ESIS extension / Jordan / Regulatory Developments / Update Memo 6

The following report outlines new developments in the past three months and the state of on-going developments.

King Abdullah of Jordan aims to establish IT as the third-largest source of revenue for the country. The King plans to create 30,000 new jobs in the IT sector, generating exports of $550 million per year of software and attracting foreign investment of around $150 million. The King also plans to establish Jordan as an online hub for the Arab world. In order to achieve his aim, the King needs to ensure that Jordan has a reliable telecommunications infrastructure. France Telecom has agreed to invest $400 million up to 2003 in the modernisation of the telecommunications network, as well as launching a new GSM network in September 2000.

In Jordan, Internet solutions are moving slowly but surely upwards. His Majesty King Abdallah is striving to turn the Kingdom into an Internet and IT hub, and encouraging the development of high-tech in the Kingdom. However, experts believe that one fundamental area of development relates to legislation. They argue that such a hub requires a reshuffle in the current laws and regulations regarding the use of Internet and IT in conducting business online.

IT leaders request new legislation, amendments to laws regulating economic life and development

His Majesty King Abdullah presided on the closing event of REACH 2.0, a 10-week effort by information technology leaders to review the software and IT services industry's development strategy. The reviewing process of the IT development strategy started on July 12, amid increased concerns as to the adequacy of the existing recommendations infrastructure and laws. After 10 weeks of consultation, the contributors and organisers finalised the recommendations of REACH 2.0. In this process, 13 international experts conducted five stakeholder roundtables and 12 workshops.

REACH 2.0 is considered as the second phase of last year's REACH Initiative, a five-year plan for:

REACH 2.0 is expected to assess achievements, failures and pending tasks, in addition to addressing some issues not exhaustively explored by its previous version, among which industry sources have cited as an example e-commerce.

According to the recommendations of the leaders of the five committees, which reviewed various industry components (capital and finance, e-regulations and regulatory frameworks, human resources development, telecommunications and infrastructure, and IT industry development issues) many articles of the existing Labour, Companies, Securities, and Investment Promotion laws should be amended.

The government was urged to produce major chunks of draft legislation on areas (so far untouched) such as e-commerce, e-banking, cyber-crime, privacy standards, and an evidence law recognising electronic equivalents to writing, original documents and signatures. The members of the Information Technology Association of Jordan, Int@j, also asked for major amendments to the most crucial laws regulating economic life and development.

IT entrepreneurs also asked for Parliament's co-operation, urging the national assembly to swiftly endorse government drafts dealing with the sector's development within the upcoming ordinary session, which is expected to convene in October. IT leaders, especially the Internet Service Providers, require more transparent services starting from making available network maps and plans and lower prices for both local calls and high speed data lines.

In his keynote speech, Post and Telecommunications Minister Fawwaz Zu'bi promised full government co-operation and announced an "IT legislation package" to be presented to the Parliament for endorsement within the next few months.

The Minister Fawwaz Zu'bi stated that it is absolutely essential that legislation should be set in place during the next parliamentary session to ensure that Jordan will be "open for business" in 2001. The Minister announced that Bahrain and Dubai have expressed interest in co-operating with the Amman Stock Exchange to create a regional board for listing IT company stocks.

Deputy Prime Minister Mohammad Halaiqa, member of the capital and finance committee of Reach 2.0, noted that most recommendations call for a major reshuffle of the Companies and Securities laws. Some of these proposals can be easily incorporated while others will require further work.

Other amendments to the current Companies Law proposed by the capital and finance committee of Reach 2.0 envisaged halving the declared capital requirements for public share-holding companies (from JD 500,000 to JD250,000) and entrusting founders, and not a ministerial committee, as it is presently the case, with evaluating companies in-kind shares. Most importantly, companies should be allowed to issue shares directly via the ASE, and not be forced, as it is currently the case according to the Securities Law, to go through banks or financial institutions.

The IT leaders also asked the government to drop the 20 per cent taxation on net profit for foreign branches of Jordanian companies stipulated in the current law. Increasing brokerage fees, removing employment requirements for the brokerage exam, and providing for Arabic and English disclosure to attract foreign investors were also mentioned as urgent steps. In addition, IT leaders asked for local and regional toll-free numbers to be allowed and for the repeal of this summer's Internet Cafes directive (see also 2.5Telecommunications and Internet - New directive for Internet Cafes). They also asked for a review of JTC prices, for high-speed leased lines and local calls, by the end of the year. In return, the ISP's will co-operate and pass on the lower prices to the market.

