Business

AMMAN — A delegation representing five British companies visited Jordan this week on a two-day business development mission, according to a press statement from the British embassy.

Representatives from Aggreko, City & Guilds, Linguaphone, KBC and Avon-Barrier, all firms with multisector experience, visited Jordan to look at new opportunities and partnerships in the energy, education and security sectors, the press release said.

The mission’s members conducted meetings with potential clients and learnt more about doing business in this fast developing region, it added. 

British Ambassador to Jordan, Peter Millett said: “ This mission demonstrates that British companies are keen to develop contacts with Jordanian firms, especially in key sectors where new opportunities are being created, such as IT, energy and health.

I hope to see some positive results from the contacts we are arranging.” In addition to calls on potential clients, the mission’s members learnt more about doing business in this fast developing region and received a briefing on different projects in Jordan and received a market briefing on Iraq and Egypt. 

AMMAN — Up to 200 private sector representatives are expected to take part in a local conference that will look into means to increase investments.

Scheduled to be held on November 17, the first International Conference for Investor Protection will bring Jordanian and foreign investors together with government officials to look into challenges facing the private sector and means to increase investments, organisers said Tuesday.

Organised by the National Association for Investor Protection (NAIP), the conference will discuss investment issues in the fields of industry, transportation, logistics, health, education and renewable energy, said Mohammad Halaiqa, NAIP chairman of the board of trustees and former minister of industry and trade, at a meeting with the media.

Participants will include representatives of banks, industry and commerce chambers and media outlets, he added, noting that the conference aims to come up with "detailed" recommendations that investors and the government agree upon, in order to develop the investment environment in Jordan.

"The conference will also discuss the effect of the recently endorsed investment and public-private partnership laws," Halaiqa said.

He added that the two laws create "a new phase" for investments in Jordan,  and  have positive aspects but can be improved further after "intense dialogue" between investors and the government.

Mohammad Abu Hammour, NAIP vice president of the board of trustees and former finance minister, underlined the country's need for a boost in real economic growth, which can be achieved by adopting investment-appealing policies.

"Jordan's natural population growth stands at 2.2 per cent, but with other growth rates that came at around 5 per cent last year… this means that Jordan's real economic growth rates, which now stand at 2 per cent must reach 7 per cent in order to sustain the current living standards," he explained. 

Abu Hammour said Jordan must work on reviewing laws and facilitating procedures governing investments, highlighting the need for implementing mega-projects and boosting the partnership between the private and public sectors.

NAIP President Akram Karmoul said the Kingdom should benefit further from its geopolitical location as a safe country in the middle of a region of turmoil.

He added that the association, founded in 2002, aims to provide exceptional services to investors in Jordan and to protect them from commercial and non-commercial risks, in addition to its role in promoting investment opportunities in the Kingdom.

DUBAI — An economic rebound has catapulted house prices and rents in Dubai to Manhattan-like peaks, the Gulf emirate's top property website says, forcing increasing numbers of residents to move to its cheaper outskirts or even to consider returning home abroad.

Rents fell 1 per cent in the third quarter after 10 straight quarters of price rises, property consultants CBRE reported this week. But the sustained cost of living surge has driven hundreds of families to relocate to smaller homes on the fringes of the  opulent, high-rise urban canyon that soars out of empty desert.

Research by Dubai website Dubizzle showed rents and house prices in Dubai's prime locations now match those in Manhattan.

"We're talking about $2,000 to $3,000 [a month] for a rental in Manhattan," indicated Ann Boothello, property product marketing manager at Dubizzle, which attracted 2.4 million monthly visitors to its property pages in the third quarter.

"For a one-bedroom apartment in Manhattan it would be about 1.9 million UAE dirham [$517,388], which would be the same for a prime community here," she pointed out.

Dubai rents and house prices are estimated to have increased broadly by some 30 per cent year-on-year, the highest growth rate in the world during the first half of 2014, according to various studies, while in some areas price rises have been much steeper.

