The importance of the industrial sector

The industrial sector contributes about 25 per cent to the GDP and accounts for approximately 94 per cent of national exports, valued at JD7.7 billion, reaching more than 144 countries worldwide.

It is also the largest employer, providing jobs for 265,000 workers, which represents 21 per cent of the local workforce.

Moreover, the industrial sector is the top attraction for investments, with around 62 per cent of incoming investments directed toward this sector in 2024.

The sub-sectors within the industrial sector are among the most significant and valuable economic sectors in terms of the “multiplier effect” on the economy.

This economic concept refers to how an increase in spending within a specific sector generates a multiplied impact on total income or GDP.

For instance, the food industries sector in Jordan has a multiplier effect of approximately JD2.55, meaning that every JD1 spent in this sector increases income by JD2.55.

Similarly, the manufacturing industries sector has a multiplier effect of about JD2.166, indicating a substantial contribution to the overall economy.

A central priority of the Economic Modernisation Vision (EMV) is to expand the contribution of local products to the overall supply in the Jordanian economy.

This goal focuses on boosting productivity in high-value-added sectors, driving faster and more substantial GDP growth.

Achieving this requires increasing total demand and investment, enhancing the efficiency of government spending, and promoting exports from high-value-added industries.

To move forward with the EMV, prioritising the industrial sector is vital for the government. 

Around 30 per cent of the initiatives and projects within the EMV focus on this sector. 

The EMV aims for a JD27.9 billion increase in real GDP, with the industrial sector expected to contribute 21 per cent of this growth, or approximately JD5.8 billion.

Additionally, creating 1 million new jobs in Jordan by 2023 will require the industrial sector to generate 260,000 new jobs.

The vision also targets attracting JD32.2 billion in both local and foreign investments, with JD11.6 billion of that allocated to the industrial sector.

Achieving these targets depends on addressing several key factors with an economic mindset. The industrial sector requires stimulation through a range of tax and customs incentives, as well as non-financial incentives such as land allocation and lowering infrastructure costs. 

Additionally, supporting exports, for example, through an export rebate program, would play a major role in boosting national exports.

Furthermore, limiting imports of goods that have local alternatives can pave the way for domestic production.

This can be done by creating a list of such imported goods, encouraging their local manufacturing, and discouraging imports of items with local substitutes by increasing customs duties on those products.

The meeting between Prime Minister Jaafar Hassan and the industrial sector at the Amman Chamber of Industry was both important and timely, reflecting the government’s serious commitment to improving the industrial sector.

A committee is set to be formed, consisting of ministers, directors of government institutions, and industrial sector representatives.

This committee will meet regularly to address the challenges facing the sector and take necessary actions.

It is expected to have a positive and immediate impact on the sector’s development.

Raad Mahmoud Al Tal is head of the Economics Department - University of Jordan