Investements in Israel

25 May

Many Americans consider to allocate some of their nest egg towards an investment in Israel.

Some see it as a way to channel some money to Israel in order to support its economy and strengthen the nation; others are keen to find new opportunities, discover new markets and to diverse their investment portfolios; others still are interested in emerging technologies in the computers industry, medical devices, bio-tech, nano-tech, and more.

Whatever be the reason you are interested in investments in Israel, whether it be mere curiosity or a real financial purpose, you may wish to acquire an understanding of how that market works and be able to identify the pros and cons in it. Or – in dramatic words – you wish to identify who are the good players and who are the bad ones in this market of opportunities. As Israeli lawyers, we face that dilemma over and over again during our professional careers.

Identifying the “good guys” has never been an easy task. In every nation it is always the million dollar question of how to find that one person or the one thing, which will make me a rich man/ woman. In order to find the right players and opportunities people sometime spend a lifetime of searches. Knowing our options and understanding the market and the various opportunities in it, is the first step towards making the right choice.

And, indeed, Israel has a lot to offer. The high-tech industry blooms over years, and there is no significant reason for it to stop: people are highly educated and the young workforce continues to acquire high education in order to be competitive in a small and educated society (highest ratio of university degrees per population in the world; the largest number of startups per capita in the world).

The World Economic forum (WEF [1] ) has ranked Israel the 15th most competitive economy in the 2006 Global Competitive Index.

The WEF world competitive yearbook of 2004-2005 placed it in the 1st place in few of the most important fields, such as: technological readiness; business costs of irregular payments; availability of mobile or cellular telephones.

In the field of venture capital availability, the country was ranked 2nd place (USA 1st place); and for other topics it was granted very high grades: quality of scientific research institutions; availability of scientists and engineers [2] .

Many articles were published recently in the media dealing with the question of whether it is the right time to invest in real estate. The general conclusion seems to be that a real estate investment in Israel is always a good option for those who favor real estate investments. A country with a small piece of land has, apparently, some advantages – there is always demand for it. Some experts note, that it is important to adopt a broad perspective: the state’s economy is fairly strong, while there is still a war in the middle east; therefore, it is highly probable that the market has not extended to its full potential, and there is definitely space for future growth.

Few American investors have drawbacks while they face opportunities to invest in markets other than the U.S. It is a common phenomena usually related to fear from the unknown.

Many drawbacks against investments in Israel are based upon the Media. News about corruption in the government and repeated headlines about the bloody Middle East play an important role in influencing public opinion. In addition, in recent years, some charges were filed against Israeli lawyers, some of whom related to large law firms. This fact had some effect on Americans who needed to employ the services of Israeli lawyers for their potential investments.

We live in the information era. At one hand, information is widely available. On the other hand, the wide range of data from all over the world is confusing, therefore information became a new commodity. Getting the right information is a matter of price, while the harder the information to get, the greater will be the price tag placed upon it.

Therefore, we believe that on of the tasks of the professionals employed in the process of investment, whether it be real estate or technology, is to gather the information and simplify it. That is not a simple task, as it may sound. It requires a different point of view, quite a mathematical perspective, an ability to arrange the vast amount of information in some kind of logical formula. Succeeding in providing the right information that way allows investors to reach their goal efficiently and to make their assignment considerably easier.

However, many professionals lack that ability to simplify data. One of the reasons could be that they do not think mathematically. Their thinking process is rather theoretical. Another reason is an inherent belief that the more complicated the material they present to their clients, the greater will eventually be their fee. That is why some professionals present an information which is rather vague and incoherent.

Keeping that in mind, we still believe that lawyers are a good source of information for the foreign investor. They are familiar with the rules and regulations governing their legal system, they usually understand the business climate and have experience dealing with bureaucrats; they may have the necessary skills needed for negotiation of commercial transactions. Moreover, qualified Israeli lawyers, somewhat like CPA’s, may assist you by showing a cautious point of view regarding your potential purchase.

Another advantage of using the services of lawyers versus other professionals and agents (i.e, real estate agents, investment companies, accountants) is that the information is strictly confidential. The legislative protection is two- folded: first, all the data delivered to the lawyer must be kept confidential; second, under the rules of evidence, no information can be delivered to any other entity (governmental or other) except – in rare situations – by a strict court injunction. That protects the entrepreneurs and other clients who place great importance upon confidentiality, that may sometimes be of the essence of the deal.

Disclaimer: the information contained in this article should be considered general information and not a legal or professional opinion. The user must get professional advise before any legal or other action related to topics in the article. The writer and site are not liable for any misuse of the articles and are under no legal responsibility to readers of articles in this site. users should not treat the articles as legal, accounting ,or professional advice. Such advice can only be properly given by qualified professionals who are fully aware of a user’s particular circumstances.

[1] http://www.weforum.org/en/index.htm

[2] http://www.investinisrael.gov.il/NR/exeres/C901DB9C-83EE-4937-8CAD-78D15B92A55B.htm

Dganit Toren, Adv. (Israel), L.L.M

D. Toren Law Offices A civil and commercial Israeli law firm providing comprehensive business and legal solutions, tailored to meet the needs of clients in the United States and in Israel. Call us with any question: Tel:  1-818-986-7800 http://www.torenlaw.com/

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