Jordan Trade

Subchapters:

  • Business Relationships
  • Foreign direct investment
  • FTAs ​​and Treaties
  • Development Cooperation
  • Prospective fields of study (MOP)

Business relations

Trade relations with the EU

The EU is now Jordan’s largest trading partner and foreign investor (approx. 55% share), Jordan is 66th for the EU (2021). Trade turnover reached €billion in 2021, representing 16% of Jordanian and 0.1% of EU trade. Jordan mainly exports chemicals, mineral raw materials and engineering products to the EU. Mainly engineering equipment, means of transport and food are imported from the EU.

  • Allcountrylist: Overview of major industries in Jordan, including mining, construction, transportation, tourism, and foreign trade.
2017 2018 2019 2020 2021
Exports from the EU (million EUR) 3,711.20 3,293.20 3,428.80 2,996.00 3,307.70
Imports into the EU (million EUR) 323.9 273.6 320.5 361.1 408.1
Balance with the EU (million EUR) -3,387.4 -3,019.7 -3 108.3 -2,635.0 -2,899.6

Source: European Commission

Trade relations with the Czech Republic

During the pandemic, there was a decrease in exports from the Czech Republic, however, the first quarter of 2022 brought an increase of 36% compared to the same period of the previous year. In contrast, Jordanian imports to the Czech Republic have increased more than tenfold since the beginning of the pandemic thanks to a single item, which is silver waste and scrap. In 2021, it accounted for more than 90% of total imports from Jordan to the Czech Republic (which, by the way, also accounted for 12% of total Jordanian imports to the EU), and as a result, from the Czech perspective, the mutual trade balance became negative for the first time. This also created the main difference between Jordan’s balance with the Czech Republic and with the EU – previously the value of imports and exports was more than tenfold in both cases, to the detriment of Jordan. In the long term, Jordan’s main export items to the Czech Republic are textile products. Mainly motor vehicles are exported from the Czech Republic to Jordan,

2017 2018 2019 2020 2021
Exports from the Czech Republic (billion CZK) 1.4 1.1 2.7 1.0 0.8
Imports to the Czech Republic (billion CZK) 0.0 0.1 0.1 0.8 1.4
Balance with the Czech Republic (billion CZK) 1.3 1.1 2.6 0.2 -0.5

Source: CZSO

Trade relations with countries outside the EU

Jordan imports 98% of its energy sources and 90% of food, as well as cars, pharmaceuticals, electrical engineering, etc. The most important export item is chemicals, especially potash and phosphates. Traditional trade partners are the USA, India, the Gulf countries, and the share of imports from China is increasing.

2017 2018 2019 2020 2021
Exports from countries outside the EU (million EUR) 17,021.6 16,925.4 15,925.7 14,243.3 15,364.6
Imports to countries outside the EU (million EUR) 2,673.5 3,294.6 3,640.7 3,755.6 3,647.0
Balance with non-EU countries (million EUR) -14,348.1 -13,630.8 -12,285.1 -10,487.7 -11,717.6

Source: EIU, Eurostat

Foreign direct investment

Due to the lack of domestic capital, Jordan is in great need of foreign investment, but their inflow to the country was already declining before the pandemic. In 2019, they reached the level of 1.5% of GDP, which was the lowest in the last 20 years. The main reason is that foreign investors encounter not only general complications, such as bureaucracy and a confusing system of regulations, but also a number of rules that put them at a disadvantage compared to local and also investors from other Arab countries. Restrictions relate to land ownership, there are also differences in the requirements for the amount of basic capital (some services, construction, wholesale, retail, etc.). For some sectors, foreign investment is prohibited completely, for example in the case of land transport and real estate services. In order to attract foreign investment, a new Ministry of Investment was created in 2021. The new investment law presented by him is currently being discussed (Investment Law No. 30 from 2014 remains in force), the main goal of which is primarily to improve the situation for foreign investors. However, they now have significantly more favorable conditions within forty private and nine state-owned free zones, where requirements for the share of local capital do not apply or, compared to normal practice, it is much easier to obtain work permits for foreign workers. The zones are exempt from tax obligations and can also be imported into them duty-free. If the share of local inputs (raw materials, components, labor and even energy costs) exceeds 40%, goods produced within the zones can acquire local origin and with it the benefits of Jordanian preferential trade agreements.

