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DE RUEHAM #0146/01 0150909
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R 150909Z JAN 08
FM AMEMBASSY AMMAN
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RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC
RUCPCIM/CIMS NTDB WASHDC

UNCLAS AMMAN 000146 
 
SIPDIS 
 
SIPDIS 
 
STATE PLEASE PASS TO USTR 
STATE FOR NEA/ELA AND EB/IFD/OIA 
TREASURY FOR SETH BLEIWEIS 
 
E.O. 12958: N/A 
TAGS: EINV EFIN ETRD ELAB PGOV OPIC KTDB USTR
JO 
SUBJECT: JORDAN 2008 INVESTMENT CLIMATE STATEMENT: OPENNESS TO 
FOREIGN INVESTMENT 
 
REF: 07 STATE 158802 
 
OPENNESS TO FOREIGN INVESTMENT 
 
¶1. Since King Abdullah succeeded to the throne in 1999, Jordan 
has taken several steps to encourage foreign investment and 
realize the vision of transforming Jordan into an outward- 
oriented, market-based economy competitive in the global 
marketplace.  Key reforms have been undertaken in the 
information technology, pharmaceuticals, tourism, and services 
sectors.  Foreign and domestic investment laws grant specific 
incentives to industry; agriculture; tourism, including 
conference facilities; hospitals; transportation; and 
distribution of water, gas, and oil/oil derivatives using 
pipelines.  The laws also allow the cabinet flexibility in 
offering investment incentives to other sectors. 
 
¶2. Jordan acceded to the World Trade Organization (WTO) in April 
¶2000.  In addition, a U.S.-Jordan Free Trade Agreement (FTA) 
entered into force on December 17, 2001.  Investment promotion 
activities have been consolidated under the Jordan Investment 
Board (JIB), which provides a "one-stop shop" for investors and 
is working to pass a new investment promotion law in 2008. 
Jordan aims to conclude negotiations for a WTO Government 
Procurement Agreement by early 2008.  Jordan's current 
investment laws treat foreign and local investors equally, with 
the following exceptions (as per regulation No. 54 of 2000, 
entitled "Non Jordanian Investments Promotion Regulation"): 
-- Under the terms of the U.S.-Jordan FTA, ownership of 
periodical publications is restricted to Jordanian natural 
persons or Jordanian juridical entities wholly-owned by 
Jordanians. 
-- Foreign investors may not have whole or partial ownership of 
investigation and security services, sports clubs (except for 
health clubs), stone quarrying for construction purposes, 
customs clearance services, or land transportation of passengers 
and cargo using trucks, buses or taxis. 
-- Under the same agreement, foreign investors are limited to 50 
percent ownership in printing/publishing and in aircraft or 
maritime vessel maintenance and repair services.  Also under the 
FTA, foreign investors are limited to 50 percent ownership in a 
number of businesses and services.  The most up-to-date listing 
of limitations on investments is available in the FTA Annex 3.1 
and may be found at the following internet address: 
http://www.ustr.gov/Trade_Agreements/Bilatera l/Jordan 
/Section_Index.html. 
 
¶3. A minimum capital requirement of JD 50,000 (U.S. $70,000) is 
set for foreign investors.  This requirement does not apply to 
participation in public shareholding companies.  There is no 
formal screening or host government selection process for 
foreign investment.  However, investors in large projects find 
that the informal approval of local and central government 
officials helps to ensure governmental cooperation in project 
implementation. 
 
¶4. The law stipulates that expropriation is prohibited unless 
deemed in the public interest.  It provides for fair 
compensation to the investor in convertible currency. 
 
¶5. The government has engaged in an extensive privatization 
program since 1999, with significant achievements in 2007 in 
electricity generation and aviation.  Following successful 
privatizations in the telecommunications sector, government 
sentiment now strongly supports privatization.  The number and 
size of future privatization projects, however, is expected to 
shrink as most government assets have already been privatized. 
The majority of future projects are expected to be public- 
private partnerships rather than pure privatization deals. 
 
¶6. In October 2007, the Jordanian Government completed a 
significant privatization deal in the energy sector by selling 
51 percent of the Central Electricity Generating Company (CEGCO) 
to the newly formed Enara Company, and transferring 9 percent of 
its shares to the Social Security Corporation.  The government 
plans to sell its remaining 55 percent of shares in the Irbid 
District Electricity Company (IDECO), and 100 percent of the 
Electricity Distribution Company (EDCO).  Jordan has also 
announced its intent to begin privatizing the As-Samra 
electrical power plant. 
 
¶7. Throughout 2007, the Government of Jordan made considerable 
progress in privatizing its aviation sector.  The national 
carrier Royal Jordanian's initial public offering (IPO) began in 
December 2007.  74 percent of the shares were available for 
 
sale, with the government keeping 26 percent.  The government- 
owned Queen Noor Aviation College was also privatized and was 
sold to the private Royal Jordanian Air Academy.  Concurrent 
with these privatizations, the role of the regulatory body, the 
Jordan Civil Aviation Commission, is evolving.  In the spring of 
2007, the GOJ also accepted a build-operate-transfer (BOT) bid 
for the expansion and management of Queen Alia International 
Airport. 
 
¶8. The Government of Jordan also intends to privatize the Jordan 
Silos and Supply General Company in 2008.  In addition to 
completed privatization projects, deregulation is also occurring 
in the energy sector.  The 50-year concession to the Jordan 
Petroleum Refinery Company will end in March 2008, and the 
government has drafted a new energy law to open up the 
hydrocarbon sector for local and foreign investors.  This 
restructuring will involve unbundling the distribution and 
storage facilities. 
 
