Business

AMMAN — Industry, Trade and Supply Minister Maha Ali said Tuesday that Jordan works on enhancing economic partnerships with different countries through free trade agreements in order to contribute to increasing exports and stimulating investments in the Kingdom.

She was speaking at the start of bilateral meetings with her Belgian counterpart Cécile Jodogne, organised by the Amman Chamber of Commerce. Ali said Jordanian exports to Belgium are still modest, standing at $12 million during 2014 whereas imports were worth $223 million, which indicates the need for more Jordanian exports, the Jordan News Agency, Petra, reported.

Jordan succeeded in achieving significant progress during the past 15 years under the leadership of His Majesty King Abdullah, Ali added, noting that legal, administrative and judiciary reforms were conducted intensively with a special focus on business environment.

The result of those policies is obvious from the increase of the gross domestic product significantly from $8.5 billion in 2000 to $35.8 billion in 2014 as well as other indications, Ali continued, referring to the Jordan’s 10-year economic and social development plan and the economic blueprint “Jordan 2025”.

Ali said this meeting allows the private sector in Jordan and Belgium to discover new chances and channels to boost economic relations.

AMMAN — Senator Mohammad Halaiqah has called for applying more flexible procedures in dealing with the Kingdom in terms of the international trade rules, due to the big regional challenges that led to Jordan’s loss to many main markets.

Heading the Jordanian delegation to the 2015 World Trade Forum, held in Geneva between September 25 and 26, Halaiqah called for extending the exemption period for Jordanian exports from taxes, in a way that would contribute to increasing the country’s exports.

Dutch minister for foreign trade and development cooperation, Lilianne Ploumen, agreed noting that the Netherlands will work within the European Union to increase its support to the Kingdom, a gesture that was also agreed by the Kenyan trade minister and the World Bank representative.

The delegation also participated in specialised workshops on parliaments’ roles in enhancing international trade and the meeting of the Inter-Parliamentary Union.

ATLANTA — The United States and 11 other Pacific Rim countries have reached a deal on the most sweeping trade liberalisation pact in a generation but the accord on Monday faced initial skepticism in the US Congress.

In a deal that could reshape industries and influence everything from the price of cheese to the cost of cancer treatments, the 12 countries will cut trade barriers and set common standards. Details of the pact were emerging in statements by officials after days of marathon negotiations in Atlanta.

The Trans-Pacific Partnership (TPP) would affect 40 per cent of the world economy and stand as a legacy-defining achievement for US President Barack Obama, if it is ratified by Congress. Lawmakers in other TPP countries must also approve the deal.

Initial reaction from key US lawmakers was skeptical.

Vermont Senator Bernie Sanders, a US Democratic presidential candidate, said he was disappointed and warned the pact would cost US jobs and hurt consumers.

"Wall Street and other big corporations have won again," he indicated in a statement, vowing to "do all that I can to defeat this agreement" in Congress.

Senate Finance Committee Chairman Orrin Hatch, a Republican, said he feared the TPP could fail to break down trade barriers for American-made products.

"While the details are still emerging, unfortunately I am afraid this deal appears to fall woefully short," Hatch added.

The TPP has been controversial because of the secret negotiations that have shaped it over the past five years and the perceived threat to interest groups from Mexican auto workers to Canadian dairy farmers.

Obama said the pact will "level the playing field" for American workers and businesses and added that Americans would have months to read the deal before he signs it into law.

Biotech compromise

The trade talks had snared on the question of how long a monopoly period should be allowed on next-generation biotech drugs, until the United States and Australia negotiated a compromise.

Although the complex deal sets tariff reduction schedules on hundreds of imported items from pork and beef in Japan to pickup trucks in the United States, the issue of the length of the monopolies awarded to the developers of new biological drugs had threatened to derail talks until the end.

Negotiating teams had been deadlocked over the question of the minimum period of protection to the rights for data used to make biologic drugs, made by companies including Pfizer Inc., Roche Group's Genentech and Japan's Takeda Pharmaceutical Co.

