TORONTO — Ten miles wide at its narrowest, barely a speck on the map when compared to its much vaster neighbours, endowed with few natural resources, home to only 7.3 million people, Israel manages to punch far above its weight when it comes to matters of the economy and trade.
In fact, says lawyer and investment expert Uriel Lynn, Israelis’ “buying power has increased tremendously in the last 10 years, especially the last five years.”
Israelis are hungry for the type of services provided by North American companies, particularly in the financial services sector, and they’ve got the money to pay for it.
Lynn, who serves as president of the Federation of Israeli Chambers of Commerce, was in Toronto recently to make his pitch for more Canadian business interest in Israel.
A former Knesset member and governor of state revenue, Lynn said “in terms of population, we are about equal to Austria and we are growing. We are larger than Denmark and Norway.”
Israel’s buying power has moved up as its economy has blossomed in the last few years, corresponding to economic reforms advanced by former Finance Minister Benjamin Netanyahu. “Many of the restrictions that were artificially burdening the economy were lifted and the real economic and business energy of the people was more free to move on,” Lynn said.
“Israel is a very interesting market. It’s a big market. It has substantial buying power. It is a country with a lot of innovation, entrepreneurial spirit and it’s really a country on the move.”
Lynn had a personal role in the reforms as well. As governor of state revenue, he was responsible for a number of changes to Israel’s tax system, including the cancelling of inheritance tax, property tax and capital gains tax on the sale of residential apartments.
The success of the reforms are apparent in the statistics: Israel’s economy has grown an average of five per cent per year for the last five years and the country’s GDP has swollen to more than $28,000 (US), “a little below the average European Union country,” he said.
That has left Israelis with formidable purchasing power and “we would like for North America to take a greater share of Israeli buying.”
In particular he would like to increase imports from North America and import a little less from Europe.
As he sees it, “North American products cost less and will encourage more business co-operation between North American and Israeli companies.
“We’d like to see capital markets increase,” especially the presence in Israel of banks, investment bank and, large auditing firms. The Israeli economy today is dominated by five big banks and “we’d like to see more competition,” Lynn said.
The country’s consumer market would benefit from the presence of foreign banks, he added.
Lynn dismissed concerns that foreign businesses might be deterred by the country’s security concerns. “Security is a consideration but it’s not a deterrent. We are proving that our economy is growing very nicely without having peace with our neighbours. We are not dependent on our neighbours’ economies because we are integrated into the world economy.”
While in Canada, Lynn addressed a group of lawyers involved in trade and another group brought together by the Canada-Israel Chamber of Commerce. He believes Canada’s financial sector, and businesses in the transportation and infrastructure sectors, as well as high tech industries could find good opportunities in Israel.
“I’m just trying to lay down a framework for the opportunities that exist,” he said of his Toronto visit.
Some Israeli economic factoids, courtesy of Lynn:
• In 2001 and 2002, GDP declined by .6 per cent and .9 per cent respectively. In 2006 and 2007, gross domestic product grew by 5.2 and 5.3 per cent respectively;
• Unemployment in 2002 stood at 10.5 per cent; in the first quarter of 2008, it was 6.3 per cent;
• Israel’s population jumped from 3.9 million in 1980 to 7.2 million in 2007; GDP grew from $50 billion to $165 billion; GDP per capita in the period soared from $8,050 to $28,800;
• In 2003, taxes, including payroll deductions and other mandatory charges, stood at 723 shekels for a worker with two children and a salary of 5,000 shekels. The 2008 estimate will be 321 shekels on a 5,000 shekel salary. As a percentage, the tax take will drop from 14.5 per cent of income to 6.4 per cent;
• Israel is ranked first of 55 countries in expenditure on research and development, second in funding for tech development and venture capital investment, third in entrepreneurship and fourth in skilled labour;
• Direct foreign investment in Israel was $10.2 billion in 2007, up from $5.1 billion in 2000;
• In 2007 Israel recorded a trade deficit, with $75 billion in imports versus $74 billion in exports. In 1980 it operated a larger deficit, with $11.2 billion in imports versus $8.6 billion in exports;
• Israel enjoys a trade surplus with Canada. In 2007, exports were $715 million and imports $434 million. Israel’s main exports were jewellery, machines and chemicals while its main imports were machines and mineral products;
• From 1999-2005, Israeli companies invested $7 billion Cdn in Canada. In 2005 alone, $1 billion Cdn was put into real estate, including residential, commercial and industrial properties.
