Executive Summary

Jordan is a Middle Eastern country centrally located on desert plateaus in southwest Asia and strategically positioned to serve as a regional business platform. Since King Abdullah II’s 1999 ascension to the throne, Jordan has taken steps to encourage foreign investment and to develop an outward-oriented, market-based, and globally competitive economy. Jordan is also uniquely poised geopolitically to host investments focused on the reconstruction of Iraq, Syria, and projects in other regional markets.

In 2014, Jordan moved forward on a number of legislative reforms, including the new Income Tax Law, Public Private Partnership Law and Investment Law. The Investment Law grants equal treatment to local and foreign investors and grants specific incentives for local and foreign investment in industry, agriculture, tourism, hospitals, transportation, energy, and water distribution. The banking, information and communication technology, pharmaceuticals, and tourism sectors have all experienced key reforms in the past decade.

Jordan’s economy grew 2.1 percent in 2016, despite ongoing challenges both domestically and in the region. The government pursued economic reform measures as part of its International Monetary Fund (IMF) Extended Fund Facility program, which began in August 2016.

Jordan’s economic growth has been slow due to the regional security environment, the 2015 closure of Jordan’s borders with Iraq and Syria, and the influx of refugees, particularly from Syria. The government was able to reduce its near-term financing gap with savings from reform measures, loans, and foreign assistance. Notwithstanding the regional environment, the general investment outlook for Jordan remains favorable and, in several sectors, advantageous.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 57 of 176 http://www.transparency.org/
World Bank’s Doing Business Report “Ease of Doing Business” 2017 118 of 190 doingbusiness.org/rankings
Global Innovation Index 2016 30 of 128 https://www.globalinnovationindex.org/
U.S. FDI in partner country ($M USD, stock positions) 2015 USD 228 http://www.bea.gov/
World Bank GNI per capita 2015 USD 4,680 http://data.worldbank.org/

Policies Towards Foreign Direct Investment

Jordan is largely open to foreign investment and foreign and local investors are treated equally under the law. The Jordan Investment Commission is responsible for implementing the 2014 Investment Law and promoting new and existing investment in Jordan, including through simplifying investment procedures. The Chair of the Commission and the administrative team supervise and centrally approve investment-related matters within the guidelines set by the Investment Council and approved by the government. The Investment Commission can expedite the provision of government services and provide a number of investment incentives, tax, and customs exemptions.

Jordan acceded to the World Trade Organization (WTO) in April 2000. In addition, the U.S.-Jordan Free Trade Area Agreement (FTA) was signed in October of 2000, and fully implemented in January 2010. The United States and Jordan signed a Bilateral Investment Treaty in 1997 that went into force in 2003.

Limits on Foreign Control and Right to Private Ownership and Establishment

Investment and property laws allow domestic and foreign entities to establish businesses that engage in remunerative activities. 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.

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. 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, which must be developed within five years after the date of approval.

Regulations governing foreign ownership include the following exceptions:

  • Foreigners are prohibited from wholly or partially owning investigation and security services, sports clubs (exception: 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 Council, which is comprised of the Prime Minister, ministers with economic portfolios, and representatives from the private sector. To qualify for the exemption, projects have to be categorized as being highly valuable to the national economy and must employ a large number of Jordanians.
  • Investors are limited to 50 percent ownership in a number of businesses and services, including the ownership of periodical publications, printing/publishing companies, aircraft or maritime vessel maintenance, and repair services. However, according to the Bilateral Investment Treaty with Jordan, U.S. investors are granted exceptions and are accorded the same treatment as Jordanian nationals, so U.S. investors are allowed to maintain 100 percent ownership in some restricted businesses. The most up-to-date listing of limitations on investments is available in the FTA Annex 3.1 and may be found at http://www.ustr.gov/trade-agreements/free-trade-agreements/jordan-fta/final-text .
  • Foreign firms may not 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. The agent’s connection to the foreign company must be direct, without a sub-agent or intermediary. The Commercial Agents and Intermediaries Law No. 28/2001 governs contractual agreements between foreign firms and commercial agents. Private foreign entities, whether licensed under sole foreign ownership or as a joint venture, compete on an equal basis with local companies.

