Business

AMMAN — Exports from East Amman Industrial Zone dropped by less than 2 per cent during the first seven months of 2014 compared to the same period of last year, affected by the regional political developments. Society of East Amman Industrial Investors Chairman Iyad Abu Haltam on Monday said the zone’s exports reached JD214 million compared to JD218 million during the same comparison period. He noted that exports to Iraq, despite the deteriorated security situation there, increased by 7 per cent growing to JD98 million compared to JD92 in the same comparison period. Chemical industries and cosmetics topped the zone’s export list at JD45 million, followed by engineering, electricity and information technology sector at JD44 million, while the supply, food, agricultural and animal products came third at JD41 million. 

AMMAN — Jordan Enterprise Development Corporation (JEDCO) will support the "Made in Jordan” campaign and an exhibition for the Jordanian products under two agreements signed Monday with Amman Chamber of Commerce. The accords, all financed by the European Union, amount to 63,000 euros, according to a JEDCO statement sent to The Jordan Times. During the signing ceremony, JEDCO Chief Executive Officer Yaroub Qudah highlighted the importance of the agreements in boosting Jordanian products, citing the campaign's significance in enhancing the Kingdom's economy. Qudah also said that the industrial sector has witnessed a considerable growth during the past 10 years, registering by the end of 2013 a 13.2 per cent rise in industrial production. Head of the campaign, Musa Saket, said the second phase of the campaign will target school students to enhance their awareness of the high quality of the Jordanian products, and their contribution to bolstering the national economy and creating job opportunities, the statement said. 

GAZA CITY, Palestinian Territories — Israeli bombardment has left parts of Gaza in ruins and the enclave's already shattered economy is also feeling the pinch as prices for staple foods have started to climb.

The market in Gaza City's Shati refugee camp was bustling this week, but many of the camp's hard-up residents are buying less.

Israel's offensive on the enclave has hit agricultural areas badly, pushing up prices.

Khaled Ighrad, 48, who was buying food with his wife and one of his six children, has had to cut back on some key items for his family.

The price of eggs has doubled from 10 shekels (two euros, $3) to 20 since Israel launched a campaign of air strikes on July 8.

"I'm not buying a whole box of eggs, I'm buying half. I'll buy this and it lasts us for two days," he said, wistfully looking at the trays of eggs on the stall in front of him.

"Prices have gone up because things like meat and eggs are produced on the border area. We don't go to the border area any more, so the people only went during the ceasefire," he added.

Israel expanded its offensive against Hamas into a ground operation in mid-July, pushing troops, tanks and artillery across the border into the narrow enclave.

Grown in Gaza       

A few stalls away, under a coloured canvas awning, Abu Ahmed Badawi sits next to tables stacked with peppers, onions, tomatoes and potatoes. Few people stop to ask about his wares, grown in Gaza, since he has had to raise his prices.

Not only are farmers unwilling to tend their crops because of the risk of air strikes or shelling, or Hamas rocket attacks falling short, but drivers are wary of travelling to these areas to bring them to the city's markets.

"If they go, they're worried, they're taking their life in their hands, they might die — or they might live. So the price of goods has increased. Not only because of the sellers, but the people who transport their goods," he indicated.

Before the conflict, he sold a kilogramme of potatoes or tomatoes for one shekel. This has climbed to three shekels, a further pinch for Gazans whose economy has been strangled by seven years of Israeli blockade.

"It is difficult to people because they don't have money or work and there's no economy," Badawi said angrily. The fruits on his stall have not changed in price — he said they were imported from Israel at the Kerem Shalom crossing.

"This is the Israelis' strategy — they strike us, then they open the border" to let their produce in, he said bitterly.

50 factories razed

Mahir Al Tabaa, head of the Gaza chamber of commerce and industry, agreed the conflict had caused "huge and long term indirect losses" for the economy.

"The direct losses when [Israel] destroyed the economic and industrial establishments, and residential buildings is around $3 billion," he told AFP.

