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Last update - 14:43 06/07/2008 Doing business in Israel is tough, and only getting tougher By Guy Lashem Tags: Business, Israel There are many Hebrew words, which lack counterparts in other languages. The word "macher," which actually comes from Yiddish and means a middleman who can solve problems, fix things and cut red tape with the authorities, is just such a word. Attempts to find similar words in other languages have failed miserably. While not invented in Israel, macher certainly reached new heights here: In a survey conducted in 2004 for TheMarker among 300 senior executives in Israel, over a quarter admitted they think it is legitimate to use the services of a macher when dealing with government institutions. Advertisement Last year's State Comptroller Report also covered the dealings of such brokers in the public sector. State Comptroller Micha Lindenstrauss wrote in the report the use of such machers poses a threat to public confidence in the rule of law. When the report was published, a huge cry arose from senior public officials. Some of them, speaking off the record, claimed Lindenstrauss blew the whole matter out of proportion just to give the report, and himself, better public relations. It is easy to understand these anonymous senior officials: After all, many of those who retire from the civil service go on themselves to do such work as machers in the corridors of power, and any battle against the business would likely harm their future earnings. Six months ago, World Bank economists and lawyers published a fascinating study, which only further supported the comptroller's criticisms. The report, "Doing Business 2008," which surveyed 178 different countries around the world, compared the difficulty - or the ease - of doing business in each nation. The study determined that Israel was a bureaucratic superpower. The bottom line? Israel was "only" in 29th place in the world, a drop of three places from the previous year. But an in-depth reading of the study reveals this is an optical illusion - a particularly deceptive trick. In most interfaces between the authorities and citizens or small- and medium-sized businesses, Israel came out very badly. According to the World Bank experts, Israel is adept at producing bureaucracies. For example, it takes 34 days on average to open a business here - over twice the average of the OECD, to which Israel is striving to enter. Israel comes out only slightly above average in this category compared to the rest of the Middle East and North Africa - hardly a position of honor. As for the time it takes to license a business, the complicated processes here put Israel in 109th place with an average of 235 days. In Israel licensing a business takes about 20 difficult, convoluted bureaucratic steps at eight different government bodies. Middle Eastern and North African nations only averaged 201 days to license a business, and the same procedure took only 150 days in OECD countries. It will take a citizen 144 days to register property he bought in the Land Registry. Compare this to 48 days on average in our neighboring countries and only 28 days in Western nations. In this category, Israel came out in exceedingly bad shape: 152 out of 178. Only 26 countries were worse. Another honorable mention went to Israel in the category of how long it takes to enforce contracts in a court of law: Such a legal procedure takes an average of 890 days in Israel - about two and a half years. This is over 200 days longer than neighboring countries and over twice as long as OECD nations. In the best case, the court proceedings will end without the need to invoke the Bailiff's Office, because such a step would add years to the process. According to the World Bank, if a business owner gives up and decides to shut down the business, or goes bankrupt, life won't get any easier. It takes an average of four years here in Israel to completely shut down a business, even if all the sides involved mean well and work hard. The first senior official to declare war on this bureaucracy was the former budgets director in the Finance Ministry, Kobi Haber. He pushed a cabinet decision to set up an interministerial committee to remove barriers to business licensing. The committee, which was appointed in 2006, submitted its recommendations - and in recent months a working group lead by the Interior Ministry has been formulating the necessary changes to somewhat shorten the time required to get a business license. The necessary changes in the law, if they pass, will not be effective before 2009. For many businesses, this is too far off. But in all the other bureaucratic categories, no one has even started taking steps toward improving the sad situation. As far as the director general of the Finance Ministry, Yarom Ariav, is concerned, the matter is a top priority. "The World Bank's report is from our perspective an excellent tool," said Ariav. "In general, all of those involved in the matter do not provide exact figures. It is hard to measure the public sector in terms of success and failure. What we need to do with the numbers collected in the report is to locate the points of failure and set specific goals that we can measure their achievement. It is clear that the goal is to improve Israel's position compared to the rest of the world in the shortest amount of time. But without thinking outside the box, we will not be able to achieve that," said Ariav. "We have a lot to learn on this issue from the private sector and other countries," he added. "I regret that the report shows that a significant part of the barriers result from convoluted procedures related to the Finance Ministry and Tax Authority. Here, too, we will need to examine the process," said Ariav. Doing business in Israel is complicated and encourages machers and causes the public to lose faith in the government, he explained. "I hope we will succeed in raising Israel's position in the rankings to 24 within three years. Otherwise we will not have accomplished anything," said Ariav. Bookmark to del.icio.us   Killing spree Police conclude Jerusalem bulldozer killer acted alone. The Bar exam Attention celebrities: Israeli start-up company can save you from paparazzi   1.   "Macher" is not of Yiddish origin 08:57  |  Warschkow 06/07/08   2.   Businesses going under 09:34  |  Reality check 06/07/08   3.   But it takes only 1 day to establish a new settlement. 10:39  |  Andreas 06/07/08   4.   THIS COUNTRY NEEDS TO CHANGE!!!!! 11:32  |  b`Galil 06/07/08   5.   Machers for everything 13:16  |  Gadi 06/07/08   6.   The red tape in Israel 13:20  |  Avner 06/07/08   7.   Macher or machen is a very german and very 16:32  |  Kris Lazar 06/07/08   8.   Moving to Israel?? 16:35  |  Austin 06/07/08   9.   It`s the way-of-the-world here... 16:53  |  Esther 06/07/08   10.   Doing Business 17:21  |  ronny 06/07/08   11.   You live in Israel. You don`t do business in Israel. 17:30  |  stinglikeabee 06/07/08   12.   THIS is very very bad for Israel. Should be 17:32  |  17 06/07/08   13.   REPLY TO Moving to Israel 17:37  |  JS 06/07/08   14.   We need a new Department of Business Smoothification 18:25  |  Rami 06/07/08   15.   Reply to Andreas 21:56  |  Mordechai Klein 06/07/08   16.   The merit of living in the Land of Israel 22:00  |  Trudy Martin 06/07/08   17.   "Macher" is, indeed, of Yiddish origin 05:53  |  Serge 07/07/08   18.   It is not only bureaucracy 09:28  |  Goy in Israel 07/07/08   19.   nr.14 10:25  |  shoshana 07/07/08   20.   doing business in Israel 12:08  |  yermi 07/07/08   21.   Andreas PEE off this has SFA to do with you 12:50  |  Ari ben Yisrael 07/07/08   22.   Re: #13, JS 22:01  |  Austin 07/07/08

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