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U.S. DEPARTMENT OF STATE
JORDAN: 1994 COUNTRY REPORT ON ECONOMIC POLICY AND TRADE PRACTICES
BUREAU OF ECONOMIC AND BUSINESS AFFAIRS





                              JORDAN

                     Key Economic Indicators
        (Millions of U.S. dollars unless otherwise noted)


                                      1992      1993    1994  1/

Income, Production and Employment:

Real GDP (1985 prices)  2/         3,236.1   3,194.5   3,370.2
Real GDP Growth (pct.)                11.2       5.8       5.5
GDP (at current prices)  2/        4,851.3   5,034.0   5,523.0
By Sector:
  Agriculture                        330.6     342.9       N/A
  Energy/Water                       106.4     105.4       N/A
  Manufacturing                      610.1     632.0       N/A
  Construction                       231.0     252.3       N/A
  Rents                               11.1      11.2       N/A
  Financial Services                 770.3     819.6       N/A
  Other Services                     141.9     144.8       N/A
  Government/Health/Education        832.5     901.3       N/A
  Net Exports of Goods & Services -1,732.2  -1,648.2  -1,960.0
Real Per Capita GDP (1985 base)      807.0     770.0     802.2
Labor Force (000s)                     706       712       760
Unemployment Rate (pct.)                14        13        11

Money and Prices:  (annual percentage growth)

Money Supply (M2)                     12.8       9.3       6.0
Base Interest Rate  3/                 8.5       8.5       8.5
Personal Saving Rate                   7.0       8.0       8.0
Retail Inflation                       8.2       4.0       4.0
Wholesale Inflation                    4.8       0.7       2.0
Consumer Price Index                 100.0     103.3     107.3
Exchange Rate (USD/JD) 
  Official  4/                         1.5       1.4       1.4

Balance of Payments and Trade:

Total Exports (FOB)  5/              950.6     967.8   1,100.0
  Exports to U.S.                      6.3      10.2      11.3
Total Imports (CIF)  5/            3,321.0   3,435.1   3,550.0
  Imports from U.S.                  369.3     436.1     470.0
Aid from U.S.                         50.0      90.0     120.0
Aid from Other Countries             206.1     198.8     347.0
External Public Debt               7,804.7   7,750.1   6,500.0
Debt Service Payments (paid)         490.2     612.6     400.0
Gold and Foreign Exch. Reserves    1,501.7   1,337.3   2,155.7
Trade Balance                     -2,280.4  -2,485.3  -2,450.0
  Trade Balance with U.S.           -363.0    -425.9    -458.7


N/A--Not available.

1/ 1994 figures are estimates based on IMF targets.
2/ GDP at producers' prices.
3/ Average rediscount rate.
4/ Actual exchange rate.
5/ Merchandise trade.



1.  General Policy Framework

    The Jordanian economy experienced sustained growth in
domestic output in 1993-94.  GDP increased by 5.8 percent in
1993, with the rate of investment to GDP stabilizing at 30
percent.  For 1994, the IMF forecasted GDP growth at 5.5
percent.  The construction sector has continued to dominate
economic activity, while the financial, manufacturing,
agricultural and trading sectors have also expanded.  Overall,
the Jordanian economy responded positively to the structural
adjustment program formulated by the Government of Jordan and
the IMF in 1992.

    The government is beginning to adjust its economic policies
in response to recent progress in the peace process.  It is in
the second year of implementation of a five-year Economic and
Social Development Plan for 1993-97, but is now considering
amendments to account for Jordan's peace treaty with Israel and
plans for cooperation on economic issues with the Palestinian 
Authority.

    In May 1994, the government entered into a three-year
Extended Fund Facility with the IMF that requires a variety of
sectoral policy reforms.  Under this program, the government
projects annual GDP growth will reach 5.5 percent, the annual
inflation rate will fall below five percent, the current
account deficit will decline to 9.7 percent of GDP and Central
Bank reserves will rise to the equivalent of 2.4 months of
imports, or 665 million dollars.  To sustain development and
reach these targets, the government has announced that
increased public and private sector savings and sustained
investment levels are key priorities.

