Business

DUBAI — Growth in Egypt's economy is expected to remain sluggish this year as political uncertainty keeps tourists and foreign investors away, the International Monetary Fund (IMF) said Tuesday. 

The economy of the Arab world's most populated country was forecast to grow by 2.7 per cent this year after expanding by 2.1 per cent in 2013, the IMF said in its World Economic Outlook.

"Growth in 2014 is expected to be broadly the same as in 2013, as political uncertainty will continue to weigh on tourism and foreign direct investment," it added.

The slow performance was likely despite the "fiscal stimulus" of support from Gulf countries, which promised billions of dollars in aid to Egypt after the army ousted president Mohamed Morsi in July.

Saudi Arabia pledged $5 billion in aid to the military-installed government in Cairo, with Kuwait and the United Arab Emirates (UAE) offering a combined $7 billion.  

"Large imbalances will persist unless structural reforms and fiscal consolidation are initiated," said the IMF, which was until last year negotiating a $4.8 billion loan to Cairo to help finance the government while it undertakes reforms.

Political changes in the country have set the talks back.   

Egypt's economy grew at 5.1 per cent in 2010, prior to the January 2011 uprising that forced president Hosni Mubarak to step down after ruling for nearly 30 years.

Separately, the IMF expects economic growth in Tunisia, cradle of the Arab Spring uprisings, to gather pace on the back of political and security improvements.

The economy of the North African nation grew by 2.7 per cent in 2013, but is expected to expand by 3 per cent this year, the IMF said.

Growth in gross domestic product (GDP) should reach 4.5 per cent in 2015, it indicated.

"Tunisian growth is expected to strengthen, spurred by improved confidence from a new constitution, reduced security tensions, and pre-election reforms," the IMF said.

Tunisia's central bank said last month that economic growth slowed in 2013 to 2.6 per cent from 3.6 per cent in 2012, citing negative political and security factors. 

Since the 2011 uprising that ousted dictator Zine Al Abidine Ben Ali, Tunisia has been hit by sporadic violence.

Elsewhere, the IMF warned that a rapid growth in US oil production combined with potentially weaker global demand present a downside risk to Gulf oil output and prices.

But despite an expected drop in their current account surpluses, most Gulf Cooperation Council (GCC) economies continue to have "substantial buffers" to cope with short-lived price shocks, the IMF said.

And economic growth in most of the oil-rich GCC economies is to hover near the rates registered last year, with Saudi Arabia's largest Arab economy expanding by 4.1 per cent in 2014, compared to 3.8 per cent in 2013, it added.

"Faster-than-expected growth in the US oil supply and lingering risks of weaker-than-expected global oil demand because of a slowdown in either emerging markets or advanced economies present downside risks to oil prices and GCC production," it elaborated.

The GCC comprises top oil exporter Saudi Arabia, as well as Bahrain, Kuwait, Oman, Qatar and the UAE.

US oil output has been rising fast on the back of the newly tapped shale-based reserves.

The Organisation of Petroleum Exporting Countries (OPEC) oil group said last month that supply from non-members is expected to increase by 1.31 million barrels per day this year, mainly from the United States, Canada and Brazil.

Large current account surpluses in Middle East and North Africa oil exporters are expected to decline in 2014 "because of lower oil revenues," the IMF indicated.

"Although fiscal positions have been weakening across the GCC economies over the past several years, most still have substantial buffers to withstand large shocks to oil prices, provided the shocks are short lived," it said.

Those countries adopted expansionary fiscal policies to fend off the impact of the global financial crisis in 2008, channelling some of the oil windfall into infrastructure projects.

Reduce dependence
on oil

"Policy priorities continue to be centred on diversifying these economies to reduce dependence on oil, increase employment opportunities in the private sector for nationals and enhance resilience to shocks," the IMF recommended.

"Reforms to foster entrepreneurship, along with public wage and employment restraint, are key," it stressed. 

Economic growth in the UAE is expected to be around 4.4 per cent and 4.2 per cent in 2014 and 2015 respectively, compared to 4.8 per cent last year, the IMF said.

