Business

AMMAN — Local products can reach Nigeria, Ethiopia, Kenya, Tanzania, Djibouti, Uganda and South Africa for having “excellent” markets, especially due to the availability of regular maritime routes and high level of security, Jordan Chamber of Industry (JCI) President Ayman Hatahet said Sunday. 

In an interview to the Jordan News Agency, Petra, Hatahet described African markets as “thirsty” to import Jordanian industrial products, with big opportunities to compensate traditional markets. 

He said JCI is currently planning to arrange a visit to some African countries to enhance the availability of the Kingdom’s products.

Hatahet added that the national industry was negatively affected by the instability in Iraq, Syria and Libya, considered traditional markets for Jordanian exports.

He stressed the Jordanian capability and determination  to address challenges facing the local industry, especially those related to energy, funding and labour skills, 

The JCI chief reiterated the importance of reflecting the sharp drop in international oil prices on the national economy, in general, and the industrial sector in particular, especially in terms of electricity tariffs. 

Hatahet referred to the difficulty for small-and medium-sized (SMEs) enterprises to secure necessary funding despite the Central Bank of Jordan’s support programmes and grants.

He acknowledged that some SMEs have already benefited from these programmes, and requested that the category of industrial beneficiaries be widened to finance raw material inputs, expand production lines or even establish new ones. 

Credit facilities for the industrial sector during the first 11 months of 2014 reached around JD2.7 billion, according to JCI figures. 

Regarding the workforce challenge, Hatahet called for drawing up a real strategy to develop the capabilities of Jordanian employees, referring to the letter His Majesty King Abdullah recently sent to Prime Minister Abdullah Ensour in terms of the need to improve human resources. 

JCI figures also showed that the total number of workers in the industrial sector reached 219,737 in 2014, compared with 205,367 workers in 2013, with the total value of national industrial exports in 2014 reaching JD5 billion compared to JD4.9 billion in 2013. 

Hatahet highlighted the importance of encouraging current industrial investments to increase production capacity, support new investments and enhance export growth, noting that 90 per cent of the Kingdom’s exports are Jordanian products.

He also referred to the sector’s importance in terms of reducing poverty and unemployment, creating new jobs for Jordanians, achieving development, securing foreign currencies, attracting foreign investments and its role in providing work for the transportation and logistics sectors. 

The industrial sector’s contribution to the gross domestic product during the first three quarters of 2014 constituted 24.1 per cent, with the industrial production value standing at JD3.9 billion in the same period, compared to JD3.7 billion during the same period of 2013, according to JCI data. 

In 2014, the total number of industrial institutions was estimated at 17,633 with a total capital of JD4.4 billion, compared to 17,568 institutions in 2013 with a total capital of JD3.6 billion.

AMMAN — Because of higher payments for energy, electricity, water and manpower, Arab Potash Company (APC) is now among the world producers with highest production costs, according to the firm's 58th annual report.

In a foreword, APC Chairman Jamal Ahmad Al Sarayreh told the shareholders that the company ranked among the best of world producers in terms of low production costs until 2008.

He indicated that, although part of the higher costs was associated with higher output, energy and electricity charges went up last year by 15 per cent from the 2013 level.

The 24 per cent increase in water charges, cost APC JD37 million, the chairman remarked.  

The annual report listed National Electric Power and Jordan Petroleum Refinery as the companies on which APC depends for more than 10 per cent of  its total supplies (26 per cent and 21 per cent respectively).  

The chairman also mentioned a 4 per cent rise in labour costs, noting that APC employs 2,100 workers.

To lower costs, especially high electricity charges which were hiked by 7.5 per cent and overburdened the company with JD2.9 million last year, Sarayreh said the company decided to proceed with a scheme to generate energy through solar cells with a 33 megawatt capability when it considered the possibility of implementing renewable energy projects.

Besides this project that will take two years to complete, APC will  continue to study the option of setting up a station that depends on natural gas for generating electricity and steam.

The chairman revealed that the company exceeded its 2-million tonne production target as output reached 2.1 million tonnes last year compared with 1.7 million tonnes recorded in 2013. 

"With the market expecting higher demand for potash in the long term, the board of directors decided to go ahead with a multi-stage expansion project, the first of which to be completed within 30 months is to raise production capacity by 65,000 tonnes annually," Sarayreh wrote.

This project, he said, will be in addition to another expected for completion in 2016 to boost the production capacity of granular potash to 250,000 tonnes at a cost of JD9 million.

"APC is also considering other options  for expansion," he added.

