20-Jun-2021

Al-addustour_  head of the Jordan and Amman Chambers of Industry, Engineer Fathi Al-Jaghbir, confirmed that local commodities did not witness a significant increase in their prices despite all the current circumstances surrounding the national economy, with the exception of some products imported from the food industries such as oils, sugar, and raw materials for some industries, which confirms the availability of Sufficient reserve in the local market of various products, and the ability of the national industry to adapt and adapt to what is witnessed in the global commodity market.

In response to Al-Dustour's questions about the reasons for the rise in prices globally, how to confront the crisis, and the role of national industries, he said that as a result of the turmoil and changes that hit most global trade and economic indicators as a result of the repercussions imposed by the pandemic on the global economy, and the measures and policies that followed, aimed at reducing The spread of the epidemic, such as closures and bans of all kinds, which led to the creation of imbalances in most global markets for goods and services, from raw materials to shipping and transport services in their various means, and others.

At the local level, the national economy has been clearly affected by these changes, for example, but not limited to, the prices of sea freight from China to Jordan witnessed an unexpected rise, from about $ 2,000 per 40-foot container - before the pandemic - to more than $ 10,000 (excluding customs duties incurred), as a result of what the pandemic imposed on the transport and shipping sector.

On the level of raw materials, many raw materials have witnessed a significant increase with the beginning of the new year 2021, including, for example:

- Raw materials for the plastic industries, with rates ranging between 30-40% compared to pre-pandemic prices.

The prices of raw materials for the food industry, particularly vegetable oils, have more than doubled during the current year.

The global prices of packaging materials increased by more than 35% compared to the prices before the pandemic.

- The increase in industrial fuel prices by more than 17% compared to what it was previously, which negatively affected production costs and the rise in cost accordingly.

Of course, the rise in the prices of the aforementioned raw materials will affect one way or another the rise in the prices of final goods in many sectors, especially since most sectors depend for their production on those imported raw materials.
 Available options:

Speaking about the options available to confront these rises, and (suggestions) for (urgent) and other solutions during the coming months, Eng. Jaghbir said:

As a result of these rises being global and not local causes, it is very difficult to find radical solutions to limit their impact on the national industry. and the local market, but it is possible to create alternative solutions to reduce the impact of these increases, including:

1 - In the short term: thinking about importing larger quantities of raw materials, and supporting the process of storing them to meet the needs of the local market during the coming periods, to avoid the impact of the continued rise in prices These materials are placed on the local market, and support the import of those materials, by reducing the fees due on their import, and exempting them from the customs services allowance of 1% of the total import value, and any other fees.

2 - In the medium term: reducing production costs, including; Energy costs (electricity and fuel), which constitute the largest share of total production costs after raw materials, which may support one way or another the final price of the product, and reduce the size of fees imposed on national industries such as registration subscriptions, labor licenses, facilities, social security and others.

3- In the long run: Supporting and protecting the national industry within the local market, by imposing restrictions on foreign products with local counterparts, and tightening control over those products, especially since these products have a competitive advantage in terms of price, as a result of the low costs of their production compared to the local costs of production. With the aim of raising the share of the national industry in the local market and diversifying and expanding the production base, in addition to supporting the establishment of industries for basic raw materials in national industrialization, and providing actual incentives for these industries, with the aim of self-reliance in providing raw materials for national industries.

 Self-sufficiency:

- Regarding the percentage of what we have of self-sufficiency, specifically in basic commodities, and the time in which these materials suffice us, Eng. Jaghbir said:

Jordan has a number of highly competitive industries through which it is possible to meet the needs of the local market, where the national industry covers what Approximately 45% of the total local market needs of various commodities, for example, but not limited to;

The Jordanian food industries sector possesses many diverse food items that are able to meet the needs of the local market with the required quality and quantities, as these industries account for more than 52 percent of the total needs of the Jordanian market of food products, and the production of some food commodities has reached the point of self-sufficiency on style; Dairy and its products, table eggs, chicken and its products.

Today, the local industry has a daily production of more than 5 million masks, which has brought about sufficiency for the local market and the trend towards export markets, especially the markets of the Arab countries surrounding the Kingdom.

- Respirators were developed and manufactured by Jordanian hands, and all preventive medical supplies were manufactured, from protective clothing to investigation teams, caps, face coverings and others, which led to the sufficiency of the local market and providing it with all its needs.

