Business

AMMAN — Lawsuits filed in courts against Trust International Transport carry JD0.8 million in claims for compensation.

According to the notes accompanying the unaudited review of financial statements as of March 31, 2015, the necessary provisions have been taken for those compensation claims in lieu of deaths and injuries involving the company's buses.

The unaudited review noted that other lawsuits with unspecified value and results are still under examination in courts.

Within its plans for 2015, the company intends to amicably resolve the disputes at the least possible payouts.

"The company worked and is still working on amicable financial settlements to many lawsuits against it as a result of traffic accidents; so that it will later be able to renew its activity as per the multiple objectives specified in the company by-laws," the board of directors said in its 2014 report.

With no income in 2014 and 2013, the summarised interim review conducted by public accountants Ibrahim Abbasi & Co. indicated that Trust International Transport sold its main route licences and bus terminals. 

A knowledgeable source told The Jordan Times that Trust International Transport was inoperative and that the buses were also sold because when route licences are relinquished, the buses must be given up as well.

Substantiating the information that the buses were sold, the balance sheet as of March 31, 2015, shows that the value of property and machinery at few thousand Jordanian dinars compared to JD0.9 million at the end of 2014.

Another source said present activities were frozen.

"There is no share for our company [Trust] in domestic competition due to the sale of the operating routes and, also, there is no share for our company in markets abroad because it currently does not function on routes from the Kingdom to outside Jordan," the company's annual report said.

"The company is posting annual and quarterly losses that have accumulated to more than 89 per cent of the capital," Ibrahim Abbasi & Co. said in the review, noting the losses at the end of this year's first quarter amounted to JD0.5 million, a JD0.4 million of which was loss from the sale of property and machinery. 

At the end of the first quarter of last year, the loss stood at JD0.1 million.

With accumulated losses at the end of March 31, 2015, totalling JD3.1 million, the JD3.4 million capital was considerably eroded bringing down shareholders' equity to JD0.5 million.  

"There are fundamental doubts casting negative shadow over the company's capability to continue as an independent ongoing concern unless it adopts a remedial action," the review added.

Besides trying to settle the compensation claims, the future plan includes diversifying its activities, meticulously continuing to control expenses and following up with the Land Transport Regulatory Commission to obtain licences for new routes, particularly international ones to Arab countries.     

"The company, in general, faces financial, credit and liquidity risks as well as market and capital management risks," the review said.

The auditor mentioned in a report that covered 2014 that it was not provided with the licences of some buses and, as such, it was unable to verify their ownership.

Moreover, the auditor remarked that the provision was not increased on JD42,530 of slow-moving inventory and said the company did not create a provision to guard against the risk of default on JD105,000 of net receivables and promissory notes that were due.

Other assets included JD0.3 million in cash at hand and at banks and JD0.25 million of additional receivables owed by Al Taif International Company for Renewable Energy, which is a wholly-owned subsidiary of Al Ekbal Investment Company.

According to the 2014 annual report, Al Taif International Company for Renewable Energy held  a 37.8 per cent stake in Trust International Transport at the end of last year from none in the previous year. 

At the end of 2013, a 38.4 per cent stake in Trust belonged to Al Ekbal whose equity in that company at the end of last year diminished to 0.6 per cent.

In both years, Bank of Jordan held a 9 per cent stake.

The annual report showed Trust's capital investment at JD3.9 million and that only 5 persons were employed at the company at the end of last year.

PARIS — The Organisation for Economic Cooperation and Development (OECD) sharply lowered its global growth forecasts for 2015 and 2016, dragged down partly by a "transitory" shortfall in US performance and by businesses and governments skimping on investment.

"Global growth is projected to strengthen in the course of 2015 and 2016, but will remain modest relative to the pre-crisis period," the OECD said this week.

It predicted the world economy would grow at a rate of 3.1 per cent this year, down from the 4 per cent increase it projected in March.

The growth forecast for next year has been revised downward half a percentage point, from 4.3 to 3.8 per cent, with an expectation that the world economy "will strengthen gradually to approach its past [pre-crisis] average pace by late 2016".

"The global recovery continues but is mired by unemployment, rising inequality, low wages and low productivity growth," OECD chief Angel Gurria said, unveiling the new report.

The OECD, a policy analysis body grouping 34 advanced economies, slashed its outlook for the United States from 3.1 to 2 per cent this year, and from 3 per cent to 2.8 per cent next year.

