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RUCPDOC/DEPT OF COMMERCE WASHDC
RUFTNAB/COMUSNAVCENT

UNCLAS SECTION 01 OF 03 AMMAN 001000 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: ECON EINV EAID JO
SUBJECT: AQABA DEVELOPMENT UPDATE 
 
Ref: 07 Amman 2017 
 
¶1. (U) Summary: In March, the Aqaba Special Economic Zone Authority 
(ASEZA) was honored at the Jordan Economic Forum for its 
achievements, including its ability to attract $8 billion in 
investment pledges in seven years.  Tourism accounts for about 70 
percent of all investment in this port city, concentrated in three 
large real estate development complexes.  The number of tourists to 
Aqaba is growing, and is continuing to put pressure on hotels' 
ability to recruit staff.  Several USAID-funded projects are 
developing human resources.  End Summary. 
 
A LOT OF MONEY . . . FAST 
------------------------- 
 
¶2. (U) In 2000, Jordan's parliament passed a law which established 
the ASEZA as the statutory institution empowered with regulatory, 
administrative, fiscal and economic responsibilities within the 
Aqaba Special Economic Zone (ref A).  ASEZA was recognized at the 
Jordan Economic Forum (JEF) on March 2 for its achievements, 
particularly its ability to attract investments to the real estate 
sector.  JEF keynote speaker, former President of the Council of 
Ministers in Lebanon, Najib Mikati noted that Aqaba "has moved from 
planning and investment to a successful reality, which will lead to 
further prosperity."  While the original Aqaba plan estimated $6 
billion in investment in 20 years, Aqaba has already attracted $8 
billion in investment pledges over eight years.  Saleh Kilani, 
ASEZA's Commissioner for Economic Development, said that Aqaba has 
grown at a 12.1 percent rate annually since 2000 (twice Jordanian 
GDP growth during that period), and he attributed ASEZA's success to 
its good planning, as well as the fortunate timing of the Gulf oil 
boom.  NOTE: USAID was instrumental in the formation of ASEZA and 
current USAID projects are continuing to grow the human resources 
and planning capacity of ASEZA and the Aqaba Development Corporation 
(ADC).  END NOTE. 
 
¶3. (SBU) Jim O'Gara, a U.S.-based business consultant working in 
Aqaba, confirmed to EmbOffs March 5 -6 that Aqaba's ability to 
attract investment funds was a function of the large amount of Gulf 
oil money looking for investment opportunities; the difficulty of 
traveling to the U.S. for Arabs after 9/11; and waterfront 
property's growing popularity, especially after several successful 
projects in Dubai.  Larry Hearn, Chief of Party for the USAID-funded 
Aqaba Community and Economic Development project (ACED), and O'Gara 
agreed that Aqaba has attracted more money than expected, and that 
the fast influx of funds created some serious development 
challenges.  The ability of the local government to meet the needs 
of local businesses - especially related to land registry, the 
ability to recruit hotel and construction workers, and to conduct a 
planned move of the commercial port in a timely manner to improve 
the tourism experience - is being tested. 
 
¶4. (U) In February, ADC announced that it will spend $700 million on 
a project to move the commercial port of Aqaba 12 miles south, which 
will be the biggest infrastructure project in Jordan's history.  ADC 
is eager to move the port to free up additional waterfront land for 
tourism development and to increase the distance between tourists 
and the heavy industry currently located in the port.  In spite of 
these plans, no funds have yet been requested from the government, 
and the project still requires government approval. 
 
TOURISM: INDUSTRY NUMBER ONE 
---------------------------- 
 
¶5. (U) During 2007, 432,000 tourists visited Aqaba, a two percent 
increase from 2006.  Aqaba's hotels have a 65 percent occupancy 
rate.  Approximately 56 percent of visitors to Aqaba are Jordanian, 
and Europeans account for an additional 22 percent of visitors, with 
an increasing number of Russian and Eastern European guests. 
 
¶6.  (U) ASEZA Commissioner Kilani said although the initial Aqaba 
investment plan aimed for a mix of 50 percent tourism; 30 percent 
services, including transportation; and 20 percent light industry, 
investments have been heavily weighted towards tourism, estimated at 
70 percent of recent investments.  Most of these investments are 
concentrated in three large real estate development projects.  Tala 
Bay, located south of Aqaba, was the first of the three projects and 
began construction in 2002.  The project plan includes 1,500 
residential units, five hotels with 1,000 four and five-star rooms, 
 
AMMAN 00001000  002 OF 003 
 
 
as well as a marina.  The $500 million resort is being developed by 
the Jordan Project for Tourism Development, and is scheduled to be 
completed in 2008. 
 
