This month, Venture presents a snapshot of the work underway to realize Aqaba’s ambitions of becoming a major hub for everything from tourism and manufacturing, to logistics and cargo support.
With its strategic location, state-of-the-art port, kilometers of sandy beaches, and year-round sunny weather, Aqaba’s potential as an engine of economic growth is obvious.
While regional instability has hampered this potential over recent years, decision makers and business leaders in the city still believe in its potential. They agree it’s still uniquely placed to quickly capitalize on any economic boom that could follow a settlement of the conflicts that have sealed off crucial export markets and kept foreign visitors and investors away.
By Laith Abou-Ragheb
ASEZA Sets Sail for Growth
The head of the Aqaba Special Economic Zone Authority (ASEZA) believes the foundations have been set to ensure a bright future for Jordan’s Red Sea city.
ASEZA Chief Commissioner Hani al-Mulki is charged with overseeing the development of the Aqaba Special Economic Zone, which was launched in the early 2000s as a liberalized, low tax, duty free, and multi-sector development area.
Since he was appointed to his position in 2014, al-Mulki has helped implement several important milestones within the zone, the most notable of which was the creation of a game-changing LNG terminal that will likely prove crucial to ensuring Jordan’s energy security over the coming years.
Al-Mulki, who’s held several government cabinet posts in the past, is now focused on bringing a slew of new projects and ideas to fruition that should set Aqaba up for greater future growth.
How is Aqaba’s economy faring at the moment?
Aqaba is a unique city on the Red Sea. Its uniqueness comes from the fact that it’s not a single-faceted economic zone. It addresses tourism, infrastructure, real estate, industry, transportation, and logistics. This is why we are not affected directly when interruptions in any one sector of the economy occurs. When we talk about harbors, Aqaba is the only one in Jordan. It’s the only harbor on the Red Sea to service Iraq and Syria. We had one general harbor in 2000. Now we have nine. We have the only state-of-the-art harbor for natural gas on the Red Sea. This pipeline is unique because it’s also linked to the Arab Gas pipeline.
Unemployment in Aqaba has held at 12.5 percent over the last 15 years. But Aqaba then had 60,000 people, and today it has 160,000 people. We grew four-and-half times that of Jordan. This means that if we didn’t add these 100,000 people, we would have hit zero unemployment. So we have contributed very positively to the GDP.
In 2008, we had a slow down but we did not have a stoppage—we kept on going. Last year, things returned to normal. All the projects that had stopped for some time are back on track. We have moved in terms of tourism. We expect by the end of this year to have 8,000 hotel rooms. Today, we have 5,000. We had less than 500 in 2000. The same can be said in terms of the infrastructure, in terms of transportation and logistics. We are seriously looking at how we can better utilize King Hussein Airport.
These will be great for Aqaba when the reconstruction in Iraq and Syria starts. We’re telling everyone that now is the time to invest. Don’t come tomorrow after the reconstruction has started, then it may be a day too late. We need to start investing with an eye on a market bigger than Jordan, which includes Iraq and Syria. Syria is on the Mediterranean, but trade flows are coming from the East to the West, so Aqaba is the gateway.
On the subject of what’s happening in Iraq and Syria, how do you attract investors and visitors in light of the problems there?
First of all, what can be said about individual acts in terms of the troubled region cannot be said about institutional acts. When you talk to a tourist and say: “Let’s go to Jordan,” they would say: “Daesh.” But when you talk to an institution, they know that Jordan is stable and peaceful. So when you’re addressing tourism, yes, you have a problem. You have to convince people that you’re safe. When the drop in tourism in Aqaba is holding at a single digit even with all the turmoil around us, we’re doing well.
But when you talk about investments, investors know more. They know that it’s safe, but they have to be directed towards what the vision of Jordan is vis-a-vis its region. Jordan’s market is not a big one, but it’s a gateway. Jordan’s economic ties with Syria and Iraq are historic. We know exactly what’s going to happen there in terms of reconstruction. You can’t get somebody who doesn’t know about Syria or Iraq and tell them to do this.
