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French Version

SSC steers clear of pitfalls

Khaled Wazani, director general of the Social Security Corporation (SSC), ruled out this week earlier suggestions that the SSC’s investments in tourism have failed. He confirmed on Monday that “these investments are doing fine,” corroborated by their present worth of JD 80 million, three times more than the money the Corporation has paid for them a few years ago. Wazani, however, confirmed that the Corporation is already facing problems with some of its other investments, which he regarded as “failures”, but considered “insignificant,” as they constitute only one percent of the Corporation’s gross activities.

Over the last decade, the SSC diversified its investments in almost all of the economic sectors in Jordan to enhance its vital contribution to economic growth,” Wazani told The Star.

We are proud to be the Kingdom’s biggest and most influential corporation.” By targeting tourism, he said, the SSC wants to boost the sector significantly, despite the fact that tourism in Jordan is currently walking a tightrope in view of the ramifications of the regional political instability on the industry. He said that the corporation is planning to set up a company in conjunction with the Jordanian private sector and foreign investors. This company would administer all the touristic sites in the Kingdom. The SSC plans to own 25 percent of the company’s shares, which would be run by the private sector.

We are determined to develop our tourism investments, particularly by streamlining the function of companies we are already engaged in,” he said. The National Tourism Development Co, which is owned by the SSC, would soon witness drastic changes regarding its function and capacity. With the SSC’s portfolio of investments worth JD 2.2 billion, a number of local economists argued recently that the corporation should originate new approaches to enhance its domain in further beneficial investments, both on the regional and international scales. They suggested that SSC’s investments in Jordan are “sufficient” and need to be supported by foreign ones. Wazani denied earlier rumors that the corporation has bank accounts in foreign banks, and said, “All the SSC’s assets are deposited in a number of local banks, since the SSC Law prohibits depositing all its assets in one bank.

The SSC established its investment unit in 2000 to diversify its local investments, and to sustain their credit-worthiness. The unit paved the way for the SSC to strengthen its potency in the local market. Today, the SSC is considered a vital partner in the fields of industry, commerce and services in the country. Hence, economists desired to see the corporation expand the area of its investments by taking part in some of the regional or international industries. However, economists warn the SSC from venturing into the international financial markets, where risks factors could be high. Wazani agrees.

Nothing prevents the corporation from infusing its funds into international investments as long as these investments are carefully selected—being risk-free and well-timed,” he said. “The SSC’s current investments in Jordan proved to be cost-effective and contributory to the economy.” Ibrahim Seif, economic researcher at the Center of Strategic Studies at the University of Jordan, believes the corporation has the potential to increase its profits by having shares in some of the well-known international firms or businesses.

It is clear that the SSC’s investment unit has developed its work efficiently, as the corporation enjoys the required proficiency to examine its steps before making the leap,” he told The Star. “It has to be made clear that all the SSC’s investments are long-term projects based on broad vision and fixed revenues. That is why random investments become useless for firms like the SSC.” Seif said for the SSC to conduct investments abroad, requires eligible policies that should target potential economic sectors that do not imitate those in Jordan. Wazani said the Corporation is financially secure enough to seek foreign investments. Proceeds of the SSC’s investments have grown rapidly, estimated at JD 850 million in total for the past 25 years.

Our investments constitute 6.4 percent of the GDP,” he stressed. “The SSC paid out JD 1 billion in pensions and dividends since it was established in 1979.” Meanwhile, the SSC would undergo more financial and administrative reforms in the coming years. Wazani pointed out that the Corporation would start in 2008 to gradually raise the age of early retirement to 50 by 2012.

This system would not be retroactive, but rather it will be implemented for the new subscribers,” Wazani said. The SSC also plans to raise the amount deducted off a subscriber’s salary by four points to reach 20 percent in 2015. This procedure will start in 2010 on a yearly basis. Today, the corporation deducts 16.5 percent off each salary. There are 1.85 million subscribers to the SSC today, about 503,500 of them are active workers. Subscription to the SSC covers all workers in the private and public sectors, excluding those working in small enterprises that employ less than five people. However, subscription is voluntarily for those working in small enterprises. Among the reforms the SSC is working on is to fix ceilings for pensions and deductions.

The Corporation currently pays more than JD 13 million in pensions each month, and this figure is expected to reach JD 20 million in 10 years time. It means that the corporation will pay each year JD 240 million in pensions, starting 2014,” Wazani said. The main objective of the early retirement system is to ease the SSC’s financial liabilities and help those working in the fields of military, mining, chemical manufacturing or any other contingent industry to retire once they are seriously affected by work injuries. This, said Wazani, would help the corporation manage its liabilities more efficiently. The SSC is now working on a three-year strategy to be implemented next year. The strategy includes an intensive study to provide health insurance for pensioners and the unemployed. Wazani pointed out, however, that the study needs 15 years to materialize “due to the huge preparations and financial needs that such insurance requires.

The strategy also envisions enhancing the services provided for the subscribers, developing the SSC’s financial aspects, advancing its human resources and computerizing its database. “Any setback to the SSC’s businesses would certainly affect the economy drastically. It is our duty to make this corporation a hugely beneficial one to ensure better returns for the Kingdom,” Wazani concluded.

The Star

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