Business

LONDON – Prices of oil and other commodities will come under renewed pressure on Monday on fears that Friday night's deadly attacks on Paris will further slow the global economy.

Oil is already trading near its six-year lows and healthy demand has been a major factor preventing the prices from sliding any lower amid a worsening global oil glut due to abundant supplies.

At least 129 people were killed on Friday evening in a series of coordinated attacks on Paris with Islamist militants claiming responsibility for the carnage.

"Currently sentiment is really bearish, so this could be seen as hurting demand, so oil prices could fall further," said Amrita Sen from Energy Aspects.

Sen added that a short-term sell-off could, however, be followed in the mid-term by a rally if people think events in Paris could lead to a serious escalation of tensions in the Middle East.

Analysts from Eurasia Group said the attacks will likely undermine the French government's ability to focus attention on the improving economy.

Looking at the broader financial repercussions, global stocks are set for a short-term sell-off on Monday but few strategists expect a prolonged economic impact or change in prevailing market directions.

ActivTrades chief analyst Carlo Alberto de Casa and Ed Meir, analyst at INTL FCStone, both said they expect a moderate rebound in gold prices given that equities and commodities were poised to be hit.

"People in France are in shock. They are not doing much shopping and that could last for a few days," said Olivier Jakob from Petromatrix consultancy.

"The rest of the world is not as deeply affected to change consumer behaviour," said Jakob adding that the bearish impact of Paris attacks would likely be short-lived.

"The attack could however result in a re-calibration of France's foreign policy and positioning in the Middle East," he added.

An OPEC delegate from a Gulf producing country said he also believed that in the mid-term oil prices could get some in support due to rising geopolitical tensions especially if the international community takes additional steps to reduce smuggling of oil and hits oil facilities under Islamic State's control in Syria and Iraq.

But the short-term impact could see prices remain under pressure, the OPEC delegate agreed: "Certainly any more controls — though it ensures safety of travellers — will reduce transport. Look at what happened after the September 11 attacks," he said.

He added the markets would react depending on details of how severe and prolonged any restrictions across France and the rest of Europe are.

ING Bank energy analyst Hamza Khan said the Western coalition could now begin targeting Daesh-run oil fields and refineries but the risk would be destruction of already perilous Syrian supplies.

AMMAN – ArabiaWeather Inc., a leading weather company in the Middle East, has announced a new round of funding totaling $5 million, following the $2.1 million it raised earlier this year. 

The round, one of the largest venture deals raised in the region in 2015, is led by Silicon Badia and Wamda Capital, and includes the founding investor Jabbar Internet Group and DASH Ventures.

The investment will be used to continue growing ArabiaWeather’s customer and enterprise offerings in the region, the company said in a statement e-mailed to The Jordan Times Sunday.

ArabiaWeather serves millions of customers across the Middle East and North Africa with weather forecasts, information, and content, delivered through its web and mobile properties. 

The company said it will invest in expanding the reach of its flagship mobile app, which is one of the most popular native Arab mobile applications on both iOS and Android, adding that it will also be expanding its video coverage and content, and launching new specialised mobile apps targeted at weather aficionados. 

"The company is launching a new digital monetisation unit that will allow advertisers to create smarter digital ad products which leverage ArabiaWeather’s weather and customer data," said the statement.

On the enterprise side, ArabiaWeather said it will invest in developing integrated industry-specific solutions for businesses in the Middle East as the decision-support solutions enables companies in sectors that are particularly affected by weather conditions — such as aviation, marine, oil and gas, agriculture, insurance and retail — to save costs, enhance safety and drive operational efficiency. 

“We are happy with the continued growth of our customer-focused properties, and we will continue to serve our millions of users with the most accurate and informative weather forecasts and content by enhancing our mobile offerings and expanding our original video content," said ArabiaWeather CEO Mohammed Al Shaker. 

The company plans to invest a portion of the proceeds of the round in its weather infrastructure, including expanding the deployment of its own weather stations across the region and the unique weather forecasting technology, said the statement, adding the company also has plans to utilise its 35 million strong user-base to crowd-source more accurate hyper-local weather observations.

Khaled Talhouni Managing Partner at Wamda Capital said the funding is fully dedicated to further growing the company, which has established "an exceptional track record as a premier provider of highly useful weather information in the region." 

