Business

AMMAN — Jordan’s efforts to attract investment for areas of the economy identified as ripe for development, against a backdrop of wide-ranging fiscal reforms, are explored in a new report from the global research and consultancy firm Oxford Business Group (OBG).

The Report: Jordan 2018 notes that the manufacturing, electricity, water, transportation, ICT and construction sectors are being targeted for double-digit growth as part of the kingdom’s broader drive to boost its gross domestic product.

With local, regional and international transit networks earmarked for development, OBG also maps out a raft of public transport projects in the pipeline.

Moreover, the port city of Aqaba is a key focus of the publication. 

OBG charts the seaport’s growth story, documenting its ongoing expansion into a tourist destination and success in attracting investors for its special economic zone.

The Report: Jordan 2018 also looks at the steps being taken to support the broader tourism industry’s development, which include marketing strategies to tap fledgling segments, rolling out new attractions and strengthening international connectivity. 

Other areas of the economy explored include the kingdom’s health sector, which has carved a niche as a regional hub for both medical tourism and the manufacturing of pharmaceuticals, according to the OBG statement.

The Report: Jordan 2018 contains contributions from HRH Crown Prince Hussein and Prime Minister Hani Mulki, along with a detailed sector-by-sector guide for investors. 

It also features interviews with other high-profile personalities, including Omar Malhas, minister of finance; Muhannad Shehadeh, minister of state for investment affairs; and Nasser Shraideh, chief commissioner of the Aqaba Special Economic Zone Authority. 

Commenting after the launch, Oliver Cornock, OBG’s editor-in-chief and managing editor for the Middle East, said the implementation of a new, mid-term economic development strategy confirmed the kingdom’s commitment to reinvigorating growth, boosting foreign direct investment and bridging the budget deficit after a few difficult years.

“While a challenging external climate, austerity measures and higher taxes have weighed on some sectors of Jordan’s economy, its strengths, which include an educated, skilled workforce, a resilient private sector and well-established tourism industry, continue to provide solid foundations for future growth,” he said. 

“The government’s latest plans to give priority to green practices and digital technology will support its longer-term targets for economic development.” 

Sofia - French President Emmanuel Macron's ambitious plans for an EU digital tax targeting US tech giants faced strong headwinds on Saturday from small member states eager to defend their strong ties with Silicon Valley.

Finance ministers from the EU's 28 member states were to discuss a controversial proposal aimed at claiming a bigger share of billions of euros from mainly US multinationals that shift earnings around Europe so as to pay lower tax rates.

"It must be discussed with the Americans, because if we do this all by ourselves as the EU, this digital tax will be very ineffective," said Luxembourg Finance Minister Pierre Gramegna as he arrived for talks in Sofia, Bulgaria.

Luxembourg hosts the EU headquarters for Amazon and along with Facebook and Apple hub Ireland, is loathe to see US tech giants head for the exit.

Getting all countries on board is crucial as tax reforms in the EU require unanimity.

The special tax is the latest measure by the European Union to rein in Silicon Valley giants and could also further embitter the bad-tempered trade row pitting the EU against US President Donald Trump.

"It is not an anti (US tech giant) tax, it is not an anti US tax, it is not a protectionist approach, it is something which it is in interest of all Europeans wherever they live," said EU Economic Affairs Commissioner Pierre Moscovici, who is driving the plan.

The transatlantic shot across the bow has been championed by Macron who believes the measure would be a popular accomplishment for the EU ahead of European elections next year, in which anti-Brussels populists could do well.

The most controversial part of the plan is to slap an emergency tax on digital companies with worldwide annual turnover above 750 million euros ($924 million), such as Facebook, Google, Twitter, Airbnb and Uber.

EU members would adopt this tax unilaterally, without cooperating with the US and other countries from the OECD, the club of developed countries that has coordinated major corporate tax reforms worldwide.

"On the European level I doubt it's going to be soon because to have consensus on tax issues is not easy," said Slovak Finance Minister Peter Kazimir.

