2011 Investment Climate Statement - Jordan

2011 Investment Climate Statement
Bureau of Economic, Energy and Business Affairs
March 2011


In the eleven years since King Abdullah ascended to the throne, Jordan has taken steps to encourage foreign investment and transform its economy into an outward-oriented, market-based, and globally competitive one. The banking, information technology, pharmaceuticals, tourism, and services sectors have all recently seen key reforms. Foreign and domestic investment laws grant specific incentives to industry, agriculture, tourism, hospitals, transportation, energy, and water distribution. The laws also allow the Cabinet flexibility in offering investment incentives to other sectors.

Jordan acceded to the World Trade Organization (WTO) in April 2000. In addition, the U.S.-Jordan Free Trade Area Agreement (FTA) entered into force in December 2001 and came into full effect in January 2010. Investment promotion activities have been consolidated under the Jordan Investment Board (JIB), which provides a “one-stop shop” for investors seeking to do business in Jordan. A new draft investment promotion law which stalled in the 2009 Parliament is expected to be resubmitted to the newly-elected Parliament in 2011. Jordan is still conducting negotiations on a WTO Government Procurement Agreement and submitted a new entry offer in 2010. Jordan’s current investment laws treat foreign and local investors equally, with the following exceptions:

· Ownership of periodical publications is restricted to Jordanian citizens or entities wholly-owned by Jordanians.

· Foreigners are prohibited from wholly or partially owning investigation and security services, sports clubs (except for health clubs), stone quarrying operations for construction purposes, customs clearance services, or land transportation services. The Cabinet, however, may approve foreign ownership of projects in these sectors upon the recommendation of the Investment Promotion Committee. The Committee includes senior officials from the Ministry of Industry and Trade, Income Tax Department, Customs Department, the private sector, and the Jordan Investment Board. To qualify for exemption, projects have to be deemed highly valuable to the national economy and plan to employ a large number of Jordanians. The Prime Ministry deals with such exceptional cases and provides exemptions accordingly.

· Investors are limited to 50 percent ownership in a number of businesses and services, including printing/publishing companies and aircraft or maritime vessel maintenance and repair 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://ustraderep.gov/assets/Trade_Agreements/Bilateral/Jordan/Annexes/asset_upload_file543_8460.pdf

· A minimum capital requirement of JD 50,000 (USD $70,000) is set for foreign investors seeking to register a business. The minimum capital requirement for new enterprises was lowered for Jordanian businesses in 2008 to JD 1,000 (USD $1,400). The minimum does not apply to investments in publicly held companies.

Local and foreign investments are screened by the JIB’s Incentives Committee. Investors in large projects often find that the involvement of local and central government officials helps to ensure overall governmental cooperation in project implementation.

Jordanian law stipulates that expropriation is prohibited unless deemed in the public interest. It provides for fair compensation to the investor in convertible currency.

The Jordanian government engaged in an extensive privatization program over the last decade, with activities still continuing in the energy sector. By 2008, the majority of Jordan’s energy sector had been privatized, including two distribution companies — Electricity Distribution Company (EDCO) and the Irbid District Electricity Company (IDECO) — and one generation company, the Central Electricity Generating Company (CEGCO). The privatization of a second generation company, Samra Power Plant (SEPGCO), remains in progress. The Amman East Power Plant was built and is owned and operated by AES Jordan PSC, a consortium of AES Oasis (a subsidiary of U.S.-based AES Corporation) and Japan-based Mitsui and Co. AES Jordan PSC will operate the plant on a build-own-operate (BOO) basis for 25 years. The $300 million plant project was financed jointly by the U.S. Overseas Private Investment Corporation (OPIC), Japan Bank of International Cooperation (JBIC), and the Sumitomo Banking Corporation (SMBC), with International Bank for Reconstruction and Development (IBRD) risk guarantees.

