Business

AMMAN — A 68-member Indian business delegation on Sunday held business-to-business meetings with their Jordanian counterparts.

The delegates, representing 36 Indian companies which are all members at the Federation of Indian Export Organisations, will also participate in the "Interbuild Jordan-2014", to be held in Amman this week.

Indian companies will be showcasing electrical and construction machinery, equipment, sanitary wares & fittings, marbles, tiles, granites, office furnishing, and everything related to building and infrastructure, according to a statement from the Indian embassy.

AMMAN — A trade delegation from South Korea, Choongbuk City, will arrive in Amman on Monday to explore potential business opportunities with their Jordanian counterparts.

The delegation comprises representatives of nine companies specialised in manufacturing and exporting SMC water tanks, PVC food packing wrap, housekeeping products, crane lorries, purified water pre-treatment system, refrigerants, cookware, truck-mounted hydraulic crane, smartphone screen protector.

The group of Korean businessmen will hold business meetings with their Jordanian counterparts on Tuesday.

This event is organised by Korea Business Centre (KOTRA) in Amman, the commercial office of the embassy of the Republic of Korea, according to KOTRA statement.

AQABA — The Aqaba Special Economic Zone Authority (ASEZA) participated recently in the ninth Silk Road International Conference in the province of Fujian in China.

The head of the Jordanian delegation to the conference and assistant director of ASEZA, Abdullah Yaseen, stressed the importance of investing in Aqaba in the fields of tourism, industrial and logistic services.

Yaseen discussed aspects of joint cooperation with Chinese officials in the fields of training and expertise exchange, as well as ways to attract Chinese investments to Aqaba. 

AMMAN — Jordan Enterprise Development Corporation announced Sunday in a press statement that, in cooperation with International Trade Centre (ITC) and the World Bank, it launched the regional project “Development of SMEs Exports through Virtual Market Places” valued at $3 million through the period 2014-2017.

The project aims to support 600 projects — 200 projects from each country (Jordan, Morocco and Tunisia), and the impact will be measured through the increase of sales and exports during the implementation period of the project.

The target groups for this project is the overall government agencies, chambers of commerce, businesses, and institutions of civil society and in particular the staff who will be trained by the ITC to work on the process of choosing the small and medium enterprises, performance monitoring, information classification, and provide the projects with information about market opportunities and potential risks.

AMMAN — The government and Royal Jordanian (RJ) board members are studying a number of options to help the company return to profitability, and secure a bright future, an RJ press statement sent to The Jordan Times quoted RJ Chairman Nasser Lozi as telling shareholders on Sunday.

Lozi, also the company's president and chief executive officer, said in the press release that RJ is running its services under difficult operational conditions. 

Security and stability are top drivers of tourism and air transportation in the world, the press release noted. Consequently, tourism and the air transport industry are the first victims of unrest, because they directly reflect on the load factors, the ticket fares and eventually the final results of airlines. 

By operating from the heart of the Middle East, which is surrounded by unrest, the chairman indicated that the airline's operations underwent major changes and its route network was highly affected.

"Damascus and Aleppo, two stations of a strategic significance to Royal Jordanian, are still suspended. The two Syrian stations, added to Beirut, are considered feeding routes for RJ flights to North America and Europe. Last year, the load factor to these destinations went remarkably down," Lozi said.

He added that the airline had to halt operations to three Libyan cities and one to Iraq this year. RJ also had to reduce frequencies to some destinations, the most significant Beirut, due to the low demand for travel to the Lebanese capital. 

He noted that the company incurred losses when it had to change the route between Amman and Beirut in March 2013. The flight duration now takes 1 hour and 45 minutes instead of 1 hour, a result of avoiding flying over Syrian airspace. 

"It [the airline] was highly impacted by the low demand on travel, and tourism to Jordan and the Arab world, particularly from the traditional markets of Europe and the Far East, since tour operators look at the Middle East as one tourism station," he explained.  

Lozi said that these factors contributed to the 2013 operational and financial results. RJ used to achieve a 15-20 per cent growth in the number of passengers and revenues year on year. 

Last year, however, the number of passengers declined by 3 per cent, which resulted in a decrease in revenues from JD802 million in 2012 to JD744 million in 2013. 

He said the company did its utmost to cut costs without affecting the level of services to passengers indicating that the high fuel bill paid by the company last year constituted 38 per cent of the total operational cost

The cost reduction efforts resulted in bringing down the operational expenses from JD722 million in 2012 to JD713 million in 2013.