    In January 1994, the government announced its intention to
adopt an agenda of economic reforms affecting the legal
environment of doing business in Jordan.  The government plans
to introduce a new investment law, amend the customs and income
tax laws, harmonize the General Sales Tax with customs duties
and simplify tariff schedules.  In addition to reforming the
civil service system, the government also plans to limit the
growth of the public sector by freezing hiring during 1995.

    As for monetary policy, the Central Bank of Jordan
announced in July that it would begin exercising indirect
control over the banking system through the use of
dinar-denominated certificates of deposit.  It also has
encouraged holdings in dollar-denominated CD's by offering
interest at two points above the London Interbank Offered Rate
(LIBOR), a move intended to enhance reserves and discourage
capital flight.  The Central Bank also plans to streamline its
handling of deposit facilities and credits.  By early 1995, it
will eliminate commercial bank deposit requirements and no
longer compel local banks to adhere to credit/deposit ratios. 
The Central Bank has not fully eliminated the double reserve
requirement on interbank deposits, but has announced its
intention to simplify its oversight of this market.


2.  Exchange Rate Policies

    The Central Bank regulates foreign currency transactions in
Jordan and sets the banking system exchange rate.  It also
restricts moneychangers to dealing within a specified range of
buying and selling rates.  On October 12, 1994, the average
exchange rate was one dinar equals USD 1.43, one cent lower
than the average rate in 1993.  The Central Bank has announced
that it will not float the dinar despite its application to the
IMF for assistance in implementing a system for partial dinar
convertibility.  In negotiations between the Jordanian
government and the Palestinian Authority, the Central Bank has
sought to assure West Bank residents holding dinars of the
currency's continued stability.


3.  Structural Policies

    Pricing Policies:  In general, market forces set prices. 
However, the government imports and subsidizes the prices of
basic foodstuffs such as cereals, sugar, milk and frozen meat. 
It also controls the prices of other non-strategic commodities
such as automobile spare parts, construction materials,
household cleaning materials and food and beverage served in
restaurants.  The Ministry of Supply may intervene and set a
maximum price ceiling on any consumer commodity.  It operates a
ration card system for consumer purchases of sugar, rice and
milk for citizens whose monthly income is less than 715
dollars.  Subsidized prices and controls have no impact on
Jordanian imports of U.S. food staples.  The Ministry of Supply
has submitted a proposal to the Cabinet to eliminate price
controls on non-subsidized, non-strategic commodities and
limiting food subsidies to employees in the civil service and
the military.

    Tax Policies:  The government remains dependent on customs
duties and import taxes as its primary source of domestic
revenue, which it collects on all imports.  To stimulate export
production, import tariffs are low for many raw materials,
machinery and semi-finished goods.  Although high tariff rates
are imposed on many consumer and luxury goods, tariff reducing
measures have recently been taken.  In November, for instance,
the government announced a duty reduction on automobiles,
previously ranging from 110 to 310 percent, to 44 to 200
percent.  Also announced were tariff reductions to 50 percent
on numerous consumer products.

    In recent years, customs collections have yielded a lower
percentage of total government revenues as other taxes have
assumed greater importance.  In June, 1994 the government
enacted a general sales tax to replace a previously-imposed
consumption tax.  The sales tax applies to all durable and
consumer goods except food staples and health care and
education-related products.  An income tax is levied at a
maximum marginal rate of 40 percent for all businesses.  The
marginal tax rate on individual income is capped at 55 percent,
with high personal, educational and medical deductions
permitted.  Interest, dividend and capital gains earnings are
exempt from taxation, except for income earned by financial
institutions.  In addition, income derived from agriculture is
exempt.  The government plans to submit changes to the income
tax law to parliament in November, 1994 that will extend its
coverage to capital gains in property and stock market
transactions and limit total liability to 35 - 40 percent of
income.

