-
al standards. Improving levels of FDI in the industri-
al sector will thus create employment opportunities
for Jordanians and strengthen the economy.
To what extent are production cost issues exert-
ing downward pressure on the sector and in turn
acting as a deterrent to higher levels of FDI?
AL HALAWANI: The per unit cost of industrial pro-
duction in Jordan is relatively high compared to neigh-
bouring countries due to the limitation of input
resources. In fact, energy inputs represent a signif-
icant portion of production costs in Jordan.
Therefore, programmes have been adopted to
reduce energy consumption and implement eco-
efficient systems, increasing the competitiveness of
local products. The government also promotes inno-
vation as a way to produce new and improved prod-
ucts. As a result, these products will gain an added
value, which is expected to eventually attract and
increase investments in the industrial sector.
What kind of impact would more diversified ener-
gy channels have on production in Jordan?
AL HALAWANI: Jordan needs to make a renewed
effort to diversify its energy channels if it is to meet
the increasing demand necessary to sustain current
levels of economic growth. The government and pri-
vate companies have accordingly taken various steps
to invest in long-term solar and wind energy proj-
ects. The national energy strategy, meanwhile, aims
to increase the share of renewable energy sources
in the energy mix to 10% by 2020.
What kind of consequences will the deal between
Arab Potash Company (APC) and Noble Energy to
import gas from Israel have on other companies?
AL HALAWANI: This agreement aims to produce
cost savings through the shift from heavy fuel to less
expensive and more eco-friendly natural gas, and is
projected to help APC restore its position as one of
the lowest-cost producers of potash across the
world. However, it is unlikely to become a blueprint
for other companies, as the agreement is strictly
between the APC and Jordan Bromine Company on
the one hand, and NBL East Mediterranean, which
is owned by Noble Energy, on the other hand.
How is the government ensuring that Jordanian
businesses can make full use of the various free
trade agreements Jordan has signed?
AL HALAWANI: The Ministry of Industry, Trade and
Supply, which supervises the negotiation, drafting
and implementation of bilateral, regional and mul-
tilateral trade agreements, has exerted an intensive
effort to engage interested stakeholders through-
out the various stages of this process.
During the course of these negotiations, the par-
ticular needs of local industries can be taken into
consideration, by setting suitable provisions on spe-
cial flexibilities and ensuring longer implementation
periods for tariff reductions. Public awareness can
be raised after the negotiations have concluded to
promote these trade agreements. This will also
encourage local industries to meet the requirements
stipulated within these agreements so as to access
new markets and consequently increase exports.
121
THE REPORT Jordan 2014
Growing investmentOBG talks to Hatem Al Halawani, Minister of Trade and Industry
INDUSTRY ANALYSIS
There are plans to establish industrial zones in every governorate
As Jordan has expanded the global reach of its indus-
trial sector over the years, the kingdom has also devel-
oped a range of industrial zones. These aim to give the
companies based there important advantages when it
comes to both exports and imports, while also aiming
to attract more foreign direct investment, internation-
al companies and joint ventures. The kingdom is also
embarking on yet another ambitious programme to
establish industrial zones in each of the country’s gov-
ernorates, signalling still more opportunities to come.
DEVELOPMENT AREAS: Following a law enacted in
2008 the kingdom built four designated development
areas – the King Hussein Business Park (KHBP) in Amman;
the King Hussein Bin Talal Development Area (KHBT-
DA), located in Mafraq; the Irbid Development Area; and
the Ma’an Development Area (MDA). In all of these
areas sales, social services and dividend taxes are zero,
while income tax is just 5%. The areas have particular
business focuses. The KHBP targets the health care, ICT,
media, education and security industries, while the
KHBTDA targets industrial and logistics outfits. Irbid,
meanwhile, seeks to leverage local universities to also
expand research and development facilities, alongside
IT outsourcing, and health care. Ma’an looks to manu-
facturing and construction, renewables and minerals.
The Aqaba Port also has its own Aqaba Special Eco-
nomic Zone (ASEZ). While established in 2001, and
offering low taxes and zero Customs duties, the ASEZ
really took off after 2004, when it came under the aus-
pices of the Aqaba Development Corporation (ADC). A
private company owned equally by the ASEZ Authori-
ty and the Jordanian government through a success-
ful example of a public-private partnership, the ADC has
been mandated to expand the ASEZ’s existing facilities
and to establish new infrastructure. Private investment
has been selected as the main means of achieving this,
meaning that the ASEZ has become a key focus for the
country’s overall foreign and domestic investment drive.
Aqaba is a vital port and multi-modal transport hub,
strategically located near one of the world’s most impor-
tant trade routes – that between the Mediterranean
Sea, the Red Sea, the Indian Ocean and the Far East.
Thus, a major port expansion has been under way in
recent times, with June 2014 seeing BAM Internation-
al and its Jordanian partner, MAG, announce the com-
pletion of a major first phase in the construction of the
new Aqaba Port. Four new berths are now available,
along with breakwaters and revetment works. In 2013
a new container port was completed, while a liquefied
natural gas terminal is also under way south of Aqaba.
Growth of the ASEZ has been helped along by region-
al instability, as it can continue to offer international
logistics firms a safe base for operations. Plans for two
new railway lines – one to the phosphate mines in
Chidiya and the other to Amman – are likely to further
enhance the zone’s importance.
INDUSTRIAL ESTATES: The Jordan Investment Corpo-
ration, the kingdom’s investment promotion agency, also
offers six public and six private industrial estates, with
several others in the pipeline. These estates benefit from
cheap land and fast-track procedures, along with a
two-year exemption from income and social service tax-
es. Local municipality fees are also reduced.
Three of the public estates are also qualified indus-
trial zones (QIZs, see overview), special zones created
to give occupants access to the US market without
having to pay duties or be subject to quotas, provided
they take inputs from Israel. The three are the Al Has-
san Industrial Estate in Irbid, the first and largest QIZ in
Jordan; the Al Hussein bin Abdullah II Industrial Estate
in Al Karak governorate; and the Aqaba International
Industrial Estate, which lies within the ASEZ.
The overall authority for the public sector QIZ and
non-QIZ estates is the Jordan Industrial Estates Com-
pany (JIEC). The public non-QIZs are the Abdullah II Ibn
Al Hussein Industrial Estate (AIE) in Amman, which is
the largest estate in the country; the Ma’an Industrial
Estate (MIE), on the highway linking Saudi Arabia, Amman
and Iraq; and the Al Muwaqar Industrial Estate, locat-
ed between Saudi Arabia, Jordan and Iraq, which is
Following a law enacted in
2008 the kingdom built
four designated
development areas. In all of
these areas sales, social
services and dividend taxes
are zero, while income tax
is just 5%.
Aqaba is a vital port and
multi-modal transport hub,
strategically located near
one of the world’s most
important trade routes –
that between the
Mediterranean Sea, the
Red Sea, the Indian Ocean
and East Asia.
122
In the zoneAmbitious plans are in the works for the expansion of industrial zones
www.oxfordbusinessgroup.com/country/Jordan
INDUSTRY ANALYSIS
equipped with state-of-the art infrastructure and enjoys
a 50% exemption on income and social services taxes
for a period of 10 years.
The AIE has some 358 different small and medium-
sized enterprises (SMEs) located within it, underscor-
ing the main focus of the estates – the development
and support of SMEs. Over JD1bn ($1.41bn) has been
invested in the AIE, according to the JIEC, providing jobs
for more than 13,000 workers. The MIE, meanwhile,
forms part of the Industrial Park, one of four clusters
within the MDA. The other three are a skills develop-
ment centre, a residential community and the Hajj
Oasis, a 200,000-sq-metre site dedicated to serving
pilgrims on their way to the holy cities.
When it comes to the private sector, there are eight
industrial estates, with responsibility for these falling
under the Free Zones Corporation. Among the largest
are the Al Tajamouat Industrial City in Sahab – the first
private estate – the Ad Dulayl Industrial Park, north-
east of Amman; the Cyber City Park, near Irbid; and Al
Zay Century, in Russaifeh. These all have QIZ status.
FREE ZONES: Some of these have also obtained free-
zone status, the last category of special economic zones
in the country. These too are both public and private,
with some of the most important public ones being the
Sahab Free Zone, which also includes the smaller
Al Muaqar Free Zone; the Queen Alia International Air-
port Free Zone; the Al Karak Free Zone – also a QIZ – and
the Al Karameh Free Zone on the Jordan-Iraq border.
The benefits of operating in these zones are extensive,
including exemptions from project income taxes for
goods exported outside the kingdom, or for transit
trade. Income and social security taxes are also waived
for non-Jordanian employees. Import fees and Customs
duties for goods brought into the zones, if they are not
for domestic market consumption, are also waived.
Thus the export focus of the zones is clear, with, once
again, SMEs being the main beneficiaries.
SHARING THE BENEFITS: As part of the plan to estab-
lish estates in each governorate a new industrial estate
is to be built in Jerash, with plans also announced for
others in Tafileh and Ajloun. All three of these are areas
of above-average poverty. They are also areas with less
well-developed infrastructure.
Successful industrial zones in every governorate will
thus likely need to be accompanied by more investment
beyond the boundaries of the zones, in areas such as
better roads and data networks. To this end, the Jor-
danian government is also looking to establish strong
partnerships with the private sector to facilitate such
investment, while planning to establish a financing
institution to take on the role of the now-dissolved
Industrial Development Bank.
The plans are ambitious, with the wide collection of
industrial zones likely to be enhanced in the years ahead.
A new investment law being drafted and debated
will probably help facilitate a simplification of the
current mosaic of different types of industrial zones.
123
As part of the plan to
establish estates in each
governorate a new
industrial estate is to be
built in Jerash, with plans
also announced for others
in Tafileh and Ajloun.
INDUSTRY ANALYSIS
Jordan is one of 12 countries worldwide that produces potash
As a key pillar of Jordan’s economy, the potash and
phosphate extraction industry and its related fertilis-
er business has faced challenging times recently. While
global output and competition has hiked, power and
water costs in the kingdom have also been on the rise,
affecting profitability and competitiveness. These chal-
lenges have also had their upsides, as the sector looks
to install better cost management while broadening the
base of its energy suppliers.
With the market expected to pick up in the years
ahead, these measures should stand the industry in good
stead for the future. Given the organic global growth
in demand for fertilisers – the end-product of much
potash and phosphate extraction – the current mar-
gin squeeze is seen by most as a temporary phenom-
enon and nothing new, as the industry has faced such
over- and then under-supply environments before and
come away from them stronger.
FACTS & FIGURES: Jordan is amongst the world’s top
producers of potash, phosphate rock and bromine, and
has also produced significant quantities of calcium car-
bonate, kaolin, limestone, silica sand and zeolitic tuff.
About 95% of global potash production – which is a
name given to a range of potassium compounds, most
often potassium chloride – goes into the agricultural
sector, mainly for use in fertilisers. Almost every coun-
try in the world has a demand for it – yet Jordan is one
of only 12 countries worldwide that produces it.
Phosphate, meanwhile, is also a key ingredient for
the production of agricultural fertilisers, with about
90% of global output of phosphate rock going to this
end. Around 40 countries produce phosphates – the
US, China and Morocco being the top three – and East
Asia and North America are the biggest consumers.
Demand for both raw materials and fertilisers in gen-
eral is continuously rising due to a series of organic driv-
ers. First, there is global population growth, driving up
basic demand for food. Then there is global economic
growth, which has led to increasing demand for nutri-
tion per capita. This also impacts a third driver, the
shifting diet of the global population towards more
expensive, higher-protein foods, such as meat, mean-
ing that animal feed is also a growth product. A fourth
driver is increased demand for biofuels, which once
again feeds into increased demand for grains, oil seeds
and oil palm, all of which require increasingly more fer-
tilisers to grow. Finally, global urbanisation has also
meant the growth of cities at the expense of agricul-
tural land; thus the need for greater productivity in
agriculture – and more demand for fertilisers.
Jordan has thus benefitted from some fundamental
trends in the global economy. Preliminary figures from
the Central Bank of Jordan show production of potash
in 2013 at 1.73m tonnes, while 5.27m tonnes of phos-
phates were also produced. Exports of the former were
valued at JD420m ($593.23m) that year, while the lat-
ter saw exports of some JD267m ($377.15m). Most of
the country’s production goes into three main types
of fertilisers – diammonium phosphate, complex fer-
tiliser NPK and potassium sulphate.
LEADERS: Two major companies dominate the sector,
the Arab Potash Company (APOT) and the Jordan Phos-
phate Mines Company (JPMC). APOT, the only potash
producer in Jordan, has a government concession that
runs until 2058 to operate in the Dead Sea region. In
2003 the company was partly privatised, with half the
government’s 52.4% stake sold to Canada’s Potash Cor-
poration. APOT has undergone something of a restruc-
turing since, but maintains a series of other subsidiaries.
These are, Arab Fertilisers and Chemicals Industries, a
joint venture between APOT and Kemira GrowHow from
Finland; the Nippon Jordan Fertilisers Company, a joint
venture with JPMC and Mitsubishi; Numeira, which pro-
duces some 20,000 tonnes a year of mixed salts and
5000 tonnes a year of Dead Sea mud; and the Jordan
Bromine Company (JBC), which produces bromine and
bromine derivatives. JBC is equally split between APOT
and Albemarle Holdings of the US.
According to its annual report, APOT’s 2013 net prof-
it was JD130.6m ($184.49m). This was a figure down
Jordan is among the world’s
top producers of potash,
phosphate rock and
bromine, and has also
produced significant
quantities of calcium
carbonate, kaolin,
limestone, silica sand and
zeolitic tuff.
Preliminary figures from
the Central Bank of Jordan
show production of potash
in 2013 at 1.73m tonnes,
while 5.27m tonnes of
phosphates were also
produced.
124
From strength to strengthStill a global player in the potash, phosphate and fertiliser market
www.oxfordbusinessgroup.com/country/Jordan
INDUSTRY ANALYSIS
on previous years, as was overall output, which was 1.8m
tonnes in 2012 and 2.3m tonnes in 2011. The reasons
for the decline stem from the global story of potash
production. While in 2003 world supply was greater than
demand, with potash selling for about $120-150 a
tonne, “in about 2004 demand began catching up with
supply,” Brent E Heimann, general manager of APOT, told
OBG. “Prices started to rise, up to $700-800 a tonne in
2008, and firms began to expand capacity.”
CHANGING MARKET: The global downturn in 2008 saw
a fall in demand, as farmers cut costs by reducing their
use of fertilisers. Expansion projects had started while
prices were still high, however, and continued to run,
progressively coming on-stream even though the price
per tonne was falling. Competition was also height-
ened in 2013 by a split in Uralkali, the Russian-Beloruss-
ian joint marketing company responsible for about a
third of global potash supply. They then began market-
ing separately, expanding the number of competitors
for a lower-priced, more highly supplied market.
APOT responded to these changed circumstances by
concentrating on reducing its costs. This had not been
an issue until then, as the company had a reputation
as one of the world’s lowest-cost producers. Yet, 2008
also marked the start of a period of higher electricity
costs in Jordan, with which the company has had to cope.
APOT has done this in two ways. First, by securing its
own gas deal with US company Nobel, which extracts
gas from offshore Israel. In quarter one of 2016 the
company will likely start using the gas to fuel its own
power plant. At the same time it is pursuing a renew-
able energy strategy, with solar power the likely target.
Meanwhile, JPMC was also privatised in 2006 with
Kamil Holdings, owned by the Brunei Investment Author-
ity, and the Jordanian Finance Ministry the two largest
shareholders. JPMC experienced similar constraints to
APOT, with declining global demand for fertilisers after
the global economic downturn, along with scheduled
capacity expansion projects leading to oversupply.
Nonetheless, according to JPMC’s 2013 annual report,
total phosphate sales were 5.1m tonnes that year, with
3.2m tonnes of this exported. These figures were both
down on 2012, when 6.2m tonnes was sold, 4.3m
tonnes of this abroad; yet net profit of JD2.6m ($3.67m)
was still recorded. The company also boosted wages,
despite increasing costs and pressured margins.
CHALLENGES: There remains the challenge of increas-
ing competition in international markets. Bilateral agree-
ments with other producer countries may provide a way
forward, with Jordan recently renewing a potash agree-
ment with China in light of this challenge.
The sector also has to look to renewable energy as
a way to cut bills, while seeking more secure energy sup-
plies. In this way the sector echoes some of the chal-
lenges facing the kingdom as a whole. Despite these
difficulties, the sector continues to be a major global
player in the potash, phosphate and fertiliser market,
a status it is likely to maintain for many years to come.
125
Bilateral agreements with
other producer countries
may be a way to deal with
increasing competition in
international markets, with
the kingdom recently
renewing a potash
agreement with China in
light of this challenge.
RETAIL OVERVIEW
A shift is under way from traditional retail outlets to modern ones
Recent years have seen Jordan’s retail sector grow
in both sophistication and diversity, with the arrival
of global-quality shopping malls and a range of inter-
national brands. The shift from traditional retail out-
lets to more modern ones is also under way, along
with the beginning of destination shopping, with
larger out-of-centre stores. The amount of modern
retail space is set to grow further, too, with the arrival
of a new mall in the Abdali Boulevard development.
Existing malls are also heightening competition for
footfalls and outlets with a wave of promotions.
EXPANDING REACH: Much depends on the state of
consumer confidence, and how well each retailer
does in attracting and retaining a share of both the
higher-spending section of the Jordanian popula-
tion and the population at large. The expansion of
purchasing power also depends on solid economic
growth. Meanwhile, at the middle- and lower-income
end many Jordanians continue to look to local stores
and “one-door shops” for many of their daily needs.
Nonetheless, there is a great deal of confidence
that Jordan will follow the patterns seen in other
emerging markets, with the current state of play
holding great opportunities for future investment in
modern retail, given low levels of gross leasable area
(GLA) per capita and the freshness of the market.
“As a retailer,” Omar U Salfiti, CEO of TAJ lifestyle cen-
tre in Amman, told OBG, “there is a lot of room. Pret-
ty much anything you have could potentially be the
first time it’s been brought to market here.”
RETAIL EVOLUTION: Traditionally most Jordanians
have shopped in outdoor markets or family-owned,
mixed-retail shops and other street-facing outlets,
with that still the pattern for most. Indeed, accord-
ing to HSBC, Jordan’s top five organised retail brands
account for only 5% of the market, the rest going to
more traditional stores. Income levels in the coun-
try have also been generally low, although they have
risen from about $1793 in 1980 to $1763 in 2000.
$2325 in 2005, $3797 in 2008 and $5214 in 2013.
MIXED MARKET: The per capita figures mask major
geographical disparities, with many surveys suggest-
ing that average monthly incomes in the capital may
be as much as twice the national average. As a result,
international retailers tend to focus almost exclu-
sively on Amman. As Imad Bukhari, CEO of The Group,
told OBG, “At the moment Amman is still the only
true retail hub in Jordan, but as satellite cities con-
tinue to reap the benefits of growth, we expect to
see the segment begin to spread outside of Amman.”
The Jordanian middle class has also grown, although
recent years have seen it – and income distribution
– largely stabilise. World Bank data show that the
top 10% income group has consistently been respon-
sible for about 30% of the country’s wealth over the
past five years, while the top 20% has been respon-
sible for around 45%. These higher-income groups
have been the first to embrace the newer forms of
retail, although as many retailers point out, prices
in modern malls may in fact sometimes be lower
than in more traditional outlets.
“The Jordanian market is a very mixed one,” Fateh
Haddad, senior marketing officer with electrical and
electronics chain Smart Buy in Jordan, told OBG. “You
can’t say you are just addressing the wealthy. Who-
ever has an electricity socket is our customer. We
are also cheaper than the one-door shops and can
carry more items and more models.”
PRICING: Price is thus the main determinant, as ever,
with competition fierce between the modern and tra-
ditional stores. This makes promotions a continuous
process, with stores often decked out with discount
offers and major sales campaign literature. These
focus particularly around monthly and weekly pay
days, with activity noticeably trailing off mid-month.
Campaigns run throughout the year, too, with stores
sometimes offering major discounts well outside
traditional sales seasons. Many Jordanians do not
have major savings to invest in new products, with
the advertising sector necessarily focusing on a short
Jordan’s top five organised
retail brands account for
only 5% of the market, with
the rest comprised of more
traditional, family-owned,
mixed-retail shops and
other street-facing outlets.
World Bank data show that
the top 10% income group
has consistently been
responsible for about 30%
of the country’s wealth
over the past five years,
while the top 20% has been
responsible for
approximately 45%.
126
Consolidating positionsTraditional street stores and modern retail outlets compete for business
www.oxfordbusinessgroup.com/country/Jordan
RETAIL OVERVIEW
buying period. Instalment purchase systems are also
very popular for big-ticket items, as well as loyalty
cards and co-branded credit cards.
With pricing such a key factor, however, there is
also the danger of low-price, low-quality products
skewing the market. This is a particular concern with
electrical and electronic products, with the preva-
lence of equipment breakdowns potentially putting
consumers off further purchases. Consumers are
becoming more conscious and sophisticated, how-
ever, when it comes to such deals, with some retail
representatives predicting to OBG that the next evo-
lution will be towards better-quality – and in the
long term more cost-effective – products. Salim
Karadsheh, CEO of Nuqul Group echoed this senti-
ment. “As Jordan continues to get wealthier, we are
noticing a shift in consumers who demand the high-
est quality from brands,” he told OBG.
As price wars affect margins, organised retailers
also face the challenge of competing against the grey
economy. Many traditional stores are largely out-
side the tax system, allowing them to lower costs.
ENERGY CONCERNS: Retailers of all kinds are
impacted by high costs when it comes to power, with
electricity a major expense in a country with near-
ly none of its own energy resources. Indeed, while
power has long been an issue it has recently increased
in importance, as electricity prices have risen, in
keeping with an IMF programme aimed at eliminat-
ing energy subsidies (see Energy chapter). This has
pushed some larger retailers to consider their own
power sources, such as rooftop solar panels.
LOCALISATION: Labour costs are generally low by
Western standards, while the local workforce has a
reputation for being well educated and eager to
learn. Global retail chains have their own philoso-
phies, of course, with an ability to adapt these to local
culture while maintaining an international brand
image. This also applies to their products. “We are
a Scandinavian firm,” said Emile Shaar, project leader
for IKEA in Amman, “but not everything is Scandi-
navian style. What we sell are items that are not ‘Jor-
danian style’ or ‘Chinese style’, but items that can be
tailored to local needs anywhere. An average Jordan-
ian family is six people, while in Scandinavia a house-
hold might be just two people. They all need a sofa
though, it’s just that here they need a bigger one.”
LARGER CHAIN OUTLETS: The oldest established
supermarket chain with an international franchise
is Safeway, founded in 1987. It was purchased by the
Masri family in 1991, and then Kuwait’s the Sultan
Centre in 2003. The chain has six full and eight
express stores, as well as two wholesale centres.
Also in 2003 Amman-headquartered The Group
was established, setting up a retail chain called Coz-
mo. The Group also moved into a series of franchis-
es, being behind British Home Stores in Jordan, along
with Hamley’s toy stores. In addition, it established
a bookstore, Readers. With the exception of Ham-
ley’s these are all located in The Group’s Cozmo Cen-
tre shopping mall in Amman, while Readers is also
in the TAJ lifestyle centre. Cozmo supermarkets,
meanwhile, have also expanded out of the mall, with
six other branches spread around the capital area.
However, in 2007 the fast-moving consumer goods
(FMCG) segment underwent a shake-up with the
opening of the first Carrefour hypermarket. Car-
refour France operates in Jordan in a joint venture
with Majid Al Futtaim, a Dubai-headquartered group
that is one of the region’s main retail players. There
are two Carrefour hypermarkets in Amman, both
located in shopping centres – at Galleria and City
Mall. Carrefour Jordan also has eight supermarkets,
all also in the capital. In 2014 the store opened a
third hypermarket of 6000 sq metres in Irbid, mak-
ing a total of 11 branches countrywide.
A fourth main player in FMCG in the modern sec-
tor is Spinney’s, which opened its first branch in Jor-
dan in 2011, at the TAJ. Spinney’s has a presence
throughout the Middle East, with its first store, Arthur
Spinney’s, having been set up in Alexandria in 1924.
MARCH OF THE MALLS: The country has a number
of large malls, the main ones being City, Cozmo, Mec-
ca, Baraka, Galleria and TAJ, all in Amman, although
there are others elsewhere as well, such as Sameh,
Irbid, Arabella and City Centre in Irbid. The capital’s
malls are congregated in the higher-income areas
of West Amman, like Abdoun, Sweifiyah and Tlaa Al
Aall. The first of these was established in 2007 and
is owned by Al Khayr. City Mall covers 160,000 sq
metres, with 55,000 sq metres of GLA. The four-lev-
el mall includes Jordan’s largest multi-level car park.
Cozmo Centre, meanwhile, started out in 2003,
housing The Group’s outlets, and is in that sense a
different kind of mall, leveraging synergies between
its retail outlets. Mecca Mall opened in 2003 and was
then the largest shopping centre in the country. It
later expanded to a total area of 195,000 sq metres.
The mall is owned by the Kurdi Group, which also
opened the Abdoun Mall in 2001, the country’s first
luxury shopping centre, covering 25,000 sq metres.
128
The kingdom has a number of large-scale malls, all located in the capital, Amman
The major shopping malls
are City, Cozmo, Mecca,
Abdoun, Baraka, Galleria
and TAJ, all of which are
based in the higher-income
areas of West Amman, such
as Abdoun, Sweifiyah and
Tlaa Al Aall.
Retailers of all kinds are
impacted by high costs
when it comes to power,
with electricity a major
expense in a country with
nearly none of its own
energy resources.
www.oxfordbusinessgroup.com/country/Jordan
RETAIL OVERVIEW
Al Baraka Mall opened in 2008, aiming to estab-
lish itself as a middle- to high-end fashion centre. It
covers 40,000 sq metres, with 18,000 sq metres of
GLA. Another small-sized mall is the Zara Centre, a
retail and leisure centre adjoining the Grand Hyatt
Hotel and the Zara Exhibition and Conference Cen-
tre. Zara Centre has some 11,500 sq metres of GLA
and Jordan’s first five-screen multiplex cinema.
Indeed, cinemas are now a feature of many malls,
with movie-going still a popular activity locally.
Galleria is the latest mall to open its doors, start-
ing out in 2013. It has 106,000 sq metres of total
space, with 55,000 sq metres of retail GLA. It also
includes office space and room for 1200 cars.
The TAJ lifestyle centre opened in December 2011
and has some 150,000 sq metres of indoor and out-
door space, housing 190 different outlets. The TAJ
appears to have taken off in recent times, with man-
agement telling OBG that footfalls in its half-year for
2014 had been around 45% up on the previous year.
MIXED-USE: All of these shopping centres will have
to compete in the years ahead with the now-launch-
ing $423m Abdali Boulevard development, a mixed-
use project set to include about 70,000 sq metres
of retail space that will be both mall and street-fac-
ing. This project is being developed as a public-pri-
vate partnership between the National Resources and
Development Corporation and Horizon Internation-
al for Development, which runs projects owned by
Lebanon’s Sheikh Bahaa Rafiq Al Hariri. The Boule-
vard is the first phase of a $1.5bn project and was
given an official opening on June 12, 2014.
Cozmo is taking a large supermarket, British Home
Stores and Hamley’s to Abdali Boulevard, which will
likely be a major challenge to other retail outlets
focusing on the high end. A further new mall, the
$150m Crystal International, had been planned for
completion in the fourth quarter of 2012, but appears
to be on hold for now. Another recent development
in Amman has been the arrival of the first major
destination store, IKEA, which opened a JD55m
($77.67m) outlet close to the airport in March 2014.
The store is located on good transport routes, in an
area of the city that is also likely to expand.
QUESTIONS OF SATURATION: As the FMCG and
mall segments show, the growth of modern retail in
Jordan traces much of its strength to two sources:
international, mainly Western, brands, and GCC and
other Middle Eastern investment. Jordanian retail-
ers often look to the GCC for comparison. GLA per
capita in Jordan is, of course, much lower than in most
of the GCC, yet insiders point to the dangers of draw-
ing the wrong conclusions. “If you look at the GLA
per capita, we are far behind Saudi Arabia or Kuwait.
But if you look at GLA in comparison to GDP, you get
a far more accurate reflection of the market,” TAJ
lifestyle centre’s Salfiti told OBG.
WATCHING THE MIDDLE: AT Kearney’s 2014 Glob-
al Retail Development Index (GRDI) ranked Jordan
22nd in its assessment of the attractiveness for new
investment of 30 developing markets worldwide,
two places down on 2013. Many retailers told OBG
they would be consolidating their positions over the
next few years, rather than undertaking major expan-
sion plans, with Abdali probably the last new devel-
opment for a while. The GRDI also noted, however,
that annual retail sales since 2011 had been strong
– up 7.8% overall. Grocery sales had risen 5% in the
2011-13 period, too, with the number of internation-
al chains operating in the country rising steadily.
