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 as a platform to host investments focused on the reconstruction of Iraq and other projects in regional markets.
Jordan is committed to investment promotion as a key driver of economic growth and job creation, though in practice these policies are implemented unevenly. Traditionally, foreign investment has been concentrated in the energy (from both conventional sources and renewables), tourism, real estate, manufacturing, and services sectors. The Government of Jordan offers a range of incentives to potential investors and has undertaken measures to review and enhance the economic, financial, and legal framework governing the investment process. However, despite improvement on doing business indicators, operating in Jordan is more difficult than elsewhere in the region. U.S. investors specifically cite instability in the tax regime and incentive packages as a key challenge, as well as public-private interface issues including the government’s inconsistent interpretation of its policies and regulations.
Jordan’s economic growth has been limited for over a decade by exogenous shocks, including the global financial crisis, energy disruptions during the 2011 Arab Spring, the 2015 closure of Jordans borders with Iraq and Syria, and the Syrian civil war. Although the borders with Iraq fully and Syria partially reopened in 2017 and 2018 respectively, cross-border movements have not recovered to previous levels. After a 1.6 percent GDP contraction in 2020 due to the pandemic, Jordan achieved 2.2 percent real GDP growth in 2021. IMF projections estimate growth will reach 2.7 percent in 2022.
In recent years, the government has run large annual budget deficits and reducing the financing gap with loans, foreign grants, and savings. In March 2020, the IMF board approved a $1.3 billion Extended Fund Facility (EFF) program focused on fiscal consolidation, increased revenue collection, targeted social spending, economic growth, and job creation. The IMF also released additional credit from a Rapid Financing Instrument to help Jordan meet its fiscal obligations during the pandemic. In January 2022, Jordan and the IMF completed its third review of the EFF program.
In October 2021, Jordan established a dedicated Ministry of Investment, which has absorbed the duties of the Jordan Investment Commission and the Public Private Partnerships (PPP) Unit. The Minister of Investment is charged with all issues related to local and foreign investors and setting policies to stimulate investment and enhance competitiveness.
Foreign Direct Investment (FDI) dropped slightly by 1.5 percent to JD 509.8 million ($720 million) in 2020 compared to 2019. FDI inflow reached JD 269.4 million ($380 million) during the first three quarters of 2021.
1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
Jordan is largely open to foreign investment, and the government is committed to supporting foreign investment. Foreign and local investors are treated equally under the law.
In October 2021, a new, dedicated Ministry of Investment absorbed the responsibilities of the Jordan Investment Commission (JIC) and is now responsible for implementing the 2014 Investment Law and promoting new and existing investment in Jordan. The Ministry is the focal point for investors and can expedite government services and investment incentives. The Ministry supervises and approves investment-related matters within guidelines set by the Investment Council and approved by the government.
The Investment Council, comprised of the Prime Minister, ministers with economic portfolios, and representatives from the private sector, oversees the management and development of national investment policy and propose legislative and economic reforms to facilitate investment.
The Ministry of Investment oversees an “Investment Window” to provide information and technical assistance to investors, with a mandate to simplify registration and licensing procedures for investment projects that benefit from the Investment Law. The Ministry will continue offering the same services that were initiated by The Jordan Investment Commission, including the “Follow-Up and After Care” department established in 2018 and the investor grievance mechanism introduced in 2019 to address investor complaints, with the aim to resolve legal disputes outside of the formal court system.
In 2018, the government issued the “Code of Governance Practices of Policies and Legislative Instruments in Government Departments for the Year 2018.” It aims to increase legislative predictability and stability to ensure the confidence of citizens and the business sector. The government developed and adopted guidelines for a Regulatory Impact Assessment (RIA), to be implemented across all government entities.
Limits on Foreign Control and Right to Private Ownership and Establishment
Investment and property laws allow U.S. entities to establish businesses in many, but not all, sectors. Foreign companies may open regional and branch offices; branch offices may carry out full business activities; and regional offices may serve as liaisons between head offices and Jordanian or regional clients. The Ministry of Industry, Trade and Supply’s Companies Control Department implements the government’s policy on the establishment of regional and branch offices.
Under the U.S.-Jordan Bilateral Investment Treaty, U.S. investors are granted several exceptions and are accorded the same treatment as Jordanian nationals, allowing U.S. investors to maintain 100 percent ownership in some restricted businesses. In some sectors, including aerospace and defense, travel and tourism, transportation, and media and entertainment, there are limits to U.S. ownership and/or requirements for key positions to be filled by Jordanian nationals, among other restrictions. The most up-to-date listing of limitations on U.S. investments is available in the FTA Annex 3.1 and may be found athttp://www.ustr.gov/trade-agreements/free-trade-agreements/jordan-fta/final-text
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 Land and Survey Department, the Ministry of Finance, and/or the Cabinet may need to approve foreign ownership of land and property, which must then be developed within five years of the date of approval.
In 2020, the government amended its bylaw governing foreign ownership, expanding ownership percentage in some economic activities, while maintaining the following restrictions:
Foreigners are prohibited from wholly or partially owning investigation and security services, stone quarrying operations for construction purposes, customs clearance services, and bakeries of all kinds; and are prohibited from trading in weapons and fireworks. The Cabinet, however, may approve foreign ownership of projects in these sectors upon the recommendation of the Investment Council. To qualify for the exemption, projects must be categorized as being highly valuable to the national economy.
Investors are limited to 50 percent ownership in certain businesses and services, including retail and wholesale trading, engineering consultancy services, exchange houses apart from banks and financial services companies, maritime, air, and land transportation services, and related services.
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 bylaw authorizes the Council of Ministers, upon the recommendation of the Prime Minister to grant a higher percentage ownership to non-Jordanian investors in any investment based on a certain criterion.
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.
For national security purposes, foreign investors must undergo security screening through the Ministry of Interior, which can be finalized through the Commission’s “Investment Window” located at the Investment Commission or online https://www.jic.gov.jo/en/home-new/.
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.
