Business

AMMAN — Jordan faced large pressures in recent years because of the political and security instability in the region, which led to the influx of a large number of Syrian refugees and border closures with Iraq and Syria, Central Bank of Jordan (CBJ) Governor Ziad Fariz said Monday.

Speaking at the 15th International Conference on Sustainability and Competitiveness in Business held at Al Zaytoonah University, Fariz added that these crises led to a severe pressure on the limited economic resources of the Kingdom and its infrastructure besides a sharp drop in exports to Syria and Iraq. 

During the conference, organised by the university's faculty of economics and administrative sciences, Fariz mentioned that the current conditions also affected the influx of the foreign direct investment and the tourist activity in the Kingdom.

He continued that these difficulties heightened risks and shipments costs for both exports and imports, which affected the competitiveness of Jordanian products, especially in 2015. 

Fariz said the central bank is adopting a serious initiative, to be launched soon, aiming to support scientific research that could accurately diagnose problems facing Jordanian economy and come up with applicable technical recommendations in the field of interest to the national economy and decision makers. 

"Sustainability and Competitiveness in Business" as the headlines for the conference this year is a clear indication of coping with modern approaches in developing the business sector and realising the importance of increasing the level of competiveness and sustaining it to achieve comprehensive development, the CBJ governor said. 

DOHA — Saudi Arabia demanded on Sunday that Iran join a global deal on freezing oil output, jeopardising the chances of an agreement between members of Organisation of the Petroleum Exporting Countries (OPEC) and non-OPEC producers that was supposed to prop up the price of crude.

Some 18 countries, including Russia, had been due to meet on Sunday morning in the Qatari capital of Doha to rubber-stamp a deal, in the making since February, to stabilise output at January levels until October 2016.

But the meeting was postponed after OPEC's de facto leader Saudi Arabia told participants it wanted all OPEC members to take part in the freeze, according to OPEC sources.

Riyadh had earlier insisted on excluding Iran from the talks because Tehran had refused to stabilise production, seeking to regain market share after the lifting of Western sanctions against it in January.

After the deal ran into trouble, oil ministers in Doha met with the Qatari Emir Tamim Bin Hamad Al Thani who was instrumental in promoting output stability in recent months.

Following that meeting, a new draft communique emerged containing none of the binding points of the previous outline, sources said.

The document said producers in and outside OPEC should agree to freeze oil production at "an agreeable level" as long as all OPEC countries and major exporting nations participated.

Ministers started talks after 1230 GMT and were still debating the draft almost five hours later, according to sources.

The Saudi and Russian delegations disagreed on the wording, the sources said, dimming the prospects of what would be the first production deal between OPEC and non-OPEC countries in 15 years.

"I am not sure you can call it a freeze," one OPEC source said.

A senior oil industry source said: "The problem now is to come up with something that excludes Iran, makes the Saudis happy and doesn't upset Russia."

Failure to reach a global deal would signal the resumption of a battle for market share between key producers and likely halt a recent recovery in prices.

"If there is no deal today, it will be more than just Iran that Saudi Arabia will be targeting. If there is no freeze, that would directly affect North American production going forward, perhaps something Saudis might like to see," said Natixis oil analyst Abhishek Deshpande.

Supply glut

Brent oil has risen to nearly $45 a barrel, up 60 per cent from January lows, on optimism that a deal would help ease the supply glut that has seen prices sink from levels as high as $115 hit in mid-2014.

Saudi Arabia has taken a tough stance on Iran, the only major OPEC producer to refuse to participate in the freeze.

Deputy Crown Prince Mohammed Bin Salman told Bloomberg that the kingdom could quickly raise production and would restrain its output only if Iran agreed to a freeze.

Iran's Oil Minister Bijan Zanganeh said on Saturday OPEC and non-OPEC should simply accept the reality of Iran's return to the oil market: "If Iran freezes its oil production... it cannot benefit from the lifting of sanctions."

Although a freeze would be a significant step for oil producers, it would have only a limited impact on global supply and the market is unlikely to rebalance before 2017, the International Energy Agency (IEA) said on Thursday. 

According to the IEA, a global oil glut that has hit energy companies hard but meant cheap prices for consumers is set to ease by year's end as US shale production slides.

However, the agency said any production freeze possibly agreed by leading oil producers would only have a "limited" impact on supplies.

The 29-nation IEA said the oil market, which for months has been depressed by a vast oversupply, was expected to practically balance out in the second half of the year.

Prices shot to 2016 highs this week and are now well over $40 a barrel after plummeting below $30 early in the year. They are nevertheless far below the $100-a-barrel mark of mid-2014.

