JORDAN TRANSPORTATION PLANNING FACES MULTIPLE ROADBLOCKS,

UNCLAS AMMAN 001793 SENSITIVE SIPDIS E.O. 12958: N/A TAGS: ECON ELTN PGOV JO SUBJECT: JORDAN TRANSPORTATION PLANNING FACES MULTIPLE ROADBLOCKS, BUT SECTOR STILL AN INCOME GENERATOR REFS: A) AMMAN 1646 B) AMMAN 1633 C) AMMAN 460 D) 08 AMMAN 3139 (U) Sensitive but unclassified. Not for internet distribution. ¶1. (SBU) Summary: Jordan's new transportation strategy for 2009-2011 aims to make the country a regional transportation hub. The approach outlines plans to improve infrastructure, ease traffic flow, and encourage private investors to participate in Build-Operate-Transfer (BOT) arrangements. Long-term goals include ultimately banning trucks from transiting cities and introducing new regulatory standards and tax incentives to encourage truck owners to operate cleaner, safer vehicles. Transportation fees generate significant income for the Government of Jordan (GOJ),yet there are several obstacles to expansion of the sector. In particular, Jordan's roads are not optimal for heavy truck traffic -- especially within Amman city limits -- and the customs regime and governmental bureaucracy tend to hinder outside investment. Like proposed projects for other sectors, Jordan also lacks the financial resources needed to fully implement the transportation strategy. End Summary. Jordan Hopes to Become Regional Transportation Hub -------------- -------------- ¶2. (SBU) Ministry of Transport (MOT) officials explained that the 2009-2011 transportation strategic plan, announced earlier in the year by former Minister Ala'a Batynah, was aimed at turning Jordan into a regional transportation hub, particularly for neighboring countries such as Iraq. The comprehensive strategy addresses traffic flows, fees, and other issues and specifically outlines plans to improve infrastructure and encourage private investors to participate in BOT agreements. MOT officials shared they do not yet have a clear idea of how potential investors could actually generate income from BOT investments and dismissed the idea of toll booths as a particularly poor idea, labeling them as disruptive to traffic and annoying to drivers. Poor Roadway Infrastructure A Major Obstacle -------------- ¶3. (SBU) While MOT is responsible for what goes on the roads, transportation issues are also shared with the Ministry of Housing and Public Works (MHPW),which is responsible for the actual roadways. MHPW reports that Jordan has a relatively well-maintained 4,808 miles of paved roadways. Nevertheless, MHPW officials told EmbOffs there clearly is a need for more roads of better quality and higher capacity in order to support more commercial traffic. Muhammad Hujrat, Director General at the Jordanian Traffic Institute (JTI),agreed on the need to upgrade the road network, arguing that Jordan's road infrastructure is poorly organized and, contrary to official claims, poorly maintained with the highways being particularly unfit for trucking. He further added that the GOJ's failure to create a universal and dependable public transportation system and inability to finance such projects, coupled with a cumbersome bureaucracy that was inhospitable to outside investors, had harmed commercial transportation throughout the country. Industry Objects to Taxation Structure -------------- ¶4. (SBU) One of the prime reasons for Jordan's interest in expanding the sector is that transportation generates income for the Jordanian government. Dr. Mitry Mudanat, Chief Researcher at the Ministry of Finance (MOF),said that in 2008, transportation fees, such as license plate fees, registration fees, road usage revenues, diesel charges, and overload fees, brought JD 124.5 million (USD 175.5 million) into the treasury. He noted that these rates are based on a vehicle's worth and generally range between three and seven percent of the vehicle's book value, but in certain situations, cargo and transaction fees could be as high as 16 percent. Facing an extreme budget deficit, all revenue-generating services are extremely important to the GOJ (Ref A). In stark contrast, traffic delays as a result of congestion represent an estimated nationwide loss of revenues and wages in excess of JD 567 million (USD 799 million),highlighting GOJ interest in developing the sector. ¶5. (SBU) Abdul Karim Al-Dirabani, Director of the Jordanian Truckers Union, criticized GOJ fees as having a substantial negative impact on the transportation industry. On top of the registration and usage charges, he complained that high fuel prices in Jordan were unjustified, given that the world price for crude