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. All current treaties and agreements in force between the United States and Jordan may be found here: https://www.state.gov/treaties-in-force/
As a follow-up to OECD’s Investment Policy Review of Jordan and Jordan’s adherence to the
OECD Declaration on International Investment and Multinational Enterprises in 2013, the MENA-OECD competitiveness program issued a report in 2018 entitled “Enhancing the legal
framework for sustainable investment: Lessons from Jordan” (http://www.oecd.org/mena/competitiveness/Enhancing-the-Legal-Framework-forSustainable-Investment-Lessons-from-Jorden.pdf).
Businesses in Jordan need to register with the Ministry of Industry, Trade, and Supply, Companies Control Department, or the Chambers of Commerce or Industry depending on the type of business they conduct. Registration is required to open a bank account, obtain a tax identification number and obtain a VAT number. New businesses also need to obtain a vocational license from the municipality, receive a health inspection, and register with the SSC.
In February 2022, the Parliament endorsed a new law for licensing professions within the jurisdiction of the Greater Amman Municipality (GAM) to create a registration fast-track. More than 383 economic activities will be eligible to obtain their licenses within one day, or maximum seven days if the business is considered high-risk. The law also extended the validity of licenses from one to five years.
The Ministry of Investment (which has absorbed the responsibilities of the Jordan Investment Commission) maintains an “Investment Window” which serves as a comprehensive investment center for investors. The Investment Window offers technical advice and complete registration and licensing services for investments inside and outside of development zones. Investors can register their businesses in one day if all documents are provided. Approvals for exemptions granted under the investment law can be approved and obtained in one week.
Jordan has also adopted a single security approval for new investors. The new approval covers registering and licensing the company, obtaining driving licenses for investors, possessing immovable property for the establishment of investment projects in the industrial and developing zones, in addition to granting residence permits to non-Jordanian investors and their family members. The commission has published a number of online guides, including the investor guide (Investor Guide – Moin).
In 2018, the Companies Control Department has developed and launched a portal for online registration: http://www.ccd.gov.jo/. Foreign investors can access it to register new companies.
However, e-signatures have not been implemented, so investors must sign documents using notary services in their countries.
In November 2019, under the Jordan Investment Commission (JIC), the government introduced several new online services including the issuance and renewal investor IDs, issuance and renewal of IDs for investors’ family members, registration of institutions in development zones, first-time registration of individual institutions, changing the method of use, registration and renewal of subscriptions to the Amman Chamber of Commerce (ACC), amendments to subscriptions to the ACC, and issuance of environmental permits. The introduction of these electronic services reduced the time needed to grant or renew the investor identification card (required to facilitate various transactions) to one day. (home new – Moin). In December 2020, the Greater Amman Municipality (GAM) digitized thirteen of its licensing related services, including vocational licensing and renewal.
In 2018, Jordan launched a National Single Window (NSW) for customs clearance. In 2020, all export and import custom declarations became electronic. In January 2022, the government adopted a simplified import tariff structure and reduced tariff rates. The Ministry of Finance reduced tariff brackets from eleven levels of taxation to four, ranging from zero to 25 percent. The maximum tariff rate (previously 40 percent) was reduced to 25 percent and will be reduced to 15 percent by 2023 (https://services.customs.gov.jo/JCcits/sections.aspx).
The Ministry of Digital Economy and Entrepreneurship continues to encourage the use of e-services and expand the number of government transactions that can be completed online. As of March 2021, 413 e-services are available including services provided by the Greater Amman Municipality, Ministry of Investment, Tax Department, Ministry of Trade, and Jordan Customs.
Outward Investment
Jordan does not have a mechanism to specifically incentivize outward investment, nor does it restrict it.
2. Bilateral Investment and Taxation Treaties
In addition to the United States, Jordan has signed bilateral investment treaties with 57 countries including the European Union, Singapore, and Canada. Jordan’s bilateral investment treaty with the United States entered into force in 2003 and provides reciprocal protection of Jordanian and U.S. individual and corporate investments.
The U.S.-Jordan Free Trade Agreement (FTA) (https://ustr.gov/trade-agreements/free-trade-agreements/jordan-fta), entered into force in 2001 and came into full effect in January 2010. It does not supersede or eliminate the Qualified Industrial Zones QIZ initiative, which requires 8 percent of Israeli content (7% for high tech goods) to qualify for duty-free U.S. entry. 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.
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 its neighbors, including Egypt, Syria, Morocco, Tunisia, the UAE, Algeria, Lebanon, the Palestinian Authority, Kuwait, Sudan, Bahrain, and Iraq.
An economic association agreement between Jordan and the European Union (EU) entered into force in 2002. This agreement facilitates 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 products, conditional to hiring a certain percentage of Syrian labor. Jordan and the EU are discussing potential revisions to this agreement.
With respect to other agreements, Jordan signed a Free Trade Agreement with Singapore in 2004. 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. Jordan negotiated a new framework economic agreement with Turkey in 2019 to replace the Jordan-Turkey FTA, which was suspended in 2018.
Jordan has double taxation avoidance agreements with 31 countries including the United Arab Emirates, Saudi Arabia, Qatar, Bahrain, Egypt, Algeria, Tunisia, Canada, the United Kingdom (UK), France, and Turkey. The terms of each agreement vary 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.
In October 2019, The OECD announced that Jordan has become the 135th country to join the “Inclusive Framework on Base Erosion and Profit Shifting (BEPS).” Jordan is party to the Members of the OECD/G20 Inclusive Framework on BEPS joining the October 2021 Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy as of 4 November 2021.
3. Legal Regime
Transparency of the Regulatory System
Legal, regulatory, and accounting policies, applicable to both domestic and foreign investors, are transparent.
The Jordanian Companies Law stipulates that all registered companies should maintain sound accounting records and present annual audited financial statements in accordance with internationally recognized accounting and auditing principles. According to the Jordanian Securities Commission (JSC) Law and Directives of disclosures, auditing, and accounting standards (1/1998), all entities subject to JSC’s supervision are required to apply International Financial Reporting Standards (IFRS).
In 2018, the government issued the “Code of Governance Practices of Policies and Legislative Instruments in Government Departments” to increase legislative predictability and the stability of legislative environment. Currently, the government is updating its Regulatory Impact Assessment (RIA) guidelines. Furthermore, it is working to establish a unified public consultation portal to ensure all government entities conduct consultations on all their regulations.
