The Ministry of Industry, Trade and Labor,

Foreign Trade Administration

Добро пожаловать ברוכיםהבאים

Welcomes the Visitors of the Russian Companies to Israel

Tel-Aviv 14.03.2007

Israeli Economy:

Where the Breakthroughs Happen

Israel’s Economy – Main CharacteristicsIsrael’s Economy – Main Characteristics

Export Oriented Growth

Rapid Development of Technology & Hi-Tech

Industries

High Skilled Human Resources

Entrepreneurial Culture

Supportive Environment for Business

Investment & R&D Incentives

Foreign Direct Investment (B$)

Source: Bank of Israel, Not including traded securities

* - Jan-Jun 2006

1.6 1.7

3.1

5.1

3.6

1.8

3.9

1.6

6.2

7.7

0

1

2

3

4

5

6

7

8

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006*

High-Tech Boom

High-Tech

Bubble Burst

Expenditure on Civilian R&D in Israel & in Selected OECD Countries

(% of GDP, 2002)4.5

4.1

3.4

2.8 2.82.6 2.5

2.32

1.8 1.7

1.2 1.1

0

1

2

3

4

5

Israel

Sweden

Finland

Japan

Korea

Switzerland

Germany

USAFrance

Netherlands

UK Ireland

Italy

Source: Central Bureau of Statistics, Bank of Israel

Policy and New Toolsfor Development of the Trade

and Economic Relations between Israel and Russia

Government Incentives

• Investment Incentives

• R&D Incentives

• Industrial Technology Incubator Program

• Industrial Innovation Support Program

• International Cooperation ( Trade, R&D, Investments)

• Programs aimed at assisting SME’s (Consulting Services, Financing, Marketing)

The Joint Commissions

The economic activity between Israel and Russia is settled through the Joint Commissions.

Until now Six joint commissions have taken place, the last of them are:

•6th Joint Commission November 2006, Jerusalem

• 5th Joint Commission, June 2005, Moscow

• 4th Joint Commission, November 2002, Jerusalem

• 3rd Joint Commission, January 2000, Moscow

Inter-Governmental Economic Agreements between Israel and Russia

• MFN agreement (1994) • Agreement on avoidance of double taxation (1994)• Agreement on cooperation in customs (1998) • Aviation agreement (1998) • Framework agreement on cooperation in science and

culture (1995) • Agreement on cooperation in industrial R&D between

MATIMOP and Rosnauka (2006)• Israel’s support of Russia’s bid to join WTO

Inter-Governmental Economic Agreements under negotiations between Israel and Russia

• Agreement on investment protection • Agreement in the area of standardization • Agreement on cooperation in industrial R&D on

the governmental level

Inter-Organizational Agreements Israel - Russia

• Agreement between SME authorities • Agreement on insurance of credit lines between ASHRA

and Russian commercial banks • Quadruple cooperation agreement between

Manufacturer’s Association of Israel, Israeli Export Institute, Israel-Russia Chamber of Commerce and Association of Entrepreneurs and Industrialists of Russia (2006)

• Cooperation agreement between Manufacturer’s Association of Israel and Federation of Chambers of Commerce of Russia (2006)

Russia as one of the priority countries for the Israeli foreign trade

• Announcement of Russia as one of the priority countries for promotion of the Israeli exports and of the bilateral trade in general.

• Opening in St. Petersburg of a regional office of the Trade & Economic Department of the Israeli Embassy in Moscow.

• Concentration of efforts in selected sectors with high potential for bilateral cooperation (Telecom, HLS, Agriculture, Software)

• ASHRA - The Israel Export Insurance Corporation provides additional financial tools for development of Israel-Russia trade cooperation.

• Russia as an Technology partner for Israel.

Trade and Economics Relations:

Latest Developments

• Working group in standardization – negotiations toward mutual recognition of the laboratories in the selected sectors

• Diamonds – announcement of the President of Alrosa about starting of direct marketing of rough diamonds to Israel

Israel’s Foreign Trade and

Israel – Russia Trade Relations

Exports as a % of GDP

31%

35% 36%

38%

44%

46%

48%

25%

30%

35%

40%

45%

50%

1995 2001 2002 2003 2004 2005 2006*

Source: Central Bureau of Statistics, Bank of Israel, EIU *Forecast

Israel’s Free Trade AgreementsUSA (1985)

EFTA (1992)

Jordan (1995): Bilateral Trade Agreement

Canada (1997)

Turkey (1997)

Mexico (1999)

Romania (2000)

European Union – Association Agreement 2000

Bulgaria (2002)MERCOSUR(Under Negotiation)

Exports of Goods by Region 2005 (exc. Diamonds)

Asia15%

Rest of the World11.5%

USA28.5%

South & Central America

4%

European Union34%

Rest of Europe7%

Source: Central Bureau of Statistics, Bank of Israel

Imports of Goods by Region 2005 (exc. Diamonds)

Asia18%

Rest of the World18%

USA15%

Central & South America

3%

EU37%

Rest of Europe9%

Source: Central Bureau of Statistics, Bank of Israel

Israel’s Major High-Tech Exports 2005

Software22%

Pharmaceutical Products

15%

Equipment for Control and Supervision

20%

Aircraft8%

Electronic Communication

Equipment 19%

Office and Computing Equipment

6%

Electronical Components

10%

Source: Israel Export & International Cooperation Institute, Israel Association of Software Houses

Total High-Tech Export

(Including Software): 15 B$

-1,000,000

-500,000

0

500,000

1,000,000

1,500,000

2,000,000

2002 2003 2004 2005 2006

שנה

Importיבוא

Exportיצוא

Trade Balanceמאזן מסחרי

Total Tradeהיקף הסחר

Israel’s Trade with Russia

0%

20%

40%

60%

80%

100%

Export 2005 H1 Export 2006 H1

Israeli Export to Russia Micellaneous

Optical & MedicalEquipmentPrecious Stones &MetalsPrepared Foodstuffs

Plants & VegetableProductsRubber & Plastics

Chemical Products

Machinery

0%

20%

40%

60%

80%

100%

Import 2005 H1 Import 2006 H1

Israeli Import from Russia

Micellaneous

Plants & VegetableProducts

Chemical Products

Mineral Products

Base Metals

Precious Stones & Metals

ThanksWishing you a Fruitful and Enjoyable Exhibition

Спасибо за внимание

תודה על ההקשבה

Ministry of Industry, Trade and LaborForeign Trade Administration