Economic development in Jordan
An Overview
Jordan which has not been much in news of late is one of the Arab Kingdoms, A small country with harsh landscapes and not endowed with much natural resources. scarcity of water being a major problem. Population of Jordan mainly consists of Arabs and Palestinians, former outnumbering the latter. The country faces several problems like poverty, unemployment etc. typical of other underdeveloped countries in this region, with not much industrial development to speak of.
However, some conscious steps by the government during the period from 2006-08 appear to have borne fruit and Jordan have been able to over come many of the problems.
Government initiative
One important step the government took was privatisation coupled with stopping of subsidies for petroleum and other goods. Foreign investment was accorded priority by the authorities, to stem the decreasing foreign grants. In 2008 Jordanian economy showed satisfactory trends with budget deficits reducing and enhanced flow of foreign investments creating favourable conditions in macro economics. There was increased domestic demand due to higher private consumption. In 2008 the purchasing power parity was estimated at $19.12 billion besides the real growth rate showing a figure of approx 5.8%.Unemployment rate is estimate at 12.9% and 30% respectively official and unofficial sources. During this period, the investment and public debt are estimated at 34.1% and 58.3% respectively. The country exported products like pharmaceuticals, vegetables, clothing, fertilizers etc. and grossed revenue to the tune of $ 6.521 billion from this. However the trade balance was negative with inputs vis-a –vis exports being higher. Real estate and construction sectors showed declines; with sale of cement showing decrease of 3.6% in early 2008 compared to 2007.
Hospitality sector, an important driver of economic activity recorded an increase of 9.8% in the first three quarters of 2008. During this year, air traffic also increased by 14.9%. In fact the thrust to economy was a historical record high of 41.6% growth as compared to 2007. The foreign trade volume was up by 27% in 2008 but that was coupled with a 12% widening of trade deficit to total JD 5.11 billion in 2008, or 38% of GDP. (Jordan economic report.2009).
The public sector performance and public revenues benefited from helpful economic conditions thereby achieving an increase of 19%. The shortage to GDP ratio was balanced around 5%. Total public debt increased by 4% in 2008 but the GDP ratio ceased at 10% below the 70% level.
Banking sector in Jordan fared well with good performance, and the high gains in this sector can be ascertained by the increase in deposit and lending of money. These activities indicated good increase in 2008. Banking operations recorded an increasing trend 2007 with total size of the market operation in the local marketing which is calculated by the bank assets. In 2008 the rate of loans increased by 16.8%, rising to JD 13,193 million by December 2008. The discount rate of central bank in December 2008 was 6.25% and the prime lending rate of commercial bank is 8.45%.
In the year 2005 the average quantity of exported oil from the country was of O bbl/day and along with this, the import of oil was largely increased at a rate of 112,300. In the year 2008, the oil reserves existing in the country was of1 million bbl. The Natural gas consumption in the country in the year 2006 was of 2.25 billion cu m and its exports from the country were of 0 cu m. It is estimated that there exist 6.031 billion cu m reserve of natural gas in the country by 2008. Reserves of foreign exchange and gold in the country in 2008 were of $7.884 and its debt-external crossed $6.597billion. Stock of direct foreign investment at home was $20.38 billion and that of money was estimated $7.87 billion, quasi money was $17.98 billion and stock of domestic credit was $25.05 billion.
It was in 2000 that Jordan first signed with US an agreement, and became a member of WTO. After the joining of WTO the country was able to enter into strong trade relations with the other members. Besides, in 2002 Jordan signed the European Council Agreement. This agreement provided major benefits like exemption from customs tax and other fees for manufactured products of Jordan. Yet another agreement namely EFTA free trade agreement was made with countries like Iceland, Lichtenstein, Norway, and Switzerland. These agreements, and the business relations that ensued, boosted the commercial activities in the country which in turn rendered pace to its economic development. Qualified industrial agreement is one of the important agreements signed between Jordan and USA. This helped Jordan to manufacture products through Qualifying Industrial Zones which ensured the quality of products and there by facilitated duty and quota free admission to US markets.