¶9. With respect to ownership and participation in the major 
economic sectors in Jordan, there is no apparent discrimination 
against foreign participation.  In fact, many Jordanian 
businesses seek foreign partners, which are perceived as the key 
to increased competitiveness and easier entry into international 
markets.  Jordan's efforts have combined to make Jordan's 
investment climate more welcoming, but some large U.S. investors 
have reported "hidden costs" when investing in Jordan due to 
bureaucracy, red tape, vague regulations and conflicting 
jurisdictions.  In the World Bank's (WB) 2008 Doing Business 
Report, Jordan was ranked 80th out of 178 countries for the 
regulatory ease of doing business.  Jordan received its best 
rankings for taxation and employment policies.  Jordan received 
its worst rankings for enforcing contracts and starting a 
business, although the WB acknowledged reform in this area. 
Jordan ranked 8th out of 141 countries in inward investment 
performance in 2006, according to the 2007 World Investment 
Report issued by the United Nations Conference on Trade and 
Development (UNCTAD).  As they would in other countries, 
investors should execute due diligence in exploring investment 
opportunities and concluding purchases. 
 
CONVERSION AND TRANSFER POLICIES 
 
¶10. Jordan's liberal foreign exchange law entitles foreign 
investors to remit abroad, in a fully convertible foreign 
currency, foreign capital invested, including all returns, 
profits, and proceeds arising from the liquidation of investment 
projects.  Non-Jordanian administrative and technical employees 
are permitted to transfer their salaries and compensation 
abroad. 
 
¶11.  The Jordanian Dinar (JD) is fully convertible for all 
commercial and capital transactions.  The JD has been pegged to 
the U.S. dollar at an exchange rate of approximately 1 JD to US 
$1.41 since 1995, and the Central Bank of Jordan (CBJ) is 
expected to continue this policy.  NOTE: This peg may benefit 
American exporters able to serve a small market.  END NOTE. 
 
¶12. Licensed money-exchangers are supervised by the CBJ, the 
banking system?s regulatory authority, but are free to set their 
own exchange rates depending on market conditions.  Unlike 
banks, they do not pay the CBJ commissions for exchange 
transactions, giving them a competitive edge over banks. 
 
¶13. Other foreign exchange regulations include: 
-- Non-residents are allowed to open bank accounts in foreign 
currencies.  These accounts are exempted from all transfer- 
related commission fees charged by the CBJ. 
-- Banks are permitted to purchase an unlimited amount of 
foreign currency from their clients in exchange for JD on a 
forward basis.  Banks are permitted to engage in reverse 
operations involving the selling of foreign currency in exchange 
for JD on a forward deal basis for the purpose of covering the 
value of imports. 
-- There are no restrictions on the amount of foreign currency 
that residents may hold in bank accounts, and there are no 
ceilings on the amount residents are permitted to transfer 
abroad. 
-- Banks do not require prior CBJ approval for the transfer of 
funds, including investment-related transfers, although stricter 
measures are now in place to monitor bank wire transfers to 
boost Jordan's ability to participate in the global fight 
against illicit financial flows. 
 
EXPROPRIATION AND COMPENSATION 
 
 
¶14. There are no known cases where the government has 
expropriated the private property of an investor. 
 
DISPUTE SETTLEMENT 
 
¶15. Under Jordanian law, foreign investors may seek third party 
arbitration or an internationally recognized settlement of 
disputes.  The Jordanian government recognizes decisions issued 
by the International Center for the Settlement of Investment 
Disputes (ICSID) of which it is a member.  Jordan is also a 
member of the New York Convention of 1958 on the recognition and 
enforcement of foreign arbitral awards.  In cases where the 
government (or its agencies) is a party to the dispute, it 
generally prefers settlement in local courts if an out-of-court 
settlement is not forthcoming.  Jordan abides by WTO dispute 
settlement mechanisms.  Dispute settlement mechanisms under the 
FTA are consistent with WTO commitments. 
 
¶16. Article IX of the Bilateral Investment Treaty (BIT) 
establishes procedures for dispute settlement. 
 
¶17. A dispute between a U.S. investor and the Jordanian 
government that was brought before an ICSID tribunal in 2002 was 
settled in May 2004.  Another U.S. investor began to file 
arbitration proceedings against the Jordanian government in 
ICSID in 2007.  In another instance, a foreign company investing 
in a joint venture with a state-owned Jordanian corporation 
found that the management contract for that Jordanian SOE 
partner had been given to a rival without prior consultation. 
With substantial support from the Embassy, the dispute was 
resolved to the satisfaction of the foreign investor. 
 
Jordan's Legal System: 
 
¶18. In the legislative process, draft laws are prepared by 
various ministries, then submitted to the cabinet and 
subsequently presented to the lower house of parliament for 
consideration.  Once passed by the lower house, draft laws must 
be approved by the Senate.  All laws require royal assent and 
must be published in the Official Gazette before they come into 
force. 
 
¶19. According to the constitution, the judiciary is independent 
of other branches of the government.  In some cases, it is 
susceptible to political pressure and interference by the 
executive branch. 
 
