Jordan King Abdullah II urges building on privatization review panel findings
AMMAN — His Majesty King Abdullah on Sunday stressed the importance of building on the outcome of the Privatisation Evaluation Committee (PEC) report by utilising its results in drawing up economic strategies, and boosting the partnership between the public and the private sectors.
During a meeting with PEC members, attended by Prime Minister Abdullah Ensour who had received the report earlier Sunday, the King commended the committee’s efforts, stressing that the government should conduct an in-depth study of the report to assess the reality on the ground, a Royal Court statement said on Sunday.
The government should adopt the panel’s recommendations as it devises future strategies, in accordance with the directives appearing in the Royal letter to the premier on Saturday, the statement said.
The committee’s report coincided with the letter in which His Majesty called for drawing up a clear plan on the economy for the coming decade.
In the letter, the King said it is of utmost urgency that the government devises an economic blueprint to guide our national economy over the next 10 years. This economic blueprint should have a comprehensive framework targeting the following: enhancing financial and monetary policies and assuring their consistency; improving economic competitiveness; enhancing values of high productivity and self-reliance to realise sustainable and comprehensive development; and securing “decent living standards and a promising bright future for the men and women of our beloved Jordan”.
The King highlighted the need to benefit from the report and to have it published so that everybody may have a chance to get acquainted with its content, noting that success is not determined by not making mistakes, but through the ability to draw lessons from them.
At the meeting, the King was briefed by Omar Razzaz, who heads PEC, on the different aspects and course of the committee’s work since its formation, and the stages that the report, which was submitted to the government, had gone through.
Razzaz highlighted foremost of the results included in the report, noting that the committee based its assessment of the privatisation process “on facts and figures”.
The meeting was also attended by Royal Court Chief Fayez Tarawneh and Director of King’s Office Imad Fakhoury.
PEC was formed last year, upon a Royal directive to Ensour, comprising a group of local and international experts in the field of economic and social policies who were tasked with assessing privatisation policies and transactions.
In an interview with the Jordan News Agency, Petra, Razzaz said that the report’s foremost outcome is that the privatisation programme achieved significant results that were highlighted in the findings. However, he said, there were some failures and these were also pinpointed. “This is because we strongly believe that successful countries are not the ones which do not make mistakes, but are those which learn from their mistakes.”
Decision makers, the panel’s head said, would review and document these mistakes and make use of them as they build their future vision so as not to repeat them, he said.
Razzaz added that the most important results fall under three main categories: Strategic, legislative and executive. In the strategic dimension, it was necessary to shed light on the credibility and transparency of all privatisation transactions, he noted.
Regarding the legislative aspect, the report highlighted an urgent need for drafting a law on the partnership between the public and the private sectors.
The law should be based on the points of strength that the two sides exhibit, in a manner that identifies roles and responsibilities and safeguards the rights of citizens and the state in national resources. For Jordan, there is no alternative for this partnership in light of the need to attract large investments, Razzaz pointed out.
He also stressed the need to carry out follow-ups on the privatised companies “to avert loopholes regarding companies’ commitment to fulfilling their responsibilities”.
From the executive perspective, Razzaz explained that the report included a set of recommendations on the rights of workers whose services were terminated and who were not legally entitled to combine social security and civil service pension allowances. Other aspects had to do with consumer protection and ways to enhance competitiveness.
He also said that hiding information and facts from public opinion had created a state of uncertainty and scepticism among average citizens regarding the privatisation process. This situation remained unchanged until the Royal directives were issued to the government to conduct a comprehensive review of all privatised entities and to also check on the mechanisms and procedures followed, and their social and economic effects.
Regarding the work of the committee, Razzaz added that the committee answered eight questions about each privatisation case. The questions were: Why did the government choose the privatisation option in the case concerned? Did the government follow the proper administrative, constitutional and legal procedures? Were these companies assessed properly? Did their performance improve after privatisation? Did citizens and workers at these companies have enough information? How were workers at these companies affected? How did privatisation affect the macro-economy? and where did the privatisation revenues go?