Lozi also mentioned that, besides instability, intense competition among regional airlines, was another challenge faced by RJ in 2013 as it had a big role in reducing ticket prices.

According to the press statement, the chairman told the shareholders that Royal Jordanian has taken many steps and measures in 2014 to improve the performance of the company and enable it to achieve profits. 

He underlined the airline's determination to generate ancillary revenue and find different sources of income by investing in different areas in the aviation industry, such as aircraft maintenance, ground handling and airport services.

RJ will enter these fields in new markets and regional airports, thus contributing to developing and building up the aviation industry in neighbouring countries, besides its contribution to the progress in the Jordanian airports, the press release said. 

"At operational level, 2014 marks a new positive turning point in RJ's history and fleet," he said. "Starting with the end of August this year, the airline received the first Boeing 787 aircraft [Dreamliner]. The company will add four other new 787s by the end of 2014; the rest of the ordered aircraft will join the RJ fleet in the upcoming years, replacing the Airbus 340s and 330s."

The new Dreamliner, with its host of new technologies and fuel efficiency features, will operate on RJ's medium- and long-haul routes, opening new horizons and markets for the airline in different countries around the world. It uses 20 per cent less fuel than today's similarly sized planes. 

The airline phased out a number of its aircraft during 2014, due to the fact that the company decided to forgo some destinations on its route network that is constantly reviewed by the airline.

Due to the weak economic feasibility, RJ decided to shut down its operations to Milan, Colombo, Accra, Delhi, Mumbai and Lagos, and passed on the Sharm Al Sheikh operations to Royal Wings. 

It also reduced the number of flights to Beirut from four to two daily, based on a code-share agreement concluded recently with the Middle East Airlines. 

Lozi assured the 7th ordinary general assembly meeting of the airline’s keenness to improve its financial results and achieve a return on investment for shareholders. 

He said that in spite of the company’s unsatisfactory financial results, various other indicators show that RJ is a successful and progressive airline that competes with big international airlines in terms of ground and air services, qualified staff, technology, and safety and security standards it adopts.

Noting that RJ is not only a shareholding company, but also a big national company that has sovereignty and economic dimensions as it is the national carrier of Jordan, connecting the Kingdom with a large number of countries and mirroring a bright image of Jordan to the world, he drummed up the firm's JD378.5 million contribution to Jordan's gross domestic product last year, with an average of 2-3 per cent.

"With its qualified human capital, its revised route network, its modern fleet of aircraft, competitive services to passengers and highest safety standards, RJ will be able to become stronger," Lozi concluded. 

At the beginning of this year, RJ was named one of the top 10 safest airlines in the world in 2013 on the world's best one-stop airline safety and product rating review website. 

BUENOS AIRES — President Cristina Fernandez's campaign to bolster the state's role in Argentina's economy took a big step forward last week when lawmakers approved a bill that will allow the government to intervene in the pricing and output levels of large companies.

The house of deputies voted 130-105 on Thursday for the so-called supply law. It enables the government to set profit margins and confiscate merchandise from private companies judged to have hiked prices unjustifiably.

The vote came despite strong opposition from big business and the nation's key grain sector. The bill has already passed the upper house of congress.

Fernandez still has to sign the measure into law. This, though, is widely seen as a rubber-stamping exercise.

Fernandez's leftist government says the bill will protect consumers from unfair price rises and stem job losses in times of crisis. The administration has shrugged off opponents' criticisms that more state intervention will stifle the economy.

The bill "creates the conditions for regulations by the state in order to prevent large firms abusing their strong positions and holding back stock without good reason," Cabinet chief Jorge Capitanich told reporters.

Capitanich said the bill would protect small- and medium-sized companies, encourage investment and boost job creation.

Leaders from the agricultural, banking, industrial and retail sectors vow to sue to get the law thrown out on grounds that it violates private property and trade rights.

‘parasitic relationship’

In a marathon debate, opposition lawmakers accused the government of suffocating growth of the $490 billion economy.

"This government has a parasitic relationship with production and work because it feeds off them but simultaneously wants to destroy them," said legislator Carlos Brown.

The supply law is one of a series of interventionist policies announced by Argentina since it defaulted on its debt in July.

Rattled by the default, markets will watch closely to see how the new rules are enforced in a country where private economists forecast inflation may top 40 per cent this year as the peso tanks and the economy shrinks.

The farm sector worries that the measure will allow the state to grab corn and wheat crops if it decides domestic food prices are too high. Economy Minister Axel Kicillof said those fears were unfounded.

