Overseas Market Profiles

Recent Development

• Jordan is a natural corridor to trade with Iraq. Amman, the Jordanian capital, has a large expatriate Iraqi business community, and the port of Aqaba, to the south of Jordan, is a convenient place to re-export goods to Iraq.
• Jordan has been working to reduce its external debt. External debt as a percentage to GDP fell from over 60% in 2005 to around 30% in 2008, and this helped Jordan weather the financial tsunami in late 2008.
• Manufacturing appears to be regaining strength, with the manufacturing production index rising above pre-crisis levels to 172.6 in the second quarter of 2009.

Current Economic Situation

Jordan is a fairly developed economy in the Middle East, with a relatively high concentration of services in its economy. Services accounted for 65% of the Jordanian economy as of 2007. Of the various service sectors, financing, business and real estate services were the largest sector, contributing about 20% to Jordan’s GDP in 2007.

Jordan has traditionally been a tourist destination for the Arabic world and beyond. According to the Jordanian Ministry of Tourism and Antiquities, tourism is Jordan’s largest export sector and the second largest private sector employer. In Jordan’s National Tourism Strategy 2004-2010, the tourism sector accounts for about 10% of Jordan’s GDP. The strategy aims to more than double tourism related jobs from some 40,000 in 2003 to 91,000 by end-2010. Banking on a good medical system, the Jordanian government is also keen to promote medical tourism to Jordan.

Jordan is also promoting the country as an information and communication technology (ICT) hub in the region. The development of its ICT industry is mapped out by its National ICT Strategy of Jordan. Recently, the king has proposed setting up a new fund to support Jordan’s IT sector. According to Intaj, the industry association, the IT sector in Jordan has a turnover of US$900m and exports in 2008 were valued at about US$200m.

Manufacturing took a 20.2% share of total GDP in 2007, of which textile and garment were predominant. Manufacturing activities had been robust before the financial tsunami touched off by the Lehman Brothers’ debacle in September 2008. The manufacturing production index reached 165.8 (1999 = 100) in the second quarter of 2008 and fell to a low of 153.3 in the first quarter of 2009. However, manufacturing appears to be regaining strength, with the index rising above its pre-crisis level, at 172.6 in the second quarter of 2009.

Agriculture has diminished in significance as other sectors grow, dropping from about 9% in 1994 to 3.1% in 2007.

There are an estimated 600,000 Jordanians working abroad, mostly in the Gulf Cooperation Council (GCC, with the UAE, Saudi Arabia, Kuwait, Qatar, Bahrain and Oman as members) countries. Their remittances, which equalled to about 17% of Jordan’s GDP in 2007, helped sustain private consumption in the country. However, because of a slowdown in Gulf economies, remittances from overseas Jordanians dropped year-on-year (YoY) by 6.5% to US$2.7 billion in the first nine months of 2009. This has somewhat affected consumer spending in Jordan.

Jordan is a natural corridor to trade with Iraq. Amman, the capital, has a large expatriate Iraqi business community, and the port of Aqaba, to the south of Jordan, is a convenient place to re-export goods to Iraq. While demand from the US may remain weak, a stabilising situation in Iraq is likely to spur Jordanian exports to the country.

The Jordanian Dinar is pegged to the currency of its largest export market, the US dollar, at a target rate of JD0.709 to US$1.

Trade Policy

Jordan joined the World Trade Organisation in April 2000, and has been pursuing an open trade regime.

Jordan has bound its MFN tariffs on all products except electricity and tariffs are levied on an ad valorem basis. The applied MFN tariffs generally range between 0 and 30%, but some products such as lighters, tobacco products, alcohol, and alcoholic beverages face a tariff up to 180%. Jordan has reduced its simple average applied MFN tariff rate from 14.7% in 2000 to 10.9% in 2008, with average rates of 17.1% for agricultural products (WTO definition) and 9.9% for non-agricultural products. Less than 10 agricultural products are subject to Non-ad valorem MFN customs duties. Customs duties are assessed on the basis of the c.i.f. value of imports on the registration date of the customs valuation form. Almost half of the 6,206 lines in Jordan's applied MFN tariff are duty-free in 2008, a far greater share than Jordan committed to in its schedule of concessions (6.8%).

Jordan has not applied anti-dumping measures or countervailing duties; but safeguard measures are in place on footwear and insecticides.