The Paris-based think tank said the stronger dollar and a brutal North American winter, which it said caused "transitory disruptions", put a brake on growth in the first quarter of 2015, while predicting: "Activity should regain steam, with aggregate demand propelled by continued employment gains, wealth effects from rising asset prices, and the boost to purchasing power from lower oil prices."

China, too, will grow more slowly than the OECD predicted in March, by two-tenths of a percentage point lower in both years, at 6.8 per cent in 2015 and 6.7 per cent in 2016. 

"Consumption will remain robust" in China, where growth will also be spurred by stepped-up infrastructure investment, it said.

The OECD added that overall, "the economic recovery from the global financial and economic crisis that broke out in 2008 has been unusually weak".

The knock-on effects have included continuing job insecurity, sluggish development in emerging economies and "rising inequality nearly everywhere", the report indicated .

However, the OECD expects growth "to be shared more evenly across regions of the world" in the coming period.

Its outlook for the eurozone was unchanged at 2.1 per cent for this year and a slightly rosier 2 per cent for 2016, thanks to lower oil prices, the weak euro, better financial conditions and fresh stimulus spending.

But unemployment in the eurozone will remain stubborn, declining to a still painful 10.25 per cent by the end of next year, the OECD said.

'Tepid' investment

The report chided businesses and governments for what it called "tepid" investment.

"By and large, firms have been unwilling to spend on plant, equipment, technology and services as vigorously as they have done in previous cyclical recoveries," it said.

"Moreover, many governments postponed infrastructure investments as part of fiscal consolidation," it added, with negative effects on employment and wages and therefore consumption.

"On the supply side, sluggish investment has undermined the rate of growth of potential output, the capacity of economies to increase living standards, make good on future obligations to citizens, and repay debt," the report continued.

Addressing a news conference at the OECD's Paris headquarters, Gurria urged governments "to use all the policy tools they have in hand" to step-up investment.

"If investment is there, growth will come," he said.

Among global risk factors the OECD cited were new drops in oil prices, failure to reach a "satisfactory" deal between Greece and its creditors, and a "disorderly exit" from Washington's zero interest rate policy.

It said it expected oil prices to "stabilise above current levels" but well below the $110 per barrel average of the three years preceding last year's precipitous drop. 

Greece faces a Friday deadline to repay more than 300 million euros ($328 million) to the International Monetary Fund. Overall it needs to repay the global lender some 1.6 billion euros this month, funds it currently lacks.

The US Federal Reserve funds rate has remained locked at zero since the end of 2008 as the Fed has sought to help pull the economy back from the Great Recession.

Fed boss Janet Ellen last week said to expect a rate hike "at some point this year" as the economy continues to mend.

VIENNA — The Organisation of Petroleum Exporting Countries (OPEC) which meets on output this week, appears to have changed its approach to US shale oil, which it now welcomes as part of the global energy landscape.

"Shale oil is a phenomenon that will stay with us. We have to live together and find a balance," OPEC Secretary-General Abdullah Al Badri told delegates at a seminar in Vienna on Wednesday, ahead of the group's scheduled production meeting on Friday.

OPEC's decision not to limit output in November was perceived by market traders as a tactical attempt to maintain its share of a market flooded by a vast supply glut, partly caused by US shale.

Over the past five years, OPEC has shrugged off talk that the US shale energy revolution would weaken the influence of the group, whose 12 member nations pump 30 per cent of the world's crude.

The United States has since significantly ramped up its production of oil extracted from hard-to-reach shale, or sedimentary rock, now producing 5 million barrels of oil per day and far less dependent on imports from the crude-rich Middle East.

"We're not thinking or imagining or dreaming that shale oil producers are not going to be there. We want them to be," said United Arab Emirates Energy Minister Suhail Al Mazrouei.

"They are a very good balance for the market. We want everyone to share the responsibility of balancing the market," he told the audience at the seminar, which included chief executives from energy majors BP, Chevron, Eni, ExxonMobil and Total.

World oil prices tumbled between June 2014 and January on the back of faltering global energy demand and worsening oversupply, which many observers regard as being fuelled by booming US shale oil exploration and production.

'Pyrrhic victory' 

OPEC opted to keep its official production ceiling at 30 million barrels per day in November, a strategy backed by kingpin Saudi Arabia aimed at boosting demand, lowering prices and hurting non-OPEC output, particularly US shale producers that have far higher costs.

