Business

AMMAN — Aqaba Container Terminal (ACT) announced in a press statement on Tuesday a tariff adjustment effective June 15, 2014. 

“The adjustment is a result of consumer price index changes and increased utility costs,” the company said in the statement noting that the ACT has kept its tariffs unchanged over the last four years.

According to the statement, rapidly rising costs for utilities and services necessitate the adjustment.

“The cost of petrol has increased by more than 45 per cent and the cost of electricity has increased by more than 100 per cent since the last tariff adjustment of 2010,” the company indicated.

It pointed out that, overall, the cost increases represent more than 25 per cent of ACT’s operating cost which is no longer sustainable.

“ACT has, with due consideration to the shipping lines, changed the storage calculation for export containers to stop upon container loading onto the vessel in lieu of vessel departure and ,with due consideration to the local trading community, kept storage free-time at 7 days, as well as keeping storage tariffs from 7-14 days unchanged,” the company explained.

While the storage fees for the first 14 days remain unchanged, “ACT is inviting all stakeholders to continue working together on the imperative requirement for Jordan to keep increasing the efficiencies of its supply chain through faster clearance and evacuation of the import full containers from the terminal”.

ACT said in the press statement that it will continue to increase its engagement by investing in the container terminal as well as further increasing the productivity through already defined efficiency programmes. 

“Since the successful partnership between APM Terminals and Aqaba Development Corporation was established in 2006, ACT has through its shareholders invested $284 million including expansion programmes nearly doubling the berth capacity to 1 kilometre of quayside, as well as investing in state of the art ship-to-shore cranes and yard equipment,” it added.

“Furthermore, ACT has over the same period increased its productivity by more than 20 per cent in order to stay the most efficient transportation hub for the Levant region,” the company continued.

ACT is a joint venture between the Aqaba Development Corporation and APM Terminals — operating via a 25-year build-operate-transfer agreement signed in 2006.

The terminal constitutes the logistical and economic backbone of the Aqaba Special Economic Zone Authority, serving as the preferred gateway to the region for many active markets around the world.

AMMAN — The Jordan Chamber of Commerce (JCC) will promote investment opportunities available in the Kingdom to the European business community at the beginning of next month, on the sidelines of the 17th Arab German Business Forum that will be held in Berlin. On Monday, JCC President Nael Kabariti said the chamber will work to draw more investments to the Kingdom, especially in the fields of therapeutic tourism, renewable energy, healthcare, pharmaceutical industry, information technology and communications. The JCC will market Jordan over three days, targeting European businessmen, on the sidelines of the forum.  Jordan is participating in the forum which will be attended by more than 600 experts and decision makers, who are specialised in different areas of business, politics and science. 

AMMAN — Prime Minister Abdullah Ensour on Monday directed the Jordan Industrial Estate Corporation (JIEC) to speed up work on studies and designs for new industrial estates in the governorates in order to arrive at the tendering process as quickly as possible. At a meeting, attended by JIEC’s  Director General Loai Suhweil and other concerned officials, the premier also called for speeding up work on the initial stages in order to ready the estates for receiving early  investments. After a briefing about JIEC’s plans to set up industrial estates in the governorates, Ensour stressed that the government will provide all necessary facilities as well as incentives for investment projects at industrial estates, especially in the governorates of Salt, Mafraq, Madaba, Zarqa, Tafileh, Jerash and Ajloun, in accordance with the Royal directives. The premier highlighted the importance of investments in the governorates for bringing about sustainable development, providing work opportunities for young Jordanians and ensure technology transfer. Suhweil spoke about obstacles and measures that are deemed necessary to facilitate the corporation’s plans.

LONDON/ANKARA — Payment problems are disrupting commercial food cargoes to Iran, with hundreds of thousands of tonnes of grain and sugar stuck in transit, as Western banking sanctions complicate deals and trade financiers scale back exposure.

Iran is not barred from buying food or other "humanitarian" goods under sanctions imposed over Tehran's pursuit of nuclear technology, but measures by the European Union (EU) and the United States have made trade more difficult over the past two years.