"We are ready to do it (but) on a national level ... in line with OECD recommendations," he added.

AMMAN — Royal Jordanian's (RJ) financial figures for 2017 showed that the national carrier has achieved positive results in the second half of the year, after a "very weak first half", the company's Board of Directors Chairman Said Darwazeh said on Thursday.

While a net profit before tax of JD468,000 might not be significant, Darwazeh explained, it reflects the effectiveness of the turnaround plan towards profitability, implemented in the second half of 2017. This net profit is the first positive outcome of the five-year strategy implemented by RJ, Darwazeh said, according to an RJ statement sent to The Jordan Times. 

Speaking at the RJ General Assembly's ordinary and extraordinary meetings, held on Thursday at the InterContinental Hotel, Amman, Darwazeh highlighted the significance of this result, when compared to the net losses incurred in the first six months of 2017, which amounted to JD26.3 million due to commercial challenges and the decrease in ticket prices due to fierce competition, increased capacity in the regional markets and operating costs that grew by 3 per cent because of the 28 per cent rise in fuel prices which could not be compensated in the ticket prices.

RJ President and CEO Stefan Pichler explained how RJ was able to stage a strong recovery after a weak start in the fiscal year 2017. 

At the end of the first five months of last year, the airline had very weak revenues, which were on the verge of "dropping even further into the operating loss zone this year", but that the commercial performance recovered considerably and the load factor performance was significantly enhanced while stabilising the fares in the second half of the year.

He said that the revenue management, the sales and marketing strategies were completely changed in order to attract new customers for the airline, and "that worked very well". So, the recovery in the second half of the year was the fruit of a strong revenue performance across the network, noting that the airline achieved a positive operating cash flow of JD22.8 million in 2017, according to the statement.

During the extraordinary meeting, the shareholders approved the increase of RJ’s authorised capital by 28.2 million shares to become 274.6 million shares, the statement added. 

The additional capital increase will be offered through a private placement to the Government’s Contributions Company at a par value of JD1 per share with a discount of 610 fils per share, i.e. 390 fils per share. 

The amendments on the establishment contract and the bylaws of the company were also approved to reflect this capital increase, according to the statement. 

Darwazeh explained that the 28.2 million share capital increase is part of a previously approved plan, assuring that this increase in capital will not lower the number of the shareholders' shares by any means, and the new capital will reflect positively on the airline’s future and improve its financial situation. 

AMMAN — The general assembly of the Arab Potash Company (APC) on Wednesday approved a board of directors’ proposal to distribute a cash dividend of 100 per cent of the capital which is equivalent to JD 83 million.

The meeting was headed by Sami Dawoud, who was elected as board chairman on Tuesday, the Jordan News Agency, Petra, reported.

During the meeting, APC President and CEO Brent Heimann said that the company has maintained its status as a leading national firm and a pivotal contributor to the Treasury, adding that the APC's direct cash transfers to the Treasury have amounted to JD296 million during the past five years, constituting around 65 per cent of the company's net profits, according to Petra.

Heimann also said that APC and its subsidiary and affiliate companies boosted the Kingdom's foreign currency reserves by $845 million in 2017, according to Petra.

The CEO added that the international potash market started recovering from the crisis it has been facing which enabled the APC to achieve a net profit of JD90 million in 2017, a 44-per cent increase from 2016.

He also said that the company achieved "record" sales volume in 2017; reaching 2.36 million tonnes, marking a 16-per cent increase from 2016.

LONDON — World stocks steadied on Tuesday after three sessions of losses, thanks to strong earnings from the likes of Google and as a rise in benchmark US bond yields towards 3 per cent stalled, while oil prices stretched to fresh highs above $75 a barrel. 

US stock futures pointed to a firm open on Wall Street, although European shares were mixed with stock markets in London and Frankfurt around 0.3 per cent higher and shares in Paris flat.

