Business

AMMAN — Amman Chamber of Industry (ACI) President Ziad Homsi expressed the chamber's interest to benefit from Chinese expertise to develop the Jordanian industrial competitiveness.

At a meeting with Chinese Ambassador to Jordan Pan Weifang, he said good relations between the two countries should play a role in enhancing economic ties and increase Chinese investments in the Kingdom, according to an ACI statement.

Homsi, who is also a senator, called on the Chinese diplomat to help expand investments in Jordan and launch effective partnerships between Chinese investors and their Jordanian counterparts in a way that serves joint interests of both countries.

Osama Qteishat, head of the Dead Sea Product Manufacturers Association, said that Jordanian Dead Sea products enjoy high-quality added value since raw materials in these industries are not available except in the two countries on the seashores.

Qteishat noted there are 40 facilities that produce these items and export them to 50 countries. The ambassador expressed his country's readiness to cooperate with Jordan to contribute to increasing Jordanian exports to China through enhancing the Kingdom's participation in exhibitions that are hosted in China, the statement added.

PARIS — Investment in renewable energy hit a record $286 billion (256 billion euros) in 2015, more than half of which came from developing countries for the first time, according to a UN report released on Thursday.

All told, new money put into solar, wind, biofuels and other cleaner energy technologies has exceeded $2.3 trillion since 2004, when total investment was less than $50 billion, it indicated.

"Renewables are becoming ever more central to our low-carbon lifestyles," said Achim Steiner, executive director of the UN Environment Programme, which co-wrote the report.

"Importantly, for the first time in 2015, renewables investments were higher in developing countries than developed," he added.

That shift was led by China and India, both of which have invested heavily in clean energy even as their juggernaut economies continue to be mainly powered by carbon-intensive fossil fuels.

Renewables added more to global energy generation capacity in 2015 than all other technologies combined, including nuclear, coal, gas and mega-hydro projects of more than 50 megawatts.

Despite rock-bottom fossil fuel prices, new clean energy capacity, even excluding nuclear, outstripped new coal and gas by more than 100 per cent, said the report, Global Trends in Renewable Energy Investment 2016.

The rapid transition to renewables, especially in developing and emerging economies, is "helped by sharply reduced costs, and by the benefits of local power production over reliance on imported commodities", said Michael Liebreich, chairman of the advisory board of Bloomberg New Energy Finance, which co-launched the report.

As in previous years, the growth in clean energy in 2015 was dominated by solar photovoltaics and wind, which together added 118 gigawatts (GW) in generating capacity, nearly a quarter more than the year before.

Wind contributed 62GW and photovoltaics 56 GW, with more modest inputs coming from biomass, geothermal, solar thermal and "waste-to-power", in which waste products are recycled.

The fact that renewables far exceeded conventional energy for new capacity in 2015 shows that a "structural change is under way", the report said.

But the ultimate goal of a "carbon neutral" global economy enshrined by the world's nations at UN climate talks in Paris in December is still a distant prospect.

Excluding major hydro projects, renewables still only account for 16 per cent of the world's total power capacity, even if that figure has consistently climbed by double digits in recent years.

Actual electricity generated is even less, barely 10 per cent.

"Despite the ambitious signals from COP21 and the growing capacity of new installed renewable energy, there is still a long way to go," said Udo Steffens, president of the Frankfurt School or Finance and Management.

The Paris Agreement inked at the 195-nation "COP21" talks vowed to cap global warming at below 2°C, a goal that scientists say will require a wholesale shift away from fossil fuels.

Much of the record-breaking investment in clean energy last year came from China, which spent nearly $103 billion (92 billion euros), 17 per cent more than in 2014 and 36 per cent of the world total.

India was a distant second, spending $10.2 billion, followed by South Africa ($4.5 billion), Mexico ($4 billion) and Chile ($3.4 billion).

Morocco, Turkey and Uruguay filled out the list of nations investing at least $1 billion.

Overall, developing countries poured 17 times more money into clean energy last year than in 2004.

Among wealthy nations, investment in Europe was down 21 per cent, from $62 billion in 2014 to $48.8 billion in 2015, the continent's lowest figure in nearly a decade despite record development of offshore wind power.

US investment rose 19 per cent to $44.1 billion, while Japan's held steady at $36.2 billion.

