The Ministry of Investment recently announced that it will offer a high-speed rail project linking Amman and Aqaba as an investment opportunity. The project will undoubtedly have a significant and comprehensive developmental impact, especially if the train carries both passengers and freight. It will transform the economy through four main channels: time and transportation costs, tourism (primarily domestic), the labor market and income, and logistics and trade. The true impact will depend on travel time, fares, and whether the train operates at high or medium speed.

 

Regarding the impact on domestic and international tourism to Aqaba, domestic tourism is likely to increase rapidly. Currently, the journey by road takes approximately four hours on the desert highway. If the journey were reduced to 1.5–2.5 hours with a regular train schedule, access to Aqaba would become easier, leading to an increase in weekend trips from Amman, higher hotel occupancy rates, and a growth in conference and event tourism. As for foreign tourism, the impact will be less significant than on domestic tourism, but it will be noticeable when the train is integrated into a streamlined tourism package, such as a single ticket and a continuous journey from Amman Airport to the train station, Aqaba, Wadi Rum, and Petra.

 

Aqaba's economy will surge through the creation of direct jobs in operation and maintenance, indirect jobs in hotels, restaurants, and marine activities, and a general rise in demand for services. Hotel room revenues will also increase as the length of stay increases, not just the number of visitors.

 

In Amman, the benefits will extend to travel companies, tour operators, supply chains, and corporate offices operating in Aqaba. Some leisure spending may shift from Amman to Aqaba, depending on the volume of foreign tourism the train attracts.

 

The train will expand the customer base, reduce reliance on cars, provide a very convenient means of transportation to Aqaba, and improve accessibility while reducing travel time. This will lead to an increase in the value of major tourism and real estate projects in Aqaba, such as Ayla, Tala Bay, and Marsa Zayed.

 

If the train is solely for passengers, its implementation will be financially more challenging. However, the project's feasibility will improve significantly if it is designed appropriately (for freight, containers, and passengers), and its economic return on overall economic activity and logistics in Jordan will be very high. This is especially true if Aqaba is connected to logistics hubs and dry ports, taking into account national railway studies and plans in Jordan, which typically place the Aqaba-Amman-Zarqa axis as its backbone.

 

While the project will be costly, it can be financed through a public-private partnership concession, establishing a private company or consortium to build and operate the project in exchange for ticket revenues, freight (long-term contracts with major shippers generating a stable cash flow), and real estate development around the train stations (property developments, regulatory fees, and land partnerships). Furthermore, concessional climate financing can be obtained from international funds and institutions, and green bonds can be issued if the project is declared to be used to reduce transport emissions and decrease truck traffic. To reduce costs for citizens practically without open-ended subsidies, a smart tiered pricing system can be used, along with discounts for residents and students partially funded by surplus freight or development revenues, or dynamic pricing as airlines do.

 

What about truck owners? Historical experience in many countries suggests that some truck owners will object if they feel the train will take away their container transport between Aqaba and Amman. Long-distance container transport (Aqaba to Amman and vice versa) is the segment most likely to be converted to rail.

 

Measures are being taken in most countries, such as involving transport unions or associations early in designing the business model, and avoiding pricing rail freight in a way that eliminates road transport. The goal is for the train to be used for heavy containers and long distances, while trucks are used for distribution and flexibility, such as transporting containers to/from the logistics station to the warehouse or factory. This creates significant demand for trucks instead of eliminating them. Furthermore, transport companies should be part of the train's supply chain, creating a qualitative shift from low-margin long-distance journeys to high-turnover regional distribution. I have repeatedly called for this project since I was teaching economics at Mutah University in 1994. For me, this is a dream come true.

 

 

The writer is a former minister of state for economic affairs in Jordan.