Middle- and low-income expatriate families have suffered most from rocketing rents, often including Indians and Pakistanis as well as expatriate Arabs and also some families from affluent Western states.

Construction workers usually live in company accommodations but their families remain in their home countries.

The property market in the city of 2.3 million people rebounded in the last two years after a more than 50 per cent plunge in home prices from their peak in the aftermath of the 2008-09 global economic slowdown.

Expensive safe haven

The oil-rich Gulf sheikhdom's reputation as a solid safe haven in a Middle East increasingly torn by political upheaval and civil war has lured tourists and foreign investors alike.

Costs have kept rising and the emirate jumped to 67th spot among the world's most expensive cities to live in the world compared to the 90th position last year, according to the 2014 Mercer cost of living survey.

The leap in living costs was attributed in part to a significant increase in expatriate rental accommodation costs.

Some rents in the Dubai marina, for example, jumped by more than 50 per cent between August 2013 and February 2014.

"I don't save a thing," said Abdul, a 33-year-old website programmer from Bangalore, India who declined to give his full name. He relocated with his wife last December to Remraam, a new development built by Dubai Properties 30 kilometres inland on the desert periphery of the city.

"We moved out here because it was the cheapest area, but it will probably go up [in price] next year and we will have to move out of here too," added Abdul. "We will probably move back to India next year."

At an annual property exhibition in Dubai this week, state-linked companies announced projects they estimated to be worth billions of dollars combined.  Among the units on display were mansions in central Dubai priced at 75 million dirham each.

"There's been an exceptional amount of interest for these mansions," said Ajay Rajendran, vice chairman of Sobha Group, which is developing the project.

The increase in activity is causing many — including the International Monetary Fund — to worry that the Dubai market is overheating.

A senior government official said on Sunday that rising inflation needs to be controlled to ensure Dubai remains affordable.

The government has introduced some measures like increased transfer rates and mortgage caps to control prices.

These figured in the slight cooling of the market in the third quarter with average residential rents falling by 1 per cent, their first decline since 2012, a CBRE report said.

Developers at the property show have rolled out scale models of latest projects, including Mall of the World, a larger-than-life venture announced in July complete with temperature-controlled high streets, a theme park, hotels and a theatre.

Also on display at the Cityscape show on Sunday were models of mansions for sale at a price of more than $25 million apiece.

Dubai property prices have been on a roller coaster over the past 10 years.

The market began expanding when it was opened to foreigners in 2002 and peaked at record highs in 2008, driven mainly by speculative investments.

Prices took a nosedive in 2009 as finances dried up in the global financial crisis, shedding half the value of the sector.

But a revival in demand propped up values and rents at breakneck speed, stirring fears of another bubble.  

Data shows that sale prices surged by 56 per cent and rents by 41 per cent since August 2012, according to Dana Salbak, senior research analyst at Jones Lang LaSalle (JLL).

"We realise that this was very unsustainable," she said on the sidelines of the annual property show, pointing out a "welcome levelling off" in sale prices and rents in the residential sector in the third quarter of 2014.  

"We see the residential market stabilising. This is a healthy and sustainable level. We welcome prices and rents as they are," she added.

A JLL report put growth in sale prices and rents in the third quarter at just 2 per cent and 1 per cent, respectively.

Knight Frank real estate consultancy also noted that prices and rents have cooled down.

"The growth rate has been weakening," after having entered positive territory in mid-2011, the agency said in an autumn report.

AMMAN — Traders, manufacturers and exporters of construction materials from several countries, including Jordan, are eyeing business growth through Interbuild Jordan Fair 2014 which was inaugurated on Monday by Prime Minister Abdullah Ensour.

Representatives of companies, who were exhibiting their products in Jordan for the first time, said they pinned great hopes on the fair whose visitors, according to some exhibitors, were not up to expectations on the first day.  

“We are planning to develop good commercial relations by exporting marble items to Jordan and importing lime stone and marble from the Kingdom if prices are competitive.” Sindy Huang, manager of Foshan Ever Rising Trading Company Limited, told The Jordan Times.  

