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Last Updated: Sep 25th, 2006 - 11:36:04 |
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Jordan is increasingly becoming a production hub with access to the Middle Eastern economies, as its strategic trade agreements with the US, EU and other Arab countries is said to offer investors access to markets of over one billion consumers. |
Strategically situated at the crossroads of several trade routes that linked the lands of China, India, and South Arabia with the Mediterranean world, the ancient city of Petra, in the modern-day country of Jordan, came into prominence in the late first century through the success of the spice trade.
As proficient entrepreneurs, the Nabataean Arabs were among the first to settle in Jordan, and took tactical advantage of Petra’s location. They offered water and a safe haven for merchants, collected fees for their service, and developed Petra into a rich and powerful centre of international commerce.
Today, Jordan’s geographical advantage still holds true for global trade and communication - located at the north-western corner of the Arabian Peninsula, it is bound by Syria in the north, Saudi Arabia on the south, Iraq and Saudi Arabia on the east, and the Occupied West Bank and Israel in the west - rendering a multi-border characteristic that propels Jordan as a focal trading centre for the Middle Eastern region.
In the past decade, Jordan has undergone extensive economic reforms, particularly in areas of privatisation to improve the business and investment climate. Additionally, the government pursued comprehensive efforts to liberalise trade and implement legislative and regulatory reform, in efforts to secure Jordan’s membership in the World Trade Organisation (WTO). Graduating from a decade of IMF programs in June 2004, the government has so far managed to maintain overall economic stability, despite regional disturbances.
Limited to the natural resources of phosphates and potash, the Jordanian economy depends largely on services, tourism and foreign aid, of which United States is the main provider. Jordan has one of the best health services and the highest literacy rates in the region. Its labour is considered to be one of the most highly qualified in the region and highly competitive in terms of wages. Despite the limited mineral resources of the country, the mining sector does play a large role in the Jordanian economy as it represents the main part of the proceeds from Jordanian exports; Jordan is considered one of the largest exporters of phosphates in the world.
In moving forward, Jordan is increasingly becoming a production hub with access to the Middle Eastern economies, as its strategic trade agreements with the US, EU and other Arab countries is said to offer investors access to markets of over one billion consumers. The Jordan – US Free Trade Agreement (FTA) is by far the most attractive element of Jordan’s trade relations. Being the first Arab country to sign such an agreement with the United States, the FTA has become a point of achievement for Jordan.
This agreement has been gradually lifting tariffs on goods and services between the two countries and aims to eventually eliminate all duties and commercial barriers over a ten year period, a process that will be completed by the year 2010. This means that investors can run a plant in Jordan, manufacture products and export them to the United States with no tariffs imposed.
Another major agreement is the Euro-Jordanian Association Agreement which calls for the gradual removal of trade barriers and the establishment of a free zone with the European Community over a twelve year period. The accord will encourage more direct European investments, provide free access to EU market for the Kingdom's agriculture and industrial products and facilitate the transfer of state-of-the-art technology to Jordan.
Access to other Arab markets is also possible through GAFTA (Greater Arab Free Trade Agreement). Under this agreement, goods originating from member Middle Eastern states are awarded the status of national goods and can move freely over the Arab world without quota or duties.
Agriculture and the food industry
Jordan is self-sufficient in a number of agricultural products, but still imports basic items such as wheat, barley, corn, dairy products, sugar, red meat, rice, and legumes. The contribution of the agricultural sector to the country’s GDP in 2005 was 3.5%, with the industry sector at 29.9% and services at 66.7%.
Although intensive irrigation and modernisation processes are available, the primary obstacle to local agriculture is the shortage of natural fresh water resources. Over 91% of the country's land mass is classified as desert or arid desert, and irrigation agriculture currently accounts for about 72% of Jordan's entire water usage.
About 80% of local agricultural production consists of fruits, vegetables and citrus. These constitute 70% of agricultural exports, while Jordan’s agricultural exports make up 10% of Jordan’s total export. Among Jordan’s primary foodstuff imports are live animals, meat and fish, wheat and wheat flour, rice, barley, maize, nuts, sugar, coffee, tea, cocoa, spices, fodder, beverages, tobacco, animal and vegetable oils.
The food processing industry in Jordan is stronger than the agricultural sector in terms of strength and potential, and represents Jordan’s largest manufacturing sector.
Interestingly enough, 73% of meat and meat products are exported although there is a lack of information with regard to whether these products are Halal. According to the Jordan Investment Board (JIB) the Agri-food sector in Jordan offers great opportunities to investors particularly in the areas of puff pastry leaves, citric acid, PET Performs, Products from Olive Pomace, National Drinks, Instant Soup Noodles, Food Portions Packaging, Pasteurized Egg, Special Drinks, and Olive Pickling. The JIB also describes the food industry as the second most important sector in Jordan to attract Foreign Direct Investments (FDIs).
Among the major companies that have chosen Jordan as a production site are Coca Cola, Pepsi, Nestle, Del Monte, British American Tobacco, Carrefour, Sultan Centers, Americana and Starbucks.
Halal in Jordan
According to Abeer Al-Ahmad from the Jordan Investment Board, Halal food in Jordan is placed under the jurisdiction of the Jordan Institute of Standards & Metrology (JISM). The guidelines or standards for Halal food in Jordan are mostly based on the Codex Alimentarius, a collection of internationally recognised standards relating to foods, food production and food safety.
Under the Codex Alimentarius, general guidelines are given in labeling foods as Halal. However, there is yet the use of a standard Halal logo, although sources have indicated that the word ‘Halal’ is stamped on the packaging of certain foods. While the Jordanian government has not indicated plans to push the Halal food industry per se, there has been much effort to push and promote the Jordanian food sector in general.
At a Glance: Jordan
POPULATION: 5,906,760
CAPITAL: Amman
GOVERNMENT TYPE: Constitutional monarchy
CURRENCY: Jordanian dinar (JOD)
ETHNIC GROUP: Arab 98%, Circassian 1%, Armenian 1%
LANGUAGES: Arabic (official), English widely understood among upper and middle classes
RELIGIONS: Sunni Muslim 92%, Christians 6%, other 2% (several small Shi'a Muslim and Druze populations)
GDP (PURCHASING POWER PARITY): $26.8 billion
GDP – COMPOSITION BY SECTOR: agriculture 3.5%, industry 29.9%, services 66.7%
BUDGET: revenues $2.8 billion, expenditures $4.688 billion
AGRICULTURE PRODUCTS: wheat, barley, citrus, tomatoes, melons, olives; sheep, goats, poultry
INDUSTRIES: textiles, phosphate mining, fertilizers, pharmaceuticals, petroleum refining, cement, potash, inorganic chemicals, light manufacturing, tourism
INDUSTRIAL PRODUCTION GROWTH RATE: 7.5%
EXPORTS: $4.226 billion
EXPORTS – COMMODITIES: clothing, phosphates, fertilizers, potash, vegetables, manufactures, pharmaceuticals
EXPORTS PARTNERS: US 28.9%, Iraq 17.6%, India 7.1%, Saudi Arabia 5.6%
IMPORTS: $8.681 billion
IMPORTS-COMMODITIES crude oil, textile fabrics, machinery, transport equipment, manufactured goods
IMPORTS PARTNERS Saudi Arabia 19.8%, China 8.4%, Germany 6.8%, US 6.8% (2004)
Source: CIA World Factbook
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