Business

AMMAN — Industry, Trade and Supply Minister Maha Ali on Tuesday said the government took a set of measures to stimulate different economic sectors, enhance their competitiveness and improve the business environment to face challenges, especially those resulting from regional instability. Ali stressed during a meeting with president and members of the Iraqi Business Council that the government will remove hindrances facing investors.

Ali valued Iraqi investments in Jordan and indicated that the government is following up with the Iraqi side to reopen border crossings as soon as possible to facilitate the entrance of Jordanian exports that was damaged a lot as a result of the Treibeel border crossing's closure. She said specialised government entities were working in coordination with commissions representing the private sector to resolve any obstacles facing investment projects in different fields.

The minister said the government is also working on diversifying energy resources and shifting to renewable ones to use in the industrial and other sectors in order to reduce production costs. The president and members of the Iraqi council spoke about some problems facing their investment projects which the ministry will be following up on them with concerned institutions.

WASHINGTON — President Barack Obama on Monday signed into law a bipartisan budget bill that avoids a catastrophic US default and puts off the next round of fighting over federal spending and debt until after next year's presidential and congressional elections in November.

Obama praised the rare bipartisan cooperation behind the deal, saying that two-year agreement puts the government on a responsible path.

"It should finally free us from the cycle of shutdown threats and last-minute fixes and allows us to, therefore, plan for the future," Obama said in brief remarks as he signed the bill.

Tuesday was the deadline for averting a default on US financial obligations by raising the debt limit.

The Senate gave final approval to the House-passed bill late last week and sent it to Obama. He signed it in the Oval Office, shortly before departing on a day trip to New Jersey and New York.

The legislation raises the limit on the government's debt through March 2017, pushing reconsideration of what in recent years has become a contentious issue until after the elections for the White House and Congress in November 2016.

The measure also sets federal spending through the 2016 and 2017 fiscal years, and eases strict caps on spending by providing an additional $80 billion, split evenly between military and domestic programmes.

The appropriations committees must write legislation to reflect the spending and they face a December 11 deadline to finish the work.

Negotiations over the budget, which began weeks ago, wrapped up quickly last week as Republican Representatve Paul Ryan prepared to become the new House speaker.

Obama negotiated the agreement with Republican and Democratic congressional leaders who were intent on steering the institution away from brinkmanship and government shutdown threats that have haunted lawmakers for years. 

Republican Representatve John Boehner of Ohio, who stepped down both as speaker and from his seat in Congress at the end of last week, said he felt a sense of urgency to reach a deal before turning the gavel over to Ryan. 

Other lawmakers wanted the issue taken off the table as they look ahead to next fall's elections.

Obama called the deal "a signal of how Washington should work" and urged lawmakers to keep up the collaboration.

"My hope is now that they build on this agreement with spending bills that also invest in America's priorities — without getting sidetracked by a whole bunch of ideological issues that have nothing to do with the budget," he said.

The $80 billion in additional spending is paid for with a mix of spending cuts and revenue increases touching areas from tax compliance to spectrum auctions.

The deal would also avert a looming shortfall in the Social Security disability trust fund that threatened to slash benefits, and head off an unprecedented increase in Medicare premiums for outpatient care for about 15 million beneficiaries.

The plan will lift caps on the appropriated spending passed by Congress each year by $50 billion in 2016 and $30 billion in 2017, evenly divided between defense and domestic programmes. Another approximate $16 billion would come each year in the form of inflated war spending, evenly split between the defence and state departments.

Separately, the Congressional Budget Office (CBO) said last month that the US budget deal would reduce deficits by nearly $80 billion over 10 years due to increases in revenues and lower expenditures on healthcare, pension guarantees and Social Security.

The legislation, which would ease automatic spending caps to increase discretionary spending by $80 billion over the next two fiscal years, would produce larger savings in later years, according to the analysis by the CBO, Congress' nonpartisan referee agency on fiscal matters.

The budget plan would show a net deficit increase of $4.6 billion in fiscal 2016 and $53 million in fiscal 2017. But this swings to annual deficit reductions of $4.9 billion to $9 billion between fiscal 2018 and fiscal 2025.