Many of these new chains have come into the
food and beverage section, with restaurants and
cafes widely seen as profitable enterprises. The US
brand Ponderosa Steakhouse and Bonanza Steak-
house entered in 2013, while most globally estab-
lished café and restaurant chains are already in town.
This market segment also connects with the enter-
tainment side of retail, as malls establish themselves
as places not only for shopping, but also for social-
ising and amusement – leveraging the popularity of
cinema complexes attached to malls, too. The fam-
ily is of enormous importance in Jordan, with the mall
able to offer multi-generational activities in a clean
– and air-conditioned – environment. These are
important factors in a country that experiences aver-
ages of 30-33°C in the summer months, and the
other extreme of occasional snow in the winter.
These factors indicate that modern retail is growing
and likely to continue to grow, if at a slower rate than
in other, richer and larger markets.
E-COMMERCE: This is not always the case though,
as in one particular area Jordanian retail is something
of a regional leader. In e-commerce the kingdom’s
advantage in educated human capital has stood it
in good stead, with Jordanians behind some of the
region’s most successful ventures in online shopping,
a market likely to be worth more than $2bn by 2016,
according to Euromonitor International.
Some of the more successful ventures playing in
the Jordanian market are MarkaVIP, which offers
short time-limit sales on luxury goods to subscribers.
The firm has about 1.5m members based in Jordan,
Lebanon and the GCC. Another success story is
souq.com, founded by Jordan’s Sami Toukan. This has
a customer base of around 3.5m and was the recip-
ient of an undisclosed 2013 investment by Tiger
Global and Nasper Limited, US and South African
hedge funds. Souq.com has also invested $2.5m in
Run2Sport, the region’s first online sports retailer.
OUTLOOK: There are some segments of the retail
market that have leapt ahead, even while others
have made less rapid progress. Young Jordanians
may well skip some of the typical stages in market
development by going straight to e-commerce, espe-
cially as Jordan continues to invest in infrastructure.
Yet, for the vast majority of Jordanians, retail is like-
ly to continue to mean traditional souks and street
stores. Knowledge of the local market and customer-
s’ needs is an invaluable resource, with the next stage
being that of drawing hyperlocal retailers to mod-
ern practices. Boosting mall footfall will depend
mainly on economic growth and consumer confidence.
129
THE REPORT Jordan 2014
The food and beverage
segment connects with the
entertainment side of
retail, as malls establish
themselves as places not
only for shopping, but also
for socialising and
amusement.
Jordan is something of a
regional leader in
e-commerce, where the
kingdom’s advantage in
educated human capital
has stood it in good stead.
131
TourismBranding campaigns help boost country’s profile abroad
New developments extend luxury hotels to the seaside
Emphasis placed on ecotourism and green construction
High-quality medical offerings put kingdom on the map
TOURISM OVERVIEW
Ideal weather year-round is a main attraction for visitors
Whilst not endowed with the energy riches of its neigh-
bours, Jordan can count among its blessing several nat-
ural advantages in its burgeoning tourism industry. The
kingdom offers sweeping desert landscapes, natural hot
springs, the rejuvenating shores of the Dead Sea and
beaches along the Gulf of Aqaba. This natural landscape
is further dotted with numerous religious and histori-
cal sites that offer visitors a peek into the country’s rich
past. For religious tourists of all backgrounds, Jordan is
an ideal location to step back in time and see some of
the formative places in Islam and Christianity.
In addition to ideal year-round weather, Jordan’s
tourism sector has an impressive pool of human capi-
tal that is well educated, English-speaking and welcom-
ing. Significant investment in the health sector has
helped the kingdom become an in-demand treatment
destination. Indeed, UK-based International Medical
Tourism Journal named Jordan medical tourism desti-
nation of the year in 2014 due to the high quality of
the kingdom’s hospitals and medical facilities.
OVERSIGHT OF THE SECTOR: Jordan’s tourism sector
is administered via a network of state and non-state
actors. The Ministry of Tourism and Antiquities (MoTA)
oversees the sector as a whole. Throughout 2013 the
ministry underlined the need to play a more unifying
role in strengthening the sector through the creation
of a database that would relay accurate information
and figures regarding the conditions and demands of
tourism projects, the numbers of tourists and other rel-
evant statistics to the private sector.
The Jordan Tourism Board (JTB) is an independent
organisation that operates on private funding with
some assistance from the state. Over the years, the JTB
has stepped in to fill the important role of marketing
and investment promotion abroad. The JTB has divid-
ed the sector into six separate focal points: history and
culture, religion, leisure and wellness, adventure, busi-
ness, and ecotourism. The JTB and the MoTA are also
assisted by the Investment Commission (IC), which
researches and identifies investment opportunities in
the sector as part of a programme of attracting and
promoting foreign investment in Jordan.
NATIONAL TOURISM STRATEGY: These organisations
work within the National Tourism Strategy (NTS) guide-
lines, which is a five-year plan published in July 2011
that articulates the government's full goals for the sec-
tor. These focus on four main points: product develop-
ment, marketing, growing the labour market and improv-
ing the business environment.
According to the NTS, the government estimates
that the public sector will spend $215.5m on the tourism
sector with the private sector contributing $53.6m over
the five-year plan to help deepen tourism offerings. Oth-
er related projects call for a greater participation of
female workers in the industry, the creation of 25,000
new jobs in the sector and the training of 5000 stu-
dents at vocational training centres.
SECTOR PERFORMANCE: With updates to tourist infra-
structure like the renovation of Amman’s Queen Alia
International Airport, Jordan’s tourism sector contin-
ues to mature. The kingdom has been hard hit by the
ongoing political crisis in Egypt, as for years Jordan fea-
tured prominently on package tours that once includ-
ed Egypt. Despite increased visa fees and the loss of
low-cost UK carrier EasyJet’s Gatwick-Amman service
also had a negative impact on the sector, Jordan’s
tourism industry has shown positive growth in 2014.
According to the MoTA, the country has seen tourism
revenues rise to JD2.5bn ($3.53bn) as of July 2014, up
10% on 2013 figures. As a whole, tourism makes up some
14% of GDP. Around 5.4m tourists visited Jordan in 2013,
down from 6.3m in 2012. The ministry said the rise in
tourism revenue was largely due to new campaigns
aimed at attracting religious tourists from East Asia
who visit the region as part of the annual hajj pilgrim-
age to Saudi Arabia. A total of 1.66m arrived in the first
three quarter of 2014, a rise of 6.6% compared with
the same period of 2013.
HOSPITALITY: Jordan’s hotel market is continuing to
expand, too. The sector is typified by smaller hotels
Spearheaded in 2011, the
National Tourism Strategy
aims to develop the sector
by focusing on product
development, marketing,
expanding the labour
market and improving the
business environment.
133
THE REPORT Jordan 2014
Tourism accounts for 14%
of Jordan’s GDP, and as of
July 2014 receipts reached
$3.53bn, up 10%
year-on-year, thanks to
new campaigns attracting
religious tourists.
Leaning greenFocusing on niche markets to expand the sector
TOURISM OVERVIEW
that operate to a higher standard than other popular
Middle Eastern destinations. Given the high cost of
energy and water in Jordan, this model works best as
opposed to other models in the region that feature larg-
er hotels but enjoy subsidised utilities.
MEDICAL TOURISM: Jordan’s medical infrastructure
remains one of the country’s most valuable tourism
assets. With 2.45 physicians and 1.8 hospital beds per
1000 people, Jordan continues to attract foreign med-
ical tourists. There are roughly 20,000 physicians, 22,000
nurses and 102 hospitals in the kingdom, including 59
hospitals operated by the private sector, according to
the Jordan Hospitals Association (JHA).
The World Bank ranked Jordan as a top medical
tourism destination in the Middle East and fifth in the
world in 2012. Since the second half of 2011, 170,000
patients from across the world have come to Jordan
for medical care. The kingdom has seen a spike in
regional visitors arriving for medical treatment as well.
The influx of regional citizens seeking safe, quality med-
ical care in the past three years has raised medical
tourism receipts in the kingdom to more than $1bn in
2012, up from $850m in 2011 (see analysis). “Jordan
provides medical services for Arab countries such as
Libya, Iraq, Yemen, Sudan, Algeria, Palestine and the Gulf
states, and we are looking to expand these services to
Europe, America and some African countries,” Zuhair
Abu Faris, president of the JHA, told Jordan Times.
NEW INTERNATIONAL PLAYERS STEPPING UP: Jor-
dan’s tourism industry remains attractive to foreign
investors given the kingdom’s continued interest in
development and industrial cities. The opportunity to
invest in new tourism projects is particularly appealing
in areas around the Dead Sea and Gulf of Aqaba given
the natural beauty of the landscape and ideal weath-
er conditions. Indeed, the Dead Sea has long been one
of the highlights in the kingdom’s tourism portfolio
thanks to its wide array of attractions, ranging from reli-
gious sites to wellness and ecotourism, and all acces-
sible within one hour’s drive from Amman.
To streamline development in the Dead Sea region,
the government created the Dead Sea Development
Zone, one of six special development zones established
by King Abdullah II in 2008. The Development and Free
Zones Commission (DFZC) oversees creation and man-
agement of these zones. The DFZC has attracted a slew
of international hotel chains, in part thanks to incen-
tives like a flat 5% corporate income tax rate, 100% for-
eign ownership and exemptions from Customs duties,
sales tax, and social services payments. US-based Hol-
iday Inn and Marriott, Germany’s Kempinski and Switzer-
land’s Movenpick operate hotels in the zone, along
with the InterContinental Hotels Group’s Crowne Plaza
Jordan Dead Sea Resort and Spa, which opened in 2011.
Egypt-based Amer Group is currently working on one
of its biggest ventures in the region with the Porto
Dead Sea project. Located on 800,000 sq metres of
coastline on the Dead Sea, the project will include four
luxury hotels, three malls and nearly 11,000 apart-
ments. Prime Minister Abdullah Ensour was on hand
to lay the cornerstone of the project in April 2014. The
project will also include an on-site medical facility that
incorporates the reported healing properties of the
mineral-rich Dead Sea. It will also include special offer-
ings for religious visitors, such as women-only swim-
ming pools. The project will raise total hotel capacity
in Jordan by nearly 25% once completed.
INDUSTRY TRENDS: Jordan’s tourism industry is look-
ing to capitalise on a new national branding campaign
that highlights the country’s religious sites, natural
beauty and political stability as a standalone Middle East-
ern holiday destination free from the troubles affect-
ing much of the rest of the region. The private sector
is looking to boost tourism products on offer in the king-
dom, ranging from ecotourism to medical tourism. Pub-
lic-private initiatives like the JTB are further attempt-
ing to raise the industry’s competitiveness by attracting
more tourists through international branding efforts
aimed at emerging markets for Jordanian tourism, like
Central America, East Asia and Africa.
While business conferences and exhibitions have
been a main facet of the country’s tourism projects in
the past, Jordan is looking to hone its adventure and
134
Receipts from medical tourism topped $1bn in 2012
Jordan’s medical
infrastructure remains one
of its most valuable tourism
assets. In 2012 the World
Bank ranked the country as
a top medical tourism
destination in the Middle
East and fifth in the world.
www.oxfordbusinessgroup.com/country/Jordan
Travel & tourism contribution to GDP, 2013 (JD bn)
SOU
RCE:
Wor
ld T
rave
l & T
ouris
m C
ounc
il
0
1
2
3
4
5
GDP
InducedIndirectDirect
TOURISM OVERVIEW
ecotourism products as a way of offering alternatives
for Western tourists dissuaded from travelling to
Lebanon or Egypt because of the well-documented
unrest there. Jordan has long been an attractive desti-
nation for a variety of conferences and exhibitions giv-
en its central location and advanced infrastructure, as
well as the presence of many multinational and inter-
national organisations within the country.
The push into adventure and ecotourism is a centre-
piece in Jordan’s drive to attract younger tourists. With
long-term prospects in mind, the industry is hoping
that younger tourists that visit the kingdom for adven-
ture, ecotourism and wellness retreats will cultivate a
deep relationship with the country. While these tourists
might not spend large amounts of money on their first
trip, the country believes that they will fall in love with
Jordan and return in the future with family and friends.
SPREADING THE WORD: As part of the tourism brand-
ing overhaul, the government is partnering with the US
Agency for International Development (USAID) to cre-
ate a global online marketing campaign. Over the past
eight years, USAID gave Jordan $362,727 for promo-
tion in foreign markets. “Jordan has so much to offer
in terms of tourism,” Stuart Jones, the former US ambas-
sador to Jordan, said at the signing ceremony of a mem-
orandum of understanding between USAID’s Econom-
ic Growth Through Sustainable Tourism project and
JTB. “We want to help [tourists] find this experience and
a great way to do it is through social media.”
Additional marketing efforts include the renovation
of the online Jordan Travel Agent Academy to better
assist North American travel agents when marketing
Jordan in the US and Mexico. The marketing campaign
will also redefine the kingdom’s social media strategy
for marketing tourism. With substantial assistance from
the IC, marketing campaigns highlighting Jordan’s eco-
and adventure tourism will be carried on a variety of
social media platforms including Facebook, Twitter,
Instagram and the popular travel website Tripadvisor.
KEY MARKETS: The events of the so-called Arab Spring
led the Jordanian authorities to review their tourism
strategy. Whereas the kingdom once often featured
alongside Syria and Egypt on multi-destination pack-
age deals, this is no longer possible. Solutions to this
loss of package tourism business have been identified
in various new areas, including religious tourism. The
kingdom is using recent visits by Pope Francis to estab-
lish itself as a premier location for Christian tourists from
Europe and the US. Mount Nebo and the Mosaic Map
in Madaba are popular with Christian tourists. The king-
dom has also shifted focus to Muslim religious tourists,
seeking to capitalise on Saudi Arabia’s high number of
religious visitors. The returns are evident, especially
with East Asian visitors. Tourists from Malaysia increased
42.2% in 2013 and there was a recorded rise of Pak-
istani (64.2%), Bangladeshi (48.8%) and Indian (13.5%)
tourists visiting the kingdom in the beginning of 2014.
Given its many Muslim religious sites and proximity
to Saudi Arabia, Jordan is ideally located to attract more
Muslim religious tourists. Today the kingdom ranks
eighth in the world in terms of Islamic-oriented tourism,
according to a study produced by Singapore-based
Crescentrating. From halal menu options to gender-seg-
regated times for gymnasia and swimming pools, Jor-
dan ranked competitively in the region.
Some 20% of all visitors to Jordan in 2013 arrived from
Saudi Arabia, which shares a 728-km long border with
the kingdom. Given instability in the region, especially
in Egypt, those numbers will likely increase as pilgrim
tourists visit Jordan to extend their hajj pilgrimage to
include the kingdom’s wide variety of religious sites. Addi-
tionally, many Gulf countries have issued travelling advi-
sory notes dissuading their citizens from travelling to
Lebanon due to the political situation, making Jordan,
with its relaxed atmosphere and established tourism
infrastructure, a good alternative for Gulf residents
looking to escape soaring temperatures in the summer.
ONTO AFRICA: Another new market for Jordan’s tourism
sector lies to the west in Africa. While the country’s
national flag carrier Royal Jordanian (RJ) has made
progress in reducing visa-processing times for African
passport holders, it has also curtailed service to and
from the continent. Last year, RJ ended its service to
137
THE REPORT Jordan 2014
New incentives have encouraged top-end hotels to open
In the aftermath of the
Arab Spring, Jordan can no
longer rely on visitors on
multi-country package
tours to the region, and
instead it is focusing on
other areas, like religious
tourism.
Tourist nights by region of origin, 2012-13 (000)
SO
UR
CE:
Min
istr
y o
f To
uri
sm a
nd
An
tiq
uit
ies
0
300
600
900
1200
1500
20132012
Jordanians living abroad
Gulf Arab countries
EuropeEast Asia & the Pacific
AmericasAfrica
TOURISM OVERVIEW
Accra, Ghana after a year operating the route. RJ remains
in Africa though, with routes to Nigeria and Kenya that
look to capitalise on Jordan’s medical tourism as an
incentive for African passengers. Tourists from African
countries accounted for a 4% increase in visitors com-
ing to the kingdom for overnight stays between 2012
and 2013. Jordan aims to grow this market and entice
more overnight visitors to stay for tours. Jordan’s Pri-
vate Hospitals Association is also marketing medical
services to African countries like Chad and Nigeria.
VISA CHANGES: In an effort to raise short-term cap-
ital, the Jordanian government recently increased the
cost of a single-entry tourist visa. In April 2014 the cost
for a single entry tourist visa doubled from JD20 ($28.25)
to JD40 ($56.50) per visitor. While the visa changes
affect individual travellers, those arriving in groups of
five or more, staying more than three nights and using
a national tour operator are exempt from paying a visa
fee. The decision was no doubt a difficult one for the
authorities, given that they are faced with a reduction
in visitor numbers as a result of the regional unrest, and
simultaneously significant budget shortfalls.
The government, however, has shelved a departure
tax for tourists flying in and out of the country’s sec-
ond-largest airport, King Hussein International Airport
(KHIA) in Aqaba. Part of a plan to attract tourists from
Egypt’s Sharm El Sheikh, the government is making
operating costs for Aqaba cheaper for tour operators.
A new 1500-metre expansion to the airport is helping
update tourism infrastructure in the Red Sea port city.
National flag carrier RJ, Turkish Airlines and a host of
seasonal charter flights servicing destinations in north-
ern Europe, currently serve KHIA. With flights from
Europe to Egypt’s Sharm El Sheikh costing up to six times
less than flights to Amman, relaxation of departure
taxes should boost tourism to Jordan’s Red Sea coast
and lure new carriers into servicing the airport.
NEW HOTELS & INFRASTRUCTURE: Hotel developers
continue eying opportunities in Jordan’s tourism sec-
tor. In the realm of luxury travel alone, there are plans
for a St Regis Hotel and W Hotel, both run by Starwood
hotels, opening in Amman in 2016.
The pace of hotel construction, however, is shifting
from the capital to Aqaba and the Dead Sea due to the
myriad tourism prospects ranging from ecotourism to
wellness retreats, as well as the ease of doing business
thanks to special economic benefits for tourism proj-
ects. Dubai-based Arabtec Construction is leading the
curve with $1.55bn contract to build a resort overlook-
ing the Gulf of Aqaba, complete with a Star Trek theme
park. The project also has support from Jordan’s Rubi-
con Group and the King Abdullah II Fund for Develop-
ment is considering to invest. The resort will be locat-
ed in the Aqaba Special Economic Zone (ASEZ), home
to a host of private firms and shipping outlets with
direct access to the Red Sea. Construction is expect-
ed to create 4000 jobs and begin in late 2014, and the
project is due for completion in 2017. Arabtec is also
working on the Saraya Aqaba luxury tourism project on
the Red Sea. The project is further evidence of the gov-
ernment’s plan to raise public-private cooperation in
expanding the tourism sector.
The government is moving ahead with another large
project in the Wadi Araba region. One of the poorest
areas of the country that extends from the Dead Sea
to the Aqaba port, the project is under the jurisdiction
of the Jordan Valley Authority (JVA) after a government
decision to change oversight of the area. The ambitious
initiative reflects the government’s aim to develop
infrastructure in the kingdom with an eye for tourism
and environmental sustainability. The first phase of the
project, valued at $84.7m will include development of
infrastructure, streets and incorporation of more than
8000 acres of agricultural land, JVA secretary-general
Saad Abu Hammour told Gulf newspaper Al Shorfa.
Addressing one of the major challenges facing the
tourism sector – availability of cheap energy – the proj-
ect will include dam and water harvesting schemes, as
well the creation of new power plants. Additional proj-
ects include establishment of several ecotourism offer-
ings, like hiking trails and new hotels for ecotourism
markets. The second phase of the project, which will
be implemented over the next 20 years, will include
industrial, agricultural and tourism-specific projects.
OUTLOOK: With ideal year-round weather, political sta-
bility, a variety of religious tourism sites and new infra-
structure like the recently renovated Queen Alia Inter-
national Airport, the kingdom is well placed to
consolidate its position on the Middle East tourism
map. Challenges like visa fee increases may adversely
affect the industry’s short-term growth, but continued
development in the Dead Sea and Gulf of Aqaba hold
the greatest promise to solidify medium-term expan-
sion in the industry with the many religious, wellness
and ecotourism attractions in those areas.
Recent initiatives will help Jordan overcome obsta-
cles such as energy costs with private power plants and
green energy initiatives that will aid medium-term
growth. Meanwhile, global branding efforts aimed at
marketing the diverse tourism infrastructure will ensure
that tourism remains an economic growth engine.
138
The national airline has been key in expanding the number of African visitors to the kingdom
While the cost of a
single-entry visa for
individual travellers rose
from $28.25 to $56.50 in
April 2014, those on
package tours in groups of
five or more are exempt
from paying the fee.
New initiatives like water
harvesting to develop the
Wadi Araba region will help
promote environmental
sustainability and
ecotourism to the region.
www.oxfordbusinessgroup.com/country/Jordan
TOURISM ANALYSIS
Libyans have made up nearly 30% of medical tourists since 2011
While the Jordanian tourism industry is expanding into
new areas like adventure and ecotourism, one of the
kingdom's more robust tourism niches is medical
tourism. Over the past several years, Jordan has emerged
as a premier destination in the Middle East for med-
ical needs, given the high quality of health care and rel-
atively low costs for patients.
In 2011 when regional events threatened to stifle
tourism, Jordan’s medical tourism industry expanded.
The sector has since been in a period of steady growth,
registering roughly 255,000 medical tourists in 2013,
according to the Private Hospitals Association (PHA).
This is a jump from the 240,000 patients seen in 2012.
According to Abdullah Al Hindawi, CEO of PHA, med-
ical tourism revenues in Jordan now exceed $1bn, and
medical tourists account for roughly 23% of the total
number of patients in the country’s hospitals.
TOP-RATE TREATMENT: Given Jordan’s ability to pro-
vide the growing number of medical tourists with excel-
lent care, the UK-based International Medical Travel
Journal recognised Jordan in March 2014 as the best
overall destination for medical tourism in the world. The
government invests handsomely in the health indus-
try. According to the World Bank, Jordan spent $2.45bn
in 2012 on total health care expenditure, or 9.8% of GDP.
This high spending on the health care industry has
translated to some of the best medical facilities in the
region, with 2.45 physicians and 1.8 hospital beds per
1000 people, according to the PHA. Since many med-
ical tourists want assurance that they are receiving
care from internationally accredited physicians, the pri-
vate sector is also working closely with the govern-
ment to streamline the process of obtaining and main-
taining international accreditation for medical
professionals in the kingdom.
FROM FAR & WIDE: The majority of Jordan’s medical
tourists arrive from Arab countries like Iraq, Libya, Pales-
tine, Sudan and Yemen. Since the outbreak of civil war
in 2011, Libyans have led the number of medical tourists,
accounting for nearly 30% of the patients arriving in
Jordan for treatment. However, the ongoing financial
crisis in Libya has led to debts exceeding JD120m
($169.5m) owed to Jordanian hospitals. The government
has threatened to curtail the number of medical tourist
visas for Libyans until the debt situation is resolved.
Visa restrictions for medical tourists to the kingdom
continue to present the greatest challenge to the med-
ical tourism sector. To remain competitive with leading
regional medical tourism destinations like Turkey and
the UAE, which often provide visas on arrival for med-
ical patients, the PHA is working closely with the Jor-
danian government to change the visa structure for
medical tourists. The industry hopes that the relax-
ation of visa regulations for patients will allow Jordan
to expand its footprint in Africa. Nigeria, Algeria and
Chad are possible markets for patients, and private
sector actors like the PHA are working with several
charter airlines to explore flight additions that would
facilitate more medical tourists from these countries.
RIGHT BALANCE: While medical tourism has spiked
in countries like Turkey, India, Iran and the Gulf, Jordan
retains a qualitative edge in the sector. Treatment is
cheaper than in places like Turkey, and Jordan has an
advantage in terms of language and similar culture for
attracting Arab medical tourists. Typically, most foreign
patients arrive in Jordan for non-elective treatments and
operations, but this trend is changing with the rise in
elective surgery in the kingdom. Cosmetic surgery treat-
ment is another area that has been on the rise over
the past several years, especially among patients from
the Gulf, given that treatment in Jordan is cheaper and
of a higher quality. The kingdom is therefore looking to
capitalise on medical tourists that arrive in Jordan for
non-elective treatments but choose to undergo cos-
metic procedures during their stay.
Relaxation of visa regulations for medical tourists
along with streamlining the accreditation process
for Jordanian medical professionals will allow Jordan
to maintain its status as a premier destination for
medical tourism, both in the Middle East and globally.
Thanks in part to its high
spending on the medical
sector – at around $2.45bn
in 2012 – Jordan has one of
the best medical systems in
the Middle East.
141
THE REPORT Jordan 2014
Despite the many
competitors for medical
tourism in the region,
Jordan’s advantages are its
quality of care, price point,
and language and culture,
which are familiar for Arab
patients.
On tourCombining quality and affordability for attractive care
TOURISM ANALYSIS
Luxury developments are going up along the nation’s coastline
Contributing some 14% to GDP, Jordan’s tourism sec-
tor is a powerhouse of the national economy, and
employs roughly 6% of the country’s total workforce.
In order to boost the industry, the Ministry of Tourism
and Antiquities (MoTA), along with several private organ-
isations, such as the Jordan Tourism Board (JTB), are seek-
ing to attract investment, both local and foreign, into
the kingdom’s hospitality infrastructure. In the realm
of luxury hotels and the development of large tourism
projects in the Gulf of Aqaba and the Dead Sea, the
year 2013 saw a number of encouraging developments.
NEW INVESTMENT: Capital investment stood at
JD403.7m ($570.27m) in 2013, a rise of 0.7% from 2012
according to regional business publication Alif Arabiya.
This figure is likely to increase further with the success
of several hotel projects and announcement of new
developments in the pipeline.
InterContinental Hotel Group’s Crowne Plaza Jordan
Dead Sea Resort and Spa, with its 420 rooms and suites,
celebrated its first year in operation and proved itself
a strong player in the increasingly competitive Dead Sea
market. “The resort is only a year old, but it has achieved
a lot during this year,” Firas Irsheidat, general manag-
er of the Crown Plaza, told Hotelier Middle East. “The
resort has become popular among residents of Jordan
and incoming tourists as well.”
BUILDING UP: In Amman, Starwood Hotels is working
on two new luxury properties that will compete with
the InterContinental and Four Seasons for the up-and-
coming luxury travel market in the city. Starwood will
be taking charge of at least four properties in the near
future, underlying the company’s commitment to the
Jordanian market. Two hotels are scheduled for Amman:
the St Regis is expected to be in operation in 2016 with
270 rooms, and the W Hotel Amman is expected to come
on-line in 2016 with 280 rooms. Starwood also has two
properties in Aqaba, both expected to be operational
in 2016 – the Westin Aqaba Harbour Resort & Spa
with 300 rooms and the Al Manara Hotel that will fea-
ture 200 luxury rooms. According to Starwood’s Mid-
dle East regional director, the four hotels will bring
18,000 jobs to the Jordanian economy.
Aside from the luxury offerings in Amman, other
centres of hospitality infrastructure development are
the Dead Sea and the Gulf of Aqaba. The Dead Sea devel-
opment zone stretches 40 km and provides many ben-
efits for the hotel industry. Created in 2008 under the
auspice of King Abdullah II, the Development and Free
Zones Commission (DFZC) offers a flat 5% corporate
income tax rate, 100% foreign ownership and exemp-
tions from Customs duties, sales tax and social servic-
es payments. Given the high cost of energy and water
in Jordan, the DFZC helps attract international luxury
hotel projects like Germany’s Kempinski, Switzerland’s
Movenpick to the Dead Sea and InterContinental Hotels
Group’s Crowne Plaza Jordan Dead Sea Resort and Spa,
which opened in October 2012. “The climate is 100%
better because confidence has been restored political-
ly,” Nasser Al Khaldi, CEO of Samarah Dead Sea Resort,
told OBG. “Our sales on the real estate side for the first
quarter of 2014 have already surpassed all of the sales
of 2013. We have also seen a surge in international book-
ings for the King Hussein Bin Talal Convention Centre.”
SEASIDE LUXURY: Egypt-based Amer Group is work-
ing on one of its biggest ventures in the region with
the Porto Dead Sea project. Located on 800,000 sq
metres of coastline on the Dead Sea, the project, dubbed
“the Pulse of the Dead Sea”, will include four luxury
hotels, three malls and nearly 11,000 apartments. Jor-
danian Prime Minister Abdullah Ensour was on hand to
lay the cornerstone of the project in April 2014. The
implementation phase for the project is estimated to
cost $1.1bn along with JD60m ($84.8m) for the initial
development phase. The project will include an on-site
medical facility aimed at taking advantage of the pur-
ported healing properties of the mineral-rich Dead Sea.
