INVESTMENT MOTIVATION SURVEY SUMMARY REPORT May 2016 Abstract A survey of 302 domestic and foreign investors in Jordan, of medium and large size, across different sectors and geographic locations (including Development Zones and the Aqaba Special Economic Zone), conducted through face-to-face interviews in 2016, which provides data to policy makers and other stakeholders on the main factors motivating investment in Jordan, the key issues of investment climate (particularly investment incentives), and employment (including hiring Syrian refugees). 0 Acknowledgments This report was authored by Yassin Sabha (Private Sector Specialist Consultant) under the leadership of Mohamed Hamoud Baider (Senior Private Sector Specialist and Task Team Leader) and the management of Najy Benhassine (Practice Manager), with substantive inputs from Ivan Anton Nimac (Head), Harald Jedlicka (Senior Private Sector Specialist), and Nesreen Abu Suleiman (Private Sector Analyst), all from the World Bank Group’s Trade and Competitiveness Global Practice. The report was conducted under the Jordan Competitiveness and Investment Program funded by the Middle East and North Africa Transition Fund. Comments were provided by: Syed Akhtar Mahmoud (Lead Private Sector Specialist), Jan Erik Von Uexkull (Senior Economist), Susan Razzaz (Senior Consultant), and William Scott Mut (Senior Consultant), from the World Bank Group’s Trade and Competitiveness Global Practice. Editorial support was provided by Amelia Jane Kelly. The report builds on the Investor Motivation Survey Report authored by Dajani Consulting. The team would like to thank the Government of Jordan, and particularly the Ministry of Planning and International Cooperation and the Jordan Investment Commission, for its support and collaboration. Finally, the team would like to thank the Government of Austria for its financial support to investment climate reforms in Jordan. 1 Contents Acknowledgments ..............................................................................................................................................1 Executive Summary ............................................................................................................................................4 Introduction..................................................................................................................................................... 10 Chapter 1: Understanding Investor Motivations ............................................................................................ 12 BOX: Types of Investment by Motivation .................................................................................................. 12 What drives investment locational decisions? .......................................................................................... 13 Alternative investment locations ............................................................................................................... 18 Encouraging others to invest in Jordan and expectations on future investment .................................... 19 Incentives received by investors between 2011 and 2015: ...................................................................... 21 Importance of incentives in influencing investment locational decisions: .............................................. 23 BOX: Assessing the Effectiveness of Incentives ......................................................................................... 26 Importance of incentives in influencing investor activities/behaviors: ................................................... 26 Chapter 3: Employment, Syrian Refugees, Gender and Foreign Workers ...................................................... 30 Hiring Syrian Refugees ................................................................................................................................ 30 Gender and employment ........................................................................................................................... 32 Domestic vs. foreign employment ............................................................................................................. 33 Employment and skills................................................................................................................................ 34 Future expectations on the workforce: ..................................................................................................... 35 Chapter 4: Sub-National Considerations on Investment................................................................................. 36 Investment locational decisions at the sub-national level and incentives:.............................................. 36 Conclusions and Policy Recommendations ..................................................................................................... 38 Investment Promotion and Retention: ...................................................................................................... 38 Investment Incentives: ............................................................................................................................... 40 Employment:............................................................................................................................................... 41 Annex 1: Jordan Investor Motivation Survey 2016 - Sample Description ..........................................................1 Annex 2: Jordan Investor Motivation Survey 2016 – Sampling Frame Description ...........................................6 Annex 3: Jordan Investor Motivation Survey 2009 - Sample Description ..........................................................8 Annex: Jordan Investor Motivation Survey 2016 Methodology ........................................................................9 Annex 4: Jordan Investor Motivation Survey 2016 - Questionnaire ............................................................... 12 Annex 5: Classification of Economic Sectors and Sub-Sectors ...........................................................................0 Annex 6: Investment Incentives: Key Concepts and Definitions ........................................................................5 2 Definition of incentives .................................................................................................................................5 The different incentive instruments available .............................................................................................5 The role of incentives (locational vs. behavioral).........................................................................................6 Annex 7: Inventory of Incentives in Jordan ........................................................................................................0 Annex 8: Types of Investment, Motivations and Incentives ........................................................................... 34 Definitions of FDI ......................................................................................................................................... 34 Types of Investment by Motivation ............................................................................................................ 34 Incentives and Types of Investment............................................................................................................ 35 Annex: Jordan Investor Motivation Survey 2016 – Tables of Relevant Responses......................................... 36 3 Executive Summary As part of an ongoing commitment from the World Bank Group (WBG) to the Government of Jordan (GoJ) to implement effective investment policies to attract and retain private investment and create jobs for Jordanians and Syrian refugees, the WBG’s Trade and Competitiveness Global Practice conducted the Jordan Investor Motivation Survey, hereinafter ‘the survey’, from January to July 2016. In collaboration with the GoJ, the main objectives of the survey were to: (i) understand the motivating factors and future expectations of investors in Jordan; (ii) indicate the types of incentives received by investors, the main beneficiaries, and the role of these incentives in influencing investment locational decisions and selected activities and/or behaviors; (iii) investigate investor motivations at the sub-national level, including the role of incentives; (iv) offer insights on investors’ willingness to hire Syrian refugees, the gender composition of the workforce, the presence of foreign labor and the level of skills; and (v) understand differences in motivations (efficiency-seeking, domestic market-seeking, and natural resource-seeking)1, incentives and employment among investors in key sectors. The survey sample included 302 active domestic and foreign investors, both medium and large sized, operating within different economic sectors in Jordan and located across several municipalities, both inside and outside the Development Zones, Industrial Estates, and Aqaba Special Economic Zone2. Companies were randomly selected to build a representative sample, of incentive recipients, from a unique database of 6,680 companies. The field work was conducted between February and July 2016 via face-to-face interviews, using standard WBG investor motivation survey (IMS) methodology. The survey follows a 2009 IMS that included 62 domestic and foreign investors operating in similar sectors and located primarily outside the Zones. Key Findings Three overarching themes - including investor motivations, investment incentives and employment - were assessed in the survey. Following an analysis of each theme, below, this report provides a list of recommendations for the Government to consider in addressing issues within each thematic area. Investor motivations: The survey highlights that, while investors of different types and economic sectors tend to be motivated by different factors, certain drivers are common to all investors. These primarily include security and safety; regulatory predictability and the soundness of the overall investment climate. In light of the current political turmoil affecting the Middle East and North Africa (MENA), Jordan remains one of the few stable countries in the region where investors can do business. Further to this, the need for a conducive investment climate and predictable business regulation were highlighted as additional motivating factors for investors across all sectors. Resultantly, the survey indicates the importance of sound investment climate fundamentals to attract and retain investors, which cannot be offset by lower cost factors, including incentives. 1 Please refer to Annex 8 for a definition of investment by motivations. 2 It is important to note that the Free Zones were not included in the JIMS. 4 In line with evidence based literature, the survey also points to the greater importance of incentives for efficiency-seeking investors and, to a lesser extent, domestic market-seekers, in their decisions to invest in Jordan. Further, the survey confirms that natural resources and raw materials remains the most important driver for attracting and retaining natural resource-seeking investors. While the survey demonstrates that Jordan is competing with other locations in the region to attract investment, it is important to note that competition is fiercer for attracting efficiency-seeking investors. This can be explained by the fact that efficiency-seekers, who are export-oriented by definition, tend to select alternative investment locations based on the competitiveness of production and capital cost factors. Egypt, the United Arab Emirates (UAE) and Turkey are these top alternative destinations for efficiency-seekers, with competitive production factors and overall business environment in these locations helping explain this. For domestic market-seekers, the Kingdom of Saudi Arabia (KSA) and the UAE were the top alternative locations, attributed to the large market size (especially KSA), high incomes and consumer behaviors. Taking into account sub-national considerations, most investors (75.8%) did not consider alternative locations within Jordan. Nevertheless, efficiency-seeking investors considered alternative sub-national locations the most (30.6%), compared to domestic market- (20.1%) and natural resource-seekers (14.3%). This confirms that this type of investor weighs several alternative options before investing, and is the most difficult to attract. The survey also shows that a minority of investors are planning additional investment in Jordan, while the majority are expecting to maintain their current size, with few planning to leave or shut down operations. Contextual factors might help to explain these expectations on low investment, including political turmoil in the region leading to the closure of Iraq and Syria trade routes, lower commodity prices and fall in global demand for Jordan’s export products. However, it is important to consider other issues which may be hindering re-investment, such as operational issues and investor grievances. The fact that only a small majority of investors encouraged their peers to invest in the country, and that among them were mostly domestic market-seekers, might point to some obstacles faced by businesses. Current investors can represent a great source of investment3, and it is, therefore, key for the GoJ to facilitate re-investments by current investors and ensure issues are being addressed. Investment incentives: The Jordan incentives inventory shows that Jordan provides investors to most economic sectors through different legislation4. However, there is currently no systematic approach to assess the direct cost and benefit of incentives provided to investors. In 2012, a USAID project estimated tax expenditures to be at least 1,556 million Jordan Dinar (JD), approximately 7% of GDP5. Further, the survey highlights that fiscal incentives account for the quasi totality of incentives received by surveyed companies between 2011 and 2015 (95% of the total number and 93% of the self-reported/estimated value). Customs duty incentives account for the highest number (54%) and self-reported/estimated value (67%). Incentives were received by investors in all economic sectors surveyed, however, it is not clear whether these are in line with the Government’s national 3 For instance, in 2015, re-invested earnings accounted for almost half (49%) of total FDI received by developing countries and 43% of total FDI to developed economies. 3 4 https://jic.gov.jo/portal/Home/Inventory 5 https://jordankmportal.com/resources/evaluating-tax-expenditures-in-jordan-2013 5 priorities6. The sectors that received the highest number of incentives between 2011 and 15 were7: food, beverages and tobacco (17% of the total number of incentives received); chemicals and pharmaceuticals (15%); textile, wearing apparel and leather (14%); computer, electronic products, electrical equipment, machinery, equipment, metal products (13%); other non-metallic mineral products (8%); rubber and plastics (8%); and paper, furniture and wood products (8%). Overall, the survey presents varying responses on the overall importance of incentives in influencing investment locational decisions. Almost half of the respondents (48%) answered that they would not have invested in Jordan without the incentives (marginal investors), with the remainder (52%) stating they would have invested in Jordan even without the incentives (non-marginal investors). In contrast, respondents in the 2009 IMS evidenced marginal investors constituting only 30%. This could be explained by the changes in incentives policy implemented in Jordan since 2009, or by the increased importance of cost factors, as well as by the composition of the sample. Among types of investors, the survey confirms results for the literature. Efficiency-seekers reported the highest share of marginal investors (52%), while incentives played a moderate/more limited role for domestic market-seekers (46%). Only a small share of natural resource- seekers would not have invested without the incentives (28.6%). Investors in the following sectors had a higher-than-average share of marginal investors: other manufacturing (80%); computer, electronic products, electrical equipment, machinery (59%); food, beverages and tobacco (56.6%); textile, wearing apparel and leather (53.5%); printing and reproduction of media (53.3%); and rubber and plastics (52.9%). Taking into account sub-national considerations, a small majority of companies (53.7%) reported that they would have invested in the same location within Jordan even without the location-specific incentives they received (non-marginal investors)8. In Jordan, in fact, investors can enjoy greater economic benefits if located in certain geographic areas (particularly the Zones9). Finally, among the activities/behaviors assessed in the survey10, the top three for which incentives played the most important role were: buying new machineries/equipment (75.1% are marginal investors reporting that the incentive they received influenced this activity); exporting (57.1%); and retaining existing workers (56.2%). However, more rigorous research should be conducted to understand the effectiveness of incentives in attracting investment in specific sectors and achieving selected objectives relatively to their costs. Employment: The majority of investors (61.3%) indicated they would be willing to hire Syrian refugees if work permits were granted to them. Efficiency-seeking11 investors are the most willing to hire Syrian refugees (66.1%) among 6 These include the sectors designated by the Jordan 2025 strategy6 and the Jordan Investment Promotion Strategy 7 The number of incentives was computed as the summation of incentive instruments reportedly received by companies in 2011-15. The sectoral shares are calculated as the proportion of incentives received by firms in the sector out of the total sample. It is important to note here that 100% of interviewed companies in each sector received incentives in 2011-15. 8 It is important to note that the segment of the sample relevant for this question is only that of investors located inside the Zones who received location-specific incentives. 9 For more information on incentives in Jordan please refer to the Annex: Inventory of Investment Incentives in Jordan. 10 The investor activities/behaviors analyzed included: re-investing; starting up a business; buying new machineries/equipment; hiring new workers; retaining existing workers; exporting; and investing in green technologies. 11 Natural resource-seeking investors include companies the following sectors: mining of metal ores; other mining & quarrying; extraction of crude petroleum and natural gas. Domestic market-seeking investors include companies in all 6 types of investor by motivation. The sectors with higher-than-average willingness to hire Syrian refugees were:12 paper, furniture and wood products (80.8%); computer, electronic products, electrical equipment, machinery, metal products (66.7%); printing and reproduction of recorded media (66.7%); other non-metallic mineral products (65.2%); other services (66.7%); and food, beverages, and tobacco (62.3%). The cost of the work permit would be an issue to hire a Syrian refugee for the minority of investors (44%). The sectors for which the cost of the work permit would be more of an issue to hire Syrian refugees were: construction (87.5% of investors in the sector); mining and quarrying (85.7%); food, beverages and tobacco (60.4%); and computer, electronics, and machinery (53.8%). Promoting private sector engagement is key to succeed in gender equality13. The survey provides some initial indications on the sectors with a higher proportion of female workers. Overall, companies interviewed have a higher share of female employees (53.7% of total employees) than male (46.3%). This can be partially explained by the sectoral composition of the sample. The sector with the largest proportion of female workers is textile, wearing apparel and leather (71.1% of the workforce) (which is also highly represented in the sample), followed by ICT (52.6%), and other services (43.9%). Efficiency-seeking investors have the highest proportion of female workers (62.4%). The proportion of female workers is much higher for companies inside the Development Zones and Industrial Estates (62.8%). Overall, foreign workers represent 59.3% of the workforce of companies in the sample, and domestic workers 40.7%. Textile, wearing apparel and leather has the highest proportion of foreign workers (75.7%), and it is also the sector with more jobs in the sample. In the remaining sectors, the proportion of foreign workers is much lower, reaching a maximum of 33.5% in other manufacturing and 33.7% in rubber and plastics products, and a minimum of 2.2% in ICT and other services. Investors in the Development Zones and Industrial Estates have a much higher proportion of foreign workers (68.8%) compared to investors outside the Zones (17.8%). South Asian workers represent 87.6% of the foreign workforce of investors in the sample. They come from countries including Bangladesh (53.4% of foreign workers); Sri Lanka (22.6%); Nepal (7.8%); and Pakistan (2.8%). The other foreign workers come from Middle Eastern countries such as: Egypt (7.2% of foreign workers); and Syria (2.2%). South Asian workers from Bangladesh, Nepal, Sri Lanka and Pakistan work mostly in the textile sector. Egyptian workers are employed predominantly in food and beverages and rubber and plastics, and Syrian workers are employed mostly in food and beverages, rubber and plastics, and textile. The survey confirms that some of the sectors providing the largest number of jobs in the sample (i.e. textile and wearing apparel) create mostly low- and mid-low-skilled jobs, particularly for foreigners14. Over two thirds (68.1%) of the workforce falls within the low-skilled and mid-low-skilled categories (32.4% and 35.7% respectively). Existing laws and regulations are the key obstacle for hiring foreign skilled workers, followed service and manufacturing sectors that are non-export-oriented (with less than 50.1% of sales originating from exports). Efficiency-seeking investors include companies in all manufacturing and services sectors that are export oriented (with more than 50% of sales originating from exports). 12 The sector with higher response was other manufacturing (100%). However, this sub-group comprises residual manufacturing sectors and its overall size is quite small. Therefore, the responses for other manufacturing should be analyzed deeper at the sub-sector level. 13 http://blogs.worldbank.org/psd/private-sector-engagement-key-success-gender-equity 14 In order to estimate the skill-level of the workforce, four ranges of monthly salaries were used as proxy (set in collaboration with the GoJ): below 190 JOD: low-skilled; 190-250JOD: mid-low-skilled; 251-500 JOD: mid-high-skilled; over 501 JOD: high skilled. 7 by the lack of availability. For hiring Jordanian skilled workers, lack of availability is the main obstacle, followed by the cost of salaries. Recommendations The survey identified priority actions and/or recommendations, with headline findings including: Investor motivations: 1. Jordan Investment Commission (JIC) focuses on attracting private investment in priority sectors aligned with national development strategies, including Jordan 2025 and the Jordan Investment Promotion Strategy. Particular focus should be on attracting efficiency-seeking investment (and investment targeting the regional market) in manufacturing and services sectors with higher potential for job creation, exports and linkages with the domestic private sector. 2. JIC, and particularly its Investment Promotion Department, should benchmark with key competitors in priority sectors to understand comparative areas of strengths and weaknesses. This should be followed with developing a value proposition that leverages Jordan’s competitive advantages. 3. Leverage Jordan’s security and stability as key strengths to attract and retain private investment, which have been identified as key motivating factors by investors across the board. Alongside, continue efforts to improve the fundamentals of Jordan’s investment climate, including sustaining doing business and business regulatory reforms. 4. In the short term, JIC implements an effective aftercare function to help identify and address investors’ concerns, understand why many existing businesses are not planning additional investments and are not referring Jordan as an investment destination, and ultimately facilitate investment retention and expansion. Contextual factors might help explain part of the less optimistic expectations on investment, as well as on the workforce by companies. 5. Efforts should be made to enhance regulatory predictability, which has been identified as a key motivating factor by investors across the board. Examples of interventions in this space include: notice and comments systems; feedback loop mechanisms; grievance management systems; enhancing regulatory transparency and access to information for investors; promoting consultations with relevant stakeholders; etc. Investment incentives: 1. Government consider revising its incentives policy in order to target the type of investors and economic sectors that are more responsive to incentives, in order to avoid wasting public resources. This would imply limiting the use of incentives to natural resource-seeking investors and better target efficiency-seekers, with particular focus on those sectors with higher returns on investment for the Government and incentive impact. a. Government should assess whether the incentives provided are coherent with the priority sectors designated in its strategic documents, including Jordan 2025 and the Jordan Investment Promotion Strategy. 2. In the short term, more rigorous research is conducted to understand the actual impact/effectiveness of incentives in attracting and retaining investment in specific sectors and achieving selected objectives (i.e. creating jobs, exports, etc.), relatively to their costs (i.e. fiscal revenue foregone). This could be undertaken using different methodologies, including return on investment from incentives in selected sectors. This type of analysis should be undertaken 8 periodically and its evidence inform incentive policy making, including how to rationalize incentives based on national development objectives, avoiding wasting public resources. 3. JIC, and particularly its Research Department, should take the leading role in assessing the effectiveness of incentives, being JIC the agency devoted to attract and retain investment in Jordan. The JIC should collaborate with other agencies to collect the data required for the analysis.15 4. JIC establishes a system to monitor and evaluate the costs and benefits of incentives received by investors in different sectors. 5. Taking into account sub-national considerations, the Government should examine the impact of the different incentives regimes currently in place in the different types of Zones, versus the non-Zone locations, to attract and retain investment in specific sectors in targeted sub-national destinations. Employment: 1. Analyze the sectors with higher potential for employing Syrian refugees and the related issue of work permits, with particular regard to the sectors operating within the EU Trade deal and relaxation of rules of origin16. In sectors with an already important presence of Syrian workers, promoting investment and facilitating the hiring of refugees could be one of the alternatives to absorb Syrian workers. 2. Promoting investment in sectors hiring more females could help increase gender equality. Textile and ICT, for instance, are also among the priority sectors identified by the Government as strategic. Nevertheless, more research should be conducted to understand the barriers to female employment in specific sectors, particularly those that are traditionally associated with higher female employment. Incentives could be used, for example, to stimulate businesses to hire female workers in the existence of specific market failures such as access to finance, or to cover the cost of child care / transportation. In addition, promoting the opening of satellite factories closer to households would reduce commuting for workers, that is reportedly a key obstacle to female employment. 3. The Government should conduct an assessment of the impediments/market failures to skills upgrading of the domestic workforce to identify the most suitable policy instruments. a. Review existing laws and regulations to hire foreign high-skilled workers which are reportedly an obstacle for businesses. b. Conduct an assessment of the factors contributing to low levels of Jordanian employees in those identified priority sectors for investment attraction. 15 These include: the Income and Sales Tax Department (ISTD) (to provide data on tax returns/declarations); the Customs Department (to provide data on customs duty transactions related to imports and exports of products); the Company Controller Department (to provide data on active companies registered in Jordan and their paid capital); the Social Security Corporation (to provide data on labor); and the Department of Statistics (to provide data on establishments, including the census). 16 For more information about the EU Trade deal: http://europa.eu/rapid/press-release_IP-16-2570_en.htm 9 Introduction Over the past decade, Jordan has been suffering from diminished private investment. Foreign Direct Investment (FDI) inflows went from an annual average of USD 2.7 billion (equal to 15.5% of Gross Domestic Product) between 2005 and 2009 to USD 1.63 billion between 2010 and 2015 (5.15%)17. Gross fixed capital formation, that measures investment, went from 30.6% in 2005 to 22.9% of GDP in 201518. In addition, Jordan has been facing one of the most dramatic humanitarian crisis since World War II, with the large inflow of Syrian refugees, whose registered number reached 659,828 in May 2017, while unofficial numbers report more than one million refugees19. This added to the existing need of creating jobs for locals, and particularly females (with total 11.4% unemployment in 2015, reaching 19.5% among females and 47.6% among female youth)20. In its continued efforts to help the Government of Jordan (GoJ) implement effective investment policies to attract and retain private investment and create jobs for Jordanians and Syrian refugees, the World Bank Group Trade & Competitiveness Global Practice conducted the Jordan Investor Motivation Survey from January to July 2016, in collaboration with the GoJ, the Ministry of Planning and International Cooperation (MOPIC) and the Jordan Investment Commission (JIC). The objectives of the survey were: (a) understanding the motivating factors of investors in Jordan and their future expectations; (b) providing an indication of the types of incentives received by investors, the main beneficiaries, and the role of incentives in influencing investment locational decisions and selected activities/behaviors; (c) investigating investor motivations at the sub-national level including the role of incentives influencing sub-national locational decisions; (d) offering insights on investors’ willingness to hire Syrian refugees, the gender composition of the workforce, the presence of foreign labor, and the level of skills; and (e) understanding differences in motivations, incentives, and employment among investors in key sectors and driven by different motivations (efficiency-seeking, domestic market-seeking, and natural resource-seeking investors21. The survey sample included 302 active domestic and foreign investors operating in different economic sectors and located across several Municipalities in Jordan, both inside (the Development Zones, Industrial Estates, and Aqaba Special Economic Zone22) and outside the Zones. Companies were randomly selected to build a representative sample (of incentive recipients) from a unique database (of 6,680 companies), which combined investors registered in the Development Zones; companies in the Aqaba Special Economic Zone; investors receiving incentives from the Jordan Investment Commission between 2011 and 2015; and recipients of incentives from the Jordan Enterprise Development Corporation (including the Governorate Development Fund and the Jordan Innovation Center program) in the same time-frame. The field work was conducted between February and July 2016 via face-to-face interviews by Dajani Consulting, in collaboration with the WBG and the GoJ, using standard WBG IMS methodology. This followed a pilot conducted in February 2016. The survey follows a 2009 Investor Motivation Survey (IMS) implemented by the WBG, which included 62 domestic and foreign investors located primarily outside the Zones, and with the main objectives to 17 UNCTAD, World Investment Report 2016, Jordan Country Fact Sheet. 18 World Bank Group, World Development Indicators. 19 http://data.unhcr.org/syrianrefugees/regional.php 20 World Bank Group, World Development Indicators. 21 Please refer to Annex 1 for a definition of investment by motivations. 22 It is important to note that the Free Zones were not included in the JIMS. 10 understand: (a) investor motivations; (b) the role of incentives in influencing investment locational decisions and the cost of obtaining the incentives; and (c) the quality of information available for investment decisions. While providing empirical evidence to the existing literature on investor motivations, investment incentives and employment in Jordan - via a sectoral and investment-type focus – the survey faced some limitations and caveats. Such limitation included; the lack of an existing database covering all registered investors benefiting from incentives both inside and outside Zones; the exclusion of Free Zones from the sample; the reliance on companies’ self-reported data; and other typical survey limitations (i.e. potential interviewer bias, lack of causality, etc.). Therefore, the findings should be interpreted with these considerations, and provide and indication of areas where more robust research is required to effectively address investor motivations, investment incentives and employment. This report summarizes the main findings from the survey. Throughout the report, the results are analyzed at the aggregate-level, as well as taking into account sectors, type of investment by motivation, Zone- location, and nationality, when meaningful. The report is structured in the following sections: • Chapter 1 discusses: the key factors influencing locational decisions for investors in Jordan; the main alternative destinations considered; the extent to which companies are encouraging their peers to invest in Jordan; and future investment expectations. • Chapter 2 addresses: the types of incentives received by investors between 2011 and 2015; the relative importance of incentives (compared to other factors) in influencing investor locational decisions and investor activities/behaviors (i.e. hiring new/retaining existing workers, buying new machineries/equipment, investing in green technology, exporting and starting-up a firm). • Chapter 3 examines: investors’ willingness to hire Syrian refugees and the cost of work permits; the gender composition of the workforce; the foreign composition of the workforce, including countries of origin; the skill level of the workforce and the reported obstacles to hiring (domestic and foreign) skilled workers. • Chapter 4 looks at: the drivers of investment locational decisions; and the role of incentives in influencing investment decisions within Jordan. • The last section provides conclusions and policy recommendations to the GoJ based on the findings of the survey, including potential areas for further research and investment climate reforms. The survey was conducted in the context of the Jordan Competitiveness & Investment Partnership (JCIP), a multi-year (2013-2017) technical assistance project funded by the Middle East and North Africa (MENA) Transition Fund and delivered jointly by the World Bank Group Trade & Competitiveness Global Practice and the Organization for Economic Cooperation and Development (OECD). The JCIP’s main objective is to support the Government of Jordan in investment climate reforms strengthening the implementation capacity of selected institutions responsible for investment policy, promotion and services (mainly the Jordan Investment Commission), with focus on investment promotion, investment incentives, business regulations for investment entry and the energy efficiency sector (Jordan Standards and Measuring Organization, JSMO). The JCIP is part of a broader WBG’s effort to assist the GoJ to implement Trade & Competitiveness reforms, including, among others, the USD 300 million Creating Economic Opportunities for Jordanians and Syrian Refugees Program-for-Results lending operation. 11 Chapter 1: Understanding Investor Motivations Over the past decade, Jordan has been suffering from diminished private investment. Foreign Direct Investment (FDI) inflows went from an annual average of USD 2.7 billion between 2005 to 2009, equal to 15.5% of Gross Domestic Product (GDP), to USD 1.63 billion between 2010 and 2015, equal to 5.15% of GDP23. Gross fixed capital formation, which measures investment, went from 30.6% of GDP in 2005 to 22.9% of GDP in 201524. In order to achieve the objective of attracting and retaining investment, in spite of current contextual factors such as regional turmoil, it is important for the Government to understand what drives the locational decisions of investors, what their expectations are, and what issues they face. This is particularly important in light of some of the country’s development challenges, including tackling the Syrian refugee crisis and creating jobs for both Jordanians and refugees. This Chapter presents the key JIMS’s findings on; • factors influencing locational decisions for investors in Jordan; • alternative destinations considered; • the extent to which companies are encouraging their peers to invest in Jordan; and • future investment expectations. The results are analyzed at the aggregate-level, as well as taking into account sectors, type of investment by motivation, Zone-location, and nationality, when meaningful. Comparisons with the 2009 survey are made where possible. BOX: Types of Investment by Motivation Different types of investment are motivated by different factors and characterized by distinct benefits, opportunities and challenges for the host economy. A useful typology identifies four types of investment based on investor motivations:25 • Natural resource seeking-investment: This type of investment occurs when the investor seeks to access resources that are location-specific (e.g. diamonds, petroleum, natural gas, coal and other mining and mineral resources, as well as renewable energy sources). While this type of investment can generate significant exports and fiscal revenues, more benefits are secured for the host country if value added processing occurs domestically and if a competitive ecosystem of local suppliers of various goods and services used in extractives can be sustainably created. • Domestic market-seeking investment: This type of investment is motivated by the potential to deliver goods and services to customers within the host country or the regional market. It is almost entirely dependent on the size and characteristics of the market. It can be an important source of jobs, through the creation of higher- skilled and better-paying jobs associated with the service sector. This type of FDI is an important means to industrialize a country, since it has the potential to develop linkages with the local economy, upgrade the quality of local suppliers, create competition, increase productivity, and lower prices to consumers. • Efficiency-seeking investment: This investment occurs when investors seek to increase the cost efficiency of production by taking advantage of factors that improve firm-level competitiveness. These include, among other variables, lower labour costs or higher labour productivity, easier or cheaper access to land, easier or even preferential access to export markets, access to key inputs and components, and more efficient international production and supply patterns. This type of investment has the most transformative potential. Efficiency- seeking investment is always export-oriented. 23 UNCTAD, World Investment Report 2016, Jordan Country Fact Sheet. 24 World Bank Group, World Development Indicators. 25 Dunning, J. 2015. “The eclectic paradigm as an envelope for economic and business theories of MNE activity�. International Business Review; Fruman, C. 2015. “Why does efficiency-seeking FDI matter?� World Bank. 12 • Strategic-asset seeking investment: This type of investment is used to acquire immobile strategic assets, business information, proprietary technologies and brands. Such investment entails acquisition of companies which possess desired strategic assets and own corporate networks of affiliates. For the purpose of this report the first three types of investment are the most relevant. What drives investment locational decisions? The survey asked companies to openly list the top three most critical factors that influenced their investment location decision, and to rate a list of 21 factors on a scale from one to five26. Most critical factors openly listed by investors: The top three factors (openly) listed by investors as the most critical in influencing their decision to invest in Jordan are; i. security and political stability; ii. investment incentives; and iii. predictability of business regulations27. These three factors were listed by almost all sectors. Other critical factors include: nationalistic reasons (relevant for domestic investors); domestic market potential and geographic location (mentioned by investors in food, beverages and tobacco; computer, electronic products and electronics; and transportation); and availability of workforce (mentioned by investors in textile, wearing apparel and leather; information and communications technology (ICT); printing and reproduction of recorded media; and other manufacturing). The same aggregate results emerged in the 2009 survey. Factors rated as the most critical/important for investing in Jordan: Investors rated the following factors as the most critical or important in their decision to invest in Jordan (from a list of 21 factors); i. security and safety (88.3% of investors); ii. investment incentives (particularly: customs duty (70.5%) and tax incentives (64.2%); and. iii. predictability of business regulations (63%)28. Other critical or important business factors according to investors include: presence of Free Trade Agreements or Preferential Trade Agreements (56.1%); the availability of land (56.1%); the domestic market potential (56%); and the geographic proximity to other MENA countries (55.8%). In the 2009 survey, which excluded security and safety, and predictability of business regulations from the question, the most critical factors were the domestic market potential; incentives; access to land; and access to raw materials. 