Jordan witnesses investment boom

By Paul Tate

AMMAN — The country has witnessed an investment boom this year totalling JD1.634 billion in the first nine months alone, more than double the amount for the whole of 2005.

Figures released by the Jordan Investment Board (JIB) show a huge surge in the amount of capital flowing into the country’s economy, from JD750 million in 2005 to JD1.634 billion up until September 2006.

Also significant is the level of foreign direct investment the country is managing to attract, up from JD227 million in 2005 to JD834 million in the first nine months of this year alone.

The increase in foreign direct investment has also, for the first time, exceeded the level of local investment, which currently stands at JD799 million.

JIB Chief Executive Officer Maen Nsour told The Jordan Times yesterday that the country’s sound macro-economic policies and investment legislation have proved to be key factors in attracting investors.

“Our macro-economic policies have been the main driving force leading to the growth in investments that we are now witnessing, along with the country’s security and stability,“ said Nsour.

The forecast economic growth for the country this year is 6 per cent. In 2005 the growth rate was 7.2 per cent.

“The lion’s share of new investments have been made in the industrial sector and high-value-added sectors whose contribution to the overall economy of the country is significant as they increase exports and provide employment opportunities,” said the JIB official.

“We are trying to create about 60,000 new jobs a year and at least 27,000 of these jobs should be in areas considered as high value sectors,” Nsour added.

Investment in Jordan has grown significantly over the past four years. In 2002 the level of investment in the country’s economy stood at just JD301 million, of which JD131 million was foreign investment.

The majority of the capital currently flowing into the country is coming from Gulf States flush with petrodollars from the recent high oil prices, and is focused on industry and the booming real estate sector, particularly hotel construction.

According to JIB figures, Arab financiers invested JD764 million in the country’s economy in the first nine months of this year, compared to just JD22 million from the US and Canada and a mere JD8.5 million from Europe.

Nsour said he doesn’t expect the level of investment from the Gulf to drop even if oil prices continue their recent downward spiral of below $60 a barrel from a high of above $72 earlier in the year.

“A slide in oil prices will not greatly affect the flow of investment into the country as there are ample opportunities here that Gulf investors are keen to take advantage of,” said Nsour.

Although Jordan is a small country with a population of just 5.5 million and limited natural resources, the head of the JIB said that this is not what investors are looking at when weighing up their options.

“Investors are more focussed on the bigger picture and the benefits that Jordan now offers as a bridge to a much wider consumer market,” said Nsour.

The official was referring to the various trade agreements the country has signed, particularly the Free Trade Agreement with the US and the Qualifying Industrial Zones agreement, but also the Great Arab Free Trade Agreement, all of which offer industrialists access to a much greater market.

“When investors look at Jordan they are not thinking solely about the local market but are taking into consideration the fact that through Jordan they can reach 1.3 billion people, which is the combined population of the countries with which Jordan has trade agreements,” Nsour said.

The JIB was created after the introduction of the Investment Law of 2003 and the Investment Promotion Law of 1995, which established it as a governmental body enjoying both financial and administrative independence with a remit to increase foreign direct investment to create new job opportunities and increase national exports.

In order to capitalise on its success, the JIB is opening four new offices in Abu Dhabi, Kuwait, Qatar and Saudi Arabia.

Wednesday, October 4, 2006