The shift away from rich nations can be attributed to China's breakneck dash to develop wind and solar, along with rapidly rising energy demand in emerging economies coupled with plummeting costs.

Sluggish economic growth in Europe, as well as cutbacks in subsidies, reinforce the trend, the report concluded.

LONDON — Tougher rules aimed at holding top UK bankers to account when things go wrong are driving up pay, which smaller "challenger" banks say is making it harder to recruit senior staff.

Executives at several such banks told Reuters the Senior Managers Regime (SMR), which came into force this month, is hurting those with no history of wrongdoing more than bigger rivals, who were the ones the rules were aimed at.

Public outrage over the financial crisis and subsequent scandals prompted the SMR, allowing regulators to pin the blame for excessive risk-taking and reckless expansion on individuals.

This marks a step change for British banking, where political scrutiny and tough new regulations had already made it hard to find people to take on some of the most senior jobs.

"While the SMR could potentially improve accountability and transparency, it raises that barrier further," Rishi Khosla, chief executive of OakNorth Bank, said.

The challengers say a one-size fits all approach to regulation is stifling their efforts to grab market share from big fish such as HSBC, Lloyds Banking Group, Barclays and Royal Bank of Scotland (RBS).

This now appears to be at odds with the aim of Britain's Fnance Minister George Osborne and other politicians of boosting retail banking competition by encouraging new players.

HSBC, Lloyds, Barclays declined to comment, while RBS and the Financial Conduct Authority (FCA), which designed the regulation, did not immediately respond to requests for comment.

While rising pay impacts all banks, the problem is particularly acute for the minnows trying to recruit non-executive directors (NEDs) who see increased risk from joining new banks with no track record and are demanding more pay.

"[They] are having to pay more to attract NEDs to their boards due to the competition with the larger banks for the limited pool of NEDs with relevant experience and willingness to join a bank's board," said Paul Lynam, chief executive of challenger Secure Trust Bank.

Barclays and HSBC, which reported billions of pounds in profits last year, paid NEDs an average of £211,857 and £229,933 respectively, while Shawbrook Group  posted underlying pretax profit of £80 million and paid them a base fee of £65,000.

Personal risks

The challenger banks are also harder hit by the fixed costs of complying with the new regime, the executives said.

Shawbrook needed six months to prepare the papers to comply with the SMR, its Chief Executive Steve Pateman told Reuters.

"The cost to the organisation was huge, both relative to our size and relative to the damage or harm that we could do to the economy if we got it wrong," he said.

The rules are also impacting middle managers, with some now preferring to keep a low profile in order to avoid being singled out in the event of another banking scandal.

Some are concerned about gaining promotion at smaller banks with a shorter path to the top, according to PWC risk and regulatory partner Sarah Isted. This leads some to seek roles in bigger banks, enabling them to advance without taking on a more regulated status.

At the same time the SMR has clarified responsibilities, Chris Box, human resources partner at PWC said, adding that people wanting to join an institution perceived to have a cleaner culture are more likely to work for a challenger.

It is not just the SMR which fledgling lenders say is stunting their growth. They already face sharp rises in tax after Osborne introduced a profit surcharge because of the risk they pose to the economy, a policy approved by Britain's top competition watchdog last month.

Osborne hinted at more proportionate regulation of smaller lenders in his budget last week, including possible changes to capital requirements, but said nothing on executive supervision.

"It seems slightly arbitrary to punish the challengers when, in most instances, their existence postdates the credit crunch and they're far too small to pose any broader systemic risk," Jamie Clark, a fund manager for Liontrust, said.

According to legal and compliance experts, the  new rules that hold bosses responsible for wrongdoing at British banks is deterring some bankers from taking on senior management roles and even prompting big hitters to play down their own importance.

Public anger that so few senior bankers were punished after taxpayers bailed out the industry in the financial crisis, or for scandals such as the London Inter-Bank Offered Rate (LIBOR) and currency market rigging, has led to the rules which make it easier to hold them to account.

The SMR replaces a system that UK lawmakers criticised for giving illusory control over individuals with little prospect of enforcement action.

A step change in banking rules, it will allow regulators to pin blame on named people rather than just firms, which lawyers said has triggered anxiety among top bankers.

"I have had some clients with staff resistant to being a senior manager, worried they are going to be kept awake at night about what their team is doing, and if something goes wrong, will they be the scapegoat," said Sarah Henchoz, an employment partner at Allen & Overy (A&O) law firm.

