Investment Opportunities in Israel

Placed in the top slot for innovation, stability, governance and skilled labour, Israel is a go-to destination for anyone looking for investing in the country. The country, in a very small period, has become a leading economy, which with the concentration of innovative people and countless cutting edge technologies, makes it one of the most preferred nations for investment particularly the biggest start-ups of the world. Ranked 1st in the world for innovative capacity and 1st in the world for entrepreneurship, Israel’s creative, skilled, and ambitious workforce are one of the most obvious reasons leading executives to turn to Israel to do business. Israel boasts one of the most highly educated, entrepreneurial, and multi-cultural workforces in the world. The richness of the tapestry of Israel’s different cultures results in a flexible work system, across sectors and locations. The reasons why Israel is your next best investment are endless. “It’s no exaggeration to say that the kind of innovation going on in Israel is critical to the future of the technology business. so many great companies have been started here” – Bill Gates, Founder of Microsoft.

Whether you are expanding your business, searching for inspiring technologies or simply looking for attractive opportunities; whether you’re in Automotive, New Media & Internet, Health & Life Sciences, Agro-Tech or Water Technologies, Israel’s leading ecosystems have everything to offer. There is a reason why Facebook’s second-largest R&D centre is located in Israel. It’s the same reason why Warren Buffett chose to make Israel the home of his first major acquisition outside of the United States. And it’s the same reason why Microsoft, Google, Apple, Intel, Samsung, HP, Siemens, GE, Philips, Alcatel-Lucent, Cisco, Toshiba, Barclays, Hutchison and LG spark the long list of over 330 multinational companies who have realized that Israel is their ideal choice for investment. “I see innovation coming out of Israel in levels that I don’t see in other parts of the world, and in some areas in particular” – Don Callahan, Head of Global Operations and Technology, Citi.

Israel is one of the most advanced countries in Southwest Asia in both economic and industrial development. With a robust and growing economy, the country is a leading exporter of technology and pharmaceuticals, with the world’s largest number of start-ups and NASDAQ-listed companies in the world outside of North America. Israel is a world leader in software, telecommunication, semiconductors, and pharmaceuticals. The easiest way to invest in Israel is by using exchange-traded funds (ETFs), which offer instant diversification in a single U.S.-traded security. With nearly $80 million in assets under management, the iShares MSCI Israel Capped ETF (NYSE: EIS) is one of the most popular options for investors looking for exposure to Israel’s economy. While the ETF offers diversified exposure with 67 stocks in its portfolio, investors should consider the fact that approximately a third of the fund is exposed to the financial sector and nearly 20% is invested in Teva Pharmaceutical Industries Ltd. (NYSE: TEVA). The fund also has an expense ratio of 0.61%, which is roughly in-line with many other countries ETFs.

Two principles that give huge investing benefits to Israel are a strong startup ecosystem and its effective central bank. The country is well known for its startup companies and strong venture capital industry, with many investors comparing it to Silicon Valley. Also, while many economies may lose steam when central banks fail to act properly, but Israel has one of the best rated central banks in the world.

Invest in Israel, the Israeli Investment Promotion Agency (IPA), is an integrative body within the Ministry of Economy and Industry that serves as a one-stop-shop for a wide range of potential and existing investors. Invest in Israel identifies lucrative investment opportunities, maps potential obstacles and helps fast-track investment. The IPA can bridge between private clients’ needs and to promote activities within the framework of the government. Working with government ministries, local authorities, tax authorities, and planning and building commissions, Invest in Israel specializes in helping foreign investors navigate the regulatory framework and receive the benefits to which they are entitled. Invest in Israel works with multinational corporations, private investors, investment funds and foreign suppliers to forge close business ties and promote long-term local market activities.

Some of the main investment opportunities sectors in Israel are:

Hi-Tech Industries: Israel is home to one of the most highly developed and industrialized sectors of the world. The modern Israeli ecosystem of high technology is highly optimized making up a significant bulk of Israeli economy. The government facilitates a smooth synthesis for anyone looking to invest in the country. Israel spends a significant amount of its economy in research and development (R&D) in the tech industry. Israel’s percentage of the total number of scientific articles published worldwide is almost 10 times higher than its percentage of the world’s population. As a result of the country’s highly renowned and creative start-up culture, Israel is often referred to as the Start-up Nation and the “Silicon Valley of the Middle East”. “Israel is a dynamic and important part of the future of the internet, and of course eBay. we are looking to increase our presence in Israel and we will continue to seek good technologies and talents in Israel, to bring innovation into the company” — John Donahoe of eBay.

Israel’s Diamond Industry: Israel is one of the world’s premier centres for polished diamonds, alongside Belgium and India. Eleven years before the State of Israel was established, the first diamond polishing plant was opened in Petah Tikva in 1937. By 1944 the industry employed 3,300 workers in 33 factories, with £P 1,320,000 capital investment. The industry is located in the Diamond District, located in Ramat Gan in the Tel Aviv District. The entire trading operation takes place here. Israel’s government funds a non-profit industry body, the Israel Diamond Institute, to represent organisations and institutions involved in Israel’s diamond industry. The sector attracts investment from across the world. The Israeli diamond industry guarantees all diamonds are 100% naturally made and participates in the Kimberley Process, a certification scheme whose goal is to ensure no blood diamonds enter the marketplace

Agriculture: The agriculture sector in Israel is a highly developed industry making it one of the major exporter of fresh produce and a world-leader in agricultural technologies. Although, the geographical terrain of Israel is not very conducive for agriculture practices, with the support of its highly skilled labour and technological advancement has made it a profitable occupation for the country and the investors.

Defence: One of the world’s major exporters of military equipment, Israel accounts for more than 10% of the world total in 2007. Elbit Systems, Israel Aerospace Industries and RAFAEL are three Israeli companies that were listed on the 2010 Stockholm International Peace Research Institute index as the world’s top 100 arms-producing and military service companies.

The Defense industry in Israel plays a very significant role in boosting its economic prowess. The industry is also one of the larger employers within the country. There are over 150 active defence companies based in the country with combined revenues of more than US$3.5 billion annually. The investment opportunities in the defence sector in Israel is a lucrative option for the investors looking to participate in the Israelis growth story.

Tourism: Attracting more than 3.6 million foreign tourists each year, Tourism is one of Israel’s major sources of income in the country. The largest percentage of tourists come from the United States accounting for 19% of all tourists, followed by Russia, France, Germany, the United Kingdom, China, Italy, Poland, and Canada. The industry has huge potential for investors looking to invest in the service sector in Israel.

Israeli thinkers, makers and doers are changing the world of Media & Internet, Cyber Security, Water Technology, AgroTech, Health & Life Sciences, Financial Technology, Automotive, High-Tech & Smart Manufacturing. Israel’s groundbreaking Advanced Manufacturing technologies offer countless opportunities for high-level industries and products.  The Ministry of Economy offers countless programs and services designed to simplify the process of investment and magnify the investor’s profits. The wide range of government incentives and grants makes Israel the perfect place for foreign investors to shine.

The government of Israel promotes the formation of a friendly environment for foreign investment through its rewarding policies. Israel operates as a support centre for foreign investors looking for being part of the country’s growth story.

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