20 June 2018
Jordan: Market Profile
- Picture: Jordan factsheet
- Graph: Jordan real GDP and inflation
- Graph: Jordan GDP by sector (2016)
- Graph: Jordan unemployment rate
- Graph: Jordan current account balance
- Graph: Jordan merchandise trade
- Graph: Jordan major export commodities (2016)
- Graph: Jordan major export markets (2016)
- Graph: Jordan major import commodities (2016)
- Graph: Jordan major import markets (2016)
- Graph: Jordan trade in services
- Graph: Jordan FDI stock
- Graph: Jordan FDI flow
- Graph: Jordan short term political risk index
- Graph: Jordan long term political risk index
- Graph: Jordan short term economic risk index
- Graph: Jordan long term economic risk index
- Graph: Jordan vs global and regional averages
- Graph: Jordan major export commodities to Hong Kong (2017)
- Graph: Jordan major import commodities from Hong Kong (2017)
- Graph: Jordan merchandise exports to Hong Kong
- Graph: Jordan merchandise imports from Hong Kong
Over the past decade, Jordan has pursued structural reforms in education, health, as well as privatisation and liberalisation. The Government of Jordan has introduced social protection systems and reformed subsidies, creating the conditions for public-private partnerships in infrastructure and making tax reforms. More work needs however to be accomplished so the focus on identifying steps towards enhancing the investment climate and ease of doing business can lead to concrete outcomes. Adverse regional developments, in particular the Syria and Iraq crises, remain the largest recent shock affecting Jordan. This is reflected in an unprecedented refugee influx, in disrupted trade routes, and in lower investments and tourism inflows. Other major challenges facing Jordan include high unemployment, a dependency on grants and remittances from Gulf economies as well as continued pressure on natural resources (particularly water). Moving forward, it will remain critical for Jordan to continue diversifying its energy supply in the medium term in order to reduce its macroeconomic vulnerabilities. Further sound economic policies and growth-enhancing reforms will also be necessary to reduce the country’s sensitivity to external shocks. Finally, creating conditions for increased private investment and improved competitiveness will remain indispensable for Jordan to stimulate job-creating growth.
Source: World Bank
2. Major Economic/Political Events and Upcoming Elections
King dissolves parliament half-way through its four-year term and appoints new premier to push through economic reform.
New electoral law introduced.
Parliamentary elections, boycotted by the opposition Islamic Action Front. Riots break out after it is announced that pro-government candidates have won a sweeping victory.
Tunisian street protests which unseat the president encourage similar demonstrations in other countries, including Jordan. Against a background of large-scale street protests, King Abdullah appoints a new prime minister, former army general Marouf Bakhit, and charges him with carrying out political reforms.
Prime Minister Awn al-Khasawneh resigns. King Abdullah appoints former prime minister Fayez al-Tarawneh to succeed him.
King Abdullah calls early parliamentary elections for January. The Muslim Brotherhood's political wing, the Islamic Action Front, decides to continue to boycott them in protest at unequal constituency sizes and lack of real parliamentary power. The King appoints Abdullah Ensour, a former minister and vocal advocate of democratic reform, as prime minister.
Clashes between protesters and supporters of the king follow mass demonstrations in Amman against the lifting of fuel subsidies, at which calls for the end of the monarchy are heard. Three people are killed.
Pro-government candidates victorious in parliamentary elections which are boycotted by the main opposition Islamic Action Front.
Jordan expels Syrian ambassador over accusations that Jordan harbours Syrian rebels.
Radical Muslim preacher Abu Qatada, deported from the UK after a long legal battle, is found not guilty of terrorism offences by a court in Jordan over an alleged plot in 1998.
Jordan is one of four Arab states to take part, together with the US, in air strikes on Islamic State militants in Syria.
Jordanian authorities arrest the deputy head of the country's Muslim Brotherhood organisation, in the first arrest of a major opposition figure in Jordan for several years.
Jordan takes part in Saudi-led air strikes on Houthi rebels in Yemen.
King Abdullah says Jordan has reached saturation point in its ability to take in more Syrian refugees.