Other Investment Policy Reviews

Jordan has been a World Trade Organization (WTO) member since 2000. The WTO conducted Jordan’s second Trade Policy Review in November 2015. https://www.wto.org/english/tratop_e/tpr_e/tp425_e.htm 

In 2012, the United States and Jordan agreed to Statements of Principles for International Investment and for Information and Communication Technology Services, and a Trade and Investment Partnership Bilateral Action Plan, each of which is designed to increase transparency, openness, and governmental and private sector cooperation. The two parties also began discussions on a Customs Administration and Trade Facilitation Agreement.

The government of Jordan underwent an investment policy review by the Organization for Economic Cooperation and Development (OECD) and in November 2013 subscribed to the OECD Declaration on International Investment and Multinational Enterprises. http://www.oecd.org/countries/jordan/jordan-investment-policy.htm 

Business Facilitation

Businesses in Jordan need to register with the Ministry of Industry, Trade, and Supply, Chambers of Commerce or Industry depending on the type of business they are in, open a bank account, obtain a tax identification number, and register for VAT. They also need to obtain a vocational license from the municipality, receive a health inspection, and register with the Social Security Corporation.

The World Bank Group in their Doing Business report mapped out the registration requirements in Jordan and provided a detailed summary of procedures, time, cost, and legal requirements to incorporate and register a new firm in Jordan. http://www.doingbusiness.org/data/exploreeconomies/jordan/starting-a-business/  The report compared regulations relevant to the life cycle of a small- to medium-sized domestic business in 188 economies. In the June 2015 report, Jordan ranked 88 out of 189 with 12 days needed to complete registration.

The “Investment Window” at the Jordan Investment Commission (www.jic.gov.jo ) serves as a comprehensive investment center for investors. The window provides its services to both local and foreign investors, particularly those in the agricultural sector, medical, tourism, industrial, ICT-BPO, and energy sectors.

Outward Investment

Jordan does not have a mechanism in place to incentivize outward investments; however the government has signed 57 Bilateral Investment Treaties; currently 42 are fully enforced.

In addition to the United States, Jordan signed bilateral investment treaties with several countries including the European Union, Singapore, and Canada. Jordan’s bilateral investment treaty with the United States came into effect in 2003. The agreement provides reciprocal protection of Jordanian and U.S. individual and corporate investments.

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 of value must be added in the QIZ, eight percent in Israel, and 15.3 percent in a Jordanian QIZ, Israel, or the West Bank/Gaza. The QIZs have attracted over USD 1 billion dollars in capital investments, generated around USD 9.2 billion dollars in exports to the U.S. between 2006 and 2013, and currently employ more than 47,000 workers; about one-quarter of whom are Jordanians. The bulk of QIZ exports continue 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 considerably shrank as exporters took advantage of the FTA’s broader mandate. FTA rules of origin simply require 35 percent Jordanian content without other restrictions.

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 member states, with the exception of gradual reductions for Sudan and Yemen. Jordan has also signed trade preference agreements and bilateral free trade agreements with various Arab neighbors, including Egypt, Syria, Morocco, Tunisia, the UAE, Algeria, Lebanon, the Palestinian Authority, Kuwait, Sudan, and Bahrain.

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 completed the transitional period in 2014. In 2016, Jordan and the European Union agreed on new rules of origin designed to facilitate Jordanian exports to the EU manufactured with set percentages of Syrian labor content.

With respect to other agreements, 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 European Union’s Pan Euro-Mediterranean trade rules of origin. Jordan signed a Free Trade Agreement with Canada in 2009 which came into effect in October 2012. The FTA with Canada eliminates all non-agricultural tariffs and most agricultural tariffs. A similar agreement with Turkey was also signed in November 2009 and entered into effect on March 1, 2011. Jordan has also signed with Iraq a number of Memoranda of Understanding for bilateral cooperation in various sectors such as education, health, energy, transportation, and trade.

Jordan concluded double taxation avoidance agreements with 31 countries including the United Arab Emirates, Qatar, Bahrain, Egypt, Algeria, Tunisia, in addition to Canada, the United Kingdom, France, Turkey, and others. Jordan signed its first double taxation agreement in 1981 with Romania, and the latest with UAE in 2017. The terms of each agreement varies to match the priorities of each signatory, but often include income tax, corporate tax, capital gain, social service tax, and gains generated by the alienation of movable and immovable property.

Jordan does not have a double taxation agreement with the United States.

Transparency of the Regulatory System

Legal, regulatory and accounting policies, applicable to both domestic and foreign investors, are transparent and promote competition. However, historically red tape and bureaucratic procedures, particularly at the local government level, presented problems for foreign and domestic investors. There is not a policy of public comment on draft legislation, although the executive branch does consult with the legislative branch and key stakeholders.

