Jordan is a Middle Eastern country centrally located on desert plateaus in southwest Asia and strategically positioned to serve as a regional business platform. Since King Abdullah II’s 1999 ascension to the throne, Jordan has taken steps to encourage foreign investment and to develop an outward-oriented, market-based, and globally competitive economy. Jordan is also uniquely poised as a platform to host investments focused on the reconstruction of Iraq and other projects in regional markets.
Jordan is committed to the promotion of investments as a key driver of economic growth and job creation, though in practice these policies face implementation challenges. The Government of Jordan offers a range of incentives to potential investors and has undertaken measures to review and enhance the economic, financial, and legal framework governing the investment process to take better advantage of available opportunities and spur growth through investment. However, despite improvement on the World Bank Ease of Doing Business report, doing business in Jordan is more difficult than elsewhere in the region.
Jordan’s economic growth has been limited for over a decade by exogenous shocks, starting with the Global Financial Crisis in 2008, followed by the Arab Spring in 2011 which resulted in interruptions of energy imports, the 2015 closure of Jordan’s borders with Iraq (reopened in August 2017 but still not flourishing) and Syria (partially re-opened in 2018), and an influx of Syrian refugees. Over this period, the government consistently ran large annual budget deficits but has been able to reduce the financing gap with loans, foreign assistance, and savings from economic reform measures enacted as part of an International Monetary Fund (IMF) Extended Fund Facility programs. On March 25, 2020, the IMF Board approved a $1.3 billion Extended Fund Facility program for Jordan centered on fiscal consolidation, increased revenue collection, targeted social spending, economic growth, and job creation.
After growing by two percent in 2019, Jordan’s economy contracted by 1.6 percent in 2020 according to Department of Statistics data, largely due to the COVID-19 pandemic. The IMF estimates it will grow at 2.0 percent in 2021, though this number could be revised down as the effects of the pandemic’s second wave continue. Early in the pandemic, the Government of Jordan implemented a set of measures to contain the spread of the virus, which entailed a strict curfew and lockdown of schools, colleges, and 75 percent of all economic activity. The economy gradually re-opened after the initial lockdowns, although evening and Friday curfews persisted through much of 2020 and into 2021. The IMF has released additional credit from a Rapid Financing Instrument to help Jordan manage its fiscal obligations during the pandemic.
Jordan introduced plans to mitigate the pandemic’s negative impact on the economy in both the short and medium terms. The Central Bank of Jordan (CBJ) injected JD 1.5 billion ($2.1 billion) to increase liquidity in the banking system. It also lowered the lending rate by 1.5 percent. The CBJ launched a JD 500 million ($706 million) loan guarantee program at competitive interest rates to help small and medium enterprises (SMEs) resume their operations and pay their operational costs; this loan guarantee program increased in March 2021 to JD 700 million ($988 million). The CBJ also raised credit ceilings for the tourism sector and encouraged banks to reschedule and defer loans for those affected by the crisis through the end of 2021.
King Abdullah II activated the National Defense Law on March 17, 2020. Since then, the Government of Jordan has enacted 25 defense orders which stipulate measures to offset the socioeconomic impact of COVID-related restrictions and protect the economy. . The government also announced measures to alleviate financial and operational burdens on businesses by postponing General Sales Tax (GST) payment and customs fees, reducing the cost of labor by exempting companies from paying social security retirement insurance for three months starting in March 2020, reducing energy costs for the industrial sector, reducing inspection rate of imported essential products, and halting judicial procedures on defaulting individuals/companies. The government issued Defense Order 6 which aims to protect employees’ rights and bans layoffs. It addressed employment conditions in the private sector, including required salary payments and temporary closure of entities/institutions largely hit by the pandemic.
The Social Security Corporation (SSC), in coordination with the government, initiated a number of programs to support workers in most affected sectors and their employers, including the relief program “Estidama,” launched in December 2020 to subsidize the salaries of workers in the sectors most affected by COVID.
Even while Jordan’s economy struggles, international metrics indicate Jordan’s investment regulatory environment is improving. Jordan was selected as one of the top three most improved business climates in the World Bank’s “Doing Business Report 2020,” jumping 29 places from 104 to 75. Jordan advanced 33 points in the simplified tax services index for implementing an electronic filing and payment system for labor taxes. In ease of getting credit, Jordan ranked on par with the United States and Australia. Despite this progress, many investors complain the business environment continues to be challenging due to excessive red tape, shifting interpretations of laws and regulations, difficulties starting and exiting businesses, and other factors.
The Jordanian Investment Law grants equal treatment to local and foreign investors and incentivizes investments in industry, agriculture, tourism, hospitals, transportation, energy, and water distribution. In December 2020, the government submitted amendments to address loopholes related to tax breaks; the proposal is now awaiting parliamentary approval. The ongoing process to rationalize the tax structure and close tax loopholes may reduce incentives offered to foreign investors.
In January 2020, the Jordan Investment Commission (JIC) implemented an investor grievances bylaw which enables investors to file complaints concerning decisions issued by government agencies. Jordan also endorsed a new Public Private Partnership Law in 2020 to support the government’s commitment to broadening the utilization of the public-private partnerships and encouraging the private sector to play a larger role in overall economic activity.
Despite the pandemic, Foreign Direct Investment dropped only by 1.8 percent to JD 390 million ($551 million, equivalent to 1.7 percent of GDP) in the first three quarters of 2020 compared to the same period in 2019.
|TI Corruption Perceptions Index||2020||60 of 180||http://www.transparency.org/research/cpi/overview|
|World Bank’s Doing Business Report||2020||75 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2020||81 of 129||https://www.globalinnovationindex.org/analysis-indicator|
|U.S. FDI in partner country ($M USD, historical stock positions)||2019||$179||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2019||$4,410||http://data.worldbank.org/indicator/NY.GNP.PCAP.CD|
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
Jordan is largely open to foreign investment, and the government is committed to supporting foreign investment. Foreign and local investors are treated equally under the law. The Jordan Investment Commission (JIC) is the body responsible for implementing the 2014 Investment Law and promoting new and existing investment in Jordan, through a range of measures to incentivize and facilitate investment procedures.
The Investment Law established an Investment Council, comprised of the Prime Minister, ministers with economic portfolios, and representatives from the private sector, to oversee the management and development of national investment policy and propose legislative and economic reforms to facilitate investment.
The Investment Law also identifies JIC as the focal point for investors, capable of expediting the provision of government services and providing investment incentives such as tax and customs exemptions. The President of the Commission and the administrative team supervise and approve investment-related matters within the guidelines set by the Investment Council and approved by the government.
JIC oversees an investment-dedicated “Investment Window” to provide information and technical assistance to investors, with a mandate to simplify registration and licensing procedures for investment projects that benefit from the Investment Law. In 2018, the Commission launched a “Follow-Up and After Care” section with an aim to remove obstacles facing investors and find appropriate solutions as part of the investment process.
In 2018, the government issued the “Code of Governance Practices of Policies and Legislative Instruments in Government Departments for the Year 2018.” It aims to increase legislative predictability and stability to ensure the confidence of citizens and the business sector. The government developed guidelines for a regulatory impact assessment, to be adopted and implemented across all government entities by 2021.
