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Coping with war – the Israeli model

2 January 2009
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Categories: Business, Israel, Kassam, Palestinian Society, Palestinians

Hamas’s war with Israel directly impinges on the lives of 0.5m civilians. Add in battalions of regular soldiers and reservists, stationed in the region. And more are being rushed to secure the north, against a possible reprisal attack from Hizbollah in Lebanon. Maybe 15% of the population has been sucked in to the horrific scenario.

In Gaza, the makeshift Hamas society, based on smuggling and repression, is imploding under the weight of Israel’s attacks. Many basic services are not functioning with the leadership suspected of hiding in mosques and hospitals.

Israel offers a different approach, where as far as possible life goes on normally.

What do I mean? Take a large food distribution company, which I visited on Thursday. Located near the port of Ashdod, where many rockets have landed this week, its 550 workers are continuing to clock in. The company is also making a special effort to distribute special parcels to families directly in the line of fire. And that is no one-off story.

In Tel Aviv, the stock market has ticked along, actually rising 5% this week despite the hostilities. I have heard of at least one finance house organising deliveries for citizens living under the Kassams sent from Gaza.

Ashkelon’s Sapir Institute for Higher Learning has been forced to close its classrooms. Some of the students have put together an ad-hoc local radio station, broadcasting mesages of support to affected communities.

It is self-help. It is mutual respect.  A Druse soldier was killed by a rocket and many went to the funeral. The city of Jerusalem has organised for whole families from the south to be hosted locally for a few days. And so the list goes on.

Hamas has deliberately refused any partnership with Israel’s way of life. Israel’s society is now 60 years old. It has emerged out of the depths of struggle and human despair, yet evolved, for all its faults, in to a showcase of pluralism.

The war against Hamas is not just aimed at protecting Israel’s special jewel. The conduct of the home front during the war helps to show off its success.

Israel’s economy – the Gaza search factor

29 December 2008
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Categories: Business, Israel, Kassam, Palestinians

As the world concentrates on the Israeli air forces efforts over the skies of Gaza, analysts are asking if the campaign will divert scarce resources away from pressing economic needs.

Consider the size of the issue. According to new IMF figures, Israel’s annual GNP (what she produces) per person stands at US$24,000. (Saudi Arabia – $21,220; UAE – $56,670).

The Tel Aviv stock market has dropped 1.5% in its first response to the campaign. Reservists are leaving work stations and putting on uniforms. Places of entertainment and tourist attractions in the south are empty. All this in light of a poor global economic outlook. And yet…..

Over the past decade, Israel’s economy has coped with an Intidfada, withdrawal from Gaza, wars in the north, and more. Until recently, growth remained around 5% per annum. In effect, Israel’s neighbours have forced her to develope a virtual technology for its economy. This allows the country to find success despite war rather because of peace.

If you are a high tech geek, you may call it a perverse form of search engine optimization technology – looking for a way through the clouded cyber space of war.

Specifically, regarding the events in Gaza:

  • Yes, industry in the south is winding down. There again, nearly, 8,000 Kassam rockets and mortars have landed in the region over 8 years, so these companies have been on a reduced footing for a long time.
  • Hotel bookings around Ashkelon are down (except for journalists). Again, I openly admit that people like myself have long stayed clear of Ashkelon for family holidays. So not much change there.
  • Aside from one-person businesses or SMEs in general, most organisations will continue to functions, especially in the Israel’s commercial centres further to the north.

The future? Who knows. Certainly reduced economic activity to begin with, but no disaster. Much will depend on the length of the military scope and the potential horrors that Hamas have threatened to launch against Israeli civilian targets. And it is a threat not to be underestimated.

For the moment, Israel’s economy looks to be safe and under good management.

Israel – learning from Wall Street’s mistakes

26 December 2008
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Categories: Business, Israel

The fall of real estate in America, the collapse of several banks, retail chains like Woolworths disappearing – they all have something in common with the Madoff disaster. Greed. Most of us have been trying to make a bigger buck, and too quickly.

