US embassy cable - 04AMMAN5676

UNCLAS SECTION 01 OF 02 AMMAN 005676 
 
SIPDIS 
 
SENSITIVE 
 
USTR FOR A/USTR NOVELLI AND E. SAUMS 
STATE FOR NEA/ARN 
ALSO FOR EB/CBA 
 
E.O. 12958: N/A 
TAGS: ETRD, PREL, ETTC, EINV, KTIA, JO 
SUBJECT: AMBASSADOR'S VISIT TO KERAK QIZ 
 
 
SENSITIVE BUT UNCLASSIFIED.  PROTECT ACCORDINGLY. 
 
1. (SBU) SUMMARY:  During a June 23 visit to the Kerak QIZ, 
Ambassador led the press through a tour of Camel Textile's 
factory-based training center helping to build skills of 
local Jordanian garment workers.  In a separate, private 
tour, the Ambassador witnessed a rapidly growing garment 
factory of 3500 workers that has recruited most if not all of 
the local Kerak workforce and shuttles in others from as far 
away as the Jordan Valley.  The in-factory training program 
is evidence the government gets the message that it needs to 
pay attention to its population's skills set.  Camel 
Textile's factory director proposed single-factory QIZs in 
areas where needed workers live.  END SUMMARY. 
 
Inside the QIZ's Walls of Opportunity 
------------------------------------- 
 
2.  (U)  Kerak QIZ is a walled compound in the middle of the 
desert on the main highway some 20 minutes to the east of 
Kerak.  Ambassador toured the sprawling Camel factory zone 
where modern, light-industry factory sheds house some 3500 
workers, half of whom are Jordanians and half mainland 
Chinese.  On row after row of production lines, the 
Ambassador saw rural Jordanians from the Kerak area for the 
first time earning paychecks from industrial employment.  The 
factory expects to hire an additional 1000-1500 workers by 
the end of the year, evidenced by new building construction. 
A modern cafeteria building and newly finished on-site 
dormitories at Camel provide the basic necessities to the 
Chinese workers.  Camel Textile International Corporation is 
run by Kuohwa Garment and Enamel Industry of Taipei, Taiwan. 
Director Jay Yuan explained that the company has garment 
factories in a handful of countries strategically located 
around the world, in part as a stopgap measure against any 
unforeseen circumstances such as the SARS outbreak in Asia or 
security-related delivery problems.  Camel's customers 
include Liz Claiborne, JC Penney, and Lee.  They produce a 
monthly average of about 2.6 million units of mainly knits 
over two shifts per day. 
 
3. (U)  On the training line, the Ambassador saw about 60 
young women being trained by Tunisian experts on 
production-level sewing skills.  The trainers are funded as 
part of a GOJ effort begun last fall to train 4000 Jordanians 
in the first year.  (COMMENT:  Whether the target is met is a 
matter of some doubt, mainly due to a shortage of raw 
recruits in or near the QIZ areas.  END COMMENT.)  The 
factory pays all trainees a starting wage for the duration of 
the training period, which can last from five weeks to three 
months.  The Ambassador chatted briefly with the training 
line manager, a young woman from Kerak who had worked her way 
up to her current JD 200 per month position (about USD282). 
Press coverage of the training center was extensive, with at 
least four dailies releasing article and photos the next day 
and noting the continued need to train Jordanians to work in 
QIZ garment factories. 
 
Bring the QIZ Factories to the People? 
-------------------------------------- 
 
4. (SBU)  In a discussion with Camel's Jay Yuan, other Camel 
executives, and Amer Majali, head of the Jordan Industrial 
Estates Corporation (JIEC), the Ambassador heard about the 
challenges faced with the end of the Multi Fiber Agreement 
and quotas in 2005, thus depriving Jordan QIZs of their 
no-quota advantage.  Camel executives seemed content with the 
current, self-imposed restrictions on Chinese imports to the 
U.S. at least until 2008.  Camel was upgrading some of its 
product lines as well.  Turning to the general labor 
shortage, Yuan noted that Camel is already transporting 
Jordanian workers to the factory from as far away as the 
Jordan Valley in 80-minute drives one way.  He proposed that 
if Camel were allowed to take the factory to such an area, it 
could employ up to 1000 persons in the area.  By assigning 
such a plant QIZ status, it could create more jobs for 
Jordanians, he said. The Ambassador thanked Yuan for the 
suggestion saying that he understood the concept, but that it 
might need further study, if the ways and means were there to 
implement it. 
 
5. (SBU)  Amer Majali, whose JIEC owns the Kerak QIZ, was 
extremely skeptical about the idea.  He referred to the 
difficulties involved in securing three-way agreement to any 
outside-the-QIZ standalone factory.  (COMMENT: Kerak, with 
just two operating garment factories, has not been able to 
attract additional investors to the QIZ, in part because the 
current QIZ estate manager is a local townsman nearing 
retirement age and with few ideas, ensconced in what appears 
to be his last sinecure.  Majali would see the idea as 
competing with the development of the government-owned QIZs 
he manages, including both Kerak and the more dynamic Al 
Hassan QIZ in the north.  END COMMENT.) 
 
Expo Uniform Attracts U.S. Investment 
------------------------------------- 
 
6.  (U)  In a separate visit to a nearby factory just in the 
process of opening, the Ambassador spoke briefly with Saleh 
Bin Tareef, General Manager of the Expo Uniform Inc. a 40 
percent co-investor with an American.  Bin Tareef had earlier 
explained that the factory will begin with 200 employees, but 
hoped to employ 400 by the end of the year. 
 
Why Not Try Standalone QIZs Nearer to the Workforce? 
--------------------------------------------- ------- 
 
7.  (SBU)  EMBASSY COMMENT:  Jordan has shown over the last 
six years of QIZ experience that it can avoid the problems of 
trans-shipment or not enough local content in the product, 
two good reasons to control the geographic areas in which 
QIZs are established, so as to monitor factory production. 
It makes sense to build more factories closer to the 
workforce concentrations.  Though managing customs and other 
logistics would admittedly not be easy, why send thousands on 
wasted shuttle-bus journeys when just a few officials could 
be relocated?  The El Zay factory QIZ proves that it can be 
done, and quite successfully by all accounts.  To be sure, 
current QIZ estate owners would be upset, especially the 
government, which invested heavily in land for QIZs and may 
not, as in Kerak, ever recoup its investment.  But some of 
the current private QIZ investors would likely embrace a 
sub-zone concept that included them in the picture.  If, for 
example, Tajamouat QIZ could build Tajamouat QIZ II factory 
in the Jordan Valley, that might work.  It would certainly 
solve the labor shortage problem and be a sign that the 
government cared about the livelihood of its people. 
GNEHM