"The state does not want to intrude on the economy, but it does have to regulate the economy," Kicillof told local radio while the bill was being debated.

"The government does not have the ability or the desire to control all the comings and goings of the economy, all the prices, or go confiscate grains from the silos," he said.

But Martin Fraguio, executive director of Argentina's Maizar corn industry chamber, told Reuters the bill threatened farmers.

"This puts the entire corn chain — planting, harvesting, buying and selling — at risk," Fraguio said.

Argentina is the world's No. 4 corn exporter and No. 3 supplier of soybeans.

Separately, the government expects the economy to grow 2.8 per cent in 2015 despite the recession gripping the country.

In its annual budget proposal to Congress, the government forecast the country would return to growth next year and slash annual inflation to 15.6 per cent.

Economic analysts are forecasting the economy will shrink at least 2 per cent this year.

Annual inflation has topped 20 per cent since 2007.

The South American country has seen sluggish consumption and industrial output in recent months.

Its economic woes have been exacerbated by its $1.3-billion debt dispute with two hedge funds that won a US court ruling blocking the country from servicing its debt without paying them.

The row forced Argentina into its second debt default in 13 years in July.

CAIRNS, Australia — Financial leaders of the Group of 20 (G-20) top economies remain committed to chasing higher global growth, but were divided on how to achieve it as Germany pushed back at calls from the United States and others for more immediate stimulus.

Opening a meeting of G-20 finance ministers and central bankers, Australian Treasurer Joe Hockey outlined on Saturday an ambitious agenda of boosting world growth, fireproofing the global banking system and closing tax loopholes for giant multinationals.

"We have the opportunity to change the destiny of the global economy," said Hockey, who back in February launched a campaign to add 2 percentage points to world growth by 2018 as part of Australia's presidency of the G-20.

That goal has seemed ever more distant as members from China to Japan, Germany and Russia have all stumbled in recent months. Just this week, the Organisation for Economic Cooperation and Development (OECD) slashed its growth forecasts for most major economies.

US Treasury Secretary Jack Lew called for the eurozone and Japan to do more to boost demand and revive activity, signalling out Germany as having scope to do much more thanks to its burgeoning trade surplus.

Berlin was none too pleased.

"We will not agree on shortsighted stimuli," a German G-20 delegate said, arguing that in most countries debt was still too high to allow for increased spending.

Germany has been under intense pressure to allow the eurozone to ease back on fiscal austerity and to boost its own economy through more government spending or tax cuts.

More than 900 individual growth proposals had been submitted and analysed by officials, said Canadian Finance Minister Joe Oliver, the co-head of a G-20 working group on growth.

"We believe that these actions in total — and if implemented, and that is key — would come very close to 2 per cent," he told Reuters.

French Finance Minister Michel Sapin was certainly putting the accent on near-term stimulus.

"I want to repeat and say again that the immediate concern with the shorter term is very much expressed," he said was his message to his G-20 colleagues. "The immediate concern is really to recover growth while global growth in 2014 is still subdued."

Geopolitics a thorn

The outlook for activity has not been helped by geopolitical tensions, from fighting in the Middle East to the strife between Russia and Ukraine.

Hockey said Australia, as the G-20 host this year, had sought feedback from other G-20 members on whether Russia should attend the meeting of leaders in Brisbane in November.

There had been calls from some quarters to block President Vladimir Putin from attending the summit given Russia's actions in Ukraine and the downing of airliner MH17.

The overwhelming consensus was that the door be left open to continue engagement with Russia, said Hockey.

Geopolitical tensions were also high on the agenda when financial policymakers of Japan, China and South Korea held their first trilateral meeting in more than two years in Cairns on Friday.

Another risk discussed was the Ebola epidemic as Sierra Leone began a three-day lockdown to try and stem the disease.

World Bank Group President Jim Yong Kim on Friday warned of the economic danger if fear of the disease caused consumers and travellers to change their behaviour.

So serious was the situation, he said, that the United Nations was taking a leading role. Sources indicated the G-20 communique on Sunday would include the need for international cooperation in fighting the outbreak.

"The [UN] Secretary General is handling Ebola as if it were sort of an outbreak of war, where instead of sending peacekeeping troops, we're going to send in people who are going to be battling Ebola," Kim said.

Tax troubles

Also on the drawing board at the G-20 are plans to stem the loss of revenue from multinationals shifting their profits to low-tax countries, potentially reclaiming billions of dollars.

Taxation arrangements of global companies such as Google Inc., Apple Inc. and Amazon.com Inc. have become a hot political topic following media and parliamentary investigations into how many companies reduce their bills.

