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Experts outline key hurdles in attracting foreign investments

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(Photo: Jordan News)
AMMAN — Prime Minister Bisher Al-Khasawneh presided over the first meeting for the Steering Committee for the Development of the Legislative Environment on Sunday, which extensively discussed a new law that aims to modernize Jordan’s investment environment to make it more conducive for foreign investors.اضافة اعلان

Key figures who attended the meeting included the Minister of Planning Nasser Shraideh, Minister of Justice Ahmad Zyadat, Minister of Finance Mohamad Al-Ississ, Minister of Interior Mazen Faraia, Minister of Investment Khairy Amr, Minister of Labor Nayef Steitieh, and Head of the Lower House Economy and Investment Committee Khair Abu Salik.

The new law, which is yet to be drafted, will focus on strengthening pre-existing investments in Jordan, slashing some bureaucratic procedures in the investment sector which may hinder future progress, as well as working towards creating a more attractive investment climate for investors from the Gulf region, and other parts of the world.

Today, there are 44 laws and over 1,800 regulations that govern the Jordanian investment sector, and one of the main aspects of the new law, according to Khasawneh, is attempting to consolidate all these regulations under one common umbrella.

Improving the climate for investors wishing to enter the Jordanian market can be done in three essential ways, according to the prime minister. The first method is to establish a single window specifically meant for licensing and registering businesses and their economic activities; allowing companies to secure a license within 24 hours.

Second, the law intends to lower production costs throughout the Kingdom. “This is what the government has worked on through the new electricity tariff, which will reduce production costs on a number of vital economic sectors including health, tourism, commercial, agricultural, and industrial sectors to raise their competitiveness, motivate economic growth, and create more jobs,” Khasawneh said.

As for the third approach, it basically relates to eliminating obstacles that are discouraging investment into Jordan, through legislation.

Jordanian economist Yousef Damra told Jordan News that “when it comes to bureaucratic challenges in the field of investment, this might refer to the fact that there are at least 16 regulatory obstacles facing investors in Jordan, and most of them involve getting numerous approvals from a range of ministries, like the Ministry of Interior, the Ministry of Environment, the Ministry of Tourism, the Ministry of Health, as well as having to go through the Jordan Food and Drug Administration.”

According to Damra, for an attractive investment climate to exist in Jordan, then investors would not really feel deterred by Jordanian income tax rates, especially if these stakeholders are benefitting from high-income margins in Jordan. He added, “an increase in investments can ameliorate the country’s unemployment troubles since a surge in investments will inevitably create jobs.”

Economic expert Mohammad Basheer told Jordan News, that the main reason behind the reluctance of foreign investors to break into the Jordanian market over the past few years “is partly a result of the high costs to enter the Jordanian economy. This refers to both the cost of products and services in Jordan. One of the main factors behind these high costs is the effect of the sales tax, which is often imposed on agricultural and industrial inputs of production.”

Another key element behind Jordan’s struggle with investments in the recent past, in Basheer’s view, “is the fact that the interest rates of debts in Jordan are relatively high, and this applies to the individual level, and the corporate level, encompassing the main sectors of agriculture, manufacturing, and services.”

Bahseer said “the combined debts of Jordanian citizens and businesses is in the ballpark of JD30 billion, and this amount has an average interest rate ranging between 9 to 10 percent.

Ultimately, this ends up reflecting negatively on local economic costs.” Any attempt to enhance investment levels into Jordan, will need to diligently address these factors, he noted.

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