Additional considerations will include special offerings
for conservative visitors such as women-only swim-
ming pools. The project will increase total hotel capac-
ity in Jordan by nearly 25% when completed in 2016.
Between 2012 and 2013,
investment in Jordan’s
hospitality sector grew by
0.7%, and that figure is
expected to rise in
the coming years given the
success of recent projects.
Beyond Amman, centres for
luxury tourism include the
40-km Dead Sea
development zone, which
enjoys several investment
incentives from the
Development and Free
Zones Commission.
142
Brick by brickSector expansion spurs construction
www.oxfordbusinessgroup.com/country/Jordan
TOURISM ANALYSIS
However, the pace of investment does not stop there.
Ayla Oasis, a mixed-use real estate and tourism project
in the Gulf of Aqaba, is working on a 300-room Hyatt
Regency along with an 80-100 room boutique hotel that
is planned to come on-line by the end of 2016 in the
Red Sea port city. “Aqaba is witnessing a boom but
more foreign labour is needed to sustain growth,” Sahl
Dudin, CEO of Ayla Oasis, told OBG.
GREENER BUILD: To combat the high cost of energy
and possibly setting a precedent for the industry, Ayla
Oasis is working on several sustainable energy proj-
ects, including the use of desalinated water from the
Red Sea to maintain the project’s Greg Norman-
designed 18-hole golf course, the first such course in
the kingdom. Part of the Ayla Oasis $1bn development
project is earmarked for the development of long-term
infrastructure in Aqaba. Ayla Oasis will create 17 km of
new waterfront area and build the Ayla Marina, which
will extend the existing marina’s capacity to 200 yachts.
Signalling regional investment in Aqaba, Dubai-based
Arabtec Construction won a $1.55bn contract to build
a resort overlooking the Gulf of Aqaba. The resort will
be located in the Aqaba Special Economic Zone, home
to a host of private firms and shipping outlets with
direct access to the Red Sea. With construction expect-
ed to create 4000 jobs and begin in late 2014, the proj-
ect is due for completion in 2017.
DOWN THE ROAD: The pace of investment in Jordan’s
tourism sector provides evidence of the rebound in
the industry, yet challenges remain. While the opening
of luxury properties in Amman is a welcome boost to
the tourism economy, high energy costs and contin-
ued tax increases on the hotel industry remain obsta-
cles in the market. The shift in focus among hotel groups
away from Amman to the Gulf of Aqaba and the Dead
Sea highlights the potential Jordan has to emerge as a
major holiday destination in the Middle East. By forgo-
ing the mass-market appeal that typifies some other
locations in the region for luxury and quality, Jordan has
the ability to carve out a special niche for itself in the
competitive Middle Eastern market.
With numbers of tourists on the rise in 2014, greater
communication between the government and private
sector is crucial. The groundwork is already established
through a network of public-private partnerships such
as the JTB, which markets and brands the country’s
tourism sector throughout the international commu-
nity. Further initiatives specifically aimed at marketing
new projects in the Dead Sea and Gulf of Aqaba would
go far in raising the developments in the tourism sec-
tor and attracting foreign investment. Current investors
in Jordan’s hospitality infrastructure have come to under-
stand that profitability in the tourism sector requires
a developed energy strategy. Additional efforts by the
Jordan Hotel Association to establish energy independ-
ence for the hospitality sector will ensure increased local
and foreign investment, which will ultimately help to
lift Jordan to a premier Middle East holiday destination.
143
By expanding luxury
tourism development from
Amman to the Dead Sea
and Gulf of Aqaba, Jordan is
positioning itself to be a
major holiday destination
in the region.
TOURISM ANALYSIS
The country’s holy sites are a draw for many religious tourists
When Pope Francis arrived in Jordan as part of a Holy
Land visit in May 2014, he was bringing with him more
than a message of peace. For Jordan’s tourism sector,
the Pope’s visit can be seen as a cornerstone in a new
push to attract a wide variety of religious tourists to
the country. Every year roughly 90,000 tourists visit the
baptism site of Jesus Christ, a 6-km strip of land near
the Dead Sea that is said to be the location where Jesus
was immersed in the waters of the Jordan River. Jordan
has invested in renovating dozens of churches and oth-
er Christian holy sites, including caves and baptism
pools dating to the Roman and Byzantine period, as part
of a national push to elevate the profile of Christian
religious tourism in the kingdom.
BRANCHING OUT: Despite slower than desirable growth
rates in recent years, the first quarter of 2014 has
shown positive increase in the numbers of individual
tourists coming to Jordan. The Ministry of Tourism and
Antiquities reports a 3.1% rise in the numbers of tourists
arriving in the country in the first three months of 2014
as compared with the same period in 2013. The expan-
sion is partially due to a diversification strategy in the
tourism sector that is working to market the country
as a stand-alone destination ideal for religious, busi-
ness and ecotourism visits. The Pope’s visit in May 2014
offered a welcome boost to this new strategy. “It is a
historic moment. We hope it will encourage Christian
tourists from all over the world to visit Jordan,” Nedal
Qatameen, Jordan’s tourism minister, told Al Jazeera.
“We hope numbers will double after the pope’s visit. It
is an opportunity for the world to learn about the his-
toric religious sites in Jordan.”
RELIGIOUS CALLING: It is not just Christian tourism
that the sector is after; the kingdom has long been an
ideal place for Islamic religious tourism as well. From
sites of Muslim conquests to the number of services
and infrastructure that cater to Muslim tourists, Jordan
is a perfectly situated destination for Muslim travellers
looking to add on days for the annual hajj pilgrimage
in Saudi Arabia. Roughly 20% of Jordan’s visitors come
from Saudi Arabia after performing the annual hajj pil-
grimage, and the kingdom is looking to build on that
number via branding campaigns for Muslim tourists.
For instance, seeing growth in the number of Mus-
lim tourists from East Asia, the Jordan Tourism Board
recently launched a campaign in Malaysia to promote
Muslim travel in the kingdom. The campaign focuses
on attracting pilgrims performing the annual hajj in Sau-
di Arabia to continue with a religious tour of Jordan and
the Palestinian Territories. A number of agreements
have been signed with tour companies in Indonesia and
Malaysia to heighten the profile of the religious places
in Jordan and the Palestinian Territories, specifically the
historical sites of Islamic conquest in the country. The
Jordanian government is also updating infrastructure
at some of the kingdom’s most magnificent sites. These
updates will further deepen the country’s rich portfo-
lio of varied religious sites available for tourists.
With a wide availability of halal food and gender seg-
regated swimming pools and gymnasiums, Jordan has
the necessary infrastructure to attract Muslim trav-
ellers looking for a holiday location that offers servic-
es in line with religious observance. Given its relaxed
atmosphere and pleasant summer temperatures, espe-
cially in higher areas like Amman, Jordan is becoming
a popular alternative destination to Beirut for Gulf
tourists looking to escape soaring temperatures.
BETTER PACKAGE: However, many of Jordan’s most
tranquil and inviting religious sites are still being left
off of itineraries and tour operator promotional mate-
rial due to lack of infrastructure. The country is address-
ing this as part of the new marketing campaign. More
agreements with Jordan’s neighbours, like the joint Jor-
danian-Palestinian tourism initiative, are considered
necessary to fully entrench Jordan’s position as an ide-
al stop-off point for religious holidays in the Middle East.
With promotional agreements and construction plans
under way, Jordan’s fundamentals in the religious tourism
sector helps position the country as an ideal destina-
tion for religious tourists from a variety of backgrounds.
A visit by Pope Francis to
Jordan in May 2014 helped
to highlight Jordan’s
Christian sites. The
kingdom has invested in
renovating dozens of
churches and other
Christian holy sites as part
of a national push to boost
religious tourism.
145
THE REPORT Jordan 2014
As part of its efforts to
diversify the tourism sector,
Jordan aims to make itself
more attractive to Muslim
travellers visiting
neighbouring Saudi Arabia
on the hajj pilgrimage.
A divine pathNew initiatives promote religious tourism
TOURISM INTERVIEW
Nidal Katamine, Minister of Tourism & Antiquities
Tourism is a major contributor to GDP in Jordan.
What plans are there to further develop and
expand tourist activities in the Dead Sea?
KATAMINE: There are currently plans in place to
develop several different areas and sites in an effort
to adhere to the high standard of quality that we have
set for ourselves all around Jordan. We are always
striving to maintain and improve our offerings in
order to accommodate visitors from all across the
world and all walks of life.
That is why there have been several development
projects under way at the Dead Sea and elsewhere
that are tailored to fit the needs of every traveller,
from backpackers to the luxury seeker. At the Dead
Sea, in particular, there have been several recent
projects that include two brand new five-star hotels,
five four-star hotels and three three-star hotels, as
well as a couple of serviced apartments that include
access to restaurants and cafes.
We understand the importance of the Dead Sea
as a world-renowned destination and have therefore
invested a lot of time and effort in its development
and infrastructure. Besides being a relaxation spot,
a traditional leisure and wellness destination, as well
as a significant religious site, there have been sev-
eral initiatives to add an adventurous flavour to the
mix through skydiving and other extreme sports.
What is the breakdown between foreign and
domestic tourists in Jordan? On the internation-
al side, which countries or regions present the
most potential for growth?
KATAMINE: Jordan is blessed with a very diverse mix
of international and domestic tourists. The area gen-
erally enjoys a large presence of foreign travellers
during high tourism season and a large number of
both domestic tourists and expatriates during the
summer and public holidays. This is especially advan-
tageous for the tourism industry, as it means that
it is busy with plenty of visitors throughout the year.
We enjoy great relationships with several coun-
tries that act as major exporters of tourists every
year. These range from the US, Russia and the UK to
several Arab Gulf countries. These markets are con-
stantly maintained through various campaigns, but
we are striving to grow in other areas such as the
East Asia, Eastern Europe and South America. Our
research indicates that people from these areas
appreciate a good vacation spot where they can
enjoy some sunshine and lounge on the beach, but
also get something cultural, and possibly religious,
from their travel experience.
Given the issues of instability and conflict cur-
rently being faced in the Middle East region, how
important is it for Jordan to promote itself as a
stand-alone destination?
KATAMINE: Regional instability has affected inbound
tourism numbers in Jordan, due to the mispercep-
tion of the Middle East in general and Jordan in par-
ticular. In order to mitigate this, the government is
making a substantial effort to put together an action
plan for its tourism sector.
We are marketing Jordan in a non-traditional way,
for example, as a stand-alone destination, and
encouraging more charter flights and low-cost car-
riers to start flying to the country from Eastern
Europe. This new approach should help attract new
unaffected markets that hopefully will drive growth
in our tourism sector.
We are confident that our international market-
ing plans and promotions will continue to be suc-
cessful since Jordan boasts a tourism experience
that cannot be rivalled anywhere else in the world.
With attractions and sites that range from classic
history and cultural offerings – such as UNESCO
World Heritage site Petra, the site of Jesus’s baptism
on the Jordan River and the ancient Roman city of
Jerash – to leisure and fun at the Dead Sea, each loca-
tion and experience plays into several niche markets.
146
A whole new world OBG talks to Nidal Katamine, Minister of Tourism and Antiquities
www.oxfordbusinessgroup.com/country/Jordan
147
Telecoms & ITPenetration rates high for internet and mobile phones
Strong growth in data services and smartphone sales
Bidding on new frequencies for the first 4G services
Tax hikes on voice services challenge mobile operators
National broadband network to launch within two years
Tech start-up sector a leader in the Middle East
Gaming development segment well established
Initiatives to train and retain talent in the IT workforce
TELECOMS OVERVIEW
A large and growing proportion of mobile users have smartphones
After Qatar, Jordan was the second Middle East coun-
try to launch a global system for mobile communica-
tions, or GSM, and has not looked back since. More
recently, advancements in data and the greater avail-
ability of smartphones are positioning the kingdom for
another leap forward in the telecoms sector.
The state was the sole operator until the mid-1990s,
when it slowly began to open up the sector to private
players in a bid to increase competition, enhance effi-
ciency and develop service quality. In 1994, the first pri-
vate mobile operator was licensed and began services
under the brand Fastlink, now operating as Zain. The
pace of change picked up in 1995 when the kingdom
re-evaluated its telecoms strategy, eventually issuing a
new telecommunications law that introduced wide-
ranging reforms. At the heart of the new law was the
creation of the Telecommunications Regulatory Com-
mission (TRC), which is charged with regulating ICT and
the postal system in line with global best practices.
NEW DIRECTION: These reforms ushered in a new era
of private investment and competition. As part of the
changes, the government-run Telecommunications
Corporation was transformed into a state-owned enti-
ty, the Jordan Telecommunications Company (JTC).
Later, after Jordan’s accession to the World Trade
Organisation, the kingdom launched a wave of privati-
sations as part of its membership obligations, and in
2000 the JTC opened a bidding process for 40% of its
shares. With a bid of $508m, a consortium led by France
Telecom (FT) won the lucrative management contract,
taking 88% of the offered stake, with the rest being held
by Arab Bank. By 2004, Jordan’s telecommunications
sector was fully liberalised, preceding the majority of
other countries in the region.
Further changes came in 2006, when the JTC com-
bined all operations under one umbrella company, Jor-
dan Telecom Group (JTG). The government also sold
more of its private shares, allowing FT to take a
controlling 51% holding. In 2007 JTG’s retail mobile
operations rebranded as Orange, FT’s commercial arm.
LOCAL LANDSCAPE: Besides Orange, there are two
other mobile network operators, Zain and Umniah, and
one mobile virtual network operator (MVNO) called
FRiENDi. Each is part of a foreign parent group: Zain
comes under Kuwait’s Mobile Telecommunications
Company, Umniah under Bahrain’s Batelco and FRiEN-
Di under the UK’s Virgin Mobile. The local mobile land-
scape remains dominated by pre-paid customers, but
changes in consumer habits point to encouraging signs
of growth in the post-paid segment. Factors driving this
shift include an increased interest in smartphones,
growth in data subscriptions and the prospect of faster
4G services becoming available.
THE NUMBERS: ICT is one of Jordan’s fastest growing
industries, despite the recent tax increases that have
hit the telecoms sector. In 2013 the telecoms sector
had revenues of $1.58bn, down from $1.69bn in 2012,
according to the TRC. In the first quarter of 2014, Zain
had 4,095,576 pre- and post-paid active subscribers,
according to the TRC, followed by Orange (3,263,063)
and Umniah (3,027,546). In the same period for 2013,
pre-paid subscribers accounted for 8,745,120 or about
92% of the kingdom’s 9,475,171 subscribers.
Competition is serious in the pre-paid mobile sector.
For customers in this segment, Zain remains the leader,
with about 3.57m active subscribers, followed by Orange
(3.09m), Umniah (3m) and FRiENDi (66,694), accord-
ing to the TRC. One particularly attractive feature of
pre-paid subscriptions in Jordan is the flexibility of the
tariff structure, which allows mobile users to carry two
SIM cards and switch between them to take advantage
of seasonal deals. This reality is reflected in the king-
dom’s mobile penetration rate, which rose from 120%
in 2011 to 156% by the end of 2013, reaching nearly
10.7m subscribers, according to the TRC and Arab Advi-
sors Group. The state body further estimates that this
figure will hit 200% by 2018.
TECH SAVVY: Nine out of 10 people in Jordan own a
mobile phone, and a large and growing portion of these
are smartphones. Fully 38% of the country’s mobile
The kingdom launched a
wave of privatisations in
the late 1990s as part of its
obligations as a new
member of the World Trade
Organisation.
149
THE REPORT Jordan 2014
In 2013 the telecoms
sector had revenues of
$1.58bn, down from
$1.69bn in 2012, according
to the Telecommunications
Regulatory Commission.
Holding its ownRegulators work to maintain a balance between healthy growth andstrong competition
TELECOMS OVERVIEW
users own a smartphone, compared with 23% in Egypt,
17% in Turkey and 12% in Tunisia. With a 47% usage
rate, Jordan ranked second in the Arab world by mobile
data usage, according to a 2013 survey run by the Pew
Research Centre’s Global Attitudes Project (GAP). Social
media are also proving popular: Jordan ranks third in
the Middle East for engagement in social networking
sites, according to the GAP survey. Given its penetra-
tion and many operators, Jordan is the second-most-
competitive mobile market in the Middle East after
Saudi Arabia, according to the Cellular Competition
Intensity index released by Arab Advisors Group in 2014.
REGULATORY ENVIRONMENT: The TRC is responsible,
principally through regulation, for ensuring stiff com-
petition without stifling the sector, a task that has been
challenged by a series of tax hikes in recent years. In
2012 the TRC released a “green paper” aimed at address-
ing a regulatory mismatch created by the differing com-
petencies and jurisdictions of the TRC and its sister reg-
ulator, the Audiovisual Commission (AVC). The AVC
regulates content delivered by terrestrial frequencies,
but not that sent by satellite, cable or internet, though
it licenses the entities that do so. Meanwhile, the TRC’s
mandate covers the provision of data services over
telecoms networks, but not content. One proposed
solution is to develop a completely new set of rules,
merge the TRC and AVC, and bring all content regula-
tion under the authority of a new body.
Regulators have long been concerned about the
quality of the service operators provide. In August 2011
Azzam Sleit, the minister of ICT, raised the issue at a
TRC meeting. “We all suffer because of the bad quali-
ty at present,” he said. “We do not want free calling min-
utes when every minute there is a disruption in the call.”
Still, major mobile providers note that Jordan has one
of the lowest dropped call rates in the region. Accord-
ing to TRC’s year-end 2013 report, Orange dropped the
most calls with 0.42%, while Umniah dropped the least
with 0.28%. Network availability was 99.68% for Orange,
99.98% for Umniah and 99.99% for Zain.
MARKET SHAKE-UP: In 2012 the TRC announced it
would open a bidding process for frequencies in bands
of 800 MHz, 2100 MHz, 2300 MHz and 2600 MHz to
pave the way for the kingdom’s first 4G services. Includ-
ed in the tender document was a clause allowing for
the possibility of a potential new entrant to participate
in the bidding. However, in June 2013 the three main
operators united against the tender, arguing that a
fourth operator would affect capital investment, have
a negative impact on an already saturated market and
erode earnings at a time of increased tax burden for
the sector. A price war would ensue, they said, drying
up funds for long-term sector investments.
TAXATION CHALLENGE:This resistance belied a broad-
er challenge: major operators are grappling with a steep
rise in taxes on mobile subscriptions. In July 2013 the
government – in an attempt to raise short-term capi-
tal, and spurred by a combination of factors including
an unexpected energy crisis in 2012 – raised sales tax-
es on voice and value-added services for mobile users
from 12% to 24% (tax on data usage remained at 8%).
The sector is at the same time subject to direct taxa-
tion, paying both income tax and a revenue-sharing levy,
and has further suffered from electricity rate increas-
es of nearly 150% in 2013.
The three major operators thus united in opposition.
In a special report on the tax increase, Zain, Orange and
Umniah argued that combined revenue had fallen by
9% since the taxes came into force, while profits had
dropped by 30-40%. The providers further asserted
that the additional taxes will hurt long-term invest-
ment as funds earmarked for development would be
diverted for disbursement to the state.
AFTERMATH: In time, however, the fierceness of the
opposition waned, and all providers have now begun
looking for ways to diversify their revenue base. In an
annual report on its 2013 consolidated financial per-
formance, Zain’s parent company, Zain Group, said that
the higher state tariffs will slow market expansion.
“These taxes have effectively acted as an impediment
to the sustained growth of the telecom sector in the
country in the short term,” the statement said.
The effects on the market have been far-reaching.
JTG, the country’s sole fixed-line operator, reported a
37.8% drop in net profits in 2013, to JD51.7m ($73.03m).
While the three main providers have come out against
150
The mobile penetration rate reached 142% as of the end of 2013
Fully 38% of the country’s
mobile users own a
smartphone, compared
with 23% in Egypt, 17% in
Turkey and 12% in Tunisia,
while the kingdom ranked
second in the Arab world
by mobile data usage.
www.oxfordbusinessgroup.com/country/Jordan
SOURCE: Jordan Telecommunications Regulatory Commission
Telecoms indicators, 2013
Q1 Q2 Q3 Q4
Fixed phone
Residential 252,788 249,774 244,276 243,191
Business 140,081 138,255 136,212 136,720
Total 392,869 385,029 380,488 379,911
Penetration (%) 6.1 6 6 5.5
Active mobile
Post-paid 730,051 726,830 725,178 756,583
Pre-paid 8,745,120 9,228,962 9,502,643 9,557,223
Total 9,475,171 9,955,792 10,227,821 10,313,806
Penetration (%) 147 150 155 156
TELECOMS OVERVIEW
the new tax scheme, intense competition has signifi-
cantly lowered costs for consumers and profits for the
operators. “They are rushing to lower prices when they
should be working together to weather the difficult tax
climate the industry currently finds itself in,” Rafat Al
Nawawi, CEO of FRiENDi Mobile, told OBG.
In the end, the tender process was closed due to the
non-compliance of the two bidders. Zain Jordan then
applied for the 4G spectrum and was granted it, but
without any exclusivity that would prohibit existing
operators from acquiring similar spectrum under the
same terms. By winning the first such licence in the king-
dom, Zain hoped to stay on top of the market with the
largest number of subscribers, and is expecting to offer
4G services by the end of 2014.
The government has shown a willingness to reduce
some levies. To further stimulate the expanding smart-
phone market, it exempted these products from a sales
tax in August 2011, causing prices for high-end hand-
sets to fall by between $124 and $140. This exemption
also boosted smartphone sales and, by extension, the
demand for 3G data services.
SMARTPHONES: Smartphone sales continue to grow,
as mobile broadband in the country is already well
established –about 36% of mobile subscriptions include
access to mobile broadband services, according to the
TRC. Looking forward, Zain and other providers are
looking to capitalise on this through the introduction
of ultra-fast 4G mobile web services. “Smartphone
penetration in Jordan stands at 41% and is rising,” Ali
Toukan, research manager at Ipsos, a global research
group, said at an industry event covered by The Jordan
Times. “The increase in usage of smartphones is chang-
ing the behaviours of Jordanians and this represents
an opportunity for businesses.”
According to a separate study released by Ipsos, 43%
of mobile users in Jordan currently have broadband, and
eight in 10 smartphone owners have data subscriptions
on their devices. The recent introduction of low-cost
smartphones is also further expanding the market base.
A typical high-end smartphone can cost between $500
and $700, around the average monthly salary in Jor-
dan. Low-cost models now carry price tags of around
$150 or less, creating even more opportunities in the
kingdom’s mobile broadband industry.
The growth in recent years has already been strong.
Between 2012 and 2014, mobile broadband subscrip-
tions in Jordan grew from 800,000 to 1.2m. According
to a separate World Bank report, 35.9% of mobile sub-
scribers use mobile broadband services, compared with
32.4% in Kuwait. Such sector growth is having an effect
on the behaviour of service providers. Umniah is the
latest and final major service provider to complete a
3G roll-out in Jordan, complete with a lively campaign
of attractive offers for low-cost smartphones. “The
concept of MVNO is new to the MENA region, and we
expect it to thrive in Jordan after successful launches
in the US and Europe,” Al Nawawi told OBG.
3G EFFECT: As the voice market declines and gives
way to 3G wireless networks and low-cost smartphones,
the mobile data market offers the most promising area
152
Some 36% of mobile subscriptions include access to broadband
In August 2011, the
government exempted
smartphones from a sales
tax, boosting smartphone
sales and demand for data
services, and causing prices
for high-end headsets to
fall by between $124 and
$140.
TELECOMS OVERVIEW
for new revenue streams in Jordan. All major carriers
currently offer 3G services, and Zain is scheduled to
release the kingdom’s first 4G service in late 2014. “We
now see devices sold at below $100, and operators
can subsidise part of that if needed,” Ihab Hinnawi, CEO
of Umniah, told the media after the company launched
its 3G service. “We are seeing a pick-up in the growth
of mobile content in the region, especially with the
emergence of social media and other apps.”
Another healthy sign for the sector is that software
designers are focusing on mobile content to deliver new
products. Zain regularly partners with popular celebri-
ties in the region to leverage its mobile platform. In May
2012 local singer Omar Al Abdallat partially released
his album on Zain’s mobile network. Other providers,
meanwhile, offer exclusive mobile content such as
Orange’s Min Al Akher 2 campaign, which bundles an
application for unlimited music and content streaming
with SMS messaging and talk time.
Growth in social media applications is the most attrac-
tive selling point for mobile content in the country.
Facebook, Google and the video-streaming platform
YouTube have the greatest reach in the kingdom. Video-
chat applications such as Skype and Apple’s FaceTime
have also boosted data demand in the sector.
E-COMMERCE: Building on the successful reach of
mobile data, telecoms companies are moving forward
with e-commerce, billing platforms and mobile money
transferring schemes. Zain has partnered with SLA
Mobile, a multinational operator, to offer direct oper-
ator billing services – a first in the region. The service
will allow Zain’s customers to pay for digital goods from
a third party or service by charging the transaction to
their monthly phone bill or using pre-paid credit. In addi-
tion, Zain selected Ericsson to offer greater billing flex-
ibility for its pre- and post-paid subscribers. The new
charging and billing in one solution allows users to try
new services without running into unexpected costs.
Orange continues to expand its mobile money port-
folio in Jordan. It now reports about 10m customers for
its Orange Money service in 13 countries throughout
the Middle East and Africa region, and says some $3.4bn
in transactions were conducted through it in 2013.
With Jordan’s growing population of expatriates and for-
eign workers, the service is widely popular in the king-
dom. Such growth in non-voice products is an exam-
ple of the steady replacement of voice-based services
in the kingdom. “The telecoms industry will drive Jor-
dan on the path to an e-economy – and the private sec-
tor will build the networks to make this possible,”
Jean Francois Thomas, CEO of Orange Jordan, told OBG.
FIXED LINES:As mobile subscriptions grow, phones with
cords are becoming rarer. In 2013 total fixed-line con-
nections fell from 392,869 in the first quarter to 379,911
in the fourth, according to the TRC. Penetration rates
for these also dropped to 5.2% in the last quarter of
2013. A fall in residential fixed lines, from 252,788 in
the first three months of 2013 to 243,191 at year’s end,
contributed to a dip in the sector’s performance. Busi-
ness fixed lines also declined, but more slowly, slipping
from 140,081 to 136,720 over 2013. JTG remains the
kingdom’s sole provider of fixed telephone lines. How-
ever, the TRC decided in its July 2010 “Fixed Broadband
Market Review” to begin local loop unbundling.
PARTNERSHIP: Work is continuing on a National Broad-
band Network (NBN) with funding from the GCC. Cur-
rently estimated to be about 35% complete, the NBN
will aid the development of e-commerce, e-services,
e-health and e-education schemes across the king-
dom. The NBN aims to connect all schools, hospitals and
government institutions into one network, enabling
them to provide additional services to citizens. Jordan
is looking to capitalise on the growth of electronic plat-
forms by launching e-education initiatives to help raise
the quality of instruction. One such project set to begin
in 2014 is a three-year partnership with Barcelona’s Uni-
versitat Oberta de Catalunya, which aims to develop edu-
cation standards through e-learning initiatives.
OUTLOOK: The core health of Jordan’s telecoms indus-
try is robust thanks to high penetration rates, strong
competition and liberal regulation. However, the tax cli-
mate has created short-term challenges to realising its
full potential. While data demand continues to rise
sharply, partly due to Jordan’s growing tech start-ups
and e-commerce sector (see IT chapter), the TRC
remains in the delicate position of maintaining sector
health by facilitating investments to foster innovation
and improve service, all while avoiding putting too much
pressure on providers’ margins. Deeper integration with
EU mobile standards, furthermore, will help local reg-
ulators keep competition lively without curtailing growth.
153
THE REPORT Jordan 2014
New payment schemes at telecoms companies allow users to try new services without unexpected costs
In 2013 total fixed-line
connections fell from
392,869 in the first quarter
to 379,911 in the fourth,
lowering penetration rates
for these to 5.2%.
SOURCE: Jordan Telecommunications Regulatory
Post-paid Pre-paid Total
Zain 529,240 3,566,336 4,095,576
Orange 173,441 3,089,622 3,263,063
Umniah 72,452 2,955,074 3,027,526
FRiENDi mobile 0 66,694 66,694
Total 775,133 9,677,726 10,452,859
Mobile subscribers by provider, Q1 2014
TELECOMS ANALYSIS
The country’s first 4G service is set to launch by the end of 2014
The recent surge in data usage is reshaping Jordan’s
telecoms sector. Zain Jordan, the country’s largest
mobile provider, is expected to introduce 4G long-
term evolution (LTE) services that enable data trans-
fer rates of up to 150 Mbps by the end of 2014. In
2013, Zain secured new 4G and additional 3G fre-
quencies for $270.2m. The purchase has set off a
race to provide the first LTE service, and other
providers are now announcing similar plans.