He said while the price of petrol, which is also imported from Israel and the price of which is controlled by the government, has not changed in the conflict, "the prices of all goods and agricultural produce like vegetables and meat will significantly increase”.

"This is a heavy burden," he remarked.

In addition to this, the destruction of "350 industrial sites, including more than 50 large, strategic factories" would set unemployment climbing.

The "unemployment level will be around 50 per cent after the war, an average of 200,000 people out of work... the level was 41 per cent before the conflict," he indicated.

One sector still doing a lively trade is tobacco.

In the market at Shati, Abu Salim sits by his small stall, where he sells cigarettes.

Although his prices have increased, he is doing brisk business and shoppers constantly stop by to pick up a pack of Royals, the brand favoured by many Gazans.

A packet of 20 Royals costs eight shekels, one more than before July 8, although Abu Salim has seen no decline in demand.

"In the truce, people smoked a pack a day," he said, referring to the three-day ceasefire that ended on Friday. "After it ended, they smoked two a day, because of the situation in the country." 

AMMAN — International General Insurance Holdings (IGIH) announced Sunday in a press statement that the group’s net earnings amounted to $18.5 million during the first half (H1) of this year compared to $21.3 million for the same period in 2013.  Wasef Jabsheh, vice chairman and chief executive officer of IGIH, said in the press statement: “Although we were unable to surpass last year’s profit for the first half, our results were in line with our projections given the soft market the industry is facing.” He added: “Attaining a combined ratio of 87.64 per cent in the current environment continues to prove that IGIH remains focused on writing profitable business whilst firmly managing risk and expenses.  We will continue to adhere to our philosophy of writing for profit rather than volume in the current environment.” 

SYDNEY — Australia's central bank Friday cut its growth forecasts as it reinforced a "period of stability" in interest rates and highlighted the challenges the economy faces as it moves away from mining-led expansion.

The Reserve Bank of Australia (RBA) lowered its gross domestic product (GDP)  forecasts for 2014 and 2015 by 25 percentage points, and said the "key uncertainties" facing the economy included when and how large the fall-off in resources investment would be.

"The key uncertainties for the domestic economy continue to be centred on the timing and extent of the decline in mining investment and how this is balanced by the expansion of resource exports and the recovery in non-mining activity," the RBA said.

"Mining investment could decline more sharply than anticipated. On the other hand, it is possible that consumption and non-mining business investment could, in time, be stronger than expected," it added.

In its quarterly Statement on Monetary Policy, the central bank projected economic growth to be about 2.5 per cent in the year to December 2014, down from 2.75 per cent forecast in May.

It estimated GDP to be about 2 to 3 per cent in the year to June 2015, from the prior forecast of 2.25 to 3.25 per cent.

Near-term inflation expectations were revised lower after the government repealed carbon tax legislation. Consumer prices were tipped to rise by 2 per cent instead of by 2.75 per cent in the year to December 2014.

The Australian dollar slipped by almost a quarter of a cent to about 92.45 US cents after the statement was released.

The updated growth forecasts came a day after official figures showed Australia's unemployment rate spiked to a 12-year high of 6.4 per cent in July, from 6 per cent in June.

The surprise jump in the jobless rate strengthened expectations that a near-time hike in interest rates was less likely amid continued signs of weakness in the economy.

The RBA kept the cash rate on hold at a record low of 2.5 per cent on Tuesday. Interest rates have remained at 2.5 per cent since the central bank last eased monetary policy in August 2013 to boost growth in non-mining activity as the economy exits from an unprecedented resources investment boom.

The reserve bank said Friday that "the recent softness in some indicators has increased the uncertainty around the strength and timing of the pick-up in consumption and non-mining investment".

"With only tentative signs of improvement in near-term indicators, the timing of the pick-up has been pushed out a bit further," it added.

AMMAN — Advancement in technology and means of transportation should be exploited to achieve Arab economic integration and enhance the efficiency of inter-Arab trade, experts told a conference on Sunday. 

Dubbed "The Cost of Inter-Arab Trade Conference", participants also proposed that Arab countries alter regulations on trade and commerce to facilitate the transportation of goods and capitals across the region's borders.   

