Business

AMMAN – Musa Shihadeh, the chief exicutive  and general manager of Jordan Islamic Bank, was named among the top 50 influential financial people in the Middle East by Global Finance’s list of Who’s Who in Middle Eastern finance. In its April supplement on the Middle East, Shihadeh was recognised for the achievements he made during his service at the Jordan Islamic Bank, according to a bank statement that was received by The Jordan Times on Saturday. 

Shihadeh worked at conventional commercial banks from 1961 until 1980, when he joined the Jordan Islamic Bank, a subsidiary of Al Baraka Bank. He has also served as chairman of the accounting committee of the Accounting and Auditing Organisation for Islamic Financial Institutions, and on the board of the General Council for Islamic Banks. 

LONDON — British house prices could fall by up to 18 per cent if the country leaves the European Union, the Treasury says — a claim dismissed as scaremongering by campaigners for a UK exit from the bloc.

Treasury chief George Osborne said leaving the EU would be a “profound economic shock” that would lower property values and raise mortgage rates.

Treasury analysis estimates property prices will be worth between 10 and 18 per cent less by 2018 if Britain leaves than if it stays.

British house prices rose 9 per cent in the year to March, and the value of property is something of a national obsession — especially in London, where the average home costs 535,000 pounds ($775,000), more than 10 times the average annual household income.

Some economists think a fall in house prices would be a good thing because it would help new buyers currently priced out of the market. Others argue any benefit would be offset by a rise in mortgage rates and economic instability.

Many international banks and ratings agencies have warned that leaving the EU would destabilise the economy, and Bank of England Governor Mark Carney said earlier this month that a British exit, or Brexit, could tip the country into recession.

Osborne, who was attending a meeting of G-7 finance minister in Japan Saturday, said allies including France, Germany and the United States agreed that “it would be bad for the British economy if we left the European Union”.

But Energy Minister Andrea Leadsom, who backs a “leave” vote in Britain’s June 23 referendum, said Saturday that “the greatest threat to the economy is the perilous state of the euro” currency used by 19 EU states.

“The safer option in this referendum is to take back control of the vast sums we send to Brussels every day and Vote Leave on 23 June,” she said.

AMMAN – Jordan and the United States Free Trade Agreement (FTA) Joint Committee convened at the Ministry of Industry and Trade on Thursday. 

At the opening session, Industry, Trade and Supply Minister Maha Ali said the Jordanian-US FTA, increased trade between the two countries, mainly the Jordanian exports to the US markets, expressing hope that the joint committee meetings will lead to further economic cooperation.  

In 2015, the Kingdom's exports to the US amounted to more than $1.4 billion compared to $63 million in 2000, according to the minister.  

During the same period, Jordan's imports from the US went up by more than threefold, reaching $1.2 billion from $306 million.

In the first quarter of 2016, trade between the two countries rose by 14 per cent compared with the figures recorded in the same period of last year. 

US Ambassador to  Jordan Alice G. Wells stressed the strong  relations between the US and Jordan, and asserted the US' continued support for the country in several areas that can enable it in confronting challenges.  

She noted that the Jordan-US FTA was built on shared goals to achieve peace, stability and security.

The delegations on Thursday discussed means to boost the joint trade volume and to increase cooperation in the areas of agricultural trade, customs and investments, in addition to bolstering regional commercial cooperation, according to a ministry statement.   

The US delegation, chaired by Deputy Assistant US Trade Representative Eurasia and the Middle East John Mowrey, included representatives of the US departments of agriculture, and labour, as well as from the US State Department, besides embassy officials. 

The Jordanian delegation included representatives from the ministries, and other trade and investment concerned entities. 

AMMAN — Iraq has reached a $5.4 billion standby loan agreement (SBA) with the International Monetary Fund (IMF) that could unlock $15 billion more in international assistance over the next three years, Iraq's Finance Minister Hoshiyar Zebari said on Thursday.

The IMF standby arrangements allow the fund to respond quickly to countries’ external financing needs, and to support policies designed to help them emerge from crisis, with lending tailored to member countries' needs. 

