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The investment conundrum

Amman - Ameer
(File photo: Ameer Khalifeh/Jordan News)
Amman - Ameer

Yusuf Mansur

The writer is CEO of the Envision Consulting Group and former minister of state for economic affairs.

In the coming few days, Jordan is most likely to pass a very important piece of legislation, the investment environment law, which would be a disastrous move. Not only is the draft law encumbered with flaws and shortcomings, it is also draconian in certain areas, and simply naive (the most polite one can be in this situation) in its incentives.اضافة اعلان

The draft law went through several revisions, and with every revision the reader is faced with additional challenges emanating mainly from the fact that it was drafted in haste, and as if Jordan were the only country in the world, as the law ignores the fact that other countries in the region, such as Egypt, Turkey, Saudi Arabia, and UAE, provide extremely sophisticated, generous, and transparent incentives.

These countries, besides offering larger economies than that of Jordan, and promising higher growth rates, offer general incentives, which are published on websites and granted automatically, without the need for committees to meet and decide. Investors from anywhere in the world know what is being offered.

These general incentives are accompanied by special incentives, which are awarded in special zones or mapped locations, according to an investment map that spells the advantages and incentives provided.

Projects that are considered strategic are provided incentives that go far beyond those already on offer. For example, Egypt promises to reimburse the investor 85 percent of the value of investment should the project qualify as strategic.

The Jordanian draft law does not make such distinctions, and offers very shy general incentives that do not affect the cost of production; moreover, whatever incentives it plans to offer will be specified in a by-law to be drafted later.

This draft law will not cut it for a country that seeks to attract JD41 billion and generate 10 million employment opportunities in the next 10 years. It makes no reference to the sectors of the Economic Modernization Vision that was launched only a few days ago. There is no relevance in the draft to the vision or its driving sectors; in fact the draft ignores this much celebrated vision, as if it had never happened or came out from a different country, which is truly strange.
By-laws are discussed at the Prime Ministry level and are not sent to Parliament for approval. Instructions are drafted at the ministry level and are not subject to discussion at the Prime Ministry or in Parliament. Therefore, approval of the draft law poses a moral dilemma since one is approving what one has no complete information about.
The draft law promised that it would spell things out in by-laws and instructions that will come later. Hence, all that is needed now is to approve this current piece of legislation, and its complements/supporting documents will follow later.

It took several years for a new investment by-law to emerge: in 2005, the by-law of the 1995 Investment Law was still in use for the 2003 Investment Law. Such a separation of law and by-law creates a dilemma for the Parliament as parliamentarians only approve a piece of the puzzle, not the whole.

By-laws are discussed at the Prime Ministry level and are not sent to Parliament for approval. Instructions are drafted at the ministry level and are not subject to discussion at the Prime Ministry or in Parliament. Therefore, approval of the draft law poses a moral dilemma since one is approving what one has no complete information about.

The absence of details regarding incentives also means that foreign investors would be hesitant to invest in a country where the incentives can be easily changed. Would anyone invest in a country where the incentives can change every week?

And why a week? Because it only takes one of the weekly meetings of the Cabinet to change a by-law.

Investors require certainty and stability in the legislative framework and content. Relegating the details of the incentives to committees, by-laws, and instructions is lazy and will do more harm than good. Yet, this is what the current draft law stipulates; and, based on this point alone, the draft should not be passed.


Yusuf Mansur is CEO of the Envision Consulting Group and former minister of state for economic affairs.


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