Building Material Products & Construction Equipment & Services

Jordan is in the midst of an immense boom in construction activity sparked by huge real estate investments.  Most of the construction activity is in the capital Amman, the Dead Sea, and the Red Sea port of Aqaba.  There have been announced project investments of over $30 billion, in a market that has seen just $2 billion of investment over the last 20 years.  These projects are on a very large scale, across the tourist, residential, and commercial sectors. They have created demand for new construction equipment and techniques, as well as project and property management services. As these projects are in incipient stages, the demand for construction in Jordan will last for some time.

The demand for construction equipment and construction materials is on the rise.  All such equipment in Jordan is currently imported, either directly or through representative dealers in Jordan.  With new types of real estate and construction projects introduced to Jordan, there is a need for specialized equipment, materials, and engineering services.

Given the trend towards larger projects that are relatively new to the Jordanian construction industry (e.g., resorts, gated communities, towers), there will be a continuous need for specialized construction equipment and materials.  In addition to the traditional construction equipment and machinery, there is a need for innovative equipment that helps reduce labor requirements.  In addition, technical expertise in the areas of construction management for such large scale projects is needed.  Given that a significant number of the projects are gated residential communities, expertise in Master Designs and implementation for such projects is also needed.  Energy efficient technologies are also a market opportunity.  Transportation planning and traffic management needs resulting from such projects are also areas where significant help and assistance is needed. 

Energy (Oil, Gas And Electrical Power)

With the electricity demand growing at approximately 6% per annum and a current installed capacity of 1763 MW.  The Jordanian government has been seeking ways to attract foreign capital to fund additional capacity.  The Ministry of Energy and Mineral Resources (MEMR) has developed a master plan for the energy sector for the coming 15 years. The plan noted that this sector needs $3 billion of investments to cover the country’s need for the coming 15-20 years. These investments will be needed in the generation, transmission, and distribution.

Currently, the Central Electricity Generation Co. (CEGCO)  is responsible for power generation. Transmission of electric power is the responsibility of National Electrical Power Co. (NEPCO)   There are three distribution companies; Jordan Electrical Power Co (JEPCO), Irbid District Electricity Co. (IDECO) and Electricity Distribution Co. (EDCO).

MEMR opened the door for the private sector to invest in power generation by opening an Individual Power Plant (IPP) project.  The objective is to relieve the government of the cost of financing the construction of new generating capacity.  The government is looking to other sources of power, mainly renewable energy, like solar, wind, and oil shale.  Jordan has a very large, high quality deposit of oil shale, much of it near the surface.

Best sales prospects include: distribution transformers, insulators, overhead conductor switchboards, underground cables, engineering and consulting services.

The U.S. Trade Development Agency (USTDA) is currently financing three major studies; one on a 400 KV line from Aqaba to Amman, one on electricity loss reduction study, and a technical assistance for oil shale extraction.  All three studies may result in investment opportunities for US companies. 

The planned $700 million upgrade and expansion of the Jordan Petroleum Refining Company’s refinery is a significant business opportunity.  The majority of Jordan’s electrical generation is fired by natural gas imported from Egypt via pipeline.  In addition, the government is studying the idea of municipal and industrial distribution of natural gas.  This will open new market

Environmental, Pollution Control/Water Resource Equipment & Services

The market for environmental technology in Jordan is primarily focused on water - its conservation and management at all levels of use.  Given Jordan’s high population growth, limited renewable water resources, and deteriorating water quality, the effective management and efficient use of water resources is critical both at the household and the country-wide levels.  With the ongoing construction boom, improving the water supply and infrastructure, non-traditional water resources, and reclaimed water measures are urgently needed.

Treated wastewater is an important component of the Kingdom’s water resources.  Currently, sewerage services are available to around 70% of the urban population; therefore, increasing sewerage coverage and treatment will help the national water budget.

To help combat the water shortage projects promoting the re-use of reclaimed water, reducing system leakages, increasing the efficiency of water use, and the use of desalinated water are needed.

The most promising services in the sector are for engineering services, contracting, and treatment/desalination technology.

Jordan lacks resources for major environmental projects and generally seeks donor funding for these.  USAID and other international donors contributed significantly to a $2.5 billion water sector investment program for Jordan. The program promises to yield more than 50 major projects for international contractors in the next 10 years. 

