Magazine article The Middle East

Jordan Achieves Record Foreign Investment: Jordan's Plan to Open Up Its Markets, to Provide Investment Incentives That Will Ensure Both Economic and Social Prosperity, Is Paying Dividends

Magazine article The Middle East

Jordan Achieves Record Foreign Investment: Jordan's Plan to Open Up Its Markets, to Provide Investment Incentives That Will Ensure Both Economic and Social Prosperity, Is Paying Dividends

Article excerpt

Despite a major fiscal crisis, Jordan is on target to reap some $5.4 billion in investments this year, thanks to substantial new incentives under its Investment Promotion Law. Figures for the first two months of 2010 show an increase of 235%, to just under $900 million, compared to the same period in 2009. Some analysts and bankers say the total could be even higher by the end of 2010 if global economic recovery is maintained and if political and economic development in neighbouring Iraq accelerates.

Foreign investments during the January to February period this year amounted to $207 million, about a quarter of the total. This represented an increase of 115% over the same period last year, despite the global economic downturn. Saudi Arabia led by volume, followed by Yemen, the US, Spain, Iraq, the Palestinian Authority, the UK and Japan, according to official figures.

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Local investments reached $690 million, up by more than 300% compared to the same period in 2009. The rise reflected in part a greater willingness of local investors to fund projects in Jordanian dinars, analysts reported. Tourism, including amusement parks and hotels, industry and agriculture were the main beneficiaries. The projects include a new five-star hotel and a $200-million factory in Tafileh to produce construction materials.

As part of efforts to reduce the current budget deficit, which has been adversely affected by falls in foreign aid, tourism receipts and workers' remittances, the government of Prime Minister Samir Al Rifai is planning to introduce legislation to promote public-private partnerships with sweeping new incentives to attract foreign investors, according to media reports in Amman.

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Jordan has managed to avoid the worst of the global recession and, according to the IMF, is expected to register a real growth rate this year of 4%, while inflation is predicted to average about 3%. Overall, the IMF is forecasting an average annual growth rate of 5% between now and 2014.

Although the country's property sector has been severely affected following an unprecedented boom prior to the global financial crisis, the banking sector has emerged unscathed. Last year, the consolidated assets of Jordan's domestic banks rose by an impressive 7.3%, largely because of a 12.3% rise in customer deposits, according to a report by Bank Audi in Beirut. Central Bank reserves hit a record high of more than $11 billion.

This year, company balance sheets, tax receipts, retail sales and employment are expected to be affected adversely by the austerity budget brought in by Al Rifai's government, which assumed office in December. Budget cuts of some $1.4 billion are planned in order to bring the deficit down to 6.3% of gross domestic product (GDP), compared to 7.8% last year.

The Jordan Investment Board (JIB) is highlighting a number of sectors which it sees as favourable to both foreign and local investors, including textiles, pharmaceuticals, energy, tourism, infrastructure and utilities.

Textile exports have been growing at annual rate of 20% for the past five years, according to the JIB. …

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