The IMF $5.4 billion loan to Iraq will have an annual interest rate of 1.5 per cent, Iraq's Central Bank Governor Ali Al Alak said at a press conference, following a week of talks with IMF officials in Jordan, Reuters reported. 

At the press conference, Alak did not state the loan's tenure.

The IMF deal will allow Iraq to secure additional financial aid of around $15 billion over the next three years, including securing international bonds, according to Zebari.

The deal was conditional on reducing Iraq's budget deficit and other unspecified measures, he said.

Iraq, a major OPEC exporter, is planning to lower its oil price forecast, widening its current fiscal deficit of 24 trillion Iraqi dinars ($21 billion) by several billion dollars.

Christian Josz, the head of the IMF's Iraq mission, told reporters the agreement was an important first step that would give confidence to other donors to extend more financing.

The agreement still needs the approval of the IMF board which meets in June.

Iraq's oil-reliant economy has been knocked hard by plummeting oil prices in international markets. 

The drop has wreaked havoc on the country's national budget, financed almost entirely by oil revenues.

Large-scale landgrabs by the extremist group (Daesh) since 2014 exacerbated economic decline, forcing the Iraqi government to divert large sums to fighting the militants.

In 2016, Iraq's budget stood at around $90 billion, with a deficit of about $20.5 billion. 

The government hopes to narrow the spending gap with loans from local and international lenders.

AMMAN — Jordan’s national exports dropped at the end of the first quarter of this year by 12.7 per cent, while the country's imports rose by 4 per cent. Subsequently, the trade balance deficit rose to 13 per cent during the same period, according to the Department of Statistics (DoS) report on external trade.

Pharmaceuticals and phosphate exports rose whereas garments, potash, fertilisers, and fruit and vegetable exports went down, according to the DoS report. With regard to imports, the value of cereals, electric appliances and vehicles recorded an increase by 263 per cent, 45per cent and 20 per cent respectively, whereas oil imports saw a drop by 22 per cent.   

TOKYO — Japan managed to sidestep a recession after its economy grew in the first quarter, preliminary data showed on Wednesday, but efforts to cement recovery in the world's number three economy were gaining little traction.

Japan's gross domestic product (GDP) expanded by 0.4 per cent between January and March — or 1.7 per cent at an annualised rate — after a contraction in the last quarter of 2015.

A consumer spending rebound helped drive the better than expected figures, but the leap year added another day of production — and spending — to the economy's performance.

In January, Japan's central bank shocked markets with a negative interest rate policy, designed to boost lending to people and businesses.

Back then, the move was widely criticised as a desperate bid to prop up Tokyo's faltering economic plan.

However, the fresh data is not expected to do much in terms of buoying hopes for Japanese Prime Minister Shinzo Abe's faltering growth blitz.

His bid to revive Japan's once-soaring economy, dubbed Abenomics, was shaken by a bloodbath on equity markets at the start of the year and a resurgent yen which has taken a bite out of Japan Inc.'s profits.

Local media have suggested that Abe will delay plans to raise Japan's consumption tax over concerns that the step may harm the country's already fragile economy.

But Abe on Wednesday insisted his growth plan was making headway, and that no final decision has been made on the levy increase.

"I will make the appropriate decision at an appropriate time," he told reporters.

A consumption tax rise in 2014 — seen as key to helping pay down Japan's enormous national debt — was blamed for ushering in a brief recession.

This week the government approved a 778 billion yen, an equivalent of $7.1 billion extra budget in response to April's deadly earthquakes, which prompted factory shutdowns in southern Japan. 

"But even if the government delays the tax hike, it still needs to set a course for getting public finances on a sound footing, which is not an easy job," said Yoko Takeda, on economist at the Mitsubishi Research Institute.

"The economy is in a tough situation with the strong yen hurting corporate earnings, stalled wages and a lack of confidence among consumers. There are going to be some tough times ahead."

Wednesday's figures came days before the meeting of the Group of Seven finance chiefs that Japan is scheduled to host, followed by a summit of their leaders next week.

 The group will chiefly look into ways to kickstart global growth.

AMMAN — South Africa and Jordan should work to increase the flow of trade between them, a top South African official said on Tuesday.  