SETTING THE BENCHMARK: “Zain Jordan has about
eight to nine months to launch the service commer-
cially in the kingdom,” Azzam Sleit, the minister of
information and communications technology, told the
press as the firm received final approval to acquire
the necessary frequencies. Initially, the kingdom’s
three major mobile providers firmly opposed the LTE
bidding process in reaction to stiff tax hikes: taxes
on voice and traditional value-added services rose
from 12% to 24% in July 2013, though those on data
remained at 8%. As Zain realigns its position, the
door is still open for both Umniah and Orange to apply
for a licence. The Telecommunications Regulatory
Commission (TRC) disqualified separate bids from
Kulacom Jordan and US-based Ameriphone, which
would have allowed the entry of a fourth mobile
provider in the kingdom. “There will be no exclusiv-
ity for Zain Jordan. Any other operator can acquire
frequencies to introduce the services at any time,”
Mohammad Al Taani, chief commissioner of the TRC,
told media after the Zain announcement. If the race
to launch LTE goes anything like that of 3G, all three
providers will be offering the service by 2017.
RIPPLE EFFECT: LTE is the most advanced broadband
internet for mobile devices, allowing data to be
exchanged at extremely high speeds – roughly 130
Mbps for download and 43 Mbps for upload. It also
reduces network access delays by one-quarter. The
network’s capability for high-speed transfer and pro-
cessing of data is of particular significance for the
Jordanian telecoms market, which is in a period of
data growth, in terms of both new customers and
the sale of smartphones (see overview).
The introduction of LTE is also expected to boost
video consumption. Estimates from Zain suggest
that the service will increase mobile video usage by
300%. That the process of acquiring LTE frequencies
was so challenging, and faced such strong opposi-
tion from current operators, underlines the com-
plex relationship between regulators and local mobile
providers. However, having faster data speeds will
be central to growth in the industry. “Data is the pri-
mary focus over the next couple of years,” Ahmed
Darwazeh, senior manager for market research at
Umniah, told OBG. “While voice remains strong in Jor-
dan, especially among refugees and new immigrants
to the kingdom, we are seeing a shift away from
voice and towards data.”
ALIGNMENT NEEDED: While the government is
working to ensure that the LTE infrastructure is in
place and available in the kingdom, increasing the
prevalence of LTE-enabled smartphones remains a
challenge. Despite the tax hike on mobile subscrip-
tions, Jordan has experimented with tax relief for
smartphones. In August 2011 such products were
exempted from sales tax, resulting in savings of
between $124 and $140 on high-end handsets, and
boosting demand for 3G-equipped handsets.
Underlining the demand for LTE expansion in Jor-
dan is the growth of mobile data subscribers (see
overview) and the entrance of small providers such
as FRiENDi Mobile, which operates as a mobile vir-
tual network operator and will continue to open up
niche markets in the kingdom as internet access
develops. Ultra-premium services and the devices
that enable them will help the high-earning data
market develop and keep in lockstep with Jordan’s
rapidly developing technology start-up sector.
As happened with 3G in the kingdom, LTE may not
take root quickly. Once it does, however, demand is
expected to rise, opening up new channels for revenue.
The kingdom’s three major
mobile providers initially
opposed the long-term
evolution (LTE) bidding
process in 2013, partly in
reaction to steep tax hikes
on voice and value-added
services in July 2013.
LTE broadband, which
allows data transfer at
extremely high speeds and
reduces access delays by
one-quarter, is of particular
significance for Jordan’s
telecoms market, where
data and smartphone sales
are growing rapidly.
154
Long-term visionNew services are coming to the market
www.oxfordbusinessgroup.com/country/Jordan
TELECOMS & IT INTERVIEW
Azzam Sleit, Minister of ICT
What can be done to further encourage the ICT
sector to contribute to economic growth?
SLEIT: The ICT sector has the capacity to serve as a cat-
alyst for wider socio-economic growth within Jordan,
while at the same time making the country more region-
ally competitive. Growth levels must be sustained and
ultimately increased across telecommunications, infor-
mation technology and postal services, while ensuring
the maintenance of affordable pricing solutions. Accord-
ingly, we are in the process of identifying certain objec-
tives to implement our national strategy for strength-
ening telecommunications, information technology
and the postal service.
To what extent could Jordan attract more foreign
investment into start-ups with better “branding”?
SLEIT: We need to focus on attracting funds from
abroad, and this starts with enhancing our image around
the globe, particularly through promoting human cap-
ital. It would also be wise for start-ups to work closely
with the Investment Commission and The ICT Associa-
tion of Jordan (int@j) to foster higher growth.
The government has introduced generous invest-
ment promotion laws that accompany a sound tax and
legal framework, although more should be done to pro-
mote and secure intellectual property rights. The rewards
are already being felt all throughout the economy: for
example, IT export revenues reached approximately
$300m in 2012, up 30% on the previous year.
How is the government encouraging the adoption
of a fully integrated general ICT platform?
SLEIT: The government has focused its business devel-
opment policies on small and medium-sized enterpris-
es, for instance by explaining how IT can help build and
revolutionise businesses, by achieving increases in effi-
ciency with multiplier effects for the economy as a
whole. A greater number of private funds, both foreign
and domestic, are aiming to build capacity, but there
have also been initiatives undertaken by the central bank
to make IT equipment more affordable through low-
interest financing programmes.
Jordan’s regulatory framework is very advanced
compared to the rest of the region. How has this
affected prospects for economic growth?
SLEIT: Advancing our general legal and regulatory
frameworks in 1995 enabled us to catapult ahead of
our neighbours in many respects. The frameworks were
re-worked through phases, which provided for a grad-
ual change. Ultimately we began to see higher levels
of foreign direct investment, but a flagging start-up cul-
ture also began to take root again.
Start-ups are turning heads, and not just in Jordan.
We have seen a great many of our brightest minds
expanding their ideas throughout the region. I am opti-
mistic that given the correct environment, we shall
remain at the forefront of innovation in the region.
In what ways is policy being developed to encour-
age greater external funding?
SLEIT: The government is working with the Ministry of
Finance, the Ministry of ICT, the Ministry of Industry and
Trade, the Investment Commission and the Jordan Enter-
prise Development Corporation in order to facilitate
greater funding within the sector. The government reg-
ularly reviews, and if necessary is also able to adjust,
the tax burdens that are imposed on the IT sector, as
well as IT-enabled services. We try to identify promis-
ing IT business ventures in Jordan and will support the
development of such ventures by garnering private
funding for them as is appropriate.
The government will continue to promote foreign
direct investment by supporting the establishment of
call centres, IT support centres, IT-enabled business
process outsourcing, content development for mobile
phones – especially in Arabic, including gaming, edu-
cation services, health services, banking services – and
the enhancement and customisation of IT services
and applications that are suitable for the MENA region.
155
THE REPORT Jordan 2014
Starting upOBG talks to Azzam Sleit, Minister of Information and CommunicationsTechnology (ICT)
IT OVERVIEW
The ICT sector has become an economic powerhouse, at 14% of GDP
The ICT sector is Jordan’s fasting growing industry, ris-
ing by about one-quarter a year and providing more than
80,000 direct, indirect and induced jobs – equivalent
to more than 6% of the labour force – according to the
Information Technology Association of Jordan (int@j).
Since the country opened itself to ICT development in
the late 1990s, the sector has grown into an econom-
ic powerhouse, and now contributes about 12% of GDP.
From 2000 to 2008, year-on-year growth in the ICT
sector was roughly 25%. The sector attracts an aver-
age of $150m a year in investment and has some 540
active companies in telecoms, IT, online and mobile
content, outsourcing and games. Liberal regulations on
the sector mean Jordan’s skilled ICT workforce enjoys
some of the best connectivity in the region.
IT export revenues totalled $324.44m in 2013, and
the major export markets included Saudi Arabia at
$86.31m (26.60%), the US at $69.74m (21.49%), Iraq
at $41.14m (12.68%), Nigeria at $23.13m (7.12%) and
the UAE at $20.57m (6.34%), according to int@j.
According to the Innovative Jordan conference,
between 2011 and 2012 Amman ranked first in the
region in terms of the number of tech deals funded and
second for the amount of funds invested.
REACH-ING HIGHER: In 2012 the Ministry of ICT
(MoICT) drafted the National ICT Strategy 2013-17, a
policy document to steer the sector’s development
and increase its contribution to growth. Drawn up in
conjunction with int@j, the sector’s main advocacy
group, and representing more than 200 firms in IT, tele-
coms, outsourcing, internet and mobile business, the
strategy was approved at the beginning of 2013.
The creation of int@j by King Abdullah II in 1999 was
part of the REACH initiative, the kingdom’s first ICT
development strategy. This five-year plan focused on
increasing industry competitiveness and forging part-
nerships between the public sector and ICT companies.
Partly as a result, from 1999 to 2007, ICT revenues
expanded from $60m to $1.4bn and the total number
of ICT jobs rose from 1000 to 17,000, as per int@j data.
REACH gave way to the National ICT Strategy of 2007-
11, which targeted internet penetration, job creation
and revenue growth. The focus on employment con-
tinues under the current strategy, but the emphasis has
now shifted towards infrastructure development and
improved links between IT and other economic sectors.
INFRASTRUCTURE: At the core of the current strate-
gy is the National Broadband Network (NBN), to which
the state has committed $209m to finish in the next
two years. By connecting all public schools, universi-
ties, state agencies and hospitals to a nationwide fibre-
optic network that was launched in 2003, the NBN will
facilitate a host of e-learning and e-commerce projects
in the kingdom. It will also boost Jordan’s existing oper-
ators of WiMAX, a wireless communication system that
provides fixed internet capacity and higher speeds.
Local operators entered the market in late 2009, occu-
pying a 17% share of the entire broadband market.
The strategy’s other goals are manifold. These include
deepening cooperation between the sector and oth-
er high-value-added industries, and supporting the
development of electronic content in Arabic – Jordan
produces roughly three-quarters of global online con-
tent in that language. To facilitate a better working
environment for the ICT sector, it also calls for greater
intellectual property rights, support for more efforts
in international marketing, regulation of radio-frequen-
cy spectrums and further development of ICT skills at
universities. In numerical terms, its aim is to raise total
internet penetration from 73% currently to 85% by the
end of 2017, while increasing the number of jobs in the
sector by around 4000 to a total of 20,000.
GROWING TALENT: Given its many universities and
quality of education, Jordan has been able to produce
a large and skilled IT workforce. However, the challenge
of staying ahead in this fast-paced sector is pushing
some private organisations to offer further skills train-
ing for the IT workforce. At the behest of int@j and oth-
er sector players, the kingdom is working with private
providers to better prepare its workforce for the world
From 2000 to 2008,
year-on-year growth in the
ICT sector was roughly 25%.
It now has some 540 active
firms and attracts an
average of $150m a year in
investment.
The National ICT Strategy
2013-17, drafted in 2012 by
the Ministry of ICT, was
drawn up in conjunction
with the sector’s main
advocacy group and
approved at the beginning
of 2013.
156
Into the cloudsA strong talent base and infrastructure upgrades make for attractiveprospects in the IT sector
www.oxfordbusinessgroup.com/country/Jordan
IT OVERVIEW
of IT. For many years, private local IT firms have con-
ducted their own training for new graduates, but many
of these, once trained, have taken their skills to more
lucrative markets in the Gulf, Europe or the US.
Several new programmes are thus under way to train
and retain the local IT workforce. One such initiative is
int@j’s public-private partnership (PPP) with the MoICT
and the Ministry of Labour to take advantage of the
existing state-sponsored Graduate Internship Pro-
gramme (GIP). GIP placements last for 18 months, dur-
ing which time the government subsidises half of a
graduate’s salary of $420 a month for the first year, after
which the subsidy is reduced to one-quarter for the
remainder of the internship. From 2012 to mid-2013,
more than 1200 graduates and students took advan-
tage of this programme, according to int@j.
The association has also facilitated partnerships with
major IT groups such as Google to host Jordanian tech
entrepreneurs. The developers of Sowt, a local social
networking platform that promotes discussion and dia-
logue through short audio posts, were recently invit-
ed to spend three months in Silicon Valley to work with
Google to help develop their application.
REVERSING THE CYCLE: The success of tech start-ups
like Sowt is helping to address Jordan’s steady exodus
of IT developers to other markets. Of the roughly 5000-
6000 IT graduates in Jordan each year, about 3000 go
abroad for better wages. However, increasing numbers
are looking to stay home and take advantage of avail-
able on-the-job training and internship programmes.
“Amman is a great place to launch start-ups due to its
location, infrastructure, low cost of living and liberal leg-
islation,” Omar Al Sharif, managing director of tech
incubator Oasis500, told OBG. “More and more fresh
graduates are seeing that their skills can be put to use
in increasingly creative ways closer to home.”
INTERNATIONAL CONNECTIVITY: Jordan is connect-
ed to a mix of copper, fibre and wireless technologies
that link its homes and businesses to the internet.
Indeed, its web infrastructure is among the region’s
most advanced, with many links to neighbouring nations
that help regional business to interconnect.
Jordan’s first foray into the world of international
fibre-optic cables came in 1999, when it connected to
the Indian-owned, 27,300-km Fibre-Optic Link Around
the Globe, or “FLAG”. Nearly a decade later, Amman was
included as a node in two major terrestrial fibre lines
running through the region: the Regional Cable Net-
work (RCN) and the Jeddah, Amman, Damascus, Istan-
bul (JADI) line. Given Jordan’s location almost directly
in the middle of the RCN line, Amman received a capac-
ity boost and became an ideal location for a regional
IT centre. The 2530-km JADI link is the main competi-
tor with the RCN line and, by joining together existing
infrastructure, aims to create a terrestrial alternative
to the submarine cables that run under the Red Sea.
LOCAL CONNECTIVITY: At home, Jordan has made a
number of upgrades to its domestic infrastructure.
Subscribers to ADSL services – disseminated via the
copper telephone wire network over which Jordan Tele-
com Group has a monopoly – reached 198,826 in the
fourth quarter of 2013, up from 193,553 in the first
quarter. Overall internet penetration rate also rose in
2013, from 4,435,144 users (69%) in the first quarter
to 5,320,248 (73%) in the last quarter, according to the
Telecommunications Regulatory Commission (TRC).
Orange Mobile announced in late 2013 that it would
launch broadband services with maximum download
speeds of up to 100 Mbps over very-high-bit-rate dig-
ital subscriber lines and fibre-to-the-home networks.
These upgrades are currently available to residential and
corporate customers in certain districts of Amman.
LOGGING ON: The steady growth of internet penetra-
tion is a success story for the country’s ICT sector.
Between 2000 and 2013, the percentage of individu-
als with access grew from 2.6% to 73%, or about 5.3m
of the country’s roughly 6.5m people, as per TRC sta-
tistics – an encouraging figure for Jordan’s expanding
tech start-up sector (see analysis). Mobile broadband,
by far the fastest-growing access method in Jordan, con-
tinued to dominate internet subscriptions in the king-
dom in 2013, increasing from 1.12m in the first quar-
ter to 1.5m in the fourth, according to the TRC. Such
157
THE REPORT Jordan 2014
More and more IT graduates are staying in Jordan for job training
Between 2000 and 2013,
the percentage of
individuals with internet
access grew from 2.6% to
73%, or about 5.3m of the
country’s roughly 6.5m
people.
0
1.0
2.0
3.0
4.0
5.0
6.0
Internet users (m)
Q4Q3Q2Q10
15
30
45
60
75
90
Penetration (%)
Internet users & penetration, 2013
SO
UR
CE:
Jord
an T
ele
com
mu
nic
atio
ns
Re
gu
lato
ry C
om
mis
sio
n
IT OVERVIEW
dominance has come at the expense of other proto-
cols: in the last quarter of 2013, Jordan had just 386
fixed-line customers, while WiMAX, leased-line and TV-
cable lines all showed steady but moderate numbers.
GAMING: In recent years the kingdom has developed
a strong gaming community, of both developers and
players. As the country’s tech start-up sector grows,
gaming companies have diversified to emerge as one
of the region’s primary engines of platform develop-
ment. One such firm is Mixed Dimensions (MXD), found-
ed in 2009, which provides tools for platform building,
gaming companies and developers of interactive 3D
online applications, and embodies the global viewpoint
that defines many of Jordan’s tech and game start-ups.
The company’s flagship production, a 3D asset tool
called GameDraw built for the Unity gaming engine, is
used by more than 16,000 game developers in 110
countries, and MXD recently completed the prestigious
Alchemist Accelerator programme in Silicon Valley, fur-
ther entrenching its global footprint.
ATTRACTIVE DESTINATION: Ever since the local inter-
net portal Maktoob was sold to Yahoo for $175m in
2009, Jordanian tech start-ups have been building the
sector into one of the region’s most productive tech
incubators. Numerous accelerators have cropped up in
Amman to capitalise on Jordan’s potential for tech
entrepreneurship. It is not just local companies that are
taking off; many firms from around the region have come
to the kingdom to make use of the country’s central
location and excellent infrastructure. Oasis500, a tech
accelerator in the classic Silicon Valley sense of the term,
has helped grow hundreds of firms since opening in
Amman in 2011. Taking advantage of Jordan’s quality
internet infrastructure and liberal regulations, the com-
pany provides grants, as well as office space and legal
advice, to start-ups producing everything from e-com-
merce sites to cooking apps. Oasis500 provides sup-
port to both local and global firms; 20% of accelerator
participants are non-Jordanian.
GROWING PROFILE: Other initiatives are aimed at uni-
fying the local ICT industry. The Gaming Lab, an initia-
tive supported by King Abdullah II to meet the needs
of developers and companies in game design, part-
nered with mobile operator Umniah and AppCircus, an
events and online incubation platform, to host a con-
ference in early 2014. The delegates, including all of
the kingdom’s major telecoms operators, agreed on the
need for better collaboration between developers. At
the core of the conference was a new platform called
Apps 4 Amman, which has the goal of creating various
apps related to tourist attractions, restaurants, traffic
guides, cinemas, hospitals and entertainment venues,
among other things. “We all need to work together to
create an ecosystem that boosts the app industry in
Jordan,” Carles Ferreiro, co-founder and CEO of Dotopen,
a Barcelona-based mobile platform, told delegates.
“The potential for business is huge, as [in 2014] alone
trading in this industry is expected to reach $100bn.”
158
In recent years the
kingdom has developed a
strong gaming community,
and gaming companies
have diversified to emerge
as one of the region’s
primary engines of
platform development.
IT OVERVIEW
The Jordanian start-up ecosystem draws life from the
kingdom’s embrace of social networking platforms –
indeed, Jordan has a Facebook user per internet ratio
of 79%, the second-highest in MENA after Egypt.
CLOUD: The kingdom is looking to expand services and
infrastructure in several key areas of the ICT sector with
direct and indirect state assistance. To improve nation-
al cloud computing standards, in May 2014 the MoICT
collaborated with Microsoft to launch a national cloud
platform (NCP). In the first phase, state entities will be
provided with a consolidated data centre powered by
cloud technologies and located in the National Infor-
mation Technology Centre, linking more than 90 state
entities over a private network. Later phases will use
the platform as a virtual data centre for start-ups and
small and medium-sized enterprises (SMEs). “The launch
of a consolidated data centre powered by cloud com-
puting services is part of several steps we have recent-
ly taken to help the government enhance performance
levels, as well as to support the e-governance pro-
gramme,” Azzam Sleit, the minister of ICT, told the press
at the announcement of the partnership. The MoICT
reckons that the NCP will lower costs and operational
expenses by 15-20% during its first year of operation
and by 40-45% in later years.
E-SOLUTIONS: The deployment of the NCP signals a
willingness by Jordan to tackle a long-standing issue in
the country’s IT sector: the ease and availability of plat-
forms for e-commerce. To help facilitate growth in the
country’s tech start-ups, the kingdom needs new plat-
forms for e-commerce, such as the ability to pay for
applications through mobile providers. According to
Oasis500, e-commerce in the kingdom suffers from a
lack of platforms, leading to lower demand and keep-
ing the preferred payment method for goods purchased
online as cash on delivery. Jordan’s internet users spent
an estimated $370m on products, services and online
bill payments in 2011, a 92% increase from $192m in
2010, according to Arab Advisors Group. “Internet trans-
actions and paying online for apps is an issue in Jor-
dan,” Abdelmajeed Shamlawi, CEO of int@j, told a recent
conference of developers in Amman. “People do not
trust online payments and this is relevant for the entire
Arab region.” The potential market for e-commerce in
Jordan is enormous: estimates indicate that by the end
of 2016, the volume of e-commerce in the MENA region
will amount to $16bn, according to a 2012 index com-
piled by AT Kearney, a consulting group.
The kingdom is also looking to e-commerce plat-
forms for the introduction of e-education. One such
project, slated for 2014, is a three-year partnership
with Barcelona’s Universitat Oberta de Catalunya, with
the aim of developing education standards through a
range of e-learning initiatives.
In 2012 the Ministry of Health signed a deal with the
Hakeen e-health programme for a digitised database
of health records. With more than 30 public hospitals
and about 700 health centres in the country, the imple-
mentation of the agreement over the next seven years
will be a big step forward in Jordan’s plans to build up
its e-health standards and connect the public system.
OUTLOOK: With ICT among its fastest growing indus-
tries, the country has seen its tech start-up ecosystem
emerge as a regional leader ever since the sale of Mak-
toob to Yahoo in 2009. Liberal regulation and state-fund-
ed initiatives aimed at keeping talent in Jordan will help
grow the industry into one of the permanent engines
of the economy. “IT is not at all saturated,” Mohammed
Helal, Dell’s country manager for Jordan and the Lev-
ant. “There will be very tangible growth in areas like
mobile apps and localisation, where Jordan can serve
as a staging ground for the rest of the Middle East.”
With its ICT infrastructure already healthy compared
to other countries in the region, initiatives such as NBN
(see Telecoms overview) will more deeply entrench its
ability to give developers the support they need, while
other upgrades will form the framework for further
developments in segments of the IT sector, such as e-
health, e-commerce and e-learning. At stake for Jor-
dan is its own success in churning out and retaining
highly talented developers. Additional tech accelera-
tors, such as Amman’s Oasis500, should go far in estab-
lishing a tech culture that is already one of the most
attractive in MENA for developers, and thus help curb
brain drain to the Gulf. Given its central location and
advanced infrastructure, the kingdom is well positioned
to retain a fair slice of the IT market in the region and
build its credentials in the international IT community.
159
THE REPORT Jordan 2014
New platforms for e-commerce and e-education are being launched
In May 2014 the Ministry of
ICT collaborated to launch
a national cloud platform,
which in its first phase will
provide a consolidated data
centre linking more than 90
state entities.
SOURCE: Jordan Telecommunications Regulatory Commission
Q1 Q2 Q3 Q4
Dial-up 588 685 593 386
ADSL 193,553 191,503 196,068 198,826
WiMAX 109,125 103,184 115,192 122,850
Leased line 1204 1381 1412 1535
TV-cable 3750 4206 4636 5171
Mobile broadband 812,717 988,774 1,064,345 1,173,856
Total 1,120,937 1,289,733 1,382,246 1,502,624
Penetration (%) 17.4 19 20.7 21
Internet subscriptions by connection type, 2013
IT ANALYSIS
The tech start-up sector in Jordan has grown into an IT ecosystem
One of Jordan’s greatest strengths in the information
and communications technology (ICT) sector is the
availability of educated and skilled human capital. Giv-
en the country’s increasingly strong educational stan-
dards in ICT, low start-up costs and friendly business
environment, Jordan’s expanding start-up sector is
helping to position the kingdom as a leading location
for tech entrepreneurship in the Middle East.
REGIONAL PIONEER:The country has long been known
for its strong gaming and media companies. Indeed,
three-quarters of global online Arabic content is cur-
rently developed in Jordan, according to the Geneva-
based International Telecommunication Union. Over
the past several years, the kingdom has been home to
an attractive and growing tech start-up ecosystem,
which has taken advantage of the country’s central
location and political stability to harness the growth in
regional tech entrepreneurship from Cairo to Gaza City.
After the Jordanian internet portal Maktoob was sold
to Yahoo for $175m in 2009, the kingdom earned the
title of Silicon Wadi (wadi being Arabic for “valley”).
The sale of Maktoob demonstrated the potential for
the local ICT sector, and soon a handful of start-up
incubators cropped up in Amman designed to help fos-
ter the next big idea in the tech start-up world. Lead-
ing the pack is Oasis500, the Arab world’s first and
largest tech start-up incubator. With roughly $7m in ven-
ture capital funding, the company, launched in 2011,
is a tech accelerator modelled after those that have
helped to build the tech industry in Silicon Valley.
At the heart of Oasis500’s operating model is a pro-
gramme that grants roughly $30,000 in funding to new
tech companies. The funding is made up of cash pay-
ments, which are disbursed alongside services such as
office space and legal advice. Nearly half of the grad-
uates of the programme have found further funding,
and many are still in business. Oasis500 says it sifts
through more than 350 applications a month, and
by 2015, the group aims to train and fund at least 500
ideas and start-ups in the Middle East and North Africa.
INCENTIVISING ACTIVITY: Export revenues for the IT
sector totalled $324.44m in 2013, but some experts
worry that the industry reached a crossroads during
the peak years of 2008-09. The ICT sector’s chief advo-
cacy arm, the Information Technology Association of
Jordan (int@j), is looking to boost its skills development
programme, as well as increase investment channels
into Jordan. The association also regularly conducts
conferences around the world aimed at raising the pro-
file of Jordan’s ICT and start-up sector.
Further advancements in the availability of high-
quality and ultra-fast broadband and mobile internet
are helping to entrench the kingdom’s reputation as a
force in the Middle Eastern start-up community. The
capital, Amman, is planning a $1bn telecoms, media and
technology (TMT) space in the Naour suburb – an idea
that dates back to 2008 but was put on hold due to
budget cuts and the global financial crisis. Once com-
plete, the TMT space will feature offices, conference
halls, research and development facilities, training cen-
tres and ICT company headquarters, spread across an
area of 240,642 sq metres.
RETAINING TALENT: As a leader in online Arabic con-
tent and an incubator for many of the region’s most
successful tech start-ups, Jordan’s greatest challenge
in the sector is the flight of young and talented tech
entrepreneurs to the West or the Gulf. “We have the
human capital, but the departure of many of our most
talented developers to the Gulf has hit the industry par-
ticularly hard,” Ziad Al Farekh, CEO of Semantic Intelli-
gent Technologies, a local IT solutions group, told OBG.
“However, we are noticing that given the quality of the
start-up ecosystem in Jordan, we are seeing some devel-
opers return. Our goal is to make sure that we can keep
Jordanian developers at home.” Continued state invest-
ment in the sector, such as the TMT project in Amman,
will translate into better infrastructure for Jordan’s tech
start-up industry. Jordan’s high output of Arabic con-
tent and the continued growth of start-ups look set
to bolster its reputation as a centre for IT development.
Export revenues for the IT
sector totalled $324.44m in
2013, but some experts
worry that the industry
reached a crossroads
during the peak years of
2008-09.
Amman is planning a $1bn
telecoms, media and
technology space in the
Naour suburb that will
feature offices, conference
halls, research and
development facilities,
training centres and ICT
firm headquarters, spread
over 240,642 sq metres.
160
Tech heavyweightIncentives for start-ups prove a boon for long-term growth
www.oxfordbusinessgroup.com/country/Jordan
161
HealthPrivate sector taking on an increasing role in health care
Medical tourism growing with 255,000 patients in 2013
The lack of a medical liability law remains a concern
Fixed prices and rising costs mean thin margins
HEALTH OVERVIEW
State health care spending accounted for 63.1% of the total in 2012
Rising health expenditure and Jordan’s status as the lead-
ing medical tourism destination in the Middle East are
helping to drive expansion in the kingdom’s private
hospital segment, which also benefits from the avail-
ability of well-trained medical staff and comparatively
low treatment fees. Challenges include rising operat-
ing costs – in particular electricity bills – as well as the
absence of medical liability legislation.
STRUCTURE: There were 106 hospitals, 435 childhood
support centres and 700 health centres, with an aver-
age of 21.5 beds per 10,000 people as of 2013, accord-
ing to the Private Hospitals Association (PHA). Of the
hospitals, 32 were Ministry of Health (MoH) facilities,
nine belonged to the Royal Jordanian Medical Servic-
es (the military’s health care services), two were uni-
versity hospitals and 63 were private. According to the
MoH, the number of hospital beds in 2012 stood at
12,106, up from 11,991 in 2011 and 11,029 in 2007.
Of these, 4612 were in MoH hospitals, 3453 in other
state hospitals and 4041 in private hospitals.
HEALTH SPEND: Jordan’s health care expenditure stood
at around $2.45bn in 2012, based on World Bank fig-
ures. As a proportion of GDP, spending totalled 9.8% in
2012 – a high figure by regional standards when com-
pared to Saudi Arabia’s 3.2%, Iraq’s 3.6% and Lebanon’s
7.6%. Health spend per capita was $388 in 2012, up from
$252 in 2007. According to the World Bank, govern-
ment health spending has risen substantially in recent
years, from just over 12% of total spending in the mid-
2000s to 17.8% in 2012; however, this was down from
a peak of 19.5% in 2010. Government spending on
health care accounted for 63.1% of total health expen-
diture in 2012, though this figure has varied significant-
ly over the past decade and fallen in recent years.
