Business

AMMAN — The Housing Bank for Trade and Finance (HBTF) on Monday signed a partnership agreement with the United States Agency for International Development (USAID) that will support the provision of a new loan, geared towards businesses working in tourism. 

The initiative is part of an effort by USAID’s Building Economic Sustainability through Tourism Project to boost access to credit for small, medium, and large tourism enterprises, particularly outside Amman, according to a USAID statement. 

“Community-based tourism offers the authentic, unique, local and hospitable experience that many visitors seek,” Russell Bauer, director of the Economic Development and Energy Office at USAID Jordan said, noting that small and medium-sized enterprises (SMEs) can enable local communities to benefit directly from tourism.  

The new loan product is to help SMEs grow and expand, benefitting local communities and tourists alike, Bauer explained.

“The signing of the agreement comes in support the tourism sector, as one of Jordan’s most vital sectors that contributes to the national economy, and drives development forward,” Ihab Al Saadi, HBTF general said.

The loans are offered at flexible terms and preferential interest rates as an incentive for tourism businesses.

USAID will provide technical assistance to community based tourism operators in preparing effective loan applications and enhancing their capacity to manage operations. 

The initiative aims to improve banks’ willingness to provide tourism loans by demonstrating the benefits of tourism projects and businesses, and to encourage tourism entrepreneurs to apply for loans, boosting local economies around Jordan.

AMMAN — Jordan Strategy Forum’s Jordan Investor Confidence Index increased in March 2016 by 3.76 to reach around 97.87 points compared to 94.11 points in February 2016.

Confidence, as measured by each sub-index, differed in performance in March 2016, according to a forum statement. The sub-index of confidence in the Amman Stock Exchange (ASE) drove the overall increase in the Jordan Investor Confidence Index with an increase of 3.55 points to reach 100.45 points in March 2016. This increase is attributed to the positive change in foreign investment in the ASE whereby the inflow of foreign investment was over 4.5 times the size of the outflow of foreign investment in that month. This increase in confidence in the stock exchange was accompanied by a slight decrease in the Monetary Sub-Index, which dropped by approximately 0.55 points, and an increase in the Real Economy Sub-Index, which rose by 0.75.

The forum attributed the decrease in confidence in the monetary system to a decrease in CBJ’s foreign reserves by JD 253 million to reach 12,450 million in March 2016. 

This is in addition to a decrease in money being denominated in the Jordanian Dinar from 85.3 per cent in February of 2016 to 85 per cent in March 2016. The Forum’s statement did not disclose reasons for the drop. 

The Real Economy sub-index witnessed a drop in the capital of companies registered, in spite of an increase in the number of companies registered, which increased to 616 in March 2016, compared with 605 companies in February 2016. 

Moreover, this month private sector credit relative to total remained at 60 per cent in March. In spite of these changes, the slight increase in the value of the sub-index can be attributed to the increase in the Manufacturing Quantity Production Index, which settled at 161.8 points, compared to 155.1 points in February 2016. This is in addition to an increase in the number of construction permits and real estate activities.

The Jordan Investor Confidence Index is a monthly-issued index published by Jordan Strategy Forum. It aims to measure the confidence of investors operating in the Jordanian market through three aspects: confidence in the Jordanian Dinar and the monetary system, confidence in the real economy, and confidence in the Amman Stock Exchange.

BERLIN — German prosecutors are investigating former Volkswagen CEO Martin Winterkorn and another unnamed executive over allegations that they didn’t inform investors soon enough about the company’s scandal over cars rigged to cheat on US diesel emissions tests.

The Braunschweig prosecutor’s spokesman, Matthias Diekman, said in a statement Monday that the probe was opened at the behest of Germany’s Federal Financial Supervisory Authority, the country’s financial watchdog.

German stock market law requires publicly traded companies to alert investors as soon as they have unforeseen developments that could affect a decision to buy or sell the stock. Prosecutors said that Volkswagen only made that notification on September 22, and that there was evidence that the disclosure obligation should have been fulfilled earlier.

The news release said that the second employee is not the current board of directors’ chairman, Hans Dieter Poetsch. Poetsch was chief financial officer under Winterkorn but has since left that post.

Volkswagen did not immediately respond to calls seeking comment. The company has already said in response to an investor lawsuit that it met its disclosure obligation. Volkswagen has said Winterkorn was sent a memo on May 23, 2014, about emissions irregularities uncovered by an environmental group, but the company was not sure he saw it, and that top officials discussed the matter on July 27, 2015.

