Investment Climate

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  • Investment Climate

    1. 1. Investment Climate in Israel 2002 Amir Hayek Director General State of Israel. Ministry of Industry and Trade Presentation for OECD Paris, April 10, 2002
    2. 2. Presentation <ul><li>Facts & Figures </li></ul><ul><li>Reasons for Success </li></ul><ul><li>Israeli Hi-tech – A Case Study </li></ul><ul><li>Prospects for the Future </li></ul>
    3. 3. Net Foreign Inward Investment ($ Billion)
    4. 4. Net Foreign Outward Investment ($ Billion)
    5. 5. Going Global International Investors – Some examples:
    6. 6. American Companies Invested in Israel- Some Examples <ul><li>Microsoft </li></ul><ul><li>Pratt & Whitney </li></ul><ul><li>AOL Time Warner </li></ul><ul><li>Intel </li></ul><ul><li>IBM </li></ul><ul><li>Boeing Enterprises </li></ul><ul><li>Cisco Systems </li></ul><ul><li>GE </li></ul><ul><li>Lucent </li></ul><ul><li>3Com </li></ul><ul><li>Hewlett Packard </li></ul><ul><li>Merrill Lynch </li></ul><ul><li>Motorola </li></ul><ul><li>Sun Microsystems </li></ul>
    7. 7. European Companies Invested in Israel - Some Examples <ul><li>Siemens </li></ul><ul><li>DaimlerChrysler </li></ul><ul><li>Volvo </li></ul><ul><li>Cable & Wireless </li></ul><ul><li>Baan </li></ul><ul><li>Volkswagen </li></ul><ul><li>Deutsche Telekom </li></ul><ul><li>L’Oreal </li></ul><ul><li>British Telecom </li></ul><ul><li>Danone </li></ul><ul><li>Ares Sereno </li></ul><ul><li>Unilever </li></ul>
    8. 8. Asian Companies Invested in Israel - Some Examples <ul><li>Samsung Electronics </li></ul><ul><li>Daewoo </li></ul><ul><li>Nomura </li></ul><ul><li>Hutchison Telecomm. </li></ul><ul><li>Nissho Iwai </li></ul><ul><li>LG Group </li></ul><ul><li>Sony </li></ul><ul><li>Toyo Ink </li></ul><ul><li>Hyundai </li></ul><ul><li>Acer Computers </li></ul><ul><li>Sumitomo Trading </li></ul><ul><li>Fuji </li></ul><ul><li>Honda </li></ul>
    9. 9. Venture Capital in Israel <ul><li>VC’s invested $3 Billion in 2000 </li></ul><ul><li>VC invested alone = all of Europe </li></ul><ul><li>#4 worldwide for High Tech Deals </li></ul><ul><li>Startups raised over $1 Billion in first 6 months of 2000 </li></ul>
    10. 10. Investments by Venture Capital Funds ($M)
    11. 11. Venture Capital by Industry ($M)
    12. 12. High-tech Capital Raised 1995-2001
    13. 13. II. Reasons for success:
    14. 14. <ul><li>High Annual Growth Rate (GDP) </li></ul>
    15. 15. 2. Highly Skilled Workforce Engineers per 10,000 Employees
    16. 16. 3. Deregulation and Privatization <ul><li>The privatization process began in 1986 and was accelerated in 1997. </li></ul><ul><li>2002: There are currently 7 companies in the process of privatization, including Bezeq and El Al. </li></ul><ul><li>From 1986- 2000 $8.6 billion was raised through privatization. </li></ul><ul><li>During this time around 80 companies have ceased to be state owned. </li></ul>
    17. 17. 4. Monetary Stability Annual percentage change in CPI
    18. 18. 5. Government support <ul><li>Regional Development – Investment Center </li></ul><ul><li>Industrial R&D – Office of Chief Scientist </li></ul><ul><ul><li>Grants </li></ul></ul><ul><ul><li>Technological Incubators </li></ul></ul><ul><ul><li>Magnet </li></ul></ul><ul><li>Investment Promotion Center – first stop for Foreign Investors </li></ul>
    19. 19. Investment Center Approvals as % of GDP (1996-2000)
    20. 20. Other: <ul><li>International Investors’ interest in Emerging Markets and Hi-Tech Sector </li></ul><ul><li>Liberal Foreign Trade Regime </li></ul><ul><li>Foreign Currency Liberalization </li></ul><ul><li>Favorable Geo-political Climate </li></ul>
