Violations in Palestine’s Infrastructure Sector

- State Audit and Administrative Control Bureau (SAACB) report on the role of the General Authority for Cities and Industrial Zones in establishing and developing industrial cities, which are subject to Law No. 10 of 1998, concerning free industrial cities and zones. In Chapter Three of the aforementioned law, in Article No. 5, which defines the goals and tasks of the Authority. As for Chapter Three of the aforementioned law, it concerns the Authority's Board of Directors from Article 6 through Article 14, and the Board of Directors consists of 11 members, with the Minister of Industry as chairman, and representatives from the Ministry of Economy and Trade and the Ministry of Finance, the Ministry of Planning and International Cooperation, the Ministry of Local Government, the Ministry of State for Environmental Affairs and 4 representatives: two from developers and two representatives from the chambers of commerce and industry and industrial unions...

- The Authority of Cities established four industrial cities since its establishment up to the date of issuance of this report; work was directly commenced in two of them, and the others are still under planning and preparation of external infrastructure.

1- Bethlehem Industrial City, with an area of 195 dunums, expandable to 530 dunums.

2- Jericho Agricultural Industrial City, with an area of 615 dunums.

3- Jenin Free Industrial City, with an area of 918 dunums.

4- Tarqumiya Industrial City with an area of 1,170 dunums.

· Observations and indicators of deficiency and neglect that appeared in the SAACB report on the role of the General Authority for Industrial Cities in establishing and developing the industrial cities mentioned above. Given the importance of this General Authority’s role in preparing and developing the infrastructure of the national economy in Palestine through these industrial cities, we list these observations and indicators below, from which it becomes clear the extent of neglect, mismanagement and dereliction of duty by the General Authority and its Board of Directors in bearing their responsibilities throughout this long time period, according to the systems, legislation and standards related to establishing industrial cities, preparing them for investment and developing them. We hope these violations, deficiencies and neglect will be corrected. It is necessary to follow up and examine the extent of the General Authority for Industrial Cities’ and its Board of Directors’ compliance with the SAACB’s recommendations and observations, which we list as follows:

· Failure to follow up with the developers to implement their obligations stipulated in the concession contracts concluded with them to establish the industrial cities.!

- There are fees due from the developers that were not paid and were not followed up.!

- Some operating factories within the industrial cities do not have licenses.!

- It was noted that there are no clear criteria for selecting investors in the industrial cities, such as the size and nature of the investment.

- We were not able to determine the mechanism by which developers were granted the authority to manage and develop the industrial cities, nor is there any indication that the principle of competition was taken into account.!

- The SAACB was unable to inventory the lease contracts for investors in the industrial cities because the developers did not comply with providing the Authority with annual reports, as stipulated in the concession contracts, in addition to the Authority’s failure to take the necessary measures in this regard.!

- The developer of Bethlehem Industrial City did not fulfill its financial obligations to the Authority, as it did not pay the land rent, which has an annual rental value of 50,000 dinars, nor did it pay the imposed fees. The Authority also did not place a performance guarantee requirement on the developer of Jericho Industrial City, similar to other developers in the other cities.

- The Authority did not open an account for receivables, and therefore has no data on the details of the revenues that should be collected, whether from the developer or the investor, or otherwise.

- Investors in Bethlehem Industrial City received financial grants from the French without any intervention by the Authority, or without the Authority having controls.

- There is no mechanism to provide effective incentives to attract investors.

- The Authority did not benefit from the concession fee represented by 15% of the developer’s annual profits, due to the developers’ companies incurring losses over previous years.

- The performance bond was not renewed by the developer of Jericho Industrial City since 2013.

- The Industrial Cities Authority obtains grants to cover obligations and items required of the developers and contractually binding on them, such as building warehouses and containers for Jericho Industrial City.!

- As of the date of issuance of the report, the full compensation for the land of Jericho Agricultural Industrial City, which was expropriated, had not been paid; only the amount of 1,040,000 dinars was paid out of the total compensation amount of 5,200,000 Jordanian dinars.

- Nineteen years have passed since the date of the decision to expropriate the land of Jenin Industrial City, and to date no achievement has been realized on the ground.!

- Weak governance in the Authority’s performance, and the low effectiveness of the Board of Directors’ decisions.

- The Board did not hold regular periodic sessions, and did not meet the minimum number of sessions.

- The Board did not fulfill its duties of following up on the preparation of the regulations organizing the Authority’s work within industrial cities and free industrial zones.

- The executive regulations of the General Authority for Cities and Free Industrial Zones Law of 2009 and the Unified Window Investment Licensing Procedures Guide were not approved by the competent authority up to the date of issuance of the report.!

- Clear, flexible and measurable bases and criteria were not approved for preparing the strategic plan. Likewise, the Authority’s strategic plan for the years 2017-2022 was not duly approved by the Board of Directors, nor was it linked to an annual operational plan despite the importance of the Authority’s work.

- There are no criteria for selecting investors in the industrial cities, nor is there reliance on clear, specific bases and criteria to select the most suitable investment in the industrial cities.

- There is no organized, comprehensive and clear database of all investor applications wishing to invest, whether approved or rejected by the competent committee.

- On 14-11-2020