In 2020, the Council of Ministers issued a “Legislation Data Memorandum,” which all government entities submitting new regulations are required to fill out. The memorandum provides information on the type and details of consultations conducted with the public and private sector. Laws and regulations are also published on the website of the Legislative and Opinion Bureau for public comment, in addition to executive branch consultations 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 inthe past by family affiliations, business ties, and other entrenched interests.
The draft comprehensive business law, currently with the Legislative and Opinion Bureau undergoing an RIA, includes updates that will touch on anti-competitive practices, Investors’ rights, contract enforcement, insolvency, etc.
All investments, including public sector projects, are required to conduct an environmental and social impact studies, before receiving final approval. Jordan is committed to its fiscal transparency policy; the Ministry of Finance publishes a monthly “General Government Finance Bulletin” and that includes detailed information on government’s debt obligations. (arbic_pdf_december2-2021.pdf (mof.gov.jo))
International Regulatory Considerations
Jordan recognizes and accepts most U.S. standards and specifications. However, Jordan has occasionally required additional product standards for imports. Some of these measures have been viewed as barriers to trade, such as a 2014 restriction imposed on packaging sizes for poultry available for retail resale.
As a member country of the WTO, Jordan is obliged to notify all draft technical regulations to the WTO Committee on Technical Barriers to Trade (TBT).
Jordan is a signatory of the WTO Trade Facilitation Agreement. Jordan had implemented 88.7 percent of its commitments. Jordan submitted its notifications for Category A before the agreement came into force, is currently in the final review for categories B and C and must report completion by December 2022.
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 have complained about judicial backlogs and subsequent delays in legal proceedings.
In 2018, Jordan has introduced economic judicial chambers. Jointly the Judicial Council in cooperation with the Ministry of Justice established a unit at the Amman First Instance Court and Amman Magistrate Court that includes judges who are solely dedicated to commercial cases specialized in hearing commercial cases exclusively, in accordance with the provisions of the Law of Formation of the amended Courts No. 30 of 2017. These chambers specialize in the adjudication of certain commercial and investment disputes mentioned in Article 4 of the Courts Formation Law.
Laws and Regulations on Foreign Direct Investment
Jordan’s Investment Law 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 the Jordan Investment Commission, which was absorbed by the Ministry of Investment in 2021. The law incorporates a statement of investors’ rights and a legal framework for a single Investment Window.
The Ministry published services and licensing guides outlining processes and fees, in addition to other guides on its website (Publications – Moin). In 2019, it passed amendments to the Foreign Investors bylaw which allowed larger foreign ownership in previously restricted sectors.
In 2018, Jordan passed the Insolvency Law, Movable Assets and Secured Lending Law and Bylaw, the Venture Capital Bylaw, and the Income Tax Law, along with bylaws to ensure proper implementation. The government has worked to train and certify insolvency practitioners. To date, no company has successfully used the insolvency law to re-structure operations and obligations.
In October 2019, Jordan published an amended Social Security Law stipulating temporary changes to the social security contributions of newly registered entities that meet specific conditions, with an aim to support new companies and startups. The government also issued the Investor Grievance Bylaw and established a special unit to follow up on investors’ cases. As of 2019, new investors are offered 10-year “incentive stability guarantees.”
Since 2020, the Government of Jordan has a Public Private Partnership (PPP) Unit to identify and study investment opportunities. The PPP Unit falls under the Ministry of Investment and has received technical assistance from the International Finance Corporation (IFC) and other donors.
In 2021, the Parliament approved further amendments to the Companies Law, to allow virtual General Assembly and Board of Directors meetings. The amendments also stipulated companies must keep a record that includes information about the beneficial owner of shares and further obliged companies to disclose to the Companies Control Department the actual beneficiary, in support on Anti-Money Laundering and Counter Terrorism Financing Law.
There is no systematic or legal discrimination against foreign participation with respect to ownership and participation in Jordan’s major economic sectors other than the restrictions outlined in the governing regulations. In fact, many Jordanian businesses actively seek engagement with foreign partners to increase their competitiveness and access to international markets. The government’s efforts have made Jordan’s official investment climate welcoming; however, U.S. investors have reported hidden costs, bureaucratic red tape, vague regulations, and unclear or conflicting jurisdictions.
Most economic regulations are available on the Ministry of Industry and Trade and Supply website (https://www.mit.gov.jo/Default/AR). All regulations are published in the Legislative and Opinion Bureau (http://www.lob.jo/).
Competition and Antitrust Laws
Parliament passed amendments to Competition Law No. 33/2004 in 2011 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.
The investor grievance unit established in 2019 at the Ministry of Investment can also investigate unfair competition cases filed by investors.
Expropriation and Compensation
Article 11 of the Jordanian Constitution stipulates those expropriations are prohibited unless specifically deemed to be in the public interest. In cases of expropriation, the law mandates 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).
In January 2018, the Parliament passed amendments to Arbitration Law 2017, which aims to facilitate the use of arbitration as an alternative to dispute settlement procedures.
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 treated as any other commercial or civil dispute in the Jordanian judicial system. 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 in litigating cases is being able to conduct proper process of service upon all concerned parties. The recently established Economic Chamber has an expedited route and specialized courts are also established at the appeal and cassation court, thereby reducing litigation time for commercial cases.
A large foreign investor was negatively affected by the 2018 amendments to the Income and Sales Tax Law, which eliminated tax benefits inside the private free zones. The investor filed a case before the Tax Court of First Instance against the ISTD to challenge this and reserve its right to income tax exemption the government has agreed to. The Court appointed an expert to assess the validity of such instruction. The court ultimately decided in the investor’s favor.
Rulings by U.S. courts or other international arbitration committees can be upheld through the filing of an Enforcement of Ruling motion in a Jordanian court.
International Commercial Arbitration and Foreign Courts
March 2018 amendments to Arbitration Law No. 16 introduced changes to the procedural framework of arbitrators seated in Jordan, which can be traced in the UNCITRAL model law. The amended law gives more authority to the Arbitral Tribunal and limits the role of the Court of Appeal.
Rulings by U.S. courts or other international arbitration committees can be upheld through the filing of an Enforcement of Ruling motion in a Jordanian court.