The deal would add $32.3 billion in revenues over the 10-year period, chiefly from tax compliance, health care and pension provisions, while reducing estimated outlays by $47.6 billion.

AMMAN — Indian Ambassador to Jordan Anil Trigunayat on Monday said he will invite businesspeople and several private sector institutions for a special meeting next week to prepare for holding the first Jordanian-Indian Forum at the start of 2016, the Jordan News Agency, Petra, reported.

Trigunayat made his remarks during a meeting with board members of the  Jordan Businessmen Association (JBA) to make an economic work programme between his embassy and the association, enhancing the results of  India president's visit to Jordan last month.

The ambassador said the forum will be an important chance to discuss joint projects between Jordanian and Indian businesspeople. He added that the discussions come in light of the Indian government's allocation a $100 million private fund through the Export-Import Bank of India to support and encourage exports for joint bilateral projects implemented in the Kingdom or India.

JBA President Hamdi Tabaa stressed the importance of true partnerships between businesspeople of both countries in light of investment incentives announced by Prime Minister Abdullah Ensour on Saturday, especially in the field of IT, noting that the association is ready to offer all facilitations for the success of the Jordanian-Indian forum, Petra reported.

AMMAN — The Arab Potash Company (APC) generated around JD96 million net after-tax profit during the first nine months of this year. The amount was 37 per cent higher than the JD69.7 million posted during the same period of 2014, when, the Jordan News Agency, Petra, reported.

APC Chairman Jamal Sarayrah attributed the noticeable improvement in operational costs to production efficiency and cost management. Combined with higher international prices of potash, APC's profit margin went up from 23 per cent in 2014 to 40 per cent in 2015 despite a drop in sales and earnings,

Sarayrah told Petra. He noted that income tax increased to JD22.4 million during the January-September 2015 period, compared to JD8.7 million during the same period of 2014.

Mining revenues at the end of the end of September 2015 were double those the company paid during the same period of 2014, registering JD17 million from JD8.5 million, Sarayrah pointed out.

The company's board of directors agreed to increase allocations for social responsibility programmes from JD7.5 million to JD10 million, the chairman told Petra.

AMMAN — The entrepreneurship spirit in Jordan seems more accommodating than in other countries of the region, according to a Swedish investor.

Lars Rennerfelt, president of the Swedish Jordanian Chemicals Company (SJCC), told The Jordan Times in an interview last week that aversion to risk is high in the Middle East and people shun long-term investments.

"As an entrepreneur, a person should have patience and tolerance because it takes time to be able to receive a return on an investment," he said.

Rennerfelt added that he had been looking for an opening in the region for quite some time before finding a Jordanian entrepreneur who shared his passion for a chemical project.

The SJCC president is injecting capital and providing financing, as well as technical expertise, into a project that is expected to boost the country's capabilities and tout the chemical industry in the Kingdom.

Partnering with Hazem Ishaqat, a Jordanian entrepreneur, the two chemical engineers are currently setting up a $3 million capital factory in Mafraq's King Hussein Bin Talal Development Area. 

The factory, to be built on six dunums of land, will produce ferric chloride, a chemical product used for water purification; it will have an output capacity of around 30,000 tonnes annually.

Ishaqat said the product will be sold locally at a competitive price that compares to the cost of imported ferric chloride used now in Jordan. He stressed, in this regard, the SJCC's advantages in terms of quality, and method of transportation and delivery.

Rennerfelt said the project enjoys developed production, efficiency and flexibility, adding that it will make "tap water a more reliable source for drinking".

With over 25 years of experience as an entrepreneur, he built factories in Sweden, Norway, Germany and Belgium based on proprietary technology, which has also been licensed out to manufacturers in Austria and Saudi Arabia.

Asked why he selected the Middle East to expand his investment and operations, Rennerfelt said that water scarcity makes it imperative for the region to look for options to preserve this vital resource through recycling and better waste water treatment.

According to the Swedish investor, the domestic and regional clients who might be willing to buy the locally produced ferric chloride include waste water treatment plants, desalination projects and other enterprises that require purification techniques. 

