Business

AMMAN — Jordanian and Palestinian businesspeople on Saturday launched the "Enhancing Jordanian-Palestinian commercial relations" project to increase commercial exchange and encourage establishing joint investment projects.

Launching the project came on the sidelines of a meeting organised by the Amman-based Palestinian-Jordanian Businesspeople Forum (PJBF) and the Hebron-based Palestinian Businesspeople Forum (PBF) in cooperation with the German Agency for International Cooperation (GIZ).

The project aims at developing the commercial relations between the two countries through holding a series of activities to encourage establishing joint investments, technical and technological exchange and addressing obstacles in a way that would achieve joint interests and serve both countries' economies.

PJBF President Talal Bou said the project highlights the role of Jordanian and Palestinian businesspeople in supporting the Palestinian economy and developing it by facilitating the passage of goods between both countries, Petra added. PBF President Mohammad Hirbawi said that both countries' businesspeople are capable of achieving the project's goals to develop their economies.

GIZ Representative Shaden Katbeh said the project is part of the agency's initiatives to support trans-borders cooperation in the Middle East and North Africa, especially between Palestine and Arab countries. 

AMMAN –  Jordan Enterprise Development Corporation (JEDCO) extended funding to 172 projects established by women over the past six years, Chief Executive Officer Hana Uraidi said on Saturday.

She indicated that the projects, established by women with  JD11.1 million in financing , had a JD22.4 million investment value.

In a statement e-mailed to The Jordan Times, Uraidi estimated the number of jobs to be generated at over 1,000 when some of the projects under establishment become operational.

She added that the projects were in the fields of industry, services and agriculture, adding that 52 projects were in Amman, while the rest were in governorates. 

WASHINGTON/SYDNEY — The long-awaited text of a landmark US-backed Pacific trade deal was released on Thursday, revealing the details of a pact aimed at freeing up commerce in 40 per cent of the world's economy but criticised for its opacity.

If ratified, the Trans-Pacific Partnership (TPP) will be a legacy-defining achievement for US President Barack Obama and his administration's pivot to Asia, aimed at countering China's rising economic and political influence.

Details of the TPP have been kept under wraps during the more than five years of negotiations, angering those concerned over its broad implications.

The agreement would set common standards on issues ranging from workers' rights to intellectual property protection in 12 Pacific nations.

"The TPP means that America will write the rules of the road in the 21st century," Obama said in post online. "If we don't pass this agreement — if America doesn't write those rules — then countries like China will."

China has responded with its own proposed 16-nation free-trade area, including India, that would be the world's biggest such bloc, encompassing 3.4 billion people.

The White House is likely to formally notify US lawmakers on Friday that the president intends to sign the deal, a senior Obama administration official said. That would start the 90-day clock before his signature triggers the next step in a process of seeking final congressional approval.

The earliest the TPP could come before Congress is March, just as the US presidential primary season is heating up, creating the risk that the deal becomes a campaign issue.

The TPP is opposed by labour unions and many of Obama's fellow Democrats who are worried about the impact on jobs, including presidential candidate Hillary Clinton, who backed the developing trade pact when she was secretary of state during Obama's first term.

Some pro-trade Republican lawmakers are also wary of the deal, heralding a tough fight to get the deal through Congress. Republican White House contender Donald Trump has labeled it a "disaster".

House of Representatives Speaker Paul Ryan, a Republican, said he was reserving judgement for now, and the US Chamber of Commerce, whose support will be key for passage through Congress, said it looked forward to examining the details.

US Trade Representative Michael Froman warned that trying to reopen the complex deal could unravel the whole package.

Fine print

Japan has pledged to ease trade barriers on imported french fries and butter, which have been in short supply in the Asian market, while Malaysia will eliminate tariffs on all imported alcohol for the first time in a trade agreement.

Other firsts cited by the partners — Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States and Vietnam — include a prohibition on subsidies to harmful fisheries as well as commitments to discourage imports of goods produced by forced labour and to adopt laws on acceptable working conditions.

