Project Investment Cards

Summary

On 9 July 2023 Jordan’s Investment Ministry launched a new online platform containing information on investment opportunities for local and foreign investors. The Invest in Jordan platform currently features 21 projects with a combined value of almost JOD1 billion (US$1.4 billion). Projects listed are in sectors including information and communication technology, life sciences, healthcare, mining, tourism, food processing, film production, real estate development, and apparel and textiles.

In food processing, projects include a slaughterhouse in Amman; a cold storage project; and building a sustainable agriculture and innovation park. In tourism, there is building an amusement park; an exhibition centre, and a convention centre. Healthcare opportunities include a medical centre, a wellness resort and a dermatology medical resort. In apparel and textiles, listed projects are a fibre‑to‑fibre yarn recycling plant, and introducing technology to reduce waste, among others. Public‑private partnership ventures are also listed, such as a bus rapid transit project, and a gas distribution project.

Rationale

What is the problem under consideration? Why is government intervention necessary?

The problem under consideration is the significant information asymmetry between potential investors and available opportunities in Jordan, which undermines investment acquisition, thereby restricting economic growth and FDI inflow. Investors are often unaware of what Jordan has to offer in terms of viable investment opportunities across key sectors, thus undermining its viability as prime investment location. This challenge is particularly urgent in light of Jordan's Economic Modernization Vision (EMV), which seeks to attract investments to drive sustainable development. Without a structured and transparent approach to address this information asymmetry, investors face uncertainty and miss out on promising projects. Government intervention is essential to bridge this gap, ensuring that when investors approach, it can present them with concrete, well-defined options aligned with EMV goals, thereby facilitating informed investment decisions.

What are the specific national strategy components that this intervention seek to achieve?

• EMV Driver: Invest Jordan
• Initiative: Strengthen and develop the investment environment
• Objective: Increase Foreign Direct Investment Inflows.

Monitoring & Evaluation

What Indicators would best capture the impact of this initiative? How Often?

• Number of direct inquiries/requests for information by investors regarding project card potential projects
• Number of projects, their dollar value (FDI) and jobs realized on the ground as a due to this intervention.

Evaluation Questions

• To what extent do the projects cards stimulate interest with potential investors into choosing Jordan as a location for their investment?
• To what extent do the project cards contribute into actual foreign investment flow into Jordan?
• To what extent do project cards contribute into creating jobs for Jordanians?

Program Theory

What are the assumptions behind this initiative?

• Investors are seeking developed-concept potential investment opportunities.
• The level of details in a project card is enough to entice investors.
• Information asymmetry on projects is a reason for investors not choosing a location

What pre-conditions are necessary to be in place for this initiative to be implemented?

• Availability of a large number of projects with credible and in-depth feasibility studies, data, location, costs, etc., local partners.
• Website or other mediums to publish the project cards once developed.
• Marketing strategy in-place to target investors
• No legal restrictions on potential foreign investors in targeted sectors.
• The resources such as land, machinery, labor, etc. are available for implementation of these projects (e.g. suitable workforce, proven natural resources, etc.)

What are the inputs needed?

• Potential Projects’ Economic Feasibility Studies
• Sectoral Data, background data on sectors
• Local partner/supplier database information
• IT Resources, website, CRM, etc.
• Economic & Business Technical staff to write proposals.
• Qualified Investment Promotion Staff and Resources
• Studies on target audiences and their interests.
• Data availability on actual project implementation for monitoring and evaluation.

What activities must be performed during the life of this initiative?

• Project selection criteria (focus sectors, domestic development goal needs, target market preferences, etc.)
• Conduct economic feasibility studies for potential projects
• Research and collect sectoral data for use by potential investors
• Write-up/development of potential investment project cards
• Promotion activities by Ministry staff and partners
• Responsive mechanism for project inquiry/information requests by potential investors
• Conduct monitoring and evaluation for assessing true impact of intervention.

What are the tangible outputs?

• Investment Project Selection Criteria
• 100 Simplified Investment Economic Feasibility Studies
• Data on Focus Sectors
• Target Investment Markets
• 60-80 Finalized Potential Investment Project Cards
• Investment Project Promotion Plan
• Monitoring & Evaluation Framework

What are the Short-Term Outcomes?

