Business

AMMAN — Sales of raw phosphate and fertilisers are likely to reach eight million tonnes this year, according to   Jordan Phosphate Mines Company (JPMC) Chairman Amer Majali.

His forecast was accentuated on Sunday by the signing of an agreement to supply additional quantities of phosphate to two Indian manufacturers. 

Majali noted that the exports highlight JPMC's strategic plan which aims at entering new markets and regaining those that the company left more than 10 years ago.

JPMC Chief Executive Officer Shafiq Ashqar valued the company's participation in the annual conference of Fertiliser Association of India (FAI) and described  it as an opportunity to know more about India’s policies in the coming years, communicate with prominent makers and importers of fertilisers, and enhance JPMC’s reputation in the Indian market 

Nearly 1,300 delegates representing major companies in the industry, marketing and consumption of fertilisers in the Indian peninsula attended the FAI conference.

On the sidelines of the conference, JPMC discussed prices and standards of the company’s products, and its ability to provide India with raw phosphate and fertilisers according to the standards of Indian factories, Ashqar said. 

As part of its marketing strategy in 2015, the company signed a contract to export an additional 850,000 tonnes of its products to India, whose annual imports of fertilisers represent 35 per cent of the international market share, Ashqar added.

The chief executive officer expects JPMC's exports to India to reach 3.5 million tonnes, and overall sales to local and international markets to hit eight million tonnes. 

"Such a quantity could bring the company’s sales to their previous high levels," he said.

Ashqar described a contract signed to export 250,000 tonnes of phosphate to Serbia, as a validation of the company’s success to get back to Europe through Turkey and Serbia. 

This contract would also enable JPMC to retrieve previous markets, especially in eastern Europe, Australia, New Zealand and South Korea, he said.

Ashqar said JPMC’s sales of fertilisers exceeded 600,000 tonnes in 2014, noting that the company is currently rehabilitating fertiliser factories in Aqaba to have them operate at full capacity.

At the same time, JPMC is taking measures to reduce mining costs with a view to enhancing the efficiency of producing raw phosphate and sharpening the competitiveness of the company in the international market.

Separately, the Arab Potash Company (APC) has recently opened an office in New Delhi to enhance its presence in the Indian market, increase its exports to the country and to overcome any marketing challenges the Jordanian potash could face in the Indian market. 

APC Chairman Jamal Sarayrah described the Indian market as one of the biggest fertiliser markets in the world and one of the most important markets for APC.

He noted that India imports around 550,000 tonnes of the product annually, indicating that India imported around 20 per cent of the Jordanian potash in 2013. 

Sarayrah said he held bilateral meetings with representatives of Indian companies on the sidelines of FAI conference, to increase the Jordanian potash share in the Indian market, in particular, and the international market in general.

New Delhi Office Director Rami Athamneh presented a briefing on the duties of the office which is tasked with following up on the implementation of APC’s annual contracts in the Indian market which reached $270 million in 2014, expecting their value to increase to $300 million in 2015.

NEW YORK — Crude oil markets fell 3 per cent or more to plumb new five-year lows on Friday after the world's energy watchdog forecast even lower prices on weaker demand and larger supplies next year.

Benchmark Brent oil settled at below $62 a barrel and US crude slumped to under $58 to extend Thursday's landmark fall below $60.

Surging crude inventories in the United States and top oil exporter Saudi Arabia's reiteration that it will not cut production had roiled prices over the last two days despite data pointing to strong US economic recovery.

On Friday, the Paris-based International Energy Agency (IEA) which coordinates the energy policies of industrialised countries, cut its outlook for demand growth in 2015, triggering another collapse.

The IEA slashed its outlook for global oil demand growth for 2015 by 230,000 barrels per day (bpd) to 900,000 bpd on expectations of lower fuel consumption in Russia and other oil-exporting countries.

It predicted that oil-producing nations outside of the Organisation of Petroleum Exporting Countries (OPEC) will add to global supplies. It also expected prices to fall further.

"That's just more bad news for the oil markets," said Andrew Lipow, president of Houston-based Lipow Oil Associates.

