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Investment Climate
 

Investment Climate

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Investment Climate Investment Climate Presentation Transcript

  • 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
    • Facts & Figures
    • Reasons for Success
    • Israeli Hi-tech – A Case Study
    • Prospects for the Future
  • Net Foreign Inward Investment ($ Billion)
  • Net Foreign Outward Investment ($ Billion)
  • Going Global International Investors – 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
    • Siemens
    • DaimlerChrysler
    • Volvo
    • Cable & Wireless
    • Baan
    • Volkswagen
    • Deutsche Telekom
    • L’Oreal
    • British Telecom
    • Danone
    • Ares Sereno
    • Unilever
  • 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
    • 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)
  • Venture Capital by Industry ($M)
  • High-tech Capital Raised 1995-2001
  • II. Reasons for success:
    • High Annual Growth Rate (GDP)
  • 2. Highly Skilled Workforce Engineers per 10,000 Employees
  • 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 Stability Annual percentage change in CPI
  • 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)
  • 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
  • III. Hi-tech sector- a case study
  • 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
  • Change in composition of Non-Diamond Industrial Exports 1980 vs 2000
  • Formula For Success:
    • Investment
    • Ideas
    • Innovation
    • Ingenuity
  • #2 – Investment in Civilian R&D as % of GDP
  • High Tech Education Investment in Education as a % of GDP (1995)
  • IV. Prospects for the Future
  • 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
    • 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
    • Despite the global tech downturn, during 2001, exports grew by:
      • Software +16%
      • Pharmaceuticals +37%
      • Security Products +19%
  • 2000 – A Record Year
    • Industrial exports were up 24.4%.
    • Foreign currency reserves reached an all time high of $22.93 billion.
    • TASE: 6 th 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
    • 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
    • “ 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
    • “ 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
    • 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
    • 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