tel_avivIsrael’s Splendid Global Integration
Ambassador (ret.) Yoram Ettinger, “Second Thought: US-Israel Initiative”
Straight from the Jerusalem Boardroom #193, April 25, 2014

1. “With more start-up businesses per capita than anywhere in the world, Israel is brimming with tantalizing investment prospects. Many Israeli stocks trade in the US, making it simple for Americans to invest in the country…. Steve Schoenfeld, chief investment officer of BlueStar Indexes: ‘It’s a small country with a very large global footprint, and it bats well above its average in all of the metrics that define a successful economy.’ Even when much of the developed world was retrenching in 2009, Israel was able to eke out modest growth. Since then, the nation’s economy has been growing at nearly twice the pace of the US economy. Its jobless rate is among the lowest in the developed world…. It is a second home to virtually every big high-tech company in the world, including Apple, Google, Intel and Microsoft (Kiplinger’s Personal Finance, May 2014).

2. Times of Israel, March 28, 2014: “Israel’s economy is doing well enough that the country can now be considered ‘high-income,’ according to Standard and Poor’s in its latest evaluation of Israel’s fiscal state. S&P said that with a per capita annual income of over $38,000, ‘we now view Israel as a high-income economy, with trend growth at the higher end of its peer income group….’ Just five years ago, per capita income was about $28,000. This is due, S&P said, to Israel’s ‘prosperous and diverse economy,’ with a good mix of manufacturing and high-tech, and also to the benefits the economy will realize as the country’s natural gas production comes online. S&P affirmed its long- and short- term foreign and local currency credit ratings for Israel at A+/A-1. Israel’s economy is stable, and its prospects for growth are good, the agency said…. Aiding that growth is the extra effort the government is putting in to reduce debt as a percentage of GDP. Currently that figure is at 67%, and it is expected to drop to 61% by 2017. Inflation is expected to remain low, as well, with annual rates of between 1.4% and 2.5% predicted through 2017….”

3. Bank of Israel, key 2013 economic indicators, March 31, 2014: GDP – $300BN compared to $1.5BN in 1949; GDP growth – 3.3% (US – 1.7%, OECD – 1.2%) compared to 3.4% in 2012 and 1.2% in 2009; GDP per capita – $37K ($19K in 2000); public debt per GDP – 67.4% (US -104.1%, OECD – 1.2%) compared to 68.2% in 2012 and 75.3% in 2009; budget deficit – 3.2% of GDP compared to 3.9% in 2012; unemployment – 6.2% (US – 7.5%, OECD – 8%) compared to 6.9% in 2012 and 9.5% in 2009; inflation – 1.8% compared to 1.6% in 2012 and 3.9% in 2009; interest rate – 0.75% in April, 2014.

4. Switzerland’s Novartis negotiates a buyout of Israel’s GamidaCell for $600MN (Globes Business Daily, March 19, 2014). Palo Alto Networks acquired Israel’s (cyber security) Cyvera for $200MN (Globes, March 25). Private Equity Francisco Partners acquired Israel’s (cyber security) NSO for $120MN (Globes, March 20). Opko Health initialed an agreement to acquire Israel’s Inspiro Medical, its 4th Israeli acquisition in recent years, such as Prolor Biotech, Aug. 2013 – $480MN (Globes, April 23). Russia’s Yandex acquired Israel’s KitLocate for $20MN (Globes, March 19). SecureAlert acquired Israel’s GPS Global for $11MN (Globes, March 20).

5. Israel’s MediWound raised $75MN on NASDAQ (Globes, March 21). Israel’s XLMedia raised $70MN on the British AIM (Globes, March 19). Israel’s SimilarWeb raised a few tens of millions of dollar from South Africa’s Naspers (Globes, March 21). Intel invested $15-20MN in Israel’s OrCam (Globes, March 28). Scale Venture Partners led an $11MN round of private placement by Israel’s WalkMe (Globes, April 2). Hong Kong’s Li Ka Shing (2013 most active foreign investor in Israel) led a $10MN round of private placement by Israel’s Tipa, joined by Canada’s GreenSoil, which made its 3rd Israeli investment (Globes, April 23).

6. The Times of Israel, April 22, 2014: “In 2014, Israel is expected to export more to Asia than to the United States. Asian markets accounted for 21% of Israeli exports in 2013, almost the same as exports to the US…. Israeli exports to Asia are predicted to grow 4.7% in 2014…. Europe remained Israel’s largest group trading partner in 2013. In 2013, 32% of Israeli exports went to Europe, and 28% went to the US…. Israeli companies developed new markets for their products and services in the Far East, particularly India and China, but also Taiwan, Singapore, South Korea and Vietnam…. India also looms large as a destination for Israeli companies, perhaps even more so than China…. In the coming decades, growth in India is expected significantly outpace growth in China, as India’s young population continues to grow at the same time that China’s relatively older population begins to die off….”

7. Deutsche Welle, March 24, 2014: “The continued threat of economic boycotts targeting Israel hasn’t deterred China from forging ahead with a new freight rail link through Israel. The planned link could provide an alternative to the Suez Canal, connecting the 300-plus kilometers between Eilat on the Red Sea and Ashdod Port on the Mediterranean…. The link, estimated to cost upwards of $2 billion, is expected take five years to complete…. The Inter-Disciplinary Journal of Asian and Middle Eastern Studies has said the project highlights the ‘dizzying pace’ at which China and Israel are forging economic and diplomatic ties…. The new rail link could provide a viable and safer alternative to the traditional Suez Canal route….

