Jordan, located at the crossroads of the Middle East, has become one of the most attractive destinations for foreign investment in the region. Despite its modest size and limited natural resources, Jordan offers a stable and business-friendly environment supported by a range of government incentives aimed at encouraging foreign direct investment (FDI). Over the years, the Jordanian government has implemented several strategies and policies to ensure that foreign investors are provided with significant benefits, creating an ecosystem conducive to business growth and innovation.
This article explores the various incentives and benefits that the Jordanian government provides to attract foreign investors, from tax incentives to access to key regional markets.
1. Tax Incentives
One of the primary incentives the Jordanian government offers to foreign investors is tax breaks. These incentives are designed to make doing business in Jordan financially attractive and competitive. Key tax benefits for foreign investors include:
- Corporate Tax Exemptions: Depending on the sector, foreign investors may be eligible for exemptions from corporate taxes for up to 10 years. This is particularly true for investors in strategic sectors such as manufacturing, technology, and renewable energy.
- Customs Duty Exemptions: Investors in certain sectors may also benefit from customs duty exemptions on imported capital goods and raw materials used for production purposes. This helps reduce operational costs for foreign businesses establishing operations in Jordan.
- Tax Incentives in Free Zones: The Jordanian government offers several free zones across the country where foreign investors can establish businesses with reduced or zero taxation rates. These include exemptions from income tax, sales tax, and customs duties. Free zones are ideal for investors looking to export goods to regional and international markets.
2. Investment Promotion Law
The Investment Promotion Law in Jordan is a crucial piece of legislation aimed at enhancing the investment climate. It provides several mechanisms to protect and encourage foreign investments, such as:
- Investment Window: The Investment Promotion Law establishes a “one-stop shop” for investors, which facilitates the process of obtaining permits, approvals, and licenses. This simplifies the bureaucratic procedures that can often delay business setup.
- Investor Protection: Foreign investors in Jordan enjoy the protection of their investments through legal frameworks that ensure the free transfer of profits and capital. There are also guarantees against expropriation or nationalization of foreign-owned assets.
- Investment Guarantees: The government guarantees foreign investors non-discriminatory treatment, meaning foreign businesses are treated equally to local businesses in terms of investment opportunities, access to markets, and other benefits.
3. Special Economic Zones (SEZs)
Jordan has developed a network of Special Economic Zones (SEZs), which are designated areas where businesses can benefit from preferential policies. These zones are an essential tool for attracting foreign investment as they provide a variety of advantages:
- Competitive Incentives: SEZs offer a wide range of incentives, including exemptions from income taxes, sales taxes, and customs duties. Companies operating within these zones also benefit from simplified customs procedures and access to high-quality infrastructure, such as ports and transportation networks.
- Targeted Sectors: Each SEZ focuses on specific industries, such as information technology, manufacturing, or logistics, providing targeted benefits for investors in these sectors. This focus allows foreign investors to easily enter niche markets and find local partners with expertise in these industries.
- Export Promotion: SEZs help businesses in Jordan access regional and global markets. Many SEZs are strategically located near major ports, making it easier for businesses to export goods, particularly in the MENA region and to international markets.
4. Renewable Energy and Green Investment Incentives
Jordan has a keen focus on sustainable development, particularly in the energy sector, due to its limited natural resources. As part of this focus, the government provides special incentives for investments in renewable energy and green technologies. These incentives include:
- Subsidies and Grants: The government offers grants and subsidies for renewable energy projects, such as solar and wind energy, to encourage investments in clean energy.
- Tax Exemptions: Investors in renewable energy are eligible for tax exemptions on their projects. This includes exemptions on corporate income tax, customs duties on equipment, and tax breaks on land use for energy projects.
- Green Bonds and Financing: To further support green projects, Jordan has introduced green bonds to provide financial support for renewable energy and other environmentally friendly initiatives. These financing tools attract investors looking to align their portfolios with sustainable development.
5. Skilled Workforce and Education Incentives
The availability of a skilled workforce is a key factor in attracting foreign investment. Jordan has invested heavily in education, particularly in fields related to science, technology, engineering, and mathematics (STEM), to ensure that its workforce meets international standards. The government provides several incentives for businesses investing in education and workforce development, including:
- Training and Development Programs: The Jordanian government partners with international companies and educational institutions to offer specialized training programs for local employees, ensuring that the workforce is equipped with the skills needed to work in high-tech sectors.
- Higher Education Incentives: Foreign companies investing in Jordan’s education sector can benefit from incentives related to setting up institutions or collaborating with local universities. This includes tax exemptions for education-related investments.
- English Proficiency: Many Jordanians are proficient in English, which is a major advantage for foreign investors looking to establish operations in Jordan. The government has made significant strides in improving English education at the primary and secondary levels, which has contributed to a multilingual workforce capable of handling global business requirements.
6. Strategic Location and Access to Regional Markets
Jordan’s geographic location offers significant advantages for foreign investors. Situated at the crossroads of the Middle East, it provides easy access to key regional markets such as the Gulf Cooperation Council (GCC), Iraq, and Palestine. In addition to this, Jordan has a network of free trade agreements that benefit foreign investors:
- Free Trade Agreements (FTAs): Jordan has signed several FTAs with countries around the world, including the United States, the European Union, and several Arab countries. These agreements allow businesses to export goods with reduced tariffs, thus enhancing their competitiveness in regional and international markets.
- Access to Logistics Hubs: Jordan’s proximity to major shipping routes and regional logistics hubs, such as the Aqaba port, provides businesses with easy access to global trade markets, making it an ideal location for distribution centers and manufacturing plants.
7. Access to Financing and Investment Networks
The Jordanian government, alongside local banks and international financial institutions, offers financial support and incentives for foreign investors. These include:
- Low-Cost Financing: The Jordanian government offers low-interest loans and credit facilities to foreign investors, especially in sectors like manufacturing and technology. Investors can also access international financing sources through the country’s investment networks.
- Public-Private Partnerships (PPPs): The government encourages foreign investors to participate in public-private partnerships (PPPs) in infrastructure and development projects, which help mitigate investment risks and provide a clear path for profitability.
Conclusion
The Jordanian government has implemented a wide range of incentives and policies designed to attract foreign investment across multiple sectors, including tax exemptions, investment guarantees, special economic zones, and financing options. These measures, combined with Jordan’s strategic location, skilled workforce, and focus on sustainable development, make the country an attractive and competitive destination for foreign investors.
Investors looking for stable returns, access to regional markets, and opportunities in diverse industries should consider Jordan as a prime investment destination in the Middle East.
M. Rami Maki
Business Consultant