Business

AMMAN — Secretary General of the Jordan Investment Commission (JIC), Mikhled Omari, on Tuesday  briefed Imad Faqid, vice president of the Airbus Group for MENA, on the procedures that the government has taken recently to increase foreign and local investment in the country.

During the briefing, Omari said the government has endorsed a unified investment law to eliminate red tape, offer more incentives, and make it easier for investors to set up projects, the Jordan News Agency, Petra, reported. Omari asserted JICs willingness to support Airbus Group in bringing more investments to the Kingdom.

LONDON — Eight men own the same wealth as the poorest half of the world's population, a level of inequality which "threatens to pull our societies apart", Oxfam said on Monday ahead of the World Economic Forum opening in Davos.

The wealth of the world's poorest 3.6 billion people is the equivalent to the combined net worth of six American businessmen, one from Spain and another from Mexico.

Picked from Forbes' billionaires list, they include Microsoft founder Bill Gates, Mark Zuckerberg who co-founded Facebook, and Jeff Bezos, founder of Amazon.

Oxfam pointed to a link between the vast gap between rich and poor and growing discontent with mainstream politics around the world.

"From Brexit to the success of Donald Trump's presidential campaign, a worrying rise in racism and the widespread disillusionment with mainstream politics, there are increasing signs that more and more people in rich countries are no longer willing to tolerate the status quo," Oxfam said in its new report, "An economy for the 99 per cent".

The charity said new data on wealth distribution from countries such as India and China had prompted it to revise its own calculation, having said a year ago the wealth of half the world's population was in the hands of 62 people.

Inequality will be among the issues topping the agenda as the world's political and business elite meet in Davos from Tuesday until Friday, when 3,000 people will gather for the annual meeting of the World Economic Forum. 

"Responsive and responsible leadership" has been chosen as the theme of the summit, which organisers said was a response to a "backlash against globalisation leading to two surprising vote results and a rise in populism in the West".

In its report Oxfam called for an increase in tax rates targeting "rich individuals and cooperations", as well as a global agreement to end competition between countries to lower corporate tax rates. 

The charity also condemned lobbying by corporations and the closeness of business and politics, calling for mandatory public lobby registries and stronger rules on conflicts of interest.

DETROIT — Electric cars will pick up critical momentum in 2017, many in the auto industry believe — just not in North America.

Tighter emissions rules in China and Europe leave global carmakers and some consumers with little choice but to embrace plug-in vehicles, fuelling an investment surge, said industry executives gathered in Detroit this past week for the city's annual auto show.

"Car electrification is an irreversible trend," said Jacques Aschenbroich, chief executive of auto supplier Valeo, which has expanded sales by 50 per cent in five years with a focus on electric, hybrid, connected and self-driving cars.

In Europe, green cars benefit increasingly from subsidies, tax breaks and other perks, while combustion engines face mounting penalties, including driving and parking restrictions.

China, struggling with catastrophic pollution levels in major cities, is aggressively pushing plug-in vehicles. Its carrot-and-stick approach combines tens of billions in investment and research funding with subsidies, and regulations designed to discourage driving fossil-fuelled cars in big cities.

The road ahead for electric vehicles (EVs) in the United States, however, could have more hairpin curves.

Regulators in California and a group of other US states are pushing ahead with state-level rules mandating rising quotas for electric, or "zero emission" vehicles.

But plug-in registrations in the United States fell in 2015, and the market share of electric-only vehicles declined further to 0.37 per cent in 2016, as cheap fuel drove demand for gas-guzzling sport utility vehicles and pickup trucks.

President-elect Donald Trump has pledged to roll back environmental and climate rules. Groups representing established automakers asked Trump to review Obama administration fuel economy targets out to 2025, even before the outgoing administration formally signed them into effect on Friday.

Automakers have also asked Trump to work towards a single, national set of rules to govern automotive greenhouse gas emissions, a move that could spark legal challenges to electric car quotas in California and other states on grounds they present a separate standard.

’The world
is going electric’

Still, industry executives in Detroit said hitting the brakes on electric vehicles in the United States would not relieve the pressure to bring them to market, because China and Europe are forging ahead with policies to expand sales of plug-in cars.

That is why Ford is moving forward with previously announced plans to invest $4.5 billion for plug-in vehicles by 2020, Chief Executive Mark Fields said earlier this month.

