Date of Submission to Coordination Unit:

A. GENERAL INFORMATION

1. Activity NameJordan Competitiveness and Investment

2. Requestor Information Name: Saleh Al-Kharabsheh Title: Director General

Organization and Address: Ministry of Planning and International Cooperation

Telephone: Email: saleh.kharabsheh@mop.gov.jo

3. Recipient Entity Name: Mukhallad Omari Title: Head of Competitiveness Team

Organization and Address: Ministry of Planning and International Cooperation

Telephone: Email: Mukhallad.Omari@mop.gov.jo

Name: Maha Ali Title: Secretary General

Organization and Address: Ministry of Industry and Trade

Telephone: Email: maha.a@mit.gov.jo

4. ISA SC RepresentativeName: Junaid Kamal Ahmad Title: Sector Director, MNSFP, World Bank

Organization and Address: The World Bank, 1818 H Street N.W., Washington, DC 20433 USA

Telephone: + 1 202 458-8470 Email: jahmad@worldbank.org

Name: Andreas Schaal Title: Head of Sherpa Office (ad interim)

Organization: Organisation for Economic Co-operation and Development (OECD)

Address: 2 rue André Pascal, 75775 Paris Cedex 16, France

Telephone: + 33 1 45 24 93 88 Email: andreas.schaal@oecd.org

April 9, 2014

5. Type of Execution (check the applicable box)√ Type Endorsements Justification

Country-Execution Attach written endorsement from designated ISA

Joint Country/ISA-Execution

Attach written endorsement from designated ISA

(Provide justification for ISA-Execution)

√ ISA-Execution for Country Attach written endorsement from designated ISA

The Government of Jordan would like to benefit from technical assistance (TA) from both the World Bank Group and OECD to support implementation of reforms identified in previous reports and TA projects to introduce international best practice and build local capacities through training and public private dialogue to ensure sustainability of reform processes and the project. - Both the Government of Jordan and WBG see OECD as an important partner. OECD cannot be part of recipient executed projects. - Building on existing Technical Assistance projects: The ISAs have extensive experience in supporting developed and emerging economies in identifying barriers to competitiveness and improving their investment attractiveness. The organizations have undertaken a number of analyses of the legal and institutional investment frameworks in the MENA region, notably the Jordan Investment Climate Assessment and Jordan Competitiveness Partnership (WBG) and Investment Policy Review for Jordan (OECD) to support adherence to the OECD Declaration on International Investment and Multinational Enterprises. The activity will build on the results of these reviews, a subsequent update, and on other tools for improving competitiveness and investment climate. - Introducing international best practice: The implementation of this TA by the ISAs will be used to provide capacity building and to introduce and share international best practices on investment policy and competitiveness. The ISAs analytical tools and approaches are central to the provision of best practices in these areas. - Public Private Dialogue (PPD): The project will introduce best practices on public private dialogue and promote active participation of private sector in the reform process. The creation of a regular PPD led by the Ministry of Planning and International Cooperation (MOPIC) and the National Council on

Competitiveness and Innovation in which both public and private stakeholder participate will strengthen the reform process and project sustainability. - Regional Coordination: The ISAs co-ordinate several regional Working Groups and Committees related to investment (e.g. the MENA-OECD Working Group on Investment Policies and Promotion). This project will use those fora to discuss issues of concern for the country and build appropriate linkages between the project and these fora. - Local presence and training to authorities: The ISAs staff and a roaster of experts will implement the project technical assistance to promote reform implementation using best practices. They will ensure active and consistent team presence in Jordan during execution and training and transfer of skills to the local Ministry and Authorities staff by training and capacity building activities. The ISA team will lead the project jointly with the support of the Project Steering Group which will strengthen local involvement and technical capacity.

ISA-Execution for Parliaments

Attach written endorsements from designated Ministry and ISA

6. Geographic Focus√ Individual country (name of country): The Hashemite Kingdom of Jordan

Regional or multiple countries (list countries):

7. Amount Requested (USD) Amount Requested for direct Project Activities:(of which Amount Requested for direct ISA-Executed Project Activities):

2,015,000(of which USD 1,385,000 for WBG-executed project

activities, and USD 630,000 for OECD-executed project activities)

Amount Requested for ISA Indirect Costs:1 100,000Total Amount Requested: 2,115,000

8. Expected Project Start, Closing and Final Disbursement DatesStart Date: August 1, 2014 Closing Date: August 1, 2017 End Disbursement Date: December 1st, 2017

9. Pillar(s) to which Activity RespondsPillar Primary

(One only)Secondary(All that apply)

Pillar Primary(One only)

Secondary(All that apply)

Investing in Sustainable

Growth. This could include such topics as innovation and technology policy, enhancing the business environment (including for small and medium-sized enterprises as well as for local and foreign investment promotion), competition policy, private sector development strategies, access to finance, addressing urban congestion and energy intensity.

