Local industries express dismay at tariff reductions on imported goods

1. Industrialists Tariffs Dana
A general view of the Aqaba Port. (Photo: Flickr)
AMMAN — The government’s decision to reduce customs tariffs on a number of imported goods provoked negative reactions from industrialists, who saw it as weakening national production at the local level.اضافة اعلان

Several of these industrialists expressed their fear about the flooding the market with imports at the expense of national products that would not be able to compete with the low prices of imported goods.

Omar Abu Salha, owner of a factory that produces oils and oil derivatives believes the decision will have an adverse impact on Jordanian industries, namely on vegetable oils and tahini (sesame paste), due to competition from countries like Turkey, Malaysia, and Ukraine.

He said that “the prices will be mismatched and the competition not easy at all, because these countries have an abundance of raw materials at affordable prices which will ‘kill’ the local industry in the short and long term.” According to Abu Salha, in the oils and tahini industries alone, there are about 30 to 40 Jordanian factories that employ at least 5,000 workers.

Abu Salha said that some local industries already suffer under the current exceptional circumstances and are unable to export their goods for lack of incentives and this will make the competition with imported goods “out of the question.” Consequently, he added, “there is a high probability that many factories will shut down and many employees will lose their jobs.”

Bassam Hamad, head of the Jordanian Investors Association said that the government decision to reduce customs tariffs on imported goods will result in filling the local market with goods at less than the cost of what is produced by Jordanian industries, who are already faced with the challenges of high manufacturing and energy costs, in addition to increased worker wages.

“When the government reduces the customs tariff on imported goods at a rate lower than the cost of Jordanian goods, this would lead to shutting down many factories,” he said.

As an example, Hamad said locally produced oil, if unable to compete with imported oil, will affect an entire supply chain, starting with producers of oil and ending with packaging factories.

Hamad said the government decision may lead investors to leave the country and seek other more lucrative markets. “Some have started to look for other options,” he said. 

Ehab Al-Shurafa, a tuna factory owner, described the decision as a “direct blow” to local industries, which have demonstrated efficiency and resilience since the onset of the COVID-19 pandemic; times that saw the closing down of many factories in neighboring countries.

Shurafa shared Hamad’s view that the decision would lead Jordanian manufacturers to seek other countries for their businesses, like Egypt, Iraq, and Saudi Arabia.

“Due to the restrictions we are experiencing because of ill-considered decisions, I decided to transfer some production lines to one of these countries, and the option to export to Jordan will be on the table,” he added.

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