In the water and wastewater sector, the Water Authority of Jordan’s (WAJ) list of projects for the coming 5 years includes engineering and construction services for over 11 projects in wastewater treatment and sewerage networks in various parts of the country with a total estimated cost of $447 million.  In addition, WAJ's policy of transforming into a regulatory role and opening the door for Private Sector Participation and Public Private Partnerships in water management will create significant opportunities for US entities specializing in utility management.

Plans are underway to implement the $600 million project to convey water from the Disi Aquifer in the south of Jordan to Amman, and the Red Sea-Dead Sea water conveyance project (+$5 billion .  These will create opportunities for engineering services and equipment.

Healthcare/Medical Services and Equipment

Jordan is one of the leading countries in the region in terms of health care.  It has the highest per capita rate of health related expenditures after Saudi Arabia and Lebanon, with 42 public hospitals and 56 private hospitals.  The boom in private hospitals is keyed to the growing $600 million a year “medical tourism” trade.

The Jordanian health sector is characterized by a high number of qualified and experienced doctors capable of performing procedures in advance fields of medicine such as: Cardiology and Cardiovascular Surgery, Laparoendoscopic Surgery, Kidney Transplantation, Ophthalmology, Neurosurgery, Plastic Surgery, Oncology, and many others

Local production of medical equipment is limited and below international standards and mainly include beds, medical dressing, plastic syringes, some optical products and dental supplies.

In 2004, the Minitry of Health set a plan with public and private sectors to generate an annual $1 billion in medical tourism by the year 2010.  To reach this goal, and to compete with neighboring countries that also have the ambition of becoming medical hubs in the region there is a need to continuously upgrade and improve the medical services and  medical facilities and institutions including the quality of hospital and clinic management and administration.

Medical equipment will remain to be the largest purchased items by the GoJ.  US products occupy a significant portion of those purchases.  With Jordan's medical sector advancement and its for medical tourism sector, the demand for medical equipment and supplies will continue to grow.  Projections for medical equipment for the coming 5 years exceed $200 million.  It should be mentioned that medical equipment are exempt from custom duties.

Hospitals, both private and public, will continue to expand and the demand for new hospitals and medical equipment and pharmaceuticals will continue to grow.  There are plans in Aqaba for expanding Princess Haya Hospital and to establish a Red Sea Heart Center, which will require specialized cardiologic equipment

There are also current plans for three new governmental hospitals; in Aqaba, Balqa, and Zarqa.  Needs for those projects will consist of a variety of equipment including sophisticated laboratory diagnostic, laboratory reagents, testing equipment, cardiology equipment, hospital furniture as well as other laboratory equipment.

Pharmaceuticals

Jordan’s pharmaceutical industry is the second largest exporting industry (75% of Jordanian production is exported and Jordanian firms are the biggest pharmaceutical exporters by trade volume in the region).  There are 22 factories in the Pharmaceutical sector with five major companies dominating the export business.  The sector has modern plants, established regional marketing channels, and a skilled, low-cost workforce.

Recently local production grew by 15%.  Despite increasing local production, the demand for imported, patented medicines is expected to increase.  US pharmaceutical exports to Jordan totaled $243 million in 2005, and market opportunities for US products are expected to increase. 

Further, the Government of Jordan is working on improving government policies and administrative capacities regarding food and drug administration, patent and trademark administration and customs regulations. 

In addition to market opportunities for pharmaceuticals, the generic pharmaceutical industry in Jordan presents opportunities for pharmaceutical production machinery, and laboratory equipment.

This sector specializes and excels in producing branded generics ranging from many dosage forms such as solids, semi-solids, liquids, aerosols and injectables as well as producing various licensed products from multi-national companies.

Strategic options of organic growth, licensing relationships, joint ventures, mergers, and acquisitions are considered a good opportunity between Jordanian and US firms.  Also, R&D technology strategies aimed at finding market niches, such as improving formulations or by shifting from pills to injectables is another opportunity between Jordan and US firms.

Clinical research organizations with multi-national companies could be a good investment prospect, as well as pediatric medicines.  Note also that the presence of a significant domestic industry also constitutes a market opportunity for clinical laboratory and pharmaceutical production equipment.

