The Software industry offers highly innovative and diverse state-of-the-art capabilities on a variety of hardware platforms to a global clientele. The industry's remarkable growth - over a 300% increase during the past eight years - was helped by a mutually reinforcing relationship between the hardware and software industries. Israeli software industries have been active in producing software in such varied areas as AI, application generators, real-time systems, expert systems, utilities and data bases. The industry has developed applications in such areas as defense, education, manufacturing, marketing, encryption, banking, finance, Internet, health care, anti-virus, multimedia, military, communications and billing.

Record exports of $500 million were recorded by the Software industry in 1997, with overall sales topping an estimated $1.5 billion. There are over 8,500 people employed in this sector, of whom 59% are qualified engineers and technicians. Some 300 software houses are currently active, with more joining the list on an almost daily basis! Among some of the US companies performing significant software activity in Israel are included Applied Materials, Digital, DSI, Hewlett-Packard, IBM, Motorola, Microsoft and Silicon Graphics.

Venture capital fund interest in the software sector was particularly high. In fact, 24% of all venture capital fund investments in Israel during 1997 were in the software industry, the largest single sector receiving their backing. The amount invested reached $103.1 million. Some current software innovations include:

Section C outlines Selected Examples of Institutions Related to the Software Sector.

Software

Applicom Software Industries specializes in offering comprehensive software solutions across a broad range of system platforms, in such areas as financial institutions, manufacturing, government agencies, and high-tech industries. The company provides wide range of products such as Multi-User Multi-Platform Conference systems, real-time electronic warfare systems for the Israeli army including system command and control of an anti-aircraft missile simulator and several distributed solutions based upon Microsoft’s windows and Windows/NT systems.

A.T.L. (Advanced Technology Ltd.), in Hebrew TEKEM, is Israel's largest systems integrator, software developer and consulting company. Its main activities and services are real-time and defense systems, management information systems, migration and rightsizing, and software packages marketing and development.

Carmel Software engineering, an Israeli company that created one of the computer industry's most popular anti-virus programs, has now developed a new personal computer security package. This package is designed to make sensitive data accessible only the authorized users. Called Infolock, it provides on-line encryption of data files and programs in selected directories on floppy disks, hard disks and networks.

Casdim Software Systems is a software house specializing in the development and implementation of computerized systems for medical and diagnostic applications. The company provides Scope - software system for the operation and management of medical laboratories and Obsteric - the high performance software data management system designed to monitor the development and health of fetus and mother during pregnancy. Obsteric provides maximum compatibility with ultrasound systems and integrates ultrasound laboratory automation utilities under a consistent menu driven interface.

Checkpoint Software Technologies is a market share leader in network security software. The company's mission is to provide industry-leading software products that allow businesses to implement Internet and Intranet connectivity solutions with full security.

C.Mer has been one of the world leaders in computer based call management systems, beginning with the introduction of TABS, one of the first PC based, on-line call management systems in the early 1980s. Mer accomplished another major breakthrough through the release of REGARD, the world's first MS-Windows based CCTV viewing and control system.

Comfy (TM) Interactive Movies is a world leader in the multimedia edutainment market for children. Comfy set out to develop hi-tech computerized educational games for children as young as only several months old. They also have developed interactive educational software and hardware. The company specialized in integrating hardware items with movies.

Compedia has been making educational games since 1988. Many of its titles are available in English, German, French, Spanish, Dutch, Portuguese, Korean, and other languages. Compedia new line of products is technologically advanced and CD-ROM based (MPC/Windows compatible) featuring high resolution animation, 3D modeling, original music, and realistic sound e.

CrystSystems Solutions develops conversion projects for mainframe computer systems, various programming language upgrades and data field conversion. The company manufactures the C-MILL automated millennium conversion solution for information systems in the IBM MVS mainframe environment.

Degem Systems is a pioneer and world leader in the development and marketing of computer-based training and education systems. All of Degem's computerized training systems are adapted for multiple applications in high schools, vocational/technical educational institutions, universities, and industrial training centers. Degem is engaged in three more fields namely technological training, educational software and special projects, such as skills development, agriculture and other.

DCL Systems Engineering is a company specializing in the development of state-of-the-art software systems for commercial and government organizations, financial institutions, pharmaceutical companies, and hardware and software vendors. DCL's focus is on the design and development of expert systems, network management systems, management information systems and command control, communication, and intelligence systems.