"The industry is changing, the infrastructure's starting to build, and that's why our view is [that] within the next 15 years we'll see more electrified offerings than we'll see gasoline-powered," Fields said as he unveiled a $700 million plan to build a battery SUV and other plug-in vehicles in Flat Rock, Michigan.

To drive the shift to electric, industry executives said they needed more help from governments.

In China, Europe and the United States, automakers are advocating new infrastructure money go to public electric car charging networks.

In the United States, EV manufacturers are pushing for the continuation of a $7,500 federal tax subsidy for consumers who buy a fully electric car. Even if Trump were to try to eliminate it, it would take time as Congress would have to act.

"There is not a disagreement that the world is going electric," California Air Resources Board Chair Mary Nichols said on the sidelines of the auto show, noting that all vehicle makers were now investing in electric models across their entire product lines. The debate, she said, was "over timing, not the goal”.

The Chinese electric car market cast its shadow over the Detroit auto show, where manufacturers showed off plug-in hybrid and electric models that will likely do scant business in the United States.

IHS Automotive predicts Chinese plug-in deliveries will hit 1 million in 2019, four years before the United States. China pulled ahead in 2015 with a fourfold sales surge before adding 55 per cent last year to 348,000 vehicles, with the United States at 138,000.

"Look to China rather than the US for the future of electric cars," Gerard Detourbet, a Renault-Nissan executive leading low-cost plug-in development, said recently. "China is compelled to act — that's the main difference."

BRUSSELS — The European Union's chief Brexit negotiator warned Saturday the bloc must be aware of the risk to financial stability during what are expected to be very tough talks with Britain.

Earlier, The Guardian newspaper reported that the negotiator, Michel Barnier, had told colleagues the EU would have to strike a "special" deal with Britain's hugely important finance sector to keep credit flowing in Europe.

In a tweeted message, Barnier said, however, he had not been talking about an arrangement with the City of London, one of the world's most important financial markets.

"When asked on equivalence I said: EU would need special vigilance on financial stability risk, not special deal to access the City," he said in the message.

A European Commission spokesman told AFP on Saturday: "The minutes referred to in the article do not correctly reflect what Mr Barnier said."

British and especially international finance houses currently have full access to the European Union's single market by virture of being based in Britain as a member state.

EU banks enjoy reciprocal rights and the key question is whether this mutual access will continue after Brexit.

British Prime Minister Theresa May has appeared to put the stress on regaining full control over immigration, at the expense of the freedom of movement which the EU regards as one of its core achievements.

May insists she will do her best to ensure full access for British-based banks but Brussels has repeatedly made clear it will not allow London to cherry-pick what it wants in its future relationship with the EU.

Barnier has taken a hard line on the negotiations for Brexit — which May says she will trigger by end-March — and has a reputation in the City of London to match from his time as EU Internal Market and Services Commissioner in 2010-14.

Bank of England chief Mark Carney warned earlier this week that Europe also had much to lose if no deal was reached, given how important London was as a financial market for European companies and governments.

There were "greater financial stability risks on the continent in the short term, for the transition, than there are for the UK," Carney said.

CAIRO — In an economic crisis that has led to a shortage of medicines, Egyptians are skipping trips to drug stores, and instead turning to herbal remedies to treat every-day illnesses.

In the Cairo working class neighbourhood of Basateen, dozens can be seen lining up outside a decades-old herbal spice shop with pyramid-shaped stacks of jars on display, filled with everything from honey and ginger to camel's hay.

Apothecaries say there is a roughly 70-80 per cent increase in sales after a series of harsh economic reforms hit medicine supply in pharmacies across the country and increased the cost of some generic and even life-saving drugs.

Store owner Samy Al Attar — whose last name is Arabic for apothecary — says a knowledgeable apothecary can find substitutes for drugs treating almost all non-terminal illnesses.

Just like pharmacies, the walls inside Al Attar's store are lined with drawers and containers. But rather than pharmaceutical drugs, they hold herbs, each said to have its own unique healing property.

Customers impatiently crowd outside the shop window, where employees can be seen dashing around the tiny interior, choosing from a variety of textures and colours, filling clear plastic bags with orders.

Al Attar's role is like many pharmacists. Customers explain their symptoms and he produces a concoction of spices and herbs along with a method of administration.