Despite a strong local industry, imports of pharmaceuticals were valued at $243 million in 2005.   The Ministry of Health’s procurement expenditures in the same year were $69 million, of which pharmaceuticals accounted for 56%.  Those trends are expected to continue in the coming years.  In addition, there are opportunities for U.S. firms to explore licensing agreements, mergers, and joint ventures with Jordanian companies. Jordan itself is a small market, but the region has a fast-growing population that tends to be weighted toward young people.  As the population ages in the region, the needs for health care will rise and the opportunities for pharmaceutical makers will similarly rise. 

Aerospace

Air transport plays an important role in Jordan, which has heavily invested in tourism projects over the past decade.  There are three major airports in Jordan through which over 3 million passengers pass a year.  The Jordan Civil Aviation Authority (JCAA), which falls under the jurisdiction of the Ministry of Transport (MoT), is responsible for safely and securely developing, managing, and operating the civil aviation airports and airspace in Jordan.

Aircraft manufacturing in Jordan is restricted to licensing to assemble and service light general aviation type aircraft and manufacturing Canadian and German designs.  Jordan Aircraft Maintenance Company (Jormaco) and Jordan Air motive Limited Company (JALCO) are dynamic aircraft maintenance centers specializing in aircraft maintenance and component repair and overhaul.  Finally, there are three Jordanian Airlines; Royal Jordanian and its subsidiary Royal Wings, and Jordan Aviation, and two main aviation academies in Jordan; The Royal Jordanian Air Academy (RJAA) and the Mid-East Aviation Academy (MAA). 

The Government of Jordan has high ambitions for the Kingdom to become a regional hub, therefore, the demand for aircraft and spare parts, maintenance equipment, and aircraft systems for manufacturing will continue to rise.  In addition, there is a bill currently under review of the parliament that allows the Jordan Civil Aviation Authority to form a Civil Aviation Regulatory Commission.  Once formed, the services of the JCAA would be privatized, which will create significant potential for US companies that specialize in civil aviation and airport management. 

Plans are currently underway for a three-year, $300 million project on a BOT basis to construct a new terminal at the Queen Alia Airport.  This project is expected to create sales opportunities for airport equipment exceeding $120 million.  In addition, airlines envisage fleet expansions, which are a significant opportunity for US aircraft and auxiliary systems’ manufacturers and providers. 

Jordan Aerospace Industries is seeking agreements with manufacturers of aircraft communication and auxiliary systems to meet the demand in Iraq for surveillance aircraft and agricultural aircraft equipped with a state of the art crop spraying and monitoring system.  JAI has also created coalitions and partnerships in Iraq for a multi-purpose manufacturing facility for light aircraft in Northern Iraq that will also create opportunities for light aircraft manufacturers in the US.  Finally, the aircraft maintenance companies will continue to need spare parts and equipment to sustain their operations.

Airports and Safety Equipment

There are three major airports in Jordan, and three airlines.  The continuous growth in cargo and passenger volumes traveling through Jordanian airports warrants the upgrade of Jordanian airports' and security equipment.  This trend, coupled with the events of September 11, the November 2005 bombings in Amman and other recent terrorist attempts in airports around the world warrant upgrades in security equipment

The Jordan Civil Aviation Authority (JCAA) falls under the jurisdiction of the Ministry of Transport (MoT) and is responsible for safely and securely developing and operating the civil aviation airports and airspace in Jordan.  Other government entities responsible for safety & security include Public Security Directorate (Police), Civil Defense Department, Jordanian Armed Forces and the General Intelligence Department.  

Significant opportunities exist in the airport and security equipment sectors.  Plans are currently underway for a $300 million airport expansion project of Queen Alia International Airport that is expected to create sales opportunities for airport and security equipment exceeding $120 million.  The JCAA estimates for security equipment needs for the next two years exceed $20 million. 

In addition to airports, several entities are using security equipment following the November 2005 bombings.  This includes hotels, restaurants, shopping centers, movie theaters, embassies, and others.  Accurate data related to the overall security equipment market size and imports for such end users are not available.  Therefore, the market data for end users other than airports are unofficial estimates based on discussions with leading industry specialists in the Kingdom.