Limits on Foreign Control and Right to Private Ownership and Establishment
Investment and property laws allow domestic and foreign entities to establish businesses that engage in remunerative activities. Foreign companies may open regional and branch offices; branch offices may carry out full business activities and regional offices may serve as liaisons between head offices and Jordanian or regional clients. The Ministry of Industry, Trade and Supply’s Companies Control Department implements the government’s policy on the establishment of regional and branch offices.
Foreign nationals and firms are permitted to own or lease property in Jordan for investment purposes and are allowed one residence for personal use, provided that their home country permits reciprocal property ownership rights for Jordanians. Depending on the size and location of the property, the Land and Survey Department, the Ministry of Finance, and/or the Cabinet may need to approve foreign ownership of land and property, which must then be developed within five years of the date of approval.
In April 2019, the government amended its bylaw governing foreign ownership, expanding ownership percentage in some economic activities, while maintaining the following restrictions:
- Foreigners are prohibited from wholly or partially owning investigation and security services, stone quarrying operations for construction purposes, customs clearance services, and bakeries of all kinds; and are prohibited from trading in weapons and fireworks. The Cabinet, however, may approve foreign ownership of projects in these sectors upon the recommendation of the Investment Council. To qualify for the exemption, projects must be categorized as being highly valuable to the national economy.
- Foreigners are prohibited from wholly or partially owning investigation and security services, stone quarrying operations for construction purposes, customs clearance services, and bakeries of all kinds; and are prohibited from trading in weapons and fireworks. The Cabinet, however, may approve foreign ownership of projects in these sectors upon the recommendation of the Investment Council. To qualify for the exemption, projects must be categorized as being highly valuable to the national economy.
- Investors are limited to 50 percent ownership in certain businesses and services, including retail and wholesale trading, engineering consultancy services, exchange houses apart from banks and financial services companies, maritime, air, and land transportation services, and related services.
- Investors are limited to 50 percent ownership in certain businesses and services, including retail and wholesale trading, engineering consultancy services, exchange houses apart from banks and financial services companies, maritime, air, and land transportation services, and related services. • Foreign firms may not import goods without appointing an agent registered in Jordan; the agent may be a branch office or a wholly owned subsidiary of the foreign firm. The agent’s connection to the foreign company must be direct, without a sub-agent or intermediary. The Commercial Agents and Intermediaries Law No. 28/2001 governs contractual agreements between foreign firms and commercial agents. Private foreign entities, whether licensed under sole foreign ownership or as a joint venture, compete on an equal basis with local companies.
- Foreign firms may not import goods without appointing an agent registered in Jordan; the agent may be a branch office or a wholly owned subsidiary of the foreign firm. The agent’s connection to the foreign company must be direct, without a sub-agent or intermediary. The Commercial Agents and Intermediaries Law No. 28/2001 governs contractual agreements between foreign firms and commercial agents. Private foreign entities, whether licensed under sole foreign ownership or as a joint venture, compete on an equal basis with local companies.
The bylaw authorizes the Council of Ministers, upon the recommendation of the Prime Minister, to grant a higher percentage ownership to non-Jordanian investors in any investment based on a certain criteria.
Under the U.S.-Jordan Bilateral Investment Treaty, U.S. investors are granted several exceptions and are accorded the same treatment as Jordanian nationals, allowing U.S. investors to maintain 100 percent ownership in some restricted businesses. The most up-to-date listing of limitations on investments is available in the FTA Annex 3.1 and may be found at http://www.ustr.gov/trade-agreements/free-trade-agreements/jordan-fta/final-text.
For national security purposes, foreign investors must undergo security screening through the Ministry of Interior, which can be finalized through the Commission’s “Investment Window” located at the Investment Commission or online .
Other Investment Policy Reviews
In 2012, the United States and Jordan agreed to Statements of Principles for International Investment and for Information and Communication Technology Services, and a Trade and Investment Partnership Bilateral Action Plan, each of which is designed to increase transparency, openness, and governmental and private sector cooperation. The two parties also began discussions on a Customs Administration and Trade Facilitation Agreement. All current treaties and agreements in force between the United States and Jordan may be found here: .
As a follow-up to OECD’s Investment Policy Review of Jordan and Jordan’s adherence to the OECD Declaration on International Investment and Multinational Enterprises in 2013, the MENA-OECD competitiveness program issued a report in 2018 entitled “Enhancing the legal framework for sustainable investment: Lessons from Jordan”( ).
Businesses in Jordan need to register with the Ministry of Industry, Trade, and Supply’s Companies Control Department, or the Chambers of Commerce or Industry depending on the type of business they conduct. Registration is required to open a bank account, obtain a tax identification number, and obtain a VAT number. New businesses also need to obtain a vocational license from the municipality, receive a health inspection, and register with the SSC. In November 2017, the government issued a decision to cancel all non-security related pre-approvals for registering a business and only require final approvals before starting operations.
JIC’s “Investment Window” at the Jordan Investment Commission ( ) serves as a comprehensive investment center for investors. The window provides services to local and foreign investors, particularly those in the agricultural, medical, tourism, industrial, ICT-Business Process Outsourcing (BPO), and energy sectors.
In 2017, the Commission further streamlined procedures to register and license investment projects in development zones: it introduced a Fast-Track Investment Window, which reduced the number of committee approvals from 23 to 13, and reduced registration procedures from 15 to 5. These changes reduced the typical time required to register in development zones from five days to one day. Additionally, the time period to grant exemptions under the investment law has been reduced from two weeks to one, and the time period to grant exemptions under the decisions of the Prime Minister from seven days to one.
Jordan has also adopted a single security approval to replace the 11 approvals previously required for new investors. The new approval covers registering and licensing the company, obtaining driving licenses for investors, possessing immovable property for the establishment of investment projects in the industrial and developing zones, in addition to granting residence permits to non-Jordanian investors and their family members. The commission has published a number of online guides, including the investor guide ( ).
In 2018, the Companies Control Department has developed and launched a portal for online registration: . Foreign investors can access it to register new companies. However, e-signatures have not been implemented, so investors must sign documents using notary services in their countries.
In November 2019, under the Jordan Investment Commission (JIC), the government introduced several new services including the issuance and renewal investor IDs, issuance and renewal of IDs for investors’ family members, registration of institutions in development zones, first-time registration of individual institutions, changing the method of use, registration and renewal of subscriptions to the Amman Chamber of Commerce (ACC), amendments to subscriptions to the ACC, and issuance of environmental permits. The introduction of these electronic services reduced the time needed to grant or renew the investor identification card (required to facilitate various transactions) to one day. ( ).
In December 2020, the Greater Amman Municipality (GAM) digitized thirteen of its licensing-related services, including vocational licensing and renewal.
In accordance with the Investor Grievances Bylaw No. 163 of 2019, the JIC established a unit to follow up on and address investor complaints, with the aim to resolve legal disputes outside of government the formal court proceedings and reduce related cost.
Jordan launched a National Single Window (NSW) for customs clearance. In 2020, all export and import custom declarations became electronic. This was supported by new regulations enforcing the use of electronic clearances.
The Ministry of Digital Economy and Entrepreneurship statistics said that total electronic transactions in 2020 reached 14 million, including services provided by institutions such as GAM, JIC, Tax Department, Ministry of Industry and Trade, and Jordan Customs. As of March 2021, the total number of available e-services is 404.