The IEA said in its monthly oil market report that it still anticipates "steady oil demand growth and falling non-OPEC supply", referring to producers outside OPEC.

"This scenario is now taking shape and the oil market looks set to move close to balance in the second half of this year," it said.

"We cannot know the outcome but if there is to be a production freeze, rather than a cut, the impact on physical oil supplies will be limited," said the IEA, which gives advice to countries on energy policy.

It added: "With Saudi Arabia and Russia already producing at or near record rates and very little upside seen apart from Iran... any deal struck will not materially impact the global supply-demand balance during" the first half of 2016.

US shale slide 'gathers pace' 

Analyst Patrick Dennis, of Oxford Economics, also said he saw a "marginal effect" from the Doha meet.

But he said it "should be seen as a first step towards instilling market discipline, unifying OPEC and eventually bringing Iran back into the fold".

All oil producers, including those in the 13-nation OPEC group but also non-OPEC members like Russia, have suffered from the more than 60 per cent drop in oil prices since mid-2014.

The collapse was due to a global glut caused in large part by US shale oil producers flooding the market.

The IEA said it remained confident that in 2016 global oil demand would grow by 1.2 million barrels per day.

India may overtake China as "the main engine of global demand growth", the agency also noted.

On the supply side, the IEA said it saw signs that an expected slide in US shale production "is gathering pace". 

"By early April, the rig count had fallen nearly 80 per cent from the peak seen in October 2014 and more anecdotal evidence is emerging of financial problems taking their toll on the shale pioneers," the IEA said.

Oil surplus declines  

The agency said the global oil surplus is expected to fall to 200,000 barrels per day in the second half of 2016, from 1.5 million in the first six months.

While its demand and supply figures are "highly provisional", the agency warned, it added that "there is no doubt as to the direction of travel for the supply/demand balance".

Meanwhile, the pace of Iran's return to the market after the lifting of sanctions under its nuclear deal with world powers has been "more measured than some expected", the IEA said.

AMMAN — Euromoney Conferences, leading organiser of conferences for cross-border investment and capital markets, announced Sunday in a press statement  that Ziad Fariz, governor of the Central Bank of Jordan (CBJ) and former deputy prime minister and minister of finance, will deliver a keynote address at the upcoming Euromoney Jordan Conference, speaking on behalf of His Majesty King Abdullah.

Returning to Amman on April 25, 2016, the financial conference will be held under the Patronage of His Majesty King Abdullah and co-hosted by the Ministry of Finance. "Other high-profile keynote speakers include Omar Malhas, minister of finance, Imad Fakhoury, mnister of planning and international cooperation, as well as Nemeh Sabbagh, chief executive officer of Arab Bank," the statement said.

Supported by senior lead sponsor, Arab Bank, and co-sponsors, Jordan Kuwait Bank and Standard Chartered, the Euromoney Jordan Conference will bring together 300 financiers, investors, business leaders, entrepreneurs and government officials to address the development of Jordan’s innovation economy.

Addressing Jordan’s role as a regional hub for entrepreneurship, Fariz will speak about the CBJ’s initiatives to support the development of start-ups and small- and medium-sized enterprises (SMEs),as well as their impact on Jordan’s wider economic development. 

AMMAN — Jordan Phosphate Mines Company (JPMC) will be raising capital by 10 per cent to JD82.5 million as authorised by shareholders during an extraordinary general assembly meeting last week.

The company will be capitalising JD7.5 million of retained earnings and distributing it as bonus shares to shareholders. 

The general assembly also raised the limit that the company can borrow to four times the authorised and paid-up capital instead of three times.

JPMC Chairman Amer Majali told the shareholders that the company last year achieved the targeted level, with operational profit at some JD62 million, compared to JD50.2 million in 2014, while the net profit reached JD34.6 million, compared to JD20.9 million in 2014.

According to the financial results, net sales in 2015 amounted to JD750.2 million, compared to JD738.4 million in 2014, assets totalled JD1.2 billion and shareholders equity increased by 4.4 per cent to JD818.2 million.

JPMC in 2015 reached operational stability in terms of  production and export plans, said the chairman, indicating that phosphate sales in 2015 stood at 8.2 million tonnes, 4.8 million tonnes of which were exported, the highest since 2011, while in 2014, sales reached 7.3 million tonnes, 4.3 million tonnes of which were sold abroad. 

The company in 2015 sold 318,000 tonnes of fertilisers, down from 646,000 tonnes the year before, he added, noting that JPMC increased the sales of phosphoric acid at the expense of fertilisers through following a flexible marketing policy based on demand.