So, it has been refreshing this week to come across two Israeli start ups that are taking a step-by-step approach. Although in different fields, they share common features. They have developed a new technology. And they are taking a “softly softly” approach to the market channels overseas.

Leviathan Energy generates around 20% more energy from wind turbines by altering velocity input. In a global market, which is expected to expand around 30% p.a. for several years to come, including 2009, this makes them an exciting propositon.

The company has 3 product lines. Significantly, they are not looking to move them all at once. In fact, they are seeking joint ventures, partnerships which are a healthy feature of the cleantech phenomenon. They are prepared to share some of the “treasure”, and to help the environment at the same time.

Now leap over to Covertix, which has drawn up an ERP solution for companies to track, manage and control documentation. Covertix anticipates finishing beta trials in early 2009, and has an impressive list of leading names already demanding installations.

As above, my discussions with Covertix senior management show that they know the importance of learning to walk before you can run the world. Serious marketing will commence only once the trial stage has been completed.

You cannot just print money. Neither can you invent it. It has to be supported by something of value. It is this new and true value that these Israeli companies are creating, and which has been missing for years around the international financial markets.

Israel’s split economy

24 December 2008
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Categories: Business, Israel, Jerusalem

So is Israel in a free fall recession?

I was walking around the centre of Beersheba yesterday. This is the capital of Israel’s Negev desert. Wind swept and cold, shoppers seemed to be elsewhere. Several premises were boarded up. Depressing.

The “Madoff effect” will hit the Jerusalem economy in particular, as so many NPOs are located there. Special ed, student research, medicare care for the poor and more – many of these groups will have their funding severely restricted overnight.

Go to the economic section of the newspapers and you will read about inflation levels dropping. The Bank of Israel has dropped interest rates, but cannot compete with the near zero levels in America, which is keeping Israeli exports relatively expensive at a time of lower demand.

Now look again, but look hard at what is going on, almost slipping by unnoticed. Yesterday, I was informed of a string of potential investment deals worth tens of millions of dollars in high tech. In today’s issue of the Yediot newspaper, the journal has highlighted thousands of positions in different sectors waiting to be filled. 

Personally, I took part this week in a new effort to launch a Cleantech forum in Jerusalem, specifically aimed at bring new technologies and biz dev facilitators together. The first meeting will be in about three weeks and we already have people queueing up to present. There are more companies than we believed.

The conclusion: It is not all doom and gloom. There is a very sorry side of this downturn, which will hit people badly. There is also a second economy, which is soldiering through and should emerge triumphant in 12 months time. That is the sector for the overseas analysts to act on, now.

Business Networking in Israel

15 December 2008
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Categories: Business, Israel

The reading of today’s financial papers may not look too encouraging. “The Economist” predicts zero growth for Israel in 2009. The Finance Minister, Bar-On, is quoted as saying: “I must honestly admit that the ability of the Israeli economy to cope with the global crisis is wide-ranging and effective. Even in the most optimistic scenario, the Israeli economy will suffer a substantial slowdown in 2009.”

So what channels are open to Israeli entrepreneurs, looking for a way out?

Last week I commented on the importance of social networking, especially in the Israeli economy. Israel is very much at the heart of the industrial revolution in communications, with software engineers often being leaders in blogging and more.

Today, I went to a working lunch, hosted by IBM, in honour of a visiting delegation from the SE Region of the American-Israel Chamber of Commerce. Based in Atlanta, Georgia, this state sees itself as the 29th largest economy in the world. And these guys were investing their time in coming to Israel. Why?

Look at the current crop of Georgians in the Holy Land. GE, UPS, Coca Cola, Panasonic all have major centres in Tel Aviv or nearby. GE have an r&d unit here, and “the real thing” is produced in Israel. 

Just over 2 years ago, McKesson of Atlanta bought out a small Israeli cardiology team, Medcon, for a cool US$100m. Today, 45 Israeli companies are based in Georgia and nearby.

The IBM building is no small edifice. On the same campus are the status symbols of Alcatel, Intel and others. The Atalanta-based delegation came looking for technologies that offer reimbursement in medical care. Specifically, in a state with a large city and an enormous hinterland, they need ways to provide services, equally to all.