The Government of Jordan concluded the ten year privatization process for Royal Jordanian Airlines (RJ) in 2008 with the completion of RJ’s initial public offering. The role of the Jordan Civil Aviation Regulatory Commission consequentially evolved with a greater separation between regulation and aviation management. Management of Amman’s Queen Alia International Airport was fully privatized during the same period. A privately managed build-operate-transfer (BOT) airport expansion is well underway with a target completion date in mid-2012.

The number and size of future privatization projects are expected to shrink as most government assets targeted for privatization have already been privatized. The few remaining assets, including Jordan Silos and Supply, elicit little private sector interest. The majority of future projects are expected to be public-private partnerships (PPP) rather than pure privatization deals. The government accordingly changed the privatization commission mandate to focus on partnerships.

The Executive Privatization Commission has initiated a number of important projects in recent years, including a medical and industrial waste project scheduled for completion in 2011. Jordan is also seeking investors for a passenger and cargo rail system, the postal system, and the nation’s refinery. The 50-year concession to the Jordan Petroleum Refinery Company ended in March 2008, prompting the government to draft a new energy law which will be presented to the Parliament in 2011. The new law will open the hydrocarbon sector to local and foreign investors. The sector’s restructuring will involve unbundling the distribution and storage facilities and creating several new companies. The Jordan Petroleum Refinery expansion project was temporarily suspended in late 2009 because of a corruption scandal involving company officials. Four people in the scandal were sentenced to three year prison terms for bribery and abuse of public office. In addition to that scandal, some U.S. companies have expressed frustration over transparency issues, unexpected delays, and changing requirements during the tendering process for several large PPP projects, including the Disi water project.

With respect to ownership and participation in Jordan’s major economic sectors, there is no apparent discrimination against foreign participation other than the restrictions outlined above. In fact, many Jordanian businesses actively seek foreign partners as a way to increase their competitiveness and access into other international markets. Governmental efforts have made Jordan’s official investment climate welcoming; however, some large U.S. investors have reported "hidden costs" due to bureaucratic red tape, vague regulations, and conflicting jurisdictions.

Jordan was ranked 111th out of 183 countries for the ease of doing business by the World Bank’s 2011 Doing Business Report, down eleven places from its 2010 ranking. Jordan ranked tenth in the Arab world, behind Saudi Arabia, Bahrain, the UAE, Qatar, Kuwait, Oman, Tunisia, Egypt and Yemen. Jordan received its best rankings for taxation, getting construction permits, and trading across borders. Jordan received its worst rankings for starting a business, registering property, protecting investors, and enforcing contracts. Jordan’s economic freedom score was 66.1, up 0.7 points from the previous year and making its economy the 52nd freest in the world. The increase reflected improvements in trade freedom, fiscal freedom, and investment freedom. Jordan ranked 7th out of 17 countries in the Middle East/North Africa region on the economic freedom scale, and its score is better than the world and regional averages. Investors should continue to execute due diligence while exploring investment opportunities and concluding business transactions in Jordan, as they would in other countries.


Jordan’s liberal foreign exchange law entitles foreigners to remit abroad, in fully convertible foreign currency, foreign capital invested, including all returns, profits, and proceeds arising from the liquidation of investment projects. Non-Jordanian workers are permitted to transfer their salaries and compensation abroad.

The Jordanian Dinar (JD) is fully convertible for all commercial and capital transactions. Since 1995 the JD has been pegged to the U.S. dollar at an exchange rate of approximately 1 JD to USD 1.41. The Central Bank of Jordan (CBJ) is expected to maintain the peg throughout the coming years.

The CBJ supervises and licenses currency exchange businesses that are free to set their own rates to reflect market conditions. Unlike banks, these entities do not pay the CBJ commissions on exchange transactions, offering them a competitive edge over banks.

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 unlimited amounts of foreign currency from their clients in exchange for JDs on a forward basis. Banks are permitted to sell foreign currencies in exchange for JDs on a forward basis for the purpose of covering the value of imports.

· There is no restriction on the amount of foreign currency that residents may hold in bank accounts, and there is no ceiling on the amount residents may transfer abroad.