- Chemical industries, specifically fertilizer industries, which have a high added value, as a result of the availability of raw materials inside the country, and their coverage of about 90% of the total local market needs of fertilizers.

- The detergents and sterilizers industry, which clearly flourished during the pandemic period, as the national exports of these products recorded during the year 2020 a growth of 80%, after covering the local needs of them.

 Local alternatives:

- And whether we have local alternatives to the commodities whose prices have risen, and those that are likely to rise? And the percentage of sufficiency or the available production quantities, the head of the Jordan and Amman Chambers of Industry said:

Despite the huge potentials of national industries and the great opportunities within the local market, no country in the world has the total ability to dispense with imports from the countries of the world absolutely, especially since Jordan It does not have actual alternatives to cover the local market needs of imported raw materials, which recorded a significant increase in their prices. However, there is a sufficient advance stock at pre-rising prices that can cover the local needs of those products in the next few months, which gives opportunity and time to decision makers. From creating solutions to avoid any future effects in the event that these rises continue on the local market.

 Incentives:

In response to a question about whether there is a need now for quick incentives for traders and industrialists to contribute by providing the required quantities at reasonable prices? What is the form of the required incentives? Eng. Jaghbir said:

Yes, there is an urgent need to provide incentives to support proposals and prior solutions, from reducing production costs, with the aim of increasing the competitiveness of the national product locally and internationally, and encouraging self-reliance in the manufacture of the main raw materials for national industries in the future, with the aim of reducing the national industry’s impact on external factors and global turmoil. .

 The impact of the “Corona pandemic”:

- On the commodities that (the Corona pandemic) contributed to increasing the demand for them, and those that the “pandemic” reduced the demand for, M. said. Fathi Al-Jaghbir:

The Corona pandemic has greatly affected the structure of demand for commodities locally and globally according to their classification, as the pandemic has played a major role in changing the consumption behavior of individuals, quickly and significantly, as basic commodities (such as food, medicines, medical supplies, detergents and sterilizers...) have witnessed a rise The demand for it during the pandemic period has increased, and it has continued to this day, as a result of the changes imposed by the pandemic on the lifestyle in various countries of the world, with the continuation of the repercussions of the pandemic, in addition to the closure of some sectors that were taking a large share of the total expenditure of per capita income as a sector Tourism and travel, and these expenditures are directed towards the basic sectors mentioned earlier, in addition to the health needs necessary to confront the spread of the epidemic, which was the cause of the high demand for medicines and medical supplies.

On the other hand, other industries witnessed a significant decline in the volume of demand for them during the same period, such as the clothing industry, machinery and equipment, the furniture industry, and the plastic industries, due to the sudden change in consumer behavior, and the closures that affected most of those sectors, as well as secondary sectors supporting the process of demand for products These sectors largely, such as the tourism sector, hotels and restaurants, the education sector, transportation, and the housing and real estate projects sector.

 Production inputs:

Regarding local production inputs, and do we have local raw materials that are alternative to imported ones, he said:

With the exception of some chemical industries, specifically fertilizer industries (potash and crude phosphate), as well as some food industries, most industrial sectors depend on imports to cover their needs of raw materials, as Jordan is among the poor countries in natural resources, the most important of which are oil and gas, which are considered one of the The most important inputs to the production process for most industries, which requires the need for a clear national orientation towards supporting and strengthening local production capacities to provide the basic needs of raw materials and self-reliance.

 Commodity prices “locally”:

And about the commodities whose prices have risen locally, and those that are likely to rise in their prices in the near period? And what are the solutions? The head of the Jordan and Amman Chambers of Industry, Engineer Fathi Al-Jaghbir, said:

Local goods did not witness a significant increase in their prices despite all the current circumstances surrounding the national economy, with the exception of some products imported from the food industries such as oils, sugar, and raw materials for some industries, which confirms the availability of sufficient reserves within the local market of various products, and the capacity of the national industry To adapt and adapt to what the global commodity market is witnessing, as figures from the Department of Statistics indicate slight increases in the industrial producer price index in some industries during the first quarter of this year, with a decline in the index of manufacturing industries as a whole during the same period by 0.41 % compared to the same period in the previous year, and the following are those industries that witnessed an increase:

Industrial producer price index during the first quarter (2020-2021)