Business

AMMAN — The Aqaba Special Economic Zone Authority (ASEZA) and the Aqaba Development Corporation (ADC) are premium sponsors of the 2nd Arab British Economic Forum held in London Tuesday. 

The Aqaba delegation was headed by ASEZA Chief Commissioner and ADC Chairman Kamel Mahadin and Sharhabeel Madi, ASEZA’s commissioner for economic development and investment affairs, along with ADC’s vice president, Bashar Abu Rumman, according to an ASEZA statement. 

Organised by the Arab-British Chamber of Commerce, the 2nd Arab British Economic Forum brings together senior government officials, diplomats, business executives, investors and decision makers from the UK and the Arab World to discuss new opportunities for business and investment cooperation in partnership with Jordan Chamber of Commerce, League of Arab States, the General Union of Chambers of Commerce, Industry and Agriculture, and United Kingdom Trade & Investment (UKTI).

Mahadin was quoted  as saying that his team seeks to have “strong and effective presence for Aqaba in this important event as it very much serves our marketing efforts and goals on both the tourism and investment levels ”.

In his remarks at the event, the chief commissioner  described Jordan as “an oasis of security and safety. With its competitive investment climate, infrastructure, and world-class transport system, the Aqaba Special Economic Zone represents a strategic choice for investment in sectors that serve the region as a whole."

He stressed Jordan’s ability to attract investment from the Arabian Gulf, Europe, Asia, and from countries in the Middle East and North Africa (MENA) that are facing political instability.

Highlighting some of the major developments taking place in Aqaba, Mahadin said $700 million has recently been invested in Jordan's ports development , noting that the goal was to attract $6 billion in investment in ASEZA over two decades, he said, but it has already surpassed the $20 billion mark. He added that 85 per cent of what Jordan imports comes through Aqaba, 65 per cent of what Jordan exports goes through Aqaba, and half of what passes through the port ends up in Iraq, he pointed out.

He listed the sectors Aqaba is currently promoting, namely, tourism and real-estate development, trade, logistics, services, health, education and industry. He invited British investors to visit Aqaba and explore what the zone offers in terms of its competitive investment climate, streamlined procedures, decentralised governance model, modern
multimodel transportation network and tourism attributes.

AQABA —  Jordan Customs, in close collaboration with USAID-funded Fiscal Reform II Project (FRP II) officially launched on Wednesday the Pre-Arrival Processing (PAP) programme at Aqaba Port. "FRP II provided technical assistance to introduce PAP at Aqaba Port and conducted a comprehensive assessment of the port operations," Jordan Customs said in a press statement. "The assessment concluded that PAP pilot average results for the targeted sample which lasted three months did not exceed five days, in contrast to the average time of 15 days for imports processing in the World Bank Trade Across Border report." Implementing this programme across the board will contribute to improving cross border trade thereby further strengthening Jordan’s competitive edge.

LONDON — President of the Jordan Chamber of Commerce Nael Kabariti on Tuesday called on Arab and British businesspeople to invest in Jordan and seize the opportunity of the Kingdom's business atmosphere. He was speaking at the 2nd Arab-British Economic Forum, which took place in London. Kabariti highlighted investment opportunities in Jordan, which he noted are attractive for many reasons, mainly due to the stability and security the Kingdom enjoys. He underlined the "strong" ties between Jordan and the UK, voicing hope that British companies engage their Jordanian counterparts to establish joint corporations, especially in the ICT, tourism and pharmaceutical sectors. Baroness Symons, chairperson of the Arab-British commerce chamber, noted that Jordan is considered an "attractive" place for investment due to its stability and geographical location, which makes it a gate that links the West with the East.   

AMMAN – Microfinance industry in Jordan grew by around 24 per cent between 2010 and 2013, reaching a JD123 million total gross loan portfolio, according to the Jordan Microfinance Network (Tanmeyah). 

In its report, made available to The Jordan Times, Tanmeyah attributed  the growth to increasing demand for small loans in areas outside Amman.   

The 74-page study on the industry said microfinance institutions in Jordan managed to operate most of their direct lending portfolio in areas outside the capital –– such as Zarqa, Irbid, Balqa and Karak –– taking around 62 per cent of the total portfolio or JD76 million.

The microfinance industry has succeeded in increasing the total number of clients directly served with the industry's available financing products reaching around 282,000 client in all over the Kingdom, Tanmeyah indicated. 

Nearly 84 per cent of the clientele are female based, 80 per cent of them are under the age of 45 years.

The report showed that active loans grew by 20 per cent reaching 302,000 in 2013.