The 2020 World Bank Doing Business Report attributed Jordan’s rise to 75th globally to reforms regarding the legal rights of borrowers and lenders, the introduction of a unified legal framework for secured transactions, launching a notice-based collateral registry, improvements to the insolvency law, and implementation of an electronic filing and payment for labor taxes and other mandatory contributions. The number of payments that businesses need to file every year was also cut from twenty-three to nine. However, Jordan ranked 120 in starting a business, with 7.5 procedures and 12.5 days to complete the process.
Jordan does not have a mechanism to specifically incentivize outward investment, nor does it restrict it.
3. Legal Regime
Transparency of the Regulatory System
Legal, regulatory and accounting policies, applicable to both domestic and foreign investors, are transparent and promote competition. The Jordanian Companies Law stipulates that all registered companies should maintain sound accounting records and present annual audited financial statements in accordance with internationally recognized accounting and auditing principles. According to the Jordanian Securities Commission (JSC) Law and Directives of disclosures, auditing, and accounting standards (1/1998), all entities subject to JSC’s supervision are required to apply International Financial Reporting Standards (IFRS).
In 2018, the government issued the “Code of Governance Practices of Policies and Legislative Instruments in Government Departments” to increase legislative predictability and the stability of legislative environment. A pilot project was initiated in 2018 that enforced online consultations for new business regulations across six major entities in preparation for the roll out of the regulatory impact assessment across all government entities by 2021. The Legislative and Opinion Bureau is developing a “Legislation Data Memorandum,” which all government entities submitting new regulations will be required to fill out. The memorandum will provide information on the type and details of consultations conducted with the public and private sector and proof that the parties impacted have been consulted. Currently, laws and regulations are usually published on the website of the Legislative and Opinion Bureau for public comment, in addition to executive branch consultations with the legislative branch and key stakeholders. The new steps are aimed at institutionalizing public-private sector consultations.
The government is gradually implementing policies to improve competition and foster transparency in implementation. These reforms aim to change an existing system influenced in the past by family affiliations and business ties. The Jordan Investment Commission (JIC), through its Fast-Track Investment Window, introduced a number of measures to streamline the investment process.
Jordan is committed to its fiscal transparency policy; therefore the Ministry of Finance (MoF) publishes a monthly “General Government Finance Bulletin” and that includes detailed information on government’s debt obligations. ( ).
International Regulatory Considerations
Jordan recognizes and accepts most U.S. standards and specifications. However, Jordan has occasionally required additional product standards for imports. Some of these measures have been viewed as barriers to trade, such as a 2014 restriction imposed on packaging sizes for poultry available for retail resale.
As a member country of the WTO, Jordan is obliged to notify all draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).
Jordan is a signatory of the WTO Trade Facilitation Agreement. Jordan had implemented 88.7 percent of its commitments. Jordan submitted its notifications for Category A before the agreement came into force, and is currently in the final review for categories B and C.
Legal System and Judicial Independence
Jordan has a mixed legal system based on civil law, sharia law (Islamic law), and customary law. The Constitution establishes the judiciary as one of three separate and independent branches of government. Jordanian commercial laws do not make a distinction between Jordanian and non-Jordanian investors. However, plaintiffs complain of judicial backlogs and subsequent delays in legal proceedings. In 2018, Jordan has introduced economic judicial chambers, established under the Amman First Instance Court and Amman Appeal Court under the provisions of the Law of Formation of the amended Courts No. 30 of 2017. These chambers specialize in the adjudication of certain commercial and investment disputes mentioned in Article 4 of the Courts Formation Law.
Laws and Regulations on Foreign Direct Investment
Jordan’s Investment Law governs local and foreign investment. The law consolidated three entities – the Jordan Investment Board, the Jordanian Development Zones Commission, and the Free Zones Corporation – into the Jordan Investment Commission. The law incorporates a statement of investors’ rights and a legal framework for the newly established Investment Window, which is located at the Investment Commission’s headquarters.
The commission issued and published services and licensing guides outlining processes and fees, in addition to other guides ( ). The commission also issued a new bylaw that regulates non-Jordanian investments to allow larger foreign investors’ ownership in previously restricted areas.
In September 2017, Parliament passed the Monitoring and Inspection of Economic Activities Law No. 33/2017, and amendments to Jordan’s Companies Law No. 34/2017. This law governs the requirements to establish venture capital companies for the purpose of direct investment, or for creating funds, to contribute or invest in high-growth companies that are not listed in the stock market.
In 2018, Jordan passed the Insolvency Law, Movable Assets and Secured Lending Law and Bylaw, the Venture Capital Bylaw, and the Income Tax Law, along with bylaws to ensure proper implementation.
In October 2019, Jordan published an amended Social Security Law stipulating temporary changes to the social security contributions of newly registered entities that meet specific conditions, with an aim to support new companies and startups. The government also issued the Investor Grievance Bylaw and established a special unit to follow up on investors cases. As part of the government economic stimulus package announced in 2019, new investors are offered 10-year “incentive stability guarantees.” In January 2020, Jordan passed a new Public Private Partnership (PPP) law and established a PPP Unit to identify and study investment opportunities. The PPP Law introduced a comprehensive PPP framework and created a special fund to finance PPP Projects. The PPP unit reports to the Prime Minister and is authorized to provide technical assistance to the government by preparing feasibility studies and Financial Commitments Reports. The International Financing Corporation (IFC) and other donors are providing technical assistance programs to enhance the capacity and effectiveness of the PPP unit and framework.
There is no systematic or legal discrimination against foreign participation with respect to ownership and participation in Jordan’s major economic sectors other than the restrictions outlined in the governing regulations. In fact, many Jordanian businesses actively seek engagement with foreign partners to increase their competitiveness and access to other international markets. The government’s efforts have made Jordan’s official investment climate welcoming; however, U.S. investors have reported hidden costs, bureaucratic red tape, vague regulations, and unclear or conflicting jurisdictions.
Most economic regulations are available on the Jordan Investment Commission website ( ), or on the Ministry of Industry and Trade and Supply website (https://www.mit.gov.jo/Default/AR). All regulations are published in the Official Gazette ( ) or the Legislative and Opinion Bureau ( ).
For further details please contact:
Jordan Investment Commission
Telephone: +962 (6) 5608400/9 Ext: 120
P.O. Box 893
Amman 11821 Jordan
Competition and Antitrust Laws
Parliament passed amendments to Competition Law No. 33/2004 in 2011 to strengthen the local economic environment and attract foreign investment by providing incentives to improve market competitiveness, protect small and medium enterprises from restrictive anticompetitive practices, and give consumers access to high quality products at competitive prices. The Competition Directorate at the Ministry of Industry, Trade, and Supply conducts market research, examines complaints, and reports violators to the judicial system.
The investor grievance unit established in 2019 at the Jordan Investment Commission can also look into unfair competition cases filed by investors.
Expropriation and Compensation
Article 11 of the Jordanian Constitution stipulates that expropriations are prohibited unless specifically deemed to be in the public interest. In cases of expropriation, the law mandates provision of fair compensation to the investor in convertible currency.
ICSID Convention and New York Convention
Since 1972, Jordan has been a contracting state to the International Centre for Settlement of Investment Disputes (ICSID Convention). Only a small number of cases between foreign investors and the Jordanian government have been brought before ICSID tribunals. Jordan is also a signatory to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York convention).