    Regulatory Policies:  Jordanian regulations pertaining to
the licensing and operations of regional offices of foreign
firms are fairly clear.  However, local American businessmen
complain of difficulties with customs authorities regarding
tariff exemptions and licensing.  Potential investors note that
cumbersome and time consuming procedures delay registration and
government approval of their projects.  In August 1994, King
Hussein announced the formation of a Royal Development and
Modernization Commission under the leadership of Crown Prince
Hassan.  One of the Commission's stated goals is the
facilitation of foreign investment through the elimination of
major regulatory and bureaucratic impediments and
disincentives.  In one of its first recommendations, the
Commission has proposed the establishment of a centralized
office for foreign investment applications.


4.  Debt Management Policies

    Jordan's external debt as of December 1, 1993 stood at 6.8
billion dollars, about 130 percent of GDP.  A week later, the
government reached agreement in rescheduling its $895 million
commercial debt under terms finalized with the London Club. 
Commercial creditors agreed to sell up to 35 percent of
principal with a discount of 35 percent, on which Jordan would
pay 50 percent of outstanding interest.  The rest of the
principal (at least 65 percent) was converted into 30-year
par-value bonds guaranteed by U.S. zero interest coupon bonds. 
Under this option, Jordan agreed to immediately pay ten percent
of outstanding interest while converting the remainder into
12-year dollar bonds payable in 19 semi-annual installments
after a three-year grace period.  The London Club agreement
helped Jordan reduce 60 percent of its debt to the Club, or 12
percent of its total external debt.

    Following successful negotiations in June 1994, Jordan and
its bilateral creditors in the Paris Club reached a $1.2
billion debt rescheduling agreement covering principal and
interest payments falling due between 1994 and 1997 in addition
to arrearages from the first half of 1994.

    Despite its success at rescheduling its foreign debt, the
Jordanian government continued to pressure its bilateral
creditors for debt forgiveness.  After the Washington
Declaration of King Hussein and Prime Minister Rabin of Israel
in July 1994, the United States agreed to write off $705
million of Jordanian debt over a three-year period.  An
agreement was signed in September 1994 to forgive the first
tranche of $220 million.  Other bilateral creditors have
followed the United States' example.  The United Kingdom,
Germany and France agreed to write off $90 million, $53 million
and $4.5 million, respectively.  Even with these commitments,
Jordan's total foreign debt remains above five billion dollars,
one of the highest in the world on a per capita basis.


5.  Significant Barriers to U.S. Exports

    Import Licenses:  The 1993 Import and Export Law abolished
import licensing requirement.  But due to the lack of
implementing regulations, the Jordanian Customs Department
continues to require licenses on all imports except for certain
exemptions for agricultural commodities and imports by the
royal family and government agencies.  The continued need for
import licenses, which are tied to the issuance of foreign
exchange permits controlled by the Central Bank of Jordan
(CBJ), hampers the free flow of trade between the United States
and Jordan.

    Standards, Testing, Labeling, and Certification:  All
imports to Jordan are subject to the approval of the Standards
and Measures Department.  Foodstuffs and medicines must undergo
laboratory testing and certification.  Local traders who
regularly import from the United States complain that Jordanian
testing standards for consumer and durable items are not fully
transparent.  They also complain that they are routinely fined
for importing U.S. products that contain parts and components
made outside the U.S.

    Investment Barriers:  There are no restrictions on the
degree of foreign ownership in manufacturing enterprises. 
However, foreigners may not own more than 49 percent of hotels,
restaurants, banks and businesses engaged in trading and
transport.  Although the government officially encourages
foreign investment, an application requires prior approval by
the Council of Ministers, which is often a lengthy process.  To
facilitate foreign investment, the Jordan Investment Promotion
Department was separated from the Ministry of Industry and
Trade and made an independent agency in January 1994.  The
Jordan Investment Corporation, a government agency that manages
the pension fund of civil service employees, encourages foreign
participation in projects that it promotes.

