Israel wants multinational corporations operating in the country to go beyond investing in research and development or acquiring Israeli technology and firms, and expand into advanced manufacturing and other areas.
“We want to make Israel the best business environment, with less regulation and less bureaucracy, so that the investment process will be smooth,” said Ziva Eger, head of the Invest in Israel arm of the Ministry of Economy and Industry, which wants to become a one-stop-shop for foreign investors in Israel. The idea is to “make multinational corporations feel it is worthwhile to set up their business here, not only for research and development activity but also for manufacturing.”
The ministry announced on Wednesday the setting up of an investor service center, which aims to become a hotline for problems foreign corporations may encounter while setting up their operations in Israel.
“We have direct channels,” to regulators, tax authority and visa officials, and the access to grants, said Eyal Eliezer, the head of strategy for Invest in Israel, which was set up two years ago with the aim to draw multinational investments to the so called Startup Nation.
In its annual “Ease of Doing Business” report for the 2017 calendar year, Israel was given an overall rank as the 52nd easiest place to do business, slightly worse than its 2016 ranking of 49th, out of a total of 190 economies.
Multinational corporations contribute to the local economy by bringing investments and jobs to the country, helping diversify risks, contributing new knowledge, in terms of both technologies and management skills, and opening up the Israeli market to the world. Once a local firm becomes a supplier to a multinational corporation, it is a sort of a stamp of approval regarding quality, Eliezer explained.
Invest in Israel held its first annual MNC Invest in Israel Conference on Wednesday, as part of an events of the DLD Innovation Festival, which will see some 10,000 visitors attend tech events in Tel Aviv over the next few days, according to the organizers of DLD.
At the conference, Minister of Economy Eli Cohen said that if once Israel was shunned by multinationals for fear of an Arab boycott, today, “Israel is an asset, and not a burden. The boycott today is no longer relevant,” he said, adding he expects Israeli exports in 2017 to top $100 billion.
“Israel is actually the R&D center of the world,” he told an audience of 400 global business leaders who participated in the invite-only event. Speakers included DLD chairman Yossi Vardi and Amazon’s chief technology officer Werner Vogels, as well as senior executives from Mercedes-Benz, Phillips, IBM and Flex.
“Amazon came to Israel due to talent,” said Amazon’s Vogels at the conference. Amazon has an R&D locally. “Everything we do here is driven by the local talent. They work with a global mindset and are very well connected and disciplined thanks to their army service.”
Security, he said, is Amazon’s number one concern. “Israel has the talent and systems to tackle this challenge, but it’s a moving target so we need to keep investing here to get better all the time,” he added.
Israeli engineers are known for their ability to “work smarter, rather than harder,” Vogels said. But youth should not take all the glory, he hinted.
“People mistakenly believe that it is only the young people who drive innovation, but it’s really the more mature and experienced mentors, like Yossi Vardi, here in Israel who are the engine behind it.”
The 75-year old Vardi is one of Israel’s first high-tech entrepreneurs.
There are already more than 300 multinational corporations (MNCs) already operating in Israel, including Google, Facebook, IBM and Amazon. Most of them have set up R&D centers, but some 80 of them, like Flex and Intel, for example, also have manufacturing centers locally.
Israeli companies and their technologies are also being snapped up by foreign corporations, with major deals this year including the sale of automotive technology firm Mobileye to Intel Corp. for $15.3 billion and the sale of drugmaker NeuroDerm for $1.1 billion in July.
Interest in Israel on part of multinationals is growing, explained Eger, with delegations from China and India adding to the already high interest from the US and Europe.
“Everyone knows that Israel is a global leader in R&D investment with world-class talent, but it also offers sophisticated advanced manufacturing capabilities – which together create an ideal formula for business success,” said Vardi at the event.
Philips has been active in Israel since 2001, after it acquired the operations of Marconi Medical Systems Israel Ltd. and operates both an R&D center, an incubator and a production center in Haifa.
“Israel is one of the R&D hubs we have globally and it is very important for the development of or diagnostic imaging and software,’ said Stefano Folli, the CEO of Philips Italy, Israel and Greece at the sidelines of the conference. “It is very easy to find good local talent.”
Entrepreneurs, investors, students all thronged the old train station in the south of Tel Aviv Wednesday as part of the DLD innovation events over the next few days, with conferences, meet-ups and activities showcasing startups, both day and night.
Attendees could also take part in a session on artificial intelligence held by Google, in which the latest developments in the field were discussed and demo products were exhibited.
Ruchir Patel, VP of business development of Ahmedabad, India-based Krish Compusoft Services (KCS), was one of many companies that set up a stand at the event. His company provides software development services to Israeli companies and the firm is seeking to expand its client pool locally. “When Israeli companies want to scale up, they can use Indian resources,” he said. DLD “is fantastic,” he said. “We have seen a great response.”
Five students from New York University posed for a picture on one of the Lego-shaped statues at the event. “We are here to take in the scene of Startup Nation,” said 20-year old Louis Demetroulakos, one of the students. They are in Israel for a semester as part of the studies in innovation and new technologies.
“We feel we are stepping into the future,” he said.