The government is gradually implementing policies to improve competition and foster transparency in implementation. These reforms aim to change an existing system influenced in the past by family affiliations and business ties. The Jordan Investment Commission (JIC), with its newly established Investment Window, promises to streamline the investment process.

For further details please contact:

Investment Window
Jordan Investment Commission
Telephone: +962 (6) 5608400/9 Extn: 230
P.O.Box 893
Amman 11821 Jordan
E-mail: info@jic.gov.jo

International Regulatory Considerations

Jordan recognizes and accepts most U.S. standards and specifications. However, Jordan has sometimes required that imports meet additional product standards. Some measures with the potential to be viewed as barriers to trade are imposed periodically, such as a 2014 restriction imposed on packaging sizes for poultry available for retail resale.

Legal System and Judicial Independence

Jordan has a mixed legal system based on civil law, Sharia Law (Islamic Law), and customary law. The Constitution establishes the judiciary as one of three separate and independent branches of government. Jordanian commercial laws do not make a distinction between Jordanian and non-Jordanian investors. However, plaintiffs complain of judicial backlogs and subsequent delays in legal proceedings.

Laws and Regulations on Foreign Direct Investment

Jordan’s 2014 Investment Law No. 30/2014 governs local and foreign investment. The law consolidated three entities – the Jordan Investment Board, the Jordanian Development Zones Commission, and the Free Zones Corporation – into a new entity called the Jordan Investment Commission. The law incorporates a statement of investors’ rights and a legal framework for the newly established Investment Window, which is located at the Investment Commission’s headquarters.

The law requires governing regulations for a number of investment aspects. Currently, thirteen new sets of regulations are under different stages of review and approval by the government. The government approved 11 out of the 13 sets of regulations most importantly the regulations governing the operations of the Investment Window, investment incentives, income tax, and sales tax in Development Zones, in addition to custom procedures and registration in the development zones. They are available here: https://jic.gov.jo/portal/en/about/regulations-and-legislation-en 

With respect to ownership and participation in Jordan’s major economic sectors, there is no systematic or legal discrimination against foreign participation other than the restrictions outlined in the governing regulations. In fact, many Jordanian businesses actively seek engagement with foreign partners as a way to increase their competitiveness and access to other international markets. The government’s 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.

Competition and Anti-Trust Laws

The Jordanian parliament passed the Amendments to Competition Law No. 33/2004 in 2011. The amendments aim to strengthen the local economic environment and attract foreign investment by providing incentives to improve market competitiveness, protect small and medium enterprises from restrictive anticompetitive practices, and give consumers access to high quality products at competitive prices. The Competition Directorate at the Ministry of Industry, Trade, and Supply conducts market research, examines complaints, and reports violators to the judicial system.

Expropriation and Compensation

Article 11 of the Jordanian Constitution stipulates that expropriations are prohibited unless deemed in the public interest. In cases of expropriation, the law also mandates the provision of fair compensation to the investor in convertible currency.

Dispute Settlement

ICSID Convention and New York Convention

Since 1972, Jordan has been a contracting state to the International Centre for Settlement of Investment Disputes (ICSID convention). Only a small number of cases between foreign investors and the Jordanian government have been brought before ICSID tribunals. Jordan is also a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York convention).

Investor-State Dispute Settlement

Under domestic law, foreign investors may seek third party arbitration as a means of settling disputes. 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 United States-Jordan Bilateral Investment Treaty (BIT) establishes procedures for dispute settlements between Jordanians and U.S. persons.

Investment disputes are dealt with as any other commercial or civil dispute in the Jordanian judicial system. Large investment agreements with the Jordanian government as a party generally contain a dispute resolution clause that would refer cases to arbitration in Jordan.

On average, it takes three to four years for cases that go through the local court system to reach a verdict. Cases settled through arbitration take between 12 to 18 months. The main challenge regarding litigation cases is being able to conduct proper process of service upon all concerned parties. Another challenge is the lack of specialized investment and commercial courts limiting the judges’ capacity to review cases.

International Commercial Arbitration and Foreign Courts

Rulings by U.S. courts or other international arbitration committees can be upheld through the successful filing in a local domestic court of a motion called Enforcement of Ruling.

