Business

AMMAN — Construction licences issued during the first quarter of 2015 reached 7,931 licences, 27 per cent less than the 10,857 licences issued in the same period of 2014, the Department of Statistics (DoS) announced Wednesday.

The total area of licensed buildings in the first three months of this year stood at 2.9 million square metres, compared with 3.98 million square metres in the same period of 2014.

Buildings for housing purposes accounted for  2.53 million square metres of the total licensed buildings in the January-March period of 2015, compared to 3.34 million square metres in the same period of 2014, marking a 24.3 per cent decline.

Non-housing licensed buildings dropped to 380,000 square metres in the first quarter of 2015, while it stood at 635,000 square metres in the same period of 2014, according to DoS figures. On governorate basis, Amman topped the list of licensed buildings with 50.7 per cent, followed by Irbid with 20.6 per cent, Zarqa 9.3 per cent and Balqaa 5.4 per cent, the DoS revealed. 

NEW DELHI — Lawmakers on Wednesday approved a crucial bill that aims to unearth billions of unaccounted dollars believed to be illegally stashed in foreign banks by Indians to avoid paying tax.

The upper house of parliament passed the bill that calls for fines as high as 10 million rupees (about $156,500) and prison terms up to 10 years for offenders.

The passage of the legislation underscores Prime Minister Narendra Modi's resolve to trace hidden and undeclared cash outside the country, known as "black money".

Modi's Bharatiya Janata Party (BJP) won the biggest mandate in 30 years last May on pledges to revive the economy and end corruption. 

Modi pledged during his high-octane election campaign to "bring back black money within 100 days" of being elected, after accusing the previous Congress Party-led government of failing to crack down on the issue.

He set up a team of regulators and ex-judges to identify illicit fund-holders and repatriate money as soon as he took office.

Illegal deposits abroad cost India billions of dollars in lost revenue. According to the Washington-based think-tank Global Financial Integrity, India suffered $344 billion in illicit outflows between 2002 and 2011.

The government has already submitted a list of people with illegal foreign bank accounts to India's top court, which is monitoring the case.

But the latest bill's passage is a rare victory for Modi in the upper house, where his coalition lacks a majority and regularly faces opposition protests.

Modi's struggle in the house has stymied his economic agenda, especially after furor over a controversial land-buying law and a further delay in the long-awaited goods and services tax (GST) bill which was sent for scrutiny to a committee earlier this week.

The GST bill aims to end India's patchwork of taxes under which each state can tax different commodities at different rates. The move would stop rival states competing for business through taxes.

It will now be introduced in the next parliamentary session in July.

Separately, India's government moved Wednesday to toughen child labour laws in a country where millions of youngsters work long hours, often in poor conditions, but activists slammed the steps as inadequate.

Modi's Cabinet approved a ban on all children under the age of 14 from working, except if employed in family businesses or in the sports and entertainment industry.

The current law prohibits children under 14 from working only in hazardous jobs, although even this is not properly implemented, according to activists.

The government defended the decision to allow some forms of labour after school hours or during vacations saying some children needed to learn traditional skills. 

"In a large number of families, children help their parents in their occupations... and while helping parents, children also learn the basics," the government indicated in a statement.

The Cabinet also needed to "keep in mind the country's social fabric and socio-economic conditions".

Some argue that outlawing child labour altogether is impractical in India where almost a quarter of the 1.2 billion population lives on less than $1.25 a day, according to the World Bank.

Millions of children work as domestic servants and in factories, mines and many other areas, aid agencies and government figures show.

Activists warned that the proposed changes could be exploited by unscrupulous employers and would be difficult to enforce in a country with a huge number of backyard industries. 

"There have been many discussions around providing vocational training to children but we think that this is regressive," Sreedhar Mether, advocacy and policy manager with Save The Children, told AFP.

"Enforcement of these points is really difficult and opens the possibility of children being exploited in bangle or garment industries where work is often outsourced to home-based units," he said.

