Business

AMMAN — Corporate governance was stressed on Tuesday as a crucial step for the sustainability and competitiveness of family businesses.

Although around 90 per cent of small- and medium-sized businesses in Jordan are family-owned, only 3 per cent survive past the third generation, according to Maali Qasem, executive manager of the Jordan Institute of Directors (JIoD).

"Only 30 per cent of family owned businesses pass on to the second generation, while only 10 per cent pass on to the third generation," she said at a conference of family governance carried out by the JIoD.

She added that corporate governance policies can help family businesses improve their performance and grow, noting that the institute works closely with enterprises and businesses on enhancing governance practices.

Corporate governance practices seek to enhance economic and financial stability of businesses as well as achieving capital market development and firm growth,  Philip Armstrong,  International Finance Corporation (IFC)  senior adviser on corporate governance, said. 

He added that corporate governance practices include the creation of internal control units that monitor the performance of board members and protect investors.

Moreover, family businesses, which form around 75 per cent of businesses worldwide, should develop a "clear and agreed process for leadership succession" to take over when the business founder passes away to avoid internal dispute.

However, family businesses willing to follow corporate governance practices face challenges including leadership succession and creating a balance between family and business interests, said IFC country manager in Jordan, Ahmad Atiqa.

He added that the IFC has helped several public and private institutions in enhancing governance practices, including the Central Bank of Jordan, the Jordan Securities Commission, the Companies Control Department and Nuqul Group, which comprises 30 companies.

Ghassan Nuqul, vice chairman of Nuqul Group, said corporate governance is "more needed" in family businesses than in non-family ones, noting that it is easier to start governance practices in small businesses.

He noted that family businesses tend to involve emotions, which sometimes leads to escalation of disputes between family members, highlighting a need for separating business ownership from business management.

He called on family businesses to open up for diversity among their employees and to encourage independent non-family board members and "top calibres" to join the business.

He noted that family businesses are usually less affected by economic recessions as sustaining a family legacy is a key drive for these businesses, in addition to the passion for work and risk taking.

NEW YORK — Crude prices came under renewed pressure on Monday, and Brent hit five-year lows of nearly $60 a barrel after producers grouped under the Organisation of Petroleum Exporting Countries (OPEC) said it would stick to its decision not to cut output despite fears of a world awash in oil.

Brent and US oil initially extended last week's rout, which wiped more than 10 per cent off global crude prices. They were up in New York's Monday morning trade after news that Libya's two biggest oil ports had shut due to fighting between armed factions allied to the country's two rival governments.

Loading delays for January cargoes of North Sea Forties crude due to lower-than-expected output was also positive for oil. The North Sea Forties set prices for Brent.

But oil later gave up its gains, with Brent turning negative and US crude down almost $2 a barrel by noon in New York. While some traders cited market wariness ahead of a two-day policy meeting of the US Federal Reserve, others attributed the decline to OPEC's affirmation of no output cuts.

Abdullah Al Badri, OPEC's secretary general said the group could ride out the nearly 50 per cent slump in oil prices since June without amending production. Influenced by top exporter Saudi Arabia, OPEC decided last month that cutting output meant losing its market share.

"OPEC is simply telling us it will not take any action to support oil prices in the foreseeable future, and that can hardly be good," said Andrew Lipow, president at Lipow Oil Associates, an oil services advisory in Houston.

Brent was down 80 cents at $61.05 a barrel at 1700 GMT. It had risen as much as $1.40 earlier to $63.25 after a session low at $60.28, a bottom since July 2009.

US crude fell $1.75 to $56.05 after plumbing a new May 2009 low of $55.87.

The spread between the two oils, a key arbitrage trade, widened to nearly a month-high premium of nearly $5 a barrel for Brent, which lost less than US crude.

Traders attributed the difference to better fundamentals for Brent that included the Libyan security situation and the delay in the North Forties cargo loadings. US crude, on the other hand, could face another sharply weekly build in inventories in Cushing, the main delivery point for the oil, they said.

AMMAN — Industry and Trade Minister Hatem Halawani on Monday emphasised the importance of increasing commercial exchange volume between Jordan and Iraq. During a meeting with Iraqi counterpart Malas Husseini and an accompanying delegation, Halawani expressed Jordan’s readiness to help Iraq under current circumstances. Jordanian exports to Iraq until September 2014 reached JD638.6 million compared to JD648.2 million during the same period last year, according to a ministry statement sent to The Jordan Times. Halawani underlined the importance of benefiting from the Grand Arab Free Trade Zone Agreement, and the bilateral free trade agreement between the Kingdom and Iraq which was signed in September 2009 and took effect in March 2013. Jordan is interested in Iraqi investments which are considered an added value to the national economy, Halawani said, stressing that the Kingdom will take all necessary procedures to facilitate Iraqi investments in the Kingdom. Iraqi investments in Jordan reached JD379 million until the end of 2013, according to the statement. For his part, Husseini pledged to work with relevant Iraqi institutions to remove all obstacles affecting the bilateral trade, in addition to encouraging private sector in the two countries to establish more investments. 