The United States had sought 12 years of protection to encourage pharmaceutical companies to invest in expensive biological treatments like Genentech's cancer treatment Avastin. Australia, New Zealand and public health groups had sought a period of five years to reduce drug costs and the burden on state-subsidised medical programmes.

Negotiators agreed on a compromise on minimum terms that was short of what US negotiators had originally sought and that through a two-track process would effectively grant biologic drugs a minimum period of 5 years and up to a minimum of 8 years, aiming to achieve a comparable outcome across both tracks, free from the threat of competition from generic versions.

A politically charged set of issues surrounding protections for dairy farmers was also addressed in the final hours of talks, officials said. New Zealand, home to the world's biggest dairy exporter, Fonterra, wanted increased access to US, Canadian and Japanese markets.

Separately, the United States, Mexico, Canada and Japan  agreed rules governing the auto trade that dictate how much of a vehicle must be made within the TPP region in order to qualify for duty-free status.

The North American Free Trade Agreement between Canada, the United States and Mexico mandates that vehicles have a local content of 62.5 per cent. The way that rule is implemented means that just over half of a vehicle needs to be manufactured locally. It has been credited with driving a boom in auto-related in investment in Mexico.

The TPP would give Japan's automakers, led by Toyota Motor Corp, a freer hand to buy parts from Asia for vehicles sold in the United States but sets long phase-out periods for US tariffs on Japanese cars and light trucks.

The deal being readied for expected announcement later Monday also provides minimum standards on issues ranging from workers' rights to environmental protection and sets up dispute settlement guidelines between governments and foreign investors separate from national courts.

AMMAN — The Jordan Insurance Federation (JOIF) and the General Arab Insurance Federation (GAIF) are scheduled to organise on December 6 an Arab symposium on "Credit classification and institutional risk management" in the Dead Sea area.

Local, Arab and international lecturers and experts will participate in the pan-Arab event expected to attract around 150 participants representing administrators, financial managers and personnel of insurance companies, according to a JOIF statement.

The symposium's agenda include eight working papers spread over four sessions tackling two major aspects of credit classification, while the second aspect will deal with the institutional risk management.

AMMAN — Jordan and Romania on Saturday signed three documents aimed at promoting business opportunities in both countries to further enhance bilateral economic growth, Industry, Trade and Supply Minister Maha Ali said Sunday.

During a meeting organised by the Jordan Chamber of Commerce (JCC) to discuss ways to enhance economic relations with Bucharest in the presence of a high ranking official Romanian delegation headed by Prime Minister Victor Ponta, the minister added that two memoranda of understanding between both countries' private sectors were also signed.

The first aimed at enhancing bilateral cooperation in the ICT field, and the second to devlop cooperation at the public sector level.

"We look at Romania as a gateway to European countries for Jordanian businesses and industries, and we look forward to fostering joint partnerships in areas of mutual interest," Ali told attendees who included representatives of commercial and industrial sectors from both countries.

JCC Chairman Nael Kabariti underlined the importance of the Romanian delegation's visit and expressed the Jordanian private sector's keenness on bolstering bilateral cooperation at the ICT, aviation, health, energy and bio-energy levels, among others.

Kabariti also voiced hope the Romanian government would solve visa issues for Jordanian businessmen, noting that a commercial delegation failed twice in receiving visas for business trips to the European country. 

Ponta expressed concern over the low level of economic relations between Jordan and Romania despite the good friendship ties on the political level, noting that some 30 years ago both countries had better commercial ties, especially at the industrial and agricultural levels.

"It is [the visit] a good opportunity to start again with developing relations, especially that Romania is now a member of the European Union and can open all the European market for Jordan," the premier said.

The prime minister added that Economy, Trade and Tourism Minister Mihai Tudose, who is a member of the current delegation, will be back in Amman in one month heading a delegation of the Romanian Chamber of Commerce and businesspeople to further boost bilateral economic cooperation.

Regarding visa issues, Ponta promised to facilitate procedures for Jordanian businesspeople to apply to visas online and receive confirmations within 24 hours.