Bankruptcy Regulations

The Commercial Code, Civil Code, and Companies Law collectively govern bankruptcy and insolvency proceedings. A temporary bankruptcy law was enacted in 2002 and remains in effect. A new Insolvency and Bankruptcy draft law is currently pending Parliamentary review.

Investment Incentives

Under the current Investment Law No. 30/2014, the Council of Ministers, upon the recommendation of the Investment Council, may offer a number of investment incentives in accordance with the law and governing regulations for projects outside the Development and Free Zones. The Investment Council and Investment Commission can offer some types of exemptions for projects in the following sectors:

  1. Agriculture and Livestock
  2. Hospitals and specialized medical centers
  3. Hotel and touristic facilities
  4. Touristic entertainment and recreation cities
  5. Contact and communication centers
  6. Scientific research centers and medical laboratories
  7. Technical and media production

These incentives include customs exemptions, refunding of the general tax for production inputs, or zero sales tax. Automatic exemptions are also granted for specific services whether purchased locally or imported. The Income and Sales Tax Department will refund the general tax levied within thirty (30) days from submitting a written request in accordance with the terms and conditions determined by the Regulations Governing Investment Incentives (Number 33 of 2015).

A number of non-automatic exemptions will be granted for production requirements and assets of economic, industrial, or handicrafts activities of dual-use. Such exemptions are subject to administrative procedures and approvals obtained from the Jordan Investment Commission Technical Committee and are also governed by the above regulation.

Article 8-A of the 2014 Investment Law allows the cabinet to grant additional advantages, exemptions, or incentives to any economic activities in the Kingdom. Under this article, the cabinet granted additional incentives to the ICT, tourism, and transport sectors in 2016, decisions published in the Official Gazette.

Net profits generated from most export revenues are 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. Jordan extended this regime to December 31, 2018, although it is in violation of its WTO obligations.

Foreign Trade Zones/Free Ports/Trade Facilitation

Investments in special economic zones and development zones will receive a minimum of 30 percent income tax waiver depending on the zone. Additional incentives are provided for projects under the Industrial Estate Corporation, and the Aqaba Special Economic Zone.

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.

Jordan’s 2014 investment law merged the Development and Free Zones Commission (DFZC) into the newly formed Jordan Investment Commission, an independent governmental body responsible for creating, regulating, and monitoring Jordan’s free trade zones, industrial estates, and development zones. The 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, the Jabal Ajloun Development Zone, and Business Park Development Zone. The 2014 Investment Law assigns the Jordan Industrial Estates Corporation (JIEC) and the Development and Free Zones Corporation (DFZC) as main developers of industrial estates and development and free zones, under the supervision of the Investment Commission.

As part of Jordan’s efforts to foster economic development and enhance its investment climate, the government has created four industrial estates in Amman, Irbid, Karak, and Aqaba, in addition to several privately-run industrial parks, 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 will continue to receive incentives until their current contracts expire and will also receive various exemptions, including a two-year exemption on income and social services taxes, complete exemptions from building and land taxes, and exemptions or reductions on most municipalities’ fees.

Besides the six public free zones in Zarqa, Sahab, Karak, Karama, Mowaqaar, and Queen Alia Airport. Jordan has over 37 designated private free zones administered by private companies under the DFZC’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.

Jordan announced plans for new specialized development zones in a number of governorates including two Solar parks in Ma’an and Ajloun, and four new industrial parks in Salt, Madaba, Tafileh, and Jarash.

The Aqaba Special Economic Zone (ASEZ) is an independent economic zone not governed by the Investment Commission or the articles in the Investment Law No. 30/2014 governing investments in free zones or development zones. 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. The government continues to implement development projects aimed at attracting commerce and tourism through the Port of Aqaba. The Aqaba New Port project, initiated in 2010 with completion expected in late 2017, includes relocating the current port 20 km south, adding four new terminals, and expanding ship berthing, marine services, and capacity, including for energy resources such as natural gas, phosphates, and propane. In early 2014, Jordan announced a new public-private partnership committee tasked with enhancing Aqaba’s investment climate.

Both nationals and foreign investors have 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; or,
  • Industries that provide consumer goods and that contribute to reducing market dependency on imported goods.

For further details please visit:

Performance and Data Localization Requirements

Jordan does not mandate local employment, but encourages hiring Jordanians. Jordan has a well-educated and trained labor force of 1.8 million people, of which approximately 350,000 are registered foreign workers. Unofficial indicators speculate that unregistered foreign workers are nearly double this number. Most foreign laborers are employed in construction, agriculture, and domestic housekeeping sectors. Approximately 35,000 also work in the QIZs as textile workers. 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.

