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

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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

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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

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