Epicos interviews Mrs. Bina Bar - On, Director General of the Industrial Cooperation Authority (ICA) in Israel
"More than 30% of foreign companies that began their business activities in Israel due to an Industrial Cooperation Obligation, have yet continuous, active and long term successful business relations with numerous Israeli companies, even though their obligation has been long ago fully accomplished. One does not need a more powerful proof that doing business in Israel which might begin with an Obligation, very quickly turns out to be a real Opportunity", said Mrs. Bina Bar - On, Director General of the Industrial Cooperation Authority (ICA) in Israel, on an exclusive interview given to Epicos.
Epicos: Ms. Bar - On, how would you describe the role of the ICA?
Operating within the Ministry of Industry Trade and Labor, the Industrial Cooperation Authority (ICA) offers its expertise and guidance on the implementation of any Industrial Cooperation Obligation undertaken by a foreign company towards the State of Israel.
This is done through the provision of assistance to overseas companies in forming appropriate partnerships in Israel as well as by furnishing them with the relevant information regarding the capabilities of the Israeli Industry. In this sense, the ICA may assist any foreign businessman in locating appropriate Israeli manufacturers for the purpose of producing the components, subsystems and products he might be interested in, as well as establishing strategic partnerships for joint ventures R&D, investments and other cooperation activities for the benefit of the parties involved.
Epicos: Why should someone pursue partnerships with the Israeli Industry? What are its advantages?
Building upon the strong entrepreneurial, engineering and scientific strengths of its citizens, Israel has managed to develop unique sectors of its industry at internationally acclaimed levels within a relatively short period of time. This is especially true regarding the developments of the past decade, where Israel has become one of the most important centres of advanced technology research and development in the world.
More specifically in the sectors of Aerospace, Defence and Security, Israeli companies have rightfully ascended to the highest positions between their piers, in terms of international successes and entry to new markets, as well as for providing reliant, high quality products at affordable costs and reasonably delivery time.
The above has become true primarily because of the skills and qualities of the local work force, the engineers and scientists involved in the R&D and Manufacturing processes. A second factor is the support of the government of Israel. The industry operates in an overall business and economic environment that supports creativity, development initiatives and provides assistance whenever required.
More so, Israel is a party to a fairly large number of bilateral and multilateral trade agreements with various countries, an avail that eases on foreign companies to do business in Israel. By establishing industrial partnerships in Israel, international companies may benefit from all the above advantages, making Israel an excellent option for the development of their business activities.
Epicos: How many foreign defence companies are active in Israel? What is the amount of Offset Fulfilments for the last year?
The ICA has Industrial Cooperation Agreements with nearly sixty defense and defense related companies that have carried out last year Industrial Cooperation activities with the Israeli industry in a value of USD 700 Million. Additional USD 2.4 Billion were implemented with the Israeli industry by foreign companies that have Industrial Cooperation Obligations due to non defense/commercial sales to the Government of Israel.
In general, we can proudly proclaim that in 2007, Industrial Cooperation Fulfilments grew by USD 158 Million to USD 3.1 Billion, representing a 5% increase over Y2006.
Epicos: Are there any recent changes in the Israeli Industrial Cooperation Policy?
Yes, in early 2007, some new directives came into force and were incorporated under the Mandatory Tenders Regulations (Mandatory Industrial Cooperation). The basic principles of these new directives are as follows:
Mandatory Industrial Cooperation, in the commercial domain, will apply to transactions exceeding NIS 25 Million. (This is being revised these days, to USD5 Million)
Health Care Funds and Local Corporations are additional Government entities that the Regulations will apply to.
Defense related purchases that are not financed with Foreign Military Funds are subject to Industrial Cooperation amounting 50% of the transaction value.
Enforcement tools were also determined enabling the ICA to freeze a tender that does not comply with the Mandatory Industrial Cooperation Regulations and to black list a foreign supplier that did not comply with its Industrial Cooperation Undertaking.
Epicos: What should a company do in order to succeed in the Israeli market? Are there any such examples from where someone could derive useful "lessons"?
Companies should be looking at medium and long term strategies of investment in Israel. Eventually, these investments create self-sufficient, sustainable business entities that offer benefits reciprocally. One such example is Intel; having been investing in Israel since the 1970s it now has over 6,000 employees in various facilities, design centers and plants. Having made the largest investment ever in Israel by a private company, Intel invested USD 1.8 Billion in a manufacturing plant. Additional USD 600 Million was invested by the Israeli Government, under the Encouragement of Capital Investments Law. Over the last five years, Intel's Israeli plants exported nearly USD 8 Billion while its local design center developed many of Intel's processors including Centrino, a world wide leading technology for laptops.
There are many more examples of companies with a successful business story in Israel. Among them, General Electric (GE Healthcare), Siemens, Pratt & Whitney, that developed their presence in Israel whether by engaging local manufacturers to their supply chain, or through acquisitions. Their local business units are thriving and employ hundreds of people.
Concluding our interview, I'd like to make notice of exceptional phenomena. More than 30% of foreign companies that began their business activities in Israel due to an Industrial Cooperation Obligation, have yet continuous, active and long term successful business relations with numerous Israeli companies, even though their obligation has been long ago fully accomplished.
One does not need a more powerful proof that doing business in Israel which might begin with an Obligation, very quickly turns out to be a real Opportunity.
The article originally appeared in the newsletter of Epicos.com – The Portal for Aerospace & Defence Professionals. Its appears herein with their kind permission.