Jordan Industrial Sector

The Jordanian industrial sector consists mainly of "manufacturing industries" sector, "extractive industries" sector and "electricity and water" sector. This sector stands as one of the main pillars of the Jordanian economy, thanks to the multiple and notable contributions to the achievement of economic and social development process. The most prominent contributions of the industrial sector include the following:

  • The Industrial sector contributes directly to about a quarter of the national economy (25% of GDP), and due to its forward and backward links with many sectors such as transport, insurance, trade and others, it is concluded that this sector is playing a greater role to directly or indirectly contribute to about 40% of GDP.
  • The industrial sector contributes significantly to the promotion of the Jordanian dinar exchange rate stability, through supplementing the Kingdom's official reserves of foreign currency with more than $ 8 billion a year.
  • The sector's Market share accounts for about 60% of the total investments benefiting from the Investment law.
  • The Industrial sector contributes to the consolidation of financial stability by providing the Treasury with more than one billion dinars annually in direct or indirect taxes, as each dinar invested in industry provides the Treasury with more than 8 taxes pennies.

The number of establishments in the industrial sector amounts to nearly 18 thousand facilities scattered throughout the Kingdom's governorates. Pertinently, the industrial chambers Act for the year 2005 has adopted a formal definition of enterprises operating in the field of industry on the basis of two indicators: the registered capital of the facility and the size of employment (number of employees), it has also classified the facilities operating in industry as follows:

  1. Industrial facilities: any facility with the basic purpose of industry and a registered capital of thirty thousand dinars and the number of ten or more Jordanian workers involved in the Jordanian social security. Those establishments amount to no more than 2,000 facilities registered in the local chambers of industry.
  2. Craft facilities: any facility with the basic purpose of industry and a registered capital of less than thirty thousand Dinars and the number of less than ten workers involved in the Jordanian social security. Those establishments amount to nearly 16 thousand facilities registered in the local chambers of industry.

The facilities operating in the industrial sector have been classified into ten sub-sectors as follows:

  1. Garments and Leather Industries
  2. Therapeutic Industries and Medical Supplies
  3. Chemical and Cosmetics Industries
  4. Plastic and Rubber Industries
  5. Engineering, Electrical and Information Technology Industries
  6. Wood and Furniture Industries
  7. Construction Industry
  8. Ration, Food, Agriculture and Livestock Industries
  9. Packaging, Paper, cardboard, printing and supplies Industry
  10. Extraction Industries
  11. Craft Industries

Despite the various social and economic contributions provided by the industrial sector, it still faces many problems and challenges internally as well as abroad, which hinder its performance and reduce its competitiveness. The following are the most prominent challenges:

  • Once Jordan began to recover from the consequences of the global financial crisis that hit the economies of all countries in the world, the Arab Spring movements that have emerged recently, greatly affected the industrial exports due to the loss of some important export markets, as well as the fact that the markets serve as a crossing path for industrial products.
  • Problems related to employment, especially in light of poor education and vocational training centers outputs and their relevance to the actual needs of the labor market in the industrial sector in particular. Besides, the reluctance of young people to work in the handicraft and crafts professions, as well as the difficulty of obtaining foreign labor licenses which are also high-mandated, leave many production lines suspended in many factories due to lack of workforce.
  • Rising costs of production and energy in all its forms, most recently raising the electrical fees, which constitute a production input. The cost of electricity in some industrial sectors reaches to approximately 60% of total production costs, as well as higher energy bills due to the suspension of the Egyptian gas and oil supplies from Iraq.
  • Lack of liquidity and the difficulty of access to finance, especially for SMEs, which account for more than 98% of the total enterprises.
  • As the industrial sector faces other challenges related to tax in terms of the high rates imposed on the sector either as income or sales tax.
  • Inspection and licensing process, which relates to regulatory inspection on the industrial sector and bears the recipe of the judicial police to 16 different specialties, which poses a great confusion and conflict among facilities' owners in achieving the requirements of each party.
  • Let alone, high transport fares, limited benefit from trade agreements, and frequent labor unrest in the port of Aqaba, government bureaucracy, and others.