In the wake of the decision, the global oil market collapsed further to strike six-year low points in late January, but they have since recovered to stand at around $60 per barrel.

Yet Citi analyst Eric Lee argued this was a "pyrrhic" victory for the group.

"Ahead of the OPEC meeting this Friday, some might pronounce OPEC as having 'won' the first round against shale, but in such a framing, it's a pyrrhic victory, with Brent prices down from the peak of $115 last June to $64 at the time of writing," Lee wrote in a research note.

"A better analogy is that shale has been a massive new competitor... and OPEC has had to make room, and take lower prices in order to keep market share," he indicated.

Natixis analyst Abhishek Deshpande said: "It's become apparent that shale oil is profitable around $60-$65 per barrel level."

"We knew OPEC could not restrain US production for too long," he added.

Chevron Chief Executive John Watson, addressing the Vienna seminar on Wednesday, said that the group was facing a "brave new market".

"The difference today is that OPEC is choosing to produce and not managing the market," Watson told delegates.

"Most of the discussion has been around US shale oil, and it has been a remarkable revolution in the United States... We are producing close to 5 million barrels per day that no one expected, and shale oil will be a balancing mechanism to some degree over the next few years," he indicated.

Qatar's energy minister said Wednesday that the global oil market should be "more balanced" in the second half of the year.

"The last nine months or so have been particularly challenging for the oil industry," Mohammed Al Sada said in Vienna. "However, there are a number of reasons to feel optimistic about the general situation going forward... There should be a more balanced market in the second half of this year."

Sada, speaking at a seminar involving industry figures, said however that the market was "not out of the woods yet" and that "still a lot of uncertainty" remained.

Saudi Arabia's oil minister said the recent unrest in the Middle East and North Africa has little impact on oil prices because the market has become "comfortable" with risk.

Questioned about ongoing violence in Iraq, Libya, Yemen and also Saudi Arabia, Ali Al Naimi replied that there was "very, very small" risk premium in the current oil price. 

"This premium is there but fortunately the world is getting very comfortable with the risk," said Naimi, addressing the seminar.

"That is why you see that portion is really very small no matter what is happening... in the most productive part of the Middle East. "They don't seem to be affecting production, shipping, demand, supply... The risk premium is there, but it is very very small because of the variabliity of supplies."

The top oil officials of Iraq and Venezuela said that $75 to $80 a barrel was now a "fair" price for oil, reflecting an emerging consensus on a possible equilibrium for volatile markets.

Asked for his view while speaking at an OPEC seminar in Vienna, Iraqi Oil Minister Adel Abdul Mahdi said he believed $75 to $80 was fair.

"We share the same opinion of the minister of Iraq regarding this issue," Venezuela's Oil Minister Asdrubal Chavez said. Iran's oil minister declined to comment.

Iran's Oil Minister Bijan Zanganeh forecast Wednesday that his country's oil production could be lifted by 1 million barrels per day (bpd) within half a year of Western sanctions being lifted.

Questioned about the Islamic republic's oil output, he told delegates: "We believe that immediately, or after one month of lifting the sanctions, [we will achieve] half a million [extra] barrels per day, and after 6-7 months we will achieve one million barrels."

"Iran, because of the sanctions and limitations, has reduced production and exports," Zanganeh said.

Iran currently exports 1.3 million bpd, against 2.2 million bpd before the sanctions were imposed about one decade ago.

"It's fair we return to the level of the production [which Iran had] before the sanctions," Zanganeh added. "OPEC members countries will consider the return of Iran to the market, and it will not have a negative impact on the market." 

Zanganeh said Wednesday that the group needs to find a "fair price" for its oil.

"OPEC needs an equitable price, a price that would not be harmful to global economic growth and allow investments to continue... and allow for the development of production capacity in member countries thus allowing continuity and stability," he added.

AMMAN — Jordan Customs announced in a press statement on Wednesday that it  held the second of two Public-Private Dialogue Forums with Jordanian businesses to create awareness of its revised Golden List programme.

"The Golden List,  a trade facilitation programme, gives preferred operator status to companies that demonstrate low risk and a strong compliance history with customs requirements," the statement said. Developed in coordination with USAID’s Fiscal Reform Project, the revised programme  seeks to incentivise more companies to join.

