Foreign investment in Israel: Hightech & traditional industries benefit

It’s been a bumper week for foreign direct investment in Israel. American pharma multinational, Abbott Laboratories, paid US$123m for control of Starlims, an Israeli data management software enterprise.

That news was preceded 24 hours earlier by the purchase of Optonol, a small company just outside Jerusalem, which has developed  a brilliant application to treat glaucoma. Medical device giant, Alcon, has offered a deal potentially valued at hundreds of millions of dollars.

This is all part of a growing trend. A UK based investor report noted that for the period August – October 2009, foreign direct investment in to Israel, hit over US$250 million every month.

Significantly, not all of this financial flow is directed at high tech. For example, in a statement released by the Israeli Tourism Ministry, there has been an “unprecedented demand from entrepreneurs to invest in hotels.”

37 entrepreneurs recently replied to the Tourism Ministry’s invitation for grant allocations to establish new hotels and to return buildings once used as hotels to their former use. The Tourism Ministry allocated 300 million NIS to providing grants for entrepreneurs within the framework of the 2009-2010 work plan for this dual purpose. An extra 100 million NIS will be allocated to this program next year in line with demand.

In accordance with the Law for the Encouragement of Capital Investment in Israel, the Tourism Ministry offers a higher level of participation: 20% of the total investment excluding land costs.

It has already been announced that the Ritz Carlton chain intends to open its first hotel in Israel in 2012.

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