¶20. The constitution classifies the judiciary into three 
categories: religious courts, special courts (e.g., Military 
Court, Customs Court, Income Tax Court), and regular courts. 
Verdicts rendered by the Jordanian judiciary are based on 
decisions made by a judge or a panel of judges. 
 
¶21. General legal provisions are incorporated within the Civil 
Code, unless a separate, more specialized law governs the nature 
of the specific relationship.  Commercial activities are 
governed by the Commercial Code.  Business contracts, such as 
commercial agency and commission agency contracts, are subject 
to the code's provisions.  Financial papers such as checks and 
promissory notes are also dealt with under the Commercial Code. 
 
¶22. Various provisions in the Commercial Code, the Civil Code, 
and the Companies Law govern bankruptcy and insolvency.  A 
temporary Bankruptcy Law came into force in 2002.  NOTE: 
Temporary laws in Jordan are constitutionally permitted laws 
passed when parliament is not in session.  They remain in force 
until parliament convenes and takes further action.  END NOTE. 
 
PERFORMANCE REQUIREMENTS/INCENTIVES 
 
¶23. Following Jordan's accession to the WTO, the Trade-Related 
Investment Measures (TRIMS) agreement came into force. 
Investment and commercial laws do not contain any trade- 
restrictive investment measures and have generally been in 
compliance with TRIMS. 
 
¶24. Investment incentives take the form of income tax and 
custom-duties exemptions, which are granted to both Jordanian 
and foreign investors. 
 
¶25. The country is divided into three development areas: Zones 
A, B, and C. Investments in Zone C, the least developed areas of 
Jordan, receive the highest level of exemptions.  All 
agricultural, maritime transport, and railway investments are 
 
classified as Zone C, irrespective of location.  Hotel and 
tourism-related projects set up along the Dead Sea coastal area, 
leisure and recreational compounds, and convention and 
exhibition centers receive Zone A designations.  Qualifying 
industrial zones (QIZs) are zoned according to their 
geographical location, unless they apply for an exemption.  The 
three-zone classification scheme does not apply to nature 
reserves and environmental protection areas, which are granted 
special consideration. 
 
¶26. Specifically, the Investment Promotion Law allows for: 
-- Exemptions from income and social services taxes of up to ten 
years for projects approved by the Investment Promotion 
Committee (which includes senior officials from the Ministry of 
Industry and Trade, Income Tax Department, Customs Department, 
the private sector, and the Director General of the Jordan 
Investment Board), in accordance with the designated zone 
scheme: 
-- 25 percent tax exemption for Zone A 
-- 50 percent tax exemption for Zone B 
-- 75 percent tax exemption for Zone C 
 
¶27. An additional year of these tax exemptions is granted to 
projects each time they undergo expansion, modernization, or 
development resulting in a 25 percent increase in their 
production capacity for a maximum of four years. 
-- Capital goods are exempt from duties and taxes if delivered 
within three years from the date of the investment promotion 
committee's approval.  The committee may extend the three-year 
period, if necessary. 
-- Imported spare parts related to a specific project are exempt 
from duties and taxes, provided that their value does not exceed 
15 percent of the value of fixed assets requiring spare parts. 
They should be imported within ten years from a project's 
commencement date. 
-- Capital goods used for expansion and modernization of a 
project are exempt from duties and taxes, provided they result 
in at least a 25 percent increase in production capacity. 
-- Hotel and hospital projects receive exemptions from duties 
and taxes on furniture and supply purchases, which are required 
for modernization and renewal once every seven years. 
-- Increases in the value of imported capital goods are exempt 
from duties and taxes if the increases result from higher 
freight charges or changes in the exchange rate. 
--In addition to the Investment Promotion Law, additional 
exemptions are granted to investments within industrial estates 
designated as Special Industrial Zones. 
-- Industrial projects are granted exemptions on income and 
social services taxes for a two-year period.  Established 
industrial facilities that relocate to an industrial estate also 
receive this benefit. 
-- Industrial projects are granted property tax exemptions 
throughout their lifetime. 
-- Industrial projects are granted partial or full exemptions 
from most municipality and planning fees. 
 
¶28. To pQote exports, all exporters are granted the following 
incentives: 
-- Net profits generated from most export revenues are fully 
exempt from income tax.  Exceptions include fertilizer, 
phosphate, and potash exports, in addition to exports governed 
by specific trade protocols and foreign debt repayment schemes. 
Under the WTO, the exemption is extended until the end of 2015. 
-- Approximately 95 percent of foreign inputs used in the 
production of exports are exempt from custom duties and all 
additional import fees on a drawback basis. 
 
¶29. The DAMAN program - a product conformity standards measure 
that had been enforced through pre-shipment inspections - ended 
in September 2007. 
 
RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT 
 
¶30. In general, the laws on investment and property ownership 
permit domestic and foreign entities to establish and own 
businesses and engage in remunerative activities.  However, 
activities relevant to military and national security are 
subject to different provisions and procedures. 
 
¶31. Foreign companies may open regional and branch offices; 
branch offices may carry out full business activities, while 
regional offices may serve as liaisons between head offices and 
Jordanian or regional clients.  The Ministry of Industry and 
Trade manages the government's policy on setting up regional and 
branch offices. 
 
