Business

AMMAN — Prime Minister Abdullah Ensour on Thursday stressed the importance of developing commercial cooperation between Jordan and the Common Market for Eastern and Southern Africa (COMESA).

At a meeting with COMESA Secretary General Sindiso Ngwenya, Ensour reviewed the Kingdom's endeavours to boost the national economy, open new export markets, attract investors and developing the commercial ties with COMESA countries.

In 2007, Jordan signed a cooperation memorandum with the COMESA secretariat general, that covered economic, commercial, investment and tourist fields, and Jordan was accepted as an observer in the organisation in 2006.

Ngwenya said the 20-country COMESA is an important market, since the group's population reaches around 472.1 people with a gross domestic product (GDP) of $256 billion. He also noted that the average GDP growth for its countries is around 4.4 per cent, and Jordanian products can be exported to the group through the Red Sea.

Ngwenya praised the Jordanian products' quality and their ability to compete in international markets, stressing the importance of enhancing cooperation between Jordanian businesspeople and exporters with COMESA countries.

Total Jordanian exports to COMESA in 2014 reached JD218 million, while imports reached JD472 million.

AMMAN — The Palestinian Jordanian Business Forum on Thursday signed a memorandum of understanding (MoU) with the Palestinian Businessmen Association, based in Hebron, to enhance economic cooperation between both countries' businesspeople and boost joint trade.

The MoU stipulates both signatories' participation in activities held in Jordan and Palestine. It also aims at organising joint meetings between both countries' businesspeople, creating joint work opportunities, exchanging commercial information to be acquainted with business environment in the two countries.

It also included scientific and technical exchange in a way that serves merchants to launch a database for economic opportunities and projects available in both countries and promoting them.

AMMAN — The Securities Depository Centre (SDC) has reduced the capital of Royal Jordanian Airlines by 37,968,008 shares, represnting 45 per cent of the company's capital.

The company's registered capital at the SDC has become 46,405,342 shares, down from 84,373,350 shares.

The decision was based on the company's general assembly at its extraordinary meeting held May 2, which was approved by the minister of industry and trade to reduce the company's accumulated losses.

AMMAN — The Amman Chamber of Commerce (ACC) issued 30,817 certificates of origin with a total value of JD717 million during the first seven months of 2015, ACC announced Wednesday.

In terms of value, Iraq topped the list with JD235 million spread over 1,732 certificates, the UAE came second with JD153 million through 6,529 certificates and Saudi Arabia accounted for JD63 million with 5,908 certificates of origin.

Regarding the certificates of origin ACC issued during the first half of the year, re-exported foreign products had 4,170 certificates valued JD404 million. There were 24,732 certificates for agricultural products, (JD143 million), 442 certificates for industrial products, (JD83 million), and 472 certificates for Arab products with a value of JD47 million.

TRIPOLI — Libya will import electricity from Egypt and Tunisia and rent generators as it struggles with power outages that have plunged its main cities into darkness, the Tripoli-based prime minister said.

Four years of fighting following the ousting of leader Muammar Qadhafi has hobbled Libya's oil industry and power grid, with damaged plants and foreign firms reluctant to deliver spare parts needed to repair them.

Outages in the capital Tripoli lasting up to 18 hours a day have forced the country's biggest steel company to close as well as dozens of bakeries and petrol stations.

The blackouts are even worse in the east where the main city of Benghazi has seen only sporadic power in the past few days, shutting down the mobile phone network for much of the day.

Libya will get 250 megawatts (MW) (0.25 gigawatts GW) of electricity from neighbouring Tunisia and 75MW from Egypt, Khalifa Al Ghwell told a televised news conference on Tuesday.

Al Ghwell said his government had also rented generators with a capacity of 240MW, adding that the closure of steel firm Lisco would save 100MW which will be fed into the Tripoli grid.

There are also plans to try to restart the Sarir power plant this week, he added.

Al Ghwell provided no details on delivery of the electricity nor on how the scheme would be funded.

In November, APR Energy Plc., which runs temporary power plants, said it had suspended its Libya operations, citing  unfinished paperwork by Libyan authorities regarding renewal of a 450MW power contract.

