Identifier
Created
Classification
Origin
03AMMAN4929
2003-08-06 07:40:00
UNCLASSIFIED
Embassy Amman
Cable title:  

JORDAN: 2003 INVESTMENT CLIMATE STATEMENT

Tags:  EINV KTDB KIDE EFIN ECON ETRD JO OPIC 
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UNCLAS SECTION 01 OF 12 AMMAN 004929 

SIPDIS

STATE FOR EB/IFD/OIA
STATE PLEASE PASS TO USTR

E.O. 12958: N/A
TAGS: EINV KTDB KIDE EFIN ECON ETRD JO OPIC
SUBJECT: JORDAN: 2003 INVESTMENT CLIMATE STATEMENT

REF: SECSTATE 128494

UNCLAS SECTION 01 OF 12 AMMAN 004929

SIPDIS

STATE FOR EB/IFD/OIA
STATE PLEASE PASS TO USTR

E.O. 12958: N/A
TAGS: EINV KTDB KIDE EFIN ECON ETRD JO OPIC
SUBJECT: JORDAN: 2003 INVESTMENT CLIMATE STATEMENT

REF: SECSTATE 128494


1. OPENNESS TO FOREIGN INVESTMENT

SINCE KING ABDULLAH SUCCEEDED TO THE THRONE IN
1999, JORDAN HAS TAKEN STEPS TO ENCOURAGE FOREIGN
INVESTMENT. KEY REFORMS HAVE BEEN UNDERTAKEN IN
THE INFORMATION TECHNOLOGY, TOURISM, AND SERVICES
SECTORS. FOREIGN AND DOMESTIC INVESTMENT LAWS
GRANT SPECIFIC INCENTIVES TO INDUSTRY, AGRICULTURE,
HOTELS, HOSPITALS, MARITIME AND RAIL
TRANSPORTATION, LEISURE AND RECREATION PROJECTS,
CONVENTION AND EXHIBITION CENTERS, TRANSPORTATION
AND DISTRIBUTION OF WATER, GAS, AND OIL/OIL
DERIVATIVES USING PIPELINES WERE ADDED TO THIS
LIST. THE LAWS ALSO ALLOW THE CABINET FLEXIBILITY
IN OFFERING INVESTMENT INCENTIVES TO OTHER SECTORS.

JORDAN ACCEDED TO THE WORLD TRADE ORGANIZATION
(WTO) IN APRIL 2000. IN ADDITION, A U.S.-JORDAN
FREE TRADE AGREEMENT (FTA) ENTERED INTO FORCE ON
DECEMBER 17, 2001. IN MAY 2001, THE GOVERNMENT
CONVERTED THE AQABA PORT AND SURROUNDING AREA INTO
A SPECIAL ECONOMIC ZONE (SEZ) OFFERING SPECIAL
INCENTIVES TO INVESTORS (SEE BELOW). THE
GOVERNMENT IS REVAMPING THE INVESTMENT PROMOTION
SYSTEM IN JORDAN. IT IS RE-EXAMINING INVESTMENT
INCENTIVES, AND IS CONSIDERATING THE CONSOLIDATION
OF ALL INVESTMENT PROMOTION ACTIVITIES UNDER A NEW
"JORDANIAN AGENCY FOR ECONOMIC DEVELOPMENT (JAED)".
THESE DEVELOPMENTS WILL LIKELY LEAD TO EXPANDED
INVESTMENT OPPORTUNITIES IN JORDAN FOR U.S.
INVESTORS.

JORDAN'S INVESTMENT LAWS TREAT FOREIGN AND LOCAL
INVESTORS EQUALLY, WITH THE FOLLOWING EXCEPTIONS
(AS PER REGULATION NO. 54 OF 2000, ENTITLED "NON-
JORDANIAN INVESTMENTS PROMOTION REGULATION"):

-- FOREIGN INVESTORS MAY NOT OWN MORE THAN 50
PERCENT OF PROJECTS IN:


--CONSTRUCTION AND CONTRACTING;
-- WHOLESALE AND RETAIL TRADE;
--TRANSPORT (MARITIME, AIR AND TRAIN
TRANSPORT) AND AUXILIARY SERVICES;
-- WASTEWATER TREATMENT;
--FOOD SERVICES;
--TRAVEL AGENT SERVICES;
--IMPORT AND EXPORT SERVICES;
--ADVERTISING SERVICES;
-- A NUMBER OF BUSINESS-RELATED AND COMMERCIAL
SERVICES;

--UNDER THE TERMS OF THE U.S.-JORDAN FTA, FOREIGN
INVESTORS ARE LIMITED TO 60 PERCENT OWNERSHIP IN
PUBLISHING AND IN AIRCRAFT MAINTENANCE AND REPAIR
SERVICES.

--FOREIGN INVESTORS MAY NOT HAVE WHOLE OR PARTIAL
OWNERSHIP OF:
--INVESTIGATION AND SECURITY SERVICES;
--SPORTS CLUBS (EXCEPT FOR HEALTH CLUBS)
--STONE QUARRYING FOR CONSTRUCTION PURPOSES
--CUSTOMS CLEARANCE SERVICES
--LAND TRANSPORTATION OF PASSENGERS AND CARGO
USING TRUCKS, BUSES AND TAXIS.

A MINIMUM CAPITAL REQUIREMENT OF JD 50,000 (USD
70,000) IS SET FOR FOREIGN INVESTORS. THIS
REQUIREMENT DOES NOT APPLY TO PARTICIPATION IN
PUBLIC SHAREHOLDING COMPANIES.

BLIC SHAREHOLDING COMPANIES.

THERE IS NO FORMAL SCREENING OR HOST GOVERNMENT
SELECTION PROCESS FOR FOREIGN INVESTMENT. HOWEVER,
INVESTORS IN LARGE PROJECTS FIND THAT THE INFORMAL
APPROVAL OF LOCAL AND CENTRAL GOVERNMENT OFFICIALS
HELPS TO ENSURE GOVERNMENTAL COOPERATION IN PROJECT
IMPLEMENTATION.

THE LAW STIPULATES THAT EXPROPRIATION IS PROHIBITED
UNLESS DEEMED IN THE PUBLIC INTEREST. IT PROVIDES
FOR FAIR COMPENSATION TO THE INVESTOR IN
CONVERTIBLE CURRENCY.

THE GOVERNMENT MADE MODEST PROGRESS IN ITS
PRIVATIZATION PROGRAM, BEGUN IN 1998, IN 2002. THE
GOJ SOLD ITS REMAINING 14.3% STAKE OF THE JORDAN
CEMENT FACTORIES COMPANY TO THE SOCIAL SECURITY
CORPORATION IN FEBRUARY 2002. 10.5% OF JORDAN
TELECOM SHARES WERE SOLD BY THE GOJ VIA AN INITIAL
PUBLIC OFFERING (IPO) IN OCTOBER 2002. IN
ADDITION, THE GOVERNMENT CONTINUES TO SEEK A
STRATEGIC FOREIGN PARTNER TO BUY UP TO A 49 PERCENT
STAKE OF ROYAL JORDANIAN (RJ) AIRLINE'S OPERATING
DIVISION. RJ'S ENGINE OVERHAUL FACILITY AND
AIRCRAFT MAINTENANCE DIVISION ARE FOR SALE; THE
FLIGHT TRAINING CENTER HAS BEEN SOLD IN PRIONCIPLE
TO BOEING, BUT THE TRANSACTION IS CURRENTLY ON
HOLD.

IN 2002, THE GOVERNMENT BEGAN THE RESTRUCTURING OF
THE ELECTRICITY GENERATING AND DISTRIBUTION
COMPANIES (CEGCO, IDECO AND EDCO) AHEAD OF
PRIVATIZATION EXPECTED LATE 2003. JORDAN HAS ALSO
ANNOUNCED ITS INTENTION TO PRIVATIZE THE JORDAN
PHOSPHATE MINES COMPANY AND TO SELL A STAKE IN THE
ARAB POTASH COMPANY TO STRATEGIC PARTNERS. THE
GOVERNMENT IS SEEKING AN INTERNATIONAL INVESTOR TO
DEVELOP A 370 KM GAS-PIPELINE FROM AQABA TO ZARQA
ON A BOO BASIS. THE POSTAL SERVICE HAS BEEN
TRANSFORMED INTO A PUBLIC SHAREHOLDING COMPANY
PENDING ITS EVENTUAL PRIVATIZATION.