According to a JCC statement, made available to attendees, Jordanian national exports to Romania in 2013 reached around $6.11 million and increased by 14.4 per cent in 2014 to stand at $6.99 million.

The statement, based on figures from the Department of Statistics, showed that Romanian exports to the Kingdom in 2014 stood at $372.39 million, marking a 36.5 per cent increase in comparison with 2013, when Bucharest exports were worth $272.74 million.

Jordan's main exports to Romania include fresh and frozen vegetables, medicaments and skin care products, whereas major Romanian exports to the Kingdom include sheep, wood and paper, tubes and pipes and calcium carbide, the statement added.

AMMAN — The banking sector in the Kingdom should play a big role to uphold corporate social responsibility as an essential part of its work, Central Bank of Jordan Governor Ziad Fariz said Sunday.

Inaugurating the fourth forum of social responsibility for banks, he praised the efforts exerted by Jordanian banks to contribute to launching many social and humanitarian initiatives, referring to the banks' initiatives of establishing Pilot Muath Kasasbeh Scholarship Fund.

The Association of Banks in Jordan (ABJ) Deputy President Mousa Shihadeh said the forum is an annual event for ABJ to highlight and enhance its social responsibility, exchange experience and expertise and discuss ways to develop this role.

Shihadeh noted that banks in 2014 employed some 20,000 employees and trained 43,000 others as part of its role in supporting the national economy and contributing to sustainable, comprehensive development.

In 2014, banks in Jordan spent around JD43.2 million on social responsibility initiatives, that constituted 8 per cent of the banks' net profits in that year, he indicated.

Such initiatives, according to Shihadeh, included the participation in a project to develop the financial culture which was launched by the CBJ with a support of JD6 million, in addition to carrying out maintenance to old computers and donating them to charitable societies.

ABJ also presented annual support to the Goodwill Campaign, Al Hussein Fund for Excellence, Al Aman Fund for the Future of Orphans and the Jordanian Hashemite Fund for Human Development, the ABJ official said.

Also on Sunday, ABJ launched its guidebook of banking services, products and solutions offered by Islamic banks working in the Kingdom.

The guidebook, jointly prepared by ABJ and Islamic banks, is an important step forward to shed light on Islamic banking services, especially under the growing demand on them in local, regional and international markets.

ABJ President Adli Qandah said the guidebook, the first of its kind in Jordan and the region, is an initiative from ABJ to serve its members and clients.

AMMAN — Jordan Express Tourist Transport (JETT) is banking on public transportation to offset losses resulting from its tourist transport activities which include the Hajj.

JETT operates public transportation routes between cities in Jordan and  with other cities outside the Kingdom  in accordance with authorisations granted by concerned parties.

According to a disclosure sent to the Jordan Securities Commission, the company earned JD7 million during the first half of this year, 18.6 per cent less than the JD8.6 million generated during the first six months of 2014.

Of the JD7 million earned between January-June 2015, JD1.5 million came from tourist transport and JD5.5 million from public transportation, compared to JD2.4 million and JD6.2 million respectively in the same period of last year.  

Tourist transport on June 30, 2015 was in the red with a JD0.5 million loss after the deduction of operational expenses, but the gross profit from public transportation amounted to JD2.7 million.

After taking into consideration administrative expenses, financing costs and other gains or losses, the mid-2015 loss from tourism transport amounted to JD1.6 million compared to a JD0.9 million loss registered on June 30, 2014.

The operations from public transportation, after subtracting the additional expenses and costs as mentioned above, resulted in JD1.9 million profit compared to a JD2.3 million profit posted during the first half of last year.  

As such, collective gross profit stood at JD2.2 million, 26.7 per cent down from JD3 million during January- June 2014 and after-tax profit plunged 78.6 per cent to JD0.3 million on June 30, 2015 from JD1.4 million on June 30, 2014.

JETT's 22nd annual report covering 2014 operations, showed that the company was able to maintain a steady performance with a JD1.7 million after-tax profit and even higher earnings which reached JD16.3 million (JD15.8 million in 2013).