The port and its supporting industries seem to be central to your growth strategy. How are you planning to develop them further?
We are concentrating on the rail road system. Nine harbors without a rail road is a problem, the efficiency will be very low. The nine harbors without a dry harbor in Ma’an will also reduce the competitive edge of the logistics. The oil harbor without a pipeline also has economic deficiencies. The Iraq-Jordan oil pipeline agreement is in the final stages. But more importantly, the Ma’an-Aqaba oil pipeline is now also on the drawing board.
In terms of developing tourism, will you ever go for mass market appeal?
I would like to see diving tourism, cultural tourism, and antiquity tourism. I’m an hour away from Wadi Rum and an hour-and-a-half away from Petra. I have more to offer as a high-end product. It’s not only a bed, a beach, and water. Unfortunately we spent so many years competing with the wrong markets, and selling ourselves as if we are a replacement for this or that. We are more than this or that. I am not Sharm el-Sheikh, I am not a single economic sector developer.
Aqaba’s international airport has undergone a major overhaul. How does it fit into your vision for the future?
In order for me to promote Aqaba better, I have to improve the reachability of Aqaba. If Aqaba is hard to reach, then it’s hard to promote. If you can only reach it via the Desert Highway, and by an airplane at six o’clock in the morning and 11 o’clock at night, then the reachability is bad.
In terms of the airport, we were able to get a cabinet decision to exempt its passengers from paying an exit tax. I concluded negotiation with Royal Jordanian to add a midday flight to Amman. Now I’m looking at establishing our own regional airline. For example, we want to be able to serve Erbil and Tabuk for business, and Beirut for leisure. We started talking to Royal Jordanian and we’ve contacted some of the businessmen that have airlines or are in the business so that we can do a project where we become partners. We are looking for a regional airline to improve the accessibility of Aqaba. We understand it’s not demand driven, it’s supply driven. There is no demand today. But in development, you don’t usually take demand driven situations, you take supply driven. Which means you provide something, then people come and ask for it. You don’t wait for the demand to grow because this becomes a chicken or the egg situation. ASEZA has over the past 10 to 15 years worked on demand driven, waiting for something to happen so that they do that. Today, I’m moving in a different direction. I know the feasibility in the first year is not going to be there. I know we will lose money in the first year. But it is essential that I have to have an airline, a hospital, a sports stadium. The feasibility might not be good, but if I have these things, then the demand will come.
Next year I will have no less than 1,000 apartments coming on line across Ayla, Saraya, Al Raha Village, and Tala Bay. Who is going to buy them? What I’m seeing so far is cross-purchasing, such as somebody owning in Tala Bay, and selling and buying in Ayla. This is not new demand.
If you look at who are the potential buyers, there are two potential buyers. Anyone who wants to retire in Aqaba and buy these apartments will need two things. They need residency for at least 10 years and they need healthcare, because their life insurance will not cover them if they live in an area that doesn’t have good healthcare. So for me to attract retirees, I need legislation to improve on the residency, which I can do, and I need to have the services they want, which will mainly be healthcare services.
I would also like to attract Jordanian expats that work in the Gulf—they can afford it. But why would they come? What happens if somebody comes and all of a sudden his boss calls him back to Dubai? He’ll need about three days to get back. At the center of doing business and doing tourism in Aqaba is accessibility. I can’t come by car in three-and-a-half hours and then have a road that’s all holes and wait for half an hour at the border. It doesn’t work. King Hussein Airport can offer something that Queen Alia can’t, which are low cost carriers. We can have easyJet. I exempt them from the departure tax and my landing fees are very cheap.
How big a priority is it for you to have areas surrounding Aqaba benefit from its economic growth?
For Aqaba to be developed without extending its development towards the neighboring governorates will also create an economic disparity that should not happen. Yes, I’m responsible for Aqaba, but we have to make sure that whatever comes into Aqaba spills over into the regional governorates. Just like Amman did with Zarqa, just like Irbid did with its neighboring governorates, whether it’s Jerash or Ajloun.
This is part one of a three-piece story. Articles in the series of The Aqaba Rising include: