JORDAN'S INFORMATION TECHNOLOGY SECTOR HOPES TO BE

C O N F I D E N T I A L SECTION 01 OF 03 AMMAN 002306 SIPDIS STATE FOR NEA/ELA, EEB/CIP E.O. 12958: DECL: 10/15/2019 TAGS: ECON EINT TINT PGOV JO SUBJECT: JORDAN'S INFORMATION TECHNOLOGY SECTOR HOPES TO BE "THE INDIA OF THE MIDDLE EAST" Classified By: DCM Lawrence C. Mandel for reasons 1.4 (b) and (d) ¶1. (C) Summary: Yahoo's recent acquisition of the Jordanian internet portal company Maktoob has focused media and government attention on the technology sector and generated considerable excitement about Jordan's future as a regional IT hub. Recent meetings with industry and government officials confirm that Jordanians in both the public and private sectors are committed to expanding Jordan's IT infrastructure and are taking significant steps to expand internet access and computer usage. However, GOJ and industry contacts privately express doubts that Jordan can ever rival Dubai as the technology hub of the region. While Jordanian entrepreneurs have good ideas about how Jordan can become a technology leader and a cradle of innovation, GOJ officials envision Jordan's role as the "India of the Middle East," with Jordan providing technical support, customer service and back-end software development instead of front-line innovation, marketing or development. End Summary. Public Optimism, Private Doubts -------------- ¶2. (U) On August 25, Yahoo announced the acquisition of Maktoob, an Arabic-language internet portal and content company with over 16 million users, for around $85 million U.S. This acquisition is the largest by an American company in the Jordanian technology sector and raised hopes of increased investment and attention from other U.S. companies. The acquisition generated considerable local excitement, including front page coverage in major newspapers and a personal meeting for the two founders with King Abdullah who presented them with the Al Hussein Medal for Distinguished Performance. Soon after the Maktoob/Yahoo deal was announced, The American Chamber of Commerce in Jordan introduced Google as its newest member and corporate sponsor, further increasing speculation that Jordan could become a regional hub for technology companies interested in expanding in the Arabic-speaking world. ¶3. (C) In the midst of these promising developments, some GOJ and private sector contacts expressed doubts about Jordan's future as an IT hub. In a September 14 meeting, Samih Toukan, the CEO and a founder of Maktoob, told EconOffs that Jordan's advantages in the technology sector are comparative but not absolute. For example, while labor in Jordan is cheaper than in Dubai, and higher education is better than in Egypt, there are still more qualified engineers and software developers in Egypt and the quality and variety of labor is better in Dubai because of Jordan's relatively small domestic population with limited numbers of third-country technology experts. Toukan also asserted that Jordan's claims of having a bilingual work-force are exaggerated. He said that Maktoob finds that very few graduates of Jordanian Universities are fluent enough in English to function at a business level, and noted that Maktoob has spent considerable resources providing English training to its employees. He also noted that any company based in Jordan must act regionally since Jordan's domestic market is too small to support a robust IT industry on its own. ¶4. (C) Toukan had several suggestions for improving the landscape for IT innovation in Jordan. Toukan told EconOffs that he encouraged King Abdullah to set up tax-free zones similar to Dubai's Internet City, and to help establish and subsidize a venture capital industry to encourage entrepreneurship Toukan said one of the biggest obstacles to entrepreneurship in Jordan is the lack of financing available for startups, especially in the technology sector. He also suggested that the government relax rules that make it difficult to import highly-skilled foreign labor, particularly IT managers, who would help the IT sector in Jordan become a leader in the region. King Promotes IT Sector -------------- ¶5. (C) On October 5, King Abdullah convened IT sector leaders AMMAN 00002306 002 OF 003 in Jordan and emphasized the role of the IT industry in boosting the national economy. At the meeting, the King outlined an IT strategy that reflects some of Toukan,s suggestions. The King announced that the GOJ will provide administrative and financial assistance to IT startups and will work with universities and the public and private sectors to further develop IT-related industries in Jordan. The King did not offer details about how the plan will be implemented or paid for, but