WHILE THESE EFFORTS HAVE COMBINED TO MAKE JORDAN'S
INVESTMENT CLIMATE MORE WELCOMING, SOME LARGE U.S.
INVESTORS HAVE REPORTED THAT THERE WERE MANY
"HIDDEN COSTS" INVOLVED WHEN INVESTING IN JORDAN
DUE TO BUREAUCRACY, RED TAPE, VAGUE REGULATIONS AND
CONFLICTING JURISDICTIONS. INVESTORS SHOULD
EXECUTE DUE DILIGENCE IN EXPLORING INVESTMENT
OPPORTUNITIES AND CONCLUDING PURCHASES.


2. CONVERSION AND TRANSFER POLICIES

JORDAN'S LIBERAL FOREIGN EXCHANGE LAW ENTITLES
FOREIGN INVESTORS TO REMIT ABROAD, IN A FULLY
CONVERTIBLE FOREIGN CURRENCY, FOREIGN CAPITAL
INVESTED, INCLUDING ALL RETURNS, PROFITS, AND
PROCEEDS ARISING FROM THE LIQUIDATION OF INVESTMENT
PROJECTS. NON-JORDANIAN ADMINISTRATIVE AND
TECHNICAL EMPLOYEES ARE PERMITTED TO TRANSFER THEIR
SALARIES AND COMPENSATION ABROAD.

THE JORDANIAN DINAR IS FULLY CONVERTIBLE FOR ALL
COMMERCIAL AND CAPITAL TRANSACTIONS. THE JD IS
PEGGED TO THE U.S. DOLLAR AT AN EXCHANGE RATE OF
APPROXIMATELY 1 JD TO USD 1.41.

LICENSED MONEY-EXCHANGERS ARE SUPERVISED BY THE
CENTRAL BANK, BUT ARE FREE TO SET THEIR OWN
EXCHANGE RATES DEPENDING ON MARKET CONDITIONS.
UNLIKE BANKS, THEY DO NOT PAY THE CENTRAL BANK
COMMISSIONS FOR EXCHANGE TRANSACTIONS, GIVING THEM
A COMPETITIVE EDGE OVER BANKS.

OTHER FOREIGN EXCHANGE REGULATIONS INCLUDE:

--NON-RESIDENTS ARE ALLOWED TO OPEN BANK ACCOUNTS
IN FOREIGN CURRENCIES. THESE ACCOUNTS ARE EXEMPTED
FROM ALL TRANSFER-RELATED COMMISSION FEES CHARGED
BY THE CENTRAL BANK.

-- BANKS ARE PERMITTED TO PURCHASE AN UNLIMITED
AMOUNT OF FOREIGN CURRENCY FROM THEIR CLIENTS IN
EXCHANGE FOR JD ON A FORWARD BASIS. BANKS ARE
PERMITTED TO ENGAGE IN REVERSE OPERATIONS INVOLVING
THE SELLING OF FOREIGN CURRENCY IN EXCHANGE FOR JD
ON A FORWARD DEAL BASIS FOR THE PURPOSE OF COVERING
THE VALUE OF IMPORTS.

-- THERE ARE NO RESTRICTIONS ON THE AMOUNT OF
FOREIGN CURRENCY THAT RESIDENTS MAY HOLD IN BANK
ACCOUNTS, AND THERE ARE NO CEILINGS ON THE AMOUNT
RESIDENTS ARE PERMITTED TO TRANSFER ABROAD.

--BANKS DO NOT REQUIRE PRIOR CENTRAL BANK APPROVAL
FOR THE TRANSFER OF FUNDS, INCLUDING INVESTMENT-
RELATED TRANSFERS.


3. EXPROPRIATION AND COMPENSATION

THERE ARE NO KNOWN CASES WHERE THE GOVERNMENT HAS
EXPROPRIATED THE PRIVATE PROPERTY OF AN INVESTOR.


4. DISPUTE SETTLEMENT

UNDER JORDANIAN LAW, FOREIGN INVESTORS MAY SEEK
THIRD PARTY ARBITRATION OR AN INTERNATIONALLY
RECOGNIZED SETTLEMENT OF DISPUTES. THE JORDANIAN
GOVERNMENT RECOGNIZES DECISIONS ISSUED BY THE
INTERNATIONAL CENTER FOR THE SETTLEMENT OF
INVESTMENT DISPUTES (ICSID),OF WHICH IT IS A
MEMBER. JORDAN IS ALSO A MEMBER OF THE NEW YORK
CONVENTION OF 1958 ON THE RECOGNITION AND
ENFORCEMENT OF FOREIGN ARBITRAL AWARDS. IN CASES
WHERE THE GOVERNMENT (OR ITS AGENCIES) IS A PARTY
TO THE DISPUTE, IT GENERALLY PREFERS SETTLEMENT IN
LOCAL COURTS IF AN OUT-OF-COURT SETTLEMENT IS NOT
FORTHCOMING. JORDAN ABIDES BY WTO DISPUTE
SETTLEMENT MECHANISMS. DISPUTE SETTLEMENT
MECHANISMS UNDER THE FTA ARE CONSISTENT WITH WTO
COMMITMENTS.

ARTICLE IX OF THE BILATERAL INVESTMENT TREATY
(BIT),SIGNED IN 1997, ESTABLISHED PROCEDURES FOR
DISPUTE SETTLEMENT.

THERE IS CURRENTLY ONE OUTSTANDING DISPUTE BETWEEN
A U.S. INVESTOR AND THE JORDANIAN GOVERNMENT. THE
DISPUTE IS CURRENTLY BEFORE AN ICSID TRIBUNAL AND
WITH A JORDANIAN APPELATE COURT.

--JORDAN'S LEGAL SYSTEM

IN THE LEGISLATIVE PROCESS, DRAFT LAWS ARE PREPARED
BY VARIOUS MINISTRIES, WHICH ARE THEN SUBMITTED TO
THE CABINET AND SUBSEQUENTLY PRESENTED TO THE LOWER
HOUSE OF PARLIAMENT FOR CONSIDERATION. ONCE PASSED
BY THE LOWER HOUSE, DRAFT LAWS MUST BE APPROVED BY
THE SENATE. ALL LAWS REQUIRE ROYAL ASSENT AND MUST
BE PUBLISHED IN THE NATIONAL GAZETTE BEFORE THEY
COME INTO FORCE.

SINCE PARLIAMENT'S DISSOLUTION IN MAY 2001, ALL
LAWS APPROVED BY THE CABINET AND GIVEN ROYAL
CONSENT ARE CONSIDERED TEMPORARY LAWS WHICH HAVE TO
BE SUBMITTED TO PARLIAMENT FOR DEBATE AND APPROVAL
ONCE IT RECONVENES. PARLIAMENTARY ELECTIONS TOOK
PLACE IN JUNE 2003, AND PARLIAMENT RECONVENED IN
JULY 2003.

ACCORDING TO THE CONSTITUTION, THE JUDICIARY IS
INDEPENDENT OF OTHER BRANCHES OF THE GOVERNMENT. IN
SOME CASES, IT IS SUSCEPTIBLE TO POLITICAL PRESSURE
AND INTERFERENCE BY THE EXECUTIVE.

THE CONSTITUTION CLASSIFIES THE JUDICIARY INTO
THREE CATEGORIES: RELIGIOUS COURTS, SPECIAL COURTS
(E.G. MILITARY COURT, CUSTOMS COURT, INCOME TAX
COURT) AND REGULAR COURTS. VERDICTS RENDERED BY
THE JORDANIAN JUDICIARY ARE BASED ON DECISIONS MADE
BY A JUDGE OR A PANEL OF JUDGES.

GENERAL LEGAL PROVISIONS ARE INCORPORATED WITHIN
THE CIVIL CODE, UNLESS A SEPARATE, MORE SPECIALIZED
LAW GOVERNS THE NATURE OF THE SPECIFIC
RELATIONSHIP.