Dubai's winning of the right to host World Expo 2020 has further strengthened growth prospects in the UAE where real estate prices are rising at a "fast pace", the IMF added.

Dubai's property sector had nosedived due to the global financial crisis, following five years of rapid growth. But the sector has made a strong comeback as investors flocked back in the emirate that is perceived as a safe haven amid regional turmoil.

Growth in gas-rich Qatar will ease slightly from 6.1 per cent last year to 5.9 per cent in 2014, picking up again in 2015 at 7.1 per cent.

The emirate is expected to spend billions of dollars on infrastructure projects in preparation for the football World Cup tournament in 2022.

Kuwait's economy will grow 2.6 per cent this year and 3 per cent in 2015 after growing by just 0.8 per cent last year.

AMMAN — Jordan Insurance Company (JIC) announced this week in a press statement that it will be distributing dividends to shareholders at a rate of six per cent following the approval of the general assembly during an ordinary  meeting held recently. According to the statement, shareholders discussed the 2013 annual report which showed that the company’s  technical profit reaching JD3 million last year. JIC Managing Director Imad Abdel Khaleq said in the press statement: “Although technical reserves increased exceptionally last year, we managed to achieve good technical profit in 2013 and enhance the overall financial position of the company. Because of the instability of the financial market and the subsequent setbacks in the stock prices, our net profit was slightly affected. Abdel Khaleq pointed to JIC’s diverse real estate portfolio as evidence of the company’s enduring financial strength, noting that although the book value stands at  JD17 million, the current market value comes at JD30 million.

AMMAN — Jordan Ahli Bank (JAB) on Tuesday announced that under a preliminary agreement signed this week, a Lebanese commercial bank will buy all the shares of JAB in the International Ahli Bank in Lebanon which accounts for 97 per cent of total shares. JAB disclosed its announcement on the Amman Stock Exchange website. 

AMMAN — A Cabinet decision to cancel the sales taxes on financial transfer services went into effect on Sunday after being published in the Official Gazette. The decision was recommended by the finance minister in order to amend a provision in the General Sales Tax Law. Meanwhile, the Cabinet decided to continue imposing JD50 per tonne export tax on scrap iron.

AMMAN — China has extended more than $162 million to Jordan in the form of loans and grants between 1999 and 2013, according to the Ministry of Planning and International Cooperation. During the meeting of the Jordanian-Chinese technical and economic committee on Monday, the two sides agreed to increase trade volume, tourism exchange, improve transport and energy cooperation and encourage investments and the exploitation of oil shale, said a statement received by The Jordan Times. Amman and Beijing agreed to expedite the implementation of development schemes China has agreed to fund through grants, including water networks, housing units for the underprivileged and installation of CCTV cameras. They also agreed to send a Chinese team to study renovating the Salt-Arda road before the end of this month. 

AMMAN — International Finance Corporation (IFC) and the Jordanian government on Monday launched a new smartphone application, according to an IFC statement sent to The Jordan Times.  IFC designed this application, named “Tawasol” (communication), to enable business owners to send their feedback on inspection and inspectors’ performance through answering a short questionnaire via smartphones, SMS and the Internet. The application provides inspection bodies with reports about the inspection systems efficiency, and enable them to assess inspectors’ performance and behaviour while on duty, which will improve businesses productivity and save time and money. Industry and Trade Minister Hatem Halawani said this new inspection feedback process will enhance transparency, accountability and private and public partnership. Public Sector Development Minister Khleef Al Khawaldeh said feedback is a key component to assess the success of reform programmes. IFC Country Manager in Jordan Ahmad Ali Ateqa said running proper reform programmes is the base of improving the business environment, attracting investments and enhancing the market competitiveness.  The project was made possible by USAID, IFC development partner, the statement concluded.

TOKYO — Japan and Australia clinched a basic trade deal on Monday to cut import tariffs, as US and Japanese officials stepped up efforts to reach a parallel agreement that would re-energise stalled talks on a broader regional pact.

The agreement between Japan and Australia comes as the United States and Japan push for their own two-way trade deal — a key component of a broader US-led Trans-Pacific Partnership (TPP) pact — before a visit this month by President Barack Obama.

