Business

KARAK — The new investment law includes mechanisms, procedures and authorisations that encourage investors to consider Al Hussein Industrial Estate in Karak for their projects, Industry, Trade and Supply Minister Maha Ali said Thursday.

During a visit to the estate, Karak Chamber of Commerce and the Civil Consumer Corporation in the governorate, she added the law did not include any changes on incentives to ensure attracting more investments that provide more jobs to local workforce.

The minister indicated that the Jordan Enterprise Development Corporation has implemented 56 development schemes in Karak, some 140 kilometres south of Amman, during the past six years, and that the Governorate Development Fund implemented 21 projects that were financed with JD14 million.

Ali said that there is an intention to invest in the solar energy sector to reduce the costs of using energy in the Kingdom.

JOHANNESBURG — A $1.2 trillion free-trade area stretching across 26 African countries from Cape Town to Cairo is a stepping stone to uniting the poorest continent as one commercial bloc within the next two years, Africa’s top trade official said on Thursday.

The Tripartite Free Trade Agreement (TFTA) was signed into effect in Cairo this week, amalgamating three of Africa’s main trading blocs: the Southern African Development Community (SADC), the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA).

As well as simplifying Africa’s alphabet soup of overlapping trade zones, the TFTA should boost woefully low levels of intra-regional trade, key to the continent’s economic well-being, African Union (AU) Trade Commissioner Fatima Haram Acyl said.

At the moment, trade between African nations accounts for around 10 per cent of the 54-nation continent’s total commerce, a ratio that has been in gradual decline over the past decade and which compares unfavourably to 25 per cent in southeast Asia.

Enforcing tariff cuts could take five years or more but Acyl said the success of Africa’s deepest free-trade zone, the EAC of Kenya, Tanzania, Uganda, Rwanda and Burundi, suggested the local share of total trade could double in a decade.

“Just removing the trade barriers should increase it to 22 per cent,” Acyl, a Chadian, told Reuters at an AU summit in Johannesburg. “East Africa has been able to do it.”

The TFTA does not include Nigeria, Africa’s biggest economy after revisions to its gross domestic product (GDP) calculations last year, but the inclusion of heavyweights South Africa, Egypt, Angola and Kenya mean it accounts for 60 per cent of continental output.

Negotiations to broaden the new bloc to incorporate West Africa, where the major economies besides Nigeria are Ghana and Ivory Coast, open on June 15 and are expected to wrap up within two years, Acyl said.

That timeline depends on negotiators learning lessons from the pitfalls encountered during the seven years of TFTA talks, she added. “It’s ambitious but we’re not building from zero.” 

Few question the economic power of freer trade but sceptics say improving Africa’s infrastructure, there is no tarred road leading from Egypt to sub-Saharan Africa, for instance, might make a bigger difference.

African trade also remains centred on the three countries that have an appreciable manufacturing base, South Africa, Kenya and Egypt, and it is hard to see the TFTA breaking down those structures.

There is even a possibility the TFTA will create another layer of confusion for businesses already contemplating a continent with eight regional trading zones.

However as a statement of political intent, analysts said it was a welcome, long-term force for good.

“Even a marginal increase in cross-border trade could make a difference for small isolated economies,” said Capital Economics analyst John Ashbourne. “And it will provide a real boost to AU efforts to build a continent-wide economic community.”

The TFTA deal, which must still be fine-tuned and ratified, caps five years of talks to set up a framework for preferential tariffs to ease the movement of goods in an area home to 625 million people.

Analysts say it could have an enormous impact on African economies, which account for only about 2 per cent of global trade despite strong growth.

Egyptian President Abdel Fattah Al Sisi, President Robert Mugabe of Zimbabwe and President Omar Al Bashir of Sudan were among those who signed the pact at a summit in the Red Sea resort of Sharm El Sheikh.

“What we are doing today represents a very important step in the history of the regional integration of Africa,” Sisi said as he opened the summit.

“We have told the word today... of our desire to adopt practices that are necessary to increase trade among ourselves... We will do whatever is possible to activate this agreement,” he later said, wrapping up the summit.

World Bank President Jim Yong Kim said that with the launch of the TFTA “Africa has made it clear that it is open for business”.

Bolster intra-regional trade 

“The geographical area covers the Cape [of Good Hope] to Cairo... The agreement paves the way for a continental free trade area that will combine the three biggest regional communities,” Ethiopian Prime Minister Hailemariam Desalegn said.