COMMERCIAL ACTIVITIES ARE GOVERNED BY THE
COMMERCIAL CODE. BUSINESS CONTRACTS, SUCH AS
COMMERCIAL AGENCY AND COMMISSION AGENCY CONTRACTS,
ARE SUBJECT TO THE CODE'S PROVISIONS. FINANCIAL
PAPERS SUCH AS CHECKS AND PROMISSORY NOTES ARE ALSO
DEALT WITH UNDER THE COMMERCIAL CODE.

VARIOUS PROVISIONS IN THE COMMERCIAL CODE, THE
CIVIL CODE, AND THE COMPANIES LAW GOVERN BANKRUPTCY
AND INSOLVENCY. A DRAFT BANKRUPTCY LAW HAS BEEN
APPROVED BY THE CABINET AND CAME INTO FORCE IN

2002.


5. PERFORMANCE REQUIREMENTS/INCENTIVES

FOLLOWING JORDAN'S ACCESSION TO THE WTO, THE TRADE-
RELATED INVESTMENT MEASURES (TRIMS) AGREEMENT CAME
INTO FORCE. INVESTMENT AND COMMERCIAL LAWS DO NOT
CONTAIN ANY TRADE-RESTRICTIVE INVESTMENT MEASURES
AND HAVE GENERALLY BEEN IN COMPLIANCE WITH TRIMS.

INVESTMENT INCENTIVES TAKE THE FORM OF INCOME TAX
AND CUSTOM-DUTIES EXEMPTIONS, WHICH ARE GRANTED TO
BOTH JORDANIAN AND FOREIGN INVESTORS.

THE COUNTRY IS DIVIDED INTO THREE DEVELOPMENT
AREAS: ZONES A, B, AND C. INVESTMENTS IN ZONE C,
THE LEAST DEVELOPED AREAS OF JORDAN, RECEIVE THE
HIGHEST LEVEL OF EXEMPTIONS.
HOWEVER, ALL AGRICULTURAL, MARITIME TRANSPORT, AND
RAILWAY INVESTMENTS ARE CLASSIFIED AS ZONE C,
IRRESPECTIVE OF LOCATION. HOTEL AND TOURISM-
RELATED PROJECTS SET UP ALONG THE DEAD SEA COASTAL
AREA, LEISURE AND RECREATIONAL COMPOUNDS, AND
CONVENTION AND EXHIBITION CENTERS RECEIVE ZONE A
DESIGNATIONS. QUALIFIED INDUSTRIAL ZONES (QIZS)
ARE CONSIDERED ZONE B PROJECTS UNLESS THEY FALL IN
ZONE C. THE THREE-ZONE CLASSIFICATION SCHEME DOES
NOT APPLY TO NATURE RESERVES AND ENVIRONMENTAL
PROTECTION AREAS, WHICH ARE GRANTED SPECIAL
CONSIDERATION.

SPECIFICALLY, THE INVESTMENT PROMOTION LAW ALLOWS:

-- EXEMPTIONS FROM INCOME AND SOCIAL SERVICES TAXES
OF UP TO TEN YEARS FOR PROJECTS APPROVED BY THE
INVESTMENT PROMOTION COMMITTEE (WHICH INCLUDES
SENIOR OFFICIALS FROM THE MINISTRY OF INDUSTRY AND
TRADE, INCOME TAX DEPARTMENT, CUSTOMS DEPARTMENT,
THE PRIVATE SECTOR, AND THE DIRECTOR GENERAL OF THE
JORDAN INVESTMENT BOARD),IN ACCORDANCE WITH THE
DESIGNATED ZONE SCHEME:

-- 25 PERCENT TAX EXEMPTION FOR ZONE A
-- 50 PERCENT TAX EXEMPTIONS FOR ZONE B
-- 75 PERCENT TAX EXEMPTIONS FOR ZONE C

AN ADDITIONAL YEAR OF THESE TAX EXEMPTIONS IS
GRANTED TO PROJECTS EACH TIME THEY UNDERGO
EXPANSION, MODERNIZATION, OR DEVELOPMENT RESULTING
IN A 25 PERCENT INCREASE IN THEIR PRODUCTION
CAPACITY FOR A MAXIMUM OF FOUR YEARS.

-- CAPITAL GOODS ARE EXEMPT FROM DUTIES AND TAXES
IF DELIVERED WITHIN THREE YEARS FROM THE DATE OF
THE INVESTMENT PROMOTION COMMITTEE'S APPROVAL. THE
COMMITTEE MAY EXTEND THE THREE-YEAR PERIOD IF
NECESSARY.

-- IMPORTED SPARE PARTS RELATED TO A SPECIFIC
PROJECT ARE EXEMPT FROM DUTIES AND TAXES, PROVIDED
THAT THEIR VALUE DOES NOT EXCEED 15 PERCENT OF THE
VALUE OF FIXED ASSETS REQUIRING SPARE PARTS. THEY
SHOULD BE IMPORTED WITHIN TEN YEARS FROM THE
PRODUCTION DATE.

-- CAPITAL GOODS USED FOR EXPANSION AND
MODERNIZATION OF A PROJECT ARE EXEMPT FROM DUTIES
AND TAXES, PROVIDED THEY RESULT IN AT LEAST A 25
PERCENT INCREASE IN PRODUCTION CAPACITY.

-- HOTEL AND HOSPITAL PROJECTS RECEIVE EXEMPTIONS
FROM DUTIES AND TAXES ON FURNITURE AND SUPPLY
PURCHASES WHICH ARE REQUIRED FOR MODERNIZATION AND
RENEWAL ONCE EVERY SEVEN YEARS.

-- INCREASES IN THE VALUE OF IMPORTED CAPITAL GOODS
ARE EXEMPT FROM DUTIES AND TAXES IF THE INCREASES
RESULT FROM HIGHER FREIGHT CHARGES OR CHANGES IN
THE EXCHANGE RATE.

IN ADDITION TO THE INVESTMENT PROMOTION LAW,
ADDITIONAL EXEMPTIONS ARE GRANTED TO INVESTMENTS
WITHIN INDUSTRIAL ESTATES DESIGNATED AS SPECIAL
INDUSTRIAL ZONES:

-- INDUSTRIAL PROJECTS ARE GRANTED EXEMPTIONS ON
INCOME AND SOCIAL SERVICES TAXES FOR A TWO-YEAR
PERIOD. ESTABLISHED INDUSTRIAL FACILITIES THAT
RELOCATE TO AN INDUSTRIAL ESTATE ALSO RECEIVE THIS
BENEFIT.

-- INDUSTRIAL PROJECTS ARE GRANTED PROPERTY TAX
EXEMPTIONS THROUGHOUT THEIR LIFETIME.

-- INDUSTRIAL PROJECTS ARE GRANTED PARTIAL OR FULL
EXEMPTIONS FROM MOST MUNICIPALITY AND PLANNING
FEES.

TO PROMOTE EXPORTS, ALL EXPORTERS ARE GRANTED THE
FOLLOWING INCENTIVES:

-- NET PROFITS GENERATED FROM MOST EXPORT REVENUES
ARE FULLY EXEMPT FROM INCOME TAX. EXCEPTIONS
INCLUDE FERTILIZER, PHOSPHATE, AND POTASH EXPORTS,
IN ADDITION TO EXPORTS GOVERNED BY SPECIFIC TRADE
PROTOCOLS AND FOREIGN DEBT REPAYMENT SCHEMES. UNDER
THE WTO SUCH EXEMPTIONS WERE SUPPOSED TO BE PHASED
OUT BY THE END OF 2002, BUT THE GOVERNMENT IS
SEEKING A TWO-YEAR EXTENSION.
-- FOREIGN INPUTS USED IN THE PRODUCTION OF EXPORTS
ARE EXEMPT FROM CUSTOM DUTIES AND ALL ADDITIONAL
IMPORT FEES ON A REIMBURSABLE OR DRAWBACK BASIS.

FOREIGN INVESTORS CAN BID FOR GOVERNMENT-
COMMISSIONED RESEARCH AND DEVELOPMENT PROGRAMS THAT
ARE SLATED FOR INTERNATIONAL OR MIXED BIDDERS.
OTHERWISE, THEY HAVE TO FIND A JORDANIAN PARTNER.
THIS QUALIFICATION WILL BE DROPPED ONCE JORDAN
ACCEDES TO THE WTO'S GOVERNMENT PROCUREMENT
AGREEMENT (GPA),FOR WHICH IT IS CURRENTLY
PREPARING AN ENTITIES OFFER.


6. RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT

IN GENERAL, THE LAWS ON INVESTMENT AND PROPERTY
OWNERSHIP PERMIT DOMESTIC AND FOREIGN ENTITIES TO
ESTABLISH AND OWN BUSINESSES AND ENGAGE IN
REMUNERATIVE ACTIVITIES. HOWEVER, ACTIVITIES
RELEVANT TO MILITARY AND NATIONAL SECURITY ARE
SUBJECT TO DIFFERENT PROVISIONS AND PROCEDURES.

FOREIGN COMPANIES MAY OPEN REPRESENTATIVE
(REGIONAL) AND BRANCH OFFICES; BRANCH OFFICES MAY
CARRY OUT FULL BUSINESS ACTIVITIES, WHILE REGIONAL
OFFICES MAY SERVE AS LIAISONS BETWEEN HEAD OFFICES
AND JORDANIAN OR REGIONAL CLIENTS. THE MINISTRY OF
INDUSTRY AND TRADE MANAGES THE GOVERNMENT'S POLICY
ON SETTING UP REGIONAL AND BRANCH OFFICES.

NO FOREIGN FIRM MAY IMPORT GOODS WITHOUT APPOINTING
AN AGENT REGISTERED IN JORDAN. THE AGENT'S
CONNECTION TO THE FOREIGN COMPANY MUST BE DIRECT,
WITHOUT A SUB-AGENT OR INTERMEDIARY. IN MID 2001,
A COMMERCIAL AGENTS AND INTERMEDIARIES LAW WAS
PASSED TO GOVERN THE CONTRACT BETWEEN FOREIGN FIRMS
AND COMMERCIAL AGENTS. IT CLEARLY DELINEATES THE
DISTINCTION BETWEEN COMMERCIAL AGENCY AND
DISTRIBUTION CONTRACTS RELATIONSHIPS. PRIVATE
FOREIGN ENTITIES, WHETHER LICENSED UNDER SOLE
FOREIGN OWNERSHIP OR AS A JOINT VENTURE, COMPETE ON
AN EQUAL BASIS WITH LOCAL COMPANIES.

NON-ARAB FOREIGN NATIONALS ARE PERMITTED TO OWN OR
LEASE PROPERTY IN JORDAN, PROVIDED THAT THEIR HOME
COUNTRY DOES NOT DISCRIMINATE AGAINST JORDANIANS
AND THE PROPERTY IS DEVELOPED WITHIN FIVE YEARS
FROM THE DATE OF APPROVAL. THE CABINET IS THE
AUTHORITY ON LICENSING FOREIGN OWNERSHIP OF LAND
AND PROPERTY. AGRICULTURAL LAND IS NOT INCLUDED IN
THE PROVISIONS OF THIS LAW. HOWEVER, A FOREIGN
COMPANY THAT INVESTS IN THE AGRICULTURAL SECTOR IN
JORDAN AUTOMATICALLY OBTAINS NATIONAL TREATMENT
WITH RESPECT TO OWNERSHIP OF AGRICULTURAL LAND,
ONCE REGISTERED AS A JORDANIAN COMPANY.


7. PROTECTION OF PROPERTY RIGHTS

INTEREST IN PROPERTY (MOVEABLE AND REAL) IS
RECOGNIZED, ENFORCED AND RECORDED THROUGH RELIABLE
LEGAL PROCESSES. THE LEGAL SYSTEM FACILITATES AND
PROTECTS THE ACQUISITION AND DISPOSITION OF ALL
PROPERTY RIGHTS.

PRIOR TO ITS ACCESSION TO THE WTO, JORDAN PASSED
SEVERAL NEW LAWS TO IMPROVE PROTECTION OF
INTELLECTUAL PROPERTY RIGHTS (IPR),PATENTS,
COPYRIGHTS, AND TRADEMARKS. TRIPS (TRADE RELATED
ASPECTS OF INTELLECTUAL PROPERTY RIGHTS)-CONSISTENT
LAWS NOW PROTECT TRADE SECRETS, PLANT VARIETIES AND
SEMICONDUCTOR CHIP DESIGNS. THE LAW REQUIRES
REGISTRATION OF COPYRIGHTS, PATENTS AND TRADEMARKS.
COPYRIGHTS MUST BE REGISTERED AT THE NATIONAL
LIBRARY, PART OF THE MINISTRY OF CULTURE. PATENTS
MUST BE REGISTERED WITH THE REGISTRAR OF PATENTS
AND TRADEMARKS AT THE MINISTRY OF INDUSTRY AND
TRADE.

JORDAN'S PHARMACEUTICAL INDUSTRY GENERALLY ABIDES
BY THE NEW TRIPS-CONSISTENT PATENT LAW. IN
ADDITION, IN SIGNING THE FTA JORDAN COMMITTED TO
EVEN STRONGER ENFORCEMENT OF IPR, PARTICULARLY IN
THE PHARMACEUTICAL SECTOR. IT IS ALSO EXPECTED TO
ACCEDE TO THE WORLD INTELLECTUAL PROPERTY
ORGANIZATION (WIPO) TREATIES ON COPYRIGHTS (WCT)
AND PERFORMANCES AND PHONOGRAPHS (WPPT) BY THE END
OF 2002. JORDANIAN FIRMS ARE NOW SEEKING JOINT
VENTURES AND LICENSING AGREEMENTS WITH
MULTINATIONAL PARTNERS.
JORDAN'S RECORD ON IPR ENFORCEMENT HAS IMPROVED.
HOWEVER, EFFECTIVE ENFORCEMENT MECHANISMS AND LEGAL
PROCEDURES ARE YET TO BE FULLY ESTABLISHED. AS A
RESULT, THE GOVERNMENT'S RECORD ON IPR PROTECTION
REMAINS MIXED. A SIZEABLE PROPORTION OF VIDEOS AND
SOFTWARE SOLD IN THE MARKETPLACE CONTINUES TO BE
PIRATED. ENFORCEMENT ACTION AGAINST AUDIO/VIDEO
AND SOFTWARE PIRACY IS IMPROVING, BUT REMAINS
SPOTTY.


8. TRANSPARENCY OF THE REGULATORY SYSTEM

THE GOVERNMENT IS SLOWLY IMPLEMENTING POLICIES TO
IMPROVE COMPETITION AND FOSTER TRANSPARENCY. THESE
REFORMS AIM TO CHANGE AN EXISTING SYSTEM THAT CAN
BE INFLUENCED GREATLY BY FAMILY AFFILIATIONS AND
BUSINESS TIES. ALTHOUGH IN MANY INSTANCES
BUREAUCRATIC PROCEDURES HAVE BEEN STREAMLINED, RED
TAPE AND OPAQUE PROCEDURES STILL PRESENT PROBLEMS
FOR FOREIGN AND DOMESTIC INVESTORS. THE ARBITRARY
APPLICATION OF CUSTOMS, TAX, LABOR, HEALTH AND
OTHER LAWS OR REGULATIONS, PARTICULARLY AT THE
LEVEL OF LOCAL GOVERNMENT, HAVE IMPEDED INVESTMENT.

IN 2002, THE GOVERNMENT CONTINUED ITS AGGRESSIVE
STRATEGY TO PROMOTE E-GOVERNMENT. THE GOVERNMENT
HAS PLEDGED TO MAKE ITS SERVICES, REGULATIONS, AND
PROCUREMENT PROCEDURES MORE ACCESSIBLE AND
TRANSPARENT VIA E-GOVERNMENT.


9. EFFICIENT CAPITAL MARKETS AND PORTFOLIO
INVESTMENT

JORDAN'S CAPITAL MARKET IS SMALL, WITH A
CAPITALIZATION OF APPROXIMATELY USD 7 BILLION
(AROUND 80 PERCENT OF GDP). MAJOR RESTRUCTURING OF
THE MARKET WAS COMPLETED IN 2000.

