The Jordanian economy is very open. The country is part of the Greater Arab Free Trade Area(GAFTA), a pact of the Arab League entered into force in January 2005 which aims to form an Arabic free trade area. It has also signed bilateral free trade agreements with most of the countries of the Arab League. Jordan has also signed an agreement with the European Free Trade Association (EFTA), the United States and Singapore. Jordan has signed the Euro-Mediterranean Association Agreement which provides for a free trade area between the European Union and the other signatory countries. Finally, Jordan is a member of the Agadir agreement which provides for a system of free trade between Jordan, Tunisia and Egypt. Jordan also signed a Free Trade Agreement with Canada.
Non Tariff Barriers
The Jordanian trade system is in full liberalization. An import license is normally not necessary but an exchange permit is. However, it is obtained in an automatic way and allows you to pay on presentation of the documents or to open a documentary credit. There are quantitative limitations on the import of certain manufactured goods and it is forbidden to import tomatoes, fresh milk, mineral water, table salt and plastic waste. Some specific products are reserved for the State's business such as sugar, wheat, flour, rice, powdered milk, cigarillos, frozen chicken, lentils and olive oil. A license for the import of fruits, vegetables, certain chemicals, medicines, some foodstuffs and telecommunications equipment is required. Some products also require a license from various public organizations.
Customs Duties and Taxes on Imports
Customs duties are governed by law n°20/98. This provides for a progressive reduction of applicable duties with an upper limit in 2003 of 30% (40% in 1998). This rate should be brought down to 20% maximum in 2010. There is thus a scale of five rates for the most common goods: 0%, 5%, 10%, 20% or 30%. Alcohol and tobacco are taxed on a scale from 50 to 180%. Imports of raw materials and machinery for the production of capital equipment as well as basic foodstuffs are exempted from Customs tax.
The documents required for importing a product into Jordan are:
a bill of lading for imports coming in through the port of Aqaba
an air waybill for products imported by air or a transporter's certificate for goods having transited by land.
a declaration of Arab transit for goods having transited Arab countries which are not neighbours of Jordan.
an invoice showing the quantity, type and numbers of the goods as well as their weight, value and the names of the buyer and seller.
a certificate of origin
a declaration of value for goods whose value is over 2 000 JD.
an exit permit for goods warehoused in free zones.
Also, it should be noted that Jordan uses the system of the single administrative document (SAD) for import declarations. This means that the declaration is directly submitted by the importer or the licenced seller through the Asycuda system. The system validates the entry, gives a registration number and indicates if the entry is green (no inspection), orange (inspection of the documents) or red (inspection of the documents and the goods). A paper copy of the declaration is given to Customs accompanied by the supporting documents if necessary. All Jordanian and foreign trading companies must either obtain an importer’s card from the Ministry of Industry and Trade for customs clearance purposes or pay a Customs fee equivalent to five per cent of the value of the imported goods. For non-trading entities such as banks, hospitals and hotels, the Ministry issues a special limited card that allows the import of goods specific to that entity’s purpose.
Certain products such as fruits, chemicals, medicines or telecommunications equipment require an import license. For more information, please visit the website of Jordanian Customs.
Samples are exempt from Customs duty. Their value must not be over 10 JD excluding transport costs.
With a GDP per capita of USD 4,360 (IMF, 2021) and a median age of 23.5 years (CIA World Factbook, 2020 est.), the average Jordanian consumer is young and less wealthy than their neighbours south across the Gulf region. Jordanian commercial activity is concentrated around Amman and in large provincial cities such as Aqaba, Zarqa and Irbid. There are considerable differences in consumer behaviour within the country. The local population of Amman has a more Westernised taste, especially young Jordanians with higher exposure to global brands and trends, while the inhabitants of the rest of the country have more traditional lifestyles and more conservative consumer habits. Jordan also has a relatively high level of economic disparity (Gini coefficient index of 33.7 points, 124th worldwide - CIA World Factbook, latest data available).
Jordan has been traditionally price-sensitive but consumer behaviour is changing rapidly to a point where most Jordanians spend more than their income (There is a JOD 1,000 gap between annual income and spending according to Jordan's Department of Statistics' latest data available). Also, young people (aged from 0 to 29 years), who represent 62.9% of the total population (Jordan's Department of Statistics, 2019), are very fond of technological innovation and spend a considerable amount of their income on telecom products and services. A real and effective after-sales service is also considered to be important by most Jordanian buyers. In the field of clothing, brand names are much sought-after.
