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 projects in regional markets.
Jordan’s economy grew by two percent in 2019, despite ongoing domestic and regional challenges. Jordan’s economic growth has been slowed for several years by series of 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) and Syria (partially re-opened in 2018), and an influx of Syrian refugees. By October 2019, foreign direct investment had dropped 29 percent from its level at the end of 2018 and 67 percent from 2017 levels.
During this same period, the government ran large annual budget deficits but has been able to reduce its near-term financing gap with loans, foreign assistance, and savings from economic reform measures enacted as part of an International Monetary Fund (IMF) Extended Fund Facility program that began in August 2016. On March 25, 2020, the IMF Board approved a USD 1.3 billion Extended Fund Facility program for Jordan centered on increasing economic growth, job creation, and transparency while and strengthening fiscal stability and social spending.
The COVID-19 outbreak poses a huge burden on the Jordanian economy. The IMF forecasts a 3.4 percent contraction in Jordan’s Gross Domestic Product (GDP) for 2020 as a result of 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 IMF Mission Chief to Jordan commended the government’s measures to defeat the pandemic, stating “Jordan will reap from the tough measures the government put in place in the coming weeks and months.” The IMF approved Jordan to receive additional credit from the Rapid Financing Instrument, to help manage its fiscal obligations during the pandemic.
In parallel, Jordan introduced plans to mitigate the negative impact on the economy in the short and medium terms. The Central Bank of Jordan (CBJ) injected JD 1.5 billion (USD 2.1 billion) to reduce hardships in the banking system. It also lowered the lending rate and allowed borrowers to reschedule their loans until the end of 2020. The CBJ launched a JD 500 million (USD 706 million) loan guarantee program at competitive interest rates to help small and medium enterprises (SMEs) resume their operations and pay their operational costs. 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, and facilitating control procedures on incoming goods by reducing inspection rate of essential products, in addition to halting judicial procedures on defaulting individuals/companies.
In response to the COVID-19 crisis, the Prime Minister formed specialized, public-private sector teams focused on setting manufacturing priorities, balancing domestic needs with export obligations, outlining production plans, and developing an enabling environment to ensure sustainability, focusing on sectors that excelled during the crisis, and have great potential to expand. The sector-focused teams are: pharmaceutical manufacturing team; food manufacturing team; medical devices and sterilization manufacturing team.
International reports and metrics indicate that Jordan’s overall investment 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. In the World Economic Forum’s 2019 Global Competitiveness Report Jordan ranked 40, advancing six points in its domestic competition indicator. Jordan also ranks sixty-third on the 2018 Global Entrepreneurship Index, and twenty-ninth on the Global Innovation Index.
The Jordanian Investment Law grants equal treatment to local and foreign investors and grants incentives for local and foreign investment in industry, agriculture, tourism, hospitals, transportation, energy, and water distribution. In 2017, Jordan passed amendments to the Companies’ Law and a law to regulate and unify monitoring and inspection of economic activities. The government implemented additional reforms in 2018, including the Insolvency Law, Movable Assets and Secured Lending Law and Bylaw, the Venture Capital bylaw, and a new Income Tax Law. In January 2020, The Jordan Investment Commission (JIC) implemented an investors grievances bylaw which enables investors to file complaints concerning decisions issued by government agencies.
In 2020, Jordan endorsed a new Public Private Partnership Law to support the government’s commitment to broadening the utilization of the public-private sectors partnership and encouraging the private sector to play a larger role in overall economic activity.
|TI Corruption Perceptions Index||2019||60 of 175||http://www.transparency.org/
|World Bank’s Doing Business Report||2019||75 of 190||http://www.doingbusiness.org/en/rankings|
|Global Innovation Index||2019||86 of 129||https://www.globalinnovationindex.org/
|U.S. FDI in partner country ($M USD, historical stock positions)||2019||USD 179||https://apps.bea.gov/international/factsheet/|
|World Bank GNI per capita||2019||USD 4200||http://data.worldbank.org/