Thirty six members of the Federation of Indian Export Organisations (FIEO)  are exhibiting products at the Indian pavilion which was inaugurated on Monday by India’s Ambassador to Jordan Anil Trigunayat and Industry and Trade Ministry Secretary General Maha Ali.

“In the past, Jordanians used to indirectly acquire Indian products, after they were exported by India to European markets. But today, businessmen are finding more competitive prices by buying directly from India,” FIEO Chairman S.C. Ralhan told The Jordan Times.

“The partnership between India and Jordan is growing due to improvement in quality," said Hani Ghanem, member of the fair organising committee. ”For example, Jordan is buying drilling equipment used in the phosphate industry from India.”

Several representatives from Chinese companies, besides Jordanian manufacturers and real estate specialists are also taking part in the fair. There were also fewer participants from Poland, Greece, the United Arab Emirates, Egypt and Palestine, according to Ghanem.

Rick Xiong, a representative of a Chinese company specialised in timber and wooden industries, expressed frustration with business prospects. 

“Some customers from Jordan said the market is bad at this time, because construction projects are little slow. As such, importers of construction equipment have overstock,” he said, hoping his business will see a turnaround.  

A salesperson working at a Jordanian energy company, underscored the importance of changing customers’ mentality. 

In the past, everyone wanted European products. But some European solar panel companies were forced to shut down recently because they were incapable of competing with the Chinese and Indian products, she said.   

Ahmad Saleh, a Jordanian acting director at a real estate company said he expects good growth this year. 

“Despite political and economic challenges, people have gotten used to such difficulties. These challenges are no longer keeping us behind,” he said, 

The Interbuild Jordan Fair will remain open until Thursday.

AMMAN — A 68-member Indian business delegation on Sunday held business-to-business meetings with their Jordanian counterparts.

The delegates, representing 36 Indian companies which are all members at the Federation of Indian Export Organisations, will also participate in the "Interbuild Jordan-2014", to be held in Amman this week.

Indian companies will be showcasing electrical and construction machinery, equipment, sanitary wares & fittings, marbles, tiles, granites, office furnishing, and everything related to building and infrastructure, according to a statement from the Indian embassy.

AMMAN — A trade delegation from South Korea, Choongbuk City, will arrive in Amman on Monday to explore potential business opportunities with their Jordanian counterparts.

The delegation comprises representatives of nine companies specialised in manufacturing and exporting SMC water tanks, PVC food packing wrap, housekeeping products, crane lorries, purified water pre-treatment system, refrigerants, cookware, truck-mounted hydraulic crane, smartphone screen protector.

The group of Korean businessmen will hold business meetings with their Jordanian counterparts on Tuesday.

This event is organised by Korea Business Centre (KOTRA) in Amman, the commercial office of the embassy of the Republic of Korea, according to KOTRA statement.

AQABA — The Aqaba Special Economic Zone Authority (ASEZA) participated recently in the ninth Silk Road International Conference in the province of Fujian in China.

The head of the Jordanian delegation to the conference and assistant director of ASEZA, Abdullah Yaseen, stressed the importance of investing in Aqaba in the fields of tourism, industrial and logistic services.

Yaseen discussed aspects of joint cooperation with Chinese officials in the fields of training and expertise exchange, as well as ways to attract Chinese investments to Aqaba. 

AMMAN — Jordan Enterprise Development Corporation announced Sunday in a press statement that, in cooperation with International Trade Centre (ITC) and the World Bank, it launched the regional project “Development of SMEs Exports through Virtual Market Places” valued at $3 million through the period 2014-2017.

The project aims to support 600 projects — 200 projects from each country (Jordan, Morocco and Tunisia), and the impact will be measured through the increase of sales and exports during the implementation period of the project.

The target groups for this project is the overall government agencies, chambers of commerce, businesses, and institutions of civil society and in particular the staff who will be trained by the ITC to work on the process of choosing the small and medium enterprises, performance monitoring, information classification, and provide the projects with information about market opportunities and potential risks.

