14 June 2007
Jordan is continuing apace with plans to upgrade its industrial infrastructure with several key announcements in the last month. These projects to expand and develop industrial investment in the kingdom cover a wide variety of industries.
The Jordan Industrial Estate Corporation (JIEC) floated a tender last week for the development of the first phase of the Al Muwaqqar Industrial Estate. This project, which is effectively an extension of the fully occupied King Abdullah II Industrial Estate in Sahab near Amman, is expected to create 125 projects and 7000 jobs in its first five years of operation. The first phase will occupy 1178 dunums (1.8m sq metres) and construction is expected to be completed by the end of 2008.
JIEC, the semi-governmental body charged with encouraging private-sector participation in the industrial sector, has five further projects in the pipeline, including the Al Muwaqqar Industrial Estate and projects in Zarqa, Tafeleh, Madaba and phase II of the Aqaba International Industrial Estate.
JIEC already caters to 460 companies. Oday Obaidat, director of the investment department at JIEC, told OBG, We have a social role for Jordan, encouraging social and economic development in the kingdom. We operate through strategic decisions aimed at aiding development rather than through purely commercial decisions. Estates run by JIEC have created 41,000 jobs, which have largely benefited the local population with as many as 95% of the jobs at the corporation's Ma'an Industrial Estate held by Jordanians while at Karak, 65% of the workers are Jordanian.
The activities of JIEC are supported by other industrial estates that are being developed by the private sector. JIEC is engaged in a joint venture with PBI Aqaba Industrial Estates, a subsidiary of the American civil engineering company Parsons Brinckerhoff International, to develop an upscale, value-added estate in Aqaba. Investors & Eastern Arab for Industrial and Real Estate Investments (IEAI) are constructing what will be the largest industrial estate in the country on the outskirts of Amman using a similar model to PBI Aqaba. The 4000-acre site is expected to be completed by 2017 and already has attracted the attention of real estate and development company Tameer, which will occupy 250,000 sq m of land. As such, Tameer is the largest investor in the estate and will be responsible for developing much of its infrastructure. IEAI has also signed memoranda of understanding with several other companies in industries ranging from aviation to construction to pharmaceuticals. Mohammed Turk, CEO of IEAI, told OBG that he expects four or five more joint ventures in the next two years.
Such estates are attracting large-scale investment from local and overseas investors. At last month's World Economic Forum in Jordan, a raft of deals for investment in the recently established King Hussein bin Talal Economic Zone in the north-eastern city of Mafraq were announced. The special economic zone for light industry and logistics, established by King Abdullah in November 2006, announced its first anchor tenants in May. This includes a $21m project by Petra Engineering for a production facility to manufacture air conditioning units as well as a $20m investment from Emaar Industries & Investments Multiforms to establish an aluminium manufacturing plant. However, the single biggest investment thus far is by MESC Specialized Cables of Saudi Arabia in partnership with Jordan New Cable Company and Japan's Fujikura for a $49.4m cabling manufacturing facility.
Such investments illustrate the investor confidence in the country's growing industrial sector. Infrastructure and service developments have been paralleled by regulations in the sector that have facilitated growth. A crucial part of this has been the establishment of Qualifying Industrial Zones (QIZs). Since their inception in 1999, they are estimated to have created 46,000 jobs, of which approximately 40% are held by Jordanian workers. The QIZs were created following the signing of the Jordanian Peace Treaty with Israel. Under the agreement, the QIZs in Jordan can export to the US without tariffs or quotas as long as they meet certain rules of origin requirements. To this end, products manufactured in the QIZs should be 35% jointly Jordanian and Israeli, and the Israeli component must constitute at least 8% of the exported value. JIEC was the first to establish QIZs in the kingdom.
The industrial sector as a whole provides approximately 150,000 jobs - the majority of which are generated by small and medium enterprises, according to the ministry of trade and industry. The ministry's statistics for 2005, the most recent available, also show that the industrial sector comprised 17% of the country's GDP and 93.5% of national exports.
