Jordan’s manufacturing industry is responsible for 75 per cent of national exports. It employs over 20 per cent of the labour force.
Industry is too important to be left for the harsh factors of the international open market to kill while officials are watching and seem indifferent to the alarming situation.
The state of Jordan’s industry’s economics, based on facts and figures from the Department of Statistics, can be summarised as follows: industrial output registered a negative growth of 1.1 per cent in the first 10 months of this year.
Industrialists were obliged under fierce competition to reduce their prices in the same period by an average of 13.6 per cent, yet they were unable to maintain their share of the market. This meant that the proceeds of industrial sales dropped by around 15 per cent during the first 10 months of this year.
Can Jordan’s infant industry survive when the proceeds of its sales drop that much at a time when costs continue to rise with inflation?
For 25 years or so Jordan opted for an open market and free trade policies in dealing with the world market.
It did not only join the World Trade Organisation, it also entered into free trade agreements with more advanced industrial countries.
The result of this unequal arrangement was that trade flew in one direction, imports. Jordan sustained a huge trade deficit with most trade partners, as well as with all Arab, European and Asian economic blocs.
Under these difficult and unfair circumstances, the Jordanian manufacturing industry was required to have output that competes with European, Chinese, Turkish and Gulf products and match them in price and quality, a job that is far beyond the capability of the Jordanian developing industry under the present circumstances.
To be realistic, it is out of the question that Jordan may give up its present open-market policy, even as the disastrous results of this policy became evident.
It seems that the government does not mind seeing national industries collapse and go out of business as long as the world market is ready to supply us with all our needs of higher quality and at lower prices, as long as we are able to pay in foreign exchange.
Let us face it: the Jordanian manufacturing industry badly needs a measure of customs protection for some time in order to recover.
It is not enough that the government is giving industry certain incentives and exacts lower income tax rates on its profits, as there are no substantial profits to benefit from these ineffective favours.
If the government decides to impose reasonable customs fees to protect a selected group of imported products, in violation of the rules of the World Trade Organisation, the latter will not move against such action unless it receives a strong complaint from one or more of its influential members.
It is unlikely that this will happen against a small country like Jordan, the exports of which are too little to threaten the trade of other exporting countries.