· Banks do not require prior CBJ approval for a transfer of funds, including investment-related transfers. However, stricter measures are now in place to monitor wire transfers in accordance with Jordan’s fight against illicit cash flows.


There are no known cases where the government has expropriated the private property of an investor without just compensation and a just court process.


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 Jordan is a member state. A small number of cases between investors and the Jordanian government have been brought before ICSID tribunals. 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, Jordan generally prefers settlement in local courts if an out-of-court settlement is not forthcoming. Jordan abides by WTO dispute settlement mechanisms, and dispute settlement mechanisms under the U.S.-Jordan FTA are consistent with WTO commitments. Article IX of the Bilateral Investment Treaty (BIT) establishes procedures for dispute settlements between Jordanians and Americans.


Members of Jordan’s Parliament do not have the power to write legislation. According to Article 95 of Jordan’s Constitution, ten members of the lower or upper house can propose an idea for a law. If the majority of both houses agree, the idea is then submitted to the Prime Ministry for drafting. Draft laws may be prepared by the relevant government ministry. However, in practice, the Legislative and Opinion Bureau of the Prime Ministry drafts most legislation, with input from the appropriate bodies. Once drafted, laws are submitted to the Cabinet and subsequently presented to the lower house of Parliament for consideration. Once passed in the lower house, draft laws must be approved by the upper house. All laws require royal assent and must be published in the Official Gazette before taking effect. “Provisional” (also referred to as “temporary”) laws are constitutionally permitted and may be enacted by a Cabinet decision when the Parliament is not in session or has been dissolved. Provisional laws remain in force until Parliament reconvenes and takes further action. Temporary laws retain their validity for the time they were in force, even if they are later repealed by Parliament. The relevant ministry drafts implementing regulations.

According to the Constitution, the judiciary is independent of other branches of the government. It is, however, susceptible to political pressure and interference by the executive branch in some cases. The judiciary does not have an independent budget and appointments to the bench are not always done on the basis of merit.

The Constitution classifies the judiciary branch 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.

General legal provisions are incorporated within the Civil Code unless a separate, more specialized law governs the nature of a specific relationship. Commercial activities, contracts, and financial papers are governed by the Commercial Code.

The Commercial Code, Civil Code, and Companies Law collectively govern bankruptcy and insolvency. A temporary bankruptcy law was enacted in 2002 and remains in effect. A new bankruptcy law is expected to be presented to the Parliament in 2011.


The Trade-Related Investment Measures (TRIMS) agreement came into force following Jordan’s WTO accession. Investment and commercial laws do not contain any trade-restrictive investment measures and have generally been in compliance with TRIMS.

Investment incentives take the form of income tax and custom duties exemptions which are granted to both Jordanian and foreign investors.

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 incentives while those in Zone A receive the lowest level. All agricultural, maritime transport, and railway investments are classified as Zone C, irrespective of location. Hotel and tourism-related projects along the Dead Sea coast, 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 granted an exemption. The three-zone classification scheme does not apply to nature reserves and environmental protection areas.

Under the Investment Promotion Law:

· There are exemptions from income and social services taxes for up to ten years for projects approved by the Investment Promotion Committee.

· An additional year of these tax exemptions is granted to these projects each time they undergo expansion or modernization 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 specific projects may be exempted from duties and taxes, provided that their value does not exceed 15 percent of the value of the fixed assets requiring spare parts. They should be imported within ten years from a project’s commencement date.

· Capital goods used for the expansion and modernization of a project may be exempted from duties and taxes, provided they result in at least a 25 percent increase in production capacity.

· Furniture for hotel and hospital projects may receive exemptions from duties and taxes as may supply purchases once every seven years if the supplies are required for modernization and renewal.

· 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.

· Industrial projects are granted exemptions on income and social services taxes for a two-year period.

· Industrial projects are granted property tax exemptions throughout their lifetime.

· Although not governed by the Investment Promotion Law, industrial projects are usually granted partial or full exemptions from most municipality and local approval and attestation fees.