The OECD has unveiled a series of measures that, if implemented by members, could stop companies from employing many commonly used practices to shift profits into low-tax centres.

Since countries began targeting cross-border loopholes five years ago, an additional 37 billion euros ($47.5 billion) in tax had been recovered, OECD Secretary General Angel Gurria pointed out, indicating that firms were estimated to be holding $2 trillion in low- or no-tax countries.

"The whole world needs to go after tax cheats," Hockey said about the measures, which he hopes will be adopted by at least 44 countries.

MOSCOW — Russia approved a fragile budget on Thursday that promises to cover generous social spending and control borrowing, but relies on high oil prices and reserves to try to overcome the economic damage of Western sanctions.

For months, Russian officials have played down the impact of the punitive measures imposed by the European Union (EU) and United States over Moscow's policy on Ukraine which have curbed access to foreign capital, hurt investment and sent the ruble to lows.

But in the 2015-2017 budget, the tightest since the 2008 global crisis, the government may for the first time in six years be allowed to tap its rainy day reserves — a sign it will struggle to cover social promises by President Vladimir Putin.

Admitting that macroeconomic stability was a "fragile" thing, Prime Minister Dmitry Medvedev told his ministers the state will not borrow excessively and will keep spending tight.

"This is the first time when work on the federal budget, the three-year budget, took place in such difficult circumstances, when an economic slowdown was exacerbated by the implementation of sanctions," Medvedev said.

"The main problem that we face today is the high level of uncertainty when it comes to how fast trust will return, how soon businesses become interested in investing, how the consumer market grows and what steps our partners will take," he added.

The economy is expected to grow 0.5 per cent at best this year, down from forecasts of 2.5-3 per cent at the beginning of the year.

The budget foresees a struggle to tame inflation and a  falling ruble, and depends on an optimistic assumption for the price of oil, Russia's main source of income, at $100 per barrel. Urals, the country's chief crude blend, stood at around $95 per barrel on Thursday.

"It seems that the Russian government is quite comfortable with the oil price and with its reserves, but the proper effect of the sanctions comes with a lag," said Vladimir Miklashevsky, an economist at Danske Bank.

At a meeting with senior officials, Putin indicated that Russia's best response to sanctions was to boost the domestic market.

"God will judge them, it's their decision," he said at a meeting with government and central bank officials. "Our main goal is to make use of one of the major competitive advantages of Russia: A large domestic market. Fill it with competitive, high-quality goods, which make up the real sector of the national economy."

What investment?

The health of the Russian economy and the ability to supply the market with goods and cash has depended in post-Soviet years on investment, both foreign and domestic.

After returning to the presidency two years ago, Putin ordered the government to shake up state-run industries and to take measures to raise capital investment to no less than 25 per cent of annual economic output in 2015.

But after sanctions, capital outflows are expected at $100 billion this year and capital investment is expected to decline by 2.4 per cent.

Economy Minister Alexei Ulyukayev said the arrest of  billionaire Vladimir Yevtushenkov on money laundering charges had hurt, not helped, Russia's business climate. These marked the first critical comments by an official since the chairman of Sistema, a telecoms-to-oil conglomerate, was put under house arrest on Tuesday.

"This is certainly reflected in the investment climate. It is clear that the suspicion that there is some economic motive behind this complicates investors' decision-making," Ulyukayev told reporters, adding that the situation could spur capital flight.

Social spending

The budget sees slower public wage increases, but nonetheless allocates 57 per cent of its spending to social causes, chiefly supporting Putin's main electorate — pensioners and state sector employees.

Slower wages rises, economists say, are the price Russia must pay for not introducing a sales tax in the next three years. 

"We ... note that the decent growth in public wages has been the only factor keeping the headline real wage growth from falling into negative territory," Dmitry Polevoy, chief economist for Russia at ING, said in a note.

Medvedev assured the country's 40 million retired people that 2.5 trillion rubles ($65 billion) in the next three years will go towards pension payments, subsidies and various allowances. 

"We will continue to increase the salaries of state employees: teachers, medical personnel, social workers, academics," he said.

ING estimates that nominal private sector wage growth slowed to 6.6 per cent year-on-year in June, falling well short of both annual inflation — which is now at 7.7 per cent — and the equivalent figure for public sector workers at 12.2 per cent.

The weighted-average nominal wage in the public sector, such as public administration and education, stood at 35,200 rubles against 23,000 rubles in the private sector.