Several international trade sources, with knowledge of deals that have been affected, told Reuters that ships carrying cargoes of grain, including wheat and soybeans, as well as raw sugar, have been stuck for several weeks outside Iranian cargo ports such as Bandar Imam Khomeini and Bandar Abbas.

With evidence of people starting to stockpile food and prices rising following cuts in government subsidies, Iranian officials acknowledged to Reuters that there are import problems, notably due to reluctance among international banks.

One European trade source said: "There are problems getting paid on deals and Iran looks to be struggling on the trade finance side. It comes down to the banking complexities, which have held up cargoes for a number of suppliers."

Several trade sources point to growing difficulties opening letters of credit, vital to ensuring smooth delivery of goods.

"Western banks are unwilling to get involved," a second European trade source said. "As soon as the banks see the word 'Iran' in the paperwork, you get it rejected."

Banks ‘afraid’

Bankers and government officials said Western lenders are steering clear of attempts by Iran to get them involved in financing humanitarian transactions, fearing they could be penalised under US sanctions.

"We still cannot open letters of credit," said one Iranian government official, who spoke on condition of anonymity.

"International banks are concerned about — or let's say afraid of — doing business with Iran," the official added. "And we don't know what the solution will be. Dozens of ships are waiting at the ports and we just can't do anything."

Reuters ship tracking data shows that five panamax-sized vessels, each capable of carrying 60,000 to 70,000 tonnes of grain, reached Iran in early April from ports in Europe, Australia and South America. The vessels were still located around Bandar Imam Khomeini and Bandar Abbas on May 9, several weeks after they should have been able to discharge a cargo.

Reuters was unable to reach owners of the five vessels, which all sailed from international wheat terminals, including Australia's Kwinana and Rostock and Hamburg in Germany.

"Having a panamax at port for that long would suggest to me there has been a payment issue," said a Sydney commodities trader. "There have been some issues with Iran in the past."

The five cargoes would represent nearly 2 per cent of Iran's estimated annual wheat consumption of around 17 million tonnes.

Ships waiting

Ship tracking data indicated that other vessels may also have been disrupted in recent months. Four panamax-sized vessels left Australia for Iran at the end of January.

After arriving in Iranian waters in mid- to late February, the vessels were stuck mainly around Bandar Imam Khomeini until they departed in April. A spokesman at agribusiness group Cargill's Australia office said three panamaxes it had been involved with had been delayed due to port congestion in Iran.

A separate panamax vessel originating in Ukraine was also stuck in Iran for weeks until April. A further three smaller vessels, including one carrying raw sugar, were also held up for weeks, ship tracking data showed.

A European trade source noted that at least one or two cargoes had been re-routed to other buyers. 

"The shipments in question were stuck in Iran for a long time and clocked up a big loss," the source said. "They were subsequently traded to other buyers."

A second Iranian government official said ships were waiting with perishable goods. 

"A few have had to return to the country that we purchased goods from,” he indicated "Various factors are involved — like Iran not facilitating the delivery and also the banking problems."

A spokeswoman for US agribusiness company Archer Daniels Midland, which has supplied Iran, said many international banks would not participate in transactions with Iran "for fear of being sanctioned or fined".

"Another hindrance is Iran's foreign currency controls," she added. "Ships arriving in Iran with grain must frequently wait weeks for the Central Bank of Iran to approve the release of funds to pay for the cargo."

According to banking and trade finance sources, several Iranian banks were cut off from the global electronic cross-border payment system SWIFT, which was adding to further financing problems.

A banking source said: "We should not rule out further bureaucratic delays in Iran to manage their limited availability of hard currency until sanctions are properly eased."

BERLIN — German industry is ramping up efforts to dissuade Chancellor Angela Merkel from imposing tough new economic sanctions on Russia over Ukraine, warning of lasting damage to domestic firms and the broader economy if Moscow is hit hard.

Although German companies have toned down their public criticism of sanctions since the chief executive officer (CEO) of Siemens was vilified in the press for meeting Russian President Vladimir Putin in late March, a behind-the-scenes lobby effort remains in full force.