Decision Systems Israel (D.S.I.) 's expertise includes systems and software engineering, real-time systems, image processing, signal processing and the design and development of state-of-the-art digital hardware boards based on DSPs and high-speed programmable logic devices. D.S.I. successfully delivered military and commercial turnkey projects to the I.A.F & Navy.

DSP Telecommunication is a leading worldwide supplier of DSP based technologies and solutions for the wireless communication market. The company's expertise lies in the field of digital communications, digital signal processing, speech processing, speech recognition and system level support. CSP also produces baseband chip sets for digital cellular telephone, chip sets, and voice command processing VLSI devices.

Edunetics is a major developer and a world leader in curriculum-based educational software and classroom management. Edunetics lessons have been translated in many languages, including Swedish, Portuguese, Spanish, Arabic and Hebrew. The company's product offering includes 900 computer lessons, mainly in science and mathematics, multimedia, and proprietary pedagogic management systems.

Edusoft is a world leader in the development and marketing of educational software products. Its products are offered in 15 languages and are grouped in four major product lines : science, technology, English learning and early childhood.

Elecs Israel has developed the Acoustic Face Monitoring (AFM) system, that provides for safety precautions in the coal, diamonds, gold or other types of mines. The functioning principle of AFM is to distinguish the acoustic emission pulses from the spectrum of acoustic signals that received from mechanisms working and processes taking place in the mine stratum.

Eliashim Microcomputers develops and markets state-of-the-art security systems for personal computers and local area network. The range of products currently includes a variety of products for data security and peripheral equipment protection. The protection methods are among the most advanced in the world, based on software, hardware, or combination of both.

Elonet produces EMULE - a component software that enables application programs to support an unlimited number of national languages without the need of localized operating system. The current version of EMULE delivers full Java programming lingual support and uses TCP/IP as a communication protocol. EMULE also supports the Unicode ® standard.

Elron Electronic Industry's global businesses are conducted through a group of affiliated companies in the field of information technologies, medical diagnostic imagine, advanced defense electronics, communicating and networking, manufacturing automation, semiconductor products and software products. Elron has started to position its activities in the convergence of communication, information technology, consumer software and interactive services.

Enigma Information Systems produces and markets its in-house developed insight into information, a powerful MS-Windows (3.1, NT and 95) based authoring tool for all stages of electronic publishing of professional full text retrieval, multimedia titles on CD-ROM, LAN and on-line.

Eshed Robotec's computer integrated manufacturing system (ER-CIM) is the combination of state-of-the-art CIM technology today. The ER-CIM also utilizes a combination of computers, CNC machinery, robots, material handling equipment, communication networks and software. The result is maximum flexibility in a modular environment.

Eureka Interactive Knowledge Systems has produced a wide range of turnkey solutions and products. The company has adopted a multi-disciplinary approach which blends the experience of professionals from psychology, education, instructional design, graphic design and systems analysis. The main products include a knowledge workstation, personal decision support tool and small management interactive learning environment.

Formula Systems is one of the largest software group in Israel. The formula group's companies can be divided into 3 categories: a software house, a full service software houses that operate domestically and internationally, providing turnkey projects and systems development services; software R&D (Agrotec); software distribution and support services.

4th Dimension software develops, markets and supports the CONTROL family of integrated system software products, which automate many key functions of data centers of large organizations. The company's products increase the efficiency of the data center by automating manual tasks by improving hardware utilization.

Golden Screens develops and markets high performance turn-key multimedia information systems designed for governmental and business entities. The company has developed a proprietary multimedia information system, "Infocenter", on which the company's customized turn-key solutions provide a comprehensive approach to information management.

Ganot-Electronic Industries is a system house established in 1983. Ganot specializes in comprehensive data collection, integrated system solutions and services, based on original design, development and production covering software, hardware and packaging.

Hypermed is a medical software company concentrated on development of its sophisticated software program, which permits physicians to practice their profession within a fully supported, constantly updated environment of medical data. Hypermed produces high-quality software products for the global medical community. Hypermed's first product line in the Hypermed Medical Series.

I.C.T. (Image Compression Technology)'s long term goal is to achieve a reputation for leadership, superior quality, thoroughness and innovation in the field of digital imaging, and in particular, image and video compression. ICT intends to develop, produce and market commercial and military products in the general multimedia arena, including digital video and audio packages.

