Business

AMMAN — The European Bank for Reconstruction and Development (EBRD) is launching a new initiative to increase access to trade finance and advisory services for small and medium-sized businesses (SMEs). 

The initiative, known as Trade Ready, will expand the outreach of the EBRD’s pioneering Trade Facilitation Programme (TFP) and Advice for Small Businesses (ASB), helping SMEs involved in importing and exporting activities to get the finance and know-how they need to strengthen their ability to trade and to grow.

Trade Ready aims to unleash the potential of SMEs for international trade,  according to an ERBD statement. 

It offers trade finance training for local banks as well as advisory services for companies alongside policy dialogue to engage in improvements in the regulatory environment. While banks can expect to win new clients with the introduction of trade finance products, businesses will benefit from better access to finance and the chance to expand to international markets.

The initiative was presented to the public today at the World Trade Organisation (WTO) Public Forum 2016 in Geneva which was held under the theme “Inclusive Trade”. The Forum is the largest annual outreach event of the WTO and it usually attracts more than 2,000 guests.

Rudolf Putz, EBRD head of the Trade Facilitation Programme, said: “We are very happy to present this new initiative as it will allow local banks to reach small businesses that have the potential to benefit from international trade. Private SMEs represent the core of the economies in most countries where the EBRD invests and supporting the trade activities of these firms is an important element for securing their sustainable growth. The potential is huge, but often the know-how is missing, and this is exactly the issue Trade Ready will address.”

“We know that small businesses need access to both finance and the right advice to develop and grow. With Trade Ready, the EBRD will support small businesses through a wide range of services to make them more competitive abroad and at home, whether it is having enough information to make the best choice in their trade finance options or working with a consultant or adviser to adapt their product for a particular market.

“To achieve inclusive trade, we need to address the fact that smaller businesses are often overlooked,” said Charlotte Ruhe, EBRD director of advice for small businesses.

The initiative will provide SMEs with advice in a wide range of areas as well as offering training on trade finance instruments and networking opportunities to help engage in export and import activities. Trade Ready will also work with local banks to help them tailor trade finance products to the needs of small businesses and market them effectively. By engaging with smaller firms in trade finance, banks can expand the range of financial products they offer and diversify their portfolio. 

More details are available online.

 Established in 1999, the programme has enabled more than 18,500 transactions worth over 12.8 billion euro in 28 countries where the EBRD invests. 

The EBRD helps small and medium-sized businesses to access external advice in 26 countries from Morocco to Mongolia, applying donor funding from the European Union and a wide range of bilateral and multilateral donors. More than 16,000 SMEs have been supported to date, employing over 250 million euro of donor support that has been combined with contributions from the clients themselves.

AMMAN — In cooperation with the Italian Piemonte Agency for Investments, Export and Tourism and other European institutions, the Jordan Chamber of Industry (JCI), on Tuesday acquainted businessmen with the Euro-Mediterranean (Euromed) business promotion campaign in Jordan.

The campaign promotes Jordanian-Euromed partnerships and businesses to strengthen Euromed economic relations and increase the commercial exchange, the Jordan News Agency, Petra, reported.

JCI President Adnan Abul Ragheb highlighted the EU’s recent agreement to simplify the rules of origins for Jordanian products as an important deal to increase the Kingdom’s exports to Europe, stressing the importance of the campaign.

The Barcelona Process or Euromed Partnership was launched in 1995 to strengthen European relations with the countries in the Mashriq and Maghreb regions.

GENEVA — The World Trade Organisation (WTO) on Tuesday downshifted its global trade forecast, warning that anti-globalisation rhetoric and Brexit were pushing trade growth to its slowest pace since the financial crisis.

The warning comes as talks on a landmark free trade deal between the European Union and United States battle stiff opposition and as Britain's EU exit causes jitters.

The WTO said that global trade was now estimated to expand by just 1.7 per cent this year, compared to its April projection of 2.8 per cent.

The new figure is also a far cry from a projection a year ago that trade would swell by 3.9 per cent this year.

Describing it as "wake-up call", the Geneva-based global trade body said growth had fallen to its slowest pace in around seven years when the global financial crisis hit.

"With expected global GDP [gross domestic product] growth of 2.2 per cent in 2016, this year would mark the slowest pace of trade and output growth since the financial crisis of 2009," the trade body said in a statement.