Unlike the old system, bankers deemed to wield significant managerial influence will have to sign up to a legal duty of responsibility for their units, and show they took reasonable steps to prevent or stop rule breaking that comes to light.

They include chief executive officers, heads of big business units, and non-executive directors who chair key committees and will amount to about 10,000 staff across 900 banking companies, or an average of about 12 per firm, rising to 40-50 for the biggest lenders.

Ron Gould, a former UK regulator who is now European chairman of compliance Science, which helps financial companies comply with rules, said some senior bankers were looking at whether they could convince regulators that they did not have significant managerial influence over their teams.

"One thing I have seen that does make me smile is the wonderful term used by some firms that want to 'juniorise' positions," Gould added. "It may be more wishful thinking than anything else."

One person familiar with how the SMR is being introduced said regulators were aware of this and were pushing back against banks that fail what the person described as the "sniff test", or too many senior managers saying that they did not have full responsibility over teams but simply reported to other more senior managers.

But such attempts at creating a chain of senior managers to blur direct accountability were not widespread, the source said.

The FCA and the Bank of England's Prudential Regulation Authority, which will both enforce the regime, declined to comment.

Asked if bankers were balking at the new rules, Simon Hills, an executive director at the British Bankers' Association, said the SMR was regarded in the industry as a key element to restoring trust in banking.

"I talk to senior managers at banks who say it's been a useful exercise, enabling banks to check and confirm they have got the right people in the right roles and clarify job descriptions where necessary," he added.

E-mail trail

The United States and other European countries have not gone as far as the SMR by holding senior managers personally responsible by law.

Requirements in the rules for senior managers to demonstrate they took steps to prevent or stop rule breaking will also prompt bosses to document all delegation of tasks and to archive e-mails to help keep them in the clear if misconduct is uncovered, lawyers said.

"You need to be clear that you have a document trail on how you delegated responsibility, how you supervised key parts of the business, that you know in five years' time exactly what you did," said Henchoz.

Adrian Crawford, employment partner at Kingsley Napley, which advises individuals in the financial sector, said more senior managers might have been held responsible for the LIBOR-rigging scandal if the SMR had existed in past years.

"We have heard anecdotally that some banks now have a lawyer present at every meeting... and that as a result decision making is becoming increasingly bureaucratic," he said.

"This is good for the protection of the individuals but not so good for the competitiveness of the City," he added.

Few lawyers expect regulators to make any major enforcement moves in the early days, but said they would eventually want to bare their teeth.

"It only applies to conduct on or after March 7, so we are unlikely to see enforcement action under the SMR for at least 18 months or so," said Elly Proudlock, counsel at WilmerHale's UK investigations and criminal litigation team.

Compliance adviser Gould said that while some bankers were genuinely frightened, others were blase, viewing this as simply another set of rules from regulators.

"You are going to get a crystallisation of feelings only in the aftermath of some action by the FCA," he added.

RIYADH/KHOBAR, Saudi Arabia — Mobarak Musa, a mobile telephone salesman from Syria, has spent 10 years working in Saudi Arabia, sending part of his wages back home to support his parents and three brothers. A shift in Saudi labour policy means he won't be able to do so for much longer.

In early March, the ministry of labour announced that within six months foreigners would be banned from selling and maintaining mobile phones and accessories for them, in an effort to keep open more jobs for Saudi citizens.

So Musa became one of hundreds of thousands of foreign workers in Saudi Arabia who may lose their jobs and be sent back to their home countries this year, as low oil prices slow the kingdom's economy and prompt the government to restrict employment opportunities for expatriates.

"I don't know where else can I go — I don't know any other job to do," Musa, in his 30s, said in his small shop at a mobile phone market in downtown Riyadh.

Millions of foreigners from south Asia, southeast Asia and elsewhere flocked to work in Saudi Arabia during the economic boom of the past decade, filling relatively low-paid posts in the oil industry, construction and services as well as many middle-management and professional positions.

Foreigners accounted for 10.1 million of the total population of 30.8 million in 2014, according to the latest official data. The money they sent home was important for their home countries; they remitted $9.1 billion out of Saudi Arabia in the third quarter of 2015, central bank data shows.

The inflow of people may now go into reverse. Saudi economic growth is slowing as low oil prices produce a state budget deficit that totalled nearly $100 billion last year, forcing the government into spending cuts.