"We strongly doubt this is fundamentally justified, given all the concerns on public sector productivity and extensive inefficiencies," Polevoy said. 

Finance Minister Anton Siluanov said on Wednesday that infrastructure spending including new railway tracks that bypass Ukraine would total 500 billion rubles ($13 billion). He gave no details of the project.

LONDON — Developing nations are leading a revival of interest in nuclear power, say atomic plant builders, but orders remain elusive as more safety features post-Fukushima have inflated investment costs.

Three-and-a-half years after Japan's reactor accident shook confidence, around 25 countries are thinking of turning nuclear to sustain strong growth and provide cleaner and reliable power.

"It's not so much growth in the developed countries but we're seeing a lot of other countries that are wanting to develop nuclear. We're finding money in places we didn't even know existed," Danny Roderick, chief executive of Toshiba-owned  nuclear reactor maker Westinghouse, told Reuters at a nuclear industry conference last week in London.

Rival reactor designer GE Hitachi Nuclear Energy, a joint venture between the US and Japanese companies, said it has held meetings with officials from India, Mexico and Vietnam, among others.

Countries as diverse as Bangladesh, Turkey or Jordan, are also considering building nuclear plants and around 160 reactors are expected to come online over the next decade, according to the World Nuclear Association.

On paper, that should provide plenty of work, but the industry continues to lick its wounds in the aftermath of a devastating earthquake in Japan in March 2011, which caused triple meltdowns and hydrogen explosions at Tepco's Fukushima Daiichi nuclear plant.

The accident put a break on much of the world's nuclear plans as governments re-assessed the risks of running nuclear reactors and some, such as Germany, decided to part ways with nuclear altogether. 

Looking East? 

As of July this year, 67 reactors were under construction globally, with 56 of those in Asia and eastern Europe, according to the World Nuclear Industry Status Report 2014, whose lead authors are industry consultants Mycle Schneider and Antony Froggatt.

For US-based Westinghouse, opportunities in eastern Europe and new orders from China will be key to filling its order book, while GE Hitachi will seek to benefit from interest from nuclear newcomers across the globe.

"There certainly is some interest by some of the emerging markets compared to where we were 10 years ago," Preston Swafford, chief executive of Canadian reactor maker Candu Energy, told Reuters.

France's Areva, struggling with a slump in core earnings, is pinning its hopes on fresh orders for Britain's nuclear new build programme, as well as from Turkey, India and Saudi Arabia.

Russia's recent gas supply restrictions to some European buyers and the threat to oil supplies from conflicts in Iraq and Libya have increased the need for diversified energy supplies, especially in the West.

For Russian state nuclear energy corporation Rosatom, sanctions against Russia amid diplomatic disputes over violence in Ukraine will likely add to its struggle to sell new reactors.

Rosatom's deputy director general of international business and development, Kirill Komarov, told Reuters that emerging markets in South Asia, China, India, South Africa, Latin America and North America will be of high importance over the next 20 years.

Rising costs

However, many countries have scaled back more ambitious development plans and some have been cancelled or halted, Schneider and Froggatt said in the World Nuclear Industry Status Report 2014.

"Construction costs are a key determinant of the final nuclear electricity generating costs and many projects are significantly over budget," they indicated.

The United Nations' atomic agency has cut its projections for nuclear capacity growth to 2030 for a fourth consecutive year, reducing its forecast to 8 per cent for the least optimistic scenario, compared with 17 per cent last year.

The global financial crisis in 2009 had already constrained funding for these huge projects and stricter safety requirements after Fukushima have also pushed up construction costs.

The latest cost estimates have risen to around $8,000 per installed kilowatt (kW) for a new nuclear plant, from $1,000/kW ten years ago, according to the industry status report.

"Fukushima served as a wake up call and it took the industry the past three years to digest and incorporate the lessons learned," said George Borovas, head of the global nuclear practice at law firm Shearman and Sterling.

AMMAN — The Amman Chamber of Industry's (ACI) announced on Wednesday that certificates of origin it issued for exports increased slightly during the last eight months compared with the same period of 2013, reaching JD2.7 billion compared with JD2.6 billion during the same period of last year. Despite a decrease in exports to Iraq, the country topped the list of markets that import Jordanian products, standing at JD575 million compared with JD693 million in the first eight months of last year. Saudi Arabia came second importing around JD369 million worth of national products, followed by India at JD252 million and the US at JD248 million. Exports included cosmetics, chemical and manufacturing industries, medical and pharmaceutical supplies as well as foodstuff, agricultural produce and carton.