Country name: Hashemite Kingdom of Jordan
Population: 5,906,760 (July 2007 estimate)
Land Area: 92,300km²
Official Language: Arabic
Currency: 1 Jordanian Dinar (JD) = 1,000 fils
Capital: Amman
Main Cities: Al Ramtha, Al Mafraq, Irbid, Ajloun, Jarash, Salt, Zarqa, Aqaba
In 2006 Jordan achieved some notable economic successes, especially in terms of attracting foreign investment and ended the year with its economy expanding by 6.2%. Though representing solid growth, this was still down on the 7.2% of 2005 and the 8% of 2004. The Kingdom has also experienced strong growth in its exports, which rose by 18% year on year, with increased ready-to-wear clothing sales to the Gulf and a strong demand in fertilizers contributing to this success.
Jordan was ranked 5th among the countries of the Middle East and North Africa in the international report of Doing Business 2007 from the International Financing Program of the World Bank which was released in February 2007. The report commented that the business climate in the country had improved due to the reform policies of the government. The Kingdom’s Minister of Industry and Trade Salem Khazaaleh said that Jordan took the World Bank grading very seriously, which clearly measures the country’s success in attracting foreign investment. In global terms, Jordan was ranked 78th out of 175 countries.
Jordan ended the year with a budgetary deficit of $320 million or 4.5% of GDP, but the government is looking to reduce it to a more manageable $270 million or 3.4% in 2007.
Foreign investment reached $3 billion, double the figure for 2005 mainly coming from the Gulf, Jordan’s traditional investors. Most of the investment was directed towards the property and tourism sectors. As the IMF commented, Jordan’s structural reforms have been progressing well, particularly privatization. Through to November 2006, five companies were sold, yielding receipts of $0.6 billion, representing 4.3% of GDP. The most important transaction, Jordan Telecom, yielded $0.4 billion, in itself more than 3% of GDP, with additional receipts expected in 2007. Jordan also embarked on a program to improve education, health, and public administration with support from the World Bank and other agencies.
In recent years the country has made great strides in opening and liberalising its economy, notably investment and trade legislation, and progressing on a program of privatization. Jordan early recognised the benefit that foreign investors can bring in terms of know-how, access to markets, foreign exchange and the creation of employment opportunities for local people. The investment climate can be considered generally favourable compared with some other parts of the region, although both domestic and international investment decisions can be influenced by regional security factors. Foreign investment levels have increased substantially over the last few years. However investment from European Union member states remains relatively low indicating that obstacles to further growth remain to be removed.
Jordan’s main agricultural products are wheat, barley, citrus, tomatoes, melons, olives; in addition can be mentioned the rearing of sheep, goats and poultry.
The main industries in the country are textiles, phosphate mining, fertilizers, pharmaceuticals, petroleum refining, cement, potash, inorganic chemicals, light manufacturing and the tourism sector. Jordan’s main natural resources are phosphates, potash and shale oil.
The real estate sector enjoyed a good year in 2006, with high levels of investment and a series of major new developments announced. The single biggest property venture is a tourism development to be built at the Red Sea port of Aqaba by the Saudi Arabian construction firm Saudi Oger and rights holder Saraya Aqaba, which has an estimated value of $995.7million.
During 2006, Jordan also unveiled a series of new infrastructure projects, as part of its drive to become a major logistics and transport centre for the region. These include plans for a 28km standard gauge rail link between Amman and the industrial city of Zarqa estimated at between $120 and $140 million, upgrades and expansion of the port of Aqaba and a $284 million scheme to build a new terminal at Queen Alia International Airport.
Plans to create a single financial hub in the capital Amman are currently moving ahead, with the appointment in February 2007 of a design team for the $70 million Jordan National Financial Centre project. The scheme will see the moving of the Amman Stock Exchange from its present site in the capital’s Arjan district, to a new location near the Jordan Securities Commission building in the Shmeisani district.
With regards the stock market, the Amman Stock Exchange saw its index falling just over 30% during 2006 and its trading volume off 16% compared to 2005. The big loser was the financial sector, where the index fell by 33%, followed by a 19% drop in the services sector index while the industry index was down 16% of the year end figure for 2005. Total capitalisation on the Amman Stock Exchange stood at $15 billion when trading closed for the year, 21% below the level for the same time the previous year. However, as a reflection of the greater interest by foreign investors in Jordan, the net holdings of non-Jordanians of listed shares rose to 45.1% by the end of 2006.