26 The question asked investors to rate each factor on a scale from 1 to 5 in their decision to invest in Jordan. Importance scale: 5 = critical factor; 4 = important factor; 3 = positive factor; 2 = irrelevant factor; 1 = negative factor; 0 = not applicable. 27 It is important to note here that this indicates that investors considered such factors as the most important in their decision to invest. However, it does not imply that Jordan provides a competitive/attractive business environment, predictable business regulations, or effective incentives, according to investors. 28 As above, it is important to note here that this indicates that investors considered such factors as the most important in their decision to invest. However, it does not imply that Jordan provides a competitive/attractive business environment, predictable business regulations, or effective incentives, according to investors. 13 Factors rated by investors as important or critical in the decision to invest in Jordan (% of investors) Legal security Predictability of business regulations 63.2% Access to unskilled labor 50.6% Access to skilled labor 35.4% Bank financing 43.4% Land 56.1% Presence of FTAs and PTAs 56.1% Security and safety 88.3% Domestic market potential 56.0% Road, power and water infrastructure 52.9% Status of Zone, SEZ, QIZ, FZ, DZ, etc. 53.5% Geographic proximity to port 30.0% Availability of suppliers 47.1% Raw material 48.5% Access to natural resources 45.1% Geographic proximity to EU 35.0% Geographic proximity to MENA countries 55.8% Financial incentives 49.6% Customs duty incentives 70.5% Tax incentive 64.2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: World Bank Group, “Jordan Investor Motivation Survey (JIMS)�, 2016 When taking into account the type of investment by motivation29, security and safety is the most important/critical factor for all three types of investors. • For efficiency-seeking investors, investment incentives are the second most critical/important factor, after security and safety. Customs duty incentives were rated as critical or important by 78.9% of efficiency-seeking investors, tax incentives by 78.2%, and Zone-status by 71.7%. The other most important factors for these investors include regulatory predictability (64.5%) and presence of Free Trade Agreements (FTAs) and Preferential Trade Agreements (PTAs) (67.3%). • For domestic market-seeking investors, the most important/critical factors include, in addition to security and safety, domestic market potential (62.3%); investment incentives factors, in particular customs duty incentives (66.7%); and regulatory predictability (62.8%). • For natural resource-seeking investors, the most important/critical factors, after security and safety, are access to raw materials (71.4%); access to natural resources (71.4%); and proximity to other Middle East and North Africa (MENA) countries (66.7%). 29 Natural resource-seeking investors include companies the following sectors: mining of metal ores; other mining & quarrying; extraction of crude petroleum and natural gas. Domestic market-seeking investors include companies in all service and manufacturing sectors that are non-export oriented (with less than 50.1% of sales originating from exports). Efficiency-seeking investors include companies in all manufacturing and services sectors that are export oriented (with more than 50% of sales originating from exports). 14 Sectoral differences also emerge in the relative importance of individual factors driving investor’s locational decision. For instance, among the factors rated as most important/critical in the overall sample, tax incentives were more critical/important for: other manufacturing30 (100% of investors in the sector rated them as either important or critical in their decision to invest in Jordan); other services31 (100%); manufacture of other non-metallic products (85.7%); textile and wearing apparel (85.4%); rubber and plastics (75%); and chemicals (70%). Customs duty incentives were more critical/important for: textile and wearing apparel (86%); other non-metallic mineral products (82.6%); other manufacturing (80%); and ICT (80%). Regulatory predictability was more important/critical for: paper, furniture and wood products (76%); other manufacturing (75%); printing and reproduction of recorded media (75%); and rubber and plastics (69%). Security and safety was important/critical for all sectors, with small variations. The domestic market potential was more important/critical for: paper, furniture and wood products (84.6%); other services (75%); and other non-metallic mineral products (68%). Access to natural resources and access to raw materials was more important/critical for investors in mining and quarrying (71.4% for both). Access to high skilled labor was more important/critical for other services (75%), where access to unskilled labor was more important/critical for: ICT (80%); paper, furniture and wood products (66.7%); and chemicals and pharmaceuticals (61.3%). It is important to note that some of the differing responses can be attributed to the small size of certain sub- groups. 30 Other manufacturing includes: manufacture of coke & refined petroleum products; manufacture of basic metals; repair and installation of machinery and equipment. 31 Other services include: wholesale & retail trade, accommodation and food services activities, financial and insurance activities, electricity, gas, steam and air conditioning supply, water collection treatment and supply. 15 Factors rated by investors as important or critical in the decision to invest in Jordan by type of investment (% of investors within investmnet types) 50.0% Legal security and predictability of business regulations 64.5% 62.8% 42.9% Access to unskilled labor 44.3% 55.1% 33.3% Access to skilled labor 30.5% 42.7% 0.0% Bank financing 39.8% 48.2% 33.3% Land 58.7% 55.2% 57.1% Presence of FTAs and PTAs 46.5% 67.3% 100.0% Security and safety 86.3% 89.2% 42.9% Domestic market potential 45.7% 62.3% 30% Road, power and water infrastructure 48% 61% 0.0% Status of Zone, SEZ, QIZ, FZ, DZ, etc. 40.5% 71.7% 33.3% Geographic proximity to port 25.0% 35.1% 50.0% Suppliers 45.8% 47.8% 71.4% Raw material 46.6% 48.5% 71.4% Access to natural resources 43.7% 44.6% 33.3% Geographic proximity to EU 30.7% 41.3% 66.7% Geographic proximity to MENA countries 52.1% 60.0% 0.0% Financial incentives 50.0% 51.5% 28.6% Customs duty incentives 66.7% 78.2% 14.3% Tax incentives 56.1% 78.9% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Natural resource-seeking investors Efficiency-seeking investors Domestic market-seeking investors Source: World Bank Group, “Jordan Investor Motivation Survey (JIMS)�, 2016 16 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Factors rated by investors as important or critical in the decision to invest in Jordan by economic sector (% of investors within sector, sub-group size) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Construction (8 firms) Information and communication technology (5) Manufacture of chemicals and pharmaceuticals (34) Manufacture of computer, electronic products, electrical equipment, machinery, etc. (39) Manufacture of food, beverages and tobacco (53) Manufacture of other non-metallic mineral products (23) Manufacture of paper, furniture & wood products (26) Manufacture of rubber and plastics products (34) Manufacture of textile, wearing apparel and leather (43) Mining & quarrying (7) Other manufacturing (5) Other services (6) Printing and reproduction of recorded media (15) Transportation (4) Source: World Bank Group, “Jordan Investor Motivation Survey (JIMS)�, 2016 17 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Preliminary conclusions and policy implications: The JIMS shows how investors of different types and sectors tend to be motivated by different factors, while certain drivers tend to be common to all investors (i.e. security and safety and the predictability of business regulations). First, Jordan should continue to leverage its security and political stability as key strengths in its efforts for attracting and retaining investors. These remain key drivers for investors across sectors and types, both domestic and foreign. Second, efforts should be made to ensure predictability of business regulations. This is in fact one of the most important factors for both domestic and foreign investors across all sectors and types of investment. Third, as discussed in Chapter 2 below, further research should be made to investigate the role of investment incentives as a policy tool for attracting and retaining different types of investors and specific sectors. In line with evidence from the literature, the survey seems to point to a larger importance of incentives (particularly related to tax and customs duty) for efficiency-seekers, with some sectoral highlights. This is followed by domestic market-seekers, who also valued the domestic market potential in addition to the above mentioned factors. The survey confirms that natural resources and raw materials are the most important factors for attracting and retaining natural resource-seeking investors. Alternative investment locations Investing in alternative country locations: The great majority of investors (73.8%) did not consider investing in other countries. A similar result emerged also in the 2009 survey, with less than one third of investors who had considered investing other countries. No significant difference emerges between foreign and domestic investors. Investors in the following sectors were the ones to consider more alternative country locations: transportation (75% of respondents in the sector); printing and reproduction of recording media (53.3%); ICT (40%); construction (37.5%); and rubber and plastics products (35.3%). Efficiency-seeking investors considered alternative countries (32.2% of efficiency-seeking investors) more than domestic-market seeking (23%) and natural resource-seeking (0%) investors. Top three alternative country locations: The top three countries for investors considering alternative locations were the Kingdom of Saudi Arabia (KSA) (22% of all respondents), Egypt (14.2%) and the United Arab Emirates (UAE) (10.6%). Turkey was also mentioned by several investors. When considering investment type and sectors, the following key messages emerge: i. KSA was the top alternative location for investors in: printing and reproduction of recorded media (30% of respondents in the sector); computer, electronic products, electrical equipment, machinery (30%); non-metallic mineral products (25%); and food, beverages and tobacco (16.7%). These investors were predominantly domestic market-seeking investors. The key factors mentioned for considering the KSA include the domestic market size, and high purchasing power of the local population; investment incentives; and the quality of physical infrastructure and facilities. ii. Egypt was the top alternative location for investors in: textile, apparel and leather (30.8% of investors in the sector); food, beverages and tobacco (16.7%); and rubber and plastics products 18 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group (26.3%). These were mostly efficiency-seekers that mentioned incentives, cheap labor, lower cost of utilities and trade logistics as the main reasons for considering Egypt. UAE was the top alternative location for investors in: ICT (33.3%); and textile, apparel and leather (30.8%). These included both efficiency and domestic market-seeking investors. Incentives, investment laws and regulations, and ease of Doing Business were the main reasons for considering the UAE. iii. Turkey was mentioned by investors in: textile, food and beverages, and reproduction of recorded media. These were predominantly efficiency-seeking investors who mentioned domestic market size, investment incentives, physical infrastructure, and skilled labor force as the main reasons for considering Turkey. Preliminary conclusions and policy implications: The survey confirms that efficiency-seeking investors tend to evaluate alternative locations before undertaking an investment decision more than other types of investors, followed by domestic market- seekers. These type of investors are in fact the most ‘footloose’ and most difficult to attract and/or retain, as they are driven by the competitiveness of production factors along the value chain. KSA, Egypt, UAE and Turkey are the top alternative destinations for investors in Jordan, with the latter three cited by efficiency- seekers and KSA and UAE by domestic market-seekers, with sectoral differences. Depending on the type of investment and priority sector, Jordan’s competitive advantage should be evaluated versus the competing locations. In addition, the investment climate factors cited by investors as motivations for considering such locations should also be further investigated to provide lessons learned for Jordan. Encouraging others to invest in Jordan and expectations on future investment Investor referrals: A small majority of investors encouraged others to invest in Jordan (52.6%). This was slightly less than in 2009 (54%). No major differences emerged between Zone- and non-Zone investors, exporters and non-exporters. The sectors that encouraged others to invest in Jordan the most included: mining and quarrying (71.4% of investors in the sector); other services (66.7%); textile, wearing apparel and leather (65.1%); other non-metallic mineral products (65.2%); and other manufacturing (60.5%). Natural resource- and efficiency-seeking investors encouraged others to invest in Jordan more than domestic market- seeking (71.4%, 57% and 48.9% respectively). Foreign investors encouraged others to invest in Jordan more than domestic (59.3%, vs. 47.3%). Future investment expectations: The majority of companies (53%) expect to maintain the same size of investment in Jordan, meaning that they are not planning either expansion or closure. Only 27.2% is expecting additional investments in Jordan, while 18.2% is planning additional investments in another country. A minority of investors (7.9%) is planning to close their operations completely, and 6.6% is expecting to close their Jordan operations and move to another country, or to move to another location within Jordan (6.3%). These responses are very similar for both domestic and foreign investors. Sectors that are planning re-investment/expansion in Jordan include mostly: textile, food and beverages; chemicals and pharmaceuticals; paper, furniture and wood; and rubber and plastics. These are domestic market-seeking and efficiency-seeking investors. In 2009, the survey only asked if companies were planning additional 19 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group investment in Jordan or not. At that time, the majority (57%) reported that they were not planning any additional investment. Preliminary conclusions and policy implications: Further research should be conducted to understand why certain types of investors, in particular domestic market-seeking investors, and sectors have encouraged others to invest in Jordan much less than others, and why the expectations on re-investment is so low. Contextual factors might help explain some of the expectations on investment by, such as political turmoil in the region and closure of Iraq and Syria trade routes, lower commodity prices and fall in global demand for export products). The survey also shows that a minority of investors are planning additional investment, while the great majority is planning to maintain the same size. The JIMS, thus, suggests the importance of implementing an investor aftercare program to facilitate the actual materialization of planned investments, to encourage further reinvestment, and to address potential areas of grievances by current investors. 20 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Chapter 2: Investment Incentives32 Investment incentives can be used as important instruments for Governments to attract and retain investment, as well as to stimulate certain investor activities/behaviors, such as hiring workers, investing in green technology, exporting, linking with domestic suppliers and upgrading the skills of the workforce. However, incentives often come at a high fiscal cost for Governments33. Therefore, it is key to understand what incentives are being awarded and to whom, and whether they are important for investors to achieve the objectives targeted by the Government. This Chapter presents the key findings from the survey on: the types of incentives received by investors between 2011 and 2015; the importance of incentives, in comparison to other factors, in influencing investor locational decisions and activities/behaviors (i.e. hiring new/retaining existing workers, buying new machineries/equipment, investing in green technology, exporting and starting-up a firm); and the main changes proposed by investors to the current incentives regime. The results are analyzed at the aggregate-level, as well as taking into account differences in sectors, type of investment by motivation, Zone-location, export orientation, and nationality, when meaningful. Comparisons with the 2009 survey are also made where possible. Incentives received by investors between 2011 and 2015: Types of incentives received: The Jordan incentives inventory, implemented by the World Bank Group in 2016, showed that Jordan provides investors to most economic sectors through different legislation34. The JIMS identifies that fiscal incentives account for the quasi totality of incentives received by surveyed companies between 2011 and 2015 (95% of the total number and 93% of the self-reported/estimated value). Customs duty incentives, including exemptions from import duties granted inside and outside the Zones, account for the highest number (54%) and self-reported/estimated value (67%). This is followed by incentives related to General Sales Tax (GST) (29% of the total number and 12% of the self-reported/estimated value) and to Corporate Income Tax (CIT) (12% of the total number and 14% of the self-reported/estimated value), including exemptions and reductions from the statutory rates granted inside and outside the Zones. Financial incentives are the minority of incentives received by surveyed companies between 2011 and 2015 (5% of the total number and 7% of the self-reported/estimated value). Among financial incentives, those provided by the Jordan Enterprise Development Corporation (JEDCO) (including the matching grants under the Jordan Upgrading and Modernization Program (JUMP) and the Governorate Development Fund (GDF)) and by the Jordan Loan Guarantee Corporation (JLGC) (including different types of loan guarantees) are the majority. Recipients of incentives: Incentives were received by investors in all economic sectors surveyed. However, it is not clear which sectors receiving incentives were in line with the Government national priorities, 32 It is important to note here that the survey sample was selected from a frame that included only incentive beneficiaries. In light of the absence of a comprehensive database of incentives recipients from the different Government agencies, in order to ensure the internal validity of the results from this section on incentives, the sample frame was built by the team to be the best possible approximation of the total universe of firms that received incentives in 2011-15 from the different agencies (except for the Free Zones Company). Nevertheless, the results should be interpreted with due caution and more rigorous analysis (using firm-level data on incentive beneficiaries and non-beneficiaries in each sector) should be performed to draw more solid conclusions. 33 In the European Union, the 28 member states spent 93.5 billion euros on non-crisis State Aid to businesses in 2014. http://ec.europa.eu/eurostat/tgm_comp/table.do?tab=table&init=1&language=en&pcode=comp_sa_01&plugin=1 In the United States, local Governments provided and average of US$80.4 billion in incentives each year from 2007 to 2012. http://www.nytimes.com/interactive/2012/12/01/us/Government-incentives.html?_r=1& 34 https://jic.gov.jo/portal/Home/Inventory 21 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group including the sectors designated by the Jordan 2025 strategy35 and the Jordan Investment Promotion Strategy. The sectors that received the highest number of incentives between 2011 and 2015, according to the sample, were36: food, beverages and tobacco (17% of the total number of incentives received); chemicals and pharmaceuticals (15%); textile, wearing apparel and leather (14%); computer, electronic products, electrical equipment, machinery, equipment, metal products (13%); other non-metallic mineral products (8%); rubber and plastics (8%); and paper, furniture and wood products (8%). In comparison, the sectors that received the lowest number of incentives between 2011 and 2015 were: transportation (1%); other manufacturing (1%); mining and quarrying (2%); and ICT (2%)37. Fiscal incentives were especially received by investors in: food and beverages; textile, wearing apparel and leather; computer, electronic products, electrical equipment, machinery, and metal products; and chemicals and pharmaceuticals. In contrast, financial incentives were especially received by investors in: paper, furniture, and wood products; and food and beverages. Domestic market-seeking investors received the highest number of incentives between 2011 and 2015 (54% of the total), followed by efficiency-seeking investors (44%), according to the sample. These two types of investors received almost all incentives between 2011 and 2015 (98%). In contrast, natural resource-seeking investors received very little incentives (2%). Investors outside the different types of Zones received a small majority of the incentives, according to the sample (53% of the total), followed by investors in the Development Zones and Industrial Estates - including former Qualified Industrial Zones (43%) - and investors in the Aqaba Special Economic Zone (ASEZ) (4%). However, it is important to note that the Free Zones were not included in the sample. With all Free Zones companies de jure eligible for fiscal incentives, the results may alter in favor of companies located inside the Zones, were these included in the sample. Nevertheless, the survey suggests that investors both inside and outside the Zones benefited from incentives. Preliminary conclusions and policy implications: Further analysis should be conducted to estimate the actual type, cost, and benefit of incentives received by investors. The Jordan incentives inventory shows that incentives are currently being awarded to most economic sectors. The survey indicates that fiscal incentives represent the lion share of the total number and estimated value of incentives received by all companies between 2011 and 2015. The survey also highlights certain sectors that have benefited more from incentives than others, including: food, beverages and tobacco; chemicals and pharmaceuticals; textile, wearing apparel and leather; computer, electronic products, electrical equipment, machinery, equipment, metal products; other non-metallic mineral products; rubber and plastics; and paper, furniture and wood products. However, it is not clear whether these sectors are aligned with the Government national priorities and those sectors designated in the Jordan 2025 strategy. Therefore, future analysis on incentives should pay particular emphasis to these fiscal instruments and sectors. 35 http://inform.gov.jo/en-us/By-Sector 36 The number of incentives was computed as the summation of incentive instruments reportedly received by companies in 2011- 15. The sectoral shares are calculated as the proportion of incentives received by firms in the sector out of the total sample. It is important to note here that 100% of interviewed companies in each sector received incentives in 2011-15. 37 For the ICT sector this can be explained by the fact that most incentives directed specifically to the ICT sector were awarded by the Decision of JIC Investment Council no. 1/1/2016 dated 25/1/2016. 22 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group BOX: Investment Incentives Definitions and Key Concepts Investment incentives are measurable economic advantages that Governments provide to specific enterprises, with the goal of steering investment into favored sectors or regions or of influencing the character of such investments 38. Broadly, investment incentives can be divided into two types: • Fiscal incentives: Government revenue contribution exemptions that are otherwise due by the general population. They include both incentives related to corporate taxes, such as corporate income tax (CIT), value added tax (VAT), export tax, property tax and withholding tax, and customs duties, on the import and export of products. Examples of tax incentives include, but are not limited to, tax holidays, special deductions, tax allowances and credits, and deferrals. Examples of customs duty incentives include, but are not limited to, exemptions from, or reduction of, duties on the import of products. • Financial incentives: Direct or indirect transfers of funds/liabilities to benefit a particular business/activity/sector; or advantageous provisions of goods and services; or specific payments-in-kind which benefit only the investor in question. Examples of financial incentives include, but are not limited to, direct subsidies, matching grants, reduced interest rate loans and reduced prices on land. An important categorization of incentives relates to the policy objective for which they are utilized: • Locational incentives: Aimed at attracting investment into the host country or a particular location within that country. • Behavioral incentives: Induce investors to engage in certain behaviors or activities, including producing certain goods or services, creating employment, establishing linkages between foreign and domestic suppliers, adopting green technologies and so on. Importance of incentives in influencing investment locational decisions: The following section presents the main findings from the survey regarding the importance of incentives in influencing investors’ locational decisions. However, it is important to note here that the data is based on investor’s responses and does not provide indications on the ‘true’ impact, causal link, or effectiveness of incentives in influencing locational decisions or investors’ behaviors. Therefore, it should be interpreted with due caution. Importance of incentives in influencing investment locational decisions: Overall, 48% of respondents suggested that they would not have invested in Jordan without the incentives (marginal investors) and 52% would have invested even without the incentives (non-marginal investors). In comparison, the 2009 IMS indicated that overall marginal investors were only 30%. This may be attributed to changes to incentives policy implemented in Jordan since 2009 or differing sample composition between the 2009 and 2016 surveys. Furthermore, as mentioned in Chapter 1, incentives were listed by investors as among the top three factors influencing investment locational decisions and rated among the most critical/important factors for investing in Jordan39. Nationality and zone-location only provided small differences in the motivating factors for investment in the 2016 JIMS, which may be attributable to the statistical significance of the sample size. 38 World Bank Group, “Investment Incentives Toolkit�, 2015. James, Sebastian, “Tax and Non -Tax Incentives and Investment: Evidence and Policy Implications�, World Bank Group, 2013. 39 These included: customs duty incentives (rated critical/important by 70% of investors); tax incentives (64%); benefits under Free Trade Agreements (56.6%); and status of Special Economic Zone/Free Zone/Development Zone/Qualified Industrial Zone (53.4%). 23 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Analyzing sector, investment type and nationality: Among the type of investment, efficiency-seeking investors reported the highest share of marginal investors (52%). As mentioned in Chapter 1, customs duty incentives (78.9% of efficiency-seeking investors), tax incentives (78.2%), and the status of Free/Development/Special Economic Zone (71.7%) were rated as critical or important. On the other hand, incentives played a moderate/more limited role for domestic market-seeking investors (46%), whose share of marginal investors was well below the sample’s average. Nevertheless, for this type of investor, customs duty incentives continued to be rated as important/critical (66.7% of investors), in addition to the domestic market potential (62.3%), which is generally the key motivation for domestic market-seekers who are by definition non-export-oriented. Finally, only a small share of natural resource-seekers would not have invested without the incentives (28.6%). For this type of investor, the most important/critical factors were access to natural resources; and access to raw materials (as discussed above)40. Investors in the following sectors reported that they would not have invested in Jordan without the incentives they received: other manufacturing (80% in the sector were marginal investors); computer, electronic products, electrical equipment, machinery (59%); food, beverages and tobacco (56.6%); textile, wearing apparel and leather (53.5%); printing and reproduction of media (53.3%); and rubber and plastics (52.9%). For all these sectors, the share of marginal investors was much higher than the sample’s average, showing a reportedly higher responsiveness to incentives. In addition, in many of these sectors, investors also rated tax and/or customs duty incentives as critical/important in their decision to invest in Jordan (from the list of 21 factors as discussed in Chapter 1). These results also hold when taking into account the difference between domestic and foreign investors within the investment types. Considering investor nationality, incentives were slightly more important in influencing the locational decisions of foreign investors (49.6% were marginal investors, which was higher than the sample’s average) than domestic investors (46.7%), which could also be attributed to the sample size. 40 Access to raw materials was rated as critical/important (in the list of 21 factors) by 71.4% of natural resource-seekers and access to natural resources by 71.4%; 24 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Would you have invested in Jordan without the incentives received? (% share of investors saying 'yes' and 'no', sub-group size, sample = 302) sample's average saying 'no' = 48% Foreign (135) 50.4% 49.6% NATIONALITY Domestic (167) 53.3% 46.7% ZONE LOCATION Industrial Estates (120) 49.2% 50.8% Development zones (9) 55.6% 44.4% ASEZA (15) 53.3% 46.7% Outside zones (155) 54.8% 45.2% SECTORS Other services (6) 66.7% 33.3% Transportation (4) 50.0% 50.0% Information and communication technology (5) 80.0% 20.0% Other manufacturing (5) 20.0% 80.0% Printing and reproduction of recorded media (15) 46.7% 53.3% Manufacture of other non-metallic mineral products (23) 69.6% 30.4% Manufacture of computer, electronic products, electrical… 41.0% 59.0% Manufacture of rubber and plastics products (34) 47.1% 52.9% Manufacture of chemicals and chemical products, basic… 61.8% 38.2% Manufacture of paper, furniture and wood products (26) 69.2% 30.8% Manufacture of food, beverages and tobacco products (53) 43.4% 56.6% Manufacture of textile, wearing apparel and leather (43) 46.5% 53.5% Construction (8) 50.0% 50.0% Mining & Quarrying (7) 71.4% 28.6% INVESTMENT TYPE Efficiency-seeking (121) 47.9% 52.1% Domestic market-seeking (174) 54.0% 46.0% Natural resource seeking (7) 71.4% 28.6% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 'Yes' 'No' Source: World Bank Group, “Jordan Investor Motivation Survey (JIMS)�, 2016 Preliminary conclusions and policy implications: The JIMS presents mixed evidence on the overall importance of incentives in influencing investment locational decisions. The results, as also mentioned in Chapter 1, appear to highlight a more preeminent role of incentives in attracting efficiency-seeking investors, compared to domestic market- and natural resource- seeking investors, which is also in line with literature on locational incentives. Certain sectors also appear to be more responsive to incentives than others (i.e. other manufacturing; computer, electronic products, electrical equipment, machinery; food, beverages and tobacco; textile, wearing apparel and leather; printing and reproduction of media; and rubber and plastics). Finally, the survey points to a relatively more important role of incentives in the locational decisions of foreign investors rather than domestic. Interestingly, the overall importance of incentives for investors’ locational decisions increased from 2009, and it would thus be worthy to further assess underlying reasons for this. More rigorous research should also be conducted to understand the actual impact/effectiveness of incentives in attracting and retaining investment in specific sectors and achieving selected objectives (i.e. creating jobs, exports, etc.) relatively to their costs (i.e. fiscal revenue foregone). 25 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group In the process of creating a sample frame for the JIMS, the team discovered there was currently no systematic monitoring and evaluation mechanism to track the performance of firms benefitting from incentives against policy objectives. The Company Controller Department (CCD) maintains a regularly updated database of companies registered, which contains information on economic sector of activity and paid capital. The Social Security Corporation (SSC) holds a regularly updated database of workers, which includes information at the firm-level on gender, salary level, and nationality. Finally, the Department of Statistics (DoS) conducts establishment surveys and establishment census, with the latest conducted in 2011. On the cost side, there is currently no systematic approach to assess the direct cost of incentives provided to investors under the different laws and regulations, including calculating tax expenditures. In 2012, a USAID project calculated estimated tax expenditures to be at least JD 1,556 million (ca. 7% of GDP) and recommended undertaking tax expenditures annually as part of the public budget41. The effectiveness of incentives should thus be assessed by the Government in a systematic manner. The Box below describes a few techniques that can be used for this purpose. BOX: Assessing the Effectiveness of Incentives An assessment of the impact or effectiveness of incentives can be implemented based on different approaches with varying degrees of rigor, depending on factors such as type of incentive (locational versus behavioral incentives), data availability and cost and timing considerations. The WBG has elaborated a range of approaches that can be tailored to different country and policy contexts. For locational incentives (i.e. incentives used to attract investors in a certain geographic location), for example, the first and most important question for assessing their impact is whether an incentive has been effective in actually bringing firms into the country. Depending on the availability of (in particular) firm-level data, approaches built on Return on Investment (RoI) can be applied, including econometric models, using, for example, data on: tax returns, paid capital, workforce and exports etc. This methodology can help clients assess how incentives impact ROI of firm beneficiaries and lift individual projects above the threshold ROI. It can be applied at the aggregate-level, sector- and sub sector-level, and type of investment. The key data requirements are: firm- level paid capital, jobs, exports, tax returns data on Corporate Income Tax, Value Added Tax etc., transaction- level import and export customs data, and financial incentive disbursements data. Tax Expenditure (TE) analysis can be used to estimate the cost of fiscal incentives based, for instance, on the revenue foregone Importance of incentives in influencing investor activities/behaviors: Importance of incentives in influencing investor activities/behaviors: The investor activities/behaviors analyzed included: re-investing; starting up a business; buying new machineries/equipment; hiring new workers; retaining existing workers; exporting; and investing in green technologies. Among these, the top three activities/behaviors for which incentives played the most important role according to investors were: buying new machineries/equipment (75.1% are marginal investors reporting that the incentive they received influenced this activity); exporting (57.1%); and retaining existing workers (56.2%). Nevertheless, also for other activities/behaviors (i.e. hiring new workers; re-investing; starting up a business) the share of investors reporting incentives’ influence was between 55.2% and 55.3%. In contrast, incentives played a very limited/almost no role in influencing investment in green technology (0.8%). This can be explained by the fact that incentives for renewable energy and energy efficiency were only enacted in 2016. 41 https://jordankmportal.com/resources/evaluating-tax-expenditures-in-jordan-2013 26 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Analyzing sectors and nationality: For re-investing, the sectors reported with the most important role of incentives were: textile, wearing apparel and leather (70%); other services (66.7%); paper, furniture and wood products (65.4%); information and communication technology (60%); and other non-metallic mineral products (61%). For starting-up, sectors were: other services (83.3%); transportation (75%); textile, wearing apparel and leather (72.1%); food and beverages (58.5%); and chemicals and pharmaceuticals (56%) as most important. For buying new machineries, sectors were: other manufacturing (80%); other services (100%); textile, apparel and leather (88.4%); rubber and plastics (76.5%); and construction (75%), although most sectors reported a high share of marginal investors (except for mining and quarrying). For hiring new workers, sectors were: other manufacturing (80%); transportation (75%); mining and quarrying (71.4%); textile, apparel and leather (67.4%); and other non-metallic mineral products (66.7%). For retaining existing workers, sectors were: other manufacturing (80%); information and communication technology (80%); transportation (74%); mining and quarrying (71.4%); and textile, wearing apparel and leather (67.4%). For exporting, sectors were: textile, wearing apparel and leather (76.2%); chemicals and pharmaceuticals (73.5%); transportation (75%); other manufacturing (75%); and other non-metallic and mineral products (72.2%). For investing in green technology, all sectors reported a very low/zero share of marginal investors. Foreign investors were reportedly more responsive to incentives than domestic investors for all the activities/behaviors, with the exception of hiring new workers (yet with a very limited difference). 27 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Did the incentive received influence any of these actiivities/behaviors? (% of companies saying "yes", sample = 302) 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Re-investment Start-up Buy new Hire new Retain existing Export Invest in green machinery workers workers technology Construction Mining & Quarrying Samples’average ICT Transportation Manufacture of textile, apparel and leather. Manufacture of food, beverages and tobacco products Manufacture of paper, furniture and wood products Manufacture of chemicals and pharmaceuticals Manufacture of rubber and plastics products Manufacture of computer, electronic products, etc. Manufacture of other non-metallic mineral products Printing and reproduction of recorded media Other manufacturing Other services Sample's average Source: World Bank Group, “Jordan Investor Motivation Survey (JIMS)�, 2016 Preliminary conclusions and policy recommendations: The survey identifies the more important role of incentives in influencing the purchase of new machinery/equipment, the retention of existing workers and exporting. In particular, this was the case for foreign investors, which would be interesting to investigate further. The survey also highlights that some sectors reported higher incentives’ influence than others for the selected behaviors (i.e. retaining existing workers; exporting; buying new machinery/equipment). Some of the findings may be explained by the fact that most of the incentives received were not specifically designed to influence the studied behaviors. Or, in the case of investing in green technology, the incentives specific to this behavior were not yet effective at the time of the study42. Nevertheless, if the aforementioned investor behaviors remain of importance to the Government, it will be important to undertake more rigorous analysis on what market failures are impeding investors to undertake them and, if incentives are relevant, what type of incentives could be more effective. 42Incentives under the Renewable Energy and Energy Efficiency Law came into force with the Renewable Energy & Energy Efficiency Law Bylaw No. 13 of 2015. 