ѵ Enhancing Economic Governance. This could include areas such as transparency, anti-corruption and accountability policies, asset recovery, public financial management and oversight, public sector audit and evaluation, integrity, procurement reform, regulatory quality and administrative simplification, investor and consumer protection, access to economic data and information, management of environmental and social impacts, capacity building for local government and decentralization, support for the Open Government Partnership, creation of new and innovative government agencies related to new transitional reforms, reform of public service delivery in the social and infrastructure sectors, and sound banking systems.

ѵ

Inclusive Development and Job Creation. This could include support of policies for integrating lagging regions, skills and labour market policies, increasing youth employability, enhancing female labour force participation, integrating people with disabilities, vocational training, pension reform, improving job conditions and regulations, financial inclusion, promoting equitable fiscal policies and social safety net reform.

ѵ Competitiveness and Integration. This could include such topics as logistics, behind-the-border regulatory convergence, trade strategy and negotiations, planning and facilitation of cross-border infrastructure, and promoting and facilitating infrastructure projects, particularly in the areas of urban infrastructure, transport, trade facilitation and private sector development.

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1 ISA indirect costs are for grant preparation, administration, management (implementation support/supervision) including staff time, travel, consultant costs, etc.

B. STRATEGIC CONTEXT

10. Country and Sector Issues

This project can have a transformational impact upon the Jordanian economy by potentially unlocking much higher levels of domestic and foreign investment in support of faster growth, stronger private sector development and enhanced job creation. Key barriers to investment occur at entry, in investment protection and investment attraction/retention and incentives policy. In order to attract more quality investment, Jordan must reform throughout the investment life cycle and the institutional mechanisms through which investment policy is delivered. Based upon detailed analyses conducted by the World Bank Group and OECD, this project proposes well defined support in these very precise areas to strengthen national and sector competitiveness and attract much needed investment into the country which will impact on employment and livelihoods in a very direct way.

Country Context Urgent structural economic reforms are needed in Jordan to solve problems such as persistent high unemployment, especially among youth and graduates, the large share of population just above the poverty line, and fiscal and external vulnerability. Jordan remains highly dependent on foreign aid and remittances to pay rising costs for oil and food imports. In addition, the current regional unrest and the unstable global economic environment further threaten social and economic stability in the country. GDP growth dropped to 2.6% in 2011, compared to 5% in 2009.

To strengthen economic growth and employment generation, conditions for foreign direct investments (“FDI”) inflows to the country should be improved. Jordan has been unsuccessful in receiving sufficient investment of the right quality into productive sectors in recent years. The country has missed out on important regional investment opportunities and there are new cases of investor/state disputes signifying a major risk. Jordan has experienced falling investment flows and escalating fiscal deficit. Between 2008-2011, FDI inflows dropped by more than 30%. FDI in 2011 was just USD 1.47 billion from a high of 3.5 billion in 2006. Along with insufficient quantity, the quality of the investment has been an issue. Investment into Jordan has been largely market and asset seeking into non-productive sectors dominated by the financial services, retail and real estate. This investment has not been contributing sufficiently to create the needed technological spill-overs to create the higher value added production of goods and services and associated employment. Comparing investment decisions in Jordan to investments in the whole of MENA highlights the potentially missed investment opportunities. In terms of regional FDI decisions and projects, Jordan ranked 7th in MENA in 2009-11. Finally, the need to reform the conditions for FDI can be illustrated by a current investor-state dispute. It is understood that a case is being brought at ICSID against Jordan by a GCC-based investor under a bilateral investment treaty. The claim is alleged to be for USD 100 million and relates to undelivered taxation incentives to the investor. The lack of a proper institutional mechanism to detect investor grievances before they become disputes, an inadequately implemented incentives regime not aligned with national development objectives, the intricate and unclear legal investment regime, and poor understanding of the international obligations of the Government could cost it more than USD 100 million should a judgment be rendered against it in just one case.

Jordan presents a rather complex legal investment regime, with a corpus of laws not all easily accessible, some overlapping and others being temporary. This has led to a certain degree of legal and institutional confusion, even more so among foreign investors. Jordan’s legal investment regime is governed by a series of mostly outdated laws and regulations. The current investment framework suffers from other issues including: (1) numerous restrictions on market access; (2) emphasis on provision of fiscal and financial incentives which have failed to achieve Jordan’s national priorities in terms of human development, job creation, regional development and development of value added industries; and (3) complex and time-consuming procedures governed by multiple entities which retained broad discretionary powers. This results in missed opportunities. For example, recently, a multinational company CEO who was assessing Jordan as an investment destination but decided not to invest – their team was met by officials other than from the Jordan Investment Board on their site visit. The value proposition presented was not convincing, the incentives regime was unclear and the one-stop-shop was perceived inefficient with a set of independent offices inside the actual one-stop-shop.

The Government of Jordan (GoJ) is aware that the legal and institutional investment framework needs to be clarified, unified and improved. As a consequence, it embarked on an ambitious program to reform its investment framework several years ago and prepared a number of draft laws. However, there has been limited reform progress. The country’s problems with coordination, integration, implementation and monitoring and evaluation of reforms undermine improvements in competitiveness. The country has been outperformed by other economies in the region in both the Global Competitiveness Index 2012-2013 and the Doing Business ranking 2013.

