Business

NEW DELHI — Jordan’s phosphate producers and India’s distributors should negotiate to work out and renew deals that would increase bilateral trade, India’s Minister of State for Commerce and Industry E.M.S. Natchhiappan said last week.

“I hope Jordan will negotiate with India to arrive at a long-range contract,” the minister replied when asked about the prospects for future trade, noting that Algeria, Tunisia and Morocco pose strong competition at the world level.

“Through negotiations, the two parties should steer out of difficulties and come out with a deal that boosts phosphate trade figures between them,” Natchhiappan said during a meeting with around 22 journalists and senior editors from West Asia and North African countries.

Subsequently, the Kingdom will be able to enhance exports of the commodity to India, deemed the largest market for the product.

Regarding potash, as well, there is a slowdown in its sales from Jordan to the South Asian sub-continent.

“We are following the markets at the international level and we want to build up long contractive cooperation with producers,” Natchhiappan noted.

Amer Majali, chairman of Jordan Phosphate Mines Company (JPMC), attributed the drop in phosphate exports last year to internal and external factors.

In a telephone interview, he said: “In Jordan, workers’ sit-ins and a shut down for maintenance affected the exports volume”.

Regarding the Indian markets, the problems were mainly due to fluctuation of prices because the Indian rupee depreciated last year by 20 to 25 per cent. Also, they had sufficient stocks so there was no increase in the demand, the chairman indicated.

Around 65-75 per cent of the country’s phosphate exports go to the Indian market, Majali pointed out, noting that Jordan’s share of the global market stands at around 50 per cent.

“Jordan has partnerships and joint projects with India. This gives us leverage,”Majali said.

A delegation from the JPMC will start negotiations with the Indian side on Monday to renew previous agreements and adjust prices in accordance with changes at the international level, Majali added, noting that the company’s revenues were affected last year because there was no increase in terms of sold quantities.

Expressing hope for an improvement this year, Majali indicated that the JPMC exports totalled JD1 billion in 2012.

Besides Jordan, Algeria, Morocco and Tunisia produce phosphate in commercial quantities.

In 2008, India was Jordan’s largest export partner and ninth largest importer while subsequent years saw a drop in phosphate exports, in particular for several reasons, including the global economic slowdown and few other bumps that surfaced because of alleged corruption.

During an interaction at the Confederation of Indian Industry, Gurpal Singh, principal adviser and head of Gulf, Middle East and North Africa said India has taken serious steps to eradicate corruption at all levels over the past few years, stressing India’s serious efforts and diligence to win its battle against corruption.

“After we have had control of the corruption issue, now we want to move on and enhance our cooperation and work to import more of this commodity. We hope that more negotiations will develop into real cooperation,” he told The Jordan Times.

Besides commercial cooperation, Jordan has more than 10,000 Indian workers in the textile industry and in the health sector. Jordan houses some 20 factories for Indian investors and the investment volume stands at $16 million.

Regarding India’s relations with its nearby countries, the minister said: “We want a peaceful atmosphere around us to achieve economic progress. That is why we have adopted peaceful policies to make sure the border is safe, Anil Wadhawa, secretary (East) at India Ministry of External Affairs said.

“India needs a very stable environment for the cooperation to flourish,” he noted.

In an interaction with the journalists, he highlighted the importance of fostering cooperating with the Middle East region.

To further help emerging democracies and efforts to boost democracy in regional countries, he expressed India’s readiness to exchange voting machines, highlighting India’s long and vast experience in this field.

“We have already offered simple technology at low cost,” Wadhwa who looks after Middle East affairs said.

India's economic growth has been recovering since 2008 with its present growth rate ranging between 4.5 - 5 per cent.

BEIJING — Overseas investment into China rebounded last year after declining in 2012, official data showed Thursday, as confidence in the country’s growth potential picks up.

Investment by China also rose and officials said it could overtake the incoming total this year — although Chinese businesses shied away from the European Union (EU) and Japan as market and political tensions become strained.

Foreign direct investment (FDI) into China, which excludes financial sectors, totalled $117.59 billion last year, the commerce ministry pointed out, adding it had “steadily rebounded”.

The figure is up 5.3 per cent from the $111.72 billion posted in 2012, when it skidded 3.7 per cent for the first time in three years in the face of economic weakness in developed markets and a growth slowdown at home.

Louis Kuijs, Hong Kong-based economist with Royal Bank of Scotland, said some strength in the economy, “especially in the second half of 2013”, and Beijing’s plan to transform its growth model helped investor confidence.

“The intentions of the government to change China’s pattern of growth to increase the role of domestic demand perhaps stimulated foreign companies to invest more,” he told AFP.

