AMBASSADOR'S VISIT TO KERAK QIZ

UNCLAS SECTION 01 OF 02 AMMAN 005676

SIPDIS

SENSITIVE

USTR FOR A/USTR NOVELLI AND E. SAUMS
STATE FOR NEA/ARN
ALSO FOR EB/CBA

E.O. 12958: N/A
TAGS: ETRD PREL ETTC EINV KTIA JO
SUBJECT: AMBASSADOR'S VISIT TO KERAK QIZ


SENSITIVE BUT UNCLASSIFIED. PROTECT ACCORDINGLY.


1. (SBU) SUMMARY: During a June 23 visit to the Kerak QIZ,
Ambassador led the press through a tour of Camel Textile's
factory-based training center helping to build skills of
local Jordanian garment workers. In a separate, private
tour, the Ambassador witnessed a rapidly growing garment
factory of 3500 workers that has recruited most if not all of
the local Kerak workforce and shuttles in others from as far
away as the Jordan Valley. The in-factory training program
is evidence the government gets the message that it needs to
pay attention to its population's skills set. Camel
Textile's factory director proposed single-factory QIZs in
areas where needed workers live. END SUMMARY.

Inside the QIZ's Walls of Opportunity
--------------


2. (U) Kerak QIZ is a walled compound in the middle of the
desert on the main highway some 20 minutes to the east of
Kerak. Ambassador toured the sprawling Camel factory zone
where modern, light-industry factory sheds house some 3500
workers, half of whom are Jordanians and half mainland
Chinese. On row after row of production lines, the
Ambassador saw rural Jordanians from the Kerak area for the
first time earning paychecks from industrial employment. The
factory expects to hire an additional 1000-1500 workers by
the end of the year, evidenced by new building construction.
A modern cafeteria building and newly finished on-site
dormitories at Camel provide the basic necessities to the
Chinese workers. Camel Textile International Corporation is
run by Kuohwa Garment and Enamel Industry of Taipei, Taiwan.
Director Jay Yuan explained that the company has garment
factories in a handful of countries strategically located
around the world, in part as a stopgap measure against any
unforeseen circumstances such as the SARS outbreak in Asia or
security-related delivery problems. Camel's customers
include Liz Claiborne, JC Penney, and Lee. They produce a
monthly average of about 2.6 million units of mainly knits
over two shifts per day.


3. (U) On the training line, the Ambassador saw about 60
young women being trained by Tunisian experts on
production-level sewing skills. The trainers are funded as
part of a GOJ effort begun last fall to train 4000 Jordanians
in the first year. (COMMENT: Whether the target is met is a
matter of some doubt, mainly due to a shortage of raw
recruits in or near the QIZ areas. END COMMENT.) The
factory pays all trainees a starting wage for the duration of
the training period, which can last from five weeks to three
months. The Ambassador chatted briefly with the training
line manager, a young woman from Kerak who had worked her way
up to her current JD 200 per month position (about USD282).
Press coverage of the training center was extensive, with at
least four dailies releasing article and photos the next day
and noting the continued need to train Jordanians to work in
QIZ garment factories.

Bring the QIZ Factories to the People?
--------------


4. (SBU) In a discussion with Camel's Jay Yuan, other Camel
executives, and Amer Majali, head of the Jordan Industrial
Estates Corporation (JIEC),the Ambassador heard about the
challenges faced with the end of the Multi Fiber Agreement
and quotas in 2005, thus depriving Jordan QIZs of their
no-quota advantage. Camel executives seemed content with the
current, self-imposed restrictions on Chinese imports to the
U.S. at least until 2008. Camel was upgrading some of its
product lines as well. Turning to the general labor
shortage, Yuan noted that Camel is already transporting
Jordanian workers to the factory from as far away as the
Jordan Valley in 80-minute drives one way. He proposed that
if Camel were allowed to take the factory to such an area, it
could employ up to 1000 persons in the area. By assigning
such a plant QIZ status, it could create more jobs for
Jordanians, he said. The Ambassador thanked Yuan for the
suggestion saying that he understood the concept, but that it
might need further study, if the ways and means were there to
implement it.


5. (SBU) Amer Majali, whose JIEC owns the Kerak QIZ, was
extremely skeptical about the idea. He referred to the
difficulties involved in securing three-way agreement to any
outside-the-QIZ standalone factory. (COMMENT: Kerak, with
just two operating garment factories, has not been able to
attract additional investors to the QIZ, in part because the
current QIZ estate manager is a local townsman nearing
retirement age and with few ideas, ensconced in what appears
to be his last sinecure. Majali would see the idea as
competing with the development of the government-owned QIZs
he manages, including both Kerak and the more dynamic Al
Hassan QIZ in the north. END COMMENT.)

Expo Uniform Attracts U.S. Investment
--------------


6. (U) In a separate visit to a nearby factory just in the
process of opening, the Ambassador spoke briefly with Saleh
Bin Tareef, General Manager of the Expo Uniform Inc. a 40
percent co-investor with an American. Bin Tareef had earlier
explained that the factory will begin with 200 employees, but
hoped to employ 400 by the end of the year.

Why Not Try Standalone QIZs Nearer to the Workforce?
-------------- --------------


7. (SBU) EMBASSY COMMENT: Jordan has shown over the last
six years of QIZ experience that it can avoid the problems of
trans-shipment or not enough local content in the product,
two good reasons to control the geographic areas in which
QIZs are established, so as to monitor factory production.
It makes sense to build more factories closer to the
workforce concentrations. Though managing customs and other
logistics would admittedly not be easy, why send thousands on
wasted shuttle-bus journeys when just a few officials could
be relocated? The El Zay factory QIZ proves that it can be
done, and quite successfully by all accounts. To be sure,
current QIZ estate owners would be upset, especially the
government, which invested heavily in land for QIZs and may
not, as in Kerak, ever recoup its investment. But some of
the current private QIZ investors would likely embrace a
sub-zone concept that included them in the picture. If, for
example, Tajamouat QIZ could build Tajamouat QIZ II factory
in the Jordan Valley, that might work. It would certainly
solve the labor shortage problem and be a sign that the
government cared about the livelihood of its people.
GNEHM