The Government of Jordan, the WBG and OECD have conducted a number of analytical reviews of the investment climate and sector performance to inform the reform process. The technical assistance initiatives include the WBG SME Investment Climate Assessment (2013) and Jordan Competitiveness and Innovation Partnership (2013), and the OECD Investment Policy Review of Jordan (IPR 2012) to support the country’s adherence to the OECD Declaration on International Investment and Multinational Enterprises and the SME Policy Index in MENA (2014). The analytical reports provided recommendations to improve the investment climate through sound policies at the national level and in selected sectors. The RE/EE sector was one of three studied in detail by the Jordan Competitiveness and Innovation Partnership report and reviewed in the OECD IPR of Jordan.

The Government of Jordan sought additional support for investment reform implementation from both WBG and OECD and sent a letter of request in March 2014. The activities will build on the results of previous reviews and on other tools and instruments for improving competitiveness and investment climate. The Government and WBG and OECD teams met during exploratory missions in Jordan to define priority activities to be implemented as part of a WBG-OECD supported Transition Fund Technical Assistance Project. The GoJ and the ISA teams agreed on a set of TA measures in areas where the GoJ seeks specific implementation reform assistance to address the different stages of the investment life cycle: investment entry, investment protection/retention and investment incentives.

It was also agreed that in addition to the national level reforms, the WBG and OECD would promote implementation of reforms in one specific sector. The renewable energy and energy sector was selected by the Government and ISA based on the previous reports, existing analysis and the strategic importance of the sector given Jordan’s challenging energy situation. The RE/EE sector currently misses an implementation and institutional framework that could promote investment into the sector which in turn would alleviate the increasing energy costs for households and businesses once the energy subsidies are removed. The project will deliver a number of standard WBG and OECD TA analytical reports, including for example an analysis of the legal investment framework including in the RE/EE sector and of restrictions to investment, a Cost and Benefit Analysis of Incentives, and One-Stop-Shop Mapping and Recommendations. The project will also benefit from the extensive collaboration between the ISAs, other international organizations and various countries in the MENA region. The ISAs have an identified methodology and pool of experts and hence the project has high implementation readiness.

The studies and other technical assistance will enable the GoJ to develop investment rules and institutions according to best practices, and benefit from international experiences to build local capacity. The project leverages other WBG, OECD and donor projects. It supports directly some of the triggers included in the WBG Development Policy Loan series. The cost and benefit analysis will allow the GoJ to consider option for addressing the fiscal deficit problems.

The Jordan Competitiveness and Investment project is expected to have a wide transitional impact on the economy. Through improved investment policies and development of innovative investment promotion institutions, Jordan would be able to increase private investment – domestic and foreign – in a sustainable fashion. Increased domestic and foreign investments would lead to more competition in the market that would encourage firms to innovate. The right quality investment into productive sectors would also bring with them new technologies and processes that could be transferred to locally hired staff and domestic firms. New investors and more competitive and innovative companies would create more quality jobs for local labour force and contribute to the improved living conditions. Attracting more and better investments was a key factor in successful economic transition and increased competitiveness of countries in the Central and Eastern Europe and East Asia.

11. Alignment with Transition Fund Objective

The objective of the Transition Fund as provided on the Operations Manual (Section 2, Para. 7) is, “to improve the lives of citizens in transition countries, and to support the transformation currently underway in several countries in the region (the “Transition Countries”) by providing grants for technical cooperation to strengthen governance and public institutions, and foster sustainable and inclusive economic growth by advancing country-led policy and institutional reforms.”

The proposed technical assistance project is in alignment with the above stated objective and with all four pillars of the Transition Fund as it aims to support the Jordanian authorities in their efforts to reform the institutional and legal investment framework with the objective to create a more attractive business environment for investors to promote local and foreign investment. This technical cooperation will allow for a successful set-up of a new and innovative legal and institutional framework which is expected to raise Jordan’s attractiveness and help increase investments and the number of new firms or existing firms willing to reinvest, and thus create growth and jobs. In addition, by promoting use of the public-private dialogue mechanism, the proposal strengthens the reform coordination among involved authorities, enhances participation of the private sector and civil society in the reform process, and mitigates against the risk of non-implementation of reforms.

Improvements of the investment framework would have positive transformative effect on other donor projects in the areas of FDI attractiveness and SME performance. More investments lead to more competition and motivate firms to innovate. More competitive and innovative firms create better quality jobs, train better their employees and provide opportunities for local SME companies and other suppliers.

12. Alignment with Country’s National Strategy

The National Agenda 2007-2017, as envisioned by H.M. King Abdullah II ibn Al Hussein, defines as key development objective the improvement of “the quality of life of Jordanians through the creation of income-generating opportunities, the improvement of standards of living and the guarantee of social welfare”. The National Agenda stresses among other aspects the importance of creating of a favourable investment environment and supporting SMEs general. In line with these medium-term objectives, the Ministry of Planning and International Cooperation (MoPIC) stresses in its Executive Development Program 2011-2013 (EDP) the need to attract foreign and local investments in order to provide job opportunities for its citizens. The EDP identifies as key objective to set up “an institutional framework for the business environment to ensure coordination between various investment and economic entities and policies”. The EDP further highlights the need to “increase foreign and local investments”. Further, better investment policies are the objective of the National Investment Strategy (NIS) and have the potential to contribute substantially to the goals of Jordan’s National Employment Strategy 2011-2020 by fostering growth and creating employment opportunities.