The company said earlier that the issue was believed to be something that could be resolved through a settlement that would not impose heavy costs, and it still believed that to be the case in early September 2015. On September 18, the US Environmental Protection Agency issued a violation notice, leading Volkswagen to assess the risks as more serious and issue its investor advisory four days later.

Winterkorn stepped down as the scandal came to light, saying he was doing so “in the interests of the company even though I am not aware of any wrongdoing on my part”.

Volkswagen has admitted equipping cars with software that sensed when the car was on a test stand and turned off emission controls during everyday driving. The company has apologised and commissioned a law firm to investigate. It is negotiating a settlement with US authorities in federal court in San Francisco on how it would fix or buy back some 500,000 diesels sold in the United States. Some 11 million such cars were sold worldwide.

Volkswagen has set aside 16.2 billion euros ($18.3 billion) from last year’s earnings to deal with the costs of recalls and fixes.

AMMAN — Six Jordanians will attend the Global Entrepreneurship Summit (GES), which will take place between June 22 and 24, 2016, in Palo Alto, California, according to a statement of the US embassy. 

They will be joining more than 700 entrepreneurs from around the world along with investors, speakers and leaders in the entrepreneurship space.

The attendees from Jordan are Massa Al Dalqamouni, Kamel Al Asmar, Rasha Al Khateeb, Sami Hourani, Sima Najjar and Lama Shashaa, according to the statement. 

These entrepreneurs will be joined by high-level US government officials, including President Barack Obama, Secretary of Commerce Penny Pritzker, and Administrator of the Small Business Administration Maria Contreras-Sweet.

They will also meet with USAID Administrator Gayle Smith, Ambassador at-Large for Global Women’s Issues Catherine Russell, and Under Secretary of State for Public Diplomacy and Public Affairs Richard Stengel.

This summit will be the 7th installment in a series previously hosted by the United States and the governments of Turkey, the United Arab Emirates, Malaysia, Morocco and Kenya.  

In bringing the summit back to the United States, President Obama highlights his commitment to building bridges that help us tackle global challenges together, according to the embassy statement. 

PARIS — Three mega-mergers in the agrochemical sector, including Bayer and Monsanto, have raised concerns among farmers who fear higher prices and consumers more genetically-modified food.

Even before Bayer successfully woos US-based Monsanto, German civil society has erupted in protest against a national champion acquiring a producer of genetically-modified seeds and Roundup, the world’s leading but also controversial weedkiller that is suspected of being a carcinogen.

Meanwhile ChemChina is tying the knot with Swiss-based Syngenta, and US companies Dow and DuPont are also finishing wedding plans.

The three giants born of these mergers will control two-thirds of the global market for seeds and pesticides, two key products for farming.

As competition regulators in Europe and the United States weigh the mergers, non-governmental organisations and advocates of small-scale farming are voicing their concerns.

“Wherever you set the bar to define an oligopoly, it’s clear that the mergers will further reduce choice for farmers, especially in southern countries,” said Renee Vellvee of the NGO Grain.

She expressed concern the mergers would put “too much power at the top of the food chain in the hands of several company boards”.

In Germany, Annemarie Volling of the AbL group of small and medium-sized farmers worries that after such mergers “the big players will decide themselves which sorts of seeds will go on the market”.

“For the moment, there are no GM crops in Europe, but the question is whether Bayer will dare to try it,” she said.

Large farmers and cooperatives in Germany are so far less engaged.

“It isn’t an issue at all, the farmers have other concerns at the moment,” such as the fall in milk prices, said Holger Brantsch of the Brandenburg Agricole Federation. “It doesn’t interest them at the moment.”

Consolidation = higher costs 

While some sympathetic US farm groups see the mergers as a means for their suppliers to cut costs and maintain funding for research and development into innovative products, others are calling for the mergers to be blocked.

“Seed costs are the highest input expense for farmers,” National Farmers Union president Roger Johnson said in a statement last month.

“While some of the cost can be attributed to more sophisticated technology, we have seen time and again that consolidation and market restructuring has increased the cost of crop inputs.”

With the current low prices for food commodities, “additional cost increases for crop inputs could cripple a lot of family farms in this country”, he warned.

In Argentina, a big customer for GM seeds for corn, soybeans and cotton, there is a wait-and-see attitude.

“While the scenario of price hegemony is likely, it isn’t the immediate reality,” said Carlos Marin, member of a group of over 2,000 agricultural businesses. 

