Business

SEOUL — South Korea offered billions of dollars in stimulus spending on Thursday to shore up domestic demand after Asia’s fourth-largest economy grew at its weakest in more than a year in the second quarter.

The finance ministry’s plans included additional spending of 11.7 trillion won ($11.4 billion) from the fiscal and quasi-fiscal accounts, 26 trillion won of loans or other financial support and easing in mortgage borrowing restrictions.

The central bank separately unveiled a plan to create a 3 trillion won lending facility, based on which banks can lend up to 12 trillion won with low interest rates to support corporate investment in production facilities within the country.

President Park Geun-hye has called for all-out efforts to boost the economy and Finance Minister Choi Kyung-hwan promised to take massive action, which investors believe will pressure the central bank to cut interest rates as soon as next month.

“The government’s will to improve the economy is quite strong and there is a social understanding right now that the economy has to be supported. I feel that the measures will work,” said Kim Jong-su, economist at Taurus Investment & Securities.

“In the past, the government would focus its strength on one policy or another, but right now it is pulling in everything from all possible points,” he added.

The won fell 0.4 per cent on the day to 1,027.8 per dollar by 0153 GMT as traders slightly increased expectations for an interest rate cut, but bond futures eased as investors opted to take profits after recent rallies.

South Korea, which relies heavily on exports, has been dragged down by a slower-than-expected recovery in global demand, while domestic consumption has been fragile, partly as a result of the ferry sinking that hurt tourism and services.

South Korea’s economy grew 0.6 per cent in the April-June period over the prior quarter, data showed earlier on Thursday, the weakest since the first quarter of 2013 and slightly below  market expectations for 0.7 per cent growth.

Rate cut looms

The Bank of Korea data showed private consumption fell a seasonally adjusted 0.3 per cent in the second quarter after edging up 0.2 per cent in the January-March period. Capital investment rose 1.3 per cent after a 1.9 per cent decline.

 It was the worst fall in private consumption since the third quarter of 2011 and only the second quarterly loss since then.

The Sewol ferry sank on April 16, killing more than 300 people in the country’s worst maritime accident in two decades. That led to massive cancellations of tour contracts across the country, badly affecting all businesses serving tourists.

“In the domestic tourism industry, how the public sector entities are doing is very important,” said Nickey Joo, who runs Air Tours Co. “All public-sector travelling was cancelled immediately after the accident and that quickly stopped activity in the private sector as well.”

Private consumption generates about half of South Korea’s gross domestic product (GDP) but the economy still relies heavily on exporters as their performance has a strong influence on jobs and investment within the country.

The won has also emerged as an important factor for the Bank of Korea’s policy as a firmer won cuts profits at exporters and lowers inflation. The won was up 12.9 per cent against the dollar by the end of June from a year earlier.

South Korea’s SK Hynix Inc., the world’s second-largest memory chip maker, reported on Thursday a 2.7 per cent drop in its second-quarter operating profit over a year before as the firmer won ate into profits earned on overseas sales.

Unusually low inflation also underscores the currency effects and depressed consumer demand. Annual inflation averaged 1.4 per cent for the first six months, below the lower end of the central bank’s target band of 2.5 - 3.5 per cent.

Low inflation and the government’s call for policy coordination will likely lead to the Bank of Korea’s interest rate cut as soon as at its August 14 meeting. It would mark the first rate cut since May last year, when the central bank also lowered interest rates to support the government’s stimulus efforts.

From a year earlier, South Korea’s GDP rose 3.6 per cent for the June quarter, matching a median 3.6 per cent gain forecast in the Reuters survey but slowing from a 3.9 per cent rise in the first quarter.

The Bank of Korea downgraded its economic growth forecast for the whole of this year to 3.8 per cent from the previous 4 per cent, with many analysts seeing the projection as still too optimistic. The economy expanded 3 per cent in 2013.