DUBAI — Oil producers grouped in the Organisation of Petroleum Exporting Countries (OPEC) can ride out a slump in oil prices and keep output unchanged, its head said on Sunday, He argued that market weakness did not reflect supply and demand fundamentals and could have been driven by speculators.

Speaking at a conference in Dubai, Abdullah Al Badri defended November's decision by OPEC to not cut its output target of 30 million barrels per day (bdp) in the face of a drop in crude prices to multi-year lows.

"We agreed that it is important to continue with production [at current levels] for the... coming period. This decision was made by consensus by all ministers," he said. "The decision has been made. Things will be left as is."

OPEC policy remains a crucial factor in global economic prospects after Brent crude settled at below $62 a barrel on Friday, following a steep descent which hammered energy stocks and currencies exposed to crude exports.

The move left benchmark grades nearly half levels set earlier this year and doused appetite for riskier assets, pushing investors into the safety of government debt despite strong US consumer sentiment.

In a further reaction to slumping oil, stock markets across the Middle East fell sharply on Sunday, adding to a plunge in Gulf equity markets which has wiped out roughly $150 billion of value since the end of October.

Some say selling may continue as few participants are yet willing to call a bottom for markets.

But Badri suggested the crude price fall had been overdone. 

"The fundamentals should not lead to this dramatic reduction [in price]," he said in Arabic through an English interpreter.

He added that only a small increase in supply had led to a sharp drop in prices, stating: "I believe that speculation has entered strongly in deciding these prices."

Asked if OPEC planned an emergency meeting before its next scheduled gathering in June, or a meeting with non-OPEC producers, Badri said such meetings would not have an effect on oil prices.

No target

OPEC had no target price for oil, Badri said in a reiteration of policy, and urged Gulf states to continue investing in exploration and production, saying the United States would continue to rely on Middle East crude for many years.

Stopping new production projects would bring about a  situation in which prices "will go back to $147 a barrel as in 2008. This was a result of a previous such situation", he said, recalling the potential market effect of a dearth in supply brought about by inadequate upstream investment.

Badri said OPEC sought a price level that was suitable and satisfactory both for consumers and producers, but did not specify a figure. 

The OPEC chief also said November's decision was not aimed at any other oil producer, rebutting suggestions it was intended to either undermine the economics of US shale oil production or weaken rival powers closer to home.

"Some people say this decision was directed at the United States and shale oil. All of this is incorrect. Some also say it was directed at Iran and Russia. This also is incorrect," he said.

However Saudi Arabia's oil minister Ali Al Naimi had told last month's OPEC meeting the organisation must combat the US shale oil boom, arguing for maintaining output to depress prices and undermine the profitability of North American producers, said a source who was briefed by a non-Gulf OPEC minister.

Badri said OPEC members Iran and Iraq, their oil sectors restricted respectively by sanctions and insecurity, both had the potential to raise production, but significant increases were possible only after two or three years.

Adding to the effects of OPEC's unchanged production level, a lower demand growth forecast from the International Energy Agency further put the skids under oil on Friday, raising concerns of possible broader negative effects such as debt defaults by companies and countries heavily exposed to crude prices.

There was also talk of the price trend adding to deflation pressures in Europe, increasing bets that the European Central Bank will be forced to resort to further stimulus early next year.

AMMAN — Sales of raw phosphate and fertilisers are likely to reach eight million tonnes this year, according to   Jordan Phosphate Mines Company (JPMC) Chairman Amer Majali.

His forecast was accentuated on Sunday by the signing of an agreement to supply additional quantities of phosphate to two Indian manufacturers. 

Majali noted that the exports highlight JPMC's strategic plan which aims at entering new markets and regaining those that the company left more than 10 years ago.

JPMC Chief Executive Officer Shafiq Ashqar valued the company's participation in the annual conference of Fertiliser Association of India (FAI) and described  it as an opportunity to know more about India’s policies in the coming years, communicate with prominent makers and importers of fertilisers, and enhance JPMC’s reputation in the Indian market 

Nearly 1,300 delegates representing major companies in the industry, marketing and consumption of fertilisers in the Indian peninsula attended the FAI conference.