In line with the EDP, the proposed project aims to support the improvement of the investment legal and institutional framework in Jordan with an eye to fostering investment and generating jobs. The project will fulfil an important role in guiding and assisting the process of institutional restructuring, improving the investment legal framework, and facilitating investments in Jordanian enterprises. In doing so, the project will contribute to the existing efforts by the involved investment institutions, the Ministry of Trade and Industry, and the Ministry of Planning and International Cooperation. In providing specific technical assistance and capacity-building measures necessary for the improvement of the relevant legal regime and institutions, the project will fit in well with existing efforts to improve the investment climate and overall business environment.

C. PROJECT DESCRIPTION

13. Project Objective

The project aims to support the Government of Jordan in strengthening the reform implementation capacity of selected institutions responsible for investment policy, promotion and services.

14. Project Components

The areas proposed for support: investment rules and regulations, strengthening investment service provision and capacities and reform implementation associated with these each address investment entry, investment protection, investment attraction/retention and incentives. Importantly, the GoJ is already moving in these areas and has sought advice on best practices and capacity building. Further, these are areas in which the WBG and OECD have strong competencies, global experience and have already been working with the GoJ. In this way, this project targets improving Jordan’s investment framework so that by aligning it more closely to the country’s national development goals of employment and high value added production, investment can be more effectively put at the service of development.

The project is scheduled for 36 months and will be implemented jointly by the WBG and the OECD. It consists of three components. :

- 1. Support to strengthen the investment rules and regulations;- 2. Support to strengthen the investment facilitation provisions and capacities; - 3. Reform implementation support and coordination.

Component 1: Support to strengthen the investment rules and regulations; The Component 1 supports the implementation of improved investment rules and regulations, both for domestic and foreign investors, at the national level and in the selected pilot sector of RE/EE. The investment framework will be assessed, with a particular focus on the core protection provisions, the rules and conditions applying to foreign investors, the incentives regime and the consistency with Jordan’s international investment obligations, issues of special importance for the follow-up of the OECD Investment Committee recommendations encouraging: “the Jordanian authorities to design the new law so that it reaffirms commitments to non-discrimination, transparency and investor protection in line with international and OECD high standards, streamlines FDI restrictions currently found in separate regulations and provides for their review.” Based on the assessment of the investment rules and regulations, policy advice and recommendations will be elaborated to implement, improve and strengthen the reforms.

The component builds on recommendations of the OECD Investment Policy Framework and WBG Jordan Competitiveness Project. The ISA teams will provide advice to the Government in the preparation of laws and subsidiary legislation, as well as support in building implementation capacity.

Activity 1.1: Analysis of and advice on the legal investment framework of Jordan (ISA: OECD, USD 250,000)

The analysis will review the legal (de jure) measures limiting the establishment of FDI in the country (i.e. related to investment protection, investor treatment, transfer of funds, investment dispute resolution, restrictions of FDI in certain sectors, equity limitations, discriminatory requirements to provide licenses, top managerial personnel, performance requirements) and map measures and practices that de facto have the same effect.

The aim will be to support the Government in assessing, redrafting and enacting the relevant rules and regulations. Advice will be made in light of international standards, best practices and Jordan development’s objectives. Once the regulations are adopted, the aim will be (1) to ensure proper implementation and advice on broader investment legal reforms over time, and (2) to build awareness of investors on the reforms (enhanced communication, seminars with the private sector, investor’s guide, user manual for public servants dealing with

investors).

- Output 1.1: Report and recommendations on how to improve and implement the investment legal and institutional regime based on the analysis of the current legal regime, and awareness-building activities to promote reforms

Activity 1.2: Investor Protection and Restrictions Analysis (ISA: OECD, USD 150,000)

The analysis identifies reforms to the legal and regulatory framework relating to investor protection guarantees to align with good practices and the international commitments. The team will analyze Jordan’s international obligations to investors under bilateral investment treaties (BITs), regional investment-related instruments (including the amended Arab League Investment Agreement, recently ratified by Jordan) and multilateral rules. Recommendations will be provided to ensure the coherence of this network of agreements with a view to strengthen investor protection standards. Lack of coherence makes Jordan vulnerable to investor-state disputes. Technical advice to forthcoming negotiations (including the investment components of the Deep and Comprehensive Free Trade Agreement with the EU) will also be provided.

The GOJ will be advised in the drafting of the bylaw on foreign investments. Based on its current FDI restrictions, the team will assist the Government in “considering lifting some restrictions on foreign investment in sectors that are usually open in other countries, when alternative, non-discriminatory measures make it possible to meet the legitimate public policy objectives” as suggested in the OECD IPR of Jordan.

