Reduced tariffs draw flak from industry sector, receive commercial support

AMMAN — The recent government decision to reduce customs tariffs will affect Gross Domestic Product negatively, say industrial sector representatives.

“The decision will abolish all support for the local industry, causing irreversible damage and resulting in increasing unemployment rates,” said Eyad Abu Haltam, a board member at the Amman Chamber of Industry, told The Jordan Times. 

Abu Haltam noted that due to the decision, the Kingdom’s imports will increase, which will negatively affect the competitiveness of locally manufactured products. 

The Kingdom will likely see more imports from Turkey and China, Abu Haltam stated, noting that most of the other countries Jordan imports from are included in the Free Trade Agreement, meaning they already have customs tariff reductions. 

“Our operational costs are among the highest regionally,” Abu Haltam noted. 

Keeping the customs tariffs at 30 per cent would more fairly support domestic products, said Abu Haltam. 

According to Abu Haltam, the most important factor to boost the economy and increase purchasing power is reducing sales tax.

“If the government wants to ‘ease’ the prices for customers, I suggest they reduce sales tax,” Abu Haltam stated.

Many imported products are already exempt from custom fees, as stated in the Jordanian Investment Law, a member of the industry sector who preferred to remain anonymous, told The Jordan Times. 

The source noted that the decision is going to be “harmful” for the local industry sector. 

Locally manufactured products will not have a competitive advantage over the imported products as “the industry sector will not benefit from the reduction in custom tax at all”, the source said. 

Meanwhile, the trade sector is “optimistic” about the decision and representatives of the sector are expecting the market to revive.

“The reduction in customs tariff will bring positive returns to the Kingdom’s Treasury,” Asad Qawasmi, footwear, clothes and textile representative, told The Jordan Times. 

Qawasmi said customers purchasing power will increase, resulting in more sales, therefore the Treasury’s returns will increase. 

“This decision will help dampen smuggling,” Qawasmi noted. 

However, Abu Haltam disagreed with the claim that reducing tariffs will help eliminate smuggling, noting that “high smuggling rates are due to high sales tax not customs tariffs”. 

As for the national industry, Qawasmi highlighted that the decision considers the local industry, by eliminating imported products that have a locally manufactured alternative from the tax revamp, such as men’s suits, underwear and many others. 

However, Abu Haltam noted that only three categories that have locally manufactured alternatives are exempt from the decision: Furniture, foodstuffs and engineering equipment. As for the rest of the categories, customs tariffs will be reduced.