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DOHA — Qatar unveiled plans for labour reforms on Wednesday after persistent criticism from rights group over its treatment of workers, but it set no timetable and the changes would still leave employees without a minimum wage or trade unions.

Qatar has the highest proportion of migrant workers per population in the world.

Pressure on the Arab country, host of the 2022 soccer World Cup, grew after Britain’s Guardian newspaper reported in September that dozens of Nepali construction workers had died, and that labourers were not given enough food and water. Qatari and Nepali officials denied the report.

The proposed reforms include replacing a contentious sponsorship law, known as “kafala”, in which workers need their employer’s permission to change jobs, with a system based on employment contracts, officials said in Doha. 

An exit permit law requiring workers to obtain an employer’s consent to leave Qatar will also be reformed.

Officials announced the steps in response to a review of  labour legislation by a British-based law firm, which made a number of recommendations including the creation of a minimum wage for each category of construction worker.

The review, by law firm DLA Piper, also noted that Qatari law does not provide a right to freedom of association and collective bargaining for migrant workers.

The reforms envisaged do not include the creation of trade unions or the establishment of a minimum wage. Officials at Wednesday’s press conference said that wages were dictated by supply and demand in the market.

Under the reforms, workers will have their wages paid electronically to avoid late payments. And the country would adopt a “unified accommodation standard”, a measure apparently aimed at improving the quality of migrant workers’ housing, which is often spartan or squalid.

The officials also propose raising to 50,000 riyals ($13,700)  from 10,000 riyals a fine for employers holding the passport of an employee, a common practice among most construction firms and other companies in Qatar. Currently the fine is rarely enforced.

Reforms ‘soon’

“Let it be clear the current kafala system will be replaced with a system based on employment contracts, and that will govern the relationship between the employer and employee,” said Abdullah Saqr Al Mohannadi, director of the human rights department at the ministry of interior.

But these proposals would now have to go through the Shura Council, a consultative body, as well as Qatar’s chamber of commerce and government departments prior to their conversion into law, said Muhammad Ahmed Al Atiq, assistant director general of expatriate affairs at the ministry of interior.

“God willing, we hope that this will happen soon, but its hard to put a timeframe,” he added.

Unions are banned in Qatar, the world’s top exporter of liquefied natural gas, and workers who strike in protest are often deported.

In response, the International Trade Union Confederation (ITUC) said the announcements gave no guarantee for workers in Qatar.

“No moves were announced to stop the death and injury toll amongst the migrant workforce,” it noted in a statement. The ITUC has said more than 1,200 men have died in preparations since the World Cup was awarded to Qatar in 2010. Qatar has said no construction workers have died working on a World Cup site.

According to DLA Piper’s report, Qatar has 1.39 million migrant workers, which makes its the highest migrant to citizen ratio in the world, with migrant workers making up 85 per cent of the population. 

DLA’s report also found that the prescribed accommodation standards, which allow a maximum of four people in a room, are not being met by some contractors.  

SHANGHAI — China’s vast “shadow banking” sector is now valued at $4.4 trillion, according to the government’s premier research group the Chinese Academy of Social Sciences (CASS) as it warned of potential risks to the financial system.

Shadow banking in China encompasses a huge network of lending outside formal channels and beyond the reach of regulators, including activities by online finance platforms, credit guarantee companies and microcredit firms.

The system is worth 27 trillion yuan ($4.4 trillion), equivalent to nearly one fifth of the domestic banking sector’s total assets, according to a report by the Institute of Finance and Banking under CASS — China’s highest academic research organisation in the social sciences.

The figure is slightly lower than an earlier estimate by ratings agency Moody’s, which put shadow banking activities at $4.8 trillion in 2012, more than half of the country’s gross domestic product (GDP).

“What matters most is not the scale of the shadow banking system,” CASS said in a statement for the launch of the report provided to AFP on Tuesday.

“Once big risks arise from the shadow banking system, they could rapidly spread to the banking segment and the real economy through the monetary and credit markets, posing systemic financial risks,” it explained.

China’s financial markets were rocked by several debt defaults earlier this year.

In one case, a $160 million investment product structured by Jilin Province Trust, and backed by a coal firm failed to make capital and interest payments.

A $500 million investment product structured by China Credit Trust avoided default in January after an unknown party made good on principal payments to hundreds of investors, though they did not receive pledged interest.

Chinese authorities have shown tolerance towards individual defaults, calling them unavoidable, but have pledged to keep potential risks in check.

