قراءتي لمشروع قانون موازنة 2023

من المعروف أن موازنة الحكومة هي استراتيجيتها ومخططها لما ستفعله في العام المقبل لتحفيز الاقتصاد، وهو المنظور الواجب استخدامه في تقييم أي استراتيجية لأي دولة كانت. وفي الأردن يعتبر شهر كانون الأول هو ذلك الوقت الذي نبدأ فيه نقاشات مشروع الموازنة المقترح. السؤال الصعب هو، هل تجلب هذه الموازنة شيئًا جديدًا؟ السؤال مهم جداً وخاصة بالنسبة للحالة الاقتصادية.

فالحال لدينا هو كالآتي: انخفاض النمو الاقتصادي الحقيقي منذ اثني عشر عام وتدنيه أيضاً في عام 2022 حيث يتوقع أن لا يتجاوز 2.7 في المائة؛ ارتفاع معدل البطالة (22.6 في المائة) ومعدل بطالة الشباب (49 في المائة)؛ وسقوط مشاركة الإناث في القوى العاملة الى 12 في المائة وهو الأدنى في العالم؛ و تجاوز الدين العام 112 في المائة من الناتج المحلي الإجمالي.

بسبب كل ذلك دعونا نرى ما تجلبه الموازنة لتخفيف حدة الوضع القائم. ولنبدأ بتحليل موجز لبعض افتراضات الموازنة. من المتوقع أن يكون معدل النمو الاقتصادي الحقيقي حوالي 2.7٪، أي أنه لن يكون هناك تغيير في معدل النمو. كما سيكون معدل التضخم 3.8٪ (أقل من المتوسط ​​الحالي البالغ 4.1٪). وبإضافة المعدلين معاً، تتوقع الموازنة معدل نمو اقتصادي اسمي يبلغ 6.5 في المائة (نمو حقيقي +تضخم)، وهو أمر جيد للحكومة لأنه يساعد على زيادة إيراداتها، خاصة من الضرائب غير المباشرة (تلك الضرائب غير المفروضة على الدخل مباشرة كالجمارك والمبيعات والجامعات والتلفزيون وما إلى ذلك) والرسوم التي تفرضها.

وتتوقع الموازنة (دون مبرر واضح) أن تنمو الإيرادات الحكومية العامة بنحو 10 في المائة مع ارتفاع الإيرادات الضريبية بمقدار 696 مليون دينار، والإيرادات غير الضريبية 133 مليون دينار. وستتحقق هذه الزيادة دون فرض ضرائب أو رسوم جديدة كما وعدت وزارة المالية مما يُعني أنه سيكون هناك تركيز أكبر على أنشطة تحصيل الضرائب ورفع الرسوم التي تفرضها الحكومة على خدماتها، والتي يمكن للحكومة رفعها دون موافقة البرلمان.

وسترتفع الإيرادات غير الضريبية (وتتشكل بشكل أساسي من الرسوم والتي ستكون حوالي 2.14 مليار دينار أردني) بنسبة 6.7 في المائة. وستظل تشكل ثلث الإيرادات الضريبية، أو حوالي 22 في المائة من الإيرادات المحلية. إن حقيقة اعتماد الحكومة كثيرًا على زيادة الرسوم ليست ممارسة فضلى لأن هذا يعزز غموض السياسة المالية ويجعل بيئة الاستثمار والإنتاج والاستهلاك أقل شفافيةً ويضعف قدرة المستثمر والمنتج والمستهلك على التخطيط.

سترتفع النفقات الجارية بمقدار 767 مليون دينار أردني أو بنسبة 8.5٪ عن مستواها في عام 2022، أي أنه لن يكون هناك تقشفاً خاصةً وأن 500 مليون دينار منها ستكون زيادات لرواتب وتقاعد الحكومة ووحداتها المستقلة. وسيخصص من النفقات الجارية حوالي 3 مليارات دينار للأجهزة العسكرية وأجهزة الأمن العام، وبالتالي فإن الإنفاق على الجيش والأمن سيكون أعلى من الإنفاق على التعليم والصحة والنقل بنحو 8٪، وقد ارتفعت فئة الإنفاق هذه بمقدار 252 مليون دينار مقارنة بمستواها في عام 2022.

من اللافت للنظر أن الإنفاق تحت بند "دعم الجامعات الحكومية" سيظل في العام المقبل 70 مليون دينار، وهو نفس الإنفاق في السنوات المقبلة، وهو أقل مما كان عليه في عام 2021 حيث كان الدعم 74 مليون دينار. مما يعني ان الحكومة تنوي تقليل الانفاق على الدراسات العليا بالقيمة المطلقة وبالرغم من زيادة عدد الطلاب عاما بعد عام. أي وبعبارة أخرى، بينما نشكو عمومًا من تدهور جودة النظام التعليمي، فإن الحكومة لن تفعل شيئًا حيال ذلك. علاوة على ذلك، لماذا تستخدم الموازنة هنا كلمة "دعم"؟ إنها جامعات عامة حكومية، يجب أن تأتي ميزانياتها من الدولة وليس من هياكل ورسوم التعليم المرتفعة والمشوهة مثل نظام التعليم الموازي الذي يتيح دخول الجامعة ليس على أساس الجدارة ولكن على القدرة المالية لذوي الطالب فنضحي من أجل حفنة من الدنانير بمدخلات ومخرجات التعليم العالي. على كلٍ، إذا كانت الحكومة ترغب في إزالة هذا المستوى التافه من الإنفاق، فقد يكون الوقت قد حان لخصخصة الجامعات والتخلص من التعليم العام العالي - الأمر الذي سيكون اثره كارثيا.

هناك جوهرة أخرى مخفية في الموازنة يجب أن تلفت انتباه المرء وهي بند الإنفاق الرأسمالي، وهو بند ضروري لتنمية الأردن لأنه استثمار في مستقبل البلاد ومفتاح لإخراجها من ضائقة الاقتصاد الحالية. حيث تفيد الموازنة أن النفقات الرأسمالية في عام 2023 ستبلغ 1592 مليون دينار، وهي أعلى مما كان مخصصاً في عام 2022 بمقدار 100 مليون دينار.

