Annual Conference on Developing Service Markets and Value Chains
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1 Annual Conference on Developing Service Markets and Value Chains The case for Jordan Jordan Stone and Tile Exporters Association (JOSTONE)
2 Table of Contents 1. Overall objective of BDS Conference 2. Overview of Jordan Case Study Stone and Tile Exporters Association (Jostone) 3. BDS at Jordan Stone and Tile Exporters Association (Jostone) 4. Lessons learned - Objective - Methodology - Results and Impacts
3 Objective of BDS Conference To learn about case studies from the region that are demonstrating: ng: The ability to benefit many people living in relative poverty, through Private Sector Development (PSD). Focus on the sustainable and large-scale delivery of Business Development Services (BDS) through commercial market channels to small businesses. Has good practice in related themes, such as value chain development that reaches small producers including women entrepreneurs, or reform of the legal and regulatory environment for small businesses
4 A Case Study from Jordan: Jordan Stone and Tile Exporters Association (Jostone( Jostone) The case was selected due to its; Focus on the sustainable and large scale delivery of Business Development Services (BDS) through commercial market channels to small and medium businesses Has good practice in the reform of the legal and regulatory environment for small and medium businesses The main objective of this presentation is to highlight how Jostone was able to meet these two objectives
5 Table of Contents 1. Overall objective of BDS Conference 2. Overview of Jordan Stone and Tile Exporters Association (JOSTONE) 3. BDS at Jordan Stone and Tile Exporters Association (JOSTONE) 4. Lessons learned - Objective - Methodology - Results and Impacts
6 Table of Contents 1. Overall objective of BDS Conference 2. Overview of Jordan Stone and Tile Exporters Association (JOSTONE) 3. BDS at Jordan Stone and Tile Exporters Association (JOSTONE) 4. Lessons learned - Objective - Methodology - Results and Impacts
7 Jostone Objectives 1. Jostone overall objective is to enhance the competitiveness of the business environment of the Stone, Tile and Marble (MST) sector 2. Offer an umbrella for all companies in this Sector operating along the value chain from extraction of stones, to processing of stones to exporting final product. 3. Increase companies exports and production capacities. 4. Market the Jordanian MST Products in Export markets
8 Case Study from Jordan: JOSTONE Introduction Jostone was established in In 2001, Jostone signed an Memorandum Of Understanding with JUSBP Jordan US Business Partnership, a USAID funded BDS Facilitator, to support the sector through Jostone. As a result, Jostone became an active representative of (MST) sector 1993 Establish Jostone Jostone inactive association representing 4 members only 2001 A new partnership Jostone Management 2006 Jostone BDS Provider Turning point as marks the beginning of a Jostone independent Jostone becomes strong coordination between Jostone and the only BDS from any BDS facilitator JUSBP provider for most newly appointed CEO BDS facilitators in JUSBP provided assistance in the form of was established in new the MST sector office space, director appointment, technical assessment of all factories in the sector, premises from JUSBP Jostone increases market research of the US market, and outreach to Board of Directors means to participate in the Coverings Show include 80 resume a stronger members and in Orlando/ USA. direction still growing An additional 6 members joined Jostone and several members were able at a later stage to penetrate the US market
9 Business Development Services Facilitators in Jordan BDS Facilitator NAFES, funded by the Japanese, on going JUSBP ( ) funded by USAID BDC/Tatweer, on going, funded by USAID JUMP funded by the EU & Jordanian Government, on going Supplier Supplier Supplier Supplier Beneficiaries SME SME SME SME EJADA funded by the EU ended 2006 EJEP funded by the EU on going UNIDO on going BDS Facilitators in SME Jordan provide direct technical assistance to SMEs on one-to-one basis. Their assistance is mainly in the field of production, quality, equipment, etc at the SME level.