Al Ghwell is prime minister of the National Salvation government set up in Tripoli after an alliance of armed factions from Misrata and other western regions called Libya Dawn took control of the capital in August 2014.

It controls key state institutions there such as ministries and the headquarters of the electricity company while Libya's internationally recognised government has withdrawn to the east, where it operates from the town of Bayda and has set up a parliament in Tobruk.

According to the US Energy Information Administration, Libya's installed electricity generation capacity was over 7GW in 2012.

However, demand for electricity has more than doubled since 2000 as living standards have improved, outstripping capacity and creating electricity shortfalls.

It is estimated that power demand will increase two-and-a-half fold by the end of 2020.

AMMAN — Total medical insurance premiums reached JD141.7 million last year, representing 27.1 per cent of total insurance premiums, data from the Ministry of Industry, Trade and Supply showed Wednesday.

According to a ministry statement sent to The Jordan Times, last year's figure was 10 per cent higher than the JD128.6 million registered in 2013. Arab Orient Insurance Company accounted for 37 per cent of the 2014 total medical premiums.

Data showed that 93 per cent of medical insurance coverage was in the form of collective contracts that employers provided to employees, and 97-99 per cent of the coverage provided for treatment in and outside hospitals.

By the end of 2014, a total of 584,000 people (subscribers and beneficiaries) were covered by medical insurance documents in all insurance companies, according to the data.

The total compensations paid for medical insurances in 2014 reached JD111.8 million, compared to JD110.3 million in 2013, marking a loss rate of 78.9 per cent, the statement said, adding that 50 per cent of compensations were paid for medicines and doctors.

HANOI/BRUSSELS — The European Union (EU) and Vietnam reached a free trade agreement on Tuesday, the EU's second in Southeast Asia, paving the way for deep cuts in tariffs on almost all goods between their markets.

The agreement in principle may take several years to be implemented. A legal text should be completed later this year, after which it must be ratified by the 28 EU member states and the European Parliament.

Free trade with the EU would be a boon for Vietnam, a fast-growing, export-led economy set to receive preferential access to a bloc with a combined gross domestic product (GDP) of $18.46 trillion. 

The two already share $31 billion in annual trade, and Vietnam's exports to the EU account for nearly four-fifths of their trade.

"We have a deal. This finely balanced agreement will boost trade with one of Asia's most dynamic economies," EU Trade Commissioner Cecilia Malmstrom told reporters in Brussels. "The agreement with Vietnam sets a new standard on agreements with developing countries."

The agreement would probably take effect in late 2017 or in 2018, she said.

Among the more sensitive issues to be resolved, she added, were commitments on human rights and a provision to avoid shipping material from third countries, to prevent the agreement becoming a channel for cheap Chinese fabric.

Citing complexities, the EU shelved trade negotiations with the Association of South East Asian Nations (ASEAN) and opted to pursue deals separately with ASEAN members as steps towards a multilateral pact.

The EU has reached an agreement with Singapore and begun talks with Malaysia. It says negotiations with Thailand will be on hold until its ruling military junta cedes power to an elected government.

Faced with economic uncertainty at home, some EU members are seeking to expand trade and investment in Asia. British Prime Minister David Cameron took a business delegation to four Southeast Asian countries last week.

Vietnam shipped $24 billion of goods to the EU last year, among them cellphones, electronics, footwear, garments, coffee, rice and seafood. The EU exports mainly electrical machinery and equipment, aircraft, vehicles and pharmaceuticals to Vietnam.

Industry and Trade Minister Vu Huy Hoang said Vietnam still help its exports and investment.

"We can integrate more into the economic life of the world," he told reporters.

Communist Vietnam is implementing broad reforms to its $184 billion economy and is aiming for trade deals with more than 60 of its export markets.

It hopes eliminating trade barriers with the United States, in its low-cost manufacturers, which is already used by Samsung , LG, Gap, Nike and Inditex's Zara.

