Investment draft law encourages bureaucracy, lacks incentives — experts

2. Lower House
(File photo: Ameer Khalifeh/Jordan News)
AMMAN — Opposition to the draft bill regulating the investment environment has been growing since it was sent to the Lower House for approval last month. Currently, the House’s Legal Committee is looking into the proposed law but experts claim that it lacks incentives to attract foreign investors and will not resolve the bureaucratic problems.اضافة اعلان

Experts interviewed by Jordan News said the proposed draft lacks any inducement that would encourage entrepreneurial projects and women investors, that some articles are vague, or even that they may violate the Constitution.

Economist and industry and investment specialist Musa Al-Saket told Jordan News that the draft law does not live up to expectations and is not up to what the government was hoping to deliver. He said that an investment law that comes in these times should boost the outcome of the Economic Modernization Vision, but this draft will not achieve the main drivers of the vision, which are to create a million jobs, attract annual investments worth JD4 billion, and increase exports.

The vision aims at boosting economic growth to 5.7 percent annually as a minimum within the next 10 years.

According to Saket, one of the main issues investors face is bureaucracy and the lack of incentives. Yet, “this draft does not contain any incentives nor does it resolve the challenge of bureaucracy”, he said.

He noted that abolishing incentives provided to development zones, granted under existing laws, after seven years will lead to the closure of many entities.

“This is not a sustainable solution,” Saket said.

“One of the main issues surrounding this law is that the private sector was not involved in developing the draft. They were only asked to review it after it was written. So there is no true partnership between the public and private sectors,” Saket added.

Director General of the Jordanian Businessmen Association Tariq Hijazi told Jordan News that many committees are to be formed in the proposed draft, which will only increase red tape, adding that the proposed Investment Council has limited authority and that there should be an incentives committee that offers packages that favor projects established outside Amman.

“This committee should come within the Investment Council, not separate from it, so the investor is not entangled in red tape,” he said. 

Hijazi noted that the draft bill lacks incentives for entrepreneurial projects and women ventures, stressing that Jordan lost its position as a haven for entrepreneurs.

“Few Economic Modernization Vision drivers are included in this new law. There are no incentives for investments in the draft; the whole law draft should be amended. This draft does not organize the investment environment at all,” Hijazi said.

Lawmaker Saleh Al-Armouti told Jordan News that there is massive opposition to this draft in the Lower House, for many reasons. For one, it enables foreign investments to overtake local ones.

“There is no equality and no protection for national industries; this is bound to reflect negatively on the national economy,” he said.

Armouti also pointed to some possible violations of the Constitution in the draft law, such as giving certain authorities to the minister of investment at the expense of the governorate councils who are responsible for development areas.

“The ministry should not hijack the powers of municipalities,” he said.

Economic analyst Mazen Irsheid told Jordan News that, unfortunately, this draft bill is not the kind of law that local or foreign investors aspire to see. 

He noted that the way the bill suggests providing incentives to attract investors is “bizarre”, since it will be done through a ministerial committee looking into each investment project and providing specific incentives.

“It should not work this way. There should not be a ministerial committee that decides the incentives according to each project; there should be a clear list of incentives written in the proposed law so there is no vagueness or unfairness,” Irsheid said.

“This committee can be unfair, or it could discriminate between investors based on personal relations. In addition, this committee would be bureaucratic,” he added.

Nonetheless, Irsheid noted that the daft has few positive points, such as observing equality between local and foreign investors in terms of incentives offered.

“However, there is high competition in the region from Egypt, Turkey, and the Gulf, so we should provide better incentives in order to compete,” he added.

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