 
¶32. No foreign firm may import goods without appointing an agent 
registered in Jordan; the agent may be a branch office or a 
wholly owned subsidiary of the foreign firm, notwithstanding the 
limitations on foreign ownership in certain sectors.  The 
agent's connection to the foreign company must be direct, 
without a sub-agent or intermediary.  A Commercial Agents and 
Intermediaries Law governs the contract between foreign firms 
and commercial agents.  It clearly delineates the distinction 
between commercial agency and distribution contracts 
relationships.  Private foreign entities, whether licensed under 
sole foreign ownership or as a joint venture, compete on an 
equal basis with local companies. 
 
¶33. Foreign nationals and firms are permitted to own or lease 
property in Jordan for investment purposes and personal use, 
provided that their home country permits reciprocal property 
ownership rights for Jordanians.  Property intended for 
investment should be developed within five years from the date 
of approval.  Depending on the size and location of the 
property, the Lands and Surveys Department, its Director 
General, the Minister of Finance, or the Cabinet are the 
authorities that approve foreign ownership of land and property. 
Foreign companies holding a majority share in a Jordanian 
company, as well as wholly-owned subsidiaries, automatically 
obtain national treatment with respect to ownership of land 
where the company's business objectives require (e.g., 
agriculture), or allow for, ownership of land or real estate. 
 
PROTECTION OF PROPERTY RIGHTS 
 
¶34. Interest in property (moveable and real) is recognized, 
enforced and recorded through reliable legal processes and 
registries.  The legal system facilitates and protects the 
acquisition and disposition of all property rights. 
 
¶35. Jordan has passed several new laws to comply with the FTA 
and meet international commitments in protection of intellectual 
property rights (IPR).  Laws consistent with "Trade Related 
Aspects of Intellectual Property Rights" (TRIPS) now protect 
trade secrets, plant varieties, and semiconductor chip designs. 
The law requires registration of copyrights, patents, and 
trademarks.  Copyrights must be registered at the National 
Library, part of the Ministry of Culture.  Patents must be 
registered with the Registrar of Patents and Trademarks at the 
Ministry of Industry and Trade.  Jordan has signed the Patent 
Cooperation Treaty and the protocol relating to the Madrid 
Agreement Concerning the Registration of Marks, and amended 
patent and trademark laws in 2007 to enable pending ratification 
of the agreements.  Jordan's pharmaceutical industry generally 
abides by the new TRIPS-consistent Patent Law.  Jordan acceded 
to the World Intellectual Property Organization (WIPO) treaties 
on copyrights (WCT) and performances and phonographs (WPPT), and 
has been developing new regulations to the national copyright 
law to meet international standards.  Jordanian firms now seek 
joint ventures and licensing agreements with multinational 
partners. 
 
¶36. Jordan's record on IPR enforcement has improved, but more 
effective enforcement mechanisms and legal procedures are still 
needed.  As a result, the government's record on IPR protection 
remains mixed.  A sizeable portion of videos and software sold 
in the marketplace continues to be pirated.  Enforcement action 
against audio/video and software piracy is growing in frequency 
and improving in its targeting capability, resulting in the 
first jail sentence in 2007 for software piracy in Jordan. 
Government committees are examining means to provide more 
comprehensive IPR protections, including more stringent 
enforcement of existing laws and creation of an umbrella IPR 
agency to coordinate government policy and enforcement efforts. 
 
TRANSPARENCY OF THE REGULATORY SYSTEM 
 
¶37. The government is gradually implementing policies to improve 
competition and foster transparency.  These reforms aim to 
change an existing system that can be influenced greatly by 
family affiliations and business ties.  Although in many 
instances bureaucratic procedures have been streamlined, red 
tape and opaque procedures still present problems for foreign 
and domestic investors.  The arbitrary application of customs, 
tax, labor, health, and other laws or regulations, particularly 
at the local government level, have impeded investment. 
 
¶38. Jordan?s 2004 Competition Law (similar to the Antitrust Law 
in the U.S.) aims to improve the Jordanian economic environment 
 
and attract foreign investment by providing incentives for 
enterprises to improve their competitiveness, protect small and 
medium enterprises from restrictive anticompetitive practices, 
and provide consumers with high quality products at competitive 
prices.  The Competition Directorate at the Ministry of Industry 
and Trade monitors market performance, conducts research, 
examines complaints, reports violators to the judicial system, 
and investigates cases referred by the courts.  The Competition 
Directorate has settled 127 cases since 2004, and referred four 
cases to the courts in 2007. 
 
¶39. In 2007, the government continued its strategy to promote e- 
government.  The government has pledged to make its services, 
regulations, and procurement procedures more accessible and 
transparent via e-government.  Implementation to date has been 
slow, but programs to register businesses and to view tax 
records and pending legislation online are now available. 
 
EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT 
 
¶40. The three key capital market institutions are the regulator, 
Jordan Securities Commission (JSC); the exchange, the Amman 
Stock Exchange (ASE); and the custodian for all transaction 
contracts, clearings and settlement, the Securities Depository 
Center (SDC).  The government passed the most recent Securities 
Law in 2002, which brought the law more in line with 
international best practices.  The ASE suffers from intermittent 
liquidity problems, which have meant that the bourse remains 
prone to speculative movements.  The ASE's market capitalization 
grew rapidly between 2003 and 2005, experienced a correction in 
2006 but grew over one-third in 2007. 
 