The IMF approved an extended arrangement of USD723 million under the Extended Fund Facility (EFF) in support of the country’s economic and financial reforms.
First parliamentary elections under proportional representation since 1989.
Israel withdraws staff from its embassy in Amman after an incident in which a security guard shot dead two Jordanians.
Jordan and Iraq reopen their main border crossing for the first time in two years after Islamic State militants were driven from the main highway to Baghdad.
Source: BBC country profile – Timeline
3. Major Economic Indicators
Note: (e) estimate, (f) forecast
Source: IMF, World Bank
4. External Trade
4.1 Merchandise Trade
Note: (e) estimate
Source: WTO, World Bank WITS database
4.2 Trade in Services
Note: (e) estimate
5. Trade Policies
- The FTAs signed by Jordan are slowly reducing the weighted average applied tariff rate, which currently stands at a regionally average 4%. Import tariffs remain considerable for goods arriving from states not covered by FTAs, particularly for foodstuffs, clothing and other manufactured products. Beverages and tobacco face the highest tariffs, of up to 81.3%, with the next-highest duties dropping to 19.7% for fruits and vegetables.
- Jordan joined the World Trade Organisation (WTO) in April 2000, and has been pursuing an open trade regime.
- Jordan has bound its MFN tariffs on almost all products and tariffs are levied on an ad valorem basis. The applied MFN tariffs generally range between 0% and 30%, but some products such as lighters, tobacco products, alcohol, and alcoholic beverages face a tariff up to 200%. Jordan has reduced its simple average applied MFN tariff rate from 14.7% in 2000 to 10.2% in 2014, with average rates of 17.4% for agricultural products (WTO definition) and 8.9% for non-agricultural products. Customs duties are assessed on the basis of the c.i.f. value of imports on the registration date of the customs valuation form. In 2015, there were 6,767 tariff lines in Jordan's applied MFN tariffs, out of which 33.7% of agricultural products and 56.4% of non-agricultural products were duty-free.
- Imports of some agricultural goods remain subject to additional licensing requirements, adding to the bureaucratic burden; however, a number of reforms including fewer physical inspections of traded goods and the introduction of online customs services have reduced non-tariff barriers for importers and exporters. This is indicative of continuing improvements to Jordan's operating environment for businesses engaged in international trade. Logistics and security issues will also continue to hamper Jordan's cross-border trade in the short term.
- The Jordanian government has worked to reduce the burden of bureaucracy and other-non tariff barriers for importers. Customs regulations have been standardised and streamlined to improve efficiency.
- Companies seeking to import must obtain an importers card from the Ministry of Industry and Trade in order to clear customs. Import licenses are not required for most goods, with a few exceptions, including telecommunications equipment and some processed food products. Sanitary requirements and technical inspections can cause delays for food imports.
- With the challenges to Middle East and European countries brought by the Syrian refugees, the EU is engaging in deeper diplomatic and trade cooperation with Jordan. In 2016, the EU committed to increasing aid to Jordan and easing origin rules for Jordanian goods. This allows products with a minimum Jordanian content of 30% to enter the EU under the EU-Jordan FTA over the next ten years. Such change offers positive long-term prospects for Jordan’s exports to the European market.
- Jordan has not applied anti-dumping measures or countervailing duties, though safeguard measures are in place.
- Jordan has signed preferential trade treaties, including a number of free trade agreements (FTAs) with its major trading partners.
Jordan has signed FTAs with the US, Canada, Turkey, MERCOSUR (which includes Argentina, Brazil, Paraguay and Uruguay), Egypt, Morocco, Tunisia (the Agadir Agreement), the EFTA states (which includes: Switzerland, Norway, Iceland and Liechtenstein), and Singapore. Jordan is a member of the Pan Arab Free-Trade Area (PAFTA) Treaty, with members including: Egypt, United Arab Emirates (UAE), Bahrain, Jordon, Tunisia, Saudi Arabia, Sudan, Syria, Iraq, Oman, Palestine, Qatar, Kuwait, Lebanon, Libya, Morocco, and Yemen. These treaties are in force.