Malaysia will have to implement reforms to combat human trafficking, and Vietnam will have to allow independent labour unions before they can reap benefits of the pact.

But the deal does not include measures demanded by some US lawmakers to punish currency manipulation with trade sanctions, disappointing carmaker Ford Motor Co., although members pledged not to deliberately weaken their currencies.

The TPP would be a boon for factory and export economies like Malaysia and Vietnam. Anticipated tariff perks are already luring record foreign investment into Vietnamese manufacturing, and both countries are expected to see increased demand for their key exports, including palm oil, rubber, electronics, seafood and textiles.

That could put pressure on several of Asia's major developing economies, including the Philippines and Indonesia, which have recently expressed interest in signing up to the pact. Thailand said it was studying the deal and might consider joining.

Chinese officials recently softened their stance towards the pact after initially giving it a frosty reception.

Beijing's commerce ministry called it "important" and said China is "open to any mechanism that follows the rules of the World Trade Organisation and can boost the economic integration of the Asia-Pacific".

Some argue the deal could hammer Chinese manufacturers, already struggling with slowing growth in the world's number-two economy, by cutting off key export markets.

Ma Jun, chief economist at the research institute of China's central bank warned in an article this week that the textiles, clothing and electronics industries will miss out significantly. 

And a study in 2014 by two US academics and a Chinese researcher estimated Beijing could lose out on a potential $1.6 trillion boost to its exports by 2025 by not signing up.

China and the US would be "the countries expected to benefit the most" from a widened TPP, they wrote.

Of the many free-trade agreements China has signed globally, five are with TPP members, including Australia and New Zealand, and as the largest economy in Asia, it is the biggest trading partner of many others.

Beijing is also pursuing a rival vision for trade, the Regional Comprehensive Economic Partnership, a 16-nation agreement that includes several TPP signatories.

"The impact of the TPP on China won't be a very painful one," Chun Jiangyue, director of a think tank affiliated to China's foreign ministry said. "China has its own theory for the development of international trade and commerce."

President Xi Jinping has pledged to roll out a massive investment scheme across Asia, known as "One Belt, One Road", as part of a drive to spread Chinese influence. 

A plan to make the yuan a more internationally traded currency is also slowly taking shape.

"China has been progressively building an extensive web of free-trade agreements", said Alice Ekman, head China researcher at the French Institute of International Relations.

The country has been "particularly proactive" in promoting regional economic integration, a "long-term trend unlikely to be altered by the signing of the TPP", she added.

Those who wish for deeper free-market reforms in China hope that the pact's standards could drive domestic change, but officials are likely to drag their feet.

"If China wants to open up foreign trade relations according to TPP standards, there would likely be some negative impact to the Chinese economy," said Jia Qingguo, a professor at Peking University who is close to policy makers.

They also say it will be tough for Beijing to meet standards on the environment and worker's rights specified in the deal.

"Labour union provisions and Internet openness could be deal-breakers" which rule out Chinese participation, said Graham Webster, a researcher at Yale Law School.

But he added: "China designs its global and regional development efforts to be compatible with Chinese interests... TPP would do nothing to remove China from its central role in the Asia-Pacific economy."

LONDON — Global demand for crude oil produced by the Organisation of the Petroleum Exporting Countries (OPEC) will remain under pressure in the next few years, the group said in an internal report, potentially fuelling a debate on its strategy of defending market share rather than prices.

The draft report of OPEC's long-term strategy, seen by Reuters, forecasts crude supply from OPEC, which has an output target of 30 million barrels per day (bpd), falling slightly from 2015's level until 2019, unless output slows faster than expected in rival producers.

OPEC governors, official representatives of the 12 member countries, met at the group's Vienna headquarters on Wednesday to approve the final draft of the report.

The 44-page report, marked "CONFIDENTIAL," includes an annex containing comments from two members, Iran and Algeria, suggesting OPEC return to its old policy of propping up prices at a desired level by adjusting supplies.

"Reaching agreement on a fair and reasonable price of oil for the next six to 12 months" is one of the steps that Iran recommends OPEC take. "OPEC production ceiling should be set for six or 12 months intervals."