He explained that ferric chloride was a chemical substance known for quite a long time; it is now more effective in waste water treatment with higher efficiency and better qualities.

The process entails quicker and improved methods of coagulation and flocculation, he elaborated.

Ishaqat pointed out that some local industries, like steel and fertilisers, will be having an input in SJCC's operations.

The partners valued the support extended by the officials at the Investment Commission and at  King Hussein Bin Talal Development Area who facilitated the process for moving ahead with the project which is expected to start production in August 2016 employing around 20 workers from the Mafraq community. 

AMMAN — Amman Chamber of Commerce (ACC) President Issa Murad on Sunday expressed the private sector's appreciation for the recent government decision to launch procedures aimed at stimulating the investment environment and increasing the economic growth in the Kingdom.

In a statement carried out by the Jordan News Agency, Petra, Murad said the investment decision announced by Prime Minister Abdullah Ensour on Saturday at the Jordan Investment Commission (JIC), would have a great effect in boosting the national economy's competitiveness.

Murad described these decisions as "constructive" and added that they could stimulate economic activity and help Jordan improve its ranking on the foreign investment attraction index.

The government's decision to grant the transportation sector some tax and customs exemptions represent a "qualitative leap" in motivating the sector to present better services to citizens, the ACC president indicated. 

By granting government incentives, with certain conditions, to companies owning 20 buses would encourage consolidation among public transportation companies in the near future, he elaborated.

The president also commended the government's decision to extend the exemption period for some unfinished projects, reiterating the importance of the decision in enhancing some major projects which encountered difficulties and were not able to complete the jobs   on time, Petra reported.

Expanding the incentive umbrella to include ICT sector activities within the Investment Law is also a positive step, Murad said, stressing that the ICT sector is essential in developing economies in general.

He also expressed the chamber's appreciation for the JIC's efforts in boosting Jordanians' capabilities, praising the draft bylaw of residence, labour and workers at development areas and free zones, which organises labour issues and give priority to Jordanians to work in these schemes, according to Petra.

RIYADH — Saudi Arabia on Saturday strongly criticised Standard and Poor’s (S&P)agency for downgrading the kingdom’s credit rating over the oil price slump, saying it was not backed by facts.

“The evaluation... came as a hasty reaction, unjustified and not backed by reality,” the finance ministry said in a statement cited by the SPA state news agency. “The agency depended on temporary and unsustainable factors,” it said.

S&P late Friday lowered the long-term credit rating for Saudi Arabia one notch to A+ after its deficit rose sharply because of low oil prices.

The ratings agency maintained its negative outlook on the world’s top crude exporter, saying that the decision reflected the challenges of reversing the “marked deterioration” in the Saudi fiscal balance.

S&P said it could further lower the rating within the next two years if Riyadh fails to achieve a “sizable and sustained reduction in the general government deficit”.

The finance ministry cast doubt on the decision, saying S&P lowered the country’s ratings twice within one year from AA- with a positive outlook to A+ with a negative outlook because of the oil price fall.

It also said the decision did not take into account the sound fiscal position of Saudi Arabia, which is backed by assets of more than 100 per cent of gross domestic product (GDP) besides large foreign currency reserves.

Saudi Arabia recorded a $17 billion budget deficit last year for the first time since 2009. It is expected to post a deficit of around $130 billion this year, according to the International Monetary Fund.

S&P said that Saudi Arabia, a key member of the Organisation of Petroleum Exporting Countries, had seen its deficit climb to 16 per cent of GDP in 2015 compared with 1.5 per cent in 2014 because of the plunge in the price of oil, Riyadh’s main source of revenue.

It added that the government could cut back on key investments and cut subsidies on power, water and fuel to strengthen government finances in the coming years.

But it also referred to political risk, saying that “intra-family issues around succession could make the kingdom’s policy decisions more challenging and difficult to predict”.

In February S&P had put the Gulf state on negative outlook, warning about its dependence on oil.

The price of a barrel of oil has tumbled from $90 to less than $50 since June last year.

WASHINGTON — US President Barack Obama early Friday won congressional passage of legislation that lifted the threat of a default on government debt through the end of his presidency and a budget blueprint easing strict spending caps through September 2017.