- Output 1.2a: Report with recommendations on how to ensure coherence of international investment obligations, consistent articulation with the national investment framework and use of best practice standards of investor protection in future regulatory reforms and investment treaty negotiations.

- Output 1.2b: Advisory assistance and a technical workshop in relations to the drafting of the bylaw related to non-Jordanian investments.

Activity 1.3. A Cost-Benefit Analysis of the Incentives Regime (ISA: WBG, USD 200,000)

Direct and indirect incentives, as well as other measures designed to promote FDI, should, while important, be subject to regular, independent costs-benefits analyses to assess impact, efficiency, and value-for-money. In the Investment Policy Review (IPR), the OECD invited Jordan to “thoroughly assess the impact of its incentive regime, in parallel to the revision of its Investment Law”. This exercise would benefit from the WBG global experience with the cost and benefit analysis of the investment incentives and the related tools.

The WBG team will focus on promoting increased transparency of incentives granted by the GoJ, including type of incentives, amounts, and adjudication procedures. The team will also propose ways how to streamline procedures related to obtaining incentives and examines their compatibility with existing international obligations. The analysis will include:

a. Preparation of an inventory of fiscal and non-fiscal incentives followed by,b. Inventory of good practices to minimize the distortive effects on competition,c. Analysis of provision of data on incentives to promote transparency,d. Suggestions on streamlining processes and procedures associated with granting and receiving incentives; e. Evaluation of the effectiveness of incentives in achieving the desired policy objective by calculating the

associated costs and benefits, and f. Suggestions on implementation of reforms, including in the design, implementation, administration of

incentives, to generate investment and achieve different objectives, and g. Assessment of the sustainability of incentives over time.

- Output 1.3a: Report on the cost and benefit analysis of the incentives regime - Output 1.3b: Report with recommendations on how to best match the proposed incentives regimes with cost-effectiveness and sound revenue mobilization imperatives on the basis of best practices and tools. The report will also clarify responsibilities of various authorities for the tax and other investment incentives - Output 1.3c: Workshop to assist in drafting and reviewing the bylaws related to incentives

Activity 1.4: Assessment of policy and legal barriers to the Renewable Energy/Energy Efficiency sector (ISA: OECD; USD 150,000)

Building on relevant tools and instruments, such as the OECD Policy Guidance for Investment in Clean Energy Infrastructure, the team will map the policy, legal and administrative barriers to investment along the renewable energy/energy efficiency sector value chain and will work with stakeholders to confirm the diagnosis and identify any other legal, regulatory and administrative value chain barriers to the development of the renewable energy and/or energy efficiency sector. Some focus will be given to the problems which prevent private developers from entering into long-term purchase agreements for the sale of electricity generated from RE sources and other obstacles to EE. In the RE sector, the analysis will focus on key policy issues to consider in order to address investment barriers and help mobilize investment in renewable energy, including: investment policy, investment promotion and facilitation, competition, financial market and public governance policies.

- Output 1.4: Report with recommendations for the improvement of the legal framework for investment into the RE/EE sector.

Component 2: Support to strengthen the investment service provision and capacities

The component, implemented by WBG, focuses on strengthening the capacity to provide investment facilitation, investor protection, tracking and aftercare services building on experiences from the region and other countries. The component proposes the streamlining of investment procedures for the entry of FDI into the host country through a strengthened one-stop shop. The investment authorities will be provided with recommendations to improve internal procedures and regulations, streamlining the decision making process, and defining efficient prospective and established investors’ services. The services include, inter alia, promotion, one-stop shop, aftercare services, market research, and policy advocacy. Based on the recommendations, Action Plans will provide an exact roadmap to improve the promotion capacities and services to investors. The project will not be procuring the IT system.

Activity 2.1: Simplification of the investor entry (ISA: WBG, USD 565,000)

The component will identify and promote a roll-back of measures and practices that de facto limit the establishment of FDI in the country.

Per government request, WBG is expanding this activity beyond Jordan Investment Commission (JIC) to include simplification and streamlining of the licensing and approval requirements by other government agencies. This is an essential and difficult part of the Investment Window reform because it deals with all relevant agencies and its outcome will impact the performance and the private sector perception of the new JIC. While tasks in activity 2.1.1 focused on JIC internal processes only, activity 2.1.2 will address processes and procedures managed by government agencies represented in JIC and will include infrastructural and process improvements that will provide quality to the end user, i.e. the business community, but will also establish solid grounds for future JIC reforms. The extra activities are estimated to cost 465,000 USD. Details of the budget is provided in Project Budget below. The original budget of 100,000 USD has been utilized and the outputs in activity 2.1.1 were completed and delivered as planned.

Activity 2.1.1: Development of Investment Window internal processes -. This activity will facilitate the streamlining of investment procedure for the entry of FDI into Jordan through a single one-stop shop. The aim is to reduce de facto barriers through streamlining JIC internal procedures, facilitate screening processes, and ensure the application of best practices in the one-stop shop for investors.