لكن ولسوء الحظ، تُظهر مراجعة سريعة للفئات الفرعية تحت هذا البند قصة مختلفة: سيتم إنفاق معظم النفقات الرأسمالية (83 بالمائة) على المشاريع الجارية والمستمرة، أي أن المشاريع الجديدة (إن وجدت) سيكون الانفاق عليها 262 مليون دينار أردني فقط (17٪ من النفقات الرأسمالية) في عام 2023. وبالتالي، فإن النفقات الرأسمالية الجديدة ستكون حوالي 2٪ من إجمالي الإنفاق الحكومي الكلي. لاحظ أن ما يسمى بالنفقات الرأسمالية، كما أشارت إلى ذلك الأجندة الوطنية الأردنية (المنسية) عام 2005، هي 75٪ من النفقات الجارية (رواتب وما في حكمها). علاوة على ذلك، ليست هذه نهاية القصة: حيث يسمح قانون الموازنة لوزارة المالية بتحويل المخصصات من النفقات الرأسمالية إلى النفقات الجارية، لكنه لا يمكنها او غيرها من تحويل المخصصات من النفقات الجارية إلى النفقات الرأسمالية، ليمكن هذا التحيز الواضح وزراء المالية في السنوات الماضية من تحويل الموارد من النفقات الرأسمالية بعد إقرار الموازنة الى النفقات الجارية وكما يراه الوزير. أيضاً، كل ما على الوزارة فعله ان تقول بأنه لا يوجد دراسات لمشاريع جديدة وبالتالي تحول الأموال الى النفقات الجارية. وبالنتيجة، رغم ضآلة هذا المبلغ البائس فإن إنفاقه سيكون غير مؤكد.

سيرتفع مستوى الدين مع بقاء النمو خامداً وارتفاع أسعار الفائدة كما تعد بها الموازنة. سبب ارتفاع الدين هو أنه وفقًا لهذه الموازنة، ستستمر الحكومة في فعل ما فعله الآخرون في الماضي، على أمل أن يؤدي نفس التفكير والأساليب إلى نتائج مختلفة، وهو بالطبع ما لن يحدث !!!

بالإضافة إلى ما سبق؛ يتذكر المرء أنه كان هنالك وعد في الأسبوع الماضي بتخصيص 355 مليون دينار أردني لتنفيذ رؤية التحديث الاقتصادي التي تم إطلاقها مؤخرًا. من الصعب معرفة كيف ستخصص الحكومة الأموال للركائز الثمانية للرؤية.

لا تعتبر هذه الموازنة بأنها جديدة او أضافت شيء جديد، جُل ما فعلته أنها دمجت موازنات الحكومة المركزية وموازنات الهيئات الحكومية المستقلة في موازنة واحدة، وهو طلب طال انتظاره ليس فقط محليًا ولكن أيضًا من قبل المنظمات المانحة.

 وبالمحصلة يمكن الجزم بأن هذه الموازنة ليست موازنة تنموية 

Gaining from free trade

Article in Jordan News

Tue 22 11, 2022 

Jordan signed the EU Association Agreement (AA) with the EU in 1997, two years after the Barcelona Declaration. The AA, which entered into effect in 2002, covered political, trade, economic, social, and cultural venues of cooperation. Moreover, in 2016, to help with the refugee situation in what became known as the Jordan Compact, the EU, through the EU Relaxation Decision (No.1/2016), relaxed requirements concerning certificates of origin for certain goods produced in Jordan for a 10-year period, until December 31, 2026. Now that 20 years have passed, it is only fair to ask whether the AA added value, and had a discernible impact on employment and foreign direct investment (FDI) in Jordan, and, if not, what remedies/changes can be done to fix the AA.

 EU is Jordan’s largest trade partner, accounting for 14.7 percent of Jordan’s trade in 2020. EU imported goods from Jordan worth 0.4 billion euros, and its exports to Jordan reached 3.0 billion euros. However, Jordan’s trade with the EU does not represent more than 3 percent of its total trade. Interestingly, there is something of a rule in economics, which says that for a small country to gain from trade with a large country, the latter should be altruistic toward the smaller one. It is not by chance that the EU is the leading foreign investor in Jordan, accounting for 55 percent of the foreign direct investment (FDI) stock in the Kingdom, and that the EU became a major donor to Jordan after the signing of the AA (EU aid to Jordan averaged 130 million euros per year during 2014–2020).

A recent report, “Trade liberalization and jobs in the Mediterranean: towards a new generation of trade agreements”, by the Center for Mediterranean Integration (CMI), underscores that the impact on jobs, value-added, and FDI has been mixed (a hodgepodge of few winning and losing sectors) and mild (underwhelming is the wording of the authors) across the Jordanian economy. In fact, other regional developments, such as the Palestinian Intifada, the invasion of Iraq, the Arab Spring, the influx of refugees from Syria, may have more of an impact than the AA.

So what can be done to make the AA more beneficial to Jordan (and the other three countries, Tunisia, Morocco, and Egypt)? According to the CMI report, three things can be done: liberalization of the services sectors (such as business services, information, telecommunication, and financial services), which contribute to enhancing the value added in the manufacturing sector; attracting FDI in manufacturing to promote knowledge-intensive production, especially in labor-intensive sectors; improving the competitiveness of the industry and addressing the non-tariff barriers (which are more forbidding to trade than tariffs sometimes).

Clearly, one must agree with the report that by simply signing a free trade agreement a country does not immediately benefit from trade, particularly if it is the smaller partner, which is Jordan’s case. Jordan needs to do much more than simply sign a free trade agreement to benefit from trade. It needs to put in place and implement a strategy to develop its manufacturing industry. It should facilitate the manufacturing sector’s access to finance, which remains a challenge today.

Jordan needs to focus on value-added everywhere (services, industry, and agriculture). There is a great need to support firms to become exporters to the EU market (market access). In other words, there is a whole cluster of activities that ought to be done internally to ensure that local producers enhance their competitiveness and gain from trade.

 

*Yusuf Mansur is CEO of the Envision Consulting Group and former minister of state for economic affairs.

https://www.jordannews.jo/Section-36/Opinion/Gaining-from-free-trade-24862

Jordanian public sector as an innovator 15 11 2022

A fundamental question emerging in innovation research is why some organizations innovate while others do not.

Innovation has traditionally been studied in the private sector. It is only recently that some research has been addressing innovation in a public sector context. Given the size of the public sector relative to the economy in Jordan, the variety of its organizations, and the fact that there is a new vision for economic modernization, addressing what would make organizations in the public sector innovate is a vital and timely undertaking.

A good example of innovation in the public sector is the introduction of new or significant changes to the provision of services and goods, operations, organization, or communication. Innovations need not be developed by the organization itself, but simply applied or implemented by it.

To begin with, one should recognize that public sector innovation is often seen and assessed through private sector frameworks and paradigms. Basic economic theory states that private sector organizations maximize profits while public sector agencies focus on minimizing costs. Moreover, it is widely accepted that the public sector is less efficient than the private sector. This latter claim could be generally true, but not necessarily in all government agencies.

