A Brief Look at Jordanian Economic Development
The Importance of ASEZ and Qualifying Industrial Zones to Growth
Apr 8, 2009
Limited access to Israeli markets and the introduction of United Nations sanctions in Iraq, followed by the fall of Saddam Hussein, meant that Jordan’s opportunitiy to do business in the Middle East with one of its major trading partners was substantially curtailed. Although as the security situation in Iraq improves Jordan should see a growing economic benefit.
Since King Abdullah succeeded his late father King Hussein in 1999 he has established and sustained a commitment to both social and economic reforms.
In an effort to balance the budget, the King and the Jordanian government have worked hard to introduce economic reforms, increasing the pace of privatisation and ending subsidies on a range of consumer items including petrol. The country however continues to receive high levels of international subsidy from the US and EU.
Member of World Trade Organisation
On 11 April 2000, the Hashemite Kingdom ofJordan became the 136th member of the World Trade Organisation (WTO) allowing it to join other governments at the negotiating table when trade agreements or trade disputes or indeed the lowering of trade barriers are discussed.
Aqaba Special Economic Zone (ASEZ)
The Aqaba Special Economic Zone (ASEZ) was established in 2001 by the Jordanian government. It was designed to offer a low tax, liberalised investment opportunity for investors.
ASEZ offers investors a number of incentives including:
- Traded goods are exempt from customs taxes and fees (some exceptions)
- Business activities are subjected to a 5 percent corporate tax (some exceptions)
- No restrictions on repatriation of capital and profits
- Registered entities benefit from preferential access Jordan possesses with the EU and the US through QIZ
- Exemption from taxes on distributed dividends and profits
(Information courtesy of the Special Economic Zone Authority)
There are an impressive number of projects either completed or in the pipeline, for example, a range of tourism related developments including some of the world’s best-known companies: Marriott, Intercontinental, and Hilton are taking shape. New schools, hospitals, retail units and a number of development projects are included in the mix.
Qualifying Industrial Zones (QIZ’s)
Qualifying Industrial Zones, which were established in order to foster closer regional integration and stability are specific geographical areas in Jordan which have been accorded the QIZ status by the US and Jordanian governments.
This measure allows Jordan to export products manufactured in these zones to the US without payment of US duty or taxes. These products must include an 8% input from Israel to qualify for QIZ status. The US also has a similar agreement with Egypt and Israel although this demands an 11.7 input from Israel.
The figures listed below do allow some room for optimism but Jordan still has a long way to go. A stable Middle East will greatly increase the pace of economic development in a number of areas, particularly tourism and increased trade with Iraq.
Key Jordanian economic indicators and statistics:
- GDP – US$ 19.1 billion (2008 est.)
- GDP per capita – US$ 5,000 (2008)
- Real GDP growth – 5.8 per cent (2008)
- GDP by sector:
- Agriculture 3.6%
- Industry 10.1%
- Services 77.4% (2001 est.)
- Inflation – 14.9 per cent (2008)
- Unemployment 12.9% (official rate), 30% (unofficial rate% 2008 est.)
(Figures courtesy of CIA World Factbook, original source the World Bank)
Sources:
The Hashemite Kingdom of Jordan, Foreign Ministry
UK Foreign and Commonwealth Office, Jordan country profile last reviewed February 2009
CIA World Factbook, Jordan country profile updated April 2009
World bank, Jordan country profile
Israeli Ministry of Industry, Trade and Labour, Regional Cooperation
Jordan Investment Board, Aqaba Special Economic Zone Authority, Doing Business in Jordan
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