OPEC oil ministers meet on December 4 to decide whether to extend the strategy of allowing prices to fall to slow higher-cost rival supply. Since November 2014, when the group adopted that policy, OPEC production has risen but prices have deepened their collapse, hurting oil revenue.

The report sees only a gentle recovery over the next few years in oil prices, which have more than halved to $50 a barrel since June 2014 due to plentiful supply.

OPEC's basket of crude oils is assumed in the report at $55 in 2015 and to rise by $5 a year to reach $80 by 2020.

Long-term gain in market share

Saudi Arabia, supported by other relatively wealthy Gulf members, led the change in strategy last year. Riyadh shows no sign of changing course, seeing the approach as long-term.

The draft report supports the view that OPEC's market share will rise in the long run as output of shale oil, also known as tight oil, and natural gas liquids is curbed.

"It is... assumed that tight crude and unconventional NGL supply will reach a maximum at some point after 2020 and then start to decline slightly," the report said.

"As a result of non-OPEC supply developments, OPEC crude is expected to rise over the long term, reaching 40.7 million bpd in 2040," it added. "Moreover, the share of OPEC crude in the world liquids supply in 2040 is 37 per cent, which is above current levels of around 33 per cent."

Over the long run, as non-OPEC supply growth fades, the report assumes oil will rise further and its nominal price will reach $162, or $95 in 2014 dollars.

But a chart in the report also presents a scenario in which non-OPEC supply is more resilient, putting increased downward pressure on the group's market share and highlighting the uncertainty over future demand for OPEC oil.

"OPEC crude production would reach its lowest point in this scenario at 28.7 million bpd in 2023," the report indicated. "The resulting range for OPEC crude in 2040 amounts to 9.4 million bpd, which highlights the challenges for member countries' long-term investment decisions."

OPEC publishes long-term strategy reports every five years. Its 2010 report did not mention shale oil as a serious competitor, highlighting the dramatic change the oil market has undergone in the past few years.

The long-term report, prepared by OPEC's research team in Vienna, traditionally cautions that it does not articulate the final position of OPEC or any member country on any proposed conclusions it contains.

Last month, a meeting of oil experts from OPEC and non-member countries discussed the risk that low oil prices would reduce investment in new supplies but agreed no concrete steps on boosting the market.

Venezuela's Oil Minister Eulogio del Pino presented his country's proposals for measures to bolster prices, such as an OPEC and non-OPEC summit and said the market equilibrium price for crude was around $88 a barrel.

"At $40 a barrel, we are below the equilibrium price," he told reporters. "We are concerned about the depletion of the reservoirs, the decline of the production and about the investment that is required." 

Non-OPEC producers have refused to work with OPEC in cutting supply to reduce a surplus. OPEC has refused to cut supply alone and many members have raised output.

Russia's representative at the meeting, Ilya Galkin, head of the international cooperation department at the energy ministry, said there is real risk for oil-producing countries of under-investing.

Separately, just as the energy industry has brushed aside concerns that the world could run out of oil, industry executives now say they believe it is demand, rather than supply, that is nearing its apex.

In 1985, Ian Taylor, today the chief executive of the world's largest oil trader Vitol, was part of a team at Royal Dutch Shell that forecast oil prices would rise five fold to $125 a barrel in 2015, as global reserves were expected to become more scarce. Now he says it is unlikely to ever reach those levels again.

Oil today stands at around $50 a barrel, having more than halved since June 2014 after global supplies dramatically rose due in large part to the US shale oil boom but also due to the unlocking of huge offshore reserves in Brazil, Africa and Asia.

"We all talk about 'peak supply' and maybe with shale that is becoming a disabused concept. I have begun feeling that... we are coming to peak demand towards 2030," Taylor said on Wednesday at The Economist Energy Summit in London.

"I believe we may not see $100 [a barrel] ever again," Taylor added.

Such forecasts come at a time when oil companies have slashed billions off their budgets and scrapped more than $200 billion of oil and gas projects to cope with the sharp price drop.

