Business

AMMAN — Central Bank of Jordan (CBJ) Governor Ziad Fariz on Saturday said the upcoming stage requires measures to ration public spending and increase revenues.

During a meeting with bankers and economic leaders, he stressed the importance of fair taxation with appropriate measures that encourage investment and economic activity to address challenges.

He called for reducing public indebtedness, budget deficit and energy losses in order to alleviate pressure on the balance of payments, besides restoring confidence in economic stability and ensuring that the public and private sectors are not competing to access funding.

The CBJ governor underlined the financial, credit and political measures as steps that spared the economy more harms and put it on the right track despite the difficulty of the previous stage.

The official highlighted a 3 per cent economic growth last year indicating that foreign reserves at the CBJ went up to $12 billion and the foreign investment flow to Jordan amplified by around 20 per cent until September.

Fariz said exports’ competitiveness has improved, particularly the untraditional produce, which went up by 7.9 per cent in 2013.

DEAD SEA — Experts on Thursday pointed to inadequate funding as the main cause inhibiting the growth of Jordanian small businesses into larger ventures.

Describing small-and medium-sized enterprises (SMEs) in the Kingdom as a “static” sector despite its huge magnitude, they lamented the “inflexibility” hindering its development.

“The sector is rigid. Small businesses remain small due to the lack of funding,” Omar Razzaz, chairman of the King Abdullah II Fund for Development, told a conference on the role of the private sector in supporting the economy.

Speaking at the conference entitled “Private Sector Led-Growth: promoting entrepreneurship, MSME development and job creation in Jordan”, he stressed the need a “structural” unemployment problem indicating that economic growth in Jordan is not accompanied by a decline in unemployment rates among citizens.

“It is one of the paradoxes of our economy,” Razzaz said.

Participants at the event, organised by the Jordan Enterprises Development Corporation (JEDCO) in cooperation with the “Mubadara” parliamentary initiative, listed access to finance, tax rates and lack of guidance and training as the main challenges facing micro, small, and medium enterprises (MSMEs).

“Citizens with innovative and applicable ideas are discouraged from implementing them due to banking requirements in terms of guarantees, interest rate and repayment period,” JEDCO Chief Executive officer Yarub Qudah said, calling for establishing a national fund to support SMEs.

Mohammad Amaireh from the Central Bank of Jordan revealed that a credit bureau will be established at the bank this year to provide information to banks on accredited entities that provide partial funding to SMEs in order to cooperate with them.

With small- and medium-sized enterprises (SMEs) representing nearly 97 per cent of the total private sector businesses, participants discussed ways to come up with an applicable national strategy that identifies funding and coordinating entities.

According to Luis Abughattas, European Union (EU) programmes team leader at JEDCO, Jordan along with other countries that need economic reforms, suffers from growth slowdown, sluggish productivity and relative high investment ratio, but not in tradable activities.

He noted that countries should prioritise developing capabilities at the social and company levels in order to overcome the aforementioned challenges.

The conference provided an opportunity for representatives of the public and private sectors, the EU and international organisations working in the area of financing and development to discuss best practices to promote entrepreneurship and present a draft on the national strategy and regulations governing SMEs.

AMMAN — Arab Bank Group announced in a press statement on Saturday that it weathered the challenging environment in the region with a record growth in 2013.

“Net operating income before provisions and taxes exceeded the $1 billion mark,” the press release said, pointing out that the group’s net profit after tax surged by 43 per cent to $501.9 million at the end of 2013 compared with $352.1 million at the end of 2012.

According to the press release, the board of directors has recommended distributing cash dividends at a rate of 30 per cent for the financial year ended in December 2013 and one free share for each fifteen shares.

“The bank has shown consistent solid growth over the last three years with profits growing from $305.9 million in 2011 to $352.1 million in 2012 and to $501.9 millioni n 2013,” the bank indicated. “Dividends payouts have also increased from 25 per cent in 2011 to 30 per cent in 2012 to 37 per cent in 2013.”