THE AMMAN FINANCIAL MARKET (AFM) IS DIVIDED AMONG
THE JORDAN SECURITIES COMMISSION (JSC),THE AMMAN
STOCK EXCHANGE (ASE) AND THE SECURITIES DEPOSITORY
CENTER (SDC). THE SDC IS THE CUSTODIAN FOR ALL
TRANSACTION CONTRACTS, CLEARING AND SETTLEMENT.
THE JSC WAS ESTABLISHED AS THE GOVERNMENT'S
SUPERVISORY AND MONITORING AGENCY FOR THE CAPITAL
MARKET IN JORDAN. THE GOVERNMENT IS WORKING ON
FURTHER AMENDMENTS TO THE SECURITIES LAW THAT WILL
BRING IT MORE IN LINE WITH INTERNATIONAL BEST
PRACTICES.

THERE ARE APPROXIMATELY 24 BROKERAGE FIRMS AND 158
LISTED PUBLIC-SHAREHOLDING COMPANIES ON THE ASE.
THIRTY-SEVEN PERCENT OF OWNERSHIP IS BY NON-
JORDANIAN, MOSTLY ARAB, INVESTORS. DESPITE
SIGNIFICANT PROGRESS OVER THE PAST FIVE YEARS, MORE
REFORM IS NEEDED TO ESTABLISH A MARKET WITH
ADEQUATE LEGAL, REGULATORY, AND BEST PRACTICES
NORMS.

THE ASE ALSO SUFFERS FROM INTERMITTENT LIQUIDITY
PROBLEMS, WHICH HAVE ENSURED THAT THE BOURSE
REMAINS PRONE TO SPECULATIVE MOVEMENTS. STRUCTURAL
PROBLEMS (SUCH AS LACK OF TRANSPARENCY AND
CORPORATE GOVERNANCE AND THE DEARTH OF MUTUAL
FUNDS) HAVE BEEN EXACERBATED BY THE INSUFFICIENCY
OF INSTITUTIONAL BUYING AND WAVERING INVESTOR
CONFIDENCE.

THE CENTRAL BANK, ON BEHALF OF THE MINISTRY OF
FINANCE, CONDUCTS REGULAR AUCTIONS OF SIX-MONTH
TREASURY BILLS AND THREE-YEAR TREASURY BONDS.
TREASURY BONDS AND BILLS AND DEVELOPMENT BONDS
(EQUIVALENT TO TREASURY BONDS) ARE LISTED ON THE
ASE. MONTHLY TRADING VOLUME AVERAGES JD 600,000
(USD 840,000) AT FACE VALUE. DESPITE THIS LOW
VOLUME, MARKETS ARE ACTIVELY QUOTED ON DEVELOPMENT
BONDS EACH TRADING DAY. THESE QUOTES PROVIDE THE
BASIS FOR THE BENCHMARK YIELD CURVE PUBLISHED DAILY
ON THE CENTRAL BANK REUTERS PAGES AND IN THE LOCAL
ARABIC NEWSPAPERS. THE MINISTRY OF FINANCE WILL BE
ISSUING BONDS OF DIFFERING MATURITIES LATER IN
2002, LENGTHENING THE YIELD CURVE. THE CENTRAL
BANK ALSO INTRODUCED A PRIMARY DEALER PLAN DESIGNED
TO INCREASE LIQUIDITY IN THE SECONDARY MARKET. A
NEW PUBLIC DEBT LAW THAT ALLOWS FOR AN INCREASE IN
THE VOLUME OF BOND AND BILL ISSUANCE BY THE
TREASURY CAME INTO FORCE IN SUMMER 2001.
GOVERNMENT BOND AND BILL OWNERSHIP IS STILL
REGISTERED IN BOOK-ENTRY FORM AT THE CENTRAL BANK,
BUT IT WILL BE HANDLED BY THE SDC SOMETIME IN 2003.
COMMERCIAL BANKS MAINTAIN SUB-REGISTRIES. FOREIGN
INVESTORS ARE WELCOME TO PARTICIPATE IN AUCTIONS
AND TO PURCHASE GOVERNMENT SECURITIES.

THE CORPORATE BOND MARKET REMAINS UNDER-DEVELOPED,
AND CONTINUES TO BE OVER-SHADOWED BY TRADITIONAL
DIRECT LENDING. ONE REASON IS RIGID INTEREST RATES;
ANOTHER RELATES TO THE ABSENCE OF A SECONDARY
MARKET FOR SUCH ISSUES. INCREASINGLY, HOWEVER,
SOME BANKS HAVE STARTED INTRODUCING NEW PRODUCTS
AND CORPORATE BOND ISSUES. THE LATTER AMOUNTED TO
JD 69.8 MILLION (USD 98 MILLION) IN 2002.
ONE FLAW IN THE CREDIT MARKET IS THE LACK OF LONG-
TERM CREDIT, OWING TO THE SHORT-TERM NATURE OF
BANKS' DEPOSIT STRUCTURE. ON AVERAGE, REGULAR
CORPORATE LOANS ARE EXTENDED FOR PERIODS OF 1-3
YEARS, WHILE SYNDICATED LOANS MAY REACH UP TO 7
YEARS. LONG-TERM FINANCING HAS ALSO BEEN LONG
CURTAILED BY THE OTTOMAN-ERA LAW THAT STIPULATED
THAT TOTAL INTEREST PAYMENTS OVER THE LIFE OF A
BOND MAY NOT BE GREATER THAN THE PRINCIPAL AMOUNT.
THIS EFFECTIVELY IMPEDED THE DEVELOPMENT OF LONGER-
MATURITY FIXED-INCOME INSTRUMENTS, EVEN THOUGH IT
WAS NOT EFFECTIVELY ENFORCED. THE PUBLIC DEBT LAW
HAS SCRAPPED THIS REQUIREMENT, ALLOWING FOR LONGER
MATURITIES AND INCREASED VOLUMES.

THE ABSENCE OF LONG-TERM CREDIT DISCOURAGES
PROJECTS REQUIRING LONG DEVELOPMENT PERIODS. AS A
CONSEQUENCE, LARGE INVESTMENT PROJECTS OFTEN RESORT
TO FOREIGN MARKETS TO RAISE CAPITAL.

THE CENTRAL BANK OF JORDAN (CBJ) IS THE BANKING
SYSTEM'S REGULATORY AUTHORITY. AN ECONOMIC SLOW-
DOWN SINCE 1996 HAS TAKEN A TOLL ON JORDANIAN
BANKS, AND UNOFFICIAL ESTIMATES OF NON-PERFORMING
LOANS PUT THE TOTAL AT AROUND 30 PERCENT OF ALL
LOANS.

A BANKING LAW, WHICH AIMS AT IMPROVING THE
INDUSTRY'S EFFICIENCY, CAME INTO FORCE IN 2000.
THE NEW LAW PROTECTS DEPOSITORS' INTERESTS,
DIMINISHES MONEY MARKET RISK, GUARDS AGAINST THE
CONCENTRATION OF LENDING, AND INCLUDES ARTICLES ON
NEW BANKING PRACTICES (E-COMMERCE AND E-BANKING)
AND MONEY LAUNDERING. THE CBJ HAS ISSUED A NUMBER
OF CIRCULARS THROUGHOUT THE PAST YEAR TO IMPLEMENT
MONEY LAUNDERING REGULATIONS THAT ARE CONSISTENT
WITH THE RECOMMENDATIONS OF THE OECD'S FINANCIAL
ACTION TASK FORCE. IT ALSO ALLOWS MARKET FORCES
GREATER INFLUENCE TO ENCOURAGE THE DEVELOPMENT OF
FINANCIAL MARKETS. IN ADDITION, THE CBJ SET UP A
SEPARATE AND INDEPENDENT DEPOSIT INSURANCE
CORPORATION IN LATE 2000, THAT ENSURES DEPOSITS OF
UP TO JD 10,000 (USD 14,000). THE CORPORATION ALSO
ACTS AS THE LIQUIDATOR OF BANKS AS DIRECTED BY THE
CBJ.