In January 2018, the Parliament passed amendments to Arbitration Law 2017, which aims to facilitate the use of arbitration as an alternative to dispute settlement procedures.
Investor-State Dispute Settlement
Under domestic law, foreign investors may seek third party arbitration as a means of settling disputes. Jordan abides by WTO dispute settlement mechanisms, and dispute settlement mechanisms under the U.S.-Jordan FTA are consistent with WTO commitments. Article IX of the United States-Jordan Bilateral Investment Treaty (BIT) establishes procedures for dispute settlements between Jordanians and U.S. persons.
Investment disputes are treated as any other commercial or civil dispute in the Jordanian judicial system. Investment agreements with the Jordanian government as a party generally contain a dispute resolution clause that would refer cases to arbitration in Jordan. On average, it takes three to four years for cases that go through the local court system to reach a verdict. Cases settled through arbitration take between 12 to 18 months. The main challenge in litigating cases is being able to conduct proper process of service upon all concerned parties. Another challenge is recently established Economic Chamber is still developing its expertise in complex commercial litigation.
Rulings by U.S. courts or other international arbitration committees can be upheld through the filing of an Enforcement of Ruling motion in a Jordanian court.
International Commercial Arbitration and Foreign Courts
In March 2018, King Abdullah II approved Arbitration Law No. 16, amending the 2001 law. The amendment introduced changes to the procedural framework of arbitrators seated in Jordan, which can be traced in the UNCITRAL model law. The amended law gives more authority to the Arbitral Tribunal and limits the role of the Court of Appeal.
Rulings by U.S. courts or other international arbitration committees can be upheld through the filing of an Enforcement of Ruling motion in a Jordanian court.
The Jordan Investment Commission (JIC) established an investor grievance mechanism in accordance with the Investor Grievance bylaw No. 163 of 2019, and Grievance Hearing regulation No. 1 of 2020. This mechanism allows investors to file complaints against government decisions outside of court system; complaints can be filed electronically through JIC’s website.
The Commercial Code, Civil Code, and Companies Law collectively govern bankruptcy and insolvency proceedings. In December 2017, the cabinet endorsed a bankruptcy bylaw which stipulates procedures for optional and compulsory liquidation, along with the mechanism, liquidation plan, and required documentation and reporting. In 2018, parliament passed the Insolvency Law, which allows individuals and companies to offset their financial position through a debt management plan. The law was designed to help the insolvent entity continue its economic activity, rather than directly resorting to bankruptcy, and regulates insolvency proceedings for foreign organizations according to international conventions ratified by Jordan. As of 2021, judges had dismissed almost all petitions for insolvency on technical grounds and no company has yet used the insolvency law successfully.
Defaulting on loans or issuing checks without adequate available balances is a crime in Jordan and may subject the offender to imprisonment under Jordan’s penal system. While Jordan is reexamining these laws, prison terms for debtors remains a legal practice in Jordan. Investors should conduct thorough due diligence on potential partners and avail themselves of local legal counsel in order to understand best business practices in Jordan and conform with local laws. The U.S. Commercial Service office of the Embassy of the United States in Amman can assist American businesses in these endeavors.
4. Industrial Policies
Under Investment Law No. 30/2014, the Council of Ministers, upon the recommendation of the Investment Council, may offer investment incentives in accordance with the law and governing regulations for projects outside the Development and Free Zones. The Investment Council and Investment Commission can also offer certain exemptions for projects in the following sectors:
1. Agriculture and livestock
2. Hospitals and specialized medical centers
3. Hotel and touristic facilities
4. Tourism-related entertainment and recreation
5. Contact and communication centers
6. Scientific research centers and medical laboratories
7. Technical and media production
Such incentives include customs exemptions, refunding of the general tax for production inputs, and no sales tax. JIC can provide investors with further information on these exemptions ( ). Automatic exemptions are also granted for specific services whether purchased locally or imported. The Income and Sales Tax Department will refund the general tax levied within 30 days from submitting a written request in accordance with the terms and conditions determined by the Regulations Governing Investment Incentives (Number 33 of 2015).
A number of non-automatic exemptions are granted for production requirements and fixed assets used in industrial or handicrafts activities. Such exemptions are subject to administrative procedures and approvals obtained from the Jordan Investment Commission Technical Committee and are governed by the previously referenced regulation.
Article 8-A of the 2014 Investment Law allows the cabinet to grant additional advantages, exemptions, or incentives to any economic activities in the Kingdom. Under this article, the cabinet granted additional incentives to the ICT, tourism, and transport sectors in 2016, as published in the Official Gazette.
Net profits generated from most exports were exempt from income tax until December 2018. The new Income Tax Law No. 38 (2018) imposed taxes on income generated from exports, in accordance with WTO agreements.
In October 2019, the government announced an economic stimulus package granting direct incentives to investors in industrial and commercial sectors, offering cash incentives for companies that replace foreign laborers with Jordanian staff, and covering health insurance for employees and their families.
As the government implements reforms under the IMF Extended Fund Facility program and its own pro-growth reform agenda, several U.S. investors have reported the government has sought to reduce or eliminate incentives, guarantees, and/or tax exemptions previously expected.
Foreign Trade Zones/Free Ports/Trade Facilitation
The country is divided into three development areas: Zones A, B, and C. Investments in Zone C, the least developed areas of Jordan, receive the highest level of incentives while those in Zone A receive the lowest level. All agricultural, maritime, transport and railway investments are classified as Zone C, irrespective of location. Hotel and tourism-related projects along the Dead Sea, leisure and recreational compounds, and convention and exhibition centers receive Zone A designations. Qualifying Industrial Zones (QIZs) are zoned according to their geographical location unless granted an exemption. The three-zone classification scheme does not apply to nature reserves and environmental protection areas.
Jordan’s Investment Law No. 30 of 2014 merged the Development and Free Zones Commission (DFZC) into the newly formed Jordan Investment Commission, an independent governmental body responsible for creating, regulating, and monitoring Jordan’s free trade zones, industrial estates, and development zones. The development areas are the King Hussein Bin Talal Development Area (KHBTDA) in Mafraq, the Ma’an Development Area, the Irbid Development Area (IDA), the Dead Sea Development Zone, the Jabal Ajloun Development Zone, and the King Hussein Business Park Development Zone. The Investment Law assigns the Jordan Industrial Estates Corporation (JIEC) and the Development and Free Zones Corporation (DFZC) as main developers of industrial estates and development and free zones, under the supervision of the investment commission.
As part of Jordan’s efforts to foster economic development and enhance its investment climate, the government has created nine industrial estates in Amman, Irbid, Karak, Mafraq, Madaba , Tafileh, Salt and Aqaba, in addition to several privately-run industrial parks, including al-Mushatta, al-Tajamouat, al-Dulayl, Cyber City, al-Qastal, Jordan Gateway, and al-Hallabat. These estates provide basic infrastructure for a wide variety of manufacturing activities, reducing the cost of utilities and providing cost-effective land and buildings. Investors in the estates continue to receive incentives until their contracts expire, and receive various additional exemptions, such as a two-year exemption on income and social services taxes, complete exemptions from building and land taxes, and exemptions or reductions on most municipalities’ fees.