Agreements were reached in the past 90 days with South Korea and the Russian-led Eurasian Economic Union, while negotiations are edging closer to completion for a Trans-Pacific Partnership, covering 12 countries worth 40 per cent of GDP, including the United States, Vietnam's top export destination.

BERLIN — The German government's panel of independent economic advisers favours creating an insolvency mechanism for eurozone states and says countries should be able to leave the single currency as a last resort.

In a report, the council of five experts, known as the "wise men", said the Greek crisis showed further reforms were needed, such as an insolvency procedures, to make the eurozone more stable.

But the council stressed that it should still be possible for a country to drop the euro as a "last resort", to avoid threatening the existence of the single currency.

"In a currency union, the basic rules must be adhered to and for this reason the exit of a member state should not be taboo, for otherwise partners are susceptible to blackmail," council member Lars Feld told reporters on a media call.

Feld also said the council viewed a third bailout for Greece as the "right step" as long as Athens implemented reforms.

He added that an insolvency mechanism would work by assessing whether a country requesting aid from the eurozone's bailout fund was caught in an extreme budget crisis. If so, debt restructuring would be needed, for example through a one-off extension of maturities or a haircut.

Nonetheless, the council said an insolvency mechanism would only be possible once states had dealt with current debt levels. They also warned against "quick-win" fiscal policies, such as the creation of a eurozone treasury, a European unemployment insurance scheme or an economic government for the bloc.

"Making the euro area collectively responsible for potential costs without member states giving up any national sovereignty over fiscal and economic policies would, sooner or later, make the currency union more unstable," they wrote.

The council's stance conflicted with a study from the ZEW think tank that proposed a common unemployment insurance scheme and an insolvency process for countries threatened with bankruptcy.

The economists envisaged granting heavily indebted states a three-year period to access funds from the eurozone's bailout mechanism before negotiations over debt restructuring start.

Both sets of proposals come as politicians look for lessons from the Greek debt crisis. 

The German magazine Der Spiegel reported recently that Germany was willing to discuss naming a eurozone finance minister, who would have his own budget and the power to raise extra taxes. 

AMMAN — Regional turmoil is taking a toll on International Silica Industries Company (ISIC).

According to a disclosure to the Jordan Securities Commission, the company's accumulated losses reached JD0.8 million at the end of June 30, 2015.

The losses began in 2012 when the company was in the red by JD0.1 million, increasing to JD0.2 million in 2013 and JD0.3 million in 2014.

Prior to that, ISIC showed signs of regression generating lower profits that dropped from JD0.2 million in 2010 to JD0.1 million in 2011.

"Due to continued political instability in the region, the company is in a jam with a sharp and noticeable shortage in cash liquidity," the auditor wrote in the notes clarifying the summarised interim financial statements. 

"The turbulence played a role in raising production costs and shipment charges, weakening sales to neighbouring countries, and causing an inventory pile up," PricewaterhouseCoopers Jordan said in the financial review.

Noting that ISIC recently secured a JD0.2 million credit facility from a local bank to ensure cash liquidity necessary for operations, the auditor added that the company is seeking higher credit ceilings from banks in order to  have the needed liquidity to maintain sustainability.

PricewaterhouseCoopers 'Jordan' indicated that the company's management was also trying to look for other options to guarantee the endurance and development of ISIC.

"The financial statements were prepared based on the principle of  continuity," the auditor said, although it mentioned that the conditions cast deep doubt on the capability of the company to proceed as an ongoing concern.

Board Chairman Ayman Hatahet told the shareholders in the 18th annual report covering the year 2014 that sales to the main markets, such as Saudi Arabia, Iraq and Syria, dropped sharply.

He pointed out that a 62 per cent fall in overall sales last year had a great impact on the results expressing hope that events and harsh conditions in neighbouring countries and the repercussions of the financial crisis would not persist much longer and that the surrounding situation would improve.

To minimise the negative effects on the company and the inability to market the silica due to lower prices of materials and higher costs , Hatahet said ISIC opted for "Talc",  a new product other than silica.

The chairman added that  the company experimented with 1,000 tonnes of talc towards the end of last year and that results were positive in terms of production and sales.

