Jordan illustration
January 20, 2008
Jordan
Jordan has been reforming its economy significantly under King Abdullah, including eliminating fuel subsidies, passing legislation targeting corruption, and beginning tax reform.
Area: 35,997 square miles Capital:AmmanGovernment: Constitutional Monarchy Population: 6.053,193 Languages: Arabic (official), English widely understood among upper and middle classes GDP per capita: USD 5,100 Monetary unit: Jordanian dinar Imports: crude oil, textile fabrics, machinery, transport equipment, manufactured goods. Exports: clothing, pharmaceuticals, potash, phosphates, fertilizers, vegetables, manufactures.
Foreign investment reaches record levels
Jordan has achieved outstanding success in boosting GDP, modernizing the financial sector, upgrading education and health care, and creating incentives for investors (including Qualified Industrial Zones).
A force for stability in a volatile region, Jordan has strongly aligned itself with the United States and welcomes American investors. The free-trade agreement established between the two countries in 2001 adds to Jordan’s attractions.
As Ziad Fariz, former Deputy Prime Minister and former Minister of Finance, points out, “Jordan’s economy is becoming very attractive for foreign and domestic investors. In 2006, foreign investment reached a record of about USD 3 billion.” Concerning links between Jordan and the United States, he adds, “Our relationship with the United States is very important for the future growth of Jordan. Jordan’s policies are directed towards promoting good relations with the United States.”
Jordan is especially interested in technology transfer, for example concerning investments in key sectors like electricity and water services. Fariz cites telecommunications and pharmaceuticals as other fast-growing sectors with investment potential.
As for the financial sector, Jordan’s banks now provide the highest quality services and meet international criteria concerning the control of money-laundering. “The banking sector is now diversified, the capital base has been enhanced, and the type of lending is moving from traditional short-term overdrafts into instruments,” Fariz explains.
With GDP growth of 6.4 percent in 2006, Jordan offers significant investment opportunities.
Amman Stock Exchange
Jalil Tarif, CEO
Jordan has made remarkable progress in implementing economic and legislative reforms aimed at liberalization and integration in the global economy. Since his accession to the throne, HM King Abdullah II has been determined to transform Jordan into a viable model in the region, designed to be a catalyst for building the new Middle East. As a result, sustainable development, economic growth, and social welfare are at the top of the national agenda and are being realized in an environment that safeguards solid political and democratic reforms and social cohesion in order to provide Jordanians with the necessary tools to contribute to the development of the country.
The financial sector, particularly the capital market, is distinguished in having an independent supervisory body represented by the Jordan Securities Commission (JSC) whose reference is the supremacy of the law. Besides, there are well-developed stock exchange and banking institutions. Amman Stock Exchange (ASE) is considered one of the most advanced in the region. It also contributed to the establishment of most of the regional markets.
Among the regional stock markets Jordan has the largest market capitalization as percent of GDP said Mr. Jalil Tarif, the CEO of ASE. “The ASE reached 218 percent by the end of July 2007, and its market capitalization reached USD 31.2 billion. Jordan has a well-developed and sophisticated banking system. The financial sector constitutes around 70 percent of the ASE market capitalization. The ASE introduced electronic trading in March 2000. Trading on the ASE takes place on an automated, order-driven system with remote access.
Mr. Tarif said that the ASE is open to foreign investors, and there is no ceiling on foreign ownership of companies listed on the ASE. Non-Jordanian investors are treated on equal footings with Jordanian investors; non-Jordanians own 46 percent of the ASE market capitalization. No taxes on cash dividends, on capital gains, or on the repatriation of proceeds of sale of securities, or income. A number of steps will be taken to enhance the market efficiency, such as: upgrading the trading and surveillance systems, implanting Internet trading, and introducing new financial instruments.
Securities Depository Center
“The SDC plays a key role in promoting investment activity in Jordan.”
Samir Jaradat, CEO
Jordan’s Securities Depository Center (SDC) was established in 1997 along with the Jordan Securities Commission and the Amman Stock Exchange, and began operating in 1999. The SDC’s responsibilities, according to Jordan’s Securities Law, are to register securities, handle deposits of securities, transfer ownership of securities, and oversee the deposit, clearing and settlement of securities.
As Samir Jaradat, CEO, points out, “Holding the ownership registry for all listed shares in the country, the SDC plays a key role in promoting investment activity in Jordan and in ensuring transparent, fair and efficient equities trading. The SDC operates according to the highest international standards and has been recognized by the Association of National Numbering Agencies (ANNA). All shareholder registers at the SDC are numbered according to the International Security Identification Number scheme.
The SDC’s members include publicly listed companies (banks, insurance firms, services companies and industrial enterprises), public-sector entities, brokers and others.
In one example of its forward-thinking approach to securities trading, the SDC developed its own “Securities Central Operation Registry Processing and Information Online” (SCORPIO) system that provides a complete solution for the registration, deposit, clearing and settlement of securities. Jaradat explains, “SCORPIO also offers a mechanism for risk management and surveillance of clearing and settlement, and its modules include brokers, issuers, custodians, surveillance and auditing systems.” Through SCORPIO, SDC can provide investors with an impressive array of services.
As for the future, the SDC aims to establish a central registry of securities to make it easier for investors to follow up on the progress of securities and thus to help increase investor confidence in the local market. In addition, the SDC aims to continue to implement new procedures and technologies to ensure efficient, fair and safe trading. The SDC is one reason American investors can be confident about entering the Jordanian market.