Jordan’s retail network is transitioning from traditional shops and markets to American-style malls and hyper-markets. Several large malls have opened in Amman and there are plans for outlet stores in southern Amman. On-line and mail ordering is popular. Marketing via internet is possible, but is still a nascent channel, as there is a low internet penetration rate in Jordan and consumers tend to consider internet shopping to be insecure. Foodstuffs are distributed basically by 4 channels. The first hypermarket (12 000 m2) opened its doors in Amman under the Carrefour name. Supermarkets are widespread in the country. There are classic supermarkets (100 to 400 m2) and western style supermarkets (1 000 to 3 000m2). There are four supermarket channels: - Cozmo and El Ahlia Plaza are local ones - C-Town and Safety are operated under franchise agreement. In addition there are also civil and military cooperatives which sell local produce, with little variety, at low prices. The market also includes groceries, markets and wholesalers specialized in spices, dried fruits, fruit and vegetables and fresh meat.
The retail sector’s immediate future is tied closely to that of the overall economy, with this in turn subject to a number of external uncertainties: the conflicts in Syria and Iraq look likely to continue to impose constraints on economic growth, while the overall regional downturn caused by lower oil and gas prices will also have a knock-on effect on the kingdom’s economy and consumer spending. At the same time, however, the fundamentals remain strong. Jordan has major room for growth in the modern, organised retail segment, as its population also continues to grow. It has a unique geographical location, making it a natural corridor for growth in the surrounding region, as well as a convenient destination for shoppers from abroad. With any easing in regional tensions, the kingdom has the capacity to position itself for more robust future growth. Alongside more active government and private sector cooperation in ironing out legislation that affects the sector, the footfall may only increase in Jordan’s burgeoning retail environment.
The Jordanian distribution network is undergoing a process of transformation, as it is shifting from stalls and traditional markets to shopping centres. Several major shopping centres have opened in Amman recently and factory outlets are being built in the south of the capital. E-commerce is also in full expansion. There are three major retail chains: Cozmo, C-Town and Safeway.
It should be noted that the Carrefour Group has opened 4 hypermarkets and 36 supermarkets in the country, with its local partner Majid Al Futtaim (CCI France Jordanie, 2020).
With 8.7 million users, internet penetration in Jordan reached 87.8% by the end of 2017. That year, there were 4 fixed-broadband subscriptions per 100 inhabitants, a number that grows significantly when it comes to mobile-broadband subscriptions (106.3 per 100 inhabitants). Additionally, 55.8% of households had a computer, and 82.9% of them had internet access at home. Even though the country has a high internet penetration rate, access in remote areas remains poor, as almost all companies concentrate their operations and promotions in major cities. There is also a contrast when it comes to the age of the internet users. While 75% of individuals aged 18-34 were internet users, only 57% of those aged 35 and above were connected to the internet. Internet connection fees have been considered high for years, but prices have dropped lately. Still, internet users in the country seem to be unhappy with what they claim is poor quality of service. It is worth noting that formerly state-owned Jordan Telecom controls the fixed-line network, centralising most of the connections to the international internet. Therefore, the government retains a certain level of control over the country’s internet, given that all traffic within the country must flow through a government-controlled telecommunications hub.
E-Commerce in Jordan is considered to be one of the most advanced in the region. Total e-Commerce sales in Jordan was estimated at US$ 662 million in 2017. According to the government' s e-Commerce strategy, the main obstacles to the market in the country are the lack of legislation which supports e-Commerce and protects consumers, arbitrary changes to licenses and taxes that deter e-Commerce companies and the lack of a viable electronic payment system. Given that 70% of the population does not have a bank account, cash-on-delivery is the most popular payment method among Jordanian consumers. However, while that may be an option when buying from local websites, it becomes a hurdle when it comes to making cross-boarder purchases. Even though about 60% of the online purchases are paid with cash on delivery, this method is also not ideal for Jordanian businesses, because customers can refuse to hand over cash if they are not satisfied with the item they ordered. Some of the most popular e-Commerce websites in the country are souq.com, automart-me.com, mansoura.com, semiramispastries.com and markavip.com.
Organizing Goods Transport
Main Useful Means of Transport
Generally speaking, the road infrastructures in Jordan are very good. The country has 6 678 km of roads of which 2 756 km are motorways. Most of the roads run north/south, which allows you to reach the whole country. All the big cities are linked by motorway. Piggybacking concerns exclusively phosphates in the region of El-Hassa near Aqaba. The Ministry of Transport launched a tender in 2005 to develop rail infrastructures over the long term (over 20-25 years).
The port of Aqaba, Jordan's only access to the sea, is very modern with special containers for hydrocarbons and phosphates.
Finally, Queen Alia international airport has modern services and infrastructures.
- the manufacturing sector which is dominated by activities of leather processing and making shoes, by the chemical and plastics industries, by the telecommunications industry, by the manufacturing of furniture, by agrifood and packaging.
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