US embassy cable - 02AMMAN4060

JORDAN: 2002 INVESTMENT CLIMATE STATEMENT

Identifier: 02AMMAN4060
Wikileaks: View 02AMMAN4060 at Wikileaks.org
Origin: Embassy Amman
Created: 2002-07-23 07:04:00
Classification: UNCLASSIFIED
Tags: EINV KTDB KIDE EFIN ECON ETRD JO OPIC
Redacted: This cable was not redacted by Wikileaks.
This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS SECTION 01 OF 12 AMMAN 004060 
 
SIPDIS 
 
STATE FOR EB/IFD/OIA 
STATE PLEASE PASS TO USTR 
 
E.O. 12958: N/A 
TAGS: EINV, KTDB, KIDE, EFIN, ECON, ETRD, JO, OPIC 
SUBJECT:  JORDAN: 2002 INVESTMENT CLIMATE STATEMENT 
 
REF: SECSTATE 98069 
 
1. OPENNESS TO FOREIGN INVESTMENT 
 
SINCE KING ABDULLAH SUCCEEDED TO THE THRONE IN 
1999, JORDAN HAS TAKEN STEPS TO ENCOURAGE FOREIGN 
INVESTMENT.  KEY REFORMS HAVE BEEN UNDERTAKEN IN 
THE INFORMATION TECHNOLOGY, TOURISM, AND SERVICES 
SECTORS.  FOREIGN AND DOMESTIC INVESTMENT LAWS 
GRANT SPECIFIC INCENTIVES TO INDUSTRY, AGRICULTURE, 
HOTELS, HOSPITALS, MARITIME AND RAIL 
TRANSPORTATION, LEISURE AND RECREATION PROJECTS, 
AND CONVENTION AND EXHIBITION CENTERS. IN DECEMBER 
2001, PROJECTS FOR THE TRANSPORTATION AND 
DISTRIBUTION OF WATER, GAS, AND OIL/OIL DERIVATIVES 
USING PIPELINES WERE ADDED TO THIS LIST.  THE LAWS 
ALSO ALLOW THE CABINET FLEXIBILITY IN OFFERING 
INVESTMENT INCENTIVES TO OTHER SECTORS. 
 
JORDAN ACCEDED TO THE WORLD TRADE ORGANIZATION 
(WTO) IN APRIL 2000.  IN ADDITION, A U.S.-JORDAN 
FREE TRADE AGREEMENT (FTA) ENTERED INTO FORCE ON 
DECEMBER 17, 2001.  IN MAY 2001, THE GOVERNMENT 
CONVERTED THE AQABA PORT AND SURROUNDING AREA INTO 
A SPECIAL ECONOMIC ZONE (SEZ) OFFERING SPECIAL 
INCENTIVES TO INVESTORS (SEE BELOW).  THE 
GOVERNMENT IS REVAMPING THE INVESTMENT PROMOTION 
SYSTEM IN JORDAN.  IT IS RE-EXAMINING INVESTMENT 
INCENTIVES, AND IS CONSIDERATING THE CONSOLIDATION 
OF ALL INVESTMENT PROMOTION ACTIVITIES UNDER A NEW 
"JORDANIAN AGENCY FOR ECONOMIC DEVELOPMENT (JAED)". 
THESE DEVELOPMENTS WILL LIKELY LEAD TO EXPANDED 
INVESTMENT OPPORTUNITIES IN JORDAN FOR U.S. 
INVESTORS. 
 
JORDAN'S INVESTMENT LAWS TREAT FOREIGN AND LOCAL 
INVESTORS EQUALLY, WITH THE FOLLOWING EXCEPTIONS 
(AS PER REGULATION NO. 54 OF 2000, ENTITLED "NON- 
JORDANIAN INVESTMENTS PROMOTION REGULATION"): 
 
--    FOREIGN INVESTORS MAY NOT OWN MORE THAN 50 
PERCENT OF PROJECTS IN: 
 
   -- CONSTRUCTION AND CONTRACTING; 
   --     WHOLESALE AND RETAIL TRADE; 
   -- TRANSPORT  (MARITIME, AIR AND TRAIN 
TRANSPORT) AND AUXILIARY SERVICES; 
   --     WASTEWATER TREATMENT; 
   -- FOOD SERVICES; 
   -- TRAVEL AGENT SERVICES; 
   -- IMPORT AND EXPORT SERVICES; 
   -- ADVERTISING SERVICES; 
   --     A NUMBER OF BUSINESS-RELATED AND 
COMMERCIAL SERVICES; 
 
-- UNDER THE TERMS OF THE U.S.-JORDAN FTA, FOREIGN 
INVESTORS ARE LIMITED TO 60 PERCENT OWNERSHIP IN 
PUBLISHING AND IN AIRCRAFT MAINTENANCE AND REPAIR 
SERVICES. 
 
-- FOREIGN INVESTORS MAY NOT HAVE WHOLE OR PARTIAL 
OWNERSHIP OF: 
   -- INVESTIGATION AND SECURITY SERVICES; 
   -- SPORTS CLUBS (EXCEPT FOR HEALTH CLUBS) 
   -- STONE QUARRYING FOR CONSTRUCTION PURPOSES 
   -- CUSTOMS CLEARANCE SERVICES 
   -- LAND TRANSPORTATION OF PASSENGERS AND CARGO 
USING TRUCKS, BUSES AND TAXIS. 
 
A MINIMUM CAPITAL REQUIREMENT OF JD 50,000 (USD 
70,000) IS SET FOR FOREIGN INVESTORS. THIS 
REQUIREMENT DOES NOT APPLY TO PARTICIPATION IN 
PUBLIC SHAREHOLDING COMPANIES. 
 
THERE IS NO FORMAL SCREENING OR HOST GOVERNMENT 
SELECTION PROCESS FOR FOREIGN INVESTMENT.  HOWEVER, 
INVESTORS IN LARGE PROJECTS FIND THAT THE INFORMAL 
APPROVAL OF LOCAL AND CENTRAL GOVERNMENT OFFICIALS 
HELPS TO ENSURE GOVERNMENTAL COOPERATION IN PROJECT 
IMPLEMENTATION. 
 
THE LAW STIPULATES THAT EXPROPRIATION IS PROHIBITED 
UNLESS DEEMED IN THE PUBLIC INTEREST.  IT PROVIDES 
FOR FAIR COMPENSATION TO THE INVESTOR IN 
CONVERTIBLE CURRENCY. 
 
SINCE THE GOVERNMENT BEGAN ITS PRIVATIZATION 
PROGRAM IN 1998, FOREIGN COMPANIES HAVE BOUGHT 
STAKES IN THE JORDAN CEMENT FACTORIES COMPANY AND 
THE JORDAN TELECOMMUNICATIONS COMPANY, ACQUIRING 
MANAGERIAL CONTROL OF BOTH FIRMS.  JORDAN'S FIRST 
INDEPENDENT POWER PROJECT (IPP) WAS AWARDED TO THE 
BELGIAN FIRM TRACTABEL ON THE BASIS OF A BUILD-OWN- 
OPERATE (BOO) AGREEMENT.  IN ADDITION, THE 
GOVERNMENT IS SEEKING A STRATEGIC FOREIGN PARTNER 
TO BUY UP TO A 49 PERCENT STAKE OF ROYAL JORDANIAN 
(RJ) AIRLINE'S OPERATING DIVISION.  RJ'S DUTY-FREE 
OPERATIONS AND CATERING SERVICES HAVE BEEN SOLD TO 
SPANISH AND BRITISH FIRMS RESPECTIVELY.  STILL FOR 
SALE ARE THE ENGINE OVERHAUL FACILITY, THE AIRCRAFT 
MAINTENANCE DIVISION, AND THE FLIGHT TRAINING 
CENTER. 
 
IN DECEMBER 2001, THE GOVERNMENT SIGNED A CONTRACT 
WITH NM ROTHSCHILD & SONS TO EVALUATE AND RECOMMEND 
A PRIVATIZATION SCHEME FOR THE ELECTRICITY 
GENERATING AND DISTRIBUTION COMPANIES (CEGCO, IDECO 
AND EDCO).  JORDAN HAS ALSO ANNOUNCED ITS INTENTION 
TO PRIVATIZE THE JORDAN PHOSPHATE MINES COMPANY AND 
TO SELL A STAKE IN THE ARAB POTASH COMPANY TO 
STRATEGIC PARTNERS.  THE GOVERNMENT IS SEEKING AN 
INTERNATIONAL INVESTOR TO DEVELOP A 370 KM GAS- 
PIPELINE FROM AQABA TO ZARQA ON A BOO BASIS. 
OPPORTUNITIES FOR PRIVATE SECTOR PARTICIPATION IN 
THE WATER AND POSTAL SECTORS ARE ALSO EXPECTED IN 
2002. 
 
