Even as Israel's exports are stagnating and manufacturing is declining, more than NIS 1 billion in aid packages is stuck in Ministry of Finance and is not being transferred to the Ministry of Industry, Trade and Labor. The money is for the Office of the Chief Scientist, the Investment Promotion Center, the Israel Export and International Cooperation Institute's exporters marketing fund, and other programs.
Top Ministry of Industry and Manufacturers Association of Israel say that an NIS 1.2 billion transfer was agreed upon with the Ministry of Finance's Budget Department early this year, but that most of the funds have been blocked because of opposition by senior Ministry of Finance officials.
"We're being rebuffed with 'there is no money', and 'maybe tomorrow'. It's embarrassing when this is heard from the heads of the ministry that is responsible for the government's money," said a top government source familiar with the subject. "We're talking about money that is critical for the routine functioning of entire units of the Ministry of Industry, which the Ministry of Finance is paralyzing by delaying the transfers."
Manufacturers Association director general Amir Hayek met top Ministry of Finance yesterday. He said, "It is unacceptable that in such difficult and challenging times for industry, programs which are intended to achieve economic growth are stuck in bureaucracy. The new marketing fund, which is intended to expose exporters to new markets, because of the crisis in traditional markets, has not yet been budgeted, despite explicit promises. The time has come to keep the promises."
The delays are also affecting companies that want to set up plants in the periphery. Galilee's Alon Tavor Industrial Park CEO Avraham Barkan says, "Israeli industry's distress is known, but the government is not doing enough to solve it. The current budget for the Ministry of Industry's Development Areas Administration Authority is negligible compared with what is needed on the ground, amounting to NIS 140 million. Five years ago, it was NIS 350 million. This money is intended for infrastructures development for enterprises in the Galilee and Negev. Of the negligible funds available for the Authority, more than NIS 100 million is for previous commitments. It's absurd that enterprises in the periphery cannot expand because of the government's budget distress."
The Ministry of Finance said in response that it would meet all the agreements with the Ministry of Industry. Ministry of Finance officials said that the budget department's promise to spread out payments, including the NIS 1.2 billion for the Ministry of Industry, was partly due to corresponding programs and measures by the Ministry of Industry, such as fully adopting the Trajtenberg Report's recommendations. These include removing import duties and the adoption of international standards.
The Ministry of Finance said, "Some of the money was already transferred during the year, and the Ministry of Finance will transfer the rest later. The country has no money now, because various programs intended to finance these measures have not yet been approved by the Knesset. We all hope that we won't reach a situation in which the state will not be able to meet its commitments because of the financial crisis."
Phoenecia CEO Eran Chaimovich seeks to meet Netanyahu
In a separate development, Phoenecia America-Israel (Flat Glass) Ltd. CEO Eran Chaimovich has asked for a meeting with Prime Minister Benjamin Netanyahu to explain the threat of closing down the company's plant in Upper Nazareth. "On behalf of 1,000 families whose livelihoods rely on Phoenicia, please devote a little of your precious time, because all the budgets are trapped or are in process, and an innovative exporting enterprise is about to shut its doors after 78 years in business," Chaimovich wrote.
He told "Globes", "I am sure that once I explain the distress, the prime minister will show understanding and help find the right and just solution to the problem."
Published by Globes [online], Israel business news - www.globes-online.com - on September 12, 2012
© Copyright of Globes Publisher Itonut (1983) Ltd. 2012