To date, Jordan has no forced localization policy, nor does it have requirements for foreign IT providers to turn over source code or provide access to surveillance.

Real Property

Interest in real property is recognized and enforced once it is recorded in legal registries. The legal system facilitates and protects the acquisition and disposition of property rights.

Foreign ownership of Jordanian land and assets is governed by The Leasing of Immovable Assets and Their Sale to Non-Jordanian and Judicial Persons Law No. 47/2006. As per Article 3 of the law, provided that the buyer’s country of residence maintains a reciprocal relationship, foreign nationals are afforded the right of ownership of property within urban borders in Jordan for residential purposes. According to the law, foreign nationals may rent immovable assets for business or accommodation purposes, provided that the plot of land does not exceed 10 acres and the lease is for no more than 3 years.

All land plots in Jordan have titles and are registered with the Jordanian Land and Survey Department; all other land is considered federal property.

Intellectual Property Rights

Jordan has passed several laws in compliance with international commitments to the 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, and patents are registered with the Registrar of Patents and Trademarks at the Ministry of Industry and Trade. Jordan is a signatory to 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 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 consist of pirated content. 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. Since 2000, 5,619 violations of Jordan’s current copyright law were referred to the judiciary, including 317 cases in 2016 and 361 cases in 2015. Trademark incursions are notable in franchising among other sectors. Overall, 33 trademark violation cases were referred to court in 2016.

As a resource for American stakeholders and to improve IPR systems in Jordan and the region, the U.S. Patent and Trademark Office places an Intellectual Property Attaché for the Middle East and North Africa region based in the U.S. Embassy in Kuwait City, Kuwait. Please see: https://www.uspto.gov/learning-and-resources/ip-policy/intellectual-property-rights-ipr-attach-program/ip-attach-kuwait for contact information.

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/ .

Capital Markets and Portfolio Investment

Investors, both foreign and domestic, are permitted to open margin accounts and to engage in short-selling. Commercial banks hold securities for their clients in a sub-account format. There are three key capital market institutions: the regulator, Jordan Securities Commission (JSC); the exchange, Amman Stock Exchange (ASE); and the custodian for all transaction contracts, clearings, and settlements, Securities Depository Center (SDC). The ASE launched an Internet Trading Service in 2010, providing an opportunity for investors to engage in securities trading regardless of geographic location.

Jordan’s market is among the most open among its regional competitors, as there are no caps in place for foreign ownership. Non-Jordanian ownership in companies listed at the ASE by the end of 2015 represented 49.5 percent of the total market value, 36.8 percent for Arab investors and 12.7 percent for non-Arab investors. Currently, U.S. investment is the sixth largest in the market and is valued at $781 million, with 2,226 investors owning some 46.4 million shares.

In spite of recent reforms and technological advances, the ASE suffers from intermittent liquidity problems and decreased trading activity. The ASE’s market capitalization has grown and shrunk rapidly and repeatedly since 2003. Jordan’s financial market reached its height in 2007-2008, where average trading volumes topped $118 million daily. Following the global economic downturn, the market declined precipitously, with market capitalization falling from $41 billion in 2007 to $25 billion in 2015 and down to $24 billion as of July 31, 2016. Market capitalization as a percentage of GDP dropped over the same period from 289 percent to 70.7 percent. Liquidity in the market has diminished, as roughly $10 million trade hands daily. The bourse remains prone to speculative movements.

The ASE price index increased 2.4 percent at the end of February 2017 compared to its level at the end of 2016 to stand at 2,213 points. Trading volume increased by 6.6 percent to1.6 billion from 1.5 billion shares in 2015, traded shares stood at 84 million the end of April of 2017 down from 88 million for the same period of 2016. The number of listed companies stood at 223 at the end of April of 2017 compared to 224 at the end of 2016. The market capitalization of listed shares at the ASE amounted to USD 25.5 billion as of April 30, 2017.

Money and Banking System

Jordan has 25 banks in total, including commercial banks, Islamic banks, and foreign bank branches. Due to strict regulations on lending, particularly mortgage lending, and limited integration with global financial markets, 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, and non-performing loan ratios modestly decreased over the past couple of years. Jordan does not distinguish between investment banks and commercial banks. Jordan’s rate of non-performing loans, as a percentage of all bank loans, was 4.8 percent in 2016.