WHILE THESE EFFORTS HAVE COMBINED TO MAKE JORDAN'S 
INVESTMENT CLIMATE MORE WELCOMING, SOME LARGE U.S. 
INVESTORS HAVE REPORTED THAT THERE WERE MANY 
"HIDDEN COSTS" INVOLVED WHEN INVESTING IN JORDAN 
DUE TO BUREAUCRACY, RED TAPE, VAGUE REGULATIONS AND 
CONFLICTING JURISDICTIONS.  INVESTORS SHOULD 
EXECUTE DUE DILIGENCE IN EXPLORING INVESTMENT 
OPPORTUNITIES AND CONCLUDING PURCHASES. 
 
2. CONVERSION AND TRANSFER POLICIES 
 
JORDAN'S LIBERAL FOREIGN EXCHANGE LAW ENTITLES 
FOREIGN INVESTORS TO REMIT ABROAD, IN A FULLY 
CONVERTIBLE FOREIGN CURRENCY, FOREIGN CAPITAL 
INVESTED, INCLUDING ALL RETURNS, PROFITS, AND 
PROCEEDS ARISING FROM THE LIQUIDATION OF INVESTMENT 
PROJECTS.  NON-JORDANIAN ADMINISTRATIVE AND 
TECHNICAL EMPLOYEES ARE PERMITTED TO TRANSFER THEIR 
SALARIES AND COMPENSATION ABROAD. 
 
THE JORDANIAN DINAR IS FULLY CONVERTIBLE FOR ALL 
COMMERCIAL AND CAPITAL TRANSACTIONS. THE JD IS 
PEGGED TO THE U.S. DOLLAR AT AN EXCHANGE RATE OF 
APPROXIMATELY 1 JD TO USD 1.41. 
 
LICENSED MONEY-EXCHANGERS ARE SUPERVISED BY THE 
CENTRAL BANK, BUT ARE FREE TO SET THEIR OWN 
EXCHANGE RATES DEPENDING ON MARKET CONDITIONS. 
UNLIKE BANKS, THEY DO NOT PAY THE CENTRAL BANK 
COMMISSIONS FOR EXCHANGE TRANSACTIONS, GIVING THEM 
A COMPETITIVE EDGE OVER BANKS. 
 
OTHER FOREIGN EXCHANGE REGULATIONS INCLUDE: 
 
--NON-RESIDENTS ARE ALLOWED TO OPEN BANK ACCOUNTS 
IN FOREIGN CURRENCIES.  THESE ACCOUNTS ARE EXEMPTED 
FROM ALL TRANSFER-RELATED COMMISSION FEES CHARGED 
BY THE CENTRAL BANK. 
 
-- BANKS ARE PERMITTED TO PURCHASE AN UNLIMITED 
AMOUNT OF FOREIGN CURRENCY FROM THEIR CLIENTS IN 
EXCHANGE FOR JD ON A FORWARD BASIS.  BANKS ARE 
PERMITTED TO ENGAGE IN REVERSE OPERATIONS INVOLVING 
THE SELLING OF FOREIGN CURRENCY IN EXCHANGE FOR JD 
ON A FORWARD DEAL BASIS FOR THE PURPOSE OF COVERING 
THE VALUE OF IMPORTS. 
 
-- THERE ARE NO RESTRICTIONS ON THE AMOUNT OF 
FOREIGN CURRENCY THAT RESIDENTS MAY HOLD IN BANK 
ACCOUNTS, AND THERE ARE NO CEILINGS ON THE AMOUNT 
RESIDENTS ARE PERMITTED TO TRANSFER ABROAD. 
 
--BANKS DO NOT REQUIRE PRIOR CENTRAL BANK APPROVAL 
FOR THE TRANSFER OF FUNDS, INCLUDING INVESTMENT- 
RELATED TRANSFERS. 
 
3. EXPROPRIATION AND COMPENSATION 
 
THERE ARE NO KNOWN CASES WHERE THE GOVERNMENT HAS 
EXPROPRIATED THE PRIVATE PROPERTY OF AN INVESTOR. 
 
4. DISPUTE SETTLEMENT 
 
UNDER JORDANIAN LAW, FOREIGN INVESTORS MAY SEEK 
THIRD PARTY ARBITRATION OR AN INTERNATIONALLY 
RECOGNIZED SETTLEMENT OF DISPUTES.  THE JORDANIAN 
GOVERNMENT RECOGNIZES DECISIONS ISSUED BY THE 
INTERNATIONAL CENTER FOR THE SETTLEMENT OF 
INVESTMENT DISPUTES (ICSID), OF WHICH IT IS A 
MEMBER.  JORDAN IS ALSO A MEMBER OF THE NEW YORK 
CONVENTION OF 1958 ON THE RECOGNITION AND 
ENFORCEMENT OF FOREIGN ARBITRAL AWARDS.  IN CASES 
WHERE THE GOVERNMENT (OR ITS AGENCIES) IS A PARTY 
TO THE DISPUTE, IT GENERALLY PREFERS SETTLEMENT IN 
LOCAL COURTS IF AN OUT-OF-COURT SETTLEMENT IS NOT 
FORTHCOMING.  JORDAN ABIDES BY WTO DISPUTE 
SETTLEMENT MECHANISMS.  DISPUTE SETTLEMENT 
MECHANISMS UNDER THE FTA ARE CONSISTENT WITH WTO 
COMMITMENTS. 
 
ARTICLE IX OF THE BILATERAL INVESTMENT TREATY 
(BIT), SIGNED IN 1997, ESTABLISHED PROCEDURES FOR 
DISPUTE SETTLEMENT. 
 
AS OF JUNE 2002 THERE WERE NO OUTSTANDING DISPUTES 
BETWEEN U.S. INVESTORS AND THE JORDANIAN 
GOVERNMENT. 
 
-- JORDAN'S LEGAL SYSTEM 
 
IN THE LEGISLATIVE PROCESS, DRAFT LAWS ARE PREPARED 
BY VARIOUS MINISTRIES, WHICH ARE THEN SUBMITTED TO 
THE CABINET AND SUBSEQUENTLY PRESENTED TO THE LOWER 
HOUSE OF PARLIAMENT FOR CONSIDERATION. ONCE PASSED 
BY THE LOWER HOUSE, DRAFT LAWS MUST BE APPROVED BY 
THE SENATE.  ALL LAWS REQUIRE ROYAL ASSENT AND MUST 
BE PUBLISHED IN THE NATIONAL GAZETTE BEFORE THEY 
COME INTO FORCE. 
 
SINCE PARLIAMENT'S DISSOLUTION IN MAY 2001, ALL 
LAWS APPROVED BY THE CABINET AND GIVEN ROYAL 
CONSENT ARE CONSIDERED TEMPORARY LAWS WHICH HAVE TO 
BE SUBMITTED TO PARLIAMENT FOR DEBATE AND APPROVAL 
ONCE IT RECONVENES AFTER PARLIAMENTARY ELECTIONS - 
CURRENTLY SLATED FOR FALL 2002. 
 
ACCORDING TO THE CONSTITUTION, THE JUDICIARY IS 
INDEPENDENT OF OTHER BRANCHES OF THE GOVERNMENT. IN 
SOME CASES, IT IS SUSCEPTIBLE TO POLITICAL PRESSURE 
AND INTERFERENCE BY THE EXECUTIVE. 
 
THE CONSTITUTION CLASSIFIES THE JUDICIARY INTO 
THREE CATEGORIES: RELIGIOUS COURTS, SPECIAL COURTS 
(E.G. MILITARY COURT, CUSTOMS COURT, INCOME TAX 
COURT) AND REGULAR COURTS.  VERDICTS RENDERED BY 
THE JORDANIAN JUDICIARY ARE BASED ON DECISIONS MADE 
BY A JUDGE OR A PANEL OF JUDGES. 
 
GENERAL LEGAL PROVISIONS ARE INCORPORATED WITHIN 
THE CIVIL CODE, UNLESS A SEPARATE, MORE SPECIALIZED 
LAW GOVERNS THE NATURE OF THE SPECIFIC 
RELATIONSHIP. 
 