The Jordanian government has signed a landmark deal with Microsoft Corp. aimed at bringing the IT vision of His Majesty King Abdallah II to Jordan and its people. The enterprise agreement, which will cover all the government's software requirements, is a first step in Jordan's attempt to transform the country into a technology research and development hub of the region. Attending the signing ceremony in New York City were King Abdallah, Prime Minister Ali Abul Ragheb, Deputy Prime Minister Mohammad Halaiqa, Chief of the Royal Court Fayez Al Tarawneh, and an entourage of senior Jordanian government officials. Representing Microsoft was Vice-President of the Eastern US region, Bob Vellone and General Manager of Microsoft Gulf and Eastern Mediterranean (GEM) in the Middle East, Bahram Mohazzebi.

The King held meetings with senior Microsoft officials and Microsoft Chief Software Architect Bill Gates at the World Economic Forum in Davos, Switzerland in January where they discussed ways in which Microsoft could help to achieve his vision. Follow-up meetings were then held when Microsoft President for Europe, Middle East and Africa, (EMEA) Michel Lacombe visited Jordan and held discussions with the King and the government.

In December, the company intends to provide the ISDN service for customers in main cities around the Kingdom, while the data network will be dedicated only for those living in Amman. JTC's projects included the launch of an Internet portal (www.jordanwide.com) in September, and the launching of pre-paid card service by November. As for 2001, JTC plans to expand its voice network coverage in the first quarter of the year along with providing the data network service for other major cities in the Kingdom.

The board of the Telecommunications Regulatory Commission approved the proposal by Jordan Telecommunications Co. (JTC) to reduce its tariffs. The reduction in JTC tariffs became effective from the 1st of August, and will help Internet Service Providers (ISP) and end-users to enhance affordability of telecommunications and support social development. JTC has proposed the new tariff package to the Regulatory Commission. The package aims at making telecommunications services more accessible and affordable to the public. It focuses on services closely related to Internet and Data Communications.
Back in 1997, JTC adopted a long-term tariff-restructuring program. After privatisation, the company has accelerated implementation of the program in order to align tariffs more closely with actual costs and to comply with license obligations and price regulations. In determining tariffs for various telecommunications services, commercial objectives of the company have been taken into account, as well as political, economic and social needs and the ability of customers to pay.

Jordan's second mobile operator MobileCom launched its GSM services on the 15^th of September and targets at at least 50 percent market share within the next few years. MobileCom is planning to invest more than JD 180 million in the Kingdom over the next four years and has already spent JD 38 million in establishing mobile networking and supply sites. The service covers 94 percent of the country from the first day of the launch. The firm targets at around 50,000 subscribers by the end of the year. The firm offers a whole range of cellular services, including the widely popular pre-paid card, data and voice mail services.

The Jordan Mobile Telephone Services Co. (Fastlink) aims to increase its subscribers in Jordan to one million by 2004. Motorola announced the award of a contract worth $23 million for the expansion of the Fastlink GSM mobile network. The Fastlink network has been in commercial service for five years and 100 per cent of the network infrastructure is supplied by Motorola's Global Telecom Solutions Sector (GTSS). This latest contract is for multilayer GSM network expansion, utilising Motorola's Horizonsystems GSM network solutions for high quality wide area and high capacity coverage.

Once the expansion is completed the Fastlink network will have the capacity to handle over a quarter of a million subscribers, providing enhanced coverage in advance of the expected demand for the new mobile data services. Fastlink has spent more than $500 million on expanding its network to meet the demand. About 200,000 people are currently using Fastlink's mobile services in Jordan.

In accordance with the directives of the Ministry of Interior, Internet cafés are now under new regulations.

One of the essential sectors for e-commerce is the banking sector. While many banks and financial institutions in the world conduct business and monetary transactions through the web, Jordanian financial institutions like the Arab Bank, the Housing Bank and the Jordan-Kuwait Bank (JKB) seem to be moving ahead in creating an e-commerce culture. However, the Internet is principally used for promotional purposes. JKB launched its e-banking system on 2 July in a step to enter the world of e-commerce. The decision aims at saving time and effort and scaling down the voluminous routine paperwork involved in banking services and helping the clients.

A $30 million project to enhance IT at Jordan's state-run universities and community colleges is in the works. The project is part of the higher education development project currently being carried out by the Ministry of Planning. The ultimate aim of the project is to supply students, pursuing higher education, with skills and know-how in state-of-the-art technology.