It pointed out that loans increased by 3 per cent from $22.5 billion in 2012 to $23.1 billion in 2013 and that customer deposits went up by 5 per cent to $1.5 billion from $32.9 billion in 2012 to $34.4 billion at the end of last year.

Noting that liquidity remains a key pillar of strength for Arab Bank, the loan to deposit ratio stood at 67.1 per cent and capital adequacy ratio at a solid 15.15 per cent.

Sabih Masri, chairman of Arab Bank, said in the press release that the solid growth reflects the bank’s prudent policies and strategic initiatives besides the confidence of customers in Arab Bank.

Chief Executive Officer Nemeh Sabbagh attributed the bank’s success in achieving several key strategic objectives in 2013, despite the challenges that emerged during the year, to higher operating revenues and lower spending.

Besides controlling operating expenses, Sabbagh added that the bank has continued to improve the quality of the credit portfolio with the provisions coverage ratio for non-performing loans in excess of 100 per cent, excluding the value of collaterals held.

Masri expressed confidence that the bank will continue to show strong performance notwithstanding the challenging regional environment.”

The bank’s results are subject to the final approval of the Central Bank of Jordan.

Separately, the bank’s share price ended last week’s trading at JD10.200, after recent jumps from below JD7. 

TOKYO — Toyota sold a record 9.98 million vehicles last year, it pointed out Thursday, outpacing rivals General Motors (GM) and Volkswagen to maintain its title of world’s biggest automaker.

The Japanese auto giant’s highest-ever annual sales volume came thanks to a weaker yen as well as strong US and China sales, signalling it had recovered from a series of damaging safety recalls and Japan’s 2011 quake-tsunami disaster.

The figures beat US-based GM, which said it sold 9.71 million cars last year, while Germany’s Volkswagen logged annual sales of 9.5 million.

Toyota broke GM’s decades-long reign as world’s top automaker in 2008 but lost the crown three years later as the quake-tsunami hammered production and disrupted the supply chains of Japanese automakers.

However, in 2012 it once again overtook its Detroit rival, which sells the Chevrolet and luxury Cadillac brands. GM’s strong results come after it emerged from bankruptcy and a government bailout during the 2008 global economic crisis.

Toyota, maker of the Camry sedan and Prius hybrid, expects this year to become the first automaker to break the 10 million vehicle sales barrier.

That growth would be driven by overseas demand — Toyota expects volume at home to slip 5 per cent this year as consumer demand takes a hit from an April sales tax hike.

Toyota has outmanoeuvred other automakers with a “comprehensive edge” in product lineup, sales network and cost structure, said SMBC Nikko Securities auto analyst Shotaro Noguchi.

“They have maintained that balance well, compared to its rivals,” he added. “Toyota should have reached the 10 million mark sooner if they had not faced major negative factors like the impact of the quake disaster and flooding in Thailand.”

But he warned that the auto giant should not get complacent.

“If they only pay attention to production and sales figures, they could lose their competitive edge and wind up in trouble,” he indicated

China, emerging markets driving sales

The sales figures cap off an impressive comeback for Toyota, which took a heavy blow from a series of mass recalls affecting millions of cars that damaged its once-stellar reputation for quality and safety and led to US congressional hearings in 2010.

The firm expects a net profit of 1.67 trillion yen ($16.02 billion) in the fiscal year to March thanks to a sharply weaker yen and improving sales in North America.

Toyota has ramped up its drive to tap emerging markets while key US demand has also been on the upswing, helping the firm book ever-increasing profits with its half-year earnings surging 82.5 per cent.

Japanese industry has benefited from the big-spending and easy-money policies of Prime Minister Shinzo Abe, with huge monetary easing measures from the premier’s hand-picked team at the Bank of Japan helping push down the currency.

The weaker currency boosts Japanese manufacturers’ bottom line by making them more competitive overseas and inflating repatriated overseas profits.

The latest sales also signal improving demand in China after Japanese automakers were hammered in 2012 by a damaging consumer boycott in the world’s biggest vehicle market that was sparked by a territorial spat between Tokyo and Beijing.