COMMERCIAL ACTIVITIES ARE GOVERNED BY THE 
COMMERCIAL CODE.  BUSINESS CONTRACTS, SUCH AS 
COMMERCIAL AGENCY AND COMMISSION AGENCY CONTRACTS, 
ARE SUBJECT TO THE CODE'S PROVISIONS.  FINANCIAL 
PAPERS SUCH AS CHECKS AND PROMISSORY NOTES ARE ALSO 
DEALT WITH UNDER THE COMMERCIAL CODE. 
 
VARIOUS PROVISIONS IN THE COMMERCIAL CODE, THE 
CIVIL CODE, AND THE COMPANIES LAW GOVERN BANKRUPTCY 
AND INSOLVENCY.  A DRAFT BANKRUPTCY LAW HAS BEEN 
APPROVED BY THE CABINET AND IS EXPECTED TO COME 
INTO FORCE BY THE END OF 2002. 
 
5. PERFORMANCE REQUIREMENTS/INCENTIVES 
 
FOLLOWING JORDAN'S ACCESSION TO THE WTO, THE TRADE- 
RELATED INVESTMENT MEASURES (TRIMS) AGREEMENT CAME 
INTO FORCE.  INVESTMENT AND COMMERCIAL LAWS DO NOT 
CONTAIN ANY TRADE-RESTRICTIVE INVESTMENT MEASURES 
AND HAVE GENERALLY BEEN IN COMPLIANCE WITH TRIMS. 
 
INVESTMENT INCENTIVES TAKE THE FORM OF INCOME TAX 
AND CUSTOM-DUTIES EXEMPTIONS, WHICH ARE GRANTED TO 
BOTH JORDANIAN AND FOREIGN INVESTORS. 
 
THE COUNTRY IS DIVIDED INTO THREE DEVELOPMENT 
AREAS: ZONES A, B, AND C.  INVESTMENTS IN ZONE C, 
THE LEAST DEVELOPED AREAS OF JORDAN, RECEIVE THE 
HIGHEST LEVEL OF EXEMPTIONS. 
 
HOWEVER, ALL AGRICULTURAL, MARITIME TRANSPORT, AND 
RAILWAY INVESTMENTS ARE CLASSIFIED AS ZONE C, 
IRRESPECTIVE OF LOCATION.  HOTEL AND TOURISM- 
RELATED PROJECTS SET UP ALONG THE DEAD SEA COASTAL 
AREA, LEISURE AND RECREATIONAL COMPOUNDS, AND 
CONVENTION AND EXHIBITION CENTERS RECEIVE ZONE A 
DESIGNATIONS.  QUALIFIED INDUSTRIAL ZONES (QIZS) 
ARE CONSIDERED ZONE B PROJECTS UNLESS THEY FALL IN 
ZONE C.  THE THREE-ZONE CLASSIFICATION SCHEME DOES 
NOT APPLY TO NATURE RESERVES AND ENVIRONMENTAL 
PROTECTION AREAS, WHICH ARE GRANTED SPECIAL 
CONSIDERATION. 
 
SPECIFICALLY, THE INVESTMENT PROMOTION LAW ALLOWS: 
 
-- EXEMPTIONS FROM INCOME AND SOCIAL SERVICES TAXES 
OF UP TO TEN YEARS FOR PROJECTS APPROVED BY THE 
INVESTMENT PROMOTION COMMITTEE (WHICH INCLUDES 
SENIOR OFFICIALS FROM THE MINISTRY OF INDUSTRY AND 
TRADE, INCOME TAX DEPARTMENT, CUSTOMS DEPARTMENT, 
THE PRIVATE SECTOR, AND THE DIRECTOR GENERAL OF THE 
JORDAN INVESTMENT BOARD), IN ACCORDANCE WITH THE 
DESIGNATED ZONE SCHEME: 
 
         -- 25 PERCENT TAX EXEMPTION FOR ZONE A 
         -- 50 PERCENT TAX EXEMPTIONS FOR ZONE B 
         -- 75 PERCENT TAX EXEMPTIONS FOR ZONE C 
 
AN ADDITIONAL YEAR OF THESE TAX EXEMPTIONS IS 
GRANTED TO PROJECTS EACH TIME THEY UNDERGO 
EXPANSION, MODERNIZATION, OR DEVELOPMENT RESULTING 
IN A 25 PERCENT INCREASE IN THEIR PRODUCTION 
CAPACITY FOR A MAXIMUM OF FOUR YEARS. 
 
-- CAPITAL GOODS ARE EXEMPT FROM DUTIES AND TAXES 
IF DELIVERED WITHIN THREE YEARS FROM THE DATE OF 
THE INVESTMENT PROMOTION COMMITTEE'S APPROVAL.  THE 
COMMITTEE MAY EXTEND THE THREE-YEAR PERIOD IF 
NECESSARY. 
 
-- IMPORTED SPARE PARTS RELATED TO A SPECIFIC 
PROJECT ARE EXEMPT FROM DUTIES AND TAXES, PROVIDED 
THAT THEIR VALUE DOES NOT EXCEED 15 PERCENT OF THE 
VALUE OF FIXED ASSETS REQUIRING SPARE PARTS.  THEY 
SHOULD BE IMPORTED WITHIN TEN YEARS FROM THE 
PRODUCTION DATE. 
 
-- CAPITAL GOODS USED FOR EXPANSION AND 
MODERNIZATION OF A PROJECT ARE EXEMPT FROM DUTIES 
AND TAXES, PROVIDED THEY RESULT IN AT LEAST A 25 
PERCENT INCREASE IN PRODUCTION CAPACITY. 
 
-- HOTEL AND HOSPITAL PROJECTS RECEIVE EXEMPTIONS 
FROM DUTIES AND TAXES ON FURNITURE AND SUPPLY 
PURCHASES WHICH ARE REQUIRED FOR MODERNIZATION AND 
RENEWAL ONCE EVERY SEVEN YEARS. 
 
-- INCREASES IN THE VALUE OF IMPORTED CAPITAL GOODS 
ARE EXEMPT FROM DUTIES AND TAXES IF THE INCREASES 
RESULT FROM HIGHER FREIGHT CHARGES OR CHANGES IN 
THE EXCHANGE RATE. 
 
IN ADDITION TO THE INVESTMENT PROMOTION LAW, 
ADDITIONAL EXEMPTIONS ARE GRANTED TO INVESTMENTS 
WITHIN INDUSTRIAL ESTATES DESIGNATED AS SPECIAL 
INDUSTRIAL ZONES: 
 
-- INDUSTRIAL PROJECTS ARE GRANTED EXEMPTIONS ON 
INCOME AND SOCIAL SERVICES TAXES FOR A TWO-YEAR 
PERIOD.  ESTABLISHED INDUSTRIAL FACILITIES THAT 
RELOCATE TO AN INDUSTRIAL ESTATE ALSO RECEIVE THIS 
BENEFIT. 
 
-- INDUSTRIAL PROJECTS ARE GRANTED PROPERTY TAX 
EXEMPTIONS THROUGHOUT THEIR LIFETIME. 
 
-- INDUSTRIAL PROJECTS ARE GRANTED PARTIAL OR FULL 
EXEMPTIONS FROM MOST MUNICIPALITY AND PLANNING 
FEES. 
 
TO PROMOTE EXPORTS, ALL EXPORTERS ARE GRANTED THE 
FOLLOWING INCENTIVES: 
 
-- NET PROFITS GENERATED FROM MOST EXPORT REVENUES 
ARE FULLY EXEMPT FROM INCOME TAX.  EXCEPTIONS 
INCLUDE FERTILIZER, PHOSPHATE, AND POTASH EXPORTS, 
IN ADDITION TO EXPORTS GOVERNED BY SPECIFIC TRADE 
PROTOCOLS AND FOREIGN DEBT REPAYMENT SCHEMES. UNDER 
THE WTO SUCH EXEMPTIONS WERE SUPPOSED TO BE PHASED 
OUT BY THE END OF 2002, BUT THE GOVERNMENT IS 
SEEKING A TWO-YEAR EXTENSION. 
-- FOREIGN INPUTS USED IN THE PRODUCTION OF EXPORTS 
ARE EXEMPT FROM CUSTOM DUTIES AND ALL ADDITIONAL 
IMPORT FEES ON A REIMBURSABLE OR DRAWBACK BASIS. 
 
FOREIGN INVESTORS CAN BID FOR GOVERNMENT- 
COMMISSIONED RESEARCH AND DEVELOPMENT PROGRAMS THAT 
ARE SLATED FOR INTERNATIONAL OR MIXED BIDDERS. 
OTHERWISE, THEY HAVE TO FIND A JORDANIAN PARTNER. 
THIS QUALIFICATION WILL BE DROPPED ONCE JORDAN 
ACCEDES TO THE WTO'S GOVERNMENT PROCUREMENT 
AGREEMENT (GPA), FOR WHICH IT IS CURRENTLY 
PREPARING AN ENTITIES OFFER. 
 
6. RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT 
 
IN GENERAL, THE LAWS ON INVESTMENT AND PROPERTY 
OWNERSHIP PERMIT DOMESTIC AND FOREIGN ENTITIES TO 
ESTABLISH AND OWN BUSINESSES AND ENGAGE IN 
REMUNERATIVE ACTIVITIES.  HOWEVER, ACTIVITIES 
RELEVANT TO MILITARY AND NATIONAL SECURITY ARE 
SUBJECT TO DIFFERENT PROVISIONS AND PROCEDURES. 
 
FOREIGN COMPANIES MAY OPEN REPRESENTATIVE 
(REGIONAL) AND BRANCH OFFICES; BRANCH OFFICES MAY 
CARRY OUT FULL BUSINESS ACTIVITIES, WHILE REGIONAL 
OFFICES MAY SERVE AS LIAISONS BETWEEN HEAD OFFICES 
AND JORDANIAN OR REGIONAL CLIENTS.  THE MINISTRY OF 
INDUSTRY AND TRADE MANAGES THE GOVERNMENT'S POLICY 
ON SETTING UP REGIONAL AND BRANCH OFFICES. 
 
NO FOREIGN FIRM MAY IMPORT GOODS WITHOUT APPOINTING 
AN AGENT REGISTERED IN JORDAN.  THE AGENT'S 
CONNECTION TO THE FOREIGN COMPANY MUST BE DIRECT, 
WITHOUT A SUB-AGENT OR INTERMEDIARY.  IN MID 2001, 
A COMMERCIAL AGENTS AND INTERMEDIARIES LAW WAS 
PASSED TO GOVERN THE CONTRACT BETWEEN FOREIGN FIRMS 
AND COMMERCIAL AGENTS.  IT CLEARLY DELINEATES THE 
DISTINCTION BETWEEN COMMERCIAL AGENCY AND 
DISTRIBUTION CONTRACTS RELATIONSHIPS.  PRIVATE 
FOREIGN ENTITIES, WHETHER LICENSED UNDER SOLE 
FOREIGN OWNERSHIP OR AS A JOINT VENTURE, COMPETE ON 
AN EQUAL BASIS WITH LOCAL COMPANIES. 
 
NON-ARAB FOREIGN NATIONALS ARE PERMITTED TO OWN OR 
LEASE PROPERTY IN JORDAN, PROVIDED THAT THEIR HOME 
COUNTRY DOES NOT DISCRIMINATE AGAINST JORDANIANS 
AND THE PROPERTY IS DEVELOPED WITHIN FIVE YEARS 
FROM THE DATE OF APPROVAL.  THE CABINET IS THE 
AUTHORITY ON LICENSING FOREIGN OWNERSHIP OF LAND 
AND PROPERTY.  AGRICULTURAL LAND IS NOT INCLUDED IN 
THE PROVISIONS OF THIS LAW.  HOWEVER, A FOREIGN 
COMPANY THAT INVESTS IN THE AGRICULTURAL SECTOR IN 
JORDAN AUTOMATICALLY OBTAINS NATIONAL TREATMENT 
WITH RESPECT TO OWNERSHIP OF AGRICULTURAL LAND, 
ONCE REGISTERED AS A JORDANIAN COMPANY. 
 
7. PROTECTION OF PROPERTY RIGHTS 
 
INTEREST IN PROPERTY (MOVEABLE AND REAL) IS 
RECOGNIZED, ENFORCED AND RECORDED THROUGH RELIABLE 
LEGAL PROCESSES.  THE LEGAL SYSTEM FACILITATES AND 
PROTECTS THE ACQUISITION AND DISPOSITION OF ALL 
PROPERTY RIGHTS. 
 
PRIOR TO ITS ACCESSION TO THE WTO, JORDAN PASSED 
SEVERAL NEW LAWS TO IMPROVE PROTECTION OF 
INTELLECTUAL PROPERTY RIGHTS (IPR), PATENTS, 
COPYRIGHTS, AND TRADEMARKS.    TRIPS (TRADE RELATED 
ASPECTS OF INTELLECTUAL PROPERTY RIGHTS)-CONSISTENT 
LAWS NOW PROTECT TRADE SECRETS, PLANT VARIETIES AND 
SEMICONDUCTOR CHIP DESIGNS.  THE LAW REQUIRES 
REGISTRATION OF COPYRIGHTS, PATENTS AND TRADEMARKS. 
COPYRIGHTS MUST BE REGISTERED AT THE NATIONAL 
LIBRARY, PART OF THE MINISTRY OF CULTURE.  PATENTS 
MUST BE REGISTERED WITH THE REGISTRAR OF PATENTS 
AND TRADEMARKS AT THE MINISTRY OF INDUSTRY AND 
TRADE. 
 
JORDAN'S PHARMACEUTICAL INDUSTRY GENERALLY ABIDES 
BY THE NEW TRIPS-CONSISTENT PATENT LAW.  IN 
ADDITION, IN SIGNING THE FTA JORDAN COMMITTED TO 
EVEN STRONGER ENFORCEMENT OF IPR, PARTICULARLY IN 
THE PHARMACEUTICAL SECTOR.  IT IS ALSO EXPECTED TO 
ACCEDE TO THE WORLD INTELLECTUAL PROPERTY 
ORGANIZATION (WIPO) TREATIES ON COPYRIGHTS (WCT) 
AND PERFORMANCES AND PHONOGRAPHS (WPPT) BY THE END 
OF 2002.  JORDANIAN FIRMS ARE NOW SEEKING JOINT 
VENTURES AND LICENSING AGREEMENTS WITH 
MULTINATIONAL PARTNERS. 
JORDAN'S RECORD ON IPR ENFORCEMENT HAS IMPROVED. 
HOWEVER, EFFECTIVE ENFORCEMENT MECHANISMS AND LEGAL 
PROCEDURES ARE YET TO BE FULLY ESTABLISHED.  AS A 
RESULT, THE GOVERNMENT'S RECORD ON IPR PROTECTION 
REMAINS MIXED.  A SIZEABLE PROPORTION OF VIDEOS AND 
SOFTWARE SOLD IN THE MARKETPLACE CONTINUES TO BE 
PIRATED.  ENFORCEMENT ACTION AGAINST AUDIO/VIDEO 
AND SOFTWARE PIRACY IS IMPROVING, BUT REMAINS 
SPOTTY. 
 
8. TRANSPARENCY OF THE REGULATORY SYSTEM 
 
THE GOVERNMENT IS SLOWLY IMPLEMENTING POLICIES TO 
IMPROVE COMPETITION AND FOSTER TRANSPARENCY.  THESE 
REFORMS AIM TO CHANGE AN EXISTING SYSTEM THAT CAN 
BE INFLUENCED GREATLY BY FAMILY AFFILIATIONS AND 
BUSINESS TIES.  ALTHOUGH IN MANY INSTANCES 
BUREAUCRATIC PROCEDURES HAVE BEEN STREAMLINED, RED 
TAPE AND OPAQUE PROCEDURES STILL PRESENT PROBLEMS 
FOR FOREIGN AND DOMESTIC INVESTORS.  THE ARBITRARY 
APPLICATION OF CUSTOMS, TAX, LABOR, HEALTH AND 
OTHER LAWS OR REGULATIONS, PARTICULARLY AT THE 
LEVEL OF LOCAL GOVERNMENT, HAVE IMPEDED INVESTMENT. 
 
IN 2001, THE GOVERNMENT EMBARKED ON AN AGGRESSIVE 
STRATEGY TO PROMOTE E-GOVERNMENT.  THE GOVERNMENT 
HAS PLEDGED TO MAKE ITS SERVICES, REGULATIONS, AND 
PROCUREMENT PROCEDURES MORE ACCESSIBLE AND 
TRANSPARENT VIA E-GOVERNMENT. 
 
9. EFFICIENT CAPITAL MARKETS AND PORTFOLIO 
INVESTMENT 
 
JORDAN'S CAPITAL MARKET IS SMALL, WITH A 
CAPITALIZATION OF APPROXIMATELY USD 6.3 BILLION 
(AROUND 70 PERCENT OF GDP).  MAJOR RESTRUCTURING OF 
THE MARKET WAS COMPLETED IN 2000. 
 
