EBRD and JSC present capital market strategy for Jordan

By Nibal Zgheib

EBRD and JSC present capital market strategy for Jordan

Jordan must implement a set of well-coordinated reforms to fully develop its capital markets, according to a new strategy presented today.

The capital market development strategy and roadmap for Jordan, presented by the European Bank for Reconstruction and Development (EBRD) and the Jordan Securities Commission (JSC) at an event held under the patronage of Jordan’s Prime Minister Dr Hani Al-Mulki, is based on a year-long examination of Jordan’s capital market.

The results of the analysis show that Jordan has all the ingredients to operate a healthy capital market, as the required regulatory entities are in place in the country, but they need to be upgraded. Furthermore, the range of available instruments needs to be broadened to encourage the use of available domestic investable funds and to attract foreign investors.  Making Jordan’s capital market more attractive to issuers will therefore require legal and regulatory reforms.

The strategy calls for better access to government securities and the development of investment funds as well as the enabling of exchange-traded funds, such as tracking a commodity or bond index. It also calls for tax policy changes as the current regime is seen as detrimental to investment funds.

Improving the effectiveness of the JSC by strengthening its authority and capacity is seen as key to enable the commission to fully play its role as a major catalyst in the review of the regulatory environment and a move to a risk-based supervision.

Funded and prepared by the EBRD, the strategy builds on Jordan 2025: A National Vision and Strategy, an integrated economic and social framework. The strategy aims at supporting the country in its efforts to foster economic growth, create jobs and raise standards of living for its citizens.

Successful implementation of the strategy will depend on the involvement and participation of the private sector such as investment firms, asset and fund managers, and investment bankers, all of whom are indispensable partners on the road towards reforming and reviving the Jordanian capital market.

Mohammad Saleh Hourani, Executive Chairman of the JSC thanked the EBRD for its assistance in preparing the strategy and made the following remarks: "The JSC is celebrating today, together with the EBRD, the launch of the strategy which covers all aspects of the national capital market and defines the actions that should be taken to upgrade and develop the capital market. After soliciting feedback and comments from stakeholders, the JSC is very keen to implement the strategy in a manner that would further enhance investor protection and the investment climate in Jordan’s capital market, and that would help the sector in facing its current challenges."

Heike Harmgart, EBRD Head of Office in Jordan, said: “We are pleased to partner with the JSC to work towards further developing Jordan’s capital market during these economically challenging times. What we need is the mobilisation of capital within a robust and transparent regulatory framework which allows for clear monitoring on the one hand and supplying the private sector with capital on the other.”

Christelle Fink, EBRD Head of local capital markets development in the southern and eastern Mediterranean region, said: “In addition to strong government leadership and accountability, the development of capital markets in Jordan will require the input and cooperation of both the regulator and market participants.”

Jordan became an EBRD shareholder in 2012 and to date the Bank has committed US$ 775 million across 33 projects in various sectors of the country’s economy, in addition to US$ 120 million of trade facilitation credit lines with local banks.

The capital market strategy and roadmap for Jordan can be found here.