Business

AMMAN — The national economy is on the right track, with plans and programmes under implementation by the government achieving positive results at several levels, Industry, Trade and Supply Minister Hatem Halawani said Sunday.

At a meeting with members of the Amman Chamber of Commerce (ACC) board of directors, Halawani underlined the importance of the achievements in light of huge challenges the Kingdom is facing due to surrounding regional circumstances and the continuous increase of the energy bill, which consequently raised the debt burden.

Referring to economic indicators released by the Central Bank of Jordan, he cited credit economic reforms that helped to achieve a 3 per cent growth rate during the first half of 2014, and raise national exports by 7 per cent during the first eight months of the year.  

The minister indicated a ministry statement, e-mailed to The Jordan Times, that the Kingdom’s foreign currency reserves achieved unprecedented levels reaching $14.3 billion until the end of the third quarter of 2014, registering a 19.3 per cent increase, compared to the same period in 2013.

Inflation rate dropped to 3.1 per cent during the first nine months of the year, compared with 6.1 per cent in the same period of 2013, in addition to the decline in unemployment rate to 11.4 per cent, Halawani said.

He added that the energy bill still places a huge burden on the Jordanian economy, noting that the government support to the electricity bill stands at JD1.4 billion annually.

The losses of the National Electric Power Company (NEPCO) has exceeded JD5 billion so far, Halawani indicated, noting that the electricity charges for the majority of citizens were not affected since their monthly consumption does not go beyond JD50, a consumption rate that benefits from government support. 

The minister stressed the government’s keenness  on real and effective partnership with the private sector, in a way that positively affects the national economy and contributes to solving all problems faced by various economic sectors.

He also added that the 10-year economic plan, which the government is currently working on under Royal directives, partly focuses on enhancing the competitiveness of the commercial and industrial sectors and intensifying investments based on real partnership.

ACC President Issa Murad and other ACC members spoke about some problems facing the commercial sector, such as the recent strike of workers at the Aqaba Container Terminal  and the high cost of handling.

Murad requested a follow up to cancel the 1 per cent customs services fees on some exempted imports, and to resolve some exceptions on imports from some countries stressing the importance of cooperation to speed up the work on the specifications law. 

AMMAN – Jordan's exports of fruits and vegetables are picking up despite instability in neighbouring Iraq and Syria which once were key importers of the Kingdom's agriculture produce. 

According to official foreign trade figures released Sunday by the Department of Statistics (DoS), the value of fruit and vegetable exports during the first three quarters of this year went up by over 20 per cent to JD410 million from JD340 million during the same period of last year. 

In September alone, agriculture produce exports surged by 85.5 per cent to JD61.6 million from JD33 million when compared with the same month of last year, the DoS report pointed out. 

Jordan is currently a major supplier of fruits and vegetables to the Gulf Arab market, particularly Saudi Arabia and the United Arab Emirates. Syria and Iraq used to import nearly two thirds of production but exports to these markets dropped tangibly due to several years of turmoil there. 

The DoS report also showed that the Kingdom's energy bill increased by 13.9 per cent in the January-September period of this year as the value of imports of crude oil and its derivatives went up to JD3.3 billion compared to JD2.9 billion during the same period last year. 

The DoS report also showed that the Kingdom’s trade deficit, the value imports exceeding those of exports,  increased by 1.9 per cent during the January-September period of this year to JD7.6 billion at current prices compared with JD7.5 billion recorded during the same period of 2013.
The DoS noted that the coverage ratio of total exports to imports has increased to 36.9 per cent from 35.8 per cent.

The Kingdom’s exports during the first nine months of the year went up by 8.6 per cent to JD3.88 billion from JD3.57 billion during the same period of 2013, while imports increased by 3.7 per cent from JD11.6 billion to JD12.1 billion, according to the statistics.

AMMAN — A conference on financing small- and medium-sized projects and the role of loan guarantee programmes will be launched on Monday under the patronage of Prime Minister Abdullah Ensour.

The two-day conference will discuss the economic and social roles of small- and medium-sized projects and financial challenges facing these projects, among other issues.

