Productivity and Innovation Instead of Steel and Cement

The new proposal attempts to correct the old lack of support for small and medium-sized businesses, while fixing the ills of traditional industries.

The new state support program for industry focuses on the weak points of the existing law. The new proposal attempts to correct the old lack of support for small and medium-sized businesses, while fixing the ills of traditional industries suffering from a life-threatening lack of innovation.

Finance Minister Roni Bar-On is trying to implement the vision of developing the periphery in his 2009 budget, and has found a full partner in Industry, Trade and Labor Minister Eli Yishai. Yishai does not view himself, unlike his predecessors, as the minister of the industrialists, but is more concerned about creating employment.

The treasury has learned quite a lot in the past year from the vision of Stef Wertheimer, which focuses on industrial development in top-quality industrial parks. To this vision they have added the recommendations of the Makov Committee to encourage traditional industries, and the result is a revolution in government support for industry.

Now the treasury, and other ministries, are hoping the new legislation will lead to flourishing industry in the five new regional industrial parks in the south and north, and add 7,000 high-quality, long-term jobs at relatively high wages.

The treasury has claimed for a long time that the laws encouraging investment have failed, were spread out over too much area and too many companies, and did not produce results.

Quite a number of leading businesspeople have supported the view that transferring grants from large companies to small and medium-sized businesses would be much better for the economy.

If the new legislation passes, industry could again become a source of growth, and traditional industries could be upgraded with new technologies and design. Small and medium businesses would see a whole new world of support, and local and international high-tech firms would start moving to the periphery.

Up until now, the grants were sucked up by the big companies and turned into investments in steel and concrete. Now the money will go to improving productivity and innovation. A company that wants to expand its production line will not enjoy a grant, unless the line is newer and more innovative than the present line.

However, a battle will be waiting in the cabinet if it turns out, for example, that the industrial park in Carmiel is to be granted the new status of a regional industrial area, while the park in Ma'alot-Tarshiha is not - or vice versa. Bar-On, who formulated the Economic Arrangements Law with a long-term vision of favoring the periphery, will need to convince other politicians that this is the proper step, even on the eve of new elections.