AMMAN, Jordan — This summer, Jordan’s IT sector took many outsiders by surprise with the announcement that Yahoo! had purchased Maktoob.com, a local company that provides Arabic email and other online services. While the terms of the deal have not been disclosed, it represents one of the most high-profile IT success stories in the Arab world.

Within Jordan, the founders of Maktoob.com have become something of national heroes. Earlier this month, King Abdullah II awarded the company’s founders, Samih Toukan and Hussam Khoury, with the Hussein Medal for Distinguished Performance of the First Order. King Abdullah, who has long lobbied for Jordan to develop its tech sector, went on to praise the deal as a reflection of his country’s blossoming IT industry and said he hoped it would continue to grow.

Though Jordan is still a long way from becoming the Silicon Valley of the Middle East, it’s steadily on its way to becoming a central hub for Arab IT entrepreneurship. The country’s supportive and permissive government has helped make it an attractive place to do business. Also without oil or other natural resources, Jordanians have been forced more than their neighbors to develop intellectual industries.

There remain, however, many challenges to further developing the nation’s IT sector.

Arab investors tend to avoid the IT sector, preferring more stable options, such as real estate development. Additionally, with some of the most lucrative IT jobs outside Jordan, the country has to plug the brain drain.

Those in the IT sector are hoping the Maktoob.com deal will encourage investors to consider more seriously local technology companies as a sound investment opportunity.

Following his meeting with the King, Toukan went on Jordanian TV to emphasize the possibilities for Jordanian entrepreneurs. “The agreement signed with Yahoo! underlines Jordan’s ability to compete with global megacompanies operating in the sector,” he said.

Indeed, the IT sector has come to play an increasingly significant role in Jordan, comprising 12 percent of the country’s GDP. A national initiative started in 2007 has been working to double the size of the IT sector by 2011. Additionally, independent growth here is strong, with only the United Arab Emirates listing more startups than Jordan on StartupArabia, a website dedicated to tracking Arab technology companies.

When Ahmad Humeid and George Akra founded Ikbis, an Arabic photo and video sharing website three years ago, they were among the first Arab web 2.0 startups and a handful of Jordanian Internet companies. Back then, the local online entrepreneur community was small enough that everyone knew one another, but now it’s grown large enough that the Humeid and Akra say they have a hard time keeping track of all the new ventures.

“If you want to compare it to the rest of the Arab world, [Jordan] has definitely created a niche for itself in this field of basically being the country where there are a remarkable number of startups,” says Humeid, who also holds the distinction of having produced the first Arabic podcast.

Though Israel is still far ahead of its Arab neighbors, and the UAE offers more job opportunities than Jordan, Humeid says that the cost of starting a company in Amman is much lower than in Dubai, for example, where office space is much more expensive. Additionally, there is no government interference or Internet censorship in Jordan, compared with Arabian Gulf nations where governments block many websites.

Since taking the throne, Abdullah has also pushed hard for the country to become a leader in the IT sector. Among the most notable programs, the government has also sponsored iPark, a business incubator program that offers fledgling technology companies office space and logistical support, such as secretarial services, at a nominal fee. Since its launch in 2003, 20 companies have graduated from the program, and of those only two have failed.

Wissam Rabadi, director of iPark, says the companies have created more than 600 jobs at a cost to the government of only $1,400 per job. Among the most valuable aspects of the program though, is its role in helping to foster the culture of innovation in Jordan, Rabadi says.

Successful companies like Maktoob.com or graduates from iPark “have a passion for [technology companies] and they believe in this industry, that it could produce multiples of return. They will become the next generation of investors looking at this type of investment,” Rabadi says. Even outside the IT community, he adds that unlike the older generation, “The new generation is more techie. I think they will be more comfortable looking at these deals.”

In a darkly positive twist of fate, the global economic crisis may also help to strengthen Jordan’s IT sector. The small Arab nation has remained relatively unscathed by the financial meltdown and a number of citizens have returned from the Arabian Gulf after losing high paying jobs there. Those in the tech industry are hoping the returnees may stay on to develop their own businesses.

Additionally, the Princess Sumaya University for Technology, one of Jordan’s leading technical universities, is having a much easier time finding graduates local jobs. Just five years ago, Yahia Al-Halabi, the dean of PSUT, estimates that only a quarter of graduates could find technology jobs in Jordan. Today, nearly 60 percent are able to find work in their home country.

Despite the increasing availability of jobs in Jordan, Al-Halabi says Jordan is still lagging in terms of the salaries it can offer.

“We try to find them jobs here,” he says. “But there is a big difference between the salaries here and in the Gulf. If I was a graduate and somebody offered me four times my salary here, I would go.”

While Jordan is still a long way from creating anything like Silicon Valley, Humeid of Ikbis says that, “We are remotely part of that culture.” He and his colleagues signed their first major sponsorship deal with Nokia when their headquarters consisted of a table, some computers, and a few chairs in their friend’s office.

“We are the representation of that culture, in that you can start with a couple of computers in a garage or in a bedroom and with not much capital,” he says.

http://www.globalpost.com/dispatch/jordan/090923/jordan-tech-silicon-valley-yahoo%21