Markets brushed off further signs that European powerhouse economy Germany is losing some of its momentum, with the Ifo business climate index falling in April.

In Asia, Japan's Nikkei added 0.9 per cent as a lower yen supported export-heavy firms and Chinese shares posted their strongest gains in two months.

That left MSCI's world equity index a tad higher after three days of declines.

The recovery in stocks came as bond markets also bounced back from a selloff. US ten-year Treasury yields came within striking distance of the psychologically significant barrier of 3 per cent on Monday, which in the past has triggered market spasms.

"There's a tug and a pull from all kinds of things in equity markets right now, such as the approach of US bond yields to 3 per cent, but I don't think that would be the end of the world," said Lukas Daalder, chief investment officer at Robeco.

Earnings meanwhile, especially from the tech sector, were in focus after a turbulent few months for leading US tech firms.

Google parent Alphabet was up slightly in volatile after-hours trading on Monday after the tech giant reported a 73 per cent jump in profits in the first quarter. 

Chipmaker AMS reported first-quarter sales towards the lower end of its guidance range on Monday, and warned of a downturn owing to weaker orders from one of its main customers.

AMS did not name the customer, but the Austrian company is a big supplier to Apple, making components for the iPhone.

SAP, Europe's largest tech company by stock market valuation, meanwhile announced upbeat results in the seasonally tough first quarter.

Of around 18 per cent of the companies in the S&P 500 that have already reported, 78.2 per cent beat consensus estimates. 

Oil Surge 

Brent crude oil prices, the global benchmark, rose above $75 a barrel to their highest level since November 2014, supported by OPEC-led production cuts, strong demand and the prospect of renewed US sanctions on Iran.

US West Texas Intermediate crude futures were 0.5 per cent higher at $69.11 a barrel.

A rally in oil prices and renewed focus on the inflation outlook has added to upward pressure on bond yields recently. 

"It is this move higher in crude oil prices, along with the rise in demand, that is helping fuel the recent rise in yields as well as the positive tone for equity markets," said Michael Hewson, chief market analyst at CMC Markets in London. 

"However if it continues too far we could start to see it act as a drag on equity markets, if prices along with yields start to move even higher."

All about bonds

The fallout from rising US bond yields, which have helped lift US financial stocks, continued to be felt in currency markets.

The euro nursed losses at a two-month low on growing concerns that firmer Treasury yields would reduce incremental demand for the region's bonds and stocks at a time when hedge funds have amassed record long bets on the single currency.

The euro fell to a two-month low as concerns that rising US Treasury yields would push the currency to break below a range it has been stuck within most of this year, prompting hedge funds to unwind some of their record long bets.

It stabilised around $1.22 on Tuesday after having slumped to $1.22 in Asia, its lowest since March 1. 

The dollar set a two-month high of 108.87 yen and was holding near those levels.

Elsewhere, aluminium hit its lowest in nearly two weeks, extending declines from the previous day after Washington gave US companies more time to comply with sanctions on Russian producer Rusal and hinted at further sanctions relief.

YEREVAN — Armenian prime minister Serzh Sargsyan said on Monday he was resigning to help safeguard civic peace, following almost two weeks of mass street protests that have plunged the impoverished ex-Soviet republic into political crisis. 

Sargsyan, a close ally of Russian President Vladimir Putin, had served as Armenia's president for a decade until this month and had faced accusations of clinging to power when parliament elected him as prime minister last week.

Under a revised constitution, the prime minister now holds most power in the tiny southern Caucasus nation, while the presidency has become largely ceremonial.

Pressure on the 63-year-old to quit had increased sharply on Monday when unarmed soldiers in the capital Yerevan joined the anti-government protests, which first erupted on April 13.

Though peaceful, the tumult has threatened to destabilise Armenia, a key Russian ally in a volatile region riven by its decades-long, low-level conflict with Azerbaijan. Moscow, which has two military bases in Armenia, was closely watching events.

"I got it wrong," Sargsyan said in a statement issued by his office. 