"We believe there is a true opportunity to further build ArabiaWeather’s portfolio of decision-support weather solutions for the benefit of companies and customers in the region” he added.

ArabiaWeather Inc. is the first and considered the largest private weather company in the Middle East.  

Founded in 2006, ArabiaWeather is headquartered in Amman and has an office in Dubai.

SHARM EL SHEIKH – The Russian plane crash in Egypt has forced hotels in Sharm El Sheikh to send dozens of staff on "unpaid leave", as tourist numbers plunge, with tens of thousands of jobs at risk within months.

The October 31 crash over the Sinai Peninsula that killed all 224 people on board prompted Russia and Britain to halt flights to the Red Sea resort and to begin repatriating nationals holidaying there.

The Egyptian affiliate of the jihadist Daesh group claimed it brought down the plane minutes after it took off from Sharm El Sheikh, and there are growing suspicions this was done with a bomb.

Two weeks after the tragedy, the travel restrictions have hit hard, with resort operators in Sharm El Sheikh cutting staff to reduce costs.

"I have been told not to come from tomorrow," luxury hotel employee Ahmed said on Friday, giving only his first name.

"I'll be called if the situation improves. Nothing is clear."

Ahmed said five other employees at his hotel were also told to go on unpaid leave. 

At least four luxury hotels confirmed to AFP they have asked several employees to take leave.

Tourism employs one in nine workers in Egypt, and in Sharm El Sheikh nearly 80,000 depend on it for their livelihood. 

"The way the situation is, about 40,000 people risk losing their jobs within months," Givara El Gafy, head of the South Sinai chamber of tourism, told AFP.

Although plagued by instability since the 2011 ouster of longtime president Hosni Mubarak and a rising tide of militant attacks, Egypt's tourism had shown signs of a pick-up ahead of Christmas and the New Year.

Resort owners were even considering hiring new staff, but no longer.

"We stopped hiring new staff... and those who want to go can go," said Anwar Hawary, a manager at a five-star hotel.

'Blessing in disguise' 

For a hotel to break even, at least 30 per cent of its rooms have to be occupied, experts say. Failing that, many hotels, especially new ones, will have to close.

In a holiday spot such as Sharm El Sheikh, many foreigners are also employed in resorts and companies catering to tourists.

"Two days back I lost my job," said Oxana, a Russian who worked for an Egyptian perfume company based in Sharm.

"Sixteen of our 20-member sales team have been told to go," she said.

Oxana, 40, said her clients were Russian holidaymakers who stayed in the coastal town for weeks at a time.

With a monthly salary of about $600, Oxana said she lived comfortably in Sharm — a favourite holiday destination for millions attracted by its pristine beaches, sunny weather and dive sites. 

"I can live off my savings for two months, but if things don't improve by then, I'll have to return to Moscow," said the former rescue diver.

Chances of finding a job in Moscow are also tough because of the economic recession back home, she said. "I prefer working here... the weather is beautiful and Sharm is safe."

For some big resorts, however, the lull in business is an opportunity to renovate their properties.

"This is a blessing in disguise," the general manager of a luxury hotel chain told AFP.

"We plan to close two wings of our hotel for renovation, so that when the situation changes, we are ready."

Prospects of that happening in the near term were called into question Friday when reports from Russia said the Federal Air Transport Agency had banned EgyptAir flights to Russia from Saturday.

Moscow's Domodedovo airport told AFP they had received a telegram to that effect from Rosaviatsia, but the agency declined to comment.

Meanwhile, the British government said the country's airlines will stop repatriating tourists from Sharm El Sheikh on Tuesday, and that anyone who stays after that will have to fly back "at their own risk".

"British airlines estimate that after this date, there will be fewer than 200 of their passengers remaining in the resort," a statement said.

Anyone staying on "should make their own alternative arrangements for returning to the UK".

AMMAN — Jordan Enterprise Development Corporation (JEDCO) on Saturday launched its Entrepreneurial Communities Initiative inspired by the European Training Foundation (ETF)’s Entrepreneurial Communities Initiative, which identifies entrepreneurial communities, learns from the participatory governance they incite, and makes their successes known.

JEDCO, along with its partners – both national and international, set out to shape a customised Entrepreneurial Communities Initiative for Jordan. 