Cabinet also approved higher fines of between 20,000 rupees ($300) and 50,000 rupees and jail terms of between six months and two years for employers hiring children under 14.

The approved amendments still need to be approved by both houses of parliament.

The changes are meant to bring India's child labour law into line with its landmark Right to Education law, which was passed in 2010 and provides free, compulsory schooling to children up to 14.

LONDON — With Middle East giants Saudi Arabia and Iran squaring up on opposing sides in the Yemen war, the dangers to vital oil tanker and goods voyages are growing daily.

Millions of barrels of oil pass through the Bab Al Mandeb and Strait of Hormuz everyday to Europe, the United States and Asia, waterways which pass along the coasts of Yemen and Iran respectively. Insurance costs for shippers are likely to jump.

Last week, Iran released Marshall-Islands container ship Maersk Tigris and its crew which were seized in the Strait of  Hormuz. This prompted the United States to send vessels to temporarily accompany US flagged ships through the strait. Iranian patrol boats had shadowed a separate container ship earlier last month.

"The whole area is a tinder box now," said John Dalby of Marine Risk Management Ltd., which provides private armed security teams for ships in the area.

"The main tension appears to be between the navies, be it Iranian patrol boats or ships or other forces in the area. That in some ways creates more uncertainty than dangers from Somali pirates as we saw previously, and, more worryingly, far more firepower capability," he added.

Iran's foreign ministry spokesman was quoted as saying on Wednesday that it would not let Saudi-led naval forces inspect an Iranian cargo ship bound for Yemen.

Saudi-led forces have imposed inspections on all ships entering Yemen in an attempt to prevent weapons being smuggled to the Iran-allied rebel Houthi group that controls much of the country.

"The question for us is: Could the Bab Al Mandeb become so perilous to navigate that guns onshore, controlled by Houthis, might shoot at ships? ... If so, fasten your seatbelts, the insurance rates are going to go up," said Michael Frodl, of US based consultancy C-Level Global Risks. 

Changing routes? 

The likelihood of a sharp rise in the premiums on voyages could be as much a deterrent to trade as the conflict itself.

"The reality is that ships heading to the Gulf, the Red Sea and the Eastern Mediterranean will be obliged to reconsider their movements not simply because of the widening scope of the attacks on, and seizures of, commercial vessels but also because of prohibitive insurance premiums," indicated Jonathan Moss of law firm DWF, who acts for insurers.

Khalid Hashim of Precious Shipping, one of Thailand's largest dry cargo owners, said: "If gets really bad, insurers may altogether stop covering calls to the badly affected areas."

According to Hashim, if the Iranian cargo ship went ahead with its intention to deliver aid to Yemen despite a call by the US to deliver it to neighbouring Djibouti, it may lead to a response by the Saudi-led coalition.

"That could possibly escalate tensions in a wide area including the Red Sea, the Gulf of Aden and through to the Straits of Hormuz. That would surely be bad for shipping, and for all the countries in the region," Hashim added.

The US Maritime Administration and the Marshall Islands flag registry have both warned of increased risks for ships operating around Hormuz.

"If a boarding by Iranian forces occurs even after declining permission, the boarding should not be forcibly resisted by persons on the US flag merchant vessel. Refraining from forcible resistance in no way indicates consent or agreement that such a boarding is lawful," one of the advisories said.

The region has already seen disruptions in recent years due to Somali piracy and attacks by militants.

A suicide bombing carried out by Al Qaeda killed 17 sailors on the US warship Cole in the southern Yemeni port of Aden in 2000. Two years later, Al Qaeda hit a French tanker in the Gulf of Aden, south of the Bab Al Mandeb, which led to a tripling of insurance premiums.

"The tensions are rising, with some concern evident as tanker owners have long memories of the tanker war from the 1980s," said Phillip Belcher of tanker association INTERTANKO, referring to vessels that were fired at during the Iran-Iraq war.