On the contrary, he noted pesticide and fertiliser costs have been decreasing in recent months.

In France, the cooperative group InVivo, which holds about half of the market for the distribution of pesticides, believes it is large enough to hold its own in price negotiations with the agrochemical giants.

And “there are new suppliers arriving on the market, in particular with generic versions of pesticides, where there is a frenzy of competition,” said Jean-Sebastien Bailleux, who heads up the agricultural supplies unit at InVivo.

Tractors too? 

But Pat Mooney, director of the Canadian NGO ETC, called it “short term thinking by any company... to think they can face the pressure themselves”.

He believes the pressure could be even greater as the current crop of mergers could be just a prelude to agrochemical companies being picked by tractor manufacturers, which have much higher sales.

The purchase of Bayer-Monsanto would be of interest to a company like John Deere as both agrochemical groups and equipment manufacturers have been moving towards providing data services to farmers for “precision agriculture”.

A mash of precise data on soil conditions, often gleaned in part from satellites, plus GPS guided application of pesticides or water, can help boost yields while cutting costs.

“I don’t think any farmers feel very good about having so much of their input controlled by so few companies,” said Mooney, noting concerns voiced by several farm groups.

“They’d be much more nervous if John Deere was coming in, because it’s a much bigger company than Monsanto,” he added.

AMMAN — Amman Chamber of Commerce (ACC) President Issa Murad commended the Central Bank of Jordan’s (CBJ) issuance of bonds for individuals, describing it as a sound step that enhances citizens’ participation in investment with high-profit rates, according to an ACC statement received on Sunday. The step is also good for the economy, he indicated.

This type of bonds is used in many countries due to its flexible characteristics that offer citizens a chance to enrol in the economy with a new, secure and less-risky method, Murad added in the statement.

Under the name “Saving Bonds for Individuals”, the bonds will be issued on July 3rd, at a fixed interest rate of 4.25 per cent with a maturity term of five years.

The issuance will provide all citizens, including those living abroad, with the chance to effectively participate in the economy, and will enable them to use these bonds for mortgages and loans, he said.

AMMAN — Arab Businessmen Association President Hamdi Tabbaa on Friday stressed the importance of establishing economic integration among Arab countries, as a means to mitigate the fallout of the past five years of regional turmoil.   

The regional economic outlook continues to be dim, amid the state of ongoing political and security uncertainty witnessed in several Arab countries for more than five years now, Tabbaa said in an interview with the Jordan News Agency, Petra.

Tabbaa put the Arab countries’ losses at around $245 billion annually, amounting to $1,225 billion in the past five years.

These figures are in accordance with reports of the HSBC Bank that estimate that the losses of Syria, Iraq, Yemen, Libya, Egypt, Tunisia and Lebanon represent 35 per cent of their annual gross domestic product, Tabbaa said. 

A report of the Arab Investment and Export Credit Guarantee Corporation unveils that direct foreign investment inflows into Arab countries were down to $44 billion in 2014 from around $48 billion in 2013, he said.

In 2008, foreign investment in Arab countries reached a record of $96 billion.

In order to deal with the ongoing challenges, Tabbaa also recommended the restructuring of the Arab League, calling for a full makeover, as well as reviewing the overall educational system of Arab countries, to focus on instilling the spirit of creativity and innovation. 

SAN FRANCISCO/BENGALURU — Apple Inc. said its iPhone 6 and 6 Plus were still available for sale in China after Beijing's intellectual property regulators barred their sales saying the designs had infringed a patent held by a Chinese company.

"We appealed an administrative order from a regional patent tribunal in Beijing last month and as a result the order has been stayed pending review by the Beijing IP Court," Apple said in a statement on Friday.

The notice, dated May 19, banning sales of certain iPhone models in Beijing was posted on a Chinese government website. 

The Chinese market is vital to Apple, driving more of its sales than any other region outside the United States. But the tech giant has faced greater scrutiny there in recent months, with its online book and film services blocked by Chinese regulators earlier this year.

Apple historically had enjoyed favourable treatment in China, but Beijing's crackdown on the iPhone 6 and 6 Plus is a reminder that the tech giant is not immune to the scrutiny that other US tech firms have long faced in the country, said analyst Colin Gillis of BGC Partners.

"There's a variety of risks of having dependence on sales in China to Apple, and government intervention in whatever form is one of them," he said.

