Ministry of Industry, Trade & Labor
30 Agron St.
P.O. Box 299, 91002 Jerusalem
Tel. (02) 6220220
Fax. (02) 6245110
Investment Promotion Center(English)
Center of Incubators for Technological Initiative(English)
Economic and Trade Representatives Abroad
Functions and Structure
The Ministry of Industry and Trade implements government policy in several major economic domains. Within these parameters, the Ministry pursues various goals that may be summarized as follows:
Developing and consolidating efficient, profitable industry capable of contributing to economic growth, increasing national product (especially industrial exports), furthering economic progress, and integrating Israel's economy into that of the developed world.
Developing Israel's foreign trade by consolidating international economic relations through membership in economic organizations and international customs agreements, and by monitoring changes in international trade. Such activities are designed to promote exports, reduce imports, and improve the balance of payments.
Improving trade and marketing methods, promoting the establishment of large, modern retail chains.
Ensuring consumer protection and well-being through legislation, direct Ministry intervention, and encouragement of consumers' organizations.
Ensuring regular and emergency supplies of vital basic food commodities at controlled prices.
Dispersing the population and developing economic infrastructure in peripheral areas.
The Ministry's organizational structure takes account of the need to attain the aforementioned goals through the efficient use of resources. The Ministry is composed of professional offices assisted by staff and service units. The professional offices are the Food Division; the Metal, Electric, and Electronics Industries Division; the Chemical and Mineral Division; the Textile and Light Industry Division; the Diamonds and Precious Stones Department; the Commerce, Artisanship, and Small Industries Department; the Consumer Division; the Government Trade Administration; and Israeli Film Promotion. The staff units are the Investments Center; the Financial Aid and Government Corporations Administration; the Foreign Trade Administration; the Office of the Chief Scientist and Research Administration; Planning and Economy; Development Areas; Economic Information Systems; the Israel Fibre Institute; and the National Physics Laboratory. Several institutions, corporations, and research agencies are organizationally affiliated with the Ministry; they operate under full or partial Ministry auspices, and Ministry employees are appointed to their boards.
The head office professional and staff units discharge their duties through regional offices that function as the Ministry's executive agencies in the field, handle liaison between citizens and Ministry authorities, and provide the best possible service on site.
A committee examined the performance of the Ministry's regional offices with intent to find ways of improving the efficiency and efficacy of their services. The regional offices are girding for the concerted, planned implementation of the committee's recommendations.
The Foreign Trade Administration sets and implements Israel's foreign trade policy, with primary emphasis on promoting Israeli exports and penetrating export markets. The administration is responsible for FTA (free trade area) negotiations with the European Communities and the United States, for administering such agreements, for multilateral GATT negotiations, and for setting import and export policy in keeping with these agreements with intent to improve access to foreign markets.
The administration also attends to all aspects of foreign trade relations and export promotion. Some of these activities, meant to improve Israeli access to foreign markets, are carried out abroad by the Ministry's commercial attachs, who are at the service of all exporters.
Export promotion and finance is a cardinal Ministry objective and a cornerstone of government economic policy. The export process may be promoted at two stages: manufacturing and marketing.
Manufacturing: Export promotion at this stage is conducted by means of a foreign-exchange fund that dispenses loans.
Marketing: Several marketing funds complement the support given at earlier stages. The best-known is the Export Shipment Fund, through which exporters obtain credit on international market terms. The Export Promotion Fund furthers Israeli firms' overseas sales promotion efforts, including export companies embracing several small and start-up enterprises.
The Israel Export Institute is a public nonprofit organization that provides information and instruction at symbolic fees for exporters and manufacturers trying to break into export markets. The Institute organizes exhibitions abroad and sponsors other overseas activities to promote exports. Ministry-recognized export companies receive grants equivalent to 2.5% of turnover.
The Investments Center is enabled by the Encouragement of Capital Investment Law (ECIL) and pursues the objectives of this legislation: development of production capacity, efficient utilization of economic resources and capabilities, and full use of existing plants' production capacity; improvement of the balance of payments by reducing imports and increasing exports; immigrant absorption and planned dispersion of the population throughout the country; job creation; and implementation of government policy for the promotion of industry in development areas.
The metals and electronics industries have been industry leaders in equipment and R&D investments. Electronics alone account for 50% of investments in industrial R&D. Massive investments in production equipment, R&D, and new technologies and manufacturing methods have triggered far-reaching developments in production and quality with no increase in headcount.
