ISRAEL

Sanam Ahmed, Naweed Anjum, Gauri Patel,

Manjot Singh, Daniel Zelikovsky

Important Events and Country Background

Israel is not known for having an abundant supply of natural
resources; but for its hi-tech sectors having increasing growth rates.
Main exports are computer software, military equipment,
chemicals, and agriculture products.
Gaza Strip conflict have many investors concerned.
The Gaza Strip conflict has led the Israeli government to tighten
the border crossings.
The average growth rate has been 5% between 2004-2011, which is
a inviting factor for companies to start businesses in Israel today.

Political Structure and Stability

Democratic Parliamentary System
Countrys Legislature is the Knesset which enacts all the laws
Association of Government is made of 120 members of different
political parties which make up the Knesset.
Recent conflict in June 2014 due to kidnapping of 3 Israeli kids,
Ceasefire has been agreed but the conflict is still open.
Regional Stability risk is high due to the everlasting IsraelPalestine Conflict.
Efforts by US for the peace talks have been unsuccessful.

Political Structure and Stability

Fragmentation and Weak Association of the Government formed in
2013.
Rise of New political Party- Yesh Atid- Equitable system for all
Israelis.
March 2014- Government passed the law which will require Ultra
Orthodox jews to serve in the Military.
Led to tensions as this will make them less secular.
Members of the Political parties have different opinions.
Overall Political Risk is Moderate.

Ease of Doing Business

PROCESSES FOR
STARTING
BUSINESS

CONSTRUCTION
PERMITS

GETTING
ELECTRICITY

REGISTERING
PROPERTY

GETTING
CREDIT

PROTECTION
FOR INVESTORS

PAYMENT OF
TAXES

TRADE ACROSS
BORDERS

ENFORCING
CONTRACTS

RESOLVING
INSOLVENCY

REFORMS

2014
The Israeli government made starting a business easier by reducing the time required
for registration at the Income Tax Department and the National Insurance Institute.

Made resolving insolvency easier by improving the time frame allowed for certain
procedures and improving the liquidity position for companies when needed.

2013
There was an attempt to make the transfer of property easier by enforcing a tight
schedule for tax authorities to follow.

2012
There was a reform which changed the method of calculating port fees.

PROS

CONS

No minimum paid-in capital required

890 days to enforce contract

(230 days in S.K./ 360 days in Japan/ 539 days as OECD average)

Tax as a percentage of profit: 30%

235 hours per year spent on taxes.

(32% in South Korea/ 51% in Japan)

(187 days in S.K./ 330 days in Japan/ 175 as the OECD average)

Ease of access to credit and credit information

low cost procedures in starting a business

Low costs of imports and exports

Recovery rate in resolving insolvency: 61%

(93% in Japan/ 83% in South Korea/ 72% as the OECD average)

81 days to register property.

(13 days in Japan/ 7 days in S.K./ 24 days as the OECD average)

209 days to get construction permit.

(29 days in S.K./ 197 days in Japan/ 150 days as the OECD average)

Hofstedes Dimensions
Power Distance
Israel scores a 13
Believe in independency, equal rights, and easy access to superiors

Have decentralized power and rely teamwork and experience to achieve tasks
Uncertainty Avoidance
Israel scores a 81

More likely to avoid risks

Have a need for rules and structure
People are vocal and have an urge to be busy and work hard

Hofstedes Dimensions
Individualism versus collectivism

Israel scores a 54
Society is both collective and individualistic
Have small families with focus on parents and child relationship

Communication is direct and expressive

Masculinity versus femininity
Israel scores a 47

Is neither masculine or feminine

Performance is highly valued
Status is shown by cars and technical devices

Tips For Doing Business

Official work week is Sunday to Thursday.

You dress business Casual for first meeting and any
meeting after that you dress as you would for a
meeting in your home country
English is the official language used in business.
Move to a first name business quickly to establish a
comfortable environment
Israelis like to get to the bottom line quickly.
Punctuality is relaxed. Allow 15-20 mins before
assuming your clients are late

Tips For Doing Business

Very polychronic culture (relationship oriented) whereas USA and

other European countries are monochronic (rule oriented)
Israel culture feelings and emotions are primary guidelines for
Israelis while intuition and objective facts are secondary

Competitiveness & Innovation Potential

Works to innovate its weak sectors to max efficiency
Strong governmental push for further investment
Large amount of educated Human Capital
Business culture that supports experimentation
Google, IBM, Intel, Apple, Microsoft, Facebook, etc. have all
already opened offices, research facilities, or factories

Competitiveness & Innovation Potential

Competitiveness within Middle East & North African Region: 4th
place

Innovation Top 10 Globally: 3rd place

Innovation Capacity: 1st place
Business Expenditures on Research & Development: 1st place
Expenditures on education and scientific research: 2nd place

Future Outlook and Investment Opportunities

Future Outlook looks stable.
Fitch Rating- Credit Rating is not looking good in the future due to
the recent events- increase in defense spending.
Tourism has dropped significantly due to the recent conflicts.
Gaza Strip issue still unresolved.
Bloomberg - GDP Expected to increase in 2015.
Current Interest Rates are low.
Past years - Average Annual Growth Rate is 4.09% compared to
1.67% in US.

Future Outlook and Investment Opportunities

Investing is a good idea

Inflation low
GDP Increasing
Interest Rates Steady
Israeli Companies are Competitive and Innovative.

Israeli Stocks have good historical Performance, also is No. 3rd on US

NASDAQ.
Israel Invests 5% of their GDP in R&D.