- Jordan has an associate agreement with the European Union, and this agreement provides for the establishment of a free trade area, with negotiations now underway.
- In 1997, Jordan, the US and Israel reached an agreement on establishing “Qualified industrial Zones” (QIZs) in Jordan. QIZs are designated areas where manufactured products in the zones enjoy duty-free access to the US market with no quota limit, provided that specific requirements on the rule of origins have been satisfied. Importance of QIZs has declined in the wake of the Jordan-US Free Trade Agreement concluded in 2001, under which qualified Jordanian goods entering the US market are both duty- and quota-free.
- In recent years, Jordan has further opened up its economy to attract foreign direct investment (FDI). The Investment Promotion Law provides tax exemption on fixed assets from foreign investors for three years and duty-free import of raw materials into Jordan. Further, the Jordanian government has been active in creating free trade zones (FTZs) including the Aqaba Special Economic Zone.
- Border Closures: Regional instability including the civil war in Syria and the expansion of Islamic State (IS) in Iraq has resulted in border closures which have significantly disrupted international trade. Overland supply chain routes to trade partners in the Middle East have been cut off, and access to the Iraqi market in particular has been restricted since 2014.The border crossing with Iraq reopened in 2017 following the removal of IS militants from the border province of Anbar, which will ease trade flows somewhat.
Source: WTO – Trade Policy Review
6. Trade Agreement
6.1 Trade Updates
Instability in neighbouring states has forced Jordan to seek other markets for its exports, and this endeavour has been facilitated by the government's commitment to free trade and proactive seeking of numerous FTAs. Jordan has signed a number of important agreements with major economies and key trade partners.
6.2 Multinational Trade Agreements
- Greater Arab Free Trade Area (GAFTA), comprising: Algeria, Bahrain, Egypt, Iraq, Kuwait, Lebanon, Libya, Morocco, Oman, Palestine, Qatar, Saudi Arabia, Sudan, Syria, Tunisia, United Arab Emirates and Yemen. GAFTA was declared within the Social and Economic Council of the Arab League as an executive program to activate the Trade Facilitation and Development Agreement that has been in force since January 1st, 1998. Trade liberalisation will be of great benefit to all member states and will reduce the cost of imports to Jordan. However, regional instability and domestic security concerns has diminished the effect of this agreement and created security-related trade barriers. Bilateral FTAs between Jordan and non-MENA countries also have largely superseded this agreement.
- US - Jordan has benefitted considerably from its extensive economic partnership with the US through a comprehensive free trade agreement signed in 2000. The US is the country's top export partner and the agreement has facilitated significant US investment in higher value-add industries such as textiles manufacturing.
- EU (and EFTA) - Jordan and the EU signed an association agreement in 2002 as part of the EU's efforts to enhance Mediterranean trade. The Free Trade Agreement covers trade in industrial products as well as fish and marine products and processed agricultural products. Among the objectives of the Agreement are to promote, through the expansion of reciprocal trade, the harmonious development of economic relations.By 2014, virtually all customs duties on trade in industrial goods and fish and other marine products were eliminated. We therefore expect to see medium-term growth in trade volumes between Jordan and this important bloc.
- Jordan-Turkey FTA - Turkey is an important trade partner for Jordan, providing a key market for phosphate and fertilizer exports, as well as a source of refined fuel. Though trade flows have been disrupted by regional instability, economic ties between the two countries remain strong.
- Jordan also has FTAs with Canada and Singapore. Though these agreements will assist with trade diversification, overall trade flows with both countries remain low compared to other FTA partners.
Source: WTO Regional Trade Agreements database, BMI
7. Investment Policy
7.1 Foreign Direct Investment
7.2 Foreign Direct Investment Policy
- The Jordanian government has also attempted to channel FDI into certain priority sectors through legislative programmes and the JIC. Jordan's Investment Promotion Law of 1995 (amended in 2000) includes provisions for attracting FDI as well as domestic investment and covers many sectors including agriculture, industry, tourism, infrastructure, utilities and R&D. Although a minimum non-Jordanian investment requirement of USD70,000 (or JOD50,000) is imposed, foreign investors in these sectors will be eligible for a number of incentives. These may include exemptions from applicable customs duties and taxes on capital goods, imported spare parts, furniture for hotels and hospitals, and salaries paid to non-Jordanian employees. The level of exemptions provided depends on the geographic location of the investment, with the country divided into three investment zones: A, B, and C, representing the most developed (Zone A) to the least developed (Zone C) areas of Jordan. Reductions and exemptions from applicable taxes and duties are available for 10 years at 25% for Zone A, 50% for Zone B and 75% for Zone C.