WASHINGTON — The International Monetary Fund (IMF) lowered its 2014 global economic growth forecast Thursday, warning of “negative surprises” from the United States and China and geopolitical risks in Ukraine and the Middle East.

The IMF projected global growth of 3.4 per cent for this year, down from its April estimate of 3.7 per cent.

In 2013, the world economy grew 3.2 per cent. 

The downgraded 2014 growth outlook reflects “both the legacy of the weak first quarter, particularly in the United States, and a less optimistic outlook for several emerging markets”, the IMF said, in an update of its semiannual World Economic Outlook.

The US economy, which accounts for nearly a quarter of the world’s gross domestic product (GDP), shrunk by 2.9 per cent in the first quarter, in part because of severe winter weather.

“An unusually harsh winter conspired with other factors, including an inventory correction, a still-struggling housing market, and slower external demand” to lead the economy to contract by 2.9 per cent in the first quarter, the 188-nation global lender said.

On Wednesday, the IMF lowered its 2014 US growth forecast to a “disappointing” 1.7 per cent, from 2 per cent in mid-June and 2.8 per cent in April.

“It’s really a story of something which has just happened and that is behind us,” said Olivier Blanchard, the IMF’s chief economist.

The IMF is projecting growth will pick up in the US the rest of the year, but not enough to offset the first-quarter drag. 

The IMF predicted the improvement would be driven by strong consumption growth, a declining fiscal drag, a pickup in residential investment, and easy financial conditions.

“Risks around this outlook include slowing growth in emerging markets, oil price spikes related to events in Ukraine and Iraq, and earlier-than-expected interest rate rises,” the IMF indicated.

“This makes it critical for the authorities to take immediate steps to raise productivity, encourage innovation, augment human and physical capital, and increase labour force participation,” it stressed.

High poverty 

While welcoming a drop in unemployment rate, with the jobless rate falling to 6.1 per cent in June from 7.5 per cent a year earlier, the IMF expressed concern about the high level of poverty in the US.

It said that recent growth since the severe 2008-2009 crisis has left millions of Americans behind, with the latest US government data pointing to almost 50 million Americans living in poverty and the poverty rate stuck above 15 per cent. 

To combat rising poverty, the IMF recommended an expansion of the Earned Income Tax Credit and an increase in the federal minimum wage of $7.25 per hour.

The IMF called for a “long overdue” reform of the tax system to boost potential growth, including a reduction in the federal corporate tax rate, which at 35 per cent is the highest among the other 33 industrialised countries in the Organisation for Economic Cooperation and Development.

“Given the substantial slack in the economy, there is a strong case to provide continued policy support to the recovery” that is aimed at reducing poverty and encouraging longer-term growth, it said.

The IMF said that President Barack Obama’s fiscal year 2015 budget offers “various valuable steps that would move towards such a policy mix”.

Those proposed steps include healthcare savings, immigration reform, and measures that limit tax deductions and exclusions for higher earners, the Washington-based institution said.

The Federal Reserve’s (Fed) planned exit from its extraordinarily accommodative monetary policy must be carefully managed to avoid damaging spillover effects on the US and global economies, the fund reiterated.

The IMF suggested the impending rise in the Fed’s key federal funds rate, which has been stuck near zero since 2008 and is expected in mid-2015 by central bank officials, could be pushed back.

With expectations that inflationary pressures will remain muted and full employment only slowly achieved, the Fed has “some scope for policy rates to stay at zero for longer while still keeping inflation under 2 per cent”.

To increase transparency, the IMF recommended that Fed Chair Janet Yellen hold a press conference after each meeting of the policy-setting Federal Open Market Committee.

The IMF expected the expansion in China, the world’s second-largest economy, to be less than previously thought, lowering its forecast to 7.4 per cent from 7.6 per cent.

“In China, domestic demand moderated more than expected,” it said.