Around 63 per cent or 178,000 of borrowers live outside Amman, according to the study, which said that increasing demand for small loans was mainly derived from developmental needs in governorates. 

According to the network, 87 per cent of the microfinance loans extended during the four-year period were under the range of JD3,000, with nearly 31 per cent of the loans positioned within the financing group of JD100-JD500 with an average loan size of JD435. The rest was between JD501-JD1,000 and JD1,001-JD3,000. 

The ceiling of microfinance loans varies from one institution to another, ranging between JD15,000 and JD70,000.

"Jordan microfinance industry has taken a good leap towards achieving financial inclusion goals. The market is mature comparing to neighbouring countries’ markets in MENA region in terms of number of lenders, penetration rates [number of clients comparing to population],depth of outreach [average amount of outstanding loan comparing to GDP per capita], and credit products range offering to productive poor and low income people," said the report. 

"Today, Jordan has eight active microfinance institutions through 133 branches deployed in all parts of the Kingdom covering all governorates," it pointed out.

Tanmeyah was established and formally registered as a non-profit institution at the Ministry of Industry and Trade in 2007. It succeeded the Microfinance Association of Jordan as the official representative of the Jordanian microfinance institutions. 

The report detailed the ratios to measure the quality of the microfinance institutions loan portfolio by indicating that lenders enjoy high-quality and robust portfolio. 

It said that  the write-off ratio, which represents the loans that the institution has removed from its books because of a substantial doubt that they will be recovered, was very low as it was less than 1  per cent in 2013. 

The report also highlighted the portfolio at risk of lending institutions, which shows the portion of the portfolio that is “contaminated” by arrears and therefore at risk of not being repaid. 

"Generally, any portfolio at risk exceeds 6 per cent should raise a flag of concern," it said, but in Jordan, all microfinance institutions have an average of portfolio at risk of less than 2  per cent.

TEL AVIV — An Israeli firm will supply Egypt with natural gas, a company spokesman said Monday, more than two years after sabotage halted the flow of Egyptian gas to Israel.

For more than a decade Israel relied on Egypt for roughly 40 per cent of its gas needs in line with an export accord signed in 2005 by the two countries which are bound by a peace treaty.

But in April 2012 Egypt annulled the contract, saying Israel had not met the financial obligations of the agreement, in a decision that came amid a spate of bomb attacks that targeted the pipeline used to transport natural gas to Israel and Jordan.

On Sunday, the Israeli owners of the Tamar offshore gas field informed the Tel Aviv stock exchange they had struck a deal to export natural gas to the Egyptian firm Dolphinus Holdings.

A statement said Tamar was in "exclusive negotiations" with Dolphinus Holdings to provide it with up to 2.5 billion cubic metres (bcm) over a seven-year span.

Dolphinus Holdings "represents a consortium of large non-governmental industrial and commercial Egyptian gas customers”, according to Tamar.

The natural gas would be transported to Egypt through the same East Mediterranean Gas pipeline used by Cairo to export gas to Israel and Jordan before it was attacked and crippled the saboteurs.

Experts estimate the deal to be worth over $4 billion (3.13 billion euros).

Tamar holds 250 bcm of natural gas, and lies 80 kilometres west of the northern Israeli port city of Haifa.

US giant Noble Energy owns 36 per cent of Tamar, with four other Israeli partners holding smaller shares.

Tamar's discovery, along with the twice-as-large Leviathan gas field, shifted Israel from costly and unreliable imports to a growing self-sufficiency and the potential to become an energy exporter.

Last month, Noble and its partners signed a letter of intent to supply Jordan's National Electric Power Company Ltd. with 487 bcm of natural gas from Leviathan over 15 years.

Egypt's gas contract with Israel was the largest trade deal between the two former foes who signed a peace treaty in 1979, with the first exports launched in 2008.

AMMAN — The decline in oil prices will provide significant boost to the oil importing countries in the Middle East, according to a Standard Chartered press statement received Sunday by The Jordan Times.

In the statement, Sayem Ali, senior economist at Standard Chartered, Middle East and North Africa (MENA), tells a macroeconomic briefing that the decline in oil prices will provide additional fiscal and foreign exchnage resources to scale up investment spending in the oil importing countries of the Middle East. 

"Growth in the MENA region in projected to accelerate to 4.6 per cent in 2015 vs. 3.8 per cent in 2014 led by higher investment spending in the Gulf Cooperation Council (GCC) countries and rising investor confidence in Egypt, Jordan and Iraq," Ali said in the statement.

