BUSINESS
Affording the best is not the
questionwfinding the best is.
I
Israel Industry Welcomes
Outside Investors
CARL ALPERT
Special to The Jewish News
0
nce upon a time it
was extremely diffi-
cult to set up private
business or industry in Israel
or to invest in existing con-
cerns. The socialist establish-
ment looked upon private
capital with proletarian
suspicion and hedged the
economic potential of the
country with a maze of red
tape and a bureaucratic
jungle. There was truth to the
charge that the all-powerful
Histadrut was willing to ac-
cept new enterprises on con-
dition that the Labor Federa-
tion be taken in as a partner
with a 50 percent or 51 per-
cent share.
In the intervening years the
climate has changed, though
it has not been easy to erase
widely-held myths, or to alter
the patterns of thought of
some personnel at this end.
Yet the change has indeed
been made, and bona fide in-
vestors in ever-increasing
numbers are beginning to
discover that their capital,
their expertise and their in-
itiative are warmly welcome
in Israel. An updated guide
published by the Ministry of
Industry and Trade (Horizons
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— Business Opportunities — A
Share in the Future), sets
forth the program in clear
and unmistakable terms.
The declared goal is to
"create a friendly climate for
investment based on clear,
consistent and reliable
government policies, offering
economic certainty, profitable
business and the elimination
of bureaucratic red tape." The
present policy is un-
precedented in that it calls for
government participation in
the investment risk, up to
two-thirds of the total invest-
ment. In certain cir-
cumstances there are
outright grants available. The
government's risk-sharing,
we are assured, will not in
any way lead to government
intervention in the manage-
ment of the project. The policy
is to encourage a free and
competitive market.
Investors in outlying devel-
opment areas receive a full
tax exemption for 10 years.
There is one address to han-
dle all details, the Investment
Center, and entrepreneurs
from abroad no longer have to
run to numerous agencies. Of
course the government must
first be certain that the pro-
posed project is economically
sound.
How is all this working in
practice? Some 150 American
companies are already
operating in Israel, providing
employment, exporting, and
making a profit. Cautious
economic observers venture
that Israel is about to enter a
period of economic growth,
fueled by the mass immigra-
tion of talents and skills, and
large-scale government pro-
jects. Elmer Winter's Com-
mittee for Economic Growth
notes that the Ministry of
Transportation will invest
more than half a billion
dollars for road, rail, sea and
air transportation projects. A
new seaport development will
receive a U.S. government
grant of $15 million for Haifa,
in view of the shipyard's
potential to the U.S. Sixth
Fleet.
Alert investors are already
well advanced in their study
Leading Israeli
firms are already
benefiting from the
new climate.
of the potential in a country
which enjoys a free trade
agreement with the U.S. and
has preferential customs
agreements, with con-
siderable deductions in
customs duties for industrial
exports to Austria, Australia,
Japan, Finland, Canada,
Sweden, Switzerland and
Norway.
Leading Israeli firms are
already benefitting from the
new climate. While economic
problems faced by a number
of Histadrut companies are
given wide publicity, this
tends to obscure the fact that
well-managed private or cor-
porate companies are doing
well. Net profit of Scitex for
the first three months of 1991
is $22.5 million, up 59 per-
cent over the same period last
year. Africa-Israel Investment
had a net profit of $26 million
in those three months, up 68
percent. Discount Investment-
Corp. profit was $10.2 million,
up 110 percent. The list is
long and similarly
encouraging.
Yet several American
businessmen with whom I
have talked continue to be
skeptical. It's the red tape
that frightens them more
than anything else. The
answer comes from Moshe
Teri, Director of the Israel In-
vestment Center, at 30 Agron
St., Jerusalem, who told
Elmer Winter: "If any