Despite reaping off the Syrian crisis, Jordan's industrialists enter the new year with new worries
Industrialists enter 2014 by keeping a wary eye on government policies, which according to sector leaders, are manufacturers’ biggest worry.
Director of the Jordan Chamber of Industry (JCI) Maher Mahrouq said policies related to energy and labour always affect the performance of the industrial sector, indicating that another round to hike electricity tariffs, slated to go into effect January 1, will hurt the competitiveness of Jordan-made products.
“Irresponsible government policies are the biggest worry for the sector,” Mahrouq told The Jordan Times, urging decision makers not to increase power tariffs on factories.Jordanian manufacturers compete with regional products that receive cheap and subsidised energy supplies for production.
Under a five-year government plan, economic sectors –– except for the agricultural sector –– and relatively high-spending households will continue to see gradual increases of nearly 15 per cent every year in an attempt by the government to bring the state-owned National Electric Power Company (NEPCO) to cost recovery by 2017.
Authorities should choose between fixing NEPCO losses and curbing economic growth, Mahrouq said, indicating that energy represents over 40 per cent of production costs in some industries.
The JCI director indicated that many countries charge two types of power tariffs. One for household consumption and “a much lower” price for production, he explained. Asked about his outlook for 2014, Mahrouq said he was cautiously optimistic about the performance of the sector.
Fathi Jaghbeir, vice chairman of the Amman Chamber of Industry, voiced the same concerns of Mahrouq, saying frequent increases in power tariffs would push many factories to close down or leave for other countries.Indicating that around 1,100 factories quit the market since 2012, either closed down or left to other countries, Jaghbeir expressed fears that 2014 losses could be higher if the government continues “to neglect the energy woes of industries”.
He called on authorities to consult the private sector before making economic decisions, particularly in the fields of energy and labour. Among the issues the industrial sector is worried about is amending the Income Tax Law, which could include higher levies on manufacturers and consumers, Jaghbeir noted.
“Officials have been talking about public-private partnership for almost a decade… but there is no partnership,” he charged, accusing the incumbent government of ignoring dialogue with the private sector.
The Syrian factor
Mahrouq said that political instability in the region, particularly in Syria, helped to boost confidence in Jordanian industries in the domestic and regional markets in 2013.
“It is not government policies that helped the sector perform well in 2013 but the crisis in Syria,” he said, adding Jordanian-made products replaced Syrian products in the domestic and regional markets, particularly food products.
Mahrouq said that the influx of thousands of Syrian families into the Kingdom has also contributed to strengthening consumption, adding that many Syrian businesspeople have opened factories in Jordan.
“If production costs were lower the industrial sector would have seen a boom,” he said.
- Time to face the fundemantals: GCC economies need fiscal reform to handle oil price volatility
- Contours of US-Iranian nuclear deal shaping up
- Perfect timing? France to ink controversial jet sale to Egypt as Cairo bombs IS
- Erdogan's 'unorthodox' views spark fear for Turkish economy
- Egypt seeks to ‘diversify’ weapons providers
- Presidential vacuum, Syrian crisis leaves Lebanon's business leaders more than worried
- New start? No chance: Spruced-down NY party as the ME braces for a sobering 2013
- Sitting in the eye of the storm: Jordan braces for Bashar backlash
- Despite violence, investors heading to Damascus bourse to 'protect savings'