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PKF Jordan and Iraq PKF ProGroup PKF Khattab & Co. PKF Planning Tax Advisory PKF Human Resource Consulting Market Overview | Aqaba - Jordan September 2015 PKF Jordan and PKF Iraq are member firms of the PKF International Limited network of legally independent firms and do not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms. Country Overview The Hashemite Kingdom of Jordan has a very strategic location in the heart of the Middle East. It is bounded by Syria from the north, Iraq from the east, Saudi Arabia from the south and southern east and West Bank from the west. Jordan overlooks the Dead Sea from the west and Gulf of Aqaba from south which gives the country a 27 km coastline with the Red Sea. Jordan is a small country with a total area of 89,556 square kilometers. According to the Jordanian Department of Statistics, Jordan’s population reached 6,675,000 in 2014. Jordan had a rising population growth rate of more than 2.2% in 2014. The capital Amman is the biggest city in the country with an estimated population of 2,584,600 in the metropolitan area, therefore forming 38.7% of the country’s population in 2014. Jordan has a vibrant young population, 37.1 percent of the population are less than 14 years old (males form 1,279,370/females form 1,212,090), 59.4 percent are between ages 15 and 64 years (males form 2,052,560/females form 1,915,510) and 3.2 percent are above 65 years (males form 109,070/females form 106,400). The birth rate is 26.23 births/ 1,000 populations. Area: 89,556 km2 Population: 6.675 Million (2014) Average Population Growth Rate: 2.2% Main Economic Indicators (2014): GDP: $33.6 billion Inflation Rate: 2.8% Unemployment Rate: 11.9% Industrial Production Growth Rate: 2.4% Jordan is classified by the World Bank as an “upper middle income country”, the below table summarizes the Jordanian economy status for the past five years: Indicator 2010 2011 2012 2013 2014 GDP (purchasing power parity) $36.6 billion $37.5 billion $38.7. billion $40.02. Billion $33.6 billion Inflation Rate (consumer prices) 5% 4.4 % 4.3% 5.9% 2.8% Unemployment Rate 12.5% 12.3% 12.3% 14% 1.9% Industrial Production Growth Rate % 2.7% 1% 0.8% 2.8% 2.4% PKF Jordan and PKF Iraq: Market Overview: Aqaba 2 The History of Aqaba Aqaba's history dates back to the 4th millennium BC. The name of Aqaba was given to the port city in the 14th century when it was ruled by the Mamluk Sultan based in Egypt. Previously, it was also known as Ayla. From 106 AD, the Romans, who ruled the region from their base in Syria, also used Ayla as their trading sea port, until it came under the control of the Byzantine Empire in the early 4th century. The Byzantines appointed Christian Arabs from south Arabia to rule the port city on their behalf. Ayla came under Islamic rule in 630 AD, when the spread of Islam from Hejaz reached the people of the Red Sea. During this time, the port was known as the "Door to Palestine". The walled city of Ayla was constructed during the early days of the Islamic era, a rare example of early Islamic urbanization policy. Its layout is marked by axial streets leading to 4 gates and intersecting in the middle, where a tetra pylon (4 interconnecting arches) was set up, thus recalling the plan of Roman legionary camps. Ayla benefited from the annual pilgrimage to Mecca and continued to prosper until the end of the 12th Century when the city suffered from a series of earthquakes, Bedouin raids, and Crusader attacks. During the 12th century, Crusaders wrested Ayla from Muslims and built a castle on Pharaoh's Island. When Saladin captured Aqaba in 1182 AD, the castle became known as Saladin's Castle. The Aqaba Fort was rebuilt in 1587 AD under one of the last Sultans of the Mameluk era and has been substantially altered several times since then. When the Mameluk Sultans of Egypt took control of the region, they renamed the city Aqaba and, in the 14th century, built the town's famous Mameluk fort. The Mameluks were followed by the Ottomans, who ruled Aqaba for 4 centuries. Aqaba was taken from the Ottomans in 1917 by Arab forces together with T. E. Lawrence. At the end of World War I, the British secured Aqaba for Jordan. PKF Jordan and PKF Iraq: Market Overview: Aqaba 3 The History of Aqaba Location Aqaba Special Economic Zone (ASEZA) Aqaba is located in the south side of Jordan The Aqaba Special Economic Zone (ASEZ) was 330Km from the capital Amman bordering two established in 2001 as an economic initiative by governorates of Tafeeleh and Ma’an. the government of Jordan. A liberalized, low tax Aqaba represents 50% of Jordan’s shoreline and duty-free and multi–sector development zone. is a tremendous tourism asset for visitors and The ASEZ offers multiple investment residents