AMMAN — The government and Royal Jordanian (RJ) board members are studying a number of options to help the company return to profitability, and secure a bright future, an RJ press statement sent to The Jordan Times quoted RJ Chairman Nasser Lozi as telling shareholders on Sunday.

Lozi, also the company's president and chief executive officer, said in the press release that RJ is running its services under difficult operational conditions. 

Security and stability are top drivers of tourism and air transportation in the world, the press release noted. Consequently, tourism and the air transport industry are the first victims of unrest, because they directly reflect on the load factors, the ticket fares and eventually the final results of airlines. 

By operating from the heart of the Middle East, which is surrounded by unrest, the chairman indicated that the airline's operations underwent major changes and its route network was highly affected.

"Damascus and Aleppo, two stations of a strategic significance to Royal Jordanian, are still suspended. The two Syrian stations, added to Beirut, are considered feeding routes for RJ flights to North America and Europe. Last year, the load factor to these destinations went remarkably down," Lozi said.

He added that the airline had to halt operations to three Libyan cities and one to Iraq this year. RJ also had to reduce frequencies to some destinations, the most significant Beirut, due to the low demand for travel to the Lebanese capital. 

He noted that the company incurred losses when it had to change the route between Amman and Beirut in March 2013. The flight duration now takes 1 hour and 45 minutes instead of 1 hour, a result of avoiding flying over Syrian airspace. 

"It [the airline] was highly impacted by the low demand on travel, and tourism to Jordan and the Arab world, particularly from the traditional markets of Europe and the Far East, since tour operators look at the Middle East as one tourism station," he explained.  

Lozi said that these factors contributed to the 2013 operational and financial results. RJ used to achieve a 15-20 per cent growth in the number of passengers and revenues year on year. 

Last year, however, the number of passengers declined by 3 per cent, which resulted in a decrease in revenues from JD802 million in 2012 to JD744 million in 2013. 

He said the company did its utmost to cut costs without affecting the level of services to passengers indicating that the high fuel bill paid by the company last year constituted 38 per cent of the total operational cost

The cost reduction efforts resulted in bringing down the operational expenses from JD722 million in 2012 to JD713 million in 2013.

Lozi also mentioned that, besides instability, intense competition among regional airlines, was another challenge faced by RJ in 2013 as it had a big role in reducing ticket prices.

According to the press statement, the chairman told the shareholders that Royal Jordanian has taken many steps and measures in 2014 to improve the performance of the company and enable it to achieve profits. 

He underlined the airline's determination to generate ancillary revenue and find different sources of income by investing in different areas in the aviation industry, such as aircraft maintenance, ground handling and airport services.

RJ will enter these fields in new markets and regional airports, thus contributing to developing and building up the aviation industry in neighbouring countries, besides its contribution to the progress in the Jordanian airports, the press release said. 

"At operational level, 2014 marks a new positive turning point in RJ's history and fleet," he said. "Starting with the end of August this year, the airline received the first Boeing 787 aircraft [Dreamliner]. The company will add four other new 787s by the end of 2014; the rest of the ordered aircraft will join the RJ fleet in the upcoming years, replacing the Airbus 340s and 330s."

The new Dreamliner, with its host of new technologies and fuel efficiency features, will operate on RJ's medium- and long-haul routes, opening new horizons and markets for the airline in different countries around the world. It uses 20 per cent less fuel than today's similarly sized planes. 

The airline phased out a number of its aircraft during 2014, due to the fact that the company decided to forgo some destinations on its route network that is constantly reviewed by the airline.

Due to the weak economic feasibility, RJ decided to shut down its operations to Milan, Colombo, Accra, Delhi, Mumbai and Lagos, and passed on the Sharm Al Sheikh operations to Royal Wings. 

It also reduced the number of flights to Beirut from four to two daily, based on a code-share agreement concluded recently with the Middle East Airlines. 