The room contained around 15+ Israeli start ups; medical devices, logistic operations etc. I was there in my capacity as CEO of CEPCO. We made a strong pitch, engaging the visions and concepts of the American guests.

In February 2009, Georgia will invest in hosting a medical care delegation from Israel. This economic powerblock clearly is aware of how to drive through the global recession, and meeting today was a significant step on that road.

The Israeli economy – the “P” effect

12 December 2008
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Categories: Business, Israel, Palestinians

Depending on how you look at it, Israel devotes up to a third of her resources to defending the country. In the past decade alone, Israel has fought an on-going was against internal Palestinian terror, fought a war in Lebanon, had to prepare for the Iranian threat, and more.

Contrast all that (+ the fall out from the Millenniumeconomic bubble  burst) with the fact that Israel’s economy has grown approx 5% pa on average since 2002. Staggering by most standards. As a mark of its success, in 2008, Israel was accepted into the OECD and the Financial Times upped its recognition of the Tel Aviv Stock Exchange.

Usually, peace leads to prosperity. An explanation for the dichotomy? In May 2007, CNBC  ran a series on the Israeli economy. A leader in formulating world economic opinion, the TV channel concluded that Israel has developed a strong model for economic growth, despite war rather than through peace.

How so? Well, some of Israel’s first high tech giants like Elbit were effectively spun out of the local defence establishment. Since then, if the current global industrial revolution is IT based, Israeli tech is a central part of that recent history. By way of proof, just look at the components in your mobile phone or the microchip enabling you to read this. All this coupled with massively improved fiscal and monetary policies from central government.

Israel’s economic joy of this decade has been led by technology transfer. It has been supported by arms sales (also tech based), real estate and the diamond industry. The inevitable consumer boom was the result of and not the trigger for the success.

So what is the effect on Israel’s economy of Palestinian and Hizbollah terror? I can identify 3 specific sectors.

1) SMEs – when people are called for reserve duty, it is the small enterprises which suffer the most. This was shown in stats after the 2006 Lebanese war, as individuals were called for 30+ days of service.

2) Certain regions of Israel suffer more from Palestinian terror. For example, in the south there is a refugee issue as one third of Sderot’spopulation have fled the constant shellings from Gaza. For example, despite the ceasefire, over 200 rockets and mortars have been launched since November 4th.

3) As resources are devoted to the defense sector, health, education and other social services are pushed way below recognised red lines. Only this week, yet another report was released showing how standards in maths and other subjects have dived again in high schools.

As a parallel, I leave my final word for the Palestinian economy: According to World Bank figures, it grew 5.5% annually from 1968 to 1999, just before  Chairman Arafat launched the second Intifada. In effect, once the Palestinians had been freed from Egyptian and Jordanian rule, Israeli support handed them one of the fastest growing economies internationally for over 2 decades. Today…..well, that’s for another posting.

Marketing in a downturn – Anecdotes from Israel

9 December 2008
3 Comments
Categories: Business, Israel

This Sunday, I met up with the CEO of a large Israeli importer of biscuits, sweets and other yummies. He is an established and notable power house in the economy. His premises offers approx 20 sophisticated docking bays for large distribution trucks – over 500 employees.

Was this guy feeling the downturn? Basically, no. His reasoning took him through a cross section of local peculiarities. But to sum it all up – He knows his market. He is listening hard to what people want.

Now jump forward 24 hours, and I moderated the monthly meeting of the Jerusalem Business Networking Forum. David Nordell presented a fascinating discussion on Business Intelligence. Bottom line – understand what your market wants.

How? Nordell spelt it out. Get close to people either by physically networking or by using Twitter and the like.

Nordell has his own blog, is available of LinkedIn and several other net forums.

Significantly, these two anecdotes confirm a series of one off comments passed on to me in recent weeks from a multitude of business persons in Israel. The path to beating a recession is to offer a quality service. And you start to do that by learning what the market requires and why.

