Israel targets NIS 74b in reciprocal procurement

Eli Cohen  photo: Tamar Matsafi

Foreign companies spent NIS 4 billion on reciprocal procurement in Israel last year.

Minister of Economy and Industry Eli Cohen has urged Israel's cabinet to continue imposing the obligation of reciprocal procurement on Israeli industry as part of the large infrastructure tenders that the government will promote in the coming few years.

According to Cohen, reciprocal procurement from these tenders will bring back NIS 74 billion into the Israeli economy.

Reciprocal procurement is when governments compel foreign companies and suppliers from which it procures services and equipment to commit to purchasing a certain percentage of the deal from local industry.

In the coming few years, government companies are expected to issue about 100 infrastructure and energy tenders worth NIS 200 billion for foreign companies. The Ministry of Economy and Industry will demand reciprocal procurement worth NIS 74 billion for these contracts.

Cohen warned again the discontinuation of reciprocal procurement, saying that it would cost the economy dearly. Some economists oppose the concept of reciprocal procurement. Officials in the Ministry of Transport and Ministry of Finance have argued in the past that reciprocal procurement for buses, for example, lead to more expensive bus fares.

During the cabinet meeting, Foreign Investments and Industrial Cooperation chief executive Ziva Eger, presented reciprocal procurement data for 2018. The figures showed that foreign companies spent NIS 4 billion on reciprocal procurement last year from 1,065 Israeli companies including 430 small and medium companies and 235 companies in the periphery.

An analysis presented by the Manufacturers Association of Israel found that every $1 billion spent in Israel on reciprocal procurement earned $3.4 billion for the economy.

Published by Globes, Israel business news - en.globes.co.il - on November 4, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Eli Cohen  photo: Tamar Matsafi
Eli Cohen photo: Tamar Matsafi
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018