8. South Korea Ministry of Trade Industry and Energy April 18, 2014:
South Korea and Israel expand the 1999 technological cooperation agreement in such areas as unmanned aerial vehicles (Israel, through IAI and Elbit, is second only to the US!) and information security. Along with Sweden and Finland, Israel has been highly recognized as having one of the world’s best cyber threat response systems. “Israel is our great benchmarking model….”

Wishing you Shabbat Shalom and a rewarding weekend,
Yoram Ettinger, Jerusalem, “Second Thought: A US-Israel Initiative”

PREVIOUS RELATED POST:

Israel’s Enhanced Global Integration

Ambassador (ret.) Yoram Ettinger, “Second Thought: a US-Israel initiative”
Straight from the Jerusalem Boardroom #192, March 21, 2014

bengurionairport

1. The Daily Telegraph, March 12, 2014: “Bilateral UK-Israel trade is booming to an extent never before imagined.  Last year it was estimated by the Foreign & Commonwealth Office (FCO) at 5.1 billion British Pounds…. Prime Minister Cameron’s meetings in Israel are primarily about business, not the Kerry Plan.Look at who is on the plane with him: the Trade Minister, the CEO of the London Stock Exchange, the UK Chief Technology Officer, the Chief Technology Officer of Talk Talk, the Europe CEO of Balfour Beatty, the Chairman of Princess Production, the President of GSK’s Pharmaceuticals R&D, the Chairman of Arup UK Division, the ASOS’ Strategy Director, the founder of Kiwi Power, the Chairman of MyOptique, CEO of Tura, the CEO of Tech City…. [Israel expands] free trade agreements with the European Union, the US, the European Free Trade Association, Turkey. Mexico, Canada, Jordan and Egypt…. [According to the] FCO, ‘Israeli innovations give British companies a global competitive edge.’”

2.  The Wall Street Journal, March 12:  “A dramatic increase in the number of foreign venture capital (vc) funds initiating first investments [in Israeli startups]…. 84 foreign vc funds made at least one first investment in Israel in 2013, an 11% increase over 2012 and a 223% over 2009.”

3.  Israeli companies raised over $500MN on Wall Street since the end of January, 2014 (Globes business daily, March 3).  Israel’s AudioCodes raised $30MN on Wall Street (Globes, March 13).  Susquenhanna Growth Equity and Greylock led a $25MN 4th round of private placement by Israel’s Payoneer (Globes, March 6).  GE and OrbiMed led a $10MN round of private placement by Israel’s Oranim Medical (Globes, February 19).

4. In 2013, foreign direct investment in Israel reached a 7 year high of $12BN  (Bloomberg, March 16). Deloitte, one of world’s largest accounting firms, ranks Israel as the 4th most attractive country for foreign investors.   

5.  Japan Times, March 4, 2014:  “Inquiries into Israeli companies have tripled in the last three years….Rakuten, the e-commerce Japanese giant, announced plans last month to buy [Israel’s] call and messaging application provider Viber Media Inc., for $900MN…. More Japanese companies are looking at the Israeli startup market in search of innovative technologies and investments to beef up their businesses…. Takeda Pharmaceutical Co. and Johnson & Johnson last August together teamed up with the Israeli government andOrbiMed to build FutuRx, a collectively owned biotech incubator.  …. Samurai Incubate Inc., one of the biggest business incubation hubs in Japan announced Monday it will open an incubation center in Tel Aviv in May…. ‘I am worried that Japan is lagging behind the Americans and South Koreans in discovering up-and-coming technology in Israel,’ said Kentaro Sakakibara, head of Samurai Incubate, who plans to move to Tel Aviv. Samurai aims to invest in 10 Israeli companies in the first year while setting up a new fund with local venture capitalists.”

6.  China examines dozens of joint technology projects with Israel; three years ago, there were none.  China’s Li Ka-Shing is the most active foreign investor in Israel. China’s Bright Food giant wants to acquire Israel’s Tnuva Food Industries (Bloomberg, February 26).  China-Israel trade balance approached $10BN during January-November, 2013.  A free trade agreement is currently negotiated. Fifty Israeli high-tech companies have benefitted from Chinese investors (Bloomberg, February 27).  China’s EverBright vc fund invested in Israel’s Real Imaging (Globes, February 24).

7.  The Economist Intelligence Unit (March 10) expects Israel’s GDP to expand by an average 4.8% during 2014-18, bolstered by a steady increase in domestic gas supplies and exports, with an average inflation rate of 2.5%. 

8.  Israel’s compounded annual economic growth rate leads the OECD: 22% during the last five years. Israel’s economy has grown 180% during the last 20 years, while Israel’s population increased 45% (Adam Reuter,Financial Immunities, Israel). Israel’s Central Bureau of Statistics: GDP per capita surged from $15,600 in 2002 to $36,500 in 2013, trending upward. 

9.  According to the Mexico-based Market Business News, October 21, 2013Israel is the 10th most powerful country in the world, based on its GDP, population, technology and military.

Shabbat Shalom and have a pleasant weekend,

Yoram

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