"In the current situation there are several solutions, but I won't choose any of them. It's not my style. I am quitting the country's leadership and the post of prime minister of Armenia."

He said he was bowing to protesters' demands and wanted his country to remain peaceful.

Armenia's 2025 dollar-denominated bond fell 0.83 cents after Sargsyan said he would resign, hitting a one-year low. 

Former Armenian prime minister Karen Karapetyan, an ally of Sargsyan from his ruling pro-Russian Republican Party, was named as acting prime minister, Russia's RIA news agency reported, citing the Armenian government's press office.

Armenia's political parties in parliament now have seven days to put forward the name of a new prime minister.

Sargsyan's allies remain in key positions in the government and it remains unclear whether his resignation will herald any real change. 

Celebrations

Protesters loudly celebrated Sargsyan's resignation.

Some hugged policemen in the street amid repeated cries of "Hurrah!", others beeped car horns, and some residents of Yerevan were even seen dancing outside. 

The protests which toppled Sargsyan lasted for 11 days and saw tens of thousands of protesters march through Yerevan and other towns, blocking streets and staging sit-ins that disrupted daily life.

On Sunday, police had detained three opposition leaders and nearly 200 protesters, drawing a rebuke from the European Union. Police released Nikol Pashinyan, a lawmaker regarded as the main opposition leader, on Monday.

Asked about the crisis on Monday before Sargsyan's resignation, the Kremlin called Armenia an "extraordinarily important country" for Russia, but dismissed the idea it might intervene, calling the crisis a domestic matter.

Last week, Putin rang Sargsyan to congratulate him on becoming premier. As president, Sargsyan took Armenia, a country of about 3 million people, into a Russia-backed economic bloc and bought weapons from Moscow.

The protesters' complaints were mainly domestic and focused on pervasive corruption and poverty in a country that won independence from Moscow in 1991 but has been hampered by its conflict with Azerbaijan over the breakaway region of Nagorno-Karabakh and other issues. 

But critics have also accused Sargsyan of moving landlocked Armenia too close to Russia at the expense of better ties with the West and increased prosperity, and it was unclear whether his political demise could lead to a change in foreign policy.

In what may have been a turning point in the protests, soldiers wearing military uniforms marched through Yerevan on Monday morning with the protesters.

Images broadcast on the Internet and social media showed the soldiers hugging protesters and waving the country's national flag, a development the Armenian defence ministry condemned as illegal and promised to harshly punish.

Opposition leader Pashinyan had told Sargsyan that his time was up in a tense meeting on Sunday.

"The situation in Armenia has changed, you don't have the power of which you are told," he had told him. "In Armenia, the power has passed to the people."

BRUSSELS — EU anti-trust regulators on Monday opened an in-depth probe to establish whether a massive rescue loan by the Italian government to troubled airline Alitalia constituted illegal state aid.

The salvo from Brussels targets a 900 million euro ($1.1 billion) bridge loan by Rome to keep Alitalia afloat after staff in 2017 rejected a last-ditch cost-cutting plan to save the company.

"The EU Commission has a duty to make sure that loans given to companies by member states are in line with the EU rules on state aid," said EU Competition Commissioner Margrethe Vestager.

"We will investigate whether this is the case for Alitalia," she said.

Under EU state aid rules, public interventions to troubled companies must be made under terms equivalent to market conditions.

The EU said it had received "a number of complaints" in 2017 alleging that the loan to Alitalia did not meet the criteria and would dig deeper to establish an opinion.

The probe comes just days after three rivals officially bid to take the reins of Alitalia, just the latest of former flagship carriers to be sold off to bigger groups in Europe.

An Italian government minister said Germany's Lufthansa emerged as the number one candidate to take over Alitalia, which is now partly owned by the UAE carrier Etihad Airways.

Britain's budget airline EasyJet and Hungarian carrier Wizz Air are also reported to be in the bidding.