"The impact on the big GCC oil producers is limited, as current oil prices remain above the fiscal breakeven price for GCC states and are unlikely to disrupt the big investment spending in the region," he added. "However, medium-term challenges remain including high youth unemployment and weakening competitiveness."

He indicated that nearly all MENA economies are falling behind in the WEF Global Competitiveness Index due to slow pace of economic, political and regulatory reforms. The only exceptions are the United Arab Emirates, Jordan and Morocco which improved their rankings in the WEF 2014 report. 

Philippe Dauba-Pantanacce, senior economist, Turkey and MENA, and John Davies, US interest rate strategist, also spoke in the briefing session titled: “Transition and Divergence” and held exclusively for Standard Chartered’s clients to provide in-depth insight and analysis on the global, regional and local economic outlook as well as the financial picture for the year ahead.

 “Transition has been the main theme for 2014 for global economy  a motif that applies equally well to China and the US. China is rebalancing, with policy makers working to boost consumption and services relative to investment, manufacturing and construction," Dauba-Pantanacce said in the statement.

"The US is normalising its monetary policy, ending its quantitative easing (QE) programme and preparing markets for the first interest-rate hikes in 2015. The theme of transition will continue to apply in 2015 and beyond," he added.

He noted that for the MENA region, economic dynamics are increasingly diverging between the GCC countries and the rest of the region. 

While this is nothing new, he indicated that these risks have become more far-reaching, ranging from violence and wars to difficult political transitions. 

"The GCC enjoys strong social and geopolitical stability and an exceptionally profitable hydrocarbon sector that has created wealth and supported investment," Dauba-Pantanacce said. 

"In the wider MENA region, the fundamental challenges are a lack of resources to introduce the necessary measures to reduce social and economic pressures, and ongoing political transitions,” he added..

Ahmad Abu Eideh, chief executive officer-Jordan, said: “Today’s briefing session forms an ideal platform for our clients to closely interact with our economists and senior bank representatives to get specific insights into the latest developments affecting their business, and opportunities present in the regional and global markets and outlook on the global and regional economy.” 

Jordan economic highlights

The economy posted strong growth of 3.2 per cent in Q1-2014, versus 2.8 per cent in 2013, despite regional unrest, falling tourist arrivals and a persistent energy crisis. 

Unemployment also fell to 12 per cent in June 2014 from 12.6 per cent in June 2013.

Tough reforms under the $2 billion International Monetary Fund programme have started to yield results, and investor confidence has increased on improving credit metrics and large aid inflows from GCC states. 

Real gross domestic product (GDP) growth is predicted to accelerate to 3.5 per cent  in 2014 from 2.8 per cent in 2013. Financial assistance from the GCC states should also support growth; they have set up a $5b fund for investment projects in Jordan. 

The budget outlines aggressive spending plans for 2014, with investment increased by 25 per cent year on year to deal with the energy crisis and create new jobs. 

The key risk to the economy is the spread of violence across the region. The sharp increase in refugees is straining limited water, food and energy resources. Several war-torn countries are key export markets for Jordan; the conflict in the region will likely have a significant effect on Jordan’s growth. 

The tourism industry, which accounts for more than 15 per cent of GDP, has been the hardest hit; tourist arrivals declined more than 14 per cent in 2013.

AMMAN — While family businesses create more than 70 per cent of global gross domestic product,  many say they find their fund-raising options limited,  a new international survey revealed on Sunday. 

According to a KPMG press statement received by The Jordan Times,  58 per cent of family businesses are currently seeking external financing to fund their investment plans, but finding the right strategic investment partner can be challenging.

Hatem Kawasmy, the managing partner of KPMG in Jordan, said in the press statement: “Private equity funding often requires the entire business to be sold to maximise value in the event of an exit, and corporate strategic partners often see any investment as part of a longer-term plan to secure full control."

"As a result of these limitations, many family businesses may not be maximising their growth potential,” he added.

KPMG has identified one possibly underutilised route for investment with the involvement of high-net-worth individuals (HNWIs), many of which have family business experience as well as significant investment capital. 

It is estimated that there are up to 14 million HNWIs around the world with around $53 trillion of wealth.  

Survey results show that the top priorities of HNWIs and family owned businesses align, making this underutilisation surprising: HNWIs name long-term capital appreciation (37 per cent) as their top driver for investment, while family businesses name long-term orientation towards investment returns as their top investor characteristic (23 per cent).   

“From the survey, education and awareness on the potential benefits of these partnerships have emerged as important first steps to link these two groups. This report has revealed some important misconceptions on the sides of both family members and HNWIs,” Christophe Bernard, KPMG’s global head of family business explained in the statement.

