Jordan International Financial Centre (JIFC)

The international financial Centre is a term that refers to an area that has advanced financial legislation and procedures and provides advanced infrastructure to facilitate global financial business. The international financial centre is distinguished by its ability to attract international investments, provide diverse financial services, strong business infrastructure and strong regulation of financial markets. In general, the financial centre is a free zone that provides financial and tax advantages to attract companies and investors.

The benefits of international financial centers lie in enhancing economic growth, providing job opportunities, enhancing international trade and diversifying the economy. Financial centres create commercial and investment environments that attract capital to the country. The centers also provide an independent legal climate and a constant regulatory path for businesses to conduct financial activities supported by advanced infrastructure and advanced technology. Financial centers offer economic activities, such as investment funds, emerging and innovative companies, commercial real estate, financial sector activities, banks, renewable energy. However, despite this promising view, attention must be paid to the financial risks and their economic effects to ensure that the financial centre is able to manage the risks in order to develop policies and procedures to govern them and to deal with them while remaining fully informed of local and international financial instructions and compliance requirements, such as anti-money laundering, terrorist financing and currency smuggling.

The success of the international financial centre depends on several aspects: Firstly, the presence of international banks and major financial institutions in the country, the existence of strong and developed financial markets. In addition, fostering Investment banking activities, attracting business and investments with tax exemptions and incentives. Lastly, accessibility to advanced financial services such as online trading, and electronic (digital) currencies.

As for the concept of establishing international financial centre in Jordan (JIFC), the idea is legitimate, applicable, and it has the elements of success and prosperity, especially since Jordan has got vast experience in financial services sector. Jordan hosts international and regional financial institutions and boasts excellent financial and monetary policies, along with good credit rating and a strong banking sector. Jordan has many advantages that qualify it to be a desirable financial destination because of its geographical location, political, economic and security stability, the diversity of its economy, the transparency of Jordan’s banking system, the adoption of international standards in financial management and control, and the probability to repatriate currency, profits and funds if needed.

The idea of developing JIFC is an important step to advance Jordan to the next economic level. However, measures need to be taken at the national level to ensure successful implementation. This includes strengthening the financial infrastructure and providing modern offices and integrated facilities for financial operations, developing financial laws and regulations to bring Jordan in line with international standards. This also includes strengthening cooperation with international and regional banks and financial institutions and developing strategic partnerships with them, as well as encouraging financial technology (fintech) and modern instruments of financial innovation, such as developing solutions for electronic payment and digital finance, the use of artificial intelligence, blockchain and digital payment technologies. Foreign direct investments shall also be integral to ensuring JIFC’s success in addition to participation in the global economy and introducing legislation to avoid double taxation. Lastly, providing various services such as insurance, reinsurance, investment funds, and wealth management to attract different types of financial companies and investors.

On the other hand, the impact of the financial centre on the economy depends on its size, services, and competitive strength. Financial centres play an important role in the economies of their countries and the world by participating in financing economic activity and providing advanced financial regulations through specialised arbitration centers, investment courts, and reconciliation centres. They provide modern financial infrastructure such as banking networks, financial technology, electronic commerce, artificial intelligence, data analysis and encryption. Further, they ensure diversity, financial integration, and financial services in one place and offer solutions to meet financial needs and enhance economic efficiency. They also encourage global investment and trade as well as offer non-banking services i,e insurance, reinsurance, and wealth management. These stimulants for the economy in general however, for the local economy the effect is obvious in improving financial and technological infrastructure, the development of financial markets, attracting foreign investments and international financial institutions and increasing tax revenues due to expansion.

In conclusion, international financial centers are an excellent addition to the economy. The international community has created an umbrella that brings these centers together under the name of the Global Alliance for International Financial Centers. However, at the local level, establishing JIFC will contribute to improving Jordanian economic performance. It will change the rules of business in Jordan and the area. Its effects will be reflected positively in the indicators of economic growth, unemployment rates, and job opportunities. It will facilitate attracting major companies and international financial institutions to be part of the development in the country and participate in the expected financial activities that expected to launch such as the industrial activities and the construction events to rebuild Iraq and Syria. JIFC should host these events and benefit from such business. Finally, we hope JIFC, will deliver the aspirations of His Majesty the King and His Highness the Crown Prince to move Jordan economy to advanced level and will contribute to the overall development of Jordan.

Haider Al-Majali is an economist and investment expert. haider.majali@gmail.com