The previous  forum was held with members of Jordan Customs and with businesses from the Aqaba Special Economic Zone, respectively. This most recent forum targeted businesses operating in the Qualified Industrial Zone. During the session, Jordan Customs delivered a presentation about the programme followed by open discussion to address questions and provide more information about the revised programme and its benefits.

“The Golden List programme is one of our signature initiatives, [which] seeks to facilitate trade and increase competitiveness of Jordan’s economy,” said Jordan Customs Director General Munther Abdel Qader Al Assaf. He also affirmed during the workshop that Jordan Customs has been applying the Golden List programme since 2005 making it the first Arab country to do so.

ISTANBUL — In Istanbul's centuries-old Grand Bazaar, the hum of commerce is as noisy as ever. Vendors sell tea, coppersmiths craft their wares, merchants shout out to passing tourists.

But beneath this hubbub, discord is brewing against President Recep Tayyip Erdogan and the ruling Justice and Development Party (AKP) ahead of June 7 parliamentary elections.

The Grand Bazaar, home to some 4,000 shops where over 20,000 people work, has long been seen as a bastion of support for Erdogan and the Islamic-rooted AKP.

But as the economy starts to show weakness after years of impressive growth under Erdogan, who became president in 2014 after more than a decade as premier, there are growing signs that this support is beginning to wane.

"I used to vote for AKP but it's time for a change now. They have been in power for too long. I think they are burnt out now," said Huseyin Kaya, a silver shop owner who has worked in the Bazaar for two decades.

"The economy is not good. Business is bad. I have bought merchandise for tens of thousands of dollars and I have debts now that I cannot pay back," he added.

Many of the shopkeepers and small-scale manufacturers who have thrived under the AKP's rule voted for political stability and rewarded Erdogan for the country's growing prosperity, even after a corruption scandal and anti-government protests in 2013.

But the party is entering an election under fire over Turkey's economic performance for the first time since it came to power in 2002 due to stalling growth, stubbornly high inflation and unemployment.

'Spitting in our face' 

The bazaar was the scene of protests last month by shopkeepers who refused to vacate their stalls in Sandal Bedesten, a section of the 15th century shopping area, following a notice calling for the immediate eviction of some 80 shops.

The shopkeepers locked themselves in their shops, shouting anti-government slogans, before riot police stormed the area, evicting all the shops in Sandal Bedesten and briefly detaining some 20 shopkeepers.

The tenants say that Fatih Municipality, run by the AKP, had leased their shops for a higher rent to a single tenant "to cover the costs of the restoration" of the Grand Bazaar, which hosted a motorcycle chase scene in 2011 in the James Bond movie "Skyfall" that caused damage to the structure.

There are rumours that the shops could be converted into hotels as part of an ambitious project by the municipality.

"The government is just spitting on our face. I don't believe in any of them anymore. I'm not going to vote for AKP because we are in a grave situation here," said Mustafa Kahraman, a cloth merchant.

"They've clearly demonstrated they are there to serve mainly the rich and powerful," he added outside a square where his shop was located, now deserted.

Huseyin Kaya, a board member of Grand Bazaar Association of Shopkeepers, agreed: "All the government cares about is money. Is there anything they haven't sold yet?"

"People in our community used to vote for the AKP when they stood for something. But they have held the reins too long and the corruption and undemocratic behaviour is now shining through," he said.

'No economic miracle' 

Turkish economist Mustafa Donmez said "there is no economic miracle anymore" for the AKP's core voters, who until now supported the party over "bread and butter issues".

"The AKP has not much left to give them. The economy is very fragile and the future rates of growth will no longer be enough to create jobs for their children," he added.

"When the economy is going bad, they start to question whether the government is really corrupt, whether the officials really stuffed their pockets full and whether there is really a lack of freedom in the country," he indicated

Erdogan is hoping the AKP will win a two-thirds majority in the polls in order to change the constitution and boost his office's powers to that of a US-style executive president.

The latest opinion polls, however, suggest the AKP's support could fall sharply from the almost 50 per cent of the vote it garnered in 2011, with it possibly even losing its parliamentary majority.

But Selvi Gurey, who owns a souvenir shop in the bazaar, says he will vote for the AKP because he thinks a presidential system will bolster stability and economic growth.

"We owe a debt of gratitude to Erdogan, who has worked so tirelessly to make our life better. I think Turkey will be better off with a stronger president," he said.

Separately, Turkey's agriculture sector, a key pillar of the domestic economy, is increasingly feeling the pinch in a troubling development for the ruling party that is counting on farmers' support in this weekend's legislative elections.