The Ministry of Investment has an investor grievance mechanism in accordance with the Investor Grievance bylaw No. 163 of 2019, and Grievance Hearing regulation No. 1 of 2020. This mechanism allows investors to file complaints against government decisions outside of court system; complaints can be filed electronically through Ministry’s website.
Bankruptcy Regulations
The Commercial Code, Civil Code, and Companies Law collectively govern bankruptcy and insolvency proceedings. In December 2017, the cabinet endorsed a bankruptcy bylaw which stipulates procedures for optional and compulsory liquidation, along with the mechanism, liquidation plan, and required documentation and reporting. In 2018, Parliament passed the Insolvency Law, which allows individuals and companies to offset their financial position through a debt management plan. The law was designed to help the insolvent entity continue its economic activity, rather than directly resorting to bankruptcy. The law regulates insolvency proceedings for foreign organizations according to international conventions ratified by Jordan. As of 2022, judges had dismissed almost all petitions for insolvency on technical grounds and no company has yet used the insolvency law successfully.
Defaulting on loans or issuing checks without adequate available balances is a crime in Jordan and may subject the offender to imprisonment under Jordan’s penal system. While Jordan is reexamining these laws, prison terms for debtors remains a legal practice in Jordan. Investors should conduct thorough due diligence on potential partners and avail themselves of local legal counsel to understand best business practices in Jordan and conform with local laws. The U.S. Commercial Service Office of the Embassy of the United States in Amman can assist American businesses in these endeavors.
4. Industrial Policies
Investment Incentives
Under Investment Law No. 30/2014, the Council of Ministers, upon the recommendation of the Investment Council, may offer 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 also offer certain exemptions for projects in the following sectors:
Agriculture and livestock
Hospitals and specialized medical centers
Hotel and touristic facilities
Tourism-related entertainment and recreation
Contact and communication centers
Scientific research centers and medical laboratories
Technical and media production
Such incentives include customs exemptions, refunding of the general tax for production inputs, and no sales tax. The Ministry of Investment can provide investors with further information on these exemptions (home new – Moin). 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 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 are granted for production requirements and fixed assets used in industrial or handicrafts activities. Such exemptions are subject to administrative procedures and approvals obtained from the Ministry of Investment Technical Committee and are governed by the previously referenced regulation.
Article 8-A of the 2014 Investment Law allows the cabinet to grant additional advantages, exemptions, or incentives to any economic activities. Under this article, the cabinet granted additional incentives to the ICT, tourism, and transport sectors in 2016, as published in the Official Gazette.
As the government implements reforms under the IMF Extended Fund Facility program and its own pro-growth reform agenda, several U.S. investors have reported the government has sought to reduce or eliminate incentives, guarantees, and/or tax exemptions previously expected.
Bylaw number 13 for year 2015 regulates the incentives granted to renewable energy and energy efficiency equipment and projects. The Bylaw exempted those items from customs duties and imposed a General Sales Tax (GST) at a rate of zero percent. However, the Ministry of Energy has stalled all renewable energy projects of more than 1 MW capacity.
Jordanian law and regulation promote and incentivizes water efficiency, waste management, and green building in commercial property development. For example, since 2015 the Jordan National Building Codes have required energy efficient practices in new construction.
Starting April 1, 2022, the Government will implement a new electricity tariff structure, which will reduce production costs for several vital economic sectors including health, tourism, commercial, agricultural, and industrial sectors.
Foreign Trade Zones/Free Ports/Trade Facilitation
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, 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 Investment Law No. 30 of 2014 merged the Development and Free Zones Commission (DFZC) into the newly formed Jordan Investment Commission (now absorbed by the Ministry of Investment), thus it became the main 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 the King Hussein Business Park Development Zone. The 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.
The government has also created nine industrial estates in Amman, Irbid, Karak, Mafraq, Madaba , Tafileh, Salt, 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 for a wide variety of manufacturing activities, reducing the cost of utilities and providing cost-effective land and buildings. Investors in the estates continue to receive incentives until their contracts expire, and receive various additional exemptions, such as 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 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 launched a solar park in Ma’an development zone and announced plans to establish two new industrial parks in Zarqa and Jerash.
Under the Investment Law, establishments operating within development zones are subject to a unified tax rate of 5 percent. However, Income Tax Law No. 38 of 2018 modified the tax rates applicable to entities operating in the Development Zones depending on the source of the income; industrial activities with a local value-added of at least 30 percent are subject to 5 percent income tax rate, while other projects and activities are subject to 10 percent.
The Investment Law also grants entities registered in the free zones a tax exemption on any activity conducted within the borders of the free zones, the export of goods and services outside the Kingdom, and associated transit trade. Profits earned on activities pertaining to the sale, disposal, or importation of goods and services within the borders of the free zones are subject to tax based on the normal income tax rates applicable to each entity, depending on its status (corporation or individual).
The Aqaba Special Economic Zone (ASEZA) is an independent economic zone not governed by the Investment Commission or the articles in the Investment Law 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, ASEZA has attracted projects, mainly in hotel and property development sectors, valued at over $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 became operational in 2018 and reached design capacity in 2019. The new port, 20 kilometers south of the previous port, added four new terminals and expanded general ship berthing and marine services, in addition to adding dedicated terminals for grain silos, liquefied natural gas, phosphates, and propane.
Investors, foreign or domestic, face specific requirements 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.
In 2021, the government passed tax legislation to address gaps and loopholes to prevent tax leakages and ensure transparency and fairness; This included legislation on economic substance and transfer pricing and brought ASEZA under the national control for tax and customs administration.
Jordan does not follow “forced localization.” However, some of the incentives are being tied to deployment of local content at certain percentages.
Jordan does not have requirements for foreign IT providers to turn over source code or provide access to surveillance.
In 2020, the Ministry of Digital Economy and Entrepreneurship submitted a draft for the personal Data Protection Law, which supports Jordan’s digitization efforts. The Council of Ministers approved the law and sent it to the Legislative and Opinion Bureau for review, as of March 2022, the draft law is with the Lower House for review. Jordan does not have a modern data protection law. The Criminal Law, Cybercrime Law, and Telecommunication Law offer partial protection of personal data.