The report pointed out that sales rose last year by more than 26 per cent reaching 2.24 million tonnes from the 1.77 million tonnes in 2013.

The chairman highlighted the marketing drive indicating that local and regional sales went up significantly and that exports to India and China also increased.

Locally, consumption in Jordan reached 228,790 tonnes compared with 192,340 tonnes in 2013. Main buyers were Jordan Bromine and KEMAPCO.

Regionally, Egypt bought 87,880 tonnes compared with 78,300 tonnes and Gulf Arab countries purchased 56,661 tonnes compared with 54,398 tonnes.     

"Of the noteworthy achievements was the company's success to more than double its exports to China to over 643,000 tonnes in line with the memorandum of understanding, signed with Beijing in 2013, covering Jordanian potash sales until 2016," Sarayreh said.

"With a 46 per cent surge in sales to India, the volume crossed the 500,000 tonnes mark," he added, stressing that the quality of the potash has improved markedly surpassing the specifications by about 3 per cent.

He mentioned the special focus on Africa where potash sales rose 32,000 tonnes last year, a 37 per cent surge over the volume in 2013 when sales that year were 24 per cent higher than the figure in 2012.

African countries imported 116,710 tonnes of APC potash in 2014 compared with 85,448 tonnes in the previous year.  

According to the report, shipments to Malaysia and Indonesia were down in 2014 because of large fluctuations in exchange rates of local currencies and the competition between Russia and Belarus.

Malaysia bought 184,535 tonnes compared with 253,445 tonnes while Indonesia purchased 145,707 tonnes compared with 311,967 tonnes.  

Sarayreh told the shareholders that the average sale price of potash dropped last year from $380 per tonne to $300 per tonne attributing the fall to the repercussions from the break up in 2013 of the Russia-Belarus joint marketing company which highly unsettled international supply patterns last year.

Moreover, he remarked, lower oil prices and the higher dollar value caused the price of potash to rise in local currencies and, consequently, have a direct impact on demand for the commodity.

Financially, APC announced that earnings from potash sales amounted to JD475 million, down from JD482.6 million in 2013.

Gross profit stood at JD140.5 million (JD183.3 million in 2013) and net profit generated after tax and provisions came at JD99.8 million (JD130.7 million) 

APC spent JD7.5 million on various corporate social responsibility programmes last year.

The company said that dividends to shareholders will be determined during the company's general assembly meeting.

LONDON — From the shabby streets of east London, some of the brightest minds in technology and banking are plotting a revolution.

London's "Silicon Roundabout" has become one of the top hubs for financial technology, or fintech, where start-up firms are launching products to bypass traditional banks with phone apps and websites, or help financial firms adapt to a digital era.

Investment in fintech firms in Britain and Ireland swelled to $623 million last year, more than double the $264 million seen in 2013 and representing 42 per cent of fintech investment in Europe, according to research by consultancy Accenture.

Although the United States continues to attract the lion's share of fintech investment, London has established itself as Europe's fintech hub and the pace of growth had accelerated this year, start-up firms and bankers told Reuters.

The Silicon Roundabout area around Whitechapel and Shoreditch claims to be the third-largest technology cluster in the world, after San Francisco and New York. And with most top banks and much of the world's trading on its doorstep, London's tech hub has put more of its focus on financial products.

"Right now, London clearly has an edge" over other fintech hubs, said Sean McCormack, co-founder of New York start-up Stockfuse, which creates gaming platforms that simulate a trading desk and help banks evaluate and recruit trading talent by using behavioural analysis.

"It's noticeable that the financial institutions here are very eager to hear what entrepreneurs and start-ups are doing, because they've seen a little bit earlier that it's something they need to catch on to," McCormack added.

Stockfuse is among 10 firms picked for an "accelerator" programme run by Barclays in east London, which provides advice, access to bank executives, facilities and seed funding. Four of the 10 firms in the 15-week programme are from overseas, and start-ups from 64 countries applied for a place.

'Take next risk' 

It is one of several such programmes in London, including Accenture's FinTech Innovation Lab which is backed by more than a dozen banks. In return, banks supporting these kind of schemes potentially get access to new technology and expertise.

Banks have also sets aside tens of millions of dollars to invest in fintech firms and to spend on in-house technology development.

While Berlin, Stockholm and Amsterdam are also trying to lure fintech entrepreneurs, investment in Europe is dwarfed by the United States, which attracted about three-quarters of the $12.2 billion of global fintech investment last year, which was more than triple the funding seen in 2013, Accenture estimated.