The Senate voted 64-35 to approve the measure, which was negotiated over the past few weeks by the White House and congressional leaders, including former House speaker John Boehner, who retired from Congress.

Obama will sign the bill into law as soon as he receives it, the White House said in a statement.

Without action by Congress, the Treasury Department would have exhausted the last of its borrowing capacity on November 3, according to Treasury Secretary Jack Lew, and risked default on US obligations within days that would roil global financial markets.

The two-year budget provision provides new top-line spending levels for Congress for the fiscal year that began October 1 and the one starting October 1, 2016.

It loosens budget caps, allowing an additional $80 billion in spending on military and domestic programmes over the two years.

But lawmakers still need to allocate that money among thousands of budget-line items. They face a December 11 deadline, when existing spending authority by government agencies expires, and a spirited fight is expected.

Obama called on Congress to build on the budget "by getting to work on spending bills that invest in America's priorities without getting sidetracked by ideological provisions that have no place in America's budget process".

Conservative Republicans are likely to try to attach  controversial policy add-ons, such as prohibiting funding for women's healthcare provider Planned Parenthood to punish the group for an abortion-related controversy involving fetal tissue.

Some may also try to undo Dodd-Frank Wall Street reforms enacted after the 2008-09 financial crisis or prohibit new regulations on carbon emissions.

During Senate debate on Thursday, conservatives railed  against the budget and debt limit bill.

Republican Senator Rand Paul, who is running for the Republican nomination for president, complained in a floor speech: "The right's going to get more military money. The left's going to get more welfare money. The secret handshake goes on and the American public gets stuck with the bill."

Senator Ted Cruz, a rival Republican presidential hopeful, returned to Washington from the campaign trail to accuse Republican majorities in Congress of "handing the president a blank credit card for the remainder of his tenure".

Senate Majority Leader Mitch McConnell, a Republican who helped negotiate the bill, praised the measure for rejecting tax increases and noted that the added spending would be offset by savings elsewhere in the government.

He also said it would "enact the most significant reform to Social Security since 1983". The estimated $168 billion in long-term savings from the programme would be achieved by clamping down on medical fraud and excess claims associated with disability benefits.

Separately, the International Monetary Fund (IMF) on Friday urged the Federal Reserve (Fed) to be cautious on raising rates, warning that tightening too fast could force it to reverse and possibly lose credibility.

In a review of the world's top industrial economies ahead of the November 15-16 Group of 20 (G-20) summit in Antalya, Turkey, the IMF said the United States and the global economy face risks tied to the impending rate hike, which would be the first in more than nine years.

The Fed on Wednesday put off the decision, but pointed to the distinct possibility that it could happen in December.

While a rate rise would represent the Fed's confidence in US economic growth, the IMF warned that it could happen "amid large uncertainty about slack in labour markets, the neutral policy rate and the path for inflation and wages."

It said global financial stability is often in the balance, given that an increase in the Fed's benchmark rates could spark "abrupt" shifts in global investment portfolios and high market volatility.

Domestically, the IMF added, "should financial conditions tighten more than warranted by cyclical conditions, it may become a drag to the recovery, and may force the Fed to reverse direction, with a potential cost in terms of credibility".

And it could also drive the dollar higher, with more negative consequences for US exports.

The IMF had advice for other G-20 economies as it pushed more efforts to right global economic "imbalances", such as excess debt and huge trade surpluses.

It said the United States, Japan, and France, most notably, need strong medium-term plans to cut their debts.

Surplus countries like Germany and the Netherlands can afford to spend more and spur growth at home and across the sagging eurozone.

As for China, the world's second largest economy, the IMF said the country needs to work to prevent "too sharp a slowdown in growth" while advancing structural reforms.

The reforms are crucial "to unleash new sources of growth and rebalance the economy towards consumption over the medium term", it said.

It also urged Beijing to rein in credit growth and slow investment growth to reduce risks in the domestic economy.

"Finding the right mix of reducing vulnerabilities and maintaining growth will be an ongoing challenge," it added.