Speaking at a seminar on South Africa's economy and trade that was hosted by the Jordan Chamber of Commerce, South Africa's Deputy Minister of International Relations and Cooperation Nomaindiya Mfeketo said it is important that Jordan and South Africa work to improve trade relations and increase the flow of trade between them. 

"The South African government wants to introduce South Africa to you as a potential trading partner, as a potential investment partner, as a partner that can offer Jordan an alternative to traditional trading partners, and as a reliable partner that can offer fairly balanced trade,” she told the attendees at the seminar, comprising Jordanian businessmen, industrialists and concerned officials.   

South Africa works to ensure a trading system that allows developing countries and middle-income countries, such as South Africa and Jordan, to have the chance to grow their local industries, their national economies and their trading footprint without being overwhelmed by the larger economies of the world, she explained. 

"Balanced trade is a key goal of the South Africa government," she told the gathering.

South Africa and Jordan are similar in many ways. They are upper middle-income countries that are still developing. They are also young democracies that have a young population which requires the creation of economic opportunities and sustainable employment, she pointed out

"Trade is thus important as it contributes to government revenue, economic growth, and job creation."

Political and trade cooperation between countries of the South is a priority for South Africa. With this in mind, and while maintaining strong trading ties with traditional partners in Europe and Southern Africa, the government has recently moved to diversify South Africa’s trade with the world, she pointed out, noting that this has resulted in positive growth in Asia, in particular, and also in South America.

Over the past 10 years, South Africa's trade with Asian countries such as China, India, Malaysia and Vietnam has increased by up to 300 per cent, however, trade growth with the Middle East has remained at lower levels, she conceded. 

"This is a situation that South African business, in coordination with government, needs to address," she stressed.

Although it is known for its mineral and agricultural products, South Africa actually has a diverse economy, that has been transformed into a manufacturing and service-based economy with the service sector contributing two-thirds of the country’s gross domestic product (GDP) while the mining and agricultural sectors now contribute far less to the GDP, she told the gathering, highlighting the importance of making use of potential business cooperation.

Agro-processing, healthcare, pharmaceuticals, manufactured goods, financial services, and mineral processing are promising sectors that the Middle East region can avail on, she said, noting that these are areas that Jordanian business persons should target. 

"Jordan can act as a gateway for South Africa into the Levant and into the Middle East. South Africa can act as a gate-way into Southern Africa – a market of 200 million," she noted.

AMMAN — Oxford Business Group (OBG), a global publishing firm,  will prepare a report on the  efforts exerted by the Jordan Investment Commission (JIC) to draw investors into the country, amid market volatility and regional unrest. 

The report: Jordan 2016 will include coverage of an estimated $20 billion in investment opportunities in sectors such as energy, transport, water, infrastructure, urban development, tourism and ICT.

It will also provide an idea about the country’s developing renewable energy sector within the larger scheme of ensuring future energy security. It will also highlight the country’s new generation of modern investment and business-related laws, as part of an effort to improve the business environment.

JIC has signed a memorandum of understanding with OBG regarding the publication, according to an OBG statement. 

RIYADH — Saudi Arabia's plan to build a financial district from scratch was viewed by its neighbours as among the glossiest excesses of the kingdom's oil boom profligacy: a white elephant in the making, unlikely to attract tenants and possibly never even to be completed.

The creators of the King Abdullah Financial District (KAFD) envisaged a kind of mini-Dubai, a haven for foreign financial services and investors, as well as local banks and companies currently doing business from offices all over Riyadh.

But more than 10 years later — and a year after it was supposed to be finished — most of the 1.6-million-square-metre district on the edge of Riyadh is still a construction site, and no businesses have moved in.

Reform-minded Saudi Deputy Crown Prince Mohammad Bin Salman said last month he wants to salvage the $10 billion project. 

The Public Investment Fund, re-imagined as the world's largest sovereign wealth fund, will be based there and sources have said it will also own the project.

According to the prince's "Vision 2030", KAFD will become a "special zone" with internationally competitive regulations, an easier visa regime and a direct connection to the airport, steps he hopes will "increase the chances of ... success".