Despite the challenges in the industry of fertilisers and phosphate and the ups and downs in international markets, the company has been achieving a remarkable growth in operational processes and total profit, Majali continued. 

The mining sector faced many challenges in 2015, the chairman elaborated, referring to the drop in prices of phosphate and fertilisers by 25 to 30 per cent, especially in the second half of that year.

Other difficulties included a decline in international demand, an increase on the income tax imposed on mining from 14 to 24 per cent and deducting some financial allocations for the death and compensation fund.

OXFORD, England — Growing global wealth inequality is becoming a fundamental risk to democracy and to economies around the world as more people feel government rules "rigged" in favour of the rich leave them with few options, investors and governance experts said Friday.

"It's very dangerous," said Ngaire Woods, dean of the Blavatnik School of Government at the University of Oxford. "If people can't aspire to succeed within the system, they will aspire outside the system, in ways that break the system."

That frustration is feeding into everything from the contentious US presidential race to growing dissatisfaction over the amount of aid money that lands in the hands of rich-nation consultants rather than reaching the poor, experts said at the Skoll World Forum on Social Entrepreneurship in Oxford.

In the United States, for example, "trickle down" economic policies that support tax cuts for the rich with the aim of boosting economic growth and jobs have led to a $2 trillion annual redistribution of wealth from the bottom 99 per cent of earners to the top 1 per cent over the last 30 years, indicated Nick Hanauer, a former venture capitalist and now head of Civic Ventures, which aims to drive social change.

If the trend continues, by 2030, the top 1 per cent of Americans will earn 37 to 40 per cent of the country's income, with the bottom 50 per cent getting just 6 per cent, he pointed out.

"That's not a capitalist market economy anymore," he warned. "That's a feudalist system and it scares me."

Globally, half of the world's wealth is now held by just 1 per cent of the world's population, according to a 2015 report by Credit Suisse, a financial services company.

That trend towards greater inequality, driven in part by tax policies and shifts such as the growing power of corporate lobbyists in the United States, is leading to the increasing belief that political systems can no longer deliver results for many people, said Darren Walker, president of the US-based Ford Foundation.

Many people feel that "the political apparatus of democracy is corrupted" and the result is "dissatisfaction by huge swathes of the population about the potential of democracy to deliver anything of value and meaning to their lives," he added.

Suitcase of money

It is also putting the United States in an odd spot when it comes to enforcing anti-corruption rules overseas, including in the aid business, he remarked.

US aid groups ask, "Can we really trust Africans to spend this money in the way Congress has appropriated?" Walker continued. "People say, 'Poor you, you have to bring a suitcase of money when doing things in Africa.'"

"But we have the same thing in the United States — but you don't have to bring a suitcase. You bring a check. And you get the same effect. You give it to the officials' fund-raiser and say, 'By the way, I need you to do this for me'," he said.

"It's no different [except] it's legal," he added. "We need to [see] our own culpability in this inequality."

Aid agencies and social enterprises, businesses that strive for social good, as well as profits, also are part of the problem when huge sums of money they spend on bringing people out of poverty in poor countries end up in the pockets of rich-world consultants, the experts said.

Donors "make a lot of fuss holding us to account on the money we get," Woods recalled a frustrated representative of an Indonesian organisation saying. "But for every dollar we get, 80 cents stays in the beltway [around Washington DC]," she said.

Many organisations, including USAID, are now trying to improve that percentage, delegates at the Skoll Forum said. But progress in helping aid recipient countries build their own systems to take care of their own problems has been slow.

Building capacity

The goal of giving "capacity building grants", Walker said, should be to make sure "you don't need to go back to Africa. So there is a rich, robust civil society there. That's the vision, and we're a long way from it".

Investing more in civil society groups in poor countries, rather than just UN organisations, is one way of bringing change, saiid Degan Ali, the executive director of Adeso, a local charity working in Somalia and the Horn of Africa.

Reversing growing inequality will depend largely on revamping government policies and making rules fairer, changes that often need to be driven by public pressure, panellists said.

Those might include everything from ensuring that civil servants don't change with each election to eliminating private schools to drive funding into improving state-run schools, the panellists and audience members said.

Woods noted that her own university education in New Zealand was funded by taxes. "That opportunity is one we're all agreed is open to far too few people today. We have to think about why," she said.

AMMAN —  Royal Jordanian (RJ) Chairman Suleiman Al Hafez told shareholders on Thursday that 2015 marked the beginning of the process of real transformation undergone by the national airline  in terms of financial results and  profits.  

According to an RJ press statement, the chairman indicated that  since the beginning of 2015, the company started to implement the 2015-2019 business plan, which came after a detailed analytical study of income, expenditure, route network, fleet, cost and nature of financial restructuring. 