called for a panel of IT experts to present a detailed action plan to him by the end of the year. In a meeting two days after the King's announcement, leaders of the Information Technology Association of Jordan (Intaj) privately expressed to EconOffs skepticism of the King's plans, saying that limited funding and the limited influence of the Ministry of Information and Communication Technology (MOICT) on the sector make it unlikely that the announced plan will move the sector forward. Ambitious Plans to Connect Rural Areas -------------- ¶6. (C) The GOJ is taking steps to improve Jordan's IT infrastructure. The Minister of Information and Communications Technology described to EconOff an ongoing effort to increase internet penetration in Jordan from the current level of 29% to 50% by 2011. Internet penetration has been on the rise (and was 11% in 2007). The most significant action on this front involves a cooperative effort between the Royal Jordanian Air Force, the Public Security Directorate (the national police),and the MOICT to run fiber optic cables to elementary schools in remote parts of Jordan, connecting under-served communities outside of the big cities of Amman, Irbid and Zarqa. The Minister explained that the government is running eight tubes of fiber-optic cable lines to under-served rural areas to provide sufficient capacity to give entire villages access to high-speed internet services. The last mile of connectivity will be provided by private companies, including Orange and Wi-tribe, which already offer internet service in urban areas. ¶7. (C) To improve "last mile connectivity" and provide internet access to rural areas where wired connectivity might not be possible, the Telecommunications Regulatory Commission (TRC) has approved wireless internet service for much of the country, eliminating the need to run wire to every house. MOICT officials have also discussed utilizing cloud technology (software shared by a group of users via the internet) to provide easy and cost-efficient computing to underserved parts of the country. Nidal Quanadilo, Director of ICT Investment and Promotion at MOICT, told EconOff that the GOJ is pursuing a partnership with Microsoft to set up cloud computing systems in small towns and to provide residents with low-cost desktop units they could use to access the internet and e-mail. Quanadilo asserted that Microsoft is excited about using this project as a prototype to test cloud technology in the developing world and says that Microsoft executives are coming to Jordan in November to meet with King Abdullah about this and other technology projects in the country and region. Goals for Regional IT Role -------------- ¶8. (C) Despite these ambitious goals, Quanadilo told EconOff that Jordan has no ambitions to be the "new Dubai" (the major IT hub in the region). He explained that he envisions Jordan's role as the "India of the Arabic-speaking world," providing customer service support and back-end software development to companies based elsewhere. According to Quanadilo, Jordan has several advantages in the call center field. He explained that the Jordanian accent is generally preferred by Gulf residents over other regional accents and that Jordan's rapidly expanding internet and job skills programs, funded in part by USAID projects, are developing a generation of tech savvy young workers who could staff the call centers. Quanadilo also told EconOff that the GOJ is planning three tax advantaged technology centers to attract call centers and similar businesses. He drew a direct contrast between call centers which he said would employ AMMAN 00002306 003 OF 003 hundreds or even thousands of Jordanians with the textile industry in Jordan, which mostly employs foreign workers and has not succeeded in offering the massive employment of Jordanians. ¶9. (C) Comment: Though the Yahoo-Maktoob deal generated some initial excitement, GOJ interlocutors are privately realistic about Jordan's limited potential to be a regional technology hub. GOJ initiatives to expand internet penetration in rural areas, increase job training in high-tech skills, and explore new technologies like clouds and wireless internet service are all promising developments in a country that badly needs to create fresh revenue sources and new employment streams for Jordan's young, well-educated, and underemployed workforce. There are still significant obstacles to be overcome, including implementing and funding the King's IT initiatives, but Jordan is taking concrete steps to lay a firm foundation for a well-connected future. End Comment Visit Amman's Classified Website at: http://diplopedia.state.sgov.gov/index.php?ti tle=EmbassyAmman Beecroft