• Generated interest/inquiries (calls, emails, web page clicks, etc.)
• Increase in requests for additional detailed information on potential projects
• Building image for Jordan that there are actual ways to invest and make profit.

What are the Long-Term Outcomes?

• Investors actually making the investments and creating FDI inflow, jobs, exports, etc.

What Risks are expected for this initiative?

• Wrong targeting of potential projects that investors want
• Lack or inaccuracy of data projects are based upon, which could weaken trust by investors in the end product
• Project cards are the wrong medium for attracting investment, some studies suggest that investors already have their own ideas and are looking for locations. They do their own studies as they trust their own calculations and thus require sectoral data.

Analysis & Evidence

Current literature, surveys and stud=ies on the effectiveness of Investment Promotion Agencies (IPAs) have little direct evidence on similar initiatives by these agencies as far as potential investment cards are concerned. However, studies do mention “Matchmaking Services” functions that connect foreign investors with local suppliers, which is the closest function with credible research.

That being said, matchmaking services are a critical function of high-performing Investment Promotion Agencies (IPAs) as they bridge the gap between foreign investors and local businesses. By connecting foreign investors with suitable domestic partners, suppliers, or service providers, IPAs facilitate smoother entry into the local market (What Makes an Investment Promotion Agency Effective?, World Bank, 2023, p. 9). These services help foreign companies navigate regulatory, operational, and cultural challenges, while also boosting local businesses by creating new opportunities for collaboration and growth. Effective matchmaking can accelerate the establishment of foreign firms, enhance local supply chains, and promote knowledge transfer, leading to economic benefits for both the investors and the host country (What Makes an Investment Promotion Agency Effective?, Heilbron and Kronfol, 2020, p. 7).

The table below, based on empirical data from the World Bank Survey in 2019, clearly shows that matchmaking services, connecting foreign investors to local suppliers is the 2nd most common function among high-performing IPAs, as 70% of such agencies have it as part of their mandate.

Focusing on specific target sectors is another crucial strategy for IPAs to maximize their impact. Rather than spreading resources thinly across multiple industries, successful IPAs prioritize sectors that align with national development goals or have the potential for significant economic impact (What Makes an Investment Promotion Agency Effective?, Steenbergen, 2023, p. 16). By concentrating on industries with competitive advantages, such as technology, renewable energy, or manufacturing, IPAs can better tailor their promotional efforts, attract high-quality investments, and advocate for policy reforms specific to these sectors (What Makes an Investment Promotion Agency Effective?, World Bank, 2023, p. 6). This strategic targeting allows for more focused resource allocation, making it easier to attract the right investors and achieve long-term growth in priority areas (What Makes an Investment Promotion Agency Effective?, Heilbron and Kronfol, 2020, p. 8).

Recommendations

• Research and best practices for developing economies show that Investment Promotion Agencies (IPAs) are most effective when they focus on reducing information asymmetry.
• Prioritize key sectors that are strategically important. The current list of projects is broad and covers multiple sectors. In this phase, it is recommended that the GoJ focuses on a few priority sectors to concentrate resources, build capacity, and generate momentum in those targeted areas.
• Conduct an in-depth analysis to identify areas where information asymmetry exists within the target sectors and work proactively to reduce these gaps.
• Shift focus from creating specific investment projects to developing comprehensive information resources. Research shows that the one of the main obstacles facing investors is information asymmetry; addressing this by providing accurate sector data, local supplier/partner information, and market intelligence will better serve investors.
• Employ the Ministry of Investment’s Customer Relationship Management (CRM) system to track investor interest and inquiries. This will help create a resilient and responsive information provision system for prospective investors.
• Currently, the Economic Modernization Vision (EMV) progress dashboard tracks milestones related to the implementation of investment project cards, using the number of developed investment opportunities as a key performance indicator (KPI). Merely producing potential investment project cards is an inadequate KPI, as it does not effectively measure the actual impact on investments or progress toward EMV goals.
• Additionally, the dashboard lacks transparency, as it does not specify the number of project cards targeted by the GoJ, making it difficult to assess accountability and progress.