Australian Prime Minister Tony Abbott and Japanese Prime Minister Shinzo Abe confirmed a basic agreement on the deal at talks in Tokyo, and agreed to work towards signing it as soon as possible, the two sides said in a statement.

“The Japan-Australia EPA (economic partnership agreement) is an extremely important framework that promotes  bilateral trade and investments,” Abe later told a news conference with Abbott. “This basic agreement has historical significance for getting the two countries closer together.”

The bilateral deal, expected to be finalised when Abe travels to Australia in July, features cuts to Japanese  tariffs on Australian beef — including a halving of the levy on frozen beef to 19.5 per cent with deep cuts in the first year — and an end to an Australian duty on cars.

A deal with Australia that lets Japan keep even reduced tariffs on politically sensitive agricultural products such as beef gives Japan ammunition against US demands to scrap tariffs in the TPP deal, which aims to remove import levies, experts said.

Such a deal means “Australia gets preferential treatment over the US, and America will be under pressure to strike a TPP deal short-term that puts it on a level playing-field with Australia,” said Aurelia George Mulgan, a professor of Japanese politics at the University of New South Wales.

Australia had a lower hurdle on tariffs for Japanese cars after Australia’s three remaining carmakers — Toyota Motor Corp., General Motors Corp. and Ford Motor Co. — decided to quit Australian domestic production by 2017 due to high costs and a strong Australian currency.

US-Japan ‘game 

of chicken’

US Trade Representative Michael Froman leaves will meet Japan’s Economy Minister Akira Amari on Wednesday, Japanese media said, in a bid to break a bilateral stalemate bogging down the 12-nation TPP talks.

Washington and Tokyo are each urging the other to be more flexible on the sticking points of access to Japan’s farm and car markets and US tariffs on imported cars and trucks.

The TPP is a centrepiece of Obama’s push to expand the US presence in Asia. The talks have entered their fifth year. The Japanese and US economies dominate the grouping, which encompasses one-third of global imports and exports.

“What is going on is a game of chicken,” Mulgan said. The US and Japan “want an agreement but they are not prepared to pay a high price. Japan knows that America wants it on board because TPP without Japan is not worth all that much. Japan is playing hardball”.

The United States wants Japan to open its rice, beef and pork, dairy and sugar sectors — areas Abe has vowed to defend. Japan wants a timetable on US promises to drop tariffs of 2.5 per cent on imports of passenger cars and 25 per cent on light trucks.

Advocates say the TPP could accelerate global economic growth, boost US exports and level the playing-field between emerging and rich nations in. The TPP talks, including Canada, Mexico, New Zealand, Malaysia and others, missed a deadline for an agreement by the end of last year.

Abe and Abbott also stressed close security ties as Japan seeks tighter relations with regional partners to cope with a rising China. They agreed to start talks on cooperation in defence technology and equipment, following  Japan’s recent overhaul of a decades-old ban on arms exports

“The relationship between Australia and Japan is about much more than economics and trade and growing wealthy together,” Abbott said at the news conference. “It’s about respect, it’s about values and that’s why this is such a very strong partnership.”

In a symbolic gesture, Abbott became the first foreign leader to attend a special session of Japan’s National Security Council, set up last year to coordinate policies.

“I think this fact that we are having this session with you signifies the fact that there is a strong bond of trust between Japan and Australia,” Abe told Abbott at the beginning of the session.    

AMMAN — Jordanians' remittances went up  by 4.1 per cent until the end of March, standing at $550.1 million, up from $528.6 million in the same period of last year, according to the Central Bank of Jordan (CBJ). A CBJ statement attributed the increase to the recovery of countries hosting Jordanian labourers from the global economic crisis repercussions, noting that the rise has contributed to providing the Kingdom with the needed foreign currency to fund economic activities in different sectors. 

AMMAN –– Over 350 investment professionals, policy makers, business leaders and economists will convene on the eastern shores of the Dead Sea on April 9 and 10 to discuss opportunities and challenges facing Middle East and North Africa  (MENA) economies. 