Besides the six public free zones in Zarqa, Sahab, Karak, Karama, Mowaqaar, and Queen Alia Airport, Jordan has over 37 designated private free zones administered by private companies under the DFZC’s supervision. The free zones are outside of the jurisdiction of Jordan Customs and provide a duty and tax-free environment for the storage of goods transiting Jordan.
Jordan launched a new solar park in Ma’an development zone and announced plans to establish two new industrial parks in Zarqa and Jerash.
Under the Investment Law, establishments operating within development zones are subject to a unified tax rate of 5 percent. However, Income Tax Law No. 38 of 2018 modified the tax rates applicable to entities operating in the Development Zones depending on the source of the income; industrial activities with a local value-added of at least 30 percent are subject to 5 percent income tax rate, while other projects and activities are subject to 10 percent.
The Investment Law also grants entities registered in the free zones a tax exemption on any activity conducted within the borders of the free zones, the export of goods and services outside the Kingdom, and associated transit trade. Profits earned on activities pertaining to the sale, disposal, or importation of goods and services within the borders of the free zones are subject to tax based on the normal income tax rates applicable to each entity, depending on its status (corporation or individual).
The Aqaba Special Economic Zone (ASEZA) is an independent economic zone not governed by the Investment Commission or the articles in the Investment Law governing investments in free zones or development zones. It offers special tax exemptions, a flat five percent income tax, and facilitates customs handling at Aqaba Port. In recent years, ASEZA has attracted projects, mainly in hotel and property development sectors, valued at over $8 billion. The government continues to implement development projects aimed at attracting commerce and tourism through the Port of Aqaba. The Aqaba New Port project became operational in 2018 and reached design capacity in 2019. The new port, 20 kilometers south of the previous port, added four new terminals and expanded general ship berthing and marine services, in addition to adding dedicated terminals for grain silos, liquefied natural gas, phosphates, and propane.
Investors, foreign or domestic, face specific requirements in trade, services, and industrial projects in free zones. Industrial projects must be related to one of the following industries: • New industries that depend on advanced technology;
• New industries that depend on advanced technology; • Industries that require locally available raw material and/or locally manufactured parts;
• Industries that require locally available raw material and/or locally manufactured parts; • Industries that complement domestic industries;
• Industries that complement domestic industries; • Industries that enhance labor skills and promote technical know-how; or,
• Industries that enhance labor skills and promote technical know-how; or, • Industries that provide consumer goods and that contribute to reducing market dependency on imported goods.
• Industries that provide consumer goods and that contribute to reducing market dependency on imported goods.
In 2021, the government introduced a number of tax legislations to address gaps and loopholes in the current regime to prevent tax leakages and ensure transparency and fairness; including legislation on economic substance, transfer pricing, and to bring the Aqaba Special Economic Zone (ASEZA) under the national control for tax and customs administration.
For further details, please visit: • Jordan Investment Commission (http://www.jic.gov.jo/)
• Jordan Investment Commission (http://www.jic.gov.jo/) • Jordan Industrial Estate Corporation (http://www.jiec.com)
• Jordan Industrial Estate Corporation (http://www.jiec.com) • Aqaba Special Economic Zone (http://www.aqabazone.com/)
• Aqaba Special Economic Zone (http://www.aqabazone.com/)
Performance and Data Localization Requirements
Jordan has a well-educated and trained labor force of 2.5 million people, of which approximately 700,000 are registered foreign workers. Unregistered foreign workers may be nearly double this number. Most foreign laborers are employed in construction, agriculture, and domestic housekeeping sectors. Approximately 70,000 also work in the QIZs as textile workers.
The Ministry of Labor regulates foreign worker licensing, licensing fees, prohibited sectors, and employer liability. Along with the Ministry of Interior, the Ministry of Labor is responsible for approving the hiring of professional foreign workers by private businesses.
Official unemployment reached 23.4 percent at the end of 2020, leading the Ministry of Labor to announce new labor regulations aimed at creating jobs for Jordanian youth through the reduction of foreign labor by 2024. The regulations stipulate increases in permit fees for non-Jordanians and closure of certain jobs to foreign employment altogether.
In February 2020, the Ministry of Labor increased the number of professions closed to foreign workers from 11 to 28. However, employers may request the Ministry of Labor review applications for foreign workers in restricted sectors if local expertise cannot be found; these requests have generally been approved. The government issued Industrial Sector Tax Incentives Bylaw No.18 granting tax incentives to industries that employ certain percentages of Jordanians, with additional incentives to those who hire Jordanian women and people with disabilities. The bylaw also extends tax incentives to small and medium enterprises based on certain conditions. Beneficiaries of the bylaw are industries whose finished products contain at least 30 percent local content. The tax rate (after incentives) has a floor of 10 percent for pharmaceuticals and garment industries, and 14 percent for other industries.
Jordan does not have requirements for foreign IT providers to turn over source code or provide access to surveillance.
In 2020, the Ministry of Digital Economy and Entrepreneurship submitted a draft for the personal Data Protection Law, which supports Jordan’s digitization efforts. The Council of Ministers approved the law and sent it to the Legislative and Opinion Bureau for review. Jordan does not have a modern data protection law. The Criminal Law, Cybercrime Law, and Telecommunication Law offer partial protection of personal data.
5. Protection of Property Rights
The legal system reliably facilitates and protects the acquisition and disposition of property rights. Foreign ownership of land and assets is governed by the Leasing of Immovable Assets and Their Sale to Non-Jordanian and Judicial Persons Law No. 47/2006. Under Article 3 of the law, if the buyer’s country of residence has a reciprocal relationship with Jordan, foreign nationals are afforded the right of ownership of property within urban borders in Jordan for residential purposes. According to the law, foreign nationals may rent immovable assets for business or accommodation purposes, provided that the plot of land does not exceed 10 acres and the lease is for no more than three years in duration. Interest in real property is recognized and enforced once recorded in a legal registry.
Jordan approved an investment program that grants citizenship or permanent residency of non-Jordanians in February 2018. This program includes permanent residency for non-Jordanians who purchase properties worth a minimum of JOD 200,000 ($282,100) and hold the properties for 10 years.
A new Property law passed in 2019 consolidated 13 laws governing property ownership in one legislation and addressed issues such as zoning and the facilitation of ownership and leases for foreign investors.
All land plots in Jordan are titled and registered with the Jordanian Land and Survey Department; any land not titled as private property is considered government property.
According to the Ease of Doing Business report of 2020, Jordan ranked 78 out of 190 countries in “Registering Property.”
Intellectual Property Rights
Jordan has passed several laws in compliance with international commitments to protect intellectual property rights (IPR). Laws consistent with Trade Related Aspects of Intellectual Property Rights (TRIPS) now protect trade secrets, plant varieties, and semiconductor chip designs.
Copyrights are registered with the Ministry of Culture’s National Library Department and patents are registered with the Registrar of Patents and Trademarks at the Ministry of Industry and Trade.
Jordan is a signatory to the Patent Cooperation Treaty and the Madrid Protocol and amended its patent and trademark laws in 2007 to enable ratification of the agreements. Jordan is a signatory to World Intellectual Property Organization (WIPO) treaties on both copyrights and on performances and phonograms, and it has been developing updated laws for copyrights, trademark standards, and customs regulations to meet international standards. Jordanian firms are able to seek joint ventures and licensing agreements with multinational partners. In 2017, Jordan acceded to the Patent Cooperation Treaty (PCT); the treaty entered into force October 2017. The Ministry of Industry and Trade introduced an e-filing service in 2018 through .