    21. 21. Jaffa Oranges vs Software
    22. 22. III. Hi-tech sector- a case study
    23. 23. From every point of view, Israel is technology: <ul><li>36% of Israelis surf regularly on the Internet vs global average of 7% </li></ul><ul><li>Over 70% are cell-phone users –2nd highest usage in world </li></ul><ul><li>54% of all households have PCs outranking US and UK </li></ul>
    24. 24. Hi-Tech as a Percentage of GDP
    25. 25. Change in composition of Non-Diamond Industrial Exports 1980 vs 2000
    26. 26. Formula For Success: <ul><li>Investment </li></ul><ul><li>Ideas </li></ul><ul><li>Innovation </li></ul><ul><li>Ingenuity </li></ul>
    27. 27. #2 – Investment in Civilian R&D as % of GDP
    28. 28. High Tech Education Investment in Education as a % of GDP (1995)
    29. 29. IV. Prospects for the Future
    30. 30. 2001 <ul><li>2001 economic indicators were affected by: </li></ul><ul><li>Slowdown in US Economy starting with High Tech crisis </li></ul><ul><li>Worldwide downturn </li></ul><ul><li>Deterioration of the security situation </li></ul>
    31. 31. World Economic Downturn <ul><li>The Israeli economy was in a mature, strong and stable position when the global recession hit. </li></ul><ul><li>As a result, the economy was able to absorb the shocks occurring abroad with minimal effect on the local economy. </li></ul><ul><li>After a record breaking year in 2000, during 2001 economic indicators dipped, but remained well above 1999 levels. </li></ul>
    32. 32. 2001: Some Growth Areas Continued <ul><li>Despite the global tech downturn, during 2001, exports grew by: </li></ul><ul><ul><li>Software +16% </li></ul></ul><ul><ul><li>Pharmaceuticals +37% </li></ul></ul><ul><ul><li>Security Products +19% </li></ul></ul>
    33. 33. 2000 – A Record Year <ul><li>Industrial exports were up 24.4%. </li></ul><ul><li>Foreign currency reserves reached an all time high of $22.93 billion. </li></ul><ul><li>TASE: 6 th best performing market in the world (Merrill Lynch Report, 28.12.00) </li></ul><ul><li>Electronics exports were up 150% over 1999. </li></ul><ul><li>The Israeli Shekel was one of the strongest currencies in the world during 2000. </li></ul>
    34. 34. 2000 vs 2001 <ul><li>So, 2001 economic indicators appear low when compared to the unusual example of 2000. </li></ul><ul><li>When viewed in relation to previous years, 2001 figures point to modest gains. </li></ul>
    35. 35. IMF Report, 2002 <ul><li>“ 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.” </li></ul><ul><li>IMF: Israel Interim Staff Visit, Concluding Statement (Preliminary)—February 26, 2002, Section 12. </li></ul>
    36. 36. Recovery <ul><li>“ 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.” </li></ul><ul><li>International ratings agency, Fitch- report on Israel, Feb 10, 2002. </li></ul>
    37. 37. Improved Outlook <ul><li>The State of the Economy Index rose 0.4% in February 2002. </li></ul><ul><li>Industrial exports increased by 4%, and high tech exports by 13.5% in January-February 2002. </li></ul><ul><li>The number of job seekers dropped in February 2002, after rising steadily from January 2001 through January 2002. </li></ul>
    38. 38. OECD NATIONAL CONTACT POINT <ul><li>Established at Ministry of Industry and Trade (web site: www. moit . gov . il /ncp) </li></ul><ul><li>Intra-ministerial Advisory Committee to NCP </li></ul><ul><li>Guidelines translated to Hebrew and Arabic </li></ul><ul><li>Ongoing dialogue with civil society </li></ul>

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