THE AMMAN FINANCIAL MARKET (AFM) IS DIVIDED AMONG 
THE JORDAN SECURITIES COMMISSION (JSC), THE AMMAN 
STOCK EXCHANGE (ASE) AND THE SECURITIES DEPOSITORY 
CENTER (SDC).  THE SDC IS THE CUSTODIAN FOR ALL 
TRANSACTION CONTRACTS, CLEARING AND SETTLEMENT. 
THE JSC WAS ESTABLISHED AS THE GOVERNMENT'S 
SUPERVISORY AND MONITORING AGENCY FOR THE CAPITAL 
MARKET IN JORDAN.  THE GOVERNMENT IS WORKING ON 
FURTHER AMENDMENTS TO THE SECURITIES LAW THAT WILL 
BRING IT MORE IN LINE WITH INTERNATIONAL BEST 
PRACTICES. 
 
THERE ARE APPROXIMATELY 30 BROKERAGE FIRMS AND 158 
LISTED PUBLIC-SHAREHOLDING COMPANIES ON THE ASE. 
THIRTY-EIGHT PERCENT OF OWNERSHIP IS BY NON- 
JORDANIAN, MOSTLY ARAB, INVESTORS. DESPITE 
SIGNIFICANT PROGRESS OVER THE PAST FIVE YEARS, MORE 
REFORM IS NEEDED TO ESTABLISH A MARKET WITH 
ADEQUATE LEGAL, REGULATORY, AND BEST PRACTICES 
NORMS.  A NEW DRAFT SECURITIES LAW WAS AWAITING 
GOVERNMENT APPROVAL IN JUNE 2002. 
 
THE ASE ALSO SUFFERS FROM INTERMITTENT LIQUIDITY 
PROBLEMS, WHICH HAVE ENSURED THAT THE BOURSE 
REMAINS PRONE TO SPECULATIVE MOVEMENTS.  STRUCTURAL 
PROBLEMS (SUCH AS LACK OF TRANSPARENCY AND 
CORPORATE GOVERNANCE AND THE DEARTH OF MUTUAL 
FUNDS) HAVE BEEN EXACERBATED BY THE INSUFFICIENCY 
OF INSTITUTIONAL BUYING AND WAVERING INVESTOR 
CONFIDENCE. 
 
THE CENTRAL BANK, ON BEHALF OF THE MINISTRY OF 
FINANCE, CONDUCTS REGULAR AUCTIONS OF SIX-MONTH 
TREASURY BILLS AND THREE-YEAR TREASURY BONDS. 
TREASURY BONDS AND BILLS AND DEVELOPMENT BONDS 
(EQUIVALENT TO TREASURY BONDS) ARE LISTED ON THE 
ASE.  MONTHLY TRADING VOLUME AVERAGES JD 600,000 
(USD 840,000) AT FACE VALUE.  DESPITE THIS LOW 
VOLUME, MARKETS ARE ACTIVELY QUOTED ON DEVELOPMENT 
BONDS EACH TRADING DAY.  THESE QUOTES PROVIDE THE 
BASIS FOR THE BENCHMARK YIELD CURVE PUBLISHED DAILY 
ON THE CENTRAL BANK REUTERS PAGES AND IN THE LOCAL 
ARABIC NEWSPAPERS.  THE MINISTRY OF FINANCE WILL BE 
ISSUING BONDS OF DIFFERING MATURITIES LATER IN 
2002, LENGTHENING THE YIELD CURVE.  THE CENTRAL 
BANK ALSO INTRODUCED A PRIMARY DEALER PLAN DESIGNED 
TO INCREASE LIQUIDITY IN THE SECONDARY MARKET.  A 
NEW PUBLIC DEBT LAW THAT ALLOWS FOR AN INCREASE IN 
THE VOLUME OF BOND AND BILL ISSUANCE BY THE 
TREASURY CAME INTO FORCE IN SUMMER 2001. 
 
GOVERNMENT BOND AND BILL OWNERSHIP IS STILL 
REGISTERED IN BOOK-ENTRY FORM AT THE CENTRAL BANK, 
BUT IT WILL BE HANDLED BY THE SDC SOMETIME IN 2003. 
COMMERCIAL BANKS MAINTAIN SUB-REGISTRIES (TO BE 
LIMITED TO PRIMARY DEALERS AS OF AUGUST 1, 2002). 
FOREIGN INVESTORS ARE WELCOME TO PARTICIPATE IN 
AUCTIONS AND TO PURCHASE GOVERNMENT SECURITIES. 
 
THE CORPORATE BOND MARKET REMAINS UNDER-DEVELOPED, 
AND CONTINUES TO BE OVER-SHADOWED BY TRADITIONAL 
DIRECT LENDING. ONE REASON IS RIGID INTEREST RATES; 
ANOTHER RELATES TO THE ABSENCE OF A SECONDARY 
MARKET FOR SUCH ISSUES.  INCREASINGLY, HOWEVER, 
SOME BANKS HAVE STARTED INTRODUCING NEW PRODUCTS 
AND CORPORATE BOND ISSUES.  THE LATTER AMOUNTED TO 
A RECORD JD 83.5 MILLION (USD 117 MILLION) IN 2001. 
 
ONE FLAW IN THE CREDIT MARKET IS THE LACK OF LONG- 
TERM CREDIT, OWING TO THE SHORT-TERM NATURE OF 
BANKS' DEPOSIT STRUCTURE.  ON AVERAGE, REGULAR 
CORPORATE LOANS ARE EXTENDED FOR PERIODS OF 1-3 
YEARS, WHILE SYNDICATED LOANS MAY REACH UP TO 7 
YEARS.  LONG-TERM FINANCING HAS ALSO BEEN LONG 
CURTAILED BY THE OTTOMAN-ERA LAW THAT STIPULATED 
THAT TOTAL INTEREST PAYMENTS OVER THE LIFE OF A 
BOND MAY NOT BE GREATER THAN THE PRINCIPAL AMOUNT. 
THIS EFFECTIVELY IMPEDED THE DEVELOPMENT OF LONGER- 
MATURITY FIXED-INCOME INSTRUMENTS, EVEN THOUGH IT 
WAS NOT EFFECTIVELY ENFORCED.  THE NEW PUBLIC DEBT 
LAW HAS SCRAPPED THIS REQUIREMENT, ALLOWING FOR 
LONGER MATURITIES AND INCREASED VOLUMES. 
 
THE ABSENCE OF LONG-TERM CREDIT DISCOURAGES 
PROJECTS REQUIRING LONG DEVELOPMENT PERIODS.  AS A 
CONSEQUENCE, LARGE INVESTMENT PROJECTS OFTEN RESORT 
TO FOREIGN MARKETS TO RAISE CAPITAL. 
 
THE CENTRAL BANK OF JORDAN (CBJ) IS THE BANKING 
SYSTEM'S REGULATORY AUTHORITY. AN ECONOMIC SLOW- 
DOWN SINCE 1996 HAS TAKEN A TOLL ON JORDANIAN 
BANKS, AND UNOFFICIAL ESTIMATES OF NON-PERFORMING 
LOANS PUT THE TOTAL AT AROUND 30 PERCENT OF ALL 
LOANS. 
 
A NEW BANKING LAW, WHICH AIMS AT IMPROVING THE 
INDUSTRY'S EFFICIENCY, CAME INTO FORCE IN 2000. 
THE NEW LAW PROTECTS DEPOSITORS' INTERESTS, 
DIMINISHES MONEY MARKET RISK, GUARDS AGAINST THE 
CONCENTRATION OF LENDING, AND INCLUDES ARTICLES ON 
NEW BANKING PRACTICES (E-COMMERCE AND E-BANKING) 
AND MONEY LAUNDERING.  THE CBJ HAS ISSUED A NUMBER 
OF CIRCULARS THROUGHOUT THE PAST YEAR TO IMPLEMENT 
MONEY LAUNDERING REGULATIONS THAT ARE CONSISTENT 
WITH THE RECOMMENDATIONS OF THE OECD'S FINANCIAL 
ACTION TASK FORCE.  IT ALSO ALLOWS MARKET FORCES 
GREATER INFLUENCE TO ENCOURAGE THE DEVELOPMENT OF 
FINANCIAL MARKETS.  IN ADDITION, THE CBJ SET UP A 
SEPARATE AND INDEPENDENT DEPOSIT INSURANCE 
CORPORATION IN LATE 2000, THAT ENSURES DEPOSITS OF 
UP TO JD 10,000 (USD 14,000).  THE CORPORATION ALSO 
ACTS AS THE LIQUIDATOR OF BANKS AS DIRECTED BY THE 
CBJ. 
 