Chinese overseas investment rose 16.8 per cent to $90.17 billion last year, the ministry indicated, as mainland firms continue to buy foreign assets, particularly energy and resources, to power the world’s number two economy.

“China’s overseas investment will probably exceed FDI next year or in 2016, if not this year,” ministry spokesman Shen Danyang said.

Though destinations such as Russia and the United States saw sharp increases, investment in the EU and Japan fell.

Investment in the EU fell 13.6 per cent at a time when the two sides are embroiled in trade disputes including on Chinese solar panels and European wine. 

There was also a 23.5 per cent slump in investment in Japan, as Asia’s two top economies remain engaged in a territorial row that has led to frostier relations.

The ministry did not provide total amounts to those destinations.

FDI from the EU into China jumped 18.1 per cent to $7.2 billion. Investment from Japan to China slipped 4.3 per cent to $7.1 billion.

Jeroen Dijsselbloem, Netherlands finance minister and president of the Eurogroup of eurozone finance chiefs, said Chinese officials did not bring up any concerns about investing in Europe during talks in Beijing.

“At least, we certainly made clear from our side that Chinese investment is very welcome in Europe,” he told reporters before the data release.

Markus Ederer, outgoing EU ambassador to China, said Chinese companies have far more access to Europe than vice versa.

“Would the Chinese ever allow a European company to lease a major port for 30 years?” he asked, referring to Chinese state-owned global shipping giant Cosco’s concession deal at the Greek port of Piraeus. “No.”

“Would the Chinese ever allow a European company to take over a Chinese car company?” he asked, referring to Geely’s acquisition of Sweden’s Volvo. “No.”

Kuijs said beyond political reasons, rising wage and transport costs in China, along with environmental regulations, have prompted European and Japanese firms to move output to cheaper regions or closer to home.

“China is kind of moving up the value chain,” he said. “But on the other hand, China is losing parts of the production chain that are now being done in cheaper countries.”

Among China’s outbound destinations, Russia soared 518.2 per cent to $4.08 billion last year with a raft of projects under way, including in the energy sector.

Investment in the United States also surged, 125 per cent to $4.23 billion. In September, shareholders of US pork giant Smithfield Foods agreed a takeover by China’s Shuanghui International, the biggest ever Chinese acquisition of a US company. FDI from the US rose 7.1 per cent to $3.35 billion.

By far, the most investment into China comes from a group of 10 Asian countries and regions including Hong Kong, Taiwan, Japan, Thailand and Singapore, and FDI from those economies rose 7.1 per cent to $102.52 billion.

According to the ministry, FDI in the services sector made up more than half the annual total for the first time, accounting for 52.3 per cent.

For December alone FDI increased 3.3 per cent year on year to $12.08 billion.

LONDON — A chronic gap between rich and poor is yawning wider, posing the biggest single risk to the world in 2014, even as economies in many countries start to recover, the World Economic Forum (WEF) said on Thursday.

Its annual assessment of global dangers, which will set the scene for its meeting in Davos next week, concludes that income disparity and attendant social unrest are the issue most likely to have a big impact on the world economy in the next decade.

The forum warned there was a “lost” generation of young people coming of age in the 2010s who lack both jobs and, in some cases, adequate skills for work, fuelling pent-up frustration.

This could easily boil over into social upheaval, as seen already in a wave of protests over inequality and corruption from Thailand to Brazil.

“Disgruntlement can lead to the dissolution of the fabric of society, especially if young people feel they don’t have a future,” said Jennifer Blanke, the WEF’s chief economist. “This is something that affects everybody.”

The survey of more than 700 global experts identified extreme weather events as the second most likely factor to cause systemic shocks, reflecting a perceived increase in severe conditions such as America’s big freeze this winter.

The risk of precarious government finances triggering fiscal crises remains the hazard with the potential to have the biggest economic impact, but the likelihood of such fiscal blow-ups is lower now than in previous years, the report indicated.

Capitalism ‘overdrive’ 

Europe, in particular, is out of the immediate financial danger zone — a fact which has helped income inequality to rise up the agenda, according to David Cole, head of risk at Swiss Re , who worked on the report.

Increasing public attention to inequality, which has in fact been trending upwards since the 1980s, will require policymakers and the global elite to tread carefully, he said.

“I’m a big supporter of capitalism but there are moments in time when capitalism can go into overdrive and it is important to have measures in place — whether regulatory, government or tax measures — that ensure we avoid excesses in terms of income and wealth distribution,” Cole added.

So far, the massive fiscal and monetary stimulus that has helped stabilise and revive economies has had little impact on the poor, the unemployed and the younger generation.

In the West, the WEF pointed out that young people were graduating from “expensive and outmoded” schools and colleges with high debts and the wrong skills, while in developing countries around two-thirds of them were not reaching their economic potential.