Nonetheless, a breakdown of last year's earnings and profit showed a negative performance in tourism transport as revenue declined by 9 per cent to JD4 million (JD4.4 million) and the loss increased to JD2.6 million (JD2.1 million).

Public passenger transport counterbalanced the drawback with higher revenue and profit that reached JD12.3 million (JD11.4 million) and JD4.4 million (JD3.8 million).   

In the report, the board of directors expected 2015 earnings to hit around JD17.5 million, but also predicted a disappointing business for tourist transport.  

In a foreword, Chairman Munir Nassar wrote that the company built and equipped two petrol stations in the Jordan Valley (Ghor) and Aqaba so as to save a sizeable amount in fuel costs.

Malek Haddad, JETT's  general manager, told the shareholders during the general assembly meeting that the company plans to broaden its income resources with more petrol station projects.

Nassar, responding to demands for a higher rate of cash dividends, said it is not possible to distribute more than 10 per cent in light of expansion and development of new projects.

According to the external auditor's mid-year interim review of the consolidated summary of financial statements, the company bought property and equipment worth JD1.1 million during the first six months of this year. In 2014, the company sold eight old-model buses.

The chairman highlighted other achievements pointing out that in 2014 the company opened a new office in the Raghadan tourism compound (downtown Amman) to serve incoming individual tourists.

Nassar mentioned in the annual report that “JETT introduced a new tourism activity with the City Tour Bus which provide an open-topped bus service for sightseeing in Amman and Aqaba”.

When the company was contacted for further details, The Jordan Times was informed that the City Tour Bus was now operating in Aqaba and will be running in Amman at a later date.

The annual report listed three key risks facing the company, chiefly the repercussions arising from the political events and disturbances as well as the changes in neighbouring countries and their impact on various economic sectors.

Secondly, it deplored government policies related to transport, especially those concerning taxation and indicated that in this regard JETT was treated multifold compared to others in the transport business.

Thirdly, the report mentioned harmful price competition as another main risk.

In highlighting JETT's competitive position, the disclosure estimated the company's market share of tourism transport at 31 per cent indicating that it owns 109 tourist buses, or 17 per cent of the 641 buses operated by eight companies specialised in this type of activity.

The company estimated its market share of the public transport at 30 per cent indicating that, in 2014, 2.3 million passengers used its 97 buses which represent 4 per cent of the 2,500 public transport buses operating in the Kingdom.  

The report referred to a study, conducted by the Land Transport Regulatory Commission, which showed that 45 million local passengers use public transportation in and between cities in Jordan and that 16 per cent of those, or 7.2 million, use buses.

Financially, the company calculated its capital investment at JD18.4 million noting that its registered and paid up capital was JD10.8 million.

By adding mandatory and voluntary reserves, each amounting to JD2.3 million and retained earnings (JD3.3 million), shareholders equity reached JD18.9 million on June 30, 2015.

JETT's liabilities totaled JD4.3 million, of which JD2.8 million were accounts payable and the remaining JD1.5 million were short and long-term debts to Cairo Amman Bank.

Total assets amounted to JD23.2 million, JD12.8 million of which were property and equipment, JD4.6 million were inventory and receivables and JD3 million were financial assets at fair value.

At the end of last year, JETT's workforce totaled 636 employees, 322 of whom worked in a subsidiary that operates public transportation routes between cities in and outside Jordan and another subsidiary that provides VIP transport service and ordinary public transportation for passengers traveling the Amman-Aqaba-Amman route.

26 shareholders accounting for 68 per cent of JETT's equity attended the general assembly meeting that approved the distribution of JD1.1 million in cash dividends at a rate of 10 per cent, a consistent figure since 2010.

Key shareholders at the end of last year included Arab Supply and Trading Corporation or ASTRA (21 per cent), Cairo Amman Bank (10 per cent), Bank of Jordan (10 per cent), Al Massira Investment Company (6 per cent), Al Zafer Investment Company (6 per cent) and Khaled Hashem Al Shawwa (5 per cent).

AMMAN — Jordan Chamber of Industry President Ayman Hatahet on Saturday called on the government to lower electricity charges for the industrial sector in response to the international decline in oil prices.