"The study concluded that maximising revenues and reducing expenses in a manner that would not affect the safety standard, which is a top priority for the company, and the services offered to RJ passengers are  two important factors and the cornerstone to the advancement of the company," Hafez said.

Speaking at the ordinary general assembly meeting of shareholders that was attended by  RJ President/Chief Executive Officer Suleiman Obeidat and RJ auditors Ernst and Young, he added that the business plan was based on six main pillars. 

"The first focusses on the route network and fleet," Hafez continued. "The company took the decision to close eight destinations due to their poor feasibility and suspended operations to eight other cities for security reasons, and it opened five new destinations: Tabuk, Najaf, Ankara, Jakarta and Guangzhou. 

At the same time, RJ phased out a number of aircraft and introduced five new Boeing 787s. 

The second pillar of the plan involves boosting the market share locally and internationally by increasing the number of passengers from and to Jordan and by increasing the transit traffic via Queen Alia International Airport.

Revenue management is the third pillar of the plan. The company has taken a number of measures to boost revenues, with a focus on ancillary revenues, which are part of the fourth pillar.

The fifth pillar is the efficient use of fuel in order to lower cost. The company is implementing a number of initiatives that reduce fuel consumption, including continuously renewing its fleet and negotiating with fuel suppliers to obtain best prices.

The sixth pillar involves an analysis of the aircraft ownership structure. The company will study the best ways to meet its needs and achieve its interests in regards to the options of the operational and/or capital lease.

Regarding the procedures undertaken by the company to raise its capital, Hafez said in the press statement that the company worked on the implementation of the decision taken at the previous general meeting, including restructuring the company's capital by reducing it to become 46,405,342 shares/dinars and increasing the authorised capital by JD200 million, making its total authorised share capital 246, 405,342 million shares/dinars. The board of directors decided to proceed with increasing the subscribed capital through two phases. 

The first phase involved the first part of the increase in the amount of 100 million dinars/shares, while the second part of the increase (also in the amount of 100 million dinars/shares) to be carried out through a second phase based upon the company’s results and performance. 

The shares of the first part of capital increase were offered to the main shareholders and the implementation of these procedures was complete. The offering represented 100 million shares at a cost of JD1  per share. RJ’s management looks forward to commencing the second phase of the capital increase in the future. 

RJ contributes about 3 per cent of the country's GDP, exceeding the contribution of other key sectors. 

The business plan, said Hafez, also included a quite successful rescheduling of the company's debts; RJ closed $275 million loan facility deal at the end of 2015.

 The facility carries a tenor of five years and its proceeds will be primarily utilised to pay RJ’s existing bank debts and further support the company’s ongoing strategic growth and turnaround plans in the short and medium run, particularly those regarding the modernisation of the fleet. 

RJ will continue modernising its fleet by introducing three new Boeings 787, one at the end of 2016, a second at the beginning 2017 and a third in 2018.  RJ introduced five 787s in 2014. 

According to Hafez, the drop in fuel prices was not the main reason for the profit made by the company last year, despite their importance on airline budgets. 

He said that RJ reduced ticket prices due to fierce competition, but the lower fuel prices helped offset some of the losses incurred because of the drop in ticket prices. 

In 2015, RJ halted two significant routes to Sanaa and Aden, incurring losses of JD12.3 million, which was offset by lower oil prices as well. 

While the lower fuel prices offset mostly the mentioned two factors, the profit achieved was the result of the staff's keenness to carry out the company’s business plan. 

Hafez stressed that Royal Jordanian will keep working to achieve its ambitious plan for the coming years, confident in its goals and vision.

"The company is now on the right track. It is able to control the variables that affect the airline industry, in terms of fleet and network, despite the challenges it faces due to the political instability in Syria, Iraq, Libya and Yemen, where it has suspended its operations, incurring losses," the press statement said.

At the meeting, a new board of directors was elected. 

Government Contributions Managing Company holding 5 seats, the Social Security Corporation holding one seat, Mint Trading Middle East Limited holding one seat, in addition to Michael Nazzal and Mohammad Ali Bdeir.

AMMAN — A 15-member businessmen delegation from the Amman Chamber of Commerce (ACC) and the Textile & Ready-Made Clothes Syndicate participated last week in the first-ever, textile-sector specific exhibition named ‘TEXPO’, organised by Trade Development Authority of Pakistan (TDAP).

The delegation was led by ACC board member  Marwan Ghaith, and Sultan Allan, the syndicate's president.

An ACC press statement said the visit provided the Jordanian businessmen with a first-hand experience of Pakistan's dynamic textile sector as many major Pakistani textile exporters were present at the exhibition.

