Localization of foreign investments in Jordan… Syrians are about to become naturalized
Since the Jordanian government has announced a number of measures aiming to naturalize foreigners living inside its territory, attention has been drawn to the Syrians residing there. Those who were living in camps were not concerned by this announcement, but rather it involves those who came to the Kingdom to establish economic projects and invest large sums of money to contribute in the Jordanian economy and serve their own interest.
The new naturalization decision issued on February 2018 did not refer to Syrians in particular and was inclusive of foreign investors living on Jordan’s territory. It has clearly reflected the Jordanian government’s desire to benefit from the Syrian investors living on its territory in exchange for the burdens brought by the refugees of the neighboring country, as more than 1.3 million Syrians are living in Jordan, half of them depend on UNHCR assistance.
Localization of foreign investment … Weak take-off
Article (4) of the new naturalization decision provides for granting Jordanian nationality to 500 investors annually, after conducting the security check and verifying the financial eligibility of the applicant. The government was unable to reach this number and managed to achieve only 1.2 of the total, ten months after the announcement of the decision, according to Jordanian economist and Head of the Studies and Research Department at the United Financial Investments Company (UFICO), Mazen Arshid.
Arshid stated during an interview with Enab Baladi that the number of foreign investors who have acquired Jordanian nationality since the adoption of the new procedures did not exceed six, and only two of whom were Syrians. He pointed out that 15 applications are currently under study.
He considered that the new naturalization conditions are not impossible but “a bit exaggerated,” compared to the conditions provided by other countries whose economies are more prosperous than the Jordanian one. This is very revealing of the reason why only few investors have Jordanian nationality nowadays.
“Being in such economic situation, it would have been better for Jordan to set simpler conditions for naturalization so that the government will be able to achieve the desired outcomes of the decision,” said the expert Mazen Arshid. He stressed that these conditions even exceed the requirements several Western and European countries require for naturalization.
Some Western countries, such as the Dominican Republic, require investors to provide the central bank with half a million dollars in order to grant them its nationality. Bulgaria also requires 1 million dollars. However, the Jordanian government requires investors wishing to naturalize to deposit a million and a half million dollars at the central bank or to buy a property using the same amount, in addition to other conditions that “are not easy” to fulfill, said Archid.
“At least 100 investors were supposed to be naturalized over the past months. I think the Jordanian government will reconsider the terms and loosen them up a little bit in the future,” he added.
In addition to the countries Archid has mentioned while comparing the terms of naturalization, Turkey, which also attracts Syrians, allows foreigner living in Turkey to acquire citizenship when buying property worth more than 250,000 US dollars, or making a deposit worth 500,000 dollars in Turkish banks, according to the amendments to the Naturalization Act, adopted on 19 September, 2018.
Common Interests… Will the naturalized citizens foster the “wrecked” economy?
According to the economic expert Mazen Arshid, the new investment decision aims primarily to improve the Jordanian economy by settling existing foreign investments and encouraging foreign investors to invest their money in new projects within the Kingdom. He stated that this law was issued at a time when the country is experiencing a decline in terms of foreign investment, especially during the past two years.
The figures released by the Central Bank of Jordan indicate that the net foreign direct investment flowing into Jordan fell by 56.3% at the beginning of 2018, as it has reached 381.6 million, which is equal to 538 million dollars, compared to the same period in 2017 which reached 875 million Jordanian dinars.
The state of economic decline that Jordan has never witnessed before, according to Arshid, has made the Naturalization Law a serious attempt to generate a new capital flow in order to ease economic pressures on a country having a total debt of 40 billion dollars, according to official figures.
Reducing unemployment rate in Jordan is another outcome the Jordanian government hopes to achieve thanks to the naturalization of investors. Unemployment in the country has reached an unprecedented level of 18.7% according to the data declared by the Government Department of Statistics in 2018.
In order to address the unemployment issue, the Jordanian government required investors wishing to naturalize to hire 20 Jordanian citizens, register them at the Social Security Corporation and sign a three-year contract at least.