He also said that the team which studied each privatisation case included economic, audit, financial and legal experts in their individual capacity or who represented companies that were not involved in the privatisation to ensure complete neutrality and objectivity.
International Finance Corporation’s Principal Country Officer Ahmad Attiga, also a committee member, said that the privatisation study was conducted to assess all privatisation aspects in Jordan.
He said that the committee’s recommendations would attract international institutions to play a future role in developing the private sector, and the partnership between the private and the public sectors, in both financial or advisory terms.
He also said that privatisation had some loopholes, which would require all concerned parties to avoid such mistakes as they proceed with the privatisation experience successfully, in a way that meets the Jordanian people’s and the private sector’s needs in attracting new investments in a sustainable manner.
Chairperson of the Islamic Solidarity Fund for Development, affiliated with Islamic Development Bank, Bashir Omar Fadlallah, a committee member, said that what made the study special was that Jordan is the first country in the region that chose willingly to make a comprehensive assessment to privatisation, “which will have a positive effect on Jordan’s assessment in the world transparency table”.
Fadlallah said that the committee’s report is a serious step to stand at facts, a matter that will contribute to attracting foreign investments from the international private sector into the Kingdom.
He added that the committee’s findings should be used to devise future policies which King Abdullah directed the government to prepare, noting that the premier had promised to incorporate the panel’s recommendations into future economic policies.
European Bank for Reconstruction and Development member Ivan Mclaws, also a PEC member, told Petra that the process was critical to Jordan to improve companies’ performance and increase the competitiveness of the Jordanian economy.
He highlighted the success of privatisation process in Jordan when compared to some European countries, since privatisation in Jordan was accomplished professionally and at a high organisational level, due to the availability of specialised, experienced institutions in administrating the economic market in the Kingdom.
Mclaws also stressed the importance of exerting more efforts to educate Jordanian citizens on the reasons for any privatisation project in the future and the goals it seeks to achieve, create awareness for better understanding of the privatisation drives, and carry out procedures with more transparency and competition among strategic partners who care about publicising the procedures and transfer expertise and technology.
Launching the report
Also on Sunday, PEC revealed its findings on privatisation deals since 1989.
The panel released the report and its findings and recommendations at a special ceremony attended by Ensour, ministers and parliamentarians as well as a number of private sector representatives.
The committee, which included members from the International Finance Corporation (IFC), the Islamic Development Bank and the European Bank for Reconstruction and Development in addition to other Jordanian experts, started its work in March last year after the King directed Ensour in the Letter of Designation late 2012 to review all privatisation deals –– which have triggered public debate in the Kingdom.
The panel, according to Razzaz has reviewed privatisation deals of 15 companies that used to be state-owned in addition to investigating licensing and contracts of four other firms.
The deals were mainly in the fields of mining, telecommunications, water, transport and aviation.
According to Razzaz, revenues generated from privatisation reached JD1.7 billion, of which around JD1.5 billion went to paying the Kingdom’s debts.
The study found that some deals were made in a transparent manner and in accordance with the law, while others lacked transparency and violated the law, he said, adding that the privatisation programme did not contradict the Constitution.
The report cited that the privatisation process of the phosphate company was the result of direct negotiations and not according to offers presented by various investors.
In his address at the event, Ensour said that the privatisation process has been a source of heated public debate as there are some people who believe that selling key companies to the private sector would boost their performance while others believe privatisation has made economic conditions in the Kingdom worse than they had been.
The premier indicated that neither the government nor any official agency interfered in the work of the committee.
IFC representative Attiga said that good governance should always be followed when implementing privatisation or public-private partnerships.
Fadlallah reiterated that Jordan was the only country in the region to review the privatisation process, reasserting that the committee worked in a neutral and transparent manner.
This step to review the privatisation programme will boost Jordan’s transparency ranking in international reports and will send positive signs to investors, he said.
Mclaws said that Jordan was the first country in the world, not only in the region, to review privatisation, indicating that authorities should have enhanced public awareness on the programme in a bid to avoid scepticism and rumours.
He urged officials to follow best international transparency and competitiveness practices when they plan to enter partnerships with private firms.