28 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group 29 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Chapter 3: Employment, Syrian Refugees, Gender and Foreign Workers43 Creating jobs, especially high-skilled and well paid, is one of the top items in every Government’s agenda. Jordan, with its 11.4% unemployment rate, is no exception. Particularly pressing is the need to generate employment to tackle vulnerable members of the Jordanian population, such as females (for whom unemployment reaches 19.5% and 47.6% among female youth) and Syrian refugees (whose registered number reached 659,828 in May 2017, while unofficial numbers report more than one million refugees44). Private sector investment is key for helping Jordan to generate these jobs in certain sectors. However, such sectors, including textile and wearing apparel, have long been associated with employing mostly foreign labor and creating low-skilled jobs. This Chapter presents the key findings from the survey on: investors’ willingness to hire Syrian refugees and the cost of work permits; the gender composition of the workforce; the foreign component of the workforce, including countries of origin; the levels of skills of the workforce and the reported obstacles to hire skilled workers, both domestic and foreign. The results are analyzed at the aggregate-level, as well as taking into account sectors, type of investment, Zone-location, and nationality, when meaningful. Hiring Syrian Refugees Willingness to hire Syrian refugees: The majority of investors (61.3%) would be willing to hire Syrian refugees if work permits were granted to them. The responses are equally positive for domestic and foreign investors, and Zone- and non-Zone investors, with small differentials. Efficiency-seeking45 investors are the most willing to hire Syrian refugees (66.1%), although both domestic market- and natural-resource-seeking are also, for the great majority, willing to hire (58% and 57.1% respectively). The sectors with higher-than-average willingness to hire Syrian refugees were:46paper, furniture and wood products (80.8%); computer, electronic products, electrical equipment, machinery, metal products (66.7%); printing and reproduction of recorded media (66.7%); other non-metallic mineral products (65.2%); other services (66.7%); and food, beverages, and tobacco (62.3%). In contrast, the sector that would be the least willing to hire Syrian refugees is ICT (40%). This may be attributed to the fact that many jobs in ICT are included in the list of occupations closed to employment for Syrian refugees. Finally, both investors inside and outside the Development Zones and Industrial Estates were willing to hire Syrian refugees (with small differences, 63.2% vs. 59.2% respectively, potentially due to the sample selection). 43It is important to note that the analysis in this Chapter is based on self-reported data by companies that was not verified with Government agencies (including the Social Security Department and the Ministry of Labor). 44 http://data.unhcr.org/syrianrefugees/regional.php 45 Natural resource-seeking investors include companies the following sectors: mining of metal ores; other mining & quarrying; extraction of crude petroleum and natural gas. Domestic market-seeking investors include companies in all service and manufacturing sectors that are non-export-oriented (with less than 50.1% of sales originating from exports). Efficiency-seeking investors include companies in all manufacturing and services sectors that are export oriented (with more than 50% of sales originating from exports). 46 The sector with higher response was other manufacturing (100%). However, this sub-group comprises residual manufacturing sectors and its overall size is quite small. Therefore, the responses for other manufacturing should be analyzed deeper at the sub- sector level. 30 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group "Would you hire Syrian refugees if work permits were granted to them?" (% of companies saying (sample size), sample = 302 companies) Sample average saying ‘Yes’: 61.3% Outside the zones (155) 63.20% 36.80% ZONES Inside the zones (147) 59.20% 40.80% Foreign investors (135) 62.20% 37.80% NATIONALITY Domestic investors (251) 61.30% 39.50% Efficiency-seeking (121) 66.1% 33.9% INVESTMENT TYPE Domestic market-seeking (174) 58.0% 42.0% Natural resource seeking (7) 57.1% 42.9% SECTORS Other services (6) 66.7% 33.3% Information and communication technology (5) 40.0% 60.0% Transportation (4) 50.0% 50.0% Other manufacturing (5) 100.0% 0.0% Printing and reproduction of recorded media (15) 66.7% 33.3% Manufacture of other non-metallic mineral products (23) 65.2% 34.8% Manufacture of computer, electronic products, electrical equipment, machinery, equipment, metal products (39) 66.7% 33.3% Manufacture of rubber and plastics products (34) 50.0% 50.0% Manufacture of chemicals and chemical products, basic pharmaceutical products and pharmaceutical preparations (34) 58.8% 41.2% Manufacture of paper, furniture and wood products (26) 80.8% 19.2% Manufacture of food, beverages and tobacco products (53) 62.3% 37.7% Manufacture of textile, wearing apparel, and leather (43) 51.2% 48.8% Construction (8) 50.0% 50.0% Mining & Quarrying (7 companies) 57.1% 42.9% Source: World Bank Group, “Jordan Investor Motivation Survey�, 2016 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 31 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group The cost of work permits as an obstacle to hire Syrian refugees: The cost of work permits was referenced as an issue to hire a Syrian refugee for the minority of investors (44% of all companies). Similar results emerge when considering the investor nationality, Zone location and investment type, although with some differentials. The sectors for which the cost of work permits was referenced as more of an issue to hire Syrian refugees were: construction (87.5% of investors in the sector); mining and quarrying (85.7%); food, beverages and tobacco (60.4%); and computer, electronic products, electrical equipment, machinery (53.8%). The sectors lamenting the lowest issues with the work permit cost were: other manufacturing (20%); ICT (20%); transportation (25%); other non-metallic mineral products (26.1%); and textile, apparel and leather (27.9%). Preliminary conclusions and policy implications: Most investors reported a willingness to hire Syrian refugees if work permits were granted to them, despite sectoral differences. This is a positive indication in light of the urgent need to create employment for Syrian refugees in Jordan. Going forward, it will be important for the Government to further analyze the sectors with higher potential for employing Syrian refugees, with particular regard to the sectors operating within the EU Trade deal and relaxation of rules of origin47. The survey provides some initial indications. For some sectors, the cost of work permits would not be an issue, such as other non-metallic mineral products and textile sectors. In comparison, the cost of work permits would be an issue in the food and beverages sector. Currently, the cost of work permits for Syrians is 10 JOD. Employers can apply for work permits for Syrians if they have a one-year employment contract and cover social security. BOX: Program for Results: Economic Opportunities for Jordanians and Syrian Refugees On September 27, 2016, the WBG’s Board of Executive Directors approved a USD 300 million Economic Opportunities for Jordanian and Syrian Refugees Program-for-Results. With a Program Development Objective to improve economic opportunities for Jordanians and Syrian refugees in Jordan, the Program will help in; (i) reforming Jordan’s labor market regulations to grant access to Syrian refugee workers to the formal labor market and allowing them to legally contribute to Jordan’s economic activity; (ii) improving Jordan’s investment climate; and (iii) attracting and retaining both domestic and foreign investments, especially in manufacturing and Special Economic Zones that will benefit from preferential access to the European Union. Gender and employment Gender composition of the workforce: Overall, companies interviewed referenced a higher share of female employees (53.7% of total employees) than male (46.3%). This can be partially explained by the sectoral composition of the sample. The sector with the largest proportion of female workers is textile, wearing apparel and leather (71.1% of the workforce), which was also highly represented in the sample, followed by ICT (52.6%), and other services (43.9%). The remaining sectors referenced over 75% of male composition in their workforce. This can be partially explained by the traditionally male-predominant nature of the workforce in the sample sector representation, such as construction, mining and quarrying, and other industrial sectors. Efficiency-seeking investors represented the highest proportion of female workers (62.4%), accounting for 95.6% of all female employment, and natural resource-seeking investors 47 For more information about the EU Trade deal: http://europa.eu/rapid/press-release_IP-16-2570_en.htm 32 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group representing the lowest share (2%). This may be attributed to the sectors included in these categories (i.e. export-oriented textile and apparel in efficiency-seeking, and mining and quarrying in natural resource- seeking). The proportion of female workers is much higher for companies inside the Development Zones and Industrial Estates (62.8%), in contrast to outside the Zones (15.4%). These investors accounted for 95% of all female employment in the sample. This can be partially explained by the fact that sectors hiring relatively more females are located inside the Zones (e.g. textile and apparel). Foreign investors have a much higher proportion of female employees (61%) than domestic investors (23%). Again, this can be explained by the sectors represented in the sample. Preliminary conclusions and policy implications: Overall, promoting private sector engagement is key to success in gender equality48. The survey provides some initial indications on the sectors with higher a proportion of female workers (i.e. textile and ICT). Should gender employment be a priority in the Government’s agenda, promoting investment in these sectors could help fulfill such an objective. Textile and ICT, for instance, are also among the priority sectors identified by the Government. Nevertheless, more research should be conducted to understand the barriers to female employment in specific sectors, particularly those that are traditionally associated with higher female employment. Incentives could be used, for example, to stimulate businesses to hire female workers in the existence of specific market failures, such as access to finance, or to cover the cost of child care and/or transportation. One of the main barriers to employment reported by females in Jordan is the distance of factories from households and the time spent on transportation that is subtracted to family care49. In line with this, satellite factories closer to household locations and main urban areas should be promoted. Domestic vs. foreign employment Nationality of the workforce: Foreign workers represented 59.3% of the workforce of companies in the sample, and domestic workers 40.7%. This can be partially explained by the sector composition of the sample. In fact, textile, wearing apparel and leather has the highest proportion of foreign workers (75.7%). This sector also accounts for 70% of the workforce by all companies in the sample, which explains the overall high proportion of foreign employees. This sector alone accounts for 92.2% of the foreign workforce by companies in the sample. In contrast, in the remaining sectors, the proportion of foreign workers is much lower, reaching a maximum of 33.5% in other manufacturing and 33.7% in rubber and plastics products, and a minimum of 2.2% in ICT and other services. Investors in the Development Zones and Industrial Estates have a much higher proportion of foreign workers (68.8%) compared to investors outside the Zones (17.8%), accounting for 94.1% of the foreign workforce by companies in the sample. This can be explained by the fact that companies in the Development Zones and Industrial Estates are predominantly operating in the textile and apparel sector. Countries of origin of the foreign workforce: South Asian workers represent 87.6% of the foreign workforce in the sample, coming from countries such as: Bangladesh (53.4% of all foreign workers in the sample); Sri Lanka (22.6%); Nepal (7.8%); and Pakistan (2.8%). The other foreign workers come from Middle Eastern 48 http://blogs.worldbank.org/psd/private-sector-engagement-key-success-gender-equity 49 International Labor Organization, forthcoming research. 33 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group countries such as: Egypt (7.2% of foreign workers); and Syria (2.2%). When analyzing sectors, South Asian workers from Bangladesh, Nepal, Sri Lanka and Pakistan work almost entirely in the textile and apparel sector (accounting for 81.1% of foreign workers in this sector) by investors located in the Development Zones and Industrial Estates, including former Qualified Industrial Zones. Egyptian workers are employed predominantly in food and beverages (51.7% of foreign workers in the sector and 49% of all Egyptian workers), construction (59% and 27.8%), and rubber and plastics (23.9% and 10%). Syrian workers are employed mostly in food and beverages (14.1% and 43%), rubber and plastics (13.9% and 19%), and textile and wearing apparel (0.3% and 16.2%). Preliminary conclusions and policy implications: The survey confirms that one of the main sectors studied (textile) is also the main provider of jobs to foreigners, and particularly South Asian workers. This can be attributed to many reasons (i.e. lower salaries, lack of attractiveness to Jordanians, etc.) as referenced in much literature50. The survey also shows that Syrian workers are already employed in several manufacturing sectors (i.e. food and beverages and rubber and plastics). Depending on policy priorities for the Government, and whether promoting local employment is a key objective, it will be important to further understand the reasons behind low levels of Jordanian workers in some of the labor-intensive sectors that Government has a priority to attract investment (i.e. textile). In addition, in those sectors with an already notable presence of Syrian workers, promoting investment and facilitating the hiring of refugees into such sectors could be one of the alternatives to absorb Syrian refugees. Employment and skills Workforce by skill-level51: Over two thirds (68.1%) of the workforce falls within the low-skilled and mid-low- skilled categories (32.4% and 35.7% respectively). High-skilled workers represent only 10.6%, and mid-high- skilled 21.3%. This can be explained in part by the sectoral composition of the survey’s sample. Textile, wearing apparel and leather is the sector with the highest share of low-skilled workers (44.2% of their workforce; with mid-low-skilled, this figure goes up to 83%). Textile is also the sector with the largest number of employees in the sample. Sectors providing large numbers of high-skilled workers include: other manufacturing (47.9%); construction (46.3%); ICT (35.8%); and chemicals and pharmaceuticals (36.1%). When including also mid-high-skilled workers, additional sectors worth mentioning are: other services (86.7%); computer, electronic products, electrical equipment (74.6%); printing and reproduction of media (74.3%); and transportation (73.7%). Efficiency-seeking investors hire the relatively largest number of low- (38.5% of their workforce) and mid-low-skilled workers (37.8%). This is also partly explained by the presence of textile and apparel within efficiency-seekers. Domestic market-seeking investors, on the other hand, employ the relatively highest number of high- (26.6%) and mid-low-skilled (46.4%) workers. Investors in the Development Zones and Industrial Estates employ the highest number of low-skilled workers (39.1% of their workforce). Companies outside the Zones, including ASEZ, employee the largest share of high-skilled (26.4%), as well as mid-low-skilled (46.5%) workers. This can be explained in part by the composition of the sample. Obstacles for hiring skilled workers: Existing laws and regulations are key obstacles for hiring foreign skilled workers, rated on average as a moderate/high obstacle and indicated by 56% of investors as high or very 50 See for example: http://carnegieendowment.org/sada/?fa=66598 and https://www.businessoffashion.com/articles/global- currents/made-in-jordan-garment-manufacturing-industry 51 In order to estimate the skill-level of the workforce, four ranges of monthly salaries were used as proxy (set in collaboration with the GoJ): below 190 JOD: low-skilled; 190-250JOD: mid-low-skilled; 251-500 JOD: mid-high-skilled; over 501 JOD: high skilled. 34 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group high. This is followed by the lack of availability. On the other hand, lack of availability is the main obstacle for hiring Jordanian skilled workers, rated on average as moderate, and indicated by 49% of investors as high or very high. The cost of salaries and wages followed as an obstacle for hiring Jordanian skilled workers. Preliminary conclusions and policy implications: The survey confirms that some of the sectors providing the largest number of jobs in the sample (i.e. textile and wearing apparel) create mostly low- and mid-low-skilled jobs, particularly for foreigners. These are predominantly efficiency-seeking investors (located in the Zones) attracted by lower production costs, hiring primarily foreign, female, cheap labor (as explained above). If the Government objective is to create a large number of low- or mid-low-skilled jobs, promoting investment in these sectors might be a good policy. However, it should further investigate what would make it attractive also for Jordanian workers. In addition, to promote high- or mid-high-skilled jobs, the Government should explore on one hand opportunities to upgrade existing low- and mid-low-skilled sectors in higher value added activities. On the other hand, it should promote sectors hiring higher-skilled labor (particularly in services, i.e. ICT and other services). In addition, the Government should review existing laws and regulations to hire foreign high-skilled workers and investigate further how to upgrade the skill of the domestic workforce (that are reportedly the main obstacles to hire high skilled workers according to businesses). On the latter, an analysis of the impediments/market failures to skills upgrading by firms might be needed to identify the most suitable policy instruments (i.e. incentives). Future expectations on the workforce: A small majority of companies (51%) is expecting to have a larger workforce in the near future: More than one third (35.4%) expects to have the same size of the workforce, while only a small share (13.6%) expects a smaller size. The sectors with higher expectations of a larger workforce include: mining and quarrying (85.7% in the sector expect to have a larger workforce); other manufacturing (80%); other non-metallic mineral products (60.9%); ICT (60%); paper, furniture and wood products (57.7%); and textile, apparel and leather (55.8%). No sector was reported to have very high expectations of a smaller workforce. The most pessimistic was construction with 25% respondents expecting a smaller workforce. Companies inside the Zones have higher expectations of a larger workforce. 63% of investors located in the Development Zones and Industrial Estates expect a larger workforce versus 41.9% of companies outside the Zone. Foreign investors have more optimistic expectations (57.8% expect a larger workforce and only 10.4% a smaller workforce) than domestic investors (45.5% and 16.2%). Preliminary conclusions and policy implications: It will be important for the Government to continue supporting the labor expansion of growing businesses and the retention of the existing workforce. In addition, the Government should also investigate further the reasons behind more pessimistic expectations by certain sectors, and particularly those of businesses located outside the Zones. Contextual factors might help explain part of the less optimistic expectations on the workforce by companies (i.e. political turmoil in the region with closure of Iraq and Syria trade routes; lower commodity prices; fall in global demand for certain Jordan’s export products etc.). However, there could also be investment climate-related issues that could be addressed by the Government, including obstacles on hiring skilled workers. 35 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Chapter 4: Sub-National Considerations on Investment In order to fully understand investment locational decisions, it is important to examine not only what drives the selection of country destinations but also sub-national locations. Regions, Provinces, Zones, or cities in the same country often have to compete among each other, as well as with foreign destinations, to attract investment. Jordan places a heavy reliance on spatial solutions (i.e. Development Zones, Industrial Estates, Free Zones, etc.) to attract investment into specific geographic areas, including less developed regions, and provides a variety of economic benefits (i.e. incentives) to encourage investors to locate in such areas. This Chapter presents the key findings from the survey on: the drivers of investment locational decisions within Jordan; and the role of incentives in influencing investment decisions within Jordan. The results are analyzed both at the aggregate-level, as well as taking into account sectors, type of investment by motivation, and nationality, when meaningful. Investment locational decisions at the sub-national level and incentives: Considering alternative investment locations: Most investors (75.8%) did not consider alternative locations within Jordan. This was a similar result to the national-level locational decision and it holds for both domestic and foreign investors, inside and outside the Zones, and across sectors and types of investment. Efficiency- seeking investors considered alternative sub-national locations the most (30.6%), compared to domestic market-seeking (20.1%) and natural resource-seeking (14.3%). Among investors that considered alternative locations within Jordan, the Aqaba Special Economic Zone (ASEZ) and the Sahab Zone were the most cited. Key factors in sub-national investment decisions52: The top three factors openly listed by investors as driving investment decisions at the sub-national level included: investment incentives; availability of production factors (i.e. land, labor and raw materials); and geographic location; together with infrastructure. In addition, from a list of 18, the most critical and important factors at the sub-national level were: security and safety (rated as critical by 60.2% of investors, and as important or critical by 78.5%); incentives (particularly tax incentives and customs duty incentives, both rated as critical by 53.8%, and financial incentives 40%); and predictability of business regulations (41.4%). Investment incentives were rated as more critical by efficiency- seeking investors, while the local market potential and geographic location was more critical for domestic market-seeking investors. These results are very similar to the national-level locational decisions. Incentives and sub-national investment decisions: A small majority of companies (53.7%) reported that they would have invested in the same location within Jordan without the location-specific incentives they received (non-marginal investors)53. In Jordan, in fact, investors can enjoy greater economic benefits if located in certain geographic areas (particularly the Zones54). These results are in line with the national-level trend described in Chapter 2. Similar responses were provided by both domestic and foreign investors. However, when looking at the investment-type by motivation, domestic market- and efficiency-seeking investors reported a higher share of marginal investors (54.8% and 52.9%) than natural resource-seekers (0%). Investment incentives were also rated as the most critical in the investment locational decision at the sub- national level by efficiency-seeking investors, in line with the national-level results and literature. The sectors 52 The survey asked companies to openly list the top three most critical factors that influenced their investment locational decision, and to rate a list of 18 factors in a scale from 1 to 5. 53 It is important to note that the segment of the sample relevant for this question is only that of investors located inside the Zones who received location-specific incentives. 54 For more information on incentives in Jordan please refer to the Annex: Inventory of Investment Incentives in Jordan. 36 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group with the highest share of marginal investors, who would not have invested without the sub-national location- specific incentives they received, included: transportation (66.7%); other non-metallic mineral products (66.7%); and paper furniture and wood products (60%). The sectors with the lowest share of marginal investors (0%) included: mining and quarrying; other manufacturing; other services; and ICT. Preliminary conclusions and policy implications: While the great majority of investors did not consider alternative locations within Jordan, it is important to note that efficiency-seekers were the investors to compare different sub-national destinations the most. This confirms the higher degree of competition among alternative locations to attract this type of investment. In addition, in spite of the high share of non-marginal investors, location specific-incentives were among the most important factors considered by investors (particularly efficiency-seeking), together with domestic market potential and location (for market-seekers), security and safety, predictability of business regulations, and availability of production factors. This shows the more relative importance of incentives for efficiency- seekers, followed by market seekers, as well as the relevance of fundamental investment climate factors for investment locational decisions, also at the sub-national level. Going forward, it will be important for the Government to analyze more carefully the drivers of investment locational decisions within Jordan, with focus on specific sectors and types of investment. The Government should also assess the impact of the different incentives regimes currently in place in the different types of Zones, versus the non-Zone locations, relatively to other investment climate factors, to attract and retain investment in specific sectors in targeted sub-national destinations. 37 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Conclusions and Policy Recommendations Investment Promotion and Retention: The JIMS shows that, while investors of different types and economic sectors tend to be motivated by different factors, certain drivers are common to all investors. These include security and safety; and regulatory predictability and the soundness of the overall investment climate. In light of the political turmoil affecting the Middle East and North Africa, Jordan remains one of the few stable countries in the region where investors can do business. The need for a conducive investment climate and predictable business regulations were identified as motivating factors for investors across a variety of sectors, highlighting their importance in attracting and retaining investors, which cannot be offset by lower cost factors, including incentives. With WBG support, investment climate reforms have been ongoing in Jordan in recent years, with impressive achievements in areas of Doing Business reform, business regulation, and investment policy. With regulatory predictability also identified as a priority reform area by the Government, the WBG team also provides technical assistance in this space. In line with literature, the survey further identified the importance of incentives for efficiency-seeking investors in their decision to invest in Jordan, with domestic market-seeking investors identifying their importance to a lesser extent. However, they were also motivated by the domestic market potential, being their main reason to invest in Jordan to serve the domestic market. Finally, the survey confirms that natural resources and raw materials are the most important/critical factors for attracting and retaining natural resource-seeking investors. While Jordan is not known to be a natural resource-abundant country, it is home to reserves of phosphate and potash, as well as renewable energy sources (especially wind and solar) that have recently attracted renewable energy FDI projects (six projects were announced in the last two years in renewable energy sectors)55. The survey shows that Jordan is competing with other locations in the region to attract investment. In particular, the JIMS shows that competition is fiercer for attracting efficiency-seeking investors. This can be explained by the fact that efficiency-seekers (who are export-oriented by definition) tend to select among alternative investment locations based on the competitiveness of production and capital cost factors of a specific location. Efficiency-seeking investors also tend to locate value chain activities in different geographic locations to leverage the competitiveness of individual locations in different stages of the value chain (thus organizing production according to global or regional value chains). This type of investors is in fact the most footloose and harder to attract/retain as it is driven by the competitiveness of production factors along the value chain. Egypt, the UAE and Turkey are the top alternative destinations for efficiency-seekers. Competitive production factors (including: cost of electricity, incentives, availability of workforce, transportation costs, etc.) and overall business environment in these destinations can help explain this. On the other hand, the KSA and the UAE were the top alternative locations for domestic market-seekers in light of the large market size (especially KSA), high incomes, and consumer behaviors. Finally, the JIMS shows that a minority of investors is planning additional investment in Jordan, while the majority is expecting to maintain its current size, and few are planning to leave/shut down operations. Contextual factors might help explain part of the expectations on low investment (i.e. political turmoil in the region with closure of Iraq and Syria trade routes; lower commodity prices; fall in global demand for certain Jordan’s export products). However, other issues might be present that could be preventing re-investments 55 Financial Times, “FDI Markets�, 2017. 38 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group (i.e. operational issues, investor grievances, etc.). The fact that only a small majority of investors encouraged their peers to invest in the country, and that among them were mostly domestic market-seekers, might point to some obstacles faced by businesses. Current investors can represent a great source of investment, as confirmed also by the literature. For instance, in 2015, re-invested earnings accounted for almost half (49%) of total FDI received by developing countries and 43% of total FDI to developed economies.56 Therefore, it is key for Governments to facilitate re-investments/expansions by current investors and ensure that their issues are being addressed. In many countries, this function is played by the Investment Promotion Agency, and within that by the Investment Aftercare unit. Currently, the Jordan Investment Commission (JIC) does not have an effective aftercare program, as defined by the WBG team. While the JIC hosts and aftercare unit in its Investor Services Directorate, this is primarily focused on administrative issues and does not address investor grievances, or operational problems. Recommendations: 1. JIC focuses on attracting private investment in priority sectors aligned with national development strategies, including Jordan 2025 and the Jordan Investment Promotion Strategy. Particular focus should be on attracting efficiency-seeking investment (and investment targeting the regional market) in manufacturing and services sectors with higher potential for job creation, exports and linkages with the domestic private sector. 2. JIC, and particularly its Investment Promotion Department, should benchmark with key competitors in priority sectors to understand comparative areas of strengths and weaknesses. This should be followed with developing a value proposition that leverages Jordan’s competitive advantages. 3. Leverage Jordan’s security and stability as key strengths to attract and retain private investment, which have been identified as key motivating factors by investors across the board. Continue efforts to improve the fundamentals of Jordan’s investment climate, including sustaining doing business and business regulatory reforms. 4. In the short term, JIC implements an effective aftercare function to help identify and address investors’ concerns, understand why many existing businesses are not planning additional investments and are not referring Jordan as an investment destination, and ultimately facilitate investment retention and expansion. Contextual factors might help explain part of the less optimistic expectations on investment, as well as on the workforce by companies. 5. Efforts should be made to enhance regulatory predictability, which has been identified as a key motivating factor by investors across the board. Examples of interventions in this space include: notice and comments systems; feedback loop mechanisms; grievance management systems; enhancing regulatory transparency and access to information for investors; promoting consultations with relevant stakeholders; etc. 56 UNCTAD, “World Investment Report 2016�, 2016. http://unctad.org/en/PublicationsLibrary/wir2016_en.pdf 39 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Investment Incentives: The survey shows that incentives were received by investors in all economic sectors part of the study (both in manufacturing, services, and extractives). However, it is not clear whether these are in line with the Government national priorities, including the sectors identified by the Jordan 2025 strategy and the Jordan Investment Promotion Strategy. Overall, the survey seems to point to a more preeminent role of incentives in attracting efficiency-seeking investors in Jordan compared to domestic market- and (particularly to) natural resource-seeking investors, in line with the literature on locational incentives. As mentioned above, incentives tend to be more effective in attracting efficiency-seeking investors (that are by definition export-oriented). Certain sectors also seem to be more responsive to incentives than others. This is because efficiency-seeking investors are motivated by the competitiveness of production and cost of capital factors of investment locations, while natural resource-seekers by the quality and quantity of raw materials and natural resources, and domestic-market seekers by the potential of the local market. However, incentives are currently being provided in Jordan by different agencies to investors of all types, in different economic sectors, and locations, regardless of their alignment with the Government national priority (i.e. the Jordan 2025 strategy), their motivation to invest in Jordan, and without a clear assessment of their cost-effectiveness (as shown by the Jordan Incentives Inventory57). This can result in incentives being provided to businesses that would have undertaken their investments in Jordan any way (non-marginal investors) (particularly natural resource-seekers), thus wasting public resources that could be directed to other Government goals (i.e. improving infrastructure, education, healthcare, etc.). Furthermore, in the process of creating a sample frame for the JIMS, the team discovered that there is currently no system in place at JIC (or in other organizations) to track incentive beneficiaries, including monitoring and evaluating the costs and benefits of incentives. Therefore, the team had to create a database of incentive recipients merging different databases. There is currently no systematic monitoring and evaluation mechanism to track the performance of firms benefitting from incentives against policy objectives. A USAID project estimated overall tax expenditures to be at least JD 1,556 million in 2012 (ca. 7% of GDP), and recommended undertaking tax expenditures annually as part of the public budget58. Recommendations: 1. Government consider revising its incentives policy in order to target the type of investors and economic sectors that are more responsive to incentives, in order to avoid wasting public resources. This would imply limiting the use of incentives to natural resource-seeking investors and better target efficiency-seekers, with particular focus on those sectors with higher returns on investment for the Government and incentive impact. a. Government should assess whether the incentives provided are coherent with the priority sectors designated in its strategic documents, including Jordan 2025 and the Jordan Investment Promotion Strategy. 57 https://jic.gov.jo/portal/Home/Inventory 58 https://jordankmportal.com/resources/evaluating-tax-expenditures-in-jordan-2013 40 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group 2. In the short term, more rigorous research is conducted to understand the actual impact/effectiveness of incentives in attracting and retaining investment in specific sectors and achieving selected objectives (i.e. creating jobs, exports, etc.), relatively to their costs (i.e. fiscal revenue foregone). This could be undertaken using different methodologies, including return on investment from incentives in selected sectors. This type of analysis should be undertaken periodically and its evidence inform incentive policy making, including how to rationalize incentives based on national development objectives, avoiding wasting public resources. 3. JIC, and particularly its Research Department, should take the leading role in assessing the effectiveness of incentives, being JIC the agency devoted to attract and retain investment in Jordan. However, data on costs and benefits of incentives is currently not being tracked in Jordan. Therefore, the JIC should collaborate with other agencies to collect the data required for the analysis. Agencies to be engaged in the process include: the Income and Sales Tax Department (ISTD) (to provide data on tax returns/declarations); the Customs Department (to provide data on customs duty transactions related to imports and exports of products); the Company Controller Department (to provide data on active companies registered in Jordan and their paid capital); the Social Security Corporation (to provide data on labor); and the Department of Statistics (to provide data on establishments, including the census) 4. In the short-medium term JIC establishes a system to monitor and evaluate the costs and benefits of incentives received by investors in different sectors (at least from its agency, including the Incentives Department). Such system could be managed by the Incentives Departments in collaboration with the Research and Studies Department. It would specify (at least): incentive recipients; types of incentives received; legal basis for the incentive; objective of the incentives; and track the direct costs to the Government (in terms of fiscal revenue not collected/foregone, or financial disbursement), as well as the benefits achieved (i.e. invested capital, exports, jobs created, etc.). The system would then allow the Government to collect the relevant data to monitor the effectiveness of its incentives policy and conduct cost-benefit-analysis periodically. 5. Taking into account sub-national considerations, the Government should examine the impact of the different incentives regimes currently in place in the different types of Zones, versus the non-Zone locations, relatively to other investment climate factors, to attract and retain investment in specific sectors in targeted sub-national destinations. Employment: Most investors reported willingness to hire Syrian refugees if work permits were granted to them, despite sectoral differences. This is a positive indication in light of the urgent need to create employment for Syrian refugees in Jordan. The survey also shows that Syrian workers are already employed in several manufacturing sectors (i.e. food and beverages and rubber and plastics). The survey also provides some initial indications on the sectors with relatively higher proportion of female workers (i.e. textile and ICT). 41 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group The JIMS confirms that one of the main sectors studied (textile and wearing apparel) is also the main provider of jobs to foreigners, and particularly to South Asian workers, which is due to many reasons (i.e. lower salaries, lack of attractiveness to Jordanians, etc.), as showed also by previous literature59. Existing laws and regulations are the key obstacle for hiring foreign skilled workers, followed by the lack of availability. On the other hand, the main obstacle for hiring Jordanian skilled workers is lack of availability, followed by the cost of salaries and wages. The survey confirms that some of the sectors providing the largest number of jobs in the sample (i.e. textile and wearing apparel) create mostly low- and mid-low-skilled jobs. These are predominantly efficiency- seeking investors located in the Zones attracted by lower production costs, hiring primarily foreign, female, cheap labor. Recommendations: 1. Analyze more in depth the sectors with higher potential for employing Syrian refugees and the related issue of work permits, with particular regard to the sectors operating within the EU Trade deal and relaxation of rules of origin60. In sectors with an already important presence of Syrian workers, promoting investment and facilitating the hiring of refugees could be one of the alternatives to absorb Syrian workers. Existing work is being carried out by the Government in this space, including with the help of the WBG. 2. Promoting investment in sectors hiring more females could help increase gender equality. Textile and ICT, for instance, are also among the priority sectors identified by the Government as strategic. Nevertheless, more research should be conducted to understand the barriers to female employment in specific sectors, particularly those that are traditionally associated with higher female employment. Incentives could be used, for example, to stimulate businesses to hire female workers in the existence of specific market failures such as access to finance, or to cover the cost of child care / transportation. In addition, promoting the opening of satellite factories closer to households would reduce commuting for workers, that is reportedly a key obstacle to female employment. 