Factors that determine the level of innovation in the private sector, such as size, location, performance, and investment in human capital (training), can also be applied with some tweaking to public sector organizations.

In the public sector, innovation may respond to specific organizational and managerial conditions and practices. Managerial conditions that are conducive to innovation in public agencies include sufficient space for experimentation, availability of clear and efficient feedback loops, effective response level to low performance, motivation to make improvements (reward systems), and budget constraints to drive efficiency (however, this is the least significant condition, according to the literature).

A good example comes from Australia, where the government not only allows its employees to experiment and innovate but also established for them a framework to do so.

In Jordan, any initiative that focuses on enhancing innovation at the public organization level must start there: at the organization level. Each organization has a unique work culture affected by location, structure, geography, placement within the bureaucratic hierarchy, function, etc.

The literature on innovation in the public sector underscores that the focus should be on the individuals’ interest in those organizations.  Consequently, public organizations should focus on the fundamental aspects of jobs, and increase the employees’ motivation to innovate through experimentation.

Providing motivation and experimentation to public sector employees will lead to greater innovation and job satisfaction. On the other hand, budget cuts are not recognized as a motivator to innovate, as the carrot is always a better motivator than the stick (which is the budget cuts here).

Based on the above, having a merit-based management system in the public sector is an important and necessary condition for enhancing innovation in the public sector, but it is not sufficient. Measures that specifically focus on enhancing the level of innovation are also vital for public sector innovation.

Published in Jordan News:

https://www.jordannews.jo/Section-36/Opinion/Jordanian-public-sector-as-an-innovator-24554

Economy needs long-term vision, not slogans 25/10/2022

The words gig economy, innovation, and entrepreneurship are thrown around and discussed almost daily in the media and policy corridors in Jordan. They are also touted as the three musketeers, the saviors of unemployment in Jordan. However, given that there is little on the ground in terms of government support for all three, it may be that there is a sinister motive for using such slogans.

The gig economy describes a labor market that relies heavily on temporary and part-time jobs that are filled by independent workers/freelancers rather than permanent, full-time employees. Gig workers have the flexibility and while some workers may prefer this mode of employment, they have little to no job security. Examples of gig workers include rideshare drivers, food delivery drivers, self-employed consultants, and craftspeople.

Innovation, on the other hand, is the practical implementation of ideas that lead to the introduction of new products (goods or services) or improvement(s) in offering goods or services. While related to the invention, innovation and invention are not the same. Innovation is about implementation and may not require an invention. Furthermore, innovations may require significant support from (policy, funding, procedures, etc.) and interventions (such as publicly funded research and projects) by the state, especially in nascent economic systems.

Entrepreneurship refers to an entrepreneur, who is typically the owner of a business enterprise who gathers the economic resources to create an enterprise, assumes all risks and uncertainties and his payment is profit. The concept of entrepreneurship goes back to the works of Richard Cantillon and Adam Smith, in the late 17th and early 18th centuries, and later to  Jean-Baptiste Say, in the 19th century, who provided the definition. Works on entrepreneurship were further elaborated on in the 20th century by Joseph Schumpeter, Carl Menger, Ludwig von Mises, and Friedrich von Hayek, among others.

So, according to the definition of entrepreneurship, a small shop or fruit stand is an enterprise, and its owner/manager is an entrepreneur. Anyone can become an entrepreneur and they may succeed or fail. In fact, the failure rate is quite high, which is why most people (especially those that are risk-averse) opt to work for others.

So where is the sinister move that I alluded to?  Let us go back to the mid-1990s when another catchphrase was invented: “culture of shame”. According to the culture of shame principle, Jordanians are too proud to work in menial jobs and prefer cushy office jobs, preferably, public sector employment, where they are endowed with authority, job security, few work hours, health insurance, and social security coverage. But then who would not prefer that?

Jordanians, I had argued at the time, are no different or better genetically than any other people in the world; all people would prefer the same when offered the opportunity. The result, however, was that a good ready-made, and easily at-hand excuse became available to policymakers to justify the rising unemployment rates and the futility of policies in addressing such an embarrassing policy failure. All they needed to be done was to blame the victim: even though jobs are available, Jordanians are too proud to work.

In the mid-1990s, the term entrepreneurship emerged in Jordan and started to gain prominence. But while it is important to have enterprises and entrepreneurs in society, the concept should not be used to explain high unemployment rates and the failure to produce a job-creating economy.

In a way, the term is being used to say that Jordanians want to be employees, rather than employers; that they lack the initiative to start their own ventures. Hence, the government is not at fault for the high unemployment rates, people are.

Innovation started appearing in the common lingo and dialogue in the new century. It is underpinned by a primary claim that Jordanians are not innovative; that they are traditional, and do not seek new ways to do things.

Again, this is a case of blaming the victim. Where is the role of the government in innovation? In all the countries that have been innovative and shown great success, government support had plenty to do with the success. On the other hand, in Jordan, would-be innovators have little to no access to capital, a dearth of legal protection when it comes to intellectual property rights, and an unstable legislative environment where laws and by-laws are changed frequently and whimsically.

The current arguments claim that Jordanians are at fault, and not a government that relegates such an important task to aid programs and projects, which last for a few years and are then uprooted.

Sadly, one has yet to see one aid-funded project with focus on innovation that has lasted beyond its initially stipulated lifetime because the government adopted it and decided to fund its permanence.

Back to the gig economy, which is gaining in popularity, with youths encouraged to engage in it as a solution to their 50 percent unemployment rate.

Is it a solution? Does not a country need a core workforce that gains and builds skill and specialization over decades of work? Does not a country need institutions that hire graduates and workers on a full-time basis so they can move from youth to adulthood? Is the solution for all of us to work part-time, have no proper medical insurance, and have no job stability?

Of course not, but this is what is being espoused by the thought leaders with the blessings of policymakers as the solution to the economic downturn and the rising unemployment.

Slogans come and go, but they will not whittle down the unemployment rate. They are, simply, easy to use when one is buying time to conclude his or her term in office.

The country does not need to change capitalism; it needs to become a capitalist.

Published in Jordan News:

https://www.jordannews.jo/Section-36/Opinion/Economy-needs-long-term-vision-not-slogans-23610

Not hiring engineers 18 10 2022

Engineering degrees are highly sought in Jordan, demanding in terms of academic rigor, and costly. But in terms of employment, recent data shows they are not rewarding. In fact, about one-third (even close to 40 percent in some fields) of engineers are unemployed.

What is the cause of this and how can the situation be remedied?