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 insures deposits up to JOD 50,000 (USD 71,000). The DIC also acts as the liquidator of banks as directed by the CBJ.

Foreign Exchange and Remittances

Foreign Exchange

Jordan’s liberal foreign exchange law entitles foreigners to remit abroad 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 (JOD) is fully convertible for all commercial and capital transactions. Since 1995, the JOD has been pegged to the U.S. dollar at an exchange rate of approximately JOD 1 to USD 1.41.

The Central Bank of Jordan (CBJ) supervises and licenses currency exchange businesses. These entities are exempt from paying commissions on exchange transactions and therefore enjoy a competitive edge over banks.

Other foreign exchange regulations include the following:

  • 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 JODs on a forward basis. Banks are permitted to sell foreign currencies in exchange for JODs 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.

Remittance Policies

Jordanian law entitles foreigners to remit abroad all returns, profits, and proceeds arising from the liquidation of investment projects. Non-Jordanian workers are permitted to transfer their salaries and compensation abroad.

Sovereign Wealth Funds

Jordan does not have a sovereign wealth fund.

A number of state-owned enterprises (SOEs) exist in Jordan. Currently, 17 SOEs of different sizes and mandates are fully owned by the government. Five were established in 2016 and are not yet operational.

Few are considered large in terms of the size of operations, assets, number of employees, and income. Those that are include: National Electrical Power Company (NEPCO), Samra Electric Power Company, and the Yarmouk Water Company, Aqaba Development Corporation (ADC). Assets of wholly-owned SOEs exceed $11 billion, and provide around 3000 jobs.

Jordan’s economy is mainly led by the private sector, which creates 71 percent of GDP and 75 percent of net cumulative investment. SOEs in Jordan are mainly established to bridge the gap between the government and the private sector; they exercise delegated governmental powers and operate in fields that are not yet open for investment, such as managing the transmission and distribution of electrical power and water. Other activities include logistics, mining, storage and inventory management of strategic products, in addition to economic development activities. The government supports these companies as necessary. As an example, the government has issued and guaranteed Treasury bonds for NEPCO since 2011 to ensure continuous power supply for the country.

SOEs compete under largely equal terms with private enterprises with respect to access to markets, credit, and other business operations. The laws do not provide preferential treatment to SOEs and they are held accountable by their Board of Directors, typically chaired by the sector-relevant Minister and the Audit Bureau.

The government, enterprises and NGOs are progressively taking initiatives to incorporate Responsible Business Conduct into their practices.

Jordan is not a party to the Government Procurement Agreement.

Privatization Program

Over the last fifteen years, the Jordanian government has engaged in a wide-scale privatization program, including in the telecom, energy, and transportation sectors. The few remaining government assets not privatized, including Jordan Silos and Supply Company, elicit little private sector interest.

There is general awareness of responsible business conduct among both manufacturers and consumers in Jordan, with many local and multinational companies voluntarily developing and adopting corporate social responsibility (CSR) programs. CSR efforts focus on improving infrastructure in adjoining communities or providing better access to educational opportunities.

The government of Jordan underwent an investment policy review by the Organization for Economic Cooperation and Development (OECD) and in November 2013 subscribed to the OECD Declaration on International Investment and Multinational Enterprises.

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 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 2006, Parliament approved a Financial Disclosure Law which officially required public office holders and specified government officials to declare their assets. Parliament also enacted an Anti-Corruption Law in 2006 that created the Anti-Corruption Commission (ACC) to investigate allegations of corruption. In 2016, the Integrity and Anti-Corruption Commission (“IACC”) came into force by Law No. 13/2016 (“IACC Law”). Two Authorities were merged into one, with the cancelling of the Bureau of Ombudsman Law No. 11 of 2008 and the Anti-Corruption Law No. 62/2006.

In 2015, the commission referred 116 cases to prosecution and secured 87 convictions. In Transparency International’s 2015 Corruption Perceptions Index, Jordan ranked 57 out of 176 countries.

Jordan signed the UN Anti-Corruption Convention in 2003, which was ratified in 2005.

Jordan is not a party to the OECD Convention on Combatting Bribery.