Output 2.1.1a: Analyses of the existing processes and procedures for registration under the JIC and the MIT including bottlenecks and redundant processes

Output 2.1.1b: JIC process optimization activities Output 2.1.1c: Comprehensive reform roadmap from legal, organizational and technological perspective that

will yield a more transparent and investor/business friendly environment in Jordan.

Activity 2.1.2: Streamlining and simplification of licenses and approval by other government agencies. This activity will streamline procedural barriers affecting FDI entry (such as obtaining investment approvals, registration, work permits, visas, opening bank account in foreign currency, miscellaneous procedures (recognition of documents, use of third parties).

Output 2.1.2a: Government licenses and approvals streamlining .This segment will be analyzed and the procedures will be streamlined, shortened and where possible even eliminated.Output 2.1.2b: Reorganization of the legal entity registration institution. Output 2.1.2c: optimized Legal entity registration process and establishment of a standardized application form for all licenses. Output 2.1.2d: Establishment of unique company ID (recommended lead: Steering Committee).Output 2.1.2e: Removal of capital requirement Output 2.1.2f: Name search, protection and reservation.Output 2.1.2g: Reorganization of the investment promotion institution in the Investment Window Output 2.1.2h: Creation of technical infrastructure : The Investment registration and tracking systemOutput 2.1.2i: Creation/upgrade of a centralized core registry system Output 2.1.2j: Introduction of electronic payment

Activity 2.2: Strengthened services to investors (ISA: WBG, USD 100,000)

The team will help design a comprehensive investment tracking mechanism in order to capture information on current and prospective investors, on the evolution of investment, issues faced as well as lost investors to assist in investor aftercare. The team will provide recommendations on:

a. Investment tracking mechanism - the team will provide recommendations on establishment of a comprehensive management framework, allowing to capture information on current and prospective investors, on the evolution of the investment, issues faced as well as lost investors.

b. Introduction of an investor aftercare to address the gap between investor guarantees and their enforcement.

Output 2.2: Compiling the Action Plan to improve services to investors through recommendations on the implementation of the investment tracking mechanism and aftercare services. Activity 2.3: Building the RE/EE promotion capacities (ISA: WBG, USD 100,000)

The team will provide support to the GoJ to establish the appropriate institutional arrangements architecture for investors, including legal status, mandate, roles and responsibilities and governance structure for investment into the renewable energy/energy efficiency sector. The recommendations will be based on mapping of indigenous Jordanian businesses for purposes of linkages with incoming investors (supplier development) to maximize potential benefits of FDI to local business as suppliers and from technology and management practices; as well as cluster mapping using extant analyses as a starting point to unlock the potential for enhanced sector competitiveness, the analysis will help the government prioritize reforms based on capacity of the private sector to take advantage of RE/EE opportunities and their overall impact on costs and energy savings.

Output 2.3a: Action Plan to improve services to investors in the RE/EE sector

Output 2.3b: Public private dialogue workshops to improve services to investors in the RE/EE sector

Component 3: Reform implementation support and coordination

WBG/OECD Reform Implementation Support (USD 340,000): The project will finance a local senior staff who will be based in Jordan and a team of appropriate skill mix responsible for reform implementation the day-to-day running of the project. The team will draft Terms of Reference to commission consultants to deliver technical assistance and capacity building activities, assist the Government to launch and sustain the Public Private Dialogue (PPD) process and ensure coordination with other donor initiatives. The consultants will be selected jointly by WBG and OECD and hired by WBG.

Project Steering Group (USD 60,000): The Group will be composed of government representatives to be nominated by the national coordinator (MoPIC) in consultation with relevant ministries and institutions, as well as representatives of the WBG and OECD. The Project Steering Group will meet regularly and at least every 6 months and will provide guidance to the project.

Public-Private Dialogue (PPD) mechanism for project implementation (USD 40,000): The project will be implemented along with a PPD mechanism. The activities of the project will be developed and implemented through regular consultations with the private sector. Representatives of the private sector will be consulted for the elaboration of the policy recommendations and invited to participate in the workshops organized under this project. The National Council on Competitiveness and Innovation that gathers top business representatives, as well as local business associations, will be instrumental for the implementation of this activity.

Monitoring and evaluation (USD 60,000): The project will finance a monitoring and evaluation system of project activities to ensure indicators are established and verified and the outputs and outcomes are attained. The World Bank/OECD team will coordinate the monitoring and evaluation of the project results.

15. Key Indicators Linked to Objectives

Key indicators for measuring the results of the project include: • Adoption of a strategic plan to implement a new investment framework; • Endorsement of the Action Plan to improve services to investors;• Endorsement of an Action Plan to improve services to investors in the RE/EE sector. • Participation of officials in training and workshops on drafting bylaws and promoting investment services. • Regular meetings of a Public Private Dialogue group on Competitiveness and Investment Issues.

Section E (Results Framework and Monitoring) identifies the project’s key indicators and progress measures of intermediate results.