Jordan is continuing apace with plans to upgrade its industrial infrastructure with several key announcements in the last month. These projects to expand and develop industrial investment in the kingdom cover a wide variety of industries.
The Jordan Industrial Estate Corporation (JIEC) floated a tender last week for the development of the first phase of the Al Muwaqqar Industrial Estate. This project, which is effectively an extension of the fully occupied King Abdullah II Industrial Estate in Sahab near Amman, is expected to create 125 projects and 7000 jobs in its first five years of operation. The first phase will occupy 1178 dunums (1.8m sq metres) and construction is expected to be completed by the end of 2008.
JIEC, the semi-governmental body charged with encouraging private-sector participation in the industrial sector, has five further projects in the pipeline, including the Al Muwaqqar Industrial Estate and projects in Zarqa, Tafeleh, Madaba and phase II of the Aqaba International Industrial Estate.
JIEC already caters to 460 companies. Oday Obaidat, director of the investment department at JIEC, told OBG, We have a social role for Jordan, encouraging social and economic development in the kingdom. We operate through strategic decisions aimed at aiding development rather than through purely commercial decisions. Estates run by JIEC have created 41,000 jobs, which have largely benefited the local population with as many as 95% of the jobs at the corporation's Ma'an Industrial Estate held by Jordanians while at Karak, 65% of the workers are Jordanian.
The activities of JIEC are supported by other industrial estates that are being developed by the private sector. JIEC is engaged in a joint venture with PBI Aqaba Industrial Estates, a subsidiary of the American civil engineering company Parsons Brinckerhoff International, to develop an upscale, value-added estate in Aqaba. Investors & Eastern Arab for Industrial and Real Estate Investments (IEAI) are constructing what will be the largest industrial estate in the country on the outskirts of Amman using a similar model to PBI Aqaba. The 4000-acre site is expected to be completed by 2017 and already has attracted the attention of real estate and development company Tameer, which will occupy 250,000 sq m of land. As such, Tameer is the largest investor in the estate and will be responsible for developing much of its infrastructure. IEAI has also signed memoranda of understanding with several other companies in industries ranging from aviation to construction to pharmaceuticals. Mohammed Turk, CEO of IEAI, told OBG that he expects four or five more joint ventures in the next two years.
Such estates are attracting large-scale investment from local and overseas investors. At last month's World Economic Forum in Jordan, a raft of deals for investment in the recently established King Hussein bin Talal Economic Zone in the north-eastern city of Mafraq were announced. The special economic zone for light industry and logistics, established by King Abdullah in November 2006, announced its first anchor tenants in May. This includes a $21m project by Petra Engineering for a production facility to manufacture air conditioning units as well as a $20m investment from Emaar Industries & Investments Multiforms to establish an aluminium manufacturing plant. However, the single biggest investment thus far is by MESC Specialized Cables of Saudi Arabia in partnership with Jordan New Cable Company and Japan's Fujikura for a $49.4m cabling manufacturing facility.
Such investments illustrate the investor confidence in the country's growing industrial sector. Infrastructure and service developments have been paralleled by regulations in the sector that have facilitated growth. A crucial part of this has been the establishment of Qualifying Industrial Zones (QIZs). Since their inception in 1999, they are estimated to have created 46,000 jobs, of which approximately 40% are held by Jordanian workers. The QIZs were created following the signing of the Jordanian Peace Treaty with Israel. Under the agreement, the QIZs in Jordan can export to the US without tariffs or quotas as long as they meet certain rules of origin requirements. To this end, products manufactured in the QIZs should be 35% jointly Jordanian and Israeli, and the Israeli component must constitute at least 8% of the exported value. JIEC was the first to establish QIZs in the kingdom.
The industrial sector as a whole provides approximately 150,000 jobs - the majority of which are generated by small and medium enterprises, according to the ministry of trade and industry. The ministry's statistics for 2005, the most recent available, also show that the industrial sector comprised 17% of the country's GDP and 93.5% of national exports.
© Oxford Business Group 2007