In the eurozone, still struggling to recover from recession, the growth estimate was unchanged at 1.1 per cent and the IMF reiterated concern about weak inflation in the 18-nation European bloc.

“In major advanced economies, there is a risk of stagnation in the medium term,” the IMF warned.

Geopolitical risks on rise 

The brief update showed the IMF increasingly concerned by escalating geopolitical tensions.

“Geopolitical risks have risen relative to April: Risks of an oil price spike are higher due to recent developments in the Middle East while those related to Ukraine are still present,” the report said.

Russia, the target of recent US and European Union (EU) economic sanctions for its alleged support of separatist fighting in Ukraine, was likely to see its economy brought to the brink of recession this year.

IMF slashed its Russian growth forecast by 1.1 percentage point, to 0.2 per cent, saying “activity in Russia decelerated sharply as geopolitical tensions further weakened demand”.

Emerging-market economies would slow a bit more than previously estimated, to a 4.6 per cent growth pace, but they were not expected to suffer significantly from the eventual US exit from extremely loose monetary policy.

“Emerging market economies — particularly those with domestic weaknesses and external vulnerabilities — may face a sudden worsening of financial conditions and a reversal in capital flows in the event of a shift in financial market sentiment,” the IMF said.

Such a scenario occurred in 2013 when investors abruptly withdrew capital from emerging-market economies anticipating the Fed would raise its key US interest rate, stuck near zero since late 2008. That did not happen, but the Fed is looking to hike the federal funds rate in mid-2015. 

“I don’t think we’ll see major financial chaos in the future... but there are going to be bumps,” Blanchard indicated.

Despite the worse-than-expected global growth outlook for 2014, the IMF left its 2015 forecast unchanged at an annual rate of 4 per cent, the fastest pace since 2011.

JAKARTA — Indonesia’s new President, Joko “Jokowi” Widodo, promised to make life simpler for investors by beefing up the country’s threadbare infrastructure, untangling near-impenetrable regulations and sacking his ministers if they aren’t up to the job.

“We need to get our economy growing. To do that we must have more investment and also deliver in terms of infrastructure,” Jokowi told Reuters in an interview on Saturday, given on the condition that it not be published until after he was officially named winner.

A lack of roads, ports, electricity and other basic services, along with corrupt bureaucracies, is beginning to disenchant foreign investors, essential for the resource-based economy to grow.

“[Investors] say getting business permits is very complicated. Some investors say they need two years. Imagine. So if we can give solutions for getting business permits, I’m sure that we can improve the infrastructure faster,” he said.

Jokowi is the first businessman to become president of Indonesia, which took all six of its previous leaders from a political elite. 

His simple, direct approach and success in cutting through red tape appealed to ordinary voters. And investors have been pushing up share prices on expectations he would become leader of the world’s third-largest democracy and home to its biggest Muslim population.

Jokowi’s humble “I’m just like the rest of you” style has made him the country’s most popular politician and it is an image he is careful not to lose, repeatedly referring to his time as mayor of Solo, a small city, and later as the capital’s governor.

He has rented a small, plainly furnished house in central Jakarta while he waits to move, in October, into the sprawling presidential palace in central Jakarta, which began life in the 18th century as home to a wealthy Dutch businessman in the colonial era. Outside were three security guards in plain clothes.

Jokowi, in bare feet and dressed in white shirt and dark trousers, made clear he understood his presidential honeymoon could be brief.

There is little in the state coffers to address pressing problems from declining economic growth to rising poverty. But he has shown in Jakarta talent for finding money in the budget and has come down hard on officials who do not perform.

That, he noted, is a policy he will take to the presidential office.

“If [ministers don’t succeed] there are more than a thousand other good people in Indonesia to replace them. I can cut and then replace them. It’s very simple for me,” he said.

“They have to be clean, they have to be competent, they have to have good leadership [skills] and a commitment to serve the people,” the president stressed.

