Transcript Slide 1

Israel’s Economy – Main
Characteristics
Export Oriented Growth
Rapid Development of Technology &
High-Tech Industries
Entrepreneurial Culture
Supportive Environment for Business
Investment & R&D Incentives
Contents:





Facts & Figures
Foreign Trade
Industry
Doing Business in Israel
Benefits & Investments
Facts
& Figures
Facts & Figures
Main Economic Indicators
Criteria
2001
2002
2003
2004
GDP (current prices in B$)
113.6
104.2
110.4
117.6
GDP Real Growth rate (%)
-0.9%
-0.7%
1.3%
4.3%
17.6
15.9
16.5
17.3
-3.2%
-2.7%
-0.5%
2.5%
Exports of Goods & Services (B$)
35.0
37.0
38.4
50.5
Imports of Goods & Services (B$)
42.7
45.6
44.3
57.7
Unemployment Rate (%)
9.3%
10.3%
10.7%
10.4%
Inflation Rate ( CPI, end of year)
1.4%
6.5%
-1.9%
1.2%
Current Account (% of GDP)
-1.7%
-1.5%
0.5%
0.4%
GDP per Capita (current prices, 000’$)
GDP per Capita Growth rate (%)
Source: Central Bureau of Statistics, Bank of Israel
Facts & Figures
Main Economic Indicators and Forecast
Criteria
2002
2003
2004
2005F
GDP (current prices in B$)
104.2
110.4
117.6
123.2
GDP Real Growth Rate (%)
-0.7%
1.3%
4.3%
5.1%
15.9
16.5
17.3
17.9
-2.7%
-0.5%
2.5%
3.2%
Exports of Goods & Services (B$)
37.0
38.4
50.5
53.8
Imports of Goods & Services (B$)
45.6
44.3
57.7
60.2
Unemployment Rate (%)
10.3%
10.7%
10.4%
9.1%
Inflation Rate ( CPI, end of year)
6.5%
-1.9%
1.2%
2.8%
GDP per Capita (current prices, 000’$)
GDP per Capita Growth Rate (%)
Source: Central Bureau of Statistics, Bank of Israel, Forecast: Ministry of Finance June 2005
Facts & Figures
GDP and GDP per Capita
(Annual % Change, in Constant Prices)
8.0
9.0
7.0
4.6
4.3
5.0
3.0
2.6
3.0
1.0
0.5
5.1
2.5
3.2
1.3
0.0
-1.0
-0.7
-0.7
-0.9
-3.0
-3.2
-2.8
-5.0
1998
1999
2000
GDP
Source: Central Bureau of Statistics *Estimation
2001
2002
GDP per Capita
2003
2004
2005*
Facts & Figures
Business Sector GDP Growth (Annual % Change)
12
10.2
10
8
6.1
6.4
6
4
1.7
-2.4
2
-2.6
0
-2
-4
2000
2001
2002
Source: Central Bureau of Statistics, Bank of Israel *Estimation
2003
2004
2005*
Facts & Figures
Major GDP Components
(Annual % Change, in Constant Prices)
23.1
25
20
14.9
15
10
5
7.7
6.2
5.7
2.2
1.7
6.5
5.7
3.5 4.3
2.73.4
1.3
1.1
0
0.3
-2.4
-5
-4.8
-2.0
-4.9
-1.7
-1.9
2003
2004
-7.0
-10
-11.2
-15
2000
2001
2002
Private Consumption
Investment in Fixed Assets
Source: Central Bureau of Statistics, Bank of Israe l *Estimation
2005*
Government Consumption
Exports of Goods and Services
Facts & Figures
Exports of Goods and Services
(B$)
50.5
45.6
42.4
39.9
38.3
14.5
11.8
31.1
2000
14.2
12.3
10.9
36.3
30.1
28.1
27.4
2001
2002
Goods
Source: Central Bureau of Statistics, Bank of Israel
Services
2003
2004
Facts & Figures
GDP Growth and Exports Growth
(Cumulative Rate of Growth by Period)
188%
200%
150%
120%
115%
100%
100%
63%
62%
50%
54%
54%
34%
30%
0%
1960-1969
1970-1979
GDP Growth
Source: Central Bureau of Statistics, Bank of Israel
1980-1989
1990-1999
Exports Growth
1994-2003
Facts & Figures
General Government Expenditure
56%
55%
55%
55%
(% of GDP)
55%
54%
54%
53%
53%
53%
53%
52%
52%
51%
51%
51%
50%
49%
48%
1995
1996
Source: Ministry of Finance, 2005
1997
1998
1999
2000
2001
2002
2003
2004
Facts & Figures
Gross Tax Burden
(% of GDP)
41%
40%
40%
40%
40%
40%
40%
39%
39%
39%
39%
39%
38%
38%
37%
1995
1996
Source: Ministry of Finance, 2005
1997
1998
1999
2000
2001
2002
2003
2004
Facts & Figures
Budget Deficit
(% of GDP)
7%
5.6%
6%
4.4%