And Mugabe said the deal would create a “borderless economy” that would rank 13th in the world in terms of GDP.

“The establishment of TFTA will bolster intra-regional trade by creating a wider market” that would “increase investment flow... and enhance regional infrastructure development,” a final statement said.

“On the ground, it means jobs being created... or else there could be an Africa spring far worse than the Arab Spring,” COMESA Secretary General Sindiso Ngwenya, who led the negotiations among the three blocs, told AFP.

Negotiators drafted the deal this week in Sharm El Sheikh, and said it addresses such concerns as management of trade disputes and protection for small manufacturers once the TFTA comes into force.

The TFTA has been widely welcomed by world business leaders, with experts pointing out that only 12 per cent of Africa’s trade is between countries on the continent. 

‘One trade regime’

In 2013, the UN Conference on Trade and Development stressed that Africa must focus on creating more space for the private sector to play an active role if it is to boost intra-continental trade.

Analysts say although the continent’s growth in the past 15 years outstripped global GDP expansion by nearly three percentage points, falling commodity prices, power shortages, political instability and corruption are still holding back its economies.

Egypt’s Industry and Trade Minister Mounir Fakhri Abdul Nour said the TFTA would help Africa boost trade and investment, while also building infrastructure and production capacities.

Egypt itself expected to export about $5 billion worth of goods in the next five years to TFTA countries.

Officials said companies would benefit from an improved and harmonised trade regime, which would reduce costs by eliminating overlapping trade rules.

“What we have realised is that having one trade regime is better than the costly multiple trade regimes,” said Ngwenya.

“The ultimate goal is to expeditiously establish a single free trade area... then establish a single customs union and then merge” the three blocs, he added.

LONDON — The Swiss franc has emerged as a big winner from Greece's debt problems, overtaking the Japanese yen as investors' favourite safe haven currency despite Switzerland offering the world's lowest interest rates.

Fund managers have increased their Swiss franc holdings in recent weeks, attracted by the Alpine economy's current account surplus and by falling annual consumer prices that mean investors can still eke out a positive return even with benchmark rates at -0.75 per cent.

The franc  and the yen are traditionally favoured during times of market stress or economic uncertainty. Usually the yen is the more sought-after, since it is more liquid. However, data from Swiss bank UBS shows that in the past three weeks the franc has emerged as the best-bid major currency.

"There is no doubt that between the yen and the Swiss, the yen has lost out," said Niels Christensen, FX strategist at Nordea. "In a risk-off environment, especially on worries about Greece, we are not seeing as much of a reaction from the yen as we are seeing for the Swiss franc."

The franc this week hit its highest against the yen  since late-January, just days after the Swiss National Bank abruptly abandoned a 1.20 francs per euro cap on January 15, sending the currency soaring.

It also imposed negative interest rates to discourage inflows. At -0.75 per cent, they are the lowest in the world, though Denmark has since cut to the same level.

However, the negative rates have done little to deter investors, especially those seeking safety, with recent SNB data suggesting portfolio investments and repatriation by large Swiss investors back to Switzerland remain robust.

The Swiss franc's latest rise coincides with a bout of sustained weakness in the yen. Speculators, asset managers and long-term sovereign funds have been selling the yen in the past few weeks on worries that the Bank of Japan may have to resort to additional monetary easing to boost inflation.

And while the dollar has in the last three months gained 3.5 per cent against the yen, also reflecting expectations of tighter monetary policy from the Federal Reserve, it has lost more than 5 per cent against the Swiss franc.

Similarly, the euro has gained 6.5 per cent against the yen  but has lost about 2.3 per cent against the franc.

More Swiss strength

Latest data from the Commodity Futures Trading Commission showed that while speculators were betting on the yen falling, they remained favourable towards the franc.

In the derivatives market, risk reversals — a gauge of demand for options on a currency rising or falling — show a sustained bias for euro weakness against the franc.

UBS currency strategist Geoffrey Yu said the recent franc buying, which was mainly driven by asset managers, reflected worries over Greece and waning optimism that global growth was picking up and curbing the risk of deflation.

David Bloom, head of currency strategy at HSBC, reckons the franc could even hit parity against the euro, from around 1.04 francs now.

"We have our doubts that euro/Swiss franc will push higher on a sustained basis should Greece secure an agreement with its creditors. In fact, the options market hints at a greater fear factor that euro/Swiss franc could fall sharply on a 'Grexit' scenario," he said.

He said that those betting against the Swiss franc will have to battle large investors from Switzerland who have been steadily repatriating funds back into the country.

