Jordan Times
Sunday, May 23, 1999
Abu Gheida says government willing to help construction consortiums win jobs abroad
By Suha Ma'ayeh
AMMAN — The government wants Jordan's engineering, consulting and contracting companies, many hit by the country's economic recession, to form consortiums to compete for large-scale projects abroad.
Minister of Public Works Hosni Abu Gheida said that falls in line with the state's efforts to introduce a national plan of action to help revive the construction sector and attract new capital.
Jordan has 1,100 contracting firms, 1,200 engineering offices in addition to dozens of consultancy offices-way above the country's actual needs.
“Competition in a limited market would result in low quality work offered at cheap prices,” Abu Gheida told the Jordan Times in an interview this week.
He said the government asked the Contractors Association, the Engineers Association and consultancy offices to form consortiums to bid for big projects in Saudi Arabia and other oil-rich Arab Gulf states as well as in North African countries.
“Exporting consortiums will encourage team work and will enable Jordanians to compete with foreign companies and firms in those markets,” he said.
There are only a handful of Jordanian-owned engineering, consulting and contracting companies with worldwide links.
Officials said lack of regulations governing this sector in addition to limited financial resources and lack of support from Jordanian embassies abroad have discouraged many contractors, consultants and engineers to market their services and expertise outside the country.
They added that payments are often delayed stressing that the government's support is essential to boost the sluggish industry.
Abu Gheida said the government was ready to back such consortiums by lobbying for them to win Arab contracts.
He said the government could also contact Arab funds involved in large-scale development projects in Arab states.
“But before marketing such consortiums, we have to upgrade Jordanian expertise in order to present a good image in markets abroad,” he stressed.
The construction sector has been a prime victim of economic slowdown hitting the country since the late 1980s. Over the past six years, the sector witnessed a 40 per cent decline in the activity.
According to figures supplied by the Central Bank of Jordan, the share of the construction sector in the gross domestic product (GDP) declined to 6.5 per cent at fixed costs in 1997 from 7.9 per cent in 1996.
The plagued industry at present witnessed a temporary construction boom after over 300,000 Jordanians were forced to leave Kuwait and other Gulf states during the 1990-91 Gulf crisis, sparked by Iraq's invasion of Kuwait.
Officials have long stressed the importance of activating the contracting-construction industry to boost the economic share to 30 per cent of GDP as many industries are linked to them, including services and banks.
“Reviving the industry will create dozens of employment opportunities,” he emphasised.
Competition from foreign construction companies and a decline in licensed building area has also dealt a blow to this sector.
“The government is seeking to raise the value for the local contractor in projects launched by foreign investors depending on the volume of the project,” said Abu Gheida.
The ministry has also sent several memoranda to the cabinet stressing that awarding tenders be based on the most suitable prices and not necessarily the lowest and to apply arbitration when there are disputes.