The partners include the Ministries of Interior, Tourism and Antiquities, Environment, The Hashemite Fund for Development of Jordan Badia, Development and Employment Fund, The Jordanian Hashemite Fund for Human Development, The King Abdullah II Fund for Development, and the Jordan River Foundation, in addition to the ETF, Union for the Mediterranean, and GIZ. 

The CEO of JEDCO Hana Uraidi stated that the goal of the initiative is to enhance skills and entrepreneurship, create jobs, and promote the concept of entrepreneurship through partnerships aimed at the development of local communities.

The focus will be on practice, storytelling (vision) and added value.  It is about learning from good practices, big or small, to shape the economic future of Jordanian society. 

The initiative’s target communities are divided into five categories: practices in the governorates, practices that develop women and youth, practices concerned with conserving the environment, and practices that encourage and support tourism in Jordan.  

BRUSSELS — Europe's economy will strengthen if countries invest in efforts to cope with the refugee crisis, the president of the European Central Bank told EU lawmakers on Thursday.

The tide of migrants, the biggest movement of people in Europe since World War II, will deeply change the social texture of the continent, but "if properly managed, if there are investments in this change, the Union and the euro area will emerge stronger in due time", Mario Draghi told the economic and monetary affairs committee of the European Parliament in Brussels.

Last week, the European Commission, the EU's executive arm, said it expected some 3 million asylum seekers to arrive in the European Union by 2017, and predicted a boost for the EU's economic output in the longer term if migrants were integrated into the workforce.

Draghi said public investments were required to deal with the crisis, but that it was "premature to say by how much governments' deficits will have to expand in order to invest in this development".

"We do not have a completed analysis on this problem. We are working on it," he told the lawmakers.

The European Commission is expected next week to release a first analysis of the cost of the crisis in affected countries in Europe, which may grant fiscal leeway to euro zone states that can prove that their public finances have been hit by the migrant crisis.

In his address to the committee, Draghi also praised EU leaders' efforts to deal with the crisis. "It is evident that our leaders have shown both humanity and vision in coping with this problem," he said.  

ISTANBUL – When Turkey's government increases the minimum wage by around 30 per cent in January it will make good on an election promise to millions of workers currently struggling to make ends meet.

But unless it introduces strong countermeasures to soften the impact of such a steep rise on an uncompetitive and inflation-ridden economy, it also risks setting itself on a collision course with domestic employers and international investors.

The hike, re-affirmed by Prime Minister Ahmet Davutoglu following the November 1 vote, will be the biggest since 2003 and mean higher wages for around a fifth of the 26 million-strong workforce, according to official data.

But Turkey's labour productivity already trails far behind the European average while the government struggles to convince investors it is serious about fiscal discipline.

So for some the multi-billion-dollar plan — a campaign pledge by the ruling AK Party for the parliamentary election in which it regained an outright majority — is economically unjustifiable.

"Labour productivity does not justify any major increase in salaries," said Umit Ozlale, economics professor at Istanbul's Ozyegin University.

"The increase in productivity has stayed below real wage growth for the last years and a further increase in wages will worsen the already low competitiveness of the manufacturing sector."

The wage hike would be likely to cost Turkish companies around 26.4 billion lira ($9.2 billion), or roughly 1.5 per cent of GDP at 2014 prices, he said.

Annual growth in real wages has averaged 5 per cent over the last five years, while labour productivity increased by just 1.5 per cent a year during the same period, state statistics institute data shows.

Arguing the government should pay for the new increase, some in the private sector are already warning of ballooning costs and job cuts.

"A third of sales revenue goes to wages in the tourism industry, above that level and the alarm bells will ring," said Timur Bayindir, the head of Turkey's main hotels industry association.

"If we pass wage hikes onto our prices we lose our competitiveness in the Mediterranean region. Before new wages are implemented we may see job cuts."

Low wages, low added value 

Turkey's minimum wage earners are largely concentrated in labour-intensive industries manufacturing goods with low added value for export, such as textiles and processed food and services. Manufacturing goods make up more than 90 per cent of the country's $160 billion of annual exports.

Someone on the current minimum net monthly wage of 1,000 lira ($350) costs his employer 1,496 lira, including social security contributions.

The government could help ease the added burden by lowering those contributions, said Ibrahim Caglar, chairman of the Istanbul Chamber of Commerce.

"The rise in the minimum wage will help employees and revive markets. However, a cut of three per centage points in the social security payments would help relieve employers," he said.