Economic condition in Agricultural sectors
The year 2008 marked no positive trends with regard to agriculture in Jordan. The GDP growth in the agricultural sector of the Jordan economy was estimated at 3% and the real growth rate of 0.9% in the beginning of the year. However, there was an increase in foreign demand for food and animal products during this year. The country succeeded in achieving a good flow of agricultural commodities, which again contributed to the sustained growth in economy. The imports of agricultural products decreased and trade deficit was reduced to 37%. The volume of exports also increased by 24.9% to save JD 525 million and the imports decreased 33.7% to reach JD 1.87 billion. “The sector’s outlook for 2009 is challenging. In addition to the obstacles the country faces at the level of land, domestic labour, and shortage of capital, the past year saw periods of droughts that are expected to leave an impact on harvest, especially that Jordan suffers from severe water shortages.” (Jordan economic report: Agriculture and industry. 2009). All these factors stabilised the economy in Jordan and helped the country achieve rapid industrial growth.
Business culture in Jordan
Jordan is a kingdom with predominant Arab culture. The population predominantly Muslim. Arabs and Palestinians speak Arabic; usage of English limited to higher economical strata of the society. So Jordan has certain business policies toward all Arab countries. Arab countries are, in general, considered as undeveloped. In matters of commitment to honour, respect and hospitality Arab people are considered very traditional, hospitality being an inalienable part of their culture. Jordan’s economy is heavily impacted by its location in the Middle East, the arid landscape, its relations with its neighbours and its dependence on foreign aid.
Political system in Jordan
It is a country ruled by a king, king Hussein till 1999 and after his death, by king Abdulla his son. In June 2003, the parliamentary elections resulted in a majority for the king’s supporters; Islamists won 18 seats.(The country & people of Jordan 2003)
Jordan’s political and social systems are based on origin and wealth. The rules and regulations depend on wealth, size and motivations of the families to which a person belongs.
Quality Management in Jordan
Jordanian government policy and view on quality management
Establishment of a Standardisation and Metrology Department under the ministry of Trade and Industry in the year 1984 seems to be a land mark in the quality implementation polices of Jordan government. Under this system, product and work standards are made compulsory through establishing the Jordanian Product Standards. The introduction of Jordan Quality Marks is another land mark in the history of quality implementation in Jordan. Under this system, statistical quality control methods are adopted.
In between the periods of 1990- 1995, the JSQ was implemented which brought the work procedures under standardisation, and the range of STC is expanded widely. Quality and environmental management systems such as ISO 9000 and ISO 4000 standards are also introduced during this period. The concept of TQM was adopted by Jordanian organisations for improving their operational performance and competitiveness in international trade. Other quality control techniques such as six sigma and BPR were also adopted by most organisations in Jordan. The Jordanian government has shown keen interest in the implementation of quality management system in organisations. Quality and excellence awards were introduced in Jordan by the government. Some of them are explained below;
- Jordanian quality mark: In this system the products from the Jordanian markets are tested for assessing their compliance with the standards specified under the certification requirements. The quality management systems of the manufacturing organisations are tested for assessing compliance with the ISO 9001: 2000.
- King Abdullah 2 Award for Excellence
- Queen Rania Award for Excellence in Education: This was launched in 2006, with the following objectives of achieving excellence in the educational quality in the nation.
Jordan Institute for Standards and Metrology (JISM)
JISM has introduced King Abdullah Award for performance and transparency in the government sector. Its vision is to attain an eminent position in the national, regional and international levels as an exceptional centre in standardisation and related fields. JISM plays an active role in safeguarding the interests of the citizens besides the health and safety of the native individuals as well as the environment for improving the competitiveness of the products and services produced and supplied by the nation in the global markets together with keeping of the national goals and attaining them within the specified priorities. “To achieve this, JISM fulfils its mandate to build, implement and update systems compatible with international practices, in the fields of standardization, metrology, conformity assessment, market surveillance, accreditation, information and related areas through providing an internal supporting working environment and developing all needed human, knowledge, material, technological and financial resources.” (Vision and mission: Jordan institution for standards and methodology (JISM) our vision, mission & core values).
