Business

AMMAN — The Economic Policy Development Forum (EPDF), initiated by Talal Abu-Ghazaleh Organisation (TAG-Org), decided on Saturday to seek the opinions of its members and related parties in the chambers of commerce and industry on all economy related studies before endorsement. EPDF member Yousef Mansour said:  “We do not need a Jordan with high growth rates without employment,” noting that although the Kingdom’s economic performance was strong in 2004-2008, with a real growth average of 8 per cent, employment rates were not high. He noted that, against economic norms, unemployment in Jordan drops whenever economic growth declines, questioning the benefits of growth if it does not provide job opportunities for Jordanians. 

AMMAN — The renewable energy sector is growing rapidly, Industry, Trade and Supply Minister Hatem Halawani told a conference on Saturday.

Inaugurating “The Silk Road… Money and Business Forum”, Halawani said the government, in cooperation with the private sector, had taken constructive steps towards investment in long-term projects in solar and wind energies, and in generating electricity by using oil shale as fuel.

He indicated that the national strategy for energy aims at increasing Jordan’s renewable energy sources to 10 per cent by 2020.

Noting that Jordan has a regulated and modern environment for attracting investment and production, encouraging entrepreneurship, and providing the private sector with an opportunity to contribute to the economic growth, the minister mentioned textiles, electrical tools and pharmaceuticals as promising sectors for growth and development.

The minister also pointed to information technology as a sector that enjoys good investment prospects and profitability indicating that it accounts for 14 per cent of the gross domestic product. 

“The Jordanian industrial sector accounts for 90 per cent of the Kingdom’s overall exports which reach more than 100 countries,” he said.“National exports increase to JD5.6 billion last year.”  

Halawani added that the new investment law aims at improving the legal structure of the investment environment through unifying the organisations engaged in investment issues under one umbrella, facilitating procedures to set up projects via a single window for investments, developing the mechanism for granting tax and customs exemptions, and adopting criteria to extend additional incentives for investing in the governorates.

The minister indicated that direct foreign investment (FDI) went up by JD1.1 billion to JD18.7 billion at the end of last year compared to a JD867 million increase in 2012, noting that the rise is in line with the government plan to raise FDIs by 10 per cent annually until 2016. 

He highlighted higher foreign currency reserve which reached $12 billion last year and noted that the estimated budget deficit for 2014 has dropped by more than 2 per cent reaching JD2.2 billion, with inflation rate maintained at 5.6 per cent. 

Halawani mentioned higher energy and production costs as the main challenges facing the national economy besides the economic repercussions from the Syrian crisis and the slowdown in several countries that are key markets for Jordanian products.

Amman Chamber of Commerce President Issa Murad called for opening Arab markets to each other, enhancing trust factors among local and foreign investors, investment flow and benefiting from the big size of Arab markets in a way that contributes to achieving the envisioned comprehensive Arab development process.

The conference is co-organised by Jordanian-Palestinian Business Forum and Amman Chamber of Commerce.

LONDON — Brent crude hit a nine-month high near $115 a barrel on Thursday on concerns heavy fighting in Iraq could limit oil supply from the second-biggest producer of the Organisation of Petroleum Exporting Countries (OPEC).

Brent was up 50 cents at $114.76 a barrel by 1330 GMT, after reaching an intraday peak of $114.84, its highest since September 9.

The Baiji refinery, 200 kilometres north of the Iraqi capital near Tikrit, was a battlefield as troops loyal to the Shiite-led government held off insurgents from the Islamic State of Iraq and the Levant and its allies who had stormed the perimeter, threatening national energy supplies.

If the 300,000 barrels per day refinery stays closed for long, Baghdad will need to import more oil products to meet its own domestic consumption, further tightening oil markets.

"This would stress an already reasonably tight global balance further, depending on its duration," oil analysts at Vienna-based consultancy JBC Energy said in a note to clients.

Brent was poised for a third day of gains following a rise of more than 4 per cent last week.

"There are clear concerns that significant supply disruption is not far off," said Tamas Varga, oil analyst at London brokerage PVM Oil Associates.