D. IMPLEMENTATION

16. Partnership Arrangements (if applicable)

The main beneficiaries of the project are the governmental institutions in charge of investment issues, the Ministry of Industry and Trade, the Ministry of Planning and International Cooperation, but also though indirectly the Ministry of Finances, the Ministry of Environment and the Ministry of Energy.

The ISA executed technical assistance was sought by the Government of Jordan. As implementing agencies, the WBG and OECD will be in charge of the overall day-to-day co-ordination and implementation of the project. All investment related public agencies will be integrated into the process, in addition to the Investment Authority. Business associations, such as the Chamber of Commerce, the Chamber of Industry and the Jordanian Businessman

Association, will be consulted, as well as potential and established investors. The National Council for Competitiveness and Innovation will also be consulted. Transfer of best international practices, training of ministry staff by the local ISA team and various planned training activities will ensure project sustainability.

17. Coordination with Country-led Mechanism/Donor Implemented Activities

The project is aligned to the economic development objectives as laid out in the National Agenda 2007-2017 and contributes directly to the existing efforts of the Jordanian authorities to improve the legal and institutional investment framework and MOPIC and MIT projects to improve the overall business environment.

Jordan is currently benefiting from a variety of donor initiatives and the suggested TA leverages other donor funds and complements other donor projects. The project will be complementary to the work carried out by other international organisations including the Islamic Development Bank (including through the Islamic Corporation for the Development of the Private Sector), USAID, the European Commission (EC), JICCA, AFD, GIZ and other partners.

The activities under this TA will complement and augment the on-going efforts as well as cover new areas where the Jordanian authorities need support, i.e. investment policy. The Investment Policy area has systematically been identified as an obstacle and problem in all strategic donor reports. Reforms to the investment policy have been included among triggers of a series of budget support operations and development policy loans. Furthermore, improvement in investment climate for both domestic and foreign donors will unlock opportunities for SMEs and innovation supported by several donor programs.

18. Institutional and Implementation Arrangements

The project will be a programmatic technical assistance financed under a World Bank and OECD executed Trust Fund. It will follow the WBG and OECD standard operational policies and procedures, including procurement and financial management policies.

The WBG and the OECD team with an appropriate mix of specialists will be responsible for the day-to-day implementation of the project. A senior local staff will be hired in Jordan for the duration of the project to ensure local presence and coordination. This manager will be jointly selected by the WBG and the OECD and hired by the WBG. (S)he will be responsible for all the components of the projects, coordinating closely with the MOPIC Competitiveness team. (S)he will assist the Government to launch and sustain the PPD process, ensure coordination with other donors’ initiatives, etc.

In Jordan the overall project coordination will the responsibility of the Ministry of Planning and International Cooperation.

The Project Steering Committee will be formed by the Government. The project will support the functioning of this committee that will be composed of government representatives to be nominated by the national coordinator (MoPIC) in consultation with relevant ministries and institutions, as well as representatives of private sector and the WBG and OECD. The Project Steering Group will meet regularly and at least every 6 months and will provide guidance to the project.

For each of its respective components of the project, the ISA will be responsible for: Managing / leading project implementation task in close collaboration with the Ministry of Planning and

International Cooperation and other relevant stakeholders Selecting the needed experts and consultants for the implementation of project activities. Coordinating between the Ministry of Planning and International Cooperation and the Consultants on all points

related to the implementation of the Project.

Evaluating and reviewing Project results in terms of timing for implementation and achievement of intended outcomes and results

The following risks are to be addressed in the implementation:

Risk Rating: Mitigation MeasurePossibility of an upsurge in political unrest and insecurity could derail project implementation, which could make it difficult for implementation of project components.

Substantial The project will mitigate the risk by including crisis management processes that would likely include stabilization measures and potential shifts between components of the project.

Inadequate capacity of implementing entities and the bureaucratic hurdles may affect the pace and quality of implementation.

Substantial The project is designed as an ISA-executed technical assistance that will be implemented by the ISA Staff and a roaster of experts to introduce best international practice and analytical tools. The implementation arrangement will ensure active and consistent team presence in Jordan during project execution. The WBG and OECD are two multilateral institutions with the most experience in delivering assistance to strengthen the competitiveness and investment policies of countries.

Overlap with other international agencies in implementing finance and private sector projects.

Moderate The project will coordinate with relevant implementing agencies, so as to identify areas of complementarities. The projects will also liaise with the donor coordination mechanism at the Ministry of Planning and International Cooperation.

Continued limited progress of investment regime reforms, in particular the legislative process

Substantial The TA project proposes a set of technical activities that inform the reform process, including preparation of both laws and bylaws. It will provide the authorities with international best practice examples. The project will also provide a plan with timeline for actions and relevant training. As such the activities support the reform process progress as much as possible but are not directly dependent on reform progress.

19. Monitoring and Evaluation of Results

Regular and in-depth monitoring of progress and evaluation of results and outcomes is essential for the success of the project. The ISAs will be responsible for the overall monitoring and evaluation of the project with the support of the technical experts and Steering Committee.