The sector is currently in dire need to enhance its competitiveness to help it penetrate new markets to compensate for those that are no longer available for national exports, such as Iraq, Syria, Lebanon and Turkey, Hatahet said.

The industrial sector plays a vital role in the economic development process, directly accounting for 25 per cent of gross domestic product (GDP), and for 40 per cent of GDP when indirect contributions are taken into consideration, he added.

At around JD2.7 billion, he indicated that local industries accounted for more than 90 per cent of national exports in the first seven months of the year, noting that national exports in 2014 reached JD5.2 billion.

The local industry employs nearly 250,000 workers, more than 18 per cent of the workforce in Jordan, Hatahet said pointing out that the sector created around new 40,000 jobs over the past five years, ranking third, after the health and education, in terms of creating new jobs.  

NEW YORK / LONDON / SINGAPORE — The global silver-coin market is in the grips of an unprecedented supply squeeze, forcing some mints to ration sales and step up overtime while sending US buyers racing abroad to fulfill a sudden surge in demand.

The US Mint began setting weekly sales quotas for its flagship American Eagle silver coins in July because it can't meet demand, and the Canadian mint followed suit after record monthly sales in July. 

In Australia, the Perth Mint sold a record of more than 2.5 million ounces of silver this month, nearly four times more than in August, and has begun rationing supply of a new line of coins this month, a Mint official said.

"Silver demand is absolutely through the roof," indicated Neil Vance, wholesale manager at the Perth Mint.  "There seems to be a bit of frenzy as people think there is a shortage of silver. But in fact it is a [crunch in] manufacturing capacity."

While demand has risen in response to the slump in spot prices to $14.33 an ounce in late July and its subsequent drop to fresh six-year lows below $14 an ounce in August, mint officials said they were caught out by the sudden interest in coins. 

In July, the US mint halted sales for almost three weeks after running out of "blanks", which are used to make coins.

Some investors like to own physical metal to protect from volatility in other assets, particularly currencies and stocks, and to hedge against geopolitical and economic upheaval. The CBOE Volatility index, or VIX, of US stocks,  popularly known as the "fear index", briefly jumped to its highest since January 2009 earlier this year.

At the US Mint in West Point, New York, where the American Eagle is made, the plant is operating three shifts and paying staff overtime, a spokesman said.

The Austrian Mint, which has begun allocating sales of its Philharmonic silver coins, has increased production of silver blanks after higher-than-expected demand in July and August, a spokeswoman said.

In his 35 years of dealing precious metals, Roy Friedman, vice president of sales and trading at Manfra, Tordella & Brookes, one of the biggest US wholesale coin dealers, said he could not recall seeing a squeeze in supplies of North American silver coins spilling over to coins made in Austria and the UK to the degree seen this year.

Mom and pop

Dealers and mints trace the supply squeeze to a burst of buying by mom-and-pop investors in the United States, who scrambled to scoop up coins they considered to be at bargain levels after spot silver prices in early July sank to six-year lows.

The spread between silver and gold, a closely watched gauge for the precious metals markets, has risen to its highest in the third quarter since a brief silver frenzy following the financial crisis. 

Silver coins typically outsell gold anyway because they cost less, but the wide spread meant the silver price is 76 times cheaper than gold, making it even more appealing than usual to investors.

The US Mint sold 14.26 million ounces of American Eagle silver coins in the third quarter, the highest on records going back to 1986. 

The Canadian mint has been limiting sales of its silver Maple Leaf coins since July after record monthly sales that month, an official told Reuters. Sales were at all-time highs in August and September.

With North American mints overwhelmed by orders, investors and collectors were forced to look overseas for increasingly scarce supplies, triggering a domino effect in Europe and Asia.

"We can only get a fraction of what we could sell," said Terry Hanlon, president of Dillon Gage, one of the world's biggest precious metals dealers, based in Addison, Texas.

Hanlon added that  he has seen premiums for coins, which are paid on top of the spot price for physical delivery, surge to about $4 to $5 per coin in wholesale deals, compared with $2.3 in June.

