Jordan Country Profile

General Information

The Political Climate


Despite the absence of any significant natural resources, Jordan has succeeded in attracting foreign investments through economic reforms and has shown solid economic growth rates. Unlike other Arab countries in the region, Jordan does not have a burdensome record of political violence and the country is deemed politically stable.

Jordan is a hereditary constitutional monarchy where the King has broad executive power. In 1989, Jordan embarked on a path of political liberalisation and reform following widespread riots due to increased bread and animal feed prices after the government lifted subsidies. The reforms did not alter the distribution of power in any significant manner and the King retained much of his power. Government accountability is very weak, which has reportedly led to the abuse of public office and to corruption. By regional standards, however, freedom of expression is fairly well-established in Jordan, as long as it is practised within certain boundaries and does not, for example, discredit the royal family, foreign policy and foreign relations or mention corruption within the inner circles of power. The latest parliamentary elections in Jordan were held in November 2007. The most notable feature of the election was that it resulted in the defeat of the Islamist opposition party, known as Islamic Action Front (IAF), much to the surprise of observers. Many explanations have been provided for this defeat, and whether or not the elections were free, fair and transparent has been subject to dispute.

Societal interests in Jordan are generally not channelled through political parties, but through informal networks. Corruption in Jordan is manifested in favouritism, nepotism or bribery. Favouritism, cronyism and nepotism, as in the use of influence or personal and business connections to gain favours such as jobs or access to goods and services, are covered by a particular concept in the Middle East known in Arabic as wasta ('mediation'). For example, bribery and wasta are used to gain entry to universities, obtain good grades and win scholarships. According to a 2006 survey by the Centre for Strategic Studies of the University of Jordan, 46% of the respondents (the general public and opinion leaders, including business people, journalists, politicians, political party leaders, and academics) believed that corruption increased over the previous few years, 65% of the respondents believed that corruption exists in the public sector/government, and 52% believed that corruption exists in the private sector. Among a sample of opinion leaders, 75% believed that corrupt practices exist in the public sector, and 64% believed it to exist in the private sector. Corruption is for the most part confined to higher levels and is not widespread among front-line civil servants in Jordan. At the level of daily interactions, it is mostly wasta rather than bribery that dominates. The political will to combat corruption seems to be present and King Abdallah has identified the fight against corruption as a top priority. This political will has materialised into a series of initiatives, including the formation of an independent commission to draft a law to combat corruption and wasta. Also, corruption is highly publicised through state institutions, although prosecution of high-ranking civil servants and officials remains rare. There have been some cases of conviction of high-ranking officials, most notably that of Samih Batikhi within the Governance Intelligence Directorate (GID), who was charged with fraud and embezzlement in July 2003. Nevertheless, Batikhi's trial and subsequent conviction were considered by observers to be flawed with irregularities, and the extensive evidence of his alleged crimes remained secret. In general, public officials taking bribes are not systematically punished and charges of corruption are quite difficult to prove. Prosecution of high-ranking civil servants remains rare as well.

Business and Corruption

Although companies operating in Jordan rank corruption as a problematic factor for doing business in the World Economic Forum World Competitiveness Report 2008-2009, there are still many factors that are considered to be larger constraints, such as inefficient government bureaucracy, tax rates and regulations, inflation and lack of infrastructure and educated workforce. Nevertheless, according to the World Bank & IFC Enterprise Surveys 2006, 41% of the companies surveyed reported that corruption is a major constraint for doing business. Occurrences of public-private corruption have been reported in the Qualified Industrial Zones (QIZ), in the Aqaba special economic zone, as well as in relation to the misappropriation of government oil revenues. The government encourages foreign investment, but companies should note that the use of wasta to advance business interests is very widespread in Jordan. This has in part affected some foreign companies and large American companies operating in Jordan have reported hidden costs stemming from bureaucracy, red tape, vaguely formulated regulations and conflicting jurisdictions. It is recommended that foreign investors therefore implement integrity systems and carry out extensive due diligence when exploring investment opportunities, looking for partners, and concluding purchases agreements.