Looking ahead, the WTO said several issues, including Brexit's possible impact, had now cast a shadow and it had revised down its 2017 forecast.

Trade is now expected to grow between 1.8-3.1 per cent, down from the previously anticipated 3.6 per cent, said the WTO, which sets the rules of global commerce.

Also clouding the outlook, the WTO said, is "the possibility that growing anti-trade rhetoric will increasingly be reflected in trade policy" as well as financial volatility due to monetary policy changes in developed countries.

Last week, the Paris-based Organisation for Economic Cooperation and Development said Britain — the world's fifth-biggest economy — was poised to take a major hit next year from its decision to leave the EU.

The WTO said that the main impact of the shock vote in June had been on the value of the pound and noted that it had not sparked an immediate economic downturn.

But, it added: "Effects over the longer term remain to be seen. Economic forecasts for the UK in 2017 range from fairly optimistic to quite pessimistic."

'Anti-globalisation sentiment' 

The WTO said the downgrade followed a sharper-than-expected decline in merchandise trade volumes in the first quarter, and a smaller-than-expected rebound in the second quarter.

The contraction, it said, was driven especially by slowing economic and trade growth in developing economies like China and Brazil.

China's banking sector debt came into the crosshairs earlier this month of the global central bank watchdog, the Bank for International Settlements, fuelling fresh fears about the world's second biggest economy.

But, said the WTO, North America, which had showed the strongest import growth of any region between 2014 and 2015, was also hit by deceleration.

"The dramatic slowing of trade growth is serious and should serve as a wake-up call," WTO Director General Robert Azevedo warned in the statement. 

"It is particularly concerning in the context of growing anti-globalisation sentiment," he added cautioning against this translating into "misguided policies".

Azevedo also highlighted the negative impact of inequality.

"While the benefits of trade are clear, it is also clear that they need to be shared more widely," he insisted.

"We should seek to build a more inclusive trading system that goes further to support poorer countries to take part and benefit, as well as entrepreneurs, small companies, and marginalised groups in all economies," he said.

"This is a moment to heed the lessons of history and re-commit to openness in trade, which can help to spur economic growth," Azevedo said.

AMMAN — Jordan Investor Confidence Index dropped in June by 3.11 points to 92.58 points, compared with 95.69 points in May 2016.

The monthly-issued index, published by the Jordan Strategy Forum (JSF), seeks to measure the confidence of investors operating in the Jordanian market.

All three sub-indices witnessed declines in June 2016. Firstly, confidence in the monetary system sub-index dropped 0.64 points from 92.58 points in May 2016 to 91.94 points in June 2016.The drop was attributed to a slight decrease in the Central Bank of Jordan foreign reserves, which reached JD12,062 million in June.

The sub-index of confidence in the real economy dropped by 0.9 points, reaching 102.67 points compared to 103.57 points in the previous month, according to a JSF statement. 

The number of companies registered went down to 404 from 550 in May despite an increase in the total capital of registered companies, which reached JD8.4 million in June, the statement indicated

Moreover, the manufacturing quantity production index dropped by 3.89 points to reach 163.2 points, down from167.09 points in May 2016. 

This drop was mainly attributed to decreases in the production index for the mining and quarrying sector, as well as the manufacturing sector. This was accompanied by decreasing construction activity, as the number of construction permits dropped by 18 per cent. Total tax collected on real estate also dropped.

The sub-index of confidence in the Amman Stock Exchange dropped by 1.57 points to settle at 97.97 points in June, and this was attributed to a decline in shares bought by foreign investors to JD0.92 million from JD1.8 million. 

ALGIERS — Iran downplayed on Monday the chances of OPEC and non-OPEC oil producers clinching an output-restraint deal in Algeria this week even though several other members of the group said they still hoped for steps to tackle a price-eroding glut of crude.

Oil prices have more than halved from 2014 levels due to oversupply, prompting OPEC producers and rival Russia to seek a market rebalancing that would boost revenues from oil exports and help their crippled budgets.

The predominant idea since early 2016 among producers has been to agree to limit output, although market watchers have said such a move would fail to reduce unwanted barrels.

Sources told Reuters last week that Saudi Arabia had offered to reduce its output if Iran agreed to freeze production, a shift in Riyadh’s position as the kingdom had previously refused to discuss output cuts.