The US crude oil futures contract for July, which expires on Friday, was down 30 cents at $105.67. Traders said investors were taking profits before the contract closed.

VTB Capital oil and commodities strategist Andrey Kryuchenkov said Brent was near the top of its current range around $115: "It will be hard to breach $115, but then there is little serious resistance until $120."

Oil prices found more support after the Federal Reserve gave a positive assessment of the US economy and committed to retaining accommodative monetary policy.

However, US crude eased back after data from the US Energy Information Administration showed domestic crude inventories declined by 579,000 barrels in the week ended June 13, much less than the drawdown of 5.7 million barrels reported by industry group American Petroleum Institute.

A Reuters poll of analysts had forecast a drawdown of 700,000 barrels.

Crude stocks at Cushing, Oklahoma rose by 247,000 barrels — the first increase at the oil storage hub after nine weeks of consecutive drawdowns. 

LONDON — Escalating conflict in Iraq is making holders of the country's international debt nervous about whether they will get repaid.

The size of Iraq's dollar debt is relatively small — a $2.7 billion bond launched in 2006 in a restructuring of Saddam Hussein-era commercial debt.

But the bond is held by international investors — including Franklin Templeton, known for its bets on risky markets such as Ukraine — and is part of JPMorgan's closely watched NEXGEM index of frontier market debt, which has performed strongly over the past two years.

Advances by Sunni insurgents across northern Iraq and the emergence of an increasingly viable Kurdish state have got investors worried that Iraq could split. This could lead to a disruption of interest or maturity payments on the bond, particularly as there are no clear market guidelines about what might happen to the debt.

"There is no international framework for a sovereign debt restructuring. If the remaining state is not viable, it may lead to a sovereign debt restructuring — there are no rules," said Stefaan Loosveld, partner and restructuring specialist at law firm Linklaters in Brussels.

"The situation will be uncertain, not to say messy," he remarked.

Iraq had been a popular play with some frontier investors because of the oil producer's low debt and high foreign reserves. But the unrest changes that.

"We revised our view in Iraq and sold our overweight," said Marco Ruijer, emerging debt fund manager at ING Investment Management in The Hague. "We still do not think rebels from the Islamic State of Iraq and the Levant can conquer Baghdad...but they certainly increased their influence."

Iraq's bond, which matures in 2028 but starts paying principal from 2020, has fallen 8 cents in the past week, to 87 cents on the dollar.

Iraq's five-year credit default swaps, used to insure against debt restructuring or default, are trading at multi-month highs above 400 basis points, according to Markit.

Ivory Coast 

Although there are no rules on sovereign debt restructuring, there are precedents.

Ivory Coast stopped making interest payments on its dollar debt during a civil war in 2011, though it has subsequently resumed them.

If a country changed its name or borders it could repudiate its debt, legal specialists said, though this is not a given.

Countries such as Czechoslovakia, which split in two in 1993, were able to make an amicable division of debt.

But this is likely to be harder in the case of Iraq.

"Importantly, [Czechoslovakia] was a consensual split and the creditor countries had the feeling that they would still be paid by the successor states," said Loosveld. "A consensual split with an agreement on the debt division is not likely in a civil-war scenario."

Iraq's next coupon payment of $150 million, due in mid-July, is unlikely to come under threat, analysts said. But the conflict is pushing up the default risk.

"Given the deteriorated security situation...a full partition, if it takes place, would be more likely to occur in a violent fashion," said analysts at Bank of America Merrill Lynch in a client note. "This would most likely be accompanied by a default event on external debt."

Two-way trade

But not everyone is so concerned.

Bill Blain, strategist at brokerage Mint Partners, told Reuters Insider television there had been strong two-way trade in the bond. 

"The shock has driven most people...to be very concerned, or driven them right out of the market," Blain said, but added: "We've seen buyers who think potentially we are headed towards a good solution."

This may explain why the bond is at three-month lows, but has not fallen further.

Iraq's CDS are also well below record highs above 600 bps hit in 2009, at the height of the global financial crisis.