Many analysts expect gross domestic product growth, which averaged over 5 per cent annually between 2006 and 2015, to fall well below 2 per cent this year. 

Partly because labour rules make it hard and costly to fire Saudi citizens, layoffs in the early stages of a downturn tend to hit foreigners almost exclusively.

Meanwhile the government, lacking the cash to create public sector jobs for Saudis as freely as before, and worried that the official unemployment rate of 11.5 per cent among them could rise, is intervening more heavily in the labour market to push Saudis into jobs previously held by foreigners.

A top executive at a major Saudi company told Reuters in January that he wouldn't be surprised if one million foreigners had to leave the kingdom by the end of this year.

"The economic changes have started to pressure the labour market, and this has triggered the start of the migration of a large segment of foreign workers," said prominent Saudi economist Fadl Al Boainain.

"Declining corporate profitability has made the foreign workforce a target for managements seeking to cut fixed financial obligations," he added.

Construction

So far, lay-offs have been concentrated in the construction sector, which analysts estimate employs around 45 per cent of foreigners. 

Hit by shrinking state contracts and delays in payments owed to them by the government, construction firms have been laying off tens of thousands of people since last year.

"After 12 years in a stable job with a big company, I have started to update my CV and send it to other employers," said Abu Fadi, a Palestinian-Lebanese engineer at a big construction company in Riyadh which is facing a liquidity crunch and hasn't paid salaries to its staff since September.

Abu Fadi, who has delayed his marriage plans until his future is clearer, added that some of his colleagues who had brought their families to the kingdom were now unable to pay the rent. 

Some 5,000 technical workers at his company have left, he remarked.

Job losses among foreigners look likely to spread to other sectors, partly because of government policy. 

Labour ministry spokesman, Khaled Abalkhail, said the ban on mobile phone sellers would affect about 20,000 workers, and that similar action would eventually be taken in other industries.

"The labour ministry targets aim to create jobs for around 1.3 million Saudis...There are plans for gradual nationalisation of other sectors such as taxis, travel and tourism, real estate, jewellery and vegetable markets," he told Reuters.

Abalkhail said displaced foreign workers could try to find jobs in other sectors. But it will be hard for many do so in a slowing economy, and many lack training for skilled jobs. If they cannot find a company to sponsor a work visa for them, they will have to leave the country within about 90 days.

Even some highly paid foreign professionals are considering leaving the kingdom because they see fewer opportunities as the flow of oil money shrinks.

After more than nine years in Saudi Arabia, a British petrochemical consultant in the oil-producing Eastern Province said he was considering returning home as projects in the industry were postponed and budget approvals were delayed.

"Last year was mostly fine, but the end of last year and this year are the worst I have seen," he indicated, speaking on condition of anonymity because he was not authorised to discuss the economic prospects of his firm.

A year ago, there were long waiting lists for foreigners seeking to move into residential compounds for well-off expatriates in Riyadh and oil-producing Eastern Province. The waiting lists have now shrunk or disappeared, and more villas in the compounds are vacant, residents say.

"Saudi Arabia continues to decline as a top destination for expatriates... given the country's higher dependence on oil revenues and the extent of planned austerity measures," Gulf Talent, an online recruitment portal for professionals, said in a report this month.

ANKARA — Suicide bombings in Istanbul, a row with the Kremlin and hard times for the Russian middle class — all these factors spell trouble for Turkey's tourist industry and its wider economy.

Nowhere is the mood gloomier than among shopkeepers in Istanbul, Turkey's cultural gem and scene last weekend of the second suicide attack on tourists in the city this year.

"There's zero business now," said one clerk at a clothing store near the mediaeval Galata Tower, a top destination for foreign visitors.

"Everyone is nervous," chimed in his friend a few hours after the attack which killed three Israelis and an Iranian in Istanbul's most popular shopping district.

Their feeling that business, already bad, can only get worse is understandable. In January, a militant blew himself up near the fabled Blue Mosque, killing 12 people from Germany, which traditionally accounts for the largest number of visitors to Turkey.

Economists forecast that tourism revenue will tumble by a quarter this year, costing the country around $8 billion.

The risk is that better off tourists such as Germans will choose to take their holidays elsewhere while Russians, Turkish tourism's number two market, will be forced to stay away due to an economic crisis at home and political tensions following Turkey's shooting down of a Russian warplane in November.