5%
3.8%
3.8%
4%
3.0% *
2.6%
3%
2.2%
2.4%
2%
0.7%
1%
0%
1997
1998
1999
2000
2001
2002
Source: Ministry of Finance, 2005 *Forecast, Including the Disengagement Program Expenses
2003
2004
2005*
Facts & Figures
Current Account
(% of GDP)
0.5
1
-1.3
-1.7
0.5
-1.5
-1.7
0
-0.5
-1
-1.5
-2
Source: Bank of Israel
1999
2000
2001
2002
2003
2004
0.4
Facts & Figures
Net Foreign Debt
(% of GDP)
11.8%
9.9%
15%
3.2%
10%
0.5%
-1.8%
-5.1%
-9.8%
5%
0%
-5%
-10%
1998
Source: Bank of Israel
1999
2000
2001
2002
2003
2004
Facts & Figures
Foreign Direct Investment (B$)
High-Tech
Bubble Burst
6
5.1
High-Tech Boom
5
4.5*
3.9
3.6
4
3.1
3
1.8
1.7
1.6
2
1.6
1
0
1997
Source: Bank of Israel
1998
*Forecast
1999
2000
2001
2002
2003
2004
2005
Facts & Figures
Inflation Rate
(% Change in CPI, end of year)
8.6%
7.0%
6.5%
2.8%
1.4%
1.3%
1.2%
-1.9%
0.0%
1997
1998
1999
2000
Source: Economist Intelligence Unit , Bank of Israel
*Forecast
2001
2002
2003
2004
2005F*
Facts & Figures
Unemployment Rate by Quarters*
(% of Total Labor Force)
11
10.9
10.8
10.9
10.8
10.5
10.6
10.4
10.1
10.2
10
9.8
9.8
9.6
9.4
9.1
9.2
9
2003-Q3
Q4
2004-Q1
Q2
Source: Central Bureau of Statistics, Bank of Israel *Seasonally Adjusted Data
Q3
Q4
2005-Q2
Facts & Figures
New Employed Persons in 2004
(Change in Israeli Employed Persons, in Thousands)
73.8
33.8
28.5
21.8
15.1
12
-2.4
2001
2002
Business Sector
Source: Central Bureau of Statistics, Manufacturers’ Association of Israel
-3.2
2003
Public Sector
2004
Facts & Figures
Estimated Growth of Main GDP
Components 2005
Criteria
Central Bureau of Statistics*
Real GDP Growth
5.1%
Business GDP Growth
6.4%
Exports Growth
6.5%
Private Consumption Growth
3.5%
Government Consumption Growth
4.3%
Investment in Fixed Assets Growth
0.3%
*Published: September 2005
Facts & Figures
Central Bank Interest Rates-Israel vs. USA (%)
10
9
8
Bank of Israel Rate
7
6
5
4
3
Federal Reserve Rate
2
1
0
10
8
6
4
2
2005
12
11
10
9
8
7
6
5
4
3
2
2004
12
11
10
9
8
7
6
5
4
3
2
2003
12
11
10
9
8
7
6
5
4
3
2
2002
Source: Bank of Israel, Federal Reserve
Facts & Figures
Israel’s Credit Rating 1992-2005
A1/A+
6
A2/A
5
A3/A-
4
Baa1/BBB+ 3
Baa2/BBB 2
Moody's A2 Stable
S&P A- Stable
Fitch A- Stable
Baa3 /BBB- 1
0
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Source: Credit Rating Agencies
Facts & Figures
Growth Competitiveness Index, 2004
Israel Ranks 19 Out of 104 Countries (2003 Rank was 20)
1
7
11
13
15
19
21
27
23
37
46
41
47
48
60
66
o
ap
d
an
nl re
g
in
Fi
S
K
y
U
an
m
er
G
a
ad
an
C
el g
ra
n
Is Ko
g
on
H
in
pa
S e
c
an
Fr e
e c ca
re fri
G
A
th
ou
S
na
hi
C
ly
Ita o
ic
ex
M
d
an
ol
P y
e
rk
Tu
Source: World Economic Forum, GCI 2004
Facts & Figures
Business Competitiveness Index, 2004
Israel Ranks 21 Out of 103 Countries (2003 Rank was 20)
1
3
6
8
12
13
21
22
24
26
30
34
41
47
52
55
U
m
er
.A
.S
G
y
an
K
U
n
pa
Ja
ce
an
Fr
ia
al
tr
us
A
el
ra
Is
nd
la
Ire
ia
ea
or
K
n
ai
Sp
d
In
ly
Ita
e
ec
re
G
na
hi
C
ey
rk
Tu
o
ic
ex
M
Source: World Economic Forum, GCI 2004
Facts & Figures
Core Technology-Innovating Economies, 2003
Israel Ranks 4 Out of 103 Countries
1
USA
2
Japan
3
Taiwan
4
Israel
5
Switzerland
6
Sweden
7
Finland
8
Germany
9
Canada
Singapore
10
Source: The Global Competitiveness Report 2004-2005
Foreign Trade
Foreign trade
EXPORTS: The Engine of Israeli Growth
In 2004,
the Export Sector’s share
in the total GDP growth
was about 60%,
making it the main contributor
of GDP growth.