AMMAN — First Insurance Company will be proceeding with procedures to merge with Yarmouk Insurance Company, following the authorisation of shareholders.

During an extraordinary general assembly meeting at the end of last month, the shareholders empowered the board of directors to communicate with the Ministry of Industry, Trade and Supply/Insurance Department in order to obtain the approvals  necessary for the merger.

Board Chairman Ashraf Bseisu told the shareholders that First Insurance  bought 76.25 per cent of Yarmouk shares on April 2, 2015 with the aim of a merger.

He indicated that First Insurance, since established, has progressed noticeably and, in order to expand and build up business activity, merger and acquisition became imperative.

"Accordingly, the company conducted studies on available opportunities in the Jordanian market, and decided to acquire 76.25 per cent of Yarmouk capital after examining Yarmouk's portfolio of assets and capital," Bseisu said.

He described Al Yarmouk as a deep-rooted, reputable, and highly regarded company that is financially sound with a licence to provide life insurance, a service that First Insurance lacks.

The chairman also mentioned that Yarmouk was not  involved for several years in auto insurance and, as such, was able to maintain a stable insurance portfolio.

He stressed that the merger would strengthen the company's drive for  growth on all levels, especially business activity and profitability.

Asked why the company did not propose dividend distribution to shareholders, Bseisu said that a specialised committee  is to be formed by the Ministry of Industry, Trade and Supply/Insurance Department would carry out an evaluation of both entities and their share prices.

"Subsequently, retaining the profit would strengthen the financial position of First Insurance," he added.

Responding to other questions, the chairman described Yarmouk's investment portfolio as traditional indicating that there is a plan, under the supervision of a Sharia control commission, to covert the portfolio into Sharia-compliant investments during a period to be specified at a later stage.

Bseisu indicated that Yarmouk will be holding an extraordinary general assembly meeting during which shareholders will be asked to endorse its transformation into an Islamic insurance company. 

According to the 7th annual report of First Insurance, net profit after tax at the end of last year amounted to JD1.4 million, described by the company as the best in terms of growth in profit and volume of premiums.

The report showed that cash at hand and at banks totaled JD24.2 million, or 59.2 per cent of the JD41 million in total assets.

AMMAN — Around 400 experts in marine and transportation insurance from different countries around the world attended this week the fifth round of the International Conference on Insurance and Marine Transportation titled "News Risks-New Challenges" in Aqaba.

According to a Jordan Insurance Federation (JIF) statement released Tuesday, the conference, organised by the JIF and other stakeholders, discussed a number of issues such as applying electronic systems in marine insurance.

AMMAN — Jordan European Business Association's (JEBA) board of directors and Hungarian Ambassador to Jordan Csaba Czibere discussed on Tuesday economic and trade cooperation in the private sector.

The two sides highlighted the importance of activating a Jordanian-Hungarian economic committee and follow up on its articles. The two sides also stressed the need for enhancing economic cooperation and increasing trade exchange through boosting exports and making joint investments.

Czibere voiced Hungary's interest in maintaining economic cooperation with Jordan for its political and economic stability besides investment opportunities, noting that a number of Hungarian companies are interested in exporting goods to the Kingdom.

Vegetables, fruits, medicines, cosmetics, and wooden furniture are the most important exports to Hungary; whereas, Jordan imports cheese, medicines, corn, insecticides, and other goods from Hungary.

The cost of Jordan's exports to Hungary in 2014 stood at JD2 million compared to JD24 millions of imports. The two countries have signed many agreements and memoranda of understanding in the fields of health, water management, culture, scientific research, and investment protection and development.

AMMAN — The Amman Chamber of Commerce (ACC) on Tuesday presented a study that included 24 remarks on the new Income Tax Law.

The study, revealed at an ACC meeting attended by different commercial sectors, also presented recommendations on amending some of the law items to deal with tax evasion and support the local business environment to improve its competitiveness in attracting more investments.