Another change is to increase the amount of residential use from the 1.7 million square metres now designated for office space. According to a 2015 report by real estate analyst Jones Lang LaSalle, rents are bottoming out in Riyadh's current 2.5 million square metres of office space but prices for residential units are rising.

Potential tenants and investors are both hopeful and sceptical about the plan.

"The potential is amazing. The inside is impressive. I'd like to live there," said one Dubai-based expatriate who does business in Saudi Arabia and who has toured the site. "As an urban space it's interesting, with its design and architecture."

He questioned how successful the project could be in the current economic climate, however. The main contractor is Saudi Binladen Group, the biggest construction firm in the kingdom, which has been struggling since last year.

"It will not be finished. Decision making is very slow [on the project, and] people don't have cash," he said. Like other businesspeople interviewed for this story, he didn't want to be named expressing an opinion about such an important royal initiative.

A senior Saudi former banker expressed similar concerns.

"If the plan does create a genuine free zone and makes things smoother for newcomers, it'll be 'bingo!'" he said, but added that a recovery in the oil-dependent economy was key.

Inside the district last week, swallows swooped between palm trees and sparrows pecked among decorative desert shrubs near the almost completed conference centre. 

The parts that are finished include sections of its stone-paved "wadi" walkway and distinctive glass towers. From high in one tower, swimming pools and children's playgrounds could be seen on other roofs.

Jacob Kurek, a partner at the firm responsible for the KAFD masterplan, Danish firm Henning Larsen, said the original plans were flexible enough to transform space earmarked for offices into residences or retail space. A direct link to the airport would be easy to install via Riyadh's new metro, which will have a station at KAFD, he said.

Other changes, such as a different regulatory regime, visa exemptions and any blunting of Saudi Arabia's strict social restrictions, would be more complicated, however.

At the moment, visas can take many days to arrange and require a complex process of invitation by a sponsor and plenty of supplementary documentation. Setting up a business means getting permissions from many government departments.

Mustafa Alani, a security expert with close ties to the Saudi interior ministry, said visa exemptions could work like the waiver programme in the US, or like residence permits issued by free zones in the UAE.

"It's not a visa, but it's not a free walk-in, either. There might be a geographical restriction," he said, suggesting those who enter on the special visas might be forbidden to leave KAFD, or be limited to the Saudi capital.

According to rules dictated by Saudi Arabia's powerful conservative clerics, women must wear an ankle-length cloak in public and are forbidden from driving. Men and women who are not related may not mingle unchaperoned. Cinemas, music concerts and dancing are banned and alcohol and pork are illegal. Businesses must shut for half an hour during each of five daily prayers.

Saudi Arabia has found ways to accommodate foreigners, however. Expatriate compounds, hidden behind high walls, protected by army gun emplacements, to which Saudi nationals are usually forbidden entry, allow foreigners to dress and behave much as they do in the West.

Such extreme segregation could not work for a project like KAFD, which is also marketed at Saudi businesses and residents.

But there are other examples of areas that Saudis can visit that enjoy a special status and do not require strict Islamic dress codes or forbid gender mixing, like Riyadh's diplomatic quarter.

For one Western business executive now living in Dubai, the social restrictions, especially those on women, were among the most important factors in any decision to move to Saudi.

"To me, the visas are nice, but they're not even on the list of the top 10 things that need to change," he said.

AMMAN — A French delegation, comprising representatives of French companies, chaired by Pierre Gattaz, the president of MEDEF, will start a two-day visit to Jordan on Wednesday.

The visit, considered the most important, since 2011, follows Her Majesty Queen Rania's participation in the MEDEF Summer University in Paris last year and the visit of French President Francois Hollande to Amman in April.

Established in 1998, MEDEF or the "Movement of the Enterprises of France" is the largest employer federation in France.

It has more than 700,000 member firms, 90 per cent of them being small- and medium-size enterprises with fewer than 50 employees.

The delegation, led by Gattaz, comprises representatives of around 20 French companies and enterprises from various sectors, including infrastructure, finance, engineering, telecommunications, and vocational and professional training, according to a statement of the French embassy in Amman.

During the visit, the delegation is scheduled to meet with high ranking Jordanian officials and businessmen, as part of commercial talks.