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What about Aqaba?

Jul 11,2021 - Last updated at Jul 11,2021

Many believe that the storm of criticism directed at the Aqaba Special Economic Zone (ASEZ) and the ASEZ Authority (ASEZA) was only recently brewed. This is far from the truth, as the negations and accusations in addition to non-belief in its concept and merit have by now spanned over two decades. Moreover, not all the blame rests with ASEZA, a sizeable portion of it should engulf the sphere of public policy in Jordan. 

ASEZ, an area of 375km², was started as a beacon of best practice whose policies; its practices and institutions should have been a guiding light for the rest of Jordan. It was within ASEZ that reduced red tape and taxes and fees on production and consumption should have proven so successful that the rest of the country would follow. Yet, and from inception, doubters complained that the reduced customs, fees and taxes would negatively affect the income of the central government, and, thus, they started to invent other fees and ways to counter what they believed was a negative, not a positive, impact; and, in many respects, they succeeded over the years to ultimately weaken the concept of ASEZ. 

ASEZ could not escape being part of the whole. Many of the legislative pieces that governed the zone were those of the rest of the country. For example, it is governed by the water and zoning legislation that is applied within the remainder of the country. Hence, an investor whose factory needed brackish water could not drill a water well near the Red Sea to garner a cheap supply of water since clean water was already availed by the Ministry of Water — a stipulation that is applied all over Jordan; having LED lights in the streets of ASEZ to save energy, a best practice, had to be approved by the Ministry of Energy not by ASEZA; land and building zoning fees were governed by the zoning laws of the rest of Jordan even though ASEZ was the only master planned developed area in Jordan and many of the investors in it had borne the cost of the development of the infrastructure within their megaprojects; even reaching ASEZ was hampered by badly maintained roads that were outside its own mandate; and many other obstacles necessitated by the incompetence of the whole. ASEZ thus had to suffer not only because of internal challenges, which were many, but by external challenges that permeated the rest of the country.

Also, after two decades, domestic tourism and reach remained below potential. A distance of 320km can only be crossed by automotive means. A common joke in the country is that Jordan has two seas, one is dead and the other one you die trying to get to; albeit funny, it is a sad and brief description of the modus operandi. The only other means to reach Aqaba was through the use of airplanes. But the flight schedules were horrendous. The plane takes off at 6:45am, hardly a comfortable time, and if a tourist had booked a room at a hotel he would not be able to use in the room until mid-day, which meant lounging around the lobby from 7:30am until midday. The flight back was also late, and the person would be homeless between 12am and 8pm as he would have checked out of the hotel room but the only flight back was eight hours later. Flights to and from Aqaba have improved in recent years, but only slightly, and a simple solution to these flights would have been to increase their frequency, and encourage greater domestic and foreign tourism.

Internally, the independence and performance of ASEZA remains also dependent on the clout and power of the persons at its helm, not the strength of its institutions (policies, institutions and procedures). Even the staffing of ASEZA followed the model of the rest of the country to create a bloated public sector entity like the rest of the government.  

Overpromises by some past officials at ASEZA did not help matters either. Some of the officials would exaggerate, knowingly or otherwise, the size of the investment inflows. For example, some of the executives ignored telling people that a JD10 billion investment agreement that they had just signed would not pour all the money into Jordan immediately or that year but would be invested in tranches and over several years, depending on the development of the infra and supra structure necessary. This practice led on many occasions, to lose faith in public official statements and promises. 

The points related to a proper discussion of the successes and failures of ASEZ and ASEZA are many. One could point out many internal and external deficits that need to be addressed. Most importantly, ASEZ and ASEZA need fixing, not axing!

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