Opportunities for Industrial Cooperation and Investment in Israel
 
OFFICE OF THE CHIEF SCIENTIST
Government Support Provides Incentives for Multinationals Attracted to Israeli Technology
An Interview with Avi Hasson
Chief Scientist, Ministry of Economy

I sraeli is unique, not only in the advanced technologyopportunities that it offers the world’s multinationalcompanies, but also in the infrastructure of government support and incentives available to those global giants wishing to take advantage of Israel’s R&D skills and cutting edge products, systems and services. This support includes the option of fulfiling industrial cooperation reciprocal procurement commitments through R&D investments via the Offie of the Chief Scientist (OCS) at Israel’s Ministry of Economy.
Israel’s leadership in innovation and R&D eco-systems has attracted more than 300 multinational companies
“There is no parallel to Israel,” said Avi Hasson, Chief Scientist at the Ministry of Economy. “In terms of the impact of R&D spending, which represents 2% of GDP, Israel’s leadership in innovation and R&D eco-systems has attracted more than 300 multinational companies from a diverse range of areas. Historically, this included ICT and companies such as Motorola, IBM and Intel, and healthcare fims like Johnson & Johnson and Philips. In the past few years Apple and Facebook have opened up their fist development centers outside of the US in Israel.”
“But in recent years,” he added, “we see a diversifiation of areas requiring high-tech systems, with multinationals like Barclays and Citibank drawn here for fiancial technology, General Motors for automobile systems and Lockheed Martin for defense and aerospace, among others.” Mr. Hasson notes that while most of the multinationals with a development presence in Israel are from North America and Europe, Asian giants from China, India, Japan, Korea and Taiwan are now increasingly establishing R&D centers in Israel. “Many companies enter Israel through acquisitions of start-ups and this forms the basis of a development center, which is often expanded into manufacturing facilities.

Implementing Government Policy
The OCS implements government policies designed to support and encourage high added-value industrial R&D and enhance the knowledge base of Israel’s high-tech industries. The programs implemented by the OCS have played a major role in enabling Israel to emerge as a global high-tech hub. A range of R&D grants, funds and other support enables the Israeli government to share in the risks inherent in developing new ideas and bringing them to market. The OCS also promotes extensive cooperation in industrial R&D at the international level, in both bilateral and multilateral frameworks that facilitate opportunities for Israeli companies to develop strategic relationships worldwide. Mr. Hasson said, “On a weekly basis we host many delegations of the most senior executives of the world’s largest multinationals from North America, Europe and Asia. We are able to offer support programs and incentives and make the connections with leading Israeli companies, start-ups and relevant academic bodies.” Mr. Hasson himself assumed the role of Chief Scientist in 2011 after more than a decade as a venture capital General Partner at Gemini Israel Funds, where he also served as a director of ICT portfolio companies. He was previously Director of Product Marketing at ECI Telecom.

Global Enterprise Collaboration Program
In the past few years, the OCS has been implementing its Global Enterprise Collaboration framework, designed specifially for multinational corporations. Under this framework, joint R&D projects between global corporations and Israeli companies that are approved by the OCS will be entitled to fiancial assistance from the OCS in accordance with prevailing regulations. This initiative has been especially successful in the biomed sector with Merck KGaA, GE, Philips, Abbott and B. Braun signing agreements. Through this framework, the OCS also strives to bring Israeli advanced technologies to traditional sectors such as oil and gas exploration and production. Meetings and seminars are being held with the world’s major energy companies to expose them to Israeli capabilities in such areas as big data, cyber security, cleantech, water technologies, chemistry, robotics, computer engineering, communications and more.

Bilateral R&D Funds
The OCS has also set up a global infrastructure of bilateral R&D funds which began with the US BIRD (Binational Industrial R&D Foundation) and now encompasses similar funds such as the Canada Industrial R&D Foundation (CIIRDF), Singapore Industrial R&D Fund
Multinationals fid innovation and access to unique technologies while Israel is boosted by the investments of so many major global companies
(SIIRD) and Korea-Israel Industrial R&D Fund (KORIL-RDF). These funds have ploughed millions of dollars into projects that match up Israeli high-tech fims and overseas partners. In addition to the fund model, the State of Israel also has more than 50 bilateral R&D agreements with countries, provinces and cities around the world, enabling government funding for R&D projects.
In 2009, Israel signed a bilateral R&D agreement with Jiangsu province in China followed by an agreement to set up a bilateral R&D fund modeled on the existing bilateral funds. The Jiangsu agreement paved the way for similar bilateral agreements with Shanghai and Shenzhen in 2011, Shandong and Guandong in 2013, and Hong Kong, Zhenjiang and Tianjin in 2014 as well as a new federal agreement with China’s Ministry of Science and Technology (MOST). In India, Israel added to its federal level program – the India-Israel Initiative for Industrial R&D – when it signed its fist bilateral agreement with an Indian state in 2013 – the state of Karnataka. Both programs have the ability to fund Israel-India R&D projects. Mr. Hasson said, “We are negotiating to sign similar bilateral agreements with other Chinese provinces and Indian states.” These bilateral agreements and funds are implemented through MATIMOP – The Israeli Industry Center for R&D. On the multilateral plane, Israel is a member of the EU framework program Horizon 2020 (2014-2020), which with a budget of around €70 billion is the worlds’ largest ever program bringing together academia and industry. Horizon 2020 comprises three separate initiatives: Industrial Leadership; Societal Challenges and Excellent Science, each covering, amongst others aspects of climate change, resource effiiency, clean energy and transport. Among the many unique programs offered by the OCS is MAGNET, which brings together academia and industry to promote generic R&D through consortia of universities and companies including multinationals. Another highly successful OCS framework is the Technological Incubators Program which provides support for novice entrepreneurs with innovative concepts wishing to establish their own companies. After the emergence of many successful start-ups, the incubators have been privatized (though the incubator companies continuing to receive generous OCS grants) with multinationals bidding and winning tenders – for example Johnson & Johnson, Takeda Pharmaceuticals and Orbimed won the biotech incubator tender in Nes Ziona.
Mr. Hasson said, “We continue to support the eco-system of Israel’s advanced technology industry while adding new elements. We are considering a tender for a second Life Sciences venture capital fund after the fist raised $222 million and is managed by OrbiMed. We issued a Request for Information (RFI) for the world’s large pharmaceutical companies to encourage them to establish R&D centers here.”

Win-Win Relationship
“This is a win-win relationship for both Israel and the multinational companies,’ Mr. Hasson stressed. “The multinationals fid cutting edge innovation and access to unique technologies while the Israeli economy is boosted by the investments of so many major global companies, and Israeli companies gain access to overseas markets, investments, and the infrastructure of the multinationals.” “There is much logic and value for both parties and the possibility of converting offset commitments through investment in the OCS’s industrial R&D programs is an extra incentive for multinationals to look into our activities.”



Produced By: Daniel Uzan Media & Communications