Brent settled down $1.83, or nearly 3 per cent, at $61.85 per barrel. It fell to $61.35 during the session, the lowest since July 2009.

US crude finished down $2.14, or 3.6 per cent, at $57.81. It fell earlier to $57.34, its lowest since May 2009.

On the week, Brent lost more than $7, or about 11 per cent. US crude tumbled over $8, or 12 per cent.

Both markets have lost about 46 per cent of their value since their June highs, when Brent stood at above $115 and US crude at around $107.

The IEA outlook had a greater impact on Friday's market than data from US oil services firm Baker Hughes showing the number of rigs drilling for oil in the United States were down by 29 last week, the biggest weekly drop in two years.

Voluminous crude from US shale projects has been blamed for much of the global oil glut now, and energy traders have been watching rig data to see if prices that have almost halved since June will prompt a cutback in drilling.

Regulators in North Dakota, one of the largest shale oil producing states in the United States, also said on Friday the state's crude production held steady in October despite strict new rules that aim to prevent wasteful burning of natural gas produced alongside oil.

GENEVA — Talks on cutting trade tariffs on hundreds of information technology (IT) products collapsed on Friday, delaying and potentially scuppering a deal estimated to be worth $1 trillion to global trade.

"We are disappointed not to be celebrating a deal this week. We missed a big opportunity," US Ambassador Michael Punke said at the World Trade Organisation (WTO).

The talks aimed to update the WTO's 17-year-old Information Technology Agreement (ITA), which guarantees zero-tariff and duty-free trade on hundreds of products, adding about 200 more products to the list.

Several participants blamed the failure on a deadlock between China and South Korea over liquid crystal display (LCD) screens.

"The participants have significantly reduced the gaps on expanding the coverage of the ITA agreement in recent days, but unfortunately it has not been possible to finalise the negotiations this week," WTO Director General Roberto Azevedo said in a statement.

Participants are expected to reconvene in 2015 to see if they can overcome the blockage.

"Manufacturers urge negotiators to come back to the table as early as possible in the new year to agree to a strong product list in order to unlock much-needed growth opportunities for manufacturers and their workers," said Linda Dempsey, vice president of international economic affairs at the US National Association of Manufacturers.

According to participants, South Korea, home to top LCD producer LG Display Co. Ltd., wanted LCD screens included in the deal.

But China, which wants to foster its own LCD industry, refused, demanding that all countries accept the same terms that it agreed bilaterally with the United States last month after a long-standing stalemate.

One trade official involved in the talks said South Korea had offered a number of concessions, but there had been no reciprocal move by China. Other countries also offered changes to try to entice China to make the last small step needed for a deal, the official added.

Another trade diplomat said South Korea had asked China to include accumulator batteries on the list, but Beijing said no. 

"They couldn't move the last few centimetres," he added, noting that both sides were equally to blame for the collapse.

Chinese officials were not available for comment.

Although Friday's deadline for finishing the negotiation was artificially imposed, Punke had said the talks' "success or failure" would be decided this week. 

His European Union counterpart, Angelos Pangratis, said: "Later it will not be easier. ... Now is the moment."

JEDDAH, Saudi Arabia — Saudi Arabia will stop buying domestically-grown wheat in two years' time and rely completely on imports of the grain, the water-short kingdom's new agriculture minister said on Wednesday.

By investing tens of billions of dollars, the desert nation's output grew through the 1980s until it ironically became one of the world's largest wheat exporters.

But since a surge in global food prices in 2008, Saudi Arabia and other Gulf states have looked abroad to nearby Sudan and other countries to secure food supplies through agricultural investment, including land acquisition.

"The kingdom has decreased domestic wheat production since 2008 by 12.5 per cent annually," Agriculture Minister Waleed Al Khuraiji told the London-based International Grains Council, which met in the Red Sea city of Jeddah for a twice-yearly forum.

"The state will cease to purchase locally-produced wheat by 2016 and depend entirely on wheat imported from abroad," the minister said in his first major address since being appointed in a Cabinet shuffle on Monday.