Overall visitor numbers to Turkey fell a relatively modest 1.6 per cent last year, according to tourism ministry data.

But the signs are not good before the May to October peak season, when Turkey usually earns around 70 per cent of its tourism revenues.

Big spenders

Unfortunately for Turkey, tourists from the richest countries, who tend to be the biggest spenders, are also the most easily spooked by security worries.

"Security concerns have the biggest impact on high-income tourist groups, who are most likely to change their plans to visit," said Mehmet Besimoglu, an economist at Oyak Investment.

German travel group TUI has reported a 40 per cent drop in summer bookings for holidays in Turkey and the picture for Britain, the number three market, is uncertain.

British holiday company Thomas Cook said more of its customers were opting to holiday in Spain, as well as the United States and Cuba. Fewer wanted to go to Turkey, it added.

Altogether Turkey has suffered four suicide bombings this year, bringing the death toll to more than 80. The other two, claimed by an offshoot of the Kurdistan Workers Party (PKK), struck the capital, Ankara, which relatively few tourists visit.

The violence is not new. Daesh has also been blamed for bomb attacks last year that killed more than 130 people.

While these were in Ankara and near the Syrian border, the effect on tourism, which accounts for about 4.5 per cent of the $800 billion economy and provides more than 1 million jobs, has already been felt.

Last year, for instance, the number of Italians visiting Turkey decreased by 27 per cent while Japanese dropped off by nearly 40 per cent.

Now, economists say, the drop-off in tourism is so pronounced it could have a broad economic impact. They estimate an $8 billion fall in revenue would knock more than half a percentage point off economic growth, which the government is targeting at 4.5 per cent for this year.

With tourism accounting for more than half of Turkey's current account earnings last year, this would also spell trouble for the central bank's hopes that the deficit can be brought down from a yawning 4.5 per cent of the gross domestic product in 2015.

Some economists believe tourism could prove an even bigger drag on the economy. "If terrorist attacks continue and things get worse, the impact could be as high as one percentage point being deducted from economic growth," said Muammer Komurcuoglu, economist at Is Invest.

That would be unwelcome news for President Tayyip Erdogan and the ruling AK Party, which is keen to show the economy is on track despite the insecurity.

Russian chill

Prime Minister Ahmet Davutoglu has announced a plan to offer emergency support to the tourism sector, including a 255 million lira ($87 million) grant and a facility to allow firms to restructure their debt. It is unclear whether that will help.

Turkey is no longer able to rely on Russians seeking sunshine and southern beaches as a back-up due to the combined effects of economics and politics.

Middle-class Russians have been hit hard by an economic crisis caused by the weak price of oil, the country's main export earner, and Western sanctions imposed over the Ukraine crisis.

One result has been a dive in the Russian currency which has made foreign holidays, including in Turkey, much more expensive. Two years ago, Russians needed just over 15 rubles to buy a Turkish lira; now they need almost 24.

On top of that has come the chill in relations between Ankara and Moscow. President Vladimir Putin signed a series of punitive economic sanctions against Turkey, including a ban on charter flights, in retaliation for its shooting down of the Russian warplane near the border with Syria.

The biggest impact from the sanctions would be to tourism, the European Bank for Reconstruction and Development has said.

Numbers of Russian tourists declined by nearly a million last year, to 3.6 million. That could get even worse this year, said Ercan Erguzel, an economist at Morgan Stanley.

"Based on our talks with sector representatives, we have the impression that the number of Russian tourists may even fall to below 1 million in 2016 in the most extreme scenario," he added.

Security fears are on everybody's lips at the ITB travel trade fair in Berlin this year as a battered tourist industry seeks to reassure travellers and tour operators that they need not shy away from booking summer holidays for this year.

Attacks in tourist hot spots like a Tunisian beach resort and the city of Paris over the past year have rattled travellers' confidence, sending bookings for Tunisia, Turkey and Egypt plummeting and heralding a slowdown in demand for international travel.

"People have money to spend, but there's a strong negative impact from the geopolitical situation. People fear attacks," Roy Scheerder, commercial director at low cost Dutch airline Transavia, told Reuters at ITB.

Airlines, tour operators, hoteliers and travel search companies at the fair said they had seen more caution than usual in bookings at the start of the year, often a popular time for people to book trips.