3. The Government should conduct a more in depth assessment of the impediments/market failures to skills upgrading of the domestic workforce in order to identify the most suitable policy instruments. a. Review existing laws and regulations to hire foreign high-skilled workers which are reportedly an obstacle for businesses. b. Conduct an assessment of the reasons behind low levels of Jordanian workers in sectors of priority for investment attraction. 59 See for example: http://carnegieendowment.org/sada/?fa=66598 and https://www.businessoffashion.com/articles/global- currents/made-in-jordan-garment-manufacturing-industry 60 For more information about the EU Trade deal: http://europa.eu/rapid/press-release_IP-16-2570_en.htm 42 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Annex 1: Jordan Investor Motivation Survey 2016 - Sample Description61 - Distribution by sector and sub-sector: Sector ISIC 4 Code(s) Frequency Percentage 1) Mining & quarrying B 7 2.3% 2) Manufacturing: C 272 90.1% 2.1) Manufacture of basic pharmaceutical products and pharmaceutical preparations C.210 8 2.6% 2.2) Manufacture of chemicals and chemical products C.201, 202, 203 26 8.6% 2.3) Manufacture of computer, electronic products, electrical equipment, machinery, C.261, 262, 263, equipment, and metal products 264, 265, 266, 267, 268, 271, 272, 273, 274, 275, 279, 281, 282 39 12.9% 2.4) Manufacture of food, beverages and tobacco products C.101, 102, 103, 104, 105, 106, 107, 108, 110, 120 53 17.5% 2.5) Manufacture of motor vehicles and other transport equipment C.291, 292, 293 1 0.3% 2.6) Manufacture of paper products C.170 15 5.0% 2.7) Manufacture of rubber and plastics products C.221, 222 34 11.3% 2.8) Manufacture of textile, wearing apparel and leather C.131, 139, 141, 142, 143, 151, 152 43 14.2% 2.9) Manufacture of furniture & wood products C.161, 162 11 3.6% 2.10) Printing and reproduction of recorded media C.181,182 15 5% 2.11)Manufacture of other non-metallic mineral products C.231, 239 23 7.6% C.191, 192, 321, 322, 323, 324, 325, 2.12) Other manufacturing62 329 4 1.3% 3) Construction F 8 2.6% 4) Services: J, H, S 15 4.97% 4.1) Information and communication technology J 5 1.7% 4.2) Transportation H 4 1.3% 4.3) Other services63 S 6 2.0% Total 302 100% For the purpose of the analysis, sectors and sub-sectors were aggregated as follows: Sector Freq Mining & quarrying 7 Manufacturing: Construction 8 61 It is important to note that the sample included in its entirety companies that were recipient of at least one type of incentives, among tax, customs duty, and financial incentives in the 2011-15 time frame. 62 Other manufacturing includes: manufacture of coke & refined petroleum products; manufacture of basic metals; repair and installation of machinery and equipment. 63 Other services include: wholesale & retail trade, accommodation and food services activities, financial and insurance activities, electricity, gas, steam and air conditioning supply, water collection treatment and supply. 1 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Manufacture of textile, wearing apparel and leather 43 Manufacture of food, beverages and tobacco products 53 Manufacture of paper, furniture and wood products 26 Manufacture of chemicals and pharmaceuticals 34 Manufacture of rubber and plastics products 34 Manufacture of computer, electronic products, electrical equipment, 39 machinery, equipment, metal products Manufacture of other non-metallic mineral products 23 Printing and reproduction of recorded media 15 Other manufacturing 5 Services: Information and communication technology 5 Transportation 4 Other services 6 Total 302 - Nationality of ownership: Total Ownership structure Frequency Percentage Domestic investors: 100% domestic capital 167 55% Foreign investors: 135 45% 100% foreign capital 78 26% Mixed capital, half domestic half foreign 14 5% Mixed capital, majority foreign 20 7% Mixed capital, majority domestic 23 8% Total 302 100% - Geographic location of principal operations by Governorate Governorate Frequency Percentage Amman 173 57.3% Zarqa 34 11.3% Irbid 41 13.6% Aqaba 12 4.0% 2 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Other Governorates64 42 13.9% Total 302 100.00% - Geographic location of principal operations by Zone65: Location of Principal Operations by Zone Frequency Percentage Aqaba Special Economic Zone Authority (ASEZA) 15 5.0% Development Zones, Qualified Industrial Zones and Industrial Estates: 129: 42.7%: - Al Hassan Industrial City 27 8.9% - Al Tajamoat Industrial City 18 6.0% - Al Dhulail industrial complex 14 4.6% - King Abdullah II industrial estate – Sahab 45 14.9% - King Hussain Bin Talal Development Area – Mafraq 7 2.3% - Ma’an Development Zone 2 0.7% - Al Qastal Industrial Estate 15 5.0% - Mowaqqar industrial city 1 0.3% Outside the Zones 155 51.3% Inside and outside the Zones (two locations) 3 1.0% Total 302 100.00% - Size of investment: Paid capital in JOD, 2016 Frequency Percentage Medium (100,000 JOD – 499,999 JOD) 174 57.6% Large (500,000 + JOD) 128 42.4% Total 302 100.00% - Export-orientation: Category Frequency % Export-oriented investors66 103 34.11% Non-export-oriented investors 199 65.89% Total 302 100% - Principal target markets and domestic customers: Percentage Share of indicating company’s this as annual Frequency Target Markets principal sales (%, target 2015) market 64 Other governorates include: Balqa: 3%; Jarash: 0.7%; Ma’an: 0.3%, Madaba: 1.3%, Mafraq: 2.6, %; Jizah: 2%; Mowaqqar: 1.3%; Qastal/Yadoudeh: 2.6%, 65 Companies located in the Free Zones were not included in this study because the team was not provided with access to the full database of registered companies. 66 Export-oriented: at least 50.1% sales revenues originating from exports 3 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Jordan 199 65.9% 64.1% Middle East and North Africa 76 25.2% 26.2% USA 23 7.6% 7.5% EU 28 1 0.3% 0.9% Others67 3 1.0% 1.4% Total 302 100.0% 100.0% Domestic customers Share of domestic sales (%, 2015) Government 5% State-owned enterprises 6.50% (Private) large firms 23.20% (Private) Small and Medium Enterprises 35.20% (Private) Individual consumers 21.50% Other 0.40% Total 100.0% - Investment type by motivation: Type of Investment Frequency Percentage Natural Resource-seeking68 7 2.3% Domestic Market-seeking69 174 57.6% Efficiency-seeking70 121 40.1% Total 302 100% - Investment modality: Modality Frequency % Greenfield 261 86.42% Expansion 13 4.30% Acquisition 16 5.30% Merger 2 0.66% More than one modality 10 3.31% Total 302 100% - Geographic location of Headquarter: HQ in Jordan by % HQ outside Jordan by % Frequency Freq Governorate Country Amman 165 54.6% Russia 1 0.3% Zarqa 30 9.9% Germany 1 0.3% Irbid 40 13.2% Saudi Arabia 2 0.7% 67 Turkey, Ukraine, India 68 Natural resource-seeking investors include the following sectors: mining of metal ores; other mining & quarrying; extraction of crude petroleum and natural gas. 69 Domestic market-seeking investors includes all service and manufacturing sectors that are non-export oriented (with less than 50.1% of sales originating from exports). 70 Efficiency-seeking investors include all manufacturing and services sectors that are export oriented (with more than 50% of sales originating from exports). 4 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Aqaba 11 3.6% UAE 2 0.7% Other Governorates 41 13.6% Other countries71 9 3.0% Total 287 95% 15 5% 71 Lebanon, Australia, Egypt, Estonia, Kuwait, Sri Lanka, India, and China. 5 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Annex 2: Jordan Investor Motivation Survey 2016 – Sampling Frame Description Sector and Sub-Sectors Frequency Percentage 1) Agriculture, forestry & fishing 124 1.9% 2) Mining & quarrying 152 2.3% 3) Manufacturing: 4,090 61.2% 3.1) Garment, textile, apparel, footwear, leather 288 4.3% 3.2) Agro-food, food, beverages 682 10.2% 3.3) Construction materials 197 2.9% 3.4) Metal and steel manufacturing 288 4.3% 3.5) Automotive, auto-parts 15 0.2% 3.6) Chemicals, fertilizers 568 8.5% 3.7) Paper products 255 3.8% 3.8) Plastic and rubber 471 7.1% 3.9) Components, electronics, machines, machineries 175 2.6% 3.10) Other manufacturing 1,151 17.2% 4) Electricity, gas, steam and air conditioning supply 122 1.8% 5) Water supply; sewerage, waste management and remediation activities 44 0.7% 6) Construction 157 2.4% 7) Wholesale and retail trade; repair of motor vehicles and motorcycles 115 1.7% 8) Accommodation and food service activities 605 9.1% 9) Information and communications technology 346 5.2% 10) Real estate activities 213 3.2% 11) Education 71 1.1% 12) Arts, entertainment and recreation 177 2.6% 13) Health 66 1.0% 14) Transport 153 2.3% 15) Other services 245 3.7% Governorate of Principal Operations Locations Frequency Percentage Amman 2,034 30.4% Irbid 272 4.1% Zarqa 2,380 35.6% Others (including Mafraq, Aqaba, Karak, Madaba, Balqa, and Ma’an) 1,994 29.9% Size (paid capital, JOD, 2016) Frequency Percentage Small (1 - 99,999 JOD) 2,909 43.5% Medium (100,000 - 499,999 JOD) 1,746 26.1% Large (500,000 + JOD) 2,025 30.3% Nationality of investor Frequency Percentage Domestic 4,388 65.7% Foreign 2,111 34.3% Zone Location of Principal Operations Frequency Percentage Development Zones/QIZ/Industrial Estates 435 6.5% 6 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group ASEZA 763 11.4% Free Zones72 2,527 37.8% Outside the Zones 2,955 44.2% Total 6,680 100% 72The Free Zones sampling frame was estimated using information provided by the Free Zones Company. However, Free Zones companies were not included in this study since the full database of registered companies was not provided. 7 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Annex 3: Jordan Investor Motivation Survey 2009 - Sample Description Sectors and sub-sectors Frequency Percentage Manufacturing: 57 53.4% Agri-business manufacturing 8 13.1% Packaging material manufacturing 6 9.8% Textile & garment manufacturing 5 8.2% Construction 5 8.2% Chemicals manufacturing (fertilizers, cosmetics, detergents, adhesives) 5 8.2% Metal forming 4 6.6% Refrigeration & air conditioning 3 4.9% Machinery and equipment manufacturing 3 4.9% Food manufacturing 2 3.3% Healthcare 2 3.3% Furniture manufacturing 2 3.3% Plastic recycling 2 3.3% Printing & publishing of media 3 4.9% Pharmaceuticals manufacturing 1 1.6% Electrical appliances 1 1.6% Stone manufacturing 1 1.6% Services: 8 13.2% ICT 4 6.6% Tourism 4 6.6% Governorates Frequency Percentage Amman 57 93.4% Zarqa 1 1.6% Balqa 2 3.3% Madaba 1 1.6% Ownership structure Frequency Percentage Domestic: 25 41% 100% domestic 25 41% Foreign: 36 59% 100% foreign 19 31.1% Mixed, majority foreign 4 6.6% Mixed, majority domestic 13 21.3% Size of investment Frequency Percentage Medium (less than JOD 500,000) 20 32..8 % Large (more than JOD 500,000) 41 67.2% Total 61 100% 8 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Annex: Jordan Investor Motivation Survey 2016 Methodology Sample Frame The target population for the survey was that of companies receiving incentives in 2011-15 by different Government agencies in targeted sectors (predominantly: industry; extractives; and ICT and other services), including all types of Zones. In order to determine the target population, the team built a unique database combining datasets received from multiple agencies with the help of the Ministry of Planning and International Cooperation (MOPIC) and the Jordan Investment Commission (JIC). These included: Ministry of Industry and Trade, Company Control Department (CCD)’s database of registered companies in Jordan; Jordan Investment Commission (JIC)’s database of companies receiving incentives between 2011 and 2015; Department of Statistics’ 2011 Establishment Census; Jordan Investment Commission (JIC)’s database of companies registered in the Development Zones; Jordan Enterprise Development Corporation (JEDCO)’s database of companies receiving financial incentives between 2011 and 2015; Aqaba Special Economic Zone Authority (ASEZA)’s database of registered companies. It is important to note that the database did not include companies registered in the Free Zones whose list was not made available to the team at the time of the study. Therefore, the team made estimates of Free Zones’ companies’ statistics for the purpose of the sample frame based on summary statistics provided by the Free Zones Company. The initial databases contained the following company’s lists: • JIC list: included 2,686 companies; • Development Zones and Industrial Estates list: included about 435 companies; • ASEZA list: included 763 companies; • JEDCO: included 269 companies; and • Free Zones: included an estimated number of 2,527 companies. The initial total population was equal to 6,680 companies. However, upon application of sampling criteria and excluding the ineligible companies from the population, the sampling frame contained 1,796 companies. Assuming that all companies in the lists were still operating, the main reasons for excluding companies from the population database included: • Lack of valid contact or address information • Lack or incompliance with the target sectors condition • Lack or incompliance with the company size (paid capital) • Lack of investment nationality (domestic vs. foreign) • Inability to determine if the companies were actually incentive recipients during 2011-2015 In order to use the databases for sampling and field survey, a process of updating all information available about the companies was conducted. Updating included preliminary information about the companies including contact information, type of industry, type of received incentives, number of employees, year of establishment, geographic location, headquarter location, economic activities, nationality of the investors, type of investment, size of the company as well as others. A sampling frame was then developed of about 1,000 enterprises, in which 300 were selected according to the sampling criteria, while the remaining was used as a substitute sample. For more information about the sample frame please refer to the relevant Annex. 9 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Sample selection: A total of 302 companies were selected as a primary sample. This has given a confidence interval of 94.85% and precision rate of 95%. The stratified random sampling technique was used to extract a sample from the sampling frame which contained 1796 companies. The sample structure was built on proportional distribution of the sample size on the sampling frame categories including: geographic location (governorates); target sector & sub-sector; firm size (in terms of employees number and invested capital); nationality (domestic and foreign); and operations location (outside or inside zones). The proposed structure of the sample (i.e. sample size per strata) was based on the proportions of the companies population calculated in the aforementioned population statistics sheet. The sample size was distributed on the strata identified according to the sampling criteria, including the incentive-awarding agency. Questionnaire: The survey instrument was developed by adapting the WBG standard Investor Motivation Survey (IMS) template to cater for the study objectives. The instrument was reviewed and benefited from inputs by a number of WBG technical staff. It was tested on a number of firms during the pilot stage. The data collected during the survey was properly handled and entered into a data entry frame. There were a number of built- in rules to control the quality of data during data collection and entry process. A technical survey coordinator designed the questionnaire template using e-survey application and Survey Cloud including fields, tables and data entry forms based on the final version of the questionnaire, and then reflected this template on the questionnaire installed to the tablet devices. The electronic survey application/software included protective measures against human error and entry faults, such as programming skip patterns and missing values. The electronic questionnaire form was identical to the questionnaire form in terms of coding and labels. To ensure its appropriateness, the data entry frame was also tested using the pilot questionnaires, then amendments and rectifications took place. The original English questionnaire was shared with the consultants, and then it was revised and customized considering the local investment context. It was then translated into Arabic and piloted in participation with WBG team. The final questionnaire was transcribed in electronic format and uploaded to the e-survey application on the tablet devices to be used by interviewers in the field. The e-survey application ensured that adequate quality control measures are taken to yield reliable and accurate data collected via the questionnaire. Please refer to the Annex with the questionnaire for additional information on the questions. Survey Piloting To ensure the practicality and appropriateness of the survey instrument and ensure the effectiveness of survey implementation, a pilot testing was conducted in November/December 2015 with ten investors in different sectors. The piloting exercise was conducted by Dajani Consulting and supervised by the World Bank Group, and a resulted in a report and revised survey procedure and questionnaire. The pilot included firms with the following characteristics: Sector Total Nationality Zone Domestic % Foreign % inside % outside % Manufacture of 5 2 40% 3 60% 4 80% 1 20% textile and wearing apparel Paper 1 1 100% 1 100% manufacturing 10 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Chemicals 3 2 66.7% 1 33.3% 2 66.7% 1 33.3% manufacturing Food manufacturing 1 1 100% 1 100% Interviews and monitoring: Interviews were conducted face-to-face in the months between February and July 2016. Interviewers were regularly monitored by Dajani Consulting, as well as by the WBG, through 1) regular monitoring by phone interview; 2) random checks to interviews; 3) periodical reports by interviewers. Survey team: The team consisted of the following: • 1 Team leader – Mr. Samer Ghannam • 1 Survey Manager – Mr. Khalid Dajani • 1 Statistician – Mr. Muhanad Akash • 1 Data entry technical coordinator • 1 Data quality control officer • 1 Logistics officer • 20 Interviewers / enumerators • 6 Call agents • 5 Field supervisors • Mr. Mohamed Baider – Project Leader - WBG • Mr. Yassin Sabha – Technical Advisor – WBG • Ms. Nesreen Abu Suleiman – Project Coordinator – WBG Enumerators’ training: A comprehensive enumerators’ training was administered by Dajani Consulting in collaboration with the WBG in order to ensure the effective implementation of the survey. The training consisted of: instructions and guidelines for interviewers on how to interact with investors; standards of procedure on how to conduct the interviews and collect data; quality control measures, introduction to investment climate concepts (including investment incentives); instructions on how to use the survey tablets; interview simulations with investors; etc. Only well-prepared interviewers were selected and assigned to participate in the survey. A three-day capacity building and qualification program was held for all survey team in Amman, to introduce the research purpose and discuss the tasks, logistics and other issues related to the survey. A one-day technical training session was offered to the interviewer to train them on how to collect data and interview investors. The training ended with interview simulations and practical tests. Response rate: In general, response rates to the questionnaire were very high, due to the techniques used and the skills of the professional team of interviewers. However, the response rate of few questions was significantly less than others, due to the nature of these questions (focusing on financial information and values). The response rate was 100% for all questions, except question number 4 (99%), question number 28b (44%), question number 28c (96%), question number 28d (93%), and question number 43 (75%). 11 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Annex 4: Jordan Investor Motivation Survey 2016 - Questionnaire73 Jordan Investor Motivation Survey DATE: ___________________ # PLACE: ___________________ CONTACT PERSON FOR THE ENUMERATOR RESPONSIBLE FOR DATA SUBMISSION AND ACCURACY: • NAME, SURNAME:_______________________________________________________ • POSITION: _________________________________________________________ • Tel, Fax, E-mail : __________________________________________________________ The completion of the questionnaire takes about 45-60 minutes Thank you very much for your patience and cooperation. The survey is anonymous and the results of this study are confidential, however, the findings of this study will be made available to you and to the World Bank Group’s Trade & Competitiveness Global Practice as an input for technical assistance. 73 The response rate was 100% for all questions, except question number 4 (99%), question number 28b (44%), question number 28c (96%), question number 28d (93%), and question number 43 (75%). 12 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Section A: Company Characteristics Q1. Name, Position and Contact information of the Interviewee at the Company: Full Name __________ Position ___________ Email _____________ Phone number _____________ Q2. a Were you directly involved in the decision to invest/re-invest/expand/start-up your company in Jordan? Yes No If yes, please go to question 3 Q2.b. If “No,� do you have adequate knowledge about the company’s business activities and investment decisions to represent the company in responding to this survey? Yes No ____ Not applicable If the Interviewee does not have this knowledge, please ask if it would be possible to speak to one of the principals involved in the investment decision. Otherwise, please end the interview. Q3. What is the name of the Company? Official Name________________________________ Trade Name________________________________ Q4. What is the Company ID? 13 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group National ID _______ Tax ID ________ Social Security ID ________ Q5. Where is the Company Headquarter (HQ) located in Jordan? Address ___________________ City ______________ Governorate__________ Q6. Is this the same as the World Headquarter (HQ)? If no, please specify. Yes No City ___________ Country __________ Q7. Does your company have operations (select all options that apply): Inside a Development If yes which one? (please specify) Zone (including Industrial ____________________________________________ Estates) Inside a Free Zone If yes which one? (please specify) ____________________________________________ Inside the Aqaba Special Economic Zone Outside of the above 14 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Q8. What is your company’s first year of investment in Jordan (e.g. 2013, 2014, 2015)? ___________ Q9. What is the ownership structure of your business? (Choose one) 100% foreign capital 100% domestic capital Mixed capital, majority domestic Mixed capital, majority foreign Mixed capital, half domestic half foreign Q10. Which types of investment did you undertake in Jordan? In which year? (Please choose all options that apply) Type of investment Select Year Greenfield (i.e. new plant, start-up, new project) Expansion Acquisition Merger Other: Please specify _______ (i.e. licensing, contract manufacturing, franchising) Q11. What is your Principal Sector and Sub-Sector of Activity (Please choose one sector and sub-sector)? (Select from Annex 3) Sector: ____________ Sub-Sector: ________ 15 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Q12. Does your company export? Yes No Q13. What is your principal target market? (Please select one principal target market and one secondary target market) Sector Principal Target Secondary Target Market Market Domestic sales in Jordan Exports to other countries in the Middle East, Gulf Cooperation Council, and North Africa (Please also specify which countries): _______________________________ Exports to the United States of America (USA) Exports to the European Union (EU) Other (Please Specify): __________________________ 16 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Q14. Approximately what percentage of your company’s actual sales at the end of 2015 (or most recent fiscal year) is oriented to the following markets? Target (MA) Share (%) Domestic sales in Jordan Exports to other countries in the Middle East, Gulf Cooperation Council and North Africa (Please specify countries and share if available) _________ _________ _________ Exports to the US Exports to the EU Other (Please Specify): Total = 100% Q15. For your domestic sales this year (if any), approximately what percentage is to: Target market Share (%) Government State-owned or Government controlled entities Large firms Small and Medium Enterprises (SMEs) Individual consumers Other (Specify) Total = 100% 17 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Q16. What were your company’s Paid Capital, Sales Revenues, Net Income, and Number of Permanent Employees in 2011-2015 (or latest available fiscal years)? 2011 2012 2013 2014 2015 Paid Capital (JOD) Sales Revenues (JOD) Exports (JOD) Gross Income / Corporate Income Before Tax (JOD) Number of Permanent employees (people) Q17. What was the number of permanent employees in your company by sex and nationality at the end of 2015 (approximate answer acceptable)? Number of permanent employees Nationals Foreigners Total Men Women Total Q18. What was the number of permanent foreign employees in your company by nationality and sex (if possible) at the end of 2015 (approximate answer acceptable)? Number of permanent Country 1: Country 2: Country 3: Country 4: Country 5: Total foreign employees __________ ___________ ____________ ____________ _________ Men Women Total Q19. What was the number of permanent employees in your company by salary level at the end of 2015 (approximate answer acceptable)? Salary Level Total Below JOD 190 18 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group JOD 190 – JOD 250 JOD 251 – JOD 500 Over JOD 501 Total Number of employees 19 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Section B: Factors Motivating your Investment in Jordan If you have undertaken several investment projects in Jordan, please focus on one project for the following questions. Please specify which project and year of investment: ___________________ Q20. What changes to Jordan’s investment climate would you most want to see? (Please take notes below and report the exact answer provided by the interviewee) • _________________________________________________________________________________ • _________________________________________________________________________________ • _________________________________________________________________________________ Q21. a Did your company consider investing (or re-investing/expanding, or starting-up) in another country instead of Jordan? Yes No (Please explain why) ______________ ______ Q21.b If “Yes,� which countries were considered your company’s top alternative locations, and why? _____ Not applicable Country Why did you consider this country as a top alternative location to Jordan? 20 Jordan Investor Motivation Survey 2016 – DRAFT Summary Report The World Bank Group Q22. Overall, what were the three (3) most critical factors that influenced your decision to carry out this investment (or re-investment/expansion, or start-up) in Jordan [and not in other countries]? 1 _________________________________________ 2 _________________________________________ 3 _________________________________________ 21 Jordan Investor Motivation Survey The World Bank Group Q23. Looking at your decision to invest (or re-invest or start-up) in Jordan [instead of other countries], please rate each of the following factors in terms of their importance in deciding to undertake this investment. Please use a scale of 1 to 5, where: 5 = Critical factor – would not have invested without it. 4 = Important factor – improved the prospects, but not critical to the decision. 3 = Positive factor – a plus, but not very important. 2 = Irrelevant factor – not a consideration. 1 = Negative factor – detracted significantly from the investment prospects. 0 = Not applicable Tax incentives (i.e. tax credits, tax holidays, VAT exemptions, etc.) 0 1 2 3 4 5 Customs incentives (i.e. Duty-free imports, etc.) 0 1 2 3 4 5 Financial incentives (i.e. matching grants, subsidized loans, loan guarantees, training subsidies) 0 1 2 3 4 5 Geographic proximity to countries in the Middle East, Gulf Cooperation Council and North Africa 0 1 2 3 4 5 Geographic proximity to the European Union 0 1 2 3 4 5 Access to natural resources 0 1 2 3 4 5 Access to raw materials/production inputs 0 1 2 3 4 5 Presence of suppliers 0 1 2 3 4 5 Proximity to port 0 1 2 3 4 5 Status of Development Zone / Special Economic Zone / Free Zone / Qualified Industrial Zone/ 0 1 2 3 4 5 Industrial Estate Adequacy of road infrastructure 0 1 2 3 4 5 Adequacy of power infrastructure 0 1 2 3 4 5 22 Jordan Investor Motivation Survey The World Bank Group Adequacy of water infrastructure 0 1 2 3 4 5 Domestic market potential 0 1 2 3 4 5 Security and safety 0 1 2 3 4 5 Presence of Free Trade Agreements (i.e. FTA with the US, GAFTA, etc.) and other Preferential 0 1 2 3 4 5 Trade Agreements (please specify: ______________) Access to land 0 1 2 3 4 5 Access to bank financing 0 1 2 3 4 5 Access to competitively-priced unskilled labor 0 1 2 3 4 5 Access to competitively-priced skilled labor 0 1 2 3 4 5 Legal security and predictability of business regulations 0 1 2 3 4 5 Other: Specify ____________________________________________ 0 1 2 3 4 5 23 Jordan Investor Motivation Survey The World Bank Group Q24. a Did your company consider investing (or re-investing/expanding, or starting-up) in another location in Jordan? Yes No (Please explain why) ______________ ______ Q24.b If “Yes,� which other locations within Jordan were considered by your company as top alternative locations, and why? _____ Not applicable Location in Jordan Why did you consider this location within Jordan as a top alternative location? Q25. Overall, what were the three most critical factors that influenced your decision to carry out this investment (or re-investment, or start-up) in this location in Jordan [and not in other locations in Jordan]? 1 _________________________________________ 2 _________________________________________ 3 _________________________________________ 24 Jordan Investor Motivation Survey The World Bank Group Q26. Looking at your decision to invest (or re-invest or start-up) in this location in Jordan [instead of other locations], please rate each of the following factors in terms of their importance in deciding to undertake this investment. Please use a scale of 1 to 5, where: 5 = Critical factor – would not have invested without it. 4 = Important factor – improved the prospects, but not critical to the decision. 3 = Positive factor – a plus, but not very important. 2 = Irrelevant factor – not a consideration. 1 = Negative factor – detracted significantly from the investment prospects. 0 = Not applicable Tax incentives (i.e. tax credits, tax holidays, VAT exemptions, etc.) 0 1 2 3 4 5 Customs incentives (i.e. Duty-free imports, etc.) 0 1 2 3 4 5 Financial incentives (i.e. matching grants, subsidized loans, loan guarantees, training subsidies) 0 1 2 3 4 5 Preferential access to the US market or other market (please specify: _____________) 0 1 2 3 4 5 Access to raw materials/production inputs 0 1 2 3 4 5 Presence of suppliers 0 1 2 3 4 5 Proximity to port 0 1 2 3 4 5 Status of Qualified Industrial Zone/Development Zone / Special Economic Zone / Free Zone / 0 1 2 3 4 5 Industrial Estate Adequacy of road infrastructure 0 1 2 3 4 5 Adequacy of power infrastructure 0 1 2 3 4 5 Adequacy of water infrastructure 0 1 2 3 4 5 Local market potential 0 1 2 3 4 5 25 Jordan Investor Motivation Survey The World Bank Group Security and safety 0 1 2 3 4 5 Access to land 0 1 2 3 4 5 Access to bank financing 0 1 2 3 4 5 Access to competitively-priced unskilled labor 0 1 2 3 4 5 Access to competitively-priced skilled labor 0 1 2 3 4 5 Legal security and predictability of business regulations 0 1 2 3 4 5 Other: Specify ____________________________________________ 0 1 2 3 4 5 26 Jordan Investor Motivation Survey The World Bank Group Section C: Fiscal and Financial Considerations Q27. Did your company receive any tax and/or customs incentive in 2011-2015? Or did your company still benefit in 2011-2015 from any tax and/or custom incentive that had been awarded prior to 2011? (Please check Annex 1 for the list of tax and customs incentives). Yes No If no, please go to question 29 Q28. a Which tax and/or customs incentives did your company receive (or still benefited from) in 2011 – 2015 (or latest available years)? (Fill-in table below selecting options from Annex 1) ______ Not applicable Q28b. Approximately, how much was the annual value of the tax and customs incentive(s) that your company received (or still benefited from) in 2011-15 (or latest available years)? (Fill-in table below) ______ Not applicable Q28c1. What was the key objective for the incentive? ______ Not applicable 28.c2. Would you have undertaken this activity/behavior without the incentive? _______ Not applicable 27 Jordan Investor Motivation Survey The World Bank Group 28(a) 28(b) 28(c.1) 28(c.2) Incenti Tax/Custom Incentives Annual JOD value of Tax/Custom incentive and Year Key objective for the incentive (select one): Would you have ve No. Awarded/(still) Benefiting (JOD, Year) 1. Invest in a specific location in Jordan undertaken this from in 2011-2015 Guidelines: 2. Re-invest/expand your activity/behavio (or latest available years) 1. For reduced CIT rate (i.e. 14% CIT, 5% CIT): write company/operations r without the (Choose From Annex 1, annual Gross Income. 3. Start-up your firm incentive? Year) 2. For CIT exemption: write annual Gross Income. 4. Buy new machinery/equipment (Y/N) 3. For custom exemption: write: a) value of 5. Hire new workers imported/exported good, and b) approximate value 6. Export of exemption. 7. Invest in green technology 4. For GST exemption: write: a) value of good/service 8. Other objective (please specify) qualifying for exemption; and b) approximate value 9. Not applicable of exemption. 5. If tax allowance/credit: write value of investment qualifying for allowance/credit. 1 2011: 2011: 2012: 2012: 2013: 2013: 2014: 2014: 2015: 2015: 2 2011: 2011: 2012: 2012: 2013: 2013: 2014: 2014: 2015: 2015: 3 2011: 2011: 2012: 2012: 2013: 2013: 2014: 2014: 2015: 2015: 4 2011: 2011: 2012: 2012: 2013: 2013: 2014: 2014: 2015: 2015: 5 2011: 2011: 28 Jordan Investor Motivation Survey The World Bank Group 2012: 2012: 2013: 2013: 2014: 2014: 2015: 2015: 29 Jordan Investor Motivation Survey The World Bank Group Q29. Did your company receive any financial incentive in 2011-2015? Or did your company still benefit in 2011-2015 from any financial incentive that had been awarded prior to 2011? (Please check Annex 2 for the list of financial incentives). Yes No If no, please go to question 31 Q30. a Which financial incentives did your company receive (or still benefited from) in 2011 – 2015 (or latest available years)? (Fill-in table below selecting options from Annex 1) ______ Not applicable Q30.b Approximately, how much was the annual value of the financial incentive(s) that your company received (or still benefited from) in 2011-15 (or latest available years)? (Fill-in table below) ______ Not applicable Q30c1. What was the key objective for the incentive? _____ Not applicable Q30c2. Would you have undertaken this activity/behavior without the incentive? _____ Not applicable 30 Jordan Investor Motivation Survey The World Bank Group 30(a) 30(b) 30(c.1) 30(c.2) Incentive Financial Incentives Annual JOD value of financial Key objective for the incentive Would you have undertaken No. Awarded/(still) Benefiting from in incentive and Year (select one): this activity/behavior without 2011-2015 (JOD, Year) 1. Invest in a specific the incentive? (or latest available years) Guidelines: location in Jordan (Y/N) (Choose from Annex 1, Year) 1. For loan: write amount of 2. Re-invest/expand your loan received. company/operations 2. For matching grant/cost- 3. Start-up your firm sharing scheme: write 4. Buy new amount disbursed by the machinery/equipment Government agency and 5. Hire new workers amount disbursed by the 6. Export investor. 7. Invest in green 3. For direct grant/subsidy: technology write amount received. 8. Other objective (please 4. For loan guarantee: write specify) amount of loan received. 9. Not applicable 1 2011: 2011: 2012: 2012: 2013: 2013: 2014: 2014: 2015: 2015: 2 2011: 2011: 2012: 2012: 2013: 2013: 2014: 2014: 2015: 2015: 3 2011: 2011: 2012: 2012: 2013: 2013: 2014: 2014: 2015: 2015: 4 2011: 2011: 2012: 2012: 2013: 2013: 2014: 2014: 31 Jordan Investor Motivation Survey The World Bank Group 2015: 2015: 5 2011: 2011: 2012: 2012: 2013: 2013: 2014: 2014: 2015: 2015: 32 Jordan Investor Motivation Survey The World Bank Group Q31. Would your company have invested (or re-invested, or started-up) in Jordan [instead of other countries] without the tax/custom/financial incentive(s) that you received, other things being the same? Yes Specify which incentive: No Specify which incentives: Not applicable Q32. If you received a tax/custom/financial incentive that is specific for this location in Jordan (i.e. development zone, free zone, specific Governorate, ASEZA): Would your company have invested (or re-invested, or started-up) in this location in Jordan [instead of other locations in Jordan] without the incentive, other things being the same? Yes Specify which incentive: No Specify which incentives: Not applicable 33 Jordan Investor Motivation Survey The World Bank Group Q33. If you received tax/custom/financial incentives, did the incentive(s) affect any of the following behaviors/activities? (check yes or no) _______ Not applicable Behavior/Activity No Yes Not If Yes: applicable 1. Re-invest in /expand your company/operations - Which incentive(s)? (select from Annex 1 and 2) _________________________ 2. Start-up your firm - Which incentive(s)? (select from Annex 1 and 2) _________________________ - 3. Buy new machineries/equipment - Which incentive(s)? (select from Annex 1 and 2) _________________________ 4. Hire new workers - Which incentive(s)? (select from Annex 1 and 2) __________________ 5. Retain existing workforce - Which incentive(s)? (select from Annex 1 and 2) __________________ 6. Export - Which incentive(s)? (select from Annex 1 and 2) __________________ 34 Jordan Investor Motivation Survey The World Bank Group 7. Invest in green technologies - Which incentive(s)? (select from Annex 1 and 2) __________________ - 8. Other - Which incentive(s)? (select from Annex 1 and 2) __________________ - 35 Jordan Investor Motivation Survey The World Bank Group Q34. If your company did not receive a tax, custom and/or financial incentive, this was for the following reason (Please choose all the answers that apply): 1 I did not apply to any tax, custom, and/or financial incentive 2 I applied but was not awarded Incentive 1:_______________________ the incentive (please specify Incentive 2:_______________________ which incentive) Incentive 3:_______________________ 3 I was awarded but did not Incentive 1:_______________________ receive the incentive (please Why: ____________________________ specify which incentive and Incentive 2:_______________________ why) Why: ____________________________ Incentive 3:_______________________ Why: ____________________________ 4 Other (please specify) ______ Not applicable Q35. What specific changes to Jordan’s investment incentives (tax, customs and financial) would you most want to see? (Please take notes below and report the exact answer provided by the interviewee) • _________________________________________________________________________________ • _________________________________________________________________________________ • _________________________________________________________________________________ 36 Jordan Investor Motivation Survey The World Bank Group Section D: Other Considerations Q36. Is your company currently considering (please select all those that apply): Additional Location in Jordan: _________ investment in Jordan Investment type (i.e. existing plant’s expansion, new plant, new equipment): Sector: _________ Additional Country(ies): __________ investment but in another country Investment type (i.e. existing plant’s expansion, new plant, new equipment): Sector: __________ Shifting Location in Jordan: ___________ operations/your company to another location Reason: __________ in Jordan Shifting Country(ies): __________ operations/your company to another country Reason: _____________ Closing your Reason: ____________ operations/your company Other Please specify: ____________ 37 Jordan Investor Motivation Survey The World Bank Group Q37. Over the next one year, are your expecting your workforce to be (please select one option): Larger Approximately the same Smaller Q38. What obstacles do you face in hiring skilled (domestic and foreign) workers in Jordan? (Please rate from 5 = highest obstacle to 1 = lowest obstacle) 1 – 2 – 3- 4 -5 Existing laws and regulations create obstacles for hiring skilled workers. • Applicable to domestic workers: Y/N • Applicable to foreign workers: Y/N 1 – 2 – 3- 4 -5 Lack of availability of skilled workers • Applicable to domestic workers: Y/N • Applicable to foreign workers: Y/N 1 – 2 – 3- 4 -5 The location of investment is not attractive for skilled workers • Applicable to domestic workers: Y/N • Applicable to foreign workers Y/N 1 – 2 – 3- 4 -5 Salaries and wages for skilled workers are too high • Applicable to domestic workers: Y/N • Applicable to foreign workers: Y/N 1 – 2 – 3- 4 -5 Other: Please specify: ___________________________________ Q39. Would you hire Syrian workers if work permits where granted to them? Yes No Q40. Would the cost of the work permit be an issue? Yes No Q41. If you are importing inputs of production (goods and/or services): what are the top three imported inputs of production that you would like to source locally if available? 