Foreign trade
Trade of Goods and Services (B$)
51 52
46 47
44
43
40
2000
44
38
2001
2002
Exports
Source: Central Bureau of Statistics, Bank of Israel
42
*Estimation
Imports
2003
2004
Foreign trade
Trade Deficit (B$ and % of Exports)
13.0%
9.0%
3.6
4.5%
4.2
2.2%
2.0
1.0
1.5
2.0%
0.6
2000
2001
2002
Trade Deficit
Source: Central Bureau of Statistics, Bank of Israel *Estimation
2003
2004
Trade Deficit as a % of Exports
1.1%
2005*
Foreign trade
Annual Trade* Growth
21.6%
20.5%
6.7%
4.3%
2.2%
1.3%
-0.9%
-7.1% -6.1%
-0.7%
-6.4% -6.5%
2001
2002
Exports
Source: Central Bureau of Statistics, Bank of Israel
2003
Imports
GDP
*Note: Trade of Goods (exc. Diamonds )
2004
Foreign trade
Exports as a % of GDP
45%
45%
43%
38%
40%
35%
36%
35%
31%
30%
25%
1995
2001
2002
2003
2004
2005F*
Source: Central Bureau of Statistics, Bank of Israel, Israel Export & International Cooperation Institute, Ministry of Finance *Forecast
Foreign trade
Exports of Goods by Commodity Group,
2004 (% of Total Exports of Goods)
The High-Tech Sector Accounts for 33% of Total Exports of Goods
Industrial
69%
Agricultural
3%
Rough Diamonds
9%
Source: Central Bureau of Statistics, Bank of Israel
Polished
Diamonds
19%
Foreign trade
The Growth of Industrial Exports (B$)
40
23.7
35
30
19.5
25
2
15.5
20
15
10
5
0
8.6
1.1
2.1
3
2.4
1.8
2.9
1.8
3.6
4.5
6.2
5.1
4
`
6.8
1993
High-Tech
1998
Medium High-Tech
Source: Central Bureau of Statistics, Bank of Israel
9
2003
Medium Low-Tech
11
2004
Low-Tech
Foreign trade
Exports of Goods by Region 2004
(exc. Diamonds)
Rest of the World
13%
EU
33%
Asia
16%
Central & South
America
4%
Rest of Europe
6%
USA
28%
Source: Central Bureau of Statistics, Bank of Israel
Foreign trade
Imports of Goods by Region 2004
(exc. Diamonds)
Rest of the World
14%
European Union
39.5%
Asia
17%
South & Central
America
2%
USA
17%
Source: Central Bureau of Statistics, Bank of Israel
Rest of Europe
10.5%
Foreign trade
Israel’s Main Trading Partners, 2004
(inc. Diamonds)
20.2
20
B$
15
10
7.0
4.5
4.0
5
3.5
3.1
2.7
2.4
2.2
2.1
2.1
0
a
ce
ia
an
Fr
d
In
n
hi
s
nd
g
on
la
er
K
Exports of Goods
C
ly
h
et
Ita
N
g
on
d
Source: Central Bureau of Statistics, Bank of Israel
H
K
n
la
er
itz
Sw
U
m
iu
y
an
m
g
el
SA
er
G
B
U
Imports of Goods
Foreign trade
Israel’s Main Trading Partners, 2004
(exc. Diamonds)
12.3
12
10
B$
8
6
4.4
4
2.8
2.7
2.4
2.1
2.0
2.0
1.8
1.7
1.7
2
1.3
1.2
1.1
0
U
SA
G
er
m
U
K
N
an
y
Ita
et
ly
he
rla
nd
s
C
hi
na
Ja
Fr
Tu
an
pa
rk
ce
ey
n
Imports of Goods
Source: Central Bureau of Statistics, Bank of Israel
Sw
itz
B
Sp
el
ai
gi
n
um
er
la
nd
Exports of Goods
S.