On a cattle farm in the district of Cubuk outside Ankara, Ozkan Ilhan surveys his 500 cows with pride but declares that the future of the sector is in danger under the policies of AKP.

"Our economy is not going well at all. The AKP is not coping, it is carnage. If that continues it will be the end of the agricultural sector in our country." he says. "We are obliged to import agricultural products from abroad."

Such attitudes are bad news for the AKP which has smashed the opposition in Turkey's last three parliamentary elections and is seeking a two-thirds majority this time so it can make changes to the constitution.

Traditionally conservative, Turkish farmers helped the AKP come to power almost 13 years ago and their support has helped the party to maintain its grip ever since.

But now with growth dipping under three per cent and unemployment on the rise, the AKP is finding its support eroding and farmers have been among the first to vent their frustration.

Farmers and agricultural workers complain of a lack of policies aimed at helping local producers as well as an increase in charges.

For the first time, the price of fuel oil, which is widely used in the agricultural sector, has been a major election theme with the opposition promising to push prices down to 1.5 lira ($0,56) per litre from 4 lira.

The head of the opposition Republican People's Party (CHP) Kemal Kilicdaroglu told AFP that 2.7 million hectares of agricultural land have been allowed to go fallow under the AKP's rule.

"It's lamentable," he said. 

'Farmers the first victim' 

The agricultural sector is of huge importance for the country, employing one in five Turks. But there is immense room to improve its productivity and efficiency and it only accounts for nine per cent of the gross domestic product.

And even if there have been improvements in mechanisation, it remains well behind European production levels. 

Turkey is obliged to import quantities of food that it can produce itself, including barley wheat and cotton.

"We must all accept that Turkey is a major producer even if it is importing for the needs of a population of 76 million people," said Ali Ekber Yildirm, a journalist that specialises in agricultural affairs.

But he added: "One after another, state enterprises have been privatised. Prices in the sector are fixed by multinational companies. These companies have become quasi-monopolies in a strategic sector”.

He said that in general the Turkish leaders in Ankara pay little attention to what farmers have to say. "They know that most of them will vote for them under all conditions. They think they have them in their pockets for the elections."

Agriculture Minister Mehdi Eker has vehemently defended the government's record, saying that since 2010 it has handed out some 10 billion lira in subsidies for agricultural producers.

"This has never been done before in Turkey. This shows our particular interest in our agriculture," he said.

But the boasts are far from impressing everyone.

"These subsidies go mainly to people close to the ruling party," says Abdullah Aysu, a farmer from the Ankara region of Haymana who leads a trade union for farmers and pushes to give them greater rights.

"Farmers are the first victims of an economy that is on the way down and are then obliged to give up. Some 1.5 million farmers left their farms since the AKP came to power in 2002. One farmer in two has gone bankrupt," he indicated.

He said: "Our catastrophe will be that of the consumer."

ABU DHABI — Etihad Airways hit back Tuesday against claims by its US rivals that it receives unfair subsidies, urging Washington to "keep the skies open" in an official response to the allegations.

The national airline of Abu Dhabi said it "receives no government subsidies or sovereign guarantees" and no discounted fuel or airport services.

The response, submitted to the US departments of state, transportation and commerce, emphasised "the many benefits" of increased competition for US consumers, workers and carriers as well as trade and tourism.

"Our story is one of an airline that has chosen to challenge the global status quo, bringing new competition to markets that have for too long been dominated by the major legacy airlines," Etihad Chief Executive Officer (CEO) James Hogan said.

"It is now time to get back to the business of providing high quality air services and enhancing consumer choice, just as Open Skies intended," he added, referring to a pact allowing carriers more access to each other's markets.

‘Let's keep the skies open’

In March, American Airlines, Delta Airlines and United Airlines, along with US airline labour groups, accused Gulf carriers of enjoying interest-free loans, subsidised airport charges, government protection on fuel losses, and below-market labour costs that are considered unfair subsidies by the World Trade Organiaation.

They called on the US government to open new talks over bilateral air agreements to address what they said are violations of those pacts, giving the Gulf carriers unfair competitive advantage.

Etihad Airways said that "the Big Three carriers' claims, allegations, and requests for relief are not supported by fact, logic, law, or treaty."

It also reiterated earlier claims that the three US carriers had received US government subsidies worth $70 billion in the past 15 years.