Jordanian engineers are among the best in the region and can hold their own in any advanced country. As students, they are selected from among the brightest, and are well-trained, whether locally or in developed countries. The Engineers Association only grants membership, which is a license to work as an engineer, to graduates of accredited universities.

The road toward engineering degrees is fraught with steep requirements: high scores in the General Secondary Education Certificate Examination (Tawjihi), higher university fees than most other majors, and longer years of study. Yet, there is an abundance of engineers. 

There are close to 190,000 engineers in Jordan, which means that one out of 10 persons in the national labor force is an engineer; recent estimates show that their numbers grow at close to 8 percent per year. Additionally, there are over 40,000 at universities in Jordan and abroad that will be vying to join the labor market soon.

Since the 1970s, Jordan has been a supplier of engineers (mainly civil engineers) to the oil-rich GCC countries. Currently, there are 26,000 engineers working there: almost three-quarters work in Saudi Arabia, 20 percent in the UAE, and the remainder in Qatar, Kuwait, and Bahrain.

Their employment generates an inflow of remittances to the Jordanian economy. However, employment and remittances vacillate with the rise and fall in oil prices, thus almost making Jordan an oil-dependent economy without oil.

Unemployment among engineers, at 32 percent, is higher than the national unemployment rate of 22.3 percent. Architectural engineering suffers the highest unemployment rate (38 percent), followed by civil engineering (34 percent), and electrical and mechanical engineering (31 percent and 30 percent respectively).

Not only is the government in Jordan unable to affect the demand for engineers overseas, but it is also, due to cuts in capital expenditures, hardly hiring locally. Also, the private sector has suffered what may be the longest economic depression in recorded history. And, the economy in Jordan has not been able to boost productivity since 1988 — the real income per capita in Jordan remains lower than that of 34 years ago.

This also means that production is a low value-added, and requires little to no skill. In addition, Jordan suffers from growing joblessness because the bulk of economic growth is basically in the construction sector, which attracts unskilled guest workers, and hardly creates jobs for skilled Jordanians. Therefore, engineers are worse hit by the depression than most.

The fact that many engineers are unemployed can be easily explained by the dearth of high-value-added production and products, which require highly skilled workers, especially engineers, to produce. Without demand from the private sector, the engineers’ human capital and its potential will be wasted further.

To move into high-value-added production, the government must play a major, and necessary, role. It must support new projects, entrepreneurship, startups, and innovation, activities that are currently relegated to programs that are funded by foreign aid.

The government must also set the direction of change and use all the tools available to drive the economy toward greater productivity, innovation, R&D, value-added, and resilience.

It should borrow and assume more debt to grow product complexity in a mission-driven approach, and use all fiscal and monetary tools to drive and cause the change that puts the engineers to work.

Published on Jordan News:

https://www.jordannews.jo/Section-36/Opinion/Not-hiring-engineers-23301

Spread, growth, and credit 11-10-2022

Well-known economist Irving Fischer once said that it is good for a bank to be prudent, but it is bad for the economy if all banks become prudent.

One indicator of prudence is the spread (difference) between the lending and deposit rates that banks pay and receive. Another is the ratio of domestic credit to the private sector as a percentage of the GDP. There are other measures, of course, but I will stick to these two simple ones, and ask the following questions: Is the spread between the interest rate on loans and deposits high, and if it is high, then by how much? Has lending expanded to spur growth or moved in tandem with it? And how, based on these two indicators, did the private banks react to economic growth rates in the past two decades?

Let us look at the past quarter century, 1997-2021. Official data shows that during a period of low economic growth (1997-2003), domestic credit to the private sector as a percentage of the GDP was 72 percent, and the spread was 4.8 percent. During 2003, a year of uncertainty and regional turmoil, the spread was extremely high: 6.2 percent. There is no evidence that banks may have caused the slow growth rates; however, clearly, banks reacted with great trepidation by raising the spread and reducing lending.

On the other hand, during 2004-2009, the domestic credit to the private sector as a percentage of GDP rose to 83 percent and the spread decreased to 4.2 percent. Interestingly, the average growth rate of the real GDP during this period was close to 8 percent. Hence, the growth that was spurred by the invasion of Iraq and resulted in an influx of wealthy Iraqi immigrants caused greater lending and a lower spread rate.

With the growth rate slowing down slightly in 2008, amidst an unjustified fear of a bubble (which later resulted in a self-fulfilled prophecy), and the resultant prudent policy adopted by the private banks, the domestic credit to the private sector as a percentage of the GDP dropped from 92 percent in 2007 to 78 percent in 2008, and then to 73 percent in 2009, the year Jordan entered, by own design, into the Global Credit Crisis — note that the world by then had announced in Istanbul that it exited the crisis.

One cannot but be surprised that no one was later held accountable for causing Jordan to unnecessarily jump into the crisis.

Enter the last period for which data is available (2010-2021). During this period, the domestic credit to the private sector as a percentage of the GDP became 73 percent, and the spread increased to 4.6 percent. The highest spread was in 2010, a year that witnessed a collapse of the growth rate from 5.3 percent in 2009 to 2.2 percent in 2010.

Another peak emerged in 2016 when the spread became 5.1 percent. Note that the Arab Spring had little to no effect on the spread. In 2020, the COVID year, the spread fell to 3.4 percent and the domestic credit to the private sector as a percentage of the GDP increased from 77 percent in 2019 to 83 percent.

The austerity programs of the IMF led to increased taxes and reduced public expenditures. At the same time, private expenditures were squeezed due to a tight monetary policy.

Given that, consistent with unregulated capitalism doctrines, only big businesses have the capacity to borrow, micro and small enterprises will not be able to obtain credit. Consequently, a combination of tight fiscal and monetary policies will reduce potential growth to a trickle.  Solution: there needs to be a complete shift in economic governance if the economy is to turn around.

Published on Jordan News:

https://www.jordannews.jo/Section-36/Opinion/Spread-growth-and-credit-22992

التجارة الخارجية وسعر صرف الدينار- 05 10 2022

 تروي آخر أرقام التجارة الحديثة قصة متناقضة متشابكة الصعود والهبوط. ومع ذلك، كما هو الحال في معظم القصص الجيدة، فإن بها رسالة قد لا تكون بائسة تمامًا، وهو ما أستعرضه هنا.