5. Protection of Property Rights
Real Property
The legal system reliably facilitates and protects the acquisition and disposition of property rights. Foreign ownership of land and assets is governed by the Leasing of Immovable Assets and Their Sale to Non-Jordanian and Judicial Persons Law No. 47/2006. Under Article 3 of the law, if the buyer’s country of residence has a reciprocal relationship with Jordan, 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 three years in duration. Interest in real property is recognized and enforced once recorded in a legal registry.
Jordan approved an investment program that grants citizenship or permanent residency of non-Jordanians in February 2018. This program includes permanent residency for non-Jordanians who purchase properties worth a minimum of JOD 200,000 ($282,100) and hold the properties for 10 years.
A new Property law passed in 2019 consolidated 13 laws governing property ownership in one legislation and addressed issues such as zoning and the facilitation of ownership and leases for foreign investors.
All land plots in Jordan are titled and registered with the Jordanian Land and Survey Department; any land not titled as private property is considered government property.
Intellectual Property Rights
Jordan has a fairly strong legal structure to protect intellectual property rights (IPR), having passed several laws in compliance with its international commitments. Laws consistent with Trade Related Aspects of Intellectual Property Rights (TRIPS) now protect trade secrets, plant varieties, and semiconductor chip designs. Jordan’s record on IPR enforcement has improved in recent years, but more effective enforcement mechanisms and legal procedures are still needed to address the cases of infringement and theft that persist.
Copyrights are registered with the Ministry of Culture’s National Library Department, and patents and trademarks are registered with the Registrar of Patents and Trademarks at the Ministry of Industry and Trade. Registration of patents and trademarks can be done electronically at https://ippd-eservice.mit.gov.jo/.
Jordan ratified the Patent Cooperation Treaty and the Madrid Protocol in 2007. Jordan is a signatory to World Intellectual Property Organization (WIPO) treaties on both copyrights and on performances and phonograms, and it has been developing updated laws for copyrights, trademark standards, and customs regulations to meet international standards. Jordanian firms may seek joint ventures and licensing agreements with multinational partners.
In 2021, the Industrial Property Protection Directorate, in cooperation with the World Intellectual Property Organization, completed institutional intellectual property policies for Jordanian universities and research institutions where 11 Jordanian universities benefited from this technical support.
Despite improvements in enforcement generally, infringements persist, especially copyright violations of electronic media. In particular, a significant amount of pirated videos, software, and television content remains in the marketplace.
During 2021, the National Library referred 23 cases of copyright violations to the judiciary.
In October 2021, the government enacted a bylaw on Border Measures to Protect Intellectual Property Rights to stipulate the procedures to be followed by customs officials at the border to ensure the protection of IPR. The bylaw allows the right holder of a good to request the competent court to stop clearance procedures and prevent the release of suspected counterfeits.
Jordan was not included in the 2021 Special 301 report. One online market in Jordan was included in the 2021 Notorious Markets Report for streaming pirated television content.
Resources for Rights Holders
Mr. Peter Mehravari
Intellectual Property Attaché for the Middle East & North Africa
U.S. Embassy Abu Dhabi
Tel: +965 97589223
Email: Peter.Mehravari@trade.gov
For additional information about national laws and points off contact at local IP offices, please see WIPO’s country profiles at http://www.wipo.int/directory/en/.
6. Financial Sector
Capital Markets and Portfolio Investment
There are three key capital market institutions: the Jordan Securities Commission (JSC), the Amman Stock Exchange (ASE), and the Securities Depository Center (SDC). The ASE launched an Internet Trading Service in 2010, providing an opportunity for investors to engage in securities trading independent of geographic location.
Jordan’s stock market is one of the most open among its regional competitors, with no cap on foreign ownership. As of end of February 2022, non-Jordanian ownership in companies listed on the ASE represented 48.3 percent of the total market value. The foreign ownership includes governments, institutional investors, and individuals. Non-Jordanian ownership in the financial sector was 52.2 percent, 21.5 percent in the services sector and 53.7 percent in the industrial sector.
Despite recent reforms and technological advances, the ASE suffers from intermittent liquidity problems and low trading activity. No new listings have been added since 2008. Market capitalization at end of 2021 reached $21.8 billion, up by almost 20 percent from 2020 levels.
The government respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions.
Credit is allocated on market terms. The private sector has access to a limited variety of credit instruments relative to countries with more developed capital markets.
Money and Banking System
Jordan has 24 banks, including commercial banks, Islamic banks, and foreign bank branches. Jordan does not distinguish between investment banks and commercial banks. Concentration in the banking sector has decreased over the past decade, the assets of the largest five banks accounted for 50.3 percent of licensed banks’ total assets at the end of 2020. The banking system is capably supervised by the CBJ, which publishes an annual Financial Stability Report. JFSR2020 Final 28-11-2021.pdf (cbj.gov.jo)
Banks continue to be profitable and well-capitalized with deposits being the primary funding base. Liquidity and capital adequacy indicators remain strong largely due to the banks’ conservative and risk averse approach, and due to strict regulations on lending, particularly mortgage lending. The non-performing loan ratio reached 5.45 percent at the end of 2020. The rate of non-performing loans is expected to increase in 2022 as the CBJ rescinded in December 2021 measures to defer loan payments for pandemic-affected businesses.
Jordan has historically had low banking penetration, which the CBJ has worked to improve through its 2018 Financial Inclusion Strategy. As of end of 2020, 50 percent of people and 29 percent of women in Jordan above the age of 15 had bank accounts.
Banking Law No. 28 of 2000 does not discriminate between local and foreign banks, however capital requirements differ. The minimum capital requirements for foreign banks are JD 50 million ($70.6 million), and JD 100 million ($141 million) for local banks, although the CBJ has the authority to amend and increase the minimum capital requirement. The law also protects depositors’ interests, diminishes money market risk, guards against the concentration of lending, and includes articles on electronic banking practices and anti-money laundering. The CBJ set up an independent Deposit Insurance Corporation (DIC) in 2000 that insures deposits up to JOD 50,000 ($71,000). The DIC also acts as the liquidator of banks as directed by the CBJ.
Foreigners are allowed to open bank accounts with a valid passport and a Jordanian residence permit.
In January 2017, the CBJ established the Jordan Payments and Clearing Company, with an aim to establish and develop digital retail and micro payments along with the investment in innovative technology and digital financial services. The CBJ actively supports technology and is running JoMoPay, a mobile payment system and provides regulatory support to a privately-operated electronic bill payment service eFAWATEER.com.
