Stability of legislations is the most prominent challenge facing the business environment

Stability of legislations is the most prominent challenge facing the business environment

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The Jordanian investment environment is governed by a number of laws which regulate the operation of the private sector and control the relationship between the public and private sectors.

In view of the entrepreneurship wave with has appeared recently, questions came up as to whether entrepreneurship requires a law to enhance its existence in Jordan, particularly if we know that the current year will witness amendments to basic laws related to the business sectors, most important of which are income tax, communications, and the partnership between the public and private sectors.

Specialists and experts believe that supporting entrepreneurship in the Kingdom does not require a law or any controls to limit the frameworks of its operations, but rather the stability of the legislative and business environments in a manner that allows startup companies to grow without any obstacles or challenges.

They pointed out that the present business environment is appropriate for supporting entrepreneurship in the Kingdom.  Companies can be registered within a short period of time, let alone the fact that the minimum capital requirement for registering a company is one Jordanian Dinar.

They expressed concern that what is being circulated about a trend towards issuing a law for small or startup businesses, pointing out that such an action would confuse the current business environment.

Jawad Abbasi, the general manager of the Arab Advisors Group stressed the need to preserve the laws governing the economic environment, enhancing it with real partnerships between the public and private sectors.

He added that amending laws and regulations repeatedly confuses the private sector business, pushing it towards moving to a more stable place, especially since businesses are established to continue, and not to exist for a short and limited period of time.

On his part, Mr. Abdul Aziz Shamlawi, director of the Communications and Information Technology Sector (INTAJ) stated that the laws governing the business environment enhance the entrepreneurship environment in Jordan. He added that what is more important than laws is the stability of the legislative environment, whereby economic sectors face a state of confusion when any of the main laws is changed, especially regarding taxes.

He called on the government and legislative bodies to look at the benefits reaped by the national economy on the long term when approving any law, and not to search for short-term benefits only.

According to a report by the World Bank group on the practice of business in 2013, titled "More Subtle Government Measures for Small and Medium Businesses," Jordan has showed a retreat in its classification on the ease of practicing business index, assuming the 106th position from the 105th, according to the 2012 report.  The Jordanian economy did not show any procedural reforms for this year, according to this report, whereby the largest retreat was in the business startups index, with 11 positions, compared to last year’s report.  Reviewing this index’s sub-indexes, one can notice a relative stability, which could explain this retreat against an advance in other countries on this index, while Jordan’s performance remained constant.

Furthermore, the index for dealing with building permits also retreated by 5 positions compared with last year, in spite of the fact that the number of measures related to acquiring permits (17 measures) were constant, as was the time needed for obtaining the permit (70 Days).

Although Jordan’s maintained its position on the availability of electric power index, sub-indexes indicate an increase in the cost of acquiring electric power, from 274.2% of per capita income last year, to 292.3% this year.

The report also showed a retreat in Jordan’s position in tax payment as a result of a slight increase in the rate of taxes from income, reaching 27.7% in 2012, compared to 28.1% in the 2013 report, in addition to an increase in the time required to pay taxes, reaching 151 hours a year compared to 116 hours last year.

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