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Produce, Research & Develop The Israeli Advantage

State of Israel Ministry of Industry, Trade & Labor Foreign Trade Administration Investment Promotion Center. Produce, Research & Develop The Israeli Advantage. Main Indicators 2000-2004. Investment climate in Israel Foreign Direct Investment in Israel. Not including traded securities.

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Produce, Research & Develop The Israeli Advantage

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  1. State of Israel Ministry of Industry, Trade & Labor Foreign Trade Administration Investment Promotion Center Produce, Research & DevelopThe Israeli Advantage

  2. Main Indicators 2000-2004

  3. Investment climate in IsraelForeign Direct Investmentin Israel Not including traded securities Source:Bank of Israel

  4. Investment climate in IsraelSources of Foreign Investment -2003 Source: Israel Venture Association , March 2003

  5. Microsoft Pratt & Whitney AOL Time Warner Intel IBM Boeing Enterprises Cisco Systems GE Lucent 3Com Hewlett Packard Merrill Lynch Motorola Sun Microsystems Siemens DaimlerChrysler Volvo Cable & Wireless Baan Volkswagen Deutsche Telecom L’Oreal British Telecom Danone Ares Sereno Unilever Investment climate in IsraelForeign Companies Invested in Israel- Some Examples US Europe Asia • Samsung Electronics • Daewoo • Nomura • Hutchison Telecomm. • LG Group • Sony • Toyo Ink • Hyundai • Acer Computers • Sumitomo Trading • Fuji • Honda

  6. Investment climate in IsraelSupportive Business Environment • Worldwide taxation and customs treaties • Protection of trademarks, patents and intellectual property of all kinds • Comprehensive legal protection of foreign companies • State of the art telecommunications • A highly advanced banking and financial sector

  7. INDIA CHINA RUSSIA ISRAEL SINGAPORE TAIWAN S. KOREA “The World's Rising Innovation Hot Spots" U.S Patents 5,300 3,952 1,188 438 764 60 366 39 30 354 62 268 306 62 “Israel's strengths: Optical and wireless communications, chips, software, sensors” BusinessWeek, October 11, 2004

  8. Innovation climate in IsraelScientists & Technicians per 10,000 Workers

  9. Innovation climate in Israel Entrepreneurship Source: IMD World Competitiveness Yearbook, 2002

  10. Innovation climate in IsraelIMD World Report 2002 Source: IMD World Competitiveness Yearbook- 2002 Edition, White Paper on International Trade 2002

  11. * The Wall Street Journal received 585 applications from around the world for the 2004 Technology Innovation Awards. Innovation climate in IsraelWall Street Journal - 2004 Technology Innovation Awards

  12. Innovation climate in IsraelPatents Israel - An annual increase of 20% Source: BDI - Business Data Israel

  13. IsraeliCompany Technology Acquirer Sum Time P-CUBE Traffic Management CISCO $200 million August 2004 ENVARA Wireless infrastructure INTEL $40 million March 2004 EMBLAZE Chips for Mobile-device applications ZORAN $54 million June 2004 ACTONA TECHNOLOGIES Enterprise software CISCO $100 million June 2004 A2I Content management software SAP $10 million July 2004 SANCTUME Agis ART Technologies & Phonetic Systems Web security Pharmaceutical Speech Applications WATCHFIRE Scansoft Perrigo $45 million $900 million $100 million November 2004 July 2004 November 2004 Recent trends and developmentsRecent M&A

  14. Investment in Technologies • According to foreign investors, following the Silicon Valley and Boston, Israel is the main center to search for new technologiesHigh Tech Investments Q1-Q3 2004 Ernst and Young, October 2004

  15. VC Investments(by quarter) Source: IVC Online

  16. Major R&D EffortsStretching Boundaries of Imagination & Ingenuity • Innovative synergistic industry-academy cooperation, supported by the Chief Scientist, Ministry of Industry & Trade. • Over 100 industrial & academic participants. • Focused on establishment of the technological infrastructure for the next generation. • Key telecommunications R&D activities: • Internet & Multimedia • Telemedicine • Microelectronics • Network management • Digital wireless • Satellite systems • Broadband & optical technology