Toyota has also announced plans to develop components for hybrid vehicles with two Chinese automakers, in an unprecedented technology-sharing deal aimed at increasing green car sales in the fast-growing market.

The move marked shift away from Japanese carmakers’ traditional reluctance over such deals for fear of losing their competitive edge.

Previously, Toyota would make key components such as batteries and motors in high-cost Japan and then ship them to joint ventures overseas. But that drove up the price of models such as its Prius, which has seen sluggish sales in China.

China’s pollution problem has stoked big demand for environmentally friendly cars, such as electric and fuel-cell vehicles, while officials have promised stricter emissions standards to deal with the mushrooming public-health issue.

Toyota’s shares fell 1.32 per cent to 6,256 yen in Tokyo before the sales figures were published.

FRANKFURT — Sub-Saharan Africa is becoming increasingly attractive for foreign investors, even if a lack of infrastructure and other factors are holding back growth in the region, a Commerzbank study found Thursday.

"Persistently low global economic growth has not affected sub-Saharan Africa much so far," the German bank wrote in the study.

"The international financial crisis has barely touched the region. With real economic growth of 5 per cent in 2013 and an anticipated 6 per cent in 2014, the region ranks number two behind Asia" among the world's most dynamic regions, Commerzbank pointed out.

The countries in the region, with their wealth of raw materials, are benefitting from high commodity prices and are becoming lucrative growth markets that are awaking international interest.

"Even if there are still deficits in individual countries in democratisation and the efficiency of political institutions, political and economic stability has increased," the study found.

Rainer Schaefer, head of Commerzbank's country risk analysis, stressed that improvement and expansion of infrastructure were key to raising the economic dynamism and boosting exports from the region.

To meet its fast-growing energy needs, sub-Saharan Africa could become a key player in environmentally friendly and cost-efficient energy technology, suggested Florian Witt, head of Commerzbank's Africa department.

"There are plenty of opportunities for foreign investors with corresponding know-how in the areas of solar and wind technology and even biogas, " Witt indicated.

Separately, China has brought cheap consumer goods, roads and schools to many parts of Africa over the last decade but the continent's leaders are increasingly pushing for it to provide more of what many Africans want most: jobs.

From Pretoria to Abuja, governments have begun voicing frustration that China's use of Africa as a source of natural resources and a market for its goods may be hindering the continent haul its billion people out of poverty.

A recent report by the UN Economic Commission for Africa (UNECA) highlighted the risk that the continent's relationship with the world's second largest economy could strangle its attempts to industrialise.

China's trade with Africa ballooned from $10 billion in 2000 to an estimated $200 billion last year — four years after it overtook the United States as the continent's largest partner.

But some 85 per cent of China's exports from Africa are raw materials, such as oil and minerals. According to the African Development Bank, most minerals mined in Africa are exported raw, meaning the jobs and wealth from processing them is created elsewhere.

A flood of Chinese produce, meanwhile, has accelerated the decline in industrialisation since the 1980s. Africa's textile industry alone lost 750,000 jobs over the last decade, according to the Johannesburg-based Brenthurst Foundation.

Even in the continent's manufacturing powerhouse South Africa, some 40 per cent of footwear and fabrics come from China.

Expressing the concerns of many African governments, South African President Jacob Zuma bluntly warned that such an unbalanced pattern of trade was "unsustainable".

"The romanticised relationship surrounding China's investment in Africa has passed," said Alex Vines, head of the Africa programme at the Chatham House Research Institute.

"With the world's youngest and fastest-growing population, the main pressure on governments in Africa is to provide jobs. Having the Chinese take those jobs doesn't help," he added.

Vying for jobs

It is true China's boom has brought many benefits to Africa. Beijing has won fulsome praise from many governments for its willingness to finance massive infrastructure projects without conditions relating to democracy, governance and human rights — the "strings" Africa has often criticised in aid from the West.

Chinese economic growth rates averaging 10 per cent a year for almost a decade fuelled a commodities "super-cycle" which has lifted Africa's own growth to unprecedented rates.