I.E.T. (Intelligent Electronic) specializes in the development of software productivity tools for service, workflow and operations management in a variety of industries including aerospace, automotive, garment, oil, computers, semi-conductors, communication, and banking.

Levitech Software System's ESL software's are dynamic multimedia programs for learning English as a second language. The programs are based on an up-to-date pedagogical design. Sound and music mixed with 3-dimensional high-resolution graphics and animation create a total multimedia presentation. The programs are already available on CD's for speakers of German, French, Spanish, Danish, Russian, Hebrew and Arabic.

Ligature, a world leader in optical character recognition (OCR) technology, develops charactereyes OCR software, the ligature "OCR-on-a-chip" technology. Ligatures's OCR applications are known for their ease of use, low memory requirement and superior recof internationlanguages.

Liraz Systems is active in the development of integrated system solutions for commercial, industrial, and public organizations. Areas of specialization include manufacturing, healthcare, military and banking, as well as outsourcing services.

LiveLink Systems produces the LiveLink family of software tools used to automate hypertext and multimedia production. They generate hypertext and multimedia directly from conventional for print books without any manual coding or text manipulation. LiveLink eliminates the need for programmers in electronic document production.

Magic Software Enterprise specializes in the development, publishing, marketing and support of the magic application development and deployment system. Its main products include database management software, development tools software and educational software.

Malam Systems, of CLAL Computers and Technology, develops software systems which handle all the logistical aspects of computerized image processing. Its broad spectrum of systems and services include population registration, election, foreign trade, customs management, payroll systems, geographic information systems, data conversion services document imaging, and optical archiving.

Mer Has been one of the world leaders in computer based call management systems, beginning with the introduction of TABS, one of the first PC based, on-line call management systems in the early eighties. Mer accomplished another major breakthrough, through the release of REGARD, the world's first MS-Windows based CCTV viewing and control system.

Mercury Interactive corporation develops, markets and supports a complete family of automated software quality solutions that automate and manage testing and quality assurance for developers of client/server software and systems. The company's enterprise quality architecture empowers corporate application developers, systems integrators and independent software vendors to identify efficiently software errors.

Mihshuv Information Systems, one of Israel's leading software development houses, has led the way in the design, development and installation of sophisticated software systems for many of Israel's largest businesses. Its two leading products are a multilingual, multi-currency, financial management package and an innovative industrial/manufacturing management package.

M.L.L. Software & Computers Industries group is the largest independent professional organization in Israel providing data processing services, software development, system integration, various hardware systems and telecommunication devices. M.L.L. has a widespread applications and service base which are involved in the development and installation of software products and tailor-made system applications.

Monitin Information Systems services can be classified in three major categories: producing standard software packages on IBM AS/400 and the data general MV computer series; planning, design and development of customer-tailored software products, including interfaces to other computer and software systems; facility management of computer installations and software.

N.E.L.Y. Soft provides software solutions that integrate any combination of existing multi-vendor equipment into a single managed network. The company provides small to medium-size telecommunication operators and ISPs with solutions for the management of their telecommunication networks, as well as handling of their billing and customer care service. N.E.L.Y also involved in R & D in different fields, such as telephony over cable TV and computer integrated telephony/interactive voice response systems.

N.C.C. (New Communications and Computers), is a system house specializes in data communications applications and services. Its main activity fields include communication, computer science, mathematics and related engineering disciplines.

Nice Systems is a world leader in computer telephone integration and communication intelligence. Its products include the Nicelog Digital Voice Logging System, the Nicefax, an advanced fax logging system, the CDF1500 communications intelligence system and the Nicefix direction finding system for air and harbor traffic management.

Nulan Technologies designs, markets and manufactures a comprehensive line of high-performance, low cost, desktop virtual conferencing products operating on conventional computer networks. The products are aimed at the windows PCS linked via standard, unmodified networks starting from PSTN, via ISDN, and through LAN/WAN infrastructures.

Olivr (On-Line Interactive Virtual Reality) product family provides progressively rendered, interactive imaging and display of streamed, 3-D photorealistic movies over the World Wide Web. Patented compression and network software allow users to interact with image-mapped VR movie immediately during download.

Ornetix Technologies is a software company based in Israel. Its innovative technologies and practical easy-to-use products provide network users with the tools for "making network better", by making them simpler to manage, easier to use and more functional and efficient. Ornetix is currently developing and marketing a line of application servers that off-load tasks from the main file server, while providing specialized high performance services to network users.