Amendments to Article 41 of Customs Law No. 33 of 2018 granted more time for legal agents to file trademark violation complaints. Jordan’s record on IPR enforcement has improved in recent years, but more effective enforcement mechanisms and legal procedures are still needed. In particular, a large portion of pirated videos and software remain in the marketplace.
On January 1, 2020, Jordan issued a draft bylaw for the application of broader protections of intellectual property rights. The bylaw stipulates the procedures to be followed by customs officials at the border to ensure the protection of intellectual property rights. As of March 2021, the draft was still under review at the Legislative and Opinion Bureau. On December 1, 2020 the Ministry of Industry, Trade and Supply issued instructions allowing the public to view patent applications once the legal period specified in the law has lapsed.
On December 1, 2020 the Ministry of Industry, Trade and Supply issued instructions allowing the public to view patent applications once the legal period specified in the law has lapsed.
Since 2000, 6,234 violations of Jordan’s current copyright law have been referred to the judiciary, including 218 cases in 2019 and 15 cases 2020. The significant drop in cases between 2019 and 2020 is due to the COVID-19 pandemic, which necessitated closing courts several times during the year. In addition, the Customs Department issued 163 infringement notifications to trademark owners or their legal representatives and seized 1,159,828 pieces of merchandise due to the infringement of intellectual property rights.
Jordan is not listed in USTR’s Special 301 Report and the Notorious Markets Report.
Resources for Intellectual Property Rights Holders:
Intellectual Property Attaché for the Middle East & North Africa
For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.
6. Financial Sector
Capital Markets and Portfolio Investment
There are three key capital market institutions: the Jordan Securities Commission (JSC), the Amman Stock Exchange (ASE), and the Securities Depository Center (SDC). The ASE launched an Internet Trading Service in 2010, providing an opportunity for investors to engage in securities trading independent of geographic location.
Jordan’s stock market is one of the most open among its regional competitors, with no cap on foreign ownership. As of March 2021, non-Jordanian ownership in companies listed on the ASE represented 50.7 percent of the total market value (32 percent Arab investors and 18.7 percent non-Arab investors). Non-Jordanian ownership in the financial sector was 52.8 percent, 19.3 percent in the services sector and 63.1 percent in the industrial sector.
In spite of recent reforms and technological advances, the ASE suffers from intermittent liquidity problems and low trading activity. The financial market peaked in 2007-2008, with average trading volumes topping $118 million per day. Following the global economic downturn, the market declined precipitously, with market capitalization falling from a record high of $41 billion in 2007 to $21 billion as of Dec 31, 2019 and dropped further to $18.2 billion in 2020 due to the pandemic.
The government respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.
Credit is allocated on market terms. The private sector has access to a limited variety of credit instruments relative to countries with more developed capital markets.
Money and Banking System
Jordan has 25 banks, including commercial banks, Islamic banks, and foreign bank branches. Jordan does not distinguish between investment banks and commercial banks. Concentration in the banking sector has decreased in over the past decade; the assets of the largest five banks accounted for 54.6 percent of licensed banks’ total assets at the end of 2019. Licensed banks’ total assets reached JD 51.2 billion ($72 billion) at the end of 2019. Banking sector assets grew by 5.6 percent in the first eleven months of 2020 to reach JD 56.5 billion ($79 billion). The banking system is capably supervised by the CBJ, which publishes an annual Financial Stability Report. ( )
Banks continue to be profitable and well-capitalized with deposits being the primary funding base. Liquidity and capital adequacy indicators remain strong largely due to the banks’ conservative and risk averse approach, and due to strict regulations on lending, particularly mortgage lending. Non-performing loan ratios have increased slightly and are expected to increase further in 2021 as a result of COVID-19. Jordan’s rate of non-performing loans, as a percentage of all bank loans, was 4.9 percent at the end of 2018, reached 5 percent by the end of 2019, and increased to 5.4 in the first six months of 2020.
Jordan has historically had low banking penetration. The CBJ launched a Financial Inclusion Strategy in 2018 to increase access to the formal banking sector. Following the first iteration of the strategy, 42 percent of people in Jordan above the age of 15 had bank accounts, up from 33 percent previously.
Banking Law No. 28 of 2000 does not discriminate between local and foreign banks, however capital requirements differ. The minimum capital requirements for foreign banks are JD 50 million ($70.6 million), and JD 100 million ($141 million) for local banks. The law also protects depositors’ interests, diminishes money market risk, guards against the concentration of lending, and includes articles on electronic banking practices and anti-money laundering. The CBJ set up an independent Deposit Insurance Corporation (DIC) in 2000 that insures deposits up to JOD 50,000 ($71,000). The DIC also acts as the liquidator of banks as directed by the CBJ.
Foreigners are allowed to open bank accounts with a valid passport and a Jordanian residence permit.
In January 2017, the CBJ established the Jordan Payments and Clearing Company, with an aim to establish and develop digital retail and micro payments along with the investment in innovative technology and digital financial services. The CBJ actively supports technology and is running JoMoPay, a mobile payment system and provides regulatory support to a privately-operated electronic bill payment service eFAWATEER.com.
Foreign Exchange and Remittances
The CBJ supervises and licenses all currency exchange businesses. These entities are exempt from paying commissions on exchange transactions and therefore enjoy a competitive edge over banks.
The Jordanian Dinar (JD or JOD) is fully convertible for all commercial and capital transactions. Since 1995, the JD has been pegged to the U.S. dollar at an exchange rate of JD 1 to USD 1.41.
Other notable foreign exchange regulations include:
- Non-residents are allowed to open bank accounts in foreign currencies. These accounts are exempted from all transfer-related commission fees charged by the CBJ.
- Banks are permitted to purchase unlimited amounts of foreign currency from their clients in exchange for JODs on a forward basis. Banks are permitted to sell foreign currencies in exchange for JODs on a forward basis for the purpose of covering the value of imports.
- There is no restriction on the amount of foreign currency that residents may hold in bank accounts, and there is no ceiling on the amount residents may transfer abroad. Banks do not require prior CBJ approval for a transfer of funds, including investment-related transfers.
- Jordanian law entitles foreigners to remit abroad all returns, profits, and proceeds arising from the liquidation of investment projects. Non-Jordanian workers are permitted to transfer their salaries and compensation abroad.
Jordanian law entitles foreigners to remit abroad all returns, profits, and proceeds arising from the liquidation of investment projects. Non-Jordanian workers are permitted to transfer their salaries and compensation abroad.
Sovereign Wealth Funds
Jordan does not have a sovereign wealth fund.
7. State-Owned Enterprises
A number of state-owned enterprises (SOEs) exist in Jordan. Twenty-two SOEs of different sizes and mandates are fully owned by the government. Wholly owned SOEs employ around 11,000 individuals, with assets exceeding $8 billion. The Government has more the 50 percent ownership in six companies, employing around 4,000 individuals, with total assets of $1.3 billion.
Most of the operational SOEs are small in terms of the size of operations, assets, number of employees, and income. The largest SOEs are: National Electrical Power Company (NEPCO), Samra Electric Power Company, the Yarmouk Water Company, and Aqaba Development Corporation (ADC).
