Jordan - Country Commercial Guide
Investment Climate Statement

The Investment Climate Statement Chapter of the CCG is provided by the State Department.

Last published date: 2021-10-25

The U.S. Department of State Investment Climate Statements provide information on the business climates of more than 170 economies and are prepared by economic officers stationed in embassies and posts around the world.  They analyze a variety of economies that are or could be markets for U.S. businesses.

Topics include Openness to Investment, Legal and Regulatory systems, Dispute Resolution, Intellectual Property Rights, Transparency, Performance Requirements, State-Owned Enterprises, Responsible Business Conduct, and Corruption.

These statements highlight persistent barriers to further U.S. investment.  Addressing these barriers would expand high-quality, private sector-led investment in infrastructure, further women’s economic empowerment, and facilitate a healthy business environment for the digital economy.  To access the ICS, visit the U.S. Department of State Investment Climate Statement website.

Executive Summary

Jordan is a Middle Eastern country centrally located on desert plateaus in southwest Asia and strategically positioned to serve as a regional business platform. Since King Abdullah II’s 1999 ascension to the throne, Jordan has taken steps to encourage foreign investment and to develop an outward-oriented, market-based, and globally competitive economy. Jordan is also uniquely poised as a platform to host investments focused on the reconstruction of Iraq and other projects in regional markets.

Jordan is committed to the promotion of investments as a key driver of economic growth and job creation, though in practice these policies face implementation challenges. The Government of Jordan offers a range of incentives to potential investors and has undertaken measures to review and enhance the economic, financial, and legal framework governing the investment process to take better advantage of available opportunities and spur growth through investment. However, despite improvement on the World Bank Ease of Doing Business report, doing business in Jordan is more difficult than elsewhere in the region.

Jordan’s economic growth has been limited for over a decade by exogenous shocks, starting with the Global Financial Crisis in 2008, followed by the Arab Spring in 2011 which resulted in interruptions of energy imports, the 2015 closure of Jordan’s borders with Iraq (reopened in August 2017 but still not flourishing) and Syria (partially re-opened in 2018), and an influx of Syrian refugees. Over this period, the government consistently ran large annual budget deficits but has been able to reduce the financing gap with loans, foreign assistance, and savings from economic reform measures enacted as part of an International Monetary Fund (IMF) Extended Fund Facility programs.  On March 25, 2020, the IMF Board approved a $1.3 billion Extended Fund Facility program for Jordan centered on fiscal consolidation, increased revenue collection, targeted social spending, economic growth, and job creation.

After growing by two percent in 2019, Jordan’s economy contracted by 1.6 percent in 2020 according to Department of Statistics data, largely due to the COVID-19 pandemic. The IMF estimates it will grow at 2.0 percent in 2021, though this number could be revised down as the effects of the pandemic’s second wave continue. Early in the pandemic, the Government of Jordan implemented a set of measures to contain the spread of the virus, which entailed a strict curfew and lockdown of schools, colleges, and 75 percent of all economic activity.  The economy gradually re-opened after the initial lockdowns, although evening and Friday curfews persisted through much of 2020 and into 2021. The IMF has released additional credit from a Rapid Financing Instrument to help Jordan manage its fiscal obligations during the pandemic.

Jordan introduced plans to mitigate the pandemic’s negative impact on the economy in both the short and medium terms.  The Central Bank of Jordan (CBJ) injected JD 1.5 billion ($2.1 billion) to increase liquidity in the banking system.  It also lowered the lending rate by 1.5 percent.  The CBJ launched a JD 500 million ($706 million) loan guarantee program at competitive interest rates to help small and medium enterprises (SMEs) resume their operations and pay their operational costs; this loan guarantee program increased in March 2021 to JD 700 million ($988 million). The CBJ also raised credit ceilings for the tourism sector and encouraged banks to reschedule and defer loans for those affected by the crisis through the end of 2021.

King Abdullah II activated the National Defense Law on March 17, 2020. Since then, the Government of Jordan has enacted 25 defense orders which stipulate measures to offset the socioeconomic impact of COVID-related restrictions and protect the economy. (List of all Defense Orders on Prime Ministry’s website in Arabic) . The government also announced measures to alleviate financial and operational burdens on businesses by postponing General Sales Tax (GST) payment and customs fees, reducing the cost of labor by exempting companies from paying social security retirement insurance for three months starting in March 2020, reducing energy costs for the industrial sector, reducing inspection rate of imported essential products, and halting judicial procedures on defaulting individuals/companies. The government issued Defense Order 6 which aims to protect employees’ rights and bans layoffs. It addressed employment conditions in the private sector, including required salary payments and temporary closure of entities/institutions largely hit by the pandemic.

The Social Security Corporation (SSC), in coordination with the government, initiated a number of programs to support workers in most affected sectors and their employers, including the relief program “Estidama,” launched in December 2020 to subsidize the salaries of workers in the sectors most affected by COVID.

Even while Jordan’s economy struggles, international metrics indicate Jordan’s investment regulatory environment is improving.  Jordan was selected as one of the top three most improved business climates in the World Bank’s “Doing Business Report 2020,” jumping 29 places from 104 to 75.  Jordan advanced 33 points in the simplified tax services index for implementing an electronic filing and payment system for labor taxes.  In ease of getting credit, Jordan ranked on par with the United States and Australia. Despite this progress, many investors complain the business environment continues to be challenging due to excessive red tape, shifting interpretations of laws and regulations, difficulties starting and exiting businesses, and other factors.

The Jordanian Investment Law grants equal treatment to local and foreign investors and incentivizes investments in industry, agriculture, tourism, hospitals, transportation, energy, and water distribution. In December 2020, the government submitted amendments to address loopholes related to tax breaks; the proposal is now awaiting parliamentary approval. The ongoing process to rationalize the tax structure and close tax loopholes may reduce incentives offered to foreign investors.

In January 2020, the Jordan Investment Commission (JIC) implemented an investor grievances bylaw which enables investors to file complaints concerning decisions issued by government agencies. Jordan also endorsed a new Public Private Partnership Law in 2020 to support the government’s commitment to broadening the utilization of the public-private partnerships and encouraging the private sector to play a larger role in overall economic activity.

Despite the pandemic, Foreign Direct Investment dropped only by 1.8 percent to JD 390 million ($551 million, equivalent to 1.7 percent of GDP) in the first three quarters of 2020 compared to the same period in 2019.