Key Market Indicators (USD) 
                           2007            2006 
Market Capitalization      $40.8 billion   $30.3 billion 
Market Capitalization/GDP  289%            234% 
Index                      7519 points     5518 points 
Number of shares traded    4.5 billion     4.1 billion 
Trading Volume             $17.22 billion  $19.8 billion 
Number of brokerage firms  65              61 
Number of companies on ASE 245             226 
% of Shares owned by 
  - Jordanians             52.8%           54.9% 
  - Non-Jordanian Arabs    35.6%           34.3% 
  - Other Non-Jordanians   11.6%           10.7% 
 
Source: Amman Stock Exchange 
 
¶41. The CBJ, on behalf of the Ministry of Finance, conducts 
regular treasury bill auctions of differing maturities.  A tap 
series of one-year treasury bills is held monthly and a tap 
series of three- and five-year treasury bonds is held bimonthly. 
The government issues development bonds, equivalent to treasury 
bonds, as necessary.  All government securities are listed on 
the ASE, and ownership is registered at CBJ in a book entry 
format.  New issues for the first 10 months of 2007 reached $2.1 
billion.  The CBJ has introduced a primary dealer plan designed 
to increase liquidity in the secondary market, though the 
program has to this point been unsuccessful in achieving this 
goal.  A Public Debt Law allows for an increase in the volume of 
bond and bill issuance by the treasury.  Commercial banks hold 
securities for their clients in a sub-account format.  Foreign 
investors are welcome to participate in auctions and to purchase 
government securities through banks. 
 
¶42. The corporate bond market remains underdeveloped, and 
continues to be overshadowed by traditional direct lending.  One 
reason is the absence of proper mechanisms for corporate 
lending.  Increasingly, however, some banks have started 
introducing new products and corporate bond issues.  New 
corporate bond issues for the first 10 months of 2007 totaled 
$122.8, compared to $79 million in 2006. 
 
¶43. Jordanian banks have recovered from an economic slow-down of 
the late-1990s, and had excellent years in 2005, 2006, and 2007 
with high profits and low default rates.  The Arab Bank and the 
Housing Bank are the two largest banks in Jordan, with total 
market capitalization in December 2007 of $10.7 billion and $2.2 
billion, respectively.  The difference between their values owes 
to the vast difference in their scope of operations; the Arab 
Bank has a worldwide presence, while the Housing Bank?s prime 
focus is the local market.  Jordan no longer distinguishes 
between "investment banks" and "commercial banks."  Jordan has 
commercial banks, Islamic banks, and foreign bank branches. 
 
¶44. Banks offer loans, discounted bills, and overdraft 
facilities, and all are permitted to extend overdraft facilities 
in Jordanian Dinar.  New capital instruments such as commercial 
paper and convertible bonds are under consideration.  In 
addition to long-term instruments, securitization, short- 
selling, and treasury stocks are being introduced in some banks. 
The CBJ permits banks to extend loans and credit facilities in 
foreign currency but only for exporting purposes.  In such 
cases, it requires debt repayment to be in the denominated 
foreign currency.  A number of banks have established mutual 
funds. 
 
¶45. A banking law, which aims at improving the industry?s 
efficiency, came into force in 2000.  The law protects 
depositors' interests, diminishes money market risk, guards 
against the concentration of lending, and includes articles on 
electronic banking practices and money laundering.  In addition, 
the CBJ set up a separate and independent Deposit Insurance 
Corporation in late 2000 that insures deposits of up to JD 
10,000 (US $14,000).  The corporation also acts as the 
liquidator of banks as directed by the CBJ.  The CBJ established 
a credit bureau for bounced checks in 2001.  The bureau requires 
banks to report on a timely basis the names of account holders 
with bounced checks.  Following a third report of a bounced 
check, the CBJ circulates the names of the account holders to 
all banks with instructions to withhold checkbooks and any other 
facilities for a period of time. 
 
¶46. The CBJ issued a number of circulars in 2003-2005 to 
implement money-laundering regulations that are consistent with 
the recommendations of the Organization of Economic Cooperation 
and Development's (OECD) Financial Action Task Force.  Jordan's 
parliament passed an anti-money laundering bill that became law 
in July 2007.  The law criminalizes money laundering, and 
specifies that any money or proceeds gained from any felony 
offense or crimes stated in international agreements to which 
Jordan is a party are subject to the provisions of the law.  The 
law is also the legal basis for the creation of the Anti-Money 
Laundering Unit, Jordan's Financial Intelligence Unit.  Jordan 
has no record of major money laundering incidents. 
 
¶47. There are a number of internationally recognized accounting 
and auditing firms in Jordan.  The government's accounting and 
auditing regulations are consistent with international standards 
and are internationally recognized. 
 
POLITICAL VIOLENCE 
 
¶48. Some incidents of political violence and terrorist 
activities have occurred in Jordan, including the shooting to 
death of a tourist in downtown Amman in September 2006, the 
November 2005 hotel bombings in Amman, and the August 2005 
rocket attack on a U.S. Navy ship in Aqaba.  The hotel bombings 
targeted foreign business interests specific to the hotel 
industry.  Other industries with foreign business interests have 
remained unaffected by political violence.  While Jordan enjoys 
political stability, events in the region, particularly in the 
West Bank and Gaza or Iraq, can trigger demonstrations of anti- 
U.S. hostility.  The assassination of American diplomat Larry 
Foley outside his west Amman residence on October 28, 2002 was 
attributed to former Al Qaida in Iraq leader Abu Mus'ab Al- 
Zarqawi, who was killed in Iraq in June 2006. 
 
