The import of vehicles in Jordan is a burden on citizens and the
balance of payments. One would therefore think that improving the public
transport system should be a government priority. So, why does Jordan not
improve the public transportation system? The answer is not as straightforward
as one would expect.
اضافة اعلان
A new World Bank report, “Jordan Public Transport Diagnostic and
Recommendations”, that was released on June 6, 2022, called for, among other
things, an efficient, cost-effective, and reliable public transport system in
the Kingdom. It estimated that the current transportation system cost the
country about $3 billion loss per year. The figure neither accounts for the
loss of productivity (around $65 million per year) as a result of the low
participation of women in the economy, nor does it account for the greenhouse
gas emissions ($500–1000 million per year).
Before addressing the question it is good to recall
that in 1911 Jordan had a railway network for passengers and goods and it ran
on Jordanian oil (shale oil). Now, 111 years later, Jordan still does not have
a national railway network that connects its cities and populace. Furthermore,
the recently suggested railway projects are either too minuscule in scale
relative to the network of the past or too limited in scope.
An often-cited reason that there has not been a
serious attempt to address the public transport system is that the budget
suffers from fiscal inflexibility, which means that there is no room in the
budget for capital expenditures on major projects such as public transportation
system, including a national railway network. However, the issue of funding
could be addressed by a public-private partnership project as was the case in
building the new Queen Alia International Airport, and the projects suggested
within the Saudi Jordanian Investment Fund that has been recently reactivated.
Also, armed with this World Bank report and a plethora of other works and
research, the government could approach donors to help, through grants or soft
loans, finance such an endeavor. But this has not happened yet.
In other words, there is a case of an obvious conflict of interest between that which is good for the country, and what is beneficial to the government.
Could it be that the government could not afford to
lose a major portion of its revenues due to the fact that people import
vehicles in order to meet the deficit created by having a lack of a proper
public transport system? Let us review the figures: the government makes JD1145
million annually in taxes on imports, which include vehicles — a major source
of revenue. It also makes JD355 million per year in customs and fines of which
a sizable portion comes from the import of vehicles. Also, once inside the country, vehicles
generate several annual streams of revenue, such as JD110 million from vehicle
licenses, JD61 million from vehicle registration, and JD20 million from issuing
and renewing driver licenses issue. A public transport system would
significantly reduce these income streams; thus further increasing the deficit
of a budget which already suffers from an endemically growing budget deficit.
In other words, there is a case of an obvious
conflict of interest between that which is good for the country, and what is
beneficial to the government. Solving one dilemma would create another.
However, this would be an erroneous type of
thinking. It is myopic and extremely lacking in vision and wisdom because the
improvements in the economy would more than compensate the government in the
medium and long term for the immediate shortfalls in revenue through enhanced
productivity and economic activity. The improvement in the overall economy and
balance of payments would more than compensate for the cost of overhauling and
modernizing the transport system, which is why countries all over the world vie
to continuously improve their systems.
All that is needed is to believe, an act. Yes, act as if with a mission,
with the mission being: Modernize the economy!
The writer is CEO of the Envision Consulting Group and
former minister of state for economic affairs.
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