THE CBJ ESTABLISHED A CREDIT BUREAU FOR BOUNCED
CHECKS IN 2001. THE BUREAU REQUIRES BANKS TO
REPORT ON A TIMELY BASIS THE NAMES OF ACCOUNT
HOLDERS WITH BOUNCED CHECKS. FOLLOWING A THIRD
REPORT OF A BOUNCED CHECK, THE CBJ CIRCULATES THE
NAMES OF THE ACCOUNT HOLDERS TO ALL BANKS WITH
INSTRUCTIONS TO WITHHOLD CHECK-BOOKS AND ANY OTHER
FACILITIES FOR A CERTAIN PERIOD OF TIME.

AS OF THE END OF 2002, THE ARAB BANK AND THE
HOUSING BANK WERE THE TWO LARGEST BANKS IN JORDAN,
WITH ASSET BASES OF JD 19.3 BILLION (USD 27
BILLION) AND JD 1.7 BILLION (USD 2.4 BILLION),
RESPECTIVELY. THE DIFFERENCE BETWEEN THEIR ASSET
BASES OWES TO THE VAST DIFFERENCE IN THEIR SCOPE OF
OPERATIONS; THE ARAB BANK HAS A WORLDWIDE PRESENCE,
WHILE THE HOUSING BANK'S PRIME FOCUS IS THE LOCAL
MARKET. ALTHOUGH THE CENTRAL BANK DISTINGUISHES
BETWEEN "INVESTMENT BANKS" AND "COMMERCIAL BANKS",
THERE ARE NO SIGNIFICANT DIFFERENCES IN THE
OPERATIONS OF THE TWO.

BANKS OFFER LOANS, DISCOUNTED BILLS, AND OVERDRAFT
FACILITIES. INVESTMENT BANKS ARE NOT PERMITTED TO
EXTEND OVERDRAFT FACILITIES. THE CENTRAL BANK
PERMITS BANKS TO EXTEND LOANS AND CREDIT FACILITIES
IN FOREIGN CURRENCY. IN SUCH CASES, IT REQUIRES
DEBT REPAYMENT TO BE IN FOREIGN CURRENCY.

A NUMBER OF BANKS HAVE ESTABLISHED MUTUAL FUNDS.
NEW CAPITAL INSTRUMENTS SUCH AS COMMERCIAL PAPER
AND CONVERTIBLE BONDS ARE UNDER CONSIDERATION. IN
ADDITION TO LONG-TERM INSTRUMENTS, SECURITIZATION,
SHORT-SELLING, AND TREASURY STOCKS ARE BEING
INTRODUCED IN SOME BANKS.

A BANKING SCANDAL THAT REPORTEDLY INVOLVED
FRAUDULENT ACTIVITY AND EMBEZZLEMENT OF SOME USD
120 MILLION EMERGED IN FEBRUARY 2002 AND INVOLVED
SOME PROMINENT JORDANIANS AND LOANS DRAWN FROM
THREE BANKS. HOWEVER, THE CENTRAL BANK TOOK
ADEQUATE ACTION TO REASSURE DEPOSITORS AND RESTORE
CALM TO THE MARKET. IN ADDITION, THE SECTOR DID
NOT SUFFER ANY SIGNIFICANT SHOCKS DURING GULF WAR
II, EITHER DUE TO SIGNIFICANT EXPOSURE TO TRADE
WITH IRAQ OR TO RUNS ON BANK DEPOSITS AT THE
OUTBREAK OF THE CONFLICT. AS A RESULT, THE HEALTH
OF THE BANKING SYSTEM AND ITS RESILIENCE ARE NOT IN
QUESTION. IRAQI GOVERNMENT ASSETS IN JORDANIAN
BANKS WERE FROZEN IN EARLY 2003.

WITH RESPECT TO OWNERSHIP AND PARTICIPATION IN THE
MAJOR ECONOMIC SECTORS IN JORDAN, THERE IS NO
APPARENT DISCRIMINATION AGAINST FOREIGN
PARTICIPATION. IN FACT, MANY JORDANIAN BUSINESSES
SEEK FOREIGN PARTNERS, WHICH ARE PERCEIVED AS THE
KEY TO INCREASED COMPETITIVENESS AND EASIER ENTRY
INTO INTERNATIONAL MARKETS.

THERE ARE A NUMBER OF INTERNATIONALLY RECOGNIZED
ACCOUNTING AND AUDITING FIRMS IN JORDAN. THE
GOVERNMENT'S ACCOUNTING AND AUDITING REGULATIONS
ARE CONSISTENT WITH INTERNATIONAL STANDARDS AND ARE
INTERNATIONALLY RECOGNIZED.


10. POLITICAL VIOLENCE

SOME INCIDENTS OF POLITICAL VIOLENCE AND TERRORIST
ACTIVITIES HAVE OCCURRED IN JORDAN RECENTLY, THOUGH
THESE HAVE NOT DIRECTLY AFFECTED FOREIGN BUSINESS
INTERESTS. WHILE JORDAN ENJOYS POLITICAL
STABILITY, EVENTS IN THE REGION, PARTICULARLY IN
THE WEST BANK AND GAZA, CAN TRIGGER SMALL
DEMONSTRATIONS AND ANTI-U.S. HOSTILITY.

THE GOVERNMENT OF JORDAN IS PROACTIVE IN
MAINTAINING PUBLIC SECURITY, CONTAINING
DEMONSTRATIONS AND PREVENTING TERRORIST ATTACKS.
THE POTENTIAL FOR POLITICALLY-MOTIVATED VIOLENCE,
HOWEVER, REMAINS. VISITORS SHOULD CONSULT CURRENT
STATE DEPARTMENT PUBLIC ANNOUNCEMENTS.


11. CORRUPTION

CORRUPTION IS A CRIME IN JORDAN. THE GENERAL
INTELLIGENCE DIRECTORATE (GID) HAS AN ANTI-
CORRUPTION DEPARTMENT THAT IS RESPONSIBLE FOR
COMBATING BRIBERY, EXTORTION, AND OTHER SIMILAR
CRIMES.

INFLUENCE PEDDLING AND A LACK OF TRANSPARENCY HAVE
BEEN ALLEGED IN GOVERNMENT PROCUREMENT AND DISPUTE
SETTLEMENT. "WASTA", THE USE OF FAMILY, BUSINESS,
AND OTHER PERSONAL CONNECTIONS TO ADVANCE BUSINESS
AND INTERESTS, IS ENDEMIC.


12. BILATERAL TRADE/INVESTMENT AGREEMENTS

A FREE TRADE AGREEMENT (FTA) BETWEEN THE U.S. AND
JORDAN ENTERED INTO FORCE IN DECEMBER 2001. THE
AGREEMENT MANDATES THAT A FREE TRADE AREA BETWEEN
THE TWO COUNTRIES WILL BE ATTAINED FOLLOWING A
GRADUAL PHASING OUT OF IMPORT DUTIES AND OTHER
TRADE BARRIERS OVER THE NEXT TEN YEARS. THE
AGREEMENT INCORPORATES LABOR, ENVIRONMENTAL, AND
INTELLECTUAL PROPERTY RIGHTS PROVISIONS.

THE U.S. AND JORDAN SIGNED A BILATERAL INVESTMENT
TREATY IN 1997. THE AGREEMENT PROVIDES RECIPROCAL
PROTECTION OF JORDANIAN AND U.S. INDIVIDUAL AND
CORPORATE INVESTMENTS AND ENTERED INTO FORCE IN

2003.

JORDAN SIGNED THE TRADE AND INVESTMENT FRAMEWORK
AGREEMENT (TIFA) IN 1999. UNDER THE TIFA, A U.S.-
JORDAN COUNCIL ON TRADE AND INVESTMENT WAS
ESTABLISHED WITH THE OBJECTIVE OF WORKING TOWARDS
THE REMOVAL OF IMPEDIMENTS TO TRADE AND INVESTMENT.

JORDAN IS A MEMBER OF A PAN-ARAB ACCORD ON
FACILITATING THE MOVEMENT OF CAPITAL BETWEEN ARAB
COUNTRIES. COUNTRIES THAT HAVE SIGNED THE ACCORD
INCLUDE JORDAN, UAE, BAHRAIN, TUNISIA, SAUDI
ARABIA, IRAQ, OMAN, KUWAIT, LIBYA, EGYPT, MOROCCO,
QATAR, SYRIA, AND LEBANON.