¶49. The Government of Jordan is proactive in maintaining public 
security, containing demonstrations and preventing terrorist 
attacks, and has increased its efforts since the November 2005 
hotel bombings.  The potential for politically motivated 
violence, however, remains.  Visitors should consult current 
State Department public announcements. 
 
CORRUPTION 
 
¶50. Corruption is a crime in Jordan.  In September 2006, 
parliament approved a financial disclosure law requiring public 
office holders and specified government officials to declare 
their assets.  Parliament also enacted an Anti-Corruption Law in 
2006 that created a commission, reporting to the Prime Minister, 
to investigate allegations of corruption.  Jordan's law defines 
corruption as any act that violates official duties, and all 
acts related to favoritism and nepotism that could deprive 
others from their legitimate rights, as well as economic crimes 
and misuse of power.  The General Intelligence Directorate (GID) 
also has an anti-corruption department that is responsible for 
combating bribery, extortion, and other similar crimes. 
Attempts to establish similar, transparent entities outside the 
 
security service so far have not been successful. 
 
¶51. Influence peddling and a lack of transparency have, however, 
been alleged in government procurement and dispute settlement. 
"Wasta," the use of family, business, and other personal 
connections to advance personal business interests, at the 
expense of others, is endemic. 
 
BILATERAL TRADE/INVESTMENT AGREEMENTS 
 
¶52.  In 1996, the U.S. Congress established the "Qualifying 
Industrial Zone" (QIZ) initiative to support the Middle East 
peace process.  Under this agreement, goods produced in the 
thirteen designated QIZs in Jordan can be imported into the 
United States tariff- and quota-free if 35 percent of the 
product's content comes from the QIZ, Israel, and the West 
Bank/Gaza.  Of that 35 percent, a minimum 11.7 percent must be 
added in the QIZ, eight percent in Israel, and 15.3 percent in 
either a Jordanian QIZ, Israel, or the West Bank/Gaza.  This 
makes investment in a QIZ particularly attractive to industries 
whose products are assessed with high tariffs when they are 
imported into the U.S.  As of December 2007, the bulk of QIZ 
exports have been garments.  Since 1999, the QIZs have attracted 
over $450 million in capital investments, generated about $4 
billion in exports to the U.S., and created over 55,000 new 
jobs, of which about 15,000 are held by Jordanians and 57% by 
Jordanian women. 
 
¶53. The U.S.-Jordan FTA, which entered into force in 2001, does 
not supersede or eliminate the QIZ initiative.  Whereas the QIZ 
agreement grants immediate duty- and quota-free access to the 
U.S. for goods produced in the QIZs that meet certain rules of 
origin, the FTA mandates a gradual phasing out of import duties 
and other trade barriers by 2010.  FTA rules of origin require 
35 percent Jordanian content.  The agreement incorporates labor, 
environmental, and intellectual property rights provisions. 
 
¶54. A Bilateral Investment Treaty between Jordan and the United 
States entered into force in 2003.  The agreement provides 
reciprocal protection of Jordanian and U.S. individual and 
corporate investments. 
 
¶55. While the U.S. remains Jordan's top trading partner, Jordan 
maintains an active trade relationship with neighboring 
countries, and has been actively pursuing enhanced trade 
arrangements globally.  Jordan is a member of the Greater Arab 
Free Trade Area (GAFTA), which has been in force since 1998. 
The GAFTA reached full trade liberalization of goods in January 
2005 through full exemption of customs duties and charges for 
all 17 Arab members, with the exception of gradual reductions 
for Sudan and Yemen which are expected to benefit from full 
exemption by the end of 2010.  Jordan has also signed several 
trade preference agreements and bilateral free trade agreements 
with Arab countries, including Egypt, Syria, Morocco, Tunisia, 
the UAE, Algeria, Lebanon, the Palestinian Authority, Kuwait, 
Sudan, and Bahrain.  The bilateral agreements are generally 
applied in parallel to the GAFTA, with the GAFTA often providing 
more trade preferences than most of the bilateral trade 
agreements (see www.mit.gov.jo for more information). 
 
¶56. An economic association agreement between Jordan and the 
European Union (EU) entered into force in 2002 to establish free 
trade over a twelve-year period.  This agreement calls for the 
free movement of capital, as well as cooperation on development 
and political issues.  Jordan also signed a Free Trade Area 
Agreement in 2001 with the European Free Trade Association 
(EFTA) states (Iceland, Liechtenstein, Norway and Switzerland), 
which aims for complete trade liberalization by 2014. 
 
¶57. In 2004, Jordan signed a Free Trade Agreement with 
Singapore.  In addition to enhancing bilateral trade ties, the 
agreement aimed to create new export opportunities for Jordanian 
products worldwide through the possibility of diagonal 
accumulation of origin with countries that have concluded free 
trade agreements with both Jordan and Singapore.  In the same 
year, Jordan completed the Agadir trade agreement with Egypt, 
Morocco, and Tunisia, and upgraded its trade agreement with 
Israel to take advantage of accumulation of content provisions 
in the EU's Pan-Euro-Mediterranean trade rules of origin. 
Jordan is also considering free trade agreements with several 
other nations, including Turkey and Canada. 
 
OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS 
 
¶58. Investments in Jordan are eligible for Overseas Private 
 
Investment Corporation (OPIC) insurance and private financing. 
 
¶59. Jordan is a member of the Multilateral Investment Guarantee 
Agency (MIGA), a World Bank agency, which guarantees investment 
against non-commercial risks such as civil war, nationalization, 
policy changes, etc.  The program covers investments in Jordan 
irrespective of the investor's nationality, in addition to 
covering Jordanian investments abroad. 
 