BoA-ML analysts said a separate Kurdish state would be unlikely to shoulder any of Iraq's debt but added they did not think any ceding to that state of territory and oil would be "materially credit-negative to Iraqi external debt".

The Balkans war in the early 1990s and the collapse of the former Soviet Union in 1991 also failed to lead directly to default of debt, which is reassuring some investors.

"The Czech Republic, Yugoslavia and Russia are all good precedents — as long as there was an official successor state that recognised the debt, investors would still be paid," said Richard Segal, analyst at Jefferies.

Iraq's role as the second-biggest oil producer in the Organisation of Petroleum Exporting Countries may also support its debt.

"Financial resources remain plentiful," Segal added.

WASHINGTON — US charitable giving rose for a fourth consecutive year in 2013, nearing the record pre-recession levels of 2007, a study showed this week.

Donations from American individuals, corporations and foundations rose 4.4 per cent to $335.17 billion, according to an annual survey by Giving USA Foundation and Indiana University's school of philanthropy.

The 59th annual survey offers clues on the overall health of the US economy, the stock market and the level of optimism people are feeling.

The latest report "proves yet again that the call for support is answered generously by our citizenry," said Gregg Carlson, chair of the Giving USA Foundation.

"In fact, 2013 marked the fourth straight year of gains in total giving. I think that is news to be celebrated after the gloomy years of the Great Recession," he added.

The survey found that giving by individuals — the largest segment — increased 4.2 per cent to $240.60 billion.

But one major category, corporate gifts, declined by 1.9 per cent to $17.88 billion.

The survey found religious organisations remained the largest category of recipients, accounting for $105.5 billion, followed by education ($52 billion). 

Other categories include human services, gifts to foundations, health organisations, public society benefit groups, arts, environmental and animal organisations.

The peak for charitable contributions came in 2007, when donations totalled an estimated $349.50 billion.

"The growth in giving over the past two years suggests that a return to the peak level of total giving we saw prior to the recession could occur sooner rather than later, if recent growth rates in giving continue," said Patrick Rooney, associate dean at the school of philanthropy.

According to the latest comprehensive report on how Americans give away their money, wealthy donors in the US are lavishing money on their favoured charities, including universities, hospitals and arts institutions, while giving is flat to social service and church groups more dependent on financially squeezed middle-class donors.

Reflecting the nation's widening wealth gap, some sectors fared far better than others. Adjusted for inflation, giving was up 7.4 per cent for education, 6.3 per cent for the arts and humanities, and 4.5 per cent for health organisations, while giving to religious groups declined by 1.6 per cent and giving to social service groups rose by only 0.7 per cent.

Experts with the Giving USA Foundation and the Indiana University Lilly Family School of Philanthropy, predicted that within two more years the total could match the pre-recession peak of $347.5 billion.

During and immediately after the recession, some wealthy donors shifted their giving to social service groups working to combat hunger and homelessness, according to Rooney. Now, many of those donors — including some making multimillion-dollar gifts — are refocusing their attention on higher education, the arts and other sectors long patronised by the affluent, he indicated.

The trend is readily apparent in the listings of recent major charitable gifts compiled by the Chronicle of Philanthropy, which provides news coverage of the nonprofit world.

Among the 100 largest recent gifts, which range from $7.5 million to $275 million, the recipients overwhelmingly are universities and hospitals, along with a few arts institutions. Only four of the gifts are to social service organisations and one to a religious group.

Almost all the US income gains from 2009 to 2012 flowed to the top 1 per cent of earners, according to tax data analysed by economist Emmanuel Saez at the University of California, Berkeley.  By contrast, median household income was $51,017 in 2012, $4,600 below its peak in 2007, according to the Census Bureau.

"It's the very wealthiest who have recovered the most in terms of the giving potential, and the very wealthiest do tend to give their biggest gifts to colleges and hospitals," said Stacy Palmer, the Chronicle of Philanthropy's editor.

Those are the institutions that ask more effectively, she added. "They have development offices who offer donors these ambitious plans."

In contrast, she remarked that many social service organisations rely heavily on less wealthy donors who may not yet feel they have fully recovered from the recession. 

