Small But Significant
The textile and apparel industry in the Hashemite Kingdom Of Jordan — a Middle Eastern country sandwiched between Israel, Saudi Arabia, Iraq and Syria — is relatively small, but it is one of Jordan’s main industrial sectors.
In that country, which has a population of more than 9.5 million and a labor force of nearly 3 million, the textile and apparel industry employs approximately 75,000 people, according to the World Bank, and the apparel sector accounts for approximately 27 percent of export earnings.
In 2019, Jordan’s exports of textile yarn, fabrics, made-up articles, related products and apparel totaled US$2 billion, according to the Central Bank of Jordan’s (CBJ’s) preliminary figures.
The garment industry in Jordan has expanded rapidly over the past fifteen years. Jordan’s textile and apparel industry has benefited from numerous free trade agreements (FTAs) the country has signed as part of efforts to strengthen international cooperation and trade and increase its exports. Jordan has signed FTAs with the United States, European Union, European Free Trade Association, the Greater Arab Free Trade Area, Morocco, Turkey, Singapore and Canada.
Both the Jordan-United States FTA and the Qualified Industrial Zone (QIZ) agreement have significantly increased Jordan’s access to the U.S. market. The Jordan-United States FTA went into force in 2001 and allows Jordanian products to enter the United States duty-free.
The QIZ agreement went into force in 1996 and allows Jordanian products made in designated areas and containing Israeli inputs to enter the United States duty-free and quota-free. Together, the agreements have contributed to an increase in Jordan’s apparel and textile exports to the United States from US$50 million annually before 1999 to US$1 billion in 2010, according to a MENA Knowledge and Learning report published by the World Bank in February 2012. In 2010, the United States constituted 93 percent of Jordan’s total apparel exports, the CBJ reports.
Jordan’s exports to the United States go through two main seaports in the Middle East, Aqaba and Haifa, which are among the fastest suppliers to the East Coast and offer shipping lead times of less than three weeks.
The Jordanian textile and apparel industry’s U.S. customers include brands and retailers such as Gap, JCPenney, Levi Strauss & Co., Liz Claiborne, Calvin Klein, Tommy Hilfiger, Walmart, Kmart, Limited, Sears, Columbia, New York Laundry and Victoria’s Secret.
Jordan has been faced with numerous issues impacting its textile and apparel industry. Decreasing natural gas supply to the country and increasing oil prices have necessitated the import of more expensive fuel to generate electricity. This energy crisis, combined with regional tensions and the global economic downturn, has contributed to a slowdown in Jordan’s economic growth.
Another problem with Jordan’s textile and apparel industry is labour unrest. Several of the country’s news agencies have reported strikes by factory workers demanding increased wages, improved health insurance coverage and other benefits. Earlier this year, the Institute for Global Labour and Human Rights reported labour violations at a Jordanian apparel factory, alleging that hundreds of guest workers were forced to work overtime hours without adequate pay or health benefits.
More than two-thirds of jobs in Jordan’s textile and apparel sector are held by guest workers, primarily from Bangladesh, India and Sri Lanka. The Ministry of Labour has urged employers in the sector to reduce their dependence on foreign employees — especially considering Jordan’s high unemployment rate, which was 12.9 percent in 2017, according to Jordan’s Department of Statistics.
Last year, the Jordan Garments, Accessories, & Textiles Exporters’ Association announced there were 5,000 available jobs for Jordanians in apparel factories, but the organization was unable to fill the openings. The Ministry of Labour is offering vocational training programs to Jordanian workers in conjunction with Better Work Jordan’s efforts to boost domestic employment.
The Jordanian government has set up a comprehensive five-year national program for economic reform, and is receiving financial support from the International Monetary Fund, which has approved a three-year US$2.06 billion Stand-By Arrangement to help implement the program.
Jordan has a good opportunity to attract foreign investment in the textile and apparel sector, as many countries in the region — particularly Iran, Iraq, Syria, Lebanon and Egypt — are experiencing political unrest. The sector holds great potential for the Jordanian economy, especially if it is given adequate support by the government.
Jordan’s textile sector still has a lot to boast of. Mounting labour problems and other setbacks have not discouraged some well-known brands to choose Jordan over other countries for textile and garment manufacturing.
The broad contours of Jordan’s textile sector present an encouraging face, but the country struggles to portray a reasonable picture as far as its textile workers are concerned.
The problems and challenges are many for Jordan’s textile sector, but the industries flourish as exports rise and well-known names in apparel sector continue to support and prefer Jordan over other countries.
Jordan garment sector: exploitation of migrant workers
Jordan’s garment sector is booming, driven by a free trade agreement with the United States and cheap migrant labour from South and Southeast Asia. Historically the situation of these vulnerable workers has been dire and although there have been some real improvements in recent years, systemic problems around migrant workers’ legal status and recruitment means serious abusescontinue to occur. The potential for progress to be undone is heightened by the influx of an estimated 1.3 million Syrian refugees.
Why Garment Made in Jordan ?
Textiles play a big part in the Jordanian culture and that of the area around it. Throughout history, Jordanians have used textiles in practical, day-to-day uses; in architecture, as we see in Bedouin tents, furniture, products, and clothing and fashion. More than that, textiles have been an important part of the culture and identity of a place, reflecting its history, lifestyles, economy, and values.
- Jordan -US Free Trade Agreement
- Zero Custom Duties NO Tariff Duties
- Support Migrants And Syrian Refugees
- High Labour Standards
- International Compliance
- Collective Bargaining and Freedom Of Association
- Enhanced Gender Equality
- Workers Center and Welfare Facilities
- Occupational Safety and Health Management System
$1.1 million to boost leather, textile industries in Jordan
Leather and textile industries sector is a vital engine to the national economy, as it contributed to about 27 percent of the total exports in 2019, Minister of Industry and Trade state.
