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How to attract investors

May 08,2016 - Last updated at May 08,2016

One may think that the French, Kuwaiti and other foreign investments in Jordan took place under political decisions, as a way to support the Jordanian economy.

In fact these investments are made by private companies looking for profitable opportunities anywhere in the world, without waiting for orders or directions from their respective governments.

Therefore, efforts made by officials to attract Arab and foreign governments to invest in Jordan are doomed to fail.

Claims made by some Arab or foreign officials visiting Jordan that they encourage their businesses to invest in Jordan are made as courtesy and some sort of public relations.

French companies like Orange and Lafarge, which invested in communications and cement, did that on pure economic basis, after making sure that these investments are economically feasible, and being satisfied with the country’s political stability and legal guarantees.

The Kuwaiti companies that invested in Jordanian communication, electricity and commercial banks did not use public funds. They did not act for political considerations or out of desire to help a brotherly country.

There is no reason for the Jordanian government to urge other governments to invest in Jordan. We should go directly to the targeted companies, prominent businesses and potential investors, as is being done by His Majesty the King.

The second point that deserves to be understood in order to draw lessons is that Arab or foreign investors would not bring capital to establish new projects. They will come only to acquire existing projects that are already operational, successful and have a promising future.

Examples of this kind of investment is of the French entity in cement, Sultanate of Brunei in phosphate, Canadian in potash, and all Arab and foreign investments in the Amman Stock Exchange (ASE).

It is not a coincidence that Arab and foreign ownership in ASE amounts to 50 per cent of the market value.

Official circles still believe that it helps to present ideas and lists of possible projects that cost billions of dollars, as was done at the World Economic Forum recently held at the Dead Sea.

The government then came up with a bundle of potential projects to be considered by world potential investors. None showed interest.

Arab and foreign investors want to invest in projects that already exist and have proved themselves viable. Such projects are attractive for takeover, in part or in total.

In an effort to promote investments in Jordan, it makes sense to point out projects that are already there and can be upgraded and expanded if funds are injected in them.

Perhaps the only exception to this rule is the Emirate’s Al Maabar Company. It came to Amman and Aqaba not to buy projects but to start them.

Tax exemptions will not attract investors. They are a waste of revenue.

 

Investors are willing to pay taxes if they make money. Tax exemptions are meaningless if investors are wary of losses.

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