  17. Recently Established R&D Centers • 18-December-2004 - Telynx (USA) - Data-processing, software and services: Opening of a research and development center in northern Israel • 18-December-2004 - BrainStorm (Canada) - Biotechnologies : Announced a new research center in Kiryat Ha'Mada Ve Ha'Technologia • 15-November-2004 - Huawei Technologies (China) - Data-processing, software and services : Establishing $2m Israeli R&D center • 25-October-2004 - 3M (USA) - Drugs: Minnesota-based giant, 3M, o invest in R&D operations in Israel Source: ANIMA

  18. Technology Start-ups • Israel is one of the largest world centers for start-up enterprises, with ~800 (year 2003) active start-ups. • Innovative, technology-intensive activity, representing several technology breakthroughs. • Major international activity: • Strategic alliances and joint ventures. • Raising capital - venture, seed & risk investments.

  19. Venture Capital • Investments by venture capital funds constitute an added value above financial contributions - in management, world market familiarity, strategic guidance and economic credibility. • During 2003, 371 Israeli companies raised $1.01 billion (compared to 352 companies & $1.14 billion during 2002). • 43% ($421 million) was invested by Israeli venture capital funds. • The active sectors are communications (33%), software (19%), life sciences (18%), semiconductors (12%) & Internet (4%). Source: IVC Research Center (2004)

  20. Israeli Revenue-driving Innovations • The cellular phone, Motorola Israel • The Pentium MMX Chip technology, the Pentium-4 microprocessor and the Centrino processor, Intel Israel • Medinol’s minimally-invasive cardiovascular stent technology • AOL Instant Messenger technology, ICQ

  21. Israeli Revenue-driving Innovations • Most of the Windows NT and XP operating systems, Microsoft-Israel • VocalTec’s award-winning voice and audio compression technology • Given Imaging’s ingestible video camera AND MANY MORE…

  22. You quest we quote!Source for Technologies “There are few places like Israel where one can find leading technologies in almost every field.” Y. Hasson – Senior Vice President Nokia Venture Partners (London) September 2003

  23. You quest we quote!The promised land “Land of Tech Promise - Again” “After years of a long slump, Israel is seeing a slew of IPO’s, mergers and new startups” BusinessWeek, September 20, 2004

  24. You quest we quote!Be Part of the Future “Outside the US, we invest in only one other country. That’s Israel.” Julien Nguyen, Managing Partner, Applied Materials Ventures September 2003

  25. You quest we quote! Happy Investors “If you liked investing in Israel in the late 1990’s, you’ve got to love it today –Same talent. Same opportunity. Better prices.” Stanley Gold, CEO Shamrock Holdings Director of Walt Disney Company, July 2002

  26. You quest we quote!Innovation “Israel is important to our goal because it has historically been a hotbed of new raw technology and scientific developments.” Matthew I. Growney, Managing Director Motorola Ventures September 2003

  27. You quest we quote!Good Things –Small Packages “Israel is a small country with a tiny population, and yet it has many significant high-tech success stories.” Sven Lingjaerarde – Co-Founder & General Partner Vision Capital – September 2003

  28. You quest we quote!Touched For The Very First Time “I would like to emphasize the fact that I feel very safe and very welcome.” “Israel as safe as NYC” Madonna, a visit to Israel, Sep. 2004

  29. Incentives for R&D Centers • Tax relief program: “Cost +” Three priority areas: A, B, C National Priority Zone A National Priority Zone B Central Israel

  30. Central Israel Central Israel Grant Rates for Fixed Priority Zone A Priority Zone B Asset Industrial Projects 24% 10% 10% (Up to 140M NIS) Industrial Projects 20% 10% 10% (Above 140M NIS) Central Israel Grant Benefit Path • Fixed asset benefit level pending zone • Tax Benefit

  31. Central Israel Tax Exemption Path

  32. An example of the Tax Benefit

  33. Government Support of R&D Expenses • Lower risk: The chief scientist of the Ministry of Industry Trade and Labor can share up to 50% of R&D expenses, in exchange to future royalties.

  34. International Centers for R&D About 60 foreign R&D centers are located in Israel

  35. State of Israel Ministry of Industry, Trade & Labor Foreign Trade Administration Investment Promotion Center 5 Bank Israel St., Kiryat Ben-Gurion Jerusalem, Israel www.moital.gov.il danny@moital.gov.il

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