K
or
ea
Ta
iw
an
Foreign trade
Growth Rate of Commodity Exports by
Selected Countries, 2003-2004 (% of Change)
43
37
33
30
25 25
22 21
21 21 20
20 20
19 19 18 18
17 17 16 16
ly
Ita
S
U ico
ex
M
K rk
U a
m
en
D ium
g
el
B ce
an ny
Fr a
m
er
G nd ds
a n
el la
Ir er
h
et
N n
i
pa
S ld
or
W tria
us n
A de
e
w lia
S tra
us
A ay
w
or
N el
ra
Is il
z
ra
B a
di
In ia
s
us
R ey
rk
Tu
Source: Global Trade Information Service (GTIS)
Foreign trade
Real Growth in Exports of Goods
and Services - International Comparison
(Annual Average for 1999-2003)
9
8.3
8
8
7.1
7
5.8
6
4.8
4.5
5
4.5
3.6
4
3.6
2.9
3
1.9
1.4
2
1
0
SA
ay
um
gi
el
w
or
U
N
B
al
ug
rt
Po
ce
an
Fr
e
ec
re
y
an
k
ar
n
pa
Ja
G
el
ra
Is
m
er
m
en
G
D
d
ey
rk
Tu
n
la
Ire
Source: OECD - Organisation for Economic Co-operation and Development
Foreign trade
Medium High-Tech Export Development
6.2
5.1
0.5
0.5
1.4
1.1
4.3
3.5
2003
Chemicals (exc. Pharmaceutical)
Source: Central Bureau of Statistics, Bank of Israel
2004
Machinery & Equip.
Transport & Electrical Equip.
(B$)
Foreign trade
Medium Low-Tech Export Development (B$)
4.5
3.6
0.8
0.5
0.5
0.5
0.7
0.5
1
0.8
Rubber & Plastics
1.3
1.5
2003
2004
Metal Products
Source: Central Bureau of Statistics, Bank of Israel
Mining & Quarrying
Jewellery Goldsmith
Other
Foreign trade
Low-Tech Export Development
(B$)
2.0
1.8
0.6
0.5
1.1
1.0
0.3
0.3
2003
Food products
Source: Central Bureau of Statistics, Bank of Israel
2004
Textiles products
Paper products
Industry
Industry
Selected Indicators in Industry, 2001-2004
(Real Annual Change, Yearly Average)
17.6%
8.0%
7.0%
1.1%
-2.4%
-2.4%
-3.1%
-9.8%
Industrial Output
Employees
Industrial Export
2001- 2003
Source: Central Bureau of Statistics, Manufacturers’ Association of Israel
2004
Investments
Industry
Industrial Production and Exports
(Real Cumulative Rates of Change)
109.6%
110%
100%
92.5%
83.3%
90%
78.8%
80%
73.2%
70%
60%
46.4%
50%
36.7%
40%
30%
22.4%
22.2%
23.0%
17.0%
20%
7.5%
10%
7.2%
10.3%
11.9%
1997
1998
1999
14.8%
14.4%
2002
2003
5.4%
0%
1996
Industrial Exports
Source: Central Bureau of Statistics, Bank of Israel
2000
2001
Industrial Production
2004
Industry
Labor Productivity in Industry, 2000-2004
(Real Annual Change)
7.7%
6.0%
2.5%
1.3%
0.0%
2000
2001
2002
Source: Central Bureau of Statistics, Manufacturers’ Association of Israel
2003
2004
Industry
A High-Tech Oriented Industry The Israeli Industry is Undergoing Long Term Structural Changes
(Industrial Output Distribution 1994, 2004)
100%
90%
31%
23%
80%
70%
60%
43%
50%
43%
40%
30%
20%
34%
26%
10%
0%
1994
High-Tech
Source: Central Bureau of Statistics, Manufacturers’ Association of Israel
2004
Mixed-Tech
Low-Tech
Industry
The High-Tech Sectors led Industrial Growth
2004 (Real Annual Change)
15.1%
Average 7%
3.4%
2.2%
0.2%
High-Tech
Mixed High-Tech
Source: Central Bureau of Statistics, Manufacturers’ Association of Israel
Mixed Low-Tech
Low-Tech
Industry
The High-Tech Sectors Recruited the Largest
Number of Persons in Industry in 2004
(Real Annual Change)
4.5%
Average 1.1%