Israel – the positive economy

7 December 2008
1 Comment
Categories: Business, Israel

The number of firms in Israel declaring insolvency has risen by 13% in 2008 compared to last year. No surprise there, but I still claim that the economy is continuing to function very capably for the moment.

There are several indicators to that effect.

First, last week, I commented about the positive role of the Tel Aviv stock exchange. The Bank of Israel has reported that overseas players sold US$1.2 billion of Israeli stocks, a prime reason for the fall in the index.

However, foreign direct investment still hit US$444 million, although still 50% down from September 2008. And foreign currency reserves rose strongly in November 2008.

Aaron Katsman, managing editor of a circulated economic newsletter notes that “as far as emerging markets go, Israel has been a big out performer.”

For confirmation, look at what people abroad are saying about the country. Globes newspaper on its website quoted ING Invesment Market executive, Martin-Jan Bakkum. He sees the Tel Aviv index as a strong defensive position.

And he is not alone. Last Wednesday, I attended a private gathering with British health experts, actively looking to invest in Israeli products and services. Two days later, I was contacted by a second British group, which wants to send a delegation to recruit businesses to its shores.

Difficult times, but with a future ahead.

The Palestinian Economy – vast improvement

1 December 2008
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Categories: Business, Israel, Palestinian Society

Spin it as you want, the Palestinian economy under Israeli rule showed continuous annual growth of over 5% between 1968 and 1993. According to stats from the World Bank, it was one of the world’s best performing economy’s for that period.

The Oslo Accords gave the PA took economic control of the territories. And once Chairman Arafat launched the Intifada in September 2000, serious commercial life for Palestinians basically went the way of the bullets. Unemployment soared. Wages dropped. No serious tax revenue. Etc, etc.

Israel’s Civil Administration has just released preliminary figures for the year 2008. Focused on the West Bank, which has desisted from launching Kassam attacks against Israel, the figures give cause for optimism. For example: –

  • 35% increase in trade with Israel
  • 87% more tourists in Bethlehem
  • 24% increase in average daily wage
  • 953% more cars imported into the region, and so on.

But it is more than the boring numbers. Taxes are being collected on a more regular basis. 3 economic conferences have been held. In Jenin, Israeli Arabs are participating in a number of local projects.

These are the stories that reveal the beginning of a peace process. This process and its causes deserve the encouragement and attention of the international community.

Young Israeli companies riding the storm

30 November 2008
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Categories: Business, Israel

Yesterday in Synagogue, I sat next to a friend who works for an international IT company in Jerusalem. Between the prayers, he voiced concern that his company was about to lay off 10% of staff and cut the salaries of the survivors.

Yes, the recession has reached Israel. The retail price index for October is expected to show  a drop of a whole percentage point. Car sales are down 19.7% as against the previous quarter. Gloom, but not doom.

I continue to maintain that the Israeli economy is facing this downturn in good shape. And the Tel Aviv stock market has picked up on that. Over the past 3 months, it has fallen 22%; difficult, but brilliant compared to the 35% of the FTSE’s world index. Let’s take some specific recent success stories.

  1. Johnson & Johnson will acquire Omrix Biopharm for US$438 million. (Omrix is down the road from my friend’s employers.)
  2. A holding company, Medinvest, has raised US$129 million, backed by 7 successful previous exits.
  3. Plurality‘s efforts in the semiconductor business are already making it the target of companies like Intel and other giants. Its success at at a recent Japanese exhibition led to a central feature on Yahoo’s Finance pages.
  4. HP has become the 11th multinational to sign an agreement with Israel’s Office of the Chief Scientist. Along with Deutsche Teleom, Microsoft and others, it will seek local technologies to match their own strategic development strategies. This is on top of their US$6 billion previously invested by HP in Israel.

For all the problems of its pension funds and aging politicans fighting for their reputations, the Israeli economy is telling the world that it has a lot more to shout about. Worth listening, in my view.

After terror – How Israel encourages coexistence

27 November 2008
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Categories: Business, Israel, Palestinian Society

The events in Mumbai have proved that terrorists continue to plunge to ever new depths of violence and hatred. Israel is no stranger to similar senseless carnage. The country has learnt to live with it, and still seek ways to live in harmony with internal minorities and neighbouring countries.

