Jordans Apparel Industry

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Jordans Apparel Industry
Ministry of Industry and Trade The Hashemite
Kingdom of Jordan

• MAGIC Show
• Las Vegas 2006

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The Hashemite Kingdom of Jordan

• A population of 5.4 million.
• 35,000 square miles.
• Bordering five markets...
• ...and accessing a billion consumers

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FDI Performance Indicators (UNCTAD)
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Macroeconomic Stability
1999
2004
2005
Inflation ()
3.4
0.6
3.4
Ext. Debt ( of GDP)
95.5
67.4
57.3
Foreign Res. ( bn)
1.99
4.82
4.8
Exports ( bn)
1.48
3.29
3.9 (Nov)
Market Cap. ( bn)
18.4
37.7
5.8
Real GDP Growth ()
7.7
7.7
3.4
GDP Per Capita ()
2,306(Estimated)
1,734
2,163
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Attractive Investment Environment

• Investment Promotion Law Incentives
• Income and Social Services Tax
• Exemptions up to 100 up to 20 years.
• Customs and Sales Tax
• Capital goods and machinery are exempted from
  custom duties sales tax.

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Attractive Investment Environment

• People are our greatest asset
• Well educated population.
• Over 91 literacy rate.
• 180,000 students currently enrolled in
  universities.
• 17 of the population receives higher education.
• 24 universities (14 private, 10 public).
• 60 community colleges.
• 35 vocational training centers training over
  10,000 people each year.
• Competitive wage structure.
• Excellent labor relationship.

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International Gateway

• Member of (WTO).
• Jordan US Free Trade Agreement (FTA).
• Qualifying Industrial Zone (QIZ) Agreement.
• Greater Arab Free Trade Agreement (GAFTA).
• Euro-Jordanian Association Agreement.
• Aghadir Agreement .
• Jordan Singapore FTA.
• and 120 other bilateral trade agreements
• Access To One Billion Consumers..
• Duty Free Quota Free

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QIZ FTA

• QIZ
• 35 Regional content
• 11.7 made in the QIZ.
• (Restricted to QIZ approved areas)
• 8 made in Israel
• Balance made in QIZ, West Bank/Gaza or Israel
• Up to 15 made in USA

• FTA
• 35 Domestic content
• 35 made in Jordan
• (Entire Country)
• Up to 15 made in USA

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QIZ and FTA Rules of Origin

• 35 Content
• Cost or value of materials produced
• Direct costs of processing operations performed
• ___________________________________________
• ? 35 of the appraised value of the article

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QIZ and FTA Rules of Origin
Materials Produced

• Raw materials, parts, components etc. that are
  wholly the growth, product, or manufacture of
• ((QIZ, Israel, Gaza or West Bank) or Jordan)

• Raw materials, components etc. which undergo
  a double substantial transformation

OR
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Double Substantial Transformation
Fabric cut into component pieces in QIZ or Jordan
Component pieces sewn or assembled in QIZ or
Jordan
Foreign Fabric
Double Substantial Transformation
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QIZ FTA

• Saving up to 37 on custom duties through 100
  duty-free access under the QIZ.
• Almost 98 of Jordanian exports reached zero
  custom duties under the FTA.
• Only 100 apparel items are still subject to
  custom duties under the FTA and have reached 40
  of their NTR (Normal Trade Relations (WTO) duty
  rates.

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QIZ FTA

• Saving up to 37 on custom duties through 100
  duty-free access under the QIZ.
• Almost 98 of Jordanian exports reached zero
  custom duties under the FTA.
• Only 100 apparel items are still subject to
  custom duties under the FTA and have reached 40
  of their NTR (Normal Trade Relations (WTO)) duty
  rates.

Flexibility and freedom to import raw
materials from anywhere in the world (use of
third country fabric fulfills Rules of Origin
requirements under QIZ and FTA if it undergoes
double transformation) (Other FTAs apply yarn
forward rules of origin)
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Jordanian Apparel Exports to the USA Per
Agreement (US )
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The Jordanian Apparel Sector

• Leadership and Government are fully committed to
  sector support and development.

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The Jordanian Apparel Sector

• 30 of the Jordanian exports (over 1 billion).
• Employs over 50,000 people, mainly in rural areas
  with a majority of female workers.
• 90 of bilateral trade between Jordan Israel is
  attributed to QIZ.
• Major international buyers sourcing from Jordan
• JC Penney, Levis, Liz Claiborne, Gap, Gloria
  Vanderbilt, Victorias Secret, Jones Apparel,
  Perry Ellis, PVH, Sara Lee, Banana Republic,
  Wal-Mart, Target

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Jordanian Apparel Exports

• Examples of Items Exported under the QIZ (zero
  custom duties)
• Manmade fibers knitted Sweaters and pullovers
• (61103030) (NTR 32)
• Womens girls trousers, shorts, breeches knitted
  of synthetic fibers
• (62046335) (NTR 28.6 )
• Womens trousers, shorts, breeches knitted of
  artificial fibers
• (61046920) (NTR 28.2)
• Cotton knitted Sweaters and pullovers
• (61102020) (NTR 16.5)

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Jordanian Apparel Exports

• Examples of Items Exported under the FTA (zero
  custom duties)
• Cotton knitted T-shirts
• (6109100) (NTR 16.5 )
• Womens woven cotton trousers, shorts, breeches
• (62046240) (NTR 16.6)
• Mens cotton woven trousers, shorts
• (62034240) (NTR 16.6)
• Womens woven cotton blouses and shirts (
• 62063030) (NTR 15.4 )
• Wool knitted Sweaters and pullovers
• (61101100) (NTR 16)

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Future Outlook for the Jordanian Apparel Sector

• Track record in mass and middle market segments
  and the potential to enter higher and specialized
  market niches.
• Focus on value-added products.
• Introducing design capabilities and the creation
  of middle and upper management in the industry.
• Established on-the-job technical training program
  for Jordanian workers aiming at replacing guest
  workers.

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Future Outlook for the Jordanian Apparel Exports

• Complete package of logistics improvements that
  includes
• Aqaba Port improvements
• Land Transportation (liberalization of monopoly)
• Quarterly QPR (Qualified Product Request)

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Future Outlook for the Jordanian Apparel Exports

• Complete package of exemptions and tax and fiscal
  incentives for the Apparel sector.
• FTA with Turkey (Mid 2006)
• Flexibility of sourcing Turkish fabrics
• Cuts down on lead time
• Potential for exporting to the EU market under
  the Pan-Euro-Med accumulation system
• A similar agreement was reached with Israel to
  increase the potential of exporting to the EU
  under the same scheme

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• Thank You