He expected the new product to open new markets, locally and abroad.

Detailing ISIC's performance, the 2014 annual report showed that sales last year totalled 3,796 tonnes, 6,241 tonnes lower than the 10,037 tonnes in 2013.

The sales in 2014 amounted to JD0.4 million, JD0.2 million were inside Jordan. In 2013, sales stood at JD0.5 million, JD0.4 million of which were exports..

It attributed the sharp drop in sales to the sudden increase in shipping charges and the decline in prices in Saudi Arabia, greatly curtailing the company's sales competitive capability.

This regression caused 2014 losses to increase by 51 per cent.

Production also went down last year as the silica flour and talc output of all kinds plunged 69 per cent to 3,418 tonnes from 11,009 tonnes.  

ISIC extracts, upgrades and micronises the sand from a mining area in Ras Al Naqab, south of Kingdom, that proved the deposit to be of high quality. The quarry supplies the current plant in Khan Al Zabeeb/Dabaa. 

Being a basic raw material in various industries, the product is used in ceramics, glass, fiberglass, construction chemicals, foundries, filler materials, paints, mortar, GRC, chemical industries and adhesives among others.

Midyear financial results as of June 30, 2015 showed that sales trebled from JD0.1 million to JD0.3 million

But because production costs exceeded sales in both periods, operational losses doubled from JD0.1 million to a JD0.2 million when administrative and selling expenses were added.

The balance sheet at the end of June 2015 showed total assets at JD2.3 million, JD1.3 million of which were the value of property, and equipment.

Inventory amounted to JD0.8 million and receivables totaled JD0.1 million.

Capitalised at JD2.4 million, shareholders equity came at JD1.6 million, mainly due to accumulated losses mentioned above.

Out of JD0.6 million in total liabilities, JD0.5 million were bank debts.

According to the annual report, International Silica Industries employed 24 workers at the end of last year and capital investment was estimated at JD1.4 million.

The report listed the following as the major shareholders: Ayman Hatahet (27.2 per cent); Jordan International Insurance (17.5 per cent); Qais Fuad Saad Abu Jaber (13.2 per cent); Travertine Company (11.8 per cent); Fuad Saad Farhan Abu Jaber (11.7 per cent); and Kim Fuad Saad Abu Jaber (10 per cent).

AMMAN — The Amman Chamber of Commerce (ACC) described His Majesty King Abdullah's recent Royal directives in Aqaba as an enlightening roadmap to address imbalances in the Kingdom.

Noting that the guidelines aim at removing obstacles impeding the expansion of investment and economic activities, the ACC board of directors stressed in a statement that the Royal course of action must quickly be translated into immediate development on the ground so that it can be felt by both the citizens and investors.

"The current economic condition requires non-traditional mechanisms that contribute to stimulating the economy, executing investment transactions, and attracting foreign investors to the Kingdom," ACC President Issa Murad and the board said in the statement.

It added that the King pinpointed the economic hindrances facing local and foreign private sectors, as  impediments include complicated formal procedures that drive away investors and make them view the investment environment in Jordan negatively at a time when he personally strives to lure major world corporations to invest in Jordan. 

Murad and the board stressed His Majesty's efforts to enhance the security and stability of the Kingdom, realising that the biggest challenge facing Jordan is economy, creating job opportunities, and fighting poverty. 

They added that the King urged the government to prioritise economic issues on  top of its work and plans, which requires the government to review all its mechanisms in dealing with the investment environment and investors, as well as enhancing its partnership with the private sector.

The ACC's board of directors considered that the King's clear directives to the government can make Jordan a vital economic model in the region, especially under His Majesty's wise policies that make Jordan a destination for every Arab and foreign tourist and investor.

The ACC called for training employees at official institutions to be able to deal with investment procedures and view investors as partners in the economic and development process instead of dealing treating them with doubt and suspicion.

“This requires official stakeholders to work again, in cooperation with the private sector, to make programmes that enhance the efficiency of public sector employees and conduct regular evaluation of their work,” the statement concluded.