Jordan’s ICT sector faces critical challenges
Amman - Jordan enjoys a vibrant information and communication technologies (ICT) sector with many success stories but emigrating professionals and a shortage of skilled graduates are likely to weaken it.
Regionally, Jordan’s ICT sector faces tough competition from other countries, especially the United Arab Emirates and Egypt which add to its troubles as the kingdom tries to grow and build on previous successes.
In 2009, US giant Yahoo! acquired the Amman-based Maktoob Arabic portal for about $160 million. All eyes were focused on Jordan, awaiting more successes in the ICT sector.
A few years later, several start-ups, including Jamalon, which is the Arab world’s first online store for Arabic and English books, emerged. Other start-ups, especially in the digital gaming industry, made it to Silicon Valley and secured investments.
“Unfortunately, the authorities did not build on these successes and the ICT sector is declining,” said Jawad Abbassi, founder and general manager of the Arab Advisors Group, a specialised research entity focused on communications, media, technology and financial markets throughout the Arab region.
The ICT sector, which employs more than 80,000 people, mostly Jordanians of whom 30% are women, witnessed a decline in its contribution to the economy.
The sector’s share of gross domestic product (GDP) dropped from 14% in 2009 to 12.9% in 2010; 12.4% in 2011; 12.2% in 2012; 11.2% in 2013 and went down further in 2014 but no figures are available, according to industry experts.
“In Jordan, we were the first in the region to develop a vision to make the country an ICT hub but it was merely talk. We had problems with the implementation of the vision,” Abbassi told The Arab Weekly.
Several Jordanian ICT companies have moved their sales offices to Gulf Arab countries and programming business to Egypt, a source in the sector told The Arab Weekly on condition of anonymity, citing the sensitivity of his information. “If we don’t get our act together, the remaining companies will eventually move out of Jordan and we will end up having very small start-ups that are unable to compete regionally or globally,” the source added.
Abed Shamlawi, former chief executive officer (CEO) of the ICT Association of Jordan (int@j), said talented professionals working in local ICT firms are being offered attractive salaries abroad, whether in the Gulf or Europe.
“This is placing a heavy burden on Jordanian companies that are unable to match these lucrative offers to retain their talented employees,” Shamlawi told The Arab Weekly. Additionally, the standards of fresh ICT graduates from Jordanian universities is below the industry’s requirements and is undermining efforts to replace skilled professionals who leave for higher salaries, he said.
According to sector experts, there are more than 25,000 jobless ICT graduates in Jordan, while 75% of the sector’s companies say they face major difficulties in finding graduates with the basic skills required.
“University curricula need to be upgraded. We have been repeatedly calling for changing the curricula to yield better graduates with skills needed in the labour market, but to no avail,” said Shamlawi.
Authorities are not even helping, said Nour Khrais, chairman of the Jordan Gaming Task Force.
“The ICT sector in Jordan has partially lost attractiveness to investors, especially in the digital gaming industry,” Khrais said, pointing to red tape that bogs down the system.
“Companies in the field need to import tools, software and devices but there are always customs delays to clear their shipments,” he said. “This is a problem as one cannot be creative in an environment with complicated procedures.”
Another problem is when ICT companies opt to hire professionals from abroad; labour authorities make it almost impossible to obtain work permits, asking the companies to look for help in the domestic workforce, Khrais added.
Vague legislation and unsystematic enforcement of laws are also harming the sector, Abbassi said.
But despite the sector’s gradual decline, IT exports have been on the rise. According to official figures, exports reached $223 million in 2009, $204 million in 2010, $237 million in 2011, $308 million in 2012 and $332 million in 2013.
Jordan’s IT exports targeted 27 markets worldwide in 2013. However, growth is likely to be impeded. Profits generated from exports are exempt from income tax until the end of the year and no decision has been made on whether there will be an extension of the exemption.
“Lack of clarity and fluctuation in policies is another issue that harms the sector. For the ICT sector to restore its glory and for Jordan to become an ICT hub, there is a need for serious collaborative work and efforts,” Abbassi said.
“But first, we need to admit that we have a problem.”