COVERAGE & INSURANCE: According to the “Jordan
National Health Accounts 2010-11” report, published
in July 2013 by the High Health Council (HHC), 87.5%
of Jordanians had health insurance as of 2011, includ-
ing 6% with more than one form of coverage. A total
of 42% of the population has coverage from the Civil
Health Insurance Programme, which mainly covers gov-
ernment workers and their dependents, 27% have mil-
itary-provided insurance and 9% have private coverage.
The UN Relief and Works Agency (UNRWA) also pro-
vides health insurance to Palestinian refugees, though
this is limited in scope. In addition, the Royal Court con-
tributes toward medical treatment costs for uninsured
Jordanians who are categorised as “unable to pay”. The
HHC has been mandated with expanding health insur-
ance uptake and adopted a roadmap to achieve com-
prehensive coverage. “There should be universal health
coverage for all Jordanians within three to five years,”
Hani Brosk Kurdi, HHC’s secretary-general, told OBG.
Government-provided insurance typically only cov-
ers treatment in state-run facilities, where treatment
is heavily subsidised; however, there are agreements in
place for the transfer of patients to private hospitals
under a range of circumstances, including when state
hospitals are at capacity or if the state sector is unable
to provide the required treatment. Patients with so-
called first-class state insurance automatically receive
private treatment. The cost of government referrals to
private hospitals was about $124m in 2012, up sharply
due to increased pressure on MoH facilities as a result
of the influx of large numbers of Syrian refugees. Health
facilities are also stretched to their limits, especially in
the north where refugee numbers outweigh locals in
certain areas such as Mufraq.
Private medical insurance premiums totalled JD117.7m
($166.26m) in 2012, up 11% in nominal terms, while
paid claims stood at JD105m ($148.32m), up 7%. Most
private health care expenditure – 77.3% according to
World Bank data – remains out-of-pocket, though the
World Health Organisation (WHO) suggests that this
figure has fallen as a proportion of total spending in
recent years, from 41.6% in 2007 to 24.7% in 2012.
STATE SECTOR: In addition to hospitals, as of 2012 the
MoH operated 1502 health centres, including 464 pri-
mary and comprehensive health centres and 384 den-
tal clinics. It employed 13,075 medical staff in 2012,
There were 106 hospitals,
435 childhood support
centres and 700 health
centres as of 2013,
according to the Private
Hospitals Association. Of Of
the hospitals, 32 were
Ministry of Health facilities,
nine belonged to the Royal
Jordanian Medical Services,
two were university
hospitals and 63 were
private.
163
THE REPORT Jordan 2014
A healthy investmentLimited government resources are driving expansion of the privatehealth care system
Total health care
expenditure stood at
around $2.45bn in 2012,
equal to 9.8% of GDP.
Health spend per capita
was $388 in 2012, up from
$252 in 2007.
HEALTH OVERVIEW
up from 9758 in 2007, including 4241 physicians (up
from 3702 in 2007) and 6302 nurses (up from 4139).
The largest MoH hospital, which is also the country’s
largest hospital, is Al Bashir Hospital in Amman. Recent
projects and expansions in the state sector include the
addition of two new floors at Prince Hashem Military
Hospital in Zarqa in February 2014, adding 114 beds
and six new operating theatres. Also in February, the
University of Jordan Hospital opened a new psychother-
apy and psychiatry unit specialising in the treatment
of post-traumatic stress disorder.
The MoH directly controls most of its hospitals, with
high-level MoH officials responsible for setting budg-
ets and recruiting staff. It has been experimenting with
other management models such as granting Prince
Hamzah Hospital in Amman autonomy over its budg-
ets and operations since 2009; however, the ministry
does not appear keen to extend the model to other hos-
pitals. Meanwhile, Prince Khaled Hospital in Amman,
which opened in 2006, has operated under a special
arrangement since 2008 that allows it to bring in doc-
tors from the private sector and from military hospi-
tals to conduct medical procedures. No other MoH
hospitals are allowed to do this at present.
EXPANDING PRIVATE SECTOR: Most private hospitals
are located in Amman, though there are six in Irbid, four
in Zarqa and small numbers in several other cities. The
segment is currently witnessing a wave of expansion,
driven by the need for additional capacity. “The private
sector is short of at least 1000 beds,” said Dr Awni Al
Bashir, president of the Arabian Medical Relief Socie-
ty, an NGO that provides health care to Syrian refugees.
“Most hospitals are expanding and two or three new
ones should open between now and 2016,” said Abdal-
lah Al Hindawi, CEO of the PHA.
The planned new facilities include the Royal Hospi-
tal and Gardens Hospital, both of which are under con-
struction in Amman. Hospitals seeking to expand their
existing facilities include Istishari Hospital, which
launched in 2006 and is the newest private hospital. It
intends to build on land adjacent to its existing site in
west Amman within the next three years. “We want to
expand because on top of natural population growth,
the population of Jordan grows exponentially with every
regional crisis. Furthermore, in addition to the arrival
of refugees, such crises also typically result in large
influxes of medical tourists,” said Zahira M Haram, chief
marketing and experience officer at the hospital.
Meanwhile, Al Essra Hospital is set to start work on
two new towers towards the end of 2014, with the aim
of increasing capacity by 100 beds, at a cost of around
JD5m ($7.06m). Dr Nael Al Masalha, Al Essra’s chairman
and director-general, told OBG that the project will
take about two years to complete and is aimed prima-
rily at meeting the demand of medical tourists.
Other examples include the planned expansion of
Shmaisani Hospital from 81 beds to 96 by August 2014
by adding a new floor and a JD3m ($4.24m) extension
at the Speciality Eye Hospital completed in early 2014.
Most of the development is taking place in Amman,
where the private hospitals are concentrated. Expan-
sion to other parts of the country is limited by staffing
concerns. “Aqaba could attract large numbers of patients
from Saudi Arabia,” said Al Hindawi. “However, the chal-
lenge is to get good doctors to work in the city.” Nev-
ertheless, it is seeing investor interest: in late March
2014 real estate developer Al Maabar signed a mem-
orandum of understanding with MIS Solutions to estab-
lish a minimally invasive surgery centre as part of the
second phase of its Marsa Zayed project in Aqaba.
Foreign-backed hospitals in Amman include the Arab
Medical Centre and Istiqlal Hospital. Most private hos-
pitals are owned by local investors, but industry play-
ers say there is growing interest from abroad. “Jordan
is starting to receive enquiries from Gulf investors in
particular, for example from Kuwait and Bahrain,” said
Mohmoud Sarhan, CEO of the Arab Medical Centre.
PRICING & COSTS: Prices in the sector are capped by
the MoH, which provides a price list for hospital facil-
ities such as rooms and food, and also by the Jordan
Medical Association (a doctors’ trade union), which
determines prices for treatment-related costs such as
operations, diagnostic tests and physicians’ salaries.
Private hospital operators complain that prices have not
risen for several years. “Margins are thin as prices are
fixed and do not rise with increasing costs such as
salaries and electricity prices,” said Sarhan. Hospital
administrators say that electricity prices are a partic-
ular challenge for the sector, with energy bills account-
ing for about 20% of operating costs, according to the
PHA. “The price of electricity has risen from roughly 113
fils ($0.11) per KWh in 2011 to around 250 fils ($0.35)
today,” said Al Hindawi. Sector players say they should
receive the same preferential price as that given to
hotels, which currently stands at about 170 fils ($0.24).
The PHA has launched a project to establish a pho-
tovoltaic (PV) solar plant that will generate power for
its members. According to a feasibility study, the plant
could provide electricity at about 120 fils ($0.16) per
KWh and could supply member hospitals with 70-80%
of their needs. However, regulatory barriers are hold-
164
The sector benefits from the availability of well-trained physicians
Most private hospitals are
located in Amman, though
there are six in Irbid, four in
Zarqa and small numbers in
several other cities. The
segment is currently
witnessing a wave of
expansion, driven by the
need for additional
capacity.
www.oxfordbusinessgroup.com/country/Jordan
Prices in the sector are
capped by the MoH, which
provides a price list for
hospital facilities such as
rooms and food, and by the
Jordan Medical Association,
which determines prices
for things like operations,
diagnostic tests and
physicians’ salaries.
HEALTH OVERVIEW
ing the project up. “Everything is in place but we have
yet to receive final approval from the Ministry of Ener-
gy and Mineral Resources,” said Al Hindawi.
MEDICAL TOURISM: Jordan is the leading medical
tourism destination in the Middle East in terms of vis-
itor numbers. According to Al Hindawi, around 255,000
foreign patients came for treatment in 2013, up from
240,000 in 2012, when total revenues were $1bn and
tourists accounted for about 23% of the patients treat-
ed in hospitals. Visitor numbers have been steadily
growing from 180,000 in 2009, and Jordan recently
was recognised as the “Best Medical Tourism Destina-
tion 2014” during the International Medical Tourism
Journal travel awards ceremony. “Our thriving medical
tourism segment is a direct consequence of King Hus-
sein’s policies of educating our brightest minds abroad
and establishing a strong culture of medicine at home,”
Dr Hassib Sahyoun, CEO of Med Labs, told OBG.
Most medical tourists are from Arab countries such
as Libya, Yemen, Sudan and Iraq. In recent years Libyans
– whose numbers spiked following the country’s 2011
civil war – have led the field, constituting 30% of for-
eign patients. “Libyans have a long history of coming
to Jordan for treatment and are likely to continue to do
so for at least the next 10 years,” said Al Masalha.
The country is also popular as a medical tourism des-
tination with Iraqis; however, getting visas is more dif-
ficult for them. “We have been lobbying for a relaxation
of the visa requirements for a long time, but so far we
have not seen any indication of change,” said Al Masal-
ha. “Patients often want to bring their families but can
rarely get visas to do so.” Hospitals also cite similar
problems with visas for Sudanese patients.
According to the PHA, the leading fields of treatment
for medical tourism include cardiovascular procedures,
orthopaedics, cancer treatment, treatment for eye
conditions and fertility treatment. Foreigners also come
for transplants, provided they have a family donor in
place. “Jordan is very advanced in areas such as car-
diac, liver and kidney transplants, and the costs are
much lower than those in the US and even in regional
competitors such as Israel and Turkey,” said Al Hindawi.
Another advantage is accreditation: 10 hospitals have
international accreditation from the Joint Commission
International, while 17, in addition to 42 primary health
care centres and five breast imaging units, are locally
accredited by the Health Care Accreditation Council.
“The Jordanian health sector is highly sophisticated
compared to the rest of the region. It is comparable to
international standards in many areas and is much
cheaper,” said Dr Mazen Albashir, chairman and CEO of
Istishari Hospital, adding that he believed Jordan could
definitely become a medical tourism destination for
Europeans – though the lack of a medical liability law
negatively affects its ability to attract medical tourists.
The PHA is currently working on a strategy to boost
medical tourist numbers to 280,000-300,000 by 2018.
To achieve this it is targeting new markets, among them
165
Jordan is the leading
medical tourism
destination in the Middle
East in terms of visitor
numbers. Around 255,000
foreign patients came for
treatment in 2013, up from
240,000 in 2012 and
180,000 in 2009.
HEALTH OVERVIEW
Algeria; Al Hindawi told OBG that the PHA hoped to sign
an agreement with the Algerian Ministry of Labour to
send patients to Jordan in second-half 2014. Speaking
to OBG in April 2014, Dr Zuhair Abu Faris, president of
the Jordan Hospitals Association (which represents
state and private hospitals) said it was also targeting
Algeria. “Algeria could be a major market. The Algerian
government has a high opinion of health care in Jor-
dan, and Algerians do not require a visa,” he told OBG.
Jordan currently faces relatively little competition
from other Arab countries and has key advantages over
competitors for Arab patients. “The health sector in the
Gulf is expanding but so far it hasn’t posed a threat to
Jordan,” said Haram. “The main competition for Jordan
is Iran, India and Turkey, all of which attract a lot of Arab
patients,” said Abu Faris. “However, Jordan has an advan-
tage in terms of language and similar culture, and treat-
ment is cheaper than in Turkey, for example.”
Dr Amid Abdelnour, CEO of Biolab, told OBG, “Jordan-
ian health care is in a good place, but we will need to
ramp up education and competitiveness again in order
to remain ahead relative to the rest of the region.”
Hospitals are also looking further afield. “Nigeria is
also a good market but obtaining visas is difficult,” said
Al Hindawi. “The Commonwealth of Independent States
also has potential as a result of our shared Islamic cul-
ture and the fact that many Jordanian doctors speak
Russian. There are few direct flights but we are in dis-
cussions with airlines to launch weekly charter flights.”
GROWTH AREAS: Most foreign patients come for non-
elective treatments and operations; however, some
elective procedures are growing in popularity. “Bariatric
surgery is a growing market and is very successful,”
said Sarhan. Dr Khaled Kaznakatbi, vice-chairman of the
board of directors at Shmaisani Hospital, which carries
out more bariatric surgical procedures than any other
operation, told OBG it became popular three years ago
and most patients come from the Gulf, especially Qatar.
“The procedure is available in the Gulf, but treatment
here is cheaper and service is better,” he told OBG.
Cosmetic surgery is also becoming more popular.
Indeed, the owners of the private Eye Speciality Hos-
pital are planning to open a new facility – to be known
as Ishtar Hospital – within two to three years that will
specialise in cosmetic surgery. Dr MS Noor, chairman
of the board of directors at the hospital, told OBG that
construction should begin in August or September
2014 at a cost of JD20m ($28.25m).
“Jordan cannot rival Lebanon for cosmetic surgery,
as the field there is already very well established; how-
ever, Jordan has an advantage in that many patients
come here for other forms of treatment, some of whom
may decide to also undergo a cosmetic procedure dur-
ing their stay,” Noor said. Stability is another important
factor that enhances Jordan’s competitive edge.
POLICY & REGULATION: The HHC is responsible for
designing health policy, while the MoH regulates, licens-
es and monitors institutions and professionals. One
regulatory issue that private hospitals argue needs to
be addressed is medical liability, for which there is cur-
rently no legislation. “Work on a draft law began around
10 years ago, but it has yet to be discussed by Parlia-
ment. The issue is very important, in particular as regards
foreign patients, as some international insurers – espe-
cially those from the US, Europe and Russia – refuse to
sign agreements with Jordanian hospitals because of
the lack of a law,” said Al Masalha.
WORKFORCE ISSUES: The sector benefits from the
availability of well-trained physicians. “There is a strong
pool of doctors in both the public and private sector,”
said Haram. “Some of the medical schools here are
very good; furthermore, many of the doctors that grad-
uate from them tend to go to prestigious universities
abroad for training, and most of them return to work
in Jordan.” Private hospitals say they have few problems
recruiting well-qualified doctors; however, MoH hos-
pitals – which usually pay less – have shortages in some
areas, in particular specialised forms of surgery, and Min-
ister of Health Ali Hiasat in December 2013 said state-
run hospitals were seeking an additional 600 physicians.
Another issue is a shortage of nurses. “Nurses tend
to train in Jordan and then move to the Gulf, where they
can command higher salaries,” said Haram. “The prob-
lem is getting worse as Jordan can’t compete on pay,”
said Sarhan. The problem is particularly acute in the
private sector. Hospitals were previously allowed to
employ Filipino nurses; however, industry figures say
this permission was withdrawn as a result of pressure
from nursing unions. “We are trying to reach an agree-
ment with the government to allow us to employ for-
eigners in 10% of nursing positions,” said Al Hindawi.
The problem is exacerbated by the influx of Syrian
refugees who are increasing demand on the sector.
OUTLOOK: The prospects for bringing in more med-
ical tourists from Western countries will depend in part
on whether Jordan can pass a medical liability law, and
reining in high costs will hinge on factors such as gov-
ernment approval for the establishment of the PHA’s
planned PV plant. Nevertheless, the outlook for the sec-
tor appears strong and it is set to attract more investor
interest. “Private hospitals in Jordan represent a gold-
en investment opportunity because of factors such as
the country’s growing population and the government’s
lack of resources to build new hospitals,” said Noor.
166
The High Health Council is
responsible for designing
health policy, while the
Ministry of Health
regulates, licenses and
monitors institutions and
professionals.
www.oxfordbusinessgroup.com/country/Jordan
0
2
4
6
8
10
12As % of GDP
201220112010200920080
4
8
12
16
20
24
Public spend as % of total gov't spend
Health expenditure, 2008-12
SOU
RCE:
Wor
ld B
ank
167
EducationLiteracy rates and school attendance levels are high
Efforts are under way to promote entrepreneurialism
Local universities are popular with foreign students
Boosting spending on R&D is a government priority
EDUCATION OVERVIEW
There were 268,150 students enrolled in local universities in 2012/13
Literacy rates and school attendance are high in Jor-
dan thanks to a cultural emphasis on education. Near-
ly half of those old enough to go to university are
enrolled in them. Spending on research as a propor-
tion of GDP is also very high by regional standards.
Jordan’s universities have a good reputation in the
region and a substantial proportion of their students
come from other parts of Middle East, especially at
private universities. Challenges in the sector include
overcrowding in state universities and issues related
to politicised appointments and admissions policies.
PRIMARY & SECONDARY EDUCATION: Education
in Jordan consists of (optional) pre-school and kinder-
garten, compulsory “basic” education (which is 10
years in duration and is provided for free in govern-
ment schools), an optional secondary level of two
additional years and higher education. The Ministry
of Education (MoE) is responsible for overseeing the
kindergarten, basic and secondary sectors, as well as
managing its own schools. Its total spending in 2012
stood at JD758.9m ($1.07bn), of which 77.8% went to
basic education and 11.1% to secondary education,
while most of the remainder went towards adminis-
tration and vocational education.
MoE figures put the total number of schools in the
2012/13 academic year at 6355, up from 6172 in
2011/12. Of these, 3582 were state schools, 2600
were private (1542, or 59.3% of all private schools,
were kindergartens) and 173 were operated by the
UN Relief and Works Agency (UNRWA), which provides
services to Palestinian refugees. Of the total number
of schools, 1544 were kindergartens (consisting almost
entirely of private institutions), 3303 were basic schools
(2303 of which were government schools and 828 of
which were private, with the remainder belonging to
UNRWA) and 1508 were secondary schools (the vast
majority of which – 1243 – were government schools).
The total number of school teachers stood at
110,013 in 2012/13, up from 106,403 the previous
year. Of them, 76,761 were employed in state schools,
28,823 in private schools and 4429 in UNRWA schools,
according to the MoE. There were 1.73m students
enrolled the same year (1.18m in government schools,
424,999 in private schools and 112,838 in UNRWA
schools). The student-to-teacher ratio stood at 15.57
in MoE schools and 14.75 in private schools.
REFORM: In 2003 the government, with the support
of the World Bank and other donors, launched the
$380m Education Reform for the Knowledge Econo-
my (ERfKE) programme, aimed at ensuring that Jor-
danian children are provided with the necessary skills
to participate in a knowledge-based economy during
the course of their pre-tertiary education. The pro-
ject’s first phase, which included modernising curric-
ula and exams, computer training and building new
schools, was completed in 2009. The following year
saw the launch of a second phase, ERfKE II, which is
due to run until the end of 2015, at a cost of $408m.
Key aspects of ERfKE II include increasing access to
early childhood education, special education and
vocational education, as well as improving the design,
construction, equipment and maintenance of schools.
OUTCOMES: Basic educational outcomes in Jordan
are good, in particular when compared to similar
economies. Up to 93% of children were enrolled in pri-
mary school in 2011, the latest year for which such
data is available from the World Bank, and the over-
whelming majority – 88% – of secondary school-aged
children were enrolled in secondary school, despite
its optional status. The adult literacy rate stood at
93% in 2011 and 96% in 2012, according to the World
Bank, significantly higher than in neighbouring coun-
tries such as Iraq (78% in 2011), Syria (84% in 2011)
and Saudi Arabia (87% in 2011).
However, educators say that while the quality of
teaching in schools is good, further improvements
are needed despite the changes introduced by reform
programmes such as ERfKE. “Science teaching in par-
ticular is good; however, there is still too much of a
focus in schools on memorisation and knowledge of
Ministry of Education
figures put the total
number of schools in the
2012/13 academic year at
6355, up from 6172 in
2011/12. Of these, 3582
were state schools, 2600
were private and 173 were
operated by the UN Relief
and Works Agency, which
provides services to
Palestinian refugees.
168
A focus on learningEnrolment is high across the board, from the primary through thetertiary levels
www.oxfordbusinessgroup.com/country/Jordan
EDUCATION OVERVIEW
facts over innovation, application and the develop-
ment of analytical skills,” said Issa Batarseh, president
of Princess Sumaya University for Technology (PSUT).
INFRASTRUCTURE UNDER PRESSURE: As with
other public services such as health, the arrival of
large numbers of refugees in the country since 2011
due to the violence in neighbouring Syria, following
a previous influx of Iraqis, is straining the school sys-
tem. At the start of 2014 the number of Syrian chil-
dren enrolled in schools in the kingdom stood at over
120,000 and was expected to rise to 200,000 by the
beginning of 2015 (equivalent to about 10% of the
total number of students in Jordan), costing the gov-
ernment JD400m ($565.04m) per year.
Some schools have adopted a two-shift system to
cope, separating students into morning and after-
noon groups, although the authorities are trying to
minimise this given its negative impact on the quali-
ty of education. Currently, more than 45,000 Syrian
students are enrolled in the two-shift systems.
Donors are providing some support to help the
kingdom bear the additional costs as well. For exam-
ple, in January 2014 the EU agreed to provide €30m
of aid to help cover educational costs for refugee
children, following a previous donation of €33m for
the same purpose. Donors are also supporting the edu-
cation sector more generally; for example, in addition
to aid from the World Bank and other donors for the
ERfKE programme, in December 2013 the US Agency
for International Development agreed to provide Jor-
dan with $213m over five years to build new schools
and expand and rehabilitate existing facilities. How-
ever, the level of support still does not meet the
increased demands; UNICEF, for example, only received
$17.07m by July 2014 for educational services for Syr-
ian refugees out of $42.46m needed.
HIGHER EDUCATION: There are currently 10 pub-
lic and 19 private universities. According to figures from
the Ministry of Higher Education and Scientific
Research (MoHE), there were a total of 268,150 stu-
dents enrolled in Jordanian universities during the
2012/13 academic year, including 201,495 students
in public universities and 66,655 in the private sec-
tor. Just over half of all students were female, 249,432
were undergraduates, 13,988 were studying for a
master’s degree, 2349 were PhD students and 2381
were seeking a higher diploma.
The largest university in terms of numbers of under-
graduates in the 2012/2013 academic year was the
University of Jordan in Amman with 37,980 students,
followed by Yarmouk University in Irbid with 35,029
students and Al Balqa Applied University in Salt with
33,360 students. All three institutions are public. New-
er universities include the state-backed German Jor-
danian University in Amman, which was established
in 2005 as the result of an agreement between the
MoHE and Germany’s Federal Ministry of Education
and Research, and which offers Germany’s applied sci-
ences model of education.
Although most universities are general institutions
providing a wide range of degrees, a number of oth-
er specialised universities also exist, including PSUT,
which is primarily focused on information and com-
munications technology (ICT) and electronics, and
which is owned by the country’s Royal Scientific Soci-
ety (RSS) and the state-run Jordan University for Sci-
ence and Technology (JUST).
The most popular degree subject for undergradu-
ates in 2012/13 was commercial and business admin-
istration, with 62,799 students enrolled, followed by
engineering with 41,164 students, and mathematics
and computer sciences with 20,491 students. “Sub-
jects such as engineering are popular amongst appli-
cants as they are high-paying specialisations and jobs
are available, with regional construction drives and
projects such as the World Cup in Qatar boosting
demand for graduates,” said Mohammad Amin Mah-
moud Awwad, president of Philadelphia University.
FOREIGN STUDENTS: Jordanian universities are pop-
ular with students from elsewhere in the region. “Jor-
dan has a rich academic tradition, which is why we
see so many students from the region come to study
here,” Abdallah Husein Malkawi, president of JUST, told
OBG. In the 2012/13 academic year, 28,273 non-Jor-
danians were enrolled in undergraduate degrees with-
in the country, according to MoHE data, accounting
for around 11% of total undergraduates. The largest
source of students was Palestine, at 7465, followed
by Iraq with 3165, Syria with 2946 and Saudi Arabia
with 2826. JUST had the most foreign students by far,
5167, likely as a result of its comparatively strong
international ranking (see analysis), followed by the
University of Jordan with 2692.
Regional competition for foreign students is set to
increase but is unlikely to undermine Jordan’s attrac-
tiveness. “Jordan has been well known for the high qual-
ity of its universities for a long time,” said Awwad.
“There is now increasing competition in the region,
with good universities being established in the Gulf,
for example. However, students from other Arab coun-
tries will continue to come here, as they like the high
quality of academic provision, the climate and the
less restrictive atmosphere.”
HIGH ENROLMENT: Jordanian society puts a strong
emphasis on the importance of education. Batarseh
said that this is in part a result of the country’s his-
tory and the inflow of refugees in particular. “Pales-
tinians have been driven by a feeling of justice to seek
out education and this focus on learning has become
part of Jordanian culture as a whole,” he told OBG.
As a result, levels of university enrolment are high;
the gross tertiary enrolment ratio in 2012 stood at
169
THE REPORT Jordan 2014
As with other public
services, the arrival of large
numbers of refugees in the
country since 2011 is
straining the school system.
At the start of 2014 the
number of Syrian children
enrolled in schools in the
kingdom stood at over
120,000 and was expected
to rise to 200,000 by the
beginning of 2015.
There are 10 public and 19
private universities. In
2012/13 there were
201,495 students in public
institutions and 66,655 in
private ones. Just over half
of all students were female,
249,432 were
undergraduates, 13,988
were studying for a
master’s degree and 2349
were PhD students. SOURCE: Ministry of Education
2008/09 2009/10 2010/11 2011/12 2012/13
MoE 65,170 69,693 71,181 73,613 75,401
Other govt 1330 1172 1332 1478 1360
Private 23,356 24,079 25,627 26,855 28,823
UNRWA 4370 4505 4493 4457 4429
Total 94,226 99,449 102,633 106,403 110,013
Teachers by school type, 2008-13
EDUCATION OVERVIEW
4507 per 100,000 people, slightly higher than Jordan’s
much wealthier neighbour, Saudi Arabia, and well
above levels in Syria and Iraq, according to data from
the UNESCO Institute of Statistics. The gross enrol-
ment ratio – that is, the number of students enrolled
in university as a proportion of the university-aged pop-
ulation – stood at 44.5%, a level only slightly below
Saudi Arabia’s (at 50.9%) and, again, well above many
other countries in the region, including some Gulf
states (though the issue is complicated by factors
such as migration and students studying abroad).
While positive overall, Jordan’s cultural drive to send
as many students as possible to university has put pres-
sure on resources. “A large proportion of high school
graduates go on to university in Jordan, the downside
of which is very high student population sizes at uni-
versities,” said Batarseh.
“There is substantial pressure on infrastructure in
government institutions in particular,” said Awwad.
“Furthermore, education is expensive and Jordan lacks
resources,” he told OBG. “Some of the pressure could
be alleviated by an increased focus on community
colleges and shorter degrees, and the MoHE is cur-
rently thinking along those lines; blended education
with reduced class time and use of commoditised
materials such as standardised textbooks and record-
ed lectures is also likely to be part of the answer.”
REGULATION & LEADERSHIP: The university sec-
tor is regulated by the 2009 Higher Education and Sci-
entific Research Law, which replaced a law of the
same name from 2005. The MoHE is responsible for
the supervision of the tertiary sector and the man-
agement of state universities. The Higher Education
Council, which is presided over by the minister for high-
er education and scientific research and whose mem-
bers are mostly academics specialised in education,
sets policy in relation to tertiary education and is also
responsible for approving new universities, supervis-
ing existing ones, approving courses and recommend-
ing candidates to serve as university presidents in the
state sector, amongst other duties.
Prominent figures in the field complain that politi-
cised appointments are a significant problem in uni-
versities. “All of the problems in universities go back
to governance. Politics and personal alliances should
not decide the appointment of university presidents,”
said Batarseh, adding that this has led to inappropri-
ate candidates being selected in some cases.
He said that as a partial result of poor choices, uni-
versity presidents also often do not focus on the cor-
rect issues to develop their institutions. “University
presidents need to focus more on developmental
issues such as partnerships with industry, fundrais-
ing, developing new degrees and so on. At the moment
they behave more like vice-rectors and provosts, con-
centrating on issues such as the academic content
of particular programmes.”
Student admissions are another area of contention.
