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Israel attracts foreign investors while confronting terrorism

1. $1.6bn was raised by Israeli high tech companies during the first half of 2014, 81% higher than the first half of 2013. Israeli high tech companies raised $930mn during 2014’s 2nd quarter – the highest total since 2000, 30% higher than the 1st quarter and 109% higher than 2013’s 2nd quarter (Globes Business Daily, July 16, 2014).

2. Israel’s new investment Angels’ Law – introduced by the Minister of Economy, Naftali Bennett – is the world’s most daring, including a 100% deduction for tax purposes during the first year (Globes, July 17).  The $86bn Los Angeles-headquartered Oaktree Capital Management acquired the Israel operations of France’s Veolia Environment for $341mn (Bloomberg, July 10). The $36bn San Diego-based Qualcomm acquired Israel’s Wilocity for $300mn, made its 5th Israeli acquisition following DesignArt ($130mn), iSkoot ($75mn), CSR’s camera division ($45mn) and EPOS  for $30mn Globes, July 4).  Germany’s Altana invested $135mn in Israel’s Landa Digital Printing (Globes, June 26, 2014). Santa Clara-based ServiceNow acquired Israel’s Neebula Systems for $100mn (Globes, July 10). NASDAQ’s best Initial Public Offering (IPO) during 2014’s 2nd quarter was Israel’s $630mn Kite Pharma which raised $78mn (Globes, June 30).  The British York Investment Fund is investing up to $50mn in Israel’s InSightec (Globes, June 30). The Foxborough, MA-based Kraft Group and the Boston-based Canepa Advanced healthcare Fund led a $21mn round of private placement in Israel’s Dune Medical (Globes, June 27). Boston Scientific extended a $15mn loan – with a stock option – to Israel’s MValve (Globes, July 7).   

3. Israel’s ties with India are on the upswing…. A burgeoning strategic partnership with Israel matters more to India than reflexive solidarity with the Palestinian cause…. Prime Minister Modi’s administration arguably has more natural affinity with Israel than any previous Indian government… and sees the Jewish state more like most Americans do — as a doughty democracy standing up to terrorism in a rough neighborhood. Both countries face a threat from Islamist terrorists…. The rise of radical Islam across South Asia and the Middle East has raised the stakes for intelligence-sharing between Jerusalem and New Delhi…. Indian farmers benefit from Israeli expertise in drip irrigation. Startups in Bangalore and Hyderabad see Israeli firms like Check Point (software) and Teva (pharmaceuticals) as role models…. Israel has emerged as India’s second biggest arms supplier after Russia…. (The Wall Street Journal, Sadanand Dhume, July 23, 2014).”

4. Japan Times, July 18, 2014: “If the EU walks away from doing business with Israel, its companies will lose out while China’s will gain…. China is expanding its economic interest in Israelacquiring large positions in key Israeli industries…. China needs all of these assets to modernize and transform its economy. China has a massive industrial and global reach, while Israel has expertise in every area of high-tech….  China has become a close second to the U.S. in the number of technology projects co-managed by Israel’s Office of the Chief Scientist…. China will soon replace Europe as the second-leading source for investment in Israel’s high-tech sector…. Israel awarded the Red-Med mega-project — designed to connect the Red Sea to the Mediterranean coast by high-speed rail — to a Chinese firm. Another Chinese firm recently won the bid to build a port at Ashdod, the proposed terminal for the Red-Med rail scheme project…. In 2011, China National Chemical Corporation gained a controlling interest in a major firm in Israel’s agrochemical sector through a $2.4bn investment. Beijing has also gained access to Israeli nanotechnology via a joint venture between Tel Aviv and Tsinghua universities….”  

5.  Bloomberg, July 9, 2014: “Israel collaborates with China on dozens of technology projects.  Three years ago there were none…. South Korean interest in Israel has accelerated…. There are South Korean delegations coming to Israel nearly every week. South Korean companies which are in Israel want to expand…. Samsung Electronics announced plans to open a research center in Israel. Hyundai Ventures was in Israel looking at Israeli companies. The Director General of South Korea’s Trade, Industry and Energy Ministry calls Israel ‘our great benchmarking model.’  Last year, Samsung bought the Israeli-founded set-top box maker, Boxee. Israeli companies gain access to the Asian market…. Israel-South Korea trade has doubled in the past nine years to $2bn in 2013…. South Korea [manufacturing] and Israel [technology] complement each other….”