A survey by consultancy IPK International projected that growth in the number of international trips taken would slow to 3 per cent this year, down from 4.6 per cent in 2015.

Rolf Freitag, founder of IPK, said security fears had knocked off about 1.5 percentage points from the expected growth this year. Of 50,000 people in 42 countries surveyed at the start of February, 15 per cent said they would either not travel or holiday in their home country this year.

Hotel groups like Marriott International and Best Western expressed concern over tourist bookings for Paris after November's attacks on the French capital, which may have a knock-on effect on other destinations.

"It has a ripple effect. If you think about someone travelling from the United States to Paris, Paris was not the only city they would visit, they would also go to other parts of France or Europe, and that has been curtailed," said Best Western Chief Executive Officer David Kong.

The beneficiaries are destinations perceived to carry a smaller risk of becoming the target of attacks.

"The really hot markets are anywhere that's safe. Spain is on fire for this summer. Italy is very strong," indicated Darren Huston, chief executive of Priceline Group and its subsidiary Booking.com.

Spanish low-cost carrier Vueling, for instance, has added more capacity to Spanish destinations from Germany, the Netherlands and Switzerland to keep up with demand, though it highlighted that hotel space was running out.

Destinations in North America and the Caribbean are seeing increased demand, while search firm Kayak said Germans were more interested in hotels in their own country this year.

Some in the industry are clinging to hope that tourists will still travel this summer but are holding off on firm bookings longer than usual due to the uncertain security outlook.

"Past experience has shown us that a country that is serious about tourism and has built an infrastructure always bounces back," Taleb Rifai, the head of the United Nations World Tourism Organisation, told Reuters in an interview.

"Look at Egypt. It has been up and down for the last 10 years. Every time it comes back stronger than before," he said.

ALGIERS — After a deep slide in oil prices, Algeria's Sonatrach is shifting strategy to offer foreign firms direct negotiations to buy stakes in 20 oil and gas fields in a bid to attract investors and increase output, a source at the state energy company said.

The campaign to bring in energy investment comes at a crucial time for the North African producer, a member of the Organisation of Petroleum Exporting Countries (OPEC), as it tackles lower revenues and stagnating production.

Algeria, a key gas supplier to Europe, is also in talks with European Union (EU) officials on holding a summit in Algiers in May that will discuss energy investment opportunities in Algeria as EU leaders look to diversify from Russian gas.

The switch to bilateral deals follows two energy bidding tenders that failed to attract much interest. A bid scheduled for last year was cancelled because of low crude prices.

"Direct negotiations are a more efficient, less expensive, a faster, and a less bureaucratic approach," the Sonatrach source said of the talks. "Sonatrach is already in negotiations with ENI and several other foreign firms."

The source did not give details of the other firms and ENI declined to comment. The stakes being sold are expected to leave Sonatrach the majority holder as Algerian law dictates.

The 20 fields, which the source said Sonatrach took over from state hydrocarbons agency ALNAFT in September as part of the streamlining process, include oil and gas fields across the centre and south of the country in places such as Ouargla and Adrar provinces, and Illizi near the Libyan border.

As part of the campaign, Sonatrach chief, Amine Mazouzi, will travel to China at the end of the month for meetings with Chinese oil companies SINOPEC and CNPC, which are already operating in Algeria.

Algeria's energy potential is not in doubt, but oil executives say tough terms on production-sharing contracts, bureaucracy and other problems, such as customs delays and archaic banking systems, make the country a less attractive prospect.

Reforms to open up the and gas sector to foreign investment in 2005 were reversed a year later, adding a windfall tax and more Sonatrach control, when oil prices were high and Algeria's reserves were in good shape.

Security is also a factor after the 2013 attack on the In Amenas plant run by BP and Statoil with Sonatrach in which 40 oil workers died. BP and Statoil on Monday said they were reducing staff in Algeria after rockets hit another gas plant last week.

Oil executives said bilateral contracts may offer flexibility, but Algeria's legal framework and red tape remained a major concern for some companies and it was still unclear what terms Sonatrach would be offering.

"They will need to change the contract terms in order to get real investment," said one oil executive with Algeria experience.

Squeezing more out

Reliant on its mature fields, Algeria's output as been declining for a decade. It peaked at 233 million tonnes of oil equivalent in 2007, before dipping to 187 million tonnes by 2012. Last year it was estimated at 190 million tonnes, but the government sees it at 224 million tonnes by 2019.