Resources to Report Corruption

H.E. Dr. Muhammad al-Allaf
Integrity and Anti-Corruption Commission
P.O. Box 5000, Amman, 11953, Jordan
+962 6 550 3150

Contact at “watchdog” organization:

Ms. Tharwat Abzakh
Acting Director
Rasheed Coalition
P.O. Box 582662, Amman, 111585, Jordan
+962 5 585 2528

While Jordan does not have a history of politically motivated violence, the threat of terrorism remains high in Jordan. Terrorist organizations, including the self-proclaimed Islamic State of Iraq and Syria (ISIS), its affiliates, and sympathizers, have successfully conducted attacks in Jordan and continue to plot assaults in the country. Jordan’s prominent role in the counter-ISIL Coalition and its shared borders with Iraq and Syria increase the potential for future terrorist incidents. Within the last year, Jordanian authorities have notified the U.S. Embassy of several disrupted terrorist plots targeting U.S. citizens and Westerners. Visitors should consult current State Department public announcements at www.travel.state.gov before traveling to Jordan.

Jordan’s population grew at 5.3 percent a year between 2004 and 2015 mainly due to an 18 percent growth in non-Jordanians as result of the regional unrest. According to the 2015 census conducted by Jordan’s Department of Statistics, the total population is 9.5 million of which 69 percent are Jordanians (6.6 million) and around 30 percent non-Jordanians including 1.3 million Syrian refugees. Nearly 65 percent of the population is estimated to be under the age of 30. Literacy rates are 95.4 percent for men and 91.1 percent for women. Jordan has a generally well-educated labor force of about 1.8 million Jordanians. According to the Department of Statistics, official unemployment in 2016 reached 15.8 percent, increasing from the 12.9 percent 2015 average.

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. Additionally, there are 40 professional associations active in Jordan, including many that have mandatory membership. According to official figures, about 30 percent of the total labor force, including government workers, belongs to either a union or a professional association. 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. Similarly, the law does not address the issue of layoffs; however companies with the appropriate justification may obtain a permission from the Ministry of Labor to reduce their staff as a result of restructuring the business.

The government has been reforming and strengthening its legal framework and labor inspections since 2006. 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. In 2016, the U.S. Department of Labor removed the Jordanian garment industry from its “List of Goods Produced by Child Labor or Forced Labor.”

Investments in Jordan are eligible for Overseas Private Investment Corporation (OPIC) insurance and private financing. Projects require a minimum of 25 percent U.S. equity in order to qualify. Over the past several years, OPIC backed significant investments in Jordanian private equity ventures and in mortgage financing. In fact, OPIC has over USD 1 billion in investments in Jordan. OPIC is also active in financing projects in Jordan’s burgeoning renewable energy sector. In 2011, OPIC signed a USD 250 million loan guarantee program, and established, the Jordan Loan Guarantee Facility (JLGF) in partnership with USAID, as an inclusive finance activity aimed at improving access to finance for small and medium sized enterprises in Jordan. OPIC previously extended a USD 250 million loan to support the USD 1 billion Disi water project to 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.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2015 $37,623 2015 $37,517 www.worldbank.org/en/country 
Foreign Direct Investment Host Country Statistical Source* USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) N/A N/A 2015 288 https://bea.gov/international/factsheet/factsheet.cfm?Area=505 
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2014 $65- https://bea.gov/international/factsheet/factsheet.cfm?Area=505 
Total inbound stock of FDI as % host GDP 2015 93% N/A N/A N/A

*Source: Central Bank of Jordan

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward Amount 100% Total Outward Amount 100%
Saudi Arabia 3,783 18.1% N/A
Kuwait 3,239 15.5% N/A
United States 1,647 7.9% N/A
United Arab Emirates 1,616 7.7% N/A
Iraq 1,479 7.1% N/A
“0” reflects amounts rounded to +/- USD 500,000.

The last time Jordan surveyed FDI by economy was in 2009. The Central Bank of Jordan maintains aggregate inflows.


Table 4: Sources of Portfolio Investment

Portfolio Investment Assets
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries Amount 100% All Countries Amount 100% All Countries Amount 100%
Lebanon 1,190 6.7% N/A N/A
Kuwait 1,054 5.9% N/A N/A
Qatar 992 5.6% N/A N/A
Saudi Arabia 928 5.2% N/A N/A
Bahrain 678 3.8% N/A N/A

Shaden Al-Majali
Senior Economic Specialist
Al Umawyeen Street-Amman
+962 (6) 590-6317

2017 Investment Climate Statements: Jordan
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