"Switzerland's persistent current account surplus creates ongoing demand for the franc, especially while global growth prospects are so poor," he said.

AMMAN — Profits and job growth can speak louder than politics, a US embassy press statement quoted US Ambassador to Jordan Alice G. Wells as telling ministers,diplomats, business leaders and other guests this week. 

According to the press release, Wells said at  the Talal Abu-Ghazaleh Knowledge Forum that economic strength and self-sufficiency is Jordan's best defence amid all the chaos in the region.

"Security is unlikely to improve until economic development and opportunities for citizens improve.  Jordan must be creative in its approach to opening and strengthening new markets," she added.
Stressing the importance of keeping the private sector engaged in regional initiatives, the ambassador mentioned that the US Chamber of Commerce convened in 2014 a successful meeting of the Middle East Commercial Centre (MECC) in Jordan that brought together private sector businesspeople, from Oman, Turkey, Saudi Arabia, Israel, and Jordan, who see the potential for peace and prosperity that regional trade presents.  

"Last month, another MECC workshop brought together business leaders in the region to feature the Port of Aqaba as a destination for goods," she added.

Wells indicated in the press statement that as war and terrorism reduced trade with Jordan’s traditional partners, there is an opportunity to open up more trade corridors throughout the region.  

"When I arrived, I was shocked to learn that the West Bank does $4 billion worth of trade with Israel each year, but only $100 million with Jordan," the ambassador said.  "Although many Jordanian trucks meet Israeli standards, they cannot cross the border, and businessmen have difficulty getting Israeli visas."

She added that in the other direction, containers from the Port of Haifa have to be unloaded into pallets before shipment into Jordan, rather than trucked directly across the border.  

"The more freely that Jordanian businesses can establish, grow and develop regional partnerships, the faster they will drive prosperity," she emphasised.

Noting that workers and businesses can only thrive in environments where the rules of the road are clear and predictable, Wells urged innovative Jordanian businesses not to be stifled by artificial barriers, like tariffs. 

Like tariffs, subsidies also stifle free markets, the ambassador remarked.

"They distort economic choices, hide inefficiencies, and consume resources that could otherwise be used to directly help the poor," she said.

"I may not be a farmer, but I know that goats aren’t supposed to eat bread.  But they do in Jordan, because it goes stale before it can be eaten and bread is cheaper than grazing fields," Wells added.

Targeted food discounts for poor Jordanians would cut Jordan’s 225 million dinar bill for food subsidies in half, she indicated, describing the steps taken by the Kingdom to implement subsidy reforms as brave and applauding Prime Minister Abdullah Nsour government’s efforts to continue along this path to a free and unbiased economic platform.

Wells said international assistance does not address the root causes of economic difficulty, and unless it supports efforts at structural reform, it simply buys time in the hope that necessary changes will be made on their own.  

"And as we’ve seen during the Syria crisis, it is much easier for some donor countries to make promises of assistance than actual deposits," the US envoy told the forum.

Associating sustainable progress with the basic assumption that all honest work is dignified and of worth to society, she asked whether it is preferable for one to be an unemployed engineer, or a forklift operator with a job?  

"Would you rather that Jordan have 100,000 unemployed engineers, or 100,000 employed forklift operators?," she asked. 

According to the press release, a business contact recently told her that there are 118,000 registered engineers in Jordan, but only about 8,000 are actually practicing. 

The ambassador indicated that this region has the highest youth unemployment rate in the world; and almost a third of Jordan’s young people do not have immediate prospects after graduation.

"Every year, 100,000 new graduates look for work or continued study; there are not enough spots for all of them in their chosen fields," she said, noting that Jordan’s workforce is young, and getting younger.  

"Is it always better to have a degree, when a marketable technical skill means jobs?," she asked,  when universities produce hundreds of thousands of young Jordanians with degrees like engineering and accounting, but there are not enough jobs to absorb them.  She pointed out that only a tenth as many are in vocational schools to become electricians and carpenters, and that snatch up jobs immediately.  

The pyramid is inverted; as one Jordanian entrepreneur recently said: “Everyone wants to be an engineer, but no one wants to be a technician.”

Mentioning another inverted pyramid that begs attention, Wells pointed to access to capital and the utilisation of financial liquidity because job creation depends on that.

"We understand that in the last few years, it has been more profitable for banks to lend to the government than to an entrepreneur.  But as the government balances its budget and reduces its need to borrow, small- and medium-sized businesses should be an investment priority," she said. 

