YOUR DIRECTORY /

Dead Sea rising

by Christina Corbett on Friday, 28 September 2007

We are very bullish on the future of Jordan," says Yousef Al Essa, the CEO of Bahrain-based Addax Bank. "It is one of the most stable economies in the region," he adds, and as a major stakeholder in the US$300m Jordan-focused investment company Jordan Dubai Capital, his opinion is worth listening to.

Less than a decade ago, when the current King Abdullah II came to the throne, Jordan was barely on the periphery of the maps of many regional investors, let alone international ones.

Quick to identify and respond to opportunities, Gulf investors have moved swiftly into the market.

"Jordan was seen as the most economically disadvantaged country of the Middle East," says Christian Mouchbahani, the Dubai-based CEO for MENA at US investment firm Jefferies International.

Story continues below ↓

Oil-rich Gulf neighbours stole the affections of foreign businesses looking for opportunities in the area. Instability in Palestine and the war in Iraq were constant reminders of the volatility of the region. Now, however, things are changing. "Jordan has come a long way," says Mouchbahani. The country is, in his eyes, "a very big success story."

Keen to be part of the success story Gulf investors are lining up to get involved. "There is lots of appetite among Gulf investors" hoping to capitalise on Jordanian opportunities says Al Essa. "The investors are there, ready to move in," he confirms.

So move over phosphates and potash, the limited exports Jordan has traditionally relied on, it is time to make way for technology, tourism and real estate development: key growth drivers of the Jordanian economy. With the development of free zones and the gradual moving forward of the government's public private partnership program, foreign investment opportunities in Jordan are burgeoning.

But why now? In 2002 a total of US$428m was invested in Jordan. Of this US$186m came from abroad. In 2006, FDI reached US$3.1bn.

Fadi Ghandour, CEO of Jordan-based international company Aramex - the first Arab business to trade its shares on NASDAQ - believes it has much to do with the liberated economic stance of King Abdullah II. "The reason that people are looking towards Jordan today is because over the past nine years since King Abdullah's succession to the throne, there has been a very serious and deliberate effort to liberalise [the economy]," says Ghandour. This has "allowed for foreign investment laws to let foreign investors come and own interests and trade here without any restrictions."

King Abdullah's reign has been characterised by what many commentators have described as his ‘aggressive' economic growth and development strategy: one that has given unprecedented primacy to economic reform.

The constraints of a small market and limited physical resources have forced Jordan's government to look outwards. Geo-strategically the country is well-placed to access both the Levant and Gulf opportunities of the Arabian Peninsula. Leveraging the influence afforded by this location Jordan has positioned itself as a regional export gateway. Concentrated efforts to assert itself as an attractive investment prospect for local, regional and international players is now paying off.

"Most of our sectors are open for foreign investment today," says Ghandour. He is confident that Jordan "is probably one of the most liberal foreign investment countries in the region. This is a place where by law you can come and do your own thing without having to have a local partner." And this advantage, believes Ghandour, "makes a big difference for any investor looking at any country."

Significantly, despite turbulence in neighbouring Iraq and Palestine, Jordan has remained politically stable. As a result it is an anchor in terms of regional stability: an important position to hold and one not overlooked by the international community. In particular, the US has seen the strategic value of securing Amman's loyalty as a key ally in the region: Washington is a major aid donor. Al Essa identifies Jordan as "one of the most stable economies of the region." And one that is "more and more investor friendly."

Quick to identify and respond to opportunities in Jordan, Gulf investors have moved swiftly into the market. From Ghandour's point of view, the development is a logical one. "I think because of the proximity to the Gulf and because of the excess liquidity coming from the oil boom in the Gulf, Jordan is a natural extension, a natural place for Gulf investors to come and look at," he tells Arabian Business.

His thoughts are echoed by Al Essa. "There is excess liquidity in the Gulf looking for outlets. And, in the wake of [the US terrorist attacks of September 11], many investors prefer to stay closer to home." According to Al Essa, Jordan offers these investors "opportunities across the board in financial services, real estate, hospitality, services and technology."

Coming to Jordan’s aid

Amman is a significant recipient of aid - set to receive in excess of US$800m this year. Most of this comes from Saudi Arabia and the US. On September 16 2007, Washington agreed to give Jordan an extra US$78m to help accommodate Iraqi refugees and combat terrorism. For many, such a windfall would be reason to celebrate.

But Amman is not blind to the fact that in order for long-term, sustainable economic development to take hold Jordan's treasury will need to rely less on foreign aid donors in future.

In January it was estimated that with the inclusion of aid contributions Jordan would reduce its 2007 budget deficit by 3.4% of its GDP. The concern is these contributions mask the fact that the budget deficit actually amounts to as much as 8.4% by some estimates - well over the IMF's recommended limit of 3%.

But Jordan desperately needs this financial support. Over US$500m worth of funds were supplied to the Kingdom by the US in 2006 in the form of financial or military assistance.

Since 1952 the US has given Jordan aid in the region of US$4.7bn. Last year, US$130m of the donated funds were directed to USAID programs designed to develop infrastructure and specifically boost the private sector.

Page 1 of 3

TOP IN MIDDLE EAST BANKING & FINANCE

ALSO IN MIDDLE EAST BANKING & FINANCE

LATEST MIDDLE EAST BUSINESS FEATURES

USER COMMENTS (0 COMMENTS)
POST A COMMENT

CLICK HERE TO POST A COMMENT

Add your Comment All posts are sent to the administrator for review and are published only after approval. ArabianBusiness.com reserves the right to remove any comment at any time for any reason. Please keep your responses appropriate and on topic.

Name *
Remember me on this computer
Email *	(Your email address will not be published)
City
Country

Subject *

Comment *


Notify me of further comments
Security Code *
Please click post only once - your comment will not be published immediately.