Egypt's health ministry is in the middle of negotiations with pharmaceutical companies over a 15 per cent increase in prices of locally-produced drugs, and a 20 per cent increase in the prices of imported ones.

Local spices and herbs, meanwhile, cost between 5 and 10 Egyptian pounds per kilogramme.

AMMAN — The World Bank (WB) on Tuesday said  growth in the Middle East and North Africa (MENA) region is estimated to have slowed to 2.7 per cent in 2016, reflecting fiscal consolidation in some countries and oil production constraints in others.

In its Global Economic Prospects  report for 2017, the WB said the failed ceasefire in Syria, the ongoing war in Yemen, the fight in Iraq against the Daesh terror group, and the political crisis in Libya were part of a continued cycle of conflict in the region that has led to mass displacement, loss of life and destruction of infrastructure.

 The multilateral lender said cross-border spillovers in the form of disrupted trade, fiscal pressures from spending demands related to refugees and security, and loss of revenues from tourism have caused damage to the region and had international ripple effects.

Growth slowed sharply in the Gulf Cooperation Council (GCC) countries to 1.6 per cent as oil sector weakness spread to non-oil sectors, according to the WB group.

At the same time, output is estimated to have accelerated in Iran to a 4.6 per cent pace and in Iraq to a 10.2 per cent rate, thanks to large gains in oil production and, in the Republic of Iran, to a recovery in agriculture, automotive production, trade and transport.

Among oil-importing economies, growth in Egypt dipped slightly to a 4.3 per cent pace in fiscal year 2016, as foreign currency shortages held back manufacturing and the tourism industry slowed.

Morocco eased to an estimated 1.5 per cent in 2016 on a drought-related contraction in the agricultural sector, the WB indicated.

Outlook

Growth in the region is forecast to recover to a 3.1 per cent pace this year, with oil importers registering the strongest gains, according to the WB.

Among oil exporters, Saudi Arabia is forecast to accelerate to a 1.6 per cent growth rate in 2017, still modest by historical standards.

Iran is anticipated to pick up to a 5.2 per cent rate on the expectation oil production will continue to expand and that deals to obtain foreign investment are completed.

Algeria should slow to a 2.9 per cent pace on a decline in spending on public works and delays in tax and subsidy reforms.

Among oil importers, growth in Egypt is forecast to slow to a 4 per cent rate in FY2017, as fiscal consolidation begins and as private consumption slows with rising inflation, before picking up in 2018.

Morocco is anticipated to jump to a 4 per cent pace in 2017, thanks to a recovery in agricultural output. Jordan should see a recovery in investment and exports that will push growth up to 2.6 per cent, the WB said.

Risks

Failure of oil prices to follow their expected upward trajectory and an escalation of conflict pose substantial downside risks to growth in the region. Elevated oil price volatility could undermine government spending and fiscal paths. 

Spillovers from existing conflicts in several countries, as well as a heightened incidence of terrorism, are risks to regional economic activity, the WB reported. Rising conflict-related risks would likely increase economic uncertainty and slow investment, the WB noted. 

Fiscal and structural reforms could trigger public discontent, with negative effects on confidence, foreign investment and growth.

For GCC countries, the anticipated tightening of monetary policy in the United States could pose an indirect risk to growth, the WB added.

CAIRO — Annual consumer price inflation in Egypt's cities soared to a second straight eight-year high in December, hitting 23.3 per cent on the back of the government's decision to float the pound, effectively halving its value.

Core inflation also jumped to 25.86 per cent in the urban areas, the central bank said on Tuesday.

Urban consumer inflation hit an eight-year high of 19.4 per cent in November, the month when Egypt abandoned its currency peg of 8.8 to the US dollar in a dramatic move that has since seen the currency depreciate roughly by half.

It accompanied the November 3 move with a 300 basis point interest rate hike to fight inflationary pressures.

Despite the hike, inflation has risen sharply and is expected to climb further this year as the government pushes on with economic reforms, including fuel subsidy cuts and the implementation of a value-added tax.

Those moves were required to secure a $12 billion International Monetary Fund loan.

In cities and towns, food and beverage inflation touched 28.3 per cent in December. Healthcare inflation stood at 32.9 per cent while transportation was 23.2 per cent.