Another 2 examples of this coexistence came to light this week.

The multi-cultural school of Kfar Kana was recently portrayed on an internet TV station. The school is located inside Israel’s pre-1967 borders and is one of 3 such places in the country. The hundreds of pupils learn to speak the language and appreciate the religion of each other. The onus is not just of the schools 2 co-head principals. It is often the parents, who are the true heroes, battling trends in their respective societies. 

A few miles to the east is Nablus, a key Palestinian city. Last week, it hosted 700 investors, a direct follow up to the conference held in Bethlehem in May this year.

Significantly, the Israeli Civil Administration (ICA) played a major role in ensuring that the delegates were able to arrive and depart in comfort and in safety. Lt Col. Dacse Salame, head of the ICA’s Economics Branch observed the mutual importance of such an event, when he said that: “The Palestinian Authority has made serious preparations for the conference, and we, the Israeli side, will do our utmost to ensure a smooth and successful event. The financial benefit that the conference should provide for the Palestinian economy led us to set up a joint situation room, which will be able to solve any problem around the clock.”

These efforts – the moves to developing trust and recognition – that all terrorists reject. That is what is common to the murderers in Bali, from Gaza, in Mumbai or on the London underground.

Israel’s economic importance – UK case study

18 November 2008
1 Comment
Categories: Business, Israel

Last month, I wrote about Shimon Peres’s forthcoming trip to the UK. I have just received an official briefing from “Parliament Today”, summarising the meeting of Peres with Lord Mandelson, who has the portfolio of Business Secretary in the cabinet.

 

The following are edited highlights of a long statement. They demonstrate exactly how other countries can benefit from Israel’s desire for peace and its global commitment.

 

It reads…….

The UK aims to raise trade between the two countries to £3 billion per year by 2012. Israeli President Shimon Peres, a Nobel Peace Prize Winner, and Lord Mandelson jointly addressed a meeting of about 200 UK business leaders at Mansion House in London, hosted by the Lord Mayor of the City of London Ian Luder today.

 

The Business Secretary said:

“This is an age of great promise and immense global change – driven by the rapid development of new technologies and powerful flows of ideas, people, goods, services and capital across borders. Interdependence defines this new world.”

Lord Mandelson said that nowhere was this more evident than in the current global financial crisis, “the first great test of our new multi-polar globalised world.” “We cannot act by ourselves any more. We have to act together or we will not act at all,” he said.

 

The UK has the aim of achieving bilateral trade worth #3bn per year by 2012, a rise from the 2007 level of #2.3 billion. Opportunities exist in financial services, bio-technology, ICT, medical equipment and software, and also in creative industries, including film-making.

“Your country’s prudent fiscal policy, structural reforms and investment in education and hi-tech industries have encouraged strong growth, foreign investment and consumer spending and left your economy well placed to withstand the current global downturn,” Lord Mandelson said.

 

The International Monetary Fund recently forecast that the Israel economy, which has grown at over 5% per year for the last three years, will grow at 4.3% this year and 2.8% in 2009.

 

Notes to Editors:

1. Israel is the UK’s third biggest export market in the Middle East with leading British companies including HSBC, Unilever and Rolls Royce managing major interests there. The UK is also Israel’s third largest destination for exports. Over 250 Israeli firms are based in the UK.

2. Over 40 Israeli firms are now listed on the London Stock Exchange. Fourteen are listed on the Alternative Investment Market.

3. UK Trade & Investment is the UK Government’s international business development organisation, supporting businesses seeking to establish in the UK and helping UK companies grow internationally.

Palestinian economics – recent updates

14 November 2008
2 Comments
Categories: Business, Palestinian Society

The world economic slowdown has kept the Palestinian economy off the front pages of world media. Sure, the “Free Gaza” campaign has sent in a few boats to highlight how they see that Israel is to blame for all the poverty of the Palestinians.

The facts on the ground indicate a more intricate set of issues.