Lower future demand for fossil fuels could wreck the finances of producing countries like Saudi Arabia, Russia and Venezuela that depend on high oil prices to fund public spending, but would be an overall boon for the world. 

The overwhelming majority of people live in countries — whether rich like the United States, middle-income like China or poor like Bangladesh — that consume more energy than they produce.

The United Nations believes sharp reductions in fossil fuel use are also necessary to protect the earth from catastrophic effects of climate change.

Higher fuel efficiencies for cars and the industry's switch towards less-polluting sources of energy such as gas, biofuels, solar and wind power, mean that oil demand could plateau in the coming decades. 

Fossil fuel consumption could be further clipped if governments tighten regulations in order to combat climate change at a UN conference in Paris next month.

BP earlier this week said the world is no longer at risk of running out of oil or gas for decades ahead. Existing technology is capable of unlocking so much fossil fuel that global reserves would almost double by 2050 to 4.8 trillion barrels of oil equivalent (boe), the British giant indicated.

With new exploration and technology, the resources could leap to a staggering 7.5 trillion boe, it said.

Back to the past

"Peak demand" does not mean people will consume less energy overall. On the contrary, global energy consumption is expected to soar in the coming decades as the planet's population grows and Asian and African economies develop.

But while the world's total energy consumption is set to increase by more than one third from 2012 to 2040, oil's share is set to shrink from 31 per cent to 26 per cent, according to the International Energy Agency's (IEA) 2014 World Energy Outlook.

The IEA forecasts global oil demand to rise modestly by around 0.5 per cent per year through to 2040 to 103.9 million barrels per day, driven by countries outside the Organisation for Economic Cooperation and Development.

Eldar Saetre, chief executive officer of Norwegian oil company Statoil, sees oil demand actually declining, although oil companies will still have to invest to replace existing capacity as it declines.

"In our scenario, we see much lower oil consumption than we have today," he told reporters on the sidelines of the conference. "You still need a lot of additional [oil] capacity because of natural decline... Overall, we see the same type of combined levels for oil and gas but lower oil and more gas."

The change is expected to hit Western economies first, with demand set to go back to levels last seen in 1966, according to Dev Sanyal, BP's executive vice president, strategy and regions.

"We do believe the aspect that people were set about 25 years ago, which was peak oil, has now clearly gone away. There is a lot of supply of both oil and gas. The big challenge in OECD economies is peak demand," he said.

Still, some firms are expecting robust demand in developing countries will keep the world's thirst for oil strong. The President of New Energies at France's Total, Philippe Boisseau, said he did not expect global demand to plateau, even though OECD consumption is likely to decline.

"Even when including the huge efficiency efforts, [oil demand] will grow. So I don't believe in peak demand for the world. For Europe and the West, maybe, but not for the world," he added.

TOKYO — Japan Post skyrocketed on its trading debut Wednesday after the biggest initial public offering (IPO) this year, lifting hopes that privatising what is effectively the world’s largest bank will boost Tokyo’s faltering growth blitz.

Shares in the vast company, along with its banking and insurance units, were listed on the Tokyo Stock Exchange following an $11.5 billion share sale, in the largest offering globally since Chinese e-commerce giant Alibaba’s record $25 billion IPO last year.

The bulk of proceeds from selling shares in the government-owned behemoth, which has about 24,000 offices nationwide, are earmarked for reconstruction efforts after Japan’s 2011 quake-tsunami disaster.

Japan Post holds 200 trillion yen ($1.65 trillion) in deposits from millions of Japanese households, the equivalent of 40 per cent of the country’s gross domestic product (GDP).

Tokyo is expected to sell off more of the company to help pay for spiralling social-welfare costs in Japan’s biggest privatisation since Nippon Telephone & Telegraph’s 1987 IPO.

The triple-listing brings with it hopes of drawing more investment to Japanese firms and a lift for Prime Minister Shinzo Abe’s faltering bid to kickstart the world’s number-three economy, known as “Abenomics”.

Analysts said shareholder pressure would help force Japan Post to speed up its decision-making and control costs.

