The word “investment”
has dominated the declarations, speeches, and promises of the Bishr
Al-Khasawneh Cabinet since its appointment on October 12, 2020. A draft
investment promotion law has been in circulation for some time now, and many
parties, individuals and institutions have been invited to comment upon it. If
passed, this law would become the 16th investment law that Jordan has enacted
over the past 67 years; that is, a new investment law every four and a half
years.
اضافة اعلان
Investment promotion laws are an essential policy
tool for investment promotion and regulation for many countries, as they
constitute the basic legal framework for cross-border investment. Often, these
laws contain provisions similar to those of international investment
agreements.
UNCTAD research found that at least 108 countries
have an investment law, of which 90 are developing countries or countries with
economies in transition. Fifty-eight percent of the laws apply to both foreign
and domestic investors, while the others target only foreign investors.
Jordan, like any other country, has to maintain a
balance between modernizing legislation and keeping it stable, which means that
we should shy away from changing such an important piece of legislation every
four or even 10 years.
Avoid a bulky law — the investor does not need to become a legal and administrative expert before deciding to invest in Jordan.
There are certain
rules that should apply to any investment promotion law, which include: 1) A
clear and transparent set of incentives and conditions that is provided in an
investor friendly format. In other words, incentives and conditions should be
simply stated, detailed and automatic (e-government). No need to go to the
minister or prime minister every time an incentive is provided. 2) Avoiding
issuing by-laws and/or instructions later. If necessary, issue them at the same
time as the law. 3) The smaller the country, the more it has to do to attract
investors. Jordan, which has a very low economic growth rate, should do more
than others to attract investment. 4) The investment law should be simple and
clear, and the procedures must be transparent, to avoid discretionary power,
which encourage not only bureaucratic delays but also corruption. 5) Incentives
should go beyond tax breaks, which should be low anyway. They should aim at
lowering the costs of production, and thus could include real estate, wages,
energy, social security tax, water, interest on credit, fees, etc. 6) Additional
incentives are provided to strategic investments, which should go beyond
traditional incentives.
An investment promotion law should not be long, but
short and clear. Avoid a bulky law — the investor does not need to become a
legal and administrative expert before deciding to invest in Jordan.
It should not include penalties, authorities,
structure of the Investment Ministry and administrative material in the
investment promotion law because the investor does not care about all of these.
This is a law for promoting investment, not for scaring investors away. If the
legislator needs to mention penalties and administrative procedures related to
investment, these can be placed in a separate law, not in an investment
promotion law.
Most importantly, in the age of globalization where
countries compete for foreign direct investment, the investment promotion law
should be benchmarked against the best competitors for FDI. Does the new
investment promotion law meet all these criteria? One would hope so.
Yusuf Mansur is CEO of the Envision Consulting Group and
former minister of state for economic affairs.
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