To promote 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 a WTO agreement, the exemptions are valid until the end of 2015.

· Approximately 95 percent of foreign inputs used in the production of exports are exempt from customs duties and all additional import fees on a drawback basis.


The laws on investment and property ownership generally permit domestic and foreign entities to establish and own businesses and to engage in remunerative activities. However, activities relevant to military and national security are subject to different provisions and procedures.

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 the setting up of regional and branch offices.

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. The Commercial Agents and Intermediaries Law governs the contract between foreign firms and commercial agents. It clearly delineates the distinction between commercial agency and distribution contract relationships. Private foreign entities, whether licensed under sole foreign ownership or as a joint venture, compete on an equal basis with local companies.

Foreign nationals and firms are permitted to own or lease property in Jordan for investment purposes and are allowed one residence for 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, the Ministry 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.


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.

Jordan has passed several laws to comply with the U.S.-Jordan FTA and to meet international commitments on 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 Ministry of Culture’s National Library Department is responsible for registering copyrights. Patents are registered with the Registrar of Patents and Trademarks at the Ministry of Industry and Trade. Jordan is a signatory of the Patent Cooperation Treaty and the Madrid Protocol, and accordingly, amended its patent and trademark laws in 2007 to enable ratification of the agreements. Jordan’s domestic pharmaceutical industry generally abides by the new TRIPS-consistent Patent Law. Jordan is a signatory to World Intellectual Property Organization treaties on both copyrights and on performances and phonographs, and it has been developing updated laws for copyrights, trademark standards, and customs regulations to meet international standards. Jordanian firms are able to seek joint ventures and licensing agreements with multinational partners.

Jordan’s record on IPR enforcement has improved in recent years, but more effective enforcement mechanisms and legal procedures are still needed. As a result, the government’s record on IPR protection remains mixed. A large portion of videos and software sold in the marketplace continues to be pirated goods. 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. Over the past decade, 3,466 violations of Jordan’s current copyright law were referred to the judiciary, including 533 cases between January and November 2010 and 586 cases in 2009. The government is examining ways to strengthen IPR enforcement, including amending current laws so that they grant enforcement officers ex officio authority to seize pirated items and bring cases against violators. The government is considering the creation of an umbrella IPR agency to coordinate government policy and enforcement efforts.


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 JIB has worked to streamline the process, 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.

A new Competition Law (similar to the Antitrust Law in the U.S.) to modernize the Competition Law of 2004 is expected to be passed by Parliament in 2011. The new law aims to improve the Jordanian economic environment and attract foreign investment by providing incentives to improve market 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 conducts market research, examines complaints, and reports violators to the judicial system. The Competition Directorate has settled 308 cases since 2003, including 47 cases in 2010.

The government continued its e-government promotion strategy in 2010. The government pledges 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, file complaints, and view tax records, existing and pending legislation, and traffic violations online are now available. A national call center to answer government service-related questions was opened in 2008.


The three key capital market institutions are the regulator, the Jordan Securities Commission (JSC); the exchange, the Amman Stock Exchange (ASE); and the custodian for all transaction contracts, clearings, and settlements, the Securities Depository Center (SDC). The most recent Securities Law, passed in 2002, brought the law more in line with international best practices. ASE continually modernizes its technical infrastructure and seeks to enhance the dissemination of information. It launched the Internet Trading Service in 2010, which represents an opportunity to increase the number of investors engaged in securities trading regardless of geographic location. Additionally, the ASE launched a new, bilingual website that uses advanced technology to provide more comprehensive data.

The ASE suffers from intermittent liquidity problems, with the result that the bourse remains prone to speculative movements and is highly volatile. The ASE’s market capitalization has grown and shrunk rapidly and repeatedly since 2003. The market continued a downward trend in 2009 and 2010, with its index losing 8.1% in 2009 and 6.3% in 2010. The ASE’s market capitalization is down nearly 46 percent from its record high of $57 billion in June 2008; it currently stands at around $31 billion. The trading volume in 2010 was $9.4 billion compared to $13.7 billion in 2009 and $28.7 billion in 2008.

