Overview

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The Kingdom of Jordan has taken an aggressive stance toward developing free trade and special economic zones, looking to the success of Jebel Ali Port and free zone in Dubai, UAE, as a model for economic diversification. The Kingdom currently has seven free zones, of which two are fully operational: flagship Aqaba FTZ in the Red Sea coastal city of the same name, boasting the largest land space and most thorough tax incentives; and Zarqa FTZ, in the northern industrial city of Zarqa. The entire Aqaba area is presently being reimagined as a freeport area with industrial and commercial clusters, with the design inspiration coming from Jebel Ali Port, one of the world’s largest free zone areas by total trade volume, export volume, and number of international companies.

The most recent developments in Jordan’s free zone landscape are the Sahab FTZ in Jordan’s capital, Amman, a 63,000 square metre industrial area aimed at attracting industrial investment in export-oriented industries, and the 120,000 square metre Queen Alia International Airport free zone in Amman, a trade facilitation zone which also has the stated goal of “establishing light high-tech, pollution-free industries.”

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In 2016, a new World Bank Group programme was announced, involving $300 million in investment, with the lion’s share going toward developing existing free zones. The aim of the programme is to foster employment for the hundreds of thousands of Syrian refugees living in Jordan since the beginning of the Syria conflict in 2011, as well as job training and opportunities for young unemployed Jordanians. Along with new government and private sector investments, the profile of Jordan’s free zones is likely to increase substantial in the coming five years.

 

 

Beyond mere industry: Multisector growth envisioned for Aqaba, Sahab, Queen Alia International Airport free zones

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Jordan has numerous examples in its surrounding region to look to in charting a course for its seven free zones, and with the Sahab Free Trade Zone, Queen Alia International Airport free zone, and Aqaba Special Economic Zone and freeport area, it is looking at free zones from a cutting edge vantage point.  It views these zones as catalysts for diversification of an emerging economy into important sectors like value-added logistics, high tech, and eco-industry.

The Jebel Ali Port and free zone is perhaps the standard bearer for MENA-region free zones, accounting for more than 30% of exports from the Emirate of Dubai and hosting thousands of international companies. Jordan believes its Red Sea port city of Aqaba, known as a diving, cultural, and historical tourism hub, has the werewithal to develop along a similar trajectory, attracting foreign investment and expertise and becoming an export and regional maritime hub.

Another exemplar, perhaps more pertinent to Jordan given the two countries’ similar economic indicators, is Morocco’s Tanger Free Zone, which has attracted investment in diverse sectors, many of which were previously underrepresented in the North African country’s economic profile. Tanger Free Zone used a strong government mandate, generous incentives, and a strategic Mediterranean location to become a premier destination for foreign capital. Jordan hopes the same effect takes hold in Aqaba, which is well-positioned logistically vis-a-vis the Suez Canal and Red Sea to facilitate Eurasian and Indian Ocean trade.

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King Abdullah II of Jordan has said that developing capital Amman’s two free zones, Sahab FTZ and Queen Alia International Airport, is an economic priority for the country, and hopes they will attract sectoral diversity, especially high tech and eco-friendly industries. These and Jordan’s other zones have been tasked with developing a young and eager Jordanian workforce, as well as providing employment and training for some of the estimated 700,000 Syrian refugees currently residing in the Kingdom.

Jordan’s free zones enjoy regularity and clarity in their incentives and an unwavering government commitment, which alone distinguishes them from many of their regional competitors. They have witnessed a decade plus of steady growth in trade volumes and investment, and could now launch Jordan into a new and more diverse economic trajectory.

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