"While small- and medium-sized enterprises represent 95 per cent of registered businesses in Jordan, they only receive 10 per cent of loans, and most banks have not yet considered how their lending practices could be restructured to facilitate access to financing for this crucial sector," the envoy added.

Wells underlined the importance of entrepreneurs creating a business around a concept because it is not enough just to have a great idea.

"Jordan has a wealth of smart people with great ideas, and can make it easier for them to establish and fund businesses," she said. "Jordan’s economic potential resides within the ingenuity and creativity of its people."

An intaj programme to connect Jordanians to Silicon Valley accelerator “Plug and Play” has offered young entrepreneurs the opportunity to incubate their businesses in the United States, raising close to a million dollars in financing to date, the envoy indicated.   

"I recently visited the Zain Innovation Campus at King Hussein Business Park, a perfect example of Jordanian companies helping entrepreneurs turn their dreams into reality," she said.

The press release quoted the ambassador as saying that the gender employment gap is three times bigger in this region than in most developing economies.  

Wells added that each Jordanian woman who is not given a chance to work represents an opportunity lost, and profit lost, for Jordan.  

According to one estimate, if the gender gap was narrowed just by one-third, the gross domestic product (GDP) in the region would grow by $1 trillion per year, or 6 per cent.  If Jordanian women participated in the country’s economy as much as their Arab women neighbours, Jordan’s GDP would increase 5 to 10 per cent.

She indicated that through the USAID Jordan Loan Guarantee Facility, the United States is providing $250 million to participating Jordanian banks to fund small businesses; and over 10 per cent of the guarantees have benefitted women-owned businesses.  

Wells mentioned Innovative Packaging which provides locally-produced packaging for Jordanian products like Dead Sea minerals and olive oil as one good example.

The ambassador spoke also about energy and water telling her audience that while the loss of cheap Egyptian gas caused a JD4.7 billion debt at the state-owned National Electric Power Company and  a fiscal crisis, it has also led to opportunity in the form of diversification and new investment.

She indicated that two major American renewable energy companies have made plans to invest in Jordan, a 20 megawatt solar plant in Ma’an and a 45 megawatt wind farm in Irbid.  

"These two examples of Public-Private Partnerships demonstrate how the private sector can help the government invest in critical infrastructure.  Like us, these US companies believe in Jordan’s future," Wells said.

The ambassador added that the recent arrival of a liquefied natural gas processing ship in Aqaba will allow Jordan to import large quantities of affordable fuel that will provide 30 per cent of the country’s power needs at a third less than the cost of diesel.  

"The next hurdle is to secure a long-term supply of natural gas from the Leviathan field, with the potential to solve Jordan’s energy crisis entirely," she added.

Wells indicated that the US contributed over $1 billion to the water sector over the last 10 years and mentioned that last October, "Water Minister Hazem Nasser and I cut the ribbon on the Al Karak Dam, which was financed through the proceeds of the sale of wheat donated by the United States".

"In Zarqa, the US is completing a $275 million water programme through the Millennium Challenge Corporation [MCC]," she stated.  "When completed in December 2016, the MCC investment is expected to benefit over 3 million residents in the Amman and Zarqa governorates."

The envoy reiterated support for phase one of the Red-Dead desalination project which will bring much-needed new sources of water to Aqaba and northern Jordan, and will be an important first step in efforts to stabilise the Dead Sea. 

According to the ambassador, Jordanians benefit from US assistance in myriad ways, touching every aspect of their lives.

"Over 75 per cent of babies in Jordan are born in maternity wards renovated by USAID," she said.  

"With half a billion dollars dedicated to Jordanian education since 2005, US government programmes have reached 30,000 teachers and more than a million students, two-thirds of Jordan’s student population," the envoy added. "A third of Jordan’s population receives fresh, drinkable water via treatment plants and supply networks built with US funds."

Wells mentioned that through the Overseas Private Investment Corporation, the United States has funded projects big and small, as large-scale as the 325-kilometre Disi water pipeline and as individual as a chocolate company expanding and creating new jobs.

The ambassador also indicated that clean technology, healthcare and information and communications technology sectors are receiving help from the USAID Jordan Competitiveness Programme in research, financing, business operations and many of the other critical back-office solutions.

Wells detailed many areas where the US is backing the Kingdom, pointing particularly to the signing of a $1.5 billion agreement to guarantee Jordan’s access to international capital markets.  