The fate of Alitalia is complicated still further by March's inconclusive general election in Italy, from which no new government has, yet, been formed.

The deadline for the sale of Alitalia was originally set for the end of this month, but the government will issue a decree in the coming weeks pushing back that deadline by around six months.

LONDON - The European Union has indicated that it is willing to provide some form of access for Britain's vast financial services industry after Brexit, the City minister John Glen said on Monday.

Glen said the transition deal agreed by Britain and the EU last month allows financial firms to move forward and plan for the future with confidence.

"The fog is clearing ... We are already seeing progress," Glen told the CityWeek conference in the Square Mile's Guildhall. "The EU have now recognised that there will be some form of market access in financial services having previously dismissed the idea."

Britain's vast financial services looks set to be one of the most divisive areas in the Brexit negotiations, with Britain demanding a generous deal while the EU refuses to shift from its insistence that Britain's red lines -- such as ending the free movement of workers from the EU -- make that impossible.

Britain has proposed a future trade deal with the bloc for financial services based on mutual recognition of each other's regulation. This model would be maintained by close co-operation between regulators and financial policymakers.

But so far EU policymakers have so far rejected the idea, saying it has never been done before on such a scale.

Catherine McGuinness, policy chief for the City of London, home to the Square Mile financial district, said mutual recognition is the "only game in town".

The alternative is a one-sided system whereby the bloc grants market access if a foreign country's rules are fully aligned with its own. Such access can also be terminated by Brussels at short notice.

Anthony Belchambers, chairman of Saxo Capital Markets, said there is still a question of whether the EU has the political will to agree to mutual recognition.

Market access will involve accepting EU rules to some extent, a step pro-Brexit lawmakers in Britain dismiss.

"The reality is if you want access, it's going to come at a price. You have to be rational about all this," Belchambers said.

Meanwhile, banks, insurers and asset managers are already moving staff to new hubs in the EU to be sure of maintaining links with customers there, regardless of what is agreed in trading terms.

Some EU policymakers fear that Britain will ease rules for banks in a bid to keep London as a dominant global financial centre after Britain leaves the EU next March.

Glen dismissed talk of a "race to the bottom", a move that would make it much harder for Britain to secure access to the EU's financial market.

"We do not intend to rip up the rulebook after Brexit," he said.

WASHINGTON  — The World Bank's shareholders on Saturday endorsed a $13 billion paid-in capital increase that will boost China's shareholding but bring lending reforms that will raise borrowing costs for higher-middle-income countries, including China.

The multilateral lender said the plan would allow it to lift the group's overall lending to nearly $80 billion in fiscal 2019 from about $59 billion last year and to an average of about $100 billion annually through 2030.

"We have more than doubled the capacity of the World Bank Group," the institution's president, Jim Yong Kim, told reporters during the International Monetary Fund and World Bank Spring meetings in Washington.

"It's a huge vote of confidence, but the expectations are enormous."

The hard-fought capital hike, initially resisted by the Trump administration, will add $7.5 billion paid-in capital for the World Bank's main concessional lending arm, the International Bank for Reconstruction and Development (IBRD).

Its commercial-terms lender, the International Finance Corp. (IFC), will get $5.5 billion paid-in capital, while the IBRD will get a $52.6 billion increase in callable capital.

Lending reforms 

The bank agreed to change IBRD's lending rules to charge higher rates for developing countries with higher incomes, to discourage them from excessive borrowing.

IBRD previously had charged similar rates for all borrowers, and US Treasury officials had complained that it was lending too much to China and other bigger emerging markets.

US Treasury Secretary Steven Mnuchin said earlier on Saturday that he supported the capital hike due to the reforms that it included. The last World Bank capital increase came in 2010. 

The current hike comes with cost controls and salary restrictions that will hold World Bank compensation to "a little below average" for the financial sector, Kim said. 

He added that there was nothing specific in the agreement that targeted a China lending reduction, but he said lending to China was expected to gradually decline.