Sonatrach is now focussed on maximising output at its mature fields and seeking foreign partners for technology. That effort centres on Hassi Massoud, Hassi Berkine and Illizi in the southwest and west. Japanese firm GJC last month won a $339 million deal to help increase production at Hassi Massoud.

Southern gas fields already in development with foreign partners are expected to come online through 2018 after delays in initial start-up dates, and the government has said it expects gas output to increase by 13 per cent by 2019.

After multiple delays, the In Amenas gas plant, which produced 11 per cent of Algeria's gas before the 2013 attack by militants,  is expected to be back in full operation in April. That would bring its gas production from 16 million cubic metres a day to 20 million.

Bureaucracy, delays

Oil executives say beyond the tough financial terms and short exploration periods, other problems in Algeria can be traced back to bureaucracy, delays in data processing, and slow decision-making at Sonatrach and ALNAFT.

Mazouzi last October begun a restructuring aimed at saving money and streamlining bureaucracy to tackle the oil crisis. New assistants were put in charge of downstream, upstream, transport and pipelines, and commercial operations.

But the state company itself has been in constant flux, several former Sonatrach officials and analysts say, after four changes in top management and the loss of hundreds of technicians and engineers in recent years to overseas jobs.

Two corruption scandals and trials of former energy officials have also left Sonatrach ranks nervous and slowed decision-making, former company officials and executives said.

"Sonatrach is a huge company but it is not a great company," Said Beghoul, a former Sonatrach official who is now an oil consultant, said. "It is in serious need of reform."

At a North African oil conference in Algiers late last year, foreign executives repeatedly urged better incentives and flexibility while welcoming dialogue with the government to cut delays that can drag on for years. Even Algeria's energy minister last year called for Sonatrach to speed up work.

Those discussions may be reflected by ALNAFT, which is preparing for another bidding round in addition to Sonatrach's plans, according to the Sonatrach source.

That could be a more tailored process with fields open to only companies suited to developing them, one industry source said. But companies remain wary, with the most recent bid drawing only four deals even after changes in 2013 to oil laws to offer more incentives.

"Its fiscal terms are too tight expecially with oil prices as they are, it is not economic. How do you change that, by being creative," one oil executive indicated. "They are aware of that, they are trying to change."

AMMAN — Amman Chamber of Commerce (ACC) President Issa Murad said Jordan is on the right path of reform to merge with international economy. 

He said Jordan ranked second among Arab countries in the 2015 Economic Freedoms report, issued by the Canada-based Fraser Institute in December 2015, and ranked seventh among 157 countries in the report issued by the institute in September 2015.

The Kingdom's national economy is growing and economic indications are improving despite the issues and changes in the region, Murad added.

The Jordanian economy in the last decade developed regularly through applying comprehensive economic reform and restructuring programmes supervised by the International Monetary Fund and the World Bank, the ACC president elaborated.

The report is one of the main resources that countries and donor parties depend on to determine the countries that are fittest for implementing their activities in the fields of investment, tourism, bilateral relations, providing aid and scholarships, and support productive projects, Murad continued.

He noted that the report directly and indirectly affects the international impression about Jordan and reveals improvement in personal freedoms as well as social, health and infrastructure services. 

This result is considered a stimulator for decision and policymakers to build on the report and use it as a guide to determine what is positive and what is negative, to choose the means that can improve Jordan's ranking in other international reports, he said. 

Murad called for prioritising the adopted financial and monetary policies on increasing the "openness and competiveness" of the business environment and increasing general investment in infrastructure.

He also called for encouraging safe investment in Jordan, noting that everyone from the public and private sectors is responsible and has a social and economic role. 

Laws and regulations related to economic activity should be improved and developed, the ACC president stressed, adding that such laws include the Income Tax Law which burdens the commercial sector. 

The United Arab Emirates topped Arab countries with 8.2 points, and Jordan achieved 8.1 points in the report based on data from 2013.

DUBAI — A senior member of Iran's Revolutionary Guards urged the government on Tuesday to follow its supreme leader's vision for a self-reliant economy and said the Guards wanted to play a bigger role to make that happen.

