Foreign investment in Israel up 7%

Ziva Eger

320 multinational companies operate in Israel with 30 new companies starting operations in 2016, the Foreign Investments Authority reports.

Investments in Israel by foreign companies totaled $12.6 billion in 2016, 7% more than in 2015, according to the Ministry of Economy and Industry Industrial Cooperation and Foreign Investments Authority. The figures show that 320 multinational companies operate in Israel, and the pace at which such companies are starting to do business in Israel has tripled from 10 a decade ago to 30 in 2016.

The Foreign Investments Authority also reported that almost 10% of all employees in the business sector work at multinationals doing business in Israel. The average salary at these companies is 88% higher than the average salary in local companies and 14% higher than the average salary in local companies doing similar business.

According to the published figures, foreign companies operating in Israel account for half of total business R&D spending, and have 50,000 employees in this sphere. 200 of the foreign industrial companies operating in Israel have both production and R&D activity in the country.

The Foreign Investment Authority expressed satisfaction with the figures, particularly in view of the fact that global foreign investment declined 2% in 2016.

Competition with Ireland

The figures were revealed yesterday at a the first-ever conference of multinational companies held by the Foreign Investment Authority. Ziva Eger, who heads the Foreign Investment Authority, had trouble giving "Globes" an estimate for foreign investments next year, but it is known that representatives of the Authority and senior Ministry of Economy and Industry officials, including Minister of Economy and Industry Eli Cohen, are in accelerated talks with a number of multinationals on having them invest in manufacturing or R&D activity in Israel.

According to Eger, Israel's tools for aiding multinationals position Israel as one of the world's most attractive targets for investment. "Our biggest difficulty is against Ireland. In contrast to Israel, Ireland is an English-speaking country close to the entire European market. It has regulatory stability and a mechanism with a huge budget for providing incentives to foreign countries to enter the country," Eger explains.

"Thanks to foreign investments, Ireland emerged from the great economic crisis at the end of the previous decade, but Israel still has a unique technological advantage and tax benefits that make it an attractive target. While the corporate tax rate in Ireland is 12.5%, a foreign investor coming to Israel can receive benefits offered on the strategic track, such as a 5% corporate tax rate."

Eger adds that Chinese companies are showing interest in Israel companies, and "For them, Israel is a bridge to Europe and new markets in which they are interested."

The Ministry of Economy and Industry reports contacts with at least 10 multinationals or their subsidiaries concerning possible investment in Israel, but declines to specify which companies are involved.

It was recently reported that Chinese computer manufacturer Lenovo intended to invest in Israel, and to establish activity in the country, while considering the acquisition of local companies in the coming years, and also opening development or production centers. In recent weeks, Cohen met with representatives of Chinese company Legend Holdings, the controlling shareholder in Lenovo.

Ministry of Economy and Industry sources told "Globes" that in addition to Lenovo, another multinational was negotiating with governmental parties for a possible investment in setting up an advanced production facility in northern Israel that would create 200 jobs.

In another case, senior Ministry of Economy and Industry officials are holding intensive talks with an multination that already has activity in Israel for a substantial investment that will significantly expand its business in Israel.

Published by Globes [online], Israel Business News - www.globes-online.com - on September 7, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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