¶7. (U) Saraya Aqaba is located in the center of Aqaba.  It is a $1 
billion Jordanian-Lebanese project with investment from the Social 
Security Corporation, Arab Bank, and the Hariri family.  General 
Manager Shadi Ramzi al-Majali said the project will include 1,200 
hotel rooms in six hotels, private residences, a retail area with 12 
restaurants, a man-made lagoon, and a waterpark, among other 
attractions.  He said the residences are intended to serve as second 
homes, and range from $120,000 for a 1,000 square foot apartment to 
$4.5 million for luxury villas.  The project is designed to be 
completed in a single phase by the first quarter of 2010.  When 
completed, Saraya will employee 6,000 people, 3,500 of whom will 
live in company-provided housing. 
 
¶8. (U) Local press reported that construction work on Ayla, a $1.4 
billion real estate development project near to Saraya, is scheduled 
to start soon with a groundbreaking in April and will continue over 
the next eight years.  The project will develop one thousand acres 
of land with a golf course and inland lakes and lagoons, adding 11 
miles to Jordan's very short coastline.  The Ayla project includes 
the development of five hotels with 1,500 rooms, 300 residential 
units, and a retail town center.  When completed, Ayla will employ 
4,000 staff. 
 
¶9. (SBU) Investors in Aqaba continue to note the difficulty of 
finding employees to staff the growing number of hotels.  Ahmed Al 
Bashiti, Director of Jordan In-bound Tour Operations Association, 
said local Aqabites are not qualified for these positions, and Aqaba 
hotels already recruit a large number of Egyptian workers.  He 
emphasized that no Jordanian is going to move from Irbid or Kerak, 
where there is high unemployment, to Aqaba for low-paying work. 
Majali said that the starting salary for hotel workers at his resort 
is $240 monthly, and that Jordanians are reluctant to take hotel 
jobs because they fear being in a low-level positions throughout 
their careers.  Department of Statistics Deputy General Ghazi 
Shubeikat estimated that foreign laborers constitute about 25 
percent of Aqaba's workforce today.  COMMENT: Despite this 
challenge, a cultural shift is beginning to take place in Jordan, as 
seen by the significantly higher number of young Jordanians working 
in the tourism sector today than ten years ago, a key objective of 
USAID's programs as described below.  END COMMENT. 
 
USAID's TOURISM INITIATIVES 
--------------------------- 
 
¶10. (U) USAID has invested $160 million in the development of Aqaba 
since 1999, including tourism initiatives.  The USAID-funded Siyaha 
project focuses on Jordan tourism development through three 
branches: institutional and legal reform; product and site 
development; and human resources and tourism awareness.  Siyaha is 
currently partnering with ASEZA to develop Wadi Rum, a protected 
area outside of Aqaba to develop expanded tourism experiences 
including camel treks, enhanced local handicrafts, and Bedouin 
desert camps.  This has already resulted in the creation of 300 
jobs, 40 percent of which are being performed by conservative 
Bedouin women.  Dr. Bilal Bashir, ASEZA Deputy Chief Commissioner, 
highlighted the potential for handicrafts to employ Bedouin women in 
culturally-sensitive ways.  Siyaha has also improved human resources 
by providing customer service training for Aqaba taxi drivers and 
border patrollers and developing a local hospitality vocational 
center. 
 
¶11. (SBU) Jordan-wide, Siyaha is working to eliminate the "culture 
of shame" that discourages Jordanians from accepting positions in 
the tourism sector.  In Aqaba, Siyaha has begun teaching students in 
grades seven through twelve about hospitality careers, and has plans 
to open a hospitality university program in the near future.  The 
hospitality program would be part of the future University of Aqaba 
and will offer degrees in hotel and tourism management. 
 
¶12. (U) To support Jordan's tourism industry and the environment, 
Embassy Amman will sponsor an Aqaba clean-up event in honor of Earth 
Day on April 19.  Participants will clean the beach on foot, and 
scuba divers will pick up trash from the coral reefs. 
 
COMMENT 
 
AMMAN 00001000  003 OF 003 
 
 
------- 
 
¶13. (SBU) Visitors to Aqaba are often struck by the number of 
construction sites, cranes, and newly developed neighborhoods that 
are a testament to the rapid growth and investment in the port city. 
 Yet in some ways, Aqaba still remains a sleepy, expensive beach 
town with limited restaurants and tourist activities, especially 
compared to its regional competitor Sharm El-Sheikh in Egypt.  Some 
argue that while Petra and the Dead Sea have the comparative 
advantage of being one-of-a-kind tourist experiences, Aqaba is just 
one of many beach destinations in the region and in the world.  Even 
many professionals working in Aqaba have opted to leave their 
families in Amman, because of Aqaba's limited appeal as a full-time 
residential area.  Time is needed for some of the large real estate 
development projects to be fully implemented, and to create more 
social and commercial venues that cater to both foreign tourists and 
the local community.  Now that development of the beachfront is 
underway, the challenge remains to attract investment in light 
industry and services as initially envisioned.  Transforming Aqaba 
into a dynamic business environment and developing the local labor 
workforce will be instrumental in this regard. 
 
Visit Amman's Classified Website at 
http://www.state.sgov.gov/p/nea/amman 
 
HALE