He has faced accusations, which he denies, that he will be under the thumb of the chief of the party that supports him, former president Megawati Sukarnoputri.

Jokowi repeatedly said during his presidential campaign he would not trade Cabinet jobs for political support.

But in the interview, he acknowledged for the first time that around 20 per cent of his Cabinet will likely be political appointments from parties that backed him.

The threat of being fired is an unusual risk for ministers. For years, the biggest threat most Cabinet members have faced is a reshuffle into a less significant role.

One finance minister was forced to resign three years ago because, in the view of many analysts, she was a little too effective in tackling the rampant graft that has so long weighed down Southeast Asia’s biggest economy.

Short on specifics

But Jokowi was short on specifics. “Too much detail,” said his aide when the president-elect was asked exactly how he would handle such issues like a ban imposed this year on exports of unprocessed minerals. 

The law is meant to boost national revenues, but has worried investors by its confused implementation and suggestion of rising nationalism.

First, said Jokowi, he will immediately set a transition team to discuss how to allocate top government positions and which issues to set as priorities.

He pointed to the massive fuel subsidies, which now cost about a fifth of the annual state budget but which economists say do more to help the wealthy than the 40 per cent of the population which live in or close to abject poverty.

“We should move the subsidies to the farmers for their fertiliser or infrastructure for their irrigation. To the fishermen, we can give... engines for their boats... if we move the subsidies from fuel to productive activities, we will have more productivity,” he indicated.

“I think a first important thing is also to make regulations clearer. Because some of the regulations are not clear,” he concluded. “In my experience as mayor and governor it’s not difficult. It’s just a different scale. It’s only about management.”

KABUL — Afghans' aversion to the number 39 due to its mysterious connotations of prostitution forced the government on Tuesday to appeal for people to stop refusing vehicle licence plates containing the much-feared figure.

The "curse of 39" has struck repeatedly in recent years, returning as registration number combinations cycle over, with car dealers complaining they get stuck with vehicles that they are unable to sell due to a bizarre urban legend.

According to many Afghans, "39" got its bad reputation through a well-known pimp who was often identified by the number on his car plates as he drove around Herat, the western city that lies close to the border with Iran.

The man's seedy image and illicit business meant that the number became associated with immorality. Apocryphal or not, the tale spread to other Afghan cities — and the curse was born.

Now anyone seen sporting a "39" licence plate is in danger of being linked to the underground sex industry that is taboo in the devoutly Muslim nation.

The vehicle licensing system is now putting 39 at the front of plate numbers, causing a backlog of sales as potential buyers refuse to make a purchase that could bring ridicule.

"We cannot remove 39 — this is illogical to remove a number from the whole system," interior ministry spokesman Sediq Sediqqi told the Tolo news channel. "The people should accept the number plates that contain 39 so that the process of registering cars resumes again.”

"We cannot change the system, we have to change the people's mentality toward that number," he said.

The Kabul traffic department, which issues licence plates in the capital, said it had 800 plates that no one would take.

"This has harmed our revenue," General Assadullah, head of the Kabul traffic department, told AFP. "Revenue has gone down by a half this year. The process of distributing new number plates has been very slow because the registration is now beginning with 39 and people don't want to take them."

Buyers are alleged to pay bribes to avoid the number in new vehicles, while owners who do have 39 in their plates often doctor their plates illegally using white paint to change the digits.

"The people who fan this idea are those who are corrupt and those who intentionally want to misuse it for their own benefit," said Sediq, implying that the rumour-mongers are those who benefit from accepting bribes.

Separately, a $375 million hole in the Afghan budget is threatening public projects and civil servants' salaries, officials say, putting the aid-dependent economy under stress just as Afghanistan awaits a new leader and foreign troops prepare to go home.

US, UN and Afghan finance ministry officials have discussed ways to resolve what they say has become a critical situation for the budget, with civil projects most at risk as international assistance starts to taper off.