0.7%
0.0%
-2.1%
High-Tech
Mixed High-Tech
Source: Central Bureau of Statistics, Manufacturers’ Association of Israel
Mixed Low-Tech
Low-Tech
Industry
Israel’s Major High-Tech Exports 2004
Total High-Tech Export (Including Software): 14 B$
Software
21%
Office and
Computing
Equipment
7%
Electronical
Components
12%
Aircraft
9%
Pharmaceutical
Products
11%
Equipment for
Control and
Supervision
20%
Source: Israel Export & International Cooperation Institute, Israel Association of Software Houses
Electronic
Communication
Equipment
20%
Industry
Israeli High-Tech Exports by Geographic
Breakdown 2004
South and
Centeral America
6%
Oceania
1%
Other
7%
EU
24%
Other European
Countries
1%
North America
35%
Source: Israel Export & International Cooperation Institute, Central Bureau of Statistics
Asia
26%
Industry
Expenditure on Civilian R&D in Israel &
in Selected OECD Countries (% of GDP, 2002)
4.5
5
4.1
4
3.4
2.8
2.8
3
2.6 2.5
2.3
2
1.8
1.7
2
1.2
1
0
Ita
ly
n
la
K
d
la
er
ce
h
et
Ir e
U
N
an
Fr
d
s
nd
SA
U
y
an
m
er
G
n
la
er
ea
or
itz
Sw
K
n
pa
Ja
d
an
nl
Fi
en
l
ae
ed
Sw
r
Is
Source: Central Bureau of Statistics, Bank of Israel
1.1
Industry
Qualified Engineers Index
5.6
5.9
6.0
6.6
6.9
6.9
7.0
ss
Ru
8
7
6
6.7
an
iw
Ta
10
9
7.3
7.5
7.9
7.7
7.6
8.0
8.1
8.5
8.6
8.9
4.1
5
4
3
2
1
0
en
ed
a
di
In
d
an
nl
Fi
el
ra
Is
da
na
Ca
ce
an
Fr
nd
la
er
itz
Sw
Sw
l ia
ra
nd
la
st
Au
I re
A
US
ia
y
an
n
ai
m
er
n
pa
Sp
G
Ja
a
ly
s
I ta
nd
la
er
th
Ne
re
Ko
UK
Source: Institute for Management Development World Competitiveness Yearbook- 2004/5
Industry
Technology Index, 2004
Israel Ranks 8 Out of 104 Countries
US
A
iw
a
Fin n
la
S w nd
ed
en
Ja
De pan
Sw nma
r
itz
erl k
an
d
Isr
ae
Ko l
r
No ea
Sin r way
ga
p
Ge ore
rm
an
y
Ca
na
da
Ta
6.2
6.0
5.9
5.8
5.7
5.3
5.3
5.3
5.2
5.2
5.1
5.1
5.1
4.0
Source: World Economic Forum, GCI 2004
4.5
5.0
5.5
6.0
6.5
Industry
Israel’s ICT* and Business Sectors
Product 2004 (Annual Growth Rate %)
37
40
30
21
20
10
10
10
6
4
2
2
3
0
-2
-3
-7
-10
-13
-20
1998
1999
2000
2001
Business
2002
2003
ICT
Source: Central Bureau of Statistics, Bank of Israel *ICT: Information & Communication Technologies
2004
9
Industry
Software and Electronic Industries
(Israel & the World Growth Rates 1994-2004)
34
35
30
25
20
15
13 12 13
16
15
13
10
11
11
10
7
9
7
7
5
9
1
1
0
-5
-5
-10
-6
-5
-9
-12
-15
20
20
20
04
03
02
01
00
World
20
20
99
98
97
96
95
94
Source: Israel Association of Electronics and Information Industries
19
19
19
19
19
19
Israel
Industry
Israel’s Software Exports (B$)
3.2
3.0
2.7
2.6
2.7
2000
2001
2.6
2.7
2.0
2.2
1.5
1.7
1.0
1.2
0.6
0.7
0.3
0.2
-0.3
1995
1996
1997
1998
Source: Israel Association of Electronics and Information Industries
1999
2002
2003
2004
Industry
Israel: A Major Player in the Global
Biotechnology Industry
Sales from the Biotech sector generated
1.8 -2.3 US B$ in 2004.
Israel's share in global Biotechnology
sales is about 2.5%.
There are 23 Technological
Incubators in Israel,
more than 20% of them
are Involved in Biotechnology projects.