Panorama Software Systems' high-performance technology is based on a tier-multidimensional architecture designed to support online analytical processing. Panorama's products have the capability to seamlessly integrate data stored in multidimensional databases with data residing in relational database such as Microsoft SQL server.

Personix develops fingerprint identification products. The FP2000TM proprietary technology, developed by Personix is based on fingerprint topology and uses artificial intelligence techniques. One of the unique features of the FP2000TM technology is that it is implemented using only software.

RadGuard has launched its internetworking data security system called CryptoSystem. The CryptoSystem is a comprehensive internetworking security, data security and security management aid. It is based on in-house designed and produced hardware and software. It provides a complete array of security services for protecting private networks connected to public network.

R.T. Set, the world wide leader in virtual studio systems, is the creator and developer of the Larus, Otus and Ibis turnkey 3-D and 2-D virtual studio systems. RT Set systems enable real-time computer-generated virtual sets and environments to be use in live and tapped broadcast and cable television.

Sapiens Israel develops, markets and supports advanced rapid application development software for mainframe, mid-range, and PC environments. The Sapiens family of software products uses rule-based, objects oriented technology to facilitate rapid application development and reduce maintenance time and cost.

Servicesoft (Rosh) is the leading international provider of software-based automation solutions for service and maintenance organizations. These include medical, manufacturing, office automation, computers, communications, imaging, consumer electronics, and government/defense.

Shany's software allows remote monitoring of software problems, through its software is called AlertVIEW. AlertVIEW is a professional agent located inside LAN network, created to control the most common problems that plague remote LAN workstation. Monitoring, management and control of the network is achieved through a workstation agent code and management consoles.

Shomut has developed comprehensive software for the computerized management of plants that produce pre-stressed concrete planks. Called SpanCake, the system is designed specifically to computerize the processes of planning, scheduling, and actual concrete production.

Smarts, a powerful survey tool from Rotem Industries, offers Radiation protection personnel a streamlined procedure for generating, storing and modifying survey maps and location data in the user-friendly Windows environment.

Softel Software Technologies is an IBM ecompany for software anservices. Its mission is to integrate advanced technologies in projects and products. The company main areas are software development of client-server solutions, workstations, user interfaces, open systems, distributed computing; forms, documents, photos and other image processing, and multimedia.

Surcomp is an international full-service software and systems company. Concentrating on the development of a complete line of banking systems, the company places special emphasis on wholesale banking applications. Surcomp is dedicated to providing turnkey solutions to meet the specific needs of its clientele.

Tadiran is recognized as the largest electronics/telecommunication company in Israel. The company develops, produces and markets a comprehensive range of communications, C41, electronic warfare, advanced data links and airborne search and rescue systems for the modern, digital battlefield.

TIMC specializes in applications development tools, Geographic Information Systems (GIS) and client / server environments. Timc's main activities are development and marketing of software products and custom projects, mainly in the connectivity of database-GIS. Timc brings the advanced, yet simplified GIS concepts to the desk of the PC developer and user.

T.i.S. Top Image Systems, Ltd. is an Israeli based software house and an acknowledged leader within the forms processing and imaging industries. TiS develops and markets systems and technologies for automating form processing, data entry, and information recognition. The Company's software minimizes the need for manual data-entry by automatically reading and processing the information contained in forms, increasing data capture accuracy and the rate of information processing. TiS provides users with unprecedented system throughput, exceptional price/performance, and superior ease of use. TiS' award winning flagship product, the AFPSPro, provides a complete, cost-effective, reliable solution for mid to high-volume processing of forms. FormOut! ^TM automatically recognizes electronic form images and thereafter removes the form template, leaving only the relevant "filled-in" data for processing. AfterSCAN ^TM is a universal image enhancer which requires no foreknowledge of the scanned form; improves quality by deskewing the scanned form image, removing horizontal/vertical lines and shading, despeckling, repairing and reconstructing broken character segments, improving ICR/OCR speed and accuracy.

T.T.R. Technologies, an Israeli firm specializing in the development of technologies for software program protection, has created SoftGuard, an easy to use, extremely effective software protection system that prevents unauthorized use of protected software. It utilizes a combination of hardware and software components to protect executable and non executable software files.

