Israel Trade Commission website

ISRAELTRADE COMMISSION Commercial News from Israel October 2005

NOBEL PRIZE FINANCE & TRADE INVESTMENT IT & T MEDICAL SECURITY JEWELLERY EXHIBITIONS IN ISRAEL

Dear friends and colleagues, Welcome to the October 2005 edition of the Israel Trade Commission's Commercial news from Israel. The Israel Trade Commission (ITC) focuses on a wide range of activities and services aiming at the promotion of trade and joint ventures between Israel and Australia. The ITC is the Sydney based office of the Israeli Department of Industry Trade & Labour. It is a government service organisation, providing free assistance to Israeli businesses looking to enter the local market, and helping Australasian businesses invest in or source Israeli products.  The last two months have been monumental in Israel. Whilst the Gaza pullout has captured most of the world headlines, Israel has celebrated a Nobel Prize in Economics being awarded to one of its citizens and significant development in a cure for AIDS. In addition, Israel has now cemented its place as the second most represented country on NASDAQ. We at the Trade Commission look forward to continuing this outstanding performance, and eagerly await the upcoming Israel Trade Delegation, which will be in Australia between the 14^th and 17^th of November.   Please feel free to contact us for any assistance required. Nili Shalev Israel Trade Commissioner 6/37 York Street Sydney, NSW Tel: 02 92623943 www.israeltrade.org.au info@israeltrade.org.au

NOBEL PRIZE

ISRAELI WINS NOBEL PRIZE

Professor Aumann, 75, and American scientist Thomas Schelling were named as co-winner of the 2005 Nobel Prize for Economics.

It may sound uncanny, but an Israeli has educated the world on conflict resolution. Robert Aumann, 75, the Hebrew University professor and American scientist Thomas Schelling, “enhanced our understanding of conflict and cooperation through game-theory analysis”, the Royal Swedish Academy of Sciences said in a statement. The two will share the $US1.3-million prize.

Game theory is the science of strategy, the study of how various rival groups, whether business colleagues or warring parties, can interact to secure an ideal outcome. Professor Aumann specialised in “repeated games”, analysing conflict over time.

FINANCE & TRADE

BANK HAPOALIM BUYS TURKISH BANK Bank Hapoalim became the first Israeli bank to own a Turkish bank. Continuing on its global expansion, Bank Hapoalim signed a memorandum of understanding to buy the controlling interest (more than 50% equity interest) in the Turkish bank, C-Kredi ve Kalkimna Bankasi A.S. C-Bank, originally owned by the Turkish government, has specialised in corporate and investment banking since its privatization in 2002. Bank Hapoalim will invest $113 million in the form of shareholders equity. Bank Hapoalim plans on developing a new business plan, developing its operations with the business sector and retail banking activities in the areas which it has a great deal of experience.		BANK HAPOALIM SELLS MUTUAL FUNDS DIVISION TO SOLOMON FOR NIS 955M Bank Hapoalim on Sunday agreed to sell off its mutual funds management arm, Poalim Mutual Funds Ltd. (P.K.N.), to Solomon Capital Markets for NIS 955 million. The price represents NIS 46m. for each NIS 1 billion in assets managed by PKN. Migdal Insurance was another bidder in the auction. P.K.N., with a market share of 15.5 percent, is the largest manager of mutual funds in Israel's economy. It has NIS 20.5 billion under management in 74 separate funds. Bank Hapoalim said the deal was expected to close in the first quarter of 2006 and that it would post a NIS 500m. net capital gain on the sale.
ISRAEL - SECOND LARGEST PRESENCE ON NASDAQ Ituran became the 71^st Israeli company on the Index. Israel for some time had been third in line, after Canada on the Nasdaq. With the listing of Ituran, Israel became the second largest presence on the Index. Two more Israeli companies plan to list on Nasdaq in either October or November: Passave and Predix Pharmaceuticals.	IDB SEEKS TO OWN NO MORE THAN 5% OF LEUMI IDB Holding Corp. Ltd. has no plans to own a controlling interest in Bank Leumi. IDB is debating whether to buy all or half of the 9.99% block of shares that the government is offering for sale, in order to own a stake in the bank. IDB believes that Bank Leumi is a good investment that will probably yield a handsome dividend, but has no intention of becoming involved in the bank’s management.		ISRAEL'S GDP GROWTH  SHOWS ECONOMY IS STRONGER Merrill Lynch reports Israeli economy on a "firmer footing." Merrill Lynch revised its growth estimate for Israel for 2005 from 3.8% to 4.2%. The burst of the GDP was led by a 5.3% increase in consumer spending, driven by low interest rates and strong employment growth over the past twelve months. The growth was substantiated by figures from the Central Bureau of Statistics which revealed that the industrial production in the first half of 2005 was 4.7% higher than the same period last year. Employment Service's also reported an increase in demand for workers of 21.7% in July 2005 compared with July 2004.