"This agreement, and our previous two loan guarantees, will save Jordan over $500 million in interest payments over the life of the bonds," the envoy said, pointing out that the United States signed a three-year memorandum of understanding that pledges $1 billion in assistance each year through 2017.  

"At the end of this fiscal year, the United States will have provided $15 billion in economic assistance to Jordan since its founding," the ambassador added.  "Our latest pledge will help ensure that Jordan can continue to provide critical services to its citizens, as well as to alleviate the financial burden caused by the 630,000 registered Syrian refugees in Jordan."

Noting that total bilateral trade reached $3.4 billion in 2014 as a result of the free trade agreement signed between the two countries, Wells pointed to Petra Engineering’s air-conditioning solutions, Hikma’s pharmaceutical products, as well as Jordanian cosmetics, jewellery, and camping gear in US markets.

She concluded that assistance must have a grander goal: to help Jordan develop the capability to become independent of aid.  "Our help has an objective that we both believe in: to make Jordan strong, more economically self-sufficient, and to use its wealth of human resources to extend its influence in the region and the world."

SIDI RACHED, Algeria — At Ahmed Bekhi's cereal farm outside Algiers, there are clear signs of Algeria's campaign to increase food production to help curb billions of dollars in imports and offset a sharp fall in world oil prices.

New irrigation lines are in the works and wells have appeared to compliment a steady flow of government supplies of seeds, fertiliser and pesticides. But in an economy emerging from decades of centralised control, farmers complain they are bumping up against restrictive state bureaucracy.

Algeria, a member of the Organisation of Petroleum Exporting Countries (OPEC)is still highly dependent on energy revenues that supply 95 per cent of its exports and 60 per cent of the state budget. With oil prices down by half over the past 12 months, the North African state is feeling the pinch.

The country has around $180 billion in foreign currency reserves to ward off any crisis, but Algeria's state spends about $60 billion a year on imports for everything from cars to medicines and it is looking to reduce this sum.

Foodstuffs represent 20 per cent of the value of imports.

Traditionally one of the world's largest grain importers, Algeria has identified agriculture as an area where it can do more to boost domestic production and has speeded up a reform programme aimed at bolstering its harvests.

Low rainfall this year already means grain production is forecast to be flat at 3.4 million tonnes, highlighting the slow progress in increasing irrigation to lift crop yields.

Sidi Rached, an agricultural region 70 kilometres west of the capital Algiers, shows the task ahead. Government aid appears plentiful, but state paperwork is hobbling progress in a sector that lacks modern technologies and is shackled to the whims of the rainy seasons.

Promised disbursements are slow and even simple procedures can get snarled by rigid officialdom, the farmers say.

Bekhi's farm is one of the few to benefit already from an irrigation programme, with a government-built damn and a network of private wells helping develop the area.

"We are happy with government support, but sometimes there are delays in opening the valves. This is the kind of bureaucracy from local authorities we face," said Bekhi, standing in the middle of a 24-hectare wheat field.

Farms for sale

Besides falling energy revenues, Algeria also has a growing number of mouths to feed, with the population put at 40 million and increasing by an estimated 1 million a year.

Main foodstuffs, including cereals, sugar and milk are subsidised, but there is no such help for some products such as vegetables, which keeps prices high.

Official statistics show the state imports on average 5 million tonnes of wheat and barley a year, but that figure appears to be climbing. It hit some 7.4 million in 2014.

Lower oil revenues make farming reforms key, authorities say. 

"We must work for food security especially in these circumstances," said Agriculture Minister Abdul Wahab Nouri. "Dependency on foreign markets is dangerous for the country."

Algeria last year took its first steps towards opening up the farming sector to foreign investors, inviting bids for 16 state-owned farms focused on grains, vegetables, fruit trees and cattle breeding.

Last week, the government signed six deals with US companies for joint ventures in potato and diary production.

The agriculture ministry is hoping its various reforms will see the country grow 6.9 million tonnes of wheat and barley by 2019, against just 3.4 million in 2014.

To achieve that goal, the government plans to raise total irrigated areas to 2 million hectares from 900,000 hectares now. The share of irrigation for cereals is expected to reach 600,000 hectares, up from 60,000 hectares currently.

All other produce, including meat and vegetables, are also projected at much higher production levels within five years.

But experts and farmers say these plans may be hit not just by bureaucracy but also by climate change, which is expected to bring less rain and higher temperatures in the coming years.

"The degradation of natural resources will exert an enormous pressure on the food security. This could be aggravated by climate change," said Mohammed Henni, professor of nature and life sciences at Algiers University.

