Jordan Compact

When the Government of Jordan negotiated a set of agreements with the international community aimed at mitigating the effects of the Syria refugee crisis and turning that crisis into an economic development opportunity, the USAID decided to establish the Jordan Compact Project Management Unit (PMU) at the Ministry of Planning and International Cooperation (MoPIC) through the Jordan Competitiveness Program (JCP). Through seconded staff, logistical and procurement support, and technical assistance, the PMU has been the backbone of the Jordan Compact’s implementation and oversight. In the two years since the PMU’s establishment, it has been a catalyst for successful implementation of the Compact, assisted with donor coordination, promoted labor market access, and supported increased exports to a variety of markets.

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Working with the Jordan Investment Commission

Further complementing JCP’s contributions to the success of the Jordan Compact has been the project’s assistance to the Jordan Investment Commission (JIC) as it works to improve the country’s business environment and attract more investment. JCP’s direct assistance to the JIC in designing and implementing investor-friendly reforms has helped Jordan meet a key requirement of the World Bank’s Performance for Results (PforR) matrix. A key metric of the Jordan Compact, the PforR is the international community’s gauge for releasing vital funding tranches to the Jordanian government, helping it meet its budgetary obligations and remain resilient in the face of extraordinary challenges brought on by regional crises.

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Project Management Unit (PMU) Sets Common Benchmarks for Donor Efforts in Jordan

Through its establishment and support of a Project Management Unit (PMU) at the Ministry of Planning and International Cooperation (MoPIC), the USAID Jordan Competitiveness Program (JCP) has been instrumental in shepherding donor implementation of the Jordan Compact, helping the Kingdom transition from an “economy of crisis” to a sustainable one, spurred by the hope of peace in neighboring Syria. From the number of work permits extended to Syrians to the number of Jordanian manufacturers qualifying to export to the European Union (EU) under the Compact’s relaxed trade regime, these achievements have had an immediate and demonstrable impact on Jordan’s ability to weather the economic shocks of the Syrian refugee crisis while laying the groundwork for a better future. At the same time, USAID-JCP has also carefully adapted the activities for which it was established, ensuring that its early efforts to improve the Jordanian business climate and to boost investments and exports continue to bear fruit while also contributing to the Compact-aligned priorities set by USAID.

Among its achievements, the PMU oversaw the implementation of the World Bank’s Performance for Results (PforR) framework through continuous follow-up with Government of Jordan ministries and donor organizations and projects, ensuring progress against each of the World Bank’s five Disbursement-Linked Indicators (DLIs). As a result, Jordan received a total of $192 million through this program in 2017 alone. In addition, by working closely with the Ministry of Labor, the PMU helped secure more than 117,000 work permits for Syrians, a key requirement of the Compact.

The PMU also acts as a reform secretariat that reports to the Minister of MoPIC and an inter-ministerial committee chaired by the Prime Minister, working closely with GoJ entities, donors, and implementing partners to ensure that all reforms and benchmarks are being implemented in a timely fashion. These reforms are part of a Five-Year Growth Matrix developed by the GoJ and the World Bank and aimed at stimulating equitable economic growth and jobs. Based on implementation of this matrix, the World Bank extended to the GoJ a highly concessional Development Policy Loan (DPL) of $500 million as a first step toward financing Jordan’s new reform agenda.

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Bringing Together Trade Representatives

Supported by the USAID Jordan Competitiveness Program and the Arab-Danish Partnership Programme, the Jordan Chamber of Industry has served as a convening platform for Economic and Trade Attaches at Arab and Foreign Embassies in the Kingdom.  Representatives of participating countries have worked together to channel available support programs towards the industrial sector in Jordan and provide the necessary technical and financial support to contribute to building the business environment inside and outside Jordan, including initiatives necessary for enabling Jordanian industries to export to European markets in light of the simplified rules of origin under the Jordan Compact. 

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Assisting Firms to Export to the European Union

The USAID-supported Project Management Unit (PMU) at the Ministry of Planning and International Cooperation (MoPIC) played an instrumental role in launching the USAID Jordan Competitiveness Program (JCP) Firm-Level Assistance (FLA) program work [link] by putting out a call for Jordanian companies interested in exporting to the European Union (EU) — a primary target market of JCP’s FLA work — and, with support from JCP experts, filtering applicants and identifying the first batch to complete the program’s intensive technical assistance offerings. This activity set the stage for successful implementation of the Jordan Compact, which included a simplified Rules of Origin (RoO) arrangement encouraging Jordanian manufacturers to export to the EU.      

Since then, firm-level assistance has been a stand-out activity of JCP, growing out of this early PMU-led effort. As more donors enter the firm-level assistance space, USAID and its partners in the Jordanian public and private sectors have joined together to consolidate the lessons of the FLA program into a new national export institution — Enterprise Jordan. The institution is envisioned to become the premier export facilitation and promotion entity in the Kingdom.

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Facilitating Access to European Markets 

As per the EU-Jordanian Association Council decision made at the London Conference last year, 18 designated development zones and industrial areas across Jordan are now able to export their manufactured products to EU markets under new simplified rules of origin, or RoO. Since its establishment in late 2016, the Jordan Compact Project Management Unit (PMU) has been hard at work with relevant organizations from the government and the donor community to identify the challenges hindering Jordanian products’ export process. To this end, the PMU has held planning workshops involving key donor and government representatives. The workshops address the current export challenges for Jordanian factories operating in the 18 development zones. Those challenges include difficulty in meeting the 15 percent target of Syrian hires, lack of skilled labor to work in the industrial sector, and manufacturers’ lack of familiarity with EU standards, specifications, and technical regulations.

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