However, oil markets fell on Friday as hopes for a comprehensive deal in Algeria faded, with sources saying the informal meeting was meant only to build consensus ahead of formal OPEC talks in Vienna at the end of November. Crude prices recovered on Monday in volatile trade.

As delegations gathered in Algiers, Iranian Oil Minister Bijan Zanganeh said expectations should be modest.

“This is an advisory meeting and that’s all we should expect from it,” he was quoted as saying by oil ministry news service SHANA before he left for Algiers. “The talks among OPEC members can be used for the OPEC summit in Vienna in November.”

One OPEC delegate said the focus was now firmly on trying to persuade Iran to freeze production at levels acceptable for the rest of OPEC.

Iran’s production has been stagnant at around 3.6 million barrels per day (bpd) in the past three months, close to what the country produced before the imposition of European sanctions in 2012.

The sanctions were eased in January 2016, and Iran has said it wants to achieve output of more than 4 million bpd.

Some ministers and officials expressed hope that a deal could emerge this week.

“For us in the UAE, we are for a decision. We think a freeze will help if it is agreed. We hope that all are going to agree,” the United Arab Emirates’ energy minister, Suhail Bin Mohammed Al Mazroui, told Reuters.

Algerian Energy Minister Noureddine Bouterfa said everyone in the Organisation of the Petroleum Exporting Countries agreed that the market was badly oversupplied and the situation had worsened since the last OPEC meeting in June.

“Credible and significant action is needed to help the market rebalance... One fundamental aspect is that OPEC production should be significantly below the level of August. The second is that the effort must be shared out.”

“Third is that any agreement be limited to the time it takes to reabsorb oil stocks. And the fourth is that the action should be credible in the eyes of the market and verifiable,” Bouterfa told French-language Algerian daily Liberte.

Members of OPEC will meet on the sidelines of the International Energy Forum, which groups producers and consumers, from September 26-28. Russia is also attending.

DUBAI — Oil prices have been recovering but are still weak, the head of Gulf giant Saudi Aramco said on Monday, warning that market volatility could persist in the near future.

"While the oil market has recovered from its most severe period, it's still weak," Aramco Chief Executive Officer Amin Nasser said at an energy conference in Dubai.

He said global supply has begun to fall, "especially US shale oil", due to the cancellation or deferring of investments in new oil and gas capacity.

"Despite volatility, the market is heading toward rebalance, and prices are likely to strengthen with time," Nasser said.

"However, market volatility could remain with us for the near future."

Oil prices rose modestly ahead of a meeting of producers from the Organisation of the Petroleum Exporting Countries cartel and Russia in Algeria this week that could agree to cap supplies.

Around 1100 GMT, the US benchmark West Texas Intermediate for delivery in November was up 54 cents at $45.02 a barrel.

Brent North Sea crude for November added 60 cents to $46.49 a barrel compared with Friday's close.

Despite the positivity, fears remain that an agreement cannot be reached in Algiers. Previous attempts to do so in April were scuppered by Iran, which had just emerged from years of Western-imposed nuclear-linked sanctions.

Oil prices have been hammered by a stubborn supply glut since late 2014 that has seen supply far outweigh demand, resulting in 13-year lows earlier this year.

The Aramco chief said the company that runs the kingdom's oil production has set 2018 as a target for the anticipated listing of some of its shares as part of a privatisation programme.

"The current listing target is 2018," he said, pointing out that shares will be listed on the Saudi stock exchange and "potentially" abroad.

Aramco's listing is at the heart of Saudi Arabia's wide-ranging Vision 2030 plan to wean the economy of the world's biggest petroleum exporter off oil.

The kingdom plans to float less than 5 per cent of Saudi Aramco on the stock market.

AMMAN — International Finance Corporation (IFC), a member of the World Bank Group, has arranged a $76 million financing package for Fotowatio Renewable Ventures (FRV) to build a new 50 megawatt solar photovoltaic (PV) power plant in northern Jordan, the latest in a series of efforts to boost renewable energy investments in the oil-importing country, according to a statement from the organisation on Sunday.

The financing package, which includes $21 million from the IFC-Canada Climate Change Programme, will support the construction of FRV’s first solar power plant in the city of Mafraq.

According to the statement, the new plant will supply power at 6.9 cents per kilowatt-hour — a price far below Jordan’s average cost of electricity and among the lowest for solar energy worldwide.