Last month, Apple announced that it would invest $1 billion in Chinese ride-hailing firm Didi Chuxing, a move that was widely viewed as an attempt to shore up relations in China. 

AMMAN — Jordan has seen a decline of its agricultural sector productivity over the last six years as a result of prolonged cycles of negative growth and a decrease of productivity per worker. Regional conflict has also curtailed Jordan’s export opportunities substantially, according to a World Bank (WB) report.

“The Cost of Irrigation Water in the Jordan Valley” looks at innovative ways to better manage water in agriculture in one of the world’s most water-stressed countries. The study looks at ways to improve irrigation services delivered by the Jordan Valley Authority (JVA), and efficiency of water use across different cropping patterns.

The recent study, funded by the WB’s Water Partnership Programme, also reviews mechanisms to improve financial cost recovery, through reducing costs and increasing revenues, to manage farmers’ demand for water. Findings reveal that significant cost savings can be made through a larger focus on energy efficiency programmes and better asset management.

Towards improving revenues in a resilient way, the report combines tariff scenario analyses with cropping patterns to show how both farmers and the environment could benefit from shifts in the types of crops produced in some areas.

Growing less water-intensive crops would improve farm resilience to water scarcity in the long-run while providing an opportunity for more sustainable service delivery through higher tariffs — which would affect farmers who grow vegetables much less than those who grow the other major crops (citrus and banana). 

An analysis of the distributional impacts of irrigation tariffs demonstrate they are relatively modest, while the number of farmers in the Jordan Valley is small, and the number of poor farmers even smaller, making it relatively easy for the government to provide support or subsidies to poor farmers in the Valley if tariffs were to increase.

In its conclusion, the report says it is clear that the JVA can significantly improve its revenue flows. The rapid increase in industrial tariffs shows that the revenue base can be increased. This increase in revenues will also require a change in accountability regarding the revenues, the report says. Currently, all revenues are transferred to the Treasury and do not return to JVA. As such, the incentive for the JVA to bill and collect efficiently and effectively to expand its revenue base is small.

Jordan is one of the most water-stressed countries in the world. Its annual renewable resources of 145 cubic metres per capita are far below the threshold of severe water scarcity of 500 cubic metres. 

The competition among water needs for irrigation, industrial and domestic uses, wetland protection, and  in-stream habitat needs continues to pose serious challenges in the Kingdom, according to the WB report. 

CAIRO/RIYADH — Egypt’s efforts to stamp out illicit currency trading is pushing black market dealers to carry out transactions abroad, beyond the reach of the law, robbing the economy of its last vital source of foreign currency.

Dealers say they are scooping up dollars held by expatriate workers and exporters before they ever enter Egypt, exacerbating the dollar shortage at the heart of the currency crisis that has already undermined investment and hit trade and manufacturing.

Egyptians working abroad send back about $19 billion a year in remittances, an important source of hard currency for a country that has seen tourism, foreign investment and exports dwindle in the political turmoil that followed the 2011 revolt.

The central bank has sought to crack down on the black market, revoking the licenses of exchange bureaus found dealing far beyond the official rate. This month, the government approved plans to impose jail terms for black market trading.

But the gap between an official dollar rate of 8.8 Egyptian pounds and a black market rate close to 11 pounds is encouraging expatriates to circumvent banks altogether.

“It’s a vicious cycle because the only way for the black market to end is for banks to start providing dollars and the banks don’t have the dollar resources, because they are being sucked up by the black market abroad,” said one banker who declined to be named due to the sensitivity of the matter.

Abu Marwan, an Egyptian engineer who works in Saudi Arabia, used to transfer money each month to his wife’s bank back home. For the past year, he has gone instead to black market dealers who offer a better rate if he hands over his cash abroad.

“Me and my colleagues here stopped transferring money through the banks to Egypt because when you do that you lose,” said Abu Marwan, who makes the equivalent of $2,600 a month.

“We all open a phone line and agree on the price together, then I give the man in Riyadh the money and at the same time his partner gives my wife in Egypt the money in Egyptian pounds at a higher rate.”

Central bank officials were not immediately available to respond to queries about black market dealers carrying out transactions abroad.

Egypt has struggled to restore growth since the 2011 uprising that toppled Hosni Mubarak and scared away tourists and foreign investors - key earners of foreign currency.

Foreign reserves have halved from over $36 billion before the revolt to about $17.5 billion in May.

The central bank has been forced to ration dollars and prioritise essential goods like food, introducing restrictions on the transfer and deposit of foreign currency.