Participants in the conference include World Bank experts, International Finance Corporation, the European Bank for Reconstruction and Development and the USAID, in addition to other supporting international bodies. The conference is synchronised with the 20th anniversary of establishing the Jordan Loan Guarantee Corporation, which was founded by an initiative of the Central Bank of Jordan. The Arab Bank has fully supported arranging the conference.

CAIRO — Egypt will offer a slew of projects to domestic and foreign investors at a conference in March aimed at kick-starting an economy battered by years of political unrest, the prime minister said Saturday.

Falling tourist revenues and slowing investments have left Egypt's economy in ruins after nearly four years of turmoil that saw two presidents ousted following mass street protests.

But President Abdel Fattah Al Sisi has put economic recovery at the top of his agenda, and the March 13-15 conference in the resort town of Sharm Al Sheikh will highlight a series of projects for which investment is wanted.

The premier, Ibrahim Mahlab, told reporters in Cairo the gathering will be the "cornerstone for Egypt's economic revival and aims to provide the resources used... to improve health care services, the educational system and provide energy to all".

Among them, he mentioned at least 10 projects in energy and river transport, but did not elaborate.

Mahlab said the conference is a message to the world that "Egypt needs a strong economy that can stabilise the whole region”.

"Our economy is about to recover... All the economic indicators point to this... and this conference is to support the Egyptian economy," he added.

In August, Sisi launched the construction of a $4 billion (3.2 billion euro) expansion of the Suez Canal that aims to speed up traffic and foresees the creation of one million jobs.

Sisi has set an ambitious target of digging the new canal in one year, which will run parallel to the original one, built 145 years ago.

Egypt will use machines made by a German firm to bore at least four tunnels under the Suez Canal, part of an $8 billion project to expand the waterway that the government hopes will raise revenues and foreign currency reserves.

Unlisted Herrenknecht AG was discussing contract details, a spokesman for the company said on Friday, giving no details.

Kamal Al Waziri, chief of staff of the Egyptian armed forces' engineering division, had said on Thursday that the army had contracted a German company to provide machines for three car and train tunnels in Port Said, the northern outlet of the canal into the Mediterranean Sea. The tunnels are being built by Orascom Construction and other Arab contractors.

Half of the budget for expanding the canal was allocated for building six tunnels, the Suez Canal Authority said earlier this month.

The government of President Al Sisi hopes the expansion will almost triple revenues from the waterway by 2023 to $13.5 billion from $5 billion.

Sisi, the former army chief who has put infrastructure mega-projects at the top of his economic agenda, called for the new canal to be built within one year, instead of the five years recommended by international experts.

MOSCOW — Russia can do little to shore up slumping global prices even if the Organisation of Petroleum Exporting Countries (OPEC) wants it to. 

Russian wells will freeze if they stop pumping oil, and the country has no capacity to store the output it would otherwise export.

Before next week's meeting of OPEC, Russia has already spoken to group member Venezuela about the need to "coordinate actions in defence" of oil prices and it plans to send a high-ranking delegation to press the message.

But despite needing oil prices of $100 a barrel to balance its budget, Russia has changed little since 2008 when OPEC urged Moscow to join forces to cut supply to shore up prices.

Then and now, the world's biggest producer lacks the ability to increase or turn down its own production.

"Nothing has changed," said Valery Nesterov, an analyst with Sberbank CIB, adding that while China has built storage to beef up its stocks for its energy-intensive economy, Russia has constructed no new facilities.

Nesterov also said Russia had a harsh climate and challenging geology which meant it cannot simply stop wells from pumping oil. 

"Russian wells will just freeze if you stop them," he remarked 

But that does not mean that Moscow will not try to persuade others to help shore up a price, which has fallen 33 per cent since June to $78 a barrel.

Igor Sechin, chief executive officer of Russia's biggest oil producer Rosneft and a long-standing ally of President Vladimir Putin, and Energy Minister Alexander Novak will both fly to Austria days before OPEC is due to meet in Vienna.

They are due to attend a conference with Venezualan officials, have not shed light on the agenda or the other participants. Novak's spokeswoman said on Thursday the minister would not attend the OPEC meeting itself.