6.  A groundbreaking trade, industrial and research & development agreement was concluded between Israel and Japan (Globes, July 6).

7.  Israel is the 2nd largest cyber exporter in the world – $3bn in 2013, 5% of total exports (expected to surge to 10% in less than five years), three times larger than Britain’s. Israel’s cyber companies raised $165mn in 2013, 11% of overall global investment in this field (IMRA, June 22). Israel is a world leader in the development and manufacturing of small and medium size satellites, and one of only seven countries that possess such capabilities, as well as launching capabilities, enhancing its research & development, industrial and intelligence capabilities. 




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Foreign investment in Israel’s high-tech companies surged to new heights in the 1st quarter of 2021 – $5.7bn in 172 deals – which is up 89% over the impressive 4th quarter of 2020 and double the volume of the 1st quarter of 2020.

2020 was the first year of surpassing $10bn in capital raised by the Israeli high-tech sector from investors in the US, Asia and Europe, who trust the maturity of Israel’s brain power. Investments in Israeli companies more than tripled in six years, reflecting the effective response by Israeli startups to the technological, medical, pharmaceutical, educational, social and digital challenges posed by Covid-19.

Israel’s economic performance in defiance of Covid-19 is presented by Dr. Adam Reuter, the Chairman and Founder of “Financial Immunities,” Israel’s largest financial-risk management firm, and the co-author of Israel – Island of Success:

  1. Israel has led the globe in the rapid administration of Covid-19 vaccinations due to effective negotiations with Pfizer and an efficient, country-wide medical infrastructure.
  2. Israel is the second lowest among OECD countries in the number of Covid-19 deaths per number of Covid-19 cases: 0.7% compared to the 2.3% OECD average. Israel features a young population (median age of 30 compared to the OECD’s 42) and an effective country-wide medical infrastructure, including top level HMOs and hospitals.
  3. Israel is ranked 12th from the bottom among the 37 OECD countries in the number of deaths per million inhabitants: 645 compared to 1,145 OECD average.
  4. The International Monetary Fund’s 2025 GDP growth forecast for OECD countries: Israel – 4%, OECD average – 2.2%, US – 1.8%, Australia – 2.5%, Ireland – 2.6%, France and Canada – 1.7%, the UK – 1.6%, Germany – 1.2%, etc.
  5. Israel’s 2020 GDP was reduced by 2.5%, compared to the OECD average reduction of 4.1%, South Korea – 1%, Norway – 0.8%, Australia – 2.6%, US – 3.5%, Japan – 4.8%, Germany – 5%, France – 8%, the UK – 10% reduction, etc. GDP growth was recorded in New Zealand – 2.4% and Ireland – 3.5%.
  6. In 2020, Israel was ranked 20th among the 37 members of the OECD in terms of GDP per capita, featuring $43,000 (GDP – $408bn), ahead of Japan, Italy and Spain, and very close behind the UK ($44,000) and France ($45,000).
  7. Israel’s debt-to-GDP ratio increased from 60% in 2019 to 72% in 2020, compared to the OECD’s average increase from 66% to 82%. The 2020’s debt-to-GDP ratio was 266% in Japan, Italy – 161%, the US – 131%, Germany – 73%, etc.
  8. Israel’s foreign exchange reserves-to-GDP ratio of 41% (3rd among the OECD countries) attests to its financial stability, and Israel’s capability to raise foreign credit promptly in a cost-effective manner. Israel’s foreign exchange reserves in March 2021 – $186bn.
  9. During the past decade, Standard and Poor (S&P) accorded Israel a positive credit rating trend, unlike the negative trend for the G-7 countries. In 2020, notwithstanding Covid-19, Israel’s credit rating (S&P) remained at AA.
  10. Some 380 global high-tech giants operate in Israel, including Microsoft, Amazon, IBM, Intel, Cisco, Apple, Verizon, Applied Materials, Dell, HP, Kodak, Oracle, Philips, SAP, Medtronics, GM, eBay, GE, etc. Israel leads the world in the ratio of research and development investment to GDP: 4.9%. 85% of this investment comes from the business sector.

 




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