Mechanisation

The need for improved irrigation has been underscored by recent droughts, which pushed Algeria's grains harvest down from 4.9 million tonnes in 2013 to some 3.4 million last year. Output had hit a record 6.9 million tonnes in 2009

Besides rains, Algeria's farming sector also suffers from a lack of skilled labour, with youths attracted to better working conditions in other sectors and drawn away from rural areas by government promises of cheap credits to start small businesses.

To help tackle this shortage, the government says it will focus on using better quality seeds as well as improved mechanisation in the agriculture system.

However, farmers complain they do not benefit from increased state support due to a lack of follow-up by senior officials.

"The government has taken enough measures to help us boost output, but officials in Algiers do not come to monitor the implementation stage," said Djelloul Guiri, owner of a 12-hectare field full of orange trees.

A local government official, who declined to be named, agreed that most farmers' problems were due to mismanagement and bureaucracy. The government has approved plans to improve processes and to modernise, he said, but gave no details.

The government says it has earmarked $3.18 billion to develop agriculture in 2015 and is spending heavily to develop food products, especially grains, through mainly financial incentives to farmers including zero interest loans.

"Without agriculture, this country will not be able to resist a crisis," said farmer Ali Kardji. "Oil and gas will not feed us forever."

LONDON — Falling oil prices have led to welcome reforms of the subsidy programmes in Gulf Arab countries, but they urgently need new ways to distribute their oil wealth and shrink their public sectors, the World Bank's chief economist for the region said on Tuesday.

The Gulf, dominated by oil exporters, has relied on crude oil revenues to fund governments over the past decades. But budgets have been buckling under the pressure of bloated public sectors and lavish welfare spending since oil prices dropped from some $115 a barrel last June to as low as $45 in January.

In April, the World Bank estimated the decline in crude prices could cost the Gulf Cooperation Council (GCC) countries, Saudi Arabia, Kuwait, the United Arab Emirates (UAE), Qatar, Oman and Bahrain, $215 billion, or 14 per cent of their combined gross domestic product this year. 

Consequently, the region may record a fiscal deficit for the first time in four years.

"It's impressive how they are all mobilising to do something about the subsidies,"  Shanta Devarajan, the bank's chief economist for the Middle East and North Africa (MENA), said on the sidelines of a MENA economies conference at think tank Chatham House. 

"However, these countries really need to find a new way to distribute their petroleum revenues," he added.

Kuwait raised wholesale prices for diesel threefold at the start of 2015, though later in January reversed some of the increase following political opposition.

Devarajan said GCC countries should think about giving the funds used to keep fuel prices artificially low directly to local people, as happens in the US state of Alaska or the Canadian province of Alberta, where citizens receive an annual payout from oil revenues.

"Once you start removing subsidies and move to direct transfers, you also get a lot of advantages, like less pollution, and less traffic, and more consumption of other goods," Devarajan indicated.

The region also needed to tackle its bloated public sector, he added.

"We have not seen much curtailing to public spending... and these countries urgently need to shrink the public sector," the economist stressed.

Across the region, some 80 to 90 per cent of the male domestic labour force was employed in public-sector jobs, Devarajan estimated.

"These jobs are often well paid, and are not very stressful," he said.

This also hampered private-sector job creation, in turn preventing the development of a local labour market that offered prospects to young people in a region suffering from entrenched youth unemployment, he added.

According to World Bank data, unemployment of 15-24 year olds in Saudi Arabia stood at 29 per cent in 2013 and 20 per cent in Kuwait.

AMMAN — Chemicals and cosmetics is the second largest industrial sector in terms of exports, according to data from Jordan's chambers of industry.  

Jordan Chamber of Industry Director General Maher Mahruki said on Monday that chemical and cosmetic exports accounted for 18.4 per cent of the total industrial sales abroad in 2014 as it amounted to around JD922 million (almost $1.3 billion).

Mahruki was speaking at a press conference to launch the Fifth Jordanian International Chemical, Plastic, Print and Packaging Exhibition, in which around 80 Jordanian, Arab and foreign companies are participating.

He said the chamber was keen to participate in the event due to its importance in developing the industries of different sub-sectors in a way that meets consumers' needs in accordance with international safety and quality standards. 

"The industrial sector is among the most important economic sectors in the Kingdom, since it contributed about 90 per cent of the $7 billion worth of national exports in 2014," Mahruki added, noting that the sector employs 250,000 employees, most of whom are Jordanians. 

