Gov't industrial aid program set to be NIS 250-400m

Ashdod Port

Disappointed industrialists: The amounts are ridiculous.

Industrialists are criticizing the government industrial aid program being formulated by the Ministries of Finance and the Economy and Industry. Sources involved in drawing up the plan told "Globes" that the final extent of the assistance plan for industrialists and exporters, to be settled in the coming days, would be in the NIS 250-400 million range.

A program on this scale is likely to disappoint the industrialists, who submitted their own proposal amounting to several billion shekels to a public committee for strengthening industry headed by Ministry of Finance director general Shai Babad. Referring to the plans now being formed, Manufacturers Association of Israel president Shraga Brosh told "Globes," "Such sums are ridiculous. I can't believe that anyone in Jerusalem intends to solve the problems of Israeli industry with figures like these."

A source involved in drawing up the plan told "Globes," "While the industrialists are trying to push the Ministry of Finance into a plan involving substantial sums, the Ministry of Finance is trying to calm them down, and focus most of the efforts on reducing or reining in regulation. This can make things much easier for the productive sector, and it usually costs nothing."

The budgetary issues relating to the new plan announced two months ago by Minister of Finance Moshe Kahlon are scheduled to be settled in a discussion between the Ministries of Finance and the Economy and Industry in early September. Other than the amount to be spent on the new assistance plan, another issue left open concerns the amount of the tax benefits to be granted to industrialists and exporters in the central region and the outlying areas. A dispute between the industrialists and the government ministries exists on this matter. While the industrialists are demanding a reduction in the corporate tax, the government is less enthusiastic. The industrialists are demanding that the tax be cut from 16% to 12% in the central region and from 7.5% to 6% in the outlying areas. "The industrialists will have to make concessions or compromise," a source involved in the particulars of the plan said.

The industrial assistance plan is expected to include a number of measures designed to increase productivity, expand the technological training framework to alleviate the shortage of professional personnel in industry, reduce regulation, etc. As part of this, the Ministry of the Economy and Industry Investment Promotion Center today unveiled a new government program to provide assistance in boosting productivity at enterprises in northern Israel. The program appeals to conventional and mixed-conventional industries. It offers grants of tens of millions of shekels for installing components that will increase productivity. Enterprises with turnovers of NIS 20-200 million will be eligible for the state grants.

The Investment Promotion Center will provide assistance for new equipment and machinery, traffic equipment for use within plants, in installing innovate mechanization on production floors, etc. The aim is to increase productivity in these plants and improve their ability to compete in international markets. The projected budgetary extent of the program designated for plants in northern Israel is NIS 60 million.

Minister of the Economy and Industry Eli Cohen, who is involved in formulating the plan, said today, "Increasing productivity in Israel requires substantial state involvement, and we are allocating hundreds of millions of shekels to a variety of plans in the north. The productivity plan, the first of its kind in Israel, is designed to constitute a model for innovation and progress."

The Association of Craft and Industry in Israel - Small Enterprises, which represents small industry, objected strongly to the new plan, claiming that it excluded small businesses with an annual turnover of less than NIS 20 million. "It is impossible to devise a serious plan for increasing productivity that includes only large industry," Association of Craft and Industry in Israel CEO Liat Gur told "Globes."

Published by Globes [online], Israel Business News - www.globes-online.com - on August 22, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

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