- The only sector in which foreign participation is entirely banned is newspaper publishing, though foreigners are generally also prohibited from partial or complete ownership of security services, sports clubs, stone quarrying, customs clearance or road-based transportation. Approval for foreign investment in these sectors may be gained on a case-by-case basis, however, with the requirements that the project contribute significantly to the economy and create a large number of local jobs. Caps on foreign ownership also exist in a number of other sectors, notably in transportation, retail, and engineering, advertising and hospitality services.
- A number of restrictions were lifted following the signing of the FTA with the US in 2000, including in the telecommunications, tourism, health and services sectors. State-owned enterprises (SOEs) maintain a dominant presence in some areas of the economy, but do not pose a major barrier to foreign entry, and there are no significant local content requirements which disadvantage foreign investors.
- Investors in Jordan also benefit from a wide range of 'development areas', special economic zones (SEZs), industrial zones and free zones, all of which offer a variety of incentives, benefits and tax breaks for both foreign and domestic investors based within them. The main SEZ in Jordan is located at Aqaba, covering the entire Red Sea coastline of the country as well as an international port and airport. The SEZ is intended to encourage private sector involvement in Jordan's economy, with the 20-year strategic plan launched in 2001 aiming to channel 50% of total investment into the tourism industry, 30% in services, 13% in heavy industry and 7% in light industry. In order to achieve this, a number of incentives are offered, including financial benefits, no caps on foreign ownership and no controls over capital flows and foreign currency purchases, while streamlined immigration procedures are available, as well as a range of logistics options including excellent access to key maritime trade routes and well-established transport infrastructure.
- Free zones offer non-fiscal benefits such as logistics services, as well as exemption from income tax on profits accrued from exported goods, exemption of employees' salaries from income and social security tax, waived customs duties, and lifted property taxes. This vast incentive and SEZ development programme has not only encouraged FDI in Jordan, but contributed to the emergence of industrial clusters which support growth of key industries and will further attract foreign investors to the country. There is, however, a risk that tighter fiscal policies in line with the IMF's Stand-By Arrangement will result in some of these generous incentives being reined in as a cost-cutting measure.
- While FDI is welcomed into most sectors of the economy, there remain some restrictions on foreign ownership in certain industries.
Foreign ownership is capped at 50% for enterprises in wholesale and retail trade, engineering and construction services, advertising, money exchange, restaurants and cafes, printing and publishing and auxiliary transport services.
Foreign ownership is capped at 49% for air transport services, maintenance of road transport and maintenance of broadcasting equipment.
Foreign participation is not permitted in passenger or freight road services, quarrying for construction materials, security services and real estate services, except in a few cases with government approval.
Sources: WTO – Trade Policy Review, The International Trade Administration (ITA), U.S. Department of Commerce
7.3 Free Trade Zones and Investment Incentives
|Free Trade Zone/Incentive Programme||Main Incentives Available|
|Aqaba Special Economic Zone Authority (ASEZA)|
|Free Zones located at: Zarqa, Sahab, Queen Alia International Airport, Al-Karama, Al-Karak|
|Industrial Parks: Amman, Mafraq, Irbid and Ma'an|
8. Taxation – 2017
- Value added tax: 16%
- Corporate income tax: 20%
Source: PwC Taxes at a Glance 2017
8.1 Business Taxes
|Type of Tax||Tax Rate and Base|
|Corporate Income Tax|
|Stamp Duty||0.3% - 0.6% of the contract value|
|Value Added Tax||16% on value of the products (standard rate), 4% reduced rate for selected goods, zero rate for selected goods|
|Payroll Tax||7%-20% on a progressive basis|
|Social Security Contributions||14.25% on salaries up to a maximum amount determined on a yearly basis|
9. Foreign Worker Requirements
9.1 Localisation Requirements
A number of professions are reserved for Jordanian nationals only, including engineering, accounting, medicine, administration, teaching and warehousing. While there is considerable slack in the Jordanian labour market, absence of vocational or educational skills in these areas means that businesses will face difficulties filling vacancies and higher training costs.
