The UAE's pledge to invest $10 billion in industrial projects in Jordan and Egypt will improve competitiveness in the two countries, but it is too early to know what shareholding structures will look like, Jordan’s Industry Minister Yousef Al Shamali has said.
The Emirates announced on Tuesday that Abu Dhabi's holding company ADQ will invest $10bn in mining, textiles, pharmaceuticals, food and fertiliser production in Jordan and Egypt.
This pledge expands a drive to invest in the two countries, which are among the closest regional allies of the UAE. It comes as global supply disruptions, caused by the war in Ukraine and lingering effects of the coronavirus pandemic, have affected production of critical goods.
Mr Al Shamali told The National that the initiative “is not essentially about one party financing the other”.
He said it is aimed at forming “partnerships between entities from the three counties where capital, terms and shares are to be decided by those involved".
"The basis of various contributions cannot be measured in advance,” he said.
He said the partnerships “can assume the form of either new investments or expanding the current enterprises" that are "based on the advantages of each country, such as the availability of natural resources and qualified manpower".
The announcement came after Abu Dubai Ports, a subsidiary of ADQ, struck deals in the past few months for multibillion-dollar projects to develop a 3.2-square-kilometre seafront property in Aqaba, Jordan’s only port and to build ports in Egypt.
ADQ manages about $110bn in assets. This includes a 45 per cent stake in commodities trader Louis Dreyfus.
Mr Al Shamali said that, apart from capital inflow, the agreement would also attract managerial expertise that "would contribute to expanding production, improving products and acquiring better competitiveness".
He said a factory built with the money could easily have personnel from the three countries.
"We are seeking integration," he said.
Ties between the UAE, Egypt, and Jordan expanded in the past two years and their foreign policy positions moved closer. All three have normal ties with Israel and are US allies, but they have also developed closer ties with Russia.
The three countries, however, differ in economic performance, with Jordan's unemployment rate officially at a record high of 23-24 per cent, compared to a 7 to 8 per cent official figure for Egypt. Jordan's gross domestic product, which stands at about $43bn, is also dwarfed by the UAE's and Egypt's.
World bank data shows that foreign investment declined to $718 million Jordan in 2020, compared to $730m in 2019. Egypt received $5.9bn and $9bn in the same period.
Jordan mainly exports raw phosphate and fertilisers mined and manufactured by the largely state-owned Jordan Phosphate Mines Company. The phosphate is mined at three main sites in the kingdom and carried mainly by lorries for export through Aqaba.
Mr Al Shamali said new investments could improve the transport infrastructure for the phosphate industry in the kingdom.
"Even as production is increasing vehicle transport is proving sufficient," he said.
"But we have other options that can be utilised including railway transport and establishing a pipeline network. This latter alternative would minimise transport costs and increase net profits, especially in the light of rising oil prices."