"This initiative is based on mutual benefit which helps to provide food supplies to the kingdom while at the same time developing and modernising agriculture in the investor countries, especially local communities," Khuraiji added.

Imports of wheat to Saudi Arabia rose tenfold from 300,000 tonnes (272,100 tonnes) in 2008 to three million tonnes this year, ranking the country as the world's sixth-largest wheat importer, the minister indicated.

Dramatic growth in Saudi Arabia's wheat output pushed production to more than four million tonnes by 1992, an amount that overwhelmed domestic demand, the historian Toby Craig Jones wrote in "Desert Kingdom”.

But farmers were heavily subsidised and the crop required two or three times more water than in more moderate climates, he said, adding that between 1980 and 2005 the country spent 18 per cent of its oil revenue on growing wheat.

Ross Kingwell, chief economist at the Australian Export Grains Innovation Centre, a public company supporting the trade, said Saudi Arabia and other Gulf states will need "strategic partnerships" to benefit from their food security programmes.

Australia, Canada and the United States, for example, "will be able to provide a steady supply of grains”, he added.

The International Grains Council oversees a global convention governing trade in wheat, rice and other grains.

DHAHRAN, Saudi Arabia — Abdul Aziz Al Jouf is in many ways a typical Web entrepreneur — the 34-year-old Saudi talks fast, works late and has big plans for his online payments system.

But in one aspect he's unusual: Jouf is funded by state oil company Saudi Aramco, better known for multibillion-dollar investments in oilfields and pipelines.

Their partnership is the result of a push by Saudi Arabia to create jobs and diversify its economy beyond the oil industry — increasingly important as its population grows and oil prices fall.

The government has found it hard to promote start-ups in a society which lacks a culture of risk-taking and where financing options for small firms are rare. As a result it is ploughing oil money into small ventures in an unusual combination of state intervention and private entrepreneurship.

Saudi Aramco founded its Aramco Entrepreneurship Centre (AEC) in 2011. Its managing director, Sami Khursani, told Reuters: "We have Aramco's support to invest more and more. Money here is not an issue — we are looking for quality deals that are entrepreneurially promising."

"We want to enhance the prosperity of the economy through product and service diversification, localising technologies, developing small- and medium-sized enterprises and expanding the pool of Saudi entrepreneurs," he said.

Aramco has invested over $2 million in Jouf's venture since he returned from living in the United States in 2011 and founded his firm with a staff of two. His company, PayTabs, now has 45 employees in the Middle East and North Africa, and expects to have 70 by the end of next year as it expands in Asia.

Gradually, entrepreneurship is becoming a buzz word in Saudi Arabia. Universities hold lectures on it; chambers of commerce and government agencies stage conferences on the subject; newspapers and television programmes celebrate it. 

Creating a culture 

However, networks of angel investors and venture capital firms are still developing, only very slowly.

In 2006, the Saudi government launched a major effort to fund private businesses by establishing the Kafalah programme, which lends to small- and medium-sized firms.

So far, the fund has received 4 billion riyals ($1.1 billion) from the government and 7 billion riyals from 11 Saudi banks. 

But its push to create new industry has had only limited results: Last year the crude petroleum and natural gas sector still accounted for 44.4 per cent of the gross domestic product, down only modestly from 47.5 per cent in 2006.

So Saudi Aramco's AEC scheme takes a more direct approach, providing venture capital as well as loans to new businesses. It takes minority stakes in start-ups and injects up to $5 million into them, Khursani indicated.

In the past three years it has funded 43 ventures in sectors including manufacturing, education and information technology.

"We will have completed around 52 deals by year-end for a value of 210 million riyals that are financially committed, and we think those companies will generate around 2,300 direct jobs by 2019," Khursani said.

But beyond the basics of capital, would-be start-ups find other obstacles waiting.

Sweeping labour market reforms to funnel more local citizens into private sector jobs have made it more difficult for firms to employ large numbers of foreign workers, raising costs for many. Sluggish state bureaucracy can make getting the necessary paperwork in other areas too frustratingly slow.