Jordan’s economy is private sector led, accounting for 71 percent of GDP and 75 percent of net cumulative investment. SOEs in Jordan exercise delegated governmental powers and operating in fields that are not yet open for investment, such as managing the transmission and distribution of electrical power and water. Other activities include logistics, mining, storage and inventory management of strategic products, in addition to economic development activities. The government supports these companies as necessary, for example, the government has issued and guaranteed Treasury bonds for NEPCO since 2011 to ensure continuous power supply for the country.
SOEs generally compete on largely equal terms with private enterprises with respect to access to markets, credit, and other business operations. The law does not provide preferential treatment to SOEs, and they are held accountable by their Board of Directors, typically chaired by the sector-relevant Minister and the Audit Bureau.
The government, enterprises and NGOs are progressively taking initiatives to incorporate Responsible Business Conduct into their practices.
Jordan is not a party to the Government Procurement Agreement.
Over the last twenty years, the Jordanian government has engaged in a wide-scale privatization program, including in the telecom, energy, and transportation sectors. The few remaining government assets not privatized, including Jordan Silos and Supply Company, have elicited little private sector interest.
In 2020, Jordan adopted a new Public Private Partnership Law to support the government’s commitment to broadening the utilization of public-private sector partnerships (PPPs) and encouraging the private sector to play a larger role in the economy. The law does not limit PPPs to certain sectors, or nationalities. A PPP unit housed at the Prime Ministry supports the government in identifying and prioritizing projects, provides funding resources to cover pre-feasibility and feasibility studies, and oversees tendering processes. The PPP unit interacts with private sector and potential investors through promotional activities, market sounding exercises, and to discuss proposals. Communication during the bidding phase is strictly governed by the PPPs bylaw in line with international best practices. Once a contract is awarded, line ministries or entities will take over as main POCs for projects and their implementation. The PPP higher council will handle investors’ grievances throughout the project’s lifecycle. The unit has already identified a list of potential PPP projects in several sectors: water, energy, transport, tourism, education, health, environment, and ICT.
8. Responsible Business Conduct
There is general awareness of responsible business conduct among both manufacturers and consumers in Jordan, with many local and multinational companies voluntarily developing and adopting corporate social responsibility (CSR) programs. CSR efforts predominantly focus on improving infrastructure in adjoining communities or providing better access to educational opportunities.
The amended Companies Law of 2018 regulates the work of companies by applying the rules of corporate governance and enhancing the monitoring authorities of shareholders at public liability companies.
The government, enterprises, and NGOs are taking initiatives to incorporate responsible business conduct principles into their practices. The authorities developed a Corporate Governance Code based on the OECD Principles of Corporate Governance and ratified human rights conventions, but further steps are needed to guarantee respect for human rights by enterprises. The legal and institutional framework for employment and labor relations has been reinforced. Environmental impact assessments are conducted. With a view to promoting the OECD Guidelines for Multinational Enterprises and their observance by companies, Jordan revived its National Contact Point within the Jordan Investment Board.
The American Chamber of Commerce published in 2016 a framework code of conduct for the private sector, the Jordan Integrity and Anti-Corruption Commission (JIACC) approved and embedded as part of the governance chapter in the amended Companies Law. The Customs Department released and revised a Golden List Program, which encourages good corporate citizenship amongst trading companies and international best practice for trade across borders.
The government issues a monthly financial bulletin highlighting all revenues, including taxes and royalties paid by extractive industries. Jordan initiated discussions with the Extractive Industries Transparency Initiative (EITI), but it has not joined.
Jordan is a signatory of The Montreux Document on Private Military and Security Companies since 2009.
Department of State
- Country Reports on Human Rights Practices (https://www.state.gov/reports-bureau-of-democracy-human-rights-and-labor/country-reports-on-human-rights-practices/);
- Trafficking in Persons Report (https://www.state.gov/trafficking-in-persons-report/);
- Guidance on Implementing the “UN Guiding Principles” for Transactions Linked to Foreign Government End-Users for Products or Services with Surveillance Capabilities (https://www.state.gov/key-topics-bureau-of-democracy-human-rights-and-labor/due-diligence-guidance/) and;
- North Korea Sanctions & Enforcement Actions Advisory (https://home.treasury.gov/system/files/126/dprk_supplychain_advisory_07232018.pdf).
Department of Labor
- Findings on the Worst forms of Child Labor Report (https://www.dol.gov/agencies/ilab/resources/reports/child-labor/findings );
- List of Goods Produced by Child Labor or Forced Labor (https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods);
- Sweat & Toil: Child Labor, Forced Labor, and Human Trafficking Around the World (https://www.dol.gov/general/apps/ilab) and;
- Comply Chain (https://www.dol.gov/ilab/complychain/).
The use of family, business, and other personal connections to advance personal business interests is endemic and regarded by many Jordanians as part of the culture. However, surveys found between four and eight percent of Jordanians reported paying a bribe in the previous 12 months. In February 2021 King Abdullah directed the General Intelligence Directorate (GID) to transfer responsibility for confronting corruption to the Audit Bureau, judiciary, and other civilian institutions. In June 2020 the government began a campaign to combat tax evasion which involved tax authorities opening hundreds of investigations and raiding over a dozen firms. Authorities have opened public corruption cases against several former senior officials since 2019 , but no trials have been completed as of April 2021.
Jordan was the first Middle Eastern country to sign and ratify the United Nations Convention against Corruption (UNCAC) in 2005. In 2006, Jordan issued a code of conduct for the public sector, enacted an Illicit Gains Law, and Anti-Corruption Law. Jordanian law defines corruption as any act that violates official duties, all acts related to favoritism and nepotism that could deprive others from their legitimate rights, economic crimes, and misuse of power.
The Illicit Gains Law requires designated officials, their spouses, and minor children to file financial disclosures with the Integrity and Anti-Corruption Commission (IACC). Designated officials include the prime minister, cabinet members, members of parliament, senior government officials, as well as municipal-level council members and executives.
Jordan created the IACC in 2016 through a merger of the Bureau of the Ombudsman and the Anti-Corruption Commission. In 2019, Parliament amended the IACC Law granting the IACC more authority to access asset disclosure filings of officials exhibiting unexplained wealth. The amendment empowers the commission to request asset seizures, international travel bans, and suspension of officials under investigation for corruption. The amendment also increases the IACC’s administrative autonomy by enabling the commission to update its own regulations and protecting IACC board members and the chairperson from arbitrary dismissal.
In 2018, the government issued the Code of Governance Practices of Policies and Legislative Instruments in Government Departments, to improve the predictability of legal and regulatory framework governing the business environment.
A new Audit Bureau Law was enacted in 2018 to strengthen audit performance, capacity and independence in line with International Organization of Supreme Audit Institutions (INTOSAI) standards. Other related laws include the Penal/Criminal Code, Anti-Money Laundering Law, Right to Access Information Law, and the Economic Crimes Law.
(INTOSAI) standards. Other related laws include the Penal/Criminal Code, Anti-Money Laundering Law, Right to Access Information Law, and the Economic Crimes Law.
Jordan is not a party to the OECD Convention on Combatting Bribery.