Oil market watchers are divided on the outcome of the meeting in Vienna, which will be the most uncertain for years. Analysts are split over whether there will be a coordinated cut, with some saying output could be reduced by up to 1.5 million barrels per day (mbpd).

Only revolution will help

Some experts argue that Russia could even need oil prices as high as $115 to balance the budget, since social and military spending have soared, while Western sanctions over Ukraine have cut off Moscow from funds it borrows in Western financial markets.

Given that its production cannot be stopped, the only option left would be for Russia to cut its exports, which stand at around 4 mbpd.

Asked if Russia could hold back oil it would normally export, a trader at a major Western oil company said: "And where would you put it?"

Some oil could be stored in the Transneft pipeline system, one of the world's longest, he added. But it was never supposed to be used for prolonged storage, since it is reserve capacity to be used only in the event of if technical problems.

Transneft did not respond to a request for comment.

Russia's only major oil storage facility, the floating storage vessel Belokamenka located in the Barents Sea, can hold 2.6 million barrels.

An industry source said that even though Belokamenka is not full at the moment "you will need 365 like it to take off 2 mbpd from the market".

The position is different with Saudi Arabia, OPEC's leading producer. Unlike in Russia, where around a half of oil production is in private hands, Saudi Arabia controls all of its output via state-owned Saudi Aramco.

The company has a large fleet of supertankers which can be used to store oil at sea and also owns or leases oil storage facilities around the world.

Russia sells a big chunk of its oil to trading houses and oil majors, thus leaving the decisions where and how to store crude to its buyers.

Mikhail Krutikhin, a partner with RusEnergy consultancy, said Russia could not influence oil prices through export cuts and joked that more drastic measures might be needed.

"There is no real way for Russia to support prices, only to make a revolution in some oil producing country," he said.

ALEPPO, Syria — Once touted to become the biggest industrial zone in the Middle East, Sheikh Najjar near the ravaged Syrian city of Aleppo is now simply hoping for a second chance.

Most of its buildings have been reduced to carcasses — destroyed, burned and pillaged during the past two years of fighting in Syria's former industrial powerhouse.

But with the government's recapture of the area, Aleppo's businessmen are taking their first steps to return and restore the once-bustling zone.

"The soldiers retook the industrial zone on July 7 and when we entered a week later, we saw the devastation. Some buildings had simply disappeared," said 55-year-old Mohammed Handie, the zone's director general.

"Despite everything, we remain optimistic, because in the weeks that followed my arrival, I received many requests to return, rebuild, refurbish machines," he added.  "It was very encouraging."

Syria's civil war swept into Aleppo in mid-2012, and the fighting quickly divided the city between regime control in the west and rebel control of the east.

Sheikh Najjar, located to the northeast of the city, was in rebel hands and the scene of fierce battles until its recapture.

Near the industrial zone, the walls are still daubed with graffiti left behind by rebels, including the flags of the Islamic State jihadist group and Al Qaeda affiliate Al Nusra Front.

"Freedom for us and hell for the Alawites," reads one slogan, referring to the religious community to which President Bashar Al Assad belongs.

'Working night and day' 

The Syrian conflict that began in March 2011 has ravaged the country's economy and infrastructure.

Economists say gross domestic product has contracted more than 40 per cent, millions of homes have been destroyed, half the workforce is unemployed and inflation is around 50 per cent.

Despite the lingering presence of snipers and the occasional sound of shelling, workers labour away in Sheikh Najjar, rebuilding walls, repainting and installing generators and cables.

"When I returned, my factory had been burnt. All the walls you see, I rebuilt and repainted them," said 51-year-old Mohammed Hajar, owner of Al Bayan factory.

"Now I am repairing my machines," added Hajar, whose business making fabric for furnishings once exported to Bulgaria, Romania and Serbia.

"I've been asleep for two years! So now, I'm working night and day. I have six Italian looms. Two are lightly damaged and won't take long to get back to work, two others were burnt and I have refurbished them," he continued.

Two more charred looms, covered in a tarpaulin, are awaiting their turn, but the factory is already restarting work.

It is producing 1,000 metres of coloured fabric a day, after repairs that have already cost Hajar $75,000.

