On 24th November 2013 Jordan became the 46th country to adhere to the OECD Declaration on International Investment and Multinational Enterprises. This adherence bears witness to the determination that Jordan holds towards strengthening the liberalisation of investment, increasing its integration into the world economy and promoting responsible business conduct.

Jordan’s economy has benefitted from key reforms since the 1990s, helping to attain macroeconomic stability and improve human development indicators. The GDP per capita (PPP) reached USD 5 900 in 2011, positioning Jordan as an upper middle income country. However, structural reforms are still needed, as the country remains highly dependent on foreign aid and remittances. The current regional unrest, in particular the deteriorating situation in Syria and the remaining instability in Iraq, and the slow recovery of the global economy strongly affect economic activities.

With a GDP per capita (PPP) of USD 5 900 in 2011, Jordan is an upper middle-income country. Key economic reforms launched in the 1990s enabled Jordan to achieve important economic and social development objectives. Privatisation, budget and financial sector reforms, and international economic integration (accession to the WTO in 2000 and ratification of a free trade agreement with the United States in 2001 and an association agreement with the European Union in 2002) have helped Jordan to reach a level of macroeconomic stability. Moreover, human development indicators have improved over time and real GDP growth averaged 6% from 2000 to 2011.

Jordan’s economy has benefitted from key reforms since the 1990s, helping to attain macroeconomic stability and improve human development indicators. However, the country remains highly dependent on foreign aid and remittances and the current regional unrest strongly affects economic activities.Jordan has performed relatively well in attracting foreign direct investment. FDI inflows reached 10% of GDP during 2000-11. The regional instability and the economic slowdown in the Gulf States have nevertheless considerably affected investment inflows which were halved in 2011 compared to 2008. Prospects for recovery are still uncertain.The privatisation process has been a major driver in attracting foreign investors, but is now largely completed. A law on public-private partnerships (PPPs) is being prepared in order to set up a new legal and institutional framework.

Jordan’s legal investment regime is governed by a series of laws and regulations, not all easily accessible, some being temporary and overlapping. It suffers from deficiencies in terms of legal coherence, transparency and predictability for investors. The authorities are aware that it needs to be clarified, unified and improved, and have announced the revision of the investment law and the restructuration of the investment institutional framework.Jordan applies restrictions on foreign investment under the OECD National Treatment instrument. Limitations on foreign ownership concern sectors such as telecommunications and transport, but also wholesale trade and retail, and construction, which are more unusual among OECD countries and adherents to the OECD Declaration on International Investment. In addition, some measures having a bearing on FDI are notified for purposes of transparency. Jordan’s overall scoring under the OECD’s FDI Regulatory Restrictiveness Index is high and significantly above the average for adhering countries.

In addition to legal provisions, a number of policy areas have an important impact on the investment climate, such as investment policy, promotion and facilitation, trade policy, anti-corruption, competition policy, infrastructure and financial sector development.Jordan conducted structural reforms aimed at liberalising its trade and investment regime and fostering private-sector led growth. It joined the WTO in 2000, signed 53 bilateral investment treaties, ratified the UN Convention against Corruption, adopted national legislation on intellectual property rights and competition, and has relatively well-developed infrastructures and financial sector compared to its regional peers. However, significant challenges remain. The policy framework for investment continues suffering from administrative and regulatory obstacles and lack of policy implementation and legal enforcement.

Policies for promoting responsible business conduct (RBC) in Jordan are still scarce. The concept is relatively new, the level of awareness is low and there is no comprehensive national policy. The government, enterprises and NGOs are, however, progressively taking initiatives to incorporate RBC into their practices. The authorities developed a Corporate Governance Code based on the OECD Principles of Corporate Governance. They ratified human rights conventions, but further steps are needed to guarantee respect for human rights by enterprises. The legal and institutional framework for employment and labour relations has been reinforced, but challenges remain in relation to freedom of association and social dialogue. Environmental impact assessments are conducted, though awareness on green business conduct is limited.With a view to promoting the OECD Guidelines for Multinational Enterprises and their observance by companies, Jordan will establish its National Contact Point within the Jordan Investment Board.

Jordan is facing environmental challenges. It is one of the world’s most water-poor countries and the energy mix is heavily focusing on oil. There are significant opportunities in terms of mobilising private investment, including foreign, in support of green growth. The National Energy Strategy plans to increase by 2020 the share of renewable energy sources in the energy mix to 10% and to reduce the energy consumption by 20% through energy efficiency measures. A Law on Renewable Energies and Energy Efficiency was adopted in 2010 and incentives are provided. Despite promising initiatives, gaps remain to increase investment in green sectors. The phasing out of fossil fuel subsidies and a feed-in tariff could help stimulate investment in renewable energy. A closer monitoring of government programmes could also ensure better results.

Trans-sectoral: For registration purposes, non-Jordanian investments must have at least JD 50 000 of capital, except when participating in public shareholding companies.

The table below lists companies that have announced an investment acquisition project in Jordan between 2002 and 2012 according to the Dealogic database and look at whether these companies mention Corporate Social Responsibility (CSR) activities in their website.