In early February 2007, Jordan’s Transport Ministry announced that it would allocate JD 60 million ($85.2 million) over the next three years towards the infrastructure costs of the Amman-Zarqa light rail system, whose total cost is put at $200 million. The railway is due to be completed by 2009 on a build-operate-transfer basis. Some 17 companies prequalified for the project with a deadline set by the Public Transport Regulatory Commission at 26 April 2007 for the submission of bids. The project envisages the construction of an electric-powered line between the Kingdom’s two largest cities. Land near the planned stations will be made available for development.
Aqaba Port Re-development
Plans for the major redevelopment of the main Port of Aqaba are getting under way with the Aqaba Development Corporation (ADC) issuing a tender at the end of March 2007 for the build-operate-transfer (BOT) contract for the $3,000 million project.
The redevelopment is to be split into two phases. Under the $1,000 million first phase, the existing port facilities, currently located near the town, will be transferred to the new Southern Industrial Zone (SIZ), which is further south on the border with Saudi Arabia. The ADC will invest up to $800 million to build deeper, multi-purpose terminals at the SIZ, which will have a handling capacity of up to 30 million tonnes a year.
Under a $2,000 million second phase, an area of about 2 km2 will be developed as a mixed-use real estate project. Two Dubai-based firms, Emaar Properties and Abraaj Capital, have expressed interest in the scheme.
Plans also envisage the construction of a passenger ferry terminal close to the town and an oil terminal, the location yet to be determined.
The country’s main export goods are apparel and clothing accessories, animal and vegetable fats and oils, natural or cultured pearls and precious or semi-precious stones, vegetables, plants, roots and tubers, mineral or chemical fertilizers, crude phosphate, preparation of pharmaceutical products, non-organic chemical compounds and products, electrical machines, equipments, appliances and parts, plastic and its products, mineral fuel, wax, and bituminous substances, motor vehicles, tractors and motorcycles, tobacco and manufactured tobacco substances, pig iron and steal, and aluminum and its products.
Meanwhile, the most important imports are crude oil, electrical machines, equipments, appliances and plants, machines, equipments and accessories, animal or vegetable fats and oils and their fractions, knitted fabrics, pig iron and steel, motor vehicles, tractors and motorcycles, plastic and its products, natural or cultured pearls and precious or semi-precious stones, diesel oil, petroleum spirits (benzene), paper, paperboard and its products, aluminum and its products, articles of wood and wooden charcoal, and cotton.
Jordan’s imports from the EU consist mainly of machinery, transport equipment, chemical and agricultural products. The EU is Jordan's seventh export market. Jordanian exports concentrate on the following products: minerals 25%, chemicals 50%, and oils 12%.
The agro food sector is still important to the Jordanian economy, despite a decline accentuated since the 1990s. Trade liberalization in agriculture is well-advanced with the objective of the liberalization of 99.4% of its agricultural exports to the EU.
Pharmaceuticals are seen as one of the most competitive sectors, with prospects for growth from outsourcing by EU companies.
Services account for 73% of Jordanian GDP in 2005. Jordan commercial services balance with the world has been positive until 2000. Jordanian leading export services sectors are travel (55%) and transportation (22%). Services sectors reforms are well advanced and generally in line with international best practices and principles of the Single Market. Jordan has made substantial commitments under GATS by binding 11 sectors.
The EU's policy towards the Mediterranean region as a whole is governed by the Euro-Mediterranean Partnership, launched at the 1995 Barcelona summit between the European Union and its 10 Mediterranean partners. Jordan is an active participant in furthering the trade objective of this process whose aim is to create a Euro-Mediterranean Free Trade Area by 2010 via a network of bilateral Association Agreements between the EU and individual Mediterranean partners, together with free trade agreements between the partners themselves. The Euro-Mediterranean Association Agreement with Jordan was signed on 24 November 1997 and entered into force on 1 May 2002, replacing the Co-operation Agreement of 1977.
Industrial products originating in Jordan are imported into the EU free of customs duties and charges. Reciprocally, Jordan abolished customs duties and charges on a large number of products originating in the Community and is liberalising the remaining products in several stages, according to their sensitivity for Jordanian markets.
On 25 February 2004, Jordan signed a free trade agreement with Egypt, Morocco and Tunisia. The Agadir Agreement, as it is known, commits the parties to removing substantially all tariffs on trade between them, and to intensifying economic cooperation notably in the field of harmonising their legislation with regard to standards and customs procedures. It will soon enter into force, once Morocco has completed its ratification process. Jordan aims to conclude FTA negotiations with Turkey by the end of 2006. Jordan signed a bilateral free trade agreement with the US in 2000 and a free trade agreement with Singapore in 2004. Jordan became a member of the World Trade Organisation (WTO) in April 2000.
Quelle: Ghorfa, Arab-German Chamber of Commerce & Industry e.V.
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