In October 2021, The Central Bank of Jordan (CBJ) started a process soliciting comments from local banks over the potential introduction and licensing of digital banks, which aims to automate all front-end, back-end and middle-end operations. The CBJ is also exploring the possibility of launching the central bank digital currency (CBDC) would be linked to the Jordanian dinar and have legal standing. Full adoption and implementation could take five years.
Foreign Exchange and Remittances
Foreign Exchange
The CBJ supervises and licenses all currency exchange businesses. These entities are exempt from paying commissions on exchange transactions and therefore enjoy a competitive edge over banks.
The Jordanian Dinar (JD or JOD) is fully convertible for all commercial and capital transactions. Since 1995, the JD has been pegged to the U.S. dollar at an exchange rate of JD 1 to USD 1.41.
Other notable foreign exchange regulations include:
Non-residents are allowed to open bank accounts in foreign currencies. These accounts are exempted from all transfer-related commission fees charged by the CBJ.
Banks are permitted to purchase unlimited amounts of foreign currency from their clients in exchange for 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.
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.
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.
7. State-Owned Enterprises
Jordan has twenty-two SOEs of different sizes and mandates that are fully owned by the government. Wholly-owned SOEs employ around 11,000 people and have assets exceeding $8 billion. The government has more than 50 percent ownership in six companies, employing around 4,000 individuals, with total assets of $1.3 billion.
Most SOEs are small in terms of operations, assets, number of employees, and income. The largest SOEs are: National Electrical Power Company (NEPCO), Samra Electric Power Company, the Yarmouk Water Company, and Aqaba Development Corporation (ADC).
On average, since 2010, the private sector has maintained its share in the Jordanian economy’s Gross Domestic Product (GDP). The proportion remains around the 84% to 86% of GDP. SOEs in Jordan exercise delegated governmental powers and operate in fields not yet open for private investment, such as managing the transmission and distribution of electrical power and water. Other SOE activities include logistics, mining, storage and inventory management of strategic products, and some economic development activities such as Aqaba Port Company, Jordan National Petroleum Company, and Jordan Silos and Supply General Company. The government supports these companies as necessary, for example, the government has issued and guaranteed Treasury bonds for NEPCO since 2011 to ensure continuous power supply for the country.
SOEs generally compete on equal terms with private enterprises with respect to access to markets, credit, and other business operations. The law does 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.
Jordan is not a party to the World Trade Agreement (WTO) Government Procurement Agreement.
Privatization Program
In year 2012, Jordan completed a multi-year privatization program, in the telecom, energy, and transportation sectors. There government has no further plans for additional privatizations.
In year 2020, Jordan adopted a new Public Private Partnership Law (PPP) to support the government’s commitment to broadening the utilization of public-private sector partnerships (PPPs) and encouraging the private sector to play a larger role in the economy. The law does not limit PPPs to certain sectors or nationalities.
A PPP unit housed at the Ministry of Investment supports the government in identifying and prioritizing projects, provides funding resources to cover pre-feasibility and feasibility studies, and oversees tendering processes. The PPP unit interacts with private sector and potential investors through promotional activities, market sounding exercises, and to discuss proposals. Communication during the bidding phase is strictly governed by the PPPs bylaw in line with international best practices.
Once a contract is awarded, line ministries or entities will take over as main POCs for projects and their implementation. The PPP Higher Council will handle investors’ grievances throughout the project’s lifecycle. The unit has already identified a list of potential PPP projects in several sectors: water, energy, transport, tourism, education, health, environment, and ICT. PPPs related regulations and current investment opportunities are listed on the Ministry of Investment website (In Arabic) مشاريع الشراكة بين القطاع العام و الخاص – وزارة الاستثمار الاردنية (moin.gov.jo)
There is general awareness of responsible business conduct among both manufacturers and consumers in Jordan, with many of the large local and multinational companies voluntarily developing and adopting corporate social responsibility (CSR) programs. CSR efforts predominantly focus on improving infrastructure in adjoining communities or providing better access to educational opportunities.
The amended Companies Law of 2018 regulates the work of companies by applying the rules of corporate governance and enhancing the monitoring authorities of shareholders at public liability companies. All investors are required to conduct environmental and social impact studies.
The government, enterprises, and NGOs are taking initiatives to promote responsible business conduct principles into their practices. The authorities developed a Corporate Governance Code based on the OECD Principles of Corporate Governance and ratified human rights conventions, but further steps are needed to guarantee respect for human rights by enterprises.
Jordan Labor Watch is a non-governmental organization which contributes to improving working conditions in accordance with international labor standards. It produces reports covering labor issues and uncovers workplace violations and abuses. The program provides a comprehensive database covering indicators related to the labor market, trade unions, labor organizations, and laws and regulations governing performance. Furthermore, Jordan Labor Watch strives to present alternative policies that tackle challenges facing the Arabian and Jordanian labor market.
The American Chamber of Commerce in Jordan published in 2016 a framework code of conduct for the private sector, the Jordan Integrity and Anti-Corruption Commission (JIACC) approved and embedded as part of the governance chapter in the amended Companies Law. The Customs Department released and revised a Golden List Program, which encourages good corporate citizenship amongst trading companies and international best practice for trade across borders.
The government issues a monthly financial bulletin highlighting all revenues, including taxes and royalties paid by extractive industries. Jordan initiated discussions with the Extractive Industries Transparency Initiative (EITI), but it has not joined.
Jordan is a signatory of The Montreux Document on Private Military and Security Companies since 2009.
Climate Issues
Jordan is drafting a Nationally Determined Contributions (NDC) Action Plan in five key sectors: energy, transport, agriculture, water, and health. The NDC Action Plan seeks to scale up renewables and energy efficiency measures; adapt the water, agricultural, and health sectors to climate change impacts; and strengthen the resilience of disadvantaged groups and vulnerable ecosystems.
Jordan has raised its greenhouse gas (GHG) emission reduction target included in its revised NDCs to 31 percent compared to the baseline scenario. The reduction target is divided into conditional and unconditional a as follows: conditional target: 26 percent, unconditional target: 5 percent.