The 60-page “Global Risks 2014” report analyses 31 global risks for the next 10 years and comes ahead of the WEF’s annual meeting in the Swiss ski resort of Davos from January 22 to 25, where the rich and powerful will ponder the planet’s future.

Bringing together business leaders, politicians and central bankers, Davos has come to symbolise the modern globalised world dominated by successful multinational corporations.

The theme of this year’s meeting is “The Reshaping of the World: Consequences for Society, Politics and Business”.

AMMAN — The unemployment rate for the last quarter of 2013 stood at 11 per cent compared with 14 per cent during the previous quarter, a report by the Department of Statistics (DoS) said on Wednesday. The DoS survey said the unemployment rate was 9.5 per cent among males compared with 18.7 per cent in females. The figures also revealed a 1.5 per cent decline in the unemployment rate  in the last quarter last year compared with the same quarter in 2012, when it was 12.5 per cent.

AMMAN — It might be difficult for the Jordanian government to hit its inflation target of 4.2 per cent in 2014, according to the Oxford Business Group (OBG).

“Though some agencies, including the International Monetary Fund, have predicted inflation will ease in 2014, the consumer price index may be pushed up as the government scales back subsidies and housing costs rise,” OBG said  in its Jordan Year in Review 2013 issued this week.

The report added that following  a 15 per cent hike in electricity prices last year, power prices are expected to increase along with a forecast rise in the cost of fuel and food imports.

According to the 2014 draft budget, there will be an increase in capital spending, especially targeting energy, water and food security, while subsidies are set to be lowered.

OBG noted that inflation remained high in 2013, running at 6.1 per cent in the fourth quarter, higher than the government’s estimate of 5.9 per cent for the full year and well up on the 4.2 per cent of the final three months of 2012. 

Besides inflation, OBG mentioned the external environment as a factor that could slow recovery this year.

Noting that growth in Jordan picked up pace in 2013, the report listed the war in Syria as the foremost among the government’s foreign challenges.

“The war in Syria has severed land links with trade partners, closed an important export market and, most significantly, seen Jordan become one of the main refuges for Syrians seeking safety,” OBG said. 

“According to the UN High Commissioner for Refugees, as of mid-December Jordan was hosting more than 565,000 Syrian refugees, though this number is likely to be much higher as many of those who fled the conflict in Syria are not registered with aid agencies,” it added.

The Jordanian government has estimated that by early December, around $2.1 billion had been drained out of the economy in 2013 as a result of housing and supporting Syrians who have fled their homeland. 

This figure will rise in 2014, the UN has predicted, with the cost of providing humanitarian assistance predicted to reach $3.2 billion.

“This cost does not take into account other pressures on the economy, such as an increase in the prices of housing and food as the result of the influx of Syrians — and before them Iraqi refugees,” the Jordan Year in Review 2013 said. 

Energy issues weigh on economy

The continuing unrest in Egypt has also touched Jordan’s economy, the report said, noting that repeated cuts to gas supplies from Egypt, caused by sabotage to the pipelines running through the Sinai, have caused electricity shortages, affecting industrial output and broader economic activity. 

Faced with uncertainty over its gas supplies from Egypt, Jordan has been pushed to look to the open spot market for alternative sources, adding to an already-high energy bill.

“With Jordan having to import around 95 per cent of its energy needs, any disruptions to supplies and the continued high cost of oil mean that up to 20 per cent of the gross domestic product is spent on fuel imports,” OBG indicated. “Though longer-term plans to reduce dependence on overseas energy supplies — including developing oil shale deposits for conversion to fuel and constructing a nuclear power station — will ease the situation, it will be some years before these solutions take effect,” it said. 

Modest growth 

Despite the pressures being brought to bear, Jordan’s economy has continued to grow. The IMF has said that economic expansion in 2013 will be shown to be 3.3 per cent, rising to 3.5 per cent this year, both improvements on the 2.7 per cent growth in the gross domestic product posted in 2012. 

However, some analysts are less optimistic, suggesting the combination of the high cost of humanitarian efforts and the ongoing lack of energy security could keep the final tally of 2013 growth below 3 per cent, rising slightly this year.

The government budgeted for growth in 2014, planning to boost its expenditure from $10 billion in 2013 to $11.4 billion. Revenue has been forecast at $9.7 billion, with the deficit to be funded through borrowing and foreign aid. 

“The fact that Jordan has managed to expand the economy, albeit at a slower rate than the government had hoped for, is an achievement, serving to highlight a degree of resilience in a country that has been hit by many external difficulties over the past decade,” the report said.

While 2014 will likely bring challenges, with unrest in Egypt and no end in sight to the Syrian crisis, Jordan’s hard-won resilience should see the economy maintain its steady climb, OBG concluded.