Source: Israel's Ministry of Science
Industry
Biotechnology
149
150
135
2000
1800
130
1800
1600
110
100
90
1200
63
70
25
600
30
209
10
-10
1000
800
50
30
1400
87
15
1988
250
600
400
336
200
50
0
1990
1993
1995
Anuall Sales (M$)
1997
1999
No. of Companies
2003
Industry
Start-Ups – The Emerging Economic Force
Israel Enjoys
the Highest Concentration
of High-Tech Companies
Outside of the Silicon Valley
Robert Greifeld President & CEO NASDAQ 2004
Industry
Investments in High-Tech Companies 2004
Year
Total in
$B
1999
1.1
2000
3.2
2001
2.0
2002
1.1
2003
1.0
2004
1.5
Source: IVC - Israel Venture Capital
Others
13%
Internet
4%
Communications
29%
Semiconductors
10%
Life Sciences
22%
Software
22%
Industry
Capital Raised by Israeli VC Funds
4000
(M$)
3711
3500
3000
2500
2000
1548
1323
1500
1000
580
500
1500
92
154
123
135
724
608
299
14
0
-174
-500
*
05
20
04
20
03
20
02
20
01
20
00
20
99
19
98
19
97
19
96
19
95
19
94
19
93
19
92
19
Source: IVC - Israel Venture Capital *Forecast
Industry
VC Investments in Israel & Europe (M$)
1569
1600
1600
1400
1200
950
1000
811
800
599
600
320
400
200
790
761
131
851
644
457
315
255
135
62
0
l
ae
K
r
Is
U
s
nd
y
an
m
ce
en
la
er
Source: PWC - Price Waterhouse Cooper, May 2003
2002
er
G
ly
an
Fr
Ita
h
et
n
ed
Sw
N
ai
Sp
2001
Industry
High - Tech
Capital Raised by Israeli High-Tech Companies by Sectors (%)
100
14
16
20
18
19
22
37
33
29
15
18
22
4
4
12
11
10
14
15
13
2002
2003
2004
80
29
40
42
60
13
8
40
16
33
30
20
2
9
0
1999
Other
9
4
3
4
9
2000
2001
Semiconductors
Source: IVC - Israel Venture Capital
Internet
Life Sciences
4
Communications
Software
Industry
Israel’s Life Sciences Industry –
Sectors 2004
AGbiotech
4%
Medical IT
3%
Service
1%
Other
4%
Pharmaceuticals
13%
Biotechnology
21%
Medical Devices
54%
Source: Israel Life Sciences Industry 2004
Industry
Israel’s Biotech Companies –
Subsectors 2004
Immunology
9%
Biomaterials
9%
Cell& Tissue
Therapy
14%
Research Tools
3%
Research
Equipment
6%
Diagnostic Kits
11%
Other
4%
Industrial
8%
Source: Israel Life Sciences Industry 2004
Genetics
15%
Drug Discovery
21%
Doing
Business
In Israel
Doing Business In Israel
Foreign Investment in Israel
At the crossroads of three continents –
Europe, Africa and Asia –
Israel enjoys an excellent reputation
as a technologically advanced economy,
which has made it a prime destination
for investment by multinational
corporations
Source: World Economist Forum 2004/5
Finla
nd (1
)
USA
(2)
Swe
d en(
Ger m 3 )
any(
4)
Sing
ap or
e( 5)
Taiw
a n(6
Swit
)
zer la
nd( 7
)
Japa
n (8)
UK(9
Ne th
)
erlan
d s(
De nm 10)
ark(1
1)
Isra e
l(1
Ca na 2 )
da (1
3)
Aust
ria (1
4)
Belg
ium(
1 6)
Irela
n d(2
1)
Ch in
a (22
)
Kore
a ( 24
Ne w
)
Zeal
and (
26 )
Thai
lan d
(31)
India
(34 )
Doing Business In Israel
Cooperation Between the Academy and
Industry (1= minimal or nonexistent , 7= intensive and ongoing)
6
5.8
5.4 5.3
5.2
5
4
5.1 5.1 5.0 5.0 5.0
4.9 4.9
4.8 4.7
4.6 4.5
4.2 4.2 4.2
4.0
3.7 3.6
3
2
1
0
Doing Business In Israel
Over 20 Israeli Companies are Traded
on the London Stock Exchange
Israel is ranked 2nd after Canada
in the number of foreign companies
traded on the American
Technology Stock Exchange.
Israel is second in the world
in the number of companies
of a foreign nation traded on Wall Street.
Source: http://www.maarivintl.com/
Doing Business In Israel
Number of Companies Traded
on NASDAQ – Selected Countries
80
73
68
70
60
50
40
30
23
20
19
17
13
10
12
11
10
10
8
8
7
5
4
4
0
ea
or
K
th
g
ou
ur
S
bo
m
a
xe
ic
Lu
fr
A
th
ou re
S
po
ga
s
in
nd
S
la
d
Is
an
in
el
irg
Ir
V
h
tis
ri
B
ce
an
Fr
ia
al
tr
g
us
A
on
K
g
s
on nd
H
a
rl
he
et
N
n
pa
Ja
a
s
ud nd
m
la
er
Is
B
an
m
ay
C
K
U
el
ra
Is
a
ad
an
C
Compiled from NASDAQ data
Doing Business In Israel
Recent M&A
Israeli
Company
Technology
Acquirer
Sum
Time
Terayon
Communication
Systems Inc.
Communications
Aris
$345M
09/2005
Scitex Vision
Ltd.
Printing
HP
$230M
08/2005
Sheer Networks
Ltd
Communications
Cisco
$122M
07/2005
Siliquent
Technologies
Inc.
Communications
Broadcom
$84M
07/2005
Life Sciences
West
Pharmaceutica
l Services Inc.
$42M
07/2005
Life Sciences
McKesson
Corp. Life
Sciences
$105M
06/2005
Internet
eBay
$620M
06/2005
Medimop
Medical Projects
Ltd.
Medcon
Telemedicine
Technology Ltd.