FTAs and treaties

Treaties with the EU

The main contractual basis for trade between the EU and Jordan is the Association Agreement, which entered into force in 2002 and provides for preferential treatment in the area of ​​goods, as well as provisions on public procurement, investment and the protection of intellectual property rights. On its basis, the EU-Jordan Association Council and its subcommittee for industry, trade and services meet. Jordan is a partner country of the southern dimension of the European Neighborhood Policy and part of the pan-European-Mediterranean cumulation of rules of origin system (the so-called Pan-Euro-Med cumulation). In 2016, the so-called EU-Jordan Compact relating to the effects of the crisis in Syria was concluded and, in accordance with it, an exception simplifying the rules of origin for the access of Jordanian goods to the EU market for companies that employ Syrian refugees came into force. Although in 2011 the EU Council agreed on a mandate to negotiate a modern Deep and Comprehensive Free Trade Agreement (DCFTA) with Jordan, negotiations have not yet started due to the country’s lack of preparedness and are not expected to in the foreseeable future. So far, commitments to modernize economic relations within the Partnership Priorities, adopted in 2021, are a small substitute.

Contracts with the Czech Republic

In 2017, the Czech Republic concluded an intergovernmental agreement on economic cooperation with Jordan, on the basis of which the Czech-Jordanian joint commission for economic cooperation at the level of trade ministers was established, as well as an agreement on cooperation in the development of the peaceful use of nuclear energy. The agreement between the Czech Republic and Jordan on the protection and promotion of investments from 1997 was renegotiated, the new version is valid from 2009. The treaty on the avoidance of double taxation entered into force in 2007. The agreement on cooperation in the field of tourism has been in force since 2008, since 2009 the agreement on cooperation between the defense ministries of the two countries. Also in force are the Agreement on Cultural and Scientific Cooperation (1978), the Agreement on Cooperation in the Field of Health and Medical Sciences (amended 1995), the bilateral Government Agreement on Air Services (1997) and the Memorandum of Understanding in the Energy Sector (2015).

Developmental cooperation

Jordan is one of the largest recipients of international aid in the world, especially with regard to the number of refugees, especially Palestinian and Syrian. According to the UNCR, almost 700,000 Syrians have been accepted over the last decade. A significant part of the aid for managing the Syrian crisis is directed to Jordan as a result of the London conference in 2016 and from the six Brussels conferences from 2017 to 2022. The most important development partners of Jordan are the EU (mainly Germany and France), the USA, Japan, Canada and the Persian Gulf states. Jordan is supported by UN organizations and international financial institutions, led by the International Monetary Fund and the World Bank. A number of separate activities in Jordan are carried out by the European Investment Bank, the European Bank for Reconstruction and Development and KFW. Over the years, foreign aid has become an indispensable source of the budget, the amount received over the last 15 years is close to USD 30 billion. Since the start of the Syrian crisis, the EU alone has provided more than €billion to Jordan. Following the systematic support of Jordan within the framework of the European Neighborhood Policy and the newly concluded Partnership Priorities, the EU has promised to further provide Jordan with investment grants in the amount of EUR billion for the period 2021-2027, in addition to a minimum of EUR 164 million in direct development aid per year and 80 EUR million in addition to managing the Syrian refugee crisis. The development activity of the Czech Republic focuses on the social consequences of the Syrian refugee wave in the form of concrete solutions – e.g. retraining courses for refugees, building a children’s center in the Zaatari refugee camp, a community center for refugees in Zarqa and a health clinic. As part of “Aid on the ground”, programs focused on healthcare and education for Syrian children were implemented. The Czech Republic also financed medical facilities for refugees at border crossings and a special police office for dealing with refugee matters. The Czech Republic also helps through the medical aid program “MEDEVAC” by sending operational missions of Czech doctors.

Prospective fields of study (MOP)

Energy sector

Jordan is 98% energy dependent on imports, unlike most countries in the region, Jordan does not have its own significant deposits of oil and gas, which it also uses as an exclusive source for its thermal power plants. The territory is 90% covered by desert, 330 days of sunshine a year and strong winds create favorable conditions for solar and wind energy. The current government goal is to switch to energy from renewable sources of at least 15% in 2030. Jordan intends to invest 85 million USD in their support and energy-saving technologies by 2025, half of this amount is intended for equipping public hospitals with solar panels. Due to high electricity prices without the possibility to change suppliers, the demand for alternative solutions is increasing, even on a small scale for companies, schools or households. An interesting precedent could be the planned construction of a giant solar power plant in the Jordanian desert, which should – in exchange for supplies of desalinated water – supply electricity to Israel. Jordan also realizes its ambition to be the energy crossroads of the region by participating in the gas supply project via Syria to Lebanon or the agreement on the construction of an oil pipeline between Basra, Iraq, and Aqaba, Jordan. Jordan has the 5th largest oil shale reserves in the world. Jordan is also considering the use of atomic energy.

