VZCZCXYZ0000
RR RUEHWEB

DE RUEHAM #3368/01 3581239
ZNR UUUUU ZZH
R 231239Z DEC 08
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 4017
INFO RUEHGB/AMEMBASSY BAGHDAD 6132
RUEHLB/AMEMBASSY BEIRUT 2959
RUEHEG/AMEMBASSY CAIRO 3864
RUEHDM/AMEMBASSY DAMASCUS 4031
RUEHRH/AMEMBASSY RIYADH 2066
RUEHTV/AMEMBASSY TEL AVIV 1457
RUEHJI/AMCONSUL JEDDAH 0849
RUEHJM/AMCONSUL JERUSALEM 5277
RUCPDOC/DEPT OF COMMERCE WASHDC

UNCLAS AMMAN 003368 
 
SENSITIVE 
SIPDIS 
 
STATE FOR NEA/ELA 
STATE PASS USAID 
 
E.O. 12958: N/A 
TAGS: ECON EINT ETRD KIPR JO
SUBJECT: IPR PIRACY AND ECONOMIC SLOWDOWN THREATEN GROWTH AND 
INVESTMENT IN INFORMATION TECHNOLOGY 
 
REF: A. AMMAN 2929 
      ¶B. AMMAN 655 
 
¶1. (U) Summary:  Jordan's Information Technology (IT) sector grew 
15% in 2007, but 2008 statistics, when released, are expected to 
reflect a decline because of the worldwide economic slowdown. 
Nevertheless, for a country which lacks natural resources, but has 
an abundance of educated human capital, the IT sector is promising. 
 16,000 Jordanians currently work in the domestic IT sector at 200 
businesses.  With 7,000 engineers graduating annually, the 
government is eager to employ these new graduates domestically and 
has actively supported the IT sector politically and financially by 
seeking foreign investment.  The sector's growth, however, is 
threatened by extensive software piracy, leading local businesses to 
call for improved enforcement of intellectual property rights (IPR) 
laws.  End Summary. 
 
Growth in IT Revenues, Employment, and Computer Use 
--------------------------------------------- ------ 
 
¶2. (U) Chief Executive Officer Abed Shamlawi of Int@j, Jordan's IT 
business association, told EconOff that IT sales grew 15% between 
2006 and 2007 to $882 million but he cautioned that sales growth was 
slower in 2008, reflective of a slowing world economy, and may 
remain weak in 2009.  He said 22% of sales were exported, primarily 
to the Gulf with 10% to the U.S.  Shamlawi estimated that 16,000 
Jordanians work in the domestic IT sector in 200 IT companies or 
within the IT departments of large businesses.  Mais Al Daoud, 
Int@j's National ICT Strategy Project Manager, explained that the 
GOJ has a 2011 goal of 35,000 domestic IT workers to take advantage 
of the 7,000 engineers graduating annually, many of whom will 
otherwise move to the Gulf or will remain unemployed. 
 
¶3. (SBU) Over the summer, the government and the private sector were 
excited about the expected opening of Google offices in Amman and 
the growth of Cisco's Jordanian operations as indicators of future 
foreign investment.  GOJ also hoped Google's presence and corporate 
culture would help to reshape Jordan's business environment and 
spark innovation and public and private reform.  Google's arrival, 
however, is now on-hold because of the worldwide economic slowdown, 
but Cisco has increased the number of local positions from 15 to 55 
and may grow further.  Ashraf Arafeh, Cisco's Jordan General 
Manager, said that the Jordanian staff growth was partially because 
of the low IT salaries in Jordan relative to Saudi Arabia.  He noted 
engineers paid $30,000 - $50,000 in Jordan would be paid $150,000 in 
Saudi Arabia (ref B). 
 