One such story is the olive harvest, worth an estimated US$140 million to Palestinian farmers. Over the past few months, there had been concerns that Israeli military movement would hinder the harvest. But to quote an army  spokesperson:

“As a part of preparations for this year’s harvest, meetings were held between Israel’s Civil Administration and Palestinian counterparts. The meetings included representatives of the various villages, as well as important figures from the Palestinian Authority (PA) including the PA Olive Oil Department…”

The statement continued: “The harvest has yielded approximately 24,000 tons of olive oil, compared to last year’s 8000 ton yield. 114,000 tons of olives were harvested (compared to 41,000 tons last year), 7,000 of which will be pickled and 107,000 tons are designated for production of olive oil. An estimated 7,000 tons of the olive oil produced will be marketed in Israel.”

On the downside are trends in Palestinian society, which do not enhance economic development. A press release form Hamas on November 5th referred to the proposed “noble Islamic religious law”. This will impact directly on the banking system, employment laws, contracts and other areas of commerce.

This legislation will directly contradict the reforms demanded by the IMF and The Quartet. It has to be noted that a few of these changes have already been implemented by Fayyad, the Prime Minister under President Abbas. Fayyad, a banker with an international reputation, has been consistently ignored and rejected by Hamas.

The law coincides with the continuing decline in basic freedoms, as reported by the Palestinian NGO, the Independent Commission for Human Rights. It is not not just the arbitrary arrests or unwarranted attacks on private property. In October, the Commission received 70 separate complaints from teachers being dismissed by the Palestinian Ministry of Education because of their private political views. 

Israel’s business scene – 3 new positives

12 November 2008
1 Comment
Categories: Business, Israel

Yesterday, Tuesday, the Bank of Israel unexpectedly reduced its rate of interest to 3%, the lowest since 1948. This is a sure sign of the concern that a “mother of world recessions” is beginning to impact on the Israeli economy. Growth forecasts for 2009 are already under 2%  – around 4% for 2008.

Shadowing that news are 3 positive signs that not all is doom and gloom. Panic is neither desired nor necessary.

Take Teva, the world’s largest manufacturer of generic drugs, whose center is located in Jerusalem’s biotech hub. It has just reported for the third quarter, with sales and profits far exceeding analysts’ predictions. And, as President elect Obama prepares policies for worldwide accessibility to cheaper drugs, Teva’s future looks just as healthy.

On a second front, I was involved with a new and high quality conference in Jerusalem. Held last week, MarcShoret brought together many of Israel’s sales directors and biz dev managers from leading high tech companies. Delegates from Sandisk, ECTel, N-trig and many others came to learn how they can fight the global downturn. The presentations and discussions were of the highest calibre, demonstrating inner strengths of the industry.

Meanwhile, in Tel Aviv, the Venture Capital Research Center has revealed that investments in Israeli high tech sector rose 45% to US$600 million in the third quarter of 2008, compared to the same three months last year. Sure, the final patch of 2008 is not expected to do nearly as well.

Now, when you consider that a total of US$1.68 billion has been raised during the first 9 months of this year, it means that a lot of companies are sitting on a lot of cash. There is still a lot of “gold in dem hills of the Holyland”, a whole load of sales.

Israel’s trade with Muslim countries (2)

9 November 2008
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Categories: Business, Israel, Palestinian Society

My previous comments about a boycott of Israel and how that would affect trade with Muslim neighbours drew a fair amount of offline correspondence.

One person recalled the attempt of Egypt and Iraq to boycott M&S some years back. Most of his Arab acquaintances removed the labels before they went home. And then they discovered they didn’t need to anyway.

Today, I received some Israeli stats on the level of trade with countries in the Middle East.

 Change (T$)

1-9.2008 (T$)

1-9.2007 (T$)

Country

13,738

26,890

13,153

Gulf States

260

319

59

Algeria

718

1,863

1,145

Tunisia

-732

172

904

Iraq 

67,300

228,200

160,900

Jordan

5,100

17,200

12,100

Morocco

2,500

104,700

102,200

Egypt

88,884

379,344

290,461

Total

 

 

 

 

3,100

11,500

8,400

Indonesia

-30,600

25,100

55,700

Malaysia

 

Meanwhile, European Parliamentarians, through the “Free Gaza” campaign are increasing their demands for a boycott of Israel. If Israel’s neighbours do not feel the same way about a trade boycott, what do these protesters really hate?      Time for the truth to out!