According to economic expert Mazen Arshid, the outcomes which will be brought to Jordan thanks to naturalization of investors are “numerous and very important,” provided that the conditions which may hinder the government from achieving its desired goals will be revised.
As for the benefits foreign investors will enjoy, Arshid has specified two main things; first, acquiring economic advantages and facilities that will enable them to create new projects and own lands away from the bureaucratic procedures imposed on foreign investors, which require them to obtain the approvals of several government departments. This process usually makes the implementation of the project more expensive and lengthy, and may end up rejecting the project.
The second benefit will be getting rid of the burdens of the work permits of the investors. They have to renew these permits each year and attach them with the company or institution’s certificate of registration issued by the Ministry of Industry and Trade, which states that the company is still in business.
According to the Non-Jordanian Investments Regulation Law No. 77 of 2016, foreign investors may not be able to acquire partial or complete ownership in many economic sectors, including stone saws, private security guarding services, and bakeries of all kinds. Therefore, naturalized investors are allowed to invest their money in sectors that were exclusive to citizens.
Companies and real estates… Numbers paving the way for the Naturalization of Syrians
Local investors and owners of companies left the country during the war in Syria. Some of them chose Jordan and preferred to invest their money there for several reasons, most notably the proximity to the Syrian border.
According to official Jordanian figures, the number of Syrian companies registered at the Companies Control Department amounted to 4062, which were active in different fields, including textile, foodstuffs, trade and real estate, according to the statement of Controller-General of Companies Burhan Akroush, to the Jordanian newspaper al-Ghad.
The total value of the Syrian capital poured into those companies amounted to 194 million dinars (273 million US dollars).
Syrians ranked third as the foreigners who invest most in the real estate sector in Jordan, according to statistics published on the official website of the Jordanian Department of Lands and Survey in November.
According to the statistics, Syrians bought 250 properties in different governorates in Jordan, only in 2018, with a total cost amounting to 15 million dinars.
Regarding the catering sector, the President of the Jordanian General Association for Restaurants and Sweet Shops Owners, Raed Hamadeh, told al-Rai newspaper that 16.6% out of 18,000 restaurants registered in 2016 in Jordan are Syrian. They are worth more than 30 million dinars.
These figures indicate the advantages and facilities the Jordanian government has allocated for the Syrian investors. However, during an interview with Enab Baladi, the Jordanian economist Mazen Arshid denied this and pointed out that Syrians abide by the law regulating foreign investments just like any other investor.
Despite the slow pace of the process of naturalization of foreign investors, Syrian investors are expected to benefit from the new decision in the coming years in case they managed to meet the requirements, according to the figures reflecting their investments in Jordanian territory.
Decision of naturalizing investors: Terms and conditions
On February 19, 2018, the Jordanian Cabinet approved a resolution concerning granting Jordanian nationality to foreign investors in order to “stimulate the investment environment, strengthen the national economy and provide employment opportunities for citizens.
In this context, the Jordanian government has formed a technical committee responsible for examining the investors’ applications for citizenship and submitting a detailed report to another committee responsible for granting citizenship, which will transfer the demand to the prime minister after approving it.
The cabinet has set several conditions the investors must meet in order to obtain citizenship, namely:
- Deposit of 1.5 million dollars in the Central Bank of Jordan without acquiring any interest for five years, or purchase treasury bonds worth 1.5 million dollars for ten years with an interest determined by the Central Bank, or buy shares in Jordanian companies worth the same value.
- Establishment or registration of an investment project in any of the productive sectors of the economy with a paid capital of not less than 2 million dollars in the capital Amman and a capital of 1.5 million outside.
- Provide employment opportunities for 20 Jordanian citizens, sign a three-year contact and register them at the Social Security Corporation.
- The abovementioned items shall be applied to 500 investors annually, after conducting the security check and verifying financial eligibility.
- According to the aforementioned items, the wife of the investor, in addition to his single, widowed or divorced daughters and children under the age of 18, shall be granted Jordanian nationality.
- In case of violation of any of the above items, Jordanian nationality shall be withdrawn from the investor.