9.2 Refugee Employment Restrictions
There are a number of barriers to employing refugees in Jordan, hindering integration into the labour market. The most notable obstacles include the cost of work permits and the difficulty for refugees to obtain the necessary documentation. Jordanian nationals are also favoured for employment by law due to high levels of unemployment in the country and the risk of social unrest.
Some measures have been introduced to ease recruitment of refugees, including waiving permit costs, and allowing companies in export zones to employ 25% of their workforce as refugees. Nevertheless, employers remain unable to tap the full potential of the refugee population, limiting recruitment options. In addition, The Jordanian government agreed with the EU to somewhat open its labour market to its massive Syrian refugee population (1.3 million registered but estimated to be more) in exchange for USD2.1 billion in grants and USD1.9 billion additional financing over the next three years, as part of Jordan Compact Agreement in February 2016. As a result, issuing work permits for Syrians is being made easier, especially in low-skill sectors such as construction and agriculture. This has consequently widened the pool of labour available for recruitment and reduced compliance risk associated with employing refugees. The government also opened its first job centre in a refugee camp in August 2017, making it much easier for refugees to register for work permits and helping further integrate them into the labour force.
9.3 Foreign worker permits
Work permits are valid for up to one year and may be renewed. The foreign worker must apply for a new permit if they wish to change jobs in Jordan.
9.4 Visa/Travel Restrictions
Individuals of all nationalities must apply for work and residency permits if they want to work in Jordan, with a priority given to Arab nationals. Work and residency permits are issued with the approval of the Ministry of Labor and the Ministry of Interior. An applicant may not begin working in Jordan before obtaining work and residency permits. Work and residency permits may not be transferred from one employer to another; therefore, if an employee changes employers, the previous work and residency permits must be canceled, and the employee must apply for new work and residency permits.
The work and residency permits are valid for one year and may be renewed on an annual basis.
As a prerequisite to obtain work and residency permits, the Ministry of Labor requires the employer to submit a bank letter of guarantee to the order of the Ministry of Labor for each expatriate employee seeking work and residency permits in Jordan. Under the Jordanian Labor Law, certain occupations are exclusively reserved to Jordanians and may not be filled by non-Jordanians, such as those in the fields of medicine, engineering, accounting and administration, as well as clerical work, such as data entry and secretarial work, warehousing, hairdressing, teaching, and mechanical and car repair type of work.
10.1 Sovereign Credit Ratings
|Rating (Outlook)||Rating Date|
|Standard & Poor's||B+||20/10/2017|
NR = Not Rated
Source: Moody's, Standard & Poor's, Fitch Ratings
10.2 Competitiveness and Efficiency Indicators
|Ease of Doing Business Index ||113/189||118/190||103/190|
|Ease of Paying Taxes Index||46/189||64/190||97/190|
|Logistics Performance Index ||67/160||N/A||N/A|
|Corruption Perception Index||57/176||59/180||N/A|
|IMD World Competitiveness||53/63||56/63||N/A|
Source: World Bank, IMD, Transparency International
10.3 BMI Risk Indices
|Economic Risk Index Rank||116/202|
|Short-Term Economic Risk Score||39.2||36.7||41.3 |
|Long-Term Economic Risk Score||46.2||48.3||49.2|
|Political Risk Index Rank||64/202|
|Short-Term Economic Risk Score||63.1||63.1||63.1 |
|Long-Term Economic Risk Score||66.6||71.2||71.2|
|Operational Risk Index Rank||61/201|
|Operational Risk Score||58.7||58.6||58 |
Source: BMI Research
10.4 BMI Political and Economic Risk Indices
BMI Risk Summary - Q2 2018
Jordan's long-term political outlook is among the most stable in the region, with the monarchy enjoying extensive support in the country. Nonetheless, the social uprisings that shook the region in the past six years are indicative of the hazard that low living standards and lack of political freedoms pose to long-term stability. A high level of unemployment and sharp economic inequalities weigh long-term political risks to the upside. In addition, the resilience of Islamic State in Syria will mean that security issues will remain at the forefront over the coming years.
