More needed

I.B.I. Investment House Analyst Ori Licht reiterated the view that the Israeli enterprises successfully survived the financial crisis were focused on the post crisis period, but said that more government support was needed to strengthen their future competitive advantage.

"Though the Israeli stock market is filled with tomorrow's blockbusters and boasts interesting investment opportunities, the high-tech industry is still lacking adequate government support in terms of both financing and R&D," Licht told Xinhua.

"There are several problems concerning the formulation of laws legislated to finance the high-tech sector, which rather serve to restrict its growth. One concerns the lack of government funding to start-up companies, which require tangible assets to serve as a guarantee in order to qualify for the money," Licht said.

In addition, he noted that companies that received R&D funding from the Office of the Chief Scientist one year, had no guarantee of receiving that funding the next year. They therefore had no way to estimate the funding they would have available down the line or how they should utilize it, all of which they were required to show the chief scientist as a condition for the funding.

"There are many hindrances to the efficiency of the Israeli high-tech sector which the Israeli government is responsible for and could improve, including tax laws and excessive red tape when it concerns intellectual property," Licht said.

He noted, however, that one of the main threats to Israel's high-tech sector concerned the appreciation of the Israeli currency relative to the currencies of its primary trade partners, the United States and Europe.

"The shekel's appreciation significantly increased the employment costs of Israeli engineers," Licht said. "The rising level of education in emerging markets has created attractive alternatives."

"The importance of the high-tech sector is tremendous -- 10 percent growth in the sector, leads to 2 percent growth in output, and a 1 percent drop in unemployment," Licht said.