10 Business Development Services Facilitators in Jordan BDS Facilitator NAFES, funded by the Japanese, on going JUSBP ( ) funded by USAID BDC/Tatweer, on going, funded by USAID JUMP funded by the EU & Jordanian Government, on going BDS Provider Jostone Supplier Supplier Supplier Supplier Beneficiaries Member Member Member Member Member EJADA funded by the EU ended 2006 EJEP funded by the EU on going UNIDO on going At the sectoral level, all assistance to the sector is provided through JOSTONE who in turn utilises BDS suppliers. However, in policy advocacy issues, JOSTONE plays the BDS suppliers role directly
11 Marble, Stone and Tile Sector Business Environment Government + Environmental Standards (Natural Resource Authority & Government Ministry of Environment) - Regulation regarding foreign labour - Taxation - Regulation regarding mining practices Factor conditions + Availability of raw material - Low labour skills - Huge investment cost in machinery - Significant amounts of water needed in production process - Remote areas of quarries limits electricity cables being extended + Area of Strength - Needs Improvement Factor Strategy Cluster Related and Supporting Industries + Jostone + BDS suppliers + Royal Scientific Society -Training Institutes Firm strategy, structure & rivalry + Competition mainly depends on size of company - Limited coordination efforts among companies - Majority of companies are small Demand Demand conditions + Large local demand due to construction boom + Local taste entails use of stones for building structures + Large worldwide demand + Growing number of demand for luxury items of this sector M. E. Porter Diamond
12 Jostone Methodology of Work Jostone offers BDS in four main areas; Policy Advocacy Government Building Capabilities Strategy Factor Demand Market Access Cluster + Area of Strength - Needs Improvement Training and Technical Assistance M. E. Porter Diamond
13 MST Demand Government Strategy Exports and Imports during showed an average annual growth increase by 25%.* Factor Cluster Demand 70 Imports Exports 0 Import market: Mainly Italy, Marble, Stone and Tile Sector represents one of the most dynamic and fast-growing industries in Jordan. It should be noted that value added on imports in this sector is high reaching 60% due to processing done on imported products. Export destinations: Israel, the US, Saudi Arabia, Singapore and Lebanon. Recently, companies are trying to penetrate the EU market. *Jostone estimates
14 Government Jostone Services Provided to Enhance Demand Factor Strategy Cluster Demand Trade Missions & Exhibitions Establish contacts with key business leaders, chambers, associations and foreign economic offices to raise the profile of its member companies. Partnership Networking with foreign & Jordanian consulates & economic attaches exchange visits and business tours Advertising Market Research Advertise in international stone, architecture and design magazines to maintain a presence in target foreign markets Conduct market research that better reflects demand and supply Jostone has assisted its members by offering BDS services that better enable them to access markets worldwide
15 Government Strategy MST Firms Strategy Factor Cluster Demand Majority of companies in this sector are small and medium sized enterprises. Absence of foreign know how and multinationals in this area of the sector. Competition is fierce with minimum cooperation. < JD 250,000** JD 250,000 - JD1,000,000 ** > JD 1,000,000 ** Small enterprises Medium enterprises Large enterprises 550 enterprises on average (ten employees per company) 5500 employees 60 enterprises on average 40 employee for each company 30 enterprises On average 100 employees for each company *Jostone estimates, 2006 ** paid up capital SMEs are around 95% of the sector, employing Out about of the 80 61% current members, of the 55 total industry are small, and workforce.* hence Jostone serves mostly Small and Medium sized enterprises
16 Government Jostone Services Provided to Enhance Strategy Building Capacity Factor Working with international assistance institutions to identify and a invite experts to visit and evaluate members factories. Strategy Cluster Demand Collective group efforts to market the marble sector abroad through shared website, brochures, market researches, pavilions, etc Strategic planning workshop Focused management & technical training, counselling/ advisory services, s legal services, financial and taxation advice, etc. Member relations and activities Expanding membership to all companies with Jostone being an open club to all companies that are active in the sector Conducting bi-monthly seminars to keep producers, officials and other stakeholders apprised of the most recent developments. Coordinating participation in educational missions and international ional fairs. Creating cooperative networks among members such as: benefiting from un- utilised capacities, technology transfer, transfer of know- how, etc Sharing resources such as expensive machineries specialising in process fumigation. Jostone has assisted its members by offering BDS services that enhances companies interaction with each other
17 Government MST Government Factor Strategy Demand Extraction of Stone Cluster Extraction of Stone is considered public property and hence regulated by the Natural Resource Authority, Ministry of Energy and Mineral Resources. Regulations include: Using local materials is not properly supported a limit of extraction of specific ton of stone per year, by local mining a limit of specific months for extraction purposes, regulations, which make a permit to potential extraction sites, it difficult to do any long A specific environmental regulations on Quarries. term investing in quarrying. JD 10 per ton Export Fees Foreign Labour Shortage of local labour. Most of the labourers Such are regulations foreigners are who wviewed require as obstacles work permits which are not easy to obtain. to the growth of the sector