In 2015, China founded the Asian Infrastructure Investment Bank, and lends heavily to developing countries through its government export banks.

The agreement will lift China's shareholding in IBRD to 6.01 per cent from 4.68 per cent, while the US share would dip slightly to 16.77 per cent from 16.89 per cent. Washington will still keep its veto power over IBRD and IFC decisions.

Kim said the increase was expected to become fully effective by the time the World Bank's new fiscal year starts on July 1. Countries will have up to eight years to pay for the capital increase.

The US contribution is subject to approval by Congress. 

WASHINGTON — Trade tensions between the United States and China, which threaten to spill over into the global economy, are dominating a gathering of world finance officials even as the Group of 20 (G-20) avoided the topic on Friday.

Official after official has called for disputes to be resolved through dialogue rather than unilateral tariffs, and warned about the threat to the economic recovery.

French Economy Minister Bruno Le Maire criticised what he called a "vain and pointless" spat with China.

"We run the risk of trade war. We run the risk of multilateral order breaking down that is good for no one, and most definitely not for the world economy and growth," Le Maire told reporters during the Spring meetings of the International Monetary Fund (IMF).

But US President Donald Trump's top finance official said the fault lies with countries that employ unfair trade policies.

"We strongly believe that unfair global trade practices impede stronger US and global growth, acting as a persistent drag on the global economy," US Treasury Secretary Steven Mnuchin said in a statement to the IMF.

While IMF chief Christine Lagarde has offered the fund as a forum to resolve differences, Mnuchin instead said the IMF "should be a strong voice" in urging members "to dismantle trade and non-tariff barriers and to protect intellectual property rights".

Le Maire agreed China must respect the rules, but said the country is a key part of the world trading system.

"We must redefine international trade with China, not against China."

Theft of American intellectual property and technology has been a key irritant in the dispute with Beijing, which prompted President Donald Trump to announce steep tariffs on tens of billions of dollars' worth of Chinese goods, on top of last month's punitive duties on steel that were primarily targeted at China as well.

Washington and Beijing have traded tariff threats and also filed complaints against each other at the World Trade Organisation (WTO).

WTO Director Roberto Azevedo warned that the effects of a major escalation "could be serious", and poor countries would be the collateral damage.

"A breakdown in trade relations among major players could derail the recovery that we have seen in recent years, threatening the ongoing economic expansion and putting many jobs at risk," he said in a statement to the meetings.

The IMF has highlighted the trade tensions as a major downside risk to the otherwise solid global recovery, and Lagarde said the dispute undermines confidence and creates uncertainty that could choke off investment which has been a prime engine of the global recovery.

The WTO projects global merchandise trade will expand by 4.4 per cent this year, after increasing by 4.7 per cent in 2017.

 Despite the intense focus on the US-China dispute, the G-20 finance ministers, from the world's major economies, avoided discussion of the issue on Friday, even while acknowledging the potential danger it posed to the global economy.

"We didn't have a discussion on specific measures on trade," Argentine Treasury Minister Nicolas Dujovne told reporters after the meeting. "The G-20 is not the place to discuss specific measures. That's the WTO."

It was a surprising omission for the group that was key to shepherding the global economy through the 2008 financial crisis and preventing another depression.

But Dujovne said, "We have to also recognise the limitations that we as a group have... and try to find a consensus even if the consensus is more limited than we want."

The ministers did express concern over the growth of "inward looking policies", he said, using a frequent euphemism for trade protectionism.

But German central bank chief Jens Weidmann said the G-20 officials all agreed trade must benefit all countries.

"Protectionism, not to mention a trade war, is certainly not the solution."

Le Maire repeated his criticism of the US tariffs on steel and aluminum which were aimed at China but only spared the EU and other key trading partners under a temporary exemption that is due to expire May 1.

As close allies in the EU "we expect not only temporary exemption but a full and permanent exemption", he said.

"We cannot live with a kind of sword of Damocles hanging over our heads."