Unichamps is the Unix solution for today's maintenance management information systems. This solution is available on HP and RS/6000 platforms and is designed for installation in a diverse range of industries. Unichamps incorporates equipment management, work order control, preventive/predictive maintenance scheduling, inventory control, charge account/budget, purchasing and accounts payable into a comprehensive integrated solutions.

Vcon Telecommunications develops and manufactures superior desktop video conferencing (DVC) systems. Special features include mutual exchanges of video, audio, images and text directly from the desktop computer. Vcon's groundbreaking technology will be available for all key communication platforms including ISDN, LAN, WAN, PBX, Internet and pots.

Vdonet Has developed products to enable video broadcasting and multicasting, as well as video telephony, over Internet. The firm has two core technologies, a communications protocol which maintains the identity of the video as it makes its way over the Internet and a scalable compression algorithm that compress video sufficiently to be transferred over small bandwidths.

Wavetools creates audio signal processing tools for desktop sound signal processing for multimedia, studio recording and mixing, CD mastering, post-production studios, and broadcasting.

Xpert group is a software and system integration house operating in Israel and abroad. The group specializes in operating systems and in various communication networks at both the foundation and application levels. The main areas in which the company is active include maintenance of UNIX computers, management of communication network, software development, data network security, development of Internet information systems, and others.

Yael Software & Systems, the largest privately owned systems house in Israel, specializes in providing systems integration, turnkey project development and professional services for health care, government, logistic management, military, financial institutions and hi-tech industries.

Zoran Corporation develops and markets integrated circuits and software for digital video and audio compression. Zoran's system solutions are used in many personal computers and consumer electronic applications. The corporation provides standard-plus compression solutions for high volume consumer and PC multimedia applications, algorithms and software development along with system-level solutions in both silicon and software.

CAD/CAM

BQR Reliability Engineering is a leader in developing software to simulate reliability, maintainability and testability for improving the quality of electronic systems. BQR's main product, Computer Aided Reliability Engineering (CARE), is a complete set of software tools integrated in CAD/CAE systems. It can predict, identify and correct reliability problems at each step of the design cycle. Their other areas of expertise include artificial intelligence software, automotive simulators and computer integrated manufacturing.

Cadtech develops and markets the CADTool/NCTool CAD/CAM system for mechanical manufacturing. The system combines the advantages of full integration of the CAD/CAM modules with powerful algorithms for tool-path generation for CNC machines.

Cimatron has a family of integrated software products for complete automation of the mechanical engineering process. Their leading product is an integrated, modular CAD/CAM system which features powerful tools for design via manufacturing. Cimatron's software provides a complete range of modeling capabilities, from wireframe to surfaces to parametric solids. The system includes advanced assembly, sub-assembly and part management and advanced data exchange interfaces.

Cubital designs, manufactures and markets rapid prototyping systems which automatically generate and produce Solid 3-D parts and patterns from CAD files without tools, dies or molds.

Emultek develops and markets simulation tools for interactive applications. Their core product. Rapid Design, provides a revolutionary desktop solution for prototyping the human-machine interface of a large variety of applications, such as consumer electronics, telecommunications equipment, medical equipment and avionics systems. Their Rapid ST provides a free play simulation solution in computer based training. Rapid brings the proven benefits of object oriented technology and visual programming to the field of prototyping and simulation.

Tecnomatix develops computer-aided production engineering (CAPE) software that allows production engineers to create a computer-based virtual manufacturing environment. The company's software is used in the automotive, aerospace, heavy industry, and electronics industries.

SMART CARDS

Aladdin Knowledge Systems is a world-leading supplier of advanced solutions for software developers. Aladdin develops, manufactures and markets advanced software security and smart card development systems, including HASP, ASE and Hardlock. ASE - the Aladdin Smartcard Environment - is an e-to-use, low cost development toolkit for creating PC-based smartcard applications. ASE's three components include: ASESoft, a library of software interfaces and utilities; ASEDrive, a versatile smartcard read/write drive unit; and ASECard, a wide range of smartcards. ASE's modular structure makes accommodates developing all kinds of smartcard-based applications, including access control, authentication, electronic payment, and more. Because it supports smartcards of many types, from many manufacturers, ASE provides developers with a single standardized solution to meet all their smart card development requirements. ASE supports the PC/SC standard.