"If the political situation of the country does not become normal and businesses do not start again soon this problem will become even more worrying," Alhaj Muhammad Aqa, director general of the treasury at the finance ministry, told Reuters. 

"We will not only face problems in paying salaries of employees but we will have difficulties in other issues too," he said.

Funding for security will not be affected, as costs are met by foreign governments which recognise that any chance of stability in Afghanistan rests on quelling the Taliban insurgency.

The international community poured billions of dollars of aid into Afghanistan during Hamid Karzai's rule, but the country's next leader could struggle to receive the same levels of support.

Ex-World Bank official Ashraf Ghani, presidential election frontrunner, has called for radical economic reforms, while former foreign minister Abdullah Abdullah campaigned on job creation and fighting corruption.

"We have to put pressure on the international community to help us cope with this problem," Aqa said. 

Officials put the growing hole in the $7.6 billion budget down to a sharp decline in domestic revenue, forcing some development projects to be put on hold. So far this year, the shortfall stands at $375 million due to falling customs, the finance ministry says.

About a third of the overall budget is earmarked for development projects, ranging from building schools and hospitals to roads.

Jobs under threat

Employees of a project producing electronic identification cards, a task jointly managed by the interior and communications ministries, said they have been told their jobs might go.

"The head of the treasury department of the finance ministry came with his team to our office and told us that there is a shortfall of around $500 million, and they have to cut from every development project," Homayun Mohtat, head of the electronic ID card department, said.

Some employees said they had not been paid for months.

International assistance covers $5 billion of this year's budget, with the remainder filled by domestic revenue raising, mainly in the form of customs duties.

But customs revenue and imports are down since the start of the year, the finance ministry says. Taxes and exports contribute little to the state finances.

The UN envoy to Afghanistan Jan Kubis said recently that Afghan revenue was much less than expected and the budget was a major problem. He said international donors and the finance ministry were meeting to agree a way to cover the hole.

The UN office in Afghanistan and the US embassy in Kabul declined further comment.

In January, US lawmakers halved development aid to $1.2 billion for the 2014 fiscal year and with most foreign troops due to leave by the year's end, the new Afghan administration is being left, more than ever, to stand on its own feet.

After a dozen years of massive international aid efforts, Afghanistan is still one of the world's poorest countries. The US decision to cut aid is also expected to shape the contributions of other donor nations.

Foreign powers have poured billions of dollars of aid into Afghanistan since the fall of the Taliban in 2001, but the country's next leader is unlikely to receive the same levels of financial support.

The prospect of dwindling inflows of foreign aid could stoke uncertainty as the United States and other NATO countries move to end their long war in Afghanistan, and as Washington seeks an agreement that would permit some US forces to stay there beyond 2014.

CAIRO — The economist behind a plan to unlock at least $380 billion worth of assets from Egypt's black market says President Abdel Fattah Al Sisi must first restore another asset that has depreciated over the years: The trust of a wary public.

That is a tall order in a country where the government has chronically neglected basic duties, in many cases leaving citizens to fend for themselves and find ways around laws and bureaucracy that hinder more than help.

But Peruvian economist Hernando de Soto, who has been consulted by dozens of world leaders on private property reform over the last 25 years and has met with Sisi three times since May, is confident the president will use a narrow window of opportunity to address Egyptians' pervasive suspicion of government.

"Egyptians don't trust their own administration," de Soto told Reuters. "They're not going to hand in names or data, so you've got to start by establishing credibility."

He has given Sisi a plan outlining specific changes to the bureaucracy and legal code needed to integrate an estimated 60 per cent of the population into the system by registering and documenting ordinary Egyptians' assets.

He predicts such reforms could more than double economic growth rates within five years by giving people access to credit and the protections of legal status. Forecasts for Egypt's growth this year range between 2.0 - 2.5 per cent.