Analysts say the defaults could benefit the market in the long term by raising awareness of risk and making investors more selective.

Separately, China’s central bank hinted recently that it was willing to accept some debt defaults in the $1.8 trillion wealth management market, as the world’s second-largest economy struggles to curb bad debts that pose a risk to the financial system.

“Under the premise of preventing systematic risks, allowing some default cases to happen naturally in compliance with market forces will... help rectify behaviours of product issuers and investors, and benefit the healthy development of the wealth management market,” People’s Bank of China Deputy Governor Pan Gongsheng said at a forum in Shanghai. 

Pan’s remarks echoed those by Premier Li Keqiang earlier this year after the country’s first-ever default on a domestic corporate bond sparked concerns that other firms could follow suit. 

Li said authorities “pay very high attention” to financial and debt risks, but certain individual cases of such defaults were “hardly avoidable”. 

China’s wealth management product market ballooned to 11 trillion yuan ($1.8 trillion) in early 2014 from two trillion yuan in 2011, Pan pointe out. 

“Guaranteed repayment... although it will ensure short-term stability, won’t help the market to effectively differentiate risks and will eventually lead to accumulated risks,” he said.

In early March, Shanghai-based Chaori Solar Energy Science & Technology Co said it was unable to make bond interest payments of 89.8 million yuan, sending it into a landmark default. 

Earlier this year, the domestic financial market was gripped by worries over other financial products issued by trust companies, which have drawn comparisons to the American “junk bonds” of the 1980s. 

Authorities have in the past intervened to avoid default risks but are now more willing to accept such incidents, which may ultimately benefit the market by raising awareness of risk and making investors more selective, analysts have said.

AMMAN –– Telecom operator Zain Jordan is expected to transfer JD192 million to the Treasury in the coming two days for the Fourth Generation (4G) frequencies it obtained last month and for other frequencies to expand its third generation (3G) network, a government official said. 

Finance Ministry Secretary General Omar Zu’bi told The Jordan Times that Zain Jordan –– a unit of Kuwaiti-based Mobile Telecommunications Co. –– will transfer JD142 million for the 4G frequencies licence and JD50 million for 3G network expansion. 

Last month, the mobile operator executives said it would introduce 4G services that enable data transfer rates of up to 150 megabits per second by the end of this year. 

The government had invited the country’s three operators — Zain Jordan, Orange Jordan and Umniah — to submit requests to acquire frequencies to provide 4G services after it turned down bids from two companies.

The government received offers from KULACOM Jordan and a US-based company called “Ameriphone” to provide 4G services, but the bids were rejected as they were not in line with the tender’s conditions.

Mobile penetration in Jordan reached 156 per cent at the end of 2013, with 10.3 million mobile subscriptions, according to official figures.

AMMAN –– Prime Minister Abdullah Ensour on Monday called on Arab policy makers to work together to arrive at remedies for the economic challenges facing the region. 

Addressing participants at the high-level regional conference organised by the government, the International Monetary Fund (IMF) and the Arab Fund for Economic and Social Development, the premier said challenges facing Jordan are not different from those in other regional countries. 

"Our region is undergoing fundamental economic and political transitions. Regional policy dialogue among policy makers is no longer an option," Ensour told participants during a lunch hosted by the government, urging development stakeholders to engage in practical discussions to agree on key priorities that aim at raising the living standards of the people. 

Earlier on the day, the prime minister and IMF Managing Director Christine Lagarde were panelists in a session titled "economic transitions in the Arab world: What are today's challenges?"

At the session, Ensour said rich regional countries need to offer more financial and economic assistance to less fortunate neighbours, adding that when both groups grow richer they would both enjoy stability, and avoid dangers caused by poverty and unemployment. 

Lagarde indicated that creating more employment for the youth requires a comprehensive approach that involves reforms in many areas, including redefining the role of the state away from being an employer to becoming an enabler for a dynamic private sector, creating education systems that provide bridges to productive employment, designing labour market regulations that protect workers without constraining employers and establishing a business climate conducive to greater competitiveness.

"Reforms in all these areas will take time, but we have to start the process now. In the short run, and if sufficient additional external financing can be mobilised, scaling up public investment could make an important and visible contribution to reducing unemployment," she said.

AMMAN — Beneficiaries from microfinance services need a comprehensive framework that extends beyond financing to necessary rehabilitation, training and guidance to support micro-projects, Reem Badran, chairman of the board of directors at the National Microfinance Bank (NMB), said Monday. 

