ECONOMIC SURVEY
July 17, 1994
(COMMUNICATED BY GPO ECONOMICS DESK)
PEACE ECONOMICS:
* AFTER A LONG DELAY, PALESTINIANS APPOINT REPRESENTATIVE TO DEAL WITH
NATIONAL INSURANCE (BITUACH LEUMI) ISSUES; MEETS WITH ISRAELI OFFICIALS.
The Finance Ministry reported that David Brodet, Budget Director and
leader of Israel's economic negotiating team with the PLO, met 17.07.94
with Gabriel Banon, who has been appointed by the Palestinian Authority to
deal with pension issues of Palestinians working in Israel. Banon is one
of PLO chairman Yasser Arafat's economic advisors. At the initial meeting
an agenda for future meetings was set and the next meeting will take place
this August.
* THE FINANCING AND CONSTRUCTION SCHEDULE FOR A ROAD CONNECTING ISRAEL,
EGYPT, AND JORDAN WILL BE FINALIZED THIS WEEK, ACCORDING TO TRANSPORTATION
MINISTER ISRAEL KESSAR.
The financing and construction schedule for a joint project between the
three countries linking Aqaba, Eilat, Ismailia and Suez is expected to be
finalized this week, Kessar announced (Monday), 18.07.94. Discussions
regarding the project are expected to be conducted during meetings of the
Jordan-Israel economic subcommittee on joint projects to be held later
this week (20-21 July).
PRIVATIZATION:
* GOVERNMENT COMPANIES AUTHORITY ANNUAL REPORT: CRISIS ON TEL AVIV STOCK
EXCHANGE POSTPONES PRIVATIZATION; GOVERNMENT COMPANIES LOSE NIS1.27
BILLION IN 1993 DUE TO LARGE LOSSES IN DEFENSE INDUSTRIES; NEXT STAGE OF
ISRAEL CHEMICALS (ICL) PRIVATIZATION LIKELY TO OCCUR BY END OF 1994.
In its report published 18.07.94, the Government Companies Authority
reported that it will fall short of its revenue estimates for 1994.
According to Joseph (Yossi) Nitzani, head of the Authority, the crisis in
the stock market has caused a revision in the schedule of its public
offerings thereby pushing down its revenues to about two-thirds of the
amount expected. Nitzani said the Authority now expects to receive only
between $850 million to $1.15 billion instead of the planned $1.5 billion.
Nitzani suggested the government would sell controlling interest in Bank
Leumi for about $350 million for controlling interest in Bank Leumi and
receive some $120 million for 26% of United Mizrachi Bank by the end of
1994. Figures from the report show sales of companies brought in $1.24
billion $550 million from companies and $691m. from banks. Profits for
the Authority reached NIS1.06 billion but were overshadowed by losses of
NIS2.33 billion from the Defense Industries sector. Losses and
compensation packages for workers who left Israel Aircraft Industries and
TAAS Israel Industries (formerly Israel Military Industries) were the
major factors in the losses. Nitzani said that the government was
moving forward with its plans to sell shares in ICL with a private sale of
15% to a foreign investor while 32% will be sold concurrently on markets
in Tel Aviv or abroad. This, according to Nitzani, will reduce the
government's interest in ICL to 28% down from its present 75% stake.
FOREIGN TRADE:
* CHINA WISHES TO PURCHASE ISRAELI MEDICAL EQUIPMENT.
11 Israeli producers of medical and related equipment reported that the
Chinese are interested in acquiring Israeli medical equipment, following
their return from a business trip to China earlier this month. This was
the second such trip organized by the Israel Export Institute, in
cooperation with the Medical Business Information Center in China. The
center was established by the Export Institute earlier this year.
* ISRAEL ELECTRIC CORPORATION LOOKING AT COOPERATION WITH CZECH REPUBLIC
COMPANIES.
IEC general manager Moshe Katz met with Czech Trade Minister Vladimir
Dalohi in order to determine possible cooperation in purchasing equipment
in the Czech Republic. During the meeting it was decided to examine the
possibility of Israeli firms participating in Czech tenders and Czech
firms in Israeli tenders in the electricity sector.
* ISRAELI AGRICULTURE WILL BE THE CENTRAL FEATURE OF AN INDIAN
AGRICULTURAL EXHIBITION.
Israeli agricultural products will be the central focus of an agricultural
exhibition in the North Indian state of Chandi Garh. According to the
Israel Export Institute, some 150,000 visitors are expected to visit the
exhibition being prepared by the Indian Manufacturers Association. Some 25
Israeli companies will be exhibiting at the conference.
* JUMP IN ISRAELI EXPORTERS EXHIBITING ABROAD.
An increase in Israeli exporters requesting special permission to
transport their goods to foreign venues for the purposes of exhibition has
been registered by the Federation of Israeli Chambers of Commerce.
Companies have exported $48 million worth of goods during the first half
of 1994 using the 'Carnet ATA' special permit for commercial goods. The
'Carnet ATA' allows exporters to bring goods into countries without paying
customs and going through other procedures. During the second half of
1993, exporters exported $20.9 million using the special permit while in
the first half of 1993, some $29.4 million was exported with the special
permit.
BUSINESS SECTOR:
* THE RENAISSANCE FUND JOINS GROUP LED BY KOOR INDUSTRIES IN BIDDING TO
ACQUIRE CONTROLLING INTEREST IN SHEKEM, THE GOVERNMENT OWNED DEPARTMENT
STORE.
The Renaissance Fund, which last month announced that it had raised $157
million in funds for investment in Israel, joined a group led by Koor in
bidding to purchase controlling interest in the Shekem department store
chain. Last year the government sold 65% of its shares in Shekem to
investors on the Tel Aviv Stock Exchange as part of its privatization
program. This reduces the number of officially approved bidders by the
Finance Ministry for Shekem to six. The Renaissance Fund is working
closely with the Claridge Israel Group and is managed by New York's
Stockton Partners.