AN ECONOMIC ASSOCIATION AGREEMENT BETWEEN JORDAN
AND THE EUROPEAN UNION THAT ESTABLISHES FREE TRADE
OVER A TWELVE-YEAR PERIOD ENTERED INTO FORCE IN

2002. THIS AGREEMENT CALLS FOR THE FREE MOVEMENT
OF CAPITAL, AS WELL AS COOPERATION ON DEVELOPMENT
AND POLITICAL ISSUES.


13. OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS

INVESTMENTS IN JORDAN ARE ELIGIBLE FOR OVERSEAS
PRIVATE INVESTMENT CORPORATION (OPIC) INSURANCE AND
PRIVATE FINANCING.

IN ADDITION, THERE ARE TWO OPIC-BACKED INVESTMENT
FUNDS THAT MAKE EQUITY INVESTMENTS IN BUSINESSES IN
JORDAN, THE WEST BANK/GAZA, AND OMAN. THE WEST
BANK/GAZA AND JORDAN EMERGING FUND, WITH A TARGET
CAPITAL OF USD 60 MILLION, EXPECTS TO MAKE 40
PERCENT OF ITS INVESTMENTS IN JORDAN. IT IS
MANAGED BY INTERNATIONAL CAPITAL ADVISORS OF
VIENNA, VIRGINIA. THE OTHER FUND IS THE INTERARAB
INVESTMENT FUND, MANAGED BY INTERARAB MANAGEMENT OF
PORTOLA VALLEY CALIFORNIA, WHICH EXPECTS TO INVEST
ONE-THIRD OF ITS USD 45 MILLION TARGET CAPITAL IN
JORDAN.

JORDAN IS ALSO A MEMBER OF THE MULTILATERAL
INVESTMENT GUARANTEE AGENCY (MIGA),A WORLD BANK
AGENCY, WHICH GUARANTEES INVESTMENT AGAINST NON-
COMMERCIAL RISKS SUCH AS CIVIL WAR,
NATIONALIZATION, POLICY CHANGES, ETC. THE PROGRAM
COVERS INVESTMENTS IN JORDAN IRRESPECTIVE OF THE
INVESTORS NATIONALITY, IN ADDITION TO COVERING
JORDANIAN INVESTMENTS ABROAD.

SEVERAL EUROPEAN COUNTRIES HAVE OFFICIAL DEBT-FOR-
EQUITY SWAP PROGRAMS THAT ARE OPEN TO INVESTORS OF
ALL NATIONALITIES.


14. LABOR

THE RATE OF POPULATION GROWTH (BIRTHS MINUS DEATHS)
IS ABOUT 2.4 PERCENT A YEAR. ABOUT TWO-THIRDS OF
THE POPULATION IS UNDER THE AGE OF 30. IN GENERAL,
THE LABOR FORCE IS WELL EDUCATED. LITERACY RATES
APPROACH 94.5 PERCENT FOR MEN AND 83.5 PERCENT FOR
WOMEN. JORDAN HAS A LABOR FORCE OF 1.17 MILLION
AND A GOVERNMENT-ESTIMATED UNEMPLOYMENT RATE OF 1
PERCENT.

THE OFFICIALLY ESTIMATED 140,000 FOREIGN LABORERS
IN JORDAN WORK PRIMARILY IN UNSKILLED SECTORS, SUCH
AS CONSTRUCTION, AGRICULTURE, AND DOMESTIC SERVICE.
THEY CONSTITUTE AROUND 12 PERCENT OF THE LABOR
FORCE. THE MINISTRY OF LABOR REGULATES FOREIGN
WORKER LICENSING, LICENSING FEES, PROHIBITED
SECTORS, AND EMPLOYER LIABILITY. AMONG ITS
RESPONSIBILITES, THE MINISTRY APPROVES THE HIRING
OF PROFESSIONAL FOREIGN WORKERS BY PRIVATE
BUSINESSES. NON-CITIZENS ARE NOT PERMITTED BY LAW
TO JOIN UNIONS.

LABOR UNIONS SERVE PRIMARILY AS INTERMEDIARIES
BETWEEN WORKERS AND THE MINISTRY OF LABOR, AND MAY
ENGAGE IN COLLECTIVE BARGAINING ON BEHALF OF
WORKERS. IN ORDER TO STRIKE, WORKERS MUST OBTAIN
PERMISSION FROM THE GOVERNMENT. CURRENTLY, ABOUT
30 PERCENT OF THE TOTAL LABOR FORCE, INCLUDING
GOVERNMENT SERVICE, IS UNIONIZED. HOWEVER, THIS
FIGURE INCLUDES NUMEROUS PROFESSIONAL ASSOCIATIONS
WHERE MEMBERSHIP IS MANDATORY.

ARTICLE 28 OF THE LABOR LAW SPECIFIES THE
CONDITIONS UNDER WHICH AN EMPLOYER CAN DISCHARGE A
WORKER WITHOUT NOTICE. ARTICLE 31 ALLOWS EMPLOYERS
TO LAY OFF EMPLOYEES IF ECONOMIC OR TECHNICAL
CIRCUMSTANCES NECESSITATE REORGANIZATION. THE LAW
DOES NOT REQUIRE EMPLOYERS TO INCLUDE RETIREMENT
PLANS IN THEIR EMPLOYMENT PACKAGE. HOWEVER, IF THE
EMPLOYER AGREED TO PROVIDE RETIREMENT BENEFITS WHEN
THE WORKER WAS CONTRACTED, THE EMPLOYER MUST
FULFILL HIS/HER COMMITMENT. THE SOCIAL SECURITY
LAW STIPULATES THAT IF THE EMPLOYER HAS MORE THAN
FIVE EMPLOYEES, THEY MUST BE ENROLLED IN THE SOCIAL
SECURITY SYSTEM. THE LABOR LAW ALSO ADDRESSES
WORKER COMPENSATION AND OUTLINES COMPENSATORY
CATEGORIES FOR WORK-RELATED INJURIES. ARTICLE 67
PROVIDES UNPAID MATERNITY LEAVE FOR A MAXIMUM OF
ONE YEAR FOR MOTHERS WORKING IN FIRMS EMPLOYING 10
OR MORE WORKERS, AND ARTICLE 70 REQUIRES FULL PAY
FOR 10 WEEKS OF MATERNITY LEAVE. THE LAW PROVIDES
FOR 14 DAYS OF ANNUAL LEAVE FOR EMPLOYEES DURING
THE FIRST FIVE YEARS WITH THE EMPLOYER, AND 21 DAYS
AFTER FIVE YEARS OF SUCCESSIVE SERVICE. THIS LAW
PLACES JORDAN IN COMPLIANCE WITH INTERNATIONAL AND
ARAB LABOR AGREEMENTS.


15. FOREIGN TRADE ZONES/FREE PORTS

THE ZARQA FREE ZONE IS JORDAN'S MAJOR FREE ZONE
AREA. OTHER AREAS INCLUDE THE SAHAB INDUSTRIAL
ESTATE FREE ZOONE, QUEEN ALIA INTERNATIONAL AIRPORT
FREE ZONE, AND THE GATEWAY QUALIFYING INDUSTRIAL
ZONE.

IN MAY 2001, THE GOVERNMENT CONVERTED THE AQABA
PORT AND SURROUNDING AREA INTO A SPECIAL ECONOMIC
ZONE (SEZ) WITH STREAMLINED BURAEUCRACY, LOWER
TAXES, AND FACILITATED CUSTOMS HANDLING.