LONDON — There is no let-up in executives' appetite for corporate takeovers despite volatility in the stock market and mounting concerns over the global economy, particularly China.

According to a survey released this week by consulting firm EY, the recent wave of mergers and acquisitions, or M&A, is set to continue over the coming year. 

It found that 59 per cent of global companies are planning to secure at least one deal over the next 12 months, partly as a means of cushioning waning global growth as China's economy slows.

The figure for October is up from 56 per cent in April and 40 per cent at the same time last year. It represents the highest interest in acquisitions that EY's survey of corporate deal making has found in its six-year history. The low point was at the start, when only 24 per cent of companies signalled the intention to make a takeover.

"With modest increases in global gross domestic product, organic growth alone is not enough for companies to expand and reshape at the pace they need," said Pip McCrostie, EY's global head of transactions.

"The search for growth is lifting deal making to record highs, and executives are focusing on M&A to secure innovation, competitive advantage and market share for the foreseeable future," she added.

M&A activity has really gathered pace this year with deal values, according to EY, already up 35 per cent on 2014 and more mega deals, those valued above $10 billion, in 2015 than in any previous year of the survey's history.

Earlier this month, the world's top two beer makers agreed to join forces to create a company that would control nearly a third of the global market. Much of the logic behind the £69 billion ($106 billion) takeover of British-based SAB Miller by Anheuser Busch InBev is to cope with faltering beer consumption in many parts of the world.

Other big deals this year include Royal Dutch Shell's ¢£47 billion ($71 billion) yet-to-be-completed acquisition of BG Group, as well as the $62.6 billion merger between Heinz and Kraft Foods, which is now called Kraft Heinz.

EY said the boundaries between industries looks set to blur, with 48 per cent of executives planning acquisitions in a different sector as new technology impacts almost everything along the business chain. The manufacturing and retail sectors are set for the most such activity.

And companies are increasingly ready to make deals outside their home country. The firm said 70 per cent of respondents are looking to do so, with the 19-country eurozone set to see a rise in deals amid hopes that the debt crisis that has gripped the region has abated following the latest bailout of Greece.

"This is down to increased confidence in the stability of the region," said McCrostie.

Though deal making has been on the rise over the past few years as the global economy recovered from its deepest recession since World War II and companies built up their cash reserves, EY says it could have been even higher. It noted that 73 per cent of executives have walked away from deals over the past 12 months.

"Executives are taking a long-term view and evaluating deals more carefully than ever before," indicated McCrostie. "They are stepping back when necessary. This is not 'a deals for deals sake mentality'."

EY's survey was based on surveys of more than 1,600 executives in 53 countries.

Separately, a new survey in the US showed that many business economists expect modest economic growth for the rest of the year, with only a small percentage taking a more bullish outlook.

Four-fifths of the experts surveyed by the National Association of Business Economics expect fourth-quarter growth of at least 2 per cent. But only 7 per cent predicted growth will top 3 per cent, down from the 16 per cent who held that optimistic view in July.

Expectations are declining for fourth-quarter wages and employment, said Jim Diffley, senior director at consulting firm IHS Inc. and chairman of the survey.

Only 29 per cent of those surveyed expect their company to add jobs in the next three months, the lowest rate this year, according to the survey. But half of the economists said their firms had trouble filling some jobs, and one-third continued to say their companies face a shortage of skilled workers.

On pay, 44 per cent expect their companies to boost wages, the weakest outlook since a survey one year ago. In the last quarter, a third of the firms in the survey raised pay, down from more than 40 per cent in each of the previous two quarters.

The group surveyed 106 economists between September 21 and October 6.

Most of the economists said the slowdown in China's growth and the strong US dollar aren't affecting their companies. Lower oil prices have helped nearly one-third of the companies and hurt about one-fifth.

The group split on whether an interest-rate hike by the Federal Reserve would make much difference to their companies.

Slightly more than half said sales rose at their companies in the third quarter and expect sales to grow again in the fourth quarter. 

Profit margins shrank at 22 per cent of the companies and grew at 29 per cent. In the group's July survey, margins narrowed at only 14 per cent of companies while they grew at 32 per cent.