Compounding their struggles, some of those organisations are still experiencing increased demand for services as high unemployment and other social woes persist in many communities, Palmer said.

Rooney noted that many social-service organisations focus on obtaining government contracts and grants, while devoting fewer resources to courting wealthy donors. Universities typically have large, highly professional fundraising staffs, and an easily identifiable pool of potential benefactors.

"For many wealthy alumni, their alma mater is an important part of what made them who they are," Rooney said.

As usual, religious organisations received more donations than any other sector in 2013, with $105.5 billion in gifts. However, Giving USA said that was the lowest portion of total giving — 31 per cent — for church groups in four decades.

Rooney said giving to churches has been relatively flat for about 15 years, as many denominations report declining attendance, and polls show a drop in the percentage of Americans who consider themselves religious.

"If you don't attend church, you're not likely to give," Rooney indicated. "And most churches' fund-raising efforts are 'Pass the plate'." They don't have staff with a more scientific approach."

The Illinois-based research firm Empty Tomb, which tracks religious giving trends, says church members are giving less of their income to their churches than they used to — 2.3 per cent in 2011 compared to 3.1 per cent in 1968.

One consequence, according to Empty Tomb Vice President Sylvia Ronsvalle, is relatively less money available for the churches' social service and missionary programmes.

The nation's largest Protestant denomination, the Southern Baptist Convention (SBC), reported earlier this month that the total of gifts to its churches dropped by nearly 1.4 per cent last year.

Bill Townes, the SBC's vice president for finance, said the denomination continued to believe it can carry out its mission, but said of the giving trend, "We'd like it to turn around."

Depending on the means of measurement, both wealthy Americans and those of more modest means can claim credit for their generosity.

According to a 2012 Bank of America study, the wealthiest 3 per cent of American households accounted for about 35 per cent of all giving by individuals in 2011.

Yet the National Centre for Charitable Statistics, citing IRS data for 2011, said Americans with incomes under $100,000 gave away a higher percentage of their income — about 3.6 per cent — than those with incomes between $100,000 and $1 million, for whom the figure was about 2.5 per cent. 

Other studies have found that residents of relatively poor states in the South — including Alabama and Mississippi — are among the most generous in the US in terms of the percentage of their discretionary income that they gave to charity.

AMMAN — A world-renowned French company is likely to invest in Aqaba and in Jordan at large, according to a senior Aqaba Special Economic Zone Authority (ASEZA) official.

ASEZA Chief Commissioner Kamel Mahadin said ASEZA seeks to attract more investments in the container shipping, logistics and freight forwarding sector and, within this context, it has discussed a development plan with the CMA CGM Group, the third-largest container shipping company worldwide and number one in France. 

The group, founded in Marseille 1978,  showed interest in investing in Jordan and particularly in Aqaba where a delegation from the French group toured the Aqaba Container Terminal (ACT) facilities along with officials from ASEZA, before they looked into proposed sites for the land port the firm plans to develop there.

Bringing such huge firm into Aqaba is an added value not just to the port city but also to the country as well, Mahadin said, stressing that ASEZA will provide all the support needed to ensure that the French group would work in a convenient and flexible environment.

Aqaba Port is facing increasing demands for its services amid all the ongoing instability in the neighbouring countries, hence, it needs to improve its services and expand capacity, he added.

“Therefore, the CMA CGM Group would have the chance to cooperate with ACT, Jordan's only container port and the second busiest facility on the Red Sea.” Mahadin continued: “In this context, the French firm would look into land ports opportunities in the Kingdom.”

Farid T. Salem, executive officer and a board member of CMA CGM Group, said: "The company has studied opportunities of working in Jordan, and it will work on developing land ports in Aqaba and in Amman, to enable the shipping companies to speed up delivery of the containers to their final destinations."

This kind of investment will save costs of imports as well, he remarked.

As part of its efforts to attract more investments to Aqaba, ASEZA recently participated in 17th Arab-German Business Forum in Berlin.

A delegation from ASEZA and the Aqaba Development Corporation presented the business community in Germany with the investment opportunities available in the city ranging from tourism, logistics and hotels to light industries.

