VZCZCXYZ0002
PP RUEHWEB

DE RUEHAM #1736/01 1621418
ZNR UUUUU ZZH
P 101418Z JUN 08
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC PRIORITY 2841
INFO RUEHTV/AMEMBASSY TEL AVIV PRIORITY 1213
RUEHEG/AMEMBASSY CAIRO PRIORITY 3686
RUEHJM/AMCONSUL JERUSALEM PRIORITY 5051
RUEHC/DEPT OF LABOR WASHDC PRIORITY

UNCLAS AMMAN 001736 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ELA (ZIMMER) 
PASS TO USTR (FRANCESKI, KARESH, ROSENBERG) 
 
E.O. 12958: N/A 
TAGS: ELAB ETRD KTEX PGOV JO
SUBJECT: SATELLITE GARMENT FACTORIES BEING ESTABLISHED TO 
INCREASE JORDANIAN EMPLOYMENT IN THE APPAREL INDUSTRY 
 
REF: A. EMAIL FRANCESKI-BARON-COHEN-BROWN-PISANI 6/2/08 
     ¶B. 07 AMMAN 4993 
 
¶1.  (U) Summary:  The Government of Jordan (GOJ) has started 
a pilot project with garment companies already established in 
the Qualifying Industrial Zones (QIZs) to build satellite 
factories with 100% Jordanian workforces outside the QIZs in 
rural areas of high female unemployment.  The goal is to 
increase women's economic independence and employment in the 
apparel industry by bringing the factories to the workers. 
One company, Camel Textiles, has begun training 80 female 
Jordanian workers in the impoverished southern city of Shobaq 
in a center that will eventually be turned into a satellite 
factory.  Although the USG has indicated to the GOJ that any 
factories participating in such a program should plan to 
export under the U.S.-Jordan Free Trade Agreement (FTA), the 
GOJ is interested in trying to secure QIZ designations for 
these satellite factories.  Camel has indicated that it would 
no longer be able to participate in the project if the 
company could not ship its knit wear production under the QIZ 
arrangement.  End Summary. 
 
Lack of Local Labor Persists in QIZs 
------------------------------------ 
 
¶2.  (U) According to the Ministry of Labor, Jordan's QIZs 
employed 33,955 foreign workers and 12,206 Jordanians (4,520 
males and 7,686 females), as of April 30, 2008.  While the 
sector still represents one of the largest employers of 
domestic labor, there have been concerns that the number of 
Jordanians has decreased from the 15,175 recorded in June 
¶2007.  High turnover among Jordanians, particularly women who 
end up leaving work once they get married or become pregnant, 
has been cited as one problem.  Companies and the GOJ have 
claimed that they have made significant recruitment efforts 
to augment the local workforce, but cultural issues have been 
difficult to overcome (ref B).  Some families reportedly do 
not want their daughters or wives co-mingling with foreign 
workers or traveling long distances from their communities to 
the QIZs, particularly after work at night. 
 
Pilot Project Underway to Employ More Jordanians in QIZs 
--------------------------------------------- ----------- 
 
¶3.  (U) To help overcome these issues, the GOJ and the 
private sector developed a pilot project to bring the 
factories to the local workers.  Minister of Labor Bassem 
Salem told a visiting Government Accountability Office (GAO) 
team on May 26 that 20 areas of high female unemployment had 
been identified in Jordan as sites for satellite factories. 
He confirmed that the GOJ would provide certain incentives to 
companies already established in the QIZs to build these 
auxiliary operations, such as investment in the 
infrastructure, allocation of free land, and subsidies for 
training of local employees.  Salem hoped that at least six 
factories would be established by the end of 2008 that would 
employ 6,000-8,000 local workers.  Interlocutors in the 
garment sector have welcomed this initiative, although a few 
have noted that it would be more difficult for factories with 
high-value production to move operations to another location 
because of the more sophisticated equipment and training 
required.  Note: Most of Jordan's factories, however, still 
concentrate in low-end production.  End Note. 
 
¶4.  (U) The Taiwanese Camel Textile International 
Corporation, which is based in the Karak QIZ in central 
Jordan, began training 80 female workers in March 2008 
further south in rural Shobaq.  Camel's Amman Office Manager 
Bassam Ali Mahadin told Econoff on June 5 that many of the 
new recruits from the area had previously been unemployed for 
the last 10-14 years, and the project had become a matter of 
social responsibility for his company.  Mahadin noted that 
the King Abdullah Fund for Development provided the training 
center, which would eventually be turned into the factory, 
and Camel contributed the equipment, materials, and trainers. 
 He added that the GOJ was subsidizing the salaries and local 
transport of these workers during the training period. 
 
Need for QIZ Designations of Satellite Factories 
--------------------------------------------- --- 
 
¶5.  (U) Mahadin said that the newly trained Jordanian 
workforce would be ready to produce garments within the next 
three months.  When asked whether these garments would be 
shipped under the FTA, he said that the factory planned to 
 
ship under the QIZ because his garments were primarily knit 
wear that would still be subject to tariffs under the FTA 
until 2010.  If the satellite factory did not receive QIZ 
approval, Mahadin thought that the company would no longer be 
able to participate in the initiative. 
 
¶6.  (SBU) Comment: Encouraging employment, especially for 
women, is a Mission priority.  We believe that that USG 
should support this home-grown initiative, particularly 
during a period of skyrocketing costs and high inflation that 
will be damaging to Jordan.  Although post has encouraged any 
newly established satellite factories to ship under the FTA 
given the challenges of gaining Hill support for additional 
QIZ designations at this time, the GOJ aims to revisit the 
idea of acquiring QIZ designations for these factories during 
a July 2008 trip to Washington in coordination with the 
Israeli government (ref A).  Post would support such 
designations, even if temporary until 2010 when tariffs are 
eliminated under the FTA.  The satellite factory concept is 
most needed for the garment sector, which is Jordan's largest 
exporting industry to the U.S.  Contrary to other higher-tech 
Jordanian industries which have fewer problems finding 
high-skilled Jordanian employees, the apparel sector has 
suffered from a lack of lower-skilled local labor that 
threatens further growth and has been looking for ways to 
replace foreign workers with domestic employees.  If even 
10,000 local workers are employed through this initiative, it 
would give a boost to the garment sector and local 
employment, and further provide economic independence to 
women who would otherwise remain unemployed. 
 
Visit Amman's Classified Website at: 
http://www.state.gov/sgov.gov/p/nea/amman 
Hale