While such buying binges are not uncommon in the coin world, and the US has allocated sales of silver coins several times since prices of silver plummeted in 2013, this episode has lasted far longer, and its effect more pronounced, than in the past, dealers say.

The silver spree is also notably more intense than in gold coins. US Mint sales of gold coins had their best quarterly performance since the second quarter of 2010, but mints aren't yet straining to keep up.

Plunging silver

Still, the rush of coin buying has failed to offset a years-long silver rout by institutional and retail investors betting on further gains in the dollar, US equities and an improving US economy.

Prices have fallen 7 per cent this year, are on track for their third yearly loss and down by 70 per cent from all-time highs of $50 hit in April 2011.

Holdings in the silver-backed exchange traded funds, , which were popular with investors during the financial crisis that followed the collapse of Lehman Brothers, sank to below 518 million ounces this week, their lowest in almost three years.

For now, however, coin dealers are riding the wave. Bullion dealers around the globe who typically offer next-day delivery are now taking silver coin orders several weeks out.

"I don't expect things to get better until next year," said Gregor Gregersen, founder and director of retailer Silver Bullion based in Singapore.

KUWAIT — Kuwait will invite private investors, including foreigners, to take part over the next two years in nine infrastructure projects worth about $36 billion, under a new law designed to facilitate such deals, an official said.

The country has huge construction plans, ranging from power stations and sewage and waste treatment facilities to railway and metro systems. But the plunge in oil prices since last year has slashed its revenues.

So rather than assuming the full cost of construction, the government wants increasingly to use public-private partnerships (PPPs), in which private investors take stakes in projects, bear part of the risk and share profits from operating them.

"This has become an inevitable necessity because it reduces the burden on the state budget in light of falling oil prices," Adel Mohammad Al Roumi, the president of the Kuwait Authority for Partnership Projects, which will oversee PPPs, said in an interview.

In the past, Kuwait has completed only one PPP deal. Projects have been delayed or cancelled because of red tape, uncertainty over legal terms and political tensions between the Cabinet and parliament, which have hindered planning.

But a new PPP law which took effect this year may help to break the logjam, partly by making it easier for investors to raise money. 

While it was hard for banks to obtain security for loans under the old rules, the new law allows a range of assets to be used as collateral, including the developer's shares.

"The new PPP law and its implementation regulations are a positive step for Kuwaiti PPPs and resolve a number of challenges that were present under the previous regime," global law firm Ashurst, which has advised on projects in the country, said in a report.

Successful PPP projects in Kuwait could spur such deals in other Gulf Arab states, which also want to save money in an era of low oil prices. Dubai published a new PPP law last month.

The new law

Kuwait's new law provides for creation of joint stock companies to handle projects, with Kuwaiti citizens owning 50 per cent of such firms, the government 6 — 24 per cent and foreign investors the remainder.

Roumi said his authority would in the next few months invite expressions of interest from investors in seven projects costing about $10 billion. 

Among them, bids are expected within about four months for a $1.3 billion to 1.7 billion electricity generation and water desalination project at Al Zour, with the winners likely to be announced next March, he added.

About 70 to 80 per cent of funding for these projects would come from banks, which authorities hope will stimulate the local banking system. The rest would be provided by investors in the joint stock companies.

In the longer term, PPPs will be used for two much bigger projects, Roumi remarked. 

Kuwait aims to start building a $6 billion railway in 2016, having it ready to connect to a planned regional network in 2018. It also plans a $20 billion project to construct an urban metro system.

The government hopes PPPs will reduce the delays and cost overruns which have plagued past projects. Private investors will not get major payments until projects are operating, creating an incentive to complete construction on time and within budget.

Success in Kuwait's PPP drive is not assured. Bureaucracy and politics may continue to slow projects. Nevertheless, Ashurst said the new law could make Kuwait considerably more attractive for foreign investors.

"The new PPP law includes provisions for foreign investors to compete on a more level playing field with Kuwaiti companies," Ashurst's report added, noting that the new rules amounted to an easing of restrictions on foreign ownership of project companies.