Investing in Jordan
Trade, renewable energy, pharmacy and tourism

 

Investment environment:

Jordan has an open economy based on an encouraging investment and trade environment, appropriate skills and a modern infrastructure which allows it to move forward to become a knowledge economy. Jordan abounds with investment advantages, in addition to laws promoting investment together with low risks thanks to security and political stability. It also benefits from low operating costs, especially skilled workforce.

Indeed, various sectors provide several benefits like exempting investments in the agricultural sector from revenue taxes, exempting the renewable energy revenues from custom fees as well as other benefits granted to investment in the sectors of pharmaceuticals, health, transport, information technology, communication and tourism. The government has been recently focusing on providing more facilities through activating the investment window, removing the barriers to investment and simplifying the ownership procedures for foreign investors.

Despite the adverse effects of external shocks that led to the semi-closing of Syria’s and Iraq’s markets, with the Syrian refugees crisis, the economy in Jordan showed some progress in the first half of 2017 thanks to the recovery of exports, tourism revenues and remittances compared to 2016. It is expected that the total GDP registers a real growth by 2.3% in 2017, and that the inflation rate stabilizes at 2.5% by the end of the same year. A gradual decrease is also projected in the current deficit backed by structural reforms and fiscal cohesion.

 

Ease of cross-border trade:

Jordan ranked first in the Arab region and 50^th worldwide in the area of cross-border trade facilitation among 190 countries in the world. Indeed, cross-border trade became easier with swifter customs procedures and better use of the one stop shop, while Customs and port infrastructure was improved in Aqaba. The tax payment process was also facilitated.

In 2017, the Customs Department launched a strategic plan for 2017-2019 aiming at placing Jordan among the 20 top countries in the world in terms of cross-border trade security and facilitation, within Jordan’s vision 2025 and all related national programs. The plan is underpinned by eight objectives articulated around facilitating the Customs clearance procedures, increasing the institutional performance and capacities effectiveness, raising financial revenues, upgrading collection efficiency, improving beneficiaries’ satisfaction, strengthening corporate social responsibility, developing fact-finding processes, risks management, improving customs operations in control and supervision and promoting environmental sustainability. The plan shall be implemented through a series of initiatives mainly focused on cooperation with all partners in the public and private sectors, as well as on service providers, continuous improvement, follow up of the performance assessment and reliance on IT and communications. This will contribute to reinforcing the competitiveness of the Jordanian economy while facilitating the trade exchange movement and consolidating the trust of all individuals engaging in business with the Customs administration and staff.

 

Jordan's ranking in the World Bank indicators for ease of doing business for 2017 among 190 countries

 

Source: World Bank Doing Business 2017

 

Main sectors for investment:

The renewable energy sector is now taking the lead in attracting foreign direct investments after the traditional energy sector, alongside the real estate, financial services and communication sectors. There are major investment opportunities in the sectors of construction materials, chemical and pharmaceutical products, minerals as well as the hotels and tourism sector, the textile industries, the treatment industries and medical devices, crafts industries and other areas.

Here below are the top 10 sectors that attracted foreign direct investments during the period 2012-2016.

Jordan: Foreign direct investments according to the top 10 sectors (US$m)

Source: Fdi markets

Major countries investing in Jordan 2012-  2016

Ibid.

Development needs:

It is important in the next stage to revise the tax system in order to reduce charges on the business sectors, and to streamline laws and legislations related to investment while focusing on the following:

-     Strengthen the finance mechanisms for small and medium enterprises.

-     Set the legislations aiming at protecting small investors.

-     Simplify and streamline the legislations related to companies’ liquidation.

-     Reinforce the legal environment to ensure the smooth execution of contracts