De Soto's initiative is part of efforts to restore public finances, attract foreign investment and revive an economy battered by three years of political turmoil and unrest, and is expected to be implemented alongside others including from US consultancy Strategy and investment bank Lazard.

Sisi is also standing by other ambitious initiatives, such as one to build 48 new cities in the desert.

De Soto said in an interview that Sisi had begun appointing officials to form an agency which would run a communications campaign aimed at building consensus for the reforms and ensuring their implementation.

The presidency did not respond to Reuters' requests for comment. But a statement from Sisi's campaign released two weeks before elections in May said the candidate had met with de Soto to discuss "a vision for the future of the informal economic sector in Egypt".

Sisi, who ousted elected president Mohamed Morsi last year following protests against his rule and won 93 per cent of votes cast in May, has already expended some political capital on tax hikes and subsidy cuts.

Previous governments have talked about reforming the economy without much effect. De Soto met with officials from President Hosni Mubarak's government a decade ago and all the candidates in the 2012 presidential elections, including Morsi of the banned Muslim Brotherhood.

Obtaining buy-in from a public that may not like the status quo but has repeatedly felt cheated by empty government promises is the first step of de Soto's plan — and likely its biggest obstacle for Sisi. De Soto predicts it will take about a year.

"I think he has realised what his historic moment is and he really wants to turn the country around," de Soto told Reuters by telephone from Lima. "It's got to be relatively quickly because you've got to take advantage of expectations being high now."

Break the inertia

The symptoms of informality, which de Soto calls "a disease of government", are unavoidable in Egypt.

Unlicenced vendors flood the streets, hawking everything from clothes and electronics to vegetables and seafood. The microbuses that many Egyptians rely on for transport skirt meaningful regulation.

Whole districts spring up inside major cities and operate beyond government control, a phenomenon that has become regarded as normal.

Meanwhile, Egypt's massive public sector puts up red tape in the way of millions of Egyptians who resort to living and working beyond the law.

Loss of faith in central government was a main cause of the 2011 uprising that ended Mubarak's 30 years in power. Mistrust only increased in the following years, as police abandoned their posts, and officials avoided making decisions they feared could land them in jail.

The key to his plan, indicated de Soto, is for Sisi to "create enough enthusiasm for the idea of being able to work within a system where everybody obeys the law... That allows you to break the inertia."

Since he announced he would run for office, Sisi has adopted a rhetoric which appeals to Egyptians to help him save the country from collapse through hard work and sacrifice.

"The president would be saying and identifying for them what the obstacles are, how government intends to go about [removing them], and he will ask for help," said de Soto.

If Sisi succeeds, the economist says he has prescriptions available based on five years' of research on Egypt's informal sector conducted before the 2011 uprising, which a team from his Institute for Liberty and Democracy (ILD) think tank has recently updated.

"It's very precise: Point by point, office by office, norm by norm," he said, declining to reveal details. Legal revisions and changes to bureaucratic protocol are clearly part, but not all, of the programme.

The ILD's website lists among its achievements implementing or inspiring property titling initiatives from Thailand to Russia which it says have increased access to credit and reduced poverty.

"This is where most of the country's resources that can give you... the high growth rates are," said de Soto. "It's the informal economy."

In an another interview, Egypt’s Supplies Minister Khaled Hanafi told Reuters that a new smart card system for bread distribution launched in April is now operational in five provinces and should be implemented nationwide by October.

Egypt, the world's top wheat importer,  recently pointed out that  reforms to its bread subsidy programme alongside an improved storage system should cut its import needs by as much as 30 per cent.

"We took quick steps towards the new bread system and overcame a lot of the bureaucratic obstacles...," Hanafi said in the interview. "With the completion of the new system our imports will fall around 30 per cent." 

Egypt spends more than $4 billion a year on food subsidies, on which millions of poverty-stricken Egyptians depend. One cash-strapped government after another has resisted tackling problems in the system, fearful of a backlash from the public.

