israel's competitive advantage
TRANSCRIPT
Promoting Israeli High-Tech Industries
2011 - 2012
Competitive Advantage National Plan
משרד האוצר
Ministry of Finance
~ ReviewProgram
Highlights
Basic information
Strengths
Weaknesses
~ The Program Tool box
~ Summary
~ Appendices
“Israel related” concept
Integrated Program
No Silver Bullet
Continuous Process
Program Highlights
High-Tech
Industries
Software / Hardware
Nanotechnology
Biotechnology
Clean-Tech
Space Industry
Life Sciences Innovation
Centers
Start-ups
Large companies
SecurityIndustries
Semiconductors Communications
Internet
Basic InformationIsrael’s High-Tech industries
41.2% of total exports in 2009
270,000 employees in 2008.
c. 14% of total employees in Israel’s business sector
15% of Israel’s GDP
Industry’s Strengths
Signs of Weaknesses
THERE IS A SIGNIFICANT RISK OF IMPAIRMENT TO THE
CONTINUED GROWTH OF THE INDUSTRY IN ISRAEL
~ ReviewProgram
Highlights
Basic information
Strengths
Weaknesses
~ The Program Tool box
~ Summary
~ Appendices
Tool Box
Covers all phases of industry’s growth
Uses a wide variety of additional tools
Industry Flow chart
Industry and Academic Partnership
The Chief Scientist formulated a set of designated tools to enhance the relationships between Academy & Industry (marketing, financing, business training, etc.)
Supporting basic research that has the potential to be commercialized
Expanding existing programs ("Magneton", "Nofar," etc.) Tools 1-2 | Industry and Academic Partnership |Israeli scientists abroad
13
The Problem:
Loss of human capital as Israeli scientists move abroad (“brain drain”)
Goal : To encourage Israeli scientists and entrepreneurs, that have
the power to influence and promote the high-tech industries in Israel, to return home to Israel
Solution : Tax deductions on income from royalties, stemming from
research abroad, to scientists who have returned to Israel and commercialized the product
Israeli Scientists abroad
Tools 1-2 | Industry and Academic Partnership |Israeli scientists abroad
Updating the Chief Scientist’s Programs
Changing the R & D Act regarding the transfer and sale of franchise knowledge
Reducing uncertainty for investors
Improving the effectiveness of the Technological Incubators program
Matching the program to the industry's current characteristics
Changing the loan repayment system of the incubator franchises
Creating incentives to the franchises to reward excellence
Tools 3-4 | Update of Chief Scientist Programs |R&D for the global financial industry
The Problem: Israeli high-tech is marginal in the global financial
industry’s R&D, the biggest consumer of technology worldwide
Solution : Government incentive to multinational financial
entities to establish R&D centers in Israel
Description: New program under the Chief Scientist Office to
encourage R&D centers for global financial technology
Developing R&D Centers for Global Financial Industries
Tools 3-4 | Update of Chief Scientist Programs |R&D for the global financial industry
16
The Problem: Over dependence on ICT and a lack of investment and
limited knowledge in the bio-tech and Life Science area
Solution: Significant encouragement for the bio-tech industry in Israel
Description: 4 public-private funds for bio tech. Government’s $104m to
be leveraged with a minimum of $304m private funds.
Status: Status: 4 managers were selected for the funds in April
2010.
Development for Bio-Tech Industry
Tools 5-8 |Bio-Tech |Early stage capital |Institutional capital | Growing Large Companies
The Problem:
Not enough money is raised by SEED-stage companies. SEED-stage companies raised approximately $39 million in 2009, a decrease of about 56% compared to 2008.