1. ______________________________ 38 Jordan Investor Motivation Survey The World Bank Group 2. _______________________________ 3. _______________________________ _____Not applicable Q42. a As a result of your experience, have you encouraged any other people or companies to consider investing in Jordan? Yes No Q42.b If “Yes� what did you tell them are the most favorable factors for investing in Jordan? ________________________________________________________________________ ______Not applicable Q43. This is the end of the survey questionnaire. Do you have any other comments to offer about the motivation for your investment in Jordan? (If yes, please take notes below and report the exact answer provided by the interviewee). _______________________________________________________________________________________ _________________________________________________________________________________ ______ _________________________________________________________________________________ ______ _______________________________________________________________________________________ 39 Jordan Investor Motivation Survey The World Bank Group Thank you very much for your patience and cooperation. The survey is anonymous and the results of this study are confidential, however, the findings of this study will be made available to you and to the World Bank Group’s Trade and Competitiveness Global Practice an input for technical assistance. 40 Annex 5: Classification of Economic Sectors and Sub-Sectors International Standard Industrial Classification of All Economic Activities, Rev.4 • A - Agriculture, forestry and fishing • 01 - Crop and animal production, hunting and related service activities • 02 - Forestry and logging • 03 - Fishing and aquaculture • B - Mining and quarrying • 05 - Mining of coal and lignite • 06 - Extraction of crude petroleum and natural gas • 07 - Mining of metal ores • 08 - Other mining and quarrying • 09 - Mining support service activities • C - Manufacturing • 10 - Manufacture of food products • 11 - Manufacture of beverages • 12 - Manufacture of tobacco products • 13 - Manufacture of textiles • 14 - Manufacture of wearing apparel • 15 - Manufacture of leather and related products • 16 - Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials • 17 - Manufacture of paper and paper products • 18 - Printing and reproduction of recorded media • 19 - Manufacture of coke and refined petroleum products • 20 - Manufacture of chemicals and chemical products • 21 - Manufacture of basic pharmaceutical products and pharmaceutical preparations • 22 - Manufacture of rubber and plastics products • 23 - Manufacture of other non-metallic mineral products • 24 - Manufacture of basic metals • 25 - Manufacture of fabricated metal products, except machinery and equipment • 26 - Manufacture of computer, electronic and optical products • 27 - Manufacture of electrical equipment • 28 - Manufacture of machinery and equipment n.e.c. • 29 - Manufacture of motor vehicles, trailers and semi-trailers • 30 - Manufacture of other transport equipment • 31 - Manufacture of furniture • 32 - Other manufacturing • 33 - Repair and installation of machinery and equipment • D - Electricity, gas, steam and air conditioning supply • 35 - Electricity, gas, steam and air conditioning supply • E - Water supply; sewerage, waste management and remediation activities • 36 - Water collection, treatment and supply • 37 - Sewerage • 38 - Waste collection, treatment and disposal activities; materials recovery • 39 - Remediation activities and other waste management services • F - Construction 0 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP • 41 - Construction of buildings • 42 - Civil engineering • 43 - Specialized construction activities • G - Wholesale and retail trade; repair of motor vehicles and motorcycles • 45 - Wholesale and retail trade and repair of motor vehicles and motorcycles • 46 - Wholesale trade, except of motor vehicles and motorcycles • 47 - Retail trade, except of motor vehicles and motorcycles • H - Transportation and storage • 49 - Land transport and transport via pipelines • 50 - Water transport • 51 - Air transport • 52 - Warehousing and support activities for transportation • 53 - Postal and courier activities • I - Accommodation and food service activities • 55 - Accommodation • 56 - Food and beverage service activities • J - Information and communication • 58 - Publishing activities • 59 - Motion picture, video and television programme production, sound recording and music publishing activities • 60 - Programming and broadcasting activities • 61 - Telecommunications • 62 - Computer programming, consultancy and related activities • 63 - Information service activities • K - Financial and insurance activities • 64 - Financial service activities, except insurance and pension funding • 65 - Insurance, reinsurance and pension funding, except compulsory social security • 66 - Activities auxiliary to financial service and insurance activities • L - Real estate activities • 68 - Real estate activities • M - Professional, scientific and technical activities • 69 - Legal and accounting activities • 70 - Activities of head offices; management consultancy activities • 71 - Architectural and engineering activities; technical testing and analysis • 72 - Scientific research and development • 73 - Advertising and market research • 74 - Other professional, scientific and technical activities • 75 - Veterinary activities • N - Administrative and support service activities • 77 - Rental and leasing activities • 78 - Employment activities • 79 - Travel agency, tour operator, reservation service and related activities • 80 - Security and investigation activities • 81 - Services to buildings and landscape activities • 82 - Office administrative, office support and other business support activities • O - Public administration and defence; compulsory social security • 84 - Public administration and defence; compulsory social security • P - Education 1 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP • 85 - Education • Q - Human health and social work activities • 86 - Human health activities • 87 - Residential care activities • 88 - Social work activities without accommodation • R - Arts, entertainment and recreation • 90 - Creative, arts and entertainment activities • 91 - Libraries, archives, museums and other cultural activities • 92 - Gambling and betting activities • 93 - Sports activities and amusement and recreation activities • S - Other service activities • 94 - Activities of membership organizations • 95 - Repair of computers and personal and household goods • 96 - Other personal service activities • T - Activities of households as employers; undifferentiated goods- and services-producing activities of households for own use • 97 - Activities of households as employers of domestic personnel • 98 - Undifferentiated goods- and services-producing activities of private households for own use • U - Activities of extraterritorial organizations and bodies • 99 - Activities of extraterritorial organizations and bodies D-Electricity, gas, steam and air conditioning supply 1. Electricity, gas, steam and air conditioning supply E-Water supply; sewerage, waste management and remediation activities 2. Water collection, treatment and supply 3. Sewerage 4. Waste collection, treatment and disposal activities; materials recovery 5. Remediation activities and other waste management services F-Construction 6. Construction of buildings 7. Civil engineering 8. Specialized construction activities G-Wholesale and retail trade; repair of motor vehicles and motorcycles 9. Wholesale and retail trade and repair of motor vehicles and motorcycles 10. Wholesale trade, except of motor vehicles and motorcycles 11. Retail trade, except of motor vehicles and motorcycles H-Transportation and storage 2 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 12. Land transport and transport via pipelines 13. Water transport 14. Air transport 15. Warehousing and support activities for transportation 16. Postal and courier activities I-Accommodation and food service activities 17. Accommodation 18. Food and beverage service activities J-Information and communication 19. Publishing activities 20. Motion picture, video and television programme production, sound recording and music publishing activities 21. Programming and broadcasting activities 22. Telecommunications 23. Computer programming, consultancy and related activities 24. Information service activities K-Financial and insurance activities 25. Financial service activities, except insurance and pension funding 26. Insurance, reinsurance and pension funding, except compulsory social security 27. Activities auxiliary to financial service and insurance activities L-Real estate activities 28. Real estate activities M-Professional, scientific and technical activities 29. Legal and accounting activities 30. Activities of head offices; management consultancy activities 31. Architectural and engineering activities; technical testing and analysis 32. Scientific research and development 33. Advertising and market research 34. Other professional, scientific and technical activities 35. Veterinary activities N-Administrative and support service activities 36. Rental and leasing activities 37. Employment activities 3 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 38. Travel agency, tour operator, reservation service and related activities 39. Security and investigation activities 40. Services to buildings and landscape activities 41. Office administrative, office support and other business support activities O-Public administration and defense; compulsory social security 42. Public administration and defense; compulsory social security P-Education 43. Education Q-Human health and social work activities 44. Human health activities 45. Residential care activities 46. Social work activities without accommodation R- Arts, entertainment and recreation 47. Creative, arts and entertainment activities 48. Libraries, archives, museums and other cultural activities 49. Gambling and betting activities 50. Sports activities and amusement and recreation activities S-Other service activities 51. Activities of membership organizations 52. Repair of computers and personal and household goods 53. Other personal service activities T- Activities of households as employers; undifferentiated goods- and services-producing activities of households for own use 54. Activities of households as employers of domestic personnel 55. Undifferentiated goods- and services-producing activities of private households for own use U-Activities of extraterritorial organizations and bodies 56. Activities of extraterritorial organizations and bodies 4 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Annex 6: Investment Incentives: Key Concepts and Definitions Definition of incentives Investment incentives are measurable economic advantages that Governments provide to specific enterprises, with the goal of steering investments into favored sectors or regions or of influencing the character of such investments74. Since subsides and incentives are closely interrelated, looking at the definition of subsidies in the World Trade Organization (WTO) Agreement on Subsidies and Countervailing Measures (SCM) helps provide a basis to narrow the conceptualization of incentives. Building from the text of the SCM, incentives can be defined as financial contributions by a Government or a related public body that involves: 1. A direct transfer of funds or a potential direct transfer of funds and liabilities; 2. Exemptions from Government revenue contributions that are otherwise due; and 3. Provision of goods and services other than general infrastructure, or payments-in-kind. A Government may also make payments to a funding mechanism or entrust a private body to carry out one or more of the functions in (1) through (3)75. Investment incentives must be differentiated from other economic advantages provided to consumers (such as a low personal income tax rate), as well as incentives that promote consumption, or social/cultural activities. The different incentive instruments available Broadly, investment incentives can be divided into two types: • Fiscal incentives entail Government revenue contribution exemptions that are otherwise due by the general population. They include both incentives related to corporate taxes (i.e. corporate income tax (CIT), value added tax (VAT), export tax, property tax, withholding tax, etc.) and customs duties (on the import and export of products). Examples of tax incentives are: tax holidays, special deductions, tax allowances and credits, and deferrals. Examples of customs duty incentives include: exemptions from, or reduction of, duties on the import of products. VAT incentives may be granted on the output produced by a firm, but more often that the form of an exemption on inputs purchased by the firm from VAT. • Financial incentives are direct or indirect transfers of funds/liabilities to benefit a particular business/activity/sector; or advantageous provisions of goods and services, or specific payments-in- kind which benefit only the investor in question. Examples of financial incentives are: direct subsidies, matching grants, reduced interest rate loans, and reduced prices on land. 74 World Bank Group, “Investment Incentives Toolkit�, 2015. James, Sebastian, “Tax and Non -Tax Incentives and Investment: Evidence and Policy Implications�, World Bank Group, 2013. 75 World Trade Organization, “Standards and Countervailing Measures Agreement� https://www.wto.org/english/tratop_e/scm_e/subs_e.htm 5 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Both types of incentives are, or can be, quantifiable and are directed toward specific types of enterprises with a goal of steering investment into a particular area, or to influence their character and behavior. The role of incentives (locational vs. behavioral) An important categorization of investment incentives relates to the particular policy objective for which they are being used: • Locational incentives: Those incentives are aimed at attracting investment into the host country or a particular location within that country. • Behavioral incentives: Those incentives are meant to induce investors to engage in certain behaviors or activities, such as producing certain goods or services, creating employment, establishing linkages between foreign and domestic suppliers, adopting green technologies, and so on. 6 Annex 7: Inventory of Incentives in Jordan Issuing/ Applic Incentiv Implemen Awardi Incentive Brief able e Legal ting Applicable Sectors Eligibility Criteria ng Awarding Process Description Tax/Du Modalit Reference(s) Authoriti instituti ty y es on Any industrial, agricultural, touristic, commercial, crafts, or service activity Investments in Development Zones registered in the except for: banks, Development Zone in telecommunications companies that addition to IT. The have individual licenses, financial specific sector depends brokerage companies, and financial on the designation of Jordan companies including the companies Jordan Corporate Income the specific Investmen that practice exchange, financing Investment Law Investm Automatic - By simply Tax (CIT) Development Zone. 1) t and financial leasing business, and No. 30/2014, Art. ent registering at JIC and reduced to 5% for Corpora Maan: Light, Medium Commissi consultation & financial and tax 11.A; Investment Commis obtaining a certificate of economic te Reduced and Heavy Industries; on (JIC) audit companies, transport Incentives sion registration, the investor is activities inside Income Tax Ceramics; Plastics; and companies (air transport, sea Regulation (JIC) - given a tax number and a the Development Tax Rate Electrical Appliances; Income transport, railways, and road freight 33/2015; Income Develop purchase mechanism and Zones (instead of (CIT) Renewable Energy. 2) and Sales transport), insurance and Tax Law No. ment obtains incentives 20% standard Jabal Ajloun and the Tax reinsurance companies, basic 34/2014 Zone- automatically rate) Dead Sea: Tourism, Departme mining and extraction industries, specific Hospitality and Eco- nt (ISTD) generation and distribution of Tourism. 3) King elasticity, and transport and/or Hussein Business distribution and/or extraction of Park: Technology and water, gas, and oil derivatives using Business. 4) Mafraq: the pipelines. Light and Medium Manufacturing; Logistics. 5) Irbid: IT, BPO and Healthcare. 0 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Any industrial, agricultural, touristic, commercial, crafts, or service activity registered in the Development Zone in addition to IT. The specific sector depends on the designation of Jordan Jordan Corporate Income the specific Investmen Investment Law Investm Automatic - By simply Tax (CIT) Development Zone. 1) t No. 30/2014, Art. ent registering at JIC and reduced to 5% for Corpora Maan: Light, Medium Commissi 11.B; Investment Commis obtaining a certificate of manufacturing te Reduced and Heavy Industries; on (JIC) The industrial sector in Incentives sion registration, the investor is activities inside Income Tax Ceramics; Plastics; and Development Zones Regulation (JIC) - given a tax number and a the Development Tax Rate Electrical Appliances; Income 33/2015; Income Develop purchase mechanism and Zones (instead of (CIT) Renewable Energy. 2) and Sales Tax Law No. ment obtains incentives 20% standard Jabal Ajloun and the Tax 34/2014 Zone- automatically rate) Dead Sea: Tourism, Departme specific Hospitality and Eco- nt (ISTD) Tourism. 3) King Hussein Business Park: Technology and Business. 4) Mafraq: Light and Medium Manufacturing; Logistics. 5) Irbid: IT, BPO and Healthcare. 1 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Any industrial, agricultural, touristic, commercial, crafts, or service activity registered in the Corporate Income Development Zone in Tax (CIT) addition to IT. The exemption on the specific sector depends income on the designation of Jordan Jordan originating from the specific Investment Law Investmen Investm Automatic - By simply the exports of Development Zone. 1) No. 30/2014, t ent registering at JIC and goods for Corpora Maan: Light, Medium Art.11D; Commissi Commis obtaining a certificate of economic te Tax and Heavy Industries; Exports of goods for economic Investment on (JIC) sion registration, the investor is activities inside Income exempti Ceramics; Plastics; activities inside the Development Incentives and (JIC) - given a tax number and a the Development Tax on Electrical Appliances; Zones Regulation Income Develop purchase mechanism and Zones (instead of (CIT) Renewable Energy. 2) 33/2015; Income and Sales ment obtains incentives the standard 20% Jabal Ajloun and the Tax Law No. Tax Zone- automatically rate and 5% rate Dead Sea: Tourism, 34/2014 Departme specific for other sources Hospitality and Eco- nt (ISTD) of income in the Tourism. 3) King Development Hussein Business Zone) Park: Technology and Business. 4) Mafraq: Light and Medium Manufacturing; Logistics. 5) Irbid: IT, BPO and Healthcare. 2 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Any industrial, agricultural, touristic, commercial, crafts, or service activity registered in the Development Zone in addition to IT. The specific sector depends General Sales Tax on the designation of Jordan Jordan (GST) exemption the specific Investmen Investm Automatic - By simply for the goods and Development Zone. 1) t Investment Law ent registering at JIC and services Maan: Light, Medium Goods and services purchased or Commissi General No. 30/2014, Art. Commis obtaining a certificate of purchased or Tax and Heavy Industries; imported by the Registered on (JIC) Sales 12; Investment sion registration, the investor is imported by exempti Ceramics; Plastics; Establishment for the purpose of its and Tax Incentives (JIC) - given a tax number and a companies inside on Electrical Appliances; economic activity inside the Income (GST) Regulation No. Develop purchase mechanism and the Development Renewable Energy. 2) Development Area. and Sales 33/2015 ment obtains incentives Zones (instead of Jabal Ajloun and the Tax Zone- automatically the standard 16% Dead Sea: Tourism, Departme specific rate) Hospitality and Eco- nt (ISTD) Tourism. 3) King Hussein Business Park: Technology and Business. 4) Mafraq: Light and Medium Manufacturing; Logistics. 5) Irbid: IT, BPO and Healthcare. 3 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Any industrial, agricultural, touristic, commercial, crafts, or service activity registered in the Development Zone in addition to IT. The specific sector depends General Sales Tax on the designation of Jordan Jordan (GST) subject to the specific Investmen Investm Automatic - By simply 7% for the goods Development Zone. 1) t Investment Law ent registering at JIC and and services Maan: Light, Medium Commissi General No. 30/2014, Art. Commis obtaining a certificate of originated inside Reduced and Heavy Industries; GST is collected for a rate of 7% of on (JIC) Sales 12.E; Investment sion registration, the investor is the Development Tax Ceramics; Plastics; the services sales value after selling and Tax Incentives (JIC) - given a tax number and a Zones sold to the Rate Electrical Appliances; them for consumption Income (GST) Regulation No. Develop purchase mechanism and rest of Jordan Renewable Energy. 2) and Sales 33/2015 ment obtains incentives (instead of the Jabal Ajloun and the Tax Zone- automatically standard 16% Dead Sea: Tourism, Departme specific rate) Hospitality and Eco- nt (ISTD) Tourism. 3) King Hussein Business Park: Technology and Business. 4) Mafraq: Light and Medium Manufacturing; Logistics. 5) Irbid: IT, BPO and Healthcare. 4 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Customs duty exemption inside the Development Any industrial, Zones for the agricultural, touristic, Automatic - The investor import of commercial, crafts, or applies the incentive materials, service activity automatically upon equipment, registered in the satisfying the specified machineries and Development Zone in eligibility criteria without construction addition to IT. The Goods offered by registered further approvals. materials used for specific sector depends investors except the sales of goods However, the investor is constructing, on the designation of subject to the special sales tax Jordan still required to obtain establishing, the specific Jordan including vehicles, tobacco, alcohol Investm signature from the equipping and Development Zone. 1) Investmen and beer are subject to the GST and ent customs representative at furnishing all Maan: Light, Medium t Custom Customs custom duties collected in Jordan Commis the JIC of a hard copy types of projects and Heavy Industries; Investment Law Commissi s duties duty when sold for consumption in the sion exemption letter. The executed by Ceramics; Plastics; No. 30/2014, Art. on (JIC) on exempti Development Area. The goods (JIC) - document is then showed establishments in Electrical Appliances; 12. & 13 and imports on consumed in the development areas Develop to the customs authority at the Development Renewable Energy. 2) Customs are subject to the GST and customs ment the port in order to apply Zones, including Jabal Ajloun and the Departme duties unless consumed for the Zone- the exemption. The the necessary Dead Sea: Tourism, nt purpose of the practice of the specific investor files the signed spare parts for Hospitality and Eco- economic activity of the Registered hard-copy application their continuous Tourism. 3) King Establishment. through the Customs maintenance, and Hussein Business Authority representative at the imported Park: Technology and JIC. The investor applies goods for the Business. 4) Mafraq: the customs exemption by Development Light and Medium showing the signed Zone to practice Manufacturing; authorization at the port. economic Logistics. 5) Irbid: IT, activities or the BPO and Healthcare. export of goods outside Jordan 5 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Jordan Enterprise Development Corporation (JEDCO) Governorate Development Fund (GDF): Subsidized loans, contributions to the equity capital, convertible bonds, in kind shares. Investment Available only to Domestic SMES. currently takes The contribution of the project place using in owner should not be less than 10% kind shares, Non-automatic: Projects of the project, provided the Jordan whereby the are assessed and studied in remaining funding is made Enterpri Jordan minimum GDF's different phases (internal available. The Jordanian labor se Enterprise funding is 100.00 and sub-committees) , and should not be less than 60%. The Cabinet decision Develop Developm JODs, provided it Subsidiz Industry, Services, the funding decision is project owner should highlight the No. 617 dated ment ent does not exceed ed loan Agriculture taken by the Executive economic impact of the project 3/7/2012 Corpora Corporatio 80% of the total Committee of through the added value it tion n size of the project. Governorates represents in terms of providing (JEDCO (JEDCO) 10% of the annual Development Fund new work opportunities and migrant ) net profit is emanating from JEDCO. workers substitution, and cross- deducted, cutting with different sectors and provided that the providing export opportunities total deductions of profits does not exceed 25% of the GDF's funding. The loan is repaid within a period up to 8 years including 2 years as a grace period. The Fund aims to invest in SMEs and big companies 6 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP whether they are under establishment and construction, or in existing companies that aim to start working or expanding in productive projects (in the industrial and services sectors and agricultural industry) of economic feasibility and of a clear impact and high added value on the economy and the society, and are able to employ Jordanian labor and substitute labor. Eligible geographic areas include the Kingdom's Governorates and some areas outside Greater Amman Municipality (Muwaqqar, Jeizeh, Naour). 7 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Jordan Enterprise Development Corporation (JEDCO) Jordan Innovation Center Network (JICN): Domestic start- ups can benefit from incubators in Amman, Jerash, Irbid, Madaba, Karak, Tafila providing business development / Jordan consulting Anybody of Jordanian nationality Enterprise Non-automatic: Jordan services for who is above 18 years, has an idea Developm Companies submit the Enterpri Jordanian start- of an achievable project ent paper-format application se ups in the targeted economically feasible. Enrolment in Corporation Law Corporatio by email or in-person. The Food industries; Develop Governorates for Matchin a training course entitled "establish No. 33/2008, n Technical Committee creative industries; ment selected sectors. g grant your own business". Article 5, (JEDCO) - checks the compliance light industry; Corpora The incentive Implementation of the project in any paragraph C Jordan with the eligibility criteria tion mechanism is a governorate except for the Capital Innovation and decides whether the (JEDCO matching grant and Zarka. The project should be Centers company can benefit from ) under the JICN productive or service oriented. Network the program. covers 80% of the (JICN) costs for up to 15,000 JOD. The program is funded by JEDCO and King Abdullah II Fund for Development (KAFD) and administered by JICN. All projects that have received a grant shall be subject to income tax and stamp 8 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP duties. In the event of buying any materials from abroad, customs duties are paid by the project owner. 9 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Renewable Ministry Energy & Energy of Energy Non-automatic: The Efficiency Law and decision is based on the No. 13/2012: Mineral formation of a Technical Renewable energy sources and Article 11.a-b; Resources Ministerial Committee for energy conservation systems and Bylaw No 13 of (MEMR) - exemptions. The Zero-rate General equipment included in Table 1 of 2015 on the Committe committee shall look into Sales Tax (GST) Bylaw No 13 of 2015, and for the Provisions and Ministry e on the exemptions application for renewable inputs from the regulation no 13 for Conditions for of exemption for the renewable energy energy sources the year 2015 "Exemption Exempting Energy from General sources and its devices and energy provisions and conditions for Renewable and customs Sales Zero- Renewable Energy; and equipment and conservation renewable energy sources and Energy Sources Mineral duties and Tax rate tax Energy Efficiency exempting them from systems and energy conservation systems and Energy Resourc subjecting (GST) duties and subject them to equipment exempting renewable energy Conservation es to the GST for a certain rate or (instead of the sources systems and equipment and Systems and (MEMR general zero rate, in accordance standard 16% energy conservation systems and Equipment and ) sales tax at with the provisions of the rate) equipment from customs duties and their Production a rate of regulation and submitting subjecting them to the general sales Inputs from zero ; the suitable tax at a rate of zero Customs Duties Income recommendation to the and Subjecting and Sales minister to ratify the Them to the Tax decision Generals Sales Departme Tax of Zero. nt (ISTD) 10 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 1) Renewable energy sources and energy conservation systems and equipment included in Table 1 of Bylaw No 13 of 2015, and 2) Locally produced and imported products that are considered production and manufacturing inputs for renewable energy sources and energy conservation systems Renewable and equipment in Table 2 of Bylaw Energy & Energy Ministry No 13 of 2015. From Bylaw No 13 Non-automatic: The Efficiency Law of Energy of 2015 Article 9 A-B: "The decision is based on the No. 13/2012: and following conditions shall apply for formation of a Technical Article 11.a-b; Mineral exempting renewable energy Ministerial Committee for Bylaw No 13 of Resources sources systems and equipment and exemptions. The 2015 on the (MEMR) - energy conservation systems and committee shall look into Customs duty Provisions and Ministry Committe equipment from customs duties and the exemptions application exemption for the Conditions for of e on subjecting them to the general sales for the renewable energy import of Exempting Energy exemption Custom Customs tax at a rate of zero: 1. They shall be sources and its devices renewable energy Renewable and from s duties duty Renewable Energy; new and unused. and equipment and sources and Energy Sources Mineral customs on exempti Energy Efficiency 2. They shall have the highest exempting them from energy and Energy Resourc duties and imports on energy efficiency classification duties and subject them to conservation Conservation es subjecting according to an attached sticker GST for a certain rate or systems and Systems and (MEMR to the label issued by the Jordan Standards zero rate, in accordance equipment Equipment and ) general and Metrology Organization with the provisions of the their Production sales tax at (JSMO) or any reference regulation and submitting Inputs from a rate of organization that it accredits. the suitable Customs Duties zero ; 3. They shall realize savings not less recommendation to the and Subjecting Customs than 20% of the normal minister to ratify the Them to the Departme consumption rate of equivalent decision Generals Sales nt traditional non-energy saving Tax of Zero. systems and equipment according to a certificate issued by a local or foreign specialized testing laboratory that is accredited by the Jordan Standards and Metrology Organization (JSMO). B. The Committee may be satisfied with the two conditions stipulated in Items 1 and 3 of Paragraph A of this 11 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Article if the classification stipulated in Item 2 of the same paragraph is not available." 12 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Jordan Loan Non-automatic: Credit Guarantee studies and evaluations of Jordan Corporation applications are Loan (JLGC) Loan Jordan conducted, in addition to Guarantee guarantee for Loan ensuring that the purpose Corporatio SMEs: Maximum Loan Life Insurance on the of the Guarant of the loan is meeting the n (JLGC) - loan amount: guarante All sectors borrower/ client; Insurance on the ee loan guarantee criteria. credit 100,000 JOD. e project assets Corpora When clients submit a committee Max payment tion loan guarantee ; period: 72 (JLGC) application, it will be commerci months. financially analyzed, then al banks Guarantee ratio: an approved written letter 70% is provided to the client. Jordan Loan Guarantee Jordan Corporation Loan Jordan (JLGC) Industrial Guarantee Loan loan guarantee: Corporatio Loan Guarant Max loan amount: Industry and n (JLGC) - Non-automatic: Case by guarante ee 550,000 JOD. Handicraft credit case e Corpora Max payment committee tion period: 96 ; (JLGC) months. commerci Guarantee ratio: al banks 70% Jordan Loan Guarantee Jordan Corporation Loan Jordan (JLGC) Capital Guarantee Loan Lease guarantee: Corporatio Loan Guarant Max loan amount: Industry and n (JLGC) - Non-automatic: Case by guarante ee 550,000 JOD. Handicraft credit case e Corpora Max payment committee tion period: 96 ; (JLGC) months. commerci Guarantee ratio: al banks 70% 13 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Jordan Non-automatic: Credit Jordan Loan Loan studies and evaluations of Guarantee Guarantee applications are Corporation Jordan Corporatio conducted, in addition to (JLGC) Loan n (JLGC) ensuring that the purpose Entrepreneurship Loan Life Insurance of the borrower/ Guarant risk of the loan is meeting the financing: Max guarante All sectors client; Insurance on the project ee manageme loan guarantee criteria. loan amount: e assets Corpora nt When clients submit a 75,000 JOD. Max tion committee loan guarantee payment period: (JLGC) and application, it will be 96 months. Internal financially analyzed, then Guarantee ratio: audit an approved written letter 70% committee is provided to the client. Non-automatic: Credit Jordan Loan studies and evaluations of Jordan Guarantee applications are Loan Corporation Jordan conducted, in addition to Guarantee (JLGC) Real Loan ensuring that the purpose Corporatio estate guarantee: Loan Guarant of the loan is meeting the n (JLGC) - Max loan amount: guarante Real estate Life Insurance of the borrowed ee loan guarantee criteria. credit 75,000 JOD. Max e Corpora When clients submit a committee payment period: tion loan guarantee ; 300 months. (JLGC) application, it will be commerci Guarantee ratio: financially analyzed, then al banks 75%. an approved written letter is provided to the client. Non-automatic: Credit Jordan Loan studies and evaluations of Guarantee Jordan applications are Corporation Loan Jordan conducted, in addition to (JLGC) Land Guarantee Loan ensuring that the purpose purchase Corporatio Loan Guarant of the loan is meeting the guarantee: Max n (JLGC) - guarante All sectors Life Insurance of the borrowed ee loan guarantee criteria. loan amount: credit e Corpora When clients submit a 50,000 JOD. Max committee tion loan guarantee payment period: ; (JLGC) application, it will be 120 months. commerci financially analyzed, then Guarantee ratio: al banks an approved written letter 70%. is provided to the client. 14 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Non-automatic: 1. Providing the names and requested credit limits for Jordan Loan Jordan two buyers. Guarantee Loan 2. Receiving the approved Corporation Jordan a) In order to sign a policy it should Guarantee credit limits (JLGC) Export Loan contain at least two buyers. b) The Corporatio 3. Filling the annex with guarantee: Max Loan Guarant Maximum credit limit is n (JLGC) - the expected turnovers by credit amount: 4 guarante All sectors ee 4,000,000$, with exceptional cases. credit the Potential policy holder million JOD. Max e Corpora c) Covering Political and committee 4. Providing a Price Offer, payment period: 6 tion commercial risks. ; and receiving the months. (JLGC) commerci acceptance by the Guarantee ratio: al banks Potential policy holder 90%. 5. Preparing and signing the policy between the two parties Jordan JLGC Domestic Loan Jordan guarantee: Max a) In order to sign a policy it should Guarantee Loan credit amount: 4 contain at least two buyers. b) The Corporatio Loan Guarant million JOD. Max Maximum credit limit is n (JLGC) - Non-automatic: Case by guarante All sectors ee payment period: 4 4,000,000$, with exceptional cases. credit case e Corpora months. c) Covering Political and committee tion Guarantee ratio: commercial risks. ; (JLGC) 90%. commerci al banks Customs duty Aqaba exemption on the Special Aqaba imports of goods Custom Customs Econom Special Automatic - Upon for companies Logistics, warehouses, s duties Duty Granted to companies registered in ASEZA Law No. ic Zone Economic granting the registration established in the transportation and on Exempti ASEZ 32/2000: Art. 30 Authorit Zone certificates and final Aqaba Special tourism. imports on y Authority approvals Economic Zone (ASEZ (ASEZA) (ASEZ) (with the A) exception of cars) 15 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP General Sales Tax (GST) exemption for imports and Aqaba sales of goods and Special Aqaba services for General Econom Special Automatic - Upon Tax Logistics, warehouses, companies Sales Granted to companies registered in ASEZA Law No. ic Zone Economic granting the registration exempti transportation and established in the Tax ASEZ 32/2000: Art. 30 Authorit Zone certificates and final on tourism. Aqaba Special (GST) y Authority approvals Economic Zone (ASEZ (ASEZA) (ASEZ) (instead A) of the standard 16% rate) Corporate Income Tax (CIT) reduced to 5% on Aqaba the profits of All sectors except for: Special Aqaba companies Corpora banks and financial Econom Special Automatic - Upon established in the te Reduced institutions, insurance Granted to companies registered in ASEZA Law No. ic Zone Economic granting the registration Aqaba Special Income Tax companies and ASEZ 32/2000: Art. 30 Authorit Zone certificates and final Economic Zone Tax Rate reinsurance y Authority approvals (ASEZ) (instead (CIT) companies; and road (ASEZ (ASEZA) of the standard transport companies. A) rate of 20% and 14% for industry outside the Zones) Aqaba Building tax Special Aqaba exemption for Econom Special Automatic - Upon companies Tax Logistics, warehouses, Buildin Granted to companies registered in ASEZA Law No. ic Zone Economic granting the registration established in the exempti transportation and g tax ASEZ 32/2000: Art. 30 Authorit Zone certificates and final Aqaba Special on tourism. y Authority approvals Economic Zone (ASEZ (ASEZA) (ASEZ) A) 16 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Aqaba Land tax Special Aqaba exemption for Econom Special Automatic - Upon companies Tax Logistics, warehouses, Land Granted to companies registered in ASEZA Law No. ic Zone Economic granting the registration established in the exempti transportation and Tax ASEZ 32/2000: Art. 30 Authorit Zone certificates and final Aqaba Special on tourism. y Authority approvals Economic Zone (ASEZ (ASEZA) (ASEZ) A) Aqaba Capital Gains Tax Special Aqaba (CGT) exemption Capital Econom Special Automatic - Upon for companies Tax Logistics, warehouses, Gains Granted to companies registered in ASEZA Law No. ic Zone Economic granting the registration established in the exempti transportation and Tax ASEZ 32/2000: Art. 30 Authorit Zone certificates and final Aqaba Special on tourism. (CGT) y Authority approvals Economic Zone (ASEZ (ASEZA) (ASEZ) A) Automatic - The investor Custom duty applies the incentive exemption on the automatically upon goods imported in satisfying the specified the Free Zones, eligibility criteria without including further approvals. materials, However, the investor is equipment, still required to obtain machines, Goods imported to it including Jordan Jordan from the customs supplies, and materials, equipment, machines, Investm Investmen Investment Law representative at the JIC a construction supplies, and construction materials ent t Custom Customs No. 30/2014, Art hard copy exemption letter materials in Depends on the sector in connection with building, Commis Commissi s duties duty 14.C; Investment signed. The document is connection with designated for the construction, preparation and sion on (JIC) on exempti Incentives then showed to the building, specific Free Zone. furnishing of projects established in (JIC) - and imports on Regulation No. customs authority at the construction, the Free Zones including spare parts Free Customs 33/2015 port in order to apply the preparation and for permanent maintenance Zone- Departme exemption. The investor furnishing of excluding service fees. specific nt files the signed hard-copy projects application through the established in the Customs Authority Free Zones representative at JIC. The including spare investor applies the parts for customs exemption by permanent showing the signed maintenance authorization at the port. 17 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP excluding service fees. 18 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Automatic - The investor applies the incentive automatically upon satisfying the specified eligibility criteria without further approvals. However, the investor is still required to obtain Jordan Jordan from the customs Investm Investmen Customs duty Investment Law representative at the JIC a ent t exemption for the Customs No. 30/2014, Art hard copy exemption letter Custom Depends on the sector Goods exported form the Free Commis Commissi goods exported by duty 14.C; Investment signed. The document is s duties designated for the Zones to markets other than the sion on (JIC) companies in the exempti Incentives then showed to the on specific Free Zone. Jordanian (JIC) - and Free Zones to on Regulation No. customs authority at the exports Free Customs other countries 33/2015 port in order to apply the Zone- Departme exemption. The investor specific nt files the signed hard-copy application through the Customs Authority representative at JIC. The investor applies the customs exemption by showing the signed authorization at the port. Corporate Income Tax (CIT) Automatic - The investor exemption in the Jordan fills in an electronic form Free Zones on the Jordan Investmen Investment Law on the web-portal of the profits originating Investm t Profits that come from: exportation No. 30/2014, Art Income and Sales Tax from: the export Corpora ent Commissi of goods inside the Free Zones; 14.A; Investment Department and obtains a of goods; transit te Tax Depends on the sector Commis on (JIC) transit trade; sale or waver of goods Incentives receipt of the incentive trade; sale or Income exempti designated for the sion and inside the Free Zones; provision and Regulation No. awarding without further waver of goods Tax on specific Free Zone. (JIC) - Income supplying of services inside the Free 33/2015; Income approvals. The investor is inside the Free (CIT) Free and Sales Zone. Tax Law No. refunded the tax amount Zones; provision Zone- Tax 34/2014, Art. 78.B from the Income & Sales and supplying of specific Departme Tax Department within 30 services inside the nt days. Free Zone (instead of the 19 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP standard rate of 20%) Automatic - The investor Jordan fills in an electronic form Jordan Investmen on the web-portal of the Investm t Land tax Investment Law Income and Sales Tax ent Commissi exemption for No. 30/2014, Art Department and obtains a Tax Depends on the sector Buildings and constructions Commis on (JIC) buildings and Land 14.D; Investment receipt of the incentive exempti designated for the established in the Free Zone by sion and constructions Tax Incentives awarding without further on specific Free Zone. registered investors. (JIC) - Income established in the Regulation No. approvals. The investor is Free and Sales Free Zones. 