The plant, which is due to start operating in 2018, represents approximately 1 per cent of Jordan’s overall generation capacity and is expected to supply about 155 million kilowatt hours of electricity per year, sufficient to power over 40,000 average homes. It is also expected to create about 250 jobs during the construction phase and help reduce the carbon footprint by displacing over 80,000 metric tons of CO2 per year, equivalent to removing approximately 17,000 cars from the country’s roads.

“In Jordan, the demand for power is growing rapidly,” the statement quoted Mouayed Makhlouf, IFC director for the Middle East and North Africa, as saying. “Privately owned power companies, with their expertise and financial clout, have a vital role to play in bringing new generation capacity online at a lower cost which in turn will help the  government to provide Jordan’s economy with the energy it needs to grow.”

The Mafraq plant is the first PV solar plant to be financed out of the four planned under the Jordanian government’s second round of solar PV projects, said the statement. 

“This is our first plant in Jordan and the country has tremendous potential when it comes to renewable energy,” the statement quoted Tristán Higuero, COO of FRV, as saying. “By tapping into the power of the sun, we can help provide the country with affordable, clean energy and support a green growth path.”

In November 2013, IFC closed financing for the first commercial-scale renewable energy project, the 117-megawatt Tafilah wind farm. IFC followed this in 2014 with the financing of the Jordanian government’s first seven solar PV plants; the largest-ever private sector-led solar project in the MENA region, according to the statement. 

In addition to the $76 million from IFC and the government of Canada, IFC also mobilised financing for FRVs solar plant from other investors, including $12 million from the Dutch development bank FMO, $8 million from Europe Arab Bank, and $5 million from the Finnish development financier FinnFund. The IFC-Canada Climate Change Programme also contributed $2.4 million in a C-loan.

“The government of Canada’s investment in Jordan is helping them reduce greenhouse gas emissions and support their transition to a cleaner and greener future. Growing renewable energy production, like solar power, is part of an effective strategy to address climate change,” the statement quoted Catherine McKenna, Canadian Minister of Environment and Climate Change, as saying.

FRV is a global solar development company with a 4.3 GW development portfolio in the emerging solar markets including Australia, the Middle East, India, Africa and Latin America.

SEOUL — Exploding batteries and an embarrassing recall of a flagship gadget during a controversial, closely-watched leadership transition — it’s been a bad year for Samsung, and analysts warn the trouble isn’t over yet.

With ever-fiercer competition in the saturated smartphone market, South Korea’s biggest firm is desperate to avoid a full-blown disaster that could cost billions, hammer its reputation and taint its new leadership.

Just weeks after the early roll out of the Galaxy Note 7 “phablet”, the world’s largest maker of smartphones was forced to recall 2.5 million units globally following complaints its battery exploded while charging.

“Samsung appears to have rushed fast to roll out the Note 7 with the iPhone 7 in mind... and it is paying a hefty price now,” said Greg Roh, analyst at Seoul-based HMC Investment & Securities.

With images of charred phones flooding social media, the unprecedented recall was a humiliation for a firm that prides itself as an icon of innovation and quality — and the timing of the crisis could not be worse.

The Note 7 was meant to underpin growth this year as Samsung struggles to boost sales, squeezed by Apple in the high-end sector and Chinese rivals in the low-end market, as profit has stagnated.

One bright spot this year was the flagship handset Galaxy S7, which earned rave reviews and boosted operating profit to a two-year high in the second quarter. The Note 7 was crucial to sustaining that momentum.

The recall, currently underway in 10 nations, could cost the firm $3 billion in the long run, some analysts say, while Roh warned the fallout could significantly hurt profit for months.

The crisis has also shaved $15 billion off its market value since late August, when the firm’s share price hit the highest point so far this year. 

While unconnected, Samsung said last week it had sold shares in four technology companies to free up money, in a move it said was “aimed at focusing on our core business”.

‘Crucial test’ for new leader

Samsung and its sister firms have in recent years divested from non-core operations as the parent Samsung Group sought to streamline business amid a generational power transfer in the founding Lee family.

The group wants to nurture public support ahead of the controversial, closely-watched handover amid lingering questions about the leadership credentials of the Lee family’s scion and an overall lack of transparency in governance.

Lee Kun-hee, the head of Samsung Electronics as well as the parent Samsung Group, has been bedridden since suffering a heart attack in 2014 with his 48-year-old son, J.Y. Lee, presumed to take over.