And the cheap Chinese goods being imported help make everyday living more affordable and develop the consumer sector across the continent.

But in many countries, China's demand for ore, timber and oil is forcing African states to specialise at the bottom of the value chain in areas with low productivity gains, UNECA said.

With Africa supplying one-third of China's oil, much of it from Angola, UNECA highlighted the risk of “Dutch Disease” whereby demand for raw materials inflates a currency, making other sectors uncompetitive against foreign competition.

Even in Senegal, an arid West African country not usually associated with the “resource curse”, domestic peanut processing factories face the threat of being driven out of business as Chinese exporters buy up the crop to ship home.

Attempts to legislate for industrialisation, such as bans on the export of unprocessed logs from Gabon and Mozambique, have often proved fruitless. In Gabon, where Beijing has broken French dominance over logging, an estimated 60 per cent of timber is exported illegally to China.

According to respected Nigerian Central Bank Governor Lamidu Sanusi, China's extraction of resources from Africa had all the attributes of "colonialism".

In an apparent response to such criticism, Chinese President Xi Jinping stressed during an African tour last year that his country was seeking a win-win partnership.

"The development of China will be an unprecedented opportunity for Africa, and Africa's development will be the same for my country," he told lawmakers in Congo Republic.

Beijing has provided much-needed capital to a continent starved of investment. The China Import-Export Bank is the continent's largest creditor and Beijing has promised $20 billion more in loans over the next three years.

But Beijing's money comes with its own strings: it must be spent on Chinese goods or Chinese-built infrastructure. And Chinese firms often source their supplies and workers back home.

The number of Chinese in Africa has increased tenfold over the last 20 years to an estimated one million. From shopkeepers in Malawi to prostitutes in Cameroon, Africans complain that Chinese competition is making life tougher.

Unlike Western immigrants, the Chinese diaspora comes from the poorest section of society and competes directly for work with Africans, some 80 per cent of whom are in "vulnerable employment" according to the International Labour Organisation.

In Ghana, tensions flared into violence last year when police and residents attacked artisanal Chinese goldminers, claiming they were driving locals out of the industry. Many Chinese were brutally beaten and some 200 were deported.

Frustration has also emerged with the operating practices of some Chinese firms. In Gabon, Chinese refiner Sinopec's Addax Petroleum is embroiled in a $1 billion legal dispute over an oil licence after the government alleged it failed to pay customs duties and respect other laws.

Zambia, where Chinese mines have a record of violent labour disputes, revoked three licences for the Chinese-owned Collum coal mine, alleging non-payment of royalties taxes, and poor environmental and safety records.

"Now more countries are engaging with Africa, there are more options. Several countries are looking at Chinese investment with a more critical eye," indicated Razia Khan, head of Africa research at Standard Chartered Bank. "There will be more and more scrutiny of these contracts."

Responding to the criticism from Nigeria and South Africa, China's commerce ministry has encouraged firms to increase investment in Africa. China is launching Special Economic Zones for manufacturing companies on the continent.

Though it is Africa's largest trading partner, China has only 6 per cent of the stock of foreign investment — well behind France on 18 per cent — according to UN trade body UNCTAD.

Nigeria’s finance minister has urged African countries to woo Chinese manufacturing firms into offshoring their production as their domestic labour costs rise.

"We need to prepare ourselves to provide a welcoming home for some of the industries where the Chinese will no longer be competitive," she told a conference in London last year.

AMMAN — Jordanians’ remittances went up by 4.4 per cent in the year 2013, according to the Central Bank of Jordan (CBJ) figures.

The remittances totalled around $3.65 billion in 2013 up from around $3.45 billion in 2012, according to the CBJ.

AMMAN — Jordan Chamber of Commerce (JCC) on Wednesday expressed reservations regarding the draft laws on investment and taxes, highlighting the adverse effects they will have in their present blueprint on the private sector and the investment environment in Jordan.

At a press conference, JCC President Nael Kabariti said the two proposed pieces of legislation should be drafted together, and submitted to the Lower House as one, because they are interconnected.

