Investment Center Activities Paralyzed Since the Beginning of This Year

The administration of the Industry and Trade Ministry's Investment Center is paralyzed and has stopped functioning since the beginning of the year. This means it is not even discussing benefits for investors, or approving requests for investment aid such as grants or tax benefits.

In addition, other parts of the Investment Center, headed by Hezi Zaieg, are only functioning partially.

The cause of the de facto shutdown is an investigation into the Center's past activities by the State Comptroller, Micha Lindenstrauss, who is looking into the approval of grants that did not meet proper criteria. As a result, Investment Center employees are busy preparing their responses to the comptroller's findings.

In addition, a dispute over the map defining areas of "national priority" between the Finance and the Industry and Trade Ministries, and the Knesset Finance Committee, has created a situation where no such approved map exists. Therefore, it is impossible to approve new investments.

Zaieg responded that no new investment requests are being considered, since the map of national priority areas is no longer valid.

The Finance Committee refused to extend the map's standing for another three months, and no new map has yet been approved.

Nevertheless, according to Zaieg, the comptroller's investigation is not affecting the center's work and employees are responding to the comptroller as required, said Zaieg.

The Finance, Justice and Trade and Industry Ministries are now working on a new national priorities map, which will be based on unified criteria for government support for industrial investments.

The previous map, which expired at the end of 2006, had sections that were exceptions to the standard criteria - exceptions which the Justice Ministry said it would not be able to defend in court. The three ministries, therefore, began drawing up a new map.

At the same time, Industry and Trade Minister Eli Yishai asked the Finance Committee to extend the old map's expiration date for three months in order to have time to finish the work.

The committee actually agreed to a one-year extension, but Yishai refused, saying that he wanted to publish the new map as soon as possible in order to provide investors with a long-term, stable policy. As a result, all the discussions of new investments have been halted.

Also, the treasury and Industry and Trade Ministry disagree over the criteria. While the latter wants to include the distance from the center of the country, as well as the social and economic levels of the regions in the map, the treasury wants there to be only a single criterion: the economic and social standing of the locality.

The treasury responded that in intra-ministerial discussions, its representatives take into account a wide range of matters and considerations in drawing up the new map, including - but not limited to - those of social and economic status.

In recent months Lindenstrauss has been examining a number of grants given when Prime Minister Ehud Olmert was Industry and Trade Minister. Some relate to the period of the previous head of the Investment Center, Shmuel Mordechai, and others to Zaieg's tenure.

In addition, the comptroller is investigating two specific grants: a grant to foreign investors for the Dimona Silica Industries plant in the Negev, and a grant for a project by Israeli investors in a mushroom growing plant near Ma'alot in the North.