 بالمقارنة بين السبعة شهور الماضية بالأشهر السبعة الأولى من عام 2021، فان الصادرات والواردات ازدادت بشكل كبير بالمقارنة بين الفترتين، وهنا يجب على المحلل الحصيف أن يبحث في مصادر النمو، خاصة وأن قيمة الدينار الأردني أخذت بالارتفاع مع ارتفاع الدولار الأمريكي في الآونة الأخيرة مما رفع من أسعار الصادرات مقارنة بمنتجات أولئك الذين يستخدمون عملات أخرى، وجعل الواردات أقل كلفة.

 نمت الصادرات الوطنية (باستثناء إعادة التصدير) بنسبة 47 في المائة، من 3.2 مليار دينار أردني في الأشهر السبعة الأولى من عام 2021 إلى 4.7 مليار دينار أردني في نفس الفترة من عام 2022. (القصة ممتعة وإيجابية حتى الآن، فكل دولة ترغب في زيادة صادراتها...)

 

فمن الناحية الأخرى، ارتفعت الواردات بنسبة 39 في المائة، اي بقيمة 8 مليار دينار أردني خلال الأشهر السبعة الأولى من عام 2021 إلى 11مليار دينار أردني خلال نفس الفترة من عام 2022. وبالنظر إلى أن الواردات تعادل ضعف حجم الصادرات تقريبًا، من المتوقع أن تؤدي مثل هذه الزيادة في الواردات إلى زيادة العجز التجاري (محسوبًا على أساس الصادرات ناقص الواردات)، وهو ما حصل، حيث ارتفع العجز التجاري بحوالي 34٪ خلال فترة التحليل من4.76 مليار دينار أردني إلى 6.37 مليار دينار أردني. (لكن القصة لم تكتمل بعد...)

 صحيح أن الدول تفاخر بتطور تنوع وقيم صادراتها خاصة حين تتجاوز قيمة وارداتها، مما يعني ازياد قوة عملتها مع ارتفاع الطلب عليها وتحسن ميزان مدفوعاتها وارتفاع نسب التشغيل والأجور فيها لتصبح أكثر قدرة على المنافسة عالميًا. ولكن، لكي تحسن من تنافسيتها فإن القدرة التنافسية لأي دولة تُقاس بصادراتها من المنتجات ذات القيمة المضافة، وليس المواد الخام، مثل النفط والسلع الأساسية الأخرى. يأتي حوالي ثلثي الصادرات الوطنية في الأردن من البوتاس الخام والفوسفات الخام والملابس (تذهب الغالبية العظمى إلى الولايات المتحدة، مع القليل من القيمة المضافة المحلية). إذا أردنا إضافة الصادرات من المنتجات الكيماوية والأسمدة (وكلاهما يعتمد على البوتاس والفوسفات)، عندها يصبح المجموع 84 في المائة من الصادرات الأردنية. ولا بد من التنويه هنا ببعض من التحسن في خليط الصادرات  فقد نمت صادرات الأردن من للمواد الكيماوية والأسمدة من  17 في المائة في الأشهر السبعة الأولى من عام 2021 إلى 22 في المائة في نفس الفترة عام 2022، مما يعني زيادة في القيمة المضافة لصادرات الأردن.

 ولكن من ناحية اخرى هنالك انخفاض ملحوظ في الصادرات الدوائية، من 7.4 في المائة إلى 4.4 في المائة خلال فترة المقارنة. هنا  يجب على صانعي السياسات التوقف والنظر في معالجة هذا الامر ولعدة أسباب، منها أن صناعة الأدوية هي صناعة ذات قيمة مضافة تصل لمائة بالمئة تقريبا، كما أن الأردن كان رائدًا إقليميًا في مجال صناعة الأدوية، وخرّج سوقه شركة عملاقة مثل شركة الحكمة التي أصبحت شركة عالمية مدرجة في بورصة لندن وتقيم بالمليارات.

 دعونا ننتقل الآن إلى مسألة ارتفاع قيمة الدينار، وتأثيره على التجارة الخارجية. صحيح ان الدينار الأردني مرتبط بالدولار الأمريكي منذ بداية عام 1995، لذا، كلما ارتفع الدولار يرتفع الدينار معه أيضا بالنسبة للعملات الأخرى. ومن ثم، كان ينبغي أن تصبح صادرات الأردن أكثر كلفة، وهو ما كان سيعني انخفاضًا في الصادرات وليس زيادة! لم تتأثر صادرات الملابس، حيث تم تسعير البضائع بالدولار وبيعها إلى الولايات المتحدة. أما بالنسبة للفوسفات والبوتاس، فلم ينخفض الطلب على صادراتنا، رغم ارتفاع سعر الصرف، بسبب زيادة الطلب العالمي نتيجة اندلاع الحرب الروسية الأوكرانية. (يسرد تحليل الواردات قصة أخرى.)

 ارتفعت قيمة واردات الاردن من النفط الخام من 15.5٪ إلى 19.2٪ خلال فترة المقارنة، وذلك نتيجة لصعود أسعار النفط وليس بسبب ارتفاع ملحوظ للنشاط الاقتصادي في الأردن، وازدادت نسبة الواردات من المركبات والآلات من 15.3 في المائة إلى 17.9 في المائة نتيجة ارتفاع أسعارها بسبب تعطل سلاسل التوريد وانطلاق التضخم العالمي، ومع انخفاض الأسعار العالمية مؤخرا وتصاعد قوة الدولار، من المرجح أن ترتفع كمية الواردات مع انكماش كلفتها.

 وفي خضم تنامي كل هذا الشراء، زاد الأردنيون وارداتهم من المجوهرات والمعادن النفيسة من 406 مليون دينار (5٪) إلى 982 مليون دينار أردني (9٪ من الواردات)، وهو ما قد يعني زيادة اكتناز الأردنيين للذهب كمخزن للقيمة وهو ما قد يكون دليل على ارتفاع وتيرة التحوط والاحساس بعدم الثقة، وهو خلل هام لا يمكن معالجته إلا من خلال تصرفات ونهج حوكمة يدعو الى المزيد من الثقة بالحكومة، وبالتالي الايمان بأمن وأمان البلد.

 يمكن للمرء أن يتعلم الكثير عن الاقتصاد الأردني من خلال بيان صحفي صادر عن دائرة الإحصاءات العامة لا يتعدى صفحتين حول التجارة الخارجية. الأهم من ذلك، أن بعض القطاعات التي أكدت عليها رؤية التحديث الاقتصادي كمحركات للنمو، مثل الأدوية، تعاني بالفعل من منافسة غير عادلة في الخارج، وبعض التحديات في الداخل (احدها المدفوعات الحكومية المتأخرة لشركات الأدوية والتي فاقت 100 مليون دينار).