To return the factory to full capacity would cost the dynamic entrepreneur eight times his outlay so far.

'Back to life' 

When the industrial zone was established in 2004, it was intended to host 6,000 companies, and 1,250 were already there.

Most produced textiles, though there were also engineering, food, and chemical and pharmaceutical operations, employing 42,000 people.

Today, 140 businesses have reopened their doors, and Handie hopes that around 900 will be up and running within two years.

For that to happen, the state will need to invest $62.5 million (50 million euros) in infrastructure, because the zone now lacks virtually everything, and the businesses at least $500 million.

But that may be a tall order for the Syrian government, which is struggling to make ends meet and is heavily reliant on aid from its allies.

Handie accuses Turkey, a key backer of the Syrian opposition, of pillaging machines from Sheikh Najjar's factories and insists many of them are still on the other side of the border.

But despite the challenges, those who have returned to Sheikh Najjar are ebullient.

"I stopped working in 2012 and I lived like a zombie for two years, but I have come back to life being back in my factory," said an emotional Muwaffaq Abawi, head of a plastics factory.

"Look at me. I'm really alive! And now I'm rebuilding, repainting, restoring. I'm not going to die. We are a people who are not born to die," he added.

LONDON — Credit rating agency Standard and Poor's (S&P) said on Wednesday that China's over-priced and over-supplied property market and capital-starved Russian banks were likely to face further downgrades in the coming years.

In two new emerging market-focused reports, S&P said Chinese property ratings were likely to be hit more than other large markets in Asia, while like in Russia, banks in Turkey, South Africa and Brazil also faced difficulties.

S&P added in the property report that ratings in Asia would have "a negative bias" next year because of an expected fall in Chinese and Hong Kong house prices.

The property sector accounts for more than 15 per cent of China's annual economic output, banks provide much of the financing for building and buying, so a prolonged downturn poses possibly the biggest risk to the world's second-largest economy.

"Continuing sluggish sales, rising financing cost, and declining access to funding will hit smaller [Chinese] regional players... as a result, we may see further downgrades, and even defaults, at the lower end of our rating spectrum," S&P said.

In its banking sector analysis, it highlighted Russia as the big concern from a list of seven top emerging markets that also included China, South Africa, Brazil, Mexico, Turkey and India.

Almost 70 per cent of S&P's Russian bank ratings have negative outlooks, meaning there is roughly a one in three chance of a downgrade in the next two years.

"Russian banks remain the most vulnerable to the current operating difficulties created by Western sanctions and lower economic growth," S&P said. "The main risks we see for 2015 are capital erosion on the back of rising risk costs and funding pressures."

Western sanctions directly affect more than half of Russia's bank assets, it added, and although the immediate impact should be limited in the short term, the pressure will rise as customers use up or move savings.

"While we expect large banks' ratings to remain tied to the trajectory of sovereign ratings, due to the large state ownership in the banking sector, rating trends for small- and medium-sized banks are likely to mirror their capacity to cope with their increasingly tough operating environment," S&P continued.

Turkish banks, meanwhile, remained vulnerable to a potential downturn in global debt and capital markets due to their large debts, while low growth in South African and Brazil would weigh on their banks.

AMMAN — Of around 54,000 net new jobs created by the Jordanian economy in 2013, men snatched nearly 64 per cent of those, an official report said Wednesday. 

In 2012, the number of jobs created in Jordan stood at 50,000. 

A study released by the department of Statistics (DoS) indicated that a total of 82,000 new jobs were created in the Kingdom last year, but 28,000 of them were lost. 

The DoS report, a copy of which was e-mailed to The Jordan Times, showed that 35,000 new jobs were occupied by men, and that majority of the jobs were produced by the private sector. 

Nearly 79 per cent of the net new jobs, or 41,000, were created by the private sector, while the government sector helped create 13,000 new jobs. 

Residents of Amman, Irbid and Zarqa, Jordan’s most populous governorates with more than 70 per cent of the population, took three quarters of the new jobs, while residents of the southern governorate of Maan were the least to benefit from the new employment opportunities, said the report. 