18 Jostone Services Provided for advocacy issues Foreign labour Applying for foreign labour will be through Applying for foreign labour will be through Jostone to the Ministry of Labour. In the meantime, the Ministry of Labour in partnership with Jostone is working on training local labours to be employed in this sector Quarries Export fees Environment Jostone formed a joint committee with the Ministry of Environment to monitor and upgrade conditions at quarries to the best practices ces worldwide. Export fees have decreased from JD10/Ton to JD2.5/ton Creating an appropriate legal environment to ensure adequate Jostone agreed with the Municipality supplies of of Amman raw material to: and labor reopen the landfill for dumping by advocating wastewater with from the factories Jordanian while Jostone oversees that factories government are complying on several to environmental key issues: standards improvement of quarry license Jostone will be responsible regulations, for its members taxes factories and labor to comply and with environmental regulations. A yearly license to each factory the environment will be issued by the Ministry of Environment through a formal letter by Jostone
19 Government MST Related & Supporting Activities (Cluster) Factor Strategy Demand Cluster Accreditation Labs Limited accredited Labs that perform all necessary tests to qualify in some international markets (such as the AMST measures) Training Institutes Poor training institutes that address the issue of low labour productivity BDS Suppliers Disintegration between BDS suppliers and MST companies connection.
20 Jostone Services Provided for Cluster Government Factor Strategy Demand Accreditation Labs Jostone coordinates with the Royal Scientific Society (RSS) to standardize testing of Jordanian products and facilitate certification of companies wishing to export Cluster Training Institutes Jostone is working with the Ministry of Labour s program Local National Training to train 500 local workers BDS suppliers Jostone facilitates a full menu of training services between BDS suppliers and its members to reduce operating costs and to introduce members to a wider variety of available services
21 Results & Impacts Success cases: Formal strong advocacy and lobby forum with the Government, BDS facilitators, etc.. A number of Jordanian companies were able to enter the US market Many of Jostone members were able to upgrade their processing lines through their exposure to international markets A significant percentage of members were able to use s and utilise internet to promote to their products. Jostone played a role in bringing all members and related industries in this sector under one umbrella since the MST cluster was disintegrated
22 Government Sustainability Plan Factor Strategy Demand Jostone Revenue Stream Cluster To sustain its activities, Jostone finance its activities from: - Annual membership fees - various support it receives from the BDS Facilitators - Money generated from client contribution to technical support - Income generating activities implemented by Jostone JOSTONE became the only service provider at the sector level for the Marble, Stone and Tile sector
23 Looking Forward Looking forward, JOSTONE envisions the following; Foreign Labour Requests Monthly Seminars Foreign trade missions and fairs Training Business Development As part of its advocacy plans, Jostone will provide letters to the t Ministry of Labor for members at a cost of 10JD per each labour. Jostone aims at being able to organize monthly seminars by 2008 by charging fees to attend and by increasing sponsorships by Jostone partners. Jostone is actively working on making sure a larger percentage of o its members participate in the major trade missions and fairs through cooperation with BDS facilitators that cover some cost and allow Jostone to realize some gains. Jostone has a strategy to offer extensive training services, with h its BDS facilitators, that allows Jostone to recover some of its costs and make profits. Jostone aims at linking training participation with a complete package p of marketing services such as linking the companies website, and hence provide it with an address to be contacted, to Jostone s main webpage for a fee.
24 Table of Contents 1. Overall objective of BDS Conference 2. Overview of Jordan Stone and Tile Exporters Association (Jostone) 3. Overview of Marble Sector in Jordan 4. BDS at Jordan Stone and Tile Exporters Association (Jostone) 5. Lessons learned - Objective - Methodology - Results and Impacts
25 Lessons learned Autonomous Representative Entity Importance of having one voice with strong board of directors to represent a conglomerate of companies working in the same sector especially for: Advocacy issues with government Ability to access funds from BDS facilitators Set a map for the strategic direction for the sector Promote and facilitate technology transfer Marketing BDS quality services along Value chain Sustainable Institutions Importance of joining local and international marketing efforts to identify demand and access new markets Importance of offering BDS services at each stage of the value chain while ensuring quality provided is of highest level and is monitored and evaluated periodically Importance of having the BDS provider being autonomous and financially sustainable to better serve its clients with needed resources
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