Finance Minister Mehmet Simsek, an advocate of fiscal discipline, has said the government might be willing to help.

"There may be some incentives... but the majority of the burden from the wage increase will be on the private sector's shoulders" he said in a television interview last week.

'Pure populism'

Economists argue that such a big increase in the minimum wage will create a negative supply shock, meaning higher costs for employers, entrenched inflation inertia and increased unemployment, which would boost unregistered labour.

"That, of course, is the last thing the economy needs, or the last thing we should be debating," said Murat Ucer, an economist at consultancy Global Source Partners. "It is pure populism and makes terrible public policy."

A senior official suggested the government's hands were tied by the election pledge, which was designed to match a similar proposal from the centre-left opposition CHP.

"The private sector is very, very angry because we're increasing their salary cost. We're trying to find a way to share the cost... but we have to be careful about budget discipline," the official told Reuters.

Many minimum wage earners have good reason to look forward to the rise.

"An extra 300 lira will mean not going to a second job at night and not working 14 hours a day," said Mustafa Gungor, who works for a private cleaning company. "I am looking forward to it, but on the other hand I also fear losing my job."

And the extra spending power will fade sooner than he might hope, with the wage hike almost certain to fuel annual inflation that, at around 8 per cent, is already overshooting the central bank's 5 per cent target.

AMMAN — Chinese Ambassador to Jordan Gao Yusheng has proposed a set of measures Jordanian policy makers can consider to lure larger numbers of tourists from this Asian country into the Kingdom, which he said is rich of historical and tourist attractions.   

The ambassador said Jordan should be reconsidering the cost of visas on Chinese tourists coming to Jordan, increasing the number of Chinese restaurants and securing translators or offering Chinese language courses to tourist guides.

Official Chinese figures show that around 119 million Chinese tourists travelled abroad in 2014; this year, 120 million are expected to make visits outside the country. 

In 2014, only 9,000 tourists came to Jordan from this Asian country, according to Ministry of Tourism figures.

The ambassador, who was speaking at a session on the future of the Jordanian-Chinese economic cooperation organised by the Economic and Social Council (ESC), said the Jordanian-Chinese University is the first joint academic institution China has ever established abroad, Chinese Ambassador to Jordan Gao Yusheng said recently, adding that the deal would never have been reached without the intensive efforts of His Majesty King Abdullah.

In an ESC statement to The Jordan Times, Yusheng was also quoted as saying that the university will begin receiving students at its temporal premises as of the beginning the next academic year until its permanent building is completed in the Jiza region on the airport highway. 

"The university will be established on a 1,000-donum land. Under the agreement, Jordan will offer the land and infrastructure while the cost will be covered by the Chinese government," the ambassador said, adding the facility will focus on technical courses to meet the labour market needs in Jordan and the region.

He also said that China owns 45 per cent of shares in the Jordan Oil Shale Company at a value of $990 million, adding that China has signed agreements worth of $1.6 billion to implement renewable energy projects in Jordan.

Yusheng also said that China will finance 50 per cent of Jordan's nuclear plant which will be implemented by a Russian firm. "Russia was supposed to cover 100 per cent of the total cost of the project under the talks between Jordan, Russia and China. As a result of Russia's current conditions, tri-lateral talks concluded that China bears 50 per cent of the cost."

Yusheng also cited Jordan's security and stability as an added value in attracting Chinese investments, especially under the China Silk Road Route.

The New Silk Road, also known as the “One Belt One Road Initiative” is China’s current foreign policy priority. Beijing has pledged to invest more than $200 billion in Silk Road projects across the globe. This includes road, rails, oil and gas pipelines, ports and other infrastructure projects.

For his part, ESC President Munther Shraa said that Jordan's strategic location makes it a logistic route for the international trade, also citing the Kingdom's security and stability in attracting investments.

AMMAN – Policymakers, bankers and experts from development agencies  gathered on the eastern shores of the Dead Sea for two days, and discussed ways to deepen the dialogue on improving access to financial services and economic perspectives of enterprises and households. 

According to a statement issued by the Central Bank of Jordan (CBJ), said that more than 120 regional and international policymakers, alongside leaders from international organisations and the private sector convened over two days  to deepen the high-level policy dialogue, which was launched in Berlin in April 2015. 