Shopping.com
Doing Business In Israel
Recent M&A (cont.)
Israeli
Company
Technology
Acquirer
Sum
Time
Impulse
Dynamics
Healthcare
Johnson &
Johnson
80M$
05/2005
Siliquent
Semiconductors
Fabless
Broadcom
~85M$
05/2005
Tecnomatix
Software
UGS Corp
228M$
04/2005
Kagoor
Voiceover Internet
Juniper
Networks
68M$
03/2005
Savient
Biopharmaceutical
Ferring
Holding SA
80M$
03/2005
OREX
Radiography
Medical
Equipment
Kodak
51M$
03/2005
Native Networks
Communication
Alcatel
~50M$
03/2005
Oplus
Technologies
Processors for
Digital Display
Devices
Intel
100M$
03/2005
Modem-Art
Semiconductors
Fabless
Agere
Systems
150M$
02/2005
Doing Business In Israel
E-Readiness Score, 2004
8.7
USA
Sweden
8.6
Switzerland
8.6
Hong Kong
8.3
Finland
8.3
8.2
Singapore
8.0
Germany
8.0
Canada
7.5
Israel
7.4
Japan
7.1
Taiwan
7.1
Spain
Italy
Source: World Economic Forum, GCI 2004
7.0
Doing Business In Israel
Foreign Companies Invested in Israel
(Examples)
US
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Microsoft
Pratt & Whitney
AOL Time Warner
Intel
IBM
Boeing Enterprises
Cisco Systems
GE
Lucent
3Com
Hewlett Packard
Merrill Lynch
Motorola
Sun Microsystems
Europe
•
•
•
•
•
•
•
•
•
•
•
•
Siemens
DaimlerChrysler
Volvo
Cable & Wireless
Baan
Volkswagen
Deutsche Telecom
L’Oreal
British Telecom
Danone
Ares Sereno
Unilever
Asia
•
•
•
•
•
•
•
•
•
•
•
•
Samsung Electronics
Daewoo
Nomura
Hutchison Telecomm.
LG Group
Sony
Toyo Ink
Hyundai
Acer Computers
Sumitomo Trading
Fuji
Honda
Doing Business In Israel
IMD World Report 2004
(Examples)
Country Rank
1st
2nd
3rd
4th
Total Expenditure on R&D as
Percentage of GDP
ISRAEL
SWEDEN
FINLAND
ILE-DE
FRANCE
Number of Mobile Telephone
Subscribers per 1000 Inhabitants
ISRAEL
LUXEMBURG
HONG KONG
ITALY
Total Public Expenditure on
Education as Percentage of GDP
DENMARK
ISRAEL
CANADA
MALAYSIA
University Education Meets the
Needs Economy
FINLAND
ISRAEL
SINGAPORE
SWITZERLAND
Consumer Price Inflation –
Average Annual Rate
HONG
KONG
ISRAEL
TAIWAN
JAPAN
Source:Institute for management development World Competitiveness Yearbook- 2004
Doing Business In Israel
Entrepreneurship Index
6.3
6.4
6.6
7.0
7.3
7.6
7.9
5.9
4.9
4.9
5.0
5.3
5.4
4.2
UK
Ja
pa
n
Ta
Me
G
Fr
Si
Ko
Ire
Au
Ca
US
ng
an
iw
lan
r
s
n
xic erm
A
e
ad
tra
an
ce
ap
a
an
d
o
a
l
or
ia
y
e
Source: IMD - Institute for Management Development, World Competitiveness Yearbook- 2004/5
Isr
ae
l
HK
Doing Business In Israel
Technology Leadership
“
Thanks to quality education,
Israel is one of the most
advanced countries in the world.
… Israel is advancing in high-tech
even more than
other developed countries
”
Bill Gates, CEO Microsoft, World Economic Forum, Davos, January 2000
Doing Business In Israel
Technology Leadership (cont.)
“
Israel’s market is relatively large
and sophisticated, it boasts the world’s
greatest per capita number of engineers,
scientists and doctors.
The Israeli economy is simply a reflection
of the country’s greatest natural resource which is the brainpower and ingenuity
of its citizens
Mike Zafirovski ,COO,Motorola 2003
”
Benefits
and
Investments
Benefits and Investments
Main Economic Structural Reforms
Launched and Planned by the Government
Public sector reduction
Deep reform of the tax system- in process
Government expenditures reduction
Privatization policy: energy, transport
and communication sector
Next Stage:
Further steps to reduce the public sector
Structural reform of the capital market
Structural reform of the education system
Further steps in the privatization policy
Benefits and Investments
Government R&D Incentives
The Law for the Encouragement of Industrial R&D
supports R&D projects of Israeli Companies
by offering conditional grants
from 20%-50% of the approved
R&D proposal
Israel is a participant in the Sixth
Framework Program for R&D
of the European Union, the only
non-European Associated State,
fully participating in the program.