ACC President Issa Murad described the Law as “unfair” to the commercial sector since it increased the tax rate from 14 to 20 per cent, which will affect many economic activities, especially in terms of supply and demand.

Murad noted that the commercial sector markets 80 per cent of the local industrial products, referring to the difficult commercial status the Kingdom is going through and the decline in the net profits of companies to less than 2 per cent.

AMMAN — Participants at the 7th Jordan Afaq Economic Forum, which began on Tuesday, called for setting up a free trade zone in Amman to facilitate legal procedures for investors.

Economy and finance experts as well as representatives of companies stressed the importance of activating the economic sector through training and developing human resources and regulations that match the present circumstances, especially the regional situation.

The forum, discussing Arab economic and investment challenges and risks in light of recent events in the region, aims at contributing towards enhancing economic conditions and offering chances for the public and private sectors to meet with local and foreign investors, as well as sign economic partnerships.

On the sidelines of the forum, a number of local and international economic companies are taking part in the 10th Investment and Finance Expo and Awards.

Chief Market Strategist at ADS Securities, Nour Eldeen Al Hammoury, said boosting local economy and attracting foreign investment requires reconsidering a number of laws that regulate the economic sector, calling for establishing a free trade zone in Amman. 

Moreover, he called on stakeholders to offer simplified procedures that encourage investment in the Kingdom. 

Total Solutions Company General Manager Hani Sharif considered Amman a strategic area as it forms a link between Arab countries. He also said Amman became a global centre to hold international conferences, seminars, and meetings on various fields.

Moreover, Sharif noted that although Jordan achieved a significant progress in the economic field as well as other fields, yet some procedures and laws still form an obstacle for many investors in Jordan, like the taxes and customs.

AMMAN — Industries and hospitals topped the list of sectors where investments landed last year.

According to a study prepared by the Amman Chamber of Commerce (ACC), JD407 million flowed to the industrial sector and JD271 million to hospitals.

"A total of JD1.15 billion was directed to projects that benefited from the Investment Law in 2014, compared to JD1.92 billion in 2013," the ACC report indicated. 

Other statistics showed that the Kingdom's gross domestic product (GDP) went up by 6.6 per cent last year, reaching JD25.4 billion (JD23.8 billion in 2013). 

Consequently, GDP per capita in 2014 stood at JD3,810 (JD3,653 in 2013).

Foreign currency reserves at the Central Bank of Jordan in 2014 reached JD9.9 billion, 17.2 per cent higher than the JD8.51 billion registered in 2013,  the report said.

On trade, it added that national exports increased by 7.5 per cent reaching JD5.2 billion (JD4.81 billion) 

Imports rose by 3.1 per cent to JD16.15 billion (JD15.67 billion), taking the Kingdom's total trade bill to JD22.1 billion.

The Kingdom's internal and external debt  increased last year by 7.6 per cent to JD20.6 billion (JD19.1 billion).

The aggregate amount invested as capital of registered companies at the Ministry of Industry, Trade and Supply reached JD196 million by the end of 2014, compared to JD338 million in 2013, the report showed, noting that these companies were spread over trade, services, construction, industry and agriculture sectors. 

Returned cheques during 2014 came at JD1.73 billion, JD997 million of which were returned for "insufficient funds", while the total value of returned cheques in 2013 stood at JD1.52 billion, according to the report.

AMMAN — Exporting to Syria has stopped, as well as to Iraq and Yemen, the chairman of Arabian Steel Pipes Manufacturing Company told the shareholders during the general assembly meeting.

Musa Shehada said exports accounted for about 50 per cent of total sales and, with the turbulence around us, it is only natural that business activity slackened .

"The modest activity was not due to inefficiency or incapability but rather a result of political and military developments in neighbouring countries," Shehada added.

As an example, he mentioned that even exporting to Mosul via Saudi Arabia and Kuwait is no longer possible.

"Now we are looking for new openings and Algeria is an opportunity for us to try exporting to that country," he indicated, pointing out that even government tenders related to our products are no longer as they used to be.