A confidential paper from the German-Russian chamber of foreign trade, which was sent to the government this month, shows the extent of the concern in German business circles as a May 25th presidential election in Ukraine nears.

Merkel has said she will press for more punitive measures against Russia if the election is disrupted.

The two-page position paper, dated May 7, says the Ukraine crisis is already having a "massive impact" on German business in Russia and warns of dire consequences if Europe follows through on threats of economic sanctions.

"Deeper economic sanctions would lead to a situation where contracts would increasingly be given to domestic firms, projects would be suspended or delayed by the Russian side, and Russian industry and politicians would turn to Asia, in particular China," the paper points out.

The resulting loss of market share for German and European firms would be "long-term and sustainable", causing "irreparable damage" to Germany's competitive position, according to the paper, provided to Reuters by an official in Berlin.

Moreover, sanctions would lead to job losses in Germany and  expose companies to "massive compensation" claims if they were forced to break contracts with their Russian counterparts, it says.

The chamber represents over 800 companies, providing support to German firms operating in Russia and Russian companies present in Germany. Rainer Seele, the chief executive of Wintershall, the oil and gas unit of German chemicals company BASF, serves as president of the group.

Close ties

Germany has close economic ties to Russia. Over 6,000 German firms are active there. And Germany receives roughly a third of its oil and gas from Russia.

Recent data showed German exports to Russia — its 11th biggest trading partner — slumping 16 per cent in the first two months of the year. That was before the European Union unveiled a first round of mild sanctions in the form of visa bans and asset freezes against Russians individuals, many close to Putin.

The economic risks have not prevented Merkel from warning repeatedly that she is ready to introduce deeper-cutting trade sanctions, a stance that has opened her up to criticism from former German chancellors Gerhard Schroeder and Helmut Schmidt, Social Democrats (SPD) who reject confrontation with Russia.

German industry, on the other hand, has gone quiet since Siemens CEO Joe Kaeser met with Putin and referred to the Ukraine crisis as "short-term turbulence" which would not get in the way of his firm's ties with Russia. Last week, Kaeser said he regretted his choice of words.

Out of public view however, lobbyists for German industry continue to warn loudly against steps that might lead to a full-blown economic confrontation with Russia in the hope that Merkel could waver.

The "Ost Ausschuss", or Committee on Eastern European Economic Relations, has been at the forefront of these efforts.

Its message to German politicians has been that a confrontation with Russia would hit not only Germany, but southern European countries that are just starting to recover from the euro crisis. The suggestion is that Europe itself would be plunged back into deep economic and social turmoil.

In a sign that German industry remains determined to keep Russia close, the CEOs of big utility E.ON and retailer Metro, as well as Klaus Mangold, the chairman of tourism group TUI — and former head of the Ost Ausschuss — are all planning to attend an economic conference in St. Petersburg this week that will be hosted by Putin.

US executives have pulled out of the conference after the White House made clear that their participation would be frowned upon. Like their German counterparts, several French CEOs will also attend.

"Especially during a time of crisis like this, an international business dialogue is of great importance," Eckhard Cordes, current head of the Ost Ausschuss, told Reuters in an interview last week.

One of the biggest concerns among German businesses is that US firms will end up being the big beneficiaries of an economic confrontation between the West and Russia.

"We shouldn't forget that the debate about Russia is also about economic competition between the United States and Europe," said Heino Wiese, a former SPD politician with close ties to Schroeder who runs a consulting firm in Berlin that advises German and Russian firms.

Wiese, who admits to being a "Russia sympathiser" and has a photo of himself shaking hands with Putin prominently displayed in his office, pointed to news last week that US Vice President Joe Biden's son is joining the board of a Ukrainian gas company as evidence the US is already seeking to gain from the crisis.

"At the end of the day, the US wants to be the one that sells gas to Europe," he said.

PARIS — Grains, metals, meat: these are just three of the commodities being sucked in by the voracious Chinese economy which is set to be the key driver on raw materials markets this year. 

French commodity research specialist Cyclope in a report published last week argues that "in the coming months, global markets will feel even the slightest sneeze from China".