¶60. Several European countries have official debt-for-equity 
swap programs that are open to investors of all nationalities. 
 
LABOR 
 
¶61. The rate of population growth (births minus deaths and 
factoring in migration) is about 2.5 percent a year, based on 
the most recent census in 2004.  The 2007 population is 
estimated by the Department of Statistics at 5.7 million.  50% 
of the population is under the age of 20.  In general, the labor 
force is well educated.  Literacy rates approach 95.2 percent 
for men and 86.7 percent for women.  Jordan has a labor force of 
about 1.5 million and an unemployment rate that hovers between 
approximately 13 and 15 percent.  In November 2007, the 
Department of Statistics reported a 13.1 percent unemployment 
rate. 
 
¶62. There are an estimated 313,000 foreign laborers in Jordan. 
With the exception of the approximate 36,600 that work in the 
QIZs as textile workers, most foreign workers work primarily in 
unskilled sectors, such as construction, agriculture, and 
domestic service.  There are also unofficial indicators which 
suggest tens of thousands of unregistered foreign workers.  The 
Ministry of Labor regulates foreign worker licensing, licensing 
fees, prohibited sectors, and employer liability.  Among its 
responsibilities, the ministry approves the hiring of 
professional foreign workers by private businesses.  Non- 
citizens are not permitted by the current law to join unions, 
though the Ministry of Industry and Trade maintains that such 
workers enjoy any benefits and protections that unions obtain. 
A new draft labor law includes provisions to allow foreigners to 
join established unions. 
 
¶63. Labor unions serve primarily as intermediaries between 
workers and the Ministry of Labor, and may engage in collective 
bargaining on behalf of workers.  Currently, there are 17 
recognized unions in Jordan, all members of the General 
Federation of Jordanian Trade Unions.  Estimates put union 
membership at 10 percent of the labor force.  In addition to the 
17 unions, there are numerous professional associations active 
in Jordan, many of which have mandatory membership.  While these 
associations occasionally take on characteristics of traditional 
unions, they are primarily political bodies.  According to 
official figures, about 30 percent of the total labor force, 
including government workers, belongs to either a union or a 
professional association. 
 
¶64. Article 28 of the Labor Law specifies the conditions under 
which an employer can discharge a worker without notice. 
Article 31 allows employers to lay off employees if economic or 
technical circumstances necessitate reorganization.  The law 
does not require employers to include retirement plans in their 
employment package.  However, if the employer agreed to provide 
retirement benefits when the worker was contracted, the employer 
must fulfill his/her commitment.  The Social Security Law 
stipulates that if the employer has more than five employees, 
they must be enrolled in the national social security system. 
The Labor Law also addresses worker compensation and outlines 
compensatory categories for work-related injuries.  Article 67 
provides unpaid maternity leave for a maximum of one year for 
mothers working in firms employing 10 or more workers, and 
Article 70 requires full pay for 10 weeks of maternity leave. 
The law provides for 14 calendar days of annual leave for 
employees during the first five years with the employer, and 21 
calendar days after five years of successive service.  With the 
exception of foreigners not being allowed to join unions and the 
restriction on forming new unions outside of the General 
Federation of Jordanian Trade Union, the current law places 
Jordan in compliance with international and Arab labor 
agreements. 
 
¶65. Since 2006, the Government of Jordan has been reforming its 
labor inspection system and drafted a new labor law that will 
more clearly address issues such as compensation for overtime, 
salary deductions allowed for housing and meals, and punishment 
for illegal labor practices by employers.  Ministry of Labor 
 
(MoL) inspections have recently identified problems at some QIZ 
factories regarding delayed payment of wages, length of overtime 
and physical abuse of workers.  Under MoL's more rigorous 
inspection regime, allegations of forced labor in 2007 decreased 
substantially. 
 
FOREIGN TRADE ZONES/FREE TRADE ZONES 
 
¶66. As part of Jordan's efforts to foster economic development 
and enhance the investment climate, the government has created 
geographically demarcated, policy-favored commercial zones, 
including industrial estates, free zones, and special economic 
zones.  The goal is to encourage "clustering" among related 
firms within an industry and linkages to other industries.  Some 
of these zones overlap or have multiple designations. 
 
¶67. The semi-governmental Jordan Industrial Estates Corporation 
(JIEC) currently owns five public industrial estates in Irbid, 
Karak, Aqaba, Amman, and Ma'an.  There are also several 
privately-run industrial parks in Jordan, including al-Mushatta, 
al-Tajamouat, al-Dulayl, Cyber City, al-Qastal, Jordan Gateway, 
and al-Hallabat.  These estates provide basic infrastructure 
networks for a wide variety of manufacturing activities, 
reducing the cost of utilities and providing cost-effective land 
and factory buildings.  Investors in the estates also receive 
various exemptions, including a two-year exemption on income and 
social services taxes, total exemptions from building and land 
taxes, and exemptions or reductions on most municipalities? 
fees. 
 
¶68. Jordan also has public "free zones" (FZs) in Zarka, Sahab, 
Karak, Karama, and Queen Alia Airport that are run by the 
publicly-owned Free Zone Corporation (FZC).  Over 30 private 
free zones have also been designated, which are administered by 
private companies under the supervision of the FZC.  Considered 
outside the Jordan Customs jurisdiction, the free zones provide 
a duty- and tax-free environment designed for the storage of 
goods transiting Jordan. 
 
