Gloomy outlook for Jordan's once-hailed ICT sector
“Getting projects is more and more complicated, not only from an opportunity perspective, but from a logistics and contracts perspective."
Information and Communication Technology (ICT) is often lauded as one of Jordan’s most promising- and fastest growing sectors. Last year, it grew by 25 percent accounted for 14 percent of the country’s GDP, and provided, according to the ICT Association of Jordan (int@j).
This year’s int@j ICT Report tells a sobering story. Although export revenue is up in the sector, total ICT revenue- now $617 million- is down 16 percent from last year, with domestic revenues down 37.5 percent. The telecom sector is also suffering with revenues at $1.69 billion as compared to $1.72 billion last year.
This is mostly thanks to a lack of government support, said Abed Shamlawi, CEO of inta@j, not just with investment but also in helping IT companies secure new domestic contracts and execute on existing ones. “Getting projects is more and more complicated, not only from an opportunity perspective, but from a logistics and contracts perspective. It takes forever to get a contract signed with the government.”
“The government talks about some of the projects, but they have ben talking for the past two years,” he adds. “What’s happening? Nothing.”
int@j Chairman Jawad Abbassi put the issue even more strongly, in a statement: “The decline in local IT revenues is disheartening and reflects little government investments in much needed national E-Government & E-education programs. Jordan’s public and private sectors must work closely and diligently to enhance Jordan’s E-government infrastructure and services”.
With the government’s current focus on raising taxes- including a 100 percent increase in mobile phone taxes this July, and a planned income tax hike- along with the censorship laws put in place earlier this year and a recent hike in electricity price, it’s no surprise that IT revenues- specifically domestic revenues- are suffering. It’s getting bad; some companies are considering leaving the country. The one bright spot in the report is the fact that export revenues are up 30 percent, driven mostly by data processing and software publishing.
This is partly because companies are looking outside the region for business, partly thanks to a lack of government spending, but also due to the fact that they seek larger markets that can generate better returns, said Shamlawi.
One potential solution is strengthening public-private sector ties to enable joint project, he said. To enable revenue sharing models, the system will have to change. “Currently, the legal framework does not enable public-private partnerships. This is the source of the problem,” he added. Enabling regulation for revenue for these projects would be a step forward.
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