The company, established in 1983 as a private shareholding firm and transformed into a public shareholding entity in 1993, produces black and galvanised steel pipes, coated and column pipes,as well as tubular and lattice low and medium tension electric poles.

Operations also include dismantling and installing high voltage towers and electromechanical works through the affiliated Arab Romanian Company for Electromechanical Constructions. 

The annual report described the competition in the market as sharp indicating that about seven local firms are engaged in the production and marketing of black pipes.

As for the galvanised pipes, it said, the competition is limited to another public shareholding company in addition to the imported pipes which enter the Kingdom duty-free.

The company faces international competition in the manufacturing of metal towers noting that it is the only Jordanian company in this field. 

The annual mentioned SABIC, the Saudi Arabia Basic Industries Company, as one of its main suppliers who provide more than 10 per cent of purchases.

According to the company's financial results as of March 31, 2015, sales totaled JD1.3 million, almost half the JD2.7 million recorded during the first quarter of last year.

As a result of a sharp fall in gross profit from JD400,000 at the end of March 31, 2014 to JD200,000, the company registered a JD100,000 loss during the first quarter of this year, after taking into account administrative, selling and other expenses.

During the first three months of last year, the company generated a JD0.1 million profit.

"If I am to be asked about the situation in 2015, I would say that only God knows," Shehada responded to a shareholder who wondered why the cash dividends were low at a rate of 10 per cent when the earnings last year were higher than the previous year.

"The board of directors debated the cash dividends and, thanks be to God,  we were able to maintain the 10 per cent distribution rate in these troubling circumstances ," the chairman said. 

The company distributed JD1.35 million in cash dividends to shareholders in 2010, JD1.8 million in 2011, JD1.35 million in 2012, JD900,000 in 2013 and JD900,000 last year.

In 2014, net sales amounted to JD11.8 million, 9.8 per cent higher than the JD10.7 million registered in 2013. Exports accounted for 34 per cent and 40 per cent of the totals respectively.

A breakdown of the earnings showed income from local sales at JD2.8 million (JD2.2 million in 2013), from exports at JD3.8 million (JD4 million), from tenders at JD4.2 million (JD4 million), and from contracting at JD1 million (JD500,000).     

Noting that the 2014 results were below aspirations as the net profit was almost unchanged from 2013 at JD1 million, Shehadeh said: "With   the increase in prices of raw materials, there is no choice but to pay the higher cost or stop production, which is not logical."

He was echoing the auditor in a response to a question from a shareholder who requested clarification as to why the costs last year rose to 83 per cent of the earnings compared to 78 per cent in 2013.

The company, with a labour force of 170 employees,  sold 12,459 tonnes of different products last year, 8.35 per cent higher than the 11,500 tonnes sold in 2013.

Output in 2014 dropped by 13 per cent to 10,900 tonnes from 12,540 tonnes in the previous year.

It aims to increase output and sales in 2015 to around 12,000 tonnes.  

The profit and loss statement as of December 31, 2014 showed that production cost rose by 15.3 per cent to JD9.8 million (JD8.5 million).

According to the balance sheet at the end of last year, total assets amounted to JD20.9 million (JD20.3 million) of which JD15.4 million (JD14.2 million) were current assets, and JD5.5 million (JD6.1 million) were fixed assets.

Current assets included JD9.7 million (JD10.2 million) of inventory, and JD2.5 million(JD1.8 million) in receivables.

Property, equipment and machinery accounted for approximately JD4.7 million of  fixed assets in both years.

Capitalised at JD9 million, the shareholders equity in both years also includes JD3.6 million of mandatory and voluntary reserves as well as JD1.6 million of retained earnings. 

Net indebtedness stood at JD4.4 million (JD4.3 million).

Jordan Islamic Bank owns the largest stake in the company as its equity stands at JD4,452,265 shares or 49.46 per cent of the capital.

Al Baraka Saudi Company has a 10.9 per cent stake.