Regional instability stirred up by the ongoing wars in Iraq and Syria has had a detrimental impact on the Jordanian economy. In particular, tourism has suffered heavy losses as the risk of instability has dented the region's image abroad. Instability has also led to the export sector being severely hit by trade disruptions in the region. That said, we expect economic activity to strengthen from 2017 onward, on the back of a gradual pick-up in exports.
Jordan is one of the more prosperous and stable countries in the MENA region, owing in large part to its pragmatic foreign policy and close relationship with neighbouring states, along with strategic allies such as the US. Progressive trade and investment policies, a strong logistics network and a large, slack labour market offer considerable advantages for foreign investors. However, Jordan's proximity to several conflict hotspots, such as the West Bank, Lebanon, Syria and Iraq, has caused significant issues, notably with regard to supply chain disruption, a high influx of refugees, a growing import burden and severe pressure on public services.
10.5 BMI Operational Risk Index
|Operational Risk||Labour Market Risk||Trade and Investment Risk||Logistics Risk||Crime and Security Risk|
|Jordan Score||58.0||54.9||59.1||59.7 ||58.3 |
|East and Southeast Asia Average||47.4||49.3||48.1||48.4||43.9|
|East and Southeast Asia Position (out of 18)||6||5||7||6||7|
|Asia Position (out of 35)||6||5||7||6||7|
|Global Position (out of 201)||61||64||63||56||76|
Note: 100 = Lowest risk; 0 = highest risk
Source: BMI Operational Risk Index
|Country||Operational Risk Index||Labour Market Risk Index||Trade and Investment Risk Index||Logistics Risk Index||Crime and Security Risk Index|
|West Bank And Gaza||33.7||46.4||36.8||30.2||21.5|
|Emerging Markets Averages||46.8||48.0||47.5||45.8||46.1|
|Global Markets Averages||49.8||49.8||50.0||49.3||49.9|
Note: Higher Score = Lower Risk
Source: BMI Operational Risk Index
11. Hong Kong Connection
11.1 Hong Kong’s Trade with Jordan
|Number of Jordan residents visiting Hong Kong||10,703||-8.8%|
|Number of Jordanians residing in Hong Kong||N/A||N/A|
Source: Hong Kong Immigration Department
11.2 Commercial Presence in Hong Kong
|Number of Jordanian companies in Hong Kong||N/A ||N/A|
|- Regional headquarters|
|- Regional offices|
|- Local offices|
11.3 Chamber of Commerce (or Related Organisations) in Hong Kong
The Arab Chamber of Commerce & Industry (ARABCCI)
The Arab Chamber of Commerce & Industry (ARABCCI) was established in Hong Kong 2006 as a leading organization at promoting commercial ties between Hong Kong/Greater China and the Arab World. From a base of 8 founding member companies, ARABCCI has now evolved to include an ever-growing number of members. The Chamber is run by business experts for business professionals, dedicated to opening enormous trade opportunities by providing extensive information and professional services to members
Source: Directory of Hong Kong Trade and Industrial Organisations, Hong Kong Trade and Industry Department
Jordan Consulate General in Hong Kong, Hong Kong
Address: Room 606, Tower 1 Admiralty Centre, 18 Harcourt Road, Admiralty, Hong Kong SAR
Hours of Business: 10:00 am to 12:00 nn, 2:30 pm to 5:00 pm
Consul General: Mr David T.C. Lie, Honorary Consul
Tel: (852) 2524 0085
Fax: (852) 2524 6366
11.5 Visa Requirements for Hong Kong Residents
People travelling on a Hong Kong passport need a visa to visit Jordan.
Source: Visa on Demand