Trade and the economy: the Netherlands and Jordan

Lauded for its stability, Jordan is often recognised as the eye of the storm in a troubled and tumultuous neighbourhood. Whilst the Kingdom has remained its calm in the face of the surrounding crises, it cannot expect to remain economically unscathed as it sits out the raging storm. Indeed, with the traditionally important markets of neighbouring Syria and Iraq becoming largely inaccessible, with over 600.000 Syrian refugees leaning heavily on the public purse, and with a dwindling investment appetite for the region, Jordan has been taking some nasty economic body blows. The adverse impact of the region’s ills have recently trickled down into worrying economic trends with investments in new companies decreasing by 19.9% on a year-to-year basis in 2016, foreign currency reserves shrinking by 11.7% over the same period, and unemployment rising from 13.8% to 15.3% from 2015 to 2016 – and rising further to 18.2% in the first quarter of 2017. That said, the debilitating trade deficit has been showing solid signs of decline[iv] in the first quarter of 2017, and it is here, in the field of trade that we see a prime opportunity to make a serious dent in the unemployment figures and build momentum for an aggressive recovery.

In short, the Netherlands is committed to do its part and support Jordan in its effort to ameliorate its economic malaise by alleviating some of the financial burden, spur job creation, and improve the exporting capacity of its private sector. Practically, the Netherlands has instigated, and is running and supporting a collection of on-the-ground projects, which together serve to realise the above objectives.

Project 1: Strategic Export Marketing Plan (SEMP) in the Agricultural Sector

What is the Issue at hand?

Jordan suffers from an unrelenting trade deficit with the rest of the world. Not only does it adversely affect its foreign currency reserves, but seeing its relatively low levels of export, it also leaves much export - and by that, growth - potential untapped. As Jordanian companies often fail to expand into novel or international markets, they also miss out on the stupendous growth that comes with breaking into new markets. Without such growth, Jordanian companies will in all likelihood not find the space or need to employ more workers, and fostering job creation through trade thus remains a distant dream.

How do we contribute to the solution?

Naturally, the Netherlands cannot support the whole Jordanian private sector in bolstering its export capacity. Consequently, and following our expertise, we are focussing on the agriculture sector, especially fruits and vegetables. We are in close collaboration with JEPA (the Jordan Exporters and Producers Association for Fruits and Vegetables) to develop a Strategic Export Marketing Plan for the Jordanian agriculture sector. Spearheaded by the Centre for the promotion of Imports from developing countries (CBI), the Netherlands is developing a large-scaled exporting strategy which aims to link those Jordanian agriculture sectors that hold a comparative advantage to prospective niches in global markets. We are currently in the exploratory phase where market research is conducted to identify the most promising places for matchmaking. In the next nine months, the CBI shall lead a series of international networking/study trips with selected Jordanian companies on a cost-sharing basis. After this phase an evaluation round shall take place, and if all goes well, we aim to step up the project in the subsequent years and help Jordanian companies break into the relevant international markets.

Project 2: Cut Flower Association

What is the Issue at hand?

Jordan has considerable potential to become a regional flower hub, yet the current facilities stifle the growth of this sector and inhibit the realisation of said potential. The auction building for the flowers (an integral part to the value chain) is worn down and ill-suited for its envisaged purpose of swiftly moving flowers from the farmers to the wholesale distributers and exporters.

How do we contribute to the solution?

To the end of retaining the flower’s value during its transition in the value chain, the Netherlands seeks to support the construction of a new facility, a feat which would bolster the exporting capacity of the flower sector in Jordan. At this moment we are in the final stages of signing the grand arrangement for a feasibility study of the new auction facility.

Project 3: Cooling facility

What is the Issue at hand?

Moving up the aggregate exporting value chain, we have identified a precarious gap at the cargo space of the airport. Whilst he whole cargo infrastructure is wanting in its capacity, an especially acute problem comprises the cooling facility. Many products (eg perishables, flowers) require consistently low temperatures to retain value in the journey from production to exportation. The lack of adequate cooling at the airport stifles the export capacity of many sectors - and by that Jordanian companies - across the board.

How do we contribute to the solution?

Naturally, the endgame is to plug the hole in the value chain by drastically enhancing the cargo space’s infrastructure in general and the cooling facility’s holding ability in particular. As of this moment, we have managed to get the right parties plus relevant stakeholders around the table, and we are set to move forward swiftly. The project is still in the preliminary stages, and we are issuing a feasibility study so as to lay the groundwork for the eventual revamp.

Project 4: Decent job creation in the manufacturing sector

What is the Issue at hand?

As already noted at the outset of this section, unemployment is a problem taking on daunting proportions. Unemployment stems from a diverse set of factors, and thus the requisite response should be equally diverse in its design. Apart from the sector and value chain-specific problems that are being addressed by the previously-listed projects, we also need to address wider labour market woes. That is, one of the major drivers of unemployment comprises the mismatch between the qualities of job-seekers and the profile sought by employers. A component of this mismatch is structural or cyclical in nature and will have to be addressed with long-term reform. Still, a significant proportion of the mismatch is also frictional and can be ameliorated with initiatives that in the short to medium run drown out the noise in the labour market. It is primarily this problem which we aim to tackle by funding the ILO-managed decent job creation in the manufacturing sector project. 

How do we contribute to the solution?

Following through on the pledges made during the London-based Syrian Donor Conference in early 2016, the Netherlands is bankrolling an ILO-led project aimed at helping thousands of Jordanian and Syrian refugees access decent jobs in the Jordanian manufacturing industry. The program comprises a wide array of initiatives from the construction and staffing of employment service centres aimed at job matching, to the development of a rich and comprehensive database, to the provision of technical assistance, both to the Jordanian government as well as high-potential private sector corporations.

Further Projects

What is the Issue at hand?

The name of the game, again, is the obstinate problem of unemployment

How do we contribute to the solution?

The Netherlands is exploring proposals and partnerships with the German GIZ, the British DFID, as well as the International Rescue Committee (IRC). Whilst still in an embryonic stage, the groundwork is being laid to launch a consorted effort to assist Jordanian companies leverage the opportunity associated with the relaxation of the rules of origin for the European market. As noted in the introduction of this section, bolstering the export capacity of Jordanian companies is envisaged as one of the main channels through which we can raise demand for labour and entice companies to hire more employees.

Further Engagement

  • To provide Jordanian SME’s with the much-needed financial oxygen, the Netherland is using a wide range of instruments such as the Dutch Good Growth Fund (DGGF) to provide capital to for instance Grofin, a development financier.
  • In addition to providing funds and running projects, the Embassy of the Netherlands also functions as a facilitator between Dutch organisations and their Jordanian counterparts. In this vein, we serve as a catalyst for cooperation by bringing parties from both countries together as we did with the Netherlands Senior Expert Program (PUM) and the Jordan Europe Business Association (JEBA).
  • The groundwork is currently being laid for a future trade mission to Jordan.