‘Private sector companies constitute backbone of Jordanian economy’

AMMAN — The Jordan Strategy Forum (JSF) on Wednesday said that private sector companies constitute the “backbone” of the Jordanian economy through their contribution to GDP, generating jobs and forming fixed capital, in addition to paying taxes that increase public revenues in the national economy.

A policy paper issued by the forum titled “The role of the private sector in the Jordanian economy: Contributing to enhancing growth and reducing unemployment” showed that the government (producers of government services) maintained its share of the volume of the Jordanian economy, by about 14-15 per cent, (relative to GDP).

This ratio has remained constant on average since the 2010 fiscal year, while the rest of the economy has maintained the equivalent of 85 per cent of GDP, the Jordan News Agency, Petra, reported.

Sectors with a large contribution to the economy — mainly financial services, insurance, business services and industry — accounted for about 36 per cent of the real GDP,

Meanwhile, the size of the medium sectors — mainly transportation, storage, communications, the wholesale and retail trade sector, restaurants, hotels, and the social services sectors — accounted for some 27 per cent of the real GDP.

As for the small sectors with a modest contribution to the real GDP, they maintained their relative weight in GDP, as small sectors (electricity and water, mines and mining, construction and agriculture) accounted for about 11.5 per cent of the real GDP.

These figure show that the economy over the past decade has not witnessed structural changes in the composition of the national economy.

The paper pointed out that the private sector is an important contributor to enhancing foreign currency assets in the national economy, through national exports, as this contribution exceeded JD5 billion in 2020, in addition to the fact that the private sector generates almost double jobs that the public sector does.

The paper indicated that taxes paid by joint stock companies constitute about 17 per cent of the total taxes, and sales tax revenues are the main source with some 71 per cent of the total taxes, noting that the total amount of paid taxes increased from JD2.986 billion in 2012 to JD4.680 billion in 2019.

The paper indicated that the percentage of small enterprises (with 1 to 4 employees) in the private sector topped the total number of establishments, as it accounted for 87.7 per cent of the total number of establishments in 2018, and employed 278,000 employees.

On the other hand, big establishments with 100 employees and more accounted for 0.38 per cent of the total number of establishments in Jordan, and hired 302,000 employees in 2018.

The paper also included a set of recommendations to support the existing companies to change into big ones, including clarity of vision and policies and increasing predictability and ability.