¶4. (U) A December 2008 Department of Statistics (DOS) survey showed 
growth in Jordanian PC and internet use.  In 2008, 40% of Jordanian 
households reported having a computer compared to 33% in 2007.  22% 
of homes are connected to the internet compared to 16% in 2007. 
This growth is also reflected in Jordan's increased ranking from 57 
in 2007 to 47 in the 2008 World Economic Forum's (WEF) Networked 
Readiness Index (NRI).  NRI measures a nation's ability to benefit 
from ICT developments for individuals, businesses, and governments. 
Jordan received its highest rankings on the amount of government 
information available on-line (rank 15); total tax rate (rank 19), 
and the importance of ICT to the government's vision of the future 
(rank 23).  These scores reflect the effort the government has made 
to grow the sector and encourage investment and employment. 
 
IPR Violations Impact Local Software Development 
--------------------------------------------- --- 
 
¶5. (SBU) Increased internet and computer use has also heightened the 
importance of addressing software piracy.  During an IPR conference 
held December 1-4 in Amman, Hazem Malhas, Chief Executive Officer 
for Optimiza, described the IPR challenges his company has faced. 
He said his company successfully fought two court cases in 2008 
involving code stolen and copied by former employees.  He praised 
the courts' decisions but criticized Jordan's small business culture 
which accepts pirated software and code.  Shamlawi concurred with 
Malhas' assessment of Jordan's software piracy problem and said that 
Jordan lacks both sufficient IPR awareness and specialized IPR 
courts.  Both businessmen lamented that universities, including IT 
programs, contribute to a culture of IPR violations by encouraging 
the copying of books, software, and academic materials. 
 
¶6. (SBU) Mamoun Talhouni, Director General of the National Library, 
 
one of the lead agencies in promoting IPR, acknowledged the 
challenges with software piracy but pointed to his office's almost 
weekly raids as indicators of GOJ's growing commitment.  He said the 
next steps must occur in the courts and that judges must be 
encouraged to increase punishments and fines, which rarely exceed 
$1400, for retailers who sell pirated software and DVDs.  One of 
Jordan's few dedicated IPR judges, Nihad Al-Husban, defended the 
judicial system and argued that Jordan's judicial system for IPR, 
particularly trademarks, is stronger than its legislation.  To 
address the legal gaps, however, Al-Husban joined judges from across 
the region for a mid-December advanced judicial IPR program at the 
Dead Sea, sponsored by the U.S. Patent and Trademark Office (USPTO). 
 Other USG support to strengthen Jordan's IPR regime includes 
enforcement initiatives such as a one-year USAID-funded judicial IPR 
training program, technical assistance for revised legislation, and 
raising awareness, highlighted in a recent speech by the Ambassador 
on the relationship between trade and a strong support for IPR (ref 
A). 
 
Comment 
------- 
 
¶7. (SBU) Jordan's IT sector has received significant government 
support because the King and other senior leaders recognize that IT 
is well-suited to a country that is short on natural resources but 
strong in educated human capital.  This support has been political 
support from the top and financial help with tax cuts for consumers 
and foreign investors and e-government initiatives, which created 
work for local businesses.  The sector is, however, threatened not 
just by a slowing world economy but by pervasive software piracy. 
Although government reports applaud the decrease from 87% to 60% use 
of pirated software, thanks largely to the government's own 
improvement, most businesses and homes continue to use pirated 
software, citing cost.  One Microsoft official said that worldwide, 
countries only begin to pay attention to IPR when they have their 
own IP to protect and named Israel as an example that had recently 
improved because of its own industry.  International IT companies 
are reluctant to invest in countries where IT IPR is not 
sufficiently protected.  Jordan is on the cusp of taking IPR 
seriously - with several homegrown commercial software packages it 
wants to protect.  This software and the motivation of its Jordanian 
rights holders will help to push Jordan towards better enforcement - 
more raids, better-trained judges, and stiffer fines and 
punishments.  End Comment. 
 
Visit Amman's Classified Website at 
http://www.state.sgov.gov/p/nea/amman 
 
BEECROFT