The national goals and institutional objectives of JISM
The ultimate goal of JISM is to improve Jordanian economy and act as an excellent centre for standardisation and quality management. Through this they aim to attain better position in the regional and international markets. The strategic frame work of JISM is capable of achieving international competency. By developing awareness about the requirement of quality and quality culture and standardisation among the different types of organisations, and by meeting the conformity standards and accreditation they strive to achieve the fulfilment of their objectives. The internal and external activities of communication are strengthened by JISM and through this overall efficiency and effectiveness of the organisational management can be ensured. It ultimately contributes to the administrative and technical performance of the national organisations and their profitability, growth and development. JISM also aims to ensure better health of the society in the country by meeting different health scales. For this purpose organization and market observation procedures are followed by them and it intends to facilitate the health and safety position of the society. The safeguarding environment and its valuable scarce resources is also another major priority of JISM and they try to achieve this by conservation practises.
King Abdullah II Award for Excellence
The Award has been introduced by a Royal Decree in 2002 with a focussed objective of achieving high performance and transparency in government and to improve the operational efficiency in public sector organisations while serving the community. It is regarded as the highest award in the country awarded to those public sector organisations presenting higher level operational excellence at the national level. Their objectives are as follows; “The Award aims to create qualitative transformation and to develop the performance of government and institutions in serving Jordanian citizens and investors, as well as to enhance positive competitiveness among government departments and institutions through promoting awareness of the concepts of distinguished performance, innovation and quality, and entrenching the culture of excellence that is founded on three international pillars for best practice.” (The objectives. 2003).
In the private sector a separate award, established in 1998, has also been provided. It is an award in the field of operational quality and excellence at the national level. It aims to improve the quality management level in business organisations through quality awareness and excellence in performance. “It aims at enhancing the competitiveness of Jordanian businesses by promoting quality awareness and performance excellence, as well as recognizing quality and business achievements of Jordanian organizations. The Award also aims at sharing the experiences and success stories of participating organizations.” (The journey to excellence for Jordan).
The King Abdullah 2 Centre for Excellence has a vision of enhancing the quality culture among organisations in the country for becoming more consistently competitive in the national as well as international market. The centre undertakes training programmes and awareness seminars for the member organisations. Their mission is as follows: “King Abdullah II Centre for Excellence aims at promoting a culture of excellence in Jordan and the Region through developing excellence frameworks and assessment criteria based on international best practices, assessing organizations’ performance, managing King Abdullah II awards for excellence and promoting excellence to public sector, private sector, not-for-profit and non-governmental organizations.” (Our mission. 2007).
JUMP: Jordan Upgrading and Modernisation Programme
The JUMP was established with the objective of supporting selected small and medium sized enterprises in the country in their quality excellence programmes. Their mission is “to improve and sustain the competitiveness of Jordanian enterprises by enhancing their managerial capabilities and productive capacities.” (Mission. 2005). JUMP is aimed at improving the productivity and quality level of organisations through implementation of standardised production techniques.
It also ensures reduced production costs. Besides it facilitates organisations to attain competency at the national as well as international markets. Through enhancing the competency level, the market share of the companies will be increased. When the products and services in the country achieve a certain level of quality, it will open up mew avenues for export. JUMP insists on some bench marks and international business practises for their client organisations in the country besides ensuring quality improvement in organisations. JUMP also focuses on human resource development which is essential for meeting the quality standards by organisations. The quality standards are fixed on the basis of the market needs. To enhance the domestic demand, JUMP encourages the organisations under its scheme to use locally available resources rather than imported production inputs.
“Jordan Upgrading and Modernization Program (JUMP) was established, as part of Jordanian governmental commitment to develop the companies competitiveness, strengthen their managerial capabilities and technological capacities, and in an endeavour to maximize the benefits of international agreements Jordan have signed by supporting Jordanian SMEs technically and financially.” (Jordan upgrading and modernization program. 2005).