Source: Ministry of Industry Trade and Labor
Benefits and Investments
Government R&D Incentives (cont.)
The Global Enterprise R&D Cooperation
Framework encourages cooperation
in industrial R&D between Israel
and multi-national companies (MNCs).
Source: Ministry of Industry Trade and Labor
Benefits and Investments
Benefits for Foreign Investors
To qualify for these programs
the company must be
internationally competitive
The Law for the Encouragement
of Capital Investments offers
investors both investment
grants and tax benefits
Benefits and Investments
Benefits for Foreign Investors (cont.)
Grants program- Investment Grants of 24%
of the approved program in Priority Area A
and 10% in Priority Area B + corporate tax
benefits for foreign investors
at a rate of 10%.
Automatic Tax Benefits Programs –
offering foreign investors a complete
tax exemption when investing
in Priority area A for a 10 year period
or alternatively a 10% corporate tax rate
when not located in a Priority area.
Benefits and Investments
Benefits for Foreign Investors –
Investment Grants (%)
(Grants as a percentage of investments in fixed assets included in the Approved Enterprise Plan)
Priority Area
“A”
Priority Area
“B”
24%
10%
20%
10%
Investment in Hotels
24%
10%
Other Tourist Enterprises
15%
---
Industrial Projects
(Up to 140 Million NIS)
Industrial Projects
(Above 140 Million NIS)
Source: Investment Promotion Center
Benefits and Investments
Investment in Technologies (M$)
New Jersey
502
Georgia
551
584
New York
636
Washington
Israel
832
Texas
861
1,804
Massachusetts
7,170
California
1
10
100
1,000
10,000
According to foreign investors, the Silicone Valley, Boston, Texas and Israel are the
main centers to search for new high technology investments Q1-Q3 2004
Source: Earnest and Young, October 2004
Benefits and Investments
Israel’s Free Trade Agreements
USA (1985)
EFTA (1992)
Turkey (1997)
Mexico (1999)
Jordan (1995): Bilateral Trade Agreement
Canada (1997)
European Union – Association Agreement 2000
Romania (2000)
Bulgaria (2002)
Benefits and Investments
Avoidance of Double Taxation Agreements
Belarus
Hungary
Slovakia
Belgium
India
South Africa
Brazil
Jamaica
South Korea
Bulgaria
Japan
Spain
Canada
Luxembourg
Sweden
China
Mexico
Thailand
Czech republic
Norway
The Netherlands
Denmark
Philippines
Turkey
Finland
Poland
USA
France
Romania
Germany
Russia
Greece
Singapore
Benefits and Investments
Cooperation in Industrial R&D
Agreements
Austria
USA
UK
Finland
Spain
Netherlands
Canada
Hong Kong
Sweden
China
Belgium
Portugal
France
Ireland
Singapore
Germany
Korea
Italy
India
Benefits and Investments
Protection of Investment Agreements
Albania
El-Salvador
Argentina
Estonia
Armenia
Georgia
Belarus
Germany
Bulgaria
Hungary
Croatia
India
Cyprus
Czech Republic
Kazakhstan
Korea
Benefits and Investments
Protection of Investment Agreements
Latvia
Turkmenistan
Lithuania
Ukraine
Moldova
Uruguay
Poland
Uzbekistan
Romania
Slovakia
QIZ Agreement
Slovenia
Egypt
Thailand
Jordan
Turkey
Benefits and Investments
International Organization* Membership:
BIS | BSEC (observer) | CE (observer)
CERN (observer) | EBRD | FAO | IADB | IAEA
IBRD | ICAO | ICC | ICCt (signatory) | ICFTU
IDA | IFAD | IFC | IFRCS (observer) | ILO | IMF
IMO | Interpol | IOC | IOM | ISO | ITU | OAS (observer)
OPCW (signatory) | OSCE (partner) | PCA | UN
UNCTAD | UNECE | UNEP | UNESCO | UNHCR
UNIDO | UPU | WB | WCO | WFP | WHO | WIPO | WMO
WToO | WTrO | WTO
* Economic Organizations
Business Contacts – Links
Business Contacts With Israeli Exporters
List of Israeli Trading Companies
Israeli Government Portal
Technology Directory
For Further Information Please Contact:
The Israel Export & International Cooperation Institute
Efrat Cohen
Adrian Filut
Economist
Economist
Tel: +972-3-5142820/961
Fax: +972-3-5142852
Tel: +972-3-5142994
Fax: +972-3-5142852
E-mail: [email protected]
www.export.gov.il
E-mail: [email protected]
www.export.gov.il
Editing: Alona Ron-Snir, Director Economic Department, IEICI
Production: Hani Erez, Executive Media & Productions Unit, IEICI
Published by: The Israel Export & International Cooperation Institute, 2005