“There is a need to ensure that students admitted to
university are let in for the right reasons and have the
necessary capabilities,” said Isam Zabalawi, president
of the Arab Academy for Banking and Financial Sci-
ences, which is headquartered in Amman and provides
professional training and education to professionals
in finance and other industries throughout the Arab
world. “There are currently admissions based on fac-
tors such as regional quotas, family ties to university
staff and so on, which does not serve the interests of
the sector or the country.”
PRIVATE SECTOR: Private institutions are mostly
smaller than their state-run counterparts: only three
of 10 government universities had fewer pupils
enrolled than the largest private university in 2012/13.
The largest private institution by student numbers
was Al Zaytoonah University in Amman with 7870,
followed by Petra University in Petra with 6440 and
the Applied Sciences University in Amman with 6345.
Most private universities in Jordan are run on a prof-
it-making basis. “Many universities say they are non-
profit, but they do actually make returns for their
investors – which is fine, as long as they do a good
job educating their students,” said Awwad. Others dis-
agree, saying the profit motive tends to get in the way
of education. “There is too much of a focus on mon-
ey in private institutions,” said Batarseh, who heads a
private university that is run on a non-profit basis by
the RSS. “A handful of profit-making universities are
doing a good job, but most are not,” he added.
A key complaint of private institutions is that they
face more restrictions than their government-support-
ed public counterparts. “Private universities want to
170
Private institutions are mostly smaller than state-run ones
The gross enrolment ratio
– that is, the number of
students enrolled in
university as a proportion
of the university-aged
population – stood at
44.5%, a level only slightly
below Saudi Arabia’s
(50.9%) and well above
those of many other
countries in the region.
www.oxfordbusinessgroup.com/country/Jordan
SOURCE: MoHESR
2008/09 2009/10 2010/11 2011/12 2012/13
Undergraduate 219,277 225,602 222,586 245,884 249,432
Masters 13,555 14,783 13,054 12,634 13,988
Higher diploma 1727 2550 2367 2648 2381
PhD 2261 2362 2116 2209 2349
Total 236,820 245,297 240,123 263,375 268,150
University student enrolment, 2008-13
EDUCATION OVERVIEW
be treated more like government universities. For
example, public universities are allowed to enrol more
students every year, sometimes in excess of their
capacity,” Awwad said. “In general, public universities
can do as they please, unlike in the private sector.”
ADDRESSING EMPLOYERS’ NEEDS: As in many
countries, graduates in Jordan do not always come
out of university fully equipped with the skills sought
by employers; however, educators say that the situa-
tion is improving. “There is a skills gap between the
academic world and the requirements of the profes-
sional world,” said Awwad. “The sector is working with
corporations and small and medium-sized enterpris-
es to address this gap and to better prepare our stu-
dents to be tomorrow’s leaders.”
Initiatives to address the problem include an Indus-
try University Linkage Competition, run by the Queen
Rania Centre for Entrepreneurship (QRCE), which is
based out of PSUT. The competition helps to connect
businesses and soon-to-be-graduates by encourag-
ing firms to present industrial problems they are fac-
ing to students to see if they can help to solve them.
Another problem for local firms seeking to recruit
graduates is that many leave the country in search of
better pay abroad, often to Gulf states in particular.
“It is difficult to retain human capital in Jordan with
better wages being offered abroad,” explained Sad-
eq A Hamed, the president of Al Ahliyya Amman Uni-
versity. “However, I have every confidence that if we
continue to produce the brightest minds in the region,
then we will one day emerge as the knowledge-based
economy we so desire to be.”
ENTREPRENEURIALISM: A key component of the
MoHE’s declared vision for higher education in Jor-
dan is entrepreneurship. To promote entrepreneur-
ship amongst students, the QRCE is seeking to help
universities establish accredited courses on the top-
ic and has agreements in place with a number of local
universities, all but one of them state-run institutions,
focusing on boosting levels of technology entrepre-
neurship in general. The centre is also a partner with
an incubator and runs boot camps for would-be stu-
dent entrepreneurs. “Most ideas we get are focused
on either ICT or renewable energy,” said Mohammad
Obaidat, the executive director of the QRCE. The lat-
ter is of particular importance to Jordan given its lim-
ited hydrocarbons resources. Some other universities
are also attempting to foster entrepreneurialism,
though facilities are limited. “JUST launched a real
incubator about a year and a half ago. Other univer-
sities also claim to have incubators, but they are most-
ly just spaces for talks,” said Obaidat.
Obaidat told OBG that many university students
already have strong entrepreneurial skills. “Large com-
panies and academics tend to underestimate the
capabilities of Jordanian students and graduates,” said
Obaidat. “In fact, many students are already running
their own businesses while they are still at universi-
ty.” By contrast, Batarseh argued that more needs to
be done to increase entrepreneurial spirit amongst
university graduates. “They should think about start-
ing their own businesses when they leave university
rather than automatically looking for a job; however,
lots of people want to be spoon-fed even after their
degree. It is partly a cultural problem,” he explained.
“People need to accept the risk of failure in business,
which is currently something that Jordanian families
view very negatively.” However, he said, the situation
is nonetheless improving. “There has been a gradual
shift in the local mind-set towards an increased focus
on entrepreneurialism, innovation and ICT in partic-
ular, in part because the king gives such issues a lot
of attention. It is not yet very deeply rooted in Jordan-
ian society and the kingdom will not turn into South
Korea overnight, but we are getting there.”
OUTLOOK: Given the country’s young population,
university student numbers are likely to rise further,
though enrolment in private institutions will depend
in part on regional trends, given the high number of
foreign students in their intake. “Jordan has gone from
a largely agricultural society to one that really focus-
es on learning and, increasingly, the quality of educa-
tion,” Batarseh told OBG. “In the next five to 10 years
there will be an increasing emphasis on quality rather
than just student numbers.”
Efforts to boost the country’s research and devel-
opment capacity (see analysis) are also likely to see
a growing focus on such activities in addition to teach-
ing. As pressure on existing facilities rises, Jordan
may increasingly turn to less traditional forms of edu-
cation, including blended education and e-learning.
173
THE REPORT Jordan 2014
Efforts are under way to better prepare students for the workplace
Promoting
entrepreneurship is a key
focus for the Ministry of
Higher Education. To this
end, courses on the topic
are being established and
some universities have also
set up business incubators.
SOURCE: Ministry of Education
2008/09 2009/10 2010/11 2011/12 2012/13
MoE 1,131,113 1,129,448 1,143,008 1,154,880 1,173,976
Other gov't 16,592 13,225 14,090 14,603 15,018
Private 371,758 365,905 382,867 406,327 424,999
UNRWA 123,886 119,903 117,957 114,362 112,838
Total 1,643,349 1,628,481 1,657,922 1,690,172 1,726,831
Students by school type, 2008-13
EDUCATION ANALYSIS
Jordan spent 0.43% of GDP on scientific research in 2008
According to the latest available data from the World
Bank, Jordan spent 0.43% of GDP on scientific research
in 2008. This was up from 0.34% in 2002, the second
latest year for which data is available. Although sub-
stantially below levels in the West, this is nonetheless
well above countries in the region for which data is avail-
able, with Iraq spending 0.06% in 2011, for example,
and Saudi Arabia 0.08% in 2009 (latest available data).
Furthermore, the kingdom intends to more than dou-
ble levels in the coming years. In absolute terms, spend-
ing stood at around JD68.6m ($96.9m) in 2008.
Given its resource challenges, the main priorities for
R&D in Jordan are the energy and water sectors. Oth-
er major areas of focus include pharmaceuticals, which
accounted for 38% of Jordan’s patent applications in
1998-2012, according to the World Intellectual Prop-
erty Organisation, followed by analysis of biological
materials (13%) and organic fine chemistry (7.5%).
OVERSIGHT: The Higher Council for Science and Tech-
nology, which is chaired by Prince El Hassan bin Talal
and includes government ministers and other high-
ranking officials, is responsible for drawing up science
and technology policy and research priorities. In late
2010 the council published the kingdom’s research
priorities until 2020, covering a wide range of fields; in
the areas of technology and medicine these include nan-
otechnology, biotechnology, the development of new
materials, energy technologies such as solar-powered
desalination, stem cell research and diabetes. In 2013
the council also published its 2013-17 National Policy
and Strategy for Science, Technology and Innovation,
which includes 24 projects to be implemented at a cost
of nearly JD10m ($14.13m). Key targets under the pro-
gramme include raising the proportion of GDP devot-
ed to R&D to 1%, more than double the level in 2008.
FUNDING: The Scientific Research Support Fund helps
facilitate research in universities. In addition to fund-
ing from the state and donations, it is also financed by
revenues from patents and investments that it has sup-
ported. In the four years to the end of 2013, it provid-
ed assistance to 189 projects, at a cost of JD14m
($19.78m). According to the fund, the most popular field
in terms of the applications it receives is agricultural
research. Private sources of funding include the Applied
Scientific Research Fund, which issues between three
and six grants a year, and private universities.
RESEARCH INSTITUTIONS: Most university-based sci-
entific research takes place in state universities. Notable
research institutions include the Jordan University of
Science and Technology (JUST), which was the highest-
ranked Jordanian university in the 2013 QS World Uni-
versity Ranking, placing between 650th and 700th of
3000 and 362nd amongst universities specialising in
technology and engineering. In the research category
the ranking gave JUST a score of three out of five. JUST
is home to the Princess Haya Biotechnology Centre,
established in 2005, which focuses on genomics,
metabolomics and proteomics in particular. Current
projects include research into biological factors behind
psychological disorders; plant medicinal studies, pre-
clinical studies and clinical trials (in cooperation with
King Abdullah University Hospital); and applied research
into renewable energy, oil shale and energy efficiency.
Another key research institution is the University of
Jordan (the only other local university listed in the QS
rankings). It operates seven research centres, includ-
ing ones devoted to water, energy and the environment,
and cell therapy. Major research projects in 2013 includ-
ed an effort to build a cornea using stem cells.
NUCLEAR PROJECT: A major new research initiative at
JUST is set to dwarf such activities in terms of funding
and push it further up the rankings, while also helping
to address Jordan’s energy problems. In August 2013
the Nuclear Regulatory Commission issued a permit for
the construction of a $130m, 5-MW nuclear research
reactor, to be built at JUST. A South Korean consortium
headed by Daewoo Engineering and Construction
will build the reactor, which is due to enter into oper-
ation in 2016. The South Korean government is also
financing $70m of the project’s cost through a soft loan.
Given its resource
challenges, the main
priorities for R&D in Jordan
are the energy and water
sectors. Other major areas
of focus include
pharmaceuticals, analysis
of biological materials and
organic fine chemistry.
174
Scientific methodEmphasis on research and development aims to boost innovation inenergy and medicine
www.oxfordbusinessgroup.com/country/Jordan
In August 2013 the Nuclear
Regulatory Commission
issued a permit for the
construction of a $130m,
5-MW nuclear research
reactor, to be built at the
Jordan University of
Science and Technology.
175
TaxNew investment law aimed at improving tax governance
Various treaties established with partner countries
Understanding general sales tax and special sales tax
Incentives for investing in special economic zones
TAX OVERVIEW
CIT rates for resident corporations vary from 14% to 30%
Over the past decade, Jordan’s business environ-
ment has experienced significant and rapid changes
in terms of both its complexity and competitiveness
in global markets. Increased demand for qualified
labour, coupled with growing international compe-
tition for resources, have forced Jordanian business-
es to remain flexible and become more resourceful.
The government has worked diligently at imple-
menting a raft of different measures to support local
businesses and promote investment in the kingdom,
while at the same time maintaining a balance with
its need to generate the tax revenues that form a
large percentage of its annual budget.
With relatively well-developed basic infrastruc-
ture and business-friendly facilities, Jordan’s econ-
omy makes an attractive investment proposition,
which the government is working to strengthen
through investment promotion laws that aim to
maintain a certain amount of tax revenue while at
the same time providing the additional edge sought
by investors and business owners alike.
CORPORATE INCOME TAX: Jordan’s income tax
regime is set out in the Income Tax Law No. 28 of
2009. According to Article 3 of the law, corporate
income tax (CIT) is levied on corporate entities and
foreign branches with respect to taxable profit in Jor-
dan on all income earned in, or derived from Jordan,
irrespective of where the payment is made, and on
income generated from investing Jordanian capital
outside of the kingdom.
There is no definition of permanent establishment
in the country; however, for CIT purposes, the leg-
islature has made a clear distinction between a res-
ident and a non-resident juridical person, whereby
the latter is not liable for CIT in the kingdom.
Article 2 of the Income Tax Law indicates that if
a company is legally registered in Jordan, it would be
deemed a resident juridical person in Jordan and
would therefore be required to comply with the
applicable tax laws and regulations in the country.
RATES OF CORPORATE INCOME TAX: CIT rates for
resident corporations vary from 14% to 30%, depend-
ing on the type of activity performed by the busi-
ness. The CIT rates for specific economic sectors are
broken down as follows:
• Banking – 30%;
• Insurance, telecommunications, stockbrokers,
finance companies, currency exchange compa-
nies and leasing companies – 24%; and
• All other sectors – 14%.
ADMINISTRATION & FILING: All business expens-
es incurred to generate income are eligible for deduc-
tion with certain limitations and exceptions.
The tax year for corporations corresponds to their
accounting financial year, while for individuals it is
the calendar year. Tax returns must be filed by all tax-
payers on a prescribed form, in Arabic, within four
months after the end of each tax year.
The tax return requires disclosures relating to the
individual’s or corporation’s income, expenses,
exemptions and tax payable, including details of
goods and services supplied and payroll incurred for
the year. The total amount of tax due must be paid
at the time of filing to avoid penalties. Further, the
tax authority has the right to conduct an income tax
audit for up to four previous years and to charge the
company any additional taxes it finds to be owed that
were not previously declared or paid.
The tax regulations allow for payment of the year’s
taxes on a set payment schedule, where payments
made during the year are made on account.
Taxpayers whose gross income exceeds JD500,000
($706,300) are required to make an estimated tax
payment by the end of the sixth month during the
year. If the taxpayer’s half-yearly financial state-
ments are ready, the estimated tax payment should
be 37.5% of the half-yearly taxable income; howev-
er, if the taxpayer’s half-yearly financial statements
are not ready, the estimated tax payment should be
equal to 37.5% of the prior full year’s taxable income.
177
THE REPORT Jordan 2014
Incentivising investmentBuilding a responsive and efficient tax regime
TAX OVERVIEW
DIVIDENDS: Dividends are exempt from tax, except
for dividends received by banks and financial insti-
tutions from mutual investment funds. An amount
equal to 25% of the exempt dividend income is added
back to taxable income as long as the total income
does not exceed total allowable cost.
INTEREST: Interest paid by banks to depositors,
except for interest on local interbank deposits, is sub-
ject to a 5% withholding tax. The withholding tax is
considered to be a payment on account for resident
companies and a final tax for resident and non-res-
ident individuals and non-resident companies.
Deposit interest generated in Jordan by non-oper-
ating banks and financial companies from banks and
financial companies operating in the kingdom are
exempt from income tax.
WITHHOLDING TAXES: Withholding tax on inter-
est can be summarised as follows:
• Interest paid from registered banks in Jordan to
non-resident banks and non-resident finance com-
panies for deposits that are held in Jordan is not
subject to withholding tax in the kingdom;
• Interest paid from registered banks in Jordan to
non-residents (other than non-resident banks and
non-resident finance companies), whereby such
interest was earned by the non-residents for
deposits that are held in Jordan is subject to a 5%
withholding tax;
• Any other type of interest paid from registered
banks in Jordan on non-depository bank products
to non-residents is subject to a 7% withholding tax;
• Interest paid from residents to non-residents on
loans is subject to withholding tax and general sales
tax at 7% and 16%, respectively; and
• Any other type of interest paid from resident par-
ties (other than banks) to non-residents is sub-
ject to withholding tax and general sales tax at 7%
and 16%, respectively.
The withholding tax of 5% and 7% is considered
as a final tax for the non-resident juridical person.
178
Interest paid by banks to depositors, except on local interbank deposits, is subject to a 5% withholding tax
www.oxfordbusinessgroup.com/country/Jordan
TAX TREATIES: Jordan has double tax treaties in
force with the following countries: Algeria, Bahrain,
Bulgaria, Croatia, Canada, Czech Republic, Egypt,
France, India, Indonesia, Iraq, Kuwait, Korea, Lebanon,
Libya, Malaysia, Malta, Morocco, the Netherlands,
Qatar, Pakistan, Poland, Romania, Sudan, Syria, Tunisia,
Turkey, the UK, Ukraine, and Yemen.
In addition, the kingdom has entered into tax
treaties that relate primarily to the transportation
sector, with Austria, Belgium, Cyprus, Denmark, Italy,
Pakistan, Spain, and the US. Furthermore, the king-
dom is currently negotiating double tax treaties with
Serbia, Montenegro and the UAE.
TAX DEPRECIATION: Depreciation treatment is not
addressed under the Income Tax Law No. 28 for the
year 2009. Until specific instructions are issued by
the authorities, taxpayers should continue to apply
the prior tax law’s depreciation provisions.
The Income and Sales Tax Department (ISTD) is
responsible for establishing the statutory maximum
depreciation rates for various fixed assets. If the
rates used for accounting purposes are greater than
the prescribed rates, the excess is disallowed, but
may be used for tax purposes at a later date. The
maximum straight-line depreciation rates range from
2% to 25%, with property at the low end of the scale,
and equipment at the high end (see table).
Alternatively, the taxpayer may choose to use the
accelerated depreciation method, whereby twice
the straight-line rate will be applied (except for build-
ings). However, machinery, equipment and other
fixed assets that are imported on a temporary-entry
basis do not qualify for accelerated depreciation.
Used assets are depreciated at the statutory rates,
calculated on purchase price.
RELIEF FOR LOSSES: Taxpayers are allowed to car-
ry forward unabsorbed losses to offset against the
profits of subsequent periods indefinitely. Losses
may not be carried back.
PERSONAL INCOME TAX: Individuals, whether res-
ident or non-resident in Jordan, are taxed based on
income earned in the kingdom from all taxable activ-
ities, including income from employment, business
(either as sole proprietors or as partners), rental
income and directors’ fees. Jordan does not current-
ly tax foreign-source income. The following tax rates
apply for resident and non-resident employees:
• 7% on the first JD12,000 ($16,951); and
• 14% on any amount exceeding JD12,000 ($16,951).
Income from employment includes salaries and oth-
er employer-paid benefits, such as rent and school
SOURCE: EY
Asset Rate (%)
Plant & machinery 10-20 (25 for computer equipment)
Motor vehicles 15
Office equipment 10
Industrial buildings 4
Buildings 2
Straight line depreciation rates
TAX OVERVIEW
fees. However, the following benefits do not consti-
tute taxable income to the employee:
• Occasional meals given to employees at work;
• Accommodation given to the employees for work
purposes; and
• Uniforms and equipment necessary for work.
EXEMPTIONS: The following amounts are available
as personal exemptions from individuals’ income
before arriving at taxable income:
• JD12,000 ($16,951) for a single person; and
• JD24,000 ($33,902) for a married couple (if the
spouse does not work).
A resident non-Jordanian employee is treated as a
Jordanian employee with a personal exemption of
JD12,000 ($16,951) and an additional JD12,000
($16,951) if the employee’s dependents are also res-
idents of the kingdom.
A non-resident foreigner who has dependents
residing in Jordan may still claim the JD12,000
($16,951) exemption in respect of dependents.
Any single household’s total exemptions must not
exceed JD24,000 ($33,902).
TAX BREAKS FOR DONATIONS: Any amount that
has been paid during the year as a donation to the
government or to its armed forces, its public insti-
tutions or to its local authorities is deductible from
the net income for the year.
Subscriptions and donations paid inside the coun-
try without personal benefit for religious, charity,
humanitarian, scientific, cultural, sport or vocation-
al purposes are deductible if the Council of Minis-
ters approves the subscriptions or donations.
Donations paid for political parties are also
deductible, provided that the amount does not
exceed what the Jordanian Political Parties Law allows
and on condition that the amount deducted does
not exceed one quarter of the taxable income before
the deduction.
PERSONAL INCOME TAX FILING REQUIREMENTS:The employee’s monthly tax return form should be
filed in Arabic with the ISTD, along with a submis-
sion of the employee’s withheld income taxes, with-
in 30 days following the end of the month to avoid
late payment penalties of 0.4% of the amount due
at the beginning of each week.
An annual employee listing for all taxable compa-
nies should be filed in Arabic. This should include
employees’ names, salaries, benefits, income tax and
welfare tax deduction and should be filed with the
ISTD within one month after the end of the year.
MISCELLANEOUS TAXES: Jordan does not levy net
worth tax, inheritance tax or gift tax.
Other significant taxes levied by the government
include a general sales tax, employer and employ-
ee social security contributions, and withholding tax
on imports and on payments to non-resident serv-
ice providers (see table).
SOCIAL SECURITY: The parliament and senate have
issued an amendment to the Social Security Law
that increases the monthly social security contribu-
tion from 18.75% to 21.75%, with the increase to be
implemented over four consecutive stages starting
from January 1, 2014 as follows:
• The employees’ monthly contribution will rise from
6.5% to 7.5%: The employees’ share of the increase
of 1% in social security contribution will be intro-
duced in four consecutive stages with an increase
of 0.25% at each stage, the first stage being effec-
tive from January 1, 2014; and
• The employer’s monthly contribution will rise from
12.25% to 14.25%: The employer’s share of the
increase of 2% in social security contribution will
be introduced in four consecutive stages with an
increase of 0.5% at each stage, the first stage
being effective from January 1, 2014.
GENERAL & SPECIAL SALES TAX: Jordan’s gener-
al sales tax law is set out in Law No. 29 of 2009 (the
GST Law) which provides for two types of taxes: gen-
eral sales tax (GST) and special sales tax (SST).
GST and SST are generally applicable on any enti-
ty or individual (i.e., taxable person) registered or
required to be registered for GST and SST purpos-
es. In Jordan, GST and SST are imposed on the fol-
lowing transactions, unless specifically exempt under
the GST Law:
• The supply of taxable goods or services made by
a taxable person; and
• The importation of taxable goods or services made
by a taxable person.
179
THE REPORT Jordan 2014
All employees are taxed at 14% on wages over $16,951
SOURCE: EY
Nature of tax Rate (%)
General sales tax (similar to value-added tax) 16
Social security contribution, salaries and all benefits except overtime; paid by
Employer 12.75
Employee 6.75
Withholding tax on imports; imposed on the value of goods imported for resale;
paid on account against the taxpayer’s final tax liability 2
Withholding tax on payment to non-resident service providers 7
Tax rates by category
TAX OVERVIEW
REGISTRATION FOR GST PURPOSES: A taxable
person is required to register for GST by the earlier
of the following dates:
• On the commencement of a new business that
makes taxable supplies if the taxable turnover
during the 12 months following the commencem-
ent date appears likely to exceed the threshold;
• At the end of any month if taxable turnover dur-
ing the preceding 12 consecutive months has
reached the threshold; and
• At the end of any month if it appears that the per-
son’s taxable turnover during the 12 consecutive
months ending with the subsequent month may
reach the threshold.
The threshold referred to above for registration with
the ISTD for GST purposes is as follows:
• JD10,000 ($14,126) for manufacturers producing
goods subject to GST;
• JD50,000 ($70,630) for suppliers of goods other
than those subject to GST; and
• JD30,000 ($42,378) for service suppliers.
If a taxable person carries out more than one of the
business activities mentioned above, the minimum
limit is the applicable registration threshold.
If a taxable person fails to register for GST pur-
poses, a penalty of two to three times the output
tax plus a criminal penalty equivalent to JD200 ($283)
will be imposed if the date of registration is more
than 60 days from the date on which the business
should have been registered.
However, if the date of registration is less than 60
days from the date on which the business should have
been registered, a penalty amounting to JD100 ($141)
will be imposed.
GST & SST RATES: GST is applied in Jordan to the
supply and importation of goods and services, as well
as on interest payments on loans from non-residents
at a flat rate of 16%. For certain goods, such as tea,
dairy products and live animals, the rate of GST is
reduced to 4%. In addition to the standard GST rate,
certain goods and services are subject to the SST
based on their weight, size or unit of packing. The
goods to which this tax applies comprise mainly alco-
holic beverages, cigarettes and motor vehicles. SST
is imposed at various percentage rates and in fixed
amounts as set out in Regulation No. 80 of 2001.
FILING GST & SST RETURNS: The taxpayer should
file a GST return every two months with the ISTD with-
in 30 days following the two-month period end.
The GST tax return should reflect the GST amounts
which have been paid on the taxpayer’s inputs and
the GST received on its outputs for every two-month
period. SST returns, on the other hand, are to be
filed on a monthly basis within 30 days following the
month of payment.
If the GST and/or SST return is not submitted with-
in the statutory time limit, a penalty of at least JD100
($141) will be imposed, which will be capped at a
maximum of JD500 ($706). Furthermore, addition-
al penalties of 0.4% on any difference between the
tax return as filed and the tax assessment as deter-
mined by the ISTD will be imposed on each late week.
GST ON IMPORTED SERVICES: Imported services
are subject to GST at a rate equal to 16%. This tax is
not recoverable and will be suffered as a cost by the
non-resident party suffering the tax.
In addition, as explained above, such services will
be subject to withholding tax at a rate of 7%. In oth-
er words, imported services are subject to a total tax
rate of 23%.
Importers of services shall pay the tax due in any
of the following cases on the following timelines, at
whichever date is earlier:
• Within one month of the date when the payment
for the imported service or any part thereof is
made, limited to the amount related to that part;
• When the means that includes the service is
released from Customs; or
• During a period of six months from the date when
the service or any part thereof was received, lim-
ited to the amount related to that part.
180
Taxpayers are required to ensure that they file their general sales tax returns every two months
Employers and employees both make social security contributions
www.oxfordbusinessgroup.com/country/Jordan
TAX OVERVIEW
If the GST on imported services filing is not made
within 30 days of invoice date or payment date,
whichever is earlier, penalties ranging between a
minimum of JD100 ($141) and up to a maximum of
JD500 ($706) will be imposed.
Any late payment will give rise to penalties equiv-
alent to 0.4% of tax liable on each late week based
on any difference between the tax return as filed and
the tax assessment, up to 200% of the amount due.
A company may be able to reduce this tax by
importing such services, where possible, from the
headquarters to its branch in Jordan, since head
office charges are exempt from GST imposed on
imported services, and therefore attract only a 7%
withholding tax to the payments.
RECOVERY OF GST: A taxable entity may recover the
input tax (the GST imposed on goods and services
supplied to the taxable entity, purchased or import-
ed by the entity for business purposes).
Input tax is generally recovered by being deduct-
ed from output tax (the GST imposed on goods and
services sold by the taxable entity).
Non-resident businesses are not allowed to recov-
er GST on goods and services purchased in Jordan.
OTHER PENALTIES: According to the GST Law, a
person who commits any of the criminal tax fraud
offences shall be liable for a civil compensation
penalty to the ISTD of not less than twice and not
more than three times the tax due, as well as a crim-
inal penalty of not less than JD200 ($282) and not
more than JD1000 ($1413).
In case of recurrence of the offence, the criminal
penalty imposed shall be doubled. If the offence
recurs within one year thereafter, the court may
impose criminal fines at their highest limit which is
equivalent to 200%, or a term of imprisonment for
a period not less than three months and not exceed-
ing six months, or both.
INVESTMENT INCENTIVES: The Investment Promo-
tion Law No. 16 of 1995, and its amendments in
2000, repealed all earlier laws concerning foreign
investments in the kingdom. The new law opens the
economy to all investors, setting out detailed guide-
lines for starting a business in Jordan and the incen-
tives available for these companies.
Pursuant to the law, a Higher Council for Invest-
ment Promotion (HCIP) was formed to achieve com-
prehensive development objectives. Chaired by the
prime minister, the council is empowered to take
suitable decisions on all matters regarding invest-
ment in the kingdom.
According to the provisions of the law, a corpora-
tion named the Jordan Investment Board (JIB) was
established to assist the council to promote invest-
ment in the country. The JIB was tasked with imple-
menting measures to enhance business confidence
by simplifying registration and licensing processes
and implementing various investment promotion
programmes. Meanwhile, the Investment Promotion
Committee (IPC), with representatives from the
income tax, Customs, industry and trade depart-
ments was also formed to carry out specific func-
tions on taxation and duties.
According to the Investment Promotion Law of
1995, projects undertaken in certain sectors of the
economy are allowed special exemptions to attract
higher levels of investment. The sectors to which
these additional incentives apply include industry,
agriculture, hotels, hospitals, maritime transport and
railways. The Council of Ministers can add any oth-
er sector based on the recommendation of the HCIP.
The main incentives offered to projects in the
above sectors are as follows:
• The fixed assets of the project shall be exempted
from fees and taxes, provided they are imported
into Jordan within a period of three years from the
date of approval;
• Imported spare parts for the project shall be
exempted from fees and taxes, provided the val-
ue of the spare parts does not exceed 15% of the
value of fixed assets; and
• The IPC shall exempt fees and taxes on fixed assets
imported for expansion of capacity over 25%.