Nadia Al Dossary, a 47-year-old Saudi who plans to build a school in Khobar with a loan from the AEC, says she has been waiting for several months to obtain a construction permit from the municipality.

"I have the land, I have everything ready, but the bureaucracy at the government institutions is very stressful," she complained.

Nevertheless, Saudi Aramco's entrepreneurship drive is creating opportunities.

Dossary, 12 years a supervisor in the ministry of education, is joining a small group of female entrepreneurs in a country where women traditionally play little role in business and need permission from a male "guardian" to get a job.

She aims to have her school up and running by the 2016-2017 academic year, offering an international curriculum and taking in children with Attention Deficit Disorder. At present, few Saudi schools can cope with such pupils, she says.

AMMAN – A group of US infrastructure companies are in Jordan to explore investment opportunities, particularly in the field of renewable energy. 

Kenneth Hyatt, deputy undersecretary for international trade, is leading the infrastructure business development mission to Jordan and is accompanied by top executives of US firms working in the sectors of renewable energy, water and construction. 

At a meeting with the press on Wednesday, the US official, who also oversees the daily operations of the International Trade Administration, said the focus of the visit, that also took them to Egypt and Morocco, was renewable energy, indicating that six out of the 10 companies in the delegation operate in the solar power. 

"We chose these three countries because of their potential," he said, indicating that Jordan and the US enjoy strong economic and commercial ties. 

Jordan was the first Arab country to sign a free trade agreement (FTA) with the US, Hyatt said, noting that before the FTA was signed, trade exchange was only around $400 million but currently it exceeds $3.3 billion. 

In 2013, Jordanian exports to the US reached $1.2 billion, while this year  it is expected to go up even higher as  the value of exports  in the first nine months of this year exceeded this figure, the official indicated. 

He noted that the delegates held meetings with government officials in Amman, in addition to business to business meetings with the private sector. 

"Energy is very important to Jordan and renewable energy is a solution," he said, adding that the mission also seeks to encourage Jordanian businesspeople to invest in the US. 

Hyatt selected the sectors of ICT, healthcare and energy as important businesses that can contribute to boosting trade between Jordan and the US. 

Attending the meeting with the press was Ahmad Nada, vice chairman and regional director of First Solar, which is a global provider of comprehensive photovoltaic (PV) solar systems. 

Nada said the company is currently taking part in the Shams Maan Power Plant as it provides engineering, procurement and construction to the 52.5 megawatt solar-run power plant in the southern governorate. 

He added that First Solar is going to bid for a similar project in the governorate of Mafraq, noting that bidding would open on January 20 of next year. 

"We see valuable economic benefits in investing in Jordan," Nada said. 

GENEVA — A century after the birth of commercial flight, the industry is a vital driver of the global economy, International Air Transport Association (IATA) Director General/Chief Executive Officer (CEO) Tony Tyler said on Wednesday at the “global media day", with focus on safety.

About 1 per cent of global gross domestic product (GDP) is spent on air travel. Including direct taxation, that will bring the total spending to about $823 billion next year. 

This expectation is based on the anticipation that 3.5 billion people will travel and 53.5 million tonnes of cargo, worth some $7.3 trillion, will be transported by air.

The global air industry is expected to report a collective net profit of $25 billion in 2015, up from $19.9 billion this year, but there will be clear differences in profitability among regions.

Over half of the profits, about $13.2 billion, are expected to be generated by airlines in North America. The European industry, by contrast, although similarly sized, is expected to make only $4 billion.

Middle East airlines have one of the lowest breakeven load factors: 58.6 per cent. While average yields in the region are low, unit costs are even lower, partly driven by the strength of capacity growth, said Tyler.

Passenger capacity in the region is expected to expand by 15.6 per cent in 2015, up from 11.4 per cent in 2014, and post-tax net profits are expected to grow to $1.6 billion in 2015, up from $1.1 billion in 2014.

This represents a profit of $7.98 per passenger and a net profit margin of 2.5 per cent, according to IATA.