AMMAN — Jordan European Business Association (JEBA) on Monday held its ordinary 17th meeting, during which it endorsed the financial and administrative reports for 2013. JEBA President Issa Murad said various challenges necessitate strenuous efforts to achieve progress and overcome all obstacles resulting from political unrests in the region. He added that JEBA organised a lot of economic events in 2013 to promote investment opportunities in the Kingdom and discuss ways to increase exports of local products to Europe, one of the biggest markets of the world. He indicated that JEBA organised economic visits to Croatia and Macedonia and is planning for similar visits to Bulgaria, the Netherlands and Italy. The association also held a number of meetings with European Union ambassadors to enhance cooperation and acquaint them with the positive investment environment in the Kingdom. 

AMMAN — The European Bank for Reconstruction and Development (EBRD) announced in a press statement on Tuesday that it is helping to address Jordan’s acute energy shortage with an investment that will increase the efficiency of energy consumption in the country’s water sector.

“A $3 million EBRD loan to local energy service companies (ESCOs) owned by Engicon O&M will finance projects in water and waste water management,” the bank said in the statement.

“Part of this investment will target the modernisation of the Wala and Lib water pumping stations that serve the town of Madaba, south of Amman,” it added.

According to the statement, the EBRD loan builds on, and scales up, a successful German Agency for International Cooperation (GIZ) pilot project with Engicon ESCOs.

 It indicated that the modernisation of the pumping stations will lead to greater energy efficiency, through improved pumping technology, and lower costs for the Water Authority of Jordan, one of the country’s largest energy users. 

The financing, provided under the EBRD’s Local Enterprise Facility, will also be used to improve management and operation of the pumps.

 Heike Harmgart, head of the EBRD office in Jordan, said: “Energy is an acute problem in Jordan and this partnership will contribute to the increased use of energy-saving measures.”

“In addition, this public-private partnership will have an important demonstration effect and encourage further participation by the private sector in vital public sector improvements,” she added.

“Engicon and its subsidiary Engicon O&M have played an important part in the development of Jordan’s water sector in the past two decades and we are passionate about continuing this work,” explained Firas Matar, chief executive officer of Engicon O&M. 

“This initiative with the EBRD will enable us to make an even greater difference to the country’s water efficiency; our investment in the Wala and Lib pumping stations will have a significant impact, especially with regard to energy efficiency,” he said.

“We believe this project will become a model for future investments in the infrastructure sector in Jordan,” he added.

 To date the bank has invested about €200 million across 9 projects in Jordan. 

 The ESCOs that will benefit from the EBRD loan are to be incorporated in Jordan and are 100 per cent owned by Engicon O&M, a Jordanian operations and maintenance company, the statement concluded.

AMMAN — A Korean delegation held business meetings this week with their Jordanian counterparts in the presence of Korea’s Ambassador to Jordan Choi Hong-ghi, according to a statement from Korea Business Centre in Amman.

The delegation represents 8 companies specialised in manufacturing and exporting pharmaceuticals and drugs and medical materials and equipment. Delegates will address ways to promote and develop trade cooperation between the two countries during the visit.

According to the statement, the Korean side values Jordan’s pharmaceutical industry and the Kingdom’s reputation as a regional medical hub besides the security and stability, the qualified human resources, and the Kingdom’s geographical position as a gateway to the region. The visit is organised by Korea Business Centre in Amman.

AMMAN — Amman Chamber of Commerce (ACC) President Issa Murad on Monday called for developing trade exchange between Jordan and the US.

He also called for activating agreements between the two countries during a meeting held with the commercial counsellor at the American embassy in Amman and a US trade department economic delegation, according to an ACC statement sent to The Jordan Times.

During the meeting, Murad reiterated the importance of providing more support to the Kingdom to face economic challenges it is facing as a result of unstable conditions in the region. He noted that Jordanian exports to the US in 2013 reached about JD847 million, while the Kingdom’s imports were valued at JD966 million.

The US delegation members underlined the importance of cooperating with ACC to help it overcome challenges it faces, stressing the importance of increasing the trade exchange between the two countries.