David Pollock, Senior Managing Director, Bear Stearns/JPMorgan.; Chairman, Milken Institute Israel Center
The West Bank is open for business, and venture capital is welcome as Palestinians and Israelis work together in the private sector to create wealth and economic stability, a panel of experts and entrepreneurs said.
Opportunities exist in high-tech fields like information, communications and technology, or ICT, said Israeli entrepreneur Zvi Schreiber of G.ho.st and Palestinian venture capitalist and ICT expert Saed Nashef.
Together with Yadin Kaufmann, an experienced Israeli venture capitalist who funded Veritas and Tmura Venture Funds, Nashef is establishing Middle East Venture Capital, which focuses on Palestinian ICT companies and startups.
"Palestinians are well-placed to capitalize on the growing market in Arab-language content and mobile applications," Nashef, a Microsoft veteran, said. The Palestinians are technically savvy, and ICT is resistant to political volatility while opening global doors, offering high-paying jobs and fostering local stability.
With offices in the West Bank and Israel, G.ho.st is experiencing exponential growth in international virtual computing services and garnering international awards. CEO Zvi Schreiber talked about the challenges and achievements of his Palestinian-Israeli team of 30. Joking that he is probably the only CEO who has never visited his own company′s central office, Schreiber described how the company uses videoconferencing as a main management and meeting tool. He said his is the first Palestinian-based company to attract international venture capital (Benchmark Capital).
Coincident with these developments is the first planned community at Rawabi, in the West Bank. Amir Dajani from Bayti Real Estate Investment Company manages this first of its kind project, which will provide 5,000 residential homes in a mixed-use community that includes retail, a high-tech business cluster, a research university campus, education facilities and a multi-purpose cultural center. The cost of construction is estimated at $500 million, said Dajani who emphasized the job-creation potential of the project. He estimated the project will bring 8,000 -10,000 construction positions, 3,000-5,000 permanent jobs for residents and various employment opportunities for nine surrounding villages.
East Jerusalem presents its special challenges, but entrepreneurial spirit and opportunities exist there as well. With a focus on "what can be done now independent of 'final status' outcome," Steven Zecher of Strategy Partner highlighted opportunities in Jerusalem in international tourism, business networking, business skills training and targeted branding. These industries are scaleable and strengthen local brick-and-mortar businesses, providing greater value for tourists and opportunities for local youth, Zecher said.
All projects and entrepreneurs could potentially benefit from U.S. involvement through the Overseas Private Investment Corporation. James Williams of OPIC sees great economic opportunities in Palestinian communities as OPIC helps organize private-sector financing and equity while serving unaddressed needs by providing small-business loans and offering innovative instruments such as specialized insurance for political risk and trade disruption.
These successes encourage local banks to lend locally instead of investing overseas. Local lending has been problematic, said James Prince of the Democracy Council. The Palestinians receive significant aid, but political and security instability has encouraged local banks to invest overseas, he said. Reversing this trend is important because local banks are best-positioned to support local small business.
Other business challenges are the restricted physical movement of people and goods and the need for greater emphasis on investment and development instead of security and politics, panelists said. Technology reduces some physical movement challenges, but the absence of high-tech economic development zones complicates business operations where Palestinians and Israelis need to come together to produce goods and services, they said. The current security checkpoint and administrative processes are inefficient, complicating travel and making business planning and operations relatively difficult and expensive. Where physical projects materialize, solutions are a prerequisite for the completion of the project itself. For example, in Rawabi building materials will need to be transported and an access road must be built.
"Strengthening the economy of Palestinian neighborhoods is in Israeli interests," Israeli Consul General Jacob Dayan said at the end of the panel. The "everything or nothing" approaches are gone, he said. Israelis and Palestinians are working together to strengthen the economy through private development, to expand the Palestinian middle class and to foster and sustain democracy.
Global Conference 2013
Former Prime Minister Tony Blair, philanthropist Bill Gates and Strive Masiyiwa of Econet Wireless discuss advancing prosperity in Africa.