ICT

This sector already generates 13% of Jordanian HD, with further growth expected. The government supports ICT fields of study as well as incubators within universities. The Ministry of Digital Economy is preparing a program to modernize ICT infrastructure and digitize state services. The development of e-commerce is still very uneven in Jordan, essentially only during the pandemic did Jordanians learn to shop online, mainly food, however the started trend creates a number of new opportunities in this area. Cyber ​​security is coming into the spotlight, the army, other security forces and private companies are interested in concrete offers of protection options. Above all, banks, but also other institutions, demand solutions for secure data management. In addition to products in the field of cyber security, the military is also actively interested in the use of artificial intelligence for defense purposes. The capital Amman is preparing a strategy for the implementation of a “smart city”, in the first phase it is interested in digital technologies for public transport.

Defense industry

Jordan spends 1/3 of its budget on security. The Jordanian army deals with the purchase of armaments on its own with a high degree of autonomy, it is mainly interested in small arms, ammunition, explosives, but also equipment and subcontracts for its own production of army vehicles and other equipment. Due to the vast desert areas in which it is located, it is also interested in sophisticated modern technologies especially for border control, including means of protection against their intrusion by drones and systems for exploring inaccessible areas. The military-owned Jordan Design & Development Bureau (JODDB), which covers several local military equipment factories, is also authorized to do business with local and foreign suppliers. JODDB has long been satisfied with cooperation with Czech companies and is interested in testing new goods. Personal presentation and establishing contacts have the greatest effect for obtaining orders, especially at the Jordanian SOFEX trade fair, which JODDB is a co-organizer. A few private companies that have the appropriate government license can also buy for the army. In addition to military equipment, there is generally a growing demand for security equipment for private homes and institutions, for example camera or sophisticated fire protection systems.

Water management and waste industry

An amount of USD 965 million is to be directed to support the sustainability of water resources in Jordan until 2025. Every year, roughly half a billion of the required billion cubic meters of water are missing in the country. Jordan is currently preparing large-scale projects related to seawater desalination. Water recycling and sanitation technologies are in demand, especially now for primary schools. Jordan has a special Ministry of Water and Irrigation. This aims to promote solutions to avoid waste, including more efficient water management in production processes, especially in agriculture, which consumes most of the water. The main opportunities for the Czechs at the moment are therefore in the offer of water purification and treatment equipment and waste water revitalization technology. The largest Jordanian government project ever for the coming years is the Aqaba – Amman Water Desalination and Conveyance Project (AAWDC). The desalination plant at the port of Aqaba on the shores of the Red Sea, when fully completed, should produce 300 million m3 of potable water per year, most of it to Amman, which is over 300 km away and lies almost a thousand meters above sea level. Waste treatment is to be one of the main investment activities in the coming years for the Jordanian Ministry of Environment. In Jordan, waste is still sorted on a marginal basis, but interest in economically viable recycling technologies and relevant equipment is growing among Jordanian entrepreneurs.

Healthcare and pharmaceutical industry

Healthcare in Jordan by default generates almost 10% of its GDP. There are 115 hospitals in the country of ten million people, of which 67 are private. Jordan is a popular destination for medical tourism, over a quarter of a million foreign clients, especially from the Gulf states and North America, go to luxury hospitals and clinics every year and spend over 1 billion USD here. They are interested, for example, in orthopedic or cardiology care. Private hospitals continuously invest in state-of-the-art equipment, including laboratory diagnostic equipment, dialysis machines, and innovations in the field of plastic and transplant surgery. After the pandemic experience, the public and military health services are preparing to significantly expand the number of beds and entire intensive care units.

Agricultural and food industry

Jordan imports 98% of food items. The already weak Jordanian agriculture is further devastated by the effects of climate change, especially drought, but also unprecedented frosts. In the long term, it is therefore unable to cover even the basic food needs of the rapidly growing population and is completely dependent on imports. Even the relatively short-term interruption of supply chains during the pandemic strengthened the call for food security, the provision of which from its own resources is an unattainable goal for Jordan in the long term. Not only the government, but also Jordanian businessmen are interested in new territories and sources for food imports. Due to Jordan’s majority Muslim population, “halal” certificates are important. Opportunities for Czech companies are thus primarily in the possibility of supplying products from vegetables and fruits, while there is considerable demand on the market precisely for their frozen form. Potato and corn starch are another commodity in demand. The consumption of classic beer in Jordan is slowly but steadily increasing. At the same time, especially among the young population, the popularity of flavored beer with zero alcohol content, which is not burdened by a number of restrictions in the form of sales licenses and extremely high duties and taxes like alcohol, is increasing rapidly. A perspective field is aquaculture, the expansion of which should be supported by direct subsidies and a system of interest-free loans, as well as hydroponic crop cultivation. The Ministry of Agriculture also supports the development of beekeeping.

Jordan Trade