But in an effort to rein in its budget deficit to 10 per cent of the gross domestic product in the next fiscal year, Egypt's new government slashed subsidies for car fuel and natural gas, increasing their prices by more than 70 per cent earlier this month.

Sisi and Prime Minister Ibrahim Mehleb have not announced similar drastic cuts to the food subsidy system but reforms to the way the government hands out the subsidy have been in the making since April in an attempt to decrease waste and corruption.

Under the new system, Egyptians use electronic smart cards for bread purchases and around 20 different subsidised goods at grocery stores across the country.

The cards follow a points system which raises incentives for Egyptians to buy only as much subsidised bread as they need, helping reduce spending on wheat by as much as 5 billion Egyptian pounds ($699 million), Hanafi said.

Food and energy subsidies traditionally eat up a quarter of state spending.

Officials say wheat consumption is kept artificially high in part by citizens who purchase subsidised loaves for the equivalent of one US cent and feed them to their livestock because the bread is cheaper than animal feed.

Under the old system, Egyptians only have the option of buying infamously poor quality rice, sugar, and oil but Hanafi said the list of items available to purchase would now be expanded first to 20 and then to 100 within months. Meat and poultry will be among the new products on the initial list.

He added that smart card holders would accrue points if they bought less than the quota of five loaves per family member per day, a number that officials hope can later be reduced. The points would allow them to purchase other subsidised goods.

Hanafi, who retained his position after Sisi took office earlier this month, has been outspoken about the need to reform wasteful subsidies.

Egypt imports around 5.5 million tonnes of wheat annually for its bread subsidy programme. The country also bought 3.7 million tonnes of local wheat in the 2014 season.

Hanafi said Egypt's enhanced storage capacity should help it increase its local wheat purchases and cut waste.

Egypt is making progress in increasing local storage capacity with the help of one of its major Gulf backers, the United Arab Emirates (UAE).

The UAE has committed to funding silos that can store up to 1.5 million tonnes of wheat.

"We purchased from farmers all the quantities that were available to us and we aim to buy four million tonnes next year," he said.

Separately, Egypt's central bank raised key interest rates last week in an apparent attempt to curb inflation pressures after the government cut energy subsidies.

The central bank raised the overnight deposit rate to 9.25 per cent from 8.25 per cent and the overnight lending rate to 10.25 per cent from 9.25 per cent, it said in a statement.

AMMAN — The new  investment law will enable the Jordan Investment Commission (JIC) to attract much more funds  in the coming years, JIC Acting Chief Commissiner  Khaled Abu Rabei told investors and businessmen in Irbid on Monday. Describing the new law as a reform step, he indicated that from 1996 to mid 2014, a total of JD19.5 billion of investments benefitted from incentives under development, free zones and investment promotion laws.

AMMAN  — Jordanian expatriate remittances rose at the end of June by 3.1 per cent as they reached $1,850 million compared with $1,794 million during the same period last year.  According to the Central Bank of Jordan (CBJ),  remittances rose for the sixth month in a row this year. In June, the remittances rose by 0.5 per cent to $359 million, according to the CBJ. 

AMMAN — Prime Minister Abdullah Ensour on Thursday will patronise a ceremony  to officially launch the Islamic sukuk (finance bonds) in Jordan, the Jordan Securities Commission (JSC) said Sunday after it finished preparing all regulations and instructions needed to regulate the issuance of these bonds for economic activities in the private and public sector.

According to JSC, the three capital institutions (JSC, Amman Stock Exchange and the Securities Depository Centre) are now ready to issue the bonds. 

AMMAN – Imports of used cars into the Jordanian market surged by nearly 45 per cent during the first six months of this year over the same period of 2013 

Statistics, provided by the Jordan Free Zone Investors Commission (JFZIC) at The Jordan Times’ request, showed that a total of 29,394 second-hand cars were imported to the domestic market between January and June of this year, while in the first half of 2013 the number of imported used vehicles stood at 20,712. 