Lozi assured the 7th ordinary general assembly meeting of the airline’s keenness to improve its financial results and achieve a return on investment for shareholders. 

He said that in spite of the company’s unsatisfactory financial results, various other indicators show that RJ is a successful and progressive airline that competes with big international airlines in terms of ground and air services, qualified staff, technology, and safety and security standards it adopts.

Noting that RJ is not only a shareholding company, but also a big national company that has sovereignty and economic dimensions as it is the national carrier of Jordan, connecting the Kingdom with a large number of countries and mirroring a bright image of Jordan to the world, he drummed up the firm's JD378.5 million contribution to Jordan's gross domestic product last year, with an average of 2-3 per cent.

"With its qualified human capital, its revised route network, its modern fleet of aircraft, competitive services to passengers and highest safety standards, RJ will be able to become stronger," Lozi concluded. 

At the beginning of this year, RJ was named one of the top 10 safest airlines in the world in 2013 on the world's best one-stop airline safety and product rating review website. 

BUENOS AIRES — President Cristina Fernandez's campaign to bolster the state's role in Argentina's economy took a big step forward last week when lawmakers approved a bill that will allow the government to intervene in the pricing and output levels of large companies.

The house of deputies voted 130-105 on Thursday for the so-called supply law. It enables the government to set profit margins and confiscate merchandise from private companies judged to have hiked prices unjustifiably.

The vote came despite strong opposition from big business and the nation's key grain sector. The bill has already passed the upper house of congress.

Fernandez still has to sign the measure into law. This, though, is widely seen as a rubber-stamping exercise.

Fernandez's leftist government says the bill will protect consumers from unfair price rises and stem job losses in times of crisis. The administration has shrugged off opponents' criticisms that more state intervention will stifle the economy.

The bill "creates the conditions for regulations by the state in order to prevent large firms abusing their strong positions and holding back stock without good reason," Cabinet chief Jorge Capitanich told reporters.

Capitanich said the bill would protect small- and medium-sized companies, encourage investment and boost job creation.

Leaders from the agricultural, banking, industrial and retail sectors vow to sue to get the law thrown out on grounds that it violates private property and trade rights.

‘parasitic relationship’

In a marathon debate, opposition lawmakers accused the government of suffocating growth of the $490 billion economy.

"This government has a parasitic relationship with production and work because it feeds off them but simultaneously wants to destroy them," said legislator Carlos Brown.

The supply law is one of a series of interventionist policies announced by Argentina since it defaulted on its debt in July.

Rattled by the default, markets will watch closely to see how the new rules are enforced in a country where private economists forecast inflation may top 40 per cent this year as the peso tanks and the economy shrinks.

The farm sector worries that the measure will allow the state to grab corn and wheat crops if it decides domestic food prices are too high. Economy Minister Axel Kicillof said those fears were unfounded.

"The state does not want to intrude on the economy, but it does have to regulate the economy," Kicillof told local radio while the bill was being debated.

"The government does not have the ability or the desire to control all the comings and goings of the economy, all the prices, or go confiscate grains from the silos," he said.

But Martin Fraguio, executive director of Argentina's Maizar corn industry chamber, told Reuters the bill threatened farmers.

"This puts the entire corn chain — planting, harvesting, buying and selling — at risk," Fraguio said.

Argentina is the world's No. 4 corn exporter and No. 3 supplier of soybeans.

Separately, the government expects the economy to grow 2.8 per cent in 2015 despite the recession gripping the country.

In its annual budget proposal to Congress, the government forecast the country would return to growth next year and slash annual inflation to 15.6 per cent.

Economic analysts are forecasting the economy will shrink at least 2 per cent this year.

Annual inflation has topped 20 per cent since 2007.

The South American country has seen sluggish consumption and industrial output in recent months.

Its economic woes have been exacerbated by its $1.3-billion debt dispute with two hedge funds that won a US court ruling blocking the country from servicing its debt without paying them.

The row forced Argentina into its second debt default in 13 years in July.