33/2015 refunded the tax amount Zone- Tax from the Income & Sales specific Departme Tax Department within 30 nt days Automatic - The investor Jordan fills in an electronic form Jordan Investmen on the web-portal of the Investm t Building tax Investment Law Income and Sales Tax ent Commissi exemption for No. 30/2014, Art Department and obtains a Tax Depends on the sector Buildings and constructions Commis on (JIC) buildings and Buildin 14.D; Investment receipt of the incentive exempti designated for the established in the Free Zone by sion and constructions g tax Incentives awarding without further on specific Free Zone. registered investors. (JIC) - Income established in the Regulation No. approvals. The investor is Free and Sales Free Zones. 33/2015 refunded the tax amount Zone- Tax from the Income & Sales specific Departme Tax Department within 30 nt days 20 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Automatic - The investor Jordan fills in an electronic form Jordan Investmen General Sales Investment Law on the web-portal of the Investm t Tax (GST) No. 30/2014, Art. Income and Sales Tax ent Commissi exemption for General 12.D; Investment Department and obtains a Tax Commis on (JIC) services sold Sales For services offered in Services offered inside the Free Incentives receipt of the incentive exempti sion and inside the Free Tax the Free Zones. Zones by registered investors. Regulation No. awarding without further on (JIC) - Income Zones (instead of (GST) 33/2015; Sales approvals. The investor is Free and Sales the standard 16% Tax Law No. refunded the tax amount Zone- Tax rate) 29/2009, Art. 22 from the Income & Sales specific Departme Tax Department within 30 nt days Automatic - The investor Jordan fills in an electronic form Jordan Investmen Investment Law on the web-portal of the General Sales Tax Investm t Profits that come from: exportation No. 30/2014, Art. Income and Sales Tax (GST) exemption ent Commissi General of goods inside the Free Zones; 12.D; Investment Department and obtains a for goods Tax For goods consumed Commis on (JIC) Sales transit trade; sale or waver of goods Incentives receipt of the incentive consumed/sold exempti inside the Free Zones sion and Tax inside the Free Zones; provision and Regulation No. awarding without further inside the Free on for business purposes (JIC) - Income (GST) supplying of services inside the Free 33/2015; Sales approvals. The investor is Zones for Free and Sales Zone. Tax Law No. refunded the tax amount business purposes Zone- Tax 29/2009, Art. 22 from the Income & Sales specific Departme Tax Department within 30 nt days 21 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Automatic - The investor applies the incentive automatically upon satisfying the specified eligibility criteria without Customs duty further approvals. exemption for the However, the investor is Investment Law import of certain still required to obtain No. 30/2014, Art. Jordan production inputs Jordan from the customs Custom Customs Production inputs eligible for the 4 Para. B; Investm for certain Investmen representative at the JIC a s duties duty Industry and incentive are included in Tables 1/A Investment ent industrial t hard copy exemption letter on exempti Handicraft and 1/B of the Incentives Incentives Commis activities outside Commissi signed. The document is imports on Regulation. Regulation No. sion the Free Zones on (JIC) then showed to the 33/2015, Tables (JIC) and the customs authority at the 1/A and 1/B Development port in order to apply the Zones exemption. Direct implementation takes place once the needed documents are presented (exemption letter, manufacturing formula). 22 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Automatic - The investor applies the incentive automatically upon satisfying the specified eligibility criteria without Customs duty further approvals. exemption on However, the investor is Investment Law production still required to obtain No. 30/2014, Art. Jordan requirements and Jordan from the customs Custom Customs Production requirements and fixed 4 Para. B; Investm fixed assets for Investmen representative at the JIC a s duties duty Industry and assets for industrial and crafts Investment ent certain industrial t hard copy exemption letter on exempti Handicraft activities included in Table 1/C of Incentives Commis activities outside Commissi signed. The document is imports on the Incentives Regulation Regulation No. sion the Free Zones on (JIC) then showed to the 33/2015, Table (JIC) and the customs authority at the 1/C Development port in order to apply the Zones exemption. Direct implementation takes place once the needed documents are presented (exemption letter, manufacturing formula). 23 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Non-automatic: The JIC Technical Committee on Incentives checks the compliance of the investor with the eligibility criteria and decides the volumes of the production requirements and fixed Customs duty assets and activities to exemption on apply the exemption on. production The investor can file the Investment Law requirements and signed hard-copy No. 30/2014, Art. Jordan the dual-use fixed Jordan application through the Custom Customs Production requirements and fixed 4 Para. B; Investm assets necessary Investmen Customs Authority s duties duty Industry and assets for industrial and crafts Investment ent for certain t representative at the JIC or on exempti Handicraft activities included in Table 1/D of Incentives Commis industrial Commissi by email. The Technical imports on the Incentives Regulation Regulation No. sion activities outside on (JIC) Committee on Incentives 33/2015, Table (JIC) the Free Zones checks the compliance 1/D and the with the eligibility criteria Development and decide the volumes of Zones the fixed assets and activities to apply the exemption on. The investor receives the exemption letter and applies the incentive showing the custom exemption authorization at the port. 24 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Non-automatic: The JIC Technical Committee on Incentives checks the Agriculture and compliance of the investor livestock; hospitals with the eligibility criteria and comprehensive and decides the volumes medical centers; hotels of the production and tourist facilities; requirements and fixed entertainment and assets and activities to tourist recreation apply the exemption on. Customs duty centers;; The investor can file the exemption on the communication Investment Law signed hard-copy Jordan goods required for centers; scientific No. 30/2014, Art. Jordan application through the Custom Customs Investm certain economic research centers and Goods needed to practice the 4 Para. B; Investmen Customs Authority s duties duty ent activities outside scientific labs; artistic activities included in Table 3 of the Investment t representative at the JIC or on exempti Commis the Free Zones media production; Incentives Regulation Incentives Commissi by email. The Technical imports on sion and the conference and Regulation No. on (JIC) Committee on Incentives (JIC) Development exhibition centers; 33/2015, Table 3 checks the compliance Zones transport and/or with the eligibility criteria distribution and/or and decide the volumes of extraction water, gas the fixed assets and and oil derivatives activities to apply the using pipelines; air exemption on. The transport, sea investor receives the transport, and exemption letter and railways. applies the incentive showing the custom exemption authorization at the port. 25 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP All sectors except for: banks, telecommunications companies that have individual licenses, financial brokerage companies, and financial companies including the companies that Non-automatic: Regarding practice exchange, the articles stated in table General Sales Tax Jordan financing and financial D: 1) The investor fills in (GST) exemption Investmen leasing business, and Investment Law an electronic form on the on production t consultation & Production inputs and fixed assets No. 30/2014, Art. Jordan web-portal of the Income inputs for certain Commissi General financial and tax audit of the manufacturing activities and 4 Para. B; Investm and Sales Tax Department economic Tax on (JIC) Sales companies, transport crafts activities stated in Tables 1/B, Investment ent and obtains a receipt of activities outside exempti and Tax companies (air 1/C, and 1/D of the Incentives Incentives Commis the incentive awarding the Free Zones on Income (GST) transport, sea Regulation provided it is registered Regulation No. sion without further approvals. and Development and Sales transport, railways, in GST 33/2015, Tables (JIC) 2) The investor is Zones (instead of Tax and road freight 1/B, 1/C and 1/D refunded the tax amount the standard 16% Departme transport), insurance from the Income & Sales rate) nt (ISTD) and reinsurance Tax Department within 30 companies, basic days. mining and extraction industries, generation and distribution of elasticity, and transport and/or distribution and/or extraction of water, gas, and oil derivatives using the pipelines. 26 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP All sectors except for: banks, telecommunications companies that have individual licenses, financial brokerage companies, and financial companies including the companies that practice exchange, Automatic - The investor General Sales Tax Jordan financing and financial fills in an electronic form (GST) exemption Investmen leasing business, and on the web-portal of the on services Investment Law t consultation & Jordan Income and Sales Tax necessary for No. 30/2014, Art. Commissi General financial and tax audit Investm Department and obtains a certain economic Tax 4 Para. B; on (JIC) Sales companies, transport Sectors included in Table 2 of the ent receipt of the incentive activities outside exempti Investment and Tax companies (air Incentives Regulation Commis awarding without further the Free Zones on Incentives Income (GST) transport, sea sion approvals. The investor is and Development Regulation No. and Sales transport, railways, (JIC) refunded the tax amount Zones (instead of 33/2015, Table 2 Tax and road freight from the Income & Sales the standard 16% Departme transport), insurance Tax Department within 30 rate) nt (ISTD) and reinsurance days. companies, basic mining and extraction industries, generation and distribution of elasticity, and transport and/or distribution and/or extraction of water, gas, and oil derivatives using the pipelines. 27 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Agriculture, cattle, hospitals and comprehensive medical centers, hotels, and tourist utilities, communications Automatic - The investor General Sales Tax Jordan centers, scientific fills in an electronic form (GST) exemption Investmen research centers, labs, on the web-portal of the on the goods Investment Law t media production, Jordan Income and Sales Tax required for No. 30/2014, Art. Commissi General conferences and Investm Department and obtains a certain economic Tax 4 Para. B; on (JIC) Sales exhibitions centers, Services and activities included in ent receipt of the incentive activities outside exempti Investment and Tax transport companies Table 3 of the Incentives Regulation Commis awarding without further the Free Zones on Incentives Income (GST) (air transport, sea sion approvals. The investor is and Development Regulation No. and Sales transport, railways, (JIC) refunded the tax amount Zones (instead of 33/2015, Table 3 Tax and road freight from the Income & Sales the standard 16% Departme transport), basic Tax Department within 30 rate) nt (ISTD) mining and extraction days industries, distribution , and transport and/or distribution and/or extraction of water, gas, and oil derivatives using the pipelines. 28 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Corporate Income Tax (CIT) Jordan Non-automatic: The JIC reduction by 50% Investment Law Investmen Technical Committee on for 10 years for No. 30/2014, Art. t Incentives shall look into economic Investments in regions from 5.A and B; Jordan Corpora Commissi any application for the activities Investment Law, Art. 5., Category Income Tax Investm te Reduced on (JIC) reduction of the income established in A of the income tax reduction Reduction ent Income Tax All sectors and tax payable for the activity designated least regulation in the least developed Regulation in the Commis Tax Rate Income and shall issue its decision developed regions regions, based on the categorization least developed sion (CIT) and Sales within a period not (instead of the of the region (a,b,c,d) regions No. (JIC) Tax exceeding 30 working standard rate of 44/2016, Article Departme days as of the submission 20% and 14% for 5A nt (ISTD) of the application industry outside the Zones) 29 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Non-automatic: The JIC Technical Committee on Agriculture and Incentives checks the livestock; hospitals compliance of the investor and comprehensive with the eligibility criteria medical centers; hotels and decides the volumes and tourist facilities; of the services and entertainment and activities to apply the tourist recreation exemption on. The Customs duty centers;; Jordan investor can file the signed exemption on the communication Investment Law Investmen Jordan hard-copy application goods required for centers; scientific No. 30/2014, Art. t Custom Customs Investm through the Customs certain economic research centers and Goods needed to practice the 4 Para. B; Commissi s duties duty ent Authority representative at activities outside scientific labs; artistic activities included in Table 3 of the Investment on (JIC) on exempti Commis the JIC or by email. The the Free Zones media production; Incentives Regulation Incentives and imports on sion Technical Committee on and the conference and Regulation No. Customs (JIC) Incentives checks the Development exhibition centers; 33/2015, Table 3 Departme compliance with the Zones transport and/or nt eligibility criteria and distribution and/or decide the volumes of the extraction water, gas fixed assets and activities and oil derivatives to apply the exemption on. using pipelines; air The investor receives transport, sea notification and applies transport, and the incentive showing the railways. custom exemption authorization at the port. Loss carry forward: Losses Income approved by the Corpora and Income Income & Sales te Loss Sales and Sales Tax Authority can Income Tax Law Income carry All sectors Tax Tax Automatic be carry forward No. 34/2014 Tax forward Departm Departme for up to 5 years. (CIT) ent nt (ISTD) Carry back of (ISTD) losses is not permitted 30 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Corporate Income Tax (CIT) reduced to 14% Income for companies in Corpora and Income the industrial te Reduced Sales and Sales sector operating Industry and Income Tax Law Income Tax Tax Tax Automatic outside the Free Handicraft No. 34/2014 Tax Rate Departm Departme Zones and (CIT) ent nt (ISTD) Development (ISTD) Zones (instead of the standard rate of 20%) Income derived from capital gains is generally exempted from taxation, except All sectors except for: for capital gains capital gains on assets on assets subject subject to to depreciation, depreciation, intangible assets intangible assets (e.g. (e.g. goodwill) goodwill) and capital and capital gains gains recognized by Income recognized by Corpora banks, primary and Income banks, primary te Tax telecommunication Sales and Sales Income Tax Law telecommunicatio Income exempti companies, mining Tax Tax Automatic No. 34/2014 n companies, Tax on companies, financial Departm Departme mining (CIT) institutions, financial ent nt (ISTD) companies, brokerage companies, (ISTD) financial insurance and institutions, reinsurance financial companies, and juristic brokerage persons conducting companies, financial lease insurance and activities. reinsurance companies, and juristic persons conducting 31 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP financial lease activities. Investment Law No. 30/2014, Jordan Customs duty Article 8A; Jordan Custom Customs Activities and services of the ICT Investm Non-automatic: Based on exemption for the Decision of JIC Investmen s duties duty sector stated in Table 1 of the ent the decision of the import of certain ICT Investment t on exempti decision of JIC no 1/1/2016 dated Commis Technical Committee on goods by firms in Council no. Commissi imports on 25/1/2016 sion Incentives. the ICT sector 1/1/2016 dated on (JIC) (JIC) 25/1/2016, Tables 1-2 Jordan General Sales Tax Investment Law Investmen (GST) exemption No. 30/2014, t for certain Jordan article 8A; Commissi imported or General Activities and services of the ICT Investm Non-automatic: Based on Tax Decision of JIC on (JIC) locally purchased Sales sector stated in Table 1 of the ent the decision of the exempti ICT Investment and goods by firms in Tax decision of JIC no 1/1/2016 dated Commis Technical Committee on on Council no. Income the ICT sector (GST) 25/1/2016 sion Incentives. 1/1/2016 dated and Sales (instead of the (JIC) 25/1/2016, Tables Tax standard 16% 1-2 Departme rate) nt (ISTD) Jordan General Sales Tax Investment Law Investmen (GST) exemption No. 30/2014, t Jordan for certain article 8A; Commissi General Activities and services of the ICT Investm Non-automatic: Based on services offered Tax Decision of JIC on (JIC) Sales sector stated in Table 1 of the ent the decision of the by firms in the exempti ICT Investment and Tax decision of JIC no 1/1/2016 dated Commis Technical Committee on ICT sector on Council no. Income (GST) 25/1/2016 sion Incentives. (instead of the 1/1/2016 dated and Sales (JIC) standard 16% 25/1/2016, Tables Tax rate) 1 and 3 Departme nt (ISTD) 32 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Jordan Investment Law Investmen Corporate Income No. 30/2014, t Tax (CIT) Jordan Corpora article 8A; Commissi reduction to 5% Activities and services of the ICT Investm Non-automatic: Based on te Reduced Decision of JIC on (JIC) for firms in the sector stated in Table 1 of the ent the decision of the Income Tax ICT Investment and ICT sector decision of JIC no 1/1/2016 dated Commis Technical Committee on Tax Rate Council no. Income (instead of the 25/1/2016 sion Incentives. (CIT) 1/1/2016 dated and Sales standard rate of (JIC) 25/1/2016, Tables Tax 20%) 1-2 Departme nt (ISTD) Jordan Zero-rate General Investment Law Investmen Sales Tax (GST) No. 30/2014, t Jordan for certain article 8A; Commissi General Activities and services of the ICT Investm Non-automatic: Based on services provided Decision of JIC on (JIC) Sales Zero- sector stated in Table 1 of the ent the decision of the by firms in the ICT Investment and Tax rate tax decision of JIC no 1/1/2016 dated Commis Technical Committee on ICT sector Council no. Income (GST) 25/1/2016 sion Incentives. (instead of the 1/1/2016 dated and Sales (JIC) standard 16% 25/1/2016, Tables Tax rate) 1 and 3 Departme nt (ISTD) 33 Annex 8: Types of Investment, Motivations and Incentives Definitions of FDI The most widely recognized definitions of Foreign Direct Investment (FDI) are two: • The International Monetary Fund (IMF)’s Balance of Payments Manual (BPM)’s definition: “FDI refers to an investment made to acquire lasting interest in enterprises operating outside of the economy of the investor. […] The foreign entity or group of associated entities that makes the investment is termed the ‘direct investor’. […] The forms of investment by the direct investor which are classified as FDI are equity capital, the reinvestment of earnings and the provision of long-term and short-term intra-company loans.�76 • The Organization for Economic Development (OECD) Benchmark Definition (BD): “[FDI is] a direct investment [by] an incorporated or unincorporated enterprise in which a single foreign investor either owns 10 % or more of the ordinary shares or voting power of an enterprise […] or owns less than 10 per cent of the ordinary shares or voting power of an enterprise, yet still maintains an effective voice in management. […] The most important characteristic of FDI, distinguishing it from foreign portfolio investment, is that it is undertaken with the intention of exercising control over an enterprise.�77 Types of Investment by Motivation Different types of investment are motivated by different factors and are characterized by distinct benefits, opportunities and challenges for the host economy. A useful typology, in this regard, identifies four types of FDI based on investor motivations:78 • Natural resource seeking investment: This type of investment occurs when the investor seeks to access resources that are location-specific (e.g. diamonds, petroleum, natural gas, coal and other mining and mineral resources, as well as renewable energy sources). While this type of investment can generate significant exports and fiscal revenues, more benefits are secured for the host country if value added processing occurs domestically and if a competitive ecosystem of local suppliers of various goods and services used in extractives can be sustainably created. The challenges surrounding this FDI type have at their core the combination of adverse social, environmental and economic impacts, commonly referred to as the “resource curse�. • Domestic or regional market-seeking investment: This type of investment is motivated by the potential to deliver goods and services to customers within the host country or the regional market. It is almost entirely dependent on the size and characteristics of the market. It can be an important source of jobs, through the creation of higher-skilled, better-paying, jobs associated with the service sector. This type of FDI is an important means to industrialize a country, since it has the potential to develop linkages with the local economy, upgrade the quality of local suppliers, create competition, increase productivity, and lower prices to consumers. • Efficiency-seeking investment: This investment occurs when investors seek to increase the cost efficiency of production by taking advantage of factors that improve firm-level competitiveness. These include, among other variables: lower labour costs or higher labour productivity, easier or cheaper 76 International Monetary Fund. 1993. Balance of Payments Manual: Fifth Edition (BPM5). 77 Organization for Economic Development (OECD). 1996. Detailed Benchmark Definition of Foreign Direct Investment: Third Edition (BD3). 78 Dunning, J. 2015. The eclectic paradigm as an envelope for economic and business theories of MNE activity. International Business Review; Fruman, C. 2015. Why does efficiency-seeking FDI matter? World Bank. 34 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP access to land, easier or even preferential access to export markets, access to key inputs and components, and more efficient international production and supply patterns. This type of investment has the most transformative potential of all types of foreign investment, with its ability to transfer technology and skills and to diversify an economy rapidly by inserting it into global or regional value chains of goods and/or services. Efficiency-seeking investment is always export-oriented, although business viability can often be built on a strong (typically larger) domestic consumer base. • Strategic-asset seeking investment: This type of investment is used to acquire immobile strategic assets, business information, proprietary technologies and brands. It is regarded as a “shortcut� to establishing a company with a network of sourcing and distribution channels, advanced technologies and brands. Such investment entails acquisitions of companies, which possess desired strategic assets and own corporate networks of affiliates. For the purpose of this paper the first three types of investment are the most relevant. Incentives and Types of Investment For the purpose of investment attraction, global experience suggests that the effectiveness of incentives strongly depends on the motivation of the investor for undertaking the investment in the first place. Even where FDI promotion in a given sector or activity has been clearly identified as a priority under the country’s strategic objectives, an investment incentive is not necessarily an effective tool to promote investment. Because market and natural resource-seeking investment are motivated primarily by access to the domestic market or availability of resources, it is often found, at the global level, that investment incentives to such investors have limited or no positive effect on their location decisions and thus simply represent a windfall profit – at the expense of the public budget – to firms that would have come to the country in any case. In comparison, efficiency-seeking investors – whose investment decisions are primarily driven by the motive to save costs – are more likely to be responsive to incentives. Figure X summarizes the different types of FDI by investment motivation and the impact of incentives. Figure X: Different Types of FDI, Investor Motivations and their Impact on Incentives Source: World Bank Group, Trade & Competitiveness Global Practice 35 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Annex: Jordan Investor Motivation Survey 2016 – Tables of Relevant Responses79 Q17: What was the number of permanent employees in your company by sex and nationality at the end of 2015 (approximate answer acceptable)? Nationals Foreigners Total Gender Number % Freq % Freq % Men 15037 53.28% 13188 46.72% 28225 100.00% Women 9926 29.98% 23184 70.02% 33110 100.00% Total 24963 40.7% 36372 59.3% 61335 100.0% Nationals Foreigners Total Nationality Gender Number % Freq % Freq % Men 6473 74.5% 2213 25.5% 8686 100.0% Domestic Women 1778 68.6% 812 31.4% 2590 100.0% Total 8251 73.2% 3025 26.8% 11276 100.0% Men 8564 43.8% 10975 56.2% 19539 100.0% Foreign Women 8148 26.7% 22372 73.3% 30520 100.0% Total 16712 33.4% 33347 66.6% 50059 100.0% Men 15037 53.3% 13188 46.7% 28225 100.0% Total Women 9926 30.0% 23184 70.0% 33110 100.0% Total 24963 40.7% 36372 59.3% 61335 100.0% Nationals Foreigners Total By Sector Number % Freq % Freq % 1.Construction 1173 78.6% 319 21.4% 1492 100.0% 12.Mining & Quarrying 180 88.2% 24 11.8% 204 100.0% 2.Information and communication 134 97.8% 3 2.2% 137 100.0% 13.Transportation 190 83.3% 38 16.7% 228 100.0% 8.Manufacture of textile, apparel and leather. 10453 24.3% 32499 75.7% 42952 100.0% 79 The response rate was 100% for all questions, except question number 4 (99%), question number 28b (44%), question number 28c (96%), question number 28d (93%), and question number 43 (75%). 36 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 4.Manufacture of food, beverages and tobacco 5067 74.2% 1758 25.8% 6825 100.0% products. 6.Manufacture of paper, furniture and wood 585 77.0% 175 23.0% 760 100.0% products. 9.Manufacture of chemicals and chemical products, basic pharmaceutical products and 1945 89.7% 224 10.3% 2169 100.0% pharmaceutical preparations 7.Manufacture of rubber and plastics products 1304 66.3% 663 33.7% 1967 100.0% 3.Manufacture of computer, electronic products, electrical equipment, machinery, equipment, 2089 92.4% 171 7.6% 2260 100.0% metal products 5.Manufacture of other non-metallic mineral 966 72.2% 372 27.8% 1338 100.0% products 11.Printing and reproduction of recorded media 360 88.5% 47 11.5% 407 100.0% 10.Other manufacturing 140 66.4% 71 33.6% 211 100.0% 14.Other services 377 97.9% 8 2.1% 385 100.0% Total 24963 40.7% 36372 59.3% 61335 100.0% Men Women Total Sector Number % Freq % Freq % 1.Construction 1463 98.1% 29 1.9% 1492 100.0% 12.Mining & Quarrying 200 98.0% 4 2.0% 204 100.0% 2.Information and communication 65 47.4% 72 52.6% 137 100.0% 13.Transportation 185 81.1% 43 18.9% 228 100.0% 8.Manufacture of textile, apparel and leather. 12413 28.9% 30539 71.1% 42952 100.0% 4.Manufacture of food, beverages and tobacco 5805 85.1% 1020 14.9% 6825 100.0% products. 6.Manufacture of paper, furniture and wood 659 86.7% 101 13.3% 760 100.0% products. 9.Manufacture of chemicals and chemical products, basic pharmaceutical products and 1645 75.9% 523 24.1% 2168 100.0% pharmaceutical preparations 7.Manufacture of rubber and plastics products 1819 92.5% 148 7.5% 1967 100.0% 3.Manufacture of computer, electronic products, electrical equipment, machinery, equipment, 2035 90.0% 225 10.0% 2260 100.0% metal products 5.Manufacture of other non-metallic mineral 1202 89.8% 136 10.2% 1338 100.0% products 11.Printing and reproduction of recorded media 338 83.0% 69 17.0% 407 100.0% 37 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 10.Other manufacturing 180 84.9% 32 15.1% 212 100.0% 14.Other services 216 56.1% 169 43.9% 385 100.0% Total 28225 46.0% 33110 54.0% 61335 100.0% Nationals Foreigners Total Investment motive Number % Freq % Freq % Natural resource seeking 179 87.7% 25 12.3% 204 100.0% Domestic market-seeking 8604 83.4% 1709 16.6% 10313 100.0% Efficiency-seeking 16180 31.8% 34638 68.2% 50818 100.0% Total 24963 40.7% 36372 59.3% 61335 100.0% Men Women Total TInvestment motive Number % Freq % Freq % Natural resource seeking 200 98.0% 4 2.0% 204 100.0% Domestic market-seeking 8941 86.7% 1372 13.3% 10313 100.0% Efficiency-seeking 19084 37.6% 31734 62.4% 50818 100.0% Total 28225 46.0% 33110 54.0% 61335 100.0% Nationals Foreigners Total By Location Number % Freq % Freq % Outside zones 8691 83.4% 1728 16.6% 10419 100.0% ASEZA 586 72.9% 218 27.1% 804 100.0% Development zones 426 82.2% 92 17.8% 518 100.0% Industrial zones 15016 30.5% 34146 69.5% 49162 100.0% More than one zone 244 56.5% 188 43.5% 432 100.0% Total 24963 40.7% 36372 59.3% 61335 100.0% Men Women Total Location Number % Freq % Freq % Outside zones 8771 84.2% 1648 15.8% 10419 100.0% ASEZA 772 96.0% 32 4.0% 804 100.0% Development 476 91.9% 42 8.1% 518 100.0% Industrial zones 17791 36.2% 31371 63.8% 49162 100.0% More than one zone 415 96.1% 17 3.9% 432 100.0% Total 28225 46.0% 33110 54.0% 61335 100.0% 38 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Export orientation – Strict Nationals Foreigners Total criterion Number % Freq % Freq % Non-export oriented 11526 78.8% 3094 21.2% 14620 100.0% Strict export-oriented 13437 28.8% 33278 71.2% 46715 100.0% Total 24963 40.7% 36372 59.3% 61335 100.0% Export orientation – strict Men Women Total criterion Number % Freq % Freq % Non-export oriented 12554 85.9% 2066 14.1% 14620 100.0% Strict export-oriented 15671 33.5% 31044 66.5% 46715 100.0% Total 28225 46.0% 33110 54.0% 61335 100.0% 39 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q18: What was the number of permanent foreign employees in your company by nationality and sex (if possible) at the end of 2015 (approximates answer acceptable)? Foreign Labor Gender Nationality Male % Female % Total % Egypt 2289 99.8% 4 0.2% 2293 100% Syria 687 96.8% 23 3.2% 710 100% Bangladesh 1852 10.5% 15770 89.5% 17622 100% Nepal 603 26.6% 1661 73.4% 2264 100% Sri Lanka 1538 23.5% 5020 76.5% 6558 100% Pakistan 853 96.6% 30 3.4% 883 100% India 4804 91.6% 439 8.4% 5243 100% Others 80 562 70.3% 237 29.7% 799 100% Total 13188 36.3% 23184 63.7% 36372 100% By Egypt Syria Bangladesh Nepal Sri Lanka Pakistan India Others Total Sector F % F % F % F % F % F % F % F % F % 1.Construction 297 93.1% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 22 6.9% 0 0.0% 319 100% 12.Mining & 20 83.3% 0 0.0% 3 12.5% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 1 4.2% 24 100% Quarrying 2.Information and 1 33.3% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 2 66.7% 3 100% communication 13.Transportation 24 63.2% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 14 36.8% 38 100% 8.Manufacture of textile, apparel and 86 0.3% 118 0.4% 17483 53.7% 2250 6.9% 6558 20.1% 807 2.5% 4925 15.1% 327 1.0% 32554 100% leather. 4.Manufacture of food, beverages and 1123 63.9% 305 17.3% 84 4.8% 0 0.0% 0 0.0% 75 4.3% 18 1.0% 153 8.7% 1758 100% tobacco products. 6.Manufacture of paper, furniture and 60 34.3% 62 35.4% 10 5.7% 0 0.0% 0 0.0% 0 0.0% 25 14.3% 18 10.3% 175 100% wood products. 80 Iraq, China, Lebanon, Palestine, Yemen, Philippines, Romania, Russia, Germany, Sudan, USA, Burma and few others. 40 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 9.Manufacture of chemicals and chemical products, basic pharmaceutical 112 50.2% 24 10.8% 0 0.0% 0 0.0% 0 0.0% 1 0.4% 24 10.8% 62 27.8% 223 100% products and pharmaceutical preparations 7.Manufacture of rubber and plastics 229 35.2% 135 20.7% 8 1.2% 14 2.2% 0 0.0% 0 0.0% 164 25.2% 101 15.5% 651 100% products 3.Manufacture of computer, electronic products, electrical equipment, 78 47.3% 32 19.4% 21 12.7% 0 0.0% 0 0.0% 0 0.0% 4 2.4% 30 18.2% 165 100% machinery, equipment, metal products 5.Manufacture of other non-metallic 238 71.7% 12 3.6% 2 0.6% 0 0.0% 0 0.0% 0 0.0% 45 13.6% 35 10.5% 332 100% mineral products 11.Printing and reproduction of 13 31.0% 17 40.5% 1 2.4% 0 0.0% 0 0.0% 0 0.0% 5 11.9% 6 14.3% 42 100% recorded media 10.Other 0 0.0% 0 0.0% 10 14.1% 0 0.0% 0 0.0% 0 0.0% 11 15.5% 50 70.4% 71 100% manufacturing 14.Other services 8 100% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 8 100% Total 2289 6.3% 705 1.9% 17622 48.5% 2264 6.2% 6558 18.0% 883 2.4% 5243 14.4% 799 2.2% 36363 100% Egypt Syria Bangladesh Nepal Sri Lanka Pakistan India Others Total Investment motive F % F % F % F % F % F % F % F % F % Natural resource 20 83.3% 0 0.0% 3 12.5% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 1 4.2% 24 20 seeking Domestic market- 1024 63.6% 216 13.4% 27 1.7% 0 0.0% 1 0.1% 0 0.0% 154 9.6% 187 11.6% 1609 1024 seeking Efficiency-seeking 1245 3.6% 489 1.4% 17592 50.7% 2264 6.5% 6557 18.9% 883 2.5% 5089 14.7% 611 1.8% 34730 1245 Total 2289 6.3% 705 1.9% 17622 48.5% 2264 6.2% 6558 18.0% 883 2.4% 5243 14.4% 799 2.2% 36363 2289 Egypt Syria Bangladesh Nepal Sri Lanka Pakistan India Others Total Zone F % F % F % F % F % F % F % F % F % 41 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Outside zones 1603 54.1% 102 3.4% 17 0.6% 1000 33.7% 0 0.0% 1 0.0% 70 2.4% 171 5.8% 2964 100% ASEZA 151 69.3% 0 0.0% 19 8.7% 0 0.0% 0 0.0% 0 0.0% 22 10.1% 26 11.9% 218 100% Development zones 2 2.4% 3 3.6% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 10 11.9% 69 82.1% 84 100% Industrial zones 503 1.5% 595 1.8% 17586 53.2% 1264 3.8% 6558 19.8% 882 2.7% 5131 15.5% 527 1.6% 33046 100% More than one zone 30 58.8% 5 9.8% 0 0.0% 0 0.0% 0 0.0% 0 0.0% 10 19.6% 6 11.8% 51 100% Total 2289 6.3% 705 1.9% 17622 48.5% 2264 6.2% 6558 18.0% 883 2.4% 5243 14.4% 799 2.2% 36363 100% Egypt Syria Bangladesh Nepal Sri Lanka Pakistan India Others Total Export Orientation F % F % F % F % F % F % F % F % F % Non-export oriented 1923 62.2% 288 9.3% 127 4.1% 0 0.0% 1 0.0% 75 2.4% 308 10.0% 372 12.0% 3094 100% Strict export- oriented 366 1.1% 417 1.3% 17435 52.5% 2264 6.8% 6557 19.7% 808 2.4% 4935 14.9% 427 1.3% 33209 100% Total 2289 6.3% 705 1.9% 17562 48.4% 2264 6.2% 6558 18.1% 883 2.4% 5243 14.4% 799 2.2% 36303 100% 42 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q19: What was the number of permanent employees in your company by salary level at the end of 2015 (approximate answer acceptable)? below 190 JD 190 - 250 JD 251-500 JD over 501 JD Total (Low Skilled) (Mid-Low Skilled) (Mid-High Skilled) (High Skilled) No. % No. % No. % No. % No. % 19460 32.4% 21457 35.7% 12766 21.3% 6379 10.6% 60062 100.0% below 190 JD 190 - 250 JD 251-500 JD over 501 JD Total Nationality (Low Skilled) (Mid-Low Skilled) (Mid-High Skilled) (High Skilled) No. % No. % No. % No. % No. % Domestic 109 1.0% 3521 32.5% 4037 37.3% 3152 29.1% 10819 100.0% Foreign 19351 39.3% 17936 36.4% 8729 17.7% 3227 6.6% 49243 100.0% Total 19460 32.4% 21457 35.7% 12766 21.3% 6379 10.6% 60062 100.0% below 190 JD 190 - 250 JD 251-500 JD over 501 JD Total Sector (Low Skilled) (Mid-Low Skilled) (Mid-High Skilled) (High Skilled) No. % No. % No. % No. % No. % 1.Construction 2 0.1% 100 6.9% 681 46.7% 674 46.3% 1457 100.0% 12.Mining & Quarrying 0 0.0% 77 46.1% 87 52.1% 3 1.8% 167 100.0% 2.Information and 0 0.0% 40 29.9% 46 34.3% 48 35.8% 134 100.0% communication 13.Transportation 0 0.0% 60 26.3% 140 61.4% 28 12.3% 228 100.0% 8.Manufacture of textile, 18763 44.2% 16502 38.9% 5427 12.8% 1715 4.0% 42407 100.0% apparel and leather. 4.Manufacture of food, beverages and tobacco 473 7.1% 2430 36.7% 2233 33.7% 1485 22.4% 6621 100.0% products. 6.Manufacture of paper, 45 6.3% 204 28.5% 324 45.3% 143 20.0% 716 100.0% furniture and wood products. 9.Manufacture of chemicals and chemical products, basic 59 2.7% 485 22.4% 836 38.7% 781 36.1% 2161 100.0% pharmaceutical products and pharmaceutical preparations 7.Manufacture of rubber and 89 4.8% 520 28.0% 838 45.1% 411 22.1% 1858 100.0% plastics products 43 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 3.Manufacture of computer, electronic products, electrical 29 1.4% 515 24.1% 1103 51.7% 488 22.9% 2135 100.0% equipment, machinery, equipment, metal products 5.Manufacture of other non- 0 0.0% 352 28.8% 531 43.4% 340 27.8% 1223 100.0% metallic mineral products 11.Printing and reproduction 0 0.0% 103 25.8% 206 51.5% 91 22.8% 400 100.0% of recorded media 10.Other manufacturing 0 0.0% 21 10.9% 79 41.1% 92 47.9% 192 100.0% 14.Other services 0 0.0% 48 13.2% 235 64.7% 80 22.0% 363 100.0% Total 19460 32.4% 21457 35.7% 12766 21.3% 6379 10.6% 60062 100.0% below 190 JD 190 - 250 JD 251-500 JD over 501 JD Total Investment motive (Low Skilled) (Mid-Low Skilled) (Mid-High Skilled) (High Skilled) No. % No. % No. % No. % No. % Natural resource seeking 0 0.0% 77 46.1% 87 52.1% 3 1.8% 167 100.0% Domestic market-seeking 196 2.0% 2473 25.0% 4581 46.4% 2627 26.6% 9877 100.0% Efficiency-seeking 19264 38.5% 18907 37.8% 8098 16.2% 3749 7.5% 50018 100.0% Total 19460 32.4% 21457 35.7% 12766 21.3% 6379 10.6% 60062 100.0% below 190 JD 190 - 250 JD 251-500 JD over 501 JD Total Location (Low Skilled) (Mid-Low Skilled) (Mid-High Skilled) (High Skilled) No. % No. % No. % No. % No. % Outside zones 185 1.8% 2620 25.3% 4813 46.5% 2731 26.4% 10349 100.0% ASEZA 0 0.0% 315 40.3% 308 39.4% 158 20.2% 781 100.0% Development/industrial zones 19275 39.1% 18665 37.9% 7713 15.7% 3582 7.3% 49235 100.0% Total 19460 32.2% 21600 35.8% 12834 21.3% 6471 10.7% 60365 100.0% below 190 JD 190 - 250 JD 251-500 JD over 501 JD Total Export orientation (Low Skilled) (Mid-Low Skilled) (Mid-High Skilled) (High Skilled) No. % No. % No. No. % No. % No. Non export-oriented 260 1.8% 4299 30.4% 5949 42.1% 3634 25.7% 14142 100.0% Strict export-oriented 19200 41.8% 17158 37.4% 6817 14.8% 2745 6.0% 45920 100.0% Total 19460 32.4% 21457 35.7% 12766 21.3% 6379 10.6% 60062 100.0% 44 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q21.a: Did your company consider investing (or re-investing/expanding, or starting-up) in another country instead of Jordan? Answer Freq % Yes 79 26.2% No 223 73.8% Total 302 100% Yes No Total Nationality Freq % Freq % Freq % Domestic 46 27.5% 121 72.5% 167 100.0% Foreign 33 24.4% 102 75.6% 135 100.0% Total 79 26.2% 223 73.8% 302 100.0% Yes No Total Sector Freq % Freq % Freq % 1.Construction 3 37.5% 5 62.5% 8 100.0% 12.Mining and quarrying 0 0.0% 7 100.0% 7 100.0% 2.Information and communication 2 40.0% 3 60.0% 5 100.0% 13.Transportation 3 75.0% 1 25.0% 4 100.0% 8. Manufacture of textile, apparel and leather. 11 25.6% 32 74.4% 43 100.0% 4. Manufacture of food, beverages and tobacco products. 11 20.8% 42 79.2% 53 100.0% 6. Manufacture of paper, furniture and wood products. 