|Foreign investment : Talking trade
|Foreign investment, regional
co-operation and reform were on
the agenda at the fourth American
Jordanian Expo (AJEX 2006) held
in Amman June 7 and 8.
Organized by the American Chamber of Commerce (AmCham) in co-operation with the United States Agency for International Development (USAID), the conference drew international business and government representatives from countries including the US, Morocco, Egypt, Lebanon, India, Bahrain and Tunisia.
The conference seeks to activate the Jordanian-US Free Trade Agreement [JUSFTA], increase the country’s exports to the US and encourage US businessmen to invest in Jordan, said Azzam Shweihat, chairman of AmCham Jordan.
Trade between the US and Jordan has increased steadily over the past few years, with bilateral trade reaching $1.9 billion in 2005, up 17.7 percent over 2004. Last year, Jordan exported $1.27 billion worth of goods to the US, an increase of 15.9 percent over 2004, making it the kingdom’s largest export market. Imports from the US also increased significantly in 2005 to $643.3 million, up 16.7 percent on the previous year. Increased trade between the two nations reflects a trend that began in 1997 with the creation of the Qualified Industrial Zones (QIZ) and was significantly strengthened in 2001 with the signing of the comprehensive JUSFTA.
Under JUSFTA, trade liberalization occurs across nearly all sectors resulting in the elimination or drastic reduction of tariffs on the majority of goods between the two countries. In real terms, the benefits of the FTA to the kingdom’s economy can be seen in the spectacular 1091 percent increase in total exports since 2000. Indeed, in 2005 exports increased 19.5 percent on the 2004 figure. Whilst this is a reflection of Jordan benefiting from regional financial buoyancy, it is also an impressive indication of the country’s stability and the benefits of sometimes painful economic reform.
From 2000 to 2005, Jordan’s exports to the US have increase from $73.2 million to $1.27 billion, a figure that represented 29.6 percent of total Jordanian exports in 2005, up from a paltry 3.86 percent in 2000. Textiles dominate the Jordanian export market to the US, with cotton apparel and household goods ($751.6 million) and other fabrics ($303.9 million) holding the top two spots.
Jewelry is a distant third at $118.8 milion. In addition to increased trade, the agreements have brought increased competition to the Jordanian market as it has adjusted to the more rigorous demands of global trade. The rise in exports and an expanding domestic market have fuelled a dramatic jump in industrial output—which increased by 56 percent from 2000 to 2004—and also spurred a 57 percent increase in the service industry’s output.
While FTAs and accession to the World Trade Organization (WTO) have bolstered Jordan’s international trade, Industry and Trade Minister Sharif Zu’bi also credited recent economic reforms, a skilled labor force, development of infrastructure and political stability for fuelling the countries current growth. The kingdom has taken large strides to become a major center of commerce and investment in the region, said Zu’bi.
While the particularly strong performance of these sectors, increased foreign investment and potential for future growth was the floating theme of the two-day conference, others tempered the optimistic mood and warned that there was still much work to be done. Issues of major concern for Jordan and the region were the relatively meager proportion of foreign direct investment (FDI) received by the Arab world, high unemployment rates, poverty and regional stability.
Sessions during the opening day of the conference focused more on regionally-relevant topics including the business environments of the Middle East and North Africa (MENA) country participants, best prospects for investments in each of the MENA countries represented at the conference, opportunities for bilateral and regional trade in goods and services, and perspectives for regional co-operation to enhance trade and investment opportunities with the US. Topics on the second day included energy solutions and alternative technologies and investment opportunities, capital markets, capital investments and venture capital, real estate development and management, and science and technology. Other concerns presented at the summit referred to the socio-economic issues facing the region.
The Arab world only receives one-third of FDI expected for a developing country of comparable size—a mere 1.5 percent of the world’s total, said Zu’bi. The minister went on to comment that Arab unemployment was the highest in the developing world at 15 percent, and that poverty was increasing. Zu’bi also pointed out that home-grown political, social and economic reform was essential throughout the Arab world and that is was not a luxury to be taken lightly, but a necessity.