Israel: Investing in Israel
Israel has a liberal investment system and most activities are open to both private national and foreign investors, ranking the country 12th among the top 20 host countries. According to UNCTAD's World Investment Report 2021, Israel's investment flow increased by 30% between 2019 and 2020, reaching USD 25 billion in 2020, despite the Covid-19 pandemic. Investments were largely driven by M&A sales in electronics, which increased by 31% to USD 7.3 billion, e.g. NVidia (US) acquired Mellanox for USD 6.9 billion. The stock of FDI was about USD 189 billion in 2020. According to OECD data, FDI flows to Israel amounted to USD 14.8 billion in the first half of 2021. Israel’s main investing partners are the United States and the Netherlands. Most FDI stocks are directed towards manufacturing, information and communication, and financial and insurance activities. Chinese investment in Israel has grown rapidly in recent years, particularly in software, IT services and consumer electronics. Furthermore, the Chinese company Shanghai International Port Group (SIPG) will operate the Haifa Port - Israel's largest port - as of 2021 for 25 years whereas China Harbour Engineering Company won a tender to build a USD 1 billion port at Ashdod.
Israel has a number of assets, which appeal to foreign investors: a strong R&D sector and a high-skilled and multilingual workforce. The hi-tech sector, especially start-ups, has attracted a great deal of foreign investment. However, the country's geopolitical environment is particularly unstable because of tensions with the Palestinian territories and support for American policy by Israel. In the Doing Business 2020 report (latest report), Israel ranks 35th out of 190 economies ranked by the World Bank, up 14 places from the previous year's ranking. Significant progress has been made in particular in paying taxes and obtaining loans.
Foreign Direct Investment | 2019 | 2020 | 2021 |
FDI Inward Flow (million USD) | 17,363 | 24,283 | 29,615 |
FDI Stock (million USD) | 161,397 | 185,188 | 235,593 |
Number of Greenfield Investments* | 78 | 47 | 79 |
Value of Greenfield Investments (million USD) | 1,750 | 1,538 | 2,625 |
Source: UNCTAD, Latest available data
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Israel | Middle East & North Africa | United States | Germany |
Index of Transaction Transparency* | 7.0 | 6.4 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 9.0 | 4.8 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 9.0 | 4.7 | 9.0 | 5.0 |
Source: Doing Business, Latest available data
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
Israel has many strong advantages for FDI:
Main obstacles to the country's economic development:
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Latest Update: January 2023