The overall cost of the higher education development project is $74 million, $35 million of which is supplied by a loan from the World Bank. The IT component of the project, which costs $30 million, has five sub-projects. The first is the financing and installation of a standard-based information technology infrastructure including hardware, software and applications. It will provide inter- and intra-university connectivity and global connectivity via the Internet to provide students and faculty with access to national and global research data and information and the ability to correspond electronically with educators on national and international levels.

The second sub-project supports the design and use of modern management information systems (MIS) in decision-making by the Higher Education Council that supervises higher education in Jordan. The scheme will finance the computer equipment and training of the council's secretariat and university staff. The third project will finance the development of an inter-university library system with the hope of increasing the overall efficiency of libraries in the public education system and facilitate access and exchange of information between public universities. The scheme's fourth component will also support training for individuals who will be assigned as faculty developers in each institution.

Finally, upon establishing the IT network, the project will finance student and faculty computers and network, professional and end user training, educational technologies and human resources necessary to operate the new investment in IT. The project will be finished in late 2004.

The Ministry of Education is allocating JD 28 million to install computer networks in public schools around the Kingdom starting September. The project encompasses more than 1600 schools. Sources in the Ministry said that the government would soon establish a national network linking all public and private schools in Jordan with the Internet. The Ministry is also planning to teach students English through computer applications. The Ministry will spend another JD 1 million to purchase required books and computer tools for English language education.

An initiative that aims to collect information about Jordan's most important IT resources was launched on the 22 of July. Jordan's IT initiative is based on the Jordanian people’s IT skills and expertise. The government and the Economic Consultative Council have launched a joint project that intends to build a comprehensive and accurate database of Jordanian talent and expertise in the IT field. The site address is www.it.jo, which is a "specially prepared" URL provided for this initiative.

The site states that its aim is "to bring together IT professionals and businesses working in the field". Accordingly, it is structured in two sections, one for applicants and the other for employers. As for the applicant section, it is where people post information about themselves to be added to the databank. The applicant is required to provide information in five main categories: Personal information, education, work experience, certificates and language proficiency. People who register can always come back to update or adjust their information. This is done by the use of a password received upon registration. As for the employer section, it offers a search facility for evaluation and recruitment. Employers can conduct a search on the basis of education, experience and certificates. The database will seek a match with the corresponding registered users. To browse talents without a specific requirement in mind, the site can provide a list of all applicants available.

Jordan's communication provider, Jordan Telecom Co. (JTC), announced that it has signed a JD 9.4 million deal with the French giant Sofrecom to provide a new Customer and Care Billing System (CCBS). The system aims to supporting all current and planned products and services including basic voice services, the ISDN (Integrated Services Digital Network) service and other value-added services. The modern billing service, which is expected to be fully operational by July 2001, will allow JTC to increase its revenues and marketshare, prepare for near future competition and minimise product/service cost.

Both JTC and Sofrecom intend to launch the reference site of the project in March 2001. Two months later, the two companies will begin implementation of the project on their sites. The implementation procedures will have been completed by July 2001.

Software piracy in Jordan costs the economy more than $3 million annually. Jordan's level of software piracy has decreased from 80 percent in 1998 to 75 percent in 1999, a change that has been attributed to new copyright laws and law enforcement activities by the Business Software Alliance (BSA). According to a recent study by the International Planning and Research Corp. (IPR), piracy was reduced by 12 percent over the past five years, but 75 percent of software used in the country is still pirated.

2.17 Freedom of expression and information as far as the distribution via electronic networks is concerned

Minister of Finance Michel Marto officially launched electronic trading at the Amman Stock Exchange (ASE), ending over 20 years of manual trading. The ceremony, which was attended by officials from the Paris Bourse, US, British and French embassies, came five months after the replacement of manual trading which had lasted since the opening of the Amman Financial Market in 1978.

The reform of the capital market followed the introduction of the Jordan Securities Commission in 1997, which stipulated the establishment of the ASE and the Securities Depository Centre. The introduction of electronic trading aims to provide transparency and fairness to dealers and investors, while facilitating market surveillance by the ASE and JSC. In order to upgrade its efficiency the JSC, in cooperation with the Paris Bourse, held a training programme for its employees to pave the way for the smooth and gradual launch of electronic trading.

Please note that this report has been prepared under the sole responsibility of the ESIS II contractors.
It does not necessarily reflect the views of the Commission, nor does the Commission accept responsibility for the accuracy or completeness of information contained herein.
The ESIS Team of contractors welcomes any additional information or corrections.