Europe, by comparison, attracted 12 per cent.

Silicon Valley, home to some of the world's biggest tech firms and thousands of start-ups, attracts a deep pool of investors and benefits from close links between academia, investment and business, as well as a history of successful entrepreneurs.

London start-ups are successfully finding investors, and so are established firms like Transferwise — a four-year-old online money transfer group that raised $58 million in a January funding round that valued it at about $1 billion.

It is funding for mid-sized tech firms where the US market has an advantage, industry experts said.

"You need more medium-sized exits [in London], where the engineers and the middle-level people and the entrepreneurs receive enough money so that they take the next risk," said Mike Laven, chief executive officer of Currency Cloud, a money transfer firm. "Once you have enough activity those things start to happen... it comes from time.”

AMMAN — The annual report of Jordan Phosphate Mines Company (JPMC) showed an elevated performance with higher production, sales, exports and profit in 2014.

In a disclosure to the Amman Stock Exchange, the company revealed that phosphate output reached 7.1 million tonnes last year, 31.5 per cent more than the 5.4 million produced during 2013.

The annual report indicated that production of the DAP fertiliser came at 590,000 million tonnes, 19.4 per cent higher than the 494,000 million tonnes produced in 2013.

In terms of marketing, the company’s phosphate sales rose by 43.3 per cent to 7.3 million tonnes from 5.1 million tonnes.

Exports accounted for 4.6 million tonnes of the total sales, a 42.2 per cent increase over the 3.2 million of exports in 2013. 

Local consumption was 45 per cent higher as it reached 2.7 million compared with 1.8 million.

Sales of fertiliser last year totalled 645,000 tonnes, a 33.5 per cent increase over the 483,000 tonnes in the previous year.

Financially, the sales translated into a JD738.4 million total, a 28.5 per cent rise over the JD574.4 million recorded in 2013.

Of this gross amount, the value generated by the phosphate unit was JD357.5 million, a 37.2 per cent increase over the JD260.5 million generated in 2013. 

Sales of the fertiliser unit was higher by 31.9 per cent as the value reached JD213.7 million at the end of 2014 compared with JD162 million in the previous year.

Indo Jordan Chemicals Company contributed JD72.1 million in sales, a 12.1 per cent drop from the JD82 million achieved in 2013.

The contribution of the Nippon Jordan Fertiliser Company was higher by 35.8 per cent as its sales reached JD82.3 million last year compared with JD60.6 million.

Raw material sales also went up reaching JD12.8 million in 2014, a 37.6 per cent increase over the JD9.3 million recorded in the previous year.

As a result, gross profit last year surged by 70 per cent to JD175.6 million from JD103.3 million generated in 2013 taking into consideration that the cost of sales rose to JD562.8 million.

The company attributed the higher cost, from the JD471.1 million incurred in 2013, to the increase in output and sales.

Taking into account various administrative and selling expenses and fees, JPMC’s operational profit surged from JD16.2 million in 2013 to JD50.2 million at the end of last year.

Deducting financing costs and other miscellaneous expenditures, the profit before income tax and the provision earmarked as employees’ incentives stood at JD46.6 million.

In accordance with the labour settlements previously agreed, the board of directors decided to allocate around JD26 million as employees’ incentives provision leaving the net profit at JD21 million compared with the JD2.6 million at the end of 2013.

JPMC’s balance sheet at the end of 2014 showed total assets at JD1.2 billion, of which JD440.5 million were current assets and JD770.9 million in fixed assets.

Total liabilities stood at JD427.5 million, of which JD338.7 million were current and JD88.8 million long-term.

Total indebtedness declined last year to JD72.2 million from JD76.2 million at the end of 2013.

Shareholders equity increased by 3 per cent or JD21.7 million to JD783.9 million.

KAMIL Holding Ltd. of Brunei Investment Agency holds 37 per cent of JPMC's JD75 million capital. Jordan's Ministry of Finance holds 26 per cent and the Social Security Corporation holds 16 per cent.

AMMAN — Jordan Arab Investment Bank’s general assembly on Thursday approved the distribution of cash dividends at a rate of 12 per cent to shareholders.

Chairman Ibrahim Bin Hmoud described 2014 as a decisive year in the bank’s march, since it managed to take over HSBC’s operations after competing with other Jordanian banks.

AMMAN — Jordan Insurance Company’s (JIC) general assembly on Thursday approved the distribution of cash dividends at a rate of 7 per cent to shareholders. Financial data showed that JIC’s technical profit in 2014 reached around JD5.2 million compared with JD3 million in 2013, the Jordan News Agency, Petra, reported.