"Egypt now is in the eye of the policy restructuring cycle, and the price is higher inflation and an overall fiscal deficit pending a structural change in government spending and general re-pricing of goods and services," Arqaam Capital said in a research note.

"A reversal of over 50 years of comprehensive government support will take time," it said, predicting inflation to remain high in the first half of the year, averaging 20 per cent in 2016/17 before declining to 18 per cent in 2017/18.

President Abdel Fattah Al Sisi is under increasing pressure to revive the economy, keep prices under control and create jobs to avoid a backlash from the public.

Sisi predicted last month that the Egyptian pound would strengthen in the coming months and promised to ensure basics were available and affordable.

The government has expanded its social security network and some 70 million Egyptians have access to state subsidised bread.

But Egypt's non-oil business activity shrank for the 15th consecutive month in December as inflation caused purchase costs to rise at a near-record pace.

Economists expect the rising inflation to erode spending power, hit economic growth and prompt further hikes to interest rates, which are already up to 15.75 per cent.

Egypt's central bank has held interest rates steady at two monetary policy meetings since the flotation and some economists expect further rate hikes this year.

The monetary policy committee is due to meet again on February 16.

PARIS — Airbus is set to post an 8 per cent rise in deliveries for 2016, beating expectations, after a sprint to the finish line that narrowed the gap with arch-rival Boeing, according to industry experts and records of aircraft movements.

The European planemaker was forced to sharply accelerate deliveries in December to meet its target after production problems earlier in the year.

It delivered over 100 jets last month, a Reuters analysis of flight-tracking data supplied by FlightRadar24, unofficial airport data and plane-watcher reports suggests, lifting its 2016 tally well above 680 including 60 of the delayed A320neo.

One industry expert estimated the total as high as 688, well above the company's informal target of more than 670.

Airbus remains in second place behind Boeing, but its upward trajectory contrasts with the 2 per cent drop in 2016 deliveries reported by its US nemesis last week, to 748 planes.

The higher-than-expected Airbus performance, up from 635 in 2015, is also the latest evidence that planemakers are boosting deliveries to whittle down record order backlogs and hoard cash as they face warnings of slowing demand later this decade.

Boeing temporarily slowed output last year for industrial reasons but, like Airbus, plans further output increases.

An Airbus spokesman declined to comment.

The European planemaker is keeping operational data tightly under wraps ahead of its annual news conference on Wednesday.

Airbus's December deliveries would set a monthly record for the company, beating the previous peak by more than a quarter.

The gap between Christmas and New Year, traditionally a groggy period for European industry, saw a record burst of activity at Airbus plants in France and Germany and included one of its busiest ever days with eight jets flying away on December 29.

"I was amazed," said a veteran of such operations.

Aiming to stay ahead of Boeing in the race for new orders, rather than deliveries where it lags, Airbus may book for December at least part of a recent order for 100 jets from Iran and tie up loose ends including completing a deal with India's GoAir. It may also announce a significant order from Saudi carrier flynas.

Airbus needs to announce at least 259 orders for December to beat Boeing's 2016 total of 668. With outspoken sales chief John Leahy expected to retire in the second half of this year, Airbus is looking to end 2016 with a flourish, though analysts say prices could suffer due to weakening global economies.

Cash generation 

Airbus delivered at least 70 A320-family narrow-body jets in December, according to the sources and data, also a record. These included at least 17 of the new A320neo, whose ramp-up had been disrupted by delays in receiving new fuel-saving engines from Pratt & Whitney.

That brought 2016 deliveries of narrow-body jets — the most cash-generating models — to over 540. It also delivered more than 140 wide-bodies.

Airbus expected to deliver more than 670 aircraft in 2016, unofficially revised up from 650 in October. It is accelerating deliveries of the existing A320 to keep cash pouring in from airlines while it adopts a more conservative timeframe for the switchover to the A320neo.

Narrow-body deliveries generate cash for other developments and are increasingly vital as demand for larger wide-body aircraft suffers from a looming capacity glut.

Experts say the delays in A320neo deliveries have masked some pressure on demand for those models too, caused by low oil prices that can make earlier versions just as attractive.

On its other main profit-driver, Airbus delivered over 62 long-haul A330s in 2016, according to the estimates.

But it was forced to step up customer financing to maintain that pace as major customer Turkey faced turmoil after a failed coup and as European states withheld export credits in a row over Airbus payments to sales agents.