Key ASE Market Indicators (USD)




Market Capitalization

31.9 billion

30.9 billion

Market Capitalization/GDP




2534 points

2374 points

Number of shares traded

6 billion

7 billion

Trading Volume

13.7 billion

9.5 billion

Number of brokerage firms



Number of companies on ASE



Percent of Shares owned by



- Jordanians



- Non-Jordanian



Source: Amman Stock Exchange

The CBJ conducts regular Treasury bill auctions of differing maturities on behalf of the Ministry of Finance. Treasury bond auctions traditionally take place on a monthly or biweekly basis, depending on maturity. The government issues development bonds as necessary. All government securities are listed on the ASE and ownership is registered with the CBJ in book entry format. Treasury bonds valued at $351.6 million and Treasury bills valued at $153.9 million were issued in the local market in 2010.

Jordan issued its first bonds on international markets in November 2010 with the fully subscribed offering of $750 million in five-year bonds. The bonds were sold to some 220 international investors and carried a fixed annual interest rate of 3.875 percent, payable every six months. The Government of Jordan is also considering the issuance of Islamic bonds (sukuk), but legal changes may be required before issuance can take place. The CBJ has introduced a primary dealer plan designed to increase liquidity in the secondary market. The Public Debt Law allows for an increase in the volume of bond and bill issuance by the Treasury, so long as the sum of outstanding debt does not exceed 60% of gross domestic product. Commercial banks hold securities for their clients in a sub-account format. Foreign investors are allowed to participate in auctions and to purchase government securities through banks.

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 debt creation. A few banks, however, are introducing new products and facilitating corporate bond issuances. Corporate bonds with an overall value of USD 417 million were issued in 2007 and 2008, but the financial crises of late 2008 hindered any further issues in 2009. The market slightly revived in 2010, which witnessed the issue of $14.1 million in corporate bonds.

As a result of strict regulations on lending, particularly mortgage lending, and limited integration with global financial markets, Jordanian banks were reasonably resilient during the last global financial crisis. Despite the relative strength of the banks, the nation’s strong regional and global trade ties negatively affected the domestic economy as a whole. The banking sector’s indicators remain strong; banks continue to be profitable and well capitalized, and deposits are still the major funding base. Liquidity ratios and provisioning remain high. Non-Performing Loan ratios increased only modestly in 2009 and 2010. The CBJ in December directed Jordanian banks to maintain a minimum JD 100 million in capital and raised the requirement for foreign banks to JD 50 million. The CBJ began setting the minimum capital requirement for domestic banks by announcing a JD 30 million lower limit in 2003 which was to be raised over time. Jordan does not distinguish between investment banks and commercial banks and the CBJ has been encouraging bank mergers. Jordan has 25 banks in total, including commercial banks, Islamic banks, and foreign bank branches.

Banks in Jordan offer loans, discounted bills, and overdraft facilities. Investors are permitted to open margin accounts and to engage in short-selling. 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 same foreign currency. A number of banks have off-shore mutual funds to avoid Jordanian taxes.

The Banking Law protects depositors’ interests, diminishes money market risk, guards against the concentration of lending, and includes articles on electronic banking practices and money laundering. The CBJ set up an independent Deposit Insurance Corporation (DIC) in 2000 that traditionally has insured deposits of up to JD 10,000 (USD 14,000). The Prime Minister temporarily enacted a 100% government backing of bank deposits in response to the 2008 global financial crisis; the emergency measure has since been repealed. DIC currently insures deposits up to JD 50,000 (approximately USD 71,000) and is expected to maintain the guarantee through the end of 2011 at a minimum. The DIC also acts as the liquidator of banks as directed by the CBJ. The CBJ established a credit bureau for bounced checks in 2001 which requires banks to report the names of account holders with bounced checks. Following the report of one bounced check, the CBJ circulates the names of the account holders to all banks with recommendations to carefully evaluate the account holders’ access to banking services.

