Israel R&D chief stalls funds on budget shortfall

The new research and development programs of about 60 companies are blocked because the office of the Chief Scientist at the Ministry of Economy and Industry has stalled their approval, according to Udi Orenstein, the director general of the Kibbutz Industries Association.

The Chief Scientist’s Office, recently redubbed the Israel Innovation Authority, is in charge of funding Israel’s fledgling technology companies and approved R&D programs of larger companies. However, deliberations about what new projects to finance have been halted as the chief scientist awaits additional funding for 2016 from the government.

“Very many companies set up new development projects and they are dependent on this funding to go ahead with them,” Orenstein said in a phone interview. “Because of the delay some of these programs will not go ahead, and innovation is the essence of the future growth of our economy. The financing should resume as soon as possible.”

The 2016 budget has been “cut significantly,” and if there is no change it will be NIS 240 million ($64 million) short compared to the budget last year, the Israel Innovation Authority said in a statement. This shortfall has made the authority unable to extend additional grants, as the budget has been used in full.

“We are in advanced talks with the Finance Ministry and we hope that we will be able to reach a suitable budget that will allow the authority to support in a adequate manner the great demand we see from the industry, and to provide a response that will enable Israel to lead in technological R&D to provide growth and economic prosperity to Israeli citizens.”

Israel’s high-tech sector, which has played a historic role in the nation’s economy and which accounts for about 50 percent of its industrial exports, has already ceased to be the nation’s growth engine, the Finance Ministry warned in a report in February, as it faces a shortage of skilled labor and declining research and development investment.