December 5 2022 1:19 AM E-paper Subscribe Sign in My Account Sign out

Jordan’s low competitiveness will reduce investments — experts

AMMAN
A general view of Amman. (Photo: Ameer Khalifeh/Jordan News)
AMMAN — Jordan is losing its battle to attract foreign and local investment due to a decline in its ranking in the 2022 Global Competitiveness Index, where it fell seven places to 56 globally, down from 49 in 2021. اضافة اعلان

The report, issued by the Swiss-based International Institute for Management Development, showed that Jordan ranked fifth in the Arab world after the UAE, Qatar, Saudi Arabia, and Bahrain this year.

The Kingdom advanced one step on the economic performance axis to rank 62nd globally. But it slipped on two main axes, as it fell nine places in government efficiency and 12 in business efficiency.

The report revealed Jordan’s main economic challenges in 2021. They include the “high unemployment rates and energy costs,” in addition to “regional instability and hosting a large number of refugees, which pose challenges to the stability of economic growth.” It also pointed to finance issues, considering the high levels of public debt.

Among the indicators that showed improvement in the competitiveness report is access to finance (68.9 percent), policy stability and predictability (58.3 percent), a skilled workforce (55.3 percent), and an effective legal environment (43.7 percent).

Others included a high level of education (41.7 percent), a business-friendly environment (39.8 percent), reliable infrastructure (34 percent), effective labor relations (30.1 percent), and cost competitiveness (25.2 percent).

Economic analyst Mazen Irsheid told Jordan News that the result of the 2022 Global Competitiveness Index report was excepted since Jordan is recovering from the repercussions of the COVID-19 pandemic.

But he explained that the report “is essential to every country because it is one of the main factors that would attract foreign investments”.

“The high energy costs would always lead to increased investment and production costs, so in the case of Jordan, profits would be higher in other countries in the region that ranked higher,” he added.

Irsheid agreed with the report that there are areas of improvement, like in the renewable energy sector and. He noted that the improvement is prolonged, compared to other countries like Morocco, adding that Jordan still imports 90 percent of its energy needs. 

As for the GPD, Irsheid said there is a slight improvement in exports, where they are increasing, but the tourism sector is still not recovering and is still under the rates that it was before the pandemic.

“We hope the tourism sector will improve in the second half of the year,” he said. “Soon, we will see the results of the Jordanian-Iraqi free economic zone and the opening back to the Syrian market ... where the commerce exchange will improve, but this will take some time,” he added.

Irsheid said that Jordan’s ranking in the index could only be improved if the unemployment rate decreased, foreign investments increased, and the economy grew.

“But this will not be achieved by the end of this year since inflation is rising,” he predicted.

Economist Wajdi Al-Makhamreh told Jordan News that the report showed that Jordan is not an attractive country for investors and business people in view of its declining competitiveness.

Makhamreh attributed the receded ranking to “the bureaucracy infesting the Kingdom, in addition to the weak investment system, transportation sector, and the lack of accountability”.

“This doesn’t encourage any foreign or local investors to do business in Jordan, but they will be looking towards other countries with higher competitive markets,” he said.

“This is a bad indicator, and the government should follow through,” he added.

Makhamreh commented on the government’s efficiency indicator in the index, saying that despite its effort to reform the public sector and solve its issues, it scored low on government efficiency.

But he noted that some good indicators in the index, like access to finance, where many people can find funding for their projects, political stability, skilled force, and good education.

“The decline in the index points to the need of a lot of work so we can become a competitive market,” he said. “Now, we have the economic modernization vision, whose main purpose is to attract investment;”

He said if the report’s “indicators did not improve, there will be massive challenges in the path of the economic vision in the next 10 years,” Makhamreh added.

Economist Yousef Al-Damra agreed with Makhamreh and Irsheid on the importance of the report in attracting new investors, saying it allows the government to review its performance.

Damra is optimistic about next year’s ranking, and he expects that if the government implements the economic modernization vision, Jordan will be able to seize a higher rank and attract investments.

He said that according to the government efficiency indicator, Jordan is going backward, instead of moving forward as a result of bureaucracy.

Darma maintained that the index did not take new challenges into consideration, such as the impact of the Russian-Ukrainian conflict on Jordan and the region.


Read more Features
Jordan News