Larry Luxner reports from Amman

At the recent World Economic Forum in Davos, Switzerland, King Abdullah II made it his business to meet not only with President Clinton and Israeli Prime Minister Ehud Barak, but also with Microsoft’s Bill Gates and CEOs of other top high-tech firms.

The new royal mission: to make IT Jordan’s third largest foreign-currency earner after phosphate mining and tourism. King Abdullah’s ambitious plan would create 30,000 new jobs in the IT sector, boost software exports to $550 million and generate $150-million worth of foreign investment.

Unlike neighbouring Israel, where cellular and Internet penetration is among the world’s highest, Jordan — a desert kingdom of 4.5 million inhabitants — is a relative newcomer to the online world. Yet its highly skilled workforce, low labour costs and widespread use of English could be enough to lure companies like Microsoft, Cisco and Intel to outsource their programming here. Furthermore, Jordan’s 1994 peace treaty with Israel provides a measure of political stability not seen elsewhere in the Arab world.

“The king doesn’t expect Internet penetration in Jordan to reach 50 per cent,” says Abdullah Shahin, a telecom analyst at the Atlas Investment Group in Amman. “His project is more about using our human skills, providing the infrastructure for companies to come here and set up. It’s not necessarily for Jordan to be the end user, but rather a working station for US companies.”

“We have several big advantages,” Shahin continues. “One thing we’re blessed with is the workforce. More programmers graduate in Jordan every year than in Ireland, and labour costs in the kingdom are minimal compared to Israel, closer to levels in China and India. There are also a lot of bright software developers. The idea is to have a client service centre in the US and development centres in Jordan. This would give those companies a huge cost advantage over others.”

The success of King Abdullah’s IT plan depends, of course, on a reliable telecom infrastructure. While Jordan undoubtedly has a long way to go, in early February the government took a big step towards that goal by selling off its state telephone monopoly, Jordan Telecommunications Co (JTC).

Under the terms of the deal — the largest privatisation in Jordanian history — France Telecom and its minority partner, Arab Bank Ltd of Amman, will buy a 40 per cent chunk of JTC for $508 million, the minimum price set by the government. The state retains a 60 per cent stake in JTC.

The France Telecom-Arab Bank consortium narrowly defeated a second group — GTE Corporation and Al-Ain Investment Group of the United Arab Emirates — which had also bid the minimum $508 million. Officials say that because the dollar bids were identical, they decided to award JTC to France Telecom on purely technical grounds. A third group — SBC and Saudi-based Arab Investment Co bid substantially less, only $275 million.

France Telecom chairman Michel Bon said the acquisition would boost his company’s regional presence — it already has operations in Egypt and Lebanon — and confirmed that France Telecom would invest over $400 million between now and 2003 on modernising and revamping Jordan’s telecom infrastructure.

The big story is Internet access and Jordan’s potential for meeting the programming needs of multinational companies

At the moment, JTC has 510,000 fixed lines and a tele-density of just under 11 per 100. In 1996, the company was valued by US consulting firm Arthur Andersen at $1.26 billion, yet analysts say JTC has become a burden on the government’s Treasury Department because of the continual need to upgrade and expand the network.

In 1999, capital expenditures were estimated at JD340 million ($480 million), with JD54 million ($76.2 million) budgeted for the GSM cellular project and another JD10 million ($14 million) for expanding Internet access. JTC, whose monopoly over fixed lines ends in 2003, reported 1999 earnings of JD216 million ($305 million), up from JD189 million ($267 million) the previous year.

“With privatisation, there’ll be a lot less bureaucracy,” says Marwan Faraj, general manager of National Electronic Systems, a leading computer software firm in Amman. “France Telecom is an excellent company to be in partnership with. In two years, we will see a definite improvement in Jordan’s telecom infrastructure.”

France Telecom also plans to introduce a new GSM service by September — tentatively dubbed Petracell — to compete with Motorola-controlled Fastlink, which for the past five years has been Jordan’s sole cellular service provider.

“Privatisation will elevate Jordan Telecom to accepted international standards of quality, expediency and variety of services,” said Shabib Ammari, the new chairman of JTC, who took over in January.

But the big story is Internet access and Jordan’s potential for meeting the programming needs of multinational companies.

Currently, there are around 20,000 subscribers logged on with six ISPs — the largest of them being Global One and National Equipment Technical Services (Nets). But the real number of users is estimated at 100,000. In the last two years, some 300 Internet cafés have cropped up around the kingdom, from the busy streets of Amman to the ancient ruins of Petra. An unbelievable 20 Internet cafés are crowded along a single street in Irbid, Jordan’s second-largest city.

“JTC will develop whatever services are necessary to any software developers who hopefully will be investing in Jordan,” Ammari told The Middle East. “In our judgment, this privatisation is an important prerequisite in the development of Jordan’s IT industry.”

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