The cutting edge

Jordan is a country whose business entities are primarily (99.6 per cent) made up of micro, and small and medium-sized enterprises (SMEs).

Manufacturing SMEs are currently in a tough position, as energy, fees and taxes continue to rise.

Adding to this the flood of competition from Asian giant markets such as China and India, one immediately shifts into an emergency mindset.

SMEs need to continuously grow if the economy and welfare are to rise.

Transforming each and every one of them into something different or bigger is what eventually leads to development in a global sense.

Of course, not all SMEs should survive; some can be expected to exit the market quickly and transfer their investment into other opportunities, especially if the government maintains its stance of raising energy prices.

Businesses that cannot enjoy the same market edge as competitors in the US, China and Southeast Asia should also exit.

Those that do not have time to innovate must find the time or face withering prospects. Those that cannot adopt lean manufacturing principles and optimum value chain techniques should try to do so.

Planners should ask why businesses in the West are outsourcing to the East (China and India).

The main factor is not quality, but price for reasonable quality.

Western companies focus their resources on creativity and innovation; the higher end of manufacturing.

West and East are partnering and Jordan needs to be there to benefit from such flows, or miss the train.

How can Jordan, a small country that is hurting from high energy costs, small labour force, brain drain, no railway infrastructure, water shortages and unreasonably expensive real estate, grab the chance to become a manufacturing hub?

By moving into knowledge creation and high value-added manufacturing.

Low value-added and normal activities will not work for this small, resource-starved economy. It has to go into R&D and greater emphasis on scientific knowledge and technical input into production.

It is not easy to do that, however.

The first step must be a serious political commitment and a shift towards more stable legislation, not fast or continuously restructuring legal frameworks.

Manufacturing more than most requires a stable, enabling legal environment. This should arise from a policy statement, non-existent so far.

And even though budgets are scarcely flexible — have been so for several years now thanks to a rentier system that is stripping the budget of any fiscal development space or any type of industrial policy — funds must be committed.

Our only route to survival is through being on the cusp of the cutting edge.

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