Jordan Society for Quality (JSQ)
JSQ is a Jordanian professional non profit NGO set up by a group of professionals in 1995. It is the pioneer institution in the field of social sciences for quality among the Arab countries. Its overall direction and control is handled by a board of directors comprising of volunteer members. The entire organisation is under the control of the General Assembly. It is the recognised national body constituted by professionals and organisations focusing on the quality and excellence. It includes the representatives from all national bodies involved in quality, such as Institution for Standards and Metrology.
They undertake restructuring operations for the development of strategic plans and goals.
The vision of the JSQ is to implement the concept of quality as a culture among all segments of varies communities in the nation. Through their mission statement JSQ seeks to “develop a National Quality culture through spreading and raising people‘s awareness and understanding of Quality concepts as behavioural and professional values and a way of life in the Jordanian community.” (Elmasri).
They have built up their principles on certain core values, which are described below:
- Quality is a clear evidence of the progress and prosperity of the society and the nation.
- Individuals have the legitimate right to receive the quality services and products for their money.
- Quality behaviour is the right of the customers, and through this they can achieve better life for present and future generations.
- Quality facilitates the achievement of the economic prosperity and excellence in operational performance.
For attaining the organisational objectives, JSQ has established working committees in different businesses and public sectors. It involves specialised committees, sector working committees, quality culture and awareness committees, etc. Their activities are of a wide range and these include weekly awareness seminars as well as biannual major quality conferences. Seminars on general and specially focused areas are periodically conducted by them. They also are offering quality training courses for their client organisations. By facilitating such training programmes, they intend to develop the skills of individual who can become quality managers. Besides, the JSQ also conducts quality conferences of international level so that their managers can imbibe in them quality norms of a global standard.
ISO Implementation in Jordan
The ISO certification has commenced in Jordan in the year 1993 with the starting of the Lloyds Register Group. The Lloyds register group is an UK based organisation dealing with the quality system certification and accreditation. It has started as a quality consulting company and ISO certification body in Jordan and in 1998.
The first company in Jordan which achieved the ISO certification was Jordan Lift and Cranes Company. They attained this certification in 1995 through offering standardised quality products and services in the field of vertical transportation. As per the opinion of the Mr. Muhammad Al –Kayed, an ex-employee in the Lloyds, since its beginning in Jordan, the companies and organisations are showing keen interest in ISO certification and during the period from 1998-2000 a booming trend was seen among the companies to attain ISO certification. The number of applications for ISO certification increased during that period and it shows the keen interest of companies for getting their quality standards certified by an authorised body.
From 2001 onwards, there appears a declining trend among companies to apply for ISO certification. The complexity in the documentation process, and huge expense for the accreditation purpose seems to have affected the interest of the companies to apply for ISO certification. In the present business conditions, the companies applying for ISO certification have vastly come down. Presently there exist around 550 Jordanian companies having the ISO 9000 certification and it is only 5 to 7%of the whole manufacturing industry in Jordan. Along with the ISO 9000, other ISO certification bodies such as Det Norske Veritas (DNV) (Norwegian), Société Générale de Surveillance (SGS) (French), TÜVRheinland Group (TUV) (German) etc are functioning as quality certification bodies in Jordan.
References
Jordan economic report 2009, Bank Audi, Web.
Jordan economic report: Agriculture and industry 2009, Bank Audi, Web.
The country & people of Jordan2003, Columbia university press, Web.
Culture of Jordan2007, Advameg Inc, Web.
Vision and mission: Jordan institution for standards and methodology (JISM) our vision, mission & core values, Jordan institution for standards and methodology, Web.
The objectives 2003, King Abdullah II centre for excellence, Web.
The journey to excellence for Jordan, King Abdullah II centre for excellence, Web.
Our mission 2007, King Abdullah 2 centre for excellence, Web.
Mission 2005, JUMP, Web.
Jordan upgrading and modernization program 2005, JUMP, Web.
Elmasri, Sahar., Jordan: The story of Quality, Mission –JSQ, Web.