On the sidelines of the conference, JPMC discussed prices and standards of the company’s products, and its ability to provide India with raw phosphate and fertilisers according to the standards of Indian factories, Ashqar said. 

As part of its marketing strategy in 2015, the company signed a contract to export an additional 850,000 tonnes of its products to India, whose annual imports of fertilisers represent 35 per cent of the international market share, Ashqar added.

The chief executive officer expects JPMC's exports to India to reach 3.5 million tonnes, and overall sales to local and international markets to hit eight million tonnes. 

"Such a quantity could bring the company’s sales to their previous high levels," he said.

Ashqar described a contract signed to export 250,000 tonnes of phosphate to Serbia, as a validation of the company’s success to get back to Europe through Turkey and Serbia. 

This contract would also enable JPMC to retrieve previous markets, especially in eastern Europe, Australia, New Zealand and South Korea, he said.

Ashqar said JPMC’s sales of fertilisers exceeded 600,000 tonnes in 2014, noting that the company is currently rehabilitating fertiliser factories in Aqaba to have them operate at full capacity.

At the same time, JPMC is taking measures to reduce mining costs with a view to enhancing the efficiency of producing raw phosphate and sharpening the competitiveness of the company in the international market.

Separately, the Arab Potash Company (APC) has recently opened an office in New Delhi to enhance its presence in the Indian market, increase its exports to the country and to overcome any marketing challenges the Jordanian potash could face in the Indian market. 

APC Chairman Jamal Sarayrah described the Indian market as one of the biggest fertiliser markets in the world and one of the most important markets for APC.

He noted that India imports around 550,000 tonnes of the product annually, indicating that India imported around 20 per cent of the Jordanian potash in 2013. 

Sarayrah said he held bilateral meetings with representatives of Indian companies on the sidelines of FAI conference, to increase the Jordanian potash share in the Indian market, in particular, and the international market in general.

New Delhi Office Director Rami Athamneh presented a briefing on the duties of the office which is tasked with following up on the implementation of APC’s annual contracts in the Indian market which reached $270 million in 2014, expecting their value to increase to $300 million in 2015.

NEW YORK — Crude oil markets fell 3 per cent or more to plumb new five-year lows on Friday after the world's energy watchdog forecast even lower prices on weaker demand and larger supplies next year.

Benchmark Brent oil settled at below $62 a barrel and US crude slumped to under $58 to extend Thursday's landmark fall below $60.

Surging crude inventories in the United States and top oil exporter Saudi Arabia's reiteration that it will not cut production had roiled prices over the last two days despite data pointing to strong US economic recovery.

On Friday, the Paris-based International Energy Agency (IEA) which coordinates the energy policies of industrialised countries, cut its outlook for demand growth in 2015, triggering another collapse.

The IEA slashed its outlook for global oil demand growth for 2015 by 230,000 barrels per day (bpd) to 900,000 bpd on expectations of lower fuel consumption in Russia and other oil-exporting countries.

It predicted that oil-producing nations outside of the Organisation of Petroleum Exporting Countries (OPEC) will add to global supplies. It also expected prices to fall further.

"That's just more bad news for the oil markets," said Andrew Lipow, president of Houston-based Lipow Oil Associates.

Brent settled down $1.83, or nearly 3 per cent, at $61.85 per barrel. It fell to $61.35 during the session, the lowest since July 2009.

US crude finished down $2.14, or 3.6 per cent, at $57.81. It fell earlier to $57.34, its lowest since May 2009.

On the week, Brent lost more than $7, or about 11 per cent. US crude tumbled over $8, or 12 per cent.

Both markets have lost about 46 per cent of their value since their June highs, when Brent stood at above $115 and US crude at around $107.

The IEA outlook had a greater impact on Friday's market than data from US oil services firm Baker Hughes showing the number of rigs drilling for oil in the United States were down by 29 last week, the biggest weekly drop in two years.

Voluminous crude from US shale projects has been blamed for much of the global oil glut now, and energy traders have been watching rig data to see if prices that have almost halved since June will prompt a cutback in drilling.

Regulators in North Dakota, one of the largest shale oil producing states in the United States, also said on Friday the state's crude production held steady in October despite strict new rules that aim to prevent wasteful burning of natural gas produced alongside oil.

GENEVA — Talks on cutting trade tariffs on hundreds of information technology (IT) products collapsed on Friday, delaying and potentially scuppering a deal estimated to be worth $1 trillion to global trade.

"We are disappointed not to be celebrating a deal this week. We missed a big opportunity," US Ambassador Michael Punke said at the World Trade Organisation (WTO).