THE CBJ ESTABLISHED A CREDIT BUREAU FOR BOUNCED 
CHECKS IN 2001.  THE BUREAU REQUIRES BANKS TO 
REPORT ON A TIMELY BASIS THE NAMES OF ACCOUNT 
HOLDERS WITH BOUNCED CHECKS.  FOLLOWING A THIRD 
REPORT OF A BOUNCED CHECK, THE CBJ CIRCULATES THE 
NAMES OF THE ACCOUNT HOLDERS TO ALL BANKS WITH 
INSTRUCTIONS TO WITHHOLD CHECK-BOOKS AND ANY OTHER 
FACILITIES FOR A CERTAIN PERIOD OF TIME. 
 
AS OF THE END OF 2001, THE ARAB BANK AND THE 
HOUSING BANK WERE THE TWO LARGEST BANKS IN JORDAN, 
WITH ASSET BASES OF JD 14.54 BILLION (USD 22.2 
BILLION) AND JD 1.7 BILLION (USD 2.4 BILLION), 
RESPECTIVELY.  THE DIFFERENCE BETWEEN THEIR ASSET 
BASES OWES TO THE VAST DIFFERENCE IN THEIR SCOPE OF 
OPERATIONS; THE ARAB BANK HAS A WORLDWIDE PRESENCE, 
WHILE THE HOUSING BANK'S PRIME FOCUS IS THE LOCAL 
MARKET.  ALTHOUGH THE CENTRAL BANK DISTINGUISHES 
BETWEEN "INVESTMENT BANKS" AND "COMMERCIAL BANKS", 
THERE ARE NO SIGNIFICANT DIFFERENCES IN THE 
OPERATIONS OF THE TWO. 
 
BANKS OFFER LOANS, DISCOUNTED BILLS, AND OVERDRAFT 
FACILITIES. INVESTMENT BANKS ARE NOT PERMITTED TO 
EXTEND OVERDRAFT FACILITIES.  THE CENTRAL BANK 
PERMITS BANKS TO EXTEND LOANS AND CREDIT FACILITIES 
IN FOREIGN CURRENCY.  IN SUCH CASES, IT REQUIRES 
DEBT REPAYMENT TO BE IN FOREIGN CURRENCY. 
 
A NUMBER OF BANKS HAVE ESTABLISHED MUTUAL FUNDS. 
NEW CAPITAL INSTRUMENTS SUCH AS COMMERCIAL PAPER 
AND CONVERTIBLE BONDS ARE UNDER CONSIDERATION.  IN 
ADDITION TO LONG-TERM INSTRUMENTS, SECURITIZATION, 
SHORT-SELLING, AND TREASURY STOCKS ARE BEING 
INTRODUCED IN SOME BANKS. 
 
A BANKING SCANDAL THAT REPORTEDLY INVOLVED 
FRAUDULENT ACTIVITY AND EMBEZZLEMENT OF SOME USD 
120 MILLION EMERGED IN FEBRUARY 2002 AND INVOLVED 
SOME PROMINENT JORDANIANS AND LOANS DRAWN FROM 
THREE BANKS.  HOWEVER, THE CENTRAL BANK TOOK 
ADEQUATE ACTION TO REASSURE DEPOSITORS AND RESTORE 
CALM TO THE MARKET.  AS A RESULT, THE HEALTH OF THE 
BANKING SYSTEM AND ITS RESILIENCE ARE NOT IN 
QUESTION. 
 
WITH RESPECT TO OWNERSHIP AND PARTICIPATION IN THE 
MAJOR ECONOMIC SECTORS IN JORDAN, THERE IS NO 
APPARENT DISCRIMINATION AGAINST FOREIGN 
PARTICIPATION.  IN FACT, MANY JORDANIAN BUSINESSES 
SEEK FOREIGN PARTNERS, WHICH ARE PERCEIVED AS THE 
KEY TO INCREASED COMPETITIVENESS AND EASIER ENTRY 
INTO INTERNATIONAL MARKETS. 
 
THERE ARE A NUMBER OF INTERNATIONALLY RECOGNIZED 
ACCOUNTING AND AUDITING FIRMS IN JORDAN.  THE 
GOVERNMENT'S ACCOUNTING AND AUDITING REGULATIONS 
ARE CONSISTENT WITH INTERNATIONAL STANDARDS AND ARE 
INTERNATIONALLY RECOGNIZED. 
 
10. POLITICAL VIOLENCE 
 
THERE HAVE BEEN RELATIVELY FEW SIGNIFICANT 
INCIDENTS OF POLITICAL VIOLENCE IN JORDAN RECENTLY. 
HOWEVER, AS CONDITIONS IN THE WEST BANK AND GAZA 
DICTATE, SPORADIC PROTESTS CAN TAKE PLACE.  WHILE 
THE GOVERNMENT GENERALLY LIMITS AND CONTAINS THESE 
EVENTS, DEMONSTRATIONS, PARTICULARLY IN THE REFUGEE 
CAMPS, CAN BECOME VIOLENT. 
 
WHILE THE U.S HAS CONFIDENCE IN THE GOVERNMENT OF 
JORDAN'S ABILITY TO ADDRESS TERRORIST THREATS, IT 
CANNOT BE RULED OUT THAT TERRORIST ELEMENTS MAY BE 
AT LARGE.  VISITORS SHOULD CONSULT CURRENT STATE 
DEPARTMENT PUBLIC ANNOUNCEMENTS. 
 
11. CORRUPTION 
 
CORRUPTION IS A CRIME IN JORDAN.  THE GENERAL 
INTELLIGENCE DIRECTORATE (GID) HAS AN ANTI- 
CORRUPTION DEPARTMENT THAT IS RESPONSIBLE FOR 
COMBATING BRIBERY, EXTORTION, AND OTHER SIMILAR 
CRIMES. 
 
INFLUENCE PEDDLING AND A LACK OF TRANSPARENCY HAVE 
BEEN ALLEGED IN GOVERNMENT PROCUREMENT AND DISPUTE 
SETTLEMENT. "WASTA", THE USE OF FAMILY, BUSINESS, 
AND OTHER PERSONAL CONNECTIONS TO ADVANCE BUSINESS 
AND INTERESTS, IS ENDEMIC. 
 
12. BILATERAL TRADE/INVESTMENT AGREEMENTS 
 
A FREE TRADE AGREEMENT (FTA) BETWEEN THE U.S. AND 
JORDAN ENTERED INTO FORCE IN DECEMBER 2001.  THE 
AGREEMENT MANDATES THAT A FREE TRADE AREA BETWEEN 
THE TWO COUNTRIES WILL BE ATTAINED FOLLOWING A 
GRADUAL PHASING OUT OF IMPORT DUTIES AND OTHER 
TRADE BARRIERS OVER THE NEXT TEN YEARS.  THE 
AGREEMENT INORPORATES LABOR, ENVIRONMENTAL, AND 
INTELLECTUAL PROPERTY RIGHTS PROVISIONS. 
 
THE U.S. AND JORDAN SIGNED A BILATERAL INVESTMENT 
TREATY IN 1997.  THE AGREEMENT PROVIDES RECIPROCAL 
PROTECTION OF JORDANIAN AND U.S. INDIVIDUAL AND 
CORPORATE INVESTMENTS.  IT IS EXPECTED TO ENTER 
INTO FORCE IN 2002. 
 
JORDAN SIGNED THE TRADE AND INVESTMENT FRAMEWORK 
AGREEMENT (TIFA) IN 1999.  UNDER THE TIFA, A U.S.- 
JORDAN COUNCIL ON TRADE AND INVESTMENT WAS 
ESTABLISHED WITH THE OBJECTIVE OF WORKING TOWARDS 
THE REMOVAL OF IMPEDIMENTS TO TRADE AND INVESTMENT. 
 
JORDAN IS A MEMBER OF A PAN-ARAB ACCORD ON 
FACILITATING THE MOVEMENT OF CAPITAL BETWEEN ARAB 
COUNTRIES.  COUNTRIES THAT HAVE SIGNED THE ACCORD 
INCLUDE JORDAN, UAE, BAHRAIN, TUNISIA, SAUDI 
ARABIA, IRAQ, OMAN, KUWAIT, LIBYA, EGYPT, MOROCCO, 
QATAR, SYRIA, AND LEBANON. 
AN ECONOMIC ASSOCIATION AGREEMENT BETWEEN JORDAN 
AND THE EUROPEAN UNION THAT ESTABLISHES FREE TRADE 
OVER A TWELVE-YEAR PERIOD ENTERED INTO FORCE IN 
2002.  THIS AGREEMENT CALLS FOR THE FREE MOVEMENT 
OF CAPITAL, AS WELL AS COOPERATION ON DEVELOPMENT 
AND POLITICAL ISSUES. 
 
13. OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS 
 
INVESTMENTS IN JORDAN ARE ELIGIBLE FOR OVERSEAS 
PRIVATE INVESTMENT CORPORATION (OPIC) INSURANCE AND 
PRIVATE FINANCING. 
 
IN ADDITION, THERE ARE TWO OPIC-BACKED INVESTMENT 
FUNDS THAT MAKE EQUITY INVESTMENTS IN BUSINESSES IN 
JORDAN, THE WEST BANK/GAZA, AND OMAN.  THE WEST 
BANK/GAZA AND JORDAN EMERGING FUND, WITH A TARGET 
CAPITAL OF USD 60 MILLION, EXPECTS TO MAKE 40 
PERCENT OF ITS INVESTMENTS IN JORDAN.  IT IS 
MANAGED BY INTERNATIONAL CAPITAL ADVISORS OF 
VIENNA, VIRGINIA.  THE OTHER FUND IS THE INTERARAB 
INVESTMENT FUND, WHICH EXPECTS TO INVEST ONE-THIRD 
OF ITS USD 45 MILLION TARGET CAPITAL IN JORDAN. IT 
IS MANAGED BY INTERARAB MANAGEMENT OF PORTOLA 
VALLEY CALIFORNIA. 
 
JORDAN IS ALSO A MEMBER OF THE MULTILATERAL 
INVESTMENT GUARANTEE AGENCY (MIGA), A WORLD BANK 
AGENCY, WHICH GUARANTEES INVESTMENT AGAINST NON- 
COMMERCIAL RISKS SUCH AS CIVIL WAR, 
NATIONALIZATION, POLICY CHANGES, ETC.  THE PROGRAM 
COVERS INVESTMENTS IN JORDAN IRRESPECTIVE OF THE 
INVESTORS NATIONALITY, IN ADDITION TO COVERING 
JORDANIAN INVESTMENTS ABROAD. 
 
SEVERAL EUROPEAN COUNTRIES HAVE OFFICIAL DEBT-FOR- 
EQUITY SWAP PROGRAMS THAT ARE OPEN TO INVESTORS OF 
ALL NATIONALITIES. 
 
14. LABOR 
 
THE RATE OF POPULATION GROWTH (BIRTHS MINUS DEATHS) 
IS ABOUT 2.8 PERCENT A YEAR.  ABOUT TWO-THIRDS OF 
THE POPULATION IS UNDER THE AGE OF 30.  IN GENERAL, 
THE LABOR FORCE IS WELL EDUCATED.  LITERACY RATES 
APPROACH 94.5 PERCENT FOR MEN AND 83.5 PERCENT FOR 
WOMEN.  JORDAN HAS A LABOR FORCE OF 1.17 MILLION 
AND A GOVERNMENT-ESTIMATED UNEMPLOYMENT RATE OF 
14.9 PERCENT. 
 
THE OFFICIALLY ESTIMATED 140,000 FOREIGN LABORERS 
IN JORDAN WORK PRIMARILY IN UNSKILLED SECTORS, SUCH 
AS CONSTRUCTION, AGRICULTURE, AND DOMESTIC SERVICE. 
THEY CONSTITUTE AROUND 12 PERCENT OF THE LABOR 
FORCE.  THE MINISTRY OF LABOR REGULATES FOREIGN 
WORKER LICENSING, LICENSING FEES, PROHIBITED 
SECTORS, AND EMPLOYER LIABILITY.  AMONG ITS 
RESPONSIBILITES, THE MINISTRY APPROVES THE HIRING 
OF PROFESSIONAL FOREIGN WORKERS BY PRIVATE 
BUSINESSES. NON-CITIZENS ARE NOT PERMITTED BY LAW 
TO JOIN UNIONS. 
 
LABOR UNIONS SERVE PRIMARILY AS INTERMEDIARIES 
BETWEEN WORKERS AND THE MINISTRY OF LABOR, AND MAY 
ENGAGE IN COLLECTIVE BARGAINING ON BEHALF OF 
WORKERS.  IN ORDER TO STRIKE, WORKERS MUST OBTAIN 
PERMISSION FROM THE GOVERNMENT.  CURRENTLY, ABOUT 
30 PERCENT OF THE TOTAL LABOR FORCE, INCLUDING 
GOVERNMENT SERVICE, IS UNIONIZED.  HOWEVER, THIS 
FIGURE INCLUDES NUMEROUS PROFESSIONAL ASSOCIATIONS 
WHERE MEMBERSHIP IS MANDATORY. 
 
ARTICLE 28 OF THE LABOR LAW SPECIFIES THE 
CONDITIONS UNDER WHICH AN EMPLOYER CAN DISCHARGE A 
WORKER WITHOUT NOTICE.  ARTICLE 31 ALLOWS EMPLOYERS 
TO LAY OFF EMPLOYEES IF ECONOMIC OR TECHNICAL 
CIRCUMSTANCES NECESSITATE REORGANIZATION.  THE LAW 
DOES NOT REQUIRE EMPLOYERS TO INCLUDE RETIREMENT 
PLANS IN THEIR EMPLOYMENT PACKAGE.  HOWEVER, IF THE 
EMPLOYER AGREED TO PROVIDE RETIREMENT BENEFITS WHEN 
THE WORKER WAS CONTRACTED, THE EMPLOYER MUST 
FULFILL HIS/HER COMMITMENT.  THE SOCIAL SECURITY 
LAW STIPULATES THAT IF THE EMPLOYER HAS MORE THAN 
FIVE EMPLOYEES, THEY MUST BE ENROLLED IN THE SOCIAL 
SECURITY SYSTEM.  THE LABOR LAW ALSO ADDRESSES 
WORKER COMPENSATION AND OUTLINES COMPENSATORY 
CATEGORIES FOR WORK-RELATED INJURIES.  ARTICLE 67 
PROVIDES UNPAID MATERNITY LEAVE FOR A MAXIMUM OF 
ONE YEAR FOR MOTHERS WORKING IN FIRMS EMPLOYING 10 
OR MORE WORKERS, AND ARTICLE 70 REQUIRES FULL PAY 
FOR 10 WEEKS OF MATERNITY LEAVE.  THE LAW PROVIDES 
FOR 14 DAYS OF ANNUAL LEAVE FOR EMPLOYEES DURING 
THE FIRST FIVE YEARS WITH THE EMPLOYER, AND 21 DAYS 
AFTER FIVE YEARS OF SUCCESSIVE SERVICE.  THIS LAW 
PLACES JORDAN IN COMPLIANCE WITH INTERNATIONAL AND 
ARAB LABOR AGREEMENTS. 
 
15. FOREIGN TRADE ZONES/FREE PORTS 
 
THE ZARQA FREE ZONE IS JORDAN'S MAJOR FREE ZONE 
AREA.  OTHER AREAS INCLUDE THE SAHAB INDUSTRIAL 
ESTATE FREE ZOONE, QUEEN ALIA INTERNATIONAL AIRPORT 
FREE ZONE, AND THE GATEWAY QUALIFYING INDUSTRIAL 
ZONE. 
IN MAY 2001, THE GOVERNMENT CONVERTED THE AQABA 
PORT AND SURROUNDING AREA INTO A SPECIAL ECONOMIC 
ZONE (SEZ) WITH STREAMLINED BURAEUCRACY, LOWER 
TAXES, AND FACILITATED CUSTOMS HANDLING. 
 
BOTH JORDANIAN AND FOREIGN INVESTORS ARE PERMITTED 
TO INVEST IN TRADE, SERVICES, AND INDUSTRIAL 
PROJECTS IN FREE ZONES.  INDUSTRIAL PROJECTS MUST 
FULFILL ONE OF THE FOLLOWING CONDITIONS: 
 
-- NEW INDUSTRIES WHICH DEPEND ON ADVANCED 
TECHNOLOGY; 
 
-- INDUSTRIES REQUIRING RAW MATERIAL AND/OR LOCALLY 
MANUFACTURED PARTS THAT ARE LOCALLY AVAILABLE; 
 
-- INDUSTRIES THAT COMPLEMENT DOMESTIC INDUSTRIES; 
 
-- INDUSTRIES THAT ENHANCE LABOR SKILLS AND PROMOTE 
TECHNICAL KNOW-HOW; 
 
-- INDUSTRIES PROVIDING CONSUMER GOODS, AND THAT 
CONTRIBUTE TO REDUCING MARKET DEPENDENCY ON 
IMPORTED GOODS; 
 
THE FOLLOWING INCENTIVES ARE GRANTED TO INVESTORS 
IN THE DESIGNATED FREE ZONES: 
 
-- PROFITS ARE EXEMPT FROM INCOME AND SOCIAL 
SERVICES TAXES FOR A PERIOD OF TWELVE YEARS, WITH 
THE EXCEPTION OF PROFITS GENERATED FROM STORAGE 
SERVICES THAT INVOLVE GOODS RELEASED TO THE 
DOMESTIC MARKET. 
 