 يمكن تحقيق النمو بسهولة، وهو ما حصل مرات عديدة في السابق نتيجة لتغيرات المنطقة، لكن الطريق إلى التنافسية والتنمية شاق ويتطلب المضي قدمًا وبضع عقود من العمل الدؤوب نحو هدف. كما لا يتطلب التركيز على بضع قطاعات، فهذه موضة قديمة (حسب الأدبيات الاقتصادية)، بل يجب إشراك جميع القطاعات في التوجه نحو مهمة تحقيق التنمية.

Trade and the exchange rate 04 10 2022

Recent trade figures tell a mixed story, one of ups and downs. Yet, as in all good stories, this one has a message that is not completely dystopian.

Both exports and imports have increased significantly in the past seven months relative to the first seven months of 2021. A prudent analyst should always look into the sources of growth, especially since the value of the Jordanian dinar has been rising with the US dollar in recent months, thus making exports expensive relative to the products of those using other currencies, and rendering imports inexpensive.

National exports (not counting re-exports) grew by 46.8 percent, from JD3,196.6 million in the first seven months of 2021 to JD4,691.6 million in the same period of 2022. So far, the story is pleasant; any country would like to increase its exports.

Imports, on the other hand, increased by 38.9 percent, from JD7,959.3 million during the first seven months of 2021 to JD11,057 million during the same period of 2022. Given that imports are approximately two and a half times the size of exports, such an increase in imports would be expected to increase the trade deficit (calculated as exports minus imports). The trade deficit increased about 34 percent in the period of analysis, from JD4,762.7 million to JD6,365.4 million. But the story is not complete yet.

It is true that nations are filled with pride when the value of their exports expands beyond the value of their imports, which strengthens the currency and balance of payments of a country and means, among other things, that the nation has grown globally more competitive.

But, hark: competitiveness of a nation is measured by how much it exports of value-added products, not raw materials, such as oil and other basic commodities. Around two thirds of the national exports come from crude potash, crude phosphate and garments (the vast majority to the US, with little local value added). If we are to add exports of chemical products and fertilizers (both based on potash and phosphate), the total becomes 84 percent of Jordanian exports. There is a bit of good news here: exports of chemicals and fertilizers have grown from 17 percent in the first seven months of 2021 to 22 percent in the same period of 2022, which means an increase in value added of Jordan’s exports.

But there is a marked decline in pharmaceutical exports, from 7.4 percent to 4.4 percent during this period. Policy makers should remedy this for several reasons, chiefly because the pharmaceutical industry is almost completely a value-added industry, and Jordan was a regional leader in pharmaceuticals.

Now to the matter of the rise in the value of the dinar. Pegged to the US dollar since the beginning of 1995, whenever the dollar rises, the dinar also rises. Hence, our exports should have become more expensive, which would have meant a decline in exports, not an increase! The garment exports were not affected, since the goods are priced in dollar and sold to the US. As for phosphate and potash, demand for our exports did not decrease, despite the exchange rate increase, because of the increase in global demand due to the Russia-Ukraine war.

A quick analysis of imports bears another tale. The value of crude oil imports increased from 15.5 percent to 19.2 percent, due to the increase in oil prices. That of vehicles and machinery increased from 15.3 percent to 17.9 percent, as supply chains were disrupted and global inflation took off. As global prices decline and the dollar gains more strength, such imports are likely to increase further.

And in the midst of all this purchasing, Jordanians increased their import of jewelry and precious metals from JD405.9 million of imports (5 percent) to JD982.3 million (9 percent of imports), which could mean that Jordanians are increasingly hoarding gold as a store of value. This could be remedied through a growth in trust in government.

One can learn a lot about the Jordanian economy from a two-page press release about foreign trade by the Department of Statistics. Most importantly, some of the sectors underscored by the Economic Modernization Vision as growth drivers, such as the pharmaceutical, are already suffering from unfair competition abroad, and some challenges at home (delayed government payments for medication is one of them). Growth can be easily achieved, but the road to competitiveness and development is arduous and requires moving forward.

Published in Jordan News:

https://www.jordannews.jo/Section-36/Opinion/Trade-and-the-exchange-rate-22692

Cash transfers versus subsidies 28 09 2022

A recent article on the World Bank blog made the case that in “MENA: Uniform cash transfers are better than subsidies”, citing, among others, the Jordanian subsidy reforms. However, in spite of the overwhelming worldwide agreement about the superiority of cash transfers to subsidies, the proponents of cash transfer seem to forget several concepts, some theoretical and others practical, related to the implementation of the cash transfer mechanism.

One of the basic arguments against subsidies is that even though subsidies are meant to protect the poor, they tend to favor the rich. Take, for example, a blanket fuel or energy subsidy: a rich consumer may receive more than a poor consumer since the former has more and larger assets (car/s, house/s, etc.). Producers, on the other hand, are less incentivized to find better or more advanced means of production since energy is a relatively cheap resource.

The same applies to food subsidies, where the rich are capable of consuming more than the poor and thus the subsidy enables not only waste among the rich and poor, but also misdirection of resources in the economy. A similar argument can be made with water subsidies.

Of course, the worse forms of subsidies are those that guarantee a certain fixed price for the commodity because as commodity prices rise, the size of the fiscal burden on the budget grows.

Cash transfer is therefore considered superior in all respects. Moreover, recent empirical research has shown that cash transfer offers the receiver a greater feeling of control as he or she chooses where best to spend the money. However, there are caveats:

1) The shift from subsidy to cash transfer should be coupled with a private-public sector dialogue, and the pros and cons should be clearly explained. In Jordan, the shift from fuel subsidy to cash transfer was suddenly made in November 2012, and complete liberalization followed shortly afterward, also in an abrupt manner.

2) The government must possess accurate data, and if it does not, it should expand the target group to ensure full coverage, even if waste does occur. Ultimately, the better the database the less the waste. In Jordan, in the case of the fuel subsidy removal, almost 70 percent of the population was included in the coverage.

3) Availability of administrative capacities and efficiency is a basic requirement for implementing the new direction. Otherwise, corruption, incompetence, delays, and other mishaps, which may typically occur in third world countries, more than in advanced economies, could easily degrade the gains from the shift.  

4) Quality health and education facilities should be available, especially when the removal of subsidies may impact these two necessary developmental requirements. Countries where these two basic publicly provided services are not readily available should think twice before shifting from subsidies to cash transfers.

5) Many times the high cost of the subsidy is due to monopolistic practices, which are quite spread in Jordan. Most claims of efficiency loss in literature are based on the supply and demand model, which assumes perfect competition in the market — a completely fictitious, non-existent market. The real world is run by monopolies, monopolistic practices, and imperfect competition, which tend to raise prices when cash transfers occur. Look, for example, what happened in the developed countries after governments pumped trillions of dollars into their economies.