Since 1999, Jordan has privatised many of its state holdings with proceeds from the sales amounting to USD 1 billion since 1999. A special committee, the Executive Privatisation Commission (EPC) under the supervision of the higher privatisation council headed by the Prime Minister is in charge of selecting and assessing privatisation projects, preparing offers for interested parties, appraising submitted offers etc. Jordan's privatisation programme has been praised by the World Bank for finding a good balance between effectiveness and transparency, while Freedom House 2007 reports that the sale and privatisation of government assets have lacked transparency. This is partly due to the fact that the process of privatising a company is decentralised and public investment can be carried out by different ministries. The soundness of the privatisation process has also been affected by the fact that it is not necessarily the economic goals or fair competition that determine what is privatised, nor who is allowed to buy up the assets, but rather political considerations.

Regulatory Environment

Foreign and local investors are equal before the law. However, companies should note that there are some exceptions with regards to which domains foreign companies can invest in. These include activities pertaining to the military or to national security (for an overview consult the US Commercial Service 2007). There is no formal screening or government selection process for foreign companies wishing to invest in Jordan. Yet, it is reported that the informal approval by local and central government officials will help ensure governmental cooperation in the implementation of the company's project. The government is slowly implementing policies to improve competition and foster transparency. Numerous procedures have been streamlined, but they remain non-transparent and, along with red tape, continue to pose problems to foreign and local investors. Data from the World Bank & IFC Doing Business 2009 reveals that it takes 14 days and 10 procedures, amounting to 60% of the annual income per capita to start a business in Jordan. In a 2007 survey of companies in Amman conducted by the American Chamber of Commerce in Jordan, respondents stated that the time to register a company may be even higher in practice. In addition to this, the initiatives to ease the complex regulatory system and the numerous procedures using the 'One-Stop Shop' within the Jordan Investment Board have not been fully successful. Bureaucratic obstacles and delays remain and, at the level of local government, the application of customs, tax and labour laws is arbitrary and acts as an impediment to investment..

Private property is well-defined and protected through sound legal processes, and there are no serious limitations to the acquisition, benefits and sale or use of property. The acquisition of property by foreigners is based on the principle of reciprocity, which entails that if Jordanians can own property in the home country of the foreign investor, it is possible for the foreign investor to own property in Jordan. However, some areas are subject to different provisions and procedures. Expropriation is not permitted unless it is in the public interest; a fair compensation in convertible currency is then provided to the investor.

With regards to the resolution of disputes, Jordanian law stipulates that companies can seek third party arbitration or an internationally recognised settlement of disputes. Jordan is member of the International Centre for the Settlement of Investment Disputes (ICSID) and of the New York Convention of 1958. While some observers have noted the lack of transparency in connection with the settlement of disputes, others report that the judiciary has ruled to the advantage of foreign companies and that the judiciary is not significantly corrupt. Access the Lexadin World Law Guide for a collection of legislation in Jordan.

Corruption Levels

Sectors (Judicial System, Police, etc.) describe which kind of corruption can be encountered in different areas. This section covers various forms of corruption, including bribes and facilitation payments. All information is based on publicly available information and should be viewed as general guidelines on the types of corruption existing in the country.

Levels of corruption in the different sectors indicate where corruption can be encountered. The levels are defined as follows:

  • Individual Corruption: Corruption that takes place primarily in relations between individual citizens and public officials and authorities.
  • Business Corruption: Corruption that takes place primarily in relations between enterprises/companies and public officials and authorities.
  • Political Corruption: Corruption that takes place in the higher echelons of public administration and on a political level.

Frequency refers to quantitative surveys on corruption in the respective sectors.

Judicial System

Individual Corruption

The judicial system is divided into civil, criminal, commercial, security and religious courts. The judiciary at the level of civilian courts is generally not corrupt and most trials are open and procedurally sound. In the State Security Court (SSC), however, proceedings are often closed to the public.

Corruption in the judiciary normally involves judges' rulings being influenced by family or tribal affiliations.

Business Corruption

Observations of lack of transparency with regards to the settlement of disputes have been made. Yet, Jordanian law provides that foreign investors can seek third party arbitration or an internationally recognised settlement of disputes. Furthermore, the US Commercial Service 2007 reports a case of a foreign company investing in a joint venture with a Jordanian state-owned company, being dissatisfied with the management of the contract which was given to a rival without prior consultation. However, the company was able to resolve the dispute to its satisfaction with support from its embassy.