alike. opportunities in a strategic location on the Red Sea covering an area of (375) km² and Climate encompassing the total Jordanian coastline (27 km), the sea-ports of Jordan and an international Climate Characteristics of Aqaba : airport. • Hot sunny summer, with warm winters, Aqaba Special Economic Zone Authority summer starts from April till October. (ASEZA) • Clean dry air. The Aqaba Special Economic Zone Authority • Low rainfall, on average one day per month in (ASEZA) is the financially and administratively winter (November till March). autonomous institution responsible for: • The average high temperature ranges from 27̊ • The management, regulation and to 40̊ in summer. development of ASEZ. • The average low temperature ranges from 10̊ to 21̊ in winter. • Assisting in turning Aqaba into a world class • The relative humidity typically ranges from Red Sea business hub and leisure (23%) dry to (83%) humid over the course of destination. the year. • Sustaining a globally competitive investor– friendly environment and optimizing the 70 efficient utilization of entrusted resources in harmony with the Zone's Master Plan to 60 internationally recognized standards. 50 Investor Incentives 40 • 5% Corporate Income Tax Rate • Exemption from Sales Tax 30 • Exemption from Custom Duties 20 • Exemption from Social Services and Dividends Tax 10 • 100% Foreign Ownership • Up to 70% Foreign Labor 0 • Streamlined Registration and Licensing 1 2 3 4 5 6 7 8 9 10 11 12 Procedures • Full repatriation of profits and capital. High Low Hummidity • No foreign equity restrictions on investments • No foreign currency restrictions PKF Jordan and PKF Iraq: Market Overview: Aqaba 4 Economic Indicators Facilities in Aqaba By the year 2012, there were more than (3,212) 2,173 2,135 facilities in the Governorate of Aqaba . Data obtained from DOS indicates that there were 1,695 (3,132) institutes in ASEZ in 2011. Industrial 1,550 institutions include (Food Industries, Textiles, 1,178 1,176 Printing, Chemical Products Productions, Raw 1,084 Material Production, Electronics Manufacturing, and Furniture Production). ASEZ numbers of facilities are shown in the following table: Aqaba Development Plan (2012), Economic IndicatorsIndustrial, [Online],Institutions Available: from the 264DOS 2008 2009 2010 2011 2012 2013 2014 (2011) Institutions in the field of Transportation, Logistics, 82 Main Expenditures and Telecommunications Trade Institutions 1,874 As for the main expenditures of the households in Real Estate Companies 31 the Governorate of Aqaba, it was recorded that Service Sector Institutions 777 the main item was expenditures related to food products (41%). The following figure shows the Hotels 63 percentages of main expenditures recorded in Other 41 Aqaba in 2014: Total 3,132 Food Products 14% Employment Rates Housing 41% Recent data shows lower unemployment rates in 15% Aqaba Governorate compared to the Kingdom. Transportation & The unemployment rate reached (10.5%) in 2014 Telecommunicattion compared to (11.9%) for the Kingdom in 2014. It 30% Clothing, cigarettes, has to be noted that by the end of the year 2013, Education, and Health Aqaba Governorate had a total of 1,924 foreign workers. Aqaba Governorate struggled also in creating During the period from 2008 to 2014 Aqaba Governorate managed to create (10,991) new jobs. Nevertheless, new jobs creation witnessed an upturn during 2014 which was recorded at (1,550) new jobs compared to (1,176) jobs in 2013. The following figure illustrates the total net job creations in the Governorate of Aqaba during the period from 2008 to 2014: PKF Jordan and PKF Iraq: Market Overview : Aqaba 5 Health Care Health Centers Furthermore, the below table shows the number of medical centers found in Aqaba: The table below shows the health centers in General Aqaba governorate: 23 Medicine Dental Clinic 11 Region Comprehensive Primary Secondary Mother Care 19 Centers Aqaba 3 9 12 Medical Centers X-Ray Centers 3 Jordan 98 377 202 Emergency 9 Hospitals Hospitals Chest 1 In Aqaba Governorate as a whole there are no Family Care 19 governmental hospitals, while currently there is Centers one Royal Medical Hospital, and two private hospitals. Hospital names are listed as follows: Eye Centers 1 Specialized • Aqaba Modern Hospital (private sector) Centers • The Islamic Hospital (private sector) – under Psychology 2 construction • Prince Hashem Bin Abdullah II Hospital (Military) Health Sector Overview The following table presents an overview of the • Aqaba Governorate does not have a main indicators of the healthcare sector in Aqaba Governmental hospital although a high Governorate: percentage of people is covered by health insurance which highlights the necessity and the Aqaba Indicator Jordan high demand on health service.