6) Often times the need for a subsidy may arise from government-created inefficiencies, such as not modernizing a refinery or buying food at a spot rate instead of using sophisticated purchasing mechanisms. It is far better to address such government-created shortfalls before delving into whether to give cash or subsidize.

The upshot is that the making of economic policy is never a straightforward exercise. The economy is a highly complex, constantly changing, and evolving organism. Hence, shifting toward a cash transfer system instead of granting subsidies is not, and should not be, a remedy for all.

Published in Jordan News 27 09 2022

https://www.jordannews.jo/Section-36/Opinion/Cash-transfers-versus-subsidies-22369

رأس المال الاجتماعي والثقة المجتمعية 22 9 2022

 

يناقش كتاب فرانسيس فوكوياما لعام 1995 ، "الثقة: الفضائل الاجتماعية وخلق الرخاء" ، مسألة الثقة في الأمة وتأثير الثقة الاجتماعية على ثروتها. يجادل فوكوياما بأن النجاح الاقتصادي يعتمد ، ليس فقط على العمالة ورأس المال والتكنولوجيا والموارد الطبيعية وريادة الأعمال ، ولكن أيضًا على ما يسميه قدرة المجتمع على إنشاء "رأس المال الاجتماعي".

ما هو رأس المال الاجتماعي؟ وفقا لفوكوياما ، هي قدرة الناس في المجتمع على الوثوق بأفراد من خارج الأسرة؛ كأن يثقوا بالغرباء داخل المجتمع. إن قدرة المجتمع على خلق صندوق من رأس المال الاجتماعي (الثقة ببعضهم البعض)  تمكن أعضاء المجتمع من ايجاد مشاريع أكثر قابلية للاستدامة والحياة اقتصاديًا وهو أمر ضروري للنمو والتقدم الاقتصادي، وبالتالي الازدهار. مثل هذه الأطروحة التي تبدو بسيطة في الظاهر تحتوي على رسالة رائعة. كلما ازدادت قدرة افراد المجتمع على الثقة ببعضهم البعض ، ازداد احتمال نموه وتنميته.

ومع الاحترام لأطروحة فوكوياما فإنها ليست جديدة. تم تطوير أطروحة مماثلة من قبل الفيلسوف العربي ووالد علم الاجتماع ابن خلدون في أطروحته "المقدمة" منذ ما يقرب من خمسمائة عام. حدد ابن خلدون الرابطة، أو الثقة، الموجودة بين أعضاء المجموعة على أنها ضرورية لتوحيدهم ليس فقط ضد أعداء مشتركين ولكن أيضًا في إنتاج الحياة اليومية. أطلق على هذه الرابطة اسم "عصبية"، والتي تُترجم إلى "القومية" أو "الوطنية" في الدولة المدنية، وأعلن أنها أهم عنصر لنجاح عمل المجتمع في ممارساته وحياته اليومية.

سواء تم تصنيف الثقة المجتمعية على أنها رأس مال اجتماعي أو "قومية" أو "وطنية"، فهي مفهوم سحري يقود الناس إلى الاتحاد معًا لإنشاء مشروع عظيم. ففي الاقتصاد تتداخل جميع أنواع المؤسسات الكبيرة منها والصغيرة، لترتبط ببعضها البعض من خلال الشعور بالوحدة مما يؤازر ويعزز هذه الوحدة أيضا لخلق دورة حميدة للمجموعة. ومع ازدهار الروابط بين العمليات الاقتصادية المختلفة للأمة بسبب، من بين أمور أخرى، الثقة الموجودة في المجتمع، يصبح الاقتصاد بأكمله أكثر قدرة على التمتع باقتصاديات الحجم والنطاق أو التنوع.

فعلى سبيل المثال، إذا كان الشخص يتقاضى خمسمائة دينار أردني شهريًا، سيكون قادرًا على الاستمتاع بأشياء قيمتها أكثر من خمسمائة دينار من السلع والخدمات. كيف؟ في مجتمع الثقة، يميل الناس  أكثر  إلى المشاركة، والتصرف بإيثار تجاه بعضهم البعض، والحصول على مزيد من المتعة من الاستهلاك الجماعي بدلا من الفردية والتفرد أو التعصب لمجموعات صغيرة.

 

وعندما يصبح الناس أكثر أمانًا بشأن المستقبل، فإنهم ينفقون بحرية أكبر مما يؤدي إلى زيادة الدخل وزيادة الإنفاق والادخار، ويثق المشترون بالبائعين على الرغم من أنهم قد لا يعرفونهم، فتقل كلفة ورسوم التعامل والتبادل الاقتصادي بين الناس مع انخفاض الحاجة إلى المحامين والعقود الملزمة. علاوة على ذلك، فإن المجتمع القادر على حشد قدر كبير من رأس المال الاجتماعي ينفق أقل على حماية نفسه من الأفعال السيئة لمواطنيه. فيتم تحويل الاستثمار في حماية الشرطة وأنظمة الإنذار وما إلى ذلك نحو أنواع أخرى أكثر إنتاجية من النفقات التي يمكن الحصول منها على المنافع المباشرة. هناك العديد من الأمثلة على المجتمعات التي يعلو فيها رأس المال الاجتماعي، مثل المورمون في يوتا، والآميش في بنسلفانيا، الذين تمكنوا ، من خلال العمل الجاد وكمية كبيرة من رأس المال الاجتماعي، من خلق مجتمعات مزدهرة في ظل ظروف صعبة للغاية.

كيف يكون هذا النقاش حول رأس المال الاجتماعي بالنسبة للأردن؟ يمتلك الأردن قدرًا كبيرًا من هذا المورد الثمين، لكن يجب أن نكون حريصين على تجنب ضمور رأسمالنا الاجتماعي، وهو ضمور يمكن أن ينجم مباشرة عن بحثنا عن المصلحة الذاتية والتعظيم الشخصي كما يتجلى في الظواهر المتنامية مثل التمييز على أساس الجنس ، والإقليم، والدين، إلخ. وحسب النظرية الاقتصادية، فإن التمييز في المجتمع يستمر حين يكون منه نفع اقتصادي لجهة على حسبا أخرى، ولكن ما يخبرنا به فوكوياما وقبله ابن خلدون، فإن تقليص الثقة وخلق جماعات ثقة صغيرة بدلا من تلك الوطنية يضر بالاقتصاد ككل، ويقلص انتاجيته وكذلك ازدهاره.