SPECIAL ECONOMIC ZONES: Jordan has set up a
number of development zones in order to encour-
age development in export-oriented industry. The
Aqaba Special Economic Zone was the first such
development zone in Jordan. Other zones are locat-
ed at Zarqa, the Sahab industrial estate and Irbid.
In February 2008 parliament passed the new Devel-
opment Zones Law of 2008, which helped to estab-
lish specialised rules and conditions to facilitate the
creation of economic growth areas within certain
zones. This law also provides a number of incentives
for investment within the specified zones, includ-
ing a flat rate amounting to 5% income tax, with no
Customs duties for materials, machinery and equip-
ment used for projects established in these zones.
181
THE REPORT Jordan 2014
Standard GST is 14%, though some goods, such as dairy products and tea, are taxed at a reduced rate of 4%
OBG would like to thank EY for its
contribution to THE REPORT Jordan 2014.
TAX VIEWPOINT
Ali Samara, Partner, EY Jordan
The kingdom’s economy relies heavily on tax revenues
and foreign aid to secure the funds required to provide
public services. In order to increase tax revenues, and
consequently reduce dependence on foreign aid, the
government should allocate resources towards increas-
ing the efficiency of the tax system, and encourage com-
pliance at both the corporate and individual level. By
doing so, Jordan will be able to strengthen its standing
as a stable, competitive and sustainable economy that
promotes progress and growth.
Over the last two decades, Jordan has made signifi-
cant progress in developing and modernising its Income
Tax Law in an effort to raise the revenue collected by
the government. However, challenges include undevel-
oped capacity and the missing reciprocal link between
taxes on the one hand and public and social expendi-
tures on the other. The stubborn persistence, and social
acceptance, of tax evasion combined with non-com-
pliance represent some of the key obstacles that need
to be overcome in the kingdom.
When examining the difficulties faced by Jordan it is
important to emphasise that increasing revenue col-
lection, though crucial, will not be sufficient by itself.
The Jordanian government should also focus its efforts
on designing a tax system that is effective in encour-
aging good governance, in alignment with society’s
views on appropriate income inequalities, and devel-
oping social justice. The allocation and spending of rev-
enue are equally important for growth. A report sub-
mitted to the G20 Development Working Group by the
IMF, Organisation for Economic Cooperation and Devel-
opment, UN and World Bank, which is titled “Support-
ing the Development of More Effective Tax Systems”,
argues against “administering special tax treatments
that serve little useful purpose, and that incentive struc-
tures – both within the revenue administration and the
wider judicial and political system – discourage corrup-
tion at all levels. Political will is necessary over extend-
ed periods of time to reform tax systems and adminis-
trations, and to address these broader concerns.”
An additional challenge that continues to be faced
is the development of an attractive tax regime at both
the domestic and foreign investment level. With the
Income Tax Law having changed five times in the last
two decades, companies and organisations operating
in Jordan are facing greater difficulty in long-term plan-
ning and budgeting due to the uncertainty surround-
ing the application of an ever-changing tax law. This
inevitably reduces the incentives for businesses to con-
tinue investing in such an unpredictable environment,
while in recent years neighbouring countries in the
MENA region have been reducing income tax rates for
companies and organisations. Most countries have
seen a reduction in rates consistently over the last five
years, making it even more difficult for the Jordanian
economy to compete and secure foreign investment,
especially with Jordan’s income tax rates on the rise. In
conjunction with the above, the G20 Development
Working Group report points out that “developing coun-
tries face challenges in designing and implementing
effective transfer pricing and information exchange
regimes and more generally in improving transparen-
cy. These issues are being addressed as the debate
over transparency in the reporting of financial data by
Multinational Enterprises intensifies and as developed
and developing countries alike gear up to take ‘whole-
of-government’ action to address illicit financial flows.”
Given the increasing strain on government finances,
the push for greater transparency is expected to grow
even stronger in the coming years, with companies
facing more comprehensive reporting and disclosure
requirements, and higher administrative costs.
While the challenges Jordan faces are substantial,
there are also grounds for optimism. Several specific
actions could be taken to support the development of
a more effective tax system, such as increased trans-
parency and compliance, enhanced methods for meas-
uring progress, monitoring and reporting revenue
expenditure to reduce tax evasion, and encouraging
tax compliance for both corporations and individuals.
182
Tackling obstaclesAli Samara, Partner, EY Jordan, on real solutions for the kingdom’srevenue shortage
www.oxfordbusinessgroup.com/country/Jordan
183
Legal FrameworkSeven eligible sectors prioritised for investment
Investors prefer limited liability company structure
First law on sukuk issuances enacted in late 2012
Approval criteria for real estate and property transactions
LEGAL FRAMEWORK OVERVIEW
Some restrictions on foreign ownership exist in certain sectors
The government of Jordan has been working to achieve
economic stability through encouraging investment,
particularly foreign investment. Jordan’s legal frame-
work not only creates a secure environment for investors
and encourages investment in specific sectors through
various incentive and benefit schemes, but also pro-
vides a well-structured and easily implemented mech-
anism for establishing fully operational companies.
With the persistent political turmoil in the region, Jor-
dan has managed to maintain a stable political envi-
ronment that has created a safe haven for investors.
INCENTIVES FOR INVESTORS: Any project established
in the kingdom in any of the following “eligible sectors”,
namely, industry, agriculture, hotels, hospitals, sea and
rail transport, leisure and recreation compounds, and
convention and exhibition centres, shall be entitled to
the exemptions set out in various investment-related
laws. The Council of Ministers may add any other sec-
tor to the list. Projects falling within the eligible sec-
tors are afforded exemptions from Custom duties, sales
taxes, import fees and all other fees on initial capital
assets, spare parts for up to 15% of the value of the
assets, and fixed assets required for the expansion of
any existing exempt project are also exempt if certain
conditions are met.
The Council of Ministers may grant any project falling
within the exempted sectors additional exemptions, priv-
ileges and incentives (other than income tax-related
exemptions or incentives) based on the location of the
project, its nature, its contribution to the increase of
the kingdom’s exports or the employment of local work
force, the exploitation of natural resources, or the
development of the kingdom in general.
The Investment Laws provide that foreign invest-
ments may be in cash, in-kind, material or moral rights
of a financial value, including trademarks and patents.
They also reaffirm the right of the foreign investor to
freely repatriate in any foreign convertible currency its
capital, profits and dividends. The Investment Laws also
provide that the ownership of any project may not be
appropriated except for requirements of public inter-
est provided that a fair compensation is paid to the
investor in a convertible currency.
BILATERAL INVESTMENT TREATIES: Jordan has
entered into several bilateral investment treaties such
as the Treaty Concerning the Encouragement and Recip-
rocal Protection of Investment signed on July 2, 1997
between the US and the Euro-Mediterranean Agree-
ment establishing an association between the European
Communities and their member states and Jordan,
which entered into force in 2002. Such treaties aim to
promote investment and grant further incentives.
FREE ZONES: To incentivise investors, the government
has designated free zones, the Aqaba Special Econom-
ic Zone and other development zones where operat-
ing businesses enjoy certain exemptions and benefits.
REGULATION OF FOREIGN OWNERSHIP: Prior to set-
ting out the procedure for registering companies in the
kingdom, it is important to highlight the restrictions cur-
rently present on foreign ownership. As a general prin-
ciple, foreign ownership is accepted without restriction
provided that each foreign owner invests a minimum
of JD50,000 ($70,630) or equivalent in non-public com-
panies. However, there are some restrictions on for-
eign ownership in certain sectors that can be divided
into three bands:
• Companies/projects in which foreign ownership is
completely prohibited; examples include passenger
and freight road transportation, security and inves-
tigation, sports clubs and Customs clearance serv-
ices;
• Companies/projects in which foreign ownership is
limited to a maximum of 50%; examples include
wholesale trade and retailing, distribution of goods
and services, engineering services, construction con-
tracting, advertising services, commercial agencies,
restaurants and certain road, rail and air transport
support services; and
• Companies/projects in which foreign ownership is
limited to a maximum of 49%; examples include
184
A detailed insightThe kingdom’s investor-friendly regulations
www.oxfordbusinessgroup.com/country/Jordan
LEGAL FRAMEWORK OVERVIEW
scheduled passenger air transportation and aircraft
charter (wet lease) services.
The Council of Ministers may permit higher percent-
ages (as determined by the Council) in large develop-
ment projects that enjoy special importance.
There is no distinction between foreign nationalities
(whether GCC, Arab or otherwise). Moreover, the restric-
tions involve only the direct owner and do not look
through to the ultimate or beneficial owner unless the
direct owner is clearly a shell company.
TYPES OF COMPANIES: The Companies Law of 1997
gives the investor several types of companies through
which he can make his investment. The most popular
of these are limited liability companies (LLCs), private
shareholding companies (PSCs) and public sharehold-
ing companies (PLCs). A foreign investor also has the
option in certain circumstances to register an operat-
ing or a non-operating branch office. We set out below
a summary of each of these types of companies.
LIMITED LIABILITY COMPANY: An LLC is the most
basic Jordanian company structure that has the bene-
fit of limited liability. All LLC owners are protected from
personal liability for business debts and claims. Unlike
LLCs in other jurisdictions, a Jordanian LLC is a pure cor-
poration that does not have any flow through taxation
for its “partners” and is in fact taxed in the same way
other types of companies are taxed. Its benefits under
Jordanian law arise from the fact that it is mainly gov-
erned by a set of rules set out in the Companies Law
that are usually reflected in standard form application
form and recommended Articles of Association and
Memorandum of Association. Due to the strict rules in
the Companies Law, the investor does not have much
leeway in inserting special provisions into the Articles
of Association and Memorandum of Association. Due
to this “standard form” structure and low registered cap-
ital requirement of JD1 ($1.41) (assuming no foreign
partners), the LLC is the most commonly used struc-
ture by local investors. The Investment Law requires a
minimum amount of JD50,000 ($70,630) per foreign
investor. An LLC cannot list or trade its shares publicly.
An LLC must be composed of at least two sharehold-
ers (approval can be sought for a sole shareholder LLC).
The nominal value of each share is JD1 ($1.41) and only
one class of shares is possible. The paid-up capital of
an LLC upon registration must be at least 50% of its
total share capital, and the remaining 50% must be
paid within two years of registration.
The process for registering an LLC can be effected
in as little as two days. The cost of registering an LLC,
excluding attorney fees, comprises both registration fees
and stamp duty. The registration fee is 0.2% of the reg-
istered capital with a minimum of JD250 ($353). Addi-
tionally, stamp duty shall be applicable at the rate of
0.3% of the registered capital as well.
PRIVATE SHAREHOLDING COMPANY: A PSC com-
bines the limited liability feature of the LLC together
with the added flexibility of being able to structure the
company in any manner that the investor wishes (sub-
ject to some minimum requirements set in the Com-
panies Law) such as different classes of shares. The
added flexibility, however, comes at the price of a high-
er entry barrier. The minimum prescribed share capi-
tal of a PSC shall not be less than JD50,000 ($70,630)
that must be fully paid upon registration. A PSC, pur-
suant to its memorandum of association, may issue
various types and classes of shares that differ in their
nominal value, voting rights, profit and loss distribution
among shareholders and other ways. The minimum
investment requirements relating to foreign investors
mentioned above in the LLC section apply for PSCs as
well. It is contemplated that a PSC can list or trade its
shares publicly, however, currently there is no mecha-
nism put in place for publicly listing or trading its shares.
The process for registering a PSC tends to be a little
more complicated than that of an LLC and can be done
within 1-2 weeks. The cost of registering a PSC, exclud-
ing attorney fees, comprises both registration fees and
stamp duty. The registration fee is 0.2% of the regis-
tered capital with a minimum of JD1000 ($1413). Addi-
tionally, stamp duty shall be applicable at the rate of
0.3% of the registered capital.
PUBLIC SHAREHOLDING COMPANY: A PLC must be
composed of a minimum of two founders who subscribe
to shares that can be listed on a stock exchange
(approval can be sought for establishing a PLC by one
founder). The founders cannot dispose of their shares
until two years have passed following the registration
of the PLC. Shareholders’ liabilities are limited to their
shareholding in the PLC.
The authorised share capital of the PLC must not be
less than JD500,000 ($706,300), with a nominal value
of JD1 ($1.41) per share, and must be stated in dinar.
The prescribed share capital of a PLC shall not be less
than JD100,000 ($141,260) or 20% of the authorised
capital, whichever is greater, that must be fully paid upon
registration. The remaining authorised capital must be
fully subscribed within three years of registration. A PLC
may issue the unsubscribed shares at prices above or
below the nominal value. Members of the board of
directors for a PLC must be shareholders therein. The
185
THE REPORT Jordan 2014
Projects in eligible sectors are offered incentives such as exemptions from Custom duties and sales taxes
LEGAL FRAMEWORK OVERVIEW
registration process of a PLC is relatively complicated
when compared to an LLC and requires the assistance
of a lawyer and a licensed financial intermediary as
well as registration and prospectus filing requirements
with the Jordanian Securities Commission. The cost of
registering a PLC, excluding attorney fees, comprises
registration fees and stamp duty. The registration fee
is 0.2% of the registered capital with a minimum of
JD5000 ($7063). Stamp duty shall be applicable at the
rate of 0.3% of the registered capital.
OPERATING FOREIGN COMPANY: A foreign firm that
is incorporated and has its headquarters outside Jor-
dan can operate in the kingdom only after registering
as an operating foreign company with the Controller.
Commonly referred to as a branch office, its registra-
tion will be either temporary, for the duration of a con-
tract that the company was awarded (the registration
may be extended if other contracts are later awarded),
or permanent, pursuant to a licence from the compe-
tent official authorities. The company registering a
branch office must appoint a person resident in Jordan
who need not be a Jordanian national, as a represen-
tative to carry out its business and accept service on
its behalf. The cost of registering an operating foreign
company, excluding attorney fees, comprises only reg-
istration fees amounting to JD5000 ($7063).
NON-OPERATING FOREIGN COMPANY: A foreign com-
pany that does not intend to conduct business within
Jordan but wants to use it as a base for its business in
the region can register with the Controller as a non-
operating foreign company, commonly referred to as
a regional office (RO).
An RO may not conduct business in the kingdom. It
can collect information generally concerning business
possibilities in Jordan or for a particular project but
cannot sign any contract or offer regarding such a proj-
ect or opportunity. In return for such restriction, the
RO enjoys several exemptions and advantages such as
the exemption from local taxes, except sales tax, its non-
Jordanian employees are exempted from income and
social services taxes, and it can import its office furni-
ture free from Customs duties.
The RO must appoint a resident representative. At
least half the employees in the RO must be Jordanian
citizens. There are no official fees to register an RO.
JOINT VENTURES: Investors may enter into different
contractual arrangements such as joint ventures (JVs)
through which they make their investment. A JV is a con-
tractual arrangement in which two or more parties
agree to combine their resources to undertake a par-
ticular business activity.
Unlike a typical partnership, a JV is a finite relation-
ship based on a single business transaction. In a JV,
each party is responsible for the profits, losses and
costs associated with the activity.
It is not necessary to establish a company to create
a JV in the kingdom. JVs created by pure contractual rela-
tionships will not be regulated by the Companies Law;
however, such JVs would still enjoy legal personality. That
said, setting up a separate entity as part of the project
or business activities is fairly common for JVs in Jordan.
Therefore, parties entering a JV in the kingdom must
first decide whether they will incorporate a separate
entity or not because such a decision dictates what law
will govern the JV.
FURTHER REGISTRATIONS, LICENSING & PERMITS:The licences and permits required for a specific proj-
ect/enterprise are highly dependent on the nature and
type of project/enterprise and may vary accordingly.
However, the most common are registration with either
the Chamber of Industry/Commerce, environmental
permit, vocational licence, construction and occupan-
cy permits and registration with the Income and Sales
Tax Department.
REGISTRATION WITH THE CHAMBER OF INDUSTRY/COMMERCE: Following the registration of any compa-
ny with the Controller of Companies, other than ROs,
the company should register with either the Chamber
of Industry or Chamber of Commerce depending on
the nature of activities. Such registration is required for
the purpose of procuring the vocational licence and
commencing its activities. The registration certificate
is given for a one-year period and should be renewed
on an annual basis.
ENVIRONMENTAL PERMIT: Corporate bodies engag-
ing in activities that negatively impact the environment
are obliged to prepare an environmental impact assess-
ment (EIA) for each project they intended to establish
and submit it to the Ministry of Environment for approval.
The minister may also request that a company/entity
prepare an EIA if deemed necessary for safeguarding
the environment. Some of the projects listed in regu-
lations as requiring an EIA include: crude-oil recycling
projects; energy-generating projects; steel manufactur-
ing projects; road and railway construction projects;
waste-recycling projects; port and harbour construc-
tion projects; and covering sea water to create land for
industrial or leisure purposes.
CONSTRUCTION & OCCUPANCY PERMITS: Companies
performing any construction works require a construc-
tion permit prior to commencing such works. Such per-
mits are procured from the relevant municipality
depending on where the construction site is located.
The construction permit is for the duration of the con-
struction phase of the project.
After finalising the construction of the place of busi-
ness and in order to be able to occupy the buildings
and eventually enable the company to commence its
activities through the vocational licence as indicated
below, an occupancy permit should be obtained from
the relevant municipality. The occupancy permit evi-
dences that the works have been constructed accord-
ing to the conditions of the construction permit. This
permit is issued only once and is not renewed.
VOCATIONAL LICENCE: In order for any company to
commence its activities, the firm should obtain a voca-
tional licence from the relevant municipality depend-
ing on where the project/enterprise is located.
Such licence is required to ensure that the place of
business (e.g. office, warehouse, factory, plant, etc.) is
suitable for conducting its activities. This licence is
for a one-year term and should be renewed annually.
186
www.oxfordbusinessgroup.com/country/Jordan
LEGAL FRAMEWORK OVERVIEW
REGISTRATION WITH THE INCOME & SALES TAXDEPARTMENT: There are two types of registrations
that need to be made with the Income & Sales Tax
Department. The first is an income tax registration that
is applicable to all types of companies. Even if a partic-
ular company or project is exempt from income tax,
such registration needs to be made. The second regis-
tration is a sales tax registration which should be made
to all types of companies if:
• The company’s sales exceed certain thresholds indi-
cated in the applicable legislation; and
• The company imports goods/services, which are
subject to sales tax irrespective of any thresholds.
FINANCING COMPANIES/PROJECTS:The government
of Jordan enacted, late in 2012, the first Islamic Finance
Sukuk Law (Sukuk Law), which addresses the issuance
of sukuk of all forms. Sukuk are instruments of equal
value representing common shares in the ownership
of a project issued in the name of the holders in con-
sideration of assets presented by such holders for the
implementation of the project and receipt of revenue
for a period to be determined in the prospectus in
accordance with sharia law. The Sukuk Law contem-
plates the possibility of establishing a special purpose
vehicle (SPV) which shall own the assets, benefits or
rights financed by way of sukuk. The SPV shall own the
project for the sole purpose of the issuance of sukuk
and shall distribute the profits between different sukuk
holders. Islamic sukuk should only be issued to finance
projects that generate profits and which are independ-
ent from the issuer’s other projects.
Earlier in 2014, the Special Purpose Vehicle Compa-
ny Regulation (SPV Regulation) was enacted pursuant
to the Sukuk Law. The SPV Regulation stipulates that
SPVs established for the purpose of owning assets,
benefits or rights financed by way of sukuk should be
in a form of private shareholding companies and sets
out the procedure for registering and reporting for
such companies.
Such SPVs are, therefore, regulated by the SPV Reg-
ulation rather than the Companies Law; however, in the
event the SPV Regulation fails to regulate a particular
matter, the provisions of the Companies Law shall then
apply in so far as they comply with Islamic sharia.
The Sukuk Law enables the issuer to provide sukuk
in dinar or in other foreign currency pursuant to any
of the following contracts: ijarah; mudaraba or muqara-
da; murabaha; musharaka; salam; istisna’a; sale of right
to benefit; and any other contract approved by a spe-
cial sharia commission established under the Sukuk
Law (Central Sharia Supervisory Commission). In 2014
the Islamic Financing Sukuk Contracts Regulation (Sukuk
Regulation) was enacted. The Sukuk Regulation defines
each type of Islamic financing contract referred to in
the Sukuk Law in more detail and sets out certain
restrictions on the provisions of such contracts.
Sukuk are tradable on the Amman Stock Exchange
or any other financial markets pursuant to the appli-
cable laws, and can be traded outside the financial
market pursuant to instructions to be issued by the Board
of the Jordan Securities Commission and approved by
the Central Sharia Supervisory Commission. The issuers
shall provide an offering of the sukuk pursuant to an
issuance prospectus.
However, the procedures for the registration and
implementation of the issuance prospectus are sub-
ject to the approval of the Board of the Jordan Securi-
ties Commission pursuant to instructions to be issued
for that purpose.
Based on the Sukuk Law, sukuk bonds may only be
issued, whether directly or through an SPV, by the fol-
lowing issuers: the government; public official institu-
tions and public institutions upon the approval of the
Council of Ministers; Islamic Banks; companies that
provide Islamic financing services; and companies and
institutions which acquire the approval of the Board of
the Jordan Securities Commission.
The Sukuk Law granted the SPVs, which are created
for the issuance of sukuk, exemptions from all fees
including company and licensing registration fees; the
payment of the share capital prior to registration; prop-
erty tax applicable to sale of immovable property and
land registration fees applicable on transfers or other
disposals between the SPV and the party forming it;
and all taxes and fees of registration of assets and ben-
efits applicable when title to same is transferred or
upon any other disposal transaction between the SPV
and the party forming it. In addition, sukuk transactions
are exempt from all taxes and fees including income
tax, general sales tax and stamp duties.
However, since the mechanism or procedures for
issuing, registering, subscribing, listing and trading
sukuk and any other matters related thereto are to be
regulated pursuant to instructions which to date have
not been issued, it remains unclear how the Sukuk Law
will be implemented.
REAL ESTATE INVESTMENTApprovals for acquiring property in Jordan by foreign
individuals and corporate entities: As a general rule,
foreign individuals (i.e., non-Jordanian) and corporate
persons can hold complete ownership of property in
187
THE REPORT Jordan 2014
The authorised share capital of a public shareholding company must not be less than $706,300
LEGAL FRAMEWORK OVERVIEW
Jordan. However, they will need to obtain certain
approvals from the relevant authorities to complete the
sale and transfer title to the property the foreign indi-
vidual or corporate person intends to purchase.
The approvals needed to complete a sale transac-
tion for a property in Jordan are:
A. Foreign Natural Persons: The law differentiates
between Arab nationals, non-Arab nationals and indi-
viduals holding travelling documents or temporary
passports.
i. Approvals for Arab Nationals: Arab nationals may
acquire property within urban zones (i.e., areas within
the boundaries of cities and towns) upon the approval
of:
• The General Manager of the Lands and Survey
Department, to acquire property that does not exceed
two residential houses and one office space;
• The Minister of Finance, to acquire property that
exceeds two residential houses and office space,
provided that the area of the plot on which the prop-
erty is constructed does not exceed 10,000 sq metres;
• The Minister of Finance, to acquire plots with an area
that does not exceed 10,000 sq metres; or
• The Council of Ministers, to acquire plots with an
area that exceeds 10,000 sq metres.
Arab nationals may acquire property outside urban
zones if they intend to carry out agricultural or indus-
trial activities, or if they intend to construct residential
buildings, upon the approval of:
• The Minister of Finance, to acquire a plot with an area
that does not exceed 50,000 sq metres; or
• The Council of Ministers, to acquire a plot with an
area that exceeds 50,000 sq metres.
ii. Non-Arab Nationals:Non-Arab nationals may acquire
property in Jordan, subject to the following require-
ments:
• Reciprocity: The main condition for non-Arab foreign
nationals to acquire property in Jordan is “reciproc-
ity”. Under this requirement, a non-Arab foreign
national is only allowed to acquire property in Jor-
dan if Jordanians are also allowed to acquire prop-
erty in the country that the buyer holds its nation-
ality.
If the foreigner has more than one nationality, then for
purposes of reciprocity, the laws of all countries that
the foreigner holds its passports will be considered for
the approval. Countries that currently have reciproci-
ty with the kingdom include Belgium, Canada, Den-
mark, the UK and the US.
• Required approvals for non-Arab foreigners: Non-
Arab foreigners may only acquire property within
urban zones (i.e., areas within the boundaries of cities
and towns) upon the approval of:
• The General Manager of the Lands and Survey
Department, to acquire property that does not exceed
two residential houses and one office space;
• The Minister of Finance, to acquire property that
exceeds two residential houses and office space,
provided that the area of the plot on which the prop-
erty is constructed does not exceed 10,000 sq metres;
• The Minister of Finance, to acquire plots with an area
that does not exceed 10,000 sq metres; or
• The Council of Ministers, to acquire plots with an
area that exceeds 10,000 sq metres.
iii. Individual investors holding travel documents or tem-
porary passports: Such individuals may only acquire
property upon the approval of the Council of Ministers.
B. Corporate Persons: The law does not differentiate
between Jordanian and foreign corporate entities for
the purposes of acquiring property in Jordan.
Local and foreign corporate entities may acquire
property in Jordan for business as follows:
i. Property in urban zones: A corporate entity may
acquire property in urban zones upon the approval of:
• The Minister of Finance, for plots with an area that
does not exceed 30,000 sq metres; or
• The Council of Ministers, for plots with an area that
exceeds 30,000 sq metres.
ii. Property located outside urban zones: A corporate
entity may acquire property outside urban zones upon
the approval of:
• The Minister of Finance, for plots with an area that
does not exceed 50,000 sq meters; or
• The Council of Ministers, for plots with an area that
exceeds 50,000 sq metres.
HOLDING PERIOD & EXIT ROUTE: Foreign individuals
and corporate entities must hold the acquired proper-
ty for a minimum of three years for residential proper-
ties and for five years for other types of property.
However, investors may request to waive the mini-
mum holding period for justified reasons. Such waiver
will be granted to investors subject to the approval of
the Minister of Finance.
LOCATION OF THE PROPERTY: The above rules are
applicable to property in all locations inside Jordan
(including property in Development Zones), but not to
property within the Aqaba Special Economic Zone,
which has a different set of rules and approval system.
188
Foreign persons and corporates can acquire property provided certain approvals have been granted
OBG would like to thank Zu’bi Advocates and Legal Consultants
for its contribution to THE REPORT Jordan 2014.
www.oxfordbusinessgroup.com/country/Jordan
189
The GuideA listing of some comfortable hotels and their amenities
Phone numbers for state ministries, health care, car hire
Information on language, dress, visas, money and more
THE GUIDE HOTELS
AMMAN
GRAND HYATT AMMANJabal Amman, Hussein bin Ali Street
PO Box 831159, Amman 11183
T: (+962) 6465 1234
F: (+962) 6465 1634
www.amman.grand.hyatt.com
Rooms: 311 rooms including 16 suites.
Business & Conference Facilities: Ballroom of 904
sq metres with seating capacity of 800 can be divid-
ed into three separate sections for smaller meeting
venues; seven conference rooms and three board-
room-style conference rooms; outdoor terrace for
weddings, receptions and luncheons; links to the
Zara Expo with three exhibition halls, a 297-seat
conference auditorium, and smaller meeting rooms.
Health & Leisure Facilities: Gym, sauna, steam rooms,
whirlpools, spa.
Guest Services: 24-hour concierge, room service,
airport shuttle, 24-hour car hire, doctor on call,
babysitting, valet parking, high-speed internet with
Wi-Fi in public areas, safety deposit boxes, foreign
currency exchange and ATM, multi-lingual staff, sev-
en exclusively non-smoking floors and three guest
rooms fully equipped for physically challenged guests.
Wining & Dining: 32° North, L’Incontro Italian restau-
rant, Indochine Vietnamese restaurant, the Grand
Deli.
INTERCONTINENTAL JORDANIslamic College Street
PO Box 35014, Amman 11180
T: (+962) 6464 1361
(800) 31 929 773
F: (+962) 6464 5217
www.ihg.com/intercontinental/hotels/gb/en/
amman/ammha/hoteldetail
Rooms: 440 rooms and suites.
Business & Conference Facilities: Ballroom and nine
function rooms accommodating up to 1500 guests,
fully equipped 24-hour business centre with com-
plete secretarial services, fax machine, photocopy-
ing, computer workstations and wireless internet
access.
Health & Leisure Facilities: 24-hour fitness centre,
jacuzzi, steamroom, sauna, indoor lap pool, outdoor
heated pool, private sun deck, juice bar, massage,
facials.
Guest Services: Concierge, 24-hour room service,
ATM, laundry and dry cleaning service, valet park-
ing, barber shop, beauty salon, gift shops, taxi serv-
ice, flower shop.
Wining & Dining: Indu, Cinco De Mayo, Bourj Al
Hamam, Deli Café, Café Boulevard, The Terrace (sea-
sonal).