    Government Procurement Practices:  All government
purchases, with a few exceptions, are made by the General
Supplies Department of the Ministry of Finance.  Foreign
bidders are permitted to compete directly with local
counterparts in international tenders financed by the World
Bank.  However, local tenders are not directly open to foreign
suppliers.  By law, foreign companies must submit bids through
their agents.  While Jordan's procurement law does not permit
non-competitive bidding, the law does not prohibit a government
agency from pursuing a selective tendering process.  In
addition to the review committees at the Central Tenders and
the General Supplies Departments, the law gives the tender
issuing department the right to accept or reject any bid while
withholding information on its decisions.  Foreign bidders may
seek recourse only through the Jordanian legal system.  In
response to a recommendation of the Royal Development and
Modernization Commission, a higher procurement commission was
created in October 1994 to monitor the procedures of the
Supplies Department.  

    Customs Procedures:  Businessmen often comment that customs
procedures are the greatest impediment to doing business in
Jordan.  While the government has often promised to reform its
customs regime, overlapping areas of authority and numerous
signature clearance requirements remain in place.  Actual
commodity appraisal and tariff assessment practices commonly
differ from written regulations.  Customs officers often make
discretionary decisions about tariff and tax applications when
regulations and instructions are conflicting.  To secure tariff
exemptions, businessmen must document that imported raw
materials will be used in export production, and that the final
product will have at least a 40 percent Jordanian value-added
content.  The Director General of Customs may grant temporary
admission status to certain goods such as heavy machinery and
equipment used for executing government or government-approved
projects.  Foreign construction companies operating alone or
with Jordanian partners may apply for this temporary admission
status.  The government plans to present amendments to the
customs law to Parliament in November 1994.  These will
delegate greater authority from the Minister of Finance to the
Customs Department director, giving him increased discretionary
powers to investigate violations and order confiscations.


6.  Export Subsidies Policies

    Under Central Bank regulations, 70 percent of profits
earned from exports is exempted from corporate income tax, with
a maximum exemption of 30 percent of a company's total income. 
Excluded are exports under bilateral trade protocols and
phosphate, potash and fertilizer exports.  The Central Bank has
also implemented other export financing measures, such as
reducing interest rates on advances from eleven to six percent,
reducing the value-added requirement for financing from 40
percent to 25 percent, excluding export advances from
outstanding lines of credit, offering long-term export
financing for up to five years, and permitting the Industrial
Development Bank to offer export financing loans on machinery
imports for up to five years at no more than 8.5 percent
interest.


7.  Protection of U.S. Intellectual Property

    Jordan is a member of the World Intellectual Property
Organization (WIPO) and a party to the Paris Convention for
Protection of Industrial Property.  Domestically, Jordan's
copyright law, passed by Parliament in 1992, is the country's
only recent effort to extend legal protection to foreign
intellectual property.  The Trademark and Patents and Designs
Laws have not been amended since the early 1960's.  The
Copyright law deals with all aspects relating to the exclusive
rights to 1) copy or reproduce works, 2) translate, revise, or
otherwise adapt or prepare program derivatives work, and 3)
distribute or publicly communicate copies of the work. 
Royalties may be remitted abroad under licensing agreements
approved by the Ministry of Industry and Trade.  However, only
the intellectual property of Jordanian and foreign authors who
register their works inside the kingdom are protected by Law. 
Infringement of U.S. intellectual property rights is not
subject to any penalties.

    The government has not yet begun to enforce its copyright
law.  The pirating of audio and video tapes for commercial
purposes is a widespread practice, over which the government 
exercises no control.  Pirated books are also sold in Jordan,
although few, if any, are published within the country. 
Although the government announced that it would issue strict
measures on copyright protection in January 1994, it has issued
only procedural notes for existing regulations thusfar.