 

 

 

 

 

Israeli banks and the credit crunch

5 November 2008
1 Comment
Categories: Business, Israel

Some positive news from the Israeli finance sector.

Ok, so the Tel Aviv stock exchange has lost “just” 17% of its value, while the FTSE world index is about 35% off since May 2008.

But what about the banking sector, where the credit crunch began? We know about Lehmans and Lloyds and even Icelandic savings schemes. We know that Gordon Brown and others are going round the Gulf States with their begging bowls.

In Israel, the situation looks encouragingly healthier. Here are just 3 of the latest positive recommendations.

  • Merrill Lynch added Tefahot Mizrahi Bank to its most preferred list for financials in emeging EMEA region. With phrases such as “a relatively safe haven” and “almost zero exposure to toxic wastes”, the bank is seen as a good short term option for safety.
  • A few days previously, on 22nd October, Deutsche Bank described the Israeli banking system as “in good shape, despite the challenges”. Hapoalim and Leumi were not seen as possessing assets that would create a threat to their future. It even upgraded Mizrahi shares to “buy”, as it was not dependent on cyclical issues.
  • These findings had already been echoed by a local investment house, Leader and Co back in mid September. It detailed the exposure levels of the 5 leading Israeli banks. For example, it noted that Leumi and Discount had some investments in Freddie Mac and Fannie Mae, but they were manageable. Again, Mizrahi was seen as a “bank of choice”.

Life is not all rosy in the Israeli economy. The high tech sector has announced approximately 1,000 lay offs in the past 2 weeks. Purchases of “white household goods” were markedly down in October.

What remains true is how the fundamentals of the economy continue to remain stable. That will serve Israel well as it fights its way through the next few months of world financial turmoil.

Britain’s NHS (2)…without Israeli tech

3 November 2008
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Categories: Business, Israel

My posting on “Sky News-copper-Cupron” drove a large amount of traffic to the blog. It would be thrilling to see just how many lives could be saved or improved with a pilot project for the bed linen.

In a separate item, the Daily Mail and the Evening Standard have both written that the NHS service has frozen  a 12 billion quid computer record programme. Too many “glitches” and worse.

And yet it was only last week that I wrote about CEPCO , an Israeli software house, and its ability to collate and manage all of a patient’s medical records. If you backtrack to previous articles on this NHS failure, companies like Fujitsu, iSoft and Accenture all left the project months back.

So why CEPCO? Well the Germans have a scheme to set up something similar to the NHS. A local contractor has asked for a budget crossing the EU0.5 billion level, spread over several years. Alternatively, CEPCO can have it ready in 6 months for just a few million.

NHS fans wake up. German civil servants and politicians are working towards an operating decision on who will receive the lucrative – very lucrative – contract.

Israeli tech and Britain’s NHS

1 November 2008
5 Comments
Categories: Business, Israel

Viewers of Sky News this weekend have been treated to a synopsis of a thrilling pilot study designed to beat the super bug, MRSA, which has infested Britain’s hositals for years. 

A Birmingham hospital has switched door handles, taps and other surfaces to copper. The idea, “patented” by ancient Egyptians and other ancient civilisations, has been known to combat severe infections.

Where have these people been? If only they had spoken previously to Jeff Gabbay, CEO of Cupron, a small Israeli start up based in Bet Shemesh, midway between Jerusalem and Tel Aviv. Cupron has a series of copper-added products, ranging from clothing to cosmetics, that dramatically fight foot fungi, reduce wrinkles and destroy numerous bacteria.

Yes – Cupron has a package for hospital sheets, where diseases gather and hide. Nurses clean beds by shaking the sheets. In other words, with great irony, nurses are responsible for spreading the germs. Cupron’s copper-treated sheets significantly reduce that possibility.

Cupron is a typically small company. If you went inside their modest offices, you would never believe that this outfit can tackle MRSA, AIDS and many other horrors of the present decade.