News Digital Services has revolutionized conditional access by placing operating and security systems on removable microprocessor smart cards that fit into the consumer's set top box. This controls entrance into CATV or SMATV broadcasting systems. To upgrade the system, the inexpensive smart card is changed, instead of the costly set top box.

On Track Innovations (OTI) specializes in the field of smart card technology. The company’s prime product is the contactless smart card - a credit card sized, battery free, microprocessor based transponder. OTI technology integrates the use of it\s own patent core technology which allows each reader to be composed of several remote antennae at a distance up to 30 meters from the electrical unit, and it also enables maximum immunity to electrical interference thus allowing an operational distance up to 15 cm. between the card and antenna.

Synel Systems develops and manufactures real-time data collection systems which provide effective and immediate access to information throughout an organization. Applications of Synel's modular systems include : time and attendance, security access, shop floor control and specific applications designed to customer specifications.

Selected Companies In The Software Field :

the fly, and enforces a user-defined corporate security policy. SurfinShield Xtra monitors all

Java and ActiveX activity at the desktop, logging suspicious applets to prevent their access and

controlling applet activity as per the user's settings.

Flair Technologies Ltd. has developed the paradigm-shattering FLAIR SDK™ that enables software developers to radically improve the performance, accuracy and versatility of their search technology and information retrieval products and systems. The high-fidelity knowledge retrieval

tool kit provides: Unique "3-dimensional" analysis of text content, context and structure; Tuning of all key search system components: interface, engine, database; Expandable multi-lingual retrieval system; Consistent and scaleable information gathering and retrieval services; Seamless integration with standard SQL databases: Oracle, Informix and SQLBase.

Sammor is developing software and hardware packages that permit speedy and accurate calibration of robots and trajectory planning of manipulators. These products, for industrial robots, are based on advanced applied mathematics that will dramatically improve the efficiency of industrial robots in terms of both accuracy and industrial time utilization. The company, located in Jerusalem, has completed its Incubator period. The new technology is being integrated with a new robot controller, developed by another Israeli firm, Servotronix. Investors and/or directors are sought to advance the project's commercial stage.

TTR Technologies Ltd. is a young, aggressive and innovative high-tech company, fully owned by US-based TTR Inc. The company is primarily engaged in the design, development and marketing of a family of proprietary products designed to prevent the unauthorized reproduction and use of computer software programs, applications and electronic content. Products include: SoftGuard(TM), NetGuard(TM), RAC(TM), DiscGuard(TM) and SmartGuard(TM).

Description: High-performance computing technology has emerged as a powerful and

In the Parallel Processing group, there is a very active ongoing research effort in the

working relationship with the major research institutions and industries in Israel.

The emphasis in the research is on the applied aspects of parallel processing. This

research work combines software and systems, algorithms, applied and theoretical

mathematics.

visual characteristics as compared with other existing methods. A software package

which incorporates the new method was developed. It can be used, either as an

option in existing SPC programs or as a stand alone-tool.

If the vibrant Israeli could point to any one source of its productivity and success, it could well be ascribed to its fertile environment for research and development. In this section, especially compiled about the Software Sector, the various facilities available to support Israeli R&D efforts will be presented. It is hoped that this brief overview will provide a number of options for investment, joint ventures and other cooperation agreements.

LEGISLATIVE INCENTIVES:

To help promote the influx of funds to promote development, there are a large number of Legislative Incentives directed towards the potential investor. For example, in 1959 the government of Israel passed the Law for the Encouragement of Capital Investments, and to this day it serves as a catalyst to accelerate the growth of the Israeli economy. Under the law, the Israel Investment Center caters to the needs of the foreign investor by bestowing the status of Approved Enterprise to projects that comply with the Center's criteria.

The benefits given such Approved Enterprises include both investment grants and company tax reductions for investment in fixed assets exclusively. Grants are given as a percentage of investment in fixed assets and can reach up to 24%. Company tax exemption benefits range from accelerated depreciation to complete tax exemption on undistributed income to a maximum of ten years of complete tax exemption.

In addition, location also plays a role, since Approved Enterprises located in National Priority Areas are eligible for added benefits. These, like allthe other legislative benefits, are daccording to the specific nature of each, individual investment.