Solution:
Allowing investment in an R&D-focused company to be reported as an expense on “day one”
Description:
Deducting this investment as an expense against income from all sources, spread over three years
Incentives for Early Stage investments
Tools 5-8 |Bio-Tech |Early stage capital |Institutional capital | Growing Large Companies
18
The Problem:
There is a dramatic decline in the ability to raise capital in the Venture Capital industry in Israel from local Pension Funds
The percentage of Israeli institutional investors investing domestically is significantly lower than abroad, 0.2% vs. 2%
Solution:
The State will participate in the investment risk of Israeli institutional investors
Status:
The State has a budgetary commitment of about NIS 200 million for this program
Israeli Institutional Investment
Tools 5-8 |Bio-Tech |Early stage capital |Institutional capital | Growing Large Companies
19
Encouraging high-tech Israeli companies to acquire small Israeli high-tech companies
Encouraging the creation of clusters
Allowing the amortization of goodwill for tax purposes
Promoting M&A activity
Tools 5-8 |Bio-Tech |Early stage capital |Institutional capital | Growing Large Companies
20
The Problem:
Low rate of Arab minority and Ultra-orthodox employees in the high-tech industries
Solution:
Incentives for high-tech employers to employ underrepresented communities
Description:
Adjusting the Ministry of Industry’s support programs, which subsidize the cost of salaries for the high-tech industry
Examining other options to encourage employment via
the Chief Scientist’s programsTools 6-9 | Encouraging Underrepresented Communities | Dual R&D | CIO | Science / Technology Education
Minorities & Industry
21
The government purchases more than a billion shekels worth of technology and services each year from the high-tech industry
The CIO will see all the needs of the government, set strategy and work to create standardized tools and infrastructure
The CIO will have direct responsibility to initiate, lead and operate all horizontal projects for the government
The CIO will create a supportive environment to promote innovation in Israeli industry
Appointment of a Government CIO
Tools 6-9 | Encouraging Underrepresented Communities | Dual R&D | CIO | Science / Technology Education
22
Strengthening Technological Education
Tools 6-9 | Encouraging Underrepresented Communities | Dual R&D | CIO | Science / Technology Education
Structured combination of high-tech
industry retirees /young people
Retraining program by the Ministry of Education for teaching technologica
l subjects
Shortage of teachers in
technological education Industry
Ministry of Finance
Ministry of Education
23
Governmental Focus on R & D
The Problem: No preference or system for integrated national R&D efforts The Solution: a body responsible for: recommendations for research focus areas, formulating an
action plan and coordinating between governmental bodies Members of the Body: various government bodies that are in charge of investment
in research and development
Clean-Tech ?
Bio-Tech?
Homeland
Security ?
Tools 10-11 | Bringing Back Israeli Scientists | Governmental Focus on R&D
~ ReviewProgram Highlights
High-tech Industries
Strengths
Signs of Weakness~ The Program
Tool box
~ Summary
~ Appendices
THANK YOU
~ ReviewProgram Highlights
High-tech Industries
Strengths
Signs of Weakness~ The Program
Tool box
~ Summary
~ Appendices
2003 2006
30.6% 33.4%
0102030405060708090
100 PhilippinesSingaporeMalaysiaKoreaHong KongIsraelIrelandU.S.UKGermanySweden
Emerging markets
Developed economies
Emerging marketsDeveloped
economies
Exports of High-Tech Industries as a % of Exports
In 2009, the share of exports of high-tech industries in Israel was 41.2%
ISRAELHong Kong UK
SingaporeKoreaSweden
Germany U.S.Malaysia
IndonesiaPhilippines
Ireland
16.4%
0%
3%
6%
9%
12%
15%
18%
Export of High-tech Industries Average Growth Rate 2004 - 2006
Source: EuroStat, CBS.
Developed countries Emerging markets
High-Tech Employees by Sub-Branches 2008, thousands
Source: Central Bureau of Statistics, Manpower Survey
85%
15%
Source: USPTO.
Innovative Patents Registered by Emerging Markets in the U.S. in 2008
(Patents per million people)
U.S. Patent Applications by Country of Source 2008
Source: CBS.
University Degrees by Field of Study 1987-2008
0
1,000
2,000
3,000
4,000
5,000
6,000
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Mathematics Statistics and ComputerSciencePhysical sciences
Biological sciences
Engineering and architecture
Israeli Requests for Patents in the U.S. From 1995-2008
0500
1,0001,5002,0002,5003,0003,5004,0004,5005,000
1,072 1,042 1,097 1,3581,953
2,508 2,707 2,645 2,539 2,6933,157
3,657
4,410 4,550
Students Studying Abroad Vs. Students Studying Domestically, 2002-
2007
Source: OECD - education at glance.
2002 2003 2004 2005 2006 2007
0%
1%
2%
3%
4%
5%
6%
7%U.SUKGermanySwedenIsrael
Israeli Students in the U.S. After Receiving a Ph.D.
)% Staying and Returning(
לפי תוכניותיהם בשנה לאחר קבלת התואר*
64%
01020304050607080
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
Staying
Returning
Forecast in Venture Capital Investment Activity in 2010
Source: NVCA.
15% 40% 45%
20% 53% 27%
58% 26% 16%
70% 17% 12%
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1
Increase investment Unchanged Reduce investment
1% companies25% employees
5
9% companies30% employees
90% companies45% employees
Large companies
Over 450
employees >$100 M
Growth companiesSales >$10 M
“Start-Ups”
According to CBS: • There are 36 companies with sales greater
than $100M • There are 12 companies which were
established after 1992 • 4 companies were established after 1995
Source: IVC.
Failure of Large Company Development
Source: Gartner.
Expenditure on IT by Sector
THANK YOU