The new GHG emission reduction target is based on a combination of national policies, programs, and actions as well as international support and finance. The adaptation vision and objective of the updated NDC is directly linked to the recently launched National Adaptation Plan (NAP). This updated NDC aims at driving Jordan’s post COVID-19 recovery process into a lower carbon and more climate resilient development pathway steered by national green growth priorities while fully committing to the provisions of the UNFCCC and the Paris Agreement and paving the way for a future Climate Change Long Term Strategy (LTS). The total estimated cost of the proposed mitigation actions listed in the updated NDC submission is $7.54 billion
To support its targets, the Ministry of Environment has also identified pilot cross-sector interventions to implement mitigation actions in the energy and water sectors with Energy Efficiency (EE) and Renewable Energy (RE). The interventions aimed at fulfilling three components: A national Monitoring, Reporting and Verification MRV system and registry for climate mitigation measures, designing a platform for private sector financing in EE and RE, and exploring the potential for market-based instruments for climate mitigation measures.
The Ministry of Environment adopted two by-laws in 2005 to protect biodiversity. Article 4 Environmental Impact Assessment (EIA) Regulation No. 37 of 2005 ensures any project will need to assess its impact on the environment including biodiversity. Regulation No. 29 of 2005 on natural protected areas and national parks gave the authority of creating protected areas to a Technical Committee led by the Ministry of Environment, and management authority to the Royal Society for the Conservation of Nature (RSCN), a unique model for the region and globally. Since that time, RSCN has gone on to establish seven protected areas throughout Jordan, covering over 1200 square kilometers.
All agricultural, industrial, commercial, housing, and tourism projects, including public sector projects, are required to obtain environmental approval from the Ministry of Environment (Article 4 Environmental Impact Assessment (EIA) Regulation No. 37 of 2005). The process begins with a screening phase led by the Ministry of Environment and an initial EIA, to determine whether the project has a significant impact on the environment. Depending on the result, the Ministry of Environment may require a comprehensive EIA.
In 2020 Jordan established its first Marine Protected Area in the Gulf of Aqaba, governed and managed by the Aqaba Special Economic Zone Authority under its laws and regulations. That same year new provisions were added to the Agricultural Law of 13 of 2015 updating the fishing regulations, including an annex with endangered marine species.
Jordanian law and regulation promote and incentivizes water efficiency, waste management, and green building in commercial property development. For example, since 2015 the Jordan National Building Codes have required energy efficient practices in new construction.
9. Corruption
Courts convicted a former Minister of Public Works and Housing, Customs Director General, and several local elected officials for corruption in separate trials during 2021. In September 2021, the State Security Court issued verdicts in a case related to the illegal production and smuggling of tobacco. A three-judge panel convicted 23 defendants and sentenced the chief suspect to 20 years’ imprisonment. The judges also acquitted four defendants and dismissed charges on two defendants who died during the trial. The verdict was subject to appeal at the Court of Cassation. The State Security Court also imposed fines of JD 179 million ($252 million) on multiple defendants in the case, requiring additional hearings.
Jordan was the first Middle Eastern country to sign and ratify the United Nations Convention against Corruption (UNCAC) in 2005. In 2006, Jordan issued a code of conduct for the public sector, enacted an Illicit Gains Law, and Anti-Corruption Law. 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 Illicit Gains Law requires designated officials, their spouses, and minor children to file financial disclosures with the Integrity and Anti-Corruption Commission (IACC). Designated officials include the prime minister, cabinet members, members of parliament, senior government officials, as well as municipal-level council members and executives.
In 2019, Parliament amended the IACC Law granting the IACC more authority to access asset disclosure filings of officials exhibiting unexplained wealth. The amendment empowers the commission to request asset seizures, international travel bans, and suspension of officials under investigation for corruption. The amendment also increases the IACC’s administrative autonomy by enabling the commission to update its own regulations and protecting IACC board members and the chairperson from arbitrary dismissal.
In 2018, the government issued the Code of Governance Practices of Policies and Legislative Instruments in Government Departments, to improve the predictability of legal and regulatory framework governing the business environment.
A new Audit Bureau Law was enacted in 2018 to strengthen audit performance, capacity and independence in line with International Organization of Supreme Audit Institutions (INTOSAI) standards. Other related laws include the Penal/Criminal Code, Anti-Money Laundering Law, Right to Access Information Law, and the Economic Crimes Law.
Jordan is not a party to the OECD Convention on Combatting Bribery.
Resources to Report Corruption
H.E. Mohannad Hijazi
Chairman
Jordan Integrity and Anti-Corruption Commission (JIACC)
P.O. Box 5000, Amman, 11953, Jordan
+962 6 550 3150
Abeer Mdanat
Executive Director
Rasheed Coalition
P.O. Box 582662, Amman, 111585, Jordan
+962 6 585 2528 amdanat@rasheedti.org
10. Political and Security Environment
The threat of terrorism remains high in Jordan. Transnational and indigenous terrorist groups have demonstrated the capability to plan and implement attacks in Jordan. Violent extremist groups in Syria and Iraq, including the Islamic State of Iraq and ash-Sham (ISIS), and al-Qa’ida, directly or indirectly have conducted or supported attacks in Jordan and continue to plot against local security forces, U.S. and Western interests and “soft” targets, such as high-profile public events, hotels, places of worship, restaurants, schools, and malls. Jordan’s prominent role in the Global Coalition to Defeat ISIS and its shared borders with Iraq and Syria increase the potential for future terrorist incidents.
Demonstrations occur frequently. They may take place in response to political or economic issues, on politically significant holidays, and during international events. In general, demonstrations remain peaceful. However, some have turned violent, even when intended to be peaceful, leading security officials to intervene.
Jordan remained a committed partner on counterterrorism and countering violent extremism in 2021. As a regional leader in the Global Coalition to Defeat ISIS, Jordan played an important role in Coalition successes in degrading the terrorist group’s territorial control and operational reach.
Although Jordan experienced a decrease in terrorist activity in 2021 compared to previous years partially due to the continuing COVID-19 pandemic, the country faced a continued threat from terror groups. While the Jordanian security forces thwarted plots and apprehended suspected terrorists, the threat of domestic radicalization, especially online, persisted.