The Law for the Encouragement of Industrial R&D was passed in 1984. The purpose of the law is to encourage and support industrial R&D by fostering the development of technologically oriented industries while expanding Israel's existing technological infrastructure. The Industrial Research & Development Administration of the Ministry of Industry & Trade, headed by the Ministry's Chief Scientist, is authorized to implement the law. A Research Committee is responsible for approving research proposals and for setting the terms under which grants and other assistance are to be allocated. This assistance is distributed to corporations, developers, entrepreneurs and others who submit R&D proposals. In return for the government funding, the grant will be repaid via royalties received should the project prove commercially successful.

The MAGNET program run by the Ministry of Industry & Trade's Office of the Chief Scientist is a financial assistance program to encourage R&D and the integration of generic technologies by promoting specific cooperation between Israeli companies or between commercial enterprises and academic institutions. Technologies developed with MAGNET support are to be made available to all members of the relevant consortium for its future development needs. MAGNET's criteria for approving programs include the nature, usefulness, availability, demand and export potential of the products developed. The project began in 1992, and by the end of 1996 some 14 projects had been approved. Programs approved included such disciplines as multimedia, diagnostic kits, medical applications, diode-pumped lasers, electronic packaging and magnesium alloys and more.

TECHNOLOGICAL INCUBATORS:

Israel's economic independence is contingent to a large extent upon the development of its technology based industry. According to this basic belief, the Office of the Chief Scientist of the Ministry of Industry & Trade has formulated and is carrying out an extensive support program for business incubators aimed at promoting technological entrepreneurship in Israel. The program, established over the last seven years, endeavors to create a tool that will be used on a continuous basis to support the first stage of technological entrepreneurship, and to integrate these activities with the very special circumstances created in Israel by the recent massive immigration. It provides the support and environment essential for innovative ideas to develop and bloom. Both veteran Israelis and new immigrants, are given an unequaled opportunity to transform their concepts into commercial products and viable businesses.

The Incubator Program seeks to encourage entrepreneurs, possessing innovative technological ideas and help them to develop and commercialize a product. It also tries to implement technological ideas brought here by new immigrants. The recent immigration was accompanied by an inflow of technological knowledge and know-how in a variety of fields. Within the incubator framework, new immigrants are given the opportunity to direct their expertise toward commercial applications. The incubator framework expedites the transfer of innovative and advanced technologies to the local technological and commercial environment. The program also promotes employment of technologically experienced immigrants in their profession.

The technological incubator program was established and is operated by the Office of the Chief Scientist within the Ministry of Industry & Trade. The policy is determined by the Steering Committee for Technological Incubators, whose members are appointed by the Director General of the Ministry. Among other tasks, they set the policy regarding the technological incubator program, set support procedures for the incubator and for the projects run by it, and approve financial support to projects, as well as candidates for the incubators, as per the recommendation of the project committees of the individual incubators themselves. If necessary, they also decide upon cessation of support to an incubator or a project, in case they do not fulfill their function or do not comply with regulations.

During the incubator stage, the State provides the major part of the project's operating budget. The incubator's management is responsible to the State for professional and efficient management of the projects, including project budgeting and commercialization. The incubator's management acts as a trustee on behalf of the State for operating the projects within the incubator.

The agreements and contracts that secure the State's support to both the incubator and projects are signed by the incubators' management. The budget for both the administrative management of the incubator and for the individual projects is transferred by the state to the incubator. The incubator is an independent legal entity, registered as a non-profit organization. The incubator is managed by a salaried General Manager: a professional, with industrial management experience.

All additional investment required in the future is open for negotiation, and will dilute the founders' equity ownership. Notwithstanding the above, the management of the incubator reserves the right to initially allocate equity ownership to outside investors and/or future strategic partners. In this instance, these shares will be held in trust by the management of the incubator, and the percentage of ownership as detailed above will apply only to the remaining shares issued and not to those held in trust for future investors and/or partners.

Today, 26 incubators are operational throughout Israel, in the following locations: Jerusalem, Tel Aviv, Haifa, Nesher, Beer Sheva, Sde Boker, Dimona, Ofakim, Gush Katif, Arad, Ashkelon, Kiryat Gat, Kiryat Arba, Yavne, Nes Ziona, Netanya, Hadera, Ariel, the Jezre'el Valley, the Jordan Valley, Nazareth, Gush Segev, Kiryat Yam, Katzrin and Kiryat Shmona. There are currently 200 projects operating within the 26 technological incubators. Half of them are based on ideas brought by new immigrants. Over 750 professionals are employed on the projects' staff. About 70% of them are new immigrants. The majority of the staff are scientists and engineers holding academic degrees.