Telecommunications Equipment

Jordan’s telecommunications sector offers various opportunities for U.S. companies, especially sales opportunities in Jordan’s growing mobile phone sub-sector.  With four mobile telephone service providers and nearly 3 million subscriptions, the number of handset shipped to Jordan by the end of 2006 exceeded 1.5 million units. The mobile handset market is expected to continue exhibiting phenomenal growth out to 2008, with the value of handsets shipped into Jordan anticipated to reach US$479 million

Jordan Telecom is the only operator of fixed lines, although the monopoly on the provisions of fixed line services ended at the beginning of 2005.  At present there are no limits on the number on licenses that can be granted to provide telecom services except those specified by the Statement of Government Policy, which fall in the realm of protecting public safety, security considerations, technical limitations and scarce resources.

A high percentage of imports come from the United States. Jordan has attracted a great deal of attention from global tech leaders.  The main US companies with strong presence in the domestic telecommunications market are: AT&T, Cisco, Oracle, Motorola, and others.  Telecommunication equipment imported into Jordan is subject to testing and certification requirements developed by Jordan Institute for Standards and Metrology (JISM).

Jordan seeks investors for services currently provided on a monopoly basis by Jordan Telecom, including international bandwidth provision and international voice gateways.  The country is also interested in finding investors for international call centers.  There are other prospects in e-government services, WiFi,  WiMax, and low-cost satellite systems.

The Telecommunication Regulatory Commission is seeking to implement Mobile Virtual Network Operators (MVNO), Next Generation National Broadband Networks (NGNBN).  Opportunities also exist in the electronic service areas of banking, commerce, governance, health, education, accounting, information security, and most recently 3D animation. U.S. firms may also find equipment sales opportunities in Jordan’s growing mobile phone sub-sector.

Automotive Spare Parts & Accessories

There are 679,731 registered vehicles in 2006 with a 10% increase from the previous year. While American made vehicles represent only 4.7% of the market share in Jordan, their sales have grown due to modernization of the customs valuation procedures, which was previously based on engine size.  The increases in fuels prices have been counteracted by the sizable reduction of registration and licensing fees on big-size engine cars.  Combined with the increasing popularity of SUV’s, it is believed that this will result in a larger market share of US made vehicles in Jordan.  In addition, the FTA required elimination of tariff on certain classes of vehicles will go into effect in 2007.

This is reflected in the spare parts and accessories market as well. Currently, American made spare parts and accessories have around 6.4% of the market. But due the expected rise in American car sales in the coming years, it is expected that American spare parts and accessories’ imports will grow beyond 10%.

US corn is duty free because of the U.S. - Jordanian Free Trade Agreement while Argentinean corn is subject to a 5.2% duty.

All parts and accessories needed in car such as bumpers, cabs, brakes, suspension shock-absorbers, clutches, transfer gear boxes for speed control, silencers, exhaust pipes, steering wheels, steering boxes, steering columns and many more.

With the increase in sales of American cars in the market, an increase in the need for spare parts and accessories to maintain them will occur that will open new opportunities for American manufacturers to penetrate the market. Local buyers don’t necessarily buy genuine parts; most of them will buy commercially made ones.

Another important opportunity is the truck market.  In late 2005, the government implemented significant changes to the trucking sector, prompting a consolidation of owner/operators into larger companies, and prompting the modernization of the fleet.  A number of companies are projecting a significant renewal of their truck fleets, which will impact the market for spare parts and accessories as well.  There are approximately 11,000 tractor/trailer trucks in Jordan, with 90 percent having a service life of 20 years or more. 

The market is currently dominated by European brands, but there are is an interest in buying American trucks.  In addition to price, the critical factor to penetrating the market will be the widespread availability of spare parts and trained mechanics. 

Franchising

There are approximately 50 franchise businesses operating in Jordan today.  This industry sector provided direct employment for 10,000 people and accounts for annual sales of US$100 million.  The first franchise in Jordan opened in the 1980s, and since 1995 the market has showed increased activity. 

The local market remains enthusiastic about U.S. franchises.  However, the Jordanian market cannot absorb large numbers of a single franchise given the size of the market.  U.S. retail and service franchises have increased in the last several years. 

In 1993 there were 7 operational chains, today there are 45 American franchises.

The US is a model for Jordanian society in technology, convenience, and marketing strategies, and therefore US franchisers are well positioned for entering or expanding their presence in Jordan.

Local investors are increasingly interested in franchising, especially in services and the fast food industry.  The development of new malls and retail outlets has increased the opportunities for additional retail franchises.