In 2010, Jordan amended its existing Anti-Money Laundering Law to remedy areas of non-compliance identified by a Middle East North Africa Financial Action Task Force (MENAFATF) Mutual Evaluation Report issued in 2007. By November 2010, Jordan had remedied all key and core areas of non-compliance, consistent with Financial Action Task Force standards. Among other things, the amendments extended the range of predicate offenses to include certain crimes otherwise qualifying as misdemeanors, whether those offenses are committed in Jordan or abroad. The amendments also created a legal framework to address terrorist financing. As such, the law was renamed the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) Law and the existing financial intelligence unit re-named the AML/CFT Unit. The CBJ as well as other financial sector regulators are implementing the AML/CFT Law further through the issuance of circulars and other regulations under their own authority. Jordan has no known record of major money laundering incidents. The first two indictments for money laundering in Jordan were brought in January and April 2010. In both cases, the predicate offenses were committed outside of Jordan.

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.


The threat of terrorism remains high in Jordan. Transnational terrorist groups, as well as less sophisticated local elements, have demonstrated the capability to plan and implement attacks in Jordan. Al-Qaida in Iraq affiliates have carried out terrorist activities against U.S. and Government of Jordan targets in Jordan. The assassination of U.S. diplomat Larry Foley outside his west Amman residence on October 28, 2002 was attributed to the Al-Qaida in Iraq network. The same network also claimed responsibility for the November 9, 2005 bombings of three international hotels in Amman that killed 60 people and injured over 100. Terrorists detonated a roadside improvised explosive device near an Israeli diplomatic motorcade traveling on the Dead Sea Highway on January 14, 2010. There were no casualties as a result of this attack. On April 22, 2010 a rocket landed at a refrigeration warehouse outside Aqaba. In August 2010 another rocket attack in Aqaba killed a taxi driver and injured five other people.

The Government of Jordan is proactive in maintaining public security, containing demonstrations, and preventing terrorist attacks. However, the potential for politically motivated violence remains. Visitors should consult current State Department public announcements at www.travel.state.gov before traveling to Jordan.


Corruption is a crime in Jordan. In 2006, Parliament approved a Financial Disclosure Law which officially requires public office holders and specified government officials to declare their assets. Parliament also enacted an Anti-Corruption Law in 2006 that created a commission which reports to the Prime Minister and investigates allegations of corruption. The commission prosecuted its first case in 2010 and other cases are in the pipeline. Some domestic NGOs and international corruption watchdog groups have criticized Jordan’s anti-corruption efforts as ineffective. Jordanian law defines corruption as any act that violates official duties, all acts related to favoritism and nepotism that could deprive others from their legitimate rights, economic crimes, and misuse of power. The General Intelligence Directorate (GID) also has a separate anti-corruption department that is responsible for combating bribery, extortion, and other similar crimes.

Allegations of influence peddling and a lack of transparency do arise in government procurement and dispute settlement. The use of family, business, and other personal connections to advance personal business interests is endemic and regarded by many Jordanians as simply part of the culture and part of doing business. In Transparency International’s 2010 Corruption Perceptions Index, Jordan ranked 50th, placing it ahead of several European Union member states like the Czech Republic, Latvia, Greece, and others.


The U.S. Congress enacted the "Qualifying Industrial Zone" (QIZ) initiative in 1996 to support the Middle East peace process. Goods produced in the 13 designated QIZs in Jordan can be imported into the United States tariff and quota free under the agreement 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 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. The QIZs have attracted over USD 1 billion in capital investments, generated over USD 6.6 billion in exports to the U.S. between 2006 and 2010, and currently employ more than 33,000 workers, about one-quarter of whom are Jordanians. The bulk of QIZ exports continues to be garments.

The U.S.-Jordan FTA, which entered into force in 2001 and came into full effect in January 2010, does not supersede or eliminate the QIZ initiative. Nevertheless, exports under QIZ requirements are expected to shrink as exporters take advantage of the FTA’s less onerous requirements. 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, including percentages of Jordanian and Israeli content. FTA rules of origin require 35 percent Jordanian content without other restrictions. The FTA agreement also incorporates labor, environment, and intellectual property rights provisions.