¶69. Both Jordanian and foreign investors are permitted to invest 
with few restrictions in trade, services, and industrial 
projects in free zones.  Industrial projects must fulfill one of 
the following conditions: 
-- New industries which depend on advanced technology; 
-- Industries requiring raw material and/or locally manufactured 
parts that are locally available; 
-- Industries that complement domestic industries; 
-- Industries that enhance labor skills and promote technical 
know-how; 
-- Industries providing consumer goods and that contribute to 
reducing market dependency on imported goods. 
 
¶70. The following incentives are granted to investors in the 
designated free zones: 
-- Profits are exempt from income and social services taxes for 
a period of twelve years, with the exception of profits 
generated from storage services that involve goods released to 
the domestic market. 
-- Salaries and allowances payable to non-Jordanian employees 
are exempt from income and social services taxes. 
-- Goods imported to and/or exported from free zones are exempt 
from import taxes and customs duties, with the exception of 
goods released to the domestic market. 
-- Industrial goods manufactured in free zones enjoy partial 
customs duties exemption once released to the domestic market, 
depending on the proportion of the value of local inputs and 
locally incurred production costs. 
-- Construction projects are exempt from licensing fees and 
urban property taxes. 
-- Free transfer of capital invested in free zones, including 
profits. 
 
¶71. Jordan has established four Special Economic Zones which all 
aim to alleviate poverty and create jobs in impoverished areas 
of Jordan through development of industrial centers supported by 
logistics, transport, utilities, and information technology 
services.  In May 2001, the government converted the Aqaba port 
and surrounding area into the Aqaba Special Economic Zone (ASEZ) 
with streamlined bureaucracy, special tax exemptions, a flat 
five percent income tax, and facilitated customs handling.  ASEZ 
has attracted over U.S. $2 billion in foreign direct investment 
in recent years, mainly in hotel and property development.  In 
November 2006, Jordan created the King Hussein Bin Talal 
Economic Zone in the city of Mafraq.  Plans for the Mafraq zone 
aim to create 29,000 jobs by 2025 through a focus on industrial 
 
activities, supported by logistics and transit services.  The 
Irbid Economic Zone was launched in May 2007 as a healthcare, 
education, and information technology free zone in the northern 
city of Irbid.  Its proximity to the campus of the Jordan 
University for Science and Technology (JUST) encourages 
partnerships between the firms in the zone and the university 
students.  In September 2007, King Abdullah launched the fourth 
Economic Development Zone in Ma'an, a governorate 210 kilometers 
south of the capital, which will include infrastructure projects 
estimated at U.S. $200 million. 
 
FOREIGN DIRECT INVESTMENT STATISTICS 
 
¶72. Jordan does not maintain official detailed statistics of 
FDI.  Aggregate inflows tracked by the Central Bank give an 
indication of the overall volume, while registered capital and 
projects that benefit from the Investment Promotion Law give an 
indication of the break down of FDI by source and market 
segment. 
 
¶73. The Jordan Investment Board approved foreign investment 
projects worth about $390 million, $1.2 billion and $1.48 
billion for the years 2005, 2006 and 2007, respectively. 
 
¶74. Foreign Direct Investment Inflows 
Period          USD Million 
-------         ----------- 
2007 1-3Q         1,021 
2006 1-3Q         2,806 
2005 1-3Q         1,917 
2006              3,224 
2005              1,777 
 
Source: Central Bank of Jordan, Balance of Payments 
 
 
¶75. New Projects under the Investment Promotion Law by 
Geographical Area (in USD Million) 
 
               2007     2006     2005 
Jordan         1,652    1,393      677 
Arab             764    1,091      290 
U.S. and Canada  126       30       16 
Europe            56       13       55 
Other            534       58       19 
 
Total          3,132    2,585    1,056 
 
Source: Jordan Investment Board 
 
 
¶76. New Registered Capital by Industry (in USD Million) 
 
Industry           2007     2006     2005 
 
Manufacturing        44      144       81 
  Percent Foreign   62%      35%      43% 
 
Trade               124      109      129 
  Percent Foreign   35%      47%      36% 
 
Agriculture          27      110        9 
  Percent Foreign   60%      49%      67% 
 
Construction        167       24       35 
  Percent Foreign    2%      23%      19% 
 
Services            184      291      822 
  Percent Foreign   30%      34%      43% 
 
 
Total               545      678    1,075 
  Percent Foreign   33%      39%      42% 
 
Source: Companies Controller Directorate at the Ministry of 
Industry and Trade 
 
 
¶77. Registered Capital Stock at Year-End by Country (in USD 
Million) 
 
Country              2007     2006     2005 
 
Iraq                  667      569      470 
Kuwait                583      566      461 
 
Denmark               470      470      399 
United Arab Emirates  300      279      273 
Saudi Arabia          283      263      253 
Egypt                 214      199      176 
Belgium               202      202      201 
Bahrain               160      131      120 
United Kingdom        149      145      136 
Lebanon                93       86       82 
Syria                  92       83       73 
Netherlands            89       88       88 
United States          84       78       72 
Switzerland            55       55       52 
Palestinian Authority  44       41       40 
India                  40       40       38 
Libya                  39       39       38 
Canada                 33       31       27 
China                  32       28       24 
 
Source: Companies Controller Directorate at the Ministry of 
Industry and Trade 
 
HALE