The Abu Dhabi government has invested $14.3 billion in Etihad Airways since its establishment in 2003, of which $9.1 billion was provided in equity funding and $5.2 billion in shareholder loans, it indicated.

"These commitments were made on the basis that the airline would operate commercially, deliver a long-term return on investment, repay shareholder loans and achieve sustainable profitability," Etihad said.

Since 2003, Etihad Airways has raised in excess of $11 billion in long-term funding through the global financial markets. 

Around $5 billion of the airline's borrowings have been repaid, including $800 million in 2014, it added.

Last year, the three largest US carriers posted profits of almost $9 billion, close to half the gains racked up by the entire worldwide aviation industry, the airline noted.

Separately, the leaders of the three largest US airlines are stepping up their attack against Middle Eastern competitors that they say get unfair government subsidies.

The CEOs of American Airlines Group Inc., Delta Air Lines Inc., and United Continental Holdings Inc. made a rare public appearance together last month at the National Press Club in Washington to detail their claims.

— American's Doug Parker said Emirates, Etihad Airways and Qatar Airways have expanded service to the US by 25 per cent since the dispute broke out in January. He accused them of rushing to expand before the US government blocks new flights.

— United's Jeff Smisek said US airlines can compete against foreign rivals but not against the governments and energy riches of Qatar and the United Arab Emirates (UAE).

— Delta's Richard Anderson flatly denied a countercharge that the US airlines receive subsidies.

The US airlines charge that three big and fast-growing Middle Eastern carriers have stayed afloat by receiving more than $42 billion in subsidies from their governments since 2004.

They want the Obama administration to renegotiate treaties that allow airlines from Qatar and the UAE to fly to the US. And they want to block those airlines from adding new flights to the US.

Emirates, Etihad and Qatar Airways deny they are subsidized, and they accuse the US airlines of hypocrisy. Etihad put out a study claiming that American, Delta and United have received $70 billion in government help since 2000.

"We will prove clearly there is no harm from our market position," Katie Connell, a spokeswoman for Etihad, said, adding that her airline expands markets instead of simply poaching customers who used to fly on another airline.

The fight has gotten nasty. 

In April, the Delta CEO invoked memories of 9/11 against the Middle Eastern carriers; Qatar Airways CEO Akbar Al Baker fired back that Delta flies "crap" older planes.

It is unclear when the Obama administration might decide whether to reopen negotiations over the air-travel treaties with Qatar and the UAE or freeze their flights to the US. 

The US airlines say administration officials are looking at their arguments seriously.

For many air travellers, the dispute may be difficult to grasp. It pits US airlines that are making record profits against Gulf carriers rich enough to place huge orders for new jets.

The battle lines are a bit blurry, too. Some US consumer groups are siding with the Gulf airlines, arguing that competition will push fares down. So is JetBlue Airways, which has partnerships with Emirates, Etihad and Qatar.

Those three rarely compete directly on routes with American Airlines, United Airlines and Delta Air Lines, but they compete heavily with the US carriers' European partners including Air France and Lufthansa. 

US airlines share revenue from some flights with those partners, and they argue that subsidised airlines will eventually do great harm to them.

Those who oppose American, Delta and United in this fight, Parker said, "either don't understand that or don't care about US commercial aviation."

AMMAN — Amman East Power Plant announced Tuesday in a press statement that it recently received the highest honour in the  “Fast Start” category from the Combined Cycle Journal (CCJ), the independent voice of the gas-turbine-based generation sector of America’s electricity industry.

Amman East was honoured for its contribution to the industry with the “start up cost reduction project”.

AMMAN — Representatives of Jordan's industrial and commercial sectors on Tuesday urged Kuwaiti authorities to remove administrative and technical obstacles hindering the flow of Jordanian goods to Kuwait and bring new investments to the Kingdom.

At a meeting with an official Kuwaiti delegation, the representatives also asked that Kuwait import more Jordanian food products and medicine, encourage tourism, and facilitate transporting goods and truck crossing.

Jordan Chamber of Commerce board member Asaad Al Qawasmi called for creating an integrated business system between the two countries, pointing out that the Jordanian private sector is a leading sector in the region that is able to compete with foreign products exported to Kuwait in terms of quality and price.