World commodity prices have surged in recent years, driven by rising demand from increasingly affluent shoppers in emerging markets and particularly China.

China has also amassed huge reserves of dollars and has the financial fire-power to buy and outbid, since many commodities are traded in dollars.

China overtook India to become the world's biggest gold-consuming nation in 2013 and the World Gold Council forecasts that its appetite could jump by about 20 per cent by 2017.

It is also close to overtaking the United States as the world's biggest oil importer, and has become a vast consumer of many agricultural commodities as more people can afford to eat meat and dairy products.

Its influence on global commodity markets has become even more important in the wake of the global economic crisis, which has hampered growth in the developed world.

China and wine 

Even sales of top French wines are being driven by Chinese demand, said Philippe Chalmin, a professor at Paris Dauphine University, who led the Cyclope report.

But growth in the Chinese economy, the world's second-biggest after the United States discounting the ranking of the European Union, is decelerating as Beijing's leaders wean the country off investment as the key driver of expansion and shift the focus towards consumer spending.

The slowdown in China last year had a huge impact on metal markets in particular, sending prices lower. 

On average, raw material prices fell by 5.0 per cent in 2013, the report indicated.

In 2014, Cyclope predicts that prices will fall even further, by an average of 4.0 per cent, despite support from an expected uptick in global growth. 

Nonetheless, "the current slowdown and future activity should not cause major adjustments", reads the report. "The slow transformation of the growth model and the further development, instead, point to a higher Chinese demand for raw materials."

A giant appetite 

China cemented its position as a key player in world cereal markets in 2013 when it resumed international wheat imports for the first time for 10 years.

China has also become the world's second-biggest buyer of world beef products, with its imports quadrupling in recent years owing to concerns about local products after numerous health scares.

If this appetite for foreign beef continues, "the global market for beef will turned upside down", the report says.

Similarly, several scandals involving tainted milk and a growing appetite for Western diets have also turned China into a "key to world dairy markets", said Chalmin.

China's influence can be even harder to gauge because its politics are so opaque, Chalmin added.

In recent months several agricultural commodities of which China is a major importer — soya, wheat and corn — have felt the effects of Beijing's policy changes.

US corn exports to China, the fastest-growing US market, have dried up rapidly since the Politburo toughened its stance on genetically-modified grain, while soya prices have been hurt by worries about possible defaults by Chinese buyers.

Coffee and cocoa are the only agricultural commodities which have been little affected by China's rise — although consumption of both of these is growing. 

However, Chinese demand is not the only factor driving food prices in the year ahead.

Agricultural commodity prices are also likely to be affected by the return of the El Nino weather system this year.

The El Nino occurs when a huge mass of warm water builds in the western Pacific and eventually shifts to the eastern side of the ocean, and can cause widespread disruption.

The UN forecasts that the return of the weather pattern could constitute a "major menace" for crop output in the Pacific and Indian Ocean.

A question mark also hangs over the next grain harvest in the Black Sea region of Ukraine, a major grain exporter which is already facing a political crisis.

Biofuels and genetically modified technology will also be key drivers for agricultural prices, as will the withdrawal of major financial players commodity trading.

"Raw materials are the tip of all the tensions of the world," Chalmin indicated.

ZARQA — The value of Al Dulayl Industrial Park (DIP) exports reached $129 million during the first four months of 2014, with, 12 per cent or $13 million, higher than the amount recorded during the same period of last year. George Khayat, DIP’s general manager, told a press conference on Saturday that the park includes 23 factories that provide 17,000 direct and indirect jobs. Khayat attributed the increase in value to the growing demand on the factories’ products that are in line with international standards and enjoy competitiveness. According to Khayat, DIP’s exports account for 48 per cent of Zarqa and Mafraq exports.

AMMAN — Yemen hopes a loan deal from the International monetary Fund (IMF) that will allow it to start cutting costly energy subsidies that sap expenditure and are exploited by smugglers, but are relied on by the poorest in the country, will be sealed this month, the finance minister said.

The impoverished Arabian Peninsula nation has been holding technical talks with IMF officials for several months and is expecting to hold detailed negotiations in Jordan this week, Sakher Ahmed Al wageh said.