Held at the Talal Abu-Ghazaleh Forum, in cooperation with the Economic Policy Development Forum (EPDF) and the League of Arab States (LAS), the conference was based on a study conducted by experts at Talal Abu-Ghazaleh Consulting. 

LAS Economic and Social Council Assistant Secretary General Mohammad Tuwaijri, told the opening session that the council was able to reduce customs tariffs in 2005 and create a legal base for a modern trade system that corresponds with that of the World Trade Organisation (WTO).

"The Economic and Social Council cancelled previous bilateral trade agreements between Arab countries and created a collective agreement that binds all league members instead," he said, noting that the agreement takes into consideration the particularity of each country when it comes to economic advancement and financial abilities.

"The council aims to boost the quality and competitiveness of products," he added, stressing the importance of partnership with the private sector besides the diversification of products and markets.

Tuwaijri emphasised the need to increase inter-Arab trade from the current level of 10 per cent to over 50 per cent.

Industry and Trade Minister Hatem Halawani said the region's potentials must be utilised to better serve the Arab nation. 

"The Arab world, which represents 10 per cent of the world's area, is rich in natural and human resources," he said, indicating that the Arab population exceeds 350 million, and the workforce comprises 112 million individuals approximately.

"The Arab world possesses over 59 per cent of the world's proven oil reserves, and 29 per cent of the world's proven gas reserves," he added.    

Halawani called for creating an Arab common market that guarantees free movement of labourers, capital and means of production, stressing the need for a fiscal union that would involve monetary policies and currencies between Arab countries.

The minister attributed the weakness of inter-Arab trade to the region's political developments, in addition to delays in implementing trade agreements and decisions.

He highlighted Jordan’s success in improving economic indices. 

"The Kingdom's economic reform strategy, which started five years ago, registered a positive economic growth that helped Jordan overcome an economically critical stage," he said.   

The government's reserves reached $14 billion by the end of May this year after they stood at $6 billion in 2012, according to Halawani, who added that the Kingdom registered in 2013 real growth in gross domestic product that reached JD24 billion, compared to JD22 billion in 2012.

EPDF Chairman Talal Abu Ghazaleh described the conference as an achievement resulting from cooperation with the LAS, noting that others are to unfold in the future.

He said that efforts to include the league in the WTO as an observing member are still under way.

"Our partnership with LAS will create an Arab coalition for trading services, since trading should not be exclusive to goods," he told the audience, noting that the coalition is to be located in Lebanon.

Based on a suggestion from the league, the EPDF is to advise economic administrative bodies in Palestine, Sudan and Yemen to help these countries develop economically.

"We are working together on a project for the accreditation of the Arabic language as an official language for the WTO," he concluded.

ZARQA — Industrial exports from Zarqa and Mafraq governorates rose by 10 per cent in the first seven months of 2014, reaching $394 million, compared to the same period in 2013, Zarqa Chamber of Industry (ZCI) President Haidar Amaireh announced on Saturday. During the same period, the chamber issued 7,913 certificates of origin, he said, noting that exports of ZCI members amounted to $75 million in July, 2 per cent less than the same period of last year. Leather products and embroideries came first with $266 million achieving an increase of 10 per cent during the same comparison period. Supply, food, agricultural and animal industries came second at $66 million, 11 per cent lower than the same period of last year. Third place was achieved by plastic and rubber industries with $46 million, an increase of 7 per cent.

AMMAN — Amman Chamber of Commerce’s (ACC) statistics on Saturday showed that the trade sector’s contribution to the gross domestic product was 43.5 per cent in 2013. Transportation, telecommunication and storing topped the list at 12 per cent, followed by real estate and construction at 11.9 per cent. Transportation services and insurance came in third place at 10.1 per cent. Wholesale and retail trade stood at 8.1 per cent, while the contribution of restaurants and hotels was 1.4 per cent. Banks provided JD3.9 billion in credit facilities to the general trade sector in 2013, accounting for 20.7 per cent of the overall facilities that reached JD18.9 billion. The data showed that Jordan’s foreign trade volume developed remarkably in 2013, reaching JD21.1 billion, compared to JD6.208 billion in 2003. The general tax on sales gained from the trade and service sector reached JD1.9 billion, 76.5 per cent of the overall general tax on sales revenues in 2013. Sales tax on imported goods reached JD1.025 billion, on services JD436 million and on trade JD476 million. 

