Foreign Direct Investment

Historically, the Jordanian economy has benefited from massive investment by the Gulf countries, which continued to skyrocket until 2006. However, since then FDI has declined due to the international economic crisis, followed by geopolitical instability. The situation was compounded by the health and economic crisis triggered by the Covid-19 pandemic. According to UNCTAD's World Investment Report 2023, FDI inflows surget to USD 1.32 billion in 2022, up by 82.9% y-o-y and above the pre-pandemic level. At the end of the same period, the total stock of FDI stood at USD 38.38 billion, around 78.6% of the country’s GDP. According to a report by the Central Bank of Jordan, in the first six months of 2023, Jordan attracted USD 776 million in foreign direct investment, marking a 20.9% increase compared to the same period in 2022. Investments are mainly concentrated in the field of real estate (residential and commercial), financial services and large tourism projects.

The country's attractiveness lies mainly in the quality of its infrastructure, its solid and dynamic banking system, as well as its level of economic openness, which has allowed the establishment of free trade zones and public-private partnerships. The Government introduced a new initiative to encourage investment, including offering investors a single-window application facility through the Jordanian Investment Commission. In October 2022, Jordan enacted the Investment Environment Law No. 21 of 2022, which took effect in January 2023, replacing the Investment Law No. 30 of 2014. The purpose of this law was to foster an environment conducive to investment and to encourage greater investment inflows. It reiterated that non-Jordanian investors would receive equal treatment as Jordanian investors and broadened the range of sectors eligible for incentives, subject to specific criteria being met. Among other incentives, the aw allows companies to employ foreign workers more freely, permitting the hiring of non-Jordanians for administrative and technical roles requiring specialized skills, up to 25% of the total workforce, extendable to 40% if qualified Jordanian labor is lacking. Despite enhancements in business indicators aimed at easing investment and operations, conducting business in Jordan can be more challenging compared to other regional locations. Investors particularly highlight tax regime instability and incentive package concerns, along with issues in the public-private interface, including inconsistent government interpretation of policies and regulations. The Investment Environment Bylaw No. 7 of 2023 expanded ownership percentage in some economic activities, while maintaining some restrictions. Jordan ranks 71st among the 132 economies on the Global Innovation Index 2023 and 92nd out of 184 countries on the latest Index of Economic Freedom.