Badran was speaking during a ceremony, held under the patronage of Prime Minister Abdullah Ensour, to launch NMB’s initiative to support productive projects “from micro into small”.  

Ensour honoured Fatmeh Alwan, Alia Shawabkeh, Dirgham Abu Khourma, Fawzia Ramadneh, Samar Samardali and Tirez Samawi, who managed to achieve success through the loans they received from NMB. 

According to Badran, NMB was able to document 100 projects that managed to grow from micro-projects into small and medium-size projects, or have the potential to reach this category. 

She indicated that NMB, since its opening in 2006, has offered more than $200 million in loans to 205 borrowers, 90 per cent of whom were women beneficiaries. 

The bank’s branches have increased from nine in the past year to 20 this year, spread over all governorates in the Kingdom, Badran noted. 

NMB is committed to graduating 2,000 beneficiaries from this initiative in the coming five years with the support and cooperation of the Arab Gulf Programme for Development (AGFUND) which will copy this NMB experience in similar banks under AGFUND  in Yemen, Bahrain, Syria, Lebanon, Palestine, Sudan and Sierra Leone, she said.

AGFUND Deputy President Yousef Bassam briefed the audience on the characteristics of AGFUND, which was established in 1980 by an initiative of HRH Prince Talal Bin Abdul Aziz. 

Bassam said that AGFUND focused on comprehensive programmes to achieve a growth based on equality through five programmes: early childhood development, women empowerment, improving civil community roles, youth investment through founding Arab Open University and money integration to fight poverty. 

AGFUND established banks for the poor in nine countries to achieve social security, fight poverty and providing job opportunities through establishing productive projects, Bassam added. 

The ceremony was attended by Abdulatif Hamad, managing director of Arab Fund for Economic and Social Development, members of NMB and Arab workers in the development sector.

AMMAN – International Monetary Fund (IMF) Managing Director Christine Lagarde on Monday said the fund is open to extend its three-year stand-by arrangement (SBA) for Jordan if needed. 

"The programme extends until August 2015 and I'm very much hopeful that we can pursue this relationship. If more is needed later on down the road, in terms of more technical assistance and more financial support, we are completely open to it and prepared to help always," Lagarde said in an interview with journalists on the sidelines of a regional economic conference in Amman that concluded Monday.    

The SBA, which was approved by the IMF's executive board on August 3, 2012, enables Jordan an exceptional access of around $2 billion, representing 800 per cent of Jordan’s quota in the IMF. 

Total disbursements Jordan has received so far under the programme are about $1.3 billion.

Answering a question on flexibility in dealing with Jordan, she said the IMF recognised the burden of refugees on the public finances of Jordan by relaxing fiscal consolidation and reducing the amount by which public spending should be cut. 

That was clearly on account of special circumstances that the country went through, she noted. 

"When we discussed with Jordanian authorities how public money should be spent, we proposed more expenditure on health and education, and less on energy subsidies,” Lagarde explained.

“When we discussed how the energy subsidy should be replaced by cash transfers, we agreed that 70 per cent of the population benefiting from these subsidies should receive cash transfers," Lagarde elaborated. 

"So, we really focus on how best to use public money that is available to ensure that, at the end of the day, it is in the country's interest to restore the financial position, to reduce the debt in the long term and to reduce the deficit," she continued. 

She said the IMF works in partnership with authorities; it is their decision, their programme, their country and their population. 

"What they do is theirs not ours," said Lagarde.

AMMAN — Public endorsement and support for reform emerged as the most important issue discussed during at a high-level economy conference on Monday.

On the second day of the “Building the future: Jobs, Growth and Fairness in the Arab World” conference, organised by the government, the International Monetary Fund (IMF) and the Arab Fund for Economic and Social Development (AFESD), Prime Minister Abdullah Ensour said reform is a process that involves several elements, including decisions, for whose implementation, timing, credibility, communications and commitment are essential.

Attributing Jordan’s success over the years to the leadership’s and policy makers’ ability to foresee events and act accordingly, Ensour said the more recent trend to engage the public also helped push forward the reform agenda.

“After developing a general framework for the required decisions, we explained to the people the facts, bitter and sweet,” Ensour told the over 200 policy makers, academics and private sector, civil society and media representatives from Jordan and Arab countries, and officials from the IMF.

“We were frank and that earned us credibility,” said the prime minister.

The exchange of ideas with various parties was fruitful. It was a give-and-take process that  resulted in amendments to initial plans and, as a result, can be considered successful, said the premier.