6 23.1% 20 76.9% 26 100.0% 9.Manufacture of chemicals and chemical products, basic pharmaceutical products and pharmaceutical preparations 8 23.5% 26 76.5% 34 100.0% 7.Manufacture of rubber and plastics products 12 35.3% 22 64.7% 34 100.0% 3.Manufacture of computer, electronic products, electrical equipment, machinery, equipment, metal products 6 15.4% 33 84.6% 39 100.0% 5.Manufacture of other non-metallic mineral products 6 26.1% 17 73.9% 23 100.0% 11.Printing and reproduction of recorded media 8 53.3% 7 46.7% 15 100.0% 10.Other manufacturing 1 20.0% 4 80.0% 5 100.0% 14.Other services 2 33.3% 4 66.7% 6 100.0% Total 79 26.2% 223 37.8% 302 100.0% Yes No Total Location Freq % Freq % Freq % Outside zones 44 28.4% 111 71.6% 155 100.0% ASEZA 7 46.7% 8 53.3% 15 100.0% Development zones 1 11.1% 8 88.9% 9 100.0% 45 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Industrial zones 27 22.5% 93 77.5% 120 100.0% More than one zone 0 0% 3 100% 3 100.0% Total 79 26.2% 223 73.8% 302 100.0% Yes No Total Motive Freq % Freq % Freq % Natural resource seeking: 0 0.0% 7 100.0% 7 100.0% Foreign 0 0.0% 3 100.0% 3 100.0% Domestic 0 0.0% 4 100.0% 4 100.0% Domestic market-seeking: 40 23.0% 134 77.0% 174 100.0% Foreign 10 19.6% 41 80.4% 51 100.0% Domestic 30 24.4% 93 75.6% 123 100.0% Efficiency-seeking: 39 32.2% 82 67.8% 121 100.0% Foreign 23 28.4% 58 71.6% 81 100.0% Domestic 16 40.0% 24 60.0% 40 100.0% Total 79 26.2% 223 73.8% 302 100.0% Yes No Total Export orientation Freq % Freq % Freq % Non-export-oriented 46 23.1% 153 76.9% 199 100.0% Strict export-oriented 33 32.0% 70 68.0% 103 100.0% Total 79 26.2% 223 73.8% 302 100.0% Yes No Total Export orientation Freq % Freq % Freq % Non export-oriented 40 22.7% 136 77.3% 176 100.0% Less strict export-oriented 39 31.0% 87 69.0% 126 100.0% Total 79 26.2% 223 73.8% 302 100.0% 46 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q21.b: if “yes�, which countries were considered by your company as top alternative locations, and why? Frequency per alternative country Sector Egypt Iraq KSA Sudan Syria Turkey UAE others Total F 1 3 2 6 1.Construction % 16.7% 50% 3.33% 100% F 0 0 12.Mining & quarrying % 0% 0% F 1 1 1 3 2.Information & communication % 33.3% 33.3% 33.3% 100% F 1 1 2 1 5 13.Transportation % 20% 20% 40% 20% 100% 8.Manufacture of textile, apparel and F 4 1 1 4 3 13 leather. % 30.8% 7.7% 7.7% 30.8% 23.1% 100% 4.Manufacture of food, beverages and F 3 3 1 1 1 9 18 tobacco products. % 16.7% 16.7% 5.6% 5.6% 5.6% 50% 100% F 1 1 2 1 2 7 6. of paper, furniture and wood products. % 14.3% 14.3% 28.6% 14.3% 18.6% 100% 9.Manufacture of chemicals and chemical F 1 3 2 1 6 13 products, basic pharmaceutical products and pharmaceutical preparations % 7.7% 23.1% 15.4% 7.7% 46.2% 100% 7.Manufacture of rubber and plastics F 5 1 6 1 1 1 4 19 products % 26.3% 5.3% 31.6% 5.3% 5.3% 5.3% 21.1% 100% 3.Manufacture of computer, electronic F 1 3 2 1 3 10 products, electrical equipment, machinery, % 10% 30% 20% 10% 30% 100% equipment, metal products 5.Manufacture of other non-metallic F 2 1 1 4 8 mineral products % 25% 12.5% 12.5% 50% 100% 11.Printing and reproduction of recorded F 1 3 1 1 4 10 media % 10% 30% 10% 10% 40% 100% F 1 1 10.Other manufacturing % 100% 100% F 1 1 1 1 4 14.Other services % 25% 25% 25% 25% 100% F 16 7 25 5 6 5 12 37 113 Total % 14.2% 6.2% 22.1% 4.4% 5.3% 4.4% 10.6% 32.7% 100% 47 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q 22: Overall, what were the three (3) most critical factors that influenced your decision to carry out this investment (or re-investment/expansion, or start-up) in Jordan [and not in other countries]? Sector Top 3 Factors • Jordan is the homeland of investor (domestic) • Security and stability Construction • Predictability of business regulations • Investment incentives and benefits • Jordan is the homeland of investor (domestic) • Security and stability Mining and quarrying • Predictability of business regulations • Availability of raw materials • Availability of skilled workforce • Security and stability Information and communication • Predictability of business regulations • Investment incentives and benefits • Jordan is the homeland of investor (domestic) Transportation • Geographic location • Domestic market potential and demand • Attractive investment incentives including tax and customs exemptions Manufacture of textile, apparel and leather. • Availability of low-cost workforce • Ability to benefit from free trade agreements and export agreements to international markets • Jordan is the homeland of investor (domestic) 4. Manufacture of food, beverages and tobacco • Investment incentives and benefits such as tax and products customs exemptions • Market potential • Security and stability • Predictability of business regulations Manufacture of paper, furniture and wood products. • Jordan is the homeland of investor (domestic) • Tax and customs incentives • Jordan is the homeland of investor (domestic) Manufacture of chemicals and chemical products, • Security and safety basic pharmaceutical products and pharmaceutical • Predictability of business regulations preparations • Strategic location of Jordan 48 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP • Jordan is the homeland of investor (domestic) Manufacture of rubber and plastics products • Security and safety • Proximity to export markets • Jordan is the homeland of investor (domestic) Manufacture of computer, electronic products, • Security and safety electrical equipment, machinery, equipment, metal • Predictability of business regulations products • High market demand locally and regionally • Jordan is the homeland of investor (domestic) • Security and stability Manufacture of other non-metallic mineral products • Predictability of business regulations • Investment law and incentives • Jordan is the homeland of investor (domestic) • Availability of labor Printing and reproduction of recorded media • Security and safety • Predictability of business regulations • Jordan is the homeland of investor (domestic) • Security and safety Other manufacturing • Predictability of business regulations • Availability of workforce • Tax exemptions Other services • Predictability of business regulations • Security and safety 49 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q23: Looking at your decision to invest (or re-invest or start-up) in Jordan [instead of other countries], please rate each of the following factors in terms of their importance in deciding to undertake this investment. Please use a scale of 1 to 5 81. Cluster/Factors 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 113 11.06 131 12.82 147 14.38 184 18.00 447 43.7 1022 100 4 Tax incentives 39 14.4 31 11.4 27 01.0 40 14.8 134 49.4 271 100 Customs incentives 28 9.7 32 11.1 25 8.7 52 18.1 151 52.2 288 100 Presence of FTAs and PTAs 20 8.1 33 13.4 55 22.4 57 23.2 81 32.9 246 100 Status of Zone, SEZ, QIZ, FZ, DZ, etc. 26 12.0 35 16.1 40 18.4 35 16.1 81 37.3 217 100 (2) Local resources and production factors 202 13.44 243 16.17 350 23.29 363 24.15 345 22.9 1503 100 5 Suppliers 29 11.2 36 13.9 72 27.8 74 28.6 48 18.5 259 100 Raw materials 27 11.7 41 17.7 51 22.1 44 19.0 68 29.4 231 100 Land 29 11.4 35 13.7 48 18.8 54 21.2 89 34.9 255 100 Access to natural resources 38 17.0 41 18.3 44 19.6 49 21.9 52 23.2 244 100 Access to skilled labor 35 13.3 59 22.4 76 28.9 56 21.3 37 14.1 263 100 Access to unskilled labor 44 16.2 31 11.4 59 21.8 86 31.7 51 18.8 271 100 (3) Local market and geographic location factor 95 10.18 170 18.22 242 25.94 202 21.65 224 24.0 933 100 1 Domestic market potential 21 7.8 35 13.1 62 23.1 69 25.7 81 30.2 268 100 Geographic proximity to EU 25 12.5 51 25.5 54 27.0 35 17.5 35 17.5 200 100 Geographic proximity to MENA countries 14 5.4 38 14.7 62 24.0 70 27.1 74 28.7 258 100 Geographic proximity to port 35 16.9 46 22.2 64 30.9 28 13.5 34 16.4 207 100 (4) Other investment climate factors 170 10.34 182 11.07 314 19.1 409 24.88 569 34.6 1644 100 1 Road infrastructure 29 10.5 41 14.9 61 22.1 82 29.7 63 22.8 276 100 Power infrastructure 30 10.7 32 11.4 61 21.7 76 27.0 82 29.2 281 100 Water infrastructure 27 9.6 46 16.4 67 23.9 76 27.1 64 22.9 280 100 Bank financing 44 18.0 43 17.6 51 20.9 60 24.6 46 18.9 244 100 Legal security Predictability of business 35 12.9 16 5.9 49 18.0 67 24.6 105 38.6 272 100 regulations Security and safety 5 1.7 4 1.4 25 8.6 48 16.5 209 71.8 291 100 Total 580 11.4 726 14.2 1053 20.6 1158 22.7 1585 31.1 5102 100 81 Importance scale: 5 = Critical factor – would not have invested without it; 4 = Important factor – improved the prospects, but not critical to the decision; 3 = Positive factor – a plus, but not very important; 2 = Irrelevant factor – not a consideration; 1 = Negative factor – detracted significantly from the investment prospects 50 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Cluster 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Nationality Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 113 11.06 131 12.82 147 14.38 184 18.00 447 43.7 1022 100 4 Foreign 29 5.97 50 10.29 62 12.76 91 18.72 254 52.2 486 100 6 Domestic 84 15.67 81 15.11 85 15.86 93 17.35 193 36.0 536 100 1 (2) Local resources and production factors 202 13.44 243 16.17 350 23.29 363 24.15 345 22.9 1503 100 5 Foreign 82 12.11 97 14.33 167 24.67 173 25.55 158 23.3 677 100 4 Domestic 120 14.53 146 17.68 183 22.15 190 23.0 187 22.6 826 100 4 (3) Local market and geographic location factor 95 10.18 170 18.22 242 25.94 202 21.65 224 24.0 933 100 1 Foreign 30 7.19 73 17.51 99 23.74 113 27.1 102 24.4 417 100 6 Domestic 65 12.6 97 18.8 143 27.17 89 17.25 22 23.6 516 100 4 (4) Other investment climate factors 170 10.34 182 11.07 314 19.1 409 24.88 569 34.6 1644 100 1 Foreign 63 8.53 77 10.42 148 20.03 170 23.0 281 38.0 739 100 2 Domestic 107 11.82 105 11.6 166 18.34 239 26.41 288 31.8 905 100 2 51 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Cluster 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Sector Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 113 11.06 131 12.82 147 14.38 184 18.0 447 43.7 1022 100 4 1.Construction 6 30.0 4 20.0 5 25.0 2 10.0 3 15.0 20 100 5 17.24 2 6.9 3 10.34 9 31.03 10 34.4 29 100 2.Information & communication 8 3.Manufacture of computer, electronic 13 11.21 21 18.1 20 17.24 15 12.93 47 40.5 116 100 products, electrical equipment, machinery, 2 equipment, metal products 4.Manufacture of food, beverages and tobacco 17 10.49 22 13.58 26 16.05 34 20.99 63 38.8 162 100 products 9 5.Manufacture of other non-metallic mineral 2 2.63 7 9.21 11 14.47 17 22.37 39 51.3 76 100 products 2 6.Manufacture of paper, furniture and wood 12 12.5 13 13.54 21 21.88 20 20.83 30 31.2 96 100 products 5 14 12.17 16 13.91 13 11.3 27 23.48 45 39.1 115 100 7.Manufacture of rubber and plastics products 3 11 6.88 5 3.13 10 6.25 16 10.0 118 73.7 160 100 8.Manufacture of textile, apparel and leather 5 9.Manufacture of chemicals and chemical 9 7.44 16 13.22 20 16.53 26 21.49 50 41.3 121 100 products, basic pharmaceutical products and 2 pharmaceutical preparations 1 3.23 3 9.68 4 12.9 4 12.9 19 61.2 31 100 10.Other manufacturing 9 15 30.61 9 18.67 4 8.16 6 12.24 15 30.6 49 100 11.Printing and reproduction of recorded media 1 12.Mining & quarrying 5 17.86 10 35.71 6 21.43 7 25.0 0 0 28 100 13.Transportation 3 20.0 1 6.67 4 26.67 1 6.67 6 40.0 15 100 14.Other services 0 0 2 50.0 0 0 0 0 2 50.0 4 100 (2) Local resources and production factors 202 13.44 243 16.17 350 23.29 363 24.15 345 22.9 1503 100 5 5 10.64 13 27.66 12 25.53 9 19.15 8 17.0 47 100 1.Construction 2 2.Information & communication 9 23.68 7 18.42 10 28.95 11 26.32 1 2,63 38 100 3.Manufacture of computer, electronic 31 17.92 27 15.61 42 24.28 34 19.65 39 22.5 178 100 products, electrical equipment, machinery, 4 equipment, metal products 4.Manufacture of food, beverages and tobacco 22 7.86 52 18.57 64 22.68 65 23.21 77 27.5 280 100 products 52 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 5.Manufacture of other non-metallic mineral 18 15.25 15 12.71 22 18.64 32 27.12 31 26.2 118 100 products 7 6.Manufacture of paper, furniture and wood 14 10.07 23 16.55 35 25.18 38 27.34 29 20.8 139 100 products 6 35 22.01 27 16.98 34 21.38 38 23.9 25 15.7 159 100 7.Manufacture of rubber and plastics products 2 21 10.94 18 9.38 50 26.04 40 23.44 58 30.2 192 100 8.Manufacture of textile, apparel and leather 1 9.Manufacture of chemicals and chemical 14 7.91 32 18.08 43 24.29 50 28.25 38 21.4 177 100 products, basic pharmaceutical products and 7 pharmaceutical preparations 13 28.26 1 2.17 10 21.74 10 21.74 12 26.0 46 100 10.Other manufacturing 9 13 17.57 14 18.92 14 18.92 14 18.92 19 25.6 74 100 11.Printing and reproduction of recorded media 8 2 5.13 10 25.64 7 17.95 15 38.46 5 12.8 39 100 12.Mining & quarrying 2 13.Transportation 5 33.33 1 6.67 6 40.0 2 13.33 1 6.67 15 0 0 3 50.0 0 6 1 16.67 2 33.3 6 100 14.Other services 3 (3) Local market and geographic location factor 95 10.18 170 18.22 242 25.94 202 21.65 224 24.0 933 100 1 6 27.27 4 18.18 5 22.73 2 9.09 5 22.7 22 100 1.Construction 3 5 19.23 4 15.38 4 15.38 9 34.62 4 15.3 26 100 2.Information & communication 8 3.Manufacture of computer, electronic 9 8.49 22 20.75 32 30.19 31 29.25 12 11.3 106 100 products, electrical equipment, machinery, 2 equipment, metal products 4.Manufacture of food, beverages and tobacco 14 9.09 31 20.13 47 30.52 29 18.83 33 21.4 154 100 products 3 5.Manufacture of other non-metallic mineral 6 8.7 11 15.94 15 21.74 16 23.19 21 30.4 69 100 products 3 6. Manufacture of paper, furniture and wood 7 7.69 22 24.18 22 24.18 20 21.98 20 21.9 91 100 products. 8 10 8.93 22 19.64 31 27.68 19 16.96 30 26.7 112 100 7.Manufacture of rubber and plastics products 9 15 12.71 14 11.86 30 25.42 24 20.34 35 29.6 118 100 8. Manufacture of textile, apparel and leather. 6 53 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 9.Manufacture of chemicals and chemical 4 3.54 21 18.58 33 29.2 31 27.43 24 21.2 113 100 products, basic pharmaceutical products and 4 pharmaceutical preparations 5 16.67 4 13.33 7 23.33 4 13.33 10 33.3 30 100 10.Other manufacturing 3 8 15.69 11 21.57 7 13.73 10 19.61 15 29.4 51 100 11.Printing and reproduction of recorded media 1 12.Mining & quarrying 3 12.0 2 8.0 9 36.0 6 24.0 5 20.0 25 100 13.Transportation 2 16.67 0 0 0 0 1 8.33 9 75.0 12 100 14.Other services 1 25.0 2 50.0 0 0 0 0 1 25.0 4 100 (4) Other investment climate factors 170 10.34 182 11.07 314 19.1 409 24.88 569 34.6 1644 100 1 7 15.22 7 15.22 7 15.22 13 28.26 12 26.0 46 100 1.Construction 9 6 13.33 10 22.22 14 31.11 7 15.56 8 17.7 45 100 2.Information & communication 8 3.Manufacture of computer, electronic 19 10.16 24 12.83 37 19.79 33 17.65 74 39.5 187 100 products, electrical equipment, machinery, 7 equipment, metal products 4.Manufacture of food, beverages and tobacco 34 11.33 27 9.0 59 19.67 83 27.67 97 32.3 300 100 products 3 5.Manufacture of other non-metallic mineral 4 3.23 10 8.06 23 18.55 36 29.03 51 41.1 124 100 products 3 6. Manufacture of paper, furniture and wood 8 5.3 20 13.25 33 21.85 38 25.17 52 34.4 151 100 products. 4 26 13.9 18 9.63 38 20.32 52 27.81 53 28.3 187 100 7.Manufacture of rubber and plastics products 4 25 11.01 14 6.17 30 13.22 63 27.75 95 41.8 227 100 8. Manufacture of textile, apparel and leather. 5 9.Manufacture of chemicals and chemical 12 6.49 26 14.05 37 20.0 45 24.32 65 35.1 185 100 products, basic pharmaceutical products and 4 pharmaceutical preparations 10.Other manufacturing 5 10.0 3 6.0 7 14.0 11 22.0 24 48.0 50 100 9 10.98 12 14.63 18 21.95 18 21.95 25 30.4 82 100 11.Printing and reproduction of recorded media 9 12.Mining & quarrying 8 20.0 6 15.0 10 25.0 8 20.0 8 20.0 40 100 6 42.86 3 21.43 1 7.14 2 14.29 2 14.2 14 100 13.Transportation 9 14.Other services 1 16.67 2 33.33 0 0 0 0 3 50.0 6 100 Cluster 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total 54 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Location Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 113 11.06 131 12.82 147 14.38 184 18.00 447 43.7 1022 100 4 Development zones 9 6.3 11 7.6 15 15.0 28 19.4 81 56.3 144 100 Industrial zones 10 4.3 12 5.1 33 33.0 40 17.0 140 59.6 235 100 ASEZA 10 6.0 10 6.0 21 21.0 23 13.8 103 61.7 167 100 Outside zones 84 17.65 98 20.59 78 16.39 93 19.54 123 25.8 476 100 4 (2) Local resources and production factors 202 13.44 243 16.17 350 23.29 363 24.15 345 22.9 1503 100 5 Development zones 15 8.8 22 12.9 44 25.9 48 28.2 41 24.1 170 100 Industrial zones 42 10.4 55 13.6 100 24.7 95 23.5 113 27.9 405 100 ASEZA 20 13.4 26 17.4 33 22.1 28 18.8 42 28.2 149 100 Outside zones 125 16.05 140 17.97 173 22.21 192 24.65 149 19.1 779 100 3 (3) Local market and geographic location factor 95 10.18 170 18.22 242 25.94 202 21.65 224 24.0 933 100 1 Development zones 13 12.9 16 15.8 22 21.8 24 23.8 26 25.7 101 100 Industrial zones 17 7.4 35 15.2 57 24.7 55 23.8 67 29.0 231 100 ASEZA 12 8.6 25 17.9 30 21.4 32 22.9 41 29.3 140 100 Outside zones 53 11.5 94 20.39 133 28.85 91 19.74 90 19.5 461 100 2 (4) Other investment climate factors 170 10.34 182 11.07 314 19.1 409 24.88 569 34.6 1644 100 1 Development zones 13 8.1 22 13.7 30 18.6 42 26.1 54 33.5 161 100 Industrial zones 28 6.6 33 7.7 87 20.4 118 27.6 161 37.7 427 100 ASEZA 18 8.3 24 11.1 40 18.5 58 26.9 76 35.2 216 100 Outside zones 111 13.21 103 12.26 157 18.69 191 22.74 278 33.1 840 100 Cluster 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Investment Type Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 113 11.06 131 12.82 147 14.38 184 18.00 447 43.7 1022 100 4 Domestic market-seeking 83 14.9 85 15.26 89 15.98 95 17.06 205 36.8 557 100 Efficiency-seeking 25 5.72 36 8.24 52 11.9 82 18.76 242 55.3 437 100 8 Natural resource-seeking 5 17.86 10 35.71 6 21.43 7 25.0 0 0 28 100 (2) Local resources and production factors 202 13.44 243 16.17 350 23.29 363 24.15 345 22.9 1503 100 5 55 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Domestic market-seeking 124 14.09 159 18.07 184 20.91 207 23.52 206 23.4 880 100 1 Efficiency-seeking 76 13.01 74 12.67 159 27.23 141 24.14 134 22.9 584 100 5 Natural resource-seeking 2 15.13 10 25.46 7 17.95 15 38.46 5 12.8 39 100 2 (3) Local market and geographic location factor 95 10.18 170 18.22 242 25.94 202 21.65 224 24.0 933 100 1 Domestic market-seeking 63 11.95 98 18.6 127 24.1 114 21.63 125 23.7 527 100 2 Efficiency-seeking 29 7.61 70 18.37 106 27.82 82 21.52 94 24.6 381 100 7 Natural resource-seeking 3 12.0 2 18.0 9 36.0 6 24.0 5 20.0 25 100 (4) Other investment climate factors 170 10.34 182 11.07 314 19.1 409 24.88 569 34.6 1644 100 1 Domestic market-seeking 103 10.93 118 12.53 176 18.68 239 25.37 306 32.4 942 100 8 Efficiency-seeking 59 8.91 58 8.76 128 19.34 162 24.47 255 38.5 662 100 2 Natural resource-seeking 8 20.0 6 15.0 10 25.0 8 20.0 8 20.0 40 100 Cluster 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Export-orientation Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 113 11.06 131 12.82 147 14.38 184 18.00 447 43.7 1022 100 4 Strict export-oriented 28 7.49 31 8.29 39 10.43 72 19.25 204 54.5 347 100 5 Non-export oriented 85 13.12 100 15.43 108 16.67 112 17.28 243 37.5 648 100 (2) Local resources and production factors 202 13.44 243 16.17 350 23.29 363 24.15 345 22.9 1503 100 5 Strict export-oriented 62 12.42 64 12.83 123 24.65 124 24.85 126 25.2 499 100 5 Non-export oriented 140 13.94 179 17.83 227 22.61 239 23.8 219 21.8 1004 100 1 (3) Local market and geographic location factor 95 10.18 170 18.22 242 25.94 202 21.65 224 24.0 933 100 1 Strict export-oriented 26 8.07 50 15.53 84 26.09 77 23.91 85 26.4 322 100 Non-export oriented 69 11.29 120 19.64 158 25.86 125 20.46 139 22.7 611 100 5 56 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP (4) Other investment climate factors 170 10.34 182 11.07 314 19.1 409 24.88 569 34.6 1644 100 1 Strict export-oriented 49 8.73 52 9.27 97 17.29 134 23.89 229 40.8 561 100 2 Non-export oriented 121 11.17 130 12.0 217 20.04 275 25.39 340 31.3 1083 100 9 57 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q24: Did your company consider investing (or re-investing/expanding, or starting-up) in another location in Jordan? Answer Freq % Yes 73 24.2% No 229 75.8% Total 302 100.0% Yes No Total Nationality Freq % Freq % Freq % Domestic 43 25.7% 124 74.3% 167 100.0% Foreign 30 22.2% 105 77.8% 135 100.0% Total 73 24.2% 229 75.8% 302 100.0% Yes No Total Sector Freq % Freq % Freq % 1.Construction 3 37.5% 5 62.5% 8 100.0% 12.Mining & Quarrying 1 14.3% 6 85.7% 7 100.0% 2.Information and communication 0 0.0% 5 100.0% 5 100.0% 13.Transportation 0 0.0% 4 100.0% 4 100.0% 8. Manufacture of textile, apparel and leather. 11 25.6% 32 74.4% 43 100.0% 4.Manufacture of food, beverages and tobacco products. 15 28.3% 38 71.7% 53 100.0% 6.Manufacture of paper, furniture and wood products. 6 23.1% 20 76.9% 26 100.0% 9. Manufacture of chemicals and chemical products, basic pharmaceutical products and pharmaceutical preparations 5 14.7% 29 85.3% 34 100.0% 7.Manufacture of rubber and plastics products 9 26.5% 25 73.5% 34 100.0% 3.Manufacture of computer, electronic products, electrical equipment, machinery, equipment, metal products 4 10.3% 35 89.7% 39 100.0% 5.Manufacture of other non-metallic mineral products 6 26.1% 17 73.9% 23 100.0% 11.Printing and reproduction of recorded media 8 53.3% 7 46.7% 15 100.0% 10.Other manufacturing 2 40.0% 3 60.0% 5 100.0% 14.Other services 3 50.0% 3 50.0% 6 100.0% Total 73 24.2 229 75.8% 302 100.0% Yes No Total Location Freq % Freq % Freq % 58 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Outside zones 37 23.9% 118 76.1% 155 100.0% ASEZA 4 26.7% 11 73.3% 15 100.0% Development zones 2 22.2% 7 77.8% 9 100.0% Industrial zones 29 24.2% 91 75.8% 120 100% More than one zone 1 33.3% 2 66.7% 3 100.0% Total 73 24.2% 229 75.8% 302 100.0% Yes No Total Motive Freq % Freq % Freq % Natural resource seeking: 1 14.3% 6 85.7% 7 100.0% Foreign 1 33.3% 2 66.7% 3 100% Domestic 0 0.0% 4 100.0% 4 100% Domestic market-seeking: 35 20.1% 139 79.9% 174 100.0% Foreign 8 15.7% 43 84.3% 51 100% Domestic 27 22.0% 96 78.0% 123 100% Efficiency-seeking: 37 30.6% 84 69.4% 121 100.0% Foreign 21 25.9% 60 74.1% 81 100% Domestic 16 40.0% 24 60.0% 40 100% Total 73 24.2% 229 75.8% 302 100.0% Yes No Total Export orientation Freq % Freq % Freq % Non-export-oriented 41 20.6% 158 79.4% 199 100.0% Strict export-oriented 32 31.1% 71 68.9% 103 100.0% Total 73 24.2% 229 75.8% 302 100.0% Yes No Total Export orientation Freq % Freq % Freq % Non export-oriented 34 19.3% 142 80.7% 176 100.0% Less strict export-oriented 39 30.9% 87 69.1% 126 100.0% Total 73 24.2% 229 75.8% 302 100.0% 59 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q24.b: if “yes�, which other locations within Jordan were considered by your company’ as top alternative locations, and why? Frequency Sector Amman Ajloun Aqaba Mafraq Others Total 1 1 2 1.Construction 50% 50% 100% 1 1 12.Mining & Quarrying 100% 100% 2.Information and communication 13.Transportation 1 3 1 5 10 8.Manufacture of textile, apparel and leather. 10% 30% 10% 50% 100% 1 2 6 9 4.Manufacture of food, beverages and tobacco products. 11.1% 22.2% 66.7% 100% 2 2 6.Manufacture of paper, furniture and wood products. 100% 100% 9.Manufacture of chemicals and chemical products, basic 1 5 6 pharmaceutical products and pharmaceutical preparations 16.7% 83.3% 100% 1 1 6 8 7.Manufacture of rubber and plastics products 12.5% 12.5% 75% 100% 3.Manufacture of computer, electronic products, electrical 1 1 equipment, machinery, equipment, metal products 100% 100% 1 1 2 5.Manufacture of other non-metallic mineral products 50% 50% 100% 3 4 7 11.Printing and reproduction of recorded media 42.9% 57.1% 100% 10.Other manufacturing 1 1 2 14.Other services 50% 50% 100% Total 3 4 9 3 31 50 6% 8% 18% 6% 62% 100% 60 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q 25: Overall, what were the three most critical factors that influenced your decision to carry out this investment (or re-investment, or start-up) in this location in Jordan [and not in other locations in Jordan]? Sector Top 3 Factors • Suitability of location to operations 1. Construction • Availability of labor • Accessibility to land • Availability of raw material 12. Mining and quarrying • Accessibility to land • Ease of licensing and Governmental approvals • Availability of infrastructure 2. Information and communication • Availability of labor • Investment incentives • Suitable location for operations 13. Transportation • Market demand in the areas around location • Available support services • Availability of infrastructure • Investment promotion law and zones incentives 8. Manufacture of textile, apparel and leather. • Proximity to Governmental institutions responsible for export clearance. • Availability of infrastructure 1. Manufacture of food, beverages and tobacco products • Investment promotion law and zones incentives • Domestic market potential • Investment incentives and exemptions 5. Manufacture of paper, furniture and wood products. • High market demand • Abundance of labor • Investment and zone incentives and exemptions 9. Manufacture of chemicals and chemical products, basic • Accessibility to land pharmaceutical products and pharmaceutical preparations • Availability of raw material • Geographic location 6. Manufacture of rubber and plastics products • Availability of land • Customs exemptions and facilities 3. Manufacture of computer, electronic products, • Geographic location electrical equipment, machinery, equipment, metal • Investment incentives products • Proximity to export ports • Suitability of location for operations 2. Manufacture of other non-metallic mineral products • Availability of raw material • Abundance of workforce • Proximity to markets 8. Printing and reproduction of recorded media • Availability of labor 61 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP • Quality of infrastructure • Availability of skilled labor 10. Other manufacturing • Quality of infrastructure and services • Access to wide areas of land • Investment incentives 14. Other services • Availability of labor • Geographic location 62 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q 26: Looking at your decision to invest (or re-invest or start-up) in this location in Jordan [instead of other locations], please rate each of the following factors in terms of their importance in deciding to undertake this investment. Please use a scale of 1 to 5 82 Cluster / factors 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Scale Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 143 12.1 153 12.94 195 16.5 199 16.84 492 41.6 1182 100 2 tax incentives; 29 11.2 23 8.8 29 11.2 39 15.0 140 53.8 260 100 customs incentives; 20 7.2 15 5.4 46 16.5 48 17.2 150 53.8 279 100 financial incentives; 49 20.9 32 13.6 31 13.2 29 12.3 94 40.0 235 100 preferential access to US market or other 23 12.2 46 24.3 37 19.6 37 19.6 46 24.3 189 100 market; status of Zone, SEZ, QIZ, FZ, DZ, etc.; 22 10.0 37 16.9 52 23.7 46 21.0 62 28.3 219 100 (2) Local resources and production factors 122 9.66 143 11.32 328 25.97 320 25.34 350 27.7 1263 100 1 Suppliers; 19 7.8 25 10.3 75 30.9 67 27.6 57 23.5 243 100 raw materials; 24 10.5 24 10.5 69 30.3 51 22.4 60 26.3 228 100 land; 20 7.8 30 11.7 61 23.7 52 20.2 94 36.6 257 100 access to skilled labor; 33 12.1 29 10.7 50 18.4 82 30.1 78 28.7 272 100 access to unskilled labor; 26 9.9 35 13.3 73 27.8 68 25.9 61 23.2 263 100 (3) Local market and geographic location factor 46 9.73 65 13.74 128 27.06 95 20.08 139 29.3 473 100 9 local market potential; 20 7.4 22 8.1 72 26.5 64 23.5 94 34.6 272 100 geographic proximity to port; 26 12.9 43 21.4 56 27.9 31 15.4 45 22.4 201 100 (4) Other investment climate factors 174 10.71 151 9.3 317 19.52 377 23.21 605 37.2 1624 100 5 road infrastructure; 20 7.5 28 10.4 67 25.0 78 29.1 75 28.0 268 100 power infrastructure; 37 13.4 15 6.9 59 21.4 69 25.0 92 33.3 276 100 water infrastructure; 28 10.2 38 13.8 67 24.4 62 22.5 80 29.1 275 100 bank financing; 35 14.4 37 15.2 56 23.0 43 17.7 72 29.6 243 100 legal security and predictability of business 36 12.9 15 5.4 39 14.0 73 26.3 115 41.4 278 100 regulations. security and safety; 18 6.3 14 4.9 29 10.2 52 18.3 171 60.2 284 100 Total 485 10.7 512 11.3 968 21.3 991 21.8 1586 34.9 4542 100 82 Importance scale: 5 = Critical factor – would not have invested without it; 4 = Important factor – improved the prospects, but not critical to the decision; 3 = Positive factor – a plus, but not very important; 2 = Irrelevant factor – not a consideration; 1 = Negative factor – detracted significantly from the investment prospects 63 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP For the purpose of the analysis, factors were clustered into four groups as explained earlier 83. Cluster 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Nationality Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 143 12.1 153 12.94 195 16.5 199 16.84 492 41.6 1182 100 2 Foreign 48 8.35 60 10.43 97 16.87 95 16.52 275 47.8 575 100 3 Domestic 95 15.65 93 15.32 98 16.14 104 17.13 217 35.7 607 100 5 (2) Local resources and production factors 122 9.66 143 11.32 328 25.97 320 25.34 350 27.7 1263 100 1 Foreign 45 7.98 57 10.11 145 25.71 144 25.53 173 30.6 564 100 7 Domestic 77 11.02 86 12.3 183 26.18 176 25.18 177 25.3 699 100 2 (3) Local market and geographic location factor 46 9.73 65 13.74 128 27.06 95 20.08 139 29.3 473 100 9 Foreign 17 7.91 25 11.63 60 27.91 42 19.53 71 33.0 215 100 5 Domestic 29 11.24 40 15.5 68 26.36 53 20.54 68 26.3 258 100 6 (4) Other investment climate factors 174 10.71 151 9.3 317 19.52 377 23.21 605 37.2 1624 100 5 Foreign 63 8.53 76 10.28 139 18.81 170 23 291 39.3 739 100 8 Domestic 111 12.54 75 8.47 178 20.11 207 23.39 314 35.4 885 100 8 83 Cluster (1) Incentives factors: tax incentives; customs incentives; financial incentives; preferential access to US market or other market; status of Zone, SEZ, QIZ, FZ, DZ, etc.; Cluster (2) Local resources and production factors: Suppliers; raw materials; land; access to skilled labor; access to unskilled labor; Cluster (3) Local market and geographic location factors: local market potential; geographic proximity to port; Cluster (4) Other investment climate factors: road infrastructure; power infrastructure; water infrastructure; bank financing; legal security and predictability of business regulations. Security and safety. 64 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Cluster 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Sector Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 143 12.1 153 12.94 195 16.5 199 16.84 492 41.6 1182 100 2 7 30.43 4 17.39 7 30.43 2 8.7 3 13.0 23 100 1.Construction 4 6 17.65 4 11.76 8 23.53 7 20.59 9 26.4 34 100 2.Information & communication 7 3.Manufacture of computer, electronic 14 9.79 13 9.09 23 16.08 30 20.98 63 44.0 143 100 products, electrical equipment, machinery, 6 equipment, metal products 4.Manufacture of food, beverages and tobacco 31 15.42 29 14.43 44 21.89 34 16.92 63 31.3 201 100 products 4 5.Manufacture of other non-metallic mineral 8 8.42 11 11.58 15 15.79 13 13.68 48 50.5 95 100 products 3 6.Manufacture of paper, furniture and wood 6 5.66 22 20.75 19 17.92 19 17.92 40 37.7 106 100 products 4 17 13.39 21 16.54 23 18.11 20 15.75 46 36.2 127 100 7.Manufacture of rubber and plastics products 2 13 7.69 13 7.69 13 7.69 20 11.83 110 65.0 169 100 8. Manufacture of textile, apparel and leather 9 9.Manufacture of chemicals and chemical 13 9.03 16 11.11 23 15.97 37 25.69 55 38.1 144 100 products, basic pharmaceutical products and 9 pharmaceutical preparations 4 9.76 7 17.07 6 14.63 7 17.07 17 41.4 41 100 10.Other manufacturing 6 10 18.87 6 11.32 9 16.98 4 7.55 24 45.2 53 100 11.Printing and reproduction of recorded media 8 12.Mining & quarrying 10 38.46 6 23.08 5 19.23 3 11.54 2 7.69 26 100 4 26.67 0 0 0 0 3 20 8 53.3 15 100 13.Transportation 3 14.Other services 0 0 1 20 0 0 0 0 4 80 5 100 (2) Local resources and production factors 122 9.66 143 11.32 328 25.97 320 25.34 350 27.7 1263 100 1 5 14.29 5 14.29 8 22.86 8 22.86 9 25.7 35 100 1.Construction 1 2.Information & communication 4 11.76 6 17.65 11 32.35 11 32.35 2 5.88 34 100 3.Manufacture of computer, electronic 11 7.19 19 12.42 41 26.8 34 22.22 48 31.3 153 100 products, electrical equipment, machinery, 7 equipment, metal products 65 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 4.Manufacture of food, beverages and tobacco 21 8.82 25 10.5 61 25.63 58 24.37 73 30.6 238 100 products 7 5.Manufacture of other non-metallic mineral 12 11.76 11 10.78 20 19.61 30 29.41 29 28.4 102 100 products 3 6.Manufacture of paper, furniture and wood 9 8.04 14 12.5 23 20.54 36 32.14 30 26.7 112 100 products 9 17 12.98 12 9.16 44 33.59 34 25.95 24 18.3 131 100 7.Manufacture of rubber and plastics products 2 17 10.37 8 4.88 40 24.39 35 21.34 64 39.0 164 100 8.Manufacture of textile, apparel and leather 2 9.Manufacture of chemicals and chemical 13 8.67 19 12.67 39 26 46 30.67 33 22 150 100 products, basic pharmaceutical products and pharmaceutical preparations 3 8.11 1 2.7 8 21.62 9 24.32 16 43.2 37 100 10.Other manufacturing 4 5 8.47 7 11.86 23 38.98 7 11.86 17 28.8 59 100 11.Printing and reproduction of recorded media 1 12.Mining & quarrying 3 9.09 10 30.3 9 27.27 9 27.27 2 6.06 33 100 13.Transportation 2 20 3 30 1 10 3 30 1 10 10 100 14.Other services 0 0 3 60 0 0 0 0 2 40 5 100 (3) Local market and geographic location factor 46 9.73 65 13.74 128 27.06 95 20.08 139 29.3 473 100 9 3 23.08 3 23.08 2 15.38 2 15.38 3 23.0 13 100 1.Construction 8 2.Information & communication 0 0 3 25 2 16.67 7 58.33 0 0 12 100 3.Manufacture of computer, electronic 9 15.52 8 13.79 17 29.31 7 12.07 17 29.3 58 100 products, electrical equipment, machinery, 1 equipment, metal products 4.Manufacture of food, beverages and tobacco 5 6.41 14 17.95 23 29.49 14 17.95 22 28.2 78 100 products 1 5.Manufacture of other non-metallic mineral 2 5.56 6 16.67 6 16.67 7 19.44 15 41.6 36 100 products 7 6.Manufacture of paper, furniture and wood 4 8.16 6 12.24 11 22.45 13 26.53 15 30.6 49 100 products. 1 11 19.3 11 19.3 12 21.05 11 19.3 12 21.0 57 100 7.Manufacture of rubber and plastics products 5 4 7.02 3 5.26 23 40.35 9 15.79 18 31.5 57 100 8.Manufacture of textile, apparel and leather. 8 9.Manufacture of chemicals and chemical 1 1.79 5 8.93 20 35.71 14 25 16 28.5 56 100 products, basic pharmaceutical products and 7 pharmaceutical preparations 66 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 10.Other manufacturing 2 12.5 1 6.25 4 25 1 6.25 8 50 16 100 11.Printing and reproduction of recorded media 1 4.17 4 16.67 5 20.83 5 20.83 9 37.5 24 100 3 27.27 0 0 2 18.18 4 36.36 2 18.1 11 100 12.Mining & quarrying 8 13.Transportation 1 25 0 0 1 25 1 25 1 25 4 100 14.Other services 0 0 1 50 0 0 0 0 1 50 2 100 (4) Other investment climate factors 174 10.71 151 9.3 317 19.52 377 23.21 605 37.2 1624 100 5 7 15.22 5 10.87 7 15.22 11 23.91 16 34.7 46 100 1.Construction 8 7 14.29 5 10.2 19 38.78 11 22.45 7 14.2 49 100 2.Information & communication 9 3.Manufacture of computer, electronic 17 9.34 25 13.74 39 21.43 37 20.33 64 35.1 182 100 products, electrical equipment, machinery, 6 equipment, metal products 4.Manufacture of food, beverages and tobacco 38 13.29 19 6.64 60 20.98 54 18.88 115 40.2 286 100 products 1 5.Manufacture of other non-metallic mineral 6 4.88 9 7.32 11 8.94 44 35.77 53 43.0 123 100 products 9 6.Manufacture of paper, furniture and wood 9 6.12 15 10.2 32 21.77 36 24.49 55 37.4 147 100 products. 1 32 17.3 17 9.19 37 20 39 21.08 60 32.4 185 100 7.Manufacture of rubber and plastics products 3 19 8.41 13 5.75 33 14.6 50 22.12 111 49.1 226 100 8.Manufacture of textile, apparel and leather. 2 9.Manufacture of chemicals and chemical 4 2.15 22 11.83 39 20.97 53 28.49 68 36.5 186 100 products, basic pharmaceutical products and 6 pharmaceutical preparations 4 8.7 2 4.35 6 13.04 12 26.09 22 47.8 46 100 10.Other manufacturing 3 12 14.46 13 15.66 14 16.87 20 24.1 24 28.9 83 100 11.Printing and reproduction of recorded media 2 14 34.15 1 2.44 12 29.27 7 17.07 7 17.0 41 100 12.Mining & quarrying 7 13.Transportation 5 27.78 2 11.11 7 38.89 3 16.67 1 5.56 18 100 0 0 3 50 1 16.67 0 0 2 33.3 6 100 14.Other services 3 Cluster 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Location Responses % Responses % Response % Responses % Responses % Responses % 67 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP (1) Incentives factors 143 12.1 153 12.94 195 16.5 199 16.84 492 41.6 1182 100 2 Inside zones 45 7 57 8.86 95 14.77 107 16.64 339 52.7 643 100 2 Outside zones 98 18.18 96 17.81 100 18.55 92 17.07 153 28.3 539 100 9 (2) Local resources and production factors 122 9.66 143 11.32 328 25.97 320 25.34 350 27.7 1263 100 1 Inside zones 45 7.33 58 9.45 141 22.96 162 26.38 208 33.8 614 100 8 Outside zones 77 11.86 85 13.1 187 28.81 158 24.35 142 21.8 649 100 8 (3) Local market and geographic location factor 46 9.73 65 13.74 128 27.06 95 20.08 139 29.3 473 100 9 Inside zones 20 8.47 25 10.59 72 30.51 40 16.95 79 33.4 236 100 7 Outside zones 26 10.97 40 16.88 56 23.63 55 23.21 60 25.3 237 100 2 (4) Other investment climate factors 174 10.71 151 9.3 317 19.52 377 23.21 605 37.2 1624 100 5 Inside zones 59 7.28 72 8.89 152 18.77 194 23.95 333 41.1 810 100 1 Outside zones 115 14.13 79 9.71 165 20.27 183 22.48 272 33.4 814 100 2 68 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Cluster 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Investment Type Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 143 12.1 153 12.94 195 16.5 199 16.84 492 41.6 1182 100 2 Domestic market-seeking 96 14.86 103 15.94 99 15.33 97 15.02 251 38.8 646 100 5 Efficiency-seeking 37 7.25 44 8.63 91 17.84 99 19.41 239 46.8 510 100 6 Natural resource-seeking 10 38.46 6 23.08 5 19.23 3 11.54 2 7.69 26 100 (2) Local resources and production factors 122 9.66 143 11.32 328 25.97 320 25.34 350 27.7 1263 100 1 Domestic market-seeking 76 10.56 86 11.94 184 25.56 182 25.28 192 26.6 720 100 7 Efficiency-seeking 43 8.43 47 9.22 135 26.47 129 25.29 156 30.5 510 100 9 Natural resource-seeking 3 9.09 10 30.3 9 27.27 9 27.27 2 6.06 33 100 (3) Local market and geographic location factor 46 9.73 65 13.74 128 27.06 95 20.08 139 29.3 473 100 9 Domestic market-seeking 28 10.22 44 16.06 52 18.98 62 22.63 88 32.1 274 100 2 Efficiency-seeking 15 7.98 21 11.17 74 39.36 29 15.43 49 26.0 188 100 6 Natural resource-seeking 3 27.27 0 0 2 18.18 4 36.36 2 18.1 11 100 8 (4) Other investment climate factors 174 10.71 151 9.3 317 19.52 377 23.21 605 37.2 1624 100 5 Domestic market-seeking 110 11.97 90 9.79 190 20.67 198 21.55 331 36.0 919 100 2 Efficiency-seeking 50 7.53 60 9.04 115 17.32 172 25.9 267 40.2 664 100 1 Natural resource-seeking 14 34.15 1 2.44 12 29.27 7 17.07 7 17.0 41 100 7 69 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Cluster 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Export Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 143 12.1 153 12.94 195 16.5 199 16.84 492 41.6 1182 100 2 Strict export-oriented 30 6.99 37 8.62 70 16.32 83 19.35 209 48.7 429 100 2 Non-export oriented 113 15.01 116 15.41 125 16.6 116 15.41 283 37.5 753 100 8 (2) Local resources and production factors 122 9.66 143 11.32 328 25.97 320 25.34 350 27.7 1263 100 1 Strict export-oriented 39 9.13 32 7.49 109 25.53 112 26.23 135 31.6 427 100 2 Non-export oriented 83 9.93 111 13.28 219 26.2 208 24.88 215 25.7 836 100 2 (3) Local market and geographic location factor 46 9.73 65 13.74 128 27.06 95 20.08 139 29.3 473 100 9 Strict export-oriented 14 8.81 12 7.55 65 40.88 24 15.09 44 27.6 159 100 7 Non-export oriented 32 10.19 53 16.88 63 20.06 71 22.61 95 30.2 314 100 5 (4) Other investment climate factors 174 10.71 151 9.3 317 19.52 377 23.21 605 37.2 1624 100 5 Strict export-oriented 47 8.39 41 7.32 92 16.43 136 24.29 244 43.5 560 100 7 Non-export oriented 127 11.94 110 10.34 225 21.15 241 22.65 361 33.9 1064 100 3 70 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Cluster 1- negative factor 2- irrelevant factor 3- positive factor 4- important factor 5- critical factor Total Export Responses % Responses % Response % Responses % Responses % Responses % (1) Incentives factors 143 12.1 153 12.94 195 16.5 199 16.84 492 41.6 1182 100 2 Less Strict export-oriented 29 7.36 32 8.12 63 15.99 73 18.53 197 50 394 100 Non-export oriented 114 14.47 121 15.36 132 16.75 126 15.99 295 37.4 788 100 4 (2) Local resources and production factors 122 9.66 143 11.32 328 25.97 320 25.34 350 27.7 1263 100 1 Less Strict export-oriented 38 9.74 28 7.18 96 24.62 102 26.15 126 32.3 390 100 1 Non-export oriented 84 9.62 115 13.17 232 26.58 218 24.97 224 25.6 873 100 6 (3) Local market and geographic location factor 46 9.73 65 13.74 128 27.06 95 20.08 139 29.3 473 100 9 Less Strict export-oriented 13 9.03 10 6.94 59 40.97 21 14.58 41 28.4 144 100 7 Non-export oriented 33 10.03 55 16.72 69 20.97 74 22.49 98 29.7 329 100 9 (4) Other investment climate factors 174 10.71 151 9.3 317 19.52 377 23.21 605 37.2 1624 100 5 Less Strict export-oriented 44 8.61 35 6.85 83 16.24 119 23.29 230 45.0 511 100 1 Non-export oriented 130 11.68 116 10.42 234 21.02 258 23.18 375 33.6 1113 100 9 71 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q. 27 and Q29: Did your company receive any tax and/or customs duty and/or financial incentive in 2011-2015? See Annex 1 and 2 for the list of incentives. State- Government Response owned F % Yes 302 100% No 0 0% Q.28a: Which tax and/or customs incentives did your company receive (or still benefited from) in 2011 – 2015 (or latest available years)? 2011 2012 2013 2014 2015 Total Incentives received Freq % Freq % Freq % Freq % Freq % Freq % Customs duty exemptions 85 34.8% 66 35.5% 79 33.3% 59 33.5% 47 35.1% 336 34% General Sales Tax (GST) 39 16.0% 29 15.6% 42 17.7% 45 25.6% 24 17.9% 179 18% exemptions/ postponing Corporate Income Tax (CIT) exemptions / 20 8.2% 14 7.5% 11 4.6% 16 9.1% 13 9.7% 74 8% reductions JEDCO financial incentives 2 0.8% 5 2.7% 7 3.0% 7 4.0% 4 3.0% 25 3% JLGC loan guarantee 1 0.4% 1 0.5% 1 0.4% 1 0.6% 2 1.5% 6 1% scheme Total 147 60.2% 115 61.8% 140 59.1% 128 72.7% 90 67.2% 620 63% Customs GST CIT JEDCO JLGC F % F % F % F % F % Domestic 181 54% 80 81% 38 51% 21 84% 1 17% Foreign 155 46% 99 55% 36 49% 4 16% 5 83% Customs GST CIT JEDCO JLGC Total Sector F % F % F % F % F % F % 78. 7.1 7.1 7.1 0.0 100 1. Construction 11 1 1 1 0 14 6% % % % % % 40. 60. 0.0 0.0 0.0 100 2. Information and communication 4 6 0 0 0 10 0% 0% % % % % 72 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 3. Manufacture of computer, electronic 39. 36. 20. 