The government is unable to protect the local product

The Jordanian industry is grappling with challenges amid intense competition

Jordanian industries suffer from the high cost of energy and production inputs.

archival

Exporters in Jordan feel that they are engaged in a "cold war" with competing products. This is how Alaa Abu Khazneh, owner of a plastic factory and representative of the plastic industries sector in the Jordan Chamber of Industry, depicts the reality of the local industry in the Kingdom.

Abu Khazna told Reuters that about 650 plastic factories operate in Jordan, and the electricity bill accounts for approximately 40% of their production costs, and they struggle daily to continue “amid demands for more government support, which can only be described currently as modest.”

The high cost of energy

Abu Khazna indicated that the high cost of energy and production inputs stands as an obstacle for Jordanian factories to compete with the prices of products of other countries, such as Turkey, Iran, and some Gulf countries, which witness government support in their countries in addition to low energy costs.

However, he stressed that Jordanian products, despite these challenges, compete in quality and variety of items, in addition to the continuous development of products, indicating that exports of plastic products amount to about 250 million dinars (353 million dollars) annually.

Abu Khazna stated that the factories tried to reduce the costs of electricity consumption, by submitting applications for energy conservation programs and installing solar panels, but most of them were rejected, on the pretext that they are not located within the geographical areas suitable for the use of alternative energy.

More than 12,000 employees work in plastic factories in the local market, according to data from the Jordan Chamber of Industry.

New electric tariff

On the other hand, last April, the Jordanian Energy Authority began implementing a new electricity tariff, through which it reduced the tariff for the main economic sectors, such as the commercial, industrial, hotel, agricultural and health sectors.

Also, according to the website of the Ministry of Energy, there is a government tendency to adopt a national action plan to supply natural gas to industrial complexes.

Stopping is much more difficult

Abdullah Shawabkeh, the owner of an iron production factory, agrees with Abu Khazneh about the reality of the challenges facing the local industries, and says, "We work and try to compete despite the challenges... stopping work is much more difficult."

Shawabkeh told Reuters, "We have been working in iron production in the Kingdom for 15 years, and we have about 500 employees. Whether we have a small profit margin or losses every year, it is better than closing and exiting the market in light of commitments and loans."

And he indicated that the cost of energy is one of the most important challenges that hinder the local industry, as it constitutes about 30% of production costs, most of which are electricity.

However, according to Shawabkeh, the new electricity tariff has contributed to reducing the cost of energy for the industry, but it is still considered high, amid intense competition for imported iron commodities in the local market.

He pointed out that another challenge facing the local industry is the government's inability to protect the local product.

government support

Shawabkeh, whose iron factory exports to the Palestinian territories and some European countries, stressed the need to provide support to local industries so that they can compete in fairer ways and enter new markets.

For his part, the head of the Jordan Chamber of Industry, Fathi al-Jaghbir, told Reuters that despite what the industrial sector has achieved during the current period, it has not yet reached its maximum potential and capabilities, whether in terms of production for the local market or even export.

And Jaghbir indicated that this is due to several reasons, most notably the high costs of production, and that “the differences in production costs with our competitors in the internal and export markets reach 25%, which clearly impedes competitiveness.”

Al-Jaghbir touched on another challenge, which is the competition of imported goods with a local counterpart, which constitutes more than 35% of total imports, adding that "most of the countries from which we import do not apply the principle of reciprocity, and impede the entry of Jordanian exports to them."

• Factories tried to reduce the costs of electricity consumption, by submitting applications for energy conservation programs and installing solar panels, but most of them were rejected, on the grounds that they are in inappropriate places.

• 12,000 employees working in plastic factories in the local market

• The high cost of energy and production inputs are an obstacle for Jordanian factories to compete with the prices of other countries' products such as Turkey, Iran, and some Gulf countries.

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