Global Conference 2008
Capitalizing on Momentum: Israeli Financial Reform
Monday, April 28, 2008 / 9:35 am - 10:50 am
Yossi Hollander of the Israeli Institute for Economic Planning addressed some of Israel's challenges, noting, for example, that it is "unique among all western nations (because) it will have the highest rate of (projected) population increase in the world — from 7.5 million today to nearly 9.5 million in the year 2025." To serve its citizens, he said, there must be a 50 percent increase in available jobs, from 2.6 million to nearly 4 million in the next three to five years. GDP must increase 4.5 percent annually each year, compared to 1.2 percent each year for the past 30 years. Israel must also maintain an 8 percent annual growth in high-tech exports, from $71 billion to $230 billion in the next five years. He summed up the challenges, warning that "Israel must learn how to turn into a global financial center and international headquarters for the developing world in order promote social cohesion and avoid poverty gaps and unemployment within the state."
Guy Ben-Ishai of LECG and Tal Keinan of KCPS & Co. highlighted the Bachar Reforms, improving credit allocation and the birth of Israel′s bond market. "In the last four years," said Ben-Ishai, "Israel has been increasing economic growth by 5 percent each year, and has moved from an A to an A+ by Moody's."
"From the land of milk and honey, Israel became the land of milk and financial startups," said Ben-Ishai, "and is now becoming the land of milk, financial startups, and finance." As the audience chuckled, Keinan quipped, "It's a double mitzvah! To make aliyah (as a Jew, to immigrate to Israel) and help the economy of Israel at the same time." Israel is closer to emerging market partners in Eastern Europe than is London, and its less expensive resources are a boon to new opportunities in finance and investment.
The country is fast becoming a global center for investment, Keinan added. In 1990 the nation had no tech industry, but it took just a decade for the industry to blossom. ""What Israel has on its side," he explained, "is an impressive human resource allocation, a solid higher education system, expertise and experience gained internationally and concentrated locally, and an amazing and resilient entrepreneurial spirit — not to mention western legal and accounting procedures."
Neri Bukspan noted that government support is crucial to the success of a country's advancement and financial growth, and that Israel has that support. He offered his recipe for a "stew of success," which includes solid regulatory infrastructure, skilled personnel, open access to consumers and clients, good corporate governance, efficiency of markets, tax incentives, infrastructure and government support. Not to be excluded from the list are quality of life, Zionism, language and culture, he said, adding that "Israel has the right ingredients. Now it just needs to keep it cooking."
Israel is a land of creativity, innovation and idealistic thinking, the panelists agreed, and these characteristics have helped to create the progress we see now and will propel Israel into the future.
Managing Economist, Global Competition Practice, LECG; Visiting Fellow, Milken Institute
Managing Director and Chief Global Accountant, Standard & Poor's
Chief Financial Officer, Government of Israel Economic Mission
Chairman, Israeli Institute for Economic Planning
Chairman and CEO, KCPS & Company