oil had dropped, and thus generated unreasonable profits for the government. (NOTE: An interagency GOJ committee determines fuel prices on a monthly basis based on average international market prices during the preceding 30 days and other costs, such as freight and handling. END NOTE.) Several vehicle rental and taxi office owners added that despite recent fuel price increases -- from 5.8 to 13.8 percent -- the GOJ had prohibited them from increasing taxi and rental vehicle fares, which would cause the industry significant losses during the peak summer business period (ref B). Amman Municipality Blamed for Poor Infrastructure -------------- -------------- ¶6. (SBU) Zuhair Hattar, MOT Senior Engineer, said that the capital city of Amman was the transit center and ultimate destination for approximately 68 percent of commercial trucking activities in the country. He noted that the Greater Amman Municipality (GAM) suffered from poor highway infrastructure and high accident rates, making regular operations difficult and expensive for most regional transportation firms, further damaging Jordan's potential to become a regional transportation hub (ref D). Yet, GAM's administration has shown little interest in improving roadways for commercial transportation despite the fact that it collected taxes supposedly for this very purpose, according to JTI's Hujrat. Hattar added that GAM's responsibility (and failures, too) extended even beyond Amman because it ran the Public Transportation Organization Committee, overseeing transportation in Amman and providing financial and technical support to other parts of the country. Booming Commercial Transportation Not a Shared Goal -------------- -------------- ¶8. (SBU) Hattar further commented that a major obstacle to improving infrastructure and easing entry and transit procedures for commercial traffic was local opposition, as trucking had sometimes proven harmful to the livelihood of rural residents. During the Iraq-Iran war for example, when the transportation business with Iraq was booming, some communities suffered from increased pollution or were otherwise disrupted by the increased commercial traffic to and from Iraq, without feeling the financial advantage of the additional commerce. Such sentiments remain and many smaller communities oppose increased commercial traffic. ¶9. (SBU) Hattar stated that in order to facilitate more commercial traffic the GOJ needed to divert some highways routes around urban and suburban areas, and build more weigh stations, service units, and custom houses. Isam Shahzadah, GAM's roads coordinator, reported that GAM was planning to create a special route for larger trucks, such as freight liners or 16-wheelers, which would allow them to off-load goods onto semi-trucks at weigh stations outside Amman, eliminating the need for them to enter the city. MOT's 2009-2011 strategy includes eventually banning larger trucks from entering all cities, including Amman, and introducing new regulatory standards and tax incentives to encourage truck owners to operate newer trucks to help reduce noise and pollution. Customs and Visa Procedures Also Hinder Traffic -------------- -- ¶10. (SBU) Early in the year, MOT called for the establishment of a new organizational structure to unify the regulatory process for the trucking sector. It would replace the current system, which requires vehicle operators entering the country to present multiple documents and pay fees to multiple jurisdictions (cities and governorates) and agencies. Hattar also reported that visa procedures were also unclear to visitors, and have contributed to slow tourist and commercial traffic, particularly from Iraq. He mentioned the number of Iraqi vehicles entering Jordan dropped 94.1 percent from 66,252 vehicles in 2005 to 4,154 in 2007, possibly as a result of the GOJ imposing stricter entry and residency rules. (NOTE: The GOJ began easing entry and residency requirements for Iraqi businessmen and investors in February 2009 (ref C). END NOTE). ¶11. (SBU) Comment: Jordan recognizes transportation to be a major revenue generator and has continued efforts to make it more efficient. MOT's desire to make Jordan a regional transportation hub, however, is hindered by poor infrastructure, lack of funding, and frequent opposition from rural residents. The government bureaucracy in the customs and visa areas continues to be a significant obstacle to GOJ's objectives as well, especially inhibiting the goal of expanding trade and traffic with neighboring Iraq. Visit Amman's Classified Web Site at http://www.state.sgov.gov/p/nea/amman MANDEL