Another key finding of the survey shows that 44 per cent of HNWIs have previously invested in a family business and the vast majority (95 per cent) say that it has been a positive experience in comparison to their other investments.

Additionally, more than three-quarters of survey respondents (76 per cent) say that the family holds a majority stake in the business.

"60 per cent of HNWIs are looking for investments with reasonable risks and reasonable returns, and are focused on long-term capital appreciation. Both of these traits are well matched by investment in family businesses," the survey concluded.

KPMG in association with Mergermarket, surveyed 125 family businesses about the types of investment they require, their investors of choice and their previous experience of receiving investment from HNWIs or other family businesses. 

In addition, 125 HNWIs were surveyed about their investment strategy and how this might align with family businesses.

SURABAYA — The Jordan Phosphate Mines Company (JPMC) on Sunday inaugurated a fertiliser factory in Indonesia, marking its first strategic venture abroad.  

The plant, Petro Jordan Abadi, heralds JPMC's drive to give Jordanian  phosphate an added value bringing it up to 80 per cent, with the remaining 20 per cent as crude phosphate.

Established on a 50-50 partnership with companies owned by the Indonesia government, the factory is located in Gersik city, East Java province. 

JPMC Chairman Amer Majali said the plant is designed to annually produce 200,000 tonnes of phosphoric acid, the main component of fertilisers, 550,000 tonnes of gypsum, used to manufacture cement, and producing 550,000 tonnes of pure gypsum to be used in different industries. 

Majali expects Petro Jordan Abadi to consume around 400,000 tonnes of crude phosphate to be supplied by JPMC under a 20-year agreement. "Producing phosphoric acid and gypsum from the company's factory in Indonesia ensures a stable and permanent ground for a successful partnership between the two sides," Majali said. 

Indonesian Minister of State-Owned Enterprises Dahlan Iskan underlined his country's keenness to develop cooperation ties with Jordan, noting that expanding phosphate production abroad would support Jordan's economy. 

Iskan toured the factory along with Jordanian Trade and Industry Minister Hatem Halawani. 

On the sidelines of the ceremony,  Majali signed a memorandum of understanding with representatives of several Indonesian companies to establish a third plant with a capital estimated to reach $300 million upon implementation, while consuming 800,000 tonnes of Jordanian raw phosphate.

With a third factory, the chairman indicated that JPMC's overall capital investments in Indonesia would reach $1 billion and that the three plants would consume around 2.4 million tonnes annually of crude Jordanian phosphate to produce fertilisers and production inputs for compound fertilisers that would be used in Indonesia.

Majali spoke about the successes that JPMC achieved in several partnerships with Indian and Japanese parties.

He revealed that JPMC will soon announce two deals for setting up plants to produce compound fertilisers after completing feasibility studies and obtaining official government approvals. The first will be in an Arab country and the other in an eastern European country.     

Jordan's exports to Indonesia totalled JD115 million in 2013 while imports from the Southeast Asian country came at JD48 million.

KOMAKI, Japan — The first passenger aircraft to be made in Japan in nearly four decades was unveiled Saturday as its manufacturer pushed into the booming regional jet sector with an eye to taking on industry giants Embraer and Bombardier.

Mitsubishi Heavy Industries, a military contractor best known for its "Zero" World War II fighter, pulled back the curtain on its new Mitsubishi Regional Jet (MRJ), a fuel-efficient, next-generation aircraft that claims to offer more passenger comfort with lower operating costs. 

 The jet, which will be delivered to customers from 2017 and was built with assistance from aviation giant Boeing, was unveiled at a ceremony in Komaki, near the central city of Nagoya, on Saturday.

"The dream of a Japanese-made product that can be proudly presented to the world for top-notch efficiency and top-notch passenger comfort is finally coming true," said Mitsubishi Heavy Industries Chairman Hideaki Omiya.

"This wonderful aircraft that Japan has created after [a wait of] half a century carries with it many people's hopes and dreams," he added.

The plane marks a new chapter for Japan's aviation sector, which last built a commercial airliner in 1962 — the YS-11 turboprop. It was discontinued about a decade later.

Teruaki Kawai, president and chief operating officer of Mitsubishi Aircraft, recently said the plane boasted "state-of-the-art aerodynamic design, and a game-changing engine [that] will significantly cut fuel consumption, noise and emissions, helping airlines enhance competitiveness and profitability in the future".

Japanese firms were banned from developing aircraft by US occupiers following its defeat in World War II.

The country slowly started rebuilding its aviation industry in the 1950s, starting with carrying out repair work for the US military, before expanding its scope to start licensed production of US-developed aircraft for Japan's military. Japanese firms have also long supplied parts to Boeing.