Airbus itself provided the financing for all seven new Turkish Airlines A330s in 2016, industry sources say.

Despite separate delays due to shortages of cabin equipment, Airbus unexpectedly hit a target for at least 50 deliveries of the newer A350 after 16 in December, sources said last week. That includes one or two jets paid for but not yet in operation.

The rush to get planes away extended to the mammoth A380 as Airbus delivered seven in December, including three in two days to dominant customer Emirates. That brought the annual total to 28, up one from the previous year and enough to keep Europe's troubled superjumbo project at breakeven in 2016.

However, it plans to cut A380 output from next year after demand sagged for the world's largest four-engined jets.

The programme took another blow in late December when Dubai-based Emirates, under pressure from the impact of low oil prices on Gulf economies, delayed some 2017 deliveries.

That could put the iconic double-decker plane back into loss in 2017, marring celebrations for its 10 years in service.

AMMAN — The volume of trade transactions among the Agadir free trade agreement countries has failed to keep its upward trend, which continued until around 2011, the agreement's technical unit executive chief, Fakhri Hazaimeh, said on Sunday.

However, Hazaimeh voiced hope that the accord will once again lead to bringing about more favourable results in the next few years and that member states may resist the downward trend if they utilise their strengths.

In the period post-2011, trade under the agreement, which includes Jordan, has been adversely impacted by the so-called Arab Spring and the fall-out of the global financial crisis, Hazaimeh told the Jordan News Agency, Petra.

There is also a big deficit in terms of the trade balance between the accord member states and the EU, he told the local news agency.  

Hazaimeh cited the envisaged role that the agreement business council can play in assisting member states to venture into actual cooperative projects in several economic sectors. 

He also stressed the significant role that the private sector can play to boost multilateral trade under the agreement, on the one hand, and between its member states and the
EU, on the other.  

The trade volume among the agreement countries — comprising Egypt, Tunisia and Morocco, besides Jordan — annually stands at around $1.85 billion, of which the Kingdom's share amounts to around 7 per cent, he indicated.  

For around 10 years, trade transactions between Jordan and Egypt have witnessed a steady growth at 16 per cent until 2012. The joint commercial exchange volume stood at $1 billion in 2012, while it posted a drop in 2013 and 2014, mainly due to the disruption of the country’s natural gas imports from Egypt as it constituted some 40 per cent of the total trade volume, according to Hazaimeh.

As for the Kingdom's trade with Tunisia, he mentioned that it has always been limited, not exceeding $100 million at its best levels, while in terms of its trade with Morocco, the figure reached its best in 2009 when it amounted to $50 million.

SHANGHAI — China on Friday raised the exchange rate for the yuan against the US dollar by 0.92 per cent from the previous day, the biggest one-day increase in more than 11 years.

The People's Bank of China (PBOC), which has been battling to shore up the sagging yuan, fixed it at 6.8668 to the greenback, according to the China Foreign Exchange Trade System, which operates the national foreign exchange market.

The move comes as the yuan had flirted lately with the 7 to the dollar mark, a threshold not crossed in more than eight years. 

China only allows the tightly controlled yuan to rise or fall 2 per cent on either side of the daily fix, to prevent volatility in the currency, which is near its lowest levels in eight years.

The yuan has been under pressure from uncertainty over the health of the world's second-largest economy, massive capital outflows seeking better returns abroad, and the sharp rise in the dollar following Donald Trump's election victory and anticipation of further US interest rate hikes.

The exchange rate hike was expected by many analysts after a two-day rally in the yuan in offshore trading that sparked speculation of official Chinese intervention in support of the yuan.

"Judging from the speed of the yuan's appreciation, the PBOC may have intervened to prop up the exchange rate," Kenix Lai, a Hong Kong-based foreign-exchange analyst at Bank of East Asia Ltd., told Bloomberg News. 

"The PBOC is expressing its strong determination to keep the currency stable and is seeking to restore confidence."

China said last week it would almost double the number of foreign currencies it uses to determine the yuan's official value, thereby diluting the dollar's role, and has imposed a range of measures to curb capital flight abroad.

The equivalent of about one trillion dollars was transferred out of China in 2015 and another $690 billion in the first ten months of 2016, according to Bloomberg estimates.