In remarks during the launching ceremony of a project to enhance the competitiveness of the leather and textile industries sector in Jordan (MENATEX), implemented by the International Trade Center (ITC) in cooperation with the Industry Ministry and the Jordan Chamber of Industry, and funded by the Swedish government, the minister pointed out that the sector faces great challenges of which efforts must band together to turn them into opportunities.
Project’s Manager in Jordan, Iman Bseisu, said that ITC has evaluated the needs of the small and medium-sized enterprises (SMEs), the sector’s mechanism of work and its priorities.
‘The $1.1 million project aims at improving the environment for companies in the textile sector, by training workers on international best practices that qualify them to enter the global markets’, ITC’s advisor of the Textiles and Clothing, Abdul Latif Obaid, said.
‘About 20 companies were chosen to benefit from the project’s technical support to enhance production, export and sustainability standards,’ he said, adding that the project is part of the MENATEX regional program, which covers 4 countries: Jordan, Egypt, Tunisia and Morocco.
The Hashemite Kingdom of Jordan is a small country with few natural resources, but it has played a pivotal role in the struggle for power in the Middle East.
Jordan’s significance results partly from its strategic location at the crossroads of what Christians, Jews and Muslims call the Holy Land.
The Kingdom of Jordan
Population: 9.5 million
Area: 89,342 sq km (34,492 sq miles)
Major language: Arabic
Major religion: Islam
Life expectancy: 72 years (men), 75 years
Jordan’s textiles, garments and accessories segment pushes into new markets
The textiles, garments and accessories segment has been a success story of Jordan’s industry. The ready-wear, footwear and fabric manufacturers have grown despite difficult business environments. The segment is likely to benefit from a relaxation of the rules of origin (ROO) agreement with the EU, as more companies raise standards to meet materials-sourcing and employment criteria. Companies are set to create agreements with larger suppliers in Europe, replicating the other successful examples. “What we need to do is use the experience we have gained in the US market to establish the EU as a more major export partner,” Fares Hammoudeh, chairperson of the Zarqa Chamber of Industry, told OBG.
The industry faces challenges of cost management and competition, and there is a need to innovate and produce more value-added products. This will require a shift in output from staples to designer items, and from bulk supplying to cultivating branded chains. These may be some way off, but signs point to Jordan’s garment manufacturers moving the market in this direction.
Facts & Figures
According to the Department of Statistics, Jordanian clothing manufacturers exported JD1.11bn ($1.6bn) worth of products in 2017, equivalent to 24.9% of export earnings. When JD537,700 ($759,000) in footwear exports and JD28.7m ($40.5m) in yarn, fabrics, made-up articles and related products are added, the percentage rises to 25.5%. Only chemicals exported more, at JD1.5bn ($2.1bn).
Clothing producers have reported consistent export growth in recent years, of 2.7% and a value of JD1.02bn ($1.4bn) in 2016, 7.8% in 2015 (JD979.1m, $1.38bn), 12.1% in 2014 (JD908.2m, $1.28bn) and 9.7% (JD810.1m, $1.1bn) in 2013, bucking the more mixed trend overall. The total export value declined in 2015 and 2016 from a high of JD5.2bn ($7.3bn) in 2014, as a regional conflicts and economic softening took their toll.
The garment sector began to take off in 1996 with the signing of the qualifying industrial zones (QIZs) agreement with the US. Under this, Jordanian manufacturers were given tariff- and quota-free access to the US market if they used a certain portion of inputs from Israel, the US, Jordan and the Palestinian Territories (see overview). Manufacturers were given designated production areas, the first of which was the Al Hassan Industrial Estate at Irbid, which began operations in 1998. Additional QIZs have been created since then, with 14 in existence at the end of 2016. The removal of tariffs and quotas was a boon for the garment segment, as import tariffs on these goods were particularly high in the US at the time.
In the years of the QIZs, Jordanian garment manufacturers made agreements directly with large stores and outlets in the US, along with bulk textile and clothing manufacturers there. The US outfits established reliable supply chains, good relationships and long-term contracts, while Jordanian products became more well known and in demand. However, in 2001 a free trade agreement was signed between Jordan and the US, removing some competitive advantages of the QIZs. Nonetheless, the majority of garment firms remain there, with the three largest at Dual, Sahab and Irbid. QIZs mainly produce men’s and women’s apparel.
The garment segment was thought to be the main beneficiary of this. Yet, as of early 2018 just 11 Jordanian companies met the ROO conditions, and only three of these were engaged in trading, according to the Ministry of Planning and International Cooperation. While few businesses have taken advantage of the relaxation of the ROO, many can export qualified goods to the EU. Indeed, the kingdom already does substantial trade with the bloc, recording JD124m ($174.9m) in exports and JD3.17bn ($4.5bn) in imports in 2017.
“We need to get out of the formalities of the agreement and into the practice,” Hammoudeh told OBG. Making business-to-business connections is the next step towards this transition. The government is ready to assist with agencies such as the Jordan Enterprise Development Corporation and the Industrial Development Directorate. Individual chambers of the industry have a major role to play in solidifying partnerships as well, attempting to directly match members with major EU industrial and commercial players.
The next advantageous development target of garment firms may be domestic designer brands and becoming a sourcing place for international brands to produce in Jordan, with a booming local fashion designer scene emerging. The domestic high-end fashion industry may be in its infancy compared to more established markets, but branded products represent the most value-added line of the industry and are an area that manufacturers could more aggressively pursue.