Given the risks in the world today, economic uncertainty, political instability, public health emergencies and terrorism, among others, the $25 billion profit forecast “is not much of a buffer to absorb a significant change for the worst in the operating environment”, Tyler said.

As such, IATA’s “top priority” and an area that needs to be modernised is safety and security, the IATA head noted.

”Unless we find a better way to screen passengers, we will never be able to cope with the rising demand,” said Tyler, adding that the project “is moving forward, as well as other new initiatives in areas such as cyber security”.

The aircraft tracking task force (ATTF) was established by IATA after the disappearance of Malaysian Airlines Flight 370 on March 8, 2014. The ATTF’s mandate is to assess what can be done to improve global aircraft tracking capabilities. After evaluating the state of aircraft tracking and conducting an assessment of available and planned aircraft tracking products, services and practices, the ATTF found that “there is a range of existing technologies and services, many already installed on aircraft, which can be used to enhance worldwide aircraft tracking in the near term”.

It also established that existing procedures need to be amended and new or improved communications protocols between airlines and air navigation service providers have to be developed.

Safety statistics are still good, said Captain Kevin L. Hiatt, chairman of the ATTF and senior vice president of IATA, who acknowledged that “commercial aviation is not sustainable if the public does not have confidence in the safety of the system” and that “public trust and confidence in aviation is at risk when large and modern aircraft cannot be located”, an issue that his team “has attempted to consider” before issuing a report and recommendations that “will serve to improve the collective ability to identify and track aircraft globally, significantly reducing the remote probability of such an occurrence”.

The MH370 and MH17 tragedies have made airlines “take the tracking issue very seriously”, said Tyler, adding that "the industry is working to improve, but some issues such as tamper proofing will take time to address and implement”.

Challenges facing the industry could be easier overcome through partnerships with governments, which are critical, said Tyler, adding that while “some very enlightened governments understand the strategic value of aviation connectivity”, others, like in Europe, impose “heavy taxation and onerous regulation [which] are among the root causes of the struggles that European airlines are experiencing”.

IATA, said Tyler, is “asking governments to regulate airport monopolies with a firmer hand than currently exists in most markets” and also “calling for rigorous economic regulation to ensure that there is an incentive to deliver cost-efficient infrastructure... at agreed services levels”.

In its 100 years of history, the air travel industry has evolved in many ways, often leading the development of global systems.

“We had global reservation and telecommunication systems well in advance of the Internet, simply because, to a greater extent than most other industries, we were ahead of the curve in developing networks that spanned the globe,” said Tyler.

The Internet has changed the way industries do business, aviation included, and IATA “is taking the lead in helping the industry in several areas”.
Regarding cargo, “infamous for its paper-laden processes”, eliminating the paper trail that accompanies every air cargo shipment is a “critical development that must happen” if the process is to get modernised, said the IATA CEO.

The distribution process, when it comes to passengers, “also needs some shaking up”.

Airlines sell a growing array of product customisations and innovations using Internet technology, but “moving this innovation into the distribution processes for travel agents is a challenge”.

IATA’s “new distribution capability” programme aims to make it easy for airlines to distribute their full range through travel agencies.

PARIS — The gap between the rich and poor in a range of countries has reached its widest in 30 years and the trend has harmed growth, the Organisation for Economic Cooperation and Development (OECD) said Tuesday.

In a new report, the OECD noted that most of its 34 member countries had seen a growing widening in the inequality gap.

"In most OECD countries, the gap between rich and poor is at its highest level since 30 years," the report said.

"Today, the richest 10 per cent of the population in the OECD area earn 9.5 times the income of the poorest 10 per cent; in the 1980s this ratio stood at 7:1 and has been rising continuously ever since," it indicated

The OECD counts both developed and developing countries as members, including nations from the European Union (EU) as well as the United States, Turkey, Mexico and Japan. China, Brazil and India are not members.

In the couple of decades leading up to the global economic crisis, average household income grew for all OECD countries by about 1.6 per cent annually.