Nimer Fahad Al Sabah, assistant undersecretary for international organisations and foreign trade affairs at the Kuwaiti ministry of commerce and industry, voiced Kuwait's interest in enhancing relations with Jordan, especially in the commercial and investment fields, noting that he will present the demands to senior Kuwaiti officials to study them and remove any obstacles hindering the flow of Jordanian goods to Kuwait.

AMMAN — National Steel Industry Company will resume production by mid-July, shareholders were told this week by Vice Chairman and General Manager Hisham Al Mufleh.

Chairman Ghassan Al Mufleh said during the ordinary general assembly meeting that the investment injected by the strategic partner saved the company from obligatory liquidation.

"The company is now in a much better situation and in the final stages to restart operations," he told shareholders.

According to the chairman, the company surmounted the difficulties that afflicted it in the past due to liquidity shortage.

He said that investments and loans provided by Nasri Al Mufleh & Partners Trading Company and Jordan Enterprise Development Corporation (JEDCO) have salvaged National Steel Industry.

"With JD1.8 million from Nasri Al Mufleh & Partners Trading Company, the company was able to repay the remaining debt owed to the Arab Bank, cover the expenses during the period of modernisation and  development, and buy the 57,375 square metres of land on which the factory is situated," he wrote in the 35th annual report.

Al Mufleh said during the general assembly meeting that, because there would be no working capital by the time the upgrading is completed, the strategic partner also agreed to extend a loan without interest to supply the company with liquidity needed for buying raw materials and sustaining the production line.

The annual report showed a JD1.1 million deficit in working capital at the end of last year as total current liabilities amounted to JD2 million while total current assets stood at JD0.9 million.

The chairman expressed appreciation to JEDCO for  supplying National Steel Industry with a JD1.4 million soft loan that enabled it to sign up the Indian firm K.N. Engineering Works to  renovate the production line and raise its annual output capacity to 120,000 tonnes.

Expecting production to restart during the second half of this year, he hoped that the company would regain its position in the Kingdom's steel manufacturing.

At present, the company is engaged in commercial activity buying and selling processed steel as well as selling iron filings.

This business earned the company JD122,226 in sales last year.

According to the balance sheet as of December 31, 2014, fixed assets increased to JD4 million, of which JD2.8 million was the net value of property, equipment and machinery, and JD0.9 million were projects under execution. The remaining JD0.3 million were financial assets at fair value.

With capital at JD2.2 million after restructuring, net shareholders equity boiled down to JD1.9 million when taking into account JD0.8 million of accumulated losses and JD0.6 million of mandatory reserves.

AMMAN — Reflecting a remarkable performance, the investments of Arab Orient Insurance Company (AOIC) increased to JD42.6 million at the end of March 2015.

According to unaudited financial statements covering the first quarter of this year, bank deposits accounted for JD35.4 million of the total, with the remaining JD7.2 million spread over financial assets at fair value.

Notes to the balance sheet showed that the cash in Jordanian dinars was deposited in 12 local banks for periods ranging between six months and one year, carrying 3.5-4.75 per cent interest rates during the first quarter of 2015.

The interest rates ranged between 3.25 – 5 per cent in 2014, down from 5.50 – 6.75 per cent in 2013. 

Of the total bank deposits, JD0.2 million were restricted as a legal requirement to the order of the director general of the Insurance  Commission (IC) .

The financial assets at fair value comprised the shares of Cairo Amman Bank, Amad Investment and Real Estate Development, Afaq for Energy, and Afaq Holding for Investment and Real Estate Development.

By contrast, the investments during the first quarter of last year amounted to JD38.8 million, of which JD33.7 million were deposits in banks and JD5.2 million were financial assets at fair value.

Financially, the income statement as of March 31, 2015 showed that AOIC increased net profit during the first quarter of this year by 50 per cent to JD2.7 million, compared to JD1.8 million at the end of March 2014.

During the first three months of this year, gross written premiums totalled JD35.2 million, 30.4 per cent higher than the JD27 million posted during the same period of last year.

According to the balance sheet as of March 31, 2015, total assets amounted to JD105.3 million, of which JD42.6 million were the abovementioned investments and JD42.8 million were net receivables.

Policyholders accounted for the majority of the net receivables which totalled JD30.3 million on March 31, 2014.

At JD34.7 million, shareholders equity comprised JD21.4 million capital, JD6.6 million retained earnings, and JD4 million mandatory reserve.

Despite such an impressive growth in investments and strong performance, AOIC Chairman Nasser Al Lozi indicated in the company's 17th annual report that 2014, just like the previous year, was marked by cut throat price competition.