According to statistics compiled by the Office of the Chief Scientist, as of December 1997 338 projects have finished their stay in the incubators. Of these, 187 (55%) continue operating independently and another 151 (45%) were suspended or closed. Of the 187 successful projects, 134 have managed to attract investments ranging from $50,000 to $8 Million. There were also 53 that are in various stages of negotiations with potential strategic partners or investors, or are continuing work via independent resources (sales, consulting work etc.) These independent projects employ about 870 professionals, and this number continues to grow.

In a recent development, Dow Chemicals was announced to be poised to invest in Ashkelon Technological Industries, the city's technological incubator. This move is also Dow's first-ever Israeli investment. Dow plans to become a partner in the incubator, initially investing $750,000. Its scientists will work with scientists from the incubator on a number of hi-tech projects.

UNIVERSITY RESEARCH AUTHORITIES:

SCIENCE & RESEARCH PARKS:

Israel has over 25 Science & Research Parks, established throughout the countryby both private entrepreneurs and publauthorities. They are characterized by different criteria, since some are built in close proximity to academic centers, while others are located on the periphery to promote regional growth. All concentrate in the area of hi-tech and other "clean" industries. Some, like the Weizmann Park in Nes Tziona, is a private enterprise that concentrates on biotechnology, genetic research and other related fields. Haifa's Matam center has a general telecommunications and electronics emphasis.

It should be noted that although one sector may predominate, due to the overwhelming success of these sites many other industries and R&D ventures have also made them their homes. For example, Jerusalem's Har Hotzvim site is publicly owned and predominantly electronics oriented, with Intel and Digital two of its biggest tenants. However, it also houses the Jerusalem Software Incubator and a few facilities belonging to Teva, the pharmaceuticals giant, among others.

BI-NATIONAL DEVELOPMENT:

The US - Israel Science & Technology Commission was established by President Clinton and the late Prime Minister Yitzhak Rabin in order to support cooperation between US and Israeli firms. The Commission aims to both fund long-term projects with substantial technological impact and to facilitate development of a cooperative relationship. A good example of the latter is the facilitation of FDA approval for products developed in Israel.

The Israel - US Binational Research and Development Foundation (BIRD) was established in 1977 to stimulate mutually profitable cooperation between US and Israeli hi-tech companies. With an income of over $12m annually, BIRD cost shares 50:50 with each partner in US company - Israeli company teams that seek to develop and commercialize any innovative (non-defense) product or process. Any pair of companies, one from each company, may apply jointly so long as they have between them the capabilities and infrastructure to define, develop, manufacture, sell and support an innovative product based on industrial R&D. Since the first project was initiated in 1979, BIRD has supported some 400 joint projects. BIRD sponsored projects have generated over $5 billion in direct and indirect sales.

Based on the BIRD model, the governments of the US, Israel and Jordan decided to establish a pilot, trilateral initiative to stimulate, promote and support industrial R&D. Each Trilateral Industrial Development (TRIDE) project constitutes a joint venture between private companies from all three countries, with the three governments funding up to 50% of direct project costs. BIRD is implementing the TRIDE project from its existing offices.

The US - Israel Binational Agricultural Research & Development Fund (BARD) was established in October, 1977. The research supported covers a myriad of agricultural technologies. Independent economic studies conducted in both countries indicate that the implementation of the results from only a few BARD projects has resulted in benefits far exceeding the original investment in those projects. BARD's income derives from the interest accrued on a $110 million endowment and $5 million annual budgetary allocation. These resources are contributed equally by the United States' and Israeli governments. The income has been used mainly to support over 760 research projects, out of over 2,740 joint proposals submitted since 1979.

The Canada - Israel Industry & Research Development Foundation (CIIRDF), founded in 1994, is also modeled on the successful BIRD formula. CIIRDF funds 50% of the joint projects of Canadian and Israeli companies, the agreement encompassing several provinces. The first 15 or so projects have already received funding.

In addition to the above mentioned funds, there are also other such bodies in which Israel participates outside of North America. Israel is the only non-European country to take part in the 4th Framework Program of the European Union's Commission on Science and Technology. A Joint Israel - Singapore Fund was concluded in 1996 and, based on the BIRD/CIIRDF model, became active at the end of 1997. There are also discussions concerning the establishment of similar bodies with South Korea, Taiwan, India and other European countries.