INVESTMENT

CHIEF SCIENTIST ANNOUNCES NEW R&D PROGRAM FOR UPGRADING THE LOW-TECH INDUSTRIES The Office of the Chief Scientist, Dr. Eli Opper of the Ministry of Industry, Trade and Labor announced a program to encourage innovation through R&D in the low tech industries. Dr. Opper said that the most current civilian R&D is in the high-tech arena. The program is aimed at boosting low-tech R&D in industrial sectors such as food, chemicals and metals. The goal of the Chief Scientist is to raise the level of investment in these sectors.

TIBERIAS HOTELS INVEST IN UPGRADES The 30 hotels belonging to the Tiberias Hotel Association are investing NIS 50 million to renovate and upgrade their premises in line with efforts to renew the city and its infrastructure as a whole. The money is being invested in rooms and guest amenities at the hotels, including swimming pools, sport centers, and spas. Work on all projects should be finished by Summer 2006, though some hotels have already inaugurated new facilities. Among the hotels participating in the move are the Jordan River, Caesar, Sheraton, and Holiday Inn.

MARKSTONE FUND TO BUY STEIMATSKY GROUP Markstone Capital Group agreed to purchase full control of the Steimatsky Group for an undisclosed amount. Market sources said that the deal had a value in excess of NIS 200 million. Markstone, will take over Steimatsky's operation in Israel and abroad. Founded in 1925 by Yehezkel Steimatsky when he opened his first bookstore in Jerusalem, the company has grown to 150 stores today. For Markstone, the deal is its first investment since raising $800m. at the beginning of October, making it Israel's largest private equity fund. Until then, Markstone had raised approximately $700m. in funds earmarked for investments in Israel.

IT & TELECOMMUNICATIONS

COMPUTER ASSOCIATES AND ISRAEL COOPERATE ON R&D Israel's Ministry of Industry, Trade and Labor and Computer Associates (CA) announced in a visit by CA's chairman Lewis Ranieri and a group of company executives their plans to sign an industrial agreement. Among the terms of the agreement, Israeli companies in related fields which meet criteria to collaborate with CA will receive financial aid from the Ministry. In addition, companies will benefit through appointment of liaison personnel, marketing, sales and business development resources, business plan creation, consultancy and technical assistance. Aryeh Ofner, CA Israel's CEO said that CA’s most significant R&D activities outside the United States are in Israel.

MILLICOM DEPLOYS COMVERSE SOLUTION IN LATIN AMERICA Comverse, a unit of Comverse Technology announced that Millicom International Cellular has implemented both Comverse's prepaid billing solution and SMS solution in five of its Latin American properties. Comverse is Millicom's regional partner, providing prepaid billing platforms in Bolivia, Guatemala, El Salvador, Honduras, and Paraguay, and also provides a bundled intelligent short message service center to manage Millicom's GSM overlays and existing TDMA and CDMA networks throughout Central America. Comverse solution enables Millicom to charge for current voice and data services in real-time, as well as to introduce emerging data and content services as they become available in the future.

GOOGLE OPENS ISRAEL OFFICE Google Inc. announced that it is establishing a branch in Israel. The branch will enable the company to continue providing Israeli surfers, advertisers and partners with a search experience and advertising services via its search engine. Initially, it will focus on improving directed advertisements, and on selling services to the Israeli advertising market.

INTEL'S NEXT GENERATION PROCESSOR DEVELOPED IN ISRAEL Intel Corporation unveiled its next-generation micro-architecture, a multi-core processor, which was developed completely at its facilities in Israel. Intel introduced the new 65 nano-meter microprocessor, saying that it was designed to bring increased power per watt and that it was expected to deliver an improvement of three to five times the strength of previous products. The new technology will go into production towards the end of this year, the first products of which will enter the market in the second half 2006.

