Project Insights ENHANCING THE LEGAL FRAMEWORK FOR SUSTAINABLE INVESTMENT SUSTAINABLE FOR FRAMEWORK LEGAL THE ENHANCING ENHANCING THE LEGAL FRAMEWORK Enhancing the FOR SUSTAINABLE INVESTMENT Lessons from Jordan Legal Framework for Over the last few years, Jordan has been challenged by an unstable and fragile regional context and has engaged in a global reform agenda to enhance its economic growth and stability. Sustainable Investment Jordan is actively committed to improving its business and investment environment. Major Lessons from Jordan legal and institutional investment reforms undertaken in this context include the adoption of a modernised Investment Law in 2014 and creation of a unified Investment Promotion Agency. To guarantee long-lasting impact, all of these measures require efficient implementation. Under the Jordan Investment and Competitiveness Project (2014-2017), the OECD supported the reforms of Jordan’s domestic investment legal framework, which focused on investors’ JORDAN FROM LESSONS : protection and the revision of the FDI restrictions regime. The Project also built capacities among investment policy stakeholders, and delivered advice and training to help modernise the Jordanian international investment framework. Enhancing the legal framework for sustainable investment: Lessons from Jordan presents an analysis of the recent investment reforms and the lessons learnt in the process. It demonstrates that, despite a complex environment, building a more conducive investment climate in support of inclusive growth is possible. www.oecd.org/mena www.oecd.org/mena/competitiveness GLOBAL RELATIONS Middle East and North Africa Project Insights Enhancing the legal framework for sustainable investment: Lessons from Jordan Jordan Competitiveness and Investment Project This work is published under the responsibility of the Secretary-General of the OECD. The opinions expressed and arguments employed herein do not necessarily reflect the official views of OECD member countries. 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ENHANCING THE LEGAL FRAMEWORK FOR SUSTAINABLE INVESTMENT: LESSONS FROM JORDAN © OECD 2018 FOREWORD │ 3 Foreword Jordan has faced unprecedented geopolitical and economic challenges in recent years, starting with the slowdown of the global economy triggered by the 2008 financial crisis, then the 2011 uprisings in several countries of the region, and continuing with the Iraq and Syrian crises. Today Jordan hosts approximately 1.3 million Syrian refugees. Despite these challenges, the Jordanian authorities have moved forward with reforms, building the path towards greater and more inclusive growth, including strengthening the investment climate. Enhancing private investment is key for supporting Jordan’s economy and achieving the sustained economic growth and stability required to benefit the whole population. In recent years, Jordan has set an ambitious reform agenda to strengthen its position as an open, safe and attractive investment destination in order to further mobilise investment. In 2014, it adopted a modernised investment law (Law No. 30 of October 2014) and launched a revamped investment promotion agency. It is against this background that the Jordan Competitiveness and Investment Project (JCIP) was initiated. Implemented jointly by the OECD and the World Bank, and funded under the Middle East and North Africa (MENA) Transition Fund of the G8 Deauville Partnership, it ran for three years (September 2014 - December 2017). Its aim was to support the Government of Jordan in implementing investment reforms and building the capacities of the institutions responsible for investment policy, promotion and services, with the ultimate goal of attracting higher quality investment to generate growth and jobs. The project follows on from the OECD’s Investment Policy Review of Jordan and the country’s adherence to the OECD Declaration on International Investment and Multinational Enterprises in 2013. It continues a long-standing and active policy dialogue between the OECD and Jordan, in particular within the framework of the MENA-OECD Competitiveness Programme, which supports the country in its efforts to reach OECD standards and good practices. This report documents the work undertaken by the OECD during the project to improve the investment policy framework and reform implementation by assisting the Jordanian authorities through both policy and capacity support. Its goal is to build awareness about the reformed investment regime and share lessons learnt on improving the legal and institutional framework, despite a difficult environment. It presents policy recommendations developed throughout the project for strengthening investment rules and regulations, at national and international levels, and demonstrates the project’s tangible outcomes in improving the investment climate and mitigating the economic and political risks for investors by strengthening the investment framework. This project paves the way for future co-operation with Jordan in the context of the regional dialogue on investment reforms, alongside support adapted to fragile contexts, in order to address Jordan’s specific development needs, which include dealing with the Syrian refugee crisis. ENHANCING THE LEGAL FRAMEWORK FOR SUSTAINABLE INVESTMENT: LESSONS FROM JORDAN © OECD 2018 ACKNOWLEDGMENTS │ 5 Acknowledgments This Project Insights Report is the outcome of work conducted by the OECD during the Jordan Investment and Competitiveness Project funded under the Middle East and North Africa (MENA) Transition Fund of the G8 Deauville Partnership. This report was prepared by Ms. Diane Pallez, Policy Analyst, Middle East and Africa Division, OECD Global Relations Secretariat, under the guidance of Mr. Carlos Conde, Head of the Middle East and Africa Division, OECD Global Relations Secretariat. It builds on three policy papers drafted during the project by Ms. Marie-Estelle Rey, Senior Policy Analyst, Middle East and Africa Division, OECD Global Relations Secretariat; and Ms. Hélène François, Legal Advisor, Investment Division, Directorate for Financial and Enterprise Affairs; Mr. Fernando Mitsura, Policy Analyst, Investment Division, Directorate for Financial and Enterprise Affairs; and Mr. John Hauert, Policy Analyst, Investment Division, Directorate for Financial and Enterprise Affairs. The publication was reviewed by Mr. Alexander Böhmer, Head of Southeast Asia Division, Global Relations Secretariat, OECD. This report benefited from the assistance of Mr. Roger Fores Carron, Policy Analyst, Middle East and Africa Division, OECD Global Relations Secretariat, Mr. Arthur Pataud, Policy Analyst, Middle East and Africa Division, OECD Global Relations Secretariat, Ms. Sophie Elliott, Project Assistant, Middle East and Africa Division, OECD Global Relations Secretariat, and Ms. Kristin Sazama, Communications and Web Officer, Middle East and Africa Division, OECD Global Relations Secretariat. ENHANCING THE LEGAL FRAMEWORK FOR SUSTAINABLE INVESTMENT: LESSONS FROM JORDAN © OECD 2018 TABLE OF CONTENTS │ 7 Table of contents Foreword ................................................................................................................................................ 3 Acknowledgments .................................................................................................................................. 5 Acronyms and abbreviations ...............................................................................................................10 Executive summary ..............................................................................................................................11 1. Introduction ......................................................................................................................................15 1.1. Jordan’s recent economic development and challenges ..............................................................15 1.2. Evolution of FDI in Jordan ..........................................................................................................19 1.3. Strengthening the investment framework to maintain investor confidence and revive investment ...........................................................................................................................................23 1.4. Implementing the Jordan Investment and Competitiveness Project ............................................25 1.4.1. The project’s activities and outcomes ...................................................................................26 1.4.2. Key challenges and lessons learned ......................................................................................28 References ...........................................................................................................................................32 2. Reforming the investment legal regime while protecting investors