“JIC’s financial results from 2014 have yet again served to reaffirm the strength and stability of the company and its leading position in the local insurance industry,” a JIC statement quoted its Managing Director Imad Abdul Khaleq as saying.

“In spite of the economic challenges facing the Kingdom, we achieved encouraging technical profit last year, which enabled us to increase the dividends paid to shareholders, compared to the previous year,” he added.

Abdul Khaleq also pointed to JIC’s diverse real estate portfolio that carry a JD17 million investment value as evidence of the company’s financial strength, noting that the market value of the properties is estimated at JD31 million.

AMMAN — The Arab Bank’s general assembly on Thursday approved the recommendation of its board of directors to distribute 24.5 per cent dividends to shareholders, 12 per cent of which in cash and two free shares for each 16 shares.

The extraordinary general assembly approved increasing the bank’s capital to JD640.8 million from JD569.6 million, providing the decision is approved by relevant public institutions.

Nimeh Sabbagh, the chief executive officer of the bank, said the group achieved net profit of $577.2 million in 2014, 15 per cent higher than the 2013’s $501.9 million.

Despite the decline in some foreign currency exchange rates, client deposits reached $35 billion in 2014 compared with $34.4 billion by the end of 2013, marking a 2 per cent growth, Sabbagh added.

Sabih Masri, the chairman of Arab Bank, said that despite regional challenges, the bank continued its “strong performance” with many achievements. At the top of these achievements is the increase of net profit by 15 per cent, which reflects the confidence of clients from different countries and sectors.

Regarding the lawsuit against the bank in New York, he reaffirmed the bank’s strong position during the appeal phase expected to start before the end of 2015.

AMMAN — Speculators' liquidity is prevailing at the Amman Stock Exchange (ASE), according to the annual report of a prominent Jordanian company.  

In a forword, the chairman of  Al Amin for Investment told the shareholders that, in the absence of institutional investments, speculators are the key bourse players influencing trading volumes and share prices.

Al Amin, established in November 1995, is listed on the ASE as a public shareholding company capitalised at JD10 million to subscribe and invest in stocks, conduct brokerage business in the ASE, develop and manage securities portfolios of third parties, and manage (Islamic) Muqaradah bonds.

The company owns 94.45 per cent of the Amman Securities and Investment Company which is capitalised at Jd1.5 million and operates as a brokerage firm for trading shares and stocks on the ASE.  

Noting that the trading volume last year amounted to around JD2.3 billion, down from JD3 billion in 2013, the chairman indicated that most banks are still reserved about investing in Amman Bourse or even extending facilities to investors on the assumption that the stock market is a "risky sector".

The chairman, Mousa Abdul Aziz Shehadah, also mentioned the regress of foreign investment, and weak liquidity as other factors behind the  decline in trading volumes.

"The unusual circumstances gripping the region, and the associated risks  continuing for nearly four years until now, blurs the outlook and makes it extremely difficult  to predict the bourse's trajectory during 2015," Shehadah wrote.

"Such a situation is spoiled by speculators whose liquidity, in the absence of institutional investments, weighs heavily on trading volumes and share prices," he said.  

The chairman expressed hope that the sharp drop in oil prices would have a positive effect on the Jordanian economy and on the ASE as such a  decline would lower production costs and operations in all sectors, especially the industrial companies that rely on energy in its activities.

Within this context, he mentioned transport and distribution firms as examples of entities that may profit, if not also liable under the new Income Tax Law that went into effect on January 1, 2015.                 

"In such cases, there will be higher demand for the shares of those companies resulting in higher prices," the chairman said.

Describing the activities at the bourse last year as quiet and the dealings as cautious, the annual report concluded that the company's operations generated a JD0.6 million profit, down  from a JD1.1 million recorded in 2013.

The shareholders on Wednesday approved a recommendation from the board of directors to distribute cash dividends at a rate of 6 per cent.

The JD600,000 in dividends were taken equally  from the profit generated in 2004 and from retained earnings from previous years.       

According to the annual report, Al Amin's capital investment stood at JD6.45 million at the end of last year. 

Total assets as of December 31, 2014, stood at JD15.2 million while total liabilities were JD0.7 million. Shareholders equity totalled JD14.3 million.

Jordan Islamic Bank and Bayt Al Tawfiq for Development Holding Company are the two major shareholders in Al Amin with a 38 per cent and an 8.7 per cent stake respectively.

