Jordan’s Transport Minister is excited about the big transportation projects slated to come on line in the near future.
Because it’s sandwiched between Iraq, Syria, the Palestinian Territories, and Saudi Arabia, the important role Jordan plays as a trade hub has been greatly disrupted by ongoing regional conflicts.
To offset the significant decline in road transport, Minister of Transport Ayman Hatahet said Jordan has turned to its only port, Aqaba, which today accounts for some 70 percent of trade, not only for the Kingdom, but also for neighboring Iraq. Here he outlines plans to upgrade the services offered at the Red Sea port as well as other projects to improve the transportation sector, including a national rail and a BRT project between Amman and Zarqa, the country’s third largest city.
Jordan has always been an important trade and logistics route in the region, yet the continuing instability in the region and the closure of borders that accompanies that has significantly undermined our status. What has the government done to mitigate the impact of the crisis on the logistics sector?
We are facing major challenges, in particular the closure of the borders in the north, with the Nasib border crossing, as well as Trebil with Iraq. This has negatively affected not only the transport sector, and in particular the shipments of cargo and passengers from Jordan to Syria, Lebanon, and to the Balkan countries, as much as it has also affected negatively all our exports by land from Jordan to Iraq and its main cities through Trebil.
Unfortunately, these issues are all external crises that we cannot do anything about. Previously Jordan has never closed its borders with any country regardless of the reason. Meanwhile we have had to find alternative routes for our cargo, and so have utilized the Aqaba port in order to facilitate the cargo shipments as much as we can, despite the extra costs to our industry and exporters. I was in Aqaba last week and I was very pleased to have learned that about 40,000 containers had left to Iraq and Lebanon as an alternative route. We are hoping that these borders will reopen soon, and particularly Trebil once the political crises eases, then we can resume our transit shipments to Iraq as normal.
Aqaba has great potential to become a major hub for logistics. How can this be achieved?
We should always consider that every time we face any type of challenge, or even when everything is stable, we should always improve all our services, particularly in Aqaba. Considering that 70 percent of our trade is coming and going through the port—exports and imports—we are working hard to improve all our services. Today, we have a very successful example with the Aqaba Container Terminal (ACT) that is being handled perfectly. We have to salute them for all the services that they are providing.
What needs to be done to develop Aqaba further in terms of logistics?
We have to find all the means and tools to improve ourselves. We don’t stop and we should never stop. We have the Aqaba Port Corporation—that works on the general cargo, unlike the ACT which specializes in the container side—that was recently transformed by a cabinet decision into a company. We are hopeful this will improve services. We also have the liquid gas terminal in Aqaba as well as all the logistics terminals. Aqaba should be utilized as a hub not only to serve Jordan but also our neighboring countries as a transit port. It is the only point of entry when it comes to cargo in Jordan. We used to have exporters and importers using other ports on the Mediterranean through either Beirut or Latakia, all this has been halted completely. Currently Iraq is benefiting from Aqaba. In some cases Aqaba could also be used to serve the Red Sea ports in Saudi Arabia.
How are we looking to create jobs in this sector?
Unfortunately, the timing is not to our favor. Today we are facing huge challenges when it comes to trailers. They are suffering. Over 6,000 trailers are fighting to find opportunities. And our fleet is one of the very best in the region, and I mean the land transport fleet in particular. The services that were carried out from Jordan—as you transport commodities and products door to door—made the fleet one of the most appropriate means of transporting goods. An example of that is shipping from Amman to the major three cities of Saudi Arabia; Jeddah, Riyadh, and Dammam, with the cost of door-to-door service not exceeding the $25 per metric ton. Whereas when you have to use ports, even if you use the Jeddah Islamic Port or the Aqaba Port, the handling changes are expensive.
What are some of the big projects that the ministry is working on in 2016?
Transportation here is divided into passenger transportation, cargo, and commodities, land, sea, and airfreight. We have talked a lot about a national rail network in Jordan. This is again a big challenge due to the high cost. We are trying to seek companies on a BOT basis, whereby they can come and undertake the project. We have to prepare the infrastructure and the proper routing to link Jordan with Saudi Arabia, and with Syria later on after they are out of the crisis. It can be linked to Europe as well. This is one of the most ambitious programs. What we have here is the old Hijazi rail, and we are trying to utilize this same route because it is a very high cost project anyway; we are talking about a couple of billions of dollars and therefore we are asking our friends worldwide to come in on a BOT basis. We are doing it in two ways: a tendering process and through personal contacts. His Majesty’s visits to international communities, particularly China and South Korea, which are the two main countries that showed great interest and are willing to come and finance this project. In the end, it all depends on the payback period, no one will come to invest in any sector, particularly in the transport sector, if there’s no feasibility.
The Ministry of Transport has already designed the BRT service from Zarqa to Mahatta in Amman. This will transport some 500,000 passengers and rather than a 45-minute journey, it will drop it down to 20 minutes which will reduce and lower the congestion caused by people who are using their own private cars. We have already started the tendering process, the infrastructure has started with phase one, and we are hopeful that this project will be completed by the end of 2017. Many companies showed interest in operating the service, both international, including the Turks and Germans, and local.
Are there any plans to ease the burden on companies operating in the sector that have been affected tremendously in recent years, in terms of taxes and customs for instance?
What we are trying to do now with the private sector is give some incentives in order for them to participate by coming up with solutions for the public transport sector’s challenges. Lately we started giving incentives on custom duties plus sales tax in order to encourage the private sector. Those who wish to get 20 buses or more will be fully exempted from import duties and lower the sales tax from 16 percent to zero, conditional that all the vehicles are brand new. They can operate whatever route they decide on between the major cities.
This year we have the new Income Tax Law and we are considering, particularly in the transport sector, to provide the private sector with facilities in order for it to be reflected on the end users of these services. So any support that we give to the private sector has to be reflected immediately on the users of these services.
You spoke about the importance of investments, what other incentives are you providing to encourage more foreign investments?
The private sector themselves know better than anybody else what suites them best. One of the most important decisions that we’ve taken at the MOT is that our doors are wide open to receive ideas from the private sector, and to also discuss their needs and try to solve their issues and those of the local transport in Jordan, as much as we can. It’s always good to utilize the know-how of our friends from the Arab countries in particular, like Saudi Arabia and the UAE, that have both done a lot to develop their public transport systems.