Foreign Direct Investment in Israel
FDI in Figures
The investment system in Israel is liberal and most of the activities are open to private national and foreign investors. According to a report of the Bank of Israel, the flow of foreign direct investment (FDI) into Israel totaled USD 3.7 billion in 2009, which means a decrease of more than 50% compared to 2007, and they have remained weak in 2010. This strong decline can be explained by the context of the global economy and most of all, the American economy because Israeli start-ups depend very much on the situation of the other side of the Atlantic. Nevertheless, Israel benefits from these assets: a strong R&D activity and a high-skilled and multilingual workforce. However, the country suffers from a particularly unstable geopolitical environment.
Country Comparison For the Protection of Investors
|Israel||Middle East & North Africa||United States||Germany|
|Index of Transaction Transparency*||7.0||6.3||7.0||5.0|
|Index of Manager’s Responsibility**||9.0||4.6||9.0||5.0|
|Index of Shareholders’ Power***||9.0||3.4||9.0||5.0|
|Index of Investor Protection****||8.3||4.8||8.3||5.0|
Source: Doing Business
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action. **** The Greater the Index, the Higher the Level of Investor Protection.
|Foreign Direct Investment||2007||2008||2009|
|FDI Inward Flow (million USD)||8,798||10,877||3,892|
|FDI Stock (million USD)||62,223||64,005||71,258|
|Performance Index*, Ranking on 141 Economies||63||54||80|
|Potential Index**, Ranking on 141 Economies||25||27||-|
|Number of Greenfield Investments***||21||41||20|
|FDI Inwards (in % of GFCF****)||28.1||30.0||28.5|
|FDI Stock (in % of GDP)||37.3||31.7||36.6|
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
Why You Should Choose to Invest in Israel
- Strong Points
- Israel is the country which invests the most in research and development (4.8% of the GDP) in the world. The country has a highly qualified manpower, particularly in engineering. The country is ranked 2 nd place in world, with regard to availability of venture capital. The government provides the necessary support to entrepreneurs.
- Weak Points
- Corporate tax is relatively high. The State of Israel has a significant public debt. Manpower costs are higher than Asian or East European countries. Lastly, Israel suffers from great geopolitical instability due to the political environment of the region.
- Government Measures to Motivate or Restrict FDI
- Foreign investment incentives, to encourage investment in Israel, are given through the recently revised law. The new law differs from the first one by the addition of a financial incentives plan.
For further information consult Invest in Israel.
- Bilateral Investment Conventions Signed By Israel
- Israel has signed bilateral agreements with 37 countries.
To see the list of the countries click here.
To view the agreements, click here.
Procedures Relative to Foreign Investment
- Freedom of Establishment
- There are no restrictions on foreign investments except in the industry sectors of defence and telecommunications.
- Acquisition of Holdings
- Any settlement concerning mergers and acquisitions or takeovers which differ from these that Israelis should follow .
- Obligation to Declare
- Investment in Israel in neither subjected to authorisation nor registration except if the company wants to gain from certain advantages.
- Investment Aid Agency
Ministry of Industry and Trade
Israel's Investment Promotion Center
- Tenders, Projects and Public Procurement
Israeli Government, Tenders
Tenders Info, Tenders in Israel
DgMarket, Tenders Worldwide
- Other Useful Resources
Business Opportunities of the Ministry of Foreign Affairs
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