Luring desperately needed foreign direct investment to the Kingdom has never been easy. But the head of the new Jordan Investment Commission believes his team is up to the job.
By Elisa Oddone
In a bid to make investing in Jordan easier, the Jordan Investment Board, the Development and Free Zones Commission, and the Export Promotion Department were all recently merged into a single government entity: The Jordan Investment Commission.
The commission’s President Montaser Oklah, believes streamlining Jordan’s investment promotion agencies, combined with the new Investment Law, will make it easier to attract and sustain greater FDI over the coming years.
What is the main task of the Jordan Investment Commission?
This commission was born following last October’s issuance of a new investment law, aimed at supporting the Kingdom’s drive to attract foreign investment. The commission is a step forward towards the unification of all investment-related institutions present in the country. It will entice foreign investors by directly promoting, facilitating, and supporting them during and after their investment in the country. The new commission is entrusted with being a regulator for all Jordan’s development zones, except Aqaba.
How is the commission planning to attract foreign investment to Jordan?
Investment promotion has been carried out in a generic way in the past, as we were not targeting specific investors or specific sectors. We are now shifting to a targeted promotional approach, shooting for individual investors in definite sectors based on Jordan’s top business opportunities.
We are establishing an ‘investment window’ service which will facilitate and enhance our efficiency and cost effectiveness by backstopping investment in the country.
The new Investment Law has given the commission full authority in terms of the licensing and approval processes of new investments within a 30-day time frame. The ‘investment window’ is supposed to be a make or break solution for the fulfillment of the investors’ wishes to overcome Jordan’s bureaucracy.
What kind of investors and sectors are you eyeing?
Jordan boasts certain unique business sectors in the region that offer investors very profitable opportunities, such as the pharmaceutical, tourism, and IT sectors where Jordan has proven to be capable of attracting global players, and the fast growing renewable energy sector. There is a quite long queue of investors interested to become active in the field of solar and renewable energy in general in the Kingdom.
One should also look at Jordan not only in terms of its market size, but also in terms of its ability to grant access to other markets, both in the region as well as worldwide, like the EU and the United States, as it enjoys free trade agreements with these economic blocs.
Who are Jordan’s top foreign investors?
Kuwait, Saudi Arabia, and the UAE are the top investors from the region. In Europe, France and Italy share the primacy. Despite Jordan seeing significant investment flows from the United States, they still haven’t reached a satisfactory level, especially in light of the comparative advantages and legal trade relations that the Kingdom has with the US Investment flow, in this sense, is lagging behind.
How much investment flows into Jordan annually?
We don’t have updated numbers as we are still at an early stage of establishing this commission. Based on the activities I have been witnessing in the past four months, I would say that investment flow in Jordan is no less than JD10 billion annually.
What are the challenges that curb the flow of foreign investment to Jordan?
The turmoil in the region and the turbulences we are confronted with from all sides of our country constitute a major problem when it comes to attracting foreign investment. The refugee issue is also putting pressure on the country’s natural and financial resources, especially in terms of its capabilities to compete with other countries within the region that have proven to be successful at attracting foreign direct investment, like Egypt and the UAE. These are our top competitors. But, at the same time, the stability and security of Jordan serve as a magnet to foreign investment.
How much do Jordan’s relatively high labor, energy, and operational costs hamper efforts to attract foreign investment?
High costs of production have a negative impact on the ability to attract foreign investors. But we have to take into consideration also the quality of the human resources that Jordan has and this has been a real source of attraction especially in the IT sector.
The cost of energy has been the most problematic area for us, but opportunities are coming up as a result of the ability of Jordan’s proven renewable energy field. This has led Jordan to come up with ways and means to lower the cost of energy, like in the case of companies active in the mining, cement, and potash sectors. Such companies have been utilizing solar energy to decrease their costs of production.
Are you planning to tackle Jordan’s stifling bureaucracy and high taxes to ease foreign investment?
The ‘investment window’ is our solution to minimize bureaucracy. We are articulating an investment framework to address both existing and new investors. Delegates from the different ministries have been housed within the commission offices bearing complete authority from the institution they represent. They will be required by law to process any new investment request within a 30-day-time period.
We are also connecting via Internet all governmental offices responsible for commerce, in a way that investors will be able to apply and get the necessary approvals to their pitches online.
We are also producing an ‘investment guide’ to articulate step by step the requirements an investor needs to satisfy and go through to get the approval and license for their investment project. This will be completed by the end of this year.
The new Investment Law has also empowered the commission to designate special zones in terms of income and sales taxes. In these development zones investors will all be subject to a five percent income tax and a seven percent sales tax.
In terms of customs exemptions, all items for the manufacturing and production processes would be automatically exempted from customs and sales taxes.