AMMAN — Jordan cannot continue its policy of subsidies that benefit the rich more than the poor, a senior International Monetary Fund  (IMF) official  told the Jordan News Agency in  telephone interview on Saturday.

"The government should reduce allocations of subsidies and reform those related to energy so as to ease pressure on government finances,” Masood Ahmed, director of the IMF’s Middle East and Central Asia Department, said. 

“Money saved via the subsidy reform can be used to increase investments to achieve growth," he added. 

According to Ahmed, future generations of Jordanians will have to shoulder the burden of indebtedness arising from the budget deficit as a result of government subsidies, especially in the area of energy. 

Noting that spending on subsidies reduces chances for setting up development projects and infrastructure, he indicated that some money saved, by amending the subsidies’ mechanisms and channelling them away from the rich, can be used to create work opportunities sought by young Arab people who aspire to find jobs.

The IMF official advised the government to be "very careful" when reducing subsidies and stressed the importance of having the proper methods in place to protect the poor. 

"This process should be gradual as one cannot change a 30- year-old policy in three months. The process should be a step at a time," Ahmed said. 

He urged that a strong awareness campaign should accompany the  subsidy reform process to acquaint the masses with the reasons behind such decisions and to rally public support for the drive .

“If you do not explain to the people what you are trying to do and why, then it would be difficult for the public to accept the reform requirements, particularly in light of the situation in the region,” the IMF official cautioned.

Ahmed noted that the Kingdom had suffered from two external "traumas"; the first caused by the Syrian crisis and the influx of more than one million Syrian refugees and the second resulted from the cut in the Egyptian gas supply, which prompted the country to buy fuel derivatives at high costs to generate electricity.  

However, the IMF official said the government had realised the tough price of these "traumas" and the need to reduce expenses and amend the budget, a situation he said each country can do on its own without the fund's help. 

Ahmed added that measures to alleviate the impact of the situation can be implemented in cooperation with the IMF in order to benefit from its technical expertise in this area coupled with  financial aid. 

He indicated that the "coming step in Jordan will be stabilising the economy in the face of the difficult external traumas and then we will see what could be done to increase growth rates". 

Regarding the impact of the situation in  Iraq on Jordan's mega-projects, especially the oil pipeline the two countries have agreed to implement, Ahmed described the current events in Iraq as "tragic" that will surely affect the Jordanian economy. 

He said Iraq is one of the most important exporting markets for the Kingdom and the situation now will negatively affect trade and investors' trust in the region. 

Yet, the official stressed the IMF's commitment to continue helping Jordan next year to deal with challenges brought by neighbouring countries or international traumas, such as the increase in energy prices. 

"We are always ready to help Jordan because Jordan is a highly appreciated member," Ahmed concluded. 

TEL AVIV — Israel's 2014 budget will be able to absorb the costs incurred during the 

monthlong Gaza conflict and there will be no need to raise taxes, Finance Minister Yair Lapid said on Thursday. Lapid added that it would take a week or two before the government could determine the total impact of the conflict on the economy. "Israel has a very strong, sustainable economy. We are more than capable to digest this operation into the 2014 budget," Lapid told Reuters. "Of course it's an expense we didn't expect, but then again, why have a strong economy if not for these occasions in which you have to react to the unexpected." Lapid earlier told a news conference: "Taxes will not be raised." He noted that the budget deficit target for 2014 was 3 per cent, and that prior to the monthlong military operation, the actual deficit was running at less than 2.6 per cent. "This means we have room below the target for unexpected expenses," he said. Lapid added the government was acting swiftly to compensate local businesses that were hurt during the military campaign.