After surviving the financial difficulties caused in 2009 by the global economic crisis, industrial sector representatives expressed cautious optimism about prospects for recovery in 2010.
Mr Zaki Ayoubi GD of the Jordan Chamber of Industry said that the industrial sector was able to overcome the consequences of the global recession which increased confidence inside the sector however, that industrialists are worried that credit stagnation may continue in 2010.
Despite official figures showing that credit facilities extended by local banks increased in 2009, the majority of these loans were provided to large firms and many small and medium sized companies struggled to obtain credit.
The industrialist added that during meetings of a special committee representing the government, local banks and the Central Bank of Jordan which the previous government formed in November to look into the difficulties facing the private sector in obtaining loans, the chamber recommended creating a special fund for smaller businesses that have difficulty obtaining credit from banks.
Mr Ayoubi said that "In case banks continue to tighten their lending measures, we recommended establishing JOD 100 million funds under the supervision of the CBJ, to extend loans to healthy small and medium sized industrial companies as a partnership between the public and private sectors."
Mr Rajai Muasher deputy PM and minister of state who headed the special committee said that the committee endorsed the fund in a bid to support industrial and real estate companies. He added that a special team from the Social Security Corporation's Investment Unit and other concerned parties was formed to look into establishing the fund. The team will hold its first meeting to discuss the recommendations.
Economist Mr Hani Khalili predicted that 2010 will see recovery in the Kingdom's economy if the government establishes funds to extend credit to the private sector and individuals in light of strict lending measures by banks.
He said that "The CBJ has lowered interest rates several times but banks never responded to these decisions and never eased their lending measures. He added that banks respond to CBJ decisions only when it places tighter restrictions on credit.
Meanwhile, Mr Ayoubi indicated that despite the economic slowdown and 20% drop in Jordanian exports, the industrial sector in 2009 maintained positive growth of 3.3% over 2008, but this slowdown and drop in exports resulted in a decline in revenues that increased production costs of local industries, affecting the competitiveness of Jordanian goods in international markets.
He said that factories in the Kingdom rely on heavy fuel oil, but between December 2008 and December 2009, prices of fuel derivatives went up by almost 92% after the government liberalised the energy market.
(Sourced from Jordan Times)
