Interview with Eng. Bassem Farradj, founder and CEO of ATG, Secretary General of Amman Chamber of Commerce and Promoter of Renewable Energy in Jordan
According to the Ministry of Finance, Jordan has been affected by the economic crisis and in the last year the growth rate was 2.8% but for 2010 it should not be less than 4%. What is your perception of the business climate in Jordan? What are your expectations?
Jordan is a beautiful country and living here is a marvelous experience. On the business front, I believe Jordan can offer a lot as far as the business environment is concerned because of our leadership. Our king has been adamant about putting Jordan on the political and economic map of the world. This required gallant decisions like working in a free market economy and being open to the rest of the world and because of this we have signed free-trade agreements with the US and this is attractive for other countries interested in investing in Jordan. At the end of this year we are working on similar agreements with Canada, Turkey, Singapore, and an association agreement with the EU. Jordan has great potential when you consider it has opened itself up to 1 billion consumers by having agreements with these markets.
The Greater Arab Free Trade Agreement is also beneficial to the business climate here because it links 17 countries for trade and this provides opportunity for products produced in Jordan. Overall, I am very optimistic regarding Jordan. Jordan is unique due to several elements. First, our human resources are very educated and in the knowledge economy we could play a large role. Second, there are unique benefits we have due to our geography and natural resources and we are a logistics hub between the north and the south. The third element is the unprecedented approach of the government working very closely with the private sector to bring people into the decision making process. If we can tap into all of our resources this will just add to our growth but of course there will be challenges.
What are some of these challenges?
The major challenges that we face are structural. By this I mean we have a large public sector and the number of public sector servants is something that needs to be approached with caution because they consume and drain our government’s budget. Our budget is 5 billion dinars and 1.5 billion goes towards wages and pensions and this is a sizable drain on the economy. We have major expenses and if we try to squeeze our budget it is at the expense of the capital expenses for projects and infrastructure. We really need a paradigm shift with regard to how we move forward and try to figure out how to further engage the private sector. This is a big task to undertake but I believe the government is moving in the right direction. Our plan is very fiscally focused with increasing revenue, monetarily driven to encourage the banks to give more money to the banks, and also to encourage investment, particularly foreign direct investment to stimulate the economy and create jobs. Unemployment is another challenge Jordan has to face due to the economic slowdown.
How do you see the trend for renewable energy both globally and regionally? What are the prospects for Jordan’s private sector to develop renewables?
Renewable energy in Jordan is very exciting and we have been focusing on this since the price of oil hit an all time high in 2008 and it was a wake up call for us to see we are living way beyond our means. Our energy bill is around 23% of our GDP whereas in the US it is only 4% so clearly something needs to be done. We have a plentiful amount of sun here and this is a blessing we should tap into.
The funds are there, technology is there, and we should really look into this. We also have wind resources due to our elevation and temperature gradients which help generate turbulence that we can use a natural resources for wind energy. The renewable energy plans for Jordan are on the right track and will allow for both the private sector and the government to get involved. Developing these resources will also open up new job opportunities and improve the environment by not generating harmful emissions.
How would you illustrate the opportunities for renewable energies in Jordan to potential investors?
I would say that everyone should come and see it for themselves. The government is focused on moving forward on this and we need to cross a major bridge concerning bylaws before we get heavily involved. Within the next couple of months the Ministry of Energy and Natural Resources will release these bylaws and the investor will find this much more comfortable and easier to understand the important issues. There are a lot of funds in the world that can help produce renewable energy and help push this forward.
Can you elaborate on the Jordanian-EU business association?
Europe is the second largest trading partner with Jordan and we enjoy both geographic and cultural proximity. We feel there is great potential for exchange among Jordan and the EU in terms of trade and investment. This association is a very important platform for promotion exchange and attracting investments from the EU to Jordan.
Foreign investment is very significant for us and there are many opportunities that remain to be tapped. On the trading front we have a very large deficit. We import around 2 billion Euros and export around 100 million Euros and this gap is very unhealthy and needs to be addressed. This association is a great start for us across all domains and now we are trying to create regional projects to tie up with Europe (renewable energy is a great example). We are working with embassies and governments to facilitate trade and exchange.
How did ATG respond to the economic downturn and has your strategy shifted to different projects and brands?
The downturn since October 2008 has had a very serious impact on consumer behavior and also the way banks deal with trading and the community. Fortunately we at ATG were very lucky because we have always been very consistent with quality products and exceptional customer service so we were able to continue at the same speed. We have made our investors very confident due to our ability to persevere through the economic slowdown and this was positive for us because it attracted other investors too. Currently we are looking in the region for promising markets with good potential and looking specifically at the Iraqi market.
Are you considering a strategic partner abroad?
Although our market is mainly local we could easily tap into and clone our company and services to other markets. As a trading company it is different than being an industrial company. When you are trading perhaps you may enter a joint venture and this is worth considering to get closer to the market. We are open to consider ideas that will add to the value and competitiveness of our services and we would be very interested to see if there are companies who would like to set up shop in Jordan to reach the neighboring markets in the region. We look forward to hearing other ideas from people looking to enter Jordan and we are definitely interested in these opportunities.
Are you looking to increase the number of brands you import?
We are always trying to expand upon the products and services that we offer to our customers and we are blessed to have a high level of satisfied customers, as such. We feel it is our obligation to keep our high quality of service, expand the product range, and provide more added value to our customers. From 2011 onwards we plan to execute strategic efforts to expand and add products to our portfolio in order to maintain our dominant position in the market and expand upon the services we offer to our customers.
What is your final message to our audience?
In the future Jordan has a very good chance to find a great place under the sun due to our business environment, climate, and government cooperation with the private sector. Jordan is an important gateway to countries in the region and this is important.