The chamber has recently established a technical support unit for small- and medium-sized enterprises, that offers free legal, technical, tax and customs consultations, the director general remarked.

"The unit regularly prepares marketing studies to diversify and increase the markets where Jordanian products can be sold," Mahruki said, indicating that 44 per cent of Jordanian exports go to only eight Arab countries.

The exhibition, running until Wednesday, "is a good opportunity for participants to develop cooperation and sign partnership agreements”, said Khaldoun Nuseir, director of the Afaq Group, the company organising the event.

Irbid Chamber of Industry President Hani Abu Hassan said the event will include meetings to discuss latest developments in the Arab industrial sector, establish new partnerships and develop bilateral relations with participating countries.

"Industrial development is among top pillars in the comprehensive economic development for its role in increasing the added value of the economy, securing self-sufficiency and reducing unemployment," Abu Hassan added. 

According to Jordan Enterprise Development Corporation Director General Hana Aridi, who deputised for Industry and Trade Minister Maha Ali in inaugurating the exhibition, such an event plays a significant role in promoting national products in light of an increasing international competitiveness.  

"There is an urgent need to follow policies that enhance the economic performance, especially that Jordan has free trade agreements with 80 per cent of the world countries," Aridi said, noting that Jordan is the only Arab country that has a free trade agreement with Singapore. 

The government contributes to helping the industrial sector overcome the challenges and obstacles it faces through endorsing regulatory laws, that are amended continuously to improve the local investment environment, she added.

Several industrialists view Jordan as a safe environment with  right laws that can attract investments and further boost the economic performance.

Khalid Abu Almakarim, a representative of the Egyptian council for chemical and fertiliser industries, described the exhibition as a good opportunity to increase the investment volume between Jordan and Egypt.

"There are 1,287 Jordanian companies working in Egypt with an investment volume of around $500 million," Abu Almakarim said, indicating that the investment volume of Egyptian companies working in the Kingdom stands at $307 million.

The trade exchange volume between Jordan and Egypt is approximate to $1 billion, $900 million of which are Egyptian exports to the Kingdom, he pointed out.

The industrialist also announced that the Egyptian Institute for Plastic will present 10 free scholarships to employees of Jordanian plastic companies to benefit from its educational and training services.

AMMAN — The International Arab Banking Summit 2015 is to start Tuesday in the Hungarian capital, with the participation of several Arab and international sector leaders. 

Under the theme "Financial Inclusion for Social Development and Stability", the two-day event will look into means of serving the economy by increasing jobs and reducing poverty. 

It is also scheduled to discuss EU-MENA relations and is to review countries' experiences in increasing the usage of financial services. 

Featuring the participation of heads of central and commercial banks across the Arab world, the summit will discuss main challenges in financing small-and medium-sized enterprises.

Hungarian Prime Minister Viktor Orbán and other government personnel are to highlight the state of Hungarian economy and investment opportunities in the host country, according to a statement by the Hungarian embassy in Amman. 

The convention is also to announce the winner of the Arab Banker of the Year 2015 award. Speakers from Jordan are Adli Qandah, director general of the Association of Banks in Jordan, as well as Jordan Commercial Bank Vice Chairman Ayman Majali.

AMMAN — Al-Qarya Food and Vegetable Oil Industries Co. last week faulted the government and banks for its misfortune.

In a letter to the Jordan Securities Commission (JSC), Chairman Tareq Khoury evoked the 2008, 2009 and 2010 events when the company was battered by the international financial crises which afflicted all industrial and commercial sectors.

"Al-Qarya heeded the government recommendations in 2008 to all industrial and commercial sectors to stockpile large quantities of food products as strategic reserve in order to circumvent the expected surge in their prices, " the chairman wrote.

"To ensure food security and preempt the expected price surge of foodstuffs as a result of crude oil price reaching $105 per barrel at that time, we responded immediately to the advice of the Prime Ministry," he said.

"But, regrettably, international vegetable oil prices dropped afterwards due to the quick fall in crude oil prices," Khoury added in his letter.    

According to the chairman, who is also a member of the Lower House of Parliament, further trouble piled up when the government exempted imported vegetable oil from customs and sales tax bringing the firm to a standstill in that period.

Khoury also mentioned the extremely high interest rate on the loans extended by Jordanian banks to the company, in spite of the reduction initiated by the central bank, as another main reason for the losses incurred in 2009.

"The company requested banks several times to lower interest rates as directed by the central bank, but regrettably in vain," he said.