Kabariti said although the government reduced taxes on individuals and companies in 2009, there was an increase in the amount of collected taxes.

This means that reducing taxes did not lower government revenues. Accordingly, the government should not consider raising the income tax as a means to reduce the budget deficit, not taking into account the main economic indicators on economic growth, inflation and unemployment, he noted. 

BAGHDAD — Iraq’s oil exports and revenues declined in 2013 compared to the previous year, official figures showed Wednesday, despite efforts to dramatically ramp up crude sales to fund much-needed reconstruction.

Exports totalled 872.3 million barrels, or 2.39 million barrels per day (bpd), last year compared with 2.42 million bpd in 2012, according to oil ministry figures.

Revenues dipped to $89.22 billion (66.08 billion euros) from $94.02 billion.

Iraq relies on oil exports for nearly all of its government revenue, and crude sales account for most of the gross domestic product (GDP).

The drop in exports was attributed to various periods of bad weather, sabotage against the main northern pipeline and maintenance work at the main export terminal in the south.

But the ministry has trumpeted investment in export and storage infrastructure, which it said would pay off soon.

Additionally, it says new fields are due to begin production, helping the country increase its output and exports in 2014.

Overall production averaged 3.07 million bpd in December, according to the International Energy Agency (IEA).

Officials aim to increase capacity from 3.2 million bpd now to 9 million bpd by 2017, a target the International Monetary Fund and IEA have warned is overly optimistic.

Baghdad is seeking to dramatically ramp up exports to fund desperately needed reconstruction of Iraq’s conflict-battered infrastructure and economy.

Oil ministry spokesman Assem Jihad told AFP that while exports and sales dropped in 2013, investment in pipeline and export infrastructure, as well as major storage facilities, would reap dividends in the coming year.

“All of these will increase the amount we export, and limit the effects of any stoppages,” he said.

He also pointed to expected increases in production from the southern fields of Badra and West Qurna due later in the year.

For December, exports recovered from multi-month lows earlier in the year, but were still below their peak, according to oil ministry data.

Iraq exported 72.6 million barrels in December, an average of 2.34 million bpd, bringing in revenues of $7.47 billion.

The overall monthly figure was higher than in November, and also represented a marked increase on September, when exports averaged just 2.07 million bpd.

“The exports and income in December was an increase... even though there was bad weather and technical repairs in the southern ports,” Jihad said in a statement.

Jihad added that efforts to remove remnants of decades of war from the Shatt Al Arab waterway, through which Iraq ships the lion’s share of its exports, had also held back sales.

ABU DHABI — The United Arab Emirates (UAE) wants to boost its clean energy technologies and investment through cooperation with global leaders in the industry, such as Denmark

On Monday, the two countries signed an agreement to cooperate in nine areas to advance renewable energy and sustainability globally.

The agreement was signed by Sultan Al Jaber, UAE minister of state and chief executive officer of Masdar, and Rasmus Helveg Petersen, Danish minister of development cooperation. The signing ceremony was attended by Danish Crown Prince Frederik.

The two countries will cooperate in the fields of policy exchange to support sustainable development; commercial renewable energy development; advancing carbon, capture, usage and storage technologies, and human capital development through education and job exchanges, among other areas.

Denmark and the UAE are among the world’s leading new-energy, sustainability players.

The UAE, through Masdar, is at the forefront of renewable energy and clean technology investment — delivering nearly 1 gigawatt of clean power globally.

Denmark is widely recognised as one of the world’s leading sustainable societies. Denmark is set to generate 100 per cent of its energy from renewable sources and nearly 11 per cent of the county’s total exports are green technology products, according to official data.

Danish Ambassador to the United Arab Emirates Poul Hoiness told The Jordan Times on the sidelines of the agreement that in December of last year nearly 75 per cent of Denmark’s electricity generation was from produced from the wind energy.

“The world must diversify its energy sources and accelerate cutting-edge technologies that enable societies to be more resource efficient,” Jaber said during the signing ceremony, adding that more international cooperation is needed to meet rising global energy demands.

