The government is stepping up its aid program for the country’s exporters, including 50 million shekels ($14.2 million) of assistance for small and medium-sized businesses, Finance Minister Yair Lapid and Economy Minister Naftali Bennett said on Wednesday.
- Due Dilligence / Thinking our way out of the export slump
- Israeli economy hit four-year low in second half of 2013
- Stubbornly strong shekel takes its toll on exporters
- Israel’s exports to Far East to exceed those to U.S. in 2014
The assistance will include a doubling of foreign trade risk insurance coverage over a three-year period. The ceiling on the risk coverage, which is provided by a government agency, will be expanded to 13.3 billion shekels from the current limit of 7.5 billion shekels. In the future, steps will also be taken to encourage private insurance companies to offer insurance against political risks faced by exporters.
“After sitting with the exporters and learning of the challenges they are facing, we decided to put together a package of incentives to help exporters with the dollar-shekel exchange rate and competition in markets around the world,” Lapid said, referring in part to the fact that the current high value of the shekel makes exports more expensive for overseas customers paying in dollars. “The slowdown in exports in recent months is a worrying sign and we are determined to halt it,” he added.
Bennett said exporters deserve help in reducing uncertainty and the difficulties they face. The steps announced, he said, will provide direct assistance to manufacturers and help them reach potential export markets.
Many exporters, however, said the government’s package was insufficient but better than nothing. Sources in the export sector here claimed, for example, that doubling the export risk was still not enough and that it needed to be tripled to 20 billion shekels to provide the coverage available in other comparable developed countries.
“It’s important not only to provide credit but also to approve export deals to problematic places,” said one source. “For example, there is concern at the Finance Ministry about approving export deals to some of the countries in Africa. On the other hand, the ministry relatively easily approves export insurance to China when exporters could get insurance for this from many banks around the world.”
An existing aid fund for small and medium-sized export businesses will be replaced by a new program providing assistance to between 50 and 100 such enterprises. Small and medium-sized businesses will no longer get direct assistance under the new program for marketing their wares abroad. The previous program, in place from 2009 through 2013, provided 48 million shekels to small businesses in outlying areas, and aimed at doubling their exports within three years.
Although the program was considered a success, sources involved with it said results from the program were mixed, with some businesses not managing to double exports while others boosted them four and even 10 times over, distorting the overall results. Companies in the high-tech sector did the best overall.