E. PROJECT BUDGETING AND FINANCING

20. Project Financing (including ISA Direct Costs2)Cost by Component Transition

Fund(USD)

Country Co-

Financing (USD)

Other Co-Financing

(USD)

Total(USD)

Component 1: Support to strengthen the investment rules and regulations (a) Activity 1.1: Analysis of and advice on the legal investment

framework (OECD)(b) Activity 1.2: Investor Protection and Restriction Analysis

(OECD)(c) Activity 1.3: A Cost-Benefit Analysis of the Incentives

Regime (WBG)(d) Activity 1.4: Assessment of policy and legal barriers to the

Renewable Energy/Energy Efficiency sector (OECD)

250,000

150,000

200,000

150,000

250,000

150,000

200,000

150,000

Component 2: Support to strengthen the investment service provision and capacities(a) Activity 2.1: Simplification of the investor entry (WBG)(b) Activity 2.2: Strengthened services to investors (WBG)(c) Activity 2.3: Building the Renewable Energy/Energy

Efficiency sector promotion activities (WBG)

565,000100,000100,000

565,000100,000100,000

Component 3: Reform implementation support and coordination(a) Activity 3.1: Reform Implementation Support (WBG)(b) Activity 3.2: Project Steering Group

a. OECDb. WBG

(c) Activity 3.3: Public-Private Dialoguea. OECDb. WBG

(d) Activity 3.4: Monitoring and evaluationa. OECDb. WBG

340,000

30,00030,000

20,00020,000

30,00030,000

340,000

30,00030,000

20,00020,000

30,00030,000

Total Project Cost 2,015,000 2,015,000

21. Budget Breakdown of Indirect Costs Requested (USD) Description Amount (USD)

For grant preparation, administration and implementation support:Project Preparation cost

a. WBG 44,000TF Management

a. OECD b. WBG

46,00010,000

Total Indirect Cost 100,000

2 ISA direct costs are those costs related to the ISA’s direct provision of technical assistance within the project.

22. Budget Breakdown of expanded scope of work under activity 2.1 (USD) Items Description FY16 FY17 Total

Consultants Contract Licensing streamlining, Legal, reviews

100,000 100,000 200,000

IT (Databases and OSS) Building a central Database and improving information sharing.

150,000 50,000 200,000

Capacity Building, training and workshops, other…

Best practice visits, training, and workshops.

35,000 30,000 65,000

Total 465,000

F. Results Framework and Monitoring

Project Development Objective (PDO) : The project aims to support the Government of Jordan in strengthening the reform implementation capacity of selected institutions responsible for investment policy, promotion and services.

PDO Level Results Indicators*Unit of

MeasureBaseline

Cumulative Target Values**Frequenc

y

Data Source/

Methodology

Responsibility for Data

Collection

Description (indicator

definition etc.)YR 1

(2015)

YR 2 YR3 YR 4 YR5

Indicator One: Adoption of a strategic plan to implement a new investment framework;

Binary No No Yes One time ISAs

Indicator Two: Endorsement of the Action Plan to improve services to investors;

Binary No No Yes One time ISAs

Indicator Three: Endorsement of an Action Plan to improve services to investors in the RE/EE sector.

Binary No No No Yes One time ISAs

Indicator Four: Regular meetings of a Public Private Dialogue group on Competitiveness and Investment.

Binary No No Yes Yes Yearly ISAs

INTERMEDIATE RESULTS

Intermediate Result (Component One): Support to strengthen the investment rules and regulationsIntermediate Result indicator One: Submission of recommendations to ensure coherence of international investment obligations for endorsement

Binary No No Yes One timeProject Reports

ISAs

Intermediate Result indicator Two: Endorsement of the Cost Benefit Analysis of the Incentives Regime and related reform recommendations

Binary No Yes One timeProject Reports

ISAs

Intermediate Result indicator Three: Participants to the technical workshops on drafting of the bylaw on foreign investments

Binary No No Yes One timeProject Report

ISAs

Intermediate Result indicator Four: Submission of recommendations on how to strengthen investment framework in EE/RE sector for endorsement.

Binary No No Yes One timeProject Report

ISAs

Intermediate Result (Component Two): Support to strengthen the investment service provision and capacities

Intermediate Result indicator One: Adoption of an Action Plan to improve investor services.

Binary No n/a Yes One timeProject report

ISAs

Intermediate Result indicator Two: Number of study tours to OECD and MENA investment promotion agencies.

Number No n/a 3 n/a In YR 2Project report

ISAs

Intermediate Result indicator Three: Number of participants in workshops on investment promotion functions and tools.

Number No n/a 20 10 YearlyProject report

ISAs

Intermediate Result indicator Four: Adoption of an Action Plan to improve services to investors in the RE/EE sector.

Binary No n/a Yes One timeProject report

ISAs

Intermediate Result (Component Three): Reform Implementation Support and CoordinationIntermediate Result indicator One: Number of PPD workshop participants (public and private sector) to discuss competitiveness and investment.

Number No n/a 30 40 Yearly Project Report ISAs

Intermediate Result indicator Two: Monitoring and evaluation reports prepared and published regularly on schedule.

Binary No n/a Yes Yes Yearly Project Report ISAs