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.

While the U.S. remains one of Jordan’s top trading partners, 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 2005 through full exemption of customs duties and charges for all 17 Arab members, with the exception of gradual reductions for Sudan and Yemen. Those two countries have only been benefiting from full exemption since the end of 2010. Jordan has also signed trade preference agreements and bilateral free trade agreements with various 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).

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); this agreement seeks complete trade liberalization by 2014.

Jordan signed a Free Trade Agreement with Singapore in 2004. 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. That 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 signed a Free Trade Agreement with Canada in 2009 which will come into effect once legislation is passed and receives royal assent. The FTA with Canada will eliminate all non-agricultural tariffs and most agricultural tariffs. A similar agreement with Turkey was also signed in 2009, and will enter into effect gradually starting in 2011.


Investments in Jordan are eligible for Overseas Private Investment Corporation (OPIC) insurance and private financing. All eligible projects require a minimum of 25 percent U.S. equity. Over the past three years, OPIC backed significant investments in Jordanian private equity ventures and in mortgage financing. OPIC extended a USD 250 million loan to support the USD 1 billion Disi water project which will bring water to Amman from the Disi aquifer in the south.

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, and policy changes. The program covers investments in Jordan irrespective of the investor’s nationality in addition to Jordanian investments abroad.

Several European countries have official debt-for-equity swap programs that are open to investors of all nationalities.


The population growth rate (births minus deaths while controlling for migration) is about 2.5 percent a year, according to the most recent census in 2004. The 2010 population is estimated by the Department of Statistics at 6.11 million. Nearly 68 percent and 37 percent of the population are estimated to be under the age of 30 and 15 years, respectively. Literacy rates are approximately 95.7 percent for men and 88.4 percent for women. Jordan has a labor force of about 1.8 million, of which the domestic members are generally well-educated. According to Department of Statistics, unemployment officially averaged 12.5 percent throughout 2010, a slight decrease from 2009’s average of 12.9 percent.

Of the 1.8 million people in the labor force, roughly 322,000 are registered foreign workers. Unofficial indicators suggest that unregistered foreign workers are nearly double this number. With the exception of the approximately 25,000 who work in the QIZs as textile workers, most foreign workers are employed in construction, agriculture, and domestic service. The Ministry of Labor regulates foreign worker licensing, licensing fees, prohibited sectors, and employer liability. Along with the Ministry of Interior, the Ministry of Labor is responsible for approving the hiring of professional foreign workers by private businesses. Non-citizens are legally permitted to join unions, but do not enjoy the privilege of forming unions themselves or holding leadership positions in existing unions. However, the Ministry of Industry and Trade maintains that such workers enjoy any benefits and protections that unions obtain.

Labor unions serve primarily as intermediaries between workers and the Ministry of Labor and may engage in collective bargaining on behalf of workers. There are 17 recognized unions in Jordan, and they are all members of the General Federation of Jordanian Trade Unions. Estimates put union membership at less than 10 percent of the labor force. In addition to the 17 unions, there are 40 professional associations active in Jordan, including many that have mandatory membership. While these associations occasionally take on characteristics of traditional unions, they more closely resemble 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.

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 employment packages. However, if the employer agreed to provide retirement benefits when the worker was contracted, the employer must fulfill that 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 up to 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. Article 71 provides for one hour per day of nursing leave within a year of the date of delivery. 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. Article 65 entitles workers to 14 days of sick leave with full pay per year, which may be renewed for another 14 days at half pay if the worker is hospitalized. With the exception of the prohibition against forming new unions outside of the General Federation of Jordanian Trade Unions, the current law places Jordan in compliance with international and Arab labor agreements.