Visitors should consult current State Department public announcements at www.travel.state.gov before traveling to Jordan.
11. Labor Policies and Practices
According to Jordan’s Department of Statistics, in 2021 the total number of employed persons over the age of 15 was approximately 1.3 million, and the total number of unemployed persons was 425,000, suggesting a total workforce of approximately 1.7 million. Jordan does not officially publish a labor participation rate but given a population of 5.1 million persons above the age of 15, the implied labor participation rate is 33 percent. Jordan’s unemployment rate as of September 30, 2021, was 23.2 percent.
Women and youth are underrepresented in Jordan’s labor market. In 2021, the unemployment rate for women was 30.8 percent, and the labor participation rate for women was 14.5 percent. At the same time, the unemployment rate for youth (15-25 years) was 48.5 percent, and the labor participation rate was 34.4 percent.
Jordan does not officially track the nationality of its workforce. However, 31 percent of Jordan’s total population are not Jordanian nationals (either refugees or non-Jordanian workers) and non-Jordanian workers play a significant role in Jordan’s economy, including the informal economy.
Jordan’s workforce (employed and unemployed) is largely well educated, with nearly 40 percent holding a bachelor’s degree or higher, and literacy rates approaching 100 percent. However, educational attainment rates among the population at large are significantly lower, especially among the older population.
Informal labor plays a significant part in Jordan’s economy. Official statistics are unavailable; however, experts estimate that informal labor may account for as much as 41 percent of Jordan’s actual workforce and 15 percent of GDP. There have been few analyses on the interaction between the informal and formal sectors of the economy. However, anecdotal evidence suggests that the agriculture sector and the domestic sector rely heavily on informal employment. In January 2021, agriculture sector employers protested attempts to regularize employment in that sector, complaining regularized employment arrangements would erode their competitiveness.
The COVID-19 pandemic shed light on conditions faced by workers in the informal economy, who do not have access to social welfare protection or medical insurance or may suffer from poor working environment, unfair pay, and harassment. In response to these concerns, the Government of Jordan established a complementary welfare support system in 2021 to support vulnerable workers.
According to Jordan’s Civil Service Bureau, the labor market needs certain medical specialists (such as respiratory therapists), engineers, and cybersecurity specialists. Jordan has a surplus of people educated in the humanities and social sciences.
Many professions and types of positions may be filled only by Jordanians, e.g. administrative professions such as data entry, secretarial tasks and wholesale/retail business. In addition, each sector has a designated minimum percentage of Jordanian employees. The Minister of Labor has the authority to grant exceptions to these policies.
The Jordanian Labor Law restricts layoffs under most circumstances by requiring prior notice to the Ministry of Labor and a guarantee of payment of benefits and severance payments to which the severed employee is entitled. However, termination without prior notice is allowed under certain conditions. Companies may obtain permission from the Ministry of Labor (MOL) to reduce their staff as a result of business restructuring. The social security system provides up to six months of unemployment benefits for formally registered workers.
Local labor requirements in economic development zones and free trade zones vary based on the type of economic activity. For example, employers in qualified industrial zones are restricted in their ability to transfer employees to other sectors and have certain obligations to repatriate foreign workers at the end of their contract terms.
Collective bargaining in Jordan is rare, and labor unions are generally weak. Labor unions serve primarily as intermediaries between workers and the MOL and may engage in collective bargaining on behalf of workers. The 17 recognized unions are all members of the General Federation of Jordanian Trade Unions. Estimates put union membership at less than 10 percent of the labor force. In 2021, labor unions representing workers in garment, food, petrochemical, and oil industries signed forty Collective Bargaining Agreements.
Articles 120, 121, and 122 of the Jordanian law set forth a mechanism for collective labor dispute resolution beginning with labor inspector mediation. If mediation fails, the Minister of Labor reviews the case, followed by the Conciliation Council, then finally by the Labor Court under the Magistrate and Penalty Court to resolve the case within seven days.
There were two strikes in 2021, at Jordanian Cement Factories Company and Aqaba Container Terminal Company. The government’s role has been to keep communications open between workers and management. Neither posed a serious investment risk.
The International Labor Organization has produced a legal analysis showing the extent to which Jordanian legislation is compatible with Convention No. 190 on violence and harassment in the workplace with the aim of establishing a legislative framework conducive to creating a workplace free of these two phenomena. To date, the Government of Jordan has not addressed the issues raised in this analysis, such as defining, comprehensively prohibiting, and/or addressing workplace violence and harassment.
12. U.S. International Development Finance Corporation (DFC), and Other Investment Insurance or Development Finance Programs
DFC has a current exposure of $470.9 million in Jordan from investments made between 2007-2019. Most of these are investments made by the DFC’s predecessor agency, the Overseas Private Investment Corporation (OPIC), for large energy and water infrastructure projects, as well as the Jordan Loan Guarantee Facility, established in partnership with USAID, to expand access to finance for small and medium sized enterprises. These projects have been completed but the loan repayment/guarantee periods will continue for several years.
In 2021, DFC committed $41 million to a $72 million mixed-use real estate development project known as the Madina Mall. The project is part of a six-phase government master plan to develop shopping, parking, and recreational facilities in Jordan’s third largest city, Zarqa, which includes substantial Syrian and Palestinian refugee populations among its estimated 1.4 million inhabitants. The mall currently has about 50 percent of commercial space leased, including a Carrefour.
DFC issued a $10 million loan to the (2) Near East Foundation (NEF) UK to enable the NEF to provide micro-enterprise training for refugees and host populations in Jordan and Lebanon, primarily women and youth. This is the first Development Impact Bond (DIB) to specifically target refugees, seeking to mobilize private sector investment to enable vulnerable refugee populations to participate in the economy and become more prosperous alongside their host communities. At least 65 percent of the beneficiaries of this project will be women.
The U.S. Embassy continues to coordinate closely with the PPP Unit in the Ministry of Investment and others to identify other potential opportunities for DFC participation.
OPIC and Jordan signed the 2007 Investment Incentive Agreement, which serves as the legal framework for all OPIC and DFC agreements.
13. Foreign Direct Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
Host Country Statistical source*
USG or international statistical source
USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other
Economic Data
Year
Amount
Year
Amount
Host Country Gross Domestic Product (GDP) ($M USD)