The talks aimed to update the WTO's 17-year-old Information Technology Agreement (ITA), which guarantees zero-tariff and duty-free trade on hundreds of products, adding about 200 more products to the list.

Several participants blamed the failure on a deadlock between China and South Korea over liquid crystal display (LCD) screens.

"The participants have significantly reduced the gaps on expanding the coverage of the ITA agreement in recent days, but unfortunately it has not been possible to finalise the negotiations this week," WTO Director General Roberto Azevedo said in a statement.

Participants are expected to reconvene in 2015 to see if they can overcome the blockage.

"Manufacturers urge negotiators to come back to the table as early as possible in the new year to agree to a strong product list in order to unlock much-needed growth opportunities for manufacturers and their workers," said Linda Dempsey, vice president of international economic affairs at the US National Association of Manufacturers.

According to participants, South Korea, home to top LCD producer LG Display Co. Ltd., wanted LCD screens included in the deal.

But China, which wants to foster its own LCD industry, refused, demanding that all countries accept the same terms that it agreed bilaterally with the United States last month after a long-standing stalemate.

One trade official involved in the talks said South Korea had offered a number of concessions, but there had been no reciprocal move by China. Other countries also offered changes to try to entice China to make the last small step needed for a deal, the official added.

Another trade diplomat said South Korea had asked China to include accumulator batteries on the list, but Beijing said no. 

"They couldn't move the last few centimetres," he added, noting that both sides were equally to blame for the collapse.

Chinese officials were not available for comment.

Although Friday's deadline for finishing the negotiation was artificially imposed, Punke had said the talks' "success or failure" would be decided this week. 

His European Union counterpart, Angelos Pangratis, said: "Later it will not be easier. ... Now is the moment."

JEDDAH, Saudi Arabia — Saudi Arabia will stop buying domestically-grown wheat in two years' time and rely completely on imports of the grain, the water-short kingdom's new agriculture minister said on Wednesday.

By investing tens of billions of dollars, the desert nation's output grew through the 1980s until it ironically became one of the world's largest wheat exporters.

But since a surge in global food prices in 2008, Saudi Arabia and other Gulf states have looked abroad to nearby Sudan and other countries to secure food supplies through agricultural investment, including land acquisition.

"The kingdom has decreased domestic wheat production since 2008 by 12.5 per cent annually," Agriculture Minister Waleed Al Khuraiji told the London-based International Grains Council, which met in the Red Sea city of Jeddah for a twice-yearly forum.

"The state will cease to purchase locally-produced wheat by 2016 and depend entirely on wheat imported from abroad," the minister said in his first major address since being appointed in a Cabinet shuffle on Monday.

"This initiative is based on mutual benefit which helps to provide food supplies to the kingdom while at the same time developing and modernising agriculture in the investor countries, especially local communities," Khuraiji added.

Imports of wheat to Saudi Arabia rose tenfold from 300,000 tonnes (272,100 tonnes) in 2008 to three million tonnes this year, ranking the country as the world's sixth-largest wheat importer, the minister indicated.

Dramatic growth in Saudi Arabia's wheat output pushed production to more than four million tonnes by 1992, an amount that overwhelmed domestic demand, the historian Toby Craig Jones wrote in "Desert Kingdom”.

But farmers were heavily subsidised and the crop required two or three times more water than in more moderate climates, he said, adding that between 1980 and 2005 the country spent 18 per cent of its oil revenue on growing wheat.

Ross Kingwell, chief economist at the Australian Export Grains Innovation Centre, a public company supporting the trade, said Saudi Arabia and other Gulf states will need "strategic partnerships" to benefit from their food security programmes.

Australia, Canada and the United States, for example, "will be able to provide a steady supply of grains”, he added.

The International Grains Council oversees a global convention governing trade in wheat, rice and other grains.

DHAHRAN, Saudi Arabia — Abdul Aziz Al Jouf is in many ways a typical Web entrepreneur — the 34-year-old Saudi talks fast, works late and has big plans for his online payments system.

But in one aspect he's unusual: Jouf is funded by state oil company Saudi Aramco, better known for multibillion-dollar investments in oilfields and pipelines.

Their partnership is the result of a push by Saudi Arabia to create jobs and diversify its economy beyond the oil industry — increasingly important as its population grows and oil prices fall.

The government has found it hard to promote start-ups in a society which lacks a culture of risk-taking and where financing options for small firms are rare. As a result it is ploughing oil money into small ventures in an unusual combination of state intervention and private entrepreneurship.

Saudi Aramco founded its Aramco Entrepreneurship Centre (AEC) in 2011. Its managing director, Sami Khursani, told Reuters: "We have Aramco's support to invest more and more. Money here is not an issue — we are looking for quality deals that are entrepreneurially promising."