BOTH JORDANIAN AND FOREIGN INVESTORS ARE PERMITTED
TO INVEST IN TRADE, SERVICES, AND INDUSTRIAL
PROJECTS IN FREE ZONES. INDUSTRIAL PROJECTS MUST
FULFILL ONE OF THE FOLLOWING CONDITIONS:

-- NEW INDUSTRIES WHICH DEPEND ON ADVANCED
TECHNOLOGY;

-- INDUSTRIES REQUIRING RAW MATERIAL AND/OR LOCALLY
MANUFACTURED PARTS THAT ARE LOCALLY AVAILABLE;

-- INDUSTRIES THAT COMPLEMENT DOMESTIC INDUSTRIES;

-- INDUSTRIES THAT ENHANCE LABOR SKILLS AND PROMOTE
TECHNICAL KNOW-HOW;

-- INDUSTRIES PROVIDING CONSUMER GOODS, AND THAT
CONTRIBUTE TO REDUCING MARKET DEPENDENCY ON
IMPORTED GOODS;

THE FOLLOWING INCENTIVES ARE GRANTED TO INVESTORS
IN THE DESIGNATED FREE ZONES:

-- PROFITS ARE EXEMPT FROM INCOME AND SOCIAL
SERVICES TAXES FOR A PERIOD OF TWELVE YEARS, WITH
THE EXCEPTION OF PROFITS GENERATED FROM STORAGE
SERVICES THAT INVOLVE GOODS RELEASED TO THE
DOMESTIC MARKET.

-- SALARIES AND ALLOWANCES PAYABLE NON-JORDANIAN
EMPLOYEES ARE EXMEPT FROM INCOME AND SOCIAL
SERVICES TAXES.

-- GOODS IMPORTED TO AND/OR EXPORTED FROM FREE
ZONES ARE EXEMPT FROM IMPORT TAXES AND CUSTOMS
DUTIES, WITH THE EXCEPTION OF GOODS RELEASED TO THE
DOMESTIC MARKET.

-- INDUSTRIAL GOODS MANUFACTURED IN FREE ZONES
ENJOY PARTIAL CUSTOMS DUTIES EXEMPTION ONCE
RELEASED TO THE DOMESTIC MARKET, DEPENDING ON THE
PROPORTION OF THE VALUE OF LOCAL INPUTS AND LOCALLY
INCURRED PRODUCTION COSTS.

-- CONSTRUCTION PROJECTS ARE EXEMPT FROM LICENSING
FEES AND URBAN PROPERTY TAXES.
-- FREE TRANSFER OF CAPITAL INVESTED IN FREE ZONES,
INCLUDING PROFITS.


16. QUALIFYING INDUSTRIAL ZONES (QIZ)

APPROVED GOODS PRODUCED IN A "QUALIFYING INDUSTRIAL
ZONE" (QIZ) CAN BE IMPORTED INTO THE UNITED STATES
FREE OF DUTY IF THEY INVOLVE ECONOMIC COOPERATION
BETWEEN JORDAN AND ISRAEL, AND IF 35 PERCENT OF THE
PRODUCT'S CONTENT COMES FROM THE QIZ, ISRAEL,
AND/OR THE WEST BANK/GAZA. THIS MAKES INVESTMENT
IN A QIZ PARTICULARLY ATTRACTIVE TO INDUSTRIES
WHOSE PRODUCTS ARE ASSESSED WITH HIGH TARIFFS WHEN
THEY ARE IMPORTED INTO THE U.S. THERE ARE
CURRENTLY TEN QIZS, THREE OF WHICH ARE PUBLICLY
OWNED AND THE REMAINING SEVEN ARE PRIVATELY OWNED.
FOUR ADDITIONAL ZONES ARE PLANNED. AS OF JUNE,
2002, THE BULK OF QIZ EXPORTERS HAVE BEEN
CONCENTRATING ON TEXTILE AND GARMENT EXPORTS.
SINCE 1999, THE QIZS HAVE ATTRACTED USD 248 MILLION
IN CAPITAL INVESTMENTS, GENERATED USD 273 MILLION
IN EXPORTS TO THE U.S., AND CREATED OVER 22,000 NEW
JOBS.


17. FOREIGN DIRECT INVESTMENT STATISTICS

OFFICIAL STATISTICS ON FOREIGN DIRECT INVESTMENT
(FDI) ARE NOT PUBLICLY AVAILABLE.
THE UNCTAD'S WORLD DEVELOPMENT REPORT 2001
ESTIMATES FDI INFLOWS INTO JORDAN AT (USD MILLION):
158, 300 AND 350 FOR 1999, 2000, AND 2001
RESPECTIVELY.
THE AMOUNT AND VALUE OF REGISTERED FOREIGN CAPITAL
IS THE CLOSEST AVAILABLE INDICATOR FOR A MORE
DETAILED ANALYSIS OF FDI.

THE FOLLOWING STATISTICS SHOULD BE INTERPRETED AS
INDICATING TRENDS RATHER THAN EXACT FIGURES. NOTE
THAT FIGURES MAY DIFFER FROM PREVIOUS YEARS DUE TO
REVISIONS IN THE DATA SERIES.

TOTAL REGISTERED CAPITAL BY ECONOMIC SECTOR
('000 JORDANIAN DINARS AT YEAR END)
(1 JD= USD 1.41)

2000 2001 2002
-------------- -------------- --------------
TOTAL CAPITAL 559,499 132,587 104558
FOREIGN *363,307(65%) 10,716(8%) 12,599(12%)

INDUSTRY 37,807 26,534 18,635
FOREIGN 7,259(19%) 4,417(17%) 2,085(11%)

TRADE 478,635 84,185 34,713
FOREIGN 346,921(72%) 5,624(24%) 3,013(9%)

AGRICULTURE 393 1,762 2,957
FOREIGN 200(51%) 255(14%) 525(18%)

CONTRACTING 8,972 4,401 8,039
FOREIGN 434(5%) 132(3%) 450(6%)

SERVICES 33,693 15,704 40,218
FOREIGN 8,927(26%) 414(3%) 6,976(17%)

(THE PERCENTAGE FIGURE REFLECTS THE SIZE OF FOREIGN
CAPITAL TO TOTAL CAPITAL)

(DATA EXCLUDES CAPITAL OF PUBLIC SHAREHOLDING
COMPANIES)

(SOURCE: MINISTRY OF INDUSTRY AND TRADE)

TRY OF INDUSTRY AND TRADE)

ANNUAL REGISTERED CAPITAL INFLOWS BY ECONOMIC
SECTOR ('000 JORDANIAN DINARS)

2000 20012002
-------------- -------------- --------------
TOTAL CAPITAL 559,821 132,565 104,547
FOREIGN 382,358(68%) 34,891(26%) 27,799(27%)

INDUSTRY 37,92026,53218,911
FOREIGN 13,272(35%) 13,027(49%) 5,295(28%)

TRADE 477,40184,52634,643
FOREIGN 358,051(75%) 19,441(23%) 9,700(28%)

AGRICULTURE 393 1,821 2,598
FOREIGN 200(51%)255(14%)1,275(43%)

CONTRACTING 8,969 4,000 7,500
FOREIGN 200(2%) 20(.5%) 150(2%)

SERVICES 33,23415,33640,643
FOREIGN 10,635(32%) 2,147(14%)11,380(28%)

(THE PERCENTAGE FIGURE REFLECTS THE SIZE OF FOREIGN
CAPITAL TO TOTAL CAPITAL)

(DATA EXCLUDES CAPITAL OF PUBLIC SHAREHOLDING
COMPANIES)

(SOURCE: MINISTRY OF INDUSTRY AND TRADE)
ACCORDING TO THESE MEASUREMENTS, FDI STOCK AND FDI
INFLOWS FOR 2001 AS A PERCENTAGE OF GDP (AT CURRENT
CENTAGE OF GDP (AT CURRENT
MARKET PRICES) WOULD AMOUNT TO 13.6 PERCENT AND 4.3
PERCENT RESPECTIVELY.

TOTAL FOREIGN REGISTERED CAPITAL BY COUNTRY OF
ORIGIN('000 JORDANIAN DINARS)

2000 2001 2002
-------------- -------------- --------------
FRANCE 335,218333,222333,193
SAUDI ARABIA 62,16163,97376,828
IRAQ 64,84282,85572,357
SYRIA 72,80175,18666,467
UNITED KINGDOM 16,68438,02639,967
UNITED STATES 26,17228,45129,843
KUWAITN/A N/A28,614
INDIA 24,31224,41224,998
LEBANON 19,94821,58020,357
EGYPT 18,71125,70118,753

(DATA EXCLUDES CAPITAL OF PUBLIC SHAREHOLDING
COMPANIES)

(SOURCE: MINISTRY OF INDUSTRY AND TRADE)

HALE

OURCE: MINISTRY OF INDUSTRY AND TRADE)

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