Political Corruption

At the political level, corruption in the judiciary is common. According to several sources such as the Bertelsmann Foundation 2008 and Global Integrity 2008, the judiciary is subject to political intervention, control and pressure, has managerial deficits, lacks sufficient professionalism and has problems implementing decisions.

Appointments in the judiciary reflect interests of particulars and not professional merit or judicial philosophy. In line with this, Freedom House 2007 indicates that the judiciary is also subject to executive influence by the Ministry of Justice and the Higher Judiciary Council (whose members are appointed by the King) because they appoint and transfer judges.

Frequency

The World Bank & IFC: Doing Business 2009:
- It takes 39 procedures, 689 days and 31% of the claim to enforce commercial contracts in Jordan.

The World Bank & IFC: Enterprise Surveys 2006:
- 57% of companies surveyed believe the court system in Jordan is fair, impartial and uncorrupted.

Police

Individual Corruption

Conclusions from the US Department of State 2006 and the Fund for Peace 2006 agree that the police force is not particularly corrupt and that police officers have usually received training in how to avoid corruption.

Political Corruption

The Jordanian national police, the Public Security Directorate (PSD), is not significantly corrupt, but allegations of impunity are frequently made against the PSD.

Licences, Infrastructure and Public Utilities

Business Corruption

Companies wishing to invest in Jordan should note that obtaining licences is not particularly burdensome. Although facilitation payments may be required when obtaining licences and permits, it is less widespread than in other countries in the region.

According to the OECD National Investment Reform Agenda - Jordan 2006, a bribery case was referred to the court in 2002 involving owners of contracting companies who attempted to bribe an employee at the Jordan Electric Power Company in order to have the company’s electricity bills reduced.

Frequency

The World Bank & IFC: Doing Business 2009:
- Obtaining the necessary licences and permits for building a warehouse amounts to 443% of the income per capita, requiring 18 procedures and takes 122 days.

The World Bank &IFC: Enterprise Surveys 2006:
- 2.5% of companies are expected to give gifts to get an operating licence.

- 1.5% of companies are expected to give gifts to get an import licence.

- 4.5% of companies expect to give gifts to obtain a water connection.

- 7% of companies expect to give gifts to obtain a phone connection.

- 9% of companies expect to give gifts to obtain an electrical connection.

- 12% of companies expect to give gifts to obtain a construction permit.

- 6 days are required to obtain an operating licence and 44 days are required to obtain a construction-related permit.

Land Administration

Individual Corruption

Private property rights are guaranteed in the Constitution and safeguarded in practice. Expropriation of private property is rare.

Business Corruption

Companies should note that the number of procedures and cost of registering property are high both by regional average and compared to OECD countries. On the other hand, the time requested to register property is very low compared to the regional and OECD averages.

Political Corruption

Reports by Freedom House 2007 and The Nation 2005 indicate persisting rumours and accusations of royal land grabs carried out by classifying state or municipal land as Crown land.

Frequency

The World Bank & IFC: Doing Business 2009:
- Registering property in Jordan requires 8 procedures, 22 days and the cost amounts to 10% of the property value.

Tax Administration

Business Corruption

According to Global Integrity 2008, the collection of taxes is flawed with wasta, favouritism, and the misuse of political power. Small companies lacking connections to people with political influence are often subjected to an arbitrary application of the Value Added taxes. On the other hand, companies with the proper political connections will often not be held accountable for tax evasion and might often be exempted from paying taxes.

Political Corruption

Internal tax auditing is not as effective as it should be, and the sales tax is not uniformly implemented, according to Freedom House 2007.

Frequency

The World Bank & IFC: Doing Business 2009:
- A company must make 26 payments and spend 101 hours paying taxes.

The World Bank & IFC: Enterprise Surveys 2006:
- Only 1% of companies state that they are expected to give gifts when meeting with tax inspectors.

Customs Administration

Business Corruption

Custom procedures have been identified by Info-Prod as a serious impediment to trade. This is caused by overlapping areas of authority, many signature clearances and excessive paperwork. Written regulations vary from actual practices and discretionary decisions are carried out, sometimes regarding cases that are subject to conflicting instructions and regulations. 

Frequency

The World Bank & IFC: Doing Business 2009:
- The average time for exporting a standardised shipment of goods is 19 days.

- The average time for importing a standardised shipment of goods is 22 days.

- 7 documents are requested for both the export and the import of goods.