    Patents (product and process) must be registered at the
Ministry of Industry and Trade to receive protection.  A
foreign company may register a patent by sending a power of
attorney to a local patent agent or lawyer.  Registration may
be renewed once for a period of 14 years.  Protection under the
law is only available to domestic and foreign patents that are
registered in Jordan.  Infringement of a foreign patent, such
as a manufacturing process for a chemical compound, is
considered to be a violation by Jordanian courts only if it is
proved to be an exact duplication.

    New Technologies:  Computer software piracy is rampant in
Jordan's small, but growing, computer market.  The Government
of Jordan has announced that it will give priority to
protecting computer software copyrights, but has not yet taken
any action or issued clear policy directives.

    There is no agreement between the United States and Jordan
concerning the protection of U.S. exports of intellectual
property.  Although the impact of this lack of protection may
not have been severe enough to cause losses to U.S. firms, it
has created lost opportunities.


8.  Worker Rights

    a.  The Right of Association

    While Jordanians are free to join labor unions, only about
10 percent of the work force is unionized.  Unions represent
their membership in dealing with issues such as wages, working
conditions and worker layoffs.  Seventeen unions make up the
General Federation of Jordanian Trade Unions (GFJTU).  The
GFJTU actively participates in the International Labor
Organization.

    b.  The Right to Organize and Bargain Collectively

    GFJTU member unions regularly engage in collective
bargaining with employers.  Negotiations cover a wide range of
issues, including salaries, safety standards, working
conditions and health and life insurance.  If a union is unable
to reach agreement with an employer, the dispute is referred to
the Ministry of Labor for arbitration.  If the Ministry fails
to act within two weeks, the union may strike.  Arbitration is
the usual means of resolving disputes, and labor actions are
generally low-key and do not lead to strikes.

    c.  Prohibition of Forced Compulsory Labor

    Compulsory labor is forbidden by the Jordanian constitution.

    d.  Minimum Age of Employment of Children

    Children under age 16 are not permitted to work except in
the case of professional apprentices, who may leave the
standard educational track and begin part-time (up to 6 hours a
day) training at age 13.

    e.  Acceptable Conditions of Work

    Jordan's workers are protected by a comprehensive labor
code, enforced by 30 full-time Ministry of Labor inspectors. 
There is no comprehensive minimum wage in Jordan.  The
government maintains and periodically adjusts a minimum wage
schedule of various trades, based on recommendations of an
advisory panel consisting of representatives of workers,
employers and the government.  Maximum working hours are 48 per
week, with the exception of hotel, bar, restaurant and movie
theater employees, who can work up to 54 hours.  Working
conditions and minimum wage for foreign workers are stipulated
in bilateral treaties, but are not strictly enforced or
consistently adhered to.  Jordan also has a workers'
compensation law and a social security system which cover
companies with more than five employees.  A new draft labor law
is under consideration, but does not appear to be a high
priority.

    f.  Rights in Sectors with U.S. Investment

    Workers' rights in sectors with U.S. investment do not
differ from those in other sectors of the Jordanian economy.



  Extent of U.S. Investment in Selected Industries.--U.S. Direct
Investment Position Abroad on an Historical Cost Basis--1993

                    (Millions of U.S. dollars)
                                                                
              Category                          Amount          

Petroleum                                             (1)
Total Manufacturing                                   (2)
  Food & Kindred Products                     0
  Chemicals and Allied Products               0
  Metals, Primary & Fabricated                0
  Machinery, except Electrical                0
  Electric & Electronic Equipment             0
  Transportation Equipment                    0
  Other Manufacturing                        (2)
Wholesale Trade                                        0
Banking                                               (1)
Finance/Insurance/Real Estate                         (1)
Services                                               0
Other Industries                                       0
TOTAL ALL INDUSTRIES                                  16       

(1) Suppressed to avoid disclosing data of individual companies
(2) Less than $500,000
Source: U.S. Department of Commerce, Bureau of Economic
Analysis

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