OBG talks to Hatem Al Halawani, Minister of Trade and Industry

Interivew: Hatem Al Halawani

How would you assess current levels of foreign direct investment (FDI) in the industrial sector, and what can be done to increase these levels?

HATEM AL HALAWANI: The industrial sector contributes 25% of Jordan’s GDP and is made up of over 1800 industrial firms and 236,000 employees. In 2013 Jordan attracted JD1.3bn ($1.84bn) in FDI, 70% of which was concentrated in the industrial sector. The government is keen to increase the level of inward investment by improving the regulatory environment, for instance through the new investment law.

This aims at facilitating better returns by providing investors with an environment that enables them to conduct business in line with the best international standards. Improving levels of FDI in the industrial sector will thus create employment opportunities for Jordanians and strengthen the economy.

To what extent are production cost issues exerting downward pressure on the sector and in turn acting as a deterrent to higher levels of FDI?

AL HALAWANI: The per unit cost of industrial production in Jordan is relatively high compared to neighbouring countries due to the limitation of input resources. In fact, energy inputs represent a significant portion of production costs in Jordan.

Therefore, programmes have been adopted to reduce energy consumption and implement eco-efficient systems, increasing the competitiveness of local products. The government also promotes innovation as a way to produce new and improved products. As a result, these products will gain an added value, which is expected to eventually attract and increase investments in the industrial sector.

What kind of impact would more diversified energy channels have on production in Jordan?

AL HALAWANI: Jordan needs to make a renewed effort to diversify its energy channels if it is to meet the increasing demand necessary to sustain current levels of economic growth. The government and private companies have accordingly taken various steps to invest in long-term solar and wind energy projects. The national energy strategy, meanwhile, aims to increase the share of renewable energy sources in the energy mix to 10% by 2020.

What kind of consequences will the deal between Arab Potash Company (APC) and Noble Energy to import gas from Israel have on other companies?

AL HALAWANI: This agreement aims to produce cost savings through the shift from heavy fuel to less expensive and more eco-friendly natural gas, and is projected to help APC restore its position as one of the lowest-cost producers of potash across the world. However, it is unlikely to become a blueprint for other companies, as the agreement is strictly between the APC and Jordan Bromine Company on the one hand, and NBL East Mediterranean, which is owned by Noble Energy, on the other hand.

How is the government ensuring that Jordanian businesses can make full use of the various free trade agreements Jordan has signed?

AL HALAWANI: The Ministry of Industry, Trade and Supply, which supervises the negotiation, drafting and implementation of bilateral, regional and multilateral trade agreements, has exerted an intensive effort to engage interested stakeholders throughout the various stages of this process.

During the course of these negotiations, the particular needs of local industries can be taken into consideration, by setting suitable provisions on special flexibilities and ensuring longer implementation periods for tariff reductions. Public awareness can be raised after the negotiations have concluded to promote these trade agreements. This will also encourage local industries to meet the requirements stipulated within these agreements so as to access new markets and consequently increase exports.