He indicated that Yemen was seeking "substantially more" than the $560 million, over three years, that the IMF has proposed, without giving details.

"We hope before May [ends] matters will have been cleared and we will have entered the programme," Alwageh said noting that the IMF board was expected to meet in July to finalise the deal.

Alwageh added that the talks centred on cutting the energy subsidies that cost the state $3.07 billion last year, equivalent of 30 per cent of state revenues and 21 per cent of expenditure, swallowing funds Yemen needs to invest in education, infrastructure and health after its 2011 uprising.

He indicated that almost 30 per cent of total domestic fuel consumption, especially diesel, was smuggled to countries in east Africa where smugglers benefit from price differentials.

However, removing subsidies is highly sensitive in a country where a third of the 25 million population live on less than $2 a day. It has in the past led to violent disturbances, such as in 2005 when dozens were killed.

"The biggest burden will fall on the poor and that is why there must be successful solutions to ease the impact... the problem is not in eliminating subsidies but finding another package that will deal with the impact," he said.

Alwageh added that cutting the subsidies would be a requirement of the deal, along with expanding capital investment and widening those benefiting from a Social Welfare Fund that helps poor households with the money saved.

"These are measures we need to take whether we enter an IMF programme or not," he remarked

Fuel shortages

The IMF says even a small start in reducing mainly energy subsidies, say by 10-15 per cent, would be sufficient to increase the average monthly allowances paid by the Social Welfare Fund.

The IMF said this month Yemen had a more urgent need for financial aid in 2014 than last year to fund spending as currency reserves shrink and donor aid is slow to arrive in the country that came close to economic collapse after the uprising that later eased out veteran ruler Ali Abdullah Saleh.

Yemen's finances have been strained by frequent attacks on oil pipelines blamed by the government on militants and disgruntled tribesmen.

Saudi Arabia, the United Arab Emirates and Oman have supplied Yemen with fuel in the past. Nonetheless, the capital Sanaa has suffered severe fuel shortages for the past month, with Yemenis spending hours queuing to fill their vehicles with just 20 litres of petrol.

Any decision to reduce energy subsidies would have to be approved by the government and parliament.

"Of course this matter would be debated from the point of view of the national interest as to whether there is a benefit for Yemen from entering the programme or not," Alwageh said.

"Such decisions in countries going through transition are exploited and capitalised politically by playing on people's emotions that could bring some unrest. That's why everyone seeks consensus on this," added the minister, who has been in Jordan for IMF-sponsored conference in Amman.

Since a UN-backed transitional government took office in 2012, there have been signs of recovery and stabilisation, according to the IMF.

The IMF expects Yemen's budget deficit to shrink to 6.7 per cent of gross domestic product this year from 7.1 per cent in 2013, the biggest gap since 2009.

Alwageh said growth was forecast at around 4 per cent this year, a far cry from a massive 12.7 per cent contraction in 2012, while inflation had halved to around 9 per cent from a high 20 per cent at the peak of troubles in 2011.

The government's move to alter gas prices sold to Western oil firms in Yemen had boosted state coffers, he noted.

ZARQA — The newly-elected Zarqa Chamber of Industry board of directors on Wednesday elected Haydar Amireh as chairman. During its first session, the board also elected Faris Hamoudeh as deputy chairman, Jamil Wreikat as second deputy chairman, Talal Ghazawi as treasurer and Hussein Hawatmeh as secretary general. Wreikat was also appointed as deputy treasurer and deputy secretary general. The board decided to name Dina Fakhouri as the chamber’s representative on the board of Jordan Chamber of Industry.   

AMMAN — The Jordan Chamber of Industry board of directors on Thursday decided unanimously to retain Ayman Hatahet as chairman. During Thursday’s session, the board also elected Adnan Abu Ragheb as first deputy chairman, Mohammad Kharabsheh as second deputy chairman, Eyad Abu Haltam as secretary general, Mohammad Abdallat as treasurer, Abdul Wahab Abdeen as deputy treasurer and Adel Tawileh as deputy secretary general.