CROWNE PLAZA AMMAN6th Circle, King Faisal bin Abdul Aziz Street
PO Box 950555, Amman 11195
T: (+962) 6551 0001
F: (+962) 6551 0003
www.crowneplaza.com
Rooms: 279 rooms and suites
Business & Conference Facilities: Six meeting rooms
and one ballroom for up to 600 guests, high-speed
internet, business centre.
Health & Leisure Facilities: Thalgo spa, gym, aero-
bics lessons, swimming lessons, heated indoor and
outdoor swimming pools, steamroom, sauna and
jacuzzi, Turkish bath, tennis courts.
Guest Services: 24-hour room service, dry cleaning
and laundry, shopping centre.
Wining & Dining: Brasserie Oasis, V Lounge & Restau-
rant, Jasmine Lounge, Al Halaby, Café Vienna, Hot
Shot.
190
A good night’s sleep
Grand Hyatt Amman
Crowne Plaza Amman
Intercontinental Jordan
www.oxfordbusinessgroup.com/country/Jordan
THE GUIDE HOTELS
AMMAN MARRIOT HOTELIssam Aljuni Street, Shmeisani
PO Box 926333, Amman 11190
T: (+962) 6560 7607
F: (+962) 6560 7100
www.marriott.com/hotels/travel/ammjr-amman-
marriott-hotel
Rooms: 292 rooms and suites
Business & Conference Facilities: Eight meeting
rooms for 200-250 guests, business centre, secre-
tary, photographer, translator, audio-visual technol-
ogy, internet.
Health & Leisure Facilities: Indoor and outdoor swim-
ming pools, hair salon, fully equipped health club.
Guest Services: Airport transfers, tour planning,
laundry, valet, limousine, 24-hour room service, ATM.
Wining & Dining: Villa Mediterrano, Champions Sports
Bar, the Library Lounge, & Cigar Bar, Piano Lounge.
AL QASR METROPOLE HOTELAl-Aroub Street, Shmeisani
PO Box 926192, Amman 11190
T: (+962) 6566 6140
F: (+962) 6568 9673
www.alqasrmetropole.com
Rooms: 66 rooms and suites.
Business & Conference Facilities: Fully equipped
business centre, three meeting rooms accommo-
dating 35 or 100-120 persons (depending on room
and setup), wireless internet.
Health & Leisure Facilities: Access to Fitness First
gym located within walking distance.
Guest Services: Room service, laundry, valet.
Wining & Dining: Vinaigrette, Trattoria, Oobe, the
Qyard.
LE MERIDIEN AMMAN Queen Noor Street, Shmeisani
PO Box 950629 Amman 11195
T: +962 6 56 96 511
F: +962 6 56 74 261
lemeridien.com/amman
Rooms: 430 rooms and suites
Buisness & Connferences Facilities: Royal Convention
Centre accomodating up 1500 guests, ballroom for
up 800 guests, 13 function rooms, fully equipped,
24-hour business centre and wireless internet.
Health & Leisure Facilities: 24-hour fitness centre.
jacuzzi, steamroom, sauna, indoor lap pool, outdoor
pool, massage, facials.
Guest service: 24-hour room service, ATM, gift shop,
laundry, valet, barber shop, beauty salon, taxi serv-
ice, car hire.
Wining & Dining: Benihana, Al Mukhtar, China Town,
Enzo, 282 Steaks & Lounge, Tiffany Bar, La Brasserie,
the Terrace (summer).
KEMPINSKI HOTEL AMMAN Abdul Hamid Shouman Street
PO Box 941045
Amman 11194
T: (+962) 6520 0200
F: (+962) 6520 0202
www.kempinski-amman.com
Rooms: 278 rooms and suites.
Business & Conferences Facilities: 11 meeting rooms,
one ballroom, one foyer and exhibition area accom-
modating up to 920 guests, fully equipped business
centre with complete secretarial services, fax, pho-
tocopying, PC workstations and 40-MB high-speed
internet access through WLAN.
Health & Leisure Facilities: Kempi Spa Wet Area, heat-
ed outdoor pool, fully equipped gym with cardiovas-
cular equipment, four treatment rooms, jacuzzi,
sauna and aerobic studio.
Guest Services: Two executive floors and one exec-
utive lounge, concierge, car hire, beauty salon, bar-
ber shop, laundry and dry cleaning, gift shop, flower
shop, taxi service and valet parking.
Wining & Dining: Via Appia Italian restaurant and bar,
Timeout sports bar, all-day dining Kempi Restaurant,
Le Café Lounge & Pool Terrace, H2O Club and Bar,
Strikers Entertainment Centre.
LE ROYAL HOTELS & RESORTS AMMAN Zahran Street, 3rd Circle, Jabal Amman
PO Box 52 Amman 11118
T: (+962) 6460 3000
F: (+962) 6460 3002
www.leroyal.com/amman
Rooms: 286 rooms and suites
Business & Conference Facilities: “Ishtar” is the largest
ballroom in town with a capacity up to 1200 guests
and seven function rooms, fully equipped 24-hour
business centre with complete secretarial services,
fax, photocopying, PC workstations and wireless
internet.
Health & Leisure Facilities: Fitness centre, jacuzzi,
steam room, sauna, indoor pool, outdoor pool, Dead
Sea pool, juice bar, massage, facials.
Guest Services: Concierge, 24-hour room service,
ATM, laundry and dry cleaning, valet, barbershop,
beauty salon, gift shops, taxi service, flower shop.
Wining & Dining: The Patio, Chesters, Ivy Café, La
Vista, Buddah Bar, Diwan Shahrayar, Beerkeller Sports
Bar.
FOUR SEASONS HOTEL AMMANAl Kindi Street, 5th Circle, Jabal Amman
PO Box 950344 Amman 11195
T: (+962) 6550 5555
F: (+962) 6550 5556
www.fourseasons.com/amman
191
THE REPORT Jordan 2014
Amman Marriot Hotel
Le Merdien Amman
Al Qasr Metropole Hotel
THE GUIDE HOTELS
Rooms: 192 rooms and suites.
Business & Conference Facilities: Grand Ballroom
divisible into three equal salons, four meeting rooms.
Health & Leisure Facilities: 24-hour spa, four treat-
ment rooms, sauna and steam room, indoor pool
with an adjacent whirlpool, outdoor pool with city
panorama, fitness centre with cardio machines,
weight-training equipment and a squash court.
Guest Services: 24-hour business services, concierge,
24-hour in-room dining, babysitting services, com-
plementary standard internet access, shopping
arcade with a bank, ATM, salon and other gift shops.
Wining & Dining: Asia, Vivace, the Square Bar, the Foy-
er Lounge, Five Grill & Lounge, Olea.
DANA PLAZA HOTEL AMMANAmman Sixth Circle
PO Box 850577 Amman 11185
T: (+962) 6592 4455
www.danaplazahotel.com
Rooms: 98.
Business & Conference Facilities: Meeting facilities.
Health & Leisure Facilities: Fitness centre, gymna-
sium, sauna.
Guest Services: Shops, 24-hour room service, dry
cleaning and laundry, maid service, parking, air con-
ditioning, cable/satellite television, ensuite bath-
room, hair dryer, IDD telephone, mini-bar.
Wining & Dining: Bar and lounge, breakfast buffet,
restaurant.
SHERATON AMMAN Jordan, Amman 5th Circle
PO Box 840064 Amman
www.sheratonammanalnabil.com
T: (+962) 6593 4111 / 8002 2422
F: (+962) 6592 0933
Rooms: 268.
Business & Conference Facilities: Business centre.
Health & Leisure Facilities: Gymnasium, sauna.
Guest Services: Dry cleaning and laundry, parking,
boutique, room service, vehicle hire.
Wining & Dining: Bar and lounge, restaurant, pool
bar.
LANDMARK AMMAN HOTELAl Hussein bin Ali Street
PO Box 6399 Amman
T: (+962) 6560 7100
(+962) 6566 5160
www.landmarkamman.com
Rooms: Premium, executive, executive suites.
Business & Conference Facilities: Business centre,
business services, internet access, photocopying,
secretarial services.
Health & Leisure Facilities: Health and fitness cen-
tre, herbal treatment, spa, tennis.
Guest Services: 24-hour concierge, 24-hour room
service, sightseeing tours, car hire, babysitting, cur-
rency exchange, high-speed wireless internet, doc-
tor on call, dry cleaning and laundry, ATM.
Wining & Dining: Breathers Bar, Colours all-day din-
ing restaurant, Executive Wing, Glass Bar & Restau-
rant, Mint Lounge, Ruby Restaurant, Sugar Cube,
Turquoise Restaurant, ZEST Pool.
GOLDEN TULIP GRAND PALACE HOTELQueen Alya Street
PO Box 922444 Amman 11192
T: (+962) 6569 1131
F: (+962) 6000 0000
www.grandpalaceamman.com
Rooms: 138.
Business & Conference Facilities: Conference rooms.
Health & Leisure Facilities: Beauty services, sauna.
Guest Services: 24-hour reception, dry cleaning and
laundry, parking, room service, safety deposit box,
bookshop, gift shop.
Wining & Dining: Bar and lounge, restaurant.
AQABA
MÖVENPICK RESORT & RESIDENCES AQABAKing Hussein Street
PO Box 678, Aqaba 77110
T: (+962) 3203 4020
F: (+962) 3203 4040
www.moevenpick-hotels.com/aqaba
Rooms: 296 rooms including 87 suites and apart-
ments.
Business & Conference Facilities: Ballroom, meet-
ing room, business centre.
Health & Leisure Facilities: Water sports, shopping,
children’s activities, pools, spa, hairdresser, gym.
Guest Services: Wired and wireless LAN, free mini-
bar, 24-hour room service, parking area.
Wining & Dining: Palm Court Restaurant & Terrace,
Red Sea Grill, Fun Pub, Bakery Shop & Café.
MÖVENPICK RESORT & SPA TALA BAY AQABASouth Beach Road
PO Box 2425, Aqaba 77110
T: (+962) 3209 0300
F: (+962) 3209 0301
www.moevenpick-aqaba-talabay.com
Rooms: 306 rooms including 145 family rooms and
two suites.
Business & Conference Facilities: Ballroom, meet-
ing room, business centre.
Health & Leisure Facilities: Diving centre, amphithe-
atre, gift shop, children’s activities, outdoor pools,
Zara Wellness Spa, hairdresser, nail studio, gym.
192
Mövenpick Resort &Residences Aqaba
Radisson Blu Tala Bay Resort,Aqaba
Mövenpick Resort & Spa TalaBay Aqaba
www.oxfordbusinessgroup.com/country/Jordan
THE GUIDE HOTELS
Guest Services: Wired and wireless LAN, mini-bar, 24-
hour room service, TV.
Wining & Dining: Najel, Casalingo Italian Restaurant,
Sejan, Al Baraka Lobby Lounge & Bar, Mello Chill-Out
Bar & Terrace, Siraj Arugillah Terrace, Azure Poolside
Bar, the Bop Bar.
RADISSON BLU TALA BAY RESORT, AQABA South Beach Road
PO Box 982, Aqaba 77110
T: (+962) 3201 4448 / 3209 0777
F: (+962) 3209 0799
www.radissonblu.com
Rooms: 336 rooms including standard, superior,
deluxe, family suites and executive suites.
Business & Conference Facilities: Two meeting rooms
with the latest high-tech equipment.
Health & Leisure Facilities: Beachfront, five outdoor
swimming pools (one heated in winter), kids pool,
beach massage, water sports and diving facilities.
Guest Services: Mini-bar, 24-hour room service, laun-
dry service, parking area and free high-speed wire-
less internet.
Wining and Dining: Aziab, Heat Wave, Bay Watch, Sun-
set Deck, Kenzi Lounge and Dugout Bar.
DEAD SEA
MÖVENPICK RESORT & SPA DEAD SEASweimeh, Dead Sea Road
PO Box 815538, Amman 11180
T: (+962) 5356 1111
F: (+962) 5356 1122
www.moevenpick-hotels.com/dead-sea
Rooms: 346 room and suites.
Business & Conference Facilities: Ballroom, meet-
ing room, business centre, auditorium, outdoor ven-
ues include Sunset Arena, Beach Lounge, Argileh
Roof, Palm Court and Palm Yard.
Health & Leisure Facilities: Children’s activities, pools,
Zara Spa, hairdresser, gym, gift shop, therapy cen-
tre, tennis court, Souk Zara outlet.
Guest Services: Wired and wireless LAN, free mini-
bar, 24-hour room service, TV, parking area.
Wining & Dining: Al Saraya Restaurant, Al Khayyam
Bar, Al Hana Lounge, Luigi’s Restaurant, the Grill
Restaurant, the Chopsticks Restaurant, Valley Café
& Bar, the Splash Restaurant, the Beach Lounge, the
Zara Spa Juice Bar.
CROWNE PLAZA JORDAN DEAD SEA RESORTS & SPAPO Box 100 Swemieh Dead Sea 18186
T: (+962) 5349 4000
F: (+962) 5349 4004
www.crowneplaza.com/deadseajordan
Rooms: 420 rooms and suites.
Business & Conference Facilities: Obadas ballroom,
Shaqilath and Gamilath meeting rooms.
Health & Leisure Facilities: Thalgo Spa, three pools,
beach, amphitheatre, kids club.
Guest Services: Mini-bar, 24-hour room service.
Wining & Dining: Burj Al Hamam, El Grito’s Latin
American, Ambrosia, Rabbel, Promenade.
PETRA
MÖVENPICK RESORT PETRATourism Street
PO Box 214, Petra 71819
T: (+962) 3215 7111
F: (+962) 3215 7112
www.moevenpick-hotels.com/petra
Rooms: 183.
Business and Conference Facilities: Conference ven-
ue space for up to 100 delegates.
Health & Leisure Facilities: Swimming pool, fitness
centre, spa area.
Guest Services: Wi-Fi, free mini-bar, cleaning serv-
ice, gift shop, currency exchange bureau, car hire
service.
Wining & Dining: Al Baraka Tea Room, Al Iwan, Al
Saraya, Al Maqa’ad Bar, Burckhardt Lounge, the Car-
avan Stop Shop.
MA’IN DESERT
EVASON MA’IN HOT SPRINGS & SIX SENSES SPAPO Box 801 Madaba
11117 Ma’in
T: (+962) 5324 5500
F: (+962) 5324 5500
www.sixsenses.com/evason-resorts/ma-
in/destination
Rooms: 97 rooms and suites.
Business & Conference Facilities: Banqueting suite
able to cater up to 100 persons, equipped with the
latest technology; Jabal board room suitable for
smaller meetings and events.
Health & Leisure Facilities: Six Senses spa, children’s
activities, wine cellar, pool, gallery, hot springs, gym,
library, movie night, outdoor excursions.
Guest Services: Rain showers, butler service for
suites, 33-inch flatscreen TV, Bose wave sound sys-
tem, iPod universal docking station, balcony, DVD
player; upon request, seating area with a games
table; selected suites offer views to the waterfalls,
private bath tub, spa areas, pantries and wine cel-
lar, mini-bar.
Wining & Dining: At Springs, Senses of Arabia, Panora-
ma, Brown Bar, White Bar, Chef’s Table, the Cellar,
dining by the pool, Olive, in-room dining, private din-
ing and destination dining.
193
THE REPORT Jordan 2014
Mövenpick Resort & Spa DeadSea
Evason Ma’in Hot Springs & SixSenses
Mövenpick Resort Petra
Crowne Plaza Jordan Dead SeaResorts & Spa
THE GUIDE LISTINGS
The people of Jordan are renowned for their hospital-
ity, often going out of their way to assist visitors, and
making friends with local Jordanians is relatively easy.
While Arabic is the country’s official language, English
is widely used as most students learn it from young age.
194
Western attire is becoming more popular, especially in
the cities, although traditional garb such as the men’s
red-and-white keffiyeh (head covering) and the women’s
hijab (headscarf) are still prevalent. Outside of urban
centres, it is best to avoid wearing revealing clothing.
GOVERNMENT MINISTRIESRoyal Court
(+962) 6463 7341
Council of the Nation
(Parliament)
(+962) 6563 5100
House of Representatives
(+962) 6566 4121
Prime Ministry
(+962) 6580 5700
Awqaf & Islamic Affairs
(+962) 6566 6141
Agriculture
(+962) 6568 6151
Communications &
Information Technology
(+962) 6464 1221
Culture
(+962) 6569 6218
Education
(+962) 6560 7181
Energy and Mineral
Resources
(+962) 6586 3326
Environment
(+962) 6556 0113
Foreign Affairs
(+962) 6573 5150
Finance
(+962) 6463 6321
Health
(+962) 6520 0230
Higher Education &
Scientific Research
(+962) 6534 7671
Interior
(+962) 6569 1141
Industry & Trade
(+962) 6562 9030
Justice
(+962) 6465 3533
Labour
(+962) 6580 2666
Municipal Affairs
(+962) 6464 1393
Planning & International
Cooperation
(+962) 6464 4466
Political Development
(+962) 6569 5216
Public Works & Housing
(+962) 6585 0470
Royal Hashemite Court
(+962) 6463 7341
Sector Development
(+962) 6465 4134
Social Development
(+962) 6593 1391
Tourism & Antiquities
(+962) 6460 3360
Transport
(+962) 6551 8111
Water & Irrigation
(+962) 6568 3100
Greater Amman
Municipality
(+962) 6463 6111
Capital Governorate
(+962) 6566 5141
General Command
(+962) 6462 2131
Air Force
(+962) 6489 6351
Management of Foreign
(+962) 6562 3345
Police Directorate
(+962) 6563 8400
Vehicle Licensing
(+962) 6487 1510
General Intelligence
(+962) 6586 5131
Directorate of Civil Defense
(+962) 6566 1111
Directorate of Royal
Medical Services
(+962) 6580 4804
Press and Publications
Department
(+962) 6565 0231
Directorate of Antiquities
(+962) 6464 4336
Civil Status and Passport
Directorate
(+962) 6563 3530
General Supplies
Department and Tenders
(+962) 6556 1616
Income Tax Department
and Sales
(+962) 6460 4444
Directorate of Land and
Space
(+962) 6463 2601
Department of Statistics
(+962) 6530 0700
Jordan Meteorologiccal
Department
(+962) 6489 2408
Civil Service Bureau
(+962) 6560 4191
Audit Bureau
(+962) 6550 3333
Higher Council for Science
and Technology
(+962) 6534 0401
Royal Scientific Society
(+962) 6534 4701
Directorate of Passports
(+962) 6463 5378
Social Security
(+962) 6550 7505
HOSPITALS Arab Medical Centre
(+962) 6592 1199
Abdulhadi Eye Centre
(+962) 6465 5553
Al Khaldi Medical Centre
(+962) 6464 4281
Luzmila Hospital
(+962) 6462 4345
Islamic Hospital
(+962) 6568 0127
Ibn Al Haytham Hospital
(+962) 6551 6808
Istishari Hospital
(+962) 6500 1000
Amman Hospital
(+962) 6464 1261
Specialised Medical Centre
(+962) 6560 9609
Jordan Hospital
(+962) 6560 8080
Palestine Hospital
(+962) 6560 7071
Shmaisani Hospital
(+962) 6560 7431
Marka Ismalic Hospital
(+962) 6489 3855
Philadelphia Hospital
(+962) 6585 4801
Israa Hospital
(+962) 6530 0300
Specialised Eye Hospital
(+962) 6551 1176
Al Quds Hospital
(+962) 6438 7181
Istiklal Hospital
(+962) 6565 2600
Al Mowasah Hospital
(+962) 6489 6842
Italian Hospital
(+962) 6477 7101
Jabal Amman Maternity
Hospital
(+962) 6464 2362
Al Haya Hospital
(+962) 6439 1111
Jabal Al Zaytoun Hospital
(+962) 5365 5555
Al Hikma Hospital
(+962) 5398 2370
Qasr Shbaieb Hospital
(+962) 5398 2370
Al Safaa Specialised
Hospital
(+962) 2635 0055
Al Qawasmi Hospital
(+962) 2724 3401
Irbid Islamic Hospital
(+962) 2727 3111
Rosary Hospital
(+962) 2710 0161
Irbid Specialised Hospital
(+962) 2710 3100
Al Mahabeh Hospital
(+962) 5324 5541
Italian Hospital Al Karak
(+962) 3235 1145
Queen Rania Hospital
(+962) 3566 5131
Islamic Hospital Aqaba
(+962) 3201 8444
Aqaba Modern Hospital
(+962) 3201 6677
Pharmacy 1
(+962) 6464 2837
Al Deera Pharmacy
(+962) 6568 1480
www.oxfordbusinessgroup.com/country/Jordan
THE GUIDE LISTINGS 195
THE REPORT Jordan 2014
Pre-paid mobile phone SIM cards are cheap and easy
to purchase, and top-up minutes can be bought at
mobile phone stores throughout the country. Inter-
net cafés are common, and pre-paid mobile USB sticks
for internet service on laptops are widely available.
The national currency is the Jordanian dinar, subdivid-
ed into 1000 fils and trading at 1.41:1$ as of Septem-
ber 2014. Credit cards may be used in major cities, but
it is advisable to travel with cash, especially outside
Amman. ATMs are widely available in major urban areas.
Khalid Bin Al Walid
Pharmacy
(+962) 6567 4705
Khamees Pharmacy
(+962) 6569 3198
Grand Pharmacy
(+962) 6566 4511
Shmaisani Pharmacy
(+962) 6567 3660
Ammoun Pharmacy
(+962) 6568 0722
AL Hamra Pharmacy
(+962) 6568 4172
CHAMBERS OF COMMERCEFederation of Chambers
(+962) 6567 4495
Amman
(+962) 6566 6151/2/3
Al Zarqa
(+962) 5385 3307
Al Mafraq
(+962) 2623 4197/8
Maan
(+962) 3213 2050
Aqaba
(+962) 3201 2235
Al Ramtha
(+962) 2738 3178
Al Karak
(+962) 3235 1171
Al Tafila
(+962) 3224 1085
Madaba
(+962) 5324 4120
Jerash
(+962) 2635 1278
Al Mazar
(+962) 3237 2359
BUSINESS ASSOCIATIONSUS Chamber of Commerce
(+962) 6565 1860
Jordan Enterprise
Development Corporation
(+962) 6560 3507
US Agency for International
Development
(+962) 6590 6000
CHAMBERS OFINDUSTRYAmman
(+962) 6464 3001
Al Zarqa
(+962) 5365 4160
Irbid
(+962) 2735 8221
EMBASSIES & CONSULATESAlgeria
(+962) 6464 1271
Austria
(+962) 6460 1101
Australia
(+962) 6580 7000
Bahrain
(+962) 6566 4148
Belgium
(+962) 6465 5730
Brazil
(+962) 6592 3941
Brunei Darussalam
(+962) 6592 8021
Bulgaria
(+962) 6552 9391
Canada
(+962) 6590 1500
China
(+962) 6551 5151
Croatia
(+962) 6582 8156
Cyprus
(+962) 6565 7981
Czech Republic
(+962) 6592 7051
Denmark
(+962) 6560 9500
EU Delegation
(+962) 6460 7000
Egypt
(+962) 6592 9808
Finland
(+962) 6582 4607
France
(+962) 6460 4630
Germany
(+962) 6590 1170
Greece
(+962) 6592 2725
Hungary
(+962) 6592 5614
India
(+962) 64622098
Indonesia
(+962) 6592 6908
Iraq
(+962) 6462 3175
Ireland
(+962) 6553 3616
Israel
(+962) 6550 3542
Italy
(+962) 6463 8185
Japan
(+962) 6593 2005
Korea
(+962) 6593 0745
Kuwait
(+962) 6567 5135
Lebanon
(+962) 6592 9111
Libya
(+962) 6569 3101
Luxembourg
(+962) 6478 1135
Norway
(+962) 6590 2450
Malaysia
(+962) 6590 2400
Morocco
(+962) 6568 0591
The Netherlands
(+962) 6590 2200
New Zealand
(+962) 6420 5112
Nigeria
(+962) 6592 3481
Norway
(+962) 6593 1646
Qatar
(+962) 5902 3900
Oman
(+962) 6568 6155
Palestine
(+962) 6567 7517
Oman
(+962) 6568 6155
The Philippines
(+962) 6592 3748
Poland
(+962) 6551 2593
Qatar
(+962) 6590 2300
Romania
(+962) 6581 3423
Russia
(+962) 6464 1158
Saudi Arabia
(+962) 6592 6941
Serbia
(+962) 6593 9292
Singapore
(+962)
Slovakia
(+962) 6465 7652
South Africa
(+962) 6 592 1194
South Korea
(+962) 6593 0745
Spain
(+962) 6500 1628
Sweden
(+962) 6590 1300
Syria
(+962) 6592 0684
Tunisia
(+962) 6592 2743
Turkey
(+962) 6500 2325
UAE
(+962) 6593 4781
UK
(+962) 6590 9200
US
(+962) 6590 6000
Yemen
(+962) 6592 3771
CAR HIREPayless
(+962) 6552 5180
Reliable Car Rental
(+962) 6592 9676
COURIER SERVICESAramex
(+962) 6535 8855
THE GUIDE
NATIONAL CHARACTER: The people of Jordan are
renowned for their hospitality. Visitors will find it com-
mon to be greeted by the words, “Welcome to Jordan”.
Most people go out of their way to assist visitors, and
making friends with local Jordanians is relatively easy.
LANGUAGE: Arabic is the country’s official language,
though English is widely used as most Jordanian stu-
dents are required to study the language from a young
age. Street signs and buildings are often labelled in
both Arabic and English, making navigation easier for
Westerners. Still, knowing basic Arabic words and phras-
es is very useful and most locals appreciate the effort.
DRESS: Style of dress is reflective of the diverse and
changing nature of Jordanian society. Western cloth-
ing is becoming increasingly popular, especially in urban
settings, though traditional garb such as the men’s red-
and-white keffiyeh (head covering) and the women’s
hijab (headscarf) are still prevalent. Although many
Jordanians do not dress conservatively, it is recom-
mended that travellers remain cognizant of local cus-
toms and traditions and avoid wearing revealing cloth-
ing, especially outside urban centres. Women are
generally encouraged to keep their shoulders covered
and avoid low-cut shirts. It is rare for men to wear
shorts, even in the hot summer weather.
BUSINESS HOURS: The work week begins on Sunday
and ends on Thursday, with most businesses staying
open from 9am until 5pm. Banks are open from 8.30am
until 3pm and most government organisations have
operating hours from 8am until 2pm. Many business-
es and shops are closed on Fridays.
WEATHER: Do not be fooled by Jordan’s location in the
Arabian Desert. Winters can be quite cold, with tem-
peratures in Amman frequently dropping below 5°C
during the month of January. Freezing rain and even
snow is not uncommon in winter months, especially in
the north. By contrast, summer months can often be
oppressively hot, with temperatures exceeding 36°C.
The best time to visit for sightseeing is in April, when
temperatures are typically warm and the weather is mild.
HEALTH: Jordan’s health system is highly regarded and
medical tourism in the country is an increasingly lucra-
tive business. Doctors and staff receive extensive train-
ing, and facilities are generally well equipped with the
latest technology and equipment. Hospitals and health
centres are abundant, especially in the capital. Most
doctors speak excellent English. The price of health
care services and most pharmaceuticals is relatively inex-
pensive compared to those in the West. Pharmacies
are plentiful and Jordan is host to one of the region’s
leading pharmaceutical sectors.
ELECTRICITY: Jordan’s electrical system is 220 V. Elec-
trical outlets come in both European two-pronged and
British three-pronged types. US plugs must be used with
an adapter and power converter.
COMMUNICATIONS: Purchasing pre-paid mobile tele-
phone SIM cards is cheap and easy, and additional min-
utes can be purchased at one of the many mobile phone
stores located throughout the country. The internet con-
nection can be inconsistent at times. Internet cafés are
widespread, and pre-paid mobile USB sticks for inter-
net service on personal laptops are widely available.
VISAS: Obtaining an entry visa to Jordan is relatively
simple. Most nationalities can purchase a single-entry
visa upon arrival for JD20 ($28.25) at land, sea and air
entry points. However, the King Hussein Bridge con-
necting Israel to Jordan does not issue visas on arrival
when entering the kingdom. Tourist visas are valid for
30 days and can be extended up to three months by
registering at a local police station.
CURRENCY: The national currency is the Jordanian
dinar. The dinar is subdivided into 100 piastres and
1000 fils. Paper notes come in denominations of JD50,
JD20, JD10, JD5 and JD1, while coins come in values of
JD1, 500 fils, 250 fils, 50 fils, 25 fils and 10 fils. Credit
cards can be used in the major cities, but it is recom-
mended to travel with cash, especially outside of Amman.
Even in large cities, taxicabs and local vendors may
only accept cash and often only small bills. ATMs
are widely available in the kingdom’s major urban areas.
196
Facts for visitorsUseful tips for business and leisure travellers
www.oxfordbusinessgroup.com/country/Jordan