Reform and development covered not only the economic and social sectors, but also the constitution, the political, parliamentary, educational and media spheres, added the prime minister.

That is not enough, continued Ensour, stressing the need for sustainability in order to maintain progress and gain people’s trust.

One move that the premier believes earned his government confidence among the population is the cash paid as compensation for lifting fuel subsidies, whose mechanism was carefully studied to ensure fairness.

IMF Managing Director Christine Lagarde agreed that the reform path entails “identifying and communicating the vision” in an atmosphere of credibility.

She also stressed the importance of discipline in public finance, where “it is not economically sustainable that growth be achieved by increased borrowing or by expanding deficits”.

While urging fiscal discipline for a healthy economy, her support for subsidies came with a caveat: They have to rightfully target the poor segment of society.

Lagarde said inclusive growth is an answer to economic inequality.

The IMF chief expressed optimism vis-à-vis developments in the Middle East, indicating that the region has moved from instability to a period of stabilisation that still needs to be consolidated for a higher economic growth that can help curb the high unemployment rates.

Lagarde pointed to the importance of empowering small- and medium-size enterprises (SMEs), of strengthening the middle class and of middle-size governments that help shrink an overbloated civil service.

Yet her assessment that entrepreneurship of the like that creates SMEs helps generate jobs was described by Ensour as a modern fad.

It is easy to talk about establishing SMEs, but it is difficult to run them, said Ensour, pointing to the arduous work of designing project, transferring knowledge, exercising guidance and management, besides financing such entities.

The prime minister said policy makers are convinced about the economic viability of SMEs, as 90 per cent of the Jordanian economy falls in this category, but reiterated the fact that the implementation process is difficult.

Ensour was somehow critical of the IMF policy, saying the fund sets rigid fiscal prescriptions, and offers accounting expertise but fails to take into consideration local social and political realities.

He admitted that the international lender does not impose its will, but rather offers a remedy that countries are free to accept or reject.

Lagarde disagreed, saying that the IMF was flexible and accommodating when Jordanian officials presented their case, and argued for room to tackle the Kingdom’s economic and financial challenges.

AFESD Director General Abdlatif Yousef Al Hamad blamed the absence of a population policy and government bureaucracy for part of  the economic ills in the Arab world.

Al Hamad urged a long-term vision to tackle unemployment demanding more support for SMEs while describing measures taken by Gulf Arab states to address labour issues as wrong.

He noted in this regard that selectivity in the labour market was harmful.

The AFESD chief recommended a financial and banking reform in the entire region, and perceived economic improvement coming from small projects and from an upgraded judicial system.

AMMAN — The General Budget Department on Sunday issued a briefing on the 2014 fiscal year in a bid to develop mechanisms for preparing the state budget according to best international practices. The summary presents a briefing on the 2014 budget law and focuses on areas related to the financial and economic performance in 2013 and economic projections for the current year among other topics.  

AMMAN — Senate President Abdur-Ra'uf S. Rawabdeh on Sunday inaugurated Jordan's International Exhibition for Industries. The three-day event in Amman is  exhibiting products of more than 100 companies, mainly from Egypt,  and providing an opportunity to benefit from other countries' industrial experience, in addition to increasing inter-Arab trade. Rawabdeh toured the fair's pavilions and was briefed on the advancement of the national industry. 

AMMAN –– Jordanian banks are set to continue their strong performance this year, building on growth registered during 2013 and 2012, Central Bank of Jordan (CBJ) Governor Ziad Fariz said Sunday. 

In an interview with The Jordan Times, Fariz commended the performance of  the banking sector in terms of capital adequacy besides an  increase in credit facilities, assets and liquidity over the past two years, and expecting  the uptrend to continue this year. 

According to CBJ figures, credit facilities extended by local banks in 2013 reached JD18.9 billion, while deposits amounted to JD27.6 billion. 

The governor indicated that non-performing loans in 2013 dropped to 7.4 per cent from 8.6 per cent in 2012, attributing it to  the sound management in the Kingdom's banking sector.  

Fariz said  local banks have raised their provisions for bad debts.

Fariz was speaking on the sidelines of a high-level regional conference to discuss policies that can generate jobs and lead to better growth and equity in the region, with the participation of over 200 policy makers from the Middle East and North Africa, and leading members of the private sector, academia, civil society and media.

Under the theme ìBuilding the Future: Jobs, Growth and Fairness in the Arab Worldî, the two-day conference is co-organised by the government and the Arab Fund for Economic and Social Development, and the International Monetary Fund.