Public Procurement and Contracting

Business Corruption

The process and selection of awarding public work contracts and private-public initiatives is determined less by merit and more by connections and political necessities. A centralised tendering office displaying government tenders and relevant legislation can be accessed online and tenders are publicised, but the process of deliberation and criteria lacks transparency. There have been reports of the use of wasta regarding procurement. In general, the use of family and business connections to advance personal business interests is very widespread.

Read more about public procurement in the 'Public Anti-Corruption Initiatives' section.

Frequency

The World Bank & IFC: Enterprise Surveys 2006:
- 2% of the companies are expected to give gifts to secure a government contract.

Environment, Natural Resources and Extractive Industry

Political Corruption

According to Freedom House 2007, the government's revenues stemming from its sale of oil are unknown to the public. Kuwait and Saudi Arabia have provided Jordan with oil at favourable prices. Jordan has apparently exported oil products, while Jordanian citizens have absorbed the significant rises in the price of domestic gasoline since 2004. There is a general lack of transparency regarding how income from exports and foreign aid are spent in Jordan, since public access to government budgets and expenditures is limited. Where access to the budget is possible through the parliament, only a limited amount of data is provided to the public.

Public Anti-Corruption Initiatives

  • Legislation: Corruption is a crime in Jordan and active corruption is penalised under article 172 of the Penal Code of 1970. Jordan has an Anti-Corruption Commission Law (in Arabic) which was enacted in December 2006. This law defines corruption not only as misuse of power and economic crime, but it also includes actions related to wasta and nepotism. A Financial Disclosure Law published in the official gazette in November 2006, stipulates that specified government officials must disclose their assets in a sealed envelope that is to be opened by the Chief Justice in case of complaint. The Jordanian Parliament also passed an Access to Information Law in April 2007, although this is somewhat restricted by the State Secret and Documents Law. Furthermore, an Anti-Money Laundering Law was passed on 6 May 2007. Access the Lexadin World Law Guide for a collection of legislation in Jordan.

  • Government Strategies: The Jordanian government has recently changed its policy to curb corruption to be in closer accordance with international conventions. A more centralised approach to anti-corruption is being implemented in an attempt to strengthen the institutions that deal with anti-corruption. Several new initiatives have been introduced, such as a central Anti-Corruption Commission, whistleblower protection and the Access to Information Law etc. The King and the government have declared that curbing corruption is of high priority.

  • Anti-Corruption Agencies: The Anti-Corruption Commission Law calls for the establishment of an Anti-Corruption Commission (ACC). The members of the ACC were appointed in March 2007. The law stipulates that the ACC must be financially and administratively independent and conduct its work free from executive interference. The ACC has issued a statement saying that it will concentrate on investigating allegations of misuse of public funds. It is supposed to issue an annual report on its work. Due to the novelty of the ACC it is difficult to say whether the practice of the ACC will match the intention of the law. Nevertheless, observers such as Global Integrity have so far assessed the commission to be rather strong and independent.

  • The General Intelligence Directorate (GID) also has an anti-corruption office, the Anti-Corruption Directorate, which is in charge of dealing with cases of extortion, bribery and corruption. The GID has itself been involved in numerous scandals, but there were no major corruption indictments in 2004 and 2005.

  • The Office of the Ombudsman: The Ombudsman institution is newly created in Jordan (end of 2008) and its activities were set to start in February 2009. It is therefore too soon to assess the Ombudsman's activities, functioning, and independence. Several other organisations carry out the functions of the national ombudsman, such as the National Center for Human Rights and the Higher Council for Media, which acts as ombudsman for media issues and the Audit Bureau (see below). The National Center for Human Rights and the Higher Media Council do enjoy political independence, but their ability to remain independent depends on the character and strength of the president of each entity.

  • The Auditor-General: The Audit Bureau of the Hashemite Kingdom of Jordan is the main audit institution. It was established by Law 28 of 1952. The Audit Bureau is an independent institution - both financially and administratively - within the government. It monitors government earnings and expenditures at various levels, namely the ministerial, public enterprises, local authorities, municipalities and rural councils. The agency submits a bimonthly report to the cabinet and a yearly report to the lower office of the Parliament with its finding. The Auditor General is, however, not mandated to launch investigations on its own and observers have noted that the government has not acted upon the Auditor General's findings.

  • E-Governance: Initiatives in the area of e-governance have contributed to rendering government services more transparent and more accessible. The US Department of State 2009 reports that the government has promised to make services, regulations and procurement procedures more accessible and transparent. Companies will find numerous government websites providing them with useful information on regulations, services offered by the government and different government bodies.

  • Public Procurement: Public procurement of all government departments is regulated by the General Supplies Department of the Ministry of Finance (Supply Act 32 of 1993). In law there is a requirement of competitive bidding, but information about tenders is not always disseminated to the private sector. Unsuccessful bidders may challenge the procurement decision through a court case. Bidders who violate the procurement regulations (and who are convicted by a court ruling) by engaging in corrupt practices to influence the procurement decision will be prohibited from bidding in the future. However, observers report that there are very few examples of this. Furthermore, the US Department of State 2009 reports that influence peddling and lack of transparency in government procurement exists. Jordan has a centralised tendering office where tenders are publicised.

  • Whistle-Blowing: The Anti-Corruption Commission Law 62/2006 only provides for indirect protection of whistleblowers by stipulating that the information and documentation the latter provide may be secret. According to the President of the Anti-Corruption Commission (ACC), whistleblowers that address the ACC need not fear repercussions. However, there are concerns whether the whistleblower protection will be upheld in practice, especially since it is commonly known in Jordan that complaining about an influential person or family often lead to recriminations. It remains to be seen if the ACC will be able to enforce whistleblower protection in practice.

  • General Comments on the Public Anti-Corruption Initiatives: The political will in Jordan for countering corruption is strong. Jordan is in the process of implementing the provisions set out by the UN Convention against Corruption (UNCAC) such as the establishment of an anti-corruption commission, protection of whistleblowers and freedom of information laws. All three initiatives have been formally established, but it is too recent to verify how they work in practice and how far-reaching their scope of action and impact will be.

Private Anti-Corruption Initiatives

  • Media: According to many observers, the media is either suppressed from speaking out about corruption or co-opted. Journalists are reportedly often bribed by the authorities to write favourable stories. The government officially proclaims its commitment to press freedom and freedom of expression, has relinquished its monopoly on radio and television outlets and has issued a number of private broadcasting licences. Nevertheless, Freedom House 2008, along with other observers, indicates that the media in Jordan is mainly under state control and that independent journalists are often harassed and induced to practice self-censorship. The authorities have posted informers at printing presses; these informers regularly report to the government about offensive articles in the pipeline. The government can close print publications and ban books. Jordan's 1993 Press and Publications Law regulates freedom of expression and all publications are to be licensed by the government. The law also establishes the boundaries within which journalists can work – Article 150 of the penal code and other laws criminalise criticism of the royal family, slander of government officials and speech that harms Jordanian foreign relations, inflames religious sensitivities and undermines the state's reputation. Another of the topics that journalists can be punished for is the reporting on corruption in the higher circles of the political-administrative structures. A poet Haider Mahmoud was harassed and so was his family (his son had to resign from his position) for publicly, through a poem, speaking against corruption within the royal family. An ex-parliamentarian was also arrested for criticising corruption online. Regarding access to the Internet, the government claims that access is unrestricted, but according to observers several websites have been blocked, especially news sites. Jordan ranks number 128th out of 173 countries on the Worldwide Press Freedom Index 2009, and 140th out of 195 countries on the Freedom of the Press Index 2009, thus earning the label 'not free'.

  • Civil Society: NGOs are registered at the Ministry of Social Development which regulates their activities. They must obtain governmental approval to be able to operate. There are many civil society organisations, but they are weak and only entitled to work in their specialised area. The NGOs are prohibited from participating in political activities and, if they are deemed subversive by the authorities, their licences are instantly withdrawn. A new law has been passed in 2008 stipulating, amongst other, that NGOs must apply and get approval from the cabinet to receive foreign funding.

  • Transparency International: A local chapter, Jordanian Transparency Assembly, is reportedly under formation in Jordan (www.pogar.org).

Resources

The websites listed below provide useful facts on Jordan as well as contacts and tools for companies operating in Jordan:

 

Sources for further reading:

Conventions and Indices

UNCAC Status: Signed 9 December 2003. Ratified 24 February 2007.

Status on UNCAC Implementation
This field describes the country's status on the United Nations Convention against Corruption. Please note any declarations and reservations made upon ratification. The list of signatories can be found on the UNODC website. Read Transparency International's summary and assessment of the UNCAC.

 

Other Relevant Conventions or Treaties:

 

Transparency CPI: 2009: 49/180: (Score: 5)

Transparency CPI
This field consists of the score for the country in question on the Corruption Perceptions Index from Transparency International as well as its ranking.

 

World Bank CORR Index (-2.5 - +2.5): 2008: +0.41

World Bank Corruption Index
This field consists of the score for the country in question on the 'Control of Corruption' indicator in the World Bank Governance Research Indicator Country Snapshot (GRICS): 1996-2008.

 

OECD Country Risk Classification (0-7): 2009: 5

Country Risk Classification
The classification of countries by risk category has the aim of providing OECD countries with a basis for calculating the premium interest rate to be charged to cover the risk of non-repayment of export credits. Countries are placed in risk categories 0 - 7, with 0 being the lowest risk category and thus the least expensive. Conversely, premium group 7 is the highest risk category. Each classification is comprised of 2 components: 1) an assessment of the country's economic/financial situation, and 2) its overall political stability. Access the complete list of OECD Country Risk Classification figures.

 

Data Verification:

Latest update: April 2009

Data verified by: Global Advice Network

Information Network

 

Relevant Organisations

 

Transparency International Jordan

P.O. Box 815454
Amman

Tel: +962 6 465 6694
Fax: +962 6 495 6693
E-mail: basem(at)nol.com.jo

National TI chapter is under formation in Jordan.

Amman Chamber of Commerce (in Arabic)

P.O. Box 287
Amman 11118

Tel: +962 6 566 6151/6152/6153/6154
Fax: +962 6 566 6155
E-mail: info(at)ammanchamber.org.jo

Business association representing the private sector in Jordan with 31,000 registered members.

General Intelligence Department (GID)

 

Intelligence and security agency of the government. One of Jordan's main anti-corruption units is placed in the GID.

Jordan Investment Board

91 Mousa Bin Nussair Street
5th Circle, Wadi Saqra Intersection
P.O. Box 2019
Amman 11181

Tel: 962 6 560 8400
Fax: +962 6 560 8416
E-mail: info(at)jib.com.jo

Jordan Investment Board (JIB) is a governmental body established with the aim of facilitating the procedures for foreign investors face in Jordan. It hosts a one-stop shop (OSS).

 

Partner Embassies

 

Embassy of Denmark

Jabal Amman
3 Hanna Qa'war Street
Hay Al Radwan/Zahran
P.O. Box 830393
Amman 11183

Tel: +962 6 592 6620
Fax: +962 6 592 6639
E-mail: ammamb(at)um.dk

Embassy.

Embassy of the Netherlands

22 Ibrahim Ayoub Street
4th Circle
Amman

Tel: +962 6 590 2200
Fax: +962 6 593 0161
E-mail: amm-info(at)minbuza.nl

Embassy.

Embassy of Norway

25 Damascus Street
Abdoun
P.O. Box 830510
Amman 11183

Tel: +962 6 593 1646
Fax: +962 6 593 1650
E-mail: emb.amman(at)mfa.no

Embassy.

Embassy of Sweden

20 Abdul Majeed Al-Adwan Street
Abdoun
P.O. Box 830536
Amman

Tel: +962 6 590 1300
Fax: +962 6 593 0179
E-mail: ambassaden.amman(at)foreign.ministry.se

Embassy.

British Embassy

Abdoun
P.O. Box 87
Amman 11118

Tel: +962 6 590 9200
Fax: +962 6 590 9279

Embassy.

Embassy of Austria

Mithqal Al-Fayez Street 36
Jabal Amman
P.O. Box 830795
Amman 11183

Tel: +962 6 460 1101/1103
Fax: +962 6 461 2725
E-mail: amman-ob(at)bmeia.gv.at

Embassy.

Country Profile Sources

General Information Sources

Corruption Levels Sources

Judicial System

Police

Licences, Infrastructure and Public Utilities

Land Administration

Tax Administration

Customs Administration

Public Procurement and Contracting

Environment, Natural Resources and Extractive Industry

Public Anti-Corruption Initiatives Sources

Private Anti-Corruption Initiatives Sources