AMMAN – The Housing Bank for Trade and Finance (HBTF) will extend a JD250 million loan to the National Electric Power Company to support its financial needs under an agreement signed recently.

In a statement issued on Wednesday, the HBTF noted that the agreement is part of the bank's role in supporting the national economy through providing funding to "productive" and "effective" economic sectors, especially energy, which is witnessing huge challenges.

RAMALLAH, West Bank — Israel's decision to withhold $130 million a month in revenue collected on behalf of the Palestinians is strangling the economy and leaving the banking system dangerously exposed, the Palestinian central bank governor said on Wednesday.

Israel stopped the transfer of revenues from tax and customs duties in January in protest at the Palestinians' move to join the International Criminal Court from April 1, when war crimes charges may be filed against Israel.

Since then, more than $500 million has been withheld from the economy, prompting the Palestinian Authority, which administers the West Bank, to cut most of its employees' salaries by 40 per cent and resort to an emergency budget.

The government is also in danger of not being able to service its outstanding loans, according to the governor of the Palestinian Monetary Authority, the central bank.

"We have informed the Palestinian Authority that we have reached the limits permitted to them, or are about to get there, and that banks will not be able to continue to fund it," Governor Jihad Al Wazir told Reuters.

"The situation in general is very tough. Suspending the tax transfers is leading to a rapid economic deterioration," he said.

It is not the first time Israel has suspended the transfers — it took similar steps in 2006, 2007 and 2008 — but the risks this time may be greater and leave the economy ever more dependent on handouts from international donors, who have not followed through on commitments in recent months.

With the deficit already at around 15 per cent of the gross domestic product (GDP) and the tax transfers accounting for two-thirds of income, the budget is falling into a deeper hole every month. 

Unemployment stands at 25 per cent and output is set to contract this year, sharply increasing the threat of instability and violence.

"The situation could become untenable, with a growing risk of social unrest and strikes that could lead to political instability," the International Monetary Fund (IMF) said in a report at the end of January.

"These serious risks could be mitigated if Israel quickly resumed transfers of clearance revenue and donors front-loaded their aid," it added.

The Israeli military has warned the government that the revenue withholdings are fuelling violence in the West Bank.

There is a chance Israel will resume the payments as soon as a new government is in place although it has given no indication that it will do so. Prime Minister Benjamin Netanyahu will be formally asked to form a coalition on Wednesday and is expected to have a new government ready in weeks.

But with the Palestinians showing no signs of backing away from the ICC, Netanyahu may decide to keep up the pressure. US Congressional funding to the Palestinians may also be cut in the event that war crimes charges are brought against Israel.

One diplomat tracking the state of play estimated that if the Palestinian Authority does not receive any transfers by June, its finances would collapse.

‘At the limit’

The situation has put ordinary Palestinians under huge financial pressure.

Nidal Sadqa is a 47-year-old father of four who works for the Palestinian economy ministry in Ramallah and for the past three months he has been paid 60 per cent of his usual salary. Half of what's left each month pays bank loans and other debts.

"I haven't paid the rent for three months and I owe the supermarket for things I've already taken," he said, describing circumstances familiar to the nearly 160,000 people employed by the Palestinian Authority in Gaza and the West Bank.

The desperation has prompted more Palestinians to try to find work in Israel. Already around 130,000 cross the border each day, 30 per cent of them without permits, and Israel is making plans to handle up to 200,000 Palestinian workers.

While that provides income, it is cheap labour for Israel and draws productivity out of the Palestinian economy. The work is also unpredictable, which means that any personal loans taken out against the expected salary can quickly turn sour.

Naser Abdul Karim, an economist in the West Bank, estimates that Palestinian Authority employees have borrowed $600-$700 million from Palestinian banks, while the Palestinian Authority owes nearly $1.5 billion to the same institutions, the limit allowed by the Palestinian Monetary Authority.

"There is a fear the authority may collapse in terms of being able to function and provide services," said Abdul Karim, adding that if Netanyahu did not release the pressure, "I am sure the entire Palestinian economy will collapse."

While some big Palestinian businesses continue to perform well,  including telecoms provider PalTel and investment conglomerate Padico Holding, the lower rungs of the ladder, and especially the economy at the family level, are under strain.

And the Palestinian Monetary Authority, which tries to hold the strands together despite not having its own currency to manage, is desperate for Israel to open the taps again.

"The economy is retreating and we are facing a stage of economic shrinkage," said Wazir, a British-educated economist who has headed the bank since 2008. 

"We have reached or are about to reach the permitted limits for borrowing according to our internal regulations," he added.