Gov't to help Israel's diamond industry with credit guarantees

Diamond exchange trading hall photo: Tamar Matsafi

70% of diamond businesses suffer from a credit crunch.

A committee for examining credit and growth in the diamond sector yesterday submitted its recommendations to Minister of  Economy and Industry Eli Cohen. The recommendations include a special aid track for diamond traders in the framework of the fund for small and medium-sized businesses that will make to possible to provide diamond traders with NIS 1 billion in credit, financing for overseas conferences aimed at encouraging buyers to come to Israel, and state aid in founding a polishing facility for large stones.

Committee chairperson and Ministry of Economy and Industry director deputy director general Naama Kaufman-Fass was instrumental in drawing up the recommendations. The committee was founded at the request of the diamond traders, who complained that their ability to compete globally with countries such as India and Qatar had declined in recent years.

Following six months of discussions, the committee found that 70% of diamond sector businesses with turnovers of up to $3 million were suffering from a credit crunch that resulted mainly from their dependence on banks, which classify activity in the diamond sector as high-risk, among other things due to the lack of adequate collateral for credit.

Representatives of the Ministry of Finance Accountant General department and Budget Department, the person responsible for the Trade Levies Unit in the Ministry of Economy and Industry, and the diamond controller also participated in the discussion. The committee examined the trends in this sector, while formulating measures capable of removing barriers making it difficult for diamond traders to obtain credit.

Kaufman-Fass said, "The committee identified the main barriers for small businesses in the sector, and recommended a comprehensive response to their needs in credit and promotion of innovation."

She added, "Implementation of the committee's recommendations, together with activity by diamond sector leaders relating to the Prohibition on Money Laundering Law and the transition to full reporting to the Israel Tax Authority, will help push the sector forward in every aspect, in both credit and in the commercial aspect, so that Israel can continue being a leader in the global diamond industry."

Minister of Economy and Industry Eli Cohen said, "Implementation of the committee's recommendations, together with other measures, is needed, given the crisis in the sector created by changes in the global diamond industry in recent years. These measures are designed to provide new tools and address the diamond traders' challenges, while easing the regulatory burden. This will lead to growth in production and exports."

Diamond Exchange president Yoram Dvash, who took part in the discussion, said, "Implementation of the recommendations can help us in all the areas of importance to the sector and encourage growth."

According to Ministry of Economy and Industry figures, Israeli diamond exports totaled $28 billion in 2016, amounting to 13% of Israel's exports. Central Bureau of Statistics figures indicate that the diamond industry employs 9,500 workers.

Meanwhile, the Ramat Gan Diamond Exchange has opened an annual global diamond exhibition, and a new index displaying trade figures in the Ramat Gan diamond market has been launched.

Published by Globes [online], Israel Business News - www.globes-online.com - on February 6, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

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Diamond exchange trading hall photo: Tamar Matsafi
Diamond exchange trading hall photo: Tamar Matsafi
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