Even though it’s made encouraging moves to attract greater FDI over recent years, such as the introduction of the 2014 Investment Law, Jordan still isn’t doing enough to develop an investor-friendly business environment, a new report by the Identity Center think tank said.
“Dating back to King Abdullah’s ascension to the throne, Jordan has regularly emanated measures to encourage investments and foster a sound investment climate,” said Identity Center Project Manager Aya Samara following the release of the report. “Whilst deep reforms have involved key sectors of the national economy, the Investment Law passed in late 2014 failed to become a milestone and revealed inconsistency to a large extent.”
One key initiative of the new regulation was the consolidation of the remit of the Jordan Investment Commission (JIC), a body whose main tasks include tailoring specific geographical locations to sector-specific needs, spreading analysis of investment opportunities, and providing investors with the Investment Window. Though the Investment Window was conceived to streamline business procedures, the report said there was no evidence to show it had been successful in reducing the time or administrative cost of registration, which remains the most prominent deterrent to investments.
Following a raft of unsystematic measures, a growing number of Jordanians now look towards the ripe markets of the Gulf, where abundant pro-business reforms enable investors to make better profits. A similar sentiment is driving away foreign-owned companies that easily turn to other destinations perceived as more propitious due to their administrative procedures and investments potential.
The report released by the development think tank blames the Jordanian government for overemphasizing tax exemptions as an investment incentive, rather than focusing on improving the overall business climate. The report further criticized the government for its excessive use of these exemptions without linking them to the investor’s performance in terms of increasing capital, company size, and profit margin. The atmosphere of Jordan’s economy seems to be hampered by a broken bureaucracy and rampant favoritism, commonly referred to as wasta, which means there’s also a social barrier hindering investments in the country.
Identity Center economic researcher Wael Hyasat said good governance measures, consistency in policy, a stable legal and regulatory framework, and greater transparency were all needed to attract and retain investments. “A combination of these elements is key to spurring inclusive economy and sustaining a favorable investment climate over the long-run,” he said.