Jordanian Mining Sector\Investment Climate
Natural Resources Authority Mining Sector Investment Climate in Jordan The economy of the Hashemite Kingdom of Jordan operates according to free market and free trade principles. In its attempt to help the industrial sector, a major legal and institutional reform has been in progress for the last five years. The new framework seeks to attract foreign direct investment (FDI) and to create the conditions for entrepreneurial growth. To these ends incentives have been introduced and recognized according to the Investment Promotion Law and its bylaws. Of specific interest to foreign investors in relation to the investment climate in the Mining Sector of Jordan are the following:
•Article 117 of the Constitution of Jordan allows for foreigners to invest in mineral resources under special agreements. These are negotiated with prospective investors on a win-win basis and thereafter sanctioned by parliament as special laws, binding the government to the extent of their articles.
•Under such agreements investors have a legally secure title and mining rights permitting the investor to explore, mine and market the resulting products without risk.
•Stability of the fiscal regime: As a special law overrides normal laws and all mining-related agreements are ratified as special laws, changes in the fiscal regime are not possible. It is thus the case that a project’s IRR can be calculated on terms that are the same for the lifetime of the project.
•The fiscal regime: is stable and is secured by both the government and parliament under the constitution. The prime features of the fiscal regime are:
◦Taxes: Income tax is at 15%, which is comparably lower that in most countries worldwide;
◦Royalty: a new policy which is highly competitive by international standards.
◦Profit Sharing: profit sharing in mineral agreements is usually considered at a level that produces an acceptable IRR to the participating company in line with international practices. The division of interests in the production sharing agreements for the oil and gas sector is set by the government at a level most favorable to participating companies when compared with international norms.
•Foreign exchange and repatriation of capital: there is freedom of movement of capital into and out of Jordan. Also, there are no restrictions on foreign exchange and companies are permitted by law to have offshore accounts and to repatriate their profits from wherever they may sell their mining products.
•Project ownership: According to the new investment promotion regulations foreigners may own up to 100% of any project in the mining sector.
•The right to assign: as of the effective date of any mining agreement and at all stages of the project, companies are free to assign partially or entirely their interest in the project and all the rights and assets of the project can be used for financing purposes. In those limited cases where government approval is required, such approval will never be unreasonably withheld.
•Right to market mining products: companies are free to market the products mined wherever they deem profitable without any restrictions.
•Arbitration: The Hashemite Kingdom of Jordan is a member of the ICSID (International Center for the Settlement of Investment Disputes) but international arbitration for the settlement of disputes is acceptable. The particulars of the arbitration are a negotiable matter.
•Freedom of commercial operations: Companies after the effective date of an agreement, as long as they are inline with the environmental and safety regulations and also with the development plan, are free to conduct their commercial operations as they wish.
•Stability in Environmental Management: The local Environmental Regulations are no tighter than those applied internationally, with an environmental management plan being regularly agreed upon after completion of the feasibility study. Such a document becomes binding on both the company and the government and thus environmental requirements should never pose a risk to any project.