Jordan Times
Friday, May 20, 2005
WORLD ECONOMIC FORUM 2005
Supplement and Special Issue
Qualifying Industrial
Zones take Jordan to Wall Street
By Rami Abdelrahman
“A Wall-Street broker, sipping his morning coffee while sitting on a park bench
and reading the daily paper, wears a made-in-Jordan suit.”
This was the concept of a recent advertisement in
the local papers, promoting Jordanian garment exports to the US under the
Qualifying Industrial Zones (QIZs) agreement.
In reality, this man represents many Americans who can find made-in-Jordan
labels on their shirts, skirts, suits, jackets, trousers and underwear, as
Jordanian-made garments worth more than $930 million were exported to the US
under the QIZ agreement only last year.
Back in 1998, total Jordanian exports to the US reached a record of $18 million,
but now the figure has almost touched the margin of $2 billion.
In 1996, the US Congress established the QIZ initiative to support the peace
process in the Middle East. These zones are industrial parks in Jordan or Israel
from which goods can be exported quota- and duty-free to the US.
However, this year the QIZ exports are facing increased competition from Egypt
which signed a similar, but less preferential, agreement and from the lifting of
quota restrictions on garment giants like China, India and others as the
Multifiber Agreement came to an end on Jan. 1.
However, QIZ investors here do not fear this competition, because they have
well-established connections with buyers in the US, and because when it comes to
distance, Jordan is closer to the US than Asian countries, and therefore
exporting costs are much less.
Despite the end of quota restrictions, Asian investors still prefer to remain in
Jordan than go back to their own countries because the Jordanian government is
giving them priority as a growth-potential sector.
As an example, QIZ factories have the priority for loading and unloading at the
Aqaba port.
In fact, according to official government sources, more Asian investors are
interested in setting up factories in the Kingdom's current 11 QIZs, and in four
other QIZs that are under construction in different parts of the country.
During the World Economic Forum 2004, an agreement was signed between Jordan and
Israel to facilitate talks on signing a QIZ agreement with the European Union,
giving Jordanian QIZ a competitive advantage beyond any other export to the EU
under the same preferential treatment enjoyed by exports to the US.
The factories would not have to change anything, just find buyers in Europe and
increase their production lines, and then, export to Europe. So despite all
competition, QIZs in Jordan have more to look forward to.
However, they are still facing one problem: The shortage of qualified Jordanian
workers who are willing to work for a minimum wage of JD85.
The government has been promising for the last two years to train more people on
garment production through the vocational training corporation, however, even
those who are trained are not satisfied with the pay they are offered at QIZ,
nor with the working conditions.
However, recently His Majesty King Abdullah ordered the government to find clear
and feasible mechanisms for facilitating and improving work at QIZ. These
measurements, still to be implemented, include training Jordanian youth in
impoverished areas on line production to work in the QIZ, and replace an ever
increasing number of foreign labour in these factories.
Currently, there are about 44,000 workers at QIZs, with 40-50 per cent of them
coming from Asian countries like China, Sri Lanka and others.
QIZ factories are allowed to hire 50 per cent of their workers from abroad, but
according to government officials, they can hire more in case they did not find
enough trained Jordanians.
However, the soon-to-be-announced National Agenda, will include a master plan
for enhancing the conditions and the training of the labour sector which, if
implemented, could give QIZs more a reason to expand their operations here.