Julember is not soon enough!

In today’s global economic uncertainty, with signs of the long-awaited recovery remaining few and far in between, Jordan’s economy naturally feels the pinch of this situation, and the Jordanian government looks for ways to jumpstart economic recovery.

One of the priority areas is to support small- and medium-sized enterprises (SMEs), which is a wise decision given that the economy is small, under-industrialised, and under-corporatised, with most enterprises being SMEs.  This is a good thing because SMEs are also the backbone of the German economy. 

But like all under-developed economies, most of the economic activity in Jordan revolves around the government.  Government is the largest employer, and the principal provider as well as consumer of goods and services.  It is the largest contractor of good and service providers and their principal paymaster.  As such, it is the trend-setter for the rest of the economy in most things, including payment of dues.

This brings us to the difficulty that small and medium entrepreneurs face in collecting their dues, whether from the government or the private sector.  The common wisdom is that if the government owes you money, you have nothing to worry about, because you will get it eventually.  This is false.  You have plenty to worry about because eventually is not soon enough. 

Even a cursory inquiry would show an unbelievably large number of hardworking entrepreneurs who are suffering because they are not paid for periods that can reach six months or a good deal more.  In the meantime, the SME would be charged income and sales tax on the invoice as of the date of its issuance.  This means that the SME ends up subsidising the government not only for the cost of goods or services delivered, but also for the taxes on the invoice, and for the opportunity cost of the income that is withheld until Julember. 

The situation is worse with the private sector because the question then is not when you will be paid, but if…  Of course, the entrepreneur can appeal to the legal system which, as everyone knows, is independent, honest, transparent, and unbelievably slow.  A clear-cut case such as evicting a defaulting tenant takes at least a year to resolve, so one can imagine how long would be needed for a more complex issue.

Jordan is working to reform its legal system, so how about reaching for a low-hanging fruit?  Why not create a small claims court that would quickly handle small cases, for instance,
JD100,000 or thereabouts?  

This solution would speed up the process of justice, rush through a number of cases that do not need months to be resolved, and, here comes a clincher, it would create many new job opportunities for paper handlers and filing clerks, to say nothing of accountants and cashiers to collect fees and enter them in the ledgers.  It may even require making a whole new set of rubber stamps.  For bureaucrats, how much more beautiful can it get?