Ayatollah Ali Khamenei, Iran's most powerful figure, called for a "resistance economy" on Sunday, saying US policies to restrict business with Iran had undermined any economic benefits of international sanctions being lifted in January.

His comments presented a challenge to President Hassan Rouhani, the chief architect of last year's nuclear deal that led to sanctions relief, who has tried since that accord to attract foreign investment and open Iran's markets.

"The main audience for [Khamenei's concept of] the resistance economy is the government," Brigadier General Masoud Jazayeri, deputy joint chief of staff of the armed forces was quoted as saying by Fars news agency.

 Jazayeri is a member of the Islamic Revolutionary Guards Corps (IRGC), a powerful faction that controls a business empire as well as elite armed forces. Its economic interests could be threatened by increased competition from abroad.

"The armed forces are ready to play a significant role in the resistance economy and implementing the supreme leader's suggestions," he said.

Jazayeri added that Rouhani should see the guards' achievements in creating advanced ballistic missiles as an economic blueprint and evidence that Iran did not need foreign investment to succeed.

Any increase in the IRGC's economic footprint could make Iran a riskier market for foreign investors, as many of its members and front companies remain under US sanctions on Iran's defence industries and alleged support for what Washington sees as "acts of terrorism".

Action and implementation

In a clear reaction to Jazayeri's comments, Iranian Vice President Eshaq Jahangiri said the government was not the audience for Khamenei's speech.

"All state bodies were the audience... No person, faction or organisation should interpret 'resistance economy' as they want," he was quoted as saying by state news agency IRNA.

Khamenei called the Iranian new year, which began on Sunday, "the year of the Resistance Economy: Action and Implementation", implying that he expected the government to do more to insulate the economy from possible sanctions or hostile foreign activity.

In a video message on the same day, Rouhani said further engagement with other countries was the key to economic growth, a view that has put him increasingly at odds with Khamenei, who outranks him.

Reiterating his remarks, Rouhani said on Tuesday that he had been seeking a strong economy since his election in 2013 and "constructive engagement with the world" was the main part of that policy.

His chief of staff Mohammad Nahavandian also said on the same day that opening Iran to foreign investment would in fact help to build a "resistance economy".

"To increase the resistance of Iran's economy, we should expand ties with neighbouring countries and the world," Nahavandian was quoted as saying IRNA.

"If Iran is an active member of international organisations, the chance of getting hit by new sanctions and economic restrictions will be limited," he added.

WASHINGTON — Wars and depressed crude oil prices have diminished growth prospects for the Middle East and central Asia, and private sector productivity gains are needed to avoid a "new mediocre" for the region, the International Monetary Fund (IMF) said on Tuesday.

In a new paper, the IMF indicated that all emerging markets are facing diminished growth prospects over the next five years, but those of the Middle East and central Asian countries are expected to be 1.25 percentage points below the emerging market and developing country average.

Six years after the Arab Spring movement promised more economic inclusiveness and higher living standards, much of the Middle East remains mired in conflict, weighing on economic activity across the region as millions of refugees flee, IMF Middle East Director Masood Ahmed said in the document.

"At the same time, the new 'lower for longer' oil price reality has dampened oil-exporting countries' longer-term growth prospects and rendered their oil-centred economic growth models untenable," Masood added.

The region's oil exporters are being forced to cut spending and shrink bloated public sector employment that had been fueled by oil revenues, weighing on living standards and growth prospects, the IMF continued.

In the paper, it called for fostering a more competitive business environment to boost productivity growth, including streamlined regulations and tax codes, and reduced dominance for state-owned enterprises.

It stressed that boosting worker education, skills and professional networks is also critical for raising productivity. 

The paper suggests that the region's countries can leverage "extensive and potent" diaspora networks to help improve productivity by conveying global business knowledge and expertise and helping to raise funds for training and education.

Improving the quality of education by working with the private sector to develop a curriculum focused on the skills needed for private sector jobs can also help close the gap in worker’s talent.

The IMF said financial market development was also vital for accumulating capital — and the region had fallen behind its global peers. Easing access to finance can help develop small and medium enterprises and ensuring adequate protection of legal rights can help raise growth.

Closing gaps with global peers in regulation, education and financial market development could help lift potential growth by 1.5 percentage points in the Gulf Cooperation Council countries, by one percentage point in the Caucuses and Central Asian countries.

But the paper noted that security and stability are a precondition for such reforms to succeed.