Registered Jordanian companies, foreign companies registered in Jordan, and Jordanian sole proprietorships may import and export for commercial purposes, provided they are registered as commercial importers / exporters with the Ministry of Industry and Trade with the stated objective "engaging in trade activities", they should be natural and legal persons registered in Jordan, who are members of the Chamber of Commerce or Chamber of Industry, and whose premises have bee inspected and approved by the local municipality. Jordanian companies in the export and import business are subject to a foreign equity limit of 50%.

For customs clearance, the principal documents required are the customs declaration, commercial invoice, bill of lading (or air waybill), certificate of origin, and packing list. For some products, technical conformity / health / veterinary certificates and / or an import permit or licence are required. Jordan has computerised customs procedures based on UNCTAD's Automated System for Customs Data (ASYCUDA). The country applies a risk-based inspection which categorises imports into three risk levels: (1) the green channel represents the lowest risk. Goods passing through this channel will have their documents inspected; (2) the yellow channel represents medium risk, of which the customs will inspect both documents and compliance with Jordan’s technical regulations; and (3) the red channel represents high risk, goods entering this channel are inspected on a more regular and strict basis on their documentation and compliance to Jordanian standards.

Jordan applies general sales tax (GST) of 16% to most imported and locally-produced goods. Certain types of cement, cars, tobacco and tobacco products, alcoholic beverages, and mobile phone and radio subscription services are subject to special taxes.

Jordan prohibits the importation of certain products, including:

• Plastic waste
• Passenger cars, using other than benzene as fuels
• Dumpers designed for off-highway use
• Khat (a type of drug)
• Coral and similar materials
• Chromium
• Fireworks (certain kinds)
• Toy guns with bead bullets, laser pens and laser medals
• Holy water (Baptism water)
• Additional installations on cars, including calling devices and flashers
• Photo blocker spray
• Alarm systems and high-light devices for cars, except when imported for the Ministry of Health, Armed forces, General Intelligence Department of Jordan, Public Security Directorate, the Jordanian Civil Defense, and Jordan Customs, and ambulances for private hospitals

Jordan has signed preferential trade treaties, including a number of free trade agreements (FTAs) with its major trading partners.

In 1997, Jordan, the US and Israel reached an agreement on establishing “Qualified Industrial Zones” (QIZs) in Jordan. In these zones, provided that companies import 8% of input from Israel, then the products can be exported tariff-free to the US. However, subsequent to the signing of the Jordan-US FTA in 2001, which allows most goods to be traded tariff-free between the two countries, the QIZ initiative has become less attractive.

Jordan has also signed FTAs with Egypt, Morocco, Tunisia (the Agadir Agreement), the EFTA states (which includes: Switzerland, Norway, Iceland and Liechtenstein), and Singapore. Jordan is a member of the Pan Arab Free-Trade Area (PAFTA) Treaty, with members including: Egypt, United Arab Emirates (UAE), Bahrain, Jordon, Tunisia, Saudi Arabia, Sudan, Syria, Iraq, Oman, Palestine, Qatar, Kuwait, Lebanon, Libya, Morocco, and Yemen. These treaties are in force.

Jordan has an associate agreement with the European Community, and this agreement provides for the establishment of a free trade area within 2014, 12 years since the date of coming into force.

Hong Kong's Trade with Jordan^{^}

Hong Kong's total exports to Jordan during the first 10 months of 2009 dropped by 43.9% YoY to US$87 million. Major export items to Jordan during the period included knitted or crocheted fabrics (US$39 million, 44.3% of total, -50.7% YoY), clothing accessories of textile fabrics (US$5 million, 5.6% of total, -52.5% YoY), and woven cotton fabrics (US$5 million, 5.3% of total, -70.9% YoY). The drastic decline in trade was mainly attributed to a global contraction of trade in early 2009, which led to a substantial decrease in production inputs from Hong Kong by Jordan.

On the other hand, Hong Kong imports a small amount of goods from Jordan and the trend has been volatile. In the first 10 months of 2009, Hong Kong's imports from Jordan were down by 46.3% YoY to US$3 million. The decline was led by a sharp fall in metal waste and scrap imports, from US$1.1 million in 2008 to US$85,000 (down 92.3%), as well as a 100% fall in imports of musical instruments, which was worth US$1.1 million in the whole 2008.

As of Jan-Oct 2009, major imports from Jordan included watches and clocks (US$902,000, 32.4% of total, +50.7% YoY), jewellery (US$376,000, 13.5% of total, +12.1% YoY), and knitted or crocheted fabrics (US$311,000, 11.2% of total, +113.3% YoY).