MEDICAL

TEVA UNVEILS NEW FACTORY IN JERUSALEM Teva Pharmaceutical Industries Ltd. unveiled its new $80 million tablet production facility in Jerusalem's Har Hotzvim hi-tech complex, making it one of the biggest of its kind in the world. The facility covers an area of 25,000 square meters. It is expected to produce over 100 different products and when working at full capacity, will produce an output of approximately eight billion capsules a year. Teva is the first multinational company that has requested to participate in the Government's investment strategy program to develop the periphery. The program offers an attractive investment incentive of a complete tax exemption for 10 years.

KAMADA TO INVEST $2.5-5M IN UPGRADING PLANT Kamada Ltd., which develops drugs from human plasma, has announced that it will invest more than $2.5 million in upgrading its plant at Beit Kama in the Negev. The company is about to start clinical trials of its drug API, which is meant to become its flagship product. The drug is for chronic replacement therapy for people with congenital deficiency of Alpha 1-Proteinase Inhibitor with demonstrable panacinar emphysema. In 2003 and 2004, the company invested some $3 million in the plant, in the first stage of the upgrade plan. This is in addition to $5 million invested in research and development in that period.

BREAKTHROUGH IN AIDS TREATMENT DEVELOPMENT IN ISRAEL A team at the Ministry of Agriculture Veterinary Institute has discovered an active pharmaceutical ingredient (API) to rehabilitate the immune system and prevent and treat skin diseases and the AIDS virus. Tests conducted on animals have been successful in blocking the propagation of the AIDS virus. The Ministry of Finance is setting up a tender committee to choose a scientific institution to develop a biological inoculation against AIDS based on this API discovery.  This inoculation could lead to a breakthrough in the current treatment and prevention of AIDS worldwide.

SECURITY

ISRAEL IS A BRAND NAME IN SECURITY, SAYS RUDOLPH GIULIANI The former New York City mayor, Rudolph Guliani, a guest at the Ness Technologies conference, said, "People in the US know Israel and when talking about security and intelligence, there are few examples like it. Israelis understand what security and intelligence mean, because they have learned them the hard way.”

The Israel Export and International Cooperation Institute is pleased to announce the launching of a new website showcasing Israel’s Security and Safety sector: http://security.export.gov.il This site contains the profiles and contact information of more than 250 companies in the security and safety industries, and serves as the address for reaching exporters involved in all areas of security.

IMI SIGNS AGREEMENT WITH US ARMY Israel Military Industries Ltd. (IMI) has signed a major contract to supply the U.S. Army with $300 million worth of light arms ammunition over five years. IMI executives said this was the largest munitions contract between Israel's defense industry and the U.S. Army. IMI chairman Ovadia Eli said winning the tender was a significant achievement and an important measure of the company's capabilities. IMI participated in the U.S. Army tender as part of a consortium led by General Dynamics. The contract could reach $1.2 billion.

JEWELLERY

DANON JEWELLERY SIGNS $1.5M EXPORT CONTRACT TO JAPAN

Danon Jewellery Ltd. signed a $1.5 million contract with a local company for the marketing of an exclusive jewellery line in Japan. This is Danon’s first entry into the Japanese market. The company also recently signed a $1 million contract to export Judaica and jewellery to the US. The products will be marketed in jewellery stores across the US that have a Jewish clientele.

Founded in 1976 by CEO Yossi Danon, Danon Jewellery has a plant in Tel Aviv with 50 employees. Half the company’s sales this year will come from exports, including to Europe, Australia and New Zealand. The company plans for exports to comprise the bulk of its sales within a few years.

EXHIBITIONS IN ISRAEL

Printex The 9th International Exhibition for Printing 1-3 November 2005, Tel Aviv
IsraWinExpo The International Exhibition of Wine and Spirits June 13-15, 2006
Environment The 4th International Exhibition for Environmental Technologies December 2005
AgriTech The 16th International Argicultural Exhibition, in Tel Aviv, May 9-11, 2006. Tomorrow's agriculture - today!