| COUNTRY PERSPECTIVES
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The country has many comparative advantages in a wide range of activities, in particular the high technology sector, aeronautics, civil and military electronics, electronic components, nanotechnologies, telecommunications, data processing, safety, biotechnology, medical instrumentation etc. |
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Business opportunities & territorial marketing |
The country has many comparative advantages in a wide range of activities, in particular the high technology sector, aeronautics, civil and military electronics, electronic components, nanotechnologies, telecommunications, data processing, safety, biotechnology, medical instrumentation etc. and absolute comparative advantages in certain growth industries like security on the internet (for example encryption of online data), production of optical tools for military use, innovative administration techniques for certain drugs, etc.
The Israeli market also offers opportunities in agriculture and agrofood, environmental technologies and transport. The country is committed to a long-term programme for modernisation of its road infrastructure, production and distribution of power stations, water treatment units, and telecommunications networks.
In addition, the government intends to broaden its privatisation programme in 2005-2006, reforms relating mainly to: privatisation of Bazan (oil refineries located at Ashdod and Haifa); privatisation of the Leumi Bank (9.99 percent of State holdings having been yielded in 2006 to the US funds Cerberus Capital Management LP and Gabriel Capital Management for NIS 2.474 billion); merging of certain components of Israel Military Industries IMI with Rafael (the Armament Development Authority Ltd.) while carrying out the second stage of the privatisation plan; completion of reforms in the electricity sector; implementation of reforms in the real estate sector, including the processes of planning and construction; creation of a water control authority as well as distribution companies.
The move to mergers and acquisitions continues to generate major inflows of FDI, as testified by the purchase by Warren Buffet of 80 percent of the Israeli company Iscar for US$ 4 billion at the beginning of 2006, one of the most important foreign investments ever made in Israel after Intel.
Israel has a longstanding tradition in the diamond industry and it is the world leader in polished diamonds with more than 1200 companies installed in Ramat Gan producing two thirds of the world’s highest quality diamonds and the largest diamond exchange. Investment incentives are also available in this sector. |
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Electronics and ICT sector |
Development of Israel’s high-tech sector is an impressive success story. The excellence of its data-processing industry, information technologies, and telecommunications is a major asset for the country today and it continues to present high potential. Israel’s advanced national telecommunications infrastructure – a 100 percent digital network – has propelled Israel forward as a leading global telecommunications supplier. Producing cutting-edge, innovative technologies, Israeli communications companies continue to attract top-tier institutional investors. Dozens of telecommunication multinationals have established themselves in Israel, including Motorola, Siemens, Qualcomm and Alcatel, all benefiting from Israel's highly skilled workforce and increasingly developed market.
Israel is active in many key areas, such as wireless technologies (Wi-Fi and Wi-Max networks), satellite systems, broadband & optical technology, internet security (Firewalls by Check Point), microchips (Intel)… Israel also distinguishes itself in medical imaging and devices, electro-optics, cellular tissues, aeronautics and nanotechnology. Niches and technologies for the future that are very promising for Israel include the pills camera, instant data transmission via internet and USB keys. |
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Life sciences |
The life sciences sector has experienced considerable development in Israel thanks to a favourable economic, technological, and academic environment. Indeed, Israel has one of the highest investment rates in the world in civil research and development, estimated at 2.9 percent of GNP in 2004 according to OECD. Two academic institutes, five universities, and the many local research institutions receive funding from this funding. The sector covers mainly medical instrumentation, pharmacology, and biotechnologies, which include in particular therapeutics, diagnosis, bio-data processing, and agro-technologies. There are 700 companies employing 2000 people. Exports brought in US$ 3.3 billion in 2005 mainly to the US (63 percent), Europe (27 percent) and the Middle East and Asia. |
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Energy |
Energy consumption, particularly electricity, is growing fast. Due to its limited energy resources, Israel imports virtually all its oil needs (US$ 6.8 billion in 2005 and US$ 4.5 billion in 2004) from Egypt, Mexico, West Africa, the North Sea, and more recently from Russia. Oil exploration in Israel has not been successful, but the Israeli Oil Commission estimates that Israeli’s underground is likely to contain 5 billion barrels. Israel Oil Refineries (IOR) runs the two existing refinery facilities in Haifa and Ashdod.
The government decided at the beginning of 2000 to tap natural gas to produce electricity. In 2003, the State created the Natural Gas Authority (NGA) and the transport company Israel National Gas Lines (INGL) under the Ministry of Infrastructure to elaborate a plan of national interest, with natural gas accounting for 60 percent of overall production of electricity in the long term. |
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Transport |
The Ministry of Transport (MoT) has launched a national master plan for interurban and suburban transport infrastructure. Airport infrastructure projects involve building of a new terminal for private and business flights at the Ben Gourion International Airport. The terminal operator would work under a franchise, with no ties to service providers on the ground, paying royalties to the Israel Airports Authority (IAA). Cost is estimated at NIS 4.3 million. Other projects include the transformation of Haifa Airport into an international airport (at a cost of NIS 2 million) and construction of the new Timna Airport near Eilat. The BOT tender should be published in 2006 for start up in 2010. |
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Chemical industries |
Thanks to minerals occurring naturally in the Dead Sea (the greatest source of bromine), Israel is one of the leading chemical producers in the world and chemicals are a primary export, growing at a rate of 24.5 percent in 2004, worth US$ US 6.43 billion (including fuel). The sector is evolving toward new products such as biotechnology drugs, products and manure. Nearly 40 percent are intended for Europe and 30 percent for the US. |
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Agriculture and environmental technologies |
Agriculture accounts for 2.4 percent of Israel’s GDP. Its importance is declining largely because of ongoing negative growth. Thus, while GDP has grown by 3.2 percent since 1986, agricultural production decreased by almost 10 percent, employing 50,000 people. However, it continues to play an important role in certain poor areas of Israel like the Jordan Valley or Arava. |
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Water |
Like the other countries in the region, Israel is confronted with a crucial water deficit and deterioration of the quality of its resources. The projected increase in needs over the long term has led the government to step up efforts to mobilise water. |
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Construction and public works |
The construction sector has posted slower growth since 2002, with capital formation of roughly NIS 38.3 billion in 2005 vs. an average of NIS 44.5 billion between 2000 and 2003. It accounts for 8 percent of GDP, vs. 14 percent ten years earlier. Investment came to about US$ 9.8 billion in 2005. |
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Tourism |
Tourism plays an important role in the services sector. Thanks to its geographic location at the crossroads of the East and the West, the diversity of its landscapes, and its historical, religious and cultural heritage, Israel offers many tourist attractions year round. Tourism was up by 23.4 percent in 2003, 41.6 percent in 2004, and 26 percent in 2005 (to 1.9 million tourists). |
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