Jordan’s industry under stress

Jordan’s industrial sector is in deep trouble. It is in a retreat mode, producing less and selling at lower prices. One wonders how our national industry can stand up to competition, develop and grow if its output this year is 1.3 per cent lower than the previous year, while at the same time its selling prices are 3.1 per cent lower than last year. 

The above rates indicate that, on average, industry’s total sales are 4.4 per cent lower. The impact of this bad situation is made even worse when we take into consideration that the cost of production must have risen by 3.2 per cent, as did the general inflation rate. Thus, the total loss in real terms would be in the order of 7.6 per cent in one year. 

This state of affairs did not happen only this year. A similar development took place in the previous year and the year before. It is a continuous trend.  

What is happening is not less than a sustained spiral retreat that calls for worry about the future of the industrial sector, which is still making the biggest contribution to the gross domestic product ahead of all other sectors, providing the highest share of exports and generating the most number of jobs.  

Jordanian industries are of small size because the local market is small. They depend heavily on imported raw material. Therefore, the value added in Jordan’s industry hardly reaches 30 per cent.

Is there a solution that the government can adopt in order to save industry? But before that, what are the major hurdles facing the sector and putting it under stress?

It is obvious that the local market is very limited, but even this small market is being overrun by industrial products imported from countries where industry is subsidised one way or another, such as Turkey and the Arab Gulf states, or from advanced industrial countries that enjoy unjustified facilities in entering the Jordanian market without restrictions.

Jordan plays the role of the loser in all free trade agreements reached with advanced countries. Local industries are still in the infant stage and not ready to meet the fierce competition and benefit from the mutual opening up of markets.

Jordan’s industry is unable to face foreign competition in its own market, let alone competition in the markets of America, Europe and the Far East, which swept the small local market with their high quality and moderately priced products made possible by high technology and large-scale production that reduces the cost.

If the survival of the national industry is to be attained and for the sector to grow, it needs some sort of protection and a review of the haphazard free trade agreements Jordan was too eager to sign with the economies of advanced countries with large-scale industries that are superior in size, quality, and price. 

Our officials signed many free trade agreements under the light of television cameras to the detriment of national industry. The result is obvious.