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New Program by MOITAL and the Ministry of Finance: Encouraging Multi-National Companies to Establish Financial Research and Development Centers

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Monday, October 4th, 2010

Director General of the Ministry of Finance, Chaim Shani: In Israel’s information-based industry there are many elements that may allow R&D development within the financial sphere, the financial industry is the world’s leading technological consumer and constitutes of 20% of all annual technological expenses”

Director General of MOITAL, Sharon Kedmi: “This program is part of MOITAL’s policy for encouraging foreign investments and increasing employment rates; Multi-national companies will join firms like Intel and Google, which have, in recent years, continuously augmented their operations in Israel”.

Director General of the Ministry of Finance, Chaim Shani and Director General of MOITAL, Sharon Kedmi, have announced today the launching of a new program to encourage multi-national financial firms to establish financial research and development centers in Israel, a field that had evolved immensely within the last few years. This directive by the Director General of MOITAL has been signed and promulgated, and shall be executed by the MOITAL Office of the Chief Scientist, and is intended for the development and creation of a new growth-inducing mechanism for the Israeli financial industry. This is part of the “relative advantage” program, one of many tools promoted by the Ministry of Finance and MOITAL for the purpose of accelerating information-based industries in Israel.

Multi-national companies will be able to participate for a period of at least 5 years, during which companies will be obligated employ at least 25 R&D employees working n these centers within the first year of approved operations, at least 50 R&D employees at the end of the second year and at least 80 R&D employees within the end of the third year and so on. In addition, the company is must ensure that at least 90% of R&D employees working in the financial R&D centers are Israeli nationals.

State support for this program allocated 40% of the entire budget approved by the Office of the Chief Scientist for projects carried out in the first and second years, 30% in the third and fourth years and 25% for the fifth year. Projects taking place in peripheral regions shall receive 50% backing within the first and second years, 40% within the third and fourth and 35% for the fifth year.

The program will allow companies involved in it annually decreasing financial support, while encouraging the execution of high-end, state-of-the-art projects and research initiatives and designating the peripheral regions as high-priority.

The Ministry of Industry, Trade and Labor helps to reinforce and extend the Israeli Industry’s technological base by implementing a variety of relief programs carried out by the Office of the Chief Scientist, a department within MOITAL. On this basis, the Ministry acts to create growth-inducing mechanisms for the Israeli economy within various industries, such as the software and communications industries, the life sciences industry, the traditional industrial sector, the renewable energies industry and the water-based technologies industry.

For some time now, the two Director Generals have conducted a series of meetings with leading global financial companies, keeping them abreast of the details of the incipient plan, and were received with great interest by company representatives.

Director General of MOITAL, Sharon Kedmi, stated that this program possesses a great deal of potential, and is likely to provide a substantial contribution to the decision by multi-national companies to establish their future development centers in Israel. “The plan is part of MOITAL’s policy for encouraging foreign investments and increasing employment rates, and is set out to address the existing global demand for sophisticated analytical solutions within the financial sector. The State of Israel is endowed with a highly-qualified workforce that employs top-tier technological infrastructures and outstanding higher education. Companies involved in the program will join multi-national companies already operational in Israel, such as “Intel” and “Google”, an involvement that has palpably born fruit, as these companies have consistently increased their operations in Israel”.

Director General of the Ministry of Finance, Chaim Shani: “world’s leading technological consumer and constitutes of 20% of all annual technological expenses”. Many multi-national financial corporations invest billions of dollars in developing high-end technological systems, risk management software, advanced automatic trading platforms, sophisticated customer care applications and so on. In Israel’s information-based industry, there are many elements which may allow the development of financial R&D activities. As such, for example, there is an available supply of professional human capital relevant to the engineering, technology and research spheres within the financial sector. Furthermore, Israel is endowed with the broad know-how and experience in business management that allow successful commercial implementation of applications and technologies in a variety of fields within the global community.”

MOITAL Chief Scientist, Dr. Eli Ofer, has said that the program also constitutes a pilot for the Office of the Chief Scientist’s involvement in encouraging innovation and R&D in the service provision sector. The service provision sector constitutes two thirds of Israel’s GNP, and innovations in this sphere is likely to promote the growth of the Israeli economy and to increase job-creation.

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