Under the agreement, one of the areas of collaboration is establishing a Danish Incubator at Masdar City — Abu Dhabi’s low-carbon, sustainable city — to serve as a hub for Danish companies and to accelerate the adoption of sustainability technologies in the MENA region.

Executives from some of Denmark’s leading multinational companies are taking part in the World Future Energy Summit, being held as part of the Abu Dhabi Sustainability Week.

ABU DHABI — Thousands of energy experts, environmentalists, industry leaders and government delegates from over 150 countries are in the United Arab Emirates (UAE) to attend the Abu Dhabi Sustainability Week (ADSW), which officially started Monday.

The opening ceremony of the event was attended by Abu Dhabi Crown Prince and Deputy Supreme Commander of the UAE Armed Forces Sheikh Mohammed Bin Zayed Al Nahyan in the presence of heads of states from various countries, particularly from Africa.

This year’s ADSW featured three major events, the 7th edition of the 2014 World Future Energy Summit (WFES), the EcoWASTE summit — a conference and an exhibition on sustainable waste management that was held for the first time — and the International Water Summit.

The event is being held at the prestigious Abu Dhabi National Exhibition Centre.

The ADSW is hosted by Masdar, which is a commercially driven energy company based in Abu Dhabi and is a subsidiary of the government-owned Mubadala Development Company.

Masdar’s core mission is to invest in clean energy industry in the UAE and around the world.

The opening ceremony’s theme focused on Africa’s energy challenges and how they impede the region’s economic development.

The topic of Africa was highlighted during a panel discussion that brought together Senegal President Macky Sall, Sierra Leone President Ernest Bai Koroma, and Ethiopian Prime Minister Hailemariam Desalegn. It was moderated by Adnan Amin, the director general of International Renewable Energy Agency (IRENA).  

In his speech at the opening ceremony, Sultan Al Jaber, the UAE minister of state and the chief executive officer of Masdar, indicated that with six of the 10 fastest growing economies of the past decade located in sub-Saharan Africa “the development opportunities in this region are tremendous”.

“But these economies are also hampered by energy industries beset by high costs, poor reliability and often limited or no access to the grid,” Al Jaber said, stressing that access to clean technologies will enable developing economies to obtain efficient technologies and will allow them to adopt and scale the advanced technologies emerging on the market today.

“Providing safe, reliable and sustainable energy in sub-Saharan Africa, and in developing countries across the world, relies on our ability to rethink the energy sector,” he added, emphasising the importance of meeting the increasing energy demand worldwide through green technologies and sustainable solutions.

Amin noted that Africa is seeing a sustained growth rates as it has been one of the fastest growing regions in the past decade with an expected economic growth rate of 5 - 6 per cent annually in the coming years.

Sall described Africa as the “continent of future” as it holds large opportunities for renewable energy including his country.

He called on rich countries and private sector to consider Africa as an important partner in the global sustainable economic development.

“Africa is now prepared to move forward,” said Koroma. “Africa should not be defined by what has happened in the past.”

“The issues that are…sadly happening in South Sudan should not be used to define what is Africa. We now have countries with governments committed to transparency and good governance,” he added.

“There is much potential in hydro, geothermal and wind energy — resources that must be harvested not only for Ethiopia, but for all of Africa,” said the Ethiopian premier.

According to IRENA, despite the continent’s growing stability, impressive macroeconomic statistics and growing middle class, more than 600 million Africans still lack safe and reliable access to electricity.

A recent report by the international agency, pointed out that sub-Saharan Africa will need an additional 250 gigawatts of power by 2030 in order to meet the demands of future population and economic growth. Currently electricity blackouts and dependence on pricey diesel fuel generation costs many African economies from 1 - 5 per cent of annual gross domestic product.

The report said that solar energy, however, has huge renewable energy potential throughout the continent, and wind power is virtually untapped.

More than 30,000 people are taking part in ADSW, which is the Middle East’s largest gathering focused on addressing the challenges affecting energy, water and sustainable development.

A total of 800 companies from 40 countries are exhibiting their technologies in the event.