The DoS study pointed out that 77 per cent of the new jobs were occupied by Jordanians and that only 13,000 jobs went to guest workers. 

According to the department, the figures confirm that guest workers are still demanded by employers in the Kingdom despite government efforts to replace them with Jordanians.  

Around 50 per cent of the new jobs were occupied by individuals holding educational qualifications less than the secondary certificate, with bachelors degree holders accounted for 31 per cent of the new employees. 

Social science, commercial business and law graduates who hold a diploma degree or higher constituted 29 per cent of the new employees, with the secondary certificate holders from the literature stream taking the highest ratio to find jobs among secondary certificate holders. 

The same study showed that work environment was the main reason for employees, both males and females, to quit their jobs.

"When comparing 2013 numbers with previous years, it is clear that the private sector secured jobs in 2013 more than it did in each of the years from 2007 through 2012, and the public sector provided less jobs in 2013 compared to the statistics of the same years," the report indicated

The results also showed that the private sector always provided more jobs than the public sector through the past seven years. 

AMMAN – Amman Chamber of Commerce (ACC) President Issa Murad on Tuesday requested US help to  facilitate trade exchange between Jordan and Palestine. During a meeting with US Ambassador to Jordan Alice G. Wells, Murad called for American  influence through drawing up mechanisms to ensure a smooth flow of Jordanian commodities to with Palestine and to eliminate Israeli obstacles hindering trade with Palestinians. Discussions covered the need for the US to support small- and medium-sized enterprises in the Kingdom, in addition to programmes and plans aimed at combating poverty and unemployment. The two sides stressed the need to foster cooperation to help facilitate investments in the area of renewable energy and gas explorations through providing the required technical and financial assistance. The ACC chief underlined the importance of cooperation to promote the US-Jordan Free Trade Agreement on all levels to maximise the benefits of the accord for both sides. Total US investments in Jordan currently amount to $2.2 billion, constituting nearly 8 per cent of the $27.6 billion total accumulated foreign investment in Jordan.

AMMAN — Managing public debt tops the challenges facing Jordan, International Monetary Fund (IMF) Mission chief to Jordan Kristina Kostial said Tuesday.

In a press conference from Washington over the phone, Kostial expected Jordan’s indebtedness to reach 89 per cent of the gross domestic product (GDP) by the end of this year, noting that the percentage was 71 per cent of the GDP in 2011.

To face this challenge, Kostial said the authorities have to control public finances, especially those related to the central government and service units such as the National Electric Power Company which started implementing a strategy towards full recovery.

According to the mission chief, the Kingdom has shown the capability to overcome economic problems in a difficult environment, especially with the cuts of Egyptian gas supplies and the Syrian and Iraqi crises. 

Besides the substantial indebtedness and the considerable budget deficit of the central government and state units, Kostial stressed the need for structural reforms, particularly those to tackle chronic high levels of unemployment, especially among the youth and women. 

She mentioned the low level of economic participation for the workforce, especially women, when compared to  peers in the Middle East and North Africa countries.

The mission chief valued recent improvements with the endorsement of the Public-Private Partnership Law and the Investment Law as well as the improvement in public sector institutionalisation  and governance.  

Due to the difficult situation facing the Kingdom, she said that the IMF’s executive board has adopted a flexible policy with Jordan in order to arrive at better conditions. 

Kostial expected electricity tariffs to be raised at the beginning of next year, urging the government to make revenue amendments because the GDP lost about 9 per cent between 2007 and 2011 due to lower revenues.

She described the draft income tax law, under discussion in Parliament, as a “step in the right direction” and, noted that the draft law can be more ambitious in achieving justice.

“Three per cent of the population pay income tax and this rate must be widened to reach 20 per cent of the rich and not the middle class,” she said. “That is justice.” 

Kostial called for limiting tax incentives and for it to be more transparent, noting the IMF preferred to work on measures for additional revenues during discussions with government officials, leaving the management for spending to the authorities.   

Regarding extending the fund’s programme with the Kingdom, she said that it will end in August 2015, and it is the government’s decision to ask for a renewing the programme.

Asked about alternatives in case the income tax law is not endorsed this year, she said that tax incentives, which doubled in the last years, should be reduced.