Jordan’s FTA: an untapped gold mine…

The war in Ukraine, which is reshaping the global geopolitical situation and causing energy prices in Europe to skyrocket, is also forcing EU countries to find alternative energy sources. Electricity and natural gas prices in the EU are now close to 10 times their historical average in the decade leading up to 2020.اضافة اعلان

Swings in energy prices and persistent supply chain problems threaten Europe, hit by soaring gasoline prices. European companies that make steel, fertilizers and other raw materials that drive economic activity are moving operations abroad, attracted by more stable energy prices and strong government support.

European companies mainly look to Central and Eastern Europe and Asia as possible production locations. However, MENA has become a more critical near-coastal destination due to ease of maneuver and flexibility. It is an excellent opportunity to present Jordan as a near-shore hub for EU industries, to attract investment in fertilizers, ICT (including data centers), textiles, pharmaceuticals, agriculture and R&D. Additionally, Jordan can provide off-grid power generation solutions.

Jordan could be well positioned to fuel new growth engines by capitalizing on its high potential for climate-resilient economic growth and its environmental policy. The Kingdom was ranked 75th out of 190 economies in the World Bank’s 2020 Ease of Doing Business rating. This ranking places it near the top in the MENA region and among the top 10 economies in the world in terms of improvement.

The World Economic Forum’s Global Competitiveness Report 2019 ranks Jordan 70th out of 141 countries overall, but 35th for intellectual property protection, 37th for the adaptability of its legal framework to business models, digital businesses, ranked 24th in ease of finding qualified employees and 31st in digital skills among assets. population.

Key opportunities to accelerate long-term economic transformation include capitalizing on Jordan’s advantage as a hub for high-skill service industries. The investments would help maximize new opportunities for international teleworking, expand exports of more complex goods to critical markets, and forge various paths of green growth, especially as Jordan was the first country in the region to launch a climate policy.

To seize these opportunities, Jordan needs to invest in three areas: sustainability, digitization, and skills. Bold moves in all three fields would benefit businesses, consumers, suppliers and the EU and Jordanian economies in general.

To do so requires a paradigm shift in growth strategy, prioritizing the activation of “change agents” around crucial growth opportunities.

The EU and Jordan enjoy strong strategic relations, which will act as a catalyst for public and private investment, helping the Kingdom to offer its full investment potential to the EU to carry out its Economic and Investment Plan.

Jordan is equipped with fiscal consolidation, intellectual property, marketing, and growing R&D.

It is an excellent opportunity to present Jordan as a near-shore hub for EU industries, to attract investment in fertilizers, ICT (including data centers), textiles, pharmaceuticals, agriculture and R&D. Additionally, Jordan can provide off-grid power generation solutions.

At 17.4 percent of GDP, manufacturing is one of Jordan’s largest sectors, employing some 217,000 people. Jordan hopes to double that number in the next 10 years, to achieve economic prosperity. Actions to attract change agents are cheap and the private sector can lead growth.

Many have identified opportunities in the sector with quality, niche manufacturing, reflecting precise changes in foreign investment patterns in Jordan. They were less tied to regional and neighboring markets, which tend to reduce volatility and exposure to regional shocks.

Jordan and the US have a small but strong trading relationship. Approximately 22.3% of Jordan’s exports ($1.75 billion in 2020) go to the US, making the US Jordan’s largest trading partner. Two-way trade and investment is facilitated by the US-Jordan Free Trade Agreement (FTA), the first the US entered into with an Arab country.

In addition to the US, Jordan has FTAs ​​with the 17 members of the Greater Arab Free Trade Area, bilateral trade agreements with several Arab neighbors, an economic partnership agreement with the EU, a free trade agreement with EFTA (Iceland, Liechtenstein, Norway and Switzerland). ), and free trade agreements with Canada and Turkey.

Jordan has competitive advantages in both cost and skills. Engineers are plentiful in Jordan, which has one of the highest engineering per capita rates in the world. And yet, despite having an educated workforce, the Kingdom has low labor costs relative to the West. Therefore, Jordan needs to reposition itself where it is competitive and can add value, especially since it is located near trade routes such as the Suez Canal.

Hamzeh S. Al-Alayani is a member of the board of directors of a Jordanian public sector government investment management company and a regular commentator on regional energy and industry.

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