نعم، أن نكون مختلفين فإن هذا هو قانون الطبيعة وأحد أسباب جمالها. وإذا رغب المرء في تحديد المجموعات داخل المجموعة على أنها مختلفة، فلا ينبغي اعتبار ذلك أمرا "سيئًا"، ولكن الولاء أو العصبية يجب أن تكون للأردن أولا وأخيرا.

 

ملاحظة: نشر هذا المقال باللغة الإنجليزية في 31 3 1996 

Replacing regulatory bodies 20 09 2022

Jordan started its liberalization program in 1989 at the behest of the World Bank and the IMF, and after an economic collapse that was brought about by ballooning, unsustainable, and bad spending habits. Overspending on unnecessary and low-quality ventures (non-productivity enhancing type of spending), had swelled over a decade and a half prior to 1988, the year that preceded the storm. Thirty-three years later, the average per capita real income in Jordan remains below that of 1988, which indicates, among other things, that government spending remains profligate.  One area of apparent waste is the institutional framework of competition in Jordan.

It is well known in economics that competition legislation is the most important framework for the development of a country. Normally, the competition law applies to all production, commerce, and services in a country, as well as all international economic activities that have an effect(s) on competition in the country.

There was no specific legislation governing competition in Jordan before 2002. After two failed attempts in 1995 and 1998, Jordan enacted the Competition Law No. 33 of 2004, which came into force on September 1, 2004, and replaced the Temporary Competition Law No. 49 of 2002. Revisions, in my view, have weakened the law. Furthermore, according to several studies, the implementation of competition rules and regulations remains weak in Jordan relative to the powers extended to other sector-specific regulatory bodies in the country, which also happen to be more costly.

Let us look at the regulatory agencies in the country, which are bodies tasked with regulating competition in their sectors. Note that their powers may exceed those of the Competition Directorate that is nestled within the Ministry of Industry, Trade, and Supply since the directorate is administratively below them. The individual commissions, which carry out regulations within their respective sectors, tend to maintain large numbers of workers and spend millions per year. In the 2021 Government Budget, four regulatory commissions spent JD32.7 million: the Energy and Minerals Regulatory Commission (JD4.8 million);  the Telecommunications Regulatory Commission (JD8.6 million); the Civil Aviation Regulatory Commission (JD10.2 million); and the Land Transport Regulatory Commission (JD9.1 million). Over JD462 million was spent on these commissions in the period 2011–2022. Moreover, the four commissions employ close to 800 employees. In comparison, the Competition Directorate has a few employees and a budget that is in the hundreds of thousands at best.

The upshot is the following: the function of regulatory commissions is principally to safeguard competition in their sectors, while that of the Competition Directorate is to protect competition throughout the Kingdom. So why not have one supra regulator of competition instead of the various commissions, and thus save funds and avoid waste? The answer is not so straightforward.

Some detractors would mention the technical expertise that is required to regulate these sectors. The answer is that competition issues are the same (price, quantity, and quality), regardless of sector. When a case arises that requires expertise in a sector, technical experts are brought in to help with the investigative process.

Another question is what to do with all the staff? Most of the employees in these commissions are on contracts; they can be let go once the contracts expire or end. Some can be employed within their respective ministries, and those who were seconded from ministry departments can be returned to their old departments.

The whole concept of creating regulatory bodies followed the example of the Telecommunications Regulatory Commission, established in 1995, which was considered a success story and thus spurred the creation of other regulatory bodies.

Imagine how much money could have been saved had the above suggestion been adopted 10 or 15 years ago.

Published in Jordan News:

https://www.jordannews.jo/Section-36/Opinion/Replacing-regulatory-bodies-22061

The investment conundrum 13 09 2022

In the coming few days, Jordan is most likely to pass a very important piece of legislation, the investment environment law, which would be a disastrous move. Not only is the draft law encumbered with flaws and shortcomings, but it is also draconian in certain areas, and simply naive (the most polite one can be in this situation) in its incentives.

The draft law went through several revisions, and with every revision, the reader is faced with additional challenges emanating mainly from the fact that it was drafted in haste, and as if Jordan were the only country in the world, as the law ignores the fact that other countries in the region, such as Egypt, Turkey, Saudi Arabia, and UAE, provide extremely sophisticated, generous, and transparent incentives.

These countries, besides offering larger economies than that of Jordan, and promising higher growth rates, offer general incentives, which are published on websites and granted automatically, without the need for committees to meet and decide. Investors from anywhere in the world know what is being offered.

These general incentives are accompanied by special incentives, which are awarded in special zones or mapped locations, according to an investment map that spells the advantages and incentives provided.

Projects that are considered strategic are provided incentives that go far beyond those already on offer. For example, Egypt promises to reimburse the investor 85 percent of the value of the investment should the project qualify as strategic.

The Jordanian draft law does not make such distinctions, and offers very shy general incentives that do not affect the cost of production; moreover, whatever incentives it plans to offer will be specified in a by-law to be drafted later.

This draft law will not cut it for a country that seeks to attract JD41 billion and generate 10 million employment opportunities in the next 10 years. It makes no reference to the sectors of the Economic Modernization Vision that was launched only a few days ago. There is no relevance in the draft to the vision or its driving sectors; in fact, the draft ignores this much-celebrated vision, as if it had never happened or came out from a different country, which is truly strange.

The draft law promised that it would spell things out in by-laws and instructions that will come later. Hence, all that is needed now is to approve this current piece of legislation, and its complements/supporting documents will follow later.

It took several years for a new investment by-law to emerge: in 2005, the by-law of the 1995 Investment Law was still in use for the 2003 Investment Law. Such a separation of law and by-law creates a dilemma for the Parliament as parliamentarians only approve a piece of the puzzle, not the whole.

By-laws are discussed at the Prime Ministry level and are not sent to Parliament for approval. Instructions are drafted at the ministry level and are not subject to discussion at the Prime Ministry or in Parliament. Therefore, approval of the draft law poses a moral dilemma since one is approving what one has no complete information about.

The absence of details regarding incentives also means that foreign investors would be hesitant to invest in a country where the incentives can be easily changed. Would anyone invest in a country where the incentives can change every week?

And why a week? Because it only takes one of the weekly meetings of the Cabinet to change a by-law.

Investors require certainty and stability in the legislative framework and content. Relegating the details of the incentives to committees, by-laws, and instructions is lazy and will do more harm than good. Yet, this is what the current draft law stipulates; and, based on this point alone, the draft should not be passed.

Published in Jordan News:

https://www.jordannews.jo/Section-36/Opinion/The-investment-conundrum-21746