-- SALARIES AND ALLOWANCES PAYABLE NON-JORDANIAN 
EMPLOYEES ARE EXMEPT FROM INCOME AND SOCIAL 
SERVICES TAXES. 
 
-- GOODS IMPORTED TO AND/OR EXPORTED FROM FREE 
ZONES ARE EXEMPT FROM IMPORT TAXES AND CUSTOMS 
DUTIES, WITH THE EXCEPTION OF GOODS RELEASED TO THE 
DOMESTIC MARKET. 
 
-- INDUSTRIAL GOODS MANUFACTURED IN FREE ZONES 
ENJOY PARTIAL CUSTOMS DUTIES EXEMPTION ONCE 
RELEASED TO THE DOMESTIC MARKET, DEPENDING ON THE 
PROPORTION OF THE VALUE OF LOCAL INPUTS AND LOCALLY 
INCURRED PRODUCTION COSTS. 
 
-- CONSTRUCTION PROJECTS ARE EXEMPT FROM LICENSING 
FEES AND URBAN PROPERTY TAXES. 
-- FREE TRANSFER OF CAPITAL INVESTED IN FREE ZONES, 
INCLUDING PROFITS. 
 
16. QUALIFYING INDUSTRIAL ZONES (QIZ) 
 
APPROVED GOODS PRODUCED IN A "QUALIFYING INDUSTRIAL 
ZONE" (QIZ) CAN BE IMPORTED INTO THE UNITED STATES 
FREE OF DUTY IF THEY INVOLVE ECONOMIC COOPERATION 
BETWEEN JORDAN AND ISRAEL, AND IF 35 PERCENT OF THE 
PRODUCT'S CONTENT COMES FROM THE QIZ, ISRAEL, 
AND/OR THE WEST BANK/GAZA.  THIS MAKES INVESTMENT 
IN A QIZ PARTICULARLY ATTRACTIVE TO INDUSTRIES 
WHOSE PRODUCTS ARE ASSESSED WITH HIGH TARIFFS WHEN 
THEY ARE IMPORTED INTO THE U.S.  THERE ARE 
CURRENTLY TEN QIZS, THREE OF WHICH ARE PUBLICLY 
OWNED AND THE REMAINING SEVEN ARE PRIVATELY OWNED. 
FOUR ADDITIONAL ZONES ARE PLANNED.  AS OF JUNE, 
2002, THE BULK OF QIZ EXPORTERS HAVE BEEN 
CONCENTRATING ON TEXTILE AND GARMENT EXPORTS. 
SINCE 1999, THE QIZS HAVE ATTRACTED USD 248 MILLION 
IN CAPITAL INVESTMENTS, GENERATED USD 273 MILLION 
IN EXPORTS TO THE U.S., AND CREATED OVER 22,000 NEW 
JOBS. 
17. FOREIGN DIRECT INVESTMENT STATISTICS 
 
OFFICIAL STATISTICS ON FOREIGN DIRECT INVESTMENT 
(FDI) ARE NOT PUBLICLY AVAILABLE. 
THE UNCTAD'S WORLD DEVELOPMENT REPORT 2001 
ESTIMATES FDI INFLOWS INTO JORDAN AT (USD MILLION): 
158, 300 AND 350 FOR 1999, 2000, AND 2001 
RESPECTIVELY. 
THE AMOUNT AND VALUE OF REGISTERED FOREIGN CAPITAL 
IS THE CLOSEST AVAILABLE INDICATOR FOR A MORE 
DETAILED ANALYSIS OF FDI. 
 
THE FOLLOWING STATISTICS SHOULD BE INTERPRETED AS 
INDICATING TRENDS RATHER THAN EXACT FIGURES. NOTE 
THAT FIGURES MAY DIFFER FROM PREVIOUS YEARS DUE TO 
REVISIONS IN THE DATA SERIES. 
 
TOTAL REGISTERED CAPITAL BY ECONOMIC SECTOR 
(`000 JORDANIAN DINARS AT YEAR END) 
(1 JD= USD 1.41) 
 
               1999         2000          2001 
------        ------          ------ TOTAL CAPITAL 
3,866,756    4,569,657  4,872,031 
FOREIGN     407,861(11%)  785,510(17%) 853,314(18%) 
 
INDUSTRY       1,200,947  1,253,721      1,296,956 
FOREIGN      192,706(16%) 210,814(17%) 227,647(18%) 
 
TRADE         1,580,260      2,121,989 
2,302,075 
FOREIGN     143,953(9%)  500,150(24%)  533,347(23%) 
 
AGRICULTURE    32,063     32,248          41,907 
FOREIGN        14,391(45%) 14,526(45%)  15,172(36%) 
 
CONTRACTING    265,933    277,633        294,278 
FOREIGN        4,073(2%)  4,340(2%)      7,698(3%) 
 
SERVICES       787,552    884,056        936,813 
FOREIGN        52,737(7%) 55,679(6%)     69,450(7%) 
 
(THE PERCENTAGE FIGURE REFLECTS THE SIZE OF FOREIGN 
CAPITAL TO TOTAL CAPITAL) 
 
(DATA EXCLUDES CAPITAL OF PUBLIC SHAREHOLDING 
COMPANIES) 
 
(SOURCE:  MINISTRY OF INDUSTRY AND TRADE) 
 
ANNUAL REGISTERED CAPITAL INFLOWS BY ECONOMIC 
SECTOR (`000 JORDANIAN DINARS) 
 
               1999        2000         2001 
              ------      ------       ------ 
TOTAL CAPITAL  233,067    702,901       504,841 
FOREIGN     33,656(14%)    377,649(54%) 
270,271(54%) 
 
INDUSTRY       49,002     52,773        43,235 
FOREIGN      14,092(29%) 18,107(34%)    16,832(39%) 
 
TRADE          119,411    541,728       306,917 
FOREIGN      17,211(14%) 356,197(66%)  160,028(52%) 
 
AGRICULTURE    443        185           18,610 
FOREIGN        350(79%)       135 (73%) 9,598(52%) 
 
CONTRACTING    8,510      11,700        29,532 
FOREIGN        50 (1%)    267 (2%)      16,245(55%) 
 
SERVICES       55,701     96,513        83,651 
FOREIGN        1,952(4%)  2,942(3%)     44,674(53%) 
 
(THE PERCENTAGE FIGURE REFLECTS THE SIZE OF FOREIGN 
CAPITAL TO TOTAL CAPITAL) 
 
(DATA EXCLUDES CAPITAL OF PUBLIC SHAREHOLDING 
COMPANIES) 
 
(SOURCE:  MINISTRY OF INDUSTRY AND TRADE) 
 
ACCORDING TO THESE MEASUREMENTS, FDI STOCK AND FDI 
INFLOWS FOR 2001 AS A PERCENTAGE OF GDP (AT CURRENT 
MARKET PRICES) WOULD AMOUNT TO 13.6 PERCENT AND 4.3 
PERCENT RESPECTIVELY. 
 
TOTAL FOREIGN REGISTERED CAPITAL BY COUNTRY OF 
ORIGIN(`000 JORDANIAN DINARS) 
                1999        2000         2001 
               ------       ------      ------ 
FRANCE            2,125       335,218 
333,222 
IRAQ           55,610     64,842        82,855 
SYRIA          68,048     72,801        75,186 
SAUDI ARABIA   57,954     62,161        63,973 
UNITED KINGDOM 15,663     16,684        38,026 
UNITED STATES  30,147     26,172        28,451 
EGYPT          13,336     18,711        25,701 
INDIA          24,733     24,312        24,412 
NETHERLANDS    34,876     42,860        23,591 
LEBANON        18,001     19,948        21,580 
 
(DATA EXCLUDES CAPITAL OF PUBLIC SHAREHOLDING 
COMPANIES) 
 
(SOURCE:  MINISTRY OF INDUSTRY AND TRADE) 
 
GNEHM 

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