"This approach [price competition] was the best option for insurance companies to secure business and maintain their market share," he said.

He explained that most insurance companies focused for a number of years on the investment side of operations rather than the technical, but the slump performance at the Amman Bourse, compelled them to shift to price competition.

Lozi also described 2014 as the most difficult of the past 10 years mentioning in particular scarce liquidity and lack of investment opportunities which influenced the purchasing power of the citizens and their living priorities.

"Despite competition, AOIC managed to keep up a high rate of policy renewals which, at 83 per cent, entailed  in some cases lowering prices for certain major projects, and, in other situations, widening the insurance  coverage," he wrote in a foreword.

According to the annual report, total premiums during 2014 amounted to JD94.9 million, 10.4 per cent higher than the JD86 million registered in 2013.

Marine insurance, accounted for JD2.6 million (JD2.3 million in 2013), fire insurance came at JD9 million (JD7.7 million) and liability, aviation and other insurance branches earned JD8.2 million (JD6.9 million).

Motor insurance premiums amounted to JD23.4 million (JD20.9 million) and the medical was the largest contributor with JD51.8 million (JD48.2 million). 

The report showed that paid claims during 2014 totalled JD70.7 million (JD61.6 million) the largest portion of which was JD41.9 million (JD45.8 million) in medical paid claims.

It was followed by JD18 million (JD13.7 million) in motor paid claims.

In terms of technical profit, medical insurance came atop with JD3.5 million, 105.8 per cent higher than the JD1.7 million generated in 2013.

Motor insurance ranked second with JD2.7 million technical profit, 37 per cent more than the JD2 million recorded in 2013.

Although the results of the remaining categories were lower in 2014 than the previous year, the overall technical profit of the five divisions reached JD7.3 million, 15 per cent higher than the JD6.3 million posted in 2013.

Besides the technical profits, the company earned JD1.5 million from bank interest, 4.3 per cent less than the JD1.6 million earned in 2013.  The chairman valued the medical activities indicating that this type of insurance covers more than 292,000 subscribers who hailed from 844 companies.

Lozi also esteemed the business coming from mega-projects pointing out that AOIC continues to serve more than 2,700 companies, describing this base as the largest corporate insurance portfolio in the Kingdom.

With an eye on the opportunities in large projects, he expected advantages for the Jordanian insurance market from growth in development schemes such as phosphate, potash, electricity and airport.

However, Lozi indicated that the foremost challenge facing the companies was the negative results brought by the civil liability of compulsory motor insurance, known as third party liability (TPL), from using cars. 

"Refusing to allow insurance companies to price or to choose the risks that correspond with its underwriting policies, means more losses to the sector unless the TPL prices are floated in a way that would balance between the premium and the risk," he said in the report, noting that IC is on course towards the floating objective during 2015.

Another challenge mentioned by Lozi was the stringency in the international reinsurance market regarding renewal of contracts for 2015.

"The strategy of reinsurance corporations continues to focus on specialisation to ensure profitability, on raising the technical profits of the direct [ceding] companies, and on minimising the losses rate as a result of the drop in returns from investments in international markets," the chairman added.

This rigidity was, however, surpassed under a unified collective reinsurance agreement, or a master treaty, organised for the fifth year by the Gulf Insurance Group (GIG) which owns a 90.2 per cent stake in AOIC.

Under the reinsurance master treaty, led in 2015 by Hannover Re., AOIC and other entities obtain better advantages.

A good example of the importance of such agreement was the fire at the factory of Al Nabil Company for Food Products, 

Although the preliminary report estimated the losses at around JD10 million, a calculation of claims to be paid under the unified collective reinsurance agreement reduced the AOIC share of the claim to only JD88,000.     

At the end of last year,  the operations of the company resulted in a JD5 million net profit after tax and provisions, 23.1 per cent higher than the JD4.1 million recorded at the end of 2013.

Lozi  underlined AOIC's successes indicating that total assets rose by 12.5 per cent to JD94 million (83.6 million in 2013).

Other data highlighted by the chairman included a 4.4 per cent increase in technical provisions which reached JD34.2 million (JD32.8 million).

AOIC, whose labour force comprises 278 employees, aims at exploring all possible opportunities to obtain a licence that would enable it add life insurance to its activities.

The company is currently distributing JD2.1 million in cash dividends to shareholders at a rate of 10 per cent.