Jeff loves to tell how he met with the NHS a couple of years back, but he could not get them to understand what he had to offer. I guess they are more now more interested in changing taps and tops in hundreds of hospitals than just simply purchasing some new bed linen.

Israel’s trade with Muslim countries

31 October 2008
1 Comment
Categories: Business, Israel, Palestinian Society

Detractors of Israel often seek to punish their enemy by demanding a trade boycott with Jerusalem. 2008 has seen several such calls from EU, Norwegians and UK Parliamentarians, to name but a few.

Here’s the catch. If such calls were to be heeded, they would hurt some of the poorer Arab and Muslim countries.

  • On Monday 27th October, 160 Israeli and Jordanian businessmen participated in the fifth annual conference of the Israel-Jordan Chamber of Commerce. Those in attendance Mr. Omar El-Atoum, Economic Officer of the embassy of the Hashemite Kingdom of Jordan in Israel. Israeli-Jordanian trade currently stands at over 300 million dollars. (Remember – in 1994, before the peace treaty, the figure was effectively zero). Jordanian exports to Israeli reached 54.2 million dollars, representing a 42% increase over the same period (Mainly chemical industrial products and agricultural produce). For an economy of Jordan’s size, that is a significant amount of revenue. 
  • Also this week, there was final approval to establish a Palestinian – Israel Chamber of Commerce. The Peres Ceter for Peace and the UK’s Portland Trust have been prime movers here. This must be seen as a primary step to promote deeper understanding and cooperation, which will match the heights of trade between Israel and the Hashemite Kingdom.
  • On Wednesday, Israel’s ambulance service, MDA, signed what amounts to a joint-venture agreement with Indonesia’s Muhammadiyah organization. Cooperation between MDA and the Indonesian rescue and emergency organization began approximately one year ago, with the arrival of a delegation of Indonesian health and community organization officials for an MDA course in Israel. 

And the list goes on. It is worth listening to the words of some of the senior partners of Salens, an international legal outfit located in 19 countries. The company recently sponsored an event at the Israel – Britain Chamber of Commerce. They believe that the way out of the global recession will be found through emerging economies.

Clearly, Israel’s strong economy has an important part to play in this game. It is essential that its ability is used to the full and for the benefit of all.

Investment opportunities in Israel

29 October 2008
1 Comment
Categories: Business, Israel

Israeli stocks and shares have been buffeted as in most other countries. The shekel has suffered a 15% devaluation against the dollar, but has increased in value against most other major currencies. So, where to put your money?

Yesterday, I raised an interesting solution with a senior local financier. Our survey led us to believe that most investment possibilities today are either risky or bear little interest or both. However, if you are seeking a long-term bet, there is an alternative.

Israel start ups have seen great success over the past decade. HP, Boston Scientific, Microsoft have all made significant purchases of small dynamos from Tel Aviv and Herzylia. And the Israeli brain is still churning out new, exciting technologies, pointing to healthy revenue streams in the future.

For example, I have been working closely with CEPCO. Based in Hod Hasharon, they have developed a software, which is embedded on to a smart card with a USB application. This allows the card to collect, manage and export in a secure manner up to 32 GB of info – text, video, Xray and more. 

The first application of this platform has been directed to the medical care market. Citizens will own and possess in their pocket all their medical records, a dream for health funds until now.

What makes CEPCO interesting to an investor is not just that it has completed its r&d. An influential senior civil servant working intimately with German government health funds has welcomed the technology, opening up the CEPCO to a multi-million Euro market. Long-term funding will thus be secured, along with a partnership from the NAV, a German doctor’s association.

Dr Gunter Pollanz, the founder and chairman of CEPCO, told me that all that was missing was an immediate injection of Euro 300,000. This will create a subsiduary in Germany and a small software team for customization.

CEPCO is probably typical of many other companies in Israel, carrying on despite the tsunami sweeping world finacial markets. Savvy investors could do worse than look at such possibilites, especially while the safe blue chip altenatives like banks and insurance firms struggle to return back to base.

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