Noting that losses continued until 2011, the chairman added that the company was on top of things in the following year when strategic partners injected JD5 million bringing the capital up to JD9.5 million.

This deal enabled Al Qarya to achieve settlements with creditor banks, secure a JD0.8 million in savings and obtain a working capital for purchasing vegetable oil and packing material necessary for operations.

But the losses that returned in 2013 and 2014 were, according to Khoury, mostly due to the fluctuation in international prices of vegetable oils.

Yet again, he reiterated that bank interest rates were still another main cause for the losses which amounted to JD0.4 million last year compared to JD0.2 million in 2013.

"Interest on loans unpaid since 2008 and loans obtained to buy raw materials and other packing and packaging supplies needed for operations burdened the company," he wrote.

The annual report showed that the cost of production last year was slightly higher than the earnings from sales and that financial expenses amounted to JD0.2 million in 2014. 

In his letter to the JSC, Khoury disclosed an action plan that focuses primarily on boosting sales to shore up Al Qarya, whose labour force comprises 21 employees. 

The chairman said the management intends to raise sales to JD8.5 million in 2015, 20 per cent higher than the JD7.1 million registered in 2014. This increase will be accompanied by spending controls in order to achieve JD0.5 million net profit, or 6 per cent of net sales, and reduce the accumulated losses which stood at JD7.5 million at the end of March 2015.

Another 25 per cent boost in sales intended for 2016 will bring sales to JD10.6 million and generate about JD0.8 million net profit.

According to the plan, a further 30 per cent upsurge will expand sales to JD13.8 million in 2017 and profit to JD1.3 million. 

Al-Qarya's 2014 annual report showed that sales grew from JD3.5 million in 2011 to JD8.1 million in 2012 before peaking at JD10.4 million in 2013 and dropping back to JD7.1 million in 2014.

Besides the determination to augment sales, the management will endeavour to defer the payment of raw material imports by 90 days at low interest to be added to the cost of oil. This adjustment will enable the company to lower the interest that it pays to banks.

The auditor, Ghosheh & Co., told the shareholders during a recent general assembly meeting that the company will resort to restructuring the capital if it fails to lower the accumulated losses to less than 75 per cent of the capital.

Financially, the balance sheet as of March 31, 2015 showed current liabilities at JD2.6 million, of which JD1.1 million was debt to banks. Another JD0.5 million was a long-term debt.

Total assets at the end of this year's first quarter amounted to JD3.9 million, of which JD2 million were property and equipment, JD0.7 million stocks, and JD0.7 million receivables.

Although capitalised at JD9.5 million, shareholders equity was JD0.8 million due to accumulated losses and negative issuance premium.

The bleak financial position was portrayed positively as the letter to the JSC estimated the market value of the land and the equipment and machinery of the plants and other facilities at JD5 million, describing the 40,702 square metres of land in Al Jiza as a strategic location and  the production lines as highly technical.

The letter also estimated the value of Al-Qarya trademark at JD2.5 million noting that Al-Qarya's sunflower oil possesses a 46 per cent share of the local market.

"The consumption of vegetable oils in Jordan, except olive oil, is around 120,000 tonnes annually," the letter indicated. "10 per cent of the quantity is for sunflower oil, 20 per cent for corn oil, 30 per cent for soy oil and 40 per cent for palm oil."

Al Qarya major shareholders as of December 31, 2014, were Tareq Mohammed Ibrahim Al Hasan (47.4 per cent); Tareq Sami Hanna Khoury (24.6 per cent);  and Injaz for Supply and Distribution (5.3 per cent).

AMMAN — Amman Chamber of Commerce (ACC) President Issa Murad on Sunday discussed with Mazen Batarji, vice president of Jeddah Chamber of Commerce and Industry, ways to activate the Jordanian-Saudi Business Council.

At a meeting held on the sidelines of the second Silk Road conference, both sides conferred on  ways to deal with challenges and problems that may limit economic and investment relations and trade exchange between the two countries.

They also stressed the importance for the two countries' private sectors to exert more efforts to enhance bilateral ties, especially that Saudi Arabia is considered the biggest commercial partner for Jordan.

They also called for applying proper procedures on customs posts and border checkpoints to facilitate good transportation on the borders, stressing at the same time the importance of enhancing security procedures to maintain both countries' security and stability.

Batarji invited ACC to form an economic, commercial and industrial delegation to visit the commercial and industrial chambers in Jeddah and Mecca.