Greater access to basic financial services promotes social well-being, stimulates growth and jobs, thus shared prosperity, the experts said, indicating that in the Arab region,  only a very limited number of households and enterprises can use adequate financial services at low cost to save, invest, make payments, or to protect themselves, according to the statement. 

Unemployment among young adults is another core challenge.

The event, entitled Financial Inclusion and Employment in the Arab Region, was organised by the CBJ, the Arab Monetary Fund (AMF) and the German Society for International Cooperation (GIZ). 

The focus of the two-day event was on strategies for financial inclusion and on financial sector reforms that enable small and medium enterprises (SMEs) to flourish, as they are major contributors to employment and economic growth.

The conference witnessed the CBJ officially initiating the process of developing the financial inclusion strategy for Jordan in cooperation with other relevant stakeholders, said the statement, adding the AMF and GIZ will assist the Kingdom and other partner governments across the region in their policy change processes towards more inclusive financial sectors.

The CBJ said that Jordan takes the regional lead in speeding up policies to enable more people and firms to make use of a range of affordable financial services.

AMMAN – There are 29 private jets registered in Jordan, representing only 3.7 per cent of the Middle East's fleet, according to Gama Aviation.

The global aviation services company said, in a report sent to The Jordan Times this week that 65.5 per cent of the private jets are medium to large-sized aircrafts, adding six of the fleet in Jordan were delivered between 2010 and 2014. 

In regards to the region, the UK-based company, said there are currently 792 business aircrafts, 176 of which were delivered between 2010 and 2014. 

Compared to the rest of the world, the Middle East has a much bigger focus on mid to larger sized business aircraft as nearly 59 per cent of its fleet is classified as medium to heavy, and 11 per cent as business jet airliners.  The figures ratios to the global fleet are 29.8 per cent and 1 per cent respectively, said the report.

The region's share of the global business fleet was estimated by Gama Aviation at 30.9 per cent as there are 47,507 private jets internationally. 

Saudi Arabia has the biggest fleet of business aircraft in the Middle East, with 188 (23.7 per cent of the region’s total), followed by Turkey (157 and 18.5 per cent) and the UAE (135 and 17 per cent).  These three countries also accounted for 71 per cent of all business aircraft deliveries between 2010 and 2014, the analysis of Gama Aviation said.

“The Middle East business aviation market is rapidly developing and is one of our major focus areas, which is why we are expanding our operations at the Sharjah International Airport," said Martin Ringrose, Gama Aviation’s managing director for the Middle East region, adding the company expects to see the number of business aircraft in the region — especially the larger ones, to increase.

Gama Aviation is exhibiting at the Dubai Airshow which started on November 8 and runs until Thursday.

A recent research from Global Jet Capital, a provider of financing solutions for large-cabin, long-range private jets, revealed there are around 62 aircraft of this size for sale in the Middle East, with a combined value of around $646.9 million.

Indicating that there four mid and heavy jets are listed for sale in Jordan, the research of Global Jet Capital, e-mailed to The Jordan Times, said there are some 19 of aircraft are registered in Saudi Arabia, and 18 are in the UAE are for sale with the remainder is spread out across the Middle East. 

The finding said around 11 per cent of the fleet in the Middle East is currently on the market for sale. 

The aviation finance specialist, which said it has around $1 billion to lend to clients to purchase relevant business aircraft in the Middle East and elsewhere around the world. 

“Over the long term we expect to see growth in the sale of mid to large sized business jets in the region, and we are well positioned to meet the finance demand to help facilitate this. Many potential clients will be looking to upgrade to a more modern aircraft, but as the region’s wealth increases, we expect to see more first-time buyers,” said Shawn Vick, executive director of Global Jet Capital. 

AMMAN — Inflation in the first 10 months of 2015 went down by 0.7 per cent, compared to the same period of 2014, the Department of Statistics (DoS) announced Wednesday.

Main item groups that contributed to the drop are transportation (14.4 per cent), fuel and lighting (12.9 per cent), beverages (1.6 per cent), beverages (1.1 per cent) and personal objects (3.4 per cent), according to a DoS report sent to The Jordan Times.

In contrast, main item groups that witnessed an increase in their prices during the past 10 months included rents (5.1 per cent), fruits and nuts (6.3 per cent), tobacco and cigarettes (3.7 per cent), and education (3.3 per cent).

DoS also noted that average consumer prices went down by 1.2 per cent in October 2015, compared to the same month of 2014.