The junior Lee, currently vice chairman of Samsung Electronics, was nominated two weeks ago as the firm’s new board member, cementing his grip on power.

Senior Lee is largely credited with turning the once-obscure firm into a global giant, but less is known about his son who has kept a relatively low profile while rising the ranks.

“J.Y. Lee has a lot to prove as all eyes are on him, and the recall crisis would be a crucial test for him,” said Wi Pyoung Ryang, analyst at the Economic Research Reform Institute in Seoul.

Industry experts have criticised the Lee dynasty for controlling the vast group through a complex web of cross shareholdings, although they only directly own about five percent of total stocks.

Samsung and other family-run conglomerates, or “chaebol”, have played a major role in South Korea’s stellar growth for past decades.

But the families have come under growing public criticism for controlling and running their businesses with minimum scrutiny by investors or regulators.

“It’s a tough and crucial time for Samsung, and its new leader has his work cut out,” Wi said.

Damaged goods

As the recall threatens to drag on, it is unclear how long the crisis — and the risk of more explosions — would plague the firm, said Lee Seung-woo, analyst at IBK Investment & Securities.

Since Samsung started rolling out replacements last week, half-a-million users in the US have exchanged handsets. About a half of 420,000 South Korean users reportedly have done so, but some are complaining of delayed delivery of new phones.

While the financial hit will likely be huge, a bigger worry for the firm is the effect on the Samsung name, said Linda Sui, analyst at market research firm Strategy Analytics.

“In addition to material loss by revenue and profitability, potential damage on brand image and consumer confidence is even worse and hard to fix up in the short term,” she said.

“The Korean giant is facing a tough time now,” she said, warning of “falling fortune and tough competition” until it rolls out another flagship model next year.

ANKARA — Turkish Prime Minister Binali Yildirim hit out at Moody's on Saturday, claiming it was biased after it cut Turkey's sovereign debt rating to "junk" status.

Amid months of political turmoil, the ratings agency cut Turkey to "Ba1" level, saying the country's finances had weakened while its reaction to the July 15 attempted coup set back expected reforms.

Yildirim dismissed Moody's concerns, insisting the Turkish economy was built on solid foundations and that Ankara would not neglect fiscal discipline.

He pointed out that the central bank did not feel the need to give money to the markets, referring to the fact that there was no mass panic in the markets post-putsch.

"Just two days ago this ratings agency said 'the Turkish economy had easily overcome the shock of the attempted coup'. What changed in two days?" he told reporters in Istanbul.

"Frankly we do not think these assessments are unbiased," he said, suggesting Moody's wanted to create a "perception" of the Turkish economy, but he did not elaborate further.

The ratings agency said on Friday the rule of law was affected by the government's reaction to the failed putsch, dismissing and detaining tens of thousands of people in the education sector, the military and judiciary.

But Yildirim suggested agencies' assessments did not mean that much to Ankara, though his Cabinet stressed that Turkey was still committed to structural reforms.

"The Turkish economy is not an economy that will get into line because of three or five pieces of assessment from agencies," Yildirim said.

He added that as long as Turkey had a young citizenry and major construction projects, "let them say what they want, it is not important to us".

But he admitted to declining tourism, which he hoped would improve in a year's time.

Moody's said a fall in tourism receipts, which represent 4.4 per cent of the economy, due to Russia's sanctions last year and a rise in attacks inside the country, had weakened its balance of payments.

At the same time, it noted, external debt had surged in the government, corporate and banking sector, with some $156 billion in payments due this year.

In a series of posts on Twitter, Deputy Prime Minister Mehmet Simsek in charge of economic affairs, and Economy Minister Nihat Zeybekci said the country was committed to reforms.

Former finance minister Simsek said that research and development reforms were made this year already as well as changes to the labour market, increasing individuals' savings and improving the investment climate.

AMMAN — A Korean trade delegation met on Thursday with its Jordanian counterpart, in the presence of Korea’s Ambassador to Jordan Lee Bom-yon. The delegation, comprising five manufacturers and exporters of several products, was the second to come to Jordan from Daejeon City this month to look into the possibility of increasing commercial cooperation.

The visit is intended to explore opportunities for cooperation between the Korean and Jordanian sides and ways of developing current collaboration, according to a statement by the Korea Business Centre in Amman, the Commercial Office of the embassy of the Republic of Korea.