Allan said in the press statement that  the Jordanian businessmen were very impressed with the quality and prices of the textile products in the exhibition and it was beyond their expectations.

He also mentioned that it was the first-time that the businessmen, who were large importers of textile products from China, Turkey, Egypt, South Korea and India, got the opportunity to explore this dynamic market in Pakistan.

The Jordanian delegation held useful meetings with  heads of TADP and other economic bodies besides numerous meetings with businessmen.

This visit is expected to open new opportunities not only in textile sector but also in agriculture products, Halal meat, leather & sports goods, pharmaceutical & surgical products.

AMMAN – A Jordanian industrial delegation is participating in Kenya trade fair which starts Friday.

Jordan's participation, organised by the Jordan Small and Medium Enterprises Industrial Association (JSMEI) supported by Jordan Chamber of Industry, aims at promoting national industry and opening new markets to compensate for those lost because the region's instability.

Twelve industrial companies will exhibit  plastic, office furniture, cosmetics, detergents, food products and teaching aids, according to the JSMEI President Nidal Samain.

He said that the challenges and pressures that Jordanian economy faces, compels supporting the national industry which contribute 25 per cent of gross domestic product and 90 per cent of exports.

Most of Jordanian exports to Kenya are detergent valued at $6 millon while imports from the African country are mainly agricultural and food products valued at $8 million.

AMMAN — Jordan has many investment opportunities to offer in many economic sectors, such as the ICT, water, renewable energy, transportation and vocational education and training, Jordanian Businessmen Association (JBA) Vice President Thabit Taher said on Thursday.

At a meeting with Singaporean Ambassador to Jordan Shamsher Zaman, Taher said JBA signed a memorandum of understanding with the Singaporean union of industries in 1996, and Jordan signed a free trade agreement (FTA) with Singapore in 2004; yet the commercial exchange volume is still low, according to a JBA statement.

The Asian country represents a gateway for the Kingdom to penetrate eastern Asia, and Jordan has the potential to be a base for Singaporean products to reach Arab, US, European and Canadian markets without customs fees, thanks to FTAs Jordan has signed with these countries.

Zaman expressed his country's keenness to expand bilateral relations, noting he would follow up on exchanging visits by businessmen in both countries to boost the commercial exchange volume, the statement added.

AMMAN –– The Amman Stock Exchange (ASE) is set to launch future plans to stimulate trading, among which is to encourage family-owned companies to be listed at the bourse, ASE Chief Executive Officer Nader Azar said Wednesday. 

"There are dozens of successful family-owned business in Jordan and we will be trying to convince them to go listed at the bourse," he added at a meeting with the press. 

According to official figures, around 90 per cent of small- and medium-sized businesses in Jordan are family owned. 

Azar said that ASE is also working on amending its legislation to open over-the-counter (OTC) trading for small companies and troubled firms.

 A stock that is traded OTC market is usually because the company is small and unable to meet exchange listing requirements. Under OTC, stocks are traded by broker-dealers who negotiate directly with one another over computer networks and by phone.

ASE currently operates first market, second market and third market. 

Azar also pointed out that the Amman Bourse is part of a joint project with regional exchanges that include Muscat, Beirut and Tunisia to implement a new version of the trading system developed by a French company, expected to be completed before the end of the next year, noting that the features of the advanced system would allow larger trading of shares and securities.

ASE is also on the legislative process of being transferred from a state-owned entity into a public shareholding company that seeks profits. 

The bourse chief noted that in June last year, the Cabinet approved transferring the ASE into a public shareholding company, adding that the legislation is currently at the Lower House. 

The Amman Bourse was established in 1999 as a non-profit institution with administrative and financial autonomy. 

Foreign investors 

Investors from over 100 countries own shares in companies listed on the ASE as they believe in long-term investments in stable Jordan, the bourse chief said Wednesday. 

Azar said the market capitalisation was around JD18 billion at the end of 2015, with 50 per cent of it owned by non-Jordanians. 

Out of the 50 per cent of shares owned by non-Jordanians, Azar pointed out that 37 per cent of ASE shares were investments by Arab governments, sovereign and different investment funds and wealthy families, while the remaining 15 per cent was owned by foreign investors from over 100 countries. 

"Half of the world's nationalities are investing in ASE for long-term investments because they believe in the stability of Jordan and the performance of our companies," he said.

Azar added that the value of shares traded since the beginning of 2016 at ASE reached around JD770 million, raking seventh among 18 Arab bourses. 

The largest bourse in Arab countries is the Saudi, according to Azar, which he said it saw trading valued at JD76 billion since the beginning of the year.