"However, in three quarters of OECD countries, household incomes of the top 10 per cent grew faster than those of the poorest 10 per cent, resulting in widening income inequality," the report said.

During the recent post-crisis years, average household income stagnated or fell in most member countries, it added.

The gap between the rich and poor varies widely across OECD member states and is often narrower in many Continental European nations and the Nordic countries, according to the report.

But the average income ratio between the richest 10 per cent and the poorest 10 per cent skyrockets in other member states.

It "reaches around 10 to 1 in Italy, Japan, Korea, Portugal and the United Kingdom, between 13 and 16 to 1 in Greece, Israel, Turkey and the United States, and between 27 and 30 to 1 in Mexico and Chile".

The report argues that expanding income inequality has negatively affected the economies of member countries, estimating that it has knocked more than 10 percentage points off growth in Mexico and New Zealand.

"In the United States, the United Kingdom, Sweden, Finland and Norway, the growth rate would have been more than one fifth higher had income disparities not widened," it said.

At the same time, according to the OECD's calculations, greater equality helped boost gross domestic product per capita in Spain, France and Ireland prior to the economic crisis.

The report called for anti-poverty programmes along with increased access to high-quality education, training and healthcare.

"The paper also finds no evidence that redistributive policies, such as taxes and social benefits, harm economic growth, provided these policies are well designed, targeted and implemented," the OECD said in a statement announcing the report.

AMMAN — The Central Bank of Jordan (CBJ) on Tuesday decided to expand its medium-range lending programme to licensed banks for re-lending at competitive interest rates to the agricultural sector. The programme already supports industrial, tourist and renewable energy sectors. The CBJ, in a statement issued on Tuesday, said this procedure aims at supporting economic sector in a way that contributes to economic growth due to the importance of farming in the comprehensive development strategy and in response to the sector’s demand. The CBJ indicated that a total of JD900 million can be disbursed under the programme as the maximum amount that could be extended by each bank is based on 5 per cent of its total direct facilities in Jordanian dinars. This procedure is a continuation of the Agricultural Credit Corporation’s programme in presenting funds to farmers, which is partially financed by CBJ’s loans to the corporation at low interest rates. 

NEW YORK — World oil prices slid another 4 per cent to new five-year lows on Monday, as expectations of a deeper slump next year and a prediction by a core member of the Organisation of Petroleum Exporting Countries (OPEC) that crude will remain at $65 for several months triggered another round of selling.

The chief executive of Kuwait's national oil company said oil prices were likely to remain around $65 a barrel for the next six to seven months, the latest indication that Gulf producers were content to ride out the latest rout.

The pessimistic outlook deepened the decline in a market that many traders now see as having little chance of rebounding.

"When these things go lower, they tend to go much farther than people anticipated," indicated Tariq Zahir at Tyche Capital. "I definitely think we're going to keep heading lower, everyone is trying to pick a bottom."

Brent for January fell by $2.95 to $66.09 a barrel by 1749 GMT, its lowest since October 2009.

US crude was down $2.66 at $63.18 a barrel, its lowest since July 2009.

Late on Friday, Morgan Stanley set a new bar for bearishness on Wall Street, slashing its average 2015 Brent base-case outlook by $28 to $70 per barrel and warning that prices could drop as low as $43 a barrel next year.

"Without OPEC intervention, markets risk becoming unbalanced, with peak oversupply likely in the second quarter of 2015," Morgan Stanley analyst Adam Longson said.

Thus far, there appears little sign of intervention, even after oil prices dropped 15 per cent, or nearly $12 a barrel, since OPEC opted not to cut production at its November 27 meeting.

Top exporter Saudi Arabia has resisted calls from poorer members to curb output and shore up prices which have slumped more than 40 per cent since June.

Libya's state oil company said on Sunday the country was producing 800,000 barrels a day, though its El Sharara oilfield was closed due to a pipeline blockade.

It is unclear how soon the price slump will slow the US shale boom. While the number of onshore rigs drilling for crude oil remains relatively high, companies are making deeper cuts to spending for next year.