The Government of Jordan has been reforming its labor inspection system since 2006. It amended its labor law in 2008 to expand coverage to domestic and agricultural workers, formalize a tripartite Labor Affairs Committee, increase fines for violations of the labor law, and include sexual harassment provisions. In 2009 and 2010, the Ministry expanded efforts to investigate allegations of child labor and to monitor hazardous working conditions in the country. Ministry of Labor inspections have identified problems at some QIZ factories related to delayed payment of wages, length of overtime, and physical abuse of workers. The Better Work Jordan program was launched in 2008 as a five-year joint project between the Ministry of Labor, the International Labor Organization (ILO), and the International Finance Corporation to improve garment sector labor standards and conditions and raise compliance levels through public reporting and technical assistance. The Ministry of Labor made the program mandatory for all factories as of December 2010. The U.S. Department of Labor’s Bureau of International Labor Affairs (ILAB) included Jordan in its 2009 “List of Goods Produced by Child Labor or Forced Labor,” pursuant to the Trafficking Victims Protection Reauthorization Acts of 2005 and 2008, indicating that ILAB had reason to believe that there were significant instances of forced labor present in Jordan’s garments sector.


As part of Jordan’s efforts to foster economic development and enhance its 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.

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.

Jordan also has public “free zones” in Zarqa, 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 and are administered by private companies under the FZC’s supervision. The free zones are outside of the jurisdiction of Jordan Customs, and provide a duty- and tax-free environment for the storage of goods transiting Jordan.

Both Jordanian and foreign investors are permitted to invest with few restrictions in trade, services, and industrial projects in free zones. Industrial projects must be related to one of the following industries:

· New industries that depend on advanced technology;

· Industries that require locally available raw material and/or locally manufactured parts;

· Industries that complement domestic industries;

· Industries that enhance labor skills and promote technical know-how;

· Industries that provide consumer goods and that contribute to reducing market dependency on imported goods.

The following incentives are granted to investors in the designated free zones:

· Income and social services taxes are reduced by no more than 5% for a period of twelve years.

· 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.

· The free transfer of capital invested in free zones, including profits, is permitted.

The Development Zones Commission (DZC) is the independent governmental body responsible for creating, regulating, and monitoring Jordan’s five development zones. DZC’s mission is to increase foreign direct investment (FDI) through the enhancement of the investment environments inside the Development Zones. The DZC Board of Commissioners and an administrative team supervise and centrally approve investment-related matters. The DZC can expedite the provision of government services and provide a number of investment incentives and tax and customs exemptions. The five DZC development areas are the King Hussein Bin Talal Development Area (KHBTDA) in Mafraq, the Ma’an Development Area, the Irbid Development Area (IDA), the Dead Sea Development Zone, and the Jabal Ajloun Development Zone. The commission plans to open new development areas in other parts of the country. The Aqaba Special Economic Zone (ASEZ) is an independent economic zone and not governed by the DZC. It offers special tax exemptions, a flat five percent income tax, and facilitates customs handling at Aqaba Port. In recent years ASEZ has attracted projects mainly in hotel and property development valued at over USD 8 billion.


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 provide a break down of FDI by source and market segment.

Foreign Direct Investment


(USD Million)

2010 (Jan-Sep)










Source: Central Bank of Jordan

The Jordan Investment Board approved 265 projects worth about USD 1.49 billion in the first 9 months of 2010. About USD 750 million of that investment went to the industrial sector in 218 different projects. Foreign investment represented 20 percent of all investments that sought JIB approval in 2010 and received incentives totaling USD 300 million. Investments in Jordan from the Arab world totaled USD 252.8 million.

New Projects under the Investment Promotion Law by Geographical Area

(USD Million)


















Source: Jordan Investment Board

New Registered Capital by Industry

(USD Million)









Percent Foreign








Percent Foreign








Percent Foreign








Percent Foreign








Percent Foreign








Percent Foreign




Source: Companies Controller Directorate at the Ministry of Industry and Trade,

Top Ten Countries with Registered Capital Stock at Year-End

(USD Million)









Saudi Arabia








United States












Joint Arab








Channel Island








Source: Securities Depository Center as of December 31, 2010