Eye on 2020 Tokyo Olympics

Mitsubishi's short-to-medium-haul regional jet, which comes in a 70- and 90-seat version, was backed by the Japanese government and a consortium of major firms including Toyota, with research and development costs of around 180 billion yen ($1.7 billion).

The company has secured 375 orders and options from carriers including All Nippon Airways (ANA), US-based Trans States Holdings, and SkyWest.

 Japan Airlines (JAL) has also signed a Letter of Intent for 32 MRJs, which have a list price of $40 million, to be used on domestic flights.

The MRJ project got off the ground in 2008 after ANA agreed to buy two dozen of the planes.

But it quickly hit trouble as the global economic downturn battered the aviation industry, forcing many carriers to slash jobs and routes.

The project took off again as Tokyo tried to lure more overseas visitors ahead of the 2020 summer Olympic Games in Tokyo.

The Japanese government is also aiming to expand firms' foothold in the global aviation and military sectors as the domestic market shrinks due to a rapidly ageing population.

The jet will compete with small aircraft produced by Brazil's Embraer and Canada's Bombardier, as well as jets designed by Russian and Chinese firms.

Mitsubishi pointed to expected global demand of 5,000 regional jets over the next two decades.

"Five thousand is not a small number," Kawai told the Wall Street Journal in an interview published this month. "I'm claiming we can get 50 per cent of that. That's what we are aiming at right now. But in 20 years, I'm saying, not in three to five years, if our research is correct. We have to be ambitious."

"For a long time, Japan has been successful in industries such as automobiles," he said. "It should last, but we need to find new industries. Aircraft manufacturing can be one of them."

Automaker Honda is also developing a business jet, with its first delivery expected next year in North America and Europe.

AMMAN — Ras Al Khaimah Free Trade Zone (RAK FTZ) Authority announced on Saturday in a press statement that it is offering business-friendly investment advantages to companies in Jordan.

“If you are looking to set up your company and maximise the return on your investment, you are invited to visit RAK FTZ’s booth at the HORECA Jordan Exhibition and learn about the free zone’s award-winning services, world-class facilities and substantially lower costs of establishing and expanding businesses,” Peter Fort, chief executive officer of RAK FTZ, said in the statement. 

RAK FTZ, one of the fastest-growing and most cost-effective free zones in the Middle East, will participate in HORECA, one of the largest exhibitions in the food, beverage and hospitality industries.

HORECA Jordan Exhibition 1st Edition takes place on October 21 — 23, 2014 in Zara Expo, Grand Hyatt Hotel in Amman. It is expected to draw more than 18,000 buyers and decision makers from various industries and sectors including hotel management, restaurants, hospitals, caterers, cleaning and maintenance services, specialised technology, packaging, tableware and guest amenities, as well as engineering, architecture, consultancies, schools and universities. 

“Less than an hour’s drive from Dubai, we offer a strategic geographical location that provides easy access to fast-growing markets across the Middle East, North Africa, Europe and South Asia, as well as the ability to tap into trade flows between East and West. RAK FTZ provides 100 per cent foreign ownership, full repatriation of profits, and permanent zero tax policy,” the statement stated.

It described RAK FTZ as the destination of choice for companies in the food and beverage industry, including those that package, label, and distribute various kinds of edible products, including meat, fruits and nuts, cheese and vegetables, among others. 

Additionally, RAK FTZ’s Academic Zone includes educational institutions that provide hospitality training for workers who will provide catering and other food services in hotels and restaurants.

RAK FTZ will hold seminars on October 22-23 at Azure Hall, Le Royal Hotels & Resorts in Amman, including a presentation on how to set up a profitable company at RAK FTZ. Business-to-business meetings with RAK FTZ representatives will also take place.

Jordan is a significant trading partner with the United Arab Emirates (UAE). Vegetables, medications, gold, metallic salts, paper, heating and cooling equipment, fruits and nuts, and telecommunications equipment top the list. 

Exports from Jordan to the UAE totalled $1.34 billion between 2009 and 2013. More than 400 Jordanian companies are currently registered at RAK FTZ.

In the statement, Fort invited companies from Jordan and elsewhere to find out why more than 7,500 companies from over 100 countries and more than 50 industry sectors have chosen to set up shop at RAK FTZ.

“Our clients  benefit not only from fast-tracked visas and licensing, but also ongoing business support, including advertising, procurement, event management, recruitment and training assistance,” Fort said. “Clients can also build labour accommodations on site, eliminating the need for labour transportation risks and costs. RAK FTZ also gives companies the freedom to source labour and materials globally,” he added.