AMMAN — United Group for Land Transport Company (UGLTC)  is showing success with higher earnings and profit.

According to a disclosure sent to the Jordan Securities Commission, the company boosted earnings by 51.8 per cent to JD4.1 million during the first nine months of this year from JD2.7 million during the same period of last year.

UGLTC was also able to double gross profit to JD1.8 million from JD0.9 million.

After taking into consideration administrative and general expenses, depreciation, financing costs and other income, the company’s pretax profit boiled down to JD1.4 million, 133 per cent higher than the JD0.6 million recorded during the first nine months of last year.

Profit after tax amounted to JD1.1 million from JD0.5 million registered on September 30, 2014.

Mid-year 2015 results showed a better achievement with earnings totalling JD2.9 million, 93.3 per cent higher than the JD1.5 million recorded during the first half of the last year.

Gross profit came at JD1.4 million, a 250 per cent increase over the JD0.4 million at the end of June 2014.

The pretax profit surged 1,000 per cent to JD1.1 million as of June 30, 2015, from JD0.1 million after taking into consideration administrative and general expenses, depreciation, financing costs and other income.

Profit after tax amounted to JD0.9 million from JD0.1 million registered on June 30, 2014.

UGLTC Chairman Mazen Azmi Al Qawasmi assured the shareholders in the annual report that the company’s position was strong and described 2014 results as good in light of difficult conditions that the land transport sector is passing through.

The company earned JD4 million last year (JD3.3 million in 2013) and profit after deducting tax and provisions came at JD0.7 million. almost equal to the previous year. 

“The political situations and developments in the region are still negatively affecting land transport activity in Jordan, especially because of limited business to neighbouring Syria and Iraq,” he wrote in a foreword.

Qawasmi mentioned the decline in fuel prices during the last quarter of 2014 as another negative factor that led to a general drop in transport charges and caused some confusion in determining prices. 

He stressed that the management strenuously worked and will persist to cut operational costs as much as possible by seeking to organise transport programmes in order to benefit from all available resources and capabilities.

The chairman underlined the importance of a contract signed with Jordan India Fertiliser Company and stressed that UGLTC will meticulously look after the transport of phosphoric acid from Shidiyeh to Aqaba.

He indicated that the company was proceeding with the maintenance and asphalting of the company’s plaza located at Al Rashdiyah in Aqaba in order to obtain an official business licence and a land deed.

“This project aims at opening a parking garage in Aqaba to become a centre for the trucks that transport phosphoric acid associated with the tender for Jordan India Fertiliser Company,” the chairman wrote.

He said UGLTC would keenly try to attract new customers to maintain a good level of income and activate the handling process, indicating that the local market was marked by stiff competition with several entities engaged in the land transport of various goods.

As such, Qawasmi added, the company could not specify and evaluate its share in the domestic market because the necessary statistics for that were not available, noting in this regard that UGLTC did not have any activities abroad other than transporting goods by land to neighbouring Arab markets.

Financially, the annual report showed that UGLTC generated profits during the past five years, the highest was in 2012 when the amount reached JD1 million and the lowest was JD0.6 million in 2013.

The company distributed JD1 million in cash dividends to shareholders this year at a rate of 15 per cent. In 2011, shareholders received JD0.9 million.

In 2010 and 2012, the cash dividends amounted to JD0.6 million each year.

According to the balance sheet as of September 30, 2015, shareholders equity totalled JD9.9 million, of which JD6.6 million was capital, JD1 million mandatory reserve and JD1.1 million retained earnings. The remaining JD1.1 million was the profit generated during the January-September period of this year.

Liabilities totalled JD1.5 million, JD0.6 million of which were short –term loans. 

The company is repaying two loans amounting to JD2 million loan, at a 9 per cent interest rate and no commission, obtained from Audi Bank to finance the purchase of 60 trucks (trailers and semi trailers). The last installment is due in September 2016.

Out of JD11.3 million in total assets, JD9.3 million were property and machinery after deducting accumulated depreciation. JD1 million were receivables.

At the end of last year, UGLTC employed 73 workers and its capital investment amounted to JD9.9 million. Its offices are located in Sahab/Al Raqeem.