Resources to Report Corruption
H.E. Mohannad Hijazi
Jordan Integrity and Anti-Corruption Commission (JIACC)
P.O. Box 5000, Amman, 11953, Jordan
+962 6 550 3150
10. Political and Security Environment
The threat of terrorism remains high in Jordan. Transnational and indigenous terrorist groups have demonstrated the capability to plan and implement attacks in Jordan. Violent extremist groups in Syria and Iraq, including the Islamic State of Iraq and ash-Sham (ISIS), and al-Qa’ida, directly or indirectly have conducted or supported attacks in Jordan and continue to plot against local security forces, U.S. and Western interests and “soft” targets, such as high-profile public events, hotels, places of worship, restaurants, schools, and malls. Jordan’s prominent role in the Global Coalition to Defeat ISIS and its shared borders with Iraq and Syria increase the potential for future terrorist incidents.
Demonstrations occur frequently. They may take place in response to political or economic issues, on politically significant holidays, and during international events. In general, demonstrations remain peaceful. However, some have turned violent, even when intended to be peaceful, leading security officials to intervene. Visitors should consult current State Department public announcements at before traveling to Jordan.
11. Labor Policies and Practices
According to the Department of Statistics Annual Report for 2020, the total population of Jordan is 10.8 million, of which 69 percent are Jordanians (7.4 million) and approximately 31 percent are non-Jordanians, including 1.3 million Syrian refugees. UNHCR has registered 663,507 Syrian refugees in Jordan.
Approximately 70 percent of the population is estimated to be under the age of 30. Literacy rates are 98.2 percent for men and 92.9 percent for women. Jordan has a generally well-educated labor force of about 2.8 million Jordanians. According to the Department of Statistics, official unemployment in 2020 reached 23.9 percent. Certain types of work are restricted to Jordanians only. Local labor requirements in development and free zones vary based on the type of economic activity. Some reports estimate the share of informal laborers in the workforce to be 41 percent.
The labor law does not require employers to include retirement plans in employment packages. However, if the employer agreed to provide retirement benefits when the worker was contracted, the employer must fulfill that commitment. In 2017, Jordan introduced amendments to the labor law regarding flexible work hours and the provision of daycare; the amendments were approved and published in the official gazette in May 2019. The amendments enhanced the work environment for employees, including a definition for flexible work hours, and provisions against gender wage discrimination. The law granted paternity leave for three days, tied the eligibility for daycare to the total number of employees’ children under the age of five (minimum 15 children from the age 0-4 years old), and exempts non-Jordanian children of Jordanian women from needing a work permit.
Labor unions serve primarily as intermediaries between workers and the Ministry of Labor (MOL) and may engage in collective bargaining on behalf of workers. The 17 recognized unions are all members of the General Federation of Jordanian Trade Unions. Estimates put union membership at less than 10 percent of the labor force. Additionally, there are 40 active professional associations, including many that have mandatory membership and 15 independent unions covering the rest of the professions and trades. According to official figures, about 30 percent of the total labor force, including government workers, belong to either a union or a professional association. In 2020, labor unions representing workers in garment, food, petrochemical and oil industries signed twenty different Collective Bargaining Agreements.
In February 2020, the Ministry of Labor increased the number of professions closed to non-Jordanians from 11 to 28. However, employers may request the Ministry of Labor review applications for foreign workers in restricted sectors if local expertise cannot be found; these requests have generally been approved. Local labor requirements in development and free zones vary based on the type of economic activity
The Jordanian Labor Law addresses layoffs, and requires ministerial notification and guarantee of legitimate and entitled benefits and severance, but also allows firing without prior notice on certain conditions. Companies with the appropriate justification may obtain permission from the Ministry of Labor (MOL) to reduce their staff as a result of business restructuring. The social security system provides up to six months of unemployment benefits for formally registered workers.
On March 2020, the King issued a royal decree enacting the Jordan National Defense Law to grant the Prime Minister wide powers to undertake all necessary measures to combat the COVID-19 outbreak in the Kingdom, including the temporary suspension of ordinary legislation.
Accordingly, the government issued Defense Order No. 1 March 19, 2020, which provided temporary amendments to the social security law to mitigate the pandemic’s impact on the private sector. It temporarily suspended the implementation of retirement insurance for private sector employees, bringing the total monthly contribution down to 5.25 percent of the employee’s wage (4.25 percent payable by the employer and 1 percent deducted from the employee) from the original contribution of 21.75 percent of the employee’s salary subject to deduction (14.25 percent payable by the employer and 7.5 percent deducted from the employee).
Defense Order No. 6 sets measures addressing employment conditions in the private sector, including required salary payments and temporary closure of entities/institutions largely hit by the pandemic. Defense Orders 9, 14, 15 and 25 mainly introduced economic programs, to sustain businesses and job stability.
Articles 120,121 and 122 of the Jordanian law introduces a mechanism for labor dispute resolution beginning with labor inspector mediation. If mediation fails, the Minister of Labor reviews the case, followed by the Conciliation Council, then finally by the Labor Court under the Magistrate and Penalty Court to resolve the case within seven days.
Three labor disputes haven taken place since 2019. Teachers went on strike in 2019 to demand a 50 percent pay raise. The government struck a deal with the teachers’ union which allowed for salary increases ranging from 35 percent to 70 percent. In April 2020, the government announced a freeze on public sector pay due to financial difficulties stemming from the COVID-19 pandemic. The teachers’ union responded by holding demonstrations to protest what it saw as the government’s failure to honor the 2019 agreement. The government responded to the protests by arresting a number of union leaders and ordering a two-year shutdown of the teachers’ union for alleged “criminal and corruption charges.” In November 2020, migrant workers in a garment factory in al Hassan Industrial Zone went on strike demanding a wage increase. Tensions eased when management offered to pay workers their annual productivity increase, normally paid in January, two months early.
Starting January 2021, Jordan increased minimum wage to JD 260 ($367) from its original level of JD 220 ($310). 12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
|Host Country Statistical source*||USG or international statistical source||USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other|
|Host Country Gross Domestic Product (GDP) ($M USD)||2019||$44,628||2019||$44,503||www.worldbank.org/en/country|
|Foreign Direct Investment||Host Country Statistical source*||USG or international statistical source||USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other|
|U.S. FDI in partner country ($M USD, stock positions)||N/A||N/A||2019||$179||BEA data available at https://apps.bea.gov/international/factsheet/|
|Host country’s FDI in the United States ($M USD, stock positions)||N/A||N/A||N/A||N/A||BEA data available at https://www.bea.gov/international/direct-investment-and-multinational-enterprises-comprehensive-data|
|Total inbound stock of FDI as % host GDP||N/A||N/A||2019||83.5%||UNCTAD data available at
* Source for Host Country Data: N/A
|Direct Investment from/in Jordan Data|
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment||Outward Direct Investment|
|Total Inward||728*||100%||Total Outward||27*||100%|
“0” reflects amounts rounded to +/- USD 500,000.
The Central Bank of Jordan does not collect or provide FDI data disaggregated by source.
*Aggregated number for 2020.
|Portfolio Investment Assets|
|Top Five Partners (Millions, current US Dollars)|
|Total||Equity Securities||Total Debt Securities|
|All Countries||Amount||100%||All Countries||Amount||100%||All Countries||Amount||100%|
|United States||3,404||47%||Bahrain||326||28%||United States||3,249||54%|
|West Bank||1,080||15%||West Bank||297||26%||West Bank||783||13%|
14. Contact for More Information
Senior Economic Specialist +962 6 590 6317
+962 6 590 6317