JFZIC President Nabil Rumman attributed the increase in imports of used cars to the rising demand in the domestic market as the average number of cars needed to cover annual demand is estimated at between 50,000 and 60,000 vehicles. 

In 2013, imports slowed down because of the government decision to impose a five-year age limit on cars allowed to enter the domestic market, Rumman remarked.

According to Rumman, over 60 per cent of the cars that entered the Jordanian market were manufactured in South Korea. 

He indicated that the number of cars that were re-exported from the free zone in Zarqa to some regional countries also rose, albeit slightly. 

The figures showed that in the January — June period of 2014 a total of 55,274 autos were re-exported, 2.5 per cent higher than the 54,085 cars shipped outside the Kingdom during the same period of last year. 

Rumman noted that the vast majority of re-exported cars go to the Iraqi market, indicating that intensive fighting between Sunni rebels and the Nouri Al Maliki government since June has caused a sharp decline in the exports to the Iraqi market. 

In May, nearly 11,000 cars were shipped to the Iraqi market while in June the number went down to 6,765, he said, adding that the average monthly exports to the Iraqi market used to be around 10,000 cars.

AMMAN — Jordan now is seeking loan guarantees from Japan to improve the Kingdom’s credit rating, Saleh Kharabsheh, secretary general of the Ministry of Planning and International Cooperation, said on Sunday.

Kharabsheh said the issue was discussed with Akihiko Tanaka, president of Japan International Cooperation Agency (JICA), who is currently visiting Jordan.

Receiving guarantees from Japan will enable Jordan to access affordable financing from international capital markets, according to Kharabsheh.

So far, the US is the only country that issued loan guarantees for Jordan. 

Last month, Jordan issued $1 billion of Eurobonds which was stood as the second loan guaranteed by the US government.

At a joint press conference with JICA president on Sunday, Kharabsheh said Jordan has requested a $200 million soft loan from the government of Japan.

However, “we have to discuss details of the loan with Japan’s finance ministry”, the official noted.

If granted, this will be the third loan that Jordan obtains from Japan in three years.

In 2012, Jordan received a $155 million loan and, in 2013, another $120 million credit was obtained .

Tanaka said his visit to Jordan is to mark the 60th anniversary of diplomatic ties and 40th anniversary of economic cooperation between the two countries.

The Japanese official added that the international community should work closely with Jordan to ease the burden for hosting Syrian refugees.

“Visiting the Zaatari Refugee Camp, I realised the burden Jordan has to bear,” Tanaka said,  indicating  that his country is assisting in the improvement of water supply networks in Jordan’s northern governorates to help ease the burden on host communities.

Asked about Japan’s future assistance to Jordan, Tanaka replied: “Our cooperation is extended upon our partners’ request, and at this moment we can’t say what we can do in 2015”.

However, he mentioned the Petra Museum Project as another project that JICA will implement in Jordan, noting that the implementation of the approved project will start in 2015 and will be completed in 2016.

Kharabsheh said the ministry is contacting the Japanese government regarding the National Response Plan to deal with the impact of the Syrian refugees.

The official said the three-year plan estimates the cost of providing services for the Syrian refugees at $4.5 billion. 

Also on Sunday, Tanaka met with Finance Minister Umayya Toukan and reiterated the importance of increasing assistance to Jordan after his close review of the sizeable challenges the Kingdom faces and his visit to the Zaatari Refugee Camp, the Jordan News Agency, Petra, reported.

Tanaka also expressed his country’s willingness to share with Jordan the burdens resulted from the Syrian crisis. 

Toukan valued Japan’s continued support in all fields and briefed the delegation on the financial reform programme that Jordan is undergoing to maintain sound financial performance and stability, Petra reported.

Since the year 1999, the government of Japan extended $764 million to Jordan, $430 million of which were grants and the rest were loans.