*EPF510 10/17/2003
Jordan's Economy Could Become Regional Model, Forum Speakers Say
(Country is "rising star" in difficult region, they add) (730)

By Kathryn McConnell
Washington File Staff Writer

Washington -- The U.S.-Jordan Free Trade Agreement and U.S.-created qualifying industrial zones (QIZs) are helping Jordan create a growing and stable economy that could serve as a model for other countries in the Middle East, according to U.S. and Jordanian speakers at a Washington investment forum October 16.

"Jordan is a rising star in a difficult regional market" with new business sectors being added to the economy, said Akel Biltaji, chief commissioner of the Aqaba Special Economic Zone Authority, parent of the Aqaba Industrial Estate, a QIZ launched in 2001.

The United States established QIZs in Jordan to support the peace process in the Middle East after Jordan and Israel signed a peace treaty in 1996. The U.S. Congress mandated them and the U.S. Agency for International Development contributed funds for their construction. Goods from these zones can be exported duty and quota free to the United States.

Aqaba, at the southern tip of Jordan on the Red Sea, is a self-sustaining industrial, commercial and financial center, Biltaji said. The area also is rapidly developing as a tourist center, he added.

In helping to establish the Aqaba QIZ, the United States used experience it gained transforming the former Subic Bay naval base into an economically prosperous area in the Philippines, Biltaji said.

Jordan's QIZs have also received financing from the International Finance Corporation (IFC), an arm of the World Bank that finances private sector projects in the developing world and helps private companies mobilize additional financing from international markets.

Stressing the importance of involving as many Jordanians as possible in the new jobs of the country's growing economy, Biltaji said that when local, employed people are confident in their economy, foreign investment will follow.

Jordan's 11 QIZs have given Jordanians "lots of jobs in a short period" said Halim Salfiti, managing director of Specialized Compounds Company, a textile company. Salfiti said the export advantages offered by QIZs and the free trade agreement reduce production costs, which translates into more jobs. Most of the workers in QIZs are from underprivileged areas, added Salfiti.

"The people know that the way to peace in the region is through jobs, not weapons," said Martin Granoff, chairman of Val D'Or, a U.S.-based garments and textiles company that has operated a factory in a QIZ in Amman for three years. "If I had to go back and decide again whether to invest in Jordan, I would definitely do it," he said.

"There have been systematic and dramatic changes [in Jordan] as a result of economic reform," with the government and private investors developing urban areas for commercial and housing purposes, said Akram Abu Hamdan, director of the National Investment and Development Corporation.

The U.S. government has supported Jordan's economic reforms by negotiating a Trade and Investment Framework Agreement and a Bilateral Investment Treaty prior to the Free Trade Agreement, which came into effect in December 2002. Jordan's reforms provide strong incentives for foreign investment, such as "state-of-the-art" protection for intellectual property rights, in the words of a U.S. economist based in Amman.

Jordan also wants to become a stronger regional educational center, building more universities and delivering electronic education services in partnership with universities and hospitals in the United States, Hamdan said. In addition, Jordan is becoming recognized as a popular destination for medical tourism, he said. The term refers to the practice of traveling to receive medical treatment in countries where it is less expensive than in the traveler's home country.

Hamdan's development corporation also is transforming a former military site near Amman into a modern "garden city" with office buildings, stores, housing and parks, he said.

As a result of QIZs and the free trade agreement, U.S. companies also stand to benefit from duty-free entry into Jordan's market, a U.S. trade official said.

The United States is pursuing other measures -- such as the U.S.-Middle East Partnership Initiative (MEPI) -- to enable Middle Eastern countries to pursue economic, social and political development. MEPI's economic programs involve programs to build intra-regional trade, closer links with the United States and integration with the global economy through arrangements tailored to their circumstances, according to Bush administration officials.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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