Pre OECD

Investment Climate in Israel 2002: 

Investment Climate in Israel 2002 Amir Hayek Director General State of Israel. Ministry of Industry and Trade Presentation for OECD Paris, April 10, 2002

Presentation: 

Presentation Facts & Figures Reasons for Success Israeli Hi-tech – A Case Study Prospects for the Future

Net Foreign Inward Investment ($ Billion): 

Net Foreign Inward Investment ($ Billion)

Net Foreign Outward Investment ($ Billion): 

Net Foreign Outward Investment ($ Billion)

Going Global: 

Going Global International Investors – Some examples:

American Companies Invested in Israel- Some Examples: 

American Companies Invested in Israel- Some Examples Microsoft Pratt & Whitney AOL Time Warner Intel IBM Boeing Enterprises Cisco Systems GE Lucent 3Com Hewlett Packard Merrill Lynch Motorola Sun Microsystems

European Companies Invested in Israel - Some Examples: 

European Companies Invested in Israel - Some Examples Siemens DaimlerChrysler Volvo Cable & Wireless Baan Volkswagen Deutsche Telekom L’Oreal British Telecom Danone Ares Sereno Unilever

Asian Companies Invested in Israel - Some Examples: 

Asian Companies Invested in Israel - Some Examples Samsung Electronics Daewoo Nomura Hutchison Telecomm. Nissho Iwai LG Group Sony Toyo Ink Hyundai Acer Computers Sumitomo Trading Fuji Honda

Venture Capital in Israel: 

Venture Capital in Israel VC’s invested $3 Billion in 2000 VC invested alone = all of Europe #4 worldwide for High Tech Deals Startups raised over $1 Billion in first 6 months of 2000

Investments by Venture Capital Funds ($M) : 

Investments by Venture Capital Funds ($M)

Venture Capital by Industry ($M): 

Venture Capital by Industry ($M)

High-tech Capital Raised 1995-2001: 

High-tech Capital Raised 1995-2001

II. Reasons for success:: 

II. Reasons for success:

High Annual Growth Rate (GDP): 

High Annual Growth Rate (GDP)

Slide15: 

2. Highly Skilled Workforce Engineers per 10,000 Employees

3. Deregulation and Privatization: 

3. Deregulation and Privatization The privatization process began in 1986 and was accelerated in 1997. 2002: There are currently 7 companies in the process of privatization, including Bezeq and El Al. From 1986- 2000 $8.6 billion was raised through privatization. During this time around 80 companies have ceased to be state owned.

4. Monetary StabilityAnnual percentage change in CPI : 

4. Monetary Stability Annual percentage change in CPI

5. Government support: 

5. Government support Regional Development – Investment Center Industrial R&D – Office of Chief Scientist Grants Technological Incubators Magnet Investment Promotion Center – first stop for Foreign Investors

Investment Center Approvals as % of GDP (1996-2000): 

Investment Center Approvals as % of GDP (1996-2000)

Other:: 

Other: International Investors’ interest in Emerging Markets and Hi-Tech Sector Liberal Foreign Trade Regime Foreign Currency Liberalization Favorable Geo-political Climate

Jaffa Oranges vs Software: 

Jaffa Oranges vs Software

III. Hi-tech sector- a case study: 

III. Hi-tech sector- a case study

From every point of view, Israel is technology:: 

From every point of view, Israel is technology: 36% of Israelis surf regularly on the Internet vs global average of 7% Over 70% are cell-phone users –2nd highest usage in world 54% of all households have PCs outranking US and UK

Hi-Tech as a Percentage of GDP: 

Hi-Tech as a Percentage of GDP

Slide25: 

Change in composition of Non-Diamond Industrial Exports 1980 vs 2000

Formula For Success:: 

Formula For Success: Investment Ideas Innovation Ingenuity

#2 – Investment in Civilian R&D as % of GDP: 

#2 – Investment in Civilian R&D as % of GDP

Slide28: 

High Tech Education Investment in Education as a % of GDP (1995)

IV. Prospects for the Future: 

IV. Prospects for the Future

2001: 

2001 2001 economic indicators were affected by: Slowdown in US Economy starting with High Tech crisis Worldwide downturn Deterioration of the security situation

World Economic Downturn: 

World Economic Downturn The Israeli economy was in a mature, strong and stable position when the global recession hit. As a result, the economy was able to absorb the shocks occurring abroad with minimal effect on the local economy. After a record breaking year in 2000, during 2001 economic indicators dipped, but remained well above 1999 levels.

2001: Some Growth Areas Continued: 

2001: Some Growth Areas Continued Despite the global tech downturn, during 2001, exports grew by: Software +16% Pharmaceuticals +37% Security Products +19%

2000 – A Record Year: 

2000 – A Record Year Industrial exports were up 24.4%. Foreign currency reserves reached an all time high of $22.93 billion. TASE: 6th best performing market in the world (Merrill Lynch Report, 28.12.00) Electronics exports were up 150% over 1999. The Israeli Shekel was one of the strongest currencies in the world during 2000.

2000 vs 2001: 

2000 vs 2001 So, 2001 economic indicators appear low when compared to the unusual example of 2000. When viewed in relation to previous years, 2001 figures point to modest gains.

IMF Report, 2002: 

IMF Report, 2002 “The Israeli economy has withstood major exogenous shocks remarkably well so far. Once global demand begins to recover, there is a good chance that the economy will return to its high potential growth path relatively quickly.” IMF: Israel Interim Staff Visit, Concluding Statement (Preliminary)—February 26, 2002, Section 12.

Recovery: 

Recovery “When the US economy stages a recovery, the flexibility and structural characteristics of the Israeli economy means that it will be well-placed to stage a quick recovery of its own.” International ratings agency, Fitch- report on Israel, Feb 10, 2002.

Improved Outlook: 

Improved Outlook The State of the Economy Index rose 0.4% in February 2002. Industrial exports increased by 4%, and high tech exports by 13.5% in January-February 2002. The number of job seekers dropped in February 2002, after rising steadily from January 2001 through January 2002.

OECD NATIONAL CONTACT POINT: 

OECD NATIONAL CONTACT POINT Established at Ministry of Industry and Trade (web site: www.moit.gov.il/ncp) Intra-ministerial Advisory Committee to NCP Guidelines translated to Hebrew and Arabic Ongoing dialogue with civil society