According to organisers of the Fifth Annual CFA Institute Middle East Investment Conference, the two-day event –– with the theme of “Realising our Potential: Investing for Sustainable Growth” –– is scheduled to be under the patronage of His Majesty King Abdullah. 

Ahead of the conference, CFA Institute, which is the global association of investment professionals, launched the results of its annual Middle East market sentiment survey at a press conference in Amman. 

The institute has surveyed its charter holders and members in the region to see their expectations for the investment climate in MENA, Nitin Mehta, managing director of CFA Institute in Europe, Middle East and Africa, said at the press conference.

Briefing journalists on the top findings of the survey, Mehta indicated that 80 per cent of the surveyed expected their local economies to expand this year, 76 per cent expected their businesses to grow and 67 per cent predicted the global economy to expand. 

Nearly two-thirds of the members also expected an increase in foreign direct investments, initial public offerings and mergers and acquisitions, he said. 

However, he noted that the survey showed that respondents believe that positive economic impact from the Arab Spring would be greater over the next five years, adding that respondents expected lower investments this year due to political changes in the region. 

Mehta said that only a small portion of respondents believed that MENA economies are competitive in the global economy. 

Regarding Jordan, the professionals called for improving market integrity, transparency and education as they can help the Kingdom in ensuring long-term sustainable growth. 

The respondents expected Saudi Arabia, United Arab Emirates and Qatar to see the strongest economic performance in 2014. 

Jameel Anz, president of CFA Society in Jordan, told The Jordan Times following the press meeting that the regional investment conference will be held in Jordan for the first time, as it used to take place in Gulf countries. 

The gathering will address investments in competitive sectors in Jordan such as the information technology and services, Anz said, adding that bankers, portfolio mangers, representatives from monitoring commissions and policy makers are expected to attend the forum. 

The CFA online survey was conducted between February 23 and March 20 of this year with 1,818 professionals participating in the survey from 12 countries in the region, he said.

AMMAN –– Residential apartment purchases are fuelling Jordan’s property market, according to official data, which show that demand for land is declining. 

Figures released by the Department of Land and Survey (DLS) on Sunday showed that real estate trading during the first quarter of this year reached JD1.8 billion, a 26 per cent increase over the same period of 2013 and higher by 74 per cent when compared with the first three months of 2012. 

Trading during the January-March period of 2013 was JD1.4 billion, while in the same period of 2012 it stood at around JD1 billion, DLS statistics show. 

Housing developers expect the performance of the market to peak to pre-2008 levels as they project trading for 2014 to reach over JD7 billion. 

Government revenues from real estate trading also grew tangibly during this year’s first quarter to reach nearly JD100 million, 24 per cent higher than the JD80 million generated in the first three months of 2013 and up by 65 per cent from the JD60 million recorded in the same period of 2012, according to the DLS report e-mailed to The Jordan Times. 

The figures indicated that apartment purchases between January and March of this year rose by 24 per cent, while land transactions declined by 10 per cent when compared with the same period of last year. 

The report pointed out that the number of apartments sold until the end of March was 8,305 units compared to 6,674 flats sold during January-march period of 2013. 

Nearly 90 per cent of the residential apartments were bought by Jordanians as non-Jordanians –– mainly Iraqis, Saudis and Kuwaitis –– purchased only 887 apartments worth JD79 million during the first quarter of this year. 

Land sales during this year’s first quarter dropped to 16,448 transactions from 18,307 in the same period of last year, down by 10 per cent, the data showed. 

‘Even stronger performance projected’ 

Jordan Housing Developers Association President Kamal Awamleh told The Jordan Times that trading in the real estate market is set to exceed JD7 million due to increasing demand for residential apartments by Jordanians. 

He attributed the surge in demand to new economic realities in Jordan as prices rise from one year to another, a fact that made Jordanians realise the need to buy housing units. 

Rise in rentals, caused by the inflow of Syrians into the country, also made Jordanians prefer to buy than rent, he said. 

Mohammad Sallam, a housing developer, agreed with Awamleh, indicating that the majority of potential buyers approach his company are mainly Jordanians.  Sallam said that demand in the coming months is expected to increase sharply as Jordanian expatriates in the Gulf region start to return to Jordan for summer holidays.