"We want to enhance the prosperity of the economy through product and service diversification, localising technologies, developing small- and medium-sized enterprises and expanding the pool of Saudi entrepreneurs," he said.

Aramco has invested over $2 million in Jouf's venture since he returned from living in the United States in 2011 and founded his firm with a staff of two. His company, PayTabs, now has 45 employees in the Middle East and North Africa, and expects to have 70 by the end of next year as it expands in Asia.

Gradually, entrepreneurship is becoming a buzz word in Saudi Arabia. Universities hold lectures on it; chambers of commerce and government agencies stage conferences on the subject; newspapers and television programmes celebrate it. 

Creating a culture 

However, networks of angel investors and venture capital firms are still developing, only very slowly.

In 2006, the Saudi government launched a major effort to fund private businesses by establishing the Kafalah programme, which lends to small- and medium-sized firms.

So far, the fund has received 4 billion riyals ($1.1 billion) from the government and 7 billion riyals from 11 Saudi banks. 

But its push to create new industry has had only limited results: Last year the crude petroleum and natural gas sector still accounted for 44.4 per cent of the gross domestic product, down only modestly from 47.5 per cent in 2006.

So Saudi Aramco's AEC scheme takes a more direct approach, providing venture capital as well as loans to new businesses. It takes minority stakes in start-ups and injects up to $5 million into them, Khursani indicated.

In the past three years it has funded 43 ventures in sectors including manufacturing, education and information technology.

"We will have completed around 52 deals by year-end for a value of 210 million riyals that are financially committed, and we think those companies will generate around 2,300 direct jobs by 2019," Khursani said.

But beyond the basics of capital, would-be start-ups find other obstacles waiting.

Sweeping labour market reforms to funnel more local citizens into private sector jobs have made it more difficult for firms to employ large numbers of foreign workers, raising costs for many. Sluggish state bureaucracy can make getting the necessary paperwork in other areas too frustratingly slow.

Nadia Al Dossary, a 47-year-old Saudi who plans to build a school in Khobar with a loan from the AEC, says she has been waiting for several months to obtain a construction permit from the municipality.

"I have the land, I have everything ready, but the bureaucracy at the government institutions is very stressful," she complained.

Nevertheless, Saudi Aramco's entrepreneurship drive is creating opportunities.

Dossary, 12 years a supervisor in the ministry of education, is joining a small group of female entrepreneurs in a country where women traditionally play little role in business and need permission from a male "guardian" to get a job.

She aims to have her school up and running by the 2016-2017 academic year, offering an international curriculum and taking in children with Attention Deficit Disorder. At present, few Saudi schools can cope with such pupils, she says.

AMMAN – A group of US infrastructure companies are in Jordan to explore investment opportunities, particularly in the field of renewable energy. 

Kenneth Hyatt, deputy undersecretary for international trade, is leading the infrastructure business development mission to Jordan and is accompanied by top executives of US firms working in the sectors of renewable energy, water and construction. 

At a meeting with the press on Wednesday, the US official, who also oversees the daily operations of the International Trade Administration, said the focus of the visit, that also took them to Egypt and Morocco, was renewable energy, indicating that six out of the 10 companies in the delegation operate in the solar power. 

"We chose these three countries because of their potential," he said, indicating that Jordan and the US enjoy strong economic and commercial ties. 

Jordan was the first Arab country to sign a free trade agreement (FTA) with the US, Hyatt said, noting that before the FTA was signed, trade exchange was only around $400 million but currently it exceeds $3.3 billion. 

In 2013, Jordanian exports to the US reached $1.2 billion, while this year  it is expected to go up even higher as  the value of exports  in the first nine months of this year exceeded this figure, the official indicated. 

He noted that the delegates held meetings with government officials in Amman, in addition to business to business meetings with the private sector. 

"Energy is very important to Jordan and renewable energy is a solution," he said, adding that the mission also seeks to encourage Jordanian businesspeople to invest in the US. 

Hyatt selected the sectors of ICT, healthcare and energy as important businesses that can contribute to boosting trade between Jordan and the US. 

Attending the meeting with the press was Ahmad Nada, vice chairman and regional director of First Solar, which is a global provider of comprehensive photovoltaic (PV) solar systems. 

Nada said the company is currently taking part in the Shams Maan Power Plant as it provides engineering, procurement and construction to the 52.5 megawatt solar-run power plant in the southern governorate. 

He added that First Solar is going to bid for a similar project in the governorate of Mafraq, noting that bidding would open on January 20 of next year. 

"We see valuable economic benefits in investing in Jordan," Nada said.