former Chairman, Amman Stock Exchange (ASE)
CEO, Jordan Strategy Forum (JSF)
DR. JAWAD ANANI In the medium to long term, the stock market is the mirror for the economic situation in a country. It reflects the overall standing of economic performance and indicators as well as the changes. However, in the short term, the stock market has its own dynamics, where players within the market decide the day-to-day fluctuations. In Jordan, we had certain boom years on the ASE, and we were hopeful we could expand it both horizontally and vertically. Unfortunately, after 2008, there was a huge drop in size and the share price index, and a number of companies also relocated elsewhere. This led to the demotion of the ASE from an emerging to a frontier market. This alienated large pension funds and institutional investors that only invest in emerging markets and above. ASE is working hard to regain that emerging market status, so we can attract more investors. There are great opportunities because funding is tight in Jordan, so most people do not run their portfolios on stocks. They opt for government bonds and securities, which provide a great income that is tax free. There are excellent opportunities for profit in the industry, banking, and finance sectors here.
DR. IBRAHIM SAIF The mandate of JSF is to engage the private sector more in public debate to achieve a common course for the country, uniting the efforts of the private and public sectors and any additional stakeholders we can identify. Since its inception, JSF has sought to promote evidence-based policymaking and well-informed debate at the societal level and identify opportunities that can attract private investment. Whenever there is new legislation, regulations, or bylaws from the government, we are engaged. JSF has a duty to inform the public and the government about these disruptive changes taking place globally and influence new policies and legislations. When something positive is happening, JSF also needs to amplify that. We need to celebrate successes and not only be critical and focused on negative issues.
JA I was vocal about my opposition to the proposal. My dissent did the trick, and we ended up adding an extra fee that both investors and brokers were satisfied with. It was not the ideal solution, but it was the next best one. In terms of the tax reforms overall, income tax law has been heavily debated in Jordan and has incited considerable emotion. There was no need for the government to increase tax rates. It could have thoroughly looked at the margins and the income groups and adjusted the rates to make it a more progressive tax system. It could have also tightened its grip on tax evaders by closing the loopholes, essentially increasing revenues without actually increasing tax rates. Now is not the time to increase rates; it is more important to enact reforms that enhance the government’s ability to collect taxes.
IS The new reform will significantly enhance the government’s revenue and help it balance the budget, which is an important pillar of the country’s macroeconomic stability. Conversely, many say this is an additional burden on the private sector that needs to be removed. We will see the full impact of the new income tax law by the end of 2019. As an economist, I see why it is important to have this reform, though we have to ensure our tax institutions have the proper capacity to treat everyone equally before the law.
JA Moving forward, Jordan must realize that its traditional and long-term beneficial relations with the Gulf states are changing. The Gulf has its own challenges to worry about as it moves out of being a rentier state and into being a region of productive state.
IS 2019 will not be an easy year; however, we see positive signs in terms of export growth, particularly in the Iraqi and Syrian markets, and identify some opportunities where we can attract more and new private investment, be it in energy, water, or infrastructure. The situation is tough, but not gloomy.
JORDAN - Economy
COO, Jordan Projects for Tourism Development (JPTD)
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