Below are the five subsectors of the metals and electronics industries:
Basic Metals: The smallest of the subsectors, constituting 7% of these industries, is composed of relatively conservative businesses that manufacture chiefly for construction and infrastructure. Among its products are pipes; steel, aluminum, and brass sections; structural steel; wire; nails; screws; mesh; fences; electrodes; doors; windows; metal shutters; and foundry products and wrought metals. Output was down 6% in 1989; a sharp downturn in the first half of the year was followed by the beginnings of a recovery triggered by the onset of large-scale immigration.
Metal Products include consumer goods (cutlery, pots, fans, refrigerators, ovens, air conditioners, razor blades), industrial and agricultural instruments and implements (cutting tools for metal and wood, sharpening stones, faucets, valves, piping accessories, and sprinklers), and armaments.
Machinery: This subsector embraces small and medium-sized firms that supply machinery and equipment to other industries - especially chemicals, petrochemicals, food, and metals - and to agriculture and utilities.
Electrical Equipment, Electronics, and Software: This subsector has been the industrial growth leader from the late 1960s. Growth was initially driven by increased defense consumption; since the mid-1970s, exports have been the major factor in growth.
Transport Vehicles: This subsector includes the manufacture of spare parts; manufacture of frames and chassis for military vehicles, tankers, trailers, dump trucks, garbage disposal equipment, and buses; and repair and manufacture of boats. The central component in production, however, is the manufacturing of aviation components, systems, and craft. Since the aviation industry exercises great influence on the subsector, and since aviation projects are generally long-term, sales to both domestic and export markets tend to fluctuate considerably.
Consumer Services and Price Controls: The Consumer Department implements consumer-protection laws for which the Ministry is responsible, e.g., the Commodities and Services Price Control Law, the Consumer Protection Law, and the Weights and Measures Ordinance. The department's subagencies provide consumer services and protect local products. The public is increasingly consumerism-conscious, filing thousands of complaints during the year with the Ministry, the Consumer Council, and various consumer organizations; these agencies did their best to help consumers by contacting suppliers and giving advice. In many cases criminal offenses were discovered, criminal files opened, investigations undertaken, and charges brought.
Consumer legislation continues to advance. The Consumer Protection Law 5741-1981 was amended for the first time in May, 1988, after which the Knesset Finance Committee debated legislation restricting advertising aimed at minors. Thus far, regulations based on this law have been issued regarding product labelling, credit sales, special and door-to-door sales, calculation of per-annum interest rates, reasons for cancelling sales of spare parts, and the details that must appear in contracts connected with non-bank loans.
The Office of the Chief Scientist promotes industrial R&D and, consequently, increased industrial exports. Israel's abundance of high-quality manpower warrants a national strategy for the development of high-tech industry. Recent years' experience, however, shows that R&D cannot attain commercial success in the absence of marketing and business endeavors. Hence the Office emphasizes its inquiries about the marketing and business aspects of the programs filed with it. The development of modern Israeli industry may also ease the absorption of scientists and engineers - immigrants and non-immigrants alike.
The Chief Scientist, the Minister's advisor on industrial R&D and his representative in relevant scientific and technological activities in Israel and overseas, helps shape Ministry policy in this field. The office applies Ministry policy in industrial R&D disciplines and subjects, and helps give industry a strong "push" in the desired direction.
Assistance from the Office of the Chief Scientist is not limited to R&D; it has expanded in recent years to include market feasibility studies and, with regard to start-up firms, the transition from R&D to sales. The goal of the transition stage is to help companies produce prototypes for selected users, soliciting feedback that affects the final coalescence of the product. In keeping with recent decisions, the office will soon introduce additional support programs for technological incubators and centers of excellence in research institutes, and will help immigrant scientists find jobs in research facilities.
Diamonds: All diamond output is earmarked for export. The diamond industry is composed of some 700 production facilities, most of which are small workshops with an average of 10-20 employees. (Only 15 diamond firms have more than 100 employees.) Most commercial activity takes place at the Diamond Exchange in Ramat Gan.
The Israel Film Center promotes the film industry by supporting the development of film-production infrastructure and facilitating production by Israeli firms and visiting foreign companies.
The Quality Israeli Film Promotion Fund was established in 1989 in conjunction with the Ministry of Education and Culture. The Fund's primary objective is to encourage Israeli companies to produce feature-length films that will improve the caliber and quality of Israeli films as well as the marketing and distribution possibilities of such films in Israel and abroad.
Sources: Israel Ministry of Foreign Affairs