It could also send a wider message that Japan Inc.’s notoriously rigid corporate culture is being shaken up.

“We have shareholders now and so we’re going to promise to lift the value of Japan Post group,” the company’s President Taizo Nishimuro told reporters at the stock exchange. “I believe this will contribute to boosting the Japanese economy.”

Legislation passed under the government of former prime minister Junichiro Koizumi stipulated that the company be split into four units in 2007, to handle deliveries, savings, insurance and counter services at each of its post offices.

Heizo Takenaka, who was a key member of Koizumi’s government and a main driver of Japan Post’s privatisation, said the IPO was not an end in itself.

“What is important is to instill a private management culture,” he stressed. “We are now at the start of that process.”

Nationwide network

At the close, Japan Post Holdings soared 25.7 per cent to 1,760 yen ($15.50), well up from its 1,400 yen IPO price, while the banking unit’s stock jumped 15.2 per cent from its offering price to 1,671 yen.

But the hotly anticipated insurance unit’s debut was the star of the day, skyrocketing 55.9 per cent to 3,430 yen.

The share sale was a hit at home with many ordinary investors eager to get their hands on Japan Post shares, with the effort getting a boost from plenty of Internet and television coverage.

A pensioner who bought shares in the bank and insurance units, said he was “happy to see the initial prices are high but I’m not sure in the longer term. I just hope to get dividends”.

Some observers warned that Japan Post must overhaul its lumbering style to fully succeed.

“One of the company’s greatest advantages is its nationwide network. The downside is its lack of cost-consciousness,” Yasuhide Yajima, chief economist of NLI Research Institute, indicated. “The biggest risk though is that the company lacks a sense of speed.”

Questions over competitiveness 

The postal giant’s efficient mail delivery unit, a big source of national pride in Japan, will remain untouched largely due to social and political pressure to maintain the status quo, including the presence of post offices across the archipelagic country even in its most remote villages.

These offices also offer services for cash deposits and insurance, and a local branch where many of Japan’s legions of retirees withdraw their pension payments.

That system, however, has long drawn criticism both inside and outside Japan.

Financial institutions, carrier services and foreign governments argued that the public body was operating in sectors where it competed directly with private businesses.

In February, Japan Post announced its first overseas acquisition with the $5 billion takeover of Australia transport logistics giant Toll Holdings.

Yoshiaki Miyakoshi, 76, a former trading house official checking share prices on a flashing board outside a brokerage in central Tokyo, told AFP that the listing “will perhaps have some positive impact on the Japanese economy”.

AMMAN — Foodstuff exports during the past 10 months reached JD353 million compared to JD339 million during the same period in 2014.

The foodstuffs industry is one of the “promising and important” sectors in the Kingdom as it has 2,132 institutions employing around 41,000 workers with an investment ratio estimated at JD628 million, Amman Chamber of Industry board member Qasem Abu Salha said.

AMMAN — Jordan Marble Company (JMC) is generating meager profits considering the volume of sales.

According to unaudited interim financial results as of September 30, 2015, disclosed to the Jordan Securities Commission, the company seems overburdened by administrative and general expenses besides financing costs.

The income statement showed that sales increased by 21.4 per cent during the first nine months of this year to JD5.1 million from JD4.1 million during the same period of last year.

After taking into consideration production costs, the gross profit boiled down to JD0.8 million on September 30, 2015, compared to JD0.6 million registered on September 30, 2014.

Yet, these aforementioned amounts were struck down to a JD25,959 net profit for January-September 2015 and JD50,734 for the same period of last year due administrative and general expenses as well as financing costs. 

In a previous disclosure sent to the JSC in late July, the company revealed that its sales amounted to JD3.4 million during the first six months of 2015, 9.7 per cent higher than the JD3.1 million recorded during the same period of 2014.

JMC indicated that JD2.3 million of the sales during January-June 2015 were exports and the remaining JD1.1 million were sales in the local market.

Sales in 2014 amounted to JD5.4 million split evenly between exports and the domestic market.

"We opened new markets in neighbouring countries, especially the Gulf states, in South Korea and the United States," JMC Chairman Nabil Salim Al Zammar wrote in the disclosure, expressing hope that the company would be able to broaden these markets in the future so that they would reflect positively on sales and profitability.

The net profit at the end of June 2015 and June 2014 amounted to JD49,144 and JD47,239 respectively.

The company's annual report covering 2014 estimated JMC's share of the local market at present at more than 10 per cent, anticipating the rate to rise over the next five years to  20-25 per cent.

It described the competition in the market as severe and mentioned in this regard 5 main firms that produce marble and granite.

"The company will try to achieve a volume that corresponds to its highly technical state-of-the-art production lines and large capital," the report said.

It added that capital investment stood at JD1.9 million at the end of June 2015, down from JD2.2 million at the end of last year and JD2.6 million at the end of 2013.

According to the balance sheet as of September 30, 2015, total assets amounted to JD7.9 million, JD1.9 million of which were property and equipment.

Other assets included JD2.9 million of inventory and JD2.1 million of receivables.

Liabilities totaled JD3.8 million, mostly debts to Arab Bank and Jordan Ahli Bank..

Notes accompanying the financial statements showed average indebtedness at JD2.7 million and shareholders equity at JD4.1 million.

Consequently, the ratio of indebtedness to shareholders equity stood at 65 per cent in 2015 compared to 60 per cent in 2014.

Shareholders approved during an ordinary general assembly meeting to distribute JD45,000 in cash dividends at a rate of 1.125 per cent and to tap the JD350,098 voluntary reserve as another disbursement.

The meeting was attended by four shareholders who held 99.2 per cent of the JD4 million capital.

At the end of last year, JMC was owned by Mohammed Marwan Salim Al Zammar (35.9 per cent), Nabil Salim Al Zammar (34.4 per cent) and Najib Salim Al Zammar (28.7 per cent).

The company, located in Amman's Abu Alanda suburb, employed 66 workers at the end of last year.

AMMAN — The Amman Stock Exchange, represented by its Chief Executive Officer Nader Azar, participated in the World Federation of Exchange (WFE) 55th General Assembly and Annual Meeting which was held in Doha, Qatar last month.

The meeting gathered CEOs and stock exchange representatives who discussed major issues related to the securities industry. During the meeting, participating stock exchanges agreed on several issues related to the WFE's work.

AMMAN — Jordan Chamber of Industry (JCI) First Deputy Chairman Adnan Abul Ragheb on Tuesday promoted Jordan's strategic location as a gateway to penetrate Arab markets. At a meeting with Danish Regional Ambassador to Amman, Damascus and Beirut Svend Waevers, Abul Ragheb discussed ways to enhance economic and commercial ties between the private sectors in Jordan and Denmark.

They stressed the importance of addressing obstacles facing Jordanian exports to the European Union (EU) in general, with Abul Ragheb noting that meeting EU technical standards is the most important challenge in this regard. The JCI official also called for arranging a visit to the Kingdom by a Danish economic delegation to have a firsthand look at available opportunities and establishing joint investment and commercial partnerships.

They also expressed their desire to promote business opportunities and partnerships and to increase the commercial trade balance, which stood at $183 million last year.

AMMAN — Industry, Trade and Supply Minister Maha Ali on Tuesday said the government took a set of measures to stimulate different economic sectors, enhance their competitiveness and improve the business environment to face challenges, especially those resulting from regional instability. Ali stressed during a meeting with president and members of the Iraqi Business Council that the government will remove hindrances facing investors.

Ali valued Iraqi investments in Jordan and indicated that the government is following up with the Iraqi side to reopen border crossings as soon as possible to facilitate the entrance of Jordanian exports that was damaged a lot as a result of the Treibeel border crossing's closure. She said specialised government entities were working in coordination with commissions representing the private sector to resolve any obstacles facing investment projects in different fields.

The minister said the government is also working on diversifying energy resources and shifting to renewable ones to use in the industrial and other sectors in order to reduce production costs. The president and members of the Iraqi council spoke about some problems facing their investment projects which the ministry will be following up on them with concerned institutions.