3.7 0.0 100 products, electrical equipment, machinery, 32 30 17 3 0 82 0% 6% 7% % % % equipment, metal products 4. Manufacture of food, beverages and tobacco 57. 23. 12. 5.6 0.9 100 62 25 13 6 1 107 products. 9% 4% 1% % % % 5. Manufacture of other non-metallic mineral 55. 34. 5.8 3.8 0.0 100 29 18 3 2 0 52 products 8% 6% % % % % 6. Manufacture of paper, furniture and wood 47. 37. 0.0 4.2 10. 100 23 18 0 2 5 48 products. 9% 5% % % 4% % 58. 22. 16. 4.0 0.0 100 7. Manufacture of rubber and plastics products 29 11 8 2 0 50 0% 0% 0% % % % 61. 27. 8.2 3.5 0.0 100 8. Manufacture of textile, apparel and leather. 52 23 7 3 0 85 2% 1% % % % % 9. Manufacture of chemicals and chemical 56. 18. 21. 3.2 0.0 100 products, basic pharmaceutical products and 54 18 20 3 0 95 8% 9% 1% % % % pharmaceutical preparations 62. 37. 0.0 0.0 0.0 100 10. Other manufacturing 5 3 0 0 0 8 5% 5% % % % % 11. Printing and reproduction of recorded 67. 25. 3.6 3.6 0.0 100 19 7 1 1 0 28 media 9% 0% % % % % 54. 36. 9.1 0.0 0.0 100 12. Mining & Quarrying 6 4 1 0 0 11 5% 4% % % % % 22. 44. 33. 0.0 0.0 100 13. Transportation 2 4 3 0 0 9 2% 4% 3% % % % 38. 52. 0.0 9.5 0.0 100 14. Other services 8 11 0 2 0 21 1% 4% % % % % 54. 28. 11. 4.0 1.0 100 Total 336 179 74 25 6 620 2% 9% 9% % % % Customs GST CIT JEDCO JLGC Total Sector F % F % F % F % F % F % Natural resource seeking: 54.5 36.4 6 4 1 9.1% 0 0.0% 0 0.0% 11 100% % % Domestic 66.7 33.3 4 2 0 0.0% 0 0.0% 0 0.0% 6 100% % % Foreign 40.0 40.0 20.0 2 2 1 0 0.0% 0 0.0% 5 100% % % % Domestic market-seeking: 53.4 30.9 180 104 32 9.5% 15 4.5% 6 1.8% 337 100% % % Domestic 59.2 25.7 129 56 21 9.6% 11 5.0% 1 0.5% 218 100% % % 73 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Foreign 42.9 40.3 51 48 11 9.2% 4 3.4% 5 4.2% 119 100% % % Efficiency-seeking: 55.1 26.1 15.1 150 71 41 10 3.7% 0 0.0% 272 100% % % % Domestic 49.5 22.7 17.5 10.3 48 22 17 10 0 0.0% 97 100% % % % % Foreign 58.3 28.0 13.7 102 49 24 0 0.0% 0 0.0% 175 100% % % % 54.2 28.9 11.9 Total 336 % 179 % 74 % 25 4.0% 6 1.0% 620 100% Customs GST CIT JEDCO JLGC Total Sector F % F % F % F % F % F % Outside zones 184 56.1% 92 28.0% 37 11.3% 15 4.6% 0 0.0% 328 100% ASEZA 11 45.8% 9 37.5% 4 16.7% 0 0.0% 0 0.0% 24 100% Development zones 9 40.9% 7 31.8% 5 22.7% 1 4.5% 0 0.0% 22 100% Industrial zones 129 53.8% 70 29.2% 27 11.3% 8 3.3% 6 2.5% 240 100% More than one zone 3 50.0% 1 16.7% 1 16.7% 1 16.7% 0 0.0% 6 100% Total 336 54.2% 179 28.9% 74 11.9% 25 4.0% 6 1.0% 620 100% 74 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q 31: Would your company have invested (or re-invested, or started-up) in Jordan [instead of other countries] without the tax/custom/financial incentive(s) that you received, other things being the same? Marginality Freq % Infra-Marginal: Yes 157 52.0% Marginal: No 145 48.0% Total 302 100.0% Infra-Marginal: Yes Marginal: No Total Nationality Freq % Freq % Freq % Domestic 89 53.3% 78 46.7% 167 100.0% Foreign 68 50.4% 67 49.6% 135 100.0% Total 157 52.0% 145 48.0% 302 100.0% Infra-Marginal: Yes Marginal: No Total Sector Freq % Freq % Freq % 1. Construction 4 50.0% 4 50.0% 8 100.0% 2. Information and communication 4 80.0% 1 20.0% 5 100.0% 3. Manufacture of computer, electronic products, electrical equipment, machinery, equipment, metal products 16 41.0% 23 59.0% 39 100.0% 4.Manufacture of food, beverages and tobacco products. 23 43.4% 30 56.6% 53 100.0% 5.Manufacture of other non-metallic mineral products 16 69.6% 7 30.4% 23 100.0% 6.Manufacture of paper, furniture and wood products. 18 69.2% 8 30.8% 26 100.0% 7.Manufacture of rubber and plastics products 16 47.1% 18 52.9% 34 100.0% 8.Manufacture of textile, apparel and leather. 20 46.5% 23 53.5% 43 100.0% 9.Manufacture of chemicals and chemical products, basic pharmaceutical products and pharmaceutical preparations 21 61.8% 13 38.2% 34 100.0% 10.Other manufacturing 1 20.0% 4 80.0% 5 100.0% 11.Printing and reproduction of recorded media 7 46.7% 8 53.3% 15 100.0% 75 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 12.Mining & Quarrying 5 71.4% 2 28.6% 7 100.0% 13.Transportation 2 50.0% 2 50.0% 4 100.0% 14. Other services 4 66.7% 2 33.3% 6 100.0% Total 157 52.0% 145 48.0% 302 100.0% Infra-Marginal: Marginal: No Total By Investment motive Yes Freq % Freq % Freq % Natural resource seeking: 5 71.4% 2 28.6% 7 100.0% Domestic 3 75.0% 1 25.0% 4 100.0% Foreign 2 66.7% 1 33.3% 3 100.0% Domestic market-seeking: 94 54.0% 80 46.0% 174 100.0% Domestic 68 55.3% 55 44.7% 123 100.0% Foreign 26 51.0% 25 49.0% 51 100.0% Efficiency-seeking: 58 47.9% 63 52.1% 121 100.0% Domestic 18 45.0% 22 55.0% 40 100.0% Foreign 40 49.4% 41 50.6% 81 100.0% Total 157 52.0% 145 48.0% 302 100.0% Infra-Marginal: Marginal: No Total Location Yes Freq % Freq % Freq % Outside zones 85 54.8% 70 45.2% 155 100.0% ASEZA 8 53.3% 7 46.7% 15 100.0% Development zones 5 55.6% 4 44.4% 9 100.0% Industrial zones 59 49.2% 61 50.8% 120 100.0% More than one zone 1 33.3% 2 66.7% 3 100.0% Total 158 52.3% 144 47.7% 302 100.0% Infra-Marginal: Marginal: No Total Export orientation Yes Freq % Freq % Freq % Non export-oriented 104 52.3% 95 47.7% 199 100.0% Strict export-oriented 53 51.5% 50 48.5% 103 100.0% 76 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q32: If you received a tax/custom/financial incentive that is specific for this location in Jordan (i.e. development zone, free zone, specific Governorate, ASEZA): Would your company have invested (or re-invested, or started-up) in this location in Jordan [instead of other locations in Jordan] without the incentive, other things being the same? Marginality Freq % Infra-Marginal: Yes 138 45.7% Marginal: No 164 54.3% Total 302 100.0% Infra-Marginal: Yes Marginal: No Total Nationality Freq % Freq % Freq % Domestic 72 43.1% 95 56.9% 167 100.0% Foreign 66 48.9% 69 51.1% 135 100.0% Total 138 45.7% 164 54.3% 302 100.0% Infra-Marginal: Yes Marginal: No Total Sector Freq % Freq % Freq % 1.Construction 1 12.5% 7 87.5% 8 100.0% 2.Information and communication 4 80.0% 1 20.0% 5 100.0% 3.Manufacture of computer, electronic products, electrical equipment, machinery, equipment, metal products 16 41.0% 23 59.0% 39 100.0% 4.Manufacture of food, beverages and tobacco products. 19 35.8% 34 64.2% 53 100.0% 5.Manufacture of other non-metallic mineral products 13 56.5% 10 43.5% 23 100.0% 6.Manufacture of paper, furniture and wood products. 15 57.7% 11 42.3% 26 100.0% 7.Manufacture of rubber and plastics products 16 47.1% 18 52.9% 34 100.0% 8.Manufacture of textile, apparel and leather. 20 46.5% 23 53.5% 43 100.0% 9.Manufacture of chemicals and chemical products, basic pharmaceutical products and pharmaceutical preparations 17 50.0% 17 50.0% 34 100.0% 10.Other manufacturing 1 20.0% 4 80.0% 5 100.0% 11.Printing and reproduction of recorded media 7 46.7% 8 53.3% 15 100.0% 12.Mining & Quarrying 4 57.1% 3 42.9% 7 100.0% 13.Transportation 2 50.0% 2 50.0% 4 100.0% 14.Other services 3 50.0% 3 50.0% 6 100.0% 77 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Total 138 45.7% 164 54.3% 302 100.0% Infra-Marginal: Yes Marginal: No Total Investment motive Freq % Freq % Freq % Natural resource seeking: 4 57.1% 3 42.9% 7 100.0% Domestic 1 25.0% 3 75.0% 4 Foreign 3 100.0% 0 0.0% 3 Domestic market-seeking: 77 44.3% 97 55.7% 174 100.0% Domestic 55 44.7% 68 55.3% 123 Foreign 22 43.1% 29 56.9% 51 Efficiency-seeking: 57 47.1% 64 52.9% 121 100.0% Domestic 16 40.0% 24 60.0% 40 Foreign 41 50.6% 40 49.4% 81 Total 138 45.7% 164 54.3% 302 100.0% Infra-Marginal: Yes Marginal: No Total Location Freq % Freq % Freq % Outside zones 71 45.8% 84 54.2% 155 100.0% ASEZA 6 40% 9 60% 15 100.0% Development zones 4 44.4% 5 55.6% 9 100.0% Industrial zones 57 47.5% 63 52.5% 120 100% More than one zone 1 33.3% 2 66.7% 3 100.0% Total 138 45.7% 164 54.3% 302 100.0% Infra-Marginal: Yes Marginal: No Total By Export orientation Freq % Freq % Freq % Non export-oriented 85 42.7% 114 57.3% 199 100.0% Strict export-oriented 53 51.5% 50 48.5% 103 100.0% Total 138 45.7% 164 54.3% 302 100.0% 78 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q33: If you received tax/custom/financial incentives, did the incentive(s) affect any of the following behaviors/activities? (check yes or no) Marginal: Yes Infra-marginal: No Total Behavior/activity Freq % Freq % Freq % Re-invest in/expand your company /operations 162 53.8% 139 46.2% 301 100% Start-up your firm 167 55.5% 134 44.5% 301 100% Buy new machineries/equipment 226 75.1% 75 24.9% 301 100% Hire new workers 155 52.2% 142 47.8% 297 100% Retain existing workforce 167 56.2% 130 43.8% 297 100% Export 165 57.1% 124 42.9% 289 100% Invest in green technologies 1 0.8% 131 99.2% 132 100% Total 1043 54.4% 875 45.6% 1918 100% Customs Sales tax Customs & sales tax Total Behavior/activity exemptions exemptions exemptions Freq % Freq % Freq % Freq % Re-invest in/expand your company 4 2.5% 4 2.5% 154 95.1% 162 100% /operations Start-up your firm 6 3.6% 1 0.6% 160 95.8% 167 100% Buy new machineries/equipment 4 1.8% 5 2.2% 217 96.0% 226 100% Hire new workers 8 5.2% 1 0.6% 146 94.2% 155 100% Retain existing workforce 8 4.8% 0 0.0% 159 95.2% 167 100% Export 6 3.6% 0 0.0% 159 96.4% 165 100% Invest in green technologies 0 0.0% 0 0.0% 1 100.0% 1 100% Total 36 3.5% 11 1.1% 996 95.5% 1043 100% 79 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Re-investing / expanding operations by sector: Marginal: Yes Infra-marginal: No Total Nationality Freq % Freq % Freq % Domestic 86 51.5% 81 48.5% 167 100.0% Foreign 76 56.3% 59 43.7% 135 100.0% Total 162 53.6% 140 46.4% 302 100.0% Marginal: Yes Infra-marginal: No Total Sector Freq % Freq % Freq % 1. Construction 3 37.5% 5 62.5% 8 100.0% 2.Information and communication 3 60.0% 2 40.0% 5 100.0% 3. Manufacture of computer, electronic products, electrical equipment, machinery, equipment, metal products 19 48.7% 20 51.3% 39 100.0% 4.Manufacture of food, beverages and tobacco products. 24 45.3% 29 54.7% 53 100.0% 5. Manufacture of other non-metallic mineral products 14 60.9% 9 39.1% 23 100.0% 6.Manufacture of paper, furniture and wood products. 17 65.4% 9 34.6% 26 100.0% 7.Manufacture of rubber and plastics products 17 50.0% 17 50.0% 34 100.0% 8.Manufacture of textile, apparel and leather. 30 69.8% 13 30.2% 43 100.0% 9. Manufacture of chemicals and chemical products, basic pharmaceutical products and pharmaceutical preparations 18 52.9% 16 47.1% 34 100.0% 10. Other manufacturing 1 20.0% 4 80.0% 5 100.0% 11. Printing and reproduction of recorded media 7 46.7% 8 53.3% 15 100.0% 12. Mining & Quarrying 4 57.1% 3 42.9% 7 100.0% 13. Transportation 1 25.0% 3 75.0% 4 100.0% 14. Other services 4 66.7% 2 33.3% 6 100.0% Total 162 53.6% 140 46.4% 302 100.0% Marginal: Yes Infra-marginal: No Total Location Freq % Freq % Freq % Outside zones 81 52.3% 74 47.7% 155 100.0% ASEZA 7 46.7% 8 53.3% 15 100.0% Development zones 8 88.9% 1 11.1% 9 100.0% 80 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Industrial zones 68 56.7% 52 43.3% 120 100.0% More than one zone 2 66.7% 1 33.3% 3 100.0% Total 166 55.0% 136 45.0% 302 100.0% Marginal: Yes Infra-marginal: No Total Export orientation Freq % Freq % Freq % Non export-oriented 99 49.75% 100 50.25% 199 100.0% Strict export-oriented 64 62.1% 39 37.9% 103 100.0% Total 163 54.0% 139 46.0% 302 100.0% 81 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Start up your firm Marginal: Yes Infra-marginal: No Total Nationality Freq % Freq % Freq % Domestic 87 52.1% 80 47.9% 167 100.0% Foreign 80 59.3% 55 40.7% 135 100.0% Total 167 55.3% 135 44.7% 301 100.0% Marginal: Yes Infra-marginal: No Total Sector Freq % Freq % Freq % 1.Construction 4 50.0% 4 50.0% 8 100.0% 2.Information and communication 2 40.0% 3 60.0% 5 100.0% 3.Manufacture of computer, electronic products, electrical equipment, machinery, equipment, 19 48.7% 20 51.3% 39 100.0% metal products 4.Manufacture of food, beverages and tobacco 31 58.5% 22 41.5% 53 100.0% products. 5.Manufacture of other non-metallic mineral 14 60.9% 9 39.1% 23 100.0% products 6.Manufacture of paper, furniture and wood 13 50.0% 13 50.0% 26 100.0% products. 7.Manufacture of rubber and plastics products 18 52.9% 16 47.1% 34 100.0% 8.Manufacture of textile, apparel and leather. 31 72.1% 12 27.9% 43 100.0% 9.Manufacture of chemicals and chemical products, basic pharmaceutical products and 19 55.9% 15 44.1% 34 100.0% pharmaceutical preparations 10.Other manufacturing 2 40.0% 3 60.0% 5 100.0% 11.Printing and reproduction of recorded media 4 26.7% 11 73.3% 15 100.0% 12.Mining & Quarrying 3 42.9% 4 57.1% 7 100.0% 13.Transportation 3 75.0% 1 25.0% 4 100.0% 14. Other services 5 83.3% 1 16.7% 6 100.0% Total 168 55.6% 134 44.4% 301 100.0% Marginal: Yes Infra-marginal: No Total Zone Location Freq % Freq % Freq % Outside zones 72 46.5% 83 53.5% 155 100.0% ASEZA 9 60.0% 6 40.0% 15 100.0% Development zones 6 66.7% 3 33.3% 9 100.0% 82 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Industrial zones 77 64.2% 43 35.8% 120 100.0% More than one zone 1 33.3% 2 66.7% 3 100.0% Total 165 54.6% 137 45.4% 302 100.0% Marginal: Yes Infra-marginal: No Total Export orientation Freq % Freq % Freq % Non export-oriented 109 55.1% 89 44.9% 198 100.0% Strict export-oriented 58 56.3% 45 43.7% 103 100.0% Total 167 55.5% 134 44.5% 301 100.0% Marginal: Yes Infra-marginal: No Total Export orientation Freq % Freq % Freq % Non export-oriented 93 53.1% 82 46.9% 175 100.0% Less Strict export-oriented 74 58.7% 52 41.3% 126 100.0% Total 167 55.5% 134 44.5% 301 100.0% Buy new machineries/equipment Marginal: Yes Infra-marginal: No Total Nationality Freq % Freq % Freq % Domestic 123 74.1% 43 25.9% 166 100.0% Foreign 103 76.3% 32 23.7% 135 100.0% Total 226 75.1% 75 24.9% 301 100.0% Marginal: Yes Infra-marginal: No Total Sector Freq % Freq % Freq % 1.Construction 6 75.0% 2 25.0% 8 100.0% 12.Mining & Quarrying 3 42.9% 4 57.1% 7 100.0% 3.Information and communication 3 60.0% 2 40.0% 5 100.0% 13.Transportation 2 50.0% 2 50.0% 4 100.0% 8.Manufacture of textile, apparel and leather. 38 88.4% 5 11.6% 43 100.0% 4.Manufacture of food, beverages and tobacco 40 75.5% 13 24.5% 53 100.0% products. 6.Manufacture of paper, furniture and wood 19 73.1% 7 26.9% 26 100.0% products. 83 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 9.Manufacture of chemicals and chemical products, basic pharmaceutical products and 22 64.7% 12 35.3% 34 100.0% pharmaceutical preparations 7.Manufacture of rubber and plastics products 26 76.5% 8 23.5% 34 100.0% 3.Manufacture of computer, electronic products, electrical equipment, machinery, equipment, 28 71.8% 11 28.2% 39 100.0% metal products 5.Manufacture of other non-metallic mineral 18 81.8% 4 18.2% 22 100.0% products 11.Printing and reproduction of recorded media 11 73.3% 4 26.7% 15 100.0% 10.Other manufacturing 4 80.0% 1 20.0% 5 100.0% 14.Other services 6 100.0% 0 0.0% 6 100.0% Total 226 75.1% 75 24.9% 301 100.0% Marginal: Yes Infra-marginal: No Total Location Freq % Freq % Freq % Outside zones 115 74.2% 40 25.8% 155 100.0% ASEZA 7 46.7% 8 53.3% 15 100.0% Development zones 8 88.9% 1 11.1% 9 100.0% Industrial zones 96 80.0% 24 20.0% 120 100.0% More than one zone 2 66.7% 1 33.3% 3 100.0% Total 228 75.5% 74 24.5% 302 100.0% Marginal: Yes Infra-marginal: No Total Export orientation Freq % Freq % Freq % Non export-oriented 149 75.3% 49 24.7% 198 100.0% Strict export-oriented 77 74.8% 26 25.2% 103 100.0% Total 226 75.1% 75 24.9% 301 100.0% Hire new workers Marginal: Yes Infra-marginal: No Total Nationality Freq % Freq % Freq % Domestic 86 52.4% 78 47.6% 164 100.0% Foreign 69 51.9% 64 48.1% 133 100.0% Total 155 52.2% 142 47.8% 297 100.0% 84 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Marginal: Yes Infra-marginal: No Total Sector Freq % Freq % Freq % 1.Construction 3 37.5% 5 62.5% 8 100.0% 12.Mining & Quarrying 5 71.4% 2 28.6% 7 100.0% 2.Information and communication 2 40.0% 3 60.0% 5 100.0% 13.Transportation 3 75.0% 1 25.0% 4 100.0% 8.Manufacture of textile, apparel and leather. 29 67.4% 14 32.6% 43 100.0% 4.Manufacture of food, beverages and tobacco 23 43.4% 30 56.6% 53 100.0% products. 6.Manufacture of paper, furniture and wood 12 48.0% 13 52.0% 25 100.0% products. 9.Manufacture of chemicals and chemical products, basic pharmaceutical products and 13 38.2% 21 61.8% 34 100.0% pharmaceutical preparations 7.Manufacture of rubber and plastics products 17 53.1% 15 46.9% 32 100.0% 3.Manufacture of computer, electronic products, electrical equipment, machinery, 21 53.8% 18 46.2% 39 100.0% equipment, metal products 5.Manufacture of other non-metallic mineral 14 66.7% 7 33.3% 21 100.0% products 11.Printing and reproduction of recorded media 6 40.0% 9 60.0% 15 100.0% 10.Other manufacturing 4 80.0% 1 20.0% 5 100.0% 14.Other services 3 50.0% 3 50.0% 6 100.0% Total 155 52.2% 142 47.8% 297 100.0% Marginal: Yes Infra-marginal: No Total Location Freq % Freq % Freq % Outside zones 78 50.6% 76 49.4% 154 100.0% ASEZA 6 40.0% 9 60.0% 15 100.0% Development zones 7 77.8% 2 22.2% 9 100.0% Industrial zones 65 54.6% 54 45.4% 119 100.0% Total 156 52.5% 141 47.5% 297 100.0% Marginal: Yes Infra-marginal: No Total Export orientation Freq % Freq % Freq % Non export-oriented 97 50.05 97 50.0% 194 100.0% 85 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Strict export-oriented 58 56.3% 45 43.7% 103 100.0% Total 155 52.2% 142 47.8% 297 100.0% Retain existing workforce Marginal: Yes Infra-marginal: No Total Nationality Freq % Freq % Freq % Domestic 87 53.0% 77 47.0% 164 100.0% Foreign 80 60.2% 53 39.8% 133 100.0% Total 167 56.2% 130 43.8% 297 100.0% Marginal: Yes Infra-marginal: No Total Sector Freq % Freq % Freq % 1.Construction 3 37.5% 5 62.5% 8 100.0% 12.Mining & Quarrying 5 71.4% 2 28.6% 7 100.0% 2.Information and communication 4 80.0% 1 20.0% 5 100.0% 13.Transportation 3 75.0% 1 25.0% 4 100.0% 8.Manufacture of textile, apparel and leather. 29 67.4% 14 32.6% 43 100.0% 28 52.8% 25 47.2% 53 100.0% 4.Manufacture of food, beverages and tobacco products. 6.Manufacture of paper, furniture and wood products. 11 44.0% 14 56.0% 25 100.0% 9.Manufacture of chemicals and chemical products, basic 18 52.9% 16 47.1% 34 100.0% pharmaceutical products and pharmaceutical preparations 7.Manufacture of rubber and plastics products 16 50.0% 16 50.0% 32 100.0% 3.Manufacture of computer, electronic products, electrical 20 51.3% 19 48.7% 39 100.0% equipment, machinery, equipment, metal products 5.Manufacture of other non-metallic mineral products 15 71.4% 6 28.6% 21 100.0% 11.Printing and reproduction of recorded media 8 53.3% 7 46.7% 15 100.0% 10.Other manufacturing 4 80.0% 1 20.0% 5 100.0% 14.Other services 3 50.0% 3 50.0% 6 100.0% Total 167 43.8% 130 56.2% 297 100.0% Marginal: Yes Infra-marginal: No Total Location Freq % Freq % Freq % Outside zones 84 54.5% 70 45.5% 154 84 ASEZA 5 33.3% 10 66.7% 15 5 Development zones 7 77.8% 2 22.2% 9 7 86 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Industrial zones 71 59.7% 48 40.3% 119 71 Total 167 56.2% 130 43.8% 297 100.0% Marginal: Yes Infra-marginal: No Total Export orientation Freq % Freq % Freq % Non export-oriented 108 55.7% 86 44.3% 194 100.0% Strict export-oriented 59 57.3% 44 42.7% 103 100.0% Total 167 56.2% 130 43.8% 297 100.0% Export Marginal: Yes Infra-marginal: No Total Nationality Freq % Freq % Freq % Domestic 83 52.9% 74 47.1% 157 100.0% Foreign 82 62.1% 50 37.9% 132 100.0% Total 165 57.1% 124 42.9% 289 100.0% Marginal: Yes Infra-marginal: No Total Sector Freq % Freq % Freq % 1.Construction 1 12.5% 7 87.5% 8 100.0% 12.Mining & Quarrying 4 57.1% 3 42.9% 7 100.0% 2.Information and communication 3 60.0% 2 40.0% 5 100.0% 13.Transportation 3 75.0% 1 25.0% 4 100.0% 8.Manufacture of textile, apparel and leather. 32 76.2% 10 23.8% 42 100.0% 4.Manufacture of food, beverages and tobacco 23 43.4% 30 56.6% 53 100.0% products. 6.Manufacture of paper, furniture and wood products. 15 62.5% 9 37.5% 24 100.0% 9.Manufacture of chemicals and chemical products, basic pharmaceutical products and pharmaceutical 25 73.5% 9 26.5% 34 100.0% preparations 7.Manufacture of rubber and plastics products 17 53.1% 15 46.9% 32 100.0% 3.Manufacture of computer, electronic products, electrical equipment, machinery, equipment, metal 17 45.9% 20 54.1% 37 100.0% products 5.Manufacture of other non-metallic mineral products 13 72.2% 5 27.8% 18 100.0% 11.Printing and reproduction of recorded media 5 33.3% 10 66.7% 15 100.0% 87 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 10.Other manufacturing 3 75.0% 1 25.0% 4 100.0% 14.Other services 4 66.7% 2 33.3% 6 100.0% Total 165 57.1% 124 42.9% 289 100.0% Marginal: Yes Infra-marginal: No Total Location Freq % Freq % Freq % Outside zones 72 48.3% 77 51.7% 149 100.0% ASEZA 7 46.7% 8 53.3% 15 100.0% Development zones 7 77.8% 2 22.2% 9 100.0% Industrial zones 80 69.6% 35 30.4% 115 100.0% Total 166 57.6% 122 42.4% 288 100.0% Marginal: Yes Infra-marginal: No Total By export Export orientation Freq % Freq % Freq % Non export-oriented 92 48.9% 96 51.1% 188 100.0% Strict export-oriented 73 72.3% 28 27.7% 101 100.0% Total 165 57.1% 124 42.9% 289 100.0% Invest in green technology Marginal: Yes Infra-marginal: No Total Nationality Freq % Freq % Freq % Domestic 0 0.0% 77 100.0% 77 100.0% Foreign 1 1.8% 54 98.2% 55 100.0% Total 1 0.8% 131 99.2% 132 100.0% Marginal: Yes Infra-marginal: No Total By Sector Freq % Freq % Freq % 1.Construction 0 0.0% 5 100.0% 5 100.0% 12.Mining & Quarrying 0 0.0% 2 100.0% 2 100.0% 2.Information and communication 0 0.0% 1 100.0% 1 100.0% 13.Transportation 0 0 0 0 0 0 8.Manufacture of textile, apparel and leather. 0 0.0% 7 100.0% 7 100.0% 4.Manufacture of food, beverages and tobacco 0 0.0% 31 100.0% 31 100.0% products. 88 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 6.Manufacture of paper, furniture and wood 0 0.0% 14 100.0% 14 100.0% products. 9.Manufacture of chemicals and chemical products, basic pharmaceutical products and 0 0.0% 15 100.0% 15 100.0% pharmaceutical preparations 7.Manufacture of rubber and plastics products 0 0.0% 17 100.0% 17 100.0% 3.Manufacture of computer, electronic products, electrical equipment, machinery, 1 6.7% 14 93.3% 15 100.0% equipment, metal products 5.Manufacture of other non-metallic mineral 0 0.0% 9 100.0% 9 100.0% products 11.Printing and reproduction of recorded media 0 0.0% 10 100.0% 10 100.0% 10.Other manufacturing 0 0.0% 3 100.0% 3 100.0% 14.Other services 0 0.0% 3 100.0% 3 100.0% Total 1 0.8% 131 99.2% 132 100.0% Marginal: Yes Infra-marginal: No Total Location Freq % Freq % Freq % Outside zones 0 0.0% 79 100.0% 79 100.0% ASEZA 0 0.0% 2 100.0% 2 100.0% Development zones 1 16.7% 5 83.3% 6 100.0% Industrial zones 0 0.0% 45 100.0% 45 100% Total 1 0.8% 131 99.2% 132 100.0% Marginal: Yes Infra-marginal: No Total Export orientation Freq % Freq % Freq % Non export-oriented 1 1.1% 90 98.9% 91 100.0% Strict export-oriented 0 0.0% 41 100.0% 41 100.0% Total 1 0.8% 131 99.2% 132 100.0% 89 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q36: Is your company currently considering (please select all those that apply): Plans / Considerations Freq % Additional investment in Jordan 82 27.2% Additional investment but in another country 55 18.2% Shifting operations/company to another location in Jordan 19 6.3% Shifting operations/company to another country 20 6.6% Closing operations/company 24 7.9% Stay the same 160 53.0% Total 360 100% Domestic Foreign Considerations Freq % Freq % Additional investment in Jordan 44 26.3% 38 28.1% Additional investment but in another country 32 19.2% 23 17.0% Shifting operations/company to another location in Jordan 13 7.8% 6 4.4% Shifting operations/company to another country 13 7.8% 7 5.2% Closing operations/company 16 9.6% 8 5.9% Stay the same 85 50.9% 75 55.6% Development Industrial ASEZA outside zones Considerations zones zones Freq % Freq % Freq % Freq % Additional investment in Jordan 5 55.6% 34 26.0% 5 31.3% 37 19.7% Additional investment but in another country 1 11.1% 19 14.5% 1 6.3% 33 17.6% Shifting operations/company to another location 0 0.0% 8 6.1% 0 0.0% 10 5.3% in Jordan Shifting operations/company to another country 1 11.1% 8 6.1% 1 6.3% 10 5.3% Closing operations/company 0 0.0% 5 3.8% 2 12.5% 17 9.0% Stay the same 2 22.2% 57 43.5% 7 43.8% 81 43.1% Natural resource Domestic market Efficiency Considerations seeking seeking seeking Freq % Freq % Freq % 90 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Additional investment in Jordan 2 25.0% 39 19.1% 41 29.3% Additional investment but in another country 1 12.5% 30 14.7% 24 17.1% Shifting operations/company to another 1 12.5% 10 4.9% 8 5.7% location in Jordan Shifting operations/company to another 0 0.0% 8 3.9% 12 8.6% country Closing operations/company 0 0.0% 14 6.9% 10 7.1% Stay the same 4 50.0% 103 50.5% 54 38.6% 91 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Additional Shifting Additional Shifting investment operations/company Closing Stay the investment operations/company Total but in another to another location operations/company same in Jordan to another country country in Jordan Sector Freq % Freq % Freq % Freq % Freq % Freq % Freq % 1.Construction 3 25% 3 25% 0 0% 2 17% 2 17% 2 17% 12 100% 12.Mining & Quarrying 2 25% 1 13% 1 13% 0 0% 0 0% 4 50% 8 100% 2.Information and communication 1 20% 2 40% 0 0% 0 0% 0 0% 2 40% 5 100% 13.Transportation 1 20% 0 0% 0 0% 1 20% 1 20% 2 40% 5 100% 8.Manufacture of textile, apparel and 14 27% 8 16% 1 2% 4 8% 2 4% 22 43% 51 100% leather. 4.Manufacture of food, beverages 16 25% 9 14% 5 8% 3 5% 4 6% 28 43% 65 100% and tobacco products. 6.Manufacture of paper, furniture 6 20% 2 7% 2 7% 1 3% 3 10% 16 53% 30 100% and wood products. 9.Manufacture of chemicals and chemical products, basic 11 28% 4 10% 1 3% 2 5% 3 8% 18 46% 39 100% pharmaceutical products and pharmaceutical preparations 7.Manufacture of rubber and plastics 9 21% 10 23% 1 2% 3 7% 4 9% 16 37% 43 100% products 3.Manufacture of computer, electronic products, electrical 7 17% 3 7% 3 7% 1 2% 3 7% 25 60% 42 100% equipment, machinery, equipment, metal products 5.Manufacture of other non-metallic 6 22% 2 7% 3 11% 0 0% 0 0% 16 59% 27 100% mineral products 11.Printing and reproduction of 3 15% 6 30% 2 10% 3 15% 0 0% 6 30% 20 100% recorded media 10.Other manufacturing 1 20% 2 40% 0 0% 0 0% 1 20% 1 20% 5 100% 14.Other services 2 25% 3 38% 0 0% 0 0% 1 13% 2 25% 8 100% 92 Non-export oriented Strict export oriented Considerations Freq % Freq % Additional investment in Jordan 46 19.5% 36 28.8% Additional investment but in another country 37 15.7% 18 14.4% Shifting operations/company to another location in Jordan 12 5.1% 7 5.6% Shifting operations/company to another country 11 4.7% 9 7.2% Closing operations/company 16 6.8% 8 6.4% Stay the same 114 48.3% 47 37.6% 93 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q37: Over the next one year, are you expecting your workforce to be (please select one option): Workforce expected to be: Freq % Larger 154 51.0% Approximately the same 107 35.4% Smaller 41 13.6% Total 302 100.0% Larger Approximately the same Smaller Total Nationality Freq % Freq % Freq % Freq % Domestic 76 45.5% 64 38.3% 27 16.2% 167 100.0% Foreign 78 57.8% 43 31.9% 14 10.4% 135 100.0% Total 154 51.0% 107 35.4% 41 13.6% 302 100.0% Approximately Larger Smaller Total Sector the same Freq % Freq % Freq % Freq % 1.Construction 1 12.5% 5 62.5% 2 25.0% 8 100.0% 12.Mining & Quarrying 6 85.7% 0 0.0% 1 14.3% 7 100.0% 2.Information and communication 3 60.0% 2 40.0% 0 0.0% 5 100.0% 13.Transportation 2 50.0% 2 50.0% 0 0.0% 4 100.0% 8.Manufacture of textile, apparel and 24 55.8% 11 25.6% 8 18.6% 43 100.0% leather. 4.Manufacture of food, beverages 26 49.1% 20 37.7% 7 13.2% 53 100.0% and tobacco products. 6.Manufacture of paper, furniture and 15 57.7% 9 34.6% 2 7.7% 26 100.0% wood products. 9.Manufacture of chemicals and chemical products, basic 17 50.0% 14 41.2% 3 8.8% 34 100.0% pharmaceutical products and pharmaceutical preparations 7.Manufacture of rubber and plastics 14 41.2% 12 35.3% 8 23.5% 34 100.0% products 94 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 3.Manufacture of computer, electronic products, electrical 22 56.4% 12 30.8% 5 12.8% 39 100.0% equipment, machinery, equipment, metal products 5.Manufacture of other non-metallic 14 60.9% 8 34.8% 1 4.3% 23 100.0% mineral products 11.Printing and reproduction of 4 26.7% 9 60.0% 2 13.3% 15 100.0% recorded media 10.Other manufacturing 4 80.0% 0 0.0% 1 20.0% 5 100.0% 14.Other services 2 33.3% 3 50.0% 1 16.7% 6 100.0% Total 154 51.0% 107 35.4% 41 13.6% 302 100.0% Approximately Larger Smaller Total Investment motive the same Freq % Freq % Freq % Freq % Natural resource seeking 6 85.7% 0 0.0% 1 14.3% 7 100.0% Domestic market-seeking 79 45.4% 71 40.8% 24 13.8% 174 100.0% Efficiency-seeking 69 57.0% 36 29.8% 16 13.2% 121 100.0% Total 154 51.0% 107 35.4% 41 13.6% 302 100.0% Approximately Larger Smaller Total Location the same Freq % Freq % Freq % Freq % Outside zones 65 41.9% 64 41.3% 26 16.8% 155 100.0% ASEZA 7 46.7% 6 40.0% 2 13.3% 15 100.0% Development zones 8 88.9% 1 11.1% 0 0.0% 9 100.0% Industrial zones 72 60.0% 35 29.2% 13 10.8% 120 100.0% More than one zone 2 66.7% 1 33.3% 0 0.0% 3 100.0% Total 154 51.0% 107 35.4% 41 13.6% 302 100.0% 95 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Approximately Larger Smaller Total Export orientation the same Freq % Freq % Freq % Freq % Non export-oriented 94 47.2% 75 37.7% 30 15.1% 199 100.0% Strict export-oriented 60 58.3% 32 31.1% 11 10.7% 103 100.0% Total 154 51.0% 107 35.4% 41 13.6% 302 100.0% Q38: What obstacles do you face in hiring skilled (domestic and foreign) workers in Jordan? (Please rate from 5 = highest obstacle to 1 = lowest obstacle) 1: very low obstacle 2: low obstacle 3: moderate obstacle 4: high obstacle 5: very high obstacle Nationality Jordanian Foreign Jordanian Foreign Jordanian Foreign Jordanian Foreign Jordanian Foreign Obstacle F % F % F % F % F % F % F % F % F % F % Existing laws and regulations create obstacles 197 65% 57 20% 16 5% 15 5% 37 12% 51 18% 19 6% 48 17% 33 11% 111 39% for hiring skilled workers Lack of availability of 63 21% 132 47% 34 11% 31 11% 57 19% 55 20% 41 14% 31 11% 107 35% 33 12% skilled workers The location of investment is not 213 71% 222 79% 24 8% 26 9% 26 9% 16 6% 15 5% 8 3% 24 8% 10 4% attractive for skilled workers Salaries and wages for skilled 96 32% 139 49% 39 13% 41 15% 61 20% 57 20% 40 13% 23 8% 66 22% 22 8% workers are too high 96 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Existing laws and The location of Salaries and wages for regulations create Lack of availability of investment is not skilled workers are too Other84 obstacles for hiring skilled skilled workers attractive for skilled high workers workers Average Average Average Average Average Average Average Average Average Average Nationality Jordanians Foreign Jordanians Foreign Jordanians Foreign Jordanians Foreign Jordanians Foreign Domestic 2 3 3 2 2 1 3 2 3 4 Foreign 2 3 3 2 2 1 3 2 3 4 Scale: 1: very low obstacle; 2: low obstacle, 3: moderate obstacle; 4: high obstacle; 5: very high obstacle 84 Training costs, high turnover of newly-hired, work permits, lack of experience in the field of operations, competition with other companies on the workers, unsatisfied workers, social security memberships expenses. 97 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Existing laws and The location of investment Salaries and wages for regulations create Lack of availability of is not attractive for skilled skilled workers are too Other obstacles for hiring skilled skilled workers workers high workers Average Average Average Average Average Average Average Average Average Average Sector Jordanians Foreign Jordanians Foreign Jordanians Jordanians Foreign Jordanians Foreign Jordanians 1.Construction 2 5 3 3 2 2 4 3 0 0 12.Mining & Quarrying 1 3 3 2 1 1 4 2 0 0 2.Information and 1 2 3 1 1 1 3 1 4 0 communication 13.Transportation 1 3 2 1 2 1 1 1 0 0 8.Manufacture of textile, 2 3 4 2 2 1 2 2 3 0 apparel and leather. 4.Manufacture of food, beverages and tobacco 2 3 3 2 2 1 3 2 4 4 products. 6.Manufacture of paper, 2 3 3 2 2 1 3 2 2 5 furniture and wood products. 9.Manufacture of chemicals and chemical products, basic 2 3 3 2 2 1 3 2 4 0 pharmaceutical products and pharmaceutical preparations 7.Manufacture of rubber and 2 4 3 2 2 1 3 2 4 3 plastics products 3.Manufacture of computer, electronic products, electrical 2 3 4 2 2 1 3 2 3 4 equipment, machinery, equipment, metal products 5.Manufacture of other non- 2 3 3 2 2 1 3 2 3 5 metallic mineral products 11.Printing and reproduction 2 3 4 2 1 1 2 1 0 0 of recorded media 10.Other manufacturing 2 3 5 2 2 2 3 3 0 0 14.Other services 2 3 2 2 1 1 3 1 0 0 Scale: 1: very low obstacle; 2: low obstacle, 3: moderate obstacle; 4: high obstacle; 5: very high obstacle 98 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Existing laws and The location of investment regulations create Lack of availability of Salaries and wages for is not attractive for skilled Other obstacles for hiring skilled skilled workers skilled workers are too high workers workers Average Average Average Average Average Average Average Average Average Average Investment motive Jordanians Foreign Jordanians Foreign Jordanians Jordanians Foreign Jordanians Foreign Jordanians Natural resource 1 3 3 2 1 1 2 2 0 0 seeking Domestic market- 2 3 3 2 2 1 3 2 3 4 seeking Efficiency-seeking 2 3 4 2 2 1 3 2 3 3 Scale: 1: very low obstacle; 2: low obstacle, 3: moderate obstacle; 4: high obstacle; 5: very high obstacle Existing laws and The location of investment regulations create Lack of availability of Salaries and wages for is not attractive for skilled Other obstacles for hiring skilled skilled workers skilled workers are too high workers workers Average Average Average Average Average Average Average Average Average Average Location Jordanians Foreign Jordanians Foreign Jordanians Jordanians Foreign Jordanians Foreign Jordanians Outside zones 2 3 3 2 2 1 3 2 3 5 ASEZA 2 3 3 1 2 1 3 1 0 0 Development/industrial 2 3 4 2 2 1 3 2 3 4 zones Scale: 1: very low obstacle; 2: low obstacle, 3: moderate obstacle; 4: high obstacle; 5: very high obstacle Existing laws and The location of investment regulations create Lack of availability of Salaries and wages for is not attractive for skilled Other obstacles for hiring skilled skilled workers skilled workers are too high workers workers Average Average Average Average Average Average Average Average Average Average Export orientation Jordanians Foreign Jordanians Foreign Jordanians Jordanians Foreign Jordanians Foreign Jordanians Non export-oriented 2 3 3 2 2 1 3 2 4 4 Strict export-oriented 2 3 3 2 2 1 3 2 3 3 Scale: 1: very low obstacle; 2: low obstacle, 3: moderate obstacle; 4: high obstacle; 5: very high obstacle 99 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q 39: Would you hire Syrian workers if work permits were granted to them? Response Freq % Yes 185 61.3% No 117 38.7% Total 302 100.0% Domestic Foreign Response Freq % Freq % Yes 185 61.3% 84 62.2% No 66 39.5% 51 37.8% Total 167 100.0% 135 100.0% Yes No Total Sector Freq % Freq % Freq % Construction 4 50.0% 4 50.0% 8 100.0% Mining & Quarrying 4 57.1% 3 42.9% 7 100.0% Information and communication 2 40.0% 3 60.0% 5 100.0% Transportation 2 50.0% 2 50.0% 4 100.0% Manufacture of textile, apparel and leather. 22 51.2% 21 48.8% 43 100.0% Manufacture of food, beverages and tobacco 33 62.3% 20 37.7% 53 100.0% products. Manufacture of paper, furniture and wood 21 80.8% 5 19.2% 26 100.0% products. Manufacture of chemicals and chemical products, basic pharmaceutical products and 20 58.8% 14 41.2% 34 100.0% pharmaceutical preparations Manufacture of rubber and plastics products 17 50.0% 17 50.0% 34 100.0% Manufacture of computer, electronic products, electrical equipment, machinery, equipment, 26 66.7% 13 33.3% 39 100.0% metal products Manufacture of other non-metallic mineral 15 65.2% 8 34.8% 23 100.0% products Printing and reproduction of recorded media 10 66.7% 5 33.3% 15 100.0% 100 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Other manufacturing 5 100.0% 0 0.0% 5 100.0% Other services 4 66.7% 2 33.3% 6 100.0% Total 185 61.3% 117 38.7% 302 100.0% Yes No Total Investment motive Freq % Freq % Freq % Natural resource seeking 4 57.1% 3 42.9% 7 100.0% Domestic market-seeking 101 58.0% 73 42.0% 174 100.0% Efficiency-seeking 80 66.1% 41 33.9% 121 100.0% Total 185 61.3% 117 38.7% 302 100.0% Inside zones Outside zone Zone location Freq % Freq % Yes 87 59.2% 98 63.2% No 60 40.8% 57 36.8% Total 147 100.0% 155 100.0% Yes No Total Export orientation Freq % Freq % Freq % Non export-oriented 120 60.3% 79 39.7% 199 100.0% Strict export-oriented 65 63.1% 38 36.9% 103 100.0% Total 185 61.3% 117 38.7% 302 100.0% 101 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q 40: Would the cost of the work permit be an issue? Response Freq % Yes 133 44.0% No 169 56.0% Total 302 100.0% Domestic Foreign Nationality Freq % Freq % Yes 81 48.5% 47 34.8% No 86 51.5% 88 65.2% Total 167 100.0% 135 100.0% Yes No Total Sector Freq % Freq % Freq % Construction 7 87.5% 1 12.5% 8 100.0% Mining & Quarrying 6 85.7% 1 14.3% 7 100.0% Information and communication 1 20.0% 4 80.0% 5 100.0% Transportation 1 25.0% 3 75.0% 4 100.0% Manufacture of textile, apparel and leather. 12 27.9% 31 72.1% 43 100.0% Manufacture of food, beverages and tobacco products 32 60.4% 21 39.6% 53 100.0% Manufacture of paper, furniture and wood products. 11 42.3% 15 57.7% 26 100.0% Manufacture of chemicals and chemical products, basic 14 41.2% 20 58.8% 34 100.0% pharmaceutical products and pharmaceutical preparations Manufacture of rubber and plastics products 11 32.4% 23 67.6% 34 100.0% Manufacture of computer, electronic products, electrical 21 53.8% 18 46.2% 39 100.0% equipment, machinery, equipment, metal products Manufacture of other non-metallic mineral products 6 26.1% 17 73.9% 23 100.0% Printing and reproduction of recorded media 7 46.7% 8 53.3% 15 100.0% Other manufacturing 1 20.0% 4 80.0% 5 100.0% Other services 3 50.0% 3 50.0% 6 100.0% Total 133 44.0% 169 56.0% 302 100.0% 102 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Yes No Total Investment motive Freq % Freq % Freq % Natural resource seeking 1 14.3% 6 85.7% 7 100.0% Domestic market-seeking 76 43.7% 98 56.3% 174 100.0% Efficiency-seeking 51 42.1% 70 57.9% 121 100.0% Total 128 42.4% 174 57.6% 302 100.0% Inside zones outside zone Response Freq % Freq % Yes 58 39.5% 70 45.2% No 89 60.5% 85 54.8% Total 147 100.0% 155 100.0% Yes No Total Export orientation Freq % Freq % Freq % Non export-oriented 86 43.2% 113 56.8% 199 100.0% Strict export-oriented 42 40.8% 61 59.2% 103 100.0% Total 128 42.4% 174 57.6% 302 100.0% 103 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Q41: If you are importing inputs of production (goods and/or services): what are the top three imported inputs of production that you would like to source locally if available? Sector Top 3 inputs of production 1.Construction • Cement • Devices & equipment • Spare parts 12.Mining & Quarrying • Stone & marble cutting equipment • Spare parts • Gunpowder 2.Information and communication • Software • Hardware • Spare parts and peripheral devices 13.Transportation • None 8.Manufacture of textile, apparel and leather. • Garment and apparel accessories • Fabrics • Threads and strings 4.Manufacture of food, beverages and tobacco products. • Packaging material and containers • Flour • Production improvers and enhancers 6.Manufacture of paper, furniture and wood products. • Accessories • Inks and paints • Raw paper (cellulose) 9.Manufacture of chemicals and chemical products, basic • Polymers pharmaceutical products and pharmaceutical preparations • Sodium compounds • Containers and packages 7.Manufacture of rubber and plastics products • Dyes • Plastic raw material (PET, PVC…etc) • Spare parts 3.Manufacture of computer, electronic products, electrical • Aluminum sheets equipment, machinery, equipment, metal products • Metal sheets • Equipment parts 5.Manufacture of other non-metallic mineral products • Accessories • Adhesives • Raw material for paints and colors 11.Printing and reproduction of recorded media • Paper sheets & rolls 104 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP • Inks and dyes • Solvents and printing chemicals 10.Other manufacturing • Glass • Aluminum • Spare parts 14.Other services • Equipment • Medical materials Q42: As a result of your experience, have you encouraged any other people or companies to consider investing in Jordan? Answer Freq % Yes 159 52.6% No 143 47.4% Total 302 100.0% Yes No Total Nationality Freq % Freq % Freq % Domestic 79 47.3% 88 52.7% 167 100.0% Foreign 80 59.3% 55 40.7% 135 100.0% Total 159 52.6% 143 47.4% 302 100.0% Yes No Total Sector Freq % Freq % Freq % 1.Construction 4 50.0% 4 50.0% 8 100.0% 12.Mining & Quarrying 5 71.4% 2 28.6% 7 100.0% 2.Information and communication 2 40.0% 3 60.0% 5 100.0% 13.Transportation 2 50.0% 2 50.0% 4 100.0% 8.Manufacture of textile, apparel and leather. 28 65.1% 15 34.9% 43 100.0% 4.Manufacture of food, beverages and tobacco 26 49.1% 27 50.9% 53 100.0% products. 6.Manufacture of paper, furniture and wood 14 53.8% 12 46.2% 26 100.0% products. 105 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP 9.Manufacture of chemicals and chemical products, basic pharmaceutical products and 14 41.2% 20 58.8% 34 100.0% pharmaceutical preparations 7.Manufacture of rubber and plastics products 14 41.2% 20 58.8% 34 100.0% 3.Manufacture of computer, electronic products, electrical equipment, machinery, equipment, 22 56.4% 17 43.6% 39 100.0% metal products 5.Manufacture of other non-metallic mineral 15 65.2% 8 34.8% 23 100.0% products 11.Printing and reproduction of recorded media 6 40.0% 9 60.0% 15 100.0% 10.Other manufacturing 3 60.0% 2 40.0% 5 100.0% 14.Other services 4 66.7% 2 33.3% 6 100.0% Total 159 52.6% 143 47.4% 302 100.0% Yes No Total Investment motive Freq % Freq % Freq % Natural resource seeking 5 71.4% 2 28.6% 7 100.0% Domestic market-seeking 85 48.9% 89 51.1% 174 100.0% Efficiency-seeking 69 57.0% 52 43.0% 121 100.0% Total 159 52.6% 143 47.4% 302 100.0% Yes No Total Location Freq % Freq % Freq % Outside zones 79 51% 76 49% 155 100.0% ASEZA 8 53.3% 7 46.7% 15 100.0% Development zones 6 66.7% 3 33.3% 9 100.0% Industrial zones 63 52.5% 57 47.5% 120 100.0% More than one zone 3 100% 0 0% 3 100.0% Total 159 52.3% 143 47.7% 302 100.0% Yes No Total Export orientation Freq % Freq % Freq % Non export-oriented 